[Title 7 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 2021 Edition]
[From the U.S. Government Publishing Office]



[[Page i]]

          

                                           Title 7

                                        Agriculture
                                 ________________________

                                    Parts 1200 to 1599

                         Revised as of January 1, 2021

          Containing a codification of documents of general 
          applicability and future effect

          As of January 1, 2021
                    Published by the Office of the Federal Register 
                    National Archives and Records Administration as 
                    Special Edition of the Federal Register

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                            Table of Contents



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

  Title 7:
    SUBTITLE B--Regulations of the Department of Agriculture 
      (Continued)
          Chapter XI--Agricultural Marketing Service 
          (Marketing Agreements and Orders; Miscellaneous 
          Commodities), Department of Agriculture                    5
          Chapter XIV--Commodity Credit Corporation, 
          Department of Agriculture                                417
          Chapter XV--Foreign Agricultural Service, Department 
          of Agriculture                                          1161
  Finding Aids:
      Table of CFR Titles and Chapters........................    1225
      Alphabetical List of Agencies Appearing in the CFR......    1245
      List of CFR Sections Affected...........................    1255

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

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

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

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                               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, 2021), 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 dropped in 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.
    An index to the text of ``Title 3--The President'' is carried within 
that volume.

[[Page vii]]

    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].

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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 
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law numbers, Federal Register finding aids, and related information. 
Connect to NARA's website 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, 2021







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                               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, 2021.

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

    All marketing agreements and orders for fruits, vegetables and nuts 
appear in the one volume containing parts 900-999. All marketing 
agreements and orders for milk appear in the volume containing parts 
1000-1199.

    For this volume, Michele Bugenhagen was Chief Editor. The Code of 
Federal Regulations publication program is under the direction of John 
Hyrum Martinez, assisted by Stephen J. Frattini.

[[Page 1]]



                          TITLE 7--AGRICULTURE




                 (This book contains parts 1200 to 1599)

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

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

                                                                    Part

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

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

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

[[Page 3]]

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

[[Page 5]]



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




  --------------------------------------------------------------------
Part                                                                Page
1200            Rules of practice and procedure governing 
                    proceedings under research, promotion, 
                    and information programs................           7
1205            Cotton research and promotion...............          18
1206            Mango promotion, research, and information..          66
1207            Potato research and promotion plan..........          82
1209            Mushroom promotion, research, and consumer 
                    information order.......................          97
1210            Watermelon research and promotion plan......         118
1212            Honey packers and importers research, 
                    promotion, consumer education and 
                    industry information order..............         141
1214            Christmas tree promotion, research, and 
                    information order.......................         158
1215            Popcorn promotion, research, and consumer 
                    information.............................         175
1216            Peanut promotion, research, and information 
                    order...................................         186
1217            Softwood lumber research, promotion, 
                    consumer education and industry 
                    information order.......................         200
1218            Blueberry promotion, research, and 
                    information order.......................         219
1219            Hass avocado promotion, research, and 
                    information.............................         235
1220            Soybean promotion, research, and consumer 
                    information.............................         255
1221            Sorghum promotion, research, and information 
                    order...................................         280
1222            Paper and paper-based packaging promotion, 
                    research and information order..........         302
1230            Pork promotion, research, and consumer 
                    information.............................         320

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1250            Egg research and promotion..................         347
1260            Beef promotion and research.................         366
1270

Wool and mohair advertising and promotion [Reserved]

1280            Lamb promotion, research, and information 
                    order...................................         391
1290            [Reserved]

1291            Specialty crop block grant program--farm 
                    bill....................................         411
1292-1299       [Reserved]

[[Page 7]]



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



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

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

Subpart B_Rules of Practice Governing Proceedings on Petitions to Modify 
  or To Be Exempted from Research, Promotion, and Information Programs

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

                      Subpart C_General Definitions

1200.100 General.
1200.101 Definitions.

Subpart D_Administrative Procedures Governing Formulation of a Research 
                           and Promotion Order

1200.200 General.
1200.201 Definitions.
1200.202 Proposals.
1200.203 Initial referendum.
1200.204 Reimbursement of Secretary's expenses.
1200.205 Termination of proceedings.
1200.206 Execution of the order.

    Authority: 7 U.S.C. 2101-2119, 2611-2627, 2701-2718, 2901-2911, 
4501-4514, 4801-4819, 4901-4916, 6101-6112, 6301-6311, 6401-6417, 7411-
7425, 7481-7491, and 7801-7813.



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

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

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



Sec.1200.1  Words in the singular form.

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



Sec.1200.2  Definitions.

    (a) The term Act means the Cotton Research and Promotion Act, as 
amended [7 U.S.C. 2101-2119]; the Egg Research and Consumer Information 
Act, as amended [7 U.S.C. 2701-2718]; the Pork Promotion, Research, and 
Consumer Information Act [7 U.S.C. 4801-4819]; and the Potato Research 
and Promotion Act, as amended [7 U.S.C. 2611-2627].
    (b) Administrator means the Administrator of the Agricultural 
Marketing Service or any officer or employee of the Department to whom 
authority has been delegated or may hereafter be delegated to act for 
the Administrator.
    (b) Board means the board or council established by the order to 
administer the program.
    (c) Department means the U.S. Department of Agriculture.
    (d) Federal Register means the publication provided for by the 
Federal Register Act, approved July 26, 1935 [44 U.S.C. 1501-1511], and 
acts supplementing and amending it.
    (e) Hearing means that part of the proceeding which involves the 
submission of evidence.
    (f) Judge means any administrative law judge appointed pursuant to 5 
U.S.C. 3105 or any presiding official appointed by the Secretary, and 
assigned to conduct the proceeding.
    (g) Hearing means that part of the proceeding that involves the 
submission of evidence.

[[Page 8]]

    (h) Hearing clerk means the Hearing Clerk, U.S. Department of 
Agriculture, Washington, D.C.
    (i) Order means any order or any amendment thereto which may be 
issued pursuant to the Act. The term order shall include plans issued 
under the Acts listed in paragraph (a) of this section.
    (j) Proceeding means a proceeding before the Secretary arising under 
the pertinent section of an Act.
    (k) Secretary means the Secretary of Agriculture of the United 
States, or any officer or employee of the Department to whom authority 
has heretofore been delegated, or to whom authority may hereafter be 
delegated, to act for the Secretary.

[67 FR 44350, July 2, 2002, as amended at 82 FR 58098, Dec. 11, 2017]



Sec.1200.3  Proposals.

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



Sec.1200.4  Reimbursement of Secretary's expenses.

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



Sec.1200.5  Institution of proceedings.

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

[[Page 9]]

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



Sec.1200.6  Docket number.

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



Sec.1200.7  Judge.

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



Sec.1200.8  Motions and requests.

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

[[Page 10]]



Sec.1200.9  Conduct of the hearing.

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

[[Page 11]]

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



Sec.1200.10  Oral and written arguments.

    (a) Oral argument before the judge. Oral argument before the judge 
shall be in the discretion of the judge. Such argument, when permitted, 
may be limited by the judge to any extent that

[[Page 12]]

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



Sec.1200.11  Certification of the transcript.

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



Sec.1200.12  Copies of the transcript.

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

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



Sec.1200.13  Administrator's recommended decision.

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

[[Page 13]]

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



Sec.1200.14  Submission to Secretary.

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



Sec.1200.15  Decision by the Secretary.

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



Sec.1200.16  Execution of the order.

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



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

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

[[Page 14]]

the extension. All rulings made pursuant to this paragraph shall be 
filed with the hearing clerk.
    (c) Effective date of filing. Any document or paper required or 
authorized in this subpart to be filed shall be deemed to be filed at 
the time it is received by the Hearing Clerk.
    (d) Computation of time. Each day, including Saturdays, Sundays, and 
legal public holidays, shall be included in computing the time allowed 
for filing any document or paper: Provided, That when the time for 
filing a document or paper expires on a Saturday, Sunday, or legal 
public holiday, the time allowed for filing the document or paper shall 
be extended to include the following business day.

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



Sec.1200.18  Ex parte communications.

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



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

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



Sec.1200.20  Hearing before Secretary.

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

[[Page 15]]

event the parties shall be afforded an opportunity to file exceptions 
before the issuance of the final decision.



Subpart B_Rules of Practice Governing Proceedings on Petitions to Modify 
   or To Be Exempted from Research, Promotion and Information Programs

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

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



Sec.1200.50  Words in the singular form.

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



Sec.1200.51  Definitions.

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

[[Page 16]]

any officer or employee of the Department to whom authority has 
heretofore been delegated, or to whom authority may hereafter be 
delegated, to act for the Secretary.

[67 FR 44350, July 2, 2002, as amended at 82 FR 58098, Dec. 11, 2017]



Sec.1200.52  Institution of proceeding.

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

[[Page 17]]

However, each reference to marketing order in the title shall mean 
order.

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



                      Subpart C_General Definitions

    Authority: 7 U.S.C. 2114, 2616, 2716, 2904, 4503, 4803, 4905, 6112, 
6311, 6406, 7490, 7424 and 7812.

    Source: 83 FR 27682, June 14, 2018, unless otherwise noted.



Sec.1200.100  General.

    The terms defined/specified in this subpart shall apply to all 
research and promotion programs authorized under the Act.



Sec.1200.101  Definitions.

    (a) Act means the Commodity Research, Promotion, and Information Act 
of 1996 [7 U.S.C. 7411-7425]; the Beef Promotion and Research Act of 
1985 [7 U.S.C. 2901-2911]; the Cotton Research and Promotion Act, as 
amended [7 U.S.C. 2101-2119]; the Dairy Production Stabilization Act of 
1983 [7 U.S.C. 4501-4514]; the Egg Research and Consumer Information 
Act, as amended [7 U.S.C. 2701-2718]; the Fluid Milk Promotion Act of 
1990 [7 U.S.C. 6401-6417]; the Hass Avocado Promotion, Research, and 
Information Act of 2000 [7 U.S.C. 7801-7813]; the Mushroom Promotion, 
Research, and Consumer Information Act of 1990 [7 U.S.C. 6101-6112]; the 
Popcorn Promotion, Research, and Consumer Information Act [7 U.S.C. 
7481-7491]; the Pork Promotion, Research, and Consumer Information Act 
[7 U.S.C. 4801-4819]; the Potato Research and Promotion Act, as amended 
[7 U.S.C. 2611-2627]; the Soybean Promotion, Research, and Consumer 
Information Act [7 U.S.C. 6301-6311]; and the Watermelon Research and 
Promotion Act, as amended, [7 U.S.C. 4901-4916].
    (b) Mail means to transmit either electronically or through a postal 
or other delivery system, information or a package (e.g., letter or 
envelope) to a recipient.



Subpart D_Administrative Procedures Governing Formulation of a Research 
                           and Promotion Order

    Source: 85 FR 45305, July 28, 2020, unless otherwise noted.



Sec.1200.200  General.

    The terms defined/specified in this subpart shall apply to all 
research and promotion programs authorized under the Act.



Sec.1200.201  Definitions.

    Act means the Commodity Research, Promotion, and Information Act of 
1996 (7 U.S.C. 7411-7425).
    Administrator means the Administrator of the Agricultural Marketing 
Service or any officer or employee of the United States Department of 
Agriculture to whom authority has been delegated or may hereafter be 
delegated to act for the Administrator.
    Cost of the Referendum means all USDA expenditures related to 
development of an order proposal, including, but not limited to, 
salaries, travel, supplies, printing, mailing, and shipping, and any 
costs related to an initial referendum.
    Order means any order which may be issued pursuant to the Act.
    Secretary means the United States Secretary of Agriculture or any 
officer or employee of the United States Department of Agriculture to 
whom authority has been delegated or may hereafter be delegated to act 
for the Secretary.



Sec.1200.202  Proposals.

    (a) An order may be proposed by any association of producers of an 
agricultural commodity, by any person that may be affected by the 
issuance of an order with respect to an agricultural commodity, or by 
the Secretary. Any person or organization other than the Secretary 
proposing an order shall file with the Administrator a written proposal.
    (b) Upon receipt of a proposal, the Administrator shall investigate 
and evaluate the proposal.

[[Page 18]]

    (c) If the proposal is submitted by an association of producers of 
the agricultural commodity or by any person that may be affected by the 
issuance of an order, and the investigation and consideration lead the 
Administrator to conclude that the proposed order will not tend to 
effectuate the declared policy of the Act, the Administrator shall deny 
the proposal. The Administrator will promptly notify the proponent(s) of 
such denial, which will be accompanied by a brief statement of the 
grounds for the denial.
    (d) If the proposal was submitted by an association of producers of 
the agricultural commodity or by any person that may be affected by the 
issuance of an order and the investigation and consideration lead the 
Administrator to conclude that an order will tend to effectuate the 
declared policy of the Act, the Administrator will promptly notify the 
proponent(s) of such conclusion, and the proponent(s) will be required 
to post a bond or other collateral in accordance with Sec.1200.204.
    (e) If the Administrator concludes that an order will tend to 
effectuate the declared policy of the Act, the Administrator shall 
publish the proposed order in the Federal Register and give due notice 
and opportunity for public comment on the proposed order.



Sec.1200.203  Initial referendum.

    For the purpose of ascertaining whether the persons to be covered by 
an order favor the order going into effect, the Administrator may 
conduct an initial referendum among persons to be subject to an 
assessment under the order who, during a representative period 
determined by the Administrator, engaged in the production or handling 
of the agricultural commodity or the importation of the agricultural 
commodity.



Sec.1200.204  Reimbursement of Secretary's expenses.

    The Administrator may require any person or organization proposing 
an order to post a bond or other collateral to cover the cost of the 
referendum as defined in Sec.1200.201.



Sec.1200.205  Termination of proceedings.

    If at any time during development of a new program the Administrator 
concludes, based on public comments, referendum votes, or other 
available information, that an order will not tend to effectuate the 
declared policy of the Act, the Administrator shall terminate the 
proceedings and collect reimbursements from the bond or other collateral 
posted pursuant to Sec.1200.204 for any expenses incurred in 
development of the proposed program.



Sec.1200.206  Execution of the order.

    (a) Issuance of the order. The Administrator shall, if the 
Administrator finds that it will tend to effectuate the purposes of the 
Act, issue the final order.
    (b) Effective date of order. No order shall become effective in less 
than 30 days after its publication in the Federal Register, unless the 
Administrator, upon good cause found and published with the order, fixes 
an earlier effective date.
    (c) Notice of issuance. After the Administrator issues the order, 
AMS will publish notice of the order's issuance in the Federal Register.



PART 1205_COTTON RESEARCH AND PROMOTION--Table of Contents



            Subpart_Procedures for Conduct of Sign-up Period

                               Definitions

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

                               Procedures

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

[[Page 19]]

1205.30 Instructions and forms.

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

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

               Subpart_Cotton Research and Promotion Order

                               Definitions

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

                              Cotton Board

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

                         Research and Promotion

1205.333 Research and promotion.

                        Expenses and Assessments

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

                       Reports, Books, and Records

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

              Certification of Cotton Producer Organization

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

                              Miscellaneous

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

                     Subpart_Members of Cotton Board

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

               Subpart_Cotton Board Rules and Regulations

                               Definitions

1205.500 Terms defined.

                                 General

1205.505 Communication.

                               Assessments

1205.510 Levy of assessments.
1205.511 Payment and collection.
1205.512 Collecting handlers and time of collection of $1 per bale 
          assessment.
1205.513 Collecting handlers and time of collection of the supplemental 
          assessment.
1205.514 Customs Service and the Collection of the $1 per bale 
          assessment.
1205.515 Customs Service and the collection of the supplemental 
          assessment.
1205.516 Reports and remittance to the Cotton Board.
1205.517 Failure to report and remit.
1205.518 Receipts for payment of assessments.
1205.519 Organic exemption.

                             Reimbursements

1205.520 Procedure for obtaining reimbursement.

                           Warehouse Receipts

1205.525 Entry of gin code number.

[[Page 20]]

                           Reports and Records

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

                        Confidential Information

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

Subpart--Fiscal Period [Reserved]

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



            Subpart_Procedures for Conduct of Sign-up Period

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

                               Definitions



Sec.1205.10  Act.

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



Sec.1205.11  Administrator.

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



Sec.1205.12  Cotton.

    The term cotton means all Upland cotton harvested in the United 
States and all imports of Upland cotton, including the Upland cotton 
content of products derived thereof.

[81 FR 38894, June 15, 2016]



Sec.1205.13  Upland cotton.

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



Sec.1205.14  Department.

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



Sec.1205.15  Farm Service Agency.

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



Sec.1205.16  Order.

    The term Order means the Cotton Research and Promotion Order.



Sec.1205.17  Person.

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



Sec.1205.18  Producer.

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

[67 FR 21169, Apr. 30, 2002]



Sec.1205.19  Importer.

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



Sec.1205.20  Representative period.

    The term representative period means the 2014 calendar year.

[80 FR 36233, June 24, 2015]



Sec.1205.21  Secretary.

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



Sec.1205.22  State.

    The term State means each of the 50 states.



Sec.1205.23  United States.

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

                               Procedures



Sec.1205.24  General.

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

[[Page 21]]

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



Sec.1205.25  Supervision of sign-up period.

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



Sec.1205.26  Eligibility.

    Only persons who meet the eligibility requirements in this subpart 
may participate in the sign-up period. No person is entitled to sign up 
more than once.
    (a) Except as set forth in paragraphs (b) and (c) of this section, 
the following persons are eligible to request the conduct of a 
continuance referendum:
    (1) any person who was engaged in the production of Upland cotton 
during calendar year 2014; and
    (2) any person who was an importer of Upland cotton and imported 
Upland cotton in excess of the value of $2.00 per line item entry during 
calendar year 2014.
    (b) A general partnership is not eligible to request a continuance 
referendum, however, the individual partners of an eligible general 
partnership are each entitled to submit a request.
    (c) Where a group of individuals is engaged in the production of 
Upland cotton under the same lease or cropping agreement, only the 
individual or individuals who signed or entered into the lease or 
cropping agreement are eligible to participate in the sign-up period. 
Individuals who are engaged in the production of Upland cotton as joint 
tenants, tenants in common, or owners of community property, are each 
entitled to submit a request if they share in the proceeds of the 
required crop as owners, cash tenants, share tenants, sharecroppers or 
landlords of a fixed rent, standing rent or share tenant.
    (d) An officer or authorized representative of a qualified 
corporation, association, or limited partnership may submit a request on 
behalf of that corporation, association, or limited partnership.
    (e) A guardian, administrator, executor, or trustee of any qualified 
estate or trust may submit a request on behalf of that estate or trust.
    (f) An individual may not submit a request on behalf of another 
individual.
    (g) Participation in the sign-up by proxy or power of attorney is 
not authorized.

[62 FR 1660, Jan. 13, 1997, as amended at 67 FR 21169, Apr. 30, 2002; 72 
FR 51160, Sept. 6, 2007; 80 FR 36233, June 24, 2015]



Sec.1205.27  Participation in the sign-up period.

    The sign-up period will be from August 3, 2015, until August 14, 
2015. Those persons who favor the conduct of a continuance referendum 
and who wish to request that USDA conduct such a referendum may do so by 
submitting such request in accordance with this section. All requests 
must be received by the appropriate USDA office by August 14, 2015.
    (a) Before the sign-up period begins, FSA shall establish a list of 
known, eligible, Upland cotton producers in the county that it serves 
during the representative period, and AMS shall also establish a list of 
known, eligible Upland cotton importers.
    (b) Before the start of the sign-up period, AMS will post sign-up 
information, including sign-up forms, on its Web site: http://
www.ams.usda.gov/Cotton. Importers who favor the conduct of a 
continuance referendum can download a form from the Web site, or request 
a sign-up form by contacting [email protected] or (540) 361-2726 and 
one will be provided to them. Importers may participate in the sign-up 
period by submitting a signed, written

[[Page 22]]

request for a continuance referendum, along with a copy of a U.S. 
Customs and Border Protection form 7501 showing payment of a cotton 
assessment for calendar year 2014. The USDA, AMS, Cotton and Tobacco 
Program, Attention: Cotton Sign-Up, P.O. Box 23181, Washington, DC 
20077-8249 shall be considered the polling place for all cotton 
importers. All requests and supporting documents must be received by 
August 14, 2015.
    (c) Each person on the county FSA office lists may participate in 
the sign-up period. Eligible producers must date and sign their name on 
the ``County FSA Office Sign-up Sheet.'' A person whose name does not 
appear on the county FSA office list may participate in the sign-up 
period. Such person must be identified on FSA-578 during the 
representative period or provide documentation that demonstrates that 
the person was a cotton producer during the representative period. 
Cotton producers not listed on the FSA-578 shall submit at least one 
sales receipt for cotton they planted during the representative period. 
Cotton producers must make requests to the county FSA office where the 
producer's farm is located. If the producer's land is in more than one 
county, the producer shall make request at the county office where FSA 
administratively maintains and processes the producer's farm records. It 
is the responsibility of the person to provide the information needed by 
the county FSA office to determine eligibility. It is not the 
responsibility of the county FSA office to obtain this information. If 
any person whose name does not appear on the county FSA office list 
fails to provide at least one sales receipt for the cotton they produced 
during the representative period, the county FSA office shall determine 
that such person is ineligible to participate in the sign-up period, and 
shall note ``ineligible'' in the remarks section next to the person's 
name on the county FSA office sign-up sheet. In lieu of personally 
appearing at a county FSA office, eligible producers may request a sign-
up form from the county FSA office where the producer's farm is located. 
If the producer's land is in more than one county, the producer shall 
make the request for the sign-up form at the county office where FSA 
administratively maintains and processes the producer's farm records. 
Such request must be accompanied by a copy of at least one sales receipt 
for cotton they produced during the representative period. The 
appropriate FSA office must receive all completed forms and supporting 
documentation by August 14, 2015.

[80 FR 36233, June 24, 2015]



Sec.1205.28  Counting.

    County FSA offices and FSA, Deputy Administrator for Field 
Operations (DAFO), shall begin counting requests no later than August 
14, 2015. FSA shall determine the number of eligible persons who favor 
the conduct of a continuance referendum.

[62 FR 1660, Jan. 13, 1997, as amended at 67 FR 21170, Apr. 30, 2002; 72 
FR 51161, Sept. 6, 2007; 80 FR 36234, June 24, 2015]



Sec.1205.29  Reporting results.

    (a) Each county FSA office shall prepare and transmit to the state 
FSA office, by August 21, 2015, a written report of the number of 
eligible producers who requested the conduct of a referendum, and the 
number of ineligible persons who made requests.
    (b) DAFO shall prepare, by August 21, 2015, a written report of the 
number of eligible importers who requested the conduct of a referendum, 
and the number of ineligible persons who made requests.
    (c) Each state FSA office shall, by August 21, 2015, forward all 
county reports to DAFO. By August 28, 2015, DAFO shall forward its 
report of the total number of eligible producers and importers that 
requested a continuance referendum, through the sign-up period, to the 
Deputy Administrator, Cotton and Tobacco Program, Agricultural Marketing 
Service, USDA, 100 Riverside Parkway, Suite 101, Fredericksburg, 
Virginia 22406.

[80 FR 36234, June 24, 2015, as amended at 82 FR 38595, Aug. 15, 2017]



Sec.1205.30  Instructions and forms.

    The Administrator is hereby authorized to prescribe additional 
instructions and forms consistent with the

[[Page 23]]

provisions of this subpart to govern conduct of the sign-up period.



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

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



Sec.1205.200  General.

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



Sec.1205.201  Definitions.

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



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

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

[[Page 24]]

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

[[Page 25]]

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



Sec.1205.203  Voting eligibility.

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



Sec.1205.204  Voting.

    (a) Place of voting. The FSA county office serving the county in 
which the producer's farm is located shall be the producer's polling 
place. For a person not participating in an FSA program, the opportunity 
to vote in a referendum will be provided at the FSA

[[Page 26]]

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



Sec.1205.205  Canvass of ballots.

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

[[Page 27]]

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



Sec.1205.206  Reporting results of referendum.

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



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

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



Sec.1205.208  Disposition of ballots and records.

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



Sec.1205.209  Confidential information.

    (a) The ballots cast or the manner in which any person voted and all 
information furnished to, compiled by, or in the possession of the 
referendum agent shall be regarded as confidential.
    (b) The ballots and other information or reports that reveal, or 
tend to reveal, the vote of any person covered under the Order and the 
voter list shall be strictly confidential and shall not be disclosed.



Sec.1205.210  Additional instructions and forms.

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

[[Page 28]]



               Subpart_Cotton Research and Promotion Order

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

                               Definitions



Sec.1205.301  Secretary.

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



Sec.1205.302  Act.

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

[56 FR 64472, Dec. 10, 1991]



Sec.1205.303  Person.

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



Sec.1205.304  Cotton.

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

[56 FR 64472, Dec. 10, 1991]



Sec.1205.305  Upland cotton.

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

[56 FR 64472, Dec. 10, 1991]



Sec.1205.306  Bale.

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

[56 FR 64472, Dec. 10, 1991]



Sec.1205.307  Fiscal period.

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

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



Sec.1205.308  Cotton Board.

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

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



Sec.1205.309  Producer.

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

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



Sec.1205.310  Importer.

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

[56 FR 64472, Dec. 10, 1991]



Sec.1205.311  Handler.

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

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



Sec.1205.312  Handle.

    Handle means to harvest, gin, warehouse, compress, purchase, market,

[[Page 29]]

transport, or otherwise acquire ownership or control of cotton.

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



Sec.1205.313  United States.

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

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



Sec.1205.314  Cotton-producing State.

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

[75 FR 24374, May 5, 2010]



Sec.1205.315  Marketing.

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

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



Sec.1205.316  Cotton-Producer organization.

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

[56 FR 64472, Dec. 10, 1991]



Sec.1205.317  Cotton-Importer organization.

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

[56 FR 64472, Dec. 10, 1991]



Sec.1205.318  Contracting organization or association.

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

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



Sec.1205.319  Cotton-producing region.

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

[75 FR 24374, May 5, 2010]



Sec.1205.320  Marketing year.

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

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



Sec.1205.321  Part and subpart.

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

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

                              Cotton Board



Sec.1205.322  Establishment and membership.

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

[[Page 30]]

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

[56 FR 64472, Dec. 10, 1991]



Sec.1205.323  Term of office.

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

[56 FR 64472, Dec. 10, 1991]



Sec.1205.324  Nominations.

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

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



Sec.1205.325  Selection.

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

[56 FR 64473, Dec. 10, 1991]



Sec.1205.326  Acceptance.

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

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



Sec.1205.327  Vacancies.

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

[56 FR 64473, Dec. 10, 1991]



Sec.1205.328  Alternate members.

    An alternate member of the Board, during the absence of the member 
for whom the person is the alternate, shall act in the place and stead 
of such member and perform such other duties as assigned. In the event 
of death, removal, resignation or disqualification of a member, the 
alternate for the member shall act for the member until a successor for 
such member is selected

[[Page 31]]

and qualified. In the event that both a producer member of the Board and 
the member's alternate are unable to attend a meeting, the Board may 
designate any other alternate member from the same cotton-producing 
state or region to serve in such member's place and stead of such 
meeting. In the event that both an importer member and the member's 
alternate are unable to attend a meeting, the Board may designate any 
other importer alternate member to serve in such member's place and 
stead at such meeting.

[56 FR 64473, Dec. 10, 1991]



Sec.1205.329  Procedure.

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

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



Sec.1205.330  Compensation and reimbursement.

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

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



Sec.1205.331  Powers.

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

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



Sec.1205.332  Duties.

    The Board shall have the following duties:
    (a) To select from among its members a chairman and such other 
officers as may be necessary for the conduct of its business, and to 
define their duties;
    (b) To appoint or employ such persons as it may deem necessary and 
to determine the compensation and to define the duties of each;
    (c) With the approval of the Secretary, to enter into contracts or 
agreements for the development and submission to it of research and 
promotion plans or projects authorized by Sec.1205.333, and for the 
carrying out of such plans or projects when approved by the Secretary, 
and for the payment of costs thereof with funds collected pursuant to 
Sec.1205.335, with an organization or association whose governing body 
consists of cotton producers selected by the cotton-producer 
organizations certified by the Secretary under Sec.1205.341, in such 
manner that the producers of each cotton-producing state will, to the 
extent practicable, have representation on the governing body of such 
organization in the proportion that the cotton marketed by the producers 
of such state bears to the total marketed by the producers of all 
cotton-producing states. Any such contract or agreement shall provide 
that

[[Page 32]]

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

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

                         Research and Promotion



Sec.1205.333  Research and promotion.

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

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

                        Expenses and Assessments



Sec.1205.334  Expenses.

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

[[Page 33]]

    (c) The Board shall reimburse any agency of the United States 
Government that assists in administering the import provisions of the 
order for a reasonable amount of the expenses incurred by that agency in 
connection therewith.
    (d) The funds to cover such expenses incurred under paragraphs (a), 
(b) and (c) of this section shall be paid from assessments received 
pursuant to Sec.1205.335.

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



Sec.1205.335  Assessments.

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

[56 FR 64473, Dec. 10, 1991]



Sec.1205.336  ``Importer Reimbursements''.

    Any cotton importer against whose imports any assessment is made and 
collected under the authority of the Act who has reason to believe that 
such assessment or any portion of such assessment was made on U.S. 
produced cotton or cotton other than Upland cotton shall have the right 
to demand and receive from the Cotton Board a reimbursement of the 
assessment or portion of the assessment upon submission of proof 
satisfactory to the Board that the importer paid the assessment

[[Page 34]]

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

[56 FR 64474, Dec. 10, 1991]



Sec.1205.337  Influencing governmental action.

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

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

                       Reports, Books, and Records



Sec.1205.338  Reports.

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

[56 FR 64474, Dec. 10, 1991]



Sec.1205.339  Books and records.

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

[56 FR 64474, Dec. 10, 1991]



Sec.1205.340  Confidential treatment.

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

[56 FR 64474, Dec. 10, 1991]

              Certification of Cotton Producer Organization



Sec.1205.341  Certification of cotton producer organization.

    Any cotton producer organization within a cotton-producing State may 
request the Secretary for certification of eligibility to participate in 
nominating members and alternate members to represent such State on the 
Cotton Board. Such eligibility shall be based in addition to other 
available information upon a factual report submitted by the 
organization which shall contain information deemed relevant and 
specified by the Secretary for the making of such determination, 
including the following:

[[Page 35]]

    (a) Geographic territory within the State covered by the 
organization's active membership;
    (b) Nature and size of the organization's active membership in the 
State, proportion of total of such active membership accounted for by 
farmers, a map showing the cotton-producing counties in such State in 
which the organization has members, the volume of cotton produced in 
each such county, the number of cotton producers in each such county, 
and the size of the organization's active cotton producer membership in 
each such county;
    (c) The extent to which the cotton producer membership of such 
organization is represented in setting the organization's policies;
    (d) Evidence of stability and permanency of the organization;
    (e) Sources from which the organization's operating funds are 
derived;
    (f) Functions of the organization; and
    (g) The organization's ability and willingness to further the aims 
and objectives of the act.

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

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



Sec.1205.342  Certification of cotton importer organizations.

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

[56 FR 64475, Dec. 10, 1991]

                              Miscellaneous



Sec.1205.343  Suspension and termination.

    (a) The Secretary will, whenever the Secretary finds that this 
subpart or any provision thereof obstructs or does not tend to 
effectuate the declared policy of the Act, terminate or suspend the 
operation of this subpart or such provision.
    (b) The Secretary may conduct a referendum at any time, and shall 
hold a referendum on request of 10 percent or more of the number of 
cotton producers and importers (if subject to the Order) voting in the 
most recent referendum, to determine whether cotton producers and 
importers subject to the Order favor the suspension or termination of 
this subpart, except that in counting such request for a referendum, not 
more than 20 percent of such request may be from producers

[[Page 36]]

from any one state or importers of cotton (if subject to the Order). The 
Secretary shall suspend or terminate such subpart at the end of the 
marketing year whenever the Secretary determines that its suspension or 
termination is approved or favored by a majority of producers and 
importers subject to the Order voting in such referendum who, during a 
representative period determined by the Secretary, have been engaged in 
the production or importation of cotton, and who produced and imported 
more than 50 percent of the volume of cotton produced and imported by 
those voting in the referendum.

[56 FR 64474, Dec. 10, 1991]



Sec.1205.345  Proceedings after termination.

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

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



Sec.1205.346  Effect of termination or amendment.

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

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



Sec.1205.347  Personal liability.

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

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



Sec.1205.348  Separability.

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

[[Page 37]]

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

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



                     Subpart_Members of Cotton Board



Sec.1205.401  Definitions.

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

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



Sec.1205.402  Determination of Cotton Board membership.

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

[56 FR 65980, Dec. 20, 1991]



Sec.1205.403  Nomination procedure.

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

[[Page 38]]

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

[56 FR 65981, Dec. 20, 1991]



               Subpart_Cotton Board Rules and Regulations

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

                               Definitions



Sec.1205.500  Terms defined.

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

[[Page 39]]

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

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

                                 General



Sec.1205.505  Communication.

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

[57 FR 29186, July 1, 1992]

                               Assessments



Sec.1205.510  Levy of assessments.

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

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

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

[[Page 40]]

    (b) Importer assessment. An assessment for cotton research and 
promotion of $1 per bale is hereby levied on each bale of cotton, or the 
bale equivalent thereof for cotton in cotton-containing products 
identified in the HTS conversion factor table in paragraph (b)(3) of 
this section and imported into the United States on or after July 31, 
1992. The $1 per bale assessment shall be converted to a fixed amount 
per kilogram to facilitate the U.S. Customs Service in collecting this 
assessment.
    (1) A supplemental assessment for cotton research and promotion in 
addition to the $1 per bale assessment provided for in paragraph (b) of 
this section is hereby levied on each bale of cotton or bale equivalent 
of cotton in cotton-containing products, identified in this subpart, 
imported into the United States on or after July 31, 1992. The 
supplemental assessment shall be levied at the rate of five-tenths of 
one percent of the historical value of cotton as determined by the 
Secretary and expressed in paragraph (b)(2) of this section. The rate of 
the supplemental assessment on imported cotton will be the same as that 
levied on cotton produced within the United States. The supplemental 
assessment will be calculated as a fixed amount per kilogram and added 
to the $1 per bale or bale equivalent assessment to facilitate the 
Customs Service in collecting assessments.
    (2) The 12-month average of monthly weighted average prices received 
by U.S. farmers will be calculated annually. Such weighted average will 
be used as the value of imported cotton for the purpose of levying the 
supplemental assessment on imported cotton and will be expressed in 
kilograms. The value of imported cotton for the purpose of levying this 
supplemental assessment is $1.1562 cents per kilogram.
    (3) The following table contains Harmonized Tariff Schedule (HTS) 
classification numbers and corresponding conversion factors and 
assessments. The left column of the following table indicates the HTS 
classifications of imported cotton and cotton-containing products 
subject to assessment. The center column indicates the conversion factor 
for determining the raw fiber content for each kilogram of the HTS. HTS 
numbers for raw cotton have no conversion factor in the table. The right 
column indicates the total assessment per kilogram of the article 
assessed. In the event that any HTS number subject to assessment is 
changed and such change is merely a replacement of a previous number and 
has no impact on the physical properties, description, or cotton content 
of the product involved, assessments will continue to be collected based 
on the new number.

                         Import Assessment Table
                           [Raw cotton fiber]
------------------------------------------------------------------------
                                                   Conv.
                    HTS No.                        factor      Cents/kg
------------------------------------------------------------------------
5007106010....................................       0.2713    0.3136664
5007106020....................................       0.2713    0.3136664
5007906010....................................       0.2713    0.3136664
5007906020....................................       0.2713    0.3136664
5112904000....................................       0.1085    0.1254434
5112905000....................................       0.1085    0.1254434
5112909010....................................       0.1085    0.1254434
5112909090....................................       0.1085    0.1254434
5201000500....................................            1    1.1561608
5201001200....................................            1    1.1561608
5201001400....................................            1    1.1561608
5201001800....................................            1    1.1561608
5201002200....................................            1    1.1561608
5201002400....................................            1    1.1561608
5201002800....................................            1    1.1561608
5201003400....................................            1    1.1561608
5201003800....................................            1    1.1561608
5204110000....................................       1.0526    1.2169749
5204190000....................................       0.6316    0.7302312
5204200000....................................       1.0526    1.2169749
5205111000....................................            1    1.1561608
5205112000....................................            1    1.1561608
5205121000....................................            1    1.1561608
5205122000....................................            1    1.1561608
5205131000....................................            1    1.1561608
5205132000....................................            1    1.1561608
5205141000....................................            1    1.1561608
5205142000....................................            1    1.1561608
5205151000....................................            1    1.1561608
5205152000....................................            1    1.1561608
5205210020....................................        1.044    1.2070319
5205210090....................................        1.044    1.2070319
5205220020....................................        1.044    1.2070319
5205220090....................................        1.044    1.2070319
5205230020....................................        1.044    1.2070319
5205230090....................................        1.044    1.2070319
5205240020....................................        1.044    1.2070319
5205240090....................................        1.044    1.2070319
5205260020....................................        1.044    1.2070319
5205260090....................................        1.044    1.2070319
5205270020....................................        1.044    1.2070319
5205270090....................................        1.044    1.2070319
5205280020....................................        1.044    1.2070319
5205280090....................................        1.044    1.2070319
5205310000....................................            1    1.1561608
5205320000....................................            1    1.1561608
5205330000....................................            1    1.1561608
5205340000....................................            1    1.1561608
5205350000....................................            1    1.1561608
5205410020....................................        1.044    1.2070319
5205410090....................................        1.044    1.2070319
5205420021....................................        1.044    1.2070319

[[Page 41]]

 
5205420029....................................        1.044    1.2070319
5205420090....................................        1.044    1.2070319
5205430021....................................        1.044    1.2070319
5205430029....................................        1.044    1.2070319
5205430090....................................        1.044    1.2070319
5205440021....................................        1.044    1.2070319
5205440029....................................        1.044    1.2070319
5205440090....................................        1.044    1.2070319
5205460021....................................        1.044    1.2070319
5205460029....................................        1.044    1.2070319
5205460090....................................        1.044    1.2070319
5205470021....................................        1.044    1.2070319
5205470029....................................        1.044    1.2070319
5205470090....................................        1.044    1.2070319
5205480020....................................        1.044    1.2070319
5205480090....................................        1.044    1.2070319
5206110000....................................       0.7368    0.8518593
5206120000....................................       0.7368    0.8518593
5206130000....................................       0.7368    0.8518593
5206140000....................................       0.7368    0.8518593
5206150000....................................       0.7368    0.8518593
5206210000....................................       0.7692    0.8893189
5206220000....................................       0.7692    0.8893189
5206230000....................................       0.7692    0.8893189
5206240000....................................       0.7692    0.8893189
5206250000....................................       0.7692    0.8893189
5206310000....................................       0.7368    0.8518593
5206320000....................................       0.7368    0.8518593
5206330000....................................       0.7368    0.8518593
5206340000....................................       0.7368    0.8518593
5206350000....................................       0.7368    0.8518593
5206410000....................................       0.7692    0.8893189
5206420000....................................       0.7692    0.8893189
5206430000....................................       0.7692    0.8893189
5206440000....................................       0.7692    0.8893189
5206450000....................................       0.7692    0.8893189
5207100000....................................       0.9474    1.0953468
5207900000....................................       0.6316    0.7302312
5208112020....................................       1.0852    1.2546657
5208112040....................................       1.0852    1.2546657
5208112090....................................       1.0852    1.2546657
5208114020....................................       1.0852    1.2546657
5208114040....................................       1.0852    1.2546657
5208114060....................................       1.0852    1.2546657
5208114090....................................       1.0852    1.2546657
5208116000....................................       1.0852    1.2546657
5208118020....................................       1.0852    1.2546657
5208118090....................................       1.0852    1.2546657
5208124020....................................       1.0852    1.2546657
5208124040....................................       1.0852    1.2546657
5208124090....................................       1.0852    1.2546657
5208126020....................................       1.0852    1.2546657
5208126040....................................       1.0852    1.2546657
5208126060....................................       1.0852    1.2546657
5208126090....................................       1.0852    1.2546657
5208128020....................................       1.0852    1.2546657
5208128090....................................       1.0852    1.2546657
5208130000....................................       1.0852    1.2546657
5208192020....................................       1.0852    1.2546657
5208192090....................................       1.0852    1.2546657
5208194020....................................       1.0852    1.2546657
5208194090....................................       1.0852    1.2546657
5208196020....................................       1.0852    1.2546657
5208196090....................................       1.0852    1.2546657
5208198020....................................       1.0852    1.2546657
5208198090....................................       1.0852    1.2546657
5208212020....................................       1.0852    1.2546657
5208212040....................................       1.0852    1.2546657
5208212090....................................       1.0852    1.2546657
5208214020....................................       1.0852    1.2546657
5208214040....................................       1.0852    1.2546657
5208214060....................................       1.0852    1.2546657
5208214090....................................       1.0852    1.2546657
5208216020....................................       1.0852    1.2546657
5208216090....................................       1.0852    1.2546657
5208224020....................................       1.0852    1.2546657
5208224040....................................       1.0852    1.2546657
5208224090....................................       1.0852    1.2546657
5208226020....................................       1.0852    1.2546657
5208226040....................................       1.0852    1.2546657
5208226060....................................       1.0852    1.2546657
5208226090....................................       1.0852    1.2546657
5208228020....................................       1.0852    1.2546657
5208228090....................................       1.0852    1.2546657
5208230000....................................       1.0852    1.2546657
5208292020....................................       1.0852    1.2546657
5208292090....................................       1.0852    1.2546657
5208294020....................................       1.0852    1.2546657
5208294090....................................       1.0852    1.2546657
5208296020....................................       1.0852    1.2546657
5208296090....................................       1.0852    1.2546657
5208298020....................................       1.0852    1.2546657
5208298090....................................       1.0852    1.2546657
5208312000....................................       1.0852    1.2546657
5208314020....................................       1.0852    1.2546657
5208314040....................................       1.0852    1.2546657
5208314090....................................       1.0852    1.2546657
5208316020....................................       1.0852    1.2546657
5208316040....................................       1.0852    1.2546657
5208316060....................................       1.0852    1.2546657
5208316090....................................       1.0852    1.2546657
5208318020....................................       1.0852    1.2546657
5208318090....................................       1.0852    1.2546657
5208321000....................................       1.0852    1.2546657
5208323020....................................       1.0852    1.2546657
5208323040....................................       1.0852    1.2546657
5208323090....................................       1.0852    1.2546657
5208324020....................................       1.0852    1.2546657
5208324040....................................       1.0852    1.2546657
5208324060....................................       1.0852    1.2546657
5208324090....................................       1.0852    1.2546657
5208325020....................................       1.0852    1.2546657
5208325090....................................       1.0852    1.2546657
5208330000....................................       1.0852    1.2546657
5208392020....................................       1.0852    1.2546657
5208392090....................................       1.0852    1.2546657
5208394020....................................       1.0852    1.2546657
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6110202049....................................       1.0965    1.2677303

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[[Page 53]]

 
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6212900050....................................       0.0914    0.1056731
6212900090....................................       0.4112    0.4754133
6213201000....................................       1.1187    1.2933971
6213202000....................................       1.0069    1.1641383
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6213901000....................................       0.4475    0.5173820
6213902000....................................       0.3356    0.3880076
6214300000....................................       0.1142    0.1320336
6214400000....................................       0.1142    0.1320336
6214900010....................................       0.8567    0.9904830
6214900090....................................       0.2285    0.2641827
6215100025....................................       0.1142    0.1320336
6215200000....................................       0.1142    0.1320336
6215900015....................................       1.0281    1.1886489
6216000800....................................       0.0685    0.0791970
6216001300....................................       0.3427    0.3962163
6216001720....................................       0.6397    0.7395961
6216001730....................................       0.1599    0.1848701
6216001900....................................       0.3427    0.3962163
6216002110....................................        0.578    0.6682609
6216002120....................................       0.2477    0.2863810
6216002410....................................       0.6605    0.7636442
6216002425....................................       0.1651    0.1908821
6216002600....................................       0.1651    0.1908821
6216002910....................................       0.6605    0.7636442
6216002925....................................       0.1651    0.1908821
6216003100....................................       0.1651    0.1908821
6216003300....................................       0.5898    0.6819036
6216003500....................................       0.5898    0.6819036
6216003800....................................       1.1796    1.3638073
6216004100....................................       1.1796    1.3638073
6217109510....................................       0.9646    1.1152327

[[Page 57]]

 
6217109520....................................       0.1809    0.2091495
6217109530....................................       0.2412    0.2788660
6217909003....................................       0.9646    1.1152327
6217909005....................................       0.1809    0.2091495
6217909010....................................       0.2412    0.2788660
6217909025....................................       0.9646    1.1152327
6217909030....................................       0.1809    0.2091495
6217909035....................................       0.2412    0.2788660
6217909050....................................       0.9646    1.1152327
6217909055....................................       0.1809    0.2091495
6217909060....................................       0.2412    0.2788660
6217909075....................................       0.9646    1.1152327
6217909080....................................       0.1809    0.2091495
6217909085....................................       0.2412    0.2788660
6301300010....................................       0.8305    0.9601916
6301300020....................................       0.8305    0.9601916
6301900030....................................       0.2215    0.2560896
6302100005....................................       1.1073    1.2802169
6302100008....................................       1.1073    1.2802169
6302100015....................................       1.1073    1.2802169
6302213010....................................       1.1073    1.2802169
6302213020....................................       1.1073    1.2802169
6302213030....................................       1.1073    1.2802169
6302213040....................................       1.1073    1.2802169
6302213050....................................       1.1073    1.2802169
6302215010....................................       0.7751    0.8961402
6302215020....................................       0.7751    0.8961402
6302215030....................................       0.7751    0.8961402
6302215040....................................       0.7751    0.8961402
6302215050....................................       0.7751    0.8961402
6302217010....................................       1.1073    1.2802169
6302217020....................................       1.1073    1.2802169
6302217030....................................       1.1073    1.2802169
6302217040....................................       1.1073    1.2802169
6302217050....................................       1.1073    1.2802169
6302219010....................................       0.7751    0.8961402
6302219020....................................       0.7751    0.8961402
6302219030....................................       0.7751    0.8961402
6302219040....................................       0.7751    0.8961402
6302219050....................................       0.7751    0.8961402
6302221010....................................       0.5537    0.6401662
6302221020....................................       0.3876    0.4481279
6302221030....................................       0.5537    0.6401662
6302221040....................................       0.3876    0.4481279
6302221050....................................       0.3876    0.4481279
6302221060....................................       0.3876    0.4481279
6302222010....................................       0.3876    0.4481279
6302222020....................................       0.3876    0.4481279
6302222030....................................       0.3876    0.4481279
6302290020....................................       0.2215    0.2560896
6302313010....................................       1.1073    1.2802169
6302313020....................................       1.1073    1.2802169
6302313030....................................       1.1073    1.2802169
6302313040....................................       1.1073    1.2802169
6302313050....................................       1.1073    1.2802169
6302315010....................................       0.7751    0.8961402
6302315020....................................       0.7751    0.8961402
6302315030....................................       0.7751    0.8961402
6302315040....................................       0.7751    0.8961402
6302315050....................................       0.7751    0.8961402
6302317010....................................       1.1073    1.2802169
6302317020....................................       1.1073    1.2802169
6302317030....................................       1.1073    1.2802169
6302317040....................................       1.1073    1.2802169
6302317050....................................       1.1073    1.2802169
6302319010....................................       0.7751    0.8961402
6302319020....................................       0.7751    0.8961402
6302319030....................................       0.7751    0.8961402
6302319040....................................       0.7751    0.8961402
6302319050....................................       0.7751    0.8961402
6302321010....................................       0.5537    0.6401662
6302321020....................................       0.3876    0.4481279
6302321030....................................       0.5537    0.6401662
6302321040....................................       0.3876    0.4481279
6302321050....................................       0.3876    0.4481279
6302321060....................................       0.3876    0.4481279
6302322010....................................       0.5537    0.6401662
6302322020....................................       0.3876    0.4481279
6302322030....................................       0.5537    0.6401662
6302322040....................................       0.3876    0.4481279
6302322050....................................       0.3876    0.4481279
6302322060....................................       0.3876    0.4481279
6302390030....................................       0.2215    0.2560896
6302402010....................................       0.9412    1.0881786
6302511000....................................       0.5537    0.6401662
6302512000....................................       0.8305    0.9601916
6302513000....................................       0.5537    0.6401662
6302514000....................................       0.7751    0.8961402
6302593020....................................       0.5537    0.6401662
6302600010....................................       1.1073    1.2802169
6302600020....................................       0.9966    1.1522299
6302600030....................................       0.9966    1.1522299
6302910005....................................       0.9966    1.1522299
6302910015....................................       1.1073    1.2802169
6302910025....................................       0.9966    1.1522299
6302910035....................................       0.9966    1.1522299
6302910045....................................       0.9966    1.1522299
6302910050....................................       0.9966    1.1522299
6302910060....................................       0.9966    1.1522299
6302931000....................................       0.4429    0.5120636
6302932000....................................       0.4429    0.5120636
6302992000....................................       0.2215    0.2560896
6303191100....................................       0.8859    1.0242429
6303910010....................................        0.609    0.7041019
6303910020....................................        0.609    0.7041019
6303921000....................................       0.2768    0.3200253
6303922010....................................       0.2768    0.3200253
6303922030....................................       0.2768    0.3200253
6303922050....................................       0.2768    0.3200253
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6304111000....................................       0.9966    1.1522299
6304113000....................................       0.1107    0.1279870
6304190500....................................       0.9966    1.1522299
6304191000....................................       1.1073    1.2802169
6304191500....................................       0.3876    0.4481279
6304192000....................................       0.3876    0.4481279
6304193060....................................       0.2215    0.2560896
6304200020....................................       0.8859    1.0242429
6304200070....................................       0.2215    0.2560896
6304910120....................................       0.8859    1.0242429
6304910170....................................       0.2215    0.2560896
6304920000....................................       0.8859    1.0242429
6304996040....................................       0.2215    0.2560896
6505001515....................................       1.1189    1.2936283
6505001525....................................       0.5594    0.6467564
6505001540....................................       1.1189    1.2936283
6505002030....................................       0.9412    1.0881786
6505002060....................................       0.9412    1.0881786
6505002545....................................       0.5537    0.6401662
6507000000....................................       0.3986    0.4608457
9404901000....................................       0.2104    0.2432562
9404908020....................................       0.9966    1.1522299
9404908040....................................       0.9966    1.1522299
9404908505....................................       0.6644    0.7681532
9404908536....................................       0.0997    0.1152692
9404909505....................................       0.6644    0.7681532
9404909570....................................       0.2658    0.3073075
9619002100....................................       0.8681    1.0036632
9619002500....................................       0.1085    0.1254434
9619003100....................................       0.9535    1.1023993
9619003300....................................       1.1545    1.3347877
9619004100....................................       0.2384    0.2756287

[[Page 58]]

 
9619004300....................................       0.2384    0.2756287
9619006100....................................       0.8528    0.9859739
9619006400....................................       0.2437    0.2817564
9619006800....................................       0.3655    0.4225768
9619007100....................................       1.1099    1.2832229
9619007400....................................       0.2466    0.2851093
9619007800....................................       0.2466    0.2851093
9619007900....................................       0.2466    0.2851093
------------------------------------------------------------------------

    (4) Any entry of cotton that qualifies for informal entry according 
to regulations issued by the Customs Service will not be subject to the 
assessment.
    (5) Imported textile and apparel articles assembled of components 
formed from cotton produced in the Unites States and identified by HTS 
numbers 9819.11.03, 9819.11.06, 9820.11.03, 9820.11.06, 9820.11.09, 
9820.11.12, 9820.11.18, 9820.11.21, 9802.00.8015, 9802.00.9000, 
9802.00.8044, or 9802.00.8046 shall not subject to assessment.
    (6) Imported cotton and products may be exempted by the Cotton Board 
from assessment under this paragraph. Such imported cotton and products 
may include, but are not limited to cotton and the cotton content of 
products which is U.S. produced cotton, or cotton other than Upland 
cotton.
    (i) A request for such exemption must be submitted to the Cotton 
Board by the importer, prior to the importation of the cotton product. 
The Cotton Board will then issue, if deemed appropriate, a numbered 
exemption certificate valid for 1 year from the date of issue. The 
exemption number should be entered by the importer on the Customs entry 
documentation in the appropriate location as determined by the U.S. 
Customs Service.
    (ii) The request for exemption should include:
    (A) the name, address, and importer identification number for the 
importer;
    (B) the HTS classification of the imported product;
    (C) weight of the product for which the exemption is sought;
    (D) estimated date of entry;
    (E) commercial invoices of other such documentation indicating the 
origin or production or type of the cotton fiber used to produce the 
imported product;
    (F) manufacture's description of the imported product.
    (7) The exemption number ``999999999'' shall be entered on the 
Customs entry summary document, in the appropriate location as 
determined by the U.S. Customs Service, by the importer when, based on 
the importer's own determination, the imported product is identified by 
a Harmonized Tariff Schedule classification number which is subject to 
assessment but the particular article contains no cotton.
    (8) Articles imported into the United States temporarily and under 
bond which are classified by the Harmonized Tariff Schedule heading 
which begins with ``9813'' shall not be subject to assessment.
    (9) Articles imported into the U.S. after being exported from the 
U.S. for alterations and which are classified by the Harmonized Tariff 
Schedule subheadings 9802.00.40 and 9802.00.50 shall not be subject to 
assessment.

[57 FR 29432, July 2, 1992]

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



Sec.1205.511  Payment and collection.

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

[[Page 59]]

the Cotton Board as required in Sec. Sec.1205.512, 1205.513 and 
1205.516.

[57 FR 29190, July 1, 1992]



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

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

[[Page 60]]

    (h) In the event of a producer's death, bankruptcy, receivership, or 
incapacity to act, the representative of such producer, or the 
producer's estate, or the person acting on behalf of creditors, shall be 
considered the producer for the purposes of this section.

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



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

    Collecting handlers and the time of collecting the supplemental 
assessment shall be as follows:
    (a) Except as provided in paragraph (b) of this section, any person 
who purchases a bale of cotton from the producer of the cotton shall be 
the collecting handler for such cotton. The handler shall collect the 
supplemental assessment at the time the handler first makes any payment 
or any credit to the producer's account for the cotton. The handler 
shall give the producer a receipt indicating payment of the supplemental 
assessment.
    (b) Any cooperative marketing association or other person that 
accepts a bale of cotton from the producer of the cotton under an oral 
or written contract or agreement providing for the marketing of the 
cotton shall be the collecting handler for such cotton. Such association 
or person shall collect the supplemental assessment regardless of 
whether the cotton is marketed or tendered to CCC for price support 
loan. The handler shall collect the supplemental assessment at the time 
the handler first makes any cash advance, any payment, or any credit to 
the producer's account for the cotton. Supplemental assessments due on 
any subsequent cash advances, payments, or credits to the producer's 
account shall be collected by the handler at the time final settlement 
is made on the cotton. The handler shall give the producer a receipt 
each time a supplemental assessment is collected.
    (c) For bales of cotton tendered to CCC for Form A loan, except 
bales tendered pursuant to paragraph (b) of this section:
    (1) The ASCS County Office shall be the collecting handler except as 
provided in paragraph (c)(2) of this section. The ASCS County Office 
shall collect the supplemental assessment when it makes disbursement 
based on the Form A loan value of cotton. The producer's copy of the 
Cotton Producer's Note (Form CCC Cotton A) shall show payment of the 
supplemental assessment and shall constitute the producer's receipt for 
payment of the supplemental assessment.
    (2) Any person (other than an ASCS County Office) who advances to 
the producer the loan value of the cotton as shown on a Cotton 
Producer's Note (Form CCC Cotton A) shall be the collecting handler for 
such cotton. The handler shall collect the supplemental assessment at 
the time the handler makes any advance to the producer on the loan value 
of the cotton. The handler shall give the producer a receipt indicating 
payment of the supplemental assessment.
    (d) With respect to any Upland cotton on which the producer or a 
cooperative marketing association acting on behalf of a producer 
receives a loan deficiency payment, the ASCS County Office or the 
cooperative marketing association shall be the collecting handler of the 
supplemental assessment on the value of the cotton represented by the 
loan deficiency payment at the time such payment is made to the producer 
or the cooperative marketing association. A copy of a document 
reflecting this transaction issued by the ASCS County Office or 
cooperative marketing association shall show the amount collected as the 
supplemental assessment and shall constitute the producer's receipt for 
payment of the supplemental assessment.
    (e) Any person who (1) purchases a producer's equity in cotton 
tendered to CCC for Form A loan or (2) purchases cotton that a producer 
has redeemed from the Form A loan, shall be the collecting handler for 
the portion of the total supplemental assessment not collected under 
paragraph (c) of this section. The handler shall give the producer a 
receipt indicating payment of that portion of the supplemental 
assessment.
    (f) Any person who purchases cotton in the cotton field where 
produced or who purchases seed cotton or unbaled

[[Page 61]]

lint cotton from the producer of the cotton shall be the collecting 
handler. The handler shall collect the supplemental assessment at the 
time such cotton is ginned and shall give the producer a receipt 
indicating payment of the supplemental assessment. When a bale is ginned 
and baled that contains any such cotton purchased from more than one 
producer, the handler shall collect each producer's proportionate share 
of the supplemental assessment and shall give each producer a receipt 
indicating the producer's proportionate share of the supplemental 
assessment payment.
    (g) Any person who purchases cotton from a producer whereby the 
producer agrees to deliver a certain quantity of cotton but retains the 
right to establish the price at some future date shall be the collecting 
handler for such cotton. The handler shall collect the supplemental 
assessment at the time final settlement is made on the cotton. The 
handler shall give the producer a receipt indicating payment of the 
supplemental assessment.
    (h) Any person who consumes domestically cotton of that person's own 
production shall be the collecting handler for such cotton. The handler 
shall pay the supplemental assessment at the time of consumption on the 
basis of a market value determined in consultation with the Cotton 
Board.
    (i) Any person who exports cotton of that person's own production 
shall be the collecting handler for such cotton. Such handler shall pay 
the supplemental assessment on the basis of the current value of cotton 
as reflected on the export settlement document.
    (j) Any person who obtains ownership of a bale of cotton from the 
producer of the cotton by transfer of any kind or by any means, under 
conditions other than those described in paragraph (a), (b), (c), (d), 
(e), or (f) of this section shall be the collecting handler for such 
cotton. Such handler shall collect the supplemental assessment at the 
time the handler takes ownership of the cotton. The handler shall give 
the producer a receipt indicating payment of the supplemental 
assessment.
    (k) In the event of a producer's death, bankruptcy, receivership, or 
incapacity to act, the representative of such producer or the producer's 
estate, or the person acting on behalf of creditors, shall be considered 
the producer for the purposes of this section.

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



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

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

[57 FR 29191, July 1, 1992]



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

    The collection of the supplemental assessment by the Customs Service 
shall be as follows:
    (a) The Customs Service will collect the supplemental assessment 
from any person acting as principal, agent, broker or consignee for 
cotton or cotton-containing products produced outside the United States 
and imported into the United States. Customs Service will collect the 
assessment on all cotton and cotton-containing products identified by 
Harmonized Tariff Schedule heading numbers in Sec.1205.510(b)(2) at 
the time of importation and forward such assessment as per the agreement 
between the United States Customs

[[Page 62]]

Service and the U.S. Department of Agriculture.
    (b) In the event of an importer's death, bankruptcy, receivership, 
or incapacity to act, the representative of such importer, or the 
importer's estate, or the person acting on behalf of creditors, shall be 
considered the importer for the purposes of this section.

[57 FR 29191, July 1, 1992]



Sec.1205.516  Reports and remittance to the Cotton Board.

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

[[Page 63]]

time specified in the request, that includes the following information:
    (1) The importer's name and address;
    (2) The quantity of cotton and cotton products imported;
    (3) The amount of the assessment paid on imported cotton and cotton 
products;
    (4) The amount of imported cotton and cotton products on which the 
assessment was not paid to the Customs Service.

[57 FR 29190, July 1, 1992]



Sec.1205.517  Failure to report and remit.

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

[57 FR 29191, July 1, 1992]



Sec.1205.518  Receipts for payment of assessments.

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

[[Page 64]]

    (g) Date on which assessment was paid by producer.

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

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



Sec.1205.519  Organic exemption.

    (a) A producer who operates under an approved National Organic 
Program (7 CFR part 205) (NOP) organic production system plan may be 
exempt from the payment of assessments under this part, provided that:
    (1) Only agricultural products certified as ``organic'' or ``100 
percent organic'' (as defined in the NOP) are eligible for exemption;
    (2) The exemption shall apply to all certified ``organic'' or ``100 
percent organic'' (as defined in the NOP) products of a producer 
regardless of whether the agricultural commodity subject to the 
exemption is produced by a person that also produces conventional or 
nonorganic agricultural products of the same agricultural commodity as 
that for which the exemption is claimed;
    (3) The producer maintains a valid certificate of organic operation 
as issued under the Organic Foods Production Act of 1990 (7 U.S.C. 6501-
6522) (OFPA) and the NOP regulations issued under the OFPA (7 CFR part 
205); and
    (4) Any producer so exempted shall continue to be obligated to pay 
assessments under this part that are associated with any agricultural 
products that do not qualify for an exemption under this section.
    (b) To apply for an exemption under this section, an eligible cotton 
producer shall submit a request for exemption to the Board on an Organic 
Exemption Request Form (Form AMS-15) at any time initially, and annually 
thereafter on or before the beginning of the crop year, as long as the 
producer continues to be eligible for the exemption.
    (c) A producer request for exemption shall include the following:
    (1) The applicant's full name, company name, address, telephone and 
fax numbers, and email address;
    (2) Certification that the applicant maintains a valid certificate 
of organic operation issued under the OFPA and the NOP;
    (3) Certification that the applicant produces and/or imports organic 
products eligible to be labeled ``organic'' or ``100 percent organic'' 
under the NOP;
    (4) A requirement that the applicant attach a copy of their 
certificate of organic operation issued by a USDA-accredited certifying 
agent under the OFPA and the NOP;
    (5) Certification, as evidenced by signature and date, that all 
information provided by the applicant is true; and
    (6) Such other information as may be required by the Board, with the 
approval of the Secretary.
    (d) If a producer complies with the requirements of this section, 
the Board will grant an assessment exemption and issue a Certificate of 
Exemption to the producer within 30 days. If the application is 
disapproved, the Board will notify the applicant of the reason(s) for 
disapproval within the same timeframe.
    (e) A producer approved for exemption under this section shall 
provide a copy of the Certificate of Exemption to each handler to whom 
the producer sells cotton. The handler shall maintain records showing 
the exempt producer's name and address and the exemption number assigned 
by the Board.
    (f) An importer who imports products that are eligible to be labeled 
as ``organic'' or ``100 percent organic'' under the NOP, or certified as 
``organic'' or ``100 percent organic'' under a U.S. equivalency 
arrangement established under the NOP, may be exempt from the payment of 
assessments on those products. Such importer may submit documentation to 
the Board and request an exemption from assessment on certified 
``organic'' or ``100 percent organic'' cotton and cotton products on an 
Organic Exemption Request Form (Form AMS-15) at any time initially, and 
annually thereafter, as long as the importer continues to be eligible 
for the exemption. This documentation shall include the same information 
required of producers in paragraph (c) of this section. If the importer 
complies with the requirements of this section, the Board will grant the 
exemption and issue a Certificate of Exemption to the importer. The 
Board will also issue the

[[Page 65]]

importer an alphanumeric number valid for 1 year from the date of issue. 
This alphanumeric number should be entered by the importer on the 
Customs entry documentation. Any line item entry of ``organic'' or ``100 
percent organic'' cotton and cotton products bearing this alphanumeric 
number assigned by the Board will not be subject to assessments. Any 
importer so exempted shall continue to be obligated to pay assessments 
under this part that are associated with any imported agricultural 
products that do not qualify for an exemption under this section.
    (g) The exemption will apply immediately following the issuance of 
the Certificate of Exemption.
    (h) An importer who is exempt from payment of assessments under 
paragraph (f) of this section shall be eligible for reimbursement of 
assessments collected by Customs on certified ``organic'' or ``100 
percent organic'' cotton and cotton products and may apply to the 
Secretary for a reimbursement. The importer would be required to submit 
satisfactory proof to the Secretary that the importer paid the 
assessment on exempt organic products.

[70 FR 2754, Jan. 14, 2005, as amended at 80 FR 82023, Dec. 31, 2015]

                             Reimbursements



Sec.1205.520  Procedure for obtaining reimbursement.

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

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

                           Warehouse Receipts



Sec.1205.525  Entry of gin code number.

    The warehouse that first receives a bale for storage after ginning 
shall enter the gin code number of the gin at

[[Page 66]]

which the bale was ginned on the warehouse receipt issued for the bale.

[57 FR 29192, July 1, 1992]

                           Reports and Records



Sec.1205.530  Gin reports and reporting schedule.

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

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



Sec.1205.531  Records.

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

[57 FR 29192, July 1, 1992]



Sec.1205.532  Retention period for reports and records.

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

[57 FR 29192, July 1, 1992]



Sec.1205.533  Availability of reports and records.

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

[57 FR 29192, July 1, 1992]

                        Confidential Information



Sec.1205.540  Confidential books, records, and reports.

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

[57 FR 29192, July 1, 1992]



Sec.1205.541  OMB control numbers.

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

[57 FR 29192, July 1, 1992]

Subpart--Fiscal Period [Reserved]



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



 Subpart A_Mango Promotion, Research, and Information Order Definitions

Sec.
1206.1 Act.
1206.2 Board.

[[Page 67]]

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

                          National Mango Board

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

                        Expenses and Assessments

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

                  Promotion, Research, and Information

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

                       Reports, Books, and Records

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

                              Miscellaneous

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

                     Subpart B_Referendum Procedures

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

                  Subpart C_Administrative Requirements

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

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

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



 Subpart A_Mango Promotion, Research, and Information Order Definitions

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



Sec.1206.1  Act.

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



Sec.1206.2  Board.

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

[84 FR 5344, Feb. 21, 2019]



Sec.1206.3  Conflict of interest.

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



Sec.1206.4  Customs.

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

[[Page 68]]



Sec.1206.5  Department.

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



Sec.1206.6  First handler.

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

[84 FR 5344, Feb. 21, 2019]



Sec.1206.7  Fiscal period.

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



Sec.1206.8  Foreign producers and foreign processor of frozen mangos
or foreign processor.

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

[69 FR 59122, Oct. 4, 2004, as amended at 84 FR 5344, Feb. 21, 2019]



Sec.1206.9  Importer.

    Importer means any person importing mangos into the United States in 
a calendar year as a principal or as an agent, broker, or consignee of 
any person who produces or handles mangos outside of the United States 
for sale in the United States, and who is listed as the importer of 
record for such mangos.

[84 FR 5344, Feb. 21, 2019]



Sec.1206.10  Information.

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



Sec.1206.11  Mangos.

    Mangos means the fruit of Mangifera indica L. of the family 
Anacardiaceae. For purposes of this Order, the term mangos includes:
    (a) Fresh mangos, which means mangos in their fresh form; and
    (b) Frozen mangos, which means mangos that are uncooked or cooked by 
steaming or boiling in water, and then frozen, whether or not containing 
added sugar or other sweetening agent.

[84 FR 5345, Feb. 21, 2019]



Sec.1206.12  Market or marketing.

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

[[Page 69]]

interstate or intrastate channels of commerce.



Sec.1206.13  Order.

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



Sec.1206.14  Part.

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



Sec.1206.15  Person.

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



Sec.1206.16  Producer.

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



Sec.1206.17  Promotion.

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



Sec.1206.18  Research.

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



Sec.1206.19  [Reserved]



Sec.1206.20  Secretary.

    Secretary means the Secretary of Agriculture of the United States.



Sec.1206.21  Suspend.

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



Sec.1206.22  Terminate.

    Terminate means to issue a rule under section 553 of title 5, 
U.S.C., to cancel permanently the operation of an order or part thereof 
beginning on a certain date specified in the rule.



Sec.1206.23  United States.

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



Sec.1206.24  [Reserved]

                          National Mango Board



Sec.1206.30  Establishment and membership.

    (a) Establishment of the National Mango Board. There is hereby 
established a National Mango Board composed of eight importers of fresh 
mangos; one first handler of fresh mangos; two domestic producers of 
fresh mangos; seven foreign producers of fresh mangos; two importers of 
frozen mangos; and one foreign processor of frozen mangos. First handler 
Board members must receive 500,000 pounds or more of fresh mangos 
annually from producers, and importer Board members must import 500,000 
pounds or more of fresh mangos or 200,000 pounds or more of frozen 
mangos annually. The chairperson shall reside in the United States and 
the Board office shall also be located in the United States.
    (b) Importer districts. Board seats for importers of fresh mangos 
shall be allocated based on the volume of fresh mangos imported into the 
Customs Districts identified by their name and Code Number as defined in 
the Harmonized Tariff Schedule of the United

[[Page 70]]

States. Two seats shall be allocated for District I, three seats for 
District II, two seats for District III, and one seat for District IV. 
Two at-large seats shall be allocated for importers of frozen mangos who 
import into any of the four defined districts.
    (c) Adjustment of membership. At least once every five years, the 
Board will review the geographical distribution of production of mangos 
in the United States, the geographical distribution of the importation 
of mangos into the United States, the quantity of mangos produced in the 
United States, and the quantity of mangos imported into the United 
States. The review will be based on Board assessment records and 
statistics from the Department. If warranted, the Board will recommend 
to the Department that membership on the Board be altered to reflect any 
changes in geographical distribution of domestic mango production and 
importation and the quantity of domestic production and imports. To 
ensure equitable representation, additional first handlers may be added 
to the Board to reflect increases in domestic production.

[69 FR 59122, Oct. 4, 2004, as amended at 76 FR 36283, June 22, 2011; 84 
FR 5345, Feb. 21, 2019]



Sec.1206.31  Nominations and appointments.

    (a) Voting for first handler, importer, and domestic producer 
members will be made by mail ballot.
    (b) There shall be two nominees for each position on the Board.
    (c) Nominations for the initial Board will be handled by the 
Department. Subsequent nominations will be handled by the Board's staff.
    (d) Nominees to fill the first handler member position on the Board 
shall be solicited from all known first handlers. The nominees shall be 
placed on a ballot which will be sent to all first handlers for a vote. 
The nominee receiving the highest number of votes and the nominee 
receiving the second highest number of votes shall be submitted to the 
Department as the first handlers' first and second choice nominees.
    (e) Nominees to fill the fresh mango importer positions on the Board 
shall be solicited from all known importers of fresh mangos. The members 
from each district shall select the nominees for two positions on the 
Board. Two nominees shall be submitted for each position. The nominees 
shall be placed on a ballot which will be sent to fresh mango importers 
in the districts for a vote. For each position, the nominee receiving 
the highest number of votes and the nominee receiving the second highest 
number of votes shall be submitted to the Department as the fresh 
importers' first and second choice nominees.
    (f) Nominees to fill the domestic producer member positions on the 
Board shall be solicited from all known domestic producers. The nominees 
shall be placed on a ballot which will be sent to all domestic producers 
for a vote. The nominee receiving the highest number of votes and the 
nominee receiving the second highest number of votes shall be submitted 
to the Department as the producers' first and second choice nominees.
    (g) Nominees to fill the foreign producer member positions on the 
Board shall be solicited from organizations of foreign mango producers 
and from foreign mango producers. Organizations of foreign mango 
producers shall submit two nominees for each position, and foreign mango 
producers may submit their name or the names of other foreign mango 
producers directly to the Board. The nominees shall be representative of 
the major countries exporting mangos to the United States.
    (h) Nominees to fill the foreign processor of frozen mangos position 
on the Board shall be solicited from foreign mango organizations and 
from foreign processors. Foreign mango organizations shall submit two 
nominees for each position, and foreign processors may submit their name 
or the names of other foreign processors directly to the Board. The 
nominees shall represent the major countries exporting frozen mangos to 
the United States.
    (i) Nominees to fill the at-large positions on the Board shall be 
solicited from all known importers of frozen mangos. The members from 
each district shall select the nominees for the two at-large positions 
on the Board. Two nominees shall be submitted for each position. The 
nominees shall be placed on a ballot which will be sent to

[[Page 71]]

importers of frozen mangos in each of the four districts for a vote. For 
each position, the nominee receiving the highest number of votes and the 
nominee receiving the second highest number of votes shall be submitted 
to the Department as the first and second choice nominees.
    (j) First handler nominees must receive 500,000 pounds or more of 
fresh mangos annually from producers, and importer nominees must import 
500,000 pounds or more of fresh mangos or 200,000 pounds or more of 
frozen mangos annually.
    (k) From the nominations, the Secretary shall select the members of 
the Board.

[69 FR 59122, Oct. 4, 2004, as amended at 76 FR 36283, June 22, 2011; 78 
FR 39566, July 2, 2013; 84 FR 5345, Feb. 21, 2019]



Sec.1206.32  Term of office.

    The term of office for first handler, importer, domestic producer, 
and foreign producer and foreign processor members of the Board will be 
three years. Members may serve a maximum of two consecutive three-year 
terms. Each term of office will end on December 31, with new terms of 
office beginning on January 1.

[84 FR 5345, Feb. 21, 2019]



Sec.1206.33  Vacancies.

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



Sec.1206.34  Procedure.

    (a) At a Board meeting, it will be considered a quorum when at least 
eleven voting members are present.
    (b) At the start of each fiscal period, the Board will select a 
chairperson and vice chairperson who will conduct meetings throughout 
that period.
    (c) All Board members will be notified at least 30 days in advance 
of all Board and committee meetings unless an emergency meeting is 
declared.
    (d) Each voting member of the Board will be entitled to one vote on 
any matter put to the Board, and the motion will carry if supported by 
one vote more than 50 percent of the total votes represented by the 
Board members present.
    (e) It will be considered a quorum at a committee meeting when at 
least one more than half of those assigned to the committee are present. 
Committees may consist of individuals other than Board members, and such 
individuals may vote in committee meetings. Committee members shall 
serve without compensation but shall be reimbursed for reasonable travel 
expenses, as approved by the Board.
    (f) In lieu of voting at a properly convened meeting and, when in 
the opinion of the chairperson of the Board such action is considered 
necessary, the Board may take action if supported by one vote more than 
50 percent of the members by mail, telephone, electronic mail, 
facsimile, or any other means of communication. In that event, all 
members must be notified and provided the opportunity to vote. Any 
action so taken shall have the same force and effect as though such 
action had been taken at a properly convened meeting of the Board. All 
telephone votes shall be confirmed promptly in writing. All votes shall 
be recorded in Board minutes.
    (g) There shall be no voting by proxy.
    (h) The chairperson shall be a voting member and shall reside in the 
U.S.
    (i) The organization of the Board and the procedures for conducting 
meetings of the Board shall be in accordance

[[Page 72]]

with its bylaws, which shall be established by the Board and approved by 
the Department.

[68 FR 58554, Oct. 9, 2003, as amended at 84 FR 5345, Feb. 21, 2019]



Sec.1206.35  Compensation and reimbursement.

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



Sec.1206.36  Powers and duties.

    The Board shall have the following powers and duties:
    (a) To administer the Order in accordance with its terms and 
conditions and to collect assessments;
    (b) To develop and recommend to the Department for approval such 
bylaws as may be necessary for the functioning of the Board, and such 
rules as may be necessary to administer the Order, including activities 
authorized to be carried out under the Order;
    (c) To meet, organize, and select from among the members of the 
Board a chairperson, other officers, committees, and subcommittees, as 
the Board determines appropriate;
    (d) To employ persons, other than the members, as the Board 
considers necessary to assist the Board in carrying out its duties and 
to determine the compensation and specify the duties of such persons;
    (e) To develop programs, plans, and projects, and enter into 
contracts or agreements, which must be approved by the Department before 
becoming effective, for the development and carrying out of programs or 
projects of research, information, or promotion, and the payment of 
costs thereof with funds collected pursuant to this subpart. Each 
contract or agreement shall provide that: any person who enters into a 
contract or agreement with the Board shall develop and submit to the 
Board a proposed activity; keep accurate records of all of its 
transactions relating to the contract or agreement; account for funds 
received and expended in connection with the contract or agreement; make 
periodic reports to the Board of activities conducted under the contract 
or agreement; and, make such other reports available as the Board or the 
Department considers relevant. Furthermore, any contract or agreement 
shall provide that:
    (1) The contractor or agreeing party shall develop and submit to the 
Board a program, plan, or project together with a budget or budgets that 
shall show the estimated cost to be incurred for such program, plan, or 
project;
    (2) The contractor or agreeing party shall keep accurate records of 
all its transactions and make periodic reports to the Board of 
activities conducted, submit accounting for funds received and expended, 
and make such other reports as the Department or the Board may require;
    (3) The Department may audit the records of the contracting or 
agreeing party periodically; and
    (4) Any subcontractor who enters into a contract with a Board 
contractor and who receives or otherwise uses funds allocated by the 
Board shall be subject to the same provisions as the contractor.
    (f) To prepare and submit for approval of the Department calendar 
year budgets in accordance with Sec.1206.40;
    (g) To maintain such records and books and prepare and submit such 
reports and records from time to time to the Department as the 
Department may prescribe; to make appropriate accounting with respect to 
the receipt and disbursement of all funds entrusted to it; and to keep 
records that accurately reflect the actions and transactions of the 
Board;
    (h) To cause its books to be audited by a competent auditor at the 
end of each calendar year and at such other times as the Department may 
request, and to submit a report of the audit directly to the Department;
    (i) To give the Department the same notice of Board and committee 
meetings as is given to members in order that the Department's 
representative(s) may attend such meetings.
    (j) To act as intermediary between the Department and any first 
handler or importer;
    (k) To furnish to the Department any information or records that the 
Department may request;

[[Page 73]]

    (l) To receive, investigate, and report to the Department complaints 
of violations of the Order;
    (m) To recommend to the Department such amendments to the Order as 
the Board considers appropriate; and
    (n) To work to achieve an effective, continuous, and coordinated 
program of promotion, research, consumer information, evaluation, and 
industry information designed to strengthen the mango industry's 
position in the U.S. domestic market; maintain and expand existing 
markets and uses for mangos; and to carry out programs, plans, and 
projects designed to provide maximum benefits to the mango industry.



Sec.1206.37  Prohibited activities.

    The Board may not engage in, and shall prohibit the employees and 
agents of the Board from engaging in:
    (a) Any action that is a conflict of interest; and
    (b) Using funds collected by the Board under the Order to undertake 
any action for the purpose of influencing legislation or governmental 
action or policy, by local, state, national, and foreign governments, 
other than recommending to the Department amendments to the Order.

                        Expenses and Assessments



Sec.1206.40  Budget and expenses.

    (a) At least 60 days prior to the beginning of each calendar year, 
and as may be necessary thereafter, the Board shall prepare and submit 
to the Department a budget for the calendar year covering its 
anticipated expenses and disbursements in administering this subpart. 
Each such budget shall include:
    (1) A statement of objectives and strategy for each program, plan, 
or project;
    (2) A summary of anticipated revenue, with comparative data or at 
least one preceding year (except for the initial budget);
    (3) A summary of proposed expenditures for each program, plan, or 
project; and
    (4) Staff and administrative expense breakdowns, with comparative 
data for at least one preceding year (except for the initial budget).
    (b) Each budget shall provide adequate funds to defray its proposed 
expenditures and to provide for a reserve as set forth in this subpart.
    (c) Subject to this section, any amendment or addition to an 
approved budget must be approved by the Department, including shifting 
funds from one program, plan, or project to another. Shifts of funds 
which do not cause an increase in the Board's approved budget and which 
are consistent with governing bylaws need not have prior approval by the 
Department.
    (d) The Board is authorized to incur such expenses, including 
provision for a reserve, as the Department finds reasonable and likely 
to be incurred by the Board for its maintenance and functioning, and to 
enable it to exercise its powers and perform its duties in accordance 
with the provisions of this subpart. Such expenses shall be paid from 
funds received by the Board.
    (e) With approval of the Department, the Board may borrow money for 
the payment of administrative expenses, subject to the same fiscal, 
budget, and audit controls as other funds of the Board. Any funds 
borrowed by the Board shall be expended only for startup costs and 
capital outlays and are limited to the first year of operation of the 
Board.
    (f) The Board may accept voluntary contributions, but these shall 
only be used to pay expenses incurred in the conduct of programs, plans, 
and projects. Voluntary contributions shall be free from any encumbrance 
by the donor, and the Board shall retain complete control of their use.
    (g) The Board shall reimburse the Department for all expenses 
incurred by the Department in the implementation, administration, and 
supervision of the Order, including all referendum costs in connection 
with the Order.
    (h) The Board may not expend for administration, maintenance, and 
functioning of the Board in any calendar year an amount that exceeds 15 
percent of the assessments and other income received by the Board for 
that calendar year. Reimbursements to the Department required under 
paragraph (g) of this section, are excluded from this limitation on 
spending.

[[Page 74]]

    (i) The Board may establish an operating monetary reserve and may 
carry over to subsequent fiscal periods excess funds in any reserve so 
established: Provided that the funds in the reserve do not exceed one 
fiscal period's budget. Subject to approval by the Department, such 
reserve funds may be used to defray any expenses authorized under this 
part.



Sec.1206.41  Financial statements.

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



Sec.1206.42  Assessments.

    (a) The funds to cover the Board's expenses shall be paid from 
assessments on first handlers and importers, donations from any person 
not subject to assessments under this Order, and other funds available 
to the Board and subject to the limitations contained therein.
    (b) The assessment rate on all fresh mangos shall be three quarters 
of a cent ($0.0075) per pound (or $0.0165 per kg). The assessment rate 
on all frozen mangos shall be one cent ($0.01) per pound (or $0.022 per 
kg). The assessment rates will be reviewed periodically and may be 
modified by the Board with the approval of the Department.
    (c) Domestic mangos. First handlers of domestic mangos are required 
to pay assessments on all mangos handled for the U.S. market. This 
includes mangos of the first handler's own production.
    (d) Imported mangos. Each importer of mangos shall pay an assessment 
to the Board through Customs on mangos imported for marketing in the 
United States.
    (1) The assessment rate for imported fresh mangos that are 
identified by the numbers 0804.50.4045, 0804.50.4055, 0804.50.6045, and 
0804.50.6055 in the Harmonized Tariff Schedule (HTS) of the United 
States shall be the same or equivalent to the rate for mangos produced 
in the United States.
    (2) The import assessment shall be uniformly applied to imported 
frozen mangos that are identified by the numbers 0811.90.5200 in the 
Harmonized Tariff Schedule (HTS) of the United States shall be the same 
or equivalent to the rate for mangos produced in the United States.
    (3) In the event that any HTS number subject to assessment is 
changed and such change is merely a replacement of a previous number and 
has no impact on the description of fresh mango and frozen mangos, 
assessments will continue to be collected based on the new numbers.
    (4) The assessments due on imported mangos shall be paid when they 
enter or are withdrawn for consumption in the United States.
    (e) Each person responsible for remitting assessments under 
paragraph (c) of this section shall remit the amounts due to the Board's 
office on a monthly basis no later than the fifteenth day of the month 
following the month in which the mangos were marketed, in such manner as 
prescribed by the Board.
    (f) A late payment charge shall be imposed on any person failing to 
remit to the Board the total amount for which the person is liable by 
the payment due date established under this section. The amount of the 
late payment charge shall be prescribed by the Department.
    (g) An additional charge shall be imposed on any person subject to a 
late payment charge in the form of interest on the outstanding portion 
of any amount for which the person is liable. The rate of interest shall 
be prescribed by the Department.
    (h) Persons failing to remit total assessments due in a timely 
manner may also be subject to actions under federal debt collection 
procedures.

[[Page 75]]

    (i) The Board may authorize other organizations to collect 
assessments on its behalf with the approval of the Department.

[68 FR 58554, Oct. 9, 2003, as amended at 77 FR 21846, Apr. 12, 2012; 84 
FR 5345, Feb. 21, 2019]



Sec.1206.43  Exemptions.

    (a) Any first handler of less than 500,000 pounds of fresh mangos 
per calendar year, or importer of less than 500,000 pounds of fresh 
mangos or less than 200,000 pounds of frozen mangos per calendar year 
may claim an exemption from the assessments required under Sec.
1206.42. First handlers who export mangos from the United States may 
annually claim an exemption from the assessments required under Sec.
1206.42.
    (b) A first handler or importer desiring an exemption shall apply to 
the Board, on a form provided by the Board, for a certificate of 
exemption. A first handler must certify that it will receive less than 
500,000 pounds of domestic fresh mangos during the fiscal period for 
which the exemption is claimed. An importer must certify that it will 
import less than 500,000 pounds of fresh mangos or less than 200,000 
pounds of frozen mangos for the fiscal period for which the exemption is 
claimed.
    (c) Upon receipt of an application, the Board shall determine 
whether an exemption may be granted. The Board then will issue, if 
deemed appropriate, a certificate of exemption to each person who is 
eligible to receive one. It is the responsibility of these persons to 
retain a copy of the certificate of exemption.
    (d) Importers who receive a certificate of exemption shall be 
eligible for reimbursement of assessments collected by Customs. These 
importers shall apply to the Board for reimbursement of any assessments 
paid. No interest will be paid on the assessments collected by Customs. 
Requests for reimbursement shall be submitted to the Board within 90 
days of the last day of the calendar year the mangos were actually 
imported.
    (e) Any person who desires an exemption from assessments for a 
subsequent calendar year shall reapply to the Board, on a form provided 
by the Board, for a certificate of exemption.
    (f) The Board may require persons receiving an exemption from 
assessments to provide to the Board reports on the disposition of exempt 
mangos and, in the case of importers, proof of payment of assessments.

[68 FR 58554, Oct. 9, 2003, as amended at 84 FR 5345, Feb. 21, 2019]

                  Promotion, Research, and Information



Sec.1206.50  Programs, plans, and projects.

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

[[Page 76]]

    (d) No program, plan, or project including advertising shall be 
false or misleading or disparaging to another agricultural commodity. 
Mangos of all origins shall be treated equally.



Sec.1206.51  Independent evaluation.

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



Sec.1206.52  Patents, copyrights, trademarks, information, 
publications, and product formulations.

    Patents, copyrights, trademarks, information, publications, and 
product formulations developed through the use of funds received by the 
Board under this subpart shall be the property of the U.S. Government, 
as represented by the Board, and shall, along with any rents, royalties, 
residual payments, or other income from the rental, sales, leasing, 
franchising, or other uses of such patents, copyrights, trademarks, 
information, publications, or product formulations, inure to the benefit 
of the Board; shall be considered income subject to the same fiscal, 
budget, and audit controls as other funds of the Board; and may be 
licensed subject to approval by the Department Upon termination of this 
subpart, Sec.1206.73 shall apply to determine disposition of all such 
property.

                       Reports, Books, and Records



Sec.1206.60  Reports.

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



Sec.1206.61  Books and records.

    Each first handler and importer shall maintain and make available 
for inspection by the Department such books and records as are necessary 
to carry out the provisions of this part, any regulations issued under 
this part, including such records as are necessary to verify any reports 
required. Such records shall be retained for at least two years beyond 
the fiscal period of their applicability.



Sec.1206.62  Confidential treatment.

    All information obtained from books, records, or reports under the 
Act and this part shall be kept confidential by all persons, including 
all employees and former employees of the Board, all officers and 
employees and former officers and employees of contracting and 
subcontracting agencies or agreeing parties having access to such 
information. Such information shall not be available to Board members, 
first handlers, or importers. Only those persons having a specific need 
for such information to effectively administer the provisions of this 
subpart shall have access to such information. Only such information so 
obtained as the Secretary deems relevant shall be disclosed by them, and 
then only in a judicial proceeding or administrative

[[Page 77]]

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

                              Miscellaneous



Sec.1206.70  Right of the Secretary.

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



Sec.1206.71  Referenda.

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



Sec.1206.72  Suspension and termination.

    (a) The Department shall suspend or terminate this part or subpart 
or a provision thereof if the Department finds that the subpart or a 
provision thereof obstructs or does not tend to effectuate the purposes 
of the Act, or if the Department determines that this subpart or a 
provision thereof is not favored by persons voting in a referendum 
conducted pursuant to the Act.
    (b) The Department shall suspend or terminate this subpart at the 
end of the marketing year whenever the Department determines that its 
suspension or termination is approved or favored by a majority of the 
first handlers and importers voting who, during a representative period 
determined by the Department, have been engaged in the handling or 
importation of mangos.
    (c) If, as a result of a referendum the Department determines that 
this subpart is not approved, the Department shall:
    (1) Not later than 180 days after making the determination, suspend 
or terminate, as the case may be, collection of assessments under this 
subpart; and
    (2) As soon as practical, suspend or terminate, as the case may be, 
activities under this subpart in an orderly manner.



Sec.1206.73  Proceedings after termination.

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

[[Page 78]]

    (3) From time to time, account for all receipts and disbursements 
and deliver all property on hand, together with all books and records of 
the Board and the trustees, to such person or persons as the Department 
may direct; and
    (4) Upon request of the Department, execute such assignments or 
other instruments necessary and appropriate to vest in such persons 
title and right to all funds, property and claims vested in the Board or 
the trustees pursuant to the Order.
    (c) Any person to whom funds, property or claims have been 
transferred or delivered pursuant to the Order shall be subject to the 
same obligations imposed upon the Board and upon the trustees.
    (d) Any residual funds not required to defray the necessary expenses 
of liquidation shall be turned over to the Department to be disposed of, 
to the extent practical, to one or more mango industry organizations in 
the interest of continuing mango promotion, research, and information 
programs.



Sec.1206.74  Effect of termination or amendment.

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



Sec.1206.75  Personal liability.

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



Sec.1206.76  Separability.

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



Sec.1206.77  Amendments.

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



Sec.1206.78  OMB control number.

    The control numbers assigned to the information collection 
requirements of this part by the Office of Management and Budget 
pursuant to the Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35, 
are OMB control number 0505-0001 and OMB control number 0581-0093.

[84 FR 5346, Feb. 21, 2019]



                     Subpart B_Referendum Procedures



Sec.1206.100  General.

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



Sec.1206.101  Definitions.

    (a) Administrator means the Administrator of the Agricultural 
Marketing Service, with power to redelegate, or any officer or employee 
of the U.S. Department of Agriculture to whom authority has been 
delegated or may hereafter be delegated to act in the Administrator's 
stead.
    (b) Department means the U.S. Department of Agriculture or any 
officer or employee of the Department to whom authority has heretofore 
been delegated, or to whom authority may hereafter be delegated, to act 
in the Secretary's stead.
    (c) Eligible first handler means any person, (excluding a common or 
contract carrier), receiving 500,000 or more

[[Page 79]]

pounds of fresh mangos from producers in a calendar year and who as 
owner, agent, or otherwise ships or causes mangos to be shipped as 
specified in this Order. This definition includes those engaged in the 
business of buying, selling and/or offering for sale; receiving; 
packing; grading; marketing; or distributing mangos in commercial 
quantities. The term first handler includes a producer who handles or 
markets mangos of the producer's own production.
    (d) Eligible importer means any person importing 500,000 or more 
pounds of fresh mangos or 200,000 or more pounds of frozen mango into 
the United States in a calendar year as a principal or as an agent, 
broker, or consignee of any person who produces or handles mangos 
outside of the United States for sale in the United States, and who is 
listed as the importer of record for such mangos that are identified in 
the Harmonized Tariff Schedule of the United States by the numbers 
0804.50.4045, 0804.50.4055, 0804.50.6045, 0804.50.6055, and 
0811.90.5200, during the representative period. Importation occurs when 
mangos originating outside of the United States are released from 
custody by Customs and introduced into the stream of commerce in the 
United States. Included are persons who hold title to foreign-produced 
mangos immediately upon release by Customs, as well as any persons who 
act on behalf of others, as agents or brokers, to secure the release of 
mangos from Customs when such mangos are entered or withdrawn for 
consumption in the United States.
    (e) Mangos means the fruit of Mangifera indica L. of the family 
Anacardiaceae. The term mangos includes:
    (1) Fresh mangos, which means in their fresh form; and
    (2) Frozen mangos, which means mangos that are uncooked or cooked by 
steaming or boiling in water, and then frozen, whether or not containing 
added sugar or other sweetening agent.
    (f) Order means the Mango Promotion, Research, and Information 
Order.
    (g) Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other legal entity. For 
the purpose of this definition, the term ``partnership'' includes, but 
is not limited to:
    (1) A husband and a wife who have title to, or leasehold interest 
in, a mango farm as tenants in common, joint tenants, tenants by the 
entirety, or, under community property laws, as community property; and
    (2) So-called ``joint ventures'' wherein one or more parties to an 
agreement, informal or otherwise, contributed land and others 
contributed capital, labor, management, or other services, or any 
variation of such contributions by two or more parties.
    (h) Referendum agent or agent means the individual or individuals 
designated by the Department to conduct the referendum.
    (i) Representative period means the period designated by the 
Department.
    (j) United States or U.S. means collectively the 50 states, the 
District of Columbia, the Commonwealth of Puerto Rico, and the 
territories and possessions of the United States.

[68 FR 58554, Oct. 9, 2003, as amended at 84 FR 5436, Feb. 21, 2019]



Sec.1206.102  Voting.

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

[[Page 80]]



Sec.1206.103  Instructions.

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



Sec.1206.104  Subagents.

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



Sec.1206.105  Ballots.

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



Sec.1206.106  Referendum report.

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



Sec.1206.107  Confidential information.

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



Sec.1206.108  OMB control number.

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



                  Subpart C_Administrative Requirements

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



Sec.1206.200  Terms defined.

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

[[Page 81]]

Promotion, Research, and Information Order.



Sec.1206.201  Definitions.

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



Sec.1206.202  Exemption for organic mangos.

    (a) A first handler who operates under an approved National Organic 
Program (7 CFR part 205) (NOP) organic handling system plan may be 
exempt from the payment of assessments under this part, provided that:
    (1) Only agricultural products certified as ``organic'' or ``100 
percent organic'' (as defined in the NOP) are eligible for exemption;
    (2) The exemption shall apply to all certified ``organic'' or ``100 
percent organic'' (as defined in the NOP) products handled by the first 
handler regardless of whether the agricultural commodity subject to the 
exemption is handled by a person that also handles conventional or 
nonorganic agricultural products of the same agricultural commodity as 
that for which the exemption is claimed;
    (3) The first handler maintains a valid certificate of organic 
operation as issued under the Organic Foods Production Act of 1990 (7 
U.S.C. 6501-6522) (OFPA) and the NOP regulations issued under OFPA (7 
CFR part 205); and
    (4) Any first handler so exempted shall continue to be obligated to 
pay assessments under this part that are associated with any 
agricultural products that do not qualify for an exemption under this 
section.
    (b) To apply for exemption under this section, an eligible first 
handler shall submit a request for exemption to the Board on an Organic 
Exemption Request Form (Form AMS-15) at any time initially, and annually 
thereafter on or before the beginning of the fiscal period, as long as 
the first handler continues to be eligible for the exemption.
    (c) A first handler request for exemption shall include the 
following:
    (1) The applicant's full name, company name, address, telephone and 
fax numbers, and email address;
    (2) Certification that the applicant maintains a valid certificate 
of organic operation issued under the OFPA and the NOP;
    (3) Certification that the applicant handles organic products 
eligible to be labeled ``organic'' or ``100 percent organic'' under the 
NOP;
    (4) A requirement that the applicant attach a copy of their 
certificate of organic operation issued by a USDA-accredited certifying 
agent under the OFPA and the NOP;
    (5) Certification, as evidenced by signature and date, that all 
information provided by the applicant is true; and
    (6) Such other information as may be required by the Board, with the 
approval of the Secretary.
    (d) If a first handler complies with the requirements of this 
section, the Board will grant an assessment exemption and issue a 
Certificate of Exemption to the first handler within 30 days. If the 
application is disapproved, the Board will notify the applicant of the 
reason(s) for disapproval within the same timeframe.
    (e) An importer who imports products that are eligible to be labeled 
as ``organic'' or ``100 percent organic'' under the NOP, or certified as 
``organic'' or ``100 percent organic'' under a U.S. equivalency 
arrangement established under the NOP, shall be exempt from the payment 
of assessments on those products. Such importer may submit documentation 
to the Board and request an exemption from assessment on certified 
``organic'' or ``100 percent organic'' mangos on an Organic Exemption 
Request Form (Form AMS-15) at any time initially, and annually 
thereafter on or before the beginning of the fiscal period, as long as 
the importer continues to be eligible for exemption. This documentation 
shall include the same information required of first handlers in 
paragraph (c) of this section. If the importer complies with the 
requirements of this section, the Board will grant the exemption and 
issue a Certificate of Exemption to the importer within the applicable 
timeframe. If Customs collects the assessment on exempt product that is 
identified as ``organic'' by a number in the Harmonized Tariff Schedule, 
the Board must reimburse the exempt importer the assessments paid upon 
receipt of such assessments from Customs. For

[[Page 82]]

all other exempt organic product for which Customs collects the 
assessment, the importer may apply to the Board for a reimbursement of 
assessments paid, and the importer must submit satisfactory proof to the 
Board that the importer paid the assessment on exempt organic product. 
Any importer so exempted shall continue to be obligated to pay 
assessments under this part that are associated with any imported 
agricultural products that do not qualify for an exemption under this 
section.
    (f) The exemption will apply immediately following the issuance of 
the certificate of exemption.
    (g) An importer who is exempt from payment of assessments under 
paragraph (e) of this section shall be eligible for reimbursement of 
assessments collected by the CBP on certified ``organic'' or ``100 
percent organic'' mangos and may apply to the Secretary for a 
reimbursement. The importer would be required to submit satisfactory 
proof to the Secretary that the importer paid the assessment on exempt 
organic products.

[69 FR 59122, Oct. 4, 2004, as amended at 80 FR 82023, Dec. 31, 2015]



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



               Subpart_Potato Research and Promotion Plan

                               Definitions

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

                     National Potato Promotion Board

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

                         Research and Promotion

1207.335 Research and promotion.

                        Expenses and Assessments

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

                       Reports, Books, and Records

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

                              Miscellaneous

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

                      Subpart_Rules and Regulations

                               Definitions

1207.500 Definitions.

                                 General

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

                               Assessments

1207.510 Levy of assessments.
1207.511 Determination of assessable quantity.
1207.512 Designated handler.
1207.513 Payment of assessments.
1207.514 Exemption for organic potatoes.
1207.515 Safeguards.

                                 Records

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

                        Confidential Information

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


[[Page 83]]


    Authority: 7 U.S.C. 2611-2627 and 7 U.S.C. 7401.



               Subpart_Potato Research and Promotion Plan

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

                               Definitions



Sec.1207.301  Secretary.

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



Sec.1207.302  Act.

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

[56 FR 40229, Aug. 14, 1991]



Sec.1207.303  Plan.

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



Sec.1207.304  Person.

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



Sec.1207.305  Producer.

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



Sec.1207.306  Potatoes.

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

[56 FR 40229, Aug. 14, 1991]



Sec.1207.307  Handle.

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



Sec.1207.308  Handler.

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



Sec.1207.309  Board.

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



Sec.1207.310  Fiscal period and marketing year.

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



Sec.1207.311  Programs and projects.

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



Sec.1207.312  Importer.

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

[56 FR 40229, Aug. 14, 1991]



Sec.1207.313  Customs Service.

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

[56 FR 40229, Aug. 14, 1991]

                     National Potato Promotion Board



Sec.1207.320  Establishment and membership.

    (a) There is hereby established a National Potato Promotion Board, 
hereinafter called the ``Board'', composed of producers, importers, and 
a public member appointed by the Secretary. Producer members shall be 
appointed from nominations submitted by producers in the various States 
or groups

[[Page 84]]

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

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



Sec.1207.321  Term of office.

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

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



Sec.1207.322  Nominations and appointment.

    The Secretary shall select the producer, importer, and public 
members of the Board from nominations which may be made in the following 
manner.
    (a) A meeting or meetings of producers shall be held in each State 
to nominate producer members for the Board. For nominations to the 
initial Board the meetings shall be announced by the U.S. Department of 
Agriculture. The Department may call upon other organizations to assist 
in conducting the meetings such as State and national organizations of 
potato producers. Such nomination meetings shall be held not later than 
60 days after the issuance of this subpart. Any organization designated 
to hold such nomination meetings shall give adequate notice of such 
meetings to the potato producers affected; also to the Secretary so that 
a representative of

[[Page 85]]

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

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



Sec.1207.323  Acceptance.

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



Sec.1207.324  Vacancies.

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



Sec.1207.325  Procedure.

    (a) Each State (or district or group of States established pursuant 
to Sec.1207.320) which has a member on the Board shall be entitled to 
not less than one vote for any production up to 1 million hundredweight, 
plus one additional vote for each additional 1 million hundredweight of 
production, or major fraction thereof, as determined by the latest crop 
production annual summary report issued by the Crop Reporting Board, 
U.S. Department of Agriculture. The casting of the votes for each State 
shall be determined by the members of the Board from that State.
    (b) A majority of the Board members shall constitute a quorum and 
any action of the Board shall require a majority of concurring votes of 
those present and voting. At assembled meetings all votes shall be cast 
in person or by duly authorized proxy.

[[Page 86]]

    (c) For routine and noncontroversial matters which do not require 
deliberation and the exchange of views, and for matters of an emergency 
nature when there is not enough time to call an assembled meeting, the 
Board may act upon a majority of concurring votes of its members cast by 
mail, telegraph, or telephone. Any vote cast by telephone shall be 
confirmed promptly in writing.

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



Sec.1207.326  Compensation and reimbursement.

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



Sec.1207.327  Powers.

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



Sec.1207.328  Duties.

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

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

                         Research and Promotion



Sec.1207.335  Research and promotion.

    The Board shall develop and submit to the Secretary for approval any 
programs or projects authorized in this section. Such programs or 
projects shall provide for:

[[Page 87]]

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

                        Expenses and Assessments



Sec.1207.341  Budget and expenses.

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

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



Sec.1207.342  Assessments.

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

[[Page 88]]

against improper use of such exemptions.

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



Sec.1207.343  [Reserved]



Sec.1207.344  Operating reserve.

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

                       Reports, Books, and Records



Sec.1207.350  Reports.

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

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



Sec.1207.351  Books and records.

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

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



Sec.1207.352  Confidential treatment.

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

[56 FR 40230, Aug. 14, 1991]

                              Miscellaneous



Sec.1207.360  Influencing governmental action.

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



Sec.1207.361  Right of the Secretary.

    All fiscal matters, programs or projects, rules or regulations, 
reports, or other substantive action proposed

[[Page 89]]

and prepared by the Board shall be submitted to the Secretary for his 
approval.



Sec.1207.362  Suspension or termination.

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

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



Sec.1207.363  Proceedings after termination.

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

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



Sec.1207.364  Effect of termination or amendment.

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



Sec.1207.365  Personal liability.

    No member of the Board shall be held personally responsible, either 
individually or jointly with others, in any way whatsoever to any person 
for errors in judgments, mistakes, or other acts, either of commission 
or omission, as

[[Page 90]]

such member except for acts of willful misconduct, gross negligence, or 
those which are criminal in nature.



Sec.1207.366  Separability.

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



                      Subpart_Rules and Regulations

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

                               Definitions



Sec.1207.500  Definitions.

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

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

                                 General



Sec.1207.501  [Reserved]



Sec.1207.502  Determination of membership.

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

[56 FR 40231, Aug. 14, 1991]



Sec.1207.503  Nominations.

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

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



Sec.1207.504  Term of office.

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

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

[[Page 91]]



Sec.1207.505  Procedure.

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

[62 FR 46179, Sept. 2, 1997]



Sec.1207.506  Policy.

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



Sec.1207.507  Administrative Committee.

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

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



Sec.1207.508  USDA costs.

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

[49 FR 26202, June 27, 1984]

                               Assessments



Sec.1207.510  Levy of assessments.

    (a) Domestic assessments. (1) An assessment rate of 3 cents per 
hundredweight shall be levied on all potatoes produced within the 50 
states of the United States.
    (2) No assessment shall be levied on potatoes grown in the 50 States 
of the United States by producers of less than 5 acres of potatoes.
    (b) Assessments on imports. (1) An Assessment rate of 3 cents per 
hundredweight shall be levied on all tablestock potatoes imported into 
the United States for ultimate consumption by

[[Page 92]]

humans and all seed potatoes imported into the United States. An 
assessment rate of 3 cents per hundredweight shall be levied on the 
fresh weight equivalents of imported frozen or processed potatoes for 
ultimate consumption by humans. The importer of imported tablestock 
potatoes, potato products, or seed potatoes shall pay the assessment to 
the Board through the U.S. Customs and Border Protection at the time of 
entry or withdrawal for consumption of such potatoes and potato products 
into the United States.
    (2) The following conversion factors shall be used to determine the 
fresh weight equivalents of frozen and processed potato products:

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

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

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

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

[57 FR 40083, Sept. 2, 1992, as amended at 58 FR 3359, Jan. 8, 1993; 59 
FR 44036, Aug. 26, 1994; 71 FR 11296, Mar. 7, 2006; 71 FR 50330, Aug. 
25, 2006; 74 FR 63543, Dec. 4, 2009; 75 FR 14491, Mar. 26, 2010]



Sec.1207.511  Determination of assessable quantity.

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



Sec.1207.512  Designated handler.

    The assessment on each lot of potatoes produced in the 50 States of 
the United States and handled shall be paid by the designated handler as 
hereafter set forth.
    (a) Unless otherwise provided in paragraphs (a)(8), (b), and (c) of 
this section, the designated handler shall be the first handler of such 
potatoes. The first handler is the person who initially performs a 
handler function as heretofore defined. Such person may be a fresh 
shipper, processor, or other person who first places the potatoes in the 
channels of commerce. A producer who grades, packs, or otherwise 
performs handler functions thereby becomes a handler and as such assumes 
first handler responsibilities under this part. The following examples 
are provided to aid in identification of first handlers who are 
designated handlers:
    (1) Producer delivers field-run potatoes of his own production to a 
handler for preparation for market. The handler in this instance is the 
designated handler, regardless of whether he subsequently handles such 
potatoes for his own account or for the account of the producer.
    (2) Producer delivers field-run potatoes of his own production to a 
handler

[[Page 93]]

who takes title to such potatoes and places them in storage for 
subsequent handling. The handler who purchases such potatoes from the 
producer is the designated handler.
    (3) Producer delivers field-run potatoes to a commercial storage 
facility for the purpose of holding such potatoes under his own account 
for later sale. There is no designated handler in this instance since 
such potatoes have not been handled as heretofore defined and no 
assessment is due. The designated handler of such potatoes would be 
identified on the basis of subsequent handling of such potatoes.
    (4) Fresh shipper purchases a lot of potatoes from a producer, packs 
a portion of such potatoes for fresh market, and delivers the balance to 
a processor. The fresh shipper is the designated handler for all 
potatoes in the lot.
    (5) Handler purchases potatoes from a producer's field or storage 
for the purpose of preparing such potatoes for market or for 
transporting such potatoes to storage for subsequent handling. The 
handler who purchases such potatoes from the producer is the designated 
handler.
    (6) Producer packs and sells potatoes of his own production from the 
field, roadside stand, or storage to a consumer, itinerant trucker, or 
other buyer. In performing such handler functions the producer assumes 
the responsibility of designated handler.
    (7) Processor utilizes potatoes of his own production in the 
manufacture of potato chips, frozen, dehydrated, or canned products for 
human consumption. In so handling potatoes, the processor assumes the 
responsibility of designated handler.
    (8) Producer utilizes potatoes of his own production for seed in 
planting his subsequent crop. Such seed potatoes do not enter the 
current of commerce; there is no designated handler in this instance 
since the potatoes have not been handled as heretofore defined and no 
assessment is due. However, seed potatoes sold or shipped to other 
producers for planting or to other persons for subsequent disposition 
enter the current of commerce and are subject to assessment. The 
producer of seed potatoes shall be the designated handler of such 
potatoes shipped to other producers for planting and the assessment is 
due when he first sells or otherwise handles such potatoes. The first 
person who acquires seed potatoes from the producer thereof for 
subsequent disposition other than planting by said person shall be the 
designated handler of such potatoes. However, the seed producer will be 
the designated handler responsible for filing reports and making 
payments, unless he can show that the first person who obtained the 
potatoes from him disposed of them other than by planting. To show this 
the seed producer must submit to the Potato Board the name and address 
of the first person who obtained the potatoes from him and an invoice of 
sale or settlement sheet on which it is indicated that such person will 
be the designated handler and therefore will be responsible for the 
payment of the assessments. Only by showing this is the seed producer no 
longer considered the designated handler and therefore not liable for 
the assessments.
    (b) Any person who handles potatoes for a producer thereof under 
oral or written contract or agreement providing for the sale thereof 
shall be the designated handler for such potatoes, notwithstanding the 
fact that the producer may have graded, packed, or otherwise handled 
such potatoes and thereby became the first handler of such potatoes.

    Examples. A cooperative marketing association, or other person, who 
makes an accounting to the producer, or pay the proceeds of the sale to 
the producer would be the designated handler responsible for the 
assessment.

    (c) Any processor who purchases potatoes from the producer thereof 
shall be the designated handler even though the producer may have 
graded, packed, or otherwise handled such potatoes and thereby became 
the first handler of such potatoes.

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



Sec.1207.513  Payment of assessments.

    (a) Time of payment. The assessment on domestically produced 
potatoes shall become due at the time a determination of assessable 
potatoes is

[[Page 94]]

made in the normal handling process, pursuant to Sec.1207.511. If no 
determination is made of the utilization of a lot, assessments shall be 
due on the entire lot when it enters the current of commerce. The 
assessment on imported potatoes, potato products, and seed potatoes 
shall become due at the time of entry, or withdrawal, for consumption 
into the United States.
    (b) Responsibility for payment. (1) The designated handler is 
responsible for payment of the assessment on domestically produced 
potatoes. He may pay with no reimbursement from the producer. In the 
alternative, he may collect the assessment from the producer, or deduct 
such assessment from the proceeds paid to the producer on whose potatoes 
the assessment is made, provided he furnishes the producer with evidence 
of such payment. Any such collection or deduction of assessment shall be 
made not later than the time when the assessment becomes payable by the 
handler to the Board. Failure of the handler to collect or deduct such 
assessment does not relieve the handler of his obligation to remit the 
assessment to the Board.
    (2) The Customs Service shall collect payment of assessment on 
imported potatoes, potato products, and seed potatoes from importers and 
forward such assessment per agreement between the Customs Service and 
the U.S. Department of Agriculture. Importers shall be responsible for 
payment of assessment directly to the Board of any assessment due but 
not collected by the Customs Service at the time of entry, or 
withdrawal, for consumption into the United States. An importer may 
apply to the Board for reimbursement of assessments paid on exempted 
products.
    (c) Payment directly to the Board. (1) Except as provided in 
paragraphs (b) and (d) of this section, each designated handler or 
importer shall remit assessments directly to the Board by check, draft, 
or money order payable to the National Potato Promotion Board, or NPPB, 
not later than 10 days after the end of the month such assessment is due 
together with a report (preferably on Board forms) thereon.
    (2) All designated handlers, including a designated handler whose 
own production is handled and assessments to the Board paid by another 
designated handler, shall report to the Board:
    (i) Date of report (which is also date of payment to the Board).
    (ii) The name and address of the designated handler;
    (iii) The period potatoes were handled;
    (iv) The total quantity of potatoes determined to be assessable 
during the period potatoes were handled, pursuant to Sec.1207.511.
    (3) Designated handlers who collect assessments from producers or 
withhold assessments from their accounts or pay the assessment 
themselves shall also include a list of all such producers whose 
potatoes were handled during the period, their addresses and the total 
assessable quantities handled for each such producer.
    (i) In lieu of such a list, the designated handler may substitute 
authentic copies of settlement sheets given to each producer provided 
such settlement sheets contain all the information listed above.
    (ii) The words ``final report'' shall be shown on the last report at 
the close of his marketing season or at the end of each fiscal period if 
such handler markets potatoes on a year-round basis.
    (4) Prepayment of assessment: (i) In lieu of the monthly assessment 
and reporting requirements of paragraph (b) of this section, the Board 
may permit designated handlers to make advance payments of their total 
estimated assessments for the season to the Board prior to their actual 
determination of assessable potatoes. Such procedure may be permitted 
when it is considered by the designated handler to be the more practical 
method of payment.
    (ii) Persons using such procedure shall provide a final annual 
accounting of actual handling and assessments.
    (iii) Specific requirements, instructions, and forms for making such 
advance payments shall be provided by the Board upon request.
    (d) Payment through cooperating agency. The Board may authorize 
other organizations to collect assessments in its behalf. In any State 
or area in which the Board has negotiated an agreement to collect 
assessments with

[[Page 95]]

an agency such as a State Potato Commission or a Potato Association 
approved by the Secretary, the designated handler shall pay the 
assessment to such agency in the time and manner, and with such 
identifying information as specified in such agreement. Such an 
agreement shall not provide any cooperating agency with authority to 
collect confidential information from handlers; to qualify, the 
cooperating agency must on its own accord have access to all information 
required by the Board for collection purposes. If the Board requires 
further evidence of payment than provided, it may acquire such evidence 
from individual designated handlers.
    (1) All such agreements are subject to the requirement of Sec.
1207.352 Confidential treatment, of the plan, the provisions of section 
310(c) of the Act, and all applicable rules and regulations and 
financial safeguards in effect under the Act and the plan; and all 
affected persons shall agree to, and conduct their operations and 
activities in accordance with, such requirements.
    (2) [Reserved]

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



Sec.1207.514  Exemption for organic potatoes.

    (a) A producer who operates under an approved National Organic 
Program (7 CFR part 205) (NOP) organic production system plan may be 
exempt from the payment of assessments under this part, provided that:
    (1) Only agricultural products certified as ``organic'' or ``100 
percent organic'' (as defined in the NOP) are eligible for exemption;
    (2) The exemption shall apply to all certified ``organic'' or ``100 
percent organic'' (as defined in the NOP) products of a producer 
regardless of whether the agricultural commodity subject to the 
exemption is produced by a person that also produces conventional or 
nonorganic agricultural products of the same agricultural commodity as 
that for which the exemption is claimed;
    (3) The producer maintains a valid certificate of organic operation 
as issued under the Organic Foods Production Act of 1990 (7 U.S.C. 6501-
6522)(OFPA) and the NOP regulations issued under OFPA (7 CFR part 205); 
and
    (4) Any producer so exempted shall continue to be obligated to pay 
assessments under this part that are associated with any agricultural 
products that do not qualify for an exemption under this section.
    (b) To apply for exemption under this section, the producer shall 
submit a request to the Board on an Organic Exemption Request Form (Form 
AMS-15) at any time during the year initially, and annually thereafter 
on or before July 1, for as long as the producer continues to be 
eligible for the exemption.
    (c) The producer request for exemption shall include the following:
    (1) The applicant's full name, company name, address, telephone and 
fax numbers, and email address;
    (2) Certification that the applicant maintains a valid certificate 
of organic operation issued under the OFPA and the NOP;
    (3) Certification that the applicant produces organic products 
eligible to be labeled ``organic'' or ``100 percent organic'' under the 
NOP;
    (4) A requirement that the applicant attach a copy of their 
certificate of organic operation issued by a USDA-accredited certifying 
agent under the OFPA and the NOP;
    (5) Certification, as evidenced by signature and date, that all 
information provided by the applicant is true; and
    (6) Such other information as may be required by the Board, with the 
approval of the Secretary.
    (d) If a producer complies with the requirements of this section, 
the Board will grant an assessment exemption and issue a Certificate of 
Exemption to the producer within 30 days. If the application is 
disapproved, the Board will notify the applicant of the reason(s) for 
disapproval within the same timeframe.
    (e) A producer approved for exemption under this section shall 
provide a copy of the Certificate of Exemption to each handler to whom 
the producer sells potatoes. The handler shall maintain records showing 
the exempt producer's name and address and the exemption number assigned 
by the Board.

[[Page 96]]

    (f) An importer who imports products that are eligible to be labeled 
as ``organic'' or ``100 percent organic'' under the NOP, or certified as 
``organic'' or ``100 percent organic'' under a U.S. equivalency 
arrangement established under the NOP, shall be exempt from the payment 
of assessments on those products. Such importer may submit documentation 
to the Board and request an exemption from assessment on certified 
``organic'' or ``100 percent organic'' potatoes, potato products, and 
seed potatoes on an Organic Exemption Request Form (Form AMS-15) at any 
time initially, and annually thereafter on or before July 1, as long as 
the importer continues to be eligible for the exemption. This 
documentation shall include the same information required of producers 
in paragraph (c) of this section. If the importer complies with the 
requirements of this section, the Board will grant the exemption and 
issue a Certificate of Exemption to the importer. If Customs collects 
the assessment on exempt product that is identified as ``organic'' by a 
number in the Harmonized Tariff Schedule, the Board must reimburse the 
exempt importer the assessments paid upon receipt of such assessments 
from Customs. For all other exempt organic product for which Customs 
collects the assessment, the importer may apply to the Board for a 
reimbursement of assessments paid, and the importer must submit 
satisfactory proof to the Board that the importer paid the assessment on 
exempt organic product. Any importer so exempted shall continue to be 
obligated to pay assessments under this part that are associated with 
any imported agricultural products that do not qualify for an exemption 
under this section.
    (g) The exemption will apply immediately following the issuance of 
the Certificate of Exemption.

[70 FR 2755, Jan. 14, 2005, as amended at 80 FR 82024, Dec. 31, 2015]



Sec.1207.515  Safeguards.

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

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

                                 Records



Sec.1207.532  Retention period for records.

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

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



Sec.1207.533  Availability of records.

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

[56 FR 40232, Aug. 14, 1991]



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

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

[49 FR 23826, June 8, 1984]

[[Page 97]]

                        Confidential Information



Sec.1207.540  Confidential books, records, and reports.

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

[56 FR 40232, Aug. 14, 1991]



Sec.1207.545  Right of the Secretary.

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



Sec.1207.546  Personal liability.

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



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



 Subpart A_Mushroom Promotion, Research, and Consumer Information Order

                               Definitions

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

                            Mushroom Council

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

   Promotion, Research, Consumer Information, and Industry Information

1209.40 Programs, plans, and projects.

                        Expenses and Assessments

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

                       Reports, Books, and Records

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

                              Miscellaneous

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

                  Subpart B_Administrative Requirements

                               Definitions

1209.200 Terms defined.

                          Nomination Procedures

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

                                 General

1209.239 Financial statements.

                               Assessments

1209.251 Payment of assessments.
1209.252 Exemptions and exemption procedures.

                                 Reports

1209.260 Reports.

[[Page 98]]

                              Miscellaneous

1209.280 OMB control numbers.

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

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

    Authority: 7 U.S.C. 6101-6112 and 7 U.S.C. 7401.

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



 Subpart A_Mushroom Promotion, Research, and Consumer Information Order

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

                               Definitions



Sec.1209.1  Act.

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



Sec.1209.2  Commerce.

    Commerce means interstate, foreign, or intrastate commerce.



Sec.1209.3  Consumer information.

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



Sec.1209.4  Council.

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



Sec.1209.5  Department.

    Department means the United States Department of Agriculture.



Sec.1209.6  First handler.

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



Sec.1209.7  Fiscal year.

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



Sec.1209.8  Importer.

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



Sec.1209.9  Industry information.

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



Sec.1209.10  Marketing.

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



Sec.1209.11  Mushrooms.

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

[[Page 99]]



Sec.1209.12  On average.

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



Sec.1209.13  Part and subpart.

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



Sec.1209.14  Person.

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



Sec.1209.15  Producer.

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



Sec.1209.16  Programs, plans, and projects.

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



Sec.1209.17  Promotion.

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



Sec.1209.18  Region.

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



Sec.1209.19  Research.

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



Sec.1209.20  Secretary.

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



Sec.1209.21  State and United States.

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

                            Mushroom Council



Sec.1209.30  Establishment and membership.

    (a) There is hereby established a Mushroom Council of not less than 
four or more than nine members. The Council shall be composed of 
producers appointed by the Secretary under Sec.1209.33, except that, 
as provided in paragraph (c) of this section, importers shall be 
appointed by the Secretary to the Council under Sec.1209.33 once 
imports, on average, reach at least 50,000,000 pounds of mushrooms 
annually.
    (b) For purposes of nominating and appointing producers to the 
Council, the United States shall be divided into three geographic 
regions and the number of Council members from each region shall be as 
follows:
    (1) Region 1: All other States including the District of Columbia 
and the Commonwealth of Puerto Rico except for Pennsylvania and 
California--2 Members.
    (2) Region 2: The State of Pennsylvania--4 Members.
    (3) Region 3: The State of California--2 Members.
    (c) Importers shall be represented by a single, separate region, 
referred to as Region 4, consisting of the United States when imports, 
on average, equal or exceed 50,000,000 pounds of mushrooms annually.

[[Page 100]]

    (d) At least every five years, and not more than every three years, 
the Council shall review changes in the geographic distribution of 
mushroom production volume throughout the United States and import 
volume, using the average annual mushroom production and imports over 
the preceding four years, and, based on such review, shall recommend to 
the Secretary reapportionment of the regions established in paragraph 
(b) of this section, or modification of the number of members from such 
regions, as determined under the rules established in paragraph (e), of 
this section or both, as necessary to best reflect the geographic 
distribution of mushroom production volume in the United States and 
representation of imports, if applicable.
    (e) Subject to the nine-member maximum limitation, the following 
procedure will be used to determine the number of members for each 
region to serve on the Council under paragraph (d) of this section:
    (1) Each region that produces, on average, at least 50,000,000 
pounds of mushrooms annually shall be entitled to one representative on 
the Council.
    (2) As provided in paragraph (c) of this section, importers shall be 
represented by a single, separate region, which shall be entitled to one 
representative, if such region imports, on average, at least 50,000,000 
pounds of mushrooms annually.
    (3) If the annual production of a region is greater than 110,000,000 
pounds, but less than or equal to 180,000,000 pounds, the region shall 
be represented by 1 additional member.
    (4) If the annual production of a region is greater than 180,000,000 
pounds, but less than or equal to 260,000,000 pounds, the region shall 
be represented by 2 additional members.
    (5) If the annual production of a region is greater than 260,000,000 
pounds, the region shall be represented by 3 additional members.
    (6) Should, in the aggregate, regions be entitled to levels of 
representation under paragraphs (e)(1), (2), (3), (4) and (5) of this 
section that would exceed the nine-member limit on the Council under the 
Act, the seat or seats assigned shall be assigned to that region or 
those regions with greater on-average production or import volume than 
the other regions otherwise eligible at that increment level.
    (f) In determining the volume of mushrooms produced in the United 
States or imported into the United States for purposes of this section, 
the Council and the Secretary shall:
    (1) Only consider mushrooms produced or imported by producers and 
importers, respectively, as those terms are defined in Sec. Sec.1209.8 
and 1209.15; and
    (2) Use the information received by the Council under Sec.1209.60, 
and data published by the Department.
    (g) For purposes of the provisions of this section relating to the 
appointment of producers and importers to serve on the Council, the term 
producer or importer refers to any individual who is a producer or 
importer, respectively, or if the producer or importer is an entity 
other than an individual, an individual who is an officer or employee of 
such producer or importer.

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



Sec.1209.31  Nominations.

    All nominations for appointments to the Council under Sec.1209.33 
shall be made as follows:
    (a) As soon as practicable after this subpart becomes effective, 
nominations for appointment to the initial Council shall be obtained 
from producers by the Secretary. In any subsequent year in which an 
appointment to the Council is to be made, nominations for positions 
whose terms will expire at the end of that year shall be obtained from 
producers, and as appropriate, importers, and certified by the Council 
and submitted to the Secretary by August 1 of such year, or such other 
date as approved by the Secretary.
    (b) Nominations shall be made at regional caucuses of producers or 
importers, or by mail ballot as provided in paragraph (e), in accordance 
with procedures prescribed in this section.
    (c) Except for initial Council members, whose nomination process 
will be initiated by the Secretary, the Council shall issue a call for 
nominations by February 1 of each year in which nominations for an 
appointment to the Council is to be made. The call shall

[[Page 101]]

include, at a minimum, the following information:
    (1) A list by region of the vacancies for which nominees may be 
submitted and qualifications as to producers and importers.
    (2) The date by which the names of nominees shall be submitted to 
the Secretary for consideration to be in compliance with paragraph (a) 
of this section.
    (3) A list of those States, by region, entitled to participate in 
the nomination process.
    (4) The date, time, and location of any next scheduled meeting of 
the Council, and national and State producer or importer associations, 
if known, and of the regional caucuses, if any.
    (d)(1) Except as provided in paragraph (e), nominations for each 
position shall be made by regional caucus in the region entitled to 
nominate for such position. Notice of such caucus shall be publicized to 
all producers or importers within the region, and to the Secretary, at 
least 30 days prior to the caucus. The notice shall have attached to it 
the call for nominations from the Council and the Department's equal 
opportunity policy. Except with respect to nominations for the initial 
appointments to the Council, the responsibility for convening and 
publicizing the regional caucus shall be that of the Council.
    (2) All producers or importers within the region may participate in 
the caucus. However, if a producer is engaged in the production of 
mushrooms in more than one region or is also an importer, such person's 
participation within a region shall be limited to one vote and shall 
only reflect the volume of such person's production or imports within 
the applicable region.
    (3) The regional caucus shall conduct the selection process for the 
nominees in accordance with procedures to be adopted at the caucus 
subject to the following requirements:
    (i) There shall be two individuals nominated for each open position.
    (ii) Each nominee shall meet the qualifications set forth in the 
call.
    (iii) If a producer nominee is engaged in the production of 
mushrooms in more than one region or is also an importer, such 
individual shall participate within the region that such individual so 
elects in writing to the Council and such election shall remain 
controlling until revoked in writing to the Council.
    (e) After the regional caucuses for the initial Council, the Council 
may conduct the selection of nominees by mail ballot in lieu of a 
regional caucus.
    (f) When producers or importers are voting for nominees to the 
Council, whether through a regional caucus or a mail ballot, the 
following conditions shall apply:
    (1) Voting for any open position shall be on the basis of:
    (i) One vote per eligible voter; and
    (ii) Volume of on-average production or imports of the eligible 
voter within that region.
    (2) Whenever the producers or importers in a region are choosing 
nominees for one open position on the Council, the proposed nominee with 
the highest number of votes cast and the proposed nominee with the 
highest volume of production or importers voted shall be the nominees 
submitted to the Secretary. If a proposed nominee receives both the 
highest number of votes cast and the highest volume of production or 
imports voted, then the proposed nominee with the second highest number 
of votes cast shall be a nominee submitted to the Secretary along with 
such proposed nominee receiving both the highest number of votes cast 
and the highest volume of production or imports voted.
    (3) Whenever the producers or importers in a region are choosing 
nominees for more than one open position on the Council at the same 
time, the number of the nominations submitted to the Secretary shall 
equal twice the number of such open positions, and for each open 
position shall consist of the proposed nominee with the highest number 
of votes cast and the proposed nominee with the highest volume of 
production or imports voted with respect to that position, subject to 
the rule set out in paragraph (f)(2). An individual shall only be 
nominated for one such open position.
    (4) Voters shall certify on their ballots as to their on-average 
production

[[Page 102]]

or import volume within the region involved. Such certification may be 
subject to verification.
    (g)(1) The Secretary may reject any nominee submitted. If there are 
insufficient nominees from which to appoint members to the Council as a 
result of the Secretary's rejecting such nominees, additional nominees 
shall be submitted to the Secretary under the procedures set out in this 
section.
    (2) Whenever producers or importers in a region cannot agree on 
nominees for an open position on the Council under the preceding 
provisions of this section, or whenever they fail to nominate 
individuals for appointment to the Council, the Secretary may appoint 
members in such manner as the Secretary, by regulation, determines 
appropriate.



Sec.1209.32  Acceptance.

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



Sec.1209.33  Appointment.

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



Sec.1209.34  Term of office.

    (a) The members of the Council shall serve for terms of three years, 
except that the members appointed to the initial Council shall serve, 
proportionately, for terms of one, two, and three years.
    (b) Members of the initial Council shall be designated for, and 
shall serve, terms as follows: One producer member each from regions 1, 
2 and 3 shall be appointed for an initial term of one year; one producer 
member each from regions 1, 2, and 3 shall be appointed for an initial 
term of two years; and one producer member each from regions 2, 3, and 4 
shall be appointed for an initial term of three years. Because current 
imports of fresh mushrooms are less than 35,000,000 pounds, the minimum 
established for representation on the Council, importers will not 
initially have a member appointed to the Council.
    (c)(1) Except with respect to terms of office of the initial 
Council, the term of office for each member of the Council shall begin 
on January 1 or such other date that may be approved by the Secretary.
    (2) The term of office for the initial Council shall begin 
immediately following appointment by the Secretary, except that time in 
the interim period from appointment until the following January 1, or 
such other date that is the generally applicable beginning date for 
terms under paragraph (c)(1) approved by the Secretary, shall not count 
toward the initial term of office.
    (d) Council members shall serve during the term of office for which 
they are appointed and have qualified, and until their successors are 
appointed and have qualified.
    (e)(1) No member shall serve more than two successive three-year 
terms, except as provided in paragraph (e)(2)(ii).
    (2)(i) Those members serving initial terms of two or three years may 
serve one successive three-year term.
    (ii) Those members serving initial terms of one year may serve two 
successive three-year terms.



Sec.1209.35  Vacancies.

    (a) To fill any vacancy occasioned by the death, removal, 
resignation, or disqualification of any member of the Council, the 
Secretary may appoint a successor from the most recent nominations 
submitted for open positions on the Council assigned to the region that 
the vacant position represents, or the Secretary may obtain nominees to 
fill such vacancy in such manner as the Secretary, by regulation, deems 
appropriate. Each such successor appointment shall be for the remainder 
of the term vacated. A vacancy will not be required to be filled if the 
unexpired term is less than six months.
    (b)(1) No successor appointed to a vacated term of office shall 
serve more than two successive three-year terms on the Council, except 
as provided in paragraph (b)(2)(ii).

[[Page 103]]

    (2)(i) Any successor serving longer than one year may serve one 
successive three-year term.
    (ii) Any successor serving one year or less may serve two successive 
three-year terms.
    (c) If a member of the Council consistently refuses to perform the 
duties of a member of the Council, or if a member of the Council is 
known to be engaged in acts of dishonesty or willful misconduct, the 
Council may recommend to the Secretary that the member be removed from 
office. If the Secretary finds the recommendation of the Council shows 
adequate cause, the Secretary shall remove such member from office. 
Further, without recommendation of the Council, a member may be removed 
by the Secretary upon showing of adequate cause, including the failure 
by a member to submit reports or remit assessments required under this 
part, if the Secretary determines that such member's continued service 
would be detrimental to the achievement of the purposes of the Act.



Sec.1209.36  Procedure.

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



Sec.1209.37  Compensation and reimbursement.

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



Sec.1209.38  Powers.

    The Council shall have the following powers:
    (a) To receive and evaluate or, on its own initiative, develop and 
budget for proposed programs, plans, or projects to promote the use of 
mushrooms, as well as proposed programs, plans, or projects for 
research, consumer information, or industry information, and to make 
recommendations to the Secretary regarding such proposals;
    (b) To administer the provisions of this subpart in accordance with 
its terms and provisions;
    (c) To appoint or employ such individuals as it may deem necessary, 
define the duties, and determine the compensation of such individuals;
    (d) To make rules and regulations to effectuate the terms and 
provisions of this subpart;
    (e) To receive, investigate, and report to the Secretary for action 
complaints of violations of the provisions of this subpart;
    (f) To disseminate information to producers, importers, first 
handlers, or industry organizations through programs or by direct 
contact using the public postal system or other systems;
    (g) To select committees and subcommittees of Council members, 
including an executive committee whose powers and membership shall be 
determined by the Council, subject to the approval of the Secretary, and 
to adopt

[[Page 104]]

such bylaws and other rules for the conduct of its business as it may 
deem advisable;
    (h) To establish committees which may include individuals other than 
Council members, and pay the necessary and reasonable expenses and fees 
for the members of such committees;
    (i) To recommend to the Secretary amendments to this subpart;
    (j) With the approval of the Secretary, to enter into contracts or 
agreements with national, regional, or State mushroom producer 
organizations, or other organizations or entities, for the development 
and conduct of programs, plans, or projects authorized under Sec.
1209.40 and with such producer organizations for other services 
necessary for the implementation of this subpart, and for the payment of 
the cost thereof with funds collected and received pursuant to this 
subpart. The Council shall not contract with any producer or importer 
for the purpose of mushroom promotion or research. The Council may lease 
physical facilities from a producer or importer for such promotion or 
research, if such an arrangement is determined to be cost effective by 
the Council and approved by the Secretary. Any contract or agreement 
shall provide that:
    (1) The contractor or agreeing party shall develop and submit to the 
Council a program, plan, or project together with a budget or budgets 
that shall show the estimated cost to be incurred for such program, 
plan, or project;
    (2) Any such program, plan, or project shall become effective upon 
approval of the Secretary;
    (3) The contracting or agreeing party shall keep accurate records of 
all of its transactions and make periodic reports to the Council of 
activities conducted, submit accountings for funds received and 
expended, and make such other reports as the Secretary or the Council 
may require; and the Secretary may audit the records of the contracting 
or agreeing party periodically; and
    (4) Any subcontractor who enters into a contract with a Council 
contractor and who receives or otherwise uses funds allocated by the 
Council shall be subject to the same provisions as the contractor;
    (k) With the approval of the Secretary, to invest, pending 
disbursement pursuant to a program, plan, or project, funds collected 
through assessments provided for in Sec.1209.51, and any other funds 
received by the Council in, and only in, obligations of the United 
States or any agency thereof, in general obligations of any State or any 
political subdivision thereof, in any interest-bearing account or 
certificate of deposit of a bank that is a member of the Federal Reserve 
System, or in obligations fully guaranteed as to principal and interest 
by the United States;
    (l) To develop and propose to the Secretary programs for good 
agricultural and good handling practices and related activities for 
mushrooms.
    (m) Such other powers as may be approved by the Secretary; and
    (n) To develop and propose to the Secretary voluntary quality and 
grade standards for mushrooms, if the Council determines that such 
quality and grade standards would benefit the promotion of mushrooms.

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



Sec.1209.39  Duties.

    The Council shall have the following duties:
    (a) To meet not less than annually, and to organize and select from 
among its members a chairperson and such other officers as may be 
necessary;
    (b) To evaluate or develop, and submit to the Secretary for 
approval, promotion, research, consumer information, and industry 
information programs, plans, or projects;
    (c) To prepare for each fiscal year, and submit to the Secretary for 
approval at least 60 days prior to the beginning of each fiscal year, a 
budget of its anticipated expenses and disbursements in the 
administration of this subpart, as provided in Sec.2109.50.
    (d) To maintain such books and records, which shall be available to 
the Secretary for inspection and audit, and to prepare and submit such 
reports from time to time to the Secretary, as the Secretary may 
prescribe, and to make appropriate accounting with respect to the 
receipt and disbursement of all funds entrusted to it;

[[Page 105]]

    (e) To prepare and make public, at least annually, a report of its 
activities carried out, and an accounting for funds received and 
expended;
    (f) To cause its financial statements to be prepared in conformity 
with generally accepted accounting principles and to be audited by an 
independent certified public accountant in accordance with generally 
accepted auditing standards at least once each fiscal year and at such 
other times as the Secretary may request, and submit a copy of each such 
audit to the Secretary;
    (g) To give the Secretary the same notice of meetings of the Council 
as is given to members in order that the Secretary, or a representative 
of the Secretary, may attend such meetings;
    (h) To submit to the Secretary such information as may be requested 
pursuant to this subpart;
    (i) To keep minutes, books, and records that clearly reflect all the 
acts and transactions of the Council. Minutes of each Council meeting 
shall be promptly reported to the Secretary;
    (j) To act as intermediary between the Secretary and any producer or 
importer;
    (k) To follow the Department's equal opportunity/civil rights 
policies; and
    (l) To work to achieve an effective, continuous, and coordinated 
program of promotion, research, consumer information, and industry 
information designed to strengthen the mushroom industry's position in 
the marketplace, maintain and expand existing markets and uses for 
mushrooms, develop new markets and uses for mushrooms, and to carry out 
programs, plans, and projects designed to provide maximum benefits to 
the mushroom industry.

   Promotion, Research, Consumer Information, and Industry Information



Sec.1209.40  Programs, plans, and projects.

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

                        Expenses and Assessments



Sec.1209.50  Budget and expenses.

    (a)(1) At least 60 days prior to the beginning of each fiscal year, 
and as may

[[Page 106]]

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

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



Sec.1209.51  Assessments.

    (a) Any first handler initially purchasing, or otherwise placing 
into the current of commerce, mushrooms produced in the United States 
shall, in the manner as prescribed by the Council and approved by the 
Secretary, collect an assessment based upon the number of pounds of 
mushrooms marketed in the United States for the account of the producer, 
and remit the assessment to the Council.
    (b) The rate of assessment effective during any fiscal year shall be 
the rate specified in the budget for such fiscal year approved by the 
Secretary, except that:
    (1) The rate of assessment during the first year this subpart is in 
effect shall be one-quarter of one cent per pound of mushrooms marketed, 
or the equivalent thereof.

[[Page 107]]

    (2) The rate of assessment during the second year this subpart is in 
effect shall not exceed one-third of one cent per pound of mushrooms 
marketed, or the equivalent thereof.
    (3) The rate of assessment during the third year this subpart is in 
effect shall not exceed one-half of one cent per pound of mushrooms 
marketed, or the equivalent thereof.
    (4) The rate of assessment during each of the fourth and following 
years this subpart is in effect shall not exceed one cent per pound of 
mushrooms marketed, or the equivalent thereof.
    (5) The Council may change the rate of assessment for a fiscal year 
at any time with the approval of the Secretary as necessary to reflect 
changed circumstances, except that any such changed rate may not exceed 
the level of assessment specified in paragraphs (b)(1), (2), (3), or 
(4), whichever is applicable.
    (c) Any person marketing mushrooms of that person's own production 
to consumers in the United States, either directly or through retail or 
wholesale outlets, shall be considered a first handler and shall remit 
to the Council an assessment on such mushrooms at the rate per-pound 
then in effect, and in such form and manner prescribed by the Council.
    (d) Only one assessment shall be paid on each unit of mushrooms 
marketed.
    (e)(1) Each importer of mushrooms shall pay an assessment to the 
Council on mushrooms imported for marketing in the United States, 
through the U.S. Customs Service or in such other manner as may be 
established by rules and regulations approved by the Secretary.
    (2) The per-pound assessment rate for imported mushrooms shall be 
the same as the rate provided for mushrooms produced in the United 
States.
    (3) The import assessment shall be uniformly applied to imported 
mushrooms that are identified by the numbers, 0709.51.01 and 0709.59 in 
the Harmonized Tariff Schedule of the United States or any other number 
used to identify fresh mushrooms.
    (4) The assessments due on imported mushrooms shall be paid when the 
mushrooms are entered or withdrawn for consumption in the United States, 
or at such other time as may be established by rules and regulations 
prescribed by the Council and approved by the Secretary and under such 
procedures as are provided in such rules and regulations.
    (5) Only one assessment shall be paid on each unit of mushrooms 
imported.
    (f) The collection of assessments under this section shall commence 
on all mushrooms marketed in or imported into the United States on or 
after the date established by the Secretary, and shall continue until 
terminated by the Secretary. If the Council is not constituted on the 
date the first assessments are to be collected, the Secretary shall have 
the authority to receive assessments on behalf of the Council and may 
hold such assessments until the Council is constituted, then remit such 
assessments to the Council.
    (g)(1) Each person responsible for remitting assessments under 
paragraphs (a), (c), or (e) shall remit the amounts due from assessments 
to the Council on a monthly basis no later than the fifteenth day of the 
month following the month in which the mushrooms were marketed, in such 
manner as prescribed by the Council.
    (2)(i) A late payment charge shall be imposed on any person that 
fails to remit to the Council the total amount for which the person is 
liable on or before the payment due date established under this section. 
The amount of the late payment charge shall be prescribed in rules and 
regulations as approved by the Secretary.
    (ii) An additional charge shall be imposed on any person subject to 
a late payment charge, in the form of interest on the outstanding 
portion of any amount for which the person is liable. The rate of 
interest shall be prescribed in rules and regulations as approved by the 
Secretary.
    (3) Any assessment that is determined to be owing at a date later 
than the payment due established under this section, due to a person's 
failure to submit a report to the Council by the payment due date, shall 
be considered to have been payable on the payment due date. Under such a 
situation, paragraphs (g)(2)(i) and (g)(2)(ii) of this section shall be 
applicable.

[[Page 108]]

    (h) The Council, with the approval of the Secretary, may enter into 
agreements authorizing other organizations to collect assessments in its 
behalf. Any such organization shall be required to maintain the 
confidentiality of such information as is required by the Council for 
collection purposes. Any reimbursement by the Council for such services 
shall be based on reasonable charges for services rendered.
    (i) The Council is hereby authorized to accept advance payment of 
assessments for the fiscal year by any person, that shall be credited 
toward any amount for which such person may become liable. The Council 
shall not be obligated to pay interest on any advance payment.

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



Sec.1209.52  Exemption from assessment.

    (a) The following persons shall be exempt from assessments under 
this part:
    (1) A person who produces or imports, on average, 500,000 pounds or 
less of mushrooms annually shall be exempt from assessments under this 
part.
    (2) [Reserved]
    (b) To claim such exemption, such persons shall apply to the 
Council, in the form and manner prescribed in the rules and regulations.
    (c) Mushrooms produced in the United States that are exported are 
exempt from assessment and are subject to such safeguards as prescribed 
in rules and regulations to prevent improper use of this exemption.
    (d) Domestic and imported mushrooms used for processing are exempt 
from assessment and are subject to such safeguards as prescribed in 
rules and regulations to prevent improper use of this exemption.

[58 FR 3449, Jan. 8, 1993, as amended at 70 FR 2756, Jan. 14, 2005; 80 
FR 82025, Dec. 31, 2015]



Sec.1209.53  Influencing governmental action.

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

                       Reports, Books and Records



Sec.1209.60  Reports.

    (a) Each producer marketing mushrooms of that person's own 
production directly to consumers, and each first handler responsible for 
the collection of assessments under Sec.1209.51(a) shall be required 
to report monthly to the Council, on a form provided by the Council, 
such information as may be required under this subpart or any rules and 
regulations issued thereunder. Such information shall include, but not 
be limited to, the following:
    (1) The first handler's name, address, and telephone number;
    (2) Date of report, which is also the date of payment to the 
Council;
    (3) Period covered by the report;
    (4) The number of pounds of mushrooms purchased, initially 
transferred, or that in any other manner are subject to the collection 
of assessments, and a copy of a certificate of exemption, claiming 
exemption under Sec.1209.52 from those who claim such exemptions;
    (5) The amount of assessments remitted; and
    (6) The basis, if necessary, to show why the remittance is less than 
the number of pounds of mushrooms determined under paragraph (a)(4) 
multiplied by the applicable assessment rate.
    (b) If determined necessary by the Council and approved by the 
Secretary, each importer shall file with the Council periodic reports, 
on a form provided by the Council, containing at least the following 
information:
    (1) The importer's name, address, and telephone number;
    (2) The quantity of mushrooms entered or withdrawn for consumption 
in the United States during the period covered by the report; and
    (3) The amount of assessments paid to the U.S. Customs Service at 
the time of such entry or withdrawal.
    (c) The words final report shall be shown on the last report at the 
end of each fiscal year.

[[Page 109]]



Sec.1209.61  Books and records.

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



Sec.1209.62  Confidential treatment.

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

                              Miscellaneous



Sec.1209.70  Right of the Secretary.

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



Sec.1209.71  Suspension or termination.

    (a) Whenever the Secretary finds that this subpart or any provision 
thereof obstructs or does not tend to effectuate the declared policy of 
the Act, the Secretary shall terminate or suspend the operation of this 
subpart or such provision thereof.
    (b)(1) Five years after the date on which this subpart becomes 
effective, the Secretary shall conduct a referendum among producers and 
importers to determine whether they favor continuation, termination, or 
suspension of this subpart.
    (2) Effective beginning three years after the date on which this 
subpart becomes effective, the Secretary, on request of a representative 
group comprising 30 percent or more of the number of mushroom producers 
and importers, may conduct a referendum to determine whether producers 
and importers favor termination or suspension of this subpart.
    (3) Whenever the Secretary determines that suspension or termination 
of this subpart is favored by a majority of the mushroom producers and 
importers voting in a referendum under paragraphs (b) (1) or (2) who, 
during a representative period determined by the Secretary, have been 
engaged in producing and importing mushrooms and who, on average, 
annually produced and imported more than 50 percent of the volume of 
mushrooms produced and imported by all those producers and importers 
voting in the referendum, the Secretary shall:
    (i) Suspend or terminate, as appropriate, collection of assessments 
within six months after making such determination; and
    (ii) Suspend or terminate, as appropriate, all activities under this 
subpart

[[Page 110]]

in an orderly manner as soon as practicable.
    (4) Referenda conducted under this subsection shall be conducted in 
such manner as the Secretary may prescribe.



Sec.1209.72  Proceedings after termination.

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



Sec.1209.73  Effect of termination or amendment.

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



Sec.1209.74  Personal liability.

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



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

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



Sec.1209.76  Amendments.

    Amendments to this subpart may be proposed, from time to time, by 
the

[[Page 111]]

Council or by any interested person affected by the provisions of the 
Act, including the Secretary.



Sec.1209.77  Separability.

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



                  Subpart B_Administrative Requirements

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

                               Definitions



Sec.1209.200  Terms defined.

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

                          Nomination Procedures



Sec.1209.230  Reallocation of Council members.

    Pursuant to Sec.1209.30, the number of members on the Council 
shall be as follows:
    (a) Region 1: All other States including the District of Columbia 
and the Commonwealth of Puerto Rico except for Pennsylvania and 
California--3 Members.
    (b) Region 2: The State of Pennsylvania--4 Members.
    (c) Region 3: The State of California--1 Member.
    (d) Region 4: Importers--1 Member.

[84 FR 17062, Apr. 24, 2019]



Sec.1209.231  Nominations.

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



Sec.1209.233  Regional caucus chairpersons.

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



Sec.1209.235  Mail balloting.

    (a) After the initial regional caucuses, the Council may conduct 
nominations of individuals as candidates for

[[Page 112]]

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



Sec.1209.237  Appointment.

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

                                 General



Sec.1209.239  Financial statements.

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

                               Assessments



Sec.1209.251  Payment of assessments.

    (a) Each first handler responsible for collecting assessments on 
domestic mushrooms shall collect the amounts assessed and remit such 
amounts to the Council on a monthly basis not later than the fifteenth 
day of the month following the month in which the mushrooms were 
marketed to or through the first handler.
    (b) Each producer responsible for paying any assessment amount on 
the producer's own mushrooms shall remit

[[Page 113]]

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

[[Page 114]]



Sec.1209.252  Exemptions and exemption procedures.

    (a) Types of exemptions and requirements. (1) Any person who 
produces or imports, on average, 500,000 pounds or less of mushrooms 
annually and who desires to claim an exemption from assessments during a 
fiscal year shall apply to the Council, on a form provided by the 
Council, for a Certificate of Exemption. The producer or importer shall 
certify that the person's production or importation of mushrooms shall 
not exceed 500,000 pounds, on average, for the fiscal year for which the 
exemption is claimed. An average shall be calculated by averaging a 
person's estimated production or importation for the fiscal year for 
which an exemption is claimed with the person's production or 
importation in the preceding fiscal year.
    (2) In addition to the exemption provided for in Sec.1209.52, a 
producer or importer who operates under an approved National Organic 
Program (7 CFR part 205) (NOP) organic production or handling system 
plan may be exempt from the payment of assessments under this part, 
provided that:
    (i) Only agricultural products certified as ``organic'' or ``100 
percent organic'' (as defined in the NOP) are eligible for exemption;
    (ii) The exemption shall apply to all certified ``organic'' or ``100 
percent organic'' (as defined in the NOP) products of a producer or 
importer regardless of whether the agricultural commodity subject to the 
exemption is produced or imported by a person that also produces or 
imports conventional or nonorganic agricultural products of the same 
agricultural commodity as that for which the exemption is claimed;
    (iii) The producer or importer maintains a valid certificate of 
organic operation as issued under the Organic Foods Production Act of 
1990 (7 U.S.C. 6501-6522)(OFPA) and the NOP regulations issued under 
OFPA (7 CFR part 205); and
    (iv) Any producer or importer so exempted shall continue to be 
obligated to pay assessments under this part that are associated with 
any agricultural products that do not qualify for an exemption under 
this section.
    (3) To apply for an exemption for organic mushrooms:
    (i) An eligible mushroom producer shall submit a request for 
exemption to the Council on an Organic Exemption Request Form (Form AMS-
15) at any time initially, and annually thereafter on or before January 
1, as long as the producer continues to be eligible for the exemption.
    (ii) A producer request for exemption shall include the following:
    (A) The applicant's full name, company name, address, telephone and 
fax numbers, and email address;
    (B) Certification that the applicant maintains a valid certificate 
of organic operation issued under the OFPA and the NOP;
    (C) Certification that the applicant produces organic products 
eligible to be labeled ``organic'' or ``100 percent organic'' under the 
NOP;
    (D) A requirement that the applicant attach a copy of their 
certificate of organic operation issued by a USDA-accredited certifying 
agent under the OFPA and the NOP;
    (E) Certification, as evidenced by signature and date, that all 
information provided by the applicant is true; and
    (F) Such other information as may be required by the Council, with 
the approval of the Secretary.
    (iii) If a producer complies with the requirements of this section, 
the Council will grant an assessment exemption and issue a Certificate 
of Exemption to the producer within 30 days. If the application is 
disapproved, the Council will notify the applicant of the reason(s) for 
disapproval within the same timeframe.
    (iv) An eligible mushroom importer shall submit a request for 
exemption from assessment on imported certified ``organic'' or ``100 
percent organic'' mushrooms, or mushrooms certified as ``organic'' or 
``100 percent organic'' under a U.S. equivalency arrangement established 
under the NOP, on an Organic Exemption Request Form (Form AMS-15) at any 
time initially, and annually thereafter on or before January 1, as long 
as the importer continues to be eligible for the exemption. This 
documentation shall include the same information required of producers 
in paragraph (a)(4)(ii) of this section. If

[[Page 115]]

the importer complies with the requirements of this section, the Council 
will grant the exemption and issue a Certificate of Exemption to the 
importer. If Customs collects the assessment on exempt product that is 
identified as ``organic'' by a number in the Harmonized Tariff Schedule, 
the Council must reimburse the exempt importer the assessments paid upon 
receipt of such assessments from Customs. For all other exempt organic 
product for which Customs collects the assessment, the importer may 
apply to the Council for a reimbursement of assessments paid, and the 
importer must submit satisfactory proof to the Council that the importer 
paid the assessment on exempt organic product. Any importer so exempted 
shall continue to be obligated to pay assessments under this part that 
are associated with any imported agricultural products that do not 
qualify for an exemption under this section.
    (v) The exemption will apply immediately following the issuance of 
the Certificate of Exemption.
    (b) On receipt of an application, the Council shall determine 
whether an exemption may be granted. The Council then will issue, if 
deemed appropriate, a certificate of exemption to each person that is 
eligible to receive one. Each person who is exempt from assessment must 
provide an exemption number to the first handler in order not to be 
subject to collection of an assessment on mushrooms. First handlers and 
importers, except as otherwise authorized by the Council, shall maintain 
records showing the exemptee's name and address along with the exemption 
number assigned by the Council. Importers who are exempt from assessment 
shall be eligible for reimbursement of assessments collected by the U.S. 
Customs Service and shall apply to the Council for reimbursement of such 
assessments paid.
    (c) Any person who desires to renew the exemption from assessments 
for a subsequent fiscal year shall reapply to the Council, on a form 
provided by the Council, for a certificate of exemption.
    (d) The Council may require persons receiving an exemption from 
assessments to provide to the Council reports on the disposition of 
exempt mushrooms.

[58 FR 3449, Jan. 8, 1993, as amended at 70 FR 2756, Jan. 14, 2005; 80 
FR 82026, Dec. 31, 2015]

                                 Reports



Sec.1209.260  Reports.

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

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

                              Miscellaneous



Sec.1209.280  OMB control numbers.

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



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

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



Sec.1209.300  General.

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

[74 FR 18464, Apr. 23, 2009]

[[Page 116]]



Sec.1209.301  Definitions.

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



Sec.1209.302  Voting.

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

[[Page 117]]

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



Sec.1209.303  Instructions.

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



Sec.1209.304  Subagents.

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



Sec.1209.305  Ballots.

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



Sec.1209.306  Referendum report.

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



Sec.1209.307  Confidential information.

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

[[Page 118]]



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



            Subpart A_Watermelon Research and Promotion Plan

                               Definitions

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

                   National Watermelon Promotion Board

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

                         Research and Promotion

1210.330 Policy and objective.
1210.331 Programs and projects.

                        Expenses and Assessments

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

                       Reports, Books, and Records

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

                              Miscellaneous

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

                     Subpart B_Nominating Procedures

                      Producer and Handler Members

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

                            Importer Members

1210.404 Importer member nomination and selection.

                              Public Member

1210.405 Public member nominations and selection.

                     Subpart C_Rules and Regulations

                               Definitions

1210.500 Terms defined.

                                 General

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

                               Assessments

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

                                 Records

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

                              Miscellaneous

1210.540 OMB assigned numbers.

                     Subpart D_Referendum Procedures

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

    Authority: 7 U.S.C. 4901-4916 and 7 U.S.C. 7401.

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

[[Page 119]]



            Subpart A_Watermelon Research and Promotion Plan

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

                               Definitions



Sec.1210.301  Secretary.

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



Sec.1210.302  Act.

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

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



Sec.1210.303  Plan.

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



Sec.1210.304  Board.

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



Sec.1210.305  Watermelon.

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

[60 FR 10797, Feb. 28, 1995]



Sec.1210.306  Producer.

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

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



Sec.1210.307  Handle.

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



Sec.1210.308  Handler.

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



Sec.1210.309  Person.

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



Sec.1210.310  Fiscal period and marketing year.

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



Sec.1210.311  Programs and projects.

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



Sec.1210.312  Promotion.

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



Sec.1210.313  Research.

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

[[Page 120]]



Sec.1210.314  Importer.

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

[60 FR 10797, Feb. 28, 1995]



Sec.1210.315  United States.

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

[60 FR 10797, Feb. 28, 1995]

                   National Watermelon Promotion Board



Sec.1210.320  Establishment and membership.

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

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

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

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

[[Page 121]]

    (f) The Board consists of 14 producers, 14 handlers, at least one 
importer, and one public member appointed by the Secretary.

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



Sec.1210.321  Nominations and selection.

    The Secretary shall appoint the members of the Board from 
nominations to be made in the following manner:
    (a) There shall be two individuals nominated for each vacant 
position.
    (b) The Board shall issue a call for nominations by February first 
of each year in which an election is to be held. The call shall include 
at a minimum, the following information:
    (1) A list of the vacancies and qualifications as to producers and 
handlers by district and to importers nationally for which nominees may 
be submitted.
    (2) The date by which the nominees shall be submitted to the 
Secretary for consideration to be in compliance with Sec.1210.323 of 
this subpart.
    (3) A list of those States, by district, entitled to participate in 
the nomination process.
    (4) The date, time, and location of any next scheduled meeting of 
the Board, national and State producer or handler associations, 
importers, and district conventions, if any.
    (c) Nominations for producer and handler positions that will become 
vacant shall be made by district convention in the district entitled to 
nominate. Notice of such convention shall be publicized to all producers 
and handlers within such district, and the Secretary at least ten days 
prior to said event. The notice shall have attached to it the call for 
nominations from the Board. The responsibility for convening and 
publicizing the district convention shall be that of the then members of 
the Board from that district.
    (d) Nominations for importer positions that become vacant may be 
made by mail ballot, nomination conventions, or by other means 
prescribed by the Secretary. The Board shall provide notice of such 
vacancies and the nomination process to all importers through press 
releases and any other available means as well as direct mailing to 
known importers. All importers may participate in the nomination 
process. A person who both imports and handles watermelons may 
participate in the nomination process and serve on the Board as either 
an importer or handler, but not both.
    (e) All producers and handlers within the district may participate 
in the convention: Provided, That a person that produces and handles 
watermelons may vote for handler members only if the producer purchased 
watermelons from other producers, in a combined total volume that is 
equal to 25 percent or more of the producer's own production; or the 
combined total volume of watermelon handled by the producer from the 
producer's own production and purchases from other producer's production 
is more than 50 percent of the producer's own production; and provided 
further, That if a producer or handler is engaged in the production or 
handling of watermelons in more than one State or district, the producer 
or handler shall participate within the State or district in which the 
producer or handler so elects in writing to the Board and such election 
shall remain controlling until revoked in writing to the Board.
    (f) The district convention chairperson shall conduct the selection 
process for the nominees in accordance with procedures to be adopted at 
each such convention, subject to requirements set in Sec.1210.321(e).
    (1) No State in a multi-State district shall have more than three 
producer and handler representatives concurrently on the Board.
    (2) Each State represented at the district convention shall have one 
vote for each producer position and one vote for each handler position 
from the District on the Board, which vote shall be determined by the 
producers and handlers from that State by majority vote. Each State 
shall further have an additional vote for each five hundred thousand 
hundredweight volume as determined by the three year average annual crop 
production summary reports of the USDA, or if such reports are not 
published, then the three year average of the Board assessment reports; 
Provided, That for the first two calls for nominees, the USDA Crop 
Production Annual Summary Reports for 1979, 1980,

[[Page 122]]

and 1981 will be controlling as to any additional production volume 
votes.

[54 FR 24545, June 8, 1989, as amended at 60 FR 10798, Feb. 28, 1995; 79 
FR 17852, Mar. 31, 2014; 85 FR 56474, Sept. 14, 2020]



Sec.1210.322  Term of office.

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

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



Sec.1210.323  Acceptance.

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



Sec.1210.324  Vacancies.

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



Sec.1210.325  Procedure.

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

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



Sec.1210.326  Compensation and reimbursement.

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



Sec.1210.327  Powers.

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

[[Page 123]]

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



Sec.1210.328  Duties.

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

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

                         Research and Promotion



Sec.1210.330  Policy and objective.

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

[[Page 124]]

    (c) Develop new or improved markets.

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



Sec.1210.331  Programs and projects.

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

                        Expenses and Assessments



Sec.1210.340  Budget and expenses.

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

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



Sec.1210.341  Assessments.

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

[[Page 125]]

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

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



Sec.1210.342  Exemption from assessment.

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

[[Page 126]]

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

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



Sec.1210.343  [Reserved]



Sec.1210.344  Operating reserve.

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

                       Reports, Books, and Records



Sec.1210.350  Reports.

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

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



Sec.1210.351  Books and records.

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

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



Sec.1210.352  Confidential treatment.

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

[[Page 127]]

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

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

                              Miscellaneous



Sec.1210.360  Right of the Secretary.

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



Sec.1210.361  Personal liability.

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



Sec.1210.362  Influencing government action.

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

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



Sec.1210.363  Suspension or termination.

    (a) Whenever the Secretary finds that this Plan or any provision 
thereof obstructs or does not tend to effectuate the declared policy of 
the Act, the Secretary shall terminate or suspend the operation of this 
Plan or such provision thereof.
    (b) The Secretary may conduct a referendum at any time and shall 
hold a referendum on request of the Board or at least 10 percent of the 
combined total of the watermelon producers, handlers, and importers to 
determine if watermelon producers, handlers, and importers favor 
termination or suspension of this Plan. The Secretary shall suspend or 
terminate this Plan at the end of the marketing year whenever the 
Secretary determines that the suspension or termination is favored by a 
majority of the watermelon producers, handlers, and importers voting in 
such referendum who, during a representative period determined by the 
Secretary, have been engaged in the production, handling, or importing 
of watermelons and who produced, handled, or imported more than 50 
percent of the combined total of the volume of watermelons produced, 
handled, or imported by those producers, handlers, and importers voting 
in the referendum. Any such referendum shall be conducted by mail 
ballot.

[54 FR 24545, June 8, 1989, as amended at 60 FR 10799, Feb. 28, 1995; 79 
FR 17852, Mar. 31, 2014]



Sec.1210.364  Proceedings after termination.

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

[[Page 128]]

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

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



Sec.1210.365  Effect of termination or amendment.

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



Sec.1210.366  Separability.

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



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

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



                     Subpart B_Nominating Procedures

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

                      Producer and Handler Members



Sec.1210.400  Terms defined.

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



Sec.1210.401  District conventions.

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

[[Page 129]]

    (2) A typed copy of the district convention's minutes.

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

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



Sec.1210.402  Voter and board member nominee eligibility.

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

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



Sec.1210.403  Voting procedures.

    (a) Proxy voting by producers and handlers for producer and handler 
nominees shall be permitted at all district conventions: Provided, That 
producers may cast proxy votes for producers only, and handlers may cast 
proxy votes for handlers only. In non-multi-State districts, proxy 
voting shall be permitted for all producer and handler nominee balloting 
to determine the districts' nominees. In multi-State districts, proxy 
voting shall be permitted for all producers and handlers participating 
in a State's balloting to determine the State's nominees. No other proxy 
voting, such as for district convention chairperson, shall be allowed. 
Any person wanting to cast proxy votes must demonstrate authorization to 
do so. Authority to cast a proxy vote on behalf of another person

[[Page 130]]

shall be demonstrated through documentation containing:
    (1) The proxy voter's name, address, and telephone number;
    (2) Signature and date signed;
    (3) A certification identifying the proxy voter as a producer or a 
handler; and
    (4) A statement identifying the person being given authority by the 
proxy voter to cast the proxy vote.

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

[[Page 131]]

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

[54 FR 38205, Sept. 15, 1989, as amended at 58 FR 3355, Jan. 8, 1993; 85 
FR 56474, Sept. 14, 2020]

                            Importer Members



Sec.1210.404  Importer member nomination and selection.

    (a) The Board shall include one or more representatives of 
importers, who shall be appointed by the Secretary from nominations 
submitted by watermelon importers. Importers' representation on the 
Board shall be proportionate to the percentage of assessments paid by 
importers to the Board, except that at least one representative of 
importers shall serve on the Board if importers are subject to the Plan. 
Nominations for importer positions that become vacant shall be made by 
importers at nomination conventions or by mail ballot.
    (b) The initial nomination of importer members shall be made not 
later than 90 days after the Plan is amended.
    (c) There shall be two individuals nominated for each vacant 
position. The importer receiving the highest number of votes for a 
vacancy shall be the first choice nominee, and the importer receiving 
the second highest number of votes shall be the second choice nominee 
submitted to the Secretary.
    (d) Any individual, group of individuals, partnership, corporation, 
association, cooperative or any other entity which is engaged in the 
production, first handling or importing of watermelons is considered a 
person and as such is entitled to only one vote, except that such person 
may cast proxy votes as provided in paragraph (e)(1) of this section.
    (e) Nomination Conventions. If nominations are made by nomination 
conventions, the Board shall widely publicize such conventions and 
provide importers and the Secretary at least 10 days notice prior to 
each convention.
    (1) Proxy voting by importers shall be permitted at all conventions. 
Any person wanting to cast proxy votes must demonstrate authorization to 
do so. Authority to cast a proxy vote on behalf of another person shall 
be demonstrated through documentation containing:
    (i) The proxy voter's name, address, and telephone number;
    (ii) Signature and date signed;

[[Page 132]]

    (iii) A certification identifying the proxy voter as an importer; 
and
    (iv) A statement identifying the person being given authority by the 
proxy voter to cast the proxy vote.
    (2) The Board shall provide to the Secretary a typed copy of each 
convention's minutes and shall arrange for completion of qualification 
statements and other specified information by each nominee and forward 
such to the Secretary within 14 calendar days of completion of a 
convention.
    (f) Mail balloting. If nominations are conducted by mail ballot, the 
Board shall request importers to submit nominations of eligible 
importers. It is the importer's responsibility to prove the individual's 
eligibility. After the names of nominees are received, the Board shall 
print ballots and ask eligible importers to vote to nominate their 
candidates. After the vote is received, the Board shall tabulate the 
results and shall send to the Department the nominees in order of 
preference. The Board shall provide the Secretary with a report on the 
results, number of importers participating in the vote, and the volume 
of imports, and shall arrange for completion of qualification statements 
and other specified information by each nominee and forward such to the 
Secretary within 14 calendar days of receiving the ballots.
    (g) A person who both imports and handles watermelons may 
participate in the nomination process and serve on the Board as either 
an importer or handler, but not both.

[60 FR 10800, Feb. 28, 1995, as amended at 79 FR 17852, Mar. 31, 2014]

                              Public Member



Sec.1210.405  Public member nominations and selection.

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

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



                     Subpart C_Rules and Regulations

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

                               Definitions



Sec.1210.500  Terms defined.

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

                                 General



Sec.1210.501  Realignment of districts.

    In accordance with Sec.1210.320(c) of the Plan, the districts 
shall be as follows:
    (a) District 1--The State of Florida.
    (b) District 2--The State of Georgia.
    (c) District 3--The States of Alabama, Arkansas, Louisiana, 
Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, and 
Texas.
    (d) District 4--The States of Connecticut, Delaware, Illinois, 
Indiana, Kentucky, Maryland, Massachusetts, Maine, Michigan, New 
Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, 
Vermont, Virginia, West Virginia, Wisconsin, and Washington, DC.
    (g) District 5--The States of Alaska, Arizona, California, Colorado, 
Hawaii,

[[Page 133]]

Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, Nevada, New 
Mexico, North Dakota, Oregon, South Dakota, Utah, Washington, and 
Wyoming.

[85 FR 56475, Sept. 14, 2020]



Sec.1210.502  Board members.

    The Board consists of 10 producers, 10 handlers, nine importers, and 
one public member appointed by the Secretary.

[85 FR 56475, Sept. 14, 2020]



Sec.1210.504  Contracts.

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



Sec.1210.505  Department of Agriculture costs.

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

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

                               Assessments



Sec.1210.515  Levy of assessments.

    (a) An assessment of three cents per hundredweight shall be levied 
on all watermelons produced for ultimate consumption as human food, and 
an assessment of three cents per hundredweight shall be levied on all 
watermelons first handled for ultimate consumption as human food. An 
assessment of six cents per hundredweight shall be levied on all 
watermelons imported into the United States for ultimate consumption as 
human food at the time of entry in the United States.
    (b) The import assessment shall be uniformly applied to imported 
watermelons that are identified by the numbers 0807.11.30 and 0807.11.40 
in the Harmonized Tariff Scheudle of the United States of any other 
number used to identify fresh watermelons for consumption as human food. 
The U.S. Customs Service (USCS) will collect assessments on such 
watermelons at the time of entry and will forward such assessment as per 
the agreement between USCS and USDA. Any importer or agent who is exempt 
from payment of assessments may submit the Board adequate proof of the 
volume handled by such importer for the exemption to be granted.
    (c) Watermelons used for non-human food purposes are exempt from 
assessment requirements but are subject to the safeguard provisions of 
Sec.1210.521.

[55 FR 13256, Apr. 10, 1990, as amended at 60 FR 10800, Feb. 28, 1995; 
72 FR 41428, July 30, 2007; 72 FR 61051, Oct. 29, 2007]



Sec.1210.516  Exemption for organic watermelons.

    (a) A producer or handler who operates under an approved National 
Organic Program (7 CFR part 205) (NOP) organic production or handling 
system plan may be exempt from the payment of assessments under this 
part, provided that:
    (1) Only agricultural products certified as ``organic'' or ``100 
percent organic'' (as defined in the NOP) are eligible for exemption;
    (2) The exemption shall apply to all certified ``organic'' or ``100 
percent organic'' (as defined in the NOP) products of a producer or 
handler regardless of whether the agricultural commodity subject to the 
exemption is produced or handled by a person that also produces or 
handles conventional or nonorganic

[[Page 134]]

agricultural products of the same agricultural commodity as that for 
which the exemption is claimed;
    (3) The producer or handler maintains a valid certificate of organic 
operation as issued under the Organic Foods Production Act of 1990 (7 
U.S.C. 6501-6522)(OFPA) and the NOP regulations issued under the OFPA (7 
CFR part 205); and
    (4) Any producer or handler so exempted shall continue to be 
obligated to pay assessments under this part that are associated with 
any agricultural products that do not qualify for an exemption under 
this section.
    (b) To apply for exemption under this section, an eligible producer 
or handler shall submit a request to the Board on an Organic Exemption 
Request Form (Form AMS-15) at any time during the year initially, and 
annually thereafter on or before January 1, for as long as the producer 
or handler continues to be eligible for the exemption.
    (c) The request for exemption shall include the following:
    (1) The applicant's full name, company name, address, telephone and 
fax numbers, and email address;
    (2) Certification that the applicant maintains a valid certificate 
of organic operation issued under the OFPA and the NOP;
    (3) Certification that the applicant produces or handles organic 
products eligible to be labeled ``organic'' or ``100 percent organic'' 
under the NOP;
    (4) A requirement that the applicant attach a copy of their 
certificate of organic operation issued by a USDA-accredited certifying 
agent under the OFPA and the NOP;
    (5) Certification, as evidenced by signature and date, that all 
information provided by the applicant is true; and
    (6) Such other information as may be required by the Board, with the 
approval of the Secretary.
    (d) If a producer or handler complies with the requirements of this 
section, the Board will grant an assessment exemption and issue a 
Certificate of Exemption to the producer or handler within 30 days. If 
the application is disapproved, the Board will notify the applicant of 
the reason(s) for disapproval within the same timeframe.
    (e) The producer shall provide a copy of the Certificate of 
Exemption to each handler to whom the producer sells watermelons. The 
handler shall maintain records showing the exempt producer's name and 
address and the exemption number assigned by the Board.
    (f) An importer who imports products that are eligible to be labeled 
as ``organic'' or ``100 percent organic'' under the NOP, or certified as 
``organic'' or ``100 percent organic'' under a U.S. equivalency 
arrangement established under the NOP, may be exempt from the payment of 
assessments on those products. Such importer may submit documentation to 
the Board and request an exemption from assessment on certified 
``organic'' or ``100 percent organic'' watermelons on an Organic 
Exemption Request Form (Form AMS-15) at any time initially, and annually 
thereafter on or before January 1, as long as the importer continues to 
be eligible for the exemption. This documentation shall include the same 
information required of producers in paragraph (c) of this section. If 
the importer complies with the requirements of this section, the Board 
will grant the exemption and issue a Certificate of Exemption to the 
importer. If Customs collects the assessment on exempt product that is 
identified as ``organic'' by a number in the Harmonized Tariff Schedule, 
the Board must reimburse the exempt importer the assessments paid upon 
receipt of such assessments from Customs. For all other exempt organic 
product for which Customs collects the assessment, the importer may 
apply to the Board for a reimbursement of assessments paid, and the 
importer must submit satisfactory proof to the Board that the importer 
paid the assessment on exempt organic product. Any importer so exempted 
shall continue to be obligated to pay assessments under this part that 
are associated with any imported agricultural products that do not 
qualify for an exemption under this section.
    (g) The exemption will apply immediately following the issuance of 
the Certificate of Exemption.

[70 FR 2756, Jan. 14, 2005, as amended at 80 FR 82026, Dec. 31, 2015]

[[Page 135]]



Sec.1210.517  Determination of handler.

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

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



Sec.1210.518  Payment of assessments.

    (a) Time of payment. The assessment on domestically produced 
watermelons shall become due at the time the first handler handles the 
watermelons for non-exempt purposes. The assessment

[[Page 136]]

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

[[Page 137]]

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

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



Sec.1210.519  Failure to report and remit.

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

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



Sec.1210.520  Refunds.

    Each importer of less than 150,000 pounds of watermelons during any 
calendar year shall be entitled to apply for a refund of the assessments 
paid in an amount equal to the amount paid by domestic producers.
    (a) Application form. The Board shall make available to all 
importers a refund application form.
    (b) Submission of refund application to the Board. The refund 
application form shall be submitted to the Board within 90 days of the 
last day of the year the watermelons were actually imported.

[[Page 138]]

The refund application form shall contain the following information:
    (1) Importer's name and address;
    (2) Number of hundredweight of watermelon on which refund is 
requested;
    (3) Total amount to be refunded;
    (4) Proof of payment as described below; and
    (5) Importer's signature.
    (c) Proof of payment of assessment. Evidence of payment of 
assessments satisfactory to the Board shall accompany the importer's 
refund application. An importer must submit a copy of the importer's 
report or a cancelled check. Evidence submitted with a refund 
application shall not be returned to the applicant.
    (d) Payment of refund. Immediately after receiving the properly 
executed application for refund, the Board shall make remittance to the 
applicant.

[60 FR 10801, Feb. 28, 1995]



Sec.1210.521  Reports of disposition of exempted watermelons.

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

[60 FR 10801, Feb. 28, 1995]

                                 Records



Sec.1210.530  Retention period for records.

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

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



Sec.1210.531  Availability of records.

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

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



Sec.1210.532  Confidential books, records, and reports.

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

[60 FR 10801, Feb. 28, 1995]

                              Miscellaneous



Sec.1210.540  OMB assigned numbers.

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

[58 FR 3356, Jan. 8, 1993]



                     Subpart D_Referendum Procedures

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



Sec.1210.600  General.

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



Sec.1210.601  Definitions.

    Unless otherwise defined in this section, the definition of terms 
used in

[[Page 139]]

these procedures shall have the same meaning as the definitions in the 
Plan.
    (a) Administrator means the Administrator of the Agricultural 
Marketing Service, with power to redelegate, or any officer or employee 
of the Department to whom authority has been delegated or may hereafter 
be delegated to act in the Administrator's stead.
    (b) Department means the United States Department of Agriculture.
    (c) Eligible handler means any person (except a common contract 
carrier of watermelons owned by another person) who handles watermelons, 
including a producer who handles watermelons of the producer's own 
production, subject to the provisions of Sec.1210.602(a) of this 
chapter, who handles watermelons as a person performing a handling 
function and either:
    (1) Takes title or possession of watermelons from a producer and 
directs the grading, packing, transporting, and selling of the 
watermelons in the current of commerce;
    (2) Purchases watermelons from producers;
    (3) Purchases watermelons from handlers;
    (4) Purchases watermelons from importers; or
    (5) Arranges the sale or transfer of watermelons from one party to 
another and takes title or possession of the watermelons: Provided, That 
harvest crews and common carriers who collect and transport watermelons 
from the field to a handler are not handlers and that retailers, 
wholesale retailers, foodservice distributors, and foodservice operators 
are not handlers.
    (d) Eligible importer means any person who imports 150,000 pounds or 
more watermelons annually into the United States as principal or as an 
agent, broker, or consignee for any person who produces watermelons 
outside the United States for sale in the United States. An importer who 
imports less than 150,000 pounds of watermelons annually and did not 
apply for and receive reimbursement of assessments is also an eligible 
importer.
    (e) Eligible producer means any person who is engaged in the growing 
of 10 or more acres of watermelons, including any person who owns or 
shares the ownership and risk of loss of such watermelon crop. A person 
who shares the ownership and risk of loss includes a person who:
    (1) Owns and farms land, resulting in ownership, by said producer, 
of the watermelons produced thereon;
    (2) Rents and farms land, resulting in ownership, by said producer, 
of all or a portion of the watermelons produced thereon; or
    (3) Owns land which said producer does not farm and, as rental for 
such land, obtains the ownership of a portion of the watermelons 
produced thereon. Ownership of, or leasehold interest in land, and the 
acquisition, in any manner other than set forth in this subpart, of 
legal title to the watermelons grown on said land, shall not be deemed 
to result in such owners or lessees becoming producers. Persons who 
produce watermelons for non-food uses are not producers for the purposes 
of this subpart.
    (f) Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other entity. For the 
purpose of this definition, the term partnership includes, but is not 
limited to:
    (1) A husband and wife who have title to, or leasehold interest in, 
land as tenants in common, joint tenants, tenants by the entirety, or, 
under community property laws, as community property, and
    (2) So-called joint ventures wherein one or more parties to the 
agreement, informal or otherwise, contributed land and others 
contributed capital, labor, management, equipment, or other services, or 
any variation of such contributions by two or more parties, so that it 
results in the production, handling, or importation of watermelons for 
market and the authority to transfer title to the watermelons so 
produced, handled, or imported.
    (g) Referendum agent or agent means the individual or individuals 
designated by the Secretary to conduct the referendum.
    (h) Representative period means the period designated by the 
Secretary pursuant to the Act.

[[Page 140]]



Sec.1210.602  Voting.

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

[66 FR 56388, Nov. 7, 2001, as amended at 79 FR 17852, Mar. 31, 2014]



Sec.1210.603  Instructions.

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



Sec.1210.604  Subagents.

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



Sec.1210.605  Ballots.

    The referendum agent and subagents shall accept all ballots cast. 
However, if an agent or subagent deems that a ballot should be 
questioned for any reason, the agent or subagent shall endorse above 
their signature, on the ballot, a statement to the effect that such 
ballot was questioned, by whom questioned, why the ballot was 
questioned, the results of any investigation made with respect to the 
questionable ballot,

[[Page 141]]

and the disposition of the questionable ballot. Ballots invalid under 
this subpart shall not be counted.



Sec.1210.606  Referendum report.

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



Sec.1210.607  Confidential information.

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



PART 1212_HONEY PACKERS AND IMPORTERS RESEARCH, PROMOTION, CONSUMER
EDUCATION AND INDUSTRY INFORMATION ORDER--Table of Contents



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

                               Definitions

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

                          National Honey Board

1212.40 Establishment and membership.
1212.41 Term of office.
1212.42 Nominations and appointments.
1212.43 Removal and vacancies.
1212.44 Procedure.
1212.45 Reimbursement and attendance.
1212.46 Powers.
1212.47 Duties.
1212.48 Reapportionment of Board membership.

                        Expenses and Assessments

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

                  Promotion, Research, and Information

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

                       Reports, Books, and Records

1212.70 Reports.
1217.71 Book and records.
1212.72 Confidential treatment.

                              Miscellaneous

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

                     Subpart B_Referendum Procedures

1212.100 General.
1212.101 Definitions.
1212.102 Voting.
1212.103 Instructions.
1212.104 Subagents.
1212.105 Ballots.
1212.106 Referendum report.

[[Page 142]]

1212.107 Confidential information.
1212.108 OMB control number.

                     Subpart C_Past Due Assessments

1212.520 Late payment and interest charges for past due assessments.

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

    Source: 73 FR 11472, Mar. 3, 2008, unless otherwise noted.



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

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

                               Definitions



Sec.1212.1  Act.

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



Sec.1212.2  Board.

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

[84 FR 1345, Feb. 4, 2019]



Sec.1212.3  Conflict of interest.

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



Sec.1212.4  Department.

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



Sec.1212.5  Exporter.

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



Sec.1212.6  First handler.

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



Sec.1212.7  Fiscal period.

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



Sec.1212.8  Handle.

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



Sec.1212.9  Honey.

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



Sec.1212.10  Honey products.

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

[[Page 143]]



Sec.1212.11  Importer.

    ``Importer'' means any person who imports for sale honey or honey 
products into the United States as a principal or as an agent, broker, 
or consignee of any person who produces honey or honey products outside 
the United States for sale in the United States, and who is listed in 
the import records as the importer of record for such honey or honey 
products.



Sec.1212.12  [Reserved]



Sec.1212.13  Information.

    ``Information'' means activities or programs designed to develop new 
and existing markets, new and existing marketing strategies and 
increased efficiency and activities to enhance the image of honey and 
honey products. These include:
    (a) Consumer education, which means any action taken to provide 
information to, and broaden the understanding of, the general public 
regarding the consumption, use, nutritional attributes, and care of 
honey and honey products; and
    (b) Industry information, which means information and programs that 
will lead to the development of new markets, new marketing strategies, 
or increased efficiency for the honey industry, and activities to 
enhance the image of the honey industry.



Sec.1212.14  Market or marketing.

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



Sec.1212.15  Order.

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



Sec.1212.16  Part and subpart.

    ``Part'' means the Honey Packers and Importers Research, Promotion, 
Consumer Education, and Industry Information Order (Order) and all 
rules, regulations, and supplemental orders issued pursuant to the Act 
and the Order. The Order shall be a ``subpart'' of such part.



Sec.1212.17  Person.

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



Sec.1212.18  Plans and programs.

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



Sec.1212.19  Producer.

    ``Producer'' means any person who is engaged in the production and 
sale of honey in any State and who owns, or shares the ownership and 
risk of loss of the production of honey or a person who is engaged in 
the business of producing, or causing to be produced, honey beyond 
personal use and having value at first point of sale.



Sec.1212.20  Promotion.

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



Sec.1212.21  Qualified national organization representing first handler interests.

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



Sec.1212.22  Qualified national organization representing importer interests.

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

[84 FR 1345, Feb. 4, 2019]

[[Page 144]]



Sec.1212.23  Qualified national organization representing producer interests.

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



Sec.1212.24  Qualified national organization representing cooperative interests.

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



Sec.1212.25  Referendum.

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



Sec.1212.26  Research.

    ``Research'' means any type of test, study, or analysis designed to 
advance the image, desirability, use, marketability, production, product 
development, or quality of honey and honey products, including research 
relating to nutritional value, cost of production, new product 
development, testing the effectiveness of market development and 
promotion efforts. Such term shall also include studies on bees to 
advance the cost effectiveness, competitiveness, efficiency, pest and 
disease control, and other management aspects of beekeeping, honey 
production, and honey bees.



Sec.1212.27  Secretary.

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



Sec.1212.28  Suspend.

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



Sec.1212.29  State.

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



Sec.1212.30  Terminate.

    ``Terminate'' means to issue a rule under 5 U.S.C. 553 to cancel 
permanently the operation of an order or part thereof beginning on a 
date certain specified in the rule.



Sec.1212.31  United States.

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



Sec.1212.32  United States Customs Service.

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

                          National Honey Board



Sec.1212.40  Establishment and membership.

    The National Honey Board is established to administer the terms and 
provisions of this part. The Board shall have ten members, composed of 
three first handler representatives, three importer representatives, 
three producer representatives, and one marketing cooperative 
representative. In addition, each producer representative must produce a 
minimum of 50,000 pounds of honey in the United States annually based on 
the best three-year average of the most recent five calendar years, as 
certified by producers. The Secretary will appoint members to the Board 
from nominees submitted in accordance with Sec.1212.42. The Secretary 
shall

[[Page 145]]

also appoint an alternate for each member.

[84 FR 1345, Feb. 4, 2019]



Sec.1212.41  Term of office.

    Each Board member and alternate will serve a three-year term or 
until the Secretary selects his or her successor. No member or alternate 
may serve more than two consecutive terms. Each term of office will end 
on December 31, with new terms of office beginning on January 1.

[84 FR 1345, Feb. 4, 2019]



Sec.1212.42  Nominations and appointments.

    All nominations to the Board will be made as follows:
    (a) All qualified national organizations representing first handler 
interests will have the opportunity to participate in a nomination 
caucus and will, to the extent practical, submit as a group a single 
slate of nominations to the Secretary for the first handler positions 
and the alternate positions on the Board. If the Secretary determines 
that there are no qualified national organizations representing first 
handler interests, individual first handlers who have paid assessments 
to the Board in the most recent fiscal period may submit nominations. 
For the initial Board, persons that meet the definition of first 
handlers as defined in this subpart will certify their qualification and 
upon certification, if qualified, may submit nominations.
    (b) All qualified national organizations representing importer 
interests will have the opportunity to participate in a nomination 
caucus and will, to the extent practical, submit as a group a single 
slate of nominations to the Secretary for importer positions and the 
importer alternate positions on the Board. If the Secretary determines 
that there are no qualified national organizations representing importer 
interests, individual importers who have paid assessments to the Board 
in the most recent fiscal period may submit nominations.
    (c) All qualified national organizations representing producer 
interests will have the opportunity to participate in a nomination 
caucus and will, to the extent practical, submit as a group a single 
slate of nominations to the Secretary for the producer positions and the 
producer alternate positions on the Board. If the Secretary determines 
that there are no qualified national organizations representing producer 
interests, individual producers may submit nominations to the Secretary. 
For the initial Board, persons that meet the definition of producer as 
defined in this subpart will certify such qualification and upon 
certification, if qualified, may submit nominations.
    (d) For the purposes of this subpart, a national honey-marketing 
cooperative means any entity that is organized under the Capper-Volstead 
Act (7 U.S.C. 291) or state law as a cooperative and markets honey or 
honey products in at least 20 states. All national honey-marketing 
cooperatives that are first handlers will have the opportunity to 
participate in a nomination caucus and will, to the extent practical, 
submit as a group a single slate of nominations to the Secretary of 
persons who serve as an officer, director, or employee of a national 
honey marketing cooperative for the cooperative position and the 
alternate position on the Board.
    (e) Eligible organizations, cooperatives, producers, first handlers 
or importers must submit nominations to the Secretary six months before 
the new Board term begins. At least two nominees for each position to be 
filled must be submitted.
    (f) Qualified national organization representing first handler 
interests. To be certified by the Secretary as a qualified national 
organization representing first handler interests, an organization must 
meet the following criteria, as evidenced by a report submitted by the 
organization to the Secretary:
    (1) The organization's voting membership must be comprised primarily 
of first handlers of honey or honey products;
    (2) The organization must represent a substantial number of first 
handlers who market a substantial volume of honey or honey products in 
at least 20 states;

[[Page 146]]

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

[73 FR 29397, May 21, 2008, as amended at 84 FR 1345, Feb. 4, 2019]



Sec.1212.43  Removal and vacancies.

    (a) In the event that any member or alternate of the Board ceases to 
be a member of the category of members from which the member was 
appointed to the Board, such position shall become vacant.
    (b) The Board may recommend to the Secretary that a member be 
removed from office if the member consistently refuses to perform his or 
her duties or engages in dishonest acts or willful misconduct. The 
Secretary may remove the member if he or she finds that the Board's 
recommendation shows adequate cause.
    (c) A vacancy for any reason will be filled as follows:
    (1) If a member position becomes vacant, the alternate for that 
position will serve the remainder of the member's term. In accordance 
with Sec.1212.42, the Secretary will request nominations for a 
replacement alternate and will appoint a nominee to serve the remainder 
of the term. The Secretary does not have to appoint a replacement if the 
unexpired term is less than six months.

[[Page 147]]

    (2) If both a member position and an alternate position become 
vacant, in accordance with Sec.1212.42, the Secretary will request 
nominations for replacements and appoint a member and alternate to serve 
the remainder of the term. The Secretary does not have to appoint a new 
member or alternate if the unexpired term for the position is less than 
six months.
    (3) No successor appointed to a vacated term of office shall serve 
more than two successive three-year terms on the Board.



Sec.1212.44  Procedure.

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



Sec.1212.45  Reimbursement and attendance.

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



Sec.1212.46  Powers.

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



Sec.1212.47  Duties.

    The Board shall have, among other things, the following duties:
    (a) To meet and organize, and to select from among its members a 
chairperson and such other officers as may be necessary; to select 
committees and subcommittees from its membership and other industry 
representatives; and to develop and recommend such rules, regulations, 
and by-laws to the Secretary for approval to conduct its business as it 
may deem advisable;
    (b) To employ or contract with such persons as it may deem necessary 
and to determine the compensation and define the duties of each; and to 
protect

[[Page 148]]

the handling of Board funds through fidelity bonds;
    (c) To prepare and submit to the Secretary for approval 60 days in 
advance of the beginning of a fiscal period, a budget of anticipated 
expenses in the administration of this part including the probable costs 
of all programs and plans and to recommend a rate of assessment with 
respect thereto.
    (d) To investigate violations of this part and report the results of 
such investigations to the Secretary for appropriate action to enforce 
the provisions of this part.
    (e) To establish, issue, and administer appropriate programs and 
enter into contracts or agreements with the approval of the Secretary 
for promotion, research, and information including consumer and industry 
information, and advertising designed to strengthen the honey industry's 
position in the marketplace and to maintain, develop, and expand 
domestic and foreign markets for honey and honey products.
    (f) To maintain minutes, books, and records and prepare and submit 
to the Secretary such reports from time to time as may be required for 
appropriate accounting with respect to the receipt and disbursement of 
funds entrusted to it.
    (g) To periodically prepare and make public and to make available to 
first handlers, producers, and importers reports of its activities and, 
at least once each fiscal period, to make public an accounting of funds 
received and expended.
    (h) To cause its books to be audited by a certified public 
accountant at the end of each fiscal period and to submit a copy of each 
audit to the Secretary.
    (i) To submit to the Secretary such information pertaining to this 
part or subpart as he or she may request.
    (j) To give the Secretary the same notice of Board meetings and 
committee meetings that is given to members in order that the 
Secretary's representative(s) may attend such meetings, and to keep and 
report minutes of each meeting to the Secretary.
    (k) To notify first handlers, importers, and producers of all Board 
meetings through press releases or other means.
    (l) To appoint and convene, from time to time, working committees or 
subcommittees that may include first handlers, importers, exporters, 
producers, members of the wholesale or retail outlets for honey, or 
other members of the honey industry and the public to assist in the 
development of research, promotion, advertising, and information 
programs for honey and honey products.
    (m) To develop and recommend such rules and regulations to the 
Secretary for approval as may be necessary for the development and 
execution of plans or activities to effectuate the declared purpose of 
the Act.
    (n) To provide any patents, copyrights, inventions, product 
formulations, or publications developed through the use of funds 
collected under the provisions of this subpart shall be the property of 
the U.S. Government, as represented by the Board, and shall along with 
any rents, royalties, residual payments, or other income from the 
rental, sales, leasing, franchising, or other uses of such patents, 
copyrights, trademarks, information, publications, or product 
formulations, inure to the benefit of the Board; shall be considered 
income subject to the same fiscal, budget, and audit controls as other 
funds of the Board; and may be licensed subject to approval by the 
Department.



Sec.1212.48  Reapportionment of Board membership.

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

[[Page 149]]

                        Expenses and Assessments



Sec.1212.50  Budget and expenses.

    (a) At least 60 days prior to the beginning of each fiscal period, 
and as may be necessary thereafter; the Board shall prepare and submit 
to the Department a budget for the fiscal period covering its 
anticipated expenses and disbursements in administering this subpart. 
The budget shall allocate five percent (5%) of the Board's anticipated 
revenue from assessments each fiscal period for production research and 
research relating to the production of honey.
    Each such budget shall include:
    (1) A statement of objectives and strategy for each program, plan, 
or project;
    (2) A summary of anticipated revenue, with comparative data or at 
least one preceding year (except for the initial budget);
    (3) A summary of proposed expenditures for each program, plan, or 
project; and
    (4) Staff and administrative expense breakdowns, with comparative 
data for at least one preceding year (except for the initial budget).
    (b) Each budget shall provide adequate funds to defray its proposed 
expenditures and to provide for a reserve as set forth in this subpart.
    (c) Subject to this section, any amendment or addition to an 
approved budget must be approved by the Department, including shifting 
funds from one program, plan, or project to another. Shifts of funds 
which do not cause an increase in the Board's approved budget and which 
are consistent with governing bylaws need not have prior approval by the 
Department.
    (d) The Board is authorized to incur such expenses, including 
provision for a reserve, as the Department finds reasonable and likely 
to be incurred by the Board for its maintenance and functioning, and to 
enable it to exercise its powers and perform its duties in accordance 
with the provisions of this subpart. Such expenses shall be paid from 
funds received by the Board.
    (e) With approval of the Department, the Board may borrow money for 
the payment of administrative expenses, subject to the same fiscal, 
budget, and audit controls as other funds of the Board. Any funds 
borrowed by the Board shall be expended only for startup costs and 
capital outlays and are limited to the first year of operation of the 
Board.
    (f) The Board may accept voluntary contributions, but these shall 
only be used to pay expenses incurred in the conduct of programs, plans, 
and projects. Voluntary contributions shall be free from any encumbrance 
by the donor, and the Board shall retain complete control of their use.
    (g) The Board shall reimburse the Department for all expenses 
incurred by the Department in the implementation, administration, 
enforcement and supervision of the Order, including all referendum costs 
in connection with the Order.
    (h) The Board may not expend for administration, maintenance, and 
functioning of the Board in any calendar year an amount that exceeds 15 
percent of the assessments and other income received by the Board for 
that calendar year. Reimbursements to the Department required under 
paragraph (g) of this section, are excluded from this limitation on 
spending.
    (i) The Board may also receive funds provided through the 
Department's Foreign Agricultural Service or from other sources, with 
the approval of the Secretary, for authorized activities.



Sec.1212.51  Financial statements.

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

[[Page 150]]



Sec.1212.52  Assessments.

    (a) The Board will cover its expenses by levying in a manner 
prescribed by the Secretary an assessment on first handlers and 
importers. For the period January 1 through December 31, 2015, the 
assessment rate shall be $0.0125 per pound of assessable honey and honey 
products. On and after January 1, 2016, the assessment rate shall be 
$0.015 per pound of assessable honey and honey products.
    (b) Each first handler shall pay the assessment to the Board on all 
domestically produced honey or honey products the first handler handles. 
A producer shall pay the Board the assessment on all honey or honey 
products for which the producer is the first handler.
    (c) Each first handler responsible for remitting assessments shall 
remit the amounts due to the Board's office on a monthly basis no later 
than the fifteenth day of the month following the month in which the 
honey or honey products were marketed.
    (d) Each importer shall pay an assessment to the Board on all honey 
or honey products the importer imports into the United States. An 
importer shall pay the assessment to the Board through the United States 
Customs and Border Protection (Customs) when the honey or honey products 
being assessed enters the United States. If Customs does not collect an 
assessment from an importer, the importer is responsible for paying the 
assessment to the Board.
    (e) The import assessment recommended by the Board and approved by 
the Secretary shall be uniformly applied to imported honey or honey 
products that are identified as HTS heading numbers 0409.00.00 and 
2106.90.9988 by the Harmonized Tariff Schedule of the United States or 
any other numbers used to identify honey or honey products.
    (f) The Board may recommend to the Secretary an increase or decrease 
in the assessment as it deems appropriate by at least a two-thirds vote 
of members present at a meeting of the Board. The Board may not 
recommend an increase in the assessment of more than $0.02 per pound of 
honey or honey products and may not increase the assessment by more than 
$0.0025 in any single fiscal year.
    (g) In situations of late payment:
    (1) The Board shall impose a late payment charge on any first 
handler or importer who fails to remit to the Board the total amount for 
which the first handler or importer is liable on or before the payment 
due date the Board recommends. The amount of the late payment charge 
shall be prescribed by the Department.
    (2) The Board shall require any first handler or importer subject to 
a late payment charge to pay interest on the unpaid assessments for 
which the first handler or importer is liable. The rate of interest 
shall be prescribed by the Department.
    (3) First handlers or importers who fail to remit total assessments 
in a timely manner may also be subject to actions under federal debt 
collection procedures.
    (h) Advance payment. The Board may accept advance payment of 
assessments from first handlers or importers that will be credited 
toward any amount for which the first handlers or importers may become 
liable. The Board does not have to pay interest on any advance payment.
    (i) If the Board is not in place by the date the first assessments 
are to be collected, the Secretary shall have the authority to receive 
assessments and invest them on behalf of the Board, and shall pay such 
assessments and any interest earned to the Board when it is formed.

[73 FR 11472, Mar. 3, 2008, as amended at 80 FR 22365, Apr. 22, 2015]



Sec.1212.53  Exemption from assessment.

    (a) A first handler who handles less than 250,000 pounds of honey or 
honey products per calendar year or an importer who imports less than 
250,000 pounds of honey or honey products per calendar year is exempt 
from paying assessments.
    (b) A first handler or importer desiring an exemption shall apply to 
the Board, on a form provided by the Board, for a certificate of 
exemption. A first handler shall certify that the first handler will 
handle less than 250,000 of honey and honey products for the calendar 
year for which the exemption is

[[Page 151]]

claimed. An importer shall certify that the importer will import less 
than 250,000 pounds of honey and honey products during the calendar year 
for which the exemption is claimed.
    (c) A first handler or importer who operates under an approved 
National Organic Program (7 CFR part 205) (NOP) organic handling system 
plan may be exempt from the payment of assessments under this part, 
provided that:
    (1) Only agricultural products certified as ``organic'' or ``100 
percent organic'' (as defined in the NOP), or certified as ``organic'' 
or ``100 percent organic'' under a U.S. equivalency arrangement 
established under the NOP, are eligible for exemption;
    (2) The exemption shall apply to all certified ``organic'' or ``100 
percent organic'' (as defined in the NOP) products of a first handler or 
importer regardless of whether the agricultural commodity subject to the 
exemption is handled or imported by a person that also handles or 
imports conventional or nonorganic agricultural products of the same 
agricultural commodity as that for which the exemption is claimed;
    (3) The first handler or importer maintains a valid certificate of 
organic operation as issued under the Organic Foods Production Act of 
1990 (7 U.S.C. 6501-6522) (OFPA) and the NOP regulations issued under 
OFPA (7 CFR part 205); and
    (4) Any first handler or importer so exempted shall continue to be 
obligated to pay assessments under this part that are associated with 
any agricultural products that do not qualify for an exemption under 
this section.
    (5) Persons eligible for an organic assessment exemption as provided 
this section may apply for such an exemption by submitting a request to 
the Board on an Organic Exemption Request Form (Form AMS-15) at any time 
during the year initially, and annually thereafter on or before January 
1, as long as the first handler or importer continues to be eligible for 
the exemption.
    (i) A first handler or importer request for exemption shall include 
the following:
    (A) The applicant's full name, company name, address, telephone and 
fax numbers, and email address;
    (B) Certification that the applicant maintains a valid certificate 
of organic operation issued under the OFPA and the NOP;
    (C) Certification that the applicant handles or imports organic 
products eligible to be labeled ``organic'' or ``100 percent organic'' 
under the NOP;
    (D) A requirement that the applicant attach a copy of their 
certificate of organic operation issued by a USDA-accredited certifying 
agent under the OFPA and the NOP;
    (E) Certification, as evidenced by signature and date, that all 
information provided by the applicant is true; and
    (F) Such other information as may be required by the Board, with the 
approval of the Secretary.
    (ii) Upon receipt of an application, the Board shall determine 
whether an exemption may be granted and issue a Certificate of Exemption 
to the first handler or importer within 30 calendar days. If the 
application is disapproved, the Board will notify the applicant of the 
reason(s) for disapproval within the same timeframe. It is the 
responsibility of the first handler or importer to retain a copy of the 
certificate of exemption.
    (d) Upon receipt of an application, the Board shall determine 
whether an exemption may be granted. The Board will then issue, if 
deemed appropriate, a certificate of exemption to each person who is 
eligible to receive one. The exemption is effective when approved by the 
Board. It is the responsibility of these persons to retain a copy of the 
certificate of exemption.
    (e) Exempt importers shall be eligible for reimbursement of 
assessments collected by Customs.
    (1) Importers exempt under paragraph (a) of this section must apply 
to the Board for reimbursement of any assessment paid. No interest will 
be paid on the assessment collected by Customs. Requests for 
reimbursement must be submitted to the Board within 90 days of the last 
day of the calendar year the honey or honey products were imported.

[[Page 152]]

    (2) If Customs collects the assessment on exempt product under 
paragraph (b) of this section that is identified as ``organic'' by a 
number in the Harmonized Tariff Schedule, the Board must reimburse the 
exempt importer the assessments paid upon receipt of such assessments 
from Customs. For all other exempt organic product for which Customs 
collects the assessment, the importer may apply to the Board for a 
reimbursement of assessments paid, and the importer must submit 
satisfactory proof to the Board that the importer paid the assessment on 
exempt organic product.
    (f) If a person has been exempt from paying assessments for any 
calendar year under this section and no longer meets the requirements 
for an exemption, the person shall file a report with the Board in the 
form and manner prescribed by the Board and begin to pay the assessment 
on all honey or honey products handled or imported.
    (g) Any person who desires an exemption from assessments for a 
subsequent calendar year shall reapply to the Board for a certificate of 
exemption.
    (h) The Board may recommend to the Secretary that honey and honey 
products exported from the United States be exempt from this subpart and 
recommend procedures for refunding assessments paid on exported honey 
and honey products and any necessary safeguards to prevent improper use 
of this exemption.

[73 FR 11472, Mar. 3, 2008, as amended at 80 FR 22366, Apr. 22, 2015; 80 
FR 82027, Dec. 31, 2015]



Sec.1212.54  Operating reserve.

    The Board may establish an operating monetary reserve and may carry 
over to subsequent fiscal periods excess funds in any reserve so 
established: Provided that the funds in the reserve do not exceed one 
fiscal period's budget. Subject to approval by the Department, such 
reserve funds may be used to defray any expenses authorized under this 
part.



Sec.1212.55  Prohibition on use of funds.

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

                  Promotion, Research, and Information



Sec.1212.60  Programs, plans and projects.

    (a) Scope of activities. The Board must develop and submit to the 
Secretary for approval plans and programs authorized by this section. 
The plans and programs may provide for:
    (1) Establishing, issuing, and administering appropriate programs 
for promotion, research, and information including consumer and industry 
information, and advertising designed to strengthen the honey industry's 
position in the marketplace and to maintain, develop, and expand 
domestic and foreign markets for honey and honey products;
    (2) Establishing and conducting research and development activities 
to encourage and expand the acquisition

[[Page 153]]

of knowledge about honey and honey products, their consumption and use, 
or to encourage, expand or improve the quality, marketing, and 
utilization of honey and honey products;
    (3) Conducting activities that may lead to developing new markets or 
marketing strategies for honey and honey products;
    (4) Conducting activities related to production issues or bee 
research activities; and
    (5) Conducting activities designed to make the honey industry more 
efficient, to improve the quality of honey or to enhance the image of 
honey and honey products and the honey industry.
    (b) No program, plan, or project shall be implemented prior to its 
approval by the Department. Once a program, plan, or project is so 
approved, the Board shall take appropriate steps to implement it.
    (c) The Board must periodically evaluate each plan and program 
authorized under this part to ensure that it contributes to an effective 
and coordinated program of research, promotion and information. The 
Board must submit the evaluations to the Secretary. If the Board and the 
Secretary find that a plan or program does not further the purposes of 
the Act, then such plan or program should be terminated.



Sec.1212.61  Independent evaluation.

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



Sec.1212.62  Patents, copyrights, inventions, product formulations,
and publications.

    Except for a reasonable royalty paid by the Board to the inventor of 
a patented invention, any patents, copyrights, inventions, product 
formulations, or publications developed through the use of funds 
collected under the provisions of this subpart shall be the property of 
the U.S. Government, as represented by the Board, and shall along with 
any rents, royalties, residual payments, or other income from the 
rental, sales, leasing, franchising, or other uses of such patents, 
copyrights, trademarks, information, publications, or product 
formulations, inure to the benefit of the Board; shall be considered 
income subject to the same fiscal, budget, and audit controls as other 
funds of the Board; and may be licensed subject to approval by the 
Department. Upon termination of this Order, Sec.1212.83 shall apply to 
determine disposition of all such property.

                       Reports, Books, and Records



Sec.1212.70  Reports.

    (a) Each first handler or importer subject to this part must report 
to the Board, at the time and in the manner it prescribes, and subject 
to the approval of the Secretary, the information the Board deems 
necessary to perform its duties.
    (b) First handlers must report:
    (1) The total quantity of honey and honey products acquired during 
the reporting period;
    (2) The total quantity of honey and honey products handled during 
the period;
    (3) The quantity of honey processed for sale from the first 
handler's own production;
    (4) The quantity of honey and honey products purchased from a first 
handler or importer responsible for paying the assessment due pursuant 
to this Order;
    (5) The date that assessment payments were made on honey and honey 
products handled; and
    (6) The first handler's tax identification number.
    (c) Unless provided by Customs, importers must report:
    (1) The total quantity of honey and honey products imported during 
the reporting period;
    (2) A record of each lot of honey or honey products imported during 
such period, including the quantity, date, country of origin, and port 
of entry; and
    (3) The importer of record's tax identification number.

[[Page 154]]

    (d) The Board may request any other information from first handlers 
and importers that it deems necessary to perform its duties under this 
subpart, subject to the approval of the Secretary.
    (e) The Board, with the Secretary's approval, may request that 
persons claiming an exemption from assessments under Sec.1212.52(b) or 
(d) must provide it with any information it deems necessary about the 
exemption, including, without limitation, the disposition of exempted 
honey or honey products.



Sec.1212.71  Book and records.

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

[80 FR 22366, Apr. 22, 2015]



Sec.1212.72  Confidential treatment.

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

                              Miscellaneous



Sec.1212.80  Right of the Secretary.

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



Sec.1212.81  Referenda.

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

[[Page 155]]

    (c) Manner of conducting referenda. A referendum conducted under 
this section shall be conducted in the manner determined by the 
Secretary to be appropriate.



Sec.1212.82  Suspension or termination.

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



Sec.1212.83  Proceedings after termination.

    (a) If this subpart terminates, the Board shall recommend to the 
Secretary up to five of its members to serve as trustees for the purpose 
of liquidating the Board's affairs. Such persons, upon designation by 
the Secretary, will become trustees of any funds and property the Board 
possesses or controls at that time and any existing claims it has, 
including, without limitation, claims for any unpaid or undelivered 
funds or property.
    (b) The trustees will:
    (1) Serve until discharged by the Secretary;
    (2) Carry out the Board's obligations under any contracts or 
agreements entered into pursuant to the Order;
    (3) Account from time to time for all receipts and disbursements and 
deliver all property on hand, together with all the Board's and 
trustees' books and records to any person the Secretary directs; and
    (4) Execute at the Secretary's direction any assignments or other 
instruments necessary or appropriate to vest in any person full title 
and right to all of the funds, property, and claims owned by the Board 
or the trustees under this subpart.
    (c) Any person to whom funds, property, or claims have been 
transferred or delivered pursuant to the Order will be subject to the 
same obligations imposed upon Board and the trustees.
    (d) Any residual funds not required to defray the necessary expenses 
of liquidation shall be turned over to the Department to be disposed of, 
to the extent practical, to one or more honey industry organizations in 
the interest of continuing honey promotion, research, and information 
programs.



Sec.1212.84  Effect of termination or amendment.

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



Sec.1212.85  Personal liability.

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



Sec.1212.86  Separability.

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



Sec.1212.87  Amendments.

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



Sec.1212.88  OMB control number.

    The control number assigned to the information collection 
requirements in this part by the Office of Management and Budget 
pursuant to the Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35, 
is OMB control number 0505-0001, and OMB control number 0581-[NEW, to be 
assigned by OMB].

[[Page 156]]



                     Subpart B_Referendum Procedures



Sec.1212.100  General.

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



Sec.1212.101  Definitions.

    (a) Administrator means the Administrator of the Agricultural 
Marketing Service, with power to re-delegate, or any officer or employee 
of the U.S. Department of Agriculture to whom authority has been 
delegated or may hereafter be delegated to act in the Administrator's 
stead.
    (b) Department means the U.S. Department of Agriculture or any 
officer or employee of the Department to whom authority has heretofore 
been delegated, or to whom authority may hereafter be delegated, to act 
in the Secretary's stead.
    (c) Eligible first handler means any person (excluding a common or 
contract carrier) who handled 250,000 or more pounds of domestic honey 
and honey products during the representative period, who first buys or 
takes possession of honey or honey products from a producer for 
marketing. If a producer markets the honey directly to consumers, the 
producer shall be considered the first handler with respect to the honey 
produced by the producer.
    (d) Eligible importer means any person who imports 250,000 or more 
pounds of honey and honey products into the United States as a principal 
or as an agent, broker, or consignee of any person who produces or 
handles honey or honey products outside of the United States for sale in 
the United States, and who is listed as the importer of record for such 
honey or honey products that are identified in the Harmonized Tariff 
Schedule of the United States by the numbers 0409.00.00 and 
2106.90.9988, during the representative period. Importation occurs when 
honey or honey products originating outside of the United States are 
released from custody by the United States Customs and Border 
Protection, referred to as the U.S. Customs Service, and introduced into 
the stream of commerce in the United States. Included are persons who 
hold title to foreign produced honey or honey products immediately upon 
release by the U.S. Customs Service, as well as any persons who acts on 
behalf of others, as agents or brokers, to secure the release of honey 
or honey products from the U.S. Customs Service when such honey or honey 
products are entered or withdrawn for consumption in the United States.
    (e) Handle means to process, package, sell, transport, purchase or 
in any other way place honey or honey products, or cause them to be 
placed, in commerce. This term includes selling unprocessed honey that 
will be consumed without further processing or packaging. This term does 
not include the transportation of unprocessed honey by the producer to a 
handler or transportation by a commercial carrier of honey, whether 
processed or unprocessed for the account of the first handler or 
producer.
    (f) Honey means the nectar and saccharine exudations of plants that 
are gathered, modified, and stored in the comb by honeybees, including 
comb honey.
    (g) Honey products mean products where honey is a principal 
ingredient. For purposes of this subpart, a product shall be considered 
to have honey as a principal ingredient, if the product contains at 
least 50 percent honey by weight.
    (h) Order means the Honey Packers and Importers Research, Promotion, 
Consumer Education and Industry Information Order.
    (i) Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other legal entity. For 
the purpose of this definition, the term ``partnership'' includes, but 
is not limited to:
    (1) A husband and a wife who have title to, or leasehold interest 
in, honey bee colonies or beekeeping equipment as tenants in common, 
joint tenants, tenants by the entirety, or, under community property 
laws, as community property; and

[[Page 157]]

    (2) So-called ``joint ventures'' wherein one or more parties to an 
agreement, informal or otherwise, contributed land and others 
contributed capital, labor, management, equipment, or other services, or 
any variation of such contributions by two or more parties, so that it 
results in the production, handling, or importation of honey or honey 
products for market and the authority to transfer title to the honey or 
honey products so produced, handled or imported.
    (j) Referendum agent or agent means the individual or individuals 
designated by the Department to conduct the referendum.
    (k) Representative period means the period designated by the 
Department.
    (l) United States or U.S. means collectively the 50 states, the 
District of Columbia, the Commonwealth of Puerto Rico, and the 
territories and possessions of the United States.



Sec.1212.102  Voting.

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



Sec.1212.103  Instructions.

    (a) Referenda. The Order shall not become effective unless the 
Department determines that the Order is consistent with and will 
effectuate the purposes of the Act; and for initial and subsequent 
referenda the Order is favored by a majority of eligible persons voting 
in the referendum and a majority of volume voting in the referendum who, 
during a representative period determined by the Department, have been 
engaged in the handling or importation of honey or honey products and 
are subject to assessments under this Order and excluding those exempt 
from assessment under the Order.
    (b) The referendum agent shall conduct the referendum, in the manner 
provided in this subpart, under the supervision of the Administrator. 
The Administrator may prescribe additional instructions, not 
inconsistent with the provisions of this subpart, to govern the 
procedure to be followed by the referendum agent. Such agent shall:
    (1) Determine the period during which ballots may be cast.
    (2) Provide ballots and related material to be used in the 
referendum. The ballot shall provide for recording essential 
information, including that needed for ascertaining whether the person 
voting, or on whose behalf the vote is cast, is an eligible voter.
    (3) Give reasonable public notice of the referendum:
    (i) By utilizing available media or public information sources, 
without incurring advertising expense, to publicize the dates, places, 
method of voting, eligibility requirements, and other pertinent 
information. Such sources of publicity may include, but are not limited 
to, print and radio; and
    (ii) By such other means as the agent may deem advisable.
    (4) Mail to eligible first handlers and importers whose names and 
addresses are known to the referendum agent, the instructions on voting, 
a ballot, and a summary of the terms and conditions of the proposed 
Order. No person who claims to be eligible to vote shall be refused a 
ballot.
    (5) At the end of the voting period, collect, open, number, and 
review the ballots and tabulate the results in the presence of an agent 
of a third party authorized to monitor the referendum process.
    (6) Prepare a report on the referendum.
    (7) Announce the results to the public.

[[Page 158]]



Sec.1212.104  Subagents.

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



Sec.1212.105  Ballots.

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



Sec.1212.106  Referendum report.

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



Sec.1212.107  Confidential information.

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



Sec.1212.108  OMB control number.

    The control number assigned to the information collection 
requirement in this subpart by the Office of Management and Budget 
pursuant to the Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35 is 
OMB control number 0505-0001, OMB control number 0581-0217, and OMB 
control number 0581-[NEW, to be assigned by OMB].



                     Subpart C_Past Due Assessments

    Source: 83 FR 11139, Mar. 14, 2018, unless otherwise noted.



Sec.1212.520  Late payment and interest charges for past due assessments.

    (a) A late payment charge will be imposed on any first handler or 
importer who fails to make timely remittance to the Board of the total 
assessments for which they are liable. The late payment will be imposed 
on any assessments not received within 30 calendar days of the date when 
assessments are due. This one-time late payment charge will be 10 
percent of the assessments due before interest charges have accrued.
    (b) In addition to the late payment charge, \2/3\ of 1 percent per 
month (or an annual rate of 8 percent) interest on the outstanding 
balance, including any late payment and accrued interest, will be added 
to any accounts for which payment has not been received within 30 
calendar days of the date when assessments are due. Interest will 
continue to accrue monthly until the outstanding balance is paid to the 
Board.



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



   Subpart A_Christmas Tree Promotion, Research, and Information Order

                               Definitions

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

[[Page 159]]

1214.22 Suspend.
1214.23 Terminate.
1214.24 United States.

                     Christmas Tree Promotion Board

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

                        Expenses and Assessments

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

                   Promotion, Research and Information

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

                       Reports, Books, and Records

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

                              Miscellaneous

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

                     Subpart B_Referendum Procedures

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

    Subpart C_Provisions Implementing the Christmas Tree Promotion, 
                     Research, and Information Order

1214.520 Late payment and interest charges for past due assessments.

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

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



   Subpart A_Christmas Tree Promotion, Research, and Information Order

                               Definitions



Sec.1214.1  Act.

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



Sec.1214.2  Board.

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



Sec.1214.3  Christmas tree.

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



Sec.1214.4  Conflict of interest.

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



Sec.1214.5  Crop year.

    Crop year means the period August 1 through July 31 or such other 
period approved by the Secretary.

[81 FR 38897, June 15, 2016]



Sec.1214.6  Customs or CBP.

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



Sec.1214.7  Department.

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

[[Page 160]]



Sec.1214.8  Fiscal period.

    Fiscal period means the period August 1 through July 31 or such 
other period approved by the Secretary.

[81 FR 38897, June 15, 2016]



Sec.1214.9  Importer.

    Importer means any person importing Christmas trees into the United 
States in a fiscal period as a principal or as an agent, broker, or 
consignee of any person who domestically produces Christmas trees 
outside of the United States for sale in the United States, and who is 
listed in the import records as the importer of record for such 
Christmas trees.



Sec.1214.10  Information.

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



Sec.1214.11  Marketing.

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



Sec.1214.12  Order.

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



Sec.1214.13  Part and subpart.

    Part means the Christmas Tree Promotion, Research, and Information 
Order and all rules, regulations, and supplemental orders issued 
pursuant to the Act and the Order. The Order shall be a subpart of such 
part.



Sec.1214.14  Person.

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



Sec.1214.15  Programs, plans and projects.

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



Sec.1214.16  Produce.

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



Sec.1214.17  Producer.

    Producer means any person who is engaged in the production of 
Christmas trees in the United States, and who owns, or shares the 
ownership and risk of loss of the production of Christmas trees or a 
person who is engaged in the business of producing, or causing to be 
domestically produced, Christmas trees beyond personal use and having 
value at first point of sale.



Sec.1214.18  Promotion.

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



Sec.1214.19  Research.

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



Sec.1214.20  Secretary.

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

[[Page 161]]



Sec.1214.21  State.

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



Sec.1214.22  Suspend.

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



Sec.1214.23  Terminate.

    Terminate means to issue a rule under section 553 of title 5 U.S.C. 
to cancel permanently the operation of an order or part thereof 
beginning on a certain date specified in the rule.



Sec.1214.24  United States.

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

                     Christmas Tree Promotion Board



Sec.1214.40  Establishment and membership.

    (a) Establishment of the Christmas Tree Promotion Board. There is 
hereby established a Christmas Tree Promotion Board, composed of no more 
than twelve (12) members as follows:
    (1) Producer members from each of the following regions:
    (i) Five producer members from Region 1--Western Region (states 
from the Pacific Ocean east to the Rocky Mountains): Alaska, Arizona, 
California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, 
Oregon, Utah, Washington, Wyoming and all U.S. Territories located in 
the Pacific Ocean.
    (ii) Two producer members from Region 2--Central Region (states 
east of the Rocky Mountains to the Great Lakes): Arkansas, Illinois, 
Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North 
Dakota, Ohio, Oklahoma, South Dakota, Texas, and Wisconsin.
    (iii) Four producer members from Region 3--Eastern Region (states 
east of the Great Lakes): Alabama, Connecticut, Delaware, Florida, 
Georgia, Kentucky, Louisiana, New York, Maine, Maryland, Massachusetts, 
Mississippi, New Hampshire, New Jersey, North Carolina, Pennsylvania, 
Rhode Island, South Carolina, Tennessee, Virginia, Vermont, Washington, 
DC, West Virginia, and all U.S. Territories located in the Atlantic 
Ocean and Caribbean Sea, including but not limited to Puerto Rico.
    (2) One Importer member.
    (b) Adjustment of membership. At least once every five years upon 
implementation of the Order, but not more frequently than once every 
three years, the Board will review the geographic distribution of United 
States production of Christmas trees and the quantity and source of 
Christmas tree imports. The review will be conducted through State crop 
production figures and Board assessment records, including the amount of 
assessments collected from importers, or other government data. If 
warranted, the Board will recommend to the Secretary that membership on 
the Board be altered to reflect any changes in geographic distribution 
of domestic Christmas tree production and the quantity of imports. 
Provided, that there shall be at least one importer member on the Board. 
Such adjustments shall not increase the total number of Board members. 
The adjustments to the Board membership would be submitted to the 
Secretary by Board recommendation and be implemented by the Secretary 
through rulemaking.



Sec.1214.41  Nominations and appointments.

    (a) Voting for producer members will be made by mail ballot, 
electronic mail, in person, or by facsimile.
    (b) Nominations for the initial Board will be conducted by the 
Department. Subsequent nominations will be conducted by the Board.
    (c) The Board shall outreach to all segments of the Christmas tree 
industry and solicit nominations as described in paragraphs (d) and (e) 
of this section. Nominees must domestically produce or import more than 
500 Christmas trees during the most recent fiscal period.

[[Page 162]]

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



Sec.1214.42  Term of office.

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



Sec.1214.43  Vacancies.

    (a) In the event that any member of the Board ceases to be a member 
of the category of membership from which the member was appointed to the 
Board, such position shall automatically become vacant.
    (b) If a member of the Board consistently refuses to perform the 
duties of a member of the Board, or if a member of the Board engages in 
acts of dishonesty or willful misconduct, the Board may recommend to the 
Secretary that the member be removed from office. If the Secretary finds 
the recommendation of the Board shows adequate cause, the Secretary may 
remove such member from office. Further, without recommendation of the 
Board, a member may be removed by the Secretary upon showing of adequate 
cause, including the failure by a member to submit reports or remit 
assessments required under this part, if the Secretary determines that 
such member's continued service would be detrimental to the achievement 
of the purposes of the Act.
    (c) Should any member position become vacant, successors for the 
unexpired terms of such member shall be appointed in the manner 
specified in Sec.1214.41. A vacancy will not be required to be filled 
if the unexpired term is less than six months.

[[Page 163]]



Sec.1214.44  Procedure.

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



Sec.1214.45  Compensation and reimbursement.

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



Sec.1214.46  Powers and duties.

    The Board shall have the following powers and duties:
    (a) To administer the Order in accordance with its terms and 
conditions and to collect assessments;
    (b) To develop and recommend to the Secretary for approval such 
bylaws as may be necessary for the functioning of the Board, and such 
rules as may be necessary to administer the Order, including activities 
authorized to be carried out under the Order;
    (c) To meet, organize, and select from among the members of the 
Board a chairperson, other officers, committees, and subcommittees, as 
the Board determines to be appropriate, provided that the committee and 
subcommittee members may also include individuals other than Board 
members;
    (d) To notify producers and importers of all Board meetings through 
press releases or other means;
    (e) To give the Secretary the same notice of meetings of the Board 
and committees as is given to members, including committee members if 
committee members are not members of the Board, in order that the 
Secretary's representative(s) may attend such meetings, and to keep and 
report minutes of each meeting of the Board and all committees to the 
Secretary;
    (f) To appoint and convene, from time to time, committees that may 
include importers, exporters, producers or other members of the 
Christmas tree industry and public to assist in the development of 
research, promotion, advertising, and information programs for Christmas 
trees;
    (g) To employ persons, other than members, as the Board considers 
necessary to assist the Board in carrying out its duties and to 
determine the compensation and specify the duties of such persons;
    (h) To act as an intermediary between the Secretary and any producer 
or importer;
    (i) To furnish to the Secretary any information or records that the 
Secretary may request;
    (j) To receive, investigate, and report to the Secretary complaints 
of violations of the Order;

[[Page 164]]

    (k) To maintain such records and books and prepare and submit such 
reports and records from time to time to the Secretary as the Secretary 
may require and to make the records available to the Secretary for 
inspection and audit; to make appropriate accounting with respect to the 
receipt and disbursement of all funds entrusted to it; and to keep 
records that accurately reflect the actions and transactions of the 
Board;
    (l) To recommend to the Secretary such amendments to the Order as 
the Board considers appropriate;
    (m) To develop and carry out generic promotion, research, and 
information activities relating to Christmas trees;
    (n) To work to achieve an effective, continuous, and coordinated 
program of promotion, research, evaluation, and information designed to 
strengthen the Christmas tree industry's position in the marketplace; 
maintain and expand existing markets for Christmas trees; and to carry 
out programs, plans, and projects designed to provide maximum benefits 
to the Christmas tree industry;
    (o) To develop programs, plans, and projects, and enter into 
contracts or agreements, which must be approved by the Secretary before 
becoming effective, for the development and carrying out of programs or 
projects of research, information, or promotion, and the payment of 
costs thereof with funds collected pursuant to this subpart. Each 
contract or agreement shall provide that any person who enters into a 
contract or agreement with the Board shall develop and submit to the 
Board a proposed activity; keep accurate records of all of its 
transactions relating to the contract or agreement; account for funds 
received and expended in connection with the contract or agreement; make 
periodic reports to the Board of activities conducted under the contract 
or agreement; and make such other reports available as the Board or the 
Secretary considers necessary. Any contract or agreement shall provide 
that:
    (1) The contractor or agreeing party shall develop and submit to the 
Board a program, plan, or project together with a budget or budgets that 
shall show the estimated cost to be incurred for such program, plan, or 
project;
    (2) The contractor or agreeing party shall keep accurate records of 
all its transactions and make periodic reports to the Board of 
activities conducted, submit accounting for funds received and expended, 
and make such other reports as the Secretary or the Board may require;
    (3) The Secretary may audit the records of the contracting or 
agreeing party periodically; and
    (4) Any subcontractor who enters into a contract with a Board 
contractor and who receives or otherwise uses funds allocated by the 
Board shall be subject to the same provisions as the contractor;
    (p) To prepare and submit for approval of the Secretary, within 60 
days after assessments are due to the Board, rates of assessment and a 
fiscal period budget of the anticipated expenses to be incurred in the 
administration of the Order, in accordance with Sec.1214.50;
    (q) To borrow funds necessary for the startup expenses of the order;
    (r) To invest assessments collected under this part in accordance 
with Sec.1214.50;
    (s) To pay the cost of the activities with assessments collected 
under Sec.1214.52;
    (t) To recommend adjustments to the assessments as provided in Sec.
1214.52;
    (u) To periodically prepare, make public and to make available to 
producers and importers, reports of its activities and, at least once 
each fiscal period, to make public an accounting of funds received and 
expended; and
    (v) To cause its books to be audited by an independent certified 
public accountant at the end of each fiscal period and at such other 
times as the Secretary may request, and to submit a report of the audit 
directly to the Secretary.



Sec.1214.47  Prohibited activities.

    The Board may not engage in, and shall prohibit the employees and 
agents of the Board from engaging in:
    (a) Any action that would be a conflict of interest;
    (b) Using funds collected by the Board under the Order to undertake

[[Page 165]]

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

                        Expenses and Assessments



Sec.1214.50  Budget and expenses.

    (a) Within 60 days after assessments are due to the Board, and as 
may be necessary thereafter, the Board shall prepare and submit to the 
Secretary a budget for the fiscal period covering its anticipated 
expenses and disbursements in administering this part. Each budget shall 
include:
    (1) A statement of objectives and strategy for each program, plan, 
or project;
    (2) A summary of anticipated revenue, with comparative data or at 
least one preceding year, except for the initial budget;
    (3) A summary of proposed expenditures for each program, plan, or 
project; and
    (4) Staff and administrative expense breakdowns, with comparative 
data for at least one preceding year, except for the initial budget.
    (b) Each budget shall provide adequate funds to defray its proposed 
expenditures and to provide for a reserve as set forth in this part.
    (c) Subject to this section, any amendment or addition to an 
approved budget must be approved by the Secretary, including shifting 
funds from one program, plan, or project to another.
    (d) The Board is authorized to incur such expenses, including 
provision for a reserve, as the Secretary finds are reasonable and 
likely to be incurred by the Board for its maintenance and functioning, 
and to enable it to exercise its powers and perform its duties in 
accordance with the provisions of this part. Such expenses shall be paid 
from funds received by the Board.
    (e) With approval of the Secretary, the Board may borrow money for 
the payment of administrative expenses, subject to the same fiscal, 
budget, and audit controls as other funds of the Board. Any such funds 
borrowed by the Board shall be expended for startup costs and are 
limited to the first year of operation of the Board.
    (f) The Board may accept voluntary contributions, but these shall 
only be used to pay expenses incurred in the conduct of programs, plans, 
and projects approved by the Secretary. Such contributions shall be free 
from any encumbrance by the donor and the Board shall retain complete 
control of their use.
    (g) In accordance with Sec.1214.54, the Board shall deposit funds 
in a refund escrow account and shall not use such funds for expenses, 
except as provided for in that section.
    (h) The Board may also receive funds provided through the 
Department's Foreign Agricultural Service or from other sources, with 
the approval of the Secretary, for authorized activities.
    (i) The Board shall reimburse the Secretary for all expenses 
incurred by the Secretary in the implementation, administration, 
enforcement, and supervision of the Order, including all referendum 
costs in connection with the Order.
    (j) For fiscal years beginning 3 or more years after the date of the 
establishment of the Board, the Board may not expend for administration, 
maintenance, and functioning of the Board in a fiscal year an amount 
that exceeds 10 percent of the assessment and other income received by 
the Board. Reimbursements to the Secretary required under paragraph (i) 
of this section are excluded from this limitation on spending.
    (k) The Board may establish an operating monetary reserve and may 
carry over to subsequent fiscal periods excess funds in any reserve so 
established: Provided: That, the funds in the reserve do not exceed one 
fiscal period's budget of expenses. Subject to approval by the 
Secretary, such reserve funds may be used to defray any expenses 
authorized under this part.
    (l) Pending disbursement of assessments and all other revenue under 
a

[[Page 166]]

budget approved by the Secretary, the Board may invest assessments and 
all other revenues collected under this section in:
    (1) Obligations of the United States or any agency of the United 
States;
    (2) General obligations of any State or any political subdivision of 
a State;
    (3) Interest bearing accounts or certificates of deposit of 
financial institutions that are members of the Federal Reserve System; 
or
    (4) Obligations fully guaranteed as to principal interest by the 
United States.



Sec.1214.51  Financial statements.

    (a) The Board shall prepare and submit quarterly financial 
statements to the Secretary, or at any other time requested by the 
Secretary. Each such financial statement shall include, but not be 
limited to, a balance sheet, income statement, and expense budget. The 
expense budget shall show expenditures during the time period covered by 
the report, year-to-date expenditures, and the unexpended budget.
    (b) Each financial statement shall be submitted to the Secretary 
within 45 days after the end of the time period to which it applies.
    (c) The Board shall submit annually to the Secretary an annual 
financial statement within 90 days after the end of the fiscal period to 
which it applies.



Sec.1214.52  Assessments.

    (a) The funds to cover the Board's expenses shall be paid from 
assessments on producers, importers, and donations from any person 
including those not subject to assessments under this Order, and other 
funds available to the Board including those collected pursuant to Sec.
1214.62 and subject to the limitations contained therein.
    (b) The payment of assessments on domestic Christmas trees that are 
cut and sold will be the responsibility of the producer who produces the 
Christmas trees or causes the trees to be cut.
    (c) Each importer of Christmas trees shall pay the assessment to the 
Board on Christmas trees imported for marketing in the United States, 
through Customs. If Customs does not collect an assessment from an 
importer, the importer will be responsible for paying the assessment 
directly to the Board 30 calendar days after importation.
    (1) The assessment rate for imported Christmas trees shall be the 
same or equivalent to the rate for Christmas trees domestically produced 
in the United States.
    (2) The import assessment shall be uniformly applied to imported 
Christmas trees that are identified by the numbers 0604.91.00.20, 
0604.91.00.40, and 0604.91.00.60 in the Harmonized Tariff Schedule of 
the United States or any other numbers used to identify Christmas trees 
in that schedule.
    (3) The assessments due on imported Christmas trees shall be paid 
when they enter into the United States.
    (d) Such assessments shall be levied at an initial rate of 15 cents 
per Christmas tree domestically produced or imported into the United 
States. The assessment rate will be reviewed by the Board, after the 
initial referendum is conducted pursuant to this subpart. The assessment 
rate may be increased or decreased no more than 2 cents per Christmas 
tree during the fiscal period. Any change in the assessment rate shall 
be subject to rulemaking by the Department. The assessment rate shall 
not exceed 20 cents per Christmas tree, nor shall it be less than 10 
cents per Christmas tree, unless a majority of producers and importers 
approve such other levels of assessment through a referendum conducted 
pursuant to this subpart.
    (e) All assessment payments and reports will be submitted to the 
office of the Board. All assessment payments are to be received no later 
than February 15 of the crop year in which they are produced or 
imported. A late payment charge, may be imposed on any producer or 
importer who fails to remit to the Board, the total amount for which any 
such producer or importer is liable on or before the due date 
established by the Board. In addition to the late payment charge, an 
interest charge may be imposed on the outstanding amount for which the 
producer or importer is liable. The rate for late payment and interest 
charges shall be specified by the Secretary through rulemaking.
    (f) Persons failing to remit total assessments due in a timely 
manner may

[[Page 167]]

also be subject to actions under federal debt collection procedures.
    (g) The Board may authorize other organizations to collect 
assessments on its behalf with the approval of the Secretary.



Sec.1214.53  Exemption from and refunds of assessments.

    (a) Producers that domestically produce and importers that import 
less than 500 Christmas trees. (1) Any producer who domestically 
produces less than 500 Christmas trees who desires to claim an exemption 
from assessments as provided in Sec.1214.52 shall file an application 
on a form provided by the Board, for a certificate of exemption. Such 
producer shall certify that he/she will domestically produce less than 
500 trees for the fiscal period for which the exemption is claimed. It 
is the responsibility of the producer to retain a copy of the 
certificate of exemption.
    (2) Any importer who imports less than 500 trees in a fiscal period 
who desires to claim an exemption from assessments as provided in Sec.
1214.52 shall file an application on a form provided by the Board, for a 
certificate of exemption. Such importer shall certify that the 
importer's total imports of Christmas trees are fewer than 500 trees for 
the fiscal period for which the exemption is claimed. It is the 
responsibility of the importer to retain a copy of the certificate of 
exemption.
    (3) On receipt of an exemption application, the Board shall 
determine whether an exemption may be granted. The Board will then 
issue, if deemed appropriate, a certificate of exemption to the producer 
or importer which is eligible to receive one.
    (4) The Board, with the Secretary's approval, may require persons 
receiving an exemption from assessments to provide to the Board reports 
on the disposition of exempt Christmas trees and, in the case of 
importers, proof of payment of assessments.
    (5) The exemption will apply immediately following the issuance of 
the certificate of exemption.
    (6) Producers and importers who received an exemption certificate 
from the Board but domestically produced or imported more than 500 
Christmas trees during the fiscal period shall pay the Board the 
applicable assessments owed and submit any necessary reports to the 
Board pursuant to Sec.1214.70.
    (7) Producers and importers who did not apply to the Board for an 
exemption and domestically produced or imported less than 500 Christmas 
trees during the fiscal period shall receive a refund from the Board for 
the applicable assessments within 30 calendar days after the end of the 
fiscal year. Board staff shall determine the assessments paid and refund 
the amount due to the producers and importers accordingly.
    (8) The Board may develop additional procedures as it deems 
necessary for accurately accounting for this exemption. Such procedures 
shall be implemented through rulemaking by the Secretary.
    (b) Assessment refunds to importers. (1) Importers who are exempt 
from assessment shall be eligible for a refund of assessments collected 
by Customs during the applicable fiscal period. No interest will be paid 
on assessments collected by Customs. The Board shall refund such 
importers their assessments as collected by Customs no later than 60 
calendar days after receipt by the Board.
    (c) Organic. (1) A producer who domestically produces Christmas 
trees under an approved National Organic Program (7 CFR part 205) (NOP) 
organic production system plan may be exempt from the payment of 
assessments under this part, provided that:
    (i) Only agricultural products certified as ``organic'' or ``100 
percent organic'' (as defined in the NOP) are eligible for exemption;
    (ii) The exemption shall apply to all certified ``organic'' or ``100 
percent organic'' (as defined in the NOP) products of a producer 
regardless of whether the agricultural commodity subject to the 
exemption is produced by a person that also produces conventional or 
nonorganic agricultural products of the same agricultural commodity as 
that for which the exemption is claimed;
    (iii) The producer maintains a valid certificate of organic 
operation as issued under the Organic Foods Production Act of 1990 (7 
U.S.C. 6501-6522) (OFPA) and the NOP regulations issued under OFPA (7 
CFR part 205); and

[[Page 168]]

    (iv) Any producer so exempted shall continue to be obligated to pay 
assessments under this part that are associated with any agricultural 
products that do not qualify for an exemption under this section.
    (2) To apply for exemption under this section, an eligible producer 
shall submit a request to the Board on an Organic Exemption Request Form 
(Form AMS-15) at any time during the year initially, and annually 
thereafter on or before the start of the fiscal period, for as long as 
the producer continues to be eligible for the exemption.
    (3) A producer request for exemption shall include the following:
    (i) The applicant's full name, company name, address, telephone and 
fax numbers, and email address;
    (ii) Certification that the applicant maintains a valid certificate 
of organic operation issued under the OFPA and the NOP;
    (iii) Certification that the applicant produces organic products 
eligible to be labeled ``organic'' or ``100 percent organic'' under the 
NOP;
    (iv) A requirement that the applicant attach a copy of their 
certificate of organic operation issued by a USDA-accredited certifying 
agent;
    (v) Certification, as evidenced by signature and date, that all 
information provided by the applicant is true; and
    (vi) Such other information as may be required by the Board, with 
the approval of the Secretary.
    (4) If a producer complies with the requirements of this section, 
the Board will grant an assessment exemption and issue a Certificate of 
Exemption to the producer within 30 days. If the application is 
disapproved, the Board will notify the applicant of the reason(s) for 
disapproval within the same timeframe.
    (5) An importer who imports Christmas trees that are eligible to be 
labeled as ``organic'' or ``100 percent organic'' under the NOP, or 
certified as ``organic'' or ``100 percent organic'' under a U.S. 
equivalency arrangement established under the NOP, may be exempt from 
the payment of assessments. Such importer may submit documentation to 
the Board and request an exemption from assessment on certified 
``organic'' or ``100 percent organic'' Christmas trees on an Organic 
Exemption Request Form (Form AMS-15) at any time initially, and annually 
thereafter on or before the beginning of the fiscal period, as long as 
the importer continues to be eligible for the exemption. This 
documentation shall include the same information required of a producer 
in paragraph (c)(3) of this section. If the importer complies with the 
requirements of this section, the Board will grant the exemption and 
issue a Certificate of Exemption to the importer within the applicable 
timeframe. Any importer so exempted shall continue to be obligated to 
pay assessments under this part that are associated with any imported 
agricultural products that do not qualify for an exemption under this 
section.
    (6) If Customs collects the assessment on exempt product under 
paragraph (c)(5) of this section that is identified as ``organic'' by a 
number in the Harmonized Tariff Schedule, the Board must reimburse the 
exempt importer the assessments paid upon receipt of such assessments 
from Customs. For all other exempt organic product for which Customs 
collects the assessment, the importer may apply to the Board for a 
reimbursement of assessments paid, and the importer must submit 
satisfactory proof to the Board that the importer paid the assessment on 
exempt organic product.
    (7) The exemption will apply immediately following the issuance of 
the Certificate of Exemption.

[76 FR 69103, Nov. 8, 2011, as amended at 80 FR 82028, Dec. 31, 2015]



Sec.1214.54  Refund escrow accounts.

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

[[Page 169]]

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

                   Promotion, Research and Information



Sec.1214.60  Programs, plans, and projects.

    (a) The Board shall receive and evaluate, or on its own initiative, 
develop and submit to the Secretary for approval any program, plan, or 
project authorized under this subpart. Such programs, plans, or projects 
shall provide for:
    (1) The establishment, issuance, effectuation, and administration of 
appropriate programs for promotion, research, and information, including 
producer and consumer industry information, with respect to Christmas 
trees;
    (2) The establishment and conduct of research with respect to the 
image, desirability, use, marketability, quality, product development or 
production of Christmas trees, to the end that the marketing and use of 
Christmas trees may be encouraged, expanded, improved, or made more 
acceptable and to advance the image, desirability, or quality of 
Christmas trees.
    (b) A program, plan, or project may not be implemented prior to 
approval of the program, plan, or project by the Secretary. Once a 
program, plan, or project is so approved, the Board shall take 
appropriate steps to implement it.
    (c) Each program, plan, or project implemented under this subpart 
shall be reviewed or evaluated periodically by the Board to ensure that 
it contributes to an effective program of promotion, research, or 
information. If it is found by the Board that any such program, plan, or 
project does not contribute to an effective program of promotion, 
research, or information, then the Board shall terminate such program, 
plan, or project.



Sec.1214.61  Independent evaluation.

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



Sec.1214.62  Patents, copyrights, trademarks, information, 
publications, and product formulations.

    Patents, copyrights, trademarks, information, publications, and 
product formulations developed through the use of funds received by the 
Board under this subpart shall be the property of the U.S. Government as 
represented by the Board and shall, along with any rents, royalties, 
residual payments, or other income from the rental, sales, leasing, 
franchising, or other uses of such patents, copyrights, trademarks, 
information, publications, or product formulations, inure to the benefit 
of the Board, shall be considered

[[Page 170]]

income subject to the same fiscal, budget, and audit controls as other 
funds of the Board, and may be licensed subject to approval by the 
Secretary. Upon termination of this subpart, Sec.1214.83 shall apply 
to determine disposition of all such property.

                       Reports, Books, and Records



Sec.1214.70  Reports.

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



Sec.1214.71  Books and records.

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



Sec.1214.72  Confidential treatment.

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

                              Miscellaneous



Sec.1214.80  Right of the Secretary.

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



Sec.1214.81  Referenda.

    (a) Required referendum. For the purpose of ascertaining whether the 
persons subject to this Order favor the amendment, continuation, 
suspension, amendment, or termination of this Order, the Secretary shall 
conduct a referendum among persons subject to assessments under Sec.
1214.52 who, during a representative period determined by the Secretary, 
have engaged in the production or importation of Christmas trees:
    (1) The first referendum shall be conducted not later than 3 years 
after assessments first begin under the Order;

[[Page 171]]

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



Sec.1214.82  Suspension or termination.

    (a) The Secretary shall suspend or terminate this part or subpart or 
a provision thereof, if the Secretary finds that the subpart or a 
provision thereof obstructs or does not tend to effectuate the purpose 
of the Act, or if the Secretary determines that this subpart or a 
provision thereof is not favored by persons voting in a referendum 
conducted pursuant to the Act.
    (b) The Secretary shall suspend or terminate this subpart at the end 
of the fiscal period whenever the Secretary determines that its 
suspension or termination is favored by a majority of producers and 
importers voting in a referenda who, during a representative period 
determined by the Secretary, have been engaged in the production or 
importation of Christmas trees.
    (c) If, as a result of a referendum the Secretary determines that 
this subpart is not approved, the Secretary shall:
    (1) Not later than one hundred and eighty (180) days after making 
the determination, suspend or terminate, as the case may be, collection 
of assessments under this subpart; and
    (2) As soon as practical, suspend or terminate, as the case may be, 
activities under this subpart in an orderly manner.



Sec.1214.83  Proceedings after termination.

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

[[Page 172]]



Sec.1214.84  Effect of termination or amendment.

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



Sec.1214.85  Personal liability.

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



Sec.1214.86  Separability.

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



Sec.1214.87  Amendments.

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



Sec.1214.88  OMB control numbers.

    The control number assigned to the information collection 
requirements by the Office of Management and Budget pursuant to the 
Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35, is OMB control 
number 0505-0001, and OMB control number 0581-0267 and 0581-0268.



                     Subpart B_Referendum Procedures

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



Sec.1214.100  General.

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



Sec.1214.101  Definitions.

    (a) Administrator means the Administrator of the Agricultural 
Marketing Service, with power to delegate, or any officer or employee of 
the U.S. Department of Agriculture to whom authority has been delegated 
or may hereafter be delegated to act in the Administrator's stead.
    (b) Customs means the United States Customs and Border Protection or 
U.S. Customs Service, an agency of the United States Department of 
Homeland Security.
    (c) Department means the U.S. Department of Agriculture or any 
officer or employee of the Department to whom authority has heretofore 
been delegated, or to whom authority may hereafter be delegated, to act 
in the Secretary's stead.
    (d) Eligible domestic producer means any person who domestically 
produces more than 500 Christmas trees annually in the United States, 
and who:
    (1) Owns, or shares the ownership and risk of loss of the production 
of Christmas trees;
    (2) Rents Christmas tree production land, facilities and/or 
equipment resulting in the ownership of all or a portion of the 
Christmas trees domestically produced;
    (3) Owns Christmas tree production facilities and equipment but does 
not manage them and, as compensation, obtains the ownership of a portion 
of the Christmas trees domestically produced; or

[[Page 173]]

    (4) Is a party in a landlord-tenant relationship or a divided 
ownership arrangement involving totally independent entities cooperating 
only to domestically produce Christmas trees who share the risk of loss 
and receive a share of the Christmas trees domestically produced. No 
other acquisition of legal title to Christmas trees shall be deemed to 
result in persons becoming eligible domestic producers.
    (e) Eligible importer means any person importing more than 500 
Christmas trees annually into the United States as a principal or as an 
agent, broker, or consignee of any person who domestically produces or 
handles Christmas trees outside of the United States for sale in the 
United States, and who is listed as the importer of record for such 
Christmas trees that are identified in the Harmonized Tariff Schedule of 
the United States by the numbers 0604.91.00.20, 0604.91.00.40, and 
0604.91.00.60 during the representative period. Importation occurs when 
Christmas trees originating outside of the United States are released 
from custody by Customs and introduced into the stream of commerce in 
the United States. Included are persons who hold title to foreign-
produced Christmas trees immediately upon release by Customs, as well as 
any persons who act on behalf of others, as agents or brokers, to secure 
the release of Christmas trees from Customs when such Christmas trees 
are entered or withdrawn for consumption in the United States.
    (f) Christmas tree means any tree of the coniferous species, that is 
severed or cut from its roots and marketed as a Christmas tree for 
holiday use.
    (g) Order means the Christmas Tree Promotion, Research, and 
Information Order.
    (h) Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other legal entity. For 
the purpose of this definition, the term ``partnership'' includes, but 
is not limited to:
    (1) A husband and a wife who have title to, or leasehold interest 
in, a Christmas tree farm as tenants in common, joint tenants, tenants 
by the entirety, or, under community property laws, as community 
property; and
    (2) So-called ``joint ventures'' wherein one or more parties to an 
agreement, informal or otherwise, contributed land and others 
contributed capital, labor, management, or other services, or any 
variation of such contributions by two or more parties.
    (i) Referendum agent or agent means the individual or individuals 
designated by the Department to conduct the referendum.
    (j) Representative period means the period designated by the 
Department.
    (j) United States or U.S. means collectively the 50 states, the 
District of Columbia, the Commonwealth of Puerto Rico, and the 
territories and possessions of the United States.



Sec.1214.102  Voting.

    (a) Each eligible domestic producer and eligible importer of 
Christmas trees shall be entitled to cast only one ballot in the 
referendum. However, each domestic producer in a landlord/tenant 
relationship or a divided ownership arrangement involving totally 
independent entities cooperating only to domestically produce Christmas 
trees, in which more than one of the parties is a domestic producer or 
importer, shall be entitled to cast one ballot in the referendum 
covering only such domestic producer or importer's share of the 
ownership.
    (b) Proxy voting is not authorized, but an officer or employee of an 
eligible corporate domestic producer or importer, or an administrator, 
executor, or trustee or an eligible entity may cast a ballot on behalf 
of such entity. Any individual so voting in a referendum shall certify 
that such individual is an officer or employee of the eligible entity, 
or an administrator, executive, or trustee of an eligible entity and 
that such individual has the authority to take such action. Upon request 
of the referendum agent, the individual shall submit adequate evidence 
of such authority.
    (c) All ballots are to be cast by mail as instructed by the 
Department.
    (d) Eligible domestic producers or eligible importers may be asked 
to provide proof of sales or acreage as proof of eligibility to vote in 
any referendum.

[[Page 174]]



Sec.1214.103  Instructions.

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



Sec.1214.104  Subagents.

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



Sec.1214.105  Ballots.

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



Sec.1214.106  Referendum report.

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



Sec.1214.107  Confidential information.

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



Sec.1214.108  OMB control number.

    The control number assigned to the information collection 
requirement in this subpart by the Office of Management and Budget 
pursuant to the Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35 is 
OMB control number 0581-0267.



    Subpart C_Provisions Implementing the Christmas Tree Promotion, 
                     Research, and Information Order

    Source: 81 FR 38897, June, 15, 2016, unless otherwise noted.



Sec.1214.520  Late payment and interest charges for past due assessments.

    (a) A late payment charge shall be imposed on any producer or 
importer

[[Page 175]]

who fails to make timely remittance to the Board of the total 
assessments for which such producer or importer is liable. The late 
payment charge will be imposed on any assessments not received within 30 
calendar days of the date they are due. This one-time late payment 
charge shall be $250 and will be increased to $500 after 90 days of 
delinquency.
    (b) In addition to the late payment charge, 1.5 percent per month 
interest on the outstanding balance, including any late payment charge 
and accrued interest, will be added to any accounts for which payment 
has not been received by the Board within 30 calendar days after the 
date the assessments are due. Such interest will continue to accrue 
monthly until the outstanding balance is paid to the Board.



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



  Subpart A_Popcorn Promotion, Research, and Consumer Information Order

                               Definitions

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

                              Popcorn Board

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

   Promotion, Research, Consumer Information, and Industry Information

1215.40 Programs, plans, and projects.
1215.41 Contracts.

                        Expenses and Assessments

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

                       Reports, Books, and Records

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

                              Miscellaneous

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

                     Subpart B_Rules and Regulations

                               Definitions

1215.100 Terms defined.

                          Exemption Procedures

1215.300 Exemption procedures.

                              Miscellaneous

1215.400 OMB control numbers.

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

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



  Subpart A_Popcorn Promotion, Research, and Consumer Information Order

                               Definitions



Sec.1215.1  Act.

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

[[Page 176]]



Sec.1215.2  Board.

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



Sec.1215.3  Board member.

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



Sec.1215.4  Commerce.

    Commerce means interstate, foreign, or intrastate commerce.



Sec.1215.5  Consumer information.

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



Sec.1215.6  Department.

    Department means the United States Department of Agriculture.



Sec.1215.7  Fiscal year.

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



Sec.1215.8  Industry information.

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



Sec.1215.9  Marketing.

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



Sec.1215.10  Part and subpart.

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



Sec.1215.11  Person.

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



Sec.1215.12  Popcorn.

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



Sec.1215.13  Process.

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



Sec.1215.14  Processor.

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



Sec.1215.15  Programs, plans, and projects.

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



Sec.1215.16  Promotion.

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



Sec.1215.17  Research.

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



Sec.1215.18  Secretary.

    Secretary means the Secretary of Agriculture of the United States or 
any officer or employee of the Department to whom authority has 
heretofore been

[[Page 177]]

delegated, or to whom authority may hereafter be delegated, to act in 
the Secretary's stead.



Sec.1215.19  State.

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



Sec.1215.20  United States.

    United States means all of the States.

                              Popcorn Board



Sec.1215.21  Establishment and membership.

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

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



Sec.1215.22  Nominations and appointment.

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



Sec.1215.23  Acceptance.

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



Sec.1215.24  Term of office.

    (a) The members of the Board shall serve for terms of three years, 
except that members appointed to the initial Board shall serve, to the 
extent practicable, proportionately for terms of two, three, and four 
years.

[[Page 178]]

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



Sec.1215.25  Vacancies.

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



Sec.1215.26  Removal.

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



Sec.1215.27  Procedure.

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



Sec.1215.28  Compensation and reimbursement.

    The members of the Board shall serve without compensation but shall 
be reimbursed for necessary and reasonable expenses incurred by such 
members in

[[Page 179]]

the performance of their responsibilities under this subpart.



Sec.1215.29  Powers.

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



Sec.1215.30  Duties.

    The Board shall have the following duties:
    (a) To meet not less than annually, and to organize and select from 
among its members a chairperson and such other officers as may be 
necessary;
    (b) To evaluate or develop, and submit to the Secretary for 
approval, promotion, research, consumer information, and industry 
information programs, plans or projects;
    (c) To prepare for each fiscal year, and submit to the Secretary for 
approval at least 60 days prior to the beginning of each fiscal year, a 
budget of its anticipated expenses and disbursements in the 
administration of this subpart, as provided in Sec.1215.50;
    (d) To maintain such books and records, which shall be available to 
the Secretary for inspection and audit, and to prepare and submit such 
reports from time to time to the Secretary, as the Secretary may 
prescribe, and to make appropriate accounting with respect to the 
receipt and disbursement of all funds entrusted to it;
    (e) To prepare and make public, at least annually, a report of its 
activities carried out, and an accounting for funds received and 
expended;
    (f) To cause its financial statements to be prepared in conformity 
with generally accepted accounting principles and to be audited by an 
independent certified public accountant in accordance with generally 
accepted auditing standards at least once each fiscal year and at such 
other times as the Secretary may request, and submit a copy of each such 
audit to the Secretary;
    (g) To give the Secretary the same notice of meetings of the Board 
as is given to members in order that the Secretary, or a representative 
of the Secretary, may attend such meetings;

[[Page 180]]

    (h) To submit to the Secretary such information as may be requested 
pursuant to this subpart;
    (i) To keep minutes, books and records that clearly reflect all the 
acts and transactions of the Board. Minutes of each Board meeting shall 
be promptly reported to the Secretary;
    (j) To act as intermediary between the Secretary and any processor;
    (k) To investigate violations of the Act, order, and regulations 
issued under the order, conduct audits, and report the results of such 
investigations and audits to the Secretary for appropriate action to 
enforce the provisions of the Act, order, and regulations; and
    (l) To work to achieve an effective, continuous, and coordinated 
program of promotion, research, consumer information, and industry 
information designed to strengthen the popcorn industry's position in 
the marketplace, maintain and expand existing markets and uses for 
popcorn, develop new markets and uses for popcorn, and to carry out 
programs, plans, and projects designed to provide maximum benefits to 
the popcorn industry.

   Promotion, Research, Consumer Information, and Industry Information



Sec.1215.40  Programs, plans, and projects.

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



Sec.1215.41  Contracts.

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

[[Page 181]]

    (d) Any subcontractor who enters into a contract with a Board 
contractor and who receives or otherwise uses funds allocated by the 
Board shall be subject to the same provisions as the contractor.

                        Expenses and Assessments



Sec.1215.50  Budget and expenses.

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



Sec.1215.51  Assessments.

    (a) Any processor marketing popcorn in the United States or for 
export shall pay an assessment on such popcorn at the time of 
introduction to market at a rate as established in Sec.1215.51(c) and 
shall remit such assessment to the Board in such form and manner as 
prescribed by the Board.

[[Page 182]]

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



Sec.1215.52  Exemption from assessment.

    (a) Persons that process and distribute 4 million pounds or less of 
popcorn annually, based on the previous year, shall be exempted from 
assessment.
    (b) Persons that operate under an approved National Organic Program 
(7 CFR part 205) (NOP) organic handling system plan may be exempt from 
the payment of assessments under this part, provided that:
    (1) Only agricultural products certified as ``organic'' or ``100 
percent organic'' (as defined in the NOP) are eligible for exemption;
    (2) The exemption shall apply to all certified ``organic'' or ``100 
percent organic'' (as defined in the NOP) products of a processor 
regardless of whether the agricultural commodity subject to the 
exemption is processed by a person

[[Page 183]]

that also processes conventional or nonorganic agricultural products of 
the same agricultural commodity as that for which the exemption is 
claimed;
    (3) The processor maintains a valid certificate of organic operation 
as issued under the Organic Foods Production Act of 1990 (7 U.S.C. 6501-
6522) (OFPA) and the NOP regulations issued under OFPA (7 CFR part 205); 
and
    (4) Any processor so exempted shall continue to be obligated to pay 
assessments under this part that are associated with any agricultural 
products that do not qualify for an exemption under this section.

[70 FR 2757, Jan. 14, 2005, as amended at 80 FR 82028, Dec. 31, 2015]



Sec.1215.53  Influencing governmental action.

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

                       Reports, Books, and Records



Sec.1215.60  Reports.

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



Sec.1215.61  Books and records.

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



Sec.1215.62  Confidential treatment.

    (a) All information obtained from books, records, or reports under 
the Act, this subpart, and the rule and regulations issued thereunder 
shall be kept confidential by all persons, including all employees, 
agents, and former employees and agents of the Board; all officers, 
employees, agents, and former officers, employees, and agents of the 
Department; and all officers, employees, agents, and former officers, 
employees, and agents of contracting and subcontracting agencies or 
agreeing parties having access to such information. Such information 
shall not be available to Board members or processors. Only those 
persons having a specific need for such information to administer 
effectively the provisions of this part shall have access to such 
information. Only such information so obtained as the Secretary deems 
relevant shall be disclosed by them, and then only in a suit or 
administrative hearing brought at the direction, or on the request, of 
the Secretary, or to which the Secretary or any officer of the United 
States is a party, and involving this part.
    (b) No information obtained under the authority of this part may be 
made available to any agency or officer of

[[Page 184]]

the Federal Government for any purpose other than the implementation of 
the Act and any investigatory or enforcement action necessary for the 
implementation of the Act.
    (c) Nothing in paragraph (a) of this section may be deemed to 
prohibit:
    (1) The issuance of general statements based upon the reports of the 
number of persons subject to this part or statistical data collected 
therefrom, which statements do not identify the information furnished by 
any person;
    (2) The publication, by direction of the Secretary, of the name of 
any person who has violated this part, together with a statement of the 
particular provisions of this part violated by such person.
    (d) Any person who knowingly violated the provisions of this 
section, on conviction, shall be subject to a fine of not more than 
$1,000 or to imprisonment for not more than 1 year, or both, or if the 
person is an officer, employee, or agent of the Board or the Department, 
that person shall be removed from office or terminated from employment 
as applicable.

                              Miscellaneous



Sec.1215.70  Right of the Secretary.

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



Sec.1215.71  Suspension or termination.

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



Sec.1215.72  Proceedings after termination.

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

[[Page 185]]

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



Sec.1215.73  Effect of termination or amendment.

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



Sec.1215.74  Personal liability.

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



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

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



Sec.1215.76  Amendments.

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



Sec.1215.77  Separability.

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



                     Subpart B_Rules and Regulations

                               Definitions



Sec.1215.100  Terms defined.

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

                          Exemption Procedures



Sec.1215.300  Exemption procedures.

    (a) Any processor who markets 4 million pounds or less of popcorn 
annually and who desires to claim an exemption from assessments during a 
fiscal year as provided in Sec.1214.52 of this part shall apply to the 
Board, on a form provided by the Board, for a certificate of exemption. 
Such processor shall certify that the processor's marketing of popcorn 
during the previous fiscal year was 4 million pounds or less.
    (b) Persons eligible for an organic assessment exemption as provided 
in Sec.1215.52(b) may apply for such an exemption by submitting a 
request to the Board on an Organic Exemption Request

[[Page 186]]

Form (Form AMS-15) at any time during the year initially, and annually 
thereafter on or before January 1, as long as the processor continues to 
be eligible for the exemption.
    (c) A processor request for exemption shall include the following:
    (1) The applicant's full name, company name, address, telephone and 
fax numbers, and email address;
    (2) Certification that the applicant maintains a valid certificate 
of organic operation issued under the OFPA and the NOP;
    (3) Certification that the applicant processes organic products 
eligible to be labeled ``organic'' or ``100 percent organic'' under the 
NOP;
    (4) A requirement that the applicant attach a copy of their 
certificate of organic operation issued by a USDA-accredited certifying 
agent under the OFPA and the NOP;
    (5) Certification, as evidenced by signature and date, that all 
information provided by the applicant is true; and
    (6) Such other information as may be required by the Board, with the 
approval of the Secretary.
    (d) Upon receipt of an application, the Board shall determine 
whether an exemption may be granted and issue a Certificate of Exemption 
to the processor within 30 calendar days. If the application is 
disapproved, the Board will notify the applicant of the reason(s) for 
disapproval within the same timeframe.
    (e) Any person who desires to renew the exemption from assessments 
for a subsequent fiscal year shall reapply to the Board by January 1 of 
that year.
    (f) The exemption will apply at the first reporting period following 
the issuance of the Certificate of Exemption.
    (g) The Board may require persons receiving an exemption from 
assessments to provide to the Board reports on the disposition of exempt 
popcorn.

[62 FR 39389, July 22, 1997, as amended at 70 FR 2757, Jan. 14, 2005; 80 
FR 82028, Dec. 31, 2015]

                              Miscellaneous



Sec.1215.400  OMB control numbers.

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



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



       Subpart A_Peanut Promotion, Research, and Information Order

                               Definitions

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

                          National Peanut Board

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

                        Expenses and Assessments

1216.50 Budget and expenses.
1216.51 Assessments.
1216.52 Programs, plans, and projects.

[[Page 187]]

1216.53 Independent evaluation.
1216.54 Operating reserve.
1216.55 Investment of funds.
1216.56 Exemption for organic peanuts.

                       Reports, Books, and Records

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

             Certification of Peanut Producer Organizations

1216.70 Certification.

                              Miscellaneous

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

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

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

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

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



       Subpart A_Peanut Promotion, Research, and Information Order

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

                               Definitions



Sec.1216.1  Act.

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



Sec. Sec.1216.2-1216.3  [Reserved]



Sec.1216.4  Board.

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



Sec.1216.5  Conflict of interest.

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



Sec.1216.6  [Reserved]



Sec.1216.7  Department.

    Department means the U.S. Department of Agriculture.



Sec.1216.8  Farm Service Agency.

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



Sec.1216.9  Farmers stock peanuts.

    Farmers stock peanuts means picked or threshed peanuts produced in 
the United States which have not been changed (except for removal of 
foreign material, loose shelled kernels and excess moisture) from the 
condition in which picked or threshed peanuts are customarily marketed 
by producers, plus any loose shelled kernels that are removed from 
farmers stock peanuts before such farmers stock peanuts are marketed.



Sec.1216.10  First handler.

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



Sec.1216.11  Fiscal year.

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

[83 FR 27686, June 14, 2018]

[[Page 188]]



Sec.1216.12  Handle.

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



Sec.1216.13  Information.

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



Sec.1216.14  Market.

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



Sec.1216.15  Minor peanut-producing states.

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

[85 FR 16231, Mar. 23, 2020]



Sec.1216.16  Order.

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



Sec.1216.17  Part and subpart.

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



Sec.1216.18  Peanuts.

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



Sec.1216.19  Peanut producer organization.

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



Sec.1216.20  Person.

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



Sec.1216.21  Primary peanut-producing states.

    Primary peanut-producing states means Alabama, Arkansas, Florida, 
Georgia, Mississippi, Missouri, New Mexico, North Carolina, Oklahoma, 
South Carolina, Texas and Virginia, Provided, these states maintain a 3-
year average

[[Page 189]]

production of at least 10,000 tons of peanuts.

[85 FR 16231, Mar. 23, 2020]



Sec.1216.22  Producer.

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



Sec.1216.23  Promotion.

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



Sec.1216.24  [Reserved]



Sec.1216.25  Research.

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



Sec.1216.26  Secretary.

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



Sec.1216.27  Suspend.

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



Sec.1216.28  State.

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



Sec.1216.29  Terminate.

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



Sec.1216.30  United States.

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

                          National Peanut Board



Sec.1216.40  Establishment and membership.

    (a) Establishment of a National Peanut Board. There is hereby 
established a National Peanut Board, hereinafter called the Board, 
composed of no more than 13 peanut producers and alternates, appointed 
by the Secretary from nominations as follows:
    (1) Twelve members and alternates. One member and one alternate 
shall be appointed from each primary peanut-producing state, who are 
producers and whose nominations have been submitted by certified peanut 
producer organizations within a primary peanut-producing state.
    (2) The minor peanut-producing states shall collectively have one 
at-large member and one alternate, who are producers, to be appointed by 
the Secretary from nominations submitted by certified peanut producer 
organizations within minor peanut-producing states or from other 
certified farm organizations that include peanut producers as part of 
their membership.
    (b) Adjustment of membership. At least once in each five-year 
period, but not more frequently than once in each three-year period, the 
Board, or a person or agency designated by the Board, shall review the 
geographical distribution of peanuts in the United States and make 
recommendation(s) to the Secretary to continue without change, or 
whether changes should be made in the number of representatives on the

[[Page 190]]

Board to reflect changes in the geographical distribution of the 
production of peanuts.

[64 FR 41256, July 29, 1999, as amended at 73 FR 14921, Mar. 20, 2008; 
79 FR 15639, Mar. 21, 2014; 85 FR 16231, Mar. 23, 2020]



Sec.1216.41  Nominations.

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



Sec.1216.42  Selection.

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



Sec.1216.43  Term of office.

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



Sec.1216.44  Vacancies.

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



Sec.1216.45  Alternate members.

    An alternate member of the Board, during the absence of the member 
for the primary peanut-producing state or at-large member for whom the 
person is the alternate, shall act in the place

[[Page 191]]

and stead of such member and perform such duties as assigned. In the 
event of death, removal, resignation, or disqualification of any member, 
the alternate for that state or at-large member shall act for the member 
until a successor for such member is selected and qualified. In the 
event that both a producer member of the Board and the alternate are 
unable to attend a meeting, the Board may not designate any other 
alternate to serve in such member's or alternate's place and stead for 
such a meeting.



Sec.1216.46  Procedure.

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



Sec.1216.47  Compensation and reimbursement.

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



Sec.1216.48  Powers and duties.

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

[[Page 192]]

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



Sec.1216.49  Prohibited activities.

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

                        Expenses and Assessments



Sec.1216.50  Budget and expenses.

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

[[Page 193]]

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



Sec.1216.51  Assessments.

    (a) The funds necessary to pay for programs and other costs 
authorized by this part shall be acquired by the levying of assessments 
upon producers in a manner prescribed by the Secretary.
    (b) Each first handler, at such times and in such manner as 
prescribed by the Secretary, shall collect from each producer or first 
purchaser/handler and pay assessments to the Board on all peanuts 
handled, including peanuts produced by the first handler, no later than 
60 days after the last day of the month in which the peanuts were 
marketed.

[[Page 194]]

    (c) Such assessments shall be levied on all farmers stock peanuts 
sold at a rate of $3.55 per ton for Segregation 1 peanuts and $1.25 per 
ton for Segregation 2 peanuts and 3 peanuts, as those terms are defined 
in Sec. Sec.996.13(b)-(d) of this title.
    (d) For peanuts placed under a marketing assistance loan with the 
Department's Commodity Credit Corporation, the Commodity Credit 
Corporation, or any entity determined by the Commodity Credit 
Corporation shall deduct and remit to the Board, from the proceeds of 
the loan paid to the producer, the assessment per ton as specified in 
paragraph (c) of this section, no more than 60 days after the last day 
of the month in which the peanuts were placed under a marketing 
assistance loan.
    (e) All assessments collected under this section are to be used for 
expenses and expenditures pursuant to this Order and for the 
establishment of an operating reserve as prescribed in the Order.
    (f) The Board shall impose a late payment charge on any person who 
fails to remit to the Board the total amount for which the person is 
liable on or before the payment due date established under this section. 
The late payment charge will be in the form of interest on the 
outstanding portion of any amount for which the person is liable. The 
rate of interest shall be prescribed in regulations issued by the 
Secretary.
    (g) Persons failing to remit total assessments due in a timely 
manner may also be subject to actions under federal debt collection 
procedures.
    (h) The Board may authorize other organizations to collect 
assessments on its behalf with the approval of the Secretary.
    (i) The assessment rate may not be increased unless the new rate is 
approved by a referendum among eligible producers.

[70 FR 55226, Sept. 21, 2005, as amended at 83 FR 27686, June 14, 2018]



Sec.1216.52  Programs, plans, and projects.

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



Sec.1216.53  Independent evaluation.

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

[[Page 195]]



Sec.1216.54  Operating reserve.

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



Sec.1216.55  Investment of funds.

    The Board may invest, pending disbursement, funds it receives under 
this subpart, only in obligations of the United States or any agency of 
the United States; general obligations of any state or any political 
subdivision of a state; interest bearing accounts or certificates of 
deposit of financial institutions that are members of the Federal 
Reserve system; or obligations that are fully guaranteed as to principal 
and interest by the United States.



Sec.1216.56  Exemption for organic peanuts.

    (a) A producer who operates under an approved National Organic 
Program (7 CFR part 205) (NOP) organic production system plan may be 
exempt from the payment of assessments under this part, provided that:
    (1) Only agricultural products certified as ``organic'' or ``100 
percent organic'' (as defined in the NOP) are eligible for exemption;
    (2) The exemption shall apply to all certified ``organic'' or ``100 
percent organic'' (as defined in the NOP) products of a producer 
regardless of whether the agricultural commodity subject to the 
exemption is produced by a person that also produces conventional or 
nonorganic agricultural products of the same agricultural commodity as 
that for which the exemption is claimed;
    (3) The producer maintains a valid certificate of organic operation 
as issued under the Organic Foods Production Act of 1990 (7 U.S.C. 6501-
6522) (OFPA) and the NOP regulations issued under OPFA (7 CFR part 205); 
and
    (4) Any producer so exempted shall continue to be obligated to pay 
assessments under this part that are associated with any agricultural 
products that do not qualify for an exemption under this section.
    (b) In order to apply for this exemption, an eligible peanut 
producer shall submit a request to the Board on an Organic Exemption 
Request Form (Form AMS-15) at any time during the year initially, and 
annually thereafter on or before August 1, for as long as the producer 
continues to be eligible for the exemption.
    (c) A producer request for exemption shall include the following:
    (1) The applicant's full name, company name, address, telephone and 
fax numbers, and email address;
    (2) Certification that the applicant maintains a valid organic 
certificate issued under the OFPA and the NOP;
    (3) Certification that the applicant produces organic products 
eligible to be labeled ``organic'' or ``100 percent organic'' under the 
NOP;
    (4) A requirement that the applicant attach a copy of their 
certificate of organic operation issued by a USDA-accredited certifying 
agent under the OFPA and the NOP;
    (5) Certification, as evidenced by signature and date, that all 
information provided by the applicant is true; and
    (6) Such other information as may be required by the Board, with the 
approval of the Secretary.
    (d) If a producer complies with the requirements of this section, 
the Board will grant an assessment exemption and issue a Certificate of 
Exemption to the producer within 30 days. If the application is 
disapproved, the Board will notify the applicant of the reason(s) for 
disapproval within the same timeframe.
    (e) The producer shall provide a copy of the Certificate of 
Exemption to each handler to whom the producer sells peanuts. The 
handler shall maintain records showing the exempt producer's name and 
address and the exemption number assigned by the Board.
    (f) The exemption will apply at the first reporting period following 
the issuance of the Certificate of Exemption.

[70 FR 2757, Jan. 14, 2005, as amended at 80 FR 82029, Dec. 31 2015]

                       Reports, Books, and Records



Sec.1216.60  Reports.

    (a) Each producer and first handler subject to this part shall be 
required to report to the employees of the Board,

[[Page 196]]

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



Sec.1216.61  Books and records.

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



Sec.1216.62  Confidential treatment.

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

             Certification of Peanut Producer Organizations



Sec.1216.70  Certification.

    (a) Organizations receiving certification from the Secretary will be 
entitled to submit nominations for Board membership to the Secretary for 
appointment and to submit requests for funding to the Board.
    (b) For major peanut-producing states, state-legislated peanut 
promotion, research, and information organizations may request 
certification, provided the state-legislated promotion program submits a 
factual report that shall contain information deemed relevant and 
specified by the Secretary for the making of such determination pursuant 
to paragraph (e) of this section.
    (c) If a state-legislated peanut promotion, research and information 
organization in a major peanut-producing state does not elect to seek 
certification from the Secretary within a specified time period as 
determined by the Secretary, or does not meet eligibility requirements 
as specified by the Secretary, then any peanut producer organization 
whose primary purpose is to represent peanut producers within a primary 
peanut-producing state, or any other organization which has peanut 
producers as part of its membership, may request certification. 
Certification shall be based, in addition to

[[Page 197]]

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

                              Miscellaneous



Sec.1216.80  Right of the Secretary.

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



Sec.1216.81  Implementation of the Order.

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



Sec.1216.82  Suspension and termination.

    (a) The Secretary shall suspend or terminate this subpart or a 
provision thereof if the Secretary finds that this subpart or a 
provision thereof obstructs or does not tend to effectuate the purposes 
of the Act, or if the Secretary determines that this subpart or a 
provision thereof is not favored by persons voting in a referendum 
conducted pursuant to the Act.
    (b) Every five years, the Secretary shall hold a referendum to 
determine whether peanut producers favor the continuation of the Order. 
The Secretary will also conduct a referendum if 10 percent or more of 
all eligible peanut producers request the Secretary to hold a 
referendum. In addition, the Secretary may hold a referendum at any 
time.
    (c) The Secretary shall suspend or terminate this subpart at the end 
of the marketing year whenever the Secretary determines that its 
suspension or termination is approved or favored by a simple majority of 
the producers voting in a referendum who, during a representative period 
determined by the Secretary, have been engaged in the production of 
peanuts.
    (d) If, as a result of the referendum conducted under paragraph (b) 
of this section, the Secretary determines that this subpart is not 
approved, the Secretary shall:
    (1) Not later than 180 days after making the determination, suspend 
or terminate, as the case may be, collection of assessments under this 
subpart; and
    (2) As soon as practical, suspend or terminate, as the case may be, 
activities under this subpart in an Orderly manner.

[[Page 198]]



Sec.1216.83  Proceedings after termination.

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



Sec.1216.84  Effect of termination or amendment.

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



Sec.1216.85  Personal liability.

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



Sec.1216.86  Separability.

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



Sec.1216.87  Amendments.

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



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

    Patents, copyrights, trademarks, information, publications, and 
product formulations developed through the use of funds received by the 
Board under this subpart shall be the property of the U.S. Government as 
represented by the Board and shall, along with any rents, royalties, 
residual payments, or other income from the rental, sales, leasing, 
franchising, or other uses of such patents, copyrights, trademarks, 
information, publications, or product formulations, inure to the benefit 
of the Board; shall be considered

[[Page 199]]

income subject to the same fiscal, budget, and audit controls as other 
funds of the Board; and may be licensed subject to approval by the 
Secretary. Upon termination of this subpart, Sec.1216.82 shall apply 
to determine disposition of all such property.



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



Sec.1216.100  General.

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



Sec.1216.101  Definitions.

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



Sec.1216.102  Voting.

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

[[Page 200]]

or trustee of an eligible producing entity and that such individual has 
the authority to take such action. Upon request of the referendum agent, 
the individual shall submit adequate evidence of such authority.
    (c) All ballots are to be cast by mail or by facsimile, as 
instructed by the Secretary.



Sec.1216.103  Instructions.

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



Sec.1216.104  Subagents.

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



Sec.1216.105  Ballots.

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



Sec.1216.106  Referendum report.

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



Sec.1216.107  Confidential information.

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



PART 1217_SOFTWOOD LUMBER RESEARCH, PROMOTION, CONSUMER EDUCATION
AND INDUSTRY INFORMATION ORDER--Table of Contents



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

                               Definitions

Sec.
1217.1 Act.
1217.2 Blue Ribbon Commission or BRC.

[[Page 201]]

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

                          Softwood Lumber Board

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

                        Expenses and Assessments

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

                   Promotion, Research and Information

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

                       Reports, Books, and Records

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

                              Miscellaneous

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

                     Subpart B_Referendum Procedures

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

                     Subpart C_Rules and Regulations

1217.520 Late payment and interest charges for past due assessments.

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

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



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

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

                               Definitions



Sec.1217.1  Act.

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



Sec.1217.2  Blue Ribbon Commission or BRC.

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



Sec.1217.3  Board or Softwood Lumber Board.

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



Sec.1217.4  Board foot.

    Board foot or BF means a unit of measurement of softwood lumber 
represented by a board 12-inches long, 12-inches wide, and 1-inch thick 
or its

[[Page 202]]

cubic equivalent. A board foot calculation for softwood lumber 1 inch or 
more in thickness is based on its nominal thickness and width and the 
actual length. Softwood lumber with a nominal thickness of less than 1 
inch is calculated as 1 inch.



Sec.1217.5  Conflict of interest.

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



Sec.1217.6  Customs or CBP.

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



Sec.1217.7  Department or USDA.

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



Sec.1217.8  Domestic manufacturer.

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



Sec.1217.9  Export.

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



Sec.1217.10  Fiscal period or year.

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



Sec.1217.11  Importer.

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



Sec.1217.12  Information.

    Information means activities or programs designed to disseminate the 
results of research, new and existing marketing programs, new and 
existing marketing strategies, new and existing uses and applications, 
and to enhance the image of softwood lumber and the forests from which 
it comes. These include:
    (a) Consumer education, which means any action taken to provide 
information to, and broaden the understanding of, the general public 
regarding softwood lumber; and
    (b) Industry information, which means information and programs that 
would enhance the image of the softwood lumber industry.



Sec.1217.13  Manufacture.

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



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

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



Sec.1217.15  Marketing.

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



Sec.1217.16  Nominal size.

    Nominal size means the size by which softwood lumber is known and 
sold in the marketplace that differs from actual size and is based on 
the thickness and width of a board when it is first cut

[[Page 203]]

from a log, or rough cut, prior to drying and planing.



Sec.1217.17  Order.

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



Sec.1217.18  Part and subpart.

    Part means the Softwood Lumber Research, Promotion, Consumer 
Education, and Industry Information Order and all rules, regulations, 
and supplemental orders issued pursuant to the Act and the Order. The 
Order shall be a subpart of such part.



Sec.1217.19  Person.

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



Sec.1217.20  Planing.

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



Sec.1217.21  Programs, plans, and projects.

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



Sec.1217.22  Promotion.

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



Sec.1217.23  Research.

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



Sec.1217.24  Secretary.

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



Sec.1217.25  Softwood.

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



Sec.1217.26  Softwood lumber.

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



Sec.1217.27  State.

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



Sec.1217.28  Suspend.

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



Sec.1217.29  Terminate.

    Terminate means to issue a rule under section 553 of title 5 U.S.C. 
to cancel permanently the operation of an order or part thereof 
beginning on a date certain specified in the rule.

[[Page 204]]



Sec.1217.30  United States.

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

                          Softwood Lumber Board



Sec.1217.40  Establishment and membership.

    (a) Establishment of the Board. There is hereby established a 
Softwood Lumber Board to administer the terms and provisions of the 
Order and promote the use of softwood lumber. The Board shall be 
composed of manufacturers for the U.S. market who manufacture and 
domestically ship or import 15 million board feet or more of softwood 
lumber in the United States during a fiscal period. Seats on the Board 
shall be apportioned based on the volume of softwood lumber production 
that is manufactured and shipped within the United States by domestic 
manufacturers and the volume of softwood lumber imported into the United 
States. Seats on the Board shall also be apportioned based on size of 
operation within each geographic region, as specified in paragraphs 
(b)(1)(i) and (ii) and (b)(2) and (3) of this section. For purposes of 
this section, ``large'' means manufacturers for the U.S. market who 
account for the top two-thirds of the total annual volume of assessable 
softwood lumber and ``small'' means those who account for the remaining 
one-third of the total annual volume of assessable softwood lumber. If 
there are no eligible nominees for a large or small seat within a 
region, that seat may be filled by a nominee representing an eligible 
manufacturer for the U.S. market of any size. Should the size of a 
manufacturer for the U.S. market change during a member's term of 
office, that member may serve for the remainder of the term.
    (b) Composition of the Board. The 2020 Board shall be composed of 16 
members. The 2021 Board and each subsequent Board shall be composed of 
14 members. The Board shall be established as follows:
    (1) Domestic manufacturers. Domestic manufacturers must reside in 
the United States. For the 2020 Board, 11 members shall represent 
domestic manufacturers and for the 2021 Board and each subsequent Board, 
ten members shall represent domestic manufacturers who reside in the 
following three regions:
    (i) Five members shall represent manufacturers of softwood lumber in 
the U.S. South Region, which consists of the states of Alabama, 
Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, 
Oklahoma, South Carolina, Tennessee, Texas, Virginia, and West Virginia. 
For the 2020 Board, of these five members, two must represent large and 
three must represent small domestic manufacturers. For the 2021 Board 
and each subsequent Board of these five members, two must represent 
large, two must represent small, and one may represent domestic 
manufacturers of any size;
    (ii) Five members shall represent manufacturers of softwood lumber 
in the U.S. West Region for the 2020 Board, and for the 2021 Board and 
each subsequent Board, four members shall manufacture softwood lumber in 
the U.S. West Region, which consists of the states of Alaska, Arizona, 
California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, North 
Dakota, Oregon, South Dakota, Utah, Washington, and Wyoming. For the 
2020 Board, of these five members, four must represent large and one 
must represent small domestic manufacturers. For the 2021 Board and each 
subsequent Board, of the four members, two must represent large, one 
must represent small, and one may represent domestic manufacturers of 
any size; and
    (iii) One member shall represent a manufacturer of softwood lumber 
in the Northeast and Lake States Region, which consists of the states of 
Connecticut, Delaware, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, 
Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, New 
Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, 
Vermont, Wisconsin and all other parts of the United States not listed 
in paragraph (b)(1)(i), (ii), or (iii) of this section. This member may 
represent domestic manufacturers of any size.

[[Page 205]]

    (iv) For the 2021 Board, four members may represent a manufacturer 
for the U.S. market of any size.
    (2) Importers for the 2020 Board. Five members shall be importers 
from the following two regions:
    (i) Three members must import softwood lumber from the Canadian West 
Region, which consists of the provinces of British Columbia and Alberta. 
Of these three members, two must represent large and one must represent 
small importers; and
    (ii) Two members must import softwood lumber from the Canadian East 
Region, which consists of the Canadian territories and all other 
Canadian provinces not listed in paragraph (b)(2)(i) of this section 
that import softwood lumber into the United States. Of these two 
members, one must represent large and one must represent small 
importers.
    (3) Importers for the 2021 Board and each subsequent Board. Four 
members shall represent importers. Of these four members, two must 
represent large, one must represent small, and one may represent 
importers of any size. At least three of these members must import 
softwood lumber from the following regions:
    (i) Two members must import softwood lumber from the Canadian West 
Region, as defined in paragraph (b)(2)(i) of this section; and
    (ii) One member must import softwood lumber from the Canadian East 
Region, as defined in paragraph (b)(2)(ii) of this section.
    (c) Periodic review. In each five-year period, but not more 
frequently than once in each three-year period, the Board shall:
    (1) Review, based on a three-year average, the geographical 
distribution of the volume of softwood lumber production that is 
manufactured and shipped within the United States by domestic 
manufacturers and the volume of softwood lumber imported into the United 
States; and
    (2) Review, based on a three-year average, the distribution of the 
size of operations within each region; and
    (3) If warranted, recommend to the Secretary the reapportionment of 
the Board membership to reflect changes in the geographical distribution 
of the volume of softwood lumber production that is manufactured and 
shipped within the United States by domestic manufacturers and the 
volume of softwood lumber imported into the United States. The 
distribution of volumes between regions and the distribution of the size 
of operations within regions shall also be considered. The number of 
Board members may also be changed. Any changes in Board composition 
shall be implemented by the Secretary through rulemaking.

[84 FR 50299, Sept. 25, 2019]

[76 FR 46193, Aug. 2, 2011, as amended at 85 FR 45059, July 27, 2020]



Sec.1217.41  Nominations and appointments.

    Nominations shall be conducted as follows:
    (a) The Board shall conduct outreach to all segments of the softwood 
lumber industry. Softwood lumber domestic manufacturers and importers 
may submit nominations to the Board. Nominees must domestically 
manufacture and/or import 15 million board feet or more of softwood 
lumber per fiscal year;
    (b) Domestic manufacturers and importer nominees may provide the 
Board a short background statement outlining their qualifications to 
serve on the Board;
    (c) Nominees may seek nomination to the Board for all open or vacant 
seats for which the nominees are eligible;
    (d) The Board will evaluate all eligible nominees and submit the 
name of one nominee for each open seat and the name of one additional 
nominee for each open seat to the Secretary. Other qualified persons 
interested in serving in the open seats but not recommended by the Board 
will be designated by the Board as additional nominees for consideration 
by the Secretary;
    (e) The Board must submit nominations to the Secretary at least six 
months before the new Board term begins. From the nominations submitted 
by the Board, the Secretary shall select the members of the Board;
    (f) No two members shall be employed by a single corporation, 
company, partnership, or any other legal

[[Page 206]]

entity. This includes subsidiaries and affiliates thereof; and
    (g) The Board may recommend to the Secretary modifications to its 
nomination procedures as it deems appropriate. Any such modifications 
shall be implemented through rulemaking by the Secretary.

[84 FR 50299, Sept. 25, 2019]



Sec.1217.42  Term of office.

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



Sec.1217.43  Removal and vacancies.

    (a) In the event that any member of the Board ceases to work for or 
be affiliated with a domestic manufacturer or importer or ceases to do 
business in the region he or she represents, such position shall become 
vacant.
    (b) The Board may recommend to the Secretary that a member be 
removed from office if the member consistently refuses to perform his or 
her duties or engages in dishonest acts or willful misconduct. The 
Secretary may remove the member if he or she finds that the Board's 
recommendation shows adequate cause. Further, without recommendation of 
the Board, a member may be removed by the Secretary upon showing of 
adequate cause, including the failure by a member to submit reports or 
remit assessments required under this part, if the Secretary determines 
that such member's continued service would be detrimental to the 
achievement of the purposes of the Act.
    (c) If a position becomes vacant, nominations to fill the vacancy 
may be conducted using the nominations process set forth in Sec.
1217.41(b) or the Board may nominate eligible persons. A vacancy will 
not be required to be filled if the unexpired term is less than 6 
months.

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



Sec.1217.44  Procedure.

    (a) A majority of Board members (exclusive of vacant seats) will 
constitute a quorum so long as at least two of the members present are 
importer members and five of the members present are domestic 
manufacturers. If participation by telephone or other means is 
permitted, members participating by such means shall count as present in 
determining quorum or other voting requirements set forth in this 
section.
    (b) All votes at meetings of the Board, executive committee, and 
other committees will be cast in person or by electronic voting or other 
means as the Board and Secretary deem appropriate to allow members 
participating by telephone or other electronic means to cast votes. 
Voting by proxy will not be allowed.
    (c) Each member of the Board will be entitled to one vote on any 
matter put to the Board and the motion will carry if supported by a 
majority of Board members (exclusive of vacant seats), except for 
recommendations to change the assessment rate or to adopt a budget, both 
of which require affirmation by at least a majority of Board members 
plus two (exclusive of vacant seats).
    (d) The Board must give members and the Secretary timely notice of 
all Board, executive committee, and other committee meetings.
    (e) In lieu of voting at a properly convened meeting, and when, in 
the opinion of the Board's chairperson, such action is considered 
necessary, the Board may take action by mail, telephone, electronic 
mail, facsimile, or any other means of communication. Any action taken 
under this procedure is valid only if:
    (1) All members and the Secretary are notified, and the members are 
provided the opportunity to vote;
    (2) A majority of Board members (exclusive of vacant seats) vote in 
favor of the action (unless a vote of a majority of Board members plus 
two (exclusive

[[Page 207]]

of vacant seats) is required under the Order); and
    (3) All votes are promptly confirmed in writing and recorded in the 
Board minutes.

[84 FR 50300, Sept. 25, 2019]



Sec.1217.45  Reimbursement and attendance.

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



Sec.1217.46  Powers and duties.

    The Board shall have the following powers and duties:
    (a) To administer this Order in accordance with its terms and 
conditions and to collect assessments;
    (b) To develop and recommend to the Secretary for approval such 
bylaws as may be necessary for the functioning of the Board and such 
rules, regulations as may be necessary to administer the Order, 
including activities authorized to be carried out under the Order;
    (c) To meet, organize, and select from among its members a 
chairperson and, such other officers as may be necessary;
    (d) To create an executive committee of five members of the Board 
comprised of the chairperson and four other members elected by the 
Board. The duties of the executive committee shall be specified in 
bylaws that are recommended by the Board and approved by the Secretary;
    (e) To create other committees or subcommittees, which may include 
individuals other than Board members, as the Board deems necessary from 
its membership and other representatives it deems appropriate;
    (f) To employ or contract with such persons, other than the members, 
as it may deem necessary to assist the Board in carrying out its duties, 
and to determine the compensation and define the duties of each;
    (g) To notify manufacturers for the U.S. market of all Board 
meetings through press releases or other means and to give the Secretary 
the same notice of Board meetings, executive committee, and subcommittee 
meetings that is given to members in order that the Secretary's 
representative(s) may attend such meetings, and to keep and report 
minutes of each meeting to the Secretary;
    (h) To develop and administer programs, plans, and projects and 
enter into contracts or agreements, which must be approved by the 
Secretary before becoming effective, for promotion, research, and 
information, including consumer and industry information, research and 
advertising designed to strengthen the softwood lumber industry's 
position in the marketplace and to maintain, develop, and expand markets 
for softwood lumber. The payment of costs for such activities shall be 
with funds collected pursuant to the Order, including funds collected 
pursuant to Sec.1217.50(f). Each contract or agreement shall provide 
that:
    (1) The contractor or agreeing party shall develop and submit to the 
Board a program, plan, or project together with a budget that specifies 
the cost to be incurred to carry out the activity;
    (2) The contractor or agreeing party shall keep accurate records of 
all of its transactions and make periodic reports to the Board of 
activities conducted, submit accounting for funds received and expended, 
and make such other reports as the Secretary or Board may require;
    (3) The Secretary may audit the records of the contracting or 
agreeing party periodically; and
    (4) Any subcontractor who enters into a contract with a Board 
contractor and who receives or otherwise uses funds allocated by the 
Board shall be subject to the same provisions as the contractor.
    (i) To prepare and submit to the Secretary for approval 60 calendar 
days in advance of the beginning of a fiscal period, rates of assessment 
and a budget of the anticipated expenses to be incurred in the 
administration of the Order, including the probable cost of each 
promotion, research, and information activity proposed to be developed 
or carried out by the Board;
    (j) To borrow funds necessary for startup expenses of the Order;
    (k) To invest assessments collected and other funds received 
pursuant to

[[Page 208]]

the Order and use earnings from invested assessments to pay for 
activities carried out pursuant to the Order;
    (l) To recommend changes to the assessment rates as provided in this 
part;
    (m) To cause its books to be audited by a certified public 
accountant at the end of each fiscal period and at such other times as 
the Secretary may request, and to submit a report of each audit directly 
to the Secretary;
    (n) To periodically prepare and make public and to make available to 
manufacturers for the U.S. market reports of its activities and, at 
least once each fiscal period, to make public an accounting of funds 
received and expended;
    (o) To maintain minutes, books, and records and prepare and submit 
to the Secretary such reports from time to time as may be required for 
appropriate accounting with respect to the receipt and disbursement of 
funds entrusted to it, and to submit to the Secretary such information 
pertaining to this part or subpart as he or she may request;
    (p) To act as an intermediary between the Secretary and any 
manufacturer for the U.S. market;
    (q) To receive, investigate and report to the Secretary complaints 
of violations of the Order; and
    (r) To develop and recommend such rules and regulations to the 
Secretary for approval as may be necessary for the development and 
execution of plans or activities to effectuate the purposes of the Act.



Sec.1217.47  Prohibited activities.

    The Board may not engage in, and shall prohibit the employees and 
agents of the Board from engaging in:
    (a) Any action that would be a conflict of interest;
    (b) Using funds collected by the Board under the Order to undertake 
any action for the purpose of influencing legislation or governmental 
action or policy, by local, state, national, and foreign governments or 
subdivision thereof, other than recommending to the Secretary amendments 
to the Order; and
    (c) No program, plan or project including advertising shall be false 
or misleading or disparaging to another agricultural commodity. Softwood 
lumber of all geographic origins shall be treated equally.

                        Expenses and Assessments



Sec.1217.50  Budget and expenses.

    (a) At least 60 calendar days prior to the beginning of each fiscal 
period, and as may be necessary thereafter, the Board shall prepare and 
submit to the Department a budget for the fiscal period covering its 
anticipated expenses and disbursements in administering this part. The 
budget for research, promotion or information may not be implemented 
prior to approval by the Secretary. Each such budget shall include:
    (1) A statement of objectives and strategy for each program, plan, 
or project;
    (2) A summary of anticipated revenue, with comparative data for at 
least one preceding fiscal year, except for the initial budget;
    (3) A summary of proposed expenditures for each program, plan, or 
project; and
    (4) Staff and administrative expense breakdowns, with comparative 
data for at least one preceding fiscal year, except for the initial 
budget.
    (b) Each budget shall provide adequate funds to defray its proposed 
expenditures and to provide for a reserve as set forth in this Order.
    (c) Subject to this section, any amendment or addition to an 
approved budget must be approved by the Department, including shifting 
funds from one program, plan, or project to another.
    (d) The Board is authorized to incur such expenses, including 
provision for a reserve, as the Secretary finds reasonable and likely to 
be incurred by the Board for its maintenance and functioning, and to 
enable it to exercise its powers and perform its duties in accordance 
with the provisions of this subpart. Such expenses shall be paid from 
funds received by the Board.
    (e) With approval of the Department, the Board may borrow money for 
the payment of startup expenses subject to the same fiscal, budget, and 
audit controls as other funds of the Board. Any funds borrowed shall be 
expended only

[[Page 209]]

for startup costs and capital outlays and are limited to the first year 
of operation by the Board.
    (f) The Board may accept voluntary contributions, and is encouraged 
to seek other appropriate funding sources to carry out activities 
authorized by the Order. Such contributions shall be free from any 
encumbrances by the donor and the Board shall retain complete control of 
their use. The Board may receive funds from outside sources (i.e., 
Federal or State grants, Foreign Agricultural Service funds), with 
approval of the Secretary, for specific authorized projects.
    (g) The Board shall reimburse the Secretary for all expenses 
incurred by the Secretary in the implementation, administration, 
enforcement and supervision of the Order, including all referendum costs 
in connection with the Order.
    (h) For fiscal years beginning two years after the date the of the 
first Board meeting, the Board may not expend for administration, 
maintenance, and the functioning of the Board an amount that is greater 
than 8 percent of the assessment and other income received by and 
available to the Board for the fiscal year. For purposes of this 
limitation, reimbursements to the Secretary shall not be considered 
administrative costs.
    (i) The Board may establish an operating monetary reserve and may 
carry over to subsequent fiscal periods excess funds in any reserve so 
established: Provided, That, the funds in the reserve do not exceed one 
fiscal period's budget of expenses. Subject to approval by the 
Secretary, such reserve funds may be used to defray any expenses 
authorized under this subpart.
    (j) Pending disbursement of assessments and all other revenue under 
a budget approved by the Secretary, the Board may invest assessments and 
all other revenues collected under this part in:
    (1) Obligations of the United States or any agency of the United 
States;
    (2) General obligations of any State or any political subdivision of 
a State;
    (3) Interest bearing accounts or certificates of deposit of 
financial institutions that are members of the Federal Reserve System;
    (4) Obligations fully guaranteed as to principal interest by the 
United States; or
    (5) Other investments as authorized by the Secretary.



Sec.1217.51  Financial statements.

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



Sec.1217.52  Assessments.

    (a) The Board's programs and expenses shall be paid by assessments 
on manufacturers for the U.S. market, other income of the Board, and 
other funds available to the Board.
    (b) Subject to the exemptions specified in Sec.1217.53, each 
manufacturer for the U.S. market shall pay an assessment to the Board at 
the rate of $0.35 per thousand board feet of softwood lumber except that 
no person shall pay an assessment on the first 15 million board feet of 
softwood lumber otherwise subject to assessment in a fiscal year. 
Domestic manufacturers shall pay assessments based on the volume of 
softwood lumber shipped within the United States and importers shall pay 
assessments based on the volume of softwood lumber imported to the 
United States.
    (c) At least 24 months after the Order becomes effective and 
periodically thereafter, the Board shall review and may recommend to the 
Secretary, upon an affirmative vote by at least two-thirds of the Board 
members, a change in the assessment rate. In no event may the rate be 
less than $0.35 per

[[Page 210]]

thousand board feet nor more than $0.50 per thousand board feet. A 
change in the assessment rate is subject to rulemaking by the Secretary.
    (d) Domestic manufacturers shall remit to the Board the amount due 
no later than the 30th calendar day of the month following the end of 
the quarter in which the softwood lumber was shipped.
    (e) Domestic product that cannot be categorized in the Harmomized 
Tariff Schedule of the United States (HTSUS) numbers listed in paragraph 
(h) of this section if it were an import is not covered under this 
Order.
    (f) Softwood lumber originating in the United States that is 
exported to another country and shipped back to the United States is 
covered under this Order, provided that it can be categorized in the 
HTSUS numbers listed in paragraph (h) of this section.
    (g) Each importer of softwood lumber shall pay through Customs to 
the Board an assessment on softwood lumber imported into the United 
States as described in section 804(a) of Title VIII of the Tariff Act of 
1930, as amended (19 U.S.C. 1202-1683g), provided that it can be 
categorized in the HTSUS numbers listed in paragraph (h) of this 
section.
    (h) The HTSUS categories and assessment rates on imported softwood 
lumber are listed in the following table. A factor shall be used to 
determine the equivalent volume of softwood lumber in thousand board 
feet. The factor used to convert one cubic meter to one thousand board 
feet is 0.423776001. Accordingly, the assessment rate per cubic meter is 
as follows.

                        Table 1 to Paragraph (h)
------------------------------------------------------------------------
                                                          Assessment ($/
             Softwood lumber (by HTSUS No.)                cubic meter)
------------------------------------------------------------------------
4407.11.00..............................................          0.1483
4407.12.00..............................................          0.1483
4407.19.05..............................................          0.1483
4407.19.06..............................................          0.1483
4407.19.10..............................................          0.1483
4409.10.05..............................................          0.1483
4409.10.10..............................................          0.1483
4409.10.20..............................................          0.1483
4409.10.90..............................................          0.1483
4418.99.10..............................................          0.1483
------------------------------------------------------------------------

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

[76 FR 46193, Aug. 2, 2011, as amended at 84 FR 50300, Sept. 25, 2019]



Sec.1217.53  Exemption from assessment.

    (a) Manufacturers for the U.S. market who domestically ship and/or 
import less than 15 million board feet annually. (1) Domestic 
manufacturers who ship less than 15 million board feet of softwood 
lumber within the United States in a

[[Page 211]]

fiscal year are exempt from paying assessments. Such manufacturers must 
apply to the Board, on a form provided by the Board, for a certificate 
of exemption prior to the start of the fiscal year. This is an annual 
exemption and domestic manufacturers must reapply each year. Such 
manufacturers shall certify that they will ship less than 15 million 
board feet of softwood lumber during the fiscal year for which the 
exemption is claimed. Upon receipt of an application for exemption, the 
Board shall determine whether an exemption may be granted. The Board may 
request past shipment data to support the exemption request. The Board 
will then issue, if deemed appropriate, a certificate of exemption to 
the eligible domestic manufacturer. It is the responsibility of the 
domestic manufacturer to retain a copy of the certificate of exemption.
    (2) Importers who import into the United States less than 15 million 
board feet of softwood lumber in a fiscal year are exempt from paying 
assessments. Such importers must apply to the Board, on a form provided 
by the Board, for a certificate of exemption prior to the start of the 
fiscal year. This is an annual exemption and importers must reapply each 
year. Such importers shall certify that they will import less than 15 
million board feet of softwood lumber during the fiscal year for which 
the exemption is claimed. Upon receipt of an application for exemption, 
the Board shall determine whether an exemption is granted. The Board may 
request past import data to support the exemption request. The Board 
will then issue, if deemed appropriate, a certificate of exemption to 
the eligible importer. It is the responsibility of the importer to 
retain a copy of the certificate of exemption. The importer may be 
requested to submit a copy of the certificate to Customs. If Customs 
collects the assessment, the Board shall refund such importers their 
assessments no later than 60 calendar days after receipt of such 
assessments by the Board. No interest shall be paid on the assessments 
collected by Customs.
    (3) Domestic manufacturers who did not apply to the Board for an 
exemption and shipped less than 15 million board feet of softwood lumber 
within the United States during the fiscal year shall receive a refund 
from the Board for the applicable assessments within 30 calendar days 
after the end of the fiscal year. Board staff shall determine the 
assessments paid and refund the amount due to the domestic manufacturer 
accordingly.
    (4) Importers who did not apply to the Board for an exemption and 
imported less than 15 million board feet of softwood lumber during the 
fiscal year shall receive a refund from the Board for the applicable 
assessments within 30 calendar days after the end of the fiscal year.
    (5) If an entity is both a domestic manufacturer and an importer, 
the sum of such entity's domestic shipments and imports during a fiscal 
year shall count towards the 15 million board feet exemption.
    (6) Domestic manufacturers and importers who received an exemption 
certificate from the Board but domestically shipped or imported 15 
million board feet or more of softwood lumber during the fiscal year 
shall pay the Board the applicable assessments owed on the domestic 
shipments or imports over the 15 million board foot-exemption threshold 
within 30 calendar days after the end of the fiscal year and submit any 
necessary reports to the Board pursuant to Sec.1217.70.
    (7) The Board may develop additional procedures to administer this 
exemption as appropriate. Such procedures shall be implemented through 
rulemaking by the Secretary.
    (b) Manufacturers for the U.S. market who domestically ship and/or 
import 15 million board feet or more annually. (1) Domestic 
manufacturers who domestically ship 15 million board feet or more per 
fiscal year shall not pay assessments on their first 15 million board 
feet of softwood lumber shipped during the applicable fiscal year.
    (2) Importers who import 15 million board feet or more per fiscal 
year shall be exempt from paying assessments on their first 15 million 
board feet of softwood lumber imported during the applicable fiscal 
year. Such importers shall receive a refund from the Board

[[Page 212]]

for the applicable assessments collected by Customs. The Board shall 
refund such importers their assessments no later than 60 calendar days 
after receipt by the Board.
    (c) Export. Shipments of softwood lumber by domestic manufacturers 
to locations outside of the United States are exempt from assessment. 
The Board shall establish procedures for approval by the Secretary for 
refunding assessments that may be paid on such shipments and establish 
any necessary safeguards as deemed appropriate. Safeguard procedures 
shall be implemented by the Secretary through rulemaking. The Board may 
also recommend to the Secretary that such shipments be assessed if it 
deems appropriate. Such action shall be implemented by the Secretary 
through rulemaking.
    (d) Organic. (1) A domestic manufacturer of softwood lumber products 
who operates under an approved National Organic Program (7 CFR part 205) 
(NOP) organic handling system plan may be exempt from the payment of 
assessments under this part, provided that:
    (i) Only agricultural products certified as ``organic'' or ``100 
percent organic'' (as defined in the NOP) are eligible for exemption;
    (ii) The exemption shall apply to all certified ``organic'' or ``100 
percent organic'' (as defined in the NOP) products of a manufacturer 
regardless of whether the agricultural commodity subject to the 
exemption is manufactured by a person that also manufactures 
conventional or nonorganic agricultural products of the same 
agricultural commodity as that for which the exemption is claimed;
    (iii) The manufacturer maintains a valid certificate of organic 
operation as issued under the Organic Foods Production Act of 1990 (7 
U.S.C. 6501-6522) (OFPA) and the NOP regulations issued under OFPA (7 
CFR part 205); and
    (iv) Any manufacturer so exempted shall continue to be obligated to 
pay assessments under this part that are associated with any 
agricultural products that do not qualify for an exemption under this 
section.
    (2) To apply for exemption under this section, an eligible 
manufacturer shall submit a request to the Board on an Organic Exemption 
Request Form (Form AMS-15) at any time during the year initially, and 
annually thereafter on or before the start of the fiscal year, for as 
long as the manufacturer continues to be eligible for the exemption.
    (3) A manufacturer request for exemption shall include the 
following:
    (i) The applicant's full name, company name, address, telephone and 
fax numbers, and email address;
    (ii) Certification that the applicant maintains a valid certificate 
of organic operation issued under the OFPA and the NOP;
    (iii) Certification that the applicant manufactures organic products 
eligible to be labeled ``organic'' or ``100 percent organic'' under the 
NOP;
    (iv) A requirement that the applicant attach a copy of their 
certificate of organic operation issued by a USDA-accredited certifying 
agent under the OFPA and the NOP;
    (v) Certification, as evidenced by signature and date, that all 
information provided by the applicant is true; and
    (vi) Such other information as may be required by the Board, with 
the approval of the Secretary.
    (4) If a manufacturer complies with the requirements of this 
section, the Board will grant an assessment exemption and issue a 
Certificate of Exemption to the manufacturer within 30 calendar days. If 
the application is disapproved, the Board will notify the applicant of 
the reason(s) for disapproval within the same timeframe.
    (5) An importer who imports softwood lumber that is eligible to be 
labeled as ``organic'' or ``100 percent organic'' under the NOP, or 
certified as ``organic'' or ``100 percent organic'' under a U.S. 
equivalency arrangement established under the NOP, may be exempt from 
the payment of assessments. Such importer may submit documentation to 
the Board and request an exemption from assessment on certified 
``organic'' or ``100 percent organic'' softwood lumber on an Organic 
Exemption Request Form (Form AMS-15) at any time initially, and annually 
thereafter on or before the beginning of the fiscal year, as long as the 
importer continues to be eligible for the exemption. This documentation 
shall include

[[Page 213]]

the same information required of a manufacturer in paragraph (d)(3) of 
this section. If the importer complies with the requirements of this 
section, the Board will grant the exemption and issue a Certificate of 
Exemption to the importer within the applicable timeframe. Any importer 
so exempted shall continue to be obligated to pay assessments under this 
part that are associated with any imported agricultural products that do 
not qualify for an exemption under this section.
    (6) If Customs collects the assessment on exempt product under 
paragraph (d)(5) of this section that is identified as ``organic'' by a 
number in the Harmonized Tariff Schedule, the Board must reimburse the 
exempt importer the assessments paid upon receipt of such assessments 
from Customs. For all other exempt organic product for which Customs 
collects the assessment, the importer may apply to the Board for a 
reimbursement of assessments paid, and the importer must submit 
satisfactory proof to the Board that the importer paid the assessment on 
exempt organic product.
    (7) The exemption will apply immediately following the issuance of a 
Certificate of Exemption.

[76 FR 46193, Aug. 2, 2011, as amended at 80 FR 82029, Dec. 31, 2015]

                  Promotion, Research, and Information



Sec.1217.60  Programs, plans, and projects.

    (a) The Board shall develop and submit to the Secretary for approval 
programs, plans and projects authorized by this subpart. Such programs, 
plans and projects shall provide for promotion, research, education and 
other activities including consumer and industry information and 
advertising designed to:
    (1) Maintain, develop, expand and grow markets for softwood lumber;
    (2) Enhance and strengthen the image, reputation and public 
acceptance of softwood lumber and the forests from which it comes;
    (3) Develop new markets and marketing strategies for softwood 
lumber;
    (4) Expand the knowledge and understanding of the strength, safety 
and technical applications and encourage innovation in the use of 
softwood lumber;
    (5) Transfer and disseminate the knowledge and understanding of the 
strength, safety, environmental and sustainable benefits and technical 
applications of softwood lumber; and
    (6) Develop, expand and grow existing and new opportunities and 
applications for softwood lumber.
    (b) No program, plan, or project shall be implemented prior to its 
approval by the Secretary. Once a program, plan, or project is so 
approved, the Board shall take appropriate steps to implement it.
    (c) The Board must evaluate each program, plan and project 
authorized under this subpart to ensure that it contributes to an 
effective and coordinated program of research, promotion and 
information. The Board must submit the evaluations to the Secretary. If 
the Board finds that a program, plan or project does not contribute to 
an effective program of promotion, research, or information, then the 
Board shall terminate such plan or program.



Sec.1217.61  Independent evaluation.

    At least once every five years, the Board shall authorize and fund 
from funds otherwise available to the Board, an independent evaluation 
of the effectiveness of the Order and the programs conducted by the 
Board pursuant to the Act. The Board shall submit to the Secretary, and 
make available to the public, the results of each periodic independent 
evaluation conducted under this paragraph.



Sec.1217.62  Patents, copyrights, trademarks, inventions, product 
formulations, and publications.

    Any patents, copyrights, trademarks, inventions, product 
formulations, and publications developed through the use of funds 
received by the Board under this subpart shall be the property of the 
U.S. Government, as represented by the Board, and shall along with any 
rents, royalties, residual payments, or other income from the rental, 
sales, leasing, franchising, or other uses of such patents, copyrights, 
trademarks, inventions, publications, or product formulations, inure to 
the benefit of

[[Page 214]]

the Board, shall be considered income subject to the same fiscal, 
budget, and audit controls as other funds of the Board, and may be 
licensed subject to approval by the Secretary. Upon termination of this 
subpart, Sec.1217.83 shall apply to determine disposition of all such 
property.

                       Reports, Books, and Records



Sec.1217.70  Reports.

    (a) Each manufacturer for the U.S. market will be required to 
provide periodically to the Board such information as the Board, with 
the approval of the Secretary, may require. Such information may 
include, but not be limited to:
    (1) For domestic manufacturers:
    (i) The name, address and telephone number of the domestic 
manufacturer;
    (ii) The board feet of softwood lumber shipped within the United 
States;
    (iii) The board feet of softwood lumber for which assessments were 
paid; and
    (iv) The board feet of softwood lumber that was exported.
    (2) For importers:
    (i) The name, address and telephone number of the importer;
    (ii) The board feet of softwood lumber imported;
    (iii) The board feet of softwood lumber for which assessments were 
paid; and
    (iv) The country of export.
    (b) For domestic manufacturers, such information shall accompany the 
collected payment of assessments on a quarterly basis specified in Sec.
1217.52. For importers who pay their assessments directly to the Board, 
such information shall accompany the payment of collected assessments 
within 30 calendar days after the end of the quarter in which the 
softwood lumber was imported.

[76 FR 46193, Aug. 2, 2011, as amended at 78 FR 77334, Dec. 23, 2013]



Sec.1217.71  Books and records.

    Each manufacturer for the U.S. market, including those exempt under 
Sec.1217.53, shall maintain any books and records necessary to carry 
out the provisions of this subpart and regulations issued thereunder, 
including such records as are necessary to verify any required reports. 
Domestic manufacturers who only export softwood lumber shall also retain 
such books and records. Such books and records must be made available 
during normal business hours for inspection by the Board's or 
Secretary's employees or agents. A manufacturer for the U.S. market must 
maintain the books and records for two years beyond the fiscal period to 
which they apply.



Sec.1217.72  Confidential treatment.

    All information obtained from books, records, or reports under the 
Act, this subpart and the regulations issued thereunder shall be kept 
confidential by all persons, including all employees and former 
employees of the Board, all officers and employees and former officers 
and employees of contracting and subcontracting agencies or agreeing 
parties having access to such information. Such information shall not be 
available to Board members or other manufacturers for the U.S. market. 
Only those persons having a specific need for such information solely to 
effectively administer the provisions of this subpart shall have access 
to such information. Only such information so obtained as the Secretary 
deems relevant shall be disclosed by them, and then only in a judicial 
proceeding or administrative hearing brought at the direction, or at the 
request, of the Secretary, or to which the Secretary or any officer of 
the United States is a party, and involving this subpart. Nothing in 
this section shall be deemed to prohibit:
    (a) The issuance of general statements based upon the reports of the 
number of persons subject to this subpart or statistical data collected 
therefrom, which statements do not identify the information furnished by 
any person; and
    (b) The publication, by direction of the Secretary, of the name of 
any person who has been adjudged to have violated this part, together 
with a statement of the particular provisions of this part violated by 
such person.

[[Page 215]]

                              Miscellaneous



Sec.1217.80  Right of the Secretary.

    All fiscal matters, programs or projects, contracts, rules or 
regulations, reports, or other substantive actions proposed and prepared 
by the Board shall be submitted to the Secretary for approval.



Sec.1217.81  Referenda.

    (a) Initial referendum. The Order shall not become effective unless 
the Order is approved by a majority of domestic manufacturers and 
importers voting in the referendum who also represent a majority of the 
volume of softwood lumber represented in the referendum who, during a 
representative period determined by the Secretary, have been engaged in 
the domestic manufacturing or importation of softwood lumber. A single 
entity who domestically manufactures and imports softwood lumber may 
cast one vote in the referendum.
    (b) Subsequent referenda. The Secretary shall conduct subsequent 
referenda:
    (1) For the purpose of ascertaining whether manufacturers for the 
U.S. market favor the continuation, suspension, or termination of the 
Order;
    (2) No later than seven years after the Order becomes effective and 
every seven years thereafter, to determine whether softwood lumber 
manufacturers for the U.S. market favor the continuation of the Order. 
The Order shall continue if it is favored by a majority of domestic 
manufacturers and importers voting in the referendum who also represent 
a majority of the volume of softwood lumber represented in the 
referendum who, during a representative period determined by the 
Secretary, have been engaged in the domestic manufacturing or 
importation of softwood lumber;
    (3) At the request of the Board established in this Order;
    (4) At the request of 10 percent or more of the number of persons 
eligible to vote in a referendum as set forth under the Order; or
    (5) At any time as determined by the Secretary.

[76 FR 22755, Apr. 22, 2011, as amended at 81 FR 59427, Aug. 30, 2016; 
84 FR 50300, Sept. 25, 2019]



Sec.1217.82  Suspension or termination.

    (a) The Secretary shall suspend or terminate this part or subpart or 
a provision thereof, if the Secretary finds that this part or subpart or 
a provision thereof obstructs or does not tend to effectuate the 
purposes of the Act, or if the Secretary determines that this subpart or 
a provision thereof is not favored by persons voting in a referendum 
conducted pursuant to the Act.
    (b) The Secretary shall suspend or terminate this subpart at the end 
of the fiscal period whenever the Secretary determines that its 
suspension or termination is favored by a majority of domestic 
manufacturers and importers voting in the referendum who also represent 
a majority of the volume represented in the referendum who, during a 
representative period determined by the Secretary, have been engaged in 
the domestic manufacturing or importation of softwood lumber.
    (c) If, as a result of a referendum the Secretary determines that 
this subpart is not approved, the Secretary shall:
    (1) Not later than one hundred and eighty (180) calendar days after 
making the determination, suspend or terminate, as the case may be, the 
collection of assessments under this subpart.
    (2) As soon as practical, suspend or terminate, as the case may be, 
activities under this subpart in an orderly manner.



Sec.1217.83  Proceedings after termination.

    (a) Upon termination of this subpart, the Board shall recommend to 
the Secretary up to nine of its members, representing all regions 
specified in Sec.1217.40(b), three of whom shall be importers and six 
of whom shall be domestic manufacturers, to serve as trustees for the 
purpose of liquidating the Board's affairs. Such persons, upon 
designation by the Secretary, shall become trustees of all of the funds 
and property then in the possession or under control of the Board, 
including

[[Page 216]]

claims for any funds unpaid or property not delivered, or any other 
existing claim at the time of such termination.
    (b) The said trustees shall:
    (1) Continue in such capacity until discharged by the Secretary;
    (2) Carry out the obligations of the Board under any contracts or 
agreements entered into pursuant to the Order;
    (3) From time to time account for all receipts and disbursements and 
deliver all property on hand, together with all books and records of the 
Board and trustees, to such person or person as the Secretary directs; 
and
    (4) Upon request of the Secretary execute such assignments or other 
instruments necessary or appropriate to vest in such persons title and 
right to all of the funds, property, and claims vested in the Board or 
the trustees pursuant to the Order.
    (c) Any person to whom funds, property, or claims have been 
transferred or delivered pursuant to the Order shall be subject to the 
same obligations imposed upon the Board and upon the trustees.
    (d) Any residual funds not required to defray the necessary expenses 
of liquidation shall be turned over to the Secretary to be disposed of, 
to the extent practical, to one or more softwood lumber industry 
organizations in the United States whose mission is generic softwood 
lumber promotion, research, and information programs.



Sec.1217.84  Effect of termination or amendment.

    Unless otherwise expressly provided by the Secretary, the 
termination of this subpart or of any regulation issued pursuant 
thereto, or the issuance of any amendment to either thereof, shall not:
    (a) Affect or waive any right, duty, obligation, or liability which 
shall have arisen or which may thereafter arise in connection with any 
provision of this subpart or any regulation issued thereunder;
    (b) Release or extinguish any violation of this subpart or any 
regulation issued thereunder; or
    (c) Affect or impair any rights or remedies of the United States, or 
of the Secretary or of any other persons, with respect to any such 
violation.



Sec.1217.85  Personal liability.

    No member or employee of the Board shall be held personally 
responsible, either individually or jointly with others, in any way 
whatsoever, to any person for errors in judgment, mistakes, or other 
acts, either of commission or omission, as such member or employee, 
except for acts of dishonesty or willful misconduct.



Sec.1217.86  Separability.

    If any provision of this subpart is declared invalid or the 
applicability of it to any person or circumstances is held invalid, the 
validity of the remainder of this subpart, or the applicability thereof 
to other persons or circumstances shall not be affected thereby.



Sec.1217.87  Amendments.

    Amendments to this subpart may be proposed from time to time by the 
Board or any interested person affected by the provisions of the Act, 
including the Secretary.



Sec.1217.88  OMB Control numbers.

    The control numbers assigned to the information collection 
requirements by the Office of Management and Budget pursuant to the 
Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35, are OMB control 
number 0505-0001 (Board nominee background statement) and OMB control 
number 0581-0093.

[84 FR 50300, Sept. 25, 2019]



                     Subpart B_Referendum Procedures



Sec.1217.100  General.

    Referenda to determine whether eligible domestic manufacturers and 
importers favor the issuance, continuance, amendment, suspension, or 
termination of the Softwood Lumber Research, Promotion, Consumer 
Education, and Industry Information Order shall be conducted in 
accordance with this subpart.



Sec.1217.101  Definitions.

    For the purposes of this subpart:

[[Page 217]]

    (a) Administrator means the Administrator of the Agricultural 
Marketing Service, with power to delegate, or any officer or employee of 
the U.S. Department of Agriculture to whom authority has been delegated 
or may hereafter be delegated to act in the Administrator's stead.
    (b) Customs or CPB means Customs and Border Protection, an agency of 
the United States Department of Homeland Security.
    (c) Department or USDA means the U.S. Department of Agriculture or 
any officer or employee of the Department to whom authority has 
heretofore been delegated, or to whom authority may hereafter be 
delegated, to act in the Secretary's stead.
    (d) Eligible domestic manufacturer means any person who manufactured 
and shipped 15 million board feet or more of softwood lumber in the 
United States during the representative period.
    (e) Eligible importer means any person who imported 15 million board 
feet or more of softwood lumber into the United States during the 
representative period as a principal or as an agent, broker, or 
consignee of any person who manufactured softwood lumber outside of the 
United States for sale in the United States, and who is listed as the 
importer of record for such softwood lumber. Importation occurs when 
softwood lumber manufactured outside of the United States is released 
from custody by Customs and introduced into the stream of commerce in 
the United States. Included are persons who hold title to foreign-
manufactured softwood lumber immediately upon release by Customs, as 
well as any persons who act on behalf of others, as agents or brokers, 
to secure the release of softwood lumber from Customs when such softwood 
lumber is entered or withdrawn for use in the United States.
    (f) Manufacture means the process of transforming softwood logs into 
softwood lumber.
    (g) Order means the Softwood Lumber Research, Promotion, Consumer 
Education and Industry Information Order.
    (h) Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other legal entity. For 
the purpose of this definition, the term ``partnership'' includes, but 
is not limited to:
    (1) A husband and a wife who have title to, or leasehold interest 
in, a softwood lumber manufacturing entity as tenants in common, joint 
tenants, tenants by the entirety, or, under community property laws, as 
community property; and
    (2) So called ``joint ventures'' wherein one or more parties to an 
agreement, informal or otherwise, contributed land, facilities, capital, 
labor, management, equipment, or other services, or any variation of 
such contributions by two or more parties, so that it results in the 
domestic manufacturing or importation of softwood lumber and the 
authority to transfer title to the softwood lumber so manufactured or 
imported.
    (i) Referendum agent or agent means the individual or individuals 
designated by the Secretary to conduct the referendum.
    (j) Representative period means the period designated by the 
Department.
    (k) Softwood means one of the botanical groups of trees that have 
needle-like or scale-like leaves, the conifers.
    (l) Softwood lumber means and includes softwood lumber and products 
manufactured from softwood as described in section 804(a) within Title 
VIII (Softwood Lumber Act of 2008 or SLA of 2008) of the Tariff Act of 
1930 (19 U.S.C. 1202-1677g), as amended by section 3301 of the Food, 
Conservation and Energy Act of 2008 (Pub. L. 110-246, enacted June 18, 
2008) and categorized in the following Harmonized Tariff Schedule of the 
United States (HTSUS) numbers--4407.11.00, 4407.12.00, 4407.19.05, 
4407.19.06, 4407.19.10, 4409.10.05, 4409.10.10, 4409.10.20, 4409.10.90, 
and 4418.99.10. Domestic product that cannot be categorized in the 
referenced HTSUS numbers if it were an import is not covered under the 
Order. Further, softwood lumber originating in the United States that is 
exported to another country and shipped back to the United States is 
also covered under the Order, provided it can be categorized in the 
referenced HTSUS numbers. Additionally, articles brought into the United 
States temporarily and for which an

[[Page 218]]

exemption is claimed under subchapter XIII of chapter 98 of the HTSUS 
are exempted from the SLA of 2008 and are not covered under the Order.
    (m) United States means collectively the 50 States, the District of 
Columbia, the Commonwealth of Puerto Rico, and the territories and 
possessions of the United States.

[76 FR 46193, Aug. 2, 2011, as amended at 84 FR 50300, Sept. 25, 2019]



Sec.1217.102  Voting.

    (a) Each eligible domestic manufacturer and importer of softwood 
lumber shall be entitled to cast only one ballot in the referendum. 
However, each domestic manufacturer in a landlord/tenant relationship or 
a divided ownership arrangement involving totally independent entities 
cooperating only to manufacture softwood lumber, in which more than one 
of the parties is a domestic manufacturer or importer, shall be entitled 
to cast one ballot in the referendum covering only such domestic 
manufacturer or importer's share of ownership.
    (b) Proxy voting is not authorized, but an officer or employee of an 
eligible corporate domestic manufacturer or importer, or an 
administrator, executor, or trustee of an eligible entity may cast a 
ballot on behalf of such entity. Any individual so voting in a 
referendum shall certify that such individual is an officer or employee 
of the eligible entity, or an administrator, executive, or trustee of an 
eligible entity and that such individual has the authority to take such 
action. Upon request of the referendum agent, the individual shall 
submit adequate evidence of such authority.
    (c) A single entity who domestically manufactures and imports 
softwood lumber may cast one vote in the referendum.
    (d) All ballots are to be cast by mail or other means, as instructed 
by the Department.



Sec.1217.103  Instructions.

    The referendum agent shall conduct the referendum, in the manner 
provided in this subpart, under the supervision of the Administrator. 
The Administrator may prescribe additional instructions, consistent with 
the provisions of this subpart, to govern the procedure to be followed 
by the referendum agent. Such agent shall:
    (a) Determine the period during which ballots may be cast;
    (b) Provide ballots and related material to be used in the 
referendum. The ballot shall provide for recording essential 
information, including that needed for ascertaining whether the person 
voting, or on whose behalf the vote is cast, is an eligible voter;
    (c) Give reasonable public notice of the referendum:
    (1) By using available media or public information sources, without 
incurring advertising expense, to publicize the dates, places, method of 
voting, eligibility requirements, and other pertinent information. Such 
sources of publicity may include, but are not limited to, print and 
radio; and
    (2) By such other means as the agent may deem advisable.
    (d) Mail to eligible domestic manufacturers and importers whose 
names and addresses are known to the referendum agent, the instructions 
on voting, a ballot, and a summary of the terms and conditions of the 
proposed Order. No person who claims to be eligible to vote shall be 
refused a ballot;
    (e) At the end of the voting period, collect, open, number, and 
review the ballots and tabulate the results in the presence of an agent 
of a third party authorized to monitor the referendum process;
    (f) Prepare a report on the referendum; and
    (g) Announce the results to the public.



Sec.1217.104  Subagents.

    The referendum agent may appoint any individual or individuals 
necessary or desirable to assist the agent in performing such agent's 
functions of this subpart. Each individual so appointed may be 
authorized by the agent to perform any or all of the functions which, in 
the absence of such appointment, shall be performed by the agent.



Sec.1217.105  Ballots.

    The referendum agent and subagents shall accept all ballots cast. 
However, if an agent or subagent deems that a

[[Page 219]]

ballot should be challenged for any reason, the agent or subagent shall 
endorse above their signature, on the ballot, a statement to the effect 
that such ballot was challenged, by whom challenged, the reasons 
therefore, the results of any investigations made with respect thereto, 
and the disposition thereof. Ballots invalid under this subpart shall 
not be counted.



Sec.1217.106  Referendum report.

    Except as otherwise directed, the referendum agent shall prepare and 
submit to the Administrator a report on the results of the referendum, 
the manner in which it was conducted, the extent and kind of public 
notice given, and other information pertinent to the analysis of the 
referendum and its results.



Sec.1217.107  Confidential information.

    The ballots and other information or reports that reveal, or tend to 
reveal, the vote of any person covered under the Order and the voter 
list shall be strictly confidential and shall not be disclosed.



Sec.1217.108  OMB control number.

    The control number assigned to the information collection 
requirement in this subpart by the Office of Management and Budget 
pursuant to the Paperwork Reduction Act of 1995, 4 U.S.C. is OMB control 
number 0581-0093.

[84 FR 50300, Sept. 25, 2019]



                     Subpart C_Rules and Regulations

    Source: 79 FR 64299, October 29, 2014, unless otherwise noted.



Sec.1217.520  Late payment and interest charges for past due
assessments.

    (a) A late payment charge shall be imposed on any domestic 
manufacturer or importer who fails to make timely remittance to the 
Board of the total assessments for which they are liable. The late 
payment will be imposed on any assessments not received within 60 
calendar days of the date they are due. This one-time late payment 
charge shall be 10 percent of the assessments due before interest 
charges have accrued.
    (b) In addition to the late payment charge, 1\1/2\ percent per month 
interest on the outstanding balance, including any late payment and 
accrued interest, will be added to any accounts for which payment has 
not been received by the Board within 60 calendar days after the day 
assessments are due. Interest will continue to accrue monthly until the 
outstanding balance is paid to the Board.



PART 1218_BLUEBERRY PROMOTION, RESEARCH, AND INFORMATION ORDER--
Table of Contents



     Subpart A_Blueberry Promotion, Research, and Information Order

                               Definitions

Sec.
1218.1 Act.
1218.2 Blueberries.
1218.3 Conflict of interest.
1218.4 Crop year.
1218.5 Department.
1218.6 Exporter.
1218.7 First handler.
1218.8 Fiscal period.
1218.9 Importer.
1218.10 Information.
1218.11 Market or marketing.
1218.12 Order.
1218.13 Part and subpart.
1218.14 Person.
1218.15 Processed blueberries.
1218.16 Producer.
1218.17 Promotion.
1218.18 Research.
1218.19 Secretary.
1218.20 Suspend.
1218.21 Terminate.
1218.22 United States.
1218.23 U.S. Highbush Blueberry Council.

                     U.S. Highbush Blueberry Council

1218.40 Establishment and membership.
1218.41 Nominations and appointments.
1218.42 Term of office.
1218.43 Vacancies.
1218.44 Alternate members.
1218.45 Procedure.
1218.46 Compensation and reimbursement.
1218.47 Powers and duties.
1218.48 Prohibited activities.

                        Expenses and Assessments

1218.50 Budget and expenses.
1218.51 Financial statements.
1218.52 Assessments.
1218.53 Exemption procedures.
1218.54 Programs, plans, and projects.
1218.55 Independent evaluation.

[[Page 220]]

1218.56 Patents, copyrights, trademarks, information, publications, and 
          product formulations.

                       Reports, Books, and Records

1218.60 Reports.
1218.61 Books and records.
1218.62 Confidential treatment.

                              Miscellaneous

1218.70 Right of the Secretary.
1218.71 Referenda.
1218.72 Suspension and termination.
1218.73 Proceedings after termination.
1218.74 Effect of termination or amendment.
1218.75 Personal liability.
1218.76 Separability.
1218.77 Amendments.
1218.78 OMB control numbers.

Subpart B_Procedure for the Conduct of Referenda in Connection with the 
          Blueberry Promotion, Research, and Information Order

1218.100 General.
1218.101 Definitions.
1218.102 Voting.
1218.103 Instructions.
1218.104 Subagents.
1218.105 Ballots.
1218.106 Referendum report.
1218.107 Confidential information.

Subpart C_Provisions for Implementing the Blueberry Promotion, Research 
                          and Information Order

1218.520 Late payment and interest charges for past due assessments.

    Authority: 7 U.S.C. 7411-7425 and 7 U.S.C. 7401.

    Source: 65 FR 7654, Feb. 15, 2000, unless otherwise noted.

    Editorial Note: Nomenclature changes to part 1218 appear at 66 FR 
37118, 37119, July 17, 2001, and 71 FR 77245, Dec. 26, 2006.



     Subpart A_Blueberry Promotion, Research, and Information Order

    Source: 65 FR 43963, July 17, 2000, unless otherwise noted.

                               Definitions



Sec.1218.1  Act.

    Act means the Commodity Promotion, Research, and Information Act of 
1996 (7 U.S.C. 7401-7425; Pub. L. 104-127; 110 Stat. 1029), or any 
amendments thereto.



Sec.1218.2  Blueberries.

    Blueberries means cultivated blueberries grown in or imported into 
the United States of the genus Vaccinium Corymbosum and Ashei, including 
the northern highbush, southern highbush, rabbit eye varieties, and any 
hybrid, and excluding the lowbush (native) blueberry Vaccinium 
Angustifolium.



Sec.1218.3  Conflict of interest.

    Conflict of interest means a situation in which a member or employee 
of the U.S. Highbush Blueberry Council has a direct or indirect 
financial interest in a person who performs a service for, or enters 
into a contract with, the Council for anything of economic value.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37118, July 17, 2001; 
71 FR 44554, Aug. 7, 2006]



Sec.1218.4  Crop year.

    Crop year means the 12-month period from November 1 through October 
31 of the following year or such other period approved by the Secretary.



Sec.1218.5  Department.

    Department means the U.S. Department of Agriculture.



Sec.1218.6  Exporter.

    Exporter means a person involved in exporting blueberries from 
another country to the United States.



Sec.1218.7  First handler.

    First handler means any person, (excluding a common or contract 
carrier), receiving blueberries from producers and who as owner, agent, 
or otherwise ships or causes blueberries to be shipped as specified in 
the Order. This definition includes those engaged in the business of 
buying, selling and/or offering for sale; receiving; packing; grading; 
marketing; or distributing blueberries in commercial quantities. This 
definition includes a retailer, except a retailer who purchases or 
acquires from, or handles on behalf of any producer, blueberries. The 
term first handler includes a producer who handles or markets 
blueberries of the producer's own production.

[[Page 221]]



Sec.1218.8  Fiscal period.

    Fiscal period means a calendar year from January 1 through December 
31, or such other period as approved by the Secretary.



Sec.1218.9  Importer.

    Importer means any person who imports fresh or processed blueberries 
into the United States as a principal or as an agent, broker, or 
consignee of any person who produces or handles fresh or processed 
blueberries outside of the United States for sale in the United States, 
and who is listed in the import records as the importer of record for 
such blueberries.



Sec.1218.10  Information.

    Information means information and programs that are designed to 
increase efficiency in processing and to develop new markets, marketing 
strategies, increase market efficiency, and activities that are designed 
to enhance the image of blueberries on a national or international 
basis. These include:
    (a) Consumer information, which means any action taken to provide 
information to, and broaden the understanding of, the general public 
regarding the consumption, use, nutritional attributes, and care of 
blueberries; and
    (b) Industry information, which means information and programs that 
will lead to the development of new markets, new marketing strategies, 
or increased efficiency for the blueberry industry, and activities to 
enhance the image of the blueberry industry.



Sec.1218.11  Market or marketing.

    (a) Marketing means the sale or other disposition of blueberries in 
any channel of commerce.
    (b) To market means to sell or otherwise dispose of blueberries in 
interstate, foreign, or intrastate commerce.



Sec.1218.12  Order.

    Order means an order issued by the Secretary under section 514 of 
the Act that provides for a program of generic promotion, research, and 
information regarding agricultural commodities authorized under the Act.



Sec.1218.13  Part and subpart.

    Part means the Blueberry Promotion, Research, and Information Order 
and all rules, regulations, and supplemental orders issued pursuant to 
the Act and the Order. The Order shall be a subpart of such part.



Sec.1218.14  Person.

    Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other legal entity.



Sec.1218.15  Processed blueberries.

    Processed blueberries means blueberries which have been frozen, 
dried, pureed, or made into juice.



Sec.1218.16  Producer.

    Producer means any person who grows blueberries in the United States 
for sale in commerce, or a person who is engaged in the business of 
producing, or causing to be produced for any market, blueberries beyond 
the person's own family use and having value at first point of sale.



Sec.1218.17  Promotion.

    Promotion means any action taken to present a favorable image of 
blueberries to the general public and the food industry for the purpose 
of improving the competitive position of blueberries both in the United 
States and abroad and stimulating the sale of blueberries. This includes 
paid advertising and public relations.



Sec.1218.18  Research.

    Research means any type of test, study, or analysis designed to 
advance the image, desirability, use, marketability, production, product 
development, or quality of blueberries, including research relating to 
nutritional value, cost of production, new product development, varietal 
development, nutritional value, health research, and marketing of 
blueberries.



Sec.1218.19  Secretary.

    Secretary means the Secretary of Agriculture of the United States, 
or any officer or employee of the Department to whom authority has 
heretofore been delegated, or to whom authority may

[[Page 222]]

hereafter be delegated, to act in the Secretary's stead.



Sec.1218.20  Suspend.

    Suspend means to issue a rule under section 553 of title 5, U.S.C., 
to temporarily prevent the operation of an order or part thereof during 
a particular period of time specified in the rule.



Sec.1218.21  Terminate.

    Terminate means to issue a rule under section 553 of title 5, 
U.S.C., to cancel permanently the operation of an order or part thereof 
beginning on a date certain specified in the rule.



Sec.1218.22  United States.

    United States means collectively the 50 states, the District of 
Columbia, the Commonwealth of Puerto Rico, and the territories and 
possessions of the United States.



Sec.1218.23  U.S. Highbush Blueberry Council.

    U.S. Highbush Blueberry Council or the Council means the 
administrative body established pursuant to Sec.1218.40.

[71 FR 44554, Aug. 7, 2006]

                     U.S. Highbush Blueberry Council



Sec.1218.40  Establishment and membership.

    (a) Establishment of the U.S. Highbush Blueberry Council. There is 
hereby established a U.S. Highbush Blueberry Council, hereinafter called 
the Council, composed of no more than 20 members and alternates, 
appointed by the Secretary from nominations as follows:
    (1) One producer member and alternate from each of the following 
regions:
    (i) Region 1 Western Region (all states from the Pacific east to 
the Rockies): Alaska, Arizona, California, Colorado, Hawaii, Idaho, 
Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming.
    (ii) Region 2 Midwest Region (all states east of the Rockies to the 
Great Lakes and south to the Kansas/Missouri/Kentucky state line): 
Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, 
Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin.
    (iii) Region 3 Northeast Region (all states east of the Great Lakes 
and North of the North Carolina/Tennessee state line): Connecticut, 
Delaware, New York, Maine, Maryland, Massachusetts, New Hampshire, New 
Jersey, Pennsylvania, Rhode Island, Virginia, Vermont, Washington, D.C., 
and West Virginia.
    (iv) Region 4 Southern Region (all states south of the Virginia/
Kentucky/Missouri/Kansas state line and east of the Rockies): Alabama, 
Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, 
Oklahoma, Puerto Rico, South Carolina, Tennessee, and Texas.
    (2) One producer member and alternate from each of the top eight 
blueberry producing states, based on the average of the total tons 
produced over the previous three years. Average tonnage will be based 
upon production and assessment figures generated by the Council.
    (3) Four importers and alternates.
    (4) Two exporters and alternates will be filled by foreign blueberry 
producers currently shipping blueberries into the United States from the 
two largest foreign blueberry production areas, respectively, based on a 
three-year average.
    (5) One first handler member and alternate shall be filled by a 
United States based independent or cooperative organization which is a 
producer/shipper of domestic blueberries.
    (6) One public member and alternate. The public member and alternate 
public member may not be a blueberry producer, handler, importer, 
exporter, or have a financial interest in the production, sales, 
marketing or distribution of blueberries.
    (b) Adjustment of membership. At least once every five years, the 
Council will review the geographical distribution of United States 
production of blueberries and the quantity of imports. The review will 
be conducted through an audit of state crop production figures and 
Council assessment records. If warranted, the Council will recommend to 
the Secretary that the membership on the Council be altered to reflect 
any changes in the geographical distribution of domestic blueberry 
production and the quantity of imports. If the

[[Page 223]]

level of imports increases, importer members and alternates may be added 
to the Council.
    (c) Council's ability to serve the diversity of the industry. When 
making recommendations for appointments, the industry should take into 
account the diversity of the population served and the knowledge, 
skills, and abilities of the members to serve a diverse population, size 
of the operations, methods of production and distribution, and other 
distinguishing factors to ensure that the recommendations of the Council 
take into account the diverse interest of persons responsible for paying 
assessments, and others in the marketing chain, if appropriate.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001; 
71 FR 44554, Aug. 7, 2006; 75 FR 31282, June 3, 2010; 80 FR 53262, Sept. 
3, 2015]



Sec.1218.41  Nominations and appointments.

    (a) State representatives. (1) When a state has a state blueberry 
commission or marketing order in place, the state commission or 
committee will nominate members to serve on the Council. At least two 
nominees shall be recommended to the Secretary for each member and each 
alternate position. Other eligible persons interested in serving in the 
respective state positions but not nominated by their State marketing 
order or commission will be designated by the State organization and/or 
Council as additional nominees for consideration by the Secretary.
    (2) Nomination and election of state representatives where no 
commission or order is in place will be handled by the Council staff. 
The Council staff will seek nominations for members and alternates from 
the specific states. Nominations will be returned to the Council office 
and placed on a ballot which will then be sent to producers in the state 
for a vote. The final nominee for member will have received the highest 
number of votes cast. The person with the second highest number of votes 
cast will be the final nominee for alternate. The persons with the third 
and fourth highest number of votes cast will be designated as additional 
nominees for consideration by the Secretary.
    (b) Regional representatives. Nomination and election of regional 
representatives will be handled by the Council staff. The Council staff 
will seek nominations for members and alternates from the specific 
regions. Nominations will be returned to the Council office and placed 
on a ballot which will then be sent to producers in the region for a 
vote. The final nominee for member will have received the highest number 
of votes cast. The person with the second highest number of votes cast 
will be the final nominee for alternate. The persons with the third and 
fourth highest number of votes cast will be designated by the Council as 
additional nominees for consideration by the Secretary.
    (c) Nominations for the importer, exporter, first handler, and 
public member positions will be made by the Council. Two nominees for 
each member and each alternate position will be recommended to the 
Secretary for consideration. Other qualified persons interested in 
serving in these positions but not recommended by the Council will be 
designated by the Council as additional nominees for consideration by 
the Secretary.
    (d) Producer, handler and importer nominees must be in compliance 
with the Order's provisions regarding payment of assessments and filing 
of reports. Further, producers and importers must produce or import, 
respectively, 2,000 pounds or more of highbush blueberries annually.
    (e) From the nominations, the Secretary shall select the members and 
alternate members of the Council.

80 FR 53262, Sept. 3, 2015]



Sec.1218.42  Term of office.

    Council members and alternates will serve for a term of three years 
and be able to serve a maximum of two consecutive terms. A Council 
member may serve as an alternate during the years the member is 
ineligible for a member position. When the Council is first established, 
the state representatives, first handler member, and their respected 
alternates will be assigned initial terms of three years. Regional 
representatives, the importer member, the exporter member, public 
member, and their alternates will serve an initial

[[Page 224]]

term of two years. Thereafter, each of these positions will carry a full 
three-year term. Council nominations and appointments will take place in 
two out of every three years. Each term of office will end on December 
31, with new terms of office beginning on January 1.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec.1218.43  Vacancies.

    (a) In the event that any member of the Council ceases to be a 
member of the category of members from which the member was appointed to 
the Council, such position shall automatically become vacant.
    (b) If a member of the Council consistently refuses to perform the 
duties of a member of the Council, or if a member of the Council engages 
in acts of dishonesty or willful misconduct, the Council may recommend 
to the Secretary that the member be removed from office. If the 
Secretary finds the recommendation of the Council shows adequate cause, 
the Secretary shall remove such member from office.
    (c) Should any member position become vacant, the alternate of that 
member shall automatically assume the position of said member. Should 
the positions of both a member and such member's alternate become 
vacant, successors for the unexpired terms of such member and alternate 
shall be appointed in the manner specified in Sec.1218.40 and Sec.
1218.41, except that said nomination and replacement shall not be 
required if said unexpired terms are less than six months.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec.1218.44  Alternate members.

    An alternate member of the Council, during the absence of the member 
for whom the person is the alternate, shall act in the place and stead 
of such member and perform such duties as assigned. In the event of 
death, removal, resignation, or disqualification of any member, the 
alternate for that member shall automatically assume the position of 
said member. In the event that both a producer member of the Council and 
the alternate are unable to attend a meeting, the Council may not 
designate any other alternate to serve in such member's or alternate's 
place and stead for such a meeting.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec.1218.45  Procedure.

    (a) At a Council meeting, it will be considered a quorum when a 
minimum of 11 members, or their alternates serving in their absence, are 
present.
    (b) At the start of each fiscal period, the Council will select a 
chairperson and vice chairperson who will conduct meetings throughout 
that period.
    (c) All Council members and alternates will receive a minimum of 10 
days advance notice of all Council and committee meetings.
    (d) Each member of the Council will be entitled to one vote on any 
matter put to the Council, and the motion will carry if supported by one 
vote more than 50 percent of the total votes represented by the Council 
members present.
    (e) It will be considered a quorum at a committee meeting when at 
least one more than half of those assigned to the committee are present. 
Alternates may also be assigned to committees as necessary. Committees 
may also consist of individuals other than Council members and such 
individuals may vote in committee meetings. These committee members 
shall serve without compensation but shall be reimbursed for reasonable 
travel expenses, as approved by the Council.
    (f) All votes at meetings of the Council and committees may be cast 
in person or by electronic voting or other means as the Council and 
Secretary deem appropriate to allow members participating by telephone 
or other electronic means to cast votes.
    (g) In lieu of voting at a properly convened meeting and, when in 
the opinion of the chairperson of the Council such action is considered 
necessary, the Council may take action if supported by one vote more 
than 50 percent of the members by mail, telephone, electronic mail, 
facsimile, or any other means of communication, and all telephone votes 
shall be confirmed promptly in writing. In that event, all members must 
be notified

[[Page 225]]

and provided the opportunity to vote. Any action so taken shall have the 
same force and effect as though such action had been taken at a properly 
convened meeting of the Council. All votes shall be recorded in Council 
minutes.
    (h) There shall be no voting by proxy.
    (i) The chairperson shall be a voting member.
    (j) The organization of the Council and the procedures for the 
conducting of meetings of the Council shall be in accordance with its 
bylaws, which shall be established by the Council and approved by the 
Secretary.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001; 
75 FR 31282, June 3, 2010; 80 FR 53262, Sept. 3, 2015]



Sec.1218.46  Compensation and reimbursement.

    The members of the Council, and alternates when acting as members, 
shall serve without compensation but shall be reimbursed for reasonable 
travel expenses, as approved by the Council, incurred by them in the 
performance of their duties as Council members.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec.1218.47  Powers and duties.

    The Council shall have the following powers and duties:
    (a) To administer the Order in accordance with its terms and 
conditions and to collect assessments;
    (b) To develop and recommend to the Secretary for approval such 
bylaws as may be necessary for the functioning of the Council, and such 
rules as may be necessary to administer the Order, including activities 
authorized to be carried out under the Order;
    (c) To meet, organize, and select from among the members of the 
Council a chairperson, other officers, committees, and subcommittees, as 
the Council determines to be appropriate;
    (d) To employ persons, other than the members, as the Council 
considers necessary to assist the Council in carrying out its duties and 
to determine the compensation and specify the duties of such persons;
    (e) To develop programs and projects, and enter into contracts or 
agreements, which must be approved by the Secretary before becoming 
effective, for the development and carrying out of programs or projects 
of research, information, or promotion, and the payment of costs thereof 
with funds collected pursuant to this subpart. Each contract or 
agreement shall provide that any person who enters into a contract or 
agreement with the Council shall develop and submit to the Council a 
proposed activity; keep accurate records of all of its transactions 
relating to the contract or agreement; account for funds received and 
expended in connection with the contract or agreement; make periodic 
reports to the Council of activities conducted under the contract or 
agreement; and make such other reports available as the Council or the 
Secretary considers relevant. Any contract or agreement shall provide 
that:
    (1) The contractor or agreeing party shall develop and submit to the 
Council a program, plan, or project together with a budget or budgets 
that shall show the estimated cost to be incurred for such program, 
plan, or project;
    (2) The contractor or agreeing party shall keep accurate records of 
all its transactions and make periodic reports to the Council of 
activities conducted, submit accounting for funds received and expended, 
and make such other reports as the Secretary or the Council may require;
    (3) The Secretary may audit the records of the contracting or 
agreeing party periodically; and
    (4) Any subcontractor who enters into a contract with a Council 
contractor and who receives or otherwise uses funds allocated by the 
Council shall be subject to the same provisions as the contractor.
    (f) To prepare and submit for approval of the Secretary fiscal year 
budgets in accordance with Sec.1218.50;
    (g) To maintain such records and books and prepare and submit such 
reports and records from time to time to the Secretary as the Secretary 
may prescribe; to make appropriate accounting with respect to the 
receipt and disbursement of all funds entrusted to it; and to keep 
records that accurately reflect the actions and transactions of the 
Council;

[[Page 226]]

    (h) To cause its books to be audited by a competent auditor at the 
end of each fiscal year and at such other times as the Secretary may 
request, and to submit a report of the audit directly to the Secretary;
    (i) To give the Secretary the same notice of meetings of the Council 
as is given to members in order that the Secretary's representative(s) 
may attend such meetings, and to keep and report minutes of each meeting 
of the Council to the Secretary;
    (j) To act as intermediary between the Secretary and any producer, 
first handler, importer, or exporter;
    (k) To furnish to the Secretary any information or records that the 
Secretary may request;
    (l) To receive, investigate, and report to the Secretary complaints 
of violations of the Order;
    (m) To recommend to the Secretary such amendments to the Order as 
the Council considers appropriate; and
    (n) To work to achieve an effective, continuous, and coordinated 
program of promotion, research, consumer information, evaluation, and 
industry information designed to strengthen the blueberry industry's 
position in the marketplace; maintain and expand existing markets and 
uses for blueberries; and to carry out programs, plans, and projects 
designed to provide maximum benefits to the blueberry industry.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec.1218.48  Prohibited activities.

    The Council may not engage in, and shall prohibit the employees and 
agents of the Council from engaging in:
    (a) Any action that would be a conflict of interest; and
    (b) Using funds collected by the Council under the Order to 
undertake any action for the purpose of influencing legislation or 
governmental action or policy, by local, state, national, and foreign 
governments, other than recommending to the Secretary amendments to the 
Order.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]

                        Expenses and Assessments



Sec.1218.50  Budget and expenses.

    (a) At least 60 days prior to the beginning of each fiscal year, and 
as may be necessary thereafter, the Council shall prepare and submit to 
the Secretary a budget for the fiscal year covering its anticipated 
expenses and disbursements in administering this subpart. Each such 
budget shall include:
    (1) A statement of objectives and strategy for each program, plan, 
or project;
    (2) A summary of anticipated revenue, with comparative data or at 
least one preceding year (except for the initial budget);
    (3) A summary of proposed expenditures for each program, plan, or 
project; and
    (4) Staff and administrative expense breakdowns, with comparative 
data for at least on preceding year (except for the initial budget).
    (b) Each budget shall provide adequate funds to defray its proposed 
expenditures and to provide for a reserve as set forth in this subpart.
    (c) Subject to this section, any amendment or addition to an 
approved budget must be approved by the Secretary, including shifting 
funds from one program, plan, or project to another. Shifts of funds 
which do not cause an increase in the Council's approved budget and 
which are consistent with governing bylaws need not have prior approval 
by the Secretary.
    (d) The Council is authorized to incur such expenses, including 
provision for a reasonable reserve, as the Secretary finds are 
reasonable and likely to be incurred by the Council for its maintenance 
and functioning, and to enable it to exercise its powers and perform its 
duties in accordance with the provisions of this subpart. Such expenses 
shall be paid from funds received by the Council.
    (e) With approval of the Secretary, the Council may borrow money for 
the payment of administrative expenses, subject to the same fiscal, 
budget, and audit controls as other funds of the Council. Any funds 
borrowed by the Council shall be expended only for startup costs and 
capital outlays and

[[Page 227]]

are limited to the first year of operation of the Council.
    (f) The Council may accept voluntary contributions, but these shall 
only be used to pay expenses incurred in the conduct of programs, plans, 
and projects. Such contributions shall be free from any encumbrance by 
the donor and the Council shall retain complete control of their use.
    (g) The Council may also receive funds provided through the 
Department's Foreign Agricultural Service or from other sources, with 
the approval of the Secretary, for authorized activities.
    (h) The Council shall reimburse the Secretary for all expenses 
incurred by the Secretary in the implementation, administration, and 
supervision of the Order, including all referendum costs in connection 
with the Order.
    (i) The Council may not expend for administration, maintenance, and 
functioning of the Council in any fiscal year an amount that exceeds 15 
percent of the assessments and other income received by the Council for 
that fiscal year. Reimbursements to the Secretary required under 
paragraph (h) are excluded from this limitation on spending.
    (j) The Council may establish an operating monetary reserve and may 
carry over to subsequent fiscal periods excess funds in any reserve so 
established: Provided that the funds in the reserve do not exceed one 
fiscal period's budget. Subject to approval by the Secretary, such 
reserve funds may be used to defray any expenses authorized under this 
part.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec.1218.51  Financial statements.

    (a) As requested by the Secretary, the Council shall prepare and 
submit financial statements to the Secretary on a periodic basis. Each 
such financial statement shall include, but not be limited to, a balance 
sheet, income statement, and expense budget. The expense budget shall 
show expenditures during the time period covered by the report, year-to-
date expenditures, and the unexpended budget.
    (b) Each financial statement shall be submitted to the Secretary 
within 30 days after the end of the time period to which it applies.
    (c) The Council shall submit annually to the Secretary an annual 
financial statement within 90 days after the end of the fiscal year to 
which it applies.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec.1218.52  Assessments.

    (a) The funds to cover the Council's expenses shall be paid from 
assessments on producers and importers, donations from any person not 
subject to assessments under this Order, and other funds available to 
the Board including those collected pursuant to Sec.1218.56 and 
subject to the limitations contained therein.
    (b) The collection of assessments on domestic blueberries will be 
the responsibility of the first handler receiving the blueberries. In 
the case of the producer acting as its own first handler, the producer 
will be required to collect and remit its individual assessments.
    (c) Such assessments shall be levied at a rate of $18 per ton (or 
$0.01984 per kg) on all blueberries. The assessment rate will be 
reviewed, and may be modified with the approval of the Secretary.
    (d) Each importer of fresh and processed blueberries shall pay an 
assessment to the Council on blueberries imported for marketing in the 
United States, through the U.S. Customs Service.
    (1) The assessment rate for imported fresh and processed blueberries 
shall be the same or equivalent to the rate for fresh blueberries 
produced in the United States.
    (2) The import assessment shall be uniformly applied to imported 
fresh and frozen blueberries that are identified by the numbers 
0810.40.0029 and 0811.90.2028, respectively, in the Harmonized Tariff 
Schedule of the United States or any other numbers used to identify 
fresh and frozen blueberries. Assessments on other types of imported 
processed blueberries, such as dried blueberries, puree, and juice, may 
be added at the recommendation of the Council with the approval of the 
Secretary.

[[Page 228]]

    (3) The assessments due on imported fresh and processed blueberries 
shall be paid when they enter or are withdrawn for consumption in the 
United States.
    (e) All assessment payments and reports will be submitted to the 
office of the Council. All final payments for a crop year are to be 
received no later than November 30 of that year. A late payment charge 
shall be imposed on any handler who fails to remit to the Council, the 
total amount for which any such handler is liable on or before the due 
date established by the Council. In addition to the late payment charge, 
an interest charge shall be imposed on the outstanding amount for which 
the handler is liable. The rate of interest shall be prescribed in 
regulations issued by the Secretary.
    (f) Persons failing to remit total assessments due in a timely 
manner may also be subject to actions under federal debt collection 
procedures.
    (g) The Council may authorize other organizations to collect 
assessments on its behalf with the approval of the Secretary.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001; 
78 FR 59779, Sept. 30, 2013]



Sec.1218.53  Exemption procedures.

    (a) Any producer who produces less than 2,000 pounds of blueberries 
annually shall be exempt from the payment of assessments. Such producer 
may apply to the Council--on a form provided by the Council--for a 
certificate of exemption. Such producer shall certify that the 
producer's production of blueberries shall be less than 2,000 pounds for 
the fiscal year for which the exemption is claimed.
    (b) Any importer who imports less than 2,000 pounds of fresh and 
frozen blueberries annually shall be exempt from the payment of 
assessments. Such importer may apply to the Council--on a form provided 
by the Council--for a certificate of exemption. Such importer shall 
certify that the importer's importation of fresh and frozen blueberries 
shall not exceed 2,000 pounds for the fiscal year for which the 
exemption is claimed.
    (c) A producer who operates under an approved National Organic 
Program (7 CFR part 205) (NOP) organic production system plan may be 
exempt from the payment of assessments under this part, provided that:
    (1) Only agricultural products certified as ``organic'' or ``100 
percent organic'' (as defined in the NOP) are eligible for exemption;
    (2) The exemption shall apply to all certified ``organic'' or ``100 
percent organic'' (as defined in the NOP) products of a producer 
regardless of whether the agricultural commodity subject to the 
exemption is produced by a person that also produces conventional or 
nonorganic agricultural products of the same agricultural commodity as 
that for which the exemption is claimed;
    (3) The producer maintains a valid certificate of organic operation 
as issued under the Organic Foods Production Act of 1990 (7 U.S.C. 6501-
6522) (OFPA) and the NOP regulations issued under OFPA (7 CFR part 205); 
and
    (4) Any producer so exempted shall continue to be obligated to pay 
assessments under this part that are associated with any agricultural 
products that do not qualify for an exemption under this section.
    (d) To apply for exemption under this section, a producer shall 
submit a request to the Council on an Organic Exemption Request Form 
(Form AMS-15) at any time during the year initially, and annually 
thereafter on or before January 1, for as long as the producer continues 
to be eligible for the exemption.
    (e) A producer request for exemption shall include the following:
    (1) The applicant's full name, company name, address, telephone and 
fax numbers, and email address;
    (2) Certification that the applicant maintains a valid certificate 
of organic operation issued under the OFPA and the NOP;
    (3) Certification that the applicant produces organic products 
eligible to be labeled ``organic'' or ``100 percent organic'' under the 
NOP;
    (4) A requirement that the applicant attach a copy of their 
certificate of organic operation issued by a USDA-accredited certifying 
agent under the OFPA and the NOP;
    (5) Certification, as evidenced by signature and date, that all 
information provided by the applicant is true; and

[[Page 229]]

    (6) Such other information as may be required by the Council, with 
the approval of the Secretary.
    (f) If a producer complies with the requirements of this section, 
the Council will grant an assessment exemption and issue a Certificate 
of Exemption to the producer within 30 days. If the application is 
disapproved, the Council will notify the applicant of the reason(s) for 
disapproval within the same timeframe.
    (g) An importer who imports products that are eligible to be labeled 
as ``organic'' or ``100 percent organic'' under the NOP, or certified as 
``organic'' or ``100 percent organic'' under a U.S. equivalency 
arrangement established under the NOP, may be exempt from the payment of 
assessments on those products. Such importer may submit documentation to 
the Council and request an exemption from assessment on certified 
``organic'' or ``100 percent organic'' blueberries on an Organic 
Exemption Request Form (Form AMS-15) at any time initially, and annually 
thereafter on or before January 1, as long as the importer continues to 
be eligible for the exemption. This documentation shall include the same 
information required of producers in paragraph (e) of this section. If 
the importer complies with the requirements of this section, the Council 
will grant the exemption and issue a Certificate of Exemption to the 
importer. If Customs and Border Protection (Customs) collects the 
assessment on exempt product that is identified as ``organic'' by a 
number in the Harmonized Tariff Schedule, the Council must reimburse the 
exempt importer the assessments paid upon receipt of such assessments 
from Customs. For all other exempt organic product for which Customs 
collects the assessment, the importer may apply to the Council for a 
reimbursement of assessments paid, and the importer must submit 
satisfactory proof to the Council that the importer paid the assessment 
on exempt organic product. Any importer so exempted shall continue to be 
obligated to pay assessments under this part that are associated with 
any imported agricultural products that do not qualify for an exemption 
under this section.
    (h) The exemption will apply immediately following the issuance of 
the Certificate of Exemption.
    (i) On receipt of an application, the Council shall determine 
whether an exemption may be granted. The Council then will issue, if 
deemed appropriate, a certificate of exemption to each person who is 
eligible to receive one. Each producer who is exempt from assessment 
must provide an exemption number to the first handler in order to be 
exempt from the collection of an assessment on blueberries. First 
handlers and importers, except as otherwise authorized by the Council, 
shall maintain records showing the exemptee's name and address along 
with the exemption number assigned by the Council.
    (j) Importers who are exempt from payment of assessments shall be 
eligible for reimbursement of assessments collected by Customs and may 
apply to the Council for a reimbursement of such assessments paid. No 
interest will be paid on assessments collected by Customs. Requests for 
reimbursement shall be submitted to the Council within 90 days of the 
last day of the year the blueberries were actually imported.
    (k) Any person who desires an exemption from assessments for a 
subsequent fiscal year shall reapply to the Council, on a form provided 
by the Council, for a certificate of exemption.
    (l) The Council may require persons receiving an exemption from 
assessments to provide to the Council reports on the disposition of 
exempt blueberries and, in the case of importers, proof of payment of 
assessments.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001; 
70 FR 2758, Jan. 14, 2005; 80 FR 82030, Dec. 31, 2015]



Sec.1218.54  Programs, plans, and projects.

    (a) The Council shall receive and evaluate, or on its own initiative 
develop, and submit to the Secretary for approval any program, plan, or 
project authorized under this subpart. Such programs, plans, or projects 
shall provide for:
    (1) The establishment, issuance, effectuation, and administration of 
appropriate programs for promotion, research, and information, including 
producer and consumer information, with

[[Page 230]]

respect to fresh and processed blueberries; and
    (2) The establishment and conduct of research with respect to the 
use, nutritional value, sale, distribution, and marketing of fresh and 
processed blueberries, and the creation of new products thereof, to the 
end that the marketing and use of blueberries may be encouraged, 
expanded, improved, or made more acceptable and to advance the image, 
desirability, or quality of fresh and processed blueberries.
    (b) No program, plan, or project shall be implemented prior to its 
approval by the Secretary. Once a program, plan, or project is so 
approved, the Council shall take appropriate steps to implement it.
    (c) Each program, plan, or project implemented under this subpart 
shall be reviewed or evaluated periodically by the Council to ensure 
that it contributes to an effective program of promotion, research, or 
information. If it is found by the Council that any such program, plan, 
or project does not contribute to an effective program of promotion, 
research, or information, then the Council shall terminate such program, 
plan, or project.
    (d) No program, plan, or project including advertising shall be 
false or misleading or disparaging another agricultural commodity. 
Blueberries of all origins shall be treated equally.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec.1218.55  Independent evaluation.

    The Council shall, not less often than every five years, authorize 
and fund, from funds otherwise available to the Council, an independent 
evaluation of the effectiveness of the Order and other programs 
conducted by the Council pursuant to the Act. The Council shall submit 
to the Secretary, and make available to the public, the results of each 
periodic independent evaluation conducted under this paragraph.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec.1218.56  Patents, copyrights, trademarks, information, 
publications, and product formulations.

    Patents, copyrights, trademarks, information, publications, and 
product formulations developed through the use of funds received by the 
Council under this subpart shall be the property of the U.S. Government 
as represented by the Council and shall, along with any rents, 
royalties, residual payments, or other income from the rental, sales, 
leasing, franchising, or other uses of such patents, copyrights, 
trademarks, information, publications, or product formulations, inure to 
the benefit of the Council; shall be considered income subject to the 
same fiscal, budget, and audit controls as other funds of the Council; 
and may be licensed subject to approval by the Secretary. Upon 
termination of this subpart, Sec.1218.73 shall apply to determine 
disposition of all such property.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]

                       Reports, Books, and Records



Sec.1218.60  Reports.

    (a) Each first handler subject to this subpart may be required to 
provide to the Council periodically such information as may be required 
by the Council, with the approval of the Secretary, which may include 
but not be limited to the following:
    (1) Number of pounds handled;
    (2) Number of pounds on which an assessment was collected;
    (3) Name and address of person from whom the first handler has 
collected the assessments on each pound handled; and
    (4) Date collection was made on each pound handled. All reports are 
due to the Council 30 days after the end of the crop year.
    (b) Each producer and importer subject to this subpart may be 
required to provide to the Council periodically such information as may 
be required by the Council, with the approval of the Secretary, which 
may include but not be limited to the following:
    (1) Number of pounds produced;
    (2) Number of pounds on which an assessment was paid;
    (3) Name and address of the producer;
    (4) Date collection was made on each pound produced. All reports are 
due to

[[Page 231]]

the Council 30 days after the end of the crop year.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec.1218.61  Books and records.

    Each first handler, producer, and importer subject to this subpart 
shall maintain and make available for inspection by the Secretary such 
books and records as are necessary to carry out the provisions of this 
subpart and the regulations issued thereunder, including such records as 
are necessary to verify any reports required. Such records shall be 
retained for at least 2 years beyond the fiscal period of their 
applicability.



Sec.1218.62  Confidential treatment.

    All information obtained from books, records, or reports under the 
Act, this subpart, and the regulations issued thereunder shall be kept 
confidential by all persons, including all employees and former 
employees of the Council, all officers and employees and former officers 
and employees of contracting and subcontracting agencies or agreeing 
parties having access to such information. Such information shall not be 
available to Council members, producers, importers, exporters, or first 
handlers. Only those persons having a specific need for such information 
to effectively administer the provisions of this subpart shall have 
access to such information. Only such information so obtained as the 
Secretary deems relevant shall be disclosed by them, and then only in a 
judicial proceeding or administrative hearing brought at the direction, 
or on the request, of the Secretary, or to which the Secretary or any 
officer of the United States is a party, and involving this subpart. 
Nothing in this section shall be deemed to prohibit:
    (a) The issuance of general statements based upon the reports of the 
number of persons subject to this subpart or statistical data collected 
therefrom, which statements do not identify the information furnished by 
any person; and
    (b) The publication, by direction of the Secretary, of the name of 
any person who has been adjudged to have violated this subpart, together 
with a statement of the particular provisions of this subpart violated 
by such person.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]

                              Miscellaneous



Sec.1218.70  Right of the Secretary.

    All fiscal matters, programs, plans, or projects, rules or 
regulations, reports, or other substantive actions proposed and prepared 
by the Council shall be submitted to the Secretary for approval.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec.1218.71  Referenda.

    (a) Initial referendum. The Order shall not become effective unless:
    (1) The Secretary determines that the Order is consistent with and 
will effectuate the purposes of the Act; and
    (2) The Order is approved by a majority of producers and importers 
voting for approval who also represent a majority of the volume of 
blueberries represented in the referendum who, during a representative 
period determined by the Secretary, have been engaged in the production 
or importation of blueberries.
    (b) Subsequent referenda. Every five years, the Secretary shall hold 
a referendum to determine whether blueberry producers and importers 
favor the continuation of the Order. The Order shall continue if it is 
favored by a majority of producers and importers voting for approval who 
also represent a majority of the volume of blueberries represented in 
the referendum who, during a representative period determined by the 
Secretary, have been engaged in the production or importation of 
blueberries. The Secretary will also conduct a referendum if 10 percent 
or more of all eligible blueberry producers and importers request the 
Secretary to hold a referendum. In addition, the Secretary may hold a 
referendum at any time.



Sec.1218.72  Suspension and termination.

    (a) The Secretary shall suspend or terminate this part or subpart or 
a provision thereof if the Secretary finds that the subpart or a 
provision thereof

[[Page 232]]

obstructs or does not tend to effectuate the purposes of the Act, or if 
the Secretary determines that this subpart or a provision thereof is not 
favored by persons voting in a referendum conducted pursuant to the Act.
    (b) The Secretary shall suspend or terminate this subpart at the end 
of the marketing year whenever the Secretary determines that its 
suspension or termination is approved or favored by a majority of 
producers and importers voting for approval who also represent a 
majority of the volume of blueberries represented in the referendum who, 
during a representative period determined by the Secretary, have been 
engaged in the production or importation of blueberries.
    (c) If, as a result of a referendum the Secretary determines that 
this subpart is not approved, the Secretary shall:
    (1) Not later than 180 days after making the determination, suspend 
or terminate, as the case may be, collection of assessments under this 
subpart; and
    (2) As soon as practical, suspend or terminate, as the case may be, 
activities under this subpart in an orderly manner.



Sec.1218.73  Proceedings after termination.

    (a) Upon the termination of this subpart, the Council shall 
recommend not more than three of its members to the Secretary to serve 
as trustees for the purpose of liquidating the affairs of the Council. 
Such persons, upon designation by the Secretary, shall become trustees 
of all of the funds and property then in the possession or under control 
of the Council, including claims for any funds unpaid or property not 
delivered, or any other claim existing at the time of such termination.
    (b) The said trustees shall:
    (1) Continue in such capacity until discharged by the Secretary;
    (2) Carry out the obligations of the Council under any contracts or 
agreements entered into pursuant to the Order;
    (3) From time to time account for all receipts and disbursements and 
deliver all property on hand, together with all books and records of the 
Council and the trustees, to such person or persons as the Secretary may 
direct; and
    (4) Upon request of the Secretary execute such assignments or other 
instruments necessary and appropriate to vest in such persons title and 
right to all funds, property and claims vested in the Council or the 
trustees pursuant to the Order.
    (c) Any person to whom funds, property or claims have been 
transferred or delivered pursuant to the Order shall be subject to the 
same obligations imposed upon the Council and upon the trustees.
    (d) Any residual funds not required to defray the necessary expenses 
of liquidation shall be turned over to the Secretary to be disposed of, 
to the extent practical, to the blueberry producer organizations in the 
interest of continuing blueberry promotion, research, and information 
programs.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec.1218.74  Effect of termination or amendment.

    Unless otherwise expressly provided by the Secretary, the 
termination of this subpart or of any regulation issued pursuant 
thereto, or the issuance of any amendment to either thereof, shall not:
    (a) Affect or waive any right, duty, obligation or liability which 
shall have arisen or which may thereafter arise in connection with any 
provision of this subpart or any regulation issued thereunder; or
    (b) Release or extinguish any violation of this subpart or any 
regulation issued thereunder; or
    (c) Affect or impair any rights or remedies of the United States, or 
of the Secretary or of any other persons, with respect to any such 
violation.



Sec.1218.75  Personal liability.

    No member, alternate member, or employee of the Council shall be 
held personally responsible, either individually or jointly with others, 
in any way whatsoever, to any person for errors in judgment, mistakes, 
or other acts, either of commission or omission, as such member, 
alternate, or employee,

[[Page 233]]

except for acts of dishonesty or willful misconduct.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec.1218.76  Separability.

    If any provision of this subpart is declared invalid or the 
applicability thereof to any person or circumstances is held invalid, 
the validity of the remainder of this subpart or the applicability 
thereof to other persons or circumstances shall not be affected thereby.



Sec.1218.77  Amendments.

    Amendments to this subpart may be proposed from time to time by the 
Council or by any interested person affected by the provisions of the 
Act, including the Secretary.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec.1218.78  OMB control numbers.

    The control number assigned to the information collection 
requirements by the Office of Management and Budget pursuant to the 
Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35, is OMB control 
number 0581-0093, except for the Council nominee background statement 
form which is assigned OMB control number 0505-001.



Subpart B_Procedure for the Conduct of Referenda in Connection with the 
          Blueberry Promotion, Research, and Information Order



Sec.1218.100  General.

    Referenda to determine whether eligible blueberry producers and 
importers favor the issuance, amendment, suspension, or termination of 
the Blueberry Promotion, Research, and Information Order shall be 
conducted in accordance with this subpart.



Sec.1218.101  Definitions.

    (a) Administrator means the Administrator of the Agricultural 
Marketing Service, with power to redelegate, or any officer or employee 
of the U.S. Department of Agriculture to whom authority has been 
delegated or may hereafter be delegated to act in the Administrator's 
stead.
    (b) Blueberries means cultivated blueberries grown in or imported 
into the United States of the genus Vaccinium Corymbosum and Ashei, 
including the northern highbush, southern highbush, rabbit eye 
varieties, and any hybrid, and excluding the lowbush (native) blueberry 
Vaccinium Angustifolium.
    (c) Eligible importer means any person who imported 2,000 pounds or 
more of fresh or processed blueberries, that are identified by the 
numbers 0810.40.0028 and 0811.90.2028, respectively, in the Harmonized 
Tariff Schedule of the United States or any other numbers used to 
identify fresh and frozen blueberries. Importation occurs when 
commodities originating outside the United States are entered or 
withdrawn from the U.S. Customs Service for consumption in the United 
States. Included are persons who hold title to foreign-produced 
blueberries immediately upon release by the U.S. Customs Service, as 
well as any persons who act on behalf of others, as agents or brokers, 
to secure the release of blueberries from the U.S. Customs Service when 
such blueberries are entered or withdrawn for consumption in the United 
States.
    (d) Eligible producer means any person who produced 2,000 pounds or 
more of blueberries in the United States during the representative 
period who:
    (1) Owns, or shares the ownership and risk of loss of, the crop;
    (2) Rents blueberry production facilities and equipment resulting in 
the ownership of all or a portion of the blueberries produced;
    (3) Owns blueberry production facilities and equipment but does not 
manage them and, as compensation, obtains the ownership of a portion of 
the blueberries produced; or
    (4) Is a party in a landlord-tenant relationship or a divided 
ownership arrangement involving totally independent entities cooperating 
only to produce blueberries who share the risk of loss and receive a 
share of the blueberries produced. No other acquisition of legal title 
to blueberries shall be deemed to result in persons becoming eligible 
producers.

[[Page 234]]

    (e) Order means the Blueberry Promotion, Research, and Information 
Order.
    (f) Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other legal entity. For 
the purpose of this definition, the term ``partnership'' includes, but 
is not limited to:
    (1) A husband and a wife who have title to, or leasehold interest 
in, a blueberry farm as tenants in common, joint tenants, tenants by the 
entirety, or, under community property laws, as community property; and
    (2) So-called ``joint ventures'' wherein one or more parties to an 
agreement, informal or otherwise, contributed land and others 
contributed capital, labor, management, or other services, or any 
variation of such contributions by two or more parties.
    (g) Processed blueberries means blueberries which have been frozen, 
dried, pureed, or made into juice.
    (h) Referendum agent or agent means the individual or individuals 
designated by the Secretary to conduct the referendum.
    (i) Representative period means the period designated by the 
Secretary.
    (j) United States means collectively the 50 states, the District of 
Columbia, the Commonwealth of Puerto Rico, and the territories and 
possessions of the United States.



Sec.1218.102  Voting.

    (a) Each person who is an eligible producer or an eligible importer, 
as defined in this subpart, at the time of the referendum and during the 
representative period, shall be entitled to cast only one ballot in the 
referendum. However, each producer in a landlord-tenant relationship or 
a divided ownership arrangement involving totally independent entities 
cooperating only to produce blueberries, in which more than one of the 
parties is a producer, shall be entitled to cast one ballot in the 
referendum covering only such producer's share of the ownership.
    (b) Proxy voting is not authorized, but an officer or employee of an 
eligible corporate producer or importer, or an administrator, executor, 
or trustee or an eligible entity may cast a ballot on behalf of such 
entity. Any individual so voting in a referendum shall certify that such 
individual is an officer or employee of the eligible entity, or an 
administrator, executive, or trustee of an eligible entity and that such 
individual has the authority to take such action. Upon request of the 
referendum agent, the individual shall submit adequate evidence of such 
authority.
    (c) All ballots are to be cast by mail or by facsimile, as 
instructed by the Secretary.



Sec.1218.103  Instructions.

    The referendum agent shall conduct the referendum, in the manner 
herein provided, under the supervision of the Administrator. The 
Administrator may prescribe additional instructions, not inconsistent 
with the provisions hereof, to govern the procedure to be followed by 
the referendum agent. Such agent shall:
    (a) Determine the period during which ballots may be cast.
    (b) Provide ballots and related material to be used in the 
referendum. The ballot shall provide for recording essential 
information, including that needed for ascertaining whether the person 
voting, or on whose behalf the vote is cast, is an eligible voter.
    (c) Give reasonable public notice of the referendum:
    (1) By utilizing available media or public information sources, 
without incurring advertising expense, to publicize the dates, places, 
method of voting, eligibility requirements, and other pertinent 
information. Such sources of publicity may include, but are not limited 
to, print and radio; and
    (2) By such other means as the agent may deem advisable.
    (d) Mail to eligible producers and importers whose names and 
addresses are known to the referendum agent, the instructions on voting, 
a ballot, and a summary of the terms and conditions of the proposed 
Order. No person who claims to be eligible to vote shall be refused a 
ballot.
    (e) At the end of the voting period, collect, open, number, and 
review the ballots and tabulate the results in the presence of an agent 
of a third party authorized to monitor the referendum process.

[[Page 235]]

    (f) Prepare a report on the referendum.
    (g) Announce the results to the public.



Sec.1218.104  Subagents.

    The referendum agent may appoint any individual or individuals 
necessary or desirable to assist the agent in performing such agent's 
functions hereunder. Each individual so appointed may be authorized by 
the agent to perform any or all of the functions which, in the absence 
of such appointment, shall be performed by the agent.



Sec.1218.105  Ballots.

    The referendum agent and subagents shall accept all ballots cast. 
However, if an agent or subagent deems that a ballot should be 
challenged for any reason, the agent or subagent shall endorse above 
their signature, on the ballot, a statement to the effect that such 
ballot was challenged, by whom challenged, the reasons therefore, the 
results of any investigations made with respect thereto, and the 
disposition thereof. Ballots invalid under this subpart shall not be 
counted.



Sec.1218.106  Referendum report.

    Except as otherwise directed, the referendum agent shall prepare and 
submit to the Administrator a report on the results of the referendum, 
the manner in which it was conducted, the extent and kind of public 
notice given, and other information pertinent to the analysis of the 
referendum and its results.



Sec.1218.107  Confidential information.

    The ballots and other information or reports that reveal, or tend to 
reveal, the vote of any person covered under the Act and the voting list 
shall be held confidential and shall not be disclosed.



Subpart C_Provisions for Implementing the Blueberry Promotion, Research 
                          and Information Order

    Source: 80 FR 53262, Sept. 3, 2015, unless otherwise noted.



Sec.1218.520  Late payment and interest charges for past due assessments.

    (a) A late payment charge will be imposed on any handler who fails 
to make timely remittance to the Council of the total assessments for 
which they are liable. The late payment will be imposed on any 
assessments not received within 30 calendar days of the date when 
assessments are due. This one-time late payment charge will be 5 percent 
of the assessments due before interest charges have accrued.
    (b) In addition to the late payment charge, 1 percent per month 
interest on the outstanding balance, including any late payment and 
accrued interest, will be added to any accounts for which payment has 
not been received within 30 calendar days of the date when assessments 
are due. Interest will continue to accrue monthly until the outstanding 
balance is paid to the Council.



PART 1219_HASS AVOCADO PROMOTION, RESEARCH, AND INFORMATION--
Table of Contents



    Subpart A_Hass Avocado Promotion, Research, and Information Order

                               Definitions

Sec.
1219.1 Act.
1219.2 Association.
1219.3 Conflict of interest.
1219.4 Consumer information.
1219.5 Crop year.
1219.6 Customs.
1219.7 Department.
1219.8 Exempt handler.
1219.9 First handler.
1219.10 Fiscal period or marketing year.
1219.11 Handle.
1219.12 Hass avocado.
1219.13 Hass Avocado Board.
1219.14 Importer.
1219.15 Industry information.
1219.16 Marketing.
1219.17 Order.
1219.18 Part and subpart.
1219.19 Person.
1219.20 Producer.
1219.21 Programs, plans, and projects.
1219.22 Promotion.
1219.23 Research.
1219.24 Secretary.
1219.25 State.
1219.26 United States.

                         The Hass Avocado Board

1219.30 Establishment and membership.

[[Page 236]]

1219.31 Initial nomination and appointment of producer members and 
          alternates.
1219.32 Initial nomination and appointment of importer members and 
          alternates.
1219.33 Subsequent nomination and appointment of Board members and 
          alternates.
1219.34 Failure to nominate.
1219.35 Term of office.
1219.36 Vacancies.
1219.37 Alternate members.
1219.38 Powers and duties.
1219.39 Board procedure.
1219.40 Committee procedure.
1219.41 Compensation and expenses.
1219.42 Prohibited activities.

                   Budgets, Expenses, and Assessments

1219.50 Budgets, programs, plans, and projects.
1219.51 Contracts and agreements.
1219.52 Control of administrative costs.
1219.53 Budget and expenses.
1219.54 Assessments.
1219.55 Exemption from assessment.
1219.56 Adjustment of accounts.
1219.57 Patents, copyrights, trademarks, publications, and product 
          formulations.
1219.58 Importer associations.

                       Books, Records, and Reports

1219.60 Reports.
1219.61 Books and records.
1219.62 Books and records of the Board.
1219.63 Confidential treatment.
1219.64 List of importers.
1219.65 List of producers.

                              Miscellaneous

1219.70 Right of the Secretary.
1219.71 Suspension or termination.
1210.72 Proceedings after termination.
1219.73 Effect of termination or amendment.
1219.74 Personal liability.
1219.75 Separability.
1219.76 Amendments.
1219.77 OMB control numbers.

                     Subpart B_Referendum Procedures

1219.100 General.
1219.101 Definitions.
1219.102 Registration.
1219.103 Voting.
1219.104 Instructions.
1219.105 Subagents.
1219.106 Ballots.
1219.107 Referendum report.
1219.108 Confidential information.
1219.109 OMB control number.

                     Subpart C_Rules and Regulations

1219.200 Terms defined.
1219.201 Definitions.
1219.202 Exemption for organic Hass avocados.
1219.203 Reapportionment of membership.

    Authority: 7 U.S.C. 7801-7813 and 7 U.S.C. 7401.

    Source: 67 FR 7264, Feb. 19, 2002, unless otherwise noted.



    Subpart A_Hass Avocado Promotion, Research, and Information Order

    Source: 67 FR 56897, Sept. 6, 2002, unless otherwise noted.

                               Definitions



Sec.1219.1  Act.

    Act means the Hass Avocado Promotion, Research, and Information Act 
of 2000, Public Law 106-387, 7 U.S.C. 7801-7813, and any amendments 
thereto.



Sec.1219.2  Association.

    Association means an avocado organization established by State 
statute in a State with the majority of Hass avocado production in the 
United States.



Sec.1219.3  Conflict of interest.

    Conflict of interest means a situation in which a Board member or 
employee has a direct or indirect financial interest in a person who 
performs a service for, or enters into a contract with, the Board for 
anything of economic value.



Sec.1219.4  Consumer information.

    Consumer information means any action or program that disseminates 
or otherwise provides information to consumers and other persons, on the 
use, nutritional attributes, and other information that will assist 
consumers and other persons in the United States in making evaluations 
and decisions regarding the purchase, preparation, and use of Hass 
avocados.



Sec.1219.5  Crop year.

    Crop year means the period from November 1 of one year through 
October 31 of the following year, or such other one-year period 
recommended by the Board and approved by the Secretary.



Sec.1219.6  Customs.

    Customs means the United States Customs Service.

[[Page 237]]



Sec.1219.7  Department.

    Department means the United States Department of Agriculture.



Sec.1219.8  Exempt handler.

    Exempt handler means a person who would otherwise be considered a 
first handler, except that all Hass avocados purchased by the person 
have already been subject to assessments under the Order. A person who 
handles both Hass avocados that have already been subject to assessments 
under the Order and Hass avocados that have not been subject to 
assessments under the Order is a first handler.



Sec.1219.9  First handler.

    First handler means a person operating in the Hass avocado marketing 
system that sells domestic or imported Hass avocados for consumption in 
the United States and who is responsible for remitting assessments to 
the Board. For the purposes of the Order, the term means the first 
person who handles Hass avocados for sale (except a common or contract 
carrier of Hass avocados owned by another person), including a producer 
who handles Hass avocados for sale of the producer's own production.



Sec.1219.10  Fiscal period or marketing year.

    Fiscal period or marketing year means the period beginning on 
November 1 of any year and extending through the last day of October of 
the following year, or such other consecutive 12-month period as shall 
be recommended by the Board and approved by the Secretary.



Sec.1219.11  Handle.

    Handle means to pack, process, transport, purchase, or in any other 
way to place or cause Hass avocados to which one has title or possession 
to be placed in the current of commerce. Such term shall not include the 
transportation or delivery of Hass avocados by the producer thereof to a 
handler.



Sec.1219.12  Hass avocado.

    Hass avocado means the fruit grown in or imported into the United 
States of the species Persea americana Mill., or other type of avocados 
that, in the determination of the Board, with approval of the Secretary, 
is so similar to the Hass variety avocado as to be indistinguishable to 
consumers in fresh form. The term shall include all fruit in fresh, 
frozen, or any other processed form.



Sec.1219.13  Hass Avocado Board.

    Hass Avocado Board or the Board means the administrative body 
established pursuant to Sec.1219.40.



Sec.1219.14  Importer.

    Importer means any person who imports Hass avocados into the United 
States. The term includes a person who holds title to Hass avocados 
produced outside of the United States immediately upon release by 
Customs, as well as any person who acts on behalf of others, as an 
agent, broker, or consignee, to secure the release of Hass avocados from 
Customs and the introduction of the released Hass avocados into the 
current of commerce and who is listed in the import records of Customs 
as the importer of record for such Hass avocados.



Sec.1219.15  Industry information.

    Industry information means information, programs, and activities 
that are designed to increase efficiency in processing, enhance the 
development of new markets and marketing strategies, increase marketing 
efficiency, and enhance the image of Hass avocados and the Hass avocado 
industry in the United States.



Sec.1219.16  Marketing.

    Marketing means any activity related to the sale or other 
disposition of Hass avocados in any channel of commerce.



Sec.1219.17  Order.

    Order means this subpart.



Sec.1219.18  Part and subpart.

    Part means the Order and all rules, regulations, and supplemental 
orders issued pursuant to the Act and the Order. The Order itself shall 
be a subpart of such part.

[[Page 238]]



Sec.1219.19  Person.

    Person means any individual, group of individuals, firm, 
partnership, corporation, joint stock company, association, cooperative, 
or any other legal entity.



Sec.1219.20  Producer.

    Producer means any person who is engaged in the business of 
producing Hass avocados in the United States for commercial use, who 
owns, or shares the ownership and risk of loss, of such Hass avocados.



Sec.1219.21  Programs, plans, and projects.

    Programs, plans, and projects means those research, promotion, and 
information programs, plans, studies, or projects established pursuant 
to Sec.1219.50.



Sec.1219.22  Promotion.

    Promotion means any action to advance the image, desirability, or 
marketability of Hass avocados in the United States, including paid 
advertising, sales promotion, and publicity. Promotion activities are 
designed to improve the competitive position and stimulate sales of Hass 
avocados in the domestic marketplace.



Sec.1219.23  Research.

    Research means any type of test, study, or analysis relating to 
market research, market development, and market efforts, or relating to 
the use, quality, or nutritional value of Hass avocados, other related 
food science research, or research designed to advance the knowledge, 
image, desirability, usage, or marketability of Hass avocados in the 
United States.



Sec.1219.24  Secretary.

    Secretary means the Secretary of Agriculture of the United States or 
any other officer or employee of the Department to whom authority has 
heretofore been delegated, or to whom authority may hereafter be 
delegated, to act in the Secretary's stead.



Sec.1219.25  State.

    State means any of the several 50 States of the United States, the 
District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth 
of the Northern Mariana Islands, the United States Virgin Islands, Guam, 
American Samoa, the Republic of the Marshall Islands, and the Federated 
States of Micronesia.



Sec.1219.26  United States.

    United States means collectively the several 50 States of the United 
States, the District of Columbia, the Commonwealth of Puerto Rico, the 
Commonwealth of the Northern Mariana Islands, the United States Virgin 
Islands, Guam, American Samoa, the Republic of the Marshall Islands, and 
the Federated States of Micronesia.

                         The Hass Avocado Board



Sec.1219.30  Establishment and membership.

    (a) A Hass Avocado Board, called the Board elsewhere in this part, 
is hereby established to administer the terms and provisions of this 
subpart. The Board shall consist of 12 members nominated by the Hass 
avocado industry and appointed by the Secretary as provided in this 
subpart, each of whom shall have an alternate nominated and appointed in 
the same manner as members of the Board are nominated and appointed. 
Board members and alternates shall be domiciled in the United States.
    (b) The membership of the Board shall be divided as follows:
    (1) Seven members and their alternates shall be producers of Hass 
avocados that are subject to assessments under this subpart;
    (2) Two members and their alternates shall be importers of Hass 
avocados that are subject to assessments under this subpart; and
    (3) Three members shall be producers of Hass avocados that are 
subject to assessments under this subpart or importers of Hass avocados 
that are subject to assessments under this subpart. Producers and 
importers shall be allocated to these positions so as to assure as 
nearly as possible that the composition of the 12-member Board reflects 
the proportion of domestic production and imports supplying the United 
States market. Such proportion shall

[[Page 239]]

be based on the Secretary's determination of the average volume of 
domestic production and the average volume of imports into the United 
States market over the previous three years, based on all information 
available to the Secretary.
    (c) Three years after the assessment of funds commences pursuant to 
this subpart, and at the end of each three-year period thereafter, the 
Board shall review the production of domestic Hass avocados in the 
United States and the volume of imported Hass avocados on the basis of 
the amount of assessments collected from producers and importers over 
the immediately preceding three-year period and, if warranted, recommend 
to the Secretary the reapportionment of the positions authorized in 
paragraph (b)(3) of this section to reflect changes in the proportion of 
domestic Hass avocado production to the volume of imported Hass 
avocados, to the extent possible in the Act. Any adjustment under this 
paragraph shall be subject to the review and approval of the Secretary.
    (d) For purposes of this section, importer means a person who is 
involved in, as a substantial activity, the importation of Hass avocados 
for sale or marketing in the United States (either directly or as an 
agent, broker, or consignee of any person that produces Hass avocados 
outside of the United States for sale in the United States), who is 
subject to assessments under the Order, and who is listed by Customs as 
the importer of record for such Hass avocados. A substantial activity 
means that the volume of a person's Hass avocado imports must exceed the 
volume of the person's production or handling of domestic Hass avocados.



Sec.1219.31  Initial nomination and appointment of producer members 
and alternates.

    (a) The Association will nominate producer members and alternates to 
serve on the Board in accordance with the following procedures.
    (1) The Association shall establish a list of producers in the 
United States who are eligible to serve on the Board and notify all 
producers that they may nominate persons to serve as members and 
alternates on the Board.
    (2) After names are received from the producers, the Association 
shall prepare a ballot with the names of all persons nominated and mail 
it to all producers to allow them the opportunity to vote for the 
persons who will represent their interests on the Board.
    (3) After tabulating the vote, the Association shall announce the 
results and submit two names for each producer member and two names for 
each alternate producer member to the Secretary from the persons 
receiving the highest number of votes.
    (b) The Secretary shall select the producer members and alternates 
of the Board from the names submitted by the Association. Following the 
selection of the producer members, the Secretary shall select the 
alternate producer members. In selecting the alternate members, the 
Secretary shall consider the names submitted by the Association for each 
alternate member position along with the individuals whose names were 
submitted by the Association for each Board member position but were not 
selected for that position.



Sec.1219.32  Initial nomination and appointment of importer members 
and alternates.

    (a) The Department will conduct the nomination process for the 
initial importer members and alternates on the Board in accordance with 
the following procedures.
    (1) The Department shall notify all known importers and importer 
organizations that they may nominate persons to serve as importer 
members and alternates on the Board.
    (2) After names are received from the importers and importer 
organizations, the Department shall prepare a ballot with the names of 
all persons nominated and mail it to all known importers to allow them 
the opportunity to vote for the persons who will represent their 
interests on the Board.
    (3) After tabulating the vote, the Department shall announce the 
results and submit two names for each importer member and two names for 
each alternate importer member to the Secretary from the persons 
receiving the highest number of votes.

[[Page 240]]

    (b) The Secretary shall select the importer members and alternates 
of the Board from the nominees elected by importers. Following the 
selection of the importer members, the Secretary shall select the 
alternate importer members. In selecting the alternate members, the 
Secretary shall consider the names for each alternate member position 
along with the individuals who were elected by importers for each Board 
member position but were not selected for that position.



Sec.1219.33  Subsequent nomination and appointment of Board members
and alternates.

    The Board's staff shall announce at least 150 days in advance of the 
expiration of members' and alternates' terms that such terms are 
expiring and shall solicit nominations in accordance with procedures 
recommended by the Board and approved by the Secretary. Nominations for 
such positions should be submitted to the Secretary no less than 90 days 
prior to the expiration of the terms.



Sec.1219.34  Failure to nominate.

    In any case in which producers or importers fail to nominate 
individuals for appointment to the Board, the Secretary may appoint 
individuals to fill vacancies from the appropriate segments of the 
industry.



Sec.1219.35  Term of office.

    The members and alternate members of the Board shall serve for terms 
of three years, except the members of the initial Board shall serve 
terms as follows: Four members and four alternates shall serve for two-
year terms; four members and four alternates shall serve for three-year 
terms; and four members and four alternates shall serve for four-year 
terms. No member shall serve more than two consecutive three-year terms. 
Members and alternates serving initial two-year or four-year terms may 
serve for one additional three-year term. A Board member may serve as an 
alternate during the years the member is ineligible for a member 
position. Each term of office will end on October 31, with new terms of 
office beginning on November 1.



Sec.1219.36  Vacancies.

    (a) In the event any member or alternate of the Board ceases to be a 
member of the category of members from which the member was appointed to 
the Board, such member or alternate shall be disqualified from serving 
on the Board and the position shall automatically become vacant.
    (b) If a member of the Board consistently refuses to perform the 
duties of a member of the Board, or if a member of the Board engages in 
acts of dishonesty or willful misconduct, the Board may recommend to the 
Secretary that the member be removed from office. If the Secretary finds 
that the recommendation of the Board shows adequate cause, the member 
shall be removed from office.
    (c) Should any Board member position become vacant in the event of 
the death, removal, resignation, or disqualification, the alternate of 
that member shall automatically assume the position of said member. The 
alternate shall serve until the end of the member's normal term. If 
there is no alternate member to assume the position of member, the 
successor member and alternate shall be nominated and selected in the 
manner specified in Sec. Sec.1219.31, 1219.32, or 1219.33.
    (d) Should any alternate member become vacant in the event of death, 
removal, resignation, or disqualification, the Board may nominate 
persons to serve for the unexpired term of such alternate member. The 
nomination shall be conducted at a regularly scheduled Board meeting as 
soon as practicable after the vacancy occurs. The Board may solicit the 
names of nominees from producers and importers prior to the meeting and 
from the floor of the meeting. All nominees must meet the qualifications 
for nomination. The Board shall submit two nominees for each vacancy to 
the Secretary. A vacancy will not be required to be filled if the 
unexpired term is less than six months.



Sec.1219.37  Alternate members.

    An alternate member of the Board, during the absence of the member 
for whom the person is the alternate, shall

[[Page 241]]

act in the place and stead of such member and perform such duties as 
assigned. In the event of the death, removal, resignation, or 
disqualification of any member, the alternate for that member shall 
automatically assume the position of said member. In the event that both 
a member of the Board and the alternate are unable to attend a meeting, 
the Board may not designate any other alternate to serve in such 
member's or alternate's place and stead for the meeting.



Sec.1219.38  Powers and duties.

    The Board shall have the following powers and duties in addition to 
the responsibilities and authorities specified in other sections of this 
subpart:
    (a) To administer the Order in accordance with its terms and 
conditions and to collect assessments;
    (b) To develop and recommend to the Secretary for approval such 
bylaws as may be necessary for the functioning of the Board and such 
rules as may be necessary to administer the Order, including activities 
authorized to be carried out under the Order;
    (c) To meet, organize, and select from among the members of the 
Board a chairperson, other officers, committees, and subcommittees, at 
the start of each fiscal period, and at such other times as the Board 
determines to be appropriate;
    (d) To recommend to the Secretary rules and regulations to 
effectuate the terms and conditions of this subpart;
    (e) To employ such persons, other than the members, as the Board 
considers necessary to assist the Board in carrying out its duties and 
to determine the compensation and specify the duties of such persons;
    (f) To appoint from its members an executive committee and to 
delegate to the committee authority to administer the terms and 
provisions of this subpart under the direction of the Board and within 
the policies determined by the Board and approved by the Secretary;
    (g) To develop budgets for the implementation of this subpart and 
submit the budgets to the Secretary for approval and to propose and 
develop (or receive and evaluate), approve, and submit to the Secretary 
for approval programs, plans, and projects for Hass avocado promotion, 
industry information, consumer information, or related research;
    (h) To develop and implement after the approval by the Secretary 
programs, plans, and projects for Hass avocado promotion, industry 
information, consumer information, or related research, to contract or 
enter into agreements with appropriate persons to implement the 
programs, plans, and projects, and to pay the costs of the 
implementation of contracts and agreements with funds collected under 
this subpart.
    (i) To maintain such records and books and prepare and submit such 
reports and records from time to time to the Secretary as the Secretary 
may prescribe; to make appropriate accounting with respect to the 
receipt and disbursement of all funds entrusted to it; and to keep 
records that accurately reflect the actions and transactions of the 
Board;
    (j) To work to achieve an effective, continuous, and coordinated 
program of promotion, research, consumer information, and industry 
information designed to strengthen the Hass avocado industry's position 
in the domestic marketplace; to maintain and expand existing domestic 
markets and uses for Hass avocados; to create new domestic markets; and 
to carry out programs, plans, and projects designed to provide maximum 
benefits to the Hass avocado industry;
    (k) To evaluate on-going and completed programs, plans, and projects 
for Hass avocado promotion, industry information, consumer information, 
or related research and to comply with the independent evaluation 
provisions of the Federal Agricultural Improvement and Reform Act of 
1996 [7 U.S.C. 7401 et seq.];
    (l) To receive, investigate, and report to the Secretary complaints 
of violations of the Order;
    (m) To recommend to the Secretary amendments to this Order;
    (n) To invest, pending disbursement under a program, plan, or 
project, funds collected through assessments authorized under this Act 
only in:
    (1) Obligations of the United States or any agency of the United 
States;

[[Page 242]]

    (2) General obligations of any State or any political subdivision of 
a State;
    (3) Any interest-bearing account or certificate of deposit of a bank 
that is a member of the Federal Reserve System; or
    (4) Obligations fully guaranteed as to principal and interest by the 
United States, except that income from any such invested funds may be 
used only for a purpose for which the invested funds may be used;
    (o) To borrow funds necessary for the startup expenses of the Order;
    (p) To cause the books of the Board to be audited by a qualified 
independent auditor at the end of each fiscal period and to submit a 
report of the audit directly to the Secretary;
    (q) To give the Secretary the same notice of meetings and 
teleconferences of the Board and its committees as is given to members 
in order that the Secretary's representative(s) may attend or 
participate in the meetings;
    (r) To act as intermediary between the Secretary and any producer, 
first handler, or importer;
    (s) To periodically prepare and make public reports of its 
activities carried out, and at least once each fiscal period, to make 
public an accounting of funds received and expended; and
    (t) To notify Hass avocado producers, first handlers, and importers 
of all Board meetings through news releases or other means.



Sec.1219.39  Board procedure.

    (a) At a properly convened meeting of the Board, seven (7) members, 
including alternates acting in place of members of the Board, shall 
constitute a quorum: Provided, that such alternates shall serve only 
when the member is absent from a meeting. Any action of the Board shall 
require the concurring votes of a majority of those present and voting. 
At assembled meetings, all votes shall be cast in person.
    (b) In lieu of voting at a properly convened meeting and, when in 
the opinion of the chairperson of the Board such action is considered 
necessary, the Board may take action if supported by one vote more than 
50 percent of the members by mail, telephone, electronic mail, 
facsimile, or other means of communication. Such alternative means for 
the Board taking action may be undertaken for various reasons. These 
reasons include the need to address matters of an emergency nature when 
there is not enough time to call an assembled meeting of the Board. All 
telephone votes shall be confirmed promptly in writing. In that event, 
all members must be notified and provided an opportunity to vote. Any 
action so taken shall have the same force and effect as though such 
action had been taken at a properly convened meeting of the Board. All 
votes shall be recorded in the Board minutes.
    (c) All Board members and alternates and the Secretary will be 
notified at least 10 days in advance of all Board meetings, except the 
chairperson of the Board can waive the 10-day requirement in matters of 
an emergency nature.
    (d) Each member of the Board will be entitled to one vote on any 
matter put to the Board, and the motion will carry if supported by one 
vote more than 50 percent of the total votes represented by the Board 
members present.
    (e) There shall be no voting by proxy.
    (f) The chairperson shall be a voting member of the Board.



Sec.1219.40  Committee procedure.

    (a) The Board may establish committees as deemed necessary to carry 
out the purposes and objectives of the Order.
    (b) The chairperson of the Board shall appoint all committee 
chairpersons and shall appoint all members of each committee after 
consultation with the committee chairperson affected. Appointments are 
subject to approval by the Board and may be changed from time to time as 
determined by the chairperson of the Board with the concurrence of the 
Board.
    (c) The chairperson of the Board may appoint committee members from 
among the Board members and alternates and from the industry in general.
    (d) The rules and procedures under which committees conduct their 
activities shall be prescribed in the Board's bylaws.
    (e) Committee members and the Secretary will be notified at least 10 
days in advance of all committee meetings.

[[Page 243]]

    (f) It will be considered a quorum at a committee meeting when at 
least one more than half of those assigned to the committee are present.
    (g) There shall be no voting by proxy on committees.
    (h) The chairperson of the Board shall be an ex-officio member of 
all committees.



Sec.1219.41  Compensation and expenses.

    (a) The members and alternates of the Board and committee members 
shall serve without compensation but shall be reimbursed for reasonable 
out-of-pocket expenses, as approved by the Board, incurred by them in 
the performance of their duties.
    (b) The Board shall have in place sufficient internal controls to 
prevent reimbursements or expenditures for unreasonable or otherwise 
controversial travel and meeting expenses.



Sec.1219.42  Prohibited activities.

    The Board may not engage in and shall prohibit its employees and 
agents from engaging in:
    (a) Any action that would be a conflict of interest. For the 
purposes of this subpart, Board members and employees thereof must 
disclose any relationship with any organization or company that has a 
contract with the Board or operates a State promotion program. No member 
may vote on any matter in which the member or member's business entity 
has a financial interest.
    (b) Using funds collected under this subpart for the purpose of 
influencing legislation or governmental action or policy, by local, 
national, and foreign governments, except to develop and make 
recommendations to the Secretary as provided for in this subpart.
    (c) In a program, plan, or project conducted under this subpart:
    (1) Making any reference to private brand names or making false, 
misleading, disparaging, or unwarranted claims on behalf of Hass 
avocados or
    (2) Making any false, misleading, or disparaging statements with 
respect to the attributes or use of any agricultural product. This 
section shall not preclude the Board from offering its programs, plans, 
and projects for use by commercial parties under such terms and 
conditions as the Board may prescribe as approved by the Secretary.
    (d) For the purposes of this section, a reference to State of origin 
or country of origin does not constitute a reference to a private brand 
name with regard to any funds credited to or disbursed by the Board to 
the Association or to any importer association established in accordance 
with Sec.1219.54.

                   Budgets, Expenses, and Assessments



Sec.1219.50  Budgets, programs, plans, and projects.

    (a) The Board shall submit to the Secretary, on a fiscal period 
basis, annual budgets of its anticipated expenses and disbursements of 
the Board in the administration of this subpart, including the projected 
costs of Hass avocado promotion, industry information, consumer 
information, and related research programs, plans, and projects. The 
first budget shall cover such period as may remain before the beginning 
of the next fiscal period. If such fiscal period is 90 days or less, the 
first budget shall cover such period, as well as the next fiscal period. 
Thereafter, the Board shall submit budgets for each succeeding fiscal 
period not less than 60 days before the beginning of such fiscal period.
    (b) The Board shall receive and evaluate, or on its own initiative 
develop programs, plans and projects for Hass avocado promotion, 
industry information, consumer information as well as related research. 
The Board shall submit to the Secretary for approval any program, plan, 
or project authorized in this subpart. Such programs, plans or projects 
shall provide for:
    (1) The establishment, implementation, issuance, effectuation, 
administration, and evaluation of appropriate programs, plans, or 
projects for advertising, sales promotion, other promotion, and consumer 
information with respect to Hass avocados directed toward increasing the 
general demand for Hass avocados in the United States. Funds shall be 
available as necessary to carry out this section;
    (2) The establishment, implementation, issuance, effectuation, 
administration, and evaluation of appropriate programs, plans, and 
projects designed

[[Page 244]]

to strengthen the position of the Hass avocado industry in the domestic 
marketplace; to maintain, develop, and expand markets for Hass avocados 
in the United States; to lead to the development of new marketing 
strategies; to advance the image and desirability of, increase the 
efficiency of, and encourage further development of the Hass avocado 
industry; and to provide for the disbursement of necessary funds for the 
purposes described in this section;
    (3) The establishment, implementation, issuance, effectuation, 
administration, and evaluation of programs, plans, and projects for 
marketing development research; research on the sale, distribution, 
marketing, use, quality, and nutritional value of Hass avocados; and 
other research with respect to Hass avocado marketing, promotion, 
industry information, or consumer information, including the creation of 
new products thereof. Information acquired from such plans and projects 
shall be disseminated as appropriate. Funds shall be available as 
necessary to carry out this section; and
    (4) The Board to enter into contracts or make agreements for the 
development and carrying out of research, promotion, and information, 
and pay for the costs of such contracts or agreements with funds 
collected pursuant to Sec.1219.54.
    (c) A budget, program, plan, or project for Hass avocados promotion, 
industry information, consumer information, or related research may not 
be implemented prior to approval of the budget, program, plan, or 
project by the Secretary. If the Secretary fails to provide notice to 
the Board or approval or disapproval of a budget, program, plan, or 
project within 45 days after receipt, such budget, program, plan, or 
project shall be deemed approved by the Secretary and may be implemented 
by the Board.
    (d) The Board, from time to time, may seek advice and consult with 
experts from the production, import, wholesale, and retail segments of 
the Hass avocado industry to assist in the development of promotion, 
industry information, consumer information, and related research 
programs, plans, and projects. For these purposes, the Board may appoint 
special committees composed of persons other than Board members. A 
committee so appointed shall consult directly with the Board.
    (e) Programs must be conducted throughout the year to reflect the 
periods when imported and domestic Hass avocados are in the U.S. 
marketplace.
    (f) The Board shall consult with both the Association and importer 
associations on programs, plans, and projects for generic promotions.



Sec.1219.51  Contracts and agreements.

    (a) The Board shall enter into a contract or an agreement with the 
Association for the implementation of programs, plans, or projects for 
promotion, industry information, consumer information, or related 
research with respect to Hass avocados and for the payment of the cost 
of the contract or agreement with funds received by the Board under this 
subpart. The Board may disburse such funds as necessary for these 
purposes after such programs, plans, or projects have been submitted to 
and approved by the Secretary.
    (b) Any contract or agreement entered into shall provide that the 
contracting or agreeing party shall develop and submit to the Board a 
program, plan or project, together with a budget that includes the 
estimated costs to be incurred for the program, plan or project, and 
such program, plan or project shall become effective on the approval of 
the Secretary. For such contract or agreement, the contracting or 
agreeing party shall:
    (1) Keep accurate records of all transactions of the party;
    (2) Account for funds received and expended;
    (3) Make periodic reports to the Board of activities conducted; and
    (4) Make such other reports as the Board or the Secretary shall 
require.
    (c) The Secretary may audit the records of the contracting or 
agreeing party periodically.
    (d) Contractors and subcontractors are subject to the provisions of 
Sec.1219.42.
    (e) The Board may enter into contracts or agreements for 
administrative services, including contracts for employment, as may be 
required to

[[Page 245]]

conduct its business. To the extent appropriate to the contract 
involved, contracts or agreements entered into by the Board under the 
authority of this section shall conform to the provisions described in 
paragraph (b) of this section.



Sec.1219.52  Control of administrative costs.

    (a) As soon as practicable after September 9, 2002, and after 
consultation with the Secretary and other appropriate persons, the Board 
shall implement a system of cost controls based on normally accepted 
business practices to:
    (1) Ensure that the costs incurred by the Board in administering 
this part in any fiscal period shall not exceed 10 percent of the 
projected level of assessments and other income received by the Board 
for generic promotion and research programs for that fiscal period; and
    (2) Cover the minimum administrative activities and personnel needed 
to properly administer and enforce this subpart, and conduct, supervise, 
and evaluate programs, plans, and projects under this subpart.
    (b) Reimbursements to the Secretary required under Sec.1219.53(b) 
are excluded from the limitation on spending.
    (c) To the extent possible, the Board shall use the resources, 
staffs, and facilities of existing avocado organizations as provided in 
Sec.1219.54(a).



Sec.1219.53  Budget and expenses.

    (a) The Board is authorized to incur such expenses, including 
provision for a reasonable reserve for operating contingencies, as the 
Secretary finds are reasonable and likely to be incurred by the Board 
for its maintenance and functioning and to enable it to exercise its 
powers and perform its duties in accordance with the provisions of this 
subpart. Such expenses shall be paid from funds received by the Board, 
including assessments, contributions from any person not subject to 
assessments under this subpart, and other funds available to the Board.
    (b) The Board shall reimburse the Department:
    (1) For expenses not to exceed $25,000 incurred by the Secretary in 
connection with any referendum conducted under the Act;
    (2) For administrative costs incurred by the Secretary for 
supervisory work of up to two employee years annually after the Order or 
amendment to the Order has been issued and made effective; and
    (3) For costs incurred by the Secretary in implementation of the 
Order, for enforcement of the Act and the order, for subsequent 
referenda conducted under the Act, and in defending the Board in 
litigation arising out of action taken by the Board or otherwise in 
defense of the Order.
    (c) The Board shall establish and maintain the minimum level of 
annual administrative expenses necessary to efficiently and effectively 
carry out the programs authorized by the Act. The Board shall include 
its annual administrative expenses as a separate item in its annual 
report. The Board shall adhere to its fiduciary responsibilities and 
ensure that all monies are spent in accordance with the Act and the 
Order.
    (d) With the approval of the Secretary, the Board may borrow money 
for the payment of administrative expenses, subject to the same fiscal, 
budget, and audit controls as other funds of the Board. Any funds 
borrowed by the Board shall be expended only for startup costs and 
capital outlays and are limited to the first period of operation of the 
Board.
    (e) The Board may accept voluntary contributions, but these shall 
only be used to pay expenses incurred in the conduct of programs, plans, 
and projects. The contributions shall be free from any encumbrance by 
the donor, and the Board shall retain complete control of their use.



Sec.1219.54  Assessments.

    (a) Except as provided in Sec.1219.55, the initial rate of 
assessment shall be 2.5 cents per pound on fresh Hass avocados produced 
and handled in the United States and on fresh Hass avocados imported 
into the United States. An equivalent rate shall be assessed on 
processed and frozen Hass avocados on which an assessment has not been 
paid. Such equivalent rate will be assessed on processed or frozen Hass 
avocados

[[Page 246]]

upon the recommendation of the Board with the approval of the Secretary. 
The rate of assessment may be increased or decreased as recommended by 
the Board and approved by the Secretary. Such an increase or decrease 
may occur not more than once annually. Any change in the assessment rate 
shall be announced by the Board at least 30 days prior to going into 
effect and shall not be subject to a vote in a referendum. The maximum 
assessment rate authorized is 5 cents per pound. No more than one 
assessment shall be made on any Hass avocados.
    (b) Domestic assessments. The collection of assessments on domestic 
Hass avocados will be the responsibility of the first handler.
    (1) In the case of a producer acting as the producer's own first 
handler, the producer will be required to collect and remit the 
assessments due to the Board.
    (2) Each first handler shall collect from the producer and pay to 
the Board an assessment of 2.5 cents per pound in accordance with this 
subpart. Assessments shall be remitted by each first handler to the 
Board or its agent within 30 days after the end of the month in which 
the sale or non-sale transfer subject to assessment under this subpart 
took place.
    (3) The first handler shall maintain a separate record of the 
domestic Hass avocados of each producer whose domestic Hass avocados are 
handled, including the domestic Hass avocados owned by the handler and 
domestic Hass avocados that are exported.
    (4) Assessment of other types of fresh avocados may be added at the 
recommendation of the Board with the approval of the Secretary.
    (c) Import assessments. Each importer of fresh Hass avocados shall 
pay an assessment to the Board through Customs on fresh Hass avocados 
imported for marketing in the United States.
    (1) The assessment rate for imported fresh Hass avocados shall be 
the same or equivalent to the rate for fresh Hass avocados produced and 
handled in the United States.
    (2) The import assessment shall be uniformly applied to imported 
fresh Hass avocados that are identified by the number 0804.40.00.10 in 
the Harmonized Tariff Schedule of the United States or any other numbers 
to identify fresh Hass avocados. Assessments on other types of imported 
fresh avocados or on processed Hass avocados, such as prepared, 
preserved, or frozen Hass avocados or Hass avocado paste, puree, and oil 
will be added at the recommendation of the Board with the approval of 
the Secretary.
    (3) The assessments due on imported Hass avocados shall be paid when 
they are released from custody by Customs and introduced into the stream 
of commerce in the United States.
    (d) All assessment payments and reports will be submitted to the 
Board's office. All final payments for a crop year are to be received no 
later than November 30 of that year, unless the Board determines that 
assessments due from the first handler shall be paid to the Board at a 
different time and manner, with approval of the Secretary.
    (e) A late payment charge prescribed by the Secretary shall be 
imposed on any first handler who fails to remit to the Board the total 
amount for which any such handler is liable on or before the due date. 
In addition to the late payment charge, an interest charge shall be 
imposed on the outstanding amount for which the handler is liable. The 
rate of interest shall be prescribed by the Secretary. The timeliness of 
a payment to the Board shall be based on the date the payment is 
actually received by the Board.
    (f) Regulations issued by the Secretary may provide for different 
first handler payment schedules of assessments on domestic Hass 
avocados, so as to recognize differences in marketing or purchasing 
practices and procedures.
    (g) Persons failing to remit total assessments due in a timely 
manner may also be subject to actions under federal debt collection 
procedures.
    (h) The Board may authorize other organizations to collect 
assessments on its behalf with approval of the Secretary.
    (i) The collection of assessments shall commence on or after a date 
established by the Secretary and shall continue until terminated by the 
Secretary. If the Board is not constituted on the date the first 
assessments are to

[[Page 247]]

be remitted, the Secretary shall have the authority to receive 
assessments on behalf of the Board and may hold such assessments in an 
interest-bearing account until the Board is constituted and the funds 
are transferred to the Board.
    (j) To facilitate the payment of assessments under this section, the 
Board shall publish lists of first handlers required to remit 
assessments under this subpart and exempt handlers.
    (k) The Association shall receive an amount of assessment funds 
equal to 85 percent of the assessments paid on Hass avocados produced in 
such State. Such funds shall be remitted to such State organization no 
later than 30 days after such funds are received by the Board. In 
addition, such funds and any proceeds from the investment of such funds 
shall be used by the Association to finance promotion, research, 
consumer information, and industry information programs, plans, and 
projects in the United States. However, no such funds shall be used for 
any administrative expenses incurred by the Association.
    (l) An association of Hass avocado importers established pursuant to 
Sec.1219.58 shall receive an amount of assessment funds equal to 85 
percent of the assessments paid on Hass avocados imported by its 
members. Such funds shall be remitted to such importer association no 
later than 30 days after such funds are received by the Board. In 
addition, such funds and any proceeds from the investment of such funds 
shall be used by the importer association to finance promotion, 
research, consumer information, and industry information programs, 
plans, and projects in the United States. However, no such funds shall 
be used for any administrative expenses incurred by the importer 
association.
    (m) In general, assessment funds received by the Board shall be 
used:
    (1) For payment of costs incurred in implementing and administering 
this subpart;
    (2) To provide for a reasonable reserve to be maintained from 
assessments to be available for contingencies; and
    (3) To cover the administrative costs incurred by the Secretary in 
implementing and administering this Act, as set forth in Sec.
1219.53(b).
    (n) The Board may establish an operating monetary reserve which may 
carry over to subsequent fiscal periods: Provided that, the funds in the 
reserve do not exceed one fiscal period's budget. Subject to approval by 
the Secretary, reserve funds may be used to defray any expenses 
authorized under this part.



Sec.1219.55  Exemption from assessment.

    (a) Any sale of Hass avocados for export from the United States is 
exempt from assessment.
    (b) The Board may require persons receiving an exemption from 
assessments to provide to the Board reports on the disposition of exempt 
Hass avocados.



Sec.1219.56  Adjustment of accounts.

    Whenever the Board or the Secretary determines through an audit of a 
person's reports, records, books, or accounts or by some other means 
that additional money is due to the Board, the person shall be notified 
of the amount due. The person shall then remit any amount due the Board 
by the next date for remitting assessments. Overpayments shall be 
credited to the account of the person remitting the overpayment and 
shall be applied against any amounts due in succeeding months unless the 
person requests a refund of the overpayment.



Sec.1219.57  Patents, copyrights, trademarks, publications,
and product formulations.

    (a) Any patents, copyrights, trademarks, inventions, information, 
publications, and product formulations developed through the use of 
funds received by the Board under this subpart shall be the property of 
the U.S. Government as represented by the Board, and shall, along with 
any rents, royalties, residual payments, or other income from the 
rental, sale, leasing, franchising, or other uses of such patents, 
copyrights, trademarks, inventions, information, publications, or 
product formulations, inure to the benefit of the Board; shall be 
considered

[[Page 248]]

income subject to the same fiscal, budget, and audit controls as other 
funds of the Board; and may be licensed subject to approval of the 
Secretary. Section 1219.72 describes the procedures for termination.
    (b) Should patents, copyrights, trademarks, inventions, 
publications, or product formulations be developed through the use of 
funds collected by the Board under this subpart and funds contributed by 
another organization or person, ownership and related rights to such 
patents, copyrights, trademarks, inventions, publications, or product 
formulations shall be determined by agreement between the Board and the 
party contributing funds towards the development of such patent, 
copyright, trademark, invention, publication, or product formulation in 
a manner consistent with paragraph (a) of this section.



Sec.1219.58  Importer associations.

    (a) An association of avocado importers is eligible to receive 
assessment funds and any proceeds from the investment of such funds only 
if such importer association is:
    (1) Established pursuant to State law that requires detailed State 
regulation comparable to that applicable to the State organization of 
domestic avocado producers, as determined by the Secretary; or
    (2) Certified by the Secretary as meeting the requirements 
applicable to the Board as to its operations and obligations, including 
budgets, programs, plans, projects, audits, conflicts of interest, and 
reimbursements for administrative costs incurred by the Secretary.
    (b) An importer association may represent any importers of Hass 
avocados including importers of Hass avocados from a particular foreign 
country. An importer association may be composed of importers as well as 
representatives of foreign avocado exporting industries. An importer 
association should establish it own bylaws and may use existing 
organizations for the establishment of the association and coordination 
of the association's promotion and research efforts.
    (c) For the purposes of the Order, the information required for 
certification of the importer associations by the Secretary may include, 
but is not limited to, the following:
    (1) Evidence of incorporation under any state law with all 
appropriate legal requirements;
    (2) Evidence that the association is composed of importers that are 
located in any state and subject to assessments under the Order, no 
matter where the association has been incorporated or in which state the 
importers reside;
    (3) Certification of the association's ability and willingness to 
further the aims and objectives of the Order;
    (4) Evidence of stability and permanency; and
    (5) A description of the functions of the association.

                       Books, Records, and Reports



Sec.1219.60  Reports.

    (a) Each first handler of domestic Hass avocados, producer, and 
importer subject to this subpart shall report to the administrative 
staff of the Board, at such times and in such manner as the Board may 
prescribe, such information as may be necessary for the Board to perform 
its duties.
    (b) First handler reports shall include, but shall not be limited 
to, the following:
    (1) Number of pounds of domestic Hass avocados received during the 
reporting period;
    (2) Number of pounds on which assessments were collected;
    (3) Assessments collected during the reporting period;
    (4) Name and address of person(s) from whom the first handler 
collected the assessments on each pound handled;
    (5) Date collection was made on each pound handled;
    (6) Record of assessments paid, including a statement from the 
handler that assessments have been paid on all domestic Hass avocados 
handled during the reporting period; and
    (7) Number of pounds exported.
    (c) Each importer subject to this subpart may be required to report 
the following:
    (1) Number of pounds of Hass avocados imported during the reporting 
period;

[[Page 249]]

    (2) Number of pounds on which an assessment was paid;
    (3) Name and address of the importer;
    (4) Date collection was made on each pound imported and to whom 
payment was made; and
    (5) Record of each importation of Hass avocados during such period, 
giving quantity, variety, date, and port of entry.



Sec.1219.61  Books and records.

    Each producer, first handler, and importer subject to this subpart 
shall maintain and make available for inspection by the employees and 
agents of the Board and the Secretary, such books and records as are 
necessary to carry out the provisions of this subpart, and the 
regulations issued thereunder, including such records as are necessary 
to verify any reports required. Books and records shall be retained for 
at least two years beyond the fiscal period of their applicability.



Sec.1219.62  Books and records of the Board.

    (a) The Board shall maintain such books and records as the Secretary 
may require. Such books and records shall be made available upon request 
by the Secretary for inspection and audit.
    (b) The Board shall prepare and submit to the Secretary, from time 
to time, such reports as the Secretary may require.
    (c) The Board shall account for the receipt and disbursement of all 
the funds entrusted to the Board.
    (d) The Board shall cause the books and records of the Board to be 
audited by an independent auditor at the end of each fiscal period. A 
report of each audit shall be submitted to the Secretary.



Sec.1219.63  Confidential treatment.

    (a) All information obtained from the books, records, or reports 
under the Act, this subpart, and the regulations issued thereunder shall 
be kept confidential and shall not be disclosed to the public by any 
person, including all current and former officers, employees, staff and 
agents of the Department, the Board, and contracting and subcontracting 
agencies or agreeing parties having access to such information. Only 
those persons having a specific need for such information to effectively 
administer the provisions of this subpart shall have access to such 
information. Only such information so obtained as the Secretary deems 
relevant shall be disclosed, and then only in a judicial proceeding or 
administrative hearing brought at the direction, or upon the request, of 
the Secretary, or to which the Secretary or any officer of the United 
States is a party, and involving this subpart. Nothing in this subpart 
shall be deemed to prohibit:
    (1) The issuance of general statements based upon the reports of the 
number of persons subject to this subpart or statistical data collected 
from such reports, if such statements do not identify the information 
furnished by any person; or
    (2) The publication, by direction of the Secretary, of the name of 
any person who has been adjudged to have violated this subpart, together 
with a statement of the particular provisions of this subpart violated 
by such person.
    (b) Any disclosure of any confidential information by any employee 
or agent of the Board shall be considered willful misconduct.
    (c) No information on how a person voted in a referendum conducted 
under the Act shall be made public.



Sec.1219.64  List of importers.

    The administrative staff of the Board shall periodically review the 
list of importers of Hass avocados to determine whether persons on the 
list are subject to this subpart.



Sec.1219.65  List of producers.

    The administrative staff of the Board shall periodically review the 
list of producers of Hass avocados to determine whether the persons on 
the list of subject to this subpart. On the request of the Secretary or 
the Board, the Association shall provide to the Secretary or the 
administrative staff of the Board the list of producers of Hass 
avocados.

[[Page 250]]

                              Miscellaneous



Sec.1219.70  Right of the Secretary.

    All fiscal matters, programs, plans, and projects, contracts, rules 
or regulations, reports, or other substantive actions proposed and 
prepared by the Board shall be submitted to the Secretary for approval.



Sec.1219.71  Suspension or termination.

    (a) The Secretary shall suspend or terminate this part or subpart or 
a provision thereof if the Secretary finds that the part or subpart or a 
provision thereof obstructs or does not tend to effectuate the purposes 
of the Act, or if the Secretary determines that this part or subpart or 
a provision thereof is not favored by persons voting in a referendum 
conducted pursuant to the Order or the Act.
    (b) The Secretary shall suspend or terminate this subpart at the end 
of the marketing year whenever the Secretary determines that its 
suspension or termination is approved or favored by a majority of the 
producers and importers voting who, during a representative period 
determined by the Secretary, have been engaged in the production or 
importation of Hass avocados.
    (c) If, as a result of a referendum, the Secretary determines that 
this subpart is not approved, the Secretary shall:
    (1) Suspend or terminate, as appropriate, the collection of 
assessments not later than 180 days after making such determination; and
    (2) Suspend or terminate, as appropriate, all activities under this 
subpart in an orderly manner as soon as practicable.



Sec.1219.72  Proceedings after termination.

    (a) Upon the termination of this subpart, the Board shall recommend 
to the Secretary not more than five of its members to serve as trustees 
for the purpose of liquidating the affairs of the Board. Such persons, 
upon designation by the Secretary, shall become trustees of all of the 
funds and property owned, in possession of or under control of the 
Board, including claims for any funds unpaid or property not delivered 
or any other claim existing at the time of such termination.
    (b) The said trustees shall:
    (1) Continue in such capacity until discharged by the Secretary;
    (2) Carry out the obligations of the Board under any contracts or 
agreements entered into by it pursuant to the Order;
    (3) From time to time account for all receipts and disbursements and 
deliver all property on hand, together with all books and records of the 
Board and of the trustees, to such person or persons as the Secretary 
may direct; and
    (4) Upon the request of the Secretary, execute such assignments or 
other instruments necessary and appropriate to vest in such persons 
title and right to all of the funds, property, and claims vested in the 
Board or the trustees pursuant to the Order.
    (c) Any person to whom funds, property, or claims have been 
transferred or delivered pursuant to the Order shall be subject to the 
same obligations imposed upon the Board and the trustees.
    (d) Any residual funds not required to defray the necessary expenses 
of liquidation shall be returned to the persons who contributed such 
funds, or paid assessments, or, if not practicable, shall be turned over 
to the Secretary to be distributed to authorized Hass avocado producer 
and importer organizations in the interest of continuing Hass avocado 
promotion, research, and information programs.



Sec.1219.73  Effect of termination or amendment.

    Unless otherwise expressly provided by the Secretary, the 
termination of this subpart or any regulation issued thereunder, or the 
issuance of any amendment to either thereof, shall not:
    (a) Affect or waive any right, duty, obligation, or liability which 
shall have arisen or which may thereafter arise in connection with any 
provision of this subpart or any such rule or regulation issued 
thereunder; or
    (b) Release or extinguish any violation of this subpart or of any 
rule or regulation issued thereunder; or
    (c) Affect or impair any rights or remedies of the United States, or 
of the

[[Page 251]]

Secretary or of any person, with respect to any such violation.



Sec.1219.74  Personal liability.

    No member, alternate member, employee, or agent of the Board shall 
be held personally responsible, either individually or jointly with 
others, in any way whatsoever, to any person for errors in judgment, 
mistakes, or other acts, either of Association or omission, as such 
member, alternate, employee, or agent, except for acts of dishonesty or 
willful misconduct.



Sec.1219.75  Separability.

    If any provision of this subpart is declared invalid or the 
applicability thereof to any person or circumstance is held invalid, the 
validity of the remainder of this subpart, or the applicability thereof 
to other persons or circumstances shall not be affected thereby.



Sec.1219.76  Amendments.

    Amendments to this subpart may be proposed, from time to time, by 
the Board or by any interested persons affected by the provisions of the 
Act, including the Secretary. Except for changes in the assessment rate, 
the provisions of the Act applicable to the Order are applicable to any 
amendment of the Order.



Sec.1219.77  OMB control numbers.

    The control numbers assigned to the information collection 
requirements in this part by the Office of Management and Budget 
pursuant to the Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35, 
are OMB control numbers 0581-0197 and 0505-0001.



                     Subpart B_Referendum Procedures



Sec.1219.100  General.

    Referenda to determine whether eligible producers and importers of 
Hass avocados favor the issuance, amendment, suspension, or termination 
of the Hass Avocado Promotion, Research, and Information Order shall be 
conducted in accordance with this subpart.



Sec.1219.101  Definitions.

    (a) Administrator means the Administrator of the Agricultural 
Marketing Service, with power to redelegate, or any officer or employee 
of the U.S. Department of Agriculture to whom authority has been 
delegated or may hereafter be delegated to act in the Administrator's 
stead.
    (b) Eligible importer means any person who imported Hass avocados 
that are identified by the number 0804.40.00.10 in the Harmonized Tariff 
Schedule of the United States for at least one year prior to the 
referendum. Importation occurs when Hass avocados originating outside of 
the United States are released from custody by the U.S. Customs Service 
and introduced into the stream of commerce in the United States. 
Included are persons who hold title to foreign-produced Hass avocados 
immediately upon release by the U.S. Customs Service, as well as any 
persons who act on behalf of others, as agents or brokers, to secure the 
release of Hass avocados from the U.S. Customs Service when such Hass 
avocados are entered or withdrawn for consumption in the United States.
    (c) Eligible producer means any person who produced Hass avocados in 
the United States for at least one year prior to the referendum who:
    (1) Owns, or shares the ownership and risk of loss of, the crop;
    (2) Rents Hass avocado production facilities and equipment resulting 
in the ownership of all or a portion of the Hass avocados produced;
    (3) Owns Hass avocado production facilities and equipment but does 
not manage them and, as compensation, obtains the ownership of a portion 
of the Hass avocados produced; or
    (4) Is a party in a landlord-tenant relationship or a divided 
ownership arrangement involving totally independent entities cooperating 
only to produce Hass avocados who share the risk of loss and receive a 
share of the Hass avocados produced. No other acquisition of legal title 
to Hass avocados shall be deemed to result in persons becoming eligible 
producers.
    (d) Hass avocados means the fruit grown in or imported into the 
United States of the species Persea americana

[[Page 252]]

Mill. For the purposes of the initial referendum, the term shall include 
fresh fruit only.
    (e) Order means the Hass Avocado Promotion, Research, and 
Information Order.
    (f) Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other legal entity. For 
the purpose of this definition, the term ``partnership'' includes, but 
is not limited to:
    (1) A husband and a wife who have title to, or leasehold interest 
in, a Hass avocado farm as tenants in common, joint tenants, tenants by 
the entirety, or, under community property laws, as community property; 
and
    (2) So-called ``joint ventures'' wherein one or more parties to an 
agreement, informal or otherwise, contributed land and others 
contributed capital, labor, management, or other services, or any 
variation of such contributions by two or more parties.
    (g) Referendum agent or agent means the individual or individuals 
designated by the Administrator to conduct the referendum.
    (h) Representative period means the period designated by the 
Administrator.
    (i) United States. The term ``United States'' means collectively of 
the several 50 States of the United States, the District of Columbia, 
the Commonwealth of Puerto Rico, the Commonwealth of the Northern 
Mariana Islands, the United States Virgin Islands, Guam, American Samoa, 
the Republic of the Marshall Islands, and the Federated States of 
Micronesia.

[67 FR 7264, Feb. 19, 2002; 67 FR 13563, Mar. 25, 2002]



Sec.1219.102  Registration.

    An eligible producer or importer of Hass avocados, as defined in 
this subpart, at the time of the referendum and during a representative 
period, who chooses to vote in any referendum conducted under this 
subpart, shall register with the referendum agent prior to the voting 
period, after receiving notice from the referendum agent concerning the 
referendum under Sec.1219.104(b). Registration information shall be 
confidential under Sec.1219.108.



Sec.1219.103  Voting.

    (a) Each eligible producer and eligible importer who registers to 
vote in the referendum shall be entitled to cast only one ballot in the 
referendum. However, each producer in a landlord-tenant relationship or 
a divided ownership arrangement involving totally independent entities 
cooperating only to produce Hass avocados, in which more than one of the 
parties is a producer, shall be entitled to cast one ballot in the 
referendum covering only such producer's share of the ownership.
    (b) Proxy voting is not authorized, but an officer or employee of an 
eligible corporate producer or importer, or an administrator, executor, 
or trustee or an eligible entity may cast a ballot on behalf of such 
entity. Any individual so voting in a referendum shall certify that such 
individual is an officer or employee of the eligible entity, or an 
administrator, executive, or trustee of an eligible entity and that such 
individual has the authority to take such action. Upon request of the 
referendum agent, the individual shall submit adequate evidence of such 
authority.
    (c) All ballots are to be cast by mail or fax, as instructed by the 
referendum agent.



Sec.1219.104  Instructions.

    The referendum agent shall conduct the referendum, in the manner 
herein provided, under the supervision of the Administrator. The 
Administrator may prescribe additional instructions, not inconsistent 
with the provisions hereof, to govern the procedure to be followed by 
the referendum agent. Such agent shall:
    (a) Determine the period during which ballots may be cast (voting 
period).
    (b) Notify producers and importers of the voting period for the 
referendum and the requirement to register to vote in the referendum at 
least 30 days in advance by utilizing available media or public 
information sources, without incurring advertising expense, to publicize 
the dates, places, method of voting, eligibility requirements, and other 
pertinent information. Such sources of publicity may include, but are 
not limited to, print and radio.

[[Page 253]]

    (c) Develop the ballots and related material to be used in the 
referendum. The ballot shall provide for recording essential 
information, including that needed for ascertaining whether the person 
voting, or on whose behalf the vote is cast, is an eligible voter.
    (d) Develop a list of producers and importers who register to vote.
    (e) Mail to registered voters the instructions on voting, a ballot, 
and a summary of the terms and conditions of the proposed Order.
    (f) At the end of the voting period, collect, open, number, and 
review the ballots and tabulate the results in the presence of an agent 
of a third party authorized to monitor the referendum process.
    (g) Prepare a report on the referendum.
    (h) Announce the results to the public.



Sec.1219.105  Subagents.

    The referendum agent may appoint any individual or individuals 
necessary or desirable to assist the agent in performing such agent's 
functions hereunder. Each individual so appointed may be authorized by 
the agent to perform any or all of the functions which, in the absence 
of such appointment, shall be performed by the agent.



Sec.1219.106  Ballots.

    The referendum agent and subagents shall accept all ballots cast. 
However, if an agent or subagent deems that a ballot should be 
challenged for any reason, the agent or subagent shall endorse above 
their signature, on the ballot, a statement to the effect that such 
ballot was challenged, by whom challenged, the reasons therefore, the 
results of any investigations made with respect thereto, and the 
disposition thereof. Ballots invalid under this subpart shall not be 
counted.



Sec.1219.107  Referendum report.

    Except as otherwise directed, the referendum agent shall prepare and 
submit to the Administrator a report on the results of the referendum, 
the manner in which it was conducted, the extent and kind of public 
notice given, and other information pertinent to the analysis of the 
referendum and its results.



Sec.1219.108  Confidential information.

    The list of registered voters, ballots, and all other information or 
reports that reveal, or tend to reveal, the identity or vote of voters 
in the referendum shall be strictly confidential and shall not be 
disclosed.



Sec.1219.109  OMB control number.

    The control number assigned to the information collection 
requirement in this subpart by the Office of Management and Budget 
pursuant to the Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35 is 
OMB control number 0581-0197.



                     Subpart C_Rules and Regulations

    Source: 70 FR 2758, Jan. 14, 2005, unless otherwise noted.



Sec.1219.200  Terms defined.

    Unless otherwise defined in this subpart, the definitions of terms 
used in this subpart shall have the same meaning as the definitions of 
such terms which appear in Subpart A--Hass Avocado Promotion, Research, 
and Information Order of this part.



Sec.1219.201  Definitions.

    Organic Act means section 2103 of the Organic Foods Production Act 
of 1990 (7 U.S.C. 6502).



Sec.1219.202  Exemption for organic Hass avocados.

    (a) A producer who operates under an approved National Organic 
Program (7 CFR part 205) (NOP) organic production system plan may be 
exempt from the payment of assessments under this part, provided that:
    (1) Only agricultural products certified as ``organic'' or ``100 
percent organic'' (as defined in the NOP) are eligible for exemption;
    (2) The exemption shall apply to all certified ``organic'' or ``100 
percent organic'' (as defined in the NOP) products of a producer 
regardless of whether the agricultural commodity subject to the 
exemption is produced by a person that

[[Page 254]]

also produces conventional or nonorganic agricultural products of the 
same agricultural commodity as that for which the exemption is claimed;
    (3) The producer maintains a valid certificate of organic operation 
as issued under the Organic Foods Production Act of 1990 (7 U.S.C. 6501-
6522) (OFPA) and the NOP regulations issued under OFPA (7 CFR part 205); 
and
    (4) Any producer so exempted shall continue to be obligated to pay 
assessments under this part that are associated with any agricultural 
products that do not qualify for an exemption under this section.
    (b) To apply for exemption under this section, an eligible Hass 
avocado producer shall submit a request to the Board on an Organic 
Exemption Request Form (Form AMS-15) at any time during the year 
initially, and annually thereafter on or before November 1, for as long 
as the producer continues to be eligible for the exemption.
    (c) A producer request for exemption shall include the following:
    (1) The applicant's full name, company name, address, telephone and 
fax numbers, and email address;
    (2) Certification that the applicant maintains a valid certificate 
of organic operation issued under the OFPA and the NOP;
    (3) Certification that the applicant produces organic products 
eligible to be labeled ``organic'' or ``100 percent organic'' under the 
NOP;
    (4) A requirement that the applicant attach a copy of their 
certificate of organic operation issued by a USDA-accredited certifying 
agent under the OFPA and the NOP;
    (5) Certification, as evidenced by signature and date, that all 
information provided by the applicant is true; and
    (6) Such other information as may be required by the Board, with the 
approval of the Secretary.
    (d) If a producer complies with the requirements of this section, 
the Board will grant an assessment exemption and issue a Certificate of 
Exemption to the producer within 30 days. If the application is 
disapproved, the Board will notify the applicant of the reason(s) for 
disapproval within the same timeframe.
    (e) The producer shall provide a copy of the Certificate of 
Exemption to each handler to whom the producer sells Hass avocados. The 
handler shall maintain records showing the exempt producer's name and 
address and the exemption number assigned by the Board.
    (f) An importer who imports products that are eligible to be labeled 
as ``organic'' or ``100 percent organic'' under the NOP, or certified as 
``organic'' or ``100 percent organic'' under a U.S. equivalency 
arrangement established under the NOP, may be exempt from the payment of 
assessments on those products. Such importer may submit documentation to 
the Board and request an exemption from assessment on certified 
``organic'' or ``100 percent organic'' Hass avocados on an Organic 
Exemption Request Form (Form AMS-15) at any time initially, and annually 
thereafter on or before November 1, as long as the importer continues to 
be eligible for the exemption. This documentation shall include the same 
information required of producers in paragraph (c) of this section. If 
the importer complies with the requirements of this section, the Board 
will grant the exemption and issue a Certificate of Exemption to the 
importer. If Customs collects the assessment on exempt product that is 
identified as ``organic'' by a number in the Harmonized Tariff Schedule, 
the Board must reimburse the exempt importer the assessments paid upon 
receipt of such assessments from Customs. For all other exempt organic 
product for which Customs collects the assessment, the importer may 
apply to the Board for a reimbursement of assessments paid, and the 
importer must submit satisfactory proof to the Board that the importer 
paid the assessment on exempt organic product. Any importer so exempted 
shall continue to be obligated to pay assessments under this part that 
are associated with any imported agricultural products that do not 
qualify for an exemption under this section.
    (g) The exemption will apply immediately following the issuance of 
the Certificate of Exemption.

[70 FR 2758, Jan. 14, 2005, as amended at 80 FR 82031, Dec. 31, 2015]

[[Page 255]]



Sec.1219.203  Reapportionment of membership.

    Pursuant to Sec.1219.30(c), the positions authorized in Sec.
1219.30(b)(3) are reapportioned as follows: 3 importer members and their 
alternates.

[71 FR 26823, May 9, 2006]



PART 1220_SOYBEAN PROMOTION, RESEARCH, AND CONSUMER INFORMATION--
Table of Contents



             Subpart A_Soybean Promotion and Research Order

                               Definitions

Sec.
1220.101 Act.
1220.102 Board.
1220.103 Commerce.
1220.104 Committee.
1220.105 Consumer information.
1220.106 [Reserved]
1220.107 Cooperator organization.
1220.108 Department.
1220.109 Eligible organization.
1220.110 First purchaser.
1220.111 Fiscal period.
1220.112 Industry information.
1220.113 Marketing.
1220.114 National nonprofit producer-governed organization.
1220.115 Net market price.
1220.116 Part and subpart.
1220.117 Plans and projects.
1220.118 Person.
1220.119 Producer.
1220.120 [Reserved]
1220.121 Promotion.
1220.122 Qualified State Soybean Board.
1220.123 Referendum.
1220.124 [Reserved]
1220.125 Research.
1220.126 Secretary.
1220.127 Soybean products.
1220.128 Soybeans.
1220.129 State and United States.
1220.130 Unit.

                          United Soybean Board

1220.201 Membership of board.
1220.202 Term of office.
1220.203 Nominations.
1220.204 Appointment.
1220.205 Nominee's agreement to serve.
1220.206 Vacancies.
1220.207 Alternate members.
1220.208 Removal.
1220.209 Procedure.
1220.210 Compensation and reimbursement.
1220.211 Powers of the Board.
1220.212 Duties.

                 Soybean Program Coordinating Committee

1220.213 Establishment and membership.
1220.214 Term of office.
1220.215 Vacancies.
1220.216 Procedure.
1220.217 Compensation and reimbursement.
1220.218 Officers of the Committee.
1220.219 Powers of the Committee.
1220.220 Duties of the Committee.

                        Expenses and Assessments

1220.222 Expenses.
1220.223 Assessments.
1220.224-1220.227 [Reserved]
1220.228 Qualified State Soybean Boards.
1220.229 Influencing governmental action.
1220.230 Promotion, research, consumer information, and industry 
          information.

                       Reports, Books, and Records

1220.241 Reports.
1220.242 Books and records.
1220.243 Confidential treatment.

                              Miscellaneous

1220.251 Proceedings after termination.
1220.252 Effect of termination or amendment.
1220.253 Personal liability.
1220.254 Patents, copyrights, inventions, and publications.
1220.255 Amendments.
1220.256 Separability.
1220.257 OMB control numbers.

                     Subpart B_Rules and Regulations

                               Definitions

1220.301 Terms defined.
1220.302 Exemption.

                               Assessments

1220.310 Assessments.
1220.311 Collection and remittance of assessments.
1220.312 Remittance of assessments and submission of reports to United 
          Soybean Board or Qualified State Soybean Board.
1220.313 Qualified State Soybean Boards.
1220.314 Document evidencing payment of assessments.
1220.330-120.332 [Reserved]

Subparts C-E [Reserved]

              Subpart F_Procedures To Request a Referendum

                               Definitions

1220.600 Act.
1220.601 Administrator, AMS.
1220.602 Administrator, FSA.
1220.603 Farm Service Agency.
1220.604 Farm Service Agency County Committee.

[[Page 256]]

1220.605 Farm Service Agency County Executive Director.
1220.606 Farm Service Agency State Committee.
1220.607 Farm Service Agency State Executive Director.
1220.608 Order.
1220.609 Person.
1220.610 Producer.
1220.611 Public notice.
1220.612 Representative period.
1220.613 Secretary.
1220.614 Soybeans.
1220.615 State and United States.

                               Procedures

1220.616 General.
1220.617 Supervision of the process for requesting a referendum.
1220.618 Eligibility.
1220.619 Time and place for requesting a referendum.
1220.620 Facilities.
1220.621 Certification and request form.
1220.622 Certification and request procedures.
1220.623 Canvassing requests.
1220.624 Confidentiality.
1220.625 Counting requests.
1220.626 FSA county office report.
1220.627 FSA State office report.
1220.628 Results of the request for referendum.
1220.629 Disposition of records.
1220.630 Instructions and forms.

    Authority: 7 U.S.C. 6301-6311 and 7 U.S.C. 7401.



             Subpart A_Soybean Promotion and Research Order

    Source: 56 FR 31049, July 9, 1991, unless otherwise noted.

                               Definitions



Sec.1220.101  Act.

    The term Act means the Soybean Promotion, Research, and Consumer 
Information Act, subtitle E of title XIX, of the Food, Agriculture, 
Conservation and Trade Act of 1990, Public Law No. 101-624, and any 
amendments thereto.



Sec.1220.102  Board.

    The term Board means the United Soybean Board established under 
Sec.1220.201 of this subpart.



Sec.1220.103  Commerce.

    The term commerce means interstate, foreign, or intrastate commerce.



Sec.1220.104  Committee.

    The term Committee means the Soybean Program Coordinating Committee 
established under Sec.1220.213 of this subpart.



Sec.1220.105  Consumer information.

    The term consumer information means information that will assist 
consumers and other persons in making evaluations and decisions 
regarding the purchase, preparation, and use of soybeans or soybean 
products.



Sec.1220.106  [Reserved]



Sec.1220.107  Cooperator organization.

    The term Cooperator Organization means the American Soybean 
Association, or any successor organization to the American Soybean 
Association, which conducts foreign market development activities on 
behalf of soybean producers.



Sec.1220.108  Department.

    Department means the United States Department of Agriculture.



Sec.1220.109  Eligible organization.

    The term eligible organization means any organization which has been 
certified by the Secretary pursuant to Sec.1220.203 of this subpart as 
being eligible to submit nominations for initial membership on the 
Board.



Sec.1220.110  First purchaser.

    The term first purchaser means--
    (a) except as provided in paragraph (b) of this section, any person 
buying or otherwise acquiring from a producer soybeans produced by such 
producer; or
    (b) In any case in which soybeans are pledged as collateral for a 
loan issued under any Commodity Credit Corporation price support loan 
program and the soybeans are forfeited by the producer in lieu of loan 
repayment, the Commodity Credit Corporation.

[56 FR 31049, July 9, 1991, as amended at 56 FR 42923, Aug. 30, 1991; 57 
FR 31095, July 14, 1992]

[[Page 257]]



Sec.1220.111  Fiscal period.

    The term fiscal period means the calendar year or such other annual 
period as the Board may determine with the approval of the Secretary.



Sec.1220.112  Industry information.

    The term industry information means information and programs that 
will lead to the development of new markets, new marketing strategies, 
or increased efficiency for the soybean industry, and activities to 
enhance the image of the soybean industry.



Sec.1220.113  Marketing.

    The term marketing means the sale or other disposition of soybeans 
or soybean products in any channel of commerce.



Sec.1220.114  National nonprofit producer-governed organization.

    The term national nonprofit producer-governed organization means an 
organization that--
    (a) Is a nonprofit organization pursuant to section 501(c) (3), (5) 
or (6) of the Internal Revenue Code (26 U.S.C. 501(c) (3), (5) and (6)); 
and
    (b) Is governed by a Board of directors of agricultural producers 
representing soybean producers on a national basis;



Sec.1220.115  Net market price.

    The term net market price means--
    (a) except as provided in paragraph (b) of this section, the sales 
price, or other value received by a producer for soybeans after 
adjustments for any premium or discount based on grading or quality 
factors, as determined by the Secretary; or
    (b) For soybeans pledged as collateral for a loan issued under any 
Commodity Credit Corporation price support loan program, and where the 
soybeans are forfeited by the producer in lieu of loan repayment, the 
principal amount of the loan.

[56 FR 31049, July 9, 1991, as amended at 56 FR 42923, Aug. 30, 1991; 57 
FR 31095, July 14, 1992]



Sec.1220.116  Part and subpart.

    Part means the Soybean Promotion and Research Order and all rules 
and regulations issued pursuant to the Act and the Order, and the Order 
itself shall be a ``Subpart'' of such part.



Sec.1220.117  Plans and projects.

    Plans and Projects means promotion, research, consumer information, 
and industry information plans, studies, or projects pursuant to Sec.
1220.230.



Sec.1220.118  Person.

    The term person means any individual, group of individuals, 
partnership, corporation, association, cooperative, or any other legal 
entity.



Sec.1220.119  Producer.

    The term producer means any person engaged in the growing of 
soybeans in the United States who owns, or who shares the ownership and 
risk of loss of, such soybeans.



Sec.1220.120  [Reserved]



Sec.1220.121  Promotion.

    The term promotion means any action, including paid advertising, 
technical assistance, and trade servicing activities, to enhance the 
image or desirability of soybeans or soybean products in domestic and 
foreign markets, and any activity designed to communicate to consumers, 
importers, processors, wholesalers, retailers, government officials, or 
other information relating to the positive attributes of soybeans or 
soybean products or the benefits of importation, use, or distribution of 
soybeans and soybean products.



Sec.1220.122  Qualified State Soybean Board.

    The term Qualified State Soybean Board means a State soybean 
promotion entity that is authorized by State law and elects to be the 
Qualified State Soybean Board for the State in which it operates 
pursuant to Sec.1220.228(a)(1). If no such entity exists in a State, 
the term Qualified State Soybean Board means a soybean producer-governed 
entity--
    (a) That is organized and operating within a State;
    (b) That receives voluntary contributions and conducts soybean 
promotion, research, consumer information, or industry information 
programs; and

[[Page 258]]

    (c) That meets the criteria, established by the Board and approved 
by the Secretary, relating to the qualifications of such entity to 
perform its duties under this part as determined by the Board, and is 
certified by the Board under Sec.1220.228(a)(2), with the approval of 
the Secretary.



Sec.1220.123  Referendum.

    The term Referendum means a referendum, other than referenda defined 
in Sec.1220.106 and Sec.1220.124, to be conducted by the Secretary 
pursuant to the Act whereby producers shall be given the opportunity to 
vote to determine whether the continuance of this subpart is favored by 
a majority of producers voting.



Sec.1220.124  [Reserved]



Sec.1220.125  Research.

    The term research means any type of study to advance the image, 
desirability, marketability, production, product development, quality, 
or functional or nutritional value of soybeans or soybean products, 
including any research activity designed to identify and analyze 
barriers to export sales of soybeans and soybean products.



Sec.1220.126  Secretary.

    The term Secretary means the Secretary of Agriculture of the United 
States or any other officer or employee of the Department to whom there 
has been delegated, the authority to act in the Secretary's stead.



Sec.1220.127  Soybean products.

    The term soybean products means products produced in whole or in 
part from soybeans or soybean byproducts.



Sec.1220.128  Soybeans.

    The term soybeans means all varieties of Glycine max or Glycine 
soja.



Sec.1220.129  State and United States.

    The terms State and United States include the 50 States of the 
United States of America, the District of Columbia, and the Commonwealth 
of Puerto Rico.



Sec.1220.130  Unit.

    The term unit shall mean each State, or group of States, which is 
represented on the Board.

                          United Soybean Board



Sec.1220.201  Membership of board.

    (a) For the purposes of nominating and appointing producers to the 
Board, the United States shall be divided into 30 geographic units and 
the number of Board members from each unit, subject to paragraphs (d) 
and (e) of this section shall be as follows:

------------------------------------------------------------------------
                                                               Number of
                             Unit                               members
------------------------------------------------------------------------
South Dakota.................................................          4
Ohio.........................................................          4
North Dakota.................................................          4
Nebraska.....................................................          4
Missouri.....................................................          4
Minnesota....................................................          4
Iowa.........................................................          4
Indiana......................................................          4
Illinois.....................................................          4
Wisconsin....................................................          3
Tennessee....................................................          3
Mississippi..................................................          3
Michigan.....................................................          3
Kentucky.....................................................          3
Kansas.......................................................          3
Arkansas.....................................................          3
Virginia.....................................................          2
Pennsylvania.................................................          2
North Carolina...............................................          2
Maryland.....................................................          2
Louisiana....................................................          2
Alabama......................................................          2
Texas........................................................          1
South Carolina...............................................          1
Oklahoma.....................................................          1
New York.....................................................          1
New Jersey...................................................          1
Georgia......................................................          1
Delaware.....................................................          1
Eastern Region (Connecticut, Florida, Maine, Massachusetts,            1
 New Hampshire, Rhode Island, Vermont, West Virginia,
 District of Columbia, and Puerto Rico)......................
Western Region (Alaska, Arizona, California, Colorado,                 1
 Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah,
 Washington, and Wyoming.....................................
------------------------------------------------------------------------

    (b) The Board shall be composed of soybean producers appointed by 
the Secretary from nominations submitted pursuant to Sec.1220.203. A 
soybean producer may only be nominated by the unit in which that soybean 
producer is a resident or producer.
    (c) At the end of each three (3) year period, the Board shall review 
the geographic distribution of soybean production volume throughout the 
United

[[Page 259]]

States and may recommend to the Secretary a modification of paragraph 
(e) of this section, to best reflect the geographic distribution of 
soybean production volume in the United States. The Secretary may amend 
this subpart to make the changes recommended by the Board in levels of 
productions used to determine per unit representation. A unit may not, 
as a result of any modifications under this subsection, lose Board seats 
to which it is entitled at the time this subpart is initially issued 
unless its average annual production, as determined under paragraph 
(e)(6) of this section, declines below the levels required for 
representation, as specified in paragraphs (e) (1) through (5) of this 
section.
    (d) At the end of each three (3) year period, the Secretary shall 
review the volume of production (minus the volume of production for 
which refunds have been paid) of each unit provided representation under 
paragraph (a) of this section, and shall adjust the boundaries of any 
unit and the number of Board members from each such unit to conform with 
the criteria set out in paragraphs (e) (1) through (5) of this section.
    (e) The following formula will be used to determine the number of 
directors for each unit who shall serve on the Board:
    (1)(i) Except as provided in paragraph (e)(1)(ii) of this section, 
each State will be considered as a separate unit.
    (ii) States which do not have annual average soybean production 
equal to or greater than three million (3,000,000) bushels shall be 
grouped, to the extent practicable, into geographically contiguous units 
each of which, to the extent practicable, have a combined annual soybean 
production level which is equal to or greater than three million 
(3,000,000) bushels and each such unit shall be entitled to at least one 
representative on the Board.
    (2) Each unit that has an annual average soybean production of less 
than fifteen million (15,000,000) bushels shall be entitled to one 
representative on the Board.
    (3) Each unit which has an annual average soybean production of 
fifteen million (15,000,000) or more bushels but less than seventy 
million (70,000,000) bushels shall be entitled to two (2) 
representatives on the Board.
    (4) Each unit which has an annual average soybean production of 
seventy million (70,000,000) or more bushels but less than two hundred 
million (200,000,000) bushels shall be entitled to three (3) 
representatives on the Board.
    (5) Each unit which has an annual average soybean production of two 
hundred million (200,000,000) bushels or more shall be entitled to four 
(4) representatives on the Board.
    (6) For the purposes of this section, average annual soybean 
production shall be determined by using the average of the production 
for the State or unit over the five previous years, excluding the year 
in which production was the highest and the year in which production was 
the lowest.
    (f) [Reserved]

[56 FR 31049, July 9, 1991, as amended at 60 FR 29962, June 7, 1995; 60 
FR 58500, Nov. 28, 1995; 62 FR 37489, July 14, 1997; 62 FR 41485, Aug. 
1, 1997; 65 FR 63768, Oct. 25, 2000; 68 FR 57327, Oct. 3, 2003; 71 FR 
69430, Dec. 1, 2006; 74 FR 62676, Dec. 1, 2009; 78 FR 2, Jan. 2, 2013; 
80 FR 63910, Oct. 22, 2015; 83 FR 53366, Oct. 23, 2018]



Sec.1220.202  Term of office.

    (a) The members of the Board shall serve for terms of 3 years, 
except that the members appointed to the initial Board shall serve, 
proportionately, for terms of 1, 2, and 3 years.
    (b) Each member shall continue to serve until a successor is 
appointed by the Secretary and has accepted the position.
    (c) No member shall serve more than three consecutive 3-year terms 
in such capacity.



Sec.1220.203  Nominations.

    All nominations for appointments to the Board under Sec.1220.204 
shall be made in the following manner:
    (a) After the issuance of this subpart by the Secretary, nominations 
shall be obtained by the Secretary as specified in paragraphs (a), (b), 
and (c) of this section from Qualified State Soybean Boards or for 
initial Board nominations, eligible organizations deemed qualified to 
nominate pursuant to paragraph (f) of the section. A Qualified State 
Soybean Board, or for initial

[[Page 260]]

Board nominations, an eligible organization shall only submit 
nominations for positions on the Board representing the unit, as 
established under Sec.1220.201, in which such Qualified State Soybean 
Board operates.
    (b) If the Secretary determines that a unit is not represented by a 
Qualified State Soybean Board or for initial Board nominations, an 
eligible organization, then the Secretary may solicit nominations from 
organizations which represent producers in that unit and from producers 
residing in that unit. A caucus may be held in such units for the 
purpose of collectively submitting nominations to the Secretary.
    (c) Where there is more than one State comprising a unit, the 
Secretary shall take into consideration the nominations submitted by 
Qualified State Soybean Boards or for initial Board nominations, 
eligible organizations, within the unit. A caucus may be held in such 
units for the purpose of collectively submitting nominations to the 
Secretary. The Secretary shall consider the proportional levels of 
production in each State comprising the unit when appointing members to 
the Board representing that unit.
    (d) At least two nominations shall be submitted for each position to 
be filled.
    (e) Nominations may be submitted in order of preference and for the 
initial Board, in order of preference for staggered terms. Should the 
Secretary reject any nomination submitted and there are insufficient 
nominations submitted from which appointments can be made, the Secretary 
may request additional nominations under paragraph (a) or (b) of this 
section, whichever provision is applicable for such unit.
    (f) Any organization authorized pursuant to State law to collect 
assessments from producers may notify the Secretary of the 
organization's intent to nominate members to the initial Board for the 
State or unit, as established under Sec.1220.201, in which such 
organization operates and is authorized by State law. Such eligibility 
shall be based only upon the criteria established pursuant to Sec.
1220.228(a)(1). There shall only be one organization authorized per 
State pursuant to this section to submit nominations to the initial 
Board. If no such entity exists in a State, any organization meeting 
those requirements of Sec.1220.228(a)(2) may request eligibility to 
submit nominations.



Sec.1220.204  Appointment.

    From the nominations made pursuant to Sec.1220.203, the Secretary 
shall appoint the members of the Board on the basis of representation 
provided for in Sec.1220.201.



Sec.1220.205  Nominee's agreement to serve.

    Any producer nominated to serve on the Board shall file with the 
Secretary at the time of nomination a written agreement to:
    (a) Serve on the Board if appointed; and
    (b) Agree to disclose any relationship with any soybean promotion 
entity or with any organization that has or is being considered for a 
contractual relationship with the Board.



Sec.1220.206  Vacancies.

    To fill any vacancy occasioned by the death, removal, resignation, 
or disqualification of any member of the Board, the Secretary shall 
request nominations for a successor pursuant to Sec.1220.203, and such 
successor shall be appointed pursuant to Sec.1220.204.



Sec.1220.207  Alternate members.

    (a) The Secretary shall solicit, pursuant to the procedures of Sec.
1220.203, nominations for alternate members of the Board.
    (b) The Secretary shall appoint one alternate member of the Board 
for each unit which has only one member pursuant to Sec.1220.204 and 
Sec.1220.205.
    (c) Alternate members of the Board may attend meetings of the Board 
as a voting member upon the following circumstances:
    (1) A member of the Board for the unit which the alternate member 
represents is absent; and
    (2) Such member, or in the case of incapacitation or death of the 
member, a relative, has contacted the appropriate officer of the Board 
to inform such officer of such absence;
    (d) An alternate member of the Board, when attending Board meetings

[[Page 261]]

in an official capacity, shall have the rights, duties and obligations 
of a Board member.



Sec.1220.208  Removal.

    If the Secretary determines that any person appointed under this 
part fails or refuses to perform his or her duties properly or engages 
in acts of dishonesty or willful misconduct, the Secretary shall remove 
the person from office. A person appointed or certified under this part 
or any employee of the Board or Committee may be removed by the 
Secretary if the Secretary determines that the person's continued 
service would be detrimental to the purposes of the Act.



Sec.1220.209  Procedure.

    (a) At a properly convened meeting of the Board, a majority of the 
members shall constitute a quorum.
    (b)(1) Except for roll call votes, each member of the Board will be 
entitled to one vote on any matter put to the Board and the motion will 
carry if supported by a simple majority of those voting.
    (2)(i) If a member requests a roll call vote, except as provided in 
paragraph (b)(2)(ii) of this section, each unit as established under 
Sec.1220.201, shall cast one vote for each percent, or portion of a 
percent, of the average total amount of assessments remitted to the 
Board that was remitted from the unit (minus refunds) during each of the 
three previous fiscal years of the Board under Sec.1220.223.
    (ii)(A) During the first fiscal year of the Board, the percentage 
used to determine the votes given to a unit will be based on annual 
average soybean production of the three previous years. If a unit is 
represented by more than one member, each member representing the unit 
shall receive an equal percentage of the votes allocated to the unit.
    (B) During the second and third year this subpart is in effect, the 
percentage used to determine the votes given to a unit will be based 
upon averaging the unit's percentage of annual assessments remitted to 
the Board (minus refunds).
    (iii) Should a member representing a unit not be present, then the 
other members representing such unit shall vote, on an equal basis if 
there is more than one member representing the unit present, the number 
of votes which the absent member would have been entitled to vote.
    (iv) A motion will carry on a roll call vote if approved by both a 
simple majority of all votes cast and a simple majority of all units 
voting (with the vote of each unit determined by a simple majority of 
all votes cast by members in that unit).
    (3) A member may not cast votes by proxy.
    (c) In lieu of a properly convened meeting and, when in the opinion 
of the chairperson of the Board such action is considered necessary, the 
Board may take action upon the concurring votes of a majority of its 
members, or if a roll call vote is requested, a simple majority of all 
votes cast and a simple majority of all units voting by mail, telephone, 
facsimile, or telegraph, but any such action by telephone shall be 
confirmed promptly in writing. In the event that such action is taken, 
all members must be notified and provided the opportunity to vote. Any 
action so taken shall have the same force and effect as though such 
action had been taken at a regular or special meeting of the Board.
    (d) On or after the end of the three-year period beginning on the 
effective date of this subpart, the Board may recommend to the Secretary 
changes in the voting procedures of the Board described in paragraph (b) 
of this section.



Sec.1220.210  Compensation and reimbursement.

    The members of the Board shall serve without compensation but shall 
be reimbursed for necessary and reasonable expenses incurred by them in 
the performance of their responsibilities under this subpart.



Sec.1220.211  Powers of the Board.

    The Board shall have the following powers:
    (a) To receive and evaluate, or on its own initiative develop, and 
budget for

[[Page 262]]

plans or projects for promotion, research, consumer information, and 
industry information and to make recommendations to the Secretary 
regarding such proposals;
    (b) To administer the provisions of this subpart in accordance with 
its terms and provisions;
    (c) To make rules to effectuate the terms and provisions of this 
subpart;
    (d) To receive, investigate, and report to the Secretary complaints 
of violations of the provisions of this subpart;
    (e) To disseminate information to producers or producer 
organizations through programs or by direct contact utilizing the public 
postage system or other systems;
    (f) To assign responsibilities relating to budget and program 
development to the Committee as provided in Sec.1220.219.
    (g) To select committees and subcommittees of Board members, and to 
adopt such rules for the conduct of its business as it may deem 
advisable;
    (h) To contract with Qualified State Soybean Boards to implement 
plans or projects;
    (i) To recommend to the Secretary amendments to this subpart; and
    (j) With the approval of the Secretary, to invest, pending 
disbursement pursuant to a plan or project, funds collected through 
assessments authorized under Sec.1220.223 in, and only in, obligations 
of the United States or any agency thereof, in general obligations of 
any State or any political subdivision thereof, in any interest-bearing 
account or certificate of deposit of a bank which is a member of the 
Federal Reserve System, or in obligations fully guaranteed as to 
principal and interest by the United States.



Sec.1220.212  Duties.

    The Board shall have the following duties:
    (a) To meet not less than three times annually, or more often if 
required for the Board to carry out its responsibilities pursuant to 
this subpart.
    (b) To organize and select from among its members a chairperson, 
vice chairperson, a treasurer and such other officers as may be 
necessary.
    (c) To appoint from its members an executive committee and to 
delegate to the committee authority to administer the terms and 
provisions of this subpart under the direction of the Board and within 
the policies determined by the Board.
    (d) To employ or contract for such persons to perform administrative 
functions as it may deem necessary and define the duties and determine 
the compensation of each.
    (e) To develop and submit to the Secretary for approval, promotion, 
research, consumer information, and industry information plans or 
projects.
    (f) To prepare, and submit to the Secretary for approval, budgets on 
a fiscal period basis of its anticipated expenses and disbursements in 
the administration of this subpart, including probable costs of 
promotion, research, consumer information, and industry information 
plans or projects, and also including a description of the proposed 
promotion, research, consumer information, and industry information 
programs contemplated therein.
    (g) To maintain such books and records, which shall be available to 
the Secretary for inspection and audit, and to prepare and submit such 
reports from time to time to the Secretary, as the Secretary may 
prescribe, and to make appropriate accounting with respect to the 
receipt and disbursement of all funds entrusted to it.
    (h) With the approval of the Secretary, to enter into contracts or 
agreements with appropriate parties, including national nonprofit 
producer-governed organizations, for the development and conduct of 
activities authorized under Sec.1220.230 of this subpart and for the 
payment of the cost thereof with funds collected through assessments 
pursuant to Sec.1220.223. Provided, that the Board shall contract with 
only one national nonprofit producer-governed organization to administer 
all projects within a program area.
    Any such contract or agreement shall provide that:
    (1) The contractor shall develop and submit to the Board a plan or 
project together with a budget or budgets which shall show the estimated 
cost to be incurred for such plan or project;
    (2) Any such plan or project shall become effective only upon 
approval of the Secretary; and

[[Page 263]]

    (3) The contracting party shall keep complete and accurate records 
of all of its transactions and make periodic reports to the Board of 
activities conducted pursuant to a contract and an accounting for funds 
received and expended, and such other reports as the Secretary or the 
Board may require. The Board and Secretary may audit the records of the 
contracting party periodically.
    (i) To prepare and make public, at least annually, a report of its 
activities carried out and an accounting for funds received and 
expended.
    (j) [Reserved]
    (k) To cause its books to be audited by a certified public 
accountant at least once each fiscal period and at such other times as 
the Secretary may require and to submit a copy of each such audit to the 
Secretary.
    (l) To give the Secretary the same notice of meetings of the Board 
and committees as is given to members in order that the Secretary, or a 
representative of the Secretary, may attend such meetings.
    (m) To submit to the Secretary such information pursuant to this 
subpart as may be requested.
    (n) To encourage the coordination of programs of promotion, 
research, consumer information, and industry information designed to 
strengthen the soybean industry's position in the marketplace and to 
maintain and expand domestic and foreign markets and uses for soybean 
and soybean products produced in the United States.

[56 FR 31049, July 9, 1991, as amended at 60 FR 29962, June 7, 1995; 60 
FR 58500, Nov. 28, 1995]

                 Soybean Program Coordinating Committee



Sec.1220.213  Establishment and membership.

    (a) The Board may establish, with the approval of the Secretary, a 
Soybean Program Coordinating Committee to assist in the administration 
of this subpart. The Committee shall consist of 15 members. The 
Committee shall be composed of 10 Board members elected by the Board and 
5 producers elected by the Cooperator Organization.
    (b) Board representation on the Committee shall consist of the 
Chairperson and Treasurer of the Board, and eight additional members 
duly elected by the Board to serve on the Committee. The eight 
representatives to the Committee elected by the Board shall, to the 
extent practicable, reflect the geographic and unit distribution of 
soybean production.
    (c) Cooperator Organization representation on the Committee shall 
consist of five members elected by the Cooperator Organization Board of 
Directors. The Cooperator Organization shall submit to the Secretary the 
names of the representatives elected by the Cooperator Organization to 
serve on the Committee, the manner in which such election was held, and 
verify that such representatives are producers. The prospective 
Cooperator Organization representatives shall file with the Secretary a 
written agreement to serve on the Committee and to disclose any 
relationship with any soybean entity or with any organization that has 
or is being considered for a contractual relationship with the Board. 
When the Secretary is satisfied that the above conditions are met, the 
Secretary shall certify such representatives as eligible to serve on the 
Committee.



Sec.1220.214  Term of office.

    (a) The members of the Committee shall serve for a term of 1 year.
    (b) No member shall serve more than six consecutive terms.



Sec.1220.215  Vacancies.

    To fill any vacancy occasioned by the death, removal, resignation, 
or disqualification of any member of the Committee, the Board or the 
Cooperator Organization, depending upon which organization is 
represented by the vacancy, shall submit the name of a successor for the 
position in the manner utilized to appoint representatives pursuant to 
Sec.1220.213 above.



Sec.1220.216  Procedure.

    (a) Attendance of at least 12 members of the Committee shall 
constitute a quorum at a properly convened meeting of the Committee. Any 
action of the Committee shall require the concurring votes of at least 
two-thirds (\2/3\)

[[Page 264]]

of the members present. The Committee shall establish rules concerning 
timely notice of meetings.
    (b) When in the opinion of the chairperson of the Committee 
emergency action must be taken before a meeting can be called, the 
Committee may take action upon the concurring votes of no less than 
twelve of its members by mail, telephone, facsimile, or telegraph. 
Action taken by this emergency procedure is valid only if all members 
are notified and provided the opportunity to vote and any telephone vote 
is confirmed promptly in writing. Any action so taken shall have the 
same force and effect as though such action had been taken at a properly 
convened meeting of the Committee.
    (c) A member may not cast votes by proxy.



Sec.1220.217  Compensation and reimbursement.

    The members of the Committee shall serve without compensation but 
shall be reimbursed by the Board for necessary and reasonable expenses 
incurred by them in the performance of their responsibilities under this 
subpart.



Sec.1220.218  Officers of the Committee.

    The following persons shall serve as officers of the Committee:
    (a) The Chairperson of the Board shall be Chairperson of the 
Committee.
    (b) The Committee shall elect or appoint such other officers as it 
may deem necessary.



Sec.1220.219  Powers of the Committee.

    If established by the Board, the Committee may have the following 
powers:
    (a) To receive and evaluate, or on its own initiative, develop and 
budget for plans or projects to promote the use of soybeans and soybean 
products as well as plans or projects for promotion, research, consumer 
information, and industry information and to make recommendations to the 
Board regarding such proposals; and
    (b) To select committees and subcommittees of Committee members, and 
to adopt such rules for the conduct of its business as it may deem 
advisable.



Sec.1220.220  Duties of the Committee.

    If established by the Board, the Committee may have the following 
duties:
    (a) To meet and to organize;
    (b) To prepare and submit to the Board for approval, budgets on a 
fiscal period basis of proposed costs of promotion, research, consumer 
information, and industry information plans or projects, and also 
including a general description of the proposed promotion, research, 
consumer information, and industry information programs contemplated 
therein;
    (c) To give the Secretary the same notice of meetings of the 
Committee and its subcommittees as is given to members in order that the 
Secretary, or the Secretary's representative, may attend such meetings;
    (d) To submit to the Board and to the Secretary such information 
pursuant to this subpart as may be requested; and
    (e) To encourage the coordination of programs of promotion, 
research, consumer information, and industry information designed to 
strengthen the soybean industry's position in the marketplace and to 
maintain and expand domestic and foreign markets and uses for soybeans 
and soybean products.

                        Expenses and Assessments



Sec.1220.222  Expenses.

    (a) The Board is authorized to incur such expenses (including 
provision for a reasonable reserve) as the Secretary finds are 
reasonable and likely to be incurred by the Board for its maintenance 
and functioning and to enable it to exercise its powers and perform its 
duties in accordance with the provisions of this subpart. However, 
during any fiscal year, expenses incurred by the Board for 
administrative staff costs and their benefits shall not exceed l percent 
of the projected level of assessments, net of projected refunds, of the 
Board for that fiscal year. Such expenses shall be paid from assessments 
received pursuant to Sec.1220.223. The administrative expenses of the 
Board, including the cost of administrative staff, shall not exceed 5 
percent of the projected level of assessments, net of projected refunds, 
of the Board for that fiscal year.

[[Page 265]]

    (b) The Board shall reimburse the Secretary, from assessments 
received pursuant to Sec.1220.223, for administrative costs incurred 
after an Order has been submitted to the Department pursuant to section 
1968(b) of the Act; Provided, that the Board shall only be required to 
reimburse the Secretary for one-half (50%) of the costs incurred by the 
Secretary to conduct the refund referendum relating to continuation of 
authority to pay refunds.
    (c)(1) The Board may, with the approval of the Secretary, authorize 
a credit to Qualified State Soybean Boards of up to 5 percent of the 
amount to be remitted to the Board pursuant to Sec.1220.223 and Sec.
1220.228 of this subpart to offset collection and compliance costs 
relating to such assessments and for fees paid to State governmental 
agencies or first purchasers for collection of the assessments where the 
payment of such fees by the Qualified State Soybean Board is required by 
State law enacted prior to November 28, 1990.
    (2) The portion of the credit authorized in paragraph (c)(1) of this 
section which compensates Qualified State Soybean Boards for fees paid 
to State governmental agencies or first purchasers for collection of the 
assessments where the payment of such fees by the Qualified State 
Soybean Board is required by State law enacted prior to November 28, 
1990:
    (i) Shall not exceed one-half of such fees paid to State 
governmental agencies or first purchasers, and;
    (ii) Shall not exceed 2.5 percent of the amount of assessments 
collected and remitted to the Board.
    (3) Except for that portion of the credit issued pursuant to 
paragraph (c)(2) of this section, credits authorized by paragraph (c)(1) 
of this section will be included as part of the Board's administrative 
expenses.



Sec.1220.223  Assessments.

    (a)(1) Except as prescribed by regulations approved by the Secretary 
or as otherwise provided in this section, each first purchaser of 
soybeans shall collect an assessment from the producer, and each 
producer shall pay such assessment to the first purchaser, at the rate 
of one-half of one percent (0.5%) of the net market price of the 
soybeans purchased. Each first purchaser shall remit such assessment to 
the Board or to a Qualified State Soybean Board, as provided in 
paragraph (a)(5) of this section.
    (2) Any producer marketing processed soybeans or soybean products of 
that producer's own production, shall remit to a Qualified State Soybean 
Board or to the Board, as provided in paragraph (a)(5) of this section, 
an assessment on such soybeans or soybean products at a rate of one-half 
of one percent (0.5%) of the net market price of the soybeans involved 
or the equivalent thereof.
    (3) In determining the assessment due from each producer under 
paragraph (a)(1) or (2) of this section, a producer who is contributing 
to a Qualified State Soybean Board shall receive a credit from the Board 
for contributions to such Qualified State Soybean Board on any soybeans 
assessed under this section in an amount not to exceed one-quarter of 
one percent of the net market price of the soybeans assessed. Producers 
receiving a refund from a State entity are required to remit that 
refunded portion to the Board in the manner and form required by the 
Secretary.
    (4) In order for a producer to receive the credit provided for in 
paragraph (a)(3) of this section, the Qualified State Soybean Board or 
the first purchaser must establish to the satisfaction of the Board that 
the producer has contributed to a Qualified State Soybean Board.
    (5)(i) If the soybeans, for which an assessment is paid, were grown 
in a State other than the State which is the situs of the first 
purchaser, the first purchaser that collects the assessment shall remit 
the assessment and information as to the State of origin of the soybeans 
to the Qualified State Soybean Board operating in the State in which the 
first purchaser is located. The Qualified State Soybean Board operating 
in the State in which the first purchaser is located shall remit such 
assessments to the Qualified State Soybean Board operating in the State 
in which the soybeans were grown. If no such Qualified State Soybean 
Board

[[Page 266]]

exists in such State, then the assessments shall be remitted to the 
Board. The Board, with the approval of the Secretary, may authorize 
Qualified State Soybean Boards to propose modifications to the foregoing 
``State of Origin'' rule to ensure effective coordination of assessment 
collections between Qualified State Soybean Boards.
    (ii)(A) If a producer pledges soybeans grown by that producer as 
collateral for a loan issued by the Commodity Credit Corporation and if 
that producer forfeits said soybeans in lieu of loan repayment, the 
Commodity Credit Corporation shall at the time of the loan settlement, 
collect from the producer the assessments due based on 0.5 percent of 
the principal loan amount received by the producer and remit the 
assessment to the Qualified State Soybean Board in the State in which 
the soybeans were pledged, or if no Qualified State Soybean Board exists 
in such State, the Board.
    (B) If a producer redeems and subsequently markets soybeans which 
have been pledged as collateral for a loan issued by the Commodity 
Credit Corporation, the first purchaser shall collect and remit the 
assessments due pursuant to paragraph (a)(1) of this section; or if a 
producer markets such soybeans as processed soybeans or as soybean 
products, the producer shall remit the assessment pursuant to paragraph 
(a)(2) of this section.
    (iii) Qualified State Soybean Boards and the Board shall coordinate 
assessment collection procedures to ensure that producers marketing 
soybeans are required to pay only one assessment per bushel of soybeans 
and collections are adjusted among States on a mutually agreeable basis.
    (b) The collection of assessments pursuant to paragraph (a) of this 
section, shall commence on and after the date assessments are required 
to be paid and shall continue until terminated by the Secretary. If the 
Board is not constituted on the date the first assessments are to be 
collected, the Secretary shall have the authority to receive the 
assessments on behalf of the Board, and to hold such assessments until 
the Board is constituted, then remit such assessments to the Board.
    (c)(1) Each person responsible for the collection of assessments 
under paragraph (a) of this section, shall collect and remit the 
assessments to the Board or a Qualified State Soybean Board on a monthly 
basis or as required by State law, but no less than quarterly, unless 
the Board, with the approval of the Secretary, has specifically 
authorized otherwise.
    (2) Any unpaid assessments due the Board or a Qualified State 
Soybean Board from a person responsible for remitting assessments to the 
Board or a Qualified State Soybean Board pursuant to paragraph (a) of 
this section, shall be increased two percent (2%) each month beginning 
with the day following the date such assessments were due under this 
subpart. Any remaining amount due shall be increased at the same rate on 
the corresponding day of each month thereafter until paid.
    (3) The amounts payable pursuant to this section shall be computed 
monthly on unpaid assessments and shall include any unpaid late charges 
previously applied pursuant to this section.
    (4) For the purpose of this section, any assessment that was 
determined at a date later than prescribed by this subpart because of a 
person's failure to submit a report to the Board or a Qualified State 
Soybean Board when due, shall be considered to have been payable by the 
date it would have been due if the report had been filed when due.
    (d) Prior to the continuance referendum, the Board, pursuant to 
procedures approved by the Secretary, shall ensure that each Qualified 
State Soybean Board is provided credit in accordance with the provisions 
of section 1969(n)(1) and subject to section 1969(n)(3) of the Act.
    (e) Following the continuance referendum, the Board, pursuant to 
procedures approved by the Secretary, shall ensure annually that each 
Qualified State Soybean Board is provided credit in accordance with the 
provisions of section 1969(n)(2) and subject to section 1969(n)(3) of 
the Act.

[56 FR 31049, July 9, 1991, as amended at 56 FR 42923, Aug. 30, 1991; 57 
FR 31096, July 14, 1992; 84 FR 20771, May 13, 2019]

[[Page 267]]



Sec. Sec.1220.224-1220.227  [Reserved]



Sec.1220.228  Qualified State Soybean Boards.

    (a)(1) Any soybean promotion entity that is authorized by State 
statute to collect assessments required by State law from soybean 
producers may notify the Board of its election to be the Qualified State 
Soybean Board for the State in which it operates so that producers may 
receive credit pursuant to Sec.1220.223(a)(3) for contributions to 
such organization. Only one such entity may make such election or be 
qualified pursuant to paragraph (a)(2) of this section. Such entity, 
upon making such election, agrees to the following:
    (i) To conduct activities as defined in Sec.1220.230 that are 
intended to strengthen the soybean industry's position in the 
marketplace;
    (ii) Provide a report describing the manner in which assessments are 
collected and the procedure utilized to ensure that assessments due are 
paid;
    (iii) Collect assessments paid on soybeans marketed within the State 
and establish procedures for ensuring compliance with this subpart with 
regard to the payment of such assessments;
    (iv) Remit to the Board each assessment paid and remitted to it, 
minus authorized credits issued pursuant to Sec.1220.222(c) and 
credits issued to producers pursuant to Sec.1220.223(a)(3), and other 
required deductions by the last day of the month following the month in 
which the assessment was remitted to it unless the Board determines a 
different date for remittance of assessments;
    (v) If the entity is authorized or required to pay refunds to 
producers, any requests from producers for refunds for contributions to 
it by the producer following the termination of authority to pay 
refunds, will be honored by forwarding to the Board that portion of such 
refunds equal to the amount of credit received by the producer for 
contributions to it pursuant to Sec.1220.223(a)(3);
    (vi) [Reserved]
    (vii) Furnish the Board with an annual report by a certified public 
accountant or an authorized State agency of all funds remitted to such 
Board pursuant to this subpart; and
    (viii) Not use funds it collects pursuant to this subpart to fund 
plans or projects which make use of any unfair or deceptive acts or 
practices with respect to the quality, value or use of any product that 
competes with soybeans or soybean products; and
    (ix)(A) Except as otherwise provided in paragraph (a)(1)(ix)(B) of 
this section, funds collected or received by the Qualified State Soybean 
Board under this subpart shall not be used in any manner for the purpose 
of influencing any action or policy of the United States Government, any 
foreign or State government, or any political subdivision thereof.
    (B) The prohibition in paragraph (a)(1)(ix)(A) of this section, 
shall not apply to--
    (1) The communication to appropriate government officials of 
information relating to the conduct, implementation, or results of 
promotion, research, consumer information, and industry information 
under the Order;
    (2) Any action designed to market soybeans or soybean products 
directly to a foreign government or political subdivision thereof; or
    (3) The development and recommendation of amendments to this 
subpart.
    (2) If no entity elects to serve as a Qualified State Soybean Board 
within a State pursuant to paragraph (a)(1) of this section, any State 
soybean promotion entity that is organized and operating within a State, 
and receives assessments or contributions from producers and conducts 
soybean or soybean product promotion, research, consumer information, or 
industry information programs, may apply for certification as the 
Qualified State Soybean Board for such State so that producers may 
receive credit pursuant to Sec.1220.223(a)(3) for contributions to 
such organizations. All provisions of this subpart applicable to 
Qualified State Soybean Boards will be applicable to such entity. The 
Board shall review such applications for certification and shall make a 
determination as to the certification of each applicant.
    (b) In order for the State soybean entity to be certified by the 
Board pursuant to paragraph (a)(2) of this section,

[[Page 268]]

as a Qualified State Soybean Board, the entity must:
    (1) Conduct activities as defined in Sec.1220.230 that are 
intended to strengthen the soybean industry's position in the 
marketplace;
    (2) Submit to the Board a report describing the manner in which 
assessments are collected and the procedure utilized to ensure that 
assessments due are paid;
    (3) Certify to the Board that such State entity will collect 
assessments paid on soybeans marketed within the State and establish 
procedures for ensuring compliance with this subpart with regard to the 
payment of such assessments;
    (4) Certify to the Board that such organization will remit to the 
Board each assessment paid and remitted to it, minus credits issued 
pursuant to Sec.1220.222(c) and authorized credits issued to producers 
pursuant to Sec.1220.223(a)(3), and other required deductions by the 
last day of the month following the month in which the assessment was 
remitted to it unless the Board determines a different date for 
remittance of assessments;
    (5)-(6) [Reserved]
    (7) Certify to the Board that it will furnish the Board with an 
annual report by a certified public accountant or an authorized State 
agency of all funds remitted to such Board pursuant to this subpart; and
    (8) Not use funds it collects pursuant to this subpart to fund plans 
or projects which make use of any unfair or deceptive acts or practices 
with respect to the quality, value or use of any product that competes 
with soybeans or soybean products; and
    (9)(i) Except as otherwise provided in paragraph (b)(9)(ii) of this 
section, funds collected or received by the Qualified State Soybean 
Board under this subpart shall not be used in any manner for the purpose 
of influencing any action or policy of the United States Government, any 
foreign or State government, or any political subdivision thereof.
    (ii) The prohibition in paragraph (b)(9)(i) of this section, shall 
not apply to--
    (A) The communication to appropriate government officials of 
information relating to the conduct, implementation, or results of 
promotion, research, consumer information, and industry information 
under this subpart;
    (B) Any action designed to market soybeans or soybean products 
directly to a foreign government or political subdivision thereof; or
    (C) The development and recommendation of amendments to this 
subpart.
    (c) Notwithstanding any other provisions of this subpart, and 
provided that activities of a Qualified State Soybean Board are 
authorized under the Act and this subpart, the Board shall not have the 
authority to:
    (1) Establish guidelines, regulations, or rules which would restrict 
or infringe upon a Qualified State Soybean Board's authority to 
determine administrative or program expenditure allocations or 
administrative or program implementation; and
    (2) Direct Qualified State Soybean Boards to participate or not 
participate in program activities or implementation.
    (d) The Board shall establish procedures, after an opportunity for 
public comment and subject to approval of the Secretary, which provide 
Qualified State Soybean Boards with a right to present information to 
the Board prior to any determinations relating to nonparticipation as a 
Qualified State Soybean Board following initial election or 
determination as a Qualified State Soybean Board.
    (e) Entities authorized or required to pay refunds to producers must 
certify to the Board that any requests from producers for such refunds 
for contributions to it by the producer will be honored by forwarding to 
the Board that portion of such refunds equal to the amount of credit 
received by the producer for contributions pursuant to Sec.
1220.223(a)(3). Entities not authorized by State statute but organized 
and operating within a State and certified by the Board pursuant to 
paragraph (a)(2) of this section must provide producers an opportunity 
for a State refund and

[[Page 269]]

must forward that refunded portion to the Board.

[56 FR 31049, July 9, 1991, as amended at 60 FR 58500, Nov. 28, 1995; 61 
FR 50694, Sept. 27, 1996; 72 FR 2769, Jan. 23, 2007; 84 FR 20771, May 
13, 2019]



Sec.1220.229  Influencing governmental action.

    (a) Except as otherwise provided in paragraph (b) of this section, 
funds collected or received by the Board under this subpart shall not be 
used in any manner for the purpose of influencing any action or policy 
of the United States Government, any foreign or State government, or any 
political subdivision thereof.
    (b) The prohibition in paragraph (a) of this section shall not apply 
to--
    (1) The development and recommendation of amendments to this 
subpart;
    (2) The communication to appropriate government officials of 
information relating to the conduct, implementation, or results of 
promotion, research, consumer information, and industry information 
under this subpart; or
    (3) Any action designed to market soybeans or soybean products 
directly to a foreign government or political subdivision thereof.



Sec.1220.230  Promotion, research, consumer information, and industry
information.

    (a) The Board shall receive and evaluate, or on its own initiative, 
develop and submit to the Secretary for approval any plans or projects 
authorized in this subpart. Such plans or projects shall provide for:
    (1) The establishment, issuance, effectuation, and administration of 
appropriate promotion, research, consumer information, and industry 
information activities with respect to soybean and soybean products;
    (2) The establishment and conduct of research, and studies with 
respect to the sale, distribution, marketing and utilization of soybean 
and soybean products and the creation of new products thereof, to the 
end that marketing and utilization of soybean and soybean products may 
be encouraged, expanded, improved or made more acceptable; and
    (3) Such other activities as are authorized by the Act and this 
subpart.
    (b) Each plan or project described in paragraph (a) of this section, 
shall be periodically reviewed or evaluated by the Board to ensure that 
each such plan or project contributes to an effective program of 
promotion, research, consumer information, and industry information. If 
it is found by the Board that any such plan or project does not further 
the purposes of the Act, then the Board shall terminate such plan or 
project.
    (c) No such plans or projects shall make use of unfair or deceptive 
acts or practices with respect to the quality, value or use of any 
competing product. In carrying out any plan or project funded by the 
Board described in paragraph (a) of this section, no preference shall be 
given to a brand or trade name of any soybean product without the 
approval of the Board and the Secretary.

                       Reports, Books, and Records



Sec.1220.241  Reports.

    Each producer marketing processed soybeans or soybean products of 
that producer's own production and each first purchaser responsible for 
the collection of assessments under Sec.1220.223 shall be required to 
report to the Board periodically such information as may be required by 
the regulations recommended by the Board and approved by the Secretary. 
Such information may include but not be limited to the following:
    (a) The number of bushels of soybeans purchased, initially 
transferred, or which, in any other manner, is subject to the collection 
of assessment;
    (b) The amount of assessments remitted;
    (c) The basis, if necessary, to show why the remittance is less than 
one-half percent (0.5%) of the net market price per bushel of soybeans 
purchased multiplied by the number of bushels purchased; and
    (d) The date any assessment was paid.

[[Page 270]]



Sec.1220.242  Books and records.

    (a) Except as provided in paragraph (b) of this section, each person 
who is subject to this subpart shall maintain and make available for 
inspection by the Board or Secretary such books and records as are 
necessary to carry out the provisions of this subpart and the 
regulations issued under this part, including such records as are 
necessary to verify any reports required. Such records shall be retained 
for at least two years beyond the fiscal period of their applicability.
    (b) Any producer who plants less than 25 acres of soybeans annually 
and does not market such soybeans shall not be required to maintain 
books or records pursuant to this subpart.



Sec.1220.243  Confidential treatment.

    Except as otherwise provided in the Act, financial or commercial 
information that is obtained under the Act and this subpart and that is 
privileged and confidential shall be kept confidential by all persons, 
including employees and former employees of the Board, all officers and 
employees and all former officers and employees of the Department, and 
by all officers and employees and all former officers and employees of 
contracting agencies having access to such information, and shall not be 
available to Board members or any other producers. Only those persons 
having a specific need for such information in order to effectively 
administer the provisions of this part shall have access to such 
information.

                              Miscellaneous



Sec.1220.251  Proceedings after termination.

    (a) Upon the termination of this subpart, the Board shall recommend 
not more than five of its members to the Secretary to serve as trustees 
for the purpose of liquidating the affairs of the Board. Such persons, 
upon designation by the Secretary, shall become trustees of all the 
funds and property, owned, in the possession of or under the control of 
the Board, including any unpaid claims or property not delivered or any 
other claims existing at the time of such termination.
    (b) The trustees shall:
    (1) Continue in such capacity until discharged by the Secretary;
    (2) Carry out the obligations of the Board under any contract or 
agreements entered into by it pursuant to Sec.1220.212(h);
    (3) From time to time account for all receipts and disbursements; 
and
    (4) Deliver all property on hand, together with all books and 
records of the Board and of the trustees, to such persons as the 
Secretary may direct, and upon the request of the Secretary, execute 
such assignments or other instruments necessary or appropriate to vest 
in such persons full title and right to all of the funds, property, and 
claims vested in the Board or the trustees pursuant to this subpart.
    (c) Any person to whom funds, property, or claims have been 
transferred or delivered pursuant to this subpart shall be subject to 
the same obligation imposed upon the Board and upon the trustees.
    (d) Any residual funds not required to defray the necessary expenses 
of liquidation shall be turned over to the Secretary to be used, to the 
extent practicable, in the interest of continuing one or more of the 
promotion, research, consumer information, or industry information plans 
or projects authorized pursuant to this subpart.



Sec.1220.252  Effect of termination or amendment.

    Unless otherwise expressly provided by the Secretary, the 
termination of this subpart or of any rule issued pursuant hereto, or 
the issuance of any amendment to either thereof, shall not:
    (a) Affect or waive any right, duty, obligation, or liability which 
shall have arisen or which may hereafter arise in connection with any 
provision of this subpart or any regulation issued thereunder;
    (b) Release or extinguish any violation of this subpart or any 
regulation issued thereunder; or
    (c) Affect or impair any rights or remedies of the United States, or 
of the Secretary, or of any person, with respect to any such violation.



Sec.1220.253  Personal liability.

    No member, employee or agent of the Board, including employees, 
agents or

[[Page 271]]

board members of Qualified State Soybean Boards, acting pursuant to 
authority provided in this subpart, shall be held personally 
responsible, either individually or jointly, in any way whatsoever, to 
any person for errors in judgment, mistakes, or other acts of either 
commission or omission, of such member or employee, except for acts of 
dishonesty or willful misconduct.



Sec.1220.254  Patents, copyrights, inventions, and publications.

    (a) Any patents, copyrights, inventions, or publications developed 
through the use of funds remitted to the Board under the provisions of 
this subpart shall be the property of the U.S. Government as represented 
by the Board, and shall, along with any rents, royalties, residual 
payments, or other income from the rental, sale, leasing, franchising, 
or other uses of such patents, copyrights, inventions, or publications, 
inure to the benefit of the Board. Upon termination of this subpart, 
Sec.1220.251 shall apply to determine disposition of all such 
property.
    (b) Notwithstanding the provisions of paragraph (a) of this section, 
if patents, copyrights, inventions, or publications are developed by the 
use of funds remitted to the Board under this subpart. Should patents, 
copyrights, inventions or publications be developed through the use of 
funds remitted to the Board under this subpart and funds contributed by 
another organization or person, ownership and related rights to such 
patents, copyrights, inventions, or publications shall be determined by 
agreement between the Board and the party contributing funds towards the 
development of such patent, copyright, invention or publication.



Sec.1220.255  Amendments.

    Amendments to this subpart may be proposed, from time to time, by 
the Board, or by any Qualified State Soybean Board recognized, or by any 
interested person affected by the provisions of the Act, including the 
Secretary.



Sec.1220.256  Separability.

    If any provision of this subpart is declared invalid or the 
applicability thereof to any person or circumstances is held invalid, 
the validity of the remainder of this subpart of the applicability 
thereof to other persons or circumstances shall not be affected thereby.



Sec.1220.257  OMB control numbers.

    The control number assigned to the information collection 
requirements by the Office of Management and Budget pursuant to the 
Paperwork Reduction Act, Public Law 96-511, is OMB number 0581-0093, 
except Board member nominee information sheets are assigned OMB number 
0505-0001.

[56 FR 31049, July 9, 1991, as amended at 61 FR 50694, Sept. 27, 1996]



                     Subpart B_Rules and Regulations

    Source: 57 FR 29439, July 2, 1992, unless otherwise noted.

                               Definitions



Sec.1220.301  Terms defined.

    As used throughout this subpart, unless the context otherwise 
requires, terms shall have the same meaning as the definition of such 
terms as appears in subpart A of this part.



Sec.1220.302  Exemption.

    (a) A producer who operates under an approved National Organic 
Program (7 CFR part 205) (NOP) organic production system plan may be 
exempt from the payment of assessments under this part, provided that:
    (1) Only agricultural products certified as ``organic'' or ``100 
percent organic'' (as defined in the NOP) are eligible for exemption;
    (2) The exemption shall apply to all certified ``organic'' or ``100 
percent organic'' (as defined in the NOP) products of a producer 
regardless of whether the agricultural commodity subject to the 
exemption is produced by a person that also produces conventional or 
nonorganic agricultural products of the same agricultural commodity as 
that for which the exemption is claimed;
    (3) The producer maintains a valid certificate of organic operation 
as issued under the Organic Foods Production Act of 1990 (7 U.S.C. 6501-
6522) (OFPA) and the NOP regulations issued under OFPA (7 CFR part 205); 
and

[[Page 272]]

    (4) Any producer so exempted shall continue to be obligated to pay 
assessments under this part that are associated with any agricultural 
products that do not qualify for an exemption under this section.
    (b) To apply for an exemption under this section, the producer shall 
submit a request to the Board on an Organic Exemption Request Form (Form 
AMS-15) at any time during the year initially, and annually thereafter 
on or before January 1, for as long as the producer continues to be 
eligible for the exemption.
    (c) A producer request for exemption shall include the following:
    (1) The applicant's full name, company name, address, telephone and 
fax numbers, and email address;
    (2) Certification that the applicant maintains a valid certificate 
of organic operation issued under the OFPA and the NOP;
    (3) Certification that the applicant produces organic products 
eligible to be labeled ``organic'' or ``100 percent organic'' under the 
NOP;
    (4) A requirement that the applicant attach a copy of their 
certificate of organic operation issued by a USDA-accredited certifying 
agent under the OFPA and the NOP;
    (5) Certification, as evidenced by signature and date, that all 
information provided by the applicant is true; and
    (6) Such other information as may be required by the Board, with the 
approval of the Secretary.
    (d) If a producer complies with the requirements of this section, 
the Board will grant an assessment exemption and issue a Certificate of 
Exemption to the producer within 30 days. If the application is 
disapproved, the Board will notify the applicant of the reason(s) for 
disapproval within the same timeframe.
    (e) The producer shall provide a copy of the Certificate of 
Exemption to each first purchaser. The first purchaser shall maintain 
records showing the exempt producer's name and address and the exemption 
number assigned by the Board.
    (f) The exemption will apply at the first reporting period following 
the issuance of the exemption.

[70 FR 2759, Jan. 14, 2005; 80 FR 80231, Dec. 31, 2015]

                               Assessments



Sec.1220.310  Assessments.

    (a) A 0.5 percent of the net market price per bushel assessment on 
soybeans marketed shall be paid by the producer of the soybeans in the 
manner designated in Sec.1220.311.
    (b) If more than one producer shares the proceeds received for the 
soybeans marketed, each such producer is obligated to pay that portion 
of the assessments which is equivalent to each producer's proportionate 
share of the proceeds.
    (c) Failure of the first purchaser to collect the assessment on each 
bushel of soybeans marketed as designated in Sec.1220.311 shall not 
relieve the producer of the producer's obligation to pay the assessment 
to the appropriate Qualified State Soybean Board or the United Soybean 
Board as required in Sec.1220.312.



Sec.1220.311  Collection and remittance of assessments.

    (a) Except as otherwise provided in this section, each first 
purchaser making payment to a producer for soybeans marketed by a 
producer shall collect from that producer at the time of settlement of 
that producer's account an assessment at the rate of 0.5 percent of the 
net market price per bushel of soybeans marketed and shall be 
responsible for remitting the assessment to the Qualified State Soybean 
Board or the United Soybean Board as provided in Sec.1220.312. The 
first purchaser shall give to the producer a receipt indicating payment 
of the assessment. The receipt shall be any document issued by the first 
purchaser that contains the information requested in Sec.1220.314(a).
    (b) A first purchaser who purchases soybeans pursuant to a contract 
with a producer, either on a volume basis or on a per acre basis, shall 
be responsible for remitting the assessment due on soybeans purchased as 
required in Sec.1220.312. Such assessment shall be

[[Page 273]]

based upon 0.5 percent of the net market price specified or established 
in the contract and shall be collected at the time of payment to the 
producer. If the net market price is not specified or established in the 
contract the assessment shall be based on fair market value as specified 
in paragraph (c) of this section below.
    (c) Any producer marketing processed soybeans or soybean products of 
that producer's own production either directly or through retail or 
wholesale outlets shall be responsible for remitting to the Qualified 
State Soybean Board or the United Soybean Board pursuant to Sec.
1220.312, an assessment on the number of bushels of soybeans processed 
or manufactured into soybean products at the rate 0.5 percent of the net 
market price of the soybeans involved or the equivalent thereof. The 
assessment shall attach upon date of sale of the processed soybeans or 
soybean products and shall be based upon the posted county price for 
soybeans on the date of the sale as posted at the local ASCS office for 
the county in which the soybeans are grown. The producer shall remit the 
assessment in the manner provided in Sec.1220.312.
    (d) Any producer marketing processed soybeans or soybean products of 
that producer's own production shall be responsible for remitting to the 
Qualified State Soybean Board or the United Soybean Board pursuant to 
Sec.1220.312, an assessment on the number of bushels of soybeans 
processed or manufactured into soybean products at the rate of 0.5 
percent of the net market price of the soybeans involved or the 
equivalent thereof. The assessment shall attach upon the date of final 
settlement for such processed soybeans or soybean products and shall be 
based upon the posted county price for soybeans on the date of final 
settlement as posted at the local ASCS office for the county in which 
the soybeans are grown. The producer shall remit the assessment in the 
manner provided in Sec.1220.312.
    (e) A producer delivering soybeans of the producer's own production 
against a soybean futures contract shall be responsible for remitting an 
assessment at the rate of 0.5 percent of net market price as specified 
in settlement documents. The assessment shall attach at the time of 
delivery and the producer shall remit the assessment due in accordance 
with Sec.1220.312.
    (f) A producer who forfeits soybeans of that producer's own 
production which were pledged as collateral on a loan issued by 
Commodity Credit Corporation shall pay an assessment. The assessment 
shall attach upon the date the settlement statement is prepared and 
issued to the producer by the Commodity Credit Corporation and shall be 
0.5 percent of the principal amount of the loan for the soybeans as 
specified by Commodity Credit Corporation in the settlement statement. 
The Commodity Credit Corporation shall collect the assessment and then 
remit the assessment due in accordance with Sec.1220.312.



Sec.1220.312  Remittance of assessments and submission of reports to
United Soybean Board or Qualified State Soybean Board.

    (a) Each first purchaser and each producer responsible for the 
remittance of assessments shall remit assessments and submit a report of 
assessments to the Qualified State Soybean Board in the State in which 
each first purchaser or each producer responsible for the remittance of 
assessments is located or if there is no Qualified State Soybean Board 
in such State, then to the United Soybean Board as provided in this 
section.
    (b) First purchasers and producers responsible for remitting 
assessments shall remit assessments and reports on a monthly or 
quarterly basis depending on the State or region in which the first 
purchasers or producers are located. The reporting period for each State 
and region shall be as follows:

------------------------------------------------------------------------
              Monthly                             Quarterly
------------------------------------------------------------------------
Arkansas                             Alabama
Iowa                                 Delaware
Kansas                               Florida
Kentucky                             Georgia
Michigan                             Illinois
Minnesota                            Indiana
Missouri                             Louisiana
Mississippi                          Maryland
North Carolina                       North Dakota
Tennessee                            Nebraska

[[Page 274]]

 
Wisconsin                            New Jersey
                                     Ohio
                                     Oklahoma
                                     Pennsylvania
                                     South Carolina
                                     South Dakota
                                     Texas
                                     Virginia
                                     Eastern Region
                                     Western Region
------------------------------------------------------------------------

    (c) Reports. Each first purchaser or producer responsible for 
remitting assessments shall make reports on forms made available by the 
United Soybean Board or on Qualified State Soybean Board forms which 
contain the information required in Sec.1220.241 and are approved by 
the Board. A first purchaser with multiple facilities or purchasing 
locations within a State shall have the option to submit a single, 
consolidated report specifying the combined volume of soybeans purchased 
or the net market value of all soybeans purchased from the producers in 
the State. Reports shall be submitted with assessments due in accordance 
with the provisions of paragraph (d) of this section.
    (d) Remittances. Each first purchaser or producer responsible for 
remitting assessments shall remit all assessments to the Qualified State 
Soybean Board, its designee, or the United Soybean Board. All 
assessments shall be remitted in the form of a check or money order 
payable to the order of the applicable Qualified State Soybean Board or 
the United Soybean Board and shall be sent to the designated address not 
later than the last day of the month following the month or quarter in 
which the soybeans, processed soybeans, or soybean products were 
marketed and shall be accompanied by the reports required by paragraph 
(c) of this section. All remittances shall be received subject to 
collection and payment at par.
    (e) Receipt of Reports and Remittances. The timeliness of receipt of 
reports and assessments by the Board or Qualified State Soybean Board 
shall be based on the applicable postmark date or the date actually 
received by the Board or the Qualified State Soybean Board whichever is 
earlier.

[57 FR 29439, July 2, 1992, as amended at 58 FR 40732, July 30, 1993; 60 
FR 58500, Nov. 28, 1995; 68 FR 69954, Dec. 16, 2003]



Sec.1220.313  Qualified State Soybean Boards.

    The following State soybean promotion organizations shall be 
Qualified State Soybean Boards. First purchasers and producers 
responsible for remitting assessments located in States which have a 
Qualified State Soybean Board shall remit assessments accompanied by the 
required reports to the Qualified State Soybean Board in the State in 
which the first purchaser or producer responsible for remitting 
assessments is located.
    (1) Alabama Soybean Producers Board
    (2) Arkansas Soybean Promotion Board
    (3) Delaware Soybean Board
    (4) Florida Soybean Advisory Council
    (5) Georgia Agricultural Commodity Commission for Soybeans
    (6) Illinois Soybean Program Operating Board
    (7) Iowa Soybean Promotion Board
    (8) Indiana Soybean Development Council, Inc.
    (9) Kansas Soybean Commission
    (10) Kentucky Soybean Promotion Board
    (11) Louisiana Soybean Promotion Board
    (12) Maryland Soybean Board
    (13) Soybean promotion Committee of Michigan
    (14) Minnesota Soybean Research and Promotion Council
    (15) Mississippi Soybean Promotion Board
    (16) Missouri Soybean Merchandising Council
    (17) Nebraska Soybean Development, Utilization, and Marketing Board
    (18) New Jersey Soybean Board
    (19) North Carolina Soybean Producers Association
    (20) North Dakota Soybean Council
    (21) Ohio Soybean Council Board of Trustees
    (22) Oklahoma Soybean Commission
    (23) Pennsylvania Soybean Board
    (24) South Carolina Soybean Board

[[Page 275]]

    (25) South Dakota Soybean Research and Promotion Council
    (26) Tennessee Soybean Promotion Board
    (27) Texas Soybean Producers Board
    (28) Virginia Soybean Board
    (29) Wisconsin Soybean Marketing Board, Inc.



Sec.1220.314  Document evidencing payment of assessments.

    (a) Each first purchaser responsible for remitting an assessment to 
a Qualified State Soybean Board or the United Soybean Board is required 
to give to the producer from whom the first purchaser collected an 
assessment written evidence of payment of the assessment containing the 
following information:
    (1) Name and address of the first purchaser.
    (2) Name of producer who paid assessment.
    (3) Number of bushels sold.
    (4) Net market price.
    (5) Total assessments paid by the producer.
    (6) Date.
    (7) State in which soybeans were grown.
    (b) [Reserved]



Sec. Sec.1220.330-1220.332  [Reserved]

Subparts C-E [Reserved]



              Subpart F_Procedures To Request a Referendum

    Source: 69 FR 13461, Mar. 23, 2004, unless otherwise noted.

                               Definitions



Sec.1220.600  Act.

    Act means the Soybean, Promotion, Research, and Consumer Information 
Act set forth in title XIX, subtitle E, of the Food, Agriculture, 
Conservation, and Trade Act of 1990 (Pub. L. 101-624), and any 
amendments thereto.



Sec.1220.601  Administrator, AMS.

    Administrator, AMS, means the Administrator of the Agricultural 
Marketing Service, or any officer or employee of USDA to whom there has 
been delegated or may be delegated the authority to act in the 
Administrator's stead.



Sec.1220.602  Administrator, FSA.

    Administrator, FSA, means the Administrator, of the Farm Service 
Agency, or any officer or employee of USDA to whom there has been 
delegated or may be delegated the authority to act in the 
Administrator's stead.



Sec.1220.603  Farm Service Agency.

    Farm Service Agency also referred to as ``FSA'' means the Farm 
Service Agency of USDA.



Sec.1220.604  Farm Service Agency County Committee.

    Farm Service Agency County Committee, also referred to as ``FSA 
County Committee or COC,'' means the group of persons within a county 
who are elected to act as the Farm Service Agency County Committee.



Sec.1220.605  Farm Service Agency County Executive Director.

    Farm Service Agency County Executive Director, also referred to as 
``CED,'' means the person employed by the FSA County Committee to 
execute the policies of the FSA County Committee and to be responsible 
for the day-to-day operation of the FSA county office, or the person 
acting in such capacity.



Sec.1220.606  Farm Service Agency State Committee.

    Farm Service Agency State Committee, also referred to as ``FSA State 
Committee,'' means the group of persons within a State who are appointed 
by the Secretary to act as the Farm Service Agency State Committee.



Sec.1220.607  Farm Service Agency State Executive Director.

    Farm Service Agency State Executive Director, also referred to as 
``SED,'' means the person employed by the FSA State Committee to execute 
the policies of the FSA State Committee and to be responsible for the 
day-to-day operation of the FSA State office, or the person acting in 
such capacity.



Sec.1220.608  Order.

    Order means the Soybean Promotion and Research Order.

[[Page 276]]



Sec.1220.609  Person.

    Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other legal entity.



Sec.1220.610  Producer.

    Producer means any person engaged in the growing of soybeans in the 
United States who owns or who shares the ownership and risk of loss of 
such soybeans.



Sec.1220.611  Public notice.

    Public notice means a notice published in the Federal Register, not 
later than 60 days prior to the last day of the Request for Referendum 
period, that provides information regarding the Request for Referendum 
period. Such notification shall include, but not be limited to 
explanation of producers' rights, procedures to request a referendum, 
the purpose, dates of the Request for Referendum period, location for 
conducting the Request for Referendum, and eligibility requirements. 
Additionally, the United Soybean Board is required to provide producers, 
in writing, this same information during the same time period. Other 
pertinent information shall also be provided, without advertising 
expense, through press releases by State and county FSA offices and 
other appropriate Government offices, by means of newspapers, electronic 
media, county newsletters, and the like.



Sec.1220.612  Representative period.

    Representative period means the period designated by the Secretary 
pursuant to section 1970 of the Act.



Sec.1220.613  Secretary.

    Secretary means the Secretary of Agriculture of the United States 
Department of Agriculture (USDA) or any other officer or employee of 
USDA to whom there has been delegated or to whom there may be delegated 
the authority to act in the Secretary's stead.



Sec.1220.614  Soybeans.

    Soybeans means all varieties of glycine max or glycine soja.



Sec.1220.615  State and United States.

    State and United States include the 50 States of the United States 
of America, the District of Columbia, and the Commonwealth of Puerto 
Rico.

                               Procedures



Sec.1220.616  General.

    An opportunity to request a referendum shall be provided to U.S. 
soybean producers to determine whether eligible producers favor the 
conduct of a referendum and the Request for Referendum shall be carried 
out in accordance with this subpart.
    (a) The opportunity to request a referendum shall be provided at the 
county FSA offices.
    (b) If the Secretary determines, based on results of the Request for 
Referendum that no less than 10 percent (not in excess of one-fifth of 
which may be producers in any one State) of all producers have requested 
a referendum on the Order, a referendum will be held within 1 year of 
that determination.
    (c) If the Secretary determines, based on the results of the Request 
for Referendum, that the requirements in paragraph (b) of this section 
are not met, a referendum will not be conducted.
    (d) For purposes of paragraphs (b) and (c) of this section, the 
number of soybean producers in the United States will be determined by 
the Secretary using data provided by USDA.

[69 FR 13461, Mar. 23, 2004, as amended at 74 FR 9049, Mar. 2, 2009; 79 
FR 12039, Mar. 4, 2014]



Sec.1220.617  Supervision of the process for requesting a referendum.

    The Administrator, AMS, shall be responsible for supervising the 
process of permitting producers to request a referendum in accordance 
with this subpart.



Sec.1220.618  Eligibility.

    (a) Eligible producers. Each person who was a producer and provides 
evidence that they or the producer entity they represent has paid an 
assessment on soybeans during the representative period is provided the 
opportunity to request a referendum. Each producer entity is entitled to 
only one request.

[[Page 277]]

    (b) Proxy Registration. Proxy registration is not authorized, except 
that an officer or employee of a corporate producer, or any guardian, 
administrator, executor, or trustee of a producer's estate, or an 
authorized representative of any eligible producer entity (other than an 
individual producer), such as a corporation or partnership, may request 
a referendum on behalf of that entity. Any individual who requests a 
referendum on behalf of any producer entity, shall certify that he or 
she is authorized by such entity to take such action.
    (c) Joint and group interest. A group of individuals, such as 
members of a family, joint tenants, tenants in common, a partnership, 
owners of community property, or a corporation engaged in the production 
of soybeans as a producer entity shall be entitled to make only one 
request for a referendum; provided, however, that any individual member 
of a group who is an eligible producer separate from the group may 
request a referendum separately.



Sec.1220.619  Time and Place for Requesting a Referendum.

    (a) The opportunity to request a referendum shall be provided during 
a 4-week period beginning and ending on a date determined by the 
Secretary. Eligible persons shall have the opportunity to request a 
referendum by following the procedures in Sec.1220.622 during the 
normal business hours of each county FSA office.
    (b) Producers can determine the location of county FSA offices by 
contacting the nearest county FSA office in their State or by an online 
search of FSA Web sites.
    (c) Each eligible person shall request a referendum in the county 
FSA office where FSA maintains and processes the producer's, 
corporation's, or other entities administrative farm records. For the 
producer, corporation, or other entity not participating in FSA 
programs, the opportunity to request a referendum would be provided at 
the county FSA office serving the county where the producer, 
corporation, or other legal entity owns or rents land. An individual or 
authorized representative of a corporation who grows soybeans in more 
than one county would request a referendum in the county FSA office 
where the individual or corporation or other entity does most of its 
business.

[69 FR 13461, Mar. 23, 2004, as amended at 79 FR 12039, Mar. 4, 2014]



Sec.1220.620  Facilities.

    Each county FSA office will provide:
    (a) A polling place that is well known and readily accessible to 
producers in the county and that is equipped and arranged so that each 
person can complete and submit their request in secret without coercion, 
duress, or interference of any sort whatsoever, and
    (b) A holding container of sufficient size so arranged that no 
request can be read or removed without breaking seals on the container.



Sec.1220.621  Certification and request form.

    Form LS-51-1 shall be used to request a referendum and certify 
producer eligibility. The form does not require a ``yes'' or ``no'' 
vote. Individual producers and representatives of other producer 
entities should read the form carefully. By completing and signing the 
form, the individual simultaneously certifies eligibility and requests 
that a referendum be conducted.



Sec.1220.622  Certification and request procedures.

    (a) To request that a referendum be conducted, each eligible 
producer shall, during the Request for Referendum period, be provided 
the opportunity to request a referendum during a specified period 
announced by the Secretary.
    (1) Each eligible producer shall be required to complete form LS-51-
1 in its entirety and sign it. The producer must legibly print his/her 
name and, if applicable, the producer entity represented, address, 
county, and telephone number. The producer must read the certification 
statement on form LS-51-1 and sign it certifying that:
    (i) The person or the producer entity they represent was a producer 
of soybeans during the representative period;
    (ii) The individual requesting a referendum on behalf of a 
corporation or other entity is authorized to do so; and

[[Page 278]]

    (iii) The individual has submitted only one request for a referendum 
unless they are also an authorized representative for another eligible 
corporation or other entity.
    (2) The producer, corporation, or other entity must also provide 
documentation, such as a sales receipt, showing that the producer, 
corporation, or other entity has paid an assessment on soybeans during 
the representative period.
    (3) Only a completed and signed form LS-51-1 accompanied by 
documentation showing that soybean assessments were paid during the 
representative period shall be considered a valid request for a 
referendum.
    (b) To request a referendum, eligible producers may obtain form LS-
51-1 in person, by mail, or by facsimile during the request for 
referendum period from the county FSA office where FSA maintains and 
processes the producer's, corporation's, or other entity's 
administrative farm records. For the producer, corporation, or other 
entity not participating in FSA programs, the opportunity to request a 
referendum would be provided at the county FSA office serving the county 
where the producer, corporation, or other entity owns or rents land. 
Eligible producers may also obtain form LS-51-1 via the Internet at a 
Web site provided by the Secretary. For those persons who chose to 
obtain form LS-51-1 via the Internet, the completed form and required 
documentation must be submitted to the county FSA office where FSA 
maintains and processes the producer's, corporation's, or other entity's 
administrative farm records. For producers, corporations, or other 
entities not participating in FSA programs, the opportunity to request a 
referendum would be provided at the county FSA office serving the county 
where the producer, corporation, or other entity owns or rents land.
    (c) Producers or producer entities may return form LS-51-1 and the 
accompanying documentation in-person, by mail, or facsimile to the 
appropriate county FSA office. Form LS-51-1 returned in-person or by 
facsimile, must be received in the appropriate county FSA office prior 
to the close of the work day on the final day of the Request for 
Referendum period to be considered a valid request. Form LS-51-1 and the 
accompanying documentation returned by mail must be postmarked no later 
than midnight of the final day of the Request for Referendum period and 
must be received in the county FSA office prior to the start of 
canvassing Form LS 51-1.
    (d) Producers who obtain form LS-51-1 in-person at the appropriate 
FSA county office may complete and return the form the same day, 
accompanied by documentation, such as a sales receipt, showing that 
soybean assessments were paid during the representative period.

[69 FR 13461, Mar. 23, 2004, as amended at 74 FR 9049, Mar. 2, 2009; 79 
FR 12039, Mar. 4, 2014]



Sec.1220.623  Canvassing requests.

    (a) Canvassing of Form LS-51-1 shall take place at the opening of 
county FSA offices on the 5th business day following the Request for 
Referendum period. Such canvassing, acting on behalf of the 
Administrator, AMS, shall be in the presence of at least two members of 
the county committee. If two or more of the counties have been combined 
and are served by one county office, the canvassing of the requests 
shall be conducted by at least one member of the county committee from 
each county served by the county office. The FSA State committee or the 
State Executive Director if authorized by the State Committee, may 
designate the County Executive Director (CED) and a county or State FSA 
office employee to canvass the requests and report the results instead 
of two members of the county committee when it is determined that the 
number of eligible voters is so limited that having two members of the 
county committee present for this function is impractical, and designate 
the CED and/or another county or State FSA office employee to canvass 
requests in any emergency situation precluding at least two members of 
the county committee from being present to carry out the functions 
required in this section.
    (b) The request for referendum should be canvassed as follows:
    (1) Number of eligible requests for a referendum. Each person who 
was a producer during the representative period

[[Page 279]]

and provides documentation to prove that they paid an assessment will be 
considered eligible to request a referendum.
    (2) Number of ineligible requests for a referendum. If FSA cannot 
determine that a producer is eligible based on the submitted 
documentation or if the producer fails to submit the required 
documentation, the producer shall be determined to be ineligible. FSA 
shall notify ineligible producers in writing as soon as practicable but 
no later than the 8th business day following the final day of the 
Request for Referendum period.
    (c) Appeal. A person declared to be ineligible by FSA can appeal 
such decision and provide additional documentation to the FSA county 
office within 5 business days after the postmark date of the letter of 
notification of ineligibility. FSA will then make a final decision on 
the producer's eligibility and notify the producer of the decision.
    (d) Number of valid requests for referendum. A person has been 
declared eligible and has provided and completed all of the required 
information on form LS-51-1.
    (e) Number of invalid requests for a referendum. An invalid request 
for referendum includes, but is not limited to the following:
    (1) Form LS-51-1 is not signed or all required information has not 
been provided;
    (2) Form LS-51-1 and supporting documentation returned in-person or 
by facsimile was not received by the last business day of the Request 
for Referendum period;
    (3) Form LS-51-1 and supporting documentation returned by mail was 
not postmarked by midnight of the final day of the Request for 
Referendum period;
    (4) Form LS-51-1 and supporting documentation returned by mail was 
not received in the county FSA office prior to canvassing of the 
ballots;
    (5) Form LS-51-1 or supporting documentation is mutilated or marked 
in such a way that any required information on the form is illegible; or
    (6) Form LS-51-1 and supporting documentation not returned to the 
appropriate county FSA office.



Sec.1220.624  Confidentiality.

    The names of persons requesting a referendum shall be confidential 
and may not be divulged except as the Secretary may direct.



Sec.1220.625  Counting requests.

    (a) The requests for a referendum shall be counted by county FSA 
offices on the same day as the requests are canvassed if there are no 
ineligibility determinations to resolve. For those county FSA offices 
that do have ineligibility determinations, the requests shall be counted 
no later than the 14th business day following the final day of the 
Request for Referendum period.
    (b) Requests for a referendum shall be counted as follows:
    (1) Total number of producers who returned a Request for Referendum 
form LS-51-1;
    (2) Number of ineligible producers requesting a referendum;
    (3) Number of eligible producers requesting a referendum;
    (4) Number of valid requests for a referendum; and
    (5) Number of invalid requests for a referendum.



Sec.1220.626  FSA county office report.

    The county FSA office report shall be certified as accurate and 
complete by the CED or designee, acting on behalf of the Administrator, 
AMS, as soon as may be reasonably possible, but in no event later than 
18th business day following the final day of the specified period, have 
prepared and certified the county summary of requests on a form provided 
by the Administrator, FSA. Each county FSA office shall transmit the 
results in its county to the FSA State office. The results in each 
county may be made available to the public upon notification by the 
Administrator, FSA, that the final results have been released by the 
Secretary. A copy of the report shall be posted for 30 days following 
the date of notification by the Administrator, FSA, in the county FSA 
office in a conspicuous place accessible to the public. One copy shall 
be kept on file in the county FSA office for a period of at least 12 
months after notification by FSA that the final results have been 
released by the Secretary.

[[Page 280]]



Sec.1220.627  FSA State office report.

    Each FSA State office shall transmit to the Administrator, FSA, as 
soon as possible, but in no event later than the 20th business day 
following the final day of the Request for Referendum period, a report 
summarizing the data contained in each of the reports from the county 
FSA offices. One copy of the State summary shall be filed for a period 
of not less than 12 months after the results have been released and 
available for public inspection after the results have been released.



Sec.1220.628  Results of the request for referendum.

    (a) The Administrator, FSA, shall submit to the Administrator, AMS, 
the reports from all State FSA offices. The Administrator, AMS, shall 
tabulate the results of the Request for Referendum. USDA will issue an 
official press release announcing the results of the Request for 
Referendum and publish the same results in the Federal Register. In 
addition, USDA will post the official results at a Web site address 
provided by the Secretary. Subsequently, State reports and related 
papers shall be available for public inspection upon request during 
normal business hours at an address provided by the Secretary.
    (b) If the Secretary deems necessary, a State report or county 
report shall be reexamined and checked by such persons who may be 
designated by the Secretary.

[69 FR 13461, Mar. 23, 2004, as amended at 74 FR 9049, Mar. 2, 2009; 79 
FR 12040, Mar. 4, 2014]



Sec.1220.629  Disposition of records.

    Each FSA CED will place in sealed containers marked with the 
identification of the ``Request for Soybean Referendum,'' all of the 
form LS-51-1's along with the accompanying documentation and county 
summaries. Such records will be placed in a secure location under the 
custody of the FSA CED for a period of not less than 12 months after the 
date of notification by the Administrator, FSA, that the final results 
have been announced by the Secretary. If the county FSA office receives 
no notice to the contrary from the Administrator, FSA, by the end of the 
12 month period as described above, the CED or designee shall destroy 
the records.



Sec.1220.630  Instructions and forms.

    The Administrator, AMS, is authorized to prescribe additional 
instructions and forms not inconsistent with the provisions of this 
subpart.



PART 1221_SORGHUM PROMOTION, RESEARCH, AND INFORMATION ORDER--
Table of Contents



      Subpart A_Sorghum Promotion, Research, and Information Order

                               Definitions

Sec.
1221.1 Act.
1221.2 Board.
1221.3 Calendar year.
1221.4 Certified organization.
1221.5 Conflict of interest.
1221.6 Crop year.
1221.7 Customs.
1221.8 Department.
1221.9 First handler.
1221.10 Fiscal period.
1221.11 Handle.
1221.12 Harvest.
1221.13 Importer.
1221.14 Information.
1221.15 Market.
1221.16 Net market price.
1221.17 Net market value.
1221.18 Order.
1221.19 Part and subpart.
1221.20 Person.
1221.21 Producer.
1221.22 Production.
1221.23 Promotion.
1221.24 Qualified sorghum producer organization.
1221.25 Referendum.
1221.26 Research.
1221.27 Secretary.
1221.28 Sorghum.
1221.29 State.
1221.30 Suspend.
1221.31 Terminate.
1221.32 United States.

           Sorghum Promotion, Research, and Information Board

1221.100 Establishment and representation.
1221.101 Nominations.
1221.102 Nominee's agreement to serve.
1221.103 Appointment.
1221.104 Term of office.
1221.105 Vacancies.
1221.106 Removal.
1221.107 Certification of organizations.
1221.108 Procedure.
1221.109 Compensation and reimbursement.

[[Page 281]]

1221.110 Powers and duties.
1221.111 Prohibited activities.

                        Expenses and Assessments

1221.112 Budget and expenses.
1221.113 Financial statements.
1221.114 Operating reserve.
1221.115 Investment of funds.
1221.116 Assessments.
1221.117 Exemptions.

                  Promotion, Research, and Information

1221.121 Programs, plans, and projects.
1221.122 Independent evaluation.
1221.123 Patents, copyrights, inventions, trademarks, information, 
          publications, and product formulations.

                       Reports, Books, and Records

1221.124 Reports.
1221.125 Books and records.
1221.126 Use of information.
1221.127 Confidential treatment.

             Qualification of Sorghum Producer Organizations

1221.128 Qualification.

                              Miscellaneous

1221.129 Right of the Secretary.
1221.130 Referenda.
1221.131 Suspension or termination.
1221.132 Proceedings after termination.
1221.133 Effect of termination or amendment.
1221.134 Personal liability.
1221.135 Separability.
1221.136 Amendments.
1221.137 Rules and regulations.
1221.138 OMB control numbers.

            Subpart B_Procedures for the Conduct of Referenda

                               Definitions

1221.200 Terms defined.
1221.201 Administrator, AMS.
1221.202 Administrator, FSA.
1221.203 Eligible person.
1221.204 Farm Service Agency.
1221.205 Farm Service Agency County Committee.
1221.206 Farm Service Agency County Executive Director.
1221.207 Farm Service Agency State Committee.
1221.208 Farm Service Agency State Executive Director.
1221.209 Public notice.
1221.210 Representative period.
1221.211 Voting period.

                               Procedures

1221.220 General.
1221.221 Supervision of the process for conducting referenda.
1221.222 Eligibility.
1221.223 Time and place of the referendum.
1221.224 Facilities.
1221.225 Certification and referendum ballot form.
1221.226 Certification and voting procedures.
1221.227 Canvassing voting ballots.
1221.228 Counting ballots.
1221.229 FSA county office report.
1221.230 FSA State office report.
1221.231 Results of the referendum.
1221.232 Disposition of records.
1221.233 Instructions and forms.
1221.234 Confidentiality.

Subparts C-E [Reserved]

    Authority: 7 U.S.C. 7411-7425 and 7 U.S.C. 7401.

    Source: 73 FR 25407, May 6, 2008, unless otherwise noted.



      Subpart A_Sorghum Promotion, Research, and Information Order

                               Definitions



Sec.1221.1  Act.

    Act means the Commodity Promotion, Research, and Information Act of 
1996 (7 U.S.C. 7411-7425), and any amendments thereto.



Sec.1221.2  Board.

    Board or Sorghum Promotion, Research, and Information Board means 
the administrative body established pursuant to Sec.1221.100, or such 
other name as recommended by the Board and approved by the Secretary.



Sec.1221.3  Calendar year.

    Calendar year means the 12-month period from January 1 through 
December 31.



Sec.1221.4  Certified organization.

    Certified organization means any organization that has been 
certified by the Secretary pursuant to this part as eligible to submit 
nominations for membership on the Board.



Sec.1221.5  Conflict of interest.

    Conflict of interest means a situation in which a representative or 
employee of the Board has a direct or indirect financial interest in a 
person or business that performs a service for, or enters

[[Page 282]]

into a contract with, the Board for anything of economic value.



Sec.1221.6  Crop year.

    Crop year means the time period by which the USDA reports crop 
production for sorghum and is indicated by the calendar year in which 
sorghum is normally harvested.



Sec.1221.7  Customs.

    Customs means the U.S. Customs and Border Protection of the U.S. 
Department of Homeland Security.



Sec.1221.8  Department.

    Department means the United States Department of Agriculture or any 
officer or employee of the USDA to whom authority has heretofore been 
delegated, or to whom authority may hereafter be delegated, to act in 
the Secretary's stead.



Sec.1221.9  First handler.

    First handler means the first person who buys or takes possession 
(excluding a common or contract carrier of sorghum owned by another) of 
more than 1,000 bushels of grain sorghum; or 5,000 tons of sorghum 
forage, sorghum hay, sorghum haylage, sorghum billets, or sorghum silage 
from producers in a calendar year for marketing. The term first handler 
includes a producer who markets sorghum of the producer's own production 
directly to consumers. In any case in which sorghum is pledged as 
collateral for a loan issued under any Commodity Credit Corporation 
price support loan program and the sorghum is forfeited by the producer 
in lieu of loan repayment, the Commodity Credit Corporation will be 
considered a first handler.



Sec.1221.10  Fiscal period.

    Fiscal period means the 12-month period ending on December 31 or 
such other consecutive 12-month period as shall be recommended by the 
Board and approved by the Secretary.



Sec.1221.11  Handle.

    Handle means to engage in the receiving or acquiring of sorghum and 
in the shipment (except as a common or contract carrier of sorghum owned 
by another) or sale of sorghum, or other activity causing sorghum to 
enter the current of commerce.



Sec.1221.12  Harvest.

    Harvest means combining or threshing sorghum for grain and/or 
severing the stalks from the land with mechanized equipment.



Sec.1221.13  Importer.

    Importer means any person importing more than 1,000 bushels of grain 
sorghum; or 5,000 tons of sorghum forage, sorghum hay, sorghum haylage, 
sorghum billets, or sorghum silage into the United States in a calendar 
year as a principal or as an agent, broker, or consignee of any person 
who produces or purchases sorghum outside of the United States for sale 
in the United States, and who is listed as the importer of record for 
such sorghum.



Sec.1221.14  Information.

    Information means information and programs that are designed to 
develop new markets and marketing strategies; increase market 
efficiency; enhance the image of sorghum on a national or international 
basis; and assist producers in meeting their conservation objectives. 
These include, but are not exclusive to:
    (a) Consumer information, which means any action taken to provide 
information to, and broaden the understanding of, the general public 
regarding the consumption, use, nutritional attributes, and care of 
sorghum;
    (b) Industry information, which means information and programs that 
will lead to the development of new markets, new marketing strategies, 
or increased efficiency for the sorghum industry, and activities to 
enhance the image of the sorghum industry.



Sec.1221.15  Market.

    Market means to sell or otherwise dispose of sorghum into 
intrastate, interstate, or foreign commerce by buying, distributing, or 
otherwise placing sorghum into commerce.



Sec.1221.16  Net market price.

    Net market price means the sales price, or other value, per 
volumetric

[[Page 283]]

unit, received by a producer for sorghum after adjustments for any 
premium or discount.



Sec.1221.17  Net market value.

    Net market value means:
    (a) Except as provided in paragraph (b)and (c) of this section, the 
value found by multiplying the net market price by the appropriate 
quantity of the volumetric units or the minimum value in a production 
contract received by a producer for sorghum after adjustments for any 
premium or discount.
    (b) For imported sorghum, the total value paid by the importer for 
the sorghum as reported on the appropriate Customs form; or
    (c) For sorghum pledged as collateral for a loan issued under any 
Commodity Credit Corporation price support loan program, the principal 
amount of the loan.



Sec.1221.18  Order.

    Order means an order issued by the Secretary under section 514 of 
the Act that provides for a program of generic promotion, research, and 
information regarding agricultural commodities authorized under the Act.



Sec.1221.19  Part and subpart.

    Part means the Sorghum Promotion, Research, and Information Order 
and all rules, regulations, and supplemental orders issued pursuant to 
the Act and the Order. The Order shall be a subpart of such part.



Sec.1221.20  Person.

    Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other legal entity.



Sec.1221.21  Producer.

    Producer means any person who is engaged in the production and sale 
of sorghum in the United States and who owns, or shares the ownership 
and risk of loss of, the sorghum.



Sec.1221.22  Production.

    Production, as used in Sec.1221.100, means:
    (a) for the purpose of establishing the initial Board in paragraphs 
(a), (b), (c), (d), and (e) of Sec.1221.100, the volume of grain 
sorghum produced during the last 5 crop years, excluding the high and 
low years, and
    (b) For the purpose of reapportionment in paragraphs (e) and (f) of 
Sec.1221.100, the total assessments collected by the Board during the 
last 5 crop years, excluding the high and low years.



Sec.1221.23  Promotion.

    Promotion means any action taken to present a favorable image of 
sorghum to the public and the end-user industry for the purpose of 
improving the competitive position of sorghum and stimulating the sale 
of sorghum. This includes paid advertising and public relations.



Sec.1221.24  Qualified sorghum producer organization.

    Qualified sorghum producer organization means a qualified State-
legislated sorghum promotion, research, and education commission or 
organization, approved by the Secretary. For States without a qualified 
State-legislated sorghum promotion, research, and education commission 
or organization, qualified sorghum producer organization means any 
qualified organization that has the primary purpose of representing 
sorghum producers, has sorghum producers as members, and that is 
approved by the Secretary.



Sec.1221.25  Referendum.

    Referendum means a referendum conducted by the Secretary pursuant to 
the Act whereby producers and importers are provided the opportunity to 
vote to determine whether the continuance of this subpart is favored by 
a majority of eligible persons voting.



Sec.1221.26  Research.

    Research means any type of test, study, or analysis designed to 
advance the knowledge, image, desirability, use, marketability, 
production, product development, or quality of sorghum, including, but 
not limited to, research relating to yield, nutritional value, cost of 
production, new product development, inbred and hybrid development, 
nutritional value, health research, and marketing of sorghum.

[[Page 284]]



Sec.1221.27  Secretary.

    Secretary means the Secretary of Agriculture of the United States, 
or any officer or employee of the Department to whom authority has 
heretofore been delegated, or to whom authority may hereafter be 
delegated, to act in the Secretary's stead.



Sec.1221.28  Sorghum.

    Sorghum means any harvested portion of Sorghum bicolor (L.) Moench 
or any related species of the genus Sorghum of the family Poaceae. This 
includes, but is not limited to, grain sorghum (including hybrid sorghum 
seeds, inbred sorghum line seed, and sorghum cultivar seed), sorghum 
forage, sorghum hay, sorghum haylage, sorghum billets, and sorghum 
silage.



Sec.1221.29  State.

    State means any of the 50 States, the District of Columbia, the 
Commonwealth of Puerto Rico, or any territory or possession of the 
United States.



Sec.1221.30  Suspend.

    Suspend means to issue a rule under section 553 of title 5, U.S.C., 
to temporarily prevent the operation of an order or part thereof during 
a particular period of time specified in the rule.



Sec.1221.31  Terminate.

    Terminate means to issue a rule under section 553 of title 5, 
U.S.C., to cancel permanently the operation of an order or part thereof 
beginning on a certain date specified in the rule.



Sec.1221.32  United States.

    United States or U.S. means collectively the 50 States, the District 
of Columbia, the Commonwealth of Puerto Rico, and the territories and 
possessions of the United States.

           Sorghum Promotion, Research, and Information Board



Sec.1221.100  Establishment and representation.

    There is hereby established a Sorghum Promotion, Research, and 
Information Board, hereinafter called the Board. Representation 
includes, but is not limited to, fixed State seats determined by total 
production with at-large seats to allow representation from a broad 
geographical area. The Board shall initially be composed of 13 
representatives, with the maximum number of producers from one State 
limited to 6, appointed by the Secretary from nominations as follows:
    (a) The largest production State based on total production shall 
have 5 sorghum producers to serve as representatives.
    (b) The second largest production State based on total production 
shall have 3 sorghum producers to serve as representatives.
    (c) The third largest production State based on total production 
shall have one sorghum producer to serve as a representative.
    (d) There shall be 4 sorghum producers to serve as at-large national 
representatives with at least two representatives appointed from States 
not described in paragraphs (a), (b), and (c) of this section.
    (e) If the value of assessments on imported sorghum reaches or 
exceeds the production of the third largest sorghum production State, 
there shall be one importer to serve as a representative plus an 
additional at-large national representative, with the maximum number of 
producers from one State being increased from six to seven.
    (f) At least once every 5 years, the Board will review the 
geographical distribution of production of sorghum in the United States, 
the production of sorghum in the United States, and the value of 
assessments on sorghum imported into the United States. The review will 
be based on Board assessment records and statistics from the USDA. If 
warranted, the Board may recommend to the Secretary that representation 
on the Board be altered to reflect any changes in geographical 
distribution of domestic sorghum production. If, in the review, the 
Board determines that the value of assessments on sorghum imported into 
the United States exceeds 15 percent of the production of sorghum, the 
Board shall recommend to the Secretary that the nomination procedures 
and appointments to the Board be altered as necessary or appropriate to 
facilitate the

[[Page 285]]

equitable representation of importers on the Board.



Sec.1221.101  Nominations.

    All nominations authorized under this section shall be made in the 
following manner:
    (a) Nominations for State-specific and at-large national seats shall 
be obtained by the Secretary from eligible organizations certified under 
Sec.1221.107. Certified eligible organizations representing producers 
in a State, or when making nominations for at-large seats, shall submit 
to the Secretary at least two nominees for each vacant seat. If the 
Secretary determines that a State is not represented by a certified 
eligible organization, then the Secretary may solicit nominations from 
other organizations or other persons residing in the State.
    (b) If so required pursuant to Sec.1221.100(f), at least two 
nominations for the importer representative shall be submitted by the 
Board to the Secretary.
    (c) After the establishment of the initial Board, the Secretary 
shall announce when a vacancy does or will exist. Nominations for 
subsequent Board representatives shall be submitted to the Secretary not 
less than 90 days prior to the expiration of the terms of the 
representatives whose terms are expiring, in the manner as described in 
this section. In the case of vacancies due to reasons other than the 
expiration of a term of office, successor Board members shall be 
appointed pursuant to section 1221.105.
    (d) When there is more than one certified eligible organization 
representing a State or when the Secretary solicits nominations from 
organizations and persons residing in that State, or when eligible 
certified organizations are nominating persons for at-large positions, 
eligible certified organizations may caucus and jointly nominate two 
qualified producers for each position on the Board for which a 
representative is to be appointed. If joint agreement is not reached 
with respect to any such nominations, or if no caucus is held, each 
eligible organization may submit to the Secretary two nominees for each 
appointment to be made to represent that State, or to fill an at-large 
position.



Sec.1221.102  Nominee's agreement to serve.

    Any producer or person nominated to serve on the Board shall file 
with the Secretary at the time of the nomination a written agreement to:
    (a) Serve on the Board if appointed;
    (b) Disclose any relationship with any sorghum promotion entity or 
with any organization that has or is being considered for a contractual 
relationship with the Board; and
    (c) Withdraw from participation in deliberations, decision-making, 
or voting on matters that concern the relationship disclosed under 
paragraph (b) of this section.



Sec.1221.103  Appointment.

    From the nominations made pursuant to Sec.1221.101, the Secretary 
shall appoint the representatives of the Board on the basis of 
representation provided in Sec.1221.100.



Sec.1221.104  Term of office.

    (a) The term of office for the representatives of the Board shall be 
three years, except for the initial term, pursuant to paragraph (c) of 
this section.
    (b) Representatives may serve a maximum of 2 consecutive 3-year 
terms.
    (c) When the Board is first established, the Secretary shall 
establish staggered terms as follows:
    (1) Largest Production State--2 representatives shall serve a 2-year 
term, 1 representative shall serve a 3-year term, and 2 representatives 
shall serve a 4-year term.
    (2) Second Largest Production State--1 representative shall serve a 
2-year term, 1 representative shall serve a 3-year term, and 1 
representative shall serve a 4-year term.
    (3) Third Largest Production State--The representative shall serve a 
3-year term.
    (4) At-large national--1 representative shall serve a 2-year term, 2 
representatives shall serve a 3-year term, and 1 representative shall 
serve a 4-year term.
    (5) States with multiple representatives shall have their staggered 
terms

[[Page 286]]

assigned by the Secretary. At-large national representatives shall also 
have their staggered terms assigned by the Secretary.
    (6) Representatives serving initial terms of 2 or 4 years shall be 
eligible to serve a single term of 3 years after their initial 2- or 4-
year term.
    (d) Each representative shall continue to serve until a successor is 
appointed by the Secretary and has accepted the position.
    (e) Any successor appointed pursuant to Sec.1221.105 serving 1 
year or less may serve two consecutive 3-year terms.



Sec.1221.105  Vacancies.

    To fill any vacancy occasioned by the death, removal, resignation, 
or disqualification of any member of the Board, a successor for the 
unexpired term of such representative shall be appointed by the 
Secretary pursuant to Sec.1221.103 from the most recent list of 
nominations for the position pursuant to Sec.1221.101 or the Secretary 
shall request nominations for a successor pursuant to Sec.1221.101, 
except that said nomination and replacement shall not be required if an 
unexpired term is less than 6 months.



Sec.1221.106  Removal.

    If the Secretary determines that any person appointed under this 
part fails or refuses to perform his or her duties properly or engages 
in an act of dishonesty or willful misconduct, the Secretary shall 
remove the person from office. A person appointed under this part or any 
employee of the Board may be removed by the Secretary if the Secretary 
determines that the person's continued service would be a detriment to 
the purposes of the Act.



Sec.1221.107  Certification of organizations.

    (a) The eligibility of State, regional, or national organizations to 
participate in making nominations for membership on the Board shall be 
certified by the Secretary. Those organizations that may seek 
certification include:
    (1) State-legislated sorghum promotion, research, and information 
organizations;
    (2) Organizations whose primary purpose is to represent sorghum 
producers within a State, region, or at the national level; or,
    (3) Organizations that have sorghum producers as members.
    (b) Such eligibility shall be based, in addition to other 
information, upon a report submitted by the organization that shall 
contain information deemed relevant and specified by the Secretary for 
the making of such determination, including the following:
    (1) The geographic territory covered by the organization's active 
membership;
    (2) The nature and size of the organization's active membership, 
proportion of active membership accounted for by producers, a map 
showing the sorghum producing counties in which the organization has 
active members, the volume of sorghum produced in each such county, the 
number of sorghum producers in each such county, and the size of the 
organization's active sorghum producer membership in each such county;
    (3) The extent to which the sorghum producer membership of such 
organization is represented in setting the organization's policies;
    (4) Evidence of stability and permanency of the organization;
    (5) Sources from which the organization's operating funds are 
derived;
    (6) The functions of the organization; and
    (7) The ability and willingness of the organization to further the 
purpose and objectives of the Act.
    (c) The primary consideration in determining the eligibility of an 
organization shall be whether its sorghum producer membership consists 
of a sufficiently large number of sorghum producers who produce a 
relatively significant volume of sorghum to reasonably warrant its 
participation in the nomination of State specific and national at-large 
members to the Board. Any sorghum producer organization found eligible 
by the Secretary under this section shall be certified by the Secretary, 
and the Secretary's determination as to eligibility shall be final.



Sec.1221.108  Procedure.

    (a) At a Board meeting, it will be considered a quorum when a simple

[[Page 287]]

majority of the voting representatives are present.
    (b) At the start of each fiscal period, the Board will approve a 
chairperson, vice chairperson, and secretary/treasurer who will conduct 
meetings throughout that period.
    (c) All Board representatives and the Secretary or the Secretary's 
designee will be notified at least 30 days in advance of all Board and 
committee meetings, unless an emergency meeting is declared.
    (d) Each voting representative of the Board will be entitled to one 
vote on any matter put to the Board, and the motion will carry if 
supported by a simple majority of the total votes of the Board 
representatives present at the meeting.
    (e) It will be considered a quorum at a committee meeting when a 
simple majority of those assigned to the committee are present at the 
meeting. Committees may consist of individuals other than Board 
representatives, and such individuals may vote in committee meetings. 
Committee members shall serve without compensation but shall be 
reimbursed for reasonable travel expenses, as approved by the Board.
    (f) In lieu of voting at a properly convened meeting and, when in 
the opinion of the chairperson of the Board such action is considered 
necessary, the Board may take action if supported by a simple majority 
of the Board representatives by mail, telephone, electronic mail, 
facsimile, or any other means of communication. In that event, all 
representatives must be notified and provided the opportunity to vote. 
Any action so taken shall have the same force and effect as though such 
action had been taken at a properly convened meeting of the Board. All 
telephone votes shall be confirmed promptly in writing. All votes shall 
be recorded in Board minutes.
    (g) There shall be no voting by proxy.
    (h) The chairperson shall be a voting representative.
    (i) The organization of the Board and the procedures for conducting 
meetings of the Board shall be in accordance with its bylaws, which 
shall be established by the Board and approved by the Secretary.



Sec.1221.109  Compensation and reimbursement.

    The representatives of the Board shall serve without compensation 
but shall be reimbursed for reasonable travel expenses, as approved by 
the Board, incurred by them in the performance of their duties as Board 
representatives.



Sec.1221.110  Powers and duties.

    The Board shall have the following powers and duties:
    (a) To administer the Order in accordance with its terms and 
conditions and to collect assessments;
    (b) To develop and recommend to the Secretary for approval such 
bylaws as may be necessary for the functioning of the Board, and such 
rules as may be necessary to administer the Order, including activities 
authorized to be carried out under the Order;
    (c) To meet not less than annually, and organize, and select from 
among the representatives of the Board a chairperson, other officers, 
committees, and subcommittees, as the Board determines appropriate;
    (d) To employ persons, other than the representatives, as the Board 
considers necessary to assist the Board in carrying out its duties and 
to determine the compensation and specify the duties of such persons;
    (e) To develop programs, plans, and projects, and enter into 
contracts or agreements, which must be approved by the Secretary before 
becoming effective, for the development and carrying out of programs, 
plans, or projects of research, information, or promotion, and the 
payment of costs thereof with funds collected pursuant to this subpart. 
Each contract or agreement shall provide that: Any person who enters 
into a contract or agreement with the Board shall develop and submit to 
the Board a proposed activity; keep accurate records of all of its 
transactions relating to the contract or agreement; account for funds 
received and expended in connection with the contract or agreement; make 
periodic reports to the Board of activities conducted under the contract

[[Page 288]]

or agreement; and, make such other reports available as the Board or the 
Secretary considers relevant. Furthermore, any contract or agreement 
shall provide that:
    (1) The contractor or agreeing party shall develop and submit to the 
Board a program, plan, or project together with a budget or budgets that 
shall show the estimated cost to be incurred for such program, plan, or 
project;
    (2) The contractor or agreeing party shall keep accurate records of 
all its transactions and make periodic reports to the Board of 
activities conducted, submit accounting for funds received and expended, 
and make such other reports as the Secretary or the Board may require;
    (3) The Secretary may audit the records of the contracting or 
agreeing party periodically; and
    (4) Any subcontractor who enters into a contract with a Board 
contractor and who receives or otherwise uses funds allocated by the 
Board shall be subject to the same provisions as the contractor.
    (f) To prepare and submit for approval of the Secretary fiscal 
period budgets in accordance with Sec.1221.112;
    (g) To maintain such records and books and prepare and submit such 
reports and records from time to time to the Secretary as the Secretary 
may prescribe; to make appropriate accounting with respect to the 
receipt and disbursement of all funds entrusted to it; and to keep 
records that accurately reflect the actions and transactions of the 
Board;
    (h) To cause its books to be audited by a competent auditor at the 
end of each fiscal period and at such other times as the Secretary may 
request, and to submit a report of the audit directly to the Secretary;
    (i) To give the Secretary the same notice of Board and committee 
meetings as is given to representatives in order that the Secretary's 
representative(s) may attend such meetings;
    (j) To act as intermediary between the Secretary and any producer, 
first handler or importer;
    (k) To furnish to the Secretary any information or records that the 
Secretary may request;
    (l) To receive, investigate, and report to the Secretary complaints 
of violations of the Order;
    (m) To recommend to the Secretary such amendments to the Order as 
the Board considers appropriate; and with the approval of the Secretary, 
to make rules and regulations to effectuate the terms and provisions of 
this subpart;
    (n) To work to achieve an effective, continuous, and coordinated 
program of promotion, research, consumer information, evaluation, and 
industry information designed to strengthen the sorghum industry's 
position in the marketplace; maintain and expand existing markets and 
uses for sorghum; and to carry out programs, plans, and projects 
designed to provide maximum benefits to the sorghum industry;
    (o) To provide not less than annually a report to producers and 
importers accounting for the funds expended by the Board, and describing 
programs implemented under the Act; and to make such report available to 
the public upon request; and
    (p) To invest funds in accordance with Sec.1221.115.



Sec.1221.111  Prohibited activities.

    The Board may not engage in, and shall prohibit the employees and 
agents of the Board from engaging in:
    (a) Any action that is a conflict of interest;
    (b) Using funds collected by the Board under the Order to undertake 
any action for the purpose of influencing legislation or governmental 
action or policy, by local, State, national, and foreign governments, 
other than recommending to the Secretary amendments to this part; and
    (c) Any advertising, including promotion, research, and information 
activities authorized to be carried out under the Order that is false or 
misleading or disparaging to another agricultural commodity.

                        Expenses and Assessments



Sec.1221.112  Budget and expenses.

    (a) Prior to the beginning of each fiscal period, and as may be 
necessary thereafter, the Board shall prepare and submit to the 
Secretary a budget for

[[Page 289]]

the fiscal period covering its anticipated expenses and disbursements in 
administering this subpart. Each such budget shall include:
    (1) A statement of objectives and strategy for each program, plan, 
or project;
    (2) A summary of anticipated revenue, with comparative data for at 
least one preceding year (except for the initial budget);
    (3) A summary of proposed expenditures for each program, plan, or 
project; and
    (4) Staff and administrative expense breakdowns, with comparative 
data for at least one preceding year (except for the initial budget).
    (b) Each budget shall provide adequate funds to defray its proposed 
expenditures and to provide for a reserve as set forth in this subpart.
    (c) Subject to this section, any amendment or addition to an 
approved budget that increases the budget must be approved by the 
Secretary. Shifts of funds that do not result in an increase in the 
Board's approved budget and that are consistent with this subpart and 
the Board's governing bylaws need not have prior approval by the 
Secretary.
    (d) The Board is authorized to incur such expenses, including 
provision for a reasonable reserve, as the Secretary finds are 
reasonable and likely to be incurred by the Board for its maintenance 
and functioning, and to enable it to exercise its powers and perform its 
duties in accordance with the provisions of this subpart. Such expenses 
shall be paid from funds received by the Board.
    (e) With approval of the Secretary, the Board may borrow money for 
the payment of administrative expenses, subject to the same fiscal, 
budget, and audit controls as other funds of the Board. Any funds 
borrowed by the Board shall be expended only for startup costs and 
capital outlays and are limited to the first fiscal period of operation 
of the Board.
    (f) The Board may accept voluntary contributions, but these shall 
only be used to pay expenses incurred in the conduct of programs, plans, 
and projects in accordance with the Order. Such contributions shall be 
free from any encumbrance by the donor and the Board shall retain 
complete control of their use.
    (g) The Board shall reimburse the Secretary for all expenses 
incurred by the Secretary in the implementation, administration, and 
supervision of the Order, including all referendum costs in connection 
with the Order.
    (h) The Board shall determine annually an allocation amount no less 
than 15 percent but no more than 25 percent of the total assessments 
collected on all sorghum available for any fiscal period, less the 
expenses pursuant to paragraph (i), for use by qualified sorghum 
producer organizations pursuant to Sec.1221.128 for State programs of 
generic promotion, research, and information. Amounts allocated by the 
Board for State generic promotion, research, and information programs 
will be based on requests submitted to the Board by qualified sorghum 
producer organizations when it is determined that these requests meet 
the goals and objectives stated in the Act and Order. The request shall 
include detailed programs, plans, or projects with budgets. Qualified 
sorghum producer organizations shall not submit requests for State 
generic promotion, research, and information programs that exceed the 
annual allocation amount determined by the Board which shall be the 
product of:
    (1) The State's proportional contribution based on reports submitted 
by first handlers pursuant to Sec.1221.124(a) to total assessments 
remitted on all sorghum for the previous fiscal period; multiplied by
    (2) The total assessments collected on all sorghum for the previous 
fiscal period less expenses pursuant to paragraph (i) of this section.
    (i) The Board may not expend for administration, maintenance, and 
functioning of the Board in any fiscal period an amount that exceeds 10 
percent of the assessments and other income received by the Board for 
that fiscal period except for the initial fiscal period. Reimbursements 
to the Secretary required under paragraph (i) of this section are 
excluded from this limitation on spending.
    (j) The Board shall allocate all other funds available for any 
fiscal period, to

[[Page 290]]

the extent practicable, subject to paragraphs (g), (h), (i), (j), and 
(k) of this section on programs, plans, or projects, as provided for in 
Sec.1221.121.
    (k) The Board shall determine annually the allocation of total funds 
pursuant to this section, with the approval of the Secretary.

[73 FR 25407, May 6, 2008, as amended at 83 FR 35106, July 25, 2018]



Sec.1221.113  Financial statements.

    (a) As requested by the Secretary, the Board shall prepare and 
submit financial statements to the Secretary on a monthly basis. Each 
such financial statement shall include, but not be limited to, a balance 
sheet, income statement, and expense budget. The expense budget shall 
show expenditures during the time period covered by the report, fiscal 
period-to-date expenditures, and the unexpended budget.
    (b) Each financial statement shall be submitted to the Secretary 
within 30 days after the end of the time period to which it applies.
    (c) The Board shall submit annually to the Secretary an annual 
financial statement within 90 days after the end of the fiscal period to 
which it applies.



Sec.1221.114  Operating reserve.

    The Board may establish an operating monetary reserve and may carry 
over to subsequent fiscal period excess funds in a reserve so 
established, provided that funds in the reserve shall not exceed one 
fiscal period's anticipated expenses.



Sec.1221.115  Investment of funds.

    The Board may invest, pending disbursement, funds it receives under 
this subpart, only in obligations of the United States or any agency of 
the United States; general obligations of any State or any political 
subdivision of a State; interest bearing accounts or certificates of 
deposit of financial institutions that are members of the Federal 
Reserve system; or obligations that are fully guaranteed as to principal 
and interest by the United States.



Sec.1221.116  Assessments.

    (a) The funds to cover the Board's expenses shall be paid from 
assessments on producers and importers, donations from any person not 
subject to assessments under this Order, and other funds available to 
the Board and subject to the limitations contained therein.
    (b) First handlers of domestic sorghum shall be responsible for 
collecting assessments from producers on all domestically handled 
sorghum. This includes sorghum of the first handler's own production. 
Grain pledged as collateral for a Commodity Credit Corporation price 
support loan program shall be considered handled sorghum. A first 
handler shall not collect an assessment on sorghum from a producer when 
said producer presents documentation demonstrating that an assessment 
has previously been collected on said sorghum.
    (c) The following assessment rates for sorghum shall apply:
    (1) Grain sorghum shall be initially assessed at a rate of 0.6 
percent of net market value received by the producer pursuant to 
paragraph (e) of this section; and
    (2) Sorghum forage, sorghum hay, sorghum haylage, sorghum billets, 
and sorghum silage shall be initially assessed at a rate of 0.35 percent 
of net market value received by the producer pursuant to paragraph (e) 
of this section.
    (d) Importers of sorghum shall pay an assessment to the Board 
through Customs on sorghum imported into the United States. The 
following apply to imported sorghum:
    (1) The assessment rates for imported sorghum shall be the same or 
equivalent to the rates for sorghum produced in the United States.
    (2) The import assessment shall be uniformly applied to imported 
sorghum that is identified by the numbers 1007.00.0020 and 1007.00.0040 
in the Harmonized Tariff Schedule of the United States.
    (3) The assessments due on imported sorghum shall be paid when the 
sorghum enters the United States.
    (4) If Customs does not collect an assessment from an importer, the 
importer is responsible for paying the assessment to the Board.

[[Page 291]]

    (e) The Board will review the assessment rates and may make 
recommendations to modify the assessment rates to the Secretary. 
Assessment rates may be raised or lowered no more than 0.2 percent of 
net market value received by producers and importers in any one calendar 
year. The maximum assessment rate cannot exceed 1 percent of the net 
market value received by producers and importers.
    (f) Each person responsible for collecting assessments under 
paragraph (b) of this section shall remit the amount due to the Board in 
such a manner as required by regulations recommended by the Board and 
prescribed by the Secretary.
    (g) Any unpaid assessment due to the Board pursuant to this section 
shall be increased 2 percent each month beginning with the day following 
the date such assessments were due. Any remaining amount due, which 
shall include any unpaid charges previously made pursuant to this 
paragraph, shall be increased at the same rate on the corresponding day 
of each month thereafter until paid. For the purposes of this paragraph, 
any assessment determined at a later date than the date prescribed by 
this subpart because of a person's failure to timely submit a report to 
the Board shall be considered to have been payable by the date it would 
have been due if the report had been filed timely. The timeliness of a 
payment to the Board shall be based on the applicable postmark date or 
the date actually received by the Board.
    (h) An additional charge shall be imposed on any person subject to a 
late payment charge in the form of interest on the outstanding portion 
of any amount for which the person is liable. The rate of interest shall 
be prescribed by the Secretary.
    (i) Persons failing to remit total assessments due in a timely 
manner may also be subject to actions under Federal debt collection 
procedures.
    (j) The Board may authorize other organizations to collect 
assessments on its behalf with the approval of the Secretary.
    (k) The collection of assessments pursuant to this section shall 
begin with respect to sorghum handled on or after the effective date 
established by the Secretary and shall continue until terminated or 
suspended by the Secretary.
    (l) If the Board is not in place by the date the first assessments 
are to be collected, the Secretary shall have the authority to receive 
assessments and invest them on behalf of the Board, and shall pay such 
assessments and any interest earned to the Board when it is formed. The 
Secretary shall have the authority to promulgate rules and regulations 
concerning assessments and the collection of assessments, if the Board 
is not in place or is otherwise unable to develop such rules and 
regulations.
    (m) Payment remitted pursuant to this subpart shall be in the form 
of a negotiable instrument made payable to the Board. Such remittances 
and the reports specified in Sec. Sec.1221.124 and 1221.125 shall be 
mailed to the location designated by the Board.



Sec.1221.117  Exemptions.

    (a) Any importer of less than and including 1,000 bushels of grain 
sorghum or 5,000 tons of sorghum forage, sorghum hay, sorghum haylage, 
sorghum billets, or sorghum silage per calendar year may claim an 
exemption from the assessment required under Sec.1221.116.
    (b) An importer desiring an exemption shall apply to the Board, on a 
form provided by the Board, for a certificate of exemption. An importer 
shall certify that the importer will import less than and including 
1,000 bushels of grain sorghum or 5,000 tons of sorghum forage, sorghum 
hay, sorghum haylage, sorghum billets, or sorghum silage.
    (c) Upon receipt of an application, the Board shall determine 
whether an exemption may be granted. The Board then will issue, if 
deemed appropriate, a certificate of exemption to each person who is 
eligible to receive one. It is the responsibility of these persons to 
retain a copy of the certificate of exemption.
    (d) Importers who receive a certificate of exemption shall be 
eligible for reimbursement of assessments collected by Customs. These 
importers shall apply to the Board for reimbursement of any assessments 
paid. No interest will be paid on the assessments

[[Page 292]]

collected by Customs. Requests for reimbursement shall be submitted to 
the Board within 90 days of the last day of the calendar year the 
sorghum was actually imported.
    (e) Any person who desires an exemption from assessments for a 
subsequent calendar year shall reapply to the Board, on a form provided 
by the Board, for a certificate of exemption.
    (f) The Board may require persons receiving an exemption from 
assessments to provide to the Board reports on the disposition of exempt 
sorghum and, in the case of importers, proof of payment of assessments.
    (g) A producer or importer who operates under an approved National 
Organic Program (7 CFR part 205) (NOP) organic production or handling 
system plan may be exempt from the payment of assessments under this 
part, provided that:
    (1) Only agricultural products certified as ``organic'' or ``100 
percent organic'' (as defined in the NOP), or certified as ``organic'' 
or ``100 percent organic'' under a U.S. equivalency arrangement 
established under the NOP, are eligible for exemption;
    (2) The exemption shall apply to all certified ``organic'' or ``100 
percent organic'' (as defined in the NOP) products of a producer or 
importer regardless of whether the agricultural commodity subject to the 
exemption is produced or imported by a person that also produces or 
imports conventional or nonorganic agricultural products of the same 
agricultural commodity as that for which the exemption is claimed;
    (3) The producer or importer maintains a valid certificate of 
organic operation as issued under the Organic Foods Production Act of 
1990 (7 U.S.C. 6501-6522) (OFPA) and the NOP regulations issued under 
OFPA (7 CFR part 205); and
    (4) Any producer or importer so exempted shall continue to be 
obligated to pay assessments under this part that are associated with 
any agricultural products that do not qualify for an exemption under 
this section.
    (h) To apply for an exemption under this section, the applicant 
shall submit a request to the Board on an Organic Exemption Request Form 
(Form AMS-15) at any time during the year initially, and annually 
thereafter on or before January 1, for as long as the producer or 
importer continues to be eligible for the exemption.
    (i) A producer or importer request for exemption shall include the 
following:
    (1) The applicant's full name, company name, address, telephone and 
fax numbers, and email address;
    (2) Certification that the applicant maintains a valid certificate 
of organic operation issued under the OFPA and the NOP;
    (3) Certification that the applicant produces or imports organic 
products eligible to be labeled ``organic'' or ``100 percent organic'' 
under the NOP;
    (4) A requirement that the applicant attach a copy of their 
certificate of organic operation issued by a USDA-accredited certifying 
agent under the OFPA and the NOP;
    (5) Certification, as evidenced by signature and date, that all 
information provided by the applicant is true; and
    (6) Such other information as may be required by the Board, with the 
approval of the Secretary.
    (j) If the applicant complies with the requirements of this section, 
the Board will grant an assessment exemption and issue a Certificate of 
Exemption to the producer or importer within 30 days. If the application 
is disapproved, the Board will notify the applicant of the reason(s) for 
disapproval within the same timeframe.
    (k) The producer or importer shall provide a copy of the Certificate 
of Exemption to each first handler. The first handler shall maintain 
records showing the name and address of the exempt producer or importer 
and the exemption number assigned by the Board.
    (l) The exemption will apply at the first reporting period following 
the issuance of the exemption.

[73 FR 25407, May 6, 2008, as amended at 80 FR 82032, Dec. 31, 2015]

                  Promotion, Research, and Information



Sec.1221.121  Programs, plans, and projects.

    (a) The Board shall receive and evaluate, or on its own initiative 
develop, and submit to the Secretary for approval any program, plan, or 
project

[[Page 293]]

authorized under this subpart. Such programs, plans, or projects shall 
provide for:
    (1) The establishment, issuance, effectuation, and administration of 
appropriate programs for promotion, research, and information, including 
consumer and industry information, with respect to sorghum; and
    (2) The establishment and conduct of research with respect, but not 
limited to: The yield, use, nutritional value and benefits, sale, 
distribution, and marketing of sorghum, and the creation of new products 
thereof, to the end that the marketing and use of sorghum may be 
encouraged, expanded, improved, or made more acceptable; and to advance 
the image, desirability, or quality of sorghum.
    (b) No program, plan, or project shall be implemented prior to its 
approval by the Secretary. Once a program, plan, or project is so 
approved, the Board shall take appropriate steps to implement it.
    (c) Each program, plan, or project implemented under this subpart 
shall be reviewed or evaluated periodically by the Board to ensure that 
it contributes to an effective program of promotion, research, or 
information. If it is found by the Board that any such program, plan, or 
project does not contribute to an effective program of promotion, 
research, or information, then the Board shall terminate such program, 
plan, or project.
    (d) No program, plan, or project including advertising shall be 
false or misleading or disparaging to another agricultural commodity. 
Sorghum of all origins shall be treated equally.



Sec.1221.122  Independent evaluation.

    Pursuant to the Federal Agriculture Improvement and Reform Act of 
1996 (7 U.S.C. 7401), the Board shall, not less often than every five 
years, authorize and fund, from funds otherwise available to the Board, 
an independent evaluation of the effectiveness of the Order and other 
programs conducted by the Board pursuant to the Act. The Board shall 
submit to the Secretary, and make available to the public, the results 
of each periodic independent evaluation conducted under this paragraph.



Sec.1221.123  Patents, copyrights, inventions, trademarks, information,
publications, and product formulations.

    (a) Any patents, copyrights, inventions, trademarks, information, 
publications, or product formulations developed through the use of funds 
collected by the Board under the provisions of this subpart shall be the 
property of the U.S. Government, as represented by the Board, and shall, 
along with any rents, royalties, residual payments, or other income from 
the rental, sales, leasing, franchising, or other uses of such patents, 
copyrights, inventions, trademarks, information, publications, or 
product formulations, inure to the benefit of the Board; shall be 
considered income subject to the same fiscal, budget, and audit controls 
as other funds of the Board; and may be licensed subject to approval by 
the Secretary. Upon termination of this subpart, Sec.1221.132 shall 
apply to determine disposition of all such property.
    (b) Should patents, copyrights, inventions, trademarks, information, 
publications, or product formulations be developed through the use of 
funds collected by the Board under this subpart and funds contributed by 
another organization or person, ownership and related rights to such 
patents, copyrights, inventions, trademarks, information, publications, 
or product formulations shall be determined by agreement between the 
Board and the party contributing funds towards the development of such 
patents, copyrights, inventions, trademarks, information, publications, 
or product formulations in a manner consistent with paragraph (a) of 
this section.

                       Reports, Books, and Records



Sec.1221.124  Reports.

    (a) Each first handler, on a State-by-State basis, will be required 
to provide to the Board periodically such information as may be required 
by the Board, with the approval of the Secretary, which may include but 
not be limited to the following:
    (1) Number of bushels or tons of domestic sorghum within the State 
that were marketed to the first handler;

[[Page 294]]

    (2) Number of bushels or tons of domestic sorghum within the State 
on which an assessment was paid;
    (3) The amount of assessments remitted on sorghum within the State;
    (4) Date that any assessments were paid within the State;
    (5) The explanation, if necessary, to show why the remittance is 
less than the applicable assessment rate multiplied by the net market 
price multiplied by the number of bushels or tons within the State that 
were marketed to the first handler; and
    (6) The first handler's tax identification number.
    (b) Each importer will be required to provide to the Board 
periodically such information as may be required by the Board, with the 
approval of the Secretary, which may include but not be limited to the 
following:
    (1) Number of bushels or tons of sorghum imported;
    (2) Number of bushels or tons of imported sorghum on which an 
assessment was paid;
    (3) The amount of assessments remitted;
    (4) Date that any assessments were paid;
    (5) The explanation, if necessary, to show why the remittance is 
less than the applicable assessment rate multiplied by the net market 
value; and
    (6) The importer's tax identification number.



Sec.1221.125  Books and records.

    (a) Each first handler, producer, or importer subject to this 
subpart shall maintain and make available during normal business hours 
for inspection By employees or agents of the Board or the Secretary such 
books and records as are necessary to carry out the provisions of this 
part, including records necessary to verify any required reports. Such 
records shall be maintained for at least 2 years beyond the fiscal 
period of their applicability.
    (b) Each first handler responsible for collecting assessments 
pursuant to this subpart is required to give the producer from whom the 
assessment was collected, written evidence of payment of the assessment 
paid pursuant to this subpart. Such written evidence serving as a 
receipt shall include, but not be limited to, the following information:
    (1) Name and address of the first handler,
    (2) Name of producer who paid the assessment,
    (3) Total number of bushels or tons of sorghum on which the 
assessment was paid,
    (4) Total assessment paid by the producer,
    (5) Date on which assessments were paid, and
    (6) Such other information as the Board, with the approval of the 
Secretary, may require.



Sec.1221.126  Use of information.

    Information from records or reports required pursuant to this 
subpart shall be made available to the Secretary as is appropriate to 
the administration or enforcement of the Act, subpart, or any regulation 
issued under the Act. In addition, the Secretary may authorize the use, 
under this part, of information regarding producers, first handlers, or 
importers, that is accumulated under laws or regulations other than the 
Act or regulations issued under the Act.



Sec.1221.127  Confidential treatment.

    All information obtained from books, records, or reports under the 
Act and this part shall be kept confidential by all persons, including 
all employees and former employees of the Board, all officers and 
employees and former officers and employees of contracting and 
subcontracting agencies or agreeing parties having access to such 
information. Such information shall not be available to Board 
representatives, first handlers, producers, or importers. Only those 
persons having a specific need for such information to effectively 
administer the provisions of this subpart shall have access to such 
information. Only such information so obtained as the Secretary deems 
relevant shall be disclosed by them, and then only in a judicial 
proceeding or administrative hearing brought at the direction, or on the 
request, of the Secretary, or to which the Secretary or any officer of 
the United States is a party, and involving this subpart. Nothing in 
this section shall be deemed to prohibit:

[[Page 295]]

    (a) The issuance of general statements based upon the reports of the 
number of persons subject to this subpart or statistical data collected 
there from, which statements do not identify the information furnished 
by any person; and
    (b) The publication, by direction of the Secretary, of the name of 
any person who has been adjudged to have violated this part, together 
with a statement of the particular provisions of this part violated by 
such person.

             Qualification of Sorghum Producer Organizations



Sec.1221.128  Qualification.

    (a) Organizations receiving qualification from the Secretary will be 
entitled to submit requests for funding to the Board pursuant to Sec.
1221.112(h). Only one sorghum producer organization per State may be 
qualified.
    (b) State-legislated sorghum promotion, research, and information 
organizations may request qualification and will be considered first for 
qualification by the Secretary.
    (c) If a State-legislated sorghum promotion, research, and 
information organization does not elect to seek qualification from the 
Secretary within a specified time period as determined by the Secretary, 
or does not meet eligibility requirements as specified by the Secretary, 
then any State sorghum producer organization whose primary purpose is to 
represent sorghum producers within a State, or any other State 
organization that has sorghum producers as part of its membership, may 
request qualification.
    (d) Qualification shall be based, in addition to other available 
information, upon a factual report submitted by the organization that 
shall contain information deemed relevant and specified by the Secretary 
for the making of such determination, including the following:
    (1) The geographic territory covered by the organization's active 
membership;
    (2) The nature and size of the organization's active membership, 
proportion of active membership accounted for by producers, a map 
showing the sorghum-producing counties in which the organization has 
active members, the volume of sorghum produced in each such county, the 
number of sorghum producers in each such county, and the size of the 
organization's active sorghum producer membership in each such county;
    (3) The extent to which the sorghum producer membership of such 
organization is represented in setting the organization's policies;
    (4) Evidence of stability and permanency of the organization;
    (5) Sources from which the organizations operating funds are 
derived;
    (6) The functions of the organization; and
    (7) The ability and willingness of the organization to further the 
purpose and objectives of the Act.
    (e) The primary consideration in determining the eligibility of an 
organization shall be whether its sorghum producer membership consists 
of a sufficiently large number of sorghum producers who produce a 
relatively significant volume of sorghum to reasonably warrant its 
qualification to submit requests for funding to the Board. Any sorghum 
producer organization found eligible by the Secretary under this section 
will be qualified by the Secretary, and the Secretary's determination as 
to eligibility shall be final.

[73 FR 25407, May 6, 2008, as amended at 83 FR 35106, July 25, 2018]



Sec.1221.128  Qualification.

    (a) Organizations receiving qualification from the Secretary will be 
entitled to submit requests for funding to the Board pursuant to Sec.
1221.112(h). Only one sorghum producer organization per State may be 
qualified.

[83 FR 35106, July 25, 2018]

                              Miscellaneous



Sec.1221.129  Right of the Secretary.

    All fiscal matters, programs, plans, or projects, rules or 
regulations, reports, or other substantive actions proposed and prepared 
by the Board shall be submitted to the Secretary for approval.

[[Page 296]]



Sec.1221.130  Referenda.

    (a) For the purpose of ascertaining whether the persons subject to 
this part favor the continuation, suspension, or termination of this 
part, the Secretary shall conduct a referendum among persons subject to 
assessments under Sec.1221.116 who, during a representative period 
determined by the Secretary, have engaged in the production or 
importation of sorghum.
    (1) The referendum shall be conducted not later than 3 years after 
assessments first begin under this part.
    (2) This part will be approved in a referendum if a majority of 
those persons voting vote for approval.
    (b) The Secretary shall conduct a subsequent referendum:
    (1) Not later than 7 years after assessments first begin under this 
part;
    (2) At the request of the Board; or
    (3) At the request of 10 percent or more of the sorghum producers 
and importers eligible to vote to determine if the persons favor the 
continuation, suspension, or termination of this part.
    (c) The Secretary may conduct a referendum at any time to determine 
whether the continuation, suspension or termination of this part or a 
provision of this part is favored by sorghum producers and importers 
eligible to vote.
    (d) The Board shall reimburse the Secretary for any expenses 
incurred by the Secretary to conduct referenda.
    (e) A referendum conducted under this section with respect to this 
part shall be conducted in the manner determined by the Secretary to be 
appropriate.



Sec.1221.131  Suspension or termination.

    (a) The Secretary shall suspend or terminate this part or subpart or 
a provision thereof if the Secretary finds that the subpart or a 
provision thereof obstructs or does not tend to effectuate the purposes 
of the Act, or if the Secretary determines that this subpart or a 
provision thereof is not favored by persons voting in a referendum 
conducted pursuant to the Act.
    (b) The Secretary shall suspend or terminate this subpart at the end 
of the fiscal period whenever the Secretary determines that its 
suspension or termination is approved or favored by a majority of the 
producers and importers voting who, during a representative period 
determined by the Secretary, have been engaged in the production or 
importation of sorghum.
    (c) If, as a result of a referendum the Secretary determines that 
this subpart is not approved, the Secretary shall:
    (1) No later than 180 days after making the determination, suspend 
or terminate, as the case may be, collection of assessments under this 
subpart; and
    (2) As soon as practical, suspend or terminate, as the case may be, 
activities under this subpart in an orderly manner.



Sec.1221.132  Proceedings after termination.

    (a) Upon the termination of this subpart, the Board shall recommend 
not more than five of its representatives to the Secretary to serve as 
trustees for the purpose of liquidating the affairs of the Board. Such 
persons, upon designation by the Secretary, shall become trustees of all 
of the funds and property then in the possession or under control of the 
Board, including claims for any funds unpaid or property not delivered, 
or any other claim existing at the time of such termination.
    (b) The said trustees shall:
    (1) Continue in such capacity until discharged by the Secretary;
    (2) Carry out the obligations of the Board under any contracts or 
agreements entered into pursuant to the Order;
    (3) From time to time, account for all receipts and disbursements 
and deliver all property on hand, together with all books and records of 
the Board and the trustees, to such person or persons as the Secretary 
may direct; and
    (4) Upon request of the Secretary, execute such assignments or other 
instruments necessary and appropriate to vest in such persons, title and 
right to all funds, property and claims vested in the Board or the 
trustees pursuant to the Order.
    (c) Any person to whom funds, property or claims have been 
transferred or delivered pursuant to the Order shall be subject to the 
same obligations imposed upon the Board and upon the trustees.

[[Page 297]]

    (d) Any residual funds not required to defray the necessary expenses 
of liquidation shall be turned over to the Secretary to be disposed of, 
to the extent practical, by qualified organizations pursuant to Sec.
1221.128 in the interest of continuing sorghum promotion, research, and 
information programs.



Sec.1221.133  Effect of termination or amendment.

    Unless otherwise expressly provided by the Secretary, the 
termination or amendment of this part or any subpart thereof, shall not:
    (a) Affect or waive any right, duty, obligation or liability which 
shall have arisen or which may thereafter arise in connection with any 
provision of this part; or
    (b) Release or extinguish any violation of this part; or
    (c) Affect or impair any rights or remedies of the United States, or 
of the Secretary, or of any other persons with respect to any such 
violation.



Sec.1221.134  Personal liability.

    No representative or employee of the Board shall be held personally 
responsible, either individually or jointly with others, in any way 
whatsoever, to any person for errors in judgment, mistakes, or other 
acts, either of commission or omission, as such representative or 
employee, except for acts of dishonesty or willful misconduct.



Sec.1221.135  Separability.

    If any provision of this subpart is declared invalid or the 
applicability thereof to any person or circumstances is held invalid, 
the validity of the remainder of this subpart or the applicability 
thereof to other persons or circumstances shall not be affected thereby.



Sec.1221.136  Amendments.

    Amendments to this subpart may be proposed from time to time by the 
Board or by any interested person affected by the provisions of the Act, 
including the Secretary.



Sec.1221.137  Rules and regulations.

    The Secretary may prescribe such rules and regulations as may be 
necessary to effectively carry out the provisions of this subpart.



Sec.1221.138  OMB control number.

    The control number assigned to the information collection 
requirements of this part by the Office of Management and Budget 
pursuant to the Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35, 
is OMB control number 0581-0246.



            Subpart B_Procedures for the Conduct of Referenda

    Source: 75 FR 70575, November 18, 2010, unless otherwise noted.

                               Definitions



Sec.1221.200  Terms defined.

    As used throughout this subpart, unless the context otherwise 
requires, terms shall have the same meaning as the definition of such 
terms in subpart A of this part.



Sec.1221.201  Administrator, AMS.

    Administrator, AMS, means the Administrator of the Agricultural 
Marketing Service, or any officer or employee of USDA to whom there has 
been delegated or may be delegated the authority to act in the 
Administrator's stead.



Sec.1221.202  Administrator, FSA.

    Administrator, FSA, means the Administrator of the Farm Service 
Agency, or any officer or employee of USDA to whom there has been 
delegated or may be delegated the authority to act in the 
Administrator's stead.



Sec.1221.203  Eligible person.

    Eligible person is defined as any person subject to the assessment 
who during the representative period determined by the Secretary has 
engaged in the production or importation of sorghum. Such persons are 
eligible to participate in the referendum.



Sec.1221.204  Farm Service Agency.

    Farm Service Agency, also referred to as ``FSA,'' means the Farm 
Service Agency of USDA.

[[Page 298]]



Sec.1221.205  Farm Service Agency County Committee.

    Farm Service Agency County Committee, also referred to as ``FSA 
County Committee or COC,'' means the group of persons within a county 
who are elected to act as the Farm Service Agency County Committee.



Sec.1221.206  Farm Service Agency County Executive Director.

    Farm Service Agency County Executive Director, also referred to as 
``CED,'' means the person employed by the FSA County Committee to 
execute the policies of the FSA County Committee and to be responsible 
for the day-to-day operation of the FSA county office, or the person 
acting in such capacity.



Sec.1221.207  Farm Service Agency State Committee.

    Farm Service Agency State Committee, also referred to as ``FSA State 
Committee,'' means the group of persons within a State who are appointed 
by the Secretary to act as the Farm Service Agency State Committee.



Sec.1221.208  Farm Service Agency State Executive Director.

    Farm Service Agency State Executive Director, also referred to as 
``SED,'' means the person within a State who is appointed by the 
Secretary to be responsible for the day-to-day operation of the FSA 
State Office, or the person acting in such capacity.



Sec.1221.209  Public notice.

    Public notice means not later than 30 days before the referendum is 
conducted, the Secretary shall notify the eligible voters in such manner 
as determined by the Secretary, of the voting period during which voting 
in the referendum will occur. The notice shall explain any registration 
and voting procedures established under section 518 of the Act.



Sec.1221.210  Representative period.

    Representative period means the period designated by the Secretary 
pursuant to section 518 of the Act.



Sec.1221.211  Voting period.

    The term voting period means a 4-week period to be announced by the 
Secretary for voting in the referendum.

                               Procedures



Sec.1221.220  General.

    A referendum to determine whether eligible persons favor the 
continuance of this part shall be carried out in accordance with this 
subpart.
    (a) The referendum will be conducted at county FSA offices for 
producers and through AMS headquarters offices for importers.
    (b) The Secretary shall determine if at least a majority of those 
persons voting favor the continuance of this part.



Sec.1221.221  Supervision of the process for conducting referenda.

    The Administrator, AMS, shall be responsible for supervising the 
process of permitting persons to vote in a referendum in accordance with 
this subpart.



Sec.1221.222  Eligibility.

    (a) Any person subject to the assessment who during the 
representative period determined by the Secretary has engaged in the 
production or importation of sorghum is eligible to participate in the 
referendum. An eligible person at the time of the referendum and during 
the representative period, shall be entitled to cast only one vote in 
the referendum.
    (b) Proxy registration. Proxy registration is not authorized, except 
that an officer or employee of a corporate producer or importer, or any 
guardian, administrator, executor, or trustee of a person's estate, or 
an authorized representative of any eligible producer or importer entity 
(other than an individual person), such as a corporation or partnership, 
may vote on behalf of that entity. Further, an individual cannot vote on 
behalf of another individual (i.e., spouse, family members, sharecrop 
lease, joint tenants, tenants in common, owners of community property, a 
partnership, or a corporation).

[[Page 299]]

    (c) Any individual, who votes on behalf of any producer or importer 
entity, shall certify that he or she is authorized by such entity to 
take such action. Upon request of the county FSA or AMS office, the 
person voting may be required to submit adequate evidence of such 
authority.
    (d) Joint and group interest. A group of individuals, such as 
members of a family, joint tenants, tenants in common, a partnership, 
owners of community property, or a corporation who engaged in the 
production or importation of sorghum during the representative period as 
a producer or importer entity shall be entitled to cast only one vote; 
provided, however, that any individual member of a group who is an 
eligible person separate from the group may vote separately.



Sec.1221.223  Time and place of the referendum.

    (a) The opportunity to vote in the referendum shall be provided 
during a 4-week period beginning and ending on a date determined by the 
Secretary. Eligible persons shall have the opportunity to vote following 
the procedures established in this subpart during the normal business 
hours of each county FSA or AMS office.
    (b) Persons can determine the location of county FSA offices by 
contacting the nearest county FSA office, the State FSA office, or 
through an online search of FSA's Web site.
    (c) Each eligible producer shall cast a ballot in the county FSA 
office where FSA maintains the person's administrative farm records. For 
eligible persons not participating in FSA programs, the opportunity to 
vote will be provided at the county FSA office serving the county where 
the person owns or rents land. A person engaged in the production of 
sorghum in more than one county will vote in the county FSA office where 
the person does most of his or her business.
    (d) Each eligible importer will cast a ballot in the Marketing 
Programs Branch, Livestock and Seed Program, AMS, USDA, Room 2628-S, 
STOP 0251, 1400 Independence Avenue, SW., Washington, DC 20250-0251; 
Telephone: (202) 720-1115; Fax: (202) 720-1125.



Sec.1221.224  Facilities.

    Each county FSA office will provide:
    (a) A voting place that is well known and readily accessible to 
persons in the county and that is equipped and arranged so that each 
person can complete and submit a ballot in secret without coercion, 
duress, or interference of any sort whatsoever, and
    (b) A holding container of sufficient size so arranged that no 
ballot or supporting documentation can be read or removed without 
breaking seals on the container.



Sec.1221.225  Certification and referendum ballot form.

    Form LS-379 shall be used to vote in the referendum and certify 
eligibility. Eligible persons will be required to complete a ballot in 
its entirety, vote ``yes'' or ``no'' to continue the program and provide 
documentation such as a sales receipt or remittance form showing that 
the person voting was engaged in the production of sorghum during the 
representative period. The person or authorized representative shall 
sign the ballot certifying that they or the entity they represent were 
engaged in the production of sorghum during the representative period.



Sec.1221.226  Certification and voting procedures.

    (a) Each eligible person shall be provided the opportunity to cast a 
ballot during the voting period announced by the Secretary.
    (1) Each eligible person shall be required to complete Form LS-379 
in its entirety, sign it and, provide evidence that they were engaged in 
the production or importation of sorghum during the representative 
period. The person must legibly place his or her name and, if 
applicable, the entity represented, address, county and, telephone 
number. The person shall sign and certify on Form LS-379 that:
    (i) The person was engaged in the production or importation of 
sorghum during the representative period;
    (ii) The person voting on behalf of a corporation or other entity is 
authorized to do so;
    (iii) The person has cast only one vote; and

[[Page 300]]

    (2) Only a completed and signed Form LS-379 accompanied by 
supporting documentation showing that the person was engaged in the 
production or importation of sorghum during the representative period 
shall be considered a valid vote.
    (b) To vote, eligible producers may obtain Form LS-379 in-person, by 
mail, or by facsimile from county FSA offices or through the Internet 
during the voting period. A completed and signed Form LS-379 and 
supporting documentation, such as a sales receipt or remittance form, 
must be returned to the appropriate county FSA office where FSA 
maintains and processes the person's administrative farm records. For a 
person not participating in FSA programs, the opportunity to vote in a 
referendum will be provided at the county FSA office serving the county 
where the person owns or rents land. A person engaged in the production 
of sorghum in more than one county will vote in the county FSA office 
where the person does most of his or her business. A completed and 
signed Form LS-379 and the supporting documentation may be returned in-
person, by mail, or facsimile to the appropriate county FSA office. Form 
LS-379 and supporting documentation returned in-person or by facsimile, 
must be received in the appropriate county FSA office prior to the close 
of the work day on the final day of the voting period to be considered a 
valid ballot. Form LS-379 and the accompanying documentation returned by 
mail must be postmarked no later than midnight of the final day of the 
voting period and must be received in the county FSA office on the 5th 
business day following the final day of the voting period. To vote, 
eligible importers may obtain Form LS-379 in-person, by mail or, by 
facsimile from AMS offices or through the Internet during the voting 
period. A completed and signed Form LS-379 and supporting documentation, 
such as a U.S. Customs and Border Protection form 7501, must be returned 
to the AMS headquarters office.
    (c) A completed and signed Form LS-379 and the supporting 
documentation may be returned in-person, by mail, or facsimile to the 
appropriate county FSA office for producers and to AMS office for 
importers. Form LS-379 and supporting documentation returned in-person 
or by facsimile, must be received in the appropriate county FSA office 
for producers or the AMS office for importers prior to the close of the 
work day on the final day of the voting period to be considered a valid 
ballot. Form LS-379 and the accompanying documentation returned by mail 
must be postmarked no later than midnight of the final day of the voting 
period and must be received in the county FSA office for producers and 
the AMS office for importers on the 5th business day following the final 
day of the voting period.
    (d) Persons who obtain Form LS-379 in-person at the appropriate FSA 
county office may complete and return it the same day along with the 
supporting documentation. Importers who obtain Form LS-379 in-person at 
the appropriate AMS office may complete and return it the same day along 
with the supporting documentation.



Sec.1221.227  Canvassing voting ballots.

    (a) Canvassing of Form LS-379 shall take place at the appropriate 
county FSA offices or AMS office on the 6th business day following the 
final day of the voting period. Canvassing of producer ballots shall be 
in the presence of at least two members of the county committee. If two 
or more of the counties have been combined and are served by one county 
office, the canvassing of the requests shall be conducted by at least 
one member of the county committee from each county served by the county 
office. The FSA State committee or the State Executive Director, if 
authorized by the State Committee, may designate the County Executive 
Director (CED) and a county or State FSA office employee to canvass the 
ballots and report the results instead of two members of the county 
committee when it is determined that the number of eligible voters is so 
limited that having two members of the county committee present for this 
function is impractical, and designate the CED and/or another county or 
State FSA office employee to canvass requests in any emergency situation 
precluding at

[[Page 301]]

least two members of the county committee from being present to carry 
out the functions required in this section.
    (b) Canvassing of importer ballots will be performed by AMS 
personnel or any other person as deemed necessary.
    (c) Form LS-379 should be canvassed as follows:
    (1) Number of valid ballots. A person has been declared eligible by 
FSA or AMS to vote by completing Form LS-379 in its entirety, signing 
it, and providing supporting documentation that shows the person who 
cast the ballot during the voting period was engaged in the production 
or importation of sorghum. Such ballot will be considered a valid 
ballot.
    (2) Number of ineligible ballots. If FSA or AMS cannot determine 
that a person is eligible based on the submitted documentation or if the 
person fails to submit the required supporting documentation, the person 
shall be determined to be ineligible. FSA or AMS shall notify ineligible 
persons in writing as soon as practicable but no later than the 8th 
business day following the final day of the voting period.
    (d) Appeal. A person declared to be ineligible by FSA or AMS can 
appeal such decision and provide additional documentation to the FSA 
county office or AMS within 5 business days after the postmark date of 
the letter of notification of ineligibility. FSA or AMS will then make a 
final decision on the person's eligibility and notify the person of the 
decision.
    (e) Invalid ballots. An invalid ballot includes, but is not limited 
to the following:
    (1) Form LS-379 is not signed or all required information has not 
been provided;
    (2) Form LS-379 and supporting documentation returned in-person or 
by facsimile was not received by close of business on the last business 
day of the voting period;
    (3) Form LS-379 and supporting documentation returned by mail was 
not postmarked by midnight of the final day of the voting period;
    (4) Form LS-379 and supporting documentation returned by mail was 
not received in the county FSA or AMS office by the 5th business day 
following the final day of the voting period;
    (5) Form LS-379 or supporting documentation is mutilated or marked 
in such a way that any required information on the Form is illegible; or
    (6) Form LS-379 and supporting documentation not returned to the 
appropriate county FSA or AMS office.



Sec.1221.228  Counting ballots.

    (a) Form LS-379 shall be counted by county FSA offices or the AMS 
office on the same day as the ballots are canvassed if there are no 
ineligibility determinations to resolve. For those county FSA offices 
that do have ineligibility determinations, the requests shall be counted 
no later than the 14th business day following the final day of the 
voting period.
    (b) Ballots shall be counted as follows:
    (1) Number of valid ballots cast;
    (2) Number of persons favoring the Order;
    (3) Number of persons not favoring the Order;
    (4) Number of invalid ballots.



Sec.1221.229  FSA county office report.

    The county FSA office report shall be certified as accurate and 
complete by the CED or designee, acting on behalf of the Administrator, 
AMS, as soon as may be reasonably possible, but in no event shall submit 
no later than the 18th business day following the final day of the 
specified period. Each county FSA office shall transmit the results in 
its county to the FSA State office. The results in each county may be 
made available to the public upon notification by the Administrator, 
FSA, that the final results have been released by the Secretary. A copy 
of the report shall be posted for 30 calendar days following the date of 
notification by the Administrator, FSA, in the county FSA office in a 
conspicuous place accessible to the public. One copy shall be kept on 
file in the county FSA office for a period of at least 12 months after 
notification by FSA that the final results have been released by the 
Secretary.



Sec.1221.230  FSA State office report.

    Each FSA State office shall transmit to the Administrator, FSA, as 
soon as possible, but in no event later than the

[[Page 302]]

20th business day following the final day of the voting period, a report 
summarizing the data contained in each of the reports from the county 
FSA offices. One copy of the State summary shall be filed for a period 
of not less than 12 months after the results have been released and 
available for public inspection after the results have been released.



Sec.1221.231  Results of the referendum.

    (a) The Administrator, FSA, shall submit to the Administrator, AMS, 
reports from all State FSA offices. The Administrator, AMS shall 
tabulate the results of the ballots. USDA will issue an official press 
release announcing the results of referendum and publish the same 
results in the Federal Register. In addition, USDA will post the 
official results on its Web site. State reports and related papers shall 
be available for public inspection upon request during normal business 
hours at the Marketing Programs Branch; Livestock and Seed Program, AMS, 
USDA, Room 2628-S; STOP 0251; 1400 Independence Avenue, SW., Washington, 
DC.
    (b) If the Secretary deems necessary, a State report or county 
report shall be reexamined and checked by such persons who may be 
designated by the Secretary.



Sec.1221.232  Disposition of records.

    Each FSA CED will place in sealed containers marked with the 
identification of the ``Sorghum Checkoff Program Referendum,'' all of 
the Forms LS-379 along with the accompanying documentation and county 
summaries. Such records will be placed in a secure location under the 
custody of FSA CED for a period of not less than 12 months after the 
date of notification by the Administrator, FSA, that the final results 
have been announced by the Secretary. If the county FSA office receives 
no notice to the contrary from the Administrator, FSA, by the end of the 
12 month period as described above, the CED or designee shall destroy 
the records.



Sec.1221.233  Instructions and forms.

    The Administrator, AMS, is authorized to prescribe additional 
instructions and forms not inconsistent with the provisions of this 
subpart.



Sec.1221.234  Confidentiality

    The names of persons voting in the referendum and ballots shall be 
confidential and the contents of the ballots shall not be divulged 
except as the Secretary may direct. The public may witness the opening 
of the ballot box and the counting of the votes but may not interfere 
with the process.

Subparts C-E [Reserved]



PART 1222_PAPER AND PAPER-BASED PACKAGING PROMOTION, RESEARCH AND
INFORMATION ORDER--Table of Contents



   Subpart A_Paper and Paper-Based Packaging Promotion, Research and 
                            Information Order

                               Definitions

Sec.
1222.1 Act.
1222.2 Board.
1222.3 Conflict of interest.
1222.4 Converted products.
1222.5 Customs or CBP.
1222.6 Department or USDA.
1222.7 Fiscal period and marketing year.
1222.8 Importer.
1222.9 Information.
1222.10 Kraft process.
1222.11 Linerboard.
1222.12 Manufacture or produce.
1222.13 Manufacturer or producer.
1222.14 Medium.
1222.15 Order.
1222.16 Panel.
1222.17 Paper and paper-based packaging.
1222.18 Part and subpart.
1222.19 Person.
1222.20 Program, plans and projects.
1222.21 Promotion.
1222.22 Pulp.
1222.23 Research.
1222.24 Secretary.
1222.25 Short ton or ton.
1222.26 State.
1222.27 Suspend.
1222.28 Terminate.
1222.29 United States.

                        Paper and Packaging Board

1222.40 Establishment and membership.
1222.41 Nominations and appointments.
1222.42 Term of office.
1222.43 Removal and vacancies.
1222.44 Procedure.

[[Page 303]]

1222.45 Reimbursement and attendance.
1222.46 Powers and duties.
1222.47 Prohibited activities.

                        Expenses and Assessments

1222.50 Budget and expenses.
1222.51 Financial statements.
1222.52 Assessments.
1222.53 Exemption from assessment.

                   Promotion, Research and Information

1222.60 Programs, plans and projects.
1222.61 Independent evaluation.
1222.62 Patents, copyrights, trademarks, inventions, product 
          formulations, and publications.

                       Reports, Books, and Records

1222.70 Reports.
1222.71 Books and records.
1222.72 Confidential treatment.

                              Miscellaneous

1222.80 Right of the Secretary.
1222.81 Referenda.
1222.82 Suspension or termination.
1222.83 Proceedings after termination.
1222.84 Effect of termination or amendment.
1222.85 Personal liability.
1222.86 Separability.
1222.87 Amendments.
1222.88 OMB control numbers.

                     Subpart B_Referendum Procedures

1222.100 General.
1222.101 Definitions.
1222.102 Voting.
1222.103 Instructions.
1222.104 Subagents.
1222.105 Ballots.
1222.106 Referendum report.
1222.107 Confidential information.
1222.108 OMB Control number.

 Subpart C_Provisions Implementing the Paper and Paper-Based Packaging 
                Promotion, Research and Information Order

1222.520 Late payment and interest charges for past due assessments.

    Authority: 7 U.S.C. 7411-7425; 7 U.S.C. 7401.

    Source: 78 FR 56820, Sept. 16, 2013, unless otherwise noted.



   Subpart A_Paper and Paper-Based Packaging Promotion, Research and 
                            Information Order

    Source: 79 FR 3706, Jan. 22, 2014, unless otherwise noted.

                               Definitions



Sec.1222.1  Act.

    Act means the Commodity Promotion, Research and Information Act of 
1996 (7 U.S.C. 7411-7425), and any amendments thereto.



Sec.1222.2  Board.

    Board means the Paper and Packaging Board established pursuant to 
Sec.1222.40, or such other name as recommended by the Board and 
approved by the Department.

[80 FR 80209, Dec. 24, 2015]



Sec.1222.3  Conflict of interest.

    Conflict of interest means a situation in which a member or employee 
of the Board has a direct or indirect financial interest in a person who 
performs a service for, or enters into a contract with, the Board for 
anything of economic value.



Sec.1222.4  Converted products.

    Converted products means products made from paper and paper-based 
packaging.



Sec.1222.5  Customs or CBP.

    Customs or CBP means the U.S. Customs and Border Protection, an 
agency of the U.S. Department of Homeland Security.



Sec.1222.6  Department or USDA.

    Department or USDA means the U.S. Department of Agriculture, or any 
officer or employee of the Department to whom authority has heretofore 
been delegated, or to whom authority may hereafter be delegated, to act 
in the Secretary's stead.



Sec.1222.7  Fiscal period and marketing year.

    Fiscal period and marketing year means the 12-month period ending on 
December 31 or such other period as recommended by the Board and 
approved by the Secretary.



Sec.1222.8  Importer.

    Importer means any person who imports paper and paper-based 
packaging from outside the United States for sale in the United States 
as a principal or

[[Page 304]]

as an agent, broker, or consignee of any person who manufactures paper 
and paper-based packaging outside the United States for sale in the 
United States, and who is listed in the import records as the importer 
of record for such paper and paper-based packaging.



Sec.1222.9  Information.

    Information means information and programs for consumers, customers 
and industry, including educational activities, information and programs 
designed to enhance and broaden the understanding of the use and 
attributes of paper and paper-based packaging, increase efficiency in 
manufacturing paper and paper-based packaging, maintain and expand 
existing markets, and develop new markets and marketing strategies. 
These include:
    (a) Consumer education and information, which means any action taken 
to provide information to, and broaden the understanding of, the general 
public regarding paper and paper-based packaging; and
    (b) Industry information, which means information and programs that 
would enhance the image of the paper and paper-based packaging industry.



Sec.1222.10  Kraft process.

    Kraft process means a process that transforms wood into a high 
quality strong pulp for making paper and paper-based packaging.



Sec.1222.11  Linerboard.

    Linerboard means a grade of containerboard that is used as facing 
material in the manufacture of corrugated or solid fiber shipping boxes.



Sec.1222.12  Manufacture or produce.

    Manufacture or produce means the process of transforming pulp into 
paper and paper-based packaging.



Sec.1222.13  Manufacturer or producer.

    Manufacturer or producer means any person who manufactures paper and 
paper-based packaging in the United States.



Sec.1222.14  Medium.

    Medium means a grade of containerboard used as the inner fluting 
material in the manufacture of corrugated or solid fiber shipping boxes.



Sec.1222.15  Order.

    Order means an order issued by the Secretary under section 514 of 
the Act that provides for a program of generic promotion, research, and 
information regarding agricultural commodities authorized under the Act.



Sec.1222.16  Panel.

    Panel means the Paper and Paper-Based Packaging Panel formed to 
pursue development of a paper and paper-based packaging promotion, 
research and information program.



Sec.1222.17  Paper and paper-based packaging.

    (a) Paper and paper-based packaging means:
    (1) Printing, writing and related paper, which is coated or uncoated 
paper that is subsequently converted into products used for printing, 
writing and other communication purposes, such as file folders, 
envelopes, catalogues, magazines and brochures. For purposes of this 
Order, printing, writing and related paper includes thermal paper but 
does not include carbonless paper;
    (2) Kraft packaging paper, which is coarse unbleached, semi-bleached 
or fully bleached grades of paper that are subsequently converted into 
products such as grocery bags, multiwall sacks, waxed paper and other 
products;
    (3) Containerboard, which is all forms of linerboard and medium that 
is used to manufacture corrugated boxes, shipping containers and related 
products; and
    (4) Paperboard, which is solid bleached kraft board, recycled board 
and unbleached kraft board that is subsequently converted into a wide 
variety of end uses, including folding boxes, food and beverage 
packaging, tubes, cans, and drums, and other miscellaneous products. 
Paperboard does not include construction-related products such as gypsum 
wallboard facings and panel board.
    (b) For purposes of this Order, paper and paper-based packaging does 
not include tissue paper, newsprint or converted products.

[[Page 305]]



Sec.1222.18  Part and subpart.

    Part means the Paper and Paper-Based Packaging Promotion, Research 
and Information Order and all rules, regulations, and supplemental 
orders issued pursuant to the Act and the Order. The Order shall be a 
subpart of such part.



Sec.1222.19  Person.

    Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other legal entity.



Sec.1222.20  Programs, plans and projects.

    Programs, plans and projects means those research, promotion and 
information programs, plans or projects established pursuant to the 
Order.



Sec.1222.21  Promotion.

    Promotion means any action, including paid advertising and the 
dissemination of information, utilizing public relations or other means, 
to enhance and broaden the understanding of the use and attributes of 
paper and paper-based packaging for the purpose of maintaining and 
expanding markets for paper and paper-based packaging.



Sec.1222.22  Pulp.

    Pulp means the material that is produced by chemically or 
mechanically separating cellulose fibers from wood or recycling 
recovered fiber.



Sec.1222.23  Research.

    Research means any type of test, study, or analysis designed to 
enhance the image, desirability, use, marketability, manufacturing, 
recyclability, reusability or quality of paper and paper-based 
packaging, including research directed to product characteristics and 
product development, including new uses of existing products, new 
products or improved technology in the manufacturing of paper and paper-
based packaging.



Sec.1222.24  Secretary.

    Secretary means the Secretary of Agriculture of the United States, 
or any other officer or employee of the Department to whom authority has 
been delegated, or to whom authority may hereafter be delegated, to act 
in the Secretary's stead.



Sec.1222.25  Short ton or ton.

    Short ton or ton means a measure of weight equal to 2,000 pounds.



Sec.1222.26  State.

    State means any of the 50 States of the United States, the District 
of Columbia, the Commonwealth of Puerto Rico, or any territory or 
possession of the United States.



Sec.1222.27  Suspend.

    Suspend means to issue a rule under 5 U.S.C. 553 to temporarily 
prevent the operation of an order or part thereof during a particular 
period of time specified in the rule.



Sec.1222.28  Terminate.

    Terminate means to issue a rule under 5 U.S.C. 553 to cancel 
permanently the operation of an order or part thereof beginning on a 
date certain specified in the rule.



Sec.1222.29  United States.

    United States means collectively the 50 States, the District of 
Columbia, the Commonwealth of Puerto Rico and the territories and 
possessions of the United States.

                        Paper and Packaging Board



Sec.1222.40  Establishment and membership.

    (a) Establishment of the Board. There is hereby established a Paper 
and Packaging Board to administer the terms and provisions of this 
Order. The Board shall be composed of manufacturers and importers of 
paper and paper-based packaging that manufacture or import 100,000 short 
tons or more of paper and paper-based packaging during a marketing year. 
Seats on the Board shall be apportioned as set forth in paragraph (b) of 
this section based on the geographical distribution of the quantity of 
paper and paper-based packaging manufactured in the United States and 
the quantity of paper and paper-based packaging imported to the United 
States.

[[Page 306]]

    (b) Composition of Board. The 2020 Board shall be composed of 10 
members. The 2021 Board shall be composed of 9 members. The 2022 Board 
and each subsequent Board shall be composed of 8 members. The Boards 
shall be established as follows:
    (1) Manufacturers. For the 2020 Board, 9 members shall be 
manufacturers. For the 2021 Board, 8 members shall be manufacturers, and 
for the 2022 Board and each subsequent Board, 7 members shall be 
manufacturers, from the following two regions:
    (i) Five members shall be from the South for the 2020 Board, five 
members shall be from the South for the 2021 Board, and four members 
shall be from the South for the 2022 Board and each subsequent Board. 
The South shall consist of the states of Alabama, Arkansas, Delaware, 
Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North 
Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, and West 
Virginia; and
    (ii) Four members shall be from all other parts of the United States 
for the 2020 Board, and three members shall be from all other parts of 
the United States for the 2021 Board and each subsequent Board. All 
other parts of the United States consist of those states not listed in 
paragraph (b)(1)(i) of this section.
    (2) Importers. One member shall be an importer.
    (c) At least once in every five-year period, but not more frequently 
than once in every three-year period, the Board will review the 
geographical distribution of the quantity of paper and paper-based 
packaging manufactured within the United States and the quantity of 
paper and paper-based packaging imported to the United States. The 
review will be conducted using the Board's annual assessment receipts 
and, if available, other reliable reports from the industry. If 
warranted, the Board will recommend to the Secretary that the membership 
or size of the Board be adjusted to reflect changes in geographical 
distribution of the quantity of paper and paper-based packaging 
manufactured in the United States and the quantity of paper and paper-
based packaging imported to the United States. Any changes in Board 
composition shall be implemented by the Secretary through rulemaking.

[78 FR 56820, Sept. 16, 2013, as amended at 80 FR 80209, Dec. 24, 2015; 
84 FR 31462, July 2, 2019]



Sec.1222.41  Nominations and appointments.

    (a) Nominees must manufacture or import 100,000 short tons or more 
of paper and paper-based packaging in a marketing year.
    (b) Initial nominations shall be submitted to the Secretary by the 
Panel. Before considering any nominations, the Panel shall publicize the 
nomination process, using trade press or other means it deems 
appropriate, and shall conduct outreach to all known manufacturers and 
importers manufacturing or importing 100,000 short tons or more of paper 
and paper-based packaging in a marketing year to generate nominees that 
reflect the range of operations within the paper and paper-based 
packaging industry. The Panel may use regional caucuses, mail or other 
methods to elicit potential nominees. The Panel shall work with USDA to 
ensure that all eligible candidates are aware of the opportunity to 
serve on the Board. The Panel shall submit the nominations to the 
Secretary and recommend two nominees for each Board position specified 
in Sec.1222.40(b). The Secretary shall select the initial members of 
the Board from the nominations submitted by the Panel.
    (c) Subsequent nominations shall be conducted as follows:
    (1) The Board shall conduct outreach to all known manufacturers and 
importers manufacturing or importing 100,000 short tons or more of paper 
and paper-based packaging in a marketing year. Manufacturers and 
importers may submit nominations to the Board;
    (2) Manufacturer and importer nominees may provide the Board a short 
background statement outlining their qualifications to serve on the 
Board;
    (3) Nominees may seek nomination to the Board for all vacant seats 
for which the nominees are qualified;
    (4) For domestic seats allocated by region, domestic manufacturers 
must manufacture paper and paper-based packaging in the region for which 
they

[[Page 307]]

seek nomination. Nominees that manufacture in both regions may seek 
nomination in one region of their choice. The Board will issue the call 
for nominations to all known manufacturers and recommend nominees for 
each open seat and the additional nominees to the Secretary;
    (5) Nominees that are both a manufacturer and an importer may seek 
nomination to the board as either a manufacturer or importer so long as 
they meet the qualifications. The Board will issue the call for 
nominations to all known importers and recommend nominees for each open 
seat and the additional nominees to the Secretary;
    (6) The Board will evaluate all the nominees and recommend at least 
two names for each open seat. Other qualified persons interested in 
serving in the open seats, but not recommended by the Board, will be 
designated by the Board as additional nominees for consideration by the 
Secretary;
    (7) The Board must submit nominations to the Secretary at least six 
months before the new Board term begins. From the nominations submitted 
by the Board, the Secretary shall select the members of the Board;
    (8) Any manufacturer or importer nominated to serve on the Board 
shall file with the Secretary at the time of the nomination a background 
questionnaire;
    (9) From the nominations made pursuant to this section, the 
Secretary shall appoint members of the Board on the basis of 
representation provided in Sec.1222.40(b);
    (10) No two members shall be employed by a single corporation, 
company, partnership or any other legal entity; and,
    (11) The Board may recommend to the Secretary modifications to its 
nomination procedures as it deems appropriate. Any such modification 
shall be implemented through rulemaking by the Secretary.

[79 FR 3706, Jan. 22, 2014, as amended at 84 FR 31462, July 2, 2019]



Sec.1222.42  Term of office.

    (a) With the exception of the initial Board, each Board member shall 
serve for a term of three years or until the Secretary selects his or 
her successor. Each term of office shall begin on January 1 and end on 
December 31. No member may serve more than two full consecutive three-
year terms, except as provided in paragraph (b) of this section.
    (b) For the initial Board, the terms of the Board members shall be 
staggered for two, three and four years. Determination of which of the 
initial members shall serve a term of two, three or four years shall be 
recommended to the Secretary by the Panel.



Sec.1222.43  Removal and vacancies.

    (a) The Board may recommend to the Secretary that a member be 
removed from office if the member consistently fails or refuses to 
perform his or her duties properly or engages in dishonest acts or 
willful misconduct. If the Secretary determines that any person 
appointed under this subpart consistently fails or refuses to perform 
his or her duties properly or engages in acts of dishonesty or willful 
misconduct, the Secretary shall remove the person from office. A person 
appointed under this subpart or any employee of the Board may be removed 
by the Secretary if the Secretary determines that the person's continued 
service would be detrimental to the purposes of the Act.
    (b) If a member resigns, is removed from office, or in the event of 
death of any member or if any member of the Board ceases to work for or 
be affiliated with a manufacturer or importer, or if a manufacturer 
ceases to do business in the region he or she represents, such position 
shall become vacant.
    (c) If a position becomes vacant, nominations to fill the vacancy 
will be conducted using the nominations process set forth in this Order 
or the Board may recommend to the Secretary that he or she appoint a 
successor from the most recent list of nominations for the position.
    (d) A vacancy will not be required to be filled if the unexpired 
term is less than six months.



Sec.1222.44  Procedure.

    (a) A majority of the Board members shall constitute a quorum.
    (b) Each member of the Board shall be entitled to one vote on any 
matter

[[Page 308]]

put to the Board and the motion will carry if supported by a majority of 
Board members, except for recommendations to change the assessment rate 
or to adopt a budget, both of which require affirmation by two-thirds of 
the total number of Board members.
    (c) At an assembled meeting, all votes shall be cast in person.
    (d) In lieu of voting at an assembled meeting and, when in the 
opinion of the chairperson of the Board such action is considered 
necessary, the Board may take action if supported by a majority of 
members (unless two-thirds is required under the Order) by mail, 
telephone, electronic mail, facsimile, or any other means of 
communication. In that event, all members must be notified and provided 
the opportunity to vote. Any action so taken shall have the same force 
and effect as though such action had been taken at an assembled meeting. 
All votes shall be recorded in Board minutes.
    (e) There shall be no proxy voting.



Sec.1222.45  Reimbursement and attendance.

    Board members shall serve without compensation, but shall be 
reimbursed for reasonable travel expenses, as approved by the Board, 
which they incur when performing Board business.



Sec.1222.46  Powers and duties.

    The Board shall have the following powers and duties:
    (a) To administer this subpart in accordance with its terms and 
conditions and to collect assessments;
    (b) To develop and recommend to the Secretary for approval such 
bylaws as may be necessary for the functioning of the Board, and such 
rules and regulations as may be necessary to administer the Order, 
including activities authorized to be carried out under the Order;
    (c) To meet not less than annually, organize, and select from among 
the members of the Board a chairperson, vice chairperson, secretary/
treasurer, other officers, and committees and subcommittees, as the 
Board determines to be appropriate. The committee and subcommittees may 
include persons other than Board members, including representatives of 
Board members, as the Board deems necessary and appropriate, provided 
Board members or their representative constitute a majority of all 
committees and subcommittees;
    (d) To employ or contract with persons, other than the Board 
members, as the Board considers necessary to assist the Board in 
carrying out its duties, and to determine the compensation and specify 
the duties of the persons;
    (e) To notify manufacturers and importers of all Board meetings 
through a press release or other means and to give the Secretary the 
same notice of meetings of the Board (including committee, subcommittee, 
and the like) as is given to members so that the Secretary's 
representative(s) may attend such meetings, and to keep and report 
minutes of each meeting of the Board to the Secretary;
    (f) To develop and submit programs, plans and projects to the 
Secretary for the Secretary's approval, and enter into contracts or 
agreements related to such programs, plans and projects, which must be 
approved by the Secretary before becoming effective, for the development 
and carrying out of programs, plans or projects of promotion, research 
and information. The payment of costs for such activities shall be from 
funds collected pursuant to this Order. Each contract or agreement shall 
provide that:
    (1) The contractor or agreeing party shall develop and submit to the 
Board a program, plan or project together with a budget or budgets that 
shall show the estimated cost to be incurred for such program, plan or 
project;
    (2) The contractor or agreeing party shall keep accurate records of 
all its transactions and make periodic reports to the Board of 
activities conducted, submit accounting for funds received and expended, 
and make such other reports as the Secretary or the Board may require;
    (3) The Secretary may audit the records of the contracting or 
agreeing party periodically; and
    (4) Any subcontractor who enters into a contract with a Board 
contractor and who receives or otherwise uses funds allocated by the 
Board shall

[[Page 309]]

be subject to the same provisions as the contractor.
    (g) To prepare and submit for the approval of the Secretary fiscal 
year budgets in accordance with Sec.1222.50;
    (h) To borrow funds necessary for startup expenses of the Order 
during the first year of operation by the Board;
    (i) To invest assessments collected and other funds received 
pursuant to the Order and use earnings from invested assessments to pay 
for activities carried out pursuant to the Order;
    (j) To recommend changes to the assessment rates as provided in this 
part;
    (k) To cause its books to be audited by an independent auditor at 
the end of each fiscal year and at such other times as the Secretary may 
request, and to submit a report of the audit directly to the Secretary;
    (l) To periodically prepare and make public reports of program 
activities and, at least once each fiscal year, to make public an 
accounting of funds received and expended;
    (m) To maintain such minutes, books and records and prepare and 
submit such reports and records from time to time to the Secretary as 
the Secretary may prescribe; to make appropriate accounting with respect 
to the receipt and disbursement of all funds entrusted to it; and to 
keep records that accurately reflect the actions and transactions of the 
Board;
    (n) To act as an intermediary between the Secretary and any 
manufacturer or importer;
    (o) To receive, investigate, and report to the Secretary complaints 
of violations of the Order;
    (p) To recommend to the Secretary such amendments to the Order as 
the Board considers appropriate; and
    (q) To work to achieve an effective, continuous, and coordinated 
program of promotion, research, and information and to carry out 
programs, plans, and projects designed to provide maximum benefits to 
the paper and paper-based packaging industry.



Sec.1222.47  Prohibited activities.

    The Board may not engage in, and shall prohibit the employees and 
agents of the Board from engaging in:
    (a) Any action that would be a conflict of interest;
    (b) Using funds collected by the Board under the Order to undertake 
any action for the purpose of influencing legislation or governmental 
action or policy, by local, state, national, and foreign governments or 
subdivision thereof, other than recommending to the Secretary amendments 
to the Order; and
    (c) No program, plan or project including advertising shall be 
false, misleading or disparaging to another agricultural commodity. 
Paper and paper-based packaging of all geographic origins shall be 
treated equally.

                        Expenses and Assessments



Sec.1222.50  Budget and expenses.

    (a) At least 60 calendar days prior to the beginning of each fiscal 
year, and as may be necessary thereafter, the Board shall prepare and 
submit to the Department a budget for the fiscal year covering its 
anticipated expenses and disbursements in administering this part. The 
budget for research, promotion or information may not be implemented 
prior to approval by the Secretary. Each such budget shall include:
    (1) A statement of objectives and strategy for each program, plan or 
project;
    (2) A summary of anticipated revenue, with comparative data for at 
least one preceding fiscal year, except for the initial budget;
    (3) A summary of proposed expenditures for each program, plan or 
project; and
    (4) Staff and administrative expense breakdowns, with comparative 
data for at least one preceding fiscal year, except for the initial 
budget.
    (b) Each budget shall provide adequate funds to defray its proposed 
expenditures and to provide for a reserve as set forth in this Order.
    (c) Subject to this section, any amendment or addition to an 
approved budget must be approved by the Department, including shifting 
funds from one program, plan or project to another. Shifts of funds that 
do not result in an increase in the Board's approved budget and are 
consistent with

[[Page 310]]

governing bylaws need not have prior approval by the Department.
    (d) The Board is authorized to incur such expenses, including 
provision for a reserve, as the Secretary finds reasonable and likely to 
be incurred by the Board for its maintenance and functioning, and to 
enable it to exercise its powers and perform its duties in accordance 
with the provisions of this subpart. Such expenses shall be paid from 
funds received by the Board.
    (e) With approval of the Department, the Board may borrow money for 
the payment of startup expenses subject to the same fiscal, budget, and 
audit controls as other funds of the Board. Any funds borrowed shall be 
expended only for startup costs and capital outlays and are limited to 
the first year of operation by the Board.
    (f) The Board may accept voluntary contributions. Such contributions 
shall be free from any encumbrance by the donor and the Board shall 
retain complete control of their use. The Board may receive funds from 
outside sources with approval of the Secretary for specific authorized 
projects.
    (g) The Board shall reimburse the Secretary for all expenses 
incurred by the Secretary in the implementation, administration, 
enforcement and supervision of the Order, including all referendum costs 
in connection with the Order.
    (h) For fiscal years beginning three years after the date of the 
establishment of the Board, the Board may not expend for administration, 
maintenance, and the functioning of the Board an amount that is greater 
than 15 percent of the assessment and other income received by and 
available to the Board for the fiscal year. For purposes of this 
limitation, reimbursements to the Secretary shall not be considered 
administrative costs.
    (i) The Board may establish an operating monetary reserve and may 
carry over to subsequent fiscal years excess funds in any reserve so 
established: Provided, That, the funds in the reserve do not exceed one 
fiscal year's budget of expenses. Subject to approval by the Secretary, 
such reserve funds may be used to defray any expenses authorized under 
this subpart.
    (j) Pending disbursement of assessments and all other revenue under 
a budget approved by the Secretary, the Board may invest assessments and 
all other revenues collected under this part in:
    (1) Obligations of the United States or any agency of the United 
States;
    (2) General obligations of any State or any political subdivision of 
a State;
    (3) Interest bearing accounts or certificates of deposit of 
financial institutions that are members of the Federal Reserve System;
    (4) Obligations fully guaranteed as to principal interest by the 
United States; or
    (5) Other investments as authorized by the Secretary.



Sec.1222.51  Financial statements.

    (a) The Board shall prepare and submit financial statements to the 
Department on a quarterly basis, or at any other time as requested by 
the Secretary. Each such financial statement shall include, but not be 
limited to, a balance sheet, income statement, and expense budget. The 
expense budget shall show expenditures during the time period covered by 
the report, year-to-date expenditures, and the unexpended budget.
    (b) Each financial statement shall be submitted to the Department 
within 30 calendar days after the end of the time period to which it 
applies.
    (c) The Board shall submit to the Department an annual financial 
statement within 90 calendar days after the end of the fiscal year to 
which it applies.



Sec.1222.52  Assessments.

    (a) The Board's programs and expenses shall be paid by assessments 
on manufacturers and importers, other income of the Board, and other 
funds available to the Board.
    (b) Subject to the exemptions specified in Sec.1222.53, each 
manufacturer and importer shall pay an assessment to the Board in the 
amount of 35 cents per short ton or its equivalent manufactured and 
imported. The assessment shall be on the roll of paper and paper-based 
packaging manufactured or imported, except that the assessment for

[[Page 311]]

cut-size printing and writing paper imported or made by domestic 
manufacturers prior to leaving the manufacturer's mill shall be on the 
cut-size paper.
    (c) At least 24 months after the Order becomes effective and 
periodically thereafter, the Board shall review and may recommend to the 
Secretary, upon an affirmative vote of at least two-thirds of the Board, 
a change in the assessment rate. A change in the assessment rate is 
subject to rulemaking by the Secretary.
    (d) Domestic manufacturers shall remit to the Board the amount due 
no later than the 30th calendar day of the month following the end of 
the quarter in which the paper and paper-based packaging was 
manufactured.
    (e) Each importer of paper and paper-based packaging shall pay 
through Customs to the Board an assessment on the paper and paper-based 
packaging imported into the United States identified in the Harmonized 
Tariff Schedule of the United States (HTSUS) numbers listed in the table 
below.

------------------------------------------------------------------------
                                                           Assessment $/
             Paper and paper-based packaging                    kg
------------------------------------------------------------------------
4802.54.1000............................................        $.000386
4802.54.3100............................................         .000386
4802.54.5000............................................         .000386
4802.54.6100............................................         .000386
4802.55.1000............................................         .000386
4802.55.2000............................................         .000386
4802.55.4000............................................         .000386
4802.55.6000............................................         .000386
4802.55.7020............................................         .000386
4802.55.7040............................................         .000386
4802.56.1000............................................         .000386
4802.56.2000............................................         .000386
4802.56.4000............................................         .000386
4802.56.6000............................................         .000386
4802.56.70..............................................         .000386
4802.57.1000............................................         .000386
4802.57.2000............................................         .000386
4802.57.4000............................................         .000386
4802.58.1000............................................         .000386
4802.58.20..............................................         .000386
4802.58.5000............................................         .000386
4802.58.60..............................................         .000386
4802.61.1000............................................         .000386
4802.61.2000............................................         .000386
4802.61.30..............................................         .000386
4802.61.5000............................................         .000386
4802.61.60..............................................         .000386
4802.62.1000............................................         .000386
4802.62.2000............................................         .000386
4802.62.3000............................................         .000386
4802.62.5000............................................         .000386
4802.62.60..............................................         .000386
4802.69.................................................         .000386
4804.11.0000............................................         .000386
4804.19.0000............................................         .000386
4804.21.0000............................................         .000386
4804.29.0000............................................         .000386
4804.31.40..............................................         .000386
4804.31.6000............................................         .000386
4804.39.4020............................................         .000386
4804.39.4049............................................         .000386
4804.39.60..............................................         .000386
4804.41.2000............................................         .000386
4804.41.4000............................................         .000386
4804.42.00..............................................         .000386
4804.49.0000............................................         .000386
4804.51.0000............................................         .000386
4804.52.00..............................................         .000386
4804.59.0000............................................         .000386
4805.11.0000............................................         .000386
4805.12.................................................         .000386
4805.19.................................................         .000386
4805.24.................................................         .000386
4805.25.0000............................................         .000386
4805.91.1010............................................         .000386
4805.91.9000............................................         .000386
4805.92.4010............................................         .000386
4805.92.4030............................................         .000386
4805.93.4010............................................         .000386
4805.93.4030............................................         .000386
4805.93.4050............................................         .000386
4805.93.4060............................................         .000386
4807.00.9100............................................         .000386
4807.00.9400............................................         .000386
4810.13.11..............................................         .000386
4810.13.1900............................................         .000386
4810.13.20..............................................         .000386
4810.13.5000............................................         .000386
4810.13.6000............................................         .000386
4810.13.70..............................................         .000386
4810.14.11..............................................         .000386
4810.14.1900............................................         .000386
4810.14.20..............................................         .000386
4810.14.5000............................................         .000386
4810.14.6000............................................         .000386
4810.14.70..............................................         .000386
4810.19.1100............................................         .000386
4810.19.1900............................................         .000386
4810.19.20..............................................         .000386
4810.22.1000............................................         .000386
4810.22.50..............................................         .000386
4810.22.6000............................................         .000386
4810.22.70..............................................         .000386
4810.29.10..............................................         .000386
4810.29.5000............................................         .000386
4810.29.6000............................................         .000386
4810.29.70..............................................         .000386
4810.31.1020............................................         .000386
4810.31.1040............................................         .000386
4810.31.3000............................................         .000386
4810.31.6500............................................         .000386
4810.32.10..............................................         .000386
4810.32.3000............................................         .000386
4810.32.6500............................................         .000386
4810.39.1200............................................         .000386
4810.39.1400............................................         .000386
4810.39.3000............................................         .000386
4810.39.6500............................................         .000386
4810.92.12..............................................         .000386
4810.92.65..............................................         .000386
4810.99.1050............................................         .000386
4810.99.6500............................................         .000386
4811.51.2010............................................         .000386
4811.51.2020............................................         .000386
4811.51.2030............................................         .000386
4811.59.4020............................................         .000386
4811.90.8030............................................         .000386
------------------------------------------------------------------------


[[Page 312]]

    (f) If Customs does not collect an assessment from an importer, the 
importer is responsible for paying the assessment directly to the Board 
within 30 calendar days after the end of the quarter in which the paper 
and paper-based packaging was imported.
    (g) When a manufacturer or importer fails to pay the assessment 
within 60 calendar days of the date it is due, the Board may impose a 
late payment charge and interest. The late payment charge and rate of 
interest shall be prescribed in regulations issued by the Secretary. All 
late assessments shall be subject to the specified late payment charge 
and interest. Persons failing to remit total assessments due in a timely 
manner may also be subject to actions under federal debt collection 
procedures.
    (h) The Board may accept advance payment of assessments from any 
manufacturer or importer that will be credited toward any amount for 
which that person may become liable. The Board may not pay interest on 
any advance payment.
    (i) If the Board is not in place by the date the first assessments 
are to be collected, the Secretary shall receive assessments and shall 
pay such assessments and any interest earned to the Board when it is 
formed.



Sec.1222.53  Exemption from assessment.

    (a) Minimum quantity exemption. (1) Manufacturers that manufacture 
less than 100,000 short tons of paper and paper-based packaging in a 
marketing year are exempt from paying assessments. Such manufacturers 
must apply to the Board, on a form provided by the Board, for a 
certificate of exemption prior to the start of the marketing year. This 
is an annual exemption and manufacturers must reapply each year. Such 
manufacturers shall certify that they will manufacture less than 100,000 
short tons of paper and paper-based packaging during the marketing year 
for which the exemption is claimed. Upon receipt of an application for 
exemption, the Board shall determine whether an exemption may be 
granted. The Board may request past manufacturing data to support the 
exemption request. The Board will issue, if deemed appropriate, a 
certificate of exemption to the eligible manufacturer. It is the 
responsibility of the manufacturer to retain a copy of the certificate 
of exemption.
    (2) Importers that import into the United States less than 100,000 
short tons of paper and paper-based packaging in a marketing year are 
exempt from paying assessments. This is an annual exemption and 
importers must qualify each year.
    (i) Importers that imported less than 100,000 short tons of paper 
and paper-based packaging during the prior marketing year shall 
automatically be considered exempt during the upcoming marketing year. 
Customs data will be reviewed to verify applicable importers.
    (ii) Importers that imported more than 100,000 short tons of paper 
and paper-based packaging during the prior marketing year, but believe 
and can document that they will import less than 100,000 short tons of 
paper and paper-based packaging during the upcoming marketing year, may 
apply to the Board, on a form provided by the Board, for a certificate 
of exemption prior to the start of the fiscal year. Such importers shall 
certify that they will import less than 100,000 short tons of paper and 
paper-based packaging during the marketing year for which the exemption 
is claimed. Upon receipt of an application for exemption, the Board 
shall determine whether an exemption may be granted. The Board may 
request past import data and other documentation to support the 
exemption request. The Board will issue, if deemed appropriate, a 
certificate of exemption to the eligible importer. It is the 
responsibility of the importer to retain a copy of the certificate of 
exemption.
    (iii) The Board shall refund such importers considered exempt their 
assessments as collected by Customs no later than 60 calendar days after 
receipt of such assessments by the Board. The Board will stop refund of 
assessments to such importers who during the marketing year import more 
than 100,000 short tons of paper and paper based packaging. These 
importers will be notified accordingly. No interest shall be paid on the 
assessments collected by Customs or the Board.

[[Page 313]]

    (3) Manufacturers that did not apply to the Board for an exemption 
and that manufactured less than 100,000 short tons of paper and paper-
based packaging during the marketing year shall automatically receive a 
refund from the Board for the applicable assessments within 30 calendar 
days after the end of the marketing year. Board staff shall determine 
the assessments paid and refund the amount due to the manufacturer 
accordingly.
    (4) Importers that did not apply to the Board for an exemption, 
imported more than 100,000 short tons of paper and paper-based packaging 
during the prior marketing year, and that imported less than 100,000 
short tons of paper and paper-based packaging during the marketing year 
shall automatically receive a refund from the Board for the applicable 
assessments within 30 calendar days after the end of the marketing year.
    (5) If an entity is a manufacturer and an importer, such entity's 
combined quantity of paper and paper-based packaging manufactured and 
imported during a marketing year shall count towards the 100,000 short 
ton-exemption.
    (6) Manufacturers and importers that received an exemption 
certificate or an automatic exemption from the Board but manufactured or 
imported 100,000 short tons or more of paper and paper-based packaging 
during the marketing year shall pay the Board the applicable assessments 
owed on the quantity manufactured or imported within 30 calendar days 
after the end of the marketing year and submit any necessary reports to 
the Board pursuant to Sec.1222.70.
    (7) The Board may develop additional procedures to administer this 
exemption as appropriate. Such procedures shall be implemented through 
rulemaking by the Secretary.
    (b) Organic. (1) A manufacturer who operates under an approved 
National Organic Program (7 CFR part 205) (NOP) organic handling system 
plan may be exempt from the payment of assessments under this part, 
provided that:
    (i) Only agricultural products certified as ``organic'' or ``100 
percent organic'' (as defined in the NOP) are eligible for exemption;
    (ii) The exemption shall apply to all certified ``organic'' or ``100 
percent organic'' (as defined in the NOP) products of a manufacturer 
regardless of whether the agricultural commodity subject to the 
exemption is manufactured by a person that also manufactures 
conventional or nonorganic agricultural products of the same 
agricultural commodity as that for which the exemption is claimed;
    (iii) The manufacturer maintains a valid certificate of organic 
operation as issued under the Organic Foods Production Act of 1990 (7 
U.S.C. 6501-6522) (OFPA) and the NOP regulations issued under OFPA (7 
CFR part 205); and
    (iv) Any manufacturer so exempted shall continue to be obligated to 
pay assessments under this part that are associated with any 
agricultural products that do not qualify for an exemption under this 
section.
    (2) To apply for exemption under this section, an eligible 
manufacturer shall submit a request to the Board on an Organic Exemption 
Request Form (Form AMS-15) at any time during the year initially, and 
annually thereafter on or before the start of the fiscal year, as long 
as the manufacturer continues to be eligible for the exemption.
    (3) A manufacturer request for exemption shall include the 
following:
    (i) The applicant's full name, company name, address, telephone and 
fax numbers, and email address;
    (ii) Certification that the applicant maintains a valid certificate 
of organic operation issued under the OFPA and the NOP;
    (iii) Certification that the applicant manufactures organic products 
eligible to be labeled ``organic'' or ``100 percent organic'' under the 
NOP;
    (iv) A requirement that the applicant attach a copy of their 
certificate of organic operation issued by a USDA-accredited certifying 
agent under the OFPA and the NOP;
    (v) Certification, as evidenced by signature and date, that all 
information provided by the applicant is true; and
    (vi) Such other information as may be required by the Board, with 
the approval of the Secretary.

[[Page 314]]

    (4) If a manufacturer complies with the requirements of this 
section, the Board will grant an assessment exemption and issue a 
Certificate of Exemption to the manufacturer within 30 calendar days. If 
the application is disapproved, the Board will notify the applicant of 
the reason(s) for disapproval within the same timeframe.
    (5) An importer who imports paper and paper-based packaging that is 
eligible to be labeled as ``organic'' or ``100 percent organic'' under 
the NOP, or certified as ``organic'' or ``100 percent organic'' under a 
U.S. equivalency arrangement established under the NOP, may be exempt 
from the payment of assessments. Such importer may submit documentation 
to the Board and request an exemption from assessment on certified 
``organic'' or ``100 percent organic'' paper and paper-based packaging 
on an Organic Exemption Request Form (Form AMS-15) at any time 
initially, and annually thereafter on or before the beginning of the 
fiscal year, as long as the importer continues to be eligible for the 
exemption. This documentation shall include the same information 
required of a manufacturer in paragraph (b)(3) of this section. If the 
importer complies with the requirements of this section, the Board will 
grant the exemption and issue a Certificate of Exemption to the importer 
within the applicable timeframe. Any importer so exempted shall continue 
to be obligated to pay assessments under this part that are associated 
with any imported agricultural products that do not qualify for an 
exemption under this section.
    (6) If Customs collects the assessment on exempt product under 
paragraph (b)(5) of this section that is identified as ``organic'' by a 
number in the Harmonized Tariff Schedule, the Board must reimburse the 
exempt importer the assessments paid upon receipt of such assessments 
from Customs. For all other exempt organic product for which Customs 
collects the assessment, the importer may apply to the Board for a 
reimbursement of assessments paid, and the importer must submit 
satisfactory proof to the Board that the importer paid the assessment on 
exempt organic product.
    (7) The exemption will apply immediately following the issuance of a 
Certificate of Exemption.

[79 FR 3706, Jan. 22, 2014, as amended at 80 FR 82032, Dec. 31, 2015]

                   Promotion, Research and Information



Sec.1222.60  Programs, plans and projects.

    (a) The Board shall develop and submit to the Secretary for approval 
programs, plans and projects authorized by this subpart. Such programs, 
plans and projects shall provide for promotion, research, information 
and other activities including consumer and industry information and 
advertising.
    (b) No program, plan or project shall be implemented prior to its 
approval by the Secretary. Once a program, plan or project is so 
approved, the Board shall take appropriate steps to implement it.
    (c) The Board must evaluate each program, plan and project 
authorized under this subpart to ensure that it contributes to an 
effective and coordinated program of research, promotion and 
information. The Board must submit the evaluations to the Secretary. If 
the Board finds that a program, plan or project does not contribute to 
an effective program of promotion, research, or information, then the 
Board shall terminate such program, plan or project.



Sec.1222.61  Independent evaluation.

    At least once every five years, the Board shall authorize and fund 
from funds otherwise available to the Board, an independent evaluation 
of the effectiveness of the Order and the programs conducted by the 
Board pursuant to the Act. The Board shall submit to the Secretary, and 
make available to the public, the results of each periodic independent 
evaluation conducted under this section.



Sec.1222.62  Patents, copyrights, trademarks, inventions, product
formulations, and publications.

    Any patents, copyrights, trademarks, inventions, product 
formulations, and publications developed through the use of funds 
received by the Board under

[[Page 315]]

this subpart shall be the property of the U.S. Government, as 
represented by the Board, and shall along with any rents, royalties, 
residual payments, or other income from the rental, sales, leasing, 
franchising, or other uses of such patents, copyrights, trademarks, 
inventions, product formulations, or publications, inure to the benefit 
of the Board, shall be considered income subject to the same fiscal, 
budget, and audit controls as other funds of the Board, and may be 
licensed subject to approval by the Secretary. Upon termination of this 
subpart, Sec.1222.83 shall apply to determine disposition of all such 
property.

                       Reports, Books, and Records



Sec.1222.70  Reports.

    (a) Manufacturers and importers will be required to provide 
periodically to the Board such information as the Board, with the 
approval of the Secretary, may require. Such information may include, 
but not be limited to:
    (1) For manufacturers:
    (i) The name, address and telephone number of the manufacturer; and
    (ii) The quantity of paper and paper-based packaging manufactured by 
type.
    (2) For importers:
    (i) The name, address and telephone number of the importer;
    (ii) The quantity of paper and paper-based packaging imported by 
type; and
    (iii) The country of export.
    (b) For manufacturers, such information shall be reported to the 
Board no later than the 30th calendar day of the month following the end 
of the quarter in which the paper and paper-based packaging was 
manufactured and shall accompany the collected payment of assessments as 
specified in Sec.1222.52. First quarter data (January-March) shall be 
reported to the Board no later than the 30th calendar day of April; 
second quarter data (April-June) shall be reported no later than the 
30th calendar day of July; third quarter data (July-September) shall be 
reported no later than the 30th calendar day of October; and fourth 
quarter data (October-December) shall be reported no later than the 30th 
calendar day of January of the following marketing year.
    (c) For importers who pay their assessments directly to the Board, 
such information shall accompany the payment of collected assessments 
within 30 calendar days after the end of the quarter in which the paper 
and paper-based packaging was imported specified in Sec.1222.52.



Sec.1222.71  Books and records.

    Each manufacturer and importer shall maintain any books and records 
necessary to carry out the provisions of this subpart and regulations 
issued thereunder, including such records as are necessary to verify any 
required reports. Such books and records must be made available during 
normal business hours for inspection by the Board's or Secretary's 
employees or agents. Manufacturers and importers must maintain the books 
and records for two years beyond the fiscal year to which they apply.



Sec.1222.72  Confidential treatment.

    All information obtained from books, records, or reports under the 
Act, this subpart and the regulations issued thereunder shall be kept 
confidential by all persons, including all employees and former 
employees of the Board, all officers and employees and former officers 
and employees of contracting and subcontracting agencies or agreeing 
parties having access to such information. Such information shall not be 
available to Board members or manufacturers and importers. Only those 
persons having a specific need for such information solely to 
effectively administer the provisions of this subpart shall have access 
to such information. Only such information so obtained as the Secretary 
deems relevant shall be disclosed by them, and then only in a judicial 
proceeding or administrative hearing brought at the direction, or at the 
request, of the Secretary, or to which the Secretary or any officer of 
the United States is a party, and involving this subpart. Nothing in 
this section shall be deemed to prohibit:
    (a) The issuance of general statements based upon the reports of the 
number of persons subject to this subpart or statistical data collected 
therefrom, which statements do not identify

[[Page 316]]

the information furnished by any person; and
    (b) The publication, by direction of the Secretary, of the name of 
any person who has been adjudged to have violated this part, together 
with a statement of the particular provisions of this part violated by 
such person.

                              Miscellaneous



Sec.1222.80  Right of the Secretary.

    All fiscal matters, programs, plans or projects, contracts, rules or 
regulations, reports, or other substantive actions proposed and prepared 
by the Board shall be submitted to the Secretary for approval.



Sec.1222.81  Referenda.

    (a) Initial referendum. The Order shall not become effective unless 
the Order is approved by a majority of manufacturers and importers 
voting in the referendum who also represent a majority of the volume of 
paper and paper-based packaging represented in the referendum and who, 
during a representative period determined by the Secretary, have been 
engaged in the manufacturing or importation of paper and paper-based 
packaging. A single entity who domestically manufactures and imports 
paper and paper-based packaging may cast one vote in the referendum.
    (b) Subsequent referenda. The Secretary shall conduct subsequent 
referenda:
    (1) For the purpose of ascertaining whether manufacturers and 
importers favor the amendment, continuation, suspension, or termination 
of the Order;
    (2) Not later than seven years after this Order becomes effective 
and every seven years thereafter, to determine whether manufacturers and 
importers favor the continuation of the Order. The Order shall continue 
if it is favored by a majority of manufacturers and importers voting in 
the referendum who also represent a majority of the volume of paper and 
paper-based packaging represented in the referendum and who, during a 
representative period determined by the Secretary, have been engaged in 
the manufacturing or importation of paper and paper-based packaging;
    (3) At the request of the Board established in this Order;
    (4) At the request of 10 percent or more of the number of persons 
eligible to vote in a referendum as set forth under the Order; or
    (5) At any time as determined by the Secretary.



Sec.1222.82  Suspension or termination.

    (a) The Secretary shall suspend or terminate this part or subpart or 
a provision thereof, if the Secretary finds that this part or subpart or 
a provision thereof obstructs or does not tend to effectuate the 
purposes of the Act, or if the Secretary determines that this subpart or 
a provision thereof is not favored by persons voting in a referendum 
conducted pursuant to the Act.
    (b) The Secretary shall suspend or terminate this subpart at the end 
of the fiscal year whenever the Secretary determines that its suspension 
or termination is favored by a majority of manufacturers and importers 
voting in the referendum who also represent a majority of the volume 
represented in the referendum who, during a representative period 
determined by the Secretary, have been engaged in the manufacturing or 
importation of paper and paper-based packaging.
    (c) If, as a result of a referendum the Secretary determines that 
this subpart is not approved, the Secretary shall:
    (1) Not later than one hundred and eighty (180) calendar days after 
making the determination, suspend or terminate, as the case may be, the 
collection of assessments under this subpart.
    (2) As soon as practical, suspend or terminate, as the case may be, 
activities under this subpart in an orderly manner.



Sec.1222.83  Proceedings after termination.

    (a) Upon termination of this subpart, the Board shall recommend to 
the Secretary up to five of its members to serve as trustees for the 
purpose of liquidating the Board's affairs. Such persons, upon 
designation by the Secretary, shall become trustees of all of

[[Page 317]]

the funds and property then in the possession or under control of the 
Board, including claims for any funds unpaid or property not delivered, 
or any other existing claim at the time of such termination.
    (b) The said trustees shall:
    (1) Continue in such capacity until discharged by the Secretary;
    (2) Carry out the obligations of the Board under any contracts or 
agreements entered into pursuant to the Order;
    (3) From time to time account for all receipts and disbursements and 
deliver all property on hand, together with all books and records of the 
Board and trustees, to such person or person as the Secretary directs; 
and
    (4) Upon request of the Secretary execute such assignments or other 
instruments necessary or appropriate to vest in such persons title and 
right to all of the funds, property, and claims vested in the Board or 
the trustees pursuant to the Order.
    (c) Any person to whom funds, property, or claims have been 
transferred or delivered pursuant to the Order shall be subject to the 
same obligations imposed upon the Board and upon the trustees.
    (d) Any residual funds not required to defray the necessary expenses 
of liquidation shall be turned over to the Secretary to be disposed of, 
to the extent practical, to one or more paper and paper-based packaging 
organizations in the United States whose mission is generic promotion, 
research, and information programs.



Sec.1222.84  Effect of termination or amendment.

    Unless otherwise expressly provided by the Secretary, the 
termination of this subpart or of any regulation issued pursuant 
thereto, or the issuance of any amendment to either thereof, shall not:
    (a) Affect or waive any right, duty, obligation, or liability which 
shall have arisen or which may thereafter arise in connection with any 
provision of this subpart or any regulation issued thereunder;
    (b) Release or extinguish any violation of this subpart or any 
regulation issued thereunder; or
    (c) Affect or impair any rights or remedies of the United States, or 
of the Secretary or of any other persons, with respect to any such 
violation.



Sec.1222.85  Personal liability.

    No member or employee of the Board shall be held personally 
responsible, either individually or jointly with others, in any way 
whatsoever, to any person for errors in judgment, mistakes, or other 
acts, either of commission or omission, as such member or employee, 
except for acts of dishonesty or willful misconduct.



Sec.1222.86  Separability.

    If any provision of this subpart is declared invalid or the 
applicability of it to any person or circumstances is held invalid, the 
validity of the remainder of this subpart, or the applicability thereof 
to other persons or circumstances shall not be affected thereby.



Sec.1222.87  Amendments.

    Amendments to this subpart may be proposed from time to time by the 
Board or any interested person affected by the provisions of the Act, 
including the Secretary.



Sec.1222.88  OMB control number.

    The control numbers assigned to the information collection 
requirements by the Office of Management and Budget pursuant to the 
Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35, are OMB control 
number 0505-0001 (Board nominee background statement) and OMB control 
number 0581-0093.

[84 FR 31462, July 2, 2019]



                     Subpart B_Referendum Procedures



Sec.1222.100  General.

    Referenda to determine whether eligible domestic manufacturers and 
importers favor the issuance, continuance, amendment, suspension, or 
termination of the Paper and Paper-Based Packaging Promotion, Research 
and Information Order shall be conducted in accordance with this 
subpart.

[[Page 318]]



Sec.1222.101  Definitions.

    For the purposes of this subpart:
    (a) Administrator means the Administrator of the Agricultural 
Marketing Service, with power to delegate, or any officer or employee of 
the U.S. Department of Agriculture to whom authority has been delegated 
or may hereafter be delegated to act in the Administrator's stead.
    (b) Converted products means products made from paper and paper-
based packaging.
    (c) Customs or CBP means the U.S. Customs and Border Protection, an 
agency of the U.S. Department of Homeland Security.
    (d) Department or USDA means the U.S. Department of Agriculture or 
any officer or employee of the Department to whom authority has 
heretofore been delegated, or to whom authority may hereafter be 
delegated, to act in the Secretary's stead.
    (e) Eligible domestic manufacturer or producer means any person who 
is currently a domestic manufacturer or producer and who manufactured 
100,000 short tons or more of paper and paper-based packaging during the 
representative period.
    (f) Eligible importer means any person who is currently an importer 
and who imported 100,000 short tons or more of paper and paper-based 
packaging into the United States during the representative period as a 
principal or as an agent, broker, or consignee of any person who 
manufactured paper and paper-based packaging outside of the United 
States for sale in the United States, and who is listed as the importer 
of record for such paper and paper-based packaging. Importation occurs 
when paper and paper-based packaging manufactured outside of the United 
States is released from custody by Customs and introduced into the 
stream of commerce in the United States. Included are persons who hold 
title to foreign-manufactured paper and paper-based packaging 
immediately upon release by Customs, as well as any persons who act on 
behalf of others, as agents or brokers, to secure the release of paper 
and paper-based packaging from Customs when such paper and paper-based 
packaging is entered or withdrawn for use in the United States.
    (g) Kraft process means a process that transforms wood into a high 
quality strong pulp for making paper and paper-based packaging.
    (h) Linerboard means a grade of containerboard that is used as 
facing material in the manufacture of corrugated or solid fiber shipping 
boxes.
    (i) Manufacture or produce means the process of transforming pulp 
into paper and paper-based packaging.
    (j) Order means the Paper and Paper-Based Packaging Promotion, 
Research and Information Order.
    (k) Paper and paper-based packaging means:
    (1) Printing, writing and related paper, which is coated or uncoated 
paper that is subsequently converted into products used for printing, 
writing and other communication purposes, such as file folders, 
envelopes, catalogues, magazines and brochures. For purposes of this 
Order, printing, writing and related paper includes thermal paper but 
does not include carbonless paper;
    (2) Kraft packaging paper, which is coarse unbleached, semi-bleached 
or fully bleached grades of paper that are subsequently converted into 
products such as grocery bags, multiwall sacks, waxed paper and other 
products;
    (3) Containerboard, which is all forms of linerboard and medium that 
is used to manufacture corrugated boxes, shipping containers and related 
products; and
    (4) Paperboard, which is solid bleached kraft board, recycled board 
and unbleached kraft board that is subsequently converted into a wide 
variety of end uses, including folding boxes, food and beverage 
packaging, tubes, cans, and drums, and other miscellaneous products. 
Paperboard does not include construction-related products such as gypsum 
wallboard facings and panel board.
    (5) For purposes of this Order, paper and paper-based packaging does 
not include tissue paper, newsprint or converted products.
    (l) Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other legal entity. For 
the purpose

[[Page 319]]

of this definition, the term ``partnership'' includes, but is not 
limited to:
    (1) A husband and a wife who have title to, or leasehold interest 
in, a paper and paper-based packaging manufacturing entity as tenants in 
common, joint tenants, tenants by the entirety, or, under community 
property laws, as community property; and
    (2) So called ``joint ventures'' wherein one or more parties to an 
agreement, informal or otherwise, contributed land, facilities, capital, 
labor, management, equipment, or other services, or any variation of 
such contributions by two or more parties, so that it results in the 
manufacturing or importation of paper and paper-based packaging and the 
authority to transfer title to the paper and paper-based packaging so 
manufactured or imported.
    (m) Referendum agent or agent means the individual or individuals 
designated by the Secretary to conduct the referendum.
    (n) Representative period means the period designated by the 
Department.
    (o) Short ton or ton means a measure of weight equal to 2,000 
pounds.
    (p) United States means collectively the 50 states of the United 
States, the District of Columbia, the Commonwealth of Puerto Rico, and 
the territories and possessions of the United States.



Sec.1222.102  Voting.

    (a) Each eligible domestic manufacturer and importer of paper and 
paper-based packaging shall be entitled to cast only one ballot in the 
referendum. However, each domestic manufacturer in a landlord/tenant 
relationship or a divided ownership arrangement involving totally 
independent entities cooperating only to manufacture paper and paper-
based manufacturing, in which more than one of the parties is a domestic 
manufacturer or importer, shall be entitled to cast one ballot in the 
referendum covering only such domestic manufacturer or importer's share 
of ownership.
    (b) Proxy voting is not authorized, but an officer or employee of an 
eligible corporate manufacturer or importer, or an administrator, 
executor, or trustee of an eligible entity may cast a ballot on behalf 
of such entity. Any individual so voting in a referendum shall certify 
that such individual is an officer or employee of the eligible entity, 
or an administrator, executive, or trustee of an eligible entity and 
that such individual has the authority to take such action. Upon request 
of the referendum agent, the individual shall submit adequate evidence 
of such authority.
    (c) A single entity who manufactures and imports paper and paper-
based manufacturing may cast one vote in the referendum.
    (d) All ballots are to be cast by mail or other means, as instructed 
by the Department.



Sec.1222.103  Instructions.

    The referendum agent shall conduct the referendum, in the manner 
provided in this subpart, under the supervision of the Administrator. 
The Administrator may prescribe additional instructions, consistent with 
the provisions of this subpart, to govern the procedure to be followed 
by the referendum agent. Such agent shall:
    (a) Determine the period during which ballots may be cast;
    (b) Provide ballots and related material to be used in the 
referendum. The ballot shall provide for recording essential 
information, including that needed for ascertaining whether the person 
voting, or on whose behalf the vote is cast, is an eligible voter;
    (c) Give reasonable public notice of the referendum:
    (1) By using available media or public information sources, without 
incurring advertising expense, to publicize the dates, places, method of 
voting, eligibility requirements, and other pertinent information. Such 
sources of publicity may include, but are not limited to, print and 
radio; and
    (2) By such other means as the agent may deem advisable.
    (d) Mail to eligible domestic manufacturers and importers whose 
names and addresses are known to the referendum agent, the instructions 
on voting, a ballot, and a summary of the terms and conditions of the 
proposed Order. No person who claims to be eligible to vote shall be 
refused a ballot;

[[Page 320]]

    (e) At the end of the voting period, collect, open, number, and 
review the ballots and tabulate the results in the presence of an agent 
of a third party authorized to monitor the referendum process;
    (f) Prepare a report on the referendum; and
    (g) Announce the results to the public.



Sec.1222.104  Subagents.

    The referendum agent may appoint any individual or individuals 
necessary or desirable to assist the agent in performing such agent's 
functions of this subpart. Each individual so appointed may be 
authorized by the agent to perform any or all of the functions which, in 
the absence of such appointment, shall be performed by the agent.



Sec.1222.105  Ballots.

    The referendum agent and subagents shall accept all ballots cast. 
However, if an agent or subagent deems that a ballot should be 
challenged for any reason, the agent or subagent shall endorse above 
their signature, on the ballot, a statement to the effect that such 
ballot was challenged, by whom challenged, the reasons therefore, the 
results of any investigations made with respect thereto, and the 
disposition thereof. Ballots invalid under this subpart shall not be 
counted.



Sec.1222.106  Referendum report.

    Except as otherwise directed, the referendum agent shall prepare and 
submit to the Administrator a report on the results of the referendum, 
the manner in which it was conducted, the extent and kind of public 
notice given, and other information pertinent to the analysis of the 
referendum and its results.



Sec.1222.107  Confidential information.

    The ballots and other information or reports that reveal, or tend to 
reveal, the vote of any person covered under the Order and the voter 
list shall be strictly confidential and shall not be disclosed.



Sec.1222.108  OMB control number.

    The control number assigned to the information collection 
requirement in this subpart by the Office of Management and Budget 
pursuant to the Paperwork Reduction Act of 1995, 44 U.S.C. is OMB 
control number 0581-0093.

[84 FR 31462, July 2, 2019]



 Subpart C_Provisions Implementing the Paper and Paper-Based Packaging 
                Promotion, Research and Information Order

    Source: 80 FR 80209, Dec. 24, 2015, unless otherwise noted.



Sec.1222.520  Late payment and interest charges for past due
assessments.

    (a) A late payment charge shall be imposed on any manufacturer or 
importer who fails to make timely remittance to the Board of the total 
assessments for which such manufacturer or importer is liable. The late 
payment shall be imposed on any assessments not received within 60 
calendar days of the date they are due. This one-time late payment 
charge shall be 10 percent of the assessments due before interest 
charges have accrued.
    (b) In addition to the late payment charge, 1\1/2\ percent per month 
interest on the outstanding balance, including any late payment charge 
and accrued interest, will be added to any accounts for which payment 
has not been received by the Board within 60 calendar days after the 
assessments are due. Such interest will continue to accrue monthly until 
the outstanding balance is paid to the Board.



PART 1230_PORK PROMOTION, RESEARCH, AND CONSUMER INFORMATION--
Table of Contents



   Subpart A_Pork Promotion, Research, and Consumer Information Order

                               Definitions

Sec.
1230.1 Act.
1230.2 Department.
1230.3 Secretary.
1230.4 Board.
1230.5 Consumer information.
1230.6 Council.
1230.7 Customs Service.
1230.8 Delegate Body.

[[Page 321]]

1230.9 Fiscal period.
1230.10 Imported.
1230.11 Imported pork and pork products.
1230.12 Importer.
1230.13 Market.
1230.14 Market value.
1230.15 Part and subpart.
1230.16 Person.
1230.17 Plans and projects.
1230.18 Porcine animal.
1230.19 Pork.
1230.20 Pork product.
1230.21 Producer.
1230.22 Promotion.
1230.23 Research.
1230.24 State.
1230.25 State association.
1230.26 State where produced.

                  National Pork Producers Delegate Body

1230.30 Establishment and membership.
1230.31 Nomination and appointment of producer members.
1230.32 Conduct of election.
1230.33 Appointment of importer members.
1230.34 Term of office.
1230.35 Vacancies.
1230.36 Procedure.
1230.37 Officers.
1230.38 Compensation and reimbursement.
1230.39 Powers and duties of the Delegate Body.

                           National Pork Board

1230.50 Establishment and membership.
1230.51 Term of office.
1230.52 Nominations.
1230.53 Nominee's agreement to serve.
1230.54 Appointment.
1230.55 Vacancies.
1230.56 Procedure.
1230.57 Compensation and reimbursement.
1230.58 Powers and duties of the Board.

              Promotion, Research, and Consumer Information

1230.60 Promotion, research, and consumer information.

                        Expenses and Assessments

1230.70 Expenses.
1230.71 Assessments.
1230.72 Distribution of assessments.
1230.73 Uses of distributed assessments.
1230.74 Prohibited use of distributed assessments.
1230.75 Adjustment of accounts.
1230.76 Charges.
1230.77 [Reserved]

                       Reports, Books, and Records

1230.80 Reports.
1230.81 Books and records.
1230.82 Confidential treatment.

                              Miscellaneous

1230.85 Proceedings after termination.
1230.86 Effect of termination or amendment.
1230.87 Personal liability.
1230.88 Patents, copyrights, inventions, and publications.
1230.89 Amendments.
1230.90 Separability.
1230.91 Paperwork Reduction Act assigned number.

                     Subpart B_Rules and Regulations

                               Definitions

1230.100 Terms defined.
1230.102 Exemption.

                               Assessments

1230.110 Assessments on imported pork and pork products.
1230.111 Remittance of assessments on domestic porcine animals.
1230.112 Rate of assessment.
1230.113 Collection and remittance of assessments for the sale of feeder 
          pigs and market hogs.
1230.115 Submission of annual financial statements.

                              Miscellaneous

1230.120 OBM control number assigned pursuant to the Paperwork Reduction 
          Act.

Subpart C [Reserved]

Subpart D_Procedures for Nominations and Elections of Pork Producers and 
 Nominations of Importers for Appointment to the Initial National Pork 
                         Producers Delegate Body

1230.501-1230.512 [Reserved]

           Subpart E_Procedures for the Conduct of Referendum

                               Definitions

1230.601 Act.
1230.602 Administrator, AMS.
1230.603 Administrator, FSA.
1230.604 Department.
1230.605 Farm Service Agency.
1230.606 Farm Service Agency County Committee.
1230.607 Farm Service Agency County Executive Director.
1230.608 Imported porcine animals, pork, and pork products.
1230.609 Importer.
1230.610 Order.
1230.611 Porcine animal.
1230.612 Person.
1230.613 Pork.
1230.614 Pork product.
1230.615 Producer.

[[Page 322]]

1230.616 Public notice.
1230.617 Referendum.
1230.618 Representative period.
1230.619 Secretary.
1230.620 State.
1230.621 Voting period.

                               Referendum

1230.622 General.
1230.623 Supervision of referendum.
1230.624 Eligibility.
1230.625 Time and place of registration and voting.
1230.626 Facilities for registering and voting.
1230.627 Registration form and ballot.
1230.628 Registration and voting procedures for producers.
1230.629 Registration and voting procedures for importers.
1230.630 List of registered voters.
1230.631 Challenge of votes.
1230.632 Receiving ballots.
1230.633 Canvassing ballots.
1230.634 FSA county office report.
1230.635 FSA State office report.
1230.636 Results of the referendum.
1230.637 Disposition of ballots and records.
1230.638 Instructions and forms.
1230.639 Additional absentee voter challenge period.

    Authority: 7 U.S.C. 4801-4819 and 7 U.S.C. 7401.



   Subpart A_Pork Promotion, Research, and Consumer Information Order

    Source: 51 FR 31903, Sept. 5, 1986, unless otherwise noted.

                               Definitions



Sec.1230.1  Act.

    Act means the Pork Promotion, Research, and Consumer Information Act 
of 1985 (7 U.S.C. 4801-4819) and any amendments thereto.



Sec.1230.2  Department.

    Department means the United States Department of Agriculture.



Sec.1230.3  Secretary.

    Secretary means the Secretary of Agriculture of the United States or 
any other officer or employee of the Department of Agriculture to whom 
authority has been delegated or may hereafter be delegated to act in the 
Secretary's stead.



Sec.1230.4  Board.

    Board means the National Pork Board established pursuant to Sec.
1230.50.



Sec.1230.5  Consumer information.

    Consumer information means an activity intended to broaden the 
understanding of the sound nutritional attributes of pork and pork 
products, including the role of pork and pork products in a balanced, 
healthy diet.



Sec.1230.6  Council.

    Council means the National Pork Producers Council, a nonprofit 
corporation of the type described in section 501(c)(5) of the Internal 
Revenue Code of 1954 and incorporated in the State of Iowa.



Sec.1230.7  Customs Service.

    Customs Service means the United States Customs Service of the 
United States Department of Treasury.



Sec.1230.8  Delegate Body.

    Delegate Body means the National Pork Producers Delegate Body 
established pursuant to Sec.1230.30.



Sec.1230.9  Fiscal period.

    Fiscal period means the 12-month period ending on December 31 or 
such other consecutive 12-month period as the Secretary or Board may 
determine.



Sec.1230.10  Imported.

    Imported means entered, or withdrawn from a warehouse for 
consumption, in the customs territory of the United States.



Sec.1230.11  Imported pork and pork products.

    Imported pork and pork products means products which are imported 
into the United States which the Secretary determines contain a 
substantial amount of pork, including those products which have been 
assigned one or more of the following numbers in Schedule 1 of the 
Tariff Schedules of the United States Annotated (1985): 106.4020; 
106.4040; 106.8000; 106.8500; 107.1000; 107.1500; 107.3020; 107.3040; 
107.3060; 107.3515; 107.3525; 107.3540; and 107.3560.

[[Page 323]]



Sec.1230.12  Importer.

    Importer means a person who imports porcine animals, pork, or pork 
products into the United States.



Sec.1230.13  Market.

    Market means to sell, slaughter for sale, or otherwise dispose of a 
porcine animal in commerce.



Sec.1230.14  Market value.

    Market value means, with respect to porcine animals which are sold, 
the price at which they are sold. With respect to porcine animals 
slaughtered for the sale by the producer, the term means the most recent 
annual seven-market average for barrows and gilts, as published by the 
Department. With respect to imported porcine animals, the term means the 
declared value. With respect to imported pork and pork products, the 
term means an amount which represents the value of the live porcine 
animals from which the pork or pork products were derived, based upon 
the most recent annual seven-market average for barrows and gilts, as 
published by the Department.



Sec.1230.15  Part and subpart.

    Part means the Pork Promotion, Research, and Consumer Information 
Order and all rules, regulations, and supplemental orders issued 
thereunder, and the aforesaid order shall be a ``subpart of such part.



Sec.1230.16  Person.

    Person means any individual, group of individuals, partnership, 
corporation, association, organization, cooperative, or other entity.



Sec.1230.17  Plans and projects.

    Plans and projects means promotion, research, and consumer 
information plans, studies, or projects.



Sec.1230.18  Porcine animal.

    Porcine animal means a swine, that is raised as (a) a feeder pig, 
that is, a young pig sold to another person to be finished for 
slaughtering over a period of more than 1 month; (b) for breeding 
purposes as seed stock and included in the breeding herd; and (c) a 
market hog, slaughtered by the producer or sold to be slaughtered, 
usually within 1 month of such transfer.



Sec.1230.19  Pork.

    Pork means the flesh of a porcine animal.



Sec.1230.20  Pork product.

    Pork product means an edible product produced or processed in whole 
or in part from pork.



Sec.1230.21  Producer.

    Producer means a person who produces porcine animals in the United 
States for sale in commerce.



Sec.1230.22  Promotion.

    Promotion means any action, including but not limited to paid 
advertising and retail or food service merchandising, taken to present a 
favorable image for porcine animals, pork, or pork products to the 
public, or to educate producers with the intent of improving the 
competitive position and stimulating sales of porcine animals, pork, or 
pork products.



Sec.1230.23  Research.

    Research means any action designed to advance, expand, or improve 
the image, desirability, nutritional value, usage, marketability, 
production, or quality of porcine animals, pork, or pork products, 
including the dissemination of the results of such research.



Sec.1230.24  State.

    State means each of the 50 States.



Sec.1230.25  State association.

    State association means the single organization of producers in a 
State that is organized under the laws of that State and is recognized 
by the chief executive officer of such State as representing such 
State's producers. If no such organization exists in a State as of 
January 1, 1986, the Secretary may recognize an organization that 
represents not fewer than 50 producers who market annually an aggregate 
of not less than 10 percent of the pounds of porcine animals marketed in 
such State. The Secretary may cease to recognize a State association and 
instead

[[Page 324]]

recognize another organization of producers in a State as that State's 
association if the Secretary determines either that a majority of the 
members of the existing State association are not producers or that a 
majority of the members of the other organization seeking recognition 
are producers and that such organization better represents the economic 
interests of producers.



Sec.1230.26  State where produced.

    State where produced means with respect to a porcine animal marketed 
as a feeder pig or as breeding stock, the State in which that porcine 
animal was born, and with respect to a porcine animal that is marketed 
as a market hog, the State in which that porcine animal was fed for 
market.

                  National Pork Producers Delegate Body



Sec.1230.30  Establishment and membership.

    (a) There is hereby established a National Pork Producers Delegate 
Body which shall consist of producers and importers appointed by the 
Secretary.
    (b)(1) At least two producer members shall be allocated to each 
State, but any State that has more than 300 but less than 601 shares 
shall receive three producer members; each State with more than 600 but 
less than 1,001 shares shall receive four producer members and each 
State with more than 1,000 shares shall receive an additional member in 
excess of four for each 300 additional shares in excess of 1,000 shares, 
rounded to the nearest 300.
    (2) [Reserved]
    (3) In each fiscal period, shares shall be assigned to each State on 
the basis of one share for each $1,000 (rounded to the nearest $1,000) 
of the net amount of assessments attributable to such State.
    (c)(1) The number of importer members to be appointed shall be 
determined by allocating three such members for the first 1,000 shares. 
Importers shall receive an additional member in excess of three for each 
300 shares in excess of 1,000 shares, rounded to the nearest 300.
    (2) [Reserved]
    (3) In each fiscal period, shares shall be assigned to importers on 
the basis of one share for each $1,000 (rounded to the nearest $1,000) 
of the net amount of assessments attributable to importers.

[51 FR 31903, Sept. 5, 1986, as amended at 60 FR 58501, Nov. 28, 1995]



Sec.1230.31  Nomination and appointment of producer members.

    (a) [Reserved]
    (b) Delegate Body nominations for appointment as producer members 
shall be submitted to the Secretary in the number requested by the 
Secretary by each State association either after an election conducted 
in accordance with Sec.1230.32 and by nominating the producers who 
receive the highest number of votes in such State; or pursuant to a 
selection process that is approved by the Secretary, is given public-
notice at least one week in advance by publication in a newspaper or 
newspapers of general circulation in such State and in pork production 
and agriculture trade publications, and provides complete and equal 
access to every producer who has paid all assessments due under this 
subpart and who has not demanded any refund of an assessment paid 
pursuant to this subpart in the period since the selection of the 
previous Delegate Body;
    (c) The Secretary shall appoint the producer members of each 
Delegate Body from the nominations submitted in accordance with this 
section, except that if a State association does not submit nominations 
in the required manner or number, or if a State has no State 
association, the Secretary shall select producer members from that State 
after consultation with representatives of the pork industry in that 
State.

[51 FR 31903, Sept. 5, 1986, as amended at 60 FR 58501, Nov. 28, 1995]



Sec.1230.32  Conduct of election.

    If a State association selects nominees for appointment to the 
Delegate Body through an election, it shall be conducted in the 
following manner:
    (a) Elections shall be administered by the Board and the Board shall 
determine the timing of any elections.

[[Page 325]]

    (b) Producers who are residents of that State may be named as 
candidates for election to be nominees for appointment to the Delegate 
Body:
    (1) By a nominating committee of producers in that State appointed 
by the Board; or
    (2) The number of pork producers in a State shall be determined by 
the Department based on the latest available Department information, 
which tabulates by State the number of farming operations with porcine 
animals.
    (c) To be eligible to vote in an election to nominate producer 
members from a State, a person must:
    (1) Be a producer who is a resident of that State;
    (2) Have paid all assessments due pursuant to this subpart; and
    (3) Not have demanded any refund of an assessment paid pursuant to 
this subpart in the period since the selection of the previous Delegate 
Body.
    (d) The Board shall cause notices of any election to be published at 
least one week prior to the election in a newspaper or newspapers of 
general circulation in that State, and in pork production and 
agricultural trade publications. The notices shall set forth the period 
of time and places for voting and such other information as the Board 
considers necessary.
    (e) The identity of any person who voted and the manner in which any 
person voted shall be kept confidential.

[51 FR 31903, Sept. 5, 1986, as amended at 53 FR 30245, Aug. 11, 1988]



Sec.1230.33  Appointment of importer members.

    The Secretary shall appoint the importer members of each Delegate 
Body after consultation with importers.



Sec.1230.34  Term of office.

    (a) The members of the Delegate Body shall serve for terms of one 
year, except that the members of the initial Delegate Body shall serve 
only until the completion of the nomination and appointment process of 
the succeeding Delegate Body.
    (b) Each member of the Delegate Body shall serve until that member's 
term expires, or a successor is appointed, whichever occurs later.



Sec.1230.35  Vacancies.

    To fill any vacancy occasioned by the death, removal, resignation, 
or disqualification of any member of the Delegate Body, the Secretary 
shall appoint a successor for the unexpired term of such member from 
nominations made either by the appropriate State association or by 
importers, depending upon whether the vacancy is a producer or importer 
vacancy.



Sec.1230.36  Procedure.

    (a) A majority of the members shall constitute a quorum at a 
properly convened meeting of the Delegate Body, but only if that 
majority is also entitled to cast a majority of the shares (including 
fractions thereof). Any action of the Delegate Body, including any 
motion or nomination presented to it for a vote, shall require a 
majority vote, that is, the concurring votes of a majority of the shares 
cast on that action. The Delegate Body shall give timely notice of its 
meetings. The Delegate Body shall give the Secretary the same notice of 
its meetings as it gives to its members in order that the Secretary or a 
representative of the Secretary may attend meetings.
    (b) The number of votes that may be cast by a producer member if 
present at a meeting shall be equal to the number of shares attributable 
to the State of such member divided by the number of producer members 
from such State. The number of votes that may be cast by an importer 
member if present at a meeting shall be equal to the number of shares 
allocated to importers divided by the number of importer members.



Sec.1230.37  Officers.

    The Delegate Body shall elect its Chairperson by a majority vote at 
the first annual meeting, but at each annual meeting after the first, 
the President of the Board shall serve as the Delegate Body's 
Chairperson.



Sec.1230.38  Compensation and reimbursement.

    The members of the Delegate Body shall serve without compensation 
but may be reimbursed by the Board for actual transportation expenses 
incurred by them in exercising their powers and

[[Page 326]]

duties under this subpart. Such expenses shall be paid from funds 
received by the Board pursuant to Sec.1230.72.



Sec.1230.39  Powers and duties of the Delegate Body.

    The Delegate Body shall have the following powers and duties:
    (a) To meet annually;
    (b) To recommend the rate of assessment prescribed by the initial 
order and any increase in such rate;
    (c) To determine the percentage of the net assessments attributable 
to porcine animals produced in a State that each State association shall 
receive; and
    (d) To nominate not less than 23 persons, including producers from a 
minimum of 12 States or importers, for appointment to the initial Board 
and not less than one and one-half persons (rounded up to the nearest 
person) for each vacancy on the Board that requires nominations 
thereafter. Each nomination shall be by a majority vote of the Delegate 
Body voting in person in accordance with Sec.1230.36.

                           National Pork Board



Sec.1230.50  Establishment and membership.

    There is hereby established a National Pork Board of 15 members 
consisting of producers representing at least 12 States or importers 
appointed by the Secretary from nominations submitted pursuant to Sec.
1230.39(d). The Board shall be deemed to be constituted once the 
Secretary makes the appointments to the Board.



Sec.1230.51  Term of office.

    (a) The members of the Board shall serve for terms of three years, 
except that the members appointed to the initial Board shall be 
designated for, and shall serve terms as follows: One-third of such 
members shall serve for one year terms; One-third shall serve for two 
year terms; and the remaining One-third shall serve for three year 
terms.
    (b) Each member of the Board shall serve until the member's term 
expires, or until a successor is appointed, unless the member is removed 
pursuant to Sec.1230.55(b).
    (c) No member shall serve more than two consecutive terms provided 
that those members serving an initial term of one year are eligible to 
serve two additional consecutive terms, but in no event, more than seven 
years in total.
    (d) The first year of the terms of the initial Board shall begin 
immediately on appointment by the Secretary and continue until July 1, 
1988. In subsequent years, the term of office shall begin on July 1.



Sec.1230.52  Nominations.

    Nominations for members of the Board shall be made by the Delegate 
Body in accordance with Sec.1230.39(d).



Sec.1230.53  Nominee's agreement to serve.

    Any person nominated to serve on the Board shall file with the 
Secretary at the time of the nomination a written agreement to:
    (a) Serve on the Board if appointed;
    (b) Disclose any relationship with the Council or a State 
association or any organization that has a contract with the Board and 
thereafter disclose, at any time while serving on the Board, any 
relationship with any organization that applies to the Board for a 
contract; and
    (c) Withdraw from participation in deliberations, decisionmaking, or 
voting on matters concerning any entity referred to in paragraph (b) of 
this section, if an officer or member of the executive committee of such 
entity.



Sec.1230.54  Appointment.

    From the nominations submitted pursuant to Sec.1230.39(d), the 
Secretary shall appoint 15 producers or importers as members of the 
Board, but in no event shall the Secretary appoint producer members 
representing fewer than 12 States.



Sec.1230.55  Vacancies.

    (a) To fill any vacancy occasioned by the death, removal, 
resignation, or disqualification of any member of the Board, the 
Secretary shall appoint a successor for the unexpired term of such 
member from the most recent list

[[Page 327]]

of nominations made by the Delegate Body.
    (b) If a member of the Board fails or refuses to perform the duties 
of a member of the Board, or if a member of the Board engages in acts of 
dishonesty or willful misconduct, the Board may recommend to the 
Secretary that that member be removed from office. If the Secretary 
finds that the recommendation of the Board demonstrates adequate cause, 
the Secretary shall remove such member from office. A person appointed 
under this part or any employee of the Board may be removed by the 
Secretary if the Secretary determines that the person's continued 
service would be detrimental to the purposes of the Act.



Sec.1230.56  Procedure.

    (a) A majority of the members shall constitute a quorum at a 
properly convened meeting of the Board. Any action of the Board shall 
require the concurring votes of at least a majority of those present and 
voting. The Board shall give timely notice of its meetings. The Board 
shall give the Secretary the same notice of its meetings, including the 
meetings of its committees, as it gives to its members in order that the 
Secretary, or a representative of the Secretary, may attend the 
meetings.
    (b) The Board may take action upon the concurring votes of a 
majority of its members by mail, telephone, telegraph or by other means 
of communication when, in the opinion of the President of the Board, 
such action must be taken before a meeting can be called. Action taken 
by this emergency procedure is valid only if all members are notified 
and provided the opportunity to vote and any telephone vote is confirmed 
promptly in writing and recorded in the Board minutes. Any action so 
taken shall have the same force and effect as though such action had 
been taken at a properly convened meeting of the Board.



Sec.1230.57  Compensation and reimbursement.

    The members of the Board shall serve without compensation but shall 
be reimbursed for reasonable expenses incurred by them in the exercise 
of their powers and the performance of their duties under this subpart. 
Such expenses shall be paid from funds received by the Board pursuant to 
Sec.1230.72.



Sec.1230.58  Powers and duties of the Board.

    The Board shall have the following powers and duties:
    (a) To meet not less than annually, and to organize and elect from 
among its members, by majority vote, a President and such other officers 
as may be necessary;
    (b) To receive and evaluate, or, on its own initiative, develop, and 
budget for proposals for plans and projects and to submit such plans and 
projects to the Secretary for approval;
    (c) To administer directly or through contract the provisions of 
this subpart in accordance with its terms and provisions;
    (d) To develop and submit to the Secretary for the Secretary's 
approval, plans and projects conducted either by the Board or others;
    (e) To prepare and submit to the Secretary for the Secretary's 
approval, which is required for the following to be implemented:
    (1) Budgets on a fiscal period basis of its anticipated expenses and 
disbursements in the administration of this subpart, including the 
projected cost of plans and projects to be conducted by the Board 
directly or by way of contract or agreement; and
    (2) The budget, plans, or projects for which State associations are 
to receive funds under Sec.1230.72, including a general description of 
the proposed plan and project contemplated therein;
    (f) With the approval of the Secretary, to enter into contracts or 
agreements with any person for the development and conduct of activities 
authorized under this subpart and for the payment of the cost thereof 
with funds collected through assessments pursuant to Sec.1230.71. Any 
such contract or agreement shall provide that:
    (1) The contracting party shall develop and submit to the Board a 
plan or project together with a budget or budgets which shall show the 
estimated cost to be incurred for such plan or project;

[[Page 328]]

    (2) Any such plan or project shall become effective upon approval of 
the Secretary; and
    (3) The contracting party shall keep accurate records of all of its 
relevant transactions and make periodic reports to the Board of relevant 
activities conducted and an accounting for funds received and expended, 
and such other reports as the Secretary or the Board may require. The 
Secretary or employees of the Board may audit periodically the records 
of the contracting party;
    (g) To appoint or employ staff persons as it may deem necessary, to 
define the duties and determine the compensation of each, to protect the 
handling of Board funds through fidelity bonds, and to conduct routine 
business.
    (h) To disseminate information to or communicate with producers or 
State associations through programs or by direct contact utilizing the 
public postage system or other systems;
    (i) To select committees and subcommittees of Board members and to 
adopt such rules and by laws for the conduct of its business as it may 
deem advisable;
    (j) To utilize advisory committees of persons other than Board 
members to assist in the development of plans or projects and pay the 
reasonable expenses and fees of the members of such committees;
    (k) To prescribe rules and regulations necessary to effectuate the 
terms and provisions of this subpart;
    (l) To recommend to the Secretary amendments to this subpart;
    (m) With the approval of the Secretary, to invest, pending 
disbursement pursuant to a plan or project, funds collected through 
assessments authorized under Sec.1230.71 in, and only in, an 
obligation of the United States, a general obligation of any State or 
any political subdivision thereof, an interest-bearing account or 
certificate of deposit of a bank that is a member of the Federal Reserve 
System, or an obligation fully guaranteed as to principal and interest 
by the United States.
    (n) To maintain such books and records, which shall be available to 
the Secretary for inspection and audit, and prepare and submit such 
reports as the Secretary may prescribe from time to time, and to make 
appropriate accounting with respect to the receipt and disbursement of 
all funds entrusted to it;
    (o) To prepare and make public and available to producers and 
importers at least annually, a report of its activities carried out and 
an accounting of funds received and expended;
    (p) To have an audit of its financial statements conducted by a 
certified public accountant in accordance with generally accepted 
auditing standards at the end of each fiscal period and at such other 
times as the Secretary may request, and to submit a copy of each such 
audit report to the Secretary;
    (q) To receive, investigate, and report to the Secretary complaints 
of violations of the provisions of this subpart;
    (r) To submit to the Secretary such information pursuant to this 
subpart as the Secretary may request; and
    (s) To carry out an effective and coordinated program of promotion, 
research, and consumer information designed to strengthen the position 
of the pork industry in the marketplace and maintain, develop, and 
expand markets for pork and pork products.

[51 FR 31903, Sept. 5, 1986, as amended at 53 FR 30245, Aug. 11, 1988]

              Promotion, Research, and Consumer Information



Sec.1230.60  Promotion, research, and consumer information.

    (a) The Board shall receive and evaluate, or, on its own initiative, 
develop, and submit to the Secretary for approval, any plans and 
projects. Such plans and projects shall provide for:
    (1) The establishment, issuance, effectuation, and administration of 
appropriate plans and projects for promotion, research, and consumer 
information with respect to pork and pork products designed to 
strengthen the position of the pork industry in the marketplace and to 
maintain, develop, and expand domestic and foreign markets for pork and 
pork products;
    (2) The establishment and conduct of research and studies with 
respect to the sale, distribution, marketing, and utilization of pork 
and pork products and the creation of new products thereof, to the end 
that marketing and utilization of pork and pork products may

[[Page 329]]

be encouraged, expanded, improved, or made more acceptable.
    (b) Each plan and project shall be periodically reviewed or 
evaluated by the Board to ensure that the plan and project contributes 
to an effective and coordinated program of promotion, research, and 
consumer information. If it is found by the Board that any such plan and 
project does not further the purposes of the Act, the Board shall 
terminate such plan and project.
    (c) No plan or project shall make a false or misleading claim on 
behalf of pork or a pork product or a false or misleading statement with 
respect to an attribute or use of a competing product.
    (d) No plan or project shall undertake to advertise or promote pork 
or pork products by private brand or trade name unless such 
advertisement or promotion is specifically approved by the Board, with 
the concurrence of the Secretary.

                        Expenses and Assessments



Sec.1230.70  Expenses.

    (a) The Board is authorized to incur such expenses (including 
provision for a reasonable reserve that would permit an effective 
promotion, research, and consumer information program to continue in 
years when the amount of assessments may be reduced) as the Secretary 
finds are reasonable and likely to be incurred by the Board for its 
administration, maintenance, and functioning and to enable it to 
exercise its powers and perform its duties in accordance with the 
provisions of this subpart, including financing plans and projects. Such 
expenses shall be paid from assessments collected pursuant to Sec.
1230.71 and other funds available to the Board, including donations.
    (b) The Board shall reimburse the Secretary, from assessments 
collected pursuant to Sec.1230.71, for reasonable administrative 
expenses incurred by the Department with respect to this subpart after 
January 1, 1986, including any expenses reasonably incurred for the 
conduct of elections of nominees for appointment to the initial Delegate 
Body and for the conduct of referenda.



Sec.1230.71  Assessments.

    (a)(1) Each producer producing in the United States a porcine animal 
raised as a feeder pig that is sold shall pay an assessment on that 
animal, unless such producer demonstrates to the Board by appropriate 
documentation that an assessment was previously paid on that animal as a 
feeder pig.
    (2) Each producer producing in the United States a porcine animal 
raised for slaughter that is sold shall pay an assessment on that 
animal, unless such producer demonstrates to the Board by appropriate 
documentation that an assessment was previously paid on that animal as a 
market hog.
    (3) Each producer producing in the United States a porcine animal 
raised for slaughter that such producer slaughters for sale shall pay an 
assessment on that animal unless such producer demonstrates to the Board 
by appropriate documentation that an assessment was previously paid on 
that animal as a market hog.
    (4) Each producer producing in the United States a porcine animal 
raised for breeding stock that is sold shall pay an assessment on that 
animal, unless such producer demonstrates to the Board by appropriate 
documentation that an assessment was previously paid by a person on that 
animal as breeding stock.
    (5) Each importer importing a porcine animal, pork, or pork product 
into the United States shall pay an assessment on that porcine animal, 
pork, or pork product, unless such importer demonstrates to the Board by 
appropriate documentation that an assessment was previously paid for 
that porcine animal, pork, or pork product.
    (b)(1) Each purchaser of a porcine animal raised by a producer as a 
feeder pig or market hog shall collect an assessment on such porcine 
animal if an assessment is due pursuant to paragraph (a) of this 
section, and shall remit that assessment to the Board. For the purposes 
of collection and remittance of assessments, any person engaged as a 
commission merchant, auction market, or livestock market in the business 
of receiving such porcine animals for sale on commission for or on 
behalf of a producer shall be deemed to be a purchaser.

[[Page 330]]

    (2) Assessments on porcine animals raised as breeding stock which 
are sold by a commission merchant, auction, market, or livestock market 
in the business of receiving such porcine animals for sale on commission 
for or on behalf of a producer shall be collected and remitted by the 
commission merchant, auction market, or livestock market selling such 
porcine animals.
    (3) Each producer of porcine animals slaughtered for sale by the 
producer or sold directly to a consumer in connection with a custom 
slaughter operation shall remit an assessment to the Board if an 
assessment is due pursuant to paragraph (a) of this section.
    (4) Assessments on domestic porcine animals shall be remitted in the 
form of a negotiable instrument made payable to the ``National Pork 
Board,'' which, together with the reports required by Sec.1230.80, 
shall be sent to the address designated by the Board.
    (5) Each importer of a porcine animal, pork, or pork product shall 
remit an assessment to the Customs Service at the time such porcine 
animal, pork, or pork product is imported or in such manner as may be 
established by regulations prescribed by the Board and approved by the 
Secretary, if an assessment is due pursuant to paragraph (a) of this 
section.
    (c) The initial rate of assessment shall be 0.25 percent of market 
value.
    (d) The rate of assessment may, upon the recommendation of the 
Delegate Body, be increased by regulations prescribed by the Board and 
approved by the Secretary by no more than 0.1 percent of such market 
value per fiscal period to a total of not more than 0.5 percent of 
market value.
    (e) Assessments on imported pork and pork products shall be 
expressed in an amount per pound for each type of pork or pork product 
subject to assessment, which shall be established by regulations 
prescribed by the Board and approved by the Secretary.

[51 FR 31903, Sept. 5, 1986; 51 FR 36383, Oct. 10, 1986; 53 FR 1910, 
Jan. 25, 1988; 53 FR 30245, Aug. 11, 1988; 56 FR 6, Jan. 2, 1991]



Sec.1230.72  Distribution of assessments.

    Assessments remitted to the Board shall be distributed as follows:
    (a) Each State association shall receive on a monthly basis, a 
percentage determined by the Delegate Body or 16.5 percent, whichever is 
higher, of the net assessments attributable to that State. The net 
assessments attributable to a State is the total amount of assessments 
received from producers in a State.
    (b) A State association which was conducting a pork promotion 
program in the period from July 1, 1984 to June 30, 1985, shall receive 
additional amounts at such times as the Board may determine, so that the 
total amount received on an annual basis would be equal to the amount 
that would have been collected in such State pursuant to the pork 
promotion program in existence in such State from July 1, 1984, to June 
30, 1985, had the porcine animals subject to assessment, been produced 
from July 1, 1984, to June 30, 1985, and been subject to the rates of 
assessment then in effect from such State to the Council and other 
national entities involved in pork promotion, research, and consumer 
information. This paragraph shall apply to a State association only if 
the annual amount determined under this paragraph would be greater than 
the annual amount determined under paragraph (a) of this section.
    (c) The Council shall receive on a monthly basis 35 percent of the 
net assessments until after the referendum is conducted, and 25 percent 
thereafter and until 12 months after the referendum.

[51 FR 31903, Sept. 5, 1986, as amended at 60 FR 58501, Nov. 28, 1995]



Sec.1230.73  Uses of distributed assessments.

    (a) Each State association shall use its distribution of assessments 
pursuant to Sec.1230.72, as well as any proceeds from the investment 
of such funds pending their use, for financing plans and projects and 
the administrative expenses incurred in connection therewith, including 
the cost of administering nominations and elections of producer members 
of the Delegate Body.
    (b) The Council shall use its distribution of assessments pursuant 
to Sec.1230.72, as well as any proceeds from

[[Page 331]]

the investment of such funds pending their use, for financing plans and 
projects and the Council's administrative expenses.
    (c) The Board shall use its distribution of assessments pursuant to 
Sec.1230.72, as well as any proceeds from the investment of such funds 
pending their use, for:
    (1) Financing plans and projects;
    (2) The Board's expenses for the Board's administration, 
maintenance, and functioning as authorized by the Secretary;
    (3) Accumulation of a reserve not to exceed one fiscal period's 
budget to permit continuation of an effective promotion, research, and 
consumer information program in years when assessment amounts may be 
reduced; and
    (4) The Secretary's administrative costs in carrying out this part.



Sec.1230.74  Prohibited use of distributed assessments.

    (a) No funds collected under this subpart shall in any manner be 
used for the purpose of influencing legislation as that term is defined 
in section 4911 (d) and (e)(2) of the Internal Revenue Code of 1954, or 
for the purpose of influencing governmental policy or action except in 
recommending to the Secretary amendments to this part.
    (b) Organizations receiving distributions of assessments from the 
Board shall furnish the Board with annual financial statements audited 
by a certified public accountant of all funds distributed to such 
organizations pursuant to this subpart and any other reports as may be 
required by the Secretary or the Board in order to verify the use of 
such funds.

[51 FR 31903, Sept. 5, 1986, as amended at 53 FR 30245, Aug. 11, 1988; 
60 FR 33683, June 29, 1995]



Sec.1230.75  Adjustment of accounts.

    Whenever the Board or the Department determines, through an audit of 
a person's reports, records, books or accounts or through some other 
means that additional money is due the Board or that money is due such 
person from the Board, such person shall be notified of the amount due. 
Any amount due the Board shall be remitted to the Board by the next date 
for remitting assessments as provided in Sec.1230.71(b)(3). Any 
overpayment to the Board shall be credited to the account of the person 
remitting the overpayment and shall be applied against amounts due in 
succeeding months except that the Board shall make prompt payment when 
an overpayment cannot be adjusted by a credit.



Sec.1230.76  Charges.

    Any assessment not paid when due shall be increased 1.5 percent each 
month beginning with the day following the date such assessment was due. 
Any remaining amount due, which shall include any unpaid charges 
previously made pursuant to this section, shall be increased at the same 
rate on the corresponding day of each month thereafter until paid. For 
the purpose of this section, any assessment that was determined at a 
date later than prescribed by this subpart because of a person's failure 
to submit a report to the Board when due shall be considered to have 
been payable by the date it would have been due if the report had been 
filed when due. The timeliness of a payment to the Board shall be based 
on the applicable postmark date or the date actually received by the 
Board, whichever is earlier.



Sec.1230.77  [Reserved]

                       Reports, Books, and Records



Sec.1230.80  Reports.

    Each person responsible for collecting or remitting any assessment 
under Sec.1230.71(b) shall report at the time for remitting 
assessments to the Board the following information:
    (a) The quantity and market value of the porcine animals subject to 
assessment;
    (b) The amount of assessment collected;
    (c) The month the assessment was collected;
    (d) The State where the porcine animals were produced; and
    (e) Such other information as may be required by regulations 
prescribed by the Board and approved by the Secretary.

[[Page 332]]



Sec.1230.81  Books and records.

    Each person who is subject to this subpart shall maintain and, 
during normal business hours, make available for inspection by employees 
of the Board and the Secretary such books and records as are necessary 
to carry out the provision of this subpart, including such records as 
are necessary to verify any required reports. Such records shall be 
retained for at least two years beyond the fiscal period of their 
applicability.



Sec.1230.82  Confidential treatment.

    All information obtained from the books, records or reports required 
to be maintained under Sec. Sec.1230.80 and 1230.81 of this subpart 
shall be kept confidential by all persons, including employees and 
agents and former employees and agents of the Board, all officers and 
employees and all former officers and employees of the Department, and 
by all officers and all employees and all former officers and employees 
of contracting parties having access to such information, and shall not 
be available to Board members. Only those persons having a specific need 
for such information in order to effectively implement, administer, or 
enforce the provisions of this subpart shall have access to such 
information. In addition, only such information so furnished or acquired 
shall be disclosed as the Secretary deems relevant and then only in a 
suit or administrative hearing brought at the direction, or upon the 
request, of the Secretary or to which the Secretary or any officer of 
the United States is a party, and involving this subpart. Nothing in 
this section shall be deemed to prohibit:
    (a) The issuance of general statements based upon the reports of a 
number of persons subject to this subpart or of statistical data 
collected therefrom, which statements or data do not identify the 
information furnished by any person; or
    (b) The publication, by direction of the Secretary, of the name of 
any person who has been adjudged to have violated this subpart, together 
with a statement of the particular provisions of this subpart violated 
by such person.

                              Miscellaneous



Sec.1230.85  Proceedings after termination.

    (a) Upon the termination of this subpart, the Board shall recommend 
not more than five of its members to the Secretary to serve as trustees 
for the purpose of liquidating the affairs of the Board. Such persons, 
upon designation by the Secretary, shall become trustees of all the 
funds and property owned, in the possession of, or under the control of, 
the Board, including unpaid claims or property not delivered or any 
other claim existing at the time of such termination.
    (b) The said trustees shall:
    (1) Continue in such capacity until discharged by the Secretary;
    (2) Carry out the obligations of the Board under any contract or 
agreement;
    (3) From time to time account for all receipts and disbursements and 
deliver all property on hand together with all books and records of the 
Board and of the trustees, to such persons as the Secretary may direct; 
and
    (4) Upon the request of the Secretary, execute such assignments or 
other instruments necessary or appropriate to vest in such persons full 
title and right to all of the funds, property, and claims vested in the 
Board or the trustees pursuant to this subpart.
    (c) Any residual funds not required to defray the necessary expenses 
of liquidation shall be turned over to the Secretary to be used, to the 
extent practicable, in the interest of continuing one or more of the 
plans and projects authorized pursuant to this subpart.



Sec.1230.86  Effect of termination or amendment.

    Unless otherwise expressly provided by the Secretary, the 
termination of this subpart or of any regulation issued pursuant hereto, 
or the issuance of any amendment to either thereof, shall not:
    (a) Affect or waive any right, duty, obligation, or liability which 
shall have arisen or which may hereafter arise in connection with any 
provision of this subpart or any regulation issued thereunder;

[[Page 333]]

    (b) Release or extinguish any violation of this subpart or any 
regulation issued thereunder; or
    (c) Affect or impair any rights or remedies of the United States, 
the Secretary, or any person with respect to any such violation.



Sec.1230.87  Personal liability.

    No member or employee of the Board shall be held personally liable, 
either individually or jointly, in any way whatsoever to any person for 
errors in judgment, mistakes, or other acts of either commission or 
omission, as such member or employee, except for acts of dishonesty or 
willful misconduct.



Sec.1230.88  Patents, copyrights, inventions, and publications.

    Any patents, copyrights, trademarks, inventions, or publications 
developed through the use of funds collected under the provisions of 
this subpart shall be the property of the United States Government as 
represented by the Board, and shall, along with any rents, royalties, 
residual payments, or other income from the rental, sale, leasing, 
franchising, or other uses of such patents, copyrights, inventions, or 
publications inure to the benefit of the Board as income and be subject 
to the same fiscal, budget, and audit controls as other funds of the 
Board. Upon termination of this subpart, Sec.1230.85 shall apply to 
determine disposition of all such property.



Sec.1230.89  Amendments.

    The Secretary may from time to time amend provisions of this part. 
Any interested person or organization affected by the provisions of the 
Act may propose amendments to the Secretary.



Sec.1230.90  Separability.

    If any provision of this subpart is declared invalid or the 
applicability thereof to any person or circumstances is held invalid, 
the validity of the remainder of this subpart or the applicability 
thereof to other persons or circumstances shall not be affected thereby.



Sec.1230.91  Paperwork Reduction Act assigned number.

    The information collection and recordkeeping requirements contained 
in this subpart have been approved by the Office of Management and 
Budget (OMB) under the provisions of 44 U.S.C. Chapter and have been 
assigned OMB Control Number 0851-0151.



                     Subpart B_Rules and Regulations

    Source: 53 FR 1911, Jan. 25, 1988, unless otherwise noted.

                               Definitions



Sec.1230.100  Terms defined.

    As used throughout this subpart, unless the context otherwise 
requires, terms shall have the same meaning as the definition of such 
terms in Subpart A of this part.



Sec.1230.102  Exemption.

    (a) A producer who operates under an approved National Organic 
Program (7 CFR part 205) (NOP) organic production system plan may be 
exempt from the payment of assessments under this part, provided that:
    (1) Only agricultural products certified as ``organic'' or ``100 
percent organic'' (as defined in the NOP) are eligible for exemption;
    (2) The exemption shall apply to all certified ``organic'' or ``100 
percent organic'' (as defined in the NOP) products of a producer 
regardless of whether the agricultural commodity subject to the 
exemption is produced by a person that also produces conventional or 
nonorganic agricultural products of the same agricultural commodity as 
that for which the exemption is claimed;
    (3) The producer maintains a valid certificate of organic operation 
as issued under the Organic Foods Production Act of 1990 (7 U.S.C. 6501-
6522) (OFPA) and the NOP regulations issued under OFPA (7 CFR part 205); 
and
    (4) Any producer so exempted shall continue to be obligated to pay 
assessments under this part that are associated with any agricultural 
products that do not qualify for an exemption under this section.

[[Page 334]]

    (b) To apply for exemption under this section, a producer shall 
submit a request to the Board on an Organic Exemption Request Form (Form 
AMS-15) at any time during the year initially, and annually thereafter 
on or before January 1, for as long as the producer continues to be 
eligible for the exemption.
    (c) A producer request for exemption shall include the following:
    (1) The applicant's full name, company name, address, telephone and 
fax numbers, and email address;
    (2) Certification that the applicant maintains a valid certificate 
of organic operation issued under the OFPA and the NOP;
    (3) Certification that the applicant produces organic products 
eligible to be labeled ``organic'' or ``100 percent organic'' under the 
NOP;
    (4) A requirement that the applicant attach a copy of their 
certificate of organic operation issued by a USDA-accredited certifying 
agent under the OFPA and the NOP;
    (5) Certification, as evidenced by signature and date, that all 
information provided by the applicant is true; and
    (6) Such other information as may be required by the Board, with the 
approval of the Secretary.
    (d) If a producer complies with the requirements of this section, 
the Board will grant an assessment exemption and issue a Certificate of 
Exemption to the producer within 30 days. If the application is 
disapproved, the Board will notify the applicant of the reason(s) for 
disapproval within the same timeframe.
    (e) The producer shall provide a copy of the Certificate of 
Exemption to each person responsible for collecting and remitting the 
assessment to the Board.
    (f) The person responsible for collecting and remitting the 
assessment to the Board shall maintain records showing the exempt 
producer's name and address and the exemption number assigned by the 
Board.
    (g) An importer who imports products that are eligible to be labeled 
as ``organic'' or ``100 percent organic'' under the NOP, or certified as 
``organic'' or ``100 percent organic'' under a U.S. equivalency 
arrangement established under the NOP, may be exempt from the payment of 
assessments on those products. Such importer may submit documentation to 
the Board and request an exemption from assessment on certified 
``organic'' or ``100 percent organic'' porcine animals or pork and pork 
products on an Organic Exemption Request Form (Form AMS-15) at any time 
initially, and annually thereafter on or before January 1, as long as 
the importer continues to be eligible for the exemption. This 
documentation shall include the same information required of producers 
in paragraph (c) of this section. If the importer complies with the 
requirements of this section, the Board will grant the exemption and 
issue a Certificate of Exemption to the importer. The Board will also 
issue the importer an alphanumeric number valid for 1 year from the date 
of issue. This alphanumeric number should be entered by the importer on 
the Customs entry documentation. Any line item entry of ``organic'' or 
``100 percent organic'' porcine animals or pork and pork products 
bearing this alphanumeric number assigned by the Board will not be 
subject to assessments. Any importer so exempted shall continue to be 
obligated to pay assessments under this part that are associated with 
any imported agricultural products that do not qualify for an exemption 
under this section.
    (h) The exemption will apply immediately following the issuance of 
the Certificate of Exemption.
    (i) An importer who is exempt from payment of assessments under 
paragraph (g) of this section shall be eligible for reimbursement of 
assessments collected by Customs on certified ``organic'' or ``100 
percent organic'' porcine animals or pork and pork products and may 
apply to the Secretary for a reimbursement. The importer would be 
required to submit satisfactory proof to the Secretary that the importer 
paid the assessment on exempt organic products.

[70 FR 2760, Jan. 14, 2005, as amended at 80 FR 82023, Dec. 31, 2015]

                               Assessments



Sec.1230.110  Assessments on imported pork and pork products.

    (a) The following Harmonized Tariff Schedule (HTS) categories of 
imported

[[Page 335]]

live porcine animals are subject to assessment at the rate specified.

------------------------------------------------------------------------
      Live porcine animals        Article description      Assessment
------------------------------------------------------------------------
0103.10.0000...................  Purebred breeding     0.40 percent
                                  animals.              Customs Entered
                                                        Value.
0103.91.00.....................  Other: Weighing less
                                  than 50 kg each.
0103.91.0010...................  Weighing less than 7  0.40 percent
                                  kg each.              Customs Entered
                                                        Value.
0103.91.0020...................  Weighing 7 kg or      0.40 percent
                                  more but less than    Customs Entered
                                  23 kg each.           Value.
0103.91.0030...................  Weighing 23 kg or     0.40 percent
                                  more but less than    Customs Entered
                                  50 kg each.           Value.
0103.92.00.....................  Weighing 50 kg or
                                  more each.
0103.92.0010...................  Imported for          0.40 percent
                                  immediate slaughter.  Customs Entered
                                                        Value.
0103.92.0090...................  Other...............  0.40 percent
                                                        Customs Entered
                                                        Value.
------------------------------------------------------------------------

    (b) The following HTS categories of imported pork and pork products 
are subject to assessment at the rates specified.

----------------------------------------------------------------------------------------------------------------
                                                                                                 Assessment
            Pork and pork products                          Article description            ---------------------
                                                                                             Cents/lb   Cents/kg
----------------------------------------------------------------------------------------------------------------
0203..........................................  Meat of swine, fresh, chilled, or frozen:
                                                 Fresh or chilled:
0203.11.0000..................................  Carcasses and half-carcasses..............        .20    .440920
0203.12.1010..................................  Processed hams and cuts thereof, with bone        .20    .440920
                                                 in.
0203.12.1020..................................  Processed shoulders and cuts thereof, with        .20    .440920
                                                 bone in.
0203.12.9010..................................  Other hams and cuts thereof, with bone in.        .20    .440920
0203.12.9020..................................  Other shoulders and cuts thereof, with            .20    .440920
                                                 bone in.
0203.19.2010..................................  Processed spare ribs......................        .23    .507058
0203.19.2090..................................  Processed other...........................        .23    .507058
0203.19.4010..................................  Bellies...................................        .20    .440920
0203.19.4090..................................  Other.....................................        .20    .440920
0203.21.0000..................................  Frozen carcasses and half-carcasses.......        .20    .440920
0203.22.1000..................................  Frozen-processed hams, shoulders, and cuts        .20    .440920
                                                 thereof, with bone in.
0203.22.9000..................................  Frozen-other hams, shoulders, and cuts            .20    .440920
                                                 thereof, with bone in.
0203.29.2000..................................  Frozen processed other....................        .23    .507058
0203.29.4000..................................  Frozen other: Other.......................        .20    .440920
0206..........................................  Edible offal of bovine animals, swine,
                                                 sheep, goats, horses, asses, mules or
                                                 hinnies, fresh, chilled, or frozen:.
0206.30.0000..................................  Of swine, fresh or chilled................        .20    .440920
0206.41.0000..................................  Of swine, frozen: Livers..................        .20    .440920
0206.49.0000..................................  Of swine, frozen: Other...................        .20    .440920
0210..........................................  Meat and edible meat offal, salted, in
                                                 brine, dried or smoked; edible flours and
                                                 meals of meat or meat offal:.
0210.11.0010..................................  Meat of swine: Hams and cuts thereof, with        .20    .440920
                                                 bone in.
0210.11.0020..................................  Meat of swine: Shoulders and cuts thereof,        .20    .440920
                                                 with bone in.
0210.12.0020..................................  Meat of swine: Bellies (streaky) and cuts         .20    .440920
                                                 thereof, Bacon.
0210.12.0040..................................  Meat of swine: Bellies (streaky) and cuts         .20    .440920
                                                 thereof, Other.
0210.19.0010..................................  Meat of swine: Canadian style bacon.......        .23    .507058
0210.19.0090..................................  Meat of Swine: Other......................        .23    .507058
1601..........................................  Sausages and similar products, of meat,
                                                 meat offal or blood; food preparations
                                                 based on these products:
1601.00.2010..................................  Pork canned...............................        .28    .617288
1601.00.2090..................................  Pork other................................        .28    .617288
1602..........................................  Other prepared or preserved meat, meat
                                                 offal or blood.
1602.41.2020..................................  Of swine: Boned and cooked and packed in          .30    .661380
                                                 airtight containers holding less than 1
                                                 kg.
1602.41.2040..................................  Of swine: Other boned and cooked and              .30    .661380
                                                 packed in airtight containers.
1602.41.9000..................................  Of swine: Other...........................        .20    .440920
1602.42.2020..................................  Of swine: Shoulders and cuts thereof:             .30    .661380
                                                 Boned and cooked and packed in airtight
                                                 containers holding less than 1 kg.
1602.42.2040..................................  Of swine: Shoulders and cuts thereof:             .30    .661380
                                                 Other boned and cooked and packed in
                                                 airtight containers.
1602.42.4000..................................  Of swine: Other shoulders and cuts thereof        .20    .440920
1602.49.2000..................................  Of swine: Other, including mixtures: Not          .28    .617288
                                                 containing cereals or vegetables: Boned
                                                 and cooked and packed in air-tight
                                                 containers.
1602.49.4000..................................  Of swine: Other, including mixtures: Not          .23    .507058
                                                 containing cereals or vegetables: Other.
1602.49.9000..................................  Of swine: Other, including mixtures: Other        .23    .507058
----------------------------------------------------------------------------------------------------------------


[[Page 336]]


[69 FR 9925, Mar. 3, 2004]



Sec.1230.111  Remittance of assessments on domestic porcine animals.

    Assessments on domestic porcine animals shall be remitted to the 
National Pork Board pursuant to Sec.1230.71(b) in accordance with the 
following remittance schedule.
    (a) Monthly assessments totaling $25 or more shall be remitted to 
the Board by the 15th day of the month following the month in which the 
porcine animals were marketed or by the 15th day following the end of a 
Board-approved, consecutive 4-week period in which the porcine animals 
were marketed.
    (b) Assessments totaling less than $25 during each month of a 
quarter in which the porcine animals were marketed may be accumulated 
and remitted by the 15th day of the month following the end of a 
quarter. The quarters shall be: January through March; April through 
June; July through September; October through December.
    (c) Assessments totaling $25 or more during any month of a quarter 
must be remitted by the 15th day of the month following the month of the 
quarter in which the assessments totaled $25 or more, together with any 
unremitted assessments from the previous month(s) of the quarter, if 
applicable.
    (d) Assessments collected during any calendar quarter and not 
previously remitted as described in paragraphs (b) or (c) of this 
section must be remitted by the 15th day of the month following the end 
of the quarter regardless of the amount.

[56 FR 6, Jan. 2, 1991]



Sec.1230.112  Rate of assessment.

    In accordance with Sec.1230.71(d) the rate of assessment shall be 
0.40 percent of market value.

[67 FR 58323, Sept. 16, 2002]



Sec.1230.113  Collection and remittance of assessments for the sale 
of feeder pigs and market hogs.

    Pursuant to the provisions of Sec.1230.71, purchasers of feeder 
pigs or market hogs shall collect assessments from producers if an 
assessment is due and shall remit those assessments to the Board. 
Failure of the purchaser to collect such assessment from a producer 
shall not relieve the producer of the obligation to pay the assessment. 
If the purchaser fails to collect the assessment when an assessment is 
due pursuant to Sec.1230.71, the producer (seller) shall remit the 
total amount of assessments due to the Board as set forth in Sec.
1230.111.

[65 FR 7283, Feb. 14, 2000]



Sec.1230.115  Submission of annual financial statements.

    State Pork Producer Associations, as defined in Sec.1230.25, that 
receive distributions of assessments pursuant to Sec.1230.72 and that 
receive less than $30,000 in assessments annually, may satisfy the 
requirements of Sec.1230.74(b) by providing to the Board unaudited 
annual financial statements prepared by State association staff members 
or individuals who prepare annual financial statements, provided that 
two members of the State association attest to and certify such 
financial statements. Notwithstanding any provisions of the Order to the 
contrary, State associations that receive less than $30,000 in 
distributed assessments annually and submit unaudited annual financial 
statements to the Board shall be required to submit an annual financial 
statement audited by a certified public accountant at least once every 5 
years, or more frequently if deemed necessary by the Board or the 
Secretary. The Board may elect to conduct its own audit of the annual 
financial statements of State Pork Producer Associations that receive 
less than $2,000 in distributed assessments annually, every 5 years in 
lieu of the required financial statements.

[60 FR 33683, June 29, 1995]

                              Miscellaneous



Sec.1230.120  OMB control number assigned pursuant to the Paperwork
Reduction Act.

    The information collection and recordkeeping requirements contained 
in this part have been approved by the Office of Management and Budget 
(OMB) under the provisions of 44 U.S.C. Chapter 35 and have been 
assigned OMB control number 0851-0151.

[[Page 337]]

Subpart C [Reserved]



Subpart D_Procedures for Nominations and Elections of Pork Producers and 
 Nominations of Importers for Appointment to the Initial National Pork 
                         Producers Delegate Body



Sec. Sec.1230.501-1230.512  [Reserved]



           Subpart E_Procedures for the Conduct of Referendum

    Source: 65 FR 43508, July 13, 2000, unless otherwise noted.

                               Definitions



Sec.1230.601  Act.

    The term Act means the Pork Promotion, Research, and Consumer 
Information Act of 1985 (7 U.S.C. 4801-4819) and any amendments thereto.



Sec.1230.602  Administrator, AMS.

    The term Administrator, AMS, means the Administrator of the 
Agricultural Marketing Service, or any officer or employee of the 
Department to whom there has heretofore been delegated or may hereafter 
be delegated the authority to act in the Administrator's stead.



Sec.1230.603  Administrator, FSA.

    The term Administrator, FSA, means the Administrator, of the Farm 
Service Agency, or any officer or employee of the Department to whom 
there has heretofore been delegated or may hereafter be delegated the 
authority to act in the Administrator's stead.



Sec.1230.604  Department.

    The term Department means the United States Department of 
Agriculture.



Sec.1230.605  Farm Service Agency.

    The term Farm Service Agency also referred to as ``FSA'' means the 
Farm Service Agency of the Department.



Sec.1230.606  Farm Service Agency County Committee.

    The term Farm Service Agency County Committee, also referred to as 
the FSA County Committee or COC, means the group of persons within a 
county elected to act as the Farm Service Agency County Committee.



Sec.1230.607  Farm Service Agency County Executive Director.

    The term Farm Service Agency County Executive Director also referred 
to as the CED, means the person employed by the FSA County Committee to 
execute the policies of the FSA County Committee and be responsible for 
the day-to-day operations of the FSA county office or the person acting 
in such capacity.



Sec.1230.608  Imported porcine animals, pork, and pork products.

    The term Imported porcine animals, pork, and pork products means 
those animals, pork, or pork products that are imported into the United 
States and subject to assessment under the harmonized tariff schedule 
numbers identified in Sec.1230.110 of the regulations.



Sec.1230.609  Importer.

    The term Importer means a person who imports porcine animals, pork, 
or pork products into the United States.



Sec.1230.610  Order.

    The term Order means the Pork Promotion, Research, and Consumer 
Information Order.



Sec.1230.611  Porcine animal.

    The term Porcine animal means a swine, that is raised:
    (a) As a feeder pig, that is, a young pig sold to another person to 
be finished over a period of more than 1 month for slaughtering;
    (b) For breeding purposes as seedstock and included in the breeding 
herd; and
    (c) As a market hog, slaughtered by the producer or sold to be 
slaughtered, usually within 1 month of such transfer.



Sec.1230.612  Person.

    The term Person means any individual, group of individuals, 
partnership, corporation, association, cooperative, or any other legal 
entity.

[[Page 338]]



Sec.1230.613  Pork.

    The term Pork means the flesh of a porcine animal.



Sec.1230.614  Pork product.

    The term Pork product means an edible product processed in whole or 
in part from pork.



Sec.1230.615  Producer.

    The term Producer means a person who produces porcine animals in the 
United States for sale in commerce.



Sec.1230.616  Public notice.

    The term Public notice means information regarding a referendum that 
would be provided by the Secretary, such as press releases, newspapers, 
electronic media, FSA county newsletters, and the like. Such notice 
would contain the referendum date and location, registration and voting 
requirements, rules regarding absentee voting, and other pertinent 
information.



Sec.1230.617  Referendum.

    The term Referendum means any referendum to be conducted by the 
Secretary pursuant to the Act whereby persons who have been producers 
and importers during a representative period would be given the 
opportunity to vote to determine whether producers and importers favor 
continuation of the Order.



Sec.1230.618  Representative period.

    The term Representative period means the 12-consecutive months prior 
to the first day of absentee and importer voting in the referendum. The 
representative period for this referendum is August 18, 1999, through 
August 17, 2000.



Sec.1230.619  Secretary.

    The term Secretary means the Secretary of Agriculture of the United 
States or any other officer or employee of the Department to whom there 
has been delegated or to whom authority may hereafter be delegated to 
act in the Secretary's stead.



Sec.1230.620  State.

    The term State means each of the 50 States.



Sec.1230.621  Voting period.

    The term Voting period means the 3-consecutive business day period 
for in-person voting.

                               Referendum



Sec.1230.622  General.

    (a) A referendum to determine whether eligible pork producers and 
importers favor continuation of the Pork Checkoff Program will be 
conducted in accordance with this subpart.
    (b) The Pork Checkoff Program will be terminated only if a majority 
of producers and importers voting in the referendum favor such 
termination.
    (c) The referendum will be conducted at the county FSA offices for 
producers and at FSA headquarters office in Washington, DC, for 
importers.



Sec.1230.623  Supervision of referendum.

    The Administrator, AMS, will be responsible for conducting the 
referendum in accordance with this subpart.



Sec.1230.624  Eligibility.

    (a) Eligible producers and importers. Persons eligible to register 
and vote in the referendum include:
    (1) Individual Producers. Each individual that owns and sells at 
least one hog or pig during the representative period and does so in his 
or her own name is entitled to cast one ballot.
    (2) Producers who are a corporation or other entity. Each 
corporation or other entity that owns and sells at least one hog or pig 
during the representative period is entitled to cast one ballot. A group 
of individuals, such as members of a family, a partnership, owners of 
community property, or a corporation engaged in the production of hogs 
and pigs will be entitled to only one vote; provided, however, that any 
member of a group may register to vote as a producer if he or she sells 
at least one hog or pig in his or her own name.
    (3) Importers. Each importer who imports hogs, pigs, pork, or pork 
products during the representative period is entitled to cast one 
ballot. A group of individuals, such as members of a family, a 
partnership, or a corporation engaged in the importation of hogs, pigs, 
pork,

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or pork products will be entitled to only one vote; provided, however, 
that any member of a group may register to vote as an importer if he or 
she imports hogs, pigs, pork, or pork products in his or her own name.
    (b) Proxy registration and voting. Proxy registration and voting is 
not authorized, except that an officer or employee of a corporate 
producer or importer, or any guardian, administrator, executor, or 
trustee of a producer's or importer's estate, or an authorized 
representative of any eligible producer or importer (other than an 
individual producer or importer), such as a corporation or partnership, 
may register and cast a ballot on behalf of that entity. Any individual 
who registers to vote in the referendum on behalf of any eligible 
producer or importer corporation or other entity must certify that he or 
she is authorized to take such action.



Sec.1230.625  Time and place of registration and voting.

    (a) Producers. The referendum shall be held for 3-consecutive days 
on September 19, 20, 21, 2000. Eligible producers shall register and 
vote on-site following the procedures in 1230.628. Producers shall 
register and vote during the normal business hours of each county FSA 
office or request absentee ballots from the county FSA offices by mail, 
telephone, or facsimile, or pick up an absentee ballot in-person. The 
absentee voting period shall be from August 18, 2000, through September 
21, 2000.
    (b) Importers. Importer voting shall take place during the same time 
period provided producers for in-person and absentee voting in the 
referendum. The referendum shall be conducted by mail ballot by the FSA 
headquarters office in Washington, DC, between August 18, 2000, through 
September 21, 2000.



Sec.1230.626  Facilities for registering and voting.

    (a) Producers. Each county FSA office shall provide:
    (1) Adequate facilities and space to permit producers of hogs and 
pigs to register and to mark their ballots in secret;
    (2) A sealed box or other designated receptacle for registration 
forms and ballots that is kept under observation during office hours and 
secured at all times; and
    (3) Copies of the Order for review.
    (b) Absentee ballots. Each FSA county office shall provide each 
producer an absentee ballot package upon request. Producers can pick up 
an absentee ballot in-person or request it by telephone, mail, or 
facsimile. The FSA county office will provide absentee ballots by mail 
for all requests received by telephone, mail, or facsimile. The FSA 
county office shall record date of receipt of the ``Pork Referendum'' 
envelope containing the completed absentee ballot on the Absentee Voter 
Request List and place it unopened in a secure ballot box.
    (c) Importers. The FSA headquarters office in Washington, DC, will:
    (1) Mail ballot packages to eligible importers upon request;
    (2) Have a sealed box or other designated receptacle for 
registration forms and ballots that is kept under observation during 
office hours and secured at all times; and
    (3) Mail copies of the Order to importers if requested by mail, 
telephone, or facsimile. Importers can also pickup a ballot in-person.



Sec.1230.627  Registration form and ballot.

    (a) Producers. (1) A ballot (Form LS-72) and combined registration 
and certification form (Form LS-72-2) will be used for voting in-person. 
The information required on the registration form includes name, 
address, and telephone number. Form LS-72-2 also contains the 
certification statement referenced in Sec.1230.628. The ballot will 
require producers to check a ``yes'' or ``no.''
    (2) A combined registration and voting form (Form LS-73) will be 
used for absentee voting. The information required on this combined 
registration and voting form includes name, address, and telephone 
number. Form LS-73 also contains the certification statement referenced 
in Sec.1230.628. The ballot will require producers to check ``yes'' or 
``no.''
    (b) Importers. A combined registration and ballot form (Form LS-76) 
will be

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used for importer voting. The information required on this combined 
registration and ballot form includes name, address, and telephone 
number. Form LS-76 also contains the certification statement referenced 
in Sec.1230.629. The ballot will require importers to check ``yes'' or 
``no.''



Sec.1230.628  Registration and voting procedures for producers.

    (a) Registering and voting in-person. (1) Each eligible producer who 
wants to vote whether as an individual or as a representative of a 
corporation or other entity shall register during the 3-day in-person 
voting period at the county FSA office where FSA maintains and processes 
the individual producer's or corporation's or other entities' 
administrative farm records. A producer voting as an individual or as a 
representative of a corporation or other entity not participating in FSA 
programs, shall register and vote in the county FSA office serving the 
county where the individual producer or corporation or other entity owns 
hogs or pigs. An individual or an authorized representative of a 
corporation or other entity who owns hogs or pigs in more than one 
county shall register and vote in the FSA county office where the 
individual or corporation or other entity does most of their business. 
Producers shall be required to record on the In-Person Voter 
Registration List (Form LS-75) their name and address, and if 
applicable, the name and address of the corporation or other entity they 
represent before they can receive a registration form and ballot. To 
register, producers shall complete the in-person registration and 
certification form (Form LS-72-2) and certify that:
    (i) They or the corporation or other entity they represent were 
producers during the specified representative period; and
    (ii) The person voting on behalf of a corporation or other entity 
referred to in Sec.1230.612 is authorized to do so.
    (2) Each eligible producer who has not voted by means of an absentee 
ballot may cast a ballot in-person at the location and time set forth in 
Sec.1230.625 and on September 19, 20, 21, 2000. Eligible producers who 
record their names and addresses and, if applicable, the name and 
address of the corporation or other entity they are authorized to 
represent on the In-Person Voter Registration List (Form LS-75) will 
receive a combined registration and certification form printed on an 
envelope (Form LS-72-2) and a ballot (Form LS-72). Producers will enter 
the information requested on the combined registration and certification 
form/envelope (Form LS-72-2) as indicated above. Producers will then 
mark their ballots to indicate ``yes'' or ``no.'' Producers will place 
their completed ballots in an envelope marked ``Pork Ballot'' (Form LS-
72-1), seal and place it in the completed and signed registration form/
envelope marked ``Pork Referendum'' (Form LS-72-2), seal that envelope 
and personally place it in a box marked ``Ballot Box'' or other 
designated receptacle. Voting will be conducted on-site under the 
supervision of the county FSA County Executive Director (CED).
    (b) Absentee voting. (1) Eligible producers who are unable to vote 
in-person may request an absentee voting package consisting of a 
combined registration and absentee ballot form (Form LS-73) and two 
envelopes--one marked ``Pork Ballot'' (Form LS-72-1) and the other 
marked ``Pork Referendum'' (Form LS-73-1) by mail, telephone, facsimile, 
or by picking up one in-person from the county FSA office where FSA 
maintains and processes the producer's administrative farm records.
    (2) If a producer, whether requesting an absentee ballot as an 
individual or as an authorized representative of a corporation or other 
entity that does not participate in FSA programs, and therefore does not 
have administrative records at a county FSA office, he or she may 
request an absentee voting package by telephone, mail, facsimile, or 
pick it up in-person from the county FSA office serving the county where 
the individual or corporation or other entity owns hogs or pigs. An 
individual or authorized representative of a corporation or other 
entity, who owns hogs or pigs in more than one county can request an 
absentee ballot from the county FSA office where the producer

[[Page 341]]

or corporation or other entity does most of their business.
    (3) An absentee voting package will be mailed to producers by the 
FSA CED to the address provided by the prospective voter. Only one 
absentee registration form and absentee ballot will be provided to each 
eligible producer. The absentee ballots and registration forms may be 
requested during August 1, 2000, through September 18, 2000.
    (4) The county FSA office will enter on the Absentee Voter Request 
List (Form LS-74) the name and address of the individual or corporation 
or other entity requesting an absentee ballot and the date the forms 
were requested.
    (5) To register, eligible producers shall complete and sign the 
combined registration and certification form and absentee ballot (Form 
LS-73) and certify that:
    (i) They or the corporation or other entity they represent were 
producers during the specified representative period;
    (ii) If voting on behalf of a corporation or other entity referred 
to in Sec.1230.612, they are authorized to do so.
    (6) A producer, after completing the absentee voter registration 
form and marking the ballot, shall remove the ballot portion of the 
combined registration and absentee ballot form (Form LS-73) and seal the 
completed ballot in a separate envelope marked ``Pork Ballot'' (Form LS-
72-1) and place the sealed ``Pork Ballot'' envelope in the mailing 
envelope marked ``Pork Referendum'' (Form LS-73-1) along with the signed 
registration form. Producers are required to print their name and 
address on the mailing envelope marked ``Pork Referendum'' (Form LS-73-
1), and mail or hand deliver it to the county FSA office from which the 
producer or corporation or other entity obtained the absentee voting 
package. Absentee ballots returned in-person must be received by close 
of business on the last day of the in-person voting period, which is 
September 21, 2000. Ballots received after that date will be counted as 
invalid ballots.
    (7) Absentee ballots returned by mail have to be postmarked with a 
date not later than the last day of the in-person voting period, which 
is September 21, 2000, and be received in the county FSA office by the 
close of business on the 5th business day after the last day of the in-
person voting period, which is September 28, 2000. Absentee ballots 
received after that date will be counted as invalid ballots. Upon 
receiving the ``Pork Referendum'' envelope (Form LS-73-1) containing the 
registration form and ballot, the county FSA CED will record the date 
the ``Pork Referendum'' envelope (Form LS-73-1) containing the absentee 
ballot was received in the FSA county office on the Absentee Voter 
Request List (Form LS-74) opposite the name of the producer voting 
absentee. The county FSA CED will place it, unopened, in a secure ballot 
box.



Sec.1230.629  Registration and voting procedures for importers.

    (a) Individual importers, corporations, or other entities can obtain 
the registration and certification forms, ballots, and envelopes by mail 
from the following address: USDA, FSA, Operations Review and Analysis 
Staff, Attention: William A. Brown, P.O. Box 44366, Washington, DC 
20026-4366. Importers may pick up the voting materials in-person at 
USDA, FSA, Operations Review and Analysis Staff, Room 2741, South 
Agriculture Building, 1400 Independence Avenue, SW., Washington, DC. 
Importers may also request voting materials by facsimile or telephone. 
The facsimile number is 202/690-3354. The telephone number is 202/720-
6833.
    (b) When requesting a ballot, eligible importers will be required to 
submit a U.S. Customs Service Form 7501 showing that they paid the pork 
assessment during the representative period.
    (c) Upon receipt of a request and U.S. Customs Service Form 7501, 
the voting materials will be mailed to importers by the FSA headquarters 
office in Washington, DC, to the address provided by the importer or 
importer corporation or other entity. Only one mail ballot and 
registration form will be provided to each eligible importer. The forms 
must be requested during August 1, 2000, through September 21, 2000.
    (d) The FSA headquarters office in Washington, DC, will enter on the 
Importer Ballot Request List (Form LS-

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77) the name and address of the importer requesting a ballot and the 
date of the request.
    (e) To register, eligible importers will complete and sign the 
combined registration form and ballot (Form LS-76) and certify that:
    (1) To the best of their knowledge and belief the information 
provided on the form is true and accurate;
    (2) If voting on behalf of an importer corporation or other entity 
referred to in Sec.1230.612, they are authorized to do so.
    (f) Eligible importers, after completing the combined ballot and 
registration form, will remove the ballot portion of the combined 
registration and ballot form (Form LS-76) and seal the completed ballot 
in a separate envelope marked ``Pork Ballot'' (Form LS-72-1) and place 
the sealed ``Pork Ballot'' envelope in the mailing envelope marked 
``Pork Referendum'' (Form LS-73-1) along with the signed registration 
form. Importers, corporations, or other entities must legibly print 
their name and address on the mailing envelope marked ``Pork 
Referendum'' (Form LS-73-1), and mail the envelope to the FSA 
headquarters office at the following address: USDA, FSA, Operations 
Review and Analysis Staff, Attention: William A. Brown, Post Office Box 
44366, Washington, DC 20026-4366. Importers may hand deliver the ``Pork 
Referendum'' envelope to USDA, FSA, Operations Review and Analysis 
Staff, Room 2741, South Agriculture Building, 1400 Independence Avenue, 
SW., Washington, DC.
    (g) The ``Pork Referendum'' envelope (Form LS-73-1) containing the 
registration form and ballot has to be postmarked with a date not later 
than the last day of the in-person voting period, which is September 21, 
2000, and be received in the FSA headquarters office by the close of 
business on the 5th business day after the date of the last day of the 
in-person voting period, which is September 28, 2000. If delivered in-
person, it has to reach headquarters office not later than the last day 
of the in-person voting period. Ballots received after that date will be 
counted as invalid ballots. Upon receiving the ``Pork Referendum'' 
envelope (Form LS-73-1) containing the registration form and ballot, an 
FSA employee will record the date the ``Pork Referendum'' envelope 
containing the completed ballot was received in the FSA headquarters 
office in Washington, DC, on the Importer Ballot Request List (Form LS-
77) directly opposite the voting importer's name. The FSA employee will 
place the ``Pork Referendum'' envelope, unopened, in a secure ballot 
box.



Sec.1230.630  List of registered voters.

    (a) Producers. The In-Person Voter Registration List (Form LS-75) 
and the Absentee Voter Request List (Form LS-74) will be available for 
inspection during the 3 days of the voting period and during the 7 
business days following the date of the last day of the voting period at 
the county FSA office. The lists will be posted during regular office 
hours in a conspicuous public location at the FSA county office. The 
Absentee and In-Person Voter Registration Lists will be updated and 
posted daily. The complete In-Person Voter Request List (Form LS-75) 
will be posted in the FSA county office on the 1st business day after 
the date of the last day of the voting period. The complete Absentee 
Voter Request List (Form LS-74) will be posted in the FSA county office 
on the 6th business day after the date of the last day of the voting 
period.
    (b) Importers. The Importer Ballot Request List (Form LS-77) will be 
maintained by the FSA headquarters office in Washington, DC, and not 
posted.



Sec.1230.631  Challenge of votes.

    (a) Challenge period. During the dates of the 3-consecutive day 
voting period and the 7 business days following the voting period, the 
ballots of producers may be challenged at the FSA county office.
    (b) Who can challenge. Any person can challenge a producer's vote. 
Any person who wants to challenge shall do so in writing and shall 
include the full name of the individual or corporation or other entity 
being challenged. Each challenge of a producer vote must be made on a 
separate sheet of paper and each challenge must be signed by the 
challenger. The identity of the challenger will be kept confidential 
except

[[Page 343]]

as the Secretary may direct or as otherwise required by law.
    (c) Who can be challenged. Any producer having cast an in-person 
ballot or an absentee ballot whose name is posted on the In-Person Voter 
Registration List (Form LS-75) or the Absentee Voter Request List (Form 
LS-74) can be challenged. There is no challenge process for importers.
    (d) Notification of challenges. The FSA County Committee or its 
representative, acting on behalf the Administrator, AMS, will notify 
challenged producers as soon as practicable, but no later than 12 
business days after the date of the last day of the in-person voting 
period. FSA will notify all challenged persons that documentation such 
as sales documents, tax records, or other similar documents proving that 
the person owned and sold hogs or pigs during the representative period 
must be submitted or his or her vote will not be counted. The 
documentation must be provided to the FSA county offices within 5 
business days of notification and not later than 17 business days after 
the date of the last day of the voting period.
    (e) Determination of challenges. The FSA County Committee or its 
representative, acting on behalf of the Administrator, AMS, will make a 
determination concerning the challenge based on documentation provided 
by the producer and will notify challenged producers as soon as 
practicable, but no later than 22 business days after the date of the 
last day of the in-person voting period of its decision.
    (f) Challenged ballot. A challenge to a ballot shall be deemed to 
have been resolved if the determination of the FSA County Committee or 
its representative, acting on behalf of the Administrator, AMS, is not 
appealed within the time allowed for appeal or there has been a 
determination by the Administrator, AMS, after an appeal.
    (g) Appeal. A person declared to be ineligible to register and vote 
by the FSA County Committee or its representative, acting on behalf of 
the Administrator, AMS, can file an appeal at the FSA county office 
within 5 business days after the date of receipt of the letter of 
notification of ineligibility, but not later than November 2, 2000. The 
FSA county office shall send a producer's appeal by facsimile to the 
Administrator, AMS, on the date it is filed at the FSA county office or 
as soon as practical thereafter.
    (h) An appeal will be determined by the Administrator, AMS, as soon 
as practical, but in all cases not later than the 45th business day 
after the date of the last day of the voting period. The Administrator, 
AMS, shall send her decision on a producer's appeal to the FSA county 
office where the producer was initially challenged. The FSA county 
office shall notify the challenged producer of the Administrator's, AMS, 
determination on his or her appeal. The Administrator's, AMS, 
determination on an appeal shall be final.

[65 FR 43508, July 13, 2000, as amended at 65 FR 62579, Oct. 19, 2000]



Sec.1230.632  Receiving ballots.

    (a) Producers. A ballot shall be considered to be received on time 
if:
    (1) It was cast in-person in the county FSA office prior to the 
close of business on the date of the last day of the in-person voting 
period; or
    (2) It was cast as an absentee ballot, having a postmarked date not 
later than the last day of the in-person voting period and was received 
in the county FSA office not later than the close of business, 5 
business days after the last day of the in-person voting period.
    (b) Importers. A ballot shall be considered to be received on time 
if it had a postmarked date not later than the date of the last day of 
the in-person voting period and was received in the FSA headquarters 
office in Washington, DC, not later than the close of business, 5 
business days after the last day of the in-person voting period.



Sec.1230.633  Canvassing ballots.

    (a) Producers. (1) Counting the ballots. Under the supervision of 
FSA CED, acting on behalf of the Administrator, AMS, the in-person 
registration and certification form envelopes (Form LS-72-2) and the 
absentee ``Pork Referendum'' envelopes (Form LS-73-1) containing the 
``Pork Ballot'' envelopes for producer voters will be checked against 
the In-Person Voter Registration List (Form LS-75) and the

[[Page 344]]

Absentee Voter Request List (Form LS-74), respectively, to determine 
properly registered voters. The ballots of producers voting in-person 
whose names are not on the In-Person Voter Registration List (Form LS-
75), will be declared invalid. Likewise, the ballots of producers voting 
absentee whose names are not on the Absentee Voter Request List (Form 
LS-74) will be declared invalid. All ballots of challenged producer 
voters declared ineligible and invalid ballots will be kept separate 
from the other ballots and the envelopes containing these ballots will 
not be opened. The valid ballots will be counted on November 29, 2000, 
during regular business hours on the 46th business day after the last 
day of the in-person voting period. FSA county office employees will 
remove the sealed ``Pork Ballot'' envelopes (Form LS-72-1) from the 
registration form envelopes and ``Pork Referendum'' envelopes (absentee 
voting) envelopes of all eligible producer voters and all challenged 
producer voters determined to be eligible. After removing all ``Pork 
Ballot'' envelopes, FSA county employees will shuffle the sealed ``Pork 
Ballot'' envelopes or otherwise mix them up so that ballots cannot be 
matched with producers' names. After shuffling the ``Pork Ballot'' 
envelopes, FSA county employees will open them and count the ballots. 
The ballots will be counted as follows:
    (i) Number of eligible producers casting valid ballots;
    (ii) Number of producers favoring continuation of the Pork Checkoff 
Program;
    (iii) Number of producers favoring termination of the Pork Checkoff 
Program;
    (iv) Number of challenged producer ballots deemed ineligible;
    (v) Number of invalid ballots; and
    (vi) Number of spoiled ballots.
    (2) Invalid ballots. Ballots will be declared invalid if a producer 
voting in-person has failed to print his or her name and address on the 
In-Person Voter Registration List (Form LS-75) or if an absentee voter's 
name and address is not recorded on the Absentee Voter Request List 
(Form LS-74), or the registration form or ballot was incomplete or 
incorrectly completed.
    (3) Spoiled ballots. Ballots will be considered spoiled if they are 
mutilated or marked in such a way that it cannot be determined whether 
the voter is voting ``yes'' or ``no.'' Spoiled ballots shall not be 
considered as approving or disapproving the Pork Checkoff Program, or as 
a ballot cast in the referendum.
    (4) Confidentiality. All ballots shall be confidential and the 
contents of the ballots not divulged except as the Secretary may direct. 
The public may witness the opening of the ballot box and the counting of 
the votes but may not interfere with the process.
    (b) Importers--(1) Counting the ballots. FSA headquarters personnel, 
acting on behalf of the Administrator, AMS, will check the registration 
forms and ballots for all importer voters against the Importer Ballot 
Request List (Form LS-77) to determine properly registered voters. The 
ballots of importers voting whose names are not recorded on the Importer 
Ballot Request List (Form LS-77), will be declared invalid. All ballots 
of importer voters declared invalid will be kept separate from the other 
ballots and the envelopes containing these ballots will not be opened. 
The valid ballots will be counted on November 29, 2000, during regular 
office hours on the 46th business day after the date of the last day of 
the in-person voting period. FSA headquarter office employees will 
remove the sealed ``Pork Ballot'' envelope (Form LS-72-1) from the 
``Pork Referendum'' envelopes (Form LS-73-1) of all eligible importer 
voters. After removing all ``Pork Ballot'' envelopes, FSA headquarter 
employees will shuffle the sealed ``Pork Ballot'' envelopes or otherwise 
mix them up so that ballots cannot be matched with importers' names. 
After shuffling the ``Pork Ballot'' envelopes, FSA headquarters 
employees will open the envelopes and count the ballots. The ballots 
will be counted as follows:
    (i) Number of eligible importers casting valid ballots;
    (ii) Number of importers favoring continuation of the Pork Checkoff 
Program;
    (iii) Number of importers favoring termination of the Pork Checkoff 
Program;
    (iv) Number of importer ballots deemed invalid; and

[[Page 345]]

    (v) Number of spoiled ballots.
    (2) Invalid ballots. Ballots will be declared invalid if an importer 
voter's name was not recorded on the Importer Ballot Request List (Form 
LS-77), or the registration form or ballot was incomplete or incorrectly 
completed.
    (3) Spoiled ballots. Ballots will be considered spoiled if they were 
mutilated or marked in such a way that it cannot be determined whether 
the voter is voting ``yes'' or ``no.'' Spoiled ballots shall not be 
considered as a ballot cast in the referendum.
    (4) Confidentiality. All ballots shall be confidential and the 
contents of the ballots not divulged except as the Secretary may direct. 
The public can witness the opening of the ballot box and the counting of 
the votes but can not interfere with the process.



Sec.1230.634  FSA county office report.

    The FSA county office will notify the FSA State office of the 
results of the referendum. Each FSA county office will transmit the 
results of the referendum in its county to the FSA State office. Such 
report will include the information listed in Sec.1230.633. The 
results of the referendum in each county will be made available to the 
public, after the results of the referendum are announced by the 
Secretary. A copy of the report of results will be posted for 30 days in 
the FSA county office in a conspicuous place accessible to the public 
and a copy will be kept on file in the FSA county office for a period of 
at least 12 months after the referendum.



Sec.1230.635  FSA State office report.

    Each FSA State office will transmit to the Administrator, FSA, a 
written summary of the results of the referendum received from all FSA 
county offices within the State. The summary shall include the 
information on the referendum results contained in the reports from all 
county offices within each State and be certified by the FSA State 
Executive Director. The FSA State office will maintain a copy of the 
summary where it will be available for public inspection for a period of 
not less than 12 months.



Sec.1230.636  Results of the referendum.

    (a) The Administrator, FSA, will submit the combined results of the 
FSA State offices' results of the producers' vote and the FSA 
headquarters office results of the importers' vote to the Administrator, 
AMS. The Administrator, AMS, will prepare and submit to the Secretary a 
report of the results of the referendum. The results of the referendum 
will be announced by the Department in an official press release and 
published in the Federal Register. State reports on producer balloting, 
FSA headquarters office report on importer balloting, and related papers 
will be available for public inspection in the office of the Marketing 
Programs Branch, Livestock and Seed Program, AMS, USDA, Room 2627, South 
Agriculture Building, 1400 Independence Avenue, SW., Washington, DC.
    (b) If the Secretary deems it necessary, the report of producer 
voting results in any State or county or the report of importer voting 
results shall be reexamined and checked by such persons as may be 
designated by the Secretary.



Sec.1230.637  Disposition of ballots and records.

    (a) Producer ballots and records. Each FSA CED will place in sealed 
containers marked with the identification of the referendum, the voter 
registration list, absentee voter request list, voted ballots, 
challenged registration forms/envelopes, challenged absentee voter 
registration forms, challenged ballots found to be ineligible, invalid 
ballots, spoiled ballots, and county summaries. Such records will be 
placed under lock in a safe place under the custody of the FSA CED for a 
period of not less than 12 months after the referendum. If no notice to 
the contrary is received from the Administrator, FSA, by the end of such 
time, the records shall be destroyed.
    (b) Importer ballots and records. The FSA headquarters office in 
Washington, DC, will deliver the importers' U.S. Customs Service Form 
7501s, the voter registration list, voted ballots, invalid ballots, 
spoiled ballots, and national summaries and records to the Marketing 
Programs Branch, Livestock and Seed Program, AMS, USDA,

[[Page 346]]

Room 2627, South Agriculture Building, 1400 Independence Avenue, SW., 
Washington, DC. A Marketing Programs Branch employee will place the 
ballots and records in sealed containers marked with the identification 
of the referendum. Such ballots and records will be placed under lock in 
a safe place under the custody of the Marketing Programs Branch for a 
period of not less than 12 months after the referendum. If no notice to 
the contrary is received from the Administrator, AMS, by the end of such 
time, the records shall be destroyed.



Sec.1230.638  Instructions and forms.

    The Administrator, AMS, is authorized to prescribe additional 
instructions and forms not inconsistent with the provisions of this 
subpart to govern the conduct of the referendum.



Sec.1230.639  Additional absentee voter challenge period.

    (a) Absentee Voter Request List. The Absentee Voter Request List 
(Form LS-74) will be available for inspection during an additional 
challenge period of five business days (October 23, 2000-October 27, 
2000) at county FSA offices. The Absentee Voter Request List will be 
posted daily during regular office hours in a conspicuous public 
location at FSA county offices during the additional challenge period.
    (b) Who can challenge. Any person can challenge a producer's vote 
during the period provided in paragraph (a) of this section. Any person 
who wants to challenge shall do so in writing and shall include the full 
name of the individual or corporation or other entity being challenged. 
Each challenge of a producer vote must be made on a separate sheet of 
paper and each challenge must be signed by the challenger. The identity 
of the challenger will be kept confidential except as the Secretary may 
direct or as otherwise required by law.
    (c) Who can be challenged. Any person whose name is on the Absentee 
Voter Request List who was not subject to challenge during the September 
19, 2000, through October 2, 2000, challenge period may be challenged. 
Those producers whose names were listed on the Absentee Voter Request 
List and who were subject to challenge because the Absentee Voter 
Request List indicated they had returned their ballot are not subject to 
challenge during this additional 5-day period.
    (d) Notification of challenges. The FSA County Committee or its 
representative, acting on behalf of the Administrator, AMS, will notify 
challenged producers as soon as practicable, but no later than the 2nd 
business day (October 31, 2000) after the last day of the additional 
challenge period. FSA county offices will notify all challenged persons 
that documentation such as sales documents, tax records, or other 
similar documents proving that the person owned and sold hogs or pigs 
during the representative period must be submitted or his or her vote 
will not be counted. The documentation must be provided to FSA county 
offices not later than November 7, 2000.
    (e) Determination of challenges. The FSA County Committee or its 
representative, acting on behalf of the Administrator, AMS, will make a 
determination concerning the challenge based on documentation provided 
by the producer and will notify challenged producers as soon as 
practicable but no later than November 9, 2000.
    (f) Challenged ballot. A challenge to a ballot shall be deemed to 
have been resolved if the determination of the FSA County Committee or 
its representative, acting on behalf of the Administrator, AMS, is not 
appealed within the time allowed for appeal or there has been a 
determination by the Administrator, AMS, after an appeal.
    (g) Appeal. A person declared to be ineligible to register and vote 
by the FSA County Committee or its representative, acting on behalf of 
the Administrator, AMS, can file an appeal at the FSA county office not 
later than November 17, 2000. The FSA county office shall send a 
producer's appeal by facsimile to the Administrator, AMS, on the date it 
is filed at the FSA office or as soon as practical thereafter.
    (h) Determination of appeals. An appeal will be determined by the 
Administrator, AMS, as soon as practical, but in all cases not later 
than the 45th business day (November 28, 2000) after the date of the 
last day of the voting period. The Administrator, AMS, shall

[[Page 347]]

send her decision on a producer's appeal to the FSA county office where 
the producer was initially challenged. The FSA county office shall 
notify the challenged producer of the Administrator's, AMS, 
determination on his or her appeal. The Administrator's, AMS, 
determination on an appeal shall be final.

[65 FR 62579, Oct. 19, 2000]



PART 1250_EGG RESEARCH AND PROMOTION--Table of Contents



                      Subpart_Referendum Procedures

Sec.
1250.200 Referenda.
1250.201 Definitions.
1250.202 Voting.
1250.203 Instructions.
1250.204 Subagents.
1250.205 Ballots.
1250.206 Referendum report.
1250.207 Confidential information.

                Subpart_Egg Research and Promotion Order

                               Definitions

1250.301 Secretary.
1250.302 Act.
1250.303 Fiscal period.
1250.304 Egg Board or Board.
1250.305 Egg producer or producer.
1250.306 Commercial eggs or eggs.
1250.307 Person.
1250.308 United States.
1250.309 Handler.
1250.310 Promotion.
1250.311 Research.
1250.312 Marketing.
1250.313 Eligible organization.
1250.314 Plans and projects.
1250.315 Part and subpart.
1250.316 Representative of a producer.

                                Egg Board

1250.326 Establishment and membership.
1250.327 Term of office.
1250.328 Nominations.
1250.329 Selection.
1250.330 Acceptance.
1250.331 Vacancies.
1250.332 Alternate members.
1250.333 Procedure.
1250.334 Compensation and reimbursement.
1250.335 Powers of the Board.
1250.336 Duties.

                   Research, Education, and Promotion

1250.341 Research, education, and promotion.

                        Expenses and Assessments

1250.346 Expenses.
1250.347 Assessments.
1250.348 Exemptions.
1250.349 Collecting handlers and collection.
1250.350 [Reserved]
1250.351 Influencing governmental action.

                       Reports, Books, and Records

1250.352 Reports.
1250.353 Books and records.
1250.354 Confidential treatment.

                     Certification of Organizations

1250.356 Certification of organizations.

                              Miscellaneous

1250.357 Suspension and termination.
1250.358 Proceedings after termination.
1250.359 Effect of termination or amendment.
1250.360 [Reserved]
1250.361 Right of the Secretary.
1250.362 Amendments.
1250.363 Separability.

                      Subpart_Rules and Regulations

                               Definitions

1250.500 Terms defined.

  OMB Control Numbers Assigned Pursuant to the Paperwork Reduction Act

1250.501 OMB control numbers assigned pursuant to the Paperwork 
          Reduction Act.

                                 General

1250.505 Communications.
1250.506 Policy and objective.
1250.507 Contracts.
1250.508 Procedure.
1250.509 USDA costs.
1250.510 Determination of Board membership.

                Assessments, Collections, and Remittances

1250.514 Levy of assessments.
1250.515 Reporting period and payment.
1250.516 Collecting handlers and collection.
1250.517 Remittance to Egg Board.
1250.518 Receipts for payment of assessments.
1250.519 Late-payment charge.

                Registration, Certification, and Reports

1250.528 Registration of collecting handlers.
1250.529 Reports.
1250.530 Certification of exempt producers.

                                 Records

1250.535 Retention of records.
1250.536 Availability of records.
1250.537 Confidentiality.

[[Page 348]]

            Patents, Copyrights, Trademarks, and Information

1250.542 Patents, Copyrights, Inventions, Trademarks, Information, 
          Publications, and Product Formulations.

                           Personal Liability

1250.547 Personal liability.

    Authority: 7 U.S.C. 2701-2718 and 7 U.S.C. 7401.



                      Subpart_Referendum Procedures

    Source: 75 FR 55256, Sept. 10, 2010, unless otherwise noted.



Sec.1250.200  Referenda.

    Referenda for the purpose of ascertaining whether the issuance by 
the Secretary of Agriculture of an Egg Research and Promotion Order, or 
the continuance, termination, or suspension of such an order, is 
approved or favored by producers shall, unless supplemented or modified 
by the Secretary, be conducted in accordance with this subpart.



Sec.1250.201  Definitions.

    (a) Act means the Egg Research and Consumer Information Act and as 
it may be amended (Pub. L. 93-428, 7 U.S.C. 2701 et seq.).
    (b) Administrator means the administrator of the Agricultural 
Marketing Service, with power to redelegate, or any other officer or 
employee of the Department to whom authority has been delegated or may 
hereafter be delegated to act in the Administrator's stead.
    (c) Egg producer or producer means any person who either is an egg 
farmer who acquires and owns laying hens, chicks, and/or started pullets 
for the purpose of and is engaged in the production of commercial eggs; 
or is a person who supplied or supplies laying hens, chicks, and/or 
started pullets to an egg farmer for the purpose of producing commercial 
eggs pursuant to an oral or written contractual agreement for the 
production of commercial eggs. Such person is deemed to be the owner of 
such laying hens unless it is established in writing, to the 
satisfaction of the Secretary or the Egg Board, that actual ownership of 
the laying hens is in some other party to the contract. In the event the 
party to an oral contract who supplied or supplies the laying hens 
cannot be readily identified by the Secretary or the Egg Board, the 
person who has immediate possession and control over the laying hens at 
the egg production facility shall be deemed to be the owner of such hens 
unless written notice is provided to the Secretary or the Egg Board, 
signed by the parties to said oral contract, clearly stating that the 
eggs are being produced under a contractual agreement and identifying 
the party (or parties) under said contract who is the owner of the hens.
    (d) Order means the order or any amendment thereto promulgated 
pursuant to the act with respect to which the Secretary has directed 
that a referendum be conducted.
    (e) Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other entity.
    (f) Referendum agent means the individual or individuals designated 
by the Secretary to conduct the referendum.
    (g) Representative period means the period designated by the 
Secretary pursuant to section 9 of the Act (7 U.S.C. 2708).
    (h) Secretary means the Secretary of Agriculture or any other 
officer or employee of the Department of Agriculture to whom there has 
heretofore been delegated, or to whom there may be hereafter delegated, 
the authority to act in the Secretary's stead.



Sec.1250.202  Voting.

    (a) Each person who is a producer, as defined in this subpart, at 
the time of the referendum, who was engaged in the production of 
commercial eggs during the representative period, and who is not exempt 
from the provisions of the order as provided for in Sec.1250.348 
thereof, shall be entitled to only one vote in the referendum.
    (b) Proxy voting is not authorized, but an officer or employee of a 
corporate producer, or an administrator, executor, or trustee of a 
producing estate, or an authorized representative of any other entity 
may cast a ballot on behalf of such producer or estate. Any individual 
so voting in a referendum shall certify that such individual is an

[[Page 349]]

officer or employee of the corporate producer, or an administrator, 
executor, or trustee of the producing estate, or an authorized 
representative of such other entity, and that such individual has the 
authority to take such action. Upon request of the referendum agent, the 
individual shall submit adequate evidence of his authority.
    (c) Each producer shall be entitled to cast only one ballot in the 
referendum.



Sec.1250.203  Instructions.

    The referendum agent shall conduct the referendum, in the manner 
herein provided, under supervision of the Administrator. The 
Administrator may prescribe additional instructions, not inconsistent 
with the provisions hereof, to govern the procedure to be followed by 
the referendum agent. Such agent shall:
    (a) Determine the time of commencement and termination of the period 
of the referendum, and the time when all ballots must be received by the 
referendum agent.
    (b) Determine whether ballots may be cast by mail, at polling 
places, at meetings of producers, or by any combination of the 
foregoing.
    (c) Provide ballots and related material to be used in the 
referendum. Ballot material shall provide for recording essential 
information for ascertaining whether the person voting or on whose 
behalf the vote is cast, is an eligible voter, and the total volume of 
commercial eggs produced during a representative period.
    (d) Give reasonable advance notice of the referendum:
    (1) By utilizing available media or public information sources, 
without incurring advertising expense, to publicize the dates, places, 
method of voting, eligibility requirements, and other pertinent 
information. Such sources of publicity may include, but are not limited 
to, print and radio; and
    (2) By such other means as the agent may deem advisable.
    (e) Make available to producers instructions on voting, appropriate 
registration, ballot, and certification forms, and, except in the case 
of a referendum on the termination or continuance of an order, a summary 
of the terms and conditions of the order: Provided, that no person who 
claims to be qualified to vote shall be refused a ballot.
    (f) If the ballots are to be cast by mail, cause all the material 
specified in paragraph (e) of this section to be mailed to each eligible 
producer whose name and address are known to the Secretary or the 
referendum agent.
    (g) If the ballots are to be cast at polling places or meetings, 
determine the necessary number of polling or meeting places, designate 
them, announce the time of each meeting or the hours during which each 
polling place will be open, provide the material specified in paragraph 
(e) of this section, and provide for appropriate custody of ballot forms 
and delivery to the referendum agent of ballots cast.
    (h) At the conclusion of the referendum, canvass the ballots, 
tabulate the results, and except as otherwise directed, report the 
outcome to the Administrator and promptly thereafter submit the 
following:
    (1) All ballots received by the agent and appointees, together with 
a certificate to the effect that the ballots listed are all of the 
ballots cast and received by the agent and appointees during the 
referendum period;
    (2) A tabulation of all challenged ballots deemed to be invalid; and
    (3) A report of the referendum including a detailed statement 
explaining the method used in giving publicity to the referendum and 
showing other information pertinent to the manner in which the 
referendum was conducted.



Sec.1250.204  Subagents.

    The referendum agent may appoint any person or persons deemed 
necessary or desirable to assist the agent in performing such agent's 
functions of this subpart. Each individual so appointed may be 
authorized by the agent to perform, in accordance with the requirements 
herein set forth, any or all of the following functions (which, in the 
absence of such appointment, shall be performed by said agent):
    (a) Give public notice of the referendum in the manner specified 
herein;
    (b) Preside at a meeting where ballots are to be cast or as poll 
officer at a polling place;

[[Page 350]]

    (c) See the ballots and the aforesaid texts are distributed to 
producers and receive any ballots which are cast; and
    (d) Record the name and address of each person casting a ballot with 
said subagent and inquire, as deemed appropriate, into the eligibility 
of such persons to vote in the referendum.



Sec.1250.205  Ballots.

    The referendum agent and subagents shall accept all ballots cast; 
but should they, or any of them, deem that a ballot should be challenged 
for any reason, the agent or subagent shall endorse above their 
signature, on the ballot, a statement to the effect that such ballot was 
challenged, by whom challenged, the reasons therefore, and the results 
of any investigations made with respect thereto, and the disposition 
thereof. Invalid ballots shall not be counted.



Sec.1250.206  Referendum report.

    Except as otherwise directed, the Administrator shall prepare and 
submit to the Secretary a report on the results of the referendum, the 
manner in which it was conducted, the extent and kind of public notice 
given, and other information pertinent to analysis of the referendum and 
its results.



Sec.1250.207  Confidential information.

    The ballots cast or the manner in which any person voted and all 
information furnished to, compiled by, or in the possession of the 
referendum agent shall be regarded as confidential. The ballots and 
other information or reports that reveal, or tend to reveal, the vote of 
any person covered under the Order and the voter list shall be strictly 
confidential and shall not be disclosed.



                Subpart_Egg Research and Promotion Order

    Source: 40 FR 59190, Dec. 22, 1975, unless otherwise noted.

                               Definitions



Sec.1250.301  Secretary.

    Secretary means the Secretary of Agriculture or any other officer or 
employee of the Department of Agriculture to whom there has heretofore 
been delegated, or to whom there may hereafter be delegated, the 
authority to act in his stead.



Sec.1250.302  Act.

    Act means the Egg Research and Consumer Information Act and as it 
may be amended (Pub. L. 93-428).



Sec.1250.303  Fiscal period.

    Fiscal period means the calendar year unless the Egg Board, with the 
approval of the Secretary, selects some other budgetary period.



Sec.1250.304  Egg Board or Board.

    Egg Board or Board or other designatory term adopted by such Board, 
with the approval of the Secretary, means the administrative body 
established pursuant to Sec.1250.326.



Sec.1250.305  Egg producer or producer.

    Egg producer or producer means any person who either:
    (a) Is an egg farmer who acquires and owns laying hens, chicks, and/
or started pullets for the purpose of and is engaged in the production 
of commercial eggs; or
    (b) Is a person who supplied or supplies laying hens, chicks, and/or 
started pullets to an egg farmer for the purpose of producing commercial 
eggs pursuant to an oral or written contractual argeement for the 
production of commercial eggs. Such person is deemed to be the owner of 
such laying hens unless it is established in writing, to the 
satisfaction of the Secretary or the Egg Board, that actual ownership of 
the laying hens is in some other party to the contract. In the event the 
party to an oral contract who supplied or supplies the laying hens 
cannot be readily identified by the Secretary or the Egg Board, the 
person who has immediate possession and control over the laying hens at 
the egg production facility shall be deemed to be the owner of such hens 
unless written notice is provided to the Secretary or the Egg Board, 
signed by the parties to said oral contract, clearly stating that the 
eggs are being produced under a contractual agreement and identifying 
the party (or parties) under said contract who is the owner of the hens.

[[Page 351]]



Sec.1250.306  Commercial eggs or eggs.

    Commercial eggs or eggs means eggs from domesticated chickens which 
are sold for human consumption either in shell egg form or for further 
processing into egg products.



Sec.1250.307  Person.

    Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other entity.



Sec.1250.308  United States.

    United States means the 48 contiguous States of the United States of 
America and the District of Columbia.



Sec.1250.309  Handler.

    Handler means any person who receives or otherwise acquires eggs 
from an egg producer, and processes, prepares for marketing, or markets, 
such eggs, including eggs of his own production.



Sec.1250.310  Promotion.

    Promotion means any action, including paid advertising, to advance 
the image or desirability of eggs, egg products, spent fowl, or products 
of spent fowl.



Sec.1250.311  Research.

    Research means any type of research to advance the image, 
desirability, marketability, production, or quality of eggs, egg 
products, spent fowl, or products of spent fowl, or the evaluation of 
such research.



Sec.1250.312  Marketing.

    Marketing means the sale or other disposition of commercial eggs, 
egg products, spent fowl, or products of spent fowl in any channel of 
commerce.



Sec.1250.313  Eligible organization.

    Eligible organization means any organization, association, or 
cooperative which represents egg producers of any egg producing area of 
the United States certified by the Secretary pursuant to Sec.1250.356.



Sec.1250.314  Plans and projects.

    Plans and projects means those research, consumer and producer 
education, advertising, marketing, product development, and promotion 
plans, studies, or projects pursuant to Sec.1250.341.



Sec.1250.315  Part and subpart.

    Part means the Egg Research and Promotion Order and all rules, 
regulations, and supplemental order issued pursuant to the act and the 
order. ``Subpart'' refers to the aforesaid order or any other portion or 
segment of this part.



Sec.1250.316  Representative of a producer.

    Representative of a producer means the owner, officer, or an 
employee of a producer who has been duly authorized to act in the place 
and stead of the producer.

                                Egg Board



Sec.1250.326  Establishment and membership.

    There is hereby established an Egg Board, hereinafter called the 
``Board,'' composed of 18 egg producers or representatives of egg 
producers, and 18 specific alternates, all appointed by the Secretary 
from nominations submitted by eligible organizations, associations, or 
cooperatives, or by other producers pursuant to Sec.1250.328.



Sec.1250.327  Term of office.

    The members of the Board, and their alternates, shall serve for 
terms of 2 years, except initial appointments shall be, proportionately, 
for terms of 2 and 3 years. Each member and alternate member shall 
continue to serve until his successor is appointed by the Secretary and 
has qualified. No member shall serve for more than three consecutive 
terms.



Sec.1250.328  Nominations.

    All nominations authorized under Sec.1250.326 shall be made in the 
following manner:
    (a) Within 30 days of the approval of this order by referendum, 
nominations shall be submitted to the Secretary for each geographic area 
as specified in paragraph (d) of this section by eligible organizations, 
associations, or cooperatives certified pursuant to Sec.1250.356, or,

[[Page 352]]

if the Secretary determines that a substantial number of egg producers 
are not members of, or their interests are not represented by, any such 
eligible organization, association, or cooperative, then from 
nominations made by such egg producers in the manner authorized by the 
Secretary;
    (b) After the establishment of the initial Board, the nominations 
for subsequent Board members and alternates shall be submitted to the 
Secretary not less than 60 days prior to the expiration of the terms of 
the members and alternates previously appointed to the Board;
    (c) Where there is more than one eligible organization, association, 
or cooperative within each geographic area, as defined by the Secretary, 
they may caucus for the purpose of jointly nominating two qualified 
persons for each member and for each alternate member to be appointed. 
If joint agreement is not reached with respect to any such nominations, 
or if no caucus is held within a defined geographic area, each eligible 
organization, association, or cooperative may submit to the Secretary 
two nominations for each appointment to be made;
    (d) The number of members of the initial Board, and their 
alternates, who shall be appointed from each area are: Area 1-3, Area 2-
4, Area 3-2, Area 4-2, Area 5-4, and Area 6-3, for a total of 18 members 
from all areas. Changes to the Board as provided in paragraph (e) of 
this section shall be accomplished by determining the percentage of 
United States egg production in each area times 18 (total Board 
membership) and rounding to the nearest whole number; and
    (e) After the establishment of the initial Board, the area grouping 
of the 48 contiguous States of the United States, including the area 
distribution of the 18 members of the Board and their alternates, shall 
be reviewed at any time not to exceed 5 years by the Board, or by a 
person or agency designated by the Board to perform such review, and the 
results shall be reported to the Secretary along with any 
recommendations by the Board regarding whether the delineation of the 
areas and the area distribution of the Board should continue without any 
change, or whether changes should be made in either the areas or the 
number of Board members to be appointed from each area, providing that 
each area shall be represented by not less than one Board member and any 
action recommended shall be subject to the approval of the Secretary.

[40 FR 59190, Dec. 22, 1975, as amended at 60 FR 66861, Dec. 27, 1995]



Sec.1250.329  Selection.

    From the nominations made pursuant to Sec.1250.328, the Secretary 
shall appoint the members of the Board, and an alternate for each such 
member, on the basis of representations provided for in Sec.1250.326, 
Sec.1250.327, and Sec.1250.328.



Sec.1250.330  Acceptance.

    Any person appointed by the Secretary as a member, or as an 
alternate member, of the Board shall qualify by filing a written 
acceptance with the Secretary within a period of time prescribed by the 
Secretary.



Sec.1250.331  Vacancies.

    To fill any vacancy occasioned by the failure to qualify of any 
person appointed as a member, or as an alternate member, of the Board, 
or in the event of the death, removal, resignation, or disqualification 
of any member or alternate member of the Board, a successor for the 
unexpired term of such member or alternate member of the Board shall be 
nominated, qualified, and appointed in the manner specified in Sec.
1250.326, Sec.1250.328(b), Sec.1250.329, and Sec.1250.330, except 
that replacement of a Board member, or alternate, with an unexpired term 
of less than 6 months is not necessary.



Sec.1250.332  Alternate members.

    An alternate member of the Board, during the absence of the member 
for whom he is the alternate, shall act in the place and stead of such 
member and perform such other duties as assigned. In the event of the 
death, removal, resignation, or disqualification of a member, his 
alternate shall act for him until a successor for such member is 
appointed and qualified.

[[Page 353]]



Sec.1250.333  Procedure.

    (a) A majority of the members, including alternates acting for 
members of the Board, shall constitute a quorum, and any action of the 
Board shall require the concurring votes of at least a majority of those 
present and voting. At assembled meetings, all votes shall be cast in 
person.
    (b) For routine and noncontroversial matters which do not require 
deliberation and exchange of views, and in matters of an emergency 
nature when there is not enough time to call an assembled meeting of the 
Board, the Board may also take action upon the concurring votes of a 
majority of its members by mail, telephone, or telegraph, but any such 
action by telephone shall be confirmed promptly in writing.



Sec.1250.334  Compensation and reimbursement.

    The members of the Board, and alternates when acting as members, 
shall serve without compensation but shall be reimbursed for necessary 
and reasonable expenses, as approved by the Board, incurred by them in 
the performance of their duties under this subpart.



Sec.1250.335  Powers of the Board.

    The Board shall have the following powers:
    (a) To administer the provisions of this subpart in accordance with 
its terms and provisions;
    (b) To make rules and regulations to effectuate the terms and 
provisions of this subpart;
    (c) To receive, investigate, and report to the Secretary complaints 
of violations of this subpart; and
    (d) To recommend to the Secretary amendments to this subpart.



Sec.1250.336  Duties.

    The Board shall have the following duties:
    (a) To meet and organize and to select from among its members a 
chairman and such other officers as may be necessary, to select 
committees and subcommittees of Board members, to adopt such rules for 
the conduct of its business as it may deem advisable, and it may 
establish advisory committees of persons other than Board members;
    (b) To appoint or employ such persons as it may deem necessary and 
to define the duties and determine the compensation of each;
    (c) To prepare and submit to the Secretary for his approval budgets 
on a fiscal-period basis of its anticipated expenses and disbursements 
in the administration of this subpart, including probable cost of plans 
and projects as estimated in the budget or budgets submitted to it by 
prospective contractors, with the Board's recommendations with respect 
thereto. In preparing a budget for each of the 1994 and subsequent 
fiscal years, the Board shall, to the maximum extent practicable, 
allocate a proportion of funds for research projects comparable to the 
proportion of funds allocated for research projects in the Board's 
fiscal year 1993 budget.
    (d) With the approval of the Secretary, to enter into contracts or 
agreements with persons, including, but not limited to, State, regional, 
or national agencies or State, regional, or national egg organizations 
which administer research, education, or promotion programs, advertising 
agencies, public relations firms, public or private research 
organizations, advertising and promotion media, and egg producer 
organizations, for the development and submission to it of plans and 
projects authorized by Sec.1250.341 and for the carrying out of such 
plans or projects when approved by the Secretary, and for the payment of 
the cost thereof with funds collected pursuant to Sec.1250.347. Any 
such contracts or agreements shall provide that such contractors shall 
develop and submit to the Board a plan or project together with a budget 
or budgets which shall show estimated costs to be incurred for such plan 
or project, and that any such plan or project shall become effective 
upon approval by the Secretary. Any such contract or agreement shall 
also provide that the contractor shall keep accurate records of all of 
its transactions and make periodic reports to the Board of activities 
carried out and an accounting for funds received and expended, and such 
other reports as the Secretary may require;

[[Page 354]]

    (e) To review and submit to the Secretary any plans or projects 
which have been developed and submitted to it by the prospective 
contractor, together with its recommendations with respect to the 
approval thereof by the Secretary;
    (f) To maintain such books and records and prepare and submit such 
reports from time to time to the Secretary as he may prescribe, and to 
make appropriate accounting with respect to the receipt and disbursement 
of all funds entrusted to it;
    (g)-(h) [Reserved]
    (i) To prepare and make public, at least annually, a report of 
activities carried out and an accounting for funds received and 
expended;
    (j) To cause its books to be audited by a certified public 
accountant at least once each fiscal period and at such other times as 
the Secretary may request, and submit a copy of each such audit to the 
Secretary;
    (k) To give the Secretary the same notice of meetings of the Board 
as is given to members in order that he or his representative may attend 
such meetings;
    (l) To act as an intermediary between the Secretary and any producer 
or handler; and
    (m) To submit to the Secretary such information pursuant to this 
subpart as he may request.

[40 FR 59190, Dec. 22, 1975, as amended at 54 FR 99, Jan. 4, 1989, and 
54 FR 11493, Mar. 21, 1989; 54 FR 12310, Mar. 24, 1989; 59 FR 38876, 
Aug. 1, 1994; 60 FR 66861, Dec. 27, 1995]

                   Research, Education, and Promotion



Sec.1250.341  Research, education, and promotion.

    The Board shall develop and submit to the Secretary for approval any 
programs or projects authorized in this section. Such programs or 
projects shall provide for:
    (a) The establishment, issuance, effectuation, and administration of 
appropriate programs or projects for advertising, sales promotion, and 
consumer education with respect to the use of eggs, egg products, spent 
fowl, and products of spent fowl: Provided, however, That any such 
program or project shall be directed towards increasing the general 
demand for eggs, egg products, spent fowl, or products of spent fowl;
    (b) The establishment and carrying on of research, marketing, and 
development projects and studies with respect to sale, distribution, 
marketing, utilization, or production of eggs, egg products, spent fowl, 
and products of spent fowl, and the creation of new products thereof in 
accordance with section 7(b) of the act, to the end that the marketing 
and utilization of eggs, egg products, spent fowl, and products of spent 
fowl may be encouraged, expanded, improved, or made more acceptable, and 
the data collected by such activities may be disseminated;
    (c) The development and expansion of foreign markets and uses for 
eggs, egg products, spent fowl, and products of spent fowl;
    (d) Each program or project authorized under paragraphs (a), (b), 
and (c) of this section shall be periodically reviewed or evaluated by 
the Board to insure that each such program or project contributes to a 
coordinated national program of research, education, and promotion 
contributing to the maintenance of markets and for the development of 
new markets for and of new products from eggs, egg products, spent fowl, 
and products of spent fowl. If it is found by the Board that any such 
program or project does not further the national purpose of the act, 
then the Board shall terminate such program or project; and
    (e) No advertising or promotion programs shall use false or 
unwarranted claims or make any reference to private brand names of eggs, 
egg products, spent fowl, and products of spent fowl or use unfair or 
deceptive acts or practices with respect to quality, value, or use of 
any competing product.

                        Expenses and Assessments



Sec.1250.346  Expenses.

    The Board is authorized to incur such expenses as the Secretary 
finds are reasonable and likely to be incurred by the Board for its 
maintenance and functioning and to enable it to exercise its powers and 
perform its duties in accordance with the provisions of this subpart. 
The total costs incurred by

[[Page 355]]

the Board for a fiscal period in collecting producer assessments and 
having an administrative staff shall not exceed an amount of the 
projected total assessments to be collected by the Board for such fiscal 
period that the Secretary determines to be reasonable. The funds to 
cover such expenses shall be paid from assessments received pursuant to 
Sec.1250.347.

[40 FR 59190, Dec. 22, 1975, as amended at 54 FR 100, Jan. 4, 1989, and 
54 FR 11493, Mar. 21, 1989]



Sec.1250.347  Assessments.

    Each handler designated in Sec.1250.349 and pursuant to 
regulations issued by the Board shall collect from each producer, except 
for those producers specifically exempted in Sec.1250.348, and shall 
pay to the Board at such times and in such manner as prescribed by 
regulations issued by the Board an assessment at a rate not to exceed 10 
cents per 30-dozen case of eggs, or the equivalent thereof, for such 
expenses and expenditures, including provisions for a reasonable reserve 
and those administrative costs incurred by the Department of Agriculture 
after this subpart is effective, as the Secretary finds are reasonable 
and likely to be incurred by the Board and the Secretary under this 
subpart, except that no more than one such assessment shall be made on 
any case of eggs.

[59 FR 64560, Dec. 15, 1994]



Sec.1250.348  Exemptions.

    The following shall be exempt from the specific provisions of the 
Act:
    (a) Any egg producer whose aggregate number of laying hens at any 
time during a 3-consecutive-month period immediately prior to the date 
assessments are due and payable has not exceeded 75,000 laying hens. The 
aggregate number of laying hens owned by a trust or similar entity shall 
be considered ownership by the beneficiaries of the trust or other 
entity. Ownership of laying hens by an egg producer also shall include 
the following:
    (1) In cases in which the producer is an individual, laying hens 
owned by such producer or members of such producer's family that are 
effectively under the control of such producer, as determined by the 
Secretary;
    (2) In cases in which the producer is a general partnership or 
similar entity, laying hens owned by the entity and all partners or 
equity participants in the entity; and
    (3) In cases in which the producer holds 50 percent or more of the 
stock or other beneficial interest in a corporation, joint stock 
company, association, cooperative, limited partnership, or other similar 
entity, laying hens owned by the entity. Stock or other beneficial 
interest in an entity that is held by the following shall be considered 
as held by the producer:
    (i) Members of the producer's family described in paragraph (a)(1);
    (ii) A general partnership or similar entity in which the producer 
is a partner or equity participant;
    (iii) The partners or equity participants in an entity of the type 
described in (a)(3)(ii); or
    (iv) A corporation, joint stock company, association, cooperative, 
limited partnership, or other similar entity in which the producer holds 
50 percent or more of the stock or other beneficial interests.
    (b) Any egg producer owning a flock of breeding hens whose 
production of eggs is primarily utilized for the hatching of baby 
chicks.
    (c) In order to qualify for exemption from the provisions of the Act 
under this section, producers claiming such exemption must comply with 
Sec.1250.530 regarding certification of exempt producers and other 
such regulations as may be prescribed by the Secretary as a condition to 
exemption from the provisions of the Act under this section.

[55 FR 6973, Feb. 28, 1990, as amended at 59 FR 38876, Aug. 1, 1994]



Sec.1250.349  Collecting handlers and collection.

    (a) Handlers responsible for collecting the assessment specified in 
Sec.1250.347 shall be any one of the following:
    (1) The first person to whom eggs are sold, consigned, or delivered 
by producers and who grades, cartons, breaks, or otherwise performs a 
function of a handler under Sec.1250.309,

[[Page 356]]

    (2) A producer who grades, cartons, breaks, or otherwise performs a 
function of a handler under Sec.1250.309 for eggs of his own 
production, or
    (3) Such other persons as designated by the Board under rules and 
regulations issued pursuant to this subpart.
    (b) Handlers shall collect and remit to the Egg Board all 
assessments collected in the manner and in the time specified by the 
Board pursuant to rules and regulations issued by the Board.
    (c) Handlers shall maintain such records as the Egg Board may 
prescribe pursuant to rules and regulations issued by the Board.
    (d) The Board with the approval of the Secretary may authorize other 
organizations or agencies to collect assessments in its behalf.

[40 FR 59190, Dec. 22, 1975. Redesignated at 55 FR 6973, Feb. 28, 1990]



Sec.1250.350  [Reserved]



Sec.1250.351  Influencing governmental action.

    No funds collected by the Board under this subpart shall in any 
manner be used for the purpose of influencing governmental policy or 
action except to recommend to the Secretary amendments to this subpart.

[40 FR 59190, Dec. 22, 1975. Redesignated at 55 FR 6973, Feb. 28, 1990]

                       Reports, Books, and Records



Sec.1250.352  Reports.

    Each handler subject to this subpart and other persons subject to 
section 7(c) of the act may be required to report to the Board 
periodically such information as is required by regulations and will 
effectuate the purposes of the act, which information may include but 
not be limited to the following:
    (a) Number of cases of eggs handled;
    (b) Number of cases of eggs on which an assessment was collected;
    (c) Name and address of person from whom any assessment was 
collected; and
    (d) Date collection of assessment was made on each case of eggs 
handled.

[40 FR 59190, Dec. 22, 1975. Redesignated at 55 FR 6973, Feb. 28, 1990]



Sec.1250.353  Books and records.

    Each handler subject to this subpart and persons subject to section 
7(c) of the act shall maintain and make available for inspection by the 
Board or the Secretary such books and records as are necessary to carry 
out the provisions of the subpart and the regulations issued hereunder, 
including such records as are necessary to verify any reports required. 
Such records shall be retained for at least 2 years beyond the fiscal 
period of their applicability.

[40 FR 59190, Dec. 22, 1975. Redesignated at 55 FR 6973, Feb. 28, 1990]



Sec.1250.354  Confidential treatment.

    (a) All information obtained from such books, records, or reports 
shall be kept confidential by all officers and employees of the 
Department of Agriculture and the Board, and only such information so 
furnished or acquired as the Secretary deems relevant shall be disclosed 
by them, and then only in a suit or administrative hearing brought at 
the direction, or upon the request of the Secretary, or to which the 
Secretary or any officer of the United States is a party and involving 
this subpart. Nothing in this paragraph shall be deemed to prohibit (1) 
the issuance of general statements based upon the reports of the number 
of persons subject to this subpart or statistical data collected 
therefrom, which statements do not identify the information furnished by 
any person, (2) the publication, by direction of the Secretary, of 
general statements relating to refunds made by the Egg Board during any 
specific period of time, or (3) the publication, by direction of the 
Secretary, of the name of any person violating this subpart together 
with a statement of the particular provisions of this subpart violated 
by such person.
    (b) All information with respect to refunds, except as provided in 
paragraph (a)(2) of this section, made to individual producers shall be 
kept confidential by all officers and employees of the Department of 
Agriculture and the Board.

[40 FR 59190, Dec. 22, 1975. Redesignated at 55 FR 6973, Feb. 28, 1990]

[[Page 357]]

                     Certification of Organizations



Sec.1250.356  Certification of organizations.

    Any organization may request the Secretary for certification of 
eligibility to participate in nominating members and alternate members 
on the Board to represent the geographic area in which the organization 
represents egg producers. Such eligibility shall be based in addition to 
other available information upon a factual report submitted by the 
organization which shall contain information deemed relevant and 
specified by the Secretary for the making of such determination, 
including, but not limited to, the following:
    (a) Geographic territory covered by the organization's active 
membership;
    (b) Nature and size of the organization's active membership, 
proportion of total of such active membership accounted for by producers 
of commercial eggs, a chart showing the egg production by State in which 
the organization has members, and the volume of commercial eggs produced 
by the organization's active membership in such State(s);
    (c) The extent to which the commercial egg producer membership of 
such organization is represented in setting the organization's policies;
    (d) Evidence of stability and permanency of the organization;
    (e) Sources from which the organization's operating funds are 
derived;
    (f) Functions of the organization; and
    (g) The organization's ability and willingness to further the aims 
and objectives of the act.

The primary consideration in determining the eligibility of an 
organization shall be whether its egg producer membership consists of a 
substantial number of egg producers who produce a substantial volume of 
the applicable geographic area's commercial eggs to reasonably warrant 
its participation in the nomination of members for the Board or to 
request the issuance of an order. The Secretary shall certify any 
organization which he finds to be eligible under this section and his 
determination as to eligibility shall be final.

                              Miscellaneous



Sec.1250.357  Suspension and termination.

    (a) The Secretary shall, whenever he finds that this subpart or any 
provision thereof obstructs or does not tend to effectuate the declared 
policy of the act, terminate or suspend the operation of this subpart or 
such provision.
    (b) The Secretary may conduct a referendum at any time, and shall 
hold a referendum on request of 10 percent or more of the number of egg 
producers voting in the referendum approving this subpart, to determine 
whether egg producers favor the termination or suspension of this 
subpart, and the Secretary shall suspend or terminate such subpart at 
the end of 6 months after he determines that suspension or termination 
of the subpart is approved or favored by a majority of the egg producers 
voting in such referendum who, during a representative period determined 
by the Secretary, have been engaged in the production of commercial 
eggs, and who produced more than 50 percent of the volume of eggs 
produced by the egg producers voting in the referendum.



Sec.1250.358  Proceedings after termination.

    (a) Upon the termination of this subpart the Board shall recommend 
not more than six of its members to the Secretary to serve as trustees 
for the purpose of liquidating the affairs of the Board. Such persons, 
upon designation by the Secretary, shall become trustees of all the 
funds and property then in the possession or under control of the Board, 
including claims for any funds unpaid or property not delivered or any 
other claim existing at the time of such termination.
    (b) The said trustees shall: (1) Continue in such capacity until 
discharged by the Secretary, (2) carry out the obligations of the Board 
under any contracts or agreements entered into by it pursuant to Sec.
1250.336, (3) from time to time account for all receipts and 
disbursements and deliver all property on hand, together with all books 
and records of the Board and of the trustees, to such person as the 
Secretary may direct, and (4) upon the request of

[[Page 358]]

the Secretary, execute such assignments or other instruments necessary 
or appropriate to vest in such person full title and right to all of the 
funds, property, and claims vested in the Board or the trustees pursuant 
to this subpart.
    (c) Any person to whom funds, property, or claims have been 
transferred or delivered pursuant to this subpart shall be subject to 
the same obligation imposed upon the Board and upon the trustees.
    (d) Any residual funds not required to defray the necessary expenses 
of liquidation shall be turned over to the Secretary to be disposed of, 
to the extent practicable, in the interest of continuing one or more of 
the research or promotion programs hitherto authorized.



Sec.1250.359  Effect of termination or amendment.

    Unless otherwise expressly provided by the Secretary, the 
termination of this subpart or of any regulation issued pursuant hereto, 
or the issuance of any amendment to either thereof, shall not:
    (a) Affect or waive any right, duty, obligation, or liability which 
shall have risen or which may hereafter arise in connection with any 
provision of this subpart or any regulation issued thereunder;
    (b) Release or extinguish any violation of this subpart or any 
regulation issued hereunder; or
    (c) Affect or impair any rights or remedies of the United States, or 
of the Secretary, or of any person, with respect to any such violation.



Sec.1250.360  [Reserved]



Sec.1250.361  Right of the Secretary.

    All fiscal matters, programs or projects, rules or regulations, 
reports, or other substantive action proposed and prepared by the Board 
shall be submitted to the Secretary for his approval.



Sec.1250.362  Amendments.

    Amendments to this subpart may be proposed, from time to time, by 
the Board, or by an organization certified pursuant to section 16 of the 
act, or by any interested person affected by the provisions of the act, 
including the Secretary.



Sec.1250.363  Separability.

    If any provision of this subpart is declared invalid or the 
applicability thereof to any person or circumstances is held invalid, 
the validity of the remainder of this subpart of the applicability 
thereof to other persons or circumstances shall not be affected thereby.



                      Subpart_Rules and Regulations

    Source: 41 FR 22925, June 8, 1976, unless otherwise noted.

                               Definitions



Sec.1250.500  Terms defined.

    Unless otherwise defined in this subpart, definitions of terms used 
in this subpart shall be those definitions of terms defined in the Egg 
Research and Consumer Information Act, hereinafter called the Act, and 
the Egg Research and Promotion Order, hereinafter called the Order.
    (a) Act. ``Act'' means the Egg Research and Consumer Information Act 
as it may be amended (Pub. L. 93-428).
    (b) Secretary. ``Secretary'' means the Secretary of Agriculture or 
any other officer or employee of the Department of Agriculture to whom 
there has heretofore been delegated, or to whom there may hereafter be 
delegated, the authority to act in his stead.
    (c) Egg Board or Board. ``Egg Board'' or ``Board'' or other 
designatory term adopted by such Board, with the approval of the 
Secretary, means the administrative body established pursuant to Sec.
1250.326.
    (d) Fiscal period. ``Fiscal period'' means the calendar year unless 
the Egg Board, with the approval of the Secretary, selects some other 
budgetary period.
    (e) Egg producer or producer. ``Egg producer'' or ``producer'' means 
any person who either:
    (1) Is an egg farmer who acquires and owns laying hens, chicks, and/
or started pullets for the purpose of and is engaged in the production 
of commercial eggs; or

[[Page 359]]

    (2) Is a person who supplied or supplies laying hens, chicks, and/or 
started pullets to an egg farmer for the purpose of producing commercial 
eggs pursuant to an oral or written contractual agreement for the 
production of commercial eggs. Such person is deemed to be the owner of 
such laying hens unless it is established in writing, to the 
satisfaction of the Secretary or the Egg Board, that actual ownership of 
the laying hens is in some other party to the contract. In the event the 
party to an oral contract who supplied or supplies the laying hens 
cannot be readily identified by the Secretary or the Egg Board, the 
person who has immediate possession and control over the laying hens at 
the egg production facility shall be deemed to be the owner of such hens 
unless written notice is provided to the Secretary or the Egg Board, 
signed by the parties to said oral contract, clearly stating that the 
eggs are being produced under a contractual agreement and identifying 
the party (or parties) under said contract who is the owner of the hens.
    (f) Commercial eggs or eggs. ``Commercial eggs'' or ``eggs'' means 
eggs from domesticated chickens which are sold for human consumption 
either in shell egg form or for further processing into egg products.
    (g) Person. ``Person'' means any individual, group of individuals, 
partnership, corporation, association, cooperative, or any other entity.
    (h) Handle. ``Handle'' means to grade, carton, process, transport, 
purchase, or in any way place eggs or cause eggs to be placed in the 
current of commerce. Such term shall not include the washing, the 
packing in cases, or the delivery by the producer of his own nest run 
eggs.
    (i) Handler. ``Handler'' means any person who receives or otherwise 
acquires eggs from an egg producer, and processes, prepares for 
marketing, or markets such eggs, including eggs of his own production.
    (j) Egg products. ``Egg products'' means products produced, in whole 
or in part, from eggs.
    (k) Cooperating agency. ``Cooperating agency'' means any person with 
which the Egg Board has entered into an agreement pursuant to Sec.
1250.517(c).
    (l) Case. ``Case'' means the standard shipping package containing 
30-dozen eggs or the equivalent thereof.
    (m) Plans and projects. ``Plans'' and ``projects'' mean those 
research, consumer and producer education, advertising, marketing, 
product development, and promotion plans, studies, or projects pursuant 
to Sec.1250.341.
    (n) Representative of a producer. ``Representative of a producer'' 
means the owner, officer, or an employee of a producer who has been duly 
authorized to act in the place and stead of the producer.
    (o) Hen or laying hen. ``Hen'' or ``laying hen'' means a 
domesticated female chicken 20 weeks of age or over, raised primarily 
for the production of commercial eggs.
    (p) Hatching eggs. ``Hatching eggs'' means eggs intended for use by 
hatcheries for the production of baby chicks.
    (q) United States. ``United States'' means the 48 contiguous States 
of the United States of America and the District of Columbia.
    (r) Promotion. ``Promotion'' means any action, including paid 
advertising, to advance the image or desirability of eggs, egg products, 
spent fowl, or products of spent fowl.
    (s) Research. ``Research'' means any type of research to advance the 
image, desirability, marketability, production, or quality of eggs, egg 
products, spent fowl, or products of spent fowl, or the evaluation of 
such research.
    (t) Consumer education. ``Consumer education'' means any action to 
advance the image or desirability of eggs, egg products, spent fowl, or 
products of spent fowl.
    (u) Marketing. ``Marketing'' means the sale or other disposition of 
commercial eggs, egg products, spent fowl, or products of spent fowl, in 
any channel of commerce.
    (v) Commerce. ``Commerce'' means interstate, foreign, or intrastate 
commerce.
    (w) Spent fowl. ``Spent fowl'' means hens which have been in 
production of commercial eggs and have been removed from such production 
for slaughter.
    (x) Products of spent fowl. ``Products of spent fowl'' means 
commercial products produced from spent fowl.

[[Page 360]]

    (y) Started pullet. ``Started pullet'' means a hen less than 20 
weeks of age.
    (z) Shell egg packer. ``Shell egg packer'' means any person grading 
eggs into their various qualities.
    (aa) Egg breaker. ``Egg breaker'' means any person subject to the 
Egg Products Inspection Act (21 U.S.C. 1031 et seq.) engaged in the 
breaking of shell eggs or otherwise involved in preparing shell eggs for 
use as egg products.
    (bb) Nest run eggs. ``Nest run eggs'' means eggs which are packed as 
they come from the production facilities without having been sized and/
or candled with the exception that some checks, dirties, or obvious 
undergrades may have been removed and provided further that the eggs may 
have been washed.

  OMB Control Numbers Assigned Pursuant to the Paperwork Reduction Act



Sec.1250.501  OMB control numbers assigned pursuant to the Paperwork 
Reduction Act.

    (a) Purpose. This section collects and displays the control numbers 
assigned to information collection requirements by the Office of 
Management and Budget contained in 7 CFR part 1250 pursuant to the 
Paperwork Reduction Act of 1980, Pub. L. 96-511.
    (b) Display.

------------------------------------------------------------------------
                                                             Current OMB
        7 CFR section where identified and described           control
                                                                number
------------------------------------------------------------------------
Sec.:
  1250.523.................................................    0581-0098
  1250.528.................................................    0581-0098
  1250.529.................................................    0581-0098
  1250.530.................................................    0581-0098
  1250.535.................................................    0581-0098
------------------------------------------------------------------------


(Agricultural Marketing Act of 1946, as amended (7 U.S.C. 1621-1627) and 
Egg Research and Consumer Information Act, as amended (7 U.S.C. 2701-
2718))

[48 FR 56566, Dec. 22, 1983]

                                 General



Sec.1250.505  Communications.

    Communications in connection with the Order shall be addressed to 
the Egg Board at its business address.



Sec.1250.506  Policy and objective.

    (a) It shall be the policy of the Egg Board to carry out an 
effective and continuous coordinated program of research, consumer and 
producer education, advertising, and promotion designed to strengthen 
the egg industry's position in the marketplace, and maintain and expand 
domestic and foreign markets and uses for eggs, egg products, spent 
fowl, and products of spent fowl of the United States.
    (b) It shall be the objective of the Egg Board to carry out programs 
and projects which will provide maximum benefit to the egg industry and 
no undue preference shall be given to any of the various industry 
segments.



Sec.1250.507  Contracts.

    The Egg Board, with the approval of the Secretary, may enter into 
contracts with persons for the development and submission to it of plans 
or projects authorized by the Order and for carrying out of such plans 
or projects. Contractors shall agree to comply with the provisions of 
the Order, this subpart, and applicable provisions of the U.S. Code 
relative to contracting with the U.S. Department of Agriculture. 
Subcontractors who enter into contracts or agreements with a primary 
contractor and who receive or otherwise utilize funds allocated by the 
Egg Board shall be subject to the provisions of this subpart.



Sec.1250.508  Procedure.

    The organization of the Egg Board and the procedure for conducting 
meetings of the Board shall be in accordance with the By-Laws of the 
Board.



Sec.1250.509  USDA costs.

    Pursuant to Sec.1250.347 of the Order, the Board shall pay those 
administrative costs incurred by the U.S. Department of Agriculture for 
the conduct of its duties under the Order as determined periodically by 
the Secretary. Payment shall be due promptly after the billing for such 
costs.



Sec.1250.510  Determination of Board Membership.

    (a) Pursuant to Sec.1250.328 (d) and (e), the 48 contiguous States 
of the United

[[Page 361]]

States shall be grouped into three geographic areas, as follows: Area 1 
(East)--Connecticut, Delaware, Maine, Maryland, Massachusetts, New 
Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, 
Virginia, West Virginia, the District of Columbia, Alabama, Georgia, 
Florida, Louisiana, Mississippi, North Carolina, South Carolina, and 
Texas; Area 2 (Central)--Arkansas, Oklahoma, Illinois, Indiana, 
Kentucky, Michigan, Missouri, Ohio, Tennessee, and Wisconsin; Area 3 
(West)--Arizona, California, Colorado, Idaho, Iowa, Kansas, Minnesota, 
Montana, Nebraska, Nevada, New Mexico, North Dakota, Oregon, South 
Dakota, Utah, Washington, and Wyoming.
    (b) Board representation among the three geographic areas is 
apportioned to reflect the percentages of United States egg production 
in each area times 18 (total Board membership). The distribution of 
members of the Board is: Area 1-6, Area 2-6, and Area 3-6. Each member 
will have an alternate appointed from the same area.

[85 FR 62945, Oct. 6, 2020]

                Assessments, Collections, and Remittances



Sec.1250.514  Levy of assessments.

    An assessment rate of 10 cents per case of commercial eggs is levied 
on each case of commercial eggs handled for the account of each 
producer. Each case of commercial eggs shall be subject to assessment 
only once. Producers meeting the requirements of Sec.1250.348 are 
exempt from the provisions of the Act including this section.

[55 FR 6974, Feb. 28, 1990, as amended at 59 FR 64560, Dec. 15, 1994]



Sec.1250.515  Reporting period and payment.

    (a) For the purpose of the payment of assessments, either a calendar 
month or a 4-week accounting period shall be considered the reporting 
period; however, other accounting periods may be used when approved by 
the Board on an individual basis. Each collecting handler shall register 
his reporting period with the Board. All changes in reporting periods 
shall be requested in writing and subject to approval by the Board.
    (b) Each producer shall pay the required assessment on his 
commercial eggs pursuant to Sec.1250.514 to the collecting handler 
designated in Sec.1250.516 on or before the date of final settlement 
between the producer and the collecting handler for the eggs received by 
the collecting handler during each reporting period.



Sec.1250.516  Collecting handlers and collection.

    (a) Handlers responsible for collecting the assessments shall be any 
of the following:
    (1) The first person to whom eggs are sold, consigned, or delivered 
by producers and who grades, cartons, or breaks such eggs. Such shell 
egg breaker or egg packer must collect and remit to the Board the 
assessments on all eggs handled except eggs for which there is a 
certification of exemption or eggs for which there is a statement 
indicating that an assessment has already been paid;
    (2) A person who buys or receives nest run eggs from a producer and 
who does not grade, carton, or break such eggs. Such person shall 
collect the assessment from the producer and remit to the Egg Board on 
all such eggs, except for which there is a certification of exemption or 
eggs for which there is a statement indicating that an assessment has 
already been paid;
    (3) Except as otherwise provided in paragraph (a)(4) of this 
section, a producer who grades, cartons, or breaks eggs of his own 
production shall be responsible for remitting the assessment to the 
Board on all eggs produced. This would include the eggs which he grades, 
cartons, or breaks as well as the nest run eggs which are graded, 
cartoned, or broken by another handler. Such a producer who remits the 
assessment on nest run eggs to the Board shall provide the handler 
specified in paragraph (a) (1) or (2) of this section with a written 
statement that the assessment has already been paid on the nest run 
eggs; or
    (4) Upon approval of the Board, any person who handles eggs for a 
producer under a written contract that includes express provisions that 
said handler

[[Page 362]]

will remit the assessment on such eggs to the Board shall be the 
collecting handler notwithstanding the fact that the producer may have 
graded, cartoned, or otherwise processed the eggs.
    Following are some examples to aid in identification of collecting 
handlers:
    (i) Producer sells, assigns, consigns, or otherwise delivers nest 
run eggs of his own production to a shell egg packer or breaker for 
preparation for market--the shell egg packer or breaker is the 
collecting handler and is responsible for remitting to the Egg Board;
    (ii) Producer grades, cartons, breaks, or otherwise prepares for 
marketing a portion of the eggs of his own production and delivers the 
remaining portion of his nest run eggs to a shell egg packer or 
breaker--the producer is the collecting handler and shall remit the 
assessment on his total production to the Board;
    (iii) Producer sells all or a portion of his eggs in nest run form 
to a handler who is not a shell egg packer or breaker--the handler is 
responsible for collecting the assessment and remitting it to the Egg 
Board except for eggs covered by a statement indicating that an 
assessment has already been paid;
    (iv) A shell egg packer or breaker who buys or receives nest run 
eggs from a handler who is not a shell egg packer or breaker--the 
handler is the collecting handler and shall remit such assessment to the 
Board;
    (v) A shell egg packer or egg breaker buys nest run or graded eggs 
including undergrade eggs from another shell egg packer or egg breaker--
the first shell egg packer or breaker is the collecting handler and 
shall remit such assessments to the Board.
    (b) In the event of a producer's death, bankruptcy, receivership, or 
incapacity to act, the representative of the producer or his estate, or 
the person acting on behalf of creditors, shall be considered the 
producer of the eggs for the purpose of this subpart.
    (c) The collecting handler may collect the assessment directly from 
the producer or deduct the assessment from the proceeds due or paid to 
the producer on whose eggs the assessment is made.

[41 FR 22925, June 8, 1976, as amended at 42 FR 60724, Nov. 29, 1977]



Sec.1250.517  Remittance to Egg Board.

    (a) The collecting handler responsible for remittance of assessments 
to the Board is not relieved of this obligation as a result of his 
failure to collect payment of the assessment from the egg producer(s).
    (b) Each collecting handler required to remit the assessments on the 
eggs handled during each reporting period, specified in Sec.
1250.515(a), shall remit the assessments directly to the Egg Board by 
check, draft, or money order payable to the Egg Board on or before the 
15th day after the end of said reporting period together with a report 
pursuant to Sec.1250.529. The assessment for each reporting period 
shall be calculated on the basis of the gross volume of eggs subject to 
assessment received by the collecting handler during each reporting 
period.
    (c) Remittance through cooperating agency.
    (1) In any State or specified geographic area the Egg Board, with 
the approval of the Secretary, may designate by agreement a cooperating 
agency to collect the assessments in its behalf. Every collecting 
handler within such a State or geographic area shall remit the 
assessments for each reporting period, specified in Sec.1250.515(a), 
to the designated cooperating agency by check, draft, or money order 
payable to said cooperating agency on or before the 15th day after the 
end of said reporting period together with a report pursuant to Sec.
1250.529.
    (2) On or before the 20th day after the end of each reporting 
period, each designated cooperating agency shall remit to the Egg Board 
the total amount of all assessments received from collecting handlers 
for said reporting period together with all collecting handler reports. 
In addition, each designated cooperating agency shall submit to the Egg 
Board such information as is required by the designation agreement with 
the Egg Board.

[[Page 363]]



Sec.1250.518  Receipts for payment of assessments.

    (a) Each collecting handler shall give each producer whose eggs are 
subject to assessment a receipt for the commercial eggs handled by said 
collecting handler showing payment of the assessment. This receipt may 
be on a separate receipt form or included as part of the invoice or 
settlement sheet for the eggs, but in either event shall contain the 
following information:
    (1) Name, address, and identification number of the collecting 
handler;
    (2) Name and address of the producer who paid the assessment;
    (3) Number of cases of eggs on which assessment was paid and the 
total amount of the assessment; and
    (4) Date on which assessment was paid by producer.
    (b) All eggs sold, consigned, or delivered from a collecting handler 
to another handler, excluding cartoned eggs and loose graded eggs sold 
to the bakeries, restaurants, and institutions, shall be accompanied 
with the collecting handler's written statement that the assessment on 
the lot of eggs covered by the invoice has been paid or that lot of eggs 
or portion thereof is exempt from assessment under provisions of Sec.
1250.514.



Sec.1250.519  Late-payment charge.

    Any unpaid assessments due to the Board pursuant to Sec.1250.347 
shall be increased by a late-payment charge of 1.5 percent each month 
beginning with the day following the date such assessments are 30 days 
past due. Any remaining amount due, which shall include any unpaid 
charges previously made pursuant to this section, shall be increased at 
the same rate on the corresponding day of each month thereafter until 
paid. Assessments that are not paid when due because of a person's 
failure to submit a handler report to the Board as required shall accrue 
late-payment charges from the time such assessments should have been 
remitted. The timeliness of a payment to the Board shall be based on the 
applicable postmark date or the date payment is actually received by the 
Board, whichever is earlier.

[58 FR 34697, June 29, 1993]

                 Registration, Certification and Reports



Sec.1250.528  Registration of collecting handlers.

    All collecting handlers shall, prior to August 1, 1976, register 
with the Egg Board by filing a registration statement. Registered 
collecting handlers will receive an identification number which must 
appear on all required reports and official communications with the Egg 
Board. New businesses subject to this subpart beginning after August 1, 
1976, shall register with the Egg Board within 30 days following the 
beginning of operations. The statement of registration shall include:
    (a) Name and complete address of the collecting handler;
    (b) Name of individual(s) responsible for filing reports with the 
Egg Board; and
    (c) Type of reporting period desired.



Sec.1250.529  Reports.

    (a) Collecting handler reports. (1) Each collecting handler shall 
make reports on forms made available or approved by the Egg Board. Each 
collecting handler shall prepare a separate report form each reporting 
period. Each report shall be mailed to the Egg Board within 15 days 
after the close of the reporting period and shall contain the following 
information:
    (i) Date of report;
    (ii) Reporting period covered by the report;
    (iii) Name and address of collecting handler and identification 
number;
    (iv) Total number of cases of eggs handled, total number of cases of 
eggs subject to collection of assessment, total number of cases of eggs 
exempt under Sec.1250.514 from collection of assessment, total number 
of cases of imported eggs handled, and total number of cases of eggs 
received from another handler and on which an assessment was already 
collected;
    (v) The names and addresses of producers subject to assessment 
supplying eggs to the handlers and number of cases of eggs received from 
each producer;
    (vi) Total amount of assessment due for eggs handled during the 
reporting

[[Page 364]]

period and remitted with the report; and
    (vii) Such other information as may be required by the Board.
    (2) Collecting handler reports shall be filed each reporting period 
following registration until such time as the Egg Board is notified in 
writing that the collecting handler has ceased to do business. During 
reporting periods in which the collecting handler does not handle any 
eggs, his report form shall state ``No Eggs Handled.''
    (b) The Egg Board may require all persons subject to section 7(c) of 
the Act to make reports as needed for the enforcement and administration 
of the Order and as approved by the Secretary.



Sec.1250.530  Certification of exempt producers.

    (a) Number of laying hens. Egg producers not subject to the 
provisions of the Act pursuant to Sec.1250.348 shall file with all 
handlers to whom they sell eggs a statement certifying their exemption 
from the provisions of the Act in accordance with the criterion of Sec.
1250.348. Certification shall be made on forms approved and provided by 
the Egg Board to collecting handlers for use by exempt producers. The 
certification form shall be filed with each handler on or before January 
1 of each year as long as the producer continues to do business with the 
handler. A copy of the certificate of exemption shall be forwarded to 
the Egg Board by the handler within 30 days of receipt. The 
certification shall list the following: the name and address of the 
producer, the basis for producer exemption according to the requirements 
of Sec.1250.348, and the signature of the producer.
    (b) Organic Production. (1) A producer who operates under an 
approved National Organic Program (7 CFR part 205) (NOP) organic 
production system plan may be exempt from the payment of assessments 
under this part, provided that:
    (i) Only agricultural products certified as ``organic'' or ``100 
percent organic'' (as defined in the NOP) are eligible for exemption;
    (ii) The exemption shall apply to all certified ``organic'' or ``100 
percent organic'' (as defined in the NOP) products of a producer 
regardless of whether the agricultural commodity subject to the 
exemption is produced by a person that also produces conventional or 
nonorganic agricultural products of the same agricultural commodity as 
that for which the exemption is claimed;
    (iii) The producer maintains a valid certificate of organic 
operation as issued under the Organic Foods Production Act of 1990 (7 
U.S.C. 6501-6522)(OFPA) and the NOP regulations issued under OFPA (7 CFR 
part 205); and
    (iv) Any producer so exempted shall continue to be obligated to pay 
assessments under this part that are associated with any agricultural 
products that do not qualify for an exemption under this section.
    (2) To apply for exemption under this section, a producer shall 
submit a request to the Board on an Organic Exemption Request Form (Form 
AMS-15) at any time during the year initially, and annually thereafter 
on or before January 1, for as long the producer continues to be 
eligible for the exemption.
    (3) A producer request for exemption shall include the following:
    (i) The applicant's full name, company name, address, telephone and 
fax numbers, and email address;
    (ii) Certification that the applicant maintains a valid certificate 
of organic operation issued under the OFPA and the NOP;
    (iii) Certification that the applicant produces organic products 
eligible to be labeled ``organic'' or ``100 percent organic'' under the 
NOP;
    (iv) A requirement that the applicant attach a copy of their 
certificate of organic operation issued by a USDA-accredited certifying 
agent under the OFPA and the NOP;
    (v) Certification, as evidenced by signature and date, that all 
information provided by the applicant is true; and
    (vi) Such other information as may be required by the Board, with 
the approval of the Secretary.
    (4) If a producer complies with the requirements of this section, 
the Board will grant an assessment exemption and issue a Certificate of 
Exemption to the producer within 30 days. If the application is 
disapproved, the Board will notify the applicant of the reason(s) for

[[Page 365]]

disapproval within the same timeframe.
    (5) The producer shall provide a copy of the Certificate of 
Exemption to each handler to whom the producer sells eggs. The handler 
shall maintain records showing the exempt producer's name and address 
and the exemption number assigned by the Board.
    (6) The exemption will apply at the first reporting period following 
the issuance of the Certificate of Exemption.
    (c) If the exempt producer no longer qualifies for an exemption as 
specified in Sec.1250.348 or 1250.530(b), that producer shall notify, 
within 10 days, all handlers with whom the producer has filed a 
Certificate of Exemption.

[70 FR 2761, Jan. 14, 2005, as amended at 80 FR 82034, Dec. 31, 2015]

                                 Records



Sec.1250.535  Retention of records.

    (a) Each person required to make reports pursuant to this subpart 
shall maintain and retain for at least 2 years beyond the fiscal period 
of their applicability:
    (1) One copy of each report submitted to the Egg Board;
    (2) Records of all exempt producers including certification of 
exemption as necessary to verify the address of each exempt producer; 
and
    (3) Such other records as are necessary to verify reports submitted 
to the Egg Board.
    (b) Egg producers subject to Sec.1250.514 shall maintain and 
retain for at least 2 years beyond the period of their applicability:
    (1) Receipts, or copies thereof, for payment of assessments; and
    (2) Such records as are necessary to verify monthly levels of egg 
production.



Sec.1250.536  Availability of records.

    Each handler and egg producer subject to this subpart and all 
persons subject to section 7(c) of the Act shall make available for 
inspection and copying by authorized employees of the Egg Board and/or 
the Secretary during regular business hours, such information as is 
appropriate and necessary to verify compliance with this subpart.



Sec.1250.537  Confidentiality.

    All information obtained by officers and employees of the Department 
of Agriculture, the Egg Board, or any person under contract by the Egg 
Board or otherwise acting on behalf of the Egg Board from the books, 
records, and reports of persons subject to this subpart, and all 
information with respect to refunds of assessments made to individual 
producers, shall be kept confidential in the manner and to the extent 
provided in Sec.1250.353 of the Order.

            Patents, Copyrights, Trademarks, and Information



Sec.1250.542  Patents, Copyrights, Inventions, Trademarks, 
Information, Publications, and Product Formulations.

    (a) Except as provided in paragraph (b) of this section, any 
patents, copyrights, inventions, trademarks, information, publications, 
or product formulations developed through the use of funds collected by 
the Board under the provisions of this subpart shall be the property of 
the U.S. Government, as represented by the Board, and shall, along with 
any rents, royalties, residual payments, or other income from the 
rental, sales, leasing, franchising, or other uses of such patents, 
copyrights, inventions, trademarks, information, publications, or 
product formulations, inure to the benefit of the Board; shall be 
considered income subject to the same fiscal, budget, and audit controls 
as other funds of the Board; and may be licensed subject to approval by 
the Secretary. Upon termination of this subpart, Sec.1250.358 shall 
apply to determine disposition of all such property.
    (b) Should patents, copyrights, inventions, trademarks, information, 
publications, or product formulations be developed through the use of 
funds collected by the Board under this subpart and funds contributed by 
another organization or person, the ownership and related rights to such 
patents, copyrights, inventions, trademarks, information, publications, 
or product formulations shall be determined by an agreement between the 
Board and the party contributing funds towards the

[[Page 366]]

development of such patents, copyrights, inventions, trademarks, 
information, publications, or product formulations in a manner 
consistent with paragraph (a) of this section.

[81 FR 90186, Dec. 14, 2016]

                           Personal Liability



Sec.1250.547  Personal liability.

    No member, alternate member, employee, or agent of the Board in the 
performance of his duties with the Board shall be held personally 
responsible either individually or jointly with others, in anyway 
whatsoever, to any person for errors in judgment, mistakes, or other 
acts, either of commission or omission, by such member, alternate 
member, employee, or agent, except for acts of dishonesty or willful 
misconduct.



PART 1260_BEEF PROMOTION AND RESEARCH--Table of Contents



               Subpart A_Beef Promotion and Research Order

                               Definitions

Sec.
1260.101 Department.
1260.102 Secretary.
1260.103 Board.
1260.104 Committee.
1260.105 Person.
1260.106 Collecting person.
1260.107 State.
1260.108 United States.
1260.109 Unit.
1260.110 [Reserved]
1260.111 Fiscal year.
1260.112 Federation.
1260.113 Established national nonprofit industry-governed organizations.
1260.114 Eligible organization.
1260.115 Qualified State beef council.
1260.116 Producer.
1260.117 Importer.
1260.118 Cattle.
1260.119 Beef.
1260.120 Beef products.
1260.121 Imported beef or beef products.
1260.122 Promotion.
1260.123 Research.
1260.124 Consumer information.
1260.125 Industry information.
1260.126 Plans and projects.
1260.127 Marketing.
1260.128 Act.
1260.129 Customs Service.
1260.130 Part and subpart.

              Cattlemen's Beef Promotion and Research Board

1260.141 Membership of Board.
1260.142 Term of office.
1260.143 Nominations.
1260.144 Nominee's agreement to serve.
1260.145 Appointment.
1260.146 Vacancies.
1260.147 Procedure.
1260.148 Compensation and reimbursement.
1260.149 Powers of the Board.
1260.150 Duties of the Board.
1260.151 Expenses.

                   Beef Promotion Operating Committee

1260.161 Establishment and membership.
1260.162 Term of office.
1260.163 Vacancies.
1260.164 Procedure.
1260.165 Compensation and reimbursement.
1260.166 Officers of the Committee.
1260.167 Powers of the Committee.
1260.168 Duties of the Committee.
1260.169 Promotion, research, consumer information and industry 
          information.

                               Assessments

1260.172 Assessments.
1260.173-1260.174 [Reserved]
1260.175 Late-payment charge.
1260.176 Adjustment of accounts.
1260.181 Qualified State Beef Councils.

                       Reports, Books and Records

1260.201 Reports.
1260.202 Books and records.
1260.203 Confidential treatment.

                              Miscellaneous

1260.211 Proceedings after termination.
1260.212 Effect of termination or amendment.
1260.213 Removal.
1260.214 Personal liability.
1260.215 Patents, copyrights, inventions and publications.
1260.216 Amendments.
1260.217 Separability.

                     Subpart B_Rules and Regulations

1260.301 Terms defined.
1260.302 Organic exemption.
1260.310 Domestic assessments.
1260.311 Collecting persons for purposes of collection of assessments.
1260.312 Remittance to the Cattlemen's Board or Qualified State Beef 
          Council.
1260.313 Document evidencing payment of assessments.
1260.314 Certification of non-producer status for certain transactions.
1260.315 Qualified State Beef Councils.
1260.316 Paperwork Reduction Act assigned number.

[[Page 367]]

Subpart C [Reserved]

  Subpart D_Beef Promotion and Research: Certification and Nomination 
    Procedures for the Cattlemen's Beef Promotion and Research Board

1260.500 General.
1260.510 Definitions.
1260.520 Responsibility for administration of regulations.
1260.530 Certification of eligibility.
1260.540 Application for certification.
1260.550 Verification of information.
1260.560 Review of certification.
1260.570 Notification of certification and the listing of certified 
          organizations.
1260.580-1260.600 [Reserved]
1260.610 Acceptance of appointment.
1260.620 Confidential treatment of information.
1260.630 Paperwork Reduction Act assigned number.
1260.640 Application for Certification Form.

    Authority: 7 U.S.C. 2901-2911 and 7 U.S.C. 7401.



               Subpart A_Beef Promotion and Research Order

    Source: 51 FR 26138, July 18, 1986, unless otherwise noted.

                               Definitions



Sec.1260.101  Department.

    Department means the United States Department of Agriculture.



Sec.1260.102  Secretary.

    Secretary means the Secretary of Agriculture of the United States or 
any other officer or employee of the Department to whom there has 
heretofore been delegated, or to whom there may hereafter be delegated, 
the authority to act in the Secretary's stead.



Sec.1260.103  Board.

    Board means the Cattlemen's Beef Promotion and Research Board 
established pursuant to the Act and this subpart.



Sec.1260.104  Committee.

    Committee means the Beef Promotion Operating Committee established 
pursuant to the Act and this subpart.



Sec.1260.105  Person.

    Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other entity.



Sec.1260.106  Collecting person.

    Collecting person means the person making payment to a producer for 
cattle, or any other person who is responsible for collecting and 
remitting an assessment pursuant to the Act, the order and regulations 
prescribed by the Board and approved by the Secretary.



Sec.1260.107  State.

    State means each of the 50 States.



Sec.1260.108  United States.

    United States means the 50 States and the District of Columbia.



Sec.1260.109  Unit.

    Unit means each State, group of States or class designation which is 
represented on the Board.



Sec.1260.110  [Reserved]



Sec.1260.111  Fiscal year.

    Fiscal year means the calendar year or such other annual period as 
the Board may determine.



Sec.1260.112  Federation.

    Federation means the Beef Industry Council of the National Live 
Stock and Meat Board, or any successor organization to the Beef Industry 
Council, which includes as its State affiliates the qualified State beef 
councils.



Sec.1260.113  Established national nonprofit industry-governed organizations.

    Established national nonprofit industry-governed organizations means 
organizations which:
    (a) Are nonprofit organizations pursuant to sections 501(c) (3), (5) 
or (6) of the Internal Revenue Code (26 U.S.C. 501(c) (3), (5) and (6));
    (b) Are governed by a board of directors representing the cattle or 
beef industry on a national basis; and

[[Page 368]]

    (c) Have been active and ongoing for at least two years.

[51 FR 26138, July 18, 1986, as amended at 77 FR 52599, Aug. 30, 2012]



Sec.1260.114  Eligible organization.

    Eligible organization means any organization which has been 
certified by the Secretary pursuant to the Act and this part as being 
eligible to submit nominations for membership on the Board.



Sec.1260.115  Qualified State beef council.

    Qualified State beef council means a beef promotion entity that is 
authorized by State statute or a beef promotion entity organized and 
operating within a State that receives voluntary assessments or 
contributions; conducts beef promotion, research, and consumer and 
industry information programs; and that is certified by the Board 
pursuant to this subpart as the beef promotion entity in such State.



Sec.1260.116  Producer.

    Producer means any person who owns or acquires ownership of cattle; 
provided, however, that a person shall not be considered a producer 
within the meaning of this subpart if (a) the person's only share in the 
proceeds of a sale of cattle or beef is a sales commission, handling 
fee, or other service fee; or (b) the person (1) acquired ownership of 
cattle to facilitate the transfer of ownership of such cattle from the 
seller to a third party, (2) resold such cattle no later than ten (10) 
days from the date on which the person acquired ownership, and (3) 
certified, as required by regulations prescribed by the Board and 
approved by the Secretary, that the requirements of this provision have 
been satisfied.



Sec.1260.117  Importer.

    Importer means any person who imports cattle, beef, or beef products 
from outside the United States.



Sec.1260.118  Cattle.

    Cattle means live domesticated bovine animals regardless of age.



Sec.1260.119  Beef.

    Beef means flesh of cattle.



Sec.1260.120  Beef products.

    Beef products means edible products produced in whole or in part 
from beef, exclusive of milk and products made therefrom.



Sec.1260.121  Imported beef or beef products

    Imported beef or beef products means products which are imported 
into the United States which the Secretary determines contain a 
substantial amount of beef including those products which have been 
assigned one or more numbers in the Tariff Schedule of the United 
States.

[82 FR 24456, May 30, 2017]



Sec.1260.122  Promotion.

    Promotion means any action, including paid advertising, to advance 
the image and desirability of beef and beef products with the express 
intent of improving the competitive position and stimulating sales of 
beef and beef products in the marketplace.



Sec.1260.123  Research.

    Research means studies relative to the effectiveness of market 
development and promotion efforts, studies relating to the nutritional 
value of beef and beef products, other related food science research, 
and new product development.



Sec.1260.124  Consumer information.

    Consumer information means nutritional data and other information 
that will assist consumers and other persons in making evaluations and 
decisions regarding the purchasing, preparing, and use of beef and beef 
products.



Sec.1260.125  Industry information.

    Industry information means information and programs that will lead 
to the development of new markets, marketing strategies, increased 
efficiency, and activities to enhance the image of the cattle industry.



Sec.1260.126  Plans and projects.

    Plans and projects means promotion, research, consumer information 
and industry information plans, studies or projects conducted pursuant 
to this subpart.

[[Page 369]]



Sec.1260.127  Marketing.

    Marketing means the sale or other disposition in commerce of cattle, 
beef or beef products.



Sec.1260.128  Act.

    Act means the Beef Promotion and Research Act of 1985, Title XVI, 
Subtitle A of the Food Security Act of 1985, Pub. L. 99-198 and any 
amendments thereto.



Sec.1260.129  Customs Service.

    Customs Service means the United States Customs and Border 
Protection of the United States Department of Homeland Security.

[79 FR 46963, Aug. 12, 2014]



Sec.1260.130  Part and subpart.

    Part means the Beef Promotion and Research Order and all rules and 
regulations issued pursuant to the Act and the order, and the order 
itself shall be a ``subpart'' of such part.

              Cattlemen's Beef Promotion and Research Board



Sec.1260.141  Membership of Board.

    (a) Beginning with the 2020 Board nominations and the associated 
appointments effective early in the year 2021, the United States shall 
be divided into 38 geographical units and 1 unit representing importers, 
for a total of 39 units. The number of Board members from each unit 
shall be as follows:

             Table 1 to Paragraph (a)--Cattle and Calves \1\
------------------------------------------------------------------------
               State/unit                  (1,000 Head)      Directors
------------------------------------------------------------------------
1. Alabama..............................           1,313               1
2. Arizona..............................           1,003               1
3. Arkansas.............................           1,763               2
4. Colorado.............................           2,850               3
5. Florida..............................           1,670               2
6. Georgia..............................           1,080               1
7. Idaho................................           2,430               2
8. Illinois.............................           1,190               1
9. Indiana..............................             877               1
10. Iowa................................           3,950               4
11. Kansas..............................           6,350               6
12. Kentucky............................           2,153               2
13. Louisiana...........................             800               1
14. Michigan............................           1,163               1
15. Minnesota...........................           2,360               2
16. Mississippi.........................             907               1
17. Missouri............................           4,317               4
18. Montana.............................           2,567               3
19. Nebraska............................           6,683               7
20. New Mexico..........................           1,473               1
21. New York............................           1,477               1
22. North Carolina......................             810               1
23. North Dakota........................           1,837               2
24. Ohio................................           1,303               1
25. Oklahoma............................           5,133               5
26. Oregon..............................           1,303               1
27. Pennsylvania........................           1,613               2
28. South Dakota........................           3,967               4
29. Tennessee...........................           1,820               2
30. Texas...............................          12,600              13
31. Utah................................             807               1
32. Virginia............................           1,480               1
33. Wisconsin...........................           3,500               4
34. Wyoming.............................           1,317               1
35. Northwest Unit:
     Alaska...........              15
     Hawaii...........             143
     Washington.......           1,163
                                         -------------------------------
        Total...........................           1,321               1
36. Northeast Unit:
     Connecticut......              48
     Delaware.........              16
     Maine............              81
     Maryland.........             192
     Massachusetts....              38
     New Hampshire....              35

[[Page 370]]

 
     New Jersey.......              29
     Rhode Island.....               5
     Vermont..........             260
                                         -------------------------------
        Total...........................             702               1
37. Mid-Atlantic Unit:
     South Carolina...             342
     West Virginia....             397
                                         -------------------------------
        Total...........................             738               1
38. Southwest Unit:
     California.......           5,167
     Nevada...........             460
                                         -------------------------------
        Total...........................           5,627               6
39. Importers Unit \2\..................           6,874               7
------------------------------------------------------------------------
\1\ 2017, 2018, and 2019 average of January 1 cattle inventory data.
\2\ 2016, 2017, and 2018 average of annual import data.

    (b) The Board shall be composed of cattle producers and importers 
appointed by the Secretary from nominations submitted pursuant to the 
Act and regulations of this part. A producer may only be nominated to 
represent the unit in which that producer is a resident.
    (c) At least every three (3) years, and not more than every two (2) 
years, the Board shall review the geographic distribution of cattle 
inventories throughout the United States and the volume of imported 
cattle, beef, and beef products and, if warranted, shall reapportion 
units and/or modify the number of Board members from units in order to 
best reflect the geographic distribution of cattle production volume in 
the United States and the volume of imported cattle, beef, or beef 
products into the United States.
    (d) The Board may recommend to the Secretary a modification in the 
number of cattle per unit necessary for representation on the Board.
    (e) The following formula will be used to determine the number of 
Board members who shall serve on the Board for each unit:
    (1) Each geographic unit or State that includes a total cattle 
inventory equal to or greater than five hundred thousand (500,000) head 
of cattle shall be entitled to one representative on the Board;
    (2) States which do not have total cattle inventories equal to or 
greater than five hundred thousand (500,000) head of cattle shall be 
grouped, to the extent practicable, into geographically contiguous units 
each of which have a combined total inventory of not less than 500,000 
head of cattle and such unit(s) shall be entitled to at least one 
representative on the Board;
    (3) Importers shall be represented by a single unit, with the number 
of Board members representing such unit based upon a conversion of the 
total volume of imported cattle, beef or beef products into live animal 
equivalencies;
    (4) Each unit shall be entitled to representation by an additional 
Board member for each one million (1,000,000) head of cattle within the 
unit which exceeds the initial five hundred thousand (500,000) head of 
cattle within the unit qualifying such unit for representation.
    (f) In determining the volume of cattle within the units, the Board 
and the Secretary shall utilize the information received by the Board 
pursuant to Sec. Sec.1260.201 and 1260.202 industry data and data 
published by the Department.

[51 FR 26138, July 18, 1986, as amended at 55 FR 20445, May 17, 1990; 58 
FR 12999, Mar. 9, 1993; 60 FR 62020, Dec. 4, 1995; 64 FR 3815, Jan. 26, 
1999; 67 FR 11412, Mar. 14, 2002; 70 FR 7005, Feb. 10, 2005; 73 FR 
60098, Oct. 10, 2008; 76 FR 42014, July 19, 2011; 79 FR 46963, Aug. 12, 
2014; 82 FR 27612, June 16, 2017; 85 FR 39463, July 1, 2020]



Sec.1260.142  Term of office.

    (a) The members of the Board shall serve for terms of three (3) 
years, except that the members appointed to

[[Page 371]]

the initial Board shall serve, proportionately, for terms of 1, 2, and 3 
years. To the extent practicable, the terms of Board members from the 
same unit shall be staggered for the initial Board.
    (b) Each member shall continue to serve until a successor is 
appointed by the Secretary.
    (c) No member shall serve more than two consecutive 3-year terms in 
such capacity.



Sec.1260.143  Nominations.

    All nominations authorized under this section shall be made in the 
following manner:
    (a) Nominations shall be obtained by the Secretary from eligible 
organizations. An eligible organization shall only submit nominations 
for positions on the Board representing units in which such eligible 
organization can establish that it is certified as an eligible 
organization to submit nominations for that unit. If the Secretary 
determines that a unit is not represented by an eligible organization, 
then the Secretary may solicit nominations from organizations, and 
producers residing in that unit.
    (b) Nominations for representation of the importer unit may be 
submitted by--
    (1) Organizations which represent importers of cattle, beef or beef 
products, as determined by the Secretary, or
    (2) Individual importers of cattle, beef or beef products. 
Individual importers submitting nominations for representation of the 
importer unit must establish to the satisfaction of the Secretary that 
the persons submitting the nominations are importers of cattle, beef or 
beef products.
    (c) After the establishment of the initial Board, the Department 
shall announce when a vacancy does or will exist. Nominations for 
subsequent Board members shall be submitted to the Secretary not less 
than sixty (60) days prior to the expiration of the terms of the members 
whose terms are expiring, in the manner as described in this section. In 
the case of vacancies due to reasons other than the expiration of a term 
of office, successor Board members shall be appointed pursuant to Sec.
1260.146.
    (d) Where there is more than one eligible organization representing 
producers in a unit, they may caucus and jointly nominate two qualified 
persons for each position representing that unit on the Board for which 
a member is to be appointed. If joint agreement is not reached with 
respect to any such nominations, or if no caucus is held, each eligible 
organization may submit to the Secretary two nominees for each 
appointment to be made to represent that unit.



Sec.1260.144  Nominee's agreement to serve.

    Any producer or importer nominated to serve on the Board shall file 
with the Secretary at the time of the nomination a written agreement to:
    (a) Serve on the Board if appointed; and
    (b) Disclose any relationship with any beef promotion entity or with 
any organization that has or is being considered for a contractual 
relationship with the Board.



Sec.1260.145  Appointment.

    (a) From the nominations made pursuant to Sec.1260.143, the 
Secretary shall appoint the members of the Board on the basis of 
representation provided for in Sec.1260.141.
    (b) Producers or importers serving on the Federation Board of 
Directors shall not be eligible for appointment to serve on the Board 
for a concurrent term.



Sec.1260.146  Vacancies.

    To fill any vacancy occasioned by the death, removal, resignation, 
or disqualification of any member of the Board, the Secretary shall 
request that nominations for a successor for the vacancy be submitted by 
the eligible organization(s) representing producers or importers of the 
unit represented by the vacancy. If no eligible organization(s) 
represents producers or importers in such unit, then the Secretary shall 
determine the manner in which nominations for the vacancy are submitted.



Sec.1260.147  Procedure.

    (a) At a properly convened meeting of the Board, a majority of the 
members

[[Page 372]]

shall constitute a quorum, and any action of the Board at such a meeting 
shall require the concurring votes of at least a majority of those 
present at such meeting. The Board shall establish rules concerning 
timely notice of meetings.
    (b) When in the opinion of the chairperson of the Board emergency 
action is considered necessary, and in lieu of a properly convened 
meeting, the Board may take action upon the concurring votes of a 
majority of its members by mail, telephone, or telegraph, but any such 
action by telephone shall be confirmed promptly in writing. In the event 
that such action is taken, all members must be notified and provided the 
opportunity to vote. Any action so taken shall have the same force as 
though such action had been taken at a regular or special meeting of the 
Board.



Sec.1260.148  Compensation and reimbursement.

    The members of the Board shall serve without compensation, but shall 
be reimbursed for necessary and reasonable expenses incurred by them in 
the performance of their duties under this subpart.



Sec.1260.149  Powers of the Board.

    The Board shall have the following powers:
    (a) To administer the provisions of this subpart in accordance with 
its terms and provisions;
    (b) To make rules and regulations to effectuate the terms and 
provisions of this subpart;
    (c) To receive or initiate, investigate, and report to the Secretary 
complaints of violations of the provisions of this subpart;
    (d) To adopt such rules for the conduct of its business as it may 
deem advisable;
    (e) To recommend to the Secretary amendments to this subpart; and
    (f) With the approval of the Secretary, to invest, pending 
disbursement pursuant to a plan or project, funds collected through 
assessments authorized under Sec.1260.172, in, and only in, 
obligations of the United States or any agency thereof, in general 
obligations of any State or any political subdivision thereof, in any 
interest-bearing account or certificate of deposit of a bank that is a 
member of the Federal Reserve System, or in obligations fully guaranteed 
as to principal and interest by the United States.



Sec.1260.150  Duties of the Board.

    The Board shall have the following duties:
    (a) To meet not less than annually, and to organize and select from 
among its members a chairperson, a vice-chairperson and a treasurer and 
such other officers as may be necessary;
    (b) To elect from its members an Executive Committee of no more than 
11 and no less than 9 members, whose membership shall, to the extent 
practicable, reflect the geographic distribution of cattle numbers or 
their equivalent. The vice-chairperson of the Board shall serve as 
chairperson of the Executive Committee and the chairperson and the 
treasurer of the Board shall serve as members of the Executive 
Committee;
    (c) To delegate to the Executive Committee the authority to 
administer the terms and provisions of this subpart under the direction 
of the Board and within the policies determined by the Board;
    (d) To elect from its members 10 representatives to the Beef 
Promotion Operating Committee which shall be composed of 10 members from 
the Board and 10 members elected by the Federation;
    (e) To utilize the resources, personnel, and facilities of 
established national nonprofit industry-governed organizations;
    (f) To review and, if approved, submit to the Secretary for 
approval, budgets prepared by the Beef Promotion Operating Committee on 
a fiscal period basis of the Committee's anticipated expenses and 
disbursements in the administration of the Committee's responsibilities, 
including probable costs of promotion, research, and consumer 
information and industry information plans or projects, and also 
including a general description of the proposed promotion, research, 
consumer information and industry information programs contemplated 
therein;

[[Page 373]]

    (g) To prepare and submit to the Secretary for approval budgets on a 
fiscal period basis of the Board's overall anticipated expenses and 
disbursements, including the Committee's anticipated expenses and 
disbursements, in the administration of this subpart;
    (h) To maintain such books and records, which shall be available to 
the Secretary for inspection and audit, and to prepare and submit such 
reports from time to time to the Secretary, as the Secretary may 
prescribe, and to make appropriate accounting with respect to the 
receipt and disbursement of all funds entrusted to it;
    (i)-(j) [Reserved]
    (k) To prepare and make public, at least annually, a report of its 
activities carried out and an accounting for funds received and 
expended;
    (l) To cause its books to be audited by a certified public 
accountant at least once each fiscal period and at such other times as 
the Secretary may request, and submit a copy of each such audit to the 
Secretary;
    (m) To give the Secretary the same notice of meetings of the Board 
as is given to members in order that the Secretary, or his 
representative may attend such meetings;
    (n) To review applications submitted by State beef promotion 
organizations pursuant to Sec.1260.181 and to make determinations with 
regard to such applications;
    (o) To submit to the Secretary such information pursuant to this 
subpart as may be requested; and
    (p) To encourage the coordination of programs of promotion, 
research, consumer information and industry information designed to 
strengthen the beef industry's position in the marketplace and to 
maintain and expand domestic and foreign markets and uses for beef and 
beef products.

[51 FR 26138, July 18, 1986, as amended at 60 FR 58502, Nov. 28, 1995]



Sec.1260.151  Expenses.

    (a) The Board is authorized to incur such expenses (including 
provision for a reasonable reserve), as the Secretary finds are 
reasonable and likely to be incurred by the board for its maintenance 
and functioning and to enable it to exercise its powers and perform its 
duties in accordance with this subpart. Administrative expenses incurred 
by the board shall not exceed 5 percent of the projected revenue of that 
fiscal period. Expenses authorized in this paragraph shall be paid from 
assessments collected pursuant to Sec.1260.172.
    (b) The Board shall reimburse the Secretary, from assessments 
collected pursuant to Sec.1260.172, for administrative costs incurred 
by the Department to carry out its responsibilities pursuant to this 
subpart after the effective date of this subpart.
    (c) [Reserved]
    (d) Expenditures for the maintenance and expansion of foreign 
markets for beef and beef products shall be limited to an amount equal 
to or less than the total amount of assessments paid pursuant to Sec.
1260.172(a).

[51 FR 26138, July 18, 1986, as amended at 53 FR 52631, Dec. 29, 1988 
and 54 FR 15918, Apr. 20, 1989; 60 FR 58502, Nov. 28, 1995]

                   Beef Promotion Operating Committee



Sec.1260.161  Establishment and membership.

    (a) There is hereby established a Beef Promotion Operating Committee 
of 20 members. The Committee shall be composed of 10 Board members 
elected by the Board and 10 producers elected by the Federation.
    (b) Board representation on the Committee shall consist of the 
chairperson, vice-chairperson and treasurer of the Board, and seven 
representatives of the Board who will be duly elected by the Board to 
serve on the Committee. The seven representatives to the Committee 
elected by the Board shall, to the extent practical, reflect the 
geographic and unit distribution of cattle numbers, or the equivalent 
thereof.
    (c) Federation representation on the Committee shall consist of the 
Federation chairperson, vice-chairperson, and eight duly elected 
producer representatives of the Federation Board of Directors who are 
members or ex officio members of the Board of Directors of a qualified 
State beef council. The eight representatives of the Federation elected 
to serve on the Committee shall, to the extent practical, reflect the 
geographic distribution of cattle numbers. The Federation shall submit

[[Page 374]]

to the Secretary the names of the representatives elected by the 
Federation to serve on the Committee and the manner in which such 
election was held and that such representatives are producers and are 
members or ex officio members of the Board of Directors of a qualified 
State beef council on the Federation Board of Directors. The prospective 
Federation representatives shall file with the Secretary a written 
agreement to serve on the Committee and to disclose any relationship 
with any beef promotion entity or with any organization that has or is 
being considered for a contractual relationship with the Board or the 
Committee. When the Secretary is satisfied that the above conditions are 
met, the Secretary shall certify such representatives as eligible to 
serve on the Committee.



Sec.1260.162  Term of office.

    (a) The members of the Committee shall serve for a term of 1 year.
    (b) No member shall serve more than six consecutive terms.



Sec.1260.163  Vacancies.

    To fill any vacancy occasioned by the death, removal, resignation, 
or disqualification of any member of the Committee, the Board or the 
Federation, depending upon which organization is represented by the 
vacancy, shall submit the name of a successor for the position in the 
manner utilized to elect representatives pursuant to Sec.1260.161 (b) 
and (c) of this section.



Sec.1260.164  Procedure.

    (a) Attendance of at least 15 members of the Committee shall 
constitute a quorum at a properly convened meeting of the Committee. Any 
action of the Committee shall require the concurring votes of at least 
two-thirds of the members present. The Committee shall establish rules 
concerning timely notice of meetings.
    (b) When in the opinion of the chairperson of the Committee 
emergency action must be taken before a meeting can be called, the 
Committee may take action upon the concurring votes of no less than two-
thirds of its members by mail, telephone, or telegraph. Action taken by 
this emergency procedure is valid only if all members are notified and 
provided the opportunity to vote and any telephone vote is confirmed 
promptly in writing. Any action so taken shall have the same force and 
effect as though such action had been taken at a properly convened 
meeting of the Committee.



Sec.1260.165  Compensation and reimbursement.

    The members of the Committee shall serve without compensation but 
shall be reimbursed for necessary and reasonable expenses incurred by 
them in the performance of their duties under this subpart.



Sec.1260.166  Officers of the Committee.

    The following persons shall serve as officers of the Committee:
    (a) The chairperson of the Board shall be chairperson of the 
Committee.
    (b) The chairperson of the Federation shall be vice-chairperson of 
the Committee.
    (c) The treasurer of the Board shall be treasurer of the Committee.
    (d) The Committee shall elect or appoint such other officers as it 
may deem necessary.



Sec.1260.167  Powers of the Committee.

    The Committee shall have the following powers:
    (a) To receive and evaluate, or on its own initiative, develop and 
budget for plans or projects to promote the use of beef and beef 
products as well as projects for research, consumer information and 
industry information and to make recommendations to the Secretary 
regarding such proposals;
    (b) To select committees and subcommittees of Committee members, and 
to adopt such rules for the conduct of its business as it may deem 
advisable;
    (c) To establish committees of persons other than Committee members 
to advise the Committee and pay the necessary and reasonable expenses 
and fees of the members of such committees.



Sec.1260.168  Duties of the Committee.

    The Committee shall have the following duties:
    (a) To meet and to organize;

[[Page 375]]

    (b) To contract with established national nonprofit industry-
governed organizations to implement programs of promotion, research, 
consumer information and industry information;
    (c) To disseminate information to Board members;
    (d) To prepare and submit to the Board for approval budgets on a 
fiscal-period basis of its anticipated expenses and disbursements in the 
administration of its responsibilities, including probable costs of 
promotion, research, consumer information and industry information plans 
or projects, and also including a general description of the proposed 
promotion, research, consumer information and industry information 
programs contemplated therein;
    (e) To develop and submit to the Secretary for approval promotion, 
research, consumer information and industry information plans or 
projects;
    (f) With the approval of the Secretary to enter into contracts or 
agreements with established national nonprofit industry-governed 
organizations for the implementation and conduct of activities 
authorized under Sec. Sec.1260.167 and 1260.169 and for the payment of 
the cost of such activities with funds collected through assessments 
pursuant to Sec.1260.172. Any such contract or agreement shall provide 
that:
    (1) The contractors shall develop and submit to the Committee a 
budget or budgets which shall show the estimated cost to be incurred for 
such activity or project;
    (2) Any such plan or project shall become effective upon approval of 
the Secretary; and
    (3) The contracting party shall keep accurate records of all of its 
transactions and make periodic reports to the Committee or Board of 
activities conducted and an accounting for funds received and expended, 
and such other reports as the Secretary, the Committee or the Board may 
require. The Secretary or agents of the Committee or the Board may audit 
periodically the records of the contracting party;
    (g) To prepare and make public, at least annually, a report of its 
activities carried out and an accounting for funds received and 
expended;
    (h) To give the Secretary the same notice of meetings of the 
Committee and its subcommittees and advisory committees in order that 
the Secretary, or his representative, may attend such meetings;
    (i) To submit to the Board and to the Secretary such information 
pursuant to this subpart as may be requested; and
    (j) To encourage the coordination of programs of promotion, 
research, consumer information and industry information designed to 
strengthen the cattle industry's position in the marketplace and to 
maintain and expand domestic and foreign markets and uses for beef and 
beef products.



Sec.1260.169  Promotion, research, consumer information and industry
information.

    The Committee shall receive and evaluate, or on its own initiative, 
develop and submit to the Secretary for approval any plans and projects 
for promotion, research, consumer information and industry information 
authorized by this subpart. Such plans and projects shall provide for:
    (a) The establishment, issuance, effectuation, and administration of 
appropriate plans or projects for promotion, research, consumer 
information and industry information, with respect to beef and beef 
products designed to strengthen the beef industry's position in the 
marketplace and to maintain and expand domestic and foreign markets and 
uses for beef and beef products;
    (b) The establishment and conduct of research and studies with 
respect to the sale, distribution, marketing, and utilization of beef 
and beef products and the creation of new products thereof, to the end 
that marketing and utilization of beef and beef products may be 
encouraged, expanded, improved or made more acceptable in the United 
States and foreign markets;
    (c) Each plan or project authorized under paragraph (a) and (b) of 
this section shall be periodically reviewed or evaluated by the 
Committee to ensure that each such plan or project contributes to an 
effective program of promotion, research, consumer information and 
industry information. If it is

[[Page 376]]

found by the Committee that any such plan or project does not further 
the purposes of the Act, then the Committee shall terminate such plan or 
project;
    (d) In carrying out any plan or project of promotion or advertising 
implemented by the Committee, no reference to a brand or trade name of 
any beef product shall be made without the approval of the Board and the 
Secretary. No such plans or projects shall make use of any unfair or 
deceptive acts or practices, including unfair or deceptive acts or 
practices with respect to the quality, value or use of any competing 
product; and
    (e) No funds collected by the Board under this subpart shall in any 
manner be used for the purpose of influencing governmental policy or 
action, except to recommend to the Secretary amendments to this part.

                               Assessments



Sec.1260.172  Assessments.

    (a) Domestic assessments. (1) Except as prescribed by regulations 
approved by the Secretary, each person making payment to a producer for 
cattle purchased from such producer shall be a collecting person and 
shall collect an assessment from the producer, and each producer shall 
pay such assessment to the collecting person, at the rate of one dollar 
($1) per head of cattle purchased and such collecting person shall remit 
the assessment to the Board or to a qualified State beef council 
pursuant to Sec.1260.172(a)(5).
    (2) Any producer marketing cattle of that producer's own production 
in the form of beef or beef products to consumers, either directly or 
through retail or wholesale outlets, or for export purposes, shall remit 
to a qualified State beef council or to the Board an assessment on such 
cattle at the rate of one dollar ($1) per head of cattle or the 
equivalent thereof.
    (3) In determining the assessment due from each producer pursuant to 
Sec.1260.172(a), a producer who is contributing to a qualified State 
beef council(s) shall receive a credit from the Board for contributions 
to such Council, but not to exceed 50 cents per head of cattle assessed.
    (4) In order for a producer described in Sec.1260.172(a) to 
receive the credit authorized in Sec.1260.172(a)(3), the qualified 
State beef council or the collecting person must establish to the 
satisfaction of the Board that the producer has contributed to a 
qualified State beef council.
    (5) Each person responsible for the remittance of the assessment 
pursuant to Sec.1260.172 (a) (1) and (2) shall remit the assessment to 
the qualified State beef council in the State from which the cattle 
originated prior to sale, or if there is no qualified State beef council 
within such State, the assessment shall be remitted directly to the 
Board. However, the Board, with the approval of the Secretary, may 
authorize qualified State beef councils to propose modifications to the 
foregoing ``State of origin'' rule to ensure effective coordination of 
assessment collections between qualified State beef councils. Qualified 
State beef councils and the Board shall coordinate assessment collection 
procedures to ensure that producers selling or marketing cattle in 
interstate commerce are required to pay only one assessment per 
individual sale of cattle. For the purpose of this subpart, ``State of 
origin'' rule means the State where the cattle were located at time of 
sale, or the State in which the cattle were located prior to sale if 
such cattle were transported interstate for the sole purpose of sale. 
Assessments shall be remitted not later than the 15th day of the month 
following the month in which the cattle were purchased or marketed.
    (6) If a State law or regulation promulgated pursuant to State law 
requires the payment and collection of a mandatory, nonrefundable 
assessment of more fifty (50) cents per head on the sale and purchase of 
cattle, or the equivalent thereof for beef and beef products as 
described in Sec.1260.172 (a)(1) and (2) for use by a qualified State 
beef council to fund activities similar to those described in Sec.
1260.169, and such State law or regulation authorizes the issuance of a 
credit of that amount of the assessment which exceeds fifty (50) cents 
to producers who waive any right to the refund of the assessment 
credited by the State due pursuant to this subpart, then any producer 
subject to

[[Page 377]]

such State law or regulation who pays only the amount due pursuant to 
such State law or regulation and this subpart, including any credits 
issued, shall thereby waive that producer's right to receipt from the 
Board of a refund of such assessment for that portion of such refund for 
which the producer received credit pursuant to such State law or 
regulation.
    (7) A producer may request a redirection of assessments from a 
Qualified State Beef Council to the Board in accordance with Sec.
1260.181(b)(8) or (9) by submitting a redirection request on the 
appropriate form postmarked by the 15th day of the month following the 
month in which the cattle were sold. Requests may not be retroactive. 
Requests to redirect assessments must be submitted by the producers who 
paid the assessments.
    (b) Importer assessments. (1) Importers of cattle, beef, and beef 
products into the United States shall pay an assessment to the Board 
through the U.S. Customs Service, or in such other manner as may be 
established by regulations approved by the Secretary.
    (2) The assessment rates for imported cattle, beef, beef products, 
are as follows:

                          Imported Live Cattle
------------------------------------------------------------------------
                                                            Assessment
                         HTS No.                           rate per head
------------------------------------------------------------------------
0102.10.0010............................................           $1.00
0102.10.0020............................................            1.00
0102.10.0030............................................            1.00
0102.10.0050............................................            1.00
0102.90.2011............................................            1.00
0102.90.2012............................................            1.00
0102.90.4024............................................            1.00
0102.90.4028............................................            1.00
0102.90.4034............................................            1.00
0102.90.4038............................................            1.00
0102.90.4054............................................            1.00
0102.90.4058............................................            1.00
0102.90.4062............................................            1.00
0102.90.4064............................................            1.00
0102.90.4066............................................            1.00
0102.90.4068............................................            1.00
0102.90.4072............................................            1.00
0102.90.4074............................................            1.00
0102.90.4082............................................            1.00
0102.90.4084............................................            1.00
------------------------------------------------------------------------


      Table 2 to Paragraph (b)(2)--Imported Beef and Beef Products
------------------------------------------------------------------------
                                                            Assessment
                        HTS code                            rate per kg
------------------------------------------------------------------------
0201.10.0510............................................       .01431558
0201.10.0590............................................       .00379102
0201.10.1010............................................       .01431558
0201.10.1090............................................       .00379102
0201.10.5010............................................       .01431558
0201.10.5090............................................       .00511787
0201.20.0200............................................       .00530743
0201.20.0400............................................       .00511787
0201.20.0600............................................       .00379102
0201.20.1000............................................       .00530743
0201.20.3000............................................       .00511787
0201.20.5015............................................       .01431558
0201.20.5025............................................       .00379102
0201.20.5035............................................       .00379102
0201.20.5045............................................       .00379102
0201.20.5055............................................       .00379102
0201.20.5065............................................       .00379102
0201.20.5075............................................       .00379102
0201.20.5085............................................       .00379102
0201.20.8090............................................       .00379102
0201.30.0200............................................       .00530743
0201.30.0400............................................       .00511787
0201.30.0600............................................       .00379102
0201.30.1000............................................       .00530743
0201.30.3000............................................       .00511787
0201.30.5015............................................       .02090075
0201.30.5025............................................       .00511787
0201.30.5035............................................       .00511787
0201.30.5045............................................       .00511787
0201.30.5055............................................       .00511787
0201.30.5065............................................       .00511787
0201.30.5075............................................       .00511787
0201.30.5085............................................       .00511787
0201.30.8090............................................       .00511787
0202.10.0510............................................       .01431558
0202.10.0590............................................       .00379102
0202.10.1010............................................       .01431558
0202.10.1090............................................       .00370102
0202.10.5010............................................       .01431558
0202.10.5090............................................       .00379102
0202.20.0200............................................       .00530743
0202.20.0400............................................       .00511787
0202.20.0600............................................       .00379102
0202.20.1000............................................       .00530743
0202.20.3000............................................       .00511787
0202.20.5025............................................       .00379102
0202.20.5035............................................       .00379102
0202.20.5045............................................       .00379102
0202.20.5055............................................       .00379102
0202.20.5065............................................       .00379102
0202.20.5075............................................       .00379102
0202.20.5085............................................       .00379102
0202.20.8000............................................       .00379102
0202.30.0200............................................       .00530743
0202.30.0400............................................       .00511787
0202.30.0600............................................       .00527837
0202.30.1000............................................       .00530743
0202.30.3000............................................       .00511787
0202.30.5015............................................       .02090075
0202.30.5025............................................       .00511787
0202.30.5035............................................       .00511787
0202.30.5045............................................       .00511787
0202.30.5055............................................       .00511787
0202.30.5065............................................       .00511787
0202.30.5075............................................       .00511787
0202.30.5085............................................       .00511787
0202.30.8000............................................       .00379102
0206.10.0000............................................       .00379102
0206.21.0000............................................       .00379102
0206.22.0000............................................       .00379102
0206.29.0000............................................       .00379102

[[Page 378]]

 
0210.20.0000............................................       .00615701
1601.00.4010............................................       .00473877
1601.00.4090............................................       .00473877
1601.00.6020............................................       .00473877
1602.50.0500............................................       .00771610
1602.50.0720............................................       .00663428
1602.50.0740............................................       .00663428
1602.50.0800............................................       .00663428
1602.50.2120............................................       .00701388
1602.50.2140............................................       .00701388
1602.50.6000............................................       .00720293
------------------------------------------------------------------------

    (3) The Board may prescribe by regulation, with the approval of the 
Secretary, an increase or decrease in the level of assessments for 
imported beef and beef products based upon revised determinations of 
live animal equivalencies.
    (4) The assessments due upon imported cattle, beef and beef products 
shall be remitted to the Customs Service upon importation of the cattle, 
beef or beef products into the United States, or in such other manner as 
may be provided by regulations prescribed by the Board and approved by 
the Secretary.
    (c) The collection of assessments pursuant to Sec.1260.172 (a) and 
(b) shall begin with respect to cattle purchased or cattle, beef, and 
beef products imported on and after the effective date of this section 
and shall continue until terminated by the Secretary.
    (d) Money remitted pursuant to this subpart shall be in the form of 
a negotiable instrument made payable as appropriate to the qualified 
State beef council or the ``Cattlemen's Beef Promotion and Research 
Board.'' Such remittances and the reports specified in Sec.1260.201 
shall be mailed to the location designated by the Board.

[51 FR 26138, July 18, 1986, as amended at 53 FR 52631, Dec. 29, 1988 
and 54 FR 15918, Apr. 20, 1989; 54 FR 28019, July 5, 1989; 71 FR 47076, 
Aug. 16, 2006; 82 FR 24457, May 30, 2017; 84 FR 20771, May 13, 2019; 85 
FR 826, Jan. 8, 2020; 85 FR 4191, Jan. 24, 2020]



Sec. Sec.1260.173-1260.174  [Reserved]



Sec.1260.175  Late-payment charge.

    Any unpaid assessments due to the Board pursuant to Sec.1260.172 
shall be increased 2.0 percent each month beginning with the day 
following the date such assessments were due. Any remaining amount due, 
which shall include any unpaid charges previously made pursuant to this 
section, shall be increased at the same rate on the corresponding day of 
each month thereafter until paid. For the purposes of this section, any 
assessment that was determined at a date later than prescribed by this 
subpart because of a person's failure to submit a report to the Board 
when due shall be considered to have been payable by the date it would 
have been due if the report had been filed when due. The timeliness of a 
payment to the Board shall be based on the applicable postmark date or 
the date actually received by the qualified State beef council or Board, 
whichever is earlier.



Sec.1260.176  Adjustment of accounts.

    Whenever the Board or the Department determines that money is due 
the Board or that money is due any person from the Board, such person 
shall be notified of the amount due. The person shall then remit any 
amount due the Board by the next date for remitting assessments as 
provided in Sec.1260.172. Overpayments shall be credited to the 
account of the person remitting the overpayment and shall be applied 
against amounts due in succeeding months except that the Board shall 
make prompt payment when an overpayment cannot be adjusted by a credit.



Sec.1260.181  Qualified State Beef Councils.

    (a) Any beef promotion entity that is authorized by State statute or 
is organized and operating within a State, that receives assessments or 
contributions from producers and conducts beef promotion, research, 
consumer information and/or industry information programs may apply for 
certification of qualification so that producers may receive credit 
pursuant to Sec.1260.172(a)(3) for contributions to such organization. 
The Board shall review such applications for certification and shall 
make a determination as to certification of such applicant.

[[Page 379]]

    (b) In order for the State beef council to be certified by the Board 
as a qualified State beef council, the council must:
    (1) Conduct activities as defined in Sec.1260.169 that are 
intended to strengthen the beef industry's position in the marketplace;
    (2) Submit to the Board a report describing the manner in which 
assessments are collected and the procedure utilized to ensure that 
assessments due are paid;
    (3) Certify to the Board that such council will collect assessments 
paid on cattle originating from the State or unit within which the 
council operates and shall establish procedures for ensuring compliance 
with this subpart with regard to the payment of such assessments;
    (4) Certify to the Board that such organization shall remit to the 
Board assessments paid and remitted to the council, minus authorized 
credits issued to producers pursuant to Sec.1260.172(a)(3), by the 
15th day of the month following the month in which the assessment was 
remitted to the Qualified State Beef Council unless the Board determines 
a different date for remittance of assessments.
    (5) [Reserved]
    (6) Certify to the Board that the council will furnish the Board 
with an annual report by a certified public accountant of all funds 
remitted to such council pursuant to this subpart and any other reports 
and information the Board or Secretary may request; and
    (7) Not use council funds collected pursuant to this subpart for the 
purpose of influencing governmental policy or action, or to fund plans 
or projects which make use of any unfair or deceptive acts or practices 
including unfair or deceptive acts or practices with respect to the 
quality, value or use of any competing product.
    (8) Certify to the Board, if the Council is authorized or permitted 
to pay refunds of contributions to the Council, that any requests from 
producers for such refunds by the producers will be honored by 
redirecting to the Board that portion of such refunds equal to the 
amount of credit received by the producer for contributions pursuant to 
Sec.1260.172(a)(3).
    (9) Certify to the Board that, if the Council is in a State in which 
State law does not require collection of the $1-per-head assessment set 
forth in the Act (the federal assessment) by the Council, or if the 
Council is in a State in which State statutes do not require producers 
to contribute a portion of the $1-per-head federal assessment to the 
Council, the Council will provide an opportunity for producers to choose 
to direct the full $1-per-head federal assessment to the Board.

[51 FR 26138, July 18, 1986, as amended at 60 FR 58502, Nov. 28, 1995; 
84 FR 20771, May 13, 2019]

                       Reports, Books and Records



Sec.1260.201  Reports.

    Each importer, person marketing cattle, beef or beef products of 
that person's own production directly to consumers, and each collecting 
person making payment to producers and responsible for the collection of 
the assessment under Sec.1260.172 shall report to the Board 
periodically information required by regulations prescribed by the Board 
and approved by the Secretary. Such information may include but is not 
limited to the following:
    (a) The number of cattle purchased, initially transferred or which, 
in any other manner, is subject to the collection of assessment, and the 
dates of such transaction;
    (b) The number of cattle imported; or the equivalent thereof of beef 
or beef products;
    (c) The amount of assessment remitted;
    (d) The basis, if necessary, to show why the remittance is less than 
the number of head of cattle multiplied by one dollar; and,
    (e) The date any assessment was paid.

    Effective Date Note: At 51 FR 26138, July 18, 1986, Sec.1260.201 
was added. This section contains information collection and 
recordkeeping requirements and will not become effective until approval 
has been given by the Office of Management and Budget.



Sec.1260.202  Books and records.

    Each person subject to this subpart shall maintain and make 
available for inspection by the Secretary the records

[[Page 380]]

required by regulations prescribed by the Board and approved by the 
Secretary that are necessary to carry out the provisions of this 
subpart, including records necessary to verify any required reports. 
Such records shall be maintained for the period of time prescribed by 
the regulations issued hereunder.

[51 FR 26138, July 18, 1986; 51 FR 26686, July 25, 1986]

    Effective Date Note: At 51 FR 26138, July 18, 1986, Sec.1260.202 
was added. This section contains information collection and 
recordkeeping requirements and will not become effective until approval 
has been given by the Office of Management and Budget.



Sec.1260.203  Confidential treatment.

    All information obtained from such books, records or reports 
required under the Act and this subpart shall be kept confidential by 
all persons, including employees and agents and former employees and 
agents of the Board, all officers and employees and all former officers 
and employees of the Department, and by all officers and employees and 
all former officers and employees of contracting organizations having 
access to such information, and shall not be available to Board members 
or any other producers or importers. Only those persons having a 
specific need for such information in order to effectively administer 
the provisions of this subpart shall have access to this information. In 
addition, only such information so furnished or acquired as the 
Secretary deems relevant shall be disclosed by them, and then only in a 
suit or administrative hearing brought at the direction, or upon the 
request, of the Secretary, or to which the Secretary or any officer of 
the United States is a party, and involving this subpart. Nothing in 
this section shall be deemed to prohibit:
    (a) The issuance of general statements based upon the reports of the 
number of persons subject to this subpart or statistical data collected 
therefrom, which statements do not identify the information furnished by 
any person; and
    (b) The publication, by direction of the Secretary, of the name of 
any person who has been adjudged to have violated this subpart, together 
with a statement of the particular provisions of the subpart violated by 
such person.

[51 FR 26138, July 18, 1986; 51 FR 26686, July 25, 1986]

                              Miscellaneous



Sec.1260.211  Proceedings after termination.

    (a) Upon the termination of this subpart the Board shall recommend 
not more than 11 of its members to the Secretary to serve as trustees 
for the purpose of liquidating the affairs of the Board. Such persons, 
upon designation by the Secretary, shall become trustees of all the 
funds and property owned, in the possession of or under the control of 
the Board, including unpaid claims or property not delivered or any 
other claim existing at the time of such termination.
    (b) The said trustees shall:
    (1) Continue in such capacity until discharged by the Secretary;
    (2) Carry out the obligations of the Board under any contract or 
agreements entered into by it pursuant to Sec. Sec.1260.150 and 
1260.168.
    (3) From time to time account for all receipts and disbursements and 
deliver all property on hand, together with all books and records of the 
Board and of the trustees, to such persons as the Secretary may direct; 
and
    (4) Upon the request of the Secretary, execute such assignments or 
other instruments necessary or appropriate to vest in such persons full 
title and right to all of the funds, property, and claims vested in the 
Board or the trustees pursuant to this subpart.
    (c) Any person to whom funds, property, or claims have been 
transferred or delivered pursuant to this subpart shall be subject to 
the same obligation imposed upon the Board and upon the trustees.
    (d) Any residual funds not required to defray the necessary expenses 
of liquidation shall be turned over to the Secretary to be used, to the 
extent practicable, in the interest of continuing one or more of the 
promotion, research, consumer information or industry information plans 
or projects authorized pursuant to this subpart.

[51 FR 26138, July 18, 1986; 51 FR 26686, July 25, 1986]

[[Page 381]]



Sec.1260.212  Effect of termination or amendment.

    Unless otherwise expressly provided by the Secretary, the 
termination of this subpart or of any regulation issued pursuant 
thereto, or the issuance of any amendment to either thereof, shall not:
    (a) Affect or waive any right, duty, obligation, or liability which 
shall have arisen or which may hereafter arise in connection with any 
provision of this subpart or any regulation issued thereunder;
    (b) Release or extinguish any violation of this subpart or any 
regulation issued thereunder; or,
    (c) Affect or impair any rights or remedies of the United States, or 
of the Secretary, or of any person, with respect to any such violation.



Sec.1260.213  Removal.

    If any person appointed under this part fails or refuses to perform 
his or her duties properly or engages in acts of dishonesty or willful 
misconduct, the Board or Committee may recommend to the Secretary that 
that person be removed from office. If the Secretary finds that the 
recommendation demonstrates adequate cause, the Secretary shall remove 
the person from office. A person appointed or certified under this part 
or any employee of the Board or Committee may be removed by the 
Secretary if the Secretary determines that the person's continued 
service would be detrimental to the purposes of the Act.



Sec.1260.214  Personal liability.

    No member, employee or agent of the Board or the Committee, 
including employees or agents of a qualified State beef council acting 
on behalf of the Board, shall be held personally responsible, either 
individually or jointly, in any way whatsoever, to any person for errors 
in judgment, mistakes or other acts of either commission or omission, or 
such member or employee, except for acts of dishonesty or willful 
misconduct.



Sec.1260.215  Patents, copyrights, inventions and publications.

    (a) Any patents, copyrights, inventions or publications developed 
through the use of funds collected by the Board under the provisions of 
this subpart shall be the property of the U.S. Government as represented 
by the Board, and shall, along with any rents, royalties, residual 
payments, or other income from the rental, sale, leasing, franchising, 
or other uses of such patents, copyrights, inventions, or publications, 
ensure to the benefit of the Board. Upon termination of this subpart, 
Sec.1260.211 shall apply to determine disposition of all such 
property.
    (b) Should patents, copyrights, inventions or publications be 
developed through the use of funds collected by the Board under this 
subpart and funds contributed by another organization or person, 
ownership and related rights to such patents, copyrights, inventions or 
publications shall be determined by agreement between the Board and the 
party contributing funds towards the development of such patent, 
copyright, invention or publication in a manner consistent with 
paragraph (a) of this section.



Sec.1260.216  Amendments.

    Amendments to this subpart may be proposed, from time to time, by 
the Board, or by any organization or association certified pursuant to 
the Act and this part, or by any interested person affected by the 
provisions of the Act, including the Secretary.



Sec.1260.217  Separability.

    If any provision of this subpart is declared invalid or the 
applicability thereof to any person or circumstances is held invalid, 
the validity of the remainder of this subpart or the applicability 
thereof of other persons or circumstances shall not be affected thereby.



                     Subpart B_Rules and Regulations

    Source: 53 FR 5754, Feb. 26, 1988, unless otherwise noted.



Sec.1260.301  Terms defined.

    As used throughout this subpart, unless the context otherwise 
requires, terms shall have the same meaning as the definition of such 
terms as appears in subpart A of this part.

[[Page 382]]



Sec.1260.302  Organic exemption.

    (a) A producer who operates under an approved National Organic 
Program (7 CFR part 205) (NOP) organic production system plan may be 
exempt from the payment of assessments under this part, provided that:
    (1) Only agricultural products certified as ``organic'' or ``100 
percent organic'' (as defined in the NOP) are eligible for exemption;
    (2) The exemption shall apply to all certified ``organic'' or ``100 
percent organic'' (as defined in the NOP) products of a producer 
regardless of whether the agricultural commodity subject to the 
exemption is produced by a person that also produces conventional or 
nonorganic agricultural products of the same agricultural commodity as 
that for which the exemption is claimed;
    (3) The producer maintains a valid certificate of organic operation 
as issued under the Organic Foods Production Act of 1990 (7 U.S.C. 6501-
6522) (OFPA) and the NOP regulations issued under OFPA (7 CFR part 205); 
and
    (4) Any producer so exempted shall continue to be obligated to pay 
assessments under this part that are associated with any agricultural 
products that do not qualify for an exemption under this section.
    (b) To apply for exemption under this section, a producer shall 
submit a request to the Board or QSBC on an Organic Exemption Request 
Form (Form AMS-15) at any time during the year initially, and annually 
thereafter on or before January 1, for as long as the producer continues 
to be eligible for the exemption.
    (c) A producer request for exemption shall include the following:
    (1) The applicant's full name, company name, address, telephone and 
fax numbers, and email address;
    (2) Certification that the applicant maintains a valid certificate 
of organic operation issued under the OFPA and the NOP;
    (3) Certification that the applicant produces organic products 
eligible to be labeled ``organic'' or ``100 percent organic'' under the 
NOP;
    (4) A requirement that the applicant attach a copy of their 
certificate of organic operation issued by a USDA-accredited certifying 
agent under the OFPA and the NOP;
    (5) Certification, as evidenced by signature and date, that all 
information provided by the applicant is true; and
    (6) Such other information as may be required by the Board, with the 
approval of the Secretary.
    (d) If a producer complies with the requirements of this section, 
the Board or QSBC will grant an assessment exemption and issue a 
Certificate of Exemption to the producer within 30 days. If the 
application is disapproved, the Board or QSBC will notify the applicant 
of the reason(s) for disapproval within the same timeframe.
    (e) The producer shall provide a copy of the Certificate of 
Exemption to each person responsible for collecting and remitting the 
assessment.
    (f) The person responsible for collecting and remitting the 
assessment shall maintain records showing the exempt producer's name and 
address and the exemption number assigned by the Board or QSBC.
    (g) An importer who imports products that are eligible to be labeled 
as ``organic'' or ``100 percent organic'' under the NOP, or certified as 
``organic'' or ``100 percent organic'' under a U.S. equivalency 
arrangement established under the NOP, may be exempt from the payment of 
assessments on those products. Such importer may submit documentation to 
the Board and request an exemption from assessment on certified 
``organic'' or ``100 percent organic'' cattle or beef and beef products 
on an Organic Exemption Request Form (Form AMS-15) at any time 
initially, and annually thereafter on or before January 1, as long as 
the importer continues to be eligible for the exemption. This 
documentation shall include the same information required of producers 
in paragraph (c) of this section. If the importer complies with the 
requirements of this section, the Board will grant the exemption and 
issue a Certificate of Exemption to the importer. The Board will also 
issue the importer an alphanumeric number valid for 1 year from the date 
of issue. This alphanumeric number should be entered by the importer on 
the Customs entry documentation. Any line item entry of ``organic'' or 
``100 percent

[[Page 383]]

organic'' cattle or beef and beef products bearing this alphanumeric 
number assigned by the Board will not be subject to assessments. Any 
importer so exempted shall continue to be obligated to pay assessments 
under this part that are associated with any imported agricultural 
products that do not qualify for an exemption under this section.
    (h) The exemption will apply immediately following the issuance of 
the Certificate of Exemption.
    (i) An importer who is exempt from payment of assessments under 
paragraph (g) of this section shall be eligible for reimbursement of 
assessments collected by Customs on certified ``organic'' or ``100 
percent organic'' cattle or beef and beef products and may apply to the 
Secretary for a reimbursement. The importer would be required to submit 
satisfactory proof to the Secretary that the importer paid the 
assessment on exempt organic products.

[70 FR 2762, Jan. 14, 2005, as amended at 80 FR 82034, Dec. 31, 2015]



Sec.1260.310  Domestic assessments.

    (a) A $1.00 per head assessment on cattle sold shall be paid by the 
producer of the cattle in the manner designated in Sec.1260.311.
    (b) If more than one producer shares the proceeds received for the 
cattle sold, each such producer is obligated to pay that portion of the 
assessments which are equivalent to the producer's proportionate share 
of the proceeds.
    (c) Failure of the collecting person to collect the assessment on 
each head of cattle sold as designated in Sec.1260.311 shall not 
relieve the producer of his obligation to pay the assessment to the 
appropriate qualified State beef council or the Cattlemen's Board as 
required in Sec.1260.312.



Sec.1260.311  Collecting persons for purposes of collection of
assessments.

    Collecting persons for purposes of collecting and remitting the 
$1.00 per head assessment shall be:
    (a) Except as provided in paragraphs (b), (c), and (f) of this 
section, each person making payment to a producer for cattle purchased 
in the United States shall collect from the producer an assessment at 
the rate of $1-per-head of cattle purchased and shall be responsible for 
remitting assessments to the QSBC or the Board as provided in Sec.
1260.312. The collecting person shall collect the assessment at the time 
the collecting person makes payment or any credit to the producer's 
account for the cattle purchased. The person paying the producer shall 
give the producer a receipt indicating payment of the assessment.
    (b) Any producer marketing cattle of that producer's own production 
in the form of beef or beef products to consumers, either directly or 
through retail or wholesale outlets, shall be responsible for remitting 
to the qualified State beef council or the Cattlemen's Board pursuant to 
Sec.1260.312, an assessment on such cattle at the rate of $1.00 per 
head of cattle or the equivalent thereof. The obligation to remit the 
assessment shall attach upon slaughter of the cattle, and the producer 
responsible for remitting the assessment shall remit the assessment in 
the manner provided in Sec.1260.312. For the purposes of this subpart, 
a producer marketing cattle of the producer's own production in the form 
of beef or beef products shall be considered a collecting person.
    (c) In the States listed in the following chart there exists a 
requirement that cattle be brand inspected by State authorized 
inspectors prior to sale. In addition, when cattle are sold in the sales 
transactions listed below in those States, these State authorized 
inspectors are authorized to, and shall, except as provided for in 
paragraph (f) of this section, collect assessments due as a result of 
the sale of cattle. In those transactions in which inspectors are 
responsible for collecting assessments, the person paying the producer 
shall not be responsible for the collection and remittance of such 
assessments. The following chart identifies the party responsible for 
collecting and remitting assessments in these States:

[[Page 384]]



--------------------------------------------------------------------------------------------------------------------------------------------------------
                                      Sales through auction   Sales to a slaughter/                           Sales to an order
               State                         market                  packer            Sales to a feedlot        buyer/dealer        Country sales \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Arizona............................  CP....................  CP....................  CP...................  B....................  B
California.........................  CP....................  CP....................  B....................  B-CP.................  B
Colorado...........................  CP....................  B.....................  B....................  B....................  B
Idaho..............................  B.....................  B.....................  B....................  B....................  B
Montana............................  CP....................  B.....................  B....................  B....................  B
Nebraska...........................  CP....................  CP....................  B-CP.................  B-CP.................  B-CP
Nevada.............................  B.....................  B.....................  B....................  B....................  B
Oregon.............................  CP....................  B-CP..................  B....................  B....................  B
New Mexico.........................  CP....................  B-CP..................  B-CP.................  B-CP.................  B-CP
Utah...............................  CP....................  B-CP..................  B....................  B....................  B
Washington.........................  CP....................  CP....................  B....................  B-CP.................  B
Wyoming............................  CP....................  B.....................  B....................  B....................  B
--------------------------------------------------------------------------------------------------------------------------------------------------------
Key:
B--Brand inspector has responsibility to collect and remit assessments due.
CP--The person paying the producer shall be the collecting person and has responsibility to collect and remit the assessments due.
B-CP--Brand inspector has responsibility to collect; however, when there has not been a physical brand inspection the person paying the producer shall
  be the collecting person and has the responsibility to collect and remit assessments due.
\1\ For the purpose of this subpart, the term ``country sales'' shall include any sales not conducted at an auction or livestock market and which is not
  a sale to a slaughter/packer, feedlot, or order buyer or dealer.

    (d) For cattle delivered on futures contracts, the commission firm 
or the market agency representing the seller in the delivery of cattle 
shall be the collecting person.
    (e) In a case where a producer sells cattle as part of a custom 
slaughter operation, the producer shall be the collecting person in the 
same manner as if the cattle were slaughtered for sale.
    (f)(1) In lieu of each person making a payment to a producer for 
cattle purchased in the United States, producers are provided the option 
in accordance with this paragraph (f) to remit the assessment to the 
QSBC in the State in which the producer resides. A producer who 
transports, prior to sale, cattle of that producer's own production to 
another State, may elect to make a directed payment of the $1-per-head 
assessment in advance to the QSBC in the State in which the producer 
resides, provided that the producer fulfills the following requirements:
    (i) Transports the cattle under retained ownership to a feedlot or 
similar location, and the cattle remain at such location, prior to sale, 
for a period not less than 30 days; and
    (ii) The producer, either before or at the time of transport, signs 
a Certification of Producer Directed Payment of Cattle Assessments form 
indicating that the assessment has been paid in advance, and remits the 
assessment to the appropriate QSBC. A copy of the certification form 
indicating the payment of the assessment shall be sent by the producer 
with the assessment when remitted to the QSBC. The producer also shall 
send a copy of the certification form to the feedlot operator at the 
time the cattle are delivered. A copy of the certification form also 
shall be given to the purchaser of the cattle by the feedlot operator at 
the time of sale.
    (2) The certification form will include the following information:
    (i) Producer's Name.
    (ii) Producer's social security number or Tax I.D. number.
    (iii) Producer's address (street address or P.O. Box, city, State, 
and zip code).
    (iv) Signature of Producer.
    (v) Producer's State of residence.
    (vi) Number of cattle shipped to out of State feedyard under 
retained ownership.
    (vii) Date cattle shipped.
    (viii) State where cattle will be on feed.
    (ix) Name of feedyard.
    (x) Address of feedyard.
    (3) Cattle of a producer's own production shall be those cattle 
which meet all of the following requirements:
    (i) The cattle shall be offspring of a producer's own cow herd;
    (ii) The cattle shall have been continuously and exclusively under 
the producer's ownership; and

[[Page 385]]

    (iii) The cattle are transported to a feedlot with such producer 
continuously owning the cattle through the entire feeding phase.
    (4) For those cattle for which the assessment has been producer 
directed and paid in advance pursuant to paragraph (f)(1) of this 
section, the purchaser of the cattle shall not be required to collect 
and remit the assessment, but shall maintain on file a copy of the 
Certification of Producer Directed Payment of Cattle Assessments form 
completed and signed by the producer who originally transported the 
cattle under retained ownership.
    (5) For those cattle for which the assessment has been producer 
directed and paid in advance pursuant to paragraph (f)(1) of this 
section, copies of the completed Certification of Producer Directed 
Payment of Cattle Assessments form shall be maintained on file by the 
producer, the QSBC or the Board, the feedlot operator, and the purchaser 
of the cattle for 3 years.
    (6) Producers shall not receive credit of the assessment required to 
be paid pursuant to paragraph (f)(1) of this section for those cattle 
lost because of death.

[53 FR 5754, Feb. 26, 1988, as amended at 67 FR 61766, Oct. 2, 2002]



Sec.1260.312  Remittance to the Cattlemen's Board or Qualified State
Beef Council.

    Each person responsible for the collection and remittance of 
assessments shall transmit assessments and a report of assessments to 
the qualified State beef council of the State in which such person 
resides or if there is no qualified State beef council in such State, 
then to the Cattlemen's Board as follows:
    (a) Reports. Each collecting person shall make reports on forms made 
available or approved by the Cattlemen's Board. Each collecting person 
shall prepare a separate report for each reporting period. Each report 
shall be mailed to the qualified State beef council of the State in 
which the collecting person resides, or its designee, or if there exists 
no qualified State beef council in such State, to the Cattlemen's Board. 
Each report shall contain the following information:
    (1) The number of cattle purchased, initially transferred or which, 
in any other manner, is subject to the collection of assessment, and the 
dates of such transactions;
    (2) The amount of assessment remitted;
    (3) The basis, if necessary, to show why the remittance is less than 
the number of head of cattle multiplied by one dollar; and
    (4) The date any assessment was paid.
    (b) Reporting periods. Each calendar month shall be a reporting 
period and the period shall end at the close of business on the last 
business day of the month.
    (c) Remittances. The remitting person shall remit all assessments to 
the Qualified State Beef Council or its designee, or, if there is no 
Qualified State Beef Council, to the Cattlemen's Board at an address 
designated by the Board, with the report required in paragraph (a) of 
this section not later than the 15th day of the month following the 
month in which the cattle were purchased or marketed. All remittances 
sent to a Qualified State Beef Council or the Cattlemen's Board by the 
remitting persons shall be by check or money order payable to the order 
of the Qualified State Beef Council or the Cattlemen's Board. All 
remittances shall be received subject to collection and payment at par.

[53 FR 5754, Feb. 26, 1988, as amended at 79 FR 46936, Aug. 12, 2014; 84 
FR 20771, May 13, 2019]



Sec.1260.313  Document evidencing payment of assessments.

    Each collecting person responsible for remitting an assessment to a 
qualified State beef council or the Board, other than a producer 
slaughtering cattle of the producer's own production for sale, is 
required to give the producer from whom the collecting person collected 
an assessment written evidence of payment of the Beef Promotion and 
Research Assessments. Such written evidence serving as a receipt shall 
contain the following information:
    (a) Name and address of the collecting person.
    (b) Name of producer who paid assessment.

[[Page 386]]

    (c) Number of head of cattle sold.
    (d) Total assessments paid by the producer.
    (e) Date.



Sec.1260.314  Certification of non-producer status for certain 
transactions.

    (a) The assessment levied on each head of cattle sold shall not 
apply to cattle owned by a person:
    (1) If the person certifies that the person's only share in the 
proceeds of a sale of cattle, beef, or beef products is a sales 
commission, handling fee or other service fee; or
    (2) If the person:
    (i) Certifies that the person acquired ownership of cattle to 
facilitate the transfer of ownership of such cattle from the seller to a 
third party,
    (ii) Establishes that such cattle were resold not later than 10 days 
from the date on which the person acquired ownership; and
    (iii) Certifies that the assessment levied upon the person from whom 
the person purchased the cattle, if an assessment was due, has been 
collected and has been remitted, or will be remitted in a timely 
fashion.
    (b) Each person seeking non-producer status pursuant to Sec.
1260.116 shall provide the collecting person, on a form approved by the 
Board and the Secretary, with a Statement of Certification of Non-
Producer Status at the time the collecting person makes payment to the 
seller of cattle, in lieu of the assessment that would otherwise be due, 
except as provided for in paragraphs (c) and (d) of this section.
    (c) When the seller of cattle is not physically present during a 
sales transaction in which the seller claims non-producer status, such 
seller shall deliver to the collecting person an original Statement of 
Certification of Non-Producer Status within 10 business days of the date 
the collecting person makes payment to the seller of the cattle.
    (d) If the collecting person is a brand inspector, as provided for 
in Sec.1260.311, the seller of cattle claiming non-producer status 
shall provide to the brand inspector at the time the physical brand 
inspection is completed, in lieu of the assessment that would otherwise 
be due, either: a Statement of Certification of Non-Producer Status or a 
valid brand inspection certificate which shows collection of the 
assessment by a brand inspector in a transaction which took place not 
more than 10 days prior to the sale of the cattle.
    (e) A copy of the Statement of Certification of Non-Producer Status 
shall be forwarded, upon request, by the collecting person to the 
qualified State beef council or the Cattlemen's Board.

[53 FR 5754, Feb. 26, 1988, as amended at 66 FR 26784, May 15, 2001]



Sec.1260.315  Qualified State Beef Councils.

    The following State beef promotion entities have been certified by 
the Board as Qualified State Beef Councils:
    (a) Alabama Cattlemen's Association.
    (b) Arizona Beef Council.
    (c) Arkansas Beef Council.
    (d) California Beef Council.
    (e) Colorado Beef Council Authority.
    (f) Delaware Beef Advisory Board.
    (g) Florida Beef Council, Inc.
    (h) Georgia Beef Board, Inc.
    (i) Hawaii Beef Industry Council.
    (j) Idaho Beef Council.
    (k) Illinois Beef Association, Inc.
    (l) Indiana Beef Council, Inc.
    (m) Iowa Beef Cattle Producers Association/dba/Iowa Beef Industry 
Council.
    (n) Kansas Beef Council.
    (o) Kentucky Cattlemen's Association, Inc.
    (p) Louisiana Beef Industry Council.
    (q) Maryland Beef Council.
    (r) Michigan Beef Industry Commission.
    (s) Minnesota Beef Council.
    (t) Mississippi Beef Council.
    (u) Missouri Beef Industry Council, Inc.
    (v) Montana Beef Council.
    (w) Nebraska Beef Council.
    (x) Nevada Beef Council.
    (y) New Jersey Beef Industry Council.
    (z) New Mexico Beef Council.
    (aa) New York Beef Industry Council.
    (bb) North Carolina Cattlemen's Beef Council.
    (cc) North Dakota Beef Commission.
    (dd) Ohio Beef Council.
    (ee) Oklahoma Beef Council.
    (ff) Oregon Beef Council.
    (gg) Pennsylvania Beef Council.

[[Page 387]]

    (hh) South Carolina Beef Council.
    (ii) South Dakota Beef Industry Council.
    (jj) Tennessee Beef Industry Council.
    (kk) Texas Beef Council.
    (ll) Utah Beef Council.
    (mm) Vermont Beef Industry Council.
    (nn) Virginia Beef Industry Council.
    (oo) Washington State Beef Commission.
    (pp) West Virginia Beef Council, Inc.
    (qq) Wisconsin Beef Council, Inc.
    (rr) Wyoming Beef Council.

[84 FR 20771, May 13, 2019]



Sec.1260.316  Paperwork Reduction Act assigned number.

    The information collection and recordkeeping requirements contained 
in this part have been approved by the Office of Management and Budget 
(OMB) under the provisions of 44 U.S.C. Chapter 35 and have been 
assigned OMB control number 0581-0093.

[79 FR 46964, Aug. 12, 2014]

Subpart C [Reserved]



  Subpart D_Beef Promotion and Research: Certification and Nomination 
    Procedures for the Cattlemen's Beef Promotion and Research Board

    Source: 51 FR 11559, Apr. 4, 1986, unless otherwise noted. 
Redesignated at 51 FR 26138, July 18, 1986, and further redesignated at 
51 FR 35197, Oct. 1, 1986. Redesignated also at 53 FR 9858, Mar. 28, 
1988.



Sec.1260.500  General.

    State organizations or associations shall be certified by the 
Secretary as provided for in the Beef Promotion and Research Act of 1985 
to be eligible to make nominations of cattle producers to the Board. 
Additionally, where there is no eligible organization or association in 
a State, the Secretary may provide for nominations in the manner 
prescribed in this subpart. Organizations or associations determined by 
the Secretary to represent importers of cattle, beef, and beef products 
may submit nominations for membership on the Board in a manner 
prescribed by the Secretary in this subpart. The number of nominees 
required for each allotted position will be determined by the Secretary.



Sec.1260.510  Definitions.

    As used in this subpart:
    Act means the Beef Promotion and Research Act of 1985 (7 U.S.C. 
2901-2918).
    Beef means the flesh of cattle.
    Beef products means edible products produced in whole or in part 
from beef, exclusive of milk and milk products produced therefrom.
    Board means the Cattlemen's Beef Promotion and Research Board 
established under section 5(1) of the Act.
    Cattle means live, domesticated bovine animals regardless of age.
    Department means the United States Department of Agriculture.
    Importer means a person who imports cattle, beef, or beef products 
from outside the United States.
    Livestock and Seed Division means the Livestock and Seed Division of 
the Department's Agricultural Marketing Service.
    Producer means a person who owns or acquires ownership of cattle, 
except that a person shall not be considered to be a producer if the 
person's only share in the proceeds of a sale of cattle or beef is a 
sales commission, handling fee, or other service fee.
    Secretary means the Secretary of Agriculture of the United States, 
or any officer or employee of the Department to whom authority has 
heretofore been delegated, or to whom authority may hereafter be 
delegated, to act in the Secretary's stead.
    State means each of the 50 States.
    Unit means a State or combination of States which has a total 
inventory of not less than 500,000 head of cattle; or importers.



Sec.1260.520  Responsibility for administration of regulations.

    The Livestock and Seed Division shall have the responsibility for 
administering the provisions of this subpart.



Sec.1260.530  Certification of eligibility.

    (a) State organizations or associations: Requirements for 
certification. (1) To be eligible for certification to nominate producer 
members to the Board, State

[[Page 388]]

organizations or associations must meet all of the following criteria:
    (i) Total paid membership must be comprised of at least a majority 
of cattle producers or represent at least a majority of cattle producers 
in a State or unit.
    (ii) Membership must represent a substantial number of producers who 
produce a substantial number of cattle in such State or unit.
    (iii) There must be a history of stability and permanency.
    (iv) There must be a primary or overriding purpose of promoting the 
economic welfare of cattle producers.
    (2) Written evidence of compliance with the certification criteria 
shall be contained in a factual report submitted to the Secretary by all 
applicant State organizations or associations.
    (3) The primary consideration in determining the eligibility of a 
State organization or association shall be based on the criteria set 
forth in this section. However, the Secretary may consider any 
additional information that the Secretary deems relevant and 
appropriate.
    (4) The Secretary shall certify any State organization or 
association which he determines complies with the criteria in this 
section, and his eligibility determination shall be final.
    (b) Organizations or associations representing importers. The 
determination by the Secretary as to the eligibility of importer 
organizations or associations to nominate members to the Board shall be 
based on applications containing the following information:
    (1) The number and type of members represented (i.e., beef, or 
cattle importers, etc.).
    (2) Annual import volume in pounds of beef and beef products and/or 
the number of head of cattle.
    (3) The stability and permanency of the importer organization or 
association.
    (4) The number of years in existence.
    (5) The names of the countries of origin for cattle, beef, or beef 
products imported.

The Secretary may also consider additional information that the 
Secretary deems relevant and appropriate. The Secretary's determination 
as to eligibility shall be final.



Sec.1260.540  Application for certification.

    (a) State organizations or associations. Any State organization or 
association which meets the eligibility criteria specified in Sec.
1260.530(a) for certification is entitled to apply to the Secretary for 
such certification of eligibility to nominate producers for appointment 
to the Board. To apply, such organization or association must submit a 
completed ``Application for Certification of Organization or 
Association,'' Form LS-25, contained in Sec.1260.640. It may be 
reproduced or additional copies may be obtained from the Livestock and 
Seed Division; Agricultural Marketing Service, USDA; 14th and 
Independence Avenue, SW., Room 2610-S; Washington, DC 20250. (Telephone: 
202/447-2650.)
    (b) Importer organizations or associations. Any organization or 
association whose members import cattle, beef, or beef products into the 
United States may apply to the Secretary for determination of 
eligibility to nominate importers under the Act. Applications shall be 
in writing and shall contain the information required by Sec.1260.530. 
Interested organizations or associations may contact the Livestock and 
Seed Division; Agricultural Marketing Service, USDA; 14th and 
Independence Avenue, SW., Room 2610-S; Washington, DC 20250; (Telephone: 
202/447-2650) for information concerning application procedures.



Sec.1260.550  Verification of information.

    The Secretary may require verification of the information to 
determine eligibility for certification to make nominations under the 
Act.



Sec.1260.560  Review of certification.

    The Secretary may terminate or suspend certification or eligibility 
of any organization or association if it ceases to comply with the 
certification or eligibility criteria set forth in this subpart. The 
Secretary may require any information deemed necessary to ascertain 
whether the organization or association may remain certified or eligible 
to make nominations.

[[Page 389]]



Sec.1260.570  Notification of certification and the listing of
certified organizations.

    Organizations and associations shall be notified in writing as to 
whether they are eligible to nominate producer members to the Board. A 
copy of the certification or eligibility determination shall be 
furnished to certified or eligible organizations and associations. 
Copies shall also be maintained on file in the Livestock and Seed 
Division office, where they will be available for inspection.



Sec. Sec.1260.580-1260.600  [Reserved]



Sec.1260.610  Acceptance of appointment.

    Producers and importers nominated to the Board must signify in 
writing their intent to serve if appointed.



Sec.1260.620  Confidential treatment of information.

    All documents and information submitted to or obtained by the 
Department shall be kept confidential by all employees of the 
Department, except that the Secretary may issue general statements based 
upon the information collected from a number of different sources. These 
general statements will not identify any information as having been 
furnished by any one source.



Sec.1260.630  Paperwork Reduction Act assigned number.

    The OMB has approved the information collection request contained in 
this subpart under the provisions of 44 U.S.C. Chapter 35, and OMB 
Control Number 0581-152 has been assigned.



Sec.1260.640  Application for Certification Form.

    The following official form, ``Application for Certification of 
Association or Organization,'' must be completed and submitted to the 
Department by eligible State organizations or associations seeking 
certification by the Secretary. This form may be reproduced.

[[Page 390]]

[GRAPHIC] [TIFF OMITTED] TC04SE91.000


[[Page 391]]





PART 1270_WOOL AND MOHAIR ADVERTISING AND PROMOTION [RESERVED]
[NOTE]--Table of Contents





PART 1280_LAMB PROMOTION, RESEARCH, AND INFORMATION ORDER--
Table of Contents



        Subpart A_Lamb Promotion, Research, and Information Order

                               Definitions

Sec.
1280.101 Act.
1280.102 Board.
1280.103 Certified organization.
1280.104 Conflict of interest.
1280.105 Department.
1280.106 Exporter.
1280.107 Feeder.
1280.108 First handler.
1280.109 Fiscal period and marketing year.
1280.110 Information.
1280.111 Lamb.
1280.112 Lamb products.
1280.113 Order.
1280.114 Part and subpart.
1280.115 Person.
1280.116 Producer.
1280.117 Producer information.
1280.118 Promotion.
1280.119 Referendum.
1280.120 Research.
1280.121 Secretary.
1280.122 Seedstock producer.
1280.123 State.
1280.124 Suspend.
1280.125 Terminate.
1280.126 Unit.
1280.127 United States.
1280.128 Wool.
1280.129 Wool products.

             Lamb Promotion, Research, and Information Board

1280.201 Establishment and membership.
1280.202 Nominations.
1280.203 Nominee's agreement to serve.
1280.204 Appointment.
1280.205 Vacancies.
1280.206 Certification of organizations.
1280.207 Term of office.
1280.208 Compensation.
1280.209 Removal.
1280.210 Powers and duties of the board.
1280.211 Prohibited activities.

                                Expenses

1280.212 Budget and expenses.
1280.213 Investment of funds.

                               Assessments

1280.217 Lamb purchases.
1280.218 Exporter.
1280.219 First handlers.
1280.220 Collections.
1280.221 Prohibition on use of funds.

                       Reports, Books, and Records

1280.222 Books and records of board.
1280.223 Reports.
1280.224 Periodic evaluation.
1280.225 Books and records of persons.
1280.226 Use of information.
1280.227 Confidentiality.

                              Miscellaneous

1280.228 Right of the Secretary.
1280.229 Personal liability.
1280.230 Separability.
1280.231 Patents, copyrights, inventions, product formulations, and 
          publications.
1280.232 Amendments.
1280.233 Referenda.
1280.234 Suspension or termination.
1280.235 Proceedings after termination.
1280.236 Effect of termination or amendment.
1280.237 Rules and regulations.
1280.238 OMB Control numbers.

Subpart B [Reserved]

                     Subpart C_Rules and Regulations

1280.401 Terms defined.
1280.402 Assessments.
1280.404 Reporting.
1280.405 Books and records.
1280.406 Exemption.

Subpart D [Reserved]

              Subpart E_Procedures To Request a Referendum

1280.601 Terms defined.
1280.602 Administrator, AMS.
1280.603 Administrator, FSA.
1280.604 Eligibility.
1280.605 Farm Service Agency.
1280.606 Farm Service Agency County Committee.
1280.607 Farm Service Agency County Executive Director.
1280.608 Farm Service Agency State Committee.
1280.609 Farm Service Agency State Executive Director.
1280.610 Public Notice.
1280.611 Representative period.
1280.612 Volume of production.
1280.613 Voting period.

                               Procedures

1280.620 General.
1280.621 Supervision of the process for conducting a referendum.
1280.622 Eligibility.
1280.623 Time and place of the referendum.

[[Page 392]]

1280.624 Facilities.
1280.625 Certifications and referendum ballot form.
1280.626 Certification and voting procedures.
1280.627 Canvassing voting ballots.
1280.628 Counting ballots.
1280.629 FSA county office report.
1280.630 FSA State office report.
1280.631 Results of the referendum.
1280.632 Disposition of records.
1280.633 Instructions and forms.
1280.634 Confidentiality.

    Authority: 7 U.S.C. 7411-7425 and 7 U.S.C. 7401.

    Source: 67 FR 17857, Apr. 11, 2002, unless otherwise noted.



        Subpart A_Lamb Promotion, Research, and Information Order

                               Definitions



Sec.1280.101  Act.

    Act means the Commodity Promotion, Research, and Information Act of 
1996 (7 U.S.C. 7411-7425; Pub. L. 104-127; 110 Stat. 1029, as amended), 
or any amendments thereto.



Sec.1280.102  Board.

    Board means the Lamb Promotion, Research, and Information Board 
established pursuant to Sec.1280.201.



Sec.1280.103  Certified organization.

    Certified organization means any organization which has been 
certified by the Secretary pursuant to this part as being eligible to 
submit nominations for membership on the Board.



Sec.1280.104  Conflict of Interest.

    Conflict of interest means a situation in which a member or employee 
of a board has a direct or indirect financial interest in a person that 
performs a service for, or enters into a contract with, a board for 
anything of economic value.



Sec.1280.105  Department.

    Department means the United States Department of Agriculture.



Sec.1280.106  Exporter.

    Exporter means any person who exports domestic live lambs from the 
United States.



Sec.1280.107  Feeder.

    Feeder means any person who acquires ownership of lambs and feeds 
such lambs in the U.S. until they reach slaughter weight.



Sec.1280.108  First handler.

    First handler means the packer or other person who buys or takes 
possession of lambs from a producer or feeder for slaughter, including 
custom slaughter. If a producer or feeder markets lamb products directly 
to consumers, the producer or feeder shall be considered to be a first 
handler with respect to such lambs produced by the producer or feeder.



Sec.1280.109  Fiscal period and marketing year.

    Fiscal period and marketing year means the 12-month period ending on 
December 31 or such other consecutive 12-month period as shall be 
recommended by the Board and approved by the Secretary.



Sec.1280.110  Information.

    Information means information and programs that are designed to 
increase efficiency in producing lambs, to maintain and expand existing 
markets, and to develop new markets, marketing strategies, increased 
market efficiency, and activities that are designed to enhance the image 
of lamb and lamb products on a national or international basis. These 
include:
    (a) Consumer information, which means any action taken to provide 
information to, and broaden the understanding of, the general public 
regarding the consumption, use, and nutritional attributes of lamb and 
lamb products; and
    (b) Industry information, which means information and programs that 
will lead to the development of new markets, new marketing strategies, 
or increased efficiency for the lamb industry, and activities to enhance 
the image of lamb.



Sec.1280.111  Lamb.

    Lamb means ovine animals of any age, including ewes and rams.

[[Page 393]]



Sec.1280.112  Lamb products.

    Lamb products means products produced in whole or in part from lamb, 
including pelts, and excluding wool and wool products.



Sec.1280.113  Order.

    Order means an order issued by the Secretary under Sec.514 of the 
Act that provides for a program of generic promotion, research, and 
information regarding agricultural commodities authorized under the Act.



Sec.1280.114  Part and subpart.

    Part means the Lamb Promotion, Research, and Information Order and 
all rules and regulations issued pursuant to the Act and the Order. The 
Order shall be a subpart of the part.



Sec.1280.115  Person.

    Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other legal entity.



Sec.1280.116  Producer.

    Producer means any person who owns and produces lambs in the United 
States for sale.



Sec.1280.117  Producer information.

    Producer information means activities designed to provide producers, 
feeders, and first handlers with information relating to production or 
marketing efficiencies, development of new markets, program activities, 
or other information that would facilitate an increase in the demand for 
lambs or lamb products.



Sec.1280.118  Promotion.

    Promotion means any action, including paid advertising and the 
dissemination of culinary and nutritional information and public 
relations with emphasis on new marketing strategies, to present a 
favorable image of U.S. lamb products to the public for the purpose of 
improving the competitive position of U.S. lamb and lamb products in the 
marketplace and to stimulate sales.



Sec.1280.119  Referendum.

    Referendum means a referendum to be conducted by the Secretary 
pursuant to the Act whereby producers, feeders, first handlers, and 
exporters shall be given the opportunity to vote to determine whether 
the continuance of this subpart is favored by a majority of eligible 
persons voting and a majority of volume voting.



Sec.1280.120  Research.

    Research means any type of test, study, or analysis designed to 
advance the image, desirability, use, marketability, production, product 
development, or quality of lamb or lamb products.



Sec.1280.121  Secretary.

    Secretary means the Secretary of Agriculture of the United States or 
any other officer or employee of the Department to whom authority has 
heretofore been delegated, or to whom authority may hereafter be 
delegated, to act in the Secretary's stead.



Sec.1280.122  Seedstock producer.

    Seedstock producer means any lamb producer in the U.S. who engages 
in the production and sale of breeding replacement lambs or semen or 
embryos.



Sec.1280.123  State.

    State means each of the 50 States and the District of Columbia.



Sec.1280.124  Suspend.

    Suspend means to issue a rule under Sec.553 of title 5, U.S.C., to 
temporarily prevent the operation of an order or part thereof during a 
particular period of time specified in the rule.



Sec.1280.125  Terminate.

    Terminate means to issue a rule under Sec.553 of title 5, U.S.C., 
to cancel permanently the operation of an order or part thereof 
beginning on a date certain specified in the rule.



Sec.1280.126  Unit.

    Unit means each State, group of States, or class designation 
(producers, feeders, first handlers, or seedstock producers) that is 
represented on the Board.

[[Page 394]]



Sec.1280.127  United States.

    United States means collectively the 50 States and the District of 
Columbia.



Sec.1280.128  Wool.

    Wool means fiber from the fleece of a lamb.



Sec.1280.129  Wool products.

    Wool products means products produced, in whole or in part, from 
wool and products containing wool fiber, excluding pelts.

             Lamb Promotion, Research, and Information Board



Sec.1280.201  Establishment and membership.

    (a) There is hereby established a Lamb Promotion, Research and 
Information Board of 13 members. Members of the Board shall be appointed 
by the Secretary from nominations submitted in accordance with this 
subpart. The seats shall be apportioned as follows:
    (1) Producers. There shall be six producer representatives on the 
Board appointed by the Secretary from nominations submitted pursuant to 
this subpart. For purposes of nominating and appointing producers to the 
Board, the United States as defined within this subpart shall be divided 
into two regions. Each region must be represented by at least two 
producers. The Secretary will appoint the remaining two producers to 
ensure that the criteria specified in paragraphs (a)(1)(i), (ii), and 
(iii) of this section are met. Region 1 shall include the geographic 
area east of the Mississippi River, which includes the following States: 
Maine, New Hampshire, Vermont, New York, Massachusetts, Connecticut, 
Pennsylvania, Rhode Island, New Jersey, Delaware, Maryland, District of 
Columbia, Virginia, West Virginia, North Carolina, South Carolina, 
Georgia, Florida, Alabama, Mississippi, Tennessee, Kentucky, Ohio, 
Indiana, Michigan, Illinois and Wisconsin. Region 2 shall consist of all 
States west of the Mississippi River, which includes the following 
states: Minnesota, Iowa, Missouri, Arkansas, Louisiana, Texas, Oklahoma, 
Kansas, Nebraska, North Dakota, South Dakota, Montana, Wyoming, 
Colorado, New Mexico, Arizona, Utah, Idaho, Washington, Oregon, Nevada, 
California, Hawaii and Alaska. With regard to appointments to the Board, 
the Secretary shall ensure that the representation for producers on the 
Board shall meet the following criteria:
    (i) Two producers appointed to the Board shall own annually 100 or 
less head of lambs;
    (ii) One producer shall own annually between 101 and 500 head of 
lambs; and
    (iii) Three producers shall own more than 500 head of lambs 
annually.
    (2) Feeders. There shall be three feeder representatives on the 
Board appointed by the Secretary from nominations submitted pursuant to 
this subpart. The Secretary will appoint two feeder representatives to 
ensure that the criteria in paragraphs (a)(2)(i), (ii) and (iii) of this 
section are met. The third feeder representative will be appointed by 
the Secretary and will not be chosen or bound by size requirements.
    (i) At least one of the feeders appointed to the Board shall feed 
less than 5,000 head of lambs annually.
    (ii) At least one of the feeders appointed to the Board shall feed 
5,000 or more head of lambs annually.
    (iii) The Secretary shall ensure that the feeders appointed to the 
Board are not all located in one geographic region as established for 
producers pursuant to paragraph (a)(1) of this section.
    (3) First handlers. There shall be three first handler 
representatives appointed to the Board by the Secretary from nominations 
submitted pursuant to this subpart.
    (4) Seedstock producers. There shall be one seedstock producer 
appointed to the Board by the Secretary from nominations submitted 
pursuant to this subpart.
    (b) In soliciting nominations for the Board, the Secretary will 
request those nominating to identify specific categories in which 
nominees will qualify.
    (c) Adjustment of membership. At least once every 5 years, the Board 
will review the geographical distribution of the United States 
production of lambs. The review will be conducted using the National 
Agricultural Statistics Service inventory figures and the Board's annual 
assessment receipts. If warranted, the Board will recommend to

[[Page 395]]

the Secretary that the membership on the Board be adjusted to reflect 
changes in geographical distribution of domestic lamb production.



Sec.1280.202  Nominations.

    All nominations authorized under this section shall be made in the 
following manner:
    (a) Nominations shall be obtained by the Secretary from eligible 
organizations certified under Sec.1280.206. Certified eligible 
organizations representing producers, feeders, first handlers, or 
seedstock producers shall submit to the Secretary at least two nominees 
for each seat on the Board. If the Secretary determines that a unit is 
not represented by a certified eligible organization, then the Secretary 
may solicit nominations from other organizations or other persons 
residing in the unit.
    (b) After the establishment of the initial Board, the Department 
shall announce when a vacancy does or will exist. Nomination for 
subsequent Board members shall be submitted to the Secretary not less 
than 60 days prior to the expiration of the terms of the members whose 
terms are expiring, in the manner as described in this section. In the 
case of vacancies due to reasons other than the expiration of a term of 
office, successor Board members shall be appointed pursuant to Sec.
1280.205.
    (c) When there is more than one certified eligible organization 
representing the unit or when the Secretary solicits nominations from 
organizations and persons residing in that unit, they may caucus and 
jointly nominate, two qualified persons for each position representing 
that unit on the Board for which a member is to be appointed. If joint 
agreement is not reached with respect to any such nominations, or if no 
caucus is held, each eligible organization may submit to the Secretary 
two nominees for each appointment to be made to represent that unit.



Sec.1280.203  Nominee's agreement to serve.

    Any producer, feeder, first handler, or seedstock producer nominated 
to serve on the Board shall file with the Secretary at the time of the 
nomination a written agreement to:
    (a) Serve on the Board if appointed;
    (b) Disclose any relationship with any lamb promotion entity or with 
any organization that has or is being considered for a contractual 
relationship with the Board; and
    (c) Withdraw from participation in deliberations, decision-making, 
or voting on matters that concern the relationship disclosed under 
paragraph (b) of this section.



Sec.1280.204  Appointment.

    From the nominations made pursuant to Sec.1280.202, the Secretary 
shall appoint the members of the Board on the basis of representation 
provided in Sec.1280.201.



Sec.1280.205  Vacancies.

    To fill any vacancy occasioned by the death, removal, resignation, 
or disqualification of any member of the Board, the Secretary shall 
appoint a successor from the most recent list of nominations for the 
position or the Secretary shall request nominations for a successor 
pursuant to Sec.1280.202 and such successor shall be appointed 
pursuant to Sec.1280.204.



Sec.1280.206  Certification of organizations.

    (a) In General. The eligibility of State, regional, or national 
organizations to represent producers, seedstock producers, feeders, and 
first handlers and to participate in the making of nominations under 
this subpart shall be certified by the Secretary. The Secretary shall 
certify any organization that the Secretary determines meets the 
eligibility criteria established under paragraphs (b) and (c) of this 
section. An eligibility determination by the Secretary shall be final.
    (b) Basis for Certification. Certification shall be based upon, in 
addition to other available information, a factual report submitted by 
the organization that shall contain information considered relevant and 
specified by the Secretary, including:
    (1) The geographic territory covered by the active membership of the 
organization;

[[Page 396]]

    (2) The nature and size of the active membership of the 
organization, including the number of active producers, seedstock 
producers, feeders, or first handlers represented by the organization;
    (3) Evidence of stability and permanency of the organization;
    (4) Sources from which the operating funds of the organization are 
derived;
    (5) The functions of the organization; and
    (6) The ability and willingness of the organization to further the 
purpose and objectives of the Act.
    (c) Primary Considerations. The primary considerations in 
determining the eligibility of an organization under this paragraph 
shall be whether:
    (1) The membership of the organization consists primarily of 
producers, seedstock producers, feeders, or first handlers who market or 
handle a substantial quantity of lamb or lamb products; and
    (2) A primary purpose of the organization is in the production or 
marketing of lamb or lamb products.



Sec.1280.207  Term of office.

    (a) The members of the Board shall serve for a term of 3 years, 
except that the members appointed to the initial Board shall serve 
proportionately for terms of 1-year, 2-years, and 3-years.
    (b) No member may serve more than two consecutive 3-year terms.
    (c) Each member shall continue to serve until a successor is 
appointed by the Secretary and has accepted the position.



Sec.1280.208  Compensation.

    Board members shall serve without compensation, but shall be 
reimbursed for their reasonable expenses incurred in performing their 
duties as members of the Board.



Sec.1280.209  Removal.

    If the Secretary determines that any person appointed under this 
part fails or refuses to perform his or her duties properly or engages 
in acts of dishonesty or willful misconduct, the Secretary shall remove 
the person from office. A person appointed under this part or any 
employee of the Board may be removed by the Secretary if the Secretary 
determines that the person's continued service would be detrimental to 
the purposes of the Act.



Sec.1280.210  Powers and duties of the Board.

    The Board shall have the following powers and duties:
    (a) To administer this subpart in accordance with its terms and 
provisions;
    (b) To develop and recommend to the Secretary for approval such 
bylaws as may be necessary to administer the Order, including activities 
authorized to be carried out under the Order;
    (c) To meet not less than annually, organize, and select from among 
the members of the Board a Chairperson, Vice Chairperson, Secretary/
Treasurer, other officers, and committees and subcommittees, as the 
Board determines to be appropriate;
    (d) To prepare and submit for the approval of the Secretary, fiscal 
year budgets in accordance with Sec.1280.212.
    (e) To employ persons, other than the members, as the Board 
considers necessary to assist the Board in carrying out its duties, and 
to determine the compensation and specify the duties of the persons;
    (f) To develop and submit plans and projects to the Secretary for 
the Secretary's approval, and to enter into contracts or agreements, 
which must be approved by the Secretary before becoming effective, for 
the development and carrying out of programs or projects of research, 
information (including producer information), or promotion, and the 
payment of costs thereof with funds collected pursuant to this subpart. 
Each contract or agreement shall provide that any person who enters into 
a contract or agreement with the Board shall develop and submit to the 
Board a proposed activity; keep accurate records of all of its 
transactions relating to the contract or agreement; account for funds 
received and expended in connection with the contract or agreement; make 
periodic reports to the Board of activities conducted under the contract 
or agreement; and make such other reports available as the Board or the 
Secretary considers relevant. Any contract or agreement shall provide 
that:

[[Page 397]]

    (1) The contractor or agreeing party shall develop and submit to the 
Board a program, plan, or project together with a budget or budgets that 
shall show the estimated cost to be incurred for such program, plan, or 
project;
    (2) The contractor or agreeing party shall keep accurate records of 
all its transactions and make periodic reports to the Board of 
activities conducted, submit accounting for funds received and expended, 
and make such other reports as the Secretary or the Board may require;
    (3) The Secretary may audit the records of the contracting or 
agreeing party periodically; and,
    (4) Any subcontractor who enters into a contract with a Board 
contractor and who receives or otherwise uses funds allocated by the 
Board shall be subject to the same provisions as the contractor.
    (g) To receive, investigate, and report to the Secretary complaints 
of violations of the Order;
    (h) To recommend to the Secretary such amendments to the Order as 
the Board considers appropriate;
    (i) To maintain such records and books and prepare and submit such 
reports and records from time to time to the Secretary as the Secretary 
may prescribe; to make appropriate accounting with respect to the 
receipt and disbursement of all funds entrusted to it; and to keep 
records that accurately reflect the actions and transactions of the 
Board;
    (j) To cause its books to be audited by a competent auditor at the 
end of each fiscal year and at such other times as the Secretary may 
request, and to submit a report of the audit directly to the Secretary;
    (k) To give the Secretary the same notice of meetings of the Board 
as is given to members in order that the Secretary's representative(s) 
may attend such meetings, and to keep and report minutes of each meeting 
of the Board to the Secretary;
    (l) To furnish to the Secretary any information or records that the 
Secretary may request;
    (m) To work to achieve an effective, continuous, and coordinated 
program of promotion, research, and information (including producer 
information), designed to strengthen the lamb industry's position in the 
marketplace; maintain and expand existing markets and uses for lamb and 
lamb products; and to carry out programs, plans, and projects designed 
to provide maximum benefits to the lamb industry;
    (n) To provide not less than annually a report to producers, feeders 
and first handlers, accounting for the funds expended by the Board, and 
describing programs implemented under the Act; and to make such report 
available to the public upon request;
    (o) To invest funds in accordance with Sec.1280.213.



Sec.1280.211  Prohibited activities.

    The Board may not engage in, and shall prohibit the employees and 
agents of the lamb industry from engaging in:
    (a) Any action that would be a conflict of interest;
    (b) Using funds collected under the Order to undertake any action 
for the purpose of influencing legislation or governmental action or 
policy, other than recommending to the Secretary amendments to the 
Order; and
    (c) Any advertising, including promotion, research, and information 
activities authorized to be carried out under the order, that may be 
false or disparaging to another agricultural commodity.

                                Expenses



Sec.1280.212  Budget and expenses.

    (a) The Board shall prepare and submit to the Secretary a budget for 
the fiscal year covering its anticipated expenses and disbursements in 
administering, this subpart. The budget shall be submitted before the 
beginning of each fiscal year, and as frequently as may be necessary 
thereafter.
    (b) Subject to this section, any amendment or addition to an 
approved budget must be approved by the Secretary, including shifting 
funds from one program, plan, or project to another.
    (c) The Board is authorized to incur such expenses, including 
provision for a reasonable reserve, as the Secretary

[[Page 398]]

finds are reasonable and likely to be incurred by the Board for its 
maintenance and functioning, and to enable it to exercise its powers and 
perform its duties in accordance with the provisions of this subpart. 
Such expenses shall be paid from funds received by the Board.
    (d) With approval of the Secretary, the Board may borrow money for 
the payment of administrative expenses, subject to the same fiscal, 
budget, and audit controls as other funds of the Board. Any funds 
borrowed by the Board shall be expended only for startup costs and 
capital outlays and are limited to the first year of operation of the 
Board.
    (e) The Board may accept voluntary contributions, but these shall 
only be used to pay expenses incurred in the conduct of programs, plans, 
and projects. Such contributions shall be free from any encumbrance by 
the donor and the Board shall retain complete control of their use.
    (f) The Board shall reimburse the Secretary for all expenses 
incurred by the Secretary in the implementation, administration, and 
supervision of the Order, including all referendum costs in connection 
with the Order.
    (g) The Board may not expend for administration, maintenance, and 
functioning of the Board in any fiscal year an amount that exceeds 10 
percent of the assessments and other income received by the Board for 
that fiscal year, except for the initial fiscal year. Reimbursements to 
the Secretary required under paragraph (f) of this section are excluded 
from this limitation on spending.



Sec.1280.213  Investment of funds.

    The Board may invest, pending disbursement, funds it receives under 
this subpart, only in obligations of the United States or any agency 
thereof, in general obligations of any State or any political 
subdivision thereof, in any interest-bearing account or certificate of 
deposit of a financial institution that is a member of the Federal 
Reserve System, or in obligations fully guaranteed as to principal and 
interest by the United States. Income from any such investment may be 
used for any purpose for which the invested funds may be used.

                               Assessments



Sec.1280.217  Lamb purchases.

    (a) Except as prescribed by regulations approved by the Secretary, 
each first handler, or exporter making payment to a producer, seedstock 
producer, or feeder for lambs purchased from such producer, seedstock 
producer, or feeder shall collect an assessment from the producer, 
seedstock producer, or feeder. Each producer, seedstock producer, or 
feeder shall pay such assessment to the first handler or exporter, at 
the rate of one-half cent ($.005) per pound of live lambs sold.
    (b) Except as otherwise specified in this subpart, a person shall 
not be considered a producer, seedstock producer, or feeder within the 
meaning of this subpart if;
    (1) The person's only share in the proceeds of a sale of lambs is a 
sales commission, handling fee, or other service fee; or
    (2) The person:
    (i) Acquired ownership of the lambs to facilitate the transfer of 
ownership of such lambs from the seller to a third party,
    (ii) Resold such lambs no later than 10 days from the date on which 
the person acquired ownership, and
    (iii) Certified, as required by regulations recommended by the Board 
and prescribed by the Secretary, that the requirements of this provision 
have been satisfied.
    (c) Each person processing or causing to be processed lambs or lamb 
products of that person's own production and marketing such lambs or 
lamb products, shall pay an assessment on such lambs or lamb products on 
the live weight of the lamb at the time of slaughter at the rate 
established in paragraph (e) of this section. In addition, pursuant to 
Sec.1280.108, such individual would be considered a first handler and 
would be required by Sec.1280.219 to pay an additional assessment of 
$.30 per head. As the first handler, the individual must remit the total 
amount of assessment to the Board.
    (d) A person who is a market agency; i.e., commission merchant, 
auction

[[Page 399]]

market, or livestock market in the business of receiving lambs for sale 
or commission for or on behalf of a producer, seedstock producer, or 
feeder shall collect an assessment from the producer, seedstock 
producer, or feeder and shall pass the collected assessments on to the 
subsequent purchaser pursuant to this subpart and regulations 
recommended by the Board and prescribed by the Secretary.
    (e) Rate. Except as otherwise provided, the rate of assessment shall 
be seven-tenths of a cent ($0.007) per pound on all live lambs sold. The 
rate of assessment may be raised or lowered no more than twenty-
hundredths of a cent ($0.002) in any one year. The Board may recommend 
any change to the Department. Prior to a change in the assessment rate, 
the Department will provide notice by publishing in the Federal Register 
any proposed changes with interested parties allowed to provide comment.
    (f) The collection of assessments pursuant to Sec.1280.217, Sec.
1280.218, and Sec.1280.219 shall begin with respect to lambs 
purchased, or lambs or lamb products marketed on or after the effective 
date established by the Secretary and shall continue until terminated or 
suspended by the Secretary.
    (g) If the Board is not in place by the date the first assessments 
are to be collected, the Secretary shall have the authority to receive 
assessments and invest them on behalf of the Board, and shall pay such 
assessments and any interest earned to the Board when it is formed. The 
Secretary shall have the authority to promulgate rules and regulations 
concerning assessments and the collection of assessments, if the Board 
is not in place or is otherwise unable to develop such rules and 
regulations.
    (h) Payment remitted pursuant to this subpart shall be in the form 
of a negotiable instrument made payable to the Board. Such remittances 
and the reports specified in Sec.1280.223 and Sec.1280.225 shall be 
mailed to the location designated by the Board.

[67 FR 17857, Apr. 11, 2002, as amended at 78 FR 28123, May 14, 2013]



Sec.1280.218  Exporter.

    Each person exporting live lambs shall remit to the Board an 
assessment on such lambs at the time of export at the rate established 
in Sec.1280.217(e). An exporter directly exporting his or her own 
lambs shall remit an assessment to the Board at the rate established in 
Sec.1280.217(e).



Sec.1280.219  First handlers.

    Each first handler, in addition to remitting the assessment 
collected pursuant to Sec.1280.217, shall pay an assessment equal to 
forty-two cents ($0.42) per head of lambs purchased by the first handler 
for slaughter or slaughtered by such first handler pursuant to a custom 
slaughter arrangement. The rates of assessment for first handlers shall 
be increased or decreased proportionately if the assessment paid by 
producers, seedstock producers, and feeders is increased or decreased. 
Such assessment shall be remitted with the assessments collected 
pursuant to Sec.1280.217.

[78 FR 28123, May 14, 2013]



Sec.1280.220  Collections.

    (a) Each first handler and each exporter responsible for the 
collection of assessments under this subpart shall remit assessments to 
the Board by the 15th day of the month following the month in which the 
lambs were purchased for slaughter or export, as required by regulations 
recommended by the Board and prescribed by the Secretary, has provided 
otherwise; or
    (b) If a first handler marketed lambs or lamb products directly to 
consumers, assessments shall be remitted to the Board by the 15th day of 
the month following the month in which the lambs or lamb products were 
marketed, as required by regulations recommended by the Board and 
prescribed by the Secretary, has provided otherwise.
    (c) Late payment charges. Any unpaid assessments due to the Board 
pursuant to Sec.1280.217 shall be increased 2 percent each month 
beginning with the day following the date such assessments were due. Any 
remaining amount due, which

[[Page 400]]

shall include any unpaid charges previously made pursuant to this 
paragraph, shall be increased at the same rate on the corresponding day 
of each month thereafter until paid. For the purposes of this paragraph, 
any assessment determined at a date later than the date prescribed by 
this subpart, because of a person's failure to timely submit a report to 
the Board, shall be considered to have been payable by the date it would 
have been due if the report had been timely filed. The timeliness of a 
payment to the Board shall be based on the applicable postmark date or 
the date actually received by the Board, whichever is earlier.
    (d) Persons failing to remit total assessments due in a timely 
manner may also be subject to actions under Federal debt collection 
procedures.



Sec.1280.221  Prohibition on use of funds.

    No funds collected by the Board under this subpart shall be used to 
undertake any action for the purpose of influencing legislation or 
governmental action or policy, other than recommending to the Secretary 
amendments to this subpart. A plan or project conducted pursuant to this 
title shall not make false or misleading claims on behalf of lamb or 
lamb products or disparage a competing product.

                       Reports, Books, and Records



Sec.1280.222  Books and Records of Board.

    The Board shall:
    (a) Maintain such books and records, which shall be made available 
to the Secretary for inspection and audit, as the Secretary may 
prescribe,
    (b) Prepare and submit to the Secretary, from time to time, such 
reports as the Secretary may prescribe, and
    (c) Account for the receipt and disbursement of all funds entrusted 
to it. The Board shall cause its books and records to be audited by an 
independent auditor at the end of each fiscal year, and a report of such 
audit to be submitted to the Secretary.



Sec.1280.223  Reports.

    Each first handler required to remit assessments to the Board for 
live lambs pursuant to Sec.1280.217, each first handler marketing lamb 
products of that person's own production, and each exporter of lambs, 
shall report to the Board information pursuant to regulations 
recommended by the Board and prescribed by the Secretary. Such 
information may include but is not limited to the following:
    (a) The number of lambs purchased, initially transferred or which, 
in any other manner, is subject to the collection of assessment, the 
total weight in pounds, and the dates of such transactions;
    (b) The number of lambs exported; the total weight in pounds of 
lambs exported;
    (c) The amount of assessment remitted;
    (d) The basis; if necessary, to show why the remittance is less than 
the total weight in pounds of lamb multiplied by the assessment rate;
    (e) The date any assessment was paid.



Sec.1280.224  Periodic evaluation.

    Pursuant to the Federal Agriculture Improvement and Reform Act of 
1996 (7 U.S.C. 7401), the Board shall, not less often than every 5 
years, authorize and fund, from funds otherwise available to the Board, 
an independent evaluation of the effectiveness of the Order and other 
programs conducted by the Board. The Board shall submit to the 
Secretary, and make available to the public, the results of each 
periodic independent evaluation conducted under this paragraph.



Sec.1280.225  Books and records of persons.

    (a) Each first handler, exporter of lambs, and market agency shall 
maintain and make available for inspection such books and records as may 
be required by regulations recommended by the Board and prescribed by 
the Secretary, including records necessary to verify any required 
reports. Such records shall be maintained for at least 2 years beyond 
the fiscal period of their applicability.
    (b) Document evidencing payment of assessments. Each person, 
including first handlers, exporters and market agencies, responsible for 
collecting an

[[Page 401]]

assessment paid pursuant to this subpart is required to give the person 
from whom the assessment was collected, written evidence of payment of 
the assessments paid pursuant to this subpart. Such written evidence 
serving as a receipt shall include, but not be limited to, the following 
information:
    (1) Name and address of the person collecting the assessment.
    (2) Name of person who paid assessment.
    (3) Number of head of lamb sold.
    (4) Total weight in pounds of lamb sold.
    (5) Total assessments paid by the producer, seedstock producer, or 
feeder.
    (6) Date of sale.
    (7) Such other information as the Board, with the approval of the 
Secretary, may require.



Sec.1280.226  Use of information.

    Information from records or reports required pursuant to this 
subpart shall be made available to the Secretary as is appropriate to 
the administration or enforcement of the Act, subpart or any regulation 
issued under the Act. In addition, the Secretary may authorize the use, 
under this part, of information regarding person paying producers, 
seedstock producers, feeders, first handlers, or exporters that is 
accumulated under laws or regulations other than the Act or regulations 
issued under the Act.



Sec.1280.227  Confidentiality.

    All information obtained from books, records, or reports under the 
Act, this subpart, and the regulations issued thereunder shall be kept 
confidential by all persons, including all employees and former 
employees of the Board, all officers and employees and former officers 
and employees of contracting and subcontracting agencies or agreeing 
parties having access to such information. Such information shall not be 
available to Board members, producers, seedstock producers, feeders, 
exporters, or first handlers. Only those persons having a specific need 
for such information to effectively administer the provisions of this 
subpart shall have access to such information. Only such information so 
obtained as the Secretary deems relevant shall be disclosed by them, and 
then only in a judicial proceeding or administrative hearing brought at 
the direction, or on the request, of the Secretary, or to which the 
Secretary or any officer of the United States is a party. Nothing in 
this section shall be deemed to prohibit:
    (a) The issuance of general statements based upon the reports of the 
number of persons subject to this subpart or statistical data collected 
therefrom, which statements do not identify the information furnished by 
any person; and
    (b) The publication, by direction of the Secretary, of the name of 
any person violating this subpart, together with a statement of the 
particular provisions of this subpart violated by such person.

                              Miscellaneous



Sec.1280.228  Right of the Secretary.

    All fiscal matters, programs, plans, or projects, rules or 
regulations, reports, or other substantive actions proposed and prepared 
by the Board shall be submitted to the Secretary for approval.



Sec.1280.229  Personal liability.

    No member or employee of the Board shall be held personally 
responsible, either individually or jointly, in any way whatsoever to 
any person for errors in judgment, mistakes, or other acts, either of 
commission or omission, as such member or employee, except for acts of 
dishonesty or willful misconduct.



Sec.1280.230  Separability.

    If any provision of the subpart is declared invalid or the 
applicability thereof to any person or circumstance is held invalid, the 
validity of the remainder of this subpart, or the applicability thereof 
to other persons or circumstances shall not be affected thereby.



Sec.1280.231  Patents, copyrights, inventions, product formulations,
and publications.

    (a) Any patents, copyrights, inventions or publications developed 
through the use of funds collected by

[[Page 402]]

the Board under the provisions of this subpart shall be the property of 
the U.S. Government as represented by the Board, and shall, along with 
any rents, royalties, residual payments, or other income from the 
rental, sale leasing, franchising, or other uses of such patents, 
copyrights, inventions, or publication, inure to the benefit of the 
Board. Upon termination of this subpart, Sec.1280.235 shall apply to 
determine the disposition of all such property.
    (b) Should patents, copyrights, inventions or publications be 
developed through the use of funds collected by the Board under this 
subpart and funds contributed by another organization or person, 
ownership and related rights to such patents, copyrights, inventions or 
publications shall be determined by agreement between the Board and the 
party contributing funds towards the development of such patent, 
copyright, invention or publication in a manner consistent with 
paragraph (a) of this section.



Sec.1280.232  Amendments.

    Amendments to this subpart may be proposed, from time to time, by 
the Board or by any interested persons affected by the provisions of the 
Act, including the Secretary.



Sec.1280.233  Referenda.

    (a) Required referendum. For the purpose of ascertaining whether the 
persons subject to this part favor the continuation, suspension, or 
termination of this part, the Secretary shall conduct a referendum among 
persons subject to assessments under Sec.1280.217, Sec.1280.218, and 
Sec.1280.219 who, during a representative period determined by the 
Secretary, have engaged in the production, feeding, handling, or 
slaughter of lamb; or the exportation of lamb.
    (1) Time for referendum. The referendum shall be conducted not later 
than 3 years after assessments first begin under this part.
    (2) Approval of part. This part may be approved in a referendum by a 
majority of those persons voting for approval who also represent a 
majority of the volume of lamb produced, fed, slaughtered, handled, and 
exported.
    (b) Subsequent referenda. The Secretary shall conduct a subsequent 
referendum:
    (1) Not later than 7 years after assessments first begin under this 
part;
    (2) At the request of the Board established pursuant to Sec.
1280.201; or
    (3) At the request of 10 percent or more of the lamb producers, 
seedstock producers, feeders, first handlers, and exporters eligible to 
vote to determine if the persons favor the continuation, suspension, or 
termination of this part.
    (c) Other referenda. The Secretary may conduct a referendum at any 
time to determine whether the continuation, suspension or termination of 
this part or a provision of this part is favored by lamb producers, 
seedstock producers, feeders, first handlers, and exporters eligible to 
vote.
    (d) Costs of referenda. The Board shall reimburse the Secretary for 
any expenses incurred by the Secretary to conduct referenda.
    (e) Manner of conducting referenda. A referendum conducted under 
this section with respect to this part shall be conducted in the manner 
determined by the Secretary to be appropriate.
    (1) Voting. Eligible voters may vote by mail ballot in the 
referendum or in person if so prescribed by the Secretary.
    (2) Notice. Not later than 30 days before a referendum is conducted 
under this section with respect to this part, the Secretary shall notify 
the eligible voters, in such manner as determined by the Secretary, of 
the period during which voting in the referendum will occur. The notice 
shall explain any registration and voting procedures established under 
this part.



Sec.1280.234  Suspension or termination.

    (a) The Secretary shall suspend or terminate this part or subpart or 
a provision thereof if the Secretary finds that this part, subpart or a 
provision thereof obstructs or does not tend to effectuate the purposes 
of the Act,
    (b) If, as a result of a referendum the Secretary determines that 
this subpart is not approved, the Secretary shall:
    (1) Not later than 180 days after making the determination, suspend 
or terminate, as the case may be, collection of assessments under this 
subpart; and

[[Page 403]]

    (2) As soon as practical, suspend or terminate, as the case may be, 
activities under this subpart in an orderly manner.



Sec.1280.235  Proceedings after termination.

    (a) Upon the termination of this subpart, the Board shall recommend 
to the Secretary not more than five of its members to serve as trustees 
for the purpose of liquidating the affairs of the Board. Such persons, 
upon designation by the Secretary, shall become trustees of all funds 
and property owned, in possession of or under control of the Board, 
including claims for any funds unpaid or property not delivered or any 
other claim existing at the time of such termination.
    (b) The said trustees shall:
    (1) Continue in such capacity until discharged by the Secretary;
    (2) Carry out the obligations of the Board under any contracts or 
agreements entered into pursuant to this subpart;
    (3) From time to time account for all receipts and disbursements and 
deliver all property on hand, together with all books and records of the 
Board and of the trustees, to such person as the Secretary may direct; 
and
    (4) Upon the direction of the Secretary execute such assignments or 
other instruments necessary or appropriate to vest in such person full 
title and right to all of the funds, property, and claims vested in the 
Board or the same obligations as imposed upon the Board and the 
trustees.
    (c) Any person to whom funds, property, or claims have been 
transferred or delivered pursuant to this subpart shall be subject to 
the same obligations as imposed upon the Board and the trustees.
    (d) Any residual funds not required to defray the necessary expenses 
of liquidation shall be returned to the persons who contributed such 
funds, or paid assessments, or if not practicable, shall be turned over 
to the Department to be utilized, to the extent practicable, in the 
interest of continuing one or more of the lamb research or information 
programs hitherto authorized.



Sec.1280.236  Effect of termination or amendment.

    Unless otherwise expressly provided by the Secretary, the 
termination of this subpart or any regulation issued thereunder, or the 
issuance of any amendment to either thereof, shall not:
    (a) Affect or waive any right, duty obligation or liability which 
shall have arisen or which may thereafter arise in connection with any 
provision of this subpart or any such rule or regulation issued 
thereunder;
    (b) Release or extinguish any violation of this subpart or of this 
subpart or of any rule or regulation issued thereunder; or
    (c) Affect or impair any rights or remedies of the United States, 
the Secretary or of any person, with respect to any such violation.



Sec.1280.237  Rules and Regulations.

    The Secretary may prescribe such rules and regulations as may be 
necessary to effectively carry out the provisions of this subpart.



Sec.1280.238  OMB Control Numbers.

    The control number for the information requirements assigned by the 
Office of Management and Budget pursuant to the Paperwork Reduction Act 
of 1995, 44 U.S.C. Chapter 35 is 0581-0198, except that the OMB control 
number for the nominee background form is 0505-0001.

Subparts B [Reserved]



                     Subpart C_Rules and Regulations

    Source: 67 FR 39253, June 7, 2002, unless otherwise noted.



Sec.1280.401  Terms defined.

    As used throughout this subpart, unless the context otherwise 
requires, terms shall have the same meaning as the definition of such 
terms in subpart A of this part.



Sec.1280.402  Assessments.

    (a) Sharing proceeds of sale. If more than one producer, feeder, or 
seedstock producer shares the proceeds received for the lamb or lamb 
products sold, each such producer, feeder, or

[[Page 404]]

seedstock producer is obligated to pay that portion of the assessments 
that is equivalent to that producer's, feeder's, or seedstock producer's 
proportionate share of the proceeds.
    (b) Market agencies. A person who is a market agency; i.e., 
commission merchant, auction market, or livestock market in the business 
of receiving lambs or lamb products for sale on commission for or on 
behalf of a producer, feeder, or seedstock producer, will be required to 
collect an assessment from the producer, feeder, or seedstock producer 
and pass the collected assessment on to the subsequent purchaser(s) 
until remitted by a first handler or exporter responsible for submitting 
assessments under this part.
    (c) Failure to collect. Failure of a person to collect the 
assessment on lambs purchased from a producer, feeder, or seedstock 
producer shall not relieve the producer, feeder, or seedstock producer 
of their obligation to pay the assessment and to remit the assessment to 
the Secretary.
    (d) Death, bankruptcy, receivership or incapacity to act. In the 
event of a producer's, feeder's, seedstock producer's, or exporter's 
death, bankruptcy, receivership or incapacity to act, the representative 
of such producer's, feeder's, seedstock producer's, or exporter's 
estate, the person acting on behalf of creditors or other person acting 
in such person's stead, shall be considered the producer, feeder, or 
seedstock producer and shall be required to pay an assessment or collect 
an assessment.
    (e) Remittance of assessments. (1) Assessments shall be remitted to 
the Lamb Promotion, Research, and Information Program, c/o the Secretary 
at USDA, 23029 Network Place, Chicago, Illinois 60673-1230, with a 
``Monthly Remittance Report'' form LS-81 not later than the 15th day of 
the following month in which lambs or lamb products were purchased for 
slaughter or export, or marketed, if a first handler markets lambs or 
lamb products directly to consumers, in order to avoid late payment 
charges.
    (2) In cases where a producer or feeder sells lambs as part of a 
custom slaughter operation, the producer or feeder shall be responsible 
for remitting the assessments pursuant to Sec.1280.219.
    (3) Each person processing or causing to be processed lamb or lamb 
products of that person's own production and marketing such lamb or lamb 
products shall be responsible for remitting the assessments pursuant to 
Sec.1280.217(c).
    (4) Late payment charges. Any unpaid assessments due to the Board 
pursuant to Sec.1280.217 shall be increased 2 percent each month 
beginning with the day following the date such assessments were due. Any 
remaining amount due, which shall include any unpaid charges previously 
made pursuant to this paragraph, shall be increased at the same rate on 
the corresponding day of each month thereafter until paid. Any 
assessment received at a date later than the date prescribed by this 
part, because of a persons failure to submit a timely report to the 
Secretary, shall be considered to have been payable by the date it would 
have been due if the report had been filed in a timely manner. The 
timeliness of a payment to the Secretary shall be based on the 
applicable postmark date or the date actually received by the Secretary, 
whichever is earlier.
    (5) Weekends and holidays. If the 15th day of the month falls on a 
Saturday, Sunday, or a federally recognized holiday then the required 
reports and assessment will be due the next business day in order to 
avoid late payment charges.
    (f) Non-producer status for certain transactions. (1) Each person 
seeking non-producer status pursuant to Sec.1280.217 shall provide the 
person remitting the assessment a Statement of Certification of Non-
Producer Status form (LS-78).
    (2) A copy of the Statement of Certification of Non-Producer Status 
shall be forwarded by the person collecting the assessment to the 
Secretary.



Sec.1280.404  Reporting.

    (a) Each first handler required to submit assessments for live lambs 
pursuant to Sec.1280.217, each first handler marketing lamb products 
of that person's own production, and each exporter of lambs, shall 
report to the

[[Page 405]]

Secretary the following information on form LS-81.
    (1) The number of lambs purchased, initially transferred or which, 
in any other manner, is subject to the collection of assessment, the 
total weight in pounds, and the dates of such transactions;
    (2) The number of lambs exported and the total weight in pounds of 
lambs exported;
    (3) The amount of assessment remitted;
    (4) The basis; if necessary, to show why the remittance is less than 
the total weight in pounds of lamb multiplied by the assessment rate; 
and
    (5) The date any assessment was paid.
    (b) Reporting periods. For reports required pursuant to Sec.
1280.223, each calendar month shall be a reporting period.



Sec.1280.405  Books and records.

    (a) Each first handler, exporter of lambs, and market agency shall 
maintain and, during normal business hours, make available for 
inspection by representatives of the Secretary, such books and records 
as are necessary to carry out the provisions of this part, including 
such books and records as are necessary to verify any required reports.
    (b) Documents evidencing payments of assessments. Each person, 
including first handlers, exporters, and market agencies, responsible 
for collecting an assessment paid pursuant to this part is required to 
give the person from whom the assessment was collected, written evidence 
of payment of the assessments paid. Such written evidence serving as a 
receipt shall include the following information:
    (1) Name and address of the person collecting the assessment.
    (2) Name of person who paid assessment.
    (3) Number of head of lambs sold.
    (4) Total weight in pounds of lamb sold.
    (5) Total assessments paid by the producer, seedstock producer, or 
feeder.
    (6) Date of sale.
    (7) Such other information as the Secretary may require.



Sec.1280.406  Exemption.

    (a) A producer, seed stock producer, feeder, handler, or exporter 
who operates under an approved National Organic Program (7 CFR part 205) 
(NOP) organic production or handling system plan may be exempt from the 
payment of assessments under this part, provided that:
    (1) Only agricultural products certified as ``organic'' or ``100 
percent organic'' (as defined in the NOP) are eligible for exemption;
    (2) The exemption shall apply to all certified ``organic'' or ``100 
percent organic'' (as defined in the NOP) products of a producer, 
handler, or exporter regardless of whether the agricultural commodity 
subject to the exemption is produced, handled, or exported by a person 
that also produces, handles, or exports conventional or nonorganic 
agricultural products of the same agricultural commodity as that for 
which the exemption is claimed;
    (3) The producer, handler, or exporter maintains a valid certificate 
of organic operation as issued under the Organic Foods Production Act of 
1990 (7 U.S.C. 6501-6522) (OFPA) and the NOP regulations issued under 
OFPA (7 CFR part 205); and
    (4) Any person so exempted shall continue to be obligated to pay 
assessments under this part that are associated with any agricultural 
products that do not qualify for an exemption under this section.
    (b) To apply for exemption under this section, the person shall 
submit a request to the Board on an Organic Exemption Request Form (Form 
AMS-15) at any time during the year initially, and annually thereafter 
on or before January 1, for as long as the producer continues to be 
eligible for the exemption.
    (c) The request for exemption shall include the following:
    (1) The applicant's full name, company name, address, telephone and 
fax numbers, and email address;
    (2) Certification that the applicant maintains a valid certificate 
of organic operation issued under the OFPA and the NOP;
    (3) Certification that the applicant produces, handles, or exports 
organic

[[Page 406]]

products eligible to be labeled ``organic'' or ``100 percent organic'' 
under the NOP;
    (4) A requirement that the applicant attach a copy of their 
certificate of organic operation issued by a USDA-accredited certifying 
agent under the OFPA and the NOP;
    (5) Certification, as evidenced by signature and date, that all 
information provided by the applicant is true; and
    (6) Such other information as may be required by the Board, with the 
approval of the Secretary.
    (d) If a person complies with the requirements of this section, the 
Board will grant an assessment exemption and issue a Certificate of 
Exemption to the applicant within 30 days. If the application is 
disapproved, the Board will notify the applicant of the reason(s) for 
disapproval within the same timeframe.
    (e) An exempt producer shall provide a copy of the Certificate of 
Exemption to each person to whom the producer sells ovine animals or 
lamb and lamb products. The Certificate of Exemption must accompany the 
ovine animals through the production chain to the person responsible for 
remitting the assessment to the Board.
    (f) The person shall maintain records showing the exempt producer's 
name and address and the exemption number assigned by the Board.
    (g) The exemption will apply at the first reporting period following 
the issuance of the exemption.

[70 FR 2762, Jan. 14, 2005, as amended at 80 FR 82035, Dec. 31, 2015]

Subpart D [Reserved]



              Subpart E_Procedures To Request a Referendum

                               Definitions

    Source: 69 FR 77572, Dec. 27, 2004, unless otherwise noted.



Sec.1280.601  Terms defined.

    As used throughout this subpart, unless the context otherwise 
requires, terms shall have the same meaning as the definition of such 
terms in subpart A of this part.



Sec.1280.602  Administrator, AMS.

    Administrator, AMS, means the Administrator of the Agricultural 
Marketing Service, or any officer or employee of USDA to whom there has 
been delegated or may be delegated the authority to act in the 
Administrator's stead.



Sec.1280.603  Administrator, FSA.

    Administrator, FSA, means the Administrator, of the Farm Service 
Agency, or any officer or employee of USDA to whom there has been 
delegated or may be delegated the authority to act in the 
Administrator's stead.



Sec.1280.604  Eligibility.

    Eligibility is defined as any person subject to the assessment who 
during the representative period determined by the Secretary have 
engaged in the production, feeding, or slaughtering of lambs. Such 
persons are eligible to participate in the referendum. Those persons 
whose only share in the proceeds of a sale of lambs is a sales 
commission, handling fee or other service fee or the person acquired 
ownership of the lambs to facilitate the transfer of ownership of such 
lambs from the seller to a third party and resold such lambs no later 
than 10 days from the date on which the person acquired ownership are 
not considered are producers, seedstock producers, or feeders and not 
subject to the assessment. Such persons will not be eligible to 
participate in the referendum.



Sec.1280.605  Farm Service Agency.

    Farm Service Agency also referred to as ``FSA'' means the Farm 
Service Agency of USDA.



Sec.1280.606  Farm Service Agency County Committee.

    Farm Service Agency County Committee, also referred to as ``FSA 
County Committee or COC,'' means the group of persons within a county 
who are elected to act as the Farm Service Agency County Committee.



Sec.1280.607  Farm Service Agency County Executive Director.

    Farm Service Agency County Executive Director, also referred to as 
``CED,''

[[Page 407]]

means the person employed by the FSA County Committee to execute the 
policies of the FSA County Committee and to be responsible for the day-
to-day operation of the FSA county office, or the person acting in such 
capacity.



Sec.1280.608  Farm Service Agency State Committee.

    Farm Service Agency State Committee, also referred to as ``FSA State 
Committee,'' means the group of persons within a State who are appointed 
by the Secretary to act as the Farm Service Agency State Committee.



Sec.1280.609  Farm Service Agency State Executive Director.

    Farm Service Agency State Executive Director, Farm Service Agency 
State Executive Director, also referred to as ``SED,'' means the person 
within a State who is appointed by the Secretary to be responsible for 
the day-to-day operation of the FSA State Office, or the person acting 
in such capacity.



Sec.1280.610  Public notice.

    Public notice means not later than 30-days before the referendum is 
conducted, the Secretary shall notify the eligible voters in such manner 
as determined by the Secretary, of the voting period during which voting 
in the referendum will occur. The notice shall explain any registration 
and voting procedures established under Sec.518 of the Act.



Sec.1280.611  Representative period.

    Representative period means the period designated by the Secretary 
pursuant to Sec.518 of the Act.



Sec.1280.612  Volume of production.

    (a) For producers and seedstock producers, the term volume of 
production means the total number of live domestic lambs owned and 
produced during the most recent calendar year.
    (b) For feeders, volume of production means the total number of 
lambs owned and fed during the most recent calendar year.
    (c) For first handlers, volume of production means the total number 
of lambs slaughtered during the most recent calendar year.



Sec.1280.613  Voting period.

    The term voting period means a 4-week period to be announced by the 
Secretary for voting the referendum.

                               Procedures



Sec.1280.620  General.

    A referendum to determine whether eligible persons favor the 
continuance of this part shall be carried out in accordance with this 
subpart.
    (a) The referendum will be conducted at county FSA offices.
    (b) The Secretary shall determine if at least a majority of those 
persons voting for approval who also represent a majority of the volume 
of lambs owned and produced; owned and fed; or slaughtered, favor the 
continuance of this part.



Sec.1280.621  Supervision of the process for conducting a referendum.

    The Administrator, AMS, shall be responsible for supervising the 
process of permitting persons to vote in a referendum in accordance with 
this subpart.



Sec.1280.622  Eligibility.

    (a) Any person subject to the assessment who during the 
representative period determined by the Secretary has engaged in the 
production, feeding, or slaughtering of lambs is eligible to participate 
in the referendum. Those persons whose only share in the proceeds of a 
sale of lambs is a sales commission, handling fee or other service fee 
or the person acquired ownership of the lambs to facilitate the transfer 
of ownership of such lambs from the seller to a third party and resold 
such lambs no later than 10 days from the date on which the person 
acquired ownership are not considered are producers, seedstock 
producers, or feeders and not subject to the assessment. Such persons 
will not be eligible to participate in the referendum.
    (b) Proxy Registration. (1) Proxy registration is not authorized, 
except that an officer or employee of a corporate producer, feeder, 
seedstock producer, or first handler, or any guardian, administrator, 
executor, or trustee of a person's estate, or an authorized 
representative of any eligible producer,

[[Page 408]]

feeder, seedstock producer, or first handler entity (other than an 
individual person), such as a corporation or partnership, may vote on 
behalf of that entity. Further, an individual cannot vote on behalf of 
another individual (i.e., spouse, sharecrop lease, etc.).
    (2) Any individual, who votes on behalf of any producer, feeder, 
seedstock producer, or first handler entity, shall certify that he or 
she is authorized by such entity to take such action. Upon request of 
the county FSA office, the person voting may be required to submit 
adequate evidence of such authority.
    (c) Joint and group interest. A group of individuals, such as 
members of a family, joint tenants, tenants in common, a partnership, 
owners of community property, or a corporation who engaged in the 
production, feeding, or slaughtering of lambs during the representative 
period as a producer, feeder, seedstock producer, or first handler 
entity shall be entitled to cast only one vote; provided, however, that 
any individual member of a group who is an eligible person separate from 
the group may vote separately.



Sec.1280.623  Time and place of the referendum.

    (a) The opportunity to vote in the referendum shall be provided 
during a 4-week period beginning and ending on a date determined by the 
Secretary. Eligible persons shall have the opportunity to vote following 
the procedures established in this subpart during the normal business 
hours of each county FSA office.
    (b) Persons can determine the location of county FSA offices by 
contacting the nearest county FSA office, the State FSA office, or 
through an online search of FSA's Web site at http://www.fsa.usda.gov/
pas/default.asp.
    (c) Each eligible person shall cast a ballot in the county FSA 
office where FSA maintains the person's administrative farm records. For 
eligible persons not participating in FSA programs, the opportunity to 
vote will be provided at the county FSA office serving the county where 
the person owns or rents land. A person engaged in the production, 
feeding, slaughtering, of lambs in more than one county will vote in the 
county FSA office where the person does most of his or her business.



Sec.1280.624  Facilities.

    Each county FSA office will provide:
    (a) a voting place that is well known and readily accessible to 
persons in the county and that is equipped and arranged so that each 
person can complete and submit their ballot in secret without coercion, 
duress, or interference of any sort whatsoever, and
    (b) a holding container of sufficient size so arranged that no 
ballot or supporting documentation can be read or removed without 
breaking seals on the container.



Sec.1280.625  Certification and referendum form ballot form.

    Form LS-86 shall be used to vote in the referendum and certify 
eligibility. Eligible persons will be required to complete a ballot in 
its entirety, vote ``yes'' or ``no'' to continue the program, enter the 
number of lambs (volume of production) owned and produced; owned and 
fed; or slaughtered during a representative period and provide 
documentation such as a sales receipt or remittance form showing that 
the person voting was engaged in the production, feeding, or 
slaughtering of lambs during the representative period. The person or 
authorized representative shall sign the ballot certifying that they or 
the entity they represent were engaged in the production, feeding, or 
slaughtering of lambs during the representative period and that the 
volume of production voted is true and accurate.



Sec.1280.626  Certification and voting procedures.

    (a) Each eligible person shall be provided the opportunity to cast a 
ballot during the voting period announced by the Secretary.
    (1) Each eligible person shall be required to complete form LS-86 in 
its entirety, sign it, and provide evidence that they were engaged in 
the production, feeding, or slaughtering of lambs during the 
representative period. The person must legibly place his or her

[[Page 409]]

name and, if applicable, the entity represented, address, county, and 
telephone number. The person shall sign and certify on form LS-86 that:
    (i) The person was engaged in the production, feeding, or 
slaughtering of lambs during the representative period;
    (ii) The person voting on behalf of a corporation or other entity is 
authorized to do so;
    (iii) The person has cast only one vote; and
    (iv) The volume of production listed on the ballot is true and 
accurate.
    (2) Only a completed and signed form LS-86 accompanied by supporting 
documentation showing that the person was engaged in the production, 
feeding, or slaughter of lambs during the representative period shall be 
considered a valid vote.
    (b) To vote, eligible persons may obtain form LS-86 in-person, by 
mail, or by facsimile from county FSA offices or through the Internet 
during the voting period. A completed and signed form LS-86 and 
supporting documentation, such as a sales receipt or remittance form, 
must be returned to the appropriate county FSA office where FSA 
maintains and processes the person's administrative farm records. For a 
person not participating in FSA programs, the opportunity to vote in a 
referendum will be provided at the county FSA office serving the county 
where the person owns or rents land. A person engaged in the production, 
feeding, or slaughtering of lambs in more than one county will vote in 
the county FSA office where the person does most of his or her business. 
Forms obtained via the Internet will be located at www.ams.usda.gov/
lsmarketingprograms.
    (c) A completed and signed form LS-86 and the supporting 
documentation may be returned in-person, by mail, or facsimile to the 
appropriate county FSA office. Form LS-86 and supporting documentation 
returned in-person or by facsimile, must be received in the appropriate 
county FSA office prior to the close of the work day on the final day of 
the voting period to be considered a valid ballot. Form LS-86 and the 
accompanying documentation returned by mail must be postmarked no later 
than midnight of the final day of the voting period and must be received 
in the county FSA office on the 5th business day following the final day 
of the voting period.
    (d) Persons who obtain form LS-86 in-person at the appropriate FSA 
county office may complete and return it the same day along with the 
supporting documentation.

[69 FR 77572, Dec. 27, 2004, as amended at 73 FR 76194, Dec. 16, 2008]



Sec.1280.627  Canvassing voting ballots.

    (a) Canvassing of form LS-86 shall take place at the county FSA 
offices on the 6th business day following the final day of the voting 
period. Such canvassing, acting on behalf of the Administrator, AMS, 
shall be in the presence of at least two members of the county 
committee. If two or more of the counties have been combined and are 
served by one county office, the canvassing of the requests shall be 
conducted by at least one member of the county committee from each 
county served by the county office. The FSA State committee or the State 
Executive Director, if authorized by the State Committee, may designate 
the County Executive Director (CED) and a county or State FSA office 
employee to canvass the ballots and report the results instead of two 
members of the county committee when it is determined that the number of 
eligible voters is so limited that having two members of the county 
committee present for this function is impractical, and designate the 
CED and/or another county or State FSA office employee to canvass 
requests in any emergency situation precluding at least two members of 
the county committee from being present to carry out the functions 
required in this section.
    (b) Form LS-86 should be canvassed as follows:
    (1) Number of valid ballots. A person has been declared eligible by 
FSA to vote by completing form LS-86 in its entirety, signing it, voting 
volume of production, and providing supporting documentation that shows 
the person who cast the ballot during the voting period was engaged in 
the production, feeding, or slaughtering of lambs during the 
representative period. Such ballot will be considered a valid ballot.

[[Page 410]]

    (2) Number of ineligible ballots. If FSA cannot determine that a 
person is eligible based on the submitted documentation or if the person 
fails to submit the required supporting documentation, the person shall 
be determined to be ineligible. FSA shall notify ineligible persons in 
writing as soon as practicable but no later than the 8th business day 
following the final day of the voting period.
    (c) Appeal. A person declared to be ineligible by FSA can appeal 
such decision and provide additional documentation to the FSA county 
office within 5 business days after the postmark date of the letter of 
notification of ineligibility. FSA will then make a final decision on 
the person's eligibility and notify the person of the decision.
    (d) Invalid ballots. An invalid ballot includes, but is not limited 
to the following:
    (1) Form LS-86 is not signed or all required information has not 
been provided;
    (2) Form LS-86 and supporting documentation returned in-person or by 
facsimile was not received by close of business on the last business day 
of the voting period;
    (3) Form LS-86 and supporting documentation returned by mail was not 
postmarked by midnight of the final day of the voting period;
    (4) Form LS-86 and supporting documentation returned by mail was not 
received in the county FSA office by the 5th business day following the 
final day of the voting period;
    (5) Form LS-86 or supporting documentation is mutilated or marked in 
such a way that any required information on the form is illegible; or
    (6) Form LS-86 and supporting documentation not returned to the 
appropriate county FSA office.



Sec.1280.628  Counting ballots.

    (a) Form LS-86 shall be counted by county FSA offices on the same 
day as the ballots are canvassed if there are no ineligibility 
determinations to resolve. For those county FSA offices that do have 
ineligibility determinations, the requests shall be counted no later 
than the 14th business day following the final day of the voting period.
    (b) Ballots shall be counted as follows:
    (1) Number of valid ballots cast;
    (2) Number of persons favoring the Order;
    (3) Number of persons not favoring the Order;
    (4) Volume of production voted favoring the continuation of the 
Order;
    (5) Volume of production voted not favoring the continuation of the 
Order; and
    (6) Number of invalid ballots.



Sec.1280.629  FSA county office report.

    The county FSA office report shall be certified as accurate and 
complete by the CED or designee, acting on behalf of the Administrator, 
AMS, as soon as may be reasonably possible, but in no event shall submit 
no later than 18th business day following the final day of the specified 
period. Each county FSA office shall transmit the results in its county 
to the FSA State office. The results in each county may be made 
available to the public upon notification by the Administrator, FSA, 
that the final results have been released by the Secretary. A copy of 
the report shall be posted for 30 calendar days following the date of 
notification by the Administrator, FSA, in the county FSA office in a 
conspicuous place accessible to the public. One copy shall be kept on 
file in the county FSA office for a period of at least 12 months after 
notification by FSA that the final results have been released by the 
Secretary.



Sec.1280.630  FSA State office report.

    Each FSA State office shall transmit to the Administrator, FSA, as 
soon as possible, but in no event later than the 20th business day 
following the final day of the voting period, a report summarizing the 
data contained in each of the reports from the county FSA offices. One 
copy of the State summary shall be filed for a period of not less than 
12 months after the results have been released and available for public 
inspection after the results have been released.



Sec.1280.631  Results of the referendum.

    (a) The Administrator, FSA, shall submit to the Administrator, AMS, 
the

[[Page 411]]

reports from all State FSA offices. The Administrator, AMS, shall 
tabulate the results of the ballots. USDA will issue an official press 
release announcing the results of referendum and publish the same 
results in the Federal Register. In addition, USDA will post the 
official results at the following Web site: http://www.ams.usda.gov/
LSMarketingPrograms or such other Web site as announced by the 
Administrator of AMS. Subsequently, State reports and related papers 
shall be available for public inspection upon request during normal 
business hours in the Marketing Programs Branch; Livestock and Seed 
Program, AMS, USDA, Room 2628-S; STOP 0251; 1400 Independence Avenue, 
SW., Washington, DC.
    (b) If the Secretary deems necessary, a State report or county 
report shall be reexamined and checked by such persons who may be 
designated by the Secretary.

[69 FR 77572, Dec. 27, 2004, as amended at 73 FR 76194, Dec. 16, 2008]



Sec.1280.632  Disposition of records.

    Each FSA CED will place in sealed containers marked with the 
identification of the ``Lamb Checkoff Program Referendum,'' all of the 
form LS-86's along with the accompanying documentation and county 
summaries. Such records will be placed in a secure location under the 
custody of FSA CED for a period of not less than 12 months after the 
date of notification by the Administrator, FSA, that the final results 
have been announced by the Secretary. If the county FSA office receives 
no notice to the contrary from the Administrator, FSA, by the end of the 
12 month period as described above, the CED or designee shall destroy 
the records.



Sec.1280.633  Instructions and forms.

    The Administrator, AMS, is authorized to prescribe additional 
instructions and forms not inconsistent with the provisions of this 
subpart.



Sec.1280.634  Confidentiality.

    The names of persons voting in the referendum and ballots shall be 
confidential and the contents of the ballots shall not be divulged 
except as the Secretary may direct. The public may witness the opening 
of the ballot box and the counting of the votes but may not interfere 
with the process.

                          PART 1290 [RESERVED]



PART 1291_SPECIALTY CROP BLOCK GRANT PROGRAM_FARM BILL--
Table of Contents



Sec.
1291.1 Purpose and scope.
1291.2 Definitions.
1291.3 Eligible grant applicants.
1291.4 Eligible grant project.
1291.5 Restrictions and limitations on grant funds.
1291.6 Completed application.
1291.7 Review of grant applications.
1291.8 Grant agreements.
1291.9 Unobligated funds.
1291.10 Reporting and oversight requirements.
1291.11 Audit requirements.

    Authority: 7 U.S.C. 1621 note, as amended.

    Source: 73 FR 51589, Sept. 4, 2008, unless otherwise noted.



Sec.1291.1  Purpose and scope.

    (a) Pursuant to the authority conferred by Section 101 of the 
Specialty Crops Competitiveness Act of 2004 (7 U.S.C. 1621 note), as 
amended by Section 10109 of the Food, Conservation, and Energy Act of 
2008, Public Law 110-246, AMS will make grants to states to enhance the 
competitiveness of specialty crops in accordance with the terms and 
conditions set forth herein and other applicable federal statutes and 
regulations, including, but not limited to, 7 CFR part 3015 and part 
3016.
    (b) AMS encourages states to develop projects solely to enhance the 
competitiveness of specialty crops pertaining to the following issues 
affecting the specialty crop industry: increasing child and adult 
nutrition knowledge and consumption of specialty crops; participation of 
industry representatives at meetings of international standard setting 
bodies in which the U.S. government participates; improving efficiency 
and reducing costs of distribution systems; assisting all entities in 
the specialty crop distribution chain in developing ``Good Agricultural 
Practices'', ``Good Handling Practices'', ``Good Manufacturing 
Practices'', and

[[Page 412]]

in cost-share arrangements for funding audits of such systems for small 
farmers, packers and processors; investing in specialty crop research, 
including organic research to focus on conservation and environmental 
outcomes; enhancing food safety; developing new and improved seed 
varieties and specialty crops; pest and disease control; and 
sustainability.

[74 FR 13316, Mar. 27, 2009]



Sec.1291.2  Definitions.

    (a) AMS means the Agricultural Marketing Service of the U.S. 
Department of Agriculture.
    (b) Application means the application for the Specialty Crop Block 
Grant Program--Farm Bill (SCBGP-FB).
    (c) Beginning farmer or rancher means an individual or entity who 
has not operated a farm or ranch for more than 10 years and 
substantially participates in the operation.
    (d) Capital expenditures means expenditures for the acquisition cost 
of capital assets (equipment, buildings, land), or expenditures to make 
improvements to capital assets that materially increase their value or 
useful life. Acquisition cost means the cost of the asset including the 
cost to put it in place. Acquisition cost for equipment, for example, 
means the net invoice price of the equipment, including the cost of any 
modifications, attachments, accessories, or auxiliary apparatus 
necessary to make it usable for the purpose for which it is acquired. 
Ancillary charges, such as taxes, duty, protective in transit insurance, 
freight, and installation may be included in, or excluded from the 
acquisition cost in accordance with the governmental unit's regular 
accounting practices.
    (e) Equipment means an article of nonexpendable, tangible personal 
property having a useful life of more than one year and an acquisition 
cost which equals or exceeds the lesser of the capitalization level 
established by the governmental unit for financial statement purposes, 
or $5000.
    (f) General purpose equipment means equipment, which is not limited 
to research, scientific or other technical activities. Examples include 
office equipment and furnishings, telephone networks, information 
technology equipment and systems, reproduction and printing equipment, 
and motor vehicles.
    (g) Grant period means the period of time from when the grant 
agreement is signed to the completion of all SCBGP-FB projects submitted 
in the State plan.
    (h) Grantee means the government to which a grant is awarded and 
which is accountable for the use of the funds provided. The grantee is 
the entire legal entity even if only a particular component of the 
entity is designated in the grant agreement.
    (i) Indirect costs means those costs incurred for a common or joint 
purpose benefitting more than one cost objective, and not readily 
assignable to the cost objectives specifically benefitted, without 
effort disproportionate to the results achieved.
    (j) Outcome measure means an event or condition that is external to 
the project and that is of direct importance to the intended 
beneficiaries and/or the public.
    (k) Project means all proposed activities to be funded by the 
Specialty Crop Block Grant Program--Farm Bill.
    (l) Socially disadvantaged farmer or rancher means a farmer or 
rancher who is a member of a socially disadvantaged group. A ``Socially 
Disadvantaged Group'' is a group whose members have been subject to 
discrimination on the basis of race, color, national origin, age, 
disability, and where applicable, sex, marital status, familial status, 
parental status, religion, sexual orientation, genetic information, 
political beliefs, reprisal, or because all or a part of an individual's 
income is derived from any public assistance program.
    (m) Special purpose equipment means equipment which is used only for 
research, scientific, or other technical activities.
    (n) Specialty crop means fruits and vegetables, tree nuts, dried 
fruits, horticulture and nursery crops (including floriculture).
    (o) State means the fifty states, the District of Columbia, the 
Commonwealth of Puerto Rico, Guam, American Samoa, the United States 
Virgin Islands, and the Commonwealth of the Northern Mariana Islands.

[[Page 413]]

    (p) State department of agriculture means the agency, commission, or 
department of a state government responsible for agriculture within the 
state.
    (q) Subgrantee means the government or other legal entity to which a 
subgrant is awarded and which is accountable to the grantee for the use 
of funds provided.

[74 FR 13316, Mar. 27, 2009]



Sec.1291.3  Eligible grant applicants.

    Eligible grant applicants are State departments of agriculture from 
the fifty states, the District of Columbia, the Commonwealth of Puerto 
Rico, Guam, American Samoa, the United States Virgin Islands, and the 
Commonwealth of the Northern Mariana Islands.



Sec.1291.4  Eligible grant project.

    (a) To be eligible for a grant, the project(s) must solely enhance 
the competitiveness of U.S. grown or U.S. territory grown eligible 
specialty crops, in either domestic or foreign markets.
    (b) To be eligible for a grant, the project(s) must be completed 
within three calendar years after the grant agreement prescribed in 
Sec.1291.8 of this part is signed. The grant period is established by 
the longest approved project submitted in the State plan. However, for 
cause, an extension of the grant period not to exceed three years may be 
granted by AMS on a case by case basis with a written request from the 
State.
    (c) Projects should benefit the specialty crop industry and/or the 
public rather than a single organization, institution, individual, or 
commercial product. Single organizations, institutions, and individuals 
are eligible to participate as project partners.
    (d) Multi-state projects that address solutions to problems that 
cross state boundaries are eligible.

[73 FR 51589, Sept. 4, 2008, as amended at 74 FR 13317, Mar. 27, 2009]



Sec.1291.5  Restrictions and limitations on grant funds.

    (a) Grant funds may not be used to fund political activities in 
accordance with provisions of the Hatch Act (5 U.S.C. 1501-1508 and 
7321-7326).
    (b) Development or participation in lobbying activities pursuant to 
31 U.S.C. 1352 including costs of membership in organizations 
substantially engaged in lobbying are unallowable.
    (c) Grant funds shall supplement the expenditure of State funds in 
support of specialty crops grown in that State, rather than replace 
State funds.
    (d) Grantees and subgrantees must comply with 7 CFR part 3015.
    (e) Capital expenditures for general purpose equipment, buildings, 
and land are unallowable as direct and indirect charges.
    (f) Capital expenditures for special purpose equipment are allowable 
as direct costs, provided that items with a unit cost of $5000 or more 
have the prior approval of AMS.
    (g) Rental costs of buildings and equipment are allowable as direct 
costs in accordance with the cost principles in subpart T of 7 CFR part 
3015.

[73 FR 51589, Sept. 4, 2008, as amended at 74 FR 13317, Mar. 27, 2009]



Sec.1291.6  Completed application.

    Completed applications shall be clear and succinct and shall include 
the following documentation satisfactory to AMS.
    (a) One SF-424 ``Application for Federal Assistance''.
    (b) SF-424A ``Budget Information--Non-Construction Programs'' 
showing the budget for each project.
    (c) One SF-424B ``Assurances--Non-Construction Program''.
    (d) Completed applications must also include one State plan to show 
how grant funds will be utilized solely to enhance the competitiveness 
of specialty crops. The State plan shall include the following:
    (1) Cover page and granting processes. Include the point of contact 
and lead agency for administering the plan. Provide a description of the 
affirmative steps taken to conduct outreach to socially disadvantaged 
farmers and beginning farmers. Describe how these groups were identified 
and the methods used to reach out to them. Identify if an award was made 
to either a socially disadvantaged farmer or a beginning

[[Page 414]]

farmer. If steps were not taken to conduct outreach to these groups, 
provide a justification for why not. Provide a description of the 
affirmative steps taken to conduct a competitive grant process. Include 
the steps taken to conduct outreach to specialty crop stakeholders to 
receive and consider public comment to identify their priority needs in 
enhancing the competiveness of specialty crops. Identify the methods 
used to solicit proposals that meet specialty crop stakeholders' needs, 
including any focus on multi-state projects. Include a description of 
the process used to review proposals in a fair and equitable manner. 
State departments of agriculture may also provide a copy of the issued 
request for proposals. If a competitive grant process was not used, 
provide a justification why not.
    (2) Project title and abstract. Include the title of the project and 
an abstract of 200 or fewer words for each project.
    (3) Project purpose. For each project, clearly state the purpose of 
the project. Describe the specific issue, problem, interest, or need to 
be addressed. Explain why the project is important and timely. If 
funding is being directed at a state marketing program, describe how the 
state will ensure that funding is being used solely to enhance the 
competitiveness of specialty crops as defined in Sec.1291.2(n). If a 
project builds on a previous Specialty Crop Block Grant Program (SCBGP) 
or SCBGP-FB project, indicate clearly how the new project compliments 
previous work. For each project, indicate if the project will be or has 
been submitted to or funded by another Federal or State grant program.
    (4) Potential impact. Discuss the number of people or operations 
affected, the intended beneficiaries of each project, and/or potential 
economic impact if such data are available and relevant to the project.
    (5) Expected measurable outcomes. For each project, describe at 
least one distinct, quantifiable, and measurable outcome-oriented 
objective that directly and meaningfully supports the project's purpose. 
The measurable outcome-oriented objective must define an event or 
condition that is external to the project and that is of direct 
importance to the intended beneficiaries and/or the public. Outcome 
measures may be long term that exceed the grant period. Describe how 
performance toward meeting outcomes will be monitored. For each project, 
include a performance-monitoring plan to describe the process of 
collecting and analyzing data to meet the outcome-oriented objectives.
    (6) Work plan. For each project, explain briefly the activities that 
will be performed to accomplish the objectives of the project. Be clear 
about who will do the work. Include appropriate time lines.
    (7) Budget narrative. The limit on indirect costs, not to exceed 10 
percent, will be published in a Federal Register notice each fiscal 
year. Provide a justification if indirect costs exceed 10 percent or 
exceed that fiscal year's limit as announced in the Federal Register. 
Provide in sufficient detail information about the budget categories 
listed on SF-424A for each project to demonstrate that grant funds are 
being expended on eligible grant activities that meet the purpose of the 
program.
    (8) Project oversight. Describe the oversight practices that provide 
sufficient knowledge of grant activities to ensure proper and efficient 
administration for each project.
    (9) Project commitment. Describe how all grant partners commit to 
and work toward the goals and outcome measures of each proposed 
project(s).
    (10) Multi-state projects. If the project is a multi-state project, 
describe how the states are going to collaborate effectively with 
related projects with one state assuming the coordinating role. Indicate 
the percent of the budget covered by each state.

[74 FR 13317, Mar. 27, 2009]



Sec.1291.7  Review of grant applications.

    (a) Applications will be reviewed and approved or rejected as 
appropriate for conformance with the provisions in Sec.1291.6 of this 
part. AMS may request the applicant provide additional information or 
clarification.
    (b) Incomplete applications as of the deadline for submission will 
not be considered.

[[Page 415]]



Sec.1291.8  Grant agreements.

    (a) After approval of a grant application, AMS will enter into a 
grant agreement with the State department of agriculture.
    (b) AMS grant agreements will include at a minimum the following:
    (1) The projects in the approved State plan.
    (2) Total amount of Federal financial assistance that will be 
advanced.
    (3) Beginning and end dates of the grant agreement period.
    (4) Terms and conditions pursuant to which AMS will fund the 
project(s).



Sec.1291.9  Unobligated funds.

    (a) States who do not apply for or do not request all available 
funding during the specified grant application period will forfeit all 
or that portion of available funding not requested for that application 
year.
    (b) Funds not obligated will be allocated, by a date as determined 
by the Secretary, pro rata to the remaining States who applied during 
the specified grant application period to be solely expended on projects 
previously approved in their State plan.



Sec.1291.10  Reporting and oversight requirements.

    (a) An annual performance report will be required of all State 
departments' of agriculture within 90 days after the completion of the 
first year of the project(s), until the expiration date of the grant 
agreement. If the grant period is one year or less, then only a final 
performance report is required (See paragraph (b) of this section). The 
annual performance report shall include the following:
    (1) Activities Performed. Briefly summarize activities performed, 
targets, and/or performance goals achieved during the reporting period 
to meet measurable outcomes for each project.
    (2) Problems and Delays. Note unexpected delays or impediments for 
each project.
    (3) Future Project Plans. Outline work to be performed during the 
next reporting period for each project.
    (4) Funding Expended To Date. Comment on the level of grant funds 
expended to date for each project.
    (b) A final performance report will be required of all State 
departments of agriculture within 90 days following the expiration date 
of the grant period. The final progress report shall include the 
following:
    (1) Project Summary. An outline of the issue, problem, interest, or 
need for each project.
    (2) Project Approach. How the issue or problem was approached via 
each project.
    (3) Goals and Outcomes Achieved. How the performance goals and 
measurable outcomes were achieved for each project(s). If outcome 
measures were long term, summarize the progress that has been made 
towards achievement.
    (4) Beneficiaries. Description and quantitative data for the number 
of people or operations that have benefited from the project's 
accomplishments, and/or the potential economic impact of each project.
    (5) Lessons Learned. Lessons learned, results, conclusions, for each 
project. If outcome measures were not achieved, identify and share the 
lessons learned to help expedite problem-solving.
    (6) Contact Person. List the contact person for each project with 
telephone number and email address.
    (7) Additional Information. Include other relevant project 
information available (e.g. publications, Web sites, photographs).
    (c) A final SF-269A ``Financial Status Report (Short Form)'' or SF-
269 ``Financial Status Report (Long Form)'' if the project(s) had 
program income, is required within 90 days following the expiration date 
of the grant period.
    (d) AMS will monitor States, as it determines necessary, to assure 
that projects are completed in accordance with the approved State plan. 
If AMS, after reasonable notice to a State, and opportunity to be heard, 
finds that there has been a failure by the State to comply substantially 
with any provision or requirement of the State plan, AMS may disqualify, 
for one or more years, the State from receipt of future grants under the 
SCBGP or SCBGP-FB.
    (e) States shall diligently monitor performance to ensure that time 
schedules are being met, project work within

[[Page 416]]

designated time periods is being accomplished, and other performance 
measures are being achieved.

[73 FR 51589, Sept. 4, 2008, as amended at 74 FR 13318, Mar. 27, 2009]



Sec.1291.11  Audit requirements.

    Each year that a State receives a grant under the SCBGP-FB, the 
State is required to conduct an audit of the expenditures of SCBGP-FB 
funds. If the Single Audit Act applies to an eligible grantee, the State 
shall submit the annual audit results to AMS within 30 days after 
completion of the audit. If the Single Audit Act does not apply, the 
State shall conduct an audit of all SCBGP-FB funds no later than 60 days 
after the end date of the grant agreement. The State shall submit to AMS 
not later than 30 days after completion of the audit, a copy of the 
audit results.

                       PARTS 1292	1299 [RESERVED]

[[Page 417]]



  CHAPTER XIV--COMMODITY CREDIT CORPORATION, DEPARTMENT OF AGRICULTURE




  --------------------------------------------------------------------


  Editorial Note: Nomenclature changes to chapter XIV appear at 60 FR 
1710, Jan. 5, 1995, and 60 FR 64297, Dec. 15, 1995.

             SUBCHAPTER A--GENERAL REGULATIONS AND POLICIES
Part                                                                Page
1400            Payment limitation and payment eligibility..         419
1401            Commodity certificates, in kind payments, 
                    and other forms of payment..............         441
1402            Policy for certain commodities available for 
                    sale....................................         446
1404            Assignment of payments......................         447
1405            Loans, purchases, and other operations......         449
1407            Debarment and suspension....................         451
1409            Trade Mitigation Program....................         452
          SUBCHAPTER B--LOANS, PURCHASES, AND OTHER OPERATIONS
1410            Conservation Reserve Program................         460
1412            Agriculture risk coverage, price loss 
                    coverage, and cotton transition 
                    assistance programs.....................         484
1413            Commodity incentive payment programs........         515
1415            Grasslands Reserve Program..................         519
1416            Emergency agricultural disaster assistance 
                    programs................................         535
1421            Grains and similarly handled commodities--
                    marketing assistance loans and loan 
                    deficiency payments.....................         572
1423            Commodity Credit Corporation approved 
                    warehouses..............................         607
1424            Bioenergy program...........................         610
1425            Cooperative marketing associations..........         616
1427            Cotton......................................         622
1429            Asparagus revenue market loss assistance 
                    payment program.........................         655
1430            Dairy products..............................         660

[[Page 418]]

1434            Nonrecourse marketing assistance loans and 
                    loan deficiency payments for honey......         698
1435            Sugar program...............................         708
1436            Farm Storage Facility Loan Program 
                    regulations.............................         730
1437            Noninsured Crop Disaster Assistance Program.         744
1450            Biomass Crop Assistance Program (BCAP)......         780
1455            Voluntary Public Access and Habitat 
                    Incentive Program.......................         796
1463            2005-2014 Tobacco Transition Program........         801
1464            Regional Conservation Partnership Program...         817
1465            Agricultural Management Assistance..........         832
1466            Environmental Quality Incentives Program....         841
1467            Wetlands Reserve Program....................         865
1468            Agricultural Conservation Easement Program..         879
1469            Conservation Security Program...............         913
1470            Conservation Stewardship Program............         932
1471            PIMA Agriculture cotton trust fund 
                    (agriculture PIMA trust) and agriculture 
                    wool apparel manufacturers trust fund 
                    (agriculture wool trust)................         947
                      SUBCHAPTER C--EXPORT PROGRAMS
1484            Programs to help develop foreign markets for 
                    agricultural commodities................         959
1485            Grant agreements for the development of 
                    foreign markets for U.S agricultural 
                    commodities.............................         980
1486            Emerging Markets Program....................        1007
1487            Technical assistance for specialty crops....        1021
1488            Financing of sales of agricultural 
                    commodities.............................        1031
1489            Agricultural Trade Promotion Program........        1041
1491            Farm and Ranch Lands Protection Program.....        1067
1492            [Reserved]

1493            CCC Export Credit Guarantee Programs........        1078
1494-1495       [Reserved]

1499            Food for Progress Program...................        1142

Cross Reference: For regulations relative to standards, inspections, and 
  marketing practices, see Chapter I of this title.

[[Page 419]]



              SUBCHAPTER A_GENERAL REGULATIONS AND POLICIES





PART 1400_PAYMENT LIMITATION AND PAYMENT ELIGIBILITY--Table of Contents



                      Subpart A_General Provisions

Sec.
1400.1 Applicability.
1400.2 Administration.
1400.3 Definitions.
1400.4 Indian Tribe.
1400.5 Denial of program benefits.
1400.6 Joint and several liability.
1400.7 Revocable trust.
1400.8 Equitable treatment.
1400.9 Appeals.

                      Subpart B_Payment Limitation

1400.100 [Reserved]
1400.101 Minor children.
1400.102 States, political subdivisions, agencies thereof.
1400.103 Charitable organizations.
1400.104 Changes in farming operations.
1400.105 Attribution of payments.
1400.106 Payment limits.
1400.107 Notification of interests.

                      Subpart C_Payment Eligibility

1400.201 General provisions for determining whether a person or legal 
          entity is actively engaged in farming.
1400.202 Persons.
1400.203 Joint operations.
1400.204 Limited partnerships, limited liability partnerships, limited 
          liability companies, corporations and other similar legal 
          entities.
1400.205 Trusts.
1400.206 Estates.
1400.207 Landowners.
1400.208 Family members.
1400.209 Sharecroppers.
1400.210 Deceased and incapacitated persons.
1400.211 Persons and legal entities not considered to be actively 
          engaged in farming.
1400.212 Growers of hybrid seed.
1400.213 Military personnel.
1400.214 Cash rent tenants.

Subpart D [Reserved]

                        Subpart E_Foreign Persons

1400.401 Eligibility.
1400.402 Notification.

           Subpart F_Average Adjusted Gross Income Limitation

1400.500 Applicability.
1400.501 Determination of average adjusted gross income.
1400.502 Compliance and enforcement.
1400.503 Commensurate reduction.

Subpart G_Additional Payment Eligibility Provisions for Joint Operations 
    and Legal Entities Comprised of Non-Family Members or Partners, 
   Stockholders, or Persons With an Ownership Interest in the Farming 
                                Operation

1400.600 Applicability.
1400.601 Definitions.
1400.602 Restrictions on active personal management contributions.
1400.603 Recordkeeping requirements.

    Authority: 7 U.S.C. 1308, 1308-1, 1308-2, 1308-3, 1308-3a, 1308-4, 
and 1308-5; and Title I, Pub. L. 115-123.

    Source: 73 FR 79273, Dec. 29, 2008, unless otherwise noted.



                      Subpart A_General Provisions



Sec.1400.1  Applicability.

    (a) This part, except as otherwise noted, is applicable to all of 
the following programs and any other programs as specified in individual 
program regulations of this chapter:
    (1) The Agriculture Risk Coverage (ARC) and Price Loss Coverage 
(PLC) Programs, part 1412 of this chapter;
    (2) The Price Support programs in parts 1421, 1427, and 1434 of this 
chapter;
    (3) The Conservation Reserve Program (CRP), part 1410 of this 
chapter;
    (4) The Noninsured Crop Disaster Assistance Program (NAP), part 1437 
of this chapter;
    (5) The Livestock Forage Disaster Program (LFP), Livestock Indemnity 
Program (LIP), and the Emergency Assistance for Livestock, Honey Bees 
and Farm-raised Fish Program (ELAP), part 1416 of this chapter;
    (6) The Tree Assistance Program (TAP), part 1416 of this chapter;
    (7) The Natural Resources Conservation Service (NRCS) conservation 
programs of this title including the Agricultural Management Assistance 
(AMA) program, Conservation Stewardship Program (CSP), Environmental 
Quality Incentives Program (EQIP),

[[Page 420]]

and Agricultural Conservation Easement Program (ACEP); and
    (8) The Emergency Conservation Program (ECP) and Emergency Forest 
Restoration Program (EFRP) in part 701 of this title.
    (9) Subparts C and G of this part do not apply to the programs 
listed in paragraphs (a)(3) through (8) of this section.
    (b) This part will apply to the programs specified in:
    (1) Paragraphs (a)(1), (2), (4), and (7) of this section on a crop 
year basis;
    (2) Paragraph (a)(3) of this section on a fiscal year basis;
    (3) Paragraphs (a)(5) and (6) of this section on a calendar year 
basis;
    (4) Paragraph (a)(7) of this section when funding is available; and
    (5) Paragraph (a)(8) of this section on a per disaster event basis.
    (c) This part will be used to determine the manner in which payments 
will be attributed to persons and legal entities for the payment 
limitations provided in this section and to other programs as specified 
in individual program regulations in this chapter.
    (d) Where more than one provision of this part may apply, the 
provision that is most restrictive on the program participant will be 
applied.
    (e) The payment limitations of this part are not applicable to:
    (1) Payments made under State conservation reserve enhancement 
program agreements approved by the Secretary, and
    (2) Payments made subject to this part if ownership interest in land 
or a commodity is transferred as the result of the death of a program 
participant and the new owner of the land or commodity has succeeded to 
the contract of the prior owner. If the successor is otherwise eligible, 
payments cannot exceed the amount the previous owner was entitled to 
receive at the time of death.
    (f) The following amounts are the limitations on payments per person 
or legal entity for the applicable period for each payment or benefit.

                        Table 1 to Paragraph (f)
------------------------------------------------------------------------
                                         Limitation per person or legal
          Payment or benefit                       entity  ($)
------------------------------------------------------------------------
(1) Price Loss Coverage, Agriculture    125,000 per program year.
 Risk Coverage payments (other than
 Peanuts).
(2) Price Loss Coverage and             125,000 per program year.
 Agriculture Risk Coverage payments
 for Peanuts.
(3) CRP annual rental payments........  50,000 per program year.
(4) NAP payments
    (i) basic 50/55 NAP coverage......  125,000 per crop year.
    (ii) Buy-up NAP coverage..........  300,000 per crop year.
(5) LFP...............................  125,000 per program year.
(6) CSP \1\...........................  200,000.
(7) EQIP \2\..........................  450,000.
(8) AMA program.......................  50,000 per fiscal year.
(9) ECP...............................  500,000 per disaster event.
(10) EFRP.............................  500,000 per disaster event.
------------------------------------------------------------------------
\1\ The $200,000 limitation is the total amount a person or legal entity
  can receive directly or indirectly in the aggregate under all CSP
  contracts entered into during fiscal years 2019 through 2023.
\2\ The $450,000 limitation is the total amount of cost share and
  incentive payments a person or legal entity can receive directly or
  indirectly, under all EQIP contracts (excluding Conservation Incentive
  Contracts) in the aggregate entered into during the period of either:
  Fiscal years 2014 through 2018, or fiscal years 2019 through 2023.


[79 FR 21096, Apr. 14, 2014, as amended at 80 FR 119, Jan. 2, 2015; 80 
FR 78128, Dec. 16, 2015; 83 FR 49463, Oct. 2, 2018; 85 FR 52036, Aug. 
24, 2020]



Sec.1400.2  Administration.

    (a) The regulations in this part will be administered under the 
general supervision and direction of the Executive Vice President, 
Commodity Credit Corporation (CCC), and the Administrator, Farm Service 
Agency (FSA). In the field, the regulations in this part will be 
administered by the FSA State and county committees (referred to as 
``State committee'' and ``county committee,'' respectively).
    (b) State executive directors, county executive directors, and State 
and

[[Page 421]]

county committees do not have authority to modify or waive any of the 
provisions of this part.
    (c) The State committee may take any action authorized or required 
by this part to be taken by the county committee that has not been taken 
by the county committee. The State committee may also:
    (1) Correct or require a county committee to correct any action 
taken by the county committee that is not in accordance with this part 
or
    (2) Require a county committee to withhold taking any action that is 
not in accordance with this part.
    (d) No delegation in this part to a State or county committee 
precludes the Executive Vice President, CCC, and the Administrator, FSA, 
or a designee, from determining any question arising under this part or 
from reversing or modifying any determination made by a State or county 
committee.
    (e) Benefits from programs subject to this part may not be issued 
until all required forms and necessary payment eligibility and payment 
limitation determinations are made.
    (f) The initial payment eligibility determinations will be made 
within 60 days after the required forms and any other supporting 
documentation needed in making the determinations are received in the 
county FSA office. If the determination is not made within 60 days, the 
producer will receive a determination for that program year that 
reflects the determination sought by the producer unless the Deputy 
Administrator determines that the producer did not follow the farm 
operating plan that was presented to the county or State committee for 
the applicable year.
    (g) Initial determinations concerning the provisions of this part 
will be made by the FSA State office with respect to any farm operating 
plan that is for a joint operation with six or more members.
    (h) Reviews of farming operations and corresponding documentation 
submitted by program participants may be conducted at any time to 
determine compliance with applicable statutes and regulations. The 
completion of the reviews is not subject to the time constraints 
specified in paragraph (f) of this section.
    (i) The Deputy Administrator will periodically monitor the status of 
completion of assigned compliance reviews and take any actions deemed 
appropriate to ensure timely completion of reviews for payment 
eligibility and payment limitation compliance purposes.

[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 899, Jan. 7, 2010; 80 
FR 78128, Dec. 16, 2015; 85 FR 52036, Aug. 24, 2020]



Sec.1400.3  Definitions.

    (a) The terms defined in part 718 of this title are applicable to 
this part and all documents issued in accordance with this part, except 
as otherwise provided in this section.
    (b) The following definitions are also applicable to this part:
    Active personal management means personally providing and 
participating in activities considered critical to the profitability of 
the farming operation and performed under one or more of the following 
categories:
    (1) Capital, which includes:
    (i) Arranging financing and managing capital;
    (ii) Acquiring equipment;
    (iii) Acquiring land or negotiating leases;
    (iv) Managing insurance; and
    (v) Managing participation in USDA programs;
    (2) Labor, which includes hiring and managing of hired labor; and
    (3) Agronomics and marketing, which includes:
    (i) Selecting crops and making planting decisions;
    (ii) Acquiring and purchasing crop inputs;
    (iii) Managing crops (that is, whatever managerial decisions are 
needed with respect to keeping the growing crops living and healthy--
soil fertility and fertilization, weed control, insect control, 
irrigation if applicable) and making harvest decisions; and
    (iv) Pricing and marketing of crop production.
    Administrator means the Administrator of the Farm Service Agency 
including any designee of the Administrator.

[[Page 422]]

    Alien means any person not a citizen or national of the United 
States.
    Attribution means the combination of any payment made directly to a 
person or legal entity with the person's or legal entity's pro rata 
direct and indirect interest in payments received by a legal entity, 
joint venture, or general partnership.
    Average Adjusted Gross Income means the average of the adjusted 
gross income as defined under 26 U.S.C. 62 or comparable measure of the 
person or legal entity over the 3 taxable years preceding the most 
immediately preceding complete taxable year.
    Capital means the funding provided by a person or legal entity to 
the farming operation for the operation to conduct farming activities. 
In determining whether a person or legal entity has independently 
contributed capital, in the form of funding, to the farming operation, 
the capital must have been derived from a fund or account separate and 
distinct from that of any other person or legal entity with an interest 
in the farming operation. Capital does not include the value of any 
labor or management that is contributed to the farming operation or any 
outlays for land or equipment. A capital contribution must be a direct 
out-of-pocket input of a specified sum or an amount borrowed by the 
person or legal entity and does not include advance program payments.
    Chief means the Chief of the Natural Resources Conservation Service 
including any designee of the Chief (also referred to in this part as 
NRCS Chief).
    Contribution means providing land, capital, or equipment assets, and 
the actions of providing active personal labor or active personal 
management to a farming operation in exchange for, or with the 
expectation of, deriving benefit based solely on the success of the 
farming operation.
    Deputy Administrator means the Deputy Administrator for Farm 
Programs, Farm Service Agency including any designee.
    Environmentally sensitive land of special significance means land 
offered for enrollment or adjacent to the land offered for enrollment 
that contains, or through enrollment will address, critical resources 
including, but not limited to:
    (1) Habitat for threatened, endangered, or at-risk species;
    (2) Historical or cultural resources;
    (3) Native grasslands;
    (4) Unique wetlands;
    (5) Rare, unique, or related soils; and
    (6) Critical groundwater recharge areas.
    Equipment means the machinery and implements needed by the farming 
operation to conduct activities of the farming operation, including 
machinery and implements involved in land preparation, planting, 
cultivating, harvesting, or marketing of the crops involved. Equipment 
also includes machinery and implements needed to establish and maintain 
conserving cover crops on CRP acreages and those needed to conduct 
livestock operations. The equipment may be leased from any source. If 
the equipment is leased from another person or legal entity with an 
interest in the farming operation, the equipment must be leased at a 
fair market value.
    Family member means a person to whom another member in the farming 
operation is related as a lineal ancestor, lineal descendant, sibling, 
first cousin, niece, nephew, spouse, or otherwise by marriage.
    Farming operation means a business enterprise engaged in the 
production of agricultural products, commodities, or livestock, operated 
by a person, legal entity, or joint operation that is eligible to 
receive payments, directly or indirectly, under one or more of the 
programs specified in Sec.1400.1. A person or legal entity may have 
more than one farming operation if the person or legal entity is a 
member of one or more joint operations.
    Indian tribe means any Indian tribe, band, nation, pueblo, or other 
organized group or community, including any Alaska Native village or 
regional or village corporation as defined in or established pursuant to 
the Alaska Native Claims Settlement Act (43 U.S.C. 1601-1629h), which is 
recognized as eligible for special programs and services provided by the 
United States to Indians because of their status as Indians.
    Interest in the farming operation means any of the following:

[[Page 423]]

    (1) Owner, lessor, or lessee of the land in the farming operation;
    (2) An interest in the agricultural products, commodities, or 
livestock produced by the farming operation; or
    (3) A member of a joint operation that is an owner, lessor, or 
lessee of the land in the farming operation or has an interest in the 
agricultural products, commodities, or livestock produced by the farming 
operation.
    Irrevocable trust means a trust as specified in this definition. Any 
trust not meeting this definition will be considered a revocable trust. 
A trust may be considered to be an irrevocable trust only if:
    (1) The trust cannot be modified or terminated by the grantor;
    (2) The grantor has no future, contingent, or remainder interest in 
the corpus of the trust; and
    (3) The trust agreement does not provide for the transfer of the 
corpus of the trust to the remainder beneficiary in less than 20 years 
from the date the trust is established except in cases where the 
transfer is contingent upon either the remainder beneficiary achieving 
at least the age of majority or the death of the grantor or income 
beneficiary.
    Joint operation means a general partnership, joint venture, or other 
similar business organization in which the members are jointly and 
severally liable for the obligations of the organization.
    Land means farmland that meets the specific requirements of the 
applicable program. The land may be leased from any source. If the land 
is leased from another person or legal entity with an interest in the 
farming operation, the land must be leased at a fair market value.
    Lawful alien means any person who is not a citizen or national of 
the United States but who is admitted into the United States for 
permanent residence under the Immigration and Nationality Act and 
possesses appropriate valid credentials issued by the United States 
Citizenship and Immigration Services, Department of Homeland Security.
    Legal entity means an entity created under Federal or State law and 
that:
    (1) Owns land or an agricultural commodity, product, or livestock; 
or
    (2) Produces an agricultural commodity, product, or livestock.
    Livestock means those animals included in Sec.1416.304(a) of this 
chapter.
    Payment means:
    (1) Payments made in accordance with part 1412 of this chapter or 
successor regulation of this chapter;
    (2) CRP annual rental payments made in accordance with part 1410 of 
this chapter or successor regulation of this chapter;
    (3) NAP payments made in accordance with part 1437 of this chapter 
or successor regulation of this chapter;
    (4) ELAP, LIP, LFP, and TAP payments made in accordance with part 
1416 of this chapter or successor regulations of this chapter:
    (5) Price support payments made in accordance with parts 1421 and 
1434 of this chapter; and
    (6) For other programs, any payments designated in individual 
program regulations in this chapter.
    Person means an individual, natural person and does not include a 
legal entity.
    Public school means a primary, elementary, secondary school, 
college, or university that is directly administered under the authority 
of a governmental body or that receives a predominant amount of its 
financing from public funds.
    Secretary means the Secretary of the United States Department of 
Agriculture.
    Sharecropper means a person who performs work in connection with the 
production of the crop under the supervision of the operator and who 
receives a share of the crop in return for work.
    Significant contribution means the provision of the following to a 
farming operation:
    (i)(A) For land, capital, or equipment contributed independently by 
a person or legal entity, a contribution that has a value at least equal 
to 50 percent of the person's or legal entity's commensurate share of 
the total:
    (1) Value of the capital necessary to conduct the farming operation;
    (2) Rental value of the land necessary to conduct the farming 
operation; or
    (3) Rental value of the equipment necessary to conduct the farming 
operation; or

[[Page 424]]

    (B) If the contribution by a person or legal entity consists of any 
combination of land, capital, and equipment, such combined contribution 
must have a value at least equal to 30 percent of the person's or legal 
entity's commensurate share of the total value of the farming operation;
    (ii) For active personal labor, an amount contributed by a person to 
the farming operation that is described by the smaller of the following:
    (A) 1,000 hours per calendar year; or
    (B) 50 percent of the total hours that would be necessary to conduct 
a farming operation that is comparable in size to such person's or legal 
entity's commensurate share in the farming operation;
    (iii) With respect to active personal management, activities that 
are critical to the profitability of the farming operation, taking into 
consideration the person's or legal entity's commensurate share in the 
farming operation; and
    (iv) With respect to a combination of active personal labor and 
active personal management, when neither contribution by itself meets 
the requirement of paragraphs (ii) and (iii) of this definition, a 
combination of active personal labor and active personal management 
that, when made together, results in a critical impact on the 
profitability of the farming operation in an amount at least equal to 
either the significant contribution of active personal labor or active 
personal management as defined in paragraphs (ii) and (iii) of this 
definition.
    Substantial amount of active personal labor means the provision of 
active personal labor to a farming operation in an amount described by 
the smaller of the following:
    (1) 1,000 hours per calendar year; or
    (2) 50 percent of the total hours that would be necessary to conduct 
a farming operation that is comparable in size to the person's or legal 
entity's commensurate share in the farming operation.
    Total value of the farming operation means the total of the costs, 
excluding the value of active personal labor and active personal 
management contributed by a person who is a member of the farming 
operation, needed to carry out the farming operation for the year for 
which the determination is made.

[73 FR 79273, Dec. 29, 2008, as amended at 79 FR 21097, Apr. 14, 2014; 
85 FR 52037, Aug. 24, 2020; 85 FR 73602, Nov. 19, 2020]



Sec.1400.4  Indian Tribe.

    Provisions of this part do not apply to Indian tribes as defined in 
Sec.1400.3.



Sec.1400.5  Denial of program benefits.

    (a) All or any part of a payment otherwise due a person or legal 
entity on all farms in which the person or legal entity has an interest 
may be withheld or be required to be refunded if the person or legal 
entity fails to comply with the provisions of this part.
    (b) All or any part of a payment otherwise due a person or legal 
entity on all farms in which the person or legal entity has an interest 
may be withheld or be required to be refunded if the person or legal 
entity fails to comply with the provisions of this part and adopts or 
participates in adopting a scheme or device designed to evade this part, 
or that has the effect of evading this part. Examples of acts may 
include, but are not limited to:
    (1) Concealing information that affects the application of this 
part;
    (2) Submitting false or erroneous information; or
    (3) Creating a business arrangement using rental agreements and 
other arrangements to conceal the interest of a person or legal entity 
in a farm or farming operation for the purpose of obtaining program 
payments the person or legal entity would otherwise not be eligible to 
receive. Examples of business arrangements or acts include, but are not 
limited to the following:
    (i) No crops are grown or agricultural commodities produced by the 
represented operation;
    (ii) The represented operation has no appreciable assets;
    (iii) The only source of capital for the operation is the program 
payments; or
    (iv) The represented operation exists only for the receipt of 
program payments.
    (c) If the Deputy Administrator determines that a person or legal 
entity has adopted a scheme or device to

[[Page 425]]

evade, or that has the purpose of evading, the provisions of 7 U.S.C. 
1308, 1308-1, or 1308-3, as amended, the person or legal entity will be 
ineligible to receive payments under the programs specified in Sec.
1400.1 in the year the scheme or device was perpetrated or adopted and 
the succeeding year.
    (d) A person or legal entity that lies or perpetuates fraud, commits 
fraud, or participates in equally serious actions for the benefit of the 
person or legal entity, or the benefit of any other person or legal 
entity, to exceed the applicable limit on payments or the requirements 
of this part will be subject to a 5-year denial of all program benefits. 
Examples of equally serious actions include, but are not limited to:
    (1) Knowingly engaged in, or aided in the creation of a fraudulent 
document;
    (2) Failed to disclose material information relevant to the 
administration of the provisions of this part, or
    (3) Any other actions of a person or legal entity determined by the 
Deputy Administrator as designed or intended to circumvent the 
provisions of this subpart.
    (e) Program payments and benefits will be denied on pro-rata basis:
    (1) In accordance to the interest held by the person or legal entity 
in any other legal entity or joint operations and
    (2) To any person or legal entity that is a cash rent tenant on land 
owned or under control of a person or legal entity for which a 
determination of this section has been made.

[73 FR 79273, Dec. 29, 2008, as amended at 85 FR 52038, Aug. 24, 2020]



Sec.1400.6  Joint and several liability.

    (a) Any legal entity, including joint operations, and any member of 
a legal entity determined to have knowingly participated in a scheme or 
device, or other equally serious actions to evade the payment limitation 
provisions in this part, or that has the purpose of evading the 
provisions of this part, will be jointly and severally liable for any 
amounts determined to be payable as the result of the scheme or device, 
or other examples of equally serious actions mentioned in this section 
or in Sec.1400.5, including amounts necessary to recover the payments.
    (b) Any person or legal entity that cooperates in the enforcement of 
the payment limitation and payment eligibility provisions of this part 
may be partially or fully released from liability, as determined by the 
Executive Vice President, CCC.
    (c) The provisions of this section will be applicable in addition to 
any liability that arises under a criminal or civil statute.

[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 899, Jan. 7, 2010; 85 
FR 52038, Aug. 24, 2020]



Sec.1400.7  Revocable trust.

    A revocable trust and the grantor will be considered to be the same 
person under this part.

[85 FR 52038, Aug. 24, 2020]



Sec.1400.8  Equitable treatment.

    (a) Actions taken by a person or legal entity in good faith based on 
action or advice of an authorized representative of the Administrator 
may be accepted as meeting the requirements of this part to the extent 
the Administrator deems necessary to provide fair and equitable 
treatment to the person or legal entity.
    (b) Actions taken by a person or legal entity in good faith based on 
action or advice of an authorized representative of the NRCS Chief may 
be accepted as meeting the requirements of this part to the extent the 
NRCS Chief deems necessary to provide fair and equitable treatment to 
the person or legal entity.

[73 FR 79273, Dec. 29, 2008, as amended at 85 FR 52038, Aug. 24, 2020]



Sec.1400.9  Appeals.

    (a) A person or legal entity may obtain reconsideration and review 
of determinations made under this part in accordance with the appeal 
regulations set forth in part 780 of this title. With respect to the 
appeals, the applicable reviewing authority will:
    (1) Schedule a hearing with respect to the appeal within 45 days 
following receipt of the written appeal and
    (2) Issue a determination within 60 days following the hearing.
    (b) The time limitations provided in paragraph (a) will not apply 
if:

[[Page 426]]

    (1) The appellant, or the appellant's representative, requests a 
postponement of the scheduled hearing;
    (2) The appellant, or the appellant's representative, requests 
additional time following the hearing to present additional information 
or a written closing statement;
    (3) The appellant has not timely presented information to the 
reviewing authority; or
    (4) An investigation by the Office of Inspector General is ongoing 
or a court proceeding is involved that affects the amount of payments a 
person may receive.
    (c) If the deadlines provided in paragraphs (a) and (b) of this 
section are not met, the relief sought by the producer's appeal will be 
granted for the applicable crop year unless the Deputy Administrator 
determines that the producer did not follow the farm operating plan 
initially presented to the county committee for the year that is the 
subject of the appeal.
    (d) An appellant may waive the provisions of paragraphs (a) and (b) 
of this section.

[73 FR 79273, Dec. 29, 2008, as amended at 85 FR 52038, Aug. 24, 2020]



                      Subpart B_Payment Limitation



Sec.1400.100  [Reserved]



Sec.1400.101  Minor children.

    (a) Except as provided in paragraph (b) of this section, payments 
received by a child under 18 years of age as of June 1 of the applicable 
crop, program, or fiscal year, including the person who is the 
beneficiary of a trust or who is an heir of an estate, will be 
attributed for the entire crop, program, or fiscal year to the parent 
receiving the greater amount of program payments subject to this part or 
to any court-appointed person such as a guardian or conservator who is 
responsible for the minor.
    (b) Payments received by a minor will not be attributed to the 
minor's parent or to any court-appointed person such as a guardian or 
conservator who is responsible for the minor if all of the following 
apply:
    (1) The minor is a producer on a farm and the minor's parents or any 
court-appointed person such as guardian or conservator who is 
responsible for the minor, does not have any interest in the farm;
    (2) The minor has established and maintains a separate household 
from the minor's parents or any court-appointed person such as a 
guardian or conservator who is responsible for the minor, and the minor 
personally carries out the farming activities with respect to the 
minor's farming operation for which there is a separate accounting; and
    (3) The minor does not live in the same household as the minor's 
parents and:
    (i) Is represented by a court-appointed guardian or conservator who 
is responsible for the minor and
    (ii) Ownership of the farm is vested in the minor.
    (c) A person will be considered to be a minor until the age 18 is 
reached. Court proceedings conferring majority on a person under 18 
years of age will not change the person's status as a minor.

[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 899, Jan. 7, 2010; 85 
FR 52038, Aug. 24, 2020]



Sec.1400.102  States, political subdivisions, and agencies thereof.

    (a) A State, political subdivision, and agency thereof, is not 
eligible for payments or benefits under programs specified in Sec.
1400.1, unless the exception provided in paragraph (b) of this section 
applies.
    (b) Subject to the limitation in paragraph (c) of this section, a 
State, political subdivision, and any agency thereof, may receive 
payments or benefits under programs specified in Sec.1400.1(a)(1) if 
both of the following apply:
    (1) The land for which payments are received is owned by the State, 
political subdivision, or agency thereof and
    (2) The payments are used solely for the support of public schools;
    (c) The total payments described in paragraph (b) of this section 
cannot exceed $500,000 annually except for States with a population less 
than 1,500,000, as established by the most recent U.S.

[[Page 427]]

Census Bureau annual estimate of the State's resident population.

[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 899, Jan. 7, 2010; 85 
FR 52038, Aug. 24, 2020]



Sec.1400.103  Charitable organizations.

    (a) A charitable organization, including a club, society, fraternal 
organization, or religious organization will be considered a separate 
legal entity for payment limitation purposes to the extent that the 
entity is independently engaged in the production of crops, agricultural 
commodities, or livestock, except where the land or the proceeds from 
the farming operation may transfer to a legal entity that exercises 
control or authority over the organization.
    (b) If the land or the proceeds from the farming operation may 
transfer to a legal entity that exercises control or authority over the 
charitable organization, payments to the charitable organization will be 
attributed to the parent organization.

[73 FR 79273, Dec. 29, 2008, as amended at 85 FR 52038, Aug. 24, 2020]



Sec.1400.104  Changes in farming operations.

    (a) Any change in a farming operation that would increase the number 
of persons to which the provisions of this part apply must be bona fide 
and substantive. If bona fide, the following will be considered to be a 
substantive change in the farming operation:
    (1) The addition of a family member to a farming operation in 
accordance with Sec.1400.208, except that the addition will not affect 
the status of any other person or legal entity that is added to the 
farming operation; or
    (2) With respect to a landowner only, a change from a cash rent to a 
share rent; or
    (3) An increase through the acquisition of land used for 
agricultural production not previously involved in the farming operation 
of at least 20 percent or more in the total land involved in the farming 
operation.
    (i) For the purpose of payment limitations, the increase in 
agricultural land will be considered an applicable bona fide and 
substantive change for the increase of only one person or legal entity 
to the farming operation, unless;
    (ii) A representative of the State FSA office determines, based on 
the magnitude and complexity of the change represented, the increase in 
agricultural land supports additional persons or legal entities to the 
farming operation; or
    (4) A change in ownership by sale or gift of equipment from a person 
or legal entity previously engaged in a farming operation to a person or 
legal entity that has not been involved in the operation. The sale or 
gift of equipment will be considered to be bona fide and substantive 
only if:
    (i) The transferred amount of the equipment is commensurate with the 
new person's or legal entity's share of the farming operation;
    (ii) The sale or gift of the equipment was based on the equipment's 
fair market value;
    (iii) The former owner of the equipment has no direct or indirect 
control over the equipment;
    (iv) The transaction was not financed by the former owner; and
    (v) Preference was not given to the former owner to re-purchase the 
equipment at a later date; or
    (5) A change in ownership by sale or gift of land or livestock from 
a person or legal entity who previously has been engaged in a farming 
operation to a person or legal entity that has not been involved in the 
operation. The sale or gift of land or livestock will be considered to 
be bona fide and substantive only if:
    (i) The transferred amount of the land or livestock is commensurate 
with the new person's or legal entity's share of the farming operation;
    (ii) The sale or gift of land or livestock was based on land's or 
livestock's fair market value;
    (iii) The former owner of the land or livestock has no direct or 
indirect control over the land or livestock;
    (iv) The transaction was not financed by the former owner; and
    (v) Preference was not given to the former owner to re-purchase the 
land or livestock at a later date.
    (b) Unless the requirements in paragraph (a) of this section are 
met, the

[[Page 428]]

increase in persons in the farming operation will not be recognized for 
payment limitation purposes and the additional persons or legal entities 
are not eligible for program payment identified in Sec.1400.1 
otherwise resulting from the farming operation.

[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 899, Jan. 7, 2010; 85 
FR 52038, Aug. 24, 2020]



Sec.1400.105  Attribution of payments.

    (a) A payment made directly to a person or legal entity will be 
combined with the pro rata interest of the person or legal entity in 
payments received by a legal entity in which the person or legal entity 
has a direct or indirect ownership interest, unless the payments of the 
legal entity have been reduced by the pro rata share of the person or 
legal entity.
    (b) A payment made to a legal entity will be attributed to those 
persons who have a direct and indirect ownership interest in the legal 
entity, unless the payment of the legal entity has been reduced by the 
pro rata share of the person.
    (c) Attribution of payments made to legal entities will be tracked 
through four levels of ownership in legal entities as follows:
    (1) First level of ownership--any payment made to a legal entity 
that is owned in whole or in part by a person will be attributed to the 
person in an amount that represents the direct ownership interest in the 
first-tier or payment legal entity;
    (2)(i) Second level of ownership--any payment made to a first-tier 
legal entity that is owned in whole or in part by another legal entity 
(referred to as a second-tier legal entity) will be attributed to the 
second-tier legal entity in proportion to the ownership of the second-
tier legal entity in the first-tier legal entity;
    (ii) If the second-tier legal entity is owned in whole or in part by 
a person, the amount of the payment made to the first-tier legal entity 
will be attributed to the person in the amount that represents the 
indirect ownership in the first-tier legal entity by the person.
    (3) Third and fourth levels--except as provided in paragraph (2)(ii) 
of this section, any payments made to a legal entity at the third and 
fourth tiers of ownership will be attributed in the same manner as 
specified in paragraph (2)(i) of this section.
    (4) Fourth-tier ownership--if the fourth-tier of ownership is that 
of a legal entity and not that of a person, a reduction in payment will 
be applied to the first-tier or payment legal entity in the amount that 
represents the indirect ownership in the first-tier or payment legal 
entity by the fourth-tier legal entity.
    (d) For purposes of administering direct attribution, and to 
determine a person's ownership interest in a legal entity that receives 
a payment subject to limitation; the ownership interest on June 1 of 
each year will be used.
    (1) If the change in ownership interest is due to the death of an 
interest holder in the legal entity or the legal entity did not exist on 
June 1 of the applicable year, the Deputy Administrator may determine 
that a change after June 1 is considered relevant or effective for the 
current year.
    (2) Changes that occur after June 1 cannot be used to increase the 
amount of program payments a legal entity, or its members, is eligible 
to receive directly or indirectly for the applicable year.
    (e) Direct attribution of payments is not applicable to a 
cooperative association of producers with respect to commodities 
produced by the members of the association that are marketed by the 
association on behalf of the members of the association. The payments 
will instead be attributed to the producers as persons.

[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 900, Jan. 7, 2010; 85 
FR 52039, Aug. 24, 2020]



Sec.1400.106  Payment limits.

    (a) Direct or indirect payments made to a person or legal entity 
will not exceed the amounts specified in subpart A of this part and will 
be determined in accordance with Sec.1400.105.
    (b) Payments made to a joint operation cannot exceed, for each 
payment specified in subpart A of this part, the amount determined by 
multiplying the maximum payment amount specified in subpart A of this 
part by the number of persons and legal entities, other

[[Page 429]]

than joint operations, that comprise the ownership of the joint 
operation.
    (c) Payments made to a legal entity will be reduced proportionately 
by an amount that represents the direct or indirect ownership in the 
legal entity by any person or legal entity that has otherwise reached 
the applicable maximum payment limitation.

[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 900, Jan. 7, 2010; 85 
FR 52039, Aug. 24, 2020]



Sec.1400.107  Notification of interests.

    (a) In order to be eligible to receive any payment specified in 
subpart A of this part, or any other program as provided in individual 
program regulations in this chapter, a person or legal entity must, 
provide information in the manner as prescribed by the Deputy 
Administrator.
    (b) The information required to be submitted under paragraph (a) of 
this section must include:
    (1) The name and social security number of each person, or the name 
and taxpayer identification number of each legal entity, that holds or 
acquires an ownership interest in the legal entity and
    (2) The name and taxpayer identification number of each legal entity 
in which the person or legal entity holds an ownership interest.



                      Subpart C_Payment Eligibility



Sec.1400.201  General provisions for determining whether a person or 
legal entity is actively engaged in farming.

    (a) To be considered eligible to receive payments with respect to a 
particular farming operation, a person or legal entity must be actively 
engaged in farming with respect to the operation.
    (b) Actively engaged in farming means, except as otherwise provided 
in this part, that the person or legal entity:
    (1) Independently and separately makes a significant contribution to 
a farming operation of:
    (i) Capital, equipment, or land, or a combination of capital, 
equipment, or land and
    (ii) Active personal labor or active personal management, or a 
combination of active personal labor and active personal management;
    (2) Has a share of the profits or losses from the farming operation 
commensurate with the person's or legal entity's contributions to the 
operation; and
    (3) Makes contributions to the farming operation that are at risk 
for a loss, with the level of risk being commensurate with the person's 
or legal entity's claimed share of the farming operation.
    (c) All of the following factors will be taken into consideration in 
determining if the person or legal entity is independently and 
separately contributing a significant amount of capital, equipment, or 
land, or a combination of capital, equipment, or land, to the farming 
operation:
    (1) A separate and distinct interest in the land, crop, and 
livestock involved in the farming operation;
    (2) The demonstration of separate and total responsibility for the 
interest in the land, crop, and livestock in the farming operation; and
    (3) All funds and business accounts of the farming operation are 
separate from that of any other person and legal entity.
    (d) In determining if the person or legal entity is independently 
and separately contributing a significant amount of active personal 
labor or active personal management, all of the following factors will 
be taken into consideration:
    (1) The types of crops and livestock produced by the farming 
operation;
    (2) The normal and customary farming practices of the area;
    (3) The total amount of labor and management necessary for the 
farming operation in the area; and
    (4) Whether the person or legal entity receives compensation for the 
labor and management activities.

[73 FR 79273, Dec. 29, 2008, as amended at 85 FR 52039, Aug. 24, 2020]



Sec.1400.202  Persons.

    (a) A person will be considered to be actively engaged in farming 
with respect to a farming operation if:
    (1) The person independently and separately makes a significant 
contribution to a farming operation of:

[[Page 430]]

    (i) Capital, equipment, or land, or a combination of capital, 
equipment, or land and
    (ii) Active personal labor or active personal management, or a 
combination of active personal labor and active personal management;
    (2) Has a share of the profits or losses from the farming operation 
commensurate with the person's or legal entity's contributions to the 
operation; and
    (3) Makes contributions to the farming operation that are at risk 
for a loss, with the level of risk being commensurate with the person's 
or legal entity's claimed share of the farming operation.
    (b) If one spouse, or an estate of a deceased spouse, is determined 
to be actively engaged in farming as specified in paragraph (a) of this 
section, the other spouse is considered to have made a significant 
contribution, as specified in paragraph (a)(1)(ii) of this section, only 
to the same farming operation.
    (c) If a farming operation is conducted by a person, and the 
capital, land, or equipment is contributed by the person, the capital, 
land, or equipment:
    (1) To meet the requirements of paragraph (a)(1)(i) of this section, 
must be contributed directly by the person and must not be acquired as a 
result of a loan made to, guaranteed, co-signed, or secured by any other 
person, joint operation, or legal entity that has an interest in the 
farming operation; and
    (2) To meet the requirements of paragraphs (a)(2) and (a)(3) of this 
section, and if acquired as a loan made to, guaranteed, co-signed, or 
secured by the persons, joint operations, or legal entities, the loan 
must:
    (i) Bear the prevailing interest rate and
    (ii) Have a repayment schedule considered reasonable and customary 
for the area.

[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 900, Jan. 7, 2010; 85 
FR 52039, Aug. 24, 2020]



Sec.1400.203  Joint operations.

    (a) A member of a joint operation will be considered to be actively 
engaged in farming with respect to a farming operation if the member:
    (1) Makes a significant contribution of:
    (i) Capital, equipment, or land or a combination of capital, 
equipment, or land and
    (ii) Active personal labor or active personal management, or a 
combination of active personal labor and active personal management, and 
that are:
    (A) Performed on a regular basis,
    (B) Identifiable and documentable, and
    (C) Separate and distinct from the contributions of any other member 
of the farming operation;
    (2) Has a share of the profits or losses from the farming operation 
commensurate with the member's contributions to the operation; and
    (3) Makes contributions to the farming operation that are at risk 
for a loss, with the level of risk being commensurate with the member's 
claimed share of the farming operation.
    (b) For a farming operation conducted by a joint operation in which 
the capital, land, or equipment is contributed by the joint operation, 
the capital, land, or equipment:
    (1) To meet the requirements of paragraph (a)(1)(i) of this section, 
and if contributed directly by the joint operation, must not be acquired 
as a loan made to, guaranteed, co-signed, or secured by any person, 
legal entity, or other joint operation that has an interest in the 
farming operation; and
    (2) To meet the requirements of paragraphs (a)(2) and (3) of this 
section, and if acquired as a result of a loan made to, guaranteed, co-
signed, or secured by the persons, legal entities, or joint operations 
with an interest in the operation, the loan must:
    (i) Bear the prevailing interest rate and
    (ii) Have a repayment schedule considered reasonable and customary 
for the area.
    (c) If a joint operation separately makes a significant contribution 
of capital, equipment, or land, or a combination of capital, equipment, 
or land, and the joint operation meets the provisions of Sec.
1400.201(b)(2) and (3), the members of the joint operation who make a 
significant contribution of active personal labor, active personal

[[Page 431]]

management, or a combination of active personal labor and active 
personal management to the farming operation as specified in paragraph 
(a)(1)(ii) of this section will be considered to be actively engaged in 
farming with respect to the farming operation.

[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 900, Jan. 7, 2010; 85 
FR 52039, Aug. 24, 2020]



Sec.1400.204  Limited partnerships, limited liability partnerships, 
limited liability companies, corporations, and other similar legal
entities.

    (a) A limited partnership, limited liability partnership, limited 
liability company, corporation, or other similar legal entity will be 
considered to be actively engaged in farming with respect to a farming 
operation if:
    (1) The legal entity independently and separately makes a 
significant contribution to the farming operation of capital, equipment, 
or land, or a combination of capital, equipment, or land;
    (2) Each partner, stockholder, or member with an ownership interest 
or their spouse with an ownership interest makes a contribution, whether 
compensated or not compensated, of active personal labor, active 
personal management, or a combination of active personal labor and 
active personal management to the farming operation; that are:
    (i) Performed on a regular basis;
    (ii) Identifiable and documentable; and
    (iii) Separate and distinct from the contributions of any other 
partner, stockholder or member of the farming operation;
    (3) The collective contribution of the partners, stockholders and 
members is significant and commensurate;
    (4) The legal entity has a share of the profits or losses from the 
farming operation commensurate with the legal entity's contributions to 
the operation; and
    (5) The legal entity makes contributions to the farming operation 
that are at risk for a loss, with the level of risk being commensurate 
with the legal entity's claimed share of the farming operation.
    (b) If any partner, stockholder, or member fails to meet the 
requirements in paragraph (a)(2) of this section, any program payment 
and benefit subject to this subpart provided to the legal entity will be 
reduced by an amount commensurate with the ownership share held by that 
partner, stockholder, or member in the legal entity.
    (c) An exception to paragraph (b) of this section will apply if:
    (1) At least 50 percent of the stock is held by partners, 
stockholders, or members that are actively providing labor or management 
and
    (2) The partners, stockholders, or members are collectively 
receiving, directly or indirectly, total payments equal to or less than 
one payment limitation.
    (d) For a farming operation conducted by a legal entity in which the 
capital, land, or equipment is contributed by the legal entity, the 
capital, land, or equipment:
    (1) To meet the requirements of paragraph (a)(1) of this section, 
must be contributed directly by the legal entity and must not be 
acquired as a loan made to, guaranteed, co-signed, or secured by any 
person, legal entity, or joint operation that has an interest in the 
farming operation, as defined in this part; and
    (2) To meet the requirements of paragraphs (a)(4) and (a)(5) of this 
section, and if acquired as a result of a loan made to, guaranteed, co-
signed, or secured by the persons, legal entities, or joint operations 
as defined, the loan must:
    (i) Bear the prevailing interest rate and
    (ii) Have a repayment schedule considered reasonable and customary 
for the area.

[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 900, Jan. 7, 2010; 85 
FR 52039, Aug. 24, 2020]



Sec.1400.205  Trusts.

    A trust will be considered to be actively engaged in farming with 
respect to a farming operation if:
    (a) The trust independently and separately makes a significant 
contribution to the farming operation of capital, equipment, or land, or 
a combination of capital, equipment, or land;
    (b) The income beneficiaries collectively make a significant 
contribution

[[Page 432]]

of active personal labor or active personal management, or a combination 
of active personal labor and active personal management to the farming 
operation. The combined interest of all the income beneficiaries 
providing active personal labor or active personal management, or a 
combination of active personal labor and active personal management, 
must be at least 50 percent;
    (c) The trust has a share of the profits or losses from the farming 
operation commensurate with the legal entity's contributions to the 
operation;
    (d) The trust makes contributions to the farming operation that are 
at risk for a loss, with the level of risk being commensurate with the 
legal entity's claimed share of the farming operation;
    (e) For a farming operation conducted by a trust in which the 
capital, land, or equipment is contributed by the trust, the capital, 
land, or equipment:
    (1) To meet the requirements of paragraph (a) of this section, must 
be contributed directly by the trust and must not be acquired as a loan 
made to, guaranteed, co-signed, or secured by any person, legal entity, 
or joint operation that has an interest in the farming operation, as 
defined in this part; and
    (2) To meet the requirements of paragraphs (c) and (d) of this 
section and if land, capital or equipment is acquired as a result of a 
loan made to, guaranteed, co-signed, or secured by the persons, legal 
entities, or joint operations as defined, the loan must:
    (i) Bear the prevailing interest rate; and
    (ii) Have a repayment schedule considered reasonable and customary 
for the area.
    (f) The trust has provided a tax identification number of the trust 
unless the trust is a revocable trust and the grantor is the sole income 
beneficiary; and
    (g) The trust has provided a copy of the trust agreement to the 
county committee unless the trust is a revocable trust.

[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 900, Jan. 7, 2010; 85 
FR 52039, Aug. 24, 2020]



Sec.1400.206  Estates.

    (a) For 2 program years after the program year in which a person 
dies, the person's estate will be considered to be actively engaged in 
farming if:
    (1) The estate, as a legal entity, makes a significant contribution 
of either:
    (i) Capital, equipment, or land or
    (ii) A combination of capital, equipment, or land; and
    (2) The personal representative or heirs of the estate collectively 
make a significant contribution of either:
    (i) Active personal labor or active personal management or
    (ii) The combination of active personal labor and active personal 
management; and
    (3) The estate has a share of the profits or losses from the farming 
operation commensurate with the legal entity's contributions to the 
operation;
    (4) The estate makes contributions to the farming operation that are 
at risk for a loss, with the level of risk being commensurate with the 
legal entity's claimed share of the farming operation; and
    (5) The representative of the estate has provided a tax 
identification number for the estate and a copy of a court order, will, 
or other legal document that identifies the heir(s) and tax 
identification number(s) of the heir(s).
    (b) For a farming operation conducted by an estate in which the 
capital, land, or equipment is contributed by the estate, the capital, 
land, or equipment:
    (1) To meet the requirements of paragraph (a) of this section, must 
be contributed directly by the estate and must not be acquired as a loan 
made to, guaranteed, co-signed, or secured by any person, legal entity, 
or joint operation that has an interest in the farming operation, as 
defined in this part; and
    (2) To meet the requirements of paragraphs (c)(3)and (a)(4) of this 
section, and if land, capital or equipment is acquired as a result of a 
loan made to, guaranteed, co-signed, or secured by the persons, legal 
entities, or joint operations as defined, the loan must:
    (i) Bear the prevailing interest rate; and

[[Page 433]]

    (ii) Have a repayment schedule considered reasonable and customary 
for the area.
    (c) After the period set forth in paragraph (a) of this section, the 
deceased person's estate will not be considered to be actively engaged 
in farming unless, on a case by case basis, the Deputy Administrator 
determines, for the purpose of obtaining program payments, that the 
estate has not been settled.

[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 900, Jan. 7, 2010; 85 
FR 52039, Aug. 24, 2020]



Sec.1400.207  Landowners.

    (a) A person or legal entity that is a landowner, including 
landowners with an undivided interest in land, making a significant 
contribution of owned land to the farming operation, will be considered 
to be actively engaged in farming with respect to the owned land, if the 
landowner:
    (1) Receives rent or income for the use of the land based on the 
land's production or the operation's operating results;
    (2) Has a share of the profits or losses from the farming operation 
commensurate with the landowner's contributions to the operation; and
    (3) Makes contributions to the farming operation that are at risk 
for a loss, with the level of risk being commensurate with the 
landowner's claimed share of the farming operation.
    (b) A landowner also includes a member of a joint operation if the 
joint operation holds title to land in the name of the joint operation 
and if the joint operation or its members submit adequate documentation 
to determine that, upon dissolution of the joint operation, the title to 
the land owned by the joint operation will revert to the member of the 
joint operation.

[73 FR 79273, Dec. 29, 2008, as amended at 85 FR 52039, Aug. 24, 2020]



Sec.1400.208  Family members.

    (a) Notwithstanding the provisions of Sec. Sec.1400.201 through 
1400.206, with respect to a farming operation conducted by persons, a 
majority of whom are family members, an adult family member who makes a 
significant contribution of active personal labor, active personal 
management, or a combination of active personal labor and active 
personal management will be considered to be actively engaged in farming 
if the adult family member meets the provisions in paragraph (b) of this 
section.
    (b) An adult family member who elects to be considered actively 
engaged in farming under this section must:
    (1) Have a share of the profits or losses from the farming operation 
commensurate with the person's contributions to the operation and
    (2) Make contributions to the farming operation that are at risk for 
a loss, with the level of risk being commensurate with the person's 
claimed share of the farming operation.

[73 FR 79273, Dec. 29, 2008, as amended at 85 FR 52039, Aug. 24, 2020]



Sec.1400.209  Sharecroppers.

    (a) Notwithstanding the provisions of Sec. Sec.1400.201 through 
1400.206 of this part, with respect to a person who is a sharecropper, 
the person will be considered to be actively engaged in farming if the 
sharecropper meets the provisions of paragraph (b) of this section.
    (b) A sharecropper who elects to be considered actively engaged in 
farming under this section must:
    (1) Make a significant contribution of active personal labor to the 
farming operation;
    (2) Have a share of the profits or losses from the farming operation 
commensurate with the person's contribution to the operation; and
    (3) Make a contribution to the farming operation that is at risk for 
a loss, with the level of risk being commensurate with the person's 
claimed share of the farming operation.

[73 FR 79273, Dec. 29, 2008, as amended at 85 FR 52039, Aug. 24, 2020]



Sec.1400.210  Deceased and incapacitated persons.

    If the person dies or is incapacitated before a determination is 
made that the person is ``actively engaged in farming,'' the 
representative of the deceased person's estate or the incapacitated 
person, or other person if necessary, must provide the determining

[[Page 434]]

authority information to verify that the person did make a conscious 
effort to and would have been determined to be actively engaged in 
farming if not for the person's death or incapacitation. If the person 
dies or is incapacitated after being determined to be ``actively engaged 
in farming,'' the determining authority will allow the determination to 
be in effect for that program year or fiscal year, as applicable. 
However, the following year the person or the person's estate must meet 
all necessary requirements in order to be determined to be ``actively 
engaged in farming'' for that year.

[73 FR 79273, Dec. 29, 2008, as amended at 85 FR 52039, Aug. 24, 2020]



Sec.1400.211  Persons and legal entities not considered to be 
actively engaged in farming.

    Any person or legal entity that does not satisfy all of the 
applicable provisions of Sec. Sec.1400.201 through 1400.210 and a 
landowner who rents land to a farming operation for cash or a crop share 
guaranteed as to the amount of the commodity will not be considered to 
be actively engaged in farming with respect to the farming operation.



Sec.1400.212  Growers of hybrid seed.

    The existence of a hybrid seed contract for a person or legal entity 
will not be taken into account when making an actively engaged in 
farming determination with respect to the person or legal entity. 
However, the person or legal entity must satisfy all other applicable 
provisions of this part.

[73 FR 79273, Dec. 29, 2008, as amended at 85 FR 52039, Aug. 24, 2020]



Sec.1400.213  Military personnel.

    If a person is called to active duty in the military before a 
determination is made that the person is actively engaged in farming, 
the person may be considered to be actively engaged in farming if the 
determining authority determines that the person did make a conscious 
effort to, and would have been determined to be, actively engaged in 
farming if the person would not have been called to active duty. If the 
person is called to active duty after being determined to be actively 
engaged in farming, the determination will remain in effect for the 
program year.

[73 FR 79273, Dec. 29, 2008, as amended at 85 FR 52039, Aug. 24, 2020]



Sec.1400.214  Cash rent tenants.

    (a) Any tenant that is actively engaged in farming in accordance 
with the provisions of this subpart and conducts a farming operation in 
which the tenant rents the land for cash, for a crop share guaranteed as 
to the amount of the commodity, or by any arrangement in which the 
tenant does not compensate the landlord by cash or a crop share, and 
receives benefits, with respect to the land under a program specified in 
Sec.1400.1(a)(1) and (2) will not be eligible to receive any payment 
with respect to the cash-rented land unless the tenant independently 
makes a significant contribution to the farming operation of:
    (1) Active personal labor; or
    (2) Significant contributions of both active personal management and 
equipment.
    (b) If the equipment is leased by the tenant from:
    (1) The landlord, then the lease must reflect the fair market value 
of the equipment leased with a payment schedule considered reasonable 
and customary for the area; or
    (2) The same person or legal entity that is providing hired labor to 
the farming operation, then the contracts for the lease of the equipment 
and for the hired labor must be two separate contracts.
    (c) If the equipment is leased by the tenant from the landlord, or 
from the same person or legal entity that is providing hired labor to 
the farming operation, then the tenant must exercise complete control 
over the leased equipment during the entire current crop year. Complete 
control is defined as exclusive access and use by the tenant.
    (d) If the cash rent tenant is a joint operation, then each member 
or their spouse must make a significant contribution of active personal 
labor or active personal management as specified in Sec.
1400.203(a)(1)(ii) to be considered eligible for the member's share of 
the program payments received by the

[[Page 435]]

joint operation on the cash rented land.
    (e) If the cash rent tenant is a legal entity, then a significant 
contribution of active personal labor or active personal management must 
be made to the legal entity as specified in Sec.1400.204(a)(2) for the 
legal entity to be considered eligible for the program payments on the 
cash rented land.

[85 FR 52040, Aug. 24, 2020]

Subpart D [Reserved]



                        Subpart E_Foreign Persons



Sec.1400.401  Eligibility.

    (a) Subject to the conditions set out in paragraphs (b) and (c) of 
this section, any person who is not a citizen of the United States or an 
alien lawfully admitted into the United States for permanent residence 
under the Immigration and Nationality Act (8 U.S.C. 1101-1778) will be 
ineligible to receive any type of loans or payments made available under 
Title I of the Food, Conservation, and Energy Act of 2008, the 
Agricultural Market Transition Act, the Commodity Credit Corporation 
Charter Act (15 U.S.C. 714-714o), or subtitle D of Title XII of the Food 
Security Act of 1985 (16 U.S.C. 3831-3836), or under any contract 
entered into under Title XII of that Act (16 U.S.C. 3801-3845), with 
respect to any commodity produced, or land set aside from production, on 
a farm that is owned or operated by the person, unless the person is an 
individual who is providing land, capital, and a substantial amount of 
personal labor in the production of crops on the farm. Likewise, and 
subject to the same conditions, such persons may be ineligible for 
payments under any other program which by its own regulations 
specifically provides for that ineligibility and adopts the regulations 
in this subpart.
    (b)(1) A corporation or other legal entity will be ineligible to 
receive payments, loans, and benefits if more than 10 percent of the 
ownership of the legal entity is held by persons who are not citizens of 
the United States or lawful aliens unless each foreign person who is a 
stockholder or other type of member provides a substantial amount of 
active personal labor in the production of crops on a farm owned or 
operated by the legal entity. However, upon the written request of the 
legal entity, the Deputy Administrator may make payments in an amount 
determined by the Deputy Administrator to be representative of the 
percentage interest of the legal entity that is owned by citizens of the 
United States and lawful aliens or foreign stockholders or other type of 
member who provide a significant contribution of active personal labor 
in the production of crops on a farm owned or operated by the legal 
entity.
    (2) In determining whether more than 10 percent of the ownership of 
a legal entity is held by persons who are not citizens of the United 
States or by lawful aliens, the ownership interest will be the higher of 
the amount of the interest on:
    (i) The date the applicable program contract or agreement is 
executed by the legal entity or
    (ii) Any other date prior to the final harvest date that is 
determined and announced by the Deputy Administrator to be normal in the 
area for the applicable program crop.
    (3) A corporation or other legal entity must inform the county 
committee of any increase in ownership that occurs after the applicable 
program contract or agreement is executed.
    (4) In the event of an increase in ownership after a payment, loan, 
or benefit has been made, the legal entity will refund the payment, 
loan, or benefit.
    (5) Where there is only one class of stock or other similar unit of 
ownership, a person's or legal entity's percentage share of the limited 
partnership, corporation, or other similar legal entity will be based 
upon the outstanding shares of stock or other similar unit of ownership 
held by the person or legal entity as compared to the total outstanding 
shares of stock or other similar unit of ownership. If the limited 
partnership, corporation, or other similar legal entity has more than 
one class of stock or other unit of ownership, the percentage share of 
the limited partnership, corporation or other similar legal entity owned 
by a person or legal entity will be determined by the Deputy 
Administrator on

[[Page 436]]

the basis of market quotations. If market quotations are unavailable or 
so infrequent that they do not represent fair market value, the 
percentage share will be determined by the Deputy Administrator on the 
basis of all relevant factors affecting the fair market value of the 
stock or other unit of ownership, including the various rights and 
privileges that are attributed to each the class.
    (c) A citizen of the United States, lawful alien, or legal entity 
that is not subject to this part who is in lawful possession, through a 
lease or otherwise, of a farm owned by a person or legal entity who is 
subject to this part may receive a payment, loan, and benefit without 
regard to this part.

[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 19189, Apr. 14, 2010]; 
85 FR 52040, Aug. 24, 2020]



Sec.1400.402  Notification.

    (a) Any legal entity, whether foreign or domestic, that executes a 
program contract or agreement under which a payment, loan, or benefit 
may be available must provide written notification to the county 
committee in the county where the legal entity conducts its farming 
operation if:
    (1) Any person, group of persons, legal entity, or group of legal 
entities holds more than a 10 percent interest in the legal entity; and
    (2) The person, group of persons, legal entity, or group of legal 
entities, in accordance with Sec.1400.401, are ineligible to receive a 
payment, loan, or benefit.
    (b) Written notification must include the name and social security 
number or taxpayer identification number of the a person or legal 
entity, if known, and of all persons and legal entities that hold an 
interest in the legal entity.
    (c) The failure of the legal entity to provide this information will 
result in the ineligibility of the legal entity to receive any payment, 
loan, or benefit.

[73 FR 79273, Dec. 29, 2008, as amended at 85 FR 52040, Aug. 24, 2020]



           Subpart F_Average Adjusted Gross Income Limitation



Sec.1400.500  Applicability.

    (a) A person or legal entity, other than a joint venture or general 
partnership, will not be eligible to receive, directly or indirectly, 
certain program payments or benefits described in Sec.1400.1 if the 
average adjusted gross income of the person or legal entity exceeds 
$900,000 for the 3 taxable years preceding the most immediately 
preceding complete taxable year, as determined by the Deputy 
Administrator.
    (b) Determinations made under this subpart for conservation programs 
are:
    (1) Applicable starting with the 2015 fiscal year, except for AMA 
which is applicable with the 2014 fiscal year;
    (2) Based on the year for which the conservation program contract or 
agreement is approved; and
    (3) Applicable for the entire term of the subject agreement or 
contract.
    (c) Vendors that receive payment for technical services provided in 
conjunction with programs made subject to this subpart by regulation or 
statute, but who are not beneficiaries of the program, are not subject 
to this subpart for services that are of the type that are also 
performed by the Federal Government in connection with the programs.
    (d) Payments to an escrow agent, or other legal entity of similar 
capacity in which the recipient is maintaining temporary custody of the 
funds for eventual disbursement to an eligible program participant, are 
not subject to this subpart so long as the party ultimately receiving 
the payment is eligible under this subpart.
    (e) Payments to States, counties, political subdivisions and 
agencies thereof, and Indian tribes as defined in Sec.1400.3 are not 
subject to this subpart.
    (f) The Administrator or NRCS Chief may waive the limitation under 
this section on a case-by-case basis for the protection of 
environmentally sensitive land of special significance. A waiver request 
must be in writing and:
    (1) Show that use of conservation program funding on or adjacent to 
environmentally sensitive land of special significance is critical to 
the success of a project that provides conservation

[[Page 437]]

benefits to multiple producers or landowners in a community, watershed, 
or other geographic area;
    (2) Demonstrate that the proposed action achieves enduring 
protection of environmentally sensitive land of special significance 
through use of a long-term agreement that is greater than 15 years in 
duration or through use of a deed restriction on the land; or
    (3) Present evidence that otherwise demonstrates, as determined by 
the Administrator or the NRCS Chief, that the waiver is necessary to 
address the critical natural resources referenced in the definition of 
environmentally sensitive land of special significance.

[73 FR 79273, Dec. 29, 2008, as amended at 79 FR 21097, Apr. 14, 2014; 
85 FR 52040, Aug. 24, 2020]



Sec.1400.501  Determination of average adjusted gross income.

    (a) Except as otherwise provided in this subpart, average adjusted 
gross income means:
    (1) For a person filing a separate tax return, the amount reported 
as ``adjusted gross income'' on the final federal income tax return for 
the person for the applicable tax year;
    (2) For a person filing a joint tax return, the amount reported as 
``adjusted gross income'' on the final federal income tax return for the 
applicable tax year unless a certified statement is provided by a 
certified public accountant or attorney specifying the manner in which 
the income would have been declared and reported if the persons had 
filed two separate returns and that this calculation is consistent with 
the information supporting the filed joint return;
    (3) For a corporation, including a subchapter S corporation, the 
total reported ``taxable income'' as reported to the Internal Revenue 
Service plus the amount of the charitable contributions as reported on 
the final federal income tax return for the applicable tax year;
    (4) For a tax exempt legal entity, the ``unrelated business taxable 
income'' of the legal entity as reported to the Internal Revenue Service 
on the final federal income tax return, less any other income CCC 
determines to be from non-commercial activities;
    (5) For a limited liability company, limited partnership, limited 
liability partnership, or similar type of organization, the income from 
trade or business activities plus the amount of guaranteed payments to 
the members as reported to the Internal Revenue Service on the final 
federal income tax return for the applicable tax year; and
    (6) For an estate or trust, the adjusted total income plus 
charitable deductions as reported to the Internal Revenue Service on the 
final federal income tax return for the applicable tax year, or the 
amount of net increase in the estate's or trust's value resulting from 
its business or investment interests.
    (b) For purposes of applying this subpart and calculating the 3-year 
average referenced in Sec.1400.500, that average will be for the 
adjusted gross income for the 3 taxable years preceding the most 
immediately preceding complete taxable year, as determined by CCC. For a 
legal entity that is not required to file a federal income tax return, 
or a person or legal entity that did not have taxable income in one or 
more tax years, the average will be the adjusted gross income, including 
losses, averaged for the 3 taxable years preceding the most immediately 
preceding complete taxable year, as determined by CCC. A new legal 
entity will have its adjusted gross income averaged only for those years 
of the base period for which it was in business; however, a new legal 
entity will not be considered ``new'' to the extent it takes over an 
existing operation and has any elements of common ownership or interests 
with the preceding legal entity, or with persons or legal entities with 
an interest in the ``old'' legal entity. When there is this commonality, 
income of the ``old'' legal entity will be averaged with that of the 
``new'' legal entity for the base period.

[73 FR 79273, Dec. 29, 2008, as amended at 79 FR 21097, Apr. 14, 2014; 
85 FR 50240, Aug. 24, 2020]



Sec.1400.502  Compliance and enforcement.

    (a) To comply with the average adjusted gross income limitation, a 
person or legal entity, including all interest holders in a legal 
entity, general

[[Page 438]]

partnership, or joint venture, must provide annually the following as 
required by CCC:
    (1) A certification in the manner prescribed by CCC from a certified 
public accountant or attorney that the average adjusted gross income of 
the person or legal entity does not exceed the applicable limitation;
    (2) A certification from the person or legal entity that the average 
adjusted gross income of the person or legal entity does not exceed the 
applicable adjusted gross income limitations;
    (3) The relevant Internal Revenue Service documents and supporting 
financial data as requested by CCC. Supporting financial data may 
include State income tax returns, financial statements, balance sheets, 
reports prepared for or provided to another Government agency, 
information prepared for a private lender, and other credible 
information relating to the amount and source of the person's or legal 
entity's income;
    (4) Authorization for CCC to obtain tax data from the Internal 
Revenue Service for purposes of verification of compliance with this 
subpart.
    (b)(1) All persons and legal entities are subject to an audit by FSA 
of any information submitted in accordance with this subpart. As a part 
of this audit, income tax returns may be requested, and if requested, 
must be supplied by all related persons and legal entities.
    (2) In addition to any other requirement under any Federal statute, 
relevant Federal income tax returns and documentation must be retained a 
minimum of two years after the end of the calendar year corresponding to 
the year for which payments or benefits are requested.
    (c) Failure to comply with this subpart's requirements, will result 
in ineligibility for all program benefits subject to this subpart for 
the year or years subject to the request.

[73 FR 79273, Dec. 29, 2008, as amended at 79 FR 21097, Apr. 14, 2014]



Sec.1400.503  Commensurate reduction.

    (a) Any program payment or benefit subject to this subpart provided 
to a legal entity, general partnership, or joint venture will be reduced 
by an amount commensurate with the direct and indirect ownership 
interest in the legal entity, general partnership, or joint venture of 
each person or legal entity determined to have an average adjusted gross 
income in excess of the applicable limitation under the standards 
provided elsewhere in this subpart for the direct recipient of the 
payments.
    (b) Ownership interest in a legal entity will be reviewed to the 
fourth level of ownership, as specified in Sec.1400.105, to determine 
whether a commensurate reduction is applicable and the extent of the 
reduction. If an ownership interest is not held by a person in the 
fourth level of ownership in a legal entity, no payment or benefit will 
be made with respect to the interest.

[73 FR 79273, Dec. 29, 2008, as amended at 85 FR 52040, Aug. 24, 2020]



Subpart G_Additional Payment Eligibility Provisions for Joint Operations 
    and Legal Entities Comprised of Non-Family Members or Partners, 
   Stockholders, or Persons With an Ownership Interest in the Farming 
                                Operation

    Source: 80 FR 78128, Dec. 16, 2015, unless otherwise noted.



Sec.1400.600  Applicability.

    (a) This subpart is applicable to all of the programs as specified 
in Sec.1400.1 and any other programs as specified in individual 
program regulations.
    (b) The requirements of this subpart will apply to farming 
operations for FSA program payment eligibility and limitation purposes 
as specified in subparts B and C of this part.
    (c) The requirements of this subpart do not apply to farming 
operations specified in paragraph (b) of this section if either:
    (1) All persons who are partners, stockholders, or persons with an 
ownership interest in the farming operation or of any entity that is a 
member of the farming operation are family members as defined in Sec.
1400.3; or
    (2) The farming operation is seeking to qualify only one person as 
making a

[[Page 439]]

significant contribution of active personal management, or a significant 
contribution of the combination of active personal labor and active 
personal management, for the purposes of qualifying only one person or 
entity as actively engaged in farming.



Sec.1400.601  Definitions.

    (a) The terms defined in Sec.1400.3 are applicable to this subpart 
and all documents issued in accordance with this part, except as 
otherwise provided in this section.
    (b) The following definitions are also applicable to this subpart:
    Active personal management means personally providing and 
participating in management activities considered critical to the 
profitability of the farming operation and performed under one or more 
of the following categories:
    (i) Capital, which includes:
    (A) Arranging financing and managing capital;
    (B) Acquiring equipment;
    (C) Acquiring land and negotiating leases;
    (D) Managing insurance; and
    (E) Managing participation in USDA programs;
    (ii) Labor, which includes hiring and managing of hired labor; and
    (iii) Agronomics and marketing, which includes:
    (A) Selecting crops and making planting decisions;
    (B) Acquiring and purchasing crop inputs;
    (C) Managing crops (that is, whatever managerial decisions are 
needed with respect to keeping the growing crops living and healthy--
soil fertility and fertilization, weed control, insect control, 
irrigation if applicable) and making harvest decisions; and
    (D) Pricing and marketing of crop production.
    Significant contribution of active personal management means active 
personal management activities performed by a person, with a direct or 
indirect ownership interest in the farming operation, on a regular, 
continuous, and substantial basis to the farming operation, and meets at 
least one of the following to be considered significant:
    (i) Performs at least 25 percent of the total management hours 
required for the farming operation on an annual basis; or
    (ii) Performs at least 500 hours of management annually for the 
farming operation.
    Significant contribution of the combination of active personal labor 
and active personal management means a contribution of a combination of 
active personal labor and active personal management that:
    (i) Is critical to the profitability of the farming operation;
    (ii) Is performed on a regular, continuous, and substantial basis; 
and
    (iii) Meets the following required number of hours:

Table 1 to Paragraph (iii) of the Definition of Significant Contribution
     of the Combination of Active Personal Labor and Active Personal
                               Management
------------------------------------------------------------------------
   Combination of active personal labor and active personal management
           minimum requirement for a significant contribution
-------------------------------------------------------------------------
                                                      Meets the minimum
                                                        threshold for
  Management contribution in     Labor contribution      significant
             hours                    in hours        contribution,  in
                                                            hours
------------------------------------------------------------------------
475...........................                   75                  550
450...........................                  100                  550
425...........................                  225                  650
400...........................                  250                  650
375...........................                  375                  750
350...........................                  400                  750
325...........................                  425                  750
300...........................                  550                  850
275...........................                  575                  850
250...........................                  600                  850
225...........................                  625                  850
200...........................                  650                  850
175...........................                  675                  850
150...........................                  800                  950
125...........................                  825                  950
100...........................                  850                  950
75............................                  875                  950
50............................                  900                  950
25............................                  925                  950
------------------------------------------------------------------------


[85 FR 73602, Nov. 19, 2020]



Sec.1400.602  Restrictions on active personal management contributions.

    (a) If a farming operation includes any nonfamily members as 
specified under the provisions of Sec.1400.201(b)(2) and (3) and the 
farming operation is seeking to qualify more than one person as 
providing a significant contribution of active personal management, or

[[Page 440]]

a significant contribution of the combination of active personal labor 
and active personal management, then:
    (1) Each person must maintain contemporaneous records or logs as 
specified in Sec.1400.603; and
    (2) Subject to paragraph (b) of this section, if the farming 
operation seeks not more than one additional person to qualify as 
providing a significant contribution of active personal management, or a 
significant contribution of the combination of active personal labor and 
active personal management, because the operation is large, then the 
operation may qualify for one additional person if the farming 
operation:
    (i) Produces and markets crops on 2,500 acres or more of cropland;
    (ii) Produces honey with more than 10,000 hives; or
    (iii) Produces wool with more than 3,500 ewes; and
    (3) If the farming operation seeks not more than one additional 
person to qualify as providing a significant contribution of active 
personal management, or a significant contribution of the combination of 
active personal labor and active personal management, because the 
operation is complex, then the operation may qualify for one additional 
person if the farming operation is determined by the FSA state committee 
as complex after considering the factors described in paragraphs 
(a)(3)(i) and (ii) of this section. Any determination that a farming 
operation is complex by an FSA state committee must be reviewed and DAFP 
must concur with that determination for it to be implemented. To 
demonstrate complexity, the farming operation will be required to 
provide information to the FSA state committee on the following:
    (i) Number and type of livestock, crops, or other agricultural 
products produced and marketing channels used; and
    (ii) Geographical area covered.
    (b) FSA state committees may adjust the limitations described in 
paragraph (a)(2) of this section up or down by not more than 15 percent 
if the FSA state committee determines that the relative size of farming 
operations in the state justify making a modification of either or both 
of these limitations. If the FSA state committee seeks to make a larger 
adjustment, then DAFP will review and may approve the request.
    (c) If a farming operation seeks to qualify a total of three persons 
as providing a significant contribution of active personal management, 
or a significant contribution of the combination of active personal 
labor and active personal management, then the farming operation must 
demonstrate both size and complexity as specified in paragraph (a) of 
this section.
    (d) In no case may more than three persons in the same farming 
operation qualify as providing a significant contribution of active 
personal management, or a significant contribution of the combination of 
active personal labor and active personal management, as defined by this 
subpart.
    (e) A person's contribution of active personal management, or the 
contribution of the combination of active personal labor and active 
personal management, to a farming operation specified in Sec.
1400.601(b) will only qualify one member of that farming operation as 
actively engaged in farming as defined in this part. Other individual 
persons in the same farming operation are not precluded from making 
management contributions, except that the contributions will not be 
recognized as meeting the requirements of being a significant 
contribution of active personal management.

[80 FR 78128, Dec. 16, 2015, as amended at 85 FR 52040, Aug. 24, 2020]



Sec.1400.603  Recordkeeping requirements.

    (a) Any farming operation requesting that more than one person 
qualify as making a significant contribution of active personal 
management, or a significant contribution of the combination of active 
personal labor and active personal management, must maintain 
contemporaneous records or activity logs for all persons that make any 
contribution of any management to a farming operation under this subpart 
that must include, but are not limited to, the following:
    (1) Location where the management activity was performed; and
    (2) Time expended and duration of the management activity performed.

[[Page 441]]

    (b) To qualify as providing a significant contribution of active 
personal management each person covered by this subpart must:
    (1) Maintain these records and supporting business documentation; 
and
    (2) If requested, timely make these records available for review by 
the appropriate FSA reviewing authority.
    (c) If a person fails to meet the requirement of paragraphs (a) and 
(b) of this section, then both of the following will apply:
    (1) The person's contribution of active personal management as 
represented to the farming operation for payment eligibility purposes 
will be disregarded; and
    (2) The person's payment eligibility will be re-determined for the 
applicable program year.



PART 1401_COMMODITY CERTIFICATES, IN KIND PAYMENTS, AND OTHER FORMS
OF PAYMENT--Table of Contents



Sec.
1401.1 Applicability.
1401.2 Payments in lieu of cash payments.
1401.3 Payments to persons with outstanding CCC loans.
1401.4 Commodity certificates.
1401.5 In kind payments.
1401.6 Assignments.
1401.7 Miscellaneous provisions.
1401.8 Subsequent holders.

    Authority: 15 U.S.C. 714b and 714c; 7 U.S.C. 1445d.

    Source: 51 FR 36921, Oct. 16, 1986, unless otherwise noted. 
Redesignated at 53 FR 20290, June 3, 1988, and further redesignated at 
61 FR 37575, July 18, 1996.



Sec.1401.1  Applicability.

    This part shall be applicable to payments and loans made in 
accordance with the programs administered by the Commodity Credit 
Corporation (CCC) or the Farm Service Agency (FSA) as determined and 
announced by the Secretary of Agriculture or a designee of the 
Secretary. The definitions of the terms applicable to 7 CFR part 713 set 
forth at Sec.713.3 also shall be applicable to this part, except that 
the term ``commodity'' shall mean any agricultural commodity.



Sec.1401.2  Payments in lieu of cash payments.

    (a) CCC will, in accordance with applicable program provisions, make 
payments in a form other than in cash to persons who otherwise are 
eligible to receive a cash payment from CCC. Further, subject only to 
statutory prohibition and notwithstanding any provisions of the contract 
to participate in a program administered by CCC or FSA, CCC may: at its 
option, make payments in a form other than in cash.
    (b) As determined by CCC, payments in a form other than in cash may 
be made in the following manner:
    (1) By delivery of a commodity to a person at a warehouse or other 
similar facility;
    (2) By transfer of negotiable warehouse receipts;
    (3) By the issuance of certificates which CCC shall redeem in 
accordance with this part;
    (4) By the acquisition and use of commodities pledged as collateral 
for CCC price support loans;
    (5) By the use of commodities owned by CCC; and
    (6) By such other methods as CCC determines appropriate, including 
methods to enable the producer to receive payments in order to assure 
that the producer receives the same total return as if the payments had 
been made in cash.
    (c) The value of the payments made in any manner set forth in 
paragraph (b) shall be determined by CCC.
    (d) Notwithstanding any other provision of this part, CCC may, with 
respect to producers who are members of a cooperative marketing 
association which has been determined in accordance with part 1425 of 
this title to be eligible to receive price support on behalf of its 
producer-members, enter into agreements with such producers and such 
cooperatives to facilitate the making of payments to such producers. 
Such agreements may include a provision which allows a producer to make 
available for the use of the cooperative the value of the non-cash 
payment which would otherwise be made to the producer.

[[Page 442]]



Sec.1401.3  Payments to persons with outstanding CCC loans.

    (a) Persons with outstanding CCC loans who are eligible to receive 
payments from CCC, including a person authorized to receive a payment on 
behalf of another person, may be required to liquidate such loans in 
accordance with this section in order to be eligible to receive a 
payment authorized by Sec.1470.2.
    (b) A person with an outstanding CCC loan must, unless otherwise 
agreed upon by the person and CCC, redeem and sell to CCC a quantity of 
the commodity pledged as collateral for a CCC loan, as determined by 
CCC, in an amount equal in value to the value of the payment which would 
otherwise be made to such person. If the person has more than one 
outstanding CCC loan, CCC may, by contract or otherwise, prescribe which 
loan collateral the person shall be required to redeem in order to 
receive payment. The purchase price shall be equal to the cost of 
liquidating the loan or the portion of the loan for which the quantity 
of the commodity sold to CCC is pledged as collateral, except that, in 
the case of a special producer storage loan or a farmer-owned reserve 
loan, the purchase price will not include the amount of any unearned 
advance storage payments received with respect to the redeemed 
collateral. After redemption and the subsequent sale to CCC of the 
commodity pledged as collateral for such CCC loan, CCC shall make 
available to the person a like quantity of the commodity.



Sec.1401.4  Commodity certificates.

    (a) General. CCC may issue commodity certificates as a form of 
payment. Commodity certificates will bear a dollar denomination. Such 
certificate may be transferred, exchanged for the inventory of CCC 
(including the receipt in accordance with paragraph (e) of this section 
of loan collateral by a person to whom a loan secured by such collateral 
is made): or exchanged for cash, as provided for in this section. 
Commodity certificates shall be subject to the provisions of this part, 
and to any terms, conditions and restrictions provided on the 
certificate, which are incorporated by reference herein.
    (b) Liens, encumbrances, and State law. (1) The provisions of this 
section or the commodity certificates shall take precedence over any 
state statutory or regulatory provisions which are inconsistent with the 
provisions of this section or with the provisions of the commodity 
certificates.
    (2) Commodity certificates shall not be subject to any lien, 
encumbrance, or other claim or security interest, except that of an 
agency of the United States Government arising specifically under 
Federal statute.
    (3) The provisions of this paragraph (b) shall apply without regard 
to the identity of the holder of the certificate.
    (c) Transferability. Any person may transfer a commodity certificate 
to any other person. However, any such transfer must be in the full 
amount of the certificate, and can be effected only by restrictive 
endorsement on the back of the certificate, showing the name of the 
transferee and the date of the transfer, and signed by the transferor. 
CCC will not honor any certificate bearing any endorsement to ``bearer'' 
or any other nonrestrictive endorsement, or otherwise transferred in a 
manner contrary to the regulations contained in this section. The person 
who submits a commodity certificate to CCC shall endorse the certificate 
to CCC.
    (d) Exchange of commodity certificate for CCC-owned commodities--(1) 
General. Except as otherwise provided in this paragraph and in 
paragraphs (f) and (g) of this section, any holder of a commodity 
certificate may exchange such certificate, by itself or together with 
other commodity certificates, for such commodities as are made available 
by CCC by endorsing and submitting the certificate to CCC. If a person 
submits commodity certificates for exchange in order that the person 
would be eligible to receive a quantity of a commodity which includes 
less than an entire unit in which the commodity is stored (e.g., less 
than an entire bale of cotton or an entire barrel of honey): (i) Such 
person may forfeit the partial unit of the commodity to CCC, or (ii) CCC 
may issue a check to such person for the partial unit of the commodity 
or permit such person to purchase the remainder of

[[Page 443]]

such unit at a price determined by CCC. A person may obtain information 
regarding commodities available for exchange and the procedure for 
exchange from Kansas City Commodity Office, FSA-USDA, Kansas City, MO 
64141-0205.
    (2) Minimum quantities. A holder of an amount of commodity 
certificates sufficient to acquire a carload lot, or other quantity as 
may be determined by CCC, may present such amount for exchange at any 
time on or before the expiration date of such certificates. A holder who 
is permitted to exchange the certificate for CCC-owned commodities but 
who does not possess commodity certificates in the amount specified in 
the preceding sentence may, not to exceed once during a calendar month, 
submit such certificates to CCC. CCC will, at CCC's option, pay such 
holder by check in the amount of the certificate or transfer to such 
holder title to commodities owned by CCC.
    (3) CCC-owned commodities stored by a person who submits commodity 
certificates to CCC. CCC may require or permit holders of commodity 
certificates to exchange such certificates for commodities owned by CCC 
which are stored by such holder, without making such commodities or 
kinds of commodities available to other holders of commodity 
certificates.
    (4) Valuation. Except as otherwise may be announced by CCC, CCC will 
determine the value of CCC-owned commodities made available to holders 
of commodity certificates.
    (5) Transfer of title. Title to commodities owned by CCC which are 
transferred to a person who submits commodity certificates to CCC shall 
be transferred in store, except as may be determined and announced by 
CCC. The person who submits certificates to CCC shall be responsible for 
all costs incurred in transferring title to the commodity, except as 
specifically provided by CCC. The transfer of title to such commodities 
shall occur without regard to any State law or any claim of lien against 
the commodity or proceeds thereof which may be asserted by any creditor 
except agencies of the U.S. Government whose lien arises specifically 
under Federal statute.
    (6) Expiration date. CCC may, at its option, discount or refuse to 
accept any commodity certificate presented for exchange after the 
expiration date stated on the certificate.
    (e) Use of commodity certificates to receive loan collateral--(1) 
General. Except as otherwise provided in this paragraph and in 
paragraphs (f) and (g) of this section, any holder of a commodity 
certificate may use such certificate to receive commodities pledged as 
collateral for CCC loans made to such person, at any time on or before 
the expiration date stated on the certificate. A holder of a commodity 
certificate who wishes to receive a quantity of a commodity pledged by 
such person as collateral for a CCC loan in exchange for a certificate 
shall redeem and sell to CCC a quantity of the commodity equal in value 
to the dollar denomination of the certificate, as determined by CCC. The 
purchase price shall be equal to the cost of liquidating the loan or the 
portion of the loan for which the quantity of the commodity sold to CCC 
is pledged as collateral, except that, in the case of a special producer 
storage loan or a farmer-owned reserve loan, the purchase price will not 
include the amount of any unearned advanced storage payments received 
with respect to the redeemed loan collateral. Upon submission of the 
certificate, which is endorsed to CCC, to the county FSA office which 
issued the loan, the holder of a commodity certificate will receive the 
quantity of the commodity which has been sold to CCC. Except as 
otherwise determined by CCC, if the holder of such certificate does not 
have commodities pledged as collateral for CCC loans equal in value to 
the dollar denomination of the certificate, as determined by CCC, CCC 
will, at CCC's option and after the producer has submitted the 
certificate, pay the difference to the person by check or in the form of 
a new commodity certificate.
    (2) Ineligible commodities. No person may use a commodity 
certificate to receive a quantity of tobacco, peanuts, or extra long 
staple cotton pledged as collateral for a CCC loan. No person may, 
before August 1, 1986, use a commodity

[[Page 444]]

certificate to receive a quantity of upland cotton pledged as collateral 
for a CCC loan.
    (f) Cash redemption start date. (1) The person to whom a generic 
certificate is issued which has a date entered in block D may submit 
such certificate, endorsed to CCC, at the issuing county FSA office for 
payment by check in the amount of the certificate on or after the date 
entered in block D through the expiration date of the certificate. Such 
person may not exchange the certificate for commodities owned by CCC, 
except as otherwise agreed upon between such person and CCC.
    (2) The person to whom a generic certificate is issued which has an 
entry of ``S/H'' in block D may exchange such certificate for 
commodities owned by CCC.
    (3) The person to whom a commodity specific certificate is issued 
which has a date entered in block D may submit such certificate, 
endorsed to CCC, to the Kansas City Commodity Office for the specific 
commodity entered in block C beginning on the date entered in block D 
through the expiration date of the certificate. Such certificate may not 
be exchanged for cash, except as otherwise agreed on by CCC.
    (4) All other certificates may be transferred and exchanged as 
determined and announced by CCC.
    (g) ``Generic'' and commodity-specific commodity certificates--(1) 
General. If a commodity certificate indicates that it is a ``generic'' 
certificate, such certificate may, subject to the provisions of 
paragraphs (a) through (f) of this section, be exchanged for any 
commodity made available by CCC or, as appropriate, used to receive a 
quantity of any commodity which serves as collateral for a CCC loan. If 
a certificate is not a ``generic certificate'', such certificate may be 
exchanged for the commodity specified on the certificate, except as may 
be determined and announced by CCC.
    (2) Cotton program payments. Certificates issued as payments under 
the 1991 through 1995 upland cotton program, including payments issued 
in accordance with section 103B(a)(5)(B) of the Agricultural Act of 
1949, may be exchanged for CCC-owned upland cotton only during such 
times as determined and announced by CCC.
    (3) Commodities not available in CCC inventory. Notwithstanding any 
other provision of this section, if a person submits a commodity 
specific certificate to CCC in exchange for a quantity of such commodity 
and CCC determines it is not possible to make such commodity available, 
CCC may: (i) Require such person to exchange the commodity specific 
certificate for a generic certificate; or (ii) refuse to accept 
submission of such certificate until CCC is able to make available a 
quantity of the commodity specified on such certificate.
    (h) CCC, at its option, may discount or refuse to accept any 
certificate made, transferred, or submitted in violation of this 
section.
    (i) Interest. With respect to producers who receive commodity 
certificates in accordance with the wheat, feed grains, upland cotton 
and rice price support and production adjustment programs authorized by 
parts 1413 and 1421 of this title, a producer to whom the certificate is 
issued who exchanges such a certificate with CCC for cash in accordance 
with subsection (f) of this section shall receive interest with respect 
to such certificate for a 150 day period. Such interest shall be the 
rate of interest determined in accordance with part 1405 of this Title 
which is in effect on the date the certificate is issued.

[51 FR 36921, Oct. 16, 1986, as amended at 51 FR 43580, Dec. 3, 1986; 52 
FR 45607, Dec. 1, 1987; 56 FR 361, Jan. 4, 1991]



Sec.1401.5  In kind payments.

    (a) Subject to the provisions of Sec. Sec.1470.2 and 1470.3, CCC 
may make payments in the form of commodities. Quantities of commodities 
made available as payment shall be based upon the value of the 
commodity, as determined by CCC. Such quantity may be adjusted by CCC to 
reflect the location, quality, and other similar factors which CCC 
determines to affect the value of the commodity.
    (b) The transfer of title to commodities made available in 
accordance with paragraph (a) of this section shall be in store, except 
as determined by CCC, and shall be made without regard to any State law 
or any claim of lien

[[Page 445]]

against the commodity, or proceeds thereof, which may be asserted by any 
creditor except agencies of the U.S. Government whose lien arises 
specifically under Federal statute. The recipient of such commodities 
shall be responsible for all costs incurred in transferring title to the 
commodity, except as specifically provided by CCC.



Sec.1401.6  Assignments.

    Notwithstanding any other provision of this chapter, a payment made 
under this part may not be the subject of an assignment, except as 
determined and announced by CCC.



Sec.1401.7  Miscellaneous provisions.

    Except as determined by CCC, the following provisions of this title 
shall apply to this part:
    (a) Part 13, Setoffs and Withholding.
    (b) Part 707, Payments Due Persons Who Have Died, Disappeared, or 
Been Declared Incompetent.
    (c) Part 718, Determination of Acreage and Compliance.
    (d) Part 780, Appeal Regulations.
    (e) Part 790, Incomplete Performance Based Upon Actions or Advice of 
an Authorized Representative of the Secretary.
    (f) Part 791, Authority to Make Payments When There has been a 
Failure to Comply Fully with the Program.
    (g) Part 795, Payment Limitation.
    (h) Part 796, Denial of Program Eligibility for Controlled Substance 
Violations.
    (i) Part 1403, Interest on Delinquent Debts.
    (j) All other parts of the Code of Federal Regulations which are 
made applicable to this part.



Sec.1401.8  Subsequent holders.

    (a) General. A person who acquires a commodity certificate from 
another person shall be considered to be a ``subsequent holder'' of the 
certificate. Subsequent holders of certificates who purchased a 
commodity certificate on or before January 1, 1990 may, after the 
expiration date specified on the certificate, submit the certificate to 
CCC for a payment from CCC determined in accordance with paragraph (b) 
of this section. All certificates must be submitted after January 2, 
1991 and on or before May 28, 1991. Certificates submitted after May 28, 
1991 shall not be accepted for payment. Certificates shall be considered 
to be submitted as of the date of the postmark on the envelope 
containing the certificate. All certificates submitted for payment must 
be submitted with, and in accordance with, Form CCC-8. All certificates 
submitted to CCC for payment shall be retained by CCC.
    (b) Payment rates. (1) Certificates with an expiration date of April 
30, 1989 or earlier shall not, in any instance, be eligible for payment 
by CCC. Certificates which are submitted 18 months after the expiration 
date specified on the certificate shall not be accepted for payment by 
CCC.
    (2) Persons who submit to CCC, in accordance with this section, 
certificates with an expiration date of May 31, 1989 or later shall 
receive a payment equal to 50 percent of the certificate's face value if 
such certificate is submitted within the period which:
    (i) Begins 6 months and one day after the expiration date specified 
on the certificate and
    (ii) Ends 18 months after such expiration date.
    (3) Persons who submit to CCC in accordance with this section 
certificates with an expiration date of May 31, 1989 or later shall 
receive a payment equal to 85 percent of the certificate's face value if 
such certificate is submitted within the period which:
    (i) Begins the day after the expiration date specified on the 
certificate and
    (ii) Ends 6 months after such expiration date.
    (c) Transitional rules. In order to provide full benefits under this 
section to parties whose certificates may decline in value from the date 
of enactment of section 1122 of the Food, Agriculture, Conservation, and 
Trade Act of 1990 (November 28, 1990) until the implementation of the 
provisions of such section, persons who, by January 31, 1991, submit to 
CCC in accordance with this section certificates with expiration dates 
of May 31, 1989, June 30, 1989, May 31, 1990, and June 30, 1990, shall 
receive payments for such certificates as if they had been submitted on 
November 30, 1990.

[[Page 446]]

    (d) Payment limit. (1) No person, as defined in Sec.719.2(r) of 
this title, shall receive a payment in excess of $1,000, except that any 
wholly-owned or wholly controlled entity, such as a corporation, shall 
be considered to be the same person as the person which owns or controls 
such entity. Any person who adopts or participates in adopting a scheme 
or device which is designed to evade this limitation or which has the 
effect of evading this limitation shall be ineligible to receive a 
payment under this section. Such acts include, but are not limited to:
    (i) Concealing information which affects the application of this 
section;
    (ii) Submitting false or erroneous information;
    (iii) Creating fictitious entities for the purpose of evading the 
application of this section.
    (2) No payment shall be paid to a person which is in excess of the 
amount which the person paid for the certificate.
    (e) Application. In order to receive a payment under this section, a 
person must:
    (1) Submit certificates with an expiration date of May 31, 1989, or 
later with a completed Form CCC-8 to CCC postmarked by May 28, 1991;
    (2) Submit no earlier than January 2, 1991 all certificates and 
Forms CCC-8 to CCC by mail at the following address: CCC Expired 
Certificate Exchange, Attn: Claims and Collections Division, P.O. Box 
419205, Kansas City, Missouri, 64141-6205;
    (3) Submit evidence to CCC which establishes to the satisfaction of 
CCC:
    (i) The date the subsequent holder purchased the certificates;
    (ii) The price paid by the subsequent holder for the certificates; 
and
    (iii) If requested by CCC, the name and address of the person from 
whom the subsequent holder purchased the certificates.

[56 FR 362, Jan. 4, 1991]



PART 1402_POLICY FOR CERTAIN COMMODITIES AVAILABLE FOR SALE--
Table of Contents



Sec.
1402.1 General.
1402.2 Sales of inventory.
1402.3 Submission of offers, terms, and conditions.
1402.4 Information availability.
1402.5 Late payments.

    Authority: 7 U.S.C. 7285, 15 U.S.C. 714b and 714c.

    Source: 71 FR 40642, July 18, 2006, unless otherwise noted.



Sec.1402.1  General.

    To facilitate trade through usual and customary channels, 
facilities, and arrangements of trade and commerce, the Commodity Credit 
Corporation (CCC) will disseminate general sales offering information on 
the Farm Service Agency's (FSA) Commodity Operations Web site located on 
the Worldwide Web at http://www.fsa.usda.gov/daco/default.htm. The Web 
site will be reviewed and amended as necessary to reflect current 
general sales offering information. CCC will make regular amendments as 
necessary deleting or adding to the sales provisions or changing prices 
or methods of sales. The information posted at this Web site is for the 
purpose of public information and does not constitute an offer to sell 
by CCC or an invitation for offers to purchase from CCC. CCC may make 
its commodities available for sale without prior notification to storing 
warehouse operators. Information pertaining to opportunities to purchase 
commodities from CCC will be published on the FSA Commodity Operations 
Web site when such opportunities are available.



Sec.1402.2  Sales of inventory.

    CCC will entertain offers from prospective buyers for the purchase 
of any commodities owned by CCC, including those commodities that are 
marketed through commercial, Internet-based marketing services. Various 
commodities owned by CCC may be offered for sale through commercial, 
Internet-based marketing services. Interested parties may submit 
requests for information related to Internet-based commodity sales to 
the Director, Warehouse and Inventory Division, Stop 0553, 1400 
Independence Avenue, SW., Washington, DC 20250-9860.

[[Page 447]]



Sec.1402.3  Submission of offers, terms, and conditions.

    Offers accepted by CCC will be subject to terms and conditions 
prescribed by CCC. These terms include, among other things, payment by 
wire transfer of funds, certified check or cashiers check before 
delivery of the commodity, removal of the commodity from CCC storage 
within a reasonable period of time, and in sales that require a 
commodity to be used for only a specific purpose, documentation that use 
of the commodity was for only that purpose.



Sec.1402.4  Information availability.

    The terms and conditions of sale with respect to commodities that 
are not sold through Internet-based marketing service are available 
online. Requests for terms and conditions may be addressed to the 
Director, Warehouse and Inventory Division, Stop 0553, 1400 Independence 
Avenue, SW., Washington, DC 20250-9860.



Sec.1402.5  Late payments.

    If payment is not received by CCC within the period specified in the 
sales contract, interest will be assessed by CCC. If a buyer fails to 
make arrangements for payment according to the provisions of the 
contract, CCC retains the right to terminate the sales contract. If CCC 
terminates the sales contract for default in whole or in part, CCC may 
offer the commodity for sale and the original party will be liable to 
CCC for any losses incurred and damages sustained as a result of the 
party's failure to timely remit payment for the commodity.



PART 1404_ASSIGNMENT OF PAYMENTS--Table of Contents



Sec.
1404.1 General statement.
1404.2 Definitions.
1404.3 Payments which may be assigned.
1404.4 Execution of assignment form.
1404.5 [Reserved]
1404.6 Payment to the assignee.
1404.7 Misrepresentations.
1404.8 Liability of the Secretary or disbursing agents.
1404.9 OMB Control Numbers assigned pursuant to the Paperwork Reduction 
          Act.

    Authority: 15 U.S.C. 714b and 714c; 16 U.S.C. 590h(g).

    Source: 54 FR 52883, Dec. 22, 1989, unless otherwise noted.



Sec.1404.1  General statement.

    This part sets forth the manner in which a person may assign a cash 
payment which is made by the Farm Service Agency (FSA) or the Commodity 
Credit Corporation (CCC). Such payments may only be assigned in the 
manner set forth in this part.



Sec.1404.2  Definitions.

    (a)(1) Assignee means any person, including any agency of the 
Federal Government, to whom an assignment of an FSA or CCC payment is 
made in accordance with this part.
    (2) Assignor means any person who is the recipient of a payment from 
FSA or CCC who assigns the payment to another person in accordance with 
this part.
    (3) Payment means a cash payment and excludes
    (i) Any payment made in accordance with part 1470 of this title;
    (i) Price support loan or purchase agreement proceeds; and
    (iii) Any payments made in accordance with parts 1487, 1488, 1491, 
1492, and 1493 of this title.
    (b) The terms defined in parts 719, 1413, 1421 and 1427 shall also 
be applicable to this part.



Sec.1404.3  Payments which may be assigned.

    Except as otherwise provided in this part or in individual program 
regulations, contracts and agreements entered into by FSA or CCC, any 
payment due a person from FSA or CCC may be assigned.

[54 FR 52883, Dec. 22, 1989, as amended at 56 FR 361, Jan. 4, 1991]



Sec.1404.4  Execution of assignment form.

    (a)(1) The assignment of any FSA or CCC payment must be made by the 
execution of Form CCC-36 or Forms CCC-251 and CCC-252. Form CCC-36 is 
applicable to payments made under programs administered in accordance 
with 7 CFR parts 701, 704, 1413, 1430, 1468, 1472 and 1475. Such form is 
also applicable

[[Page 448]]

to any other program which is administered by a county ASC committee. 
Forms CCC-251 and 252 are applicable to all other CCC or FSA programs 
and contracts.
    (2)(i) To be recognized by FSA or CCC, Form CCC-36 must be filed in 
the county FSA office prior to the time the county committee approves 
the making of the payment covered by the assignment. To be recognized by 
FSA or CCC, Forms CCC-251 and 252 must be filed with the FSA or CCC 
office from which the payment will be made prior to the making of the 
payment.
    (ii) Form CCC-36 or Forms CCC-251 and 252 must be signed by both the 
assignor and the assignee.
    (3) The assignor and the assignee shall promptly notify the 
appropriate FSA or CCC office of any change affecting the assignment.
    (b) [Reserved]

[54 FR 52883, Dec. 22, 1989, as amended at 56 FR 361, Jan. 4, 1991]



Sec.1404.5  [Reserved]



Sec.1404.6  Payment to the assignee.

    (a) The assignee shall be paid the smaller of the amount specified 
on Form CCC-36 or CCC-251 or the amount of the payment earned under the 
program or contract covered by the assignment. Any indebtedness owed by 
the assignor to CCC, FSA, or any other agency of the United States shall 
be subject to offset.
    (b) Any indebtedness owed by the assignor to CCC or FSA shall be 
offset from any payment which is owed by CCC or FSA without regard to 
the date of filing of a Form CCC-36 with the applicable FSA or CCC 
office. Except as provided in paragraph (d) of this section, any 
indebtedness owed by the assignor to CCC or FSA shall be offset from any 
payment which is owed by CCC or FSA if such indebtedness was entered on 
the debt record of the applicable FSA or CCC office prior to the date of 
the filing of Forms CCC-251 and 252 with the applicable FSA or CCC 
office.
    (c) Any indebtedness owed by the assignor to any agency of the 
United States other than CCC or FSA which was entered on the debt record 
of the applicable FSA or CCC office prior to the date of filing of the 
Form CCC-36 or Forms CCC-251 and 252 with such office shall be offset 
prior to the making of any payment to the assignee.
    (d) Any indebtedness arising under a contract between the assignor 
and FSA or CCC which is the subject of the assignment shall be offset 
from the payment prior to the making of any payment to the assignee 
under such contract without regard to the date of the filing of Form 
CCC-36 or Forms CCC-251 and 252 with the appropriate FSA or CCC office.



Sec.1404.7  Misrepresentations.

    If FSA or CCC has reason to believe that any material 
misrepresentation was made by the assignor or the assignee in executing 
Forms CCC-36, CCC-251 or CCC-252, FSA or CCC shall give notice thereof 
to the assignor and the assignee. If, after investigation and 
opportunity for the assignor and assignee to be heard, FSA or CCC finds 
that any material misrepresentation was in fact made, FSA or CCC shall 
notify the assignor and the assignee of such finding, and void such 
assignment, and insofar as concerns FSA, CCC or any other agency of the 
United States, the assignment shall be of no effect.



Sec.1404.8  Liability of the Secretary or disbursing agents.

    Neither the United States, the CCC, the Secretary nor any disbursing 
agent shall be liable in any suit if payment is made to the assignor 
without regard to the existence of any assignment, and nothing contained 
herein shall be construed to authorize any suit against the United 
States, the CCC, the Secretary or any disbursing agent if payment is not 
made to the assignee, or if payment is made to only one of several 
assignees.



Sec.1404.9  OMB Control Numbers assigned pursuant to the Paperwork 
Reduction Act.

    The information collection requirements contained in this part have 
been approved by the Office of Management and Budget under the 
provisions of 44 U.S.C. 35 and have been assigned OMB control number 
0560-0004.

[[Page 449]]



PART 1405_LOANS, PURCHASES, AND OTHER OPERATIONS--Table of Contents



Sec.
1405.1 Interest.
1405.2 Basic rule of fractions.
1405.3 Effect of changes in regulations.
1405.4 Delegations of authority.
1405.5 Notice and comment.
1405.6 Crop insurance requirement.
1405.7 Uruguay Round Agreements Act.
1405.8 Disqualification due to crop insurance violation.
1405.9 Commodity assessments.

    Authority: 7 U.S.C. 1515; 7 U.S.C. 7416a; 7 U.S.C. 7991(e); 15 
U.S.C. 714b and 714c.

    Source: 61 FR 37575, July 18, 1996, unless otherwise noted.



Sec.1405.1  Interest.

    (a) Except as may otherwise be determined by CCC as provided in 
individual program regulations, program contracts or such other means as 
deemed appropriate by CCC the rate of interest that is applicable to CCC 
loans shall be equal to the rate of interest charged by the U.S. 
Treasury for funds borrowed by CCC on the date the loan is disbursed by 
CCC, plus 1 percent. This rate of interest shall be in effect until the 
earlier of the maturity of the loan or the next January 1.
    (b) The rate of interest applicable to all CCC loans that are 
outstanding as of January 1 of any year shall be adjusted as of such 
date to equal the rate of interest charged by the U.S. Treasury for 
funds borrowed by CCC on such date, plus 1 percent. This rate shall be 
in effect until the earlier of the maturity of the loan or the next 
January 1. The rate of interest applicable to CCC loans as of January 1 
of any year shall be announced by CCC by press release or other means.



Sec.1405.2  Basic rule of fractions.

    Fractions shall be rounded in accordance with the provisions of 7 
CFR part 718.



Sec.1405.3  Effect of changes in regulations.

    Unless otherwise indicated, the regulations in effect in this 
chapter as of April 4, 1996, shall continue to apply to the 1991 through 
1995 crops of agricultural commodities, to milk produced on or before 
May 1, 1996, and to contracts entered into prior to any amendments to 
this chapter after that date.



Sec.1405.4  Delegations of authority.

    The delegations of authority relating to the CCC programs and 
activities are set forth in the by-laws of CCC and in dockets approved 
by the CCC Board of Directors. Copies of the By-laws and the dockets may 
be obtained from the Secretary of CCC.



Sec.1405.5  Notice and comment.

    The level of loans, purchases and payments made in accordance with 
the programs set forth in this chapter shall be determined without 
regard to the notice and comment provisions of 5 U.S.C. 553.



Sec.1405.6  Crop insurance requirement.

    (a) To be eligible for any benefits or payments under 7 CFR part 
1410 the producer must obtain at least the catastrophic level of 
insurance for each crop of economic significance in which the producer 
has an interest or provide a written waiver to the Secretary that waives 
any eligibility for emergency crop loss assistance in connection with 
the crop, if insurance is available in the county for the crop. In 
meeting this requirement, the producer may:
    (1) Obtain at least the catastrophic level of crop insurance in all 
counties for each crop of economic significance in which the producer 
has an interest;
    (2) Obtain at least the catastrophic level of crop insurance for 
some, but not all, crops of economic significance for which the producer 
has an interest, and sign a waiver; or
    (3) Sign a waiver that waives any eligibility for crop loss 
assistance in connection with the producer's crop.
    (b) Crop of economic significance. The term ``crop of economic 
significance'' means a crop that has contributed in the previous year, 
or is expected to contribute in the current crop year, 10 percent or 
more of the total expected value of all crops grown by the producer. 
However, notwithstanding the preceding sentence, if the total expected 
liability under the catastrophic risk protection endorsement is equal to 
or less than the administrative fee required for the crop, such crop 
will not

[[Page 450]]

be considered a crop of economic significance.

[61 FR 37575, July 18, 1996, as amended at 68 FR 32337, May 30, 2003]



Sec.1405.7  Uruguay Round Agreements Act.

    In the event the outlays by the United States for domestic support 
measures will exceed, in any required reporting period, the allowable 
levels under the Uruguay Round Agreements (as defined in section 2 of 
the Uruguay Round Agreements Act), CCC will, as determined by the 
Secretary of Agriculture, reduce the amount of payments and benefits to 
be made in any such reporting period, and/or collect a refund of 
payments or benefits previously made with respect to such reporting 
period, under parts 1412, 1413, 1421, 1427, 1430, 1434 and 1435 of this 
chapter in order to ensure that the level of domestic support provided 
by the United States complies with the commitments of the United States 
in the Uruguay Round Agreements.

[67 FR 64751, Oct. 21, 2002]



Sec.1405.8  Disqualification due to crop insurance violation.

    (a) Section 515(h) of the Federal Crop Insurance Act (FCIA) provides 
that a person who willfully and intentionally provides any false or 
inaccurate information to the Federal Crop Insurance Corporation (FCIC) 
or to an approved insurance provider with respect to a policy or plan of 
FCIC insurance after notice and an opportunity for a hearing on the 
record, will be subject to one or more of the sanctions described in 
section 515(h)(3). In section 515(h)(3), the FCIA specifies that in the 
case of a violation committed by a producer, the producer may be 
disqualified for a period of up to 5 years from receiving any monetary 
or non-monetary benefit under a number of programs. The list includes, 
but is not limited to, benefits under:
    (1) The FCIA.
    (2) The Agricultural Market Transition Act (7 U.S.C. 7201 et seq.), 
including the Noninsured Crop Disaster Assistance Program under section 
196 of that Act (7 U.S.C. 7333).
    (3) The Agricultural Act of 1949 (7 U.S.C. 1421 et seq.).
    (4) The Commodity Credit Corporation Charter Act (15 U.S.C. 714 et 
seq).
    (5) The Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et seq.).
    (6) Title XII of the Food Security Act of 1985 (16 U.S.C. 3801 et 
seq.).
    (7) The Consolidated Farm and Rural Development Act (7 U.S.C. 1921 
et seq.).
    (8) Any law that provides assistance to a producer of an 
agricultural commodity affected by a crop loss or a decline in prices of 
agricultural commodities.
    (b) Violation determinations are made by FCIC. However, upon notice 
from FCIC to CCC that a producer has been found to have committed a 
violation to which paragraph (a) of this section applies, that person 
shall be considered ineligible for payments under the programs specified 
in paragraph (a) of this section that are funded by CCC for the same 
period of time for which, as determined by FCIC, the producer will be 
ineligible for crop insurance benefits of the kind referred to in 
paragraph (a)(1) of this section. Appeals of the determination of 
ineligibility will be administered under the rules set by FCIC.
    (c) Other sanctions may also apply.

[68 FR 39448, July 2, 2003, as amended at 72 FR 63361, Nov. 8, 2007]



Sec.1405.9  Commodity assessments.

    (a) CCC will deduct from the proceeds of a marketing assistance loan 
an amount equal to the amount of an assessment otherwise required to be 
remitted to a State agency under a State statute by the producer of the 
commodity pledged as collateral for such loan or by the first purchaser 
of such commodity subject to the requirements of paragraph (b) of this 
section.
    (1) The assessment will be collected in one of the following ways, 
as requested by the State, but not both:
    (i) When the proceeds of the loan are disbursed; or
    (ii) When the commodity pledged as collateral for the loan is 
forfeited to CCC, in which case CCC will collect from the producer the 
amount of the assessment submitted by CCC to the State.

[[Page 451]]

    (2) CCC will deduct from the proceeds of a marketing assistance loan 
an amount equal to the amount of an assessment otherwise authorized to 
be remitted to a federally authorized entity under a Federal statute by 
the producer of the commodity pledged as collateral for such loan or the 
first purchaser of such commodity in the manner agreed to by CCC and the 
entity to whom the Secretary of Agriculture has authorized to collect 
such assessments.
    (b) CCC will collect commodity assessments authorized under a State 
statute when:
    (1) The State entity has:
    (i) Requested that the assessment be collected;
    (ii) Identified whether the assessment is to be collected at the 
time the loan proceeds are disbursed or at the time the commodity is 
forfeited to CCC;
    (iii) Identified the person who may enter into an agreement with CCC 
that sets forth the obligations of the State and CCC with respect to the 
collection of the assessment; and
    (iv) Provided an opinion from the Office of the Attorney General to 
CCC that concludes the person signing the agreement may obligate the 
State to comply with the agreement and the provisions of Public Law 108-
470 have been met.
    (2) The agreement described in paragraph (c) of this section has 
been executed by the appropriate State official and CCC.
    (c) CCC will enter into an agreement with an authorized State 
official to collect commodity assessments when the actions set forth in 
paragraphs (b)(1) and (2) of this section have been completed. Such 
agreement will contain the obligations and responsibilities of the State 
and CCC. All such agreements will include provisions that provide:
    (1) The State will indemnify CCC for any costs incurred in the 
collection of the assessment including costs incurred with respect to 
resolution of disputes arising from the requested collection of the 
assessment but not for administrative costs incurred by CCC in the 
collection of the assessment;
    (2) The State, in cases where an assessment has been collected two 
or more times with respect to the same quantity of the commodity subject 
to the assessment, will refund the amount of the excess collection to 
the producer.
    (3) The agreement may be terminated by either party upon 30 days 
notice.
    (4) The State, in cases where the marketing assistance loan is made 
by a cooperative marketing association or a designated marketing 
association approved by CCC, or any other similar entity that is 
approved by CCC, to obtain such a loan on behalf of its members may 
enter into individual arrangements with such entity to facilitate the 
collection of the assessment with the approval of CCC.

[70 FR 52285, Sept. 2, 2005, as amended at 75 FR 70812, Nov. 19, 2010]



PART 1407_DEBARMENT AND SUSPENSION--Table of Contents



Sec.
1407.1 Purpose.
1407.2 Nonprocurement debarment and suspension.
1407.3 Procurement debarment and suspension.

    Authority: 15 U.S.C. 714b.

    Source: 64 FR 67471, Dec. 2, 1999, unless otherwise noted.



Sec.1407.1  Purpose.

    This part specifies the policies that CCC will follow in taking 
action to debar or suspend individuals or firms from participation in 
Federal nonprocurement and procurement activities.



Sec.1407.2  Nonprocurement debarment and suspension.

    (a) CCC will proceed under 2 CFR parts 180 and 417 when taking 
action to debar or suspend participants or potential participants in 
CCC's nonprocurement activities.
    (b) The debarring and suspending official for nonprocurement actions 
taken by CCC shall be as follows: For actions initiated on behalf of CCC 
by the Foreign Agricultural Service (FAS), the Food and Nutrition 
Service (FNS), or the Agricultural Marketing Service (AMS), the 
debarring and suspending official will be the Vice President, CCC, who 
is the Administrator

[[Page 452]]

FAS, FNS, or AMS, respectively. For actions initiated on behalf of CCC 
by the Natural Resources Conservation Service (NRCS), the official will 
be the Vice President, CCC, who is the Chief, NRCS.

[64 FR 67471, Dec. 2, 1999, as amended at 79 FR 75997, Dec. 19, 2014]



Sec.1407.3  Procurement debarment and suspension.

    CCC will proceed under this part when taking action to debar or 
suspend contractors with CCC or participants or potential participants 
in CCC's procurement activities. CCC will apply the provisions of 48 CFR 
part 409, subpart 409.4, in such actions, with the exception that the 
debarring and suspending official will be the Executive Vice President, 
CCC, or a designee.



PART 1409_TRADE MITIGATION PROGRAM--Table of Contents



            Subpart A_2018 Market Facilitation Program (MFP)

Sec.
1409.1 Applicability.
1409.2 Definitions.
1409.3 Producer eligibility requirements.
1409.4 Time and method of application.
1409.5 Calculation of payments.
1409.6 Eligibility subject to verification.
1409.7 Miscellaneous provisions.

            Subpart B_2019 Market Facilitation Program (MFP)

1409.101 Applicability.
1409.102 Definitions.
1409.103 Producer eligibility requirements.
1409.104 Method of application.
1409.105 Calculation of payments.
1409.106 Eligibility subject to verification.
1409.107 Miscellaneous provisions.

     Subpart C_Expanded Domestic Commodity Donation Program (EDCDP)

1409.201 Applicability.
1409.202 Definitions.
1409.203 Application process.
1409.204 Award process.
1409.205 Execution of agreement.
1409.206 Eligibility subject to verification.
1409.207 Miscellaneous provisions.

    Authority: 15 U.S.C. 714b and 714c.

    Source: 83 FR 44176, Aug. 30, 2018, unless otherwise noted.



            Subpart A_2018 Market Facilitation Program (MFP)

    Source: Redesignated at 84 FR 36461, July 29, 2019, unless otherwise 
noted.



Sec.1409.1  Applicability.

    This subpart specifies the eligibility requirements and payment 
calculations for the Market Facilitation Program (MFP) for 2018 crops. 
MFP will provide payments with respect to commodities which have been 
significantly impacted by actions of foreign governments resulting in 
the loss of traditional exports. The determination of eligible 
commodities and any specific program requirements for a commodity will 
be specified in a notice of funding availability published by CCC in the 
Federal Register.

[83 FR 44176, Aug. 30, 2018, as amended at 84 FR 36461, July 29, 2019]



Sec.1409.2  Definitions.

    The following definitions apply to MFP. The definitions in part 718 
of this title and parts 1400, and 1421 of this section apply, except 
where they conflict with the definitions in this section.
    Application means the MFP application form.
    Commodity means an agricultural commodity produced in the United 
States intended to be marketed for commercial production that has been 
designated as eligible for payments under MFP.
    Crop means the harvested production of a commodity.
    Crop year means:
    (1) For insurable crops, the crop year as defined according to the 
applicable crop insurance policy; and
    (2) For NAP covered crops, the crop year as provided in part 1437 of 
this chapter.
    NOFA means a notice of funds availability published by CCC in the 
Federal Register that specifies terms and conditions of MFP that are 
applicable to a specific commodity.
    Producer means a livestock producer, dairy producer, or a producer 
of a crop as defined in Sec.718.2 of this title.

[[Page 453]]



Sec.1409.3  Producer eligibility requirements.

    (a) To be eligible for an MFP payment, a producer must:
    (1) Meet all of the requirements in this part and the NOFA that is 
applicable to the commodity;
    (2) Be a:
    (i) Citizen of the United States;
    (ii) Resident alien, which for purposes of this part means ``lawful 
alien'' as defined in part 1400 of this chapter;
    (iii) Partnership of citizens of the United States; or
    (iv) Corporation, limited liability corporation, or other 
organizational structure organized under State law;
    (3) Have an ownership interest in the commodity.
    (b) For eligible crops, a producer's share in the crop must be 
reported for the applicable crop year on form FSA-578, Report of 
Acreage, on file in the FSA county office as of the acreage reporting 
deadline, or no later than the date specified in the relevant NOFA. For 
crops that are covered commodities under Sec.1412.3 of this chapter, 
each applicant must be a person or legal entity who was actively engaged 
in farming, as provided in part 1400 of this chapter, in the crop year 
for which the crop is included in MFP.
    (c) For livestock and dairy, a producer must have had an ownership 
interest in livestock or dairy production during the applicable time 
period established by CCC in the applicable NOFA.



Sec.1409.4  Method of application.

    (a) To apply for an MFP payment, the producer must submit an MFP 
application on the form designated by CCC to an FSA county office.
    (b) 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 the producer had ownership in the 
commodity as claimed, the application for that commodity will be 
disapproved.
    (c) A request for an MFP payment will not be approved by CCC until 
all the applicable eligibility provisions have been met and the producer 
has submitted all required forms and supporting documentation. In 
addition to the completed application form, if the following forms and 
documentation are not on file in the FSA county office or are not 
current for the applicable crop year of the crop or applicable year for 
the commodity for which MFP has been announced as available, the 
producer must also submit:
    (1) A farm operating plan for an individual or legal entity as 
provided in part 1400 of this chapter;
    (2) An average adjusted gross income statement for the applicable 
year entity as provided in part 1400 of this chapter;
    (3) A highly erodible land conservation (sometimes referred to 
elsewhere as HELC) and wetland conservation certification as provided in 
part 12 of this title;
    (4) For crops, an acreage report for the applicable crop year as 
provided in part 718 of this title; and
    (5) Verifiable records that substantiate the amount of production as 
specified in the relevant NOFA.



Sec.1409.5  Calculation of payments.

    The payment under this rule will be calculated by multiplying fifty 
percent of the total production of the commodity times the MFP payment 
rate for that commodity that is in effect when the payment is made times 
the producer's eligible share of the commodity. On or about December 3, 
2018, CCC may announce a second payment rate, if applicable, that will 
apply to the remaining 50 percent of the producer's production for the 
selected commodity.



Sec.1409.6  Eligibility subject to verification.

    (a) Producers who are approved for participation in MFP are required 
to retain documentation in support of their application for 3 years 
after the date of approval.
    (b) Producers must submit documentation to CCC as requested to 
substantiate an application.
    (c) Producers receiving payments or any other person who furnishes 
such information to CCC must permit authorized representatives of USDA 
or the General Accounting Office during

[[Page 454]]

regular business hours to inspect, examine, and to allow such 
representatives 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.1409.7  Miscellaneous provisions.

    (a) If an MFP payment resulted from erroneous information provided 
by a producer, or any person acting on their behalf, the payment will be 
recalculated and the producer must refund any excess payment to CCC with 
interest calculated from the date of the disbursement of the payment.
    (b) The refund of any payment to CCC is in addition to liability 
under 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.
    (c) The regulations in parts 11 and 780 of this title apply to 
determinations under this part.
    (d) Any payment 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 from the sale of the commodity.
    (e) The $900,000 average AGI limitation provisions in part 1400 of 
this chapter relating to limits on payments for persons or legal 
entities, excluding joint ventures and general partnerships, apply to 
each applicant for MFP. The average AGI will be calculated for a person 
or legal entity based on the 3 complete tax years that precede the year 
for which the payment is made (for the 2018 crop year or marketing year 
for livestock and dairy the tax years are 2014, 2015, and 2016).
    (f) No person or legal entity, excluding a joint venture or general 
partnership, as determined by the rules in part 1400 of this chapter may 
receive, directly or indirectly, more than $125,000 in payments as 
specified in the relevant NOFA.
    (g) The direct attribution provisions in part 1400 of this chapter 
apply to MFP. 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. 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 an MFP payment, then the MFP 
payment to the actual payee will be reduced commensurately with that 
interest.
    (h) For the purposes of the effect of lien on eligibility for 
Federal programs (28 U.S.C. 3201(e)), CCC waives the restriction on 
receipt of funds under MFP but only as to beneficiaries who, as a 
condition of such waiver, agree to apply the MFP payments to reduce the 
amount of the judgment lien.
    (i) The provisions of Sec.718.304 of this title, ``Failure to 
Fully Comply,'' do not apply to this part.



            Subpart B_2019 Market Facilitation Program (MFP)

    Source: 84 FR 36461, July 29, 2019, unless otherwise noted.



Sec.1409.101  Applicability.

    This subpart specifies the eligibility requirements and payment 
calculations for the MFP for 2019 agricultural commodities. MFP will 
provide payments with respect to agricultural commodities that have been 
impacted by trade actions of foreign governments resulting in the loss 
of exports. Any specific program requirements for a commodity will be 
specified in a notice of funding availability published by the Commodity 
Credit Corporation (CCC) in the Federal Register.



Sec.1409.102  Definitions.

    The following definitions apply to MFP. The definitions in 7 CFR 
part 718 and parts 1400 and 1421 of this chapter apply, except where 
they conflict with the definitions in this section.
    Application means the MFP application form.
    Commodity means an agricultural commodity produced in the United 
States intended to be marketed for

[[Page 455]]

commercial purposes that has been designated as eligible for payments 
under MFP.
    County payment rate means the per acre value determined by: 
Historical acres and yields of non-specialty crops planted in that 
county and the amount of damage calculated due to trade actions of 
foreign governments resulting in the loss of exports represented as a 
per unit (for example, bushel or pound).
    Crop means the non-specialty crops and specialty crops.
    Crop year means:
    (1) For insurable crops, the crop year as defined according to the 
applicable crop insurance policy; and
    (2) For NAP covered crops, the crop year as provided in part 1437 of 
this chapter.
    MFP means the Market Facilitation Program funded by CCC and 
administered by the Farm Service Agency (FSA).
    NOFA means a notice of funds availability published by CCC in the 
Federal Register that specifies terms and conditions of MFP that are 
applicable to a specific commodity.
    Non-specialty crop means any of the following crops: Alfalfa hay, 
barley, canola, corn, crambe, dried beans, dry peas, extra long staple 
cotton, flaxseed, lentils, long grain and medium grain rice, millet, 
mustard seed, oats, peanuts, rapeseed, rye, safflower, sesame seed, 
small and large chickpeas, sorghum, soybeans, sunflower seed, temperate 
japonica rice, triticale, upland cotton, and wheat. If warranted, 
additional non-specialty crops may be included in MFP in which case the 
availability of assistance will be specified in a NOFA published in the 
Federal Register.
    Producer means a livestock producer, dairy producer, or a producer 
of a crop as defined in 7 CFR 718.2.
    Specialty crops means any of the following crops: Almonds, 
cranberries, cultivated ginseng, fresh grapes, fresh sweet cherries, 
hazelnuts, macadamia nuts, pecans, pistachios, and walnuts. If 
warranted, additional specialty crops may be included in MFP in which 
case the availability of assistance will be specified in a NOFA 
published in the Federal Register.



Sec.1409.103  Producer eligibility requirements.

    (a) To be eligible for an MFP payment, a producer must meet all of 
the requirements in this part and the NOFA that is applicable to the 
commodity.
    (b) A producer's share in the crop must be reported for the 2019 
crop year on form FSA-578, Report of Acreage, submitted to FSA, and must 
be on file in the FSA county office by the applicable reporting dates, 
or no later than the date specified in the applicable NOFA.
    (c) For non-specialty crops, except as determined by CCC, each 
applicant must be a person or legal entity who was actively engaged in 
farming, as provided in part 1400 of this chapter.
    (d) For livestock and dairy, a producer must have had an ownership 
interest in livestock or dairy production during the applicable time 
period established by CCC in the applicable NOFA.



Sec.1409.104  Method of application.

    (a) To apply for a payment, the producer must submit an MFP 
application on the form designated by CCC to an FSA county office.
    (b) In the event that the producer does not submit documentation in 
response to any request of CCC to support the producer's application or 
documentation furnished does not show the producer had ownership in the 
commodity as claimed, the application for that commodity will be 
disapproved.
    (c) A request for a payment will not be approved by CCC until all 
the applicable eligibility provisions have been met and the producer has 
submitted all required forms and supporting documentation. In addition 
to the completed application form, if the following forms and 
documentation are not on file in the FSA county office or are not 
current for the 2019 crop year of the crop or applicable year for the 
commodity for which MFP has been announced as available, the producer 
must also submit:
    (1) A farm operating plan for an individual or legal entity as 
provided in part 1400 of this chapter;

[[Page 456]]

    (2) An average adjusted gross income statement for the applicable 
year entity as provided in part 1400 of this chapter;
    (3) A highly erodible land conservation and wetland conservation 
certification as provided in part 12 of this title;
    (4) For non-specialty and specialty crops, an acreage report for the 
applicable crop year as provided in 7 CFR part 718; and
    (5) For dairy and livestock, verifiable records that substantiate 
the amount of production as specified in the applicable NOFA.



Sec.1409.105  Calculation of payments.

    (a) For non-specialty crops, the payment under this subpart will be 
calculated by multiplying the county payment rate by the 2019 reported 
planted acreage for a farm not to exceed the sum of planted and 
prevented planted acres of non-specialty crops on the farm in 2018, and 
available acreage from 2018 expired Conservation Reserve Program 
contracts. Producers' payments may be adjusted as determined by CCC and 
as detailed in the applicable NOFA.
    (b) For non-specialty prevented planted crops followed by a CCC 
approved cover crop, the payment rate will be $15 per acre.
    (c) For dairy and livestock, the payment under this subpart will be 
calculated by multiplying the total production of the commodity times 
the producer's eligible share of the commodity times the payment rate 
for that commodity, as provided for in a subsequent NOFA.
    (d) For specialty crops, the payment under this subpart will be 
calculated by multiplying 2019 bearing acres of the specialty crop by 
the payment rate for the relevant specialty crop.
    (e) For MFP payments:
    (1) The first payment will be up to 50 percent of the total 
calculated payment.
    (2) CCC will determine if any further payments are warranted. If CCC 
determines that a second payment is warranted, it will be up to 75 
percent of the total calculated payment less the amount received in the 
first payment and the second payment period will begin in November 2019.
    (3) If CCC determines that a final payment is warranted, it will be 
for up to the remaining amount of the total calculated payment, unless 
otherwise adjusted by CCC, and the last payment period will begin in 
January 2020.



Sec.1409.106  Eligibility subject to verification.

    (a) Producers approved for participation in MFP are required to 
retain documentation in support of their application for 3 years after 
the date of approval.
    (b) Producers must submit documentation to CCC as requested to 
substantiate an application.
    (c) Producers receiving payments or any other person who furnishes 
such information to CCC must permit authorized representatives of USDA 
or the General Accounting Office during regular business hours to 
inspect, examine, and to allow such representatives 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.1409.107  Miscellaneous provisions.

    (a) If an MFP payment resulted from erroneous information provided 
by a producer, or any person acting on their behalf, the payment will be 
recalculated and the producer must refund any excess payment to CCC with 
interest calculated from the date of the disbursement of the payment.
    (b) The refund of any payment to CCC is in addition to liability 
under 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.
    (c) The regulations in 7 CFR parts 11 and 780 part 1400 of this 
chapter apply to determinations under this subpart.
    (d) Any payment 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 from the sale of the commodity.
    (e) The $900,000 average AGI limitation provisions in part 1400 of 
this chapter relating to limits on payments for persons or legal 
entities, excluding

[[Page 457]]

joint ventures and general partnerships, apply to each applicant for MFP 
unless at least 75 percent of the person or legal entity's average AGI 
is derived from farming, ranching or forestry related activities. If at 
least 75 percent of the person or legal entity's average AGI is derived 
from farming, ranching, or forestry related activities, the person or 
legal entity, other than a joint venture or general partnership, is 
eligible to receive 2019 MFP payments up to the $250,000 payment 
limitation specified in the applicable NOFA. The average AGI will be 
calculated for a person or legal entity based on the 3 complete tax 
years that precede the year for which the payment is made (for the 2019 
crop year or marketing year for livestock and dairy the tax years are 
2015, 2016, and 2017).
    (f) No person or legal entity, excluding a joint venture or general 
partnership, as determined by the rules in part 1400 of this chapter may 
receive, directly or indirectly, more than $250,000 in payments as 
specified in the applicable NOFA.
    (g) The direct attribution provisions in part 1400 of this chapter 
apply to MFP. 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. 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 an MFP payment, then the MFP 
payment to the actual payee will be reduced commensurately with that 
interest.
    (h) For the purposes of the effect of lien on eligibility for 
Federal programs (28 U.S.C. 3201(e)), CCC waives the restriction on 
receipt of funds under MFP but only as to beneficiaries who, as a 
condition of such waiver, agree to apply the MFP payments to reduce the 
amount of the judgment lien.
    (i) The provisions of 7 CFR 718.304, ``Failure to Fully Comply,'' do 
not apply to this part.



     Subpart C_Expanded Domestic Commodity Donation Program (EDCDP)

    Source: 84 FR 36463, July 29, 2019, unless otherwise noted.



Sec.1409.201  Applicability.

    (a) This subpart specifies the process for eligible non-profit 
entities to receive commodities from the Commodity Credit Corporation 
(CCC) that CCC has acquired in response to trade actions taken by 
foreign governments resulting in the loss of exports. The types and 
quantities of commodities made available under this subpart, if any, is 
dependent upon the ability of CCC to use such commodities through 
existing domestic feeding programs administered by the Food and 
Nutrition Service (FNS). In the event that these domestic feeding 
programs are unable to use the commodities acquired by CCC, EDCDP is 
intended to provide the remaining commodities to low income individuals, 
primarily through eligible entities not participating in existing FNS 
food distribution programs.
    (b) CCC, as specified in the applicable Notice of Commodity 
Availability, will use grants and cooperative agreements to conduct the 
Expanded Domestic Commodity Donation Program (EDCDP).
    (c) The Food and Nutrition Service and the Agricultural Marketing 
Service will administer the EDCDP on behalf of CCC.



Sec.1409.202  Definitions.

    Commodity means an agricultural commodity produced in the United 
States intended to be marketed for commercial purposes.
    Eligible entity means an incorporated nonprofit entity that is 
operating for religious, charitable, or educational purposes, and does 
not provide net earnings to or operate in any other manner that inures 
to the benefit of any officer, employee, or shareholder of the entity as 
defined in section 22 of the Child Nutrition Act of 1966 (42

[[Page 458]]

U.S.C. 1791) and meets the requirements of Sec.1409.203.
    Notice of Commodity Availability (NOCA) means the notice published 
by CCC specifying: The types of commodities available for use under this 
subpart; the terms and conditions that are in addition to the 
requirements of this subpart regarding approved uses of such 
commodities; the requirements a non-profit entity must meet to be an 
eligible entity; and whether funds will be made available by CCC 
regarding storage, handling, transportation and other administrative 
costs.



Sec.1409.203  Application process.

    (a) A non-profit entity that seeks approval for participation in 
EDCDP, as specified in the applicable NOCA must submit to the U.S. 
Department of Agriculture office identified in the NOCA:
    (1) The application form;
    (2) A copy of the entity's 501(c)(3) tax exempt status letter from 
the Internal Revenue Service (IRS);
    (3) A copy of the entity's most recent IRS Form-990; and
    (4) Any other supporting documents specified in the NOCA.
    (b) After CCC has determined that the entity has met all eligibility 
requirements, the eligible entity may be considered for participation in 
EDCDP. After approval by CCC, the eligible entity must execute the 
applicable grant or cooperative agreement presented by CCC.



Sec.1409.204  Award process.

    (a) CCC intends to make awards to responsive applicants able to 
fully meet the requirements of the program subject to the priority 
criteria outlined below.
    (b) To the extent that it is unable to make awards to all fully 
qualified applicants due to the limited quantity of commodities that 
will be available under this subpart, CCC reserves the right to both 
make awards on a prorated basis and to prioritize awards on the criteria 
listed below. CCC will consider the following factors in accepting 
offers for participation:
    (1) The extent to which an eligible entity is already a participant 
in existing FNS administered programs with priority placed upon those 
entities that are not participating in such programs;
    (2) The ability of the eligible entity to receive, store, and 
distribute at least 20,000 pounds of food per shipment and any other 
requirements as outlined in the NOCA, as determined by CCC, to 
successfully implement the proposed program activity;
    (3) The eligible entity's operational and financial capability to 
receive and distribute commodities provided by CCC under this subpart;
    (4) The scope of the proposed program activity in terms of its 
intended use of such commodities in low income areas, as determined by 
CCC using United States Census Bureau data and information available 
from federal means tested programs; and
    (5) Any other criteria specified in the NOCA.
    (c) An eligible entity may submit only one program proposal in 
response to a NOCA for the same geographic area.



Sec.1409.205  Execution of agreement.

    CCC will enter into a grant or cooperative agreement with an 
eligible entity regarding the entity's approved program proposal. The 
eligible entity may not assign or delegate any required action or 
responsibility of the entity except as provided in the applicable grant 
or cooperative agreement. Any modification of the grant or cooperative 
agreement must be made with the written approval of CCC.



Sec.1409.206  Eligibility subject to verification.

    (a) Eligible entities participating in EDCDP are required to retain 
documentation relating to the EDCDP for 3 years after the date of 
approval of the grant or cooperative agreement. However, records 
pertaining to claims or audits that remain unresolved in this period of 
time must be retained until such actions have been resolved.
    (b) Eligible entities participating in EDCDP must permit authorized 
representatives of the U.S. Department of Agriculture or the General 
Accounting Office during regular business hours to inspect, examine, and 
to allow such representatives to make copies of such books, records, or 
other items for the

[[Page 459]]

purpose of confirming the accuracy of the information provided by such 
entity.



Sec.1409.207  Miscellaneous provisions.

    (a) An eligible entity must comply with the provisions of:
    (1) 2 CFR Chapters I and II (Office of Management and Budget 
Government-wide Guidance for Grants and Agreements);
    (2) 2 CFR parts 200 and 400 (Uniform Administrative Requirements, 
Cost Principles, and Audit Requirements for Federal Awards);
    (3) 2 CFR part 415 (General Program Administrative Regulations); and
    (4) 2 CFR part 418 (New Restrictions on Lobbying).
    (b) An eligible entity that does not comply with the terms of the 
applicable grant or cooperative agreement is subject to the provisions 
of: 18 U.S.C. 286, 287, 371, 641, 651, 1001, and 1014; 15 U.S.C. 714; 
and 31 U.S.C. 3729.

[[Page 460]]



           SUBCHAPTER B_LOANS, PURCHASES, AND OTHER OPERATIONS



    Editorial Note: For Federal Register citations to regulations 
affecting previous program years not included in this volume, see the 
List of CFR Sections Affected, which appears in the Finding Aids section 
of the printed volume and at www.govinfo.gov.



PART 1410_CONSERVATION RESERVE PROGRAM--Table of Contents



Sec.
1410.1 Administration.
1410.2 Definitions.
1410.3 General description.
1410.4 Maximum county acreage.
1410.5 Eligible persons.
1410.6 Eligible land.
1410.7 Duration of contracts.
1410.8 Conservation priority areas.
1410.10 Restoration of wetlands.
1410.11 Farmable Wetlands Program.
1410.13 Grassland enrollments and permitted uses.
1410.20 Obligations of participant.
1410.21 Obligations of the Commodity Credit Corporation.
1410.22 CRP conservation plan.
1410.23 Eligible practices.
1410.30 Signup.
1410.31 Acceptability of offers.
1410.32 CRP contract.
1410.33 Contract modifications.
1410.40 Cost-share payments.
1410.41 Levels and rates for cost-share payments.
1410.42 Annual rental payments.
1410.44 Average adjusted gross income.
1410.45 Incentive payments.
1410.51 Transfer of land.
1410.52 Violations.
1410.53 Executed CRP contract not in conformity with this part.
1410.54 Performance based upon advice or action of the U.S. Department 
          of Agriculture.
1410.55 Access to land under CRP contract.
1410.56 Division of payments and provisions about tenants and 
          sharecroppers.
1410.57 Payments not subject to claims.
1410.58 Assignments.
1410.59 Appeals.
1410.60 Scheme or device.
1410.61 Filing of false claims.
1410.62 Miscellaneous.
1410.63 Permissive uses.
1410.64 Transition Incentives Program.
1410.70 Soil Health and Income Protection Pilot Program.
1410.80 CLEAR 30 Pilot Program.
1410.90 Conservation Reserve Enhancement Program.

    Authority: 15 U.S.C. 714b and 714c; 16 U.S.C. 3801-3847.

    Source: 84 FR 66819, Dec. 6, 2019, unless otherwise noted.



Sec.1410.1  Administration.

    (a) The Conservation Reserve Program (CRP) is administered under the 
general supervision and direction of the Executive Vice President, 
Commodity Credit Corporation (CCC), the Administrator, Farm Service 
Agency (FSA), or a designee, or the Deputy Administrator, FSA; and will 
be carried out by the FSA State and county committees (``State 
committees'' and ``county committees,'' respectively).
    (b) State executive directors, county executive directors, and State 
and county committees do not have the authority to modify or waive any 
of the provisions in this part unless specifically authorized by the 
Deputy Administrator.
    (c) The State committee may take any action authorized or required 
by this part to be taken by the county committee, but which has not been 
taken by such county committee, including, but not limited to:
    (1) Correct or require a county committee to correct any action 
taken by such county committee that is not in accordance with this part; 
or
    (2) Require a county committee to withhold taking any action that is 
not in accordance with this part.
    (d) No delegation of authority herein to a State or county committee 
will preclude the Executive Vice President, CCC, the Administrator, FSA, 
or a designee, or the Deputy Administrator, from determining any 
question arising under this part or from reversing or modifying any 
determination made by a State or county committee.
    (e) Data furnished by producers will be used to determine 
eligibility for CRP benefits. Furnishing the data is

[[Page 461]]

voluntary; however, the failure to provide data could result in CRP 
benefits being withheld or denied.
    (f) Notwithstanding other provisions of this section, the 
suitability of land for permanent vegetative or water cover, factors for 
determining the likelihood of improved water quality, and adequacy of 
the planned practice to achieve desired objectives will be determined by 
the Natural Resource Conservation Service (NRCS) or other sources 
approved by the Deputy Administrator, in accordance with the Field 
Office Technical Guide (FOTG) of NRCS or other guidelines deemed 
appropriate by NRCS. In no case will such determination compel the 
Deputy Administrator to execute a CRP contract that the Deputy 
Administrator does not believe will serve the purposes of CRP 
established by this part. Any approved technical authority will use CRP 
guidelines established by the Deputy Administrator.
    (g) The regulations in this part apply to all CRP contracts approved 
after December 6, 2019.



Sec.1410.2  Definitions.

    (a) The definitions in part 718 of this title apply to this part and 
all documents issued in accordance with this part, except as otherwise 
provided in this section.
    (b) The following definitions also apply to this part:
    Agricultural commodity means:
    (i) Any crop planted and produced by annual tilling of the soil or 
on an annual basis by one-trip planters;
    (ii) Sugarcane planted or produced in a State; or
    (iii) Alfalfa and other multi-year grasses and legumes grown in a 
rotation practice as approved by CCC.
    Agricultural Conservation Easement Program (ACEP) means the program 
that provides for the establishment of wetland easements on land under 
subtitle H of Title XII of the Food Security Act of 1985, as amended.
    Annual rental payment means, unless the context indicates otherwise, 
the annual payment specified in the CRP contract that, subject to the 
availability of funds, is made to a participant to compensate a 
participant for placing eligible land in CRP, including any incentive 
payments that are not specifically cost-share payments. For purposes of 
this definition, practice incentive payments, and incentive payments 
related to forest management are not considered part of annual rental 
payments.
    Approved cover means permanent vegetative cover or water cover 
specified in an approved CRP contract.
    Carrying capacity has the same meaning as ``normal carrying 
capacity'' defined in part 1416 of this chapter.
    Commercial pond-raised aquaculture facility means any earthen 
facility from which $1,000 or more of freshwater food fish were sold or 
normally would have been sold during a calendar year.
    Common grazing practices means grazing practices, including those 
related to forage and seed production, common to the area of the subject 
ranching or farming operation. Included are routine management 
activities necessary to maintain the viability of forage or browse 
resources that are common to the locale of the subject ranching or 
farming operation.
    Conservation district means a political subdivision of a State, 
Indian Tribe, or territory, organized pursuant to the State or 
territorial soil conservation district law, or Tribal law. The 
subdivision may be a conservation district, soil conservation district, 
soil and water conservation district, resource conservation district, 
natural resource district, land conservation committee, or similar 
legally constituted body.
    Conservation plan means a record of the participant's decisions and 
supporting information for treatment of a unit of land or water, and 
includes a schedule of operations, activities, and estimated 
expenditures needed to solve identified natural resource problems by 
devoting eligible land to permanent vegetative cover, trees, water, or 
other comparable measures.
    Conservation priority area means an area designated with adverse 
water quality, wildlife habitat, or other natural resource impacts 
related to agricultural production activities or to assist agricultural 
producers to comply with Federal and State environmental laws or to meet 
other conservation needs.

[[Page 462]]

    Conserving use means a use of land that meets crop rotation 
requirements, as specified by CCC, for: Alfalfa, multi-year grasses, and 
legumes planted during 2012 through 2017; for summer fallow during 2012 
through 2017; or for land on which the CRP contract expired during the 
period 2012 through 2017 and on which the grass cover required by the 
CRP contract continues to be maintained as though still enrolled. Land 
that meets this definition of ``conserving use'' will be considered to 
have been planted to an agricultural commodity for the purposes of 
eligibility specified in Sec.1410.6(b)(1).
    Considered planted means land devoted to a conserving use during the 
crop year or during any of the 2 years preceding the crop year if the 
contract expired; cropland enrolled in CRP; or land for which the 
producer received for prevented planting credit in accordance with part 
718 of this title.
    Contour grass strip means a vegetation area that follows the contour 
of the land that complies with the FOTG and a conservation plan 
developed under this part.
    Contract period means the term of the CRP contract.
    Cost-share payment means, unless the context indicates otherwise, 
the payment made by CCC to assist CRP participants in installing the 
practices required in a CRP contract.
    Cropland means land defined as cropland in part 718 of this title, 
except for land in terraces that are no longer capable of being cropped.
    Eligible partner means a State, political subdivision of a State, 
nongovernmental organization, or an Indian Tribe.
    Erodibility index (EI) means an index, as prescribed by CCC, used to 
determine the inherent erodibility from either from water or wind, but 
not both combined, of a soil in relation to the soil loss tolerance for 
that soil.
    Federally-owned land means land owned by the Federal Government or 
any department, instrumentality, bureau, or agency thereof, or any 
corporation whose stock is wholly owned by the Federal Government.
    Field border means a strip of permanent vegetation established at 
the edge or around the perimeter of a field the purpose of which is to 
provide food and cover for quail and upland birds in cropland areas.
    Field Office Technical Guide (FOTG) means the official USDA 
guidelines, criteria, and standards for planning and applying 
conservation treatments and conservation management systems. It contains 
detailed information on the conservation of soil, water, air, plant, 
animal resources, and cultural resources applicable to the local area 
for which it is prepared. (See https://www.nrcs.usda.gov/wps/portal/
nrcs/main/national/technical/fotg/ to access your State FOTG.)
    Field windbreak, shelterbelt, and living snowfence mean a vegetative 
barrier with a linear configuration composed of trees, shrubs, or other 
vegetation, that are designated as such in a conservation plan and that 
are planted for the purpose of reducing wind erosion, controlling snow, 
improving wildlife habitat, or conserving energy.
    Filter strip means a strip or area of vegetation immediately 
adjacent and parallel to an eligible water body, the purpose of which is 
to remove nutrients, sediment, organic matter, pesticides, and other 
pollutants from surface runoff and subsurface flow by deposition, 
absorption, plant uptake, and other processes, thereby reducing 
pollution and protecting surface water and subsurface water quality and 
of a width determined appropriate for such purpose.
    Forb means any herbaceous plant other than those in the grass 
family.
    Grassland means land described in Sec.1410.6(d).
    Grass waterway means a shaped or graded channel that is established 
with suitable vegetation to convey surface water from terraces, 
diversions, or other water concentrations without causing erosion or 
flooding using a broad and shallow cross section to a stable outlet.
    Highly erodible land means land determined to have an EI equal to or 
greater than 8 on the acreage offered.
    Improved rangeland or pastureland means grazing land permanently 
producing naturalized forage species that receives varying degrees of 
periodic cultural treatment to enhance forage

[[Page 463]]

quality and yields and is primarily consumed by livestock.
    Indian Tribe means any Indian Tribe, band, nation, or other 
organized group, or community, including pueblos, rancherias, colonies 
and any Alaska Native Village, or regional or village corporation as 
defined in or established pursuant to the Alaska Native Claims 
Settlement Act (43 U.S.C. 1601-1629h), which is recognized as eligible 
for the special programs and services provided by the United States to 
Indians because of their status as Indians.
    Infeasible to farm means an area of land that is too small or 
isolated to be economically farmed, or is otherwise suitable for such 
classification.
    Local FSA office means the FSA county office serving the area in 
which the FSA records are located for the farm or ranch.
    Offer means, unless the context indicates otherwise, if required by 
CCC, the per-acre rental payment requested by the owner or operator in 
such owner's or operator's request to participate in the CRP.
    Perennial crop means a crop that is produced from the same root 
structure for 2 or more years.
    Permanent vegetative cover means perennial stands of approved 
combinations of certain grasses, legumes, forbs, shrubs and trees for 
the contract period.
    Permanent wildlife habitat means a vegetative cover with the 
specific purpose of providing habitat, food, or cover for wildlife and 
protecting other environmental concerns for the contract period.
    Practice means a conservation, wildlife habitat, or water quality 
measure with appropriate operations and management as agreed to in the 
conservation plan to accomplish the desired program objectives according 
to CRP and FOTG standards and specifications as a part of a conservation 
management system.
    Prairie strip means a strip(s) of diverse, dense, herbaceous, 
predominately native perennial vegetation designed and positioned on the 
landscape to most effectively address soil erosion and water quality by 
intercepting surface and subsurface water flow to remove nutrients, 
sediment, organic matter, pesticides, and other pollutants by 
deposition, absorption, plant uptake, denitrification, and other 
processes, and thereby reduce pollution and protect surface and 
subsurface water quality while providing food and cover for wildlife.
    Primary nesting season means the nesting season for birds in the 
local area that are economically significant, in significant decline, or 
conserved in accordance with Federal or State law, as determined by CCC 
in consultation with the State technical committee established as 
specified in part 610 of this title.
    Riparian buffer means a strip or area of vegetation immediately 
adjacent and parallel to an eligible water body of sufficient width, the 
purpose of which is to remove nutrients, sediment, organic matter, 
pesticides, and other pollutants from surface runoff and subsurface flow 
by deposition, absorption, plant uptake, and other processes, thereby 
reducing pollution and protecting surface water and subsurface water 
quality, and to provide shade to reduce water temperature for improved 
habitat for aquatic organisms and supply large woody debris for aquatic 
organisms and habitat for wildlife.
    Shrubland means land where the dominant plant species are shrubs, 
which are plants that are persistent, have woody stems, and a relatively 
low growth habit.
    Socially disadvantaged farmer or rancher means a farmer or rancher 
who is a member of a socially disadvantaged group whose members have 
been subjected to racial or ethnic prejudice because of their identity 
as members of a group without regard to their individual qualities. 
Socially disadvantaged groups include the following and no others unless 
approved in writing by CCC:
    (i) American Indians or Alaskan Natives;
    (ii) Asians or Asian-Americans;
    (iii) Blacks or African Americans;
    (iv) Hispanics; and
    (v) Native Hawaiians or other Pacific Islanders.
    Soil loss tolerance (T) means the maximum average annual erosion 
rate

[[Page 464]]

specified in the FOTG that will not adversely impact the long-term 
productivity of the soil.
    State means State agencies, departments, districts, county or city 
governments, municipalities or any other State or local government of 
the State.
    State Technical Committee means a committee established pursuant to 
part 610 of this title to provide information, analysis, and 
recommendations to the U.S. Department of Agriculture.
    Technical assistance means assistance in regard to determining the 
eligibility of land and practices, implementing and certifying 
practices, ensuring CRP contract performance, and providing annual 
rental rate surveys. The technical assistance provided in connection 
with CRP to owners or operators, as approved by CCC, includes, but is 
not limited to:
    (i) Technical expertise, information, and tools necessary for the 
conservation of natural resources on land;
    (ii) Technical services provided directly to farmers, ranchers, and 
other eligible entities, including, but not limited to, conservation 
planning, technical consultation, and assistance with design and 
implementation of conservation practices; and
    (iii) Technical infrastructure, including activities, processes, 
tools, and agency functions needed to support delivery of technical 
services, including, but not limited to, technical standards, resource 
inventories, training, data, technology, monitoring, and effects 
analyses.
    Violation means an action or inaction by the participant, either 
intentional or unintentional, that would cause the participant to no 
longer be eligible for all or a portion of cost-share payments, 
incentive payments, or annual rental payments.
    Water cover means flooding of land by water either to develop or 
restore shallow water areas for wildlife or wetlands, or as a result of 
a natural disaster.
    Wellhead protection area means the area designated by EPA or the 
appropriate State agency with an Environmental Protection Agency 
approved Wellhead Protection Program for water being drawn for public 
use, as defined for public use by the Safe Drinking Water Act, as 
amended.
    Wetland means land defined as wetland in accordance with provisions 
of part 12 of this title.
    Wetlands Reserve Program (WRP) means the program authorized by part 
1467 of this chapter in which eligible persons enter into long-term 
agreements to restore and protect wetlands.



Sec.1410.3  General description.

    (a) Under CRP, CCC will enter into contracts with eligible producers 
to convert eligible land to an approved cover during the contract period 
in return for financial and technical assistance.
    (b) A producer must obtain and adhere, for the contract period, to a 
conservation plan prepared in accordance with CCC guidelines and the 
other provisions of Sec.1410.22.
    (c) The objectives of the CRP are to cost-effectively reduce water 
and wind erosion, protect the Nation's long-term capability to produce 
food and fiber, reduce sedimentation, improve water quality, create and 
enhance wildlife habitat, and other objectives including, as 
appropriate, addressing issues raised by State, regional, and national 
conservation initiatives and encouraging more permanent conservation 
practices, including, but not limited to, tree planting.



Sec.1410.4  Maximum county acreage.

    (a) Except as provided in paragraph (b) of this section the maximum 
cropland acreage that may be placed in CRP and the wetland reserve 
easements of WRP and ACEP, as appropriate, may not exceed 25 percent of 
the total cropland in the county. No more than 15 percent of the 
cropland in a county may be subject, in the aggregate, to a wetland 
reserve easement.
    (b) The restrictions in paragraph (a) of this section:
    (1) May be waived by CCC as follows:
    (i) If such waiver would not adversely affect the local economy of 
the county and that operators in the county are having difficulties 
complying with conservation plans implemented under part 12 of this 
title; or
    (ii) If the cropland, in a county, is enrolled under provisions as 
specified in

[[Page 465]]

Sec.1410.90, provided that the county government concurs with such 
waiver.
    (2) Do not apply to cropland that is:
    (i) Subject to an easement and enrolled in CRP as a shelterbelt or 
windbreak; or
    (ii) Designated with subclass w in the land capability classes IV 
through VIII because of severe use limitations due to soil saturation or 
inundation, as determined by NRCS.
    (c) The restrictions on acreage enrollment in this section are in 
addition to any other restrictions imposed by law.



Sec.1410.5  Eligible persons.

    (a) To be eligible to enter into a CRP contract in accordance with 
this part, a person must be an owner, operator, or tenant of eligible 
land and:
    (1) If an operator of eligible land seeks to participate without the 
owner's participation, then such operator must have operated such land 
for either at least 12 months prior to the close of the applicable 
signup period for enrollments under announced signup periods, or for at 
least 12 months prior to submitting an offer under continuous signup 
periods as provided in Sec.1410.30(b); further, such operator must 
provide satisfactory evidence to CCC that such operator will be in 
control of such eligible land for the full term of the contract period;
    (2) If an owner of eligible land, such owner must have owned such 
land for either at least 12 months prior to the close of the applicable 
signup period for enrollment under announced signup periods, or for at 
least 12 months prior to submitting an offer for continuous signup 
periods as provided in Sec.1410.30(b), unless:
    (i) The new owner acquired such land by will or succession as a 
result of the death of the previous owner;
    (ii) The only ownership change in the 12-month period occurred due 
to foreclosure on the land, and the owner of the land, immediately 
before the foreclosure, exercised a timely right of redemption from the 
mortgage holder in accordance with State law; or
    (iii) The circumstances of the acquisition present adequate 
assurance that a new owner of such eligible land did not acquire such 
land for the purpose of placing it in the CRP; or
    (3) If a tenant, then the participation of an eligible owner or 
operator is also required.
    (b) The provisions of this section do not apply to beginning, 
socially disadvantaged, or veteran farmers or ranchers who are eligible 
participants in the Transition Incentives Program as specified in Sec.
1410.64.



Sec.1410.6  Eligible land.

    (a) The provisions of paragraphs (b), (c), and (d) of this section 
do not apply to:
    (1) The Transition Incentives Program as specified in Sec.1410.64;
    (2) The Soil Health and Income Protection Pilot Program as specified 
in Sec.1410.70; or
    (3) The Clean Lakes, Estuaries, and Rivers 30 (CLEAR 30) Pilot 
Program as specified in Sec.1410.80.
    (b) To be eligible for CRP, land must be one of the following:
    (1) Cropland that:
    (i) Has been annually planted or considered planted to an 
agricultural commodity in 4 of the 6 crop years from 2012 through 2017, 
provided that field margins that are incidental to the planting of crops 
may also be considered qualifying cropland; and
    (ii) Is physically and legally capable of being planted in a normal 
manner to an agricultural commodity;
    (2) Marginal pasture land that:
    (i) Is located immediately adjacent and parallel to an eligible 
stream, other water body, or wetland, but excluding such areas as 
gullies or sod waterways or similar areas; and
    (ii) Is capable, when permanent grass, forbs, shrubs, or trees are 
grown, or when planted with appropriate vegetation for the area, 
including vegetation suitable for wetland restoration or wildlife 
habitat, of either substantially reducing sediment or nutrient runoff 
that otherwise would be delivered to the adjacent eligible stream or 
water body, or serving other water quality purposes;
    (3) Acreage enrolled in CRP during the final year of the contract 
period, unless such land is federally-owned, provided the scheduled 
expiration date of the current CRP contract is before

[[Page 466]]

the effective date of the new CRP contract;
    (4) Land that meets the criteria specified in paragraph (d) of this 
section; or
    (5) Land that meets all of the criteria in paragraphs (b)(5)(i) 
through (iii) of this section, which land will then be considered as 
land enrolled in CRP in the final year of the contract period, and 
therefore will be eligible to be offered for enrollment in CRP until 
September 30, 2020, provided the effective starting date of the new CRP 
contract is on or before October 1, 2020:
    (i) The land was enrolled in CRP under a CRP contract, with a 
contract period of greater than 14 years, that expired on September 30, 
2017, or September 30, 2018;
    (ii) There was no opportunity for re-enrollment of the land in CRP 
prior to the end of the contract period; and
    (iii) The conservation practice and approved cover under the expired 
CRP contract has been maintained in accordance with the terms of the 
expired CRP contract.
    (c) Land qualifying under paragraph (b)(1) of this section must also 
meet at least one of the following criteria to be eligible for CRP:
    (1) Be a field or portion of a field that:
    (i) Is suitable for use as a permanent wildlife habitat, prairie 
strip, contour grass strip, grass waterway, field windbreak, 
shelterbelt, living snowfence, field border, or other suitable uses;
    (ii) Poses an off-farm environmental threat or a threat of continued 
degradation of productivity due to soil salinity if permitted to remain 
in production, including any applicable recharge area;
    (iii) Is an area determined eligible for CRP based on wetland or 
wellhead protection area criteria; or
    (iv) Is suitable for use as a filter strip or riparian buffer, and 
the land:
    (A) Is located immediately adjacent and parallel to an eligible 
stream, other water body, or wetland, but excluding such areas as 
gullies or sod waterways or similar areas; and
    (B) Is capable, when permanent grass, forbs, shrubs, or trees are 
grown, or when planted with appropriate vegetation for the area, 
including vegetation suitable for wetland restoration, of either 
substantially reducing sediment or nutrient runoff that otherwise would 
be delivered to the adjacent eligible stream, or water body, or serving 
other water quality purposes;
    (2) Be non-irrigated or irrigated cropland that would facilitate a 
net savings in groundwater or surface water of the agricultural 
operation of the producer, only as approved by CCC;
    (3) Be a portion of the field not enrolled in CRP, if either:
    (i) More than 50 percent of the field is enrolled as a riparian 
buffer or filter strip; or
    (ii) More than 75 percent of the field is enrolled as a conservation 
practice other than a riparian buffer or filter strip; and
    (iii) With respect to both paragraphs (c)(3)(i) and (ii) of this 
section, the remainder portion of the field is determined to be 
infeasible to farm and enrolled at an annual payment rate not to exceed 
the maximum annual calculated soil rental rate approved by CCC;
    (4) Be contributing to the degradation of water quality or posing an 
on-site or off-site environmental threat to water quality if such land 
remains in production;
    (5) Be devoted to certain covers that are established and maintained 
according to the FOTG, provided such land is not required to be 
maintained as such under any life-span obligations;
    (6) Have an EI of greater than or equal to 8 calculated by using the 
weighted average of the EI's of soil map units within the acreage 
offered;
    (7) Be within a State or federally identified wellhead protection 
area;
    (8) Be within a designated conservation priority area; or
    (9) Notwithstanding paragraph (b)(1) of this section, be cropland 
devoted to a perennial crop; such cropland will only be eligible for 
continuous signup practices authorized by Sec.1410.30(b) and practices 
authorized under a Conservation Reserve Enhancement Program agreement as 
specified in Sec.1410.90.
    (d) Notwithstanding paragraph (b) or (c) of this section, to be 
eligible under a grassland signup as specified in Sec.1410.30(c), the 
land must be one of the following:
    (1) Land that:

[[Page 467]]

    (i) Contains forbs or shrubland, including improved rangeland and 
pastureland, for which grazing is the predominant use;
    (ii) Is located in an area historically dominated by grassland; and
    (iii) Is able to provide habitat for animal and plant populations of 
significant ecological value if the land is retained in its current use 
or restored to a natural condition; or
    (2) Land that is enrolled in CRP in the final year of the contract 
period, provided the scheduled expiration date of the current CRP 
contract is the day before the effective starting date of the new CRP 
contract, and the provisions of paragraph (d)(1) of this section are 
met.
    (e) Notwithstanding paragraphs (b), (c), and (d) of this section and 
Sec. Sec.1410.64, 1410.70, and 1410.80, land will be ineligible for 
enrollment if the land is one of the following:
    (1) Federally-owned land;
    (2) Land on which the use of the land is either restricted through 
deed or other restriction prior to enrollment in CRP prohibiting the 
production of agricultural commodities, or requires any resource-
conserving measures, during any part of the contract period;
    (3) Land already enrolled in the CRP, unless authorized by paragraph 
(b)(3) of this section and Sec.1410.80;
    (4) Land for which Tribal, State, or other local laws, ordinances, 
or other regulations require any resource conserving or environmental 
protection measures or practices, and the owners or operators of such 
land have been notified in writing of such requirements, except, such 
land may be eligible for enrollment in CRP if:
    (i) The land is, at the time of offer, enrolled in CRP under an 
approved Conservation Reserve Enhancement Program agreement that was in 
effect on December 20, 2018, and was initially approved before January 
1, 2014, including any amended or successor Conservation Reserve 
Enhancement Program agreement; provided, that the CRP contract under 
which the land is enrolled is in the final year of the contract period, 
and the scheduled expiration date of the current CRP contract is before 
the effective starting date of the new CRP contract; or
    (ii) The land is such other land in the State that CCC determines is 
both otherwise eligible for CRP and appropriate for enrollment in CRP; 
and
    (iii) The land is enrolled in exchange for a 25 percent reduction to 
the annual rental payment that would otherwise be paid for such land 
were no such laws, ordinances, or regulations in effect;
    (5) Land that is required to be used, or otherwise dedicated to 
mitigate actions undertaken, or planned to be undertaken, on other land, 
or to mitigate other actions taken by landowners or operators; or
    (6) Land devoted to hardwood trees that has been re-enrolled in CRP 
one or more times while it was devoted to hardwood trees; however, such 
ineligibility does not extend to:
    (i) Forested wetlands enrolled under a Conservation Reserve 
Enhancement Program agreement or under a continuous signup as specified 
in Sec.1410.30(b);
    (ii) Riparian buffers; and
    (iii) Shelterbelts.



Sec.1410.7  Duration of contracts.

    (a) In general, except as provided in paragraphs (b) and (c) of this 
section and Sec. Sec.1410.70 and 1410.80, the CRP contract period will 
be for a term of at least 10 years, and up to no more than 15 years.
    (b) The CRP contract period for land enrolled under a grassland 
signup as specified in Sec.1410.30(c) will be for a term of 10 years 
or 15 years, as requested by the producer.
    (c) CRP contracts for land devoted to hardwood trees, shelterbelts, 
windbreaks, and wildlife corridors will be for a term of 10 years to 15 
years, as requested by the producer.
    (d) All CRP contracts will expire on September 30 of the final 
calendar year of the contract period.



Sec.1410.8  Conservation priority areas.

    (a) Subject to CCC approval, a State agency may submit proposals for 
conservation priority areas within guidelines established by CCC. Such 
submission must clearly define conservation

[[Page 468]]

and environmental objectives, and provide analysis of how CRP can cost-
effectively address such objectives. Generally, the total acreage of all 
conservation priority areas, in aggregate, will not total more than 25 
percent of the cropland in a State unless there are identified and 
documented exceptional environmental needs.
    (b) A region may be eligible for designation as a priority area only 
if the region has actual significant adverse water quality, wildlife 
habitat, or other natural resource impacts related to activities of 
agricultural production, or if the designation helps agricultural 
producers to comply with Federal and State environmental laws.
    (c) Conservation priority area designations will expire after 5 
years unless re-designated, except they may be withdrawn before 5 years 
by CCC.
    (d) In those areas designated as conservation priority areas under 
this section, cropland is considered eligible for enrollment according 
to Sec.1410.6(c)(8) based on identified environmental concerns. These 
concerns may include water quality, such as assisting agricultural 
producers to comply with nonpoint source pollution requirements or 
wildlife habitat (especially for threatened and endangered species or 
those species that may become threatened and endangered).



Sec.1410.10  Restoration of wetlands.

    (a) An owner or operator who entered into a CRP contract on land 
that is suitable for restoration to wetlands or that was restored to 
wetlands while under such CRP contract, may, if approved by CCC, subject 
to any restrictions as may be imposed by law, apply to transfer such 
land from CRP to a wetland reserve easement under WRP or ACEP, as 
appropriate. Transferred land will be terminated from CRP effective the 
day a WRP or ACEP wetland reserve easement is filed. Participants will 
receive a prorated CRP annual payment for the part of the year the land 
was enrolled in CRP as specified in Sec.1410.42. Cost-share payments 
or applicable incentive payments need not be refunded unless specified 
by CCC.
    (b) [Reserved]



Sec.1410.11  Farmable Wetlands Program.

    (a) In addition to other allowable enrollments, eligible land may be 
enrolled in the CRP through the Farmable Wetlands Program (FWP).
    (b) Eligible owners and operators may enroll land in FWP provided 
that the land:
    (1) Is a wetland, including a converted wetland, that has been 
planted or considered planted to an agricultural commodity during at 
least 3 of the immediately preceding 10 crop years and that does not 
exceed the size limitations specified in paragraph (d) of this section;
    (2) Is enrolled to be a constructed wetland that is to be developed 
so as to receive surface and subsurface flow from row crop agricultural 
production and is designed to provide nitrogen removal in addition to 
other wetland functions and that does not exceed the size limitations 
specified in paragraph (d) of this section;
    (3) Was a commercial pond-raised aquaculture facility in any year 
during the period of calendar years 2002 through 2007; or
    (4) Was cropped, after January 1, 1990, and before December 31, 
2002, at least 3 of 10 crop years, was subject to the natural overflow 
of a prairie wetland, and does not exceed the size limitations specified 
in paragraph (d) of this section.
    (c) In addition, land may be enrolled through FWP if the land is 
buffer acreage that provides protection for and is contiguous to land 
otherwise eligible under paragraph (b) of this section, subject to the 
provisions of paragraph (d) of this section.
    (d) Total enrollment in CRP under this section may not exceed 
750,000 acres. In addition, the maximum size of land enrolled under this 
section may not exceed:
    (1) 40 contiguous acres per tract, for land made eligible by 
paragraph (b)(1) of this section;
    (2) 40 contiguous acres per tract, for land made eligible by 
paragraph (b)(2) of this section;
    (3) 20 contiguous acres for land made eligible by paragraph (b)(4) 
of this section, not to exceed 40 acres per tract; or

[[Page 469]]

    (4) A suitable buffer for lands added under paragraph (c) of this 
section.
    (e) All participants subject to a CRP contract under this section 
must agree to establish and maintain, as appropriate, the practice 
described in paragraph (b) of this section in accordance with FOTG 
including, as appropriate, restoring the hydrology of the wetland and 
establishing vegetative cover (which may include emerging vegetation in 
water and bottomland hardwoods, cypress, and other appropriate tree 
species in shallow water areas).
    (f) Offers for contracts under this section must be submitted under 
continuous signup provisions as specified in Sec.1410.30(b).
    (g) The annual rental payment for land enrolled under this section 
will be determined in accordance with the provisions of Sec.1410.42 
for cropland. In addition, any incentive payments in the form of annual 
rental payments provided for enrolling filter strips under this part 
will also be provided to participants who enroll land under this 
section, provided the participant has a share of the annual rental 
payment greater than zero.



Sec.1410.13  Grassland enrollments and permitted uses.

    (a) Land may be enrolled in CRP under a grassland signup as 
specified in Sec. Sec.1410.30(c) and 1410.31(e) and (f).
    (b) Grassland enrollments will generally be administered under all 
the provisions of this part, except where specific provisions apply only 
to grassland enrollments.
    (c) Land enrolled in CRP under a grassland signup may be eligible 
for the Transition Incentives Program as specified in Sec.1410.64.
    (d) The following activities may be permitted on grassland enrolled 
in CRP according to an approved conservation plan:
    (1) Common grazing practices, including maintenance and necessary 
cultural practices, in a manner that is consistent with maintaining the 
viability of grassland, forb, and shrub species appropriate to the 
locality;
    (2) Haying, mowing, or harvesting for seed production, subject to 
appropriate restrictions during the primary nesting season;
    (3) Fire pre-suppression, fire-related rehabilitation, and 
construction of firebreaks;
    (4) Grazing related activities, such as fencing and livestock 
watering facilities; and
    (5) Other activities, when the manner, number, intensity, location, 
operation, and other features associated with such activity will not 
adversely affect the grassland resources or related conservation values 
protected under the CRP contract.



Sec.1410.20  Obligations of participant.

    (a) All participants subject to a CRP contract must agree to:
    (1) Carry out the terms and conditions of such CRP contract;
    (2) Implement the conservation plan, which is part of such CRP 
contract, in accordance with the schedule of dates included in such 
conservation plan unless CCC determines that the participant cannot 
fully implement the conservation plan for reasons beyond the 
participant's control, and CCC agrees to a modified plan; however, a 
contract will not be terminated for failure to establish an approved 
vegetative or water cover on the land if:
    (i) The failure to plant or establish such approved cover was due to 
excessive rainfall, flooding, or drought;
    (ii) The land subject to the CRP contract on which the participant 
could practicably plant or establish to such approved cover, is planted 
or established to such approved cover; and
    (iii) The land on which the participant was unable to plant or 
establish such approved cover is planted or established to such approved 
cover after the wet or drought conditions that prevented the planting or 
establishment subside;
    (3) Establish temporary vegetative cover either when required by the 
conservation plan or if the permanent approved cover cannot be timely 
established;
    (4) Comply with part 12 of this title;
    (5) Not allow grazing, harvesting, or other commercial or 
agricultural use of the land subject to such CRP contract, or the cover 
on such land, except as specified in this part;
    (6) Establish and maintain the required vegetative or water cover 
and

[[Page 470]]

the required practices on the land subject to such CRP contract, and 
take other actions that may be required by CCC to achieve the desired 
environmental benefits, and to maintain the productive capability of the 
soil throughout the contract period;
    (7) Comply with noxious weed laws of the applicable State or local 
jurisdiction on such land;
    (8) Control, on land subject to such CRP contract, all weeds, 
insects, pests, and other undesirable species to the extent necessary to 
ensure that the establishment and maintenance of the approved cover as 
specified in the CRP conservation plan, and to avoid an adverse impact 
on surrounding land, taking into consideration water quality, wildlife, 
and other similar conservation factors;
    (9) Be jointly and severally responsible, if the participant has a 
share of the annual rental payment greater than zero, with the other 
participants on the CRP contract, for compliance with the provisions of 
such CRP contract and the provisions of this part, and for any refunds 
or payment adjustments that may be required for violations of any of the 
terms and conditions of the CRP contract and this part; and
    (10) On land devoted to trees, excluding windbreaks and 
shelterbelts, carry out thinning and similar conservation practices, as 
provided in the conservation plan to enhance the conservation benefits 
and wildlife habitat resources applicable to the CRP conservation 
practice on the land, and to promote forest management.
    (b) [Reserved]



Sec.1410.21  Obligations of the Commodity Credit Corporation.

    CCC will:
    (a) Share up to 50 percent of the cost with participants of 
installing eligible practices specified in the conservation plan for 
which CCC determines that cost sharing is appropriate and in the public 
interest, and at the levels and rates of cost-sharing determined in 
accordance with the provisions of this part; and
    (b) Pay to eligible participants for a period of years not in excess 
of the contract period an annual rental payment, including applicable 
and available incentive payments, in such amounts as may be specified in 
the CRP contract.



Sec.1410.22  CRP conservation plan.

    (a) The producer must obtain a CRP conservation plan that complies 
with CCC guidelines and is approved by NRCS.
    (b) The practices included in the conservation plan and agreed to by 
the participant must cost-effectively reduce erosion necessary to 
maintain the productive capability of the soil, improve water quality, 
protect wildlife or wetlands, protect a public wellhead, improve 
grassland, or achieve other environmental benefits as applicable. The 
participant must undertake maintenance activities on the land as needed 
throughout the contract period to implement the conservation plan.
    (c) If applicable, a tree planting plan or forest stewardship plan 
must be developed and included in the conservation plan. Such tree 
planting or forest stewardship plan may allow up to 3 years to complete 
plantings if 10 or more acres of hardwood trees are to be established.
    (d) If applicable, the conservation plan must address the goals 
included in the conservation priority area designation authorized under 
Sec.1410.8.
    (e) Except for land enrolled under a grassland signup, as specified 
in Sec.1410.30(c), management activities must be conducted as needed 
throughout the contract period in accordance with an approved 
conservation plan. However, the planned management activity is not 
required in the case where a natural disaster or adverse weather event 
occurs that has the same effect of the planned management activity. CCC 
will not provide any cost-share payment for any management activities.



Sec.1410.23  Eligible practices.

    (a) Eligible practices are those CRP practices specified in the 
conservation plan that meet all standards needed to cost-effectively:
    (1) Establish permanent vegetative or water cover, including 
introduced or native species of grasses and legumes, trees, permanent 
wildlife habitat, and grassland improvements;

[[Page 471]]

    (2) Meet other environmental benefits, as applicable, for the CRP 
contract period; and
    (3) Accomplish other purposes of CRP.
    (b) Water cover is eligible cover for purposes of paragraph (a) of 
this section only if approved by CCC for purposes such as the 
enhancement of wildlife or the improvement of water quality. Such water 
cover will not include ponds for the purpose of watering livestock, 
irrigating crops, or raising aquaculture for commercial purposes.



Sec.1410.30  Signup.

    (a) Offers for CRP contracts may be submitted only during signup 
periods as announced periodically by CCC, but not less often than once 
each year. Acceptability of otherwise eligible offers will be determined 
as provided in Sec.1410.31.
    (b) Notwithstanding paragraph (a) of this section, CCC may hold a 
continuous signup for land to be devoted to particular uses. Generally, 
continuous signup is limited to those offers that provide appropriate 
environmental benefits, as determined by CCC, or that would otherwise 
rank highly under Sec.1410.31(b) and may include high priority 
practices including, but not limited to, filter strips, riparian 
buffers, shelterbelts, field windbreaks, living snowfences, grass 
waterways, shallow water areas for wildlife, salt-tolerant vegetation, 
prairie strips, field borders, and practices to benefit certain approved 
wetlands and public wellhead protection areas.
    (c) Notwithstanding paragraph (a) or (b) of this section, offers to 
enroll acreage specified in Sec.1410.6(d) may be submitted only during 
signup periods as announced by CCC. At least 1 ranking period will be 
announced subsequent to the announcement of offers specified in 
paragraph (a) of this section. Eligible offers will be evaluated and 
ranked as provided in Sec.1410.31(e) and (f).



Sec.1410.31  Acceptability of offers.

    (a) Producers may submit offers for the amounts they are willing to 
accept as rental payments to enroll their acreage in CRP. The offers 
will, to the extent practicable, be evaluated on a competitive basis in 
which the offers selected will be those where the greatest environmental 
benefits relative to cost are generated, and provided that the offer is 
not in excess of the maximum acceptable payment rate established by CCC 
for the acreage offered. Acceptance or rejection of any offer, however, 
will be in the sole discretion of CCC and offers may be rejected for any 
reason as determined needed to accomplish the goals of CRP.
    (b) In evaluating offers, different factors may be considered by CCC 
for priority purposes to accomplish the goals of CRP. Such factors may 
include, but are not limited to:
    (1) Soil erosion;
    (2) Water quality (both surface and ground water);
    (3) Wildlife benefits;
    (4) Soil productivity;
    (5) Likelihood that enrolled land will remain in non-agriculture use 
beyond the contract period, considering, for example, tree planting, 
permanent wildlife habitat, or commitments by a participant to a State 
or other entity to extend the conservation plan; and
    (6) Cost of enrolling acreage in CRP.
    (c) Notwithstanding paragraph (b) of this section, when all other 
appropriate factors are equivalent, CCC may give preference to offers 
from residents of the county or contiguous county where the offered land 
is located.
    (d) Notwithstanding paragraph (a) of this section, acreage 
determined eligible for continuous signup, as provided in Sec.
1410.30(b), may be automatically accepted in CRP if the:
    (1) Land is eligible under Sec.1410.6;
    (2) Producer is eligible under Sec.1410.5; and
    (3) Producer accepts either the maximum payment rate CCC is willing 
to offer to enroll the acreage in CRP or a lesser rate.
    (e) For grassland signup offers:
    (1) Notwithstanding paragraph (a) of this section, offers to enroll 
in CRP under grassland signup, as specified in Sec.1410.30(c), will be 
evaluated and ranked during an announced ranking period, on a 
competitive basis in which the offers selected will be those where the 
greatest environmental benefits relative to cost are generated, and 
further provided that:

[[Page 472]]

    (i) The offered land is eligible under Sec.1410.6(d);
    (ii) The producer is eligible under Sec.1410.5;
    (iii) The producer accepts either the maximum payment rate CCC is 
willing to offer to enroll the acreage in CRP, or a lesser rate; and
    (iv) The offer ranks above the minimum ranking level needed for 
offer acceptance, as determined by CCC.
    (2) Notwithstanding paragraph (e)(1) of this section, acceptance or 
rejection of any offer will be at the sole discretion of the CCC, and 
offers may be rejected for any reason as determined necessary and 
appropriate to accomplish the goals of CRP.
    (f) In ranking and evaluating grassland signup offers, different 
factors may be considered by CCC for priority purposes to accomplish the 
goals of CRP. Such factors may include, but are not limited to:
    (1) Existence of expiring CRP land;
    (2) Land at risk of development or conversion; and
    (3) Land of ecological significance, including land that:
    (i) May assist in the restoration of threatened or endangered 
species under the Endangered Species Act of 1973;
    (ii) May assist in preventing a species from being listed as a 
threatened or endangered species under the Endangered Species Act of 
1973; or
    (iii) Improves or creates wildlife habitat corridors.



Sec.1410.32  CRP contract.

    (a) In order to enroll land in CRP, the producer must enter into a 
contract with CCC.
    (b) The CRP contract is comprised of:
    (1) The terms and conditions for participation in CRP; and
    (2) The CRP conservation plan.
    (c) For offers:
    (1) In order to enter into a CRP contract, the producer must submit 
an offer to participate as provided in Sec.1410.30.
    (2) An offer to enroll land in CRP will be irrevocable for such 
period as is determined and announced by CCC. The producer will be 
liable to CCC for liquidated damages if the producer revokes an offer 
during the period in which the offer is irrevocable unless CCC 
determines to waive such liquidated damages.
    (d) The CRP contract must, within the dates established by CCC, be 
signed by:
    (1) The producer; and
    (2) The owners of the land to be enrolled in the CRP and other 
eligible producers, if applicable.
    (e) For the termination of CRP contracts:
    (1) CRP contracts may be terminated in whole or in part by CCC 
before the end of the contract period if:
    (i) The owner loses control of or transfers all or part of the 
acreage under the CRP contract and the new owner does not wish to 
continue the CRP contract;
    (ii) The participant voluntarily requests in writing to terminate 
the contract, in whole or in part, and obtains approval from CCC;
    (iii) The participant is not in compliance with the terms and 
conditions of the CRP contract;
    (iv) All or part of the acreage under the CRP contract is enrolled 
in another Federal, State or local conservation program;
    (v) The CRP practice fails or is not established after a certain 
time period and the cost of restoring the practice outweighs the 
benefits received from the restoration;
    (vi) The CRP contract was approved based on erroneous eligibility 
determinations; or
    (vii) Such termination is needed in the public interest, or is 
otherwise necessary and appropriate to further the goals of CRP.
    (2) A participant whose CRP contract has been terminated, in whole 
or in part in accordance with paragraph (e)(1) of this section, must 
refund all or part of the payments made by CCC with respect to the CRP 
contract, plus interest, and must also pay liquidated damages as 
provided for in the CRP contract, if directed to do so by CCC.
    (f) If a participant transfers all or part of the right and interest 
in, or right to occupancy of, land subject to a CRP contract and the new 
owner or operator becomes a successor to such contract within 60 days, 
or such other time as CCC determines to be appropriate, then such 
participant will not

[[Page 473]]

be required to refund previous payments received under the contract; 
provided, that no refunds of previous payments received will be required 
if such participant sells such land to, or such land is purchased for, 
the United States Fish and Wildlife Service; provided further, that no 
refunds of previous payments will be required if the person or entity to 
whom all or part of the right and interest in, or right of occupancy of, 
land subject to such contract reaches an agreement with CCC to modify 
the contract in a way that is consistent with the objectives of the 
program.
    (g) The participants on a CRP contract will not be in violation of 
the terms of the CRP contract if:
    (1) During the final year of the CRP contract period the land is 
enrolled in the Environmental Quality Incentives Program or Conservation 
Stewardship Program, as specified in parts 1466 and 1470 of this 
chapter, and the participant begins establishment of a practice under 
such programs; or
    (2) During the 3 years prior to the end of the CRP contract period, 
the participant begins the certification process under the Organic Foods 
Production Act of 1990.



Sec.1410.33  Contract modifications.

    (a) As agreed between CCC and the participant, a CRP contract may be 
modified in order to:
    (1) Decrease acreage in CRP, provided that such modification will be 
considered a partial termination for purposes of Sec.1410.32(e);
    (2) Permit the production of an agricultural commodity under 
exceptional circumstances during a crop year on all or part of the land 
subject to the CRP contract;
    (3) Facilitate the practical administration of CRP; or
    (4) During the last 2 years of the CRP contract period, facilitate a 
transition of land subject to the contract to a beginning, socially 
disadvantaged, or veteran farmer or rancher for the purpose of returning 
some or all of the land into production using sustainable grazing or 
crop production methods. For purposes of this paragraph (a)(4), 
``sustainable grazing and crop production methods'' will be considered 
methods that would be designed as part of an overall plan defined on an 
ecosystem level to be useful in the creation of integrated systems of 
plant and animal production practices that have a site specific 
application that would:
    (i) Enhance the environment and the natural resource base;
    (ii) Use nonrenewable resources efficiently; and
    (iii) Sustain the economic viability of the farming operation.
    (b) CCC may modify CRP contracts to add or substitute practices 
when:
    (1) The installed practice failed to adequately provide for the 
desired environmental benefit through no fault of the participant; or
    (2) The installed measure deteriorated because of conditions beyond 
the control of the participant; and
    (3) Another practice will achieve at least the same level of 
environmental benefit.
    (c) Offers to extend contracts may be made as allowed by law.
    (d) For the transfer of land into WRP, ACEP, or other Federal or 
State programs:
    (1) CCC may terminate or modify a CRP contract in whole or in part 
when the land is transferred into WRP, ACEP, or other Federal or State 
programs.
    (2) For contracts terminated or modified for enrollment in other 
Federal or State programs, participants will not be required to refund 
CRP payments or pay interest and liquidated damages to CCC, as otherwise 
required under this part.
    (3) Notwithstanding paragraph (d)(2) of this section, participants 
must refund CRP signup incentive payments if land in CRP containing a 
wetland reserve easement is enrolled in ACEP.
    (e) During the final year of the CRP contract period, CCC will allow 
an owner or operator to make conservation and land improvements for 
economic use that facilitate maintaining protection of enrolled land 
after expiration of the CRP contract, but only under the following 
conditions:
    (1) All provisions are identified in an approved CRP conservation 
plan;
    (2) Land improved in accordance with paragraph (e) of this section 
will not be eligible to be re-enrolled in CRP for 5

[[Page 474]]

years after end of the CRP contract period; and
    (3) CCC will reduce the final annual rental payment otherwise 
payable under the CRP contract by an amount commensurate with the 
economic value of the activity carried out.



Sec.1410.40  Cost-share payments.

    (a) Cost-share payments will be made available to the participant if 
an eligible practice, or an identifiable unit thereof, including fencing 
and water distribution, has been installed in compliance with the 
appropriate standards and specifications. Cost-share payments are not 
subject to the provisions of Sec.1410.42(d).
    (b) Except as provided in paragraph (c) of this section, cost-share 
payments will not be made to the same owner or operator on the same 
acreage for any eligible practices that have been previously 
established, or for which such owner or operator has received cost-share 
assistance from any other Federal agency.
    (c) Cost-share payments may be authorized for the replacement or 
restoration of practices for which cost-share payments have been 
previously allowed under CRP, only if:
    (1) Replacement or restoration of the practice is needed to achieve 
adequate erosion control, enhance water quality, wildlife habitat, or 
increase protection of public wellheads, or other conservation measures 
approved by CCC;
    (2) The failure of the original practice was due to reasons beyond 
the control of the participant; and
    (3) The benefits that would be received from the replacement or 
restoration of the practice outweighs the cost of replacing or restoring 
the practice.
    (d) Limitations on cost-share payments include:
    (1) The cost-share payment made to a participant will not exceed the 
participant's actual contribution to the eligible costs of establishing 
the practice.
    (2) The amount of the cost-share payments, including practice 
incentive payments, may not be an amount that, when added to such 
assistance from other sources, exceeds 100 percent of the actual cost of 
establishing the practice.
    (e) CCC will not make cost-share payments with respect to a CRP 
contract if any other Federal cost-share assistance has been, or is 
being, made with respect to the land subject to such CRP contract. 
Participants must refund to CCC all cost-share payments received under 
this part if other Federal cost-share assistance is received with 
respect to the same land.
    (f) CCC may make cost-share payments for thinning of existing tree 
stands to benefit wildlife habitat and other resource conditions on 
enrolled land.
    (g) In addition to cost-share payments, a practice incentive payment 
will be made available to a participant to whom CCC has made a cost-
share payment after a determination that an eligible practice has been 
installed in compliance with the appropriate standards and 
specifications. The practice incentive payment will be considered a 
cost-share payment for purposes of this part, and is not subject to the 
provisions of Sec.1410.42(d). A practice incentive payment will be 
provided only for land enrolled under:
    (1) Continuous sign-up as provided in Sec.1410.30(b); or
    (2) The Conservation Reserve Enhancement Program as provided in 
Sec.1410.90.



Sec.1410.41  Levels and rates for cost-share payments.

    (a) CCC will not pay more than 50 percent of either the actual or 
average cost of installing eligible practices specified in the 
conservation plan.
    (b) The average cost of performing a practice may be based on 
recommendations from the State Technical Committee. Such cost may be the 
average cost in a State, a county, or a part of a State or county.
    (c) If there is any other sources of cost-share assistance:
    (1) A participant may, in addition to any payment under this part, 
receive cost-share assistance, rental or easement payments, tax 
benefits, or other payments from a State or a private organization in 
return for enrolling lands in CRP.
    (2) A participant may not receive or retain CRP cost-share payments 
if other Federal cost-share assistance is

[[Page 475]]

provided for such acreage under any law.
    (d) Notwithstanding paragraphs (a) and (b) of this section, cost-
share payments for eligible seed related to the establishment of 
approved cover will not exceed 50 percent of the actual cost of the 
eligible seed mixture.
    (e) Practice incentive payments will not exceed an amount equal to 
50 percent of the actual cost of installing the eligible practice 
specified in the conservation plan.



Sec.1410.42  Annual rental payments.

    (a) Subject to the availability of funds, annual rental payments 
will be made in such amount and in accordance with such time schedule as 
specified in the CRP contract.
    (b) Annual rental payments are based on a weighted average soil 
rental rate, marginal pastureland rental rate, or grassland rate, as 
appropriate, and may include an incentive payment as a portion of the 
annual payment for specified practices. A per-acre national maximum 
rental payment rate may also be established by CCC for certain 
categories of CRP offers and contracts.
    (c) The annual rental payment will be divided among the participants 
on a CRP contract as agreed to in such CRP contract.
    (d) Limitations on annual rental payments include:
    (1) The maximum amount of annual rental payments that a person or 
entity may receive, directly or indirectly, under CRP for any fiscal 
year must not exceed $50,000. The regulations in part 1400 of this 
chapter will be used to determine if the limit has been reached or 
exceeded.
    (2) Notwithstanding paragraph (d)(1) of this section, annual rental 
payments received by a rural water district or association for land 
enrolled in CRP for the purpose of protecting a wellhead may exceed 
$50,000.
    (e) In the case of a contract succession, annual rental payments 
will be divided between the predecessor and the successor participants 
as agreed to among the participants and approved by CCC. If there is no 
agreement among the participants, annual rental payments will be divided 
in such manner deemed appropriate by CCC, and such distribution may be 
prorated based on the actual days of ownership of the property by each 
party.
    (f) CCC will prepare a schedule for each county that shows the 
maximum soil rental rate CCC may pay and which may be supplemented to 
reflect special contract requirements. Such schedule may be calculated 
for cropland based on the relative productivity of soils within the 
county using NRCS data and local FSA average cash rental estimates. For 
marginal pastureland, rental rates will be based on estimates of the 
prevailing rental values of marginal pastureland in riparian areas. 
Grassland rental rates will be based on not more than 75 percent of the 
estimated grazing value of the land. The schedule will be available in 
the local FSA office and will indicate, when appropriate, that:
    (1) Offers by producers who request rental payments greater than the 
maximum payment rate for their offer will be rejected;
    (2) Offers submitted under continuous signup authorized at Sec.
1410.30(b) may be accepted without further evaluation when the requested 
payment rate is less than or equal to the maximum payment rate for the 
offer; and
    (3) Otherwise qualifying offers will be ranked competitively based 
on factors established under Sec.1410.31 in order to provide the most 
cost-effective environmental benefits.
    (g) In the case of an owner or operator who transfers acreage to a 
wetland reserve easement in accordance with Sec.1410.10, annual rental 
payments will be prorated based on the actual number of days the 
transferred acreage was enrolled in CRP.



Sec.1410.44  Average adjusted gross income.

    (a) Benefits under this part will not be available to persons or 
entities whose average adjusted gross income exceeds $900,000 for the 3 
taxable years preceding the most immediately preceding complete taxable 
year, or who otherwise do not meet the AGI requirements specified in 
part 1400 of this chapter.

[[Page 476]]

    (b) The limit specified in paragraph (a) of this section may be 
waived in accordance with part 1400, subpart F, of this chapter.



Sec.1410.45  Incentive payments.

    (a) A signup incentive payment will be made to eligible participants 
only for the initial enrollment of certain land that is enrolled under:
    (1) A continuous signup authorized in Sec.1410.30(b) for land to 
be devoted to particular uses as determined by CCC; and
    (2) A Conservation Reserve Enhancement Program as specified in Sec.
1410.90 for land to be devoted to particular uses as determined by CCC.
    (b) The signup incentive payment will be:
    (1) An amount equal to 32.5 percent of the amount of the first 
annual rental payment for the land referred to in paragraph (a) of this 
section, as determined by CCC;
    (2) Divided among the participants on a CRP contract in accordance 
with their share of the annual rental payment as agreed to in such CRP 
contract;
    (3) Considered an annual rental payment and thus subject to the 
provisions in Sec.1410.42(d); and
    (4) Made only after the CRP contract is approved by CCC.
    (c) A signup incentive payment will not be made for land that was 
previously enrolled in CRP or land currently enrolled in CRP that is re-
enrolled.
    (d) CCC may make incentive payments to owners and operators of 
enrolled land in an amount sufficient to encourage proper tree thinning 
and other practices to improve the condition of resources, promote 
forest management, or enhance wildlife habitat. Incentive payments for 
such tree thinning and other practices will:
    (1) Not exceed 100 percent of the total cost of the practice;
    (2) Only be available for practices outlined in the tree planting 
plan under the approved CRP conservation plan;
    (3) Only be made to the extent that funds are available; and
    (4) Not exceed $200,000 per person or entity.
    (e) Additional financial incentives may be provided to participants 
whose contracts are expected to provide especially high environmental 
benefits. Such incentives will be considered annual rental payments and 
subject to the provisions in Sec.1410.42(d).



Sec.1410.51  Transfer of land.

    (a) If a new owner or operator purchases or obtains the right and 
interest in, or right to occupancy of, the land subject to a CRP 
contract, such new owner or operator may be approved by CCC as a 
participant to a new CRP contract for the transferred land. Such new 
owner or operator must assume all obligations of the CRP contract of the 
previous participant.
    (b) Cost-share payments will be made by CCC to the participant who 
established the practice.
    (c) Annual rental payments to be paid during the fiscal year when 
the land was transferred will be divided between the new participant and 
the previous participant in the manner specified in Sec.1410.42.
    (d) If a participant transfers all or part of the right and interest 
in, or right to occupancy of, land subject to a CRP contract and the new 
owner or operator does not become a successor to such CRP contract 
within 60 days, or such other time period as CCC determines to be 
appropriate, then such CRP contract will be terminated with respect to 
the affected portion of such land and the original participant:
    (1) Forfeits all rights to any future payments for that acreage; and
    (2) Will refund all previous payments received under the CRP 
contract by the participant(s) or prior participants, plus interest and 
liquidated damages, except as otherwise agreed to by CCC.
    (e) Federal agencies acquiring property, by foreclosure or 
otherwise, that contains CRP contract acreage cannot be a party to the 
CRP contract by succession. However, through an addendum to the CRP 
contract, if the current operator of the property is one of the CRP 
contract participants, such operator may continue to receive payments 
under such CRP contract if:
    (1) The property is maintained in accordance with the terms of the 
CRP contract;

[[Page 477]]

    (2) Such operator continues to be the operator of the property; and
    (3) Ownership of the property remains with such Federal agency.



Sec.1410.52  Violations.

    (a) If a participant fails to carry out the terms and conditions of 
a CRP contract, CCC may terminate the CRP contract in whole or in part.
    (b) If the CRP contract is terminated in whole or in part by CCC in 
accordance with paragraph (a) of this section, the participant will:
    (1) Forfeit all rights to further payments under such CRP contract 
for the terminated acres, and refund all payments previously received 
for the terminated acres, plus interest; and
    (2) Pay liquidated damages to CCC in an amount as specified in the 
contract.



Sec.1410.53  Executed CRP contract not in conformity with this part.

    If, after a CRP contract is approved by CCC, it is discovered that 
such CRP contract is found to contain material errors of fact or is not 
in conformity with this part, CCC may terminate or offer to modify the 
CRP contract in whole or in part.



Sec.1410.54  Performance based upon advice or action of the
U.S. Department of Agriculture.

    The provisions of part 718 of this title relating to performance 
based upon the action or advice of an authorized representative of the 
U.S. Department of Agriculture are applicable to this part.



Sec.1410.55  Access to land under CRP contract.

    (a) Any representative of the U.S. Department of Agriculture, or 
designee thereof, will, for purposes related to CRP, be provided by the 
producer or participant, as the case may be, with access to land that 
is:
    (1) The subject of an offer for a contract under this part; or
    (2) Under a CRP contract or otherwise subject to this part.
    (b) For land identified in paragraph (a) of this section, the 
producer or participant will provide the representative with access to 
examine records for the land to determine land classification, erosion 
rates, or for other purposes, and to determine whether the terms and 
conditions of the CRP contract are being met.



Sec.1410.56  Division of payments and provisions about tenants and sharecroppers.

    (a) Payments received under this part will be divided as specified 
in the applicable CRP contract and CCC will ensure that producers who 
would have an interest in acreage being offered receive treatment that 
is equitable. CCC may refuse to enter into a contract when there is a 
disagreement among producers seeking enrollment as to a producer's 
eligibility to participate in the CRP contract as a tenant and there is 
insufficient evidence to indicate whether the producer seeking 
participation as a tenant does or does not have an interest in the 
acreage offered for enrollment in CRP.
    (b) CCC may remove an operator or tenant from a CRP contract when:
    (1) The operator or tenant requests in writing to be removed from 
the CRP contract;
    (2) The operator or tenant files for bankruptcy and the trustee or 
debtor in possession fails to affirm the contract, to the extent 
permitted by applicable bankruptcy laws;
    (3) The operator or tenant dies during the CRP contract period and 
the administrator of the estate fails to succeed to the contract; or
    (4) A court of competent jurisdiction orders the removal from the 
CRP contract of the operator or tenant and such order is received by 
CCC.
    (c) In addition to paragraph (b) of this section, tenants must 
maintain their tenancy throughout the CRP contract period in order to 
remain on a CRP contract. Tenants who fail to maintain tenancy on the 
acreage under CRP contract, including failure to comply with applicable 
State law, may be removed from a CRP contract by CCC. CCC will assume 
the tenancy is being maintained unless notified otherwise by a party to 
the CRP contract.



Sec.1410.57  Payments not subject to claims.

    Subject to part 3 of this title, any payment or portion thereof due 
any person under this part will be allowed

[[Page 478]]

without regard to questions of title under State law, and without regard 
to any claim or lien in favor of any creditor, except agencies of the 
United States Government.



Sec.1410.58  Assignments.

    Participants may assign the right to receive cash payments, in whole 
or in part, as provided in part 1404 of this chapter.



Sec.1410.59  Appeals.

    (a) Except as provided in paragraph (b) of this section, a 
participant or producer seeking participation may appeal or request 
reconsideration of an adverse determination in accordance with the 
administrative appeal regulations at parts 11 and 780 of this title.
    (b) Determinations by NRCS assigned to make such determination for 
CCC may be appealed in accordance with procedures established in part 
614 of this title.



Sec.1410.60  Scheme or device.

    (a) If CCC determines that a person has employed a scheme or device 
to defeat the purposes of this part, or any part of any CCC or USDA 
program, payment otherwise due or paid such person during the applicable 
period may be required to be refunded with interest as determined by 
CCC.
    (b) A scheme or device includes, but is not limited to, coercion, 
fraud, misrepresentation, depriving any other person of cost-share, 
incentive, or annual rental payments, or obtaining a payment that 
otherwise would not be payable.
    (c) A new owner or operator or tenant of land subject to a CRP 
contract, and who succeeds to the CRP contract, must report in writing 
to CCC any interest of any kind in such land that is retained by a 
previous participant. The interest will include a present, future, or 
conditional interest, reversionary interest, or any option, future or 
present, on such land, and any interest of any lender in the land where 
the lender has, will, or can legally obtain, a right of occupancy to 
such land or an interest in the equity in the land other than an 
interest in the appreciation in the value of the land occurring after 
the loan was made. Failure to fully disclose interest will be considered 
a scheme or device.



Sec.1410.61  Filing of false claims.

    If CCC determines that any participant has knowingly supplied false 
information or has knowingly filed a false claim, such participant will 
be ineligible for payments under this part with respect to the fiscal 
year in which the false information or claim was filed and the CRP 
contract may be terminated, in which case a full refund of all prior 
payments may be demanded. False information or false claims include, but 
are not limited to, claims for payment for practices that do not comply 
with the conservation plan. Any amounts paid under these circumstances 
must be refunded, plus interest as determined by CCC and any amounts 
otherwise due to the participant will be withheld. The remedies provided 
for in this section will be in addition to any and all other remedies, 
criminal and civil, that may apply.



Sec.1410.62  Miscellaneous.

    (a) Except as otherwise provided in this part, in the case of death, 
incompetency, or disappearance of any participant, any payments due 
under this part will be paid to the participant's successor(s), as 
specified in part 707 of this title.
    (b) Unless otherwise specified in this part, payments under this 
part will be subject to the requirements of part 12 of this title 
concerning highly erodible land and wetland conservation and payments.
    (c) Any remedies permitted CCC under this part will be in addition 
to any other remedy, including, but not limited to, criminal remedies, 
or actions for damages in favor of CCC, or the United States, as may be 
permitted by law.
    (d) When an owner loses control of CRP acreage due to foreclosure 
and the new owner chooses not to continue the contract in accordance 
with Sec.1410.51, refunds may not be required from any participant on 
the contract to the extent CCC determines that waiver of such refund is 
appropriate.
    (e) Cropland enrolled in CRP will be classified as cropland for the 
time period it is enrolled in CRP. After the

[[Page 479]]

CRP contract ends, such land will be removed from the classification of 
cropland if the county committee determines the land no longer meet the 
definition of cropland in part 718 of this title.
    (f) As determined by CCC, incentives may be authorized to foster 
opportunities for Indian Tribes and beginning, limited resource, 
socially disadvantaged, and veteran farmers and ranchers, and to enhance 
long-term environmental goals.



Sec.1410.63  Permissive uses.

    (a) Unless specified in this part or otherwise approved by CCC, no 
uses of any kind are authorized on CRP acreage during the contract 
period.
    (b) Commercial shooting preserves may be operated on CRP acreage 
provided:
    (1) The commercial shooting preserve is licensed by a State agency 
such as the State fish and wildlife agency or State department of 
natural resources;
    (2) The commercial shooting preserve is operated in a manner 
consistent with the applicable State agency rules governing commercial 
shooting preserves; and
    (3) The CRP cover is maintained according to the conservation plan.
    (c) No barrier fencing or boundary limitations that prohibit 
wildlife access to or from the CRP acreage are allowed, unless required 
by State law.
    (d) Wind turbines and associated access to the wind turbines may be 
installed on CRP acreage in numbers and locations as determined 
appropriate by CCC considering the location, size, and other physical 
characteristics of the land, the extent to which the land contains 
threatened or endangered wildlife and wildlife habitat, and the purposes 
of CRP, but only in exchange for a 25 percent reduction in the annual 
rental payment for the acres covered by the wind turbine and associated 
access acreage.
    (e) The sale of carbon, water quality, or environmental credits may 
be permitted by CCC.
    (f) There are specific activities that are permitted on specific 
land:
    (1) The permitted activities provisions of paragraphs (f)(2) and (3) 
of this section do not apply to land enrolled under:
    (i) A grassland signup authorized by Sec.1410.30(c);
    (ii) The Soil Health and Income Protection Pilot Program described 
in Sec.1410.70;
    (iii) The Conservation Reserve Enhancement Program described in 
Sec.1410.90:
    (A) Except for land enrolled under Conservation Reserve Enhancement 
Program agreements executed before December 20, 2018; provided, that 
such agreements may be amended by mutual agreement to disallow such 
otherwise permitted activities; or
    (B) Unless the approved Conservation Reserve Enhancement Program 
agreement under which the land was enrolled specifically permits such 
activity; and
    (iv) A State Acres for Wildlife Enhancement project, unless the 
State Acres for Wildlife Enhancement project under which the land was 
enrolled specifically permits such activity.
    (2) The following activities may be permitted on CRP acreage 
according to an approved conservation plan, without any reduction to the 
annual rental payment:
    (i) Emergency haying, emergency grazing, or emergency use of the 
forage in response to a localized or regional drought, flooding, 
wildfire, or other emergency as determined by CCC on all practices, 
outside the primary nesting season, when:
    (A) All or any part of the county in which the CRP acreage is 
located is designated as D2 (severe drought) or greater according to the 
United States Drought Monitor;
    (B) There is at least a 40 percent loss in forage production in the 
county in which the CRP acreage is located; or
    (C) CCC determines that CRP can assist in the response to a natural 
disaster event without permanent damage to the established cover;
    (ii) Emergency grazing on all practices during the primary nesting 
season if payments are authorized for the county under the Livestock 
Forage Disaster Program under part 1416 of this chapter, at 50 percent 
of the normal carrying capacity determined in

[[Page 480]]

accordance with part 1416 of this chapter;
    (iii) Emergency haying on certain practices, as determined by CCC, 
only outside the primary nesting season, if payments are authorized for 
the county under the Livestock Forage Disaster Program under part 1416 
of this chapter, but on not more than 50 percent of the eligible CRP 
contract acres;
    (iv) Grazing of all practices only outside the primary nesting 
season if included as an approved CRP contract management activity in 
accordance with Sec.1410.22;
    (v) The intermittent and seasonal grazing of vegetative buffers, 
only outside the primary nesting season, that are incidental to 
agricultural production on land adjacent to the buffer provided such 
grazing:
    (A) Does not destroy the permanent vegetative cover; and
    (B) Retains suitable vegetative structure for wildlife cover and 
shelter outside the primary nesting season; and
    (vi) Grazing on all practices only outside the primary nesting 
season if conducted by a beginning farmer or rancher who is a 
participant on the CRP contract with a share of the rental payment 
greater than zero.
    (3) The following activities may be permitted on CRP acreage 
according to an approved conservation plan, but only in exchange for a 
25 percent reduction to the annual rental payment for the acres on which 
the permitted activity occurred:
    (i) Grazing of all practices not more frequently than every other 
year on the same land, except that during the primary nesting season the 
grazing will be subject to a 50 percent reduction in the stocking rate, 
as determined by CCC;
    (ii) Haying and other commercial use (including the managed 
harvesting of biomass, but not the harvesting of vegetative cover) of 
all practices, on the condition the activity:
    (A) Is completed only outside the primary nesting season;
    (B) Occurs not more than once every 3 years; and
    (C) Maintains 25 percent of the total CRP contract acres 
unharvested, in accordance with a conservation plan that provides for 
wildlife cover and shelter; and
    (iii) Annual grazing of all practices, only outside the primary 
nesting season for the control of invasive species.
    (g) Not withstanding paragraph (f) of this section, haying and 
grazing will not be permitted on any land enrolled in CRP if such haying 
and grazing for that year would cause long-term damage to the vegetative 
cover on that land.



Sec.1410.64  Transition Incentives Program.

    (a) To be eligible for the Transition Incentives Program, all the 
following must be met:
    (1) The land must be enrolled in CRP;
    (2) The conditions for the timing of the sale or lease of the land 
and to whom it must be sold or leased are:
    (i) Beginning on the date of the end of the CRP contract period, the 
land must be sold or leased (under a long-term lease, or a lease with an 
option to purchase the land, including a lease with a term of less than 
5 years and an option to purchase the land) to a beginning, veteran, or 
socially disadvantaged farmer or rancher who will return some or all of 
the land to production using sustainable grazing or crop production 
methods; and
    (ii) The sale or lease, as applicable, must take effect on the day 
immediately after the end of the CRP contract period;
    (3) The CRP contract is modified in accordance with Sec.
1410.33(a)(4);
    (4) The land is not subject to an easement or other restriction that 
prohibits the use of the land allowed under this section; and
    (5) The beginning, veteran, or socially disadvantaged farmers or 
ranchers must:
    (i) Certify that they meet the definition of either a beginning or 
veteran farmer or rancher as defined in part 718 of this title, or a 
socially disadvantaged farmer or rancher as defined in Sec.1410.2;
    (ii) Obtain an approved conservation plan prior to approval of the 
Transition Incentives Program contract; and
    (iii) Implement sustainable grazing or crop production on land not 
re-enrolled in CRP in compliance with the

[[Page 481]]

conservation plan by the time specified in the conservation plan.
    (b) Beginning in the last 2 years of the CRP contract period, the 
beginning, veteran, or socially disadvantaged farmer or rancher may:
    (1) In conjunction with the contract participants, make conservation 
and land improvements, including preparing to plant a crop, that are 
consistent with the conservation plan; and
    (2) Begin the organic certification process under the Organic Foods 
Production Act of 1990.
    (c) Eligible beginning, veteran, or socially disadvantaged farmers 
or ranchers may be eligible immediately to re-enroll certain partial 
field conservation practices in CRP, in accordance with the conservation 
plan and the provisions of this part, following the expiration of the 
CRP contract, provided that the beginning, veteran, or socially 
disadvantaged farmer or rancher has control of the land and meets all 
other qualifying conditions specified in this part.
    (d) Eligible beginning, veteran, or socially disadvantaged farmers 
or ranchers will be eligible to enroll land in the Environmental Quality 
Incentives Program or the Conservation Stewardship Program, as specified 
in parts 1466 and 1470 of this chapter, provided that their offer to 
enroll otherwise meets all program conditions, and provided that the CRP 
contract has expired and the beginning, veteran, or socially 
disadvantaged farmer or rancher is either leasing or has possession of 
the property.
    (e) As an incentive for selling or leasing land to a beginning, 
veteran, or socially disadvantaged farmer or rancher who is not a family 
member of the previous participants, CCC will pay 2 years of additional 
CRP annual rental payments at the same contract rate to the previous 
participants. The previous participants must certify in writing that the 
beginning, veteran, or socially disadvantaged farmer or rancher is not a 
family member.
    (f) The previous participants and the eligible beginning, veteran, 
or socially disadvantaged farmer or rancher must agree to be jointly and 
severally responsible for complying with both the provisions of the 
Transition Incentives Program contract and the provisions of this part, 
and must also agree to be jointly and severally responsible for any 
payment adjustments that may result from violations of the terms or 
conditions of the Transition Incentives Program contract or this part.



Sec.1410.70  Soil Health and Income Protection Pilot Program.

    (a) Enrollments under the Soil Heath and Income Protection Pilot 
Program will be administered under the provisions of this part, except 
where specifically provided otherwise.
    (b) Notwithstanding Sec.1410.6(b) and (c), to be eligible under 
the Soil Health and Income Protection Pilot Program, land must be 
cropland that:
    (1) Is physically located within a Soil Health and Income Protection 
Pilot Program pilot area specified by CCC;
    (2) Has been annually planted or considered planted to an 
agricultural commodity each of the 3 crop years immediately preceding 
the year in which the offer for enrollment is submitted; and
    (3) Is verified to be less productive land, as compared to other 
land on the farm from which the land is offered for enrollment.
    (c) Notwithstanding paragraph (b) of this section, land will be 
ineligible for enrollment under the Soil Health and Income Protection 
Pilot Program if the land was enrolled in CRP in any of the 3 crop years 
immediately preceding the year in which the offer for enrollment is 
submitted. Further, not more than 15 percent of the eligible land on a 
farm may be enrolled in the Soil Health and Income Protection Pilot 
Program.
    (d) Notwithstanding Sec.1410.30, offers for contracts under the 
Soil Health and Income Protection Pilot Program may be submitted only 
during signup periods as announced by CCC. Further, eligible land may 
only be enrolled under the Soil Health and Income Protection Pilot 
Program through December 31, 2020. Acreage determined eligible in 
accordance with paragraph (b) of this section may be automatically 
accepted in CRP without further evaluation if:
    (1) A producer is eligible under Sec.1410.5; and
    (2) The producer accepts either the maximum payment rate CCC is 
willing

[[Page 482]]

to pay to enroll the acreage in CRP, or a lesser rate.
    (e) The approved cover for land enrolled under the Soil Health and 
Income Protection Pilot Program is the lowest practicable cost permanent 
vegetative cover.
    (f) Notwithstanding Sec.1410.40, CCC will not provide any cost-
share payments for planting the approved permanent vegetative cover, 
except as provided for in paragraph (g) of this section.
    (g) Notwithstanding paragraph (f) of this section and Sec.1410.41, 
CCC will provide cost-share payments of 50 percent of the eligible 
actual cost of installation of the approved permanent vegetative cover 
to beginning, limited resource, socially disadvantaged, and veteran 
farmers and ranchers, upon a determination that the approved permanent 
vegetative cover has been planted.
    (h) The contract period for land enrolled under the Soil Health and 
Income Protection Pilot Program will be for a term of 3, 4, or 5 years, 
as requested by the producer.
    (i) The following uses are permitted on land enrolled under the Soil 
Health and Income Protection Pilot Program:
    (1) Without any reduction in the annual rental payment, the land may 
be:
    (i) Made available for a walk-in access program of the applicable 
State; and
    (ii) Hayed or grazed outside the primary nesting season, provided 
adequate stubble height of the cover is maintained to protect the soil 
as specified in the conservation plan; and
    (2) In exchange for a 25 percent reduction to the annual rental 
payment, and not being eligible to be insured or reinsured under the 
Federal Crop Insurance Act, the land may be harvested for seed outside 
the primary nesting season if included in the conservation plan.
    (j) A CRP contract for land enrolled under the Soil Health and 
Income Protection Pilot Program may be terminated before the end of the 
CRP contract period by either:
    (1) CCC, if CCC determines that such termination is appropriate; or
    (2) The participant, upon the condition that all CCC payments made 
with respect to the CRP contract being terminated are refunded.



Sec.1410.80  CLEAR 30 Pilot Program.

    (a) Not withstanding Sec.1410.6(b) and (c), to be eligible under 
the CLEAR 30 Pilot Program, land must be:
    (1) Physically located within a CLEAR 30 Pilot Program area, as 
announced by CCC;
    (2) Devoted to a grass waterway, contour grass strip, prairie strip, 
filter strip, riparian buffer, wetland restoration practice, or other 
similar water quality practice that helps reduce sediment loadings, 
nutrient loadings, and harmful algal blooms; and
    (3) Enrolled in CRP, in the final year of the CRP contract period, 
provided the scheduled expiration date of the current CRP contract is:
    (i) On or after December 20, 2018; and
    (ii) Before the effective starting date of the new CRP contract.
    (b) The contract period for land enrolled under the CLEAR 30 Pilot 
Program will be 30 years.
    (c) In addition to the provisions in Sec.1410.32 and elsewhere in 
this part, the CRP contract for land enrolled under the CLEAR 30 Pilot 
Program will:
    (1) Permit repairs, improvements, and inspections on the land that 
are necessary to maintain existing public drainage systems; and
    (2) Prohibit:
    (i) Alteration of wildlife habitat and other natural features of the 
land, unless authorized by CCC and provided for in the conservation 
plan;
    (ii) Mowing or spraying chemicals on the land, unless such action is 
authorized by CCC to:
    (A) Comply with Federal or State noxious weed laws;
    (B) Comply with a Federal or State emergency pest management 
program; or
    (C) Meet habitat needs of specific wildlife; and
    (iii) Adoption of any other practice or action that would tend to 
defeat the purpose of CRP.
    (d) Land enrolled under the CLEAR 30 Pilot Program may be used for 
compatible economic uses, including but not limited to hunting and 
fishing, managed timber harvest, or periodic haying or grazing, provided 
the use is:
    (1) Included in the conservation plan; and

[[Page 483]]

    (2) Consistent with the long-term protection and enhancement of the 
conservation resource for which the land was enrolled.
    (e) Notwithstanding Sec.1410.30, offers for contracts under the 
CLEAR 30 Pilot Program may be submitted only during a time period, as 
determined and announced by CCC, and only within the final year of the 
contract period of the CRP contract under which the land is currently 
enrolled.
    (f) In addition to the provisions in Sec.1410.52, upon a violation 
of the terms and conditions of a contract for land enrolled under the 
CLEAR 30 Pilot Program, CCC may require the participant to refund all or 
part of any payments received under CRP plus interest and liquidated 
damages.



Sec.1410.90  Conservation Reserve Enhancement Program.

    (a) An agreement executed under the provisions of this section will 
not effect, modify, or otherwise interfere with any Conservation Reserve 
Enhancement Program agreement in effect on or before December 20, 2018. 
In order to implement other provisions of this section, the signatories 
to a Conservation Reserve Enhancement Program agreement in effect on or 
before December 20, 2018, may mutually agree in writing to modify such 
agreement in such a manner.
    (b) CCC may enter into a Conservation Reserve Enhancement Program 
agreement with an eligible partner to cost-effectively assist in 
enrolling otherwise eligible land in CRP.
    (c) To enter into a Conservation Reserve Enhancement Program 
agreement with CCC, eligible partners must provide required matching 
funds. Such matching funds provided by the eligible partners may be 
cash, in-kind contributions, or technical assistance. The amount and 
type of matching funds must be specified in the Conservation Reserve 
Enhancement Program agreement. At least one-half of the matching funds 
must be provided as a direct payment to eligible participants. The 
amount of matching funds an eligible partner must contribute under a 
Conservation Reserve Enhancement Program agreement will be either:
    (1) 30 percent of the total cost of the project, unless a different 
amount is determined by negotiation between CCC and the eligible partner 
with whom CCC is entering into the Conservation Reserve Enhancement 
Program agreement, if the majority of the matching funds to carry out 
the agreement are provided by one or more eligible partners that are not 
nongovernmental organizations; or
    (2) Not less than 30 percent of the total cost of the project, if a 
majority of the matching funds to carry out the agreement are provided 
by one or more nongovernmental organizations.
    (d) Notwithstanding Sec.1410.40(d), cost-share payments, including 
practice incentive payments, from all sources may exceed 100 percent of 
the actual cost of establishing eligible practices, but only if 
specifically authorized by the Conservation Reserve Enhancement Program 
agreement. Furthermore, a participant may not receive or retain cost-
share payments if other Federal cost-share assistance is provided for 
such acreage under any law.
    (e) With regard only to land enrolled as a riparian buffer:
    (1) The term ``management'' means an activity conducted by the owner 
or operator of the land after the riparian buffer is established to 
regularly maintain or enhance only the vegetative cover throughout the 
CRP contract period and in accordance with the conservation plan;
    (2) Cost-share payments will be made available for approved 
management as provided for in the Conservation Reserve Enhancement 
Program agreement:
    (i) If such activity has been completed in accordance with the 
conservation plan; and
    (ii) In an amount as provided for in the agreement, but not greater 
than 100 percent of the normal and customary cost of such activity; but
    (iii) No practice incentive payment will be made for such activity; 
and
    (3) If provided for in the Conservation Reserve Enhancement Program 
agreement, a participant may plant food-producing woody plants as part 
of the approved cover, provided such plantings:

[[Page 484]]

    (i) Contribute to the conservation of soil, water quality, and 
wildlife habitat;
    (ii) Are consistent with recommendations of the applicable State 
Technical Committee;
    (iii) Are consistent with the FOTG; and
    (iv) Are provided for in the conservation plan.
    (f) Participants may harvest from the food-producing woody plants 
specified in paragraph (e)(3) of this section only if the following 
conditions are met:
    (1) The criteria in paragraph (e)(3) of this section are met;
    (2) The participant agrees to a reduction in the annual rental 
payment commensurate with the value of the crop harvested;
    (3) All the food-producing woody plant species within 35 feet of the 
water body the riparian buffer is buffering are only native plant 
species;
    (4) The harvesting will not damage the approved cover or otherwise 
have a negative impact on the resource concern being addressed by the 
riparian buffer; and
    (5) The harvesting is conducted in accordance with the conservation 
plan.
    (g) In the case of a Conservation Reserve Enhancement Program 
agreement whose purpose is to address regional drought concerns, CCC 
may:
    (1) Enroll otherwise ineligible cropland, marginal pastureland, or 
grassland, on which the resource concerns identified in the Conservation 
Reserve Enhancement Program agreement can be addressed if the enrollment 
of such land is critical to the accomplishment of the purposes of the 
agreement; and
    (2) Determine annual rental payments so as to be consistent with 
similar Conservation Reserve Enhancement Program agreements, and to 
ensure regional consistency regarding such payments.
    (h) Notwithstanding Sec.1410.30, generally, enrollment under a 
Conservation Reserve Enhancement Program will be held on a continuous 
signup basis. However, the terms and conditions of the Conservation 
Reserve Enhancement Program agreement will determine the basis of 
enrollment.



PART 1412_AGRICULTURE RISK COVERAGE, PRICE LOSS COVERAGE, AND COTTON
TRANSITION ASSISTANCE PROGRAMS--Table of Contents



                      Subpart A_General Provisions

Sec.
1412.1 Applicability, changes in law, interest, application, and 
          contract provisions.
1412.2 Administration.
1412.3 Definitions.
1412.4 Appeals.

Subpart B_Establishment of Base Acres for a Farm for Covered Commodities

1412.23 Base acres, and Conservation Reserve Program.
1412.24 Limitation of total base acres on a farm.
1412.25 Allocation of generic base acres on a farm and updating of 
          records.
1412.26 Treatment of base acres on farms entirely in pasture, grass, 
          idle, or fallow.

  Subpart C_Establishment of Price Loss Coverage Yields and Submitting 
                               Production

1412.31 PLC yields for covered commodities.
1412.32 Updating PLC yield for all covered commodities except seed 
          cotton.
1412.33 Updating PLC yield for seed cotton.
1412.34 PLC yield for additional oilseeds.
1412.35 Submitting production evidence.
1412.36 Incorrect or false production evidence.

  Subpart D_ ARC and PLC Contract Terms and Enrollment Provisions for 
                           Covered Commodities

1412.41 ARC or PLC program contract.
1412.42 Eligible producers.
1412.43 Reconstitutions.
1412.44-1412.45 [Reserved]
1412.46 Planting flexibility.
1412.49 Matters of general applicability.

      Subpart E_Financial Considerations Including Sharing Payments

1412.50 Transfer of land and succession-in-interest.
1412.51 Limitation of payments.
1412.52 PLC payment provisions.
1412.53 ARC payment provisions.
1412.54 Sharing of payments.
1412.55 Provisions relating to tenants and sharecroppers.

             Subpart F_Violations and Compliance Provisions

1412.61 Contract violations.

[[Page 485]]

1412.63 Contract or application liability.
1412.64 Inaccurate representation, misrepresentation, and scheme or 
          device.
1412.65 Offsets and assignments.
1412.66 Acreage and production reports, prevented planting, and notice 
          of loss.
1412.67 Compliance with highly erodible land and wetland conservation 
          provisions.
1412.68 Controlled substance violations.
1412.69 Control of noxious weeds.

                     Subpart G_ARC and PLC Election

1412.71 Election of ARC or PLC.
1412.72 Election period.
1412.73 Reconstitutions of farms and election.
1412.74 Failure to make election.

                             Subpart H_CTAP

1412.81 Administration.
1412.82 Eligibility and CTAP application.
1412.83 Sharing of CTAP payments.
1412.84 Impact of CTAP application on ARC or PLC.
1412.86 CTAP payments.
1412.87 Transfer of land and succession-in-interest.
1412.88 Executed CTAP application not in conformity with regulations.
1412.89 Division of CTAP payments and provisions relating to tenants and 
          sharecroppers.

    Authority: 7 U.S.C. 1508b, 7911-7912, 7916, 8702, 8711-8712, 8751-
8752, and 15 U.S.C. 714b and 714c.

    Source: 79 FR 46339, Aug. 8, 2014, unless otherwise noted.



                      Subpart A_General Provisions



Sec.1412.1  Applicability, changes in law, interest, application, 
and contract provisions.

    (a) This part specifies how base acres and farm program payment 
yields are established or adjusted for the purpose of calculating 
payments for agriculture risk coverage (ARC) and price loss coverage 
(PLC) for covered commodities: Wheat, oats, and barley (including wheat, 
oats, and barley used for haying and grazing); corn; grain sorghum; long 
grain rice; medium grain rice; seed cotton; pulse crops; soybeans; other 
oilseeds; and peanuts. This part specifies how and when producers on a 
farm may make an election and enroll on a farm to obtain either ARC or 
PLC (and if ARC, whether to receive ARC payments based on county 
coverage applicable on a covered commodity-by-commodity basis; or 
individual coverage applicable to all the covered commodities on a 
farm).
    (b) Payments otherwise provided for in this part are subject to 
changes made by law in rates, conditions, and eligibility 
notwithstanding any contract under this part. However, any such 
modification may, as determined by FSA, allow producers the opportunity 
to withdraw their ARC or PLC contract.
    (c) If any refund is due to FSA under this part, interest will be 
due from the date of the FSA disbursement except as determined by FSA. 
The provisions of this section will apply notwithstanding any other 
provision of this or any other part. In order to receive payment under 
this part a participant is required to comply with the regulations in 
this part and any additional requirements imposed by the ARC or PLC 
contract.
    (d) For ARC and PLC, assistance under this part will be provided for 
producers satisfying all requirements of this part who have a share of 
eligible base acres of the covered commodity. The sum of the base acres 
on a farm are based on the farm's constitution according to part 718 of 
this title. FSA farm records and PLC yields are based on the 
administrative county of the farm. ARC-CO assistance under this part 
will be determined by FSA for the enrolled covered commodity base acres 
based on the physical location of covered commodity base acres on a farm 
weighted and summarized to the farm.

[79 FR 46339, Aug. 8, 2014, as amended at 83 FR 40656, Aug. 16, 2018; 84 
FR 45887, Sept. 3, 2019]



Sec.1412.2  Administration.

    (a) ARC and PLC are administered under the general supervision of 
the Executive Vice-President, CCC, and will be carried out by FSA State 
and county committees (State and county committees).
    (b) State and county committees, and representatives and their 
employees, do not have authority to modify or waive any of the 
provisions of the regulations of this part.
    (c) The State committee may take any action required by the 
regulations of this part that the county committee

[[Page 486]]

has not taken. The State committee will also:
    (1) Correct, or require a county committee to correct, any action 
taken by such county committee that is not in accordance with the 
regulations of this part; or
    (2) Require a county committee to withhold taking any action that is 
not in accordance with this part.
    (d) No provision or delegation to a State or county committee will 
preclude the Executive Vice President, or the Deputy Administrator, or a 
designee, from determining any question arising under the program or 
from reversing or modifying any determination made by a State or county 
committee.
    (e) The Deputy Administrator has the authority to permit State and 
county committees to waive or modify any non-statutory deadline 
specified in this part.
    (f) Items of general applicability to program participants, 
including, but not limited to, application periods, application 
deadlines, internal operating guidelines issued to State and county 
offices, prices, yields, and payment factors established for ARC or PLC, 
are not subject to appeal in accordance with part 780 of this title.

[79 FR 46339, Aug. 8, 2014, as amended at 83 FR 40656, Aug. 16, 2018]



Sec.1412.3  Definitions.

    The definitions in this section are applicable for all purposes of 
administering this part. The terms defined in part 718 of this title and 
part 1400 of this chapter are also applicable, except where those 
definitions conflict with the definitions specified in this section. 
Where there is a conflict or a difference in definitions specified in 
this part and part 718 of this title or part 1400 of this chapter, the 
regulations in this part will apply.
    2014 Farm Bill means the Agricultural Act of 2014 (Pub. L. 113-79), 
as amended.
    Actual average county yield means the yield, which is calculated as 
the crop year production of a covered commodity in the county divided by 
the commodity's total planted acres for a crop year in the county.
    (1) For wheat, corn, grain sorghum, barley and oats, planted acres 
are the harvested acres plus unharvested acres.
    (2) In determining the yield for a county, FSA uses data in order 
from the following data sources: RMA and yields determined by State 
committee.
    (3) Separate irrigated and non-irrigated yields will be established 
in a county having farms with P&CP acreage history of a covered 
commodity in 2013 through 2017. These separate yields will be 
established where FSA determines the covered commodity's P&CP acreage 
was both irrigated and non-irrigated in 2013 through 2017.
    (4) At FSA's discretion, FSA will calculate and use a trend-adjusted 
yield factor to adjust the yield taking into consideration, but not 
exceeding, the trend-adjusted yield factor that is used to increase 
yield history under the crop insurance endorsement under the Federal 
Crop Insurance Act (7 U.S.C. 1501-1524).
    Actual crop revenue is calculated as follows for:
    (1) ARC-CO, for a crop year of a covered commodity: The actual 
average county yield per planted acre of the covered commodity times the 
higher of either the market year average (MYA) price of the covered 
commodity or the national average loan rate for the covered commodity. 
If a county has separate irrigated and non-irrigated yields established 
for a covered commodity, the actual crop revenue calculated for a farm 
with that covered commodity will be weighted by FSA based on the farm's 
historical irrigated percentage.
    (2) ARC-IC, for a producer on a farm for a crop year, which is based 
on the producer's enrolled share of planted acres of all covered 
commodities on all farms for which ARC-IC has been elected and in which 
the producer has an interest for which the producer enrolled: the sum of 
the results of the following calculation for each covered commodity on 
the farm:
    (i) The total production of the covered commodity for all enrolled 
farms in the State in which the producer has an interest; times
    (ii) The higher of either the MYA price or national loan rate for 
the covered commodity; divided by

[[Page 487]]

    (iii) The producer's share of the planted acres of the covered 
commodity in the State.
    Administrative units means, for the purposes of ARC-CO, the division 
of specific counties into two areas for counties that are each larger 
than 1,400 square miles and have more than 190,000 base acres where 
appropriate based on the differences in weather patterns, soil types, 
and other factors.
    Agriculture risk coverage (or ARC) means coverage provided under 
subparts D and E of this part.
    ARC-CO means the Agriculture Risk Coverage elected with the county 
option.
    ARC guarantee is calculated for a crop year for a covered commodity, 
and is equal to 86 percent of the benchmark revenue for ARC-CO and ARC-
IC, as defined in this part.
    ARC-IC means the Agriculture Risk Coverage elected with the 
individual option.
    ARC-IC farm is calculated as the sum of the producer's interests in 
all of the producer's farms having an ARC-IC election and enrollment in 
the State.
    Average historical county yield means the 5-year Olympic determined 
by FSA as the average of actual average county yields for the most 
recent 5 years for which data is available, substituting 80 percent of 
the county transitional yield as defined in this part in each year in 
which the actual average county yield is less than 80 percent of the 
county transitional yield. Separate irrigated and non-irrigated yields 
will be established in a county having a sufficient number of farms with 
P&CP acreage history of a covered commodity in 2013 through 2017. These 
separate yields will be established for counties where a covered 
commodity's P&CP acreage was both irrigated and non-irrigated in 2013 
through 2017. If needed, a trend-adjusted yield factor will be used to 
adjust the yield taking into consideration, but not exceeding, the 
trend-adjusted yield factor that is used to increase yield history under 
the crop insurance endorsement under the Federal Crop Insurance Act (7 
U.S.C. 1501-1520).
    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 7 CFR part 1412, subpart B that were in effect on that 
date, subject to any reallocation, adjustment, or reduction. The term 
``base acres'' includes any unassigned base acres.
    Benchmark revenue for ARC-CO is calculated as the product obtained 
by multiplying the average historical county yield times the average MYA 
price for the most recent 5 crop years available, excluding each of the 
crop years with the highest and lowest prices and substituting the 
effective reference price in each year where the MYA price is less than 
the effective reference price. If a county has separate irrigated and 
non-irrigated yields established for a covered commodity, the benchmark 
revenue calculated by FSA for that farm and covered commodity will be 
weighted based on the farm's historical irrigated percentage.
    Benchmark revenue for ARC-IC means a producer's share of all covered 
commodities planted on all farms in the State for which individual ARC 
has been elected and enrolled and in which the producer has an interest. 
FSA will calculate the benchmark revenue for ARC-IC using the following 
three steps, based on the producer's planted commodities:
    (1) For each planted covered commodity for each of the most recent 5 
crop years available:
    (i) Yield per planted acre (substituting 80 percent of the county 
transitional yield in each year where the yield per planted acre is less 
than 80 percent of the county transitional yield); times
    (ii) The MYA price for the most recent 5 crop years, excluding each 
of the crop years with the highest and lowest prices and substituting 
the effective reference price in each year where the MYA price is less 
than the effective reference price.
    (2) For each covered commodity, the average of the revenues 
determined under paragraph (1) of this definition for the most recent 5 
crop years available, excluding each of the crop years with the highest 
and lowest revenues; and
    (3) For each of the 2019 through 2023 crop years, the benchmark 
revenue for the ARC-IC farm is the sum of the

[[Page 488]]

amounts determined under paragraph (2) of this definition for all 
covered commodities on such farms, adjusted to reflect the ratio between 
the total number of P&CP acres and eligible subsequently planted crop 
acreage on such farms to a covered commodity and the total P&CP acres 
and eligible subsequently planted crop acreage of all covered 
commodities planted on such farms. If a producer has an interest in 
multiple farms that have enrolled in ARC-IC, the ARC-IC benchmark 
revenue for that producer will be a weighted average of the benchmark 
revenue for those multiple farms.
    Considered planted means acreage approved as prevented planted in 
accordance with part 718 of this title.
    Contract means the CCC-approved forms and appendixes that constitute 
the agreement for participation of producers and covered commodities in 
ARC or PLC Program, as applicable.
    Contract period means the compliance period specified for the 
contract for the particular program year, as designated on the contract 
or application. References to the ``contract'' period refer to the 
compliance period for the particular program year. The compliance period 
for each program year is October 1 through September 30. For example, 
for the 2019 contract (and therefore for the 2019 program), the period 
that begins on October 1, 2018 and ends on September 30, 2019.
    Contract year or program year means the particular year of the 
particular contract based on the compliance period for the contract or 
application. The compliance year will run from October 1 to the 
following September 30 and will have the same name as the corresponding 
fiscal year. For example, the 2019 contract or program year will be 
October 1, 2018, through September 30, 2019, and that year will also be 
considered the 2019 crop year. The same references will apply to all 
other years.
    Counter-cyclical payment yield means the farm's covered commodity 
yield as specified in the regulations for 7 CFR part 1412 that were in 
effect as of September 30, 2013.
    County coverage means agriculture risk coverage (ARC-CO) elected 
under subpart D of this part with the county option.
    Covered commodity means wheat, oats, and barley (including wheat, 
oats, and barley used for haying and grazing), corn, grain sorghum, long 
grain rice, medium grain rice, seed cotton, pulse crops, soybeans, other 
oilseeds, and peanuts.
    Covered commodity base acres means base acres of any covered 
commodity. The term does not include unassigned base acres on the farm.
    Crop year means the relevant contract or application year. For 
example, the 2019 crop year is the year that runs from October 1, 2018, 
through September 30, 2019, and references to payments for that year 
refer to payments made under contracts or applications with the 
compliance year that runs during those dates.
    Deputy Administrator means the Deputy Administrator for Farm 
Programs, FSA, or a designee.
    Developed means:
    (1) Land has been approved by the local government for uses other 
than commercial agricultural uses; and
    (2) Construction activity has begun to install any aspect of the 
development, for example utilities or roadways.
    Direct payment yield for upland cotton means the farm's upland 
cotton yield established as specified in the regulations for 7 CFR part 
1412 that were in effect as of September 30, 2013.
    Double-cropping means for covered commodities, notwithstanding the 
meaning in subparts D and E of this part for fruits and vegetables, the 
planting of a covered commodity for harvest in a crop year, in cycle 
with another covered commodity on the same acres for harvest in the same 
crop year in counties that have been determined to be areas where there 
is determined to be substantial, successful, and long-term double 
cropping of the crop and where the producer has followed customary 
production techniques and planting deadlines as determined by FSA (that 
is, using techniques and deadlines used by the majority of farmers in 
the region to double crop the particular crops involved). In a county 
determined capable of supporting such double-cropping of the covered 
commodities, as determined by

[[Page 489]]

FSA, both an initial crop and a subsequent crop will be considered 
planted or prevented planted acres for the purpose of this part. 
Notwithstanding any of the provisions of 7 CFR part 718, in those 
instances where the subsequently planted or approved prevented planted 
covered commodity cannot be recognized as double-cropped acreage under 
this definition, the subsequently planted crop acreage will not be 
considered planted or prevented planted.
    Dry peas means Austrian, wrinkled seed, yellow, Umatilla, and green 
peas, excluding peas grown for the fresh, canning, or frozen market.
    Effective price is, the higher of the--
    (1) National average market price received by producers during the 
12-month marketing year for the covered commodity (also known as the MYA 
price), as determined by FSA; or
    (2) National average loan rate as defined in this part for the 
covered commodity in effect for the crop year, which is the same as the 
loan rate for a marketing assistance loan for the commodity for that 
crop year.
    Effective reference price means the lesser of the following:
    (1) An amount equal to 115 percent of the reference price for a 
covered commodity; or
    (2) An amount equal to the greater of:
    (i) The reference price for a covered commodity; or
    (ii) 85 percent of the average of the MYA price of the covered 
commodity for the most recent 5 crop years available, excluding each of 
the crop years with the highest and lowest MYA price.
    Extra long staple cotton means cotton that is other than upland 
cotton and both the following:
    (1) Produced from pure strain varieties of the Barbadense species or 
any hybrid of the species, or other similar types of extra long staple 
cotton, designated by the Secretary, having characteristics needed for 
various end uses for which United States upland cotton is not suitable 
and grown in irrigated cotton-growing regions of the United States 
designated by the Secretary or other areas designated by the Secretary 
as suitable for the production of the varieties or types; and
    (2) Ginned on a roller-type gin or, if authorized by the Secretary, 
ginned on another type of gin for experimental purposes.
    Fallow means any cropland or DCP cropland that is not devoted to any 
crop or trees.
    Farm structure means the constitution of the farm. References to 
``farm structure'' can be by date or crop year. When references to farm 
structure are by crop year, that means the farm as was last constituted 
as specified in 7 CFR part 718 subpart C in that crop year.
    Fiscal year means the year running from October 1 to the following 
September 30 and will be designated by the same calendar year in which 
it ends. For example, the 2019 fiscal year begins on October 1, 2018 and 
ends on September 30, 2019.
    Generic base acres means the number of base acres for upland cotton 
in effect on September 30, 2013, as defined in the regulations in 7 CFR 
part 1412, subpart B that were in effect on that date, subject to any 
adjustment or reduction under this part. Generic base acres are subject 
to allocation according to Sec.1412.25.
    Grass or pasture means any cropland or DCP cropland devoted to 
grass, native grass, mixed forage two or more interseeded grass mix, and 
mixed forage native grass interseeded.
    Harvested means the producer has removed the crop from the field by 
hand, mechanically, or by grazing of livestock. The crop is considered 
harvested once it is removed from the field and placed in or on a truck 
or other conveyance or is consumed by livestock through the act of 
grazing. Crops normally placed in a truck or other conveyance and taken 
off the crop acreage, such as hay, are considered harvested when in the 
bale, whether removed from the field or not.
    Historical irrigated percentage means the percentage of the covered 
commodity on a farm that was irrigated (P&CP, including subsequently 
planted crop acreage) divided by the total acreage of the covered 
commodity (P&CP, including subsequently planted crop acreage) between 
the years 2013 through 2017, or, at FSA's discretion,

[[Page 490]]

such other similar 5 year-period (such as 2015 through 2019).
    Idle means any cropland or DCP cropland that is not devoted to any 
crop or trees.
    Individual coverage means ARC (ARC-IC) elected under subpart D of 
this part with the individual option.
    Initial crop means acreage of a covered commodity planted or 
approved as prevented planted for harvest as peanuts, grain, or lint. 
The initial crop includes reseeded or replanted crop acreage.
    Marketing year means the 12-month period beginning in the calendar 
year the crop is normally harvested as follows:
    (1) Barley, oats, and wheat: June 1 through May 31;
    (2) Canola, flax and rapeseed, lentils, and dry edible peas: July 1 
through June 30;
    (3) Peanuts, seed cotton, and rice: August 1 through July 31; and
    (4) Corn, grain sorghum, soybeans, sunflowers, safflower, mustard, 
crambe, sesame, and chickpeas: September 1 through August 31.
    Market year average (MYA) price means the national average price 
received by producers during the 12-month marketing year (as defined in 
this part), as determined by FSA for the relevant crop of the covered 
commodity.
    Medium grain rice means medium grain rice and includes short grain 
rice and temperate japonica rice.
    Most recent 5 crop years available means the 5 years preceding the 
most immediately preceding crop year. For example, for the 2019 crop 
year, the most recent 5 years available are 2013 through 2017.
    NASS means the National Agricultural Statistics Service.
    National average loan rate means the loan rate established for a 
crop year of the covered commodity as specified in 7 CFR part 1421.
    Other oilseed means a crop of sunflower seed, rapeseed, canola, 
safflower, flaxseed, mustard seed, crambe, sesame seed, or any oilseed 
designated by the Secretary.
    Owner means the person or legal entity meeting the definition of 
owner in part 718 of this title for the applicable contract period for 
which that person or legal entity is signing any form or performing any 
action required under this part. For example, if a signature of an 
``owner'' is required under this part, the person or legal entity must 
be an owner for the applicable contract period for which the person or 
legal entity is signing the form or performing the action required under 
this part.
    Payment acres means:
    (1) For the purpose of ARC-CO and PLC, subject to planting 
flexibility provisions as specified Sec.1412.46, the payment acres for 
each covered commodity on a farm will be equal to 85 percent of the 
covered commodity's base acres on the farm.
    (2) For the purpose of ARC-IC, subject to planting flexibility 
provisions as specified in Sec.1412.46, the payment acres for a farm 
will be equal to 65 percent of all the covered commodity base acres on 
the farm.
    Payment yield means for a farm for a covered commodity, the yield 
established under subpart C of this part.
    Price Loss Coverage (or PLC) means coverage provided under subpart D 
of this part.
    Producer means the person or legal entity meeting the definition of 
producer in 7 CFR part 718 for the applicable contract period for which 
that person or legal entity is signing any form or performing any action 
required under this part. For example, if a signature of a ``producer'' 
is required under this part, the person or legal entity must be a 
producer during the applicable contract period for which that person or 
legal entity is signing the form or performing the action required under 
this part.
    Pulse crop means dry peas, lentils, small chickpeas, and large 
chickpeas.
    Reference price means, with respect to a covered commodity for a 
crop year, the following for:
    (1) Wheat, $5.50 per bushel;
    (2) Corn, $3.70 per bushel;
    (3) Grain sorghum, $3.95 per bushel;
    (4) Barley, $4.95 per bushel;
    (5) Oats, $2.40 per bushel;
    (6) Long grain rice, $14.00 per hundredweight;
    (7) Medium grain rice, $14.00 per hundredweight;
    (8) Soybeans, $8.40 per bushel;

[[Page 491]]

    (9) Other oilseeds, $20.15 per hundredweight;
    (10) Peanuts, $535.00 per ton;
    (11) Dry peas, $11.00 per hundredweight;
    (12) Lentils, $19.97 per hundredweight;
    (13) Small chickpeas, $19.04 per hundredweight;
    (14) Large chickpeas, $21.54 per hundredweight; and
    (15) Seed cotton, $0.367 per pound.
    Replacement crop means the planting or approved prevented planting 
of any crop for harvest following the failure of planted crop acreage or 
prevented planted acreage of a covered commodity not in a recognized 
double-cropping sequence (as specified in this section). Replacement 
crops cannot generate payments under this part unless the replacement 
crop acreage meets the definition of eligible subsequently planted crop 
acreage as specified in this section; and
    Reseeded or replanted crop means the second planting of a covered 
commodity on the same acreage after the first planting of that same crop 
has failed.
    RMA means the Risk Management Agency.
    Seed cotton means unginned upland cotton that includes both lint and 
seed.
    Subsequently planted crop acreage means planted acres of a covered 
commodity following an initial P&CP covered commodity. Subsequently 
planted crop acreage can be used for base reallocation for ARC and PLC 
under subpart B.
    Supportive and necessary contractual documents mean those documents 
including, but not limited to, those items substantiating the ARC or PLC 
contract such as leases, deeds, signatures of contract participants, 
owners, operators, and other tenant signatures, as determined by FSA.
    Temperate japonica rice means rice that is grown in high altitudes 
or temperate regions of high latitudes with cooler climate conditions, 
in the Western United States, as determined by FSA, for the purpose of 
the--
    (1) Reallocation of base acres under subpart B of this part;
    (2) Establishment of a reference price equal to the medium grain 
rice reference price multiplied by the ratio obtained by dividing:
    (i) The simple average of the marketing year average price of medium 
grain rice from the 2012 through 2016 crop years, by
    (ii) The simple average of the marketing year average price of all 
rice from the 2012 through 2016 crop years; and
    (3) Determination of the actual crop revenue and ARC guarantee under 
subparts D and E of this part.
    Transitional yield means the yield determined according to section 
502(b) of the Federal Crop Insurance Act (7 U.S.C. 1502(b)).
    Trend-adjusted yield means the yield computed by multiplying the 
benchmark yield by a factor determined by taking into consideration, but 
not exceeding, the trend-adjusted yield factor that is used to increase 
yield history under crop insurance endorsement under the Federal Crop 
Insurance Act (7 U.S.C. 1501-1524) for that crop and county.
    Unassigned base acres means the number of acres derived from generic 
base acres where no ARC or PLC payments are generated or earned.
    Upland cotton means cotton that is produced in the United States 
from other than pure strain varieties of the Barbadense species, any 
hybrid thereof, or any other variety of cotton in which one or more of 
these varieties predominate. In other words, it means any cotton that is 
not extra long staple cotton.

[79 FR 46339, Aug. 8, 2014, as amended at 79 FR 57714, Sept. 26, 2014; 
79 FR 74571, Dec. 15, 2014; 83 FR 40657, Aug. 16, 2018; 84 FR 45888, 
Sept. 3, 2019; 85 FR 16232, Mar. 23, 2020]



Sec.1412.4  Appeals.

    A participant may seek reconsideration and review of any individual 
program eligibility adverse determination made under this part in 
accordance with the appeal regulations found at parts 11 and 780 of this 
title.

[[Page 492]]



Subpart B_Establishment of Base Acres for a Farm for Covered Commodities



Sec.1412.23  Base acres, and Conservation Reserve Program.

    (a) Subject to paragraphs (b) and (c) of this section, FSA will 
annually adjust the base acres for covered commodities with respect to 
the farm by the number of production flexibility contract acres or base 
acres protected by a Conservation Reserve Program (CRP) contract that 
expired, was voluntarily terminated, or was early released.
    (b) The total base acres on a farm cannot exceed the limitation 
specified in Sec.1412.24.
    (c) Adjustments to (not reallocation of) base acres on a farm in 
accordance with this section are to be completed by no later than August 
1 or other date as determined and announced by the CRP contract expired 
or was voluntarily terminated.
    (d) For the fiscal year in which an adjustment to base acres under 
this section is made, the producer of the farm may elect to receive ARC 
or PLC payments, in accordance with any ARC and PLC election made under 
section 1115 of the 2014 Farm Bill with respect to the base acres added 
to the farm under this section, or a prorated payment under the CRP 
contract, but not both. For any farm that had all of its base acres 
reduced for participation in CRP, if the farm had no base acres or 
election in effect before an adjustment is made to put base acres of a 
covered commodity back on the farm, the owners of that farm will have an 
opportunity to reallocate base acres and the producers will have an 
opportunity to elect ARC or PLC within 30 days of being notified of the 
establishment of base acres on that farm before producers enroll base 
acres on that farm.

[79 FR 46339, Aug. 8, 2014, as amended at 83 FR 40657, Aug. 16, 2018; 84 
FR 45889, Sept. 3, 2019]



Sec.1412.24  Limitation of total base acres on a farm.

    (a) The sum of the following cannot exceed the total cropland 
acreage on the farm, plus approved double-cropped acreage for the farm:
    (1) The sum of all base acres established for the farm in accordance 
with this part; plus
    (2) Any cropland acreage on the farm enrolled in a CRP contract in 
accordance with part 1410 of this chapter; plus
    (3) Any cropland acreage on the farm enrolled in a wetland reserve 
program contract in accordance with part 1467 of this chapter; plus
    (4) Any other acreage on the farm enrolled in a Federal conservation 
program for which payments are made in exchange for not producing an 
agricultural commodity on the acreage.
    (b) The Deputy Administrator will give the owner of the farm the 
opportunity to select the base acres against which any reduction 
required in this section will be made. Absent the owner selecting the 
base acres for reduction, FSA will apply a pro-rata reduction against 
the base acres before computing and issuing any payments for the program 
year when a reduction becomes necessary.
    (c) In applying paragraph (a) of this section, FSA will take into 
account the practice of double cropping on a farm, as determined by FSA.
    (d) For base acre reductions:
    (1) Subject to the limitation in paragraph (d)(2) of this section, a 
permanent reduction of all or a portion of a farm's base acres will be 
allowed when all owners of the farm execute and submit a written request 
for such reduction, on a CCC-approved standard, uniform form designated 
by CCC, to the FSA county office where the records for the farm are 
administratively maintained.
    (2) A permanent reduction of all or a portion of a farm's base acres 
to negate or reduce a program violation is not allowed.
    (e) When base acres on a farm are converted to a non-agricultural 
commercial or industrial use, the total base acres on the farm will be 
reduced accordingly regardless of the submission of a request for such 
reduction.
    (f) The base acres on a farm will be proportionately reduced when it 
is determined that the land has been subdivided and developed for 
multiple residential units or other nonfarming uses if, in the judgment 
of the county committee, the size of the tracts and the

[[Page 493]]

density of the subdivision is such that the land is unlikely to return 
to the previous agricultural use, unless either of the following 
applies:
    (1) The producers on the farm demonstrate that the land remains 
devoted to commercial agricultural production or is likely to be 
returned to the previous agricultural use and such land has not been 
divided from the farm with a farm reconstitution performed according to 
part 718 of this title; or
    (2) A properly constituted or reconstituted farm contains sufficient 
land that has not yet been subdivided and developed for multiple 
residential units or other nonfarming uses, and the producers on the 
farm demonstrate that the land remains devoted to commercial 
agricultural production or is likely to be returned to the previous 
agricultural use.

[79 FR 46339, Aug. 8, 2014, as amended at 83 FR 40657, Aug. 16, 2018; 84 
FR 45889, Sept. 3, 2019]



Sec.1412.25  Allocation of generic base acres on a farm and updating
of records.

    (a) Any or all of the owner(s) of a farm with generic base acres 
adjusted as of February 9, 2018, will have a one-time opportunity in an 
allocation period as announced by FSA, if a covered commodity including 
upland cotton was planted or prevented from being planted during the 
2009 through 2016 crop years, to:
    (1) Allocate the farm's generic base acres to seed cotton base acres 
in a quantity equal to the greater of:
    (i) 80 percent of the generic base acres on the farm; or
    (ii) The average number of upland cotton acres planted and prevented 
from being planted on the farm during the 2009 through 2012 crop years, 
not to exceed the total generic base acres on the farm; or
    (2) Allocate base acres for covered commodities, including seed 
cotton, by applying paragraph (e) of this section.
    (b) Under no circumstances will the allocation of generic base acres 
on a farm as specified in paragraph (a) of this section result in any 
increase in total base acres on a farm. Additionally, if any owner 
submits a written statement that conflicts with the allocation request 
or expresses written disagreement with the allocation filed according to 
paragraph (a) of this section, no allocation will be approved for the 
farm unless all the owners of the farm provide FSA with written evidence 
of the dispute resolution during the allocation period.
    (c) FSA will provide the farm operator and owners of record with a 
summary of all covered commodities P&CP acres and subsequently planted 
crop acreage for the 2008 through 2012 crop years (as reported to FSA on 
acreage reports filed with FSA in each of those years). Acreage not 
reported to FSA by producers will not be included in the summary. The 
summary of records specified in paragraph (c) of this section is 
intended to assist owners of farms with the one-time opportunity for 
generic base acre allocation as provided in this section. Any owner of a 
farm may also at any time visit the FSA county office and request to 
obtain a copy of the summary referenced in this paragraph (c).
    (d) Owners will be provided a one-time opportunity to update the 
records identified in paragraph (c) of this section during the 
allocation period, provided that there are crop insurance records (or 
other verifiable documentation available to support those requested 
updates). In the event that an update to a farm's P&CP acres of a 
covered commodity for 2009 through 2012 causes any payment under another 
FSA or CCC program to become unearned, the overpayment must be refunded 
to FSA or CCC in accordance with the rules for that program and the FSA 
or CCC regulations governing overpayment (part 718 of this title and 
part 1403 of this chapter).
    (e) After an update as specified in paragraph (d) of this section, 
the owner may allocate the farm's generic base acres during the 
allocation period based on a proration of each covered commodity's P&CP 
acres or subsequently planted crop acreage in crop years 2009 through 
2012 to the total P&CP acres or subsequently planted crop acreage of all 
covered commodities during that time.
    (f) Owners can allocate generic base acres at any time during the 
allocation period without receiving or requesting

[[Page 494]]

the summary records, and, therefore, failure to receive a summary record 
from FSA is not grounds for appeal or extension of the allocation 
period.
    (g) The option to allocate generic base acres is an ``all or 
nothing'' decision for the farm. Generic base acres will not be 
retained, partially or in whole. A decision by any owner to allocate 
generic base acres on a farm in accordance with this section is final 
and binding if made according to this section during the allocation 
period unless that allocation is withdrawn in writing by that owner or 
another owner. If another owner subsequently files a different 
allocation request in whatever time remains in the stated allocation 
period or if there are conflicting allocation requests of owners in the 
allocation period, FSA will not make the allocation unless the conflict 
is resolved via written agreement between the owners who filed the 
conflicting requests. In the event that a resolution is not presented, 
the provisions of paragraph (h) of this section will take effect. In the 
case of submitting evidence of resolution, the written agreement must be 
filed with FSA during the allocation period. Any and all updates and 
allocation requests mentioned in this section are subject to review and 
approval or disapproval by FSA for CCC.
    (h) In the event that an owner fails to make an allocation according 
to this part and the farm has met the planting requirement in paragraph 
(a) of this section, the farm will receive an allocation of seed cotton 
base acres in accordance with paragraph (a)(1)(i) of this section.

[83 FR 40657, Aug. 16, 2018, as amended at 84 FR 45889, Sept. 3, 2019]



Sec.1412.26  Treatment of base acres on farms entirely in pasture, 
grass, idle, or fallow.

    (a) A farm on which all of the cropland was planted to grass or 
pasture, including cropland that was idle or fallow from January 1, 
2009, through December 31, 2017, will have base acres and yields 
maintained for the covered commodities on the farm, except that no 
payment will be made with respect to those base acres under this part 
for the 2019 through 2023 crop years.
    (b) The producers on a farm for which all of the base acres are 
maintained under paragraph (a) of this section are:
    (1) Ineligible to change the election applicable to the producers on 
the farm under subpart G of this part; and
    (2) Not permitted to reconstitute the farm to void or change the 
treatment of base acres under paragraph (a) of this section.

[84 FR 45890, Sept. 3, 2019]



  Subpart C_Establishment of Price Loss Coverage Yields and Submitting 
                               Production

    Source: 79 FR 57716, Sept. 26, 2014, unless otherwise noted.



Sec.1412.31  PLC yields for covered commodities.

    (a) Except for seed cotton PLC yield for covered commodities on the 
farm is equal to the counter-cyclical payment yield established for each 
covered commodity on the farm that was effective September 30, 2013, 
unless the PLC yield is updated as specified in Sec.1421.32. If the 
Secretary designates an additional oilseed or pulse crop as a covered 
commodity that does not have a counter-cyclical payment yield, the PLC 
yield for that commodity will be established as specified in Sec.
1412.34.
    (b) The PLC yield for seed cotton on the farm is equal to the 
counter-cyclical payment yield established for upland cotton on the farm 
as in effect September 30, 2013, times 2.4, unless the PLC yield is 
updated as specified in Sec.1421.33.
    (c) If a PLC yield is not already established for a covered 
commodity on a farm for which base acres are allocated through the base 
acres reallocation process a yield will be established for the covered 
commodity on the farm using the yield on similarly situated farms, as 
determined by FSA. The yield on similarly situated farms will then be 
used as the 2013 county average counter-cyclical yield for the covered 
commodity.

[79 FR 57716, Sept. 26, 2014, as amended at 83 FR 40658, Aug. 16, 2018]

[[Page 495]]



Sec.1412.32  Updating PLC yield for all covered commodities except 
seed cotton.

    (a) For any covered commodity on the farm that has base acres as 
adjusted, in excess of zero acres, an owner of the farm has a one-time 
opportunity in a specified period, as announced by FSA, to update PLC 
yields on a covered commodity-by-covered commodity basis equal to 90 
percent of each covered commodity's 2013 through 2017 average yield per 
planted acre, excluding from the average any year when no acreage was 
planted to the covered commodity. If the yield per planted acre in any 
of the years 2013 through 2017 is less than 75 percent of the average of 
the county yield, then 75 percent of the average of the 2013 through 
2017 county yield will be substituted for that year, excluding from the 
average any year when no acreage was planted to the covered commodity, 
multiplied by the ratio obtained by dividing:
    (1) The average of the 2008 through 2012 national average yield per 
planted acre for the covered commodity; by
    (2) The average of the 2013 through 2017 national average yield per 
planted acre for the covered commodity.
    (b) The owner of the farm may retain the counter-cyclical yield as 
the PLC yield or update the PLC yield, on a covered commodity-by-covered 
commodity basis.
    (c) PLC yields are exclusively used for PLC. However, any owner of a 
farm can update the PLC yields, regardless of program election or 
decision on enrollment or participation.
    (d) A decision by any owner of a farm to update any PLC yield as 
specified in this section is final and binding unless that decision to 
update the yield is withdrawn by that owner or a different yield update 
is made by that owner or another owner. If that owner or another owner 
requests a different PLC yield update for the covered commodity during 
the yield update period specified in paragraph (a) of this section that 
update will become final.
    (e) All PLC yield updates are subject to review and approval by FSA 
as specified in Sec.1412.36. FSA's decision to issue payments based on 
the PLC yield updated by an owner is subject to verification and spot 
check by FSA at any time.
    (f) Yield updates in this section will be permitted using the 
owner's certification of yield. The certification is subject to spot 
check or verification by FSA at any time. If selected for spot check or 
verification, the owner must submit evidence specified in Sec.1412.34 
to support the certified yield.

[79 FR 57716, Sept. 26, 2014, as amended at 83 FR 40658, Aug. 16, 2018; 
84 FR 45890, Sept. 3, 2019]



Sec.1412.33  Updating PLC yield for seed cotton.

    (a) For a farm that has seed cotton base acres as adjusted, in 
excess of zero acres, an owner of the farm has a one-time opportunity in 
a specified period, as announced by FSA, to update the PLC yield equal 
to 90 percent of the seed cotton's 2013 through 2017 average yield per 
planted acre, excluding from the average any year that no acreage was 
planted to upland cotton, times 2.4. If the yield per planted acre in 
any of the years 2013 through 2017 is less than 75 percent of the 
average of the county yield, then 75 percent of the average of the 2013 
through 2017 county yields will be substituted for that year, excluding 
from the average any year when no acreage was planted to the covered 
commodity, multiplied by the ratio obtained by dividing:
    (1) The average of the 2008 through 2012 national average yield per 
planted acre for the covered commodity; by
    (2) The average of the 2013 through 2017 national average yield per 
planted acre for the covered commodity.
    (b) The owner of the farm may retain the PLC yield or update the PLC 
yield.
    (c) PLC yields are exclusively used for PLC. However, any owner of a 
farm can update the seed cotton PLC yield as specified in paragraph (a) 
of this section, regardless of program election, enrollment, or 
participation.
    (d) A decision by any owner of a farm to update the seed cotton PLC 
yield as specified in this section is final and binding unless that 
decision to update the yield is withdrawn by that owner or a different 
yield update is made by that owner or another owner. If that owner or 
another owner requests a different PLC yield update for the covered

[[Page 496]]

commodity during the yield update period specified in paragraph (a) of 
this section, that update will become final.
    (e) All PLC yield updates are subject to review and approval by FSA 
as specified in Sec.1412.36. FSA's decision to issue payments based on 
the PLC yield updated by an owner is subject to verification and spot 
check by FSA at any time.
    (f) Yield updates in this section will be permitted using the 
owner's certification of yield. The certification is subject to spot 
check or verification by FSA at any time. If selected for spot check or 
verification, the owner must submit evidence specified in Sec.1412.35 
to support the certified yield.

[83 FR 40658, Aug. 16, 2018, as amended at 84 FR 45890, Sept. 3, 2019]



Sec.1412.34  PLC yield for additional oilseeds.

    (a) The PLC yield for the farm for additional oilseeds designated by 
the Secretary will be determined by multiplying the weighted average 
yield per planted acre for the crop on the farm, as determined in 
paragraph (b) of this section, times the ratio resulting from:
    (1) The national average yield for the crop, as determined by FSA, 
divided by
    (2) The national average yield for the crop for the 1998 through 
2001 crop years, as determined by FSA.
    (b)(1) The yield per planted acre for such designated oilseed on the 
farm is calculated as follows:
    (i) The sum of the production of the crop for the 1998 through 2001 
crop years, as determined in paragraph (b)(2) of this section; divided 
by
    (ii) The sum of the total planted acres of the crop for the 1998 
through 2001 crop years.
    (2) The production of the crop for each of the 1998 through 2001 
crop years will be the higher of the following, except in a year in 
which the acreage planted to the crop was zero, in which case the 
production for the crop for such year will be zero:
    (i) The total production for the applicable year based on the 
production evidence submitted in accordance with Sec.1412.35; or
    (ii) The amount equal to the product of:
    (A) The total planted acres for the crop, times
    (B) 75 percent of the harvested average county yield for that crop 
determined, where practicable, by calculating the weighted 4-year 
average of the National Agricultural Statistics Service (NASS) harvested 
acreage yields for the crop using the 1998 through 2001 crop years.
    (3) The NASS harvested acreage yield to be used in paragraph (b)(2) 
of this section will be based on:
    (i) NASS harvested irrigated yield for the crop, if available, for 
producers who irrigated the crop in the applicable years;
    (ii) NASS harvested non-irrigated yield for the crop, if available, 
for producers who did not irrigate the crop in the applicable years; or
    (iii) NASS harvested blended yield for all acreage, regardless of 
whether or not the acres were irrigated or non-irrigated, for all crops 
in all counties for which the yields in paragraphs (b)(3)(i) and (ii) of 
this section are unavailable.
    (4) If NASS harvested acreage yield data is not available, the 
Deputy Administrator will assign a yield to be used in paragraph 
(b)(2)(ii)(B) of this section.
    (c) The establishment of PLC yield for an additional oilseed in this 
section will be permitted using a producer certification of yield. The 
certification is subject to spot check or verification by FSA at any 
time. If selected for spot check or verification, the producer must 
submit evidence as specified in in Sec.1412.35 to support the 
certified yield.

[79 FR 57716, Sept. 26, 2014. Redesignated and amended at 83 FR 40658, 
Aug. 16, 2018]



Sec.1412.35  Submitting production evidence.

    (a) When required by FSA as specified in this part, documentary 
evidence supporting any certification of yield or production must be 
provided to the county committee of the county where the farm is 
administratively located.
    (b) Documentary evidence acceptable to FSA includes, but is not 
limited to:
    (1) Production approved by the county committee for some other FSA 
program purpose;
    (2) Commercial receipts;

[[Page 497]]

    (3) Settlement sheets;
    (4) Warehouse ledger sheets;
    (5) Elevator receipts or load summaries, supported by other evidence 
showing disposition, such as sales documents;
    (6) Evidence from harvested or appraised acreage, approved for FCIC 
or multi-peril crop insurance; or
    (7) Other production evidence determined acceptable by the Deputy 
Administrator.
    (c) Production evidence specified in paragraph (b) of this section 
must show:
    (1) The producer's name,
    (2) The commodity,
    (3) The buyer or name of storage facility,
    (4) The date of transaction or delivery, and
    (5) The quantity.
    (d) FSA may verify the production evidence submitted with records on 
file at the warehouse, Risk Management Agency, or other entity that 
received or may have received the reported production.

[79 FR 57716, Sept. 26, 2014. Redesignated at 83 FR 40658, Aug. 16, 
2018]



Sec.1412.36  Incorrect or false production evidence.

    (a) If a certification of production and yield or production 
evidence submitted in support of that certification is false or 
incorrect, as determined by the county committee, the county committee 
will determine whether the owner, operator, or producer submitting the 
certification or production evidence for a farm acted in good faith or 
took action to defeat the purpose of ARC or PLC.
    (b) If the county committee determines the owner or producer who 
submitted the certification or production evidence referenced in 
paragraph (a) of this section acted in good faith and did not take 
action to defeat the purpose of ARC or PLC, the county committee will, 
as applicable:
    (1) Correct the PLC yield for the applicable covered commodity to 
equal the yield that would have been calculated as specified in Sec.
1412.32 based on accurate production evidence; and
    (2) Recalculate any payments based on the correct yield and require 
refunds of any payments that were issued as a result of the incorrect 
yield. Unearned payments must be refunded together with interest from 
the date of disbursement and are due from any producers who received 
payments that would not have issued absent the error or incorrect yield.
    (c) If the county committee determines the owner, operator, or 
producer who submitted the false or incorrect evidence did not act in 
good faith or took any action to defeat or undermine the purpose of ARC 
or PLC, the county committee will require a full refund of any payments, 
with interest, that were issued to any persons based on that false or 
erroneous certification or production evidence and the yield update 
request is invalid.

[79 FR 57716, Sept. 26, 2014. Redesignated at 83 FR 40658, Aug. 16, 
2018]



   Subpart D_ARC and PLC Contract Terms and Enrollment Provisions for 
                           Covered Commodities



Sec.1412.41  ARC or PLC program contract.

    (a) The following provisions apply to ARC and PLC Program contracts:
    (1) Eligible producers (as specified in Sec.1412.42) of covered 
commodities with base acres may enroll in ARC and PLC contracts during 
the enrollment period announced by FSA.
    (i) The 2019 contract period ends September 30, 2019. Accordingly, 
the enrollment for 2019 is the only program year a retroactive contract 
can be approved. (ii) Except as stated in this section, enrollment is 
not allowed after September 30 of the fiscal year in which the ARC or 
PLC payments are requested. FSA will not process offers of enrollment 
for a contract period after the contract period has ended. This is not a 
compliance provision but a rule of general applicability and will apply 
to every offer to contract in each contract year.
    (iii) If a 2019 farm did not have a valid election made by producers 
in accordance with subpart G of this part, no producer on that farm is 
eligible for any 2019 ARC or PLC payment for that farm. This is not an 
adverse decision

[[Page 498]]

for any enrolled producer on that farm; rather, the farm's producers are 
simply not eligible for payments on the enrolled farm because the farm's 
producers failed to make a valid election in 2019.
    (2) Except as specified in this section for ARC-CO and PLC 
enrollments, contracts will not be approved unless all producers sharing 
in contract acreage with more than a zero share have submitted all 
applicable signatures on the contract and documentation necessary for 
FSA to approve the contract.
    (i) For ARC-IC contracts there are no exceptions to this provision 
for signatures and documentation.
    (ii) A contract not having all requisite signatures of producers 
having more than a zero share of contract acreage on or before the 
enrollment deadline is incomplete and will not be considered by FSA or 
CCC for any purpose and will not be acted on or approved.
    (iii) Contracts enrolled by a producer by the date specified in 
paragraph (a)(1) of this section that were not signed by other producers 
as required by this section will be withdrawn and will not be approved.
    (iv) An exception to this signature and documentation provision 
applies to ARC-CO and PLC offers of enrollment. In those instances in 
which, at the discretion of the Deputy Administrator and where no 
dispute of shares or other disagreement between producers is evident or 
suspected, ARC-CO and PLC offers of enrollment can be approved for the 
covered commodity to permit payment to only those eligible producers who 
did enroll and without regard to shares that do not have signatures. In 
this exception, the covered commodity on the farm will be considered 
enrolled. This exception will be made only if, in the sole judgment and 
discretion of FSA, FSA is satisfied that those producers who did sign in 
accordance with this section ensure compliance with all contract 
provisions and requirements of this part.
    (v) Producers have no right to payment on any farm that is not 
enrolled in ARC or PLC and they are not entitled to a decision to 
authorize the exception in paragraph (a)(2)(iv) for ARC-CO and PLC 
enrollments, as that is discretionary. CCC and FSA are not responsible 
for ensuring that producers annually enroll in ARC or PLC.
    (3) An eligible producer's valid share of enrolled base acres on a 
farm is always limited to the producer's share of reported crop acreage 
on the farm. For example, if a producer enrolled with a 75 percent share 
of a farm's 1,000 base acres, the producer's enrollment would only be 
valid if the producer had 100 percent share interest in 750 or more 
reported crop acres on that farm. Valid claimed shares of base acres 
must always be supported by reported crop acres on the farm.
    (4) Except for enrollments of ARC-IC, eligible producers who choose 
to enter into a contract with FSA do so on a covered commodity-by-
covered commodity basis. If the decision is made to enroll a covered 
commodity on a farm, producers having not less than 100 percent of the 
interest in those covered commodity base acres must enroll all covered 
commodity base acres of the covered commodity on the farm. Enrollment of 
fewer than all base acres of the covered commodity by all the producers 
having a share interest in that covered commodity on the farm is not 
allowed and such covered commodity will not be considered enrolled 
unless all producers who share in the base acres complete enrollment by 
the end of the enrollment period. Producers on a farm are solely 
responsible for ensuring that enrollment occurs.
    (5) Producers who have enrolled according to this section must 
submit all required documents necessary to determine payment eligibility 
as specified in Sec. Sec.1412.51 and 1412.67.
    (b) Any eligible producer of an enrolled covered commodity or ARC-IC 
contract may withdraw from a contract at any time by the end of the 
contract period. The withdrawal must be filed in writing and submitted 
to CCC and FSA by the end of the contract period. If any producer of a 
covered commodity or ARC-IC contract submits a written request to 
withdraw, FSA will consider the enrollment of that covered commodity or 
ARC-IC contract withdrawn.
    (c) If the multiyear annual contract option is selected by all of a 
farm's producers of covered commodity base

[[Page 499]]

acres on the farm, the enrollment of any covered commodity on the farm 
in a year will be presumed by CCC and FSA to be the enrollment for 
following subsequent crop years unless any of the following, occur:
    (1) A change to the farm's constitution;
    (2) A change to any of the farm's base acres or PLC yield of any 
covered commodity;
    (3) A change to any of the producers or producer shares of covered 
commodities on the farm;
    (4) A change in either election or enrollment of any covered 
commodity on the farm; or
    (5) Any change, including a withdrawal of any enrolled producer, 
that FSA determines to require producers on the farm to reaffirm 
enrollment.
    (d) All contracts expire on September 30 of the fiscal year of the 
contract unless:
    (1) Withdrawn in accordance with paragraph (b) of this section;
    (2) Terminated in accordance with paragraph (e) or (f) of this 
section; or
    (3) Terminated at an earlier date by mutual consent of all parties, 
including CCC.
    (e) A transfer or change in the interest of an owner or producer in 
the farm or in acreage on the farm subject to a contract will result in 
the termination of the contract. The contract termination will be 
effective on the date of the transfer or change. Successors to the 
interest in the farm or crops on the farm subject to the contract may 
enroll the covered commodities on the farm in a new contract for the 
current year and assume all obligations under the contract.
    (f) In the event a 2019 or subsequent crop year farm reconstitution 
is completed on a properly enrolled farm or farms in accordance with 
part 718 of this title, FSA will issue notices to the farm operator and 
owners of record on a farm that all producers with an interest in the 
base acres on the farm must sign a new ARC or PLC program contract 
within the later of 30 days of the notice or September 30 of the fiscal 
year program payments are requested, after receiving written 
notification by the county committee indicating the reconstitution is 
completed. It is the responsibility of the operator and owners on a farm 
that producers with an interest in base acres are notified of the 
reconstitution and requirement for a new contract.

[84 FR 45890, Sept. 3, 2019]



Sec.1412.42  Eligible producers.

    (a) Producers eligible to enter into a contract are:
    (1) An owner of a farm who has an ownership share of a crop and who 
assumes all or a part of the risk of producing a crop that is 
commensurate with that claimed ownership share of the crop; or
    (2) A producer, other than an owner, on a farm with a share-rent 
lease for such farm, regardless of the length of the lease, if the owner 
of the farm enters into the same contract; or
    (3) A producer, other than an owner, on a farm who cash rents such 
farm under a lease expiring on or after September 30 of the year of the 
contract in which case the owner is not required to enter into the 
contract; or
    (4) A producer, other than an owner, on a farm who cash rents such 
farm under a lease expiring before September 30 of the year of the 
contract. The owner of such farm must also enter into the same contract, 
failing which the farm is not enrolled; or
    (5) An owner of an eligible farm who cash rents such farm and the 
lease term expires before September 30 of the year of the contract, if 
the tenant declines to enter into a contract for the applicable year. In 
the case of an owner covered by this paragraph, payments will not begin 
under the contract until the lease held by the tenant ends.
    (b) A minor child will be eligible to enter into a contract only if 
one of the following conditions exist:
    (1) The right of majority has been conferred upon the minor by court 
proceedings or law;
    (2) A guardian has been appointed to manage the minor's property and 
the applicable program documents are executed by the guardian; or
    (3) A bond is furnished under which a surety guarantees any loss 
incurred for which the minor would be liable had the minor been an 
adult.
    (c) The owner of the farm may be considered the ``producer'' if 
there is

[[Page 500]]

no other producer, but the owner could have shared in the crop had a 
crop been produced, but only if the farm and owner otherwise meet all 
the requirements for payment.

[79 FR 57717, Sept. 26, 2014]



Sec.1412.43  Reconstitutions.

    Farms will only be reconstituted in accordance with subpart G of 
this part and part 718 of this title.

[79 FR 57717, Sept. 26, 2014]



Sec. Sec.1412.44-1412.45  [Reserved]



Sec.1412.46  Planting flexibility.

    (a) Any crop may be planted and harvested on base acres on a farm, 
except as limited in this section. Any crop may be planted on cropland 
in excess of the base acres on a farm.
    (b) Base acres may be hayed or grazed at any time.
    (c) Except as specified in paragraph (e) of this section, the 
planting or harvesting of perennial or harvesting of non-perennial 
fruits, vegetables (except mung beans and covered commodities), or wild 
rice, as determined by FSA, will result in an acre for acre payment 
reduction when such crop or crops are planted and or harvested, as 
applicable, on more than:
    (1) 15 percent of the base acres of a farm enrolled in ARC or PLC 
using county coverage; or
    (2) 35 percent of the base acres of a farm enrolled in ARC using 
individual coverage.
    (d) For each crop year for which a reduction in payment acres is 
made according to paragraph (c) of this section, those acres will be 
considered to be P&CP to a covered commodity for the purpose of any 
adjustment or reduction of base acres for the farm.
    (e) Notwithstanding the provisions of paragraph (c) of this section, 
perennial fruits, vegetables, and wild rice may be planted or harvested 
on base acres of a farm and non-perennial fruits, vegetables, and wild 
rice may be harvested on base acres of a farm if a producer double-crops 
fruits, vegetables, or wild rice with a covered commodity in any region 
described in paragraph (f) of this section, in which case payment acres 
will not be reduced for the planting or harvesting of the fruit, 
vegetable, or wild rice.
    (f) Double-cropping for purposes of this section means planting for 
harvest non-perennial fruits, vegetables, or wild rice on the same acres 
in cycle with a planted covered commodity harvested for grain in a 12-
month period under normal growing conditions for the region and being 
able to repeat the same cycle in the following 12-month period. For 
purposes of this part, the following counties have been determined to be 
regions having a history of double-cropping covered commodities or 
peanuts with fruits, vegetables, or wild rice. State committees have 
established the following counties as regions within their respective 
States:
    (1) Alabama. Baldwin, Barbour, Butler, Chambers, Chilton, Clarke, 
Covington, Cullman, Geneva, Greene, Houston, Jackson, Jefferson, Lee, 
Madison, Mobile, Montgomery, Randolph, Sumter, Talladega, Walker, and 
Washington.
    (2) Alaska. None.
    (3) Arizona. Cochise, Graham, Greenlee, LaPaz, Maricopa, Mohave, 
Pima, Pinal, and Yuma.
    (4) Arkansas. Ashley, Benton, Clay, Craighead, Crawford, Crittenden, 
Cross, Faulkner, Franklin, Greene, Independence, Jackson, Jefferson, 
Lawrence, Lee, Lincoln, Logan, Lonoke, Mississippi, Monroe, Phillips, 
Pulaski, St. Francis, Sebastian, Washington, Woodruff, and Yell.
    (5) California. Alameda, Amador, Butte, Colusa, Contra Costa, 
Fresno, Glenn, Imperial, Kern, Kings, Madera, Merced, Riverside, 
Sacramento, San Benito, San Joaquin, Santa Clara, Siskiyou, Solano, 
Sonoma, Stanislaus, Sutter, Tehama, Tulare, Yolo, and Yuba.
    (6) Caribbean Office. None.
    (7) Colorado. Otero.
    (8) Connecticut. None.
    (9) Delaware. All counties.
    (10) Florida. All counties except Monroe.
    (11) Georgia. All counties.
    (12) Hawaii. None.
    (13) Idaho. None.
    (14) Illinois. Adams, Bureau, Calhoun, Cass, Clark, Crawford, 
DeKalb, Edgar, Edwards, Effingham, Franklin, Gallatin, Hamilton, 
Iroquois, Jefferson,

[[Page 501]]

Jersey, Johnson, Kankakee, Lawrence, LaSalle, Lee, Madison, Marion, 
Mason, Monroe, Peoria, Randolph, Sangamon, St. Clair, Tazewell, Union, 
Vermilion, Wabash, Washington, Wayne, White, Woodford, and Whiteside.
    (15) Indiana. Allen, Bartholemew, Daviess, Gibson, Jackson, Johnson, 
Knox, LaGrange, LaPorte, Madison, Marion, Martin, Miami, Pike, Posey, 
Ripley, Shelby, Sullivan, Vandenberg, and Warrick.
    (16) Iowa. Kossuth, Mitchell, Palo Alto, and Winnebago.
    (17) Kansas. None.
    (18) Kentucky. All counties.
    (19) Louisiana. Avoyelles, Franklin, Grant, Morehouse, Rapides, 
Richland, and West Carroll.
    (20) Maine. None.
    (21) Maryland. Anne Arundel, Baltimore, Calvert, Caroline, Carroll, 
Cecil, Charles, Dorchester, Harford, Kent, Prince George's, Queen 
Anne's, St. Mary's, Somerset, Talbot, Wicomico, and Worcester.
    (22) Massachusetts. None.
    (23) Michigan. St. Joseph and Kalamazoo.
    (24) Minnesota. Blue Earth, Brown, Carver, Chippewa, Cottonwood, 
Dakota, Dodge, Faribault, Fillmore, Freeborn, Goodhue, Houston, 
Kandiyohi, Le Sueur, Martin, McLeod, Meeker, Mower, Nicollet, Olmsted, 
Pope, Redwood, Renville, Rice, Scott, Sibley, Stearns, Steele, Swift, 
Waseca, Wabasha, Watonwan, and Winona.
    (25) Mississippi. All counties.
    (26) Missouri. Barton, Butler, Cape Girardeau, Dade, Dunklin, 
Jasper, Lawrence, Mississippi, New Madrid, Newton, Pemiscot, Perry, 
Ripley, Scott, and Stoddard.
    (27) Montana. None.
    (28) Nebraska. Box Butte, Dawes-North Sioux, Morrill, and Sheridan.
    (29) Nevada. None.
    (30) New Hampshire. None.
    (31) New Jersey. Atlantic, Burlington, Camden, Cape May, Cumberland, 
Gloucester, Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean, 
Salem, Somerset, Sussex, and Warren.
    (32) New Mexico. Chaves, Curry, Dona Ana, Eddy, Hidalgo, Lea, Luna, 
Quay, Roosevelt, San Juan, and Sierra.
    (33) New York. Cayuga, Columbia, Dutchess, Erie, Genesee, Greene, 
Livingston, Madison, Monroe, Niagara, Oneida, Onondaga, Ontario, Orange, 
Orleans, Putnam, Rensselaer, Saratoga, Schoharie, Seneca, Steuben, 
Suffolk, Tompkins, Ulster, Warren, Washington, Wayne, Westchester, 
Wyoming, and Yates.
    (34) North Carolina. Alamance, Alexander, Alleghany, Anson, Ashe, 
Beaufort, Bertie, Bladen, Brunswick, Burke, Cabarrus, Caldwell, Camden, 
Carteret, Caswell, Catawba, Chatham, Cherokee, Chowan, Clay, Cleveland, 
Columbus, Craven, Cumberland, Currituck, Dare, Davidson, Davie, Duplin, 
Edgecombe, Franklin, Gaston, Gates, Graham, Granville, Greene, Halifax, 
Harnett, Hertford, Hoke, Hyde, Iredell, Johnston, Jones, Lee, Lenoir, 
Lincoln, Macon, Martin, McDowell, Mecklenburg, Montgomery, Moore, Nash, 
New Hanover, Northampton, Onslow, Pamlico, Pasquotank, Pender, 
Perquimans, Person, Pitt, Richmond, Robeson, Rockingham, Rutherford, 
Sampson, Scotland, Stanly, Stokes, Tyrell, Union, Vance, Wake, Warren, 
Washington, Wayne, Wilkes, Wilson, and Yadkin.
    (35) North Dakota. None.
    (36) Ohio. Carroll, Champaign, Clermont, Fulton, Henry, Jackson, 
Lucas, Miami, Morgan, Muskingum, Scioto, Stark, Tuscarawas, Wood, and 
Vinton.
    (37) Oklahoma. Adair, Alfalfa, Beckham, Blaine, Bryan, Caddo, 
Canadian, Carter, Cherokee, Cleveland, Cotton, Custer, Delaware, Dewey, 
Ellis, Garfield, Garvin, Grady, Grant, Greer, Harmon, Haskell, Hughes, 
Jackson, Jefferson, Kay, Kingfisher, Kiowa, LeFlore, Logan, Love, 
McClain, McIntosh, Major, Marshall, Mayes, Muskogee, Noble, Nowata, 
Okmulgee, Osage, Pawnee, Payne, Pittsburg, Pottawatomie, Roger Mills, 
Rogers, Sequoyah, Stephens, Tillman, Tulsa, Wagoner, Washita, Woods, and 
Woodward.
    (38) Oregon. Clackamas, Marion, Morrow, Multnomah, Polk, Umatilla, 
and Yamhill.
    (39) Pennsylvania. Adams, Bucks, Carbon, Centre, Chester, Clinton, 
Columbia, Cumberland, Delaware, Erie, Franklin, Indiana, Lancaster, 
Lehigh,

[[Page 502]]

Montgomery, Monroe, Montour, Northampton, Northumberland, Schuylkill, 
Snyder, Union, and York.
    (40) Puerto Rico. None.
    (41) Rhode Island. None.
    (42) South Carolina. All counties.
    (43) South Dakota. None.
    (44) Tennessee. Benton, Bledsoe, Cannon, Chester, Cocke, Coffee, 
Crockett, Dickson, Dyer, Fayette, Gibson, Giles, Greene, Grundy, 
Hardeman, Haywood, Henry, Jefferson, Knox, Lake, Lauderdale, Lawrence, 
Lincoln, Madison, Marion, Maury, McNairy, Obion, Overton, Pickett, 
Putnam, Rhea, Robertson, Rutherford, Sequatchie, Shelby, Sumner, Tipton, 
Unicoi, VanBuren, Warren, Washington, Wayne, White, Williamson, and 
Wilson.
    (45) Texas. Anderson, Andrews, Atascosa, Austin, Bailey, Bastrop, 
Baylor, Bee, Bexar, Borden, Bosque, Bowie, Brazos, Brazoria, Briscoe, 
Brooks, Brown, Burleson, Caldwell, Callahan, Cass, Cameron, Castro, 
Chambers, Cherokee, Childress, Clay, Cochran, Collin, Collingsworth, 
Comanche, Cooke, Coryell, Cottle, Crosby, Culberson, Dallam, Dawson, 
Deaf Smith, Delta, Denton, Dickens, Dimmit, Donley, Duval, Eastland, 
Ellis, El Paso, Erath, Falls, Fannin, Fayette, Fischer, Floyd, Foard, 
Fort Bend, Franklin, Freestone, Frio, Gaines, Gillespie, Glasscock, 
Gonzales, Gray, Grayson, Grimes, Guadalupe, Hale, Hall, Hansford, 
Hardeman, Hardin, Harris, Hartley, Haskell, Hemphill, Henderson, 
Hidalgo, Hill, Hockley, Hood, Hopkins, Houston, Howard, Hudspeth, Hunt, 
Jefferson, Jim Hogg, Jim Wells, Johnson, Jones Karnes, Kent, Kinney, 
Kleberg, Knox, Lamar, Lamb, LaSalle, Lee, Leon, Liberty, Limestone, 
Lipscomb, Live Oak, Llano, Loving, Lubbock, Lynn, Martin, Mason, 
Matagorda, Maverick, McCulloch, McLennan, Medina, Menard, Midland, 
Milam, Mills, Mitchell, Montague, Moore, Motley, Navarro, Nueces, 
Ochiltree, Oldham, Palo Pinto, Parker, Parmer, Pecos, Rains, Randall, 
Red River, Refugio, Reeves, Robertson, Runnels, San Saba, San Patricio, 
Scurry, Sherman, Smith, Somervell, Starr, Stonewall, Swisher, Tarrant, 
Taylor, Terry, Tom Green, Upton, Uvalde, Van Zandt, Victoria, Walker, 
Washington, Webb, Wharton, Wheeler, Wilbarger, Willacy, Williamson, 
Wise, Wilson, Wood, Wise, Wood, Yoakum, Young, Zapata, and Zavala.
    (46) Utah. None.
    (47) Vermont. None.
    (48) Virginia. Accomack, Albemarle, Alleghany, Amelia, Amherst, 
Appomattox, Augusta, Bath, Bedford, Bland, Botetourt, Brunswick, 
Buchanan, Buckingham, Campbell, Caroline, Carroll, Charles City, 
Charlotte, Chesapeake, Chesterfield, Clarke, Craig, Culpeper, 
Cumberland, Dickenson, Dinwiddie, Essex, Fairfax, Fauquier, Floyd, 
Fluvanna, Franklin, Frederick, Giles, Gloucester, Goochland, Grayson, 
Greene, Greensville, Halifax, Hanover, Henrico, Henry, Highland, Isle of 
Wight, James City, King and Queen, King George, King William, Lancaster, 
Lee, Loudoun, Louisa, Lunenburg, Madison, Mathews, Mecklenburg, 
Middlesex, Montgomery, Nelson, New Kent, Northampton, Northumberland, 
Nottoway, Orange, Page, Patrick, Pittsylvania, Powhatan, Prince Edward, 
Prince George, Prince William, Pulaski, Rappahannock, Richmond, Roanoke, 
Rockbridge, Rockingham, Russell, Scott, Shenandoah, Smyth, Southampton, 
Spotsylvania, Stafford, Suffolk, Surry, Sussex, Tazewell, Virginia 
Beach, Warren, Washington, Westmoreland, Wise, Wythe, and York.
    (49) Washington. Yakima.
    (50) West Virginia. Monroe.
    (51) Wisconsin. Adams, Calumet, Columbia, Dane, Dodge, Fond du Lac, 
Green, Green Lake, Iowa, Kenosha, Milwaukee, Ozaukee, Portage, Racine, 
Richland, Rock, Sauk, Trempealeau, Walworth, Washington, Waukesha, 
Waushara, and Winnebago.
    (52) Wyoming. None.

    (g) The acreage of any fruit or vegetable specified in paragraph (i) 
of this section will first be attributed to cropland not having base 
acres, followed by base acres, before applying any payment acreage 
reduction required by paragraph (c) of this section. The reduction will 
be attributed to each of the covered commodities on the farm having 
payment acres on a pro rata basis to reflect the ratio of the payment 
acres of the covered commodity on the farm to the total payment acres of 
all covered commodities on the farm.

[[Page 503]]

    (h) For the purposes of this part, fruits, vegetables, and wild rice 
planted on payment acres of a farm under ARC or PLC Program contract:
    (1) Will be considered harvested at the time of planting, unless the 
producer pays a fee to cover the cost of a farm visit, as specified in 
part 718 of this title, to verify that the fruit, vegetable, or wild 
rice has been destroyed before harvest, as determined by FSA; or
    (2) Will not be considered as planted to a fruit, vegetable, or wild 
rice when reported by a producer on the farm with an intended use of 
green manure or forage, as determined by FSA, and a fee to cover the 
cost of a farm visit is paid by the producer, as specified in part 718 
of this title, to verify that the crop has not been harvested.
    (i) Unless otherwise specifically included as a covered commodity as 
specified in this part, fruits and vegetables include, but are not 
limited to, all nuts except peanuts, certain fruit-bearing trees and: 
Acerola (barbados cherry), antidesma, apples, apricots, aragula, ariona 
(chokeberry), artichokes, asparagus, atemoya (custard apple), avocados, 
babaco papayas, bananas, beans (except soybeans, mung, adzuki, faba, and 
lupin), beets--other than sugar, blackberries, blackeye peas, 
blueberries, bok spare choy, boysenberries, breadfruit, broccoflower, 
broccolo-cavalo, broccoli, brussel sprouts, cabbage, cailang, caimito, 
calabaza, carambola (star fruit), calaboose, carob, carrots, 
cascadeberries, cauliflower, celeriac, celery, chayote, cherimoyas 
(sugar apples), canary melon, cantaloupes, cardoon, casaba melon, 
cassava, cherries, chinese bitter melon, chicory, chinese cabbage, 
chinese mustard, chinese water chestnuts, chufes, citron, citron melon, 
coffee, collards, cowpeas, crabapples, cranberries, cressie greens, 
crenshaw melons, cucumbers, currants, cushaw, daikon, dasheen, dates, 
dry edible beans, dunga, eggplant, elderberries, elut, endive, escarole, 
etou, feijoas, figs, gai lien, gailon, galanga, genip, gooseberries, 
grapefruit, grapes, guambana, guavas, guy choy, honeydew melon, 
huckleberries, jackfruit, jerusalem artichokes, jicama, jojoba, kale, 
kenya, kiwifruit, kohlrabi, kumquats, leeks, lemons, lettuce, limequats, 
limes, lobok, loganberries, longon, loquats, lotus root, lychee 
(litchi), mandarins, mangos, marionberries, mar bub, melongene, mesple, 
mizuna, mongosteen, moqua, mulberries, murcotts, mushrooms, mustard 
greens, nectarines, ny Yu, okra, olallieberries, olives, onions, opo, 
oranges, papaya, paprika, parsnip, passion fruits, peaches, pears, peas, 
all peppers, persimmon, persian melon, pimentos, pineapple, pistachios, 
plantain, plumcots, plums, pomegranates, potatoes, prunes, pummelo, 
pumpkins, quinces, radicchio, radishes, raisins, raisins (distilling), 
rambutan, rape greens, rapini, raspberries, recao, rhubarb, rutabaga, 
santa claus melon, salsify, saodilla, sapote, savory, scallions, 
shallots, shiso, spinach, squash, strawberries, suk gat, swiss chard, 
sweet corn, sweet potatoes, tangelos, tangerines, tangos, tangors, 
taniers, taro root, tau chai, teff, tindora, tomatillos, tomatoes, 
turnips, turnip greens, watercress, watermelons, white sapote, yam, and 
yam yu choy.

[79 FR 46339, Aug. 8, 2014, as amended at 79 FR 57718, Sept. 26, 2014; 
83 FR 40659, Aug. 16, 2018; 84 FR 45891, Sept. 3, 2019; 84 FR 53579, 
Oct. 8, 2019]



Sec.1412.49  Matters of general applicability.

    (a) The regulations in this part and FSA and CCC's interpretation of 
the regulations in this part and internal agency directives issued to 
FSA State and county offices are matters of general applicability and 
are not individually appealable in administrative appeals according to 
Sec. Sec.11.3 and 780.5 of this title. Additionally, the regulations 
in this part and any decisions of CCC and FSA that are not based on 
specific facts derived from an individual participant's application, 
contract, or file are not appealable under part 11 or part 780 of this 
title. Examples of such decisions include how the program is generally 
administered, signup deadlines, payment rates, or any other generally 
applicable matter or determination that is made by CCC or FSA for use in 
all similarly situated applications. The only extent by which the 
matters referenced in this section are reviewable administratively in an 
appeal forum is

[[Page 504]]

whether FSA's or CCC's decision to apply the generally applicable matter 
is factually accurate and in conformance with the regulations in this 
part.
    (b) The relief provisions of 7 CFR part 718 are applicable only to 
ineligibility and noncompliance decisions. The relief provisions 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 
this part. Equitable relief provisions of part 718 of this title cannot 
be used to obtain a review of either these regulations, the requirements 
of this part, the agency's interpretations of this part, or compliance 
provisions of this part.

[79 FR 46339, Aug. 8, 2014, as amended at 84 FR 45893, Sept. 3, 2019]



Sec.1412.50  Transfer of land and succession-in-interest.

    (a) Land subject to an election in subpart G will continue to be 
subject to the election even if there is a transfer of land or change in 
interest of any producer or owners on the farm. If a new owner or 
operator or producer purchases or obtains the right and interest in, or 
right to occupancy of, the land subject to an election option, such new 
owner or operator or producer, upon the approval of FSA, may enroll and 
participate under a new contract with FSA with respect to such 
transferred land in accordance with Sec.1412.41.
    (b) A succession in interest to an ARC or PLC program contract is 
required if there has been a change in the operation of a farm such as:
    (1) A sale of land;
    (2) A change of operator or producer, including a change in a 
partnership that increases or decreases the number or changes who are 
partners;
    (3) A foreclosure, bankruptcy, or involuntary loss of the farm;
    (4) A change in the producer shares to reflect changes in the 
producer's share of the crop(s) that were originally approved on the 
contract; or
    (5) Another change as otherwise determined by the Deputy 
Administrator by which the succession will not adversely affect nor 
defeat the purpose of the program.
    (c) A succession in interest to an ARC program contract is not 
permitted if FSA determines that the change:
    (1) Is not for all the time remaining under the ARC or PLC program 
contract;
    (2) Results in a violation of the landlord-tenant provisions 
specified in Sec.1412.55; or
    (3) Adversely affects or otherwise defeats the purpose of the 
program.
    (d) If a producer who is entitled to receive ARC or PLC payments 
dies, becomes incompetent, or is otherwise unable to receive the 
payment, CCC will make the payment in accordance with part 707 of this 
title.
    (e) A producer or owner of an enrolled farm must inform the county 
committee of changes in interest in base acres on the farm not later 
than:
    (1) August 1 of the fiscal year in which the change occurs if the 
change requires a reconstitution be completed in accordance with part 
718 of this title or
    (2) September 30 of the fiscal year in which the change occurs if 
the change does not require a reconstitution be completed in accordance 
with part 718 of this title.
    (f) In any case in which either an ARC or PLC payment has previously 
been made to a predecessor, such payment will not be paid to the 
successor, unless such payment has been refunded in full by the 
predecessor, in accordance with Sec.1412.41(d).

[79 FR 57718, Sept. 26, 2014]



      Subpart E_Financial Considerations Including Sharing Payments



Sec.1412.51  Limitation of payments.

    (a) The provisions of part 1400 of this chapter apply to this part. 
Payments under this part cannot exceed the amounts specified in part 
1400 of this chapter.
    (b) For all covered commodities other than peanuts, the total amount 
of ARC and PLC payments received, directly or indirectly, by a person or 
legal entity (except a joint venture or general partnership) for any 
crop year for any and all commodities cannot exceed $125,000.

[[Page 505]]

    (c) For peanuts, the total amount of payments received, directly or 
indirectly, by a person or legal entity (except a joint venture or 
general partnership) for any crop year cannot exceed $125,000.
    (d) Notwithstanding any other provision of this part, a producer on 
a farm is not eligible to receive ARC and PLC payments if the sum of the 
base acres on the farm is 10 acres or less unless the sum of the base 
acres on the farm, when combined with the base acres of other farms in 
which the producer has an enrolled producer share interest greater than 
zero, is more than 10 acres. The 10-acre limitation of this section will 
not apply to a socially disadvantaged farmer or rancher, a beginning 
farmer or rancher, a veteran farmer or rancher, or a limited resource 
farmer or rancher.
    (e) Any person or legal entity interested in obtaining a payment 
under this part for a crop year, in addition to satisfying all 
eligibility requirements of this part, must submit any and all documents 
from which payment eligibility can be determined to FSA by March 1 of 
the second year after the end of the annual contract period for which 
payments are being made. For example, to obtain a payment for a 2019 
contract, which ends in calendar year 2020, all documents must be 
submitted to FSA by March 1, 2021. This includes any payment eligibility 
document required under part 12 or part 1400 of this title. For example, 
for the 2019 contract year, the final date for submission of documents 
from which payment eligibility will be determined and apply is March 1, 
2021. Payments will not issue to any person or legal entity who fails to 
submit required forms and documents by this date. Further these payments 
will not be considered denied, as the person or legal entity is presumed 
to have forfeited their interest in the payment.

[79 FR 46339, Aug. 8, 2014, as amended at 79 FR 57719, Sept. 26, 2014; 
83 FR 40659, Aug. 16, 2018; 84 FR 45893, Sept. 3, 2019]



Sec.1412.52  PLC payment provisions.

    (a) Provided all provisions of this part including but not limited 
to election have been satisfied for a contract year, a PLC payment will 
be made to eligible participants on a farm enrolled in PLC with respect 
to covered commodities for which a PLC yield and base acres are 
established:
    (1) When the effective price for a covered commodity in a crop year 
is less than the effective reference price for the PLC enrolled covered 
commodity for that crop year as specified in this part; and
    (2) As soon as practical, as determined by the Deputy Administrator, 
after October 1 following the end of the 12-month marketing year for the 
covered commodity as applicable.
    (b) The effective price for a covered commodity is equal to the 
higher of the:
    (1) MYA price received by producers during the 12-month marketing 
year for the crop year of the covered commodity, as determined by FSA, 
or
    (2) National loan rate for a marketing assistance loan for the 
covered commodity for such crop year.
    (c) The payment rate used to calculate PLC payments with respect to 
covered commodity for which PLC yields and base acres are attributed to 
the covered commodity on a farm enrolled in a PLC contract is the 
effective reference price of the covered commodity minus the effective 
price of the covered commodity for a crop year, as determined in 
accordance with paragraph (b) of this section.
    (d) For PLC contracts, when PLC payments are triggered in accordance 
with paragraph (a) of this section, subject to the limitation in Sec.
1412.51 and in part 1400 of this chapter, the PLC payment to be paid to 
producers on a farm enrolled in a contract with respect to a covered 
commodity for which a PLC yield and base acres are attributed is equal 
to the product of:
    (1) The payment rate determined in accordance with paragraph (c) of 
this section, multiplied by
    (2) The relevant payment acres of the covered commodity, as 
applicable, minus any payment acre reduction in accordance with Sec.
1412.46, multiplied by
    (3) The PLC payment yield for the covered commodity on the farm 
enrolled in a PLC contract as determined in accordance with Sec.
1412.31, minus
    (4) Any reduction calculated in accordance with subpart F of this 
part.

[[Page 506]]

    (e) If a producer declines to accept, has forfeited interest in the 
payment as specified under Sec.1412.51, or is determined to be 
ineligible for all or any part of the producer's share of the PLC 
payment computed for the farm in accordance with the provisions of this 
section, the:
    (1) Payment or portions thereof will not become available for any 
other producer and
    (2) Producer is required to refund to CCC any amounts representing 
payments that exceed the payments determined by FSA to have been earned 
under the program authorized by this part. Part 1403 of this chapter is 
applicable to all unearned payments.
    (f) The payment of any amount due any producer on a farm enrolled in 
a PLC contract will be made only after all the producers subject to the 
contract are determined to be in full compliance with the contract and 
the requirements in this part or any other applicable part.
    (g) A participant on a farm enrolled in a contract may receive a 
payment amount due without regard to the eligibility of other 
participants on the farm if the:
    (1) Participant is in full compliance with the contract and the 
requirements in this part or any other applicable part;
    (2) Payment of such amount does not adversely affect or defeat the 
purpose of the program, as determined by the Deputy Administrator, or 
designee; and
    (3) Payment is approved by the Deputy Administrator, or designee.
    (h) Temperate japonica rice or medium and short grain rice grown:
    (1) In California will receive the effective price and guarantee for 
medium and short grain based only on the prices that temperate japonica 
or medium and short grain rice receives in California.
    (2) Outside of California will receive the effective price and 
guarantee for medium and short grain rice based only on the prices that 
temperate japonica or medium and short grain rice receives outside of 
California.

[79 FR 57719, Sept. 26, 2014, as amended at 83 FR 40659, Aug. 16, 2018; 
84 FR 45893, Sept. 3, 2019]



Sec.1412.53  ARC payment provisions.

    (a) Effective with the 2019 and subsequent crop years, ARC-CO actual 
crop revenue and guarantee will be based on the physical location of 
base acres of the farm.
    (1) FSA will divide up to 25 counties into administrative units. 
Each of the resulting administrative unit will be viewed as a county for 
ARC-CO payment purposes.
    (2) If a farm has base acres physically located in more than one 
physical location county, the ARC-CO actual revenue and ARC-CO guarantee 
will be weighted and summarized to the farm level.
    (3) If determined applicable by FSA, a historical irrigated 
percentage and trend-adjusted yield factor will be used to determine 
guarantee and revenue, which will also be weighted and summarized to the 
farm level.
    (b) Provided all provisions of this part, including but not limited 
to ARC-CO election and enrollment, have been satisfied for the contract 
year, CCC will issue, as applicable and consistent with the election and 
enrollment:
    (1) An ARC-CO payment beginning October 1, or as soon as practicable 
thereafter, after the end of the applicable marketing year for the 
covered commodity to the producers on a farm for a covered commodity in 
each crop year if the farm and covered commodity were enrolled in ARC-CO 
and the farm's weighted and summarized ARC-CO actual crop revenue was 
less than the farm's weighted and summarized ARC-CO guarantee.
    (2) Payment is equal to the result of multiplying the payment acres 
for the covered commodity times the difference between the farm's 
weighted and summarized actual crop revenue and the ARC-CO guarantee, 
not to exceed 10 percent of the farm's weighted and summarized ARC-CO 
benchmark revenue.
    (c) In a county having farms with P&CP acreage history of a covered 
commodity in 2013 through 2017, where a covered commodity's P&CP acreage 
was both irrigated and non-irrigated in 2013 through 2017, a separate 
irrigated and non-irrigated benchmark revenue, guarantee, and actual 
revenue will be maintained by FSA for the affected

[[Page 507]]

county. For farms in those counties with covered commodities enrolled in 
ARC-CO, the average 2013 through 2017 reported acreage of each covered 
commodity on the farm with irrigated and non-irrigated status will be 
used by FSA to calculate a percentage of each applicable covered 
commodity that will be applied against the irrigated and non-irrigated 
benchmark revenue, guarantee, and actual revenue.
    (d) FSA has determined the irrigated and non-irrigated counties and 
crops for the 2019 program year.
    (e) Provided all provisions of this part, including but not limited 
to ARC-IC election and enrollment, have been satisfied for the contract 
year, CCC will issue, as applicable and consistent with the election and 
enrollment:
    (1) An ARC-IC payment beginning October 1, or as soon as practicable 
thereafter, after the end of the applicable marketing year for the farm 
if the farm was enrolled in ARC-IC and the ARC-IC actual crop revenue 
for that farm is less than the ARC-IC guarantee.
    (2) Payment is equal to the result of multiplying the payment acres 
for the covered commodities times the difference between actual crop 
revenue and the ARC-IC guarantee, not to exceed 10 percent of benchmark 
revenue for ARC-IC.
    (f) If a producer has an interest in multiple farms that have 
enrolled in ARC-IC, the ARC-IC benchmark revenue for that producer used 
in the payment calculation will be a weighted average of the benchmark 
revenue for those multiple farms.
    (g) The effective price and guarantee for temperate japonica rice 
will be based on the price that all medium and short grain (including 
glutinous) rice receives in California. The effective price and 
guarantee for medium grain rice outside California will be based on the 
price that all medium and short grain rice receives outside California.

[84 FR 45893, Sept. 3, 2019]



Sec.1412.54  Sharing of payments.

    (a) Each eligible producer on a farm may enroll in an ARC or PLC 
contract, as applicable, and receive assistance and payments determined 
to be fair and equitable as agreed to by all the producers on the farm 
and approved by the county committee.
    (b) When required by FSA, each person or legal entity leasing a farm 
who enrolls in ARC or PLC must provide a copy of their written lease to 
the county committee and, in the absence of a written lease, must 
provide to the county committee a complete written description of the 
terms and conditions of any oral agreement or lease.
    (1) If a farm is cash leased (that is, the landowner receives a zero 
share of covered commodities planted on the farm or a zero share of any 
base acres) and the producers on the farm cash leased the farm in the 
immediately preceding year, then the tenant(s) who enters a producer 
signature and has a share greater than zero on the contract, if the same 
was true for the immediately preceding year, is considered to have 
satisfied ARC and PLC Program requirements of landowner(s) signing to a 
zero share on the contract The evidence must have been submitted for the 
immediately preceding contract year or was referred to in that contract 
year to an immediately preceding contract year.
    (2) When required by FSA, an owner's or landlord's signature 
affirming a zero share on either an application for assistance or 
contract under this part, as applicable, may be accepted as evidence of 
a cash lease between the owner or landlord and tenant.
    (3) For the purposes of obtaining payments under this part, the 
signature or signatures, if entered on the contract to satisfy the 
requirement of furnishing a written lease, are required to be provided 
by the enrollment deadline established by CCC for the assistance or 
payment.
    (c) When land on which base acres is leased on a share basis, 
neither the landlord nor the tenant is eligible to receive 100 percent 
of the ARC or PLC contract payment for the farm.
    (d) CCC will approve an ARC or PLC contract for enrollment and 
approve the division of payment when CCC is satisfied and determines 
that all of the following apply:
    (1) The landlords, tenants, and sharecroppers sign the contract and 
agree to the payment shares shown on the contract;

[[Page 508]]

    (2) The interests of tenants and sharecroppers are being protected; 
and
    (3) The payment shares shown on the application or contract do not 
circumvent either the provisions of this part or the provisions of part 
1400 of this chapter.
    (4) If any civil dispute between persons, legal entities, or members 
of legal entities not involving FSA or CCC is known or suspected to 
exist that either FSA or CCC believes might impact the eligibility of 
any person or legal entity or administration of ARC or PLC under this 
part, the Deputy Administrator can elect to withhold making any 
determination on an application or contract until such time as the 
Deputy Administrator is satisfied that the dispute is resolved or no 
longer has any bearing on either the administration of ARC or PLC under 
this part or any eligible producer or potential eligible producer. A 
decision withheld under to this paragraph will not be construed to be a 
decision or adverse decision under any law or regulation nor will it be 
construed to be a failure of FSA or CCC to act under any law or 
regulation.
    (e) A lease will be considered to be a cash lease if the lease 
provides for only a guaranteed cash payment for a specified amount, or a 
fixed quantity of the crop (for example, pounds, or bushels per acre).
    (1) If a lease contains provisions that require the payment of rent 
on the basis of the amount of crop produced or the proceeds derived from 
the crop, or the interest such producer would have had if the crop had 
been produced, or combination thereof, the agreement will be considered 
to be a share lease.
    (2) If a lease provides for a guaranteed amount and a share of the 
crop or crop proceeds, the agreement will be considered a cash lease.
    (3) If the lease is a cash lease, the landlord is not eligible for 
assistance or payments under this part. The leasing of grazing or haying 
privileges is not considered cash leasing.
    (f) Shares of PLC and ARC-CO will be determined based on the shares 
entered on the contract. Shares of ARC-IC payments will be determined 
based on the shares recorded on the report of acreage filed as specified 
in Sec.1412.66. Further, each eligible producer having a share of 
planted or eligible subsequently planted crop acreage of covered 
commodities on a farm enrolled under an ARC or PLC Program contract has 
to do both of the following to be eligible for their share of a payment:
    (1) Unless otherwise already enrolled on the ARC or PLC Program 
contract, sign the ARC or PLC Program contract during the contract 
period; and
    (2) Have the producer's share recorded on the report of acreage 
filed as required by part 718 of this title and Sec.1412.66.
    (g) In a case where a producer has failed to sign an ARC or PLC 
Program contract by the signup deadline or contract period established 
for enrollment and participation for the producer's reported share of 
P&CP acres or eligible subsequently planted crop acreage of covered 
commodities on a farm enrolled as specified in this part, that 
producer's share will not receive any consideration for payment and will 
not generate any payment to the producer or to any other producer on the 
farm.
    (h) FSA's approval of an ARC or PLC contract or shares under this 
part on behalf of CCC based on the representations of persons or legal 
entities signing the ARC or PLC contract, or acreage report in no way 
implies or will be construed as FSA's determination that the 
representations or assertions made by persons or legal entities signing 
the ARC or PLC contract, or acreage report are correct or are approved 
as legitimate. Any and all assertions and representations of a person, 
persons, legal entity, or legal entities signing forms, applications, or 
contracts incidental to program participation in this part are always 
subject to review and scrutiny or spot check by CCC. On CCC's behalf, 
FSA can at any time demand documentation to substantiate any 
representation made by any program participant under this part and 
recover unearned amounts that are determined to have been paid based on 
such erroneous representation.

[79 FR 46339, Aug. 8, 2014, as amended at 79 FR 57720, Sept. 26, 2014; 
83 FR 40659, Aug. 16, 2018; 84 FR 45894, Sept. 3, 2019]

[[Page 509]]



Sec.1412.55  Provisions relating to tenants and sharecroppers.

    (a) No payment or assistance authorized under this part will be made 
by CCC if:
    (1) The landlord or operator has adopted a scheme or device for the 
purpose of depriving any tenant or sharecropper of the payments to which 
such person would otherwise be entitled under ARC or PLC. If any of such 
conditions occur or are discovered after payments have been made, all or 
any such part of the payments as the State committee may determine are 
required to be refunded to CCC; or
    (2) The landlord terminated a lease in violation of State law as 
determined by a State court.
    (b) [Reserved]

[79 FR 46339, Aug. 8, 2014, as amended at 83 FR 40659, Aug. 16, 2018]



             Subpart F_Violations and Compliance Provisions



Sec.1412.61  Contract violations.

    Violations of contract or application requirements will result in 
the termination or cancellation of the ARC or PLC contract. Upon such 
termination or cancellation, all producers that signed the contract or 
application forfeit all rights to receive payments for the ARC or PLC 
contract and are required to refund all payments received, plus interest 
as specified in Sec.1412.1(d) of this part, as determined in 
accordance with part 1403 of this chapter.

[79 FR 46339, Aug. 8, 2014, as amended at 83 FR 40659, Aug. 16, 2018]



Sec.1412.63  Contract or application liability.

    All producers who signed an ARC or PLC Program contract made 
according to this part are jointly and severally liable for contract or 
application violations and resulting repayments and penalties.

[79 FR 46339, Aug. 8, 2014, as amended at 83 FR 40659, Aug. 16, 2018]



Sec.1412.64  Inaccurate representation, misrepresentation,
and scheme or device.

    (a) Producers are required to accurately report and certify 
information provided to CCC for ARC or PLC. Any form containing the 
signature of a person or legal entity that contains a preprinted 
certification statement on the form will be construed to be a 
representation and certification of and from the person or legal entity 
signing the form regardless of whether or not the person or legal entity 
personally made the entry or entries on the form. Errors in reporting 
may impact eligibility or extent of eligibility. Payments under this 
part will be based on the most correct information available. CCC's 
issuing payments based on the face of a contract does not signify CCC's 
approval of the representations made by participants. Producers are 
responsible for refunding, with interest as specified in Sec.1412.1(d) 
of this part, any program benefits that were paid based on incorrect 
program information.
    (b) For those cases in which FSA determines that an inaccurate 
representation or certification is due to a misrepresentation, scheme, 
or device, the person or legal entity or members of the legal entity 
will be ineligible to receive ARC or PLC payments and will have the 
person, legal entity's or member's interest in all contracts or 
applications terminated if it is determined that such person, legal 
entity, or member of the legal entity has done any of the following:
    (1) Adopted any scheme or device that tends to defeat the purpose of 
this part;
    (2) Made any fraudulent representation;
    (3) Misrepresented any fact affecting an ARC or PLC Program contract 
or determination made under part 1400 of this chapter; or
    (4) Violated or been determined ineligible under Sec.1400.5 of 
this chapter.
    (c) Any remedies taken by FSA or CCC as specified in this section 
will be in addition to any other civil or other remedies that may be 
available, including, but not limited to, those provided in part 1400 of 
this chapter.

[79 FR 46339, Aug. 8, 2014, as amended at 83 FR 40659, Aug. 16, 2018]

[[Page 510]]



Sec.1412.65  Offsets and assignments.

    (a) Except as provided in paragraph (b) of this section, any payment 
or portion thereof to any person will be made without regard to 
questions of title under State law and without regard to any claim or 
lien against the crop, or proceeds thereof, in favor of the owner or any 
other creditor except agencies of the U.S. Government. The regulations 
governing offsets and withholdings in part 1403 of this chapter apply to 
contract payments.
    (b) Any participant entitled to any payment may assign any payments 
in accordance with regulations governing the assignment of payments in 
part 1404 of this chapter.



Sec.1412.66  Acreage and production reports, prevented planting,
and notices of loss.

    (a) An accurate report of all cropland acreage on the farm is 
required for ARC or PLC. How to submit the acreage report is specified 
in part 718 of this title.
    (b) Prevented planting acreage credit will only be available to 
acreage that CCC determines was prevented from being planted due to an 
eligible cause of loss. Acreage ineligible for prevented planted credit 
includes acreage not planted due to a management decision. Prevented 
planting acreage credit is subject to the provisions of part 718 of this 
title.
    (c) As a condition of producer payment eligibility for all ARC-IC 
payments under this part, all producers of all covered commodities on 
enrolled ARC-IC elected farms must accurately submit a report of 
production by the acreage reporting date for the crop in the year 
immediately following the crop year of the reported crop acreage for all 
the covered commodities elected and enrolled in ARC-IC. The report is 
due for each covered commodity for which an acreage report greater than 
zero planted acres was filed for the farm according to paragraph (a) of 
this section. The report of production for all of such covered commodity 
or covered commodities can be submitted by any of the producers of the 
covered commodity or covered commodities on the farm, the farm operator, 
or an owner on the farm. The absence of the required production report 
of any covered commodity being filed on an enrolled ARC-IC elected farm 
will cause all of the producers who share in any of the covered 
commodities on that farm to be ineligible for payment on that farm and 
on any other ARC-IC elected and enrolled farm in the State for the crop 
year for which the production report was not filed or is missing. At the 
discretion of CCC, the report of production must be accompanied by 
documentation acceptable to CCC. The report must include the date 
harvest was completed. Records of production acceptable to CCC may 
include those specified in:
    (1) Commercial receipts, settlement sheets, warehouse ledger sheets, 
or load summaries of the crop that was sold or otherwise disposed of 
through commercial channels provided the records are reliable or 
verifiable as determined by CCC; and
    (2) Such documentary evidence such as contemporaneous measurements, 
truck scale tickets, and contemporaneous diaries, as is necessary in 
order to verify the information provided if the crop has been fed to 
livestock or otherwise disposed of other than through commercial 
channels, provided the records are reliable or verifiable as determined 
by CCC. If the crop will be disposed of through retail sales, such as 
roadside stands, u-pick, etc. and the producer will not be able to 
certify acceptable records of production, the producer must request an 
appraisal of the crop acreage prior to harvest.

[79 FR 46339, Aug. 8, 2014, as amended at 79 FR 57720, Sept. 26, 2014; 
83 FR 40659, Aug. 16, 2018]



Sec.1412.67  Compliance with highly erodible land and wetland 
conservation provisions.

    The provisions of part 12 of this title apply to this part.



Sec.1412.68  Controlled substance violations.

    The provisions of part 718 of this title apply to this part.



Sec.1412.69  Control of noxious weeds.

    Enrolled ARC and PLC contract participants agree to effectively 
control noxious weeds and otherwise maintain

[[Page 511]]

the land on the farm in accordance with sound agricultural practices; 
and use the land on the farm for an agricultural or conserving use, and 
not for a nonagricultural commercial, industrial, or residential use.

[79 FR 46339, Aug. 8, 2014, as amended at 83 FR 40659, Aug. 16, 2018]



                     Subpart G_ARC and PLC Election

    Source: 79 FR 57720, Sept. 26, 2014, unless otherwise noted.



Sec.1412.71  Election of ARC or PLC.

    (a) For the 2019 though 2023 crop years, subject to paragraph (f) of 
this section, all of the producers on a farm must make a one-time 
election in the 2019 enrollment and election period that is both:
    (1) Unanimous, and
    (2) Irrevocable through 2020.
    (b) The election by producers is to obtain--
    (1) Either PLC or ARC-CO on a covered commodity-by-covered-commodity 
basis on the farm; or
    (2) ARC-IC for all covered commodities on the farm.
    (c) In general, a valid election will also apply to any subsequent 
year parent to the farm reconstitution as well as farms resulting from 
the parent farm as specified in Sec.1412.73. Neither the requesting of 
a farm reconstitution nor the reconstitution of any farm will impact 
either the requirement that all producers on a farm must make the 
unanimous irrevocable election in the defined election period or the 
valid election that was previously made by those producers.
    (d) FSA will process elections from producers on a farm based on the 
election as submitted. For example, if the producers of a farm attest 
that they are all or the only producers on the farm and FSA later learns 
that there was another producer at the time of election who did not 
agree to the election, the election is invalid. If at any time FSA 
determines that an election fails to satisfy the requirements of this 
subpart because it did not include the unanimous agreement of all 
producers on the farm at the time of election, the election will 
immediately be invalid. This is not a compliance provision. Only valid 
elections by all producers will be recognized and used by CCC. All ARC 
and PLC payments that were issued to any producers on a farm based on an 
election later determined by CCC to be invalid, for whatever reason, 
regardless of whether those producers who were issued unearned payments 
personally made or participated in the invalid election, must be 
refunded with interest.
    (e) Even if completed during the same period of time, election is 
separate from enrollment; producers on farms that have validly completed 
an election in the prescribed election period must enroll as specified 
in subpart D of this part for ARC and PLC payments, as applicable.
    (f) Except for those farms specified under Sec.1412.26, for the 
2021 and each subsequent crop year, all the producers on a farm may 
change the election under paragraph (a) of this section.

[79 FR 46339, Aug. 8, 2014, as amended at 83 FR 40659, Aug. 16, 2018; 84 
FR 45894, Sept. 3, 2019]



Sec.1412.72  Election period.

    (a) Election will be conducted in a defined period as announced by 
FSA. During the election period, all producers on a farm must 
unanimously make the irrevocable election as described in Sec.1412.71 
to preserve the payment eligibility for 2019 and determine whether the 
default election under Sec.1412.74 will apply to the farm.
    (b) If an election is submitted by all producers on a farm as 
specified in Sec.1412.71 and paragraph (a) of this section, that 
election will be recognized as valid for the farm unless any of the 
following occur:
    (1) The election is rescinded or terminated by any producer on the 
farm in accordance with paragraph (c) of this section during the 
election period;
    (2) The valid election is modified and replaced by another valid 
election by all producers during the election period;
    (3) A subsequent valid election by all producers is made with FSA 
during the election period; or
    (4) FSA determines the election at the time it was made was invalid 
for any reason.

[[Page 512]]

    (c) At any time during an election period, a producer can rescind or 
terminate an election by providing written notice to FSA during the 
election period. The written notice to rescind or terminate must be 
physically received by FSA for CCC during the election period in order 
to be recognized. Immediately following receipt of such notice to 
rescind or terminate, the farm will be viewed as not having any 
effective valid election (in other words, no valid election will be 
determined to exist--even if there was another previous election in 
effect before the election that is rescinded, or terminated as specified 
in with this paragraph).
    (d) FSA is under no obligation to notify producers or owners on a 
farm that an election has been submitted, filed, rescinded, or 
terminated. Producers of a farm are solely responsible for filing a 
valid election during an election period or in whatever time remains in 
an election period following the rescission or termination of an 
election.
    (e) FSA is under no obligation to notify producers or owners of 
whether or not a valid election exists or is in place or whether any 
producer has rescinded or terminated an election. FSA will respond to 
inquiries regarding the status of election of a farm by any producer or 
owner on a farm including a producer or owner who gains a producer or 
owner interest on the farm during the election period.
    (f) The election period and final day in that election period in 
which producers can unanimously and irrevocably elect are not a 
compliance requirement or provision. The requirement of an election is 
mandated in the 2014 Farm Bill, as amended and as such is not subject to 
any of the equitable relief provisions of 7 CFR part 718, subpart D. 
Further, because the requirement of a unanimous irrevocable election and 
ramifications for not having a valid election are specified in the 2014 
Farm Bill, as amended FSA will not consider any equitable relief. There 
are no late-file provisions for election.

[79 FR 57720, Sept. 26, 2014, as amended at 84 FR 45894, Sept. 3, 2019]



Sec.1412.73  Reconstitutions of farms and election.

    (a) If a new producer or new owner gains an interest in a farm after 
the filing of a valid election on that farm during the election period, 
that new producer or new owner, whether or not known to FSA or the other 
producers or owners on the farm, will be subject to any previously 
submitted valid election under Sec. Sec.1412.71 and 1412.72 unless 
that new producer or new owner modifies, rescinds, or terminates the 
election as a producer or owner as specified in Sec.1412.72(c) during 
the remaining time in the election period.
    (b) Any reconstitution request initiated after August 1, 2019, will 
not be made until after the end of the election period specified in 
Sec.1412.72. Following the close of the election period in Sec.
1412.72, a valid election on any farm cannot be changed by any 
reconstitution. This means that valid elected farms can only be combined 
with farms having an identical election for each and every covered 
commodity on the farm regardless of whether there are any base acres for 
any and all covered commodities on the farm. Reconstitutions will not be 
permitted to alter a valid election or the default election that may 
apply to a farm.

[79 FR 57720, Sept. 26, 2014, as amended at 84 FR 45895, Sept. 3, 2019]



Sec.1412.74  Failure to make election.

    (a) If all producers on a farm do not make a unanimous election 
during the period specified in Sec.1412.72, that farm will not have a 
valid election and any producer on the farm is not eligible for 2019 ARC 
or PLC enrollment or payments.
    (b) If a valid election is not made for a farm in the 2019 crop 
year, FSA will not make any payments with respect to the farm for the 
2019 crop year and the producers on the farm will, subject to Sec.
1412.71(f), default to the same coverage for each covered commodity on 
the farm for the 2020 through 2023 crop years as was applicable for the 
2015 through 2018 crop years.

[79 FR 46339, Aug. 8, 2014, as amended at 83 FR 40659, Aug. 16, 2018; 84 
FR 45895, Sept. 3, 2019]

[[Page 513]]



                             Subpart H_CTAP



Sec.1412.81  Administration.

    (a) The provisions of this part apply to this subpart, except for 
provisions that apply specifically to ARC and PLC only, for example, the 
yield and planting flexibility provisions apply specifically to ARC and 
PLC. To the extent that there is a conflict with the provisions of other 
subparts of this part and this subpart, the provisions of this subpart 
apply to CTAP.
    (b) CTAP payments as specified in this subpart will be made 
available for:
    (1) The 2014 crop year to eligible producers on farms in all 
counties; and
    (2) The 2015 crop year to eligible producers on farms only in 
counties where STAX is not available.



Sec.1412.82  Eligibility and CTAP application.

    (a) Eligibility. In addition to any general eligibility provisions 
in this part, to be eligible for CTAP the following conditions are 
required:
    (1) The producer is a person or legal entity who is actively engaged 
in farming and otherwise eligible for payment, as specified in 7 CFR 
part 1400;
    (2) The producer is on a farm that has cotton base acres that were 
in existence as of September 30, 2013, as adjusted; and
    (3) The producer has an interest in the upland cotton base acres on 
the farm.
    (b) Producer's share interest. A producer's share interest in 
cropland on a farm must be equal to or greater than that producer's 
share interest in cotton base acres on the farm for that crop year, as 
reported on that farm's acreage report.
    (c) Application. To apply, submit the application and supportive and 
necessary contractual documents to the FSA county office:
    (1) For 2014 CTAP by October 7, 2014; and
    (2) For 2015 CTAP, by July 31, 2015.



Sec.1412.83  Sharing of CTAP payments.

    (a) Each eligible producer on a farm may apply for and receive CTAP 
payments determined to be fair and equitable as agreed to by all 
producers on the farm and as approved by the county committee.
    (b) The provisions of Sec.1412.54 regarding the classification of 
leases apply to CTAP.
    (c) Shares of CTAP payments will be determined based on shares 
recorded on the application for CTAP payments for the particular program 
year. The provisions of Sec.1412.54 apply to shares of CTAP payments.



Sec.1412.84  Impact of CTAP application on ARC or PLC.

    (a) Applications for CTAP do not establish eligibility for ARC or 
PLC. Interested producers are required to file documents that are 
specifically required for CTAP as specified on the CTAP application. An 
application for CTAP will not be considered an intent to participate in 
ARC or PLC and, conversely, an election or enrollment in ARC or PLC will 
not establish eligibility for CTAP.
    (b) [Reserved]



Sec.1412.86  CTAP payments.

    (a) In the case of producers on a farm who apply for CTAP as 
specified in this part, and where all other eligibility provisions have 
been satisfied, CCC will make CTAP payments available to the producers 
on a farm's application as specified in this subpart.
    (b) CTAP payments for upland cotton producers on farms with eligible 
upland cotton base acres as specified in Sec.1412.82(a) are equal to:
    (1) For 2014, the product of multiplying 60 percent of the farm's 
upland cotton base acres, times the farm's direct payment yield for 
upland cotton, times $0.09, times the producer's share on the approved 
application; or
    (2) Where applicable for 2015 according to this part and subpart, 
the product of multiplying 36.5 percent of the farm's upland cotton base 
acres, times the farm's direct payment yield for upland cotton, times 
$0.09, times the producer's share on the approved application.



Sec.1412.87  Transfer of land and succession-in-interest.

    (a) A succession in interest application for CTAP is required if 
there has been a change in the producer shares of

[[Page 514]]

upland cotton base acres in Sec.1412.82(a) for 2014 or 2015, as 
applicable, due to:
    (1) A sale of land;
    (2) A change of producer, including a change in a partnership that 
increases or decreases the number of partners or changes who are 
partners;
    (3) A foreclosure, bankruptcy, or involuntary loss of the farm;
    (4) A change in producer shares to reflect changes in the producer's 
share of the upland cotton base acres relevant to the originally 
approved application; or
    (5) Any other change determined by the Deputy Administrator to be a 
succession that will not adversely affect or defeat the purpose of CTAP.
    (b) A succession in interest to the CTAP application is not 
permitted if CCC determines that the change:
    (1) Results in a violation of the landlord-tenant provisions 
specified in Sec.1412.55; or
    (2) Adversely affects or otherwise defeats the purpose of CTAP.
    (c) If a producer who is entitled to receive CTAP payments dies, 
becomes incompetent, or is otherwise unable to receive the payment, CCC 
will make the payment in accordance with part 707 of this title.
    (d) A producer or owner of an enrolled farm is required to inform 
the county committee of changes in interest in base acres of upland 
cotton as specified in Sec.1412.82(b) on the farm not later than:
    (1) August 1 of the fiscal year in which the change occurs if the 
change requires a reconstitution be completed in accordance with part 
718 of this title; or
    (2) September 30 of the fiscal year in which the change occurs if 
the change does not require a reconstitution be completed in accordance 
with part 718 of this title.
    (e) In any case in which a CTAP payment has previously been made to 
a predecessor, such payment will not be paid to the successor, unless 
such payment has been refunded in full by the predecessor.



Sec.1412.88  Executed application not in conformity with regulations.

    If, after a CTAP application is approved by CCC, it is discovered 
that such any information contained in the application is not in 
conformity with the provisions of this part, the provisions of this part 
will prevail.



Sec.1412.89  Division of CTAP payments and provisions relating
to tenants and sharecroppers.

    (a) CTAP payments will be divided in the manner specified in the 
applicable application approved by CCC. CCC will ensure that 2014 or 
2015 producers who would have a 2014 or 2015 reported share interest in 
cropland on the farm specified in Sec.1412.82(b) receive treatment 
that CCC deems to be equitable, as determined by CCC. CCC will refrain 
from acting on an application if, as determined by CCC, there is a 
disagreement among any person or legal entity applying as to the 
person's or legal entity's eligibility to apply as a tenant and there is 
insufficient evidence to indicate whether the person seeking 
participation as a tenant does or does not have a reported share 
interest in the cropland on the farm sufficient to cover the claimed 
share interest in cotton base acres of that farm as specified in Sec.
1412.82(b) in 2014 or 2015, as applicable.
    (b) CCC may remove an operator or tenant from an application under 
this subpart and part when the operator or tenant:
    (1) Requests, in writing to be removed from the application;
    (2) Files for bankruptcy and the trustee or debtor in possession 
fails to affirm the application, to the extent permitted by the 
provisions of applicable bankruptcy laws;
    (3) Dies during the 2014 or 2015 program year and the Administrator 
of the estate fails to succeed to the application within a period of 
time determined by the Deputy Administrator; or
    (4) Is the subject of an order of a court of competent jurisdiction 
requiring the removal from the application under this part and subpart 
of the operator or tenant and such order is received by FSA, as 
determined by CCC.
    (c) In addition to the provisions in paragraph (b) of this section, 
tenants are required to maintain their tenancy throughout the crop year 
in order to remain on an application. Tenants who

[[Page 515]]

fail to maintain tenancy on the acreage under the application, including 
failure to comply with provisions under applicable State law, may be 
removed from an application by CCC. CCC will assume the tenancy is being 
maintained unless notified otherwise by a participant specified in the 
application.



PART 1413_COMMODITY INCENTIVE PAYMENT PROGRAMS--Table of Contents



                  Subpart A_Durum Wheat Quality Program

Sec.
1413.101 Applicability.
1413.102 Definitions.
1413.103 Administration.
1413.104 Eligibility.
1413.105 [Reserved]
1413.106 Application process.
1413.107 Availability of funds.
1413.108 Payment calculation.
1413.109 Refunds, joint and several liability.
1413.110 Misrepresentation and scheme or device.
1413.111 Miscellaneous provisions.
1413.112 Appeals.
1413.113 Deceased individuals or dissolved entities.
1413.114 Records and inspections.

Subparts B-C [Reserved]

    Authority: 7 U.S.C. 8788 and 15 U.S.C. 714.

    Source: 75 FR 41965, July 20, 2010, unless otherwise noted.



                  Subpart A_Durum Wheat Quality Program



Sec.1413.101  Applicability.

    (a) This subpart establishes the terms and conditions under which 
the Durum Wheat Quality Program (DWQP) as authorized by section 1613 of 
the Food, Conservation, and Energy Act of 2008 (Pub. L. 110-246) will be 
administered.
    (b) This program will operate only to the extent appropriated 
funding is available.
    (c) Subject to available funding, eligible producers of durum wheat 
will be partially compensated for the cost of purchasing and applying 
fungicides to a crop of durum wheat to control Fusarium head blight on 
acres accurately certified as planted to durum wheat. ``Available 
funding'' requires that there be a specific appropriation for the 
program that applies to a particular crop for which the producer seeks 
compensation under this program.



Sec.1413.102  Definitions.

    The following definitions apply to this subpart. The definitions in 
parts 718 and 1400 of this title also apply, except where they conflict 
with the definitions in this section.
    Application period means the dates established by the Deputy 
Administrator for Farm Programs for producers to apply for program 
benefits.
    CCC means the Commodity Credit Corporation.
    Crop year means the calendar year in which the wheat was harvested 
or intended to be harvested. For example, a reference to the 2010 crop 
year of wheat means wheat that when planted was intended for harvest in 
calendar year 2010.
    Durum wheat means all varieties of white (amber) durum wheat as 
defined in the U.S. Standards for Wheat (7 CFR part 810, subpart M) 
including, but not limited to, hard amber durum wheat and amber durum 
wheat.
    Flowering stage means the period of time during the wheat growth 
stage, after the head emergence has completed and prior to milk 
development in the kernel.
    State committee, county committee or county office means the 
respective FSA committee or office.
    United States means all 50 States of the United States, the District 
of Columbia, the Commonwealth of Puerto Rico, and any other territory or 
possession of the United States.
    USDA means the United States Department of Agriculture.



Sec.1413.103  Administration.

    (a) DWQP will be administered under the general supervision of the 
Executive Vice President, CCC (Administrator, Farm Service Agency 
(FSA)), or a designee, and will be carried out in the field by FSA State 
and county committees and FSA employees.
    (b) FSA representatives do not have authority to modify or waive any 
of the provisions of the regulations of this

[[Page 516]]

subpart, except as specified in paragraph (e) of this section.
    (c) The State FSA committee will take any action required by the 
provisions of this subpart that the county FSA committee has not taken. 
The State FSA committee will also:
    (1) Correct, or require a county FSA committee to correct, any 
action taken by such county FSA committee that is not in compliance with 
the provisions of this subpart.
    (2) Require a county FSA committee to not take an action that is not 
in compliance with the provisions of this subpart.
    (d) No provision or delegation to a State or county FSA committee 
will preclude the Administrator, Deputy Administrator, or a designee 
from determining any question arising under the program in this subpart, 
or from reversing or modifying any determination made by a State or 
county FSA committee.
    (e) The Deputy Administrator may authorize State and county FSA 
committees to waive or modify non-statutory program requirements of this 
subpart in cases where failure to meet such requirements does not 
adversely affect operation of the program in this subpart. Producers 
have no right to seek an exception under this provision. The Deputy 
Administrator's refusal to consider cases or circumstances or decision 
not to exercise this discretionary authority under this provision will 
not be considered an adverse decision and is not appealable.



Sec.1413.104  Eligibility.

    (a) To be considered eligible for DWQP payments, the person or 
entity must have a share in the treated wheat crop on those acres 
planted to durum wheat on which an eligible fungicide was applied, as 
certified on the application, have incurred the cost of acquiring and 
applying eligible fungicide, and meet the requirements in paragraph (b) 
of this section.
    (b) To be eligible for benefits, a person or entity must be a:
    (1) Citizen of the United States;
    (2) ``Lawful alien'' as defined in Sec.1400.3 of this chapter;
    (3) Partnership of citizens of the United States; or
    (4) Corporation, limited liability corporation, or other farm 
organizational structure organized under State law.
    (c) A minor child is eligible to apply for DWQP payments if all the 
eligibility requirements of this subpart are met and the requirements in 
part 1400 of this chapter that apply to minor children are met.
    (d) A person or entity determined to be a foreign person under part 
1400 of this title is not eligible to receive benefits under this 
subpart, unless that person provides land, capital, and a substantial 
amount of active personal labor in the production of crops on such farm.
    (e) State and local governments and their political subdivisions and 
related agencies are not eligible for DWQP payments.
    (f) To be considered an eligible fungicide under this subpart, the 
fungicide must be:
    (1) Registered with the U.S. Environmental Protection Agency, as 
required under the Federal Insecticide, Fungicide, and Rodenticide Act 
(FIFRA), unless exempt from FIFRA requirements;
    (2) In compliance with State pesticide regulations, if applicable, 
in the State in which benefits are being requested; and
    (3) Applied specifically to control Fusarium head blight on acres 
certified as planted by the producer to durum wheat for the applicable 
crop year.
    (g) CCC will provide program benefits to reimburse eligible costs 
for a maximum of one fungicide treatment, including application cost, 
during the flowering stage, to a crop of durum wheat per crop year. 
Multiple or additional fungicide treatments, beyond a single treatment, 
to the same crop of wheat are not eligible for benefits.



Sec.1413.105  [Reserved]



Sec.1413.106  Application process.

    (a) To apply for DWQP payment, the producer must submit, to the FSA 
county office that maintains the producer's farm records for the 
agricultural operation, a completed application as specified in 
paragraph (c) of this section, including any supporting

[[Page 517]]

documentation required by FSA, and a report of acreage.
    (b) The producer must submit a completed application for payment and 
required supporting documentation to the administrative FSA county 
office during the relevant, for the crop, application period announced 
by FSA which will end no later than September 15 of the crop year in 
which the fungicide was applied to a crop of durum wheat.
    (c) A complete application includes all of the following:
    (1) An application form provided by FSA;
    (2) Certification of the total number and location of acres planted 
to durum wheat on which an eligible fungicide was applied specifically 
to control Fusarium head blight;
    (3) Certification of the date durum wheat, on which an eligible 
fungicide was applied specifically to control Fusarium head blight, was 
planted;
    (4) Certification of the type of eligible fungicide applied to acres 
certified as planted to durum wheat;
    (5) Certification of the date eligible fungicide was applied to 
acres certified as planted to durum wheat;
    (6) Documentation providing adequate proof, as determined by FSA, of 
the producer's actual cost of purchasing and applying eligible fungicide 
to acres certified as planted to durum wheat for one treatment; and
    (7) Any other documentation as determined by FSA to be necessary to 
make a determination of eligibility of the producer.
    (d) The producer requesting benefits under this program certifies 
the accuracy and truthfulness of the information provided in the 
application as well as any documentation filed with or in support of the 
application. All information provided is subject to verification by FSA.
    (e) Data furnished by the producer will be used to determine 
eligibility for program benefits. Furnishing the data is voluntary; 
however, without all required data program benefits will not be approved 
or provided.



Sec.1413.107  Availability of funds.

    (a) The 2008 Farm Bill authorizes up to $10 million to be 
appropriated for each of the 2009 through 2012 fiscal years for DWQP. 
Payments will not be made for claims for a particular crop year until 
after the application deadline, which is September 15 of that crop year, 
for the crop for which payment for the fungicide application is sought 
and only if funds are made available through an appropriation.
    (b) In the event that approval of all eligible applications for 
fungicide treatments for a particular crop would result in expenditures 
in excess of the amounts appropriated for that crop year, the FSA Deputy 
Administrator will prorate the funds by a national factor to reduce the 
total expected payments to the amount made available by the Secretary. 
FSA will prorate the payments in such manner as it determines 
appropriate and reasonable.
    (c) Claims that are unpaid or paid at a reduced rate for a crop year 
for any reason will not be carried forward for payment under other funds 
for later crop years, unless provided for by law and approved by the 
Deputy Administrator. Such unpaid claims will be considered, as to any 
unpaid amount, void and nonpayable.



Sec.1413.108  Payment calculation.

    (a) Subject to the availability of DWQP funds, the payment to an 
eligible producer will be the result of adding (adjusted for the 
producer's share of the crop):
    (1) The lesser of:
    (i) The result of multiplying the number of acres certified by the 
producer as planted to durum wheat on which an eligible fungicide was 
applied, during the flowering stage, times the per acre national 
fungicide acquisition payment rate as set by the Deputy Administrator; 
or
    (ii) Fifty percent of the producer's actual cost of purchasing 
eligible fungicide for acres certified as planted to durum wheat and 
treated for the applicable crop year in a manner that would otherwise 
generate a payment under paragraph (a)(1)(i) of this section; plus
    (2) The result of multiplying the number of acres certified as 
planted to durum wheat on which an eligible fungicide was applied during 
the flowering stage, times the State application per-acre payment rate 
set by the State

[[Page 518]]

committee, with such application payment not to exceed 50 percent of the 
actual application cost certified to by the producer.
    (b) The national fungicide acquisition payment rate set by the 
Deputy Administrator will be based on 50 percent of the national average 
cost of eligible fungicide (only including the cost of the chemical 
itself), applied to one acre of durum wheat for the applicable crop 
year.
    (c) The State application payment rate set by the State committee 
will be based on 50 percent of the State average cost of applying an 
eligible fungicide to one acre of durum wheat for the applicable crop 
year.



Sec.1413.109  Refunds, joint and several liability.

    (a) Excess payments, payments provided as the result of erroneous 
information provided by any person, or payments resulting from a failure 
to comply with any requirement or condition for payment in the 
application or this subpart, must be refunded to CCC.
    (b) A refund required as specified in this section will be due with 
interest from the date of CCC disbursement and otherwise determined in 
accordance with paragraph (d) of this section and late payment charges 
as provided in part 1403 of this chapter.
    (c) Persons signing an application for payment as having an interest 
in an operation will be jointly and severally liable for any refund and 
related charges found to be due as specified in this section.
    (d) Interest will be applicable to any refunds required as specified 
in parts 792 and 1403 of this title. Such interest will be charged at 
the rate that the U.S. Department of the Treasury charges CCC for funds, 
and will accrue from the date CCC made the erroneous payment to the date 
of repayment.
    (e) CCC may waive the accrual of interest if it determines that the 
cause of the erroneous determination was not due to any action of the 
person, or was beyond the control of the person committing the 
violation. Any waiver is at the discretion of CCC alone.



Sec.1413.110  Misrepresentation and scheme or device.

    (a) In addition to other penalties, sanctions, or remedies as may 
apply, a producer will be ineligible for payment through the DWQP if the 
producer is determined by CCC to have:
    (1) Adopted any scheme or device that tends to defeat the purpose of 
the program,
    (2) Made any fraudulent representation, or
    (3) Misrepresented any fact affecting a program determination.
    (b) Any funds disbursed pursuant to this subpart to any producer 
engaged in a misrepresentation, scheme, or device, must be refunded with 
interest together with such other sums as may become due and all charges 
including interest will run from the date of disbursement of the CCC 
funds. Any producer engaged in acts prohibited by this section and any 
producer receiving payment as specified in this subpart will be jointly 
and severally liable with other persons or producers involved in such 
claim for payment for any refund due as specified in this section and 
for related charges. The remedies provided in this subpart will be in 
addition to other civil, criminal, or administrative remedies that may 
apply.



Sec.1413.111  Miscellaneous provisions.

    (a) Other interests. Any payment to any producer under this part 
will be made without regard to questions of title under State law, and 
without regard to any claim or lien against the commodity, or proceeds, 
in favor of the owner or any other creditor except agencies of the U.S. 
Government.
    (b) Assignments. Any producer entitled to any payment may assign any 
payment(s) in accordance with regulations governing the assignment of 
payments in part 1404 of this chapter.
    (c) Offsets. CCC may offset or withhold any amount due to CCC from 
any benefit provided under this subpart in accordance with the 
provisions of part 1403 of this chapter and part 792 of this title.
    (d) Violations of highly erodible land and wetland conservation 
provisions. The provisions of part 12 of this title apply

[[Page 519]]

to this subpart. That part sets out certain conservation requirements as 
a general condition for farm benefits.
    (e) Violations regarding controlled substances. The provisions of 
Sec.718.6 of this title, which generally limit program payment 
eligibility for persons who have engaged in certain offenses with 
respect to controlled substances, will apply to this part.



Sec.1413.112  Appeals.

    (a) Appeals. Appeal regulations set forth at parts 11 and 780 of 
this title apply to determinations made under this subpart.
    (b) Determinations not eligible for administrative review or appeal. 
CCC determinations and policies that are not limited to a specific 
individual producer's application are not to be construed to be 
individual program eligibility determinations or adverse decisions and 
are, therefore, not subject to administrative review or appeal under 7 
CFR part 11 or part 780 of this title (but nothing in the regulations 
for this program will limit the ability of the National Appeals Division 
to decide its own jurisdiction under part 11). Such determinations 
include, but are not limited to, application periods, deadlines, crop 
years, prices, general statutory or regulatory provisions that apply to 
similarly situated producers, national average payment prices, and 
payment factors established by CCC for DWQP for which this subpart 
applies or similar matters requiring CCC determinations.



Sec.1413.113  Deceased individuals or dissolved entities.

    (a) Payment may be made for an eligible application on behalf of an 
eligible producer who is now a deceased individual or is a dissolved 
entity if a representative who currently has authority to enter into a 
contract on behalf of the producer signs the application for payment.
    (b) Legal documents showing proof of authority to sign for the 
deceased individual or dissolved entity must be provided.
    (c) If a producer is now a dissolved general partnership or joint 
venture, all members of the general partnership or joint venture at the 
time of dissolution or their duly authorized representatives must sign 
the application for payment.



Sec.1413.114  Records and inspections.

    (a) Any producer receiving DWQP payments, or any other legal entity 
or person who provides information for the purposes of enabling a 
producer to receive a DWQP payment, must:
    (1) Maintain any books, records, and accounts supporting the 
information for 3 years following the end of the year during which the 
request for payment was submitted, and
    (2) Allow authorized representatives of USDA and the U.S. Government 
Accountability Office, during regular business hours, to inspect, 
examine, and make copies of such books or records, and to enter the farm 
and to inspect and verify all applicable acreage in which the producer 
has an interest for the purpose of confirming the accuracy of 
information provided by or for the producer.
    (b) [Reserved]

Subparts B-C [Reserved]



PART 1415_GRASSLANDS RESERVE PROGRAM--Table of Contents



Sec.
1415.1 Purpose.
1415.2 Administration.
1415.3 Definitions.
1415.4 Program requirements.
1415.5 Land eligibility.
1415.6 Participant eligibility.
1415.7 Application procedures.
1415.8 Establishing priority for enrollment of properties.
1415.9 Enrollment of easements and rental contracts.
1415.10 Compensation for easements and rental contracts acquired by the 
          Secretary.
1415.11 Restoration agreements.
1415.12 Modifications to easements and rental contracts.
1415.13 Transfer of land.
1415.14 Misrepresentation and violations.
1415.15 Payments not subject to claims.
1415.16 Assignments.
1415.17 Cooperative agreements.
1415.18 Easement transfer to eligible entities.
1415.19 Appeals.
1415.20 Scheme or device.


    Authority: 16 U.S.C. 3838n-3838q.

[[Page 520]]


    Source: 75 FR 73925, Nov. 29, 2010, unless otherwise noted.



Sec.1415.1  Purpose.

    (a) The purpose of the Grassland Reserve Program (GRP) is to assist 
landowners and operators in protecting grazing uses and related 
conservation values by conserving and restoring grassland resources on 
eligible private lands through rental contracts, easements, and 
restoration agreements.
    (b) GRP emphasizes:
    (1) Supporting grazing operations;
    (2) Maintaining and improving plant and animal biodiversity; and
    (3) Protecting grasslands and shrublands from the threat of 
conversion to uses other than grazing.



Sec.1415.2  Administration.

    (a) The regulations in this part set forth policies, procedures, and 
requirements for program implementation of GRP, as administered by the 
Natural Resources Conservation Service (NRCS) and the Farm Service 
Agency (FSA). The regulations in this part are administered under the 
general supervision and direction of the NRCS Chief and the FSA 
Administrator. These two agency leaders:
    (1) Concur in the establishment of program policy and direction, 
development of the national allocation formula, and development of broad 
national ranking criteria;
    (2) Use a national allocation formula to provide GRP funds to NRCS 
State Conservationists and FSA State Executive Directors that emphasizes 
support for grazing operations, biodiversity of plants and animals, and 
grasslands under the greatest threat of conversion to uses other than 
grazing. The national allocation formula may also include additional 
factors related to improving program implementation, as determined by 
the NRCS Chief and the FSA Administrator. The allocation formula may be 
modified periodically to change the emphasis of any factor(s) in order 
to address a particular natural resource concern, such as the 
precipitous decline of a population of a grassland-dependent bird(s) or 
animal(s);
    (3) Ensure the national, State, and local-level information 
regarding program implementation is made available to the public;
    (4) Consult with USDA leaders at the State level and other Federal 
agencies with the appropriate expertise and information when evaluating 
program policies and direction; and
    (5) Authorize NRCS State Conservationists and FSA State Executive 
Directors to determine how funds will be used and how the program will 
be implemented at the State level.
    (b) At the State level, the NRCS State Conservationist and the FSA 
State Executive Director are jointly responsible for:
    (1) Determining how funds will be used and how the program will be 
implemented at the State level to achieve the program purposes;
    (2) Identifying State priorities for project selection based on 
input from the State Technical Committee;
    (3) Identifying Department of Agriculture (USDA) employees at the 
field level responsible for implementing the program by considering the 
nature and extent of natural resource concerns throughout the State and 
the availability of human resources to assist with activities related to 
program enrollment;
    (4) Developing, with advice from the State Technical Committee, 
program outreach materials at the State and local levels to help ensure 
landowners, operators, and tenants of eligible land are aware and 
informed that they may be eligible for the program;
    (5) Approving conservation practices eligible for cost-share and 
cost-share rates;
    (6) Developing GRP management plans and restoration agreements, when 
applicable;
    (7) Administering and enforcing the terms of easements and rental 
contracts unless this responsibility is transferred to an eligible 
entity as provided in Sec.1415.17 and Sec.1415.18; and
    (8) Developing, with advice from the State Technical Committee, 
criteria for ranking eligible land consistent with national criteria and 
program objectives and State priorities.
    (c) The funds, facilities, and authorities of the Commodity Credit 
Corporation (CCC) are available to NRCS and FSA to implement GRP.

[[Page 521]]

    (d) Subject to funding availability, the program may be implemented 
in any of the 50 States, the District of Columbia, the Commonwealth of 
Puerto Rico, Guam, the Virgin Islands of the United States, American 
Samoa, and the Commonwealth of the Northern Mariana Islands.
    (e) The NRCS Chief or the FSA Administrator may modify or waive a 
provision of this part if he or she deems the application of that 
provision to a particular limited situation to be inappropriate and 
inconsistent with the conservation purposes and sound administration of 
GRP. This authority cannot be further delegated. No provision of this 
part, which is required by law, may be waived.
    (f) No delegation in this part to lower organizational levels will 
preclude the NRCS Chief or the FSA Administrator from determining any 
issue arising under this part or from reversing or modifying any 
determination arising from this part.
    (g) The USDA Forest Service may hold GRP easements on properties 
adjacent to USDA Forest Service land, with the consent of the landowner.
    (h) Program participation is voluntary.
    (i) Applications for participation will be accepted on a continual 
basis at local USDA Service Centers. Eligible entities wishing to enter 
into a cooperative agreement under Sec.1415.17 in order to purchase, 
own, write, and hold easements may apply on a continuous basis to the 
NRCS State Conservationist. The NRCS State Conservationist and FSA State 
Executive Director will establish cut-off periods to rank and select 
applications for participation. These cut-off periods will be available 
in program outreach material provided by the local USDA Service Center. 
Once funding levels have been exhausted, unfunded eligible applications 
will remain on file until they are funded or the applicant chooses to be 
removed from consideration.
    (j) The services of third parties as provided for in part 652 of 
this title may be used to provide technical services to participants.



Sec.1415.3  Definitions.

    Activity means an action other than a conservation practice that is 
included as a part of a GRP management or conservation plan that has the 
effect of alleviating problems or improving treatment of the resources, 
including ensuring proper management or maintenance of the functions and 
values restored, protected, or enhanced through an easement or rental 
contract.
    Administrator means the Administrator of FSA or the person delegated 
authority to act for the Administrator.
    Applicant means a person, legal entity, joint operator, or Indian 
Tribe who applies to participate in the program.
    Chief means the Chief of NRCS or designee.
    Biological diversity means the variety and variability among living 
organisms and the ecological complexes in which they live.
    Commodity Credit Corporation is a government-owned and operated 
entity that was created to stabilize, support, and protect farm income 
and prices. The CCC is managed by a Board of Directors, subject to the 
general supervision and direction of the Secretary of Agriculture, who 
is an ex-officio director and chairperson of the Board. The CCC provides 
the funding for GRP, and FSA and NRCS administer GRP on its behalf.
    Common grazing practices means those grazing practices, including 
those related to forage and seed production, common to the area of the 
subject ranching or farming operation. Included are routine management 
activities necessary to maintain the viability of forage or browse 
resources that are common to the locale of the subject ranching or 
farming operation.
    Conservation district means any district or unit of State, Tribal, 
or local government formed under State, Tribal, or territorial law for 
the express purpose of developing and carrying out a local soil and 
water conservation program. Such district or unit of government may be 
referred to as a conservation district, soil conservation district, soil 
and water conservation district, resource conservation district, natural 
resource district, land conservation committee, or similar name.

[[Page 522]]

    Conservation plan means a record of the GRP participants' decisions 
and supporting information that will be developed to address resource 
concerns in addition to grazing land uses. The conservation plan will 
describe the implementation and maintenance of GRP management and 
conservation practices directly related to any additional land 
eligibility criteria under which the land is enrolled. Additional land 
eligibility criteria may include, but is not limited to, significant 
animal or plant habitat and historical or archeological resources.
    Conservation practice means a specified treatment, such as a 
vegetative, structural, or land management practice, that is planned and 
applied according to NRCS Field Office Technical Guide (FOTG) standards 
and specifications.
    Conservation values means those natural resource attributes that 
sustain and enhance ecosystem functions and values of the grassland area 
including, but not limited to, habitat for grassland and shrubland 
dependent plants and animals, native plant and animal biodiversity, soil 
erosion control, forage production, and air and water quality 
protection.
    Cost-share payment means the payment made by USDA to a program 
participant or vendor to achieve the restoration, enhancement, and 
protection goals in accordance with the GRP restoration plan component 
of the restoration agreement.
    Dedicated account means a dedicated fund of the eligible entity held 
in a separate account for the management, monitoring, and enforcement of 
conservation easements and that cannot be used for other purposes.
    Easement means a conservation easement, which is an interest in land 
defined and delineated in a deed whereby the landowner conveys certain 
rights, title, and interests in a property to the United States, an 
eligible entity, or both for the purpose of protecting the grassland and 
other conservation values of the property. Under GRP, the property 
rights are conveyed by a conservation easement deed.
    Easement area means the land encumbered by an easement.
    Easement payment means the consideration paid to a landowner for an 
easement conveyed to the United States, an eligible entity, or both 
under GRP.
    Eligible entity means, for the purposes of entering into a 
cooperative agreement under 16 U.S.C. 3838q(d), an agency of State or 
local government, an Indian Tribe, or a nongovernmental organization 
that has the relevant experience necessary, as appropriate for the 
application, to administer an easement on grassland, land that contains 
forbs, or shrubland; has a charter that describes a commitment to 
conserving ranchland, agricultural land, or grassland for grazing and 
conservation purposes; and has the resources necessary to effectuate the 
purposes of the charter.
    Enhancement means to increase or improve the viability of grassland 
and grazing resources, including habitat for declining species of 
grassland dependent birds and animals.
    Farm Service Agency is an agency of the Department of Agriculture.
    FSA State Executive Director means the FSA employee authorized to 
implement GRP and direct and supervise FSA activities in a State, 
Caribbean Area, or the Pacific Islands Area.
    Field Office Technical Guide means the official local NRCS source of 
resource information and interpretations of guidelines, criteria, and 
requirements for planning and applying conservation practices and 
conservation management systems. It contains detailed information on the 
conservation of soil, water, air, plant, and animal resources applicable 
to the local area for which it is prepared.
    Fire pre-suppression means activities as outlined in a GRP 
management plan such as the establishment and maintenance of firebreaks 
and prescribed burning to prevent or limit the spread of fires.
    Forb means any herbaceous plant other than those in the grass 
family.
    Functions and values of grasslands and shrublands means ecosystem 
services provided, including domestic animal productivity, biological 
productivity, plant and animal richness and diversity, fish and wildlife 
habitat (including habitat for pollinators and native

[[Page 523]]

insects), water quality and quantity benefits, aesthetics, open space, 
and recreation.
    Grantor means the landowner who is transferring land rights to the 
United States or an eligible entity, or both through an easement.
    Grassland means land on which the vegetation is dominated by 
grasses, grass-like plants, shrubs, or forbs, including shrubland, land 
that contains forbs, pastureland, and rangeland, and improved 
pastureland and rangeland.
    GRP management plan means the document developed by NRCS that 
describes the implementation of the grazing management system consistent 
with the prescribed grazing standard contained in the FOTG. The GRP 
management plan will include a description of the grazing management 
system, permissible and prohibited activities, any associated 
restoration plan or conservation plan, if applicable, and a description 
of USDA's right of ingress and egress.
    Grazing value means the financial worth of the land as used for 
grazing or forage production. The term is used in the calculation of 
compensation for rental contracts and easements. For easements, this 
value is determined by NRCS through an appraisal process or a market 
survey process. For rental contracts, FSA determines the grazing value 
based upon an administrative process.
    Historical and archeological resources mean resources that are:
    (1) Listed in the National Register of Historic Places (established 
under the National Historic Preservation Act (NHPA), 16 U.S.C. 470, et 
seq.);
    (2) Formally determined eligible for listing the National Register 
of Historic Places by the State Historic Preservation Officer (SHPO) or 
Tribal Historic Preservation Officer (THPO) and Keeper of the National 
Register in accordance with section 106 or the NHPA);
    (3) Formally listed in the State or Tribal Register of Historic 
Places of the SHPO (designated under section 101(b)(1)(B) of the NHPA) 
or the Tribal Register of Historic Places (designated under section 
101(d)(1)(C) of the NHPA); or
    (4) Included in the SPHO or THPO inventory with written 
justification as to why it meets National Register of Historic Places 
criteria.
    Improved rangeland or pastureland means grazing land permanently 
producing naturalized forage species that receives varying degrees of 
periodic cultural treatment to enhance forage quality and yields and is 
primarily harvested by grazing animals.
    Indian Tribe means any Indian Tribe, band, nation, or other 
organized group or community, including any Alaska Native village or 
regional or village corporation as defined in or established pursuant to 
the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.) that is 
eligible for the special programs and services provided by the United 
States to Indians because of their status as Indians.
    Landowner means a person, legal entity, or Indian Tribe having legal 
ownership of land and those who may be buying eligible land under a 
purchase agreement. The term landowner may include all forms of 
collective ownership including joint tenants, tenants-in-common, and 
life tenants. The term landowner includes Indian Tribes. State 
governments, local governments, and nongovernmental organizations that 
qualify as eligible entities are not eligible as landowners.
    Legal entity means an entity created under Federal or State law and 
that: (1) Owns land or an agricultural commodity, product, or livestock; 
or (2) produces an agricultural commodity, product, or livestock.
    Maintenance means work performed to keep the applied conservation 
practice functioning for the intended purpose during its life span. 
Maintenance includes work to manage and prevent deterioration, repair 
damage, or replace the practice to its original condition if one or more 
components fail.
    Native means a species that is indigenous and is a part of the 
original fauna or flora of the area.
    Natural Resources Conservation Service is an agency of the 
Department of Agriculture.
    NRCS State Conservationist means the NRCS employee authorized to 
implement GRP and direct and supervise

[[Page 524]]

NRCS activities in a State, Caribbean Area, or the Pacific Islands Area.
    Naturalized means an introduced, desirable forage species that is 
ecologically adapted to the site and can perpetuate itself in the 
community without cultural treatment. The term naturalized does not 
include noxious weeds.
    Nesting season means the time of year that grassland dependent birds 
in significant decline in the local area build nests or otherwise find a 
place of refuge for purposes of reproduction.
    Nongovernmental organization means any organization that:
    (1) Is organized for, and at all times since, the formation of the 
organization, and has been operated principally for one or more of the 
conservation purposes specified in clause (i), (ii), (iii), or (iv) of 
section 170(h)(4)(A) of the Internal Revenue Code of 1986;
    (2) Is an organization described in section 501(c)(3) of that Code 
that is exempt from taxation under 501(a) of that Code; and
    (3) Is described--
    (i) In section 509(a)(1) or 509(a)(2) of that Code, or
    (ii) Is described in section 509(a)(3) of that Code and is 
controlled by an organization described in section 509(a)(2) of that 
Code.
    Participant means a person, legal entity, joint operation, or Indian 
Tribe who is accepted to participate in GRP through a rental contract or 
option agreement to purchase an easement.
    Pastureland means grazing lands comprised of introduced or 
domesticated native forage species that are used primarily for the 
production of livestock. These lands receive periodic renovation and 
cultural treatments, such as tillage, aeration, fertilization, mowing, 
and weed control, and may be irrigated. This term does not include lands 
that are in rotation with crops.
    Permanent easement means an easement that lasts in perpetuity or for 
the maximum duration allowed under the law of a State.
    Private land means land that is not owned by a governmental entity 
and includes Tribal lands.
    Purchase price means the amount paid to acquire an easement under a 
cooperative agreement between NRCS and an eligible entity. It is the 
fair market value of the easement.
    Rangeland means a land cover or use category with a climax or 
potential plant cover composed principally of native grasses, grass-like 
plants, forbs, or shrubs suitable for grazing and browsing, and 
introduced forage species that are managed like rangeland. Rangeland 
includes lands re-vegetated naturally or artificially when routine 
management of that vegetation is accomplished mainly through 
manipulation of grazing. This term includes areas where introduced hardy 
and persistent grasses are planted and such practices as deferred 
grazing, burning, chaining, and rotational grazing are used with little 
or no chemicals or fertilizer being applied. Grasslands, savannas, many 
wetlands, some deserts, and tundra are considered to be rangeland. 
Certain communities of low forbs and shrubs, such as mesquite, 
chaparral, mountain shrub, and pinyon juniper are also included as 
rangeland.
    Rental contract means the legal document that specifies the 
obligations and rights of a participant in GRP, including the annual 
rental payments to be provided to the participant for the length of the 
contract to maintain or restore grassland functions and values under 
GRP.
    Restoration means implementing any conservation practice, system of 
practices, or activities to restore functions and values of grasslands 
and shrublands. The restoration may re-establish grassland functions and 
values on degraded land, or on land that has been converted to another 
use.
    Restoration agreement means an agreement between the program 
participant and NRCS or eligible entity to carry out activities and 
conservation practices necessary to restore or improve the functions and 
values of that land. A restoration agreement will include a restoration 
plan.
    Restoration plan is the portion of the restoration agreement that 
includes the schedule and conservation practices and activities to 
restore the functions and values of grasslands and shrublands, including 
protection of associated streams, ponds, and wetlands. The restoration 
plan incorporates the requirement that program participants

[[Page 525]]

will maintain GRP-funded conservation practices and activities for their 
expected lifespan as described in the plan.
    Right of enforcement means a property interest in the easement the 
Chief may exercise on behalf of the United States under specific 
circumstances in order to enforce the terms of the conservation 
easement. The right of enforcement provides that the Chief has the right 
to inspect and enforce the easement if the eligible entity fails to 
uphold the easement or attempts to transfer the easement without first 
securing the consent of the Secretary.
    Secretary means the Secretary of the Department of Agriculture.
    Shrubland means land where the dominant plant species is shrubs, 
which are plants that are persistent, have woody stems, and a relatively 
low growth habit.
    Significant decline means a decrease of a species population to such 
an extent that it merits conservation priority as determined by the 
State Conservationist, in consultation with the State Technical 
Committee.
    State Technical Committee means a committee established by the 
Secretary in a State pursuant to 16 U.S.C. 3861.
    Tribal land means:
    (1) Land held in trust by the United States for individual Indians 
or Indian Tribes; or
    (2) Land, the title to which is held by individual Indians or Indian 
Tribes subject to Federal restrictions against alienation or 
encumbrance; or
    (3) Land which is subject to rights of use, occupancy, and benefit 
of certain Indian Tribes; or
    (4) Land held in fee title by an Indian, Indian family, or Indian 
Tribe.
    USDA means the Department of Agriculture and its agencies and 
offices, as applicable.



Sec.1415.4  Program requirements.

    (a) Except as provided for under Sec.1415.17, only landowners may 
submit applications for easements. For rental contracts, applicants must 
own or provide written evidence of control of the property for the 
duration of the rental contract.
    (b) The easement or rental contract will require that the area be 
maintained in accordance with GRP goals and objectives for the term of 
the easement or rental contract, including the conservation, protection, 
enhancement, and if necessary, restoration of the grassland functions 
and values.
    (c) All participants in GRP are required to implement a GRP 
management plan approved by NRCS. When an eligible entity holds the GRP 
easement, NRCS will develop GRP management plans with eligible entities. 
In cases where a participant receives ranking points on the basis of 
resource concerns other than grazing land concerns, all such resource 
concerns will be addressed in an applicable conservation plan.
    (d) The easement or rental contract must grant USDA or its 
representatives a right of ingress and egress to the easement or rental 
contract area. For easements, this access is legally described by the 
conservation easement deed and the GRP management plan. Access to rental 
contract areas is identified in the GRP management plan.
    (e) Easement participants are required to convey unencumbered title 
that is acceptable to the United States and provide consent or 
subordination agreements from each holder of a security or other 
interest in the land. The landowner must warrant that the easement 
granted the United States or eligible entity is superior to the rights 
of all others, except for exceptions to the title that are deemed 
acceptable by USDA.
    (f) Landowners are required to use a standard GRP conservation 
easement deed developed by USDA or developed by an eligible entity and 
approved by USDA under Sec.1415.17 of this part. The easement grants 
development rights, title, and interest in the easement area in order to 
protect grassland and other conservation values.
    (g) The program participant must comply with the terms of the 
easement or rental contract, and comply with all terms and conditions of 
the GRP management plan and any associated conservation plan or 
restoration agreement.

[[Page 526]]

    (h) Easements and rental contracts allow, consistent with their 
terms and the program purposes, the following activities as outlined in 
the GRP management plan:
    (1) Common grazing practices, including maintenance and necessary 
conservation practices and activities (e.g., prescribed grazing; upland 
wildlife habitat management; prescribed burning; fencing, watering, and 
feeding necessary for the raising of livestock; and related forage and 
seed production) on the land in a manner that is consistent with 
maintaining the viability of grassland, forb, and shrub species common 
to the locality;
    (2) Haying, mowing, or harvesting for seed production subject to 
appropriate restrictions, as determined by the State Conservationist, 
during the nesting season for birds in the local area that are in 
significant decline, or are conserved in accordance with Federal or 
State law;
    (3) Fire pre-suppression, rehabilitation, and construction of 
firebreaks;
    (4) Grazing related activities, such as fencing and livestock 
watering facilities;
    (5) Facilities for power generation through renewable sources of 
energy production provided the scope and scale of the footprint of the 
facility and associated infrastructure is consistent with program 
purposes as determined by USDA through analysis of the potential site-
specific environmental effects; and
    (6) Other activities that USDA determines the manner, number, 
intensity, location, operation, and other features associated with the 
activity will not adversely affect the grassland resources or related 
conservation values protected under an easement or rental contract. This 
includes infrastructure development along existing right-of-ways where 
the easement deed allows the landowner to grant right-of-ways when it is 
determined by NRCS that granting such right-of-ways are in the public 
interest, that grassland resources and related conservation values will 
not be adversely impacted, and the landowner agrees to a restoration 
plan for the disturbed area as developed by NRCS, but at no cost to 
NRCS. This also includes undeveloped, passive, recreational uses such as 
hiking, camping, bird watching, hunting, and fishing as long as such 
uses, as determined by the grantee, do not impair the grazing uses and 
other conservation values.
    (i) Easement and rental contracts prohibit the following activities:
    (1) The production of crops (other than hay), orchards, vineyards, 
or other agricultural commodity that is inconsistent with maintaining 
grazing land and related conservation values; and
    (2) Except as permitted under a restoration plan, the conduct of any 
other activity that would be inconsistent with maintaining grazing uses 
and related conservation values protected under an easement or rental 
contract.
    (j) Rental contracts may be terminated by USDA without penalty or 
refund if the original participant dies, is declared legally 
incompetent, or is otherwise unavailable during the contract period.
    (k) Participants, with the agreement of USDA, may convert a rental 
contract to an easement, provided that funds are available and the 
project meets conditions established by USDA. Land cannot be enrolled in 
both a rental contract option and an easement enrollment option at the 
same time. The rental contract will be terminated prior to the date the 
easement is recorded in the local land records office.
    (l) Rental contract participants are required to suspend any 
existing cropland base and allotment history for the land under another 
program administered by the Secretary.
    (m) Easement participants are required to eliminate any existing 
cropland base and allotment history for the land under another program 
administered by the Secretary.



Sec.1415.5  Land eligibility.

    (a) GRP is available on privately owned lands, which include private 
and Tribal land. Publicly owned land is not eligible.
    (b) Land is eligible for funding consideration if the State 
Conservationist determines that the land is:
    (1) Grassland, land that contains forbs or shrubland (including 
improved

[[Page 527]]

rangeland and pastureland) for which grazing is the predominant use; or
    (2) Located in an area that has been historically dominated by 
grassland, forbs, or shrubland, and the State Conservationist, with 
advice from the State Technical Committee, determines that it is 
compatible with grazing uses and related conservation values, and
    (i) Could provide habitat for animal or plant populations of 
significant ecological value if the land is retained in its current use 
or is restored to a natural condition,
    (ii) Contains historical or archeological resources, or
    (iii) Would address issues raised by State, regional, and national 
conservation priorities.
    (c) Incidental lands, in conjunction with eligible land, may also be 
considered for enrollment to allow for the efficient administration of 
an easement or rental contract. Incidental lands may include relatively 
small areas that do not specifically meet the eligibility requirements, 
but as a part of the land unit, may contribute to grassland functions 
and values and related conservation values, or its inclusion may 
increase efficiencies in land surveying, easement management, and 
monitoring by reducing irregular boundaries.
    (d) Land will not be enrolled if the functions and values of the 
grassland are already protected under an existing contract, easement, or 
deed restriction, or if the land already is in ownership by an entity 
whose purpose is to protect and conserve grassland and related 
conservation values. This land becomes eligible for enrollment in GRP if 
the existing contract, easement, or deed restriction expires or is 
terminated, and the grassland values and functions are no longer 
protected.
    (e) Land on which gas, oil, earth, or other mineral rights 
exploration has been leased or is owned by someone other than the 
applicant may be offered for participation in the program. However, if 
an applicant submits an offer for an easement project, USDA will assess 
the potential impact that the third party rights may have upon the 
grassland resources. USDA reserves the right to deny funding for any 
application where there are exceptions to clear title on the property.



Sec.1415.6  Participant eligibility.

    To be eligible to participate in GRP, an applicant, except as 
otherwise described in Sec.1415.17:
    (a) Must be a landowner for easement participation or be a landowner 
or have control of the eligible acreage being offered for rental 
contract participation;
    (b) Agree to provide such information to USDA that is necessary or 
desirable to assist in its determination of eligibility for program 
benefits and for other program implementation purposes;
    (c) Meet the Adjusted Gross Income requirements in part 1400 of this 
chapter, unless exempted under part 1400 of this chapter; and
    (d) Meet the conservation compliance requirements found in part 12 
of this title.

[75 FR 73925, Nov. 29, 2010, as amended at 83 FR 23209, May 18, 2018]



Sec.1415.7  Application procedures.

    (a) Applicants, except as otherwise described under Sec.1415.17, 
may submit an application through a USDA Service Center for 
participation in GRP. Applications may be submitted throughout the year.
    (b) By filing an application for participation, the applicant 
consents to a USDA representative entering upon the land offered for 
enrollment for purposes of assessing the grassland functions and values 
and for other activities that are necessary for USDA to make an offer of 
enrollment. Generally, the applicant will be notified prior to a USDA 
representative entering upon their property.
    (c) Applicants submit applications that identify the duration of the 
easement or rental contract for which they seek to enroll their land. 
Rental contracts may be for the duration of 10-years, 15-years, or 20-
years; easements may be permanent in duration or for the maximum 
duration authorized by State law.

[[Page 528]]



Sec.1415.8  Establishing priority for enrollment of properties.

    (a) USDA, at the national level, will provide to NRCS State 
Conservationists and FSA State Executive Directors, national guidelines 
for establishing State-specific ranking criteria for selection of 
applications for funding.
    (b) NRCS State Conservationists and FSA State Executive Directors, 
with advice from State Technical Committees, establish criteria to 
evaluate and rank applications for easement and rental contract 
enrollment, including applications from eligible entities under Sec.
1415.17, following the guidance established in paragraph (a) of this 
section.
    (c) Ranking criteria will emphasize support for:
    (1) Grazing operations;
    (2) Protection of grassland, land that contains forbs, and shrubland 
at the greatest risk from the threat of conversion to uses other than 
grazing;
    (3) Plant and animal biodiversity; and
    (4) In ranking parcels offered by eligible entities, these 
additional criteria will also be considered--
    (i) Leveraging of non-Federal funds, and
    (ii) Entity contributions in excess of 50 percent of the purchase 
price, as defined in Sec.1415.3.
    (d) When funding is available, NRCS State Conservationists and FSA 
State Executive Directors will periodically select for funding the 
highest ranked applications, including applications from entities under 
Sec.1415.17, based on applicant and land eligibility and the State-
developed ranking criteria.
    (e) NRCS State Conservationists and FSA State Executive Directors 
may establish separate ranking pools to address, for example, specific 
conservation issues raised by State, regional, and national conservation 
priorities.
    (f) The NRCS State Conservationist and FSA State Executive Director, 
with advice from the State Technical Committee, may emphasize enrollment 
of unique grasslands or specific geographic areas of the State.
    (g) The NRCS State Conservationist and the FSA State Executive 
Director, with advice from the State Technical Committee, will select 
applications for funding.
    (h) If available funds are insufficient to accept the highest ranked 
application, and the applicant is not interested in reducing the acres 
offered to match available funding, the State Conservationist or State 
Executive Director may select a lower ranked application that can be 
fully funded.
    (i) Land enrolled in a Conservation Reserve Program (CRP) contract 
that is within one year of the scheduled expiration date will receive a 
priority for enrollment. To receive this priority, the following 
criteria must be met:
    (1) The land must be eligible as defined in Sec.1415.5;
    (2) USDA, with advice from the State Technical Committee, must 
determine it is of high ecological value and under significant threat of 
conversion to uses other than grazing;
    (3) The land must be offered for easement or 20-year rental contract 
enrollment;
    (4) Expired CRP land enrolled under this priority will not exceed 10 
percent of the total number of acres accepted for national enrollment in 
GRP in any year; and
    (5) This priority applies only up to 12 months before the scheduled 
expiration of the CRP contract.
    (j) USDA will manage the program nationally to ensure that, to the 
extent practicable, 60 percent of funds are used for the purchase of 
easements, either directly or through cooperative agreements with 
eligible entities as set forth in Sec.1415.17 and 40 percent of funds 
are used for rental contracts.



Sec.1415.9  Enrollment of easements and rental contracts.

    (a) Based on the priority ranking, NRCS or FSA, as appropriate, will 
notify applicants in writing of their tentative acceptance into the 
program for either rental contract or conservation easement options. The 
letter notifies the applicant of the intent to continue the enrollment 
process unless otherwise notified by the applicant. Enrollment under 
cooperative agreements is described under Sec.1415.17.
    (b) An offer of tentative acceptance into the program neither binds 
USDA to acquire an easement or enter into a

[[Page 529]]

rental contract, nor binds the applicant to convey an easement, enter 
into a rental contract, or agree to restoration activities.
    (c) Offer of enrollment will be through either:
    (1) An agreement to purchase an easement presented by NRCS to the 
applicant which will describe the easement, the easement terms and 
conditions, and other terms and conditions that may be required by NRCS; 
or
    (2) A rental contract will be presented by FSA to the applicant 
which will describe the contract area, the contract terms and 
conditions, and other terms and conditions that may be required by FSA.
    (d) For rental contracts, land will be considered to be enrolled in 
GRP once an FSA representative approves the GRP rental contract. FSA may 
withdraw the offer before approval of the contract due to lack of 
available funds or other reasons.
    (e) For easements, after the option agreement to purchase an 
easement is executed by NRCS and the participant, the land will be 
considered enrolled in GRP. NRCS will proceed with the development of 
the GRP management plan, conservation or restoration plan if applicable, 
and various easement acquisition activities, which may include 
conducting a legal survey of the easement area, securing necessary 
subordination agreements, procuring title insurance, and conducting 
other activities necessary to record the easement or implement GRP.
    (f) Prior to closing an easement, NRCS may withdraw the land from 
enrollment at any time due to lack of available funds, title concerns, 
or other reasons.



Sec.1415.10  Compensation for easements and rental contracts acquired
by the Secretary.

    (a) The Chief will not pay more than the fair market value of the 
land, less the grazing value of the land encumbered by the easement.
    (b) To determine this amount, the Chief will pay as compensation the 
lowest of:
    (1) The fair market value of the land encumbered by the easement as 
determined by the Chief using--
    (i) The Uniform Standards of Professional Appraisal Practice, or
    (ii) An area-wide market analysis or market survey;
    (2) The amount corresponding to a geographical cap, as determined by 
the State Conservationist, with advice from the State Technical 
Committee; or
    (3) An offer made by the landowner.
    (c) For 10-, 15-, and 20-year rental contracts, the participant will 
receive not more than 75 percent of the grazing value in an annual 
payment for the length of the contract, as determined by FSA. As 
provided by the regulations at part 1400 of this title, payments made 
under one or more rental contracts to a person or legal entity, directly 
or indirectly, may not exceed, in the aggregate, $50,000 per year.
    (d) In order to provide for better uniformity among States, the NRCS 
Chief and FSA Administrator may review and adjust, as appropriate, State 
or other geographically based payment rates for rental contracts.
    (e) Easement or rental contract payments received by a participant 
will be in addition to, and not affect, the total amount of payments 
that the participant is otherwise eligible to receive under other USDA 
programs.
    (f) Easement payments will be made in a single payment to the 
landowner unless otherwise requested by the landowner.
    (g) USDA may accept and use contributions of non-Federal funds to 
support the purposes of the program. These funds are available to USDA 
without further appropriation and until expended, to carry out the 
program.
    (h) USDA recognizes that environmental benefits will be achieved by 
implementing conservation practices and activities funded through GRP, 
and that ecosystem credits may be gained as a result of implementing 
activities compatible with the purposes of a GRP easement, rental 
contract, or associated restoration agreement. USDA asserts no direct or 
indirect interest in these credits except:
    (1) In the event the participant sells or trades credits arising 
from GRP

[[Page 530]]

funded activities, USDA retains the authority to ensure that the 
requirements for GRP rental contracts, easements, or restoration 
agreements are met and maintained consistent with this part; and
    (2) If activities required under an ecosystem credit agreement may 
affect land covered under a GRP rental contract, easement, or 
restoration agreement, participants are required to obtain an assessment 
from USDA about the compatibility of the activity prior to entering into 
such agreements.



Sec.1415.11  Restoration agreements.

    (a) Restoration agreements are only authorized to be used in 
conjunction with easements and rental contracts. NRCS, in consultation 
with the program participant, determines if the grassland resources are 
adequate to meet the participant's objectives and the purposes of the 
program, or if a restoration agreement is needed. Such a determination 
is also subject to the availability of funding. USDA may condition 
participation in the program upon the execution of a restoration 
agreement depending on the condition of the grassland resources. When 
the functions and values of the grassland are determined adequate by 
NRCS, a restoration agreement is not required. However, if a restoration 
agreement is required, NRCS will set the terms of the restoration 
agreement. The restoration plan component of the restoration agreement 
identifies conservation practices and activities necessary to restore or 
improve the functions and values of the grassland to meet both USDA and 
the participant's objectives and purposes of the program. If the 
functions and values of the grassland decline while the land is subject 
to a GRP easement or rental contract through no fault of the 
participant, the participant may enter into a restoration agreement at 
that time to improve the functions and values with USDA approval and 
when funds are available.
    (b) The NRCS State Conservationist, with advice from the State 
Technical Committee and in consultation with FSA, determines the 
conservation practices and activities and the cost-share percentages, 
not to exceed statutory limits available under GRP. A list of 
conservation practices and activities approved for cost-share assistance 
under GRP restoration plans is available to the public through the local 
USDA Service Center. NRCS may work through the local conservation 
district with the program participant to determine the terms of the 
restoration plan. The conservation district may assist NRCS with 
determining eligible conservation practices and activities and approving 
restoration agreements.
    (c) Only approved conservation practices and activities are eligible 
for cost-sharing. Payments under the GRP restoration agreements may be 
made to the participant of not more than 50 percent for the cost of 
carrying out the conservation practices or activities. As provided by 
the regulations at part 1400 of this chapter, payments made under one or 
more restoration agreements to a person or legal entity, directly or 
indirectly, may not exceed, in the aggregate, $50,000 per year.
    (d) The participant is responsible for the operation and maintenance 
of conservation practices in accordance with the restoration agreement.
    (e) All conservation practices must be implemented in accordance 
with the FOTG.
    (f) Technical assistance is provided by NRCS, or an NRCS approved 
third party.
    (g) If the participant is receiving cost-share for the same 
conservation practice or activity from another conservation program, 
USDA will adjust the GRP cost-share rate proportionately so that the 
amount received by the participant does not exceed 100 percent of the 
costs of restoration.
    (h) The participant cannot receive cost-share from more than one 
USDA cost-share program for the same conservation practice or activity 
on the same land.
    (i) Cost-share payments may be made only upon a determination by a 
qualified individual approved by the NRCS State Conservationist that an 
eligible restoration practice has been established in compliance with 
appropriate standards and specifications.
    (j) Conservation practices and activities identified in the 
restoration plan

[[Page 531]]

may be implemented by the participant or other designee.
    (k) Cost-share payments will not be made for conservation practices 
or activities implemented or initiated prior to the approval of a rental 
contract or easement acquisition unless a written waiver is granted by 
the NRCS State Conservationist or FSA State Executive Director, as 
appropriate, prior to installation of the practice.
    (l) Upon transfer of an easement with a restoration agreement to an 
eligible entity as described in Sec.1415.18, the entity will be 
responsible for administration of the agreement and providing funds for 
payment of any costs associated with the completion of the restoration 
agreement. The eligible entity may, with participant consent, revise an 
existing restoration agreement or develop a new restoration agreement. 
Restoration plans must be consistent with the GRP management plan or any 
associated conservation plan as described in Sec.1415.4.
    (m) Cooperating entities under Sec.1415.17 will be responsible for 
development, administration, and implementation costs of restoration 
plans.



Sec.1415.12  Modifications to easements and rental contracts.

    (a) After an easement has been recorded, no substantive modification 
will be made to the easement. Modifications that would not result in 
acquisition or divestiture of additional property rights may be made.
    (b) State Conservationists may approve modifications for restoration 
agreements and GRP management plans or conservation plans where 
applicable, as long as the modifications do not affect the provisions of 
the easement and meet program objectives.
    (c) USDA may approve modifications to rental contracts, including 
corresponding changes to conservation plans, GRP management plans, and 
restoration plans to facilitate the practical administration and 
management of the enrolled area so long as the modification will not 
adversely affect the grassland functions and values for which the land 
was enrolled.



Sec.1415.13  Transfer of land.

    (a) Any transfer of the property prior to an applicant's acceptance 
into the program will void the offer of enrollment, unless at the option 
of the State Conservationist or State Executive Director, as 
appropriate, an offer is extended to the new landowner and the new 
landowner agrees to the same easement or rental contract terms and 
conditions.
    (b) After acreage is accepted in the program, for easements with 
multiple payments, any remaining easement payments will be made to the 
original participant unless NRCS receives an assignment of proceeds.
    (c) Future annual rental payments will be made to the successor 
participant.
    (d) The new landowner is responsible for complying with the terms of 
the recorded easement, and the contract successor is responsible for 
complying with the terms of the rental contract and for assuring 
completion of all activities and practices required by any associated 
restoration agreement. Eligible cost-share payments will be made to the 
new participant upon presentation that the successor assumed the costs 
of establishing the practices.
    (e) With respect to any and all payments owed to participants, the 
United States bears no responsibility for any full payments or partial 
distributions of funds between the original participant and the 
participant's successor. In the event of a dispute or claim on the 
distribution of cost-share payments, USDA may withhold payments, without 
the accrual of interest, pending an agreement or adjudication on the 
rights to the funds.
    (f) The rights granted to the United States in an easement will 
apply to any of its agents or assigns. All obligations of the 
participant under the GRP conservation easement deed also bind the 
participant's heirs, successors, agents, assigns, lessees, and any other 
person claiming under them.
    (g) Rental contracts may be transferred to another landowner, 
operator, or tenant that acquires an interest in the land enrolled in 
GRP. The successor must be determined by FSA to be eligible to 
participate in GRP and must assume full responsibility under

[[Page 532]]

the contract. FSA may require a participant to refund all or a portion 
of any financial assistance awarded under GRP, plus interest, if the 
participant sells or loses control of the land under a GRP rental 
contract, and the new landowner, operator, or tenant is not eligible to 
participate in the program or declines to assume responsibility under 
the contract.



Sec.1415.14  Misrepresentation and violations.

    (a) The following provisions apply to violations of rental 
contracts:
    (1) Rental contract violations, determinations, and appeals are 
handled in accordance with the terms of the rental contract;
    (2) A participant who is determined to have erroneously represented 
any fact affecting a program determination made in accordance with this 
part may not be entitled to rental contract payments and must refund to 
CCC all payments, plus interest, in accordance with part 1403 of this 
title; and
    (3) In the event of a violation of a rental contract, the 
participant will be given notice and an opportunity to voluntarily 
correct the violation within 30 days of the date of the notice, or such 
additional time as CCC may allow. Failure to correct the violation may 
result in termination of the rental contract.
    (b) The following provisions apply to violations of easement deeds:
    (1) Easement violations are handled under the terms of the easement 
deed;
    (2) Upon notification of the participant, NRCS has the right to 
enter upon the easement area at any time to monitor compliance with the 
terms of the GRP conservation easement deed or remedy deficiencies or 
violations;
    (3) When NRCS believes there may be a violation of the terms of the 
GRP conservation easement deed, NRCS may enter the property without 
prior notice; and
    (4) The participant will be liable for any costs incurred by the 
United States as a result of the participant's negligence or failure to 
comply with the easement terms and conditions.
    (c) USDA may require the participant to refund all or part of any 
payments received by the participant under the program contract or 
agreement.
    (d) In addition to any and all legal and equitable remedies 
available to the United States under applicable law, USDA may withhold 
any easement payment, rental payment, or cost-share payments owing to 
the participant at any time there is a material breach of the easement 
covenants, rental contract, or any contract. Such withheld funds may be 
used to offset costs incurred by the United States in any remedial 
actions or retained as damages pursuant to court order or settlement 
agreement.
    (e) Under a GRP conservation easement, the United States will be 
entitled to recover any and all administrative and legal costs, 
including attorney's fees or expenses, associated with any enforcement 
or remedial action.



Sec.1415.15  Payments not subject to claims.

    Any cost-share, rental, or easement payment or portion thereof due 
any person under this part will be allowed without regard to any claim 
or lien in favor of any creditor, except agencies of the United States 
Government.



Sec.1415.16  Assignments.

    (a) Any person entitled to any cash payment under this program may 
assign the right to receive such cash payments, in whole or in part.
    (b) If a participant that is entitled to a payment dies, is declared 
legally incompetent, or is otherwise unable to receive the payment, or 
is succeeded by another person who renders or completes the required 
performance, such a participant may be eligible to receive payment in 
such a manner as USDA determines is fair and reasonable in light of all 
the circumstances.



Sec.1415.17  Cooperative agreements.

    (a) NRCS may enter into cooperative agreements which establish terms 
and conditions under which an eligible entity will use funds provided by 
NRCS to own, write, and enforce a grassland protection easement.
    (b) To be eligible to receive GRP funding, an eligible entity must 
demonstrate:

[[Page 533]]

    (1) A commitment to long-term conservation of agricultural lands, 
ranch land, or grassland for grazing and conservation purposes;
    (2) A capability to acquire, manage, and enforce easements;
    (3) Sufficient number of staff dedicated to monitoring and easement 
stewardship;
    (4) The availability of funds; and
    (5) For nongovernmental organizations, the existence of a dedicated 
account and funds for the purposes of easement management, monitoring, 
and enforcement of each easement held by the eligible entity.
    (c) NRCS enters into a cooperative agreement with those eligible 
entities selected for funding. Once a proposal is selected by the State 
Conservationist, the eligible entity must work with the appropriate 
State Conservationist to finalize and sign the cooperative agreement, 
incorporating all necessary GRP requirements. The cooperative agreement 
addresses:
    (1) The interests in land to be acquired, including the form of the 
easement deeds to be used and terms and conditions;
    (2) The management and enforcement of the interests acquired;
    (3) The responsibilities of NRCS;
    (4) The responsibilities of the eligible entity on lands acquired 
with the assistance of GRP;
    (5) The parcels accepted by the State Conservationist, landowners' 
names, addresses, location map(s), and other relevant information in an 
a attachment to the cooperative agreement;
    (6) The allowance of parcel substitution upon mutual agreement of 
the parties;
    (7) The manner in which violations are addressed;
    (8) The right of the Secretary to conduct periodic inspections to 
verify the eligible entity's enforcement of the easements;
    (9) The manner in which the eligible entity will evaluate and report 
the use of funds to the Secretary;
    (10) The eligible entity's agreement to assume the costs incurred in 
administering and enforcing the easement, including the costs of 
restoration and rehabilitation of the land as specified by the owner and 
eligible entity. The entity will also assume the responsibility for 
enforcing the GRP management plan or conservation plan, as applicable. 
The eligible entity must incorporate any required plan into the 
conservation easement deed by reference or otherwise;
    (11) The source of funding. The eligible entity may include a 
charitable donation or qualified conservation contribution (as defined 
by section 170(h) of the Internal Revenue Code of 1986) from the 
landowner as part of the entity's share of the purchase price;
    (12) The schedule of payments to an eligible entity, as agreed to by 
NRCS and the eligible entity;
    (13) GRP funds may not be used for expenditures such as appraisals, 
surveys, title insurance, legal fees, costs of easement monitoring, and 
other related administrative and transaction costs incurred by the 
entity;
    (14) NRCS may provide a share of the purchase price of an easement 
under the program. The eligible entity will be required to provide a 
share of the purchase price at least equivalent to that provided by 
NRCS. The Federal share will be no more than 50 percent of the purchase 
price, as defined in Sec.1415.3;
    (15) The eligible entity's succession plan, which describes how its 
successors or assigns will hold, manage, and enforce the interests in 
land acquired in the event that the eligible entity is no longer able to 
fulfill its obligations under the cooperative agreement entered into 
with NRCS; and
    (16) Other requirements deemed necessary by NRCS to protect the 
interests of the United States.
    (d) Easements funded under the cooperative agreement option will be 
in perpetuity, except where State law prohibits a permanent easement, 
and will require that the easement area be maintained in accordance with 
GRP goals and objectives for the term of the easement.
    (e) The entity may use its own terms and conditions in the 
conservation easement deed, but a conservation easement deed template 
used by the eligible entity will be submitted to the Chief within 30 
days of the signing of the cooperative agreement. The conservation 
easement deed templates will be reviewed and approved by the Chief.

[[Page 534]]

NRCS reserves the right to require additional specific language or to 
remove language in the conservation easement deed to protect the 
interests of the United States.
    (1) In order to protect the public investment, the conveyance 
document must contain a right of enforcement. NRCS will specify the 
terms for the right of enforcement clause to read as set forth in the 
GRP cooperative agreement. This right is a vested property right and 
cannot be condemned or terminated by State or local government;
    (2) The eligible entity will acquire, hold, manage, and enforce the 
easement. The eligible entity may have the option to enter into an 
agreement with governmental or private organizations to carry out 
easement stewardship responsibilities if approved by NRCS;
    (3) Prior to closing, NRCS must sign an acceptance of the 
conservation easement, concurring with the terms of the conservation 
easement and accepting its interest in the conservation easement deed;
    (4) All conservation easement deeds acquired with GRP funds must be 
recorded in the appropriate land records. Proof of recordation will be 
provided to NRCS by the eligible entity; and
    (5) The conservation easement deed must include an indemnification 
clause requiring the participant (grantor) to indemnify and hold 
harmless the United States from any liability arising from or related to 
the property enrolled in GRP.



Sec.1415.18  Easement transfer to eligible entities.

    (a) NRCS may transfer title of ownership to an easement to an 
eligible entity to hold and enforce an easement if:
    (1) The Chief determines that transfer will promote protection of 
grassland, land that contains forbs, or shrubland;
    (2) The owner authorizes the eligible entity to hold and enforce the 
easement; and
    (3) The eligible entity agrees to assume the costs incurred in 
administering and enforcing the easement, including the costs of 
restoration or rehabilitation of the land as specified by the owner and 
the eligible entity, and the entity assumes responsibility for enforcing 
the GRP management plan or conservation plan, as applicable, as approved 
by NRCS.
    (b) NRCS has the right to conduct periodic inspections to verify the 
eligible entities enforcement of the easement, which includes the terms 
and requirements set forth in the GRP management plan and any associated 
restoration or conservation plan for any easements transferred pursuant 
to this section.
    (c) An eligible entity that seeks to hold and enforce an easement 
will apply to the NRCS State Conservationist for approval.
    (d) The Chief may approve an application if the eligible entity:
    (1) Has relevant experience necessary, as appropriate for the 
application, to administer an easement on grassland, land that contains 
forbs, or shrublands;
    (2) Has a charter that describes the commitment of the eligible 
entity to conserving ranch land, agricultural land, or grassland for 
grazing and conservation purposes;
    (3) Possesses the human and financial resources necessary, as 
determined by the Chief, to effectuate the purposes of the charter;
    (4) Has sufficient financial resources to carry out easement 
administrative and enforcement activities;
    (5) Presents proof of a dedicated fund for enforcement as described 
in Sec.1415.17(b)(5), if the entity is a nongovernmental organization; 
and
    (6) Presents documentation that the landowner has concurred in the 
transfer.
    (e) The Chief or his or her successors and assigns, will retain a 
right of enforcement in any transferred GRP funded easement, which 
provides the Secretary the right to inspect the easement for violations 
and enforce the terms of this easement through any and all authorities 
available under Federal or State law, in the event that the eligible 
entity fails to enforce the terms of the easement, as determined by 
NRCS.
    (f) Should an easement be transferred pursuant to this section, all 
warranties and indemnifications provided for in the deed will continue 
to apply to the United States. Upon transfer of the

[[Page 535]]

easement, the easement holder will be responsible for enforcement of the 
GRP management plan, as approved by NRCS, and implementation of any 
associated conservation or restoration plans and costs of such 
restoration as agreed to by the landowner and entity.
    (g) Due to the Federal interest in the GRP easement, GRP-funded 
easements cannot be condemned.



Sec.1415.19  Appeals.

    (a) Applicants or participants may obtain a review of any 
administrative determination concerning eligibility for participation 
utilizing the administrative appeal regulations provided in parts 614 
and 780 of this title.
    (b) Before a person may seek judicial review of any administrative 
action concerning eligibility for program participation under this part, 
the person must exhaust all administrative appeal procedures set forth 
in paragraph (a) of this section, and for the purposes of judicial 
review, no decision will be a final agency action except a decision of 
the NRCS Chief or the FSA Administrator, as applicable, under these 
procedures.
    (c) Any appraisals, market analysis, or supporting documentation 
that may be used by NRCS in determining property value are considered 
confidential information, and will only be disclosed as determined at 
the sole discretion of NRCS in accordance with applicable law.
    (d) Enforcement actions undertaken by NRCS in furtherance of its 
Federally held property rights are under the jurisdiction of the Federal 
District Courts and are not subject to review under administrative 
appeal regulations.



Sec.1415.20  Scheme or device.

    (a) If it is determined by USDA that a participant has employed a 
scheme or device to defeat the purposes of this part, any part of any 
program payment otherwise due or paid to such participant during the 
applicable period may be withheld or be required to be refunded with 
interest thereon, as determined appropriate by USDA.
    (b) A scheme or device includes, but is not limited to, coercion, 
fraud, misrepresentation, depriving any other person of payments for 
cost-share practices, rental contracts, or easements for the purpose of 
obtaining a payment to which a person would otherwise not be entitled.
    (c) A participant who succeeds to the responsibilities under this 
part will report in writing to USDA any interest of any kind in enrolled 
land that is held by a predecessor or any lender. A failure of full 
disclosure will be considered a scheme or device under this section.



PART 1416_EMERGENCY AGRICULTURAL DISASTER ASSISTANCE PROGRAMS--
Table of Contents



  Subpart A_General Provisions for Supplemental Agricultural Disaster 
                           Assistance Programs

Sec.
1416.1 Applicability.
1416.2 Administration of ELAP, LFP, LIP, and TAP.
1416.3 Eligible producer.
1416.5 Equitable relief.
1416.6 Payment eligibility and limitation.
1416.7 Misrepresentation.
1416.8 Appeals.
1416.9 Offsets, assignments, and debt settlement.
1416.10 Records and inspections.
1416.11 Refunds; joint and several liability.
1416.12 Minors.
1416.13 Deceased individuals or dissolved entities.
1416.14 Miscellaneous.

Subpart B_Emergency Assistance for Livestock, Honeybees, and Farm-Raised 
                              Fish Program

1416.101 Applicability.
1416.102 Definitions.
1416.103 Eligible losses, adverse weather, and other loss conditions.
1416.104 Eligible livestock, honeybees, and farm-raised fish.
1416.105 Eligible producers, owners, and contract growers.
1416.106 Notice of loss and application process.
1416.107 Notice of loss and application period.
1416.108 [Reserved]
1416.109 National Payment Rate.
1416.110 Livestock payment calculations.
1416.111 Honeybee payment calculations.
1416.112 Farm-raised fish payment calculations.

[[Page 536]]

               Subpart C_Livestock Forage Disaster Program

1416.201 Applicability.
1416.202 Definitions.
1416.203 Eligibility.
1416.204 Covered livestock.
1416.205 Eligible grazing losses.
1416.206 Application for payment.
1416.207 Payment calculation.

                  Subpart D_Livestock Indemnity Program

1416.301 Applicability.
1416.302 Definitions.
1416.303 Eligible owners and contract growers.
1416.304 Eligible livestock.
1416.305 Application process.
1416.306 Payment calculation.

                    Subpart E_Tree Assistance Program

1416.400 Applicability.
1416.401 Administration.
1416.402 Definitions.
1416.403 Eligible losses.
1416.404 Eligible orchardists and nursery tree growers.
1416.405 Application.
1416.406 Payment Calculation.
1416.407 Obligations of a Participant.

    Authority: Title I, Pub. L. 113-79, 128 Stat. 649; Title I, Pub. L. 
115-123; Title VII, Pub. L. 115-141; and Title I, Pub. L. 116-20.

    Source: 79 FR 21097, Apr. 14, 2014, unless otherwise noted.



  Subpart A_General Provisions for Supplemental Agricultural Disaster 
                           Assistance Programs



Sec.1416.1  Applicability.

    (a) This subpart establishes general conditions for this subpart and 
subparts B through E of this part and applies only to those subparts. 
Subparts B through E cover the following programs authorized by the 
Agricultural Act of 2014 (Pub. L. 113-79, also referred to as the 2014 
Farm Bill):
    (1) Emergency Assistance for Livestock, Honeybees, and Farm-Raised 
Fish Program (ELAP);
    (2) Livestock Forage Disaster Program (LFP);
    (3) Livestock Indemnity Payments Program (LIP); and
    (4) 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.1416.2  Administration of ELAP, LFP, LIP, and TAP.

    (a) The programs in subparts B through E of this part is 
administered under the general supervision and direction of the 
Administrator, Farm Service Agency (FSA) (who also serves as the 
Executive Vice-President, CCC), and the Deputy Administrator for Farm 
Programs, FSA (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.
    (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 FSA Administrator, the Deputy Administrator, 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 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 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.

[[Page 537]]

    (f) Payments issued under this part are subject to the availability 
of funds under Federal law. Within whatever funding limitation that may 
exist under law, the only funds that will be considered available to pay 
eligible losses will be that amount approved by the Secretary. If funds 
are limited, for a particular program year, payments may be delayed 
until the time for applying for the payment for that program year has 
passed. In the event that, within the limits of the funding made 
available by the Secretary, 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 
necessary and appropriate and reasonable. Applications for payment that 
are unpaid or prorated for a program 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.

[79 FR 21097, Apr. 14, 2014, as amended at 83 FR 49463, Oct. 2, 2018; 85 
FR 10963, Feb. 26, 2020]



Sec.1416.3  Eligible producer.

    (a) Eligible producer means, in addition to other requirements as 
may apply, an individual or legal entity who is an owner, operator, 
landlord, tenant, or sharecropper, who shares in the risk of producing a 
crop or livestock and who is entitled to share in the crop or livestock 
available for marketing from the farm, or would have shared had the crop 
or livestock been produced, and who also meets the requirements of 
paragraph (b) of this section. The term eligible producer can include a 
livestock owner or contract grower who satisfies other requirements of 
this part.
    (b) An individual or legal entity seeking to be an eligible producer 
under this part must submit a farm operating plan in accordance with 
part 1400 of this chapter and be a:
    (1) Citizen of the United States;
    (2) Resident alien; for purposes of this part, resident alien means 
``lawful alien'';
    (3) Partnership of citizens of the United States;
    (4) Corporation, limited liability company, or other organizational 
structure organized under State law; or
    (5) Indian Tribe or Tribal organization, as defined in section 4(b) 
of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 
5304).

[79 FR 21097, Apr. 14, 2014, as amended at 83 FR 49463, Oct. 2, 2018; 85 
FR 10963, Feb. 26, 2020]



Sec.1416.5  Equitable relief.

    The equitable relief provisions of part 718 of this title will not 
be used to obtain a different program result, payment, or benefit not 
otherwise available to a participant who satisfies any and all program 
eligibility provision, conditions of eligibility, or compliance 
provision.



Sec.1416.6  Payment eligibility and limitation.

    (a) For 2019 and each subsequent program year, a person, legal 
entity, or member of a joint venture or general partnership, as 
determined in part 1400 of this chapter, cannot receive, directly or 
indirectly, more than $125,000 per program year under LFP.
    (b) The Deputy Administrator may take such actions as needed to 
avoid a duplication of benefits under the 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 in order to help prevent a person or legal 
entity being paid more than the total value of their loss.
    (c) For the purposes of administering LIP, LFP, ELAP, and TAP, the 
average adjusted gross income (AGI) limitation provisions in part 1400 
of this chapter relating to limits on payments for persons or legal 
entities, excluding joint ventures and general partnerships, apply under 
this subpart and will apply to each applicant for ELAP, LFP, LIP, and 
TAP. Specifically, a person or legal entity with an AGI that exceeds 
$900,000 will not be eligible to receive benefits under this part.

[[Page 538]]

    (d) The direct attribution provisions in part 1400 of this chapter 
apply to ELAP, LFP, LIP, and TAP.

[83 FR 49463, Oct. 2, 2018, as amended at 85 FR 10963, Feb. 26, 2020]



Sec.1416.7  Misrepresentation.

    (a) A person or legal entity who is determined to have 
misrepresented any fact affecting a program determination made in 
accordance with this part, or any other part that is applicable to this 
part, to receive benefits for which that person or legal entity would 
not otherwise be entitled, is ineligible for program payments under this 
part and must refund all such payments received, plus interest as 
determined in accordance with part 1403 of this chapter. The person or 
legal entity is ineligible and will be denied program benefits under 
this part 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 CCC.
    (b) For each year of ineligibility determined according to paragraph 
(a) of this section, a person or legal entity will refund to CCC all 
program payments, in accordance with Sec.1416.11, received by such 
person or legal entity with respect to all applications under this part, 
as may be applicable, if the person or legal entity is determined to 
have knowingly misrepresented any fact affecting a program determination

[83 FR 49464, Oct. 2, 2018 as amended at 85 FR 10963, Feb. 26, 2020]



Sec.1416.8  Appeals.

    Appeal regulations in parts 11 and 780 of this title apply to this 
part.



Sec.1416.9  Offsets, assignments, and debt settlement.

    (a) Any payment 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 1403 of this chapter apply to 
payments made under this part.
    (b) A participant may assign any payment(s) under this part in 
accordance with regulations governing the assignment of payments in part 
1404 of this chapter.

[79 FR 21097, Apr. 14, 2014, as amended at 83 FR 49464, Oct. 2, 2018]



Sec.1416.10  Records and inspections.

    (a) Any participant receiving payments under any program in ELAP, 
LFP, LIP 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, 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.1416.11  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, or TAP and if any refund of a payment to CCC will otherwise 
become due in connection with this part, the participant must refund to 
CCC all payments made in regard to such matter, together with interest 
and late-payment charges as provided for in part 1403 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 CCC for 
any reason under this part.

[[Page 539]]



Sec.1416.12  Minors.

    A minor child is eligible to apply for program benefits under ELAP, 
LFP, LIP, or TAP if all the eligibility requirements are met and the 
provision for minor children in part 1400 of this chapter are met.



Sec.1416.13  Deceased individuals or dissolved entities.

    (a) The provisions of part 707 of this chapter apply to the programs 
of this part.
    (b) [Reserved].

[83 FR 49464, Oct. 2, 2018]



Sec.1416.14  Miscellaneous.

    (a) As a condition of payment eligibility under ELAP, LFP, LIP, or 
TAP, a participant must have been in compliance with the applicable 
provisions of parts 12 and 718 of this title and 1400 of this chapter, 
and must not otherwise be precluded from receiving payments under those 
provisions or under any law.
    (b) In order to be eligible for benefits, participants in the 
programs specified in this part must submit an accurate acreage report 
annually as required by these provisions.

[79 FR 21097, Apr. 14, 2014, as amended at 83 FR 49464, Oct. 2, 2018; 85 
FR 10963, Feb. 26, 2020]



Subpart B_Emergency Assistance for Livestock, Honeybees, and Farm-Raised 
                              Fish Program



Sec.1416.101  Applicability.

    (a) This subpart establishes the terms and conditions under which 
the 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 for eligible losses due to an eligible adverse 
weather or eligible loss condition that occurred in the program 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. ELAP does not cover losses that 
are covered under LFP or LIP.



Sec.1416.102  Definitions.

    The following definitions apply to this subpart and to the 
administration of ELAP. The definitions in parts 718 of this title and 
1400 of this chapter 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 beefalo bull means a male hybrid of beef and bison 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 beefalo cow means a female hybrid of beef and bison that had 
delivered one or more offspring before the beginning date of the 
eligible adverse weather or eligible loss condition. A first-time bred 
beefalo heifer is also considered an adult beefalo cow if it was 
pregnant by the beginning date of the eligible adverse weather or 
eligible loss condition.
    Adult buffalo or bison 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 or bison 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 bison heifer is also considered an adult buffalo or 
bison cow if it was pregnant by the beginning date of the eligible 
adverse weather or eligible loss condition.

[[Page 540]]

    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.
    APHIS means the Animal and Plant Health Inspection Service.
    Application means CCC or 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 are eligible for payment 
under ELAP.
    Blizzard means, as defined by the National Weather Service, a storm 
which contains large amounts of snow or blowing snow with winds in 
excess of 35 miles per hour and visibility of less than one-fourth of a 
mile for an extended period of time.
    Buck means a male goat.
    Cattle tick fever means a severe and often fatal disease that 
destroys red blood cells of cattle, commonly known as Texas or cattle 
fever, which is spread by Rhipicephalus (Boophilus) annulatus, and the 
southern cattle tick, R. (Boophilus) microplus.
    Commercial use means used in the operation of a business activity 
engaged in as a means of livelihood for profit.
    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.
    Eligible adverse weather means, as determined by the Deputy 
Administrator, an extreme and abnormal damaging weather event that is 
not expected to occur during the loss period, which results in eligible 
losses. The eligible adverse weather would have resulted in agricultural 
losses not covered by other programs in this part for which the Deputy 
Administrator determines financial assistance should be provided to 
producers. Adverse weather may include, but is not limited to, blizzard, 
eligible winter storms, and wildfires. Specific eligible adverse weather 
may vary based on the type of loss. Identification of eligible adverse 
weather will include locations (National, State, or county-level) and 
start and end dates.
    Eligible drought means that any area of the county has been rated by 
the U.S. Drought Monitor as having a D3 (extreme drought) intensity:
    (1) At any time during the program year, for additional honeybee 
feed loss;
    (2) That directly impacts water availability at any time during the 
normal grazing period (for example, snow pack that feeds streams and 
springs), as determined by the Deputy Administrator or designee, for 
losses resulting from transporting water to livestock.
    Eligible grazing land means land that is native or improved 
pastureland with permanent vegetative cover or land planted to a crop 
planted specifically for the purpose of providing grazing for eligible 
livestock.
    Eligible loss condition means a condition that 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. Specific eligible loss conditions include, but 
are not limited to,

[[Page 541]]

disease (including cattle tick fever), insect infestation, and colony 
collapse disorder. Identification of eligible loss conditions will 
include locations (National, State, or county-level) and start and end 
dates.
    Eligible winter storm means an event that is so severe as to 
directly cause loss and lasts in duration for at least 3 consecutive 
days and includes a combination of high winds, freezing rain or sleet, 
heavy snowfall, and extremely cold temperatures. The wind, 
precipitation, and extremely cold temperatures must occur during the 
consecutive 3-day period, with wind and extremely cold temperatures 
occurring in each of the 3 days.
    Equine animal means a weaned 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 weaned domesticated, ruminant mammal of the genus 
Capra, including Angora goats.
    Grazing animals mean those species of weaned livestock that, from a 
nutritional and physiological perspective, satisfy more than 50 percent 
of their net energy requirement through the consumption of growing 
forage grasses and legumes. Species of livestock for which more than 50 
percent of their net energy requirements are not recommended to be met 
from consumption of forage grasses and legumes, such as poultry and 
swine, are excluded regardless of whether those species are grazing or 
are present on grazing land or pastureland.Unweaned livestock are not 
grazing animals regardless of whether those unweaned livestock are 
present on grazing land or pastureland.
    Grazing loss means the value, as calculated in Sec.1416.110(g) or 
(m), of eligible grazing lost due to an eligible adverse weather or 
eligible loss condition based on the number of days that the eligible 
livestock were not able to graze the eligible grazing land during the 
normal grazing period.
    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 during the 60 calendar days 
before the eligible adverse weather or eligible loss condition.
    Nanny means a female goat.
    Newborn livestock means livestock that are within 10 calendar days 
of the date of birth.
    Non-adult beef cattle means a weaned beef breed bovine animal that 
on or before the beginning date of the eligible adverse weather or 
eligible loss condition does not meet the definition of adult beef cow 
or bull.
    Non-adult beefalo means a weaned hybrid of beef and bison that on or 
before the beginning date of the eligible adverse weather or eligible 
loss condition does not meet the definition of adult beefalo cow or 
bull.
    Non-adult buffalo or bison means a weaned animal of those breeds 
that on or before the beginning date of the eligible adverse weather or 
loss condition does not meet the definition of adult buffalo or adult 
bison cow or bull.
    Non-adult dairy cattle means a weaned bovine animal of a breed used 
for the purpose of providing milk for human consumption that on or 
before the beginning date of the eligible adverse weather or eligible 
loss condition does not meet the definition of adult dairy cow or bull.
    Normal grazing period means, as determined by FSA, with respect to a 
specific type of grazing land or pastureland in the county, the period 
during the calendar year when grazing animals receive daily nutrients 
and satisfy net energy requirements without supplemental feed.
    Normal mortality means the numerical amount, computed by a 
percentage of expected honeybee colony and farm-raised fish deaths, by 
category, that normally occur during a program year for a producer, as 
established for the area by the FSA State Committee for

[[Page 542]]

 farm-raised fish, and as established nationwide by the Deputy 
Administrator for honeybee colonies.
    Program year means for 2019 from October 1, 2018, through December 
31, 2019; for 2020 and subsequent years, the program year is the same as 
the calendar year, January 1 through December 31.
    Ram means a male sheep.
    Reliable record means any non-verifiable record available that 
reasonably supports the eligible loss, as determined acceptable by the 
COC.
    Sheep means a weaned domesticated, ruminant mammal of the genus 
Ovis.
    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://
droughtmonitor.unl.edu. Should an eligible area not be covered by the 
U.S. Drought Monitor, the Deputy Administrator, in consultation with 
appropriate weather-related agencies and experts, will establish 
procedures for rating drought intensity using the same range of 
categories as the U.S. Drought Monitor and use this information in place 
of the missing data for eligibility purposes.
    Unweaned livestock means an animal not weaned from mother's milk or 
milk replacement to other nourishment. For ELAP purposes, unweaned 
livestock does not include turkeys, ducks, chickens, and geese.
    Verifiable record means a document provided by the producer that can 
be verified by the County Committee (COC) through an independent source.

[79 FR 21097, Apr. 14, 2014, as amended at 79 FR 57721, Sept. 26, 2014; 
79 FR 74571, Dec. 15, 2014; 83 FR 49464, Oct. 2, 2018; 85 FR 10963, Feb. 
26, 2020]



Sec.1416.103  Eligible losses, adverse weather, and other loss 
conditions.

    (a) An eligible loss covered under this subpart is a loss that an 
eligible producer, livestock owner, or contract grower of livestock, or 
eligible producer of honeybees or farm-raised fish incurs due to an 
eligible adverse weather or eligible loss condition, as determined by 
the Deputy Administrator.
    (b) A loss covered under LFP or LIP is not eligible for ELAP.
    (c) To be an eligible loss in a program year, the loss must have 
been apparent to the person or legal entity providing the notice and to 
FSA in the program year for which payment is being requested.
    (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 as specified in Sec.
1416.104(a) 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, eligible winter storms, flood, hurricane, 
lightning, tidal surge, tornado, volcanic eruption, or wildfire on non-
Federal land;
    (2) Loss of mechanically harvested forage or feedstuffs intended for 
use as feed for the participant's eligible livestock as specified in 
Sec.1416.104(a) 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, eligible winter 
storms, flood, hurricane, lightning, tidal surge, tornado, volcanic 
eruption, or wildfire on non-Federal land;
    (3) A loss resulting from the additional cost of purchasing 
additional livestock feed, above normal quantities, required to maintain 
the eligible livestock as specified in Sec.1416.104(a) during an 
eligible adverse weather or eligible loss condition, until additional

[[Page 543]]

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. Eligible adverse weather or eligible loss conditions, as 
determined by the Deputy Administrator, including, but not limited to, 
blizzard, eligible winter storms, flood, hurricane, lightning, tidal 
surge, tornado, volcanic eruption, or wildfire on non-Federal land;
    (4) A loss resulting from the additional cost incurred for 
transporting livestock feed to eligible livestock as specified in Sec.
1416.104(a) 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. To be eligible, the loss must be incurred in 
combination with a loss described in paragraphs (d)(1), (2), or (3) of 
this section. The additional costs incurred must have been incurred for 
losses suffered in the county where the eligible adverse weather or 
eligible loss condition occurred. Eligible adverse weather or eligible 
loss conditions, as determined by the Deputy Administrator, include, but 
not limited to, blizzard, eligible winter storms, flood, hurricane, 
lightning, tidal surge, tornado, volcanic eruption, or wildfire on non-
Federal land;
    (5) A loss resulting from the additional cost of transporting water 
to eligible livestock as specified in Sec.1416.104(a) due to eligible 
adverse weather, eligible loss condition, or eligible drought, as 
determined by the Deputy Administrator, including, but not limited to, 
costs associated with water transport equipment rental fees, labor, and 
contracted water transportation fees. The cost of the water is not 
eligible for payment. Transporting water to livestock located on land 
enrolled in CRP is not an eligible loss under ELAP. To be eligible for 
additional cost of transporting water to eligible livestock, the 
livestock must be on eligible grazing lands that meet all of the 
following:
    (i) Physically located in the county where the eligible adverse 
weather, eligible loss condition, or eligible drought, as determined by 
the Deputy Administrator, occurred;
    (ii) That had adequate livestock watering systems or facilities 
before the eligible adverse weather, eligible loss condition, or 
eligible drought occurred; and
    (iii) That the producer is not normally required to transport water 
to the livestock.
    (e) For a grazing loss to be considered eligible, the grazing loss 
must have been incurred:
    (1) During the normal grazing period, as specified in Sec.
1416.102;
    (2) On eligible grazing land that is physically located in the 
county where the eligible adverse weather or eligible loss condition 
occurred;
    (3) Due to an eligible adverse weather or eligible loss condition, 
as determined by the Deputy Administrator, including, but not limited 
to, blizzard, eligible winter storm, flood, hurricane, hail, lightning, 
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 C of this part, 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 resulting from the additional cost associated with 
gathering livestock to inspect or treat for cattle tick fever, the 
livestock gathered for inspection or treatment for cattle tick fever 
must be considered eligible livestock as specified in Sec.1416.104(d). 
To be considered an eligible loss, acceptable records, as determined by 
the Deputy Administrator, must be on file with APHIS, that provide the 
number of livestock gathered and inspected or treated for cattle tick 
fever and the number of treatments given during the program year.
    (g) For honeybee feed or farm-raised fish feed losses to be 
considered an eligible loss, the honeybee feed or farm-raised fish feed 
loss must be one of the following:

[[Page 544]]

    (1) Loss of honeybee feed or farm-raised fish feed that was intended 
as feed for the participant's eligible honeybees or farm-raised fish 
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, 
earthquake, flood, hurricane, lightning, tidal surge, tornado, volcanic 
eruption, and wildfire.
    (2) A loss resulting from the additional cost of purchasing 
additional honeybee feed, above normal quantities, required to maintain 
the honeybees during an eligible adverse weather or eligible loss 
condition, until additional honeybee 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 honeybees in the county where the eligible adverse weather or 
eligible loss condition occurred. 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, earthquake, early fall 
frost, excessive rainfall, flood, hurricane, late spring frost, 
lightning, tidal surge, tornado, volcanic eruption, wildfire and 
eligible drought, as specified in Sec.1416.102.
    (h) For honeybee colony or honeybee hive losses to be considered 
eligible, the hive producer must have incurred the loss in the county 
where the eligible adverse weather or eligible loss condition occurred. 
The honeybee colony or 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, colony collapse disorder, 
earthquake, eligible winter storm, as specified in Sec.1416.102, 
excessive wind, flood, hurricane, lightning, tornado, volcanic eruption, 
and wildfire. Drought is not an eligible adverse weather event or 
eligible loss condition for honeybee hive losses. To be considered 
eligible for honeybee hive loss as of the beginning date of the eligible 
adverse weather event or eligible loss condition the honeybee hive must 
be all the following: Maintained for producing honey, pollinating, or 
breeding honeybees for commercial use in a farming operation; physically 
located in the county where the eligible adverse weather or eligible 
loss conditions occurred; and be a part of a honeybee farming operation 
in which the applicant has a risk in honey production, pollination, or 
honeybee breeding. To be considered an eligible honeybee colony loss, 
the colony loss must be in excess of normal mortality, as established by 
the Deputy Administrator, and the loss could not have been prevented 
through reasonable and available measures. The notice of loss must be 
accompanied by acceptable documentation, as determined by the Deputy 
Administrator, that demonstrates an eligible loss occurred and was 
associated with an eligible adverse weather or eligible loss condition, 
and that generally accepted husbandry and production practices had been 
followed. For colony collapse disorder, acceptable documentation 
includes, but is not limited to, proof of beginning inventory and good 
management practices, and a producer certification that the loss of 
honeybee colonies was a direct result of at least 3 of the following 5 
symptoms:
    (1) The loss of live queen or drone bee populations inside the 
hives;
    (2) Rapid decline of adult worker bee population outside the hives, 
leaving brood poorly or completely unattended;
    (3) Absence of dead adult bees inside the hive and outside the 
entrance of the hive;
    (4) Absence of robbing collapsed colonies;
    (5) At the time of collapse, varroa mite and Nosema populations are 
not at levels known to cause economic injury or population decline.
    (i) For death losses of bait fish, game fish, or other aquatic 
species, as determined by the Deputy Administrator, to be considered 
eligible, the producer must have incurred the fish loss, in excess of 
normal mortality, in the county where the eligible adverse weather or 
eligible loss condition occurred. The fish death must be due to an 
eligible

[[Page 545]]

adverse weather or eligible loss condition as determined by the Deputy 
Administrator including, but not limited to, earthquake, flood, 
hurricane, tidal surge, tornado, and volcanic eruption.

[79 FR 21097, Apr. 14, 2014, as amended at 83 FR 49465, Oct. 2, 2018; 85 
FR 10964, Feb. 26, 2020]



Sec.1416.104  Eligible livestock, honeybees, and farm-raised fish.

    (a) To be considered eligible livestock for livestock grazing and 
feed, losses resulting from transporting water, and gathering livestock 
to treat for cattle tick fever, livestock must meet all the following 
conditions:
    (1) Be grazing animals such as alpacas, adult or non-adult dairy 
cattle, adult or non-adult beef cattle, adult or non-adult beefalo, 
adult or non-adult buffalo or bison, deer, elk, emus, equine, goats, 
llamas, reindeer, or sheep;
    (2) Except for livestock losses resulting from gathering livestock 
to treat cattle tick fever, 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 where the eligible adverse weather or eligible loss condition 
occurred;
    (3) Be livestock that is owned, cash-leased, purchased, under 
contract for purchase, or been raised by a contract grower or an 
eligible livestock owner, for not less than 60 days before the beginning 
date of the eligible adverse weather or eligible loss condition; and
    (4) Be livestock produced or maintained for commercial use or be 
livestock that is produced or maintained for producing livestock 
products for commercial use, such as milk from dairy, as part of the 
contract grower's or livestock owner's farming operation on the 
beginning date of the eligible adverse weather or eligible loss 
condition.
    (b) The eligible livestock types for grazing and feed losses, losses 
resulting from transporting water, and gathering livestock to treat for 
cattle tick fever, are:
    (1) Adult beef cows or bulls,
    (2) Adult beefalo cows or bulls,
    (3) Adult buffalo or bison cows or bulls,
    (4) Adult dairy cows or bulls,
    (5) Alpacas,
    (6) Deer,
    (7) Elk,
    (8) Emus,
    (9) Equine,
    (10) Goats,
    (11) Llamas,
    (12) Non-adult beef cattle,
    (13) Non-adult beefalo,
    (14) Non-adult buffalo or bison,
    (15) Non-adult dairy cattle,
    (16) Reindeer, and
    (17) Sheep.
    (c) Ineligible livestock for grazing and feed losses, and losses 
resulting from transporting water, 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) Animals that are not grazing animals;
    (3) Yaks;
    (4) Ostriches;
    (5) Poultry;
    (6) Swine;
    (7) All unweaned beef and dairy cattle, and buffalo or bison and 
beefalo that weighed less than 500 pounds on the beginning date of the 
eligible adverse weather or eligible loss condition;
    (8) Any wild free roaming livestock, including horses and deer; and
    (9) Livestock that are not produced for commercial use or those that 
are not produced or maintained in a commercial operation for livestock 
products, such as milk from dairy, 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) Under ELAP, ``contract growers'' only includes producers of 
livestock, other than feedlots, whose income is

[[Page 546]]

dependent on any of the following: Actual weight gain of the livestock, 
number of offspring produced from the livestock, or quantity of products 
(eggs, milk, etc.) produced from the livestock.
    (e) For honeybee colony, hive, and feed 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.
    (f) For fish to be eligible to generate payments under ELAP, the 
fish must be produced in a controlled environment 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 
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, game fish, or another aquatic species deemed 
eligible by the Deputy Administrator 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.

79 FR 21097, Apr. 14, 2014, as amended at 83 FR 49465, Oct. 2, 2018;85 
FR 10964, Feb. 26, 2020]



Sec.1416.105  Eligible producers, owners, and contract growers.

    (a) To be considered an eligible livestock producer for feed losses 
and losses resulting from transporting water and gathering livestock to 
treat for cattle tick fever 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 for not less 
than 60 days before the beginning date of the eligible adverse weather 
or eligible loss condition; and
    (2) Had a loss that is determined to be eligible as specified in 
Sec.1416.103(d) or (f).
    (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 for not less 
than 60 days before the beginning date of the eligible adverse weather 
or eligible loss condition;
    (2) Had a loss that is determined to be eligible as specified in 
Sec.1416.103(e);
    (3) 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;
    (4) Provided for the eligible livestock pastureland or grazing land, 
including cash leased pastureland or grazing land for eligible 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) To be considered an eligible honeybee producer, a participant 
must have an interest and risk in an eligible honeybee colony, as 
specified in

[[Page 547]]

Sec.1416.104(g), for the purpose of producing honey or pollination 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.1416.103(h) or 
(i).
    (d) To be considered an eligible farm-raised fish producer for feed 
and death loss purposes, the participant must have produced eligible 
farm-raised fish, as specified in Sec.1416.104(h), 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.
1416.103(h) or (j);
    (e) A producer seeking payments must not be ineligible under the 
restrictions applicable to foreign persons contained in Sec.1416.3(b) 
and must meet all other requirements of subpart A of this part and other 
applicable USDA regulations.

[79 FR 21097, Apr. 14, 2014, as amended at 83 FR 49466, Oct. 2, 2018; 85 
FR 10964, Feb, 26, 2020]



Sec.1416.106  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 
county office, the following:
    (1) A notice of loss to FSA as specified in Sec.1416.107(a),
    (2) A completed application as specified in Sec.1416.107(b) for 
one or both of the following:
    (i) For livestock feed and grazing losses and losses resulting from 
transporting water and gathering livestock to treat for cattle tick 
fever, a completed Emergency Loss Assistance for Livestock Application;
    (ii) For honeybee feed, honeybee colony, honeybee hive, or farm-
raised fish feed or death losses, a completed Emergency Loss Assistance 
for Honeybees or Farm-Raised Fish Application;
    (3) A report of acreage, if applicable, as determined by the Deputy 
Administrator;
    (4) A copy of the participant's grower contract, if the participant 
is a contract grower;
    (5) Other supporting documents required for FSA to determine 
eligibility of the participant, livestock, honeybee colonies, hives, 
farm-raised fish, and loss;
    (6) A farm operating plan, if a current farm operating plan is not 
already on file in the FSA county office; and
    (7) A socially disadvantaged, limited resource, beginning, or 
veteran farmer or rancher certification, if applicable.
    (b) For livestock grazing losses, participant must provide 
acceptable, verifiable, or reliable records that:
    (1) Additional livestock feed was fed to sustain eligible livestock 
during an eligible adverse weather or loss condition, or
    (2) Eligible livestock were removed from the eligible grazing land 
where the grazing loss occurred.
    (c) For livestock, honeybee, or farm-raised fish feed losses, 
participant must provide acceptable, verifiable, or reliable records of 
the following as determined by the COC:
    (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 period of time, not to exceed 150 days, until additional feed 
becomes available, due to an eligible adverse weather or eligible loss 
condition. Verifiable or reliable records may include, but are not 
limited to, feed receipts, invoices, settlement sheets, warehouse ledger 
sheets, load summaries, register tapes, and contemporaneous records.
    (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. Verifiable or reliable records may include, but 
are not limited to, weight tickets, truck scale tickets, pick records, 
contemporaneous records 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.
    (3) A loss resulting from the additional cost incurred for 
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

[[Page 548]]

equipment rental fees for hay lifts and snow removal. Verifiable or 
reliable records may include, but are not limited to, invoices, 
commercial receipts, load summaries, and contemporaneous records used to 
verify transportation cost of additional livestock feed.
    (4) Additional cost of transporting water 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 water transport equipment rental fees, labor, and 
contracted water transportation fees. Verifiable or reliable records 
include, but are not limited to, commercial receipts, contemporaneous 
records and invoices. Records must clearly indicate the dates on which 
water was transported and the total gallons transported.
    (d) For eligible honeybee colony, honeybee hive and farm-raised fish 
losses, the participant must provide verifiable or reliable records of 
honeybee colony, hive, or farm-raised fish losses. For honeybee colony 
and hive losses, the participant must also provide verifiable or 
reliable records of inventory at the beginning of the program year, and 
records of purchase and sale transactions of honeybee colonies and hives 
throughout the program year. If the participant was paid for a loss of 
honeybee colony or honeybee hive in either or both of the 2 previous 
years, the participant must provide documentation that FSA deems 
acceptable to substantiate how current year honeybee colony and honeybee 
hive inventory was acquired. For farm-raised fish losses, the 
participant must also provide verifiable or reliable records of 
inventory on the beginning date and ending date of the eligible adverse 
weather or eligible loss condition. Verifiable and reliable records may 
include, but are 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.
    (e) If verifiable or reliable records are not available or provided, 
as required in paragraphs (b) through (d) of this section, the COC may 
accept producer's certification of losses if similar producers have 
comparable losses, as determined by the COC and approved by the STC (FSA 
State Committee).

[79 FR 21097, Apr. 14, 2014, as amended at 83 FR 49466, Oct. 2, 2018; 85 
FR 10964, Feb. 26, 2020]



Sec.1416.107  Notice of loss and application period.

    (a) In addition to submitting an application for payment by the 
deadline in paragraph (b) of this section, 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 other than honeybees, provide a notice of loss to FSA 
within 30 calendar days of when the loss of livestock is first apparent;
    (2) For honeybee losses, provide a notice of loss together with 
documentation required by Sec.1416.103 to FSA within 15 calendar days 
of when the loss is first apparent;
    (3) Submit the notice of loss required in this paragraph to the FSA 
county office.
    (b) In addition to the notices of loss required in paragraph (a) of 
this section, a participant seeking payment must also submit a completed 
application for payment by 30 calendar days after the end of the 
applicable program year.

[85 FR 10965, Feb. 26, 2020]



Sec.1416.108  [Reserved]



Sec.1416.109  National Payment Rate.

    (a) For an eligible livestock, honeybee, or farm-raised fish 
producer that meets the definition of beginning farmer or rancher, 
veteran farmer or rancher, socially disadvantaged farmer or rancher, or 
limited resource farmer or rancher, payments calculated in Sec. Sec.
1416.110 through 1416.112 will be based on a national payment rate of 90 
percent.
    (b) For an eligible livestock, honeybee, or farm-raised fish 
producer, payments calculated in Sec. Sec.1416.110(a), (b), (f), (g) 
and (l), 1416.111(a), and

[[Page 549]]

1416.112(a), will be based on a national payment rate, to be determined 
by the Deputy Administrator, of not less than 60 percent and not more 
than 80 percent of the calculated payment.
    (c) For an eligible livestock, honeybee, or farm-raised fish 
producer, payments calculated in Sec.1416.11(b) and (c), and 
1416.112(b), will be based on a national payment rate, to be determined 
by the Deputy Administrator, of not less than 75 percent and not more 
than 80 percent of the calculated payment.

[79 FR 21097, Apr. 14, 2014, as amended at 85 FR 10965, Feb. 26, 2020]



Sec.1416.110  Livestock payment calculations.

    (a) Livestock feed payments for an eligible livestock producer will 
be calculated based on losses for no more than 150 days during the 
program year. Payment calculations for feed losses will be based on a 
national payment rate, as specified in Sec.1416.109, multiplied by 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 specified in Sec.
1416.103(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 specified in Sec.1416.103(d)(2);
    (3) 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 
additional livestock feed becomes available, as specified in Sec.
1416.103(d)(3); and
    (4) The additional cost incurred for transporting livestock feed to 
eligible livestock due to an eligible adverse weather or eligible loss 
condition, as specified in Sec.1416.103(d)(4);
    (b) Payments for losses resulting from the additional cost of 
transporting water to eligible livestock due to an eligible adverse 
weather, eligible loss condition, or eligible drought for no more 150 
days during the program year, as specified in Sec.1416.103(d)(5) 
calculated based on a national payment rate, as determined in Sec.
1416.109, multiplied by the lesser of either:
    (1) The total value of the cost to transport water to eligible 
livestock for 150 days, based on the daily water requirements for the 
eligible livestock, or
    (2) The total value of the cost to transport water to eligible 
livestock for the program year, based on the actual number of gallons of 
water the eligible producer transported to eligible livestock for the 
program year.
    (c) The total value of the cost to transport water to eligible 
livestock for 150 days to be used in the calculation for paragraph 
(b)(1) of this section is equal to the product obtained by multiplying:
    (1) The number of eligible livestock converted to an animal unit 
basis;
    (2) The gallons of water required per animal unit for maintenance 
for one day, as determined by the Deputy Administrator;
    (3) The national average price per gallon to transport water and any 
appropriate regional or local adjustments as recommended by the STC and 
determined by the Deputy Administrator; and
    (4) 150 days.
    (d) The total value of the cost to transport water to eligible 
livestock for the program year to be used in the calculation for 
paragraph (b)(2) of this section is equal to the product obtained by 
multiplying:
    (1) Actual number of gallons of water transported by the eligible 
producer to eligible livestock in the program year; and
    (2) The national average price per gallon to transport water and any 
appropriate regional or local adjustments as recommended by the STC and 
determined by the Deputy Administrator.
    (e) The national average price per gallon to transport water to be 
used in the calculation for paragraphs (c)(3) and (d)(2) of this section 
is $0.04, or such other price determined by the Deputy Administrator.
    (f) Payments for an eligible livestock producer, for livestock 
losses resulting

[[Page 550]]

from the additional cost associated with gathering livestock to treat or 
inspect for cattle tick fever will be calculated for the actual number 
of livestock involved in each treatment or inspection. Total payments 
are equal to the sum of the following for each treatment or inspection:
    (1) The national payment rate, as determined in Sec.1416.109, 
times
    (2) The number of eligible livestock treated or inspected by APHIS 
for cattle tick fever, times
    (3) The average cost to gather livestock, per head, as established 
by the Deputy Administrator.
    (g) Payments for an eligible livestock producer for grazing losses, 
except for losses due to wildfires on non-Federal land, will be 
calculated based on the applicable national payment rate, as determined 
in Sec.1416.109, multiplied by 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 150 days of daily feed cost for all eligible 
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 150 days of lost grazing.
    (h) The total value of feed cost to be used in the calculation for 
paragraph (g)(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 (i) of this section;
    (2) A payment rate equal to the corn price per pound, as determined 
in paragraph (j) of this section;
    (3) The number of all eligible livestock owned by the eligible 
producer converted to an animal unit basis;
    (4) The number of days grazing was lost, not to exceed 150 calendar 
days during the normal grazing period for the specific type of grazing 
land; and
    (5) The producer's ownership share in the livestock.
    (i) The feed grain equivalent to be used in the calculation for 
paragraph (g)(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.
    (j) The corn price per pound to be used in the calculation for 
paragraph (h)(2) of this section equals the quotient calculated as 
follows:
    (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 program 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 program year for which 
payments are calculated;
    (2) Divided by 56.
    (k) The total value of grazing lost to be used in the calculation 
for paragraph (h)(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 (j) 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 150 calendar 
days during the normal grazing period for the specific type of grazing 
land.
    (l) Payments for an eligible livestock producer for grazing losses 
due to a wildfire on non-Federal land will be

[[Page 551]]

calculated based on the applicable national payment rate, as determined 
in Sec.1416.109, multiplied by:
    (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;
    (m) If a participant, during the normal grazing period for the 
eligible grazing land, claims both an eligible loss resulting from the 
additional cost of purchasing additional livestock feed above normal 
quantities, as calculated in paragraph (a)(3) of this section, and an 
eligible grazing loss, as calculated in paragraphs (g) or (l) of this 
section, then the participant may receive no more than the larger of the 
value of the loss resulting from the:
    (1) Additional cost of purchasing additional livestock feed, as 
calculated in paragraph (a)(3) of this section; or
    (2) Grazing loss, as determined in:
    (i) Paragraph (g) of this section, for losses due to an eligible 
adverse weather or eligible loss condition, except wildfires on non-
Federal lands, or
    (ii) Paragraph (l) of this section, for losses due to wildfires on 
non-Federal lands.
    (n) Payments calculated in this section are subject to the 
adjustments and limits provided for in this part.

[79 FR 21097, Apr. 14, 2014, as amended at 85 FR 10965, Feb, 26, 2020]



Sec.1416.111  Honeybee payment calculations.

    (a) An eligible honeybee producer may receive payments for eligible 
honeybee feed losses, as specified in Sec.1416.103(h), based on a 
national payment rate, as determined in Sec.1416.109, multiplied by 
the producer's actual cost for honeybee feed that was:
    (1) Damaged or destroyed due to an eligible adverse weather or 
eligible loss condition, as specified in Sec.1416.103(h)(1); and
    (2) Purchased, above normal, to maintain the honeybees during an 
eligible adverse weather or eligible loss condition until additional 
honeybee feed becomes available, as specified in Sec.1416.103(h)(2);
    (b) An eligible honeybee producer may receive payments for eligible 
honeybee colony losses, as specified in Sec.1416.103(i), based on a 
national payment rate, as determined in Sec.1416.109(b), multiplied 
by:
    (1) Average fair market value of the honeybee colonies as computed 
using nationwide prices unless some other price data is approved for use 
by the Deputy Administrator; and
    (2) Number of eligible honeybee colonies that were damaged or 
destroyed due to an eligible adverse weather or eligible loss condition, 
in excess of normal honeybee mortality, as determined by the Deputy 
Administrator.
    (c) An eligible honeybee producer may receive payments for eligible 
honeybee hive losses, as specified in Sec.1416.103(i), based on a 
national payment rate, as determined in Sec.1416.109, multiplied by:
    (1) Average fair market value for honeybee hives as computed using 
nationwide prices unless some other price data is approved for use by 
the Deputy Administrator; and
    (2) Number of honeybee hives that were damaged or destroyed due to 
an eligible adverse weather or eligible loss condition.
    (d) Payments calculated in this section are subject to the 
adjustments and limits provided for in this part.



Sec.1416.112  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 specified in Sec.1416.103(h), based on a national 
payment rate, as determined in Sec.1416.109, multiplied by the 
producer's actual cost for the fish feed that was:
    (1) Damaged or destroyed due to an eligible adverse weather or 
eligible loss condition, as specified in Sec.1416.103(h)(1); and
    (2) Purchased, above normal, to maintain the farm-raised fish during 
an eligible adverse weather or eligible

[[Page 552]]

loss condition until additional farm-raised fish feed becomes available, 
as specified in Sec.1416.103(h)(2).
    (b) An eligible producer of farm-raised fish may receive payments 
for death losses of farm-raised fish due to an eligible adverse weather 
or eligible loss condition, as specified in Sec.1416.103(j), based on 
a national payment rate, as determined in Sec.1416.109, multiplied by:
    (1) Average fair market value of the bait fish, game fish, or other 
aquatic species, as determined by the Deputy Administrator, 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; and
    (2) Number of eligible bait fish, game fish, or other aquatic 
species, as determined by the Deputy Administrator, that died as a 
result of an eligible adverse weather or loss condition, in excess of 
normal mortality, as determined 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 part 1400 of this 
chapter.



               Subpart C_Livestock Forage Disaster Program



Sec.1416.201  Applicability.

    (a) This subpart establishes the terms and conditions under which 
the Livestock Forage Disaster Program (LFP) will be administered.
    (b) Eligible livestock owners or contract growers who are eligible 
producers of eligible grazed forage crop acreage will be compensated for 
eligible grazing losses for covered livestock that occur due to a 
qualifying drought or fire that occurs in the calendar year for which 
benefits are being requested.

[79 FR 21097, Apr. 14, 2014, as amended at 85 FR 10965, Feb. 26, 2020]



Sec.1416.202  Definitions.

    The following definitions apply to this subpart and to the 
administration of LFP. The definitions in parts 718 of this title and 
1400 of this chapter 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 beefalo bull means a male hybrid of beef and bison that was 
used for breeding purposes and was at least 2 years old before the 
beginning date of the qualifying drought or fire.
    Adult beefalo cow means a female hybrid of beef and bison that had 
delivered one or more offspring before the beginning date of the 
qualifying drought or fire. A first-time bred beefalo heifer is also 
considered an adult beefalo cow if it was pregnant by the beginning date 
of the qualifying drought or fire.
    Adult buffalo or bison 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 qualifying drought or fire.
    Adult buffalo or bison cow means a female animal of those breeds 
that had delivered one or more offspring before the beginning date of 
the qualifying drought or fire. A first-time bred buffalo or bison 
heifer is also considered an adult buffalo or bison cow if it was 
pregnant by the beginning date of the 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.

[[Page 553]]

    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.
    Contract grower means a person or legal entity, other than a 
feedlot, that was engaged in a farming operation not as an owner of 
covered livestock but in a business whose income is dependent on either 
the actual weight gain of the livestock or number of offspring produced 
from the livestock.
    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 will not include livestock in 
feedlots.
    Equine animal means a weaned 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), Bureau of Land 
Management (BLM), and USDA Forest Service (FS).
    Goat means a weaned domesticated, ruminant mammal of the genus 
Capra, including Angora goats.
    Grazing animals mean those species of weaned livestock that, from a 
nutritional and physiological perspective, satisfy more than 50 percent 
of their net energy requirement through the consumption of growing 
forage grasses and legumes. Species of livestock for which more than 50 
percent of their net energy requirements are not recommended to be met 
from consumption of forage grasses and legumes, such as poultry and 
swine, are excluded regardless of whether those species are present on 
grazing land or pastureland. Unweaned livestock are excluded as grazing 
animals regardless of whether those unweaned livestock are present on 
grazing land or pastureland.
    Non-adult beef cattle means a weaned beef breed bovine animal that 
on or before the beginning date of a qualifying drought or fire does not 
meet the definition of adult beef cow or bull.
    Non-adult beefalo means a weaned hybrid of beef and bison that on or 
before the beginning date of the qualifying drought or fire does not 
meet the definition of adult beefalo cow or bull.
    Non-adult buffalo or bison means a weaned animal of those breeds 
that on or before the beginning date of beginning date of the qualifying 
drought or fire does not meet the definition of adult buffalo or bison 
cow or bull.
    Non-adult dairy cattle means a weaned bovine animal, of a breed used 
for the purpose of providing milk for human consumption, that on or 
before the beginning date of a qualifying drought or fire 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, as determined by FSA, with respect to a 
specific type of grazing land or pastureland in the county, the period 
during the calendar year when grazing

[[Page 554]]

animals receive daily nutrients and satisfy net energy requirements 
without supplemental feed.
    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.
    Sheep means a weaned domesticated, ruminant mammal of the genus 
Ovis.
    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://
droughtmonitor.unl.edu.
    Unweaned livestock means an animal not weaned from mother's milk or 
milk replacement to other nourishment.

[79 FR 21097, Apr. 14, 2014, as amended at 83 FR 49466, Oct. 2, 2018; 85 
FR 10965, Feb. 26, 2020]



Sec.1416.203  Eligibility.

    (a) In addition to meeting all other requirements, to be eligible 
for benefits under this subpart, an individual or legal entity with an 
eligible producer interest in grazing land acreage who is either an 
owner or contract grower of grazing animals, 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.
    (2) As of the date of the qualifying drought or fire 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 specific forage crop acreage in 
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 prohibited from receiving 
these benefits as a result of the restrictions applicable to foreign 
persons contained in Sec.1416.3(b) and must meet all other 
requirements of subpart A of this part 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.

[79 FR 21097, Apr. 14, 2014, as amended at 83 FR 49467, Oct. 2, 2018; 85 
FR 10965, Feb. 26, 2020]



Sec.1416.204  Covered livestock.

    (a) To be considered covered livestock for LFP payments, livestock 
must meet all the following conditions:
    (1) Be grazing animals such as adult or non-adult beef cattle, adult 
or non-adult beefalo, adult or non-adult buffalo or bison, adult or non-
adult dairy cattle, alpacas, deer, elk, emus, equine, goats, llamas, 
reindeer, or sheep;
    (2) Be livestock that would normally have been grazing the eligible 
grazing land or pastureland:
    (i) During the normal grazing period for the specific type of 
grazing land or pastureland for the county during the qualifying 
drought; 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,

[[Page 555]]

    (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 livestock produced or maintained for commercial use or be 
livestock that is produced and maintained for producing livestock 
products for commercial use, such as milk from dairy, as part of the 
contract grower's or livestock owner'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, consumption by the owner, lessee, or 
contract grower, 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 beefalo cows or bulls,
    (3) Adult buffalo or bison 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 beefalo,
    (13) Non-adult buffalo or bison,
    (14) Non-adult dairy cattle,
    (15) Reindeer, and
    (16) Sheep.
    (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) Animals that are not grazing animals;
    (3) Yaks;
    (4) Ostriches;
    (5) Poultry;
    (6) Swine;
    (7) Unweaned livestock or animals not meeting the definition of a 
grazing animal;
    (8) Any wild free roaming livestock, including horses and deer; and
    (9) Livestock produced or maintained for reasons other than 
commercial use, including, but not limited to, livestock produced or 
maintained for any of the following or recreational purposes, such as:
    (i) Roping,
    (ii) Hunting,
    (iii) Show,
    (iv) Pleasure,
    (v) Use as pets, or
    (vi) Consumption by owner.

[79 FR 21097, Apr. 14, 2014, as amended at 83 FR 49467, Oct. 2, 2018; 85 
FR 10965, Feb. 26, 2020]



Sec.1416.205  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, as reported on the producer's 
acreage report, including crops such as forage sorghum, small grains, 
annual planted ryegrass, or annual planted crabgrass, but not including 
corn stalks or grain sorghum stalks; and
    (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

[[Page 556]]

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 
paragraph (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:
    (1) 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), or
    (2) The grazing loss occurs on irrigated land, unless the irrigated 
land has not been irrigated in the program year for which benefits are 
being requested due to the lack of surface wateras a result of a 
qualifying eligible drought condition.
    (c) A grazing loss due to 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.

[79 FR 21097, Apr. 14, 2014, as amended at 83 FR 49467, Oct. 2, 2018; 85 
FR 10966, Feb. 26, 2020]



Sec.1416.206  Application for payment.

    (a) To apply for LFP, the participant that suffered eligible grazing 
losses for the 2019 and subsequent program years must submit a completed 
application and required supporting documentation, including some 
supporting documentation such as an acreage report that may have been 
required at an earlier date, 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) Evidence that grazing land or pastureland is owned or leased;
    (3) A report of acreage according to part 718 of this title for the 
grazing lands incurring losses for which assistance is being requested 
under this subpart;
    (4) 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; 
and
    (iii) Occurred in the program year for which payments are being 
requested;
    (5) A farm operating plan, if a current farm operating plan is not 
already on file in the FSA county office; and
    (6) 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; written contracts; production records; private 
insurance documents; sales records; and similar documents determined 
acceptable to FSA.
    (c) [Reserved]
    (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.

[79 FR 21097, Apr. 14, 2014. Redesignated and amended at 83 FR 49467, 
Oct. 2, 2018; 85 FR 10966, Feb. 26, 2020]

[[Page 557]]



Sec.1416.207  Payment calculation.

    (a) An eligible livestock producer will be eligible to receive 
payments for grazing losses for qualifying drought as specified in Sec.
1416.205(a), calculated as specified in paragraphs (f) or (h) 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 5 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 A of this part. 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 
representative to a ``1-month'' payment, a ``3-month'' payment, ``4-
month'' payment, or a ``5-month'' payment based on the provisions of 
paragraphs (b) through (e) of this section.
    (b) To be eligible to receive a 1-month payment, that is a payment 
equal to the monthly feed cost as determined under paragraph (h) 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 3-month payment, that is a payment 
equal to three times the monthly feed cost as determined under paragraph 
(h) 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 4-month payment, that is a payment 
equal to four times the monthly feed cost as determined under paragraph 
(h) 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 (not 
necessarily consecutive 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) To be eligible to receive a 5-month payment, that is a payment 
equal to five times the monthly feed cost as determined under paragraph 
(h) 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 D4 
(exceptional drought) in any area of the county for at least 4 weeks 
(not necessarily consecutive weeks) during the normal grazing period for 
the specific type of grazing land or pastureland for the county.
    (f) The monthly payment rate for LFP for grazing losses due to a 
qualifying drought, except as specified in paragraph (h) 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 (i) of 
this section, or
    (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 (l) of this section.
    (g) An eligible livestock producer cannot receive more than a 5-
month payment for the same covered livestock during the calendar year 
regardless of the number of drought intensity ratings the county 
receives; that is, the maximum payment an eligible livestock producer 
may receive under LFP in a calendar year cannot exceed 60 percent of 5 
times the same covered livestock's monthly feed cost.

[[Page 558]]

    (h) 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 (f) of this section.
    (i) The monthly feed cost for covered livestock equals the product 
obtained by multiplying:
    (1) 30 days;
    (2) A payment quantity equal to the amount of the ``feed grain 
equivalent'', as determined under paragraph (j) of this section; and
    (3) A payment rate equal to the corn price per pound, as determined 
in paragraph (k) of this section.
    (j) 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.
    (k) The corn price per pound equals the quotient calculated as 
follows:
    (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) Divided by 56.
    (l) 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 (k) 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.
    (m) An eligible livestock producer will be eligible to receive 
payments for grazing losses due to a fire as specified in Sec.
1416.205(c):
    (1) For the period:
    (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.
    (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 
paragraph (i) of this section, pro-rated to a daily rate, for the total 
number of livestock covered by the Federal lease of the eligible 
livestock producer.

[79 FR 21097, Apr. 14, 2014, as amended at 83 FR 49468, Oct. 2, 2018; 85 
FR 10966, Feb. 26, 2020]



                  Subpart D_Livestock Indemnity Program



Sec.1416.301  Applicability.

    (a) This subpart establishes the terms and conditions of the 
Livestock Indemnity Program (LIP).
    (b) Eligible livestock owners and contract growers will be 
compensated in accordance with Sec.1416.306 for eligible livestock 
deaths in excess of normal mortality, or livestock owners will be 
compensated for sales of injured livestock for a reduced price, if 
either the death or injury that results in sale at a reduced price 
occurred as a direct result of an eligible cause of loss. The eligible 
cause of loss is one, as determined by FSA, that directly results in the 
death of livestock or injury and sale of livestock at a reduced price, 
despite

[[Page 559]]

the livestock owner's or contract grower's performance of expected and 
normal preventative or corrective measures and acceptable animal 
husbandry practices.

[83 FR 49468, Oct. 2, 2018, as amended at 85 FR 10966, Feb. 26, 2020]



Sec.1416.302  Definitions.

    The following definitions apply to this subpart. The definitions in 
parts 718 of this title and 1400 of this chapter also apply, except 
where they conflict with the definitions in this section.
    Acceptable animal husbandry means animals raised and cared for to 
produce offspring, meat, fiber, milk, eggs, or other products. Includes 
day-to-day care and selective breeding and raising of livestock. The 
practices are those that are generally recognized by the commercial 
livestock industry.
    Actual livestock beginning inventory means the actual livestock 
beginning inventory per calendar year for unweaned livestock that is 
calculated from the verifiable or reliable records of death, birthing, 
docking, inventory, and sales.
    Adjusted livestock beginning inventory means the LBIH for unweaned 
livestock that will be adjusted during the base period for years for 
which continuous actual LBIH records are not provided.
    Adult beef bull means a male beef breed bovine animal that was at 
least 2 years old and used for breeding purposes.
    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 at the time it died or 
was sold at a reduced price.
    Adult beefalo bull means a male hybrid of beef and bison that was at 
least 2 years old and used for breeding purposes.
    Adult beefalo cow means a female hybrid of beef and bison that had 
delivered one or more offspring before dying or being injured and sold 
at a reduced price. A first-time bred beefalo heifer is also considered 
an adult beefalo cow if it is pregnant at the time it died or was sold 
at a reduced price.
    Adult buffalo or bison bull means a male animal of those breeds that 
was at least 2 years old and used for breeding purposes.
    Adult buffalo or bison cow means a female animal of those breeds 
that had delivered one or more offspring before it died or was injured 
and sold at a reduced price. A first-time bred buffalo or bison heifer 
is also considered an adult buffalo or bison cow if it was pregnant at 
the time it died or was sold at a reduced price.
    Adult dairy bull means a male dairy breed bovine animal at least 2 
years old used primarily for breeding dairy cows.
    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. A first-time bred dairy heifer is also considered 
an adult dairy cow if it was pregnant at the time it died or was injured 
and sold at a reduced price.
    Agricultural operation means a farming operation.
    Application means the ``Livestock Indemnity Program'' form.
    Approved livestock beginning inventory means the approved livestock 
beginning inventory for unweaned livestock, calculated by the sum of the 
yearly actual and transitional LBIH divided by the number of years of 
LBIH.
    Base period means the five consecutive calendar years immediately 
preceding the calendar year of the LIP application for which the 
approved livestock beginning inventory is being established for the 
unweaned livestock.
    Blizzard means, as defined by the National Weather Service, a storm 
which contains large amounts of snow or blowing snow with winds in 
excess of 35 miles per hour and visibility of less than one-fourth of a 
mile for an extended period of time.
    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.
    Continuous livestock beginning inventory reports means livestock 
beginning inventory reports submitted by a producer for each calendar 
year that the producer was involved in the unweaned livestock.
    Contract means, with respect to contracts for the handling of 
livestock, a written agreement between a livestock

[[Page 560]]

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.
    Cow, Ewe, Nanny LBIH means, the applicable calendar year cow, ewe, 
or nanny verifiable livestock beginning inventory records provided to 
FSA by the unweaned livestock operation to be used in calculating the 
transitional LBIH.
    Eligible adverse weather event means extreme and abnormal damaging 
weather in the calendar year for which benefits are being requested that 
is not expected to occur during the loss period for which it occurred, 
which directly results in eligible livestock death losses in excess of 
normal mortality or injury and sale of livestock at a reduced price. 
Eligible adverse weather events include, but are not limited to, as 
determined by the Deputy Administrator or designee, earthquake; hail; 
lightning; tornado; tropical storm; typhoon; vog if directly related to 
a volcanic eruption; winter storm if the winter storm meets the 
definition provided in this section; hurricanes; floods; blizzards; 
wildfires; extreme heat; extreme cold; and straight-line wind. Drought 
is not an eligible adverse weather event except when associated with 
anthrax, a condition that occurs because of drought and results in the 
death of eligible livestock.
    Eligible attack means an attack by animals reintroduced into the 
wild by the Federal government or protected by Federal law, including 
wolves and avian predators, that directly results in the death of 
eligible livestock in excess of normal mortality or injury and sale of 
eligible livestock at reduced price. Eligible livestock owners or 
contract growers are responsible for showing to FSA's satisfaction that 
eligible attacks are substantiated according to Sec.1416.305 in order 
to be considered eligible for payment.
    Eligible disease means a disease that, as determined by the Deputy 
Administrator, is exacerbated by an eligible adverse weather event that 
directly results in the death of eligible livestock in excess of normal 
mortality, including, but not limited to anthrax, cyanobacteria, and 
larkspur poisoning, or a disease that is caused or transmitted by a 
vector and cannot be controlled by vaccination or acceptable management 
practices. Eligible diseases are not an eligible cause of loss for 
benefits based on injury and sales of eligible livestock at reduced 
price.
    Eligible loss condition means any of the following that occur in the 
calendar year for which benefits are requested: Eligible adverse weather 
event, eligible attack, and eligible disease. Eligible disease is not an 
eligible loss condition for injured livestock.
    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 beginning inventory history (LBIH) means a minimum of 
four, up to a maximum of five, calendar years of actual and transitional 
beginning inventory records used to calculate the approved livestock 
beginning inventory history for a livestock operation.
    LBIH reporting date means the LBIH reporting date for which the 
reports will be accepted for inclusion in the base period for the 
current calendar year.
    Livestock inventory report means a written record showing the 
producer's annual inventory used to determine the LBIH for LIP purposes 
for the livestock operation. The report contains LBIH by livestock 
operation by livestock type or kind.
    Livestock owner means one having legal ownership of the livestock 
for which benefits are being requested on the day such livestock died or 
were sold at a reduced sale price.
    Livestock unit means all eligible livestock in the physical location 
county where the livestock losses occurred for the program year:
    (1) In which a person or legal entity has 100 percent share 
interest; or

[[Page 561]]

    (2) Which is owned individually by more than one person or legal 
entity on a shared basis.
    Nanny means a female goat.
    Newborn livestock means livestock that are within 10 calendar days 
of date of birth.
    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 or were sold at a reduced 
price.
    Non-adult beefalo means a hybrid of beef and bison that does not 
meet the definition of adult beefalo cow or bull. Non-adult beefalo are 
further delineated by weight categories of either less than 400 pounds 
or 400 pounds or more at the time they died or were sold at a reduced 
price.
    Non-adult buffalo or bison means an animal of those breeds that does 
not meet the definition of adult buffalo or bison cow or bull. Non-adult 
buffalo or bison are further delineated by weight categories of either 
less than 400 pounds or 400 pounds or more at the time they died or were 
sold at a reduced price.
    Non-adult dairy cattle means a dairy breed bovine animal, 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 either less than 
400 pounds or 400 pounds or more at the time they died or were sold at a 
reduced price.
    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.
    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 office or county office means the respective FSA 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.
    Transitional LBIH for unweaned livestock means an estimated LBIH, 
generally determined by multiplying the livestock operation's beginning 
cow, ewe, or nanny LBIH by the national established birthing rate 
percentage established by FSA for the species of unweaned livestock. The 
Deputy Administrator has the authority to make adjustments for 
variations in stocking levels for livestock during the period covered by 
the history as necessary. It is to be used in the transitional LBIH 
calculation process when less than 4 consecutive calendar years of 
actual LBIH is available.
    Unweaned livestock means an animal not weaned from mother's milk or 
milk replacement to other nourishment. For LIP purposes, unweaned 
livestock does not include turkeys, ducks, chickens, and geese.
    Winter storm means, for an eligible adverse weather event, an event 
that so severe as to directly cause injury to livestock and lasts in 
duration for at least 3 consecutive days and includes a combination of 
high winds, freezing rain or sleet, heavy snowfall, and extremely cold 
temperatures. For a determination of winter storm, the wind, 
precipitation, and extremely cold temperatures must occur with the 3-day 
period, with wind and extremely cold temperatures occurring in each of 
the 3 days.

[79 FR 21097, Apr. 14, 2014, as amended at 83 FR 49468, Oct. 2, 2018; 85 
FR 10966, Feb. 26, 2020]

    Editorial Note: At 85 FR 10966, Feb. 26, 2020, Sec.1416.302 was 
amended in the definition ``eligible adverse weather'' however, the 
amendment to remove the last three sentences could not be incorporated 
due to inaccurate amendatory instruction.

[[Page 562]]



Sec.1416.303  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 or sale of an injured animal at a reduced price under this 
subpart, the applicant must have had legal ownership of the eligible 
livestock on the day the livestock died or was injured and sold at a 
reduced price 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.1416.304(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.
1416.304(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 livestock owner or contract grower seeking payment must be an 
eligible producer as defined in subpart A of this part and other 
applicable USDA regulations.
    (c) All of an eligible livestock owner's or contract grower's 
interest in livestock in a physical location county must be taken into 
account and summarized by livestock unit when determining the extent of 
payment eligibility.
    (d) Livestock owners are eligible for benefits for injured animals 
sold at reduced price only when those animals are not in a contract 
grower's inventory for which a contract grower seeks benefits for death 
losses. Contract growers are not eligible for benefits for injured 
animals sold at a reduced price.

[79 FR 21097, Apr. 14, 2014, as amended at 83 FR 49469, Oct. 2, 2018]



Sec.1416.304  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, beefalo, bison, buffalo, elk, emus, equine, llamas, sheep, 
goats, swine, poultry, deer, ostriches, 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 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 have:
    (1) Died as a direct result of an eligible loss condition:
    (i) With the eligible loss condition occurring in the program year 
for which benefits are sought;
    (ii) No later than 30 calendar days for livestock, or 7 calendar 
days for newborn livestock, from the ending date of the eligible loss 
condition; or
    (2) Been injured and sold at a reduced price as a direct result of 
an eligible adverse weather event or eligible attack no later than 30 
calendar days for livestock, or 7 calendar days for newborn livestock, 
from the ending date of the eligible adverse weather event or eligible 
attack.
    (3) Been produced or maintained for commercial use for livestock for 
the production of livestock products such as milk or eggs as part of a 
farming operation on the day they died or until the event that resulted 
in their sale at a reduced price; and
    (4) Not be produced or maintained for reasons other than commercial 
use for livestock sale or for the production of livestock products such 
as milk or eggs. Livestock excluded from being eligible include, but are 
not limited to, wild free roaming animals and animals produced or 
maintained for consumption by the owner or contract grower, livestock 
used for recreational purposes, livestock used for 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;

[[Page 563]]

    (2) Adult beef cows;
    (3) Adult beefalo bulls;
    (4) Adult beefalo cows;
    (5) Adult buffalo or bison bulls;
    (6) Adult buffalo or bison cows;
    (7) Adult dairy bulls;
    (8) Adult dairy cows;
    (9) Alpacas;
    (10) Chickens, broilers, pullets (regular size);
    (11) Chickens, chicks;
    (12) Chickens, layers;
    (13) Chickens, pullets or Cornish hens (small size);
    (14) Chickens, roasters;
    (15) Chickens, super roasters or parts
    (16) Deer;
    (17) Ducks;
    (18) Ducks, ducklings;
    (19) Elk;
    (20) Emus;
    (21) Equine;
    (22) Geese, goose;
    (23) Geese, gosling;
    (24) Goats, bucks;
    (25) Goats, nannies;
    (26) Goats, kids;
    (27) Llamas;
    (28) Non-adult beef cattle;
    (29) Non-adult beefalo;
    (30) Non-adult buffalo or bison;
    (31) Non-adult dairy cattle;
    (32) Reindeer;
    (33) Sheep, ewes;
    (34) Sheep, lambs;
    (35) Sheep, rams;
    (36) Swine, suckling pigs, nursery pigs under 50 pounds;
    (37) Swine, lightweight barrows, gilts 50 to 150 pounds;
    (38) Swine, sows, boars, barrows, gilts 151 to 450 pounds;
    (39) Swine, boars, sows, 450 pounds or more;
    (40) Turkeys, poults;
    (41) Turkeys, toms, fryers, and roasters; and
    (42) Ostriches.
    (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 (regular size);
    (2) Chickens, chicks;
    (3) Chickens, layers;
    (4) Chickens, pullets or Cornish hens (small size);
    (5) Chickens, roasters;
    (6) Chickens, super roasters or parts;
    (7) Ducks;
    (8) Ducks, ducklings;
    (9) Geese, goose;
    (10) Swine, boars, sows;
    (11) Swine, suckling nursery pigs;
    (12) Swine, lightweight barrows, gilts 50 to 150 pounds;
    (13) Swine, sows, boars, barrows, gilts 151 to 450 pounds;
    (14) Swine, boars and sows 450 pounds or more;
    (15) Turkeys, poults; and
    (16) Turkeys, toms, fryers, and roasters.
    (f) Ineligible livestock for the purpose of generating payments 
under this subpart include those livestock that died due to disease that 
is not an eligible disease; eligible livestock suffering injury due to 
disease or eligible disease which are sold for reduced price; and any 
eligible livestock that died or were injured by anything other than an 
eligible loss condition.

[83 FR 49469, Oct. 2, 2018, as amended at 85 FR 10966, Feb. 26, 2020]

    Editorial Note: At 85 FR 10966, Feb. 26, 2020, Sec.1416.304 (c)(3) 
was amended; however the words ``sale of'' could not be removed because 
they do not exist in text.



Sec.1416.305  Application process.

    (a) A notice of loss must be accompanied by documentation acceptable 
to FSA substantiating that the claimed eligible loss condition occurred 
and was responsible for eligible losses. For any notice of loss being 
submitted for disease exacerbated by eligible adverse weather, the 
notice of loss must be accompanied by a certification referenced in 
paragraph (g) of this section.
    (b) A livestock owner or contract grower that suffered livestock 
losses must:
    (1) Provide a notice of loss, by livestock unit, to FSA by the later 
of 30 calendar days of when the loss of livestock is first apparent to 
the livestock owner or contract grower or December 3, 2018.
    (2) Submit the notice of loss required in this section to the FSA 
county office responsible for servicing the physical location county 
where the loss occurred.

[[Page 564]]

    (c) In addition to the notice of loss required in paragraph (b) of 
this section, a participant must also submit a completed application for 
payment, by livestock unit for losses apparent in 2019 and subsequent 
years, by no later than 60 calendar days after the end of the calendar 
year in which the eligible loss condition occurred.
    (d) A participant must provide 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) Physical location of claimed livestock at the time of death or 
injury,
    (4) Documentation acceptable to FSA showing inventory numbers for 
the livestock unit and other inventory information necessary to 
establish actual mortality as required by FSA,
    (5) A farm operating plan, if a current farm operating plan is not 
already on file in the FSA county office,
    (6) Documentation of the adverse weather event from an official 
weather reporting data source that is determined by FSA to be reputable 
and available in the public domain such as, but not limited to, NOAA, 
from which State and County FSA Offices can validate the adverse weather 
event occurred,
    (7) Documentation to substantiate eligible attacks obtained from a 
source such as, but not limited to, the following:
    (i) APHIS,
    (ii) State level Department of Natural Resources, or
    (iii) Other sources or documentation, such as third parties, as 
determined by the Deputy Administrator, and
    (8) If livestock are injured and sold at a reduced price.
    (i) Documentation of injured livestock's gross price, and
    (ii) Documentation to substantiate injury of livestock due to an 
eligible adverse weather event or eligible attack.
    (9) The livestock producer may supplement additional documentation 
to support the eligible loss condition, as determined by the Deputy 
Administrator.
    (10) In addition, contract growers must provide a copy of the grower 
contract.
    (e) For death losses or losses resulting from injured livestock sold 
at a reduced price, the participant must provide adequate proof that the 
death or injury of the eligible livestock occurred as a direct result of 
an eligible loss condition, as opposed to any other possible or 
potential cause of loss. The quantity and kind of livestock that died as 
a direct result of the eligible loss condition 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. The quantity and kind of livestock that died or has 
been injured and sold at a reduced price as a direct result of an 
eligible attack must be substantiated by documentation of confirmed 
kills observed by an acceptable source as specified in paragraphs (d)(7) 
and (g) of this section.
    (f) For losses resulting from an eligible adverse weather event or 
eligible disease, if adequate verifiable proof of death or injury 
documentation is not available, the participant may provide reliable 
records as proof of death or injury. Reliable records may include 
contemporaneous producer records, dairy herd improvement records, brand 
inspection records, vaccination records, dated pictures, and other 
similar reliable documents as determined by FSA.
    (g) For livestock death losses due to disease, a licensed 
veterinarian's certification of livestock deaths may be accepted as 
proof of death, if reliable beginning inventory data is available, only 
if the veterinarian provides a written statement containing all of the 
following:
    (1) Veterinarian's personal observation of the animals and knowledge 
of how the deaths of the livestock were because of disease caused or 
exacerbated by an eligible adverse weather event;

[[Page 565]]

    (2) Livestock deaths were not otherwise avoidable and preventable 
using good animal husbandry and management protocols and practices by 
the livestock producer; and
    (3) Other information required by FSA to determine the certification 
acceptable.
    (4) Information furnished by the participant and the veterinarian 
will be used to determine eligibility for program benefits. Furnishing 
the information is voluntary; however, without all required information 
program benefits will not be approved or provided
    (h) Certification of livestock deaths or injuries by third parties 
may be accepted if 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 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 eligible 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.
    (v) 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.
    (i) Calf and lamb open range livestock operations may provide proof 
of death by using the livestock beginning inventory history for 
reporting losses.
    (1) For 2017 and subsequent calendar years, livestock inventory 
reports by livestock unit must be provided to the local county FSA 
office by the later of December 3, 2018 or 60 calendar days after the 
end of the calendar year of the eligible adverse weather event. The STC 
may approve a waiver of the reporting deadline if a participant has not 
previously received benefits under this method.
    (i) Livestock inventory reports must provide an accurate account of 
livestock beginning inventory for the livestock type or kind and must be 
supported by written records such as but not limited to: Docking 
records, sales receipts, shearing records, shipping records, bank 
records, veterinarian records, IRS records, or other records approved by 
COC. For purposes of determining beginning livestock inventory, 
livestock inventory reports may require adjustment by COC, not to exceed 
normal mortality, for when loss occurs at different points during the 
growing season (for example, inventories from docking may need little to 
no adjustment, but sales records at the end of the growing season may 
require an adjustment to account for a full years of normal mortality).
    (ii) The unweaned livestock operation must certify to the accuracy 
of the information.
    (2) The unweaned livestock operation is solely responsible for the 
timely submission and certification of accurate, complete livestock 
beginning inventory to the county FSA office. Livestock beginning 
inventory records must be provided for all livestock type or kind.
    (i) Records may be requested by the applicable COC or STC, on behalf 
of

[[Page 566]]

FSA. The unweaned livestock operation must provide such records upon 
request.
    (ii) The COC will explain the procedure for the LBIH to unweaned 
livestock operation. COC will determine the LBIH in accordance with 
Sec.1416.305(g).
    (iii) COC will determine if the livestock beginning inventory 
records are acceptable and calculate the approved livestock beginning 
inventory history.
    (3) The LBIH is calculated utilizing a minimum of 4 years of data 
and will be updated each subsequent inventory year. The transitional 
LBIH may contain a maximum of the 4 most recent calendar years and may 
include actual and transitional livestock beginning inventories. 
Transitional LBIH will only be used when less than 4 years of actual 
records are available. Appropriate adjustments to LBIH may be made to 
account for variations in ewe, cow and nanny stocking levels during the 
period covered by the history.
    (4) The unweaned livestock operation is required to provide 
beginning livestock inventory records to determine the LBIH, if 
livestock beginning inventory records are available.
    (i) If no acceptable livestock beginning inventory records are 
available for calves, lambs, or kids, calculate the 4 transitional 
livestock beginning inventory histories by multiplying the approved 
birthing rate or drop rate percentage for the unweaned livestock 
operation times the applicable cow, ewe, or nanny LBIH times 65 percent.
    (ii) If acceptable livestock beginning inventory records are 
provided for only one of the most recent 5 calendar years, calculate the 
3 transitional livestock beginning inventory histories by multiplying 
the approved birthing rate or drop rate percentage for the unweaned 
livestock operation times the applicable cow, ewe, or nanny LBIH times 
80 percent.
    (iii) If acceptable livestock beginning inventory records are 
provided for only 2 of the most recent 5 calendar years, calculate the 2 
transitional livestock beginning inventory histories by multiplying the 
approved birthing rate or drop rate percentage for the unweaned 
livestock operation times the applicable cow, ewe, or nanny LBIH times 
90 percent.
    (iv) If acceptable livestock beginning inventory records are 
provided for only 3 of the most recent 5 calendar years, calculate the 
one transitional livestock beginning inventory histories by multiplying 
the approved birthing rate or drop rate percentage for the unweaned 
livestock operation times the applicable cow, ewe, or nanny LBIH times 
100 percent.
    (v) If acceptable livestock beginning inventory history records 
containing information for 4 or more of the most recent calendar years 
are provided, calculate the livestock beginning inventory history by 
taking a simple average of the actual livestock beginning inventory 
histories.
    (j) When an eligible owner claims eligible livestock were injured by 
an eligible loss condition and were sold for a reduced price, the owner 
must provide verifiable evidence of the gross sale price of the 
livestock. The injured livestock must be sold through an independent 
third party (sale barn, slaughter facility, or rendering facility). Only 
verifiable proof of sale with price is acceptable. The gross sale price 
of the livestock is the amount received for the injured livestock before 
any reductions, such as sale yard fees. The owner must provide 
verifiable evidence of livestock sold at a reduced price. Documents that 
may satisfy this requirement include but are not limited to, any or a 
combination of the following: Sales receipt from a livestock auction, 
sale barn, or other similar livestock sales facility; bona-fide 
commercial sales receipts; private insurance documents; and processing 
plant receipts.

[79 FR 21097, Apr. 14, 2014, as amended at 83 FR 49470, Oct. 2, 2018; 85 
FR 10967, Feb. 26, 2020]

    Editorial Note: At 85 FR 10967, Feb. 26, 2020, Sec.1416.305 was 
amended, however the material could not be incorporated for (i) 
introductory text and (i)(1) introductory text because the text did not 
publish in the Federal Register



Sec.1416.306  Payment calculation.

    (a) Under this subpart, separate payment rates for eligible 
livestock owners and eligible livestock contract growers are specified 
in paragraphs (b)

[[Page 567]]

and (c) of this section, respectively. Payments for death losses 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 loss 
condition. 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 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. The rate that 
applies is based on the type, class, and weight of the animal at the 
time of the eligible loss condition and death.
    (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.
    (e) Payments to livestock owners for losses due to sale of livestock 
at a reduced price because of injury from an eligible loss condition are 
calculated by multiplying the national payment rate for each livestock 
category by the number of eligible livestock sold at a reduced price as 
a result of an eligible loss condition, minus the gross amount the 
eligible livestock owner received for the livestock up to the applicable 
national payment rate. In the event livestock sells for a reduced price 
that is in excess of the national payment rate, the national payment 
rate will be subtracted resulting in no payment for that livestock.

[79 FR 21097, Apr. 14, 2014, as amended at 83 FR 49471, Oct. 2, 2018]



                    Subpart E_Tree Assistance Program



Sec.1416.400  Applicability.

    (a) This subpart establishes the terms and conditions under which 
the Tree Assistance Program (TAP) will be administered under Title I of 
the Agricultural Act of 2014 (Pub. L. 113-79, the 2014 Farm Bill), as 
amended.
    (b) Eligible orchardists and nursery tree growers will be 
compensated as specified in Sec.1416.406 for eligible tree, bush, and 
vine losses in excess of 15 percent mortality, or, where applicable, 
damage in excess of 15 percent, adjusted for normal mortality and normal 
damage, that occurred in the calendar year (or loss period in the case 
of plant disease) for which benefits are being requested and as a direct 
result of a natural disaster.
    (c) Eligible pecan tree losses incurred in the 2017 and 2018 
calendar years not meeting the mortality loss threshold of paragraph (b) 
of this section with a tree mortality loss in excess of 7.5 percent 
(adjusted for normal mortality) will be compensated for eligible losses 
as specified in Sec.1416.406. For 2017 calendar year losses, up to a 
maximum of $15,000,000 is available.

[79 FR 21097, Apr. 14, 2014, as amended at 83 FR 49471, Oct. 2, 2018; 84 
FR 48537, Sept. 13, 2019; 85 FR 10968, Feb. 26, 2020]



Sec.1416.401  Administration.

    The program will be administered as specified in Sec.1416.2 and in 
this subpart.



Sec.1416.402  Definitions.

    The following definitions apply to this subpart. The definitions in 
parts 718 of this title and 1400 of this chapter 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.

[[Page 568]]

    Commercially viable means an eligible tree, bush, or vine, though 
damaged, that can rejuvenate and return to an acceptable level of 
commercial production at some time with rehabilitation and without 
replanting. A commercially viable tree, bush, or vine, regardless of the 
extent of damage or years of reduced production, is always excluded and 
never included as part of mortality under Sec.1416.403.
    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.
    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. 
Each of these types of disasters must be extreme, abnormal, and damaging 
as well as of significant magnitude or severity, 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 stand that 
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 
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.
    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.

[79 FR 21097, Apr. 14, 2014, as amended at 83 FR 49471, Oct. 2, 2018; 85 
FR 10968, Feb. 26, 2020]



Sec.1416.403  Eligible losses.

    (a) To qualify for any assistance under this subpart, except for 
assistance under Sec.1416.400(c), the eligible orchardist or nursery 
tree grower must first have suffered more than a 15 percent tree, bush, 
or vine mortality loss on a stand (adjusted for normal mortality) as a 
result of natural disaster as determined by the Deputy Administrator. 
For assistance for losses to pecan trees under Sec.1416.400(c), the 
eligible orchardist or nursery tree grower must first have suffered a 
mortality loss of more than 7.5 percent (adjusted for normal mortality) 
on a stand as a result of natural disaster as determined by the Deputy 
Administrator.

[[Page 569]]

    (b) The qualifying loss of a stand of trees, bushes, or vines 
specified in paragraph (a) of this section will be determined based on:
    (1) Each eligible disaster event, except for losses due to plant 
disease;
    (2) For plant disease, the time period, as determined by the Deputy 
Administrator, for which the stand is infected.
    (c) Mortality or damage loss not eligible for inclusion as a 
qualifying loss under this section or for payment under Sec.1416.406 
includes those losses where:
    (1) The loss or damage could have been prevented through reasonable 
and available measures; and
    (2) The trees, bushes, or vines, in the absence of a natural 
disaster, would normally have required rehabilitation or replanting 
within the 12-month period following the loss.
    (d) 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.
    (e) 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.
    (f) The Deputy Administrator will determine the types of trees, 
bushes, and vines that are eligible.
    (g) A stand that did not suffer a qualifying mortality loss as 
specified in paragraph (a) of this section is not eligible for 
payment.The qualifying mortality loss will be determined based on the 
eligible trees, bushes, or vines that reached mortality, which means 
that the tree, bush, or vine died, above and below ground, as a result 
of an eligible natural disaster event. If an eligible tree, bush, or 
vine is damaged to such an extent that it is not commercially viable, 
now or at any time in the future, the tree, bush, or vine can be 
considered dead in determining if the requisite qualifying mortality 
loss threshold in paragraph (a) of this section is reached.

[83 FR 49471, Oct. 2, 2018, as amended at 85 FR 10968, Feb. 26, 2020]



Sec.1416.404  Eligible orchardists and nursery tree growers.

    (a) Once the requisite qualifying eligible mortality loss is 
determined according to Sec.1416.403, 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, as a result of a natural disaster or related condition;
    (3) Have continuously owned the stand from the time of the disaster 
until the time that the TAP application is submitted.
    (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.1416.3(b) and must meet all other requirements of 
subpart A of this part.
    (d) Federal, State, and local governments and agencies and political 
subdivisions thereof are not eligible for payment under this subpart.

[79 FR 21097, Apr. 14, 2014, as amended at 83 FR 49472, Oct. 2, 2018; 85 
FR 10968, Feb. 26, 2020]

[[Page 570]]



Sec.1416.405  Application.

    (a) To apply for TAP, a producer that suffered eligible tree, bush, 
or vine losses must provide an application for payment and supporting 
documentation to FSA or 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 title;
    (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;
    (4) Sufficient evidence of the loss to allow the county committee to 
calculate whether an eligible loss occurred; and
    (5) A farm operating plan, if a current farm operating plan is not 
already on file in the FSA county office.
    (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.

[79 FR 21097, Apr. 14, 2014, as amended at 83 FR 49472, Oct. 2, 2018; 85 
FR 10968, Feb. 26, 2020]



Sec.1416.406  Payment calculations.

    (a) Once the loss threshold in Sec.1416.403(a) is satisfied, 
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) 65 percent of the actual cost of the practice for eligible 
producers, or 75 percent of the actual cost of the practice for an 
eligible producer who is a beginning or veteran farmer or rancher, 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 for eligible 
producers, or 75 percent of the actual cost of the practice for an 
eligible producer who is a beginning or veteran farmer or rancher, or
    (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 
mortality (adjusted for normal 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.1416.404(b) or be 
considered the owner of the trees under provisions appearing elsewhere 
in this subpart.

[[Page 571]]

    (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 (6) of 
this section, unless specifically determined eligible by the Deputy 
Administrator.
    (3) Costs or expenses that the eligible orchardist or nursery tree 
grower did not actually bear or incur because someone or some other 
entity bore or incurred those costs or expenses, or the costs were 
reimbursed under another program. For example, if under any other 
program the expenses are paid for on behalf of the eligible orchardist 
or nursery tree grower, those expenses are not eligible for cost share 
under this subpart.
    (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 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 cannot exceed 1,000 acres per program year.

[79 FR 21097, Apr. 14, 2014, as amended at 83 FR 49472, Oct. 2, 2018; 85 
FR 10968, Feb. 26, 2020]



Sec.1416.407  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

[[Page 572]]

of certifying compliance with TAP requirements.
    (c) Producers who do not meet all applicable requirements and 
obligations will not be eligible for payment.



PART 1421_GRAINS AND SIMILARLY HANDLED COMMODITIES_MARKETING
ASSISTANCE LOANS AND LOAN DEFICIENCY PAYMENTS--Table of Contents



                            Subpart A_General

Sec.
1421.1 Applicability and interest.
1421.2 Administration.
1421.3 Definitions.
1421.4 Eligible producers.
1421.5 Eligible commodities.
1421.6 Beneficial interest.
1421.7 Requesting MALs and LDPs.
1421.8 Eligible quantity.
1421.9 Basic loan rates.
1421.10 Loan repayment rates.
1421.11 Spot checks.
1421.12 Production evidence.
1421.13 Special loan deficiency payments.
1421.14 Obtaining peanut MALs.

                  Subpart B_Marketing Assistance Loans

1421.100 Applicability.
1421.101 Maturity dates.
1421.102 Adjustment of basic loan rates.
1421.103 Authorized storage.
1421.104 Making MALs.
1421.105 Farm-stored MALs.
1421.106 Warehouse-stored MAL collateral.
1421.107 Warehouse receipts.
1421.108 Transfers and reconcentrations.
1421.109 Personal liability of the producer.
1421.110 [Reserved]
1421.111 MAL settlement.
1421.112 Foreclosure.
1421.113 Recourse MALs.

                   Subpart C_Loan Deficiency Payments

1421.200 Applicability.
1421.201 Loan deficiency payment rate.
1421.202 Loan deficiency payment quantity.
1421.203 Personal liability of the producer.

    Subpart D_Grazing Payments for Wheat, Barley, Oats, and Triticale

1421.300 Applicability.
1421.301 Administration.
1421.302 Eligible producer and eligible land.
1421.303 Time and method for application.
1421.304 Payment amount.
1421.305 Misrepresentation and scheme or device.
1421.306 Refunds; joint and several liability.

         Subpart E_Designated Marketing Associations for Peanuts

1421.400 Applicability and abbreviations.
1421.401 DMA responsibilities.
1421.402 DMA eligibility to process loans and loan deficiency payments.
1421.403 DMA approval.
1421.404 Financial security.
1421.405 Liability.
1421.406 Reporting requirements.
1421.407 Suspension and termination.
1421.408 Prohibited activity.
1421.409 Monitoring AGI and payment limitations.
1421.410 Recordkeeping requirements.
1421.411 Forms.
1421.412 Powers of attorney.
1421.413 Liens and waivers.
1421.414 Producer request to a DMA for an MAL or LDP.
1421.415 Processing marketing assistance loans.
1421.416 Processing loan deficiency payments.
1421.417 Disbursing MAL and LDP proceeds.
1421.418 Submitting MAL and LDP documentation to FSA.
1421.419 MAL or LDP servicing.
1421.420 Inspections and reviews.
1421.421 Appeals.

    Authority: 7 U.S.C. 7231-7237, 7931-7936, and 9031- 40, 15 U.S.C. 
714b and c.



                            Subpart A_General

    Source: 67 FR 63511, Oct. 11, 2002, unless otherwise noted.



Sec.1421.1  Applicability and interest.

    (a) The regulations in this subpart are applicable to crops of 
barley, small and large chickpeas, corn, grain sorghum, lentils, oats, 
dry peas, peanuts, rice, wheat, wool, mohair, oilseeds and other crops 
designated by Commodity Credit Corporation (CCC). These regulations 
specify the general provisions under which Marketing Assistance Loans 
(MALs) and Loan Deficiency Payments (LDPs) will be administered by CCC. 
Additional terms and conditions are in the additional documents required 
to receive MALs and LDPs. In any case in which money must be refunded to 
CCC in connection with this part, interest will be due to run from the 
date of disbursement of the sum to be refunded. This provision will 
apply, unless waived by the Deputy Administrator, irrespective of any 
other rule.

[[Page 573]]

    (b)(1) The basic loan rates, the schedule of premiums and discounts, 
and forms applicable to the MAL and LDP Programs for the commodities 
specified in paragraph (a) of this section are available in Farm Service 
Agency (FSA) State and county offices. The forms for use in these 
programs will be prescribed by CCC.
    (2) LDPs will be available for unshorn pelts, hay and silage.
    (c) MALs and LDPs will not be available for any commodity produced 
on land owned or otherwise in the possession of the United States if 
such land is occupied without the consent of the United States.
    (d) Producers who produced eligible loan commodities are eligible 
for MALs or LDPs.
    (e) Adjusted Gross Income (AGI) and payment limitation provisions 
specified in part 1400 of this chapter apply to this part.

[67 FR 63511, Oct. 11, 2002, as amended at 71 FR 32422, June 6, 2006; 74 
FR 15649, Apr. 7, 2009; 80 FR 119, Jan. 2, 2015]



Sec.1421.2  Administration.

    (a) The MAL and LDP Programs will be administered under the general 
supervision of the Executive Vice President, CCC and will be carried out 
in the field by FSA State and county committees, respectively.
    (b) State and county committees, and representatives and employees 
thereof, cannot modify or waive any requirement of this part, except as 
provided in paragraph (e) of this section.
    (c) The State committee will take any required action not taken by 
the county committee. The State committee will also:
    (1) Correct or require correction of an action taken by a county 
committee that is not in compliance with this part; or
    (2) Require a county committee to not take an action or implement a 
decision that is not under the regulations of this part.
    (d) The Executive Vice President, CCC, or a designee, may determine 
any question arising under these programs, or reverse or modify a 
determination made by a State or county committee.
    (e) The Deputy Administrator for Farm Programs, FSA, may authorize 
State and county committees to waive or modify deadlines and other 
program requirements in cases where lateness or failure to meet such 
other requirements does not adversely affect the operation of the MAL 
and LDP Programs.
    (f) A representative of CCC may execute MAL and LDP applications and 
related documents only under the terms and conditions determined and 
announced by CCC. Any document not executed under such terms and 
conditions, including any purported execution before the date authorized 
by CCC, will be null and void.

[67 FR 63511, Oct. 11, 2002, as amended at 74 FR 15650, Apr. 7, 2009; 80 
FR 120, 130, Jan. 2, 2015]



Sec.1421.3  Definitions.

    The definitions in this section apply for all purposes of program 
administration. Terms defined in part 718 of this title and parts 1412 
and 1425 of this chapter also apply, except where they conflict with the 
definitions in this section.
    Administrative County Office is the FSA County Office where a 
producer's FSA records are maintained.
    Basic loan rate means the loan rate established by CCC for a 
commodity before any adjustment for premiums and discounts.
    Calling a loan is accelerating or moving forward the maturity date 
of an outstanding MAL. A MAL can be called when, as determined by CCC, 
the terms and conditions of the MAL note and security agreement are 
violated, a producer incorrectly certifies a loan quantity or makes any 
fraudulent representation with respect to obtaining a loan, removing or 
disposing of a farm-stored commodity pledged as collateral for a loan 
without authorization, to protect CCC's interest, or in emergency 
situations.
    CCC means the Commodity Credit Corporation.
    Charges means all fees, costs, and expenses incurred in insuring, 
carrying, handling, storing, conditioning, and marketing the commodity 
tendered to CCC for a MAL. Charges also include any other expenses 
incurred by CCC in protecting CCC's or the producer's interest in such 
commodity.

[[Page 574]]

    Chickpeas means any chickpea that meets the definition of a chickpea 
according to the Grain Inspection, Packers and Stockyards Administration 
(GIPSA), Federal Grain Inspection Service (FGIS).
    (1) Small chickpea falls below a 20/64th sieve.
    (2) Large chickpea stays above a 20/64th sieve.
    CMA means a cooperative marketing association that is subject to 
regulations in Part 1425 of this chapter.
    COC means the FSA county committee.
    Crop means with respect to a year, commodities harvested in that 
year. Therefore, the referenced crop year of a commodity means 
commodities that when planted were intended for harvest in that calendar 
year.
    Current net worth ratio means current assets minus current 
liabilities, divided by current liabilities, based on the financial 
statement provided in connection with a DMA application or a 
recertification for DMA status.
    Department means the United States Department of Agriculture.
    Deputy Administrator means the Deputy Administrator for Farm 
Programs, Farm Service Agency (FSA) or a designee of that person.
    DMA Service County Office is an FSA County Office designated by CCC 
to accept, process, and disburse bundled peanut MALs and LDPs to a DMA. 
In the absence of a centralized MAL and LDP processing system for 
peanuts, a service county FSA office is necessary for entering MALs and 
LDPs made by DMAs into CCC accounting systems.
    Designated Marketing Association (DMA) means an entity, or a 
subsidiary thereof, that performs marketing functions for peanut 
producers and is designated to handle MALs and LDPs for them. A DMA is 
eligible to perform those functions only if the DMA meets the 
eligibility criteria set out elsewhere in this part.
    Drawdown account is an account titled to the DMA at a financial 
institution and funded at the discretion of CCC for the purpose of 
allowing the DMA to advance funds to producers who have applied for MALs 
and LDPs before a subsequent MAL or LDP is made to the DMA by an 
assigned FSA county office.
    Electronic warehouse receipt (EWR) means a receipt electronically 
filed in a central filing system by an approved provider as provided in 
an executed, ``Farm Service Agency Provider Agreement to Electronically 
File and Maintain Warehouse Receipts.''
    FSA means the Farm Service Agency of the United States Department of 
Agriculture.
    High moisture state means corn or grain sorghum having a moisture 
content in excess of CCC standards used to determine eligibility for 
MALs made by the Secretary.
    Incorrect certification means the certifying of a quantity of a 
commodity for the purpose of obtaining a MAL or LDP in excess of the 
quantity eligible for such MAL or LDP or the making of any fraudulent 
representation with respect to obtaining MALs or LDPs.
    Loan commodities means wheat, corn, grain sorghum, barley, oats, 
rice, soybeans, other oilseeds, peanuts, wool, mohair, dry peas, 
lentils, chickpeas, and other crops designated by CCC.
    Loan deficiency payment (LDP) means a payment made in lieu of a MAL 
when the CCC-determined value, which is based on the current local price 
in a county, is below the applicable county loan rate. The payment is 
the difference between the two rates times the eligible quantity.
    Loan settlement means farm stored commodities delivered to CCC and 
warehouse stored commodities forfeited to CCC, for the applicable crop 
years.
    Locked in repayment rate means an announced repayment rate on a 
disbursed MAL that the producer has locked in for 60 calendar days. All 
locked in repayment rates expire within 14 calendar days before the loan 
maturity date. MAL can be repaid either at principal plus interest or 
the repayment rate in effect on the date the repayment is made. The 
repayment rate can only be locked in one time for a designated quantity 
and, if multiple locked in repayment rates are in effect for quantities 
under MAL that have not had a locked in repayment rate, the oldest rate 
is always applied first.

[[Page 575]]

    MAL means marketing assistance loan.
    Market loan gain is the loan rate, minus the repayment rate on loans 
repaid at a rate that is less than the loan rate. The total of all 
market loan gains received by a producer for an applicable crop year 
cannot exceed the producer's applicable payment limitation as specified 
in part 1400 of this chapter. A producer's adjusted gross income must 
also be below the limit as specified in part 1400 of this chapter to 
receive a market loan gain.
    Medium grain rice for the purposes of this part includes both short 
and medium grain rice as defined by the U.S. Standards for Rice.
    Mohair means the hair sheared from a live Angora goat. Mohair does 
not include pelts, or hides or mohair shorn from pelts or hides.
    Oilseeds means any crop of sunflower seed, canola, rapeseed, 
safflower, flaxseed, mustard seed, crambe, sesame seed, and other 
oilseeds as determined and announced by CCC.
    Other crops designated by CCC means with respect to eligibilities 
for benefits under this part:
    (1) Those crops harvested as other than grain, such as silage, 
haylage, earlage;
    (2) Specific crops designated for grazing; or
    (3) As otherwise designated by CCC.
    Pulse crops means any crop of dry peas, lentils, and chickpeas as 
defined by CCC.
    Recording FSA County Office is the FSA County Office that records 
eligibility data for producers designated as multi-county producers.
    Rice means, unless otherwise noted, long grain rice and medium grain 
rice.
    Secretary means the Secretary of the United States Department of 
Agriculture, or the Secretary's delegate.
    Security for DMAs means a certified or cashier's check payable to 
CCC, an irrevocable commercial letter of credit in a form acceptable to 
CCC, a performance or surety bond conditioned on the DMA fully 
discharging all of its obligations under this part, or other form of 
financial security as CCC may deem appropriate.
    Servicing agent bank means the bank designated as the financial 
institution for a CMA or a designated marketing association.
    STC means the FSA State committee.
    Unauthorized disposition means the conversion of any MAL quantity 
pledged as collateral for a farm-stored MAL without prior written 
authorization from the county committee.
    Unauthorized removal means the movement of any farm-stored loan 
quantity from the storage structure in which the commodity was stored or 
structures that were designated when the MAL was approved to any other 
storage structure, whether or not such structure is located on the 
producer's farm, without prior written authorization from the county 
committee.
    Unshorn pelt means the removed skin and attached wool from a 
slaughtered lamb that has never been shorn.
    Warehouse receipt means a receipt containing the required 
information prescribed in this part and is:
    (1) A pre-numbered, negotiable warehouse receipt issued under the 
authority of the U.S. Warehouse Act, a state licensing authority, or by 
an approved CCC warehouse in such format authorized and approved, in 
advance, by CCC;
    (2) An electronic warehouse receipt (EWR) issued by such warehouse 
recorded in a central filing system or system maintained in one or more 
locations which are approved by FSA to operate such system; or
    (3) Other such acceptable evidence of title, as determined by CCC.
    Wool means the fiber sheared from a live sheep and includes, unless 
noted otherwise, graded and nongraded wool.

[67 FR 63511, Oct. 11, 2002, as amended at 68 FR 37940, June 26, 2003; 
70 FR 33799, June 10, 2005; 74 FR 15650, Apr. 7, 2009; 80 FR 120, 129, 
Jan. 2, 2015]



Sec.1421.4  Eligible producers.

    (a) To be an eligible producer, the producer must:
    (1) Be a person, partnership, association, corporation, estate, 
trust, or other legal entity that produces an eligible commodity as a 
landowner, landlord, tenant, or sharecropper, or in the case of rice, 
furnishes land, labor, water, or equipment for a share of the rice crop. 
With respect to wool and mohair, the producer must own, other

[[Page 576]]

than through a security interest mortgage, or lien, the sheep and goats 
that produced the wool and mohair respectively for a period of not less 
than 30 days.
    (2) Comply with all provisions of this part and, as applicable:
    (i) 7 CFR part 12--Highly Erodible Land and Wetland Conservation;
    (ii) 7 CFR part 707--Payments Due Persons Who Have Died, 
Disappeared, or Have Been Declared Incompetent;
    (iii) 7 CFR part 718--Provisions Applicable to Multiple Programs;
    (iv) 7 CFR part 996--Minimum Quality and Handling Standards for 
Domestic and Imported Peanuts Marketed in the United States;
    (v) 7 CFR part 1400--Payment Limitation & Payment Eligibility;
    (vi) 7 CFR part 1402--Policy for Certain Commodities Available for 
Sale;
    (vii) 7 CFR part 1403--Debt Settlement Policies and Procedures;
    (viii) 7 CFR part 1405--Loans, Purchases, and Other Operations;
    (ix) 7 CFR part 1412--Agriculture Risk Coverage, Price Loss 
Coverage, and Cotton Transition Assistance Programs; and
    (x) 7 CFR part 1423--Commodity Credit Corporation Approved 
Warehouses.
    (3) Have made an acreage certification with respect to all the 
cropland on the farm.
    (b) A receiver or trustee of an insolvent or bankrupt debtor's 
estate, an executor or an administrator of a deceased person's estate, a 
guardian of an estate of a ward or an incompetent person, and trustees 
of a trust is considered to represent the insolvent or bankrupt debtor, 
the deceased person, the ward or incompetent, and the beneficiaries of a 
trust, respectively. The production of the receiver, executor, 
administrator, guardian, or trustee is considered to be the production 
of the person or estate represented by the receiver, executor, 
administrator, guardian, or trustee. MALs and LDP documents executed by 
any such person will be accepted by CCC only if they are legally valid 
and such person has the authority to sign the applicable documents.
    (c) A minor who is otherwise an eligible producer is eligible to 
receive MALs or LDPs only if the minor meets one of the following 
requirements:
    (1) The right of majority has been conferred on the minor by court 
proceedings or by statute;
    (2) A guardian has been appointed to manage the minor's property and 
the applicable MAL or LDP documents are signed by the guardian;
    (3) Any note or loan deficiency payment program application signed 
by the minor is cosigned by a person determined by the county committee 
to be financially responsible; or
    (4) A bond is furnished under which a surety guarantees to protect 
CCC from any loss incurred for which the minor would be liable had the 
minor been an adult.
    (d) If more than one producer executes a note and security agreement 
with CCC, each such producer is jointly and severally liable for any 
violation of the terms and conditions of the note and security agreement 
and the regulations in this part. Each such producer also remains liable 
for repayment of the entire MAL amount until the MAL is fully repaid 
without regard to such producer's claimed share in the commodity pledged 
as collateral for the MAL. In addition, such producer may not amend the 
note and security agreement with respect to the producer's claimed share 
in such commodities, or MAL proceeds, after execution of the note and 
security agreement by CCC.
    (e)(1) The county committee may deny a producer a MAL on farm-stored 
commodities if the producer has:
    (i) Made a misrepresentation in connection with the MAL or LDP 
program;
    (ii) Not allowed an FSA representative access to the site where 
commodities pledged as collateral for MALs were stored, or otherwise 
failed to cooperate in the settlement of MAL; or
    (iii) Failed to adequately protect the interests of CCC in the 
commodity pledged as collateral for a farm-stored MAL.
    (2) A producer who is denied a farm-stored MAL will be eligible to 
pledge a commodity as collateral for a warehouse-stored MAL or provide 
some other form of financial assurance to obtain a farm-stored MAL.

[[Page 577]]

    (f) A CMA may obtain a MAL and LDP on eligible production of a MAL 
commodity on behalf of its members who are eligible to receive MALs or 
LDPs with respect to a crop of a commodity. For purposes of this 
subpart, the term ``producer'' includes a CMA.
    (g) In case of the death, incompetency, or disappearance of any 
producer who is entitled to the payment of any sum in settlement of a 
MAL or LDP, payment will, upon proper application to the FSA county 
service center that disbursed the MAL or LDP, be made to the persons who 
would be entitled to such producer's payment under the regulations 
contained in part 707 of this title.
    (h) A producer must meet the requirements of actively engaged in 
farming, cash rent tenant, and member contribution as specified in part 
1400 of this chapter to be eligible for LDPs and market loan gains.

[67 FR 63511, Oct. 11, 2002, as amended at 74 FR 15650, Apr. 7, 2009; 75 
FR 19193, Apr. 14, 2010; 80 FR 120, 129, Jan. 2, 2015]



Sec.1421.5  Eligible commodities.

    (a) Commodities eligible to be pledged as collateral for a MAL made 
under this part are:
    (1) Barley, corn, grain sorghum, oats, peanuts, soybeans, oilseeds, 
wheat, dry peas, lentils, chickpeas, rice and other crops designated by 
CCC produced and mechanically harvested in the United States;
    (2) Dual purpose sorghum varieties as determined by CCC; and
    (3) Wool and mohair produced and shorn from live animals in the 
United States.
    (b) A commodity produced on land owned or otherwise in the 
possession of the United States that is occupied without the consent of 
the United States is not an eligible commodity.
    (c)(1) To be an eligible commodity, the commodity must be 
merchantable for food, feed, or other uses determined by CCC and must 
not contain mercurial compounds, toxin producing molds, or other 
substances poisonous to humans or animals. A commodity containing 
vomitoxin, aflatoxin, or Aspergillus mold may not be pledged for a MAL 
made under this part, except as provided by CCC in the MAL note and 
security agreement.
    (2) The determination of eligibility for rice includes class, grade, 
grading factor, milling yields, and other quality factors and will be 
based upon the U.S. Standards for Rice as applied to rough rice whether 
or not such determinations are made on the basis of an official 
inspection.
    (3) The determination of eligibility for peanuts includes type, 
quality, and quantity.
    (4) With regard to barley, canola, corn, flaxseed, grain sorghum, 
oats, rice, soybeans, sunflower seed for extraction of oil, wheat, and 
other commodities designated by CCC, the determination of eligibility 
will be based upon the Official U.S. Standards for Grain: U.S. Standards 
for Whole Dry Peas, Split Peas, and Lentils for dry peas and lentils; 
and the U.S. Standards for Beans for chickpeas, whether or not such 
determinations are made on the basis of an official inspection.
    (5) With regard to hull-less barley, hull-less oats, mustard seed, 
rapeseed, safflower seed, and sunflower seed used for a purpose other 
than to extract oil, the determination of eligibility will be based on 
quality requirements established and announced by CCC, whether or not 
such determinations are made on the basis of an official inspection. The 
costs of an official quality determination may be paid by CCC. The 
quality requirements that are used in administering MALs and LDPs for 
the oilseeds in this paragraph are available in USDA State and county 
FSA service centers.
    (6) With regard to farm-stored peanuts, the determination of 
eligibility will be determined at the time of delivery to CCC by a 
Federal or State Inspector authorized or licensed by the Secretary.
    (d) Eligible wool and mohair must:
    (1) Have been produced and sheared from live sheep and goats, of 
domestic origin and located in the U.S. for a period of not less than 30 
calendar days prior to shearing.
    (2) Be of merchantable quality deemed by CCC to be suitable for MAL 
and must have been shorn in the United States.

[[Page 578]]

    (e) When certifying acreage on farms in which an interest is held, 
the producer must provide acceptable evidence of the commodity from 
which the county committee may determine whether the eligible production 
claimed by the producer is reasonable for the production practices on 
such farm or have either the eligible or ineligible commodity measured 
by a representative of the county FSA service center at the producer's 
expense, before commingling.
    (f) A commodity that is purchased, substituted, or acquired by sale, 
gift, or exchange of an existing harvested, sheared, or slaughtered 
commodity, or through any other transaction is ineligible to be pledged 
as collateral for a MAL; in addition an LDP will not be made with 
respect to such commodities.

[67 FR 63511, Oct. 11, 2002, as amended at 71 FR 32422, June 6, 2006; 74 
FR 15651, Apr. 7, 2009; 75 FR 19193, Apr. 14, 2010; 80 FR 121, Jan. 2, 
2015]



Sec.1421.6  Beneficial interest.

    (a) To be eligible to receive MALs and loan deficiency payments, a 
producer must have beneficial interest in the commodity that is tendered 
to CCC for a MAL or is requested for a LDP. For the purposes of this 
part, the term ``beneficial interest'' refers to a determination by CCC 
that a person has title to and control of the commodity that is tendered 
to CCC as collateral for a MAL or of the commodity that will be used to 
determine a LDP. A determination of whether a person has beneficial 
interest in a commodity is made by CCC in accordance with this part and 
is not based upon a determination under any State law or any other 
regulation of a Federal agency.
    (b) Except as provided in paragraph (e) of this section, when 
requesting a MAL for a loan commodity, in order to have beneficial 
interest in the commodity tendered as collateral for the MAL, a person 
must:
    (1) Be the producer of the commodity as determined in accordance 
with Sec.1421.4;
    (2) Have had ownership of the commodity from the time it was planted 
(with respect to wool and mohair from time of shearing) through the 
earlier the date the MAL was repaid or the maturity date of the MAL;
    (3) Have control of the commodity from the time of planting (for 
wool and mohair from the time of shearing) through the maturity date of 
the MAL. To have control of the commodity, such person must have 
complete decision-making authority regarding whether the commodity will 
be tendered as collateral for a MAL, when the MAL will be repaid, or if 
the collateral will be forfeited to CCC in satisfaction of the MAL 
obligations of such person, and where the commodity will be maintained 
during the term of the MAL;
    (4) Not have received any payment from any party with respect to the 
commodity; and
    (5) If the commodity has been physically delivered to a location 
other than a location owned or under the total control of the producer, 
have delivered the commodity to a warehouse authorized in accordance 
with Sec.1421.103(c). Delivery of the commodity to a location other 
than to such an authorized warehouse will result in the loss of 
beneficial interest in the commodity on the date of physical delivery 
and the producer will be considered to have lost beneficial interest as 
of 11:59 p.m. of such day. Accordingly, delivery of a commodity to 
entities such as a dairy, feedlot, ethanol plant, wool pool, feed mill, 
feed or grain bank, or other facilities as determined by CCC will result 
in the loss of beneficial interest as of the date of delivery, 
regardless of any other action or agreement between such an entity and 
the producer unless such an entity has been authorized by CCC under 
Sec.1421.103(c).
    (c) Except as provided in paragraph (e) of this section, when 
requesting a loan deficiency payment for an eligible commodity, in order 
to have beneficial interest in the commodity a person must:
    (1) Be the producer of the commodity as determined in accordance 
with Sec.1421.4;
    (2) Have had ownership of the commodity from the time it was 
planted, with respect to wool and mohair from the time of shearing, or 
from the time of slaughter for unshorn pelts, through

[[Page 579]]

the date the producer has elected to determine the loan deficiency 
payment rate;
    (3) Have control of the commodity. For control such person must have 
complete decisionmaking authority regarding whether a loan deficiency 
payment will be requested with respect to the commodity; when the loan 
deficiency rate will be selected; and where the commodity will be 
maintained prior to the date on which the LDP rate will be determined;
    (4) Not have received any payment from any party with respect to the 
commodity; and
    (5) If the commodity has been physically delivered to a location 
other than a location owned or under the total control of the producer, 
have delivered the commodity to a warehouse authorized in accordance 
with Sec.1421.103(c). Delivery of the commodity to a location other 
than to an authorized warehouse will result in the loss of beneficial 
interest in the commodity on the date of physical delivery and the 
producer will be considered to have lost beneficial interest as of 11:59 
p.m. of such day. Accordingly, delivery of a commodity to entities such 
as a dairy, feedlot, ethanol plant, wool pool, feed mill, feed or grain 
bank, or unauthorized storage facility, will result in the loss of 
beneficial interest as of the date of delivery, regardless of any other 
action or agreement between such an entity and the producer unless such 
an entity has been authorized by CCC under Sec.1421.103(c).
    (d) Notwithstanding any provision of paragraphs (b) and (c) of this 
section and Sec.1421.5(f), in order to facilitate handling situations 
involving the death of a producer, CCC will consider an estate, heirs of 
the deceased producer, and a person to whom title to a commodity has 
passed by virtue of State law upon the death of the producer to have 
beneficial interest in a commodity produced by the producer under the 
same terms and conditions that would otherwise be applicable to such 
producer;
    (e) Notwithstanding any provision of paragraphs (b) and (c) of this 
section and Sec.1421.5(f), a person who purchases or otherwise 
acquires a commodity from a producer under any circumstances does not 
obtain beneficial interest to the commodity whether such purchase or 
acquisition is made prior to the harvest of the crop or after harvest; 
however, CCC will consider a person to have beneficial interest in a 
commodity if, prior to harvest, such person has obtained title to the 
growing commodity at the same time that such person obtained full title 
to the land on which such crop was growing;
    (f) If marketing assistance loans and loan deficiency payments are 
made available to producers through an approved CMA in accordance with 
part 1425 of this chapter, the beneficial interest in the commodity must 
always have been in the producer-member who delivered the commodity to 
the approved CMA or its member approved CMA, except as otherwise 
provided in this section. If the producer-member who delivered the 
commodity does not retain the right to share in the proceeds from the 
marketing of the commodity as provided in part 1425 of this chapter, 
commodities delivered to an approved CMA shall not be eligible to be 
pledged as collateral for a marketing assistance loan or be taken into 
consideration when a loan deficiency payment is made.
    (g) A producer will lose beneficial interest in a commodity if the 
producer receives any payment from any person under any contractual 
arrangement with respect to a commodity if the person who is making the 
payment, or any person otherwise associated with the person making the 
payment, will at any time have title to the commodity or control of the 
commodity prior to or after harvest, shearing, or slaughter unless:
    (1) Such payment is authorized in accordance with part 1425 of this 
chapter; or
    (2) The payment is made as consideration for an option to purchase 
the commodity and such option contains the following language:

    Notwithstanding any other provision of this option to purchase or 
any other contract, title and control of the commodity and beneficial 
interest in the commodity as specified in 7 CFR 1421.6 shall remain

[[Page 580]]

with the producer until the buyer exercises this option to purchase the 
commodity. This option to purchase shall expire, notwithstanding any 
action or inaction by either the producer or the buyer, at the earlier 
of:
    (1) The maturity of any Commodity Credit Corporation (CCC) loan that 
is secured by such commodity;
    (2) The date CCC claims title to such commodity; or
    (3) Such other date as provided in this option.

    (h) Inclusion in a contract of one or more of the following types of 
provisions will not result in the loss of beneficial interest in a 
commodity:
    (1) A provision that allows the producer to select the sales price 
of the commodity at a time the contract is entered into or at a later 
date, for example, a contract normally referred to as a deferred-price, 
forward or price later contract. The following conditions apply:
    (i) Producers under a deferred-price, forward, or price later 
contract will lose beneficial interest in the commodity the earlier of 
receipt of any payment or once the commodity is applied in fulfillment 
of the delivery requirements of such a contract.
    (ii) Beneficial interest in the commodity is retained by the 
producer if the contract has no restrictive or contradictory clauses 
within the contract that may cause the producer to lose beneficial 
interest in the commodity.
    (2) A provision between the producer and a warehouse authorized in 
accordance with Sec.1421.103(c) for the storage of MAL collateral that 
provides the producer a period of time following the date of physical 
delivery of the commodity to elect whether the commodity is to be stored 
and receipted on behalf of the producer or is to be considered 
transferred to the warehouse if CCC determines such a provision is 
required.
    (i) Commodities produced under a contract in which the title to the 
seed remains with the entity providing the seed to the producer, 
including contracts for the production of hybrid seed, genetically 
modified commodities, and other specialty seeds as approved in writing 
by CCC, are eligible to be pledged as collateral for a MAL or a LDP may 
be made with respect to such production if, at the time of the request 
for such a MAL or LDP, the producer has not:
    (1) Received a payment under the contract; or
    (2) Delivered the commodity to another person.

[71 FR 32422, June 2, 2006, as amended at 71 FR 51426, Aug. 30, 2006; 71 
FR 60413, Oct. 13, 2006; 74 FR 15651, Apr. 7, 2009; 80 FR 121, Jan. 2, 
2015]



Sec.1421.7  Requesting MALs and LDPs.

    (a) A producer may apply for a MAL or LDP at any FSA county office. 
The receiving FSA county office will forward the MAL or LDP request to 
the administrative county office, as specified in part 718 of this 
title, that is responsible for administrating programs for the farm on 
which the commodity was produced. The administrative county office will 
process and approve the MAL or LDP.
    (b) A MAL or LDP may be requested in person, by mail, or by 
electronic format designated by CCC. Forms prescribed by CCC may be 
obtained from the FSA Web site.
    (c) To receive a MAL or LDP for an eligible commodity, a producer 
must execute a note and security agreement or LDP application on or 
before the applicable final loan availability date, as follows:
    (1) March 31 of the year following the year in which the following 
crops are normally harvested: barley, canola, flaxseed, oats, rapeseed, 
crambe, sesame seed, and wheat.
    (2) May 31 of the year following the year in which the following 
crops are normally harvested: corn, grain sorghum, mustard seed, rice, 
safflower, soybeans, sunflower seed, dry peas, lentils, and chickpeas.
    (3) January 31 of the year following the year in which peanuts are 
normally harvested or wool and mohair are normally sheared.

[67 FR 63511, Oct. 11, 2002, as amended at 74 FR 15651, Apr. 7, 2009; 80 
FR 121, Jan. 2, 2015]



Sec.1421.8  Eligible quantity.

    (a) With respect to MALs and LDPs for:

[[Page 581]]

    (1) Farm-stored commodities, all determinations of weight and 
quality, except as otherwise agreed to or required by CCC, will be 
determined at the time of delivery of the commodity to CCC or at the 
time the LDP application is filed for measured requests, if applicable, 
or selected for spot-check for certified requests.
    (2) Warehouse-stored commodities, all determinations of grade, 
weight and quality, except as otherwise agreed to or required by CCC, 
will be determined at the time the MAL is forfeited to CCC.
    (b)(1) A producer may, before the final MAL availability date for 
obtaining a MAL for a commodity, repledge as collateral for securing a 
MAL any commodity that had been previously pledged as collateral for a 
MAL, except with respect to:
    (i) Commodities that have been redeemed at the prevailing world 
market price for rice, or the alternative repayment rate for all other 
commodities, as determined by CCC.
    (ii) Commodities on which a LDP has been received.
    (2) The commodity repledged as security for the subsequent MAL will 
have the same maturity date, under Sec.1421.101 as the original MAL.
    (c)(1) The MAL documents will not be presented for disbursement 
unless the commodity subject to the note and security agreement is an 
eligible harvested commodity, is in existence, and is in authorized farm 
or warehouse storage, as determined by CCC. If the commodity was not 
either an eligible commodity, in existence, or in authorized storage at 
the time of disbursement, the total amount disbursed under the MAL and 
charges plus interest must be refunded promptly by the producer.
    (2) CCC will limit the total quantity for MAL or LDP disbursement to 
100 percent of the quantity of such MAL or LDP application. A producer 
may obtain a separate MAL or LDP before the final loan availability date 
for the commodity for quantities in excess of 100 percent of such 
quantity if such quantities are otherwise eligible.

[67 FR 63511, Oct. 11, 2002, as amended at 74 FR 15651, Apr. 7, 2009; 80 
FR 121, 129, Jan. 2, 2015]



Sec.1421.9  Basic loan rates.

    (a) Basic MAL rates for a commodity may be established on a 
National, State, regional, county basis or other basis, will be at rates 
that comply with applicable statutes, and may be adjusted by CCC to 
reflect grade, type, quality, location and other factors applicable to 
the commodity and as otherwise provided in this section.
    (b) The basic MAL rates for wheat, corn, barley, oats, grain 
sorghum, rice, peanuts, soybean, canola, flaxseed, mustard seed, 
rapeseed, safflower, sunflower seed, dry peas, lentils, chickpeas, 
crambe, sesame seed, wool, mohair and other crops designated by CCC will 
be determined by CCC and made available to State and county offices.
    (c) Subject to adjustment as specified in paragraph (f) of this 
section, in case of forfeiture, for all commodities except rice and 
peanuts, warehouse-stored MALs will be disbursed at levels based on the 
basic county MAL rate for the county where the commodity is stored.
    (1) For rice, subject to adjustment as specified in paragraph (f) of 
this section, in case of forfeiture, warehouse-stored MALs will be 
disbursed at levels based on the milling yields times the whole and 
broken kernel MAL rates.
    (2) For peanuts, warehouse-stored MALs will be disbursed at levels 
based on National loan rates by peanut type, adjusted for the schedule 
of premiums and discounts on the basis of grade, quality, and other 
factors specified on warehouse receipts.
    (d) The Secretary will establish a single loan rate in each county 
for each kind of other oilseeds, such as but not limited to, sunflower, 
rapeseed, canola, safflower, flaxseed, mustard seed, crambe, sesame 
seed, and other oilseeds as designated by the Secretary.
    (e) Adjustments by the Secretary to establish loan rates for loan 
commodities, except rice, on a county basis will not be lower than 95 
percent of the national average loan rate, if those loan rates do not 
result in an increase in outlays. Adjustments in this section will not 
result in an increase in the national average loan rate for any year.
    (f) For all crop years, premiums and discounts will not apply for 
all eligible

[[Page 582]]

loan commodities at loan disbursement, except for peanuts. However, 
premiums and discounts will apply if the eligible loan commodities are 
forfeited or delivered to CCC and any deficiency must be repaid to CCC.

[67 FR 63511, Oct. 11, 2002, as amended at 74 FR 15651, Apr. 7, 2009; 80 
FR 122, 129, Jan. 2, 2015]



Sec.1421.10  Loan repayment rates.

    (a) For the applicable crop years of barley, corn, grain sorghum, 
oats, wheat, dry peas, lentils, chickpeas, oilseeds, wool, mohair, and 
other crops as designated by CCC (other than peanuts, long grain rice, 
medium grain rice, and confectionery and each other kind of sunflower 
seed (other than oil sunflower seed)), a producer may repay a 
nonrecourse MAL at a rate that is the lesser of:
    (2) A rate (as determined by the Secretary) that is calculated based 
on average market prices for the loan commodity during a preceding 30-
day period and that the Secretary has determined will minimize 
discrepancies in marketing loan benefits across State boundaries and 
across county boundaries; or
    (3) A rate that the Secretary may develop using alternative methods 
for calculating a repayment rate for a loan commodity that the Secretary 
determines will: Minimize potential loan forfeitures; minimize the 
accumulation of stocks of the commodity by the Federal Government; 
minimize the cost incurred by the Federal Government in storing the 
commodity; allow the commodity produced in the U.S. to be marketed 
freely and competitively, both domestically and internationally; and 
minimize discrepancies in marketing loan benefits across State 
boundaries and across county boundaries.
    (b) To the extent practicable, CCC will determine and announce 
repayment rates under paragraphs (a)(2) and (a)(3) of this section based 
upon market prices at appropriate U.S. markets as determined by CCC and 
these repayment rates may be adjusted to reflect grade, type, quality, 
location, and other factors for each crop of a commodity as follows:
    (1) On a weekly basis in each county for oilseeds, except canola, 
flaxseed, soybeans, and sunflower seed;
    (2) On a daily basis in each county for barley, canola, corn, 
flaxseed, grain sorghum, oats, soybeans, sunflower seed and wheat; and
    (3) On a weekly basis regionally for dry peas, lentils, chickpeas, 
wool and mohair.
    (1) A producer may repay a nonrecourse MAL for peanuts at a rate 
that is the lesser of:
    (i) The loan rate established for the commodity under Sec.1421.9, 
plus interest; or
    (ii) A rate that the Secretary determines will: Minimize potential 
loan forfeitures; minimize the accumulation of stocks of the commodity 
by the Federal Government; minimize the cost incurred by the Federal 
Government in storing the commodity; and allow the commodity produced in 
the United States to be marketed freely and competitively, both 
domestically and internationally.
    (2) To the extent practicable, CCC will determine and announce 
weekly alternative repayment rates for peanuts.
    (d) For peanuts, the Secretary will require the repayment of 
handling and other associated costs paid under Sec.1421.104 for all 
peanuts pledged as collateral for a MAL that are redeemed under this 
section.
    (e) The Secretary will permit producers to repay a MAL for long 
grain rice and medium grain rice at a rate that is the lesser of:
    (1) The loan rate established for the commodity under Sec.1421.9, 
plus interest; or
    (2) The prevailing world market price for the commodity, as 
determined and adjusted by the Secretary in accordance with this 
section.
    (f) For purposes of this section, the Secretary will prescribe--
    (1) A formula to determine the prevailing world market price for 
long grain rice and medium grain rice and
    (2) A mechanism by which the Secretary will announce periodically 
those prevailing world market prices.
    (g) Adjustments will be made to the prevailing world market price 
for long grain rice and medium grain rice.

[[Page 583]]

    (1) The prevailing world market price for long grain and medium rice 
determined under paragraph (f) of this section will be adjusted to U.S. 
quality and location.
    (2) In making adjustments under this subsection, the Secretary will 
establish a mechanism for determining and announcing the adjustments in 
order to avoid undue disruption in the U.S. market.
    (h)(1) The prevailing world market price for a class of rice will be 
determined by CCC based upon a review of prices at which rice is being 
sold in world markets and a weighting of such prices through the use of 
information such as changes in supply and demand of rice, tender offers, 
credit concessions, barter sales, government-to-government sales, 
special processing costs for coatings or premixes, and other relevant 
price indicators, and will be expressed in U.S. equivalent values F.O.B. 
(free on board) vessel, U.S. port of export, per hundredweight as 
follows:
    (i) U.S. grade No. 2, 4 percent broken kernels, long grain milled 
rice;
    (ii) U.S. grade No. 2, 4 percent broken kernels, medium grain milled 
rice; and
    (iii) U.S. grade No. 2, 4 percent broken kernels, short grain milled 
rice.
    (2) Export transactions involving rice and all other related market 
information will be monitored on a continuous basis. Relevant 
information may be obtained for this purpose from USDA field reports, 
international organizations, public or private research entities, 
international rice brokers, and other sources of reliable information.
    (3) The prevailing world market price for a class of rice adjusted 
to U.S. quality and location, the adjusted world price (AWP), as 
determined under paragraph (h)(5) of this section, will apply to this 
section.
    (4) The adjusted world price for each class of rice will equal the 
prevailing world market price for a class of rice (U.S. equivalent 
value) as determined under paragraphs (h)(1) and (h)(2) of this section 
and adjusted to U.S. quality and location as follows:
    (i) The prevailing world market price for a class of rice will be 
adjusted to reflect an F.O.B. mill position by deducting from such 
calculated price an amount that is equal to the estimated national 
average costs associated with:
    (A) The use of bags for the export of U.S. rice, and
    (B) The transfer of such rice from a mill location to F.O.B. vessel 
at the U.S. port of export with such costs including, but not limited 
to, freight, unloading, wharfage, insurance, inspection, fumigation, 
stevedoring, interest, banking charges, storage, and administrative 
costs.
    (ii) The price determined under paragraph (h)(4)(i) of this section 
will be adjusted to reflect the market value of the total quantity of 
whole kernels contained in milled rice by deducting the world value of 
broken kernels it contains, with the value of the broken kernels 
determined by multiplying a formulaic quantity of broken kernels (4 
percent per hundredweight) by the world market value of broken kernels. 
The world market value of broken kernels will be based upon the 
relationship of whole and broken kernel world prices as estimated from 
observations of prices at which rice is being sold in world markets.
    (iii) The price determined under paragraph (h)(4)(ii) of this 
section will be adjusted to reflect the per-pound market value of whole 
kernels by dividing the price by the quantity of whole milled kernels 
contained in the milled rice (96 percent per hundredweight).
    (iv) The price determined under paragraph (h)(4)(iii) of this 
section will be adjusted to reflect the market value of whole kernels 
contained in 100 pounds of rough rice by multiplying such price by the 
estimated national average quantity of whole kernel rice by class 
obtained from milling 100 pounds of rough rice.
    (v) The price determined under paragraph (h)(4)(iv) of this section 
will be adjusted to reflect the total market value of rough rice by:
    (A) Adding to such price:
    (1) The market value of bran contained in the rough rice, computed 
by multiplying the domestic unit market value of bran by the estimated 
national average quantity of bran produced in milling 100 pounds of 
rice; and

[[Page 584]]

    (2) The market value of broken kernels contained in the rough rice, 
computed by multiplying the estimated world market value of broken 
kernels by the estimated national average quantity of broken kernels 
produced in milling 100 pounds of rice;
    (B) Deducting from such price an estimated cost of milling rough 
rice; and an estimated cost of transporting rough rice from farm to mill 
locations.
    (5) The adjusted world price for each class of rice, loan rate 
basis, will be determined by CCC and announced, to the extent 
practicable, on or after 7 a.m. Eastern Standard Time each Wednesday or 
more frequently as determined necessary by CCC, continuing through the 
later of:
    (i) The last Wednesday of July in the calendar year following the 
year the rice crop was harvested, or in which the rice MAL matures,
    (ii) The last Wednesday of the latest month the rice MAL matures, or
    (iii) If Tuesday is not a normal business day, the price 
determination may be made on the next work day and announced the 
following day, on or after 7 a.m. Eastern Standard Time.
    (i) The producer may repay a MAL under this section for 
confectionery and each other kind of sunflower seed (other than oil 
sunflower seed) at a rate that is the lesser of:
    (1) The loan rate established for the commodity under Sec.1421.9, 
plus interest, or
    (2) The repayment rate established for oil sunflower seed.
    (j)(1) On a form prescribed by CCC, a producer may request to lock 
in the applicable repayment rate for a period of 60 calendar days or for 
the remaining life of the MAL term, whichever is less, provided that no 
request may be granted within 14 calendar days of the end of the MAL.
    (2) The request to lock in the applicable repayment rate must be 
received in the FSA county service center that disbursed the MAL.
    (3) The repayment rate that is locked in will be the rate in effect 
when the request to lock in is approved.
    (4) The repayment rate may be locked in on outstanding farm-stored 
or warehouse-stored loans.
    (5) The repayment rate that is locked in will expire as provided in 
paragraph (j)(1) of this section.
    (6) The requests can only be completed one time for a designated 
quantity.
    (7) For multiple locked in requests, the oldest unexpired locked in 
repayment rate is applied first.
    (8) The completed and signed form can be submitted in person, by 
facsimile, or electronically.
    (9) The requests cannot be canceled, terminated, or changed after 
approval.
    (10) The locked in applicable repayment rate will transfer to any 
MAL disbursed outside of the originating county where the commodity was 
stored.
    (11) Once a repayment rate is locked in it cannot be extended.
    (k) If a producer fails to repay a MAL within the time prescribed by 
CCC under the terms and conditions of the request to lock in a market 
loan repayment rate, the producer may repay the MAL:
    (1) On or before maturity, at the lesser of:
    (i) Principal plus interest as determined by CCC; or
    (ii) The repayment rate in effect on the day the repayment is 
received in the FSA County Service Center.
    (2) After maturity, at principal plus interest.
    (l) When the proceeds of the sale of the commodity are needed to 
repay all or a part of a farm-stored MAL, the producer must request and 
obtain prior written approval on a CCC-approved form and comply with the 
terms and conditions of such form, to remove a specified quantity of the 
commodity from storage. Approval does not constitute release of CCC's 
security interest in the commodity or release of producer liability for 
amounts due CCC for the MAL indebtedness if payment in full is not 
received by the FSA county office. Failure to repay a MAL within the 
time period prescribed by CCC in the case of a farm-stored loan and 
delivery of the pledged collateral to a buyer is a violation of the 
agreement. In the case of such violation, the producer must repay the 
loan principal

[[Page 585]]

and interest or another amount as determined by the Deputy 
Administrator, FSA, as specified in Sec.1421.109.
    (m) The producer may obtain county committee approval of a release 
of all or part of pledged collateral for a warehouse-stored MAL at or 
before the maturity of such MAL by paying to CCC:
    (1) The principal amount of the marketing assistance loan and 
charges plus interest or
    (2) An amount less than the principal amount of the MAL and charges 
plus interest under the terms and conditions specified by CCC at the 
time the producer redeems the collateral for such MAL.
    (n) A partial release of marketing assistance loan collateral must 
cover all of the commodity represented by one warehouse receipt. 
Warehouse receipts redeemed by repayment of the marketing assistance 
loan must be released only to the producer. However, such receipt may be 
released to persons designated in a written authorization that is filed 
with the county office by the producer within 15 days before the date of 
repayment.
    (o) The note and security agreement will not be released until the 
marketing assistance loan has been satisfied in full.
    (p)(1) If the commodity is moved from storage without obtaining 
prior approval to move such commodity, such removal will constitute 
unauthorized removal or disposition, as applicable under Sec.
1421.109(b), unless the removal occurred on a non-workday and the 
producer notified the county office on the next workday of such removal.
    (2) Any MAL quantities involved in a violation of Sec.1421.109 
must be repaid under Sec.1421.109(e).
    (q) In the event of a severe disruption to marketing, 
transportation, or related infrastructure, the Secretary may modify the 
repayment rate otherwise applicable under this section for marketing 
assistance loans. Any adjustment made to the repayment rate for 
marketing assistance loans for a loan commodity under Sec.1421.5 will 
be in effect on a short-term and temporary basis, as determined by the 
Secretary.

[74 FR 15652, Apr. 7, 2009, as amended at 80 FR 122, 129, Jan. 2, 2015]



Sec.1421.11  Spot checks.

    (a) CCC may inspect the collateral for MALs, and producers with such 
MALs must allow CCC reasonable access to the farm and storage facility 
as necessary to conduct ``spot check'' collateral inspections. Spot 
checks are intended to verify that the quality and quantity of farm-
stored commodities pledged as collateral for MALs are maintained by the 
producer.
    (b) LDPs are selected for spot check to ensure that all eligibility 
requirements, as required by CCC, are met in order to receive such LDP.
    (c) Producers must present production evidence for commodities 
acceptable to CCC when a spot check is conducted.

[67 FR 63511, Oct. 11, 2002, as amended at 80 FR 122, Jan. 2, 2015]



Sec.1421.12  Production evidence.

    (a) Producers who redeem MAL collateral at the prevailing world 
market price for rice, or the alternative repayment rate for all other 
commodities, as CCC determines or receives an LDP may be required to 
provide CCC with:
    (1) Evidence of production of the collateral such as:
    (i) Evidence of sales;
    (ii) Delivery evidence;
    (iii) Load summaries from warehouse, processor, or buyer;
    (iv) Warehouse receipts including EWRs;
    (v) Paid measurement service;
    (vi) Spot check measurements with paid measurement service;
    (vii) Cleaning tickets for seed;
    (viii) Scale tickets, if not issued by the producer for the 
producer's own production;
    (ix) Core tests for wool and mohair; or
    (x) Maximum eligible quantity as determined by CCC.
    (2) The storage location of the collateral that has not been 
otherwise disposed of and access to such collateral;
    (3) Permission to inspect, examine, and make copies of the records 
and other written data as deemed necessary to verify the eligibility of 
the producer and commodity;

[[Page 586]]

    (4) In the case of wool and mohair, permission to examine and 
inspect the sheep herd; and
    (5) Any other evidence requested by the county FSA service center or 
the Deputy Administrator, FSA.
    (b) A producer who fails to provide acceptable evidence of 
production is be required to repay the market loan gain or LDP and 
charges, plus interest, as determined by CCC.

[67 FR 63511, Oct. 11, 2002, as amended at 80 FR 122, Jan. 2, 2015]



Sec.1421.13  Special loan deficiency payments.

    (a)(1) Eligible producers of unshorn pelts produced from live sheep 
and hay and silage derived from an eligible loan commodity as provided 
in Sec.1421.5 are eligible to request unshorn pelt, hay, and silage 
quantities for a LDP under subpart C of this part.
    (2) Unshorn pelts, hay, and silage derived from an eligible loan 
commodity are not eligible to be pledged as collateral to obtain a MAL 
under subpart B of this part.

[71 FR 32424, June 6, 2006, as amended at 74 FR 15654, Apr. 7, 2009; 80 
FR 129, Jan. 2, 2015]



Sec.1421.14  Obtaining peanut MALs.

    (a) Peanuts MALs to individual producers may be obtained through:
    (1) County offices; or
    (2) A designated Marketing Association or a CMA approved by CCC.
    (b) The MAL documents will not be presented for disbursement unless 
the peanuts pledged as collateral for the MAL are eligible as specified 
in Sec.1421.8. If the peanuts were ineligible at the time of the 
disbursement, the total amount disbursed under MAL, or as an LDP, plus 
charges and interest will be refunded promptly.

[67 FR 63511, Oct. 11, 2002, as amended at 80 FR 123, Jan. 2, 2015]



                  Subpart B_Marketing Assistance Loans

    Source: 67 FR 63511, Oct. 11, 2002, unless otherwise noted.



Sec.1421.100  Applicability.

    This subpart provides the terms and conditions for MALs offered by 
CCC. Additional terms and conditions are also in the note and security 
agreement which the producer must sign to receive such MALs.

[67 FR 63511, Oct. 11, 2002, as amended at 80 FR 129, Jan. 2, 2015]



Sec.1421.101  Maturity dates.

    (a)(1) All MALs will mature on demand by CCC and no later than the 
last day of the 9th calendar month following the month in which the note 
and security agreement is filed and approved except for transferred MAL 
collateral. The maturity date for transferred MAL collateral will be the 
maturity date applicable to the original MAL that was transferred.
    (2) CCC may at any time call the MAL by notifying the producer at 
least 30 days in advance of the accelerated maturity date.
    (b) The maturity date of any MAL may not be extended.

[67 FR 63511, Oct. 11, 2002, as amended at 74 FR 15654, Apr. 7, 2009; 80 
FR 123, 129, Jan. 2, 2015]



Sec.1421.102  Adjustment of basic loan rates.

    (a) Basic loan rates are established under Sec.1421.9 and will be 
adjusted or not adjusted as follows:
    (1) For farm-stored commodities, except for peanuts, that exceed 
acceptable levels of contamination, the loan rate will be discounted to 
10 percent of the base county MAL rate.
    (2) For farm-stored commodities where the test weight discounts are 
on the:
    (i) Crop year specific schedules of premiums and discounts, the MAL 
rate will be adjusted for the higher of the discount for test weight or 
grade based on test weight.
    (ii) Additional schedule of discounts, the MAL rate will be reduced 
to 20 percent of the county loan rate.
    (3) With respect to commodities harvested, excluding silage or hay, 
as other than grain and pledged as collateral for a nonrecourse MAL, the 
MAL rate will be discounted to 30 percent of the county loan rate.
    (4) With respect to farm-stored wheat, the basic county loan rate 
will not be adjusted to reflect the protein content.

[[Page 587]]

    (5) With respect to Segregation 2 and 3 peanuts as determined by 
CCC, the MAL rate will be discounted to 35 percent of the applicable 
loan rate.

[67 FR 63511, Oct. 11, 2002, as amended at 74 FR 15654, Apr. 7, 2009; 80 
FR 123, 129, 130, Jan. 2, 2015]



Sec.1421.103  Authorized storage.

    (a) Authorized farm storage is:
    (1) A storage structure located on or off the farm, (excluding 
public warehouses that do not enter into an agreement with CCC), that 
CCC determines to be controlled by the producer which affords safe 
storage of collateral pledged for a MAL;
    (2) If determined and announced to be available in a State or 
county, on ground storage and other temporary storage structures 
approved by CCC.
    (3) As determined by CCC, temporary authorized storage may also 
include:
    (i) On-ground storage or;
    (ii) Other storage arrangements.
    (b) CCC may reduce the quantity of a commodity pledged as collateral 
for a MAL made available under paragraph (a)(2) of this section to not 
more than 75 percent of such otherwise eligible quantity in order to 
protect the interests of CCC. CCC may also limit the length of time the 
commodity may be stored on-ground or in temporary structures to not more 
than 90 days. A MAL made with respect to such commodity that is not 
moved to a structure specified in (a)(2) within 90 days of the date the 
MAL was disbursed may be called by CCC.
    (c)(1) Authorized warehouse storage consists of warehouses that:
    (i) If Federally licensed, are in compliance with 7 CFR part 735 or
    (ii) If not Federally licensed, are in compliance with State laws 
and that issue warehouse receipts that meet the criteria specified in 
Sec.1421.107.
    (iii) If not Federally licensed or in compliance with State Laws and 
issue warehouse receipts that meet the criteria specified in Sec.
1421.107, have entered into a storage agreement with CCC.
    (2) Notwithstanding paragraph (c)(1) of this section, if storing 
peanuts, the warehouse must in all cases have entered into a storage 
agreement with CCC. For storing other crops, notwithstanding paragraph 
(c)(1) of this section, CCC may, on a case-by-case basis, still require 
a warehouse operator that would qualify under paragraphs (c)(1)(i) or 
(ii) of this section to enter into a storage agreement if deemed 
necessary by the Deputy Administrator to be needed to protect CCC's 
interests.

[67 FR 63511, Oct. 11, 2002, as amended at 74 FR 15654, Apr. 7, 2009; 80 
FR 123, 129, Jan. 2, 2015]



Sec.1421.104  Making MALs.

    (a)(1) CCC may conduct such lien searches, and may perfect its 
interest in loan commodities under State law, as it deems to be in its 
interest.
    (2) The cost for terminating the financing statement for MALs 
disbursed under this part before the end of the term will be paid by the 
producer.
    (3) If there are any liens or encumbrances on the commodity pledged 
as collateral for a MAL made under this part, waivers that fully protect 
CCC's interest must be obtained even though the liens or encumbrances 
are satisfied from MAL proceeds disbursed under this part. No additional 
liens or encumbrances will be placed on the commodity after such a MAL 
is approved.
    (b) Fees, charges, interest, and all applicable approved commodity 
assessment collections must be paid by the producer at a rate CCC 
determines or, in the case of assessments, at a rate approved by the 
assessment authority. Such fees, charges, and interest include:
    (1) A non-refundable loan service fee;
    (2) Interest that accrues on a loan under part 1405 of this chapter.
    (c) To ensure proper storage of peanuts for which a MAL is made 
under this section, the Secretary will pay reasonable handling and other 
associated costs (other than storage) incurred at the time at which the 
peanuts are placed in a warehouse stored MAL. Such rates will be 
available in the State and county FSA offices.

[67 FR 63511, Oct. 11, 2002, as amended at 71 FR 32424, June 6, 2006; 74 
FR 15654, Apr. 7, 2009; 75 FR 19193, Apr. 14, 2010; 80 FR 123, Jan. 2, 
2015]

[[Page 588]]



Sec.1421.105  Farm-stored MALs.

    (a) The producer of a commodity pledged as security for a farm-
storage MAL:
    (1) Certifies the quantity of such commodity on the MAL application, 
or;
    (2) Has such quantity measured by CCC at the measurement service 
rate established by CCC.
    (b) The State committee may establish a MAL percentage not to exceed 
a percentage CCC establishes or it may apply quality discounts to the 
loan rate in each year for each commodity on a statewide basis or for 
specified areas within the State. Before approving a county committee 
request to establish a different loan percentage, or to apply quality 
discounts, the State committee will consider conditions in the State or 
areas within a State to determine if the MAL percentage should be 
reduced below the maximum MAL percentage or the quality discounts should 
be applied to the basic county MAL rate to provide CCC with adequate 
protection. MALs disbursed based upon loan percentages previously 
lowered and loan rates adjusted for quality will not be altered if 
conditions within the State or areas within the State change to 
substantiate removing such reductions. Percentages established or loan 
rates adjusted for quality under this section will apply only to new 
MALs and not to outstanding MALs. In determining loan percentages or the 
necessity to apply quality discounts, the State committee will consider 
any factor at its discretion, including the following:
    (1) General crop conditions;
    (2) Factors affecting quality peculiar to an area within the State; 
and
    (3) Climatic conditions affecting storability.
    (c) An eligible quantity of a commodity that is commingled with an 
ineligible quantity of the commodity is not eligible to be collateral 
for a MAL unless the producer, when requesting a MAL designates all 
structures that may be used for storage of the MAL collateral.
    (1) In such cases, the producer is not required to obtain prior 
written approval from the county committee before moving MAL collateral 
from one designated structure to another designated structure.
    (2) In all other instances, if the producer intends to move MAL 
collateral from a designated structure to an undesignated structure, the 
producer must request prior approval from the county committee in 
writing. The producer may request that the eligible or ineligible 
commodity be measured by a representative of the county office, at the 
producer's expense, before commingling, but such measurement is not 
required. Prior to commingling, with respect to wool and mohair, a 
representative of the FSA county committee may determine an average 
production of the wool and mohair in a manner approved by CCC.
    (d)(1) Two or more producers may obtain:
    (i) A single joint MAL for commodities that are stored in the same 
farm storage facility; or
    (ii) Individual MALs for their share of the commodity that is 
commingled in a farm storage facility with commodities owned by other 
producers if such other producers execute an agreement that provides 
that such producers will obtain the permission of a representative of 
the county committee before removal of any quantity of the commodity 
from the storage facility. All producers who store a commodity in a farm 
storage facility in which commodities that have been pledged as 
collateral for a MAL will be liable for any damage incurred by CCC for 
the deterioration or unauthorized removal or disposition of such 
commodities.
    (2) In such cases, each producer must execute a note and security 
agreement with CCC, and each such producer will be jointly and severally 
liable for the violation of the terms and conditions of the note and the 
requirements of this part. Each producer is also liable for repayment of 
the entire MAL amount until the MAL is fully repaid without regard to 
their share in the commodity pledged as collateral. In addition, such 
producer may not amend the note and security agreement for the 
producer's claimed share in such commodities, or MAL proceeds, after 
execution of the note and security agreement by CCC.

[[Page 589]]

    (e)(1) A producer, when requesting a MAL, will designate in writing 
specific storage structures.
    (2) The producer is not required to request prior approval before 
moving marketing assistance loan collateral between such designated 
structures.
    (3) Movement of MAL collateral to any other structures not 
designated or the disposal of such loan collateral without prior written 
approval of the county committee, will subject the producer to 
administrative actions.
    (4) The producer is responsible for any loss in quantity or quality 
of the farm-stored commodity pledged as collateral.
    (5) CCC will not assume any loss in quantity or quality of the MAL 
collateral for farm-stored MALs.
    (f) If the producer does not pay CCC the total amount due in 
accordance with a MAL by the maturity date, CCC has the right to acquire 
title to the MAL collateral and to sell or otherwise take possession of 
such collateral without any further action by the producer. With respect 
to farm-stored MALs, the producer may, as CCC determines, deliver the 
MAL collateral in accordance with instructions issued by CCC. CCC will 
not accept delivery of any quantity of a commodity in excess of 110 
percent of the outstanding farm-stored MAL quantity. If a quantity in 
excess of 110 percent of the outstanding farm-stored MAL quantity is 
shown on the warehouse receipt or other documents, the producer must 
provide replacement warehouse receipts and delivery documents. If the 
warehouse receipt and such other documents applicable to the settlement 
are not replaced to reflect the excess amount, CCC will provide for such 
corrected documents and apply charges for such service, if any, to the 
producer's account as charges for settlement on the MAL.

[67 FR 63511, Oct. 11, 2002, as amended at 80 FR 123, 129, Jan. 2, 2015]



Sec.1421.106  Warehouse-stored MAL collateral.

    (a) A commodity may be pledged as collateral for a warehouse-stored 
MAL in the quantity delivered to CCC for storage at a warehouse that 
meets standards for approval at part 1423 of this chapter. Such quantity 
is the net weight specified on the warehouse receipt or supplemental 
certificate.
    (b) Two or more producers may obtain a single joint MAL for 
commodities stored in an approved warehouse if the warehouse receipt 
pledged as collateral is issued jointly to the producers.
    (c) If more than one producer executes a note and security agreement 
with CCC, each such producer is jointly and severally liable for the 
violation of the terms and conditions of the note and the regulations in 
this part. Each such producer also remains liable for repayment of the 
entire MAL amount until the MAL is fully repaid without regard to such 
producer's claimed share in the commodity pledged as collateral for the 
MAL. In addition, such producer may not amend the note and security 
agreement with respect to the producer's claimed share in such 
commodities, or MAL proceeds, after execution of the note and security 
agreement by CCC.
    (d) Storage rates that CCC has approved to be deducted from MAL 
proceeds are available in FSA State and county offices and other USDA 
service centers. Deductions are based upon entries on the warehouse 
receipt or supplemental certificate, but the storage rate is not to 
exceed the storage rate CCC has approved. No storage deduction is to be 
made if written evidence acceptable to CCC is submitted indicating that:
    (1) Storage charges through the maturity date have been prepaid; or
    (2) The producer has arranged with the warehouse operator for the 
payment of storage charges through the maturity date and the warehouse 
operator enters an endorsement in substantially the following form on 
the warehouse receipt:

    Storage arrangements have been made by the depositor of the 
commodity covered by this receipt through (date through which storage 
has been provided). No lien will be asserted by the warehouse operator 
against CCC or any subsequent holder of the warehouse receipt for the 
storage charges that accrued before the specified date.

    (e) The beginning date to be used for computing storage deductions 
on the commodity stored in an approved warehouse will be the later of 
the following:

[[Page 590]]

    (1) The date the commodity was received or deposited in the 
warehouse;
    (2) The date the storage charges start; or
    (3) The day following the date through which storage charges have 
been paid.
    (f) For hard red winter and hard red spring wheat tendered to CCC 
and stored in an approved warehouse, producers must obtain official 
protein content determinations or, as CCC determines is acceptable, 
protein content may be determined by mutual agreement between the 
producer and the warehouse operator. Costs of determinations will not be 
paid by CCC.

[67 FR 63511, Oct. 11, 2002, as amended at 74 FR 15654, Apr. 7, 2009;80 
FR 124, 129, Jan. 2, 2015]



Sec.1421.107  Warehouse receipts.

    (a) Warehouse receipts for MALs tendered to CCC as specified in 
Sec.1421.3 may either be paper or electronic. All receipts, whether 
paper or electronic, must meet all the applicable provisions of this 
section and this part, and CCC program document requirements. EWRs must 
be issued by a provider approved by CCC.
    (b) Warehouse receipts must be issued in the name of the eligible 
producer or CCC. If issued in the name of the eligible producer, the 
receipt must be properly endorsed on its reverse side certifying that 
the crop is free of encumbrances in order for title to vest in the 
holder. Receipts must be issued by an authorized warehouse and must 
represent a commodity that is deemed to be stored commingled. The 
receipts must be negotiable and must represent a commodity that is the 
same quantity and quality as the eligible commodity actually in storage 
in the warehouse of the original deposit.
    (c) If the receipt is issued for a commodity that is owned by the 
warehouse operator either solely, jointly, or in common with others, the 
fact of such ownership is to be stated on the receipt. In States where 
the pledge of warehouse receipts issued by a warehouse operator on the 
warehouse operator's commodity is invalid, the warehouse operator may 
offer the commodity to CCC for a MAL if such warehouse is licensed under 
the U.S. Warehouse Act.
    (d) Each warehouse receipt or accompanying supplemental certificate 
representing a commodity stored in an authorized warehouse must indicate 
that the commodity is insured. CCC shall not be responsible for the cost 
of such insurance.
    (e) A separate warehouse receipt must be submitted for each grade 
and class of any commodity tendered to CCC and, for rice, such receipt 
must also state the milling yield of the rice, and for wool, such 
receipts must also state the yield and micron of the wool.
    (f) With respect to peanuts, a warehouse receipt must be submitted 
exhibiting grade, type, and segregation for peanuts tendered to CCC.
    (g)(1) Each warehouse receipt, or a supplemental certificate (in 
duplicate) that properly identifies the warehouse receipt, must be 
issued by an authorized warehouse as specified in Sec.1421.103(c)(1), 
as applicable, and must indicate:
    (i) The name and location of the storing warehouse;
    (ii) The warehouse code assigned by licensing authority;
    (iii) The warehouse receipt number;
    (iv) The date the receipt was issued;
    (v) The type of commodity;
    (vi) The date the commodity was deposited or received;
    (vii) The date to which storage has been paid or the storage start 
date;
    (viii) Whether the commodity was received by rail, truck or barge;
    (ix) The amount per bushel, pound, or hundredweight of prepaid in or 
out charges;
    (x) The signature of the warehouse operator or the authorized agent; 
and
    (xi) For warehouses operating under a merged warehouse code 
agreement (KC-385), the location and county to which the producer 
delivered the commodity.
    (2) In addition to the information specified in paragraph (g)(1) of 
this section, additional commodity specific requirements will be 
determined by CCC and be available at State and county offices and the 
Kansas City Commodity Office.
    (h) If a warehouse receipt indicates that the commodity tendered for 
MAL

[[Page 591]]

grades ``infested'' or ``contains excess moisture,'' or both, the 
receipt must be accompanied by a supplemental certificate in order for 
the commodity to be eligible for a MAL. The grade, grading factors, and 
quantity to be delivered must be shown on the certificate as follows:
    (1) When the warehouse receipt shows ``infested'' and the commodity 
has been conditioned to correct the infested condition, the supplemental 
certificate must show the same grade without the ``infested'' 
designation and the same grading factors and quantity as shown on the 
warehouse receipt.
    (2)(i) When the warehouse receipt shows that the commodity contained 
excess moisture and the commodity has been dried or blended, the 
supplemental certificate must show the grade, grading factors, and 
quantity after drying or blending of the commodity. Such entries must 
reflect a drying or blending shrinkage as provided in paragraph 
(h)(2)(iv) of this section.
    (ii) When a supplemental certificate is issued under paragraphs 
(g)(1) and (h)(2)(i) of this section, the grade, grading factors, and 
the quantity shown on such certificate will supersede the entries for 
such items on the warehouse receipt.
    (iii) If the commodity has been dried or blended to reduce the 
moisture content, the quantity specified on the warehouse receipt or the 
supplemental certificate represents the quantity after drying or 
blending.
    (iv) For commodities dried or blended under paragraph (h)(2)(iii) of 
this section, such quantity must reflect a minimum shrinkage in the 
receiving weight excluding dockage:
    (A) For the following commodities, 1.3 times the percentage 
difference between the moisture content of the commodity received and 
the following percentages for the specified commodity:
    (1) Barley: 14.5 percent;
    (2) Corn: 15.5 percent;
    (3) Grain sorghum: 14.0 percent;
    (4) Oats: 14.0 percent;
    (5) Rice: 14.0 percent;
    (6) Soybeans: 14.0 percent;
    (7) Wheat: 13.5 percent; and
    (8) Peanuts: 10.0 percent.
    (B) For the following commodities, 1.1 times the percentage 
difference between the moisture content of the commodity received and 
the following percentages for the specified commodity:
    (1) Canola: 10.0 percent;
    (2) Flaxseed: 9.0 percent;
    (3) Mustard Seed: 10.0 percent;
    (4) Rapeseed: 10.0 percent;
    (5) Safflower Seed: 10.0 percent;
    (6) Sunflower Seed: 10.0 percent;
    (7) Crambe: 10.0 percent; and
    (8) Sesame Seed: 10.0 percent.
    (i)(1) If, under paragraph (g) of this section, a supplemental 
certificate is issued in connection with a warehouse receipt, such 
certificate must state that no lien for processing will be asserted by 
the warehouse operator against CCC or any subsequent holder of such 
receipt.
    (2) Warehouse receipts and the commodities represented by such 
receipts may be subject to a lien for warehouse charges. For all 
commodities except peanuts, the producer who pledged such a receipt as 
collateral for a MAL under this part pays to CCC all costs incurred by 
CCC as result of the existence of the lien. In no event is a warehouse 
operator entitled to satisfy such a lien by sale of the commodities when 
CCC is the holder of such receipt.
    (j) Warehouse receipts representing commodities that have been 
shipped by rail or by barge, must be accompanied by supplemental 
certificates completed under paragraph (g) of this section.
    (k) If the warehouse issues an EWR for the commodity, the producer 
must notify the EWR provider to make CCC the holder of the EWR and to 
secure an affirmation verifying that CCC has been made the holder of the 
EWR.

[67 FR 63511, Oct. 11, 2002, as amended at 74 FR 15654, Apr. 7, 2009; 75 
FR 19193, Apr. 14, 2010; 80 FR 124, 130, Jan. 2, 2015]



Sec.1421.108  Transfers and reconcentrations.

    (a) Upon request by the producer before transfer, the county 
committee may approve the transfer of a quantity of a commodity that is 
pledged as collateral for a farm-stored MAL to a warehouse-stored MAL at 
any time during the MAL period.
    (1) Transfer of all or part of the farm-stored MAL collateral to an 
authorized

[[Page 592]]

warehouse will be made through the pledge of warehouse receipts for the 
commodity placed under a warehouse-stored MAL. The loan rate of the 
transferred MAL will be the same as the loan rate of the original MAL. 
The MAL quantity for the warehouse-stored MAL cannot exceed the loan 
quantity transferred from the farm-stored MAL.
    (2) Any amounts due the producer will be disbursed by the FSA county 
service center.
    (b) The producer must request county committee approval before the 
transfer of a warehouse-stored MAL to a farm-stored MAL. The county 
committee may approve the transfer of part or all of a warehouse-stored 
MAL at any time during the MAL period. Quantities pledged as collateral 
for a farm-stored MAL will be based on a measurement or a calculation of 
average production of wool and mohair, by a representative of the county 
office before approving the farm-stored MAL. The producer must 
immediately repay the amount by which the farm-stored MAL is less than 
the warehouse-stored MAL and charges plus interest on the shortage. The 
maturity date of the farm-stored MAL is the maturity date applicable to 
the warehouse-stored MAL that was transferred.
    (c) Upon the filing of the Reconcentration Agreement and Trust 
Receipt by the producer and warehouse operator, CCC may, during the MAL 
period, approve the reconcentration in another authorized warehouse for 
all or part of a commodity that is pledged as collateral for a 
warehouse-stored MAL. Any such approval will be subject to the terms and 
conditions in the Reconcentration Agreement and Trust Receipt. A 
producer may, before the new warehouse receipt is delivered to CCC, pay 
CCC:
    (1) The principal amount of the MAL and charges plus interest and 
applicable charges; or
    (2) If CCC so announces, an amount less than the principal amount of 
the MAL and charges plus interest under the terms and conditions 
specified by CCC at the time the producer redeems the commodity pledged 
as collateral for such MAL.

[67 FR 63511, Oct. 11, 2002, as amended at 74 FR 15654, Apr. 7, 2009; 80 
FR 124, 129, 130, Jan. 2, 2015]



Sec.1421.109  Personal liability of the producer.

    (a) When a producer obtains a commodity MAL, the producer agrees, in 
writing, not to:
    (1) Provide an incorrect certification of the quantity or make any 
fraudulent or erroneous representation for the MAL;
    (2) Remove or dispose of a quantity of commodity that is collateral 
for a CCC farm-stored MAL without prior written approval from CCC in 
accordance with Sec.1421.10; or
    (3) Violate the terms and conditions of the note and security 
agreement, which will cause harm or damage to CCC in that funds may be 
disbursed to the producer for a quantity of a commodity that is not 
actually in existence or for a quantity on which the producer is not 
eligible. If CCC determines that the producer has violated the terms and 
conditions of the applicable forms prescribed by CCC, liquidated damages 
will be assessed on the quantity of the commodity that is involved in 
the violation.
    (b) Such violations as referred to in paragraph (a)(3) of this 
section may include, but are not limited to:
    (1) Incorrect certification;
    (2) Unauthorized removal; and
    (3) Unauthorized disposition.
    (c) If the county committee determines that the producer has 
committed such violations, liquidated damages will be assessed on the 
quantity of the commodity that is involved in the violation.
    (d) Liquidated damages assessed in accordance with this section will 
be determined by multiplying the quantity involved in the violation by 
10 percent of the MAL rate applicable to the MAL note.
    (e) When it has been determined that a violation of the terms and 
conditions of the note and security agreement has occurred as a result 
of unauthorized removal or disposition, CCC will determine the quantity 
of the commodity involved with respect to such violation

[[Page 593]]

and require the repayment of that portion of the MAL which is equivalent 
to such quantity of the commodity. In the case of these violations, if 
CCC determines the producer:
    (1) Acted in good faith when the violation occurred, liquidated 
damages will be assessed according to paragraph (d) of this section and 
the commodity involved in the violation must be redeemed at the lesser 
of:
    (i) The rate at which the MAL was disbursed, plus interest and any 
other charges assessed under the note and security agreement; or
    (ii) The alternative repayment rate in effect on the date of the 
determination is issued by CCC that a violation has occurred, plus 15 
percent of the original MAL rate as provided on the note and security 
agreement.
    (2) Did not act in good faith when the violation was committed, 
liquidated damages will be assessed in accordance with paragraph (d) of 
this section, and administrative actions will be taken in accordance 
with paragraph (h) of this section. The MAL is required to be redeemed 
at the rate at which the MAL was disbursed, plus interest and any other 
charges assessed under the note and security agreement.
    (f) When it has been determined that a violation of the terms and 
conditions of the note and security agreement has occurred as result of 
an incorrect certification, CCC will determine the quantity of the 
commodity involved with respect to such violation and require the 
repayment of that portion of the MAL which is equivalent to such 
quantity of the commodity. In the case of an incorrect certification, if 
CCC determines the producer:
    (1) Acted in good faith when the violation occurred, liquidated 
damages will be assessed according to paragraph (d) of this section, and 
the commodity involved in the violation must be redeemed at the rate at 
which the MAL was disbursed, plus interest and any other charges 
assessed under the note and security agreement.
    (2) Did not act in good faith about the violation, liquidated 
damages will be assessed in accordance with paragraph (d) of this 
section and administrative actions will be taken in accordance with 
paragraph (h) of this section. The MAL must be redeemed at the rate at 
which the MAL was disbursed, plus interest and any other charges 
assessed under the note and security agreement.
    (g) If the producer fails to pay such amount within 30 days from the 
date of notification of violations as provided in paragraphs (e)(1) and 
(f)(1) of this section, the producer must immediately repay the MAL at 
the rate at which the MAL was disbursed plus interest, and any other 
charges assessed under the note and security agreement.
    (h) For violations as specified in paragraphs (e)(2) and (f)(2) of 
this section, the producer must immediately repay the MAL at the rate at 
which the MAL was disbursed plus interest, and any other charges 
assessed under the note and security agreement. If the MAL has already 
been repaid, any market loan gain previously realized on the MAL, plus 
interest, is immediately due to CCC. CCC will demand delivery of any 
remaining MAL collateral if the MAL and any other charges and interest 
are not repaid within the 30 calendar day notification period specified 
in paragraph (g) of this section.
    (i) If the county committee determines that the producer has 
committed a violation, the county committee will notify the producer in 
writing that:
    (1) The producer has 30 calendar days to provide sufficient evidence 
and information regarding the circumstances that caused the violation, 
to the county committee; and
    (2) Administrative actions will be taken.
    (j) If the MAL is accelerated, the producer may not repay the MAL at 
the alternative loan repayment rate, unless authorized by CCC.
    (k) Producers denied or rejected for a farm-stored MAL for any 
reason under this section may apply for a warehouse-stored MAL.
    (l) The MAL plus other charges are payable to CCC upon demand if a 
producer:
    (1) Makes any fraudulent representation in obtaining a MAL, 
maintaining, or settling a MAL; or
    (2) Disposes or moves the MAL collateral without the approval of 
CCC.
    (m) A producer is personally liable for damages resulting from a 
commodity delivered to or removed by CCC

[[Page 594]]

containing mercurial compounds, toxin producing molds, or other 
substances poisonous or harmful to humans or animals or property.
    (n) If the amount disbursed under a MAL or in settlement of the MAL, 
exceeds the amount authorized by this part, the producer is liable for 
repayment of the excess and charges, plus interest.
    (o) If the amount collected from the producer in satisfaction of the 
MAL is less than the amount required under this part, the producer is 
personally liable for repayment of the amount of such difference and 
charges, plus interest.
    (p) In the case of joint MALs, the personal liability for the 
amounts specified in this section is joint and several on the part of 
each producer signing the note.
    (q) Any or all of the liquidated damages assessed under this section 
may be waived if the CCC determines that the violation occurred 
inadvertently, accidentally, or unintentionally.

[67 FR 63511, Oct. 11, 2002, as amended at 68 FR 67939, Dec. 5, 2003; 71 
FR 32424, June 6, 2006; 74 FR 15655, Apr. 7, 2009; 80 FR 124, 129, 130, 
Jan. 2, 2015]



Sec.1421.110  [Reserved]



Sec.1421.111  MAL settlement.

    (a) The value of MALs at settlement will be determined by CCC on the 
following basis:
    (1) For nonrecourse MALs, the schedule of premiums and discounts for 
the commodity, provided that if the value of the eligible delivered 
collateral at settlement is:
    (i) Less than the amount due, the producer will pay to CCC the 
amount of such deficiency and charges, plus interest on such deficiency; 
or
    (ii) More than the amount due, the amount of such excess will be 
paid to the producer or, if applicable, to the producer and applicable 
secured creditors of the producer.
    (2) For recourse MALs, full repayment of principal plus interest is 
required. As specified in Sec.1421.113, recourse MAL collateral may 
not be delivered or forfeited to CCC in satisfaction of indebtedness.
    (3) If CCC sells the commodity described in paragraph (a)(1) and 
(a)(2) of this section in settlement of the MAL, the sales proceeds will 
be applied to the amount owed as follows:
    (i) For nonrecourse MALs, CCC will in all instances retain all 
proceeds obtained from the sale of the eligible commodity and will not 
make any payment of any amount of such proceeds to any party, including 
the producer who has satisfied their obligation under the MAL through 
delivery of the commodity to CCC. CCC will settle with the producer 
based on the quality and quantity of the commodity; or
    (ii) For recourse MALs, the sales proceeds from the eligible 
collateral will be applied to the amount owed CCC by the producer. The 
producer will be responsible for any costs incurred by CCC in completing 
the sale and CCC will deduct the amount of these costs from the sale 
proceeds. If:
    (A) The amount received from the sale of the collateral is less than 
the amount due, the producer will pay to CCC the amount of such 
deficiency and costs, plus interest on the remaining amount owed; or
    (B) The amount received from the sale of the collateral is greater 
than the sum of the amount due, the amount of such excess will be paid 
to the producer or, if applicable, to the producer and applicable 
secured creditor of the producer.
    (b) Settlements made by CCC for eligible commodities that are 
acquired by CCC and that are stored in an authorized warehouse will be 
made on the basis of the entries in the applicable warehouse receipt, 
supplemental certificate, and accompanying documents.
    (1) All eligible commodities that are stored in other than 
authorized warehouses must be delivered to CCC as CCC instructs. 
Settlement will be based on entries in the applicable warehouse receipt, 
supplemental certificate, and accompanying documents.
    (2) For eligible loan commodities that are delivered from other than 
an authorized warehouse, settlement will be made by CCC on the basis of 
the basic MAL rate that is in effect for the commodity at the producer's 
customary delivery point, as determined by CCC.

[[Page 595]]

    (c) Settlements made by CCC for peanuts acquired by CCC and stored 
in an authorized warehouse will be based on the settlement value at the 
time of the loan disbursement and the entries in the applicable 
warehouse receipt, supplemental certificate, and accompanying documents 
subject to adjustments for changes in quality and other factors.
    (1) All eligible commodities that are stored in other than 
authorized warehouses will be delivered to CCC as CCC instructs. 
Settlement will be based on entries in the applicable warehouse receipt, 
supplemental certificate, and accompanying documents.
    (2) For eligible loan commodities that are delivered from other than 
an authorized warehouse, settlement shall be made by CCC on the basis of 
the basic marketing assistance loan rate that is in effect for the 
commodity at the producer's customary delivery point, as determined by 
CCC.
    (d) For peanuts forfeited to CCC, the Secretary will pay reasonable 
storage, handling, and other associated costs for all peanuts pledged as 
collateral that are forfeited under this section.
    (e) In all cases, settlements may be adjusted for changes in quality 
and other factors affecting the value of the commodity.
    (f) Premiums and discounts will apply to all eligible loan 
commodities that are forfeited and delivered to CCC. There will not be 
any additional adjustments for peanuts at settlement, because such 
premiums and discounts will be accounted for when a peanut MAL is made.
    (g) If a deficiency exists after the collateral securing a 
nonrecourse MAL has been delivered to CCC or a recourse MAL sold under a 
local sale, a receivable for such deficiency will be established as 
specified in part 1403 of this chapter.
    (h) CCC will not assume any loss in quantity or quality of the loan 
collateral for any farm-stored MALs.

[67 FR 63511, Oct. 11, 2002, as amended at 71 FR 32425, June 6, 2006. 
Redesignated and amended at 74 FR 15655, Apr. 7, 2009; 80 FR 125, 129, 
130, Jan. 2, 2015]



Sec.1421.112  Foreclosure.

    (a)(1) Upon maturity and nonpayment of a warehouse-stored MAL, title 
to the unredeemed collateral securing the MAL will immediately vest in 
CCC.
    (2) Upon maturity and nonpayment of a farm-stored MAL, title to the 
unredeemed collateral will automatically transfer to CCC upon CCC 
demand.
    (3) When CCC acquires title to the unredeemed collateral, CCC will 
not pay for any market value that such collateral may have in excess of 
the MAL indebtedness, (the unpaid amount of the note and charges plus 
interest).
    (b) If the total amount due on a farm-stored MAL (the unpaid amount 
of the note plus charges, and interest) is not satisfied upon maturity, 
CCC may remove the commodity from storage, and assign, transfer, and 
deliver the commodity or documents evidencing title thereto when, how, 
and upon terms as CCC determines. Disposition may also be effected 
without removing the commodity from storage. The commodity may be 
processed before sale and CCC may become the purchaser of the whole or 
any part of the commodity at either a public or private sale.
    (1) The value of settlement for a farm-stored commodity removed by 
CCC from storage and will be as provided in Sec.1421.111.
    (2) If a deficiency exists after the collateral is sold, a 
receivable for such deficiency will be established in accordance with 
part 1403 of this title.

[67 FR 63511, Oct. 11, 2002. Redesignated and amended at 74 FR 15655, 
Apr. 7, 2009; 80 FR 124, 130, Jan. 2, 2015]



Sec.1421.113  Recourse MALs.

    (a) CCC will make recourse MALs available to eligible producers of 
high moisture corn, high moisture grain sorghum and other eligible loan 
commodities as determined by the Deputy Administrator, Farm Programs.
    (b) Repayment is required to be paid in full at principal plus 
interest on or before the loan maturity date.

[[Page 596]]

    (c) Recourse MAL collateral may not be delivered or forfeited to CCC 
in satisfaction of the loan indebtedness.

[67 FR 63511, Oct. 11, 2002. Redesignated at 70 FR 33799, June 10, 2005. 
Redesignated and amended at 74 FR 15655, Apr. 7, 2009; 80 FR 126, 129, 
Jan. 2, 2015]



                   Subpart C_Loan Deficiency Payments

    Source: 67 FR 63511, Oct. 11, 2002, unless otherwise noted.



Sec.1421.200  Applicability.

    (a) During the MAL availability period, LDPs will be made available 
to eligible producers when the alternative repayment rate is less than 
the applicable county loan rate.
    (b) To be eligible to receive LDPs a producer must:
    (1) Comply with all MAL eligibility including beneficial interest 
requirements.
    (2) Agree to forgo obtaining such MAL, if applicable; and
    (3) File in person, by mail or electronically a request for payment 
on a form prescribed by CCC; and
    (4) Otherwise comply with all program requirements.
    (c)(1) A producer must submit to the FSA Service Center a completed 
request for a LDP on forms prescribed by CCC. This submission must be 
received on or before the date beneficial interest is lost in the 
commodity and before the final loan availability date for the commodity. 
Such completed and submitted forms indicate the producer's intentions 
and further provide the terms and conditions of the LDP program. If all 
or any of the provisions of this paragraph are not met by the producer, 
the producer may not obtain the LDP benefit.
    (2) With respect to a request for a LDP for unshorn pelts, a 
completed request for such a payment must be submitted on or before the 
earlier of the date of slaughter of the lamb or the loss of beneficial 
interest in the lamb or the unshorn pelt produced from the lamb. In 
addition, the lamb must have been owned for not less than 30 days prior 
to the date such application is filed with CCC and must have been 
slaughtered for personal use, or sold for slaughter and slaughtered 
within 10 calendar days after the sale.
    (d) For unshorn pelts, the lamb must be owned for a period of not 
less than 30 days in advance of the application and sold for immediate 
slaughter or slaughtered for personal use. Producers must submit 
acceptable production evidence to CCC under Sec.1421.12 at the time of 
request. Producers who do not sell lambs for immediate slaughter are 
ineligible for a LDP.
    (e) AGI and payment limitation requirements apply as specified in 
part 1400 of this chapter.

[67 FR 63511, Oct. 11, 2002, as amended at 71 FR 32425, June 6, 2006; 74 
FR 15655, Apr. 7, 2009; 80 FR 126, 129, Jan. 2, 2015]



Sec.1421.201  Loan deficiency payment rate.

    (a) The LDP rate for a crop will be the amount by which the loan 
rate for the crop exceeds the rate at which CCC has announced that 
producers may repay their MALs as specified in Sec.1421.10.
    (b) The LDP rate will be the rate in effect in the county where the 
commodity was marketed or stored on the date:
    (1) The request for benefits is received in the FSA Service Center, 
if the producer retains beneficial interest in the quantity on that 
date.
    (2) Beneficial interest was lost, as determined by CCC and as 
provided in Sec. Sec.1421.6 and 1421.13, if on the date the request 
for benefits was received in the FSA Service Center the producer no 
longer has beneficial interest in the requested quantity.
    (3) The commodity is delivered, if the producer elects to receive 
the LDP rate based on the date of delivery.
    (c) The LDP applicable to such crop will be computed by multiplying 
the LDP rate, as determined under paragraph (b) of this section, by the 
quantity of the crop the producer is eligible to pledge as collateral 
for a nonrecourse MAL for which the LDP is requested.

[67 FR 63511, Oct. 11, 2002, as amended at 71 FR 32425, June 6, 2006; 71 
FR 51426, Aug. 30, 2006; 74 FR 15655, Apr. 7, 2009; 80 FR 126, 130, Jan. 
2, 2015]

[[Page 597]]



Sec.1421.202  Loan deficiency payment quantity.

    (a) A LDP may be based on 100 percent of the net eligible quantity 
specified on acceptable evidence of production of the commodity 
certified as eligible for LDP if such production evidence is provided 
for such commodity under Sec.1421.12.
    (b) Two or more producers may obtain a single joint LDP for 
commodities that are stored in the same storage facility. Two or more 
producers may obtain individual LDPs for their share of the commodity 
that is stored commingled in a farm storage facility with commodities 
for which an LDP has been requested and will be liable for any damage 
incurred by CCC for incorrect certification of such commodities under 
Sec.1421.203.
    (c) Two or more producers may obtain a single joint LDP for 
commodities that are stored in an authorized or unauthorized warehouse 
if the acceptable documentation representing an eligible commodity for 
which a LDP is requested is completed jointly for such producers.

[67 FR 63511, Oct. 11, 2002, as amended at 74 FR 15656, Apr. 7, 2009; 80 
FR 126, 130, Jan. 2, 2015]



Sec.1421.203  Personal liability of the producer.

    (a) When a producer requests a LDP, the producer agrees:
    (1) When signing the LDP Agreement and Request, as applicable, that 
the producer will not provide an incorrect certification of the quantity 
or make any fraudulent representation, that CCC will rely upon when 
determining eligibility for a LDP; and
    (2) That violation of the terms and conditions of the LDP request, 
as applicable, will cause harm or damage to CCC in that funds may be 
disbursed to the producer for a quantity of a commodity that is not 
actually in existence or for a quantity on which the producer is not 
eligible. If CCC determines that the producer has violated the terms and 
conditions of the applicable forms prescribed by CCC, liquidated damages 
will be assessed on the quantity of the commodity that is involved in 
the violation.
    (b) Liquidated damages assessed in accordance with this section will 
be determined by multiplying the quantity involved in the violation by 
10 percent of the LDP.
    (c) If CCC determines that the producer:
    (1) Acted in good faith when the violation occurred, liquidated 
damages will be assessed according to paragraph (b) of this section and 
the producer must repay the LDP applicable to the loan deficiency 
quantity involved in the violation and charges, plus interest applicable 
to the amount repaid. If the producer fails to pay such amount within 30 
days from the date of notification the producer must repay the entire 
LDP and any other charges plus interest.
    (2) Did not act in good faith when the violation was committed, 
liquidated damages will be assessed in accordance with paragraph (b) of 
this section and the producer shall repay the entire LDP and any other 
charges plus interest.
    (d) CCC may waive the liquidated damages assessed according to 
paragraph (b) of this section if the CCC determines that the violation 
occurred inadvertently, accidentally, or unintentionally.
    (e) If, for any violation to which paragraph (b) of this section 
applies, the county committee determines that CCC's interest is not or 
will not be protected, the county committee will:
    (1) Accelerate the maturity date on the producer's outstanding farm-
stored MALs;
    (2) Deny future farm-stored MALs for the current and 2 following 
crop years;
    (3) Deny LDPs for the current and 2 following crop years unless 
production evidence is presented to CCC. Depending on the severity of 
the violation, the county committee may deny future farm-stored MALs and 
LDPs without production evidence.
    (f) If the county committee determines that the producer has 
committed a violation, the county committee will notify the producer in 
writing that:
    (1) The producer has 30 calendar days to provide sufficient evidence 
and information regarding the circumstances that caused the violation, 
to the county committee; and

[[Page 598]]

    (2) Administrative action will be taken under this section.
    (g) If the amount disbursed under LDPs exceeds the amount authorized 
by this part, the producer is liable for repayment of such excess and 
liquidated damages, plus interest.
    (h) In the case of joint LDPs, the personal liability for the 
amounts specified in this section is joint and several on the part of 
each producer signing the LDP application.
    (i) Any or all of the liquidated damages assessed under the 
provisions of paragraph (b) of this section may be waived as determined 
by CCC.

[67 FR 63511, Oct. 11, 2002, as amended at 71 FR 32425, June 6, 2006; 74 
FR 15656, Apr. 7, 2009; 80 FR 126, 130, Jan. 2, 2015]



    Subpart D_Grazing Payments for Wheat, Barley, Oats, and Triticale

    Source: 66 FR 13404, Mar. 6, 2001, unless otherwise noted. 
Redesignated at 67 FR 63511, Oct. 11, 2002.



Sec.1421.300  Applicability.

    (a) The regulations in this subpart are applicable to the eligible 
acreage planted to wheat, barley, oats, or triticale that is grazed by 
livestock and not harvested in any other manner. This subpart specifies 
the terms and conditions under which a grazing payment will be made by 
CCC in lieu of an LDP.
    (b) The form that is used in administering these payments is 
available in State and county FSA offices and will be prescribed by CCC.

[66 FR 13404, Mar. 6, 2001. Redesignated and amended at 67 FR 63511, 
63523, Oct. 11, 2002; 74 FR 15656, Apr. 7, 2009; 80 FR 127, 130, Jan. 2, 
2015]



Sec.1421.301  Administration.

    (a) This subpart will be administered by the FSA under the general 
direction and supervision of the Executive Vice President, CCC or 
designee. The program will be carried out in the field by State and 
county FSA employees under the general direction and supervision of the 
State and county FSA committees.
    (b) State and county committees, and representatives and employees 
thereof, do not have the authority to modify or waive any of the 
provisions of the regulations in this part, as amended or supplemented.
    (c) The State committee will take any action required by this part 
which has not been taken by the county committee. The State committee 
will also:
    (1) Correct, or require a county committee to correct, any action 
taken by such county committee which is not in accordance with the 
regulations of this part; or
    (2) Require a county committee to withhold taking any action which 
is not in accordance with the regulations of this part.
    (d) No delegation herein to a State or county committee will 
preclude the Executive Vice President, CCC, or a designee, from 
determining any question arising under the program or from reversing or 
modifying any determination made by a State or county committee.
    (e) The Deputy Administrator for Farm Programs (DAFP), FSA, may 
authorize State and county committees to waive or modify deadlines and 
other program requirements in cases where timeliness or failure to meet 
such other requirements does not adversely affect the operation of the 
program. In addition, DAFP may establish other conditions for payments 
that will assist in achieving the goals of the program and may include 
such provisions in the program agreement or other program documents.

[66 FR 13404, Mar. 6, 2001, as amended at 80 FR 127, 130, Jan. 2, 2015]



Sec.1421.302  Eligible producer and eligible land.

    (a) To be an eligible producer for a payment under this subpart, the 
person must be a producer of wheat, barley, oats, or triticale in the 
applicable crop years. Also, to be an eligible producer, the person must 
meet all other qualifications for payment that are set out in this 
subpart, set out in parts 12, 718, 1400, and 1405 of this title. A 
person will not be considered the producer of the crop unless that 
person was responsible for the planting of the crop and had control and 
title of the crop at all

[[Page 599]]

times, including, at the time of planting and the time of the request 
for a payment under, this subpart.
    (b) A minor may participate in the program if the right of majority 
has been conferred on the minor by court order or by statute, or if the 
minor participates through a guardian authorized to act on the minor's 
behalf in these matters. Alternatively, a minor may participate if the 
program documents are all signed by an acceptable (to CCC) guarantor or 
if bond, acceptable to CCC, is provided by a surety.
    (c) For the crop to be eligible, the crop, in addition to other 
standards that may apply, must be grown on land that is classified as 
``cropland'' in FSA farm records or on land that FSA determines has been 
cropped in the last 3 years except that the land may also qualify if the 
land is committed to a crop rotation, normal for the locality, that 
includes harvesting the subject crop for grain. These rules are designed 
to assure, to the extent practicable, the available payment did not 
produce plantings that otherwise would not have occurred and the CCC may 
deny payments in any instance in which there is reason to believe that 
the planting was done for that purpose. To that end, if the commodity 
involved has not been previously grown by the producer or is not one 
which is not predominately produced locally, the producer must submit 
evidence of seed purchases for planting the commodities and other 
evidence deemed needed or appropriate by the COC in order to assure that 
the program goals are made and that the land was not planted to an 
eligible commodity simply to obtain a payment. Also, the land to be 
eligible must, for the year involved, be grazed and cannot, during the 
crop year, be harvested at any time for any purpose, except as 
determined by the Deputy Administrator to accommodate producers with a 
history of double-cropping when the crop to be harvested is not the crop 
for which a payment is to be made under this subpart. Land will be 
considered grazed only to the extent that the crop on the land is 
consumed in the field as live plants by livestock for the normal period 
of time for grazing in the area.
    (d)(1) A producer must, at the time the LDP agreement is signed, 
meet all other eligibility criteria for obtaining LDPs including AGI and 
payment limitation requirements as specified in part 1400 of this 
chapter.
    (2) For producers of triticale who obtain a payment under this 
subpart the producer must enter into an agreement with CCC to forgo any 
harvesting of triticale on the acreage for which such a payment is made.
    (e)(1) No payment will be made if the crop could not have been 
harvested because of weather conditions or any other reason.
    (2) The producer must retain the control and title of the commodity 
for which the payment is sought from the date of planting through the 
date on which mechanical harvesting of the crop would normally occur.
    (f) Producers who elect to graze their wheat, barley, oats, or 
triticale will not be eligible for an indemnity under the Federal Crop 
Insurance Program provisions of Chapter IV of this title or a payment 
under the Noninsured Crop Assistance Program authorized under part 1437 
of this chapter.

[66 FR 13404, Mar. 6, 2001. Redesignated and amended at 67 FR 63511, 
63523, Oct. 11, 2002. Redesignated and amended at 74 FR 15656, Apr. 7, 
2009; 80 FR 127, Jan. 2 2015]



Sec.1421.303  Time and method for application.

    (a) Application for the program provided in this subpart must be 
received, at the FSA county office that is responsible for administering 
programs for the farm, no earlier than the date on which eligible crops 
would normally be harvested and no later than the final loan 
availability date as determined in accordance with Sec.1421.5.
    (b) The application must describe the land to be grazed and, in 
accordance with standards set by CCC, the tract or field location.
    (c) The COC will determine the first harvest date, taking into 
account the date on which such crops are normally harvested locally for 
any purpose.
    (d) Where multiple producers are involved, the application must 
specify each producer's share in the crop.

[[Page 600]]

    (1) A producer may only receive payments under this subpart that are 
commensurate with that producer's share in the crop as specified on the 
application.
    (2) Should a person who is entitled to receive a payment under this 
subpart die, that payment, as earned, may be made to other persons as 
provided for in the rules specified in part 707 of this title.
    (3) Third parties may also receive payments to the extent provided 
for in part 707 of this title for other situations involving an 
incapacitation of the producer.
    (e) Refusals to allow CCC to verify information on any application 
or report used for this subpart can result in program ineligibility and 
producers must provide CCC, FSA, and its agent access to the property 
involved and to all records as may be relevant to the making of payments 
under this subpart.
    (f) False statements will disqualify the producer from the program 
and may be subject to other sanctions including criminal sanctions.

[80 FR 127, Jan. 2, 2015]



Sec.1421.304  Payment amount.

    (a) The grazing payment rate will be the LDP in effect for the farm 
on the date which the producer submits a complete program application to 
CCC. For triticale, the grazing rate will be equal to the LDP rate in 
effect for the predominant class of wheat in the county where the farm 
is located as of the date the application is filed.
    (b) The payable units of production will be computed by multiplying 
the eligible grazed acres by the applicable yield determined under 
paragraph (c) of this section.
    (c) The payment yield will be:
    (1) The yield for the loan commodity on the farm in effect for the 
calculation of Price Loss Coverage as specified in part 1412 of this 
chapter;
    (2) For a farm for which Agriculture Risk Coverage is elected, the 
payment yield that would otherwise be in effect for that loan commodity 
on the farm in the absence of such election as specified in part 1412 of 
this chapter; or
    (3) In the case of a farm for which no payment yield is established 
for the loan commodity on the farm, an appropriate yield as determined 
by the COC.
    (d) No payment may be received or retained under this subpart to the 
extent that the payment, were they considered to be LDPs, would place 
that person over the per person per year payment limit that applies to 
LDPs. The producer agrees that the CCC may collect any payment 
considered to be an overpayment by reason of this subsection by 
withholding LDPs until the matter is resolved, by treating the LDP as 
being not payable to the extent that a grazing refund would otherwise be 
due, by setoff, or by any other means available to CCC.
    (e) Payments can be withheld until the actual grazed acreage is 
verified and justified in connection with any other reports filed with 
FSA with respect to the farm (or filed with some other person or agency) 
and until all other necessary information is obtained. CCC may require 
such other verification as it deems appropriate to assure that the 
program goals are met.
    (f) To receive the payment, the eligible producer must submit a 
request for payment on an application form as prescribed by CCC or FSA. 
The application may be obtained from the county FSA office, or from the 
USDA or FSA web site in the Internet. The form must be submitted to the 
county by the close of business on or before March 31 of the calendar 
year following the year the crop is normally harvested.
    (g) The producer will be ineligible for payments under this subpart 
if any discrepancies between the reported acreage on the program form 
and other reports of acreage by the producer are not resolved by a date 
set by CCC.

[66 FR 13404, Mar. 6, 2001. Redesignated and amended at 67 FR 63511, 
63524, Oct. 11, 2002. Redesignated and amended at 74 FR 15656, Apr. 7, 
2009; 80 FR 127, 130, Jan. 2, 2015]



Sec.1421.305  Misrepresentation and scheme or device.

    (a) A producer is ineligible to receive payments under this subpart 
if it is determined by DAFP, the State committee, or the county 
committee to have:
    (1) Adopted any scheme or device which tends to defeat the purpose 
of this program;

[[Page 601]]

    (2) Made any fraudulent representation; or
    (3) Misrepresented any fact affecting a program determination.
    (b) Any funds disbursed pursuant to this subpart to a producer 
engaged in a misrepresentation, scheme, or device, or to any other 
person as a result of the producer's actions, will be refunded with 
interest together with such other sums as may become due. Any producer 
engaged in acts prohibited by this section and any person receiving 
payment under this subpart, as a result of such acts, will be jointly 
and severally liable 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 which may 
apply.

[66 FR 13404, Mar. 6, 2001. Redesignated at 74 FR 15656, Apr. 7, 2009; 
80 FR 127, 130, Jan. 2, 2015]



Sec.1421.306  Refunds; joint and several liability.

    (a) In the event there is a failure to comply with any term, 
requirement, or condition for payment arising under this application, of 
this subpart, and if any refund of a payment to CCC becomes due for that 
or other reason in connection with the application, of this subpart, all 
payments made under this subpart to any producer are to be refunded to 
CCC together with interest as determined in accordance with paragraph 
(c) of this section and late-payment charges as provided for in part 
1402 of this chapter.
    (b) All persons listed on an application are jointly and severally 
liable for any refund due in connection with that application and for 
any related charges which may be determined to be due for any reason.
    (c) Interest is applicable to refunds required from the producer. 
Interest will be charged at the rate of interest which the United States 
Treasury charges CCC for funds, as of the date CCC made such benefits 
available. Interest will accrue from the date such benefits were made 
available to the date of repayment but the interest rate will increase 
to reflect any increase in the rate charged to CCC by Treasury for any 
percent of time for which the interest assessment is collected. CCC may 
waive the accrual of interest if CCC determines that the cause of the 
erroneous determination was not due to any action of the producer.
    (d) Late payment interest will be assessed on refunds in accordance 
with the provisions of, and subject to the rates in part 1403 of this 
chapter.
    (e) Producers must refund to CCC any excess payments made by CCC 
with respect to any application in which they have an interest. Such 
refund will be subject to interest at the same rate that applies to 
other refunds.

[66 FR 13404, Mar. 6, 2001. Redesignated and amended at 74 FR 15656, 
Apr. 7, 2009; 80 FR 128, 130, Jan. 2, 2015]



         Subpart E_Designated Marketing Associations for Peanuts

    Source: 70 FR 33799, June 10, 2005, unless otherwise noted.

    Editorial Note: Nomenclature changes to subpart E of part 1421 
appear at 74 FR 15656, Apr. 7, 2009.



Sec.1421.400  Applicability.

    (a) This subpart specifies the terms and conditions under which an 
entity that is a DMA of peanut producers, or a subsidiary of such an 
entity, may qualify as a DMA, as defined in Sec.1421.3. DMAs may 
process peanut MALs and LDPs on behalf of producers.
    (b) This subpart only applies with respect to peanut MALs and peanut 
LDPs.

[80 FR 128, Jan. 2, 2015]



Sec.1421.401  DMA responsibilities.

    (a) DMAs are eligible to process the MALs and LDPs provided for in 
this part only for peanut producers and only if the DMA and the 
producers and peanuts meet all eligibility criteria set out in this 
part, including, but not limited to, the DMA eligibility provisions of 
this subpart. In carrying out those functions, DMAs must:
    (1) Prepare and execute the appropriate CCC peanut MAL and LDP 
application documents;
    (2) Determine whether producers and the commodity are eligible for 
MALs and LDPs, including whether the otherwise eligible peanuts are free 
and

[[Page 602]]

clear of all liens which DMAs determine by performing lien searches at 
DMAs expense;
    (3) Instruct the holder of EWRs, if applicable, to notify the EWR 
provider to amend the EWR to show CCC is the holder;
    (4) Receive MAL and LDP documents from a DMA Service County Office;
    (5) Disburse peanut MALs and LDP proceeds to eligible producers;
    (6) Prepare and execute documents for MAL repayments;
    (7) Collect MAL repayments from producers or buyers and transmit 
those funds to CCC;
    (8) Transmit documents to render forfeited collateral to CCC; and
    (9) Collect data for reporting to CCC as required by CCC;
    (b) As part of performing the responsibilities in paragraph (a) of 
this section, DMAs:
    (1) Become knowledgeable of and follow the procedures in CCC and FSA 
peanut MAL and LDP regulations, applicable notices published in the 
Federal Register, applicable FSA peanut program handbooks and amendments 
thereto, and any applicable notices or instructions issued by FSA and 
the Agricultural Marketing Service.
    (2) Make and service CCC peanut MALs and LDPs, only upon the 
presenting by producers or their agents of the warehouse receipts, 
unless otherwise directed by CCC.
    (3) Attend, at the DMAs expense, DMA peanut MAL, and LDP program 
training offered by CCC.
    (4) Provide sufficient personnel, computer hardware, computer 
communications systems, and software, as determined necessary by CCC, to 
administer the peanut MAL and LDP program.

[70 FR 33799, June 10, 2005. Redesignated and amended at 74 FR 15656, 
Apr. 7, 2009; 80 FR 128, Jan. 2, 2015]



Sec.1421.402  DMA eligibility to process MALs and LDPs.

    (a) A DMA is eligible to process any MAL or LDPs only if approved in 
advance to handle such matters by the Farm Service Agency pursuant to 
this part; and
    (1) The DMA meets the financial requirements and other requirements 
in this subpart and part;
    (2) The DMA is comprised solely of peanut producers or is a 
subsidiary of an organization of peanut producers;
    (3) The DMA is not controlled directly or indirectly by a person or 
entity that acquires peanuts for processing or crushing through a 
business involved in buying and selling peanuts or peanut products;
    (4) The DMA does not take title at any time to any peanuts for which 
it processes MALs or LDPs, irrespective of whether such title is taken 
before or after those activities are performed. If such title or 
interest is taken, the DMA is required to return to CCC the full amount 
of the CCC proceeds disbursed with respect to the peanuts; and
    (5) The DMA meets any additional requirements imposed by CCC or FSA.
    (b) The DMA's activities under this part are to be conducted only 
with respect to peanuts and only for producers and peanuts that meet all 
the eligibility requirements of this part. Such requirements include, 
but are not limited to, the requirement of Sec.1421.6 that the 
producer must have the beneficial interest in the peanuts while the 
peanuts are under MAL or when the LDP is received and must be the only 
person that has had such an interest in the peanuts prior to that time 
except as allowed by Sec.1421.6.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009; 
80 FR 128, Jan. 2, 2015]



Sec.1421.403  DMA approval.

    (a) Entities wishing to apply to be a DMA enabled to perform MAL and 
LDP functions under this part for peanuts must submit an application for 
such approval to FSA in a form approved by CCC. That application will 
include the following:
    (1) Two originals of a properly executed Designated Marketing 
Association agreement containing the terms and conditions prescribed by 
CCC.
    (2) A financial statement of not less than 1 year old on the date 
submitted, including accompanying notes, schedules, or exhibits, 
certified by a certified public accountant as fairly representing the 
entity's financial condition.
    (3) The entity's tax identification number.

[[Page 603]]

    (4) A copy of any applicable incorporating or partnership documents.
    (5) The applicant entity's mailing address, electronic mail address, 
and telephone number and facsimile number.
    (6) Any and all information requested by CCC regarding the DMAs 
materials, and equipment as CCC determines is necessary for the 
applicant to perform the services for which the approval to perform is 
sought.
    (7) A narrative explaining how the proposed DMA entity or parent 
entity provides marketing services to peanut producers.
    (8) Any additional information or financial security requested by 
the Agency.
    (b) Applicants are responsible for notifying FSA when any changes 
occur to their operations requiring amendments to their application or 
supporting documents.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009; 
80 FR 128, Jan. 2, 2015]



Sec.1421.404  Financial security.

    (a) In order to be approved to handle MALs and LDPs, a DMA must:
    (1) Have a current net worth ratio of at least 1:1; and
    (2) Provide security equal to $100,000 or a greater amount as 
determined by CCC.
    (b) [Reserved]

[80 FR 128, Jan. 2, 2015]



Sec.1421.405  Liability.

    (a) DMAs must indemnify CCC against any claim or loss by CCC in 
connection with the processing of any MALs or LDPs or other activity 
carried out by the DMA. If CCC pays any claim or suffers a loss as a 
result of the actions of DMA, or if a refund otherwise becomes due to 
CCC, payment in the amount of such losses or refund, plus interest, may 
be set-off by CCC from the financial security provided by DMA as 
required by this subpart. If the amount of the loss exceeds the amount 
of the financial security, such amount is paid to CCC by DMA with 
interest. Interest and other charges may be assessed consistent with 
Sec.1403.9 of this chapter. Remedies provided in this section or part 
are in addition to other remedies or penalties, whether civil, criminal 
or otherwise, as may apply.
    (b) If a DMA becomes liable to CCC under paragraph (a) of this 
section or otherwise in connection with this subpart, such DMA is not 
eligible to process an LDP or MAL until the receivable amount owed CCC 
is paid in full, and the full amount of financial security required by 
this subpart has been restored.

[80 FR 128, Jan. 2, 2015]



Sec.1421.406  Reporting requirements.

    (a) Report of changes. A DMA must furnish information to CCC within 
thirty calendar days relating to any substantial change in the DMA 
operations including but not limited to the following:
    (1) A change in its articles of incorporation;
    (2) A resolution affecting MAL or LDP operations.
    (3) A change to the DMAs name, address, phone number, or related 
information on the DMA agreement.
    (b) Other Information. The DMA must supply such additional 
information as CCC may request related to the DMAs continued approval by 
CCC to process MALs and LDPs under the authority provided in this 
subpart.
    (c) CCC request for information. CCC may require a DMA to submit 
updated information, a new application, or a request for recertification 
whenever CCC becomes aware of any changes or has any reason to be 
uncertain that the DMA is operating in a manner that is consistent with 
the information already submitted, or consistent with this part.
    (d) Annual recertification. Within 4 months after the end of the 
DMAs fiscal year, a DMA must submit the following information to CCC:
    (1) A current financial statement prepared according to generally 
accepted accounting principles;
    (2) A report of audit or review of the financial statement conducted 
by an independent Certified Public Accountant. The accountant's report 
of audit or review must include the accountant's certifications, 
assurances, opinions, comments, and notes with respect to such financial 
statements.

[[Page 604]]

    (3) Additional financial security as determined by CCC, if the 
financial security on file with CCC does not meet current requirements 
or has expired.
    (4) A report of changes as required under paragraph (a) of this 
section.
    (e) Activity report. DMAs must provide CCC reports of MAL and LDP 
volume and benefit earnings made by the DMA for individual producers, 
and gains received on behalf of each peanut producer, in a format as 
directed by CCC.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009; 
80 FR 128, Jan. 2, 2015]



Sec.1421.407  Suspension and termination.

    (a) Suspension. If CCC determines that a DMA is not in compliance 
with the DMA agreement CCC may suspend the DMA from making peanut MALs 
and LDPs until the DMA corrects the violation, or longer.
    (b) Termination. The DMA agreement may be terminated by the DMA upon 
30 calendar days' written notice to CCC. CCC may cancel the agreement at 
any time. Upon termination DMA must immediately cease processing MAL or 
LDP requests and documents except as needed to preserve CCC's position 
with respect to existing MALs or LDPs.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009; 
80 FR 128, Jan. 2, 2015]



Sec.1421.408  Prohibited activity.

    (a) DMAs approved to handle MALs and LDPs under this subpart may 
not:
    (1) Discriminate against or deny any producer from receiving MALs or 
LDPs because of race, color, national origin, gender, religion, age, 
disability, political beliefs, sexual orientation, and marital or family 
status for which they would otherwise be eligible under the statutes 
regulating the MAL and LDP program.
    (2) Pool peanuts for the purpose of obtaining peanut MALs or LDPs 
from CCC.
    (3) Pool the proceeds obtained from peanut MALs or LDPs made by CCC.
    (4) Process farm-stored certified or measured MALs or LDPs unless 
authorized by CCC.
    (5) Take title to any peanuts.
    (6) Operate the DMA under the same entity and tax identification 
number of a CCC-approved CMA.
    (7) Refuse services to producers because the DMA was not granted a 
power of attorney for purposes of executing MAL documents to obtain MALs 
for the producer, repaying the MAL for the producer, obtaining LDPs for 
the producer, or marketing the producer's peanuts.
    (8) Adopt any scheme or device to circumvent the purpose of the 
peanut MAL and LDP program regulations, the regulation governing DMAs, 
or the DMAs agreement with CCC.
    (9) Process MALs or LDPs for producers involved in a bankruptcy 
proceeding unless authorized by CCC.
    (10) Process MALs or LDPs on ineligible peanuts.
    (b) If the prohibitions of this section are violated FSA or CCC may 
take one or more of the actions authorized in this part or otherwise 
authorized.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009; 
80 FR 128, Jan. 2, 2015]



Sec.1421.409  Monitoring AGI and payment limitations.

    (a) DMAs are required to monitor their producers' AGIs and may not 
permit repayments with a market loan gain on peanut MALs or process 
peanut LDPs for those producers with annual AGI over the allowable limit 
as specified in part 1400 of this chapter.
    (b) DMAs are required to monitor their producers' payment limit and 
not process market loan gains on peanut MALs or peanut LDPs that would 
produce a gain over the payment limit as specified in part 1400 of this 
chapter.

[80 FR 128, Jan. 2, 2015]



Sec.1421.410  Recordkeeping requirements.

    A DMA must maintain producer MAL and LDP paper documents and 
electronic records for an indefinite period unless otherwise notified by 
CCC.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009; 
80 FR 129, Jan. 2, 2015]



Sec.1421.411  Forms.

    For purposes of conducting business related to this part, a DMA may 
use either current CCC forms or other forms approved by CCC. A DMA may 
perform

[[Page 605]]

functions under this part only when approval has been obtained by CCC.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009; 
80 FR 129, Jan. 2, 2015]



Sec.1421.412  Powers of attorney.

    DMAs may hold a power of attorney from a producer allowing the DMA 
to sign MAL and LDP documents for the producer, but DMAs may obtain and 
hold such powers only in accordance with the requirements of CCC 
governing such powers.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009]



Sec.1421.413  Liens and waivers.

    (a) DMAs performing MAL-related functions pursuant to the authority 
in this subpart must determine, to the same extent as required for MALs 
handled by FSA county offices, whether a lien on the peanuts exists by 
performing or obtaining a lien search for all peanuts to be pledged for 
each MAL, except that the cost associated with such lien search and any 
necessary lien waivers is borne by the DMA. If a lien exists, the DMA 
must obtain, on an approved CCC form, a signed waiver from each 
lienholder with an interest in any such lien.
    (b) [Reserved]

[80 FR 129, Jan. 2, 2015]



Sec.1421.414  Producer request to a DMA for an MAL or LDP.

    Peanut producers or their authorized agent may request that an MAL 
or LDP be processed by a DMA only if the DMA is approved under this 
subpart to process such a request and only if the producer supplies to 
the DMA:
    (a) Beneficial interest information. Beneficial interest must be 
maintained by the producer according to Sec.1421.6 for the peanuts to 
be eligible for MAL or LDP; accordingly, the producer must supply to the 
DMA such information as it needed to make that determination.
    (b) Warehouse receipts and lien information. Producers must supply 
for all peanuts either individual paper warehouse receipts in the 
producer's name or an electronic warehouse receipt (EWR) number and 
provider's name. Producers must supply relevant lien information 
regarding the peanuts; however, the producer's obligation in this regard 
does not relieve the DMA from making the appropriate lien search.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009]



Sec.1421.415  Processing marketing assistance loans.

    (a) DMAs must take the following actions in the following order when 
an application for an MAL is filed:
    (1) Make all the determinations that are a precondition for a MAL, 
including all producer eligibility requirements, lien determinations, 
and if requested by the producer, enter into a power of attorney 
agreement with the producer.
    (2) If there is an EWR for the peanuts, instruct the current holder 
to notify the EWR provider to amend the EWR to show the DMA as holder. 
If a paper receipt is involved, the DMA must obtain the receipt (and 
later, at the appropriate time include the receipt in the documents 
delivered to the CCC).
    (3) Complete all MAL forms.
    (4) After the producer or the person holding the power of attorney 
for the producer signs MAL document, provide the signatory with copies 
of the documents.
    (5) Where there is an EWR for the peanuts notify the EWR provider to 
make CCC the holder of the EWR and secure an affirmation verifying that 
CCC has been made the holder of the EWR.
    (b) [Reserved]

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009; 
80 FR 129, Jan. 2, 2015]



Sec.1421.416  Processing loan deficiency payments.

    (a) DMAs must take the following actions in the following order when 
an application for an LDP is filed:
    (1) In addition to other determinations that are required, the DMA 
must determine whether the producer exceeds the AGI limits and has 
sufficient eligibility under the applicable payment limit to allow the 
receipt of the LDP. If the producer is over the AGI limit or there is 
not sufficient payment limitation eligibility, the DMA cannot process 
the request.

[[Page 606]]

    (2) If EWRs are applicable for the peanuts for which the LDP is 
sought, the DMA must instruct the current holder to notify the EWR 
provider to amend the EWR to show that the peanuts were used to obtain 
an LDP;
    (3) The DMA must insure that the producer or the person holding the 
power of attorney for the producer signs the LDP documents; and
    (4) If the peanuts and the producer are eligible for the MAL and all 
other conditions have been met, the DMA may disburse funds to the 
producer subject to the time limits set out elsewhere in this part.
    (b) The LDP rate applicable to the LDP request will be the rate in 
effect on the date the DMA receives the request except as may otherwise 
be provided for in this part.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009; 
80 FR 129, Jan. 2, 2015]



Sec.1421.417  Disbursing MAL and LDP proceeds.

    (a) A DMA may request that CCC establish a drawdown account from 
which to disburse MAL and LDP amounts to producers, and designate the 
financial institution they wish to use.
    (b) CCC will determine whether a drawdown account is justified and 
the amount of the account.
    (c) If there is no drawdown account, MAL and LDP proceeds are to be 
distributed to the producer within 3 work days from the date the DMA 
receives MAL or LDP proceeds from CCC, after deduction of authorized 
charges or fees for services. If there is a drawdown account, the MAL 
and LDP proceeds are to be distributed to the producer within 3 days of 
the completion of the application.
    (d) The DMA is to assess charges and fees at the same rate for each 
producer that it serves.
    (e) If a drawdown account is used, CCC will replenish the amount as 
necessary as it is drawn down.
    (f) The DMA must notify CCC of the actual date on which the MAL is 
disbursed.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009; 
80 FR 129, 130, Jan. 2, 2015]



Sec.1421.418  Submitting MAL and LDP documentation to FSA.

    (a) Until such time as an alternative FSA MAL- or LDP-making system 
is made available to DMAs, within 3 business days of any DMA prepared 
disbursement, the DMA must separately group and submit to FSA:
    (1) MALs with the same disbursement date, peanut type, warehouse 
code, and State where peanuts were inspected; and
    (2) LDPs with the same LDP rate, approval date, and peanut type.
    (b) Each of the groups identified in paragraph (a) of this section 
must be submitted to FSA with the following documents:
    (1) Individual paper warehouse receipts or EWR numbers, and the EWR 
provider's name representing the bundled MALs or LDPs.
    (2) A form to itemize receipts, and other data, as required, or a 
pre-processed electronic file containing data required by FSA.
    (c) FSA may process each DMA prepared MAL or LDP group for the 
volume of peanuts on multiple receipts as one MAL or LDP, waive the 
service fee to the DMA, and either hold MAL paper warehouse receipts, or 
verify that CCC is holder of the EWRs as of the date of disbursement.
    (d) In the case of an MAL, if CCC was not the holder of the EWR on 
or before the date the DMA prepared MAL was disbursed, the applicable 
receipts will be rejected, and funds will not be distributed to the DMA 
drawdown account until CCC becomes the holder of the EWR.
    (e) If MAL and LDP documentation is acceptable, FSA will disburse 
MAL or LDP funds to the DMA, with appropriate supporting documentation.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009; 
80 FR 129, 130, Jan. 2, 2015]



Sec.1421.419  MAL or LDP servicing.

    (a) The DMA is responsible for servicing MALs and are required to 
take the following actions:
    (1) Send the producer a maturity notice letter before MAL maturity.
    (2) Maintain the MAL or LDP documents according to FSA requirements.

[[Page 607]]

    (3) Transmit the necessary funds to repay the MAL to FSA.
    (b) FSA will process the CCC release of paper receipts or EWRs where 
such a release is appropriate.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 
2009;80 FR 129, 130, Jan. 2, 2015]



Sec.1421.420  Inspections and reviews.

    The books, documents, papers, and records of the DMA and parent 
company must be maintained for 6 years after the applicable crop year 
and be made available to CCC for inspection and examination at all 
reasonable times. At any time after an application is received, CCC has 
the right to examine all books, documents, papers, and determine whether 
the DMA is operating or has operated in accordance with the regulations 
in this part, any articles of incorporation, articles of association, 
partnership documents, agreements with producers, the representations 
made by the DMA in its application for approval, and, where applicable, 
its agreements with CCC. If the DMA is determined to be not complying 
with this part or any of its agreements, CCC will take appropriate 
action as provided in elsewhere in this subpart or other action CCC 
determines appropriate.

[80 FR 129, Jan. 2, 2015]



Sec.1421.421  Appeals.

    Parts 11 and 780 of this title apply to this subpart.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009]



PART 1423_COMMODITY CREDIT CORPORATION APPROVED WAREHOUSES--
Table of Contents



Sec.
1423.1 Applicability.
1423.2 Administration.
1423.3 Definitions.
1423.4 General requirements.
1423.5 Application requirements.
1423.6 Financial information documentation requirements.
1423.7 Net worth alternatives.
1423.8 Approval or rejection.
1423.9 Examination of warehouses.
1423.10 Exceptions for United States Warehouse Act licensed warehouses.
1423.11 Delivery and shipping standards for cotton warehouses.
1423.12 Application, inspection, and annual agreement fees.
1423.13 Appeals, suspensions, and debarment.

    Authority: 15 U.S.C. 714b and 714c.

    Source: 71 FR 35773, June 22, 2006, unless otherwise noted.



Sec.1423.1  Applicability.

    (a) This part sets forth the terms and conditions for approval of a 
warehouse operator by the Commodity Credit Corporation (CCC) to store 
and handle CCC interest commodities, which are owned by CCC and, as may 
be required under parts 1421, 1427 and 1435 of this title, with respect 
to commodities pledged as security for a loan made by CCC. CCC may 
require that a warehouse enter into a storage agreement under this part 
to store such commodities. The execution of such a storage agreement by 
CCC does not constitute a commitment that CCC will use the warehouse.
    (b) By entering into a storage agreement with CCC, the warehouse 
operator agrees to comply with the terms and conditions of the storage 
agreement.



Sec.1423.2  Administration.

    On behalf of CCC, the Agricultural Marketing Service (AMS) will 
administer this part under the supervision of the AMS Administrator.

[84 FR 29033, June 21, 2019]



Sec.1423.3  Definitions.

    Active shipping order means an early shipping order or shipping 
order, as defined in this section, scheduled for a current cotton 
warehouse reporting week or for a prior reporting week, but not picked 
up.
    Agreement means agreements covering storage and handling of any such 
commodity CCC may determine appropriate for storage.
    Early shipping order means a list of bale tag numbers sent to a 
cotton warehouse operator without transfer of warehouse receipts.
    Shipping order means a list of bale tag numbers sent to a cotton 
warehouse operator accompanied by transfer of warehouse receipts.

[[Page 608]]

    Warehouse means a building, structure, or other protected enclosure, 
in good state of repair, and adequately equipped to receive, handle, 
store, preserve, and deliver the applicable commodity.
    Warehouse operator means an individual, partnership, corporation, 
association, or other legal entity engaged in the business of storing or 
handling for hire, or both, the applicable commodity.

[71 FR 35773, June 22, 2006, as amended at 75 FR 50849, Aug. 18, 2010; 
84 FR 29033, June 21, 2019]



Sec.1423.4  General requirements.

    (a) Unless otherwise provided in this part, approved warehouse 
operators must maintain a current and valid license for the kind of 
storage operation for which the warehouse operator seeks approval if 
such a license is required by State or local laws or regulations and 
maintain accurate and complete inventory and operating records.
    (b) Approved warehouse operators may only use pre-numbered warehouse 
receipts, or pre-assigned ranges of numbers for electronic warehouse 
receipts as set forth in the agreement, and may only use pre-numbered 
scale tickets, if applicable, as CCC may approve.
    (c) In addition, the warehouse operator must:
    (1) Be in compliance with state and local laws regarding fire 
safety;
    (2) Furnish a copy of any written lease agreement to CCC with the 
application. All leases are subject to CCC approval; and
    (3) Have sufficient employees and management with technical 
qualifications and skills in the warehousing business regarding the 
commodities subject to the agreement.
    (d) Unless otherwise provided in this part, each approved warehouse 
shall:
    (1) Be maintained under the control of the warehouse operator;
    (2) Be maintained in a good state of repair; and
    (3) Maintain adequate equipment to receive, handle, store, preserve 
and deliver the applicable commodity.



Sec.1423.5  Application requirements.

    To apply for approval under this part, a warehouse operator shall 
submit to CCC the following:
    (a) An application as prescribed by CCC for the applicable commodity 
storage agreement;
    (b) Evidence of compliance with Sec.1423.4;
    (c) Current financial information sufficient to meet the 
requirements of Sec.1423.6;
    (d) For State licensed or non-licensed warehouse operators, a sample 
copy of the warehouse operator's warehouse receipts or electronic 
warehouse receipt record descriptor when applicable; and
    (e) Such other documents or information as CCC may require to make a 
determination that the warehouse operator can comply with the provisions 
of this part.



Sec.1423.6  Financial information documentation requirements.

    To be approved under this part, a warehouse operator shall submit a 
current financial statement at the time of application, and annually 
thereafter, as provided for in the applicable storage agreement.



Sec.1423.7  Net worth alternatives.

    Warehouse operators with net worth equal to or greater than the 
minimum net worth required, but less than the total net worth for the 
commodity involved in the particular agreement, may satisfy the net 
worth deficiency by furnishing one of the following:
    (a) A bond which:
    (1) Is executed by a surety approved by the U.S. Department of the 
Treasury so long as the surety maintains someone authorized to accept 
service of legal process in the State where the warehouse is located.
    (2) Is executed on either a bond form obtained from CCC, or which is 
furnished under State law or operational rules for non-governmental 
supervisory agencies, if approved by CCC, so long as CCC determines that 
such alternative bond:
    (i) Provides adequate protection to CCC;
    (ii) Has been executed by a surety approved by the U.S. Department 
of the Treasury or has an acceptable blanket

[[Page 609]]

rider and endorsement executed by such a surety with the liability of 
the surety under such rider or endorsement being the same as that of the 
surety under the original bond; and
    (iii) Is effective for at least 1 year and cannot be canceled 
without 120 days notice to CCC. Excess coverage on a bond for one 
warehouse will not be accepted by CCC against insufficient bond coverage 
on other warehouses;
    (b) Cash and negotiable securities. Any such cash or negotiable 
securities accepted by CCC will be returned to the warehouse operator 
when the period for which coverage was required has ended and CCC 
determines there is no liability under the storage agreement;
    (c) An irrevocable letter of credit meeting CCC requirements that is 
effective for at least 1 year and cannot be canceled without 120 days 
notice to CCC. The issuing bank must be a commercial bank insured by the 
Federal Deposit Insurance Corporation or a financial institution subject 
to the Farm Credit Act; or
    (d) Other alternative instruments and forms of financial assurance 
as the AMS Administrator determines appropriate to secure the warehouse 
operator's compliance with this section.

[71 FR 35773, June 22, 2006, as amended at 84 FR 29033, June 21, 2019]



Sec.1423.8  Approval or rejection.

    (a) CCC will notify warehouse operators approved under this part in 
writing. Such approval does not relieve the warehouse operator of any 
obligation under any agreement to CCC or any other agency of the United 
States, and does not obligate CCC to use the warehouse.
    (b) CCC will notify the warehouse operator of rejection under this 
part in writing. The notification will state the causes for rejection. 
CCC will reconsider a warehouse for approval when the warehouse operator 
establishes that the reasons for rejection have been remedied or 
requests reconsideration of the action and presents to the Director, 
Warehouse and Commodity Management Division, AMS, in writing, 
information in support of such request. The warehouse operator may, if 
dissatisfied with the Director's determination, obtain a review of the 
determination and an informal hearing by submitting a request with the 
AMS Administrator. Appeals shall be as prescribed in part 780 of this 
title.

[71 FR 35773, June 22, 2006, as amended at 71 FR 42017, July 25, 2006; 
84 FR 29033, June 21, 2019]



Sec.1423.9  Examination of warehouses.

    Before approval, and while a storage agreement is in effect, a 
warehouse must be examined by a person designated by CCC periodically to 
determine compliance with this part. CCC or any other agency of USDA 
shall, at any time, have the right to inspect the warehouse storage 
facilities and any applicable records. Inspection or examination by CCC 
does not absolve the warehouse operator of any failure to comply with 
this part that CCC does not discover. Failure to allow access to 
facilities as required under this paragraph will result in rejection or 
revocation of approval.



Sec.1423.10  Exceptions for United States Warehouse Act licensed
warehouses.

    The financial requirements, net worth alternatives and examination 
provisions of this part do not apply if the warehouse operator is 
licensed under the U.S. Warehouse Act (USWA) for such commodities, but 
an examination under this part will be made of such a warehouse whenever 
CCC determines such action is necessary to protect its interests.



Sec.1423.11  Delivery and shipping standards for cotton warehouses.

    (a) Unless prevented from doing so by severe weather conditions, 
fire, explosion, flood, earthquake, insurrection, riot, strike, labor 
dispute, acts of civil or military authority, non-availability of 
transportation facilities or any cause beyond the control of the 
warehouse operator that renders performance impossible, the warehouse 
operator will:
    (1) Deliver stored cotton without unnecessary delay.
    (2) Be considered to have delivered cotton without unnecessary delay 
if the warehouse operator has made available for shipment at least 4.5 
percent of its applicable storage capacity

[[Page 610]]

in effect, measured as the bales made available for shipment (BMAS):
    (i) During the relevant week of shipment; or
    (ii) Calculated as the two-week, rolling average of the BMAS for the 
relevant week of shipment and the BMAS for the immediately preceding 
week; or
    (iii) Calculated as the two-week, rolling average of the BMAS for 
the relevant week of shipment and the BMAS for the immediately 
succeeding week.
    (b) The warehouse operator shall provide a written report to CCC on 
a weekly basis. The reporting week shall be the seven day period 
starting at midnight following the close of business on each Saturday 
and ending at midnight after close of business of the following 
Saturday. Before close of business of the first business day of the 
following week, the warehouse operator will provide following 
information to CCC:
    (1) BMAS during such week is defined as any cotton bales that have 
been delivered or are scheduled and ready for delivery but not picked up 
during such week;
    (2) Active shipping orders, by week; and
    (3) Applicable storage capacity that is the higher of CCC approved 
capacity or the maximum number of bales stored at any time during the 
applicable crop year.
    (c) The warehouse operator may resolve any claim for noncompliance 
from any entity other than CCC with the cotton shipping standard in a 
court of competent jurisdiction or through mutually agreed upon 
arbitration procedures. In no case will CCC provide assistance or 
representation to parties involved in arbitration proceedings arising 
with respect to activities authorized under the Cotton Storage 
Agreement.

[71 FR 51426, Aug. 30, 2006, as amended at 79 FR 70997, Dec. 1, 2014; 84 
FR 29033, June 21, 2019]



Sec.1423.12  Application, inspection, and annual agreement fees.

    Each warehouse operator not licensed under USWA shall pay to CCC a 
fee or fees, including an application fee, inspection fee, and an annual 
agreement fee for each warehouse approved by CCC or for which approval 
is sought. The terms and conditions of such fees will be set forth in 
the applicable agreement.



Sec.1423.13  Appeals, suspensions, and debarment.

    (a) After initial approval, warehouse operators may request that CCC 
reconsider adverse actions when the warehouse operator establishes that 
the reasons for the action have been remedied or requests 
reconsideration of the action and presents to the Director, Warehouse 
and Commodity Management Division, AMS, in writing, information in 
support of such request. The warehouse operator may, if dissatisfied 
with the Director's determination, obtain a review of the determination 
and an informal hearing by submitting a request to the AMS 
Administrator. Appeals shall be as prescribed in part 780 of this title, 
and under such regulations the warehouse operator shall be considered as 
a ``participant.''
    (b) Suspension and debarment actions taken under this part shall be 
conducted in accordance with part 1407 of this chapter. After expiration 
of the suspension or debarment period, a warehouse operator may, at any 
time, apply for approval under this part.

[71 FR 35773, June 22, 2006, as amended at 84 FR 29033, June 21, 2019]



PART 1424_BIOENERGY PROGRAM--Table of Contents



Sec.
1424.1 Applicability.
1424.2 Administration.
1424.3 Definitions.
1424.4 General eligibility rules.
1424.5 Agreement process.
1424.6 Payment application process.
1424.7 Gross payable units.
1424.8 Payment amounts.
1424.9 Reports required.
1424.10 Succession and control of facilities and production.
1424.11 Maintenance and inspection of records.
1424.12 Appeals.
1424.13 Misrepresentation and scheme or device.
1424.14 Offsets, assignments, interest and waivers.

    Authority: 7 U.S.C. 8108, 15 U.S.C. 714b and 714c.

    Source: 68 FR 24600, May 7, 2003, unless otherwise noted.

[[Page 611]]



Sec.1424.1  Applicability.

    This part sets out regulations for the Bioenergy Program (program). 
It sets forth, subject to the availability of funds as provided herein, 
or as may be limited by law, the terms and conditions a bioenergy 
producer must meet to obtain payments under this program and part from 
the Commodity Credit Corporation (CCC) for eligible bioenergy 
production. Additional terms and conditions may be set forth in the 
document required to request program benefits and in the program 
contract or agreement prescribed by CCC. This program is effective 
October 1, 2002, through September 30, 2006.



Sec.1424.2  Administration.

    This part shall be administered by the Executive Vice President, 
CCC, under the general direction and supervision of the Executive Vice 
President or designee. The Executive Vice President or a designee may 
authorize a waiver or modification of deadlines and other program 
requirements in cases where lateness or failure to meet such other 
requirements does not adversely affect the operation of the program, and 
may set such additional requirements as will facilitate the operation of 
the program. The funds available for the program shall be limited as set 
by this rule, otherwise announced by the Executive Vice President, CCC, 
or limited by law.



Sec.1424.3  Definitions.

    The definitions set forth in this section shall be applicable for 
all purposes of program administration under this subpart.
    Agreement means the Bioenergy Program Agreement or other form 
prescribed by CCC that must be executed for participation in the 
program.
    Application means the application form prescribed by CCC or another 
form that contains the same terms, conditions, and information required.
    ATF means the Bureau of Alcohol, Tobacco, Firearms, and Explosives 
of the United States Department of Justice.
    Base production means a biodiesel producer's current FY's biodiesel 
production from eligible commodities that is not an increase over 
biodiesel production in the previous FY to date.
    Biodiesel means a mono alkyl ester manufactured in the United States 
and its territories that meets the requirements of an appropriate 
American Society for Testing and Materials Standard.
    Biodiesel producer means a producer that produces and sells 
biodiesel who is also registered and in compliance with section 211 (b) 
of the Environmental Protection Agency Clean Air Act Amendment of 1990.
    Bioenergy means ethanol and biodiesel produced from eligible 
commodities.
    Conversion factor means:
    (1) For ethanol production, a factor that converts the number of 
ethanol gallons back to commodity units as determined in the manner 
announced by CCC;
    (2) For biodiesel production, the factor that will treat 1.4 gallons 
of biodiesel produced as having involved the consumption of one bushel 
of soybeans in any case when the feedstock was an eligible commodity 
that has a corresponding oil or grease market price; if there is none, 
then the factor shall be as determined and announced by CCC.
    Eligible commodity means barley; corn; grain sorghum; oats; rice; 
wheat; soybeans; cotton seed; sunflower seed; canola; crambe; rapeseed; 
safflower; sesame seed; flaxseed; mustard seed; cellulosic crops, such 
as switchgrass and hybrid poplars; fats, oils, and greases (including 
recycled fats, oils and greases) derived from an agricultural product; 
and any animal byproduct (in addition to oils, fats and greases) that 
may be used to produce bioenergy, as CCC determines, that is produced in 
the United States and its territories.
    Eligible producer means a bioenergy producer who meets all 
requirements for program payments.
    Ethanol means anhydrous ethyl alcohol manufactured in the United 
States and its territories and sold either:
    (1) For fuel use, rendered unfit for beverage use, produced at a 
facility and in a manner approved by ATF for the production of ethanol 
for fuel; or

[[Page 612]]

    (2) As denatured ethanol used by blenders and refiners and rendered 
unfit for beverage use.
    Ethanol producer means a person authorized by ATF to produce 
ethanol.
    FSA means the Farm Service Agency, USDA.
    FY means the fiscal year beginning each October 1 and ending 
September 30 of the following calendar year.
    KCCO means the FSA, Kansas City Commodity Office.
    Posted County Price means the same Posted County Price for different 
locations as is used under other CCC commodity programs for marketing 
loan gains and other matters.
    Producer is a legal entity (individual, partnership, cooperative, or 
corporation, etc.) who is a commercial bioenergy producer making 
application or otherwise involved under this program.
    Quarter means the respective time periods of October 1 through 
December 31, January 1 through March 31, April 1 through June 30, and 
July 1 through September 30 of each FY, as applicable.
    Sign-up period means the time period announced by CCC during which 
CCC will accept program agreements.
    USDA means the United States Department of Agriculture.



Sec.1424.4  General eligibility rules.

    (a) An applicant must be determined eligible by KCCO and be assigned 
an agreement number.
    (b) To be eligible for program payments, a producer must maintain 
records indicating for all relevant FY's and FY quarters:
    (1) The use of eligible commodities in bioenergy production;
    (2) The quantity of bioenergy produced from an eligible commodity by 
location;
    (3) The quantity of eligible commodity used by location to produce 
the bioenergy referred to in paragraph (b)(2) of this section; and
    (4) All other records, needed, or required by the agreement to 
establish program eligibility and compliance.
    (c) A producer must allow verification by CCC of all information 
provided. Refusal to allow CCC or any other agency of USDA to verify any 
information provided will result in a producer being determined not 
eligible.
    (d) For producers not purchasing raw commodity inputs, the 
production must equal or exceed that amount of production that would be 
calculated using the raw commodity inputs and the conversion factor set 
out in Sec.1424.3. A producer that purchases soy oil from a soybean 
crushing plant for further refinement into biodiesel must be able to 
prove to CCC's satisfaction both soy oil purchases and biodiesel 
production for the applicable quarter. Any special conversion factors 
needed will be the province of CCC and CCC alone and CCC's decision will 
be final.
    (e) A producer must meet all other conditions set out in these 
regulations, in the agreement, or in other program documents.



Sec.1424.5  Agreement process.

    (a) To participate, an eligible producer must submit a signed 
agreement during the FY sign-up period. Agreements may be for single or 
multiple FY's. However, multiple FY agreements require producers to 
submit annual production estimate reports during each applicable FY 
sign-up period. Such reports must comply with the terms of the agreement 
and this part. In all cases, the accounting for compliance will be made 
on a per FY basis.
    (b) Sign-up each FY will be held for 30 calendar days beginning for:
    (1) FY 2003 on the date of publication of this rule;
    (2) FY 2004 and beyond on August 1 of the FY before the applicable 
FY.
    (c) After agreements are submitted:
    (1) If determined eligible by KCCO, an agreement number will be 
assigned, and a notification will be mailed to the producer;
    (2) If additional information is needed for KCCO to determine 
eligibility, the producer will be contacted as soon as practicable and 
requested to provide additional supporting documentation;
    (3) If determined ineligible by KCCO, producers will be notified in 
writing that their agreement was rejected and the reason for the 
determination.



Sec.1424.6  Payment application process.

    (a) To apply for payments under this program during an FY, an 
eligible producer must:

[[Page 613]]

    (1) Submit an application or eligibility report for each quarter. 
Submit the last quarterly application or report of the FY within 30 
calendar days of the end of the FY for which payment is requested. If 
the actual deadline is a non-workday, the deadline will be the next 
business day;
    (2) Certify with respect to the accuracy and truthfulness of the 
information provided;
    (3) Furnish CCC such certification, and access to such records, as 
CCC considers necessary to verify compliance with program provisions; 
and
    (4) Provide documentation as requested by CCC of both the producer's 
net purchases of eligible commodities and net production of bioenergy 
compared to such production at all locations during the relevant 
periods. CCC may adjust the formulaic payments otherwise payable to the 
producer if there is a difference between the amount actually used and 
certified and the amount of increased commodity use calculated under the 
formula.
    (b) After applications or reports are submitted, eligible producers:
    (1) Shall submit such additional supporting documentation as 
requested by KCCO when additional information is needed to determine 
eligibility;
    (2) Will be notified in writing of their ineligibility and reason 
for the determination, when the application is determined ineligible by 
KCCO; and
    (3) Shall promptly refund payments when a refund to CCC is due. If a 
refund is not made promptly, CCC may establish a claim.



Sec.1424.7  Gross payable units.

    (a) For ethanol, producers will be eligible for payments on gross 
payable units for only their ethanol production from eligible inputs 
that exceeds, for the program year to date, their total comparable 
production at all locations as compared to the comparable portion of the 
previous year. Producers of ethanol are not eligible for base production 
payments. Producers shall not be paid twice for the same increase and 
any decline in relative production between quarters will require a 
comparable refund. For example, if at the end of the first quarter, a 
producer were to be paid for an increase of 500 gallons of ethanol, but 
at the end of the second quarter, that producer's year-to-date 
production was down to a net increase for the year of 450 gallons, then 
a refund would be due for the loss of the corresponding 50 gallons of 
net extra production. Repayment rates shall be based on previous payment 
rates. Unless otherwise determined by CCC, the extra ethanol production 
from eligible inputs will be converted to gross payable units by 
dividing the gallons of increased ethanol by the applicable conversion 
factor.
    (b) Biodiesel producers will be eligible for payments on gross 
payable units for all biodiesel production from eligible inputs. For 
eligibility purposes there will be two kinds of payment: additional 
production payments (APP), and base production payments (BPP). Repayment 
rates shall be based on previous payment rates. Unless otherwise 
determined by CCC, gross payable units for biodiesel production from 
eligible inputs will be calculated as follows:
    (1) For APP, by dividing the gallons of increased biodiesel by the 
biodiesel conversion factor of 1.4. APP payments will be made on 
increases as compared with the previous FY. Producers will not be paid 
twice for the same production. Failure to maintain year to date 
biodiesel production increases between quarters will require a 
comparable APP refund as specified below. That is, for example, if a 
producer were to be paid, at the end of the first quarter, for 500 
gallons of increased biodiesel production, but by the end of the second 
quarter that producer's production, for the year to date, was only 450 
gallons, then a refund of the APP premium would be due for the loss of 
the corresponding 50 gallons of net production increase.
    (2) For BPP, which will be made on production not eligible for the 
APP, by dividing the base production by the biodiesel conversion factor 
of 1.4 and multiplying the result by 0.5 in FY 2003, 0.3 in FY 2004, 
0.15 in FY 2005, or 0.0 (zero) in FY 2006 to determine base biodiesel 
production gross payable units.
    (3) Adding the APP and BPP to determine biodiesel gross payable 
units.
    (c) There shall only be one eligible producer per plant location.

[[Page 614]]

    (1) When producers move production from one plant to another between 
FY's, the prior FY's production for the producer for program payment 
calculations tied to increases in production shall be the greater of:
    (i) The production at the plant operated by the producer in the 
prior FY, or
    (ii) The production in the prior FY at the plant being taken over by 
the producer in the current FY.
    (2) New producers who are taking over a plant with prior bioenergy 
production shall assume that production history for program purposes. 
For example: in FY 2002, Producer A produced 1,000 gallons of bioenergy 
in plant 1 and Producer B produced 500,000 of bioenergy in plant 2. In 
FY 2003, Producer A assumes operation of plant 2; Producer B moves to 
plant 3, which was not in the program in FY 2002, but with FY 2002 
production of 400,000 gallons from eligible commodities; and Producer C 
assumes operations of plant 1. In FY 2003, for program purposes solely 
based on these respective plants, Producer A would have a prior FY 
production of 500,000 gallons; Producer B would have a prior FY 
production of 500,000 gallons; and Producer C would have a prior FY 
production of 1,000 gallons. These examples would apply when a producer 
moves its entire operation from one plant to another. Otherwise, for 
purposes of computing whether a producer has increased production in the 
current year from the previous year, the determination will be made by 
comparing for the current year the producer's production figures from 
all locations in which the producer has an interest with, for the 
previous year, the sum of:
    (i) Production at those locations by any person including, but not 
limited to, the producer, and
    (ii) Additional production by the producer at any other location in 
that year.
    (3) Also, as needed to avoid frustrating the goals of the program, 
the Executive Vice President of CCC may treat producers with common 
interests, common ownership, or common facilities or arrangements as the 
same producer.



Sec.1424.8  Payment amounts.

    (a) An eligible producer may be paid the amount specified in this 
section, subject to the availability of funds. Total available funds 
shall be as determined appropriate by CCC and shall not exceed $150 
million in any of FY's 2003 through 2006.
    (b) For agreements submitted during an FY sign-up, applicants must 
project increases in production. Based on expected commodity prices, 
using the formula set out in this section, submissions will be assigned 
an expected payment value. When the payment value of all timely 
submitted and validly executed agreements exceed available funding, CCC 
may, at its discretion, prorate payments to be made under such 
agreements based on total available funding.
    (c) When the payment value of all timely submitted applications 
exceed available funding, CCC will prorate payments based on total 
available funding.
    (d) Subject to this section and conditions in the agreement, a 
producer's payment eligibility shall be adjusted at the end of each 
quarter, and calculated as follows:
    (1) Gross payable units, calculated and determined in accordance 
with Sec.1424.7, shall be converted to net payable units for producers 
whose annual bioenergy production is:
    (i) Less than 65 million gallons, by dividing by 2.5;
    (ii) Equal to or more than 65 million gallons, by dividing by 3.5;
    (2) Net payable units calculated under paragraph (d)(1) of this 
section shall then be converted to a gross payment by multiplying net 
payable units by the per-unit value of the commodity as of the 10th 
business day before the start of the production quarter, determined as 
follows:
    (i) For ethanol:
    (A) For those agricultural commodities with an established Posted 
County Price, CCC will use the Posted County Price that CCC announces 
daily for the county in which the plant is located and applicable 
quality factors as CCC may establish.
    (B) For agricultural commodities that CCC determines do not have 
Posted County Prices, CCC will use market

[[Page 615]]

data CCC determines to be appropriate for the applicable commodity.
    (ii) For biodiesel made from:
    (A) Soybeans or soy oil, CCC will use the Posted County Price for 
soybeans for the county where the plant is located.
    (B) Eligible commodities other than soybeans or soy oil that have a 
corresponding oil or grease market price, CCC will first use the 
soybeans Posted County Price for Macon County, Illinois. Then, the 
applicable feedstock's oil or yellow grease (for animal fats and oils) 
market price, as determined by CCC, will be divided by the soy oil price 
published in the Agricultural Marketing Service's weekly ``Soybean Crush 
Report'' (Central Illinois (Decatur, Macon County, Illinois)) for the 
applicable date. The resulting percentage will be multiplied by the 
soybean gross payment to determine the producer's gross payment.
    (C) Eligible commodities that do not have a corresponding oil or 
grease market price, in a manner as determined by CCC.
    (3) The gross payment calculated under paragraph (d)(2) of this 
section shall be reduced to a net payment by multiplying the gross 
payment figure by the proration factor determined under paragraph (c) of 
this section.
    (4) Subject to other provisions of this section, producers shall be 
paid the net current payment, if positive, determined for the quarter, 
subject to the requirements and refund provisions of this part.
    (5) After the first quarter, adjustments shall be made based on 
changes in production. Refunds, when due, shall be due at the per unit 
values at which they were paid.
    (6) For an FY, no producer may receive more than 5 percent of the 
available funding for this program.
    (e) When the commodity's conversion factor has been established, 
that factor will, as practicable, be posted on the program's website.
    (1) If the commodity's conversion factor is not determined when the 
sign-up is announced, the conversion factor will be provided in a letter 
to producers with accepted agreements to the extent practicable.
    (2) After FY 2003, changes to established conversion factors shall 
be announced in a press release issued by CCC 90 calendar days before 
the applicable FY's sign-up, to the extent practicable.



Sec.1424.9  Reports required.

    Once an eligible producer has submitted a payment application, that 
producer shall file cumulative and per-plant information for each 
relevant bioenergy producing facility quarterly through the end of the 
applicable FY as specified by CCC or as otherwise needed to establish 
compliance with this part.



Sec.1424.10  Succession and control of facilities and production.

    A person who obtains a facility that is under contract under this 
part may request permission to succeed to the program agreement and CCC 
may grant such request if it is determined that permitting such 
succession would serve the purposes of the program. If appropriate, CCC 
may require the consent of the original party to such succession. Also, 
CCC may terminate a contract and demand full refund of payments made if 
a contracting party loses control of a facility whose increased 
production is the basis of a program payment or otherwise fails to 
retain the ability to assure that all program obligations and 
requirements will be met.



Sec.1424.11  Maintenance and inspection of records.

    For the purpose of verifying compliance with the requirements of 
this part, each eligible producer shall make available at one place at 
all reasonable times for examination by representatives of USDA, all 
books, papers, records, contracts, scale tickets, settlement sheets, 
invoices, written price quotations, or other documents related to the 
program that is within the control of such entity for not less than 
three years from the payment date.



Sec.1424.12  Appeals.

    (a) A participant subject to an adverse determination under this 
part may appeal by submitting a written request to: Deputy 
Administrator, Commodity Operations, Farm Service Agency, United States 
Department of

[[Page 616]]

Agriculture, STOP 0550, 1400 Independence Avenue, SW., Washington, D.C. 
20250-0550. The appeal must be delivered in writing to the Deputy 
Administrator or postmarked within 30 days after the date the Agency 
decision is mailed or otherwise provided to the participant. The Deputy 
Administrator may consider a late appeal if determined warranted by the 
circumstances.
    (b) The regulations at 7 CFR part 11 apply to decisions made under 
this part.
    (c) Producers who believe they have been adversely affected by a 
determination by the Agency must seek review with the Deputy 
Administrator before any other review may be requested within the 
Agency.



Sec.1424.13  Misrepresentation and scheme or device.

    (a) A producer shall be ineligible to receive payments under this 
program if CCC determines the producer:
    (1) Adopted any scheme or device that tends to defeat the purpose of 
the program in this part;
    (2) Made any fraudulent representation; or
    (3) Misrepresented any fact affecting a program determination.
    (b) Any funds disbursed pursuant to this part to a producer engaged 
in a misrepresentation, scheme, or device, or to any other person as a 
result of the bioenergy producer's actions, shall be refunded with 
interest together with such other sums as may become due, plus damages 
as may be determined by CCC.
    (c) Any producer or person engaged in an act prohibited by this 
section and any producer or person receiving payment under this part 
shall be jointly and severally liable for any refund due under this part 
and for related charges.
    (d) The remedies provided in this part shall be in addition to other 
civil, criminal, or administrative remedies that may apply.
    (e) Late payment interest shall be assessed on all refunds in 
accordance with the provisions and rates prescribed in part 1403 of this 
chapter.



Sec.1424.14  Offsets, assignments, interest and waivers.

    (a) Any payment or portion thereof to any person shall be made 
without regard to questions of title under State law and without regard 
to any claim or lien against the bioenergy, or proceeds thereof, in 
favor of the owner or any other creditor except agencies of the U.S. 
Government. The regulations governing offsets and withholdings found in 
part 1403 of this chapter shall be applicable to agreement payments.
    (b) Any producer entitled to any payment may assign any payments in 
accordance with regulations governing the assignment of payments found 
at part 1404 of this chapter.
    (c) Interest charged by CCC under this part shall be at the rate of 
interest that the United States Treasury charges CCC for funds, as of 
the date CCC made such funds available. Such interest shall accrue from 
the date such payments were made available to the date of repayment or 
the date interest increases as determined in accordance with applicable 
regulations.
    (d) CCC may waive the accrual of interest and/or damages if CCC 
determines that the cause of the erroneous determination was not due to 
any action of the bioenergy producer.



PART 1425_COOPERATIVE MARKETING ASSOCIATIONS--Table of Contents



Sec.
1425.1 Applicability.
1425.2 Administration.
1425.3 Definitions.
1425.4 Approval.
1425.5 Confidentiality.
1425.6 Approved CMA's.
1425.7 Suspension and termination of approval.
1425.8 Ownership and control.
1425.9 Open membership.
1425.10 Financial ratio requirement.
1425.11-1425.12 [Reserved]
1425.13 Uniform marketing agreement.
1425.14 Member business.
1425.15 Vested authority.
1425.16 Payment limitation and adjusted gross income provisions.
1425.17 Eligible commodity and pooling.
1425.18 Distribution of proceeds.
1425.19 Member cooperatives.
1425.20 [Reserved]
1425.21 Records required.
1425.22 Inspection and investigation.

[[Page 617]]

1425.23 Reports.
1425.24 [Reserved]
1425.25 Appeals.

    Authority: 7 U.S.C. 1441 and 1421, 7 U.S.C. 7931-7939; and 15 U.S.C. 
714b, 714c, and 714j.

    Source: 63 FR 17312, Apr. 9, 1998, unless otherwise noted.



Sec.1425.1  Applicability.

    (a) This part specifies the terms and conditions an approved 
Cooperative Marketing Association (CMA) must meet to obtain marketing 
assistance loans (MALs) and loan deficiency payments (LDPs) from CCC on 
behalf of its members.
    (b) A CMA meeting the requirements of this part may obtain MALs and 
LDPs for any eligible commodity for which a MAL and LDP program is in 
effect.

[80 FR 130, Jan. 2, 2015]



Sec.1425.2  Administration.

    (a) On behalf of the Commodity Credit Corporation (CCC), the Farm 
Service Agency (FSA) will administer the provisions of this part under 
the general direction and supervision of the Deputy Administrator for 
Farm Programs.
    (b) In the field, the provisions of this part will be administered 
by the State and county FSA committees.

[80 FR 130, Jan. 2, 2015]



Sec.1425.3  Definitions.

    The definitions in this section are applicable for all purposes of 
program administration. The terms defined in parts 718 of this title and 
parts 1421 and 1427 of this chapter are also applicable, except where 
those definitions conflict with the definitions in this section.
    Active member is a member who has utilized the services offered by a 
CMA in one of the three preceding CMA fiscal years or such shorter 
period as may be provided in the CMA's articles of incorporation or 
bylaws.
    Approved cooperative marketing association (CMA) is a cooperative 
approved by CCC to participate in MAL and LDP programs for any 
authorized commodity.
    Authorized commodity is a commodity for which a CMA is approved by 
CCC to obtain MALs or LDPs.
    Cooperative is a business owned and controlled by the producers who 
use its services and operated under generally accepted cooperative 
principles.
    Eligible commodity is a commodity which meets the commodity's 
eligibility requirements set forth in chapter XIV of this title, and is 
produced and delivered to the CMA from a producer eligible for MALs or 
LDPs.
    Loan deficiency payment (LDP) means a payment made in lieu of a MAL 
when the CCC-determined value, which is based on the current local price 
in a county, is below the applicable county loan rate. The payment is 
the difference between the two rates times the eligible quantity.
    Loan pool is any CMA pool containing commodities used by the CMA to 
obtain either MALs or LDPs.
    Market loan gain is the loan rate, minus the repayment rate on loans 
repaid at a rate that is less than the loan rate. The total of all 
market loan gains received by a producer for an applicable crop year 
cannot exceed the producer's applicable payment limitation as specified 
in part 1400 of this chapter. A producer's adjusted gross income must 
also be below the limit as specified in part 1400 of this chapter to 
receive a market loan gain.
    Member is a producer who:
    (a) Has fully paid for membership stock or earned equity credits in 
the CMA;
    (b) Has executed a uniform marketing agreement with the CMA; and
    (c) Is entitled to all CMA membership rights.

[63 FR 17312, Apr. 9, 1998, as amended at 67 FR 64458, Oct. 18, 2002; 80 
FR 130, Jan. 2, 2015]



Sec.1425.4  Approval.

    (a) For a cooperative to be eligible to participate in the MAL and 
LDP Programs as an approved CMA, the cooperative must submit an 
application to CCC. The application must include:
    (1) A completed Form CCC-846 indicating commodities for which it 
seeks approval;
    (2) A balance sheet, dated within the last year, prepared for the 
cooperative and accompanied by a letter from an independent Certified 
Public Accountant, certifying that the balance sheet

[[Page 618]]

was prepared in accordance with generally accepted accounting 
principles;
    (3) A copy of the articles of incorporation or articles of 
association and all marketing agreements for loan pools, together with a 
certification that this material is current;
    (4) Resolutions made by the cooperative's board of directors stating 
the cooperative will abide by provisions of this part, the 
nondiscrimination provisions thereof, and all other related CCC 
policies;
    (5) A detailed description of how proceeds from each loan pool will 
be distributed to members as provided for in Sec.1425.18;
    (6) An executed form CCC-Cotton G, Cotton Cooperative Loan 
Agreement, by cooperatives applying for approval to participate in the 
cotton MAL and LDP program; and
    (7) Other information as requested by CCC concerning the 
organizational, operational, financial or any other aspect of the 
cooperative requested by CCC related to the cooperative's proposed 
methods of conducting MAL and LDP business.
    (b) A CMA must submit, on an annual basis, the following information 
to CCC:
    (1) A completed Form CCC-846-1, which discloses:
    (i) The number of active and inactive CMA members;
    (ii) The CMA's allocated equity;
    (iii) The CMA's unallocated equity; and
    (iv) Quantity of each loan pool commodity delivered to the CMA for 
marketing and the portion of such commodities received from active 
members during the prior year.
    (2) The CMA's latest balance sheet. This balance sheet must be dated 
within the past year and be accompanied by a letter from an independent 
Certified Public Accountant certifying that the balance sheet was 
prepared in accordance with generally accepted accounting principles.
    (c) A CMA must furnish information to CCC within thirty calendar 
days relating to any:
    (1) Change in its articles of incorporation and loan pool marketing 
agreements;
    (2) Resolution affecting MAL or LDP operations;
    (3) Change to the CMA's name, address, phone number, or related data 
shown on the CCC-846-1;
    (4) Change in loan pool operations with an explanation and 
justification; and
    (5) Additional information CCC may request related to the CMA's 
continued approval by CCC.
    (d) CCC may require a CMA to submit a new initial application 
instead of a recertification application when it questions whether the 
CMA is operating according to documents previously submitted.

[63 FR 17312, Apr. 9, 1998, as amended at 67 FR 64458, Oct. 18, 2002; 80 
FR 130, Jan. 2, 2015]



Sec.1425.5  Confidentiality.

    Information submitted to CCC related to trade secrets, financial or 
commercial operations, or the financial condition of a CMA, whether for 
initial approval or continued approval, shall be kept confidential by 
the officers, agents, and employees of CCC and the Department of 
Agriculture except as required to be disclosed by law.



Sec.1425.6  Approved CMAs.

    (a) CCC may approve a CMA to participate in the MAL and LDP program 
as:
    (1) Unconditionally approved; or
    (2) Conditionally approved.
    (b) If CCC determines a CMA is in substantial but not total 
compliance with the requirements of this part, CCC may make the approval 
conditional on the CMA achieving full compliance within a reasonable 
period of time, as specified in the notification of conditional 
approval.
    (c) A CMA is approved to participate in the MAL and LDP program 
until the CMA's approval is suspended or terminated by CCC.

[80 FR 130, Jan. 2, 2015]



Sec.1425.7  Suspension and termination of approval.

    (a) CCC may suspend a CMA from obtaining MALs and LDPs when CCC 
determines the CMA has violated any of its agreements with CCC or the 
CMA has not:

[[Page 619]]

    (1) Operated according to the CMA's application for approval or its 
last recertification submission;
    (2) Complied with applicable regulations; or
    (3) Corrected deficiencies of the CMA's operation as noted by CCC.
    (b) A suspension may be lifted when CCC determines the CMA has 
complied with all requirements for approval. When suspensions are not 
lifted within 1 year, or a shorter time period if so indicated in CCC's 
suspension notification, the CMA's approval automatically terminates.
    (c) CCC may terminate a CMA's approval by giving the CMA written 
notice of the termination.
    (d) If a CMA does not have any MALs outstanding, it may voluntarily 
terminate its participation in the MAL and LDP program through written 
notice to CCC.
    (e) CCC may, on demand, call all outstanding CCC loans made to a 
suspended or terminated CMA. When loans are called, CCC will provide at 
least 10 calendar days written notice to the CMA. Commodities pledged as 
collateral for loans must be repaid by the date specified by CCC. If 
redemption is not made by the date specified, title to the commodity 
will vest in CCC and CCC will have no obligation to pay the commodity's 
market value above the principal amount of such loans.

[63 FR 17312, Apr. 9, 1998, as amended at 80 FR 130, Jan. 2, 2015]



Sec.1425.8  Ownership and control.

    (a) CMA's must be owned and controlled by active members of the CMA.
    (b) The CMA must provide evidence that:
    (1) Active members own more than 50 percent of its allocated equity; 
and
    (2) A majority of directors are active members of the CMA or 
authorized representatives of active members.
    (c) An applicant cooperative or a CMA, not under the ownership or 
control, of its active members, may be approved by CCC if it is able to 
establish that, by retiring the equity of its inactive members or by 
obtaining new members, it can vest ownership and control in its active 
members, as required by this section, by a date specified by CCC.



Sec.1425.9  Open membership.

    (a) The CMA must provide CCC documented proof that the CMA admits 
every membership applicant who is eligible under the statute regulating 
the CMA.
    (b) Notwithstanding paragraph (a) of this section, a CMA may refuse 
membership to an applicant whose admission would prejudice, hinder, or 
otherwise obstruct the interests or purposes of the CMA.

[63 FR 17312, Apr. 9, 1998, as amended at 80 FR 131, Jan. 2, 2015]



Sec.1425.10  Financial ratio requirement.

    To be financially able to make advances to their members and to 
market their commodities, CMA's must have a current ratio of at least 1 
dollar of current assets for each 1 dollar of current liabilities 
(current ratio of 1:1 or better) on the balance sheet it submits to CCC 
with its initial application or annual recertification required in Sec.
1425.4.

[63 FR 17312, Apr. 9, 1998, as amended at 80 FR 131, Jan. 2, 2015]



Sec. Sec.1425.11-1425.12  [Reserved]



Sec.1425.13  Uniform marketing agreement.

    (a) A CMA must enter into a uniform marketing agreement with each 
member who delivers a commodity to a loan pool.
    (b) The identification number used by the member to report acreage 
on applicable farms to FSA must appear on the marketing agreement.



Sec.1425.14  Member business.

    (a) At least 50 percent of a crop of an authorized commodity 
acquired by, or delivered to, a CMA for marketing must be produced by 
its members for the CMA to obtain a MAL or LDP for such crop. CCC may, 
for a period not to exceed 2 years, waive this requirement if:
    (1) The CMA can establish to CCC that such authorization is 
necessary for the efficient operation of the CMA; and
    (2) The CMA's plan, approved by CCC, will bring the CMA into 
compliance with the provisions of this section.

[[Page 620]]

    (b) Commodities purchased or acquired from CCC and processed 
products acquired from other processors or merchandisers shall not be 
considered in determining the volume of member or nonmember business.

[63 FR 17312, Apr. 9, 1998, as amended at 80 FR 131, Jan. 2, 2015]



Sec.1425.15  Vested authority.

    The marketing agreement between the CMA and its members will give 
the CMA the authority to pledge the commodity as collateral for a loan, 
to place a lien on such commodity, and to market the commodity on behalf 
of its members even though the individual members retain the right, in 
effect, to determine the price at which the commodity can be marketed by 
the CMA.

[63 FR 17312, Apr. 9, 1998, as amended at 80 FR 131, Jan. 2, 2015]



Sec.1425.16  Payment limitation and adjusted gross income provisions.

    (a) CMAs must apply any market loan gains received on behalf of 
members to the loan pool for distribution. However, CMAs must also 
monitor market loan gains they receive from CCC on behalf of their 
members and must not obtain market loan gains for a member above the 
member's payment limitation determined as specified in part 1400 of this 
chapter.
    (b) CMAs must monitor LDPs they receive from CCC on behalf of their 
members and not obtain LDPs for a member whose AGI is above the limit 
specified in part 1400 of this chapter.

[80 FR 131, Jan. 2, 2015]



Sec.1425.17  Eligible commodity and pooling.

    (a) A CMA may establish separate loan pools as needed for quantities 
of a commodity.
    (b) Loans and, if applicable, LDP's will be available to CMA's for 
any eligible commodity in a loan pool as provided in paragraph (e) of 
this section and the beneficial interest provisions of parts 1421 and 
1427 of this chapter.
    (c) A loan pool is eligible for MALs and LDPs if:
    (1) All of the commodity in the loan pool is eligible for MALs or 
LDPs, except as provided in paragraphs (d) and (e) of this section;
    (2) The commodity was delivered by members to the CMA for their 
benefit;
    (3) The commodity was delivered and the members are eligible for 
MALs and LDPs;
    (4) Members retain the right to share in marketing proceeds from the 
commodity in accordance with Sec.1425.18; and
    (5) Members agreed to accept a payment of initial advances from the 
CMA in accordance with Sec.1425.18(a).
    (6) Members agree to refund to the CMA, if requested by the CMA, any 
denied market loan gain or LDP benefit realized when the proceeds from 
the loan pool are distributed to the CMA members.
    (d) Ineligible commodities may be included in eligible pools when:
    (1) The CMA inadvertently included ineligible quantities based on 
grade, quality, bale weight or repacking in the case of cotton, or other 
factors; or
    (2) There are eligibility discrepancies within FSA records, the 
producer has certified to the CMA that the commodity is eligible for a 
MAL, and there is no market gain or LDP involved in the loan pool for 
the crop year.
    (e) A CMA may include a commodity in a pool that is ineligible based 
on FSA records if the producer has certified to the CMA the commodity is 
eligible. (For example, an otherwise eligible commodity that is not 
reflected on a timely filed FSA acreage report.) CCC will specify a time 
period during which CMAs may obtain MALs or LDPs on the applicable 
quantity while the eligibility status is resolved. If the final 
resolution is that the commodity was ineligible, the CMA must repay any 
MALs outstanding with principal plus interest and any market loan gains 
obtained plus interest from the date of receiving the market loan gain 
through the repayment date.
    (f) The CMA must have in inventory a quantity of commodity delivered 
by members of each class and grade at least equal to the quantity each 
class and grade pledged as MAL collateral.
    (g) MALs will be available to the CMA for the quantity of a farm-
stored commodity that is, pursuant to such CMA marketing agreement with 
a member, part of the CMA's loan pool.

[[Page 621]]

    (h) A CMA must have identity-preserved loan pool commodities stored 
in approved warehouses while the commodities are pledged as collateral 
for MAL.
    (i) Comingled commodities with MAL eligibility stored on a farm or 
in a warehouse may be transferred to an authorized warehouse.
    (j) Commodities pledged as collateral for MALs must be free and 
clear of all liens and encumbrances based on a CMA's financial 
agreements or the CMA must obtain and complete a lien waiver form. When 
liens are applicable based on CMA financial agreements, the CMA must 
provide CCC the completed lien waiver form. CMAs must not take any 
action to cause a lien or encumbrance to be placed on a commodity after 
a MAL is approved.
    (k) If a MAL or LDP is obtained for any quantity in a loan pool, 
allocations of costs and expenses among separate pools for the commodity 
in the pool will be made according to generally accepted accounting 
principles.
    (l) A CMA must not apply marketing losses from a commodity not used 
to obtain a MAL or LDP against the marketing proceeds of a commodity 
used to obtain a MAL or LDP.
    (m) CMAs will not carry forward losses from one loan pool and apply 
them against a subsequent loan pool without CCC's authorization. CCC may 
grant authorization when it determines that carrying forward the loss 
complies with the MAL or LDP Program intent.
    (n) The CMA is responsible to CCC for any loss related to 
commodities the CMA pledged as collateral for MAL or used to obtain LDP 
related to:
    (1) The CMA failing to comply with these regulations;
    (2) Changes in quantity or quality of either warehouse or farm 
stored commodities; or
    (3) Liens based on either the CMA's or its members' financial 
agreements.
    (o) Denied market loan gain or denied LDP benefits will be based on 
payment limitation attribution as specified in part 1400 of this 
chapter, and must be repaid to CCC by the CMA receiving the MAL or LDP 
proceeds.

[63 FR 17312, Apr. 9, 1998, as amended at 80 FR 131, Jan. 2, 2015]



Sec.1425.18  Distribution of proceeds.

    (a)(1) If CCC makes loans or LDP's for any quantity in a loan pool, 
the related proceeds must be distributed or otherwise made available to 
the members account:
    (i) Based on the quantity and quality of the commodity delivered by 
each member;
    (ii) Less any authorized charges for services performed or paid by 
the CMA necessary to condition or otherwise make the commodity eligible 
for MALs or LDPs, according to the marketing agreement provided for in 
Sec.1425.13;
    (iii) Within 15 work days from the date the CMA receives MAL or LDP 
proceeds from CCC, or held according to the terms of a deferred payment 
agreement if requested by the member.
    (2) CMA's may credit advances to its members made before loans and 
LDP's are obtained against the distribution of MAL and LDP proceeds 
requirement in paragraph (a)(1)(iii) of this section.
    (b)(1) Except as provided in paragraph (b)(2) of this section, loan 
pool proceeds must not be combined with non-loan pool proceeds and the 
CMA must distribute loan pool proceeds according to the information it 
provided CCC in accordance with Sec.1425.4(a)(5).
    (2) Sales proceeds from a loan pool may be combined with sales 
proceeds from other pools if the proceeds from such pools are allocated 
among the pools according to the quantity and quality of the commodity 
included in the pools.
    (3) MAL and LDP proceeds shall only be issued to members involved in 
pools used for MALs or LDP's.
    (4) When notified by CCC that MAL and LDP distributions to a member 
are required to be reduced for a program year, farm, or crop, a CMA must 
not make subsequent pool distributions and must reimburse CCC for 
distributions previously issued, if applicable.
    (c) CMAs must apply market loan gains to the payment limit that is 
earned on date of redemption for their members when the CMA distributes 
the pool funds.

[63 FR 17312, Apr. 9, 1998, as amended at 71 FR 42750, July 28, 2006; 80 
FR 131, Jan. 2, 2015]

[[Page 622]]



Sec.1425.19  Member cooperatives.

    (a) A CMA may obtain MALs or LDPs on behalf of a member cooperative 
when the member cooperative is itself a CMA operating in accordance with 
this part. For example, a cooperative of producers may be a member of a 
CMA that markets a commodity.
    (b) If the CMA is approved according to Sec.1425.6, and otherwise 
meets all the requirements of this part, the MALs and LDPs submitted by 
members of that CMA will be eligible.

[80 FR 131, Jan. 2, 2015]



Sec.1425.20  [Reserved]



Sec.1425.21  Records required.

    (a) A CMA shall maintain records for each MAL or LDP commodity 
showing the quantity:
    (1) Received from each member and nonmember;
    (2) Eligible for MALs and LDPs;
    (3) By quality factors specified in the applicable commodity 
regulations including class, grade, and quality, where applicable; and
    (4) Of unprocessed inventory broken down by items 1 through 3 above.
    (b) Except as provided in paragraph (c) of this section, inventory 
must be allocated in the following manner until all inventory in a loan 
pool is depleted:
    (1) For processed commodities, the pool's inventory must be adjusted 
when the commodity is withdrawn from inventory for processing; and
    (2) For commodities that are not processed, the pool's inventory 
must be allocated to the pool and the pool's inventories adjusted when 
the commodity is shipped.
    (c) Records of loan and non-loan pool dispositions do not have to be 
maintained separately when sales proceeds from pools are allocated 
according to the quantity and quality of commodity in the pools.

[63 FR 17312, Apr. 9, 1998, as amended at 80 FR 132, Jan. 2, 2015]



Sec.1425.22  Inspection and investigation.

    (a) The books, documents, papers, and records of the CMA and 
subsidiaries must be maintained for five years after the applicable crop 
year and must be available to CCC for inspection and examination at all 
reasonable times.
    (b) At any time after an application is received, CCC has the right 
to examine all books, documents, papers, and determine whether the CMA 
is operating or has operated in accordance with the regulations in this 
part, its articles of incorporation or articles association, and 
agreements with producers, the representations made by the CMA in its 
application for approval, and, where applicable, its agreements with 
CCC.
    (c) CCC reserves the right to determine examinations of CMAs based 
on:
    (1) A 3-year rotation; or
    (2) The previous crop year MAL or LDP activity if market loan gain 
and LDP activity increases substantially.

[63 FR 17312, Apr. 9, 1998, as amended at 80 FR 132, Jan. 2, 2015]



Sec.1425.23  Reports.

    (a) CMA's must annually provide CCC a report of all commodity 
deliveries involved in loans and LDP's by FSA farm number for each 
member.
    (b) When requested by CCC, CMA's must report market gains received 
on behalf of each member.

[63 FR 17312, Apr. 9, 1998, as amended at 80 FR 132, Jan. 2, 2015]



Sec.1425.24  [Reserved]



Sec.1425.25  Appeals.

    Parts 11 and 780 of this title apply to this part.

[67 FR 64459, Oct. 18, 2002]



PART 1427_COTTON--Table of Contents



     Subpart A_Nonrecourse Cotton Loans and Loan Deficiency Payments

Sec.
1427.1 Applicability.
1427.2 Administration.
1427.3 Definitions.
1427.4 Eligible producer.
1427.5 General eligibility requirements.
1427.6 Disbursement of MALs.
1427.7 Maturity of MALs.
1427.8 Amount of MALs.
1427.9 Classification of cotton.
1427.10 Approved storage.
1427.11 Warehouse receipts.
1427.12 Liens.
1427.13 Fees, charges and interest.

[[Page 623]]

1427.14 [Reserved]
1427.15 Special procedure where funds are advanced.
1427.16 Movement and protection of warehouse-stored cotton.
1427.17 [Reserved]
1427.18 Liability of the producer.
1427.19 Repayment of MALs.
1427.20 Handling payments of $9.99 or less and collections not exceeding 
          $24.99.
1427.21 Settlement.
1427.22 [Reserved]
1427.23 Cotton LDPs.
1427.24 [Reserved]
1427.25 Determination of the prevailing world market price and the 
          adjusted world price for upland cotton.

Subpart B [Reserved]

   Subpart C_Economic Adjustment Assistance to Users of Upland Cotton

1427.100 Applicability.
1427.101 Eligible upland cotton.
1427.102 Eligible domestic users.
1427.103 Upland cotton Domestic User Agreement.
1427.104 [Reserved]
1427.105 Payment.

                  Subpart D_Recourse Seed Cotton Loans

1427.160 Applicability.
1427.161 Administration.
1427.162 [Reserved]
1427.163 Disbursement of loans.
1427.164 Eligible producer.
1427.165 Eligible seed cotton.
1427.166 Insurance.
1427.167 Liens.
1427.168 [Reserved]
1427.169 Fees, charges, and interest.
1427.170 Quantity for loan.
1427.171 Approved storage.
1427.172 Settlement.
1427.173 Foreclosure.
1427.174 Maturity of seed cotton loans.
1427.175 Liability of the producer.

  Subpart E_Standards for Approval of Warehouses for Cotton and Cotton 
                                 Linters

1427.1081 General statement and administration.
1427.1082 Basic standards.
1427.1083 Bonding requirements for net worth.
1427.1084 Examination of warehouses.
1427.1085 Exceptions.
1427.1086 Approval of warehouse, requests for reconsideration.
1427.1087 Exemption from requirements.
1427.1088 Contract fees.
1427.1089 [Reserved]

Subpart F [Reserved]

Subpart G_Extra Long Staple (ELS) Cotton Competitiveness Payment Program

1427.1200 Applicability.
1427.1201 [Reserved]
1427.1202 Definitions.
1427.1203 Eligible ELS cotton.
1427.1204 Eligible domestic users and exporters.
1427.1205 ELS Cotton Domestic User/Exporter Agreement.
1427.1206 [Reserved]
1427.1207 Payment rate.
1427.1208 Payment.

    Authority: 7 U.S.C. 7231-7237, 7931-7936, 9011, and 9031-40, 15 
U.S.C. 714b and c.



     Subpart A_Nonrecourse Cotton Loan and Loan Deficiency Payments

    Source: 67 FR 64459, Oct. 18, 2002, unless otherwise noted.



Sec.1427.1  Applicability.

    (a) The regulations in this subpart are applicable to crops of 
upland cotton and extra long staple cotton. This part specifies the 
general provisions under which the Marketing Assistance Loans (MAL) and 
Loan Deficiency Payment (LDP) Programs will be administered by the 
Commodity Credit Corporation (CCC). Eligibility to receive MALs and LDPs 
is subject to additional terms and conditions that are in the MAL note 
and security agreement and the LDP application. The provisions in this 
part apply to the 2014 and subsequent crops.
    (b) The basic loan rate, the schedule of premiums and discounts, and 
forms applicable to the cotton MAL and LDP Programs are available from 
FSA offices. The forms for use in connection with the programs in this 
subpart will be prescribed by CCC.
    (c) MALs and LDPs will not be available for any cotton produced on 
land owned or otherwise in the possession of the United States if such 
land is occupied without the consent of the United States.
    (d) Adjusted gross income (AGI) and payment limitation provisions 
specified in part 1400 of this chapter are applicable to MALs and LDPs.

[67 FR 64459, Oct. 18, 2002, as amended at 73 FR 65719, Nov. 5, 2008; 80 
FR 132, Jan. 2, 2015]

[[Page 624]]



Sec.1427.2  Administration.

    (a) The MAL and LDP Programs will be administered under the general 
supervision of the Executive Vice President, CCC, or a designee and will 
be carried out by FSA employees, and state and county committees.
    (b) No FSA employee or committee may modify or waive any requirement 
in this subpart, except as provided in paragraph (e) of this section.
    (c) The State committee will take any required action not taken by 
the county committee. The State committee will also:
    (1) Correct, or require a correction of an action that is not in 
compliance with this part; or
    (2) Stop an employee from taking an action or decision that is not 
in accordance with the regulations of this part.
    (d) The Executive Vice President, CCC, or a designee may determine 
any question arising under these programs, and reverse or modify a 
determination made by an FSA employee or State or county committee.
    (e) The Deputy Administrator for Farm Programs, FSA, may authorize 
State or county committees to waive or modify deadlines and other 
program requirements in cases where lateness or failure to meet such 
other program requirements does not adversely affect the operation of 
the MAL and LDP Programs.
    (f) A representative of CCC may execute MAL and LDP applications and 
related documents only under the terms and conditions determined and 
announced by CCC. Any document not executed under such terms and 
conditions, including any purported execution before the date authorized 
by CCC, shall be null and void.

[67 FR 64459, Oct. 18, 2002, as amended at 73 FR 65719, Nov. 5, 2008; 80 
FR 132, 139, Jan. 2, 2015]



Sec.1427.3  Definitions.

    The definitions in this section apply for all purposes of program 
administration regarding the cotton loan and LDP programs. The terms 
defined in part 718 of this title and parts 1412, 1421, 1423, 1425, and 
1434 of this chapter also apply, except where they conflict with 
definitions in this section.
    Adjusted spot price means the spot price adjusted to reflect any 
lack of data for base quality to make the adjusted spot price comparable 
to a spot price assuming the base quality. If base quality spot price 
data are not available, spot prices for other qualities will be used and 
adjusted by the average difference between base quality spot prices and 
those for other qualities over the available observations during the 
previous 12 months.
    Bale opening means the removal of the bagging and ties from a bale 
of eligible upland cotton in the normal opening area, immediately before 
use, by a manufacturer in a building or collection of buildings where 
the cotton in the bale will be used in the continuous process of 
manufacturing raw cotton into cotton products in the United States.
    Charges means all fees, costs, and expenses incurred by CCC in 
insuring, carrying, handling, storing, conditioning, and marketing the 
cotton tendered to CCC for loan. Charges also include any other expenses 
incurred by CCC in protecting CCC's or the producer's interest in such 
cotton.
    Classification means the measurement results provided by the 
Agricultural Marketing Service (AMS) of color grade, leaf, staple, 
strength, extraneous matter and micronaire, and for upland cotton, 
length uniformity.
    Consumption means the use of eligible cotton by a domestic user in 
the manufacture in the United States of cotton products.
    Cooperative marketing association (CMA) means a cooperative 
marketing association, approved as specified in part 1425 of this 
chapter, that has executed a Cotton Cooperative Loan Agreement.
    Cotton means upland cotton and extra loan staple cotton meeting the 
definition in the definitions of ``upland cotton'' and ``extra long 
staple (ELS) cotton'' in this section, respectively, and excludes cotton 
not meeting such definitions.
    Cotton clerk means a person approved by CCC to assist producers in 
preparing loan and loan deficiency documents.

[[Page 625]]

    Cotton commercial bank means the bank designated as the financial 
institution for a CMA or loan servicing agent.
    Cotton product means any product containing cotton fibers that 
result from the use of a bale of cotton in manufacturing.
    Cotton storage deficit area means a State, County, or group of 
contiguous counties within a State, where the production of cotton for 
the area based on the most recent estimate from the USDA, National 
Agricultural Statistics Service exceeds the combined approved inside 
storage capacity less carry-in stocks, of warehouses that have entered 
into a Cotton Storage Agreement with CCC.
    Current Far East shipment price means, during the period in which 
two daily price quotations are available for the growth quoted for M 
1\3/32\ inch cotton, CFR (cost and freight) Far East, the price 
quotation for cotton for shipment no later than August/September of the 
current calendar year.
    Electronic Agent Designation is an electronic record that:
    (1) Designates the entity authorized by a producer to redeem all of 
the cotton pledged as collateral for a specific loan;
    (2) Is maintained by providers of electronic warehouse receipts; and
    (3) A producer may authorize CCC to use as the basis for the 
redemption and release of loan collateral.
    Extra long staple (ELS) cotton means any of the following varieties 
of cotton which is produced in the United States and is ginned on a 
roller gin:
    (1) American-Pima;
    (2) All other varieties of the Barbadense species of cotton, and any 
hybrid thereof; and
    (3) Any other variety of cotton in which one or more of these 
varieties predominate.
    False packed cotton means cotton in a bale containing substances 
entirely foreign to cotton; containing damaged cotton in the interior 
with or without any indication of the damage on the exterior; composed 
of good cotton on the exterior and decidedly inferior cotton in the 
interior, but not detectable by customary examination; or, containing 
pickings or linters worked into the bale.
    Financial institution means:
    (1) A bank in the United States which accepts demand deposits; and
    (2) An association organized pursuant to Federal or State law and 
supervised by Federal or State banking authorities.
    Form A loan means a nonrecourse loan entered into between a producer 
and CCC.
    Form G loan means a CCC nonrecourse loan entered into between a CMA 
and CCC.
    Good condition means a bale of cotton that, by comparison with the 
photographic standards of ``A Guide for Cotton Bale Standards'' of the 
Joint Cotton Industry Bale Packaging Committee, is determined to be a 
Grade A or Grade B bale.
    Lint Cotton means cotton that has passed through the ginning 
process.
    Loan deficiency payment (LDP) means a payment made in lieu of a MAL 
when the CCC-determined value, which is based on the current local price 
in a county, is below the applicable county loan rate. The payment is 
the difference between the two rates times the eligible quantity.
    Loan rate is the national loan rate for base quality upland cotton 
and the national average rate for ELS cotton adjusted by any premiums 
and discounts determined by CCC.
    Loan servicing agent means a legal entity that enters into a written 
agreement with CCC to act as a loan servicing agent for CCC in making 
and servicing Form A cotton loans. The loan servicing agent may perform, 
on behalf of CCC, only those services which are specifically prescribed 
by CCC including, but not limited to, the following:
    (1) Preparing and executing loan and LDP documents;
    (2) Disbursing loan and LDP proceeds;
    (3) Accepting loan repayments;
    (4) Handling documents involved with forfeiture of loan collateral 
to CCC; and
    (5) Providing loan, LDP, and accounting data to CCC for statistical 
purposes.

[[Page 626]]

    Transfer means, depending on the context, the process for a producer 
or an authorized agent of the producer to:
    (1) Physically relocate cotton loan collateral from one CCC-approved 
warehouse to another CCC-approved warehouse,
    (2) Exchange an electronic warehouse receipt for a receipt 
certificated by a warehouse for delivery under a futures contract 
without physically relocating the cotton, or
    (3) Do both of the above.
    Upland cotton means planted and stub cotton which is produced in the 
United States from other than pure strain varieties of the Barbadense 
species, any hybrid thereof, or any other variety of cotton in which one 
or more of these varieties predominate.
    Warehouse receipt means a receipt containing the required 
information specified in this part that may or may not be certificated 
for delivery for a futures-pricing contract, and is an electronic 
warehouse receipt record issued by such warehouse recorded in a central 
filing system or systems maintained in one or more locations that are 
approved by FSA to operate such system.
    Wet cotton means a bale of cotton that, at a gin, has 7.5 percent or 
more moisture, wet basis, at any point in the bale.

[67 FR 64459, Oct. 18, 2002, as amended at 71 FR 51427, Aug. 30, 2006; 
73 FR 30275, May 27, 2008; 73 FR 65719, Nov. 5, 2008;75 FR 50849, Aug. 
18, 2010; 80 FR 132, 139, Jan. 2, 2015]



Sec.1427.4  Eligible producer.

    (a) To be an eligible producer, the producer must:
    (1) Be an individual, partnership, association, corporation, estate, 
trust, or other legal entity that produces cotton as a landowner, 
landlord, tenant, or sharecropper;
    (2) Comply with all provisions of this part; and
    (i) 7 CFR part 12--Highly Erodible Land and Wetland Conservation:
    (ii) 7 CFR part 718--Provisions Applicable to Multiple Programs;
    (iii) 7 CFR part 1400--Payment Limitation and Payment Eligibility;
    (iv) 7 CFR part 1403--Debt Settlement Policies and Procedures; and
    (v) 7 CFR part 1405--Loans, Purchases and Other Operations; and
    (3) Have made an acreage certification with respect to all the 
cropland on the farm.
    (b) A receiver or trustee of an insolvent or bankrupt debtor's 
estate, an executor or an administrator of a deceased person's estate, a 
guardian of an estate of a ward or an incompetent person, and trustees 
of a trust estate is considered to represent the insolvent or bankrupt 
debtor, the deceased person, the ward or incompetent, and the 
beneficiaries of a trust, respectively. The production of the receiver, 
executor, administrator, guardian, or trustee is considered to be the 
production of the person or estate represented by the receiver, 
executor, administrator, guardian, or trust. Loan and loan deficiency 
payment documents executed by any such person will be accepted by CCC 
only if they are legally valid and such person has the authority to sign 
the applicable documents.
    (c) A minor who is otherwise an eligible producer shall be eligible 
to receive loans and loan deficiency payments only if the minor meets 
one of the following requirements:
    (1) The right of majority has been conferred on the minor by court 
proceedings or by statute;
    (2) A guardian has been appointed to manage the minor's property and 
the applicable loan or LDP documents are signed by the guardian;
    (3) Any note and security agreement or LDP application signed by the 
minor is co-signed by a person determined by CCC to be financially 
responsible; or
    (4) A bond is furnished under which a surety guarantees to protect 
CCC from any loss incurred for which the minor would be liable had the 
minor been an adult.
    (d)(1) If more than one producer executes a note and security 
agreement with CCC, each such producer is jointly and severally liable 
for the violation of the terms and conditions of the note and the 
regulations in this part. Each such producer also remains liable for 
repayment of the entire MAL amount until the MAL is fully repaid without 
regard to such producer's claimed

[[Page 627]]

share in the commodity pledged as collateral for the MAL. In addition, 
such producer may not amend the note and security agreement with respect 
to the producer's claimed share in such commodities, or loan proceeds, 
after execution of the note and security agreement by CCC.
    (2) The cotton in a bale may have been produced by two or more 
eligible producers on one or more farms if the bale is not a repacked 
bale.
    (e) A CMA may obtain MALs and LDPs on eligible cotton on behalf of 
its members who are eligible to receive loans or LDPs for a crop of 
cotton. For purposes of this subpart, the term ``producer'' includes a 
CMA.
    (f) In case of death, incompetency, or disappearance of any producer 
who is entitled to the payment of any sum in settlement of a MAL or LDP, 
payment will, upon application to CCC, be made to the person(s) who 
would be entitled to the producer's payment under the regulations in 
part 707 of this title.
    (g) Adjusted gross income (AGI) and payment limitation provisions 
specified in part 1400 of this chapter apply to producer eligibility for 
MALs and LDPs.

[67 FR 64459, Oct. 18, 2002, as amended at 73 FR 65719, Nov. 5, 2008; 80 
FR 132, 139, Jan. 2, 2015]



Sec.1427.5  General eligibility requirements.

    (a) To receive loans or LDPs for a crop of cotton, a producer must 
execute a note and security agreement or LDP application on or before 
May 31 of the year following the year in which such crop is normally 
harvested.
    (1) Form A loan documents or LDP applications must be signed by the 
applicant and submitted to CCC or a loan servicing agent. Submissions by 
cotton clerks must occur within 15 calendar days after the producer 
signs the forms and within the period of loan availability. A producer, 
except for a CMA, must request loans and LDPs:
    (i) At the FSA county office that is responsible under part 718 of 
this title for administering programs for the farm on which the cotton 
was produced; or
    (ii) From a loan servicing agent.
    (2) Form G loan documents and requests for LDPs by a CMA must be 
signed by the CMA and delivered to CCC or the cotton commercial bank 
within the period of loan availability.
    (b) For a bale of cotton to be eligible to be pledged as collateral 
for a MAL or a subject of an LDP application, the bale must:
    (1) Be tendered to CCC by an eligible producer;
    (2) Be in existence and good condition and be covered by fire 
insurance. Bales pledged as collateral for a CCC loan, must be stored 
inside an approved storage warehouse unless, as determined under Sec.
1427.10, CCC has approved the warehouse to use outside storage for 
cotton loan collateral for the period of the loan. Bales submitted to 
CCC for an LDP are not subject to the approved storage requirements 
contained in Sec.1423.10.
    (3) Be represented by a warehouse receipt meeting the requirements 
of Sec.1427.11, except as provided in Sec. Sec.1427.10(e) and 
1427.23(a)(4);
    (4) Not be false-packed, wet cotton, water-packed, mixed-packed, re-
ginned, or repacked;
    (5) Not be compressed to universal density at a warehouse where side 
pressure has been applied and not be a flat or modified flat bale;
    (6) Not have been sold, nor any sales option on such cotton granted, 
to a buyer under a contract which provides that the buyer may direct the 
producer to pledge the cotton to CCC as collateral for a loan or to 
obtain an LDP ;
    (7) Not have been previously sold and repurchased or pledged as 
collateral for a CCC loan and redeemed except as provided in Sec.
1427.172(b)(4);
    (8) Not be cotton for which an LDP has been previously made;
    (9) Weigh at least 325 pounds net weight; bales of more than 600 
pounds net weight may be pledged for loan at 600 pounds net weight.
    (10) Be packaged in materials that meet the specifications adopted 
by the Joint Cotton Industry Bale Packaging Committee sponsored by the 
National Cotton Council of America for the applicable year or that are 
identified and approved by the Joint Industry Bale Packaging Committee 
as experimental packaging materials for the applicable

[[Page 628]]

crop year, except that producers approved for the outside storage of ELS 
cotton as provided for in Sec.1427.10(e) must assure that the 
packaging materials used for bales stored outside must meet the 
materials, sealing, and humidity specifications contained in the 
outside-storage addendum to their ELS cotton MAL agreement.
    (11) Be ginned by a ginner that:
    (i) Has entered the tare weight of the bale (bagging and ties used 
to wrap the bale) on the gin bale tag or otherwise furnish warehouse 
operator the tare weight; and
    (ii) Has entered into a Cooperating Ginners' Bagging and Bale Ties 
Certification and Agreement on a form prescribed by CCC, or certified 
that the bale is wrapped with bagging and bale ties meeting the 
requirements of paragraph (b)(10) of this section and;
    (12) Be production from acreage that has been reported timely under 
part 718 of this title.
    (c) In addition to the requirements of paragraph (b) of this 
section, for ELS cotton the bale must:
    (1) Be of a grade, strength, staple length, and other factors 
specified in the schedule of loan rates for ELS cotton;
    (2) Have a micronaire specified in the schedule of micronaire 
premiums and discounts for ELS cotton; and
    (3) Have an extraneous matter specified in the schedules of premiums 
and discounts for extraneous matter for ELS cotton.
    (d) In addition to the requirements of paragraph (b) of this 
section, for upland cotton the bale must:
    (1) Have been graded by using a High Volume Instrument;
    (2) Be a grade, staple length, and leaf specified in the schedule of 
premiums and discounts for grade, staple, and leaf for upland cotton;
    (3) Have a strength reading specified in the schedule of strength 
premiums and discounts for upland cotton;
    (4) Have a micronaire specified in the schedule of micronaire 
premiums and discounts for upland cotton;
    (5) Have an extraneous matter within the limits specified in the 
schedule of discounts for extraneous matter for upland cotton; and
    (6) Have a uniformity specified in the schedule of uniformity 
premiums and discounts for upland cotton.
    (e) To be eligible to receive MALs and LDPs, a producer must have 
beneficial interest in the cotton that is tendered to CCC for a MAL or 
LDP. For the purposes of this part, the term ``beneficial interest'' 
refers to a determination by CCC that a person has the requisite title 
to and control of cotton that is tendered to CCC as collateral for a MAL 
or is the cotton that will be used to determine an LDP. A determination 
of whether a person has beneficial interest in cotton is made by CCC in 
accordance with this part and is not based upon a determination under 
any State law or any other regulation of a Federal agency.
    (f) Except as provided in paragraph (h) of this section, when 
requesting a MAL, in order to have beneficial interest in the cotton 
tendered as collateral for the loan, a person must:
    (1) Be the producer of the cotton as determined in accordance with 
Sec.1427.4;
    (2) Have had ownership of the cotton from the time it was planted 
through the earlier the date the loan was repaid or the maturity date of 
the loan;
    (3) Have control of the cotton from the time of planting through the 
maturity date of the loan. To have control of the cotton, such person 
must have complete decision making authority regarding whether the 
cotton will be tendered as collateral for a loan, when the loan will be 
repaid or if the collateral will be forfeited to CCC in satisfaction of 
the loan obligations of such person, and where the cotton will be 
maintained during the term of the loan; and
    (g) Except as provided in paragraph (h) of this section, when 
requesting an LDP, in order to have beneficial interest in the cotton a 
person must:
    (1) Be the producer of the cotton as determined in accordance with 
Sec.1427.4;
    (2) Have had ownership of the cotton from the time it was planted 
through the date the producer has elected to determine the LDP rate; and
    (3) Have control of the cotton from the time of planting through the 
date the producer has elected to determine the LDP rate. To have control 
of the

[[Page 629]]

cotton, such person must have complete decision making authority 
regarding whether an LDP will be requested with respect to the cotton; 
when the loan deficiency rate will be selected; and where the cotton 
will be maintained prior to the date on which the LDP rate will be 
determined;
    (4) If the cotton has been physically delivered to a location other 
than a location owned or under the total control of the producer, have 
delivered the cotton to a warehouse approved in accordance with Sec.
1427.10. Delivery of the cotton to a location other than to such an 
approved warehouse will result in the loss of beneficial interest in the 
cotton on the date of physical delivery and the producer will be 
considered to have lost beneficial interest as of 11:59 p.m. of such day 
regardless of any other action or agreement between the entity where the 
cotton was delivered and the producer, unless such an entity has been 
approved by CCC under Sec.1427.10.
    (h) Notwithstanding paragraphs (f) and (g) of this section, in order 
to facilitate the handling of situations involving the death of a 
producer, CCC will consider an estate and a person to whom title to 
cotton has passed by virtue of State law upon the death of the producer 
to have beneficial interest in the cotton produced by the producer under 
the same terms and conditions that would otherwise be applicable to such 
producer;
    (i) Notwithstanding paragraphs (f) and (g) of this section, a person 
who purchases or otherwise acquires cotton from a producer under any 
circumstances does not obtain beneficial interest to the cotton whether 
such purchase or acquisition is made prior to the harvest of the crop or 
after harvest except in one instance. CCC will consider a person to have 
beneficial interest in cotton if, prior to harvest, such person has 
obtained title to the growing cotton at the same time that such person 
obtained full title to the land on which such crop was growing;
    (j) A producer will lose beneficial interest in cotton if the 
producer receives any payment from any person under any contractual 
arrangement with respect to cotton if the person who is making the 
payment, or any person otherwise associated with the person making the 
payment, will at any time have title to the cotton or control of the 
cotton prior to or after harvest unless:
    (1) Such payment is authorized in accordance with part 1425 of this 
chapter; or
    (2) The payment is made as consideration for an option to purchase 
the cotton and such option contains the following provision:

    Notwithstanding any other provision of this option to purchase or 
any other contract, title and control of the cotton and beneficial 
interest in the cotton as specified in 7 CFR 1427.5 will remain with the 
producer until the buyer exercises this option to purchase the cotton. 
This option to purchase will expire, notwithstanding any action or 
inaction by either the producer or the buyer, at the earlier of:
    (1) The maturity of any Commodity Credit Corporation (CCC) loan that 
is secured by such cotton;
    (2) The date CCC claims title to such cotton; or
    (3) Such other date as provided in this option.

    (k) Absent other provisions causing the producer to lose beneficial 
interest in the cotton, inclusion in a contract of a provision that 
allows the producer to select the sales price of the cotton at the time 
the contract is entered into or at a later date, a contract normally 
referred to as a deferred price contract or a price later contract, will 
not result in the loss of beneficial interest in the cotton.
    (l) Commodities produced under a contract in which the title to the 
seed remains with the entity providing the seed to the producer, 
including contracts for the production of hybrid seed, genetically 
modified commodities, and other specialty seeds as approved in writing 
by CCC, are eligible to be pledged as collateral for a MAL and an LDP 
may be made with respect to such production if at the time of the 
request for such a loan or payment the producer has not:
    (1) Received a payment under the contract; or
    (2) Delivered the commodity to another person.
    (m) Each bale of upland cotton sampled by the warehouse operator 
upon

[[Page 630]]

initial receipt which has not been sampled by the ginner must not show 
more than one sample hole on each side of the bale. If more than one 
sample is desired when the bale is received by the warehouse operator, 
the sample will be cut across the width of the bale, broken in half or 
split lengthwise, and otherwise drawn under Agricultural Marketing 
Service (AMS) dimension and weight requirements. This requirement will 
not prohibit sampling of the cotton at a later date if authorized by the 
producer.
    (n) If MALs or LDPs are made available to producers through a CMA 
under part 1425 of this chapter, the beneficial interest in the cotton 
must always have been held by the producer-member who delivered the 
cotton to the CMA or its member, except as otherwise provided in this 
section. Cotton delivered to such a CMA will not be eligible to receive 
a MAL or an LDP if the producer-member who delivered the cotton does not 
retain the right to share in the proceeds from the marketing of the 
cotton as provided in part 1425 of this chapter.

[67 FR 64459, Oct. 18, 2002, as amended at 68 FR 49328, Aug. 18, 2003; 
69 FR 12056, Mar. 15, 2004; 71 FR 32426, June 6, 2006; 71 FR 51427, Aug. 
30, 2006; 71 FR 60413, Oct. 13, 2006; 73 FR 65719, Nov. 5, 2008; 80 FR 
133, 139, Jan. 2, 2015]



Sec.1427.6  Disbursement of MALs.

    (a) Individual producers may request loans from:
    (1) FSA County Service Centers;
    (2) Loan servicing agents; or
    (3) An approved cotton clerk who has entered into a written 
agreement with CCC on a form prescribed by CCC.
    (b) Loan proceeds may be disbursed by CCC or a cotton commercial 
bank.
    (c) The loan documents will not be presented for disbursement unless 
the cotton covered by the mortgage or pledged as security is eligible 
under Sec.1427.5. If the cotton was not eligible cotton at the time of 
disbursement, the total amount disbursed under the loan, and charges 
plus interest will be refunded promptly.

[67 FR 64459, Oct. 18, 2002, as amended at 73 FR 65720, Nov. 5, 2008; 80 
FR 139, Jan. 2, 2015]



Sec.1427.7  Maturity of MALs.

    (a)(1) Form A loans and Form G loans mature on demand by CCC and no 
later than the last day of the 9th calendar month following the month in 
which the note and security agreement is approved as specified in Sec.
1427.5(a).
    (2) CCC may at any time accelerate the loan maturity date by 
providing the producer notice of such acceleration at least 30 days in 
advance of the accelerated maturity date.
    (b) If the loan is not repaid by the loan maturity date, title to 
the cotton will vest in CCC the day after such maturity date and CCC 
will have no obligation to pay for any market value which such cotton 
may have in excess of the amount of the loan, plus interest and charges.
    (c) Following written notice by CCC to the producer and warehouse 
operator, CCC may advance the maturity date of cotton pledged as 
collateral for a MAL if:
    (1) CCC determines such loan cotton collateral is improperly 
warehoused and subject to damage,
    (2) Any term of the producer's loan agreement is violated, or
    (3) Carrying charges are substantially in excess of the average of 
carrying charges available elsewhere and the storing warehouse, after 
notice, declines to reduce such charges.
    (d) CCC will not assume a loss on MAL collateral stored in a 
warehouse for any reason.
    (e) The maturity date of any MAL may not be extended.

[67 FR 64459, Oct. 18, 2002, as amended at 73 FR 65720, Nov. 5, 2008; 80 
FR 133, 139, Jan. 2, 2015]



Sec.1427.8  Amount of MALs.

    (a) The loan rates for crops of upland cotton and ELS cotton will be 
determined and announced by CCC and made available at FSA State and 
county offices.
    (b) The quantity of cotton which may be pledged as collateral for a 
loan will be the net weight of the eligible cotton as shown on the 
warehouse receipt issued by an approved warehouse, except that in the 
case of a bale which has a net weight of more than 600 pounds, the 
weight to be used in determining the amount of the loan on the

[[Page 631]]

bale will be 600 pounds. Cotton pledged as collateral for loans on the 
basis of reweights will not be accepted by CCC.
    (c) The amount of the loan for each bale will be determined by 
multiplying the net weight of the bale, as determined under paragraph 
(b) of this section by the applicable loan rate.
    (d) CCC will not increase the amount of the loan made for any bale 
of cotton as a result of a redetermination of the quantity or quality of 
the bale after it is tendered to CCC, except that if it is established 
to the satisfaction of CCC that a bona fide error was made for the 
weight of the bale or the classification for the bale, such error may be 
corrected.

[67 FR 64459, Oct. 18, 2002, as amended at 73 FR 65720, Nov. 5, 2008; 80 
FR 133, 139, Jan. 2, 2015]



Sec.1427.9  Classification of cotton.

    (a) All cotton tendered for loan and LDP must be classed by an 
Agricultural Marketing Service (AMS) Cotton Classing Office or other 
entity approved by AMS.
    (b) An AMS cotton classification must be based upon a representative 
sample drawn from the bale by samplers under AMS procedures and 
instructions.
    (c) If the producer's cotton has not been classed or sampled in a 
manner acceptable by CCC, the warehouse must sample such cotton and 
forward the samples to the AMS Cotton Classing Office or other entity 
approved by AMS. Such warehouse must be licensed by AMS or be approved 
by CCC to draw samples for submission to the AMS Cotton Classing Office.
    (d) If a sample has been submitted for classification, another 
sample will not be drawn, except for a review classification.
    (e) Where review classification is not involved:
    (1) If through error or otherwise two or more samples from the same 
bale are submitted for classification, the loan rate will be based on 
the classification having the lower loan value;
    (2) CCC will use classification information received directly from 
AMS rather than AMS classification information received from the 
producer.
    (f) CCC will base any cotton loan rate or loan deficiency payment 
rate on the most recent classification information available before the 
loan or loan deficiency payment has been calculated. CCC will not adjust 
such rates based on review classification information submitted 
subsequent to the original benefit calculation.

[67 FR 64459, Oct. 18, 2002, as amended at 73 FR 65720, Nov. 5, 2008; 80 
FR 133, 139, Jan. 2, 2015]



Sec.1427.10  Approved storage.

    (a) Eligible cotton may be pledged as collateral for loans only if 
stored at warehouses approved by CCC, unless the producer agrees to 
provisions of 1427.5(n).
    (1) Persons desiring approval of their facilities should contact the 
Kansas City Commodity Office Beacon Facility-Mail Stop 8748, P.O. Box 
419205, Kansas City, Missouri 64141-6205.
    (2) The names of approved warehouses may be obtained from the Kansas 
City Commodity Office or from FSA State or county offices.
    (b) When the operator of a warehouse receives notice from CCC that a 
loan has been made on a bale of cotton, the operator will, if such 
cotton is not stored within the warehouse, as directed by CCC place such 
cotton within such warehouse.
    (c) An approved cotton storage warehouse may temporarily store 
cotton pledged as collateral for a CCC loan outside, subject to the 
following conditions:
    (1) The warehouse submits a request for approval of outside storage 
in a format prescribed by CCC.
    (2) The warehouse is located in a storage deficit area as determined 
by CCC.
    (3) The warehouse complies with all outside storage requirements 
established by CCC including but not limited to the duration of such 
outside storage as granted by CCC for the individual application, all-
risk insurance for the loan value of the cotton with CCC as loss payee, 
and use of additional protective coverings and materials that elevate 
the entire bottom surface of the bale to protect such cotton from damage 
by water or airborne contaminants.

[[Page 632]]

    (4) The electronic warehouse receipt for any bale or bales of cotton 
pledged as collateral for a CCC loan must include the dates that the 
bale was initially stored outside, and the date that outside storage 
stopped.
    (5) The warehouse operator provides CCC:
    (i) A weekly report in a format prescribed by CCC identifying 
individual bales of cotton pledged as collateral for a CCC loan that are 
stored outside, and
    (ii) Through their electronic warehouse receipt provider, on a 
current basis, location indicators and effective dates for any loan bale 
stored outside.
    (d) Warehouse charges paid by a producer will not be refunded by 
CCC.
    (e) The approved storage requirements provided in this section may 
be waived by CCC if the producer requests an LDP pursuant to the LDP 
provisions in Sec.1427.23.
    (f) With respect to crops of ELS cotton, a producer may obtain a 
loan on cotton that is not stored as otherwise provided in this section 
if such cotton is stored:
    (1) At a commercial entity that is involved in the handling or 
storage of cotton in a county or area determined and announced by CCC as 
approved for outside storage of ELS loan collateral; and
    (2) The site is constructed so as to prevent the accumulation of 
water under such cotton.

[67 FR 64459, Oct. 18, 2002, as amended at 68 FR 49328, Aug. 18, 2003; 
69 FR 12056, Mar. 15, 2004; 71 FR 51427, Aug. 30, 2006; 73 FR 65720, 
Nov. 5, 2008; 80 FR 134, 139, Jan. 2, 2015]



Sec.1427.11  Warehouse receipts.

    (a) Producers may obtain loans on eligible cotton represented by 
warehouse receipts only if the warehouse receipts meet the definition of 
a warehouse receipt and provide for delivery of the cotton to bearer or 
are properly assigned by endorsement in blank, so as to vest title in 
the holder of the receipt or are otherwise acceptable to CCC. The 
warehouse receipt must:
    (1) Contain the gin bale number;
    (2) Contain the warehouse receipt number;
    (3) Be dated on or before the date the producer signs the note and 
security agreement.
    (b) Warehouse receipts, under Sec.1427.3, when issued as block 
warehouse receipts will be accepted when authorized by CCC only if the 
owner of the warehouse issuing the block warehouse receipt owns the 
cotton represented by the block warehouse receipt and the warehouse is 
not licensed under the U.S. Warehouse Act.
    (c)(1) Each receipt must set out in its terms the tare and the net 
weight of the bale represented by the receipt. The net weight shown on 
the warehouse receipt must be the difference between the gross weight as 
determined by the warehouse at the warehouse site and the tare weight. 
The warehouse receipt may show the net weight established at a gin if 
gin weights are permitted by the licensing authority for the warehouse.
    (2) The tare weight shown on the receipt must be the tare weight 
furnished to the warehouse by the ginner or entered by the ginner on the 
gin bale tag. A machine card type warehouse receipt reflecting an 
alteration in gross, tare weight, or net weight will not be accepted by 
CCC unless it bears, on the face of the receipt, the following legend or 
similar wording approved by CCC, duly executed by the warehouse or an 
authorized representative of the warehouse:

    Corrected (gross, tare, or net) weight,
    (Name of warehouse),
    By (Signature or initials),
    Date.

    (3) Alterations in other inserted data on a machine card type 
warehouse receipt must be initialed by an authorized representative of 
the warehouse.
    (d) If warehouse storage charges have been paid, the receipt must 
show that date through which the storage charges have been paid.
    (e) If warehouse receiving charges have been paid or waived, the 
warehouse receipt must show such fact.
    (f) The warehouse receipt must show the compression status of the 
bale; i.e., flat, modified flat, standard, gin standard, standard 
density (short), gin universal, universal density (short), or warehouse 
universal density. The receipt must show if the compression

[[Page 633]]

charge has been paid, or if the warehouse claims no lien for such 
compression.

[67 FR 64459, Oct. 18, 2002, as amended at 73 FR 65720, Nov. 5, 2008]



Sec.1427.12  Liens.

    (a) Waivers that fully protect the interest of CCC must be obtained 
before loan disbursement, notwithstanding provisions in Sec.
1427.19(h), if there are any liens or encumbrances on the cotton 
tendered as collateral for a loan, even though the liens or encumbrances 
are satisfied from the loan proceeds, except that CCC may elect to waive 
such lien requirements for loans having a principal value of less than 
$50,000.
    (b) CCC may elect to accept cotton as loan collateral that has 
warehouse receiving, compression, or other charges without a lien waiver 
if the producer at the time of loan application agrees to reimburse CCC 
for any such charges that CCC may pay on behalf of the producer or that 
reduce the value of the cotton delivered to CCC.

[71 FR 51427, Aug. 30, 2006, as amended at 73 FR 65721, Nov. 5, 2008]



Sec.1427.13  Fees, charges and interest.

    (a) A producer must pay a nonrefundable loan service fee to CCC at 
the time of loan disbursement or, if applicable, to a loan servicing 
agent, at a rate determined by CCC. The fee is in addition to a cotton 
clerk fee specified in paragraph (b) of this section. The fee amounts 
are available in FSA State and county offices and are shown on the note 
and security agreement. Fees will be deducted from the loan proceeds.
    (b) Cotton clerks may only charge fees for the preparation of loan 
or LDP documents at the rate determined by CCC.
    (1) Such fees may be deducted from the loan or loan deficiency 
payment proceeds instead of the fees being paid in cash.
    (2) The amount of such fees is available from CCC and is shown on 
the note and security agreement.
    (c) Interest which accrues for a loan will be determined under part 
1405 of this chapter. All or a portion of such interest may be waived 
for a quantity of upland cotton which has been redeemed under Sec.
1427.19 at a level which is less than the principal amount of the loan 
plus charges and interest.
    (d) For each crop of upland cotton, the producer, as defined in the 
Cotton Research and Promotion Act (7 U.S.C. 2101), must remit to CCC an 
assessment that will be transmitted by CCC to the Cotton Board and will 
be deducted from the:
    (1) Loan proceeds for a crop of cotton and will be at a rate equal 
to one dollar per bale plus up to one percent of the loan amount; and
    (2) LDP proceeds for a crop of cotton and will be at a rate equal to 
up to one percent of the LDP amount.
    (e) If the producers elects to forfeit the loan collateral to CCC, 
the producer shall pay to CCC, at the rates that are specified in the 
storage agreement between the warehouse and CCC, the following accrued 
warehouse charges:
    (1) All warehouse storage charges associated with the forfeited 
cotton that accrued before the date that all required documents were 
provided to CCC; and
    (2) Any accrued warehouse receiving charges associated with the 
forfeited cotton, including, if applicable, charges for new ties as 
specified in Sec.1427.11.
    (3) Any warehouse storage charges associated with the forfeited 
cotton that accrued during the period of the loan and paid by CCC to the 
warehouse that:
    (i) Exceed CCC's maximum storage credit rate for the warehouse 
established in Sec.1427.19 and
    (ii) Were paid by CCC for periods subject to denied storage credits 
due to the cotton being stored outside as specified in Sec.
1427.19(h)(2)(ii).
    (4) Unpaid warehouse compression charges.

[67 FR 64459, Oct. 18, 2002, as amended at 71 FR 51427, Aug. 30, 2006; 
73 FR 65721, Nov. 5, 2008; 80 FR 134, 139, Jan. 2, 2015]



Sec.1427.14  [Reserved]



Sec.1427.15  Special procedure where funds are advanced.

    (a) The special procedure in this section is provided to assist 
persons or

[[Page 634]]

firms that, in the course of their regular business of handling cotton 
for producers, have made advances to eligible producers on cotton 
eligible to be pledged as collateral for a MAL or to receive an LDP. A 
person, firm, or financial institution that has made advances to 
eligible producers on eligible cotton may also obtain reimbursement for 
the amounts advanced under this procedure.
    (b) This special procedure will apply only:
    (1) If such person or firm is entitled to reimbursement from the 
proceeds of the MALs or LDPs for the amounts advanced and has been 
authorized by the producer to deliver the loan or LDP documents to a FSA 
county office for disbursement of the loans or LDPs; and
    (2) To MAL or LDP documents covering cotton on which a person or 
firm has advanced to the producers, including payments to prior 
lienholders and other creditors, the note amounts shown on the Form A 
loan documents, except for:
    (i) Authorized cotton clerk fees;
    (ii) The research and promotion fee to be collected for transmission 
to the Cotton Board by CCC; and
    (iii) CCC loan service charges.
    (c)(1) All MAL or LDP documents will be mailed, sent electronically, 
or delivered to the appropriate FSA county office and will show the 
entire proceeds of the MALs or LDPs, except for CCC loan service charges 
and research and promotion fees, for disbursement to:
    (i) The financial institution which is to allow credit to the person 
or firm which made the loan or LDP advances or to such financial 
institution and such person or firm as joint payees; or
    (ii) The person, firm, or financial institution which made the MAL 
or LDP advances to the producers.
    (2) The documents will be accompanied by a Transmittal Schedule of 
Loan and LDP Documents (Transmittal) on a form prescribed by CCC, in 
original and two copies, numbered serially for each FSA county office by 
the person, firm, or financial institution that made the MAL or LDP 
advance. The Transmittal will show the amounts invested by the person, 
firm, or financial institution in the MALs or LDPs.
    (3) Upon receipt of the MAL or LDP documents and Transmittal, the 
FSA county office will stamp one copy of the Transmittal to indicate 
receipt of the documents and return this copy to the person, firm, or 
financial institution.
    (d) The person, firm, or financial institution will be deemed to 
have invested funds in the loans or LDP as of the date MAL or LDP 
documents acceptable to CCC were delivered to a FSA county office or, if 
received by mail, the date of mailing as indicated by postmark or the 
date of receipt in a FSA county office if no postmark date is shown. 
Patron postage meter date stamp will not be recognized as a postmark 
date.
    (e) Interest will be computed on the total amount invested by the 
person, firm, or financial institution in the MAL or LDP represented by 
accepted documents from and including the date of investment of funds by 
the person, firm, or financial institution to, but not including, the 
date of disbursement by CCC.
    (1) Interest will be paid at the rate in effect for CCC loans as 
provided in part 1405 of this chapter.
    (2) Interest earned by the person, firm, or financial institution on 
the investment in loans disbursed during a month will be paid by CCC 
after the end of the month.

[67 FR 64459, Oct. 18, 2002, as amended at 80 FR 134, 139, Jan. 2, 2015]



Sec.1427.16  Movement and protection of warehouse-stored cotton.

    (a) CCC may insure or reinsure stored cotton against any risk, or 
otherwise take an action it deems necessary to protect the interest 
therein of CCC.
    (b) A producer may transfer cotton loan collateral subject to the 
following conditions:
    (1) The cotton is represented by an electronic warehouse receipt;
    (2) The request is submitted by a producer or a properly designated 
agent of the producer;
    (3) The transfer is agreed to by the receiving warehouse operator;
    (4) The CCC MAL that is secured by such cotton matures at least 30 
days

[[Page 635]]

after the date on which the request for the transfer is submitted to 
CCC; and
    (5) Any charges, fees, costs, or expenses incident to the transfer 
of cotton loan collateral under this paragraph must be paid by the 
requestor of the transfer.
    (c) CCC will exclude from the calculation of any storage credits 
payable under Sec.1427.19 the following periods:
    (1) The period during which the cotton is in transit between 
warehouses; and
    (2) Any period beyond 75 days starting from the date of transfer 
from the shipping warehouse, unless the shipping warehouse is:
    (i) Not in compliance with any of the terms of its Cotton Storage 
Agreement, (ii) Storing cotton loan collateral outside, or
    (iii) Under common ownership with the receiving warehouse.

[71 FR 51427, Aug. 30, 2006, as amended at 73 FR 65721, Nov. 5, 2008; 80 
FR 139, Jan. 2, 2015]



Sec.1427.17  [Reserved]



Sec.1427.18  Liability of the producer.

    (a)(1) If a producer makes any fraudulent representation in 
obtaining a MAL or LDP or in maintaining or settling a loan, or disposes 
of or moves the loan collateral without the prior written approval of 
CCC, such loan or LDP will be payable upon demand by CCC. The producer 
will be liable for:
    (i) The amount of the MAL or LDP;
    (ii) Any additional amounts paid by CCC for the loan or LDP;
    (iii) All other costs which CCC would not have incurred but for the 
fraudulent representation or the unauthorized disposition or movement of 
the loan collateral;
    (iv) Applicable interest on such amounts;
    (v) Liquidated damages under paragraph (e) of this section; and
    (vi) About amounts due for a loan, the payment of such amounts may 
not be satisfied by the forfeiture of loan collateral to CCC of cotton 
with a settlement value that is less than the total of such amounts or 
by repayment of such loan at the lower loan repayment rate as prescribed 
in Sec.1427.19.
    (vii) CCC will not assume any loss pertaining to cotton stored in a 
warehouse for any reason.
    (2) If a producer makes a fraudulent representation or if the 
producer has disposed of, or moved the loan collateral without prior 
written approval from CCC, the value of such collateral will be equal to 
its loan value, plus accrued interest, plus warehouse charges, and 
liquidated damages, as determined by CCC.
    (b) If the amount disbursed under a MAL, or in settlement thereof, 
or LDP exceeds the amount authorized by this subpart, the producer will 
be liable for repayment of the difference, plus interest. In addition, 
the commodity pledged as collateral for the loan will not be released to 
the producer until the difference is repaid.
    (c) If the amount collected from the producer in satisfaction of the 
MAL or LDP is less than the amount required under this subpart, the 
producer will be personally liable for repayment of the amount of the 
difference plus applicable interest.
    (d) If more than one producer executes a note and security agreement 
or LDP application with CCC, each producer is jointly and severally 
liable for the violation of the terms and conditions of the note and 
security agreement or LDP application and this subpart. Each producer 
also remains liable for repayment of the entire loan or LDP amount until 
the loan is fully repaid without regard to their share in the cotton 
pledged as collateral for the loan or for which the LDP was made. In 
addition, the producer may not amend the note and security agreement or 
LDP application for the producer's claimed share in the cotton after 
execution of the note and security agreement or LDP application by CCC.
    (e) The producer and CCC agree that it will be difficult, if not 
impossible, to prove the amount of damages to CCC if a producer makes 
any fraudulent representation in obtaining a loan or LDP, in maintaining 
or settling a loan, or disposing of or moving the loan collateral 
without the prior written approval of CCC. Accordingly, if CCC 
determines that the producer has violated the terms or conditions of 
their requests

[[Page 636]]

for a loan or any applicable form required by CCC, liquidated damages 
will be assessed on the quantity involved in the violation. Liquidated 
damages assessed in accordance with this section will be determined by 
multiplying the quantity involved in the violation by 10 percent of the 
MAL rate applicable to the loan note.
    (f) When it has been determined that a violation of the terms and 
conditions of a loan deficiency application has occurred, CCC will 
determine the quantity of the cotton involved with respect to such 
violation and assess liquidated damages by multiplying the quantity of 
cotton involved in the violation by 10 percent of the MAL rate.
    (g) For cases other than first or second offenses, or any offense 
for which CCC cannot determine good faith when the violation occurred, 
CCC will:
    (1) Assess liquidated damages under paragraph (e) of this section; 
and
    (2) Call the applicable MAL involved in the violation and require 
repayment of any market loan gain previously realized for the applicable 
loan, plus any interest previously waived and any storage paid by CCC, 
and for an LDP, require repayment of the LDP and charges plus interest 
from the date the LDP was made.
    (h) If the county committee acting on behalf of CCC determines that 
the producer has committed a violation under paragraph (e) of this 
section, CCC will notify the producer in writing that:
    (1) The producer has 30 calendar days to provide evidence and 
information regarding the circumstances which caused the violation, to 
the county committee; and
    (2) Administrative actions will be taken under paragraph (f) or (g) 
of this section.
    (i) If CCC accelerates the maturity date for a loan under this 
section, the producer must repay the loan at principal and charges, plus 
interest and may not repay the loan at the lower of the loan repayment 
rate under Sec.1427.19 or utilize the provisions of part 1401 of this 
chapter for such loan.
    (j) Any or all of the liquidated damages assessed under paragraph 
(e) of this section may be waived as determined by CCC.
    (k)(1) Notwithstanding any other provision of this part, for ELS 
cotton stored as provided in Sec.1427.10(f), the producer is liable 
for all costs associated with the storage of the cotton while it is 
stored outside. CCC will make no storage payment or any other payment 
with respect to ELS cotton stored as provided in Sec.1427.10(f).
    (2) The producer of ELS cotton that is stored as provided in Sec.
1427.10(f) must:
    (i) Certify the quantity of such cotton on the loan application; 
certify the cotton is packaged in a hermetically sealed bag with an 
internal humidity level established by the gin as appropriate to 
safeguard the cotton; certify that packaging materials meet or exceed 
industry minimum standards; certify that the storage area is suitable 
for cotton storage and is in an area approved by CCC; certify that the 
storage area is constructed to prevent water accumulation under the 
cotton and is outside a 100-year floodplain; and certify that the 
storage area is serviced by bale handling and transport equipment that 
will not damage the sealed bag or degrade the storage area;
    (ii) Be responsible for any loss in quantity or quality of such 
cotton;
    (iii) If the loan is satisfied by forfeiting the cotton to CCC, be 
responsible for all costs associated with delivering such cotton to a 
warehouse designated by CCC, all costs associated with any re-
classification and repackaging that may be required by CCC or the 
warehouse operator to whom the cotton is delivered, all charges by the 
receiving warehouse for receiving the cotton and issuing an electronic 
warehouse receipt for the cotton, and other charges as may be levied by 
the warehouse specific to outside-stored cotton; and
    (iv) Not move such cotton after the loan application is submitted to 
CCC without prior written approval of the county committee. Failure of 
the producer to receive such permission will subject the producer to 
administrative actions.

[67 FR 64459, Oct. 18, 2002, as amended at 68 FR 49328, Aug. 18, 2003; 
69 FR 12056, Mar. 15, 2004; 71 FR 32427, June 6, 2006; 73 FR 65721, Nov. 
5, 2008; 80 FR 134, 139, Jan. 2, 2015]

[[Page 637]]



Sec.1427.19  Repayment of MALs.

    (a) Warehouse receipts pledged as collateral for a CCC loan will not 
be released except as provided in this section.
    (b) A producer, an authorized agent or anyone subsequently 
designated by the producer in the manner prescribed by CCC may redeem 
one or more bales of cotton pledged as collateral for a loan by payment 
to CCC of an amount applicable to the bales of cotton being redeemed 
determined under this section. CCC, upon proper payment for the amount 
due, will release the warehouse receipts applicable to such cotton.
    (c) A producer or agent or subsequent agent authorized in writing in 
a manner prescribed by CCC may repay the loan amount for one or more 
bales of cotton pledged as collateral for a MAL:
    (1) For upland cotton, at a level that is the lesser of:
    (i) The loan level and charges, plus interest determined for such 
bales; or
    (ii) The adjusted world price, as determined by CCC under Sec.
1427.25, in effect on the day the repayment is received by the FSA 
county office, loan servicing agent, or cotton commercial bank that 
disbursed the loan.
    (2) For ELS cotton, by repaying the loan amount and charges, plus 
interest determined for such bales.
    (d) CCC will determine and publicly announce the adjusted world 
price for each crop of upland cotton on a weekly basis.
    (e) The difference between the loan level, excluding charges and 
interest, and the loan repayment level is the market loan gain. The 
total amount of any market loan gain realized by a person is subject to 
part 1400 of this chapter.
    (f) Repayment of loans will not be accepted after CCC acquires title 
to the cotton under Sec.1427.7.
    (g) In the event that Thursday is a non-workday, such loan 
repayments will not be accepted beginning at 7 a.m. Eastern Standard 
time the next workday until an announcement of the adjusted world price 
for the succeeding weekly period has been made under Sec.1427.25(e).
    (h) For purposes of calculating loan-period accrued storage charges 
that CCC may credit to the loan repayment amount under paragraph (i) of 
this section:
    (1) The warehouse storage rates for cotton crops under loan will be 
the lower of:
    (i) The tariff storage rate for the warehouse for the 2005 crop or, 
for any warehouse not in existence in 2005, a CCC-assigned average 2005 
crop tariff rate for the county or area; or
    (ii) The storage rate for 2006 crop cotton reduced by 10 percent.
    (2) CCC will not credit the loan repayment amount for a bale for any 
storage charges that accrued while the cotton was stored outside, except 
that storage may be credited for up to 15-days of outside storage 
beginning on the day the warehouse was notified that the bale is under 
loan if the bale was inside on the 15th day from the date of 
notification.
    (3) The loan period will be determined by CCC to begin:
    (i) For loan disbursed by the FSA, on the date all loan documents, 
as determined and announced by CCC, have been received or
    (ii) For a loan disbursed by a CMA or an authorized loan servicing 
agent, on the date the loan was disbursed by CCC.
    (i)(1) An upland cotton loan repayment rate will not exceed the loan 
principal plus accrued interest for the period provided in Sec.
1427.19(j).
    (2) When the prevailing adjusted world price of upland cotton, as 
determined under Sec.1427.25, is less than the combined value of the 
loan principal, accrued interest, and warehouse storage that accrued 
during the period of the loan, CCC will permit the loan to be repaid at 
the adjusted world price less the storage charges that accrued during 
the period of the loan.
    (j) For purposes of calculating interest charges on upland and extra 
long staple cotton loan principal, the loan period will be the period 
starting the date after the disbursement of the loan amount to, and 
including, the loan repayment date, except that interest is not charged 
for a loan that is disbursed and repaid on the same date.
    (k) Repayment of loans will not be accepted after CCC acquires title 
to the cotton in accordance with Sec.1427.7.

[[Page 638]]

    (l) A producer who receives a market loan gain or LDP and later is 
determined to have been ineligible must refund the market loan gain or 
LDP to CCC.

[67 FR 64459, Oct. 18, 2002, as amended at 71 FR 51428, Aug. 30, 2006; 
73 FR 65721, Nov. 5, 2008; 80 FR 135, 139, Jan. 2, 2015]



Sec.1427.20  Handling payments of $9.99 or less and collections not
exceeding $24.99.

    (a) Amounts of $9.99 or less will be paid to the producer only upon 
request.
    (b) Deficiencies of $24.99 or less, including interest, may be 
disregarded unless CCC demands in writing that they be paid.

[80 FR 135, Jan. 2, 2015]



Sec.1427.21  Settlement.

    (a) The settlement of cotton loans will be made by CCC on the basis 
of the quality and quantity of the cotton delivered to CCC by the 
producer or acquired by CCC subject to the producer being responsible 
for, if applicable, warehouse receiving charges, new bale ties, unpaid 
warehouse compression, charges for and related to the certification of a 
bale and for any subsequent exchange of certificated receipts, storage 
charges for any period of yard storage, and storage charges in excess of 
any maximum storage credit rates as determined and announced by CCC.
    (b) For purposes of settlements for cotton delivered to CCC in 
satisfaction of a loan obligation, CCC may elect to calculate such 
settlement values based on the net weight, condition, and classification 
as reflected on the warehouse receipt delivered to CCC, whether such 
receipt is the receipt issued by the original storing warehouse and 
presented for calculating the loan amount or a receipt issued by a 
subsequent warehouse due to the transfer of such bale while pledged as 
collateral for a CCC loan.
    (c) If a producer does not pay CCC the amount due under a loan, CCC 
will take title to the cotton as provided in Sec.1427.7(b).
    (d) With respect to ELS cotton which is stored as provided in Sec.
1427.10(f), settlement of loans will be made based upon the 
determination of the quantity and quality made by CCC at the time of 
acceptance of the cotton by CCC at the warehouse designated by CCC as 
provided in Sec.1427.18(k).
    (e) If CCC sells the commodity described in paragraph (a) of this 
section in settlement of the recourse loan, the sales proceeds will be 
applied to the amount owed CCC by the producer. The producer is 
responsible for any costs incurred by CCC in completing the sale and CCC 
will deduct the amount of these costs from the sales proceeds. When CCC 
sells any cotton obtained by forfeiture under a MAL, CCC will, in all 
instances, retain all proceeds obtained from the sale of the cotton and 
will not make any payment of any amount of such proceeds to any party, 
including the producer who had satisfied their obligation under the loan 
through forfeiture of the cotton to CCC.
    (f) CCC will pay to the warehouse any unpaid storage or receiving 
charges for forfeited loan collateral, not to exceed the amount that 
accrued from the date that all necessary documents were received by CCC 
to the loan maturity date, as soon as practicable after the cotton is 
forfeited.

[67 FR 64459, Oct. 18, 2002, as amended at 68 FR 49329, Aug. 18, 2003; 
71 FR 32427, June 6, 2006; 73 FR 65721, Nov. 5, 2008; 80 FR 135, 139, 
Jan. 2, 2015]



Sec.1427.22  [Reserved]



Sec.1427.23  Cotton LDPs.

    (a) In order to be eligible to receive such LDPs the producer of the 
upland cotton must:
    (1) Comply with all of the upland cotton MAL eligibility 
requirements under this subpart;
    (2) Agree to forgo obtaining such loans unless denied an LDP due to 
payment limitation;
    (3) Submit, on a form prescribed by CCC, to the FSA county office on 
or before beneficial interest is lost in such quantity and before the 
final loan availability date for the commodity:
    (i) An indication of their intentions to receive an LDP on the 
identified commodity or
    (ii) A completed request for an LDP for a quantity of eligible 
cotton under Sec.1427.5(a).
    (4) Provide warehouse receipts or, as determined by CCC, a list of 
gin bale

[[Page 639]]

numbers for such cotton showing, for each bale, the net weight 
established at the gin;
    (5) For LDPs requested before ginning of the cotton based on a 
locked-in adjusted world price, provide identifying numbers for modules 
or other storage units that will correspond to the gin-assigned numbers 
of the bales produced from the unginned cotton; and
    (6) Otherwise comply with all program requirements.
    (b) The LDP applicable to a crop of cotton will be computed by 
multiplying the applicable LDP rate, as determined under paragraph (c) 
of this section, by the quantity of the crop the producer is eligible to 
pledge as collateral for a loan, excluding any quantity for which the 
producer obtains a MAL.
    (c) The LDP rate for a crop of upland cotton will be the amount by 
which the loan rate determined for a bale of such crop exceeds the 
adjusted world price, as determined by CCC under Sec.1427.25, in 
effect on the day the request is received by the FSA county office, loan 
servicing agent, or cotton commercial bank. In no case will the LDP rate 
for a bale exceed the value of the bale had it been pledged as 
collateral for a MAL.
    (d) The total amount of any LDPs that a person may receive is 
subject to AGI and payment limitation requirements specified in part 
1400 of this chapter.
    (e) If the producer enters into an agreement with CCC on or before 
the date of ginning a quantity of eligible upland cotton, and the 
producer has the beneficial interest in such quantity as specified under 
Sec.1427.5(c) on the date the cotton was ginned, and the producer 
meets all the other requirements in paragraph (a) of this section on or 
before the final date to apply for an LDP under Sec.1427.5, the LDP 
rate applicable to such cotton will be:
    (1) Based on the date the cotton was ginned, which CCC will consider 
to be the date of the LDP request, if payment application is made in the 
manner prescribed by CCC for obtaining such rate;
    (2) Based on the date of request for lock-in of the adjusted world 
price if payment application is made in the manner prescribed by CCC for 
obtaining such rate; or
    (3) Based on the date a completed request including production 
evidence is submitted in the manner prescribed by CCC for obtaining such 
rate.
    (f) In the event that Thursday is a non-workday, such applications 
for loan deficiency payments will not be accepted beginning at 7 a.m. 
Eastern time the next workday until an announcement of the adjusted 
world price for the succeeding weekly period has been made under Sec.
1427.25(e).

[67 FR 64459, Oct. 18, 2002, as amended at 71 FR 32427, June 6, 2006; 73 
FR 65722, Nov. 5, 2008; 80 FR 135, 139, Jan. 2, 2015]



Sec.1427.24  [Reserved]



Sec.1427.25  Determination of the prevailing world market price and 
the adjusted world price for upland cotton.

    (a) CCC will determine the world market price for upland cotton as 
follows:
    (1) During the period when only one daily price quotation is 
available for each growth quoted for Middling one and three-thirty-
second inch (M 1\3/32\-inch) cotton, CFR (cost and freight) Far East, 
the prevailing world market price for upland cotton will be based on the 
average of the quotations for the preceding Friday through Thursday for 
the 5 lowest-priced growths of the growths quoted for M 1\3/32\-inch 
cotton, CFR Far East.
    (2) During the period when both a price quotation for cotton for 
shipment no later than August/September of the current calendar year 
(current Far East shipment price) and a price quotation for cotton for 
shipment no earlier than October/November of the current calendar year 
(forward Far East shipment price) are available for growths quoted for M 
1\3/32\-inch cotton, CFR Far East, the prevailing world market price for 
upland cotton will be based on the average of the current Far East 
shipment prices for the preceding Friday through Thursday for the 5 
lowest-priced growths of the growths quoted for M 1\3/32\-inch cotton, 
CFR Far East, except as may be determined by the Secretary as specified 
in paragraph (c)(3)(iv) of this section.

[[Page 640]]

    (3) The upland cotton prevailing world market price determined as 
specified in paragraphs (a)(1) or (a)(2) of this section is referred to 
as the ``Far East price'' (FE).
    (4) If quotes are not available for 1 or more days in the 5-day 
period, the available quotes during the period will be used. If no 
quotes are available during the Friday through Thursday period, the 
prevailing world market price will be based on the best available world 
price information, as CCC determines.
    (b) The upland cotton prevailing world market price, adjusted as 
specified in paragraph (c) of this section (adjusted world price (AWP)), 
will apply to crops of upland cotton.
    (c) The upland cotton AWP will equal the FE determined as specified 
in paragraph (a) of this section, adjusted as follows:
    (1) FE will be adjusted to U.S. location by deducting the average 
costs to market, including average transportation costs, as determined 
by the Secretary.
    (2) The price determined as specified in paragraph (c)(1) of this 
section will be adjusted to reflect the price of base quality upland 
cotton by deducting the difference, as CCC announces, between the 
applicable loan rate for an upland cotton crop for base quality M 1\3/
32\-inch, leaf 3 cotton and the loan rate for base quality SLM 1\1/16\-
inch, leaf 4 cotton.
    (3) The prevailing world market price, adjusted as specified in 
paragraphs (c)(1) and (c)(2) of this section, may be further adjusted if 
it is determined that the adjustment is necessary to:
    (i) Minimize potential loan forfeitures;
    (ii) Minimize the accumulation of stocks of upland cotton by the 
Federal Government;
    (iii) Ensure that upland cotton produced in the United States can be 
marketed freely and competitively, both domestically and 
internationally; and
    (iv) Ensure an appropriate transition between current-crop and 
forward-crop price quotations, except that forward-crop price quotations 
may be used prior to July 31 of a marketing year only if there are 
insufficient current crop quotations and the forward-crop price 
quotation is the lowest such quotation available.
    (d) The upland cotton AWP, determined as specified in paragraph (c) 
of this section, and the amount of the additional adjustment determined 
as specified in paragraphs (e) and (f) of this section, will be 
announced, to the extent practicable, at 4 p.m. eastern time each 
Thursday. In the event that Thursday is a non-workday, the determination 
will be announced, to the extent practicable, at 8 a.m. eastern time the 
next work day.
    (e)(1)(i) AWP, determined as specified in paragraph (c) of this 
section, will be subject to a further coarse count adjustment as 
provided in this section regarding all qualities of upland cotton 
eligible for loan except the following upland cotton grades with a 
staple length of 1\1/16\-inch or longer:
    (A) White Grades--Strict Middling and better, leaf 1 through leaf 6; 
Middling, leaf 1 through leaf 6; Strict Low Middling, leaf 1 through 
leaf 6; and Low Middling, leaf 1 through leaf 5;
    (B) Light Spotted Grades--Strict Middling and better, leaf 1 through 
leaf 5; Middling, leaf 1 through leaf 5; and Strict Low Middling, leaf 1 
through leaf 4; and
    (C) Spotted Grades--Strict Middling and better, leaf 1 through leaf 
2; and
    (ii) Grade, leaf, and staple length must be determined as specified 
in Sec.1427.9. If no such official classification is presented, the 
coarse count adjustment will not be made.
    (2) The adjustment for upland cotton specified in paragraph (e)(1) 
of this section will be determined by deducting from AWP:
    (i) The difference between FE, and
    (A) During the period when only one daily price quotation for each 
growth quoted for ``coarse count'' cotton, CFR Far East, is available, 
the average of the quotations for the corresponding Friday through 
Thursday for the three lowest-priced growths of the growths quoted for 
``coarse count'' cotton, CFR Far East (Far East coarse count price); or
    (B) During the period when both current Far East shipment prices and 
forward Far East shipment prices are available for the growths quoted 
for

[[Page 641]]

``coarse count'' cotton, CFR Far East, the result calculated by the 
average of the current Far East shipment prices for the preceding Friday 
through Thursday for the three lowest-priced growths of the growths 
quoted for ``coarse count'' cotton, CFR Far East (Far East coarse count 
price) minus
    (ii) The difference between the applicable loan rate for an upland 
cotton crop for base quality M 1\3/32\-inch, leaf 3 cotton and the loan 
rate for an upland cotton crop for base quality SLM 1\1/32\-inch, leaf 4 
cotton.
    (3) Regarding the determination of the Far East coarse count price 
specified in paragraph (e)(2)(i) of this section:
    (i) If no quotes are available for one or more days of the 5-day 
period, the available quotes will be used;
    (ii) If quotes for three growths are not available for any day in 
the 5-day period, that day will not be considered; and
    (iii) If quotes for three growths are not available for at least 3 
days in the 5-day period, that week will not be considered, in which 
case the adjustment determined as specified in paragraph (e)(2) of this 
section for the latest available week will continue to be applicable.
    (f)(1)(i) AWP, determined as specified in paragraph (c) of this 
section, will be subject to a further fine count adjustment as provided 
in this section regarding all upland cotton having a loan schedule 
premium or discount exceeding that for Middling, leaf 3, staple length 
1\3/32\-inch upland cotton, and
    (ii) Grade, staple length, and leaf must be determined as specified 
in Sec.1427.9. If no such official classification is presented, the 
fine count adjustment will not be made.
    (2) The adjustment for upland cotton specified in paragraph (f)(1) 
of this section will be determined by deducting from AWP:
    (i) The difference between FE, and
    (A) During the period when only one daily price quotation for each 
growth quoted for ``fine count'' cotton, CFR Far East, is available the 
average of the quotations for the corresponding Friday through Thursday 
for the three lowest-priced growths of the growths quoted for ``fine 
count'' cotton, CFR Far East (Far East fine count price) or
    (B) During the period when both current Far East shipment prices and 
forward Far East shipment prices are available for the growths quoted 
for ``fine count'' cotton, CFR Far East, the result calculated by the 
average of the current Far East shipment prices for the preceding Friday 
through Thursday for the three lowest-priced growths of the growths 
quoted for ``fine count'' cotton, CFR Far East (Far East fine count 
price) minus
    (ii) The difference between the applicable loan rate for an upland 
cotton crop for base quality M 1\3/32\-inch, leaf 3 cotton and the loan 
rate for an upland cotton crop for base quality SM 1\1/8\-inch, leaf 2 
cotton.
    (3) Regarding the determination of the Far East fine count price 
under paragraph (f)(2)(i) of this section:
    (i) If no quotes are available for one or more days of the 5-day 
period, the available quotes will be used;
    (ii) If quotes for three growths are not available for any day in 
the 5-day period, that day will not be considered; and
    (iii) If quotes for three growths are not available for at least 3 
days in the 5-day period, that week will not be considered, in which 
case the adjustment determined as specified in paragraph (f)(2) of this 
section for the latest available week will continue to be applicable.
    (g) In the determination of FE as specified in paragraph (a)(2) of 
this section, the Far East coarse count price specified in paragraph 
(e)(2)(i)(B) of this section, and the Far East fine count price as 
specified in paragraph (f)(2)(i)(B) of this section, CCC will use either 
current Far East shipment prices, forward Far East shipment prices, or 
any combination thereof to determine FE or the Far East coarse count 
price or the Far East fine count price used in the determination of the 
adjustment for upland cotton specified in paragraphs (e)(1) and (f)(1) 
of this section and determined as specified in paragraphs (e)(2) and 
(f)(2) of this section to prevent distortions in such adjustment.
    (h) For particular bales, the AWP determined as specified in 
paragraph (c)

[[Page 642]]

of this section, will be subject to further adjustments to a value no 
less than zero, as CCC determines, based on the Schedule of Premiums and 
Discounts as announced for the loan program for an upland cotton crop.

[73 FR 65722, Nov. 5, 2008, as amended at 77 FR 19927, Apr. 3, 2012; 80 
FR 135, Jan. 2, 2015]

Subpart B [Reserved]



   Subpart C_Economic Adjustment Assistance to Users of Upland Cotton

    Source: 73 FR 65723, Nov. 5, 2008, unless otherwise noted.



Sec.1427.100  Applicability.

    (a) These regulations specify the terms and conditions under which 
CCC will make payments to eligible domestic users who have entered into 
an Upland Cotton Domestic User Agreement with CCC to participate in the 
upland cotton domestic user program.
    (b) CCC will specify the forms to be used in administering the 
Economic Adjustment Assistance to Users of Upland Cotton program.

[80 FR 135, Jan. 2, 2015]



Sec.1427.101  Eligible upland cotton.

    (a) For purposes of this subpart, eligible upland cotton is baled 
upland cotton, regardless of origin, that is opened by an eligible 
domestic user, and is either:
    (1) Baled lint, including baled lint classified by USDA's 
Agricultural Marketing Service as Below Grade;
    (2) Loose samples removed from upland cotton bales for 
classification purposes that have been rebaled;
    (3) Semi-processed motes that are of a quality suitable, without 
further processing, for spinning, papermaking, or production of non-
woven fabric; or
    (4) Re-ginned (processed) motes.
    (b) Eligible upland cotton must not be:
    (1) Cotton for which a payment, under the provisions of this 
subpart, has been made available;
    (2) Raw (unprocessed) motes, pills, linters, or other derivatives of 
the lint cleaning process; or
    (3) Textile mill wastes.

[73 FR 65723, Nov. 5, 2008, as amended at 80 FR 136, Jan. 2, 2015]



Sec.1427.102  Eligible domestic users.

    (a) For purposes of this subpart, a person regularly engaged in the 
business of opening bales of eligible upland cotton for the purpose of 
spinning, papermaking, or processing of non-woven cotton fabric in the 
United States, who has entered into an agreement with CCC to participate 
in the upland cotton user program, will be considered an eligible 
domestic user.
    (b) Applications for payment under this subpart must contain 
documentation required by the provisions of the Upland Cotton Domestic 
User Agreement and other instructions that CCC issues.



Sec.1427.103  Upland cotton Domestic User Agreement.

    (a) Payments specified in this subpart will be made available to 
eligible domestic users who have entered into an Upland Cotton Domestic 
User Agreement with CCC and who have complied with the terms and 
conditions in this subpart, the Upland Cotton Domestic User Agreement, 
and instructions issued by CCC.
    (b) Upland Cotton Domestic User Agreements may be obtained from 
Contract Reconciliation Division, Kansas City Commodity Office (KCCO), 
P.O. Box 419205, Stop 8758, Kansas City, Missouri 64141-6205. In order 
to participate in the program authorized by this subpart, domestic users 
must execute the Upland Cotton Domestic User Agreement and forward the 
original and one copy to KCCO.



Sec.1427.104  [Reserved]



Sec.1427.105  Payment.

    (a) The payment rate for purposes of calculating payments as 
specified in this subpart is 3 cents per pound.
    (b) Payments specified in this subpart will be determined by 
multiplying the payment rate, of 3 cents per pound, by
    (1) In the case of baled upland cotton, whether lint, loose samples 
or reginned motes, but not semi-processed motes, the net weight of the 
cotton used

[[Page 643]]

(gross weight minus the weight of bagging and ties);
    (2) In the case of unbaled reginned motes consumed, without 
rebaling, for an end use in a continuous manufacturing process, the 
weight of the reginned motes after final cleaning; and
    (3) In the case of semi-processed motes which are of a quality 
suitable, without further processing, for spinning, papermaking, or 
manufacture of non-woven cotton fabric, 25 percent of the weight (gross 
weight minus the weight of bagging and ties, if baled) of the semi-
processed motes; provided further, that with respect to semi-processed 
motes that are used prior to August 18, 2010, payment may be allowed by 
CCC in its sole discretion at 100 percent of the weight as determined 
appropriate for a transition of the program to the 25 percent factor.
    (c) In all cases, the payment will be determined based on the amount 
of eligible upland cotton that an eligible domestic user consumed during 
the immediately preceding calendar month. For the purposes of this 
subpart, eligible upland cotton will be considered consumed by the 
domestic user on the date the bale is opened for consumption, or if not 
baled, the date consumed, without further processing, in a continuous 
manufacturing process.
    (d) Payments specified in this subpart will be made available upon 
application for payment and submission of supporting documentation, as 
required by the CCC-issued provisions of the Upland Cotton Domestic User 
Agreement.
    (e) All payments received by the eligible domestic user of upland 
cotton must be used for purposes specified in 7 U.S.C. 9037(c)(3), which 
include but are not limited to, acquisition, construction, installation, 
modernization, development, conversion, or expansion of land, plant, 
buildings, equipment, facilities, or machinery. Such capital 
expenditures must be directly attributable and certified as such by the 
user for the purpose of manufacturing upland cotton into eligible cotton 
products in the United States.

[73 FR 65723, Nov. 5, 2008, as amended at 75 FR 50849, Aug. 18, 2010; 80 
FR 136, Jan. 2, 2015]



                  Subpart D_Recourse Seed Cotton Loans

    Source: 67 FR 64459, Oct. 18, 2002, unless otherwise noted.



Sec.1427.160  Applicability.

    (a) This subpart is applicable to crops of upland and extra long 
staple seed cotton. This subpart specifies the terms and conditions 
under which recourse seed cotton loans will be made available by CCC. 
Such loans will be available through March 31 of the year following the 
calendar year in which such crop is normally harvested. CCC may change 
the loan availability period to conform to State or locally imposed 
quarantines. Additional terms and conditions are in the note and 
security agreement that must be executed by a producer in order to 
receive such loans.
    (b) Loan rates and the forms that are used in administering the 
recourse seed cotton loan program for a crop of cotton are available in 
FSA State and county offices. Loan rates will be based on the base 
quality loan rate for upland cotton and the national average loan rate 
for extra long staple cotton.
    (c) A producer must, unless otherwise authorized by CCC, request the 
loan at the FSA county office that, under part 718 of this title, is 
responsible for administering programs for the farm on which the cotton 
was produced. All note and security agreements and related documents 
necessary for the administration of the recourse seed cotton loan 
program will be prescribed by CCC and will be available at FSA State and 
county offices.
    (d) Loans will not be available for seed cotton produced on land 
owned or otherwise in the possession of the United States if such land 
is occupied without the consent of the United States.

[67 FR 64459, Oct. 18, 2002, as amended at 73 FR 65724, Nov. 5, 2008; 80 
FR 136, 139, Jan. 2, 2015]



Sec.1427.161  Administration.

    (a) The Recourse Seed Cotton Loan Program that is applicable to a 
crop of cotton will be administered under the general supervision of the 
Executive

[[Page 644]]

Vice President, CCC, or a designee and will be carried out in the field 
by FSA State and county committees.
    (b) State and county committees, and representatives and employees 
thereof, do not have the authority to modify or waive any of the 
provisions of the regulations of this subpart.
    (c) The State committee will take any action required by these 
regulations which has not been taken by the county committee. The State 
committee will also:
    (1) Correct, or require a county committee to correct, an action 
taken by such county committee which is not under the regulations of 
this subpart; or
    (2) Require a county committee to withhold taking any action which 
is not under the regulations of this subpart.
    (d) No provision or delegation herein to a State or county committee 
will preclude the Executive Vice President, CCC (Administrator, FSA), or 
a designee from determining any question arising under the recourse seed 
cotton program or from reversing or modifying any determination made by 
the State or county committee.
    (e) The Deputy Administrator, FSA, may authorize waiver or 
modification of deadlines and other program requirements where lateness 
or failure to meet such other requirements does not adversely affect the 
operation of the recourse seed cotton loan program.
    (f) A representative of CCC may execute loan applications and 
related documents only under the terms and conditions determined and 
announced by CCC. Any such document which is not executed under such 
terms and conditions, including any purported execution before the date 
authorized by CCC, will be null and void.

[67 FR 64459, Oct. 18, 2002, as amended at 80 FR 136, 139, Jan. 2, 2015]



Sec.1427.162  [Reserved]



Sec.1427.163  Disbursement of loans.

    (a) A producer or the producer's agent must request a loan at the 
FSA county office for the county that, under part 718 of this title, is 
responsible for administering programs for the farm on which the cotton 
was produced and which will assist the producer in completing the loan 
documents, except that CMAs designated by producers to obtain loans on 
their behalf may, unless otherwise authorized by CCC, obtain loans 
through a central FSA county office designated by the State committee.
    (b) Disbursement of each loan will be made by the FSA county office 
of the county that is responsible for administering programs for the 
farm on which the cotton was produced, except that CMAs designated by 
producers to obtain loans in their behalf may, unless otherwise 
authorized by CCC, obtain disbursement of loans at a central FSA county 
office designated by the State committee. Service charges will be 
deducted from the loan proceeds.
    (1) The producer or the producer's agent must not present the loan 
documents for disbursement unless the cotton is in existence and in good 
condition.
    (2) If the cotton is not in existence and in good condition at the 
time of disbursement, the producer or the agent must immediately return 
the check issued in payment of the loan or, if the check has been 
negotiated, the total amount disbursed under the loan, and charges plus 
interest must be refunded promptly.

[80 FR 136, Jan. 2, 2015]



Sec.1427.164  Eligible producer.

    An eligible producer must meet the requirements of Sec.1427.4.



Sec.1427.165  Eligible seed cotton.

    (a) Seed cotton pledged as collateral for a loan must be tendered to 
CCC by an eligible producer and must:
    (1) Be in existence and in good condition at the time of 
disbursement of loan proceeds;
    (2) Be stored in identity-preserved lots in approved storage meeting 
requirements of Sec.1427.171;
    (3) Be insured at the full loan value against loss or damage by 
fire;
    (4) Not have been sold, nor any sales option on such cotton granted, 
to a buyer under a contract which provides that the buyer may direct the 
producer to pledge the seed cotton to CCC as collateral for a loan;

[[Page 645]]

    (5) Not have been previously sold and repurchased; or pledged as 
collateral for a CCC loan and redeemed;
    (6) Be production from acreage that has been reported timely under 
part 718 of this title; and
    (b) The quality of cotton that may be pledged as collateral for a 
loan is the estimated quality of lint cotton in each lot of seed cotton 
as determined by the FSA county office, except that if a control sample 
of the lot of cotton is classed by an AMS Cotton Classing Office or 
other entity approved by CCC, the quality for the lot is the quality 
shown on the applicable documentation issued for the control sample.
    (c) To be eligible for loan, the beneficial interest in the seed 
cotton must be in the producer who is pledging the seed cotton as 
collateral for a loan as provided in Sec.1427.5(c).

[67 FR 64459, Oct. 18, 2002, as amended at 80 FR 136, Jan. 2, 2015]



Sec.1427.166  Insurance.

    The seed cotton must be insured at the full loan value against loss 
or damage by fire.



Sec.1427.167  Liens.

    If there are any liens or encumbrances on the seed cotton tendered 
as collateral for a loan, waivers that fully protect the interest of CCC 
must be obtained even though the liens or encumbrances are satisfied 
from the loan proceeds. No additional liens or encumbrances shall be 
placed on the cotton after the loan is approved.



Sec.1427.168  [Reserved]



Sec.1427.169  Fees, charges, and interest.

    (a) A producer must pay a non-refundable loan service fee at a rate 
determined by CCC.
    (b) Interest which accrues for a loan will be determined under part 
1405 of this chapter.

[67 FR 64459, Oct. 18, 2002, as amended at 80 FR 136, 139, Jan. 2, 2015]



Sec.1427.170  Quantity for loan.

    (a) The quantity of lint cotton in each lot of seed cotton tendered 
for loan will be determined by the FSA county office by multiplying the 
weight or estimated weight of seed cotton by the lint turnout factor 
determined under paragraph (b) of this section.
    (b) The lint turnout factor for any lot of seed cotton will be the 
percentage determined by the county committee representative during the 
initial inspection of the lot. If a control portion of the lot is 
weighed and ginned, the turnout factor determined for the portion of 
cotton ginned will be used for the lot. If a control portion is not 
weighed and ginned, the lint turnout factor will not exceed 32 percent 
for machine-picked cotton and 22 percent for machine-stripped cotton 
unless acceptable proof is furnished showing that the lint turnout 
factor is greater.
    (c) Loans will not be made on more than a percentage established by 
the county committee of the quantity of lint cotton determined as 
provided in this section. If the seed cotton is weighed, the percentage 
to be used will not be more than 95 percent. If the quantity is 
determined by measurement, the percentage to be used will not be more 
than 90 percent. The percentage to be used in determining the maximum 
quantity for any loan may be reduced below such percentages by the 
county committee when determined necessary to protect the interests of 
CCC on the basis of one or more of the following risk factors:
    (1) Condition or suitability of the storage site or structure;
    (2) Condition of the cotton;
    (3) Location of the storage site or structure; and
    (4) Other factors peculiar to individual farms or producers which 
related to the preservation or safety of the loan collateral. Loans may 
be made on a lower percentage basis at the producer's request.

[67 FR 64459, Oct. 18, 2002, as amended at 80 FR 136, 139, Jan. 2, 2015]



Sec.1427.171  Approved storage.

    Approved storage consists of storage located on or off the 
producer's farm (excluding public warehouses) that is determined by a 
county committee representative to afford adequate protection against 
loss or damage and is located within a reasonable distance,

[[Page 646]]

as determined by CCC, from an approved gin. If the cotton is not stored 
on the producer's farm, the producer must furnish satisfactory evidence 
that the producer has the authority to store the cotton on such property 
and that the owner of the property has no lien for such storage against 
the cotton. The producer must provide satisfactory evidence that the 
producer and any person having an interest in the cotton including CCC, 
have the right to enter the premises to inspect and examine the cotton 
and permit a reasonable time to such persons to remove the cotton from 
the premises.

[80 FR 136, Jan. 2, 2015]



Sec.1427.172  Settlement.

    (a) A producer may, at any time before maturity of the loan, obtain 
release of all or any part of the loan seed cotton by paying to CCC the 
amount of the loan, plus interest and charges.
    (b)(1) A producer or the producer's agent must not remove from 
storage any cotton that is pledged as collateral for a loan until prior 
written approval has been received from CCC for removal of the cotton. 
If a producer or the producer's agent obtains CCC approval, they may 
remove the cotton from storage, sell the seed cotton, have it ginned, 
and sell the resulting lint cotton and cottonseed. The ginner must 
inform the FSA county office in writing immediately after the seed 
cotton removed from storage has been ginned and furnish the county 
office the loan number, producer's name, and applicable gin bale 
numbers. If the seed cotton is removed from storage, the loan principal 
plus interest and charges must be paid not later than the earlier of:
    (i) The date established by the county committee;
    (ii) 5 days after the date of the producer received the AMS 
classification under Sec.1427.9 (and the warehouse receipt, if the 
cotton is delivered to a warehouse), representing such cotton; or
    (iii) The loan maturity date.
    (2) If the seed cotton or lint cotton is sold, the loan principal, 
interest, and charges must be satisfied immediately.
    (3) A producer, except a CMA, may obtain a nonrecourse loan or LDP 
under subpart A of this part, on the lint cotton, but:
    (i) The loan principal, interest, and charges on the seed cotton 
must be satisfied from the proceeds of the nonrecourse loan under 
subpart A of this part; or
    (ii) The LDP must be applied to the loan principal, interest, and 
charges on the outstanding seed cotton loan.
    (4) A CMA must repay the seed cotton loan principal, interest, and 
charges before pledging the cotton for a nonrecourse loan or before an 
LDP can be approved under subpart A of this part, on the lint cotton. If 
a CMA, which is authorized by producers to obtain loans in their behalf, 
removes seed cotton from storage before obtaining approval to move the 
cotton, the removal will constitute conversion of the cotton unless the 
CMA:
    (i) Notifies the FSA county office in writing the following morning 
by mail or otherwise that such cotton has been moved and is on the gin 
yard;
    (ii) Furnishes CCC an irrevocable letter of credit if requested; and
    (iii) Repays the loan principal, plus interest and charges, within 
the time specified by the county committee.
    (5) Any removal from storage will not be deemed to constitute a 
release of CCC's security interest in the seed cotton or to release the 
producer or CMA from liability for the loan principal, interest, and 
charges if full payment of such amount is not received by the FSA county 
office.
    (c) If, either before or after maturity, the producer discovers that 
the cotton is going out of condition or is in danger of going out of 
condition, the producer must immediately notify the FSA county office 
and confirm such notice in writing. If the county committee determines 
that the cotton is going out of condition or is in danger of going out 
of condition, the county committee will accelerate the maturity date and 
request repayment of the loan principal, plus interest and charges on or 
before a specified date. If the producer does not repay the loan or have 
the cotton ginned and obtain a nonrecourse loan under subpart A of this 
part on

[[Page 647]]

the resulting lint cotton within the period specified by the county 
committee, the cotton will be considered abandoned.
    (d) If the producer has control of the storage site and if the 
producer subsequently loses control of the storage site or there is 
danger of flood or damage to the seed cotton or storage structure making 
continued storage of the cotton unsafe, the producer must immediately 
either repay the loan or move the seed cotton to the nearest approved 
gin for ginning and must, at the same time, inform the FSA county 
office. If the producer does not do so, the seed cotton will be 
considered abandoned.
    (e) CCC will not assume any loss in quantity or quality of the loan 
collateral for recourse seed cotton loans.

[67 FR 64459, Oct. 18, 2002, as amended at 80 FR 136, 139, Jan. 2, 2015]



Sec.1427.173  Foreclosure.

    Any seed cotton pledged as collateral for a loan that is abandoned 
or has not been ginned and pledged as collateral for a nonrecourse loan 
under subpart A of this part by the seed cotton loan maturity date may 
be removed from storage by CCC and ginned and the resulting lint cotton 
warehoused for the account of CCC. The lint cotton and cottonseed may be 
sold at such time, in such manner and upon such terms as CCC may 
determine, at public or private sale. CCC may become the purchaser of 
the whole or any part of such cotton and cottonseed. If the proceeds 
received from the sales of the cotton are less than the amount due on 
the loan (including principal, interest, ginning charges, and any other 
charges incurred by CCC), the producer is liable for such difference. If 
the proceeds received from sale of the cotton are greater than the sum 
of the amount due plus any cost incurred by CCC in conducting the sale 
of the cotton, the amount of such excess will be paid to the producer 
or, if applicable, to any secured creditor of the producer.

[80 FR 137, Jan. 2, 2015]



Sec.1427.174  Maturity of seed cotton loans.

    Seed cotton loans mature on demand by CCC but no later than May 31 
following the calendar year in which such crop is normally harvested.



Sec.1427.175  Liability of the producer.

    (a)(1) If a producer makes any fraudulent representation in 
obtaining a loan, maintaining a loan, or settling a loan or if the 
producer disposes of or moves the loan collateral without the prior 
approval of CCC, such loan amount must be refunded upon demand by CCC. 
The producer will be liable for:
    (i) The amount of the loan;
    (ii) Any additional amounts paid by CCC for the loan;
    (iii) All other costs which CCC would not have incurred but for the 
fraudulent representation or the unauthorized disposition or movement of 
the loan collateral;
    (iv) Applicable interest on such amounts; and
    (v) Liquidated damages under paragraph (e) of this section.
    (2) Notwithstanding any provision of the note and security 
agreement, if a producer has made any such fraudulent representation or 
if the producer has disposed of, or moved, the loan collateral without 
prior written approval from CCC, the value of such collateral acquired 
by CCC will be equal to the sales price of the cotton less any costs 
incurred by CCC in completing the sale.
    (b) If the amount disbursed under a loan, or in settlement thereof, 
exceeds the amount authorized by this subpart, the producer is liable 
for repayment of such excess, plus interest. In addition, seed cotton 
pledged as collateral for such loan will not be released to the producer 
until such excess is repaid.
    (c) If the amount collected from the producer in satisfaction of the 
loan is less than the amount required under this subpart, the producer 
is personally liable for repayment of the amount of such deficiency plus 
applicable interest.
    (d) If more than one producer executes a note and security agreement 
with CCC, each such producer is jointly and severally liable for the 
violation of the terms and conditions of the note

[[Page 648]]

and security agreement and the regulations in this subpart. Each such 
producer also remains liable for repayment of the entire loan amount 
until the loan is fully repaid without regard to such producer's claimed 
share in the seed cotton pledged as collateral for the loan. In 
addition, such producer may not amend the note and security agreement 
for the producer's claimed share in such seed cotton, after execution of 
the note and security agreement by CCC.
    (e) If a producer makes any fraudulent representation in obtaining a 
loan, in maintaining or settling a loan, or disposing of or moving the 
collateral without the prior approval of CCC, that is a violation of the 
terms or conditions of the note and security agreement. If CCC or the 
county committee determines that the producer has violated the terms or 
conditions of the note and security agreement, liquidated damages will 
be assessed on the quantity of the seed cotton that is involved in the 
violation by multiplying the quantity involved in the violation by 10 
percent of the loan rate applicable to the loan note. This amount will 
apply for both good faith and not good faith determinations.
    (f) For first and second offenses, if CCC or the county committee 
determines that a producer acted in good faith when the violation 
occurred, the county committee will:
    (1) Require repayment of the loan principal applicable to the loan 
quantity affected by the violation, and charges plus interest applicable 
to the amount repaid;
    (2) Assess liquidated damages under paragraph (e) of this section; 
and
    (3) If the producer fails to pay such amount within 30 calendar days 
from the date of notification, call the applicable loan involved in the 
violation.
    (g) For cases other than first or second offenses, or any offense 
for which CCC or the county committee cannot determine good faith when 
the violation occurred, the county committee will:
    (1) Assess liquidated damages under paragraph (e) of this section;
    (2) Call the applicable loan involved in the violation.
    (h) If CCC or the county committee determines that the producer has 
committed a violation under paragraph (e) of this section, the county 
committee shall notify the producer in writing that:
    (1) The producer has 30 calendar days to provide evidence and 
information to the county committee regarding the circumstances which 
caused the violation, and
    (2) Administrative actions will be taken under paragraphs (f) or (g) 
of this section.
    (i) Any or all of the liquidated damages assessed under the 
provision of paragraph (e) of this section may be waived as determined 
by CCC.

[67 FR 64459, Oct. 18, 2002, as amended at 80 FR 136, 139, Jan. 2, 2015]



  Subpart E_Standards for Approval of Warehouses for Cotton and Cotton 
                                 Linters

    Authority: Secs. 4 and 5, 62 Stat. 1070, as amended, 1072, as 
amended (15 U.S.C. 714 b and c).

    Source: 44 FR 67085, Nov. 23, 1979, unless otherwise noted.



Sec.1427.1081  General statement and administration.

    (a) This subpart prescribes the requirements which must be met and 
the procedures which must be followed by a warehouseman in the United 
States or Puerto Rico who desires the approval by the Commodity Credit 
Corporation (hereinafter referred to as ``CCC'') of warehouse(s) for the 
storage and handling of cotton and cotton linters, under a Cotton 
Storage Agreement, which are owned by CCC or held by CCC as security for 
price support loans. This subpart is not applicable to cotton or cotton 
linters purchased in storage for prompt shipment or to handling 
operations of a temporary nature.
    (b) Copies of the CCC storage agreement and forms required for 
obtaining approval under this subpart may be obtained from the Kansas 
City Commodity Office, U.S. Department of Agriculture, P.O. Box 419205, 
Kansas City, Missouri 64141 (hereinafter referred to as the ``KCCO'').

[[Page 649]]

    (c) A warehouse must be approved by the KCCO and a storage agreement 
must be in effect between CCC and the warehouseman before CCC will use 
such warehouse. The approval of a warehouse or the entering into of a 
storage agreement does not constitute a commitment that CCC will use the 
warehouse, and no official or employee of the U.S. Department of 
Agriculture is authorized to make any such commitment.
    (d) A warehouseman, when applying for approval under this subpart 
must submit to CCC at KCCO:
    (1) A completed ``Application for Approval of Warehouse for Storage 
of Cotton and/or Cotton Linters,''
    (2) A current financial statement on a ``Financial Statement'' form, 
supported by such supplemental schedules as CCC may request. Financial 
statements may be submitted on forms other than a ``Financial 
Statement'' form with approval of the Director, KCCO, or the Director's 
designee. Financial statements must show the financial condition of the 
warehouseman as of a date no earlier than 90 days prior to the date of 
the warehouseman's application, or such other date as CCC may prescribe. 
Additional financial statements must be furnished annually and at such 
other times as CCC may require. CCC also may require that financial 
statements prepared by the warehouseman or by a public accountant be 
examined by an independent certified public accountant in accordance 
with generally accepted auditing standards. Only one financial statement 
is required for a chain of warehouses owned or operated by a single 
business entity. If approved by the Director, KCCO, or the Director's 
designee, the financial statement of a parent company, which includes 
the financial position of a wholly-owned subsidiary, may be used to meet 
the CCC standards for approval for the wholly-owned subsidiary.
    (3) Evidence that the warehouseman is licensed by the appropriate 
licensing authority as required under Sec.1427.1082(a)(2) and such 
other documents or information as CCC may require,
    (4) For warehouseman not operating under the U.S. Warehouse Act, a 
sample copy of the warehouseman's receipts and bale tags, and
    (5) Evidence of applicable fire insurance rates.

[44 FR 67085, Nov. 23, 1979, as amended by Amdt. 3, 50 FR 16454, Apr. 
26, 1985; 80 FR 137, Jan. 2, 2015]



Sec.1427.1082  Basic standards.

    (a) Unless otherwise provided in this subpart, each warehouseman and 
each of the warehouses owned or operated by such warehouseman for which 
CCC approval is sought for the storage or handling of CCC-owned or -loan 
commodities must meet the following standards:
    (1) The warehouseman must:
    (i) Be an individual, partnership, corporation, association, or 
other legal entity engaged in the business of storing or handling for 
hire, or both, the applicable commodity. The warehouseman, if a 
corporation, must be authorized by its charter to engage in such 
business,
    (ii) Have a current and valid license for the kind of storage 
operation for which the warehouseman seeks approval if such a license is 
required by State or local laws or regulations,
    (iii) Have a net worth which is the greater of $25,000 or the amount 
which results from multiplying the maximum storage capacity of the 
warehouse (the total number of bales of cotton or cotton linters which 
the warehouse can accommodate when stored in the customary manner) times 
ten (10) dollars per bale. The net worth need not exceed $250,000. If 
the calculated net worth exceeds $25,000, the warehouseman may satisfy 
any deficiency in net worth between the $25,000 minimum requirement and 
such calculated net worth by furnishing bond (or acceptable substitute 
security) meeting the requirements of Sec.1427.1083,
    (iv) Have available sufficient funds to meet ordinary operating 
expenses,
    (v) Have satisfactorily corrected, upon request by CCC, any 
deficiencies in the performance of any storage agreement with CCC,
    (vi) Maintain accurate and complete inventory and operating records,
    (vii) Use only card type warehouse receipts which are pre-numbered 
and pre-punched or such other document as CCC may prescribe,

[[Page 650]]

    (viii) Have available at the warehouse adequate and operable 
firefighting equipment for the type of warehouse and applicable stored 
commodity, and
    (ix) Have a work force and equipment available to provide adequate 
storage and handling service.
    (2) The warehouseman, officials, or supervisory employees of the 
warehouseman in charge of the warehouse operation must have the 
necessary experience, organization, technical qualifications, and skills 
in the warehousing business regarding the applicable commodities to 
enable them to provide proper storage and handling services.
    (3) Warehouseman, officials and each of the supervisory employees of 
the warehouseman in charge of the warehouse operation must:
    (i) Have a satisfactory record of integrity, judgment, and 
performance, and
    (ii) Be neither suspended nor debarred under applicable CCC 
suspension and debarment regulations.
    (4) The warehouse must:
    (i) Be of sound construction, in good state of repair, and 
adequately equipped to receive, handle, store, preserve, and deliver the 
applicable commodity,
    (ii) Be under the control of the contracting warehouseman at all 
times, and
    (iii) Not be subject to greater than normal risk of fire, flood, or 
other hazards.
    (b) [Reserved]

[44 FR 67085, Nov. 23, 1979, as amended by Amdt. 3, 50 FR 16455, Apr. 
26, 1985; 80 FR 138, Jan. 2, 2015]



Sec.1427.1083  Bonding requirements for net worth.

    (a) A bond furnished by a warehouseman under this subpart must meet 
the following requirements:
    (1) Such bond must be executed by a surety which:
    (i) Has been approved by the U.S. Treasury Department, and
    (ii) Maintains an officer or representative authorized to accept 
service of legal process and in the State where the warehouse is 
located.
    (2) Such bond must be on the Warehouseman's Bond form, except that a 
bond furnished under State law (statutory bond) or under operational 
rules of nongovernmental supervisory agencies may be accepted in an 
equivalent amount as a substitute for a bond running directly to CCC if:
    (i) CCC determines that such bond provides adequate protection to 
CCC.
    (ii) It has been executed by a surety specified in paragraph (a) of 
this section or has a blanket rider and endorsement executed by such a 
surety with the liability of the surety under such rider or endorsement 
being the same as that of the surety under the original bond, and
    (iii) It is noncancellable for not less than ninety (90) days or 
includes a rider providing for not less than ninety (90) days' notice to 
CCC before cancellation. Excess coverage on a substitute bond for one 
warehouse will not be accepted or applied by CCC against insufficient 
bond coverage on other warehouses.
    (3) Cash and negotiable securities offered by a warehouseman may be 
accepted by CCC in lieu of the equivalent amount of required bond 
coverage. Any such cash or negotiable securities accepted by CCC will be 
returned to the warehouseman when the period for which coverage was 
required has ended and there appears to CCC to be no liability under the 
storage agreement.
    (4) A legal liability insurance policy may be accepted by CCC in 
lieu of the required amount of bond coverage provided such policy 
contains a clause or rider making the policy payable to CCC, CCC 
determines that it affords protection equivalent to a bond, and the 
Office of the General Counsel, U.S. Department of Agriculture, approves 
it for legal sufficiency.
    (5) An irrevocable letter of credit may be accepted by CCC in lieu 
of the required amount of bond coverage provided that the issuing bank 
is a commercial bank insured by the Federal Deposit Insurance 
Corporation. Such standby letter of credit must be on the Irrevocable 
Letter of Credit form, or on such other form as may be specifically 
approved by the Director, KCCO, or the Director's designee.

[[Page 651]]

    (b) [Reserved]

[44 FR 67085, Nov. 23, 1979, as amended by Amdt. 3, 50 FR 16455, Apr. 
26, 1985; 80 FR 138, Jan. 2, 2015]



Sec.1427.1084  Examination of warehouses.

    Except as otherwise provided in this subpart, a warehouse must be 
examined by a person designated by CCC before it may be approved by CCC 
for the storage and handling of the commodity and periodically 
thereafter to determine its compliance with CCC's standards and 
requirements.



Sec.1427.1085  Exceptions.

    Notwithstanding any other provisions of this report:
    (a) The financial bond and original and periodic warehouse 
examination provisions of this subpart do not apply to any warehouseman 
approved or applying for approval for the storage and handling of cotton 
or cotton linters under CCC programs if the warehouse is licensed under 
the U.S. Warehouse Act for such commodity but a special examination will 
be made of such warehouse whenever CCC determines such action is 
necessary.
    (b) A warehouseman who has a net worth of at least $25,000 but who 
fails, or whose warehouse fails, to meet one or more of the other 
standards of this subpart may be approved if:
    (1) CCC determines that the warehouse services are needed and the 
warehouse storage and handling conditions provide satisfactory 
protection for the commodity,
    (2) The warehouseman furnishes such additional bond coverage (or 
cash or acceptable negotiable securities or legal liability insurance 
policy) as may be prescribed by CCC.

[44 FR 67085, Nov. 23, 1979, as amended by Amdt. 3, 50 FR 16455, Apr. 
26, 1985; 56 FR 11502, Mar. 19, 1991; 80 FR 139, Jan. 2, 2015]



Sec.1427.1086  Approval of warehouse, requests for reconsideration.

    (a) CCC will approve a warehouse if it determines that the warehouse 
meets the standards set forth in this subpart. CCC will send a notice of 
approval to the warehouseman. Approval under this subpart, however, does 
not relieve the warehouseman of the responsibility for performing the 
warehouseman's obligations under any agreement with CCC or any other 
agency of the United States.
    (b) Except as otherwise provided in this subpart:
    (1) CCC will not approve the warehouse if CCC determines that the 
warehouse does not meet the standards set forth in this subpart, and
    (2) CCC will send any notice of rejection of approval to the 
warehouseman. This notice will state the cause(s) for such action. 
Unless the warehouseman or any officials or supervisory employees of the 
warehouseman are suspended or debarred, CCC will approve the warehouse 
if the warehouseman establishes that the causes for CCC's rejection of 
approval have been remedied.
    (c) If rejection of approval by CCC is due to the warehouseman's 
failure to meet the standards set forth:
    (1) In Sec.1427.1082, other than the standard specified in Sec.
1427.1082(c)(2), the warehouseman may, at any time after receiving 
notice of such action, request reconsideration of the action and present 
to the Director, KCCO, in writing, information in support of such 
request. The Director will consider such information in making a 
determination and notify the warehouseman in writing of such 
determination. The warehouseman may, if dissatisfied with the Director's 
determination, obtain a review of the determination and an informal 
hearing by filing an appeal with the Deputy Administrator, Commodity 
Operations, Farm Service Agency (FSA). The time of filing appeals, forms 
for requesting an appeal, nature of the informal hearing, determination 
and reopening of the hearing will be as prescribed in the FSA 
regulations governing appeals, 7 CFR part 780. When appealing under such 
regulations, the warehouseman will be considered as a ``participant''; 
and
    (2) In Sec.1427.1082(c)(2), the warehouseman's administrative 
appeal rights with respect to suspension and debarment shall be in 
accordance with applicable CCC regulations. After expiration of a period 
of suspension or debarment, a warehouseman may, at any

[[Page 652]]

time, apply for approval under this subpart.

[Amdt. 3, 50 FR 16455, Apr. 26, 1985, as amended at 80 FR 138, 139, Jan. 
2, 2015]



Sec.1427.1087  Exemption from requirements.

    (a) If warehousing services in any area cannot be secured under the 
provisions of this subpart and no reasonable and economical alternative 
is available for securing such services for commodities under CCC 
programs, the President or Executive Vice President, CCC may exempt, in 
writing, applicants in such area from one or more of the standards of 
this subpart and may establish such other standards as are considered 
necessary to safeguard satisfactorily the interests of CCC.
    (b) Warehousemen who are currently under contract with CCC will be 
required to meet the terms and conditions of these regulations at the 
time of renewal of their contract.

[44 FR 67085, Nov. 23, 1979, as amended at 44 FR 74797, Dec. 18, 1979]



Sec.1427.1088  Contract fees.

    (a) Each warehouseman who has a non-federally licensed cotton 
warehouse must pay an annual contract fee for each such warehouse for 
which the warehouseman requests renewal of an existing Cotton Storage 
Agreement or approval of a new Cotton Storage Agreement as follows:
    (1) A warehouseman who has an existing Cotton Storage Agreement with 
CCC for the storage and handling of CCC-owned cotton or cotton pledged 
to CCC as loan collateral must pay an annual contract fee for each 
warehouse approved under such agreement in advance of the renewal date 
of such agreement.
    (2) A warehouseman who does not have an existing Cotton Storage 
Agreement with CCC for the storage and handling of CCC-owned cotton or 
cotton pledged to CCC as loan collateral but who desires such an 
agreement must pay a contract fee for each warehouse for which CCC 
approval is sought prior to the time that the agreement is approved by 
CCC.
    (b) The amount of the contract fee will be determined and announced 
annually.

[Amdt. 4, 50 FR 36569, Sept. 9, 1985, as amended at 80 FR 138, Jan. 2, 
2015]



Sec.1427.1089  [Reserved]

Subpart F [Reserved]



Subpart G_Extra Long Staple (ELS) Cotton Competitiveness Payment Program

    Source: 70 FR 67343, Nov. 7, 2005, unless otherwise noted.



Sec.1427.1200  Applicability.

    (a) This subpart specifies the terms and conditions under which CCC 
will make payments to eligible domestic users and exporters of extra 
long staple cotton who have entered into an ELS Cotton Domestic User/
Exporter Agreement with CCC.
    (b) CCC will issue payments to domestic users and exporters in any 
week following a consecutive 4-week period in which:
    (1) The LFQ is less than the USPFE; and
    (2) Adjusted LFQ is less than 134 percent of the current crop year 
loan level for the base quality U.S. Pima cotton.
    (c) CCC will prescribe the forms and information collections 
necessary in administering the ELS cotton competitiveness payment 
program. Additional terms and conditions for the program are specified 
in the ELS Cotton Domestic User/Exporter Agreement.

[70 FR 67343, Nov. 7, 2005, as amended at 80 FR 138, Jan. 2, 2015]



Sec.1427.1201  [Reserved]



Sec.1427.1202  Definitions.

    The following definitions apply as used in this subpart:
    Consumption means the use of eligible ELS cotton by a domestic user 
in the manufacture in the United States of cotton products.
    Cotton product means any product containing cotton fibers that 
result from the use of an eligible bale of ELS cotton in manufacturing.

[[Page 653]]

    Current shipment price means, during the period in which two daily 
price quotations are available for the LFQ for the foreign growth, 
quoted C/F Far East, the price quotation for cotton for shipment no 
later than August/September of the current calendar year.
    ELS means Extra Long Staple.
    Forward shipment price means, during the period in which two daily 
price quotations are available for the LFQ for foreign growths, quoted 
C/F Far East, the price quotation for cotton for shipment no earlier 
than October/November of the current calendar year.
    LFQ means, during the period in which only one daily price quotation 
is available for the growth, the lowest average for the preceding Friday 
through Thursday week of the price quotations for foreign growths of ELS 
cotton, quoted cost and freight (C/F) Far East, after each respective 
average is adjusted for quality differences between the respective 
foreign growth and U.S. Pima, of the base quality.
    (1) Adjusted LFQ means the LFQ adjusted to reflect the estimated 
cost of transportation between an average U.S. location and destination 
ports in the Far East.
    (2) LFQc means the preceding Friday through Thursday average of the 
current shipment prices for the lowest adjusted foreign growth, C/F Far 
East.
    (3) LFQf means the preceding Friday through Thursday average of the 
forward shipment prices for the lowest adjusted foreign growth, quoted 
C/F Far East.
    USPFE means the Friday through Thursday weekly average of the price 
quotation for base quality U.S. Pima cotton, as determined by CCC for 
purposes of administering this subpart, C/F Far East.
    (1) USPFEc means the preceding Friday through Thursday average of 
the current shipment prices for U.S. Pima cotton, C/F Far East.
    (2) USPFEf means the preceding Friday through Thursday average of 
the forward shipment prices for U.S. Pima cotton, C/F Far East.



Sec.1427.1203  Eligible ELS cotton.

    (a) For the purposes of this subpart, eligible ELS cotton is 
domestically produced baled ELS cotton that is:
    (1) Opened by an eligible domestic user on or after February 7, 
2014, or
    (2) Exported by an eligible exporter on or after February 7, 2014, 
during a Friday through Thursday period in which a payment rate 
determined under Sec.1427.1207 is in effect, and that meets the 
requirements of paragraphs (b) and (c) of this section;
    (b) Eligible ELS cotton must be either:
    (1) Baled lint, including baled lint classified by USDA's 
Agricultural Marketing Service as Below Grade; or
    (2) Loose.
    (c) Eligible ELS cotton must not be:
    (1) ELS for which a payment, under the provisions of this subpart, 
has been made available;
    (2) Imported ELS cotton;
    (3) Raw, unprocessed motes;
    (4) Textile mill wastes; or
    (5) Semi-processed or re-ginned, processed motes.

[70 FR 67343, Nov. 7, 2005, as amended at 73 FR 65724, Nov. 5, 2008; 80 
FR 138, Jan. 2, 2015]



Sec.1427.1204  Eligible domestic users and exporters.

    (a) For the purposes of this subpart, the following persons shall be 
considered eligible domestic users and exporters of ELS cotton:
    (1) A person regularly engaged in the business of opening bales of 
eligible ELS cotton to manufacturing such cotton into cotton products in 
the United States (a domestic user), who has entered into an agreement 
with CCC to participate in the ELS Cotton Competitiveness Payment 
Program; or
    (2) A person, including a producer or CMA approved under part 1425 
of this chapter, regularly engaged in selling eligible ELS cotton for 
exportation from the United States (an exporter), who has entered into 
an agreement with CCC to participate in the ELS Cotton Competitiveness 
Payment Program.
    (b) Payment applications must contain the documentation required by 
this subpart, an ELS Cotton Domestic User/Exporter Agreement and 
additional information that may be requested by CCC.

[70 FR 67343, Nov. 7, 2005, as amended at 80 FR 138, Jan. 2, 2015]

[[Page 654]]



Sec.1427.1205  ELS Cotton Domestic User/Exporter Agreement.

    (a) Payments under this subpart shall be made available to eligible 
domestic users and exporters who have entered into an ELS Cotton 
Domestic User/Exporter Agreement with CCC and who have complied with the 
terms and conditions in this subpart, the ELS Cotton Domestic User/
Exporter Agreement and CCC-issued instructions.
    (b) ELS Cotton Domestic User/Exporter Agreements may be obtained 
from CCC. To participate in the program authorized by this subpart, 
domestic users and exporters must execute the ELS Cotton Domestic User/
Exporter Agreement and forward the original and one copy to CCC.



Sec.1427.1206  [Reserved]



Sec.1427.1207  Payment rate.

    (a) The payment rate for payments made under this subpart will be 
determined as follows:
    (1) Beginning the Friday on or following August 1 and ending the 
week in which the LFQc, the LFQf, the USPFEc, and the USPFEf prices 
first become available, the payment rate will be the difference between 
the USPFE and the LFQ in the fourth week of a consecutive 4-week period 
in which the USPFE exceeded the LFQ each week, and the adjusted LFQ was 
less than 134 percent of the current crop year loan level for U.S. base 
quality Pima cotton in all weeks of the 4-week period; and
    (2) Beginning the Friday-through-Thursday week after the week in 
which the LFQc, the LFQf, the USPFEc, and the USFEf prices first become 
available and ending the Thursday following July 31, the payment rate 
will be the difference between the USPFEc and the LFQc in the fourth 
week of a consecutive 4-week period in which the USPFEc exceeded the 
LFQc each week, and the adjusted LFQc was less than 134 percent of the 
current crop year loan level for base quality U.S. Pima in all weeks of 
the 4-week period. If either or both the USPFEc and the LFQc are not 
available, the payment rate may be the difference between the USPFEf and 
the LFQf.
    (b) Whenever a 4-week period under paragraph (a) of this section 
contains a combination of LFQ, LFQc, and LFQf for only one to three 
weeks, such as may occur in the spring when the LFQ is succeeded by the 
LFQc and the LFQf (spring transition), and at the start of a new 
marketing year when the LFQc and the LFQf are succeeded by the LFQ 
(marketing year transition), under paragraphs (a)(1) and (a)(2) of this 
section, during both the spring transition and the marketing year 
transition periods, the LFQc and USPFEc, in combination with the LFQ and 
USPFE, will, to the extent practicable, be considered during such 4-week 
periods to determine whether a payment is to be issued. During both the 
spring transition and the marketing year transition periods, if either 
or both USPFEc price and the LFQc are not available, the USPFEf and the 
LFQf in combination with the USPFE price and LFQ will be taken into 
consideration during such 4-week periods to determine whether a payment 
is to be issued.
    (c) For purposes of this subpart, regarding the determination of the 
USPFE, USPFEc, USPFEf, the LFQ, the LFQc, and the LFQf:
    (1) If daily quotations are not available for one or more days of 
the 5-day period, the available quotations during the period will be 
used;
    (2) If none of the USPFE, USPFEc, or USPFEf prices is available, or 
if none of the LFQ, LFQc, or LFQf is available, the payment rate will be 
zero and will remain zero unless and until sufficient USPFE prices or 
the LFQ again becomes available, the USPFE, USPFEc, or USPFEf price 
exceeds the LFQ, the LFQc, or the LFQf, as the case may be, and the LFQ, 
the LFQc, or the LFQf, as the case may be, adjusted for transportation, 
is less than 134 percent of the current crop year loan rate for base 
quality U.S. Pima for 4 consecutive weeks.
    (d) Payment rates for loose lint that is of a suitable quality, 
without further processing, for spinning, papermaking or bleaching, will 
be based on a percentage of the basic rate for baled lint, as specified 
in the ELS Cotton Domestic User/Exporter Agreement.

[70 FR 67343, Nov. 7, 2005, as amended at 80 FR 139, Jan. 2, 2015]

[[Page 655]]



Sec.1427.1208  Payment.

    (a) Payments under this subpart will be determined by multiplying:
    (1) The payment rate, determined under Sec.1427.127, by
    (2) The net weight (gross weight minus the weight of bagging and 
ties) determined under paragraph (b) of this section, of eligible ELS 
cotton bales that an eligible domestic user opens or an eligible 
exporter exports during the Friday through Thursday period following a 
week in which a payment rate is established.
    (b) For the purposes of this subpart, the net weight will be based 
upon:
    (1) For domestic users, the weight on which settlement for payment 
of the ELS cotton was based (landed mill weight);
    (2) For exporters, the shipping warehouse weight or the gin weight 
if the ELS cotton was not placed in a warehouse, of the eligible cotton 
unless the exporter obtains and pays the cost of having all the bales in 
the shipment re-weighed by a licensed weigher and furnishes a copy of 
the certified weights.
    (c) For the purposes of this subpart, eligible ELS cotton will be 
considered:
    (1) Consumed by the domestic user on the date the bale is opened for 
consumption; and
    (2) Exported by the exporter on the date that CCC determines is the 
date on which the cotton is shipped for export.
    (d) Payments under this subpart will be made available upon 
application for payment and submission of supporting documentation, as 
required by this subpart, CCC instructions, and the ELS Cotton Domestic 
User/Exporter Agreement.

[70 FR 67343, Nov. 7, 2005, as amended at 80 FR 139, Jan. 2, 2015]



PART 1429_ASPARAGUS REVENUE MARKET LOSS ASSISTANCE PAYMENT PROGRAM--
Table of Contents



Sec.
1429.101 Applicability.
1429.102 Administration.
1429.103 Definitions.
1429.104 Application requirements.
1429.105 Producer eligibility requirements.
1429.106 Proof of production.
1429.107 Maximum and final payment rates.
1429.108 Calculation of individual payments.
1429.109 Availability of funds.
1429.111 Misrepresentation and scheme or device.
1429.112 Death, incompetence, or disappearance.
1429.113 Maintaining records.
1429.114 Refunds; joint and several liability.
1429.115 Miscellaneous provisions and appeals.

    Authority: 15 U.S.C. 714b and 714c, and Sec. 10404, Pub. L. 110-246, 
122 Stat. 2111.

    Source: 76 FR 6316, Feb. 4, 2011, unless otherwise noted.



Sec.1429.101  Applicability.

    (a) The regulations in this part are applicable to program 
applicants who produced both 2003- and 2007-crop asparagus. Asparagus 
producers may apply to the Commodity Credit Corporation (CCC) for a 
payment based on the actual quantity of their 2003 asparagus production 
and their share of that production.
    (b) Total payments made through the Asparagus Revenue Marketing Loss 
Assistance Payment Program will not exceed $15 million, allocated as 
$7.5 million for fresh asparagus and $7.5 million for processed 
asparagus, less any reserve allocated for disputed claims.



Sec.1429.102  Administration.

    (a) The Asparagus Revenue Market Loss Assistance Payment Program 
will be administered under the general supervision of the Executive Vice 
President, CCC (Administrator, Farm Service Administration (FSA)), or a 
designee, and will be carried out in the field by FSA State and county 
committees and FSA employees.
    (b) FSA State and county committees, and representatives and 
employees of those committees, do not have the authority to modify or 
waive any of the provisions of this part, except as provided in 
paragraph (e) of this section.
    (c) The FSA State committee will take any action required by this 
part that has not been taken by the FSA county committee. The FSA State 
committee will also:
    (1) Correct or require correction of an action taken by an FSA 
county committee that is not in compliance with this part; and

[[Page 656]]

    (2) Require an FSA county committee to not take an action or 
implement a decision that is not in compliance with the regulations of 
this part.
    (d) No delegation in this part to an FSA State or county committee 
will preclude the Executive Vice President, CCC, or a designee, from 
determining any question for the Asparagus Revenue Marketing Loss 
Assistance Payment Program, or from reversing or modifying any 
determination made by a State or county committee.
    (e) The Deputy Administrator for Farm Programs, FSA, may authorize 
FSA State and county committees to waive or modify program requirements 
that are not statutory in cases where failure to meet such requirements 
does not adversely affect the operation of the Asparagus Revenue Market 
Loss Assistance Payment Program.



Sec.1429.103  Definitions.

    The following definitions apply to this part. The definitions in 
parts 718 and 1400 of this title also apply, except where they conflict 
with the definitions in this section.
    Application means the Asparagus Revenue Market Loss Assistance 
Payment Program application form approved for use in this program by CCC 
and any required accompanying information or documentation.
    Application period means the 60-day period established by the Deputy 
Administrator for producers to apply for the Asparagus Revenue Marketing 
Loss Assistance Payment Program.
    Asparagus producer means any individual, group of individuals, 
partnership, corporation, estate, trust, association, cooperative, or 
other business enterprise or other legal entity, as defined in Sec.
1400.3 of this chapter, who is an owner, operator, landlord, tenant, or 
sharecropper, who directly or indirectly, as determined by the 
Secretary, shares in the risk of producing asparagus and who is entitled 
to ownership share in the asparagus crop available for marketing from 
the farm operation. Growers producing asparagus under contract for crop 
owners are not considered asparagus producers unless the grower can be 
determined to have an ownership share of the crop.
    Base period means the 2003 crop year of asparagus.
    County office means the FSA office responsible for administering CCC 
programs located in a specific area in a State.
    Crop year means the marketing season or year as defined by the 
National Agricultural Statistics Service (NASS).
    Department or USDA means the U.S. Department of Agriculture.
    Determined production means, with respect to the base period, the 
total amount of fresh and processed asparagus specified on the 
application for payment verified by CCC as having been produced and 
marketed by the producer in the base period.
    Farm Service Agency or FSA means the Farm Service Agency of the U.S. 
Department of Agriculture.
    Fresh asparagus means domestically-produced asparagus that, 
regardless of intended use, was marketed as a fresh product without any 
processing other than cleaning, grading, sorting, trimming, drying, 
cooling, and packing.
    Hundredweight or cwt. means 100 pounds.
    Processed asparagus means domestically-produced asparagus that, 
regardless of intended use, was marketed as frozen, canned, pickled, or 
otherwise treated or handled in such fashion that the buyer would not 
consider the asparagus to be consumed as fresh, as determined by CCC.
    Reliable production records means evidence provided by the producer 
to the FSA county office that FSA determines is adequate to substantiate 
the amount of production reported when verifiable records are not 
available, including copies of receipts, ledgers of income, income 
statements, deposit slips, register tapes, invoices for custom 
harvesting, records to verify production costs, contemporaneous 
measurements, truck scale tickets, and contemporaneous diaries. When the 
term ``acceptable production records'' is used in this rule, it may be 
either reliable or verifiable production records, as defined in this 
section.

[[Page 657]]

    Reported production means the total amount of fresh and processed 
asparagus produced and marketed by a producer, as specified by a 
producer on the application for payment.
    United States means the 50 States of the United States, the District 
of Columbia, and Puerto Rico.
    Verifiable production records means evidence that is used to 
substantiate the amount of production reported and that can be verified 
by FSA through an independent source.



Sec.1429.104  Application requirements.

    (a) To be eligible for payment, asparagus producers must submit a 
completed application for payment and meet other eligibility 
requirements as specified in this part. Asparagus producers may obtain 
an application in person, by mail, by telephone, or by facsimile from 
any FSA county office. In addition, applicants may download a copy of 
the application from http://www.sc.egov.usda.gov.
    (b) An application for payment must be submitted on a completed 
application form. Applications and any other supporting documentation 
must be submitted to the FSA county office serving the county in which 
the producer produced asparagus in 2003 unless the producer now resides 
in a different county than the county in which asparagus was produced in 
the base period.
    (c) Asparagus producers who apply for payment must certify the 
information on the application before the application will be considered 
complete. Applications may be accompanied by acceptable production 
records for all fresh and processed asparagus produced and marketed from 
the farm in the 2003 crop year. Producers must certify they had a share 
interest in both 2003 and 2007 crop asparagus. To be eligible for 
payment on asparagus produced in the base period, the producer must have 
produced asparagus in 2007 for the commercial market in commercial 
quantities as determined for this purpose by the Deputy Administrator. 
At any time CCC deems appropriate, either before or after payment 
issuance, CCC may, at its discretion, require a producer to provide 
documentation to support:
    (1) Reported production of 2003 crop fresh or processed asparagus 
production or both entered on the application accompanied by acceptable 
production record,
    (2) Share percentage of 2003 crop production by marketing category 
for each producer in the asparagus farm operation, or
    (3) Any other eligibility requirement specified in this part 
including commercial quantities of 2007 production to meet the 2007 
production requirement.
    (d) Each asparagus producer who signs the application must certify 
the accuracy and truthfulness of the information in the application and 
any supporting documentation. All information provided is subject to 
verification by CCC. Refusal to allow CCC or any other agency of USDA to 
verify any information provided will result in a denial of eligibility. 
Furnishing the information is voluntary; however, without it program 
payments will not be approved. Providing a false certification may be 
punishable by imprisonment, fines, and other penalties or sanctions.
    (e) Data furnished by the applicants will be used to determine 
eligibility for program payments. Although participation in the 
Asparagus Revenue Market Loss Assistance Payment Program is voluntary, 
program payments will not be provided unless the participant furnishes a 
complete application by the end of the application period with all 
requested data.
    (f) Individuals or entities who submit applications after the 
application period are not entitled to any payment consideration or 
determination of eligibility. Regardless of the reason why an 
application is not submitted to or received by the FSA county office, 
any late application will be considered as not having been timely filed 
and the applicants on that application will not be eligible for the 
Asparagus Revenue Marketing Loss Assistance Payment Program.



Sec.1429.105  Producer eligibility requirements.

    (a) To be eligible to receive the Asparagus Revenue Marketing Loss 
Assistance Payment Program payments, asparagus producers must submit an 
application during the application period and must:

[[Page 658]]

    (1) Have produced and marketed asparagus in commercial quantities in 
commercial markets in the United States during both of the 2003 and 2007 
crop years;
    (2) Be an asparagus producer, as defined in Sec.1429.103, for the 
2003 and 2007 crop years;
    (3) Certify their shares and the pounds of fresh and processed 
asparagus produced and marketed from the farm operation during the 2003 
crop year as reflected on the application;
    (4) If the total value of payments claimed exceeds the available 
funding, have an average adjusted gross income (AGI) of less than $2.5 
million for the 3 tax years of 2003 through 2005; and
    (5) Be in compliance with the requirements in 7 CFR part 12 
regarding highly erodible cropland and wetlands and meet any general 
farm program eligibility requirements that apply under 7 CFR part 1400 
or other regulations as applicable.
    (b) Asparagus producers must sign an application to be considered 
for payment eligibility. Asparagus producers who do not sign an 
application will not receive payment or a determination of eligibility, 
even if other producers in the asparagus farm operation sign an 
application and receive payment.
    (c) Each applicant determined by spot check or other information to 
not have an interest as an asparagus producer in 2003 and 2007 who meets 
the other qualifications of this part will be ineligible for payment and 
such applicant's claimed share shown on the application will not be 
paid.



Sec.1429.106  Proof of production.

    (a) Producers selected for spot check by CCC must, in accordance 
with instructions issued by the Deputy Administrator or a designee, 
provide adequate proof of the fresh and processed asparagus produced and 
marketed during the 2003 and 2007 crop years.
    (b) If adequate proof of marketed production and supporting 
documentation in support of any application for payment is not presented 
to the satisfaction of CCC or the FSA county office requesting 
information, the application and the producers on that application will 
be determined ineligible for payment.



Sec.1429.107  Maximum and final payment rates.

    (a) Subject to the funding limits that may apply to the program, the 
estimated maximum per pound payment rates for fresh market asparagus and 
for processed market asparagus are:
    (1) $1.06 per pound ($106.00 per hundredweight) for 2003 crop 
quantities of asparagus marketed to fresh markets; and
    (2) $1.08 per pound ($108.00 per hundredweight) for 2003 crop 
quantities of asparagus marketed for processing.
    (b) This program will be administered to assure that total payments 
do not exceed the available funding. If the total value of payments 
claimed calculated using the maximum payment rates specified in 
paragraph (a) of this section exceeds the funding available for each 
marketing category, less any reserve that may be created as specified in 
Sec.1429.109, the payment quantities will be paid at a lower rate 
determined by dividing the funds available in each marketing category of 
asparagus, by the payment quantity from applications received by the end 
of the application period in each marketing category.
    (c) In no event will the payment rate exceed the maximum payment 
rate for each marketing category of asparagus determined in paragraph 
(a) of this section.



Sec.1429.108  Calculation of individual payments.

    (a) Producers will be eligible for payment for both fresh and 
processed asparagus. CCC will calculate the payment quantity of 2003 
fresh and processed asparagus for an asparagus farm operation based on 
the lower of:
    (1) Reported production reflected on the application, or
    (2) If applicable, determined production.
    (b) The payment quantity will be multiplied by the following:
    (1) Each asparagus producer's share, and
    (2) The payment rate for the fresh or processed asparagus determined 
as specified in Sec.1429.107.
    (c) If the total value of payments claimed exceeds the available 
funding, payments to producers are subject to a

[[Page 659]]

$100,000 cap per each of the two program marketing categories (fresh and 
processed) per asparagus producer as defined in this part, not per 
``person'' or ``legal entity'' as those terms might be defined in part 
1400 of this title.



Sec.1429.109  Availability of funds.

    (a) Payments specified in this part are subject to the availability 
of funds. The total available program funds will be $15,000,000 as 
provided by section 10404 of Public Law 110-246.
    (b) Of the available funds, $7,500,000 are allocated for fresh 
market asparagus production and $7,500,000 are allocated to processed 
market asparagus.
    (c) CCC will prorate the available funds by a national factor to 
ensure that payments do not exceed $15,000,000. CCC will prorate the 
payments in such manner as it, in its sole discretion, finds fair and 
reasonable.
    (d) A reserve will be created to handle appeals and errors. Claims 
will not be payable once the available funding is expended. Any amount 
of funds reserved for such purposes that are not disbursed for the 
purpose of correcting errors or omissions, or for the payment of 
appeals, will not otherwise be distributed to any payment applicants and 
will be refunded to the U.S. Department of Treasury.



Sec.1429.111  Misrepresentation and scheme or device.

    (a) In addition to other penalties, sanctions, or remedies as may 
apply, an asparagus producer will be ineligible to receive assistance 
through the Asparagus Revenue Market Loss Assistance Payment Program if 
the asparagus producer is determined by CCC to have:
    (1) Adopted any scheme or device that tends to defeat the purpose of 
this program;
    (2) Made any fraudulent representation; or
    (3) Misrepresented any fact affecting a program determination.
    (b) Any funds disbursed pursuant to this part to any person or 
operation engaged in a misrepresentation, scheme, or device, must be 
refunded with interest together with such other sums as may become due 
and all charges including interest will run from the date of the 
disbursement of the CCC funds. Any asparagus farm operation, asparagus 
producer, or person engaged in acts prohibited by this section and any 
asparagus farm operation, asparagus producer, or person receiving 
payment as specified in this part will be jointly and severally liable 
with other persons or operations involved in such claim for payment for 
any refund due as specified in this section and for related charges. The 
remedies provided in this part will be in addition to other civil, 
criminal, or administrative remedies that may apply.



Sec.1429.112  Death, incompetence, or disappearance.

    (a) In the case of death, incompetency, disappearance, or 
dissolution of a person or an entity that is eligible to receive payment 
as specified in this part, an alternate person or persons as specified 
in part 707 of this title may receive such payment, as determined 
appropriate by CCC.
    (b) Payment may be made for asparagus market losses suffered by an 
otherwise eligible asparagus producer who is now deceased or is a 
dissolved entity if a representative who currently has authority to 
enter into an application for the producer or the producer's estate 
signs the application for payment. Proof of authority to sign for the 
deceased producer's estate or a dissolved entity must be provided. If an 
asparagus producer is now a dissolved general partnership or joint 
venture, all members of the general partnership or joint venture at the 
time of dissolution or their duly-authorized representatives must sign 
the application for payment.



Sec.1429.113  Maintaining records.

    Producers applying for payment through the Asparagus Revenue Market 
Loss Assistance Payment Program must maintain records and accounts to 
document all eligibility requirements specified in this part. Such 
records and accounts must be retained for 3 years after the date of 
payment.

[[Page 660]]



Sec.1429.114  Refunds; joint and several liability.

    (a) Excess payments, payments provided as the result of erroneous 
information provided by any person, or payments resulting from a failure 
to comply with any requirement or condition for payment in the 
application or this part, must be refunded to CCC.
    (b) A refund required as specified in this section will be due with 
interest from the date of CCC disbursement and determined in accordance 
with paragraph (d) of this section and late payment charges as provided 
in part 1403 of this chapter.
    (c) Persons signing an ALAP Program application as having an 
interest in the asparagus farm operation will be jointly and severally 
liable for any refund and related charges found to be due as specified 
in this section.
    (d) Interest will be applicable to any refunds required as specified 
in parts 792 and 1403 of this title. Such interest will be charged at 
the rate that the U.S. Department of the Treasury charges CCC for funds, 
and will accrue from the date CCC made the erroneous payment to the date 
of repayment.
    (e) CCC may waive the accrual of interest if it determines that the 
cause of the erroneous determination was not due to any action of the 
person, or was beyond the control of the person committing the 
violation. Any waiver is at the discretion of CCC alone.



Sec.1429.115  Miscellaneous provisions and appeals.

    (a) Offset. CCC may offset or withhold any amount due CCC as 
specified in this part in accordance with the provisions of part 1403 of 
this chapter.
    (b) Claims. Claims or debts will be settled in accordance with the 
provisions of part 1403 of this chapter.
    (c) Other interests. Payments or any portion thereof due under this 
part will be made without regard to questions of title under State law 
and without regard to any claim or lien against the asparagus crop, or 
proceeds thereof, in favor of the owner or any other creditor except 
agencies and instrumentalities of the U.S. Government.
    (d) Assignments. Any asparagus producer entitled to any payment as 
specified in this part may assign any payment in accordance with the 
provisions of part 1404 of this chapter.
    (e) Appeals. Appeals will be handled as specified in parts 11 and 
780 of this title.



PART 1430_DAIRY PRODUCTS--Table of Contents



         Subpart A_Margin Protection Program for Dairy Producers

Sec.
1430.100 Purpose.
1430.101 Administration.
1430.102 Definitions.
1430.103 Eligible dairy operations.
1430.104 Time and method of registration and annual election.
1430.105 Establishment and transfer of production history for a 
          participating dairy operation.
1430.106 Administrative fees.
1430.107 Buy-up coverage.
1430.108 Margin protection payments.
1430.109 Effect of failure to pay administrative fees or premiums.
1430.110 Calculation of average feed cost and actual dairy production 
          margins.
1430.111 Relation to RMA's LGM-Dairy Program.
1430.112 Multi-year contract.
1430.113 Contract modifications.
1430.114 Reconstitutions.
1430.115 Offsets and withholdings.
1430.116 Assignments.
1430.117 Appeals.
1430.118 Misrepresentation and scheme or device.
1430.119 Estates, trusts, and minors.
1430.120 Death, incompetency, or disappearance.
1430.121 Maintenance and inspection of records.
1430.122 Refunds; joint and several liability.
1430.123 Violations of highly erodible and wetland conservation 
          provisions.
1430.124 Violations regarding controlled substances.

               Subpart B_Milk Income Loss Contract Program

1430.200 Applicability.
1430.201 Administration.
1430.202 Definitions.
1430.203 Eligibility.
1430.204 Requesting benefits.
1430.205 Selection of starting month.
1430.206 [Reserved]
1430.207 Dairy operation payment quantity.
1430.208 Payment rate and dairy operation payment.
1430.209 Proof of market loss production.
1430.210 MILC agents.
1430.211 Duration of contracts.

[[Page 661]]

1430.212 Contract modifications and statutory changes in program.
1430.213 Reconstitutions.
1430.214 Violations.
1430.215 [Reserved]
1430.216 Contracts not in conformity with regulations.
1430.217 Offsets and withholdings.
1430.218 Assignments.
1430.219 Appeals.
1430.220 Misrepresentation and scheme or device.
1430.221 Estates, trusts, and minors.
1430.222 Death, incompetency, or disappearance.
1430.223 Maintenance and inspection of records.
1430.224 Refunds; joint and several liability.
1430.225 Violations of highly erodible land and wetland conservation 
          provisions.
1430.226 Violations regarding controlled substances.

                Subpart C_Dairy Product Donation Program

1430.300 Administration, purpose, and funding.
1430.301 Definitions.
1430.302 Commencement and termination of DPDP purchases.
1430.303 DPDP purchases.
1430.304 Distribution of DPDP purchased products.

                 Subpart D_Dairy Margin Coverage Program

1430.400 Purpose.
1430.401 Administration.
1430.402 Definitions.
1430.403 Eligible dairy operations.
1430.404 Time and method of registration and annual election.
1430.405 Establishment and transfer of production history for a 
          participating dairy operation.
1430.406 Administrative fees.
1430.407 Buy-up coverage.
1430.408 MPP-Dairy premium repayments.
1430.409 Dairy margin coverage payments.
1430.410 Effect of failure to pay administrative fees or premiums.
1430.411 Calculation of average feed cost and actual dairy production 
          margin.
1430.412 Relation to RMA's LGM-Dairy Program.
1430.413 Multi-year contract for lock-in option.
1430.414 Contract modifications.
1430.415 Reconstitutions.
1430.416 Offsets and withholdings.
1430.417 Assignments.
1430.418 Appeals.
1430.419 Misrepresentation and scheme or device.
1430.420 Estates, trusts, and minors.
1430.421 Death, incompetency, or disappearance.
1430.422 Maintenance and inspection of records.
1430.423 Refunds; joint and several liability.
1430.424 Violations of highly erodible and wetland conservation 
          provisions.
1430.425 Violations regarding controlled substances.

    Authority: 7 U.S.C. 9051-9060, and 15 U.S.C. 714B and 714c.



         Subpart A_Margin Protection Program for Dairy Producers

    Source: 79 FR 51462, Aug. 29, 2014, unless otherwise noted.



Sec.1430.100  Purpose.

    The regulations in this subpart apply for the Margin Protection 
Program for Dairy (MPP-Dairy), which is authorized by sections 1401 
through 1410 of the Agricultural Act of 2014 (Pub. L. 113-79, 7 U.S.C. 
9051-9060). MPP-Dairy is intended to provide eligible dairy producers 
risk protection against low margins resulting from a combination of low 
milk prices and high feed costs.



Sec.1430.101  Administration.

    (a) MPP-Dairy is administered under the general supervision of the 
Executive Vice President, CCC, or a designee, and will be carried out by 
Farm Service Agency (FSA) State and county committees and employees.
    (b) State and county committees and their employees may not waive or 
modify any requirement of this subpart.
    (c) The State committee will take any action required when not taken 
by the county committee, require correction of actions not in 
compliance, or require the withholding of any action that is not in 
compliance with this subpart.
    (d) The Executive Vice President, CCC, or a designee, may determine 
any question arising under MPP-Dairy or reverse or modify any decision 
of the State or county committee.
    (e) The Deputy Administrator, Farm Programs, FSA, may waive or 
modify MPP-Dairy requirements not statutorily required when failure to 
meet such requirements does not adversely affect the operation of MPP-
Dairy.

[[Page 662]]

    (f) A representative of CCC will execute a contract for registration 
in MPP-Dairy and related documents under the terms and conditions 
determined and announced by the Deputy Administrator on behalf of CCC. 
Any document not under such terms and conditions, including any 
execution before the date authorized by CCC, will be null and void.



Sec.1430.102  Definitions.

    The definitions in this section are applicable for the purposes of 
administering MPP-Dairy established by this subpart.
    Actual dairy production margin means the difference between the all-
milk price and the average feed cost, as calculated under Sec.
1430.110. If the calculation would produce a negative number the margin 
will be considered to be zero.
    Administrative county office means the county office designated to 
make determinations, handle official records, and issue payments for the 
producer as specified in 7 CFR part 718.
    All-milk price means the national average price received, per 
hundredweight of milk, by dairy operations for all milk sold to dairy 
plants and milk dealers in the United States, as determined by the 
Secretary.
    AMS means the Agricultural Marketing Service of the USDA.
    Annual election period for MPP-Dairy means the period, each calendar 
year, established by the Deputy Administrator, for a dairy operation to 
register initially to participate in MPP-Dairy, pay associated 
administrative fees, and applicable premiums, or, if already registered 
as a participating dairy operation, to make annual coverage elections 
for an applicable calendar year.
    Average feed cost means the national average cost of feed used by a 
dairy operation to produce a hundredweight of milk, as determined under 
Sec.1430.110(b).
    Buy up coverage means margin protection coverage for a margin 
protection level above $4 per hundredweight of milk.
    Catastrophic level coverage means $4 per cwt margin protection 
coverage and a coverage percentage of 90 percent, with no premium 
assessed.
    CCC means the Commodity Credit Corporation of the U.S. Department of 
Agriculture.
    Commercially marketed means selling whole milk to either the market 
to which the dairy operation normally delivers and receives monetary 
compensation or other similar markets.
    Consecutive 2-month period means a 2-month period consisting, 
respectively, of the months of January and February; March and April; 
May and June; July and August; September and October; or November and 
December.
    Contract means the terms and conditions to register for the MPP-
Dairy as executed on a form prescribed by CCC and required to be 
completed by the dairy operation and accepted by CCC, including any 
contract modifications made in an annual election period before coverage 
for the applicable calendar year commences.
    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.
    Covered production history is equal to the production history of the 
operation multiplied by the coverage percentage selected by the 
participating dairy operation.
    Dairy operation means a dairy operation as defined pursuant to the 
criteria and procedures under the Milk Income Loss Contract (MILC) 
Program or any dairy facility that was part of a single dairy operation 
that participated in the MILC Program as of February 7, 2014. Operations 
that are determined to be ``new operations'' under this subpart, will be 
subject to the ``affiliation'' test under Sec.1430.103(e) if the 
operation elects to participate in MPP-Dairy separately. A single dairy 
operation operated by more than one dairy producer will be treated as a 
single dairy operation for purposes of participating in MPP-Dairy and 
can only submit one application. All dairy operations under this part 
shall commercially market milk produced from cows as a single unit 
located in the United States in which each dairy producer:
    (1) Has risk in the production of milk in the dairy operation; and

[[Page 663]]

    (2) Makes contributions, including land, labor, management, 
equipment, or capital, to the dairy operation at least commensurate to 
the producers' share of the operation.
    Deputy Administrator means the Deputy Administrator for Farm 
Programs, or designee.
    Farm Service Agency or FSA means the Farm Service Agency of the 
USDA.
    Hundredweight or cwt means 100 pounds.
    Intergenerational transfer means the one-time establishment of 
additional production history for a participating dairy operation when a 
lineal descendant, who is a son, daughter, grandchild, or spouse of a 
child or grandchild of a current member joins a participating dairy 
operation.
    Milk Income Loss Contract Program or MILC means the program 
established under section 1506 of the Food, Conservation, and Energy Act 
of 2008 (7 U.S.C. 8773) and the regulations found in subpart B of this 
part.
    Milk marketing means a sale of milk for which there is a verifiable 
production record for milk commercially marketed.
    NASS means the National Agricultural Statistics Service of the USDA.
    New operation means a dairy operation that did not commercially 
market milk at least 12 full months as of February 7, 2014.
    Participating dairy operation means a dairy operation that registers 
to participate in MPP-Dairy under this part.
    Producer means any individual, group of individuals, partnership, 
corporation, estate, trust association, cooperative, or other business 
enterprise or other legal entity who is, or whose members are, a citizen 
of, or legal resident alien in the United States, and who directly or 
indirectly, shares in the risk of producing milk, makes contributions 
including land, labor, management, equipment, or capital to the dairy 
operation at least commensurate to the producers' share of the 
operation, to the dairy operation of the individual or entity, as 
determined by the Deputy Administrator.
    Production history means the production history determined for a 
participating dairy operation when the participating dairy operation 
registers in MPP-Dairy.
    RMA means the Risk Management Agency of the USDA.
    Secretary means the Secretary of Agriculture.
    United States means the 50 States of the United States of America, 
the District of Columbia, American Samoa, Guam, the Commonwealth of the 
Northern Mariana Islands, the Commonwealth of Puerto Rico, the Virgin 
Islands of the United States, and any other territory or possession of 
the United States.
    USDA means the United States Department of Agriculture.
    Verifiable production records mean evidence that is used to 
substantiate the amount of production commercially marketed and that can 
be verified by CCC through an independent source.

[79 FR 51462, Aug. 29, 2014, as amended at 81 FR 21704, Apr. 13, 2016]



Sec.1430.103  Eligible dairy operations.

    (a) The eligibility requirements for a dairy operation to register 
in MPP-Dairy and receive payments under this subpart, are to:
    (1) Produce milk from cows in the United States that is marketed 
commercially at the time of each annual election in MPP-Dairy;
    (2) Submit accurate and complete information as required by the this 
subpart;
    (3) Provide proof of milk production marketed commercially by all 
persons in the dairy operation to establish production history;
    (4) Not participate in the Livestock Gross Margin for Dairy (LGM-
Dairy) Program administered by the USDA Risk Management Agency (RMA) 
under the Federal Crop Insurance Act (7 U.S.C. 1501-1536), except to the 
extent permitted by this subpart, provided that under no circumstance 
may the operation receive coverage for the same period in MPP-Dairy for 
which payments have been received or earned under LGM-Dairy; and
    (5) Pay required administrative fees for participation in MPP-Dairy 
as specified in this subpart and any premiums, if applicable, as 
specified in this subpart.

[[Page 664]]

    (b) A person or entity covered by Sec.1400.401 of this chapter 
(hereafter ``foreign person'') must meet the eligibility requirements 
contained in that section to receive payments under this part. A dairy 
operation with ineligible foreign persons as members will have any 
payment reduced by the proportional share of such members.
    (c) Federal agencies and States, including all agencies and 
political subdivisions of a State, are not eligible for payments under 
this subpart.
    (d) As specified in Sec.1430.104, each dairy operation is required 
to submit a separate registration to be eligible for MPP-Dairy coverage 
and payment. A producer who owns more than one eligible dairy operation 
may participate separately for each dairy operation; each eligible dairy 
operation must be registered separately, subject to the affiliation test 
for new operations.
    (e) A new dairy operation will be treated as an affiliated dairy 
operation and not be treated as a separate dairy operation under MPP-
Dairy if producers that collectively own more than 50 percent of the new 
dairy operation also collectively own more than 50 percent interest in 
another dairy operation registered in MPP-Dairy.



Sec.1430.104  Time and method of registration and annual election.

    (a) A dairy operation may register to participate in MPP-Dairy by 
submitting a contract prescribed by CCC. Dairy operations may obtain a 
blank contract in person, by mail, or by facsimile from any county 
office. In addition, dairy operations may download a copy of the forms 
at http://www.sc.egov.usda.gov.
    (b) Dairy operation shall submit completed contracts and any other 
supporting documentation during the annual election period established 
by the Deputy Administrator, to the administrative county office serving 
the dairy operation.
    (1) A new dairy operation that has been established after the most 
recent election period is required to submit a contract within the first 
90 calendar days from the date on of which the dairy operation first 
commercially markets milk and may elect coverage that begins the next 
consecutive 2-month period following the submission date of the 
registration and coverage election; or
    (2) A new dairy operation that does not meet the 90 day requirement 
of paragraph (b)(1) of this section cannot enroll until the next annual 
election period for coverage for the following calendar year.
    (c) Registration requests and coverage elections are to be submitted 
in time to be received at FSA by the close of business on the last day 
of the annual election period established by the Deputy Administrator.
    (1) The applicable year of coverage for contracts arising from 
accepted registrations in the annual election period will be the 
following calendar year.
    (2) Registration requests and coverage elections submitted after the 
applicable allowed time for submission will not be considered.
    (3) During an annual election period, participating dairy operations 
may change coverage elections for the following calendar year.
    (d) To receive margin protection coverage, separate registrations 
are required for each separately constituted dairy operation. If a dairy 
producer operates more than one separate and distinct operation, the 
producer registers each operation for each operation to be eligible for 
coverage.
    (e) A participating dairy operation must elect, during the 
applicable annual election period and by using the form prescribed by 
CCC, the coverage level threshold and coverage percentage for that 
participating dairy operation for the applicable calendar year.
    (1) Once the initial completed registration is submitted and 
approved by CCC, it cannot be cancelled by the participating dairy 
operation through December 31, 2018; however, each calendar year 
subsequent to the initial registration of the participating dairy 
operation, it may elect to change the coverage level threshold and 
coverage percentage, on a form prescribed by CCC, during the election 
period for the applicable subsequent calendar year. For dairy operations 
that want to continue coverage levels established in the prior calendar 
year, the Deputy Administrator will establish a procedure to

[[Page 665]]

allow such coverage levels to continue that will include the requirement 
of a timely payment of administrative fees and any premiums, if 
applicable.
    (2) If the operation fails to file an update of its election during 
the annual election period, the coverage level will be reduced to the 
catastrophic level coverage, but such coverage will only be provided if 
the participating dairy operation pays the annual administrative fee for 
the relevant calendar year and submits the appropriate CCC forms.
    (3) All producers in the participating dairy operation must agree to 
the coverage level threshold and coverage percentage elected by the 
dairy operation.
    (f) By registering to participate or receive payment under MPP-
Dairy, producers in the participating dairy operation certify to the 
accuracy and truthfulness of the information in their applications and 
supporting documentation.
    (1) All producers in a participating dairy operation must sign and 
certify all submissions made under MPP-Dairy that relate to the level of 
coverage.
    (2) All information provided is subject to verification. FSA may 
require a dairy operation to provide documentation to support all 
verifiable records. Furnishing the information is voluntary; however, 
without it MPP-Dairy benefits will not be approved. Providing a false 
certification to the Federal Government may be punishable by 
imprisonment, fines, other penalties, or sanctions.
    (g) At the time the completed contract is submitted to FSA for the 
first year in which the dairy operation is to participate in MPP-Dairy, 
the dairy operation must also submit a separate form, as specified by 
CCC, to establish the production history for the dairy operation.

[79 FR 51462, Aug. 29, 2014, as amended at 81 FR 21704, Apr. 13, 2016]



Sec.1430.105  Establishment and transfer of production history for 
a participating dairy operation.

    (a) A participating dairy operation must provide all information 
required by FSA to establish the production history of the participating 
dairy operation for purposes of participating in MPP-Dairy. Except as 
provided in paragraph (b) of this section relating to new dairy 
operations, FSA will establish the production history for a dairy 
operation for margin protection as the highest annual milk marketings of 
the participating dairy operation during any one of the 2011, 2012, or 
2013 calendar years.
    (1) All producers in the participating dairy operation are required 
to provide adequate proof of the dairy operation's quantity of milk 
commercially marketed, to establish the production history for the dairy 
operation.
    (2) All information provided is subject to verification, spot check 
and audit by FSA. If the dairy operation does not provide to the 
satisfaction of FSA documentation requested to substantiate the 
production history of the highest annual milk marketings for the 
participating dairy operation, then, the registration will not be 
approved.
    (b) A participating dairy operation that did not produce and 
commercially market milk at least 12 full months as of February 7, 2014, 
will be considered a new dairy operation. To establish the production 
history for such a new dairy operation the new dairy operation is 
required to elect one of the following methods:
    (1) The volume of the actual milk marketings for the months the 
dairy operation has been in operation, extrapolated to a yearly amount 
based on a national seasonally adjusted index, as determined by the 
Deputy Administrator, to account for differences in milk production 
during the year; or
    (2) An estimate of the actual milk marketings of the dairy operation 
based on the herd size of the dairy operation relative to the national 
rolling herd average data published by the Secretary.
    (c) If FSA determines that the new enterprise was formed for the 
purpose of circumventing MPP-Dairy provisions, including, but not 
limited to, reconstituting a dairy operation to receive additional 
benefits, or establishing new production history, that enterprise will 
not be considered a new dairy operation for the purpose of establishing 
production history.

[[Page 666]]

    (d) Once the production history of a participating dairy operation 
is established as specified in paragraphs (a) or (b) of this section, 
the production history will be adjusted upward by FSA only to reflect 
any increase in the national average milk production, as determined by 
the Deputy Administrator, except as provided by paragraph (g) of this 
section.
    (e) The production history may be transferred from one dairy 
facility to another:
    (1) Producers of a dairy operation may relocate the dairy operation 
to another location and the production history of the original operation 
may be transferred to the new location and may be added to production 
history at the new location that has not been transferred;
    (2) Producers of a dairy operation may transfer ownership of a dairy 
operation with its associated production history, but if the producers 
start a new operation such new operation may only be eligible for new 
production history if the new operation is otherwise not affiliated with 
participants in MPP-Dairy as described in Sec.1430.103(e); or
    (3) Producers of more than one dairy operation that separately 
participate in MPP-Dairy may transfer the production histories of these 
dairy operations into a previously unregistered dairy operation.
    (f) If CCC waives the obligation, under MPP-Dairy of a participating 
dairy operation due to death or retirement of the producer or of the 
permanent dissolution of the dairy operation or under other 
circumstances as determined by the Deputy Administrator, FSA may 
reestablish the production history provided that the production history 
has not been transferred.
    (g) The established production history of a participating dairy 
operation may be adjusted upward once during the term of the contract 
for an intergenerational transfer based on the purchase of additional 
cows by the new family member(s). The increase in the established 
production history of the participating dairy operation will be 
determined on the basis of the national rolling herd average data for 
the current year in effect at the time of the intergenerational transfer 
and the quantity of the production history increase will be limited to 
an amount not more than 4 million pounds. The additional quantity of 
production history will receive coverage at the same elected coverage 
threshold and coverage percentage in effect for the participating dairy 
operation at the time the production history increase takes effect. 
Intergenerational transfers will not be allowed if the participating 
dairy operation's current annual production and the increase in herd 
size by the new member(s) is less than the operation's established 
production history.
    (1) The dairy operation must notify FSA, using the appropriate CCC 
form(s), of the intergenerational transfer within 60 days of the 
purchase of the cows, except that for purchases made for 
intergenerational transfers occurring between January 1, 2016, and June 
30, 2016, the dairy operation must notify FSA during the registration 
and annual coverage election period for coverage year 2017, established 
by the Deputy Administrator. The operation has the option of the 
additional production history taking effect beginning either with the 
consecutive 2-month period following notification, or the following 
January 1. If the additional production history takes effect between 
January 1 and August 31, the premium is due September 1, as specified in 
Sec.1430.107(a)(2). If the additional production history takes effect 
between September 1 and December 31, the premium is due immediately.
    (2) All of the items specified in this paragraph must be documented 
in the notification to FSA and self-certified by the current and new 
member(s) for the intergenerational transfer to be considered eligible 
for additional production history, except that intergenerational 
transfers that occurred in 2014 and 2015 that otherwise meet the 
requirements of this paragraph will be considered during the 
registration and annual coverage election period for coverage year 2017 
established by the Deputy Administrator for the purposes of adding the 
new member(s) to the participating dairy operation. However, there will 
not be any retroactive

[[Page 667]]

payments based on a production history increase for the 
intergenerational transfer. All of the following information is subject 
to verification by CCC. Refusal to allow CCC or any other agency of USDA 
to verify any information provided will result in disapproval of the 
intergenerational transfer.
    (i) Documentation that the new member(s) joining the operation have 
purchased the dairy cows being added to the dairy operation;
    (ii) Certification that each new member will have a share of the 
profits or losses from the dairy operation commensurate with such 
person's contributions to the dairy operation;
    (iii) Certification that each new member has a significant equity 
ownership in the participating dairy operation at levels determined by 
the Deputy Administrator and announced on the FSA Web site, 
www.fsa.usda.gov;
    (iv) Certification that each new member is a lineal descendant or 
spouse thereof of a current member of the participating dairy operation;
    (v) Agreement that each new member will contribute labor in the 
dairy operation at a minimum of 35 hours per week or have a plan for 
transition to full-time, subject to FSA county committee review and 
approval, if only working seasonally or part-time;
    (vi) Certification that the dairy operation will be the principal 
source of non-investment earned income for each new member; and
    (vii) Documentation of the participating dairy operation's current 
annual marketings as of the date of the intergenerational transfer.

[79 FR 51462, Aug. 29, 2014, as amended at 81 FR 21704, Apr. 13, 2016]



Sec.1430.106  Administrative fees.

    (a) Dairy operations must pay an initial administrative fee to CCC 
in the amount of $100 at the time of initial registration to participate 
in MPP-Dairy. Each approved participating dairy operation must also pay 
a $100 administrative fee each year through 2018. Annual administrative 
fees are due and payable to CCC through the administrative county FSA 
office no later than the close of business on the last day of the annual 
election period established by the Deputy Administrator for each 
applicable calendar year of margin protection coverage under MPP-Dairy. 
The administrative fee paid is non-refundable.
    (b) The required annual administrative fee is per dairy operation. 
Therefore, multiple dairy producers in a single participating dairy 
operation are required to pay only one annual administrative fee for the 
participating dairy operation. Conversely, in the case of a dairy 
producer that operates more than one dairy operation, each participating 
dairy operation is required to pay a separate administrative fee 
annually.
    (c) Failure to pay the administrative fee timely will result in loss 
of margin protection coverage for the applicable calendar year. The 
payment will still be due, as provided in Sec.1430.109. However, 
coverage for the applicable calendar year, at the catastrophic level 
only, may be reinstated if the administrative fee is paid late, 
effective the consecutive 2-month period following payment of the late-
filed administrative fee plus applicable charges, if any, and submission 
to FSA of the appropriate CCC form.

[79 FR 51462, Aug. 29, 2014, as amended at 81 FR 21705, Apr. 13, 2016]



Sec.1430.107  Buy-up coverage.

    (a) For purposes of receiving buy-up MPP-Dairy coverage, a 
participating dairy operation may annually elect during an annual 
election period the following for the succeeding calendar year:
    (1) A coverage level threshold for margins that, per cwt, is equal 
to one of the following: $4.50, $5, $5.50, $6, $6.50, $7, $7.50, or $8; 
and
    (2) A percentage of coverage for the production history from 25 
percent to 90 percent, in 5-percent increments.
    (b) In the absence of any such election, the applicable coverage 
level provided, with no premium due, is catastrophic level coverage.
    (c) A participating dairy operation that elects margin protection 
coverage above $4 is required to pay an annual premium based on coverage 
level and covered production history in addition to the administrative 
fee. Tier 1 applies to covered production history up to and including 4 
million pounds; Tier

[[Page 668]]

2 applies to covered production history above 4 million pounds.
    (d) The premium per cwt of milk, based on the elected percentage of 
coverage of production history is specified in the following table.

                       Table to Sec. 1430.107(d)
------------------------------------------------------------------------
                                          Tier 1 premium  Tier 2 premium
                                           per cwt (for    per cwt (for
                                            the covered     the part of
                                            production        covered
         Coverage level (margin)           history that     production
                                           is 4 million   history over 4
                                             pounds or        million
                                               less)          pounds)
------------------------------------------------------------------------
$4.50...................................          $0.010          $0.020
$5.00...................................           0.025           0.040
$5.50...................................           0.040           0.100
$6.00...................................           0.055           0.155
$6.50...................................           0.090           0.290
$7.00...................................           0.217           0.830
$7.50...................................           0.300           1.060
$8.00...................................           0.475           1.360
------------------------------------------------------------------------

    (e) The annual premium due for a participating dairy operation is 
calculated by multiplying:
    (1) The covered production history; and
    (2) The premium per cwt of milk specified in paragraph (d) of this 
section for the coverage level elected by the dairy operation.
    (f) In the case of a new dairy operation that first registers to 
participate in MPP-Dairy for a calendar year after the start of the 
calendar year, the participating dairy operation is required to pay a 
pro-rated premium for that calendar year based on the portion of the 
calendar year for which the participating dairy operation is eligible, 
and for which it purchases the coverage.
    (g) A participating dairy operation is required to pay the annual 
premium calculated as specified in paragraphs (d) and (e) of this 
section for the applicable calendar year, according to either of the 
following options:
    (1) In total at time of submission of coverage election to FSA; or
    (2) In total no later than September 1 of the applicable calendar 
year of coverage, unless otherwise specified by the Deputy 
Administrator.
    (h) If the total premium is not paid for an applicable calendar year 
of coverage as specified in paragraph (g) of this section, the 
participating dairy operation will only be covered at catastrophic level 
coverage beginning with the September-October consecutive 2-month period 
and for the remainder of the applicable coverage year.
    (i) Annual premium balances due CCC from a participating dairy 
operation for a calendar year of coverage must be paid in full no later 
than September 1 of the applicable calendar year or within a grace 
period determined by the Deputy Administrator, if applicable.
    (j) A participating dairy operation with an unpaid premium balance 
for a calendar year of coverage will lose eligibility for buy-up 
coverage for the subsequent coverage year if the premium is not paid in 
full by the close of the coverage election period, and will have its 
current buy-up level coverage reduced to the catastrophic level, as 
provided in Sec.1430.109.
    (k) The Deputy Administrator may waive the obligation to pay the 
premium, or refund the premium paid, of a participating dairy operation 
for a calendar year, in cases that include, but are not limited to, as 
determined by the Deputy Administrator, death, retirement, permanent 
dissolution of a participating dairy operation, or other circumstances 
determined by the Deputy Administrator.
    (l) MPP-Dairy administrative fees and premiums are required to be 
paid by a negotiable instrument satisfactory to FSA and made payable to 
CCC and either mailed to or provided in person to the administrative 
county office or other location designated by FSA.
    (m) In the case of an intergenerational transfer, the additional 
premium, if any, is due September 1 if the notification of the transfer 
is made to FSA between January 1 and September 1 of the applicable 
calendar year, and immediately, if the notification is made between 
September 2 and December 31, unless otherwise specified by the Deputy 
Administrator.

[79 FR 51462, Aug. 29, 2014, as amended at 81 FR 21705, Apr. 13, 2016]



Sec.1430.108  Margin protection payments.

    (a) When do MPP-Dairy payments trigger? An MPP-Dairy payment will be

[[Page 669]]

made to a participating dairy operation for any consecutive 2-month 
period when the average actual dairy production margin for the 
consecutive 2-month period falls below the coverage level threshold in 
effect for the participating dairy operation. Payments may trigger at 
either the elected buy-up level if purchased by the dairy operation, or 
the catastrophic level.
    (b) How will payments be calculated? Whether payments trigger at the 
catastrophic level or at the buy-up level, the payments will be 
calculated as explained in this paragraph. If the dairy operation only 
has catastrophic coverage or buy-up coverage at 90 percent, there will 
be a single calculation. If the dairy operation purchased buy-up 
coverage at less than 90 percent and the catastrophic level also 
triggers a payment, then there will be two calculations to determine the 
payment--first the calculation for the buy-up coverage percentage and 
then the calculation for the catastrophic level percentage, which is the 
balance of the established production history up to 90 percent; the 
result of these two calculations will be added together to determine the 
payment amount. Each calculation multiplies the payment rate times the 
coverage percentage times the production history divided by 6 as 
follows:
    (1) Payment rate. The amount by which the coverage level exceeds the 
average actual dairy production margin for the 2-month period;
    (2) Coverage percentage. The coverage percentage; and
    (3) Production history. The production history of the dairy 
operation, divided by 6.
    (c) Example of payment for buy-up coverage of less than 90 percent 
when catastrophic level also triggers a payment. If the dairy operation 
purchased buy-up level coverage at less than 90 percent of production 
history, then the dairy operation will receive a payment calculated at 
the buy-up level, plus the payment at the catastrophic level, if 
triggered, for the balance of 90 percent of its established production 
history. For example, if a producer purchased buy-up coverage at the 50 
percent level, then that producer will also receive catastrophic level 
coverage for the next 40 percent for total coverage of 90 percent.

[81 FR 21706, Apr. 13, 2016]



Sec.1430.109  Effect of failure to pay administrative fees 
or premiums.

    (a) A participating dairy operation that fails to pay a required 
administrative fee or premium payment due upon application to MPP-Dairy 
or for a calendar year of coverage:
    (1) Remains legally obligated to pay such administrative fee or 
premium, as applicable; and
    (2) Upon such failure to pay when due after initial approved 
registration, loses coverage under MPP-Dairy until such administrative 
fee or premium is paid in full, and once paid, coverage will begin with 
the next consecutive 2-month period. Failure to pay the premium fee when 
due will reduce coverage to the catastrophic level for the September and 
October period and November and December period in that coverage year.
    (b) CCC may take such actions as necessary to collect unpaid 
administrative fees and premium payments.

[79 FR 51462, Aug. 29, 2014, as amended at 81 FR 21706, Apr. 13, 2016]



Sec.1430.110  Calculation of average feed cost and actual dairy 
production margins.

    (a) Payments are made to a participating dairy operation as 
specified in this subpart only when, for a consecutive 2-month period, 
the calculated average actual dairy production margin is below the 
coverage level in effect for the participating dairy operation. That 
margin will be calculated on a national basis and is the amount by which 
for the relevant consecutive 2-month period, the all milk price exceeds 
the average feed cost for dairy producers. All calculations will be made 
on a per cwt basis. The average actual dairy production margin 
calculation applies to all participating dairy operations. The 
calculations are not made on an operation by operation basis or on their 
marketings.
    (b) For calculating the national average feed cost that dairy 
operations use to produce a cwt of milk, the following three items will 
be added together:

[[Page 670]]

    (1) The product determined by multiplying 1.0728 by the price of 
corn per bushel;
    (2) The product determined by multiplying 0.00735 by the price of 
soybean meal per ton; and
    (3) The product determined by multiplying 0.0137 by the price of 
alfalfa hay per ton.
    (c) To make those feed calculations, the Deputy Administrator on 
behalf of CCC will use the following full month data:
    (1) For corn, the full month price received by farmers during the 
month in the United States as reported in the monthly Agricultural 
Prices report by USDA NASS;
    (2) For soybean meal, the Central Illinois soybean meal price 
delivered by rail as reported in the USDA AMS Market News-Monthly; and
    (3) For alfalfa hay, the full month price received during the month 
by farmers in the United States for alfalfa hay as reported in the 
monthly Agricultural Prices report by USDA NASS.
    (d) The national average feed cost data for corn, soybean meal, and 
alfalfa hay used in the calculation of the national average feed cost to 
determine the actual dairy production margin for the relevant period, 
will be the data reported in the publication the following month. (For 
example, preliminary May prices for corn and soybean meal were reported 
in the May Agricultural Prices publication but full month May prices 
will be available in the June publication, and those will be the prices 
used).
    (e) The actual dairy production margin for each consecutive 2-month 
period, will be calculated by subtracting:
    (1) The average feed cost for that consecutive 2-month period, 
determined under paragraph (b) of this section; from
    (2) The all-milk price for that consecutive 2-month period.



Sec.1430.111  Relation to RMA's LGM-Dairy Program.

    (a) A producer may participate in either MPP-Dairy through a dairy 
operation or the LGM-Dairy program operated by RMA, but not both.
    (b) Producers in dairy operations participating in MPP-Dairy must 
certify at the time of registration and annually during each coverage 
election period that they will not have an LGM-Dairy policy in effect 
during the calendar year the dairy operation is requesting coverage.
    (c) A participating dairy operation may be required to provide 
proof, to the satisfaction of FSA, of the cancellation or expiration of 
any previous LGM-Dairy policy.

[81 FR 21706, Apr. 13, 2016]



Sec.1430.112  Multi-year contract.

    (a) Participating dairy operations enrolled in MPP-Dairy are 
enrolled until December 31, 2018. As such, a participating dairy 
operation is obligated to pay initial and annual administrative fees and 
applicable premiums each succeeding calendar year following the date the 
contract is first entered into through December 31, 2018.
    (b) Failure to pay administrative fees and premiums will result in 
the loss or reduction of coverage, as applicable, and the participating 
dairy operation remains obligated to pay such administrative fees and 
premiums as specified in Sec.1430.109.
    (c) If a participating dairy operation goes out of business as 
described in Sec.1430.107(k) before December 31, 2018, the contract 
will be terminated immediately, except with respect to payments accrued 
to the benefit of the participating dairy operation under this subpart 
before such termination.

[79 FR 51462, Aug. 29, 2014, as amended at 81 FR 21706, Apr. 13, 2016]



Sec.1430.113  Contract modifications.

    (a) Producers in a participating dairy operation must notify FSA 
immediately of any changes that may affect their participation in MPP-
Dairy under this subpart. Changes include, but are not limited to death 
of a producer on the contract, producer joining the operation, producer 
exiting the operation, relocation of the dairy operation, transfer of 
shares by sale or other transfer action, or dairy operation 
reconstitutions as provided in Sec.1430.114.
    (b) Payment of any outstanding premium or administrative fee for a 
participating dairy operation must be paid

[[Page 671]]

in full before a transfer of shares by sale or any other change in 
producers on the contract originally submitted to FSA may take effect. 
Otherwise, producer changes will not be recognized until the following 
annual election period, and only if at that time all associated premiums 
and administrative fees from any previous calendar year of coverage have 
been paid in full.



Sec.1430.114  Reconstitutions.

    (a) A participating dairy operation under this subpart may 
reorganize or restructure itself in such a way that the constitution or 
makeup of its operation is reconstituted in another organization 
framework. However, any participating dairy operation that reorganizes 
or restructures after enrolling is subject to a review by FSA to 
determine if the operation was reorganized or restructured for the sole 
purpose of establishing an alternative production history for a 
participating dairy operation or was reorganized or restructured to 
otherwise circumvent any MPP-Dairy provision under this subpart 
(including the tier system for premiums) or otherwise to prevent the 
accomplishment of the purpose of the program.
    (b) A participating dairy operation that FSA determines has 
reorganized solely to establish a new production history or to 
circumvent the determination of applicable fees or premiums based on an 
established production history determined under this subpart will be 
considered to have failed to meet MPP-Dairy requirements and, in 
addition to other sanctions or penalties that may apply, will not be 
eligible for MPP-Dairy payments.
    (c) Under no circumstance, except as approved by the Deputy 
Administrator or provided for in these regulations, will the 
reconstitution or restructure of a participating dairy operation change 
the determined production history for the operation. The Deputy 
Administrator may, however, adjust the production history of a 
participating dairy operation if there is a calculation error or if 
erroneous information has been supplied by or on behalf of the 
participating dairy operation.



Sec.1430.115  Offsets and withholdings.

    FSA may offset or withhold any amount due FSA under this subpart 
under the provisions of part 1403 of this chapter or any successor 
regulations, or any other authorities that may allow for collection 
action of that sort.



Sec.1430.116  Assignments.

    Any producer may assign a payment to be made under this subpart in 
accordance with part 1404 of this chapter or successor regulations as 
designated by the Secretary or as allowed by the Deputy Administrator in 
writing.



Sec.1430.117  Appeals.

    Any producer who is dissatisfied with a determination made pursuant 
to this subpart may request reconsideration or appeal of such 
determination under parts 11 or 780 of this title.



Sec.1430.118  Misrepresentation and scheme or device.

    (a) In addition to other penalties, sanctions or remedies as may 
apply, all or any part of a payment otherwise due a person or legal 
entity on all participating dairy operations in which the person or 
legal entity has an interest may be withheld or be required to be 
refunded if the person or legal entity fails to comply with the 
provisions of this subpart or adopts or participates in adopting a 
scheme or device designed to evade this subpart, or that has the effect 
of evading this part. Such acts may include, but are not limited to:
    (1) Concealing information that affects an registration or coverage 
election;
    (2) Submitting false or erroneous information; or
    (3) Creating a business arrangement using rental agreements or other 
arrangements to conceal the interest of a person or legal entity in a 
dairy operation for the purpose of obtaining MPP-Dairy payments the 
individual or legal entity would otherwise not be eligible to receive. 
Indicators of such business arrangement include, but are not limited to 
the following:
    (i) No milk is produced and commercially marketed by a participating 
dairy operation;

[[Page 672]]

    (ii) The participating dairy operation has no appreciable assets;
    (iii) The only source of capital for the dairy operation is the MPP-
Dairy payments; or
    (iv) The represented dairy operation exists mainly for the receipt 
of MPP-Dairy payments.
    (b) If the Deputy Administrator determines that a person or legal 
entity has adopted a scheme or device to evade, or that has the purpose 
of evading, the provisions of this subpart, such person or legal entity 
will be ineligible to receive MPP-Dairy payments in the year such scheme 
or device was adopted and the succeeding year.
    (c) A person or legal entity that perpetuates a fraud, commits 
fraud, or participates in equally serious actions for the benefit of the 
person or legal entity, or the benefit of any other person or legal 
entity, in violation of the requirements of this subpart will be subject 
to a 5-year denial of all program benefits. Such other equally serious 
actions may include, but are not limited to:
    (1) Knowingly engaging in, or aiding in the creation of a fraudulent 
document or statement;
    (2) Failing to disclose material information relevant to the 
administration of the provisions of this subpart, or
    (3) Engaging in any other actions of a person or legal entity 
determined by the Deputy Administrator to be designed, or intended to, 
circumvent the provisions of this subpart.
    (d) Program payments and benefits will be denied on pro-rata basis:
    (1) In accordance with the interest held by the person or legal 
entity in any other legal entity or joint operations; and
    (2) To any person or legal entity that is a cash rent tenant on land 
owned or under control of a person or legal entity for which a 
determination of this section has been made.



Sec.1430.119  Estates, trusts, and minors.

    (a) MPP-Dairy documents executed by producers legally authorized to 
represent estates or trusts will be accepted only if such producers 
furnish evidence of the authority to execute such documents.
    (b) A minor who is otherwise eligible for benefits under this 
subpart is also required to:
    (1) Establish that the right of majority has been conferred on the 
minor by court proceedings or by law;
    (2) Show that a guardian has been appointed to manage the minor's 
property and the applicable MPP-Dairy documents are executed by the 
guardian; or
    (3) Furnish a bond under which the surety guarantees any loss 
incurred for which the minor would be liable had the minor been an 
adult.



Sec.1430.120  Death, incompetency, or disappearance.

    In the case of death, incompetency, disappearance or dissolution of 
a producer that is eligible to receive benefits under this subpart, such 
persons as are specified in part 707 of this title may receive such 
benefits, as determined appropriate by FSA.



Sec.1430.121  Maintenance and inspection of records.

    (a) Participating dairy operations are required to maintain accurate 
records and accounts that will document that they meet all eligibility 
requirements specified in this subpart, as may be requested by CCC or 
FSA. Such records and accounts are required to be retained for 3 years 
after the date of MPP-Dairy payments to the participating dairy 
operation. Destruction of the records 3 years after the date of payment 
will be at the risk of the party undertaking the destruction.
    (b) A participating dairy operation is required to allow authorized 
representatives of CCC, the Secretary, or the Comptroller General of the 
United States to have access to the premises of the dairy operation in 
order to inspect the herd of cattle, examine, and make copies of the 
books, records, and accounts, and other written data as specified in 
paragraph (a) of this section.
    (c) Any producer or dairy operation that does not comply with the 
provisions of paragraphs (a) or (b) of this section, or that otherwise 
receives a payment for which it is not eligible, is liable for that 
payment and is required

[[Page 673]]

to repay it to FSA, with interest to run from the date of disbursement.



Sec.1430.122  Refunds; joint and several liability.

    (a) Any legal entity, including joint operations, joint ventures and 
partnerships, and any member of a legal entity determined to have 
knowingly participated in a scheme or device, or other such equally 
serious actions to evade, or that has the purpose of evading the 
provisions of this part, will be jointly and severally liable for any 
amounts determined to be payable as the result of the scheme or device, 
or other such equally serious actions, including amounts necessary to 
recover the payments.
    (b) Any person or legal entity that cooperates in the enforcement of 
the provisions of this part may be partially or fully released from 
liability, as determined by the Executive Vice President, CCC.
    (c) The provisions of this section will be applicable in addition to 
any liability that arises under a criminal or civil statute, regulation, 
or provision of law.



Sec.1430.123  Violations of highly erodible and wetland conservation 
provisions.

    The provisions of part 12 of this title apply to this part.



Sec.1430.124  Violations regarding controlled substances.

    The provisions of Sec.718.6 of this title apply to this part.



               Subpart B_Milk Income Loss Contract Program

    Source: 67 FR 64476, Oct. 18, 2002, unless otherwise noted.



Sec.1430.200  Applicability.

    (a) This subpart governs the Milk Income Loss Contract Program. This 
program provides financial assistance to dairy operations in connection 
with milk production that is sold in the commercial market.



Sec.1430.201  Administration.

    (a) This program is administered under the general supervision of 
the Executive Vice President, CCC, or a designee, and shall be carried 
out by Farm Service Agency (FSA) State and county committees and 
employees.
    (b) State and county committees, and their employees may not waive 
or modify any requirement of this subpart, except as provided in 
paragraph (e) of this section.
    (c) The State committee shall take any action required when not 
taken by the county committee, require correction of actions not in 
compliance, or require the withholding of any action that is not in 
compliance with this subpart.
    (d) The Executive Vice President, CCC, or a designee, may determine 
any question arising under the program or reverse or modify any decision 
of the State or county committee.
    (e) The Deputy Administrator, Farm Programs, FSA, may waive or 
modify program requirements where failure to meet such requirements does 
not adversely affect the operation of the Milk Income Loss Contract 
Program.
    (f) A representative of CCC may execute Milk Income Loss Contracts 
and related documents under the terms and conditions determined and 
announced by CCC. Any document not under such terms and conditions, 
including any purported execution before the date authorized by CCC, 
shall be null and void.



Sec.1430.202  Definitions.

    The definitions in this section shall be applicable for all purposes 
of administering the Milk Income Loss Contract (MILC) program 
established by this subpart.
    CCC means the Commodity Credit Corporation of the Department.
    Class I Milk means milk, including milk components, classified as 
Class I milk under a Federal milk marketing order.
    Contract application means a Milk Income Loss Contract as executed 
on a form prescribed by CCC.
    Contract application period means the date established by the Deputy 
Administrator for producers to apply for program benefits.
    County committee means the FSA county committee.

[[Page 674]]

    County office means the FSA office responsible for administering FSA 
programs to farms located in a specific area in a state.
    Dairy operation means any person or group of persons who as a single 
unit as determined by CCC, produce and market milk commercially produced 
from cows, and whose production facilities are located in the United 
States. In administering this program, for purposes of determining what 
is a ``dairy operation'' and its eligibility under this program, those 
determinations will be made in the same manner as was done for the Dairy 
Market Loss Assistance (DMLA) contracts in the State in which the dairy 
is located. New MILC operations, which is to say those operations that 
did not participate in the MILC program for marketings prior to FY 2008, 
must be unaffiliated with any other DMLA or MILC operations.
    Department or USDA means the United States Department of 
Agriculture.
    Deputy Administrator means the Deputy Administrator for Farm 
Programs (DAFP), FSA or a designee.
    Eligible production means milk that was produced at a time relevant 
to this program by cows in the United States and marketed commercially 
by a producer in a participating State.
    Farm Service Agency or FSA means the Farm Service Agency of the 
Department.
    Federal Milk Marketing Order means an order issued under section 8c 
of the Agricultural Adjustment Act (7 U.S.C. 608c), reenacted with 
amendments by the Agricultural Marketing Agreement Act of 1937.
    Fiscal Year or FY means the year beginning October 1 and ending the 
following September 30. Fiscal years will be designated for this part by 
year by reference to the calendar year in which it ends. For example, FY 
2009 is from October 1, 2008, through September 30, 2009 (inclusive).
    Hundredweight or cwt. means 100 pounds.
    Marketed commercially means sold to the market to which the dairy 
operation normally delivers whole milk and receives a monetary amount.
    MILC means the Milk Income Loss Contract program or the form upon 
which CCC and the producer agree to the terms of the payment to be made 
under the MILC program.
    Milk handler means the marketing agency to or through which the 
producer commercially markets whole milk.
    Milk marketing means a marketing of milk for which there is a 
verifiable sales or delivery record of milk marketed for commercial use.
    Participating State means each of the 50 States in the United States 
of America, the District of Columbia, and the Commonwealth of Puerto 
Rico, or any other territory or possession of the United States.
    Payment pounds means the pounds of milk production for which an 
operation is eligible to be paid under this subpart.
    Producer means any individual, group of individuals, partnership, 
corporation, estate, trust association, cooperative, or other business 
enterprise or other legal entity who is, or whose members are, a citizen 
of, or legal resident alien in the United States, and who directly or 
indirectly, as determined by the Secretary, shares in the risk of 
producing milk, and makes contributions (including land, labor, 
management, equipment, or capital) to the dairy farming operation of the 
individual or entity that are at least commensurate with the share of 
the individual or entity of the proceeds of this operation.
    United States means the 50 States of the United Sates of America, 
the District of Columbia, and the Commonwealth of Puerto Rico, or any 
other territory or possession of the United States.
    Verifiable production records means evidence that is used to 
substantiate the amount of production marketed and that can be verified 
by CCC through an independent source.

[67 FR 64476, Oct. 18, 2002, as amended at 71 FR 19622, Apr. 17, 2006; 
73 FR 73776, Dec. 4, 2008]



Sec.1430.203  Eligibility.

    To be eligible to receive payments under this subpart, a dairy 
operation must:
    (a) Have produced milk in the United States and commercially 
marketed the

[[Page 675]]

milk produced anytime during the period of October 1, 2007, through 
September 30, 2012;
    (b) Enter into a MILC during the contract application period;
    (c) Agree to all terms and conditions in the MILC and those that are 
otherwise contained in this subpart and comply with instructions issued 
by CCC;
    (d) Provide proof of monthly milk production commercially marketed 
by all persons in the dairy operation during the contract period, to 
determine the total pounds of milk that will be converted to 
hundredweight (cwt.) used for payment;
    (e) Submit timely production evidence according to Sec.1430.209;
    (f) Be actively engaged in the business of producing and marketing 
agricultural products anytime during the period of October 1, 2007, 
through September 30, 2012;
    (g) Meet all adjusted gross income eligibility requirements of part 
1400 of this chapter as regards any person or entity seeking to receive 
payment under this part. No person or entity may, generally, receive any 
payment for FY 2009 marketings and subsequent marketings if their 
nonfarm yearly income for the relevant base period for the relevant 
marketings as determined under the adjusted gross income rules (as in 
effect when the payment is sought) is over $500,000 as determined under 
this subpart. Further, for entities an otherwise due payment will be 
reduced commensurately to the extent that any person with an interest in 
the entity, as determined under the adjusted gross income rules had such 
income over that limit for the relevant period;
    (h) Have submitted a contract during the applicable contract period 
for FYs 2008 through 2012:
    (1) Except for 2009, and subject to the start month provision of 
Sec.1430.205, must have for any fiscal year or month for which payment 
is sought to be paid submitted the FY 2008 through 2012 contract before 
the end of that fiscal year or month or
    (2) For FY 2008 payments, if payments are generated under this part 
for that fiscal year, must have submitted a contract for the FY 2008 
through 2012 program by October 1, 2009 and for FY 2009 the contract 
must have been submitted by the month for which payment is first sought 
except to the extent that Sec.1430.205 explicitly permits the 
operation to pick a start month in advance of the month in which the 
contract is submitted; and
    (i) Must not, if it did not participate in the preceding MILC 
program for fiscal years prior to FY 2008, be affiliated with any other 
dairy operation.

[67 FR 64476, Oct. 18, 2002, as amended at 71 FR 19622, Apr. 17, 2006; 
73 FR 73766, Dec. 4, 2008]



Sec.1430.204  Requesting benefits.

    (a) A request for benefits or contract application, under this 
subpart must be submitted on a form as prescribed by the Agency. 
Contract applications shall be submitted to the FSA office serving the 
county where the dairy operation is located. Contract applications must 
be received by FSA by the close of business on the date established by 
the Deputy Administrator. Contract applications received after such date 
shall be disapproved.
    (b) The dairy operation requesting MILC benefits must certify the 
accuracy and truthfulness of the information in their contract 
application. All information provided is subject to verification by CCC. 
Refusal to allow CCC or any other agency of the Department to verify any 
information provided will result in disapproval.
    (c) Contract applications will be approved by execution by FSA and 
producer of a MILC. All persons who share in the risk of a dairy 
operation's total production must sign and certify the contract 
application.



Sec.1430.205  Selection of starting month.

    (a) A dairy operation that enters into a MILC contract with CCC must 
designate the starting month for each fiscal year for the calculation of 
payments and pound limits for the operation. Once a start month is 
chosen for a fiscal year the corresponding month will be the start month 
for each subsequent fiscal year unless changed by an affirmative request 
in writing on a form approved by CCC. The production start month must be 
selected on or before the 14th of the month before the

[[Page 676]]

month for which payment is sought. If such date falls on a weekend, the 
start month selection must be made on the last business day preceding 
the weekend. A dairy operation cannot select as the start month for 
payment a month which:
    (1) Has already begun, except as provided in paragraph (c)(1) of 
this section;
    (2) Has already passed; or
    (3) During which no milk production was produced by the dairy 
operation.
    (b) For FY 2009, if the operation signs its FY 2008 through 2012 
MILC contract within 30 days of the beginning of the application period 
it can pick any preceding FY 2009 month as its start month for that 
period or can use the normal rule of paragraph (c) of this section to 
pick the start month.
    (c) Except as provided in paragraph (b) of this section, the start 
month for a fiscal year may only be
    (1) For the fiscal year in which the contract is submitted, the 
month the contract is submitted or
    (2) For a fiscal year that has not yet begun, any month, provided 
that a month may not be selected after the 14th of the preceding month.
    (d) Dairy operations may change the production start month on or 
before the 14th day of the month previously selected.
    (e) If a change of the production starting month is not made by the 
dates required by paragraph (d) of this section, the MILC production 
starting month cannot be changed until the next fiscal year. If the 
selected MILC production starting month is never modified, it will 
remain the same throughout the duration of the contract.
    (f) MILC payments will be made consecutively to the dairy operation 
on a monthly basis after the production starting month has been 
designated until the earlier of the following:
    (1) Payment quantity is reached in accordance with Sec.1430.207; 
or
    (2) The end of the applicable fiscal year.
    (g)(1) MILC production start month selections made during the signup 
period designated by CCC may be made as provided in paragraph (b) of 
this section, otherwise MILC production start month selections must be 
made in accordance with paragraph (c) of this section. If a payment rate 
is not in effect during the production start month selected by the dairy 
operation, payments to the dairy operation will be issued based on the 
next consecutive month with a payment rate in effect following the MILC 
production start month selected by the dairy operation. Production in 
months in which the pay formula does not produce a payment will not 
count against the fiscal year's poundage limit for the operation.
    (2) Dairy operations with MILC production start months that begin 
with the month a MILC contract is submitted to FSA or that begin with 
the first month of the fiscal year with an effective payment rate will 
receive payments made by CCC consecutively on a monthly basis, if 
otherwise provided for in this part, until the earlier of the following:
    (i) The maximum payment quantity for the fiscal year or month is 
reached as determined in accordance with Sec.1430.207 or
    (ii) The end of the applicable fiscal year.
    (h) All producers involved in the dairy operation must agree to the 
month designated. The dairy operation assumes the risk of not reaching 
the maximum payment quantity based on the month selected by the dairy 
operation. Payments will not be issued for past months for the sole 
purpose of reaching the maximum payment quantity.

[71 FR 19622, Apr. 17, 2006, as amended at 73 FR 73766, Dec. 4, 2008]



Sec.1430.206  [Reserved]



Sec.1430.207  Dairy operation payment quantity.

    (a) The applicant's payment quantity of milk will be determined by 
CCC, based on the quantity of milk that was produced and commercially 
marketed by each dairy operation per fiscal year.
    (b) The maximum quantity of eligible production for which dairy 
operations, per separate and distinct operation, are eligible for 
payment per fiscal year under this subpart will be:

[[Page 677]]

    (1) 2,400,000 pounds (24,000 cwt.) for FY 2008 (October 1, 2007, 
through September 30, 2008);
    (2) 2,985,000 pounds (29,850 cwt.) for FY 2009 (October 1, 2008 
through September 30, 2009), FY 2010 (October 1, 2009, through September 
30, 2010), FY 2011 (October 1, 2010, through September 30, 2011) and FY 
2012 (October 1, 2011, through September 30, 2012), provided further an 
operation may receive payment for September, 2012, marketings only if 
its pre-September FY 2012 marketings did not exceed 2,400,000 pounds in 
which case new marketings that would not put the operation's FY 2012 
marketings over 2,400,000 pounds will be eligible for payments otherwise 
permitted in this rule.
    (c) In accordance with these regulations, the Deputy Administrator 
will determine what is a separate and distinct operation. That decision 
will be final

[67 FR 64476, Oct. 18, 2002, as amended at 73 FR 73767, Dec. 4, 2008]



Sec.1430.208  Payment rate and dairy operation payment.

    (a) Payments under this subpart may be made to dairy operations when 
the Boston Class I milk price under the applicable Federal milk 
marketing order is below $16.94 per cwt. No payments will be made to 
dairy operations for marketings during the months that the Boston Class 
I milk price under the applicable milk marketing order is equal to or 
exceeds $16.94.
    (b) A per-hundredweight payment rate will be determined for the 
applicable month by:
    (1) Subtracting from $16.94 the Class I milk price per cwt. in 
Boston;
    (2) Multiplying the difference by 34 percent for marketings during 
the period beginning on October 1, 2007, and ending on September 30, 
2008;
    (3) Multiplying the difference by 45 percent for marketings during 
the period beginning on October 1, 2008, and ending on August 31, 2012; 
and
    (4) Multiplying the difference by 34 percent for marketings in 
September 2012.
    (c) The payment rate as calculated as specified in paragraph (b) of 
this section, will be adjusted to compensate for feed prices when the 
National Average Dairy Feed Ration Cost for a month is greater than the 
levels set in paragraphs (c)(1) and (c)(2) of this section. The National 
Average Dairy Feed Ration Cost per cwt. for each month will be 
calculated using the same procedures used to calculate the feed 
components of the estimated price of 16 percent Mixed Dairy Feed per 
pound noted on page 33 of the USDA monthly Agricultural Prices 
publication (including the data and factors noted in footnote 4). The 
payment rate adjustment for Entire Month feed prices will be determined 
by increasing $16.94 by the percentage that is 45 percent of the 
percentage by which the National Average Dairy Feed Ration Cost exceeds 
$7.35 per cwt. (except that $7.35 will be $9.50 for September 2012 
marketings.)
    (d) Each eligible dairy operation payment will be calculated, as 
determined by the Secretary, by:
    (1) Converting whole pounds of milk to hundredweight and
    (2) Multiplying the payment rate determined in paragraphs (b) and 
(c) of this section by the quantity of eligible production marketed by 
the operation during the applicable month as determined according to 
Sec.1430.205 and other provisions of this subpart.
    (3) Payments to dairy operations will be based on calculated payment 
rates rounded seven places to the right of the decimal.
    (e) Payments under this subpart may be made to a dairy operation 
only up to the maximum production limitations set in Sec.1430.207(b) 
of eligible production per applicable fiscal year.
    (f) Dairy operations receiving benefits under this subpart, will 
receive earned payments on a monthly basis according to the MILC 
contract, to the extent practicable, not later than 60 days after the 
later of production evidence and all supporting documents for the 
applicable month are received by CCC or the entire month National 
Average Dairy Feed Ration Cost is made available by USDA, as applicable. 
Payments issued by CCC more than 60 days after the later of all 
production evidence and supporting documentation are received by CCC or 
the entire month National Average Dairy Feed Ration Cost is made 
available by

[[Page 678]]

USDA, whichever is later, will be subject to prompt payment interest as 
allowed by law. However, CCC will endeavor where possible to make 
payments within 60 days of the end of the marketing month.

[67 FR 64476, Oct. 18, 2002, as amended at 71 FR 19623, Apr. 17, 2006; 
72 FR 48231, Aug. 23, 2007; 73 FR 73767, Dec. 4, 2008]



Sec.1430.209  Proof of market loss production.

    (a) A dairy operation entering into a MILC must, based on 
instructions issued by the Deputy Administrator, provide adequate proof 
of the dairy operation's eligible production during the months of each 
fiscal year designated in the MILC. The dairy operation must also 
provide proof that the eligible production was commercially marketed 
during the months beginning October 1, 2007, and ending September 30, 
2012. Evidence of milk production claimed for payment shall be provided 
to CCC with supporting documentation under paragraph (b) of this 
section. All information provided is subject to verification, spot check 
and audit by FSA. Further verification information may be obtained from 
the dairy operation's milk handler or marketing cooperative if deemed 
necessary by CCC to verify provided information. Refusal to allow a 
representative of CCC or any other agency of the Department of 
Agriculture to verify any information provided will result in a 
determination of ineligibility for benefits under this subpart.
    (b) Eligible dairy operations marketing milk during the period 
specified in the MILC shall provide any available supporting documents 
from all producers in the dairy operation to assist CCC in verifying 
that the dairy operation produced and marketed milk commercially from 
the designated starting month and thereafter. Examples of supporting 
documentation include, but are not limited to: milk marketing payment 
stubs, tank records, milk handler records, daily milk marketings, copies 
of any payments received as compensation from other sources, or any 
other documents available to confirm the production and production 
history of the dairy operation. Producers may also be required to allow 
CCC to examine the herd of cattle as production evidence. If supporting 
documentation requested is not presented to CCC or FSA, the request for 
MILC benefits will be disapproved.

[67 FR 64476, Oct. 18, 2002, as amended at 71 FR 19623, Apr. 17, 2006; 
73 FR 73767, Dec. 4, 2008]



Sec.1430.210  MILC agents.

    (a) MILC benefits may be disbursed by a dairy marketing cooperative 
that serves special groups or communities, such as an Amish or Mennonite 
community. Producers in such groups in a dairy operation may authorize 
an agent of a dairy cooperative or milk handler affiliated with such 
cooperative to obtain and disburse MILC benefits to the dairy operation.
    (b) The authorized MILC agent must on behalf of the dairy operation 
do the following:
    (1) Obtain an acceptable power of attorney or acceptable equivalent 
for the producers of the dairy operation that authorizes the agent to 
enter into an MILC contract;
    (2) Enter into a written agreement with CCC for approval to act as a 
MILC agent on a form prescribed by CCC;
    (3) Provide the dairy operation's monthly production evidence to the 
appropriate FSA office;
    (4) Disburse payment to the dairy operation in the producer's 
monthly milk check or in an otherwise approved manner.



Sec.1430.211  Duration of contracts.

    (a) Except as provided in Sec.1430.205, or elsewhere in this 
subpart, a MILC entered into by producers in a dairy operation shall 
cover eligible production marketed by the producers in the dairy 
operation during the period beginning with the first day of the month 
the producers in the dairy operation enter into an MILC and ending on 
September 30, 2012.
    (b) If a dairy goes out of business during the contract period, the 
MILC will be terminated immediately, except as applicable to earned 
payments.

[67 FR 64476, Oct. 18, 2002, as amended at 71 FR 19623, Apr. 17, 2006; 
73 FR 73768, Dec. 4, 2008]

[[Page 679]]



Sec.1430.212  Contract modifications and statutory changes in program.

    (a) Producers in a dairy operation must notify FSA immediately of 
any changes that may affect their MILC. Changes include, but are not 
limited to changes to the starting month to receive payment for the next 
fiscal year, death of producer on the contract, new member joining the 
operation, member exiting the operation, transfer of shares by sale or 
other transfer action, or farm reconstitutions undertaken in accordance 
with Sec.1430.213.
    (b) CCC may modify an MILC if such modifications are desirable to 
carry out purposes of the program or to facilitate the program's 
administration.
    (c) Payments otherwise due under this subpart or the program will be 
adjusted or denied to the extent provided for by a statutory change in 
program eligibilities or requirements of any kind irrespective of 
whether the program contract preceded the statutory change. Operations 
will be given the option of accepting the changes or terminating the 
contract.

[67 FR 64476, Oct. 18, 2002, as amended at 73 FR 73768, Dec. 4, 2008]



Sec.1430.213  Reconstitutions.

    (a) A dairy operation receiving MILC benefits may reorganize or 
restructure such that the constitution or makeup of its operation is 
reconstituted in another organizational framework. However, any 
operation that reorganizes or restructures after October 1, 2007, is 
subject to a review by FSA to determine if the operation was reorganized 
or restructured for the sole purpose of receiving multiple or additional 
MILC payments.
    (b) A dairy operation that FSA determines has reorganized solely to 
receive additional MILC payments will be in violation of its contract 
and dealt in accordance with Sec.1430.214.
    (c) If during the contract period a change in the dairy operation 
occurs, the modification to the MILC will not take effect until the 
first day of the fiscal year following the month FSA received 
notification of the changes. Changes include but are not limited to any 
producer affiliated with a dairy operation that has an approved MILC 
with CCC forming a new dairy operation that is not formed solely to 
receive additional MILC payments.
    (d) Changes resulting in the following will take effect immediately 
upon notification to CCC, in accordance with Sec.1430.212:
    (1) Increases or reductions of shareholders or producers and their 
corresponding share amounts in the dairy operation; or
    (2) Purchases of a new dairy operation by a producer or producers 
not affiliated with an existing dairy operation that has an approved 
MILC with CCC.

[67 FR 64476, Oct. 18, 2002, as amended at 73 FR 73768, Dec. 4, 2008]



Sec.1430.214  Violations.

    (a) If producers in a dairy operation violates the MILC or the 
requirements of this subpart, CCC may:
    (1) Terminate the MILC for the remainder of the fiscal year in which 
the violation occurs, and allow the producer to retain any payments 
received under the contract; or
    (2) Allow the MILC to remain in effect and require the producer to 
repay a portion of the payments received commensurate with the 
violation's severity, as CCC determines.
    (3) If the MILC is terminated under this section, the participant 
shall forfeit all rights to further MILC benefits and shall refund all 
or part of the payments received as CCC determines appropriate.
    (4) A producer or operation with a violation, as determined by CCC, 
shall refund all MILC funds disbursed under of this part. The remedies 
provided in this subpart shall be in addition to other civil, criminal, 
or administrative remedies which may apply.
    (b) A MILC is violated by the following actions:
    (1) Failure to comply with the terms and conditions of the MILC and 
addendum;
    (2) Reconstitutions of the dairy operation for the sole purpose of 
receiving multiple program benefits;
    (3) Failure to comply with highly erodible land conservation and 
wetland provisions of this 7 CFR part 12 or their successor regulations;

[[Page 680]]

    (4) Failure to meet the definition of a dairy operation according to 
Sec.1430.202;
    (5) Any action that tends to defeat the purpose of the program, as 
CCC determines.
    (c) The Deputy Administrator for Farm Programs (DAFP) of the Farm 
Service Agency may terminate any MILC by mutual agreement upon request 
of the participant if DAFP determines that termination is in the best 
interest of the public.
    (d) The DAFP may determine that failure of the dairy operation to 
perform the MILC does not warrant termination and may require the 
participant to refund part of the payments received or accept 
adjustments in the payment as the DAFP determines to be appropriate.



Sec.1430.215  [Reserved]



Sec.1430.216  Contracts not in conformity with regulations.

    If it is discovered that an MILC contract does not comply with this 
subpart as the result of a misunderstanding by someone who has signed 
the contract, the contract may be modified by mutual agreement. If the 
parties to the MILC cannot reach agreement for such modification, it 
shall be terminated and all payments paid or payable under the contract 
shall be forfeited or refunded to CCC, except as may otherwise be 
allowed under Sec.1430.214.



Sec.1430.217  Offsets and withholdings.

    CCC may offset or withhold any amount due CCC under this subpart 
under the provisions of part 1403 of this chapter or any successor 
regulations.



Sec.1430.218  Assignments.

    Any producer may assign a payment to be made under this part in 
accordance with part 1404 of this chapter or successor regulations as 
designated by the Department.



Sec.1430.219  Appeals.

    Any producer who is dissatisfied with a determination made pursuant 
to this subpart may request reconsideration or appeal of such 
determination under part 11 or 780 of this title.



Sec.1430.220  Misrepresentation and scheme or device.

    (a) A dairy operation shall be ineligible for the MILC program if 
FSA determines that it knowingly:
    (1) Adopted a scheme or device that tends to defeat the purpose of 
this program;
    (2) Made any fraudulent representation; or
    (3) Misrepresented any fact affecting a determination under this 
program. CCC will take steps deemed necessary to protect the interests 
of the government.
    (b) Any funds disbursed to a producer or operation engaged in a 
misrepresentation, scheme, or device, shall be refunded to CCC. The 
remedies provided in this subpart shall be in addition to other civil, 
criminal, or administrative remedies which may apply.



Sec.1430.221  Estates, trusts, and minors.

    (a) Program documents executed by producers legally authorized to 
represent estates or trusts will be accepted only if such producers 
furnish evidence of the authority to execute such documents.
    (b) A minor who is otherwise eligible for assistance under this part 
must also:
    (1) Establish that the right of majority has been conferred on the 
minor by court proceedings or by statute;
    (2) Show that a guardian has been appointed to manage the minor's 
property and the applicable program documents are executed by the 
guardian; or
    (3) Furnish a bond under which the surety guarantees any loss 
incurred for which the minor would be liable had the minor been an 
adult.



Sec.1430.222  Death, incompetency, or disappearance.

    In the case of death, incompetency, disappearance or dissolution of 
a producer that is eligible to receive benefits under this part, such 
persons as are specified in part 707 of this title may receive such 
benefits, as determined appropriate by FSA.

[[Page 681]]



Sec.1430.223  Maintenance and inspection of records.

    (a) Producers approved for benefits under this program must maintain 
accurate records and accounts that will document that they meet all 
eligibility requirements specified herein, as may be requested by CCC or 
FSA. Such records and accounts must be retained for 3 years after the 
date of payment to the dairy operation under this program. Destruction 
of the records 3 years after the date of payment shall be the risk of 
the party undertaking the destruction.
    (b) At all times during regular business hours, authorized 
representatives of CCC, the Department, or the Comptroller General of 
the United States shall have access to the premises of the dairy 
operation in order to inspect the herd of cattle, examine, and make 
copies of the books, records, and accounts, and other written data as 
specified in paragraph (a) of this section.
    (c) Any funds disbursed pursuant to this part to any producers or 
operation who does not comply with the provisions of paragraphs (a) or 
(b) of this section, or who otherwise receives a payment for which they 
are not eligible, shall be refunded with interest.



Sec.1430.224  Refunds; joint and several liability.

    (a) In the event of an error on a MILC application, a failure to 
comply with any term, requirement, or condition for payment arising 
under the MILC application, or this subpart, all improper payments shall 
be refunded to CCC together with interest from the date payment was 
received through the date the refund is received by CCC.
    (b) All producers signing a dairy operation's application for 
payment as having an interest in the operation shall be jointly and 
severally liable for any refund, including related charges, that is 
determined to be due for any reason under the terms and conditions of 
the contract application and addendum or this part for such operation.



Sec.1430.225  Violations of highly erodible land and wetland 
conservation provisions.

    The provisions of part 12 of this title apply to this part.



Sec.1430.226  Violations regarding controlled substances.

    The provisions of Sec.718.11 of this title apply to this part.



                Subpart C_Dairy Product Donation Program

    Source: 79 FR 51468, Aug. 29, 2014, unless otherwise noted.



Sec.1430.300  Administration, purpose, and funding.

    (a) The regulations in this subpart apply for the Dairy Product 
Donation Program (DPDP). DPDP is authorized by section 1431 of the 
Agricultural Act of 2014 (Pub. L. 113-79, 7 U.S.C. 9071).
    (b) DPDP is designed to address low dairy producer margins, through 
periodic purchases of dairy products, as specified in this subpart. 
Dairy products purchased for DPDP will be used to provide nutritional 
assistance to members of low-income groups.
    (c) The purchase aspect of DPDP will be operated for the Secretary 
of Agriculture and for the Commodity Credit Corporation by the Farm 
Service Agency (FSA) under the direction of the FSA's Deputy 
Administrator for Commodity Operations. Purchases are subject to the 
terms and conditions in FSA's purchase announcements. The distribution 
of products purchased through DPDP will be operated for the Secretary 
under the direction of the Food and Nutrition Service.



Sec.1430.301  Definitions.

    For purposes of this subpart, the following terms and acronyms 
apply:
    2014 Farm Bill means the Agricultural Act of 2014 (Pub. L. No. 113-
79).
    Actual dairy production margin is as defined in subpart A of this 
part.
    AMS means the Agricultural Marketing Service of the USDA.
    CCC means the Commodity Credit Corporation.
    Deputy Administrator means the Farm Service Agency Deputy 
Administrator for Commodity Operations.
    Distribution means the provision of products purchased through DPDP 
to low-income groups through FNS food distribution programs in 
accordance

[[Page 682]]

with those program regulations and 7 CFR part 250.
    DPDP means the Dairy Product Donation Program.
    FNS means the Food and Nutrition Service of the USDA.
    FSA means the Farm Service Agency of the USDA.
    FSA Administrator means Administrator of the Farm Service Agency, 
USDA.
    Hundredweight or cwt means 100 pounds.
    MPP-Dairy means the Margin Protection Program for Dairy provided for 
in subpart A of this part.
    NDM means non-fat dry milk.
    Recipient agencies means agencies or organizations that are eligible 
to receive donated product for distribution under this subpart.
    USDA means the United States Department of Agriculture.



Sec.1430.302  Commencement and termination of DPDP purchases.

    (a) DPDP purchases commence only if approved by the FSA 
Administrator under the provisions of this subpart. The FSA 
Administrator will approve DPDP purchases only if the actual dairy 
production margin has been $4 or less per cwt for each of the preceding 
2 months. The actual dairy production margin will be calculated as 
specified in Sec.1430.110. The following chart shows an example of the 
timing for the determination of DPDP purchases.

   DPDP Purchase Determination Example Based on Dairy Production Margins and 3-Month Maximum for Purchases \1\
----------------------------------------------------------------------------------------------------------------
                                                        If both margins                        If either margin
                                   Calculate margin    below $4 per cwt     3-Month maximum    above $4 per cwt
      2 Consecutive months         for 2 consecutive       in the 2          consideration         in the 2
                                      months \2\      consecutive months                      consecutive months
----------------------------------------------------------------------------------------------------------------
January and February............  March.............  Dairy product       1st month of        No purchases.
                                                       purchases \3\       purchases.
                                                       begin in April.
February and March..............  April.............  Dairy product       2nd consecutive     No purchases.
                                                       purchases \3\       month of
                                                       begin in May.       purchases.
March and April.................  May...............  Dairy product       3rd consecutive     No purchases.
                                                       purchases \3\       month of
                                                       begin in June.      purchases.
April and May...................  June \4\..........  No purchases;       3-month maximum     No purchases.
                                                       terminated after    reached (1st
                                                       3 consecutive       month off).
                                                       months.
May and June....................  July..............  No purchases;       3-month maximum     No purchases.
                                                       terminated after    reached (2nd
                                                       3 consecutive       month off).
                                                       months.
June and July...................  August............  No purchases;       3-month maximum     No purchases.
                                                       terminated after    reached (3rd
                                                       3 consecutive       month off).
                                                       months.
July and August.................  September.........  Dairy product       1st month of        No purchases.
                                                       purchases \3\       purchases.
                                                       begin in October.
August and September............  October...........  Dairy product       2nd consecutive     No purchases.
                                                       purchases \3\       month of
                                                       begin in November.  purchases.
September and October...........  November..........  Dairy product       3rd consecutive     No purchases.
                                                       purchases \3\       month of
                                                       begin in December.  purchases.
October and November............  December..........  No purchases;       3-month maximum     No purchases.
                                                       terminated after    reached (1st
                                                       3 consecutive       month off).
                                                       months.
November and December...........  January...........  No purchases;       3-month maximum     No purchases
                                                       terminated after    reached (1st
                                                       3 consecutive       month off).
                                                       months.
----------------------------------------------------------------------------------------------------------------
\1\ This example assumes that purchases begin in January. In reality, DPDP can--depending on prices and margin
  triggers--begin on September 1, 2014, which is the start of MPP-Dairy.
\2\ The full month data for a given month is available at the end of the following month. For example, January
  data are not available until the end of February.
\2\ Purchases cannot begin unless domestic cheddar cheese or nonfat dry milk prices are at certain differentials
  relative to world prices.
\3\ In the example, June is the 3rd month of consevutive purchases. June would not be calculated as a potential
  trigger month, but it is shown on the chart to clearly show the concept of 3 months on and 3 months off for
  purchases. If purchases are taking place during a month, that month cannot be used as a trigger month for a
  future purchase period.

    (b) DPDP purchases terminate and are not reinstated until the 
condition specified in paragraph (a) of this section is again met, 
whenever any one of the following occurs:
    (1) If purchases were made for the preceding 3 months, even if the 
actual

[[Page 683]]

dairy production margin remains $4 or less per cwt of milk.
    (2) If the actual dairy production margin has been greater than $4 
per cwt of milk for the immediately preceding month.
    (3) If the actual dairy production margin has been $4 or less, but 
more than $3, per cwt for the immediately preceding month and during the 
same month --
    (i) The price in the United States for cheddar cheese was more than 
5 percent above the world price, or
    (ii) The price in the United States for non-fat dry milk (NDM) was 
more than 5 percent above the world price of skim milk powder.
    (4) If the actual dairy production margin has been $3 or less per 
cwt of milk for the immediately preceding month and during the same 
month --
    (i) The price in the United States for cheddar cheese was more than 
7 percent above the world price; or
    (ii) The price in the United States for NDM was more than 7 percent 
above the world price of skim milk powder.
    (c) Purchases will terminate beginning with the first day of any 
month that does not qualify for DPDP purchases.
    (d) For calculations under paragraphs (b)(3) and (4) of this 
section, the FSA Administrator may use data from a single or multiple 
locales or markets, including weighted averages, in consultation with 
AMS or other USDA agencies.



Sec.1430.303  DPDP purchases.

    (a) DPDP purchases will be made only for those months that the FSA 
Administrator has determined meet all the requirements specified in 
Sec.1430.302. The purchases are subject to DPDP requirements including 
price and quantity restrictions specified in this subpart.
    (b) The Secretary has the authority to determine purchase and 
distribution methods for dairy product purchases and distribution. 
Unless otherwise determined by the Secretary, this authority is 
delegated to the Deputy Administrator in consultation with FNS.
    (c) FSA and FNS will determine the types and quantities of products 
that will be purchased, in consultation with public or private nonprofit 
organizations and State and local agencies eligible to receive such 
products.
    (d) The FSA Administrator will determine the quantity of purchases 
to be made for a qualifying month and will consider the results of any 
consultations in determining the quantity to be purchased. In making the 
determination, the FSA Administrator will also take into account a 
number of factors, including, but not limited to, dairy product market 
conditions, logistical considerations involved in the efficient and 
immediate distribution of the dairy products, the potential effect on 
markets and margins, time constraints of DPDP, and the cost 
effectiveness of the purchases. Approved quantities for a month will not 
exceed the amount of product that may be effectively distributed without 
waste.
    (e) Purchases may be approved for a qualifying month to the extent 
that the purchase by FSA can reasonably be expected to be completed in 
that calendar month and the products delivered to recipient agencies 
within 90 days.
    (f) DPDP purchases cannot be stored by or for CCC, and CCC cannot 
incur storage costs on behalf of recipient agencies for the dairy 
products.
    (g) The purchase price of products will be the prevailing market 
price for like dairy products for private buyers as determined by the 
Deputy Administrator. That price may be, if approved by the Deputy 
Administrator, the price determined by the normal procurement methods 
used to procure foods for FNS domestic food assistance programs, if the 
dairy products are obtained that way.



Sec.1430.304  Distribution of DPDP purchased products.

    (a) Purchased products will be distributed to private and public 
nonprofit organizations eligible to receive donated foods for 
distribution to low-income groups through FNS' food distribution 
programs as specified in FNS program regulations and the requirements in 
7 CFR part 250.

[[Page 684]]

    (b) Public and private nonprofit organizations receiving donated 
dairy products under this section will be responsible for the proper 
handling and distribution of such products in accordance with FNS 
program regulations, 7 CFR part 250, and FNS guidance and instructions.
    (c) A private or nonprofit organization agency receiving donated 
products under this section which improperly distributes or uses such 
product or causes loss of or damage to such product, will be subject to 
recovery of losses or other corrective action in accordance with FNS 
program regulations, 7 CFR part 250.



                 Subpart D_Dairy Margin Coverage Program

    Source: 84 FR 28176, June 18, 2019, unless otherwise noted.



Sec.1430.400  Purpose.

    The regulations in this subpart apply to the Dairy Margin Coverage 
(DMC) Program that replaces the Margin Protection Program for Dairy 
(MPP-Dairy) in subpart A. The purpose of DMC is to provide eligible 
dairy producers risk protection against low margins resulting from a 
combination of low milk prices and high feed costs.



Sec.1430.401  Administration.

    (a) The DMC Program is administered by the Farm Service Agency (FSA) 
under the general supervision of the Executive Vice President, CCC, or a 
designee, and will be carried out by FSA State and county committees and 
employees.
    (b) FSA State and county committees, and their employees may not 
waive or modify any requirement of this subpart, except as provided in 
paragraph (e) of this section.
    (c) The State committee will take any action required when not taken 
by the county committee, require correction of actions not in 
compliance, or require the withholding of any action that is not in 
compliance with this subpart.
    (d) The Executive Vice President, CCC, or a designee, may determine 
any question arising under the program or reverse or modify any decision 
of the State or county committee.
    (e) The Deputy Administrator, Farm Programs, FSA, may waive or 
modify non-statutory program deadlines when failure to meet such 
deadline does not adversely affect the operation of the DMC Program.
    (f) A representative of CCC may execute a contract for participation 
in the DMC Program and related documents under the terms and conditions 
determined and announced by the Deputy Administrator on behalf of CCC. 
Any document not under such terms and conditions, including any 
purported execution before the date authorized by CCC, will be null and 
void.



Sec.1430.402  Definitions.

    The definitions in this section apply for all purposes of 
administering the DMC Program.
    Actual dairy production margin means the difference between the all-
milk price and the average feed cost, as calculated under Sec.
1430.411. If the calculation would produce a negative number, the margin 
is considered to be zero.
    Administrative county office means the county FSA office designated 
to make determinations, handle official records, and issue payments for 
the producer in accordance with 7 CFR part 718.
    All-milk price means the national average price received, per 
hundredweight of milk, by dairy operations for all milk sold to dairy 
plants and milk dealers in the United States, as determined by the 
Secretary.
    AMS means the Agricultural Marketing Service of USDA.
    Annual election period for DMC means the period, each calendar year, 
established by the Deputy Administrator, for a dairy operation to 
register to participate in DMC for the following coverage year, pay 
associated administrative fees, and make coverage elections for an 
applicable calendar year.
    Average feed cost means the national average cost of feed used by a 
dairy operation to produce a hundredweight of milk, as determined under 
the provisions of this subpart.
    Beginning farmer or rancher means an individual or entity who has 
both not operated a farm or ranch, or who has operated a farm or ranch 
for not more

[[Page 685]]

than 10 consecutive years; and materially and substantially participates 
in the operation of the farm or ranch. For legal entities to be 
considered a beginning farmer or rancher, all members must be related by 
blood or marriage; and all the members must be beginning farmers or 
ranchers.
    Buy up coverage means dairy margin coverage for a margin protection 
level above $4 per hundredweight of milk.
    Calendar year means the year beginning with January 1 and ending the 
following December 31.
    Catastrophic level coverage means $4 per cwt margin protection 
coverage and a coverage percentage of 95 percent, with no premium 
assessed.
    CCC means the Commodity Credit Corporation of USDA.
    Commercially marketed means selling whole milk to either the market 
to which the dairy operation normally delivers or other similar markets 
and receives monetary compensation.
    Contract means the terms and conditions to participate in the DMC 
Program as executed on a form prescribed by CCC and required to be 
completed by the producers in the dairy operation and accepted by CCC, 
including any contract modifications made in an annual election period 
before coverage for the applicable calendar year commences.
    Covered production history is equal to the production history of the 
operation multiplied by the coverage percentage selected by the 
participating dairy operation.
    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 margin coverage (or DMC) means the dairy margin coverage 
program for dairy producers established under this subpart.
    Dairy margin coverage payment (DMC payment) means a payment made to 
a participating dairy operation under the DMC Program under the terms of 
this subpart.
    Dairy operation means, as determined by the Deputy Administrator, 
and subject to conditions that the Deputy Administrator may impose to 
advance the achievement of the purposes of the DMC Program, any one or 
more dairy producers that produce and market milk commercially produced 
from cows as a single unit in which each dairy producer:
    (1) Shares in the pooling of resources under a common ownership 
structure;
    (2) Is at risk in the production of milk in the dairy operation;
    (3) Contributes land, labor, management, equipment, or capital to 
the dairy operation that are at least commensurate to the producer's 
share in the operation; and
    (4) Has production facilities located in the United States.
    Deputy Administrator means the Deputy Administrator for Farm 
Programs, Farm Service Agency, or designee.
    Farm Service Agency or FSA means the Farm Service Agency of USDA.
    Handler or producer handler means the initial individual or entity 
making payment to a dairy operation for milk produced in the United 
States and marketed for commercial use.
    Hundredweight or cwt means 100 pounds.
    Limited resource farmer or rancher means a farmer or rancher that is 
a person with both:
    (1) Direct or indirect gross farm sales not more than an amount 
determined by FSA in each of the previous 2 years; and
    (2) A total household income at or below the national poverty level 
for a family of four or less than 50 percent of county median household 
income in each of the previous 2 years.
    Milk Income Loss Contract Program or MILC means the program 
established under section 1506 of the Food, Conservation, and Energy Act 
of 2008 (7 U.S.C. 8773) and the regulations in part 1430, subpart B of 
this part.
    Milk marketing means a sale of milk for which there is a verifiable 
production record for milk commercially marketed.
    NASS means the National Agricultural Statistics Service of USDA.
    New operation means a dairy operation that:
    (1) Did not establish a production history under the MPP-Dairy;

[[Page 686]]

    (2) Has less than 12 full months in a calendar year of commercial 
milk marketings produced by the dairy operation; and
    (3) Started commercially marketing milk within 60 days of submitting 
a contract application under DMC.
    Open enrollment period for DMC means the period, each calendar year, 
established by the Deputy Administrator, for a participating dairy 
operation to either register to participate in the DMC Program, pay 
associated administrative fees, if applicable, and applicable premiums, 
or to make annual coverage elections for an applicable calendar year of 
participation.
    Participating dairy operation means a dairy operation that signs up 
to participate in the DMC Program under this part.
    Producer means any individual, group of individuals, partnership, 
corporation, estate, trust, association, cooperative, or other business 
enterprise or other legal entity who is, or whose members are, a citizen 
of, or legal resident alien in the United States, and who directly, or 
indirectly:
    (1) Shares in the risk of producing milk, and
    (2) Makes contributions including land, labor, management, 
equipment, or capital:
    (i) To the dairy operation at least commensurate to the producer's 
share of the operation, or
    (ii) To the dairy operation of the individual or entity, as 
determined by the Deputy Administrator.
    Production history means the production history determined for a 
participating dairy operation under this subpart when the participating 
dairy operation first registers to participate in DMC or previously 
established under MPP-Dairy, as determined under the provisions of this 
subpart.
    RMA means the Risk Management Agency of USDA.
    Secretary means the Secretary of USDA.
    Socially disadvantaged farmer or rancher means a farmer or rancher 
who is a member of 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. Groups include: 
American Indians or Alaskan Natives, Asians or Asian Americans, Blacks 
or African Americans, Native Hawaiians or other Pacific Islanders, 
Hispanics, and women. For legal entities requesting to be considered 
Socially Disadvantaged, the majority interest must be held by socially 
disadvantaged individuals.
    United States means, unless the context suggests otherwise, the 50 
States of the United States of America, the District of Columbia, 
American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, 
the Commonwealth of Puerto Rico, the Virgin Islands of the United 
States, and any other territory or possession of the United States.
    USDA means the U.S. Department of Agriculture.
    Verifiable production records means evidence that is used to 
substantiate the amount of production marketed and that can be verified 
by CCC through an independent source.
    Veteran farmer or rancher means a person who has served in the 
United States Army, Navy, Marine Corps, Air Force, and Coast Guard, 
including the reserve components, and who has not operated a farm or 
ranch; has operated a farm or ranch but not for more than 10 years 
total, since becoming a veteran; or has obtained status as a veteran 
during the most recent 10-year period. A legal entity or joint operation 
will be considered a veteran farmer or rancher entity, if all members 
meet this definition.



Sec.1430.403  Eligible dairy operations.

    (a) In order for a dairy operation to be eligible to register for 
DMC and receive payments, such dairy operation must:
    (1) Produce milk from cows in the United States that is marketed 
commercially at the time of each annual election for an applicable 
coverage year in DMC, except that dairy operations that have stopped 
producing and marketing milk in any month before or during the annual 
coverage election period for 2019 are eligible for only those applicable 
months;
    (2) Submit accurate and complete information as required by this 
subpart;

[[Page 687]]

    (3) Provide proof of milk production marketed commercially by all 
persons in the dairy operation to establish production history;
    (4) Pay required administrative fees for participation in DMC as 
specified in this subpart and any premiums, if applicable, as specified 
in this subpart.
    (b) A person or entity covered by Sec.1400.401 of this chapter 
(hereafter ``foreign person'') must meet the eligibility requirements in 
that section to receive payments under this subpart. A dairy operation 
with ineligible foreign persons as members will have any payment reduced 
by the proportional share of such members.
    (c) Federal agencies and States, including all agencies and 
political subdivisions of a State, are not eligible for payments under 
this subpart.
    (d) A single dairy operation operated by more than one dairy 
producer will be treated as a single dairy operation for purposes of 
participating in DMC and can only submit one application. If a producer 
owns more than one eligible dairy operation in which each operation is 
separate and distinct from each other, such dairy producer may be 
eligible to participate separately for each dairy operation, however, 
each eligible dairy operation must be separately registered, as 
specified in Sec.1430.404.
    (e) The Deputy Administrator or designee will determine additional 
dairy operations that operate in a manner that are separate and distinct 
from each other according to paragraph (d) of this section and which 
may, as determined by the Deputy Administrator, be considered an 
operation even though they may not meet the conditions otherwise imposed 
in this definition. Also, the Deputy Administrator may require 
operations to be combined and considered one operation when there is 
close interest by family or otherwise between two operations, to avoid 
schemes or devices, or otherwise. Likewise, the Deputy Administrator may 
consider other factors as are deemed appropriate to adjust what is 
considered a dairy operation to conform with the DMC Program 
requirements in an equitable manner, including taking into account a 
dairy's status under MPP-Dairy and the Milk Income Loss Contract Program 
formerly operated under this part.



Sec.1430.404  Time and method of registration and annual election.

    (a) A dairy operation may register to participate in DMC by 
establishing a production history according to Sec.1430.405 on a form 
prescribed by CCC and also submitting a contract prescribed by CCC. 
Dairy operations may obtain a contract in person, by mail, or by 
facsimile from any county office. In addition, dairy operations may 
download a copy of the forms at http://www.sc.egov.usda.gov.
    (b) A dairy operation must submit completed contracts and any other 
supporting documentation, during the annual election period established 
by the Deputy Administrator, to the administrative county FSA office 
serving the dairy operation. However, the production history must be 
established only once and approved by CCC before the contract is 
submitted and considered complete.
    (1) A new dairy operation that has been established after the most 
recent election period is required to submit a contract within the first 
60 calendar days from the date of which the dairy operation first 
commercially markets milk and may elect coverage that begins the month 
and day the dairy operation has commercial marketings.
    (2) A new dairy operation that does not meet the 60-day requirement 
of paragraph (b)(1) of this section cannot enroll until the next annual 
election period for coverage for the following calendar year.
    (c) Annual contracts with coverage elections are to be submitted in 
time to be received at FSA by the close of business on the last day of 
the annual election period, established by the Deputy Administrator.
    (1) The applicable year of coverage for contracts received during an 
annual election period will be the following calendar year, except for 
2019, where the election and coverage year will be the same, or unless 
otherwise specified by the Deputy Administrator for Farm Programs. 
Coverage for dairy operations that register during the 2019 election 
period will be retroactive to January 1, 2019.

[[Page 688]]

    (2) Annual contracts with coverage elections submitted after the 
applicable allowed time for submission will not be considered.
    (d) If the dairy producer operates more than one separate and 
distinct operation, the producer must register each operation for each 
operation to be eligible for coverage. If the producer moves the same 
herd of cattle between two facilities, then the two facilities will not 
be regarded as separate and distinct but as one operation unless the 
Deputy Administrator determines otherwise. A separate operation must 
distinctly, as a single unit, have their own cattle, facilities, milk 
marketings, tanks, feed, records, State level licenses, and permits. All 
new dairy operations that did not participate in MPP-Dairy must meet all 
the requirements of this paragraph. A participating dairy operation in 
business prior to January 1, 2019, that participated in MPP-Dairy will 
automatically be determined as a ``dairy operation'' for DMC Program 
purposes in the same manner as under MPP-Dairy. In disputes regarding 
separate dairy operations the Deputy Administrator will determine what 
is a separate and distinct operation and that decision will be final. A 
dairy operation operated by more than one dairy producer will be treated 
as a single dairy operation for purposes of participating in DMC and may 
only, submit one contract. Only participating dairy operations enrolling 
using contract forms approved by CCC will be covered by the DMC Program.
    (e) A participating dairy operation must elect, during the 
applicable annual election period and by using the form prescribed by 
CCC, the coverage level threshold and coverage percentage for that 
participating dairy operation for the applicable calendar year:
    (1) Once the registration for a calendar year of coverage is 
submitted and approved by CCC, coverage for subsequent years does not 
automatically carry forward. For each calendar year, a dairy operation 
that decides to participate in DMC must register for a calendar year of 
coverage according to this paragraph (e) during the applicable coverage 
election period, except as described in paragraph (e)(2) of this 
section;
    (2) During the 2019 annual coverage election period only, 
participating dairy operations that make a one-time election of coverage 
level and percentage of coverage, according to Sec.1430.407(j), will 
be locked in at the same coverage level and percentage of coverage for a 
5-year period beginning January 1, 2019, and ending December 31, 2023. 
Dairy operations that elect the lock-in option are required to pay the 
annual administrative fee and submit an annual contract during the 
annual contract election period for each coverage year to certify that 
the dairy operation is still in the business of producing and 
commercially marketing milk. If the operation fails to pay the 
applicable administrative fees or certify the status of the dairy 
operation, the dairy operation will remain obligated for all applicable 
unpaid administrative and premium fees calculated for that 5-year 
period.
    (3) All participating producers in the participating dairy operation 
must agree to the coverage level threshold and coverage percentage 
elected by the operation on the contract. Producers in the participating 
dairy operation that elect not to participate may not submit a separate 
contract for coverage. All producers that share in risk of the dairy 
operations production must be indicated on the contract with their 
corresponding share in the dairy operation, however, a signature from 
the non-participating member will not be required for CCC approval.
    (f) By registering to participate or receive payment under DMC, all 
participating producers in the dairy operation must certify to the 
accuracy and truthfulness of the information in their applications and 
supporting documentation.
    (1) All participating producers who share in the risk of a dairy 
operation's production must sign and certify all submissions made under 
DMC that relate to the level of coverage and marketed production for the 
dairy operation.
    (2) All information provided is subject to verification by FSA. FSA 
may require a dairy operation to provide documentation that supports all

[[Page 689]]

verifiable records. Furnishing the information is voluntary; however, 
without such information DMC 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.
    (g) At the time the completed contract is submitted to FSA for the 
first program year in which the operation is to participate in DMC, the 
dairy operation must also submit a separate form, as prescribed by CCC, 
to establish the production history for the dairy operation. An 
established production history and a completed contract are both 
required to have a complete submission that is subject to approval by 
FSA. Production histories established for dairy operations under MPP-
Dairy will be used in the DMC Program. A new production history will 
only be established for new dairy operations that did not participate in 
MPP-Dairy.



Sec.1430.405  Establishment and transfer of production history for
a participating dairy operation.

    (a) Except as provided in paragraphs (b) and (c) of this section, 
FSA will establish the production history for a dairy operation for DMC 
as the highest annual milk marketings of the participating dairy 
operation during any one of the 2011, 2012, or 2013 calendar years.
    (1) Producers in the participating dairy operation are required to 
provide adequate proof of the dairy operation's quantity of milk 
commercially marketed, to establish the production history for the dairy 
operation.
    (2) All information provided is subject to verification, spot check, 
and audit by FSA. If the dairy operation does not provide, to the 
satisfaction of FSA, documentation requested to substantiate the 
production history of the highest annual milk marketings for the 
participating dairy operation, then the registration will not be 
approved.
    (b) A participating dairy operation that was not in operation prior 
to January 1, 2014, that has not established a production history will 
elect the highest annual milk marketings during any one calendar year 
while in operation to determine the production history of the 
participating dairy operation.
    (c) A participating dairy operation with less than one year of 
production history will be considered a new dairy operation. To 
establish the production history for such a new dairy operation the new 
dairy operation is required to elect one of the following methods:
    (1) The volume of the actual milk marketings for the months the 
dairy operation has been in operation, extrapolated to a yearly amount 
based on a national seasonally adjusted index, as determined by the 
Deputy Administrator, to account for differences in milk production 
during the year; or
    (2) An estimate of the actual milk marketings of the dairy operation 
based on the herd size of the dairy operation relative to the national 
rolling herd average data published by the Secretary.
    (d) If FSA determines that the new enterprise was formed for the 
purpose of circumventing DMC provisions, including, but not limited to, 
reconstituting a dairy operation to receive additional benefits, or 
establishing new production history, that enterprise will not be 
considered a new dairy operation for the purpose of establishing 
production history.
    (e) Once the production history of a participating dairy operation 
is established under paragraph (a), (b), or (c) of this section, the 
production history will be adjusted by a one-time upward adjustment by 
FSA to reflect any increase in the national average milk production 
relative to calendar year 2017, as determined by the Deputy 
Administrator. Dairy operations participating in DMC, that had 
production history previously established under MPP-Dairy but elected 
not to participate in MPP-Dairy are not eligible for the production 
history adjustment. Dairy operations with approved contracts for 2018 
coverage under MPP-Dairy will maintain that same production history, as 
in the DMC Program and are not eligible for the production history 
adjustment. New dairy operations that participate in DMC, that did not 
previously have their production history established nor participate in 
MPP-Dairy, will have the same adjustment factor of 1.0186 applied to

[[Page 690]]

their established production history for registration in the DMC Program 
as 2018 MPP-Dairy participants. There will be no further adjustments in 
subsequent years of participation made to the established production 
history under the DMC Program.
    (f) The production history must be transferred from one dairy 
facility to another as follows:
    (1) Producers of a dairy operation relocate the dairy operation to 
another location and the production history of the original operation 
must be transferred to the new location and subject to the same elected 
coverage levels for that year; or
    (2) Producers of a dairy operation transfer ownership of a dairy 
operation with its associated production history through a succession-
in-interest transfer when there is a spouse, child, heir, or common 
member that the dairy operation is being transferred to and there is no 
break in the continuity of the dairy operation. However, the successor 
operation must submit a separate registration according to Sec.
1430.404, to participate in DMC, but will be subject to the same elected 
coverage levels made by the predecessor for that coverage year or lock-
in period, as applicable.
    (g) If CCC waives the obligation, under DMC of a participating dairy 
operation due to death or retirement of the producer or of the permanent 
dissolution of the dairy operation or under other circumstances as 
determined by the Deputy Administrator, FSA may reestablish the 
production history.
    (h) The established production history of a participating dairy 
operation may be adjusted upward once during the term of the contract 
for an intergenerational transfer based on the purchase of additional 
cows by the new family member(s). The increase in the established 
production history of the participating dairy operation will be 
determined on the basis of the national rolling herd average data for 
the current year in effect at the time of the intergenerational transfer 
and the quantity of the production history increase will be limited to 
an amount not more than 5 million pounds. The additional quantity of 
production history will receive coverage at the same elected coverage 
threshold and coverage percentage in effect for the participating dairy 
operation at the time the production history increase takes effect. 
Intergenerational transfers will not be allowed if the participating 
dairy operation's current annual production and the increase in herd 
size by the new member(s) is less than the operation's established 
production history.
    (1) The dairy operation must notify FSA, using the appropriate CCC 
form(s), of the intergenerational transfer within 60 days of the 
purchase of the cows, except that for purchases made for 
intergenerational transfers occurring in 2019 before the 2019 annual 
coverage election period, the dairy operation must notify FSA during the 
registration and annual coverage election period for coverage year 2019, 
established by the Deputy Administrator. The operation has the option of 
the additional production history taking effect beginning with the month 
the producer first began to commercially produce and market milk as part 
of the dairy operation, or the following January 1. If the additional 
production history takes effect between January 1 and August 31, the 
premium is due September 1, as specified in Sec.1430.407(h)(2). If the 
additional production history takes effect between September 1 and 
December 31, the premium is due immediately.
    (2) All of the items specified in this paragraph must be documented 
in the notification to FSA and self-certified by the current and new 
member(s) for the intergenerational transfer to be considered eligible 
for additional production history. All of the following information is 
subject to verification by CCC. Refusal to allow CCC or any other agency 
of USDA to verify any information provided will result in disapproval of 
the intergenerational transfer.
    (i) Documentation that the new member(s) joining the operation has 
purchased the dairy cows being added to the dairy operation;
    (ii) Certification that each new member will have a share of the 
profits or losses from the dairy operation commensurate with such 
person's contributions to the dairy operation;

[[Page 691]]

    (iii) Certification that each new member has a significant equity 
ownership in the participating dairy operation at levels determined by 
the Deputy Administrator and announced on the FSA website, 
www.fsa.usda.gov;
    (iv) Certification that each new member is a lineal descendant or 
spouse of a current member of the participating dairy operation;
    (v) Agreement that each new member will contribute labor in the 
dairy operation at a minimum of 35 hours per week or have a plan for 
transition to full-time, subject to FSA county committee review and 
approval, if only working seasonally or part-time;
    (vi) Certification that the dairy operation will be the principal 
source of non-investment earned income for each new member; and
    (vii) Documentation of the participating dairy operation's current 
annual marketings as of the date of the intergenerational transfer.



Sec.1430.406  Administrative fees.

    (a) Except as provided in paragraph (e) of this section, dairy 
operations must pay an administrative fee to CCC in the amount of $100 
at the time of enrollment during the annual election period for each 
applicable coverage year the dairy operation decides to participate in 
DMC. Annual administrative fees are due and payable to CCC through the 
administrative county FSA office no later than the close of business on 
the last day of the annual election period established by the Deputy 
Administrator for each applicable calendar year of dairy margin coverage 
under DMC. The administrative fee paid is non-refundable.
    (b) The required annual administrative fee is per dairy operation. 
Therefore, multiple dairy producers in a single participating dairy 
operation are required to pay only one annual administrative fee for the 
participating dairy operation. Conversely, in the case of a dairy 
producer that operates more than one dairy operation, each participating 
dairy operation is required to pay a separate administrative fee 
annually.
    (c) Dairy operations that lock-in coverage according to Sec.
1430.407(j), are required to pay the administrative fee each year 
through 2023, except as provided in paragraph (e) in this section.
    (d) Failure to pay the administrative fee timely will result in loss 
of dairy margin coverage for the applicable calendar year.
    (e) A limited resource, beginning, veteran, or socially 
disadvantaged farmer or rancher, as defined in Sec.1430.402, will be 
exempt from paying the administrative fee in this section. The 
administrative fee waiver for the DMC Program for socially 
disadvantaged, beginning, and limited resource farmers and ranchers must 
be requested on a form specified by FSA and must accompany the contract 
application for coverage under this part in the administrative county 
FSA office.



Sec.1430.407  Buy-up coverage.

    (a) For purposes of receiving buy-up dairy margin coverage, a 
participating dairy operation may annually elect, except as provided by 
paragraph (i) of this section, during an annual election period the 
following for the succeeding calendar year:
    (1) A coverage level threshold for margins that, per cwt, is equal 
to one of the following: $4.50, $5, $5.50, $6, $6.50, $7, $7.50, $8, 
$8.50. $9, or $9.50; and
    (2) A percentage of coverage for the production history from 5 
percent to 95 percent, in 5 percent increments.
    (b) In the absence of any such election, the applicable coverage 
level provided, with no premium due, is catastrophic level coverage.
    (c) A participating dairy operation that elects margin protection 
coverage above $4 is required to pay an annual premium based on coverage 
level and covered production history in addition to the administrative 
fee. Tier 1 applies to covered production history up to and including 5 
million pounds; Tier 2 applies to covered production history above 5 
million pounds.
    (d) A participating dairy operation may only select one coverage 
level threshold and only one percentage of coverage applicable to both 
Tier 1 and Tier 2. However, a participating dairy operation that elects 
a coverage level threshold of $8.50, $9, or $9.50, according to 
paragraph (a)(1) of this section, on the dairy operation's first 5 
million pounds of production history under

[[Page 692]]

Tier 1, must choose a different coverage level threshold that is equal 
to $4, $4.50, $5, $5.50, $6, $6.50, $7, $7.50, $8 to apply to production 
history in excess of 5 million pounds included in the covered production 
under Tier 2 elected by the participating dairy operation.
    (e) The premium per cwt of milk, based on the elected percentage of 
coverage of production history is specified in the following table:

                      Table 1 to Sec. 1430.407(e)
------------------------------------------------------------------------
                                          Tier 1 premium  Tier 2 premium
                                           per cwt (for    per cwt (for
                                            the covered     the part of
                                            production        covered
         Coverage level (margin)           history that     production
                                           is 5 million   history over 5
                                             pounds or        million
                                               less)          pounds)
------------------------------------------------------------------------
$4.00...................................            None            None
4.50....................................         $0.0025         $0.0025
$5.00...................................           0.005           0.005
$5.50...................................           0.030           0.100
6.00....................................           0.050           0.310
6.50....................................           0.070           0.650
7.00....................................           0.080           1.107
7.50....................................           0.090           1.413
8.00....................................           0.100           1.813
8.50....................................           0.105             N/A
9.00....................................           0.110             N/A
9.50....................................           0.150             N/A
------------------------------------------------------------------------

    (f) The annual premium due for a participating dairy operation is 
calculated by multiplying:
    (1) The covered production history; and
    (2) The premium per cwt of milk specified in paragraph (e) of this 
section for the coverage level elected in paragraph (d) of this section 
by the dairy operation.
    (g) In the case of a new dairy operation that first registers to 
participate in DMC for a calendar year after the start of the calendar 
year, the participating dairy operation is required to pay a pro-rated 
premium for that calendar year based on the portion of the calendar year 
for which the participating dairy operation is eligible, and for which 
it purchases the coverage.
    (h) A participating dairy operation is required to pay the annual 
premium in total as specified in paragraphs (d) and (e) of this section 
for the applicable calendar year, at time of submission of coverage 
election to FSA; but no later than September 1 of the applicable 
calendar year of coverage, unless otherwise specified by the Deputy 
Administrator.
    (i) If the total premium is not paid for an applicable calendar year 
of coverage as specified in paragraph (g) of this section, the 
participating dairy operation will lose coverage until such time as the 
premium has been fully paid.
    (j) For each calendar year 2019 through 2023, a participating dairy 
operation that makes a one time election of a coverage level threshold 
and a percentage of coverage according to this section, for a 5-year 
period, will have their elected coverage level, as applicable to each 
tier, reduced by 25 percent. The option to lock in for the premium rate 
discount must be elected during the 2019 annual coverage election period 
announced by FSA. Except that, new dairy operations, not in existence 
during the 2019 annual election period, that elect to participate in DMC 
according to Sec.1430.404(b), are eligible to receive the premium rate 
discount for locking coverage for the period beginning with the first 
available calendar year and ending in 2023, except that new dairy 
operations registering for DMC for the first time for coverage year 2023 
and dairy operations that stop producing and marketing milk in 2019 that 
are registering for eligible months in 2019 are not eligible for the 
multi-year premium discount. All dairy operations that elect the lock-in 
option are subject to full participation in the DMC Program at the same 
elected premium coverage levels and calculated premium for the duration 
of DMC according to Sec.1430.413.
    (k) Annual premium balances due to CCC from a participating dairy 
operation for a calendar year of coverage must be paid in full no later 
than September 1 of the applicable calendar year or within a grace 
period determined by the Deputy Administrator, if applicable.
    (l) The Deputy Administrator may waive the obligation to pay the 
premium, or refund the premium paid, of a participating dairy operation 
for a calendar year, for death, retirement, permanent dissolution of a 
participating dairy operation, or other circumstances determined by the 
Deputy Administrator. In these instances, the

[[Page 693]]

contract will be terminated immediately, except with respect to payments 
accrued to the benefit of the participating dairy operation under this 
subpart before such termination.
    (m) DMC administrative fees and premiums are required to be paid by 
a negotiable instrument satisfactory to FSA and made payable to CCC and 
either mailed to or provided in person to the administrative county 
office or other location designated by FSA.



Sec.1430.408  MPP-Dairy premium repayments.

    (a) A dairy operation that participated in MPP-Dairy during any of 
calendar years 2014 through 2017 may receive a repayment in an amount 
equal to the difference between the total amount of premiums paid by the 
dairy operation for each applicable calendar year of coverage and the 
total amount of payments made to the MPP-Dairy participating dairy 
operation for that applicable calendar year.
    (b) FSA will determine the calculated repayment amounts for each 
year for each dairy operation that participated in MPP-Dairy during the 
years of 2014 through 2017.
    (1) Coverage years in which the payments exceeded premiums paid for 
that coverage year will yield a $0 calculation for that calendar year.
    (2) Dairy operations must provide adequate proof, to the 
satisfaction of FSA, for calculated repayment amounts in dispute.
    (c) Qualifying dairy operations according to paragraph (a) of this 
section, must elect on a form prescribed by CCC, to receive the 
repayment in either an amount that is equal to the following:
    (1) 75 percent of the calculated repayment as a credit that may be 
used by the dairy operation towards DMC premiums; or
    (2) 50 percent of the calculated repayment as a direct cash 
repayment.
    (d) Dairy operations may transfer their premium repayment election 
choice in paragraph (c) of this section to a dairy operation that 
succeeded to the dairy operation through a succession-in-interest 
transfer under MPP-Dairy. However, the dairy operation to which the 
election choice is being transferred to must be participating in the DMC 
Program if the credit option is elected according to paragraph (c)(1) of 
this section. Otherwise, their credit repayment election is not 
transferrable. Dairy operations that give up their right to elect a 
premium repayment option by designation of such on a form prescribed by 
CCC are not eligible to receive a cash or credit benefit, in full or 
partially, for premiums paid under MPP-Dairy.
    (e) A dairy operation that elects the credit option can only use the 
credit in the DMC Program. If the entire credit is not used, for any 
reason, it cannot be applied as a credit to any other USDA program and 
will have zero cash value that cannot be redeemed for any purpose.
    (f) A dairy operation that elects the cash repayment option will 
have the repayment issued only in the name of the dairy operation entity 
as it existed in MPP-Dairy.
    (g) A dairy operation must choose their MPP-Dairy premium repayment 
option on a form prescribed by CCC during a period specified by FSA. 
Once the premium repayment choice of credit or cash is made by the dairy 
operation and approved by FSA, that choice cannot be changed.



Sec.1430.409  Dairy margin coverage payments.

    (a) A DMC payment will be made to a participating dairy operation 
for any month when the average actual dairy production margin for that 
month falls below the coverage level threshold in effect for the 
participating dairy operation.
    (b) Payments trigger at the catastrophic level or at the buy-up 
level; the payments will be calculated according to this paragraph. If 
the dairy operation only has catastrophic coverage or buy-up coverage at 
95 percent, there will be a single calculation. If the dairy operation 
purchased buy-up coverage at less than 95 percent and the catastrophic 
level also triggers a payment, then there will be two calculations to 
determine the payment--first the calculation for the buy-up coverage 
percentage and then the calculation for the catastrophic level 
percentage, which is the balance of the established

[[Page 694]]

production history up to 95 percent; the result of these two 
calculations will be added together to determine the payment amount. 
Each calculation multiplies the payment rate times the coverage 
percentage times the production history divided by 12 as follows:
    (1) Payment rate. The amount by which the coverage level exceeds the 
average actual dairy production margin for a month;
    (2) Coverage percentage. The coverage percentage; and
    (3) Production history. The production history of the dairy 
operation, divided by 12.
    (c) If the dairy operation purchased buy-up level coverage at less 
than 95 percent of production history, then the dairy operation will 
receive a payment calculated at the buy-up level, plus the payment at 
the catastrophic level, if triggered, for the balance of 95 percent of 
its established production history. For example, if a producer purchased 
buy-up coverage at the 50 percent level, then that producer will also 
receive catastrophic level coverage for the next 45 percent for total 
coverage of 95 percent.



Sec.1430.410  Effect of failure to pay administrative fees or 
premiums.

    (a) A participating dairy operation that fails to pay a required 
administrative fee or premium payment due upon application to DMC or for 
a calendar year of coverage:
    (1) Remains legally obligated to pay such administrative fee or 
premium, as applicable; and
    (2) Upon such failure to pay when due, loses coverage under DMC 
until such administrative fee or premium is paid in full, and once paid, 
coverage will be reinstated beginning with the month coverage was lost.
    (b) CCC may take such actions as necessary to collect unpaid 
administrative fees and premium payments.



Sec.1430.411  Calculation of average feed cost and actual dairy 
production margins.

    (a) Payments are made to a participating dairy operation as 
specified in this subpart only when the calculated average actual dairy 
production margin for a month is below the coverage level in effect for 
the participating dairy operation. That margin will be calculated on a 
national basis and is the amount by which for the relevant month, the 
all milk price exceeds the average feed cost for dairy producers. The 
average actual dairy production margin calculation applies to all 
participating dairy operations. The calculations are not made on an 
operation by operation basis or on their marketings.
    (b) For calculating the national average feed cost that dairy 
operations use to produce a cwt of milk, the following three items will 
be added together:
    (1) The product determined by multiplying 1.0728 by the price of 
corn per bushel;
    (2) The product determined by multiplying 0.00735 by the price of 
soybean meal per ton; and
    (3) The product determined by multiplying 0.0137 by the price of 
alfalfa hay per ton.
    (c) To make those feed calculations, the Deputy Administrator on 
behalf of CCC will use the following full month data:
    (1) For corn, the full month price received by farmers during the 
month in the United States as reported in the monthly Agricultural 
Prices report by USDA NASS;
    (2) For soybean meal, the Central Illinois soybean meal price 
delivered by rail as reported in the USDA AMS Market News-Monthly; and
    (3) For alfalfa hay, the average of the full month price received 
during the month by farmers in the United States for high-quality 
(premium and supreme) alfalfa hay and the alfalfa hay price (which was 
used to calculate the MPP hay price) for the same month as reported in 
the monthly Agricultural Prices report by USDA NASS will be used to 
calculate the hay price.
    (d) The national average feed cost data for corn, soybean meal, and 
alfalfa hay used in the calculation of the national average feed cost to 
determine the actual dairy production margin for the relevant period, 
will be the data reported in the publication the following month. (For 
example, full month May prices will be available in the June 
publication, and those will be the prices used).

[[Page 695]]

    (e) The actual dairy production margin for each month, will be 
calculated by subtracting:
    (1) The average feed cost for that month, determined under paragraph 
(b) of this section; from
    (2) The all-milk price for that same month.



Sec.1430.412  Relation to RMA's LGM-Dairy Program.

    (a) Dairy producers that produced and commercially marketed milk in 
2018 and participated in the LGM-Dairy Program operated by RMA in 2018 
are eligible to receive retroactive 2018 coverage under MPP-Dairy for 
those months in operation. Approved participation for retroactive MPP-
Dairy coverage is subject to verification of LGM-Dairy coverage in 2018 
by RMA.
    (b) Eligible dairy producers must apply for the retroactive 2018 
MPP-Dairy coverage on a CCC-prescribed application form during a signup 
period announced by the Deputy Administrator.
    (c) Eligible producers that received partial year benefits under 
MPP-Dairy are eligible for the full year, less any payments issued for a 
month that triggered a payment under MPP-Dairy in 2018.



Sec.1430.413  Multi-year contract for lock-in option.

    (a) Participating dairy operations enrolled in DMC according to 
Sec.1430.407(j) are registered through December 31, 2023. As such, a 
participating dairy operation is obligated to pay applicable 
administrative fees and applicable premiums each succeeding calendar 
year following the date the contract is first entered into through 
December 31, 2023. Likewise, any successor to the dairy operation with 
lock-in coverage will be bound to the same coverage elections made by 
the predecessor and applicable premiums for the duration of the lock-in 
period.
    (b) A participating dairy operation under a lock-in option that 
fails to pay applicable administrative fees and premiums for each year 
of the lock-in will remain obligated to pay such applicable 
administrative fees and premiums as specified in Sec.1430.410.
    (c) If a participating dairy operation goes out of business as 
described in Sec.1430.407(l) before December 31, 2023, the contract 
will be terminated immediately, except with respect to payments accrued 
to the benefit of the participating dairy operation under this subpart 
before such termination.



Sec.1430.414  Contract modifications.

    (a) Producers in a participating dairy operation must notify FSA 
immediately of any changes that may affect their participation in DMC. 
Changes include, but are not limited to, death of a producer who is on 
the contract, producer joining the operation, producer exiting the 
operation, relocation of the dairy operation, transfer of shares by sale 
or other transfer action, or dairy operation reconstitutions as provided 
in Sec.1430.415.
    (b) Payment of any outstanding premium or administrative fee for a 
participating dairy operation must be paid in full before a transfer of 
shares by sale or any other change in producers on the contract 
originally submitted to FSA may take effect. Otherwise, producer changes 
will not be recognized until the following annual election period, and 
only if at that time all associated premiums and administrative fees 
from any previous calendar year of coverage have been paid in full.



Sec.1430.415  Reconstitutions.

    (a) Any participating dairy operation that reorganizes or 
restructures after enrollment is subject to a review by FSA to determine 
if the operation was reorganized or restructured for the sole purpose of 
establishing an alternative production history for a participating dairy 
operation or was reorganized or restructured to otherwise circumvent any 
DMC Program provision under this subpart (including the tier system for 
premiums) or otherwise to prevent the accomplishment of the purpose of 
the DMC Program.
    (b) A participating dairy operation that FSA determines has 
reorganized solely to establish a new production history or to 
circumvent the determination of applicable fees or premiums based on an 
established production history determined under this subpart will be 
considered to have failed

[[Page 696]]

to meet the DMC Program requirements and, in addition to other sanctions 
or penalties that may apply, will not be eligible for DMC payments.
    (c) Under no circumstance, except as approved by the Deputy 
Administrator or provided for in these regulations, will the 
reconstitution or restructure of a participating dairy operation change 
the determined production history for the operation. The Deputy 
Administrator may, however, adjust the production history of a 
participating dairy operation if there is a calculation error or if 
erroneous information has been supplied by or on behalf of the 
participating dairy operation.



Sec.1430.416  Offsets and withholdings.

    FSA may offset or withhold any amount due to FSA or CCC under this 
subpart under the provisions of part 1403 of this chapter or any 
successor regulations, or any other authorities that may allow for 
collection action of that sort.



Sec.1430.417  Assignments.

    Any producer may assign a payment to be made under this subpart in 
accordance with part 1404 of this chapter or successor regulations as 
designated by the Secretary or as allowed by the Deputy Administrator in 
writing.



Sec.1430.418  Appeals.

    Any producer who is dissatisfied with a determination made pursuant 
to this subpart may request reconsideration or appeal of such 
determination under part 11 or 780 of this title.



Sec.1430.419  Misrepresentation and scheme or device.

    (a) In addition to other penalties, sanctions or remedies as may 
apply, all or any part of a payment otherwise due a person or legal 
entity on all participating dairy operations in which the person or 
legal entity has an interest may be withheld or be required to be 
refunded if the person or legal entity fails to comply with the 
provisions of this subpart or adopts or participates in adopting a 
scheme or device designed to evade this subpart, or that has the effect 
of evading this part. Such acts may include, but are not limited to:
    (1) Concealing information that affects a registration or coverage 
election;
    (2) Submitting false or erroneous information; or
    (3) Creating a business arrangement using rental agreements or other 
arrangements to conceal the interest of a person or legal entity in a 
dairy operation for the purpose of obtaining DMC payments the individual 
or legal entity would otherwise not be eligible to receive. Indicators 
of such business arrangement include, but are not limited to the 
following:
    (i) No milk is produced and commercially marketed by a participating 
dairy operation;
    (ii) The participating dairy operation has no appreciable assets;
    (iii) The only source of capital for the dairy operation is the DMC 
payments; or
    (iv) The represented dairy operation exists mainly for the receipt 
of DMC payments.
    (b) If the Deputy Administrator determines that a person or legal 
entity has adopted a scheme or device to evade, or that has the purpose 
of evading, the provisions of this subpart, such person or legal entity 
will be ineligible to receive DMC payments in the year such scheme or 
device was adopted and the succeeding year.
    (c) A person or legal entity that perpetuates a fraud, commits 
fraud, or participates in equally serious actions for the benefit of the 
person or legal entity, or the benefit of any other person or legal 
entity, in violation of the requirements of this subpart will be subject 
to a 5-year denial of all DMC Program benefits. Such other equally 
serious actions may include, but are not limited to:
    (1) Knowingly engaging in, or aiding in the creation of a fraudulent 
document or statement;
    (2) Failing to disclose material information relevant to the 
administration of the provisions of this subpart, or
    (3) Engaging in any other actions of a person or legal entity 
determined by the Deputy Administrator to be designed, or intended to, 
circumvent the provisions of this subpart.
    (d) Program payments and benefits will be denied on pro-rata basis:

[[Page 697]]

    (1) In accordance with the interest held by the person or legal 
entity in any other legal entity or joint operations; and
    (2) To any person or legal entity that is a cash rent tenant on land 
owned or under control of a person or legal entity for which a 
determination of this section has been made.



Sec.1430.420  Estates, trusts, and minors.

    (a) DMC Program documents executed by producers legally authorized 
to represent estates or trusts will be accepted only if such producers 
furnish evidence of the authority to execute such documents.
    (b) A minor who is otherwise eligible for benefits under this 
subpart is also required to:
    (1) Establish that the right of majority has been conferred on the 
minor by court proceedings or by law;
    (2) Show that a guardian has been appointed to manage the minor's 
property and the applicable DMC Program documents are executed by the 
guardian; or
    (3) Furnish a bond under which the surety guarantees any loss 
incurred for which the minor would be liable had the minor been an 
adult.



Sec.1430.421  Death, incompetency, or disappearance.

    In the case of death, incompetency, disappearance, or dissolution of 
a producer that is eligible to receive benefits under this subpart, such 
persons as are specified in part 707 of this title may receive such 
benefits, as determined appropriate by FSA.



Sec.1430.422  Maintenance and inspection of records.

    (a) Participating dairy operations are required to maintain accurate 
records and accounts that will document that they meet all eligibility 
requirements specified in this subpart, as may be requested by CCC or 
FSA. Such records and accounts are required to be retained for 3 years 
after the date of DMC payments to the participating dairy operation. 
Destruction of the records 3 years after the date of payment will be at 
the risk of the party undertaking the destruction.
    (b) A participating dairy operation is required to allow authorized 
representatives of CCC, the Secretary, or the Comptroller General of the 
United States to have access to the premises of the dairy operation in 
order to inspect the herd of cattle, examine, and make copies of the 
books, records, and accounts, and other written data as specified in 
paragraph (a) of this section.
    (c) Any producer or dairy operation that does not comply with the 
provisions of paragraph (a) or (b) of this section, or that otherwise 
receives a payment for which it is not eligible, is liable for that 
payment and is required to repay it to FSA, with interest to run from 
the date of disbursement.



Sec.1430.423  Refunds; joint and several liability.

    (a) Any legal entity, including joint operations, joint ventures and 
partnerships, and any member of a legal entity determined to have 
knowingly participated in a scheme or device, or other such equally 
serious actions to evade, or that has the purpose of evading the 
provisions of this part, will be jointly and severally liable for any 
amounts determined to be payable as the result of the scheme or device, 
or other such equally serious actions, including amounts necessary to 
recover the payments.
    (b) Any person or legal entity that cooperates in the enforcement of 
the provisions of this part may be partially or fully released from 
liability, as determined by the Executive Vice President, CCC.
    (c) The provisions of this section will be applicable in addition to 
any liability that arises under a criminal or civil law, regulation, or 
other provision of law.



Sec.1430.424  Violations of highly erodible and wetland conservation
provisions.

    The provisions of 7 CFR part 12 apply to this part.



Sec.1430.425  Violations regarding controlled substances.

    The provisions of 7 CFR 718.6 apply to this part.

[[Page 698]]



PART 1434_NONRECOURSE MARKETING ASSISTANCE LOANS AND LOAN DEFICIENCY
PAYMENTS FOR HONEY--Table of Contents



Sec.
1434.1 Applicability.
1434.2 Administration.
1434.3 Definitions.
1434.4 Eligible producer.
1434.5 Eligible honey.
1434.6 Beneficial interest.
1434.7 Approved storage.
1434.8 Containers and drums.
1434.9 Determination of quantity.
1434.10 Application, availability, disbursement, and maturity.
1434.11 Fees and interest.
1434.12 Liens.
1434.13 Transfer of producer's interest prohibited.
1434.14 Loss or damage.
1434.15 Personal liability..
1434.16 Release of the honey pledged as collateral for a MAL.
1434.17 Liquidation of loans.
1434.18 Loan repayments.
1434.19 Settlement.
1434.20 Foreclosure.
1434.21 Loan deficiency payments.
1434.22 Death, incompetency, or disappearance; appeals; other loan 
          provisions.

    Authority: 7 U.S.C. 7231-7237, 7931-7936, and 9031-40; and 15 U.S.C. 
714b and c.

    Source: 66 FR 15177, Mar. 15, 2001, unless otherwise noted.



Sec.1434.1  Applicability.

    (a) This part specifies the terms and conditions of Commodity Credit 
Corporation (CCC) nonrecourse marketing assistance loan (MAL) and loan 
deficiency payment (LDP) Programs for honey. MAL gains and LDPs for 
honey are limited by the payment limitation and adjusted gross income 
provisions specified in part 1400 of this chapter.
    (b) Producers must comply with all provisions of this part and part 
1421 of this chapter.

[74 FR 15656, Apr. 7, 2009, as amended at 80 FR 139, Jan. 2, 2015]



Sec.1434.2  Administration.

    (a) The regulations of this part will be administered under the 
general supervision of the Executive Vice President, CCC, and are 
carried out in the field by Farm Service Agency (FSA) State and county 
committees.
    (b) State and county committees, representatives and employees 
thereof, do not have the authority to modify or waive any of the 
provisions of the regulations of this part.
    (c) The State committee 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 a county committee to correct, any action 
taken by such county committee that is not in accordance with the 
regulations of this part; or
    (2) Require a county committee to withhold taking any action that is 
not in accordance with the regulations of this part.
    (d) No provision or delegation herein to a State or county committee 
will preclude the Executive Vice President, CCC, or a designee, from 
determining any question arising under the program or from reversing or 
modifying any determination made by a State or county committee.
    (e) The Deputy Administrator for Farm Programs, FSA, may authorize 
State and county committees to waive or modify deadlines and other 
program requirements in cases where timeliness or failure to meet such 
other requirements does not affect adversely the operation of the 
program.
    (f) An approving official of CCC may execute loans and related 
documents only under the terms and conditions determined and announced 
by CCC. Any such document that is not executed in accordance with such 
terms and conditions, including any purported execution before the date 
authorized by CCC, will be null and void unless affirmed by the 
Executive Vice President, CCC.

[66 FR 15177, Mar. 15, 2001, as amended at 80 FR 139, 141, Jan. 2, 2015]



Sec.1434.3  Definitions.

    The definitions in this section are applicable for all purposes of 
program administration. The terms defined in part 718 of this title are 
also applicable except where those definitions are inconsistent with the 
definitions in this section or for purpose of program instruments 
created under this part.

[[Page 699]]

    Approving official is a representative of CCC who is authorized by 
the Executive Vice President, CCC, to approve loan documents prepared 
under this part.
    Calling a loan is accelerating or moving forward the maturity date 
of an outstanding MAL. A MAL can be called when the terms and conditions 
of the MAL note and security agreement are violated, a producer 
incorrectly certifies a loan quantity or makes any fraudulent 
representation with respect to obtaining a loan, removing or disposing 
of a farm-stored commodity pledged as collateral for a loan without 
authorization, to protect CCC's interest, or in emergency situations.
    Charge is a fee, cost, and expense (including foreclosure costs) 
incident to insuring, carrying, handling, storing, conditioning, and 
marketing the honey and otherwise protecting the honey.
    CMA is a cooperative marketing association engaged in marketing 
honey.
    County office is the local FSA office.
    Crop year is the calendar year in which honey is extracted.
    Ineligible honey is honey not eligible for a MAL under this part for 
which ineligibility will include, but is not limited to, honey from 
ineligible floral sources regardless of whether the honey meets other 
eligibility requirements.
    Intermediate Bulk Container (IBC) is a bulk container with a 
polyethylene inner bottle with a galvanized steel protective cage with a 
275 and 330 gallon capacity and is reusable.
    Loan is a nonrecourse marketing assistance loan on honey.
    Loan deficiency payment (LDP) means a payment made in lieu of a MAL 
when the CCC-determined value, which is based on the current local price 
in a county, is below the applicable county loan rate. The payment is 
the difference between the two rates times the eligible quantity.
    Nontable honey is honey having a predominant flavor of limited 
acceptability for table use even though such honey may be considered 
suitable for table use.
    Person is an individual, partnership, association, corporation, 
estate or trust, or other business enterprise or other legal entity and, 
whenever applicable a State, political subdivision of a State, or any 
agency thereof.
    Table honey is any honey having a good flavor of the predominant 
floral source which can be readily marketed for table use.
    Representative is a receiver, executor, administrator, guardian, or 
trustee representing the interests of a person or an estate.

[66 FR 15177, Mar. 15, 2001, as amended at 80 FR 139, Jan. 2, 2015]



Sec.1434.4  Eligible producer.

    (a) To be eligible to receive an individual or joint loan or LDP 
under this part, a person must:
    (1) Have produced honey in the United States during the calendar 
year for which a loan is requested and extracted on or before December 
31 of such calendar year;
    (2) Be responsible for the risk of keeping the bees and producing 
honey;
    (3) Have a continuous beneficial interest in the honey from the time 
the honey was extracted through date of repayment of the loan;
    (4) Store the honey pledged as loan collateral in eligible storage 
and in eligible containers that meet the requirements of Sec.1434.7 
and Sec.1434.8, respectively; and
    (5) Adequately protect the interests of CCC by providing security 
for a loan in accordance with the requirements in Sec.1434.8 and by 
maintaining in good condition the honey pledged as security for a loan.
    (b) A person who complies with paragraph (a) of this section, who 
enters into a contract to sell the honey used as collateral for a loan 
but retains a beneficial interest in the honey and who does not receive 
an advance payment from the purchaser to enter into the contract unless 
the purchaser is a cooperative marketing association (CMA) that is 
eligible under paragraph (g) of this section, remains eligible for a 
loan.
    (c) Two or more applicants may be eligible for a joint loan if:
    (1) The conditions in paragraphs (a) and (b) of this section are met 
with respect to the commingled honey collateral stored in the same 
eligible containers they are tendering for a loan; and

[[Page 700]]

    (2) The commingled honey is not used as collateral for an individual 
loan that has not been repaid.
    (d) Heirs who succeed to a beneficial interest in the honey are 
eligible for a loan if they:
    (1) Assume the decedent's obligation under a loan if such loan has 
already been obtained; and
    (2) Assure continued safe storage of the honey if such honey has 
been pledged as collateral for a loan.
    (e) A representative may be eligible to receive a loan on behalf of 
a person or estate who or which meets the requirements in paragraphs 
(a), (b), (c), and (d) of this section and that the honey tendered as 
collateral by the representative, in the capacity of a representative, 
will be considered as tendered by the person or estate being 
represented.
    (f) A minor who otherwise meets the requirements of this part for a 
loan is eligible to receive a loan only if the minor meets one of the 
following requirements:
    (1) A court or statute has conferred the right of majority on the 
minor;
    (2) A guardian has been appointed to manage the minor's property and 
the applicable loan documents are signed by the guardian;
    (3) Any note signed by the minor is cosigned by a person determined 
by the county committee to be financially responsible; or
    (4) A surety, by furnishing a bond, guarantees to protect CCC from 
any loss incurred for which the minor would be liable had the minor been 
an adult.
    (g) A CMA that the Executive Vice President, CCC, determines meets 
the requirements for CMA's in part 1425 of this title may be eligible to 
obtain a loan on behalf of those members who themselves are eligible to 
obtain a loan provided that:
    (1) The beneficial interest in the honey must always, until loan 
repayment or forfeiture, remain in the member who delivered the honey to 
the eligible CMA or its member CMA's, except as otherwise provided in 
this part; and
    (2) The honey delivered to an eligible CMA will not be eligible for 
a loan if the member who delivered the honey does not retain the right 
to share in the proceeds from the marketing of the honey as provided in 
part 1425 of this title.

[66 FR 15177, Mar. 15, 2001, as amended at 80 FR 139, 141, Jan. 2, 2015]



Sec.1434.5  Eligible honey.

    To be eligible for a loan, the honey must:
    (a) Have been produced by an eligible producer;
    (b) Have been produced in the United States during the calendar year 
for which a loan is requested and extracted on or before December 31 of 
such calendar year;
    (c) Be of merchantable quality deemed by CCC to be suitable for 
loan; that is, the honey:
    (1) Is not adulterated;
    (2) Has not been scorched, burned, or subjected to excessive heat 
resulting in objectionable flavor, color deterioration or carmelization;
    (3) Does not contain any ineligible honey floral sources; such as 
andromeda, bitterweed, broomweed, cajeput (melaleuca), carrot, 
chinquapin, dog fennel, desert hollyhock, gumweed, mescal, onion, 
prickly pear, prune, queen's delight, rabbit brush, snowbrush 
(ceanothus), snow-on-the-mountain, spurge (leafy spurge), tarweed, and 
similar objectionably-flavored honey or blends of honey as determined by 
the Director, Price Support Division, FSA. If any blends of honey 
contain such ineligible honey, the lot as a whole will be considered 
ineligible for loan;
    (4) Does not contain excessive bees or bee parts, paint chips, wood 
chips, or other foreign matter; and
    (5) Is not fermenting; and
    (d) Be stored in acceptable containers.

[66 FR 15177, Mar. 15, 2001, as amended at 80 FR 141, Jan. 2, 2015]



Sec.1434.6  Beneficial interest.

    (a) To be eligible to receive MALs under this part a producer must 
have the beneficial interest in the honey that is tendered to CCC for a 
loan. The producer must always have had the beneficial interest in the 
honey unless, before the honey was extracted, the

[[Page 701]]

producer and a former producer whom the producer tendering the honey to 
CCC has succeeded had such an interest in the honey. Honey obtained by 
gift or purchase shall not be eligible to be tendered to CCC for loans. 
Heirs who succeed to the beneficial interest of a deceased producer or 
who assume the decedent's obligations under an existing loan shall be 
eligible to receive loans whether succession to the honey occurs before 
or after extraction so long as the heir otherwise complies with the 
provisions of this part.
    (b) A producer is not be considered to have divested the beneficial 
interest in the honey if the producer retains title and control of the 
honey including the right to make all decisions regarding the tender of 
such honey to CCC for a loan, and the producer:
    (1) Executes an option to purchase, whether or not a payment is made 
by the potential buyer for such option to purchase, with respect to such 
honey if all other eligibility requirements are met and the option to 
purchase contains the following provision:

    ``Notwithstanding any other provision of this option to purchase or 
any other contract, title and control of the honey and beneficial 
interest in the honey, as specified in 7 CFR 1434.6, must remain with 
the producer until the buyer exercises this option to purchase the 
honey. This option to purchase will expire, notwithstanding any action 
or inaction by either the producer or the buyer, at the earlier of:
    (1) The maturity of any Commodity Credit Corporation (CCC) loan 
which is secured by such honey;
    (2) The date the CCC claims title to such honey; or
    (3) Such other date as provided in this option.''

    (2) Enters into a contract to sell the honey if the producer retains 
title, and beneficial interest in the honey and the purchaser does not 
pay to the producer any advance payment amount or any incentive payment 
amount to enter into such contract except as provided in part 1425 of 
this chapter.
    (c) If loans are made available to producers through an approved CMA 
in accordance with part 1425 of this chapter, the beneficial interest in 
the honey must always have been in the producer-member who delivered the 
honey to the CMA or its member CMA's, except as otherwise provided in 
this section. Honey delivered to such a CMA is not be eligible for loans 
if the producer-member who delivered the honey does not retain the right 
to share in the proceeds from the marketing of the honey as provided in 
part 1425 of this chapter.
    (d) A producer may, before the final date for obtaining a loan for 
honey, re-offer as loan honey any honey that has been previously pledged 
if the loan was repaid with principal plus interest, the loan on such 
re-offered honey will have the same maturity date as the original loan.

[66 FR 15177, Mar. 15, 2001, as amended at 67 FR 64480, Oct. 18, 2002; 
74 FR 15656, Apr. 7, 2009; 80 FR 139, 141, Jan. 2, 2015]



Sec.1434.7  Approved storage.

    (a) Loans will be made only on honey in approved storage, which will 
consist of a storage structure located on or off the farm that is 
determined by CCC to be under the control of the producer and affords 
safe storage for honey pledged as collateral for a loan. If the honey 
located in a farm storage structure is pledged as collateral that 
secures more than one loan, the honey must be segregated so as to 
preserve the identity of the honey securing such loan. Honey securing a 
loan must also be segregated from any honey not pledged as collateral 
for a loan that is stored in the same structure.
    (b) Producers may also obtain loans on honey packed in eligible 
containers and stored in facilities owned by third parties in which the 
honey of more than one person is stored if the honey that is to be 
pledged as collateral for a loan and that is stored identity preserved 
or is segregated from all other honey. Each container of the segregated 
quantity of honey must be marked with the producer's name, loan number, 
and lot number so as to identify the honey from other honey stored in 
the structure.

[66 FR 15177, Mar. 15, 2001, as amended at 80 FR 139, 141, Jan. 2, 2015]



Sec.1434.8  Containers and drums.

    (a)(1) To be eligible for assistance under this part, honey must be 
packed in:

[[Page 702]]

    (i) CCC-approved, 5-gallon plastic containers;
    (ii) 5-gallon metal containers;
    (iii) Steel drums with a capacity not less than 5 gallons nor 
greater than 70 gallons, or
    (iv) Plastic Intermediate Bulk Containers (IBC's).
    (2) Honey stored in plastic containers must be determined safe and 
secure from all possibility of contamination.
    (3) Honey storage containers used for these purposes must meet 
requirements of the Federal Food, Drug and Cosmetic Act, as amended and 
other specified requirements, as determined by CCC and must be generally 
fit for the purpose for which they are to be used.
    (4) CCC-approved 5-gallon plastic containers must hold approximately 
60 pounds of honey. The containers must be free and clear of leakage and 
punctures and of suitable purity for food contact use and meet food 
storage standards as provided by CCC. Plastic containers must be new or 
previously used only to store honey. Plastic containers previously used 
to store chemicals, pesticides, or any other product or substance other 
than honey are ineligible for honey storage. The handle of each 
container must be firm and strong enough to permit carrying the filled 
container. The cover opening must not be damaged in any way that will 
prevent a tight seal. Containers that have been punctured and resealed 
will not be acceptable;
    (5) The 5-gallon metal containers must hold approximately 60 pounds 
of honey, and must be new, clean, sound, uncased, and free from 
appreciable dents and rusts. The handle of each container must be firm 
and strong enough to permit carrying the filled container. The cover and 
container opening must not be damaged in any way that will prevent a 
tight seal. Containers that are punctured or have been punctured and 
resealed by soldering will not be acceptable; and
    (6) The steel drums must be an open type and filled no closer than 2 
inches from the top of the drums. Drums must be new or must be used 
drums that have been reconditioned inside and outside. Drums must be 
clean, treated inside and outside to prevent rusting, fitted with 
gaskets that provide a tight seal and have an inside coating suitable 
for honey storage.
    (7) IBC's are bulk containers with a polyethylene inner bottle and a 
galvanized steel protective cage, a capacity of either 275 or 330 
gallons, and are reusable. IBC's must be clean, sound and provide a 
tight seal.
    (b) Honey is not be eligible to be pledged as collateral for loans 
if such honey is stored in:
    (1) 55-gallon steel drums having a tare weight less than 38 pounds, 
30-gallon steel drums having a tare weight less than 26 pounds, or drums 
having removable liners of polyethylene or other materials;
    (2) Bung-type drums;
    (3) Bulk tanks;
    (4) Containers that do not meet the specified requirements of 
paragraph (a) of this section or other CCC specifications or 
requirements.
    (5) Steel drums that are severely enough dented as to cause damage 
to their lining, improper seal, or stacking capabilities; and
    (6) Rusted drums with corroded areas.

[66 FR 15177, Mar. 15, 2001, as amended at 69 FR 52169, Aug. 25, 2004; 
80 FR 139, Jan. 2, 2015]



Sec.1434.9  Determination of quantity.

    The amount of a marketing assistance loan or loan deficiency payment 
will be based on 100 percent of the net weight in pounds of such 
quantity that is eligible to be pledged as security for the MAL or LDP 
and is certified by the producer and verified by the county office 
representative in the manner prescribed by CCC. Estimates of the 
quantity of honey will be made on the basis of 12 pounds for each gallon 
of the rated capacity of the container.

[80 FR 140, Jan. 2, 2015]



Sec.1434.10  Application, availability, disbursement, and maturity.

    (a) A producer must, unless otherwise authorized by CCC, request 
MALs and LDPs at the appropriate FSA county office responsible for 
administering the program as provided under part 718 of this title. To 
receive MALs and LDPs for honey, a producer must execute a note and 
security agreement or LDP

[[Page 703]]

application on or before March 31 of the year following the year in 
which the honey was extracted.
    (b) A producer must request a loan at the county office of the 
county where the honey is stored if the honey is stored at the 
producer's farm. A producer who requests a loan on honey stored in 
eligible storage other than the producer's farm, may request loans at 
either the county office of the county where the storage facility is 
located or at the county office of the county where the producer's main 
place of business is located. A CMA must request loans at the county 
office for the county in which the principal office of the CMA is 
located unless the State committee designates another county office. If 
the CMA has operations in two or more States, the CMA must file its loan 
applications at the county office for the county in which its principal 
office for each State is located.
    (c) MALs will be made on the honey as declared and certified by the 
producer in the manner specified by CCC at the time the honey is pledged 
as collateral for a MAL. The producer is also required to declare and 
certify the class of honey (table or non-table) and floral source of the 
honey in the manner specified by CCC when the honey is pledged as 
collateral for a MAL.
    (d) The request for a loan will not be approved until all producers 
having an interest in the honey sign the note and security agreement and 
CCC approves such note and security agreement. The disbursement of loans 
will be made by county offices on behalf of CCC, for honey that:
    (1) Has been extracted;
    (2) Is in eligible storage; and
    (3) Has not been blended or mixed with ineligible honey.
    (e) MALs mature on demand, but not later than the last day of the 
ninth calendar month following the month in which the note and security 
agreement was approved.
    (1) When the maturity date falls on a non-workday for county 
offices, CCC will extend the final date to the next workday. Before the 
date specified in paragraph (a) of this section, a producer may re-offer 
as MAL collateral any eligible honey that has been offered previously 
for a MAL if the previous MAL has been repaid at principal plus interest 
only.
    (2) The maturity date of any MAL may not be extended.
    (f) If, after a loan is made, CCC determines that the producer or 
the honey collateral is not in compliance with any of the provisions of 
this part, the producer must refund the total amount disbursed under 
loan and charges plus interest, including late payment interest as 
provided in part 1403 of this title.

[66 FR 15177, Mar. 15, 2001, as amended at 67 FR 64481, Oct. 18, 2002; 
80 FR 140, 141, Jan. 2, 2015]



Sec.1434.11  Fees and interest.

    (a) A producer must pay a nonrefundable MAL service fee. The MAL 
service fee will be the smaller of one-half of 1 percent (.005) times 
the gross MAL amount or $45 per MAL plus $3 for each storage structure 
over one.
    (b) Interest that accrues with respect to a loan wil be determined 
in accordance with part 1405 of this chapter.

[66 FR 15177, Mar. 15, 2001, as amended at 80 FR 140, 141, Jan. 2, 2015]



Sec.1434.12  Liens.

    (a) CCC's security interest in the honey pledged as collateral is 
first and superior to all other security interests.
    (b) The county office will file or record, as required by State law, 
all financing statements needed to perfect a security interest in honey 
pledged as collateral for a loan. The cost of filing and recording will 
be for the account of CCC.
    (c) If there are any other security interests, liens, or 
encumbrances on the honey, CCC will obtain waivers that fully protect 
the interest of CCC even though the security interests, liens, or 
encumbrances are satisfied from the loan proceeds. No additional 
security interests, liens, or encumbrances will be placed on the honey 
after the loan is approved.

[66 FR 15177, Mar. 15, 2001, as amended at 80 FR 141, Jan. 2, 2015]



Sec.1434.13  Transfer of producer's interest prohibited.

    Absent written approval from CCC, the producer may not transfer 
either the remaining interest in, or right to

[[Page 704]]

redeem, the honey pledged as collateral for a MAL on honey nor may 
anyone acquire such interest or right. Subject to the provisions of 
Sec.1434.17, a producer who wishes to liquidate all or part of a MAL 
by contracting for the sale of the honey must obtain written approval 
from the county office on a form prescribed by CCC to remove a specified 
quantity of the honey from storage. Any such approval will be subject to 
the terms and conditions in the applicable form, copies of which may be 
obtained by producers at the FSA county office.

[80 FR 140, Jan. 2, 2015]



Sec.1434.14  Loss or damage.

    The producer is responsible for any loss in quantity or quality of 
the honey pledged as collateral for a loan. CCC will not assume any loss 
in quantity or quality of the loan collateral.

[66 FR 15177, Mar. 15, 2001, as amended at 80 FR 141, Jan. 2, 2015]



Sec.1434.15  Personal liability..

    (a) As part of the application for an individual or joint MAL or 
LDP, each producer agrees that:
    (1) By signing the MAL note and security agreement, the producer 
must:
    (i) Provide correct, accurate, and truthful certifications and 
representations of the loan quantity and all other matters of fact and 
interest; and
    (ii) Not remove or dispose of any amount of the loan quantity 
without prior written approval from CCC in accordance with this section.
    (2) That violation of the terms and conditions of this part and the 
MAL note and security agreement will cause harm or damage to CCC in that 
funds may be disbursed to the producer for a MAL quantity that is not 
actually in existence or for a quantity for which the producer is not 
eligible.
    (b) For the purposes of this section, violations include any failure 
to comply with this part or the loan agreement, including but not 
limited to any incorrect certification or:
    (1) Unauthorized removal of honey, which includes, but is not 
limited to, the movement of any loan quantity of honey from the storage 
structure in the commodity was stored when the loan was approved to any 
other storage structure whether or not such structure is located on the 
producer's farm without prior written authorization from the county 
committee in accordance with Sec.1434.14;
    (2) Any unauthorized disposition, which includes, but is not limited 
to, the conversion of any loan quantity pledged as collateral for a loan 
without prior written authorization from the county committee in 
accordance with this section.
    (c) The producer and CCC agree that it will be difficult, if not 
impossible, to prove the amount of damages to CCC for conduct that is in 
violation of this section. Accordingly, if the county committee 
determines that the producer has engaged in any such violation, 
liquidated damages will be assessed in addition to any loan refund and 
other charges that may be due. The amount of such damages will be 
computed using the quantity of honey that is involved in the violation 
and the following formula. If CCC determines the producer:
    (1) Acted in good faith when the violation occurred, liquidated 
damages will be assessed by multiplying the quantity involved in the 
violation by 10 percent of the loan rate applicable to the loan note for 
each offense.
    (2) Did not act in good faith with regard to the violation, or for 
cases other than the first or second offense, liquidated damages will be 
assessed by multiplying the quantity involved in the violation by 10 
percent of the loan rate applicable to the loan note.
    (d) For liquidated damages assessed in accordance with paragraph 
(c)(1) of this section, the county committee will:
    (1) Require repayment of the loan principal applicable to the loan 
quantity involved in the violation plus charges and interest; and
    (2) If the producer fails to pay such amount within 30 calendar days 
from the date of notification, call the applicable loan for all of the 
honey under loan, plus charges and interest.
    (e) For liquidated damages assessed in accordance with paragraph 
(c)(2) of this section, the county committee will call the loan involved 
in the violation, and charges plus interest.

[[Page 705]]

    (f) The county committee:
    (1) May waive the administrative actions taken in accordance with 
paragraphs (c)(1) and (d) of this section if the county committee 
determines that:
    (i) The violation occurred inadvertently, accidentally, or 
unintentionally; or
    (ii) The producer acted to prevent spoilage of the commodity.
    (2) Will not consider the following acts as inadvertent, accidental, 
or unintentional:
    (i) Movement of loan collateral off the farm;
    (ii) Movement of loan collateral from one storage structure to 
another on the farm; and (iii) Consumption of loan collateral.
    (g) If there is any violation of the loan agreement or this part, 
the loan may be terminated in which case there must be a full refund of 
the loan plus interest and costs.
    (h) If the county committee determines that the producer has 
violated this part or the loan agreement, the county committee will 
notify the producer in writing that:
    (1) The producer has 30 calendar days to provide evidence and 
information regarding the circumstances that caused the violation, to 
the county committee, and
    (2) Administrative actions will be taken in accordance with 
paragraphs (d) or (e) of this section.
    (i)(1) If a producer:
    (i) Makes any fraudulent or misleading representation in obtaining a 
loan, maintaining, or settling a loan; or
    (ii) Disposes or moves the loan collateral without the approval of 
CCC, such loan shall become payable upon demand by CCC. The producer is 
liable for:
    (A) The amount of the loan;
    (B) Any additional amounts paid by CCC with respect to the loan;
    (C) All other costs that CCC would not have incurred but for the 
fraudulent representation, the unauthorized disposition or movement of 
the loan collateral;
    (D) Interest on such amounts;
    (E) Late payment interest as may be provided for in part 1403 of 
this title; and
    (F) Liquidated damages assessed under paragraph (c) of this section; 
and
    (2) Notwithstanding any provisions of the note and security 
agreement, if a producer has made any such fraudulent or misleading 
representation to CCC or if the producer has disposed of, or moved, the 
loan collateral without prior written approval from CCC in accordance 
with this section, the value of the settlement for such collateral 
removed by CCC is determined by CCC according to this section.
    (j) A producer is personally liable for any damages resulting from 
honey removed by CCC, containing mercurial compounds or other substances 
poisonous to humans, animals, or food commodities that are contaminated.
    (k) If the amount disbursed under a loan or in settlement thereof 
exceeds the amount authorized under this part, the producer is 
personally liable for repayment of such excess and charges, plus 
interest, and for any other sanction as may be allowed by law.
    (l) If the amount collected from the producer in satisfaction of the 
loan is less than the amount required in accordance with this part, the 
producer is personally liable for repayment of the amount of such 
deficiency and charges, plus interest.
    (m) In the case of joint MALs, the personal liability for the 
amounts specified in this section are joint and several on the part of 
each producer signing the MAL note. Further, each producer who is a 
party to a joint MAL will be jointly and severally liable for any 
violation of the terms and conditions of the note and security 
agreement, and the regulations in this part. Each such producer also 
remains liable for repayment of the entire MAL amount until the MAL is 
fully repaid without regard to such producer's claimed share in the 
honey, or MAL proceeds, after execution of the note and security 
agreement by CCC.
    (n) Any or all of the liquidated damages assessed in accordance with 
the provisions of paragraph (c) of this section may be waived as 
determined by CCC.
    (o) Remedies set out in this section are in addition to remedies the 
CCC will have through its security interest

[[Page 706]]

on honey that secures the repayment of the loan made on the honey.
    (p) All remedies provided for in this section or part are in 
addition to any remedies as may otherwise be provided for in law.

[66 FR 15177, Mar. 15, 2001, as amended at 74 FR 15657, Apr. 7, 2009; 80 
FR 140, Jan. 2, 2015]



Sec.1434.16  Release of the honey pledged as collateral for a MAL.

    (a)(1) A producer may not move or dispose of any honey pledged as 
collateral for a loan until prior written approval for such removal or 
disposition has been received from the county committee in accordance 
with this section.
    (2) A producer may at any time obtain a release of all or part of 
the honey remaining as loan collateral by paying to CCC the amount of 
the loan and any charges that had been made by CCC to the producer with 
respect to the quantity of the honey released, plus interest.
    (3) When the proceeds of a sale of honey are needed to repay all or 
part of a farm stored MAL, the producer must request and obtain prior 
written approval of the county office on a form prescribed by CCC in 
order to remove a specified quantity of the honey from storage. Any such 
approval will be subject to the terms and conditions in the applicable 
form, copies of which may be obtained by producers at the county office. 
Any such approval will not constitute a release of CCC's security 
interest in the commodity or release the producer from liability for any 
amounts due and owing to CCC with respect to any MAL indebtedness if 
full payment of such amounts is not received by the county office.
    (b) The note and security agreement will not be released until all 
loan liability has been satisfied in full.
    (c) After satisfaction of a MAL, CCC will release CCC's security 
interest in the honey at the producer's request. The producer is 
responsible for payment of any fee for such release if such fee can be 
determined.

[66 FR 15177, Mar. 15, 2001, as amended at 80 FR 140, 141, Jan. 2, 2015]



Sec.1434.17  Liquidation of loans.

    (a) The producer is required to repay the loan on or before maturity 
by payment of the amount of loan, plus any charges, plus interest.
    (b) If a producer fails to settle the loan in accordance with 
paragraph (a) of this section within 30 calendar days from the maturity 
date of such loan, or other reasonable time period as established by 
CCC, a claim for the loan amount, plus charges, plus interest will be 
established. CCC will inform the producer before the maturity date of 
the loan of the date by which the loan must be settled or a claim will 
be established in accordance with part 1403 of this title.

[66 FR 15177, Mar. 15, 2001, as amended at 80 FR 141, Jan. 2, 2015]



Sec.1434.18  Loan repayments.

    (a) A honey producer may repay a nonrecourse MAL during the loan 
period at a rate that is the lesser of:
    (1) The principal, plus interest; or
    (2) The alternative repayment rate for honey as determined by the 
Secretary.
    (3) In the event of a severe disruption to marketing, 
transportation, or related infrastructure, the Secretary may modify the 
repayment rate otherwise applicable under this section for MALs. Any 
adjustment made to the repayment rate for MALs for honey under this part 
will be in effect on a short-term and temporary basis, as determined by 
the Secretary.
    (b) To the extent practicable, CCC will determine and announce the 
alternative repayment rate, based upon the prevailing domestic market 
price for honey, on a monthly basis.

[66 FR 15177, Mar. 15, 2001, as amended at 67 FR 64481, Oct. 18, 2002; 
74 FR 15657, Apr. 7, 2009; 80 FR 140, 141, Jan. 2, 2015]



Sec.1434.19  Settlement.

    (a) The value of the settlement of loans will be made by CCC on the 
following basis:
    (1) With respect to nonrecourse loans, the schedule of premiums and 
discounts for the commodity:
    (i) If the value of the collateral at settlement is less than the 
amount due, the producer must pay to CCC the

[[Page 707]]

amount of such deficiency and charges, plus interest on such deficiency; 
or
    (ii) If the value of the collateral at settlement is greater than 
the amount due, the excess will be paid to the producer or, if 
applicable, to the producer and any secured creditor of the producer.
    (2) With respect to honey that is delivered from other than an 
approved warehouse, settlement will be made by CCC on the basis of the 
basic loan rate that is in effect for the commodity at the producer's 
customary delivery point, as determined by CCC.
    (b) CCC will not assume any loss in quantity or quality of the loan 
collateral for honey MALs.

[66 FR 15177, Mar. 15, 2001, as amended at 80 FR 140, 141, Jan. 2, 2015]



Sec.1434.20  Foreclosure.

    (a) Upon maturity and nonpayment of the loan, title to the 
unredeemed honey securing the loan will vest in CCC.
    (b) If the total amount due on a loan or the unpaid amount of the 
note and charges, plus interest is not satisfied upon maturity, CCC may 
remove the honey from storage and assign, transfer, and deliver the 
honey or documents evidencing title thereto at such time, in such 
manner, and upon such terms as CCC may determine at public or private 
sale. Any such disposition may also be effected without removing the 
honey from storage. The honey may be processed before sale and CCC may 
become the purchaser of the whole or any part of the honey at either a 
public or private sale.
    (1) If the value of the collateral computed at settlement is less 
than the amount due, the producer must pay to CCC the amount of such 
deficiency and charges, plus interest on such deficiency and CCC may 
take any action against the producer to recover the deficiency; or
    (2) If the proceeds received from the sale of the honey so computed 
are greater than the sum of the amount due plus any cost incurred by CCC 
in conducting the sale of the honey, such excess will be paid to the 
producer or, if applicable, to any secured creditor of the producer.

[66 FR 15177, Mar. 15, 2001, as amended at 80 FR 141, Jan. 2, 2015]



Sec.1434.21  Loan deficiency payments.

    (a) LDPs will be available for honey.
    (b) In order to be eligible to receive LDP for a crop of honey, the 
producer must:
    (1) Comply with all of the program requirements to be eligible to 
obtain loan in accordance with this part;
    (2) Agree to forego obtaining such loans;
    (3) Submitted a request for a honey LDP on the form as CCC 
prescribes.
    (4) Comply with Sec. Sec.1434.7 and 1434.8 or provide evidence of 
production as determined by CCC for such quantity; and
    (5) Otherwise comply with all program requirements.
    (c) The LDP rate for a crop will be the amount by which the MAL rate 
exceeds the rate at which CCC has announced that producers may repay 
their MAL as specified in Sec.1434.18.
    (d) The LDP applicable to a crop of honey will be computed by 
multiplying the LDP rate, as determined as specified in paragraph (c) of 
this section, by the quantity of honey the producer is eligible to 
pledge as collateral for a price support MAL for which an LDP is 
requested.
    (e) Notwithstanding any provisions in this section, LDPs may be 
based on 100 percent of the net quantity specified on acceptable 
evidence of disposition of the honey certified as eligible for an LDP if 
CCC determines that such quantity represented the quantity for the 
number of containers of honey initially certified for the LDP when the 
payment was made.
    (f) When applying for an individual LDP, each producer agrees:
    (1) The producer will provide correct, accurate, and truthful 
certifications and representations of the loan quantity and all other 
matters of fact and interest when submitting a request for a honey LDP; 
and
    (2) That violation of the terms and conditions of this part will 
cause harm or damage to CCC in that funds may be disbursed to the 
producer for a LDP

[[Page 708]]

quantity that is not actually in existence or for a quantity for which 
the producer is not eligible.
    (g) For the purposes of this section, violations include any failure 
to comply with this part or the loan agreement, including but not 
limited to any incorrect certification.

[66 FR 15177, Mar. 15, 2001, as amended at 67 FR 64481, Oct. 18, 2002; 
74 FR 15657, Apr. 7, 2009; 80 FR 141, Jan. 2, 2015]



Sec.1434.22  Death, incompetency, or disappearance; appeals; other 
loan provisions.

    (a) In the case of death, incompetency, or disappearance of any 
producer who is entitled to the payment of any sum in settlement of a 
loan, payment will, upon proper application to the county office that 
made the loan, be made to the persons who would be entitled to such 
producer's share under the regulations contained in part 707 of this 
title. Applications for loans may be made upon application of a 
representative of the producer as allowed under standard practice for 
farm programs.
    (b) Appeals of adverse decisions made under this part will be 
subject to the provisions of 7 CFR parts 11 and 780.

[66 FR 15177, Mar. 15, 2001, as amended at 67 FR 64481, Oct. 18, 2002. 
Redesignated at 74 FR 15657, Apr. 7, 2009; 80 FR 141, Jan. 2, 2015]



PART 1435_SUGAR PROGRAM--Table of Contents



                      Subpart A_General Provisions

Sec.
1435.1 Applicability.
1435.2 Definitions.
1435.3 Maintenance of records.
1435.4 Administration.
1435.5 Other regulations.

                      Subpart B_Sugar Loan Program

1435.100 Applicability.
1435.101 Loan rates.
1435.102 Eligibility requirements.
1435.103 Availability, disbursement, and maturity of loans.
1435.104 Loan maintenance.
1435.105 Loan settlement and foreclosure.
1435.106 Miscellaneous provisions.

     Subpart C_Information Reporting and Recordkeeping Requirements

1435.200 Information reporting.
1435.201 Civil penalties.

            Subpart D_Flexible Marketing Allotments For Sugar

1435.300 Applicability.
1435.301 Annual estimates and quarterly re-estimates.
1435.302 Establishment of allotments.
1435.303 Adjustment of the overall allotment quantity.
1435.304 Beet and cane allotments.
1435.305 State cane sugar allotments.
1435.306 Allocation of marketing allotments to processors.
1435.307 Transfer of allocation.
1435.308 New entrants.
1435.309 Reassignment of deficits.
1435.310 Sharing processors' allocations with producers.
1435.311 Proportionate shares for sugarcane producers.
1435.312 Establishment of acreage bases under proportionate shares.
1435.313 Permanent transfer of acreage base histories under 
          proportionate shares.
1435.314 Temporary transfer of proportionate share due to disasters.
1435.315 Adjustments to proportionate shares.
1435.316 Acreage reports for purposes of proportionate shares.
1435.317 Revision of allocations and proportion shares.
1435.318 Penalties and assessments.
1435.319 Appeals and arbitration.

                 Subpart E_Disposition of CCC Inventory

1435.400 General statement.
1435.401 CCC sugar inventory disposition.

         Subpart F_Processor Sugar Payment-In-Kind (PIK) Program

1435.500 General statement.
1435.501 Bid submission procedures.
1435.502 Bid selection procedures.
1435.503 In-kind payments.
1435.504 Timing of distribution of CCC-owned sugar.
1435.505 Miscellaneous provisions.

                 Subpart G_Feedstock Flexibility Program

1435.600 General statement.
1435.601 Sugar surplus determination and public announcement.
1435.602 Eligible sugar to be purchased by CCC.
1435.603 Eligible sugar seller.
1435.604 Eligible sugar buyer.
1435.605 Competitive procedures.
1435.606 Miscellaneous.
1435.607 Appeals.

    Authority: 7 U.S.C. 1359aa-1359jj, 7272, and 8110; 15 U.S.C. 714b 
and 714c.

[[Page 709]]


    Source: 67 FR 54928, Aug. 26, 2002, unless otherwise noted.



                      Subpart A_General Provisions



Sec.1435.1  Applicability.

    (a) The regulations in this part specify the terms and conditions 
under which the Farm Service Agency (FSA) will administer the Sugar 
Program for the Commodity Credit Corporation (CCC) to:
    (1) Make loans and enter agreements with eligible processors,
    (2) Collect data from sugarcane processors, sugar beet processors, 
cane refiners, and importers of sugar, syrup, and molasses,
    (3) Administer sugar marketing allotments, and
    (4) Administer an inventory disposition program to sell CCC 
inventory to bioenergy producers and exchange CCC inventory for 
processor reductions in production or certificates of quota entry.
    (b) [Reserved]

[67 FR 54928, Aug. 26, 2002, as amended at 74 FR 15363, Apr. 6, 2009; 80 
FR 141, Jan. 2, 2015]



Sec.1435.2  Definitions.

    The definitions set forth in this section are applicable for all 
purposes of program administration. Terms defined in part 718 of this 
title are also applicable.
    Ability to market means, for purposes of determining the State cane 
sugar allotments and sugarcane processor allocations for Hawaii and 
Puerto Rico, the estimated quantity of sugar, raw value, as CCC 
determines, that will be produced in the cane State or by the sugarcane 
processor, as appropriate, during the applicable crop year; for 
determining the remaining State cane sugar allotments, the highest 
single year of sugar production for the State during the 1999 through 
2003 crop years; for determining the sugarcane processor allocations for 
mainland cane States other than Louisiana, the highest single year of 
sugar production for the processor during the 1999 through 2003 crop 
years; and, for determining the sugarcane processor allocations for 
Louisiana, the simple average of two amounts for each processor, 
including:
    (1) The production of sugar for the processor, stated in short tons, 
raw value, during Crop Year 2003, as determined by CCC; and
    (2) The simple average of 3 years of the processor's production of 
sugar, stated in short tons, raw value, from among the 1999 through 2003 
crop years, excluding the year in which the production was the highest 
and the year in which the production was the lowest. With respect to the 
2003 crop year, each processor's production shall be the same as 
determined under paragraph (1).
    Allocation means the division of the beet sugar allotment among the 
sugar beet processors in the United States and the division of each 
State's cane sugar allotment among the State's sugarcane processors.
    Beet sugar means sugar that is processed directly or indirectly from 
sugar beets, sugar beet molasses, or in-process beet sugar, whether 
produced domestically or imported.
    Beet sugar allotment means that portion of the overall allotment 
quantity allocated to sugar beet processors.
    CCC means the Commodity Credit Corporation.
    Cane sugar means sugar derived directly or indirectly from sugarcane 
produced in the United States, including sugar produced from sugarcane 
molasses.
    Cane sugar allotment means that portion of the overall allotment 
quantity allocated to sugarcane processors.
    Cane sugar refiner means any person in the U.S. Customs Territory 
that refines raw cane sugar through affination or defecation, 
clarification, and further purification by absorption or 
crystallization.
    Carry-in stocks means inventories of sugar owned by sugar beet 
processors, sugarcane processors, cane sugar refiners, and CCC and 
physically located in the United States at the beginning of the fiscal 
year.
    Crop year means the period from October 1 through September 30, 
inclusive, and is identified by the year in which the crop year begins. 
For example, the 2002 crop year begins on October 1, 2002. The 2002 crop 
of sugar beets or sugar cane means domestically

[[Page 710]]

grown sugar beets or sugar cane processed during the 2002 crop year. The 
2002 crop of sugar means sugar processed from domestically-grown sugar 
beets or sugarcane during the 2002 crop year. Sugar from de-sugaring 
molasses is considered to be from the crop year the de-sugaring 
occurred.
    Deputy Administrator means the Deputy Administrator, Farm Programs, 
FSA, or designee.
    Deficit means the quantity of sugar covered by an allocation of an 
allotment that CCC estimates a sugar beet processor or sugarcane 
processor will be unable to market during the crop year in which 
marketing allotments are in effect.
    Edible molasses means molasses that is not to be further refined or 
improved in quality and that is to be distributed for human consumption, 
either directly or in molasses-containing products.
    Edible syrups means syrups that are not to be further refined or 
improved in quality and that are to be distributed for human 
consumption, either directly or in syrup-containing products.
    Executive Vice President, CCC, means the Executive Vice President, 
CCC, or designee.
    Facility means a factory, mill, or plant.
    Farm means that entity as defined in Sec.718 of this title, except 
that when a State is subject to proportionate shares, producers will not 
be allowed to have farms reconstituted across State lines even if the 
farm land is adjoining.
    Fiscal year means that year beginning October 1 and ending the 
following September 30.
    FSA means Farm Service Agency.
    Human consumption means sugar for use in human food, beverages, or 
similar products.
    Imports means sugar originating in foreign countries or areas and 
entered, or to be entered, into the United States customs territory.
    In-process beet sugar means the intermediate sugar-containing 
product, as CCC determines, produced from processing sugar beets. Like 
sugar beets, it is considered an input into the production of sugar 
regardless of whether it is produced domestically or imported.
    In-process cane sugar means the intermediate sugar-containing 
product, as CCC determines, produced from the processing of sugarcane. 
It is not raw sugar, nor is it suitable for direct human consumption.
    Market or marketing means the transfer of title associated with the 
sale or other disposition of sugar for human consumption in United 
States commerce. A marketing also includes a sale of sugar under the 
Feedstock Flexibility Program, the forfeiture of sugar loan collateral 
under the Sugar Loan Program, exportation of sugar from the United 
States Customs Territory eligible to receive credits under reexport 
programs for refined sugar or sugar-containing products administered by 
the Foreign Agricultural Service, or the sale of sugar eligible to 
receive credit for the production of polyhydric alcohol under the 
Polyhydric Alcohol program (see part 1530 of this title) administered by 
the Foreign Agricultural Service, and for any integrated processor and 
refiner, the movement of raw cane sugar into the refining process.
    Nonrecourse loan means a loan for which eligible sugar offered as 
loan collateral may be forfeited to CCC, at loan maturity, in 
satisfaction of loan indebtedness.
    Overall allotment quantity means, on a national basis, the total 
quantity of domestically produced sugar, raw value, processed from 
sugarcane, sugar beets or in-process beet sugar (whether the sugar beets 
or in-process beet sugar are produced domestically or imported), and the 
raw value equivalent of sugar in sugar products, that is permitted to be 
marketed by processors, during a crop year or other period in which 
marketing allotments are in effect.
    Past marketings means, for purposes of determining State cane sugar 
allotments and sugarcane processor allocations for States other than 
Louisiana, the average of the 2 highest years of sugar production during 
the 1996 through 2000 crop years; for Louisiana sugarcane processor 
allocations, the average of the 2 highest years of sugar production 
during the 1997 through 2001 crop years.
    Past processing means, for determining Hawaii and Puerto Rico's 
allotments, the 3-year average of the 1998

[[Page 711]]

through 2000 crop years; and for determining the remaining cane State 
allotments, the 3 crop years with the greatest production (in the States 
collectively) during the 1991 through 2000 crop years. Past processing, 
for determining the sugarcane processor allocation for States other than 
Louisiana, means the average of the 3 highest years of production during 
the 1996 through 2000 crop years; and, for determining sugarcane 
processor allocations in Louisiana, the average of the 2 highest years 
of sugar production during the 1997 through 2001 crop years.
    Per-acre yield goal means a State's yield level that is established 
at not less than the State's two highest average per-acre yield years 
from among the 1999 through 2001 crop years as CCC determines to ensure 
an adequate net return per pound to State producers.
    Proportionate share means the total acreage from which a producer 
may harvest sugarcane for sugar or seed during any crop year or other 
period in which marketing allotments are in effect.
    Proportionate share State means a State with an established 
allotment and more than 250 sugarcane producers in the State, other than 
Puerto Rico.
    Raw sugar means any sugar that is to be further refined or improved 
in quality other than in-process sugar.
    Raw value of any quantity of sugar means its equivalent in terms of 
raw sugar testing 96 sugar degrees, as determined by a polarimetric test 
performed under procedures recognized by the International Commission 
for Uniform Methods of Sugar Analysis (ICUMSA). Direct-consumption sugar 
derived from sugar beets and testing 92 or more sugar degrees by the 
polariscope shall be translated into terms of raw value by multiplying 
the actual number of pounds of such sugar by 1.07. Sugar derived from 
sugarcane and testing 92 sugar degrees or more by the polariscope shall 
be translated into terms of raw value in the following manner: raw value 
= {[(actual degree of polarization - 92) x 0.0175] + 0.93{time}  x 
actual weight. For sugar testing less than 92 sugar degrees by the 
polariscope, derive raw value by dividing the number of pounds of the 
``total sugar content'' (i.e., the sum of the sucrose and invert sugars) 
thereof by 0.972.
    Reasonable carryover stocks means desirable inventories of sugar 
owned by sugar beet processors, sugarcane processors, cane sugar 
refiners, and CCC and on hand in the United States at the end of the 
fiscal year, as CCC determines.
    State means any of the 50 States, the District of Columbia, or the 
Commonwealth of Puerto Rico.
    Sugar means any grade or type of saccharine product derived, 
directly or indirectly, from sugarcane, sugar beets, sugarcane molasses, 
sugar beet molasses or in-process beet sugar whether domestically 
produced or imported and consisting of, or containing, sucrose or invert 
sugar, including raw sugar, refined crystalline sugar, edible molasses, 
edible cane syrup, liquid sugar, and in-process cane sugar.
    Sugar beet processor means a person who commercially produces sugar, 
directly or indirectly, from sugar beets, sugar beet molasses, or in-
process beet sugar.
    Sugar products means products for human consumption, other than 
sugar, that contain 50 percent or more of sucrose, on a dry weight 
basis, and that are marketed by a sugar beet processor or sugarcane 
processor. In determining sugar subject to marketing allocations, only 
the sugar content of such products will be counted against the 
allocation.
    Sugarcane processor means a person who commercially produces sugar, 
directly or indirectly, from sugarcane, has a viable processing 
facility, and a supply of sugarcane for the applicable allotment year.
    Ton means a short ton or 2,000 pounds.
    United States means the 50 States, the District of Columbia, and the 
Commonwealth of Puerto Rico.
    U.S. market value means, for sugarcane, the daily New York Board of 
Trade No. 14 contract price for raw sugar, or other price, as determined 
by CCC; for sugar beets, the Midwest refined beet sugar price published 
in Milling and Baking News, or other price, as determined by CCC.

[[Page 712]]

    USDA means the United States Department of Agriculture.

[67 FR 54928, Aug. 26, 2002, as amended at 69 FR 55062, Sept. 13, 2004; 
74 FR 15363, Apr. 6, 2009]



Sec.1435.3  Maintenance of records.

    (a) Each sugar beet processor, sugarcane processor, importer of 
sugars, syrups and molasses, and cane sugar refiner or any person having 
custody of records required by CCC to operate the sugar program must 
retain such books, records, accounts, and other written or electronic 
data for not less than 3 years from the date:
    (1) A loan is disbursed under subpart B;
    (2) Market data are reported to CCC under subpart C of this part; 
and
    (3) Marketings are conducted under marketing allotments under 
subpart D of this part.
    (b) [Reserved]

[67 FR 54928, Aug. 26, 2002, as amended at 74 FR 15364, Apr. 6, 2009]



Sec.1435.4  Administration.

    (a) This program shall be administered under the general supervision 
of the Executive Vice President, CCC, and may be carried out in the 
field by FSA State and county committees.
    (b) State and county committees, and representatives and employees 
thereof, may not modify or waive any of the provisions of part 1435.
    (c) The State committee shall take any action required by this part 
that the county committee has not taken. The State committee shall also:
    (1) Correct, or require a county committee to correct, a county 
committee action not under this part; or
    (2) Require a county committee to withhold taking any action not 
under this part.
    (d) No provision or delegation herein to a State or county committee 
shall preclude the Executive Vice President, CCC, from determining any 
question arising under the program or from reversing or modifying any 
State or county committee determination.
    (e) The Deputy Administrator may authorize State and county 
committees to waive or modify deadlines and other program requirements 
in cases where lateness or failure to meet such requirements do not 
adversely affect program operation.
    (f) A CCC representative may execute loans and related documents 
only under the terms and conditions CCC determines and announces. Any 
such document not executed under such terms and conditions, including 
any purported execution before the CCC-authorized date, shall be null 
and void.



Sec.1435.5  Other regulations.

    The following are applicable to this part:
    (a) Part 707--Payments due persons who have died, disappeared, or 
have been declared incompetent.
    (b) Part 718--Provisions applicable to multiple programs.
    (c) Part 780--Appeal regulations.
    (d) Part 1403--Debt settlement policies and procedures.
    (e) Part 1405--Loans, purchases, and other operations.



                      Subpart B_Sugar Loan Program



Sec.1435.100  Applicability.

    (a) The regulations of this subpart set forth the terms and 
conditions under which CCC will make nonrecourse loans available to 
eligible processors. Additional terms and conditions are set forth in 
the loan application and note and security agreement that a processor 
must execute to receive a loan.
    (b) Loan rates used in administering the loan program are available 
in FSA State and county offices.
    (c) Loans shall not be available for sugar produced from imported 
sugar beets, sugarcane, molasses, syrups and in-process sugar.



Sec.1435.101  Loan rates.

    (a) The national average loan rate for raw cane sugar produced from 
domestically grown sugarcane is 18.75 cents per pound.
    (b) The national average loan rate for refined beet sugar from 
domestically grown sugar beets is equal to 128.5 percent of the loan 
rate per pound of raw cane sugar.
    (c) Loan rates for eligible sugar are adjusted to reflect the 
processing location of the sugar offered as loan collateral.

[[Page 713]]

    (d) Loan rates for eligible in-process sugar shall equal 80 percent 
of the loan rate applicable to raw cane sugar or beet sugar on the basis 
of the expected production of raw sugar or beet sugar from the in-
process sugar or syrups.

[67 FR 54928, Aug. 26, 2002, as amended at 74 FR 15364, Apr. 6, 2009; 80 
FR 141, Jan. 2, 2015]



Sec.1435.102  Eligibility requirements.

    (a) An eligible producer is the owner of a portion or all of the 
domestically-grown sugar beets or sugarcane, including share rent 
landowners, at both the time of harvest and the time of delivery to the 
processor, except those producers determined to be ineligible as a 
result of the regulations governing highly erodible land and wetland 
conservation found at 7 CFR part 12, regulations governing crop 
insurance at 7 CFR part 400, or regulations governing controlled 
substance violations at 7 CFR part 718.
    (b) In addition to all other provisions of this part, a sugar beet 
or sugarcane processor is eligible for loans only if the processor has 
agreed to all the terms and conditions in the loan application, and has 
executed a note and security agreement, and storage agreement with CCC. 
No loan proceeds will be distributed by CCC before CCC's approval of the 
note and security agreement and the CCC storage agreement.
    (c) Sugar pledged as collateral during the crop year:
    (1) May not exceed the quantity derived from processing 
domestically-grown sugar beets or sugarcane from eligible producers 
during the applicable crop year;
    (2) Must be processed and owned by the eligible processor and stored 
in a CCC-approved warehouse;
    (3) May not have been processed from imported sugarcane, sugar beets 
in-process sugars, or molasses;
    (4) Must have been processed in the United States; and
    (5) Must have processor certification in the loan application that 
the sugar or in-process sugar syrups are eligible and available to be 
pledged as collateral.
    (d) Sugar and in-process sugar must meet the following minimum 
quality requirements to be eligible to be pledged as loan collateral:
    (1) Refined beet sugar to be pledged as loan collateral must be:
    (i) Dry and free flowing;
    (ii) Free of excessive sediment; and
    (iii) Free of any objectionable color, flavor, odor, or other 
characteristic that would impair its merchantability or that would 
impair or prevent its use for normal commercial purposes.
    (2) Raw cane sugar to be pledged as loan collateral must be:
    (i) Of reasonable grain size; and
    (ii) Free of objectionable color, flavor, odor, moisture or other 
characteristic that would impair its merchantability or that would 
impair or prevent its use for normal refining and commercial purposes.
    (3) Edible sugarcane syrup or edible molasses must be free from any 
objectionable color, flavor, odor, or other characteristic that would 
impair the merchantability of such syrup or molasses or would impair or 
prevent the use of such syrup or molasses for normal commercial 
purposes.
    (4) In-process sugar must be of at least the minimum quality 
expected to commercially yield raw cane sugar or refined beet sugar, as 
determined by CCC.
    (e) The loan collateral must be stored in a CCC-approved warehouse 
as described in 7 CFR part 1423.

[67 FR 54928, Aug. 26, 2002, as amended at 74 FR 15364, Apr. 6, 2009]



Sec.1435.103  Availability, disbursement, and maturity of loans.

    (a) Before obtaining a loan, a processor must:
    (1) File a loan application, as CCC prescribes, no earlier than 
October 1 and no later than September 30 of the applicable crop year, 
with the State committee of the State where such processor is 
headquartered, or with a county committee designated by the State 
committee.
    (2) Execute a note and security agreement, and storage agreement 
with CCC;
    (3) Provide quantity and quality information as prescribed by CCC of 
the commodity to be pledged as collateral;
    (4) Pay CCC a loan service fee, as determined by CCC, for the 
disbursement of each loan.

[[Page 714]]

    (5) If there are any liens or encumbrances on sugar or in-process 
sugar pledged as loan collateral, obtain waivers that fully protect 
CCC's interest even though the liens or encumbrances are satisfied from 
the loan proceeds. No additional liens or encumbrances shall be placed 
on the sugar after loan approval; and
    (6) Agree to reimburse CCC for any costs incurred as a result of the 
failure of the processor to obtain the waivers specified in subparagraph 
(5).
    (b) No loan proceeds may be disbursed until the sugar and in-process 
sugar have actually been produced and are otherwise established as being 
eligible to be pledged as loan collateral.
    (c)(1) A processor may, within the loan availability period, 
repledge as collateral sugar that previously served as loan collateral 
for a repaid loan. In making application for such a loan, the processor 
shall:
    (i) Specify that the loan collateral should be treated as a quantity 
of eligible sugar that previously served as loan collateral for a repaid 
loan; and
    (ii) Designate the loan to which the reoffered loan collateral was 
originally pledged.
    (2) The subsequent loan shall have the same maturity date as the 
original loan.
    (3) Loan collateral repledged that was previously redeemed from CCC 
is not included in determining the total quantity of sugar on which 
loans have been obtained for purposes of Sec.1435.102.
    (d) Raw cane sugar loan disbursements shall be made without regard 
to the actual polarity or quality factors of the sugar pledged as loan 
collateral but shall be made on the assumption that the polarity of such 
sugar is 96 degrees by the polariscope.
    (e)(1) Loans will mature at the earlier of:
    (i) the end of the 9-month period beginning on the 1st day of the 
first month after the month in which the loan is made; or
    (ii) September 30 following disbursement of the loan.
    (2) CCC may accelerate loan maturity dates under Sec.1435.105(h).
    (f) Processors receiving loans in July, August, or September may 
repledge the sugar as collateral for a supplemental loan. Such 
supplemental loan must:
    (1) Be requested by the processor during the following October;
    (2) Be made at the loan rate in effect at the time the first loan 
was made; and
    (3) Mature in 9 months less the number of months that the first loan 
was in effect.

[67 FR 54928, Aug. 26, 2002, as amended at 74 FR 15364, Apr. 6, 2009]



Sec.1435.104  Loan maintenance.

    (a) All processors receiving loans shall:
    (1) Abide by the terms and conditions of the loan application, note 
and security agreement and storage agreement;
    (2) Pay interest on the principal at a rate determined in part 1405 
of this chapter.
    (b) The security interests CCC obtains as a result of the execution 
of security agreements by sugarcane and sugar beet processors shall be 
superior to all statutory and common law liens on raw cane sugar, 
refined beet sugar, and in-process sugar for the producers of sugarcane 
and sugar beets and all prior recorded and unrecorded liens on the crops 
of sugarcane and sugar beets from which the sugar was derived.
    (c) A processor receiving a loan under this part shall pay all 
eligible producers who have delivered or will deliver sugar beets or 
sugarcane to such processors for processing not less than the minimum 
payment levels CCC specifies for the applicable crop year.
    (1) In the case of sugar beets, the minimum payment shall not exceed 
the rate of payment provided for under the applicable contract between a 
sugar beet producer and a sugar beet processor.
    (2) In the case of sugarcane, CCC will annually determine and 
announce the annual grower minimum payment.
    (3) Processors are ineligible for loans for the crop year following 
their failure to meet the required minimum grower payment.
    (d)(1) A processor shall maintain eligible sugar or in-process sugar 
of sufficient quality and quantity as collateral to satisfy the 
processor's loan indebtedness to CCC. CCC shall not assume

[[Page 715]]

any loss in quantity or quality of the loan collateral.
    (2) The processor is responsible for storage costs through the loan 
maturity date or title transfer to CCC, whichever occurs later.
    (3) Sugar and in-process sugar pledged as loan collateral need not 
be stored identity preserved.
    (4) When the proceeds of the sale of loan collateral are needed to 
repay all or part of a sugar loan, the processor may request and obtain 
prior written approval from the loan making office by executing a loan 
collateral release request, as prescribed by CCC, to remove a specified 
quantity of the loan collateral from storage for the purpose of 
delivering it to a buyer before loan repayment. Any such approval shall 
be subject to the terms and conditions set forth in the applicable form. 
The loan making office shall not approve such a request unless the buyer 
of the sugar agrees to pay CCC an amount necessary to satisfy the 
processor's loan indebtedness regarding collateral being sold. Any such 
approval shall not:
    (i) Constitute a release of CCC's security interest in the loan 
collateral; or
    (ii) Relieve the processor of liability for the full amount of the 
loan indebtedness, including interest.

[67 FR 54928, Aug. 26, 2002, as amended at 74 FR 15364, Apr. 6, 2009]



Sec.1435.105  Loan settlement and foreclosure.

    (a) A processor may, any time before loan maturity, redeem all or 
any part of the loan collateral by paying CCC the applicable principal 
and interest.
    (b) Forfeiture of sugar loan collateral will be accepted as payment 
in full of the principal and interest due under a nonrecourse loan, 
subject to applicable premiums and discounts based on the difference 
between specifications reported on the sugar loan certification report 
and actual loadout characteristics.
    (c)(1) Forfeiture of in-process sugar serving as loan collateral 
will be accepted as payment in full of principal and interest if the 
processor converts the in-process sugar into raw cane sugar or refined 
beet sugar of acceptable grade and quality for sugar eligible for loans 
within 1 month of loan maturity.
    (2) The in-process sugar must be fully processed into raw cane sugar 
or refined beet sugar, before the processor shall transfer the sugar to 
CCC.
    (3) On transfer of the sugar, CCC shall make a payment to the 
processor in an amount equal to the amount obtained by multiplying the 
difference between the loan rate for raw cane sugar or refined beet 
sugar, as appropriate, and the in-process loan rate the processor 
received by the quantity of sugar transferred to CCC. The loan agreement 
shall specify the quantity of sugar that can be forfeited to CCC.
    (d) If the processor does not forfeit the collateral, but instead 
further processes the in-process sugar into raw cane sugar or refined 
beet sugar and repays the loan on the in-process sugar;
    (1) the processor may obtain a loan for the raw cane sugar or 
refined beet sugar, as appropriate, and
    (2) the term of a loan made under this subsection for a quantity of 
in-process sugar, when combined with the term of a loan made for the raw 
cane sugar or refined beet sugar derived from the in-process sugar, may 
not exceed 9 months.
    (e) CCC shall not accept delivery of sugar in settlement of a 
nonrecourse loan in excess of the quantity of sugar that is shown on the 
note and security agreement minus any quantity that was redeemed or 
released for removal under this section.
    (f) If the processor does not redeem any of the nonrecourse loan 
collateral, title to the unredeemed nonrecourse loan collateral as 
described in the note and security agreement will, without further CCC 
or processor action transfer to CCC in-store at the CCC-approved 
warehouse at 12 a.m. the next business day following the maturity date 
of the loan. Title, all rights, and interest to such sugar shall 
immediately vest in CCC.
    (g) The value of the settlement of loans shall be made by CCC 
according to the CCC schedule of premiums and discounts.
    (h) CCC may, at any time, accelerate the date for loan repayment 
including interest. CCC will give the processor notice of such 
acceleration at least 15

[[Page 716]]

days in advance of the accelerated loan maturity date.
    (i) If a processor's nonrecourse loan indebtedness is not satisfied 
under the provisions of this section or if forfeited in-process sugar is 
not converted to raw or refined sugar within the prescribed time:
    (1) Interest on the processor's indebtedness shall accrue as 
specified in part 1403 of this title and shall accrue until the debt is 
paid;
    (2) CCC may, upon notice, with or without removing the collateral 
from storage, sell such collateral at either a public or private sale;
    (3) The processor shall be liable for the deficiency if the net 
proceeds are less than the amount of principal, interest, and any other 
charges CCC incurs; and
    (4) If the processor forfeits the in-process sugar loan collateral 
but does not transfer raw or refined sugar of suitable quality to CCC 
within 1 month, CCC will charge liquidated damages, as provided in the 
loan agreement.
    (j) The CCC rates for the storage of forfeited sugar to approved 
warehouses for each crop year of 2008 through 2011 will be at least:
    (1) For refined sugar, 15 cents per hundredweight of refined sugar 
per month; and
    (2) For raw cane sugar, 10 cents per hundredweight of raw cane sugar 
per month.
    (3) For 2012 and subsequent crop years, rates for the storage of 
forfeited sugar will revert to those used before June 18, 2008.
    (4) For sugar located in space not approved by CCC for storage, the 
payment rate will be zero until such time as the processor delivers such 
sugar to a CCC-approved warehouse.

[67 FR 54928, Aug. 26, 2002, as amended at 74 FR 15364, Apr. 6, 2009]



Sec.1435.106  Miscellaneous provisions.

    (a) The regulations governing setoffs and withholding set forth at 
parts 3 and 1403 of this title are applicable to the program set forth 
in this subpart.
    (b) A producer or processor may obtain reconsideration and review of 
determinations made under this subpart under the regulations at parts 11 
and 780 of this title.
    (c) Any false certification, including those made for the purpose of 
enabling a processor to obtain a loan to which it is not entitled, will 
subject the person making such certification to liability under 
applicable Federal civil and criminal statutes.



     Subpart C_Information Reporting and Recordkeeping Requirements



Sec.1435.200  Information reporting.

    (a) Every sugar beet processor, sugarcane processor, cane sugar 
refiner, and importer of sugar, syrup, and molasses shall report, by the 
20th of each month, on CCC-required forms, its imports and receipts, 
processing inputs, production, distribution, stocks, and other 
information necessary to administer the sugar programs. If the 20th of 
the month falls on a weekend or a Federal holiday, the report shall be 
due the next business day.
    (b) Any processor must, upon CCC's request, provide such information 
as CCC deems appropriate for determining regional loan rates.
    (c) Any processor must, upon CCC's request, provide such information 
as CCC deems appropriate for determining whether processors of sugarcane 
or sugar beets will be able to market their respective sugar 
allocations.
    (d) Each sugarcane producer located in Louisiana shall report, in 
the manner CCC prescribes, sugarcane yields and sugarcane planted acres.
    (e) Importers of sugars, syrups, or molasses to be used for domestic 
human consumption or to be used for the extraction of sugar for domestic 
human consumption must report such information as CCC requires, 
including the quantities of the products imported and the sugar content 
or equivalent of the products.
    (f) The Secretary will collect information on the production, 
consumption, stocks and trade of sugar in Mexico and publish the data in 
each edition of the World Agricultural Supply and Demand Estimates 
report.
    (g) The Secretary will collect publicly available information on the 
production, consumption, and trade of high fructose corn syrup in Mexico 
and

[[Page 717]]

publish the data in each edition of the World Agricultural Supply and 
Demand Estimates report.
    (h) Based on the information received under this subsection, the 
Secretary shall publish on a monthly basis composite data on sugar 
production, imports, distribution, and stock levels.
    (i) By November 20 of each year, sugar beet processors, sugarcane 
processors, sugarcane refiners, and importers of sugars, syrups, and 
molasses, as selected by CCC, will submit to CCC a report, as specified 
by CCC, from an independent Certified Public Accountant that reviews its 
information submitted to CCC during the previous October 1 through 
September 30 period.
    (j) The sugar information reporting and recordkeeping requirements 
of this subpart are administered under the general supervision of the 
Executive Vice President, CCC.

[67 FR 54928, Aug. 26, 2002, as amended at 71 FR 16200, Mar. 31, 2006; 
74 FR 15365, Apr. 6, 2009]



Sec.1435.201  Civil penalties.

    (a) Any processor, refiner, or importer of sugar, syrup, and 
molasses who willfully fails or refuses to furnish the information, or 
who willfully furnishes false data required under Sec.1435.200(a) 
through (e), is subject to a civil penalty of no more than the amount 
specified at Sec.3.91(b)(10)(ii) of this title for each such 
violation.
    (b) The Controller, CCC, shall assess civil penalties and interest.
    (c) Affected processors, refiners, and importers of sugar, syrup, 
and molasses may request reconsideration of civil penalties by filing a 
request, within 30 days of receipt of certified written notification 
from the Controller, CCC, of such assessment of civil penalties, with 
the Executive Vice President, CCC, Stop 0501, 1400 Independence Ave. 
SW., Washington, DC 20250-0501.
    (d) After reconsideration, affected processors, refiners, or 
importers of sugar, syrup, and molasses may appeal civil penalties by 
filing a notice of appeal, within 30 calendar days of receipt of 
certified written notification from the Executive Vice President, CCC, 
of an affirmation of the assessment of civil penalties, with the 
National Appeals Division under part 780 of this title.

[67 FR 54928, Aug. 26, 2002, as amended at 74 FR 15635, Apr. 6, 2009; 75 
FR 17561, Apr. 7, 2010]



            Subpart D_Flexible Marketing Allotments For Sugar



Sec.1435.300  Applicability.

    (a) This subpart applies to the establishment and allocation of 
marketing allotments for:
    (1) Processor marketings of sugar domestically processed from sugar 
beets or in-process beet sugar, whether such sugar beets or in-process 
beet sugar were produced domestically or imported,
    (2) Processor marketings of sugar processed from sugarcane,
    (3) Distribution of a processor's allocation to producers in 
proportionate share States, and
    (4) Harvesting sugarcane by producers subject to proportionate 
shares.
    (b) This subpart does not apply to marketing imported raw or refined 
sugar.
    (c) This subpart applies throughout the United States and Puerto 
Rico.

[67 FR 54928, Aug. 26, 2002, as amended at 74 FR 15365, Apr. 6, 2009]



Sec.1435.301  Annual estimates and quarterly re-estimates.

    (a) Not later than August 1 before the beginning of the crop year, 
CCC will estimate, and make re-estimates as necessary but not later than 
the beginning of each quarter of such crop year, the:
    (1) Quantity of sugar that will be subject to human consumption in 
the United States during the crop year;
    (2) Quantity of sugar that will provide for reasonable carryover 
stocks;
    (3) Quantity of sugar that will be used for human consumption in the 
United States from carry-in stocks;
    (4) Quantity of sugar that will be available from domestically 
processed sugarcane, sugar beets, and in-process beet sugar; and
    (5) Quantity of sugars, syrups, and molasses that will be imported 
for human consumption or for the extraction of sugar for human 
consumption in the United States and Puerto Rico

[[Page 718]]

(other than sugar imported for the production of polyhydric alcohol or 
to be refined and re-exported in refined form or in sugar-containing 
products), whether such articles are included in a tariff-rate quota or 
not.
    (b) Calculation of all allotments, allocations, estimates, and re-
estimates in this subpart will use available USDA statistics and 
estimates of production, consumption, and stocks, taking into account, 
where appropriate, data supplied in reports submitted pursuant to the 
reporting requirements set forth in Sec.1435.200.

[67 FR 54928, Aug. 26, 2002, as amended at 74 FR 15365, Apr. 6, 2009]



Sec.1435.302  Establishment of allotments.

    (a) By the beginning of the crop year, CCC will establish the 
overall allotment quantity, beet sugar and cane sugar allotments, State 
cane sugar allotments, and allocations for processors marketing sugar 
domestically processed from sugarcane, sugar beets, or in-process beet 
sugar, whether the sugar beets or in-process beet sugar is domestically 
produced or imported at a level:
    (1) That is sufficient to maintain raw and refined sugar prices 
above minimum prices to avoid forfeiture of loans to the CCC, but
    (2) Not less that 85 percent of estimated quantity of sugar for 
domestic human consumption for the crop year.
    (b) Determinations under this section to establish marketing 
allotments will be published in the Federal Register and accompanied by 
a statement of the reasons for the determination.

[74 FR 15365, Apr. 6, 2009]



Sec.1435.303  Adjustment of the overall allotment quantity.

    (a) The overall allotment quantity may be adjusted, as CCC 
determines appropriate, but never to a quantity less than 85 percent of 
the estimated quantity of sugar for domestic human consumption for the 
crop year:
    (1) To avoid forfeiture of sugar loan collateral to CCC,
    (2) Ensure adequate supplies of raw and refined sugar in the 
domestic market, and,
    (3) To reflect changes in estimated sugar consumption, stocks, 
production, or imports based on re-estimates under Sec.1435.301.
    (b) Determinations to adjust the overall allotment quantity will be 
published in the Federal Register and accompanied by a statement of the 
reasons for the determination.
    (c) The beet sugar allotment, cane sugar allotment, State cane sugar 
allotments, proportionate shares, and allocations to each sugar beet 
processor and sugarcane processor will be increased or decreased, as 
appropriate, to reflect an overall allotment quantity adjustment.
    (d) If the overall allotment quantity is reduced under paragraph (a) 
of this section and the quantity of sugar and sugar products any 
individual processor marketed by the time of the reduction exceeds the 
processor's reduced allocation, the quantity of excess sugar or sugar 
products marketed will be deducted from the processor's allocation under 
an allotment next established.

[67 FR 54928, Aug. 26, 2002. Redesignated and amended at 74 FR 15365, 
Apr. 6, 2009]



Sec.1435.304  Beet and cane sugar allotments.

    (a) The allotment for beet sugar will be 54.35 percent of the 
overall allotment quantity.
    (b) The allotment for cane sugar will be 45.65 percent of the 
overall allotment quantity.
    (c) A sugar beet processor allocated a share of the beet sugar 
allotment may use only beet sugar to fill such allocation. A sugarcane 
processor allocated a share of the cane sugar allotment may use only 
cane sugar to fill such allocation.

[67 FR 54928, Aug. 26, 2002. Redesignated at 74 FR 15365, Apr. 6, 2009]



Sec.1435.305  State cane sugar allotments.

    (a) Hawaii and Puerto Rico will be allotted a total of 325,000 short 
tons, raw value, of the cane sugar allotment.
    (b) A new entrant cane State will receive an allotment to 
accommodate a new processor's allocation under 1435.308.
    (c) Subject to paragraphs (a) and (b) of this section, the remaining 
cane

[[Page 719]]

States will be allotted, in aggregate, the remaining cane sugar 
allotment.
    (d) The individual cane State allotments, other than a new entrant 
cane State, will be based on:
    (1) Past marketings of cane sugar,
    (2) Past processing of cane sugar, and
    (3) The ability to market the sugar covered under the allotment 
assigned to the State.
    (e) Past marketings and past processings will each be weighted by 
0.25 and the ability to market will be weighted by 0.50 in determining 
the States' respective cane sugar allotments. The weights may be 
adjusted, as CCC deems appropriate, for the crop year.
    (f) Except when deficits are reassigned as provided in Sec.
1435.309, a processor may fill an allocation of a cane sugar allotment 
only with sugar processed from sugarcane grown in the State for which 
the allotment was established.

[67 FR 54928, Aug. 26, 2002. Redesignated and amended at 74 FR 15365, 
Apr. 6, 2009]



Sec.1435.306  Allocation of marketing allotments to processors.

    (a) Each sugar beet processor's allocation, other than a new 
entrant's, of the beet allotment will be calculated as the beet 
processor's share times the beet sector allotment:
    (1) A beet processor's share is calculated as the beet processor's 
adjusted weighted average sugar production divided by the sum of all 
beet processors' adjusted weighted average sugar production.
    (2) A beet processor's weighted average sugar production equals 0.25 
times its 1998-crop sugar production plus 0.35 times its 1999-crop sugar 
production plus 0.40 times its 2000-crop sugar production, with the 2000 
sugar PIK payments added to its 2000-crop sugar production.
    (3) A beet processor's weighted average sugar production shall be 
adjusted by the following, as CCC determines:
    (i) Increased 1.25 percent of the sum of all beet processors' 
weighted average sugar production for opening a sugar beet processing 
factory during the 1996 through 2000 crop years;
    (ii) Decreased 1.25 percent of the sum of beet processors' weighted 
average sugar production for closing a sugar beet processing factory 
during the 1998 through 2000 crop years:
    (iii) Increased 0.25 percent of the sum of all beet processors' 
weighted average sugar production for opening a molasses desugarization 
facility during the 1998 through 2000 crop years; and
    (iv) Increased 1.25 percent of the sum of all beet processors' 
weighted average sugar production for suffering a substantial quality 
loss on stored beets, as CCC determines, during the 1998 through 2000 
crop years.
    (b) Each sugarcane processor's, other than a new entrant's, 
allocation from a State cane sugar allotment will be calculated as the 
cane processor's share times the State cane sector allotment.
    (1) Each cane processor's share will be calculated as the 
processor's production base divided by the sum of the State's processor 
production bases.
    (2) A processor's production base is the sum of 0.50 times its 
ability to market plus 0.25 times its past processings plus 0.25 times 
its past marketings. These weights may be adjusted as CCC deems 
appropriate for the crop year.
    (c) An informal hearing will be held in August of each year, if 
requested by affected sugarcane processors and growers by July 15th, to 
afford all interested persons the opportunity to comment on the next 
crop year's marketing allotments and allocations. After consideration of 
comments obtained at the hearing, a final determination on cane State 
allotments and processor allocations will be announced.
    (d) During any crop year in which marketing allotments are in effect 
and allocated to processors, the quantity of sugar and sugar products 
that a processor markets shall not exceed the quantity of the 
processor's allocation.
    (e) Paragraph (d) of this section will not apply to:
    (1) Any sugar marketings to facilitate the export of sugar or sugar-
containing products as long as such exports are not eligible to receive 
credits under reexport programs administered by the Foreign Agricultural 
Service for refined sugar or sugar-containing products;
    (2) Any sugar marketings for nonhuman consumption, except for the

[[Page 720]]

sale of sugar for the production of ethanol or other bioenergy under the 
Feedstock Flexibility program or the sale of sugar for the production of 
polyhydric alcohol under the Polyhydric Alcohol program administered by 
the Foreign Agricultural Service; and
    (3) Any processor marketings of sugar to another processor made to 
enable the purchasing processor to fulfill its allocation if such sales;
    (i) Are made before May 1, and
    (ii) Reported to CCC within 51 days of the date of sale.
    (f) Paragraph (d) of this section also shall not apply to marketings 
of purchased sugar marketed in the crop year of the purchase, but does 
apply to marketings of sugar purchased as part of a transaction pursuant 
to paragraph (e)(3) of this section.
    (g) Paragraph (d) of this section also will not apply to the 
marketing of beet sugar processed from purchased in-process beet sugar 
if the processor purchased the in-process beet sugar before October 1, 
2008.
    (h) A sugar beet processor allocated a share of the beet sugar 
allotment may use only beet sugar to fill such allocation. A sugarcane 
processor allocated a share of the cane sugar allotment may only use 
cane sugar to fill such allocation.

[67 FR 54926, Aug. 26, 2002, as amended at 69 FR 39813, July 1, 2004. 
Redesignated and amended at 74 FR 15365, Apr. 6, 2009]



Sec.1435.307  Transfer of allocation.

    (a) If a sugarcane processing facility is sold or transferred to 
another owner or is closed as part of a corporate consolidation CCC will 
transfer the allotment allocation to the purchaser or successor.
    (b) In proportionate share States, allocations, based on the number 
of acres of sugarcane base being transferred and the pro rata amount 
reflecting the grower's contribution to allocation of the processor for 
the sugarcane base being transferred, will be transferred between 
facilities if the transfers are based on:
    (1) Written consent of the crop-share owners, or their 
representatives,
    (2) Written certification from the processor that will accept the 
additional sugarcane deliveries that its processing capacity will not be 
exceeded,
    (3) CCC will only consider requests for transfer of allocation 
submitted during the month of May. The request must include the grower's 
sugar production history for crop years 1997 through 2003. The facility 
with the grower's history will be required to certify the history when 
requested by the grower, and
    (4) Allocation transfers will be effective for the next fiscal year 
after the request is submitted to CCC, that is beginning October 1.
    (c) If a sugar beet processing facility or a sugarcane processing 
facility located in a non-proportionate share State is closed, and the 
growers that delivered their crops to the closed facility elect to 
deliver their crops to another processor, the growers may petition the 
Executive Vice President, CCC, to transfer their share of the allocation 
from the processor that closed the facility to their new processor. If 
CCC approves transfer of the allocations, it will distribute the closed 
facility's allocation based on the contribution of the growers' 
production history to the closed facility's allocation. CCC may grant 
the allocation transfer upon:
    (1) Written request by a grower to transfer allocation,
    (2) Written approval of the processor that will accept the 
additional deliveries,
    (3) Evidence satisfactory to CCC that the new processor has the 
capacity to accommodate the production of petitioning growers, and
    (4) Determinations by the CCC will be made within 60 days after the 
filing of the petition.
    (d) Subject to a transfer of allocation, if any, described in 
paragraph (c) of this section being completed, CCC will consider a 
processor to be permanently terminated and eliminate the processor's 
remaining allocation and distribute it to all other processors on a pro-
rata basis when the processor:
    (1) Has been dissolved,
    (2) Has been liquidated in a bankruptcy proceeding,

[[Page 721]]

    (3) Has not processed sugarcane or sugar beets for 2 consecutive 
crop years,
    (4) Has notified CCC that the processor has permanently terminated 
operations, or
    (5) Has been determined by CCC to have permanently terminated 
operations.
    (e) If a processor of beet sugar purchases all the assets of another 
processor, then CCC will immediately transfer allocation commensurate 
with the purchased facilities' production history, unless the allocation 
has already been transferred under paragraph (d) of this section.
    (f) If a processor of beet sugar purchases some, but not all, of the 
assets of another processor, then CCC will assign a pro rata portion of 
the allocation to the buyer to reflect the historical contribution of 
the sold facilities, unless the buyer and seller have agreed upon a 
different allocation amount.
    (1) The assignment of the allocation will apply to the crop year in 
which the sale occurs and for each subsequent year.
    (2) The buyer of the facilities as specified in paragraph (e) of 
this section may fill the assigned allocation with production from other 
facilities it owns if the purchased facilities lack the production to 
fill the assigned allocation.

[74 FR 15366, Apr. 6, 2009]



Sec.1435.308  New entrants.

    (a) The Secretary may assign a new entrant sugarcane processor an 
allocation that provides a fair, efficient, and equitable distribution 
of allocations:
    (1) Applicants must demonstrate their ability to process, produce, 
and market sugar for the applicable crop year,
    (2) CCC will consider any adverse effects of the allocation upon 
existing processors and producers,
    (3) CCC will conduct a hearing on a new entrant application if an 
interested processor or grower requests a hearing,
    (4) A new entrant's allocation is limited to no more than 50,000 
short tons, raw value, for the first crop year, and
    (5) A new entrant will be provided, as determined by CCC:
    (i) A share of its State's cane allotment if the processor is 
located in Hawaii, Florida, Louisiana, or Texas or
    (ii) A share of the overall mainland cane allotment if the processor 
is located in any mainland State not listed in paragraph (a)(5)(i) of 
this section.
    (b) For proportionate share States, CCC will establish proportionate 
shares for the sugarcane required to fill the allocation.
    (c) If a new entrant beet processor constructs a new facility or 
reopens a facility that currently has no allocation, but last produced 
beet sugar from sugar beets and sugar beet molasses prior to the 1998 
crop year, CCC will:
    (1) Assign an allocation to the new entrant to enable it to achieve 
a facility utilization rate comparable to other similarly-situated sugar 
beet processors and
    (2) Reduce all other beet processor allocations by a like amount on 
a pro rata basis.
    (d) If a new entrant acquires an existing facility with production 
history that processed sugar beets for the 1998 or subsequent crop year, 
CCC will:
    (1) Assign the allocation to the buyer to reflect the historical 
contribution of the sold facilities, unless the buyer and seller have 
agreed upon a different allocation amount, or
    (2) If the new entrant and the processor holding the allocation of 
the existing facility cannot agree on an allocation amount, the new 
entrant will be denied a beet sugar allocation.

[74 FR 15366, Apr. 6, 2009]



Sec.1435.309  Reassignment of deficits.

    (a) CCC will determine, from time to time, whether sugar beet or 
sugarcane processors will be unable to market their allocations.
    (b) Sugar beet and sugar cane processors will report to CCC current 
inventories, estimated production, expected marketings, and any other 
pertinent factors CCC deems appropriate to determine a processor's 
ability to market their allocation.
    (c) If CCC determines a sugarcane processor will be unable to market 
its full allocation for the crop year in which an allotment is in 
effect, the deficit will be reassigned as follows:

[[Page 722]]

    (1) First, to allocations of other sugarcane processors within that 
State based on each processor's initial allocation share of the State's 
allotment, but no processor may receive reassigned allocation such that 
its allocation exceeds its estimated total sugar supply.
    (2) If the deficit cannot be eliminated after reassignment within 
the same State, be reassigned to the other cane States based on each 
State's initial share of the cane sugar allotment, but no State may 
receive reassigned State allotment such that its allocation exceeds its 
estimated total sugar supply, with the reassigned quantity to each State 
being allocated according to paragraph (c)(1) of this section.
    (3) If the deficit cannot be eliminated by paragraphs (c)(1) and 
(c)(2) of this section, be reassigned to CCC. CCC shall sell such 
quantity from inventory unless CCC determines such sales would have a 
significant effect on the sugar price.
    (4) If any portion of the deficit remains after paragraphs (c)(1), 
(c)(2), and (c)(3) of this section have been implemented, be reassigned 
to imports of raw cane sugar.
    (d) The initial estimate of the sugarcane deficit will be reassigned 
by June 1. CCC will conduct later reassignments if CCC determines, after 
June 1, that a sugarcane processor will be unable to market its full 
allocation.
    (e) If CCC determines that a sugar beet processor is unable to 
market its full allocation for the crop year in which an allotment is in 
effect, the deficit will:
    (1) First, be reassigned proportionately to allocations of other 
sugar beet processors, depending on the capacity of other processors to 
fill the portion of the deficit to be reassigned to them, accounting for 
the interests of associated producers.
    (2) If the deficit cannot be eliminated by paragraph (e)(1) of this 
section, be reassigned to CCC. CCC shall sell such quantity from 
inventory unless CCC determines such sales would have a significant 
effect on the sugar price.
    (3) If any portion of the deficit remains after paragraphs (e)(1) 
and (e)(2) of this section have been implemented, be reassigned to 
imports of raw cane sugar.
    (f) The crop year allocation of each sugar beet or sugarcane 
processor who receives a reassignment will be increased accordingly for 
that year.

[67 FR 54928, Aug. 26, 2002, as amended at 69 FR 55063, Sept. 13, 2004; 
69 FR 58037, Sept. 29, 2004; 70 FR 28181, May 17, 2005; 74 FR 15366, 
Apr. 6, 2009]



Sec.1435.310  Sharing processors' allocations with producers.

    (a) Every sugar beet and sugarcane processor must provide CCC a 
certification that:
    (1) The processor intends to share its allocation among its 
producers fairly and equitably, and in a manner adequately reflecting 
each producer's production history, and
    (2) The processor has, in the previous allotment year, shared its 
allocation among producers fairly and equitably, reflecting each 
producer's production history. If a processor is unable to provide such 
certification, CCC may reduce or eliminate its marketing allocation.
    (b) CCC will determine that a processor in a proportionate share 
state has met the conditions of paragraph (a) of this section if the 
processor establishes a grower payment plan that incorporates the 
following provisions:
    (1) Pays growers for sugar from their delivered sugarcane in the 
following priority:
    (i) Sugar production from proportionate share acreage; as 
established under Sec.1435.311, for producers determined by CCC, who;
    (A) Delivered to the mill in at least one of the crop years 1999, 
2000, or 2001, or
    (B) Obtained an allocation transfer from a predecessor mill,
    (ii) Sugar production from base acreage, as established under Sec.
1435.312, but exclusive of the acreage described in paragraph (b)(1)(i) 
of this section, for producers who meet the requirements of paragraph 
(b)(1)(i) of this section, then
    (iii) All other sugar production.
    (2) In determining the payment priority, a processor may aggregate 
the acreage of an operator (producer making the crop production 
decisions)

[[Page 723]]

across all the operator's farms delivering cane to the processor.
    (c) CCC will determine that a processor not in a proportionate share 
state, which is cooperatively owned by producers, has met the conditions 
of paragraph (a) of this section if the processor shares its allocation 
with its producers according to its cooperative membership agreement.
    (d) CCC will disclose farm base and reported acres data in a 
proportionate share state to processors upon their request for growers 
delivering to their mill. In the case of multiple producers on a farm or 
growers delivering to more than one mill, subject mills will be 
responsible for coordinating proportionate share data.
    (e) Any producer or processor may request arbitration of a dispute 
regarding the sharing of the processor's allocation among the producers. 
Arbitration will be available on behalf of CCC at the State FSA office 
for the State in which the processor is located. Subsequent review of 
the arbitration decision is available at the discretion of the Executive 
Vice President, CCC. Any arbitration is subject to appeal to the Office 
of the Administrative Law Judge, USDA.

[67 FR 54926, Aug. 26, 2002, as amended at 69 FR 39813, July 1, 2004; 74 
FR 15366, Apr. 6, 2009]



Sec.1435.311  Proportionate shares for sugarcane producers.

    (a) Proportionate shares and the provisions of this section and 
Sec. Sec.1435.312 through 1435.316 apply only to Louisiana sugarcane 
farms.
    (b) CCC will determine whether Louisiana sugar production, in the 
absence of proportionate shares, will exceed the quantity needed to 
enable processors to fill the State cane sugar allotment and provide a 
normal carryover inventory. If the determination is made that the 
quantity of sugar produced in Louisiana, plus a normal carryover 
inventory, will exceed the State's allotment, CCC will establish for 
each sugarcane producing farm a proportionate share that limits the 
sugarcane acreage that may be harvested on the farm for sugar or seed.
    (c) For purposes of determining proportionate shares CCC will:
    (1) Establish the State's per-acre yield goal at a level not less 
than the average per-acre yield in the State for the 2 highest years 
from among the 1999 through 2001 crop years;
    (2) Adjust the per-acre yield goal by the State average recovery 
rate;
    (3) Convert the State cane sugar allotment into a State acreage 
allotment by dividing the State allotment by the adjusted per-acre yield 
goal;
    (4) Establish a uniform reduction percentage for the crop by 
dividing the State acreage allotment by the sum of all adjusted acreage 
bases in the State as determined under Sec.1435.312; and
    (5) Apply the uniform reduction percentage to the acreage base 
established for each sugarcane producing farm in the State to determine 
the farm's proportionate share of sugarcane acreage that may be 
harvested for sugar or seed.



Sec.1435.312  Establishment of acreage bases under proportionate 
shares.

    (a) CCC will establish a sugarcane crop acreage base for each farm 
subject to proportionate shares as the simple average of the acreage 
planted and considered planted for harvest for sugar or seed (meaning 
only those varieties dedicated to the production of sugarcane to produce 
sugar for human consumption) on the farm in the 2 highest of the 1999 
through 2001 crop years. Acreage considered planted shall be determined 
under Sec.1435.315.
    (b) In establishing crop acreage bases, CCC will:
    (1) Not consider acreage prevented from planting, and
    (2) Consider acreage planted to sugarcane that fails.
    (c) In establishing crop acreage bases, CCC will allow producers who 
have not previously reported their sugarcane acreage to do so by a date 
CCC determines and announces. Late-filed acreage reports will be 
accepted as the Deputy Administrator determines appropriate.
    (d) The farm's crop acreage base shall be used to determine the 
farm's proportionate share.
    (e) The regulations at part 718 of this title shall apply to this 
subpart, except reconstitution of farms with a sugar

[[Page 724]]

crop acreage base shall not be allowed across State lines.

[67 FR 54928, Aug. 26, 2002, as amended at 74 FR 15367, Apr. 6, 2009]



Sec.1435.313  Permanent transfer of acreage base histories under
proportionate shares.

    (a) A sugarcane producer on a farm may transfer all or a portion of 
the producer's acreage base history of land owned, operated, or 
controlled to any other farm in the State that the producer owns, 
operates, or controls under the Deputy Administrator-issued 
instructions. The transfer will reduce permanently the transferring 
farm's sugarcane acreage base history and increase the receiving farm's 
crop acreage base.
    (1) All farm owners must agree in writing to the transfer.
    (2) Producers may transfer sugarcane acreage base histories under 
this section by the date the State FSA committee establishes annually.
    (b) Sugarcane acreage base that has been converted to 
nonagricultural use on or before May 13, 2002, may be transferred to 
other land suitable for the production of sugarcane under the following 
terms:
    (1) CCC must notify 1 or more affected landowners within 90 days of 
becoming aware of the conversion, of their rights to transfer the base 
to 1 or more farms owned by the landowner;
    (2) The landowner has 90 days from the date the landowner was 
notified to transfer the base;
    (3) If the landowner does not exercise this transfer right, the 
grower of record will have 90 days after being notified by CCC to 
transfer the base to 1 or more farms owned by the grower;
    (4) If the transfers as specified under paragraphs (b)(2) or (3) of 
this section are not accomplished during the specified periods, FSA 
county committee will place the base into a pool for possible 
reassignment to other farms;
    (5) After providing notice to farm owners, operators and growers of 
record in the county, the committee will accept requests from farm 
owners, operators, and growers in the county;
    (6) The county committee will assign the base to other sugarcane 
farms in the county that are eligible and capable of accepting the 
acreage base, based on a random drawing among requests received under 
paragraph (b)(5) of this section;
    (7) Any unassigned base will be made available to the State FSA 
committee and be allocated to remaining FSA county committees in the 
State representing counties with farms eligible for assignment of the 
base, based on a random drawing; and
    (8) After the acreage base has been reassigned, the acreage base 
will remain on the farm and subject to the transfer provisions of 
paragraph (a) of this section.

[67 FR 54928, Aug. 26, 2002, as amended at 74 FR 15367, Apr. 6, 2009]



Sec.1435.314  Temporary transfer of proportionate share due to
disasters.

    (a) If, for reasons beyond the control of a producer on a farm, such 
producer is unable to harvest sugarcane acreage relative to all or a 
portion of the proportionate share established for the farm, the 
Secretary may preserve, on producer application and written consent of 
all owners of the farm, for a period of not more than 5 consecutive 
years, the acreage base history of the farm to the extent of the 
proportionate share involved.
    (b) Such proportionate share may be transferred, with the written 
consent of all owners of the farm, for 1 crop year to other farm owners 
or operators subject to the following conditions:
    (1) The acreage base history of the transferring farm will be 
preserved for a period from 1 to 5 years; and
    (2) Acreage base history will not be increased on the receiving 
farm.
    (c) Producers who transfer a proportionate share under this section 
will be required to:
    (1) Initiate the transfer in the county FSA office where the 
proportionate shares are established; and
    (2) Obtain approval from the transferring county FSA committee.
    (d) All transfers made under this section must be completed by the 
date the State FSA committee establishes.



Sec.1435.315  Adjustments to proportionate shares.

    Whenever CCC determines that, because of a natural disaster or other

[[Page 725]]

condition beyond the control of producers adversely affecting a 
sugarcane crop, the amount of sugarcane produced by producers subject to 
proportionate shares will not be sufficient to enable state processors 
to produce sufficient sugar to meet the State's cane sugar allotment and 
provide a normal carryover of sugar, CCC may uniformly allow producers 
to harvest sugarcane in excess of their proportionate shares, or suspend 
proportionate shares entirely.



Sec.1435.316  Acreage reports for purposes of proportionate shares.

    (a) A report of planted and failed acreage shall be required on 
farms that produce sugarcane for sugar or seed. Such report shall also 
specify the total acreage intended for harvest for sugar and seed.
    (b) The reports required under paragraph (a) of this section shall 
be on forms prescribed by CCC and shall be filed annually with the 
county FSA committee by the applicable final reporting date CCC 
establishes. The farm operator or farm owner shall file such reports.
    (c) Acreage reports will be used to determine compliance with 
proportionate shares and acreage bases for future proportionate shares.
    (d) An acreage report may be accepted after the established date for 
reporting if physical evidence is still available for inspection that 
may be used to make a determination relative to:
    (1) Existence of the crop;
    (2) Use made of the crop;
    (3) Lack of crop; or
    (4) Disaster condition affecting the crop.
    (e) The farm operator shall pay the cost of a farm visit by an 
authorized FSA employee unless the county FSA committee has determined 
that failure to report in a timely manner was beyond the producer's 
control.
    (f) The farm operator may revise an acreage report. Revised reports 
shall be filed in accordance with CCC instructions and shall be accepted 
at any time if:
    (1) Evidence exists for inspection and determination of:
    (i) Existence of the crop;
    (ii) Use made of the crop;
    (iii) Lack of crop; or
    (iv) Disaster condition affecting the crops.
    (2) The farm has not already been inspected and the acreage already 
determined or harvesting of sugarcane already begun.
    (g) Provisions of part 718 of this chapter will apply for field 
inspections, tolerance, and variance. Assessments for false acreage 
reporting will be applied under Sec.1435.318.



Sec.1435.317  Revisions of allocations and proportionate shares.

    The Executive Vice President, CCC, may modify any processor's 
allocation or any producer's proportionate share on the same basis as 
the initial allocation or proportionate share was required to be 
established.



Sec.1435.318  Penalties and assessments.

    (a) Any sugar beet or sugarcane processor who knowingly markets 
sugar or sugar products in excess of the processor's allocation will be 
liable to CCC for a civil penalty in an amount equal to 3 times the U.S. 
market value, at the time the violation was committed, of that quantity 
of sugar involved in the violation.
    (b) CCC may assess liquidated damages, as specified in a surplus 
allocation survey and agreement, with respect to a surplus allocation 
still existing after the end of a crop year if the processor had a 
surplus allocation because the processor provided incomplete or 
erroneous information to CCC.
    (c) Under Sec.359f(c)(5) of the Agricultural Adjustment Act of 
1938, as amended, any producer of sugarcane whose farm has a 
proportionate share, and who knowingly harvests or allows to be 
harvested an acreage of sugarcane for sugar or seed in excess of the 
farm's proportionate share shall pay to CCC a civil penalty in an amount 
equal to 1.5 times the U.S. market value of the quantity of sugar that 
is marketed by the processor of such sugarcane in excess of the 
allocation of such processor, for the year in which the violation was 
committed. However, civil penalties will not be assessed when the 
producer harvests acreage for sugar or

[[Page 726]]

seed in excess of the farm's proportionate share, if the excess 
sugarcane harvested is:
    (1) Processed by a sugarcane processor that does not exceed its 
marketing allocation; or
    (2) Diverted to a use other than sugar or seed if:
    (i) The sugarcane producer requests and pays for a CCC field 
inspection, and
    (ii) CCC verifies the disposition of the excess harvest is not for 
sugar or seed.
    (d) Any penalty assessed under paragraph (b) of this section shall 
be prorated among the producers of all sugarcane acquired by the 
processor from excess acres.
    (e) Any person filing a false acreage report that exceeds tolerance 
will be subject to an assessment not to exceed the amount specified at 
Sec.3.91(b)(10)(iii) of this title. Whenever the failure of a producer 
to comply fully with the terms and conditions applicable to 
proportionate shares would result in an assessment, the Deputy 
Administrator may authorize the waiver or reduction of the assessment in 
such amounts as determined to be equitable about the seriousness of the 
failure, the producer's good-faith effort to comply fully with such 
terms and conditions, and the producer's substantial performance.
    (f) Any person who knowingly violates any provision of this subpart 
other than paragraph (d) of this section is subject to the assessment of 
a civil penalty by CCC of not more than the amount specified at Sec.
3.91(b)(10)(iv) of this title for each violation.

[67 FR 54928, Aug. 26, 2002, as amended at 74 FR 15367, Apr. 6, 2009; 75 
FR 17561, Apr. 7, 2010]



Sec.1435.319  Appeals and arbitration.

    (a) A person adversely affected by any determination made under this 
subpart may request reconsideration of such determination by filing a 
written request with the Executive Vice President, CCC, detailing the 
basis of the request within 10 days of such determination. Such a 
request must be submitted at: Executive Vice President, CCC, Stop 0501, 
1400 Independence Ave., SW, Washington, DC 20250-0501.
    (b) For issues arising under section 359d establishing allocations 
for marketing allotments, and sections 359f(b) and (c), and section 359i 
of the Agricultural Adjustment Act of 1938, as amended, after completion 
of the process provided in paragraph (a) of this section, a person 
adversely affected by a reconsidered determination may appeal such 
determination by filing a written notice of appeal within 20 days of the 
issuance of the reconsidered determination with the Hearing Clerk, USDA, 
Room 1081, South Building, 1400 Independence Ave., SW., Washington, DC 
20250-9200. Any hearing conducted under this paragraph shall be in 
accordance with instructions issued by USDA's Judicial Officer.
    (c) For issues arising under Sec. Sec.359a-359c, 359e, and 359g of 
the Agricultural Adjustment Act of 1938, as amended, after completion of 
the process provided in paragraph (a) of this section, a person 
adversely affected by the reconsidered determination may appeal such 
determination by filing a written notice of appeal with the Director, 
National Appeals Division, USDA, as provided in part 11 of this title. 
For issues arising under Sec.359f(a) of the Agricultural Adjustment 
Act of 1938, as amended, such disputes shall be resolved through 
arbitration under the direction of the Executive Vice President, CCC. A 
request for arbitration must be filed in writing at the address 
specified in paragraph (a) of this section.

[67 FR 54926, Aug. 26, 2002, as amended at 69 FR 39814, July 1, 2004]



                 Subpart E_Disposition of CCC Inventory

    Source: 78 FR 45446, July 29, 2013, unless otherwise noted.



Sec.1435.400  General statement.

    This subpart will be applicable in the event that raw, refined, or 
in-process sugar is owned and held in CCC inventory (accumulated under 
the program authorized by section 156 of the Federal Agriculture 
Improvement and Reform Act, as amended) as specified in subpart B of 
this part.

[[Page 727]]



Sec.1435.401  CCC sugar inventory disposition.

    (a) CCC will dispose of inventory in the following manner, if CCC 
has not determined there is an emergency shortage of sugar for human 
consumption in the domestic market:
    (1) By sale to bioenergy producers under the Feedstock Flexibility 
Program as specified in subpart G of this part,
    (2) By transfer to sugarcane and sugar beet processors under the 
Processor Sugar Payment-In-Kind Program as specified in subpart F of 
this part,
    (3) By the buyback of certificates of quota eligibility (CQEs), or
    (4) By the use of any other authority for the disposition of CCC-
owned sugar for nonfood use or otherwise in a manner that does not 
increase the net quantity of sugar available for human consumption in 
the United States.
    (b) CCC may use any of its authority for the disposition of CCC-
owned sugar, if CCC has determined there is an emergency shortage of 
sugar for human consumption in the domestic market caused by war, flood, 
hurricane, or other natural disaster, or similar event, as determined by 
CCC.



         Subpart F_Processor Sugar Payment-In-Kind (PIK) Program

    Source: 67 FR 54928, Aug. 26, 2002, unless otherwise noted. 
Redesignated at 74 FR 15367, Apr. 6, 2009.



Sec.1435.500  General statement.

    This subpart shall be applicable to sugar beet and sugarcane 
processors throughout the United States who, acting in conjunction with 
the producers of the sugarcane or sugar beets processed by the 
processors, reduce sugar production in return for a payment of sugar 
from CCC when CCC determines that such action will reduce forfeitures of 
sugar pledged as collateral for a CCC loan.

[67 FR 54928, Aug. 26, 2002. Redesignated at 74 FR 15367, Apr. 6, 2009]



Sec.1435.501  Bid submission procedures.

    (a) After announcement by CCC that a program authorized by this 
subpart is in effect, processors who desire to participate in the 
program must submit a bid to CCC, on a form prescribed by CCC, that 
specifies:
    (1) For a program involving acreage diversion, the amount of acreage 
to be reduced by producers who have contracts for delivery of sugar 
beets or sugar cane to the processor and contains the information CCC 
determines necessary to conduct the program and includes but is not 
limited to:
    (i) The number of acres that the processor, acting in conjunction 
with the producers, will divert;
    (ii) The previous consecutive 3-year simple average sugar beet or 
sugarcane yield on that acreage while under contract (years with no 
production contracted with a producer will not be considered (for first-
time producers, however, the previous consecutive 3-year simple average 
sugar beet or sugarcane yield for all the producers under contract who 
delivered to the applicable factory will be used);
    (iii) The previous 3-year simple average sugar content of the 
producer's beets or sugarcane (for first-time producers, the previous 3-
year simple average sugar content for all beets or cane delivered to 
that factory will be used);
    (iv) The processor's previous 3-year simple average recovery rate 
(for processors that have not been fully operational during the last 3 
years, the simple average for those years that they were fully 
operational);
    (v) The value of CCC sugar to be received as payment; and
    (vi) Other information CCC deems necessary for program 
administration; or
    (2) The sugar production capacity to be removed from production by 
the processor.
    (b) The following acreage is ineligible for enrollment in the PIK 
program:
    (1) If planted, acreage not currently under contract for delivery of 
sugar beets to a sugar beet processor or sugarcane to a sugarcane 
processor for sugar production.
    (2) If planted, acreage that is not harvestable,
    (3) Acreage devoted to roads or other non-producing areas, or
    (4) If planted, acreage on which a crop insurance indemnity or 
replant payment was received for the current

[[Page 728]]

crop or for which a claim has been, or will be, filed to receive a crop 
insurance indemnity or replant payment for the current crop, except for 
replant payments for acreage actually replanted before the end of the 
normal planting period.
    (c) If planted, the diverted acres cannot be grazed until after the 
sugar beets or sugarcane are destroyed by disking, plowing, or other 
means of mechanical destruction. In addition, the sugar beets or 
sugarcane on the diverted acres may not be used for any commercial 
purpose.
    (d) The acreage offered must meet the following requirements:
    (1) If less than or equal to 15 acres, then the acreage bid must 
consist of one of the following:
    (i) One contiguous area of land,
    (ii) One or more entire permanent fields, or
    (iii) One or more entire permanent fields and one contiguous area of 
land to complete the balance;
    (2) If more than 15 acres, then the acreage bid must consist of one 
of the following:
    (i) One or more areas of land of at least 15 contiguous acres each 
with one remaining area of land of less than 15 contiguous acres to 
complete the balance,
    (ii) One or more entire permanent fields, or
    (iii) One or more entire permanent fields and one area of contiguous 
land to complete the balance.
    (3) Contiguous areas of land must have a minimum width of 3 chains 
(198 feet).
    (e) For a program involving desugaring capacity, or other measures 
of sugar production, not involving acreage diversion, the bid must 
contain the information CCC determine necessary to conduct the program.

[67 FR 54928, Aug. 26, 2002. Redesignated at 74 FR 15367, Apr. 6, 2009]



Sec.1435.502  Bid selection procedures.

    (a) For bids in which the processor offers to remove acreage of 
sugar beets or sugarcane from production, CCC will rank bids on the 
basis of the bid amount as a percentage of the expected sugar produced 
from the retired acreage. Bids with the lowest of such percentages will 
be selected first. In the case of identical bids, selection may be based 
on random selection or pro rata shares, as CCC deems appropriate.
    (b) CCC will reject bids for which the bid amounts exceed the 
expected sugar produced from the retired acreage.
    (c) For bids in which the processor offers to remove sugar 
production capacity from production, CCC will rank the bids on the basis 
of the capacity to be removed from production.
    (d) All acceptable bids specified in paragraphs (a) and (c) of this 
section will be further reviewed by CCC and ranked in order of the 
greatest reduction in sugar program that can be achieved at the lowest 
cost to CCC.

[67 FR 54928, Aug. 26, 2002. Redesignated at 74 FR 15367, Apr. 6, 2009]



Sec.1435.503  In-kind payments.

    (a) CCC will, through such methods as CCC deems appropriate, make 
payments in the form of sugar held in CCC inventory.
    (b) To the maximum extent practicable, CCC will use its inventory in 
making an in-kind payment based on the following priority:
    (1) CCC-owned sugar held in storage by the processor;
    (2) CCC-owned sugar held in storage by any other processor in the 
same region as the producer;
    (3) CCC-owned sugar held in storage by any other processor that is 
not in the same region as the producer; and
    (4) CCC-owned sugar held in storage anywhere in the United States, 
if CCC determines that such sugar is eligible to be used for in-kind 
payments.
    (c) The value of CCC-owned inventory is dependent upon the storage 
location of the sugar and the type of sugar (raw or refined). CCC will 
announce the value of its inventory before bid solicitation. 
Accordingly, the quantity of sugar CCC will provide in terms of an in-
kind payment to a processor will be determined by dividing:
    (1) The total of the processor's bid amount that CCC accepts, by
    (2) The value of CCC's inventory at the storage location at which 
title will transfer from CCC to the processor.

[67 FR 54928, Aug. 26, 2002. Redesignated at 74 FR 15367, Apr. 6, 2009]

[[Page 729]]



Sec.1435.504  Timing of distribution of CCC-owned sugar.

    Distribution of sugar from CCC inventory will occur in such manner 
as CCC determines appropriate.

[67 FR 54928, Aug. 26, 2002. Redesignated at 74 FR 15367, Apr. 6, 2009]



Sec.1435.505  Miscellaneous provisions.

    (a) CCC may permit processors to bid, in lieu of acreage, 
desugarizing capacity or other measures of sugar production as CCC 
determines.
    (b) The contract shall provide for the payment of liquidated damages 
if a processor fails to comply with the obligations specified in the CCC 
production diversion contract.
    (c) CCC will transfer title of the sugar to the processor by 
notifying the processor or assignee that the sugar is available. CCC 
will stop storage payments on this sugar on the date of transfer.

[67 FR 54928, Aug. 26, 2002. Redesignated at 74 FR 15367, Apr. 6, 2009]



                 Subpart G_Feedstock Flexibility Program

    Source: 78 FR 45446, July 29, 2013, unless otherwise noted.



Sec.1435.600  General statement.

    (a) The provisions of this subpart will be applied when CCC 
determines that buying sugar is necessary to avoid forfeitures of sugar 
pledged as collateral for CCC sugar loans.
    (b) This subpart will be applicable to:
    (1) Any sugar seller who contractts with CCC to sell sugar, an
    (2) Any bioenergy producer who contracts with CCC to purchase sugar 
for the production of bioenergy.



Sec.1435.601  Sugar surplus determination and public announcement.

    (a) CCC will estimate by September 1 the quantity of sugar that will 
be made available for purchase and sale under FFP for the following crop 
year.
    (b) Not later than January 1, April 1, and July 1 of the fiscal 
year, CCC will re-estimate the quantity of sugar that will be made 
available for purchase and sale under the FFP for the crop year.
    (c) CCC will announce by press release the estimates in paragraphs 
(a) and (b) of this section, which will reflect CCC's forecast of sugar 
likely to be forfeited to CCC and any uncertainty surrounding that 
forecast.



Sec.1435.602  Eligible sugar to be purchased by CCC.

    (a) CCC will only purchase raw sugar, refined sugar, or in-process 
sugar for FFP that is eligible to be used as collateral under the CCC 
Sugar Loan Program, as specified in Sec.1435.102.
    (b) Raw sugar, refined sugar, or in-process sugar purchased directly 
from any domestic sugar beet or sugarcane processor that made the raw 
sugar, refined sugar, or in-process sugar will be credited against the 
processor's sugar marketing allocation. (The definition for 
``marketing'' in Sec.1435.2 applies to this subpart.)
    (c) CCC will only purchase sugar located in the United States.
    (d) CCC will evaluate an offer to sell sugar to CCC based upon CCC's 
estimate of the reduction in refined sugar supply available for human 
consumption due to the purchase. For example, if processing thick juice 
(an in-process sugar) would yield 70 percent sugar for human 
consumption, then CCC will only consider 70 percent of the volume of the 
thick juice in evaluating the per unit sales price.
    (e) CCC will only purchase the sugar if such purchase would reduce 
the likelihood of forfeitures of CCC sugar loans, as determined by CCC.



Sec.1435.603  Eligible sugar seller.

    (a) To be considered an eligible sugar seller, the sugar seller must 
be located in the United States.
    (b) [Reserved]



Sec.1435.604  Eligible sugar buyer.

    (a) To be considered an eligible sugar buyer, the bioenergy producer 
must produce bioenergy products, including fuel grade ethanol or other 
biofuels.
    (b) [Reserved]



Sec.1435.605  Competitive procedures.

    (a) CCC will generally issue tenders for bids, before entering into 
contracts with any eligible sugar seller or buyer, with the intent of 
selecting the bid(s)

[[Page 730]]

that represents the least cost to CCC of removing sugar from the market.
    (b) CCC may, at times, negotiate contracts directly with sellers or 
buyers, if CCC determines that such negotiation will result in either 
reduced likelihood of forfeited sugar under the CCC sugar loan program 
or reduced costs of removing sugar from the market, which will reduce 
the likelihood of forfeitures of sugar to CCC.



Sec.1435.606  Miscellaneous.

    (a) As a sugar buyer, a bioenergy producer must take possession of 
the sugar no more than 30 days from the date of CCC's purchase.
    (b) CCC, to the maximum extent practicable, will not pay storage 
fees for the sugar purchased under this program. A bioenergy producer 
must assume any storage costs accrued from date of contract to date of 
taking possession of the sugar.
    (c) Each bioenergy producer that purchases sugar through FFP must 
provide proof as specified by CCC that the sugar has been used in the 
bioenergy factory for the production of bioenergy and permit access for 
USDA to verify compliance.



Sec.1435.607  Appeals.

    (a) The administrative appeal regulations of parts 11 and 780 of 
this title apply to this part.
    (b) [Reserved]



PART 1436_FARM STORAGE FACILITY LOAN PROGRAM REGULATIONS--
Table of Contents



Sec.
1436.1 Applicability.
1436.2 Administration.
1436.3 Definitions.
1436.4 Application for loans.
1436.5 Eligible borrowers.
1436.6 Eligible storage or handling equipment.
1436.7 Loan term.
1436.8 Security for loan.
1436.9 Loan amount and loan application approvals.
1436.10 Down payment.
1436.11 Disbursements and assignments.
1436.12 Interest and fees.
1436.13 Loan installments, delinquency, and acceleration of maturity 
          date.
1436.14 Taxes.
1436.15 Maintenance, liability, insurance, and inspections.
1436.16 Foreclosure, liquidation, assumptions, sales or conveyance, or 
          bankruptcy.
1436.18 Appeals.
1436.19 Equal Opportunity and Non-discrimination requirements.

    Authority: 7 U.S.C. 7971 and 8789; and 15 U.S.C. 714 through 714p.

    Source: 66 FR 4612, Jan. 18, 2001, unless otherwise noted.



Sec.1436.1  Applicability.

    (a) The regulations of this part provide the terms and conditions 
under which CCC may provide low-cost financing for producers to build or 
upgrade on-farm storage and handling facilities. Because liens and 
security interests related to this activity may be governed by State 
law, CCC may adapt certain procedures relating to those issues that may 
vary between States.
    (b) Unless specified otherwise in this part, for FSFL microloans, 
all provisions of this part apply.

[66 FR 4612, Jan. 18, 2001, as amended at 74 FR 41587, Aug. 18, 2009; 81 
FR 25592, Apr. 29, 2016]



Sec.1436.2  Administration.

    (a) The Farm Storage Facility Loan Program will be administered 
under the general supervision of the Executive Vice President, CCC or 
designee and will be carried out in the field by FSA State committees, 
FSA county committees and FSA employees.
    (b) FSA State committees, FSA county committees and FSA employees, 
do not have the authority to modify or waive any of the provisions of 
the regulations of this part.
    (c) The FSA State committee will take any action required by these 
regulations that has not been taken by the county committee. The FSA 
State committee will also:
    (1) Correct, or require the FSA county committee to correct, any 
action taken by such FSA county committee that is not in accordance with 
the regulations of this part; and
    (2) Require the FSA county committee to withhold taking any action 
that is not in accordance with the regulations of this part.

[[Page 731]]

    (d) No provision or delegation herein to a State or FSA county 
committee will preclude the Executive Vice President, CCC, or a 
designee, or the Administrator, FSA, or a designee, from determining any 
question arising under the program or from reversing or modifying any 
determination made by the State or FSA county committee.
    (e) The Deputy Administrator, Farm Programs, FSA, may authorize 
State and FSA county committees to waive or modify deadlines and other 
program requirements in cases where lateness or failure to meet such 
other requirements does not adversely affect the operation of the Farm 
Storage Facility Loan Program.
    (f) A representative of CCC may execute Farm Storage Facility Loan 
Program applications and related documents only under the terms and 
conditions determined and announced by CCC. Any such document that is 
not executed in accordance with such terms and conditions, including any 
purported execution prior to the date authorized by CCC, will be void.
    (g) The purpose of the Farm Storage Facility Loan Program is to 
provide CCC funded loans for producers of grains, oilseeds, pulse crops, 
sugar, hay, renewable biomass, fruits and vegetables (including nuts), 
aquaculture, butter, cheese, eggs, floriculture, honey, hops, maple sap, 
meat, milk, poultry, rye, yogurt, and other grains and storable 
commodities, as determined by the Secretary, to construct or upgrade 
storage and handling facilities for the eligible facility loan 
commodities they produce.

[66 FR 4612, Jan. 18, 2001, as amended at 74 FR 41587, Aug. 18, 2009; 81 
FR 25592, Apr. 29, 2016]



Sec.1436.3  Definitions.

    The following definitions will be applicable to the program 
authorized by this part and will be used in all aspects of administering 
this program:
    Aggregate outstanding balance means the sum of the outstanding 
balances of all loans disbursed under this part to each borrower signing 
the note and security agreement.
    Aquaculture, for FSFL purposes, means any species of aquatic 
organism grown as food for human consumption, or fish raised as feed for 
fish that are consumed by humans.
    ARS means the Agricultural Research Service of the USDA.
    Assumption means the act or agreement by which one borrower takes 
over or assumes the debt of another borrower.
    CCC means the Commodity Credit Corporation.
    Cold storage facility means a facility or rooms within a facility 
that are specifically designed and constructed for the cold temperature 
storage of perishable commodities. The temperature and humidity in these 
facilities must be able to be regulated to specified conditions required 
for the commodity requiring storage.
    Collateral means the facility and any real estate used to secure the 
loan.
    Commercial facility means any facility, used in connection with or 
by any commercial operation including, but not limited to, grain 
elevators, warehouses, dryers, processing plants, or cold storage 
facilities used for the storage and handling of any agricultural 
product, whether paid or unpaid. Any structure suitable for the storage 
of an agricultural product that is in working proximity to any 
commercial storage operation will be considered to be part of a 
commercial storage operation.
    Commercial storage means the storing of any agricultural product, 
whether paid or unpaid, for persons other than the owner of the 
structure, except for family members and tenants or landlords with a 
share in the eligible facility loan commodity requiring storage.
    Crop of economic significance means any insurable facility loan 
commodity that contributes 10 percent or more of the total expected 
value of all crops grown by the loan applicant except if the expected 
liability under the catastrophic level of crop insurance for a crop is 
equal to or less than the administrative fee for the crop, that crop 
shall not be economically significant.
    Deputy Administrator means the Deputy Administrator for Farm 
Programs, Farm Service Agency, including any designee.
    Facility means any on-farm storage and handling facility or 
structure, storage and handling equipment, or storage and handling 
truck, for which a

[[Page 732]]

producer may receive FSFL financing to acquire or upgrade. Such 
facilities can be new or used, fixed or portable.
    Facility loan commodity means corn, grain sorghum, oats, wheat, 
barley, rice, raw or refined sugar, soybeans, sunflower seed, canola, 
rapeseed, safflower, flaxseed, mustard seed, crambe, sesame seed, other 
grains and oilseeds as determined and announced by CCC, dry peas, 
lentils, or chickpeas harvested as whole grain, peanuts, hay, renewable 
biomass, fruits and vegetables (including nuts), aquaculture, 
floriculture, hops, milk, rye, maple sap, honey, meat, poultry, eggs, 
cheese, butter, yogurt, and other storable commodities as determined by 
the Secretary. Corn, grain sorghum, wheat, and barley are included 
whether harvested as whole grain or other than whole grain.
    Financing statement means the appropriate document that gives legal 
notice of a security interest in personal property when properly filed 
or recorded.
    FSA means the Farm Service Agency of the USDA.
    FSFL means Farm Storage Facility Loan.
    FSFL microloan means a loan for which the producer's aggregate 
outstanding FSFL balance will be equal to or less than $50,000 at the 
time of loan application and disbursement.
    Hay means a grass or legume that has been cut and stored. Commonly 
used grass mixtures include rye grass, timothy, brome, fescue, coastal 
Bermuda, orchard grass, and other native species, depending on the 
region. Forage legumes include alfalfa and clovers.
    NAP means the Noninsured Crop Disaster Assistance Program.
    NEPA means the National Environmental Policy Act.
    NIFA means the National Institute of Food and Agriculture of the 
USDA.
    Non-movable or non-salable collateral means either collateral the 
county committee determines cannot be sold and moved to a new location 
because of the type of construction involved or because the collateral 
has deteriorated to the point that it has no sale recovery value.
    Off-farm paid labor means any laborer that does not work for the 
applicant on a regular basis and who is not hired as a seasonal worker.
    OSHA means the Occupational Safety and Health Administration of the 
U.S. Department of Labor.
    Portable equipment and storage structures means non-affixed 
equipment and storage containers that are manufactured to be mounted, 
hitched, or transported with a farm vehicle, truck, or trailer and its 
primary function is to store or handle eligible facility loan 
commodities at different farm, market, or storage locations. Examples of 
portable equipment include, but are not limited to, bulk tanks, 
conveyors, augers, scales, vacuums, pilers, scales, batch dryers, and 
storage containers.
    Renewable biomass means any organic matter that is available on a 
renewable or recurring basis including renewable plant material such as 
feed grains or other agricultural commodities (including, but not 
limited to, soybeans and switchgrass), other plants and trees (excluding 
old-growth timber), algae, crop residue (including, but not limited to, 
corn stover, various straws and hulls, and orchard prunings), other 
vegetative waste material (including, but not limited to, wood waste, 
wood residues, and food and yard waste) used for the production of 
energy in the form of heat, electricity, and liquid, solid, or gaseous 
fuels. Manure from any source is not included.
    Resale collateral value means collateral that can be sold and moved 
to a new location for which compensation equal to the outstanding loan 
value can be expected.
    Satisfactory credit history means a history of repaying debts as 
they came due unless the failure to repay or tardiness in payment was 
due to circumstance beyond the applicant's control as determined by CCC 
upon proof submitted by the applicant.
    Severance agreement means an agreement under which a party may 
consent to the security interest of another in property thereby allowing 
the severance of a fixture from the real estate.
    Storage and handling truck means a CCC-approved commodity storage 
truck or van designed to carry eligible commodities and may be equipped 
with a variety of mechanical refrigeration

[[Page 733]]

systems and will be used to store, handle, and move eligible commodities 
from the producer's farm location to market or storage.
    Subordination agreement means any agreement under which a party may 
subordinate a security interest in property to the interest of another 
party.
    USDA means the United States Department of Agriculture.

[66 FR 4612, Jan. 18, 2001, as amended at 67 FR 54938, Aug. 26, 2002; 74 
FR 41587, Aug. 18, 2009; 81 FR 25592, Apr. 29, 2016]

    Editorial Note: At 81 FR 25592, Apr. 29, 2016, Sec.1436.3 was 
amended; however, the amendment could not be incorporated due to 
inaccurate amendatory instruction.



Sec.1436.4  Application for loans.

    (a) An application for an FSFL must be submitted to the 
administrative FSA county office that maintains the records of the farm 
or farms to which the applicant applies. If some or all of the land does 
not have farm records established, the application may be submitted to 
the FSA county office that services the county where the FSFL financed 
equipment or facility will be primarily located.
    (b) Upon request, the applicant must furnish information and 
documents as the State or county committee deems reasonably necessary to 
support the application. This may include financial statements, 
receipts, bills, invoices, purchase orders, specifications, drawings, 
plats, or written authorization of access.
    (c) For sugar storage facility loans, a loan application must be 
submitted to the county FSA office that maintains the applicant's 
records. If no such records exist, loan applications must be submitted 
to the county office serving the headquarters location of the sugar 
processor.
    (d) Submitting an application does not ensure loan approval nor 
create any liability on behalf of CCC. Borrowers who authorize delivery, 
site preparation, or construction actions without an approved loan, do 
so at their own risk.
    (e) The application must include documentation of the need for 
storage, or for FSFL microloans self-certification, as specified in 
Sec.1436.9.

[74 FR 41587, Aug. 18, 2009, as amended at 81 FR 25593, Apr. 29, 2016]



Sec.1436.5  Eligible borrowers.

    (a) Borrower means a person who, as landowner, landlord, operator, 
producer, tenant, leaseholder, sharecropper, or processor of 
domestically produced sugarcane or sugar beets:
    (1) Has a satisfactory credit history according to the definition in 
Sec.1436.3 and as recommended to the approving committee by a FSA 
employee with FSA loan approval authority;
    (2) Demonstrates an ability to repay the debt arising under this 
program using a financial statement acceptable to CCC prepared within 90 
days of the date of application, as recommended to the approving 
committee by a FSA employee with FSA loan approval authority;
    (3) Has no disqualifying delinquent Federal debt under the Debt 
Collection Improvement Act of 1996;
    (4) Is a producer of a facility loan commodity as determined by CCC;
    (5) Demonstrates a need for increased storage capacity as determined 
by CCC if the applicant is applying for a loan for a storage structure. 
The Deputy Administrator, Farm Programs, may issue a waiver, if 
requested, on a case by case basis if a crop share landlord or tenant 
requests to construct a structure to store commodities produced on the 
farm but only one of the two wishes to accept loan liability;
    (6) Annually provides proof of crop insurance offered under the 
Federal Crop Insurance Program for insurable crops of economic 
significance on all farms operated by the borrower in the county where 
the storage facility is located. Crop insurance or Noninsured Crop 
Disaster Assistance Program (NAP) coverage, if available, is required on 
all the commodities stored in the FSFL-funded facility, whether 
economically significant or not; crop insurance under the Federal Crop 
Insurance Program may not be available for certain renewable biomass 
commodities;

[[Page 734]]

    (7) Is in compliance with the U.S. Department of Agriculture (USDA) 
provisions for highly erodible land and wetlands conservation provisions 
according to 7 CFR part 12;
    (8) Demonstrates compliance with any applicable local zoning, land 
use, and building codes for the applicable farm storage facility 
structures;
    (9) Annually provides proof of flood insurance if CCC determines 
such insurance is necessary to protect the interests of CCC, and 
annually provides proof that the structures for which the loan is made 
has all peril structural insurance;
    (10) Demonstrates compliance with the National Environmental Policy 
Act regulations at 40 CFR parts 1500-1508; and
    (11) Has not been convicted under Federal or State law of a 
disqualifying controlled substance violation or a crop insurance 
violation under 7 CFR part 718.
    (b) For sugar facility loans:
    (1) Paragraphs (a)(4), (6), and (7) of this section do not apply.
    (2) Sugar processors must be approved by CCC to store sugar owned by 
CCC or pledged as security to CCC for non-recourse loans.

[66 FR 4612, Jan. 18, 2001; 66 FR 17073, Mar. 29, 2001, as amended at 67 
FR 54938, Aug. 26, 2002; 74 FR 41588, Aug. 18, 2008]



Sec.1436.6  Eligible storage or handling equipment.

    (a) All eligible storage and handling facilities must be one of the 
following types:
    (1) Conventional-type cribs or bins designed and engineered for 
whole grain storage and having a useful life of at least the entire term 
of the loan;
    (2) Oxygen-limiting storage structures or remanufactured oxygen-
limiting storage structures built to the original manufacturer's design 
specifications using original manufacturer's rebuild kits or kits from a 
supplier approved by the Deputy Administrator, Farm Programs, and other 
upright silo-type structures designed for whole grain storage or other 
than whole grain storage and with a useful life of at least the entire 
term of the loan;
    (3) Flat-type storage structures including a permanent concrete 
floor, designed for and primarily used to store facility loan 
commodities for the term of the loan and having a useful life of at 
least the entire term of the loan;
    (4) Structures that are bunker-type, horizontal, or open silo 
structures designed for whole grain storage or other than whole grain 
storage and having a useful life of at least the entire term of the 
loan;
    (5) Structures suitable for storing hay that are built according to 
acceptable design guidelines from the National Institute of Food and 
Agriculture (NIFA) or land-grant universities and with a useful life of 
at least the entire term of the loan;
    (6) Structures suitable for storing renewable biomass that are built 
according to acceptable industry guidelines and with a useful life of at 
least the entire term of the loan; or
    (7) Bulk storage tanks, as approved by the Deputy Administrator, 
suitable for storing any eligible loan commodity, as determined 
appropriate by county committees and having a useful life of at least 
the entire term of the loan.
    (b) For all eligible facility loan commodities, except sugar, the 
calculation of the loan amount may include costs associated with 
building, improving, or renovating an eligible storage or handling 
facility, including:
    (1) Drying and handling equipment, including perforated floors 
determined by the FSA approving committee to be needed and essential to 
the proper functioning of the storage system;
    (2) Safety equipment as required by CCC and meeting OSHA 
requirements such as lighting, and inside and outside ladders;
    (3) Equipment to improve, maintain, or monitor the quality of stored 
eligible facility loan commodity, such as cleaners, moisture testers, 
and heat detectors;
    (4) Electrical equipment, including labor and materials for 
installation, such as lighting, motors, and wiring integral to the 
proper operation of the eligible facility loan commodity storage and 
handling equipment;
    (5) Concrete foundations, aprons, pits, and pads (including site 
preparation, labor and materials) essential to

[[Page 735]]

the proper operation of the eligible facility loan commodity storage and 
handling equipment; and
    (6) Flooring appropriate for storing hay and renewable biomass 
suitable for the region where the facility is located and designed 
according to acceptable guidelines from NIFA or land-grant universities.
    (c) For all eligible facility loan commodities, except sugar, no 
loans will be made for installation or related costs of:
    (1) Structures of a temporary nature that require the weight or bulk 
of the stored commodity to maintain its shape (such as fences or bags);
    (2) Structures that are not suitable for storing the facility loan 
commodities for which a need is determined; or
    (3) Storage structures to be used as a commercial facility. Any 
facility that is in working proximity to any commercial storage 
operation will be considered to be part of a commercial storage 
operation.
    (d) Loans for all eligible facility loan commodities, except sugar, 
may be approved for financing additions to or modifications of an 
existing storage facility with an expected useful life of at least the 
entire term of the loan if the county committee determines there is a 
need for the capacity of the structure, but loans will not be approved 
solely for the replacement of worn out items such as motors, fans, or 
wiring.
    (e) Loans for all eligible facility loan commodities, except sugar, 
may be approved for facilities provided the completed facility has a 
useful life of at least the entire term of the loan. The pre-owned 
facility must be purchased and moved to a new location. Eligible items 
for such a loan include costs such as bin rings or roof panels needed to 
make a purchased pre-owned structure useable, aeration systems, site 
preparation, construction off-farm paid labor cost, foundation material 
and off-farm paid labor. Ineligible items for such a loan include the 
cost of purchasing and moving the used structure.
    (f) The provisions of this paragraph apply only to sugar storage 
facility loans.
    (1) The loan amount may include costs associated with the purchase, 
installation, building, improving, remodeling or renovating an eligible 
storage or handling facility. Eligible facilities include the following:
    (i) Conventional-type bins or silos designed for and used to store 
raw or refined sugar, having a useful life of at least 15 years;
    (ii) Flat-type storage structures including a permanent concrete 
floor, designed for and used to store raw or refined sugar, having a 
useful life of at least 15 years;
    (iii) Storage structures designed for and used to store in-process 
sugar, having a useful life of at least 15 years.
    (iv) Permanently affixed sugar handling equipment determined by the 
CCC to be needed and essential to the proper functioning of the sugar 
storage system;
    (v) Safety equipment CCC requires such as lighting, and inside and 
outside ladders;
    (vi) Equipment to improve, maintain, or monitor the quality of 
stored sugar, such as moisture testers, and heat detectors;
    (vii) Electrical equipment, including labor and materials for 
installation, such as lighting, motors, and wiring integral to the 
proper operation of the sugar storage and handling equipment; and
    (viii) Concrete foundations, aprons, pits, and pads (including site 
preparation, labor and materials) essential to the proper operation of 
the sugar storage and handling equipment.
    (2) Sugar storage facility, loans may be approved for financing 
additions to or modifications of an existing storage facility with an 
expected useful life of at least 15 years if CCC determines there is a 
need for the capacity of the structure.
    (3) No sugar storage facility loans will be made for:
    (i) Structures of a temporary natures that require the weight or 
bulk of the stored commodity to maintain its shape (such as fences or 
bags);
    (ii) Structures that are not suitable for storing raw or refined 
sugar; or
    (iii) Weigh scales.
    (g) The provisions of this paragraph apply only to cold storage 
facility loans.

[[Page 736]]

    (1) For cold storage facility loans, the loan amount may include 
costs associated with the purchase, installation, building, improving, 
remodeling, or renovating an eligible storage or handling facility. 
Costs associated with the construction of a cold storage facility 
include, but are not limited to, the following: An insulated cement slab 
floor, insulation for walls and ceiling (including, but not limited to, 
loose fill cellulose, foam insulation sheets, sprayed-on and foam-in-
place materials), and a vapor barrier.
    (2) Eligible facilities include, but are not limited to, the 
following:
    (i) A cold storage facility of wood pole and post construction, 
steel, or concrete, that is suitable for storing cold storage 
commodities produced by the borrower and having a useful life of at 
least the entire term of the loan;
    (ii) Walk-in prefabricated cold storage coolers that are suitable 
for storing the producer's cold storage commodities and having a useful 
life of at least the entire term of the loan;
    (iii) Equipment necessary for a cold storage facility such as 
refrigeration units or system and circulation fans;
    (iv) Equipment to maintain or monitor the quality of commodities 
stored in a cold storage facility;
    (v) Electrical equipment, including labor and materials for 
installation, such as lighting, motors, and wiring integral to the 
proper operation of a cold storage facility.
    (3) FSFLs may be approved for financing additions or modifications 
to an existing storage facility having an expected useful life of at 
least the entire term of the loan if CCC determines there is a need for 
the capacity of the cold storage facility.
    (4) FSFLs will not be made for structures or equipment that are not 
suitable for facility loan commodities that require cold storage.
    (h) Storage and handling trucks for facility loan commodities are 
authorized according to guidelines established by the Deputy 
Administrator. Storage and handling trucks may include, but are not 
limited to, cold storage reefer trucks, grain haulers, and may also 
include storage trucks with a chassis unit. The Deputy Administrator, 
Farm Programs, or a State Committee may rescind this provision on a 
Statewide basis if it is determined that allowing loans for storage and 
handling trucks has increased loan defaults and is not in the best 
interest of CCC.
    (i) The loan collateral must be used for the purpose for which it 
was delivered, erected, constructed, assembled, or installed for the 
entire term of the loan.

[66 FR 4612, Jan. 18, 2001, as amended at 67 FR 54938, Aug. 26, 2002; 74 
FR 41588, Aug. 18, 2009; 76 FR 4805, Jan. 27, 2011; 81 FR 25593, Apr. 
29, 2016]



Sec.1436.7  Loan term.

    (a) For eligible facility loan commodities other than sugar, the 
term of the loan will not exceed 12 years, based on the total loan 
principal and loan request type, from the date a promissory note and 
security agreement is completed on both the partial and final loan 
disbursement. As determined by the Deputy Administrator, used equipment 
FSFLs may have a loan term of 3 or 5 years. The applicant will choose a 
loan term, based on the loan request type at the time of submitting the 
loan application and total cost estimates. Available loan terms are 3, 
5, 7, 10, or 12 years; available terms for a specific loan will be based 
on the loan principal and facility or equipment type.
    (b) The Deputy Administrator has the discretion and authority to 
extend loan terms for 1 or 2 years, on a case by case basis. Loan term 
extensions will only be granted after a written request is received from 
the producer before loan term expires and when determined appropriate by 
Deputy Administrator to assist borrowers with additional loan servicing 
options. Producers and participants who have already agreed to the loan 
term (maturity date) have no right to an extension of the loan term. The 
borrower agrees to the loan term through the Promissory Note at the time 
of distribution. The Deputy Administrator's refusal to exercise 
discretion to consider an extension will not be considered an adverse 
decision or a failure to act under any law or regulation and, therefore, 
is not appealable. Participants are not entitled to extensions or the 
consideration of a request for extension.
    (c) For a sugar-related loan:

[[Page 737]]

    (1) CCC, at its discretion, may authorize a maximum loan term of 15 
years. The minimum loan term of a sugar-related loan is 7 years.
    (2) The loan balance and costs are due at the end of the loan term, 
which will be established on the date the promissory note and security 
agreement is executed.

[74 FR 41589, Aug. 18, 2009, as amended at 81 FR 25594, Apr. 29, 2016]



Sec.1436.8  Security for loan.

    (a) Except as agreed to by CCC, all loans must be secured by a 
promissory note and security agreement covering the facility and such 
other assurances as CCC may demand, subject to the following:
    (1) The promissory note and security agreement must grant CCC a 
security interest in the collateral and must be perfected in the manner 
specified in the laws of the State where the collateral is located.
    (2) CCC's security interest in the collateral must be the sole 
security interest in such collateral except for prior liens on the 
underlying real estate that by operation of law attach to the collateral 
if it is or will become a fixture. If any such prior lien on the real 
estate will attach to the collateral, a severance agreement must be 
obtained in writing from each holder of such a lien, including all 
government or USDA agencies. No additional liens or encumbrances may be 
placed on the facility after the loan is approved unless CCC approves 
otherwise in writing.
    (3) CCC will hold title in accordance to applicable State laws and 
motor vehicle administration title provisions, to all eligible 
equipment, structures, components and storage and handling trucks 
acquired using loan proceeds under this part.
    (b) For loan amounts equal to or less than $100,000, or when the 
aggregate outstanding FSFLs balance will be equal to or less than 
$100,000, CCC will not require a severance agreement from the holder of 
any prior lien on the real estate parcel on which the facility is 
located. However, the Deputy Administrator, Farm Programs, or a State 
Committee may, at their discretion, require a severance agreement for 
loan amounts greater than $50,000 or less than $100,000 for all FSFLs in 
the State, if deemed necessary to protect the interests of CCC. If no 
severance agreement is provided, then the borrower must:
    (1) Agree to increase the down payment on the facility loan from 15 
percent to 20 percent, except for an FSFL microloan; or
    (2) Provides other security such as an irrevocable letter of credit 
or other form of security approved by CCC.
    (c) For loan amounts equal to or less than $100,000, or when the 
aggregate outstanding FSFLs balance will be equal to or less than 
$100,000, CCC will not require a lien on the real estate parcel on which 
the facility is located. However, the Deputy Administrator, Farm 
Programs or a State Committee may, at their discretion, require a lien 
in the form of a real estate mortgage, deed of trust, or other security 
instrument approved by USDA's Office of the General Counsel for loans 
greater than $50,000 or less than $100,000 for all FSFLs in the State, 
if deemed necessary to protect the interests of CCC. Liens are required 
for all loans greater than $100,000. All liens must meet the following 
conditions:
    (1) CCC's interest in the real estate must be superior to all other 
liens, except a loan may be secured by a junior lien on real estate when 
the loan is adequately secured and a severance agreement is obtained 
from prior lien holders; and
    (2) The real estate security for the loan must be at least equal to 
the loan amount; and
    (3) If the real estate is covered by a prior lien, a lien waiver may 
be obtained by means of a subordination agreement approved for use in 
the State by USDA's Office of the General Counsel. CCC will not require 
such an agreement from any agency of USDA.
    (d) Title insurance or a title opinion is required for loans secured 
by real estate.
    (e) Real estate liens, with prior CCC approval, may cover land 
separate from the collateral if a lien on the underlying real estate is 
not feasible and if:
    (1) The borrower owns the separate acreage and the acreage is not 
subject to any other liens or mortgages that are superior to CCC's lien 
interest and

[[Page 738]]

    (2) The acreage is of adequate size and value at the time of the 
application as determined by the county committee to adequately secure 
and insure repayment of the loan.
    (f) A borrower, in lieu of such liens required by this section, may 
provide an irrevocable letter of credit, bond, or other form of 
security, as approved by CCC.
    (g) If an existing structure is remodeled and an addition becomes an 
attached, integral part of the existing storage structure, CCC's 
security interest will include the remodeled addition as well as the 
existing storage structure.
    (h) For all farm storage facility loans, except sugar loans, the 
borrower must pay the cost of loan closings by attorneys, title 
opinions, title insurance, title searches, filing, and recording all 
real estate liens, fixture filings, appraisals if requested by the 
borrower, and all subordinations. CCC will pay costs relating to credit 
reports, collateral lien searches, and filing and recording financing 
statements for the collateral.
    (i) For loan amounts equal to or less than $100,000, or when the 
aggregate outstanding FSFLs balance will be equal to or less than 
$100,000, and secured by collateral without any resale value, as 
determined by CCC, additional security will not be required. However, 
the Deputy Administrator, Farm Programs or a State Committee may, at 
their discretion, for all FSFLs in the State, require additional 
security for loan amounts greater than $50,000 or less than $100,000 
that are secured by collateral without any resale value if deemed 
necessary to protect the interests of the CCC.
    (j) For sugar storage facility loans, in addition to other 
requirements in this section, additional security, including real 
estate, chattels, crops in storage, and other assets owned by the 
applicant, is required if deemed necessary by CCC to adequately secure 
the loan. A sugar storage facility loan will generally be considered to 
be adequately secured when the CCC-determined value of security for the 
loan is equal to at least 125 percent of the loan amount.
    (k) For sugar storage facility loans, paragraph (h) of this section 
is not applicable. However, the borrower must pay all loan making fees 
and closing costs. This includes, but is not limited to, attorney fees 
for loan closings, environmental assessments and studies, chattel and 
real estate appraisals, title opinions, title insurance, title searches, 
and filing and recording all real estate liens, fixture filings, 
subordinations, credit reports, collateral lien searches, and filing and 
recording financing statements for the collateral.

[74 FR 41589, Aug. 18, 2009, as amended at 79 FR 13192, Mar. 10, 2014; 
81 FR 25594, Apr. 29, 2016]



Sec.1436.9  Loan amount and loan application approvals.

    (a) The cost on which the loan will be based is the net cost of the 
eligible facility, accessories, and services to the applicant after 
discounts and rebates, not to exceed a maximum per-bushel, -ton or, -
cubic foot cost established by the FSA State committee.
    (b) The net cost for all facilities:
    (1) May include the following: All real estate lien related fees 
paid by the borrower, including attorney fees, except for filing fees; 
environmental and historic review fees including archaeological study 
fees; the facility purchase price; sales tax; shipping; delivery 
charges; site preparation costs; installation cost; material and labor 
for concrete pads and foundations; material and labor for electrical 
wiring; electrical motors; off-farm paid labor; on-farm site preparation 
and construction equipment costs not to exceed commercial rates approved 
by the county committee; and recently required on-farm material approved 
by the county committee.
    (2) May not include secondhand material or any other item determined 
by the approving authority to be ineligible for loan.
    (c) The maximum total principal amount of the FSFL, except for FSFL 
microloans, is 85 percent of the net cost of the applicant's needed 
facility, not to exceed $500,000 per loan. For FSFL microloans the 
maximum total principal amount of the farm storage facility loan is 95 
percent of the net costs of the applicant's needed storage,

[[Page 739]]

handling facility, including drying and handling equipment, or storage 
and handling trucks, not to exceed an aggregate outstanding balance of 
$50,000.
    (d) The storage need requirement for eligible facility loan 
commodities will be determined as follows:
    (1) For facility loan commodities, except sugar, cold storage 
commodities, maple sap, and milk:
    (i) Multiply the average of the applicant's share of the acres 
farmed for the most recent three years for each type of facility loan 
commodity requiring suitable storage at the proposed facility;
    (ii) By a yield determined reasonable by the county committee;
    (iii) Multiply by two (for 2 years production); and
    (iv) Subtract existing storage capacity in the units of measurement, 
such as bushels, tons, or cubic feet, for the type of storage needed to 
determine remaining storage need.
    (v) Compare capacity of proposed facility with storage need 
(calculated as specified in paragraphs (d)(1)(i)-(iv) of this section) 
to determine if applicant is eligible for additional storage.
    (2) For sugar storage facility loans,
    (i) Identify past processing volume and marketing allotments;
    (ii) Use the processor's projection of processing volume, available 
storage capacity, volume not to be marketed due to marketing allotment, 
and other appropriate factors affecting the processor's storage need to 
estimate the storage need requirement, and
    (iii) Compare capacity of proposed facility with storage need 
(estimated as specified in paragraphs (d)(2)(i)-(ii) of this section) to 
determine if additional storage is required.
    (3) For cold storage facilities:
    (i) Multiply the average of the applicant's share of production or 
of acres farmed for the most recent 3 years for each eligible commodity 
requiring cold storage at the proposed facility;
    (ii) By a yield determined reasonable by the county committee;
    (iii) Determine cold storage needed (calculated as specified in 
paragraphs (d)(3)(i)-(ii) of this section) with the assistance of NIFA, 
land-grant university, or ARS publications; and
    (iv) Subtract existing cold storage capacity to determine remaining 
storage need.
    (v) Compare capacity of proposed cold storage facility with cold 
storage need (calculated as specified in paragraphs (d)(3)(i)-(iv) of 
this section) to determine if applicant is eligible for additional cold 
storage.
    (4) For all eligible facility loan commodities, except sugar, if 
acreage data is not practicable or available for State and County 
Committees or authorized FSA staff to determine the storage need, 
specifically, but not limited to, maple sap, eggs, butter, cheese, 
yogurt, milk, meat and poultry, a reasonable production yield, such as 
ERS or NASS data may be used to determine the storage capacity need. A 
reasonable production yield may also be used for newly acquired farms, 
specialty farming, changes in cropping operations, prevented planted 
acres, or for facility loan commodities being grown for the first time.
    (5) For FSFL microloans if the FSA State and county committees 
determine that self-certification is practicable based on the 
applicant's farm operation, then CCC may allow applicants to self-
certify to the storage capacity need. The Deputy Administrator, Farm 
Programs, or an FSA State committee may rescind the FSFL microloan 
provision on a Statewide basis if it is determined that allowing FSFL 
microloans has increased the likelihood of loan defaults and is not in 
the best interest of CCC.
    (e) When a storage structure has a larger capacity than the 
applicant's needed capacity, as determined by CCC, the net cost eligible 
for a loan will be prorated. Only costs associated with the applicant's 
needed storage capacity will be considered eligible for loan under this 
part.
    (f) Any borrower with an outstanding loan must use the financed 
structure only for the storage of eligible facility loan commodities. If 
a borrower uses such structure for other purposes such as office space 
or display area, the loan amount will be adjusted for the ineligible 
space as determined by CCC.
    (g) The FSA county committee may approve applications, if loan funds 
are available, up to the maximum approval

[[Page 740]]

amount unless the Deputy Administrator, Farm Programs, or the FSA State 
committee establishes a lower limit for county committee approval 
authority.
    (h) The Farm storage facility loan approval period, which is the 
timeframe, from approval until expiration, during which the facility 
must be completely and fully delivered, erected, constructed, assembled, 
or installed and a CCC representative has inspected and approved such 
facility for all eligible facility loan commodities except sugar, will 
expire 6 months after the date of approval unless extended in writing 
for an additional 6 months by the FSA State Committee. A second 6 month 
extension, for a total of 18 months from the original approval date, may 
be approved by the FSA State Committee. This authority will not be re-
delegated. Sugar storage facility loan approvals will expire 8 months 
after the date of approval unless extended in writing for an additional 
4 months by the FSA State Committee.
    (i) For sugar storage facility loans, paragraphs (c) and (g) of this 
section do not apply.
    (j) For sugar storage facility loans, the agency approval officials 
may only approve loans, subject to available funds.

[74 FR 41590, Aug. 18, 2009, as amended at 76 FR 4805, Jan. 27, 2011; 81 
FR 25595, Apr. 29, 2016]



Sec.1436.10  Down payment.

    (a) A minimum down payment representing the difference between the 
net cost of the facility and the amount of the loan determined in 
accordance with Sec.1436.9 will be made by the loan applicant to the 
supplier or contractor before either the partial or final loan 
disbursements.
    (b) The down payment must be in cash unless some other form of 
payment is approved by CCC. The down payment may be obtained by the 
borrower from another lending source.
    (c) The down payment may not include any trade-in, discount, rebate, 
credit, deferred payment, post-dated check, or promissory note to the 
supplier or contractor.
    (d) The minimum down payment for an FSFL will be 5 percent for an 
FSFL microloan and 15 percent for all other FSFLs, with the down payment 
to be calculated as a percentage of net cost as specified in Sec.
1436.9. As specified in Sec.1436.8, a larger down payment may be 
required to meet security requirements.

[66 FR 4612, Jan. 18, 2001, as amended at 74 FR 41590, Aug. 18, 2009; 81 
FR 25595, Apr. 29, 2016]



Sec.1436.11  Disbursements and assignments.

    (a) At the request of the borrower, one partial disbursement of loan 
principal and one final loan disbursement will be available. The partial 
loan disbursement will be made to facilitate the purchase and 
construction of an eligible facility and will be made after the approved 
applicant has completed construction on part of the structure. County 
FSA personnel will inspect and verify the amount of construction 
completed.
    (1) The amount of the partial loan disbursement will be determined 
by CCC and made after the borrower provides acceptable documentation for 
that portion of the completed construction to the County Committee.
    (2) Security required for the amount of the partial loan 
disbursement will be required before the partial loan disbursement is 
finalized.
    (3) The final disbursement of the loan by CCC will be made after the 
facility has been completely and fully delivered, erected, constructed, 
assembled, or installed and a CCC representative has inspected and 
approved such facility.
    (4) All additional security needed to fully secure both the partial 
and final loan disbursements must be received before the final loan 
disbursement.
    (b) Both the partial and final loan disbursements will be made only 
if the borrower furnishes satisfactory evidence of the total cost of the 
facility and payment of all debts on the facility in excess of the 
amount of the loan. If deemed appropriate by CCC, the partial and final 
disbursement may have separate notes and separate security instruments.

[[Page 741]]

    (c) Both the partial and final loan disbursement will be made 
jointly to the borrower and the contractor or supplier, except 
disbursement may be made to the borrower solely where CCC determines, 
based upon information made available to CCC by the borrower, that the 
borrower has paid the contractor or supplier all amounts that are due 
and owing with respect to the facility and that all applicable liens, 
security interests, or other encumbrances have been released.
    (d) A release of liability will be required from all contractors and 
suppliers providing goods and services to the loan applicant.
    (e) Loan proceeds cannot be assigned.
    (f) For sugar storage facility loans, only one disbursement will be 
made and such disbursement will be regarded as a final disbursement.

[74 FR 41591, Aug. 18, 2009, as amended at 81 FR 25595, Apr. 29, 2016]



Sec.1436.12  Interest and fees.

    (a) Loans will bear interest at the rate equivalent, as determined 
by CCC, to the rate of interest charged on Treasury securities of 
comparable term and maturity on the date the loan is initially approved.
    (b) The interest rate for each loan will remain in effect for the 
term of the loan.
    (c) Each borrower on a loan application must pay a non-refundable 
application fee in such amount determined appropriate by CCC; the fee 
will be not less than $100 per borrower. The loan application fee is 
determined based on the cost of the fees associated with the loan, 
including, but not limited to, the cost to CCC for lien searches, 
security filings, and credit reports.
    (d) For sugar storage facility loans, paragraph (c) of this section 
does not apply.

[73 FR 41591, Aug. 18, 2009]



Sec.1436.13  Loan installments, delinquency, and acceleration of maturity date.

    (a) Equal installments of principal plus interest will be amortized 
over the loan term for purposes of setting a payment schedule. 
Installments are due and payable not later than the last day of each 12-
month period of each of the partial and final loan disbursements, until 
the principal plus interest has been paid in full.
    (b) Each installment may be paid in cash, money order, wire 
transfer, or by personal, certified, or cashier's check. Each payment 
will be applied first to accrued interest and then to principal.
    (c) When installments are not paid on the due date:
    (1) CCC will generally mail a demand for payment to the debtor after 
the due date has passed.
    (2) If the installment is not paid within 30 calendar days of the 
due date or if a new due date acceptable to CCC has not been established 
based on a financial plan submitted by the debtor, CCC may send two 
subsequent written demands at approximately 30 calendar day intervals 
unless CCC needs to take other action to protect the interests of CCC.
    (3) If the debtor files an appeal according to Sec.1436.18, CCC 
will generally cease collection action until the appeal process is 
complete, however, CCC may withhold any payments due the debtor and, 
depending on the outcome of the appeal, any payments due the debtor may 
later be offset and applied to reduce the indebtedness.
    (4) In lieu of a foreclosure on the collateral or the land securing 
a loan in the case of a delinquency, CCC may permit a rescheduling of 
the debt or other measures consistent with the collection of other debts 
under the provisions of part 1403 of this chapter. Any rescheduling or 
alternate repayment arrangements will be permitted only with prior 
approval from the Deputy Administrator, Farm Programs. Alternately, CCC 
may implement such other collection procedures as it deems appropriate.
    (d) A claim will be established against a borrower for any amounts 
remaining due after liquidation of the loan.
    (e) CCC may declare the entire indebtedness immediately due and 
payable if the borrower violates any of the terms and conditions of this 
part, fails to pay any installment on time, or breaches any of the terms 
and conditions of any of the instruments executed in connection with the 
loan, or if

[[Page 742]]

, during the life of the loan, the collateral is used in connection with 
or by any unauthorized commercial facility including, but not limited 
to, elevators, warehouses, dryers, processing plants, or retail or 
wholesale cold storage facilities.
    (f) Any action authorized by the provisions of this section may be 
taken:
    (1) Against a debtor's pro rata share of payments due any entity 
that the borrower participates in, either directly or indirectly, as 
determined by CCC.
    (2) Against related persons or entities, irrespective of the 
debtor's, share, when CCC determines that the debtor has established an 
entity, or reorganized, transferred ownership of, or changed in some 
other manner, their operation, for the purpose of avoiding the payment 
of the debt.
    (g) The loan may be paid in full or in part without penalty at any 
time before maturity.
    (h) Upon payment of a loan, CCC will release CCC's security interest 
in the collateral.

[66 FR 4612, Jan. 18, 2001, as amended at 74 FR 41591, Aug. 18, 2009]



Sec.1436.14  Taxes.

    The borrower must pay, when due, all real and personal property 
taxes that may affect CCC's security interest in all collateral or land 
securing the note evidencing the loan. To protect its interests, CCC may 
pay any unpaid taxes with respect to the collateral or land securing a 
loan made in accordance with this part, and if CCC does so, the borrower 
will reimburse CCC for such payment, and if unpaid by the borrower, such 
debt will become due immediately.

[66 FR 4612, Jan. 18, 2001, as amended at 74 FR 41591, Aug. 18, 2009]



Sec.1436.15  Maintenance, liability, insurance, and inspections.

    (a) The borrower must maintain the loan collateral in a condition 
suitable for the storage or handling of one or more of the facility loan 
commodities.
    (b) Until the loan has been repaid, the borrower will be liable for 
all damages to or destruction of the collateral. CCC will not assume any 
loss of the collateral.
    (c) CCC may conduct annual collateral inspections to insure 
compliance with this part. The borrower must consent to such inspection 
as a term of the loan and failure to supply such access will put the 
borrower into default.
    (d) Facilities must be insured against all perils in all cases and 
must also be insured against flooding if the structure is located in a 
flood plain, as determined by CCC. Proof of flood insurance, if 
required, and proof of all peril insurance, must be provided to CCC 
annually. CCC must be listed as a loss payee on all peril and flood 
insurance policies.
    (e) CCC will have rights to enter, leave, and return to the property 
where the facility is located. Failure of the borrower to secure such 
access will render a borrower ineligible for the loan and, if a loan has 
already been made will constitute a loan default for which the remaining 
balance of the loan will become immediately due and payable.
    (f) For sugar storage facility loans, in addition to the 
requirements of paragraph (d) of this section, sugar processors must 
also insure the contents of storage structures used as collateral for a 
sugar storage facility loan against all perils.

[66 FR 4612, Jan. 18, 2001, as amended at 67 FR 54939, Aug. 26, 2002; 74 
FR 41591, Aug. 18, 2009; 81 FR 25595, Apr. 29, 2016; 82 FR 16101, Apr. 
3, 2016]



Sec.1436.16  Foreclosure, liquidation, assumptions, sales
or conveyance, or bankruptcy.

    (a) The collateral or land securing a loan may be sold by CCC 
whenever CCC has declared the entire indebtedness immediately due and 
payable under this part as follows:
    (1) If a demand for payment is not received by the due date 
acceptable to CCC, CCC may call the loan and initiate foreclosure 
proceedings by issuing a liquidation letter to the borrower.
    (2) The debtor may voluntarily agree to allow removal of the 
collateral to facilitate sale by signing an agreement for sale. If the 
debtor objects to removal of collateral, the law of the

[[Page 743]]

State where the collateral exists will be used to foreclose on the 
property.
    (3) For loans with movable collateral and no real estate lien, CCC 
may sell the collateral for the best price obtainable. Sales proceeds 
will be distributed in the following order:
    (i) To CCC to satisfy the debtor's indebtedness including all costs 
associated with selling the collateral.
    (ii) Payment to junior lien holders if approved by USDA's Office of 
the General Counsel and then to the borrower or other persons as 
determined appropriate by that office.
    (4) For loans with non-movable or non-salable collateral, as 
determined by CCC, and no real estate lien, CCC may establish a claim 
according to 7 CFR part 1403.
    (5) For loans secured with a real estate lien, CCC may obtain an 
appraisal of the property. Sales proceeds will be distributed in the 
following order:
    (i) To CCC to satisfy the debtor's indebtedness including all costs 
associated with selling the collateral and the appraisal.
    (ii) To junior lien holders if approved by USDA's Office of the 
General Counsel; or
    (iii) To the borrower or other persons as determined appropriate by 
that office.
    (b) Assumption by another borrower of a farm storage facility loan 
is permitted subject to county committee approval and the subsequent 
borrower's ability to show a satisfactory credit history. An assumption 
of the loan may be approved when the collateral is sold by CCC to an 
otherwise eligible borrower, the current borrower will convey the 
collateral or property securing the loan to another eligible borrower, 
or the borrower is dead, incompetent, or missing and an eligible 
borrower wants to assume the loan.
    (1) Requests for approval of assumptions must be made to the county 
committee by the borrower, the borrower's successors, or representatives 
of the borrower. If approval is granted, the borrower's successors or 
representatives must execute a new farm storage facility note and 
security agreement for the balance of the term of the loan.
    (2) The principal amount of the loan will include the unpaid amount 
of the loan, interest computed to the date of assumption, all past due 
installments, and any other charges that may be required.
    (c) The borrower may voluntarily convey the collateral to CCC before 
repaying the loan. Before a borrower sells or conveys the facilities 
securing a loan without repaying the loan in full, the borrower must 
obtain approval for the sale or conveyance from the FSA county committee 
with the understanding that sale proceeds must be paid to satisfy the 
borrower's indebtedness to CCC.
    (d) If any significant changes are made to the legal or operating 
status of the farming operation with an outstanding Farm Storage 
Facility Loan, the borrower must do one of the following:
    (1) Find an eligible borrower or entity to assume the loan as 
specified in paragraph (b) of this section,
    (2) Repay the loan, or
    (3) Undergo new financial analysis, as approved and determined by 
CCC, to ensure CCC's interests are protected and that the current 
borrower is in a position to continue making the scheduled loan 
payments.
    (e) Remedies provided for in this section will, unless CCC 
determines otherwise, be subject to the administrative appeals provided 
for elsewhere in this part, including those that are found at Sec.
1436.13.

[66 FR 4612, Jan. 18, 2001, as amended at 74 FR 41591, Aug. 18, 2009; 81 
FR 25595, Apr. 29, 2016]



Sec.1436.18  Appeals.

    The appeal, reconsideration, or review of all determinations made 
under this part, except for provisions for which there are no appeal 
rights because they are determined rules of general applicability, must 
be in accordance with parts 11 and 780 of this title.



Sec.1436.19  Equal Opportunity and Non-discrimination requirements.

    (a) No recipient of a Storage Facility loan will directly, or 
through contractual or other arrangement, subject any person or cause 
any person to be subjected to discrimination on the basis of race, 
religion, color, national origin,

[[Page 744]]

gender, or other prohibited basis. Borrowers must comply with all 
applicable Federal laws and regulations regarding equal opportunity in 
hiring, procurement, and related matters. FSFL borrowers are subject to 
the nondiscrimination provisions applicable to Federally assisted 
programs contained in 7 CFR parts 15 and 15b.
    (b) With respect to any aspect of a credit transaction, CCC will not 
discriminate against any applicant on the basis of race, color, 
religion, national origin, disability, sex, marital status, familial 
status, parental status, sexual orientation, genetic information, 
political beliefs, reprisal, or age, provided the applicant can execute 
a legal contract. Nor will CCC discriminate on the basis of whether all 
or a part of the applicant's income derives from any public assistance 
program, or whether the applicant in good faith, exercises any rights 
under the Consumer Protection Act. FSFL is subject to the 
nondiscrimination provisions applicable to Federally conducted programs 
contained in 7 CFR parts 15d and 15e.

[67 FR 54939, Aug. 26, 2002. Redesignated at 67 FR 65690, Oct. 28, 2002; 
74 FR 41592, Aug. 18, 2009]



PART 1437_NONINSURED CROP DISASTER ASSISTANCE PROGRAM--
Table of Contents



                      Subpart A_General Provisions

Sec.
1437.1 Applicability.
1437.2 Administration.
1437.3 Definitions.
1437.4 Eligibility.
1437.5 Coverage levels.
1437.6 Coverage period.
1437.7 Application for coverage, service fee, premium, transfers of 
          coverage, and acreage report.
1437.8 Records.
1437.9 Unit division.
1437.10 Causes of loss.
1437.11 Notice of loss, appraisal requirements, and application for 
          payment.
1437.12 Average market price and payment factors.
1437.13 Crop definition.
1437.14 Multiple benefits.
1437.15 Payment and income limitations.
1437.16 Miscellaneous provisions.
1437.17 Matters of general applicability.

  Subpart B_Determining Yield Coverage Using Actual Production History

1437.101 Actual production history.
1437.102 Yield determinations.
1437.103 Late-planted acreage.
1437.104 Assigned production.
1437.105 Determining payments for low yield.
1437.106 Honey.
1437.107 Maple sap.
1437.108 Hemp.
1437.109-1437.200 [Reserved]

      Subpart C_Determining Coverage for Prevented Planted Acreage

1437.201 Prevented planting acreage.
1437.202 Determining payments for prevented planting.
1437.203-1437.300 [Reserved]

               Subpart D_Determining Coverage Using Value

1437.301 Value loss.
1437.302 Determining payments.
1437.303 Aquaculture, including ornamental fish.
1437.304 Floriculture.
1437.305 Ornamental nursery.
1437.306 Christmas tree crops.
1437.307 Mushrooms.
1437.308 Ginseng.
1437.309 Turfgrass sod.
1437.310 Sea grass and sea oats.
1437.311-1437.400 [Reserved]

Subpart E_Determining Coverage of Forage Intended for Animal Consumption

1437.401 Forage.
1437.402 Carrying capacity.
1437.403 Determining payments.
1437.404 Information collection requirements under the Paperwork 
          Reduction Act; OMB control number.

          Subpart F_Determining Coverage in the Tropical Region

1437.501 Applicability; definition of ``tropical region'' and additional 
          definitions
1437.502 Coverage periods and fees for covered tropical crops.
1437.503 Covered losses and recordkeeping requirements for covered 
          tropical crops.
1437.504 Notice of loss for covered tropical crops.
1437.505 Application for payment for the tropical region.

    Authority: 7 U.S.C. 1501-1508 and 7333; 15 U.S.C. 714-714m; 19 
U.S.C. 2497, and 48 U.S.C. 1469a.

    Source: 67 FR 12448, Mar. 19, 2002, unless otherwise noted.

[[Page 745]]



                      Subpart A_General Provisions



Sec.1437.1  Applicability.

    (a) The purpose of the Noninsured Crop Disaster Assistance Program 
(NAP) is to help manage and reduce production risks faced by producers 
of eligible commercial crops or other agricultural commodities during a 
coverage period. NAP reduces financial losses that occur when natural 
disasters (damaging weather or adverse natural occurrence that is an 
eligible cause of loss) cause a loss of expected production or actual 
value for value loss crops, or where producers are prevented from 
planting an eligible crop because of an eligible cause of loss in a 
coverage period.
    (b) The provisions in this part are applicable to eligible producers 
and eligible crops for which catastrophic risk protection is not 
available under subsection (b) of section 508 of the Federal Crop 
Insurance Act (7 U.S.C. 1508) and additional coverage under subsections 
(c) and (h) of section 508 or, if coverage is available, it is only 
available under a policy that provides coverage for specific intervals 
based on weather indexes or under a whole farm plan of insurance.
    (c) The regulations in this part are applicable to the 2019 and 
subsequent crop years.

[79 FR 74571, Dec. 15, 2014, as amended at 85 FR 12218, Mar. 2, 2020]



Sec.1437.2  Administration.

    (a) NAP is administered under the general supervision of the 
Administrator, Farm Service Agency (FSA) (who also serves as the 
Commodity Credit Corporation (CCC) Executive Vice President), and the 
Deputy Administrator for Farm Programs, FSA, (referred to as ``Deputy 
Administrator'' in this part). NAP is carried out by FSA State and 
county committees (State and county committees) with instructions issued 
by the Deputy Administrator.
    (b) State and county committees, and representatives and their 
employees, do not have authority to modify or waive any of the 
provisions of the regulations in this part, NAP's basic provisions, or 
instructions issued by the Deputy Administrator.
    (c) The State committee will take any action required by the 
regulations in this part that the county committee has not taken. The 
State committee will also:
    (1) Correct, or require a county committee to correct, any action 
taken by such county committee that is not in accordance with the 
regulations in this part; or
    (2) Require a county committee to withhold taking any action that is 
not in accordance with this part.
    (d) No delegation to a State or county committee precludes the FSA 
Administrator, the Deputy Administrator, or a designee, from determining 
any question arising under NAP or from reversing or modifying any 
determination made by a State or county committee.
    (e) The Deputy Administrator has the authority to permit State and 
county committees to waive or modify deadlines (except deadlines 
specified in a law) and other requirements or program provisions not 
specified in law, in cases where lateness or failure to meet such other 
requirements or program provisions do not adversely affect operation of 
NAP.
    (1) Producers and participants have no right to a decision in 
response to a request to waive or modify deadlines or program 
provisions. The Deputy Administrator's refusal to consider such a 
request or a decision not to exercise this discretionary authority under 
this section is not an adverse decision and is not appealable.
    (2) FSA's decision not to consider a case under this section is not 
a failure to act under any law or regulation because participants have 
no right to a decision on a request for waiver or modification.
    (f) Items including, but not limited to, application periods, 
application deadlines, basic provisions, internal operating guidelines 
issued to FSA State and county offices, coverage periods, fees, prices, 
yields, and payment factors established for NAP in accordance with this 
part that are used for similarly situated participants and eligible

[[Page 746]]

crops are not to be construed to be individual program eligibility 
determinations or extent of eligibility determinations and are, 
therefore, not subject to administrative review.
    (g) Where there is any conflict between the basic provisions and the 
regulations, the regulations apply except when the Deputy Administrator 
determines that because of the timing of issuance of the regulations, 
the basic provisions applicable to the specific crop year or coverage 
period that may be less restrictive will apply.

[79 FR 74571, Dec. 15, 2014]



Sec.1437.3  Definitions.

    The terms and definitions in this section apply to NAP. The terms 
and definitions in part 718 of this title and part 1400 of this chapter 
also apply to NAP, except where those same terms are defined in this 
section. In that case, the terms and definitions of this section apply.
    Abandoned means to have discontinued care for a crop or provided 
care so insignificant as to provide no benefit to the crop, or failed to 
harvest in a timely manner.
    Acres devoted to the eligible crop means the total planted and 
considered planted (P&CP) acres of the eligible crop.
    Additional coverage means insurance coverage offered by the Federal 
Crop Insurance Corporation under sections 508(c) or 508(h) of the 
Federal Crop Insurance Act.
    Administrative county office means the county FSA office designated 
to make determinations, handle official records, and issue payments for 
the producer in accordance with 7 CFR part 718.
    Agricultural experts means persons who are employed by the National 
Institute of Food and Agriculture, or the agricultural departments of 
universities, or other persons approved by FSA, whose research or 
occupation is related to the specific crop or practice for which such 
expertise is sought.
    Animal Unit Days (AUD) means an expression of expected or actual 
stocking rate for pasture or forage.
    Application closing date means the last date, as determined by FSA, 
producers can submit an application for coverage for noninsured crops 
for the specified crop year and coverage period.
    Application for coverage means the form specified by FSA to be 
completed by a producer applying for NAP coverage for an eligible crop 
that is accompanied by the service fee or service fee waiver form in the 
administrative county office by the application closing date.
    Basic provisions means the document summarizing the terms and 
conditions of NAP coverage for a crop year that are acknowledged as 
having been received by the person or legal entity who signs an 
application for coverage according to this part.
    Buffer zone means a parcel of land, as designated in an organic 
system plan, that separates agricultural commodities grown under organic 
practices from agricultural commodities grown under non-organic 
practices and is used to minimize the possibility of unintended contact 
by prohibited substances or organisms.
    Buy-up coverage means NAP assistance that is available for all 
eligible NAP covered crops (other than for crops and grasses intended 
for grazing) at a payment amount that is equal to an indemnity amount 
calculated for buy-up coverage computed under section 508(c) or (h) of 
the Federal Crop Insurance Act and equal to the amount that the buy-up 
coverage yield for the crop exceeds the actual yield for the crop.
    Buy-up coverage yield means not less than 50 percent nor greater 
than 65 percent of the approved yield for the crop, as elected by the 
NAP covered participant and specified in 5-percent increments.
    Bypass year means a year that the producer did not obtain NAP 
coverage for the crop and did not file a report of acreage or 
production, or obtained NAP coverage for the crop and had reported or 
determined zero acres devoted to the eligible crop.
    Catastrophic coverage means:
    (1) For insured crops, the coverage offered by the Federal Crop 
Insurance Corporation (FCIC) under section 508(b) of the Federal Crop 
Insurance Act.
    (2) For eligible NAP crops, coverage at the following levels due to 
an eligible cause of loss impacting the NAP

[[Page 747]]

covered crop during the coverage period:
    (i) Prevented planting in excess of 35 percent of the intended 
acres;
    (ii) A yield loss in excess of 50 percent of the approved yield;
    (iii) A value loss in excess of 50 percent; or
    (iv) An animal-unit-days (AUD) loss greater than 50 percent of 
expected AUD.
    Certified organic acreage means acreage in the certified organic 
farming operation that has been certified by a certifying agent as 
conforming to organic standards specified in part 205 of this title.
    Certifying agent means a private or governmental entity accredited 
by the United States Department of Agriculture (USDA) Secretary for the 
purpose of certifying a production, processing or handling operation as 
organic.
    Conventional farming practice means any good farming practice that 
is not an organic farming practice.
    Crop year means the calendar year in which the crop is normally 
harvested or in which the majority of the crop would have been 
harvested. For value loss and other specific commodities, see the 
applicable subpart and section of this part. For crops for which 
catastrophic coverage or buy-up coverage is available, the crop year 
will be as defined by such coverage.
    Feedstock means a crop including, but not limited to, grasses or 
legumes, algae, cotton, peanuts, coarse grains, small grains, oil seeds, 
or short rotation woody crops, that is grown expressly for the purpose 
of producing a biobased material or product, and does not include 
residues and by-products of crops grown for any other purpose.
    Fiber means a slender and greatly elongated natural plant filament, 
e.g. cotton, flax, etc. used in manufacturing, as determined by FSA.
    Final planting date means the date which marks the end of the 
planting period for the crop and in particular the last day, as 
determined by FSA, the crop can be planted to reasonably expect to 
achieve 100 percent of the expected yield in the intended harvest year 
or planting period.
    Food means a material consisting essentially of protein, 
carbohydrates, and fat used in the body to sustain growth, repair, and 
vital processes including the crops used for the preparation of food, as 
determined by FSA.
    Generally recognized means when agricultural experts or organic 
agricultural experts, as applicable, are aware of the production method 
or practice and there is no genuine dispute regarding whether the 
production method or practice allows the crop to make normal progress 
toward maturity and produce at least the yield used to determine the 
production guarantee or amount of insurance.
    Good farming practices means the cultural practices generally 
recognized as compatible with agronomic and weather conditions and used 
for the crop to make normal progress toward maturity and produce at 
least the individual unit approved yield, as determined by FSA. These 
practices are:
    (1) For conventional farming practices, those generally recognized 
by agricultural experts for the area, which could include one or more 
counties; or
    (2) For organic farming practices, those generally recognized by the 
organic agricultural experts for the area or contained in the organic 
system plan that is in accordance with the National Organic Program 
specified in part 205 of this title.
    Guarantee means the level of coverage provided based on the 
application for coverage and buy-up coverage elected under the 
provisions of this part.
    Hand-harvested crop means a non-forage crop that is not harvested 
mechanically and is removed from a field by hand.
    Harvested means the producer has removed the crop from the field by 
hand, mechanically, or by grazing of livestock. The crop is considered 
harvested once it is removed from the field and placed in a truck or 
other conveyance or is consumed through the act of grazing. Crops 
normally placed in a truck or other conveyance and taken off the crop 
acreage, such as hay are considered harvested when in the bale, whether 
removed from the field or not.
    Hemp means the plant Cannabis sativa L. and any part of that plant, 
including the seeds thereof and all derivatives,

[[Page 748]]

extracts, cannabinoids, isomers, acids, salts, and salts of isomers, 
whether growing or not, with a THC concentration of not more than 0.3 
percent on a dry weight basis.
    Hemp processor means any business enterprise regularly engaged in 
processing hemp that possesses all licenses and permits for processing 
hemp required by the applicable state or Federal governing authority, 
and that possesses facilities, or has contractual access to such 
facilities with enough equipment to accept and process contracted hemp 
within a reasonable amount of time after harvest.
    Hemp processor contract means a legal written agreement executed 
between the producer and hemp processor engaged in the production and 
processing of hemp containing at a minimum:
    (1) The producer's promise to plant and grow hemp and to deliver all 
hemp to the hemp processor;
    (2) The hemp processor's promise to purchase the hemp produced by 
the producer; and
    (3) A base contract price, or method to derive a value that will be 
paid to the producer for the production as specified in the processor's 
contract.
    (4) For a producer who is also a hemp processor, a corporate 
resolution by the Board of Directors or officers of the hemp processor 
will be considered a hemp processor contract if it contains the required 
terms listed in this definition.
    Industrial crop means a commercial crop, or other agricultural 
commodity used in manufacturing or grown expressly for the purpose of 
producing a feedstock for renewable biofuel, renewable electricity, or 
biobased products. Industrial crops include castor beans, chia, crambe, 
crotalaria, cuphea, guar, guayule, hesperaloe, kenaf, lesquerella, 
meadowfoam, milkweed, plantago ovato, sesame, and other crops 
specifically designated by FSA. Industrial crops exclude any plant that 
FSA has determined to be either a noxious weed or an invasive species. A 
list of plants that are noxious weeds and invasive species will be 
available in the FSA county office.
    Maximum dollar value for coverage sought means the total dollar 
amount elected by the NAP covered participant for which buy-up coverage 
may be considered for a value loss crop in a coverage period. The amount 
is set by the NAP covered participant for each value loss crop and 
represents the highest amount of field market value of the crop before 
disaster in a coverage period.
    Multiple planted means the same crop is planted and harvested during 
two or more distinct planting periods in the same crop year, as 
determined by FSA.
    Native sod means land on which the natural state plant cover before 
tilling was composed principally of native grasses, grass-like plants, 
forbs, or shrubs suitable for grazing and browsing and is land that has 
never been tilled (determined in accordance with information collected 
and maintained by an agency of the USDA or other verifiable records that 
are provided by a producer and acceptable to FSA).
    Normal harvest date means the date harvest of the crop is normally 
completed in the administrative county, as determined by FSA.
    Organic agricultural experts means persons who are employed by the 
following organizations: Appropriate Technology Transfer for Rural 
Areas, Sustainable Agriculture Research and Education, or the National 
Institute of Food and Agriculture, the agricultural departments of 
universities, or other persons approved by FSA, whose research or 
occupation is related to the specific practice for which such expertise 
is sought.
    Organic crop means an agricultural commodity that is organically 
produced consistent with section 2103 of the Organic Foods Production 
Act of 1990 (7 U.S.C. 6502).
    Organic farming practice means a system of plant production 
practices used to produce an organic crop that is approved by a 
certifying agent in accordance with 7 CFR part 205.
    Organic standards means standards in accordance with the Organic 
Foods Production Act of 1990 (7 U.S.C. 6501-6523) and 7 CFR part 205.
    Organic system plan means a plan of management of an organic 
production or handling operation that has been agreed to by the producer 
or handler

[[Page 749]]

and the certifying agent and that includes written plans concerning all 
aspects of agricultural production or handling described in the Organic 
Foods Production Act and the regulations in 7 CFR part 205, subpart C.
    Prohibited substance means any biological, chemical, or other agent 
that is prohibited from use or is not included in the organic standards 
for use on any certified organic, transitional, or buffer zone acreage. 
Lists of such substances are specified in Sec. Sec.205.602 and 205.604 
of this title.
    Secondary use means the harvested production bears little 
resemblance to, or has a different unit of expression than, the unit of 
expression for the reported intended use. It does not apply to fresh and 
processed harvested production; is not salvage; not counted as 
production of the crop for the following purposes, including, but not 
limited to:
    (1) The determination of whether the unit suffered requisite loss; 
and
    (2) APH and approved yield.
    Seed crop means propagation stock commercially produced for sale as 
seed stock for eligible crops.
    Seeded forage means forage on acreage mechanically seeded with 
forage vegetation at regular intervals, at least every 7 years, in 
accordance with good farming practices.
    Short rotation woody crops means fast-growing trees that reach their 
economically optimum size between 4 and 20 years old.
    T-Yield means the yield which is based on the county expected yield 
of the crop for the crop year and is used on an adjusted or unadjusted 
basis to calculate the approved yield for crops covered under the NAP 
when less than four years of actual, assigned, or appraised yields are 
available in the APH data base.
    THC means delta-9 tetrahydrocannabinol.
    Transitional acreage means acreage on which organic farming 
practices are being followed that does not yet qualify to be designated 
as organic acreage.
    Transitional yield means an estimated yield of that name provided in 
the Federal Crop Insurance Corporation (FCIC) actuarial table which is 
used to calculate an average/approved APH yield for crops insured under 
the Federal Crop Insurance Act when less than four years of actual, 
temporary, and/or assigned yields are available on a crop by county 
basis.

[67 FR 12448, Mar. 19, 2002, as amended at 71 FR 13742, Mar. 17, 2006; 
76 FR 4805, Jan. 27, 2011; 78 FR 21018, Apr. 9, 2013; 79 FR 74572, 
74583, Dec. 15, 2014; 85 FR 12218, Mar. 2, 2020]



Sec.1437.4  Eligibility.

    (a) Noninsured crop disaster assistance is available during the 
coverage period specified in Sec.1437.6 for loss of production or loss 
of value for value loss crops or prevented planting of eligible 
commercial crops or other eligible agricultural commodities:
    (1) Planted during the planting period, which means the time during 
which a majority of the crop is normally planted in the area, as 
determined by FSA, and is considered timely-planted for NAP purposes;
    (2) Prevented from being planted during the planting period;
    (3) Planted during the late planting period, which means the time 
after the planting period, during which certain crops, as determined by 
FSA, may be planted and remain eligible for reduced NAP coverage; and
    (4) Determined by FSA to be eligible crops for which:
    (i) Catastrophic risk protection and additional coverage under the 
Federal Crop Insurance Act (7 U.S.C. 1508(b), (c), and (h)) are not 
available or, if coverage is available, it is only available under a 
policy that provides coverage for specific intervals based on weather 
indexes or under a whole farm plan of insurance; or
    (ii) These specific practices for these crops are not included under 
the Federal Crop Insurance Act (7 U.S.C. 1508), but only when the Deputy 
Administrator determines in advance of a coverage period that the 
specific practice is appropriate for NAP coverage and is not available 
for coverage under Federal crop insurance.
    (iii) The producer applies good farming practices.
    (b) When other conditions are met, NAP may be available for an 
eligible loss of:
    (1) Any commercial crop grown for food, excluding livestock and 
their by-products;

[[Page 750]]

    (2) Any commercial crop planted and grown for livestock consumption, 
including but not limited to grain and forage crops;
    (3) Any commercial crop grown for fiber, excluding trees grown for 
wood, paper, or pulp products; and
    (4) Any commercial production of:
    (i) Aquacultural species (including ornamental fish);
    (ii) Floricultural crops;
    (iii) Ornamental nursery plants;
    (iv) Christmas tree crops;
    (v) Turfgrass sod;
    (vi) Sweet sorghum;
    (vii) Biomass sorghum;
    (viii) Industrial crops (including those grown expressly for the 
purpose of producing a feedstock for renewable biofuel, renewable 
electricity, or biobased products);
    (ix) Seed crops, including propagation stock such as non-ornamental 
seedlings, sets, cuttings, rootstock, and others, as determined by FSA; 
and
    (x) Sea grass and sea oats.
    (c) Except as specified in paragraph (e) of this section, paragraph 
(d) of this section will apply to native sod acreage in Iowa, Minnesota, 
Montana, Nebraska, North Dakota, and South Dakota that has been tilled:
    (1) During the first 4 crop years of planting for native sod acreage 
that has been tilled for the production of an annual crop during the 
period beginning on February 8, 2014, and ending on December 20, 2018; 
and
    (2) For not more than any 4 crop years for native sod acreage that 
has been tilled for the production of any crop after December 20, 2018:
    (i) During the first 10 crop years after the initial tillage; and
    (ii) For which a NAP applicant must submit a service fee or NAP 
premium for a crop on that acreage.
    (d) For acreage specified in paragraph (c) of this section:
    (1) The approved yield will be determined by using a yield equal to 
65 percent of the producer's T-yield for the annually planted crop; and
    (2) The service fee or premium for the annual covered crop planted 
on native sod will be equal to 200 percent of the amount determined in 
Sec.1437.7, as applicable, but the premium will not exceed the maximum 
amount specified in Sec.1437.7(d)(2).
    (e) If the producer's total native sod acreage that is tilled in a 
crop year is 5 acres or less, the approved yield, service fee, and 
premium provisions specified in paragraph (d) of this section will not 
apply.
    (f) Wheat, barley, oats, or triticale crop acreage subject to an 
application for grazing payments under the program specified in part 
1421, subpart D of this chapter, or successor program, is ineligible for 
NAP payments.

[67 FR 12448, Mar. 19, 2002, as amended at 67 FR 62324, Oct. 7, 2002; 71 
FR 13742, Mar. 17, 2006; 78 FR 21018, Apr. 9, 2013; 79 FR 74573, 74583, 
Dec. 15, 2014; 85 FR 12218, Mar. 2, 2020]



Sec.1437.5  Coverage levels.

    (a) NAP coverage for prevented planting is provided for approved 
prevented planting of an eligible NAP covered crop due to an eligible 
cause of loss in the coverage period. Payment is based on the approved 
prevented planted acreage in excess of 35 percent of the total intended 
acres to be planted.
    (b) Except as provided in paragraph (d) of this section, NAP 
coverage is equal to 50 percent of the yield or inventory value 
specified in paragraph (c) of this section at 55 percent of the average 
market price established by FSA.
    (c) Except as provided in paragraph (d) of this section, to be 
eligible for a NAP payment a producer must have suffered a yield or 
inventory value loss greater than 50 percent as the result of an 
eligible cause of loss in the coverage period as follows:
    (1) For yield-based crops, a yield loss in excess of 50 percent of 
the approved yield;
    (2) For value loss crops, a loss of value in excess of 50 percent of 
the total value of eligible inventory at the time of disaster;
    (d) Subject to paragraph (e) of this section, producers of eligible 
NAP crops, other than crops and grasses intended for grazing, may elect 
buy-up coverage at 100 percent of the average market price in amounts of 
50 percent to 65 percent, in 5 percent increments, of:
    (1) For yield-based crops, the approved yield; and

[[Page 751]]

    (2) For value loss crops, the lesser of the total value of eligible 
inventory at the time of disaster or the maximum dollar value for 
coverage sought.
    (e) A producer cannot obtain buy-up coverage for a crop if the 
producer has not successfully produced the crop in a previous year for 
which documentation exists and that documentation shows that the crop 
can be successfully grown by the producer in the county. Production of 
the crop is considered to be successful if the producer produced at 
least 50 percent of the county expected yield for the same county for 
which buy-up coverage is sought, unless the producer suffered a loss on 
the crop due to an eligible cause of loss in Sec.1437.10. If not 
already provided to FSA for any reason including NAP coverage or 
assistance, the producer must submit documentation showing successful 
growing of the crop in a previous year and, in the event a loss due to 
an eligible cause of loss was sustained, submit documentation of that 
loss satisfying the requirements of Sec.1437.11.
    (f) The quantity or value of any eligible NAP crop will not be 
reduced for any quality consideration unless a zero value is established 
based on a total loss of quality, except as specified in Sec.1437.105.
    (g) For crop acreage intended to be grazed, to be eligible for a NAP 
payment, a producer must have suffered a loss of AUD in excess of 50 
percent of expected AUD determined on the basis of acreage, carrying 
capacity, and grazing period.

[79 FR 74574, Dec. 15, 2014, as amended at 85 FR 12219, Mar. 2, 2020]



Sec.1437.6  Coverage period.

    (a) Coverage period. The coverage period is the time during which 
coverage is available against prevented planting, a loss of production, 
or loss of value, as applicable, of the eligible crop as a result of an 
eligible cause of loss specified in Sec.1437.10. Except as provided in 
paragraph (h) of this section, coverage periods start no earlier than 1 
calendar day after date of filing of a valid application for coverage as 
specified in Sec.1437.7.
    (1) Relief provisions cannot be used to change or modify the date an 
application is filed.
    (2) If an application for coverage is filed within 30 calendar days 
of the end of a coverage period, the application for coverage is invalid 
and will not be processed by FSA. In the event the application for 
coverage is invalid as discussed in this paragraph, service fees will 
not be refunded.
    (3) Except as provided in paragraph (h) of this section, coverage is 
never retroactive.
    (b) Annual crops. Except as provided in paragraph (h) of this 
section, the coverage period for annual crops, including annual forage 
crops,
    (1) Begins the later of:
    (i) 1 calendar day after the date the application for coverage is 
filed; or
    (ii) The date the crop is planted, not to exceed the late planting 
period; and
    (2) Ends on the earlier of:
    (i) The date harvest is complete;
    (ii) The normal harvest date of the crop in the area;
    (iii) The date the crop is abandoned; or
    (iv) The date the crop is destroyed.
    (c) Biennial and perennial crops. Except as otherwise specified in 
this part, the coverage period for biennial and perennial crops begins 
the later of 1 calendar day after the date the application for coverage 
is filed or 1 calendar day after the application closing date. The 
coverage ends as determined by FSA.
    (d) Value loss crops. Except as otherwise specified in this part, 
the coverage period for value loss crops, including ornamental nursery, 
aquaculture, Christmas tree crops, ginseng, and turfgrass sod; and other 
eligible crops, including floriculture and mushrooms begins the later of 
1 calendar day after the date the application for coverage is filed or 1 
calendar day after the application closing date. The coverage ends the 
last day of the crop year, as determined by FSA.
    (e) Honey. Except as provided in paragraph (h) of this section, the 
coverage period for honey begins the later of 1 calendar day after the 
date of the application for coverage is filed; 1 calendar day after the 
application closing date; or the date the colonies are set in place for 
honey production. The coverage ends the last day of the crop year.

[[Page 752]]

    (f) Maple sap. Except as provided in paragraph (h) of this section, 
the coverage period for maple sap begins the later of 1 calendar day 
after the date the application for coverage is filed or 1 calendar day 
after the application closing date. The coverage ends on the earlier of 
the date harvest is complete; or the normal harvest date.
    (g) Biennial and perennial forage crops. Except as provided in 
paragraph (h) of this section, for biennial and perennial forage crops 
the coverage period begins the later of 1 calendar day after the date 
the application for coverage is filed or 1 calendar day after the 
application closing date; for first year seedings, the date the crop was 
planted; or the date following the normal harvest date. The coverage 
ends on the normal harvest date of the subsequent year.
    (h) 2019 and 2020 crop years. For the 2019 and 2020 crop years only, 
if a crop's application closing date is before April 8, 2019, the 
coverage period of the crop will be as specified in paragraphs (a) 
through (g) of this section except that the date coverage begins will be 
retroactive as long as the application for coverage is filed by the 
application closing date as specified in Sec.1437.7(i). This limited 
retroactive coverage for the 2019 and 2020 crop years only will begin 1 
calendar day after the established application closing date, which would 
be the same as if they had filed by the deadlines as specified in 
paragraphs (a) through (g) of this section.

[79 FR 74574, Dec. 15, 2014, as amended at 85 FR 12219, Mar. 2, 2020]



Sec.1437.7  Application for coverage, service fee, premium, transfers
of coverage, and acreage report.

    (a) Except as provided in paragraph (i) of this section, with 
respect to each crop, commodity, or acreage, producers must file an 
application for coverage under this part in the administrative county 
office by the application closing date.
    (b) The service fee or request for service fee waiver specified in 
paragraph (g) of this section must accompany the application for 
coverage in order for it to be considered filed. The service fee is:
    (1) For applications filed by April 7, 2019, $250 per crop per 
administrative county, up to $750 per producer per administrative 
county, not to exceed $1,875 per producer; and
    (2) For applications filed on or after April 8, 2019, $325 per crop 
per administrative county, up to $825 per producer per administrative 
county, not to exceed $1,950 per producer.
    (c) The service fee will be applied per administrative county by 
crop and by planting period, as determined by FSA.
    (d) Producers who elect buy-up coverage must pay a premium, in 
addition to the service fee, equal to the lesser of:
    (1) The product obtained by multiplying:
    (i) A 5.25-percent premium fee; and
    (ii) The applicable payment limit; or
    (2) The sum of the premiums for each eligible crop, with the premium 
for each eligible crop obtained by multiplying:
    (i) The producer's share of the eligible crop;
    (ii) The number of acres devoted to the eligible crop;
    (iii) The approved yield;
    (iv) The coverage level elected by the producer;
    (v) The average market price; and
    (vi) A 5.25-percent premium fee.
    (e) For value loss crops, premiums will be equal to the lesser of:
    (1) The product obtained by multiplying:
    (i) A 5.25-percent premium fee; and
    (ii) The applicable payment limit; or
    (2) The sum of the premiums for each eligible crop, with the premium 
for each eligible crop obtained by multiplying:
    (i) The maximum dollar value for which coverage is sought by the 
applicant;
    (ii) The coverage level elected by the producer; and
    (iii) A 5.25-percent premium fee.
    (f) Premiums will be calculated separately for each crop, type, and 
intended use as reported on the acreage report and as specified in the 
basic provisions.
    (g) Beginning farmers and ranchers, limited resource farmers and 
ranchers, socially disadvantaged farmers or ranchers, and veteran 
farmers and

[[Page 753]]

ranchers will receive, upon certification, a waiver of the service fee 
and a 50 percent premium reduction. The certification is required on or 
before the time the application for coverage is filed using the form 
specified by FSA.
    (h) Transfers of NAP coverage are governed by the basic provisions.
    (i) For the 2019 and 2020 crop years, if a crop's application 
closing date is before April 8, 2019, FSA will accept applications for 
coverage without regard to whether or not the application for coverage 
was filed by the crop's application closing date, provided that the 
application for coverage includes buy-up coverage according to Sec.
1437.5(d) and is filed by May 24, 2019. Except as specifically stated in 
this rule, the provisions of this paragraph do not apply to crops having 
an application closing date established on or after April 8, 2019, or to 
applications for coverage that do not include buy-up coverage as an 
option selected by the applicant. The coverage period for applications 
for coverage filed according to this paragraph will be as specified in 
Sec.1437.6.
    (j) An accurate acreage report must be filed for each crop included 
on an application for coverage by the earliest of:
    (1) The acreage reporting date for the crop announced by FSA;
    (2) 15 calendar days before the onset of harvest or grazing of the 
crop acreage being reported; or
    (3) The established normal harvest date for the end of the coverage 
period.
    (k) Applications for coverage for hemp are governed by this part.
    (l) Applications for coverage that were filed with FSA for all crops 
other than hemp that were covered under the regulations in effect at the 
time of filing and which meet all the other requirements of this section 
will be recognized by FSA.

[79 FR 74575, Dec. 15, 2014, as amended at 85 FR 12219, Mar. 2, 2020]



Sec.1437.8  Records.

    (a) Producers must maintain accurate records of crop acreage, 
acreage yields, and production for the crop for which an application for 
coverage is filed in accordance with Sec.1437.7. For those crops or 
commodities for which it is impractical, as determined by FSA, to 
maintain crop acreage, yields, or production data, producers must 
maintain records, in addition to the available records required by this 
section, as may be required in subparts C, D, and E of this part. 
Producers must retain records of the production and acreage yield for a 
minimum of 3 years for each crop for which an application for coverage 
is filed in accordance with Sec.1437.7. Producers may be selected and 
be required to provide records acceptable to FSA to support any 
certification provided. For each harvested crop for which producers file 
an application for payment in accordance with Sec.1437.11, producers 
must provide documentary evidence acceptable to FSA of production and 
the date harvest was completed, including production of crops planted 
after the planting period or late planting period. Such documentary 
evidence must be provided no later than the acreage reporting date for 
the crop in the subsequent crop year or, for crops with a coverage 
period of more than 12 months, no later than 60 days after the normal 
harvest date. Records of a previous crop year's production for inclusion 
in the actual production history database used to calculate an approved 
yield for the current crop year must be certified by the producer no 
later than the acreage reporting date for the crop in the current crop 
year. Production data provided after the acreage reporting date in the 
current crop year for the crop may be included in the actual production 
history data base for the calculation of subsequent approved yield 
calculations if accompanied by acceptable records of production as 
determined by FSA. Certifications must be accompanied by a record of 
production; records of production acceptable to FSA may include:
    (1) Commercial receipts, settlement sheets, warehouse ledger sheets, 
or load summaries if the eligible crop was sold or otherwise disposed of 
through commercial channels provided the records are reliable or 
verifiable as determined by FSA; and
    (2) Such documentary evidence such as contemporaneous measurements, 
truck scale tickets, and contemporaneous diaries, as is necessary in 
order

[[Page 754]]

to verify the information provided if the eligible crop has been fed to 
livestock, or otherwise disposed of other than through commercial 
channels, provided the records are reliable or verifiable as determined 
by FSA.
    (3) For quality losses specified in Sec.1437.105, verifiable 
records substantiating a quality loss due to an eligible cause of loss 
in the coverage period. The record submitted must come from tests or 
analysis substantiating that the loss of quality occurred from an 
eligible cause of loss during the coverage period. FSA will disapprove 
quality adjustments under Sec.1437.105 if FSA determines the evidence 
does not substantiate a loss of quality occurred due to an eligible 
cause of loss in the coverage period. For example, if FSA determines the 
tests or analysis of the specific crop's production were taken too late 
to determine if the measured loss of quality occurred from an eligible 
cause of loss in the coverage period (regardless whether a loss of 
quality was in fact measured or determined), no quality loss adjustment 
will be made or permitted. There is no presumption that a measured loss 
of quality occurred due to an eligible cause of loss in the coverage 
period. It is a NAP covered producer's burden to present evidence, 
satisfactory to FSA, substantiating that the alleged quality loss 
occurred to the NAP covered crop in the coverage period.
    (b) During any crop year that a notice of loss is filed according to 
this part:
    (1) Producers of hand-harvested or rapidly deteriorating crops, as 
determined by the Deputy Administrator, must, in addition to providing 
acceptable production records according to this part, notify the 
administrative county office that harvest is complete. This notification 
must be made within 72 hours of when harvest is complete. If an 
appraisal of the crop acreage is requested by the producer or determined 
necessary by FSA, the producer must not destroy the crop residue until 
the crop acreage is released by an FCIC- or FSA-qualified loss adjustor. 
Producers may, at their expense, request that an appraisal by certified 
FCIC or FSA loss adjusters of acreage of hand-harvested or rapidly 
deteriorating crops be completed during non-loss crop years in order to 
maintain accurate actual production history.
    (2) Producers must not allow the gathering (gleaning) of any produce 
left in the field following normal harvest of the crop acreage until the 
crop acreage is released by a qualified FSA or FCIC loss adjustor, as 
determined by FSA. Except, crop acreage may be released by an authorized 
FSA representative for acceptable gleaning operations, as determined by 
FSA, when producers and gleaners agree to provide acceptable records, as 
determined by FSA, of the quantity of the crop gleaned.
    (c) Producers must provide acceptable evidence, as determined by 
FSA, of:
    (1) An interest in the commodity produced or control of the crop 
acreage on which the commodity was grown at the time of disaster;
    (2) The authority of the applicable individual to execute program 
documents;
    (3) The producer's risk in the crop; and
    (4) The producer's ability and intent to harvest, transport, and 
market the crop's expected production determined by using the approved 
yield or inventory of the crop or commodity.
    (d) Reports of acreage planted or intended but prevented from being 
planted must be provided to FSA at the administrative county office for 
the acreage no later than the date specified by FSA for each crop and 
location. Reports of acreage filed beyond the date specified by FSA for 
the crop and location may, however, be processed and used for 
determining acres devoted to the eligible crop if all the provisions of 
7 CFR part 718 are met. In the case of a crop-share arrangement, all 
producers will be bound by the acreage report filed by the landowner or 
operator unless the producer files a separate acreage report by the date 
specified by FSA for the crop and location. Reports of acreage planted 
or intended and prevented from being planted must include all of the 
following information:
    (1) Number of acres of the eligible crop in the administrative 
county (for each planting in the event of multiple

[[Page 755]]

planting) in which the producer has a share;
    (2) Zero acres planted when the producer's crop for which an 
application for coverage was filed, is not planted;
    (3) The producer's share of the eligible crop at the time an 
application for coverage was filed;
    (4) The FSA farm serial number;
    (5) The identity of the crop, practices, intended uses, and for 
forage crops, the predominant species or type and variety of the 
vegetation;
    (6) For organic crops with an average market price established under 
Sec.1437.12(b), the identity of the crop planted on:
    (i) Acreage using conventional farming practices;
    (ii) Certified organic acreage;
    (iii) Transitional acreage being converted to certified organic 
acreage;
    (iv) Buffer zone acreage;
    (7) The identity of all producers sharing in the crop;
    (8) The date the crop was planted or planting was completed, 
including the age of the perennial crops; and
    (9) The acreage intended but prevented from being planted.
    (e) Producers receiving a guaranteed payment for planted acreage, as 
opposed to receiving a payment only upon delivery of the production must 
provide documentation of any written or verbal contract or arrangement 
with the buyer to FSA. Net production, as determined by FSA, may be 
adjusted upward by the amount of production corresponding to the amount 
of the contract payment received.
    (f) Producers must provide documentation of any salvage value 
received by or made available for the quantity of the crop or commodity 
that cannot be marketed or sold in any market, as determined by FSA and 
any value received by or made available for a secondary use of the crop 
or commodity.
    (g) Producers requesting payment under this part must maintain 
records which substantiate gross revenue for the tax year preceding the 
crop year for which coverage is requested.
    (h) Producers requesting a waiver of service fees as a limited 
resource producer must maintain records which substantiate annual gross 
income for the two tax years preceding the crop year for which coverage 
is requested.
    (i) Producers requesting payment under this part for a crop grown on 
certified organic acreage for which a price and T-yield are established, 
as provided in Sec. Sec.1437.12(b) and 1437.102, must provide, no 
later than the acreage reporting date specified by FSA for the crop and 
location:
    (1) A written certification in effect from a certifying agency 
indicating the name of the entity certified, effective date of 
certification, certificate number, types of commodities certified, and 
name and address of the certifying agent (a certificate issued to a 
tenant may be used to qualify a landlord or other similar arrangement); 
and
    (2) Records from the certifying agent showing the specific location 
of certified organic, transitional, and buffer zone acreage, and acreage 
not subject to organic farming practices according to an organic system 
plan.
    (j) Producers providing reports of acreage that include transitional 
acreage being converted to certified organic acreage in accordance with 
an organic system plan must provide, no later than the acreage reporting 
date specified by FSA for the crop and location:
    (1) Written documentation from a certifying agent indicating an 
organic system plan is in effect for the acreage; and
    (2) Records from the certifying agent showing the specific location 
of certified organic, transitional, and buffer zone acreage, and acreage 
not subject to organic farming practices according to an organic system 
plan.
    (k) Producers who are exempt from National Organic certification 
requirements, as specified in Sec.205.101 of this title, and are 
requesting payment under this part for a crop grown on organic acreage 
for which a price and T-yield is established, as provided in Sec. Sec.
1437.12(b) and 1437.102, must provide, no later than the acreage 
reporting date specified by FSA for the crop and

[[Page 756]]

location, a copy of their organic system plan, which must be developed 
with an organic certifying agent.

[67 FR 12448, Mar. 19, 2002, as amended at 71 FR 13742, Mar. 17, 2006. 
Redesignated and amended at 79 FR 74574, 74575, 74583, Dec. 15, 2014; 85 
FR 12220, Mar. 2, 2020; 85 FR 16232, Mar. 23, 2020]



Sec.1437.9  Unit definition.

    (a) The unit identifies the interest of the producer in the 
administrative county on the basis of the unique relationship of the 
owner to one or more operators. The unit is the foundation for all 
determinations of acreage, production, value, AUD, approved yields, 
requisite losses, payments, and other program requirements.
    (b) Separate and distinct units are:
    (1) One-hundred percent interest as owner/operator;
    (2) Less than one-hundred percent interest as owner or operator; or
    (3) Less than one-hundred percent interest, as owner or operator in 
an inverse relationship.

[71 FR 13743, Mar. 17, 2006. Redesignated at 79 FR 74574, Dec. 15, 2014]



Sec.1437.10  Causes of loss.

    (a) To qualify for assistance, production losses or prevented 
planting must occur as a result of an eligible cause of loss during the 
coverage period. Not all causes of loss are eligible causes of loss for 
all crops or all commodities.
    (b) An eligible cause of loss is:
    (1) Damaging weather, including, but not limited to:
    (i) Drought;
    (ii) Hail;
    (iii) Excessive moisture;
    (iv) Freeze;
    (v) Tornado;
    (vi) Hurricane;
    (vii) Excessive wind;
    (viii) Lightning;
    (ix) Insufficient chill hours, but only for specific crops and 
locations for which FSA has determined in advance of a coverage period, 
based on FSA's review of sufficient scientific evidence that a requisite 
amount of chill hours is required for the crop to produce and a lack of 
chill hours is adverse to the crop's production without any regard to 
any management. In this context, ``without regard to any management'' 
means if a crop's inability to produce due to lack of chill hours can be 
mitigated by any managerial practices, application of chemical, or other 
management intervention, the lack of chill hours will not be included as 
an eligible cause of loss for the crop, In cases where FSA makes the 
decision to include insufficient chill hours as a cause of loss by 
itself for a crop and location, the crop and location and subsequent 
crop year coverage period for which the decision will apply will be 
specified in a list maintained by FSA. If the crop and location is not 
on that list, then insufficient chill hours can only be an eligible 
cause of loss if the insufficient chill hours were related to a damaging 
weather event or an adverse natural occurrence included in paragraphs 
(b)(1) or (2) of this section; or
    (x) Any combination of paragraphs (b)(1)(i) through (viii) of this 
section;
    (2) Adverse natural occurrence, including, but not limited to:
    (i) Earthquake;
    (ii) Flood; or
    (iii) Volcanic eruption; or
    (3) A condition related to an eligible cause of loss in paragraphs 
(b)(1) or (2) of this section (in this context, the related condition 
must result from the damaging weather or adverse natural occurrence; it 
is not eligible if it occurs on its own) including, but not limited to:
    (i) Heat;
    (ii) Insect infestation;
    (iii) Disease;
    (iv) Insufficient chill hours;
    (v) Wildfire; or
    (vi) Any combination thereof.
    (c) The damaging weather, adverse natural occurrence, or related 
condition as specified in paragraph (b) of this section must occur in 
the coverage period before or during harvest and directly cause, 
accelerate, or exacerbate destruction or deterioration of the eligible 
crop as determined by the county committee.
    (d) NAP coverage is provided against only eligible causes of loss. 
All specified causes of loss must be due to a naturally occurring event 
during the coverage period. All other causes of loss, including, but not 
limited to, the following, are not covered:

[[Page 757]]

    (1) Negligence, mismanagement, or wrongdoing by the NAP covered 
producer or anyone else;
    (2) Failure to follow recognized good farming practices for the 
eligible crop;
    (3) 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;
    (4) Failure or breakdown of the irrigation equipment facilities, 
unless the failure or breakdown is due to an eligible cause of loss. If 
damage is due to an eligible cause of loss, the producer must make all 
reasonable efforts to restore the equipment or facilities to proper 
working order within a reasonable amount of time unless FSA determines 
it is not practical to do so. Cost will not be considered when 
determining whether it is practical to restore the equipment or 
facilities;
    (5) Failure to carry out a good irrigation practice for the covered 
crop, if applicable;
    (6) Any cause of loss that results in damage that is not evident or 
would not have been evident during the NAP coverage period. Even though 
FSA may not inspect the damaged crop until after the end of the NAP 
coverage period, only damage due to eligible causes that would have been 
evident during the NAP coverage period will be covered;
    (7) Except for lack of chill hours as specified in paragraph 
(b)(1)(viii) of this section, normal variance of temperatures from 
average normal temperatures including, but not limited to, cyclic yield 
variations that occur for a crop that are not causes of loss included in 
paragraphs (b)(1) or (2) of this section;
    (8) Any managerial decision to attempt to grow or produce a crop in 
an area that is not suited for successful commercial production of the 
eligible NAP crop as determined by FSA;
    (9) Failure of the producer to reseed to the same crop during the 
same planting period in those areas and under such circumstances where 
it is customary to do so;
    (10) Except for tree crops and perennials and as provided for in 
Sec.1437.201, inadequate irrigation resources at time of planting;
    (11) Except as specified in Sec.1437.303, a loss of inventory or 
yield of aquaculture (including ornamental fish), floriculture, or 
ornamental nursery stemming from drought or any failure to provide 
water, soil, or growing media to such crop for any reason;
    (12) Any failure to provide a controlled environment or exercise 
good nursery practices when such controlled environment or practices are 
a condition of eligibility under this part;
    (13) Except as provided for mollusks in Sec.1437.303, any alleged 
or actual loss of inventory or missing non-containerized inventory 
resulting from a managerial decision not to seed or raise the eligible 
NAP crop in containers, net pens, or wire baskets, on ropes, or using 
similar devices;
    (14) For crops grown using organic farming practices, failure to 
comply with organic standards;
    (15) Contamination by application or drift of prohibited substances 
onto land on which crops are grown using organic farming practices;
    (16) Weeds; or
    (17) Failure to harvest or market the crop due to lack of a 
sufficient plan or resources.
    (e) The lack of an eligible cause of loss during a coverage period 
is not a compliance matter or issue. NAP will not provide assistance for 
crops that do not suffer from an eligible cause of loss during a 
coverage period. The relief provisions of these regulations and of 7 CFR 
part 718 cannot be used to pay producers of crops that did not suffer 
from an eligible cause of loss during the coverage period.

[79 FR 74576, Dec. 15, 2014, as amended at 85 FR 12220, Mar, 2, 2020]

    Editorial Note: At 85 FR 12220, Mar. 2, 2020, Sec.1437.10 was 
amended; however, the amendment in paragraph (b)(1)(ix) could not be 
incorporated due to inaccurate amendatory instruction.



Sec.1437.11  Notice of loss, appraisal requirements, and application
for payment.

    (a) In addition to the written notice of loss requirements specified 
for all crops in paragraphs (b) and (c) of this section, for hand-
harvested or rapidly

[[Page 758]]

deteriorating crops and for other crops determined by FSA, at least one 
producer having a share in the unit must notify FSA of the damage or 
loss through the administrative county office for the unit within 72 
hours of the date damage or loss on the unit first becomes apparent. 
Notification required under this paragraph may be via telephone to the 
administrative county office during business hours or via written notice 
on a form prescribed by FSA as specified in paragraph (c) of this 
section.
    (b) Unless written notice for hand-harvested or rapidly 
deteriorating crops has already been provided within 72 hours of date of 
damage or loss as specified in paragraphs (a) and (c) of this section, 
in case of damage to any NAP covered crop, at least one producer having 
a share in the unit must file a notice of loss in the administrative 
county office:
    (1) For prevented planting claims, within 15 days after the final 
planting date;
    (2) For low yield claims and value loss claims, the earlier of:
    (i) 15 days after the disaster occurrence or date of loss or damage 
to the crop first becomes apparent; or
    (ii) 15 days after the normal harvest date.
    (c) The notice of loss specified in paragraph (b) of this section 
must be for each crop and be in writing on a form prescribed by FSA and 
include:
    (1) The alleged cause of crop damage;
    (2) Date the disaster occurred and when the damage or loss first 
became apparent;
    (3) A copy of the contract or agreement if a contract or agreement 
of a guaranteed payment for planted acreage exists;
    (4) The type of loss that occurred, for example, prevented planting 
or low yield;
    (5) Practices used, for example, irrigated or non-irrigated;
    (6) For prevented planting:
    (i) Total intended planted acreage of the crop on the unit;
    (ii) Total acreage of the crop planted on the unit;
    (iii) Whether seed, chemicals, fertilizer, etc. was purchased, 
delivered, or an arrangement for purchase or delivery was made for the 
intended to be planted crop;
    (iv) What and when land preparation measures were completed, and
    (v) What has been done or will be done with the acreage, for 
example, abandoned, replanted, etc.;
    (7) For low yield:
    (i) Total acreage devoted to the crop in the unit;
    (ii) Total acreage of the crop affected;
    (iii) What and when land preparation measures and practices were 
completed before and after the loss; and
    (iv) What will be done with the affected crop acreage, for example, 
harvested, destroyed, replanted to a different crop, abandoned, etc.; 
and
    (8) Any other information requested by an FSA authorized 
representative.
    (d) Producers who file a notice of loss, using the appropriate FSA 
form, for crop acreage that will not be harvested as intended, such as 
abandoned, put to another use, replanted to the same or a different 
crop, or in the case of forage, acreage intended to be mechanically 
harvested that will be both mechanically harvested and grazed, must:
    (1) Not put the crop to another use or prepare the acreage for 
replanting or otherwise change any conditions of the crop or acreage 
until written notification of release of the crop or acreage is received 
from FSA;
    (2) Request, using the appropriate FSA form, an appraisal of the un-
harvested acreage for potential production and release of the crop or 
acreage:
    (i) No less than 15 calendar days before replanting or in the case 
of forage intended to be mechanically harvested, grazing of the crop 
acreage.
    (ii) Within 72 hours after the acreage is abandoned for hand-
harvested or rapidly deteriorating crops, or within 15 calendar days 
after the acreage is abandoned for all other crops;
    (iii) No later than the normal harvest date of the crop, as 
determined by FSA.
    (3) Request the loss adjustor on the day the initial appraisal is 
completed, or request in any manner of written correspondence received 
in the administrative county office no later than 15

[[Page 759]]

calendar days after the request for initial appraisal is submitted, that 
the appraisal be deferred until the end of the growing season, the 
producer be permitted to establish representative sample areas according 
to paragraph (d)(4) of this section, and that the acreage be released 
immediately when:
    (i) Time is critical for replanting, or other urgent reasons; and
    (ii) Producers and loss adjustors cannot resolve disagreement with 
the initial appraisal of the acreage to be released.
    (4) Establish representative sample areas of the acreage according 
to the loss adjustor's instructions received on the day the initial 
appraisal is completed or, if the loss adjustor is not available, 
according to the FCIC Loss Adjustment Manual (LAM) and applicable FCIC 
crop handbooks. Report the size, number, and location of the areas in 
any manner of written correspondence received in the administrative 
county office, no later than 15 calendar days after requesting a 
deferred appraisal and before the acreage is put to another use or 
replanted. Representative sample areas must be of adequate construction 
and numbers to provide acceptable sampling results and maintained in 
sound condition, as determined by FSA, until released by FSA.
    (5) If possible, be present for the appraisal involving un-harvested 
crop acreage and accept or contest the results of the loss adjustor's 
appraisal. Producers unable to be present for the appraisal may contest 
the results of the appraisal in the administrative county office.
    (e) Crop acreage for which an application for coverage has been 
filed, that is intended for production of forage seed and for which a 
notice of loss is filed indicating the crop acreage will not be 
harvested as seed, will be appraised for potential production of seed 
when producers provide FSA acceptable evidence of a contract to produce 
seed for the current crop year or acceptable records of acreage and seed 
production for three or more of the last 5 consecutive crop years, as 
determined by FSA.
    (f) Forage acreage for which a notice of loss is filed and:
    (1) Catastrophic coverage was obtained for forage intended to be 
grazed will have NAP benefits calculated based on Sec.1437.401(f);
    (2) Catastrophic coverage was obtained for forage that was intended 
to be mechanical harvested but will be grazed and not mechanical 
harvested;
    (i) Must have an appraisal and release for the unit to have NAP 
benefits calculated based on mechanical harvested forage; or
    (ii) For which an appraisal or release was not obtained, will have a 
loss calculated as specified in Sec.1437.401(f).
    (3) Buy-up coverage was obtained for forage intended to be 
mechanically harvested but will be grazed and not mechanically 
harvested:
    (i) Must have an appraisal and release in order for the unit to have 
NAP benefits calculated based on the loss of expected mechanically 
harvested forage; or
    (ii) For which an appraisal or release was not obtained is 
ineligible for payment consideration and will have the unit guarantee 
assigned to the forage crop acreage.
    (g) Producers must file an application for payment on a form 
specified by FSA to apply for NAP payments within 60 days of the last 
day of coverage for the crop year for any NAP covered crop in the unit.
    (h) A notice of loss under paragraph (a) of this section filed 
beyond the time specified in this section or notification provided under 
paragraph (b) of this section may satisfy the requirements of these 
provisions, if, at the discretion of FSA, the notice is filed at such 
time that permits:
    (1) An authorized FSA representative to verify information on the 
notice of loss by inspecting the affected acreage or the crop or 
commodity involved; and
    (2) The county committee or an authorized FSA representative the 
opportunity to determine that eligible disaster conditions caused the 
damage or loss.

[67 FR 12448, Mar. 19, 2002, as amended at 71 FR 13743, Mar. 17, 2006. 
Redesignated and amended at 79 FR 74574, 74577, 74583, Dec. 15, 2014; 85 
FR 12220, Mar. 2, 2020]

[[Page 760]]



Sec.1437.12  Average market price and payment factors.

    (a) An average market price will be used to calculate assistance 
under this part and will be:
    (1) A dollar value per the applicable unit of measure of the 
eligible crop;
    (2) Determined on a harvested basis without the inclusion of 
transportation, storage, processing, marketing, or other post-harvest 
expenses, as determined by FSA;
    (3) Comparable with established FCIC prices; and
    (4) Determined, as practicable, for each intended use of a crop type 
within a State, as determined by FSA, for a crop year.
    (b) For each crop and location (State or county or other location as 
determined appropriate by FSA), FSA will establish an average market 
price using the following method:
    (1) Obtaining market prices for each crop for the 5 consecutive crop 
years beginning with the most recent year for which price data is 
available; then
    (2) Dropping the crop years in the 5 consecutive crop years with the 
highest and lowest prices; and then
    (3) Averaging the prices for the remaining 3 crop years in the 5 
consecutive crop years; and
    (4) If 5 crop years of data is not available for determining the 
average market price, FSA will use the best data available, as 
determined by FSA, for as many crop years of average market price data 
as possible within the 5 consecutive crop years beginning with the most 
recent year for which price data is available and determine an average 
market price for the crop by computing a simple average of the prices 
for those years.
    (c) FSA will disregard small differences in prices for a crop based 
on different types or varieties or various intended uses. If FSA 
determines there is a significant amount of production being marketed in 
a location or region at significantly different prices, FSA will 
determine whether or not to establish different average market prices 
for subsequent crop years.
    (d) Separate average market prices may be established within a State 
based on conventional or organic practices or the intended market, as 
determined by FSA.
    (e) For these purposes, where needed, an Animal-unit-days (AUD) 
value will be based on the national average price of corn and the daily 
requirement of 13.6 megacalories of net energy for maintenance of 1 
animal unit.
    (f) Payment factors will be used to calculate assistance for crops 
produced with significant and variable harvesting expenses that are not 
incurred because the crop acreage was prevented planted, or planted but 
not harvested, as determined by FSA. The imposition of payment factors 
is based on the acre status and disposition not whether a NAP 
participant actually incurs or does not incur expenses.
    (g) The average market price used to determine the amount of NAP 
assistance for crop acreage reported with a specific intended use will 
be based on the smaller of the approved average market price established 
for either the specific intended use reported on the acreage report or 
actual market or actual use for which more than 50 percent of the 
acreage's harvested production is marketed. For example: A producer 
reports 50 acres of carrots intended for fresh market and the producer 
suffers a 70 percent loss of production on the acreage. Additionally, 
more than 50 percent of the carrots actually produced from the 50 acres 
are sold as processed carrots. Because the established average market 
price for processed carrots is less than fresh carrots and more than 50 
percent of the harvested crop was marketed as processed carrots, the 
established average market price for processed carrots will be used to 
compute the producer's NAP assistance. If an average market price had 
not been established for processed carrots in this example before the 
coverage period, then the average market price for fresh carrots would 
be used.
    (1) The provisions of this paragraph do not apply to secondary use, 
peanuts, seed intended uses, and small grain intended for use as forage.
    (2) [Reserved]
    (h) For crops with an established yield and market price for 
multiple intended uses, the average market price will be as provided in 
paragraph (g) of this section except that for producers

[[Page 761]]

who choose buy-up coverage under Sec.1437.5(d), the average market 
price used to determine assistance may be based on historical production 
and acreage evidence provided by the participant. The evidence of actual 
final use of historical production must come from the 3 previous crop 
years immediately preceding the coverage year. Only years in which the 
producer had acreage and production harvested will be counted. In other 
words, if a producer only marketed a crop in 1 previous year, FSA will 
review the evidence of final use in that year and based on the evidence 
for that year, determine a percent of production attributable to each 
use. Based on that determined percentage, an appropriate average market 
price and use will be calculated and determined, respectively. If more 
than 1 and up to 3 years of final use evidence are available, FSA will 
count all years and production and determine the average. If a producer 
had crop acreage and evidence of final use for any year in the 3-year 
period, but the producer does not submit evidence for any other year in 
the 3-year period for which the producer also had acreage, the average 
market price will be as provided in paragraph (g) of this section.
    (i) A final payment price will be determined by multiplying, as 
appropriate, the average market price determined in this section by the 
applicable payment factor (that is, harvested, unharvested, or prevented 
planting).

[67 FR 12448, Mar. 19, 2002, as amended at 71 FR 13744, Mar. 17, 2006. 
Redesignated and amended at 79 FR 74574, 74578, 74583, Dec. 15, 2014; 85 
FR 12220, Mar. 2, 2020]



Sec.1437.13  Crop definition.

    (a) For the purpose of providing benefits under this part, FSA will, 
at its discretion, define crops as specified in this section.
    (b) FSA may separate or combine types and varieties as a crop when 
specific credible information as determined by FSA is provided showing 
the crop of a specific type or variety has a significantly different or 
similar value when compared to other types or varieties, as determined 
by FSA.
    (c) FSA may recognize two or more different crops planted on the 
same acreage intended for harvest during the same crop year as two or 
more separate crops. The crop acreage may include a crop intended for 
harvest before planting of a succeeding crop or a succeeding crop 
interseeded with the preceding crop prior to intended harvest of the 
preceding crop. The acreage must be in an area where the practice is 
recognized as a good farming practice, as determined by FSA, and all 
crops are recognized by FSA as able to achieve the expected yield, as 
determined by FSA.
    (d) FSA may consider crop acreage that is harvested more than once 
during the same crop year from the same plant as a single crop. The 
acreage must be in an area where the practice is recognized as a good 
farming practice, as determined by FSA.
    (e) FSA may consider each planting period of multiple planted 
acreage as a separate crop. The acreage must be in an area where the 
practice is recognized as a good farming practice, as determined by FSA.
    (f) FSA may define forage as separate crops according to the 
intended method of harvest, either mechanical harvest or grazed.
    (g) Forage acreage intended to be grazed may be further defined as 
warm and cool season forage crops.
    (h) Forage acreage intended to be mechanically harvested may be 
defined as a separate crop from grazed forage and may be separated based 
upon the commodity used as forage, to the extent such separation is 
allowed under paragraph (b) of this section.
    (i) Crop acreage intended for the production of seed may be 
considered a separate crop from other intended uses, as determined by 
FSA, if all the following criteria apply:
    (1) The specific crop acreage is seeded, or intended to be seeded, 
with an intent of producing commercial seed as its primary intended use;
    (2) There is no possibility of other commercial uses of production 
from the same crop without regard to market conditions; and
    (3) The growing period of the specific crop acreage is uniquely 
conducive to the production of commercial seed and not conducive to the 
production of any other intended use of the crop, (e.g.

[[Page 762]]

vernalization in a biennial crop such as carrots and onions) and that 
accommodation renders the possibility of production for any other 
intended use of the crop improbable.

[67 FR 12448, Mar. 19, 2002. Redesignated and amended at 79 FR 74574, 
74583, Dec. 15, 2014]



Sec.1437.14  Multiple benefits.

    (a) If a producer is eligible to receive payments under this part 
and benefits under any other program administered by the Secretary for 
the same crop loss, the producer must choose whether to receive the 
other program benefits or payments under this part, but will not be 
eligible for both. The limitation on multiple benefits prohibits a 
producer from being compensated more than once for the same loss.
    (b) The limitation on multiple benefits specified in paragraph (a) 
of this section will not apply to:
    (1) Emergency Loans made under subtitle C of the Consolidated Farm 
and Rural Development Act (7 U.S.C. 1961-1970).
    (2) Livestock Forage Disaster Program (LFP) payments as specified in 
part 1416 of this chapter,
    (3) Tree Assistance Program (TAP) payments as specified in part 1416 
of this chapter, or
    (4) Emergency Assistance for Livestock, Honeybees, and Farm-Raised 
Fish Program (ELAP) payments as specified in part 1416 of this chapter.
    (c) The restriction on multiple benefits does not relieve the 
producer from the requirements of making a production and acreage 
report.
    (d) If the other USDA program benefits are not available until after 
an application for benefits has been filed under this part, the producer 
may, to avoid this restriction on such other benefits, refund the total 
amount of the payment to the administrative county office from which the 
payment was received.

[67 FR 12448, Mar. 19, 2002, as amended at 78 FR 21018, Apr. 9, 2013. 
Redesignated and amended at 79 FR 74574, 74579 Dec. 15, 2014]



Sec.1437.15  Payment and income limitations.

    (a) The provisions of part 1400 of this title apply to NAP.
    (b) CCC will pay, for up to one year, simple interest on payments to 
producers which are delayed. Interest will be paid on the net amount 
ultimately found to be due, and will begin accruing on the 31st day 
after the date the producer signs, dates, and submits a properly 
completed application for payment on the designated form, or the 31st 
day after a disputed application is adjudicated. Interest will be paid 
unless the reason for failure to timely pay is due to the producer's 
failure to provide information or other material necessary for the 
computation of payment, or there was a genuine dispute concerning 
eligibility for payment.

[67 FR 12448, Mar. 19, 2002, as amended at 78 FR 21019, Apr. 9, 2013. 
Redesignated and amended at 79 FR 74574, 74579, Dec. 15, 2014]



Sec.1437.16  Miscellaneous provisions.

    (a) To be eligible for benefits under this part, producers must be 
in compliance with the highly erodible land and wetlands provisions of 
part 12 of this title.
    (b) The provisions of Sec.718.11 of this title, providing for 
ineligibility for benefits for offenses involving controlled substances, 
apply.
    (c) A person is ineligible to receive assistance under this part for 
the crop year plus two subsequent crop years if it is determined by the 
State or county committee or an official of FSA that such person has:
    (1) Adopted any scheme or other device that tends to defeat the 
purpose of a program operated under this part;
    (2) Made any fraudulent representation with respect to such program; 
or
    (3) Misrepresented any fact affecting a program determination.
    (d) All amounts paid by FSA to any such producer, applicable to the 
crop year in which a violation of this part occurs, must be refunded to 
FSA together with interest and other amounts as determined appropriate 
to the circumstances by FSA. FSA may assess liquidated damages of 10 
percent of the projected or received NAP payment for the crop or 
commodity in violation. Liquidated damages are in addition to any refund 
of program benefits and are not considered a penalty.
    (e) All persons with a financial interest in the operation receiving 
benefits

[[Page 763]]

under this part are jointly and severally liable for any refund, 
including related charges, which is determined to be due FSA for any 
reason under this part.
    (f) In the event that any request for assistance or payments under 
this part was established as result of erroneous information or a 
miscalculation, the assistance or payment will be recalculated and any 
excess refunded with applicable interest.
    (g) The liability of any person for any penalty under this part is 
in addition to any other liability under any civil or criminal fraud 
statute or any other provision of law.
    (h) The appeal regulations at parts 11 and 780 of this title apply 
to decisions made according to this part.
    (i) Any payment or portion thereof to any person will be made 
without regard to questions of title under State law and without regard 
to any claim or lien against the crop, or proceeds thereof.
    (j) For the purposes of 28 U.S.C. 3201(e), the Secretary waives the 
ineligibility to receive benefits under this program but only for 
beneficiaries who as a condition of such waiver agree to apply the 
benefits to reduce the amount of the judgment lien.
    (k) The provisions of parts 1400, 1403 and 1404 of this chapter 
apply to NAP.
    (l) In the case of death, incompetence or disappearance of any 
person who is eligible to receive payments under this part, such 
payments will be disbursed in accordance with part 707 of this title.
    (m) Any person or legal entity who has a debt from nonpayment of the 
premium for coverage levels specified in Sec.1437.5(c) will be 
ineligible for assistance under any subsequent crop year NAP coverage on 
any crop from the crop year of nonpayment of premium until the debt is 
paid in full.
    (1) If a person or legal entity is ineligible for NAP assistance due 
to the debt because of the nonpayment of premium, FSA will permit the 
person or legal entity to file an application for coverage together with 
payment of any service fees; however, that application and payment of 
service fees will not make the person or legal entity eligible for any 
assistance until the premium debt is paid in full.
    (2) Service fees paid with applications for coverage that are filed 
by persons or legal entities who are ineligible for NAP assistance as 
specified in paragraph (m) of this section will not be credited to any 
unpaid premium debt nor are they refundable.
    (n) A person or legal entity ineligible for NAP assistance under 
paragraph (m) of this section may become eligible for future NAP 
assistance if they remit all unpaid debt related to the nonpayment of 
premium before the application for payment filing deadline (see Sec.
1437.11(g)).
    (o) Any NAP payment that was not issued for a prior NAP crop year 
due to an outstanding debt as specified in paragraph (m) of this section 
will not be issued.
    (p) Unpaid debt related to the failure to pay any premium satisfied 
by administrative offset will reinstate the eligibility of a person or 
legal entity from the date the offset satisfies all the unpaid premium 
debt with interest.

[67 FR 12448, Mar. 19, 2002. Redesignated and amended at 79 FR 74574, 
74579, 74583, Dec. 15, 2014; 85 FR 12220, Mar. 2, 2020]



Sec.1437.17  Matters of general applicability.

    (a) The regulations in this part and FSA's interpretation of the 
regulations in this part, the basic provisions, and internal agency 
directives issued to FSA State and county offices are matters of general 
applicability and are not individually appealable in administrative 
appeals according to Sec. Sec.11.3 and 780.5 of this title. 
Additionally, the regulations in this part and any FSA decisions that 
are not based on specific facts derived from an individual participant's 
application, contract, or file are not appealable under parts 11 or 780 
of this title. Examples of such decisions include how NAP is generally 
administered, signup deadlines, payment rates, or any other generally 
applicable matter or determination that is made by FSA for use in all 
similarly situated applications. The only extent to which the matters 
referenced in this section are reviewable administratively in an appeal 
forum is whether FSA's determination of facts incidental to the case

[[Page 764]]

and decision to apply the generally applicable matter is in conformance 
with the regulations in this part.
    (b) The relief provisions of 7 CFR part 718 are applicable only to 
participant ineligibility and noncompliance decisions. The relief 
provisions 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 all the eligibility and compliance 
requirements of this part. Equitable relief provisions of part 718 of 
this title cannot be used to obtain a review of either these 
regulations, the requirements of this part, the agency's interpretations 
of this part, or compliance provisions of this part.

[79 FR 74579, Dec. 15, 2014]



  Subpart B_Determining Yield Coverage Using Actual Production History



Sec.1437.101  Actual production history.

    Actual production history (APH) is the unit's record of crop yield 
by crop year for the APH base period. The APH base period consists of 
ten crop years of actual yield, T-yield, assigned yield, and zero 
credited yield, immediately preceding the crop year for which an 
approved yield is calculated in accordance with this part. APH will be 
used, except as otherwise indicated in this part, as the basis for 
providing noninsured crop disaster assistance.

[71 FR 13744, Mar. 17, 2006]



Sec.1437.102  Yield determinations.

    (a) An actual yield is the total amount of harvested and appraised 
production from unit acreage for the crop year on a per-acre, or other 
basis, as applicable.
    (b) A T-yield (county expected yield):
    (1) Is the Olympic average (disregarding the high and low yields) of 
historical yields of the crop in the county for the five consecutive 
crop years immediately preceding the previous crop year. For example, 
for the 2015 crop year, the five consecutive crop years immediately 
preceding the previous crop year would be 2009 through 2013.
    (2) Will be the same as the FCIC transitional yield if crop 
insurance is available for the crop, (but not necessarily for the cause 
of loss if excluded by policy provisions), in the administrative county.
    (3) Will be calculated so as to be comparable to the FCIC 
transitional yield most reasonable to the area if crop insurance was 
available for the crop (but not necessarily for the cause of loss) in 
contiguous counties, but not in the immediate county.
    (4) Will be based on the most representative available historical 
information, as determined by FSA, from such sources as, but not limited 
to, actual acreage and production data of participating producers in the 
county; or in similar areas; National Agricultural Statistics Service 
data; National Institute of Food and Agriculture records, Federal Crop 
Insurance data, and credible non-government studies. Such data is based 
on the acreage intended for harvest.
    (5) May be adjusted on an administrative county-wide basis for:
    (i) Yield variations due to different farming practices in the 
administrative county such as irrigated and non-irrigated; and
    (ii) Cultural practices when such practices in the administrative 
county are different from those used on acreage to establish the yield.
    (6) Will be adjusted on a State-wide basis, for crops grown on 
certified organic and transitional acreage for which FSA has established 
a separate organic price as specified in Sec.1437.12(b), based on an 
average of FCIC organic yield reductions, as determined by FSA, for the 
same crop in the same State.
    (7) May be adjusted on a county-wide or regional basis for crops 
grown on certified organic and transitional acreage for which FSA has 
established a separate organic price as specified in Sec.1437.12(b), 
based on the most representative available historical information, as 
determined by FSA.
    (8) Will, for all land for those producers who have land physically 
located in multiple counties and administered in one county office, be 
based on the administrative county's expected yield for the crop.

[[Page 765]]

    (9) May be reduced, on a specific APH basis, when, as determined by 
FSA, it does not accurately reflect the productive capability of 
specific crop acreage.
    (10) Will be used in the actual production history base period when 
less than four consecutive crop years of actual, assigned, or zero-
credited yields, as applicable, are available.
    (c) An assigned yield is:
    (1) Equal to 75 percent of the approved yield calculated for the 
most recent crop year for which the producer did not certify a report of 
production in a crop year that is not a bypass year.
    (2) Used, after the first crop year an approved yield for the crop 
is calculated, in the actual production history base period when the 
producer reports acreage for the crop but fails to certify a report of 
production in a crop year that is not a bypass year. Producers may have 
only one assigned yield in the actual production history base period.
    (3) May be replaced with an actual yield when the producers provide 
a certification of production and acceptable production records for the 
applicable crop year in accordance with Sec.1437.8.
    (4) May not be used if the acreage of a crop in the administrative 
county in which the unit is located for the crop year increases by more 
than 100 percent over any year in the preceding seven crop years, or 
significantly from the previous crop years, as determined by FSA, unless 
producers provide:
    (i) Detailed documentation of production costs, acres planted, and 
yield for the crop year for which the producer is requesting assistance, 
or
    (ii) If FSA determines the documentation is inadequate, proof that 
the eligible crop, had it been harvested, could have been marketed at a 
reasonable price.
    (5) May be used, notwithstanding paragraph (c)(4) of this section, 
if:
    (i) The planted acreage for the crop has been inspected by a third 
party acceptable to FSA, or
    (ii) The FSA county executive director, with the concurrence of the 
FSA state executive director, makes a recommendation for an exemption 
from the requirements and FSA approves such recommendation.
    (d) A zero-credited yield:
    (1) Will be used in the applicable crop year of the actual 
production history base period for each crop year following the crop 
year containing an assigned yield, for which producers do not certify a 
report of acreage or production in a crop year that is not a bypass 
year, as determined by CCC.
    (2) May be replaced with an actual yield when the producer provides 
a certification of production and acceptable production records for the 
applicable crop year in accordance with Sec.1437.8.
    (e) An approved yield:
    (1) Is used in the calculation of the requisite loss and payment.
    (2) Is a simple average of a minimum of four base period crop year 
yields, i.e., actual yield, T-yield, assigned yield, or zero-credited 
yield. The base period is 10 crop years, except 5 crop years for apples 
and peaches, immediately preceding the crop year for which an approved 
yield is calculated, not including any crop year the crop was out of 
rotation, not planted, or prevented from being planted.
    (3) Will be calculated according to the following criteria when the 
producer does not have at least four consecutive crop years of actual, 
assigned, or zero credited yields beginning with the most recent crop 
year.
    (i) If there are no certified acceptable production records of 
actual production for the most recent crop year, or zero credited or 
assigned yields in the producer's APH base period, and no formula 
provided for the producer under paragraphs (e)(3)(ii) through (iv) of 
this section, then the approved yield for the current crop year will be 
calculated on the simple average of 65 percent of the applicable T-yield 
for each of the minimum four APH crop years.
    (ii) If certified acceptable production records of actual production 
are available for only the most recent crop year and there are no zero 
credited or assigned yields in the producer's APH base period, the 
approved yield for the current crop year will be calculated on the 
simple average of the one actual yield plus 80 percent of the applicable 
T-yield for the remaining three of the minimum four APH crop years.

[[Page 766]]

    (iii) If certified acceptable production records of actual 
production are available for only the two most recent crop years and 
there are no zero credited or assigned yields in the producer's APH base 
period, the approved yield for the current crop year will be calculated 
on the simple average of the two actual yields plus 90 percent of the 
applicable T-yield for the remaining two of the minimum four APH crop 
years.
    (iv) If certified acceptable production records of actual production 
are available for only the three most recent crop years and there are no 
zero credited or assigned yields in the producer's APH base period, the 
approved yield for the current crop year will be calculated on the 
simple average of the three actual yields plus 100 percent of the 
applicable T-yield for the remaining crop year of the minimum four APH 
crop years.
    (f) If, for one or more actual production history crop years used to 
establish the approved yield, the actual or appraised yield is less than 
65 percent of the current crop year T-yield due to losses incurred in a 
disaster year, as determined by FSA, producers may request FSA replace 
the applicable yield with a yield equal to 65 percent of the current 
crop year T-yield.
    (g) If approved yields were calculated for any of the 1995 through 
2014 crop years, and subsequently in that period production was not 
certified, producers may request FSA replace the missing yields for such 
years with yields equal to the higher of 65 percent of the current crop 
year T-yield or the missing crop years actual yield.
    (h) If producers add land in the farming operation and do not have 
available production records for the added land FSA will calculate an 
approved yield for the new unit by utilizing the actual production 
history yields for the existing unit. In the event the crop suffers a 
loss greater than the unit guarantee for the crop year and unit acreage 
has increased by more than 75 percent of the historical average acreage, 
FSA may adjust the approved yield, as determined by FSA.
    (i) If a producer is a new producer, the approved yield may be based 
on unadjusted T-Yields or a combination of actual yields and unadjusted 
T-Yields. A new producer is a person who has not been actively engaged 
in farming for a share of the production of the eligible crop in the 
administrative county for more than two APH crop years. Formation or 
dissolution of an entity which includes individuals with more than two 
APH crop years of production history during the base period does not 
qualify the new entity as a new producer for APH determination purposes.
    (j) A producer who has not shared in the risk of the production of 
the crop for more than two crop years during the base period, as 
determined by FSA, will have an approved yield calculated based on a 
combination of 100 percent of the applicable T-yield and any actual 
yield for the minimum crop years of the producer's APH base period. 
Producers who have produced the crop for one or more crop years must 
provide FSA, at the administrative county office serving the area in 
which the crop is located, a certification of production and production 
records for the applicable crop years as specified in Sec.1437.8.
    (k) Further adjustments may be made as necessary to accomplish the 
purposes of this program.

[67 FR 12448, Mar. 19, 2002, as amended at 71 FR 13744, Mar. 17, 2006; 
76 FR 4805, Jan. 27, 2011; 79 FR 74579, 74583, Dec. 15, 2014]



Sec.1437.103  Late-planted acreage.

    (a) Producers planting crop acreage after the final planting date 
and during the late planting period, as determined by FSA, may be 
eligible for reduced coverage as specified in paragraphs (b) and (c) of 
this section.
    (b) Crops with multiple planting periods and value loss crops are 
not eligible for reduced coverage for late planting. Exceptions to this 
are the last planting period of multiple planted crops and multiple-
planting periods having a defined gap of 60 days or more between harvest 
date of the previous planting period and beginning of the immediately 
following planting period.
    (c) For crops with a growing period of:
    (1) 60 days or less and planted:
    (i) From 1 to 5 calendar days after the final planting date, 
production will be assigned equal to 5 percent of unit expected 
production for each day the

[[Page 767]]

crop is actually planted after the final planting date;
    (ii) From 6 days after the final planting date, production will be 
assigned equal to the unit guarantee for the late planted crop acreage.
    (2) 61 to 120 calendar days and planted:
    (i) From 1 to 5 calendar days after the final planting date, 
production will be assigned equal to 5 percent of expected unit 
production of the applicable late-planted crop acreage and for days 6 
through 20 an additional 1 percent for each day the crop is planted 
after the final planting date;
    (ii) From 21 days after the final planting date, production will be 
assigned equal to the unit guarantee for the late planted crop acreage.
    (3) 121 calendar days or more and planted:
    (i) From 1 to 5 calendar days after the final planting date, 
production will be assigned equal to 5 percent of expected production of 
the applicable late-planted crop acreage and for days 6 through 25 an 
additional 1 percent for each day the crop is planted after the final 
planting date.
    (ii) From 26 or more calendar days after the final planting date, 
production will be assigned equal to unit guarantee of the producer's 
expected production of the applicable late-planted crop acreage.

[79 FR 74580, Dec. 15, 2014]



Sec.1437.104  Assigned production.

    (a) When determining losses under this section, assigned production 
will be used to offset the loss of production when, as determined by 
FSA, any of the following has occurred:
    (1) The loss is a result of an ineligible cause of loss and the loss 
has not been otherwise accounted for.
    (2) The unit acreage was destroyed without consent notwithstanding 
Sec.1437.11(e).
    (3) The producer has a contract to receive a guaranteed payment for 
all or a portion of the production, as opposed to or regardless of 
delivery of such production.
    (4) The crop is planted after the STC-established final planting 
date according to Sec.1437.103.
    (5) Irrigation equipment is not capable of supplying adequate water 
to sustain the expected production of a normal irrigated crop.
    (6) For normal irrigated annual, biennial, and perennial crops, the 
irrigation practice is not used.
    (7) For normal irrigated annual and biennial crops, the supply of 
available water at the beginning of the crop year is not adequate.
    (8) For normal irrigated perennial crops, the supply of available 
water at the beginning of the crop year is not adequate as a result of 
an ineligible cause of loss.

[71 FR 13745, Mar. 17, 2006, as amended at 79 FR 74580, 74583, Dec. 15, 
2014]



Sec.1437.105  Determining payments for low yield.

    (a) Except to the extent that the loss calculation provisions of 
other subparts apply, and subject to limitations set out elsewhere in 
this part and in this title and to the availability of funds, payments 
under this part will be made on eligible crops with eligible losses by:
    (1) Multiplying the total acres devoted to the eligible crop by the 
producers share, and subject to provisions for specific crops provided 
elsewhere in this part;
    (2) Multiplying the product of paragraph (a)(1) of this section by 
50, 55, 60, or 65 percent, as selected by the producer as specified in 
Sec.1437.5; of the approved yield per acre for the commodity for the 
producer.
    (3) Multiplying the net production of the total eligible acreage by 
the producer's share;
    (4) Subtracting the product of paragraph (a)(3) of this section from 
the product of paragraph (a)(2) of this section;
    (5) Multiplying the amount calculated as specified in paragraph 
(a)(4) of this section by 55 or 100 percent (selected by the producer as 
specified in Sec.1437.5) of the final payment price calculated as 
specified in Sec.1437.12; and
    (6) Adding the producer's share of any salvage value and secondary 
use and subtracting the result from the result of paragraph (a)(5) of 
this section.

[[Page 768]]

    (b) Further adjustments may be made as needed to accomplish the 
purposes and goals of the program.
    (c) The crops and locations eligible for quality adjustments will be 
determined by the Deputy Administrator in advance of the coverage 
period, only if supporting documentation of industry standards for 
quality adjustments are available. For specific crops and locations 
determined by the Deputy Administrator for which buy-up coverage under 
Sec.1437.5(d) is elected and for which adjustments to net production 
based on quality losses will be authorized for a coverage period in 
accordance with this paragraph, producers may opt for an adjustment of 
net production of a covered crop as specified in paragraph (a)(3) of 
this section based on a specific measure of quality against a set of 
standards that are acceptable to FSA. The standards and permissible 
adjustments to net production based on alleged quality losses stemming 
from eligible causes of loss in a coverage period will be based on FSA's 
review of sufficient documentation and are subject to FSA acceptance and 
State committee recommendation to the Deputy Administrator. The crops 
and locations where quality adjustments will be permitted will be as 
specified on a list maintained by FSA.
    (d) Production will not be adjusted under this section unless all 
other provisions of this section are met and the crop and location are 
included on a list of approved crops and locations before the beginning 
of the coverage period for the crop.
    (e) A producer of a NAP covered crop in a location and coverage 
period approved by FSA as specified in paragraphs (c) and (d) of this 
section who opts for the quality loss adjustment option must submit 
verifiable records obtained by testing or analysis of the specific 
crop's production and the alleged loss of quality stemming from an 
eligible cause of loss in the coverage period. Records must meet 
requirements of Sec.1437.8(a)(3).
    (f) If a quality adjustment option is sought by a producer and 
approved for a crop year, FSA will enter the adjusted value of net 
production into the producer's actual production history yield database 
for the loss year. The lower actual yield that results from the quality 
adjustment will be used for future approved yield calculations.

[67 FR 12448, Mar. 19, 2002. Redesignated and amended at 71 FR 13745, 
13746, Mar. 17, 2006; 78 FR 21019, Apr. 9, 2013; 79 FR 74580, Dec. 15, 
2014]



Sec.1437.106  Honey.

    (a) Honey production eligible for benefits under this part includes 
table and non-table honey produced commercially.
    (b) All of a producer's honey will be considered a single crop, 
regardless of type or variety of floral source or intended use.
    (c) The crop year for honey production is the calendar year, January 
1 through December 31.
    (d) In addition to filing a report of acreage in accordance with 
Sec.1437.8, honey producers must provide a record of colonies to FSA. 
The report of colonies must be filed before the crop year for which 
producers seek to maintain coverage. The report of colonies must 
include:
    (1) The address of the producer's headquarters and FSA farm serial 
number, if available;
    (2) Names and shares of each person sharing in the honey produced 
from the unit;
    (3) The number of all colonies of bees belonging to the unit;
    (4) The names of counties in which colonies of bees are located as 
of the date of the report; and
    (5) A certification of the number of colonies reported including all 
colonies from which production is expected.
    (e) The honey unit consists of all the producer's bee colonies, 
regardless of location.
    (f) Producers must designate a FSA office as the control office for 
the honey operation. Producers must complete the following actions only 
in the control office:
    (1) File an application for coverage;
    (2) File a report of colonies;
    (3) Report total unit production; and
    (4) Request to change a unit's control office.
    (g) Actions that may be taken in any administrative county office 
includes:
    (1) Designating or selecting another control office; or

[[Page 769]]

    (2) Filing a notice of loss in accordance with Sec.1437.11.
    (h) Producers must notify the control office designated in 
accordance with paragraph (f) of this section within 30 calendar days of 
the date of:
    (1) Any changes in the total number of colonies; and
    (2) The movement of any colonies into any additional counties.
    (i) Payments will be based on the amount of losses for this 
community based on the applicable guarantee at a rate determined in 
accord with this part and the authorizing legislation.
    (j) Premiums for coverage levels specified in Sec.1437.5(c) will 
be calculated based on the highest number of colonies reported during 
the program year.

[67 FR 12448, Mar. 19, 2002. Redesignated at 71 FR 13745, Mar. 17, 2006, 
as amended at 79 FR 74581, Dec. 15, 2014]



Sec.1437.107  Maple sap.

    (a) NAP assistance for maple sap is limited to maple sap produced on 
private property for sale as sap or syrup. Eligible maple sap must be 
produced from trees that:
    (1) Are located on land the producer controls by ownership or lease;
    (2) Are managed for production of maple sap;
    (3) Are at least 30 years old and 12 inches in diameter; and
    (4) Have a maximum of 4 taps per tree according to the tree's 
diameter.
    (b) The crop year for maple sap production is the calendar year, 
January 1 through December 31.
    (c) If producers file an application for coverage in accordance with 
Sec.1437.7, tree acreage containing trees from which maple sap is 
produced or is to be produced must be reported to FSA no later than the 
beginning of the crop year.
    (d) In addition to the applicable records required under Sec.
1437.8, producers must report the:
    (1) Total number of eligible trees on the unit;
    (2) Average size and age of producing trees; and
    (3) Total number of taps placed or anticipated for the tapping 
season.
    (e) A maximum county-expected-yield for maple sap is 10 gallons of 
sap per tap per crop year unless acceptable documentary evidence, as 
determined by FSA, is available to FSA to support a higher county-
expected-yield.
    (f) The average market price for maple sap must be established for 
the value of the sap before processing into syrup. If price data is 
available only for maple syrup, this data must be converted to a maple 
sap basis. The wholesale price for a gallon of maple syrup is multiplied 
by 0.00936 to arrive at the average market price of a gallon of maple 
sap.
    (g) The actual production history for maple sap will be recorded on 
the basis of gallons of sap per tap.
    (h) The unit's expected production is determined by:
    (1) Multiplying the number of taps placed in eligible trees; by
    (2) The approved per tap yield as determined in accordance with 
Sec.1437.102.
    (i) Payments will be based on the amount of losses for this 
community based on the applicable guarantee at a rate determined in 
accord with this part and the authorizing legislation.
    (j) Premiums for coverage levels specified in Sec.1437.5(c) will 
be calculated based on the number of taps reported by the producer.

[67 FR 12448, Mar. 19, 2002. Redesignated at 71 FR 13745, Mar. 17, 2006; 
79 FR 74581, Dec. 15, 2014]



Sec.1437.108  Hemp.

    (a) Hemp is eligible for NAP coverage only if the hemp is:
    (1) Grown under an official certification or license issued by the 
applicable governing authority that permits the production of the hemp;
    (2) Grown under a hemp processor contract executed by the applicable 
acreage reporting date; and
    (3) Planted for harvest as hemp in accordance with the requirements 
of the hemp processor contract and the production management practices 
of the hemp processor.
    (b) In addition to all other requirements under this part, a 
producer who obtains NAP coverage for hemp must submit by the acreage 
reporting date:
    (1) The certification or license number;
    (2) A copy of the certification form or official license issued by 
the applicable

[[Page 770]]

governing authority authorizing the producer to produce hemp; and
    (3) A copy of each fully executed hemp processor contract.
    (c) A producer must submit THC test results taken at harvest of the 
hemp crop. If the producer does not submit the THC test results, that 
production will not be included in the producer's actual yield for the 
purpose of determining a producer's APH under Sec.1437.101.
    (d) Hemp is not eligible for NAP coverage if it is planted on acres 
on which Cannabis, canola, dry beans, dry peas, mustard, rapeseed, 
soybeans in states as determined by the Deputy Administrator, or 
sunflowers were grown the preceding crop year.
    (e) Hemp that has a THC level above 0.3 percent:
    (1) Is not eligible for NAP benefits; and
    (2) Is not included in the producer's actual yield for the purpose 
of determining a producer's APH under Sec.1437.101.
    (f) Hemp will be ineligible for NAP payment for that NAP crop year 
if the producer's certification or license is terminated or suspended 
during that NAP crop year.

[85 FR 12220, Mar. 2, 2020]



Sec. Sec.1437.109-1437.200  [Reserved]



      Subpart C_Determining Coverage for Prevented Planted Acreage



Sec.1437.201  Prevented planting acreage.

    (a) In addition to the provisions of this section, the provisions of 
Sec.718.103 of this title apply.
    (b) When determining losses under this section:
    (1) Producers must be prevented from planting more than 35 percent 
of the total eligible acreage intended for planting to the eligible crop 
and in the case of multiple planting, more than 35 percent of the total 
eligible acres intended to be planted within the applicable planting 
period.
    (2) Prevented planted acreage will be considered separately from 
low-yield losses of planted acreage of the same crop.
    (c) Acreage and units ineligible for prevented planting coverage 
includes, but is not limited to:
    (1) Value-loss crops, including, but not limited to, Christmas 
trees, aquaculture, and ornamental nursery;
    (2) Tree crops and other perennials, unless:
    (i) The producer can prove resources unique to the planting of tree 
crops and other perennials were available to plant, grow, and harvest 
the crop, as determined by FSA; and
    (ii) FSA has approved the planting period for the crop;
    (3) Uninsured crop acreage that is unclassified for insurance 
purposes;
    (4) Any acreage on which a crop was harvested, hayed, or grazed 
during the crop year;
    (5) Acreage of which the producer or any other person received a 
prevented planted payment for any crop for the same acreage, excluding 
share arrangements; and
    (6) Acreage planted during the late-planting period.

[71 FR 13746, Mar. 17, 2006, as amended at 79 FR 74581,74583, Dec. 15, 
2014]



Sec.1437.202  Determining payments for prevented planting.

    (a) Subject to limitations, availability of funds, and specific 
provisions dealing with specific crops, a payment for prevented planting 
will be determined by:
    (1) Adding the total planted and prevented-planted acres;
    (2) Multiplying the sum of paragraph (a)(1) of this section by .35;
    (3) Subtracting the product of paragraph (a)(2) of this section from 
the total prevented planted acres;
    (4) Multiplying the producer's share by the approved yield by the 
positive result of paragraph (a)(3) of this section;
    (5) Multiplying the producer's share by the assigned production;
    (6) Subtracting the product of paragraph (a)(5) of this section from 
the product of paragraph (a)(4) of this section; and
    (7) Multiplying the result of paragraph (a)(6) of this section by 55 
or 100 percent, as selected by the producer as specified in Sec.
1437.5, of the final payment price calculated under Sec.1437.12.

[[Page 771]]

    (b) Yields for purposes of paragraph (a) of this section will be 
calculated in the same manner as for low-yield claims.

[67 FR 12448, Mar. 19, 2002, as amended at 71 FR 13746, Mar. 17, 2006; 
79 FR 74581, Dec. 15, 2014]



Sec. Sec.1437.203-1437.300  [Reserved]



               Subpart D_Determining Coverage Using Value



Sec.1437.301  Value loss.

    (a) Special provisions are required to assess losses and calculate 
assistance for a few crops and commodities that do not lend themselves 
to yield loss situations. Assistance for these commodities is calculated 
based on the loss of value at the time of disaster. FSA determines which 
crops are value-loss crops, but unless otherwise announced, value-loss 
crops are those identified in Sec. Sec.1437.303 through 1437.309. Lost 
production of value loss crops is eligible for payment only as specified 
in this subpart.
    (b) The crop year for all value loss crops, except ornamental 
nursery as specified in Sec.1437.305, is October 1 through September 
30.
    (c) Producers must file an application for coverage in accordance 
with Sec.1437.7, and must:
    (1) Provide a report of the crop, commodity, and facility to FSA for 
the acreage or facility, in a form prescribed by FSA, no later than the 
beginning of the crop year.
    (2) Maintain a verifiable inventory of the eligible crop throughout 
the crop year; and
    (3) Provide an accurate accounting of the inventory, as required by 
FSA.

[67 FR 12448, Mar. 19, 2002, as amended at 78 FR 21019, Apr. 9, 2013; 79 
FR 74581, 74583, Dec. 15, 2014; 85 FR 12221, Mar. 2, 2020]



Sec.1437.302  Determining payments.

    (a) Subject to all restrictions and the availability of funds, value 
loss payments for qualifying losses will be determined by:
    (1) Multiplying the field market value of the crop before the 
disaster, or for buy-up coverage specified in Sec.1437.5(c), the 
lesser of the field market value of the crop before the disaster or the 
maximum dollar value for coverage sought, by 50, 55, 60, or 65 percent, 
as selected by the producer as specified in Sec.1437.5;
    (2) Subtracting the sum of the field market value after the disaster 
and value of ineligible causes of loss from the result from paragraph 
(a)(1) of this section;
    (3) Multiplying the result from paragraph (a)(2) of this section by 
the producer's share;
    (4) Multiplying the result from paragraph (a)(3) of this section by 
55 or 100 percent, as selected by the producer as specified in Sec.
1437.5, plus whatever appropriate factor reflects savings from non-
harvesting of the damaged crop or other factors as appropriate; and
    (5) Subtracting the producer's share of any salvage value, if 
applicable.
    (b) [Reserved]

[79 FR 74581, Dec. 15, 2014]



Sec.1437.303  Aquaculture, including ornamental fish.

    (a) Aquaculture is a value loss crop and will have NAP assistance 
calculated only in accord with restrictions set in this section. 
Eligible aquacultural species only include:
    (1) Any species of aquatic organisms grown as food for human 
consumption as determined by CCC.
    (2) Fish raised as feed for other fish that are consumed by humans; 
and
    (3) Ornamental fish propagated and reared in an aquatic medium.
    (b) The aquacultural facility must be:
    (1) A commercial enterprise on private property;
    (2) Owned or leased by the producer, with readily identifiable 
boundaries; and
    (3) Managed and maintained using good aquacultural growing 
practices.
    (c) Producers must:
    (1) Ensure adequate and proper flood prevention, growing medium, 
fertilization or feeding, irrigation and water quality, predator 
control, and disease control; and
    (2) Have control of the waterbed.
    (d) Eligible aquacultural species must be:
    (1) Placed in the facility and not be indigenous to the facility; 
and

[[Page 772]]

    (2) Kept in a controlled environment; and
    (3) Planted or seeded in containers, wire baskets, net pens, on 
ropes, or similar device designed for the protection and containment of 
the seeded aquacultural species.
    (e) For mollusks that are not planted or seeded in containers, net 
pens, on ropes, wire baskets, or similar device designed for the 
containment and protection of the mollusks, the only eligible cause of 
loss of mollusks or missing mollusk inventory will be a direct result of 
a National Oceanic and Atmospheric Administration-determined tropical 
storm, typhoon, or hurricane.
    (f) In the crop year in which a notice of loss is filed, producers 
may be required, at the discretion of CCC, to provide evidence that the 
aquacultural species are produced in a facility in accordance with 
paragraphs (b), (c) and (d) of this section.
    (g) If all other eligibility provisions of this part are determined 
by FSA to be satisfied, assistance will be provided to producers for 
eligible NAP aquaculture crop losses that are the direct result of 
drought.

[67 FR 12448, Mar. 19, 2002, as amended at 78 FR 21019, Apr. 9, 2013; 79 
FR 74581, Dec. 15, 2014]



Sec.1437.304  Floriculture.

    (a) Floriculture, except for seed crops as specified in paragraph 
(d) of this section, is a value loss crop and is compensable only in 
accord with restrictions set in this section. Eligible floriculture is 
limited to commercial production of:
    (1) Field-grown flowers, including flowers grown in containers or 
other growing medium maintained in a field setting according to industry 
standards, as determined by FSA; and
    (2) Tubers and bulbs, for use as propagation stock of eligible 
floriculture plants; and
    (3) Seed for propagation of eligible floriculture plants.
    (b) Floriculture does not include flowering plants indigenous to the 
location of the floriculture facility or acreage.
    (c) Eligible floriculture must be grown in a region or controlled 
environment conducive to the successful production of flowers, tubers, 
and bulbs, as determined by FSA.
    (d) Claims on losses on the production of flower seed for 
propagation of eligible floriculture plants will not be treated under 
``value loss'' rules, but under the rules for normal production low 
yield crops under subpart B of this part.
    (e) The facility or acreage for eligible floriculture must be 
managed and maintained using good floriculture growing practices. At a 
minimum, producers are responsible for providing a controlled 
environment and must ensure adequate and proper fertilization, 
irrigation, weed control, insect and disease control, and rodent and 
wildlife control.
    (f) In the crop year in which a notice of loss is filed, producers 
may be required, at the discretion of FSA, to provide evidence the 
floriculture is produced in accordance with paragraph (e) of this 
section.
    (g) Flowers having any dollar value are counted as having full value 
for loss calculations. Damaged plants that are determined able to 
rejuvenate or determined to be merely stunted are counted as worth full 
value.

[67 FR 12448, Mar. 19, 2002, as amended at 79 FR 74581, 74583, Dec. 15, 
2014]



Sec.1437.305  Ornamental nursery.

    (a) Eligible ornamental nursery stock is a value loss crop and is 
compensable only in accord with restrictions set out in this section. 
Eligible ornamental nursery stock is limited to field-grown and 
containerized decorative plants grown in a controlled environment for 
commercial sale.
    (b) The property upon which the nursery stock is located must be 
owned or leased by the producer.
    (c) The eligible nursery stock must be placed in the ornamental 
nursery facility and not be indigenous to the facility.
    (d) The facility must be managed and cared for using good nursery 
growing practices for the geographical region. At a minimum producers 
must provide a controlled environment and ensure adequate and proper 
flood prevention, growing medium, fertilization, irrigation, insect and 
disease control, weed control, rodent and wildlife control,

[[Page 773]]

and over-winterization storage facilities.
    (e) An ornamental plant having any value as an ornamental plant, or 
a damaged ornamental plant that may rejuvenate and re-establish value as 
an ornamental plant, will be considered as worth full value based on the 
age or size of the plant at the time of disaster.
    (f) In the crop year in which a notice of loss is filed, producers 
may be required, at the discretion of FSA, to provide evidence the 
ornamental nursery is maintained in accordance with this section.
    (g) For the 2010 and subsequent crops, the crop year for ornamental 
nursery is June 1 through May 31.

[67 FR 12448, Mar. 19, 2002, as amended at 78 FR 21019, Apr. 9, 2013; 79 
FR 74582, 74583, Dec. 15, 2014]



Sec.1437.306  Christmas tree crops.

    (a) A Christmas tree is a value loss crop and may generate a claim 
for benefits under this part only if the tree was grown exclusively for 
commercial use as a Christmas tree, and only if other requirements of 
this section are met.
    (b) The unit of measure for all Christmas tree crops is a plant.
    (c) A Christmas tree having any value as a Christmas tree, or a 
damaged Christmas tree that may rejuvenate and re-establish value as a 
Christmas tree, will be considered as worth full value based on the age 
of the tree at the time of disaster.

[67 FR 12448, Mar. 19, 2002, as amended at 79 FR 74582, Dec. 15, 2014]



Sec.1437.307  Mushrooms.

    (a) Eligible mushrooms is a value loss crop and is only compensable 
in accord with the restrictions of this section. To be eligible, the 
mushrooms must be grown as a commercial crop in a facility with a 
controlled environment utilizing good mushroom growing practices. The 
facility must be located on private property either owned or leased by 
the producer.
    (b) The controlled environment for eligible mushrooms must include 
primary and backup systems for:
    (1) Temperature and humidity controls;
    (2) Proper and adequate lighting; and
    (3) Positive air pressurization and filtration.
    (c) The growing medium must consist of a substrate (a habitat and 
nutrient base) sterilized by heat treatment.
    (d) Good mushroom growing practices must be used, and they consist 
of proper and adequate insect and disease control and the maintenance of 
a sterile environment. Maintaining a sterile environment includes at a 
minimum:
    (1) Adequate hygiene;
    (2) Overall cleanliness;
    (3) Isolation or minimum contact procedures;
    (4) Use of footpaths; and
    (5) Availability and frequent utilization of wash-down facilities.
    (e) In the crop year in which a notice of loss is filed, producers 
may be required, at the discretion of FSA, to provide evidence the 
mushrooms are maintained in accordance with this section.

[67 FR 12448, Mar. 19, 2002, as amended at 79 FR 74583, Dec. 15, 2014]



Sec.1437.308  Ginseng.

    (a) Ginseng is a value loss crop and is compensable only as allowed 
in this section. Ginseng is eligible only if:
    (1) The ginseng includes stratified seeds for use as propagation 
stock in a commercial ginseng operation or rootlet for commercial sale 
that are grown in a controlled, cultivatable environment on private 
property either owned or leased by the producer; and
    (2) The ginseng is grown using good ginseng growing practices with 
all plant needs supplied and under control of the producer;
    (b) Ginseng will not be eligible to generate benefits under this 
part if it:
    (1) Is indigenous to the facility;
    (2) Is grown solely for medicinal purposes; and
    (3) Includes wild ginseng rootlet that is harvested and transplanted 
from woodland grown ginseng.
    (c) Good ginseng growing practices must be followed, and include, 
but are not limited to:
    (1) Adequate drainage;
    (2) Proper and adequate shade;
    (3) Accurate pH level;
    (4) Adequate and timely fertilization, including an adequate supply 
to ensure

[[Page 774]]

nutrient reserves to the ginseng plants and customary application 
equipment;
    (5) Adequate pest control, including but not limited to, weed, 
rodent, and wildlife control; and
    (6) Disease control.
    (d) Ginseng producers must:
    (1) Provide a report of inventory of all ginseng, as determined by 
FSA;
    (2) Provide production and sales records necessary to determine the 
value of eligible ginseng;
    (3) Allow an FSA-certified loss adjustor to verify loss, including 
physically removing representative samples;
    (4) Maintain and provide, as determined by FSA, adequate records of 
fertilization, and pest and disease controls used or put into place 
during the crop year; and
    (5) Possess a valid food processing license issued by the applicable 
State Department of Agriculture or equivalent and subject to food 
regulations administered by the Food and Drug Administration.
    (e) In the crop year in which a notice of loss is filed, producers 
may be required, at the discretion of FSA, to provide evidence the 
ginseng was produced in accordance with this section.

[67 FR 12448, Mar. 19, 2002, as amended at 79 FR 74582,74583, Dec. 15, 
2014]



Sec.1437.309  Turfgrass sod.

    (a) Turfgrass sod is a value loss crop and is the upper stratum of 
soil bound by mature grass and plant roots into a thick mat produced in 
commercial quantities for sale.
    (b) Specific species, types or varieties of grass intended for 
turfgrass sod will be considered a separate crop without regard to other 
intended uses.
    (c) The unit of measure for all turfgrass sod is a square yard.
    (d) Turfgrass sod having any value will be considered as worth full 
value.
    (e) In addition to the records required in Sec.1437.8, producers 
seeking payment must provide information to FSA regarding the average 
number of square yards per acre and all unharvested areas.

[67 FR 12448, Mar. 19, 2002, as amended at 79 FR 74582, 74583, Dec. 15, 
2014]



Sec.1437.310  Sea grass and sea oats.

    (a) Sea grass and sea oats are value loss crops and eligibility will 
be limited to ornamental plants grown for commercial sale and seeds and 
transplants produced for commercial sale as propagation stock.
    (b) An eligible commodity under this section intended for sale on a 
commercial basis as:
    (1) An ornamental plant can produce a claim in the event of a loss 
due to a qualifying condition only in the same manner and subject to the 
same conditions as ornamental nursery stock under Sec.1437.305 and 
such claims will not, as such, be subject to the provisions of 
paragraphs (c) through (h) of this section, except to the extent that 
similar provisions apply to claims under Sec.1437.305.
    (2) Propagation stock (seed or transplant) can produce a claim under 
this part but only in accord with the provisions that follow in this 
section and subject to other conditions on payment as may be imposed 
elsewhere in this part.
    (c) For purposes of a loss calculation arising under paragraph 
(b)(2) of this section, the value of:
    (1) Seed will be determined on a yield basis made in accordance with 
subpart B of this part and average market price established in 
accordance with Sec.1437.12.
    (2) Transplant losses will be determined based on inventory that 
existed immediately before and after the disaster and average market 
price established in accordance with Sec.1437.12.
    (d) Transplant producers must have up-to-date inventory and sales 
records and other documents, sufficient to document actual losses, as 
determined by FSA.
    (e) The land, waterbed, or facility in which the eligible commodity 
was located at the time of loss must:
    (1) Be owned or leased by the producer;
    (2) Have readily identifiable boundaries; and
    (3) Be managed and maintained using acceptable growing practices for 
the geographical region, as determined by FSA.
    (f) The producer must have control of the land, waterbed, or 
facility and must ensure adequate and proper:

[[Page 775]]

    (1) Flood prevention;
    (2) Growing medium;
    (3) Fertilization or feeding;
    (4) Irrigation and water quality;
    (5) Weed control;
    (6) Pest and disease control;
    (7) Rodent and wildlife control; and
    (8) Over-winterization facilities, as applicable.
    (g) The eligible commodity must be:
    (1) Grown in a region or controlled environment conducive to 
successful production, as determined by FSA; and
    (2) Placed in the waterbed or facility in which the loss occurs and 
not be indigenous to the waterbed or facility.
    (h) Eligible commodities having any dollar value after the disaster 
will be considered as having full value when making loss calculations. 
Also, damaged plants that do not have any value after the disaster but 
that can be rejuvenated or may, if not fully rejuvenated, reacquire 
value, will be counted as worth full value as well.
    (i) In the crop year in which a notice of loss is filed, producers 
may be required, at the discretion of FSA, to provide evidence that the 
eligible commodity was produced in accordance with paragraphs (e), (f), 
and (g) of this section and other provisions of this part.

[67 FR 62324, Oct. 7, 2002, as amended at 79 FR 74582, 74583, Dec. 15, 
2014]



Sec. Sec.1437.311-1437.400  [Reserved]



Subpart E_Determining Coverage of Forage Intended for Animal Consumption



Sec.1437.401  Forage.

    (a) Forage eligible for benefits under this part is limited to 
mature vegetation, as determined by FSA, produced in a commercial 
operation. Benefits are not available for first-year seeding of alfalfa 
and similar vegetation when production is not produced in the seeding 
year, as determined by FSA. The commercial operation must use acceptable 
farming, pasture, and range management practices for the location 
necessary to sustain sufficient quality and quantity of the vegetation 
so as to be suitable for grazing livestock or mechanical harvest as hay 
or seed. Forage to be mechanically harvested will be treated under the 
rules for low-yield crops as calculated under Sec.1437.103, except 
claims on forage for grazing benefits will be determined according to 
paragraph (f) of this section. The provisions in this subpart apply to 
all claims including forage for mechanical harvest.
    (b) Producers of forage must, in addition to the records required in 
Sec.1437.8, specify the intended method of harvest of all acreage 
intended as forage for livestock consumption as either mechanically or 
grazed.
    (c) Producers must request an appraisal from the administrative 
county office for the unit prior to the onset of grazing of any intended 
mechanically harvested forage acreage that will be both mechanically 
harvested and grazed.
    (d) Forage acreage reported to FSA as intended to be mechanically 
harvested, but which is instead subsequently grazed, will be considered 
for crop definition purposes as mechanically harvested. Expected 
production of the specific acreage for which catastrophic coverage was 
obtained will be calculated on the basis of carrying capacity. The loss 
of such grazed forage will be determined according to paragraph (f) of 
this section. For acreage intended to be mechanically harvested which is 
instead subsequently grazed, the loss of intended mechanically harvested 
forage may alternatively be determined based on a review of acceptable 
production evidence or appraisal of the specific crop acreage. As part 
of the payment computation for this loss, intended mechanically 
harvested forage crop acreage that is not mechanically harvested but 
instead grazed will be deemed to be un-harvested for the purposes of 
determining a payment factor.
    (e) Small grain forage is the specific acreage of wheat, barley, 
oats, triticale, or rye intended for use as forage. Small grain forage 
is a separate crop and distinct from any other forage commodities and 
other intended uses of the small grain commodity. In addition to the 
records required in Sec.1437.8, producers must specify whether the 
intended forage crop is intended for fall

[[Page 776]]

and winter, spring, or full season forage. In addition to other 
eligibility requirements, FSA will consider other factors, such as water 
sources and available fencing, and adequate fertilization to determine 
small grain forage eligibility, yields, and production.
    (f) FSA will establish forage losses of acreage intended to be 
grazed including, in some cases, acreage intended to be mechanically 
harvested but instead subsequently grazed for producers with 
catastrophic coverage, on the basis of:
    (1) The percentage of loss of similar mechanically-harvested forage 
acreage on the farm, or on similar farms in the area when approved 
yields have been calculated to determine loss; or
    (2) Where there is no similar mechanically-harvested forage acreage 
on the farm or similar farms in the area, the collective percentage of 
loss as determined by FSA for the geographical region after 
consideration of at least two independent assessments of grazed forage 
acreage conditions, or by alternative methods as determined by the 
Deputy Administrator.
    (i) The assessments must be completed by forage or range specialists 
in Federal, State, and local government agencies, educational 
institutions, and private companies not having a financial interest in 
the outcome of the assessment. Collective percentage of loss determined 
by FSA for the geographical region may be based on any or all the 
following methods as may be available and as determined appropriate by 
the Deputy Administrator:
    (A) Independent assessments of grazed forage acreage conditions;
    (B) The U.S. Drought Monitor;
    (C) Information obtained from loss adjusters with sufficient forage 
knowledge to provide grazing loss assessments;
    (D) Data obtained from approved areas where clippings are obtained 
on a regular basis to compare with expected levels of production in a 
geographical region; or
    (E) Information from Natural Resources Conservation Service 
technical service providers having a specialized knowledge.
    (ii) Neither the assessments themselves, nor collective loss 
percentages established in accordance with this section are subject to 
appeal. FSA's determinations of geographical area for assessments and 
collective grazing loss are generally applicable to all similarly 
situated participants farming in such defined geographical region.
    (g) For those NAP covered participants who seek to have a NAP 
payment determined based on paragraph (f)(2) of this section, a notice 
of loss under Sec.1437.11 will not be required; only an application 
for payment must be filed. Unless otherwise expressed by the NAP covered 
participant, FSA will presume the participant to want assistance for 
grazed forage determined according to paragraph (f)(2) of this section.

[79 FR 74582, Dec. 15, 2014, as amended at 85 FR 12221, Mar. 2, 2020]



Sec.1437.402  Carrying capacity.

    (a) FSA will establish a carrying capacity for all grazed forage 
present in the county for purposes of administering this program and to 
that end:
    (1) Multiple carrying capacities may be determined for a specific 
vegetation if factors, such as soil type, elevation, and topography, 
result in a significant difference of carrying capacity within the 
county.
    (2) FSA may establish separate carrying capacities for irrigated and 
non-irrigated forage acreage when acreage of traditionally irrigated 
forage (forage actually irrigated 3 of the last 5 crop years) is present 
in the county.
    (b) Producers may provide evidence that unit forage management and 
maintenance practices are improvements over those practices generally 
associated with the established carrying capacity. Based on this 
evidence, FSA may adjust the expected AUD for the specific forage 
acreage with catastrophic coverage upward for the crop year NAP 
assistance is requested by:
    (1) Three percent when at least 1 practice was completed at least 1 
time in the previous 5 crop years and such practice can be expected to 
have a positive impact on the forage's carrying capacity in the crop 
year NAP assistance is requested;
    (2) Five percent when 2 or more practices were completed at least 1 
time in the previous 5 crop years and such practices can be expected to 
have a

[[Page 777]]

positive impact on the forage's carrying capacity in the crop year NAP 
assistance is requested; and
    (3) Greater than 5 percent when producers provide acceptable 
records, as determined by FSA, of higher forage production or an 
increase in animal units supported on the specific forage acreage in 3 
of the 5 crop years immediately before the crop year NAP assistance is 
requested.

[67 FR 12448, Mar. 19, 2002, as amended at 79 FR 74582, 74583, Dec. 15, 
2014]



Sec.1437.403  Determining payments.

    (a) Subject to payment limits, availability of funds, and other 
limits as may apply, payments for catastrophic coverage of losses of 
forage reported to FSA as intended to be grazed will be determined by:
    (1) Multiplying the eligible acreage by the producer's share;
    (2) Dividing the result from paragraph (a)(1) of this section by the 
carrying capacity or adjusted per day carrying capacity established for 
the specific catastrophic coverage acreage, as determined by FSA;
    (3) Multiplying the result from paragraph (a)(2) of this section by 
the number of days established as the grazing period;
    (4) Adding adjustments of AUD for practices and production to the 
product of paragraph (a)(3) of this section;
    (5) Multiplying the result from paragraph (a)(4) of this section by 
the applicable percentage of loss established by FSA;
    (6) Multiplying the amount of assigned AUD, as determined by FSA, by 
the producer's share;
    (7) Subtracting the result from paragraph (a)(6) of this section 
from the result from paragraph (a)(5) of this section;
    (8) Multiplying the result from paragraph (a)(4) of this section by 
0.50;
    (9) Subtracting the result from paragraph (a)(8) of this section 
from the result from paragraph (a)(7) of this section; and
    (10) Multiplying the result from paragraph (a)(9) of this section by 
55 percent of the final payment price established in accordance with 
Sec.1437.12.
    (b) [Reserved]

[79 FR 74582, Dec. 15, 2014]



Sec.1437.404  Information collection requirements under the Paperwork
Reduction Act; OMB control number.

    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a 
currently valid OMB control number. The OMB control number for the 
regulation in this part is 0560-0175.



          Subpart F_Determining Coverage in the Tropical Region

    Source: 71 FR 52739, Sept. 7, 2006, unless otherwise noted.



Sec.1437.501  Applicability; definition of ``tropical region'' and
additional definitions.

    (a) This subpart applies to covered tropical crops in the tropical 
region, as those terms are defined in this subpart. Benefits under this 
part may be extended to those crops only to the extent that they are 
otherwise eligible for assistance under this part. Covered crops do not 
include ``value loss'' crops, as defined elsewhere in this part. For 
those crops that are covered by this subpart, loss and payment 
determinations for NAP covered in this part are determined by the rules 
that otherwise apply to NAP subject to the modifications provided by 
this subpart. The rules that otherwise apply include, but are not 
limited to, limitations on payments that are specified in part 1400 of 
this chapter.
    (b) For purposes of this subpart:
    (1) Tropical region includes, as may be further limited by the 
Deputy Administrator: Hawaii, American Samoa, Guam, the U.S. Virgin 
Islands, Puerto Rico, and the territories and possessions of the United 
States. Other areas may be included as determined by the Deputy 
Administrator to be required by law. References to specific areas 
elsewhere in this subpart will not limit the ability of the Deputy 
Administrator to limit the geographic scope of this subpart.
    (2) Covered tropical crops means those crops and commodities in the 
tropical

[[Page 778]]

region governed by this subpart, those being all crops and commodities 
in the tropical region that are otherwise eligible for generating a 
benefit claim under this part, except for value-loss crops as defined 
elsewhere in this part.
    (c) The Deputy Administrator may adjust requirements for assistance 
so as to provide a fair transition from previous rules for crop covered 
by this subpart to those provisions which are provided for in this 
subpart.

[71 FR 52739, Sept. 7, 2006, as amended at 78 FR 21019, Apr. 9, 2013; 79 
FR 74583, Dec. 15, 2014]



Sec.1437.502  Coverage periods and fees for covered tropical crops.

    (a) The crop year for all covered tropical crops is the calendar 
year (January 1 through December 31).
    (b) The application closing date for all covered tropical crops is 
December 31 of the calendar year before the applicable crop year.
    (c) For covered tropical crops, the maximum service fee per crop per 
county provided at Sec.1437.7 is required of the producer for coverage 
of:
    (1) With respect to annual and biennial crops, all plantings of the 
same crop planted during the crop year, as determined by FSA.
    (2) With respect to perennial crops, all acreage of the crop 
existing during the crop year, as determined by FSA.
    (d) Multiple planting periods and final planting dates are not 
applicable for covered tropical crops. However, nothing in this section 
will be interpreted to prohibit assigning different production 
expectations to different fields.
    (e) The coverage period for perennial and other crops covered by 
this subpart begins on January 1 of the relevant crop year and ends on 
December 31 of that year.

[71 FR 52739, Sept. 7, 2006, as amended at 78 FR 21019, Apr. 9, 2013; 79 
FR 74583, Dec. 15, 2014; 85 FR 12221, Mar. 2, 2020]



Sec.1437.503  Covered losses and recordkeeping requirements for
covered tropical crops.

    (a) Prevented planting coverage is not available for covered 
tropical crops.
    (b) Except in Hawaii, Puerto Rico, and other areas approved by the 
Deputy Administrator, or as otherwise approved by the Deputy 
Administrator in individual cases, eligible causes of loss for covered 
tropical crops will only include hurricanes, typhoons, and named 
tropical storms.
    (c) Producers who have applied for coverage on covered tropical 
crops must maintain for the full coverage period contemporaneous 
records. Contemporaneous records are those created at the time of 
planting and harvesting of the crop for which the application for 
coverage is filed. In this regard:
    (1) Producers may be selected on a random or targeted basis for 
compliance review with this requirement and any other requirements that 
may apply to this program.
    (2) A failure to maintain acceptable contemporaneous records 
throughout the crop year may be treated by FSA as grounds of 
ineligibility for benefits under this part.

[71 FR 52739, Sept. 7, 2006, as amended at 78 FR 21019, Apr. 9, 2013; 79 
FR 74583, Dec. 15, 2014; 85 FR 12221, Mar. 2, 2020]



Sec.1437.504  Notice of loss for covered tropical crops.

    (a) The provisions of Sec.1437.11(d) regarding late filed notice 
of loss do not apply to covered tropical crops.
    (b) Where a notice of loss for covered tropical crops is provided 
according to Sec.1437.11, producers must provide records maintained 
according to Sec.1437.503(c) of the:
    (1) Number of acres or other basis of measurement, as applicable, of 
the crop from which production could be achieved existing on the day the 
eligible natural disaster occurred or, for prolonged natural disasters, 
such as a drought and similar damage where applicable, existing on the 
day the notice of loss is filed.
    (2) Amount, including zero, as applicable, of production harvested, 
before or after the disaster, from those crop plantings (damaged or 
undamaged) which were in existence on the farm at the time of the 
disaster including production from the covered plantings (in existence 
at the time of the loss event) that may occur after the loss event

[[Page 779]]

even when, to the extent provided for in paragraph (c) of this section, 
the harvest occurs after the end of the crop year. Crop acreage of the 
covered crop that is in existence at the time of the loss event that can 
be harvested after the eligible natural disaster must be harvested, or 
continue to be harvested, and the harvested acres and production 
reported to FSA according to this subpart, except that for perennial 
crops the requirement ends with the end of the crop year. For non-
perennial crops the obligation to harvest ends with the end of the life-
cycle for the plantings that were in existence at the time of the loss 
event. In this regard:
    (i) Except as otherwise determined by FSA, such production, before 
or after the loss event, will be taken into account in computing 
eligibilities.
    (ii) Production that must be reported under paragraph (b)(2)(i) of 
this section includes, except in the case of perennial plants, all 
production irrespective of whether the production occurs in the same 
crop year.
    (iii) For perennial plants, only production in the same crop year 
must be reported.
    (iv) All production that must be reported for covered tropical crops 
will, except as specified by the Deputy Administrator, be taken into 
account in the loss determinations made under this part. The producer is 
obligated to maximize that production. That is, harvesting and other 
production activities for the plants in the ground at the time of the 
disaster must be undertaken or continue to be undertaken, to the maximum 
extent possible, for the full reporting period, that being the period 
for which production could count against a loss as indicated in this 
subpart.
    (3) Failure to keep sufficient records to allow the computations 
provided for in this subpart is grounds for denial of the claim.
    (c) Producers with coverage of a covered tropical crop for a crop 
year must, by the earlier of 90 calendar days after the crop year ends 
or the date a notice of loss is filed, file a certified report setting 
out the:
    (1) Collective acres of the crop acreage planted or in the ground 
during the crop year.
    (2) Total production harvested from the crop acreage for the full 
crop year in the case of a perennial plant and for the full life of the 
plants for other crops.
    (d) With respect to the report required in paragraph (c) of this 
section:
    (1) If a report is filed before the end of the crop year, an updated 
crop report must be filed within 90 calendar days from the end of the 
crop year to supplement the original report;
    (2) If the report is for any annual or biennial crops where 
production continued or could have continued beyond the period covered 
in the reports otherwise filed under this section, an additional report 
of production must be filed within 30 days of the end of the last 
countable production for the covered crop or 30 days after the last date 
on which such production could have been obtained, whichever is later.
    (3) A failure to file an adequate report where a report is required 
by this section may result in the producer being treated as having a 
zero yield capability for the crop year involved for purposes of 
constructing a crop history. Alternatively, the Deputy Administrator may 
assign another sanction for that failure. In addition to other sanctions 
as may apply, a failure to file such reports may be grounds for denial 
of a claim. The Deputy Administrator may adjust crop histories as 
determined appropriate to create, to the extent practicable, an 
appropriate crop history for loss computation purposes.
    (4) Such reports as are provided for in this subsection must be 
filed for every crop year for which there is coverage, irrespective of 
whether a claim is filed for that year.
    (e) Unless otherwise specified by the Deputy Administrator, 
appraisals are not required of crop acreage for covered tropical crops 
on Guam, Virgin Islands, American Samoa, and the Commonwealth of the 
Northern Mariana Islands.
    (f) All crop acreage for covered tropical crops for which a notice 
of loss is filed must not be destroyed until authorized by FSA.

[71 FR 52739, Sept. 7, 2006, as amended at 78 FR 21019, Apr. 9, 2013; 79 
FR 74583, Dec. 15, 2014]

[[Page 780]]



Sec.1437.505  Application for payment for the tropical region.

    (a) For producers of covered tropical crops, except as specified in 
paragraph (b) of this section or approved in individual cases by the 
Deputy Administrator, an application for payment must be filed at the 
same time as the filing of the notice of loss required under Sec. Sec.
1437.11 and 1437.504.
    (b) For producers in Puerto Rico, Hawaii, Guam, American Samoa, and 
the Northern Marianna Islands, an application for payment for such crops 
must be filed by the later of:
    (1) The date on which the notice of loss is filed in accordance with 
Sec. Sec.1437.11 and 1437.504, or
    (2) The date of the completion of harvest for the specific crop 
acreage that existed at the time of loss for which the notice of loss 
was filed.

[78 FR 21019, Apr. 9, 2013, as amended at 79 FR 74583, Dec. 15, 2014]



PART 1450_BIOMASS CROP ASSISTANCE PROGRAM (BCAP)--Table of Contents



                       Subpart A_Common Provisions

Sec.
1450.1 Administration.
1450.2 Definitions.
1450.3 General.
1450.4 Violations.
1450.5 Performance based on advice or action of USDA.
1450.6 Access to land.
1450.7 Division of payments and provisions about tenants and 
          sharecroppers.
1450.8 Payments not subject to claims.
1450.9 Appeals.
1450.10 Scheme or device.
1450.11 Filing of false claims.
1450.12 Miscellaneous.

                       Subpart B_Matching Payments

1450.100 General.
1450.101 Qualified biomass conversion facility.
1450.102 Eligible material owner.
1450.103 Eligible material for payments.
1450.104 Signup.
1450.105 Obligations of participant.
1450.106 Payments.

          Subpart C_Establishment Payments and Annual Payments

1450.200 General.
1450.201 Project area proposal submission requirements.
1450.202 Project area selection criteria.
1450.203 Eligible persons and legal entities.
1450.204 Eligible land.
1450.205 Duration of contracts.
1450.206 Obligations of participant.
1450.207 Conservation plan, forest stewardship plan, or equivalent plan.
1450.208 Eligible practices.
1450.209 Signup.
1450.210 Acceptability of offers.
1450.211 BCAP contract.
1450.212 Establishment payments.
1450.213 Levels and rates for establishment payments.
1450.214 Annual payments.
1450.215 Transfer of land.

    Authority: 7 U.S.C. 8111.

    Source: 75 FR 66234, Oct. 27, 2010, unless otherwise noted.



                       Subpart A_Common Provisions



Sec.1450.1  Administration.

    (a) The regulations in this part are administered under the general 
supervision and direction of the Executive Vice President, Commodity 
Credit Corporation (CCC), or a designee. In the field, the regulations 
in this part will be implemented by the Farm Service Agency (FSA) State 
and county committees (``State committees'' and ``county committees,'' 
respectively).
    (b) State executive directors, county executive directors, and State 
and county committees do not have the authority to modify or waive any 
of the provisions in this part unless specifically authorized by the FSA 
Deputy Administrator for Farm Programs (Deputy Administrator).
    (c) The State committee may take any action authorized or required 
by this part to be taken by the county committee, but which has not been 
taken by such committee, such as:
    (1) Correct or require a county committee to correct any action 
taken by such county committee that is not in accordance with this part; 
or
    (2) Require a county committee to withhold taking any action that is 
not in accordance with this part.
    (d) No delegation of authority to a State or county committee will 
preclude the Executive Vice President, CCC, or a designee, from 
determining any question arising under this part or

[[Page 781]]

from reversing or modifying any determination made by a State or county 
committee.
    (e) Data furnished by participants will be used to determine 
eligibility for program benefits. Furnishing the data is voluntary; 
however, the failure to provide data could result in program benefits 
being withheld or denied.
    (f) Subject to the availability of funds and all other eligibility 
provisions of this part, this part provides the terms, conditions and 
requirements of BCAP. In the event that CCC determines that available 
funds are insufficient to accommodate the demand for establishment and 
annual payments as well as all potential applications for matching 
payments for collection, harvest, storage, and transportation of 
eligible material, without any advance notice other than that stated 
here, CCC may prioritize the expenditure of program funds in favor of 
funding for the selection of BCAP project areas and the establishment 
and annual payments related to those project areas, and may make such 
other priorities in approvals that will, in the determination of the 
Deputy Administrator, advance the purposes of BCAP.

[75 FR 66234, Oct. 27, 2010, as amended at 76 FR 56951, Sept. 15, 2011; 
80 FR 10573, Feb. 27, 2015]



Sec.1450.2  Definitions.

    (a) The definitions in part 718 of this title apply to this part and 
all documents issued in accordance with this part, except as otherwise 
provided in this section.
    (b) The following definitions apply to this part:
    Advanced biofuel means fuel derived from renewable biomass other 
than corn kernel starch, including biofuels derived from cellulose, 
hemicellulose, or lignin; biofuels derived from sugar and starch (other 
than ethanol derived from corn kernel starch); biofuel derived from 
waste material, including crop residue, other vegetative waste material, 
animal waste, food waste, and yard waste; diesel-equivalent fuel derived 
from renewable biomass including vegetable oil and animal fat; biogas 
(including landfill gas and sewage waste treatment gas) produced through 
the conversion of organic matter from renewable biomass; and butanol or 
other alcohols produced through the conversion of organic matter from 
renewable biomass; and other fuel derived from cellulosic biomass.
    Agricultural land means cropland, grassland, pastureland, rangeland, 
hayland, and other land on which food, fiber, or other agricultural 
products are produced or capable of being produced.
    Agricultural residue means crop residue from agricultural lands, 
including woody orchard waste.
    Animal waste means the organic animal waste of animal operations 
such as confined beef or dairy, poultry, or swine operations including 
manure, contaminated runoff, milking house waste, dead poultry, bedding, 
and spilled feed. Depending on the poultry system, animal waste can also 
include litter, wash-flush water, and waste feed.
    Annual payment means the annual payment specified in the BCAP 
contract for BCAP project areas that is issued to a participant for 
placing eligible land in BCAP.
    Biobased product means a product determined by CCC to be a 
commercial or industrial product (other than food or feed) that is:
    (1) Composed, in whole or in significant part, of biological 
products, including renewable domestic agricultural materials and 
forestry materials; or
    (2) An intermediate ingredient or feedstock.
    Bioenergy means renewable energy produced from organic matter. 
Organic matter may be used directly as a fuel, be processed into liquids 
and gases, or be a residual of processing and conversion.
    Biofuel means a fuel derived from renewable biomass.
    Biomass conversion facility means a facility that converts or 
proposes to convert renewable biomass into heat, power, biobased 
products, or advanced biofuels.
    Conservation district is as defined in part 1410 of this chapter.
    Conservation plan means a schedule and record of the participant's 
decisions and supporting information for treatment of a unit of land or 
water,

[[Page 782]]

and includes a schedule of operations, activities, and estimated 
expenditures for eligible crops and the collection or harvesting of 
eligible material, as appropriate, and addresses natural resource 
concerns including the sustainable harvesting of biomass, when 
appropriate, by addressing the site-specific needs of the landowner.
    Contract acreage means eligible land that is covered by a BCAP 
contract between the producer and CCC.
    Delivery means the point of delivery of an eligible crop or eligible 
material, as determined by the CCC.
    Deputy Administrator means the FSA Deputy Administrator for Farm 
Programs, or a designee.
    Dry ton means one U.S. ton measuring 2,000 pounds. One dry ton is 
the amount of renewable biomass that would weigh one U.S. ton at zero 
percent moisture content. Woody material dry ton weight is determined in 
accordance with applicable American Society for Testing and Materials 
(ASTM) standards.
    Eligible crop means a crop of renewable biomass as defined in this 
section that is eligible for establishment payments and annual payments 
as specified in Subpart C of this part.
    Eligible land means agricultural and nonindustrial private forest 
lands on which eligible crops for establishment payments and annual 
payments may be grown, as specified in subpart C of this part.
    Eligible material means renewable biomass, including agricultural 
residue, as defined in this section that is harvested directly from the 
land and that is eligible for matching payments, as specified in subpart 
B of this part.
    Eligible material owner, for purposes of the matching payment, means 
a person or entity having the right to collect or harvest eligible 
material, who has the risk of loss in the material that is delivered to 
an eligible facility and who has directly or by agent delivered or 
intends to deliver the eligible material to a qualified biomass 
conversion facility, including:
    (1) For eligible material harvested or collected from private lands, 
including cropland, the owner of the land, the operator or producer 
conducting farming operations on the land, or any other person 
designated by the owner of the land; and
    (2) For eligible material harvested or collected from public lands, 
a person having the right to harvest or collect eligible material 
pursuant to a contract or permit with the US Forest Service or other 
appropriate Federal agency, such as a timber sale contract, stewardship 
contract or agreement, service contract or permit, or related applicable 
Federal land permit or contract, and who has submitted a copy of the 
permit or contract authorizing such collection to CCC.
    Equivalent plan means a plan approved by a State or other State 
agency or government entity that is similar to and serves the same 
purpose as a forest stewardship plan and has similar goals, objectives, 
and terms. These plans generally address natural resource concerns 
including the sustainable harvesting of biomass, when appropriate, by 
addressing the site-specific needs of the landowner.
    Establishment payment means the payment made by CCC to assist 
program participants in establishing the practices required for non-
woody perennial crops and woody perennial crops, as specified in a 
producer contract under the project portion of BCAP.
    Food waste means, as determined by CCC, a material composed 
primarily of food items, or originating from food items, or compounds 
from domestic, municipal, food service operations, or commercial 
sources, including food processing wastes, residues, or scraps.
    Forest stewardship plan means a long-term, comprehensive, multi-
resource forest management plan that is prepared by a professional 
resource manager and approved by the State Forester or equivalent State 
official. Forest stewardship plans address the following resource 
elements wherever present, in a manner that is compatible with landowner 
objectives concerning:
    (1) Soil and water;
    (2) Biological diversity;
    (3) Range;
    (4) Aesthetic quality;
    (5) Recreation;
    (6) Timber;
    (7) Fish and wildlife;
    (8) Threatened and endangered species;

[[Page 783]]

    (9) Forest health;
    (10) Archeological, cultural and historic sites;
    (11) Wetlands;
    (12) Fire; and
    (13) Carbon cycle.
    Higher-value product means an existing market product that is 
comprised principally of an eligible material or materials and, in some 
distinct local regions, as determined by the CCC, has an existing market 
as of October 27, 2010. Higher-value products may include, but are not 
limited to, products such as mulch, fiberboard, nursery media, lumber, 
or paper.
    Highly erodible land means land as determined as specified in part 
12 of this title.
    Indian tribe has the same meaning as in 25 U.S.C. 450b (section 4 of 
the Indian Self-Determination and Education Assistance Act).
    Institution of higher education has the same meaning as in 20 U.S.C. 
1002(a) (section 102(a) of the Higher Education Act of 1965).
    Intermediate ingredient or feedstock means an ingredient or compound 
made in whole or in significant part from biological products, including 
renewable agricultural material (including plant, animal, and marine 
material), or forestry material that is subsequently used to make a more 
complex compound or product.
    Legal entity has the same meaning as in the regulations in Sec.
1400.3 of this chapter.
    Matching payments means those CCC payments provided for eligible 
material delivered to a qualified biomass conversion facility.
    Native sod means land:
    (1) On which the plant cover is composed principally of native 
grasses, grasslike plants, forbs, or shrubs suitable for grazing and 
browsing; and
    (2) That had never been tilled or the producer cannot substantiate 
that the ground has ever been tilled for the production of an annual 
crop as of June 18, 2008.
    Nonindustrial private forest land means, as defined in 16 U.S.C. 
2103a (the Cooperative Forestry Assistance Act of 1978, as amended), 
rural lands with existing tree cover, or suitable for growing trees, 
where the land is owned by any private individual, group, association, 
corporation, Indian tribe, or other private legal entity.
    Offer means, unless otherwise indicated, the per-acre rental payment 
requested by the owner or operator in such owner's or operator's request 
to participate in the establishment payment and annual payment component 
of BCAP.
    Operator means a person who is in general control of the land 
enrolled in BCAP, as determined by CCC.
    Participant means a person who is participating in BCAP--either as a 
person who has applied for and is eligible to receive payments, has a 
BCAP contract, or is a project sponsor.
    Payment period means a contract period of either up to 5 years for 
annual and non-woody perennial crops, or up to 15 years for woody 
perennial crops, during which the participant receives an annual payment 
under the establishment payment and annual payment component of BCAP.
    Person has the same meaning as in the regulations in Sec.1400.3 of 
this chapter. In addition, for BCAP, the term ``producer'' means either 
an owner or operator of BCAP project acreage that is physically located 
in a BCAP project area, or a producer of an eligible crop produced on 
that acreage.
    Producer means, with respect to subpart B of this part, a person who 
had the risk of loss in the production of the material that is the 
subject of the BCAP payment; and with respect to subpart C of this part, 
an owner or operator of contract acreage that is physically located 
within a BCAP project area or a producer of an eligible crop produced on 
that acreage and who has the risk of loss in the relevant crop at the 
relevant period of time or who will have the risk of loss in crops 
required to be produced.
    Project area means a geographic area with specified boundaries 
submitted by a project sponsor and approved by CCC under the 
establishment payment and annual payment component of BCAP.
    Project sponsor means a group of producers or a biomass conversion 
facility who proposes a project area.
    Qualified biomass conversion facility means a biomass conversion 
facility that meets all the requirements for

[[Page 784]]

BCAP qualification, and whose facility representatives enter into a BCAP 
agreement with CCC.
    Renewable biomass means:
    (1) Appropriate materials, pre-commercial thinnings, or invasive 
species from National Forest System land and U.S. Department of the 
Interior, Bureau of Land Management land that:
    (i) Are by-products of preventive treatments that are removed to 
reduce hazardous fuels, to reduce or contain disease or insect 
infestation, or to restore ecosystem health;
    (ii) Would not otherwise be used for higher-value products; and
    (iii) Are harvested in accordance with applicable law and land 
management plans and the requirements for old-growth maintenance, 
restoration, and management direction of 16 U.S.C. 6512 (specifically, 
sections 102(e)(2), (3), and (4) of the Healthy Forests Restoration Act 
of 2003 and large-tree retention provisions of subsection (f)); or
    (2) Any organic matter that is available on a renewable or recurring 
basis from non-Federal land or land belonging to an Indian or Indian 
Tribe that is held in trust by the United States or subject to a 
restriction against alienation imposed by the United States, including:
    (i) Renewable plant material, including:
    (A) Feed grains;
    (B) Other agricultural commodities;
    (C) Other plants and trees; or
    (D) Algae;
    (ii) Waste material, including:
    (A) Crop residue;
    (B) Other vegetative waste material (including wood waste and wood 
residues);
    (C) Animal waste and byproducts (including fats, oils, greases, and 
manure); and
    (D) Food waste and yard waste.
    Technical assistance means assistance in determining the eligibility 
of land and practices for BCAP, implementing and certifying practices, 
ensuring contract performance, and providing annual rental rate surveys. 
BCAP technical assistance may include, but is not limited to: technical 
expertise and services, information, and tools necessary for the 
conservation of natural resources on land; technical services provided 
directly to farmers, ranchers, and other eligible entities, such as 
conservation planning, technical consultation, and assistance with 
design and implementation of eligible practices; and technical 
infrastructure, including activities, processes, tools, and functions 
needed to support delivery of technical and program services, such as 
technical standards, resource inventories, training, data, technology, 
monitoring, compliance spot checks, and effects analyses.
    Tribal government means any Indian tribe, band, nation, or other 
organized group, or community, including pueblos, rancherias, colonies 
and any Alaska Native Village, or regional or village corporation as 
defined in or established pursuant to 43 U.S.C. 1601-1629h (the Alaska 
Native Claims Settlement Act), that is recognized as eligible for the 
special programs and services provided by the United States to Indians 
because of their status as Indians.
    Violation means an act by the participant, either intentional or 
unintentional, that would cause the participant to no longer be eligible 
to receive or retain all or a portion of BCAP payments.
    Yard waste means any renewable biomass generated from municipal or 
residential land, such as urban forestry materials, construction or 
demolition materials, trimmings from grasses and trees, or biomass 
removed due to invasive species or weather-related disaster, that can be 
separated from and has low potential (such as contamination with 
plastics, metals, chemicals, or other toxic compounds that cannot be 
removed) for the generation of toxic by-products resulting from 
conversion, and that otherwise cannot be recycled for other purposes 
(such as post-consumer waste paper).

[75 FR 66234, Oct. 27, 2010, as amended at 76 FR 56951, Sept. 15, 2011; 
80 FR 10573, Feb. 27, 2015]



Sec.1450.3  General.

    (a) The objectives of BCAP are to:
    (1) Support the establishment and production of eligible crops for 
conversion to bioenergy and biobased products in selected project areas; 
and

[[Page 785]]

    (2) Assist agricultural and forest landowners and operators with 
matching payments to support the collection, harvest, storage, and 
transportation costs of eligible material for use in a biomass 
conversion facility.
    (b) A participant must implement and adhere to a conservation plan, 
forest stewardship plan, or equivalent plan prepared in accordance with 
BCAP guidelines, as established and determined by CCC. A conservation 
plan, forest stewardship plan, or equivalent plan for contract acreage 
must be implemented by a participant and must be approved by the 
conservation district in which the lands are located, or, in the case of 
Federal lands, the appropriate approval authority of jurisdiction. If 
the conservation district declines to review the conservation plan, 
forest stewardship plan, or equivalent plan, the provider of technical 
assistance may take such further action as is needed to account for lack 
of such review.
    (c) Agricultural and forest landowners and operators must comply 
with any applicable existing conservation plan, forest stewardship plan, 
or equivalent plan and all other applicable laws, regulations, or 
Executive Orders for any removal of eligible material for use in a 
biomass conversion facility to receive matching payments.
    (d) Except as otherwise provided in this part, a participant may 
receive, in addition to any payments under this part, financial 
assistance, rental or easement payments, tax benefits, or other payments 
from a State or a private organization in return for enrolling lands in 
BCAP, without any commensurate reduction in BCAP payments.



Sec.1450.4  Violations.

    (a)(1) If a participant fails to carry out the terms and conditions 
of a BCAP contract, CCC may terminate the BCAP contract.
    (2) If the BCAP contract is terminated by CCC in accordance with 
this paragraph:
    (i) The participant will forfeit all rights to further payments 
under the contract and must refund all payments previously received, 
plus interest; and
    (ii) The participant must pay liquidated damages to CCC in an amount 
as specified in the contract.
    (b) CCC may reduce a demand for a refund under this section to the 
extent CCC determines that such relief would be appropriate and would 
not deter the accomplishment of the purposes of BCAP.



Sec.1450.5  Performance based on advice or action of USDA.

    (a) The provisions of Sec.718.303 of this title relating to 
performance based on the action or advice of an authorized 
representative of USDA apply to this part, and may be considered as a 
basis to provide relief to persons subject to sanctions under this part 
to the extent that relief is otherwise permitted by this part.
    (b) [Reserved]

[75 FR 66234, Oct. 27, 2010, as amended at 76 FR 56951, Sept. 15, 2011]



Sec.1450.6  Access to land.

    (a) For purposes related to this program, the participant must upon 
request provide any representative of USDA, or designee thereof, with 
access to land that is:
    (1) The subject of an application for a contract under this part; or
    (2) Under contract or otherwise subject to this part.
    (b) For land identified in paragraph (a) of this section, the 
participant must provide such representatives or designees with access 
to examine records for the land to determine land classification, 
eligibility, or for other purposes, and to determine whether the 
participant is in compliance with the terms and conditions of the BCAP 
contract.



Sec.1450.7  Division of payments and provisions about tenants and 
sharecroppers.

    (a) Payments received under this part will be divided as specified 
in the applicable contract. CCC may refuse to enter into a contract when 
there is a disagreement among persons or legal entities seeking 
enrollment as to a person's or legal entity's eligibility to participate 
in the contract as a tenant or sharecropper, and there is insufficient

[[Page 786]]

evidence, as determined by CCC, to indicate whether the person or legal 
entity seeking participation as a tenant or sharecropper has an interest 
in the acreage offered for enrollment in the BCAP.
    (b) CCC may remove an operator or tenant from a BCAP contract when:
    (1) The operator or tenant requests in writing to be removed from 
the BCAP contract;
    (2) The operator or tenant files for bankruptcy and the trustee or 
debtor in possession fails to affirm the contract, to the extent 
permitted by applicable bankruptcy laws;
    (3) The operator or tenant dies during the contract period and the 
administrator of the estate fails to succeed to the contract within a 
period of time determined appropriate by CCC; or
    (4) A court of competent jurisdiction orders the removal of the 
operator or tenant from the BCAP contract and such order is received by 
CCC.
    (c) Tenants who fail to maintain tenancy on the acreage under 
contract for any reason may be removed from a contract by CCC.



Sec.1450.8  Payments not subject to claims.

    (a) Subject to part 1403 of this chapter, any payment or portion of 
the payment due any person or legal entity under this part will be 
allowed without regard to questions of title under State law, and 
without regard to any claim or lien in favor of any creditor, except 
agencies of the U.S. Government.
    (b) [Reserved]



Sec.1450.9  Appeals.

    (a) Except as provided in paragraph (b) of this section, a person or 
legal entity applying for participation may appeal or request 
reconsideration of an adverse determination in accordance with the 
administrative appeal regulations at parts 11 and 780 of this title.
    (b) Determinations by the Natural Resources Conservation Service, 
U.S. Forest Service, Department of Interior, Bureau of Land Management, 
or other authorized technical assistance provider may be appealed in 
accordance with procedures established in part 614 of this title or 
otherwise established by the respective Agency.

[75 FR 66234, Oct. 27, 2010. Redesignated and amended at 80 FR 10573, 
Feb. 27, 2015]



Sec.1450.10  Scheme or device.

    (a) If CCC determines that a person or legal entity has employed a 
scheme or device to defeat the purposes of this part, or any part, of 
any USDA program, payment otherwise due or paid such person or legal 
entity during the applicable period may be required to be refunded, with 
interest calculated from the date of disbursement of the funds by CCC, 
as determined appropriate by CCC.
    (b) A scheme or device includes, but is not limited to, coercion, 
fraud, misrepresentation, depriving any other person or legal entity of 
any payments, or obtaining a payment that otherwise would not be 
payable.
    (c) A new owner or operator or tenant of land subject to this part 
who succeeds to the contract responsibilities must report in writing to 
CCC any interest of any kind in the land subject to this part that is 
retained by a previous participant. Such interest may include a present, 
future, or conditional interest, reversionary interest, or any option, 
future or present, on such land, and any interest of any lender in such 
land where the lender has, will, or can legally obtain, a right of 
occupancy to such land or an interest in the equity in such land other 
than an interest in the appreciation in the value of such land occurring 
after the loan was made. Failure to fully disclose such interest will be 
considered a scheme or device under this section.

[75 FR 66234, Oct. 27, 2010. Redesignated at 80 FR 10573, Feb. 27, 2015]



Sec.1450.11  Filing of false claims.

    (a) If CCC determines that any participant has knowingly supplied 
false information or has knowingly filed a false claim, such participant 
will be ineligible for payments under this part with respect to the 
fiscal year in which the false information or claim was filed and the 
contract may be terminated, in which case CCC may demand a full refund 
of all prior payments.

[[Page 787]]

    (b) False information or false claims include, but are not limited 
to, claims for payment for practices that do not comply with the 
conservation plan, forest stewardship plan, or equivalent plan. Any 
amounts paid under these circumstances must be refunded to CCC, together 
with interest as determined by CCC, and any amounts otherwise due the 
participant will be withheld.
    (c) The remedies provided for in this section will be in addition to 
any other remedy available to CCC and in addition to any criminal 
penalty or any other remedy available to the United States.

[75 FR 66234, Oct. 27, 2010. Redesignated at 80 FR 10573, Feb. 27, 2015]



Sec.1450.12  Miscellaneous.

    (a) Except as otherwise provided in this part, in the case of death, 
incompetency, or disappearance of any participant, any payments due 
under this part may be paid to the participant's successor(s) in 
accordance with part 707 of this title.
    (b) Unless otherwise specified in this part, payments under this 
part will be subject to the compliance requirements of part 12 of this 
title concerning highly erodible land and wetland conservation and 
payments.
    (c) Any remedies permitted CCC under this part will be in addition 
to any other remedy, including, but not limited to, criminal remedies or 
actions for damages in favor of CCC, or the United States as may be 
permitted by law.
    (d) Absent a scheme or device to defeat the purposes of BCAP, when 
an owner loses control of BCAP acreage enrolled under subpart C of this 
part due to foreclosure and the new owner chooses not to continue the 
contract in accordance with Sec.1450.215 refunds will not be required 
from any participant on the contract to the extent that the Deputy 
Administrator determines that forgiving such repayment is appropriate in 
order to provide fair and equitable treatment.

[75 FR 66234, Oct. 27, 2010. Redesignated at 80 FR 10573, Feb. 27, 2015]



                       Subpart B_Matching Payments



Sec.1450.100  General.

    (a) A person or legal entity with the right to collect or harvest 
eligible material for the sale and delivery of such eligible material to 
a qualified biomass conversion facility, may be eligible for payment 
under the provisions of this subpart.
    (b) [Reserved]



Sec.1450.101  Qualified biomass conversion facility.

    (a) To be considered a qualified biomass conversion facility, a 
biomass conversion facility must enter into an agreement with CCC and 
must:
    (1) Meet all applicable regulatory and permitting requirements by 
applicable Federal, State, or local authorities;
    (2) Agree in writing to:
    (i) Maintain accurate records of all eligible material purchases and 
related documents regardless of whether matching payments will be sought 
by the seller; and
    (ii) Make available at one place and at all reasonable times for 
examination by representatives of USDA, all books, papers, records, 
contracts, scale tickets, settlement sheets, invoices, written price 
quotations, or other documents related to BCAP for not less than 3 years 
after the date that eligible material was delivered to the qualified 
biomass conversion facility;
    (iii) Clearly indicate the actual tonnage delivered on the scale 
ticket or equivalent to be provided to the eligible material owner;
    (iv) Calculate a total dry ton weight equivalent of the actual 
tonnage delivered and provide that measurement to the eligible material 
owner;
    (v) Use commercial weight scales that are certified for accuracy by 
applicable State or local authorities and accurate moisture measurement 
equipment to determine the dry ton weight equivalent of actual tonnage 
delivered. Woody material dry ton weight must be determined in 
accordance with applicable ASTM standards; and
    (vi) Purchase eligible material at a fair market price that is 
consistent with similar products, regardless of whether or not the 
seller has applied

[[Page 788]]

for or receives a matching payment authorized by this subpart or if the 
seller and purchaser are related entities.
    (b) For a qualified biomass conversion facility, CCC can:
    (1) Periodically inform the public that payments may be available 
for deliveries of eligible material to such qualified biomass conversion 
facility;
    (2) Maintain a listing of qualified biomass conversion facilities 
for general public access and distribution that may include general 
information about the facility and its eligible material needs; and
    (3) Suspend, terminate, or take other actions as appropriate when 
CCC determines a qualified biomass conversion facility fails to comply 
with the agreement.

[75 FR 66234, Oct. 27, 2010, as amended at 80 FR 10573, Feb. 27, 2015]



Sec.1450.102  Eligible material owner.

    (a) In order to be eligible for a payment under this subpart, a 
person or legal entity must:
    (1) Be a producer of an eligible crop that is produced on contract 
acreage authorized by subpart C of this part; or
    (2) Have the right to collect or harvest eligible material, 
regardless of whether the eligible material is produced on contract 
acreage authorized by subpart C of this part, and such person may only 
receive payment if the risk of loss for the material transferred to that 
person occurred prior to the time the payment is made that will be used 
to determine the matching payment that is requested under this subpart; 
and
    (3) Certify that the eligible material for which a payment may be 
issued as specified in Sec.1450.106 has been harvested according to a 
conservation plan, forest stewardship plan, or equivalent plan, and, if 
woody eligible material collected or harvested on land other than 
contract acreage, the woody material is a by-product of preventative 
treatments that was removed to reduce hazardous fuels or to reduce or 
contain disease or insect infestation.
    (b) A qualified biomass conversion facility that meets the 
requirements of paragraph (a) of this section may be considered an 
eligible material owner if it otherwise meets the definition in this 
part.

[75 FR 66234, Oct. 27, 2010, as amended at 76 FR 56951, Sept. 15, 2011; 
80 FR 10573, Feb. 27, 2015]



Sec.1450.103  Eligible material for payments.

    (a) Except for the exclusions specified in paragraph (b) of this 
section, in order to qualify for matching payments, eligible material 
must meet the following requirements:
    (1) Eligible material must be collected or harvested by the eligible 
material owner:
    (i) Directly from:
    (A) National Forest System land, Bureau of Land Management land;
    (B) Non-Federal land; or
    (C) Land belonging to an Indian or Indian tribe that is held in 
trust by the United States or subject to a restriction against 
alienation imposed by the United States;
    (ii) Consistent with a conservation plan, forest stewardship plan, 
or plan that CCC determined to be an equivalent plan, that provides the 
following:
    (A) The purpose of the harvest of the eligible material;
    (B) The expected volume of the harvest;
    (C) The total number of acres to be harvested;
    (D) The name of the eligible material owner(s); and
    (E) Any additional information, as determined by CCC; and
    (iii) Consistent with Executive Order 13112, ``Invasive Species. ''
    (2) Woody eligible material produced on land other than contract 
acreage must be:
    (i) By-products of preventative treatments that were removed to 
reduce hazardous fuels or to reduce or contain disease or insect 
infestation; and
    (ii) If harvested from Federal lands then done so in accordance with 
the requirements for old-growth maintenance, restoration, and management 
direction provided by 16 U.S.C. 6512 for Federal lands; and
    (3) Eligible material must be delivered to a qualified biomass 
conversion facility (as specified in Sec.1450.101 and other provisions 
of these regulations).

[[Page 789]]

    (b) Notwithstanding paragraph (a) of this section, payments under 
this subpart are not authorized for:
    (1) Any eligible material delivered before May 28, 2015;
    (2) Any eligible material for which payment from a biomass 
conversion facility was received before the application for payment 
under this subpart is received and approved by the FSA county office, as 
specified in Sec.1450.104;
    (3) Material that is whole grain from any crop that is eligible to 
receive payments under title I of the Agricultural Act of 2014 or an 
amendment made by that title, including, but not limited to, barley, 
corn, grain sorghum, oats, rice, or wheat; honey; mohair; certain 
oilseeds such as canola, crambe, flaxseed, mustard seed, rapeseed, 
safflower seed, soybeans, sesame seed, and sunflower seeds; peanuts; 
pulse; chickpeas, lentils, and dry peas; dairy products; sugar; and wool 
and cotton boll fiber;
    (4) Animal waste and by-products of animal waste including fats, 
oil, grease, and manure;
    (5) Food waste and yard waste;
    (6) Algae;
    (7) Woody eligible material that is not a by-product of a 
preventative treatment to reduce hazardous fuel or to reduce or contain 
disease or insect infestation;
    (8) Any woody eligible material collected or harvested outside 
contract acreage that would otherwise be used for higher-value products;
    (9) Any otherwise eligible material collected or harvested outside 
contract acreage that, after delivery to a biomass conversion facility, 
its campus, or its affiliated facilities, must be separated from an 
eligible material used for a higher-value market product in order to be 
used for heat, power, biobased products, research, or advanced biofuels; 
or
    (10) Bagasse.
    (c) For eligible woody material harvested or collected from public 
lands, a person having the right to harvest or collect eligible material 
pursuant to a contract or permit with the U.S. Forest Service or other 
appropriate Federal agency will not be eligible for additional haul 
costs unless the facility is a further distance than specified in the 
contract requirement or the material was not a mandatory removal item 
from Federal lands.

[75 FR 66234, Oct. 27, 2010, as amended at 80 FR 10573, Feb. 27, 2015]



Sec.1450.104  Signup.

    (a) Applications for participation and requests for payments under 
this subpart will be accepted as specified in the FSA announcement(s) in 
a given fiscal year through the end of the announced sign up period on a 
continuous basis, subject to the availability of funds.
    (b) An eligible material owner must apply to participate in the 
matching payments component of BCAP before delivery is made to a 
qualified biomass conversion facility and before payment for the 
eligible material is received from the qualified biomass conversion 
facility. The application must be submitted to the FSA county office 
servicing the tracts of land where the collection and harvest will occur 
and must be approved by CCC, before any delivery is made to or payment 
is made by the qualified biomass conversion facility for the eligible 
material.
    (c) Applications must include the following:
    (1) Based on information obtained from contracts, agreements, or 
binding letters of intent:
    (i) An estimate of the total dry tons of eligible material expected 
to be sold to the qualified biomass conversion facility;
    (ii) The type(s) of eligible material that is expected to be sold;
    (iii) The name of the qualified biomass conversion facility that 
will purchase the eligible material;
    (iv) The expected, fair market, per dry ton payment rate the owner 
plans to receive for the delivery of the eligible material; and
    (v) The date or dates the eligible material is expected to be 
delivered to the qualified biomass conversion facility.
    (2) A new or amended conservation plan, forest stewardship plan, or 
equivalent plan, as specified in Sec.1450.103.
    (d) Eligible material owners who deliver eligible material to more 
than one qualified biomass conversion facility must submit separate 
applications for each facility to which eligible material will be 
delivered.

[[Page 790]]

    (e) After delivery, eligible material owners must notify CCC and 
request the payment. Payments will be disbursed only after delivery is 
verified by CCC.
    (f) Information that must be submitted to CCC in order to request 
payments includes settlement, summary, or other acceptable data that 
provide:
    (1) Total actual tonnage delivered and a total dry weight tonnage 
equivalent amount determined by the qualified biomass conversion 
facility using standard moisture determinations applicable to the 
eligible material (Woody material dry ton weight is determined in 
accordance with applicable ASTM standards);
    (2) Total payment received, including the per dry-ton payment 
rate(s) matched with actual and dry weight tonnage delivered; and
    (3) The qualified biomass conversion facility's certification as to 
the authenticity of the information.

[75 FR 66234, Oct. 27, 2010, as amended at 80 FR 10573, Feb. 27, 2015]



Sec.1450.105  Obligations of participant.

    (a) All participants whose payment application was approved must 
agree to:
    (1) Carry out and certify compliance with the terms and conditions 
of the payment application including adherence to a conservation plan, 
forest stewardship plan, or equivalent plan, as appropriate; and
    (2) Be jointly and severally responsible, if the participant has a 
share of the payment greater than zero, with other contract participants 
for compliance with the provisions of such contract and the provisions 
of this part, and for any refunds or payment adjustments that may be 
required for violations of any of the terms and conditions of the BCAP 
contract and this part.
    (b) [Reserved]



Sec.1450.106  Payments.

    (a) Payments under this subpart will be made for a term not to 
exceed 2 years, commencing on the date that CCC issues the first payment 
under this subpart to the participant. The 2-year eligibility period for 
each participant runs from the date that the participant is first issued 
any matching payment from CCC, regardless of payment for subsequent 
deliveries to any other biomass conversion facility. The eligibility 
period will not include any BCAP matching payments received prior to May 
28, 2015.
    (b) Payments under this subpart will be paid at a rate of $1 for 
each $1 per dry ton provided by the qualified biomass conversion 
facility for the market-based sale of eligible material in an amount up 
to $20 per dry ton.

[75 FR 66234, Oct. 27, 2010, as amended at 80 FR 10574, Feb. 27, 2015]



          Subpart C_Establishment Payments and Annual Payments



Sec.1450.200  General.

    (a) As provided in this subpart, establishment payments and annual 
payments may be provided by CCC to producers of eligible crops within a 
project area.
    (b) Eligible crops include renewable biomass, as defined Sec.
1450.2, excluding:
    (1) Any crop that is eligible to receive payments under title I of 
the Agricultural Act of 2014 or an amendment made by that title, 
including, but not limited to, barley, corn, grain sorghum, oats, rice, 
or wheat; honey; mohair; certain oilseeds such as canola, crambe, 
flaxseed, mustard seed, rapeseed, safflower seed, soybeans, sesame seed, 
and sunflower seeds; peanuts; pulse; chickpeas, lentils, and dry peas; 
dairy products; sugar; and wool and cotton boll fiber; and
    (2) Any plant that CCC has determined to be either a noxious weed or 
an invasive species. With respect to noxious weeds and invasive species, 
a list of such plants will be available in the FSA county office.

[75 FR 66234, Oct. 27, 2010, as amended at 80 FR 10574, Feb. 27, 2015]



Sec.1450.201  Project area proposal submission requirements.

    (a) To be considered for selection as a project area, a project 
sponsor must submit a proposal to CCC that includes, at a minimum:

[[Page 791]]

    (1) A description of the sources of renewable biomass, eligible 
land, and eligible crops that may be enrolled within the proposed 
project area;
    (2) A letter of commitment from a biomass conversion facility 
stating that the facility will use, for BCAP purposes, eligible crops 
intended to be produced in the proposed project area;
    (3) Information demonstrating that the biomass conversion facility 
has or will have sufficient equity available to operate if the facility 
is not operational at the time the project area proposal is submitted; 
and
    (4) Any other information that gives CCC a reasonable assurance that 
the biomass conversion facility will be in operation in a timely manner 
so that it will use the eligible crops, as determined by CCC.
    (b) The project area description required in paragraph (a) of this 
section needs to specify geographic boundaries and be described in 
definite terms such as acres, watershed boundaries, mapped longitude and 
latitude coordinates, or counties.
    (c) The project area needs to be physically located near a biomass 
conversion facility or facilities, as determined by CCC.
    (d) Project area proposals may limit the nature and types of 
eligible crops to be established within a project area.

[75 FR 66234, Oct. 27, 2010, as amended at 80 FR 10574, Feb. 27, 2015]



Sec.1450.202  Project area selection criteria.

    (a) In selecting project areas, CCC will consider:
    (1) The dry tons of the eligible crops proposed to be produced in 
the proposed project area and the probability that such crops will be 
used for BCAP purposes;
    (2) The dry tons of renewable biomass projected to be available from 
sources other than the eligible crops grown on contract acres;
    (3) The anticipated economic impact in the proposed project area;
    (4) The opportunity for producers and local investors to participate 
in the ownership of the biomass conversion facility in the proposed 
project area;
    (5) The participation rate by beginning or socially disadvantaged 
farmers or ranchers;
    (6) The impact on soil, water, and related resources;
    (7) The variety in biomass production approaches within a project 
area, including agronomic conditions, harvest and postharvest practices, 
and monoculture and polyculture crop mixes;
    (8) The range of eligible crops among project areas;
    (9) Status as an existing project area that has received funding 
under this subpart and the continuation of funding such project areas to 
advance the maturity of such project areas; and
    (10) Any other necessary additional information, as determined by 
CCC.
    (b) [Reserved]

[75 FR 66234, Oct. 27, 2010, as amended at 80 FR 10574, Feb. 27, 2015]



Sec.1450.203  Eligible persons and legal entities.

    (a) In order to be eligible to enter into a BCAP contract for this 
subpart, a person or legal entity must be an owner, operator, or tenant 
of eligible land within a project area, as defined in Sec.1450.204 and 
be the person or entity with the ability to perform under the terms of 
the contract.
    (b) [Reserved]



Sec.1450.204  Eligible land.

    (a) For the purposes of this subpart, eligible land must be 
physically and legally capable of producing an eligible crop and must 
be:
    (1) Agricultural land; or
    (2) Nonindustrial private forest land.
    (b) For the purposes of this subpart, eligible land is not:
    (1) Federal- or State-owned land, including land owned by local 
governments or municipalities;
    (2) Land that is native sod;
    (3) Land enrolled in the Conservation Reserve Program (CRP) as 
specified in part 1410 of this chapter for which either:
    (i) The enrollment is not expiring in the current fiscal year; or
    (ii) A CRP payment for this land has been received in the current 
fiscal year; or

[[Page 792]]

    (4) Land enrolled in the Agricultural Conservation Easement Program 
(ACEP) for which either:
    (i) The enrollment is not expiring in the current fiscal year; or
    (ii) An ACEP payment for this land has been received in the current 
fiscal year.

[75 FR 66234, Oct. 27, 2010, as amended at 80 FR 10575, Feb. 27, 2015]



Sec.1450.205  Duration of contracts.

    (a) Contracts under this subpart will be for a term of up to:
    (1) 5 years for annual and non-woody perennial crops; and
    (2) 15 years for woody perennial crops.
    (b) The establishment time period may vary due to: Type of crop, 
agronomic conditions (for example, establishment time frame, winter 
hardiness), and other factors.



Sec.1450.206  Obligations of participant.

    (a) All participants subject to a BCAP contract must:
    (1) Carry out the terms and conditions of the contract;
    (2) Make available to CCC or to an institution of higher education 
or other entity designated by CCC, such information as CCC determines to 
be appropriate to promote the production of eligible crops and the 
development of renewable biomass conversion technology;
    (3) Comply with the highly erodible land and wetland conservation 
requirements of part 12 of this title;
    (4) Implement a:
    (i) Conservation plan,
    (ii) Forest stewardship plan, or
    (iii) Equivalent plan.
    (5) Implement the conservation plan, forest stewardship plan, or 
equivalent plan which is part of such contract, in accordance with the 
schedule of dates included in such conservation plan, forest stewardship 
plan, or equivalent plan, unless CCC determines that the participant 
cannot fully implement the conservation plan, forest stewardship plan, 
or equivalent plan for reasons beyond the producer's control and CCC and 
the participant agree to a modified plan.
    (6) Demonstrate compliance with the conservation plan, forest 
stewardship plan, or equivalent plan through required self-certification 
subject to compliance spot checks, as determined by CCC.
    (7) Establish temporary vegetative cover either within the 
timeframes required by the conservation plan, forest stewardship plan, 
or equivalent plan or as determined by the Deputy Administrator, if the 
eligible crops cannot be timely established; and
    (8) If the participant has a share of the payment greater than zero, 
be jointly and severally responsible with the other contract 
participants for compliance with the provisions of such contract and the 
provisions of this part, and for any refunds or payment adjustments that 
may be required for violations of any of the terms and conditions of the 
contract and this part.
    (b) Payments may cease and producers may be subject to contract 
termination for failure to establish eligible crops.
    (c) A contract will not be terminated for failure by the participant 
to establish an approved cover on the land if, as determined by CCC:
    (1) The failure to plant or establish such cover was due to a 
natural disaster such as excessive rainfall, flooding, or drought; and
    (2) The participant establishes the approved cover as soon as 
practicable after the wet or drought conditions that prevented the 
establishment of such cover subside.

[75 FR 66234, Oct. 27, 2010, as amended at 76 FR 56951, Sept. 15, 2011]



Sec.1450.207  Conservation plan, forest stewardship plan,
or equivalent plan.

    (a) The producer must implement a conservation plan, forest 
stewardship plan, or equivalent plan that complies with CCC guidelines 
and is approved by the appropriate conservation district for the land to 
be entered in BCAP. If the conservation district declines to review the 
conservation plan, forest stewardship plan, or equivalent plan, or 
disapproves the conservation plan, forest stewardship plan, or 
equivalent plan, such approval may be waived by CCC.
    (b) The practices and management activities included in a 
conservation

[[Page 793]]

plan, forest stewardship plan, or equivalent plan, and agreed to by the 
producer, must be implemented in a cost-effective manner that meets BCAP 
purposes as determined by CCC.
    (c) If applicable, a tree planting plan must be developed and 
included in the conservation plan, forest stewardship plan, or 
equivalent plan. Such tree planting plan may allow a reasonable time to 
complete plantings, as determined by CCC.
    (d) Each conservation plan, forest stewardship plan, or equivalent 
plan, and any revision of the plan, will be subject to approval by CCC.



1450.208  Eligible practices.

    (a) Eligible practices are those practices specified in the 
conservation plan, forest stewardship plan, or equivalent plan that meet 
all standards needed to cost-effectively establish:
    (1) Annual crops;
    (2) Non-woody perennial crops; and
    (3) Woody perennial crops.
    (b) [Reserved]



Sec.1450.209  Signup.

    (a) Offers for contracts may be submitted on a continuous basis to 
CCC as determined by the Deputy Administrator.
    (b) [Reserved]



Sec.1450.210  Acceptability of offers.

    (a) Acceptance or rejection of any contract offered will be at the 
sole discretion of CCC, and offers may be rejected for any reason as 
determined appropriate to accomplish the purposes of BCAP.
    (b) An offer to enroll land in BCAP will be irrevocable for such 
period as is determined and announced by CCC. The producer will be 
liable to CCC for liquidated damages if the applicant revokes an offer 
during the period in which the offer is irrevocable as determined by 
CCC. CCC may waive payment of such liquidated damages if CCC determines 
that the assessment of such damages, in a particular case, is not in the 
best interest of CCC and BCAP.



Sec.1450.211  BCAP contract.

    (a) In order to enroll land in BCAP, the participant must enter into 
a contract with CCC.
    (b) The contract is comprised of:
    (1) The terms and conditions for participation in BCAP;
    (2) The conservation plan, forest stewardship plan, or equivalent 
plan; and
    (3) Any other materials or agreements determined necessary by CCC.
    (c) In order to enter into a contract, the producer must submit an 
offer to participate as specified in Sec.1450.209;
    (d) The contract must, within the dates established by CCC, be 
signed by:
    (1) The producer; and
    (2) The owners of the eligible land to be placed in the BCAP and 
other eligible participants, if applicable.
    (e) The Deputy Administrator is authorized to approve contracts on 
behalf of CCC.
    (f) CCC will honor contracts even in the event that a project area 
biomass conversion facility does not become fully or partially 
operational.
    (g) Contracts may be terminated by CCC before the full term of the 
contract has expired if:
    (1) The owner loses control of or transfers all or part of the 
acreage under contract and the new owner does not wish to continue the 
contract;
    (2) The participant voluntarily requests in writing to terminate the 
contract and obtains the approval of CCC according to terms and 
conditions as determined by CCC;
    (3) The participant is not in compliance with the terms and 
conditions of the contract;
    (4) The BCAP practice fails or is not established after a certain 
time period, as determined by CCC, and the cost of restoring or 
establishing the practice outweighs the benefits received from the 
restoration or establishment;
    (5) The contract was approved based on erroneous eligibility 
determinations; or
    (6) CCC determines that such a termination is needed in the public 
interest.
    (h) Except as allowed and approved by CCC where the new owner of 
land enrolled in BCAP is a Federal agency that agrees to abide by the 
terms and conditions of the terminated contract,

[[Page 794]]

the participant in a contract that has been terminated must refund all 
or part of the payments made with respect to the contract plus interest, 
as determined by CCC, and must pay liquidated damages as provided for in 
the contract and this part. CCC may permit the amount(s) to be repaid to 
be reduced to the extent that such a reduction will not impair the 
purposes of BCAP. Further, a refund of all payments need not be required 
from a participant who is otherwise in full compliance with the contract 
when the land is purchased by or for the United States, as determined 
appropriate by CCC.

[75 FR 66234, Oct. 27, 2010, as amended at 80 FR 10575, Feb. 27, 2015]



Sec.1450.212  Establishment payments.

    (a) Establishment payments will be made available upon a 
determination by CCC that an eligible practice, or an identifiable 
portion of a practice, has been established in compliance with the 
appropriate standards and specifications.
    (b) Except as otherwise provided for in this part, such payments 
will be made only for the cost-effective establishment or installation 
of an eligible practice, as determined by CCC.
    (c) Except as provided in paragraph (d) of this section, such 
payments will not be made to the same owner or operator on the same 
acreage for any eligible practices that have been previously 
established, or for which such owner or operator has received 
establishment assistance from any Federal agency.
    (d) Establishment payments may be authorized for the replacement or 
restoration of practices on land for which assistance has been 
previously allowed under BCAP, only if the failure of the original 
practice was due to reasons beyond the control of the participant, as 
determined by CCC.
    (e) In addition, CCC may make partial payments when the participant 
completes identifiable components of the contract. CCC may make 
supplemental establishment payments, if necessary.

[75 FR 66234, Oct. 27, 2010, as amended at 80 FR 10575, Feb. 27, 2015]



Sec.1450.213  Levels and rates for establishment payments.

    (a) CCC will pay not more than 50 percent of the actual or average 
cost (whichever is lower) of establishing non-woody perennial crops and 
woody perennial crops specified in the conservation plan, forest 
stewardship plan, or equivalent plan, not to exceed $500 per acre. For 
socially disadvantaged farmers or ranchers, as defined in part 718 of 
this title, establishment payments may not exceed $750 per acre.
    (b) The average cost of performing a practice will be determined by 
CCC based on recommendations from the State Technical Committee. Such 
cost may be the average cost in a State, a county, or a part of a State 
or county, as determined by CCC. The average cost as determined by CCC 
will be used for payment purposes, if it is less than the actual cost 
for an individual participant.
    (c) Except as otherwise provided for in this part, a participant may 
receive, in addition to any payment under this part, establishment 
assistance, rental payments, or tax benefits from a State or a private 
organization in return for enrolling lands in BCAP without a 
commensurate reduction in BCAP establishment payments.

[75 FR 66234, Oct. 27, 2010, as amended at 80 FR 10575, Feb. 27, 2015]



Sec.1450.214  Annual payments.

    (a) Annual payments will be made in such amount and in accordance 
with such time schedule as may be agreed upon and specified in the BCAP 
contract.
    (b) Based on the regulations in Sec.1410.42 of this chapter and as 
determined by CCC, annual payments include a payment based on all or a 
percentage of:
    (1) A weighted average soil rental rate for cropland;
    (2) The applicable marginal pastureland rental rate for all other 
land except for nonindustrial private forest land;
    (3) For forest land, the average county rental rate for cropland as 
adjusted for forest land productivity for nonindustrial private forest 
land; and

[[Page 795]]

    (4) Any incentive payment as determined by CCC.
    (c) The annual payment will be divided among the participants on a 
single contract as agreed to in such contract, as determined by CCC.
    (d) A participant that has an established eligible crop and is 
therefore not eligible for establishment payments under Sec.1450.212 
may be eligible for annual payments under the provisions of this 
section.
    (e) In the case of a contract succession, annual payments will be 
divided between the predecessor and the successor participants as agreed 
to among the participants and approved by CCC. If there is no agreement 
among the participants, annual payments will be divided in such manner 
deemed appropriate by the Deputy Administrator and such distribution may 
be prorated based on the actual days of ownership of the property by 
each party.
    (f) Annual payments will be reduced, as determined by CCC:
    (1) By a percentage of the sum of the sale price and payments under 
subpart B of this part for the crop collected or harvested from the 
contract acreage as follows:
    (i) By 1 percent if the eligible crop is delivered to a biomass 
conversion facility for conversion to cellulosic biofuels as defined by 
40 CFR 80.1401;
    (ii) By 10 percent if the eligible crop is delivered to a biomass 
conversion facility for conversion to advanced biofuels;
    (iii) By 25 percent if the eligible crop is delivered to a biomass 
conversion facility for conversion to heat, power, or biobased products;
    (iv) By 100 percent if the eligible crop is used for a purpose other 
than conversion to heat, power, biobased products, or advanced biofuels;
    (2) If the producer violates a term of the contract; or
    (3) In other circumstances deemed necessary or appropriate to carry 
out BCAP.



Sec.1450.215  Transfer of land.

    (a)(1) If a new owner or operator purchases or obtains the right and 
interest in, or right to occupancy of, land subject to a BCAP contract, 
such new owner or operator, upon the approval of CCC, may become a 
participant to a new BCAP contract with CCC for the transferred land.
    (2) For the transferred land, if the new owner or operator becomes a 
successor to the existing BCAP contract, the new owner or operator will 
assume all obligations of the BCAP contract of the previous participant.
    (3) If the new owner or operator is approved as a successor to a 
BCAP contract with CCC, then, except as otherwise determined by the 
Deputy Administrator:
    (i) Establishment payments will be made to the past or present 
participant who established the practice; and
    (ii) Annual payments to be paid during the fiscal year when the land 
was transferred will be divided between the new participant and the 
previous participant in the manner specified in Sec.1450.214(c).
    (b) If a participant transfers all or part of the right and interest 
in, or right to occupancy of, land subject to a BCAP contract and the 
new owner or operator does not become a successor to such contract 
within 60 days of such transfer, or such other time as CCC determines to 
be appropriate, such contract will be terminated with respect to the 
affected portion of such land, and the original participant:
    (1) Forfeits all rights to any future payments for that acreage;
    (2) Must refund all previous payments received under the contract by 
the participant or prior participants, plus interest, except as 
otherwise specified by CCC. The provisions of Sec.1450.211(g) will 
apply.
    (c) Federal agencies acquiring property, by foreclosure or 
otherwise, that contains BCAP contract acreage cannot be a party to the 
BCAP contract by succession. However, through an addendum to the BCAP 
contract, if the current operator of the property is one of the BCAP 
contract participants, the BCAP contract may remain in effect and, as 
permitted by CCC, such operator may continue to receive payments under 
such contract if CCC determines that such allowance is in the public 
interest and:
    (1) The property is maintained in accordance with the terms of the 
contract;

[[Page 796]]

    (2) Such operator continues to be the operator of the property; and
    (3) Ownership of the property remains with such Federal agency.

[75 FR 66234, Oct. 27, 2010, as amended at 80 FR 10575, Feb. 27, 2015]



PART 1455_VOLUNTARY PUBLIC ACCESS AND HABITAT INCENTIVE PROGRAM--
Table of Contents



Sec.
1455.1 Purpose and administration.
1455.2 Definitions.
1455.10 Eligible grant applicants.
1455.11 Application procedure.
1455.20 Criteria for grant selection.
1455.21 Additional responsibilities of grantee.
1455.30 Reporting requirements.
1455.31 Miscellaneous.

    Authority: 15 U.S.C. 714b and 714c; 16 U.S.C. 3839.

    Source: 75 FR 39140, July 8, 2010, unless otherwise noted.



Sec.1455.1  Purpose and administration.

    (a) The purpose of this part is to specify requirements and 
definitions for the Voluntary Public Access and Habitat Incentive 
Program (VPA-HIP).
    (b) VPA-HIP provides, within funding limits, grants to State and 
tribal governments to encourage owners and operators of privately-held 
farm, ranch, and forest land to voluntarily make that land available for 
access by the public for wildlife-dependent recreation, including 
hunting and fishing under programs administered by State and tribal 
governments. VPA-HIP is not an entitlement program and no grant will be 
made unless the application is acceptable to the Commodity Credit 
Corporation (CCC). CCC may reject a application for any reason deemed 
sufficient by CCC.
    (c) The regulations in this part are administered under the general 
supervision and direction of the Chief, Natural Resources Conservation 
Service (NRCS).

[75 FR 39140, July 8, 2010, as amended at 79 FR 44641, Aug. 1, 2014]



Sec.1455.2  Definitions.

    (a) The definitions in part 718 of this chapter apply to this part 
and all documents issued in accordance with this part, except as 
otherwise provided in this section.
    (b) The following definitions apply to this part:
    Appropriate wildlife habitat means habitat that is suitable or 
proper, as determined by the applicable State or tribal government, to 
support fish and wildlife populations in the area.
    Farm land means the land that meets definition of ``farmland'' in 
Sec.718.2 of this title.
    Forest land means land at least 120 feet wide and 1 acre in size 
with at least 10 percent cover (or equivalent stocking) by live trees of 
any size, including land that formerly had such tree cover and that will 
be naturally or artificially regenerated. Forest land includes 
transition zones, such as areas between forest and nonforest lands that 
have at least 10 percent cover (or equivalent stocking) with live trees 
and forest areas adjacent to urban and built-up lands. Roadside, 
streamside, and shelterbelt strips of trees must have a crown width of 
at least 120 feet and continuous length of at least 363 feet to qualify 
as forest land. Unimproved roads and trails, streams, and clearings in 
forest areas are classified as forest if they are less than 120 feet 
wide or an acre in size. Tree-covered areas in agricultural production 
settings, such as fruit orchards, or tree-covered areas in urban 
settings, such as city parks, are not considered forest land.
    Legal entity means any entity created under Federal or State law, 
excluding: (a) a local, State or Federal government or political 
subdivision or agency of such government; and (b) a Tribal government.
    Privately-held land means farm, ranch, or forest land that is owned 
or operated by a person or legal entity.
    Ranch land means land that meets the definition of ``farmland.''
    State or State government means any State or local government, 
including State, city, town, or county government.
    Tribal government means any Federally-recognized Indian tribe, band, 
nation, or other organized group, or community, including pueblos, 
rancherias, colonies and any Alaska Native Village, or regional or 
village corporation

[[Page 797]]

as defined in or established pursuant to the Alaska Native Claims 
Settlement Act (43 U.S.C. 1601-1629h), which is recognized as eligible 
for the special programs and services provided by the United States to 
Indians because of their status as Indians.
    Wildlife-dependent recreation means a land use involving hunting, 
fishing, wildlife-observation, photography, environmental education and 
interpretation, or other activities as determined by CCC.

[75 FR 39140, July 8, 2010, as amended at 80 FR 19009, Apr. 9, 2015]



Sec.1455.10  Eligible grant applicants.

    (a) A State or Tribal government may apply for a VPA-HIP grant.
    (b) Any applications received by an individual or entity that is not 
a State or tribal government will not be considered.



Sec.1455.11  Application procedure.

    (a) Announcement of Program Funding (APF). The CCC will issue 
periodic APFs for VPA-HIP on www.grants.gov subject to available 
funding. Unless otherwise specified in the applicable APF, applicants 
must file an original and one hard copy of the required forms and an 
application.
    (b) Single application. A State or tribal government must include 
all proposed activity under a single application per APF review period. 
Multiple applications from an applicant during a single APF period will 
not be considered. The applicant is the individual State or Tribe; any 
application from any unit of the State or tribal government must be 
coordinated for a single submission of one application from the State or 
Tribe.
    (c) Incomplete applications. Incomplete applications will not be 
considered for funding. However, incomplete applications may be 
returned, and may be resubmitted, if time permits.
    (d) Providing data. Data furnished by grant applicants will be used 
to determine eligibility for the VPA-HIP benefits. Furnishing the data 
is voluntary; however, the failure to provide data could result in 
program benefits being withheld or denied.
    (e) Required forms. The following forms must be completed, signed, 
and submitted as part of the application; other forms may be required, 
as specified in the applicable APF:
    (1) Application for Federal Assistance;
    (2) Budget Information--Non-Construction Programs; and
    (3) Assurances--Non-Construction Programs.
    (f) Application. Each application must contain the following 
elements; additional required elements may be specified in the 
applicable APF:
    (1) Title page;
    (2) Table of contents;
    (3) Executive summary, which includes;
    (i) Activities. Provide a summary of the application that briefly 
describes activities proposed to be funded under the grant.
    (ii) Objectives, funding, performance, and other resources. Include 
objectives and tasks to be accomplished, the amount of funding 
requested, how the work will be performed, whether organizational staff, 
consultants or contractors will be used, and whether other resources 
will be used;
    (4) Eligibility certification that certifies that the applicant is a 
State or tribal government and the individual submitting the application 
is acting in a representative capacity on behalf of the State or tribal 
government;
    (5) Application narrative that must include, but is not limited to, 
the following:
    (i) Project title. The title of the proposed project must be brief 
(not to exceed 75 characters) yet describe the essentials of the 
project.
    (ii) Information sheet. A separate one-page information sheet 
listing each of the evaluation criteria referenced in the APF, followed 
by the page numbers of all relevant material and documentation contained 
in the application that address or support the criteria.
    (iii) Objectives of the project. This section must include the 
following:
    (A) A description of how the VPA-HIP funding will be used to 
encourage public access to private farm, ranch, and forest land for 
hunting, fishing, and other recreational purposes;
    (B) A description of the methods that will be used to achieve the 
provisions

[[Page 798]]

of paragraph (f)(5)(iii)(A) of this section;
    (C) A description of how and to what extent the proposed program 
will meet with widespread acceptance among landowners;
    (D) A detailed description of how and to what extent the land 
enrolled will have appropriate wildlife habitat and how program funds 
may be used to improve those habitats;
    (E) A detailed description of how and to what extent public hunting 
and other recreational access will be increased on land enrolled under a 
USDA conservation program, or if conservation program land is not 
available, specify that there is no impact;
    (F) A detailed description of how any additional Federal, State, 
tribal government, or private resources will be used to carry out grant 
activities; and
    (G) A detailed description of how the public will be made aware of 
the location of the land enrolled.
    (iv) Work plan. Applications must discuss the specific tasks to be 
completed using grant and matching funds. The work plan should show how 
customers will be identified, key personnel to be involved with 
administration of the grant, and the evaluation methods to be used to 
determine the success of specific tasks and overall objectives of a VPA-
HIP grant. The budget must present a breakdown of the estimated costs 
associated with VPA-HIP activities and allocate these costs to each of 
the tasks to be undertaken. Additional funds from Federal, State, tribal 
government, or private resources as well as grant funds and resources 
provided in kind must be accounted for in the budget.
    (H) A description on how this will create a new program or enhance 
an existing program.
    (v) Performance evaluation criteria. Applications should discuss how 
the State or tribal government will evaluate whether the program for 
which the grant is being sought will meet the stated goals for the State 
or tribal program, including but not limited to landowner and 
recreationist participation, outreach, and cost-effectiveness.
    (vii) Other similar efforts. The applicant must describe its 
previous accomplishments and outcomes in public access activities, if 
any.
    (viii) Qualifications of personnel. Applicants must describe the 
qualifications of personnel expected to perform key tasks, and whether 
these personnel are to be full- or part-time employees or contract 
personnel.

[75 FR 39140, July 8, 2010, as amended at 79 FR 44641, Aug. 1, 2014]



Sec.1455.20  Criteria for grant selection.

    (a) Incomplete or non-responsive applications will not be evaluated. 
Applicants may revise their applications and re-submit them prior to the 
published deadline if there is sufficient time to do so.
    (b) After all applications have been evaluated using the evaluation 
criteria and scored in accordance with the point allocation specified in 
the announcement for program funding, a list of all applications in 
ranked order, together with funding level recommendations, will be 
submitted to the Chief or designee.
    (c) Unless supplemented in a APF, applications for grants for VPA-
HIP will be evaluated using the criteria listed in this section. The 
distribution of points to be awarded per criterion will be identified in 
the APF.
    (1) Benefits. The application will be evaluated to determine whether 
and to what extent the project's anticipated outcomes promote 
improvement of public access for wildlife-dependent recreation and 
intended environmental benefits.
    (2) Project description and feasibility. The application will be 
evaluated on the extent and quality to which the applicant demonstrates 
a reasonable approach to the project, sufficient resources to complete 
the project, and a capability to complete the project in a timely 
manner.
    (3) Widespread acceptance and maximizing participation of 
landowners. The application will be evaluated based on the applicant's 
plan for encouraging the participation of owners and operators of 
privately-held farm, ranch, and forest land, and for engaging the public 
users. Additionally, the extent to which the applicant has identified 
and

[[Page 799]]

established relationships with the partners necessary to achieve the 
project's goals will be evaluated.
    (4) Appropriate wildlife habitat. The application will be evaluated 
to determine whether the applicant demonstrates expertise in providing 
technical assistance with respect to establishing and maintaining 
appropriate wildlife habitat on public access land.
    (5) Strengthening wildlife habitat for lands under a USDA 
conservation program. The application will be evaluated to determine 
whether the project proposes to provide incentives to increase public 
hunting and other recreational access on land enrolled under a USDA 
conservation program, including lands enrolled in the Wetland Reserve 
Easement component of the Agricultural Conservation Easement Program, 
part 1468, subpart C of this chapter.
    (6) Additional private, Federal, State, or tribal government 
resources. The application will be evaluated to determine the extent to 
which the support letters provided by other organizations involved with 
the project demonstrate specific and quantified commitments to the 
project. Applications that demonstrate additional resources will receive 
more points, all else being equal, than those that do not.
    (7) Making available the location of enrolled land. The application 
will be evaluated to determine how the project proposes to make 
available to the public the location of the land enrolled.
    (8) Performance evaluation criteria. The application will be 
evaluated to determine whether the applicant has included outcome-based 
performance measures.
    (9) Administrative capabilities. The application will be evaluated 
to determine whether the grant applicant has a track record of 
administering the project or, in the absence of a track record, the 
capacity to administer the project. Applicants that have demonstrated 
capable financial systems and audit controls, personnel and program 
administration performance measures, and clear rules of governance will 
receive more points than those not evidencing this capacity.
    (10) Delivery. The application will be evaluated to determine 
whether the applicant has a track record in implementing public access 
or similar programs or, in the absence of an actual track record, the 
capacity to implement a public access program. The applicant's potential 
for delivering an effective public access program and the expected 
effects of that program will also be assessed.
    (11) Work plan and budget. The work plan will be reviewed for 
detailed actions and an accompanying timetable for implementing the 
components of the application. Clear, logical, realistic, and efficient 
plans will result in a higher score. Budgets will be reviewed for 
completeness and whether and to what extent additional resources were 
committed by Federal, State, or tribal government, and private 
resources.
    (12) Qualifications of those performing the tasks. The application 
will be reviewed to determine if key personnel have appropriate 
knowledge, skills, and abilities with respect to wildlife-dependent 
recreation including hunting or fishing on privately-held farm, ranch, 
and forest land, funds control, grants management, performance 
monitoring and evaluation, or other activities relevant to the success 
of the proposed public access program.

[75 FR 39140, July 8, 2010, as amended at 79 FR 44641, Aug. 1, 2014; 84 
FR 19703, May 6, 2019]



Sec.1455.21  Additional responsibilities of grantee.

    (a) Before receiving grant funding, the grantee will be required to 
sign an agreement similar in form and substance to the form of agreement 
published within or as an appendix to the APF. The agreement will 
require the grantee to commit to do all of the following:
    (1) Take all practicable steps to develop continuing sources of 
financial support from other Federal, State, tribal government, or 
private resources;
    (2) Make arrangements for the monitoring and evaluation of the 
activities related to implementation of the public access program of the 
owners or operators that enroll farm, ranch, and forest land; and
    (3) Provide an accounting for the money received by the grantee 
under this subpart.

[[Page 800]]

    (b) Grantees will be required to monitor funds or services as 
specified in paragraph (c) of this section, and must agree to that 
monitoring before grant funds are awarded.
    (c) The grantee must certify that the grant funds and services will 
not be used for ineligible purposes. Specifically, grant funds and 
services may not be used to:
    (1) Duplicate or replace current services; however, grant funds may 
be used to expand the level of effort or service beyond what is 
currently being provided;
    (2) Pay costs of preparing the application for funding under VPA-
HIP;
    (3) Pay costs of the project incurred prior to the date of grant 
approval;
    (4) Fund political activities;
    (5) Pay any judgment or debt owed to the United States;
    (6) Pay for the design, repair, rehabilitation, acquisition, or 
construction of a building or facility (including a processing 
facility);
    (7) Purchase, rent or pay for the installation of fixed equipment, 
other than property identification signs;
    (8) Pay for the repair of privately owned vehicles; or
    (9) Pay for research and development not directly related to 
quantifying the performance of VPA-HIP lands enrolled with funding from 
VPA-HIP.
    (d) Grant agreements under this part will be for a term of up to 3 
years.
    (e) Grantees that are States will have the grant amount reduced by 
25 percent if opening dates for migratory bird hunting in the State are 
not consistent for residents and non-residents. This paragraph does not 
apply to grantees that are Tribal governments.
    (f) Failure of the grantee to execute a grant agreement in a timely 
fashion, as determined by the CCC, will be construed to be a withdrawal 
from VPA-HIP.



Sec.1455.30  Reporting requirements.

    (a) Grantees must provide the following to NRCS:
    (1) A ``Financial Status Report'' listing expenditures according to 
agreed upon budget categories, on a periodic basis as specified in the 
grant document.
    (2) Annual performance reports that compare accomplishments to the 
objectives stated in the application, and that also:
    (i) Identify all tasks completed to date and provide documentation 
supporting the reported results;
    (ii) If the original schedule provided in the work plan is not being 
met, the report must discuss the problems or delays that may affect 
completion of the project;
    (iii) List objectives for the next reporting period; and
    (iv) Discuss compliance with any special conditions on the use of 
award funds. Reports are due as provided in paragraph (a)(1) of this 
section.
    (3) Final project performance reports, inclusive of supporting 
documentation. The final performance report is due within 90 days of the 
completion of the project.
    (b) All reports submitted to NRCS will be held in confidence to the 
extent permitted by law.
    (c) Grantees must comply with applicable registration and reporting 
requirements of the Federal Funding Accountability and Transparency Act 
of 2006 (Pub. L. 109-282, as amended) and 2 CFR parts 25 and 170.

[75 FR 39140, July 8, 2010, as amended at 79 FR 44641, Aug. 1, 2014]



Sec.1455.31  Miscellaneous.

    (a) Inspection. Grantees must permit periodic inspection of the 
program operations by a CCC representative, as determined by CCC.
    (b) Performance evaluation. CCC will incorporate performance 
criteria in grant award documentation and will regularly evaluate the 
progress and performance of grant awardees.
    (c) Suspend, terminate, or require refund. CCC may elect to suspend 
or terminate a grant in all or part, or funding of a particular workplan 
activity, and require refund of part or all of the grant, with interest, 
where CCC has determined:
    (1) That the grantee or subrecipient of grant funds has demonstrated 
insufficient progress in complying with the terms of the grant 
agreement;
    (2) The opening dates for migratory bird hunting in a State have 
been changed so as to be not consistent for

[[Page 801]]

residents and non-residents during the term of the grant;
    (3) There is reasonable evidence that shows joint funding has not 
been or will not be forthcoming on a timely basis; or
    (4) Such other cause as CCC identifies in writing to the grantee 
based on reasonable evidence (including but not limited to the use of 
Federal grant funds for ineligible purposes).
    (d) Advance or reimbursement. Grantees must use the request for 
advance or reimbursement form, which will be provided by CCC, to request 
advances or reimbursements;
    (e) Appeals. Appeals will be handled according to 7 CFR parts 11, 
614, and 780.
    (f) Environmental review. All grants made under this subpart are 
subject to the requirements of 7 CFR part 650. Applicants for grant 
funds must consider and document within their plans the important 
environmental factors within the planning area and the potential 
environmental impacts of the plan on the planning area, as well as the 
alternative planning strategies that were reviewed.
    (g) Civil rights. CCC prohibits discrimination in all its programs 
and activities on the basis of race, color, national origin, age, 
disability, and where applicable, sex, marital status, familial status, 
parental status, religion, sexual orientation, genetic information, 
political beliefs, reprisal, or because all or a part of an individual's 
income is derived from any public assistance program. VPA-HIP will also 
be administered in accordance with all other applicable civil rights 
law.
    (h) Other regulations. The grant program under this part is subject 
to the provisions of 2 CFR part 200, Uniform Administrative 
Requirements, Cost Principles, and Audit Requirements for Federal 
Awards.
    (i) Audit. Grantees must comply with the audit requirements of 2 CFR 
part 200. The audit requirements apply to the years in which grant funds 
are received and years in which work is accomplished using grant funds.
    (j) Change in scope or objectives. The Grantee must obtain prior 
approval from NRCS for any change to the scope or objectives of the 
approved project. Failure to obtain prior approval of changes to the 
scope of work or budget may result in suspension, termination, or 
recovery of grant funds.
    (k) Exceptions. CCC may, in individual cases, make an exception to 
any requirement or provision of this part, provided that any such 
exception is not inconsistent with any applicable law or opinion of the 
Comptroller General, and provided further, that CCC determines that the 
application of the requirement or provision would adversely affect the 
Federal Government's interest.
    (l) Enforcement and refunds; liens and schemes or devices. Grantees 
must comply with all conditions of the grant and any monies not spent or 
improperly spent must be returned immediately with interest to run at 
the normal rate for CCC obligations. Interest charges will be computed 
from the date of the CCC disbursement. Grantees must insure that parties 
that receive funds from the grantee comply with the grantee's 
application and return funds made available by the grantee where there 
is no such compliance. Any scheme or device to avoid any limits of this 
part will be considered to be a program violation with respect to any 
grant to which that scheme or device is related. Grant funds will be 
made available to the States or Tribes that are grantees under this part 
without regard to the claims of others, unless CCC determines otherwise.

[75 FR 39140, July 8, 2010, as amended at 79 FR 44641, Aug. 1, 2014]



PART 1463_2005	2014 TOBACCO TRANSITION PROGRAM--Table of Contents



                Subpart A_Tobacco Transition Assessments

Sec.
1463.1 General.
1463.2 Administration.
1463.3 Definitions.
1463.4 National assessment.
1463.5 Division of national assessment among classes of tobacco.
1463.6 Determination of persons liable for payment of assessments.
1463.7 Division of class assessment to individual entities.
1463.8 Notification of assessments.
1463.9 Payment of assessments.

[[Page 802]]

1463.10 Civil penalties and criminal penalties.
1463.11 Appeals and judicial review.

              Subpart B_Tobacco Transition Payment Program

1463.100 General.
1463.101 Administration.
1463.102 Definitions.
1463.103 Eligible quota holder.
1463.104 Eligible tobacco producer.
1463.105 Base quota levels for eligible quota holders.
1463.106 Base quota levels for eligible tobacco producers.
1463.107 Payment to eligible quota holders.
1463.108 Payment to eligible tobacco producers.
1463.109 Contracts.
1463.110 Misrepresentation and scheme or device.
1463.111 Offsets and assignments.
1463.112 Successor in interest contracts.
1463.113 Issuance of payments in event of death.
1463.114 Appeals.

                   Subpart C_Miscellaneous Provisions

1463.201 Refunds of importer assessments.

    Authority: 7 U.S.C. 518-519a, 714b, and 714c.

    Source: 70 FR 7011, Feb. 10, 2005, unless otherwise noted.



                Subpart A_Tobacco Transition Assessments



Sec.1463.1  General.

    The Commodity Credit Corporation (CCC) will levy assessments from 
January 1, 2005 through September 30, 2014 on certain domestic 
manufacturers and importers of tobacco products as provided for in this 
subpart in order to fund the issuance of payments made under subpart B 
of this part and to fund other activities authorized by Title VI of the 
American Jobs Creation Act of 2004. The total amount of assessments that 
may be collected under this part shall not exceed $10.140 billion.



Sec.1463.2  Administration.

    The provisions of this subpart will be administered under the 
general supervision of the Executive Vice President, CCC.



Sec.1463.3  Definitions.

    The definitions in this section shall apply for all purposes of 
administering the provisions of this subpart:
    Act means Title VI of the America Jobs Creation Act of 2004 (Public 
Law 108-357).
    Adjusted market share means the market share of a manufacturer of 
tobacco products or an importer of tobacco products adjusted to reflect 
such entity's share of a class of tobacco during the immediately 
preceding calendar year quarter. With respect to the 39th and 40th 
quarterly payments due on September 30, 2014, the adjusted market share 
will be the entity's share of a class of tobacco during the April 1-June 
30, 2014 quarter.
    Base period means the period July 1 through June 30 immediately 
preceding the beginning of a fiscal year.
    CCC's point of contact means, for items physically sent to CCC, 
``Fibers, Peanuts, and Tobacco Analysis Group, Economic and Policy 
Analysis Staff, Farm Service Agency, United States Department of 
Agriculture (USDA), STOP 0515, Room 3720-S, 1400 Independence Avenue, 
SW., Washington, DC 20250-0515'' unless otherwise specified by CCC 
through actual notice.
    Calendar year means the period January 1 through December 31.
    Class of tobacco means each of the following types of tobacco and 
tobacco products for which taxes are required to be paid for the removal 
of such into domestic commerce: cigarettes; cigars; snuff; roll-your-own 
tobacco; chewing tobacco; and pipe tobacco.
    Domestic manufacturer of tobacco products means an entity that is 
required to obtain a permit from the Alcohol and Tobacco Tax and Trade 
Bureau of the Department of the Treasury with respect to the production 
of tobacco products under title 27 of the Code of Federal Regulations.
    Fiscal year means the period October 1 through September 30.
    Gross domestic volume means the volume of tobacco products removed, 
as defined by section 5702 of the Revenue Code, and not exempt from tax 
under chapter 52 of such code at the time of their removal under that 
chapter or the Harmonized Tariff Schedule of the United States.

[[Page 803]]

    Importer of tobacco products means an entity that is required to 
obtain a permit from the Alcohol and Tobacco Tax and Trade Bureau of the 
Department of the Treasury with respect to the importation of tobacco 
products under title 27 of the Code of Federal Regulations.
    Market share means the share of each domestic manufacturer and 
importer of a class of tobacco product, to the fourth decimal place, of 
the total volume of domestic sales of the class of tobacco product in 
the base period. Such sales shall be determined by CCC by using the 
total volume of such class of tobacco product that is removed into 
domestic commerce in the base period.
    National assessment means the total amount of funding that CCC has 
determined to be necessary to collect in a year from domestic 
manufacturer and importer of tobacco products in order to reimburse CCC 
for expenditures that it will incur in the year for expenses incurred 
under sections 622 and 623 of the Act in making payments under subpart B 
of this part; losses sustained by CCC in the disposition of tobacco 
acquired under price support loan agreements as provided in section 
641(c) of the Act; and costs incurred by CCC in the utilization of 
financial institutions in administering sections 622 and 623 of the Act.
    Revenue Code means the Internal Revenue Code of 1986.
    Tobacco Trust Fund means an account established for deposit of 
assessments collected under this subpart, plus interest that accrues on 
such assessments, to be used to implement this subpart.

[70 FR 7011, Feb. 10, 2005, as amended at 70 FR 17158, Apr. 4, 2005; 73 
FR 23066, Apr. 29, 2008]



Sec.1463.4  National assessment.

    Annually, CCC will make a determination of a national assessment in 
as far in advance of when the first assessment is due as CCC determines 
to be practicable. Based upon the amount of assessments received and 
expenditures incurred in a calendar year quarter, CCC may adjust the 
national assessment for one or more classes of tobacco established for a 
particular year with respect to succeeding calendar year quarters.



Sec.1463.5  Division of national assessment among classes of tobacco.

    (a) Except as provided in paragraph (b) of this section, the 
national assessment will be divided by CCC among each class of tobacco 
based upon CCC's determination of each class's share of the excise taxes 
paid using for all years the tax rates that applied in fiscal year 2005. 
The value of the excise taxes paid for each class of tobacco will be 
based upon the reports filed by domestic manufacturers and importers of 
tobacco products with the Department of the Treasury and the Department 
of Homeland Security:
    (b) For fiscal year 2005, the national assessment will be divided as 
follows:
    (1) Cigarettes, 96.331 percent;
    (2) Cigars, 2.783 percent;
    (3) Snuff, 0.539 percent;
    (4) Roll-your-own tobacco products, 0.171 percent;
    (5) Chewing tobacco, 0.111 percent; and
    (6) Pipe tobacco, 0.066 percent.
    (c) For fiscal years 2006 through 2014, the division of the national 
assessment for each class of tobacco will be adjusted annually.

[70 FR 7011, Feb. 10, 2005, as amended at 75 FR 76923, Dec. 10, 2010]



Sec.1463.6  Determination of persons liable for payment of assessments.

    (a) All domestic manufacturers and importers of tobacco products are 
required to pay to CCC their proportionate share of a calendar year's 
national assessment. Such entities are those that import or manufacture 
tobacco products in a calendar year and are required to report to the 
United States Department of the Treasury or to the Department of 
Homeland Security the removal of tobacco products into domestic commerce 
under the Revenue Code or are required to pay taxes under chapter 52 of 
such code.
    (b)(1) Such entities must provide to CCC's point of contact:
    (i) Entity name; mailing address of the entity's principal place of 
business; an office or individual that CCC may contact for further 
information; an e-mail address and postal address at

[[Page 804]]

which they wish to receive notifications required by the Act to be made 
to them by CCC; and
    (ii) On a monthly basis for each class of tobacco, the total amount 
of tobacco products, summarized by employer identification number or 
such other method as may be prescribed by CCC, that are required to be 
reported to the United States Department of the Treasury or to the 
Department of Homeland Security in each month beginning October 1, 2004, 
and ending September 30, 2014.
    (2) The information required to be submitted to CCC under paragraph 
(b)(1) of this section must be submitted by:
    (i) With respect to fiscal year 2005 activities occurring prior to 
February 10, 2005, by February 25, 2005; and
    (ii) With respect to all other activities, on the same date the 
information was required to be submitted to the United States Department 
of the Treasury or to the Department of Homeland Security.



Sec.1463.7  Division of class assessment to individual entities.

    (a) In order to determine the assessment owed by an entity, that 
portion of the national assessment assigned to each class of tobacco 
will be further divided at the entity level. The amount of the 
assessment for each class of tobacco to be paid by each domestic 
manufacturer and importer of tobacco products will be determined by 
multiplying:
    (1) With respect to each class of tobacco, the adjusted market share 
of such manufacturer or importer; by
    (2) The total amount of the assessment for that class of tobacco for 
the calendar year quarter.
    (b) For purposes of determining the volume of domestic sales of each 
class of tobacco products and for each entity, such sales shall be based 
upon the reports filed by domestic manufacturers and importers of 
tobacco with the Department of Treasury and the Department of Homeland 
Security and shall correspond to the quantity of the tobacco product 
that is removed into domestic commerce by each such entity:
    (1) For cigarettes and cigars, on the number of cigarettes and 
cigars reported on such reports;
    (2) For all other classes of tobacco, on the number of pounds of 
those products.
    (c) In determining the adjusted market share of each manufacturer or 
importer of a class of tobacco products, except for cigars, CCC will 
determine to the fourth decimal place an entity's share of excise taxes 
paid of that class of tobacco product during the immediately prior 
calendar year quarter. With respect to cigars, CCC will determine the 
adjusted market share for each manufacturer or importer of a class of 
tobacco products based on the number of such products removed into 
domestic commerce.
    (d) The amount of a quarterly assessment owed by a domestic 
manufacturer or importer of tobacco products that must be remitted to 
CCC by the end of a calendar year quarter is based upon the application 
of the manufacturer's or importer's adjusted market share to the amount 
of the national assessment that has been allocated to one of the six 
specified tobacco product sectors under Sec.1463.5. As provided in 
Sec.1463.3, this adjusted market share is determined by the actions of 
such manufacturer or importer in a prior calendar year quarter. 
Accordingly, this amount must be remitted to CCC whether or not the 
manufacturer or importer is engaged in the removal of tobacco or tobacco 
products into commerce in the calendar year quarter in which it receives 
notification of the amount of assessment owed to CCC.

[70 FR 7011, Feb. 10, 2005, as amended at 70 FR 17158, Apr. 4, 2005]



Sec.1463.8  Notification of assessments.

    (a) Once CCC has determined a national assessment, CCC will collect 
that amount on a quarterly basis from all domestic manufacturers and 
importers of tobacco products subject to Sec.1463.5.
    (b) 30 calendar days prior to the end of each calendar year quarter 
domestic manufacturers and importers of tobacco products will receive 
notification of:
    (1) The national assessment;

[[Page 805]]

    (2) The percentage of the national assessment that has been 
allocated to each class of tobacco product and the total amount of 
assessments due from each such class;
    (3) Any adjustments that have been from the prior fiscal year with 
respect to the allocation of the gross domestic volume determined for 
use in a fiscal year among the classes of tobacco products;
    (4) An adjustment in the national assessment if CCC determines that 
the assessments imposed will result in insufficient funds due to changes 
in the amount of expenditures that CCC has determined will be made in a 
calendar year;
    (5) The volume of gross sales of each class of tobacco that CCC has 
allocated to the domestic manufacturer or importer of tobacco products 
for the purposes of determining such entity's adjusted market share. The 
volume of gross sales of each class of tobacco allocated to such an 
entity shall correspond to the quantity of the tobacco product that is 
removed into domestic commerce by each such entity;
    (6) The total volume of gross sales of each class of tobacco that 
CCC has allocated to a class of tobacco, within the gross domestic 
volume determined for use in a fiscal year, that was used for the 
purpose of determining a tobacco manufacturer's or tobacco importer's 
adjusted market share. The total volume of gross sales of each such 
class of tobacco shall correspond to the total quantity of the tobacco 
product that is removed into domestic commerce.
    (7) For that quarter, the adjusted market share of the domestic 
manufacturer or importer of tobacco products;
    (8) Beginning with the 2nd quarter of 2008, or as soon as 
practicable thereafter, the applied market share for that quarter of 
each other manufacturer and importer, for the applicable class of 
tobacco product of those manufacturers and importers that have provided 
such information to CCC in accordance with the provisions of Sec.
1463.6, as determined by the Deputy Administrator, Farm Service Agency.
    (9) The manner in which assessments are to be remitted to CCC; and
    (10) Identification of those Department of the Treasury and 
Department of Homeland Security forms filed by the domestic manufacturer 
or importer of tobacco products that are used to calculate assessments.

[70 FR 7011, Feb. 10, 2005, as amended at 70 FR 17158, Apr. 4, 2005; 73 
FR 23066, Apr. 29, 2008]



Sec.1463.9  Payment of assessments.

    (a) Assessments under this subpart are imposed for the expenditures 
CCC has determined it will incur in the 2005 through 2014 calendar 
years. Except as provided in paragraph (c) of this section, payment of 
such assessments are due to CCC no later than the end of each calendar 
year quarter. If prior to 30 calendar days before the end of a calendar 
year quarter CCC has not notified an entity of the amount that is 
required to be remitted in that quarter, no interest will be assessed by 
CCC under paragraph (d) of this section until 30 calendar days have 
elapsed from the date CCC provided notification of the amount owed.
    (b) Payments due under this subpart must be submitted to CCC by 
electronic fund transfer unless prior written approval has been obtained 
from CCC.
    (c) The final two calendar year quarterly payments due to CCC under 
this part shall be due to CCC on September 30, 2014.
    (d) Notwithstanding any other provision of this chapter, if CCC has 
not received payment of assessments determined to be owed at the end of 
a calendar year quarter, CCC will assess interest on such unpaid amount 
beginning on the first day of the calendar year quarter immediately 
following the end of such prior quarter. Such interest will be at the 
rate CCC assesses on delinquent debts in accordance with part 1403 of 
this title.
    (e) With respect to funds placed in escrow that are refunded to the 
domestic manufacturer or importer of tobacco products due to the 
resolution of an appeal, interest will be paid on such amount from the 
date of receipt by CCC until the date of the refund. Such interest rate 
will be at the rate charged by the U.S. Treasury for CCC's

[[Page 806]]

borrowing that is in effect on the date of receipt by CCC of such funds.



Sec.1463.10  Civil penalties and criminal penalties.

    (a) Any person who knowingly fails to provide information required 
to be filed under this subpart, or provides false information under this 
subpart, may be subject to the penalties prescribed in 15 U.S.C. 714m, 
18 U.S.C. 1003, and such other civil and criminal statutes as the United 
States determines to be appropriate.
    (b) In addition to an action that may be taken under paragraph (a) 
of this section, with respect to any person who knowingly fails to 
provide information required to be filed under this subpart, or that 
provides false information under this subpart, a person may be subject 
to assessment of a civil penalty by CCC. Such civil penalty will be 
imposed by CCC taking into account the severity of the action; whether 
the action is of a repetitive nature; and the disruption the action has 
caused with respect to other parties subject to this subpart. Any such 
civil penalty will not exceed two percent of the value of the kind of 
tobacco products manufactured or imported by such entity in the fiscal 
year in which the violation occurred.



Sec.1463.11  Appeals and judicial review.

    (a) An entity may appeal any adverse determination made under this 
subpart, including with respect to the amount of the assessment, by 
submitting a written statement that sets forth the basis of the dispute 
to Darlene Soto, Tobacco Transition Assessment Program Manager, U.S. 
Department of Agriculture, 1400 Independence Avenue SW., Room 3722, Mail 
Stop 0515, Washington DC 20250-0514, within 30 business days of the date 
of receipt of the notification by CCC of its determination.
    (b) The Executive Vice President shall assign a person to act as the 
hearing officer on behalf of CCC. The duty of the hearing officer will 
be to develop an administrative record that will provide the Executive 
Vice President, or a designee, with sufficient information to render a 
final determination on the matter in dispute. The hearing to be 
conducted by the hearing officer will be an informal hearing at which 
the appellant may present oral and written evidence in support of the 
appellant's position. A copy of the rules of conduct that will be 
applicable to the proceeding will be provided to the appellant upon 
receipt of the appeal by CCC.
    (c) For any appeals filed after October 1, 2014, appellants must 
submit all supporting documentation within 30 calendar days following 
the date of the initial written appeal to CCC. Any documents received 
after that time will not be considered by the hearing officer.
    (1) The final date that entities may file an appeal is January 14, 
2016.
    (2) If 30 calendar days elapse following receipt by CCC of the final 
submission of supporting documentation by an appellant with respect to 
any appeal filed under this section regarding an assessment imposed on a 
domestic manufacturer or importer of tobacco products, without a final 
administrative decision by CCC, then all administrative remedies 
available to the appellant will be deemed to be exhausted; except, if 
the 30th calendar day would fall on a weekend day or federal holiday, 
then the 30th calendar day will be deemed the next business day 
following such weekend day or federal holiday.
    (d) Any domestic manufacturer or importer of tobacco products 
aggrieved by a determination made by CCC under this subpart may seek 
review of the determination upon the exhaustion of the administrative 
remedies provided by this part in the United States District Court for 
the District of Columbia, or for the district in which such importer or 
manufacturer has its principal place of business.

[70 FR 7011, Feb. 10, 2005, as amended at 79 FR 19464, Apr. 9, 2014]



              Subpart B_Tobacco Transition Payment Program

    Source: 70 FR 17159, Apr. 4, 2005, unless otherwise noted.

[[Page 807]]



Sec.1463.100  General.

    (a) The Commodity Credit Corporation (CCC) will make payments to 
tobacco quota holders and tobacco producers as provided in this subpart 
with respect to farms for which a tobacco marketing quota had been 
established by the Farm Service Agency (FSA). To be eligible for a 
payment, such person must meet all provisions of this part; submit to 
CCC an application provided by CCC to enter into a contract for payment; 
and submit other information as may be required by CCC. Payments will be 
made by CCC annually over a 10-year period.
    (b) As provided in this part, a tobacco quota holder or tobacco 
producer who is not the subject of an outstanding claim established by 
the United States may, under the terms and conditions established by CCC 
and with the prior approval of CCC, enter into a successor in interest 
contract with another person or entity. Upon approval by CCC, all rights 
and obligations of the quota holder or producer, with respect to 
payments made by CCC under this part, will be terminated and transferred 
to the successor party.
    (c) As provided in this part, a tobacco quota holder or tobacco 
producer who may, under the terms and conditions established by CCC, and 
with the prior approval of CCC, may assign the right to receive a 
payment to be made under this part by executing an assignment as 
provided in Sec.1463.111.
    (d) Notwithstanding any other provision of this chapter, the 
provisions of 7 CFR parts 723 and 1464 shall not be applicable to the 
2005 and subsequent crops and the 2005 and subsequent marketing years.



Sec.1463.101  Administration.

    (a) The program will be administered under the general supervision 
of the Executive Vice President, CCC, and shall be carried out by FSA 
State and county committees (State and county committees).
    (b) State and county committees and their representatives and 
employees have no authority to modify or waive provisions of this 
subpart.
    (c) The State committee shall take any action required by the 
regulations of this subpart that has not been taken by the county 
committee. The State committee shall also:
    (1) Correct, or require a county committee to correct, any action 
taken by such county committee that is not in accordance with this 
subpart; or
    (2) Require a county committee to withhold taking any action that is 
not in accordance with this subpart.
    (d) No provision or delegation herein to a State or county committee 
shall preclude the Executive Vice President, CCC, or designee, from 
determining any question arising under the program or from reversing or 
modifying any determination made by a State or county committee. 
Further, the Executive Vice-President, CCC, or designee, may modify any 
deadline in this subpart to the extent doing so is determined to be 
appropriate and consistent with the purposes of the program.
    (e) A representative of CCC may execute a contract for a transition 
payment only under the terms and conditions of this part, and as 
determined and announced by the Executive Vice President, CCC. Any 
contract that is not executed in accordance with such terms and 
conditions, including any purported execution prior to the date 
authorized by the Executive Vice President, CCC, is null and void and 
shall not be considered to be a contract between CCC and any person 
executing the contract.



Sec.1463.102  Definitions.

    The definitions in this section shall apply for all purposes of 
administering the Tobacco Transition Payment Program (TTPP) authorized 
by this subpart.
    Act means the Fair and Equitable Tobacco Reform Act of 2004.
    Actual marketings means tobacco that was disposed of in raw or 
processed form by voluntary or involuntary sale, barter, or exchange, or 
by gift between living persons.
    Actual undermarketings means the amount by which the effective quota 
is more than the amount of tobacco marketed.
    Assignee means the person designated by a tobacco quota holder or 
tobacco producer on the correct CCC form to receive a payment to be made 
by CCC under this subpart.

[[Page 808]]

    Assignor means the owner of a farm, or a producer on a farm, who has 
been determined by CCC to be eligible for a payment under this subpart 
and who has elected to assign to another person on the correct CCC form, 
the payment to be made by CCC under this subpart.
    Average production yield means, for each kind of tobacco, other than 
burley (type 31) and flue-cured (types 11-14), the average of the 
production of a kind of tobacco in a county, on a per-acre basis, for 
the 2001, 2002, and 2003 crop years. For quota holders only, if no 
records are available to provide the average production of a kind of 
tobacco in a county, the average yield will be the production yield 
established by the National Agricultural Statistical Service of the 
Department of Agriculture (NASS) for the 2002 marketing year for the 
applicable kind of tobacco.
    Basic allotment means the factored allotment plus and minus 
permanent adjustments.
    Basic quota means the factored quota plus permanent adjustments.
    Base Quota Level (BQL) means the payment pounds as determined under 
this subpart.
    Calendar year means the twelve-months from January 1 through 
December 31.
    Claim means any amount of money determined by any Federal agency to 
be owed by a tobacco quota holder or a tobacco producer to the United 
States, or any agency or instrumentality thereof, that has been the 
subject of a completed debt collection activity that is in compliance 
with the Debt Collection Improvement Act of 1996.
    Considered planted means tobacco that was planted but failed to be 
produced as a result of a natural disaster, as determined by CCC.
    Contract means a Tobacco Transition Payment Quota Holder Contract, a 
Tobacco Transition Payment Producer Contract, a Tobacco Transition 
Payment Quota Holder Successor In Interest Contract, or a Tobacco 
Transition Payment Producer Successor In Interest Contract.
    Contract payment means a payment made under a contract entered into 
under this subpart.
    Dependent means an offspring child who is under 18 years of age.
    Disaster lease means, as approved by FSA, a written transfer by 
lease under certain natural disaster conditions of flue-cured or burley 
tobacco when the transferring farm has suffered a loss of production due 
to drought, excessive rain, hail, wind, tornado, or other natural 
disasters. A disaster transfer of flue-cured tobacco must have occurred 
after June 30 and on or before November 15. A disaster transfer of 
burley tobacco must have occurred after July 1 and on or before February 
16 of the following calendar year.
    Effective allotment means the basic farm allotment plus or minus 
temporary adjustments.
    Effective quota means the current year farm marketing quota plus or 
minus any temporary quota adjustments.
    Effective undermarketings means the smaller of the actual 
undermarketings or the sum of the previous year's basic quota plus 
pounds of quota temporarily transferred to the farm for the previous 
year.
    Eligible quota holder means only a person who, as of October 22, 
2004, has either a fee simple interest or life estate interest in the 
farm for which FSA established a farm basic marketing quota for the 2004 
marketing year. An eligible quota holder does not include any other 
person who: claims a lien, security interest or other similar equitable 
interest in the farm or in any personal asset of the owner of the farm 
or a producer on the farm; has a remainder interest or any other 
contingent interest in the farm or in any personal asset of the owner of 
the farm or a producer on the farm; or who may have caused any such 
marketing quota to have been transferred to the farm.
    Eligible tobacco producer means an owner, operator, landlord, 
tenant, or sharecropper who shared in the risk of producing tobacco on a 
farm where tobacco was produced, or considered planted, pursuant to a 
tobacco poundage quota or acreage allotment assigned to the farm for the 
2002, 2003 or 2004 marketing years and who otherwise meets the 
requirements in Sec.1463.104.
    Experimental tobacco means tobacco grown by or under the direction 
of a

[[Page 809]]

publicly-owned agricultural experiment station for experimental 
purposes.
    Factored allotment means allotment that has been factored to equate 
it to the 2002 basic allotment level.
    Factored quota means quota that has been factored to equate it to 
the 2002 basic quota level.
    Family member means a parent; grandparent or other direct lineal 
ancestor; child or other direct lineal descendent; spouse; or sibling of 
a tobacco quota holder or tobacco producer.
    Farm means a farm as defined in part 718 of this title.
    Fiscal year means the twelve-month period from October 1 through 
September 30.
    Marketing year means, for flue-cured tobacco, the period beginning 
July 1 of the current year and ending June 30 of the following year. For 
kinds of tobacco other than flue-cured, the period beginning October 1 
of the current year and ending September 30 of the following year.
    NASS means the National Agricultural Statistics Service of USDA.
    New farm means a farm for which a basic marketing quota was 
established for the 2003 or 2004 year from the national reserve that is 
set aside for such purposes from the national marketing quota 
established for the applicable year for the kind of tobacco.
    Overmarketings means the pounds by which the pounds marketed exceed 
the effective farm marketing quota.
    Permanent quota adjustments means adjustments made by FSA under part 
723 of this title for:
    (1) Old farm adjustments from reserve;
    (2) Pounds of quota transferred to the farm from the eminent domain 
pool;
    (3) Pounds of quota transferred to or from the farm by sale; or
    (4) Pounds of forfeited quota.
    Secretary means the Secretary of the United States Department of 
Agriculture.
    Share in the risk of production means having a direct financial 
interest in the successful production of a crop of tobacco through 
ownership of a direct share in the actual proceeds derived from the 
marketing of the crop, which share is conditional upon the success of 
that marketing.
    Successor party means the means the person who has assumed all 
rights and obligations of a quota holder or tobacco producer arising 
under this part by executing a TTPP contract.
    Temporary quota adjustments means adjustments made by FSA under part 
723 of this title for:
    (1) Effective undermarketings;
    (2) Overmarketings from any prior year;
    (3) Reapportioned quota from quota released from farms in the 
eminent domain pool;
    (4) Quota transferred by lease or by owner, for all kinds of tobacco 
except flue-cured and cigar tobacco; except for flue-cured disaster 
lease;
    (5) Violations of the provisions of part 723 of this title and part 
1464 of this chapter.
    Tobacco means the following kinds of tobacco: Burley tobacco (type 
31); cigar-filler and cigar binder tobacco (types 42, 43, 44, 53, 54, 
and 55); dark air-cured tobacco (types 35 and 36), fire-cured tobacco 
(types 21, 22 and 23); flue-cured tobacco (types 11, 12, 13 and 14); and 
Virginia sun-cured tobacco (type 37).
    TTPP effective quota means effective quota plus or minus temporary 
adjustments because of disaster lease and transfer and before adjustment 
to the 2002 level for establishment of BQL.
    United States includes any agency and instrumentality thereof.



Sec.1463.103  Eligible quota holder.

    (a) CCC will make a payment under this subpart to a person 
determined by CCC to be an eligible quota holder, as defined in Sec.
1463.102.
    (b) The wetlands and highly erodible land provisions of part 12 of 
this title, the controlled substance provisions of part 718 of this 
title, and the payment limitation provisions of part 1400 of this 
chapter shall not be applicable to payments made under this part to an 
eligible quota holder.



Sec.1463.104  Eligible tobacco producer.

    (a) CCC will make a payment under this subpart to a person 
determined by CCC to be an eligible tobacco producer, as defined in 
Sec.1463.102.

[[Page 810]]

    (b) The wetlands and highly erodible land provisions of part 12 of 
this title and the controlled substance provisions of part 718 of this 
title shall be applicable to payments made under this part to an 
eligible tobacco producer. However, the payment limitation provisions of 
part 1400 of this chapter shall not be applicable to payments made under 
this part to an eligible tobacco producer.
    (c) For purposes of determining if an eligible tobacco producer has 
shared in the risk of producing a crop in the 2002, 2003, or 2004 crop 
years, CCC will consider evidence presented by a producer that includes, 
but is not limited to: written leases; contracts for the purchase of 
tobacco; crop insurance documents; or receipts for the purchase of items 
used in the production of tobacco.



Sec.1463.105  Base quota levels for eligible quota holders.

    (a) The BQL is determined separately for each kind of tobacco for 
each farm for which a 2004 basic marketing year quota was established 
under part 723 of this title. Any marketing quota assigned by FSA to a 
new farm in 2003 or 2004, other than through transfer from another farm, 
shall not be considered when determining the BQL.
    (b) For burley tobacco quota holders BQL is established according to 
the following table, except as adjusted under paragraph (e) of this 
section:
    (1) Farm BQL. The 2004 basic quota, multiplied by the BQL adjustment 
factor 1.071295. (Note: The factor adjusts the 2004 basic quota to the 
2002 basic quota level.)
    (2) Quota holder BQL. The farm BQL multiplied by the quota holder's 
ownership share in the farm. (Note: In the case of undivided tract 
ownership, BQL must be distributed among the tract quota holders by the 
tract owners.)
    (c) For flue-cured tobacco quota holders the BQL is established 
according to the following table, except as adjusted under paragraph (e) 
of this section:
    (1) Farm BQL. The 2004 basic quota, multiplied by the BQL adjustment 
factor 1.23457. (Note: The factor adjusts the 2004 basic quota to the 
2002 level.)
    (2) Quota holder BQL. The farm BQL multiplied by the quota holder's 
ownership share in the farm. (Note: In the case of undivided tract 
ownership, BQL must be distributed among the tract quota holders by the 
tract owner.)
    (d) For quota holders of all other kinds of tobacco the BQL is 
established according to the following table, except as adjusted under 
paragraph (e) of this section:
    (1) Farm BQL. The basic allotment established for the farm in 2002 
multiplied by the county average production yield. The following NASS 
yields are to be used for any county without production:
    (i) Fire-cured (type 21)--1746 lbs.
    (ii) Fire-cured (types 22-23)--2676 lbs.
    (iii) Dark Air-cured (types 35-36)--2475 lbs.
    (iv) Virginia Sun-cured (type 37)--1502 lbs.
    (v) Cigar Filler/Binder (types 42-44, 54, 55)--2230 lbs.
    (2) Quota holder BQL. The farm BQL multiplied by the quota holder's 
ownership share in the farm. (Note: In the case of undivided tract 
ownership, BQL must be distributed among the tract quota holders by the 
tract owner.)
    (e)(1) CCC will divide the BQL for the farm between the parties to 
the agreement as CCC determines to be fair and equitable, taking into 
consideration the proportionate amounts of cropland sold, if:
    (i) On or before October 22, 2004, the owner of a farm had entered 
into an agreement for the sale of all or a portion of a farm for which a 
farm marketing quota was established for the 2004 marketing year; and
    (ii) Such agreement had not been fulfilled or terminated prior to 
that date; and
    (iii) The parties to the agreement are unable to agree to the 
disposition of the contract payment to be made with respect to the farm.
    (2) If, on or before October 22, 2004, the owner of a farm had 
entered into an agreement for the permanent transfer of all or a portion 
of a tobacco marketing quota and the transfer had not been completed by 
such date, the owner of the farm to which such quota was to be 
transferred shall be considered to be the owner of the marketing

[[Page 811]]

quota for the purposes of this subpart. The BQL's for the transferring 
farm and the receiving farm will be adjusted to reflect this transfer.
    (f) Any tobacco marketing quota preserved under part 1410 of this 
chapter as the result of the enrollment of a farm in the Conservation 
Reserve Program shall be included in the determination of the BQL of the 
farm.



Sec.1463.106  Base quota levels for eligible tobacco producers.

    (a) BQL is determined separately, for each of the years 2002, 2003 
and 2004, for each kind of tobacco and for each farm for which a 2002 
farm marketing quota had been established under part 723 of this title.
    (b) The BQL for producers of burley tobacco is established as 
follows:
    (1) The 2002-crop year BQL for burley producers is the 2002 
effective quota pounds actually marketed, adjusted for disaster lease 
and transfer, and considered-planted undermarketings and overmarketings. 
The BQL is then multiplied by the producer's share in the 2002 crop to 
determine the producer's 2002 BQL. The adjustments for disaster lease 
and transfer and considered-planted undermarketings and overmarketings 
are made as follows:
    (i) Disaster-leased pounds are added to the marketings of the 
transferring farm and deducted from the marketings of the receiving 
farm;
    (ii) Considered-planted pounds are added to the farm's actual 
marketings, and includes only undermarketings that were not part of the 
farm's 2003 effective quota.
    (iii) Pounds actually marketed as overmarketings and sold penalty-
free are added to the farm BQL after the BQL adjustment factor of 
1.12486 has been applied to the overmarketed pounds.
    (2) The 2003-crop year BQL for burley producers is the 2003 
effective quota pounds actually marketed, adjusted for disaster lease 
and transfer and considered-planted undermarketings and overmarketings, 
as follows:
    (i) Disaster leases are added to the marketings of the transferring 
farm and deducted from the marketings of receiving farm.
    (ii) Considered-planted pounds are added to the farm's actual 
marketings, and includes only undermarketings that were not part of the 
farm's 2004 effective quota.
    (iii) Pounds actually marketed as overmarketings and sold penalty-
free are added to the farm BQL after the BQL adjustment factor of 
1.071295 has been applied to the overmarketed pounds.
    (iv) After these adjustments the BQL is calculated as follows:

------------------------------------------------------------------------
        Step                             Calculation
------------------------------------------------------------------------
1..................  Subtract all 2002 undermarketings from the 2003
                      marketings, including undermarketings from the
                      parent farm in any special tobacco combinations.
                      Leased pounds are apportioned undermarketing
                      history by dividing the transferring farm's
                      undermarketings by the transferring farm's
                      effective quota, before any temporary transfers,
                      resulting in the percentage of undermarketings
                      that were leased.
2..................  Multiply the 2003 marketings remaining after Step 1
                      times 1.12486 (the 2003-BQL adjustment factor).
3..................  Add the undermarketings that were subtracted in
                      Step 1 to the sum of Step 2 to determine the farm
                      2003 BQL.
4..................  Multiply the sum from Step 3 times the producer's
                      share in the 2003 crop to determine the producer's
                      2003 BQL.
------------------------------------------------------------------------

    (3) The 2004-crop year BQL for burley producers is the 2004 
effective quota before disaster lease and transfer is calculated as 
follows:

------------------------------------------------------------------------
        Step                             Calculation
------------------------------------------------------------------------
1..................  Subtract all 2003 undermarketings from the 2004
                      effective quota, including undermarketings from
                      the parent farm in any special tobacco
                      combinations. Leased pounds are apportioned
                      undermarketing history by dividing the
                      transferring farm's undermarketings by the
                      transferring farm's effective quota, before any
                      temporary transfers, resulting in the percentage
                      of undermarketings that were leased.
2..................  Multiply the 2004 effective quota remaining after
                      Step 1 times 1.071295 (the 2004 BQL adjustment
                      factor).
3..................  Multiply the undermarketings that were subtracted
                      in Step 1 times 1.12486 (the 2003 BQL adjustment
                      factor).
4..................  Add the effective quota from Step 2 to the
                      undermarketings in Step 3 to determine the farm
                      2004 BQL.
5..................  Multiply the sum from Step 4 times the producer's
                      share in the 2004 crop to determine the producer's
                      2004 BQL.
------------------------------------------------------------------------


[[Page 812]]

    (c) The BQL for producers of flue-cured tobacco is established by 
year, as follows:
    (1) The 2002-crop year BQL for flue-cured producers is the effective 
2002 quota actually marketed, adjusted for disaster lease and transfer 
and considered-planted undermarketings and overmarketings. The BQL is 
then multiplied by the producer's share in the 2002 crop to determine 
the producer's 2002 BQL. Adjustments for disaster lease and transfer and 
considered-planted undermarketings and overmarketings are calculated as 
follows:
    (i) Disaster-leased pounds are added to the marketings of the 
transferring farm and deducted from the marketings of the receiving 
farm;
    (ii) Considered-planted pounds are added to the farm's actual 
marketings, and include only undermarketings that were not part of the 
farm's 2003 effective quota.
    (iii) Pounds actually marketed as overmarketings and sold penalty-
free are added to the farm BQL after the BQL adjustment factor of 
1.10497 has been applied to the overmarketed pounds.
    (2) The 2003-crop year BQL for flue-cured producers is the 2003 
effective quota actually marketed, adjusted for disaster lease and 
transfer and considered-planted undermarketings and overmarketings, as 
follows:
    (i) Disaster leases are added to the marketings of the transferring 
farm and deducted from the marketings of the receiving farm.
    (ii) Considered-planted pounds are added to the farm's actual 
marketings, and includes only undermarketings that were in not part of 
the farm's 2004 effective quota.
    (iii) Pounds actually marketed as overmarketings and sold penalty-
free are added to the farm BQL after the BQL adjustment factor of 
1.23457 has been applied to the overmarketed pounds.
    (iv) After these adjustments the BQL is calculated as follows:

------------------------------------------------------------------------
        Step                             Calculation
------------------------------------------------------------------------
1..................  Subtract all 2002 undermarketings from the 2003
                      marketings, including undermarketings from the
                      parent farm in any special tobacco combinations.
2..................  Multiply the 2003 marketings remaining after Step 1
                      times 1.10497 (the 2003 BQL adjustment factor).
3..................  Add the undermarketings that were subtracted in
                      Step 1 to the sum of Step 2 to determine the farm
                      2003 BQL.
4..................  Multiply the sum from step 3 times the producer's
                      share in the 2003 crop to determine the producer's
                      2003 BQL.
------------------------------------------------------------------------

    (3) The 2004-crop year BQL for flue-cured producers is the 2004 
effective quota before disaster lease and transfer. The 2004 BQL is 
calculated as follows:

------------------------------------------------------------------------
        Step                             Calculation
------------------------------------------------------------------------
1..................  Subtract all 2003 undermarketings from the 2004
                      effective quota, including undermarketings from
                      the parent farm in any special tobacco
                      combinations.
2..................  Multiply the 2004 effective quota remaining after
                      Step 1 times 1.23457 (the 2004 BQL adjustment
                      factor).
3..................  Multiply the undermarketings that were subtracted
                      in Step 1 times 1.10497 (the 2003 BQL adjustment
                      factor).
4..................  Add the effective quota from Step 2 to the
                      undermarketings in Step 3 to determine the farm
                      2004 BQL.
5..................  Multiply the sum from Step 4 times the producer's
                      share in the 2004 crop to determine the producer's
                      2004 BQL.
------------------------------------------------------------------------

    (d) The BQL for producers of cigar filler and binder tobacco is 
established by years, as follows:
    (1) The 2002-crop year BQL for cigar filler and binder tobaccos is 
calculated as follows:

------------------------------------------------------------------------
        Step                             Calculation
------------------------------------------------------------------------
1..................  Multiply the 2002 farm's basic allotment times the
                      farm's average yield for 2001, 2002, and 2003 to
                      get the 2004 farm base pounds total.
2..................  Multiply any 2002 special tobacco combination acres
                      times the 2002-equivalence factor of 1.000.
3..................  Multiply the sum from Step 2 times the farm's
                      average yield for 2001, 2002, and 2003 to get the
                      2002 farm special tobacco combination pounds
                      total.
4..................  Add the sum from Step 1 to the sum from Step 3 to
                      get the 2004 farm BQL total.
5..................  Multiply the sum from Step 4 times the producer's
                      share in the 2002 crop to get the producer 2002
                      BQL.
------------------------------------------------------------------------

    (2) The 2003-crop year BQL for cigar filler and binder tobaccos is 
calculated as follows:

[[Page 813]]



------------------------------------------------------------------------
        Step                             Calculation
------------------------------------------------------------------------
1..................  Multiply the 2002 farm's basic allotment times the
                      farm's average yield for 2001, 2002, and 2003 to
                      get the 2003 farm base pounds total.
2..................  Multiply any 2003 special tobacco combination acres
                      times the 2003 BQL adjustment factor of 0.8929.
3..................  Multiply the sum from Step 2 times the farm's
                      average yield for 2001, 2002, and 2003 to get the
                      2003 farm special tobacco combination pounds
                      total.
4..................  Add the sum from Step 1 to the sum from Step 3 to
                      get the 2003 farm BQL total.
5..................  Multiply the sum from Step 4 times the producer's
                      share in the 2003 crop to get the producer 2003
                      BQL.
------------------------------------------------------------------------

    (3) The 2004-crop year BQL for cigar-filler and binder tobaccos is 
calculated as follows:

------------------------------------------------------------------------
        Step                             Calculation
------------------------------------------------------------------------
1..................  Multiply the 2002 farm's basic allotment times the
                      farm's average yield for 2001, 2002, and 2003 to
                      get the 2004 farm base pounds total.
2..................  Multiply any 2004 special tobacco combination acres
                      times the 2004 BQL adjustment factor of 0.9398.
3..................  Multiply the sum from Step 2 times the farm's
                      average yield for 2001, 2002, and 2004 to get the
                      2003 farm special tobacco combination pounds
                      total.
4..................  Add the sum from Step 1 to the sum from Step 3 to
                      get the 2004 farm BQL total.
5..................  Multiply the sum from Step 4 times the producer's
                      share in the 2004 crop to get the producer 2004
                      BQL.
------------------------------------------------------------------------

    (e) The BQL's for producers of all kinds of tobacco other than 
burley, flue-cured and cigar filler and binder, are established by year, 
as follows.
    (1) The 2002-crop year BQL's for these kinds of tobaccos are 
calculated as follows:

------------------------------------------------------------------------
        Step                             Calculation
------------------------------------------------------------------------
1..................  Multiply the 2002 farm's basic allotment times the
                      farm's average yield for 2001, 2002, and 2003 to
                      get the 2002 farm base pounds total.
2..................  Multiply any 2002 special tobacco combination acres
                      times the farm's average yield for 2001, 2002, and
                      2003 to get the 2002 special tobacco combinations
                      pounds total.
3..................  Add the sum from Step 1 to the sum from Step 2.
4..................  Multiply any 2002 acres leased to or from the farm
                      times the farm's average yield for 2001, 2002, and
                      2003 to get the 2002 lease pounds total. Then, to
                      the sum from either:
                       (i) Step 3, add pounds leased to the farm to get
                        the farm 2002 BQL total
                       (ii)Step 3, subtract pounds leased from the farm
                        to get the farm 2002 BQL total.
5..................  Multiply the result from Step 4 times the
                      producer's share in the 2002 crop to get the
                      producer 2002 BQL.
------------------------------------------------------------------------

    (2) The 2003-crop year BQL's for these kinds of tobaccos are 
calculated as follows:

------------------------------------------------------------------------
        Step                             Calculation
------------------------------------------------------------------------
1..................  Multiply the 2002 farm's basic allotment times the
                      farm's average yield for 2001, 2002, and 2003 to
                      get the 2003 farm base pounds total.
2..................  Multiply any 2003 special tobacco combinations
                      acres times the applicable 2003 BQL adjustment
                      factor:
                       (i) Fire-cured (type 21)--1.0000
                       (ii) Fire-cured (types 22-23)--.980392
                       (iii) Dark Air-cured (35-36)--.952381
                       (iv) Virginia Sun-cured (type 37) 1.0000
3..................  Multiply the sum from Step 2 times the farm's
                      average yield for 2001, 2002, and 2003 to get the
                      2003 farm special tobacco combination pounds
                      total.
4..................  Add the sum from Step 1 to the sum from Step 3.
5..................  Multiply any 2003 acres leased times the applicable
                      2003 BQL adjustment factor:
                       (i) Fire-cured (type 21) 1.0000
                       (ii) Fire-cured (types 22-23)--.980392
                       (iii) Dark Air-cured (35-36)--.952381
                       (iv) Virginia Sun-cured (type 37) 1.0000
6..................  Multiply the sum from Step 5 times the farm's
                      average yield for 2001, 2002, and 2003 to get the
                      2003 lease pounds total.
7..................  To the sum from Step 4 either:
                       (i) Add pounds from Step 6 leased to the farm to
                        get the farm 2003 BQL total
                       (ii) Subtract pounds from Step 6 leased from the
                        farm to get the farm 2003 BQL total.
8..................  Multiply the sum from Step 7 times the producer's
                      share in the 2003 crop to get the producer 2003
                      BQL total.
------------------------------------------------------------------------

    (3) The 2004-crop year BQL's for these kinds of tobaccos are 
calculated as follows:

[[Page 814]]



------------------------------------------------------------------------
        Step                             Calculation
------------------------------------------------------------------------
1..................  Multiply the 2002 farm's basic allotment times the
                      farm's average yield for 2001, 2002, and 2003 to
                      get the 2004 farm base pounds total.
2..................  Multiply any 2004 special tobacco combinations
                      acres times the applicable 2004 BQL adjustment
                      factor:
                       (i) Fire-cured (type 21) 1.0000
                       (ii) Fire-cured (types 22-23)--.951837
                       (iii) Dark Air-cured (35-36)--.94264
                       (iv) Virginia Sun-cured (type 37) 1.0000
3..................  Multiply the sum from Step 2 times the farm's
                      average yield for 2001, 2002, and 2003 to get the
                      2004 farm special tobacco combination pounds
                      total.
4..................  Add the sum from Step 1 to the sum from Step 3.
5..................  Multiply any 2004 acres leased times the applicable
                      2004 BQL adjustment factor:
                       (i) Fire-cured (type 21) 1.0000
                       (ii) Fire-cured (types 22-23)--.951837
                       (iii) Dark Air-cured (35-36)--.92464
                       (iv) Virginia Sun-cured (type 37) 1.0000
6..................  Multiply the sum from Step 5 times the farm's
                      average yield for 2001, 2002, and 2003 to get the
                      2004 lease pounds total.
7..................  To the sum from Step 4 either:
                       (i) Add pounds from Step 6 leased to the farm to
                        get the farm 2004 BQL total
                       (ii) Subtract pounds from Step 6 leased from the
                        farm to get the farm 2004 BQL total.
8..................  Multiply the sum from Step 7 times the producer's
                      share in the 2004 crop to get the producer 2004
                      BQL total.
------------------------------------------------------------------------



Sec.1463.107  Payment to eligible quota holders.

    (a) The total amount of contract payments that may be made to an 
eligible quota holder shall be the product obtained by multiplying:


$7.00 per pound x the BQL for the quota holder as determined under Sec.
1463.105 for each kind of tobacco

    (b) During each of the fiscal years 2005 through 2014, CCC will make 
a payment to each eligible quota holder in an amount equal to 10 percent 
of the total amount due under a contract entered into under this 
subpart, except that in the case an application was filed after June 17, 
2005, the applicant will receive only the TTPP payments that have not 
been made as of the date the contract is approved. However, in order for 
the contract participant to receive the 2005 TTPP payment an application 
to enter into a TTPP contract must be filed no later than June 17, 2005. 
CCC may, in its discretion, extend any deadline set forth in this 
paragraph. However, CCC will make the FY 2005 payment between June and 
September of 2005, and subsequent payments will be made in January, to 
the extent practicable, of each FY.



Sec.1463.108  Payment to eligible tobacco producers.

    (a) Subject to paragraph (b) of this section, the total amount of 
contract payments that may be made to an eligible tobacco producer shall 
be the product obtained by multiplying:


$3.00 per pound x the BQL for the producer determined under Sec.
1463.106 for each kind of tobacco

    (b) Payments to an eligible producer shall be equal to:
    (1) For an eligible producer that produced tobacco that was marketed 
or considered by CCC as planted under a marketing quota in all of the 
2002, 2003, and 2004 marketing years, 100 percent of the rate specified 
in paragraph (a) of this section;
    (2) For an eligible producer that produced tobacco that was marketed 
or considered by CCC as planted under a marketing quota in any two of 
the 2002, 2003, and 2004 marketing years, \2/3\ of the rate specified in 
paragraph (a) of this section; and
    (3) For an eligible producer that produced tobacco that was 
marketed, or considered by CCC as planted under a marketing quota in any 
one of the 2002, 2003, and 2004 marketing years, \1/3\ of the rate 
specified in paragraph (a) of this section.
    (c) During each of the fiscal years 2005 through 2014, CCC will make 
a payment to each eligible producer in an amount equal to 10 percent of 
the total amount due under a contract entered into under this subpart 
except that in the case an application was filed after June 17, 2005, 
the applicant will receive only the TTPP payments that have not

[[Page 815]]

been made as of the date the contract is approved. However, in order for 
the contract participant to receive the 2005 TTPP payment, an 
application to enter into a TTPP contract must be filed no later than 
June 17, 2005. CCC may, in its discretion, extend any deadline set forth 
in this paragraph. However, CCC will make the FY 2005 payment between 
June and September of 2005, and subsequent payments will be made in 
January, to the extent practical, of each FY.



Sec.1463.109  Contracts.

    (a) CCC will enter into a contract with eligible tobacco quota 
holders and producers. To the extent a person has filed such a contract 
with CCC, but a final administrative decision has not been made with 
respect to such person's status as an eligible quota holder or tobacco 
producer prior to the final enrollment date, CCC will enter into such a 
contract only upon the issuance of a final determination of eligibility 
and the passing of any deadline for any administrative appeal under 
parts 780 and 11 of this title.
    (b)(1) If contracts or other written claims are provided to CCC by 
June 3, 2005, by two or more persons with respect to the same tobacco 
BQL used to calculate a program payment, CCC will not issue such payment 
until CCC has determined the eligibility status of each claimant.
    (2) If CCC has made a payment to a person after June 3, 2005, a 
person who is not an eligible holder or producer, as identified on FSA 
records, for such farm, or claims to be an eligible tobacco holder or 
producer and submits a contract or other written claim with CCC for the 
same quota used to issue the initial payment, CCC will issue no further 
payments for such farm until CCC has determined the eligibility status 
of each person who has submitted a contract or other written claim for 
such farm and the occurrence of the repayment of the initial payment 
made by CCC.



Sec.1463.110  Misrepresentation and scheme or device.

    A person must refund all payments received on all contracts entered 
into under this subpart, plus interest as determined in accordance with 
part 1403 of this chapter, and pay to CCC liquidated damages as 
specified in the contract, if CCC determines the person has:
    (a) Erroneously represented any fact affecting a program 
determination made in accordance with this subpart;
    (b) Adopted any scheme or device that tends to defeat the purpose of 
the program; or
    (c) Made any fraudulent representation affecting a program 
determination made in accordance with this subpart.



Sec.1463.111  Offsets and assignments.

    (a) TTPP payments made to any person under this subpart shall be 
made without regard to questions of title under State law and without 
regard to any claim or lien against the tobacco quota, tobacco marketing 
allotment, or the farm for which a tobacco quota had been established 
under part 723 of this title by any creditor or any other person.
    (b) The provisions of part 1404 of this title shall not apply to 
this part.
    (c) A quota holder or tobacco producer who is eligible to receive a 
payment under this part may assign a payment, or a portion thereof, to 
be made under this part to another person using the correct CCC form. 
Such an assignment will become effective upon approval by CCC. In order 
to provide for the orderly issuance of payments under this part, CCC may 
limit, in its sole discretion, the number of assignments that may be 
made with respect to a contract.
    (d)(1) CCC will establish, after consultation with the Department of 
the Treasury, a discount rate that reflects the value of any remaining 
payments due under this part if such payments were to be made as a lump 
sum payment in the current year. Unless there is consideration for such 
contract in an amount equal to or greater than the discounted value of 
the payments, subject to the assignment, based on the discount rate 
established for such payments by CCC, CCC will not approve any 
assignment other than to:
    (i) A family member; or
    (ii) A party who had purchased a tobacco marketing quota prior to 
October 22, 2004 and had placed the quota on

[[Page 816]]

a farm with the owner's consent prior to that date in the manner that 
had been prescribed by FSA under part 723 of this chapter.
    (2) The discount rate established by CCC will be determined by 
adding 200 basis points to the prime lending rate, as determined by CCC. 
If this sum is a fraction of a number, CCC will round the discount rate 
to the nearest whole number. Rounding of a half percent will be to the 
next higher whole number.
    (e) CCC will issue a payment to an assignee only to the extent and 
amount of payment that CCC would otherwise have issued to the quota 
holder or producer in the absence of the assignment. In accordance with 
part 1403 of this title, any claim owed by the assignor to the United 
States will be deducted from any payment made under this part prior to 
the issuance of the payment to the assignee.
    (f) CCC will report to the Internal Revenue Service any payment 
assigned under this section as income earned by the assignor.



Sec.1463.112  Successor in interest contracts.

    (a) A quota holder or tobacco producer who is eligible to receive a 
payment under this part, and for whom a claim has not been established 
by the United States, may enter into a successor in interest contract 
with another party using the correct CCC form. Such successor in 
interest contract will become effective upon approval by CCC, and will 
not include the 2005 payment. Only one such successor in interest 
contract may be entered into by a quota holder or tobacco producer with 
respect to a farm for each kind of tobacco.
    (b) Annually, CCC will establish, after consultation with the 
Department of the Treasury, a discount rate that reflects the value of 
any remaining payments due under this part if such payments were to be 
made as a lump sum payment in the current year. This discount rate will 
be determined as provided in Sec.1463.111(d)(2). Unless there is 
consideration for such contract in an amount equal to or greater than 
the discounted value of the payments, subject to the successor in 
interest or contract, based on the discount rate established for such 
payments by CCC, CCC will not approve any succession in interest 
contract other than to:
    (1) A family member; or
    (2) A party who had purchased a tobacco marketing quota prior to 
October 22, 2004 and had placed the quota on a farm with the owner's 
consent prior to that date in the manner that had been prescribed by FSA 
under part 723 of this chapter.
    (c) CCC will issue a payment, except the 2005 payment, to a 
successor party only if such party is otherwise in compliance with all 
other applicable regulations, which includes for successors to producer 
contracts only the wetlands and highly erodible land provisions of part 
12 of this chapter. In accordance with part 1403 of this title, any 
claim owed by the successor party to the United States will be deducted 
from any payment made under this part prior to the issuance of the 
payment to the successor party.
    (d) CCC will report to the Internal Revenue Service any payment made 
under a successor in interest contract as income earned by the successor 
party.



Sec.1463.113  Issuance of payments in event of death.

    If a quota holder or tobacco producer who is eligible to receive a 
payment under this subpart dies, the right to receive payments shall be 
transferred to the estate of the quota holder or tobacco producer unless 
such person is survived by a spouse or one or more dependents, in which 
case the right to receive the payments shall be transferred to the 
surviving spouse.



Sec.1463.114  Appeals.

    A person may obtain reconsideration and review of any adverse 
determination made under this subpart in accordance with the appeal 
regulations found at parts 11 and 780 of this title.



                   Subpart C_Miscellaneous Provisions



Sec.1463.201  Refunds of importer assessments.

    Assessments paid on imported flue-cured or burley tobacco under 
sections

[[Page 817]]

106A and 106B of the Agricultural Act of 1949 with respect to imports in 
the 2004 and prior marketing years may be refunded by CCC in accordance 
with the provisions of 7 CFR 1464.105 that were in effect prior to March 
30, 2005, so long as such request for refunds are filed in accordance 
with such part no later than:
    (a) August 1, 2005 for flue-cured tobacco; and
    (b) November 1, 2005 for burley tobacco.

[70 FR 17159, Apr. 4, 2005]



PART 1464_REGIONAL CONSERVATION PARTNERSHIP PROGRAM--Table of Contents



                      Subpart A_General Provisions

Sec.
1464.1 Applicability.
1464.2 Administration.
1464.3 Definitions.
1464.4 Funding pool allocations.
1464.5 Program requirements.

                    Subpart B_Partnership Agreements

1464.20 Proposal procedures.
1464.21 Ranking considerations and proposal selection.
1464.22 Partnership agreements.
1464.23 Funding.
1464.24 Modifications, noncompliance, termination, and remedies.
1464.25 Alternative funding arrangements or grant agreements.
1464.26 Supplemental agreements.
1464.27 Third-party contracts or agreements.

                       Subpart C_Program Contracts

1464.30 Application for contracts and selecting applications for 
          funding.
1464.31 Program contract requirements.
1464.32 Modifications and transfers of land.
1464.33 Violations and remedies.

                    Subpart D_General Administration

1464.40 Appeals.
1464.41 Compliance with regulatory measures.
1464.42 Access to agricultural operation or tract.
1464.43 Equitable relief.
1464.44 Offsets and assignments.
1464.45 Misrepresentation and scheme or device.
1464.46 Environmental credits for conservation improvements.

    Authority: 15 U.S.C. 714b and 714c; 16 U.S.C. 3871 et seq.

    Source: 85 FR 8137, Feb. 13, 2020, unless otherwise noted.



                      Subpart A_General Provisions



Sec.1464.1  Applicability.

    (a) The purposes of the Regional Conservation Partnership Program 
(RCPP) are as follows:
    (1) Carry out eligible activities to further the conservation, 
protection, restoration, and sustainable use of soil, water (including 
sources of drinking water and ground water), wildlife, agricultural 
land, and related natural resources on eligible land on a regional or 
watershed scale;
    (2) Encourage eligible partners to cooperate with producers in--
    (i) Meeting or avoiding the need for national, State, and local 
natural resource regulatory requirements related to production on 
eligible lands, including through alignment of partnership projects with 
other national, State, and local agencies and programs addressing 
similar natural resource or environmental concerns, and
    (ii) Implementing projects that will result in the adoption, 
installation, and maintenance of eligible activities that affect 
multiple agricultural or nonindustrial private forest operations on a 
local, regional, State, or multistate basis;
    (3) Encourage flexible and streamlined delivery of conservation 
assistance to producers through partnership agreements; and
    (4) Engage producers and eligible partners in conservation projects 
to achieve greater conservation outcomes and benefits for producers than 
would otherwise be achieved.
    (b) Through RCPP, NRCS provides technical and financial assistance 
to implement eligible activities through partnership and supplemental 
agreements with eligible partners and program contracts with producers.
    (c) RCPP is available in any of the 50 States, the District of 
Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin Islands of 
the United States, American Samoa, and the Commonwealth of the Northern 
Mariana Islands.

[[Page 818]]

    (d) Each program contract, partnership agreement, and supplemental 
agreement is subject to the regulations in place on the date it is 
executed.



Sec.1464.2  Administration.

    (a) The funds, facilities, and authorities of the Commodity Credit 
Corporation (CCC) are available to NRCS for carrying out RCPP. 
Accordingly, each reference to NRCS in this part also refers to CCC 
funds, facilities, and authorities where applicable.
    (b) No delegation in this part to lower organizational levels will 
preclude the Chief of NRCS from making any determinations under this 
part, redelegating to other organizational levels, or from reversing or 
modifying any determination made under this part.
    (c) NRCS may use other agency-wide authorities, such as 16 U.S.C. 
3842 and 31 U.S.C. 1535, to enter into agreements with other Federal or 
State agencies, Indian Tribes, conservation districts, units of local 
government, public or private organizations, and individuals to assist 
NRCS with implementation of the program in this part.
    (d) To assist in the implementation of the program, the Chief may 
waive the applicability of the limitation in section 1001D of the Food 
Security Act of 1985 for participating producers if the Chief determines 
that the waiver is necessary to fulfill the objectives of the program. 
Section 1001D of the Food Security Act of 1985 does not apply to 
eligible partners.
    (e) NRCS will identify in each State a program coordinator who will 
serve as the primary point of contact for programmatic implementation of 
RCPP in that State.
    (f) NRCS will establish guidance to assist eligible partners with 
quantifying conservation benefits of RCPP implementation. Due to the 
diversity of natural resource issues addressed by an RCPP project and 
the diversity of conservation activities that a project may undertake, 
NRCS will work with each partner to develop project-specific outcome 
approach that will be included in the partnership agreement.



Sec.1464.3  Definitions.

    The following definitions will apply to this part and all documents 
issued in accordance with this part, unless specified otherwise:
    Agricultural operation means a parcel or parcels of land whether 
contiguous or noncontiguous, that is--
    (1) Under the effective control of the producer at the time the 
producer applies for a program contract; and
    (2) That is operated by the producer with equipment, labor, 
management, and production, forestry, or cultivation practices that are 
substantially separate from other operations.
    Applicant means a producer who has requested in writing to 
participate in RCPP.
    Beginning farmer or rancher means a person, Indian Tribe, Tribal 
corporation, or legal entity who has not materially and substantially 
operated a farm, ranch, or nonindustrial private forest land (NIPF), or 
who has materially and substantially operated a farm, ranch, or NIPF for 
not more than 10 consecutive years, subject to the following conditions:
    (1) In the case of a contract with an individual, individually or 
with the immediate family, material and substantial participation 
requires that the individual provide substantial day-to-day labor and 
management of the farm or ranch, consistent with the practices in the 
county or State where the farm is located.
    (2) In the case of a contract with an entity or joint operation, all 
members must materially and substantially participate in the operation 
of the farm or ranch, and no member may have materially and 
substantially operated a farm, ranch, or NIPF for more than 10 
consecutive years, and material and substantial participation requires 
that each of the members provide some amount of the management, or labor 
and management necessary for day-to-day activities, such that if each of 
the members did not provide these inputs, operation of the farm or ranch 
would be seriously impaired.
    Chief means the Chief of NRCS, USDA, or designee.
    Conservation benefits means the improvements in the status of 
resource concerns, priority resource concerns, and similar project goals 
resulting from the implementation of eligible activities in an RCPP 
project area.

[[Page 819]]

    Covered program means the--
    (1) Agricultural Conservation Easement Program administered under 7 
CFR part 1468;
    (2) Environmental Quality Incentives Program administered under 7 
CFR part 1466;
    (3) Conservation Stewardship Program administered under 7 CFR part 
1470, except for the Grassland Conservation Initiative set forth in 
section 1240L-1 of the Food Security Act of 1985;
    (4) Healthy Forests Reserve Program administered under 7 CFR part 
625;
    (5) Watershed protection and flood prevention programs administered 
under 7 CFR part 622, except the Watershed Rehabilitation Program set 
forth in 16 U.S.C. 1012; and
    (6) Conservation Reserve Program administered under 7 CFR part 1410.
    Critical conservation area (CCA) means a geographical area 
designated by the Secretary of Agriculture that contains a critical 
conservation condition that can be addressed through the program.
    Effective control means possession of the land by ownership, written 
lease, or other legal agreement and authority to act as decision maker 
for the day-to-day management of the operation from the time of 
application and for the duration of the program contract or applicable 
terms of a supplemental agreement.
    Eligible activity means a practice, activity, land rental, 
agreement, easement, or related conservation measure that is available 
under the statutory authority for a covered program, as determined by 
NRCS.
    Eligible land means any land that NRCS determines is eligible under 
Sec.1464.5.
    Eligible partner means an agency, organization, or other entity 
specified in Sec.1464.5 that NRCS determines the appropriate 
authority, expertise, and resources necessary to carry out partnership 
responsibilities.
    Historically underserved producer means a person, joint operation, 
Indian Tribe, or legal entity who is a beginning farmer or rancher, 
socially disadvantaged farmer or rancher, limited resource farmer or 
rancher, or veteran farmer or rancher.
    Indian Tribe means any Indian Tribe, Band, Nation, Pueblo, or other 
organized group or community, including any Alaska Native village or 
regional or village corporation as defined in or established pursuant to 
the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.) that is 
eligible for the special programs and services provided by the United 
States to Indians because of their status as Indians.
    Joint operation means, as defined in part 1400 of this chapter, a 
general partnership, joint venture, or other similar business 
arrangement in which the members are jointly and severally liable for 
the obligations of the organization.
    Lead partner means an eligible partner who is the primary signatory 
of a partnership agreement with NRCS and is identified as the lead 
partner in that agreement.
    Legal entity means, as defined in part 1400 of this chapter, an 
entity created under Federal or State law that--
    (1) Owns land or an agricultural commodity, product, or livestock; 
or
    (2) Produces an agricultural commodity, product, or livestock.
    Limited resource farmer or rancher means:
    (1) A person who:
    (i) Has direct or indirect gross farm sales not more than the 
current indexed value in each of the previous 2 years (adjusted for 
inflation using the Prices Paid by Farmer Index as compiled by USDA's 
National Agricultural Statistical Service), and
    (ii) Has a total household income at or below the national poverty 
level for a family of four, or less than 50 percent of county median 
household income in each of the previous 2 years (to be determined 
annually using Commerce Department data); or
    (2) A legal entity or joint operation if all individual members 
independently qualify under paragraph (1) of this definition.
    Liquidated damages means a sum of money stipulated that a 
participant agrees to pay NRCS if the participant fails to fulfill the 
terms of the program contract. The sum represents an estimate of the 
expenses incurred by NRCS to service the program contract and reflects 
the difficulties of proof of loss

[[Page 820]]

and the inconvenience or nonfeasibility of otherwise obtaining an 
adequate remedy.
    Natural Resources Conservation Service (NRCS) is an agency of the 
USDA, which has responsibility for administering RCPP using the funds, 
facilities, and authorities of the CCC.
    Nonlead partner means an eligible partner, other than a lead 
partner, who has entered into a supplemental agreement with NRCS 
consistent with the terms of a partnership agreement.
    Nonindustrial private forest land (NIPF) means rural land, as 
determined by NRCS, that has existing tree cover or is suitable for 
growing trees; and is owned by any nonindustrial private individual, 
group, association, corporation, Indian Tribe, acequia, or other private 
legal entity that has definitive decision-making authority over the 
land.
    Participant means a person, legal entity, joint operation, or Indian 
Tribe who has applied for participation and is receiving a financial 
assistance payment or is responsible for implementing the terms and 
conditions of a program contract.
    Partnership agreement means a programmatic agreement between NRCS 
and a lead partner.
    Person means a natural person and does not include a legal entity.
    Priority resource concern means a natural resource concern located 
in a CCA that can be addressed through:
    (1) Water quality improvement, including through reducing erosion, 
promoting sediment control, and addressing nutrient management 
activities affecting large bodies of water of regional, national, or 
international significance;
    (2) Water quantity improvement, including improvement relating to:
    (i) Drought;
    (ii) Ground water, surface water, aquifer, or other water sources; 
or
    (iii) Water retention and flood prevention;
    (3) Wildlife habitat restoration to address species of concern at a 
Federal, State, or local level; and
    (4) Other natural resource improvements, as determined by the Chief, 
within the CCA.
    Producer means a person, legal entity, joint operation, or Indian 
Tribe who NRCS determines is:
    (1) Engaged in agricultural production or forestry management on the 
agricultural operation; or
    (2) The landowner of eligible land for purposes of a program 
contract or associated supplemental agreement, as determined by NRCS.
    Program means the Regional Conservation Partnership Program (RCPP) 
administered by NRCS under this part.
    Program contract means a binding agreement under the program for the 
transfer of assistance from NRCS to the producer to compensate the 
producer for the implementation of eligible activities that specifies 
the rights and obligations of any producer participating in the program.
    Project resource concern means a specific resource concern set out 
in a partnership agreement that is of special importance or significance 
for the purposes of that partnership agreement.
    Proposal means an offer submitted by an eligible partner for 
consideration and ranking for selection by NRCS to enter into a 
partnership agreement.
    RCPP plan of operations means the document that identifies the 
location and timing of eligible activities that the participant agrees 
to implement on eligible land.
    Resource concern means a specific natural resource problem that is 
likely to be addressed successfully through the implementation of the 
eligible activities.
    Socially disadvantaged farmer or rancher means a producer who is a 
member of a group whose members have been subjected to racial or ethnic 
prejudices without regard to its members' individual qualities. For an 
entity, at least 50 percent ownership in the business entity must be 
held by socially disadvantaged individuals.
    State Technical Committee means a committee established by NRCS in a 
State pursuant to 7 CFR part 610, subpart C.
    Supplemental agreement means a legal document between NRCS and an 
eligible lead or nonlead partner that is subject to the terms of a 
partnership agreement and which furthers the purposes of the partnership 
agreement.

[[Page 821]]

    Technical service provider (TSP) means an individual, private-sector 
entity, Indian Tribe, or public agency either:
    (1) Certified pursuant to 7 CFR part 652 and placed on the approved 
list to provide technical services to participants; or
    (2) Selected by USDA to assist in program implementation through a 
supplemental agreement or otherwise through a procurement contract, 
contribution agreement, or cooperative agreement with USDA.
    Veteran farmer or rancher means a producer who meets the definition 
in section 2501(a)(7) of the Food, Agriculture, Conservation, and Trade 
Act of 1990, as amended (7 U.S.C. 2279(a)(7)).



Sec.1464.4  Funding pool allocations.

    (a) Of the funds made available for the program, NRCS will allocate:
    (1) Fifty percent of the funds to projects based on a State or 
multistate competitive process; and
    (2) Fifty percent of the funds to projects for the CCAs designated 
by the Secretary.
    (b) NRCS will allocate funds under the funding pools identified 
under paragraph (a) of this section to projects selected on a 
competitive basis pursuant to partnership agreement proposals submitted 
under the requirements of subpart B of this part.



Sec.1464.5  Program requirements.

    (a) General requirements.
    (1) Program participation is voluntary.
    (2) NRCS and lead partners enter into partnership agreements that 
identify the purposes and scope of RCPP projects under the framework of 
a partnership agreement.
    (3) NRCS and lead partners enter into supplemental agreements to 
facilitate assistance to producers.
    (4) NRCS enters into program contracts with producers to provide 
program assistance to eligible producers to implement eligible 
activities on eligible land.
    (5) NRCS may enter into an alternative funding arrangement with a 
lead partner for the lead partner to deliver program assistance directly 
to producers in accordance with Sec.1464.25 of this part.
    (b) Partner eligibility. An eligible partner may include:
    (1) An agricultural or silvicultural producer association or other 
group of producers;
    (2) A State or unit of local government, including a conservation 
district;
    (3) An Indian Tribe;
    (4) A farmer cooperative;
    (5) An institution of higher education;
    (6) A water district, irrigation district, acequia, rural water 
district or association, or other organization with specific water 
delivery authority to producers on agricultural land;
    (7) A municipal water or wastewater treatment entity;
    (8) An organization or entity with an established history of working 
cooperatively with producers on agricultural land, as determined by the 
Secretary, to address--
    (i) Local conservation priorities related to agricultural 
production, wildlife habitat development, and NIPF management; or
    (ii) Critical watershed-scale soil erosion, water quality, sediment 
reduction, or other natural resource concerns; or
    (9) An eligible entity as identified by NRCS pursuant to 7 CFR part 
1468.
    (c) Producer eligibility. To be eligible to receive payments or 
benefits under the program, each producer must--
    (1) Be in compliance with the highly erodible land and wetland 
conservation provisions found at part 12 of this title;
    (2) Meet the adjusted gross income payment limitations under part 
1400 of this chapter unless waived by the Chief;
    (3) Have effective control of the land;
    (4) Supply information, as required by NRCS, to determine 
eligibility for the program, including but not limited to, information 
that verifies the producer's status as a historically underserved 
producer, compliance with part 12 of this title, and compliance with 
adjusted gross income payment eligibility as established by part 1400 of 
this chapter; and
    (5) For producers operating as a legal entity or joint operation, 
provide a list of all members of the legal entity or joint operation and 
embedded entities

[[Page 822]]

along with each members' tax identification numbers and percentage 
interest in the entity. However, where applicable, American Indians, 
Alaska Natives, and Pacific Islanders may use another unique 
identification number for each individual eligible for payment.
    (d) Eligible land. Land may be considered eligible for enrollment in 
RCPP if NRCS determines that:
    (1) The land is private or Tribal agricultural land, nonindustrial 
private forest land, or associated land on which an eligible activity 
would help achieve the conservation benefits defined for an approved 
project; or
    (2) The land is publicly owned agricultural land or associated land 
and the enrollment of such land is--
    (i) Appropriate for the type of eligible activity, and
    (ii) The eligible activity to be implemented on the public land is 
necessary and will contribute meaningfully to achieving conservation 
benefits consistent with an approved project.
    (e) Eligible activities. (1) In each partnership agreement, NRCS 
will identify the eligible activities that are available to producers 
and landowners through the project. Eligible activities may include land 
management, land rental activities, easements, or watershed type 
projects. Projects may use more than one type of eligible activity.
    (2) NRCS may approve interim conservation practice standards or 
activities if--
    (i) New technologies or management approaches that provide a high 
potential for optimizing conservation benefits have been developed; and
    (ii) The interim conservation practice standard or activity 
incorporates the new technologies and provides financial assistance for 
pilot work to evaluate and assess the performance, efficiency, and 
effectiveness of the new technology or management approach.
    (f) Technical service provision. (1) NRCS may use the services of a 
qualified TSP, including a qualified eligible partner, in meeting its 
responsibilities for technical assistance.
    (2) Producers or eligible partners may use technical services from 
qualified personnel of other Federal, State, and local agencies, Indian 
Tribes, or individuals who are certified as TSPs under 7 CFR part 652.
    (3) Technical services provided by qualified personnel not 
affiliated with USDA may include but are not limited to: Conservation 
planning; conservation practice survey, layout, design, installation, 
and certification; information, education, and training for producers; 
and other program implementation services as identified by NRCS.
    (4) NRCS retains approval authority of work done by non-NRCS 
personnel for the purpose of approving RCPP payments.

[85 FR 8137, Feb. 13, 2020, as amended at 85 FR 15051, Mar. 17, 2020]



                    Subpart B_Partnership Agreements



Sec.1464.20  Proposal procedures.

    (a) NRCS will:
    (1) Periodically announce opportunities through a simplified 
competitive process for eligible partners to submit proposals for 
partnership agreements; and
    (2) Make public the criteria that will be used to evaluate proposals 
for partnership agreements in each announced project selection 
opportunity, which may include whether NRCS will consider alternative 
funding arrangements or grant agreements during the selection 
opportunity or whether proposals seeking alternative funding 
arrangements or grant agreements will have a separate selection 
opportunity. These criteria will relate to four principle categories: 
Impact, partner cash and in-kind contribution, innovation, and project 
management.
    (b) A partnership agreement proposal submitted by the eligible 
partner must include the following:
    (1) The scope of the proposed project;
    (2) A plan for monitoring, evaluating, and reporting on progress 
made toward achieving the project's objectives;
    (3) The estimated RCPP funding and other program resources requested 
for the project including any advance technical assistance for outreach 
in the project area;
    (4) Whether the eligible partner is requesting NRCS to consider the 
proposal for funding under an alternative

[[Page 823]]

funding arrangement or grant agreement under Sec.1464.25;
    (5) Each eligible partner collaborating to achieve project 
objectives, including their roles, responsibilities, capabilities, and 
contribution; and
    (6) Other information NRCS may identify as necessary to evaluate and 
select proposals.



Sec.1464.21  Ranking considerations and proposal selection.

    (a) Final selection. NRCS will rank and select proposals for 
partnership agreements pursuant to the evaluation criteria listed in 
1464.20(a)(2).
    (b) Priority to certain proposals. NRCS may give a higher priority 
to proposals for partnership agreements that--
    (1) Assist producers in meeting or avoiding the need for a natural 
resource regulatory requirement;
    (2) Have a high percentage of producers in the area to be covered by 
the agreement;
    (3) Significantly leverage non-Federal financial and technical 
resources and coordinate with other local, State, or national efforts;
    (4) Build new partnerships with local, State, and private entities 
to include a diversity of stakeholders in the project;
    (5) Deliver a high percentage of applied conservation to achieve 
conservation benefits or address the priority resource concern for a 
designated CCA;
    (6) Implement the project consistent with existing watershed, 
habitat, or other area restoration plans;
    (7) Provide innovation in conservation methods and delivery, 
including outcome-based performance measures and methods; or
    (8) Meet other factors that are important for achieving the purposes 
of the program, as determined by NRCS.
    (c) Proposals in CCAs. (1) NRCS will select proposals for 
partnership agreements within CCAs that address one or more priority 
resource concerns for which the CCA is designated.
    (2) NRCS will identify the designated CCAs and publish the priority 
resource concerns for each CCA.
    (3) NRCS will identify the priority resource concerns and associated 
ranking criteria in any announcement under Sec.1464.20.



Sec.1464.22  Partnership agreements.

    (a) In general. Upon selection of a proposal for partnership 
agreement, NRCS will work with the eligible partner to develop the 
specifics of the partnership agreement. NRCS may offer a reduced amount 
of program assistance from that requested in the proposal for a 
partnership agreement or negotiate other project details.
    (b) Duration. A partnership agreement between NRCS and a lead 
partner will be for a period of time:
    (1) Not to exceed 5 years; or
    (2) That is longer than 5 years if the longer period of time is 
necessary to meet the objectives of the program, as determined by NRCS.
    (c) Extension. A partnership agreement, including a renewal of a 
partnership agreement, may be extended not more than one time for a 
period of time not longer than 12 months, as determined by NRCS.
    (d) Requirements. The partnership agreement between NRCS and a lead 
partner will:
    (1) Specify the scope of a project, including:
    (i) One or more conservation benefits that the project will achieve;
    (ii) The eligible activities on eligible land to be conducted under 
the project to achieve conservation benefits;
    (iii) The implementation timeline for carrying out the project, 
including any interim milestones;
    (iv) The local, State, multistate, or other geographic area covered; 
and
    (v) The planning, outreach, implementation, and assessment to be 
conducted.
    (2) Identify the outreach and education to producers for potential 
participation in the project;
    (3) Authorize the lead partner, at the request of a producer, to act 
on behalf of a producer participating in the project in applying for 
assistance under subpart C of this part;
    (4) Identify the significant contribution to the project costs by 
the lead partner, including any direct or indirect funding or in-kind 
support that will be contributed to help achieve the project objectives;
    (5) Define the conservation benefits and other outcomes to be 
achieved by

[[Page 824]]

the project including the impact to any priority or project resource 
concern;
    (6) Require the lead partner to assess periodically the progress 
made by the project in achieving the defined conservation benefits and 
outcomes;
    (7) Require the lead partner to report to NRCS at the conclusion of 
the project on the project's results and funding leveraged;
    (8) Set forth the total amount of financial and technical assistance 
funding that NRCS will reserve to support project implementation;
    (9) Establish the general terms and conditions of any supplemental 
agreements that NRCS or the lead partner may enter into with nonlead 
partners;
    (10) Identify the terms and conditions under which either NRCS or 
the lead partner may enter into supplemental agreements to further the 
purposes of the partnership agreement;
    (11) Identify the other requirements identified by NRCS; and
    (12) Include any unique requirements if the partnership agreement is 
a grant agreement or alternative funding arrangement.
    (e) Supplemental agreements. NRCS may enter into supplemental 
agreements with a lead partner or a nonlead partner to provide technical 
assistance or to assist producers with implementation of eligible 
activities in the project area as identified in Sec.1464.26.
    (f) Partnership agreement renewal. (1) As determined by NRCS, a 
partnership agreement may be renewed for a period not to exceed 5 years.
    (2) NRCS may agree to renew the partnership agreement through an 
expedited process if--
    (i) The lead partner requests such a renewal; and
    (ii) NRCS determines that the project has met or exceeded project 
objectives as verified by NRCS.
    (3) To facilitate expedited renewal, NRCS may designate a portion of 
available RCPP funding for expedited renewal requests.
    (4) NRCS will not rank expedited renewal requests against new 
proposals.
    (5) Under a renewal of a partnership agreement, the parties may 
request to continue to implement the project as defined in the original 
partnership agreement or expand the scope of the project consistent with 
the objectives and purposes of the original partnership agreement.
    (g) Notification. All eligible partners who submit a proposal for a 
partnership agreement or submit a request to renew a partnership 
agreement will receive notification from NRCS regarding selection or 
nonselection of the project proposal or approval or denial of the 
renewal request.



Sec.1464.23  Funding.

    (a) Except as otherwise provided in this subpart, NRCS will only 
provide technical and financial assistance to producers through program 
contracts as described in subpart C of this part.
    (b) Notwithstanding the restriction set forth in paragraph (a) of 
this section, NRCS may provide technical and financial assistance to a 
partner:
    (1) Where the partnership agreement is funded through an alternative 
funding arrangement or grant agreement under Sec.1464.25; or
    (2) Pursuant to a supplemental agreement executed in furtherance of 
a partnership agreement, as set forth in Sec.1464.26.
    (c) Notwithstanding the restriction set forth in paragraph (a) of 
this section, pursuant to a partnership agreement or supplemental 
agreement, NRCS may provide funding to a partner for technical 
assistance for an eligible purpose, such as:
    (1) Providing outreach and education for potential participation in 
the project;
    (2) Establishing baseline metrics to support the development of the 
assessment required under Sec.1464.22(d)(6); or
    (3) Providing technical assistance to producers.
    (d) Notwithstanding the restriction set forth in paragraph (a) of 
this section, NRCS may enter into third-party contracts or agreements to 
meet its responsibilities under the program using program funding.
    (e) Any funding provided by NRCS under paragraphs (a) through (d) of 
this section will count against the total amount of funding that NRCS 
agreed to provide to the project under the terms of the partnership 
agreement.

[[Page 825]]



Sec.1464.24  Modification, noncompliance, termination, and remedies.

    (a) Modifications. NRCS may modify a partnership agreement, 
including associated supplemental agreements, if--
    (1) The lead partner or, as applicable, the nonlead partner agrees 
to the modification; and
    (2) NRCS determines the modified partnership agreement or associated 
supplemental agreement continues to meet the purposes of the program.
    (b) Noncompliance. In the event of noncompliance with the 
partnership agreement terms, NRCS will provide the lead partner written 
notice as specified in the partnership agreement, and, where 
appropriate, a reasonable opportunity to correct voluntarily the 
noncompliance in accordance with the terms of the partnership agreement.
    (c) Terminations. (1) Lead partners may request that NRCS terminate 
the partnership agreement, provided the request for termination is in 
writing, and includes the reasons for termination.
    (2) NRCS may terminate a partnership agreement if--
    (i) Justified by the reasons provided by the lead partner;
    (ii) NRCS determines that a modification of the partnership 
agreement is necessary to comply with applicable law and the partner 
does not concur with such modification; or
    (iii) The lead partner fails to correct noncompliance with a term of 
the partnership agreement under paragraph (b) of this section.
    (3) A termination may be justified by circumstances beyond the lead 
partners' control that prevents completion of one or more provisions of 
the partnership agreement, such as a natural disaster or other 
circumstances in which NRCS may determine that termination is in the 
public interest.
    (4) If a program agreement is terminated, the lead partner forfeits 
all rights to any remaining technical or financial assistance under the 
partnership agreement.
    (d) Effect on other agreements. Termination of a partnership 
agreement under this section will--
    (1) Not affect the validity of any program contract that was entered 
into within the project area encompassed by the partnership agreement; 
and
    (2) Result in the termination of a supplemental agreement unless 
NRCS determines that the supplemental agreement would continue to 
provide necessary program implementation assistance to producers with 
program contracts or otherwise advance an eligible program activity 
within the project area.
    (e) Refund and right to future assistance. If NRCS terminates a 
partnership agreement due to noncompliance with its terms or conditions, 
the lead partner will forfeit any right to future assistance under the 
partnership agreement and will refund all or part of any payments 
received directly by the lead partner, plus interest.
    (f) Liquidated damages. (1) NRCS may include terms in a partnership 
agreement that allow for the assessment of liquidated damages against 
the lead partner in the event of an intentional breach.
    (2) The amount of any liquidated damages will be set at an amount 
reasonably calculated to reimburse NRCS for its foreseeable losses in 
the event of noncompliance and will not be punitive in nature.



Sec.1464.25  Alternative funding arrangements or grant agreements.

    (a) When the Chief so determines, NRCS may offer to fund a proposal 
through an alternative funding arrangement or grant agreement under this 
section.
    (b) In determining whether to offer to fund a proposal through an 
alternative funding arrangement or grant agreement, the Chief will 
consider the extent to which the proposal:
    (1) Will achieve conservation benefits on a regional or watershed 
scale;
    (2) Involves investments in infrastructure (such as roads, dams, and 
irrigation facilities) related to agricultural or nonindustrial private 
forest production that would benefit multiple producers and address 
natural resource concerns such as drought, wildfire, or water quality 
impairment on the land within the proposal area;
    (3) Addresses natural resource concerns, including the development 
and

[[Page 826]]

implementation of watershed, habitat, or other area restoration plans;
    (4) Uses innovative approaches to leverage the Federal investment 
with private financial mechanisms, such as:
    (i) Provision of performance-based payments to producers, or
    (ii) Support for an environmental market; and
    (5) Otherwise demonstrates that the goals and objectives of the 
program would be more easily achieved by offering to fund the proposal 
through an alternative funding arrangement or grant agreement under this 
section.
    (c) The terms of an alternative funding arrangement or grant 
agreement may be made expressly in the partnership agreement and may 
include providing financial assistance directly to the lead partner or 
to nonlead partners through supplemental agreements.
    (d) NRCS will not enter into more than 15 partnership agreements 
funded through an alternative funding arrangement or grant agreement 
each fiscal year.



Sec.1464.26  Supplemental agreements.

    (a) Authorization. Subject to the conditions in this section and in 
the partnership agreement, NRCS may enter into supplemental agreements 
with a lead partner or a nonlead partner.
    (b) Effect on programmatic agreement. A supplemental agreement may 
not modify the substantive terms of the partnership agreement.
    (c) Technical assistance. (1) NRCS may provide technical assistance 
funds under a supplemental agreement to facilitate the provision of 
technical assistance by the lead partner or nonlead partner to producers 
in the project area.
    (2) Any technical assistance funds obligated under a supplemental 
agreement by NRCS will count against the total amount of technical 
assistance funds that NRCS agreed to provide to the project under the 
terms of the partnership agreement.
    (d) Financial assistance. Based upon eligibility, evaluation, and 
selection criteria developed by NRCS, NRCS may provide financial 
assistance funds under a supplemental agreement if the supplemental 
agreement is:
    (1) To facilitate the conveyance of an easement to an eligible 
entity by a producer;
    (2) To implement an eligible activity that is available under 7 CFR 
part 622, except for the Watershed Rehabilitation Program set forth in 
16 U.S.C. 1012;
    (3) Other situations where a program contract requires the 
integration of a supplemental agreement to facilitate the implementation 
of an eligible activity, as determined by NRCS.
    (e) Term. A supplemental agreement will be for a term that is within 
the term of a partnership agreement unless NRCS determines that the term 
of the supplemental agreement should extend beyond the term of the 
partnership agreement to ensure appropriate assistance to participating 
producers or completion of an eligible activity.
    (f) Noncompliance and remedies. NRCS will incorporate in a 
supplemental agreement:
    (1) The procedures required in the event of a determination that the 
lead partner or nonlead partner is not in compliance with the terms and 
conditions of the supplemental agreement;
    (2) The consequences for failure to remedy noncompliance, including 
termination of the supplemental agreement, the requirement to repay any 
payments received, forfeit any future payments, and the availability of 
liquidated damages;
    (3) The impacts of termination of the supplemental agreement upon 
the partnership agreement or any associated program contract;
    (4) The availability, if any, of administrative review of NRCS 
determinations under Sec.1464.40; and
    (5) Other terms and conditions NRCS determines necessary to ensure 
the effective delivery of program resources to producers.



Sec.1464.27  Third-party contracts or agreements.

    (a) Lead and nonlead partners may employ third-party contracts or 
agreements to fulfill their obligations under a partnership or 
supplemental agreement, subject to approval by the Chief or as allowed 
per the terms of the partnership or supplemental agreement.

[[Page 827]]

    (b) Any costs to a lead or nonlead partner as part of a third-party 
contract or agreement as described in paragraph (a) of this section may 
constitute all or part of a partner contribution described in Sec.
1464.22(d)(4) to the extent that such costs directly relate to 
fulfilling the obligations of a partnership or supplemental agreement, 
as determined by NRCS.
    (c) NRCS may employ third-party contracts or agreements in order to 
meet its responsibilities under the terms of an approved partnership 
agreement, supplemental agreement, or program contract, including but 
not limited to easement acquisition services, implementation services, 
or other goods or services NRCS determines are necessary to meet its 
responsibilities under RCPP.



                       Subpart C_Program Contracts



Sec.1464.30  Application for program contracts and selecting 
applications for funding.

    (a) Evaluation guidelines. In evaluating program contract 
applications, NRCS may take into consideration the following guidelines:
    (1) Any producer who has eligible land in a project area encompassed 
by a partnership agreement may submit an application for participation 
in RCPP.
    (2) To the greatest extent practicable, applications for similar 
eligible activities may be grouped together in ranking pools for 
evaluation and ranking purposes.
    (3) Upon execution of a partnership agreement, NRCS will accept 
producer applications for funding under such agreement throughout the 
fiscal year and may be evaluated and ranked on a continuous or ranking-
period basis.
    (4) NRCS may give priority to applications that are submitted as 
part of a bundle submitted by a lead partner.
    (5) In selecting RCPP applications, NRCS will develop an evaluation 
and ranking process to prioritize eligible applications for funding that 
address the purposes of the project or CCA, including treating the 
identified project or priority resource concerns, as applicable.
    (b) Selection order. (1) NRCS will select eligible applications for 
funding in order of ranking priority taking into account identified 
evaluation periods and ranking pools.
    (2) NRCS may decline to select an eligible application if the 
remaining funding is insufficient to fund that application and NRCS may 
proceed to the next application in ranked order that can be funded with 
available funding.
    (3) NRCS, in consultation with the lead partner, may identify and 
establish in the partnership agreement other limited circumstances that 
may warrant selection of eligible applications outside of a strictly 
applied rank order because such application is critical to the success 
of a project that provides conservation benefits to multiple producers 
or landowners in a community, watershed, or other geographic area.
    (c) Public information. Pursuant to the terms of the partnership 
agreement, NRCS or the lead partner will make available to the public 
sign-up information, including the identification of program and 
priority resource concerns, a listing of eligible activities, payment 
rates for certain eligible activities, State supplemental guidance, and 
contact information for the RCPP State coordinators available to assist 
partners and applicants with the program.
    (d) Applications in CCAs. (1) NRCS will identify the designated CCAs 
and publish priority resource concerns for a CCA project.
    (2) NRCS will select eligible applications for program contracts 
within CCAs that address one or more priority resource concerns for 
which the CCA is designated.
    (3) NRCS will identify the priority resource concerns and associated 
ranking criteria in any announcement under Sec.1464.20.



Sec.1464.31  Program contract requirements.

    (a) Requirement of a program contract. For a producer to receive 
payments, the producer must enter into a program contract and agree to 
the terms and conditions associated with the type of eligible activity 
to be implemented.

[[Page 828]]

    (b) Program contract contents. A program contract will:
    (1) Identify the requirements for participation under RCPP, 
including:
    (i) Contract duration;
    (ii) Maximum Federal payment amounts or rates; and
    (iii) Any other necessary requirements, as determined by NRCS;
    (2) Identify:
    (i) The eligible activities that the participant agrees to 
implement; and
    (ii) The requirements to demonstrate successful implementation of 
the eligible activities;
    (3) Incorporate the RCPP plan of operations, as applicable, which 
includes--
    (i) Identification of eligible activities contained in the program 
contract, including which resource concerns each eligible activity 
addresses;
    (ii) A schedule or timeline for implementation of selected eligible 
activities, as applicable; and
    (iii) Other criteria as determined necessary by NRCS;
    (4) Incorporate provisions to further the purposes of the 
partnership agreement;
    (5) Incorporate all provisions as required by statute or regulation, 
including requirements that the participant will:
    (i) Not conduct any action that would defeat the program's purposes;
    (ii) Refund any program payments received with interest, and forfeit 
any future payments under the program, on the violation of a term or 
condition of the program contract, consistent with the provisions of 
Sec.1464.36; and
    (iii) Supply information if required by NRCS to determine compliance 
with program requirements; and
    (6) Specify any other provision determined necessary or appropriate 
by NRCS to ensure the program purpose is met.
    (c) Payment eligibility. To be eligible to enter into a program 
contract or receive a payment, an applicant or participant must--
    (1) Provide a tax identification number; however, where applicable, 
American Indians, Alaska Natives, and Pacific Islanders may use another 
unique identification number for each individual eligible for payment;
    (2) Indicate, where applicable, the percent interest share in a 
payment that is consistent with operation or ownership shares;
    (3) Comply with the highly erodible land and wetland conservation 
provisions found at part 12 of this title at the time of application and 
throughout the contract term; and
    (4) Be eligible for payments in accordance with part 1400 of this 
chapter, average adjusted gross income limitation, including any waiver 
of these requirements, prior to program contract approval.
    (d) Duplication of payment. (1) Except as otherwise indicated in 
this paragraph, any payments received by a participant from a State, 
private entity, or person for the implementation of one or more eligible 
activities on eligible land will be in addition to the payments provided 
to the participant under this part.
    (2) NRCS will not issue financial assistance to a participant 
through a program contract for eligible activities on eligible land if 
the participant receives payments or other benefits for the same or 
similar eligible activity on the same land under any other conservation 
program administered by USDA.
    (3) NRCS will not provide technical or financial assistance to a 
participant for more than one eligible activity to achieve the same 
resource benefit on the same land during the same time period.



Sec.1464.32  Modifications and transfers of land.

    (a) Modifications. NRCS may modify a program contract, if:
    (1) The parties agree to the modification, and
    (2) NRCS determines the modified program contract continues to meet 
the purposes of the program.
    (b) Notice of loss of effective control. NRCS may terminate an 
entire program contract if, within the time specified in the program 
contract, the participant does not provide NRCS with written notice 
regarding any voluntary or involuntary loss of effective control of any 
acreage under the program contract, which includes changes in the 
participant's ownership structure or corporate form.

[[Page 829]]

    (c) Approval of transfer. NRCS may approve a transfer of a program 
contract if:
    (1) NRCS has documented notice from the current participant that 
identifies the new producer who will take control of the acreage, as 
required in paragraph (e) of this section;
    (2) The current participant transfers rights and responsibilities to 
the new producer;
    (3) The new producer meets program eligibility requirements within a 
reasonable time frame, as determined by NRCS, and agrees to assume the 
rights and responsibilities from the current participant for the acreage 
under the program contract; and
    (4) NRCS determines that the purposes of the program will continue 
to be met despite the current participant's losing effective control of 
all or a portion of the land under contract.
    (d) Payment status. (1) Until NRCS approves the transfer of program 
contract rights, the transferee is not a participant in the program and 
may not receive payment for eligible activities implemented prior to 
NRCS approval of the program contract transfer.
    (2) For program contract payment purposes, NRCS will consider the 
transferor to be the participant to whom payments may be made for 
eligible activities implemented when NRCS approval of the program 
contract transfer is pending.
    (e) Right to terminate. NRCS may not approve a program contract 
transfer and may terminate the program contract in its entirety if NRCS 
determines that the loss of effective control of the land was voluntary, 
the participant's written notification of loss of effective control was 
not provided to NRCS within the specified timeframe, the new producer is 
not eligible or willing to assume responsibilities under the contract, 
or the purposes of the program cannot be met.
    (f) Run with the land. Once an easement deed has been acquired, an 
easement will run with the land and bind all successors and assigns. 
Subordination, modification, exchange, or termination of an easement 
acquired under this part will be consistent with the policies and 
procedures under 7 CFR part 1468.
    (g) Reestablishment. In the event an eligible activity fails through 
no fault of the participant, NRCS may issue payments to reestablish the 
eligible activity, subject to such limitations that NRCS may establish.



Sec.1464.33  Violations and remedies.

    (a) Reasonable notice. In the event of a violation of the program 
contract terms, NRCS will provide the participant written notice as 
specified in the program contract, and, where appropriate, a reasonable 
opportunity to voluntarily correct the violation in accordance with the 
terms of the program contract.
    (b) Voluntary correction. If the participant fails to correct the 
violation of a term of the program contract in the timeframe specified 
by NRCS, NRCS may terminate the program contract or require modification 
as a condition to keep the program contract in effect.
    (c) Refund and right to future assistance. If NRCS terminates a 
program contract due to a violation of its terms or conditions, the 
participant will forfeit any right to future assistance under the 
program contract and will refund all or part of any payments received by 
the participant, plus interest.
    (d) Liquidated damages. (1) NRCS may include terms in a program 
contract that allow for the assessment of liquidated damages in the 
event of a violation.
    (2) The amount of any liquidated damages will be set at an amount 
reasonably calculated to reimburse NRCS for its foreseeable losses in 
the event of a violation by the participant and will not be punitive in 
nature.
    (3) NRCS will enforce a liquidated damage provision if the Chief 
determines doing so is in the best interests of RCPP.
    (e) Hardships. (1) NRCS may allow a participant in a program 
contract terminated in accordance with the provisions of paragraph (b) 
of this section to retain a portion of any payments received appropriate 
to the effort the participant has made to comply with the program 
contract, or in cases of hardship, where NRCS determines that forces 
beyond the participant's control

[[Page 830]]

prevented compliance with the program contract.
    (2) The condition that is the basis for the participant's inability 
to comply with the program contract must not have existed at the time 
the program contract was executed by the participant.
    (3) If a participant believes that such a hardship condition exists, 
the participant may submit a written request to NRCS for relief pursuant 
to this paragraph and any such request will contain documentation 
sufficient for NRCS to determine that this hardship condition exists.
    (f) Death, incompetency, disappearance. In the case of death, 
incompetency, or disappearance of any participant, NRCS may, as 
identified in the program contract, terminate the contract, make any 
payments due under this part pursuant to guidance under applicable 
provisions of parts 707 and 1400 of this title (including payment to 
successor(s)), or take any further action that the Chief determines is 
fair and reasonable in light of all of the circumstances.
    (g) Administrative errors. NRCS reserves the right to correct any 
and all errors in entering data or the results of computations in a 
program contract. If a participant does not agree to such corrections, 
NRCS will terminate the program contract.



                    Subpart D_General Administration



Sec.1464.40  Appeals.

    (a) Participants under program contracts. A participant may obtain 
administrative review of an adverse decision under RCPP in accordance 
with parts 11 and 614 of this title. Any and all determination in 
matters of general applicability, such as payment rates, the designation 
of identified program or priority resource concerns, and eligible 
activities are not subject to appeal.
    (b) Lead partners and nonlead partners under partnership or 
supplemental agreements.
    (1) A lead partner or nonlead partner may obtain a review of any 
administrative determination concerning eligibility as a partner under 
the program or eligibility for financial assistance payments under an 
agreement that obligated financial assistance funds utilizing the 
administrative appeal regulations provided in 7 CFR parts 11 and 614.
    (2) NRCS provision of technical assistance funds under a partnership 
agreement or supplemental agreement are not subject to administrative 
review as the provision of such funds are to assist NRCS with its 
implementation of the program consistent with 16 U.S.C. 3842 and are not 
program payments or benefits to a lead partner or nonlead partner.



Sec.1464.41  Compliance with regulatory measures.

    Participants who implement eligible activities will be responsible 
for obtaining the authorities, rights, easements, permits, or other 
approvals necessary for their implementation consistent with applicable 
statutes and regulations. Participants will be responsible for 
compliance with all laws and for all effects or actions resulting from 
the participant's performance under the contract.



Sec.1464.42  Access to agricultural operation or tract.

    Any authorized NRCS representative will have the right to enter an 
agricultural operation or tract of land for the purposes of determining 
eligibility, conducting ranking and due diligence activities, and for 
ascertaining the accuracy of any representations related to agreement or 
contract performance. Access will include the right to provide technical 
assistance, determine eligibility, conduct ranking and onsite 
inspections prior to execution of an agreement or contract, inspect any 
actions undertaken under the agreement or contract, and collect 
information necessary to evaluate agreement or contract performance, as 
specified in the agreement or contract. The NRCS representative will 
attempt to contact the applicant or participant prior to exercising this 
provision.



Sec.1464.43  Equitable relief.

    (a) If a participant relied upon the advice or action of NRCS and 
did not know, or have reason to know, that the

[[Page 831]]

action or advice was improper or erroneous, the participant may be 
eligible for equitable relief under 7 CFR part 635; however, the 
financial or technical liability for any action by a participant that 
was taken based on the advice of a TSP will remain with the TSP and will 
not be assumed by NRCS.
    (b) If a participant has been found in violation of a program 
requirement through failure to comply fully with that requirement, the 
participant may be eligible for equitable relief under 7 CFR part 635.



Sec.1464.44  Offsets and assignments.

    (a) Except as provided in paragraph (b) of this section, any payment 
or portion thereof to any person, legal entity, joint operation, or 
Indian Tribe will be made without regard to questions of title to the 
payment under State law and without regard to any claim or lien against 
the crop, or proceeds thereof, in favor of the owner or any other 
creditor except agencies of the U.S. Government. The regulations 
governing offsets and withholdings found at part 1403 of this chapter 
will apply to contract payments.
    (b) Any person, legal entity, Indian Tribe, eligible entity, or 
other party entitled to any cash payment under this program may assign 
the right to receive such cash payments, in whole or in part.



Sec.1464.45  Misrepresentation and scheme or device.

    (a) A person, legal entity, joint operation, or Indian Tribe that is 
determined to have erroneously represented any fact affecting a program 
determination made in accordance with this part will not be entitled to 
payments under RCPP and must refund to NRCS all RCPP payments, plus 
interest, determined in accordance with part 1403 of this chapter.
    (b) A participant will lose all interest in all contracts or 
agreements with NRCS and will refund to NRCS all payments, plus interest 
determined in accordance with part 1403 of this chapter, received by 
such participant with respect to all contracts and agreements if it is 
determined that the participant has knowingly:
    (1) Adopted any scheme or device that tends to defeat the purpose of 
the program;
    (2) Made any fraudulent representation to NRCS;
    (3) Adopted any scheme or device for the purpose of depriving any 
tenant or sharecropper of the payments to which such person would 
otherwise be entitled under the program; or
    (4) Misrepresented any fact affecting a program determination.
    (c) If NRCS determines that a participant has violated the terms of 
a program contract, a lead partner has violated the terms of a 
partnership agreement, or a lead partner or nonlead partner has violated 
the terms of a supplemental agreement, NRCS may determine that the 
severity of the violation renders the participant, lead partner, or 
nonlead partner, respectively, ineligible for future NRCS conservation 
program consideration in accordance with applicable suspension and 
debarment regulations.



Sec.1464.46  Environmental credits for conservation improvements.

    NRCS recognizes that environmental benefits will be achieved by 
implementing eligible activities funded through RCPP, and a participant 
may obtain environmental credits as a result of implementing additional 
eligible activities through an environmental service market if one of 
the purposes of the market is the facilitation of additional 
conservation benefits that are consistent with the purposes of a program 
contract or supplemental agreement. NRCS asserts no direct or indirect 
interest on these credits. However, NRCS retains the authority to ensure 
that operation and maintenance (O&M) requirements for RCPP-funded 
eligible activities are met. Where the non-RCPP funded additional 
eligible activities may impact the land under a program contract or 
supplemental agreement, producers and participants are highly encouraged 
to request an O&M compatibility determination from NRCS prior to 
entering into any environmental credit agreements.

[[Page 832]]



PART 1465_AGRICULTURAL MANAGEMENT ASSISTANCE--Table of Contents



                      Subpart A_General Provisions

Sec.
1465.1 Purposes and applicability.
1465.2 Administration.
1465.3 Definitions.
1465.4 National priorities.
1465.5 Program requirements.
1465.6 AMA plan of operations.
1465.7 Conservation practices.
1465.8 Technical services provided by qualified personnel not affiliated 
          with USDA.

                           Subpart B_Contracts

1465.20 Applications for participation and selecting applications for 
          contracting.
1465.21 Contract requirements.
1465.22 Conservation practice operation and maintenance.
1465.23 Payments.
1465.24 Contract modifications, extensions, and transfers of land.
1465.25 Contract violations and terminations.

                    Subpart C_General Administration

1465.30 Appeals.
1465.31 Compliance with regulatory measures.
1465.32 Access to operating unit.
1465.33 Equitable relief.
1465.34 Offsets and assignments.
1465.35 Misrepresentation and scheme or device.
1465.36 Environmental services credits for conservation improvements.

    Authority: 7 U.S.C. 1524(b).

    Source: 74 FR 64595, Dec. 8, 2009, unless otherwise noted.



                      Subpart A_General Provisions



Sec.1465.1  Purposes and applicability.

    Through the Agricultural Management Assistance program (AMA), the 
Natural Resources Conservation Service (NRCS) provides financial 
assistance funds annually to producers in 16 statutorily designated 
States to: Construct or improve water management structures or 
irrigation structures; plant trees to form windbreaks or to improve 
water quality; and mitigate risk through production diversification or 
resource conservation practices including soil erosion control, 
integrated pest management, or the transition to organic farming. AMA is 
applicable in Connecticut, Delaware, Hawaii, Maine, Maryland, 
Massachusetts, Nevada, New Hampshire, New Jersey, New York, 
Pennsylvania, Rhode Island, Utah, Vermont, West Virginia, and Wyoming.



Sec.1465.2  Administration.

    (a) Administration and implementation of AMA's conservation 
provisions for the Commodity Credit Corporation (CCC) is assigned to 
NRCS, using the funds, facilities, and authorities of the CCC. 
Accordingly, where NRCS is mentioned in this part, it also refers to the 
CCC's funds, facilities, and authorities, where applicable.
    (b) NRCS will:
    (1) Provide overall management and implementation leadership for 
AMA;
    (2) Establish policies, procedures, priorities, and guidance for 
implementation;
    (3) Establish payment limits;
    (4) Determine eligible practices;
    (5) Develop and approve AMA plans of operation and contracts with 
selected participants;
    (6) Provide technical leadership for implementation, quality 
assurance, and evaluation of performance;
    (7) Make AMA allocation and contract funding decisions; and
    (8) Issue payments for completed conservation practices.
    (c) No delegation in this part to lower organizational levels will 
preclude the Chief of NRCS from determining any issues arising under 
this part or from reversing or modifying any determination made under 
this part.



Sec.1465.3  Definitions.

    The following definitions apply to this part and all documents used 
in accordance with this part, unless specified otherwise:
    Agricultural land means cropland, grassland, rangeland, pasture, and 
other agricultural land on which agricultural or forest-related products 
or livestock are produced. Other agricultural lands may include cropped 
woodland, marshes, incidental areas included in the agricultural 
operation, and other types of agricultural land used for production of 
livestock.
    Agricultural operation means a parcel or parcels of land whether 
contiguous

[[Page 833]]

or noncontiguous, which the producer is listed as the operator or owner/
operator in the Farm Service Agency (FSA) record system, which is under 
the effective control of the producer at the time the producer applies 
for a contract, and which is operated by the producer with equipment, 
labor, management and production, forestry, or cultivation practices 
that are substantially separate from other operations.
    AMA plan of operations (APO) means the document that identifies the 
location and timing of conservation practices that the participant 
agrees to implement on eligible land in order to address the resource 
concerns and program purposes. The APO is part of the AMA contract.
    Applicant means a person, legal entity, joint operation, or Indian 
Tribe that has an interest in an agricultural operation, as defined in 7 
CFR part 1400, who has requested in writing to participate in AMA.
    Beginning farmer or rancher means a person or legal entity who:
    (1) Has not operated a farm or ranch, or who has operated a farm or 
ranch for not more than 10 consecutive years. This requirement applies 
to all members of an entity who will materially and substantially 
participate in the operation of the farm or ranch.
    (2) In the case of a contract with an individual, individually, or 
with the immediate family, material and substantial participation 
requires that the individual provide substantial day-to-day labor and 
management of the farm or ranch consistent with the practices in the 
county or State where the farm or ranch is located.
    (3) In the case of a contract with an entity or joint operation, all 
members must materially and substantially participate in the operation 
of the farm or ranch. Material and substantial participation requires 
that each of the members provide some amount of the management, or labor 
and management necessary for day-to-day activities, such that if each of 
the members did not provide these inputs, operation of the farm or ranch 
would be seriously impaired.
    Chief means the Chief of NRCS, United States Department of 
Agriculture (USDA), or designee.
    Conservation district means any district or unit of State, Tribal, 
or local government formed under State, Tribal, or territorial law for 
the express purpose of developing and carrying out a local soil and 
water conservation program. Such district or unit of government may be 
referred to as a ``conservation district,'' ``soil conservation 
district,'' ``soil and water conservation district,'' ``resource 
conservation district,'' ``natural resource district,'' ``land 
conservation committee,'' or similar name.
    Conservation practice means one or more conservation improvements 
and activities, including structural practices, land management 
practices, vegetative practices, forest management, and other 
improvements that achieve program purposes.
    Contract means a legal document that specifies the rights and 
obligations of any participant accepted into the program. An AMA 
contract is an agreement for the transfer of assistance from USDA to the 
participant to share in the costs of applying conservation practices.
    Designated conservationist means an NRCS employee whom the State 
Conservationist has designated as responsible for AMA administration in 
a specific area.
    Historically underserved producer means an eligible person, joint 
operation, or legal entity who is a beginning farmer or rancher, 
socially disadvantaged farmer or rancher, limited resource farmer or 
rancher, or nonindustrial private forest landowner who meets the 
beginning, socially disadvantaged, or limited resource qualifications 
set forth in this section.
    Indian Tribe means any Indian Tribe, band, nation, or other 
organized group or community, including any Alaska Native village, or 
regional or village corporation as defined in or established pursuant to 
the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.) that is 
eligible for the special programs and services provided by the United 
States to Indians because of their status as Indians.
    Indian land is an inclusive term describing all lands held in trust 
by the United States for individual Indians or Tribes, or all lands, 
titles to which are

[[Page 834]]

held by individual Indians or Tribes, subject to Federal restrictions 
against alienation or encumbrance, or all lands which are subject to the 
rights of use, occupancy, and benefit of certain Tribes. For purposes of 
this part, the term Indian land also includes land for which the title 
is held in fee status by Indian Tribes and the United States Government-
owned land under the Bureau of Indian Affairs (BIA) jurisdiction.
    Joint operation means, as defined in 7 CFR part 1400, a general 
partnership, joint venture, or other similar business arrangement in 
which the members are jointly and severally liable for the obligations 
of the organization.
    Legal entity means, as defined in 7 CFR part 1400, an entity created 
under Federal or State law that: (1) Owns land or an agricultural 
commodity, product, or livestock; or (2) produces an agricultural 
commodity, product, or livestock.
    Lifespan means the period of time in which a conservation practice 
should be operated and maintained and used for the intended purpose.
    Limited resource farmer or rancher means:
    (1) A person with direct or indirect gross farm sales of not more 
than $155,200 in each of the previous 2 years (adjusted for inflation 
using the Prices Paid by Farmer Index as compiled by the National 
Agricultural Statistics Service), and
    (2) Has a total household income at or below the national poverty 
level for a family of four, or less than 50 percent of county median 
household income in each of the previous 2 years (to be determined 
annually using Commerce Department data).
    Liquidated damages means a sum of money stipulated in the AMA 
contract that the participant agrees to pay NRCS if the participant 
fails to adequately complete the terms of the contract. The sum 
represents an estimate of the technical assistance expenses incurred to 
service the contract and reflects the difficulties of proof of loss and 
the inconvenience or non-feasibility of otherwise obtaining an adequate 
remedy.
    Livestock means all animals produced on farms and ranches, as 
determined by the Chief.
    Natural Resources Conservation Service is an agency of USDA which 
has responsibility for administering AMA using the funds, facilities, 
and authorities of the CCC.
    Nonindustrial private forest land means rural land that has existing 
tree cover or is suitable for growing trees and is owned by any 
nonindustrial private individual, group, association, corporation, 
Indian Tribe, or other private legal entity that has definitive 
decision-making authority over the land.
    Operation and maintenance means work performed by the participant to 
keep the applied conservation practice functioning for the intended 
purpose during the conservation practice lifespan. Operation includes 
the administration, management, and performance of non-maintenance 
actions needed to keep the completed practice safe and functioning as 
intended. Maintenance includes work to prevent deterioration of the 
practice, repairing damage, or replacement of the practice to its 
original condition if one or more components fail.
    Operation and maintenance (O&M) agreement means the document that, 
in conjunction with the APO, specifies the operation and maintenance 
responsibilities of the participants for conservation practices 
installed with AMA assistance.
    Participant means a person, legal entity, joint operation, or Indian 
Tribe that is receiving payment or is responsible for implementing the 
terms and conditions of an AMA contract.
    Payment means the financial assistance provided to the participant 
based on the estimated costs incurred in performing or implementing 
conservation practices, including costs for planning, design, materials, 
equipment, installation, labor, maintenance, management, or training, as 
well as the estimated income foregone by the producer for the designated 
conservation practices.
    Person means, as defined in 7 CFR part 1400, an individual, natural 
person and does not include a legal entity.
    Producer means a person, legal entity, joint operation, or Indian 
Tribe that has an interest in the agricultural

[[Page 835]]

operation, according to 7 CFR part 1400, or who is engaged in 
agricultural production or forestry management.
    Resource concern means a specific natural resource problem that 
represents a significant concern in a State or region and is likely to 
be addressed successfully through the implementation of the conservation 
practices by participants.
    Secretary means the Secretary of USDA.
    Socially disadvantaged farmer or rancher means a farmer or rancher 
who has been subjected to racial or ethnic prejudices because of their 
identity as a member of a group without regard to their individual 
qualities.
    State Conservationist means the NRCS employee authorized to direct 
and supervise NRCS activities in a State, Caribbean Area, or Pacific 
Islands Area.
    Structural practice means a conservation practice, including a 
vegetative practice, that involves establishing, constructing, or 
installing a site-specific measure to conserve and protect a resource 
from degradation, or improve soil, water, air, or related natural 
resources in the most cost-effective manner. Examples include, but are 
not limited to, animal waste management facilities, terraces, grassed 
waterways, tailwater pits, livestock water developments, contour grass 
strips, filterstrips, critical area plantings, tree plantings, 
establishment or improvement of wildlife habitat, and capping of 
abandoned wells.
    Technical assistance means technical expertise, information, and 
tools necessary for the conservation of natural resources on land active 
in agricultural, forestry, or related uses. The term includes the 
following:
    (1) Technical services provided directly to farmers, ranchers, and 
other eligible entities, such as conservation planning, technical 
consultation, and assistance with design and implementation of 
conservation practices; and
    (2) Technical infrastructure, including activities, processes, 
tools, and agency functions needed to support delivery of technical 
services, such as technical standards, resource inventories, training, 
data, technology, monitoring, and effects analyses.
    Technical Service Provider (TSP) means an individual, private-sector 
entity, or public agency certified by NRCS to provide technical services 
to program participants or in lieu of, or on behalf of NRCS.



Sec.1465.4  National priorities.

    (a) The Chief, with advice from State Conservationists, will 
identify national priorities to achieve the conservation objectives of 
AMA.
    (b) National priorities will be used to guide annual funding 
allocations to States. (c) State Conservationists will use national 
priorities in conjunction with State and local priorities to prioritize 
and select AMA applications for funding.
    (d) NRCS will undertake periodic reviews of the national priorities 
and the effects of program delivery at the State and local levels to 
adapt the program to address emerging resource issues.



Sec.1465.5  Program requirements.

    (a) Participation in AMA is voluntary. The participant, in 
cooperation with the local conservation district, applies for practice 
installation for the agricultural operation. NRCS provides payments 
through contracts to apply needed conservation practices within a time 
schedule specified in the APO.
    (b) The Chief determines the funds available for financial 
assistance according to the purpose and projected cost for which the 
financial assistance is provided in a fiscal year. The Chief allocates 
the funds available to carry out AMA in consideration of national 
priorities established under Sec.1465.4.
    (c) To be eligible to participate in AMA, an applicant must:
    (1) Own or operate an agricultural operation within an applicable 
State, as listed in 1465.1;
    (2) Provide NRCS with written evidence of ownership or legal control 
for the life of the proposed contract, including the O&M agreement. An 
exception may be made by the Chief:
    (i) In the case of land allotted by the BIA, Tribal land, or other 
instances in which the Chief determines that there is sufficient 
assurance of control; or

[[Page 836]]

    (ii) If the applicant is a tenant of the land involved in 
agricultural production, the applicant will provide NRCS with the 
written concurrence of the landowner in order to apply a structural 
practice(s);
    (3) Submit an application form NRCS-CPA-1200;
    (4) Agree to provide all information to NRCS determined to be 
necessary to assess the merits of a proposed project and to monitor 
contract compliance;
    (5) Provide a list of all members of the legal entity and embedded 
entities along with members' tax identification numbers and percentage 
interest in the entity. Where applicable, American Indians, Alaska 
Natives, and Pacific Islanders may use another unique identification 
number for each individual eligible for payment;
    (6) With regard to contracts with Indian Tribes or Indians 
represented by the BIA, payments if a BIA or Tribal official certify in 
writing that no one individual, directly or indirectly, will receive 
more than the payment limitation. The Tribal entity must also provide, 
annually, a listing of individuals and payments made by social security 
or tax identification number or other unique identification number, 
during the previous year for calculation of overall payment limitations. 
The BIA or Tribal entity must also provide, at the request of NRCS, 
proof of payments made to the person or legal entity that incurred costs 
or sacrificed income related to conservation practice implementation.
    (7) Supply other information, as required by NRCS, to determine 
payment eligibility as established by 7 CFR part 1400, Adjusted Gross 
Income;
    (8) With regard to any participant that utilizes a unique 
identification number as an alternative to a tax identification number, 
the participant will utilize only that identifier for any and all other 
AMA contracts to which the participant is a party. Violators will be 
considered to have provided fraudulent representation and be subject to 
full penalties of Sec.1465.25;
    (9) States, political subdivisions, and entities thereof will not be 
persons eligible for payment. Any cooperative association of producers 
that markets commodities for producers will not be considered to be a 
person eligible for payment;
    (10) Be in compliance with the terms of all other USDA-administered 
conservation program agreements to which the participant is a party; and
    (11) Develop and agree to comply with an APO and O&M agreement, as 
described in Sec.1465.3.
    (d) Land may only be considered for enrollment in AMA if NRCS 
determines that the land is:
    (1) Privately owned land;
    (2) Publicly owned land where:
    (i) The land is a working component of the participant's 
agricultural and forestry operation; and
    (ii) The participant has control of the land for the term of the 
contract; and
    (iii) The conservation practices to be implemented on the public 
land are necessary and will contribute to an improvement in the 
identified resource concern; or
    (3) The land is Indian land.

[74 FR 64595, Dec. 8, 2009, as amended at 76 FR 19684, Apr. 8, 2011; 83 
FR 23209, May 18, 2018]



Sec.1465.6  AMA plan of operations.

    (a) All conservation practices in the APO must be approved by NRCS 
and developed and carried out in accordance with the applicable NRCS 
technical guidance.
    (b) The participant is responsible for implementing the APO.
    (c) The APO must include:
    (1) A description of the participant's specific conservation and 
environmental objectives to be achieved;
    (2) To the extent practicable, the quantitative or qualitative goals 
for achieving the participant's conservation and environmental 
objectives;
    (3) A description of one or more conservation practices in the 
conservation system, including conservation planning, design, or 
installation activities to be implemented to achieve the conservation 
and environmental objectives;
    (4) A description of the schedule for implementing the conservation 
practices, including timing, sequence, operation, and maintenance; and
    (5) Information that will enable evaluation of the effectiveness of 
the plan

[[Page 837]]

in achieving the environmental objectives.
    (d) An APO may be modified in accordance with Sec.1465.24.



Sec.1465.7  Conservation practices.

    (a) The State Conservationist will determine the conservation 
practices eligible for AMA payments. To be considered eligible 
conservation practices, the practices must meet the purposes of the AMA 
as set out in Sec.1465.1. A list of eligible practices will be 
available to the public.
    (b) The APO includes the schedule of operations, activities, and 
payment rates of the practices needed to solve identified natural 
resource concerns.



Sec.1465.8  Technical services provided by qualified personnel not
affiliated with USDA.

    (a) NRCS may use the services of qualified TSPs in performing its 
responsibilities for technical assistance.
    (b) Participants may use technical services from qualified personnel 
of other Federal, State, local agencies, Indian Tribes, or individuals 
who are certified as TSPs by NRCS.
    (c) Technical services provided by qualified personnel not 
affiliated with USDA may include, but are not limited to: conservation 
planning; conservation practice survey, layout, design, installation, 
and certification; and information, education, and training for 
producers, and related technical services as defined in 7 CFR part 652.
    (d) NRCS retains approval authority of work done by non-NRCS 
personnel for the purpose of approving AMA payments.



                           Subpart B_Contracts



Sec.1465.20  Applications for participation and selecting applications
for contracting.

    (a) Any producer who has eligible land may submit an application for 
participation in AMA at a USDA service center. Producers who are members 
of a joint operation will file a single application for the joint 
operation.
    (b) NRCS will accept applications throughout the year. The State 
Conservationist will distribute information on the availability of 
assistance, national priorities, and the State-specific goals. 
Information will be provided that explains the process to request 
assistance.
    (c) The State Conservationist will develop ranking criteria and a 
ranking process to select applications, taking into account national, 
State, Tribal, and local priorities.
    (d) The State Conservationist, or designated conservationist, using 
a locally-led process will evaluate, rank, and select applications for 
contracting based on the State-developed ranking criteria and ranking 
process.
    (e) The State Conservationist, or designated conservationist, will 
work with the applicant to collect the information necessary to evaluate 
the application using the ranking criteria.



Sec.1465.21  Contract requirements.

    (a) In order for a participant to receive payments, the participant 
will enter into a contract agreeing to implement one or more eligible 
conservation practices. Costs for technical services may be included in 
the contract.
    (b) An AMA contract will:
    (1) Encompass all portions of an agricultural operation receiving 
AMA assistance;
    (2) Be for a duration of not more than 10 years;
    (3) Incorporate all provisions required by law or statute, including 
participant requirements to:
    (i) Not conduct any practices on the agricultural operation that 
would tend to defeat the purposes of the contract according to Sec.
1465.25;
    (ii) Refund any AMA payments received with interest, and forfeit any 
future payments under AMA, on the violation of a term or condition of 
the contract, consistent with the provisions of Sec.1465.25;
    (iii) Refund all AMA payments received on the transfer of the right 
and interest of the producer in land subject to the contract, unless the 
transferee of the right and interest agrees to assume all obligations, 
including operation and maintenance of the AMA contract's conservation 
practices, consistent with the provisions of Sec.1465.24; and

[[Page 838]]

    (iv) Supply information as required by NRCS to determine compliance 
with the contract and requirements of AMA.
    (4) Specify the participant's requirements for operation and 
maintenance of the applied conservation practices consistent with the 
provisions of Sec.1465.22; and
    (5) Specify any other provision determined necessary or appropriate 
by NRCS.
    (c) The participant must apply the practice(s) according to the 
schedule set out in the APO.

[74 FR 64595, Dec. 8, 2009, as amended at 79 FR 44641, Aug. 1, 2014]



Sec.1465.22  Conservation practice operation and maintenance.

    (a) The contract will incorporate the O&M agreement that addresses 
the operation and maintenance of the conservation practices applied 
under the contract.
    (b) NRCS expects the participant to operate and maintain each 
conservation practice installed under the contract for its intended 
purpose for the conservation practice lifespan as specified in the O&M 
agreement.
    (c) NRCS may periodically inspect the conservation practice(s) 
during the contract duration to ensure that operation and maintenance 
requirements are being carried out, and that the conservation practice 
is fulfilling its intended objectives.
    (d) Conservation practices installed before the contract execution, 
but included in the contract to obtain the environmental benefits agreed 
upon, must be operated and maintained as specified in the contract and 
O&M agreement.
    (e) If NRCS finds during the contract that a participant is not 
operating and maintaining practices in an appropriate manner, NRCS may 
terminate and request a refund of payments made for that conservation 
practice under the contract.
    (f) In the event a conservation practice fails through no fault of 
the participant, the State Conservationist may issue payments to re-
establish the conservation practice, at the rates established in 
accordance with Sec.1465.23, provided such payments do not exceed the 
payment limitation requirements as set forth in Sec.1465.23.



Sec.1465.23  Payments.

    (a) The Federal share of payments to a participant will be:
    (1) Up to 75 percent of the estimated incurred cost or 100 percent 
of the estimated income foregone of an eligible practice, except as 
provided in (a)(2) of this section.
    (2) In the case of historically underserved producers, the payment 
rate will be the applicable rate and an additional rate that is not less 
than 25 percent above the applicable rate, provided that this increase 
does not exceed 90 percent of the estimated incurred costs or estimated 
income foregone.
    (3) In no instance will the total financial contributions for an 
eligible practice from other sources exceed 100 percent of the estimated 
incurred cost of the practice.
    (b) Participants may contribute their portion of the estimated costs 
of practices through in-kind contributions, including labor and 
materials, providing the materials contributed meet the NRCS standard 
and specifications for the practice being installed.
    (c) Payments for practices applied prior to application or contract 
approval--
    (1) Payments will not be made to a participant for a conservation 
practice that was applied prior to application for the program.
    (2) Payments will not be made to a participant for a conservation 
practice that was initiated or implemented prior to contract approval, 
unless the participant obtained a waiver from the State Conservationist, 
or designated conservationist, prior to practice implementation.
    (d) The total amount of payments paid to a person or legal entity 
under this part may not exceed $50,000 for any fiscal year.
    (e) For purposes of applying the payment limitations provided for in 
this section, NRCS will use the provisions in 7 CFR part 1400, Payment 
Limitation and Payment Eligibility.
    (f) A participant will not be eligible for payments for conservation 
practices on eligible land if the participant

[[Page 839]]

receives payments or other benefits for the same practice on the same 
land under any other conservation program administered by USDA.
    (g) The participant and NRCS must certify that a conservation 
practice is completed in accordance with the contract before NRCS will 
approve any payment.
    (h) Subject to fund availability, the payment rates for conservation 
practices scheduled after the year of contract obligation may be 
adjusted to reflect increased costs.



Sec.1465.24  Contract modifications, extensions, and transfers of land.

    (a) The participant and NRCS may modify a contract if both parties 
agree to the contract modification, the APO is revised in accordance 
with NRCS requirements, and the designated conservationist approves the 
modified contract.
    (b) It is the participant's responsibility to notify NRCS when he or 
she either anticipates the voluntary or involuntary loss of control of 
the land.
    (c) The participant and NRCS may mutually agree to transfer a 
contract to another party.
    (1) To receive an AMA payment, the transferee must be determined by 
NRCS to be eligible to participate in AMA and will assume full 
responsibility under the contract, including the O&M agreement for those 
conservation practices already installed and those conservation 
practices to be installed as a condition of the contract.
    (2) With respect to any and all payment owed to participants who 
wish to transfer ownership or control of land subject to a contract, the 
division of payment will be determined by the original party and the 
party's successor. In the event of a dispute or claim on the 
distribution of payments, NRCS may withhold payments without the accrual 
of interest pending a settlement or adjudication on the rights to the 
funds.
    (d) NRCS may require a participant to refund all or a portion of any 
assistance earned under AMA if the participant sells or loses control of 
the land under an AMA contract, and the successor in interest is not 
eligible or refuses to accept future payments to participate in the AMA 
or refuses to assume responsibility under the contract.
    (e) The contract participants will be jointly and severally 
responsible for refunding the payments with applicable interest pursuant 
to paragraph (d) of this section.



Sec.1465.25  Contract violations and termination.

    (a) If NRCS determines that a participant is in violation of the 
terms of a contract, O&M agreement, or other documents incorporated into 
the contract, NRCS will give the participant notice and 60 days, unless 
otherwise determined by the State Conservationist, to correct the 
violation and comply with the terms of the contract and attachments 
thereto. If a participant continues in violation, the State 
Conservationist may terminate the AMA contract.
    (b) Notwithstanding the provisions of (a) of this section, a 
contract termination will be effective immediately upon a determination 
by the State Conservationist that the participant has submitted false 
information or filed a false claim, or engaged in any act, scheme, or 
device for which a finding of ineligibility for payments is permitted 
under the provisions of Sec.1465.35, or in a case in which the actions 
of the party involved are deemed to be sufficiently purposeful or 
negligent to warrant a termination without delay.
    (c) If NRCS terminates a contract, the participant will forfeit all 
rights to future payments under the contract and refund all or part of 
the payments received, plus interest. Participants violating AMA 
contracts may be determined ineligible for future NRCS-administered 
conservation program funding.
    (1) The State Conservationist may require only a partial refund of 
the payments received if the State Conservationist determines that a 
previously installed conservation practice can function independently 
and is not affected by the violation or the absence of other 
conservation practices that would have been installed under the 
contract.
    (2) If NRCS terminates a contract due to breach of contract, or the 
participant voluntarily terminates the

[[Page 840]]

contract before any contractual payments have been made, the participant 
will forfeit all rights for further payments under the contract and will 
pay such liquidated damages as prescribed in the contract. The State 
Conservationist will have the option to waive the liquidated damages 
depending upon the circumstances of the case.
    (i) When making all contract termination decisions, NRCS may reduce 
the amount of money owed by the participant by a proportion that 
reflects the good faith effort of the participant to comply with the 
contract or the existence of hardships beyond the participant's control 
that have prevented compliance with the contract. If the participant 
claims hardship, that claim must be well documented and cannot have 
existed when the applicant applied for participation in the program.
    (ii) The participant may voluntarily terminate a contract if NRCS 
agrees based on NRCS' determination that termination is in the public 
interest.
    (iii) In carrying out NRCS' role in this section, NRCS may consult 
with the local conservation district.



                    Subpart C_General Administration



Sec.1465.30  Appeals.

    (a) A participant may obtain administrative review of an adverse 
decision under AMA in accordance with 7 CFR parts 11 and 614, except as 
provided in paragraph (b) of this section.
    (b) The following decisions are not appealable:
    (1) Payment rates, payment limits;
    (2) Funding allocations;
    (3) Eligible conservation practices; and
    (4) Other matters of general applicability, including:
    (i) Technical standards and formulas;
    (ii) Denial of assistance due to lack of funds or authority; or
    (iii) Science-based formulas and criteria.



Sec.1465.31  Compliance with regulatory measures.

    Participants who carry out conservation practices will be 
responsible for obtaining the authorities, rights, easements, permits, 
or other approvals necessary for the implementation, operation, and 
maintenance of the conservation practices in keeping with applicable 
laws and regulations. Participants will be responsible for compliance 
with all laws and for all effects or actions resulting from the 
participant's performance under the contract.



Sec.1465.32  Access to operating unit.

    Any authorized NRCS representative will have the right to enter an 
operating unit or tract for the purpose of determining eligibility and 
for ascertaining the accuracy of any representations related to 
contracts and performance. Access will include the right to provide 
technical assistance; determine eligibility; inspect any work undertaken 
under the contracts, including the APO and O&M agreement; and collect 
information necessary to evaluate the conservation practice performance 
as specified in the contracts. The NRCS representative will make an 
effort to contact the participant prior to exercising this provision.



Sec.1465.33  Equitable relief.

    (a) If a participant relied upon the advice or action of any 
authorized NRCS representative and did not know, or have reason to know, 
that the action or advice was improper or erroneous, the participant may 
be eligible for equitable relief under 7 CFR part 635, section 635.3. 
The financial or technical liability for any action by a participant 
that was taken based on the advice of an NRCS certified TSP is the 
responsibility of the certified TSP and will not be assumed by NRCS when 
NRCS authorizes payment.
    (b) If a participant has been found in violation of a provision of 
the AMA contract or any document incorporated by reference through 
failure to comply fully with that provision, the participant may be 
eligible for equitable relief under 7 CFR part 635, section 635.4.



Sec.1465.34  Offsets and assignments.

    (a) Except as provided in paragraph (b) of this section, any payment 
or portion thereof to any participant will be made without regard to 
questions of Title under State law and without regard to any claim or 
lien against the crop, or proceeds thereof, in favor of

[[Page 841]]

the owner or any other creditor except agencies of the United States 
Government. The regulations governing offsets and withholdings found at 
7 CFR part 1403 will be applicable to contract payments.
    (b) AMA participants may assign any payments in accordance with 7 
CFR part 1404.



Sec.1465.35  Misrepresentation and scheme or device.

    (a) A participant who is determined to have erroneously represented 
any fact affecting an AMA determination made in accordance with this 
part will not be entitled to contract payments and must refund to NRCS 
all payments plus interest, as determined in accordance with 7 CFR part 
1403.
    (b) A participant will refund to NRCS all payments, plus interest, 
as determined by NRCS with respect to all NRCS contracts to which they 
are a party if they are determined to have knowingly:
    (1) Adopted any scheme or device that tends to defeat the purpose of 
AMA;
    (2) Made any fraudulent representation;
    (3) Adopted any scheme or device for the purpose of depriving any 
tenant or sharecropper of the payments to which such person would 
otherwise be entitled under the program; or
    (4) Misrepresented any fact affecting an AMA determination.
    (c) Where paragraph (a) or (b) of this section applies, the 
participant's interest in all contracts will be terminated. In 
accordance with Sec.1465.25(c), NRCS may determine the producer 
ineligible for future funding from any NRCS conservation programs.



Sec.1465.36  Environmental services credits for conservation 
improvements.

    NRCS recognizes that environmental benefits will be achieved by 
implementing conservation practices funded through AMA, and that 
environmental credits may be gained as a result of implementing 
activities compatible with the purposes of an AMA contract. NRCS asserts 
no direct or indirect interest on these credits. However, NRCS retains 
the authority to ensure that operation and maintenance requirements for 
AMA-funded improvements are met, consistent with Sec.1465.21 and Sec.
1465.22. Where activities may impact the land under an AMA contract, 
participants are highly encouraged to request an operation and 
maintenance compatibility determination prior to entering into any 
credit agreements. The AMA conservation program contract may be modified 
in accordance with policies outlined in Sec.1465.24 provided the 
modifications meet AMA purposes and are in compliance with this part.



PART 1466_ENVIRONMENTAL QUALITY INCENTIVES PROGRAM--Table of Contents



                      Subpart A_General Provisions

Sec.
1466.1 Applicability.
1466.2 Administration.
1466.3 Definitions.
1466.4 National priorities.
1466.5 Outreach activities.
1466.6 Program requirements.
1466.7 EQIP plan of operations.
1466.8 Conservation practices.
1466.9 Technical services provided by qualified personnel not affiliated 
          with USDA.

                     Subpart B_Contracts and Payment

1466.20 Application for contracts and selecting applications.
1466.21 Contract requirements.
1466.22 Conservation practice operations and maintenance (O&M).
1466.23 Payment rates.
1466.24 EQIP payment restrictions and exceptions.
1466.25 Contract modifications and transfers of contract rights.
1466.26 Contract violations and terminations.

                    Subpart C_Conservation Innovation

1466.30 Definitions.
1466.31 Purpose and scope.
1466.32 Conservation innovation grant funding.
1466.33 Conservation innovation grant administration.
1466.34 Award determinations.
1466.35 State-level conservation innovation grant component.
1466.36 Intellectual property.
1466.37 On-Farm Conservation Innovation Trials.
1466.38 Soil Health Demonstration trial.

[[Page 842]]

                      Subpart D_Incentive Contracts

1466.40 High priority areas.
1466.41 Incentive contract selection.
1466.42 Incentive contract requirements.
1466.43 Incentive contract period.
1466.44 Incentive payment rates and restrictions.

                    Subpart E_General Administration

1466.50 Appeals.
1466.51 Compliance with regulatory measures.
1466.52 Access to operating unit.
1466.53 Equitable relief.
1466.54 Offsets and assignments.
1466.55 Misrepresentation and scheme or device.
1466.56 Environmental credits for conservation improvements.

    Authority: 15 U.S.C. 714b and 714c; and 16 U.S.C. 3839aa--3839-8.

    Source: 84 FR 69280, Dec. 17, 2019, unless otherwise noted.



                      Subpart A_General Provisions



Sec.1466.1  Applicability.

    (a) Purposes. (1) The purposes of the Environmental Quality 
Incentives Program (EQIP) are to promote agricultural production, forest 
management, and environmental quality as compatible goals, and to 
optimize environmental benefits.
    (2) Through EQIP, NRCS provides technical and financial assistance 
to eligible agricultural producers, including nonindustrial private 
forest (NIPF) landowners and Indian Tribes, to help implement 
conservation practices that address resource concerns related to organic 
production; soil, water, and air quality; wildlife habitat; nutrient 
management associated with crops and livestock; pest management; ground 
and surface water conservation; irrigation management; drought 
resiliency measures; adapting to and mitigating against increasing 
weather volatility; energy conservation; and related resource concerns.
    (3) EQIP's financial and technical assistance helps:
    (i) Producers comply with environmental regulations and enhance 
agricultural and forested lands in a cost-effective and environmentally 
beneficial manner; and
    (ii) To the maximum extent practicable, avoid the need for resource 
and regulatory programs.
    (4) The purposes of EQIP are achieved by planning and implementing 
conservation practices on eligible land to address identified, new, or 
expected resource concerns, including such resource concerns related to 
lands enrolled under a Conservation Reserve Program contract that are 
transitioning into production as specified in 16 U.S.C. 3835(f).
    (b) Availability. EQIP is available in any of the 50 States, 
District of Columbia, Commonwealth of Puerto Rico, Guam, Virgin Islands 
of the United States, American Samoa, and Commonwealth of the Northern 
Mariana Islands.
    (c) Applicability. Each contract enrolled into EQIP, is subject to 
the regulations in effect on the date it is enrolled.

[84 FR 69280, Dec. 17, 2019, as amended at 85 FR 67647, Oct. 26, 2020]



Sec.1466.2  Administration.

    (a) The Commodity Credit Corporation (CCC) funds, facilities, 
authorities. Because the funds, facilities, and authorities of the CCC 
are available to NRCS for carrying out EQIP, each reference to NRCS in 
this part also refers to the CCC's funds, facilities, and authorities 
where applicable.
    (b) Locally-led conservation. (1) NRCS supports locally-led 
conservation by soliciting input from the State Technical Committee and 
the Tribal Conservation Advisory Council at the State level, and local 
working groups at the county, parish, or Tribal level to advise NRCS on 
issues relating to EQIP implementation.
    (2) Recommendations from the State Technical Committee and the 
Tribal Conservation Advisory Council may include but are not limited to:
    (i) Recommendations for program priorities and criteria;
    (ii) Identification of priority resource concerns;
    (iii) Recommendations about which conservation practices will be 
effective to treat identified priority resource concerns; and
    (iv) Recommendations of program payment rates for payment schedules.

[[Page 843]]

    (c) Delegations. No delegation in the administration of this part to 
lower organizational levels will preclude the Chief from making any 
determinations under this part, redelegating to other organizational 
levels, or from reversing or modifying any determination made under this 
part.
    (d) Waiver. The Chief may modify or waive a nonstatutory, 
discretionary provision of this part if the Chief determines the 
application of that provision to a particular limited situation to be 
inappropriate and inconsistent with the purposes of the program;
    (e) Scope of agreement authority. NRCS may enter into agreements 
with other Federal or State agencies, Indian Tribes, conservation 
districts, units of local government, public or private organizations, 
acequias, and individuals to assist NRCS with implementation of the 
program in this part.



Sec.1466.3  Definitions.

    The definitions in this section apply to this part and all documents 
issued in accordance with this part, unless specified elsewhere in this 
part:
    Agricultural operation means a parcel or parcels of land whether 
contiguous or noncontiguous, which is under the effective control of the 
producer at the time the producer applies for a contract, and which is 
operated by the producer with equipment, labor, management, and 
production, or cultivation practices that are substantially separate 
from other operations.
    Animal feeding operation (AFO) means a lot or facility (other than 
an aquatic animal production facility) where the conditions in this 
definition are met:
    (1) Animals have been, are, or will be stabled or confined and fed 
or maintained for a total of 45 days or more in any 12-month period; and
    (2) Crops, vegetation, forage growth, or post-harvest residues are 
not sustained in the normal growing season over any portion of the lot 
or facility.
    Animal waste storage or treatment facility means a structural 
conservation practice, implemented on an AFO consistent with the 
requirements of a comprehensive nutrient management plan (CNMP) and 
Field Office Technical Guide (FOTG), which is used for storing, 
treating, or handling animal waste or by-products, such as animal 
carcasses.
    Applicant means a producer who has requested in writing to 
participate in EQIP.
    At-risk species means any plant or animal species listed as 
threatened or endangered; proposed or candidate for listing under the 
Endangered Species Act; a species listed as threatened or endangered 
under State law or Tribal law on Tribal land; State or Tribal land 
species of conservation concern; or other plant or animal species or 
community, as determined by the State Conservationist, with advice from 
the State Technical Committee or Tribal Conservation Advisory Council, 
that has undergone, or is likely to undergo, population decline and may 
become imperiled without direct intervention.
    Beginning farmer or rancher means a person, Indian Tribe, Tribal 
corporation, or legal entity who:
    (1) Has not operated a farm or ranch, or NIPF, or who has operated a 
farm, ranch, or NIPF for not more than 10 consecutive years. This 
requirement applies to all members of an entity who will materially and 
substantially participate in the operation of the farm or ranch.
    (2) In the case of a contract with an individual, individually, or 
with the immediate family, material and substantial participation 
requires that the individual provide substantial day-to-day labor and 
management of the farm or ranch, consistent with the practices in the 
county or State where the farm is located.
    (3) In the case of a contract with an entity or joint operation, all 
members must materially and substantially participate in the operation 
of the farm or ranch. Material and substantial participation requires 
that each of the members provide some amount of the management, or labor 
and management necessary for day-to-day activities, such that if each of 
the members did not provide these inputs, operation of the farm or ranch 
would be seriously impaired.
    Chief means the Chief of NRCS, U.S. Department of Agriculture 
(USDA), or designee.
    Comprehensive nutrient management plan (CNMP) means a conservation 
plan

[[Page 844]]

that is specifically for an AFO. A CNMP identifies conservation 
practices and management activities that, when implemented as part of a 
conservation system, will manage sufficient quantities of manure, waste 
water, or organic by-products associated with a waste management 
facility. A CNMP incorporates practices to use animal manure and organic 
by-products as a beneficial resource while protecting all applicable 
natural resources including water and air quality associated with an 
AFO. A CNMP is developed to assist an AFO owner or operator in meeting 
all applicable local, Tribal, State, and Federal water quality goals or 
regulations. For nutrient-impaired stream segments or water bodies, 
additional management activities or conservation practices may be 
required by local, Tribal, State, or Federal water quality goals or 
regulations.
    Conservation benefit means the improved condition of a natural 
resource concern resulting from the implementation of a conservation 
practice.
    Conservation district means any district or unit of State, Tribal, 
or local government formed under State, Tribal, or territorial law for 
the express purpose of developing and carrying out a local soil and 
water conservation program. Such district or unit of government may be 
referred to as a ``conservation district,'' ``soil conservation 
district,'' ``soil and water conservation district,'' ``resource 
conservation district,'' ``land conservation committee,'' ``natural 
resource district,'' or similar name.
    Conservation practice means one or more conservation improvements 
and activities, including structural practices, land management 
practices, vegetative practices, forest management practices, and other 
improvements that achieve the program purposes, including such items as 
CNMPs, agricultural energy management plans, dryland transition plans, 
forest management plans, soil testing, soil remediation, integrated pest 
management, and other plans or activities determined acceptable by the 
Chief. Approved conservation practices are listed in the NRCS FOTG.
    Contract means a legal document that specifies the rights and 
obligations of any participant accepted into the program. An EQIP 
contract is a binding agreement for the transfer of assistance from USDA 
to the participant to share in the costs of implementing conservation 
practices.
    Cost-effectiveness means the least costly option for achieving a 
given set of conservation objectives to address a resource concern.
    Eligible land means land on which agricultural commodities, 
livestock, or forest-related products are produced, and specifically 
includes:
    (1) Cropland;
    (2) Grassland;
    (3) Rangeland;
    (4) Pasture land;
    (5) Nonindustrial private forest land; and
    (6) Other agricultural land (including cropped woodland, marshes, 
environmentally sensitive areas as identified by NRCS, and agricultural 
land used for the production of livestock) on which identified or 
expected resource concerns related to agricultural production that may 
be addressed by a contract under EQIP as determined by the Chief.
    Enrolled land means the land area identified and included in the 
program contract at the time when funds have been obligated.
    EQIP plan of operations means the document that identifies the 
location, timing, and extent of conservation practices that the 
participant agrees to implement on eligible land enrolled in the program 
in order to address the priority resource concerns, optimize 
environmental benefits, and address program purposes as defined in Sec.
1466.1. The EQIP plan of operations is part of the EQIP contract.
    Estimated income foregone means an estimate of the net income loss 
associated with the adoption of a conservation practice. Along with 
other estimated incurred costs, income foregone is one of the costs 
associated with practice implementation as recorded in a payment 
schedule.
    Field Office Technical Guide (FOTG) means the official local NRCS 
source of resource information and interpretations of guidelines, 
criteria, and requirements for planning and implementation of 
conservation practices. It

[[Page 845]]

contains detailed information on the quality standards to achieve 
conservation of soil, water, air, plant, energy, and animal resources 
applicable to the local area for which it is prepared. (See https://
www.nrcs.usda.gov/wps/portal/nrcs/main/national/technical/fotg/ to 
access your State FOTG.)
    Forest management plan means a site-specific plan that is prepared 
according to NRCS criteria by a professional resource manager, in 
consultation with the participant, and is approved by NRCS. Forest 
management plans may include a forest stewardship plan, as specified in 
section 5 of the Cooperative Forestry Assistance Act of 1978 (16 U.S.C. 
2103a); another plan approved by the State forester or Indian Tribe; or 
another plan determined appropriate by NRCS. The plan is intended to 
comply with Federal, State, Tribal, and local laws, regulations, and 
permit requirements.
    Habitat development means the application of conservation practices 
to establish, improve, protect, enhance, or restore the conditions of 
the land for the specific purpose of improving conditions for fish and 
wildlife.
    High priority area means a watershed (or other appropriate region or 
area within a State) wherein the Chief, in consultation with the State 
Technical Committee, has identified one or more priority resource 
concerns.
    Historically underserved producer means a person, joint operation, 
legal entity, or Indian Tribe who is a beginning farmer or rancher, 
socially disadvantaged farmer or rancher, limited resource farmer or 
rancher, or veteran farmer or rancher.
    Incentive practice means a practice or set of practices approved by 
the Chief that, when implemented and maintained on eligible land, 
address one or more priority resource concerns under a contract entered 
into under subpart D of this part.
    Indian land means:
    (1) Land held in trust by the United States for individual Indians 
or Indian Tribes;
    (2) Land, the title to which is held by individual Indians or Indian 
Tribes subject to Federal restrictions against alienation or 
encumbrance;
    (3) Land which is subject to rights of use, occupancy or benefit of 
certain Indian Tribes; or
    (4) Land held in fee title by an Indian, Indian family, or Indian 
Tribe.
    Indian Tribe means any Indian Tribe, band, nation, pueblo, or other 
organized group or community, including any Alaska Native village or 
regional or village corporation as defined in or established pursuant to 
the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.) which 
is recognized as eligible for the special programs and services provided 
by the United States to Indians because of their status as Indians.
    Integrated pest management means a sustainable approach to managing 
pests by combining biological, cultural, physical, and chemical tools in 
a way that minimizes economic, health, and environmental risks.
    Joint operation means, as defined in 7 CFR part 1400, a general 
partnership, joint venture, or other similar business organization in 
which the members are jointly and severally liable for the obligations 
of the organization.
    Legal entity means, as defined in 7 CFR part 1400, an entity created 
under Federal or State law that:
    (1) Owns land or an agricultural commodity, product, or livestock; 
or
    (2) Produces an agricultural commodity, product, or livestock.
    Lifespan means the period of time during which a conservation 
practice or activity should be maintained and used for the intended 
purpose.
    Limited resource farmer or rancher means either:
    (1) Individual producer:
    (i) A person with direct or indirect gross farm sales not more than 
the current indexed value in each of the previous 2 fiscal years 
(adjusted for inflation using Prices Paid by Farmer Index as compiled by 
National Agricultural Statistical Service), and
    (ii) Has a total household income at or below the national poverty 
level for a family of four, or less than 50 percent of county median 
household income in each of the previous 2 years (to be determined 
annually using Commerce Department Data); or
    (2) A legal entity or joint operation if all individual members 
independently

[[Page 846]]

qualify under paragraph (1) of this definition.
    Liquidated damages means a sum of money stipulated in the EQIP 
contract that the participant agrees to pay NRCS if the participant 
fails to adequately complete the terms of the contract. The sum 
represents an estimate of the technical assistance expenses incurred to 
service the contract and reflects the difficulties of proof of loss and 
the inconvenience or nonfeasibility of otherwise obtaining an adequate 
remedy.
    Livestock means all domesticated animals produced on farms or 
ranches, as determined by the Chief.
    Livestock production means farm or ranch operations involving the 
production, growing, raising, or reproduction of domesticated livestock 
or livestock products.
    Local working group means the advisory body as defined in 7 CFR part 
610.
    National Organic Program means the national program established 
under the Organic Foods Production Act of 1990 (7 U.S.C. 6501 et seq.), 
administered by the Agricultural Marketing Service, which regulates the 
standards for any farm, wild crop harvesting, or handling operation that 
wants to sell an agricultural product as organically produced.
    National priorities mean resource issues identified by the Chief, 
with advice from other federal agencies, Indian Tribes, and State 
Conservationists, which is used to determine the distribution of EQIP 
funds and guide local EQIP implementation.
    Natural Resources Conservation Service (NRCS) is an agency of USDA, 
which has responsibility for administering EQIP using the funds, 
facilities, and authorities of the CCC.
    Nonindustrial private forest land (NIPF) means rural land, as 
determined by NRCS, that has existing tree cover or is suitable for 
growing trees; and is owned by any nonindustrial private individual, 
group, association, corporation, Indian Tribe, or other private legal 
entity that has definitive decision-making authority over the land.
    Operation and maintenance (O&M) means work performed by the 
participant to keep the applied conservation practice functioning for 
the intended purpose during the conservation practice lifespan. 
Operation includes the administration, management, and performance of 
nonmaintenance actions needed to keep the completed practice functioning 
as intended. Maintenance includes work to prevent deterioration of the 
practice, repairing damage, or replacement of the practice to its 
original condition if one or more components fail.
    O&M agreement means the document that, in conjunction with the EQIP 
plan of operations, specifies the O&M responsibilities of the 
participant for conservation practices installed with EQIP assistance.
    Organic system plan (OSP) means a management plan for organic 
production or for an organic handling operation that has been agreed to 
by the producer or handler and the certifying agent. The OSP includes 
all written plans that govern all aspects of agricultural production or 
handling as required under the Organic Foods Production Act of 1990 (7 
U.S.C. 6501 et seq.).
    Participant means an applicant that has entered into an EQIP 
contract who incurs the cost of practice implementation, will receive or 
has received payment, or is responsible for implementing the terms and 
conditions of an EQIP contract.
    Payment means financial assistance provided to the participant based 
on the estimated costs incurred in performing or implementing 
conservation practices, including costs for: Planning, design, 
materials, equipment, installation, labor, management, maintenance, or 
training, as well as the estimated income foregone by the participant 
for designated conservation practices.
    Person means, as defined in 7 CFR part 1400, an individual, natural 
person, and does not include a legal entity.
    Priority resource concern means a resource concern, as determined by 
the Chief, with input from the State Technical Committee, that--
    (1) Is identified at the national, State, or local level as a 
priority for a particular area of a State; and
    (2) Represents a significant concern in a State or region.
    Producer means a person, legal entity, Indian Tribe, or joint 
operation who

[[Page 847]]

NRCS determines is engaged in agricultural production or forestry 
management on the agricultural operation.
    Resource concern means a specific natural resource issue or problem 
that represents a significant concern in a State or region and is likely 
to be addressed through the implementation of conservation practices by 
producers according to NRCS technical standards.
    Semi-public means entities that are private or public companies that 
serve a public purpose, i.e. Public utility companies. They often have 
condemnation authority but are not considered part of the State or State 
government.
    Socially disadvantaged farmer or rancher means a producer who is a 
member of a group whose members have been subjected to racial or ethnic 
prejudices without regard to its members' individual qualities. For an 
entity, at least 50-percent ownership in the business entity must be 
held by socially disadvantaged individuals.
    Soil remediation means scientifically based practices, as determined 
by NRCS, that--
    (1) Ensure the safety of producers from contaminants in soil;
    (2) Limit contaminants in soils from entering agricultural products 
for human or animal consumption; and
    (3) Regenerate and sustain the soil.
    Soil testing means the evaluation of soil health, including testing 
for the--
    (1) Optimal level of constituents in the soil, such as organic 
matter, nutrients, and the potential presence of soil contaminants 
(including heavy metals, volatile organic compounds, polycylic aromatic 
hydrocarbons, or other contaminants), as determined by NRCS; and
    (2) Biological and physical characteristics indicative of proper 
soil functioning.
    State conservationist means the NRCS employee authorized to 
implement EQIP and direct and supervise NRCS activities in a State and 
the Caribbean and Pacific Island Areas.
    State Technical Committee means a committee established by NRCS in a 
State pursuant to 7 CFR part 610, subpart C.
    Structural practice means a conservation practice, including a 
vegetative practice, that involves establishing, constructing, or 
installing a site-specific measure to conserve and protect a resource 
from degradation, or improve soil, water, air, or related natural 
resources. Examples include, but are not limited to, animal waste 
management facilities, terraces, grassed waterways, tailwater pits, 
livestock water developments, contour grass strips, filter strips, 
critical area plantings, tree plantings, establishment or improvement of 
wildlife habitat, and capping of abandoned wells.
    Technical assistance means technical expertise, information, 
training, education, and tools necessary for a producer to be able to 
successfully implement, operate, and maintain conservation practices to 
ensure the conservation of natural resources on land active in 
agricultural, forestry, or related uses. These technical services 
include:
    (1) Technical services provided directly to farmers, ranchers, 
Indian Tribes, and other eligible entities, such as conservation 
planning, technical consultation, and assistance with design and 
implementation of conservation practices; and
    (2) Technical infrastructure, including activities, processes, 
tools, and agency functions needed to support delivery of technical 
services, such as technical standards, resource inventories, training, 
education, data, technology, monitoring, and effects analyses.
    Technical service provider (TSP) means an individual, private-sector 
entity, Indian Tribe, or public agency either:
    (1) Certified by NRCS pursuant to 7 CFR part 652 and placed on the 
approved list to provide technical services to participants; or
    (2) Selected by the Department to assist in the implementation of 
conservation programs covered by this part through a procurement 
contract, contributions agreement, or cooperative agreement with the 
Department.
    Tribal Conservation Advisory Council means, in lieu of or in 
addition to forming a Tribal conservation district, an Indian Tribe may 
elect to designate an advisory council to provide input on NRCS programs 
and the conservation needs of the Tribe and Tribal producers. The 
advisory council may be an

[[Page 848]]

existing Tribal committee or department and may also constitute an 
association of member Tribes organized to provide direct consultation to 
NRCS at the State, regional, and national levels to provide input on 
NRCS rules, policies, and programs and their impacts on Tribes.
    Veteran farmer or rancher means a producer who meets the definition 
in section 2501(a) of the Food, Agriculture, Conservation, and Trade Act 
of 1990, as amended (7 U.S.C. 2279(a)).
    Water management entity means a State, irrigation district, 
groundwater management district, acequia, land grant-merced, or similar 
entity that has jurisdiction or responsibilities related to water 
delivery or management to eligible lands.
    Wildlife means nondomesticated birds, fishes, reptiles, amphibians, 
invertebrates, and mammals.
    Wildlife habitat means the aquatic and terrestrial environments 
required for fish and wildlife to complete their life cycles, providing 
air, food, cover, water, and spatial requirements.

[84 FR 69280, Dec. 17, 2019, as amended at 85 FR 67647, Oct. 26, 2020]



Sec.1466.4  National priorities.

    (a) The national priorities in paragraphs (a)(1) through (8) of this 
section, consistent with statutory resources concerns, include soil 
quality, water quality and quantity, plants, energy, wildlife habitat, 
air quality, increased weather volatility, and related natural resource 
concerns, that may be used in EQIP implementation are:
    (1) Reductions of nonpoint source pollution, such as nutrients, 
sediment, pesticides, or excess salinity in impaired watersheds 
consistent with total maximum daily loads (TMDL) where available;
    (2) The reduction of ground and surface water contamination;
    (3) The reduction of contamination from agricultural sources, such 
as animal feeding operations;
    (4) Conservation of ground and surface water resources, including 
improvement of irrigation efficiency and increased resilience against 
drought and weather volatility;
    (5) Reduction of emissions, such as particulate matter, nitrogen 
oxides, volatile organic compounds, and ozone precursors and depleters 
that contribute to air quality impairment violations of the National 
Ambient Air Quality Standards;
    (6) Reduction in soil erosion and sedimentation from unacceptable 
levels and improvement of soil health on eligible land;
    (7) Promotion of at-risk species habitat conservation including 
development and improvement of wildlife habitat; and
    (8) Energy conservation to help save fuel, improve efficiency of 
water use, maintain production, and protect soil and water resources by 
more efficiently using fertilizers and pesticides.
    (b) In consultation with other Federal agencies and Indian Tribes, 
NRCS may undertake periodic reviews of the national priorities and the 
effects of program delivery at the State and local levels to adapt the 
program to address emerging resource issues. NRCS may--
    (1) Use the national priorities to guide the allocation of EQIP 
funds to the NRCS State offices;
    (2) Use the national priorities in conjunction with States, Indian 
Tribes, and local priorities to assist with prioritization and selection 
of EQIP applications; and
    (3) Periodically review and update the national priorities utilizing 
input from the public, Indian Tribes, other Federal and State agencies, 
and affected stakeholders to ensure that the program continues to 
address priority resource concerns.

[84 FR 69280, Dec. 17, 2019, as amended at 85 FR 67647, Oct. 26, 2020]



Sec.1466.5  Outreach activities.

    (a) NRCS conducts outreach activities at the national, State, 
Tribal, and local levels to ensure that producers whose land has 
environmental problems or priority resource concerns are aware and 
informed that they may be eligible to apply for program assistance.
    (b) NRCS will make special outreach to eligible producers with 
historically low participation rates, including but not restricted to, 
limited resource, socially disadvantaged, small-scale, beginning farmers 
or ranchers, veteran

[[Page 849]]

farmers or ranchers, Indian Tribes, Alaska Natives, and Pacific 
Islanders.
    (c) NRCS provides outreach to ensure producer participation is not 
limited based on the size or type of operation or production system, 
including small-scale, specialty crop, and organic production.
    (d) NRCS will notify historically underserved producers, at the time 
of enrollment in the program, of the option to receive advance payments 
under Sec.1466.24 of this part and document the election of each of 
these producers.



Sec.1466.6  Program requirements.

    (a) General. Program participation is voluntary. An applicant must 
develop an EQIP plan of operations for the eligible land to be treated 
which serves as the basis for the EQIP contract. Under EQIP, NRCS 
provides participants with technical assistance and payments to plan and 
apply needed conservation practices.
    (b) Applicant eligibility. To be eligible to participate in EQIP, an 
applicant must--
    (1) Be in compliance with the highly erodible land and wetland 
conservation provisions at 7 CFR part 12;
    (2) Be a producer as determined by NRCS;
    (3) Have control of the land for the term of the proposed contract 
unless an exception is made by the Chief in the case of land 
administered by the Bureau of Indian Affairs (BIA), Indian lands, or 
other instances in which the Chief determines sufficient assurance of 
control;
    (i) The Chief may determine that land administered by BIA, Indian 
land, or other such circumstances provides sufficient assurance of 
control, and
    (ii) If the applicant is a tenant of the land involved in 
agricultural production or forestry management, the Chief may require 
the applicant to obtain the written concurrence of the landowner to 
apply a conservation practice;
    (4) Agree to implement the EQIP plan of operations according to the 
provisions and conditions established in the EQIP contract, including 
the EQIP contract appendix;
    (5) Submit an EQIP plan of operations or plan developed for the 
purposes of acquiring an air or water quality permit, provided these 
plans contain elements equivalent to those elements required by an EQIP 
plan of operations and are acceptable to NRCS as being consistent with 
the purposes of the program;
    (6) Supply information, as required by NRCS, to determine 
eligibility for the program, including but not limited to, information 
to verify the applicant's status as a historically underserved producer, 
and payment eligibility as established by 7 CFR part 1400; and
    (7) Provide a list of all members of the legal entity and embedded 
entities along with members' tax identification numbers and percentage 
interest in the entity.
    (c) Consideration for enrollment of eligible land. Eligible land, as 
defined in Sec.1466.3, may be considered for enrollment in EQIP only 
if NRCS determines that the land is--
    (1) Privately owned land;
    (2) Publicly owned land where--
    (i) The land is a working component of the participant's 
agricultural or forestry operation,
    (ii) The participant has control of the land for the term of the 
contract, and
    (iii) The conservation practices to be implemented on the public 
land are necessary and will contribute to an improvement in the 
identified resource concern; or
    (3) Indian land.
    (d) Eligibility of a water management entity. (1) Notwithstanding 
paragraphs (b) and (c) of this section, NRCS may enter into an EQIP 
contract with a water management entity provided the criteria in 
paragraphs (d)(1)(i), (ii), and (iii) of this section can be met:
    (i) The entity is a public or semipublic agency or organization,
    (ii) Its purpose is to assist private agricultural producers manage 
water distribution or conservation systems, and
    (iii) The water conservation or irrigation practices support a water 
conservation project under Sec.1466.20(c) that will effectively 
conserve water, provide fish and wildlife habitat, or provide for 
drought-related environmental mitigation, as determined by the Chief.
    (2) Water conservation or irrigation practices that are the subject 
of a contract entered into under paragraph

[[Page 850]]

(d)(1) of this section shall be implemented on--
    (i) Eligible land of a producer; or
    (ii) Land that is--
    (A) Under the control of the water management entity, and
    (B) Adjacent to eligible land of a producer, provided the Chief 
determines the adjacent land is necessary to support the installation of 
a practice or system implemented on eligible land.
    (3)(i) The Chief may waive the average adjusted gross income 
limitation set forth in 7 CFR part 1400 or the aggregate payment 
limitation set forth in Sec.1466.24 of this part for a contract under 
paragraph (d)(1) of this section if the Chief determines that the waiver 
is necessary to fulfill the objectives of the project.
    (ii) In determining whether to grant a waiver under this paragraph, 
the Chief shall consider--
    (A) The number of producers who will benefit from the project;
    (B) The conservation benefit of the practices involved in the 
project;
    (C) The amount of non-federal assets leveraged to facilitate the 
project;
    (D) The extent to which the project involves progressive 
implementation of conservation practices; and
    (E) Other criteria as determined by NRCS.
    (iii) Notwithstanding any waiver of the aggregate payment 
limitation, a water management entity or individual member thereof shall 
not receive, in the aggregate, directly or indirectly, payments under 
this paragraph, in aggregate, in excess of $900,000 for all contracts 
entered into under this paragraph by the water management entity during 
the period of fiscal years 2019 through 2023.

[84 FR 69280, Dec. 17, 2019, as amended at 85 FR 67647, Oct. 26, 2020]



Sec.1466.7  EQIP plan of operations.

    (a) All conservation practices in the EQIP plan of operations must 
be approved by NRCS and developed and carried out in accordance with the 
applicable NRCS planning and FOTG technical requirements.
    (b) The participant is responsible for implementing the EQIP plan of 
operations according to the approved implementation schedule.
    (c) The EQIP plan of operations must include--
    (1) A description of the participant's specific conservation 
objectives to be achieved;
    (2) To the extent practicable, the quantitative or qualitative goals 
for achieving the participant's conservation and natural resource 
objectives;
    (3) A description of one or more conservation practices in the 
conservation management system, including conservation planning, design, 
or installation activities to be implemented to achieve the conservation 
objectives;
    (4) A schedule for implementing the conservation practices, 
including timing, sequence, operation, and maintenance; and
    (5) Information that enables evaluation of the effectiveness of the 
plan of operations in achieving the conservation objectives.
    (d) If an EQIP plan of operations includes an animal waste storage 
or treatment facility to be implemented on an AFO, the participant must 
agree to:
    (1) Develop a CNMP by the end of the contract period; and
    (2) Implement any applicable conservation practices in the EQIP plan 
of operation consistent with an approved CNMP.
    (e) An EQIP plan of operations on forest land must implement 
conservation practices consistent with an approved forest management 
plan.
    (f) NRCS may provide a participant with assistance to implement an 
EQIP plan of operations which includes irrigation-related practices to 
address a water conservation resource concern only if the participant 
establishes through documented evidence, including irrigation history, 
that such assistance will facilitate a reduction in ground or surface 
water use on the agricultural operation, unless the producer is 
participating in a watershed-wide project, as approved by NRCS, which 
will effectively conserve water in accordance with Sec.1466.20 of this 
part.

[84 FR 69280, Dec. 17, 2019, as amended at 85 FR 67647, Oct. 26, 2020]

[[Page 851]]



Sec.1466.8  Conservation practices.

    (a) NRCS will determine the conservation practices for which 
participants may receive program payments and provide a list of eligible 
practices to the public.
    (b) Payment will not be made to a participant for conservation 
practices that--
    (1) Either the applicant or another producer has initiated or 
implemented prior to application for the program; or
    (2) Has been initiated or implemented prior to contract approval, 
unless a waiver was granted by the Chief prior to the practice 
implementation.
    (c) Unless waived for circumstances as determined by the Chief, a 
participant is eligible for payments for water conservation and 
irrigation-related conservation practices only on land that has been 
irrigated for 2 of the last 5 years prior to application for assistance.
    (d) Upon the development of a new technology or management approach 
that provides a high potential for optimizing conservation benefits, 
NRCS may approve an interim conservation practice standard that 
incorporates the new technology or management approach and provide 
financial assistance for pilot work to evaluate and assess the 
performance, efficiency, and effectiveness of the new technology or 
management approach.
    (e) NRCS will at least annually consult with State Technical 
Committees, Tribal Conservation Advisory Councils, local work groups, 
and other stakeholders to identify conservation practices with 
appropriate purposes and the criteria for their application to address 
priorities to establish wildlife habitat including--
    (1) Upland wildlife habitat;
    (2) Wetland wildlife habitat;
    (3) Habitat for threatened and endangered species;
    (4) Fish habitat;
    (5) Habitat on pivot corners and other irregular areas of a field; 
and
    (6) Other types of wildlife habitat, as determined by NRCS.



Sec.1466.9  Technical services provided by qualified personnel not 
affiliated with USDA.

    (a) NRCS may use the services of qualified third-party TSPs in its 
delivery of EQIP technical assistance in accordance with 7 CFR part 652.
    (b) Participants may obtain technical services from certified TSPs 
in accordance with 7 CFR part 652.
    (c) NRCS retains approval authority of work done by non-NRCS 
personnel for the purpose of approving EQIP payments.



                     Subpart B_Contracts and Payment



Sec.1466.20  Application for contracts and selecting applications.

    (a) General guidelines. (1) Any producer who has eligible land may 
submit an application for participation in EQIP.
    (2) NRCS, to the greatest extent practicable, will group 
applications of similar crop, forestry, and livestock operations for 
evaluation purposes.
    (3) Applications may be accepted on a continuous basis throughout 
the year.
    (4) Producers who are members of a joint operation may file a single 
application for ranking purposes for the joint operation.
    (b) Ranking guidelines. In evaluating EQIP applications, NRCS--
    (1) Will establish ranking pools to address a specific resource 
concern by geographic area or agricultural operation type with advice 
from the State Technical Committee, Tribal Conservation Advisory 
Council, or local working groups;
    (2) Will develop an evaluation process using, where applicable, 
science-based tools to prioritize and rank applications for funding that 
considers national, State, and local priority resource concerns, taking 
into account the factors related to conservation benefits to address 
identified resource concerns through implementation of conservation 
practices such as:
    (i) The degree of cost-effectiveness of the proposed conservation 
practices;
    (ii) The magnitude of the expected conservation benefits resulting 
from the conservation treatment and the priority of the resource 
concerns that

[[Page 852]]

have been identified at the local, State, and national levels;
    (iii) How effectively and comprehensively the project addresses the 
designated resource concern or resource concerns;
    (iv) Use of conservation practices that provide long-term 
conservation enhancements;
    (v) Compliance with Federal, State, Tribal, or local regulatory 
requirements concerning soil, water, and air quality; wildlife habitat; 
and ground and surface water conservation;
    (vi) Willingness of the applicant to complete all conservation 
practices in an expedited manner;
    (vii) The ability to improve existing conservation practices or 
systems which are in place at the time the application is accepted, or 
that complete a conservation system;
    (viii) The applicant's meeting O&M requirements for the lifespan of 
conservation practices previously funded through EQIP;
    (ix) The land is enrolled under a CRP contract transitioning to a 
covered farmer or rancher as specified in 16 U.S.C. 3835(f); and
    (x) Other locally defined pertinent factors, such as the location of 
the conservation practice, the extent of natural resource degradation, 
and the degree of cooperation by local producers to achieve 
environmental improvements.
    (3) May give priority for applications that include water 
conservation or irrigation-related practices, and consistent with State 
law in which the applicant's eligible land is located, if the 
application--
    (i) Results in a reduction in water use in the agricultural 
operation, or
    (ii) Includes an agreement by the applicant not to use any 
associated water savings to bring new land (other than incidental land 
needed for efficient operations) under irrigation production unless the 
producer is participating in a watershed-wide project that will 
effectively conserve water as designated under paragraph (c) of this 
section;
    (4) May not assign a higher priority to the application solely 
because it would present the least cost to the program if determined 
that the conservation benefits of two or more applications for payments 
are comparable;
    (5) Will ensure that the ranking score does not give preferential 
treatment to applications based on size of the operation, income 
generated from the operation, type of operation, or other factors not 
related to conservation benefits to address a resource concern unless 
authorized in this rule;
    (6) Will determine through the evaluation process the order in which 
applications will be selected for funding; and
    (7) Will make available to the public all information regarding 
priority resource concerns, the list of eligible practices, payment 
rates, and how EQIP is implemented in a State.
    (c) Eligibility of certain water conservation projects. NRCS may 
designate as eligible watershed-wide projects that effectively conserve 
water, using the criteria in paragraphs (c)(1) through (3) of this 
section:
    (1) The project area has a current, comprehensive water resource 
assessment; and
    (2) The project plan incorporates one or more of the practices in 
paragraphs (c)(2)(i) through (iii) of this section:
    (i) Water conservation scheduling, water distribution efficiency, 
soil moisture monitoring, or an appropriate combination thereof,
    (ii) Irrigation-related structural or other measures that conserve 
surface or ground water, including managed aquifer recovery practices, 
or
    (iii) A transition to water-conserving crops, water-conserving crop 
rotations, or deficit irrigation; and
    (3) The project sponsors have consulted relevant State and local 
agencies.
    (d) Administrative efficiency. (1) NRCS may use screening factors as 
part of its evaluation process that may include sorting applications 
into high, medium, or low priority.
    (2) If screening factors are used to designate a higher priority for 
ranking, all eligible applications screened with a higher priority are 
ranked and considered for funding before ranking applications that are a 
lower priority.

[[Page 853]]

    (3) NRCS is the approving authority for all EQIP contracts.

[84 FR 69280, Dec. 17, 2019, as amended at 85 FR 67647, Oct. 26, 2020]



Sec.1466.21  Contract requirements.

    (a) Requirement for a contract. For a participant to receive 
payments, the participant must enter into a contract agreeing to 
implement one or more conservation practices. Payment for technical 
services may be included in the contract pursuant to requirements of 
this part.
    (b) Contract terms. An EQIP contract will--
    (1) Identify all conservation practices to be implemented, the 
timing of practice installation, the O&M requirements for the practices, 
and applicable payments allocated to the practices under the contract;
    (2) Have a term for no more than 10 years;
    (3) Incorporate all provisions as required by law or statute, 
including requirements that the participant will--
    (i) Not implement any practices on the enrolled land that would 
defeat the program's purposes,
    (ii) Refund any program payments received with interest, and forfeit 
any future payments under the program, on the violation of a term or 
condition of the contract, consistent with the provisions of Sec.
1466.26,
    (iii) Refund all program payments received on the transfer of the 
right and interest of the producer in land subject to the contract, 
unless the transferee of the right and interest agrees to assume all 
obligations, including O&M of the EQIP contract's conservation 
practices, consistent with the provisions of Sec.1466.25,
    (iv) Develop and implement any conservation practices identified in 
an EQIP plan of operations consistent with a CNMP when the EQIP contract 
includes an animal waste management facility on an AFO,
    (v) Implement conservation practices consistent with an approved 
forest management plan when the EQIP plan of operations includes forest-
related practices that address resource concerns on NIPF,
    (vi) Supply information as required by NRCS to determine compliance 
with contract and program requirements, and
    (vii) Specify the participant's responsibilities for the O&M of the 
applied conservation practices, consistent with the provisions of Sec.
1466.22; and
    (4) Specify any other provision determined necessary or appropriate 
by NRCS to achieve the technical requirements of a practice or purposes 
of the program.
    (c) Timeline for implementation. At least one conservation practice 
must be scheduled for completion within the first 12 months of the 
contract; NRCS may extend this timeframe if NRCS determines that the 
participant is unable to complete the conservation practice for reasons 
beyond their control.
    (d) Contract limitation. Each contract will be limited to no more 
than $450,000, unless the contract is with an Indian Tribe or the Chief 
grants a waiver. Contracts related to organic operations are also 
subject to payment limitations pursuant to Sec.1466.24(b).
    (e) Waiver to contract limitation. (1) The Chief may waive the 
contract limitation set forth in paragraph (d) of this section if the 
Chief determines that--
    (i) The waiver is in the best interests of the program; and
    (ii) The contract involves either--
    (A) A joint operation,
    (B) A group project, such as for the development of an anaerobic 
digestor or the improvement of privately owned and operated irrigation 
systems that benefits multiple producers or a large area of land; or
    (C) A water management entity for which NRCS has approved a payment 
limitation waiver.
    (2) A contract for which the Chief has granted a waiver to the 
contract limitation set forth in paragraph (d) of this section shall be 
limited to no more than $900,000.
    (f) Water conservation and irrigation efficiency projects with water 
management entities. NRCS may decline to select an EQIP application from 
a legal entity who is otherwise eligible under Sec.1466.6(d) if NRCS 
determines that the project is better suited to be implemented under the 
Regional Conservation Partnership Program or 7 CFR part 622.

[[Page 854]]



Sec.1466.22  Conservation practice operation and maintenance (O&M).

    (a) The contract will incorporate the O&M agreement that addresses 
the O&M of conservation practices applied under the contract.
    (b) NRCS expects the participant to operate and maintain each 
conservation practice installed under the contract for its intended 
purpose for the conservation practice lifespan as specified in the O&M 
agreement.
    (c) Conservation practices installed before the contract execution 
but included in the contract to obtain the conservation benefits agreed 
upon, must be operated and maintained as specified in the contract and 
O&M agreement.
    (d) NRCS may periodically inspect the conservation practice during 
the contract duration as specified in the O&M agreement to ensure that 
O&M requirements are being carried out and that the conservation 
practice is fulfilling its intended objectives.
    (e) If NRCS finds during the contract that a participant is not 
operating and maintaining practices in an appropriate manner, NRCS may 
terminate the contract and request a refund of payments made for that 
conservation practice under the contract.



Sec.1466.23  Payment rates.

    (a) Conservation practices. NRCS will develop a list of conservation 
practices eligible for payment under the program, which considers:
    (1) The conservation practice cost-effectiveness, implementation 
efficiency, and innovation;
    (2) The degree and effectiveness in treating priority resource 
concerns;
    (3) The number of resource concerns the practice addresses;
    (4) The longevity of the practice's conservation benefit;
    (5) The conservation practice's ability to assist producers in 
meeting regulatory requirements; and
    (6) Other pertinent local considerations.
    (b) Payment schedules. The Chief will determine the process and 
methodology used for development, review, and approval of payment 
schedules to support accurate and cost-effective delivery of program 
benefits, including determination of estimated incurred costs and income 
foregone associated with implementation of all financially-supported 
conservation practices or activities.
    (1) Payment to a participant for performing a practice may not 
exceed, as determined by NRCS, the maximum payment percentages in 
paragraphs (b)(1)(i) through (iii) of this section:
    (i) Seventy-five percent of the estimated costs incurred by 
implementing the conservation practice,
    (ii) One hundred percent of the estimated income foregone, or
    (iii) Both conditions in paragraphs (b)(1)(i) and (ii) of this 
section, where a producer incurs costs in implementing a conservation 
practice and foregoes income related to that practice implementation.
    (2) In determining the amount and rate of estimated income foregone, 
NRCS may assign higher significance to conservation practices which 
promote--
    (i) Soil health;
    (ii) Water quality and quantity improvement;
    (iii) Nutrient management;
    (iv) Pest management;
    (v) Air quality improvement;
    (vi) Wildlife habitat development, including pollinator habitat;
    (vii) Invasive species management; or
    (viii) Other natural resource concerns of regional or national 
significance, as determined by NRCS.
    (3) Notwithstanding paragraph (b)(1) of this section, a participant 
that meets the definition of a historically underserved producer under 
Sec.1466.3 may be awarded the applicable payment rate and an 
additional rate that is not less than 25 percent above the applicable 
rate, provided this increase does not exceed 90 percent of the estimated 
costs incurred for implementing the conservation practice.
    (4) NRCS shall reduce the payments to a participant through EQIP 
proportionately below the contracted payment rate established by the 
Chief, so that the total combined payments for a conservation practice 
from EQIP and other USDA sources does not exceed 100 percent of the 
estimated costs incurred for implementing or performing the conservation 
practice.

[[Page 855]]

    (5) When NRCS enters into a formal agreement with partners who 
provide financial support to help implement program initiatives, the 
Chief shall adjust NRCS program payment percentages to provide practice 
payment rates to an amount such that the total financial assistance to 
the participant from NRCS and the partner does not exceed the amount 
needed to encourage voluntary adoption of the practice. The formal 
agreement must be approved by NRCS prior to announcement of the program 
initiative and adjusted payment rates.
    (6) NRCS may provide payments for conservation practices on some or 
all of the operations of a participant related to organic production and 
the transition to organic production. Payments may not be provided for 
any costs associated with organic certification, enterprise costs 
associated with transition to organic production, or for practices or 
activities that are eligible for financial assistance under the National 
Organic Program (7 U.S.C. 6523).
    (c) High priority practices. (1) NRCS, with input from the State 
Technical Committee, may designate not more than 10 practices to be 
eligible for increased payments under paragraph (c)(2) of this section, 
on the condition that the practice, as determined by NRCS--
    (i) Addresses specific causes of impairment relating to excessive 
nutrients in ground or surface water;
    (ii) Addresses the conservation of water, to advance drought 
mitigation and declining aquifers;
    (iii) Meets other environmental priorities and other priority 
resource concerns identified in habitat or other area restoration plans; 
or
    (iv) Is geographically targeted to address a natural resource 
concern in a specific watershed.
    (2) Notwithstanding paragraph (b) of this section, in the case of a 
practice designated as high priority under paragraph (c)(1) of this 
section a participant may receive an increased amount provided the 
payment does not exceed 90 percent of the incurred costs estimated for 
the conservation practice.
    (d) Source water protection practices. Notwithstanding paragraph (b) 
of this section, in the case of a practice that is a source water 
protection practice as identified by the Chief, a participant may 
receive an increased amount provided the payment does not exceed 90 
percent of the incurred costs estimated for the practice.



Sec.1466.24  EQIP payment restrictions and exceptions.

    (a) EQIP general aggregate payment limitation. (1) The total amount 
of financial assistance payments paid to a person or legal entity under 
this part, during the period of fiscal years 2019 through 2023, may not 
exceed an aggregate of $450,000, directly or indirectly.
    (2) Except as otherwise provided in Sec.1466.6, the limitation in 
paragraph (a)(1) of this section cannot be waived.
    (b) Organic production aggregate payment limitation. Payments for 
conservation practices related to organic production to a person or 
legal entity, directly or indirectly, during the period of fiscal years 
2019 through 2023, may not exceed an aggregate of $140,000.
    (c) Payment eligibility criteria. To determine eligibility for 
payments, NRCS will use the criteria in paragraphs (c)(1) through (9) of 
this section:
    (1) The provisions in 7 CFR part 1400, Payment Limitation and 
Payment Eligibility;
    (2) Except as otherwise set forth in this part, States, political 
subdivisions, and entities thereof are not considered to be producers 
eligible for payment;
    (3) In accordance with 7 CFR part 1400, an applicant applying as a 
joint operation or legal entity must provide a list of all members of 
the legal entity and joint operation and associated embedded entities, 
along with the members' tax identification numbers and percentage 
interest in the joint operation or legal entity, which all legal 
entities or persons applying, either alone or as part of a joint 
operation, must provide to be eligible to receive an EQIP payment;
    (4) Contracts with Indian Tribes are not subject to payment or 
contract limitations, provided that--
    (i) Indian Tribes certify in writing that no one individual, 
directly or indirectly, will receive more than the payment limitation,

[[Page 856]]

    (ii) Certification provided at the time of enrollment covers the 
entire contract period, and
    (iii) The Tribal entity provides, upon request from NRCS, a listing 
of individuals and payment made, by Social Security number or other 
unique identification number, during the previous year for calculation 
of overall payment limitations, with the conditions in paragraphs 
(c)(4)(iii)(A) through (C) of this section:
    (A) Payment limitations apply to individual Tribal member(s) when 
applying and subsequently being granted a contract as an individual(s);
    (B) American Indians, Alaska Natives, and Pacific Islanders may use 
another unique identification number for each individual eligible for 
payment; and
    (C) Any individual Tribal member who is identified utilizing a 
unique identification number as an alternative to a tax identification 
number will utilize only that identifier for all contracts to which the 
individual Tribal member receives a payment directly or indirectly;
    (5) Any cooperative association of producers that markets 
commodities for producers is not eligible for payment;
    (6) NRCS will confirm eligibility for payments in accordance with 7 
CFR part 1400, subpart F, Average Adjusted Gross Income Limitation, 
prior to contract approval;
    (7) To be eligible for payments for conservation practices related 
to organic production or the transition to organic production:
    (i) Participants who are USDA certified organic producers will 
implement conservation practices that are consistent with an approved 
organic system plan (OSP), and
    (ii) Participants who are transitioning to organic production 
(including participants who are exempt from certification as defined by 
the Organic Foods Production Act of 1990) will develop an OSP and 
implement conservation practices that are consistent with OSP 
requirements and purposes of the program;
    (8) A participant is not eligible for payments for conservation 
practices on eligible land if the participant receives payments or other 
benefits for the same practice to address the same resource concern on 
the same land under any other conservation program administered by USDA; 
and
    (9) Before NRCS approves and issues any EQIP payment, the 
participant must certify that the conservation practice has been 
completed in accordance with contract requirements, and NRCS or an 
approved TSP must certify that the practice has been carried out in 
accordance with the applicable NRCS FOTG technical standards.
    (d) Advance payments. (1) Notwithstanding paragraph (c) of this 
section, with respect to participants who are historically underserved 
producers, NRCS may issue advance payments of at least 50 percent and 
not to exceed 100 percent of the anticipated amount of the costs 
incurred for the purpose of purchasing materials or services to 
implement a conservation practice.
    (2) Eligibility for advance payment is contingent upon the 
requirement that the participant obtain an NRCS-approved practice design 
prior to approval of the advance payment.
    (3) The participant must expend advanced funds for practice 
implementation within 90 days from receipt of funds or return the funds 
to NRCS within a reasonable time as determined by NRCS.



Sec.1466.25  Contract modifications and transfers of contract rights.

    (a) NRCS may modify a contract, if--
    (1) The participant agrees to the modification; and
    (2) NRCS determines the modified contract continues to meet the 
purposes of the program.
    (b) NRCS may approve a transfer of the contract if--
    (1) NRCS receives written notice that identifies the new producer 
who will take control of the acreage, as required in paragraph (e) of 
this section;
    (2) The new producer meets program eligibility requirements within a 
reasonable time frame, as specified in the EQIP contract;
    (3) The new producer agrees to assume the rights and 
responsibilities for the acreage under the contract; and
    (4) NRCS determines that the purposes of the program will continue 
to

[[Page 857]]

be met despite the original participant's losing control of all or a 
portion of the land under contract.
    (c)(1) Until NRCS approves the transfer of contract rights, the 
transferee is not a participant in the program and may not receive 
payment for a conservation practice commenced prior to approval of the 
contract transfer.
    (2) For contract payment purposes, NRCS will consider the transferor 
to be the participant to whom payments will be made for conservation 
practices implemented during the pendency of the approval of contract 
transfer.
    (d) NRCS may terminate the entire contract if, within the time 
specified in the contract, a participant does not provide NRCS with 
written notice regarding any voluntary or involuntary loss of control of 
any acreage under the EQIP contract, which includes changes in a 
participant's ownership structure or corporate form.
    (e) Unless NRCS receives timely notice of a loss of control and 
approves a transfer of contract rights, a participant losing control of 
any acreage will constitute a violation of the EQIP contract and NRCS 
may terminate the contract and require a participant to refund all or a 
portion of any financial assistance provided.
    (f) NRCS may not approve a contract transfer and may terminate the 
contract in its entirety if NRCS determines that the loss of control is 
voluntary, the new producer is not eligible or willing to assume 
responsibilities under the contract (including payment rate 
eligibility), or the purposes of the program cannot be met.
    (g) In the event a conservation practice fails through no fault of 
the participant, NRCS may issue payments to reestablish the practice, at 
the rates established in accordance with Sec.1466.23, provided such 
payments do not exceed the payment limitation requirements as set forth 
in Sec.1466.24.
    (h) In the case of death, incompetency, or disappearance of any 
participant, NRCS may, as identified in the EQIP contract--
    (1) Terminate the contract;
    (2) Make any payments due under this part pursuant to guidance under 
applicable provisions of 7 CFR parts 707 and 1400 (including payment to 
successor(s)); or
    (3) Take any further action that the Chief determines is fair and 
reasonable in light of all of the circumstances.



Sec.1466.26  Contract violations and terminations.

    (a) NRCS may terminate a contract--
    (1) Without the consent of the participant where NRCS determines 
that the participant violated the contract; or
    (2) With the consent of the participant if NRCS determines that the 
termination is in the public interest.
    (b)(1) NRCS may allow a participant in a contract terminated in 
accordance with the provisions of paragraph (a) of this section to 
retain a portion of any payments received appropriate to the effort the 
participant has made to comply with the contract, or in cases of 
hardship, when forces beyond the participant's control prevented 
compliance with the contract.
    (2) The condition that is the basis for the participant's inability 
to comply with the contract must not have existed at the time the 
contract was executed by the participant.
    (3) If a participant believes that such a hardship condition exists, 
the participant may submit a request with NRCS for relief pursuant to 
this paragraph and any such request must contain documentation 
sufficient for NRCS to make a determination that this hardship condition 
exists.
    (c)(1) If NRCS determines that a participant is in violation of the 
terms of a contract, O&M agreement, or documents incorporated by 
reference into the contract, NRCS may give the participant a reasonable 
period of time, as determined by NRCS, to correct the violation and 
comply with the terms of the contract and attachments thereto.
    (2) If a participant continues to be in violation after such 
reasonable time, NRCS may terminate the EQIP contract in accordance with 
Sec.1466.26(f).
    (d) Notwithstanding the provisions of paragraph (c) of this section, 
a contract termination is effective immediately upon a determination by 
NRCS that the participant--
    (1) Submitted false information or filed a false claim;

[[Page 858]]

    (2) Engaged in any act, scheme, or device for which a finding of 
ineligibility for payments is permitted under the provisions of Sec.
1466.35; or
    (3) Incurred a violation of the contract provisions that cannot be 
corrected in a timeframe established by NRCS.
    (e) If NRCS terminates a contract due to breach of contract, the 
participant forfeits all rights to future payments under the contract, 
pay liquidated damages, and refund all or part of the payments received, 
plus interest.
    (1) NRCS may require a participant to provide only a partial refund 
of the payments received if a previously installed conservation practice 
can function independently and is not adversely affected by the 
violation or the absence of other conservation practices that would have 
been installed under the contract.
    (2) NRCS may reduce or waive the liquidated damages depending upon 
the circumstances of the case.
    (3) When terminating a contract, NRCS may reduce the amount of money 
owed by the participant by a proportion that reflects the good faith 
effort of the participant to comply with the contract or the existence 
of hardships beyond the participant's control that have prevented 
compliance with the contract.
    (4) Any participant whose EQIP contract is terminated under 
paragraph (d) of this section may be subject to debarment or suspension 
under 7 CFR part 1407.
    (f) NRCS may terminate a contract that provides payments to a 
participant for conservation practices related to organic production, if 
NRCS determines that the participant is not implementing practices 
according to provisions of the contract agreement or does not meet 
provisions of this part.



                    Subpart C_Conservation Innovation



Sec.1466.30  Definitions.

    In addition to the terms defined in Sec.1466.3, the definitions in 
this section apply to this subpart:
    Eligible entity means, as determined by NRCS:
    (1) A third-party private entity the primary business of which is 
related to agriculture;
    (2) A nongovernmental organization with experience working with 
agricultural producers; or
    (3) A governmental organization.
    Grant agreement means a document describing a relationship between 
NRCS and a State or local government, or other recipient whenever the 
principal purpose of the relationship is the transfer of a thing of 
value to a recipient in order to accomplish a public purpose of support 
or stimulation authorized by Federal law and substantial Federal 
involvement is not anticipated.
    Grant Review Board consists of representatives of NRCS staff as 
determined by the Chief.
    On-Farm Conservation Innovation Trial (OFCIT) agreement means an 
agreement that governs the relationship between NRCS and the participant 
for the purposes of OFCIT implementation. An OFCIT agreement may be 
between either NRCS and a producer or NRCS and an eligible entity.
    On-farm conservation research means an investigation conducted to 
answer a specified conservation-related question using a statistically 
valid design, while employing farm-scale equipment on farm fields.
    Project means the activities as defined within the scope of the 
grant agreement or cooperative agreement.
    Project director means the individual responsible for the technical 
direction and management of the project as designated in the 
application.
    Technical Peer Review Panel means a panel consisting of Federal and 
non-Federal technical advisors who possess expertise in a discipline or 
disciplines deemed important to provide a technical evaluation of 
project proposals submitted under the funding opportunity announcement.



Sec.1466.31  Purpose and scope.

    (a) The purpose of Conservation Innovation Grants (CIG) is to 
stimulate the development and adoption of innovative conservation 
approaches and technologies, including field research, while leveraging 
Federal investment in

[[Page 859]]

environmental enhancement and protection in conjunction with 
agricultural production. Notwithstanding any limitation of this part, 
NRCS administers CIG in accordance with this subpart. Unless otherwise 
provided for in this subpart, grants under CIG are subject to the 
provisions of 2 CFR part 200, Uniform Administrative Requirements, Cost 
Principles, and Audit Requirements for Federal Awards.
    (b) Applications for CIG are accepted from the 50 States, District 
of Columbia, Commonwealth of Puerto Rico, Guam, Virgin Islands of the 
United States, American Samoa, and Commonwealth of the Northern Mariana 
Islands.
    (c) NRCS may award grants to applicants either through a national 
competition or, at the Chief's discretion, separate State-level 
components, either of which may be offered multiple times each fiscal 
year.
    (d) Applications for CIG should propose innovative projects or 
activities that--
    (1) Demonstrate the use of innovative approaches and technologies to 
leverage Federal investment in environmental enhancement and protection, 
in conjunction with agricultural production;
    (2) Promote innovative on-the-ground conservation, including pilot 
projects and field demonstrations of promising approaches or 
technologies;
    (3) Lead to the transfer of conservation technologies, management 
systems, and innovative approaches (such as market-based systems) into 
NRCS technical manuals and guides or to the private sector.
    (e) For NRCS to consider a proposal eligible for CIG funding, the 
applicant must clearly demonstrate the innovative features of the 
proposed technology or approach.
    (f) An applicant may demonstrate the innovative features of the 
proposed technology or approach through a variety of means, such as by 
establishing that it--
    (1) Uses a technology or approach that was studied sufficiently to 
indicate a high probability for success;
    (2) Demonstrates, evaluates, and verifies the effectiveness, 
utility, affordability, and usability of natural resource conservation 
technologies and approaches in the field;
    (3) Adapts and transfers conservation technologies, management, 
practices, systems, approaches, and incentive systems to improve 
performance and encourage adoption; or
    (4) Introduces proven conservation technologies and approaches to a 
geographic area or agricultural sector where that technology or approach 
is not currently in use.
    (g) Projects or activities under CIG shall comply with all 
applicable Federal, Tribal, State, and local laws and regulations 
throughout the duration of the project.

[84 FR 69280, Dec. 17, 2019, as amended at 85 FR 67647, Oct. 26, 2020]



Sec.1466.32  Conservation innovation grant funding.

    (a) General guidelines. The guidelines in paragraphs (a)(1) through 
(5) of this section apply for national-level CIG awards:
    (1) CIG funding is available for single- or multi-year projects.
    (2) The Chief will determine the funding level for CIG on an annual 
basis.
    (3) CIG funding is made available from EQIP funds made available for 
EQIP.
    (4) The Chief may establish funding limits for individual grants.
    (5) The Chief will publicly announce funding for CIG.
    (b) Project or activity funding. (1) Selected applicants may receive 
grants or cooperative agreements of up to 50 percent of the total 
project cost, not to exceed the federal project cap.
    (2) Applicants must provide non-federal funding at least equal to 
the amount of federal funds requested.
    (3) Non-federal funds must be derived from cash or in-kind sources.
    (c) Authority to reduce matching requirement. The Chief may reduce 
the matching requirements of paragraphs (b)(1) and (2) of this section, 
provided that the applicant is:
    (1) An historically underserved producer;
    (2) A community-based organization comprised of, representing, or 
exclusively working with historically underserved producers on a CIG 
project;

[[Page 860]]

    (3) Developing an innovative conservation approach or technology 
specifically targeting historically underserved producers' unique needs 
and limitations; or
    (4) An 1890 or 1994 land grant institution (7 U.S.C. 3222 et seq.), 
Hispanic-serving institution (20 U.S.C. 1101a), or other minority-
serving institution, such as an historically Black college or university 
(20 U.S.C. 1061), a tribally controlled college or university (25 U.S.C. 
1801), or Asian American and Pacific Islander-serving institution (20 
U.S.C. 1059g).
    (d) Limitation to funding technical assistance. CIG provides 
financial assistance to grantees. Procurement of any technical 
assistance to agricultural producers required to carry out a project is 
the responsibility of the grantee. A Federal technical representative 
designated by NRCS will provide technical oversight for grant projects.
    (e) Set-aside. NRCS may set aside up to 10 percent of the total 
funds available for CIG for applications from historically underserved 
producers, or a community-based organization comprised of, representing, 
or exclusively working with these producers on a CIG project.

[84 FR 69280, Dec. 17, 2019, as amended at 85 FR 67648, Oct. 26, 2020]



Sec.1466.33  Conservation innovation grant administration.

    (a) CIG applications must describe the use of innovative approaches 
or technologies to address announced national or State program 
priorities.
    (b) NRCS may consider as eligible for CIG any individual or non-
federal entity; however, all agricultural producers receiving a direct 
or indirect payment through participation in a CIG project to address 
announced national or State program priorities must--
    (1) Be in compliance with the highly erodible land and wetland 
conservation provisions of 7 CFR part 12;
    (2) Be a producer as determined by NRCS; and
    (3) Have control of the land for the term of the proposed contract 
unless an exception is made by the Chief in the case of land 
administered by the Bureau of Indian Affairs (BIA), Indian lands, or 
other instances in which the Chief determines that there is sufficient 
assurance of control.
    (c) NRCS will annually publish detailed guidance on how to apply for 
the grants competition(s) to address announced national or State program 
priorities.



Sec.1466.34  Award determinations.

    (a) A peer review panel evaluates completed applications based on 
the application evaluation criteria that address announced national or 
State program priorities.
    (b) The peer review panel forwards compiled application evaluations 
to a Grant Review Board (Board).
    (c) The Board reviews the peer review panel evaluations and 
considers review comments from State Conservationists. The Board then 
makes recommendations for awards to the Chief, who makes final 
selections.
    (d) The NRCS National Headquarters makes a grant or cooperative 
agreement award after the Chief selects a grantee and the grantee agrees 
to the terms and conditions of the NRCS grant or cooperative agreement 
document.



Sec.1466.35  State-level conservation innovation grant component.

    (a) NRCS has the option of implementing a State-level CIG component. 
Except as otherwise indicated of this section, State-level CIG awards 
follows the requirements of this subpart for national-level CIG awards.
    (b) Funding availability, application, and submission information 
for State competitions are announced through public notices separately 
from the national program and emphasize projects that cover limited 
geographic areas including individual farms, multicounty areas, or small 
watersheds.
    (c) The State Conservationist determines the funding level for the 
State CIG competition and creates a review process for applications that 
considers various relevant criteria, including any potential conflicts 
of interest.
    (d) NRCS may choose to adhere to the CIG national priorities or 
select other priority resource concerns.

[[Page 861]]



Sec.1466.36  Intellectual property.

    (a) This section applies to all CIG awardees under this subpart.
    (b) Allocation of rights to patents and inventions shall be in 
accordance with 2 CFR part 200.
    (c) Small businesses may retain the principal worldwide patent 
rights to any invention developed with the support of USDA.
    (d) USDA may--
    (1) Receive a royalty-free license for Federal Government use,
    (2) Reserve the right to require the patentee to license others in 
certain circumstances, and
    (3) Require that anyone exclusively licensed to sell the invention 
in the United States must normally manufacture it domestically.



Sec.1466.37  On-Farm Conservation Innovation Trials.

    (a) Purpose. The purpose of the On-Farm Conservation Innovation 
Trials (OFCIT) under this section is for NRCS to facilitate and 
incentivize experimentation and testing of new and innovative 
conservation approaches on farms in a diversity of geographic regions 
and on multiple scales.
    (b) Eligibility determinations. When determining eligibility for a 
private or nongovernmental organization, whether or not that 
organization is operated for profit, to enroll in OFCIT, NRCS may 
consider multiple factors including--
    (1) The extent to which the organization conducts business that is 
related to agriculture;
    (2) The quantity and quality of experience the organization has 
working with agricultural producers; or
    (3) Other factors related to the organization's likelihood to 
succeed or the proposed trial's likelihood to fulfill the purpose of 
OFCIT, as determined by the Chief.
    (c) Agreements with eligible entities. An OFCIT agreement with an 
eligible entity shall contain provisions indicating how NRCS or the 
eligible entity shall provide technical assistance to producers.
    (d) Innovation determinations. Notwithstanding any limitation in 
Sec.1466.31(f) of this subpart, when determining whether to approve of 
a proposed conservation approach as new or innovative, NRCS may consider 
multiple factors including--
    (1) The extent to which the proposed conservation approach makes use 
of new or innovative conservation practices, systems, or technology;
    (2) The extent to which the proposed conservation approach applies 
conservation practices, systems, or technology in new or innovative 
ways, geographic regions, or agricultural sectors; or
    (3) The extent to which the proposed conservation approach uses new 
or innovative processes or financing for implementing conservation 
practices or activities.
    (e) Requirements for producers. When considering whether to enroll 
the land of a producer under an OFCIT agreement, NRCS first determines 
that--
    (1) The participating producer complies with the highly erodible 
land and wetland conservation provisions of 7 CFR part 12;
    (2) The producer controls the land for the term of the proposed 
OFCIT agreement, unless an exception is made by the Chief in the case of 
land administered by the BIA, Indian lands, or other instances in which 
the Chief determines that there is sufficient assurance of control;
    (3) The producer is within the income limitations set forth in part 
1400, subpart F of this chapter; and
    (4) The land subject to the project proposal meets the definition of 
eligible land under Sec.1466.3.
    (f) Restriction on administrative cost. None of the funds made 
available to carry out this section may be used to pay for the 
administrative expenses of an eligible entity.
    (g) OFCIT agreement period. (1) An OFCIT agreement shall be for a 
period of at least 3 years, unless the Chief determines that a longer 
period is necessary.
    (2) The contract period in excess of 3 years shall be no longer than 
reasonably and foreseeably necessary to fulfill the purpose of OFCIT, as 
determined by the Chief.
    (3) When determining whether to set a contract period longer than 3 
years,

[[Page 862]]

NRCS shall consider whether such a period is appropriate including 
whether the period supports--
    (i) Adaptive management over multiple crops years; and
    (ii) Adequate data collection and analysis by a producer or eligible 
entity to report the natural resource and agricultural production 
benefits of the new or innovative conservation approaches to the 
Secretary.
    (h) Data collection. For all OFCIT contracts, NRCS shall ensure that 
appropriate data is collected and analyzed while respecting relevant 
privacy safeguards by transforming the data into statistical or 
aggregated form so as not to include any identifiable or personal 
information of individual producers.
    (i) OFCIT payments. Pursuant to an OFCIT agreement, NRCS may 
provide--
    (1) Technical assistance to a participating producer or eligible 
entity with respect to the design, installation, and management of the 
new or innovative conservation approaches;
    (2) Technical assistance to a participating eligible entity with 
respect to data analyses of the OFCIT; and
    (3) Financial assistance to a participating producer (either 
directly or through an eligible entity) that may include payments to 
compensate for income foregone, as appropriate to address the increased 
economic risk potentially associated with new or innovative conservation 
approaches:
    (j) Absence of payment limitation. Neither the contract payment 
limitation set forth in Sec.1466.22 nor the aggregate payment 
limitation set forth in Sec.1466.24 shall apply to OFCIT agreements.



Sec.1466.38  Soil Health Demonstration trial.

    (a) The Soil Health Demonstration (SHD) shall make use of the OFCIT 
process, including eligibility requirements, and funding set forth in 
Sec.1466.37 to provide incentives to producers to implement 
conservation practices that improve soil health, increase carbon levels 
in the soil, or both.
    (b) In carrying out SHD, NRCS shall coordinate with eligible 
entities to establish protocols for measuring carbon levels in the soil 
and testing carbon levels on land where conservation practices described 
in paragraph (a) of this section were applied to evaluate gains in soil 
health as a result of the practices implemented by the producers in the 
soil health demonstration trial.
    (c) For each SHD contract, NRCS shall ensure that appropriate data 
is collected and analyzed while respecting relevant privacy safeguards 
by transforming the data into statistical or aggregated form so as not 
to include any identifiable or personal information of individual 
producers.



                      Subpart D_Incentive Contracts



Sec.1466.40  High priority areas.

    (a) The Chief shall, in consultation with the State Technical 
Committee, develop a set of high priority areas for each State.
    (b) The set of high priority areas described in paragraph (a) of 
this section must encompass every region within the State.
    (c) A high priority area may encompass an entire State or overlap 
with other high priority areas such that a given parcel of land may 
exist in multiple high priority areas.
    (d) The Chief, in consultation with the State Technical Committee, 
shall identify up to three priority resource concerns for each land use 
within a given high priority area.
    (e) An identification under paragraph (d) of this section of a 
priority resource concern for one land use shall not preclude NRCS from 
identifying the same priority resource concern for a different land use 
within the same high priority area.
    (f) NRCS shall identify which practices qualify as incentive 
practices for each land use within each high priority area based on the 
priority resource concern(s) identified for that land use.
    (g) NRCS shall make public all determinations made under this 
section.



Sec.1466.41  Incentive contract selection.

    (a) NRCS will give priority to applications that address eligible 
priority resource concerns identified under Sec.1466.40.
    (b) NRCS will evaluate applications relative to other applications 
for similar agriculture and forest operations.

[[Page 863]]

    (c) NRCS shall not select an application for an incentive contract 
that does not contain at least one qualifying incentive practice as 
identified under Sec.1466.40.



Sec.1466.42  Incentive contract requirements.

    (a) Requirement for a contract. (1) In order for a participant to 
receive incentive payments, the participant must enter into an incentive 
contract agreeing to implement one or more incentive practices.
    (2) Payment for technical services may be included in the contract 
pursuant to requirements of this part.
    (b) Incentive contract terms. An incentive contract will--
    (1) Identify all incentive practices to be implemented, the timing 
of practice installation, responsibilities of the participant, the O&M 
requirements for the practices, and applicable payments allocated to the 
practices under the contract;
    (2) Have a period as set forth in Sec.1466.43;
    (3) Specify any other provision determined necessary or appropriate 
by NRCS to achieve the technical requirements of a practice or purposes 
of the program.
    (c) Termination of the incentive contract. NRCS may terminate an 
incentive contract consistent with the provisions of Sec.1466.26.



Sec.1466.43  Incentive contract period.

    (a) NRCS shall apply science-based criteria to determine an 
appropriate contract period to achieve desired conservation benefits.
    (b) The period determined as appropriate under paragraph (a) of this 
section shall not be less than 5 years nor exceed 10 years.



Sec.1466.44  Incentive payment rates and restrictions.

    (a) Aggregate payment limitation. (1) Notwithstanding the payment 
limitation in Sec.1466.24, the total amount of payments paid to a 
person or legal entity under this subpart, during the period of fiscal 
years 2019 through 2023, may not exceed an aggregate of $200,000, 
directly or indirectly.
    (2) Payments received for technical assistance will be excluded from 
the limitation in paragraph (a)(1) of this section.
    (3) The limitation in paragraph (a)(1) of this section cannot be 
waived.
    (b) Restrictions and exceptions. Except as otherwise indicated in 
paragraph (a) of this section, incentive contracts are subject to the 
payment restrictions and exceptions as set forth in Sec.1466.24.
    (c) Implementation payments. The payment rates for implementation of 
incentive practices shall be identical to the payment rates for practice 
implementation as set forth in Sec.1466.23.
    (d) Annual payments. In addition to the payment for implementation 
set forth in paragraph (c) of this section, NRCS may award annual 
payments through incentive contracts to compensate the participant for 
up to 100 percent of the costs of--
    (1) O&M of the incentive practice; and
    (2) Income foregone by the participant, including payments to 
address, as appropriate--
    (i) Increased economic risk,
    (ii) Loss in revenue due to anticipated reductions in yield, and
    (iii) Economic losses during transition to a resource-conserving 
cropping system, resource-conserving crop rotation, or resource-
conserving land uses.



                    Subpart E_General Administration



Sec.1466.50  Appeals.

    A participant may obtain administrative review of an adverse 
decision under EQIP in accordance with 7 CFR parts 11 and 614. 
Determination in matters of general applicability, such as payment 
rates, payment limits, the designation of identified priority resource 
concerns, and eligible conservation practices are not subject to appeal.



Sec.1466.51  Compliance with regulatory measures.

    Participants who carry out conservation practices will be 
responsible for

[[Page 864]]

obtaining the authorities, rights, easements, permits, or other 
approvals necessary for the implementation, operation, and maintenance 
of the conservation practices in keeping with applicable laws and 
regulations. Participants will be responsible for compliance with all 
laws and for all effects or actions resulting from the participant's 
performance under the contract.



Sec.1466.52  Access to operating unit.

    An authorized NRCS representative will have the right to enter land 
under an NRCS conservation program contract for the purposes of 
determining eligibility and for ascertaining the accuracy of any 
representations related to contract performance. Access will include the 
right to provide technical assistance, determine eligibility, inspect 
any work undertaken under the contract, and collect information 
necessary to evaluate the conservation practice performance specified in 
the contract. The NRCS representative will make an effort to contact the 
participant prior to the exercising this provision.



Sec.1466.53  Equitable relief.

    (a) If a participant relied upon the advice or action of an 
authorized NRCS representative and did not know, or have reason to know, 
that the action or advice was improper or erroneous, NRCS may accept the 
advice or action as meeting program requirements and may grant relief, 
to the extent it is deemed desirable by NRCS, to provide a fair and 
equitable treatment because of the good-faith reliance on the part of 
the participant. The financial or technical liability for any action by 
a participant that was taken based on the advice of an NRCS certified 
non-USDA TSP is the responsibility of the certified TSP and will not be 
assumed by NRCS when NRCS authorizes payment. Where a participant 
believes that detrimental reliance on the advice or action of an NRCS 
representative resulted in ineligibility or a program violation, but the 
participant believes that a good-faith effort to comply was made, the 
participant may request equitable relief under 7 CFR 635.3.
    (b) If, during the term of an EQIP contract, a participant has been 
found in violation of a provision of the EQIP contract, the O&M 
agreement, or any document incorporated by reference through failure to 
fully comply with that provision, the participant may be eligible for 
equitable relief under 7 CFR 635.4.
    (c) NRCS reserves the right to correct all errors in entering data 
or the results of computations in an EQIP contract. If a participant 
does not agree to such corrections, NRCS shall terminate the contract.



Sec.1466.54  Offsets and assignments.

    (a) Except as provided in paragraph (b) of this section, any payment 
or portion thereof to any person, joint venture, legal entity, or Tribe 
will be made without regard to questions of this title under State law 
and without regard to any claim or lien against the crop, or proceeds 
thereof, in favor of the owner or any other creditor except agencies of 
the U.S. Government. The regulations governing offsets and withholdings 
found at part 1403 of this chapter will be applicable to contract 
payments.
    (b) EQIP participants may assign any payments in accordance with 
part 1404 of this chapter.



Sec.1466.55  Misrepresentation and scheme or device.

    (a) A person, joint operation, legal entity, or Indian Tribe that is 
determined to have erroneously represented any fact affecting a program 
determination made in accordance with this part will not be entitled to 
contract payments and must refund to NRCS all payments, plus interest, 
determined in accordance with 7 CFR part 1403.
    (b) A producer who is determined to have knowingly--
    (1) Adopted any scheme or device that tends to defeat the purpose of 
the program;
    (2) Made any fraudulent representation;
    (3) Adopted any scheme or device for the purpose of depriving any 
tenant or sharecropper of the payments to which such person would 
otherwise be entitled under the program; or
    (4) Misrepresented any fact affecting a program determination, will 
refund to NRCS all payments, plus interest,

[[Page 865]]

determined in accordance with 7 CFR part 1403, received by such producer 
with respect to all contracts. The producer's interest in all contracts 
will be terminated.



Sec.1466.56  Environmental credits for conservation improvements.

    (a) A participant in EQIP may achieve environmental benefits that 
may qualify for environmental credits under an environmental credit-
trading program. NRCS asserts no direct or indirect interest on these 
credits. However, NRCS retains the authority to ensure that EQIP 
purposes are met. In addition, any requirements or standards of an 
environmental market program in which an EQIP participant simultaneously 
enrolls to receive environmental credits must be compatible with the 
purposes and requirements of the EQIP contract and with this part.
    (b) The participant must meet all O&M requirements for EQIP-funded 
activities, consistent with Sec. Sec.1466.21 and 1466.22. Where 
activities required under an environmental credit agreement may affect 
the land and conservation practices under an EQIP contract, NRCS 
recommends that EQIP participants request assistance with the 
development of a compatibility assessment prior to entering into any 
credit agreement. The EQIP contract may be modified in accordance with 
policies outlined in Sec.1466.25, provided the modification meets EQIP 
purposes and is in compliance with this part.
    (c) EQIP participants may not use EQIP funds to implement 
conservation practices and activities that the participant is required 
to establish as a result of a court order. EQIP funds may not be used to 
satisfy any mitigation requirement for which the EQIP participant is 
responsible.



PART 1467_WETLANDS RESERVE PROGRAM--Table of Contents



Sec.
1467.1 Applicability.
1467.2 Administration.
1467.3 Definitions.
1467.4 Program requirements.
1467.5 Application procedures.
1467.6 Establishing priority for enrollment of properties in WRP.
1467.7 Enrollment process.
1467.8 Compensation for easements and 30-year contracts.
1467.9 Wetlands Reserve Enhancement Program.
1467.10 Cost-share payments.
1467.11 Easement participation requirements.
1467.12 The WRPO development.
1467.13 Modifications.
1467.14 Transfer of land.
1467.15 Violations and remedies.
1467.16 Payments not subject to claims.
1467.17 Assignments.
1467.18 Appeals.
1467.19 Scheme and device.
1467.20 Market-based conservation initiatives.

    Authority: 16 U.S.C. 3837 et seq.

    Source: 74 FR 2328, Jan. 15, 2009, unless otherwise noted.



Sec.1467.1  Applicability.

    (a) The regulations in this part set forth the policies, procedures, 
and requirements for the Wetlands Reserve Program (WRP) as administered 
by the Natural Resources Conservation Service (NRCS) for program 
implementation.
    (b) The Chief, NRCS, may implement WRP in any of the 50 States, the 
District of Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin 
Islands of the United States, American Samoa, and the Commonwealth of 
the Northern Mariana Islands.



Sec.1467.2  Administration.

    (a) The regulations in this part will be administered under the 
general supervision and direction of the Chief.
    (b) The Chief is authorized to modify or waive a provision of this 
part if the Chief deems the application of that provision to a 
particular limited situation to be inappropriate and inconsistent with 
the environmental and cost-efficiency goals of the WRP. This authority 
cannot be further delegated. The Chief may not modify or waive any 
provision of this part that is required by applicable law.
    (c) The State Conservationist will seek advice from the State 
Technical Committee on the development of the geographic area rate caps 
of compensation for an easement, a priority ranking process, and related 
policy matters.
    (d) NRCS may delegate at any time easement management, monitoring, 
and enforcement responsibilities to

[[Page 866]]

other Federal or State agencies that have the appropriate authority, 
expertise, and technical and financial resources, as determined by NRCS 
to carry out such delegated responsibilities.
    (e) NRCS may enter into cooperative agreements with Federal or State 
agencies, conservation districts, and private conservation organizations 
to assist NRCS with program implementation, including the provision of 
technical assistance.
    (f) NRCS shall consult with the U.S. Department of the Interior's 
Fish and Wildlife Service (FWS) at the local level in determinations of 
land eligibility and as appropriate throughout the program 
implementation process. NRCS may consult Federal or State agencies, 
conservation districts, or other organizations in program 
administration. No determination by these agencies or organizations 
shall compel NRCS to take any action which NRCS determines will not 
serve the purposes of the program established by this part.
    (g) The Chief may allocate funds for purposes related to: 
Encouraging enrollment by historically underserved producers as 
authorized by 16 U.S.C. 3844; special pilot programs for wetland 
management and monitoring; acquisition of wetland easements with 
emergency funding; cooperative agreements with other Federal or State 
agencies for program implementation; coordination of easement enrollment 
across State boundaries; coordination of the development of conservation 
plans; or, for other goals of the WRP found in this part. NRCS may 
designate areas as conservation priority areas where environmental 
concerns are especially pronounced and to assist landowners in meeting 
nonpoint source pollution requirements and other conservation needs.



Sec.1467.3  Definitions.

    The following definitions are applicable to this part:
    30-year Contract means a contract that is for a duration of 30 years 
and is limited to acreage owned by Indian Tribes.
    Acreage Owned by Indian Tribes means lands held in private ownership 
by an Indian Tribe or individual Tribal member and lands held in trust 
by a native corporation, Tribe or the Bureau of Indian Affairs (BIA).
    Activity means an action other than a conservation practice that is 
included in the WRPO or restoration cost-share agreement, as applicable, 
and that has the effect of alleviating problems or improving treatment 
of the resources, including ensuring proper management or maintenance of 
the wetland functions and values restored, protected, or enhanced 
through an easement, contract, or restoration cost-share agreement.
    Agreement means the document that specifies the obligations and 
rights of NRCS and any person or legal entity who is participating in 
the program.
    Agricultural commodity means any agricultural commodity planted and 
produced in a State by annual tilling of the soil, including tilling by 
one-trip planters; or sugarcane planted and produced in a State.
    Beginning Farmer or Rancher means an individual or legal entity who 
has not operated a farm or ranch, or who has operated a farm or ranch 
for not more than 10 consecutive years. This requirement applies to all 
members of a legal entity, and who will materially and substantially 
participate in the operation of the farm or ranch. In the case of an 
individual, individually or with the immediate family, material and 
substantial participation requires that the individual provide 
substantial day-to-day labor and management of the farm or ranch, 
consistent with the practices in the county or State where the farm is 
located. In the case of a legal entity or joint operation, material and 
substantial participation requires that each of the members provide some 
amount of the management, or labor and management necessary for day-to-
day activities, such that if each of the members did not provide these 
inputs, operation of the farm or ranch would be seriously impaired.
    Chief means the Chief of the Natural Resources Conservation Service 
or the person delegated authority to act for the Chief.
    Commenced conversion wetland means a wetland or converted wetland 
for

[[Page 867]]

which the Farm Service Agency has determined that the wetland 
manipulation was contracted for, started, or for which financial 
obligation was incurred before December 23, 1985.
    Conservation district means any district or unit of State or local 
government formed under State or territorial law for the express purpose 
of developing and carrying out a local soil and water conservation 
program. Such district or unit of government may be referred to as a 
``conservation district,'' ``soil conservation district,'' ``soil and 
water conservation district,'' ``resource conservation district,'' 
``natural resource district,'' ``land conservation committee,'' or a 
similar name.
    Conservation practice means a specified treatment, such as a 
vegetative, structural, or land management practice, that is planned and 
applied according to NRCS standards and specifications.
    Conservation Reserve Program (CRP) means the program administered by 
the Commodity Credit Corporation pursuant to 16 U.S.C. 3831-3836.
    Contract means the legal document that specifies the obligations and 
rights of NRCS and any person or legal entity accepted to participate in 
the program. A WRP contract is an agreement for the transfer of 
assistance from NRCS to the participant for conducting the prescribed 
program implementation actions.
    Converted wetland means a wetland that has been drained, dredged, 
filled, leveled, or otherwise manipulated (including any activity that 
results in impairing or reducing the flow, circulation, or reach of 
water) for the purpose, or to have the effect of, making the production 
of an agricultural commodity possible if such production would not have 
been possible but for such action; and before such action such land was 
wetland; and such land was neither highly erodible land nor highly 
erodible cropland.
    Cost-share payment means the payment made by NRCS to a participant 
to carry out conservation practices and to achieve the protection of 
wetland functions and values, including necessary activities, as set 
forth in the Wetlands Reserve Plan of Operations (WRPO).
    Easement means a reserved interest easement, which is an interest in 
land defined and delineated in a deed whereby the landowner conveys all 
rights, title, and interests in a property to the grantee, but the 
landowner retains those rights, title, and interests in the property 
which are specifically reserved to the landowner in the easement deed.
    Easement area means the land encumbered by an easement.
    Easement payment means the consideration paid to a landowner for an 
easement conveyed to the United States under the WRP, or the 
consideration paid to an Indian Tribe or tribal members for entering 
into 30-year contracts.
    Easement Restoration Agreement means the agreement used to implement 
the Wetland Restoration Plan of Operations for projects enrolled through 
the permanent easement, 30-year easement, or 30-year contract enrollment 
options.
    Farm Service Agency (FSA) is an agency of the United States 
Department of Agriculture.
    Fish and Wildlife Service (FWS) is an agency of the United States 
Department of the Interior.
    Historically Underserved Producer means a beginning, limited 
resource, or socially disadvantaged farmer or rancher.
    Indian Tribe means any Indian tribe, band, nation, or other 
organized group or community, including any Alaska Native village or 
regional or village corporation as defined in or established pursuant to 
the Alaska Native Claims Settlement Act (85 Stat. 688, 43 U.S.C. 1601 et 
seq.), which is recognized as eligible for the special programs and 
services provided by the United States to Indians because of their 
status as Indians.
    Landowner means a person or legal entity having legal ownership of 
eligible land. Landowner may include all forms of collective ownership 
including joint tenants, tenants in common, and life tenants. The term 
landowner includes trust holders of acreage owned by Indian Tribes.
    Lands substantially altered by flooding means areas where flooding 
has created wetland hydrologic conditions which,

[[Page 868]]

with a high degree of certainty, will develop wetland soil and 
vegetation characteristics over time.
    Legal entity means an entity that is created under Federal or State 
law and that owns land or an agricultural commodity; or produces an 
agricultural commodity.
    Limited Resource Farmer or Rancher means a person with direct or 
indirect gross farm sales not more than $100,000 in each of the previous 
two years (to be increased to adjust for inflation using Prices Paid by 
Farmer Index as compiled by National Agricultural Statistical Service 
(NASS)), and who has a total household income at or below the national 
poverty level for a family of four, or less than 50 percent of county 
median household income in each of the previous two years (to be 
determined annually using U.S. Department of Commerce data).
    Maintenance means work performed to keep the enrolled area 
functioning for program purposes for the duration of the enrollment 
period. Maintenance includes actions and work to manage, prevent 
deterioration, repair damage, or replace conservation practices on 
enrolled lands, as approved by NRCS.
    Natural Resources Conservation Service (NRCS) is an agency of the 
United States Department of Agriculture, including when NRCS carries out 
program implementation using the funds, facilities, or authorities of 
the Commodity Credit Corporation (CCC).
    Option agreement to purchase means the legal document that is the 
equivalent of a real estate option contract for purchasing land. The 
landowner signs the option agreement to purchase, which is authorization 
for NRCS to proceed with the easement acquisition process, and to incur 
costs for surveys, where applicable, title clearance and closing 
procedures on the easement. The option becomes a contract for sale and 
obligates CCC funding after it is executed by NRCS and transmitted to 
the landowner.
    Participant means a person or legal entity who has been accepted 
into the program and who is receiving payment or who is responsible for 
implementing the terms and conditions of an option to purchase 
agreement, 30-year contract, or restoration cost-share agreement, and 
the associated WRPO.
    Permanent easement means an easement that lasts in perpetuity.
    Person means a natural person, a legal entity, or an Indian Tribe, 
but does not include governments or their political subdivisions.
    Prairie Pothole Region means the counties designated as part of the 
Prairie Pothole National Priority Area for the Conservation Reserve 
Program (CRP) as of June 18, 2008.
    Private land means land that is not owned by a governmental entity, 
and includes acreage owned by Indian Tribes, as defined in this Part.
    Restoration Cost-Share Agreement means the legal document that 
describes the rights and obligations of participants who have been 
accepted to participate in WRP restoration cost-share enrollment option 
that is used to implement conservation practices and activities to 
protect, restore, or enhance wetlands values and functions to achieve 
the purposes of the program. The restoration cost-share agreement is an 
agreement between NRCS and the participant to share in the costs of 
implementing the Wetland Restoration Plan of Operations.
    Riparian areas means areas of land that occur along streams, 
channels, rivers, and other water bodies. These areas are normally 
distinctly different from the surrounding lands because of unique soil 
and vegetation characteristics, may be identified by distinctive 
vegetative communities that are reflective of soil conditions normally 
wetter than adjacent soils, and generally provide a corridor for the 
movement of wildlife.
    Socially disadvantaged farmer or rancher means a farmer or rancher 
who has been subjected to racial or ethnic prejudices because of their 
identity as a member of a group without regard to their individual 
qualities.
    State Technical Committee means a committee established by the 
Secretary of the United States Department of Agriculture (USDA) in a 
State pursuant to 16 U.S.C. 3861.
    Wetland means land that:
    (1) Has a predominance of hydric soils;

[[Page 869]]

    (2) Is inundated or saturated by surface or groundwater at a 
frequency and duration sufficient to support a prevalence of hydrophytic 
vegetation typically adapted for life in saturated soil conditions; and
    (3) Supports a prevalence of such vegetation under normal 
circumstances.
    Wetland functions and values means the hydrological and biological 
characteristics of wetlands and the socioeconomic value placed upon 
these characteristics, including:
    (1) Habitat for migratory birds and other wildlife, in particular at 
risk species;
    (2) Protection and improvement of water quality;
    (3) Attenuation of water flows due to flood;
    (4) The recharge of ground water;
    (5) Protection and enhancement of open space and aesthetic quality;
    (6) Protection of flora and fauna which contributes to the Nation's 
natural heritage; and
    (7) Contribution to educational and scientific scholarship.
    Wetland restoration means the rehabilitation of degraded or lost 
habitat in a manner such that:
    (1) The original vegetation community and hydrology are, to the 
extent practical, re-established; or
    (2) A community different from what likely existed prior to 
degradation of the site is established. The hydrology and native self-
sustaining vegetation being established will substantially replace 
original habitat functions and values and does not involve more than 30 
percent of the wetland restoration area.
    Wetlands Reserve Plan of Operations (WRPO) means the conservation 
plan that identifies how the wetland functions and values will be 
restored, improved, and protected and which is approved by NRCS.



Sec.1467.4  Program requirements.

    (a) General. (1) Under the WRP, NRCS may purchase conservation 
easements from, or enter into 30-year contracts or restoration cost-
share agreements with, eligible landowners who voluntarily cooperate to 
restore, protect, or enhance wetlands on eligible private and Tribal 
lands. The 30-year contract enrollment option is only available to 
acreage owned by Indian Tribes.
    (2) To participate in WRP, a landowner must agree to the 
implementation of a WRPO, the effect of which is to restore, protect, 
enhance, maintain, and manage the hydrologic conditions of inundation or 
saturation of the soil, native vegetation, and natural topography of 
eligible lands. NRCS may provide cost-share assistance through a 
restoration cost-share agreement or an easement restoration agreement 
for the conservation practices and activities that promote the 
restoration, protection, enhancement, maintenance, and management of 
wetland functions and values. For easement transactions, NRCS may 
implement such conservation practices and activities through an 
agreement with the landowner, a contract with a vendor, or a cooperative 
agreement with a cooperating entity. Specific restoration, protection, 
enhancement, maintenance, and management actions may be undertaken by 
the landowner, NRCS, or other designee.
    (b) Acreage limitations. (1) Except for areas devoted to windbreaks 
or shelterbelts after November 28, 1990, no more than 25 percent of the 
total cropland in any county, as determined by the FSA, may be enrolled 
in the CRP and the WRP, and no more than 10 percent of the total 
cropland in the county may be subject to an easement acquired through 
the WRP.
    (2) NRCS and FSA shall concur before a waiver of the 25 percent 
limit of this paragraph can be approved for an easement proposed for 
enrollment in the WRP. Such a waiver will only be approved if the waiver 
will not adversely affect the local economy, and operators in the county 
are having difficulties complying with the conservation plans 
implemented under 16 U.S.C. 3812.
    (c) Landowner eligibility. To be eligible to enroll in the WRP, a 
person, legal entity, or Indian Tribe must be in compliance with the 
highly erodible land and wetland conservation provisions in 7 CFR part 
12. Persons or legal entities must be in compliance with the Adjusted 
Gross Income Limitation

[[Page 870]]

provisions at Subpart G of 7 CFR part 1400, and:
    (1) Be the landowner of eligible land for which enrollment is 
sought;
    (2) For easement applications, have been the landowner of such land 
for the 7-year period prior to the time the land is determined eligible 
for enrollment unless it is determined by the State Conservationist 
that:
    (i) The land was acquired by will or succession as a result of the 
death of the previous landowner;
    (ii) The ownership change occurred due to foreclosure on the land 
and the owner of the land immediately before the foreclosure exercises a 
right of redemption from the mortgage holder in accordance with State 
law; or
    (iii) The land was acquired under circumstances that give adequate 
assurances, as determined by NRCS, that such land was not acquired for 
the purposes of placing it in the program, such as demonstration of 
status as a beginning farmer or rancher.
    (3) Agree to provide such information to NRCS as the agency deems 
necessary or desirable to assist in its determination of eligibility for 
program benefits and for other program implementation purposes.
    (d) When a parcel of land that has been accepted for enrollment into 
the WRP is sold or transferred prior to the easement being perfected, 
the application or option agreement to purchase will be cancelled and 
acres will be removed from enrollment. If the new landowner wishes to 
continue enrollment, a new application must be filed so that all 
eligibility criteria may be examined and documented.
    (e) Land eligibility. (1) Only private land or land owned by Indian 
Tribes may be considered for enrollment into WRP.
    (2) NRCS shall determine whether land is eligible for enrollment and 
whether, once found eligible, the lands may be included in the program 
based on the likelihood of successful restoration of wetland functions 
and values when considering the cost of acquiring the easement and the 
cost of the restoration, protection, enhancement, maintenance, and 
management.
    (3) Land shall only be considered eligible for enrollment in the WRP 
if NRCS determines, in consultation with the FWS, that:
    (i) The enrollment of such land maximizes wildlife benefits and 
wetland values and functions;
    (ii) Such land is--
    (A) Farmed wetland or converted wetland, together with adjacent 
lands that are functionally dependent on the wetlands; or
    (B) Cropland or grassland that was used for agricultural production 
prior to flooding from the natural overflow of a closed basin lake or 
pothole, together with the adjacent land, where practicable, that is 
functionally dependent on the cropland or grassland; and
    (iii) The likelihood of the successful restoration of such land and 
the resultant wetland values merit inclusion of such land in the 
program, taking into consideration the cost of such restoration.
    (4) Land may be considered farmed wetland or converted wetland under 
paragraph (3)(ii)(A) of this section if such land is identified by NRCS 
as:
    (i) Wetlands farmed under natural conditions, farmed wetlands, prior 
converted cropland, commenced conversion wetlands, farmed wetland 
pastures, and lands substantially altered by flooding so as to develop 
wetland functions and values; or
    (ii) Former or degraded wetlands that occur on lands that have been 
used or are currently being used for the production of food and fiber, 
including rangeland and forest production lands, where the hydrology has 
been significantly degraded or modified and will be substantially 
restored.
    (5) Land under paragraph (e)(3)(ii)(B) of this section may be 
considered for enrollment into 30-year easements if it meets the 
criteria under paragraph (e)(3) of this section, it is located in the 
Prairie Pothole Region as defined under Sec.1467.3 of this part, and 
the size of the parcel offered for enrollment is a minimum of 20 
contiguous acres. Such land meets the requirement of likelihood of 
successful restoration only if the soils are hydric and the depth of 
water is 6.5 feet or less.
    (6) If land offered for enrollment is determined eligible under 
paragraph (e)(3) and (e)(5) of this section, then

[[Page 871]]

NRCS may also enroll land adjacent or contiguous to such eligible land 
together with the eligible land, if such land maximizes wildlife 
benefits and:
    (i) Is farmed wetland and adjoining lands enrolled in CRP, with the 
highest wetland functions and values, and is likely to return to 
production after it leaves CRP;
    (ii) Is a riparian area along streams or other waterways that links 
or, after restoring the riparian area, will link wetlands which are 
protected by an easement or other device or circumstance that achieves 
the same objectives as an easement; or
    (iii) Land adjacent to the eligible land that would contribute 
significantly to wetland functions and values, such as buffer areas, 
wetland creations, non-cropped natural wetlands, and restored wetlands, 
but not more than the State Conservationist, in consultation with the 
State Technical Committee, determines is necessary for such 
contribution.
    (7) To be enrolled in the program, eligible land must be configured 
in a size and with boundaries that allow for the efficient management of 
the area for program purposes and otherwise promote and enhance program 
objectives, as determined by NRCS.
    (f) Enrollment of CRP lands. Land subject to an existing CRP 
contract may be enrolled in the WRP only if the land and landowner meet 
the requirements of this part, and the enrollment is requested by the 
landowner and agreed to by NRCS. To enroll in WRP, the CRP contract for 
the property must be terminated or otherwise modified subject to such 
terms and conditions as are mutually agreed upon by FSA and the 
landowner.
    (g) Ineligible land. The following land is not eligible for 
enrollment in the WRP:
    (1) Converted wetlands if the conversion was commenced after 
December 23, 1985;
    (2) Land that contains timber stands established under a CRP 
contract or pastureland established to trees under a CRP contract;
    (3) Lands owned by an agency of the United States, other than held 
in trust for Indian Tribes;
    (4) Lands owned in fee title by a State, including an agency or a 
subdivision of a State, or a unit of local government;
    (5) Land subject to an easement or deed restriction which, as 
determined by NRCS, provides similar restoration and protection of 
wetland functions and values as would be provided by enrollment in WRP; 
and
    (6) Lands where implementation of restoration practices would be 
undermined due to on-site or off-site conditions, such as risk of 
hazardous substances either on-site or off-site, proposed or existing 
rights of way, either on-site or off-site, for infrastructure 
development, or adjacent land uses, such as airports, that would either 
impede complete restoration or prevent wetland functions and values from 
being fully restored.

[74 FR 2328, Jan. 15, 2009, as amended at 74 FR 26284, June 2, 2009]



Sec.1467.5  Application procedures.

    (a) Application for participation. To apply for enrollment, a 
landowner must submit an Application for Participation in the WRP.
    (b) Preliminary agency actions. By filing an Application for 
Participation, the landowner consents to an NRCS representative entering 
upon the land for purposes of assessing the wetland functions and 
values, and for other activities, such as the development of the 
preliminary WRPO, that are necessary or desirable for NRCS to evaluate 
applications. The landowner is entitled to accompany an NRCS 
representative on any site visits.
    (c) Voluntary reduction in compensation. In order to enhance the 
probability of enrollment in WRP, a landowner may voluntarily offer to 
accept a lesser payment than is being offered by NRCS.



Sec.1467.6  Establishing priority for enrollment of properties in WRP.

    (a) When evaluating easement, 30-year contract, or restoration cost-
share agreement offers from landowners, the NRCS, with advice from the 
State Technical Committee, may consider:

[[Page 872]]

    (1) The conservation benefits of obtaining an easement, or other 
interest in the land;
    (2) The cost effectiveness of each easement or other interest in 
eligible land, so as to maximize the environmental benefits per dollar 
expended;
    (3) Whether the landowner or another person is offering to 
contribute financially to the cost of the easement or other interest in 
the land to leverage Federal funds;
    (4) The extent to which the purposes of the easement program would 
be achieved on the land;
    (5) The productivity of the land; and
    (6) The on-farm and off-farm environmental threats if the land is 
used for the production of agricultural commodities.
    (b) To the extent practicable, taking into consideration costs and 
future agricultural and food needs, NRCS shall give priority to:
    (1) Obtaining permanent easements over shorter term easements; and
    (2) Acquiring easements based on the value of the easement for 
protecting and enhancing habitat for migratory birds and other wildlife, 
in consultation with FWS.
    (c) NRCS, in consultation with the State Technical Committee, may 
place higher priority on certain geographic regions of the State where 
restoration of wetlands may better achieve State and regional goals and 
objectives.
    (d) Notwithstanding any limitation of this part, the State 
Conservationist may, at any time, exclude enrollment of otherwise 
eligible lands if the participation of the adjacent landowners is 
essential to the successful restoration of the wetlands and those 
adjacent landowners are unwilling or ineligible to participate. The 
State Conservationist may coordinate with other Federal, State, and 
nonprofit organizations to encourage the restoration of wetlands on 
adjacent ineligible lands, especially in priority geographic areas.
    (e)(1) The Chief will conduct an assessment during fiscal year 2008 
and each subsequent fiscal year for the purpose of determining the 
interest and allocations for the Prairie Pothole Region to enroll land 
determined eligible under Sec.1467.4(d)(5) of this part into 30-year 
easements. Annually, the Chief will provide specific instructions for 
the assessment in writing to the applicable State Conservationists.
    (2) The Chief will make an adjustment to the allocation for an 
applicable State for a fiscal year, based on the results of the 
assessment conducted under paragraph (e)(1) of this section for the 
State during the previous fiscal year.



Sec.1467.7  Enrollment process.

    (a) Tentative Selection. Based on the priority ranking, NRCS will 
notify an affected landowner of tentative acceptance into the program.
    (b) Effect of notice of tentative selection. The notice of tentative 
acceptance into the program does not bind NRCS or the United States to 
enroll the proposed project in WRP, nor does it bind the landowner to 
continue with enrollment in the program. The notice informs the 
landowner of NRCS' intent to continue the enrollment process on their 
land unless otherwise notified by the landowner.
    (c) Acceptance and effect of offer of enrollment--(1) Easement. For 
applications requesting enrollment through an easement, an option 
agreement to purchase will be presented by NRCS to the landowner, which 
will describe the easement area; the easement compensation amount; the 
easement terms and conditions; and other terms and conditions for 
participation that may be required by NRCS as appropriate. The landowner 
accepts enrollment in the WRP by signing the option agreement to 
purchase. NRCS will continue with easement acquisition activities after 
the property has been enrolled.
    (2) Restoration cost-share agreement. For applications requesting 
enrollment through the restoration cost-share agreement option, a 
restoration cost-share agreement shall be presented by NRCS to the 
landowner, which will describe the enrolled area, the agreement terms 
and conditions, and other terms and conditions for participation that 
may be required by NRCS as appropriate. The landowner accepts enrollment 
in the WRP by signing the restoration cost-share agreement. NRCS will 
proceed with implementation of the WRPO after the property has been 
enrolled.

[[Page 873]]

    (3) 30-year contract. For applications requesting enrollment through 
the 30-year contract option, a 30-year contract shall be presented by 
NRCS to the landowner, which will describe the contract area, the 
contract terms and conditions, and other terms and conditions for 
participation that may be required by NRCS as appropriate. The landowner 
accepts enrollment in the WRP by signing the 30-year contract. NRCS will 
proceed with implementation of the WRPO after the property has been 
enrolled.
    (d) Restoration responsibility and the scope of enrollment. (1) The 
enrollment document establishes the terms of enrollment consistent with 
the terms and conditions of this part, and identifies the:
    (i) Scope of the agreement between NRCS and the landowner;
    (ii) Basis for NRCS to obligate funds; and
    (iii) Nature and method through which NRCS will provide WRP 
technical and financial assistance to the landowner.
    (2) The option agreement to purchase between NRCS and the landowner 
under the easement option constitutes the agreement for:
    (i) Granting an easement on the enrolled land as set forth under 
Sec.1467.11;
    (ii) Implementing a WRPO which provides for the restoration and 
protection of the functions and values of wetlands;
    (iii) Recording the easement in accordance with applicable State 
law; and
    (iv) Ensuring the title to the easement is superior to the rights of 
all others, except for exceptions to the title that are deemed 
acceptable by NRCS.
    (3) The terms of the easement identified in paragraph (d)(2)(i) of 
this section includes the landowner's agreement to the implementation of 
a WRPO identified in paragraph (d)(2)(ii) of this section. In 
particular, the easement deed identifies that NRCS has the right to 
enter the easement area to undertake, on a cost-share basis with the 
landowner or other entity, any activities to restore, protect, manage, 
maintain, enhance, and monitor the wetland and other natural values of 
the easement area.
    (4) At the time NRCS enters into an agreement to purchase, NRCS 
agrees, subject to paragraph (e) of this section, to acquire and provide 
for restoration of the land enrolled into the program.
    (e) Withdrawal of offer of enrollment Prior to execution of the 
easement deed by the United States and the landowner, NRCS may withdraw 
the land from enrollment at any time due to lack of availability of 
funds, inability to clear title, sale of the land, risk of hazardous 
substance contamination, or other reasons. The offer of enrollment to 
the landowner shall be void if not executed by the landowner within the 
time specified.

[74 FR 2328, Jan. 15, 2009, as amended at 74 FR 26284, June 2, 2009]



Sec.1467.8  Compensation for easements and 30-year contracts.

    (a) Determination of easement payment rates. (1) Compensation for an 
easement under this part shall be made in cash in such amount as is 
agreed to and specified in the option agreement to purchase or 30-year 
contract.
    (2) Payments for non-permanent easements or 30-year contracts shall 
be not more than 75 percent of that which would have been paid for a 
permanent easement as determined by the methods listed in paragraph 
(a)(3) of this section.
    (3) NRCS shall pay as compensation the lowest of the following:
    (i) The fair market value of the land using the Uniform Standards 
for Professional Appraisal Practices, or based on an area-wide market 
analysis or survey;
    (ii) The geographic area rate cap determined under paragraph (a)(4) 
of this section; or
    (iii) The landowner offer.
    (4) The State Conservationist, in consultation with the State 
Technical Committee, shall establish one or more geographic area rate 
caps within a state. The State Conservationist shall submit geographic 
area rate caps and supporting documentation to the Chief for approval. 
Each State Conservationist will determine the geographic area rate cap 
using the best information which is readily available in that State. 
Such information may include: Soil types, type(s) of crops capable of

[[Page 874]]

being grown, production history, location, real estate market values, 
and tax rates and assessments.
    (b) Acceptance of offered easement compensation. (1) NRCS will not 
acquire any easement unless the landowner accepts the amount of the 
easement payment offered by NRCS. The easement payment may or may not 
equal the fair market value of the interests and rights to be conveyed 
by the landowner under the easement. By voluntarily participating in the 
program, a landowner waives any claim to additional compensation based 
on fair market value.
    (2)(i) For easements or 30-year contracts valued at $500,000 or 
less, NRCS will provide compensation in up to 30 annual payments, as 
requested by the participant, as specified in the option agreement to 
purchase or 30-year contract between NRCS and the participant.
    (ii) For easements or 30-year contracts valued at more than 
$500,000, the Secretary may provide compensation in at least 5, but not 
more than 30 annual payments. NRCS may provide compensation in a single 
payment for such easements or 30-year contracts when, as determined by 
the Chief, it would further the purposes of the program. The applicable 
payment schedule will be specified in the option agreement to purchase, 
warranty easement deed, or 30-year contract between NRCS and the 
participant.
    (c) Reimbursement of a landowner's expenses. For completed easement 
conveyances, NRCS will reimburse participants for their fair and 
reasonable expenses, if any, incurred for legal boundary surveys and 
other related costs, as determined by NRCS. The State Conservationist, 
in consultation with the State Technical Committee, may establish 
maximum payments to reimburse participants for reasonable expenses, if 
incurred.
    (d) Tax implications of easement conveyances. Subject to applicable 
regulations of the Internal Revenue Service, a participant may be 
eligible for a bargain sale tax deduction which is the difference 
between the fair market value of the easement conveyed to the United 
States and the easement payment made to the participant. NRCS disclaims 
any representations concerning the tax implications of any easement or 
cost-share transaction.
    (e) Per acre basis calculations. If easement payments are calculated 
on a per acre basis, adjustment to stated easement payment will be made 
based on final determination of acreage.



Sec.1467.9  Wetlands Reserve Enhancement Program.

    (a) Wetlands Reserve Enhancement Program (WREP). (1) The purpose of 
WREP is to target and leverage resources to address high priority 
wetlands protection, restoration, and enhancement objectives through 
agreements with States (including a political subdivision or agency of a 
State), nongovernmental organizations, and Indian Tribes.
    (2) Funding for WREP agreements will be announced in the Federal 
Register.
    (i) The announcement will provide details on the priorities for 
funding, required level of partner matching funds, ranking criteria, 
level of available funding, and additional criteria as determined by the 
Chief.
    (ii) The Chief will determine the funding level for WREP on an 
annual basis. Funds for WREP are derived from funds available for WRP.
    (3) Proposals will be submitted to the State Conservationist of the 
State in which the majority of the project area resides.
    (i) State Conservationists will evaluate proposals based on the 
ranking criteria established in the announcement and provide proposals 
recommended for funding to the Chief.
    (ii) The Chief will evaluate proposals recommended for funding and 
make final funding selections, in accordance with ranking factors 
identified in the announcement.
    (4) Selected proposals and associated funding will be provided to 
the State Conservationist to enter into WREP agreements with the 
eligible partner to carry out the project.
    (b) Reserved Rights Pilot. (1) The Chief shall carry out a reserved 
rights pilot subject to the requirements established in this part.
    (2) Under the reserved rights pilot, a landowner may reserve grazing 
rights

[[Page 875]]

in the warranty easement deed or 30-year contract, if the State 
Conservationist determines that the reservation and use of the grazing 
rights:
    (i) Is compatible with the land subject to the easement or 30-year 
contract; and
    (ii) Is consistent with the long-term wetland protection and 
enhancement goals for which the easement or 30-year contract was 
established; and
    (iii) Complies with a WRPO developed with NRCS.
    (3) The State Conservationist will provide public notice of the 
availability of the reserved rights pilot and the reserved rights 
template deed or 30-year contract, approved by the Chief, to be used in 
the pilot.
    (4) Compensation for easements or 30-year contracts entered into 
under the reserved rights pilot will be based on the method described in 
Sec.1467.8 with the following exceptions:
    (i) Section 1467.8(a)(3)(i) is adjusted to reduce the fair market 
value of the land by an amount equal to the value of the retained 
grazing rights as determined by a Uniform Standards for Professional 
Appraisal Practices appraisal or a market survey; and
    (ii) Section 1467.8(a)(3)(ii) is adjusted to reduce the geographic 
area rate cap determined as described in Sec.1467.8(a)(4) by an amount 
equal to the value of the retained grazing rights.



Sec.1467.10  Cost-share payments.

    (a) NRCS may share the cost with participants of implementing the 
WRPO on the enrolled land. The amount and terms and conditions of the 
cost-share assistance shall be subject to the following restrictions on 
the costs of establishing or installing conservation practices or 
activities specified in the WRPO:
    (1) On enrolled land subject to a permanent easement, NRCS will 
offer to pay at least 75 percent but not more than 100 percent of such 
costs; and
    (2) On enrolled land subject to a non-permanent easement, 30-year 
contract, or restoration cost-share agreement, NRCS will offer to pay at 
least 50 percent but not more than 75 percent of such costs.
    (3) The total amount of payments that a person or legal entity may 
receive, directly or indirectly, for one or more restoration cost-share 
agreements, for any year, may not exceed $50,000.
    (b) Cost-share payments may be made only upon a determination by 
NRCS that an eligible conservation practice or component of the 
conservation practice has been implemented in compliance with 
appropriate NRCS standards and specifications; or an eligible activity 
has been implemented in compliance with the appropriate requirements 
detailed in the WRPO. Identified conservation practices or activities 
may be implemented by the participant, NRCS, or other NRCS designee.
    (c) Cost-share payments may be made for replacement of an eligible 
conservation practice, if NRCS determines that the practice is still 
needed and that the failure of the original conservation practice was 
due to reasons beyond the control of the participant.
    (d) A participant may seek additional cost-share assistance from 
other public or private organizations as long as the conservation 
practices or activities funded are in compliance with this part. In no 
event shall the participant receive an amount that exceeds 100 percent 
of the total actual cost of the restoration.

[74 FR 2328, Jan. 15, 2009, as amended at 74 FR 26284, June 2, 2009]



Sec.1467.11  Easement and 30-year contract participation requirements.

    (a) Easement requirements. (1) To enroll land in WRP through the 
permanent or non-permanent easement option, a landowner shall grant an 
easement to the United States. The easement shall require that the 
easement area be maintained in accordance with WRP goals and objectives 
for the duration of the term of the easement, including the restoration, 
protection, enhancement, maintenance, and management of wetland and 
other land functions and values.
    (2) For the duration of its term, the easement shall require, at a 
minimum, that the participant, and the participant's heirs, successors 
and assigns, shall, consistent with the terms of this part, cooperate in 
the restoration, protection, enhancement, maintenance,

[[Page 876]]

and management of the land in accordance with the warranty easement deed 
and with the terms of the WRPO. In addition, the easement shall grant to 
the United States, through NRCS:
    (i) A right of access to the easement area;
    (ii) The right to permit compatible uses of the easement area, 
including such activities as hunting and fishing, managed timber 
harvest, or periodic haying or grazing, if such use is consistent with 
the long-term protection and enhancement of the wetland resources for 
which the easement was established;
    (iii) All rights, title and interest in the easement area; and
    (iv) The right to restore, protect, enhance, maintain, and manage 
activities on the easement area.
    (3) The participant shall convey title to the easement in a manner 
that is acceptable to NRCS. The participant shall warrant that the 
easement granted to the United States is superior to the rights of all 
others, except for exceptions to the title that are deemed acceptable by 
NRCS.
    (4) The participant shall:
    (i) Comply with the terms of the easement;
    (ii) Comply with all terms and conditions of any associated contract 
or agreement;
    (iii) Agree to the permanent retirement of any existing cropland 
base and allotment history for the easement area under any program 
administered by the Secretary, as determined by the FSA;
    (iv) Agree to the long-term restoration, protection, enhancement, 
maintenance, and management of the easement in accordance with the terms 
of the easement and related agreements;
    (v) Have the option to enter into an agreement with governmental or 
private organizations to assist in carrying out any participant 
responsibilities on the easement area; and
    (vi) Agree that each person or legal entity that is subject to the 
easement shall be jointly and severally responsible for compliance with 
the easement and the provisions of this part and for any refunds or 
payment adjustment which may be required for violation of any terms or 
conditions of the easement or the provisions of this part.
    (b) 30-year contract requirements. (1) To enroll land in WRP through 
the 30-year contract option, a landowner shall enter into a contract 
with NRCS. The contract shall require that the enrolled area be 
maintained in accordance with WRP goals and objectives for the duration 
of the contract, including the restoration, protection, enhancement, 
maintenance, and management of wetland and other land functions and 
values.
    (2) For the 30-year duration, the contract shall require, at a 
minimum, that the participant, and the participant's heirs, successors 
and assigns, shall, consistent with the terms of this part, cooperate in 
the restoration, protection, enhancement, maintenance, and management of 
the land in accordance with the contract and with the terms of the WRPO. 
In addition, the contract shall grant to NRCS:
    (i) A right of access to the contract area;
    (ii) The right to permit compatible uses of the contract area, 
including such activities as a traditional Tribal use of the land, 
hunting and fishing, managed timber harvest, or periodic haying or 
grazing, if such use is consistent with the long-term protection and 
enhancement of the wetland resources for which the contract was 
established; and
    (iii) The right to restore, protect, enhance, maintain, and manage 
activities on the enrolled area.
    (3) The participant shall:
    (i) Comply with the terms of the contract;
    (ii) Comply with all terms and conditions of any associated 
agreement;
    (iii) Agree to the long-term restoration, protection, enhancement, 
maintenance, and management of the enrolled area in accordance with the 
terms of the contract and related agreements;
    (iv) Have the option to enter into an agreement with governmental or 
private organizations to assist in carrying out any participant 
responsibilities on the enrolled area;
    (v) Agree that each person or legal entity that is subject to the 
contract shall be jointly and severally responsible for compliance with 
the contract

[[Page 877]]

and the provisions of this part and for any refunds or payment 
adjustment which may be required for violation of any terms or 
conditions of the contract or the provisions of this part.

[74 FR 2328, Jan. 15, 2009, as amended at 74 FR 26284, June 2, 2009]



Sec.1467.12  The WRPO development.

    (a) The development of the WRPO will be made through the local NRCS 
representative, in consultation with the State Technical Committee, with 
consideration of site-specific technical input from FWS and the 
Conservation District.
    (b) The WRPO will specify the manner in which the enrolled land 
shall be restored, protected, enhanced, maintained, and managed to 
accomplish the goals of the program. The WRPO will be developed to 
ensure that cost-effective restoration and maximization of wildlife 
benefits and wetland functions and values will result. Specifically, the 
WRPO will consider and address, to the extent practicable, the on-site 
alternations and the off-site watershed conditions that adversely impact 
the hydrology and associated wildlife and wetland functions and values. 
NRCS will review, revise, and supplement the WRPO as needed throughout 
the duration of the enrollment to ensure that program goals are fully 
and effectively achieved.

[74 FR 2328, Jan. 15, 2009, as amended at 74 FR 26285, June 2, 2009]



Sec.1467.13  Modifications.

    (a) Easements. (1) After an easement has been recorded, no 
modification will be made in the easement except by mutual agreement 
with the Chief and the participant. The Chief will consult with FWS and 
the Conservation District prior to making any modifications to 
easements.
    (2) Approved modifications will be made only in an amended easement, 
which is duly prepared and recorded in conformity with standard real 
estate practices, including requirements for title approval, 
subordination of liens, and recordation.
    (3) The Chief may approve modifications to facilitate the practical 
administration and management of the easement area or the program so 
long as the modification will not adversely affect the wetland functions 
and values for which the easement was acquired or when adverse impacts 
will be mitigated by enrollment and restoration of other lands that 
provide greater wetland functions and values at no additional cost to 
the government.
    (4) Modifications must result in equal or greater environmental and 
economic values to the United States and address a compelling public 
need, as determined by the Chief.
    (b) WRPO. Insofar as is consistent with the easement and applicable 
law, the State Conservationist may approve modifications to the WRPO 
that do not affect provisions of the easement in consultation with the 
participant and with consideration of site specific technical input from 
the FWS and the Conservation District. Any WRPO modification must meet 
WRP regulations and program objectives, comply with the definition of 
wetland restoration as defined in Sec.1467.3, must result in equal or 
greater wildlife benefits, wetland functions and values, and ecological 
and economic values to the United States.



Sec.1467.14  Transfer of land.

    (a) Offers voided. Any transfer of the property prior to the 
enrollment of the easement, 30-year contract, or restoration cost-share 
agreement contract, including the landowner entering into a contract or 
purchase agreement to sell the land subject to offer, shall void the 
offer of enrollment.
    (b) Payments to landowners. For easements with multiple annual 
payments, any remaining easement payments will be made to the original 
participant unless NRCS receives an assignment of proceeds.
    (c) Claims to payments. With respect to any and all payments owed to 
participants, NRCS shall bear no responsibility for any full payments or 
partial distributions of funds between the original participant and the 
participant's successor. In the event of a dispute or claim on the 
distribution of cost-share payments, NRCS may withhold payments without 
the accrual of interest pending an agreement or adjudication on the 
rights to the funds.

[[Page 878]]



Sec.1467.15  Violations and remedies.

    (a) Easement violations. (1) In the event of a violation of the 
easement, 30-year contract, or any restoration cost-share agreement 
involving the participant, the participant shall be given reasonable 
notice and an opportunity to voluntarily correct the violation within 30 
days of the date of the notice, or such additional time as the State 
Conservationist determines is necessary to correct the violation at the 
landowner's expense.
    (2) Notwithstanding paragraph (a)(1) of this section, NRCS reserves 
the right to enter upon the easement area at any time to remedy 
deficiencies or easement violations. Such entry may be made at the 
discretion of NRCS when such actions are deemed necessary to protect 
important wetland functions and values or other rights of the United 
States under the easement. The participant shall be liable for any costs 
incurred by the United States as a result of the participant's 
negligence or failure to comply with easement or contractual 
obligations.
    (3) At any time there is a material breach of the easement covenants 
or any associated agreement, the easement shall remain in force and NRCS 
may withhold or require the refund of any easement and cost-share 
payments owed or paid to participants. Such withheld or refunded funds 
may be used to offset costs incurred by the United States in any 
remedial actions or retained as damages pursuant to court order or 
settlement agreement. This remedy is in addition to any and all legal or 
equitable remedies available to the United States under applicable 
Federal or State law.
    (4) The United States shall be entitled to recover any and all 
administrative and legal costs, including attorney's fees or expenses, 
associated with any enforcement or remedial action.
    (b) 30-year Contract and Restoration Cost-Share Agreement 
violations. (1) If the NRCS determines that a participant is in 
violation of the terms of a 30-year contract, or restoration cost-share 
agreement, or documents incorporated by reference into the 30-year 
contract or restoration cost-share agreement, the participant shall be 
given reasonable notice and an opportunity to voluntarily correct the 
violation within 30 days of the date of the notice, or such additional 
time as the State Conservationist determines is necessary to correct the 
violation. If the violation continues, the State Conservationist may 
terminate the 30-year contract or restoration cost-share agreement.
    (2) Notwithstanding the provisions of paragraph (b)(1) of this 
section, a restoration cost-share agreement or 30-year contract 
termination is effective immediately upon a determination by the State 
Conservationist that the participant has:
    (i) Submitted false information;
    (ii) Filed a false claim;
    (iii) Engaged in any act for which a finding of ineligibility for 
payments is permitted under this part; or
    (iv) Taken actions NRCS deems to be sufficiently purposeful or 
negligent to warrant a termination without delay.
    (3) If NRCS terminates a restoration cost-share agreement or 30-year 
contract, the participant will forfeit all rights for future payments 
under the restoration cost-share agreement or 30-year contract, and must 
refund all or part, as determined by NRCS, of the payments received, 
plus interest.



Sec.1467.16  Payments not subject to claims.

    Any cost-share, contract, or easement payment or portion thereof due 
any person under this part shall be allowed without regard to any claim 
or lien in favor of any creditor, except agencies of the United States 
Government.



Sec.1467.17  Assignments.

    Any person entitled to any cash payment under this program may 
assign the right to receive such cash payments, in whole or in part.



Sec.1467.18  Appeals.

    (a) A person participating in the WRP may obtain a review of any 
administrative determination concerning eligibility for participation 
utilizing the administrative appeal regulations provided in 7 CFR part 
614.
    (b) Before a person may seek judicial review of any administrative 
action taken under this part, the person must

[[Page 879]]

exhaust all administrative appeal procedures set forth in paragraph (a) 
of this section, and for purposes of judicial review, no decision shall 
be a final Agency action except a decision of the Chief of the NRCS 
under these procedures.
    (c) Any appraisals, market analysis, or supporting documentation 
that may be used by the NRCS in determining property value are 
considered confidential information, and shall only be disclosed as 
determined at the sole discretion of the NRCS in accordance with 
applicable law.
    (d) Enforcement actions undertaken by the NRCS in furtherance of its 
federally held property rights are under the jurisdiction of the federal 
courts and not subject to review under administrative appeal 
regulations.



Sec.1467.19  Scheme and device.

    (a) If it is determined by the NRCS that a participant has employed 
a scheme or device to defeat the purposes of this part, any part of any 
program payment otherwise due or paid such participant during the 
applicable period may be withheld or be required to be refunded with 
interest thereon, as determined appropriate by NRCS.
    (b) A scheme or device includes, but is not limited to, coercion, 
fraud, misrepresentation, depriving any other person of payments for 
cost-share practices, contracts, or easements for the purpose of 
obtaining a payment to which a person would otherwise not be entitled.
    (c) A participant who succeeds to the responsibilities under this 
part shall report in writing to the NRCS any interest of any kind in 
enrolled land that is held by a predecessor or any lender. A failure of 
full disclosure will be considered a scheme or device under this 
section.



Sec.1467.20  Market-based conservation initiatives.

    (a) Acceptance and use of contributions. Section 1241(e) of the Food 
Security Act of 1985, as amended, (16 U.S.C. 3841(e)), allows the Chief 
to accept and use contributions of non-Federal funds to support the 
purposes of the program. These funds shall be available without further 
appropriation and until expended, to carry out the program.
    (b) Ecosystem Services Credits for Conservation Improvements. (1) 
USDA recognizes that environmental benefits will be achieved by 
implementing conservation practices and activities funded through WRP, 
and that environmental credits may be gained as a result of implementing 
activities compatible with the purposes of a WRP easement, 30-year 
contract, or restoration cost-share agreement. NRCS asserts no direct or 
indirect interest in these credits. However, NRCS retains the authority 
to ensure that the requirements of the WRPO, contract, and easement deed 
are met. Where activities required under an environmental credit 
agreement may affect land covered under a WRP easement, 30-year 
contract, or restoration cost-share agreement, participants are highly 
encouraged to request a compatibility assessment from NRCS prior to 
entering into such agreements.
    (2) Section 1222(f)(2) of the Food Security Act of 1985 as amended, 
does not allow wetlands restored with Federal funds to be utilized for 
Food Security Act wetland mitigation purposes.



PART 1468_AGRICULTURAL CONSERVATION EASEMENT PROGRAM--
able of Contents



                      Subpart A_General Provisions

Sec.
1468.1 Applicability.
1468.2 Administration.
1468.3 Definitions.
1468.4 Appeals.
1468.5 Scheme or device.
1468.6 Subordination, exchange, modification, and termination.
1468.7 Transfer of land.
1468.8 Payments not subject to claims.
1468.9 Assignments.
1468.10 Environmental markets.

                  Subpart B_Agricultural Land Easements

1468.20 Program requirements.
1468.21 Application procedures.
1468.22 Establishing priorities, ranking considerations, and project 
          selection.
1468.23 ALE-agreements.
1468.24 Compensation and funding for agricultural land easements.
1468.25 Agricultural land easement deeds.
1468.26 Eligible entity certification.

[[Page 880]]

1468.27 Buy-Protect-Sell transactions.
1468.28 Violations and remedies.

                   Subpart C_Wetland Reserve Easements

1468.30 Program requirements.
1468.31 Application procedures.
1468.32 Establishing priorities, ranking consideration, and project 
          selection.
1468.33 Enrollment process.
1468.34 Compensation for easements and 30-year contracts.
1468.35 Wetland Reserve Enhancement Partnerships.
1468.36 WRPO payments.
1468.37 Easement and 30-year contract participation requirements.
1468.38 Development and revision of the WRPO and associated compatible 
          use authorizations.
1468.39 Violations and remedies.

    Authority: 15 U.S.C. 714b and 714c; 16 U.S.C. 3865-3865d.

    Source: 85 FR 571, Jan. 6, 2020, unless otherwise noted.



                      Subpart A_General Provisions



Sec.1468.1  Applicability.

    (a) The regulations in this part set forth requirements, policies, 
and procedures for implementation of the Agricultural Conservation 
Easement Program (ACEP) administered by the Natural Resources 
Conservation Service (NRCS). ACEP purposes include:
    (1) Combining the purposes and coordinating the functions of the 
Wetlands Reserve Program established under section 1237, the Grassland 
Reserve Program established under section 1238N, and the Farmland 
Protection Program established under section 1238I, as such sections 
were in effect on the day before the date of enactment of the 
Agricultural Act of 2014;
    (2) Restoring, protecting, and enhancing wetlands on eligible land;
    (3) Protecting the agricultural use and future viability, and 
related conservation values, of eligible land by limiting 
nonagricultural uses of that land that negatively affect the 
agricultural uses and conservation values; and
    (4) Protecting grazing uses and related conservation values by 
restoring or conserving eligible land.
    (b) The NRCS Chief may implement ACEP in any of the 50 States, the 
District of Columbia, Commonwealth of Puerto Rico, Guam, the Virgin 
Islands of the United States, American Samoa, and the Commonwealth of 
the Northern Mariana Islands.
    (c) Subpart B of this part sets forth additional requirements, 
policies, and procedures for implementation of the Agricultural Land 
Easements (ALE) component of ACEP.
    (d) Subpart C of this part sets forth additional requirements, 
policies, and procedures for the Wetland Reserve Easement (WRE) 
component of ACEP.
    (e) Easement lands previously enrolled under the predecessor 
programs Farm and Ranch Lands Protection Program (7 CFR part 1491), the 
Grassland Reserve Program (7 CFR part 1415), and the Wetlands Reserve 
Program (7 CFR part 1467) are considered enrolled in ACEP. Existing 
easements and agreements remain valid and enforceable, and subject to 
the legal framework in place at the time of enrollment, except that the 
long-term stewardship and management of these easements, and any ACEP 
funding made available for implementation, will be in accordance with 
this part.



Sec.1468.2  Administration.

    (a) The regulations in this part will be administered under the 
general supervision and direction of the NRCS Chief.
    (b) NRCS may seek advice from the State technical committee on 
considerations relating to implementation and technical aspects of the 
program, such as identification of lands of statewide importance or 
special significance, review of State-level geographic area rate caps, 
development of ranking criteria, wetland restoration objectives, 
management considerations, including compatible use criteria, or related 
technical matters.
    (c) NRCS may obtain input from Federal or State agencies, 
conservation districts, or other organizations in program 
administration. No determination by these agencies or organizations will 
compel NRCS to take any action which NRCS determines does not serve the 
purposes of the program established by this part.
    (d) Applications may be submitted on a continuous basis or in 
response to specific program solicitations. NRCS may announce one or 
more application

[[Page 881]]

cut-off dates for funding consideration within a given fiscal year.
    (e) The Chief may allocate funds for purposes related to: 
Encouraging enrollment by beginning farmers or ranchers, socially 
disadvantaged farmers or ranchers, limited resource farmers or ranchers, 
Indian Tribes, and veteran farmers or ranchers as authorized by 16 
U.S.C. 3844; implementing landscape and related initiatives, special 
pilot programs for easement management and monitoring; agreements with 
other agencies and organizations to assist with program implementation; 
coordination of easement enrollment across State boundaries; 
coordination of the development of easement plans for ACEP-WRE or 
conservation plans for ACEP-ALE; or for other goals of the ACEP found in 
this part.
    (f) NRCS may delegate at any time its ACEP-WRE monitoring or 
management responsibilities to conservation organizations that have 
appropriate authority, expertise and technical and financial resources, 
as determined by NRCS, to carry out such delegated responsibilities.
    (g) NRCS may delegate at any time its ACEP-WRE monitoring, 
management, or enforcement responsibilities to other Federal or State 
agencies that have the appropriate authority, expertise, and technical 
and financial resources, as determined by NRCS, to carry out such 
delegated responsibilities.
    (h) For ACEP-ALEs, the easement holder is responsible to ensure the 
easement is monitored on an annual basis and to provide annually to NRCS 
a monitoring report. For ACEP-WREs, NRCS or its delegate, is responsible 
to monitor the easement on an annual basis and comply with applicable 
reporting requirements.
    (i) No delegation in the administration of this part to lower 
organizational levels will preclude the Chief from making any 
determinations under this part, redelegating to other organizational 
levels, or from reversing or modifying any determination made under this 
part.
    (j) The Chief may modify or waive nonstatutory, discretionary 
provisions of this part if the Chief determines the waiver of such 
discretionary provision is necessary to further the purposes of ACEP as 
part of an ACEP-ALE buy-protect-sell transaction or under the ACEP-WRE 
wetland reserve enhancement partnership option. The waiver must further 
ACEP purposes and be consistent with the specific ACEP-WRE or ACEP-ALE 
conservation purposes and objectives. No waiver will result in reducing 
the quality of wetland functions and values restored under ACEP-WRE, or 
the protection of agricultural viability under ACEP-ALE.
    (k) To assist in ACEP implementation the Chief may also waive the 
applicability of the adjusted gross income limitation as authorized by 
section 1001D(b)(3) of the Food Security Act of 1985 for participating 
landowners if the Chief determines that environmentally sensitive land 
of special significance would be protected as a result of such waiver.



Sec.1468.3  Definitions.

    The definitions in this section apply to this part, and all 
documents issued in accordance with this part, unless specified 
otherwise:
    30-year Contract means an ACEP-WRE contract that is for a duration 
of 30 years and is limited to acreage owned by Indian Tribes.
    Access means legal and physical ingress and egress to the entire 
easement area over adjacent or contiguous lands for the exercise of any 
of the rights or interests under the easement for the duration of its 
term for the purposes of the program. Access for easement enrollments 
must be described in the easement deed.
    Acreage owned by Indian Tribes means lands held in private ownership 
by an Indian Tribe or individual Tribal member and lands held in trust 
by a native corporation, Tribe, or the Bureau of Indian Affairs. This 
land may be also be referred to as ``Tribal land.''
    Agreement means the document that specifies the rights, 
requirements, and responsibilities of NRCS and any persons, legal 
entities, or eligible entities participating in the program or any 
document that authorizes the transfer of assistance between NRCS and a 
third party for provision of authorized goods and services associated 
with program implementation. Agreements

[[Page 882]]

may include but are not limited to an agreement to purchase, an ALE-
agreement, a buy-protect-sell arrangement, a wetland reserve easement 
restoration agreement, a cooperative agreement, a grant agreement, a 
partnership agreement, or an interagency agreement.
    Agreement to purchase means the legal document that is the 
equivalent of a real estate purchase and sale contract. The landowner 
signs the agreement to purchase, which is the authorization for NRCS to 
proceed with the ACEP-WRE acquisition process.
    Agricultural commodity means any agricultural commodity planted and 
produced in a State by annual tilling of the soil, including tilling by 
one-trip planters or sugarcane planted and produced in a State.
    Agricultural land easement means an easement or other interest in 
eligible land that is conveyed for the purposes of protecting natural 
resources and the agricultural nature of the land, and of promoting 
agricultural viability for future generations, and permits the landowner 
the right to continue agricultural production and related uses.
    Agricultural land easement plan means a document developed by the 
eligible entity that describes the activities which promote the long-
term viability of the land to meet the purposes for which the easement 
was acquired. An agricultural land easement plan includes a description 
of the farm or ranch management system and the natural resource concerns 
on the land, describes the conservation measures and practices that may 
be implemented to address applicable resource concerns for which the 
easement was enrolled, and incorporates by reference any component plans 
such as a grasslands management plan, forest management plan, or 
conservation plan as defined in this part.
    Agricultural uses means those activities defined by a State's farm 
or ranch land protection program or where no program exists, by the 
State agricultural use tax assessment program. However, if NRCS 
determines that a State definition of agricultural use is so broad that 
an included use would constitute a violation of Federal law, limit 
future agricultural viability, degrade soils or the agricultural nature 
of the land or the related natural resources, NRCS reserves the right to 
impose greater deed restrictions on the property to be subject to an 
agricultural land easement. These deed restrictions would narrow the 
State definition of agricultural use in order to meet Federal law, or to 
protect soils, the agricultural nature of the land, or related natural 
resources.
    ALE-agreement means the document that outlines the rights, 
requirements, roles, and responsibilities of NRCS and eligible entities 
participating in the program under subpart B, including cost-share 
payment provisions.
    At-risk species means any plant or animal species listed as 
threatened or endangered; proposed or candidate for listing under the 
Endangered Species Act; a species listed as threatened or endangered 
under State law or Tribal law on Tribal land; State or Tribal land 
species of conservation concern; or other plant or animal species or 
community, as determined by the State conservationist, with advice from 
the State technical committee or Tribal Conservation Advisory Council, 
that has undergone, or is likely to undergo, population decline and may 
become imperiled without direct intervention.
    Beginning farmer or rancher means a person, Indian Tribe, Tribal 
corporation, or legal entity who:
    (1) Has not operated a farm or ranch, or non-industrialized private 
forest land (NIPF), or who has operated a farm or ranch or NIPF for not 
more than 10 consecutive years. This requirement applies to all members 
of an entity who will materially and substantially participate in the 
operation of the farm or ranch or NIPF.
    (2) In the case of an individual, individually, or with the 
immediate family, material and substantial participation requires that 
the individual provide substantial day-to-day labor and management of 
the farm or ranch consistent with the practices in the county or State 
where the farm is located.
    (3) In the case of a legal entity or joint operation, all members 
must materially and substantially participate in the operation of the 
farm or ranch. Material and substantial participation requires that each 
of the members provide some amount of the management

[[Page 883]]

or labor and management necessary for day-to-day activities, such that 
if each of the members did not provide these inputs, operation of the 
farm or ranch would be seriously impaired.
    Buy-Protect-Sell transaction means a legal arrangement between an 
eligible entity and NRCS relating to land owned or being purchased by an 
eligible entity on a transitional basis during which an agricultural 
land easement will be secured on eligible private or Tribal land, and 
ownership of the land transferred to a qualified farmer or rancher 
following conditions specified in this part.
    Certified entity means an eligible entity that NRCS has determined 
to meet the certification requirements in Sec.1468.26 for the purposes 
of ACEP-ALE.
    Chief means the Chief of the Natural Resources Conservation Service 
or the person delegated the authority to act for the Chief.
    Commenced conversion wetland means a wetland or converted wetland 
for which the Farm Service Agency (FSA) has determined that the wetland 
manipulation was contracted for, started, or for which financial 
obligation was incurred before December 23, 1985.
    Commodity Credit Corporation (CCC) is a wholly-owned government 
corporation within the Department of Agriculture.
    Compatible use means a use or activity conducted on a wetland 
reserve easement that NRCS determines, in its sole discretion, is 
consistent with the long-term protection and enhancement of the wetland 
and other natural values of the easement area when performed according 
to amount, method, location, timing, frequency, intensity, and duration 
limitations prescribed by NRCS.
    Conservation plan is for ACEP-ALE the document that--
    (1) Applies to highly erodible cropland;
    (2) Describes the conservation-system applicable to the highly 
erodible cropland and describes the decisions of the person with respect 
to location, land use, tillage systems, and conservation treatment 
measures and schedules and where appropriate, may include conversion of 
highly erodible cropland to less intensive uses; and
    (3) Is developed in accordance with 7 CFR part 12.
    Conservation practice means a specified treatment, such as a 
vegetative, structural, or land management practice, that is planned and 
applied according to NRCS standards and specifications.
    Conservation Reserve Program (CRP) means the program administered by 
the CCC as required by 16 U.S.C. 3831-3836.
    Converted wetland means a wetland that has been drained, dredged, 
filled, leveled, or otherwise manipulated (including the removal of 
woody vegetation or any activity that results in impairing or reducing 
the flow, circulation, or reach of water) for the purpose of, or to have 
the effect of, making possible the production of an agricultural 
commodity if such production would not have been possible but for such 
action, and before such action such land was wetland, farmed wetland, or 
farmed-wetland pasture and was neither highly erodible land nor highly 
erodible cropland.
    Cost-share payment means the payment made by NRCS to an eligible 
entity for the purchase of an ACEP-ALE easement as set forth in subpart 
B of this part.
    Dedicated fund means an account held by a certified nongovernmental 
organization which is sufficiently capitalized for the purpose of 
covering expenses associated with the management, monitoring, and 
enforcement of agricultural land easements and where such account cannot 
be used for other purposes.
    Easement administration action means an easement subordination, 
easement modification, easement exchange, or easement termination.
    Easement area means the portion of a parcel that is encumbered by an 
ACEP easement.
    Easement exchange means a real estate transaction where NRCS, on 
behalf of the United States and in its sole discretion, relinquishes all 
or a portion of its rights or interests in an easement which are 
replaced by similar rights or interests in an easement that have 
equivalent or greater conservation value, acreage, and economic value to 
the United States on land that

[[Page 884]]

is not adjacent to the original easement area. NRCS is not required to 
exchange any of its rights or interests in an easement, and easement 
exchanges are discretionary, voluntary, real estate transactions between 
the United States, landowner, and other parties with an interest in the 
easement.
    Easement modification means a real estate transaction where NRCS, on 
behalf of the United States and in its sole discretion, agrees to adjust 
the boundaries or terms of an easement that will result in equivalent or 
greater conservation value, acreage, and economic value to the United 
States, and the modification only involves lands within or physically 
adjacent to the original easement area. NRCS is not required to modify 
any of its rights or interests in an easement, and easement 
modifications are discretionary, voluntary, real estate transactions 
between the United States, landowner, and other parties with an interest 
in the easement that are subject to the requirements of this part.
    Easement payment means the consideration paid to a participant or 
their assignee for an easement conveyed to the United States under the 
ACEP-WRE, or the consideration paid to an Indian Tribe or Tribal members 
for entering into 30-year contracts under ACEP-WRE.
    Easement restoration agreement means the agreement or contract NRCS 
enters into with the landowner or a third party to implement the WRPO on 
a wetland reserve easement or 30-year contract.
    Easement subordination means a real estate transaction where NRCS, 
on behalf of the United States and in its sole discretion, agrees to 
subordinate all or a portion of its rights or interests in an easement. 
NRCS is not required to subordinate any of its rights or interests in an 
easement, and easement subordinations are discretionary, voluntary, real 
estate transactions between the United States, landowner, and other 
parties with an interest in the easement that are subject to the 
requirements of this part. As determined by NRCS, the subordination must 
be in the public interest or further the practical administration of the 
program, minimally affect the easement acreage, and increase or have 
limited negative effects on the conservation values of the easement 
area.
    Easement termination means a real estate transaction where NRCS, on 
behalf of the United States and in its sole discretion, agrees to 
terminate all or a portion of its rights or interests in an easement. 
The termination must address a compelling public need for which there is 
no practicable alternative even with avoidance and minimization of 
adverse impacts and must facilitate the practical administration of the 
program. The United States must be provided full compensation for such 
termination and any costs and damages related to the termination. NRCS 
is not required to terminate any of its rights or interests in an 
easement, and easement terminations are discretionary, voluntary, real 
estate transactions between the United States, landowner, and other 
parties that are subject to the requirements of this part. Unless and 
until the parties enter into a binding termination agreement, any party 
may withdraw its approval of a termination proposal at any time during 
the termination process.
    Eligible activity means an action other than a conservation practice 
that has the effect of alleviating problems or improving the condition 
of the resources, such as ensuring proper management or maintenance of 
the wetland functions and values restored, protected, or enhanced 
through an ACEP-WRE easement or 30-year contract as identified in the 
WRPO.
    Eligible entity means an Indian Tribe, State government, local 
government, or a nongovernmental organization that has a farmland or 
grassland protection program that purchases agricultural land easements 
for the purposes of protecting:
    (1) The agricultural use and future viability, and related 
conservation values, of eligible land by limiting nonagricultural uses 
of that land that negatively affect the agricultural uses and 
conservation values; or
    (2) Grazing uses and related conservation values by restoring or 
conserving eligible land.
    Eligible land means private or acreage owned by Indian Tribes that 
NRCS has

[[Page 885]]

determined to meet the requirements of Sec.1468.20 or Sec.1468.30 of 
this part.
    Fair market value means the value of an agricultural land easement 
as determined using the Uniform Standards of Professional Appraisal 
Practice, an areawide market analysis or survey, or another industry-
approved method approved by the Chief, as established in subpart B or, 
for a wetland reserve easement, the value of the land as determined 
using the Uniform Standards of Professional Appraisal Practices or 
areawide market analysis or survey, as established in subpart C.
    Farm and ranch land of local importance means farm or ranch land 
used to produce food, feed, fiber, forage, biofuels, and oilseed crops 
that are locally important but not identified as having national or 
statewide importance. Criteria for defining and delineating this land 
are to be determined by the appropriate local agency or agencies. 
Farmlands of local importance may include tracts of land that have been 
designated for agriculture by local ordinance.
    Farm and ranch land of statewide importance means, in addition to 
prime and unique farmland, land that is of statewide importance for the 
production of food, feed, fiber, forage, biofuels, and oilseed crops. 
Criteria for defining and delineating this land are to be determined by 
the appropriate State agency or agencies. Generally, additional 
farmlands of statewide importance include those that are nearly prime 
farmland and that economically produce high yields of crops when treated 
and managed according to acceptable farming methods. Some may produce as 
high a yield as prime farmlands if conditions are favorable. In some 
States, additional farmlands of statewide importance may include tracts 
of land that have been designated for agriculture by State law in 
accordance with 7 CFR part 657.
    Farm or ranch succession plan means a general plan to address the 
continuation of some type of agricultural business on the enrolled land. 
The farm or ranch succession plan may include specific intra-family 
succession agreements or business asset transfer strategies to create 
opportunities for new or beginning farmers or ranchers, veteran farmers 
or ranchers, or other historically underserved landowners.
    Farm Service Agency (FSA) is an agency of the United States 
Department of Agriculture.
    Field Office Technical Guide (FOTG) means the official local NRCS 
source of resource information and interpretations of guidelines, 
criteria, and requirements for planning and applying conservation 
practices and conservation management systems. The FOTG contains 
detailed information on the conservation of soil, water, air, plant, 
animal, and energy resources applicable to the local area for which it 
is prepared.
    Fish and Wildlife Service (FWS) is an agency of the United States 
Department of the Interior.
    Forest management plan means a site-specific plan that describes 
management practices that conserve, protect, or enhance the viability of 
the forest land. Forest management plans may include a forest 
stewardship plan, as specified in section 5 of the Cooperative Forestry 
Assistance Act of 1978 (16 U.S.C. 2103a) or other plan approved by the 
State forester.
    Future viability means the legal, physical, and financial conditions 
under which the land itself will remain capable and available for 
continued sustained productive agricultural or grassland uses while 
protecting related conservation values such as management of the 
agricultural land easement area consistent with an agricultural land 
easement plan.
    Grassland means land on which the vegetation is dominated by 
grasses, grass-like plants, shrubs, or forbs, including shrubland, land 
that contains forbs, pastureland, and rangeland, and improved 
pastureland and rangeland.
    Grassland of special environmental significance means grasslands 
that contain little or no noxious or invasive species, as designated or 
defined by State or Federal law; are subject to the threat of conversion 
to non-grassland uses or fragmentation; and the land:
    (1)(i) Is rangeland, pastureland, shrubland, or wet meadows on which 
the vegetation is dominated by native grasses, grass-like plants, 
shrubs, or forbs, or

[[Page 886]]

    (ii) Is improved, naturalized pastureland, rangeland, or wet 
meadows;
    (2)(i) Provides, or could provide, habitat for threatened or 
endangered species or at-risk species,
    (ii) Protects sensitive or declining native prairie or grassland 
types or grasslands buffering wetlands, or
    (iii) Provides protection of highly sensitive natural resources as 
identified by NRCS, in consultation with the State technical committee.
    Grasslands management plan means a site-specific plan that describes 
the grassland resources, the management system and practices that 
conserve, protect, or enhance the viability of the grassland, and as 
applicable, the habitat, species, or sensitive natural resources.
    Grazing management plan means for ACEP-WRE, a site-specific plan 
developed as a component of the WRPO that provides for grazing of the 
grass and grass-like cover while accomplishing the wetland functions and 
values of the easement area as identified by NRCS.
    Historical and archaeological resources mean resources that are:
    (1) Listed in the National Register of Historic Places (established 
under the National Historic Preservation Act (NHPA), 54 U.S.C. 300101, 
et seq.);
    (2) Formally determined eligible for listing in the National 
Register of Historic Places (by the State Historic Preservation Office 
(SHPO) or Tribal Historic Preservation Office (THPO) and the Keeper of 
the National Register in accordance with section 106 of the NHPA);
    (3) Formally listed in the State or Tribal Register of Historic 
Places of the SHPO (designated under section 101(b)(1)(B) of the NHPA) 
or the THPO (designated under section 101(d)(1)(C) of the NHPA); or
    (4) Included in the SHPO or THPO inventory with written 
justification as to why it meets National Register of Historic Places 
criteria.
    Historically underserved landowner means a beginning, limited 
resource, socially disadvantaged farmer or rancher, or veteran farmer or 
rancher.
    Imminent harm means easement violations or threatened violations 
that, as determined by NRCS, would likely cause immediate and 
significant degradation to the conservation values for which the 
easement was acquired.
    Impervious surface means surfaces that are covered by asphalt, 
concrete, roofs, or any other surface that does not allow water to 
percolate into the soil.
    Indian Tribe means any Indian Tribe, band, nation, pueblo, or other 
organized group or community, including any Alaska Native village or 
regional or village corporation as defined in or established as required 
by the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.), 
that is eligible for the special programs and services provided by the 
United States to Indians because of their status as Indians.
    Land evaluation and site assessment system means the land evaluation 
system approved by NRCS and used, when applicable, to rank land for farm 
and ranch land protection purposes based on soil potential for 
agriculture, as well as social and economic factors such as location, 
access to markets, and adjacent land use. For additional information see 
the Farmland Protection Policy Act regulation at 7 CFR part 658.
    Landowner means a person, legal entity, or Indian Tribe having legal 
ownership of eligible land and those who may be buying eligible land 
under a purchase agreement. The term landowner may include all forms of 
collective ownership including joint tenants and tenants-in-common, and 
includes heirs, successors, assigns, and anyone claiming under them. 
State and local governments are not eligible as landowners. For ACEP-
ALE, nongovernmental organizations and Indian tribes that qualify as 
eligible entities are not eligible as landowners unless otherwise 
determined by the Chief following an approved buy-protect-sell 
transaction.
    Lands substantially altered by flooding means agricultural lands 
where flooding has created wetland hydrologic conditions which, with a 
high degree of certainty, will develop and retain wetland soil, 
hydrology, and vegetation characteristics over time.
    Limited resource farmer or rancher means either:

[[Page 887]]

    (1)(i) A person with direct or indirect gross farm sales not more 
than the current indexed value in each of the previous two fiscal years 
(adjusted for inflation using Prices Paid by Farmer Index as compiled by 
National Agricultural Statistical Service), and
    (ii) Has a total household income at or below the national poverty 
level for a family of four, or less than 50 percent of county median 
household income in each of the previous two years (to be determined 
annually using Commerce Department Data); or
    (2) A legal entity or joint operation if all individual members 
independently qualify under paragraph (1) of this definition.
    Maintenance means work performed to keep the wetland reserve 
easement lands functioning for program purposes for the duration of the 
enrollment period. Maintenance includes actions and work to manage, 
prevent deterioration, repair damage, or replace conservation practices 
or eligible activities on a wetland reserve easement, as approved or 
conducted by NRCS.
    Monitoring report means a report, the contents of which are 
formulated and prepared by the easement holder, or their delegate, that 
accurately documents on an annual basis whether the land subject to 
easement is in compliance with the terms and conditions of the easement.
    Natural Resources Conservation Service (NRCS) means an agency of the 
U.S. Department of Agriculture (USDA), including when NRCS carries out 
program implementation using the funds, facilities, or authorities of 
the CCC.
    Nongovernmental organization means any organization that for 
purposes of qualifying as an eligible entity under subpart B:
    (1) Is organized for, and at all times since the formation of the 
organization, has been operated principally for, one or more of the 
conservation purposes specified in clause (i), (ii), (iii), or (iv) of 
section 170(h)(4)(A) of the Internal Revenue Code of 1986;
    (2) Is an organization described in section 501(c)(3) of that Code 
that is exempt from taxation under 501(a) of that Code; and
    (3) Is described in--
    (i) Section 509(a)(1) and (2) of that Code, or
    (ii) Section 509(a)(3) of that Code and is controlled by an 
organization described in section 509(a)(2) of that Code.
    Nonindustrial private forest land (NIPF) means rural land, as 
determined by the NRCS, that has existing tree cover or is suitable for 
growing trees; and is owned by any nonindustrial private individual, 
group, association, corporation, Indian Tribe, or other private legal 
entity that has definitive decision-making authority over the land.
    Other interests in land include any right in real property other 
than easements that are recognized by State law that the Chief 
determines can be purchased by an eligible entity to further the 
agricultural use of the land and other ACEP-ALE purposes.
    Other productive soils means farm and ranch land soils, in addition 
to prime farmland soils, that include unique farmland or farm and ranch 
land of statewide and local importance.
    Parcel means the defined area of land and may be a portion or all of 
the area of land that is owned by the landowner.
    Participant means a person, legal entity, Indian Tribe, native 
corporation, or eligible entity who has been accepted into the program 
and who is receiving payment or who is responsible for implementing the 
terms and conditions of an agreement to purchase, an agreement to enter 
a 30-year contract, or an ALE-agreement.
    Pending offer means a written bid, contract, or option between a 
landowner and an eligible entity for the acquisition of an agricultural 
conservation easement in perpetuity, or for the maximum duration allowed 
by State law, before the legal title to these rights has been conveyed 
for the purposes of protecting:
    (1) The agricultural use and future viability, and related 
conservation values, of eligible land by limiting nonagricultural uses 
of that land; or
    (2) Grazing uses and related conservation values by restoring or 
conserving eligible land.
    Permanent easement means an easement that lasts in perpetuity.
    Person means a natural person.
    Prime farmland means land that has the best combination of physical 
and

[[Page 888]]

chemical characteristics for producing food, feed, fiber, forage, 
oilseed, and other agricultural crops with minimum inputs of fuel, 
fertilizer, pesticides, and labor without intolerable soil erosion, as 
determined by NRCS.
    Private land means land that is not owned by a governmental entity 
and includes acreage owned by Indian Tribes, as defined in this part.
    Right of enforcement means the right of the United States to enforce 
the easement entered into under this part in those instances in which 
the grantee of the easement does not fully protect the interests 
provided to the grantee under the easement.
    Riparian areas means areas of land that occur along streams, 
channels, rivers, and other water bodies. These areas are normally 
distinctly different from the surrounding lands because of unique soil 
and vegetation characteristics, may be identified by distinctive 
vegetative communities that are reflective of soil conditions normally 
wetter than adjacent soils, and generally provide a corridor for the 
movement of wildlife.
    Socially disadvantaged farmer or rancher means a producer who is a 
member of a group whose members have been subjected to racial or ethnic 
prejudices without regard to its members' individual qualities. For a 
legal entity, at least 50-percent ownership in the legal entity must be 
held by socially disadvantaged individuals.
    State conservationist means the NRCS employee authorized to direct 
and supervise NRCS activities in a State and includes the directors of 
the Caribbean Area (Puerto Rico and the Virgin Islands), or the Pacific 
Islands Area (Guam, American Samoa, and the Commonwealth of the Northern 
Mariana Islands).
    State technical committee means a committee established under 16 
U.S.C. 3861 and 7 CFR part 610, subpart C.
    Unique farmland means land other than prime farmland that is used 
for the production of specific high-value food and fiber crops as 
determined by NRCS. It has the special combination of soil quality, 
location, growing season, and moisture supply needed to economically 
produce sustained high quality or high yields of specific crops when 
treated and managed according to acceptable farming methods. Examples of 
such crops include citrus, tree nuts, olives, cranberries, fruits, and 
vegetables. Additional information on the definition of prime, unique, 
or other productive soil can be found in 7 CFR part 657 and 7 CFR part 
658.
    Veteran farmer or rancher means a producer who meets the definition 
in section 2501(a) of the Food, Agriculture, Conservation, and Trade Act 
of 1990, as amended (7 U.S.C. 2279(a)).
    Wetland means land that:
    (1) Has a predominance of hydric soils;
    (2) Is inundated or saturated by surface or groundwater at a 
frequency and duration sufficient to support a prevalence of hydrophytic 
vegetation typically adapted for life in saturated soil conditions; and
    (3) Supports a prevalence of such vegetation under normal 
circumstances.
    Wetland functions and values means the hydrological and biological 
characteristics of wetlands and the socioeconomic value placed upon 
these characteristics, including--
    (1) Habitat for migratory birds and other wildlife, in particular 
at-risk species.
    (2) Protection and improvement of water quality.
    (3) Attenuation of water flows due to flood.
    (4) The recharge of ground water.
    (5) Protection and enhancement of open space and aesthetic quality.
    (6) Protection of flora and fauna which contributes to the Nation's 
natural heritage.
    (7) Carbon sequestration.
    (8) Contribution to educational and scientific scholarship.
    Wetland reserve easement means a reserved interest easement which is 
an interest in land defined and delineated in a deed whereby the 
landowner conveys all rights, title, and interests in a property to the 
United States, but the landowner retains those rights, title, and 
interests in the property which are specifically reserved to the 
landowner in the easement deed.
    Wetland reserve plan of operations (WRPO) means the document that is 
developed or approved by NRCS that

[[Page 889]]

identifies how the wetland functions and values and associated habitats 
on the easement will be restored, improved, protected, managed, 
maintained, and monitored to achieve the purposes of the wetland reserve 
easement enrollment.
    Wetland restoration means the rehabilitation of degraded or lost 
wetland and associated habitats pursuant to published State-specific 
criteria and guidelines developed in coordination with the State 
technical committee in a manner such that:
    (1) The original, native vegetative community and hydrology are, to 
the extent practical, reestablished; or
    (2) A hydrologic regime and native vegetative community different 
from what likely existed prior to degradation of the site is established 
that will:
    (i) Substantially replace the original habitat functions and values 
while providing significant support or benefit for migratory waterfowl 
or other wetland-dependent wildlife; or
    (ii) Address local resource concerns or needs for the restoration of 
wetland functions and values for wetland-dependent wildlife as 
identified in an approved State wildlife action plan or NRCS national 
initiative.



Sec.1468.4  Appeals.

    (a) ACEP-ALE eligibility of entities. An entity which has submitted 
an ACEP-ALE application to be considered an eligible entity may obtain a 
review of any administrative determination concerning their eligibility 
for participation utilizing the administrative appeal regulations 
provided in 7 CFR parts 11 and 614.
    (b) ACEP-WRE applicants and participants. An applicant or 
participant in the ACEP-WRE may obtain a review of any administrative 
determination concerning eligibility for participation or receipt of 
payment utilizing the administrative appeal regulations provided in 7 
CFR parts 11 and 614.
    (c) Easement administration and management determinations under ACEP 
after easement closing. NRCS determinations that are made pursuant to 
its rights or interests in an ACEP-funded easement after closing may 
only be appealed to the State conservationist as specified in the notice 
provided to the landowner or easement holder when NRCS exercises its 
rights under the easement. Such determinations are not subject to appeal 
under 7 CFR parts 11 or 614.



Sec.1468.5  Scheme or device.

    (a) In addition to other penalties, sanctions, or remedies that may 
apply, if it is determined by NRCS that anyone has employed a scheme or 
device to defeat the purposes of this part, any part of any program 
payment otherwise due or paid during the applicable period may be 
withheld or be required to be refunded with interest, thereon, as 
determined appropriate by NRCS.
    (b) A scheme or device includes, but is not limited to, coercion, 
fraud, misrepresentation, depriving anyone of a program benefit, or for 
the purpose of obtaining a payment to which they would otherwise not be 
entitled.



Sec.1468.6  Subordination, exchange, modification, and termination.

    (a) After an easement has been recorded, no subordination, 
modification, exchange, or termination will be made in any interest in 
land, or portion of such interest, except as approved by the NRCS. NRCS 
may approve such easement administration actions if NRCS determines, in 
accordance with the sequencing considerations under the National 
Environmental Policy Act, that--
    (1)(i) The subordination, modification, or exchange action results 
in no net loss of easement acres, and is in the public interest or will 
further the practical administration and management of the easement area 
or the program, as determined by the NRCS, or
    (ii) The termination action will address a compelling public need 
for which there is no practicable alternative even with avoidance and 
minimization, and will further the practical administration and 
management of the easement area or the program, as determined by the 
NRCS.
    (2) For modification or exchange actions--
    (i) There is no reasonable alternative that would avoid the easement 
area, or if the easement area cannot be avoided entirely, then the 
preferred alternative must minimize impacts to the original easement 
area and its conservation

[[Page 890]]

functions and values to the greatest extent practicable and any 
remaining adverse impacts must be mitigated, as determined by NRCS, at 
no cost to the government,
    (ii) The action is consistent with the original intent of the 
easement and is consistent with the purposes of the program, and
    (iii) The action results in equal or greater conservation functions 
and value and equal or greater economic value to the United States. A 
determination of equal or greater economic value to the United States 
will be made in accordance with an approved easement valuation 
methodology for agricultural land easements under subpart B or for 
wetland reserve easements under subpart C. In addition to the value of 
the easement itself, NRCS may consider other financial investments it 
has made in the acquisition, restoration, and management of the original 
easement to ensure that the easement administration action results in 
equal or greater economic value to the United States.
    (3) For subordination actions, the action--
    (i) Increases conservation functions and values or has a limited 
negative effect on conservation functions and values;
    (ii) Is at no cost to the Government; and
    (iii) Notwithstanding paragraph (a)(4) of this section, will only 
minimally affect the acreage subject to the interest in land.
    (4) For termination actions, the action--
    (i) Is in the interest of the Federal Government; and
    (ii) The United States will be fully compensated for the fair market 
value of the interest in land including any costs and damages related to 
the termination.
    (5) The easement administration action will not affect more than 10 
percent of the original easement area unless NRCS determines that it is 
impracticable to achieve program purposes on the original easements 
area, in which case NRCS may authorize a greater percentage of the 
original easement area to be affected.
    (6) The landowner and, if applicable, the agricultural land easement 
holder agrees to such easement administration action prior to NRCS 
considering that such easement administration action may be approved.
    (b) Easement subordinations or modifications are preferred to 
easement exchanges that may involve lands that are not physically 
adjacent to the original easement area. Easement exchanges are limited 
to circumstances where there are no available lands adjacent to the 
original easement area that will result in equal or greater conservation 
and economic values to the United States.
    (c) Replacement of easement acres as part of an easement exchange 
must occur within the same State and within the same eight-digit 
watershed as determined by the hydrologic unit codes developed by the 
U.S. Geological Survey.
    (d) Where NRCS determines that recordation of an amended or new 
easement deed is necessary to affect an easement administration action 
under this section, NRCS may use the most recent version of the ACEP 
deed document or deed terms approved by NRCS. The amended or new 
easement deed must be duly prepared and recorded in conformity with 
standard real estate practices, including requirements for title 
approval, subordination of liens, and recordation of documents.
    (e) Modification or exchange of all or a portion of an interest in 
land enrolled in ACEP-ALE may not increase any payment to an easement 
holder.
    (f)(1) A termination action must meet criteria identified in this 
part and are limited to those circumstances where NRCS determines it is 
in the Federal Government's interest to terminate all or a portion of 
the interest in the land enrolled in the program, that the purposes of 
the program can no longer be achieved on the original easement area, or 
the terms of the easement are no longer enforceable and there are no 
acceptable replacement acres available.
    (2) NRCS will enter into a compensatory agreement with the proponent 
of the termination that identifies the costs for which the United States 
must

[[Page 891]]

be reimbursed, including but not limited to the value of the easement 
itself based upon current valuation methodologies, repayment of legal 
boundary survey costs, legal title work costs, associated easement 
purchase and restoration costs, legal filing fees, costs relating to the 
termination, and any damages determined appropriate by NRCS.
    (3) At least 90 days prior to taking any termination action, written 
notice of such termination action will be provided to the Committee on 
Agriculture of the House of Representatives and the Committee on 
Agriculture, Nutrition, and Forestry of the Senate.
    (g) Insofar as is consistent with the easement and applicable law, 
NRCS may approve modifications to an easement plan that do not affect 
provisions of the easement. Easement plans include any conservation 
plan, WRPO, wetland reserve easement restoration agreements, grazing 
management plan, habitat management plans, or other plans required as a 
condition of enrollment. Any easement plan modification must meet this 
part and must result in equal or greater conservation benefits on the 
enrolled land.



Sec.1468.7  Transfer of land.

    (a) Offers voided. Any transfer of the property prior to recording 
the easement in the applicable land records or executing the 30-year 
contract may void the availability of ACEP funding for that transaction, 
unless the new landowner is determined eligible, the transfer is 
approved by NRCS, and the new landowner is willing to comply with ACEP 
requirements.
    (b) Payments to participants. For wetland reserve easements with 
annual installment payments, any remaining easement payments will be 
made to the original participants unless NRCS receives an assignment of 
proceeds.
    (c) Claims to payments. With respect to any and all payments owed to 
participants, NRCS will bear no responsibility for any full payments or 
partial distributions of funds between the original participant and the 
participant's successor. In the event of a dispute or claim on the 
distribution of payments, NRCS may withhold payments without the accrual 
of interest pending an agreement or adjudication on the rights to the 
funds.



Sec.1468.8  Payments not subject to claims.

    Any cost-share, contract, agreement, or easement payment or portion, 
thereof, due any person, legal entity, Indian Tribe, eligible entity, or 
other party under this part will be allowed without regard to any claim 
or lien in favor of any creditor, except agencies of the United States.



Sec.1468.9  Assignments.

    Any person, legal entity, Indian Tribe, eligible entity, or other 
party entitled to any cash payment under this program may assign the 
right to receive such cash payments, in whole or in part.



Sec.1468.10  Environmental markets.

    (a) Ecosystem services credits for conservation improvements under a 
wetland reserve easement. Landowners may obtain environmental credits 
under other programs if one of the purposes of such program is the 
facilitation of additional conservation benefits that are consistent 
with the conservation purposes for which the easement was acquired, and 
such action does not adversely affect the rights or interests granted 
under the easement to the United States.
    (b) Ecosystem services credits related to an agricultural land 
easement. Landowners may obtain environmental credits under other 
programs if one of the purposes of such program is the facilitation of 
additional conservation benefits that are consistent with the 
conservation purposes for which the easement was acquired, and such 
action does not adversely affect the interests granted under the 
easement to the grantee or to the United States right of enforcement.
    (c) Voluntary action. ACEP funds may not be used to acquire 
easements to establish protections or to implement conservation 
practices that the landowner is required to establish as a result of a 
court order or to satisfy any mitigation requirement for which the ACEP 
landowner is otherwise responsible.

[[Page 892]]



                  Subpart B_Agricultural Land Easements



Sec.1468.20  Program requirements.

    (a) General. (1) Under ACEP-ALE, NRCS will facilitate and provide 
cost-share assistance for the purchase by eligible entities of 
agricultural land easements or other interests in eligible private or 
Tribal land that is--
    (i) Subject to a written pending offer; or
    (ii) Owned or in the process of being purchased by the eligible 
entity as part of an approved buy-protect-sell transaction.
    (2) To participate in ACEP-ALE, eligible entities as identified in 
(b) below must submit applications to NRCS State offices to partner with 
NRCS to acquire conservation easements on eligible land. Eligible 
entities must enter into an ALE-agreement with NRCS and address the 
ACEP-ALE deed requirements specified therein, the effect of which is to 
protect natural resources and the agricultural nature of the land and 
permit the landowner the right to continue agricultural production and 
related uses.
    (3) Under the ALE-agreement, unless otherwise specified in this 
part, the Federal share of the cost of an agricultural land easement or 
other interest in eligible land will not exceed 50 percent of the fair 
market value of the agricultural land easement and the eligible entity 
will provide a share that is at least equivalent to the Federal share.
    (4) The duration of each agricultural land easement or other 
interest in land will be in perpetuity or the maximum duration allowed 
by State law.
    (b) Entity eligibility. (1) To be eligible to receive ACEP-ALE 
funding, an Indian Tribe, State, unit of local government, or a 
nongovernmental organization must meet the definition of eligible entity 
as listed in Sec.1468.3. In addition, eligible entities interested in 
receiving ACEP-ALE funds must provide NRCS sufficient evidence of--
    (i) A commitment to long-term conservation of agricultural lands,
    (ii) A capability to acquire, manage, and enforce easements,
    (iii) Sufficient number of staff dedicated to monitoring and 
easement stewardship,
    (iv) The estimated easement and related costs and the anticipated 
sources of funding sufficient to meet the non-Federal share requirements 
for each parcel as described in Sec.1468.24, and
    (v) For individual parcels on which the eligible entity's own cash 
resources will comprise less than 10 percent of the fair market value of 
the agricultural land easement for payment of easement compensation to 
the landowner, the eligible entity must provide NRCS specific evidence 
of funding available to manage, monitor, and enforce the easement.
    (2) All eligible entities identified on an application or ALE-
agreement must--
    (i) Ensure that their records and the records of all landowners of 
parcels identified on an application have been established in the USDA 
customer records system and that USDA has all the documentation needed 
to establish these records, and
    (ii) Eligible entities must also comply with applicable registration 
and reporting requirements of the Federal Funding Accountability and 
Transparency Act of 2006 (Pub. L. 109-282, as amended) and 2 CFR parts 
25 and 170, and maintain such registration for the duration of the ALE-
agreement.
    (c) Landowner eligibility. Under ACEP-ALE, all parcel landowners, 
including an eligible entity owner of private or Tribal land in an 
approved buy-protect-sell transaction, must--
    (1) Be in compliance with the highly erodible land and wetland 
conservation provisions in 7 CFR part 12,
    (2) Persons or legal entities must be in compliance with the 
Adjusted Gross Income Limitation provisions of 7 CFR part 1400;
    (3) Agree to provide access to the property and such information to 
NRCS as the agency deems necessary or desirable to assist in its 
determination of eligibility for program implementation purposes; and
    (4) Have their records established in the USDA customer records 
system.
    (d) Land eligibility. (1) Land will only be considered eligible for 
enrollment in

[[Page 893]]

ACEP-ALE based on NRCS determination that such private or Tribal 
agricultural land, including land on a farm or ranch that--
    (i) Is subject to a written pending offer by an eligible entity or 
part of an approved buy-protect-sell transaction;
    (ii)(A) Contains at least 50 percent prime or unique farmland, or 
designated farm and ranch land of State or local importance unless 
otherwise determined by NRCS,
    (B) Contains historical or archaeological resources,
    (C) The enrollment of which would protect grazing uses and related 
conservation values by restoring or conserving land, or
    (D) Furthers a State or local policy consistent with the purposes of 
the ACEP-ALE;
    (iii) Is--
    (A) Cropland;
    (B) Rangeland;
    (C) Grassland or land that contains forbs or shrubland for which 
grazing is the predominant use;
    (D) Located in an area that has been historically dominated by 
grassland, forbs, or shrubs and could provide habitat for animal or 
plant populations of significant ecological value;
    (E) Pastureland; or
    (F) Nonindustrial private forest land that contributes to the 
economic viability of a parcel offered for enrollment or serves as a 
buffer to protect such land from development; and
    (iv) Possesses suitable onsite and offsite conditions which will 
allow the easement to be effective in achieving the purposes of the 
program.
    (2) If land offered for enrollment is determined eligible under 
paragraph (d)(1) of this section, then NRCS may also enroll land that is 
incidental to the eligible land if the incidental land is determined by 
NRCS to be necessary for the efficient administration of an agricultural 
land easement.
    (3) Eligible land, including eligible incidental land, may not 
include nonindustrial private forest land of greater than two-thirds of 
the easement area unless waived by NRCS with respect to lands identified 
by NRCS as sugar bush that contributes to the economic viability of the 
parcel.
    (e) Ineligible land. The land specified in paragraphs (e)(1) through 
(7) of this section is not eligible for enrollment in ACEP-ALE:
    (1) Lands owned by an agency of the United States, other than land 
held in trust for Indian Tribes;
    (2) Lands owned in fee title by a State, including an agency or a 
subdivision of a State, or unit of local government;
    (3) Land owned by a nongovernmental organization whose purpose is to 
protect agricultural use and related conservation values including those 
listed in the statute under eligible land unless the eligible land is 
owned on a transitional basis as part of an approved buy-protect-sell 
transaction;
    (4) Land subject to an easement or deed restriction which, as 
determined by NRCS, provides similar restoration and protection as would 
be provided by enrollment in the program;
    (5) Land where the purposes of the program would be undermined due 
to onsite or offsite conditions, such as risk of hazardous materials, 
permitted or existing rights-of-way, infrastructure development, or 
adjacent land uses;
    (6) Land which NRCS determines to have unacceptable exceptions to 
clear title or insufficient legal access; or
    (7) Land on which gas, oil, earth, or mineral rights exploration has 
been leased or is owned by someone other than the landowner is 
ineligible under ACEP-ALE unless it is determined by NRCS that the 
third-party rights will not harm or interfere with the conservation 
values or agricultural uses of the easement, that any methods of 
exploration and extraction will have only a limited and localized impact 
on the easement, and the limitations are specified in the ALE deed.
    (f) Buy-Protect-Sell transaction land eligibility. (1) NRCS may 
enter into a buy-protect sell transaction with an eligible entity on a 
parcel that--
    (i) Otherwise meets the eligibility criteria described in this 
section,
    (ii) Is subject to conditions, as determined by NRCS, that 
necessitate the ownership of the parcel by the eligible entity on a 
transitional basis prior to the creation of an agricultural land 
easement, such as imminent threat of

[[Page 894]]

development, including, but not limited to, planned or approved 
conversion of grasslands to more intensive agricultural uses, and
    (iii) Is owned by or is in the process of being purchased by the 
eligible entity.
    (2) At the time of application, the eligible entity must provide 
NRCS evidence of ownership or active purchase of the parcel, such as a 
valid purchase agreement.
    (3) The eligible entity must meet all program requirements and any 
specific provisions related to buy-protect-sell transactions as 
specified in this part.



Sec.1468.21  Application procedures.

    (a) To apply for enrollment an eligible entity must submit an entity 
application for an ALE-agreement and any associated individual parcel 
applications to NRCS. For buy-protect-sell transactions, additional 
information may be required at the time of application as identified by 
NRCS.
    (b) NRCS may conduct initial eligibility determinations for the 
fiscal year an application is submitted. As determined by NRCS, the 
entity eligibility requirements must be met for the fiscal year in which 
the ALE-agreement is executed, and the land and landowner must be 
eligible for the fiscal year the parcel is approved for funding through 
an ALE-agreement. NRCS eligibility determinations are based on the 
application materials provided by the eligible entity, onsite 
assessments, and the criteria in Sec.1468.20.



Sec.1468.22  Establishing priorities, ranking considerations, and project selection.

    (a) NRCS will use national and State criteria to rank and select 
eligible parcels for funding. The national ranking criteria will 
comprise at least half of the ranking score. The State criteria will be 
developed by NRCS on a State-by-State basis, with input from the State 
technical committee. The weighting of ranking criteria, including 
adjustments to account for geographic differences, will be developed to 
maximize the benefit of the Federal investment under the program. 
Parcels are ranked and selected for funding at the State level.
    (b) The national ranking criteria are--
    (1) Percent of prime, unique, and other important farmland soils in 
the parcel to be protected;
    (2) Percent of cropland, rangeland, grassland, historic grassland, 
pastureland, or nonindustrial private forest land in the parcel to be 
protected;
    (3) Ratio of the total acres of land in the parcel to be protected 
to average farm size in the county according to the most recent USDA 
Census of Agriculture;
    (4) Decrease in the percentage of acreage of farm and ranch land in 
the county in which the parcel is located between the last two USDA 
Censuses of Agriculture;
    (5) Percent population growth in the county as documented by the 
United States Census;
    (6) Population density (population per square mile) as documented by 
the most recent United States Census;
    (7) Existence of a farm or ranch succession plan or similar plan 
established to address agricultural viability for future generations;
    (8) Proximity of the parcel to other protected land, such as 
military installations; land owned in fee title by the United States or 
an Indian Tribe, State or local government, or by a nongovernmental 
organization whose purpose is to protect agricultural use and related 
conservation values; or land that is already subject to an easement or 
deed restriction that limits the conversion of the land to 
nonagricultural use or protects grazing uses and related conservation 
values;
    (9) Proximity of the parcel to other agricultural operations and 
agricultural infrastructure;
    (10) Maximizing the protection of contiguous or proximal acres 
devoted to agricultural use;
    (11) Whether the land is currently enrolled in CRP in a contract 
that is set to expire within 1 year and is grassland that would benefit 
from protection under a long-term easement;
    (12) Decrease in the percentage of acreage of permanent grassland, 
pasture, and rangeland, other than cropland and woodland pasture, in the 
county in which the parcel is located

[[Page 895]]

between the last two USDA Censuses of Agriculture;
    (13) Percent of the fair market value of the agricultural land 
easement that is the eligible entity's own cash resources for payment of 
easement compensation to the landowner and comes from sources other than 
the landowner; and
    (14) Other criteria as determined by NRCS.
    (c) State or local criteria as determined by NRCS, with advice of 
the State technical committee, may only include--
    (1) The location of a parcel in an area zoned for agricultural use;
    (2) The eligible entity's performance in managing and enforcing 
easements. Performance must be measured by the efficiency by which 
easement transactions are completed or percentage of parcels that have 
been monitored and the percentage of monitoring results that have been 
reported;
    (3) Multifunctional benefits of farm and ranch land protection 
including--
    (i) Social, economic, historic, and archaeological benefits;
    (ii) Enhancing carbon sequestration;
    (iii) Improving climate change resiliency;
    (iv) At-risk species protection;
    (v) Reducing nutrient runoff and improving water quality;
    (vi) Other related conservation benefits.
    (4) Geographic regions where the enrollment of particular lands may 
help achieve national, State, and regional agricultural or conservation 
goals and objectives, or enhance existing government or private 
conservation projects;
    (5) Diversity of natural resources to be protected or improved;
    (6) Score in the land evaluation and site assessment system as 
identified in 7 CFR part 658 or equivalent measure for grassland 
enrollments, to serve as a measure of agricultural viability (access to 
markets and infrastructure);
    (7) Measures that will be used to maintain or increase agricultural 
viability, such as succession plans, agricultural land easement plans, 
or entity deed terms that specifically address long-term agricultural 
viability; and
    (8) Other criteria determined by NRCS that will account for 
geographic differences provided such criteria allow for the selection of 
parcels that will achieve ACEP-ALE purposes and continue to maximize the 
benefit of the Federal investment under the program.
    (d) If NRCS determines that the purchase of two or more agricultural 
land easements are comparable in achieving program goals, NRCS will not 
assign a higher priority to any one of these agricultural land easements 
solely on the basis of lesser cost to the program.
    (e) NRCS will rank all eligible parcels that have been submitted 
prior to an application cut-off date in accordance with the national and 
State ranking criteria before selecting parcels for funding.
    (f) Eligible parcels selected for funding by NRCS will be identified 
in an agreement executed by NRCS and an eligible entity, either as part 
of the ALE-agreement or through a supplemental arrangement as agreed to 
by the parties.
    (g) Pursuant to the terms of the ALE-agreement, eligible parcels may 
be selected for funding in a fiscal year subsequent to the fiscal year 
in which the parties entered into an ALE-agreement.



Sec.1468.23  ALE-agreements.

    (a) NRCS will enter into an ALE-agreement with a selected eligible 
entity that stipulates the terms and conditions under which the eligible 
entity is permitted to use ACEP-ALE funding and will incorporate all 
ACEP-ALE requirements. NRCS will make available to eligible entities the 
ALE-agreement terms and conditions, including any applicable templates, 
based on enrollment type. The ALE-agreement will address--
    (1) The interests in land to be acquired, including the United 
States' right of enforcement, the deed requirements specified in this 
part, as well as the other terms and conditions of the easement deed;
    (2) The management and enforcement of the rights on lands acquired 
with ACEP-ALE funds;
    (3) The responsibilities of NRCS;
    (4) The responsibilities of the eligible entity on easements 
acquired with ACEP-ALE funds;

[[Page 896]]

    (5) The requirement for any conservation plan for highly erodible 
cropland or agricultural land easement plans to be developed as required 
or agreed-to prior to execution of the easement deed and payment of 
easement compensation to the landowner;
    (6) As applicable, the allowance of eligible parcel substitution 
upon mutual agreement of the parties;
    (7) The certification by the landowner at the time of easement 
execution and payment of easement compensation of the extent of any 
charitable contribution or other donation the landowner has provided to 
the eligible entity;
    (8) The submission of documentation of procured costs for each 
parcel, including appraisal, boundary survey, phase-I environmental site 
assessment, title commitment or report, title insurance, and closing 
cost if such procured costs are to be considered as part of the eligible 
entity's non-Federal share; and
    (9) Other requirements deemed necessary by NRCS to meet the purposes 
of this part or protect the interests of the United States.
    (10) For buy-protect-sell transactions, the ALE-agreement will also 
include the requirements identified in Sec.1468.27.
    (b) The term of standard ALE-agreements, except as described in 
Sec.1468.27 for ALE-agreements for approved buy-protect-sell 
transactions, will be:
    (1) Up to 5 fiscal years following the fiscal year the agreement is 
signed for certified entities; and
    (2) Up to 3 fiscal years and not to exceed 5 fiscal years following 
the fiscal year the agreement is signed for other eligible entities.
    (c) Eligible parcels selected for funding by NRCS will be identified 
on an attachment to the ALE-agreement. The attachment will include 
landowners' names, acreage of the easement area, the estimated fair 
market value, the estimated Federal contribution, and other relevant 
information.
    (d) The ALE-agreement will require the eligible entity to comply 
with applicable registration and reporting requirements of the Federal 
Funding Accountability and Transparency Act of 2006 (Pub. L. 109-282, as 
amended) and 2 CFR parts 25 and 170.
    (e) With NRCS approval, the eligible entity may substitute acres 
within a pending easement offer. Substituted acres must not reduce the 
easements capability in meeting program purposes.
    (f) With NRCS approval, an eligible entity may substitute pending 
easement offers within a standard ALE-agreement. The substituted 
landowner and easement offer must meet eligibility criteria as described 
in Sec.1468.20. NRCS may require re-ranking of substituted acres 
within an easement offer and substituted easement offers within an ALE-
agreement. Substitutions are not authorized under ALE-agreements for 
buy-protect-sell transactions.



Sec.1468.24  Compensation and funding for agricultural land easements.

    (a) Determining the fair market value of the agricultural land 
easement. (1) The Federal share will not exceed 50 percent of the fair 
market value of the agricultural land easement, as determined using--
    (i) An appraisal using the Uniform Standards of Professional 
Appraisal Practices or the Uniform Appraisal Standards for Federal Land 
Acquisitions,
    (ii) An areawide market analysis or survey, or
    (iii) Another industry-approved method approved by NRCS.
    (2) Prior to receiving funds for an agricultural land easement, the 
eligible entity must provide NRCS with an acceptable determination of 
the fair market value of the agricultural land easements that conforms 
to applicable industry standards and NRCS specifications and meets the 
requirements of this part.
    (3) If the value of the easement is determined using an appraisal, 
the appraisal must be completed and signed by a State-certified general 
appraiser and must contain a disclosure statement by the appraiser. The 
appraisal must conform to the Uniform Standards of Professional 
Appraisal Practices or the Uniform Appraisal Standards for Federal Land 
Acquisitions as selected by the eligible entity.

[[Page 897]]

    (4) If the fair market value of the easement is determined using an 
areawide market analysis or survey, the areawide market analysis or 
survey must be completed and signed by a person determined by NRCS to 
have professional expertise and knowledge of agricultural land values in 
the area subject to the areawide market analysis or survey. The use of 
areawide market analysis or survey must be approved by NRCS prior to 
entering into an ALE-agreement.
    (5) Requests to use another industry-approved method must be 
submitted to NRCS and approved by NRCS prior to entering into the ALE-
agreement. NRCS will identify the applicable industry standards and any 
associated NRCS specifications based on the methodology approved.
    (6) NRCS will review for quality assurance purposes, appraisals, 
areawide market analysis or surveys, valuation reports, or other 
information resulting from another industry-approved method approved for 
use by NRCS.
    (7) Eligible entities must provide a copy of the applicable report 
or other information used to establish the fair market value of the 
agricultural land easement to NRCS at least 90 days prior to the planned 
easement closing date.
    (8) Prior to the eligible entity's purchase of the easement, 
including payment of easement compensation to the landowner, NRCS must 
approve the determination of the fair market value of the agricultural 
land easement upon which the Federal share will be based.
    (b) Determining the Federal share of the agricultural land easement. 
(1) Subject to the statutory limits, NRCS may provide up to 50 percent 
of the fair market value of the agricultural land easement. An eligible 
entity will provide a non-Federal share that is at least equivalent to 
the Federal share.
    (2) The non-Federal share provided by an eligible entity may be 
comprised of--
    (i) The eligible entity's own cash resources for payment of easement 
compensation to the landowner;
    (ii) A charitable donation or qualified conservation contribution 
(as defined by section 170(h) of the Internal Revenue Code of 1986) from 
the landowner;
    (iii) The procured costs paid by the eligible entity to a third-
party for an appraisal, boundary survey, phase-I environmental site 
assessment, title commitment or report, title insurance, or closing 
cost; and
    (iv) Up to 2 percent of the fair market value of the agricultural 
land easement for easement stewardship and monitoring costs where the 
costs as identified in paragraphs (b)(2)(i) through (iii) of this 
section are not sufficient to meet the non-Federal share;
    (3) NRCS may authorize a waiver to increase the Federal share of the 
cost of an agricultural land easement to an amount not to exceed 75 
percent of the fair market value of the agricultural land easement if--
    (i) NRCS determines the lands to be enrolled are grasslands of 
special environmental significance as defined in this part,
    (ii) An eligible entity provides a non-Federal share that is at 
least equivalent to the Federal share or comprises the remainder of the 
fair market value of the agricultural land easement, whichever is less, 
and
    (iii) The eligible entity agrees to incorporate and enforce the 
additional necessary deed restrictions to manage and enforce the 
easement to ensure the grassland of special environmental significance 
attributes are protected.
    (c) Uses of NRCS ACEP-ALE funds. (1) ACEP-ALE funds may not be 
provided or used for eligible entity expenditures for expenses, such as: 
Appraisals, areawide market analysis, legal surveys, access, title 
clearance or title insurance, legal fees, phase I environmental site 
assessments, closing services, development of agricultural land easement 
plans or component plans by the eligible entity, costs of easement 
monitoring, and other related administrative and transaction costs 
incurred by the eligible entity.
    (2) NRCS will conduct its own technical and administrative review of 
appraisals, areawide market analysis, or other easement valuation 
reports and hazardous materials reviews.
    (3) NRCS may provide technical assistance for the development of a 
conservation plan on those portions of a parcel that contain highly 
erodible cropland, or if requested, to assist in

[[Page 898]]

compliance with the terms and conditions of easements.



Sec.1468.25  Agricultural land easement deeds.

    (a) Under ACEP-ALE, a landowner grants an easement to an eligible 
entity with which NRCS has entered into an ALE-agreement. The easement 
deed will require that the easement area be maintained in accordance 
with ACEP-ALE goals and objectives for the term of the easement.
    (b) The term of an agricultural land easement must be in perpetuity, 
except where State law prohibits a permanent easement. In such cases 
where State law limits the term of a conservation easement, the easement 
term will be for the maximum duration allowed under State law.
    (c) The eligible entity may use its own terms and conditions in the 
agricultural land easement deed, but the agricultural land easement deed 
must address the deed requirements as specified by this part and by NRCS 
in the ALE-agreement.
    (d) All deeds, as further specified in the ALE-agreement, must 
address the following regulatory deed requirements:
    (1) Include a right of enforcement clause for NRCS. NRCS will 
specify the terms for the right of enforcement clause, including that 
such interest in the agricultural land easement:
    (i) May be used only if the terms and conditions of the easement are 
not enforced by the eligible entity;
    (ii) Extends to a right of inspection only if the holder of the 
easement fails to provide monitoring reports in a timely manner or NRCS 
has a reasonable and articulable belief that the terms and conditions of 
the easement have been violated;
    (iii) Remains in effect for the duration of the easement and any 
changes that affect NRCS's interest in the agricultural land easement 
must be reviewed and approved by NRCS under Sec.1468.6 of this part.
    (2) Specify that impervious surfaces will not exceed 2 percent of 
the ACEP-ALE easement area, excluding NRCS-approved conservation 
practices unless NRCS grants a waiver as follows:
    (i) The eligible entity may request a waiver of the 2-percent 
impervious surface limitation at the time an individual parcel is 
approved for funding,
    (ii) NRCS may waive the 2-percent impervious surface limitation on 
an individual easement basis, provided that no more than 10 percent of 
the easement area is covered by impervious surfaces,
    (iii) Before waiving the 2 percent limitation, NRCS will consider, 
at a minimum, population density; the ratio of open, prime, and other 
important farmland versus impervious surfaces on the easement area; the 
impact to water quality concerns in the area; the type of agricultural 
operation; parcel size; and the purposes for which the easement is being 
acquired,
    (iv) Eligible entities may submit an impervious surface limitation 
waiver process to NRCS for review and consideration. The eligible 
entities must apply any approved impervious surface limitation waiver 
processes on an individual easement basis, and
    (v) NRCS will not approve blanket waivers or entity blanket waiver 
processes of the impervious surface limitation. All ACEP-ALE easements 
must include language limiting the extent of impervious surfaces within 
the easement area.
    (3) Include an indemnification clause requiring the landowner to 
indemnify and hold harmless the United States from any liability arising 
from or related to the property enrolled in ACEP-ALE.
    (4) Include an amendment clause requiring that any changes to the 
easement deed after its recordation must be consistent with the purposes 
of the agricultural land easement and this part. Any substantive 
amendment, including any subordination of the terms of the easement or 
modifications, exchanges, or terminations of the easement area, must be 
approved by NRCS and the easement holder in accordance with Sec.1468.6 
prior to recordation or else the action is null and void.
    (5) Prohibit commercial and industrial activities except those 
activities that NRCS has determined are consistent with the agricultural 
use of the land.

[[Page 899]]

    (6) Limit the subdivision of the property subject to the 
agricultural land easement, except where State or local regulations 
explicitly require subdivision to construct residences for employees 
working on the property or where otherwise authorized by NRCS.
    (7) Prohibit subsurface mineral development unless the terms of the 
deed, as determined by NRCS, specify that any subsurface mineral 
development allowed by the eligible entity on the easement area must--
    (i) Be conducted in accordance with applicable State law;
    (ii) Have a limited and localized impact;
    (iii) Not harm the agricultural use and conservation values of the 
land subject to the easement;
    (iv) Not materially alter or affect the existing topography;
    (v) Comply with a subsurface mineral development plan that includes 
a plan for the remediation of impacts to the agricultural use or 
conservation values of the land subject to the easement and is approved 
by NRCS prior to the initiation of mineral development activity;
    (vi) Not be accomplished by any surface mining method;
    (vii) Be within the impervious surface limits of the easement under 
paragraph (d)(2) of this section;
    (viii) Use practices and technologies that minimize the duration and 
intensity of impacts to the agricultural use and conservation values of 
the land subject to the easement; and
    (ix) Ensure that each area impacted by the subsurface mineral 
development are reclaimed and restored by the holder of the mineral 
rights at cessation of operation.
    (8) Include specific protections related to the purposes for which 
the agricultural land easement is being acquired, including provisions 
to protect historical or archaeological resources or grasslands of 
special environmental significance.
    (9) For parcels with highly erodible cropland, include terms that 
ensure compliance with the conservation plan that will be developed and 
managed in accordance with the Food Security Act of 1985, as amended, 
and its associated regulations.
    (10) Include any additional provisions needed to address the 
attributes for which a parcel was ranked and selected for funding by 
NRCS, such as the purchase of the agricultural land easement, the 
development and maintenance of an agricultural land easement plan, or 
use of the minimum deed terms as described in paragraph (f) of this 
section.
    (11) Include terms, if required by the eligible entity, that 
identify an intent to keep the land subject to the agricultural land 
easement under ownership of a farmer or rancher.
    (12) Include other minimum deed terms specified by NRCS to ensure 
that ACEP-ALE purposes are met.
    (e) NRCS reserves the right to require additional specific language 
or require removal of language in the agricultural land easement deed to 
ensure the enforceability of the easement deed, protect the interests of 
the United States, or to otherwise ensure ALE purposes will be met.
    (f) For eligible entities that have not been certified, the deed 
document must be reviewed and approved by NRCS in advance of use as 
provided herein:
    (1) NRCS will make available for an eligible entity's use a standard 
set of minimum deed terms that satisfactorily address the deed 
requirements in paragraph (d) of this section and may be wholly 
incorporated along with the eligible entity's own deed terms into the 
agricultural land easement deed, or as an addendum that is attached and 
incorporated by reference into the deed. The standard minimum deed terms 
addendum will specify the terms that will prevail in the event of a 
conflict.
    (2) If an eligible entity agrees to use the standard set of minimum 
deed terms as published by NRCS, NRCS and the eligible entity will 
identify in the ALE-agreement the use of the standard minimum deed terms 
as a requirement and National Office review of individual deeds may not 
be required. NRCS may place priority on applications where an eligible 
entity agrees to use the standard set of minimum deed terms as 
published.
    (3) The eligible entity must submit all individual agricultural land 
easement deeds to NRCS at least 90 days

[[Page 900]]

before the planned easement closing date and be approved by NRCS in 
advance of use.
    (4) Eligible entities with multiple eligible parcels may submit an 
agricultural land easement deed template for review and approval. The 
deed templates must be reviewed and approved by NRCS in advance of use.
    (5) NRCS may conduct an additional review of the agricultural land 
easement deeds for individual parcels prior to the execution of the 
easement deed by the landowner and the eligible entity to ensure that 
they contain the same language as approved by the National Office and 
that the appropriate site-specific information has been included.
    (g) The eligible entity will acquire, hold, manage, monitor, and 
enforce the easement. The eligible entity may have the option to enter 
into an agreement with appropriately qualified governmental or private 
organizations that have no property rights or interests in the easement 
area to carry out easement monitoring, management, and enforcement 
responsibilities.
    (h) All agricultural land easement deeds acquired with ACEP-ALE 
funds must be recorded. The eligible entity will provide proof of 
recordation to NRCS within the timeframe specified in the ALE-agreement.



Sec.1468.26  Eligible entity certification.

    (a) To be considered for certification, an entity must submit a 
written request for certification to NRCS, which specifically addresses 
the items in paragraphs (a)(1) through (7) of this section:
    (1) An explanation of how the entity meets the requirements 
identified in Sec.1468.20(b) of this section;
    (2) An agreement to use for ACEP-ALE funded acquisitions easement 
valuation methodologies identified in section Sec.1468.24 of this 
part;
    (3) A showing of a demonstrated record of completing acquisition of 
easements in a timely fashion;
    (4) A showing that it has the capacity to monitor and enforce the 
provisions of easement deeds and history of such monitoring and 
enforcement;
    (5) A plan for administering easements enrolled under this part, as 
determined by NRCS;
    (6) Proof that the eligible entity--
    (i) Has been accredited by the Land Trust Accreditation Commission 
and has acquired not fewer than 10 agricultural land easements under 
ACEP-ALE, the Farm and Ranch Lands Protection Program, or the Farmland 
Protection Program;
    (ii) Is a State department of agriculture or other State agency with 
statutory authority for farm and ranchland protection and has acquired 
not fewer than 10 agricultural land easements under ACEP-ALE or its 
predecessor programs; or
    (iii) Holds, manages, and monitors a minimum of 25 agricultural land 
conservation easements, of which a minimum of 10 of these easements are 
agricultural land easements under ACEP-ALE or its predecessor programs, 
and if the eligible entity is a nongovernmental organization, provides 
evidence that the eligible entity possesses a dedicated fund for the 
purposes of managing, monitoring, and enforcing each easement held by 
the eligible entity; and
    (7) Successfully met the responsibilities of the eligible entity 
under the applicable agreements with NRCS, as determined by NRCS, 
relating to agricultural land easements that the eligible entity has 
acquired under the program or any predecessor program;
    (b) NRCS will notify an eligible entity in writing whether they have 
been certified and the rationale for the agency's decision. When NRCS 
determines an eligible entity qualifies as certified--
    (1) NRCS may enter into an ALE-agreement with the certified entity 
that is for a period of up to 5 fiscal years following the fiscal year 
the agreement is executed. NRCS will review and select parcel 
applications submitted for funding by certified entities as specified in 
Sec.1468.22. Funding for selected parcels is identified on an 
attachment to the ALE-agreement.
    (2) The terms of the ALE-agreement will include the regulatory deed 
requirements specified in Sec.1468.25 of this part that must be 
addressed in the deed to ensure that ACEP-ALE purposes

[[Page 901]]

will be met without requiring NRCS to pre-approve each easement 
transaction prior to closing.
    (i) Certified entities may purchase easements without NRCS approving 
the agricultural land easement deeds, baseline reports, titles, or 
appraisals before the purchase of the easement;
    (ii) Certified entities will prepare the agricultural land easement 
deeds, baseline reports, titles, and appraisals in accordance with NRCS 
requirements as identified in the ALE-agreement;
    (3) NRCS will conduct quality assurance reviews of a percentage of 
the closed agricultural land easement transactions and annual monitoring 
reports submitted by the certified entity; and
    (4) NRCS will provide the certified entity an opportunity to correct 
errors or remedy deficiencies identified in the NRCS quality assurance 
review. If the certified entity fails to remedy the identified items to 
NRCS's satisfaction, NRCS will consider whether to allow the certified 
entity to continue to purchase ALE-funded easements without prior NRCS 
approval, to decertify the entity in accordance with paragraph (c) of 
this section, or, require the certified entity to take administrative 
steps necessary to remedy the deficiencies.
    (c)(1) NRCS will conduct a quality assurance review of the certified 
entity a minimum of once every 3 fiscal years to ensure that the 
certified entities are meeting the certification criteria established in 
this section.
    (2) If NRCS determines that the certified entity no longer meets 
these criteria, the Chief will--
    (i) Provide the certified entity a specified period of time, at a 
minimum 180 days, in which to take such actions as may be necessary to 
correct the identified deficiencies, and
    (ii) If NRCS determines the certified entity does not meet the 
criteria established in this part after the 180 days, NRCS will send 
written notice of decertification. This notice will specify the actions 
that have not been completed to retain certification status, the actions 
the entity must take to regain certification status, the status of funds 
in the ALE-agreement; and the eligibility of the entity to apply for 
future ACEP-ALE funds. The entity may contest the notice of 
decertification in writing to NRCS within 20 calendar days of receipt of 
the notice of decertification. The entity's letter must provide specific 
reasons why the decision to decertify is in error.
    (3) The period of decertification may be up to 3 years, based upon 
the circumstances associated with the action.
    (4) The entity may submit a new request for certification to NRCS 
only after the decertification period has expired.



Sec.1468.27  Buy-Protect-Sell transactions.

    (a) NRCS may enter into an ALE-agreement with an eligible entity for 
a buy-protect-sell transaction to provide cost-share assistance for the 
purchase of an agricultural land easement on eligible private or Tribal 
agricultural land that an eligible entity owns or is in the process of 
purchasing for the purposes of securing the long-term protection of 
natural resources and the agricultural nature of the land and ensuring 
timely transfer to a qualified farmer or rancher.
    (b) At the time the individual parcel application is submitted, the 
eligible entity must identify the specific buy-protect-sell transaction 
type as either--
    (1) Pre-closing transfer, wherein the eligible entity will transfer 
fee title ownership to a farmer or rancher at or prior to closing on the 
agricultural land easement and the eligible entity will hold the 
agricultural land easement prior to receiving the Federal share, or
    (2) Post-closing transfer, wherein the eligible entity will transfer 
fee title ownership to a farmer or rancher not later than 3 years after 
closing on the agricultural land easement, unless an extension of such 
time has been authorized by NRCS based on documentation of extenuating 
circumstances provided by the eligible entity.
    (c) The ALE-agreement must contain the information described in 
Sec.1468.23 and must specify the details of the legal arrangement for 
the individual buy-protect-sell transaction, including that for all buy-
protect-sell transactions the eligible entity must--

[[Page 902]]

    (1) Own the land or within 12 months of execution of the ALE-
agreement for the buy-protect-sell transaction by both NRCS and the 
eligible entity, and the eligible entity has completed or has 
demonstrated to the satisfaction of NRCS that completion of the purchase 
of the land is imminent.
    (2) Make an initial sale of the land to a farmer or rancher that is 
or will be subject to the agricultural land easement pursuant to the 
terms of the ALE-agreement.
    (3) Sell the land to the farmer or rancher for a purchase price that 
does not exceed the lesser of--
    (i) The original purchase price of the land paid by the eligible 
entity; or
    (ii) The agricultural value as determined by an appraisal.
    (4) Ensure that amounts included in the sale of the land to the 
farmer or rancher for reasonable holding and transaction costs incurred 
by the eligible entity in total do not exceed more than 10 percent of 
the agricultural value.
    (5) Submit documentation satisfactory to NRCS that confirms the sale 
of the land that is or will be subject to the agricultural land easement 
meets the buy-protect-sell transaction requirements. Pursuant to the 
terms and conditions of the ALE-agreement for the buy-protect-sell 
transaction, the eligible entity must provide--
    (i) Evidence that the purchaser of the land is a qualified farmer or 
rancher,
    (ii) Documentation of the purchase price for the land paid by the 
eligible entity,
    (iii) The appraisal used to determine the agricultural value of the 
land,
    (iv) An itemized list of the allowable holding or transaction costs 
included in the sales price,
    (v) A copy of the settlement statements identifying the sale price 
and all holding and transactions costs charged to the farmer or rancher 
purchaser, and
    (vi) Other documents as specified by NRCS in the ALE-agreement.
    (6) Reimburse NRCS for the entirety of the Federal share provided 
if, as determined by NRCS, the eligible entity failed to transfer 
ownership per the terms and conditions of the ALE-agreement for the buy-
protect-sell transaction.
    (d) In addition to the requirements identified in paragraph (c) of 
this section, for buy-protect-sell transactions that involve a pre-
closing transfer as required by paragraph (b)(1) of this section:
    (1) The maximum duration of the ALE-agreement may be the same as 
described in Sec.1468.23(b).
    (2) The Federal share for the agricultural land easement will be 
provided on a reimbursable basis only, after the agricultural land 
easement has closed and the required documents have been provided to and 
reviewed by NRCS.
    (e) For buy-protect-sell transactions that involve a post-closing 
transfer as required by paragraph (b)(2) of this section:
    (1) At the time of application, in addition to the information 
identified Sec.1468.21, the eligible entity must provide NRCS specific 
information on the proposed structure of the buy-protect-sell 
transaction, including the parties to be involved in the transaction, 
the roles and responsibilities of each party related to the acquisition, 
holding, monitoring, and enforcement of the easement and the fee title 
ownership of the land, relevant State law that authorizes such 
transactions, proposed timeline, and other information identified by 
NRCS.
    (2) NRCS will determine the legal conformance of the proposed 
arrangement for the buy-protect-sell transaction.
    (3) Based on the NRCS determination of legal conformance of the 
proposed buy-protect-sell transaction, for eligible applications 
selected for funding based on ranking and availability of funds, NRCS 
will identify the specific terms of the ALE-agreement for the buy-
protect-sell transaction.
    (4) The buy-protect-sell transaction must meet the timing 
requirements in paragraphs (e)(4)(i) through (iv) of this section--
    (i) The term of the ALE-agreement for a buy-protect-sell transaction 
will be for a period no longer than 5 fiscal years following the fiscal 
year of execution of the ALE-agreement by NRCS and the eligible entity.

[[Page 903]]

    (ii) The agricultural land easement must be closed within 2 fiscal 
years following the fiscal year of ALE-agreement execution, and the sale 
of the land subject to the agricultural land easement to a qualified 
farmer or rancher must occur within 3 years of closing on the 
agricultural land easement.
    (iii) Prior to the expiration of the 3-year timeframe, the eligible 
entity may submit to NRCS a request for an extension that includes 
documentation of extenuating circumstances and the anticipated timeline, 
not to exceed 12 months, in which the sale of the land subject to the 
easement will occur.
    (iv) NRCS may, in its discretion, authorize such additional time for 
the sale of the land subject to the agricultural land easement to a 
qualified farmer or rancher through a modification to the ALE-agreement.



Sec.1468.28  Violations and remedies.

    (a) In the event of a violation of the agricultural land easement 
terms, the agricultural land easement holder will notify the landowner 
and the violator, if different than the landowner, and NRCS. The 
landowner may be given reasonable notice and, where appropriate, an 
opportunity to voluntarily correct the violation in accordance with the 
terms of the agricultural land easement.
    (b) In the event that the agricultural land easement holder, or its 
successors or assigns, fails to enforce any of the terms of the 
agricultural land easement as determined by NRCS, NRCS may exercise the 
United States' rights to enforce the terms of the agricultural land 
easement through any and all authorities available under Federal or 
State law.
    (c) Notwithstanding paragraph (a) of this section, NRCS, upon 
notification to the landowner and the agricultural land easement holder, 
reserves the right to enter upon the easement area if the annual 
monitoring report provided by the agricultural land easement holder 
documenting compliance with the agricultural land easement is 
insufficient or is not provided annually, the United States has a 
reasonable and articulable belief that the terms and conditions of the 
easement have been violated, or to remedy deficiencies or easement 
violations as it relates to the conservation plan in accordance with 7 
CFR part 12.
    (d) In the event of an emergency, the entry onto the easement area 
may be made at the discretion of NRCS when the actions are deemed 
necessary to prevent, terminate, or mitigate a potential or unaddressed 
violation with notification to the landowner and the agricultural land 
easement holder provided at the earliest practicable time. The landowner 
will be liable for any costs incurred by NRCS as a result of the 
landowner's failure to comply with the easement requirements as it 
relates to agricultural land easement violations.
    (e) The United States will be entitled to recover any and all costs 
from the eligible entity, or its successors or assigns, including 
attorney's fees or expenses, associated with any enforcement or remedial 
action as it relates to the enforcement of the agricultural land 
easement.
    (f) In instances where an easement is terminated, the proponent of 
the termination action must pay to CCC an amount determined by NRCS.
    (g) If NRCS exercises its rights identified under an agricultural 
land easement NRCS will provide written notice to the agricultural land 
easement holder at their last-known address. The notice will set forth 
the nature of the noncompliance by the agricultural land easement 
holder, or its successors or assigns, and provide a 180-day period to 
cure. If the agricultural land easement holder fails to cure within the 
180-day period, NRCS will take the action specified under the notice. 
NRCS reserves the right to decline to provide a period to cure if NRCS 
determines that imminent harm may result to the conservation values or 
other interest in land that it seeks to protect.



                   Subpart C_Wetland Reserve Easements



Sec.1468.30  Program requirements.

    (a) General. (1) Under the ACEP-WRE, NRCS may purchase wetland 
reserve easements from eligible landowners who voluntarily cooperate to 
restore, protect, and enhance wetlands

[[Page 904]]

on eligible private or Tribal lands. A 30-year contract enrollment 
option is also available for acreage owned by Indian Tribes.
    (2) To participate in ACEP-WRE, a landowner must agree to the 
implementation of a WRPO, the effect of which is to restore, protect, 
enhance, maintain, manage, and monitor the hydrologic conditions of 
inundation or saturation of the soil, native vegetation, and natural 
topography of eligible lands.
    (3) NRCS may provide financial assistance through an easement 
restoration agreement for the conservation practices and eligible 
activities that promote the restoration, protection, enhancement, 
maintenance, and management of wetland functions and values and 
associated habitats.
    (4) For ACEP-WRE enrollments, NRCS may implement such conservation 
practices and eligible activities through an agreement with the 
landowner, a contract with a vendor, an interagency agreement, or a 
cooperative agreement. The specific restoration, protection, 
enhancement, maintenance, and management actions authorized by NRCS, may 
be undertaken by the landowner, NRCS, or its designee.
    (5) The duration of a wetland reserve easement may be either 
perpetual, 30-years, or the maximum duration allowed by State law. The 
duration of a 30-year contract on acreage owned by Indian Tribes is 30 
years.
    (b) Acreage limitations. (1) No more than 25 percent of the total 
cropland in any county, as determined by the FSA, may be enrolled in CRP 
and ACEP-WRE, and no more than 15 percent of the total cropland in the 
county may be subject to an easement under ACEP-WRE.
    (2) The limitations in paragraph (b)(1) of this section do not apply 
to areas devoted to windbreaks or shelterbelts after November 28, 1990, 
or to cropland designated by NRCS with ``subclass w'' in the land 
capability classes IV through VIII because of severe use limitations due 
to factors related to excess water such as poor soil drainage, wetness, 
high water table, soil saturation, or inundation.
    (3) NRCS and the FSA will concur before a waiver of the 25-percent 
limit of paragraph (b)(1) of this section can be approved for an 
easement proposed for enrollment in ACEP-WRE. Such a waiver will only be 
approved if the waiver will not adversely affect the local economy, and 
operators in the county are having difficulties complying with the 
conservation plans implemented under 16 U.S.C. 3812.
    (c) Landowner eligibility. To be eligible to enroll in the ACEP-WRE, 
all landowners must be in compliance with the highly erodible land and 
wetland conservation provisions in 7 CFR part 12. Persons or legal 
entities must be in compliance with the Adjusted Gross Income Limitation 
provisions at 7 CFR part 1400 and:
    (1) Be the landowner of eligible land for which enrollment is 
sought;
    (2) Provide any documentation required by NRCS as necessary to 
determine eligibility; and
    (3) For easement applications, have been the landowner of such land 
for the 24-month period prior to the time of application unless it is 
determined by NRCS that:
    (i) The land was acquired by will or succession as a result of the 
death of the previous landowner or pursuant to the terms of an existing 
trust,
    (ii) The ownership change occurred due to foreclosure on the land 
and the owner of the land immediately before the foreclosure exercises a 
right of redemption from the mortgage holder in accordance with State 
law, or
    (iii) The land was acquired under circumstances that give adequate 
assurances, as determined by NRCS, that such land was not acquired for 
the purposes of placing it in the program. Adequate assurances will 
include documentation that the change of ownership resulted from 
circumstances such as:
    (A) The prior landowner owned the land for 2 years or more and 
transferred ownership amongst members of the immediate family (father, 
mother, spouse, children, grandparents, or grandchildren),
    (B) A completion of a contract for deed entered into 24 months or 
more prior to the application date,

[[Page 905]]

    (C) The new landowner had leased the land for agricultural purposes 
for 24 months or more prior to the application date, or
    (D) The easement area is a portion of a larger property where the 
majority portion was acquired for agriculture purposes.
    (4) Agree to provide such information to NRCS as the agency deems 
necessary to assist in its determination of eligibility for program 
benefits and for other program implementation purposes.
    (d) New landowner. When a parcel of land that has been accepted for 
enrollment into the ACEP-WRE is sold or transferred prior to NRCS 
purchase of the easement, NRCS will cancel the application or agreement 
to purchase and remove the acres from enrollment unless the new 
landowner meets the requirements of paragraph (c) of this section and 
accepts the terms and conditions of enrollment. The new landowner must 
submit required documentation for NRCS review and execute any required 
agreements or contracts. The decision to approve and execute an 
enrollment transferred prior to closing is at NRCS's discretion.
    (e) Land eligibility. (1) Only private land or acreage owned by an 
Indian Tribe may be considered for enrollment into ACEP-WRE.
    (2) NRCS will determine whether land is eligible for enrollment and 
whether, once found eligible, the lands may be included in the program 
based on the likelihood of successful restoration of such land and 
resultant wetland functions and values merit inclusion of such land in 
the program when considering the cost of acquiring the easement and the 
cost of the restoration, protection, enhancement, maintenance, 
management, and monitoring.
    (3) Land will only be considered eligible for enrollment in the 
ACEP-WRE if NRCS determines that the enrollment of such land maximizes 
wildlife benefits and wetland function and values.
    (4) To be determined eligible, NRCS must also determine that such 
land is--
    (i) Farmed wetland or converted wetland, together with adjacent 
lands that are functionally dependent on the wetlands, if such land is 
identified by NRCS as:
    (A) Wetlands farmed under natural conditions, farmed wetlands, prior 
converted cropland, commenced conversion wetlands, farmed wetland 
pastures, and agricultural lands substantially altered by flooding so as 
to develop and retain wetland functions and values; or
    (B) Former or degraded wetlands that occur on lands that have been 
used or are currently being used for the production of food and fiber, 
including rangeland and forest production lands, where the hydrology has 
been significantly degraded or modified and will be substantially 
restored; or
    (C) Farmed wetland and adjoining land enrolled in CRP that has the 
highest wetland functions and values and is likely to return to 
production after the land leaves CRP; or
    (D) A riparian area along a stream or other waterway that links, or 
after restoring the riparian area, will link wetlands protected by the 
ACEP-WRE easement, another easement, or other device or circumstance 
that achieves the same objectives as an ACEP-WRE easement.
    (ii) Cropland or grassland that was used for agricultural production 
prior to flooding from the natural overflow of--
    (A) A closed basin lake, together with adjacent land that is 
functionally dependent upon it, if the State or other entity is willing 
to provide a 50-percent share of the cost of the easement; or
    (B) A pothole and adjacent land that is functionally dependent on 
it; and
    (C) The size of the parcel offered for enrollment is a minimum of 20 
contiguous acres. Such land meets the requirement of likelihood of 
successful restoration only if the soils are hydric and the depth of 
water is 6.5 feet or less.
    (5) If land offered for enrollment is determined eligible under this 
section, then NRCS may also enroll land adjacent or contiguous to such 
eligible land together with the eligible land, if such land maximizes 
wildlife benefits and contributes significantly to wetland functions and 
values. Such adjacent or contiguous land may include buffer areas, 
created wetlands, noncropped

[[Page 906]]

natural wetlands, riparian areas that do not meet the requirements of 
paragraph (e)(4)(i)(D) of this section, and restored wetlands, but not 
more than NRCS, in consultation with the State technical committee, 
determines is necessary to maximize wildlife benefits and contribute 
significantly to wetland functions and values. NRCS will not enroll as 
eligible adjacent or contiguous land any constructed wetlands that treat 
wastewater or contaminated runoff.
    (6) To be enrolled in the program, eligible land must have 
sufficient access and be configured in a size and with boundaries that 
allow for the efficient management and monitoring of the area for 
program purposes and otherwise promote and enhance program objectives as 
determined by NRCS.
    (f) Enrollment of CRP lands. Land subject to an existing CRP 
contract may be enrolled in ACEP-WRE only if the land and landowner meet 
the requirements of this part and the enrollment is requested by the 
landowner and agreed to by NRCS. To enroll in ACEP-WRE, the CRP contract 
for the property must be terminated or otherwise modified subject to 
such terms and conditions as are mutually agreed upon by FSA and the 
landowner.
    (g) Ineligible land. The land specified in paragraphs (g)(1) through 
(7) of this section is not eligible for enrollment in the ACEP-WRE:
    (1) Converted wetlands if the conversion was commenced after 
December 23, 1985;
    (2) Land established to trees under the CRP, except in cases where 
the land meets all other WRE eligibility criteria, the established cover 
conforms to WRE restoration requirements and NRCS specifications, an 
active CRP contract will be terminated or otherwise modified upon 
purchase of the WRE easement, and any additional criteria NRCS uses to 
determine if enrollment of such lands would further the purposes of the 
program;
    (3) Lands owned by the United States other than held in trust for 
Indian Tribes;
    (4) Lands owned in fee title by a State, including an agency or a 
subdivision of a State or a unit of local government;
    (5) Land subject to an easement or deed restriction which, as 
determined by NRCS, provides similar restoration and protection of 
wetland functions and values as would be provided by enrollment in ACEP-
WRE;
    (6) Lands where the purposes of the program or implementation of 
restoration practices would be undermined due to onsite or offsite 
conditions, including, but not limited to--
    (i) Risk of hazardous materials or petroleum products either onsite 
or offsite;
    (ii) Permitted or existing rights of way, either onsite or offsite, 
for infrastructure development;
    (iii) Adjacent land uses, such as airports, that would either impede 
complete restoration or prevent wetland functions and values from being 
fully restored; or
    (7) Land which NRCS determines to have unacceptable exceptions to 
clear title or legal access that is encumbered, nontransferable, 
restricted, or otherwise insufficient.



Sec.1468.31  Application procedures.

    (a) Application for participation. To apply for enrollment, a 
landowner must submit an application to NRCS.
    (b) Preliminary agency action. By filing an application, the 
landowner consents to an NRCS representative entering upon the land for 
purposes of assessing the wetland functions and values and for other 
activities, such as the ranking and development of the preliminary WRPO, 
that are necessary or desirable for NRCS to evaluate applications. The 
landowner is entitled to accompany an NRCS representative on any site 
visits.
    (c) Voluntary reduction in costs. In order to enhance the 
probability of enrollment in ACEP-WRE, the landowner or someone other 
than the landowner may offer to contribute financially to the cost of 
the acquisition or restoration of the wetland reserve easement to 
leverage Federal funds. This offer must be made in writing to NRCS.

[[Page 907]]



Sec.1468.32  Establishing priorities, ranking consideration, and project selection.

    (a) When evaluating easements or 30-year contract applications from 
landowners, NRCS, with advice from the State technical committee, may 
consider:
    (1) The conservation benefits of obtaining an easement or other 
interest in the land, including but not limited to--
    (i) Habitat that will be restored for the benefit of migratory birds 
and wetland-dependent wildlife, including diversity of wildlife that 
will be benefitted or life-cycle needs that will be addressed;
    (ii) Extent and use of habitat that will be restored for threatened, 
endangered, or other at-risk species or number of different at-risk 
species benefitted;
    (iii) Protection or restoration of native vegetative communities;
    (iv) Habitat diversity and complexity to be restored;
    (v) Proximity and connectivity to other protected habitats;
    (vi) Extent of beneficial adjacent land uses;
    (vii) Proximity to impaired water bodies;
    (viii) Extent of wetland losses within a geographic area, including 
wetlands generally or specific wetland types;
    (ix) Capacity of the wetland to improve water quality;
    (x) Hydrology restoration potential, which must comprise at least 50 
percent of the points for conservation benefits.
    (2) The cost effectiveness of each easement;
    (3) Whether the landowner or another person or entity is offering to 
contribute financially to the cost of the easement or other interest in 
the land to leverage Federal funds;
    (4) The extent to which the purposes of this part would be achieved 
on the land;
    (5) The productivity of the land;
    (6) The on-farm and off-farm environmental threats if the land is 
used for the production of agricultural commodities;
    (7) Such other factors as NRCS determines are necessary to carry out 
the purposes of the program.
    (b) To the extent practicable, taking into consideration costs and 
future agricultural and food needs, NRCS will give priority to--
    (1) Obtaining permanent easements over shorter term easements; and
    (2) Acquiring easements based on the value of the easement for 
protecting and enhancing habitat for migratory birds and other wetland-
dependent wildlife or improving water quality, in coordination with FWS 
at the local level, as may be appropriate.
    (c) NRCS, in consultation with the State technical committee, may 
place higher priority on--
    (1) Certain land types or geographic regions of the State where 
restoration of wetlands may better achieve State and regional goals and 
objectives; and
    (2) Land that is currently enrolled in CRP in a contract that is set 
to expire within 1 year from the date of application and is farmed 
wetland and adjoining land that has the highest wetland functions and 
values and is likely to return to production after the land leaves CRP.
    (d) Notwithstanding any limitation of this part regarding priority 
ranking, NRCS may enroll eligible lands at any time to encompass total 
wetland areas subject to multiple ownership or otherwise to achieve 
program objectives. NRCS may, at any time, exclude enrollment of 
otherwise eligible lands if the participation of the adjacent landowners 
is essential to the successful restoration of the wetlands and those 
adjacent landowners are unwilling or ineligible to participate.



Sec.1468.33  Enrollment process.

    (a) Tentative selection. Based on the priority ranking, NRCS will 
notify an affected landowner of tentative acceptance into the program.
    (b) Effect of notice of tentative selection. The notice of tentative 
acceptance into the program does not bind NRCS or the United States to 
enroll the proposed project in ACEP-WRE, nor does it bind the landowner 
to continue with enrollment in the program. The notice informs the 
landowner of

[[Page 908]]

NRCS's intent to continue the enrollment process on their land.
    (c) Acceptance and effect of offer of enrollment--(1) Wetland 
reserve easement. For applications requesting enrollment through a 
wetland reserve easement, NRCS will present an agreement to purchase to 
the landowner which will describe the easement area, the easement 
compensation amount, the easement terms and conditions, and other terms 
and conditions for participation that may be required by NRCS as 
appropriate. The easement compensation amount will be based upon the 
lowest of the fair market value of the land, the geographic area rate 
cap, or the landowner offer, as provided in Sec.1468.34 of this part. 
The landowner accepts enrollment in the ACEP-WRE by signing the 
agreement to purchase. NRCS will continue with easement acquisition 
activities after the property has been enrolled.
    (2) 30-year contract. For applications requesting enrollment of 
acreage owned by an Indian Tribe through the 30-year contract option, 
NRCS will present an agreement to enter 30-year contract to the Tribal 
landowner which will describe the contract area, the contract 
compensation amount, the contract terms and conditions, and other terms 
and conditions for participation that may be required by NRCS as 
appropriate. The Tribal landowner accepts enrollment in the ACEP-WRE by 
signing the agreement to enter 30-year contract. NRCS will proceed with 
implementation of the WRPO after the 30-year contract has been executed.
    (d) Restoration responsibility and the scope of enrollment. (1) The 
agreement to purchase or agreement to enter 30-year contract is the 
enrollment document that establishes the terms of enrollment consistent 
with the terms and conditions of this part and identifies the--
    (i) Scope of the agreement between NRCS and the landowner,
    (ii) Basis for NRCS to obligate funds,
    (iii) Nature and method through which NRCS will provide ACEP-WRE 
technical and financial assistance to the landowner, and
    (iv) Withholding of the landowner's share of the restoration cost 
from the easement payment for applicable 30-year or nonpermanent 
easement or 30-year contract enrollments.
    (2) The agreement to purchase between NRCS and the landowner under 
the easement option also constitutes the agreement for--
    (i) Granting an easement on the enrolled land and sufficient access 
to the enrolled land as set forth under Sec.1468.37,
    (ii) Implementing a WRPO which provides for the restoration, 
protection, and management of the wetland functions and values,
    (iii) Recording the easement in accordance with applicable State 
law, and
    (iv) Ensuring the title to the easement is superior to the rights of 
all others, except for exceptions to the title that are deemed 
acceptable by NRCS and in accordance with Department of Justice Title 
Standards.
    (3) The terms of the easement identified in paragraph (d)(2)(i) of 
this section includes the landowner's agreement to the implementation of 
a WRPO identified in paragraph (d)(2)(ii) of this section. In 
particular, the easement deed identifies that NRCS has the right to 
enter the easement area to undertake on its own or through an agreement 
with the landowner or other third party, any activities to restore, 
protect, enhance, manage, maintain, and monitor the wetland and other 
natural values of the easement area.
    (4) At the time NRCS enters into an agreement to purchase, NRCS 
agrees, subject to paragraph (e) of this section, to acquire and provide 
for restoration of the land enrolled into the program.
    (e) Withdrawal of offer of enrollment. Prior to execution of the 
easement deed or 30-year contract by the United States and the 
landowner, NRCS may withdraw the land from enrollment at any time due to 
lack of availability of funds, inability to clear title, insufficient 
access, sale of the land, risk of contamination from hazardous materials 
or petroleum products, or other reasons.
    (f) Landowner failure to accept enrollment offer in timely manner. 
The offer of enrollment to the landowner will be void if not executed by 
the landowner within the time specified.

[[Page 909]]



Sec.1468.34  Compensation for easements and 30-year contracts.

    (a) Determination of easement compensation values. (1) Compensation 
for an easement or 30-year contract under this part will be made in cash 
in such amount as is agreed to and specified in the agreement to 
purchase or agreement to enter 30-year contract and finalized in the 
warranty easement deed or 30-year contract.
    (2) Payments for 30-year easements, nonpermanent easements as 
limited by State law, or 30-year contracts will be not more than 75 
percent of that which would have been paid for a permanent easement as 
determined by the methods listed in paragraph (a)(3) of this section.
    (3) NRCS will pay as compensation the lowest of the values from 
paragraphs (a)(3)(i) through (iii) of this section:
    (i) The fair market value of the land using the Uniform Standards 
for Professional Appraisal Practices or based on an area-wide market 
analysis or survey,
    (ii) The geographic area rate cap determined under paragraph (a)(4) 
of this section, or
    (iii) A written offer made by the landowner.
    (4) Each fiscal year NRCS, in consultation with the State technical 
committee, will establish one or more geographic area rate caps within a 
State. NRCS will determine the geographic area rate cap using the best 
information which is readily available in that State. Such information 
may include soil types, types of crops capable of being grown, 
production history, location, real estate market values, and tax rates 
and assessments.
    (b) Acceptance of offered easement compensation. (1) NRCS will not 
acquire any easement unless the landowner accepts the amount of the 
easement payment offered by NRCS. The easement payment may be less than 
the fair market value of the interests and rights to be conveyed by the 
landowner under the easement.
    (2)(i) For easements or 30-year contracts valued at $500,000 or 
less, NRCS will provide compensation in up to 10 annual payments, as 
requested by the participant, as specified in the agreement to purchase 
or 30-year contract between NRCS and the participant.
    (ii) For easements or 30-year contracts valued at more than 
$500,000, NRCS may provide compensation in at least 5, but not more than 
10 annual payments. NRCS may provide compensation in a single payment 
for such easements or 30-year contracts when, as determined by the NRCS 
Chief, it would further the purposes of the program. The applicable 
payment schedule will be specified in the agreement to purchase or 30-
year contract, entered into between NRCS and the landowner.
    (c) Reimbursement of a landowner's expenses. For completed easement 
conveyances, NRCS will reimburse the landowner for fair and reasonable 
expenses, if any, incurred for legal boundary surveys and other related 
costs, as authorized and determined by NRCS.
    (d) Per-acre-basis-calculations. If easement or 30-year contract 
compensation values are calculated on a per-acre basis, NRCS will 
identify an estimated amount in its agreement to purchase and the final 
easement or 30-year contract payment will be made based on final 
determination of value and acreage and specified in the warranty 
easement deed or 30-year contract.



Sec.1468.35  Wetland Reserve Enhancement Partnerships.

    (a) The purpose of the Wetland Reserve Enhancement Partnership 
(WREP) option is to target and leverage resources to address high 
priority wetland protection, restoration, and enhancement objectives 
through agreements with States (including a political subdivision or 
agency of a State), nongovernmental organizations, or Indian Tribes.
    (b) NRCS will establish priorities for funding, required level of 
partner contribution of resources, ranking criteria, and other criteria. 
NRCS will prioritize proposals that address wetland restoration needs of 
national or regional importance, including special project or area-wide 
proposals.
    (c) NRCS will make the information regarding WREP available to the 
public and potential partners.
    (d) NRCS will evaluate proposals and make final funding selections 
based

[[Page 910]]

upon the priorities identified in the public notice of funding 
availability.
    (e) NRCS will enter into WREP agreements with partners who have 
projects selected for funding.



Sec.1468.36  WRPO payments.

    (a) NRCS may provide financial assistance for implementing the WRPO 
on the enrolled land subject to an easement or 30-year contract. The 
amount and terms and conditions of the financial assistance will be 
subject to the restrictions in paragraphs (a)(1) and (2) of this section 
on the costs of establishing or installing conservation practices or 
eligible activities specified in the WRPO:
    (1) On enrolled land subject to a permanent easement, NRCS will 
offer to pay at least 75 percent but not more than 100 percent of such 
costs; and
    (2) On enrolled land subject to a 30-year or nonpermanent easement 
or 30-year contract, NRCS will offer to pay at least 50 percent but not 
more than 75 percent of such costs. The landowner's share of the WRPO 
implementation costs may be withheld from the easement or 30-year 
contract payment.
    (b) Payments may be made only upon a determination by NRCS that an 
eligible conservation practice or component of the conservation practice 
has been implemented in compliance with appropriate NRCS standards and 
specifications; or an eligible activity has been implemented in 
compliance with the appropriate requirements detailed in the WRPO.
    (c) Payments may be made for repair or replacement of an eligible 
conservation practice or activity, if NRCS determines that the 
conservation practice or eligible activity is still needed and that the 
disrepair or failure of the original conservation practice or eligible 
activity was due to reasons beyond the control of the participant.
    (d) A participant may seek additional assistance from other public 
or private organizations as long as the conservation practices or 
eligible activities funded are approved by NRCS and implemented in 
compliance with this part.



Sec.1468.37  Easement and 30-year contract participation requirements.

    (a) Easement requirements. (1) To enroll eligible land in ACEP-WRE 
through the permanent or 30-year easement option, a landowner will grant 
an easement to the United States. The easement will require that the 
easement area be maintained in accordance with ACEP-WRE goals and 
objectives for the duration of the term of the easement, including the 
restoration, protection, enhancement, maintenance, management, and 
monitoring of wetland and other land functions and values.
    (2) For the duration of its term, the easement will require, at a 
minimum, that the landowner and the landowner's heirs, successors, and 
assigns will cooperate in the restoration, protection, enhancement, 
maintenance, management, and monitoring of the land in accordance with 
the warranty easement deed and with the terms of the WRPO. In addition, 
the easement will grant to the United States:
    (i) A sufficient right of legal access to the easement area,
    (ii) The right to authorize compatible uses of the easement area, 
including but not limited to such activities as hunting and fishing, 
managed timber harvest, water management, or periodic haying or grazing, 
if such use is consistent with the long-term protection and enhancement 
of the wetland resources for which the easement was established,
    (iii) All rights, title, and interest in the easement area except 
those rights specifically reserved in the deed, and
    (iv) The right to restore, protect, enhance, maintain, manage, and 
monitor activities on the easement area.
    (3) The landowner will convey title to the easement in a manner that 
is acceptable to NRCS. The landowner will warrant that the easement 
granted to the United States is superior to the rights of all others, 
except for title exceptions deemed acceptable by NRCS.
    (4) The participant will--
    (i) Comply with the terms of the easement,
    (ii) Comply with all terms and conditions of any related contract or 
agreement,

[[Page 911]]

    (iii) Agree to the permanent retirement of any existing cropland 
base and allotment history for the easement area, as determined by FSA,
    (iv) Agree to the long-term restoration, protection, enhancement, 
maintenance, management, and monitoring of the easement in accordance 
with the terms of the easement and related agreements, and
    (v) Agree that each person or legal entity that is subject to the 
easement will be jointly and severally responsible for compliance with 
the easement and the provisions of this part and for any refunds or 
payment adjustment which may be required for violation of any terms or 
conditions of the easement or the provisions of this part.
    (b) 30-year contract requirements. (1) To enroll eligible land in 
ACEP-WRE through the 30-year contract option, a landowner will enter 
into a contract with NRCS. The contract will require that the enrolled 
area be maintained in accordance with ACEP-WRE goals and objectives for 
the duration of the contract, including the restoration, protection, 
enhancement, maintenance, management, and monitoring of wetland and 
other land functions and values.
    (2) For the duration of the 30-year contract, the contract will 
require, at a minimum, that the landowner and the landowner's heirs, 
successors, and assigns will, consistent with the terms of this part, 
cooperate in the restoration, protection, enhancement, maintenance, 
management, and monitoring of the land in accordance with the contract 
and with the terms of the WRPO. In addition, the 30-year contract will 
grant to NRCS:
    (i) A sufficient right of legal access to the entire contract area 
for the duration of the contract,
    (ii) The right to authorize compatible uses of the contract area, 
including such activities as a traditional Tribal use of the land, 
hunting and fishing, managed timber harvest, water management, or 
periodic haying or grazing if such use is consistent with the long-term 
protection and enhancement of the wetland resources for which the 
contract was established, and
    (iii) The right to restore, protect, enhance, maintain, manage, and 
monitor activities on the enrolled area.
    (3) The landowner will--
    (i) Comply with the terms of the contract,
    (ii) Comply with all terms and conditions of any associated 
agreement,
    (iii) Agree to the long-term restoration, protection, enhancement, 
maintenance, management, and monitoring of the enrolled area in 
accordance with the terms of the contract and related agreements, and
    (iv) Agree that each person or legal entity that is subject to the 
contract will be jointly and severally responsible for compliance with 
the contract and the provisions of this part and for any refunds or 
payment adjustment which may be required for violation of any terms or 
conditions of the contract or the provisions of this part.
    (c) Reservation of grazing rights. (1) NRCS may include in the terms 
and conditions of an easement a provision under which the landowner 
reserves grazing rights if NRCS determines that the reservation and use 
of the grazing rights:
    (i) Is compatible with the land subject to the wetland reserve 
easement or 30-year contract,
    (ii) Is consistent with the historical natural uses of the land and 
long-term wetland restoration, protection, and enhancement goals for 
which the wetland reserve easement or 30-year contract was established,
    (iii) Is subject to a recorded exhibit to the deed outlining grazing 
purposes and limitations, and
    (iv) Complies with a WRPO developed by NRCS, which may include a 
grazing management plan component that is consistent with the WRPO and 
is reviewed and modified as necessary, at least every 5 years.
    (2) Compensation for easements or 30-year contracts where the 
grazing rights are reserved under this section will be based on the 
method described in Sec.1468.34, except such compensation will be 
reduced by an amount equal to the value of the reserved grazing rights, 
as determined by NRCS.

[[Page 912]]



Sec.1468.38  Development and revision of the WRPO and associated
compatible use authorizations.

    (a) The WRPO will be developed and updated as determined by NRCS in 
consultation with the State technical committee and consideration of 
available site-specific technical input from FWS at the local level and 
others as appropriate.
    (b) The WRPO will specify the manner in which the enrolled land will 
be restored, protected, enhanced, maintained, managed, and monitored to 
accomplish the goals of the program. The WRPO, and any revisions 
thereto, will be developed to ensure that cost-effective restoration and 
maximization of wildlife benefits and wetland functions and values will 
result. Specifically, the WRPO will consider and address, to the extent 
practicable, the onsite alterations and the offsite watershed conditions 
that adversely impact the hydrology and associated wildlife, water 
quality, and wetland functions and values.
    (c) The WRPO will identify the conservation practices and eligible 
activities needed to restore the functions and values on the enrolled 
land. NRCS may review, revise, and supplement the WRPO as needed 
throughout the duration of the enrollment to ensure that program goals 
are fully and effectively achieved. Revisions to the WRPO may result in 
the addition of conservation practices or eligible activities needed to 
enhance, maintain, manage, repair, replace or otherwise to protect the 
functions and values of the easement or 30-year contract area.
    (d) As required by the terms of the easement deed as described in 
Sec.1468.37(a)(2)(ii) or 30-year contract as described in Sec.
1468.37(b)(2)(ii), NRCS may, in its sole discretion, authorize the 
landowner to conduct compatible uses as defined in this part on the 
easement or contract area. Compatible use authorizations are time-
limited and may be modified or rescinded at any time by NRCS. In 
evaluating and authorizing compatible uses of the easement or contract 
area, NRCS will--
    (1) Consider whether the authorized use will facilitate the 
practical administration and management of the land subject to the 
easement or contract; and
    (2) Ensure that the authorized use furthers the functions and values 
for which the easement or 30-year contract was enrolled.



Sec.1468.39  Violations and remedies.

    (a) Easement violations. (1) In the event of a violation of the 
easement involving the landowner, the landowner will be given reasonable 
notice and an opportunity to voluntarily correct the violation within 30 
days of the date of the notice, or such additional time as NRCS 
determines is necessary to correct the violation at the landowner's 
expense.
    (2) Notwithstanding paragraph (a)(1) of this section, NRCS reserves 
the right to enter upon the easement or 30-year area at any time to 
remedy deficiencies or easement violations. Such entry may be made at 
the discretion of NRCS when such actions are deemed necessary to protect 
important wetland functions and values or other rights of the United 
States under the easement. The landowner will be liable for any costs 
incurred by the United States as a result of the landowner's failure to 
comply with easement obligations.
    (3) If there is failure to comply with easement obligations, the 
easement will remain in effect, and NRCS may, in addition to any other 
remedy available to the United States, retain any payment otherwise 
required to be paid under this part and require the refund of any 
payment previously made under this part.
    (b) 30-year contract or wetland reserve easement restoration 
agreements violations. (1) If NRCS determines that a landowner is in 
violation of the terms of a 30-year contract or wetland reserve easement 
restoration agreement, or documents incorporated by reference into the 
30-year contract or wetland reserve easement restoration agreement, the 
landowner will be given reasonable notice and an opportunity to 
voluntarily correct the violation within 30 days of the date of the 
notice, or such additional time as NRCS determines is necessary to 
correct the violation. If the violation continues, NRCS may terminate 
the 30-year contract or wetland reserve easement restoration agreement.

[[Page 913]]

    (2) Notwithstanding the provisions of paragraph (b)(1) of this 
section, a 30-year contract or wetland reserve easement restoration 
agreement termination is effective immediately upon a determination by 
the NRCS that the landowner has--
    (i) Submitted false information,
    (ii) Filed a false claim, or
    (iii) Engaged in any act for which a finding of ineligibility for 
payments is permitted under this part.
    (3) If NRCS terminates a 30-year contract or wetland reserve 
easement restoration agreement, the landowner will forfeit all rights 
for future payments under the 30-year contract or wetland reserve 
easement restoration agreement, and must refund all or part, as 
determined by NRCS, of the payments received, plus interest.



PART 1469_CONSERVATION SECURITY PROGRAM--Table of Contents



                      Subpart A_General Provisions

Sec.
1469.1 Applicability.
1469.2 Administration.
1469.3 Definitions.
1469.4 Significant resource concerns.
1469.5 Eligibility requirements.
1469.6 Enrollment criteria and selection process.
1469.7 Benchmark condition inventory and conservation stewardship plan.
1469.8 Conservation practices and activities.
1469.9 Technical assistance.

                    Subpart B_Contracts and Payments

1469.20 Application for contracts.
1469.21 Contract requirements.
1469.22 Conservation practice operation and maintenance.
1469.23 Program payments.
1469.24 Contract modifications and transfers of land.
1469.25 Contract violations and termination.

                    Subpart C_General Administration

1469.30 Fair treatment of tenants and sharecroppers.
1469.31 Appeals.
1469.32 Compliance with regulatory measures.
1469.33 Access to agricultural operation.
1469.34 Performance based on advice or action of representatives of 
          NRCS.
1469.35 Offsets and assignments.
1469.36 Misrepresentation and scheme or device.

    Authority: 16 U.S.C. 3830 et seq.

    Source: 70 FR 15212, Mar. 25, 2005, unless otherwise noted.



                      Subpart A_General Provisions



Sec.1469.1  Applicability.

    (a) This part sets forth the policies, procedures, and requirements 
for the Conservation Security Program (CSP) as administered by the 
Natural Resources Conservation Service (NRCS) for enrollment during 
calendar year 2004 and thereafter.
    (b) CSP is applicable only on privately owned or Tribal lands in any 
of the 50 States, the District of Columbia, the Commonwealth of Puerto 
Rico, Guam, the Virgin Islands of the United States, American Samoa, and 
the Commonwealth of the Northern Marianna Islands.
    (c) The Commodity Credit Corporation (CCC), by and through the NRCS, 
provides financial assistance and technical assistance to participants 
for the conservation, protection, and improvement of soil, water, and 
other related resources, and for any similar conservation purpose as 
determined by the Secretary.



Sec.1469.2  Administration.

    (a) The regulations in this part will be administered under the 
general supervision and direction of the Chief, Natural Resources 
Conservation Service (NRCS), who is a Vice President of the CCC.
    (b) The Chief may modify or waive a provision of this part if the 
Chief determines that the application of such provision to a particular 
limited situation is inappropriate and inconsistent with the goals of 
the program.
    (c) The Chief determines fund availability to provide financial and 
technical assistance to participants according to the purpose and 
projected cost of contracts in a fiscal year. The Chief allocates the 
funds available to carry out CSP to the NRCS State Conservationist. 
Contract obligations will not exceed the funding available to the 
Agency.
    (d) The State Conservationist may obtain advice from the State 
Technical Committee and local workgroups on the development of State 
program

[[Page 914]]

technical policies, payment related matters, outreach efforts, and other 
program issues.
    (e) NRCS may enter into agreements with Federal agencies, State and 
local agencies, conservation districts, Indian Tribes, private entities, 
and individuals to assist NRCS with educational efforts, outreach 
efforts, and program implementation assistance.
    (f) For lands under the jurisdiction of an Indian Tribe or Tribal 
Nation, certain items identified in paragraph (d) of this section may be 
determined by the Indian Tribe or Tribal Nation and the NRCS Chief.



Sec.1469.3  Definitions.

    The following definitions apply to this part and all documents 
issued in accordance with this part, unless specified otherwise:
    Activity means an action other than a conservation practice that is 
included as a part of a conservation stewardship contract; such as a 
measure, incremental movement on a conservation index or scale, or an 
on-farm demonstration, pilot, or assessment.
    Agricultural land means cropland, rangeland, pastureland, hayland, 
private non-industrial forest land if it is an incidental part of the 
agricultural operation, and other land on which food, fiber, and other 
agricultural products are produced. Areas used for strip-cropping or 
alley-cropping and silvopasture practices will be included as 
agricultural land. This includes land of varying cover types, primarily 
managed through a low input system, for the production of food, fiber or 
other agricultural products.
    Agricultural operation means all agricultural land and other lands 
determined by the Chief, whether contiguous or noncontiguous, under the 
control of the applicant and constituting a cohesive management unit, 
that is operated with equipment, labor, accounting system, and 
management that is substantially separate from any other. The minimum 
size of an agricultural operation is a field.
    Applicant means a producer as defined in this rule who has requested 
in writing to participate in CSP.
    Beginning farmer or rancher means an individual or entity who:
    (1) Has not operated a farm or ranch, or who has operated a farm or 
ranch for not more than 10 consecutive years, as defined in 7 U.S.C. 
1991(a). This requirement applies to all members of an entity; and
    (2) Will materially and substantially participate in the operation 
of the farm or ranch.
    (i) In the case of a contract with an individual, solely, or with 
the immediate family, material and substantial participation requires 
that the individual provide substantial day-to-day labor and management 
of the farm or ranch, consistent with the practices in the county or 
State where the farm is located.
    (ii) In the case of a contract with an entity, all members must 
materially and substantially participate in the operation of the farm or 
ranch. Material and substantial participation requires that each of the 
members provide some amount of the management, or labor and management 
necessary for day-to-day activities, such that if each of the members 
did not provide these inputs, operation of the farm or ranch would be 
seriously impaired.
    Benchmark condition inventory means the documentation of the 
resource condition or situation pursuant to Sec.1469.7(a) that NRCS 
uses to measure an applicant's existing level of conservation activities 
in order to determine program eligibility, to design a conservation 
stewardship contract, and to measure the change in resource conditions 
resulting from conservation treatment.
    Certified Conservation Planner means an individual certified by NRCS 
who possesses the necessary skills, training, and experience to 
implement the NRCS nine-step planning process to meet client objectives 
in solving natural resource problems. The certified conservation planner 
has demonstrated skill in assisting producers to identify resource 
problems, to express the client's objectives, to propose feasible 
solutions to resource problems, and assists the producers select and 
implement an effective alternative that treats resource concerns and 
consistent with client's objectives.
    Chief means the Chief of NRCS, USDA or designee.

[[Page 915]]

    Conservation district means any district or unit of State or local 
government formed under State, territorial, or Tribal law for the 
express purpose of developing and carrying out a local soil and water 
conservation program. Such a district or unit of government may be 
referred to as a ``conservation district,'' ``soil conservation 
district,'' ``soil and water conservation district,'' ``resource 
conservation district,'' ``land conservation committee,'' or similar 
name.
    Conservation practice means a specified treatment, such as a 
structural or land management practice, that is planned and applied 
according to NRCS standards and specifications.
    Conservation Reserve Program (CRP) means the Commodity Credit 
Corporation program administered by the Farm Service Agency pursuant to 
16 U.S.C. 3831-3836.
    Conservation stewardship contract means a legal document that 
specifies the rights and obligations of any participant who has been 
accepted to receive assistance through participation in CSP.
    Conservation stewardship plan means the conservation planning 
document that builds on the inventory of the benchmark condition 
documenting the conservation practices currently being applied; those 
practices needing to be maintained; and those practices, treatments, or 
activities to be supported under the provisions of the conservation 
stewardship contract.
    Conservation system means a combination of conservation practices, 
measures and treatments for the treatment of soil, water, air, plant, or 
animal resource concerns.
    Conservation treatment means any and all conservation practices, 
measures, and works of improvement that have the purpose of alleviating 
resource concerns, solving or reducing the severity of natural resource 
use problems, or taking advantage of resource opportunities.
    Considered to be planted means a long term rotation of alfalfa or 
multi-year grasses and legumes; summer fallow; typically cropped wet 
areas, such as rice fields, rotated to wildlife habitat; or crops 
planted to provide an adequate seedbed for re-seeding.
    Cropland means a land cover/use category that includes areas used 
for the production of adapted crops for harvest, including but not 
limited to land in row crops or close-grown crops, forage crops that are 
in a rotation with row or close-grown crops, permanent hayland, 
horticultural cropland, orchards, and vineyards.
    Designated conservationist means an NRCS employee whom the State 
Conservationist has designated as responsible for administration of CSP 
in a specific area.
    Enhancement payment means CSP payments available to all tiers as 
described in Sec.1469.23(d).
    Enrollment categories means a classification system used to sort out 
applications for payment. The enrollment category mechanism will create 
distinct classes for funding defined by resource concerns, levels of 
treatment, and willingness to achieve additional environmental 
performance.
    Existing practice component of CSP payments means the component of a 
CSP payment as described in Sec.1469.23(b).
    Field means a part of an agricultural operation which is separated 
from the balance of the agricultural operation by permanent boundaries, 
such as fences, permanent waterways, woodlands, and crop-lines in cases 
where farming practices make it probable that such crop-line is not 
subject to change, or other similar features.
    Field Office Technical Guide (FOTG) means the official local NRCS 
source of resource information and the interpretations of guidelines, 
criteria, and standards for planning and applying conservation 
treatments and conservation management systems. It contains detailed 
information on the conservation of soil, water, air, plant, and animal 
resources applicable to the local area for which it is prepared. Guides 
can be reviewed at the local USDA Service Center or online athttp://
www.nrcs.usda.gov/technical/efotg.
    Forage and animal balance means that the total amount of available 
grazing forage and the addition of any roughage supply (hay, silage, or 
green chop) is balanced with the amount consumed by the total number of 
livestock and

[[Page 916]]

wildlife to meet their daily consumption needs.
    Forest land means a land cover/use category that is at least 10 
percent stocked by single-stemmed woody species of any size that will be 
at least 4 meters (13 feet) tall at maturity. Also included is land 
bearing evidence of natural regeneration of tree cover (cut over forest 
or abandoned farmland) that is not currently developed for nonforest 
use. Ten percent stocked, when viewed from a vertical direction, equates 
to an aerial canopy cover of leaves and branches of 25 percent or 
greater. The minimum area for classification as forest land is 1 acre, 
and the area must be at least 100 feet wide. Exceptions may be made by 
the Chief for land primarily managed through a low-input system for 
food, fiber or other agricultural products.
    Hayland means a subcategory of ``cropland'' managed for the 
production of forage crops that are machine harvested. The crop may be 
grasses, legumes, or a combination of both.
    Incidental forest land means forested land that includes all 
nonlinear forested riparian areas (i.e., bottomland forests), and small 
associated woodlots located within the bounds of working agricultural 
land or small adjacent areas and that are managed to maximize wildlife 
habitat values and are within the NRCS FOTG standards for a wildlife 
practice. However, silvopasture that meets NRCS practice standards will 
be considered as pasture or range land and not incidental forestland 
since silvopasture is one type of intense grazing system. Areas of 
incidental forest land that are not part of a linear conservation 
practice are limited individually in size to 10 acres or less and 
limited to 10 percent in congregate of the total offered acres.
    Indian Tribe means any Indian Tribe, band, Nation, or other 
organized group or community, including any Alaska Native village or 
regional or village corporation as defined in or established pursuant to 
the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.) that is 
recognized as eligible for the special programs and services provided by 
the United States to Indians because of their status as Indians.
    Indian trust lands means real property in which:
    (1) The United States holds title as trustee for an Indian or Tribal 
beneficiary; or
    (2) An Indian or Tribal beneficiary holds title and the United 
States maintains a trust relationship.
    Joint operation means a general partnership, joint venture, or other 
similar business arrangement as defined in 7 CFR 718.2.
    Land cover/use means a term that includes categories of land cover 
and categories of land use. Land cover is the vegetation or other kind 
of material that covers the land surface. Land use is the purpose of 
human activity on the land; it is usually, but not always, related to 
land cover. The National Resources Inventory uses the term land cover/
use to identify categories that account for all the surface area of the 
United States.
    Land management practice means conservation practices and measures 
that primarily use site-specific management techniques and methods to 
conserve, protect from degradation, or improve soil, water, air, or 
related natural resources in the most cost-effective manner. Land 
management practices include, but are not limited to, nutrient 
management, energy management, manure management, integrated pest 
management, integrated crop management, resource conserving crop 
rotations, irrigation water management, tillage or residue management, 
stripcropping, contour farming, grazing management, and wildlife habitat 
management.
    Limited resource producer means a producer:
    (1) With direct or indirect gross farm sales not more than $100,000 
in each of the previous two years (to be increased starting in FY 2004 
to adjust for inflation using Prices Paid by Farmer Index as compiled by 
National Agricultural Statistical Service (NASS)); and
    (2) Who has a total household income at or below the national 
poverty level for a family of four, or less than 50 percent of county 
median household income in each of the previous 2 years (to be 
determined annually using Commerce Department Data).

[[Page 917]]

    Liquidated damages means a sum of money stipulated in the 
conservation stewardship contract which the participant agrees to pay 
NRCS if the participant fails to adequately complete the contract. The 
sum represents an estimate of the anticipated or actual harm caused by 
the failure, and reflects the difficulties of proof of loss and the 
inconvenience or non-feasibility of otherwise obtaining an adequate 
remedy.
    Local work group means representatives of local offices of FSA, the 
National Institute of Food and Agriculture, the conservation district, 
and other Federal, State, and local government agencies, including 
Indian Tribes, with expertise in natural resources who advise NRCS on 
decisions related to implementation of USDA conservation programs.
    Maintenance means work performed to keep the applied conservation 
practice functioning for the intended purpose during its life span. 
Maintenance includes work to prevent deterioration of the practice, 
repairing damage, or replacement of the practice to its original 
condition if one or more components fail.
    Management intensity means the degree and scope of practices or 
measures taken by a producer which are beyond the quality criteria for a 
given resource concern or beyond the minimum requirements of a 
management practice, and which may qualify as additional effort 
necessary to receive an enhancement payment.
    Measure means one or more specific actions that is not a 
conservation practice, but has the effect of alleviating problems or 
improving the treatment of the resources.
    Minimum level of treatment means the specific conservation treatment 
NRCS requires that addresses a resource concern to a level that meets or 
exceeds the quality criteria according to NRCS technical guides or the 
minimum tier requirements to address resource concerns as defined in 
Sec.1469.5(e).
    Nationally significant resource concerns means the significant 
resource concerns identified by NRCS in this rule and in the sign-up 
notice as basic program eligibility requirements.
    New practice payment means the payment as described in Sec.
1469.23(c).
    Operator means an individual, entity, or joint operation who is in 
general control of the farming operations on the farm at the time of 
application.
    Participant means a producer who is accepted into CSP and any 
signatory to a CSP contract.
    Pastured cropland means a land cover/use category that includes 
areas used for the production of pasture in grass-based livestock 
production systems that could support adapted crops for harvest, 
including but not limited to land in row crops or close-grown crops, and 
forage crops that are in a rotation with row or close-grown crops. 
Pastured cropland will receive the same stewardship payment as cropland.
    Pastureland means a land cover/use category of land managed 
primarily for the production of introduced forage plants for grazing 
animals and includes improved pasture. Pastureland cover may consist of 
a single species in a pure stand, a grass mixture, or a grass-legume 
mixture. Management usually consists of cultural treatments: 
fertilization, weed control, reseeding or renovation, and control of 
grazing.
    Practice life span means the time period in which the conservation 
practices are to be used and maintained for their intended purposes as 
defined by NRCS technical references.
    Priority resource concern means nationally significant resource 
concerns and local resource concerns, approved by the Chief, for which 
enhancement payments will be available.
    Producer means an owner, operator, landlord, tenant, or sharecropper 
who shares in the risk of producing any crop or livestock; and is 
entitled to share in the crop or livestock available for marketing from 
a farm (or would have shared had the crop or livestock been produced).
    Quality criteria means the minimally acceptable level of treatment 
as defined in the technical guide of NRCS, required to achieve a 
resource management system for identified resource considerations for a 
particular land use.
    Rangeland means a land cover/use category on which the climax or 
potential plant cover is composed principally of native grasses, 
grasslike plants, forbs, or shrubs suitable for

[[Page 918]]

grazing and browsing, and introduced forage species that are managed 
like rangeland. This term would include areas where introduced hardy and 
persistent grasses are planted and such practices as deferred grazing, 
burning, chaining, and rotational grazing are used, with little or no 
chemicals or fertilizer being applied. Grasslands, savannas, prairie, 
many wetlands, some deserts, tundra, coastal marshes and wet meadows are 
considered to be rangeland. Certain communities of low forbs and shrubs, 
such as mesquite, chaparral, mountain shrub, and pinyon-juniper, are 
also included as rangeland.
    Resource concern means the condition of natural resources that may 
be sensitive to change by natural forces or human activity. Resource 
concerns include the resource considerations listed in Section III of 
the FOTG, such as soil erosion, soil condition, soil deposition, water 
quality, water quantity, animal habitat, air quality, air condition, 
plant suitability, plant condition, plant management, and animal habitat 
and management.
    Resource-conserving crop rotation means a crop rotation that reduces 
erosion, maintains or improves soil fertility and tilth, interrupts pest 
cycles, or conserves soil moisture and water and that includes at least 
one resource-conserving crop, such as a perennial grass, a legume grown 
for use as forage, seed for planting, or green manure, a legume-grass 
mixture, a small grain grown in combination with a grass or legume, 
whether inter-seeded or planted in rotation.
    Resource management system means a system of conservation practices 
and management relating to land or water use that is designed to prevent 
resource degradation and permit sustained use of land, water, and other 
natural resources, as defined in accordance with the technical guide of 
NRCS.
    Secretary means the Secretary of the U.S. Department of Agriculture.
    Sharecropper means an individual who performs work in connection 
with the production of the crop under the supervision of the operator 
and who receives a share of such crop in return for the provision of 
such labor.
    Sign-up notice means the public notification document that NRCS 
provides to describe the particular requirements for a specific CSP 
sign-up.
    Significant resource concerns means the list of resource concerns, 
identified by NRCS, associated with an agricultural operation that is 
subject to applicable requirements under CSP, such as the additional 
Tier II contract requirement.
    Soil quality means resource concerns and/or opportunities related to 
depletion of soil organic matter content through soil disturbance or by 
sheet, rill, and wind erosion, and the physical condition of the soil 
relative to ease of tillage, fitness as a seedbed, the impedance to 
seedling emergence or root penetration, salinity, and overall soil 
productivity.
    State Conservationist means the NRCS employee authorized to direct 
and supervise NRCS activities within a specified State, the Pacific 
Basin, or the Caribbean Area.
    State Technical Committee means a committee established by the 
Secretary in a State pursuant to 16 U.S.C. 3861.
    Stewardship payment means the CSP base payment component of the 
payment as described in Sec.1469.23(a).
    Structural practice means a land-based conservation practice, 
including vegetative practices, that involves establishing, 
constructing, or installing a site-specific measure to conserve, protect 
from degradation, or improve soil, water, air, or related natural 
resources in the most cost-effective manner. Examples include, but are 
not limited to, terraces, grassed waterways, tailwater pits, livestock 
water developments, contour grass strips, filterstrips, critical area 
plantings, tree planting, wildlife habitat, and capping of abandoned 
wells.
    Technical assistance means the activities as defined in 7 CFR part 
1466.
    Technical Service Provider means an individual, private-sector 
entity, or public agency certified or approved by NRCS to provide 
technical services through NRCS or directly to program participants, as 
defined in 7 CFR part 652.
    Tenant means one who rents land from another in consideration of the

[[Page 919]]

payment of a specified amount of cash or amount of a commodity; or one 
(other than a sharecropper) who rents land in consideration of the 
payment of a share of the crops or proceeds there from.
    Tier means one of the three levels of participation in CSP.
    Water quality means resource concerns or opportunities, including 
concerns such as excessive nutrients, pesticides, sediment, 
contaminants, pathogens and turbidity in surface waters, and excessive 
nutrients and pesticides in ground waters, and any other concerns 
identified by state water quality agencies.
    Watershed or regional resource conservation plan means a plan 
developed for a watershed or other geographical area defined by the 
stakeholders. The plan addresses identified resource problems, contains 
alternative solutions that meet the stakeholder objectives for each 
resource, and addresses applicable laws and regulations as defined in 
the NRCS National Planning Procedures Handbook.
    Wetlands Reserve Program (WRP) means the Commodity Credit 
Corporation program administered by NRCS pursuant to 16 U.S.C. 3837-
3837f.

[70 FR 15212, Mar. 25, 2005, as amended at 76 FR 4806, Jan. 27, 2011]



Sec.1469.4  Significant resource concerns.

    (a) Soil quality and water quality are nationally significant 
resource concerns for all land uses.
    (b) For each sign-up, the Chief may determine additional nationally 
significant resource concerns for all land uses. Such significant 
resource concerns will reflect pressing conservation needs and emphasize 
off-site environmental benefits. In addition, the Chief may approve 
other priority resource concerns for which enhancement payments will be 
offered for specific locations and land uses.



Sec.1469.5  Eligibility requirements.

    (a) In general--To be eligible to participate in CSP:
    (1) Applicants must meet the requirements for eligible applicants, 
including any additional eligibility criteria and contract requirements 
that may be included in a CSP sign-up notice pursuant to Sec.
1469.6(c);
    (2) Land must meet the definition of eligible land; and
    (3) The application must meet the conservation standards established 
pursuant to this section.
    (b) Applicants may submit only one application for each sign-up. 
Producers who are participants in an existing conservation stewardship 
contract are not eligible to submit another application.
    (c) Eligible applicants. To be eligible to participate, an applicant 
must--
    (1) Be in compliance with the highly erodible land and wetland 
conservation provisions found in 7 CFR Part 12;
    (2) Have control of the land for the life of the proposed contract 
period.
    (i) The Chief may make an exception for land allotted by the Bureau 
of Indian Affairs (BIA), Tribal land, or other instances in which the 
Chief determines that there is sufficient assurance of control; and
    (ii) If the applicant is a tenant, the applicant must provide NRCS 
with the written evidence or assurance of control from the landowner;
    (3) Share in risk of producing any crop or livestock and be entitled 
to share in the crop or livestock available for marketing from the 
agricultural operation (landlords and owners are ineligible to submit an 
application for exclusively cash rented agricultural operations);
    (4) Complete a benchmark condition inventory for the entire 
agricultural operation or the portion being enrolled in accordance with 
Sec.1469.7(a); and
    (5) Supply information, as required by NRCS, to determine 
eligibility for the program, including but not limited to information 
related to eligibility criteria in the sign-up notice, and information 
to verify the applicant's status as a beginning or a limited resource 
farmer or rancher.
    (d) Eligible land:
    (1) To be eligible for enrollment in CSP, land must be:
    (i) Private agricultural land;
    (ii) Private non-industrial forested land that is an incidental part 
of the agricultural operation;
    (iii) Agricultural land that is Tribal, allotted, or Indian trust 
land;

[[Page 920]]

    (iv) Other incidental parcels, as determined by NRCS, which may 
include, but are not limited to, land within the bounds of working 
agricultural land or small adjacent areas (such as center pivot corners, 
field borders, linear practices, turn rows, intermingled small wet areas 
or riparian areas); or
    (v) Other land on which NRCS determines that conservation treatment 
will contribute to an improvement in an identified natural resource 
concern, including areas outside the boundary of the agricultural land 
such as farmsteads, ranch sites, barnyards, feedlots, equipment storage 
areas, material handling facilities, and other such developed areas. 
Other land must be treated in Tier III contracts; and
    (vi) A majority of the agricultural operation must be within a 
watershed selected for sign-up.
    (2) The following land is not eligible for enrollment in CSP:
    (i) Land enrolled in the Conservation Reserve Program;
    (ii) Land enrolled in the Wetlands Reserve Program;
    (iii) Land enrolled in the Grassland Reserve Program;
    (iv) Public land including land owned by a Federal, State or local 
unit of government;
    (v) Land referred to in paragraphs (d)(2)(i), (ii) (iii) and (iv) of 
this section may not receive CSP payments, but the conservation work on 
this land may be used to determine if an applicant meets the minimum 
level of treatment on the eligible land and may be described in the 
conservation stewardship plan.
    (3) The following land is not eligible for any payment component in 
CSP: Land that is used for crop production after May 13, 2002, that had 
not been planted, considered to be planted, or devoted to crop 
production, as determined by NRCS, for at least 4 of the 6 years 
preceding May 13, 2002.
    (4) Delineation of the agricultural operation.
    (i) The applicant will delineate the agricultural operation to 
include all agricultural lands, other incidental parcels identified in 
paragraph (d)(1)(iv) of this section, and other lands, identified in 
paragraph (d)(1)(v) of this section under the control of the applicant 
and constituting a cohesive management unit, and is operated with 
equipment, labor, accounting system, and management that is 
substantially separate from any other land.
    (ii) In delineating the agricultural operation, USDA farm boundaries 
may be used. If farm boundaries are used in the application, the entire 
farm area must be included within the delineation. An applicant may 
offer one farm or aggregate farms into one agricultural operation and 
any other additional eligible land not within a farm boundary.
    (e) Conservation standards--(1) Minimum tier eligibility 
requirements:
    (i) An applicant is eligible to participate in CSP Tier I only if 
the benchmark condition inventory demonstrates to the satisfaction of 
NRCS that the applicant has addressed the nationally significant 
resource concerns of Water Quality and Soil Quality to the minimum level 
of treatment as specified in paragraphs (e)(2) and (3) of this section 
on part of the eligible land uses within the agricultural operation. 
Only the acreage meeting such requirements is eligible for stewardship 
and existing practice payments in CSP.
    (ii) An applicant is eligible to participate in CSP Tier II only if 
the benchmark condition inventory demonstrates to the satisfaction of 
NRCS that the applicant has addressed the nationally significant 
resource concerns of water quality and soil quality to the minimum level 
of treatment as specified in paragraphs (e)(2) and (3) of this section 
for all eligible land uses on the entire agricultural operation. Under 
Tier II, the entire agricultural operation must be enrolled in CSP.
    (iii) An applicant is eligible to participate in CSP Tier III only 
if the benchmark condition inventory demonstrates to the satisfaction of 
NRCS that the applicant has addressed all of the applicable resource 
concerns to the minimum level of treatment as specified in paragraph 
(e)(4) of this section for all eligible land uses on the entire 
agricultural operation. Practices or activities shall not be required 
for participation in the program unless they would have an ultimate 
conservation

[[Page 921]]

benefit as demonstrated by the Conservation Practice Physical Effects 
matrix in the FOTG. Under Tier III, the entire agricultural operation is 
enrolled in CSP including other land as defined in Sec.
1469.5(d)(1)(v).
    (2) The minimum level of treatment on cropland for Tier I and Tier 
II:
    (i) The minimum level of treatment for soil quality on cropland is 
considered achieved when the Soil Conditioning Index value is positive.
    (ii) The minimum level of treatment for water quality on cropland is 
considered achieved if the benchmark inventory indicates that the 
current level of treatment addresses the risks that nutrients, 
pesticides, sediment, and salinity present to water quality by meeting 
or exceeding the quality criteria for the specific resource concerns of 
nutrients, pesticides, sediment and salinity for surface water and 
nutrients, pesticides and salinity for ground water.
    (iii) The Chief may make minor exceptions to criteria for areas, 
such as tropical and tundra regions, where technology tools are being 
refined or testing is needed to review performance data.
    (3) The minimum level of treatment on pastureland and rangelands for 
Tier I and Tier II is vegetation and animal management accomplished by 
following a grazing management plan that provides for:
    (i) A forage-animal balance;
    (ii) Proper livestock distribution;
    (iii) Timing of use; and
    (iv) Managing livestock access to water courses.
    (4) The minimum level of treatment for Tier III:
    (i) The minimum level of treatment for Tier III is having a fully 
implemented resource management system that meets the quality criteria 
for the local NRCS FOTG for all applicable resource concerns and 
considerations with the following exceptions:
    (A) The minimum requirement for soil quality on cropland is 
considered achieved when the Soil Conditioning Index value is positive;
    (B) The minimum requirement for water quantity--irrigation water 
management on cropland or pastureland is considered achieved when the 
current level of treatment and management for the system results in a 
water use index value of at least 50; and
    (C) The minimum requirement for wildlife is considered achieved when 
the current level of treatment and management for the system results in 
an index value of at least 0.5 using a general or species specific 
habitat assessment guide; and
    (ii) All riparian corridors, including streams and natural 
drainages, within the agricultural operation are buffered to restore, 
protect, or enhance riparian resources. Riparian corridors, as 
appropriate, will be managed or designed to intercept sediment, 
nutrients, pesticides, and other materials in surface runoff; reduce 
nutrients and other pollutants in shallow subsurface water flow; lower 
water temperature; and provide litter fall or structural components for 
habitat complexity or to slow out-of-bank floods.
    (5) In the instance of a significant natural event, such as drought, 
wildfire, pestilence, or flooding which would prevent the participant or 
applicant from achieving the minimum requirements, those requirements 
will be considered met so long as the participant or applicant can 
provide documentation of their stewardship prior to such an event.



Sec.1469.6  Enrollment criteria and selection process.

    (a) Selection and funding of priority watersheds. (1) NRCS will 
prioritize watersheds based on a nationally consistent process using 
existing natural resource, environmental quality, and agricultural 
activity data along with other information that may be necessary to 
efficiently operate the program. The watershed prioritization and 
identification process will consider several factors, including but not 
limited to:
    (i) Potential of surface and ground water quality to degradation;
    (ii) Potential of soil to degradation;
    (iii) Potential of grazing land to degradation;
    (iv) State or national conservation and environmental issues e.g., 
location of air non-attainment zones or important wildlife/fisheries 
habitat; and

[[Page 922]]

    (v) Local availability of management tools needed to more 
efficiently operate the program, such as digital soils information.
    (2) Priority watersheds selected, in which producers would be 
potentially eligible for enrollment, will be announced in the sign-up 
notice.
    (b) Enrollment categories. The Chief may limit new program 
enrollments in any fiscal year to enrollment categories designed to 
focus on priority conservation concerns and enhancement measures. NRCS 
will utilize enrollment categories to determine which contracts will be 
funded in a given sign-up.
    (1) Enrollment categories may be defined by criteria related to 
resource concerns and levels of historic conservation treatment, 
including the producer's willingness to achieve additional environmental 
performance or conduct enhancement activities.
    (2) All applications which meet the sign-up criteria within the 
priority watersheds will be placed in an enrollment category regardless 
of available funding.
    (3) NRCS will develop subcategories within each enrollment category 
and include them in the sign-up notice. The development of subcategories 
may consider several factors, including:
    (i) Willingness of the applicant to participate in local 
conservation enhancement activities;
    (ii) Targeting program participation for Limited Resource Producers;
    (iii) Targeting program participation to water quality priority 
areas for nutrient or pest management;
    (iv) Targeting program participation for locally important wildlife/
fisheries habitat creation and protection; and
    (v) Other priorities as determined by the Secretary.
    (4) At the beginning of each sign-up, the Chief will announce the 
order in which categories and subcategories are eligible to be funded.
    (5) All eligible applications will be placed in the highest priority 
enrollment category and sub-category for which the application 
qualifies.
    (6) Enrollment categories and subcategories will be funded in 
priority order until the available funds specified in the CSP sign-up 
notice are exhausted.
    (c) Sign-up process. (1) NRCS will publish a CSP sign-up notice with 
sufficient time for producers to consider the benefits of participation 
prior to the opening of the sign-up period. In the public sign-up 
notice, the Chief will announce and explain the rationale for decisions 
for the following information:
    (i) Any additional program eligibility criteria that are not listed 
in Sec.1469.5;
    (ii) Any additional nationally significant resource concerns that 
are not listed in Sec.1469.4(a) that will apply;
    (iii) Any additional requirements that participants must include in 
their CSP applications and contracts that are not listed in Sec.
1469.21;
    (iv) Information on the priority order of enrollment categories and 
subcategories for funding contracts;
    (v) Specific information on the level of funding that NRCS estimates 
will go toward stewardship, existing practice, and enhancement payments;
    (vi) An estimate of the total funds NRCS expects to obligate under 
new contracts during a given sign-up, and an estimate for the number of 
enrollment categories and contracts NRCS expects to be able to fund; and
    (vii) The schedule for the sign-up process, including the 
deadline(s) for applying.
    (2) NRCS will accept applications according to the timeframes 
specified in the sign-up notice.
    (d) Selection of contracts. (1) NRCS will determine whether the 
application meets the eligibility criteria, and will place applications 
into an enrollment category and subcategory based on the criteria 
specified in the sign-up notice and into a Tier based on the criteria in 
1469.5(e). Enrollment categories will be funded in the order designated 
in the sign-up notice until the available funding is exhausted. NRCS 
will determine the number of categories that can be funded in accordance 
with the sign-up notice, and will inform the applicant of its 
determinations.
    (2) NRCS will develop a conservation stewardship contract for the 
selected applications. If the contract falls within the enrollment 
categories and subcategories funded in the given sign-up, NRCS will make 
payments as described

[[Page 923]]

in the contract in return for the implementation and/or maintenance of a 
specified level of conservation treatment on all or part of the 
agricultural operation.



Sec.1469.7  Benchmark condition inventory and conservation stewardship
plan.

    (a) The benchmark condition inventory and associated case file 
information must include:
    (1) A map, aerial photograph, or overlay that delineates the entire 
agricultural operation, including land use and acreage;
    (2) A description of the applicant's production system(s) on the 
agricultural operation to be enrolled;
    (3) The existing conservation practices and resource concerns, 
problems, and opportunities on the operation;
    (4) Other information needed to document existing conservation 
treatment and activities, such as, grazing management, nutrient 
management, pest management, and irrigation water management plans;
    (5) A description of the significant resource concerns and other 
resource concerns that the applicant is willing to address in their 
contract through the adoption of new conservation practices and 
measures; and,
    (6) A list of enhancements that the applicant may be willing to 
undertake as part of their contract.
    (b) Conservation stewardship plan. (1) The conservation stewardship 
plan and associated case file information must include:
    (i) To the extent practicable, a quantitative and qualitative 
description of the conservation and environmental benefits that the 
conservation stewardship contract will achieve;
    (ii) A plan map showing the acreage to be enrolled in CSP;
    (iii) A verified benchmark condition inventory as described in Sec.
1469.7(a);
    (iv) A description of the significant resource concerns and other 
resource concerns to be addressed in the contract through the adoption 
of new conservation measures;
    (v) A description and implementation schedule of--
    (A) Individual conservation practices and measures to be maintained 
during the contract, consistent with the requirements for the tier(s) of 
participation and the relevant resource concerns and with the 
requirements of the sign-up,
    (B) Individual conservation practices and measures to be installed 
during the contract, consistent with the requirements for the tier(s) of 
participation and the relevant resource concerns,
    (C) Eligible enhancement activities as selected by the applicant and 
approved by NRCS, and
    (D) A schedule for transitioning to higher tier(s) of participation, 
if applicable;
    (vi) A description of the conservation activities that is required 
for a contract to include a transition to a higher tier of 
participation;
    (vii) Information that will enable evaluation of the effectiveness 
of the plan in achieving its environmental objectives; and
    (viii) Other information determined appropriate by NRCS and 
described to the applicant.
    (2) The conservation stewardship plan may be developed with 
assistance from NRCS or NRCS-certified Technical Service Providers.
    (3) All additional conservation practices in the conservation 
stewardship plan for which new practice payments will be provided must 
be carried out in accordance with the applicable NRCS FOTG.



Sec.1469.8  Conservation practices and activities.

    (a) Conservation practice and activity selection. (1) The Chief will 
provide a list of structural and land management practices and 
activities eligible for each CSP payment component. If the Chief's 
designee provides the list, it will be approved by the Director of the 
Financial Assistance Programs Division of NRCS. When determining the 
lists of practices and activities and their associated rates, the Chief 
will consider:
    (i) The cost and potential conservation benefits;
    (ii) The degree of treatment of significant resource concerns;
    (iii) The number of resource concerns the practice or activity will 
address;
    (iv) Locally available technology;

[[Page 924]]

    (v) New and emerging conservation technology;
    (vi) Ability to address the resource concern based on site specific 
conditions; and,
    (vii) The need for cost-share assistance for specific practices and 
activities to help producers achieve higher management intensity levels 
or to advance in tiers of eligibility.
    (2) To address unique resource conditions in a State or region, the 
Chief may make additional conservation practices, measures, and 
enhancement activities eligible that are not included in the national 
list of eligible CSP practices.
    (3) NRCS will make the list of eligible practices and activities and 
their individual payment rates available to the public.
    (b) NRCS will consider the qualified practices and activities in its 
computation of CSP payments except as provided for in paragraph (d) of 
this section.
    (c) NRCS will not make new practice payments for a conservation 
practice the producer has applied prior to application to the program.
    (d) New practice payments will not be made to a participant who has 
implemented or initiated the implementation of a conservation practice 
prior to approval of the contract, unless a waiver was granted by the 
State Conservationist or the Designated Conservationist prior to the 
installation of the practice.
    (e) Where new technologies or conservation practices that show high 
potential for optimizing environmental benefits are available, NRCS may 
approve interim conservation practice standards and financial assistance 
for pilot work to evaluate and assess the performance, efficacy, and 
effectiveness of the technology or conservation practices.
    (f) NRCS will set the minimum level of treatment within land 
management practices at the national level; however, the State 
Conservationist may supplement specific criteria to meet localized 
conditions within the State or areas.



Sec.1469.9  Technical assistance.

    (a) NRCS may use the services of NRCS-approved or certified 
Technical Service Providers in performing its responsibilities for 
technical assistance.
    (b) Technical assistance may include, but is not limited to: 
Assisting applicants during sign-up, processing and assessing 
applications, assisting the participant in developing the conservation 
stewardship plan; conservation practice survey, layout, design, 
installation, and certification; information, education, and training 
for producers; and quality assurance activities.
    (c) NRCS retains approval authority over the certification of 
technical assistance done by non-NRCS personnel.
    (d) NRCS retains approval authority of the conservation stewardship 
contracts and contract payments.
    (e) Conservation stewardship plans will be developed by NRCS 
certified conservation planners.



                    Subpart B_Contracts and Payments



Sec.1469.20  Application for contracts.

    (a) Applications must include:
    (1) A completed self-assessment workbook;
    (2) Benchmark condition inventory and conservation stewardship plan 
in accordance with Sec.1469.7 for the eligible land uses on the entire 
operation or, if Tier I, for the portion being enrolled;
    (3) Any other requirements specified in the sign-up notice;
    (4) For Tier I, clear indication of which acres the applicant wishes 
to enroll in the CSP; and,
    (5) A certification that the applicant will agree to meet the 
relevant contract requirements outlined in the sign-up notice.
    (b) Producers who are members of a joint operation, trust, estate, 
association, partnership or similar organization must file a single 
application for the joint operation or organization.
    (c) Producers can submit only one application per sign-up.
    (d) Participants can only have one active contract at any one time.

[[Page 925]]



Sec.1469.21  Contract requirements.

    (a) To receive payments, each participant must enter into a 
conservation stewardship contract and comply with its provisions. Among 
other provisions, the participant agrees to maintain at least the level 
of stewardship identified in the benchmark inventory for the portion of 
land being enrolled for the entire contract period, as appropriate, and 
implement and maintain any new practices or activities required in the 
contract.
    (b) Program participants will only receive payments from one 
conservation stewardship contract.
    (c) CSP participants must address the following requirements or 
additional resource concerns to the minimum level of treatment by the 
end of their conservation stewardship contract:
    (1) Tier I contract requirement: additional practices and activities 
as included by the applicant in the conservation stewardship plan and 
approved by NRCS, over the part of the agricultural operation enrolled 
in CSP.
    (2) Tier II contract requirements:
    (i) Address an additional locally significant resource concern, as 
described in section III of the NRCS FOTG over the entire agricultural 
operation. Applicants may satisfy this requirement by demonstrating that 
the locally significant resource concern is not applicable to their 
operation or that they have already addressed it in accordance with 
NRCS'; quality criteria; and
    (ii) Additional practices and activities as included by the 
applicant in the conservation stewardship plan and approved by NRCS, 
over the entire agricultural operation, where applicable.
    (3) Tier III contract requirement: additional practices and 
activities as included by the applicant in the conservation stewardship 
plan and approved by NRCS, over the entire agricultural operation, where 
applicable.
    (d) Transition to a higher tier of participation. (1) Upon agreement 
by NRCS and the participant, a conservation stewardship contract may 
include provisions that lead to a higher tier of participation during 
the contract period. Such a transition does not require a contract 
modification if that transition is laid out in the schedule of contract 
activities. In the event that such a transition begins with Tier I, only 
the land area in the agricultural operation that meets the requirements 
for enrollment in Tier I can be enrolled in the contract until the 
transition occurs. Upon transition from Tier I to a higher tier of 
participation, the entire agricultural operation must be incorporated 
into the contract. All requirements applicable to the higher tier of 
participation would then apply. NRCS will calculate all stewardship, 
existing practice, new practice payments, and enhancement payments using 
the applicable enrolled acreage at the time of the payment.
    (2) A contract which transitions to higher tier(s) of participation 
must include:
    (i) A schedule for the activities associated with the transition(s);
    (ii) A date certain by which time the transition(s) must occur; and,
    (iii) A specification that the CSP payment will be based on the 
current Tier of participation, which may change over the life of the 
contract.
    (3) A contract which transitions to a higher tier will be modified 
to receive the higher payments once the required level of treatment has 
been achieved and field verified by NRCS.
    (4) A contract which includes a transition from Tier I to Tier II or 
III may be adjusted in length up to 10 years beginning from the original 
contract date.
    (e) A conservation stewardship contract must:
    (1) Incorporate by reference the conservation stewardship plan;
    (2) Be for 5 years for Tier I, and 5 to 10 years for Tier II or Tier 
III;
    (3) Incorporate all provisions as required by law or statute, 
including participant requirements to--
    (i) Implement and maintain the practices as identified and scheduled 
in the conservation stewardship plan, including those needed to be 
eligible for the specified tier of participation and comply with any 
additional sign-up requirements,
    (ii) Not conduct any practices on the farm or ranch that tend to 
defeat the purposes of the contract,
    (iii) Comply with the terms of the contract, or documents 
incorporated

[[Page 926]]

by reference into the contract. NRCS will give the participant a 
reasonable time, as determined by the State Conservationist, to correct 
any violation and comply with the terms of the contract and attachments 
thereto. If a violation continues, the State Conservationist may 
terminate the conservation stewardship contract, and
    (iv) Supply records and information as required by CCC to determine 
compliance with the contract and requirements of CSP;
    (4) Specify the requirements for operation and maintenance of the 
applied conservation practices;
    (5) Specify the schedule of payments under the life of the contract, 
including how those payments--
    (i) Relate to the schedule for implementing additional conservation 
measures as described in the conservation stewardship plan,
    (ii) Relate to the actual implementation of additional conservation 
measures as described in the conservation stewardship plan, and
    (iii) May be adjusted by NRCS if the participant's management 
decisions change the appropriate set or schedule of conservation 
measures on the operation; and,
    (6) Incorporate any other provisions determined necessary or 
appropriate by NRCS, or included as a requirement for the sign-up.
    (f) Practices scheduled in contracts must be applied and maintained 
within the timelines specified in the contract.
    (g) Contracts expire on September 30 in the last year of the 
contract.
    (h) Participants must:
    (1) Implement the conservation stewardship contract approved by 
NRCS;
    (2) Make available to NRCS, appropriate records showing the timely 
implementation of the contract;
    (3) Comply with the regulations of this part; and
    (4) Not engage in any activity that interferes with the purposes of 
the program, as determined by NRCS.
    (i) NRCS will determine the payments under the contract as described 
in Sec.1469.23.
    (j) For contracts encompassing the entire agricultural operation, 
the geographic boundaries of the acreage enrolled in the contract must 
include all fields and facilities under the participant's direct 
control, as determined by NRCS.



Sec.1469.22  Conservation practice operation and maintenance.

    (a) The contract will incorporate the operation and maintenance of 
the conservation practice(s) applied under the contract.
    (b) The participant must operate and maintain any new conservation 
practice(s) for which a payment was received to ensure that the new 
practice or enhancement achieves its intended purpose for the life span 
of the conservation treatment, as identified in the contract or 
conservation stewardship plan, as determined by NRCS.
    (c) Conservation practices that are installed before the execution 
of a contract, but are needed in the contract to obtain the intended 
environmental benefits, must be operated and maintained as specified in 
the contract whether or not an existing practice payment is made.
    (d) NRCS may periodically inspect the conservation practices during 
the practice lifespan as specified in the contract to ensure that 
operation and maintenance are being carried out, and that the practice 
is fulfilling its intended objectives. When NRCS finds that a 
participant is not operating and maintaining practices installed through 
the CSP in an appropriate manner, NRCS will initiate contract violation 
procedures as specified in Sec.1469.25. If an existing practice is 
part of a system that meets the quality criteria, but does not 
technically meet NRCS minimum practice standards, the practice must be 
modified or updated to meet the standard according the FOTG as specified 
in Sec.1469.25(a) of this part.



Sec.1469.23  Program payments.

    (a) Stewardship component of CSP payments. (1) The conservation 
stewardship plan, as applicable, divides the land area to be enrolled in 
the CSP into land use categories, such as irrigated and non-irrigated 
cropland, irrigated and non-irrigated pasture, pastured cropland and 
range land, among other categories.

[[Page 927]]

    (2) NRCS will determine an appropriate stewardship payment rate for 
each land use category using the following methodology:
    (i) NRCS will initially calculate the average 2001 rates using the 
Agriculture Foreign Investment Disclosure Act (AFIDA) Land Value Survey, 
the National Agriculture Statistics Service (NASS) land rental data, and 
Conservation Reserve Program (CRP) rental rates.
    (ii) Where typical rental rates for a given land use vary widely 
within a State or between adjacent States, NRCS will adjust the county-
level rates to ensure local and regional consistency and equity.
    (iii) The State Conservationists can also contribute additional 
local data, with advice from the State Technical Committee.
    (iv) The final stewardship payment rate will be the adjusted 
regional rates described in paragraph (a)(2)(i) through (iii) of this 
section multiplied by a reduction factor of 0.25 for Tier I, 0.50 for 
Tier II, and 0.75 for Tier III.
    (v) Pastured cropland will receive the same stewardship payment as 
cropland.
    (3) NRCS will compute the stewardship component of the CSP payment 
as the product of: the number of acres in each land use category (not 
including ``other'' or land not in the applicant's control); the 
corresponding stewardship payment rate for the applicable acreage; and a 
tier-specific percentage. The tier-specific percentage is 5 percent for 
Tier I payments, 10 percent for Tier II payments, and 15 percent for 
Tier III payments.
    (4) Other incidental parcels as defined in Sec.1469.5(d)(1)(iv) 
may be given a stewardship rate as though they were the land use to 
which they are contiguous if they are serving a conservation purpose, 
such as wildlife habitat. Payment is limited to not more than ten 
percent of the contract acres. Minimum treatment requirements for the 
contract tier apply.
    (5) Other land, as defined in Sec.1469.5(d)(1)(v), is not included 
in the stewardship payment computation.
    (6) NRCS will publish the stewardship payment rates at the 
announcement of each program sign-up.
    (b) Existing practice component of CSP payments. (1) The Chief will 
determine and announce which practices will be eligible for existing 
practice payments in accordance with Sec.1469.8(a).
    (2) With exceptions including, but not limited to, paragraph (b)(3) 
and (4) of this section, NRCS may pay the participant a percentage of 
the average 2001 county cost of maintaining a land management, and 
structural practice that is documented in the benchmark condition 
inventory as existing upon enrollment in CSP. The Chief may offer 
alternative payment methods such as paying a percentage of the 
stewardship payment as long as the payment will not exceed 75 percent 
(or, in the case of a beginning farmer or rancher, 90 percent) of the 
average 2001 county costs of installing the practice in the 2001 crop 
year. NRCS will post the rates for payment at the time of the sign-up 
notices on the NRCS website and in USDA Service Centers.
    (3) NRCS will not pay for maintenance of equipment.
    (4) NRCS will not pay an existing practice component of CSP payments 
for any practice that is required to meet conservation compliance 
requirements found in 7 CFR Part 12.
    (5) Existing practice payments are not intended to pay for routine 
maintenance activities related to production practices or practices 
considered typical in farm and ranch operations for a specific location.
    (6) Existing practice payments will be made only on practices that 
meet or exceed the practice standards described in the FOTG.
    (7) The Chief may reduce the rates in any given sign-up notice.
    (c) New practice payments. (1) The Chief will determine and announce 
which practices will be eligible for new practice payments in accordance 
with Sec.1469.8(a).
    (2) If the conservation stewardship contract requires the 
implementation of a new structural or land management practice, NRCS may 
pay a percentage of the cost of installing the new practice. NRCS will 
provide the list of approved practices and the percentage cost-share 
rate for each practice at the time of each CSP sign-up notice.

[[Page 928]]

    (3) Participants may contribute to their share of the cost of 
installing a new practice through in-kind sources, such as personal 
labor, use of personal equipment, or donated materials. Contributions 
for a participant's share of the practice may also be provided from non-
Federal sources, as determined by the Chief.
    (4) Cost-share payments may be provided by other programs; except 
that payments may not be provided through CSP and another program for 
the same practice on the same land area.
    (5) If additional practices are installed or implemented to advance 
a contract from one tier of participation to a higher tier, the practice 
must be certified as meeting FOTG practice standards by NRCS.
    (6) In no instance will the total financial contributions for 
installing a practice from all public and private entity sources exceed 
100 percent of the actual cost of installing the practice.
    (7) NRCS will not pay a new practice payment for any practice that 
is required to meet the conservation compliance plan requirements found 
in 7 CFR Part 12.
    (8) The Chief may reduce the rates in any given sign-up notice.
    (d) Enhancement component of CSP payments. (1) The Chief will 
establish a list of conservation practices and activities that are 
eligible for enhancement payments for a given sign-up. State 
Conservationists, with advice from the State Technical Committees, will 
tailor the list to meet the needs of the selected watersheds and submit 
to the Chief for concurrence.
    (2) NRCS may pay an enhancement component of a CSP payment if a 
conservation stewardship plan demonstrates to the satisfaction of NRCS 
that the plan's activities will increase conservation performance 
including activities related to energy management as a result of 
additional effort by the participant and result in:
    (i) The improvement of a resource concern by implementing or 
maintaining multiple conservation practices or measures that exceed the 
minimum eligibility requirements for the contract's Tier of 
participation as outlined in the sign-up notice and as described in 
Sec.1469.5(e) and the contract requirements in Sec.1469.21; or
    (ii) An improvement in a local resource concern based on local 
priorities and in addition to the national significant resource 
concerns, as determined by NRCS.
    (3) NRCS may also pay an enhancement component of a CSP payment if a 
participant:
    (i) Participates in an on-farm conservation research, demonstration, 
or pilot project as outlined in the sign-up notice; or
    (ii) Cooperates with other producers to implement watershed or 
regional resource conservation plans that involve at least 75 percent of 
the producers in the targeted area; or
    (iii) Carries out assessment and evaluation activities relating to 
practices included in the conservation stewardship plan as outlined in 
the sign-up notice.
    (4) NRCS will not pay the enhancement component of a CSP payment for 
any practice that is required to meet the conservation compliance plan 
requirements found in 7 CFR Part 12.
    (5) Eligible enhancement payments. (i) State Conservationists, with 
advice from the State Technical Committees, will develop proposed 
enhancement payment amounts for each practice and activity.
    (ii) An enhancement payment will be made to encourage a producer to 
perform or continue a management practice or activity, resource 
assessment and evaluation project, or field-test a research, 
demonstration, or pilot project that produces enhanced environmental 
performance and benefits or produces information and data to improve a 
resource concern or update the NRCS technical guides. Enhancement 
payments will be:
    (A) For activities where NRCS can demonstrate the economic value of 
the environmental benefits, based on a given activity's expected 
environmental benefit value. The payment may not exceed the activity's 
expected economic value; or
    (B) For activities where NRCS cannot demonstrate the economic value 
of the environmental benefits, a rate that will not exceed a producer's 
cost to implement a given activity.

[[Page 929]]

    (iii) NRCS will post the list of approved enhancement activities and 
payment amounts for each activity concurrent with the CSP sign-up 
notice.
    (6) The Chief may set a not-to-exceed limit or variable payment rate 
for the enhancement payment in any given sign-up notice.
    (7) Enhancements above the minimum criteria for the resource concern 
that are included in the benchmark inventory may be included in the 
first CSP payment.
    (e) Contracts will be limited as follows:
    (1) $20,000 per year for a Tier I conservation stewardship contract,
    (2) $35,000 per year for a Tier II conservation stewardship 
contract, or
    (3) $45,000 per year for a Tier III conservation stewardship 
contract.
    (4) Stewardship components of CSP payments cannot exceed $5,000 per 
year for Tier I, $10,500 per year for Tier II, or $13,500 per year for 
Tier III.
    (5) The new practice payment will not exceed 50 percent of the 
average county costs of installing the practice (or a similar practice, 
if new) in the 2001 crop year with the exception of beginning and 
limited resource producers, in which case the new practice payment may 
be up to 65 percent.
    (f) The new practice and enhancement components of the conservation 
stewardship contract payment may increase once the participant applies 
and agrees to maintain additional conservation practices and activities 
as described in the conservation stewardship plan.
    (g) The Chief of NRCS may limit the stewardship, practice, and 
enhancement components of CSP payments in order to focus funding toward 
targeted activities and conservation benefits the Chief identifies in 
the sign-up notice and any subsequent addenda.
    (h) In the event that annual funding is insufficient to fund 
existing contract commitments, the existing contracts will be pro-rated 
in that contract year.
    (i) NRCS may not make any payments to participants for:
    (1) Practices within their conservation stewardship plan that are 
required to meet conservation compliance requirements found in 7 CFR 
Part 12;
    (2) Practices that are included in maintenance agreements (with 
financial reimbursements for maintenance) that existed prior to the 
conservation stewardship contract approval;
    (3) Construction or maintenance of animal waste storage or treatment 
facilities or associated waste transport or transfer devices for animal 
feeding operations;
    (4) The purchase or maintenance of equipment;
    (5) A non-land based structure that is not integral to a land based 
practice, as determined by the Chief; or
    (6) New practices that were applied with cost-share assistance 
through other USDA cost-share programs.



Sec.1469.24  Contract modifications and transfers of land.

    (a) Contracts may be modified:
    (1) At the request of the participant, if the modification is 
consistent with the purposes of the conservation security program, or;
    (2) As required by the State Conservationist due to changes to the 
type, size, management, or other aspect of the agricultural operation 
that would interfere with achieving the purposes of the program.
    (b) Participants may request a modification to their contract to 
change their tier of participation under a conservation stewardship 
contract once the measures determined necessary by NRCS to meet the next 
tier level have been established.
    (c) Contract transfers are permitted when there is agreement among 
all parties to the contract and the contract area remains intact.
    (1) NRCS must be notified within 60 days of the transfer of interest 
and the transferee's acceptance of the contract terms and conditions, or 
the contract will be terminated.
    (2) The transferee must be determined by NRCS to be eligible and 
must assume full responsibility under the contract, including operation 
and maintenance of those conservation practices and activities already 
undertaken and to be undertaken as a condition of the contract.

[[Page 930]]



Sec.1469.25  Contract violations and termination.

    (a) If the NRCS determines that a participant is in violation of the 
terms of a contract, or documents incorporated by reference into the 
contract, NRCS will give the participant a reasonable time, as 
determined by the State Conservationist, to correct the violation and 
comply with the terms of the contract and attachments thereto. If the 
violation continues, the State Conservationist may terminate the 
conservation stewardship contract.
    (b) Notwithstanding the provisions of paragraph (a) of this section, 
a contract termination is effective immediately upon a determination by 
the State Conservationist that the participant has: submitted false 
information; filed a false claim; engaged in any act for which a finding 
of ineligibility for payments is permitted under this part; or taken 
actions NRCS deems to be sufficiently purposeful or negligent to warrant 
a termination without delay.
    (c) If NRCS terminates a contract due to breach of contract, the 
participant will forfeit all rights for future payments under the 
contract, and must refund all or part of the payments received, plus 
interest, and liquidated damages as determined in accordance with part 
1403 of this chapter. The State Conservationist may require only partial 
refund of the payments received if a previously installed conservation 
practice can function independently, is not affected by the violation or 
other conservation practices that would have been installed under the 
contract, and the participant agrees to operate and maintain the 
installed conservation practice for the life span of the practice.
    (d) If NRCS terminates a contract due to breach of contract, or the 
participant voluntarily terminates the contract before any contractual 
payments have been made, the participant will forfeit all rights for 
further payments under the contract, and must pay such liquidated 
damages as are prescribed in the contract. The State Conservationist has 
the option to waive the liquidated damages, depending upon the 
circumstances of the case.
    (e) When making any contract termination decisions, the State 
Conservationist may reduce the amount of money owed by the participant 
by a proportion which reflects the good faith effort of the participant 
to comply with the contract, or the hardships beyond the participant's 
control that have prevented compliance with the contract including 
natural disasters or events.
    (f) The participant may voluntarily terminate a contract, without 
penalty or repayment, if the State Conservationist determines that the 
contract terms and conditions have been fully complied with before 
termination of the contract.
    (g) In carrying out this section, the State Conservationist may 
consult with the local conservation district.



                    Subpart C_General Administration



Sec.1469.30  Fair treatment of tenants and sharecroppers.

    Payments received under this part must be divided in the manner 
specified in the applicable contract or agreement, and NRCS will ensure 
that potential participants who would have an interest in acreage being 
offered receive treatment which NRCS deems to be equitable, as 
determined by the Chief. NRCS may refuse to enter into a contract when 
there is a disagreement among multiple applicants seeking enrollment as 
to an applicant's eligibility to participate in the contract as a 
tenant.



Sec.1469.31  Appeals.

    (a) An applicant or a participant may obtain administrative review 
of an adverse decision under CSP in accordance with parts 11 and 614, 
Subparts A and C, of this title, except as provided in paragraph (b) of 
this section.
    (b) Participants cannot appeal the following decisions:
    (1) Payment rates, payment limits, and cost-share percentages;
    (2) Eligible conservation practices; and,
    (3) Other matters of general applicability.
    (c) Before a participant can seek judicial review of any action 
taken under this part, the participant must exhaust all administrative 
appeal procedures

[[Page 931]]

set forth in paragraph (a) of this section, and for purposes of judicial 
review, no decision will be a final agency action except a decision of 
the Chief under these procedures.



Sec.1469.32  Compliance with regulatory measures.

    Participants who carry out conservation practices are responsible 
for obtaining the authorities, permits, easements, or other approvals 
necessary for the implementation, operation, and maintenance of the 
conservation practices in keeping with applicable laws and regulations. 
Participants must comply with all laws and are responsible for all 
effects or actions resulting from their performance under the contract.



Sec.1469.33  Access to agricultural operation.

    Any authorized NRCS representative has the right to enter an 
agricultural operation for the purpose of ascertaining the accuracy of 
any representations made in a contract or in anticipation of entering a 
contract, as to the performance of the terms and conditions of the 
contract. Access includes the right to provide technical assistance, 
inspect any work undertaken under the contract, and collect information 
necessary to evaluate the performance of conservation practices in the 
contract. The NRCS representative will make a reasonable effort to 
contact the participant prior to the exercise of this provision.



Sec.1469.34  Performance based on advice or action of representatives
of NRCS.

    If a participant relied upon the advice or action of any authorized 
representative of CCC, and did not know or have reason to know that the 
action or advice was improper or erroneous, the State Conservationist 
may accept the advice or action as meeting the requirements of CSP. In 
addition, the State Conservationist may grant relief, to the extent it 
is deemed desirable by CCC, to provide a fair and equitable treatment 
because of the good faith reliance on the part of the participant.



Sec.1469.35  Offsets and assignments.

    (a) Except as provided in paragraph (b) of this section, NRCS will 
make any payment or portion thereof to any participant without regard to 
questions of title under State law and without regard to any claim or 
lien against the crop, or proceeds thereof, in favor of the owner or any 
other creditor except agencies of the U.S. Government. The regulations 
governing offsets and withholdings found at 7 CFR part 1403 are 
applicable to contract payments.
    (b) Any producer entitled to any payment may assign any payments in 
accordance with regulations governing assignment of payment found at 7 
CFR part 1404.



Sec.1469.36  Misrepresentation and scheme or device.

    (a) If the Department determines that a participant erroneously 
represented any fact affecting a CSP determination made in accordance 
with this part, the participant's conservation stewardship contract will 
be terminated immediately in accordance with Sec.1469.25(b). The 
participant will forfeit all rights for future contract payments, and 
must refund payments received, plus interest, and liquidated damages as 
described in Sec.1469.25.
    (b) A producer who is determined to have knowingly:
    (1) Adopted any scheme or device that tends to defeat the purpose of 
CSP;
    (2) Made any fraudulent representation; or
    (3) Misrepresented any fact affecting a CSP determination, must 
refund to NRCS all payments, plus interest, and liquidated damages as 
determined in accordance with Sec.1469.25 received by such participant 
with respect to all contracts. In addition, NRCS will terminate the 
participant's interest in all conservation stewardship contracts.
    (c) If the producer acquires land subsequent to enrollment in CSP, 
that land is not considered part of the agricultural operation; however, 
if the land was previously owned or controlled by them before the date 
of enrollment and after May 13, 2002, then NRCS will conduct an 
investigation into the activity to see if there was a scheme or device.

[[Page 932]]



PART 1470_CONSERVATION STEWARDSHIP PROGRAM--Table of Contents



                      Subpart A_General Provisions

Sec.
1470.1 Applicability.
1470.2 Administration.
1470.3 Definitions.
1470.4 Allocation and management.
1470.5 Outreach activities.
1470.6 Eligibility requirements.
1470.7 Conservation activities.
1470.8 Technical and other assistance.

                    Subpart B_Contracts and Payments

1470.20 Application for contracts and selecting offers from applicants.
1470.21 Contract requirements.
1470.22 Conservation stewardship plan.
1470.23 Conservation activity operation and maintenance.
1470.24 Payments.
1470.25 Contract modifications and transfers of land.
1470.26 Contract renewal.
1470.27 Contract violations and termination.
1470.28 Grassland conservation initiative contracts.

                    Subpart C_General Administration

1470.30 Fair treatment of tenants and sharecroppers.
1470.31 Appeals.
1470.32 Compliance with regulatory measures.
1470.33 Access to agricultural operation.
1470.34 Equitable relief.
1470.35 Offsets and assignments.
1470.36 Misrepresentation and scheme or device.
1470.37 Environmental credits for conservation improvements.

    Authority: 16 U.S.C. 3839aa-21-3839aa-25.

    Source: 84 FR 60891, Nov. 12, 2019, unless otherwise noted.



                      Subpart A_General Provisions



Sec.1470.1  Applicability.

    (a) This part sets forth the policies, procedures, and requirements 
for the Conservation Stewardship Program (CSP) as administered by the 
Natural Resources Conservation Service (NRCS), for enrollment during 
fiscal year (FY) 2019 and thereafter. Contracts entered into prior to FY 
2019 will use the regulations and policies in effect prior to December 
20, 2018.
    (b) The purpose of CSP is to encourage producers to address priority 
resource concerns and improve and conserve the quality and condition of 
natural resources in a comprehensive manner by--
    (1) Undertaking additional conservation activities; and
    (2) Improving, maintaining, and managing existing conservation 
activities.
    (c) CSP is applicable in any of the 50 States, District of Columbia, 
Commonwealth of Puerto Rico, Guam, Virgin Islands of the United States, 
American Samoa, and Commonwealth of the Northern Mariana Islands.
    (d) NRCS provides financial and technical assistance to eligible 
producers.



Sec.1470.2  Administration.

    (a) The regulations in this part will be administered under the 
general supervision and direction of the Chief, NRCS.
    (b) No delegation in the administration of this part to lower 
organizational levels will preclude the Chief from making any 
determinations under this part, redelegating to other organizational 
levels, or from reversing or modifying any determination made under this 
part. The Chief may modify or waive a nonstatutory, discretionary 
provision of this part if the Chief determines the application of that 
provision to a particular limited situation is inappropriate and 
inconsistent with the purposes of the program.
    (c) To achieve the conservation goals of CSP, NRCS will--
    (1) Make the program available nationwide to eligible applicants on 
a continuous application basis with one or more ranking periods to 
determine enrollments. One of the ranking periods will occur in the 
first quarter of each fiscal year to the extent practicable.
    (2) Establish a science-based stewardship threshold for each 
priority resource concern at the level of management required to 
conserve and improve the quality and condition of a natural resource. To 
the extent practicable, NRCS will use scientifically developed 
assessment tools and guides including, but not limited to, soil erosion 
prediction tools, wildlife habitat assessment tools, rangeland health 
assessments, and soil health assessments, to establish the stewardship 
threshold

[[Page 933]]

and measure the level of improvement once the participant applies 
additional conservation activities to meet or exceed a resource concern.
    (3) To the maximum extent feasible, manage CSP to enhance soil 
health.
    (d) To support locally led conservation, NRCS will solicit input 
from State technical committees, Tribal Conservation Advisory Councils, 
and local working groups to develop State-level technical, outreach, and 
program materials, including:
    (1) Establishment of ranking pools appropriate for the conduct of 
CSP within the State to ensure program availability and better 
distribution of the funds. Ranking pools may be based on watersheds, 
geographic areas, or other appropriate regions within a State and may 
consider high-priority regional and State-level priority resource 
concern areas;
    (2) Identification of not less than five priority resource concerns 
in particular geographic areas or other appropriate regions within a 
State;
    (3) Identification of resource-conserving crops that will be part of 
resource-conserving crop rotations; and
    (4) Identification of combinations of grazing conservation 
activities that will be part of an advanced grazing management system.
    (e) NRCS may enter into agreements with Federal, State, and local 
agencies, conservation districts, Indian Tribes, private entities, and 
individuals to assist NRCS with program implementation including, but 
not limited to, planning activities, outreach, and providing other forms 
of technical assistance.

[84 FR 60891, Nov. 12, 2019, as amended at 85 FR 64002, Oct. 9, 2020]



Sec.1470.3  Definitions.

    The following definitions will apply to this part and all documents 
issued in accordance with this part, unless specified otherwise:
    Advanced grazing management means the use of a combination of 
grazing conservation activities, as determined by NRCS, which may 
include management-intensive rotational grazing, that provide for--
    (1) Improved soil health and carbon sequestration;
    (2) Drought resilience;
    (3) Wildlife habitat;
    (4) Wildfire mitigation;
    (5) Control of invasive plants; and
    (6) Water quality improvement.
    Agricultural operation means all eligible land, as determined by 
NRCS, whether contiguous or noncontiguous that is--
    (1) Under the effective control of a producer at the time of 
enrollment in the program; and
    (2) Operated by the producer with equipment, labor, management, and 
production or cultivation practices that are substantially separate from 
other agricultural operations.
    Applicant means a producer who has requested in writing to 
participate in CSP.
    Beginning farmer or rancher means a person or legal entity who--
    (1) Has not operated a farm, ranch, or nonindustrial private forest 
land (NIPF); or who has operated a farm, ranch, or NIPF for not more 
than 10 consecutive years. The requirement in this paragraph (1) applies 
to all members of a legal entity who will materially and substantially 
participate in the operation of the farm or ranch.
    (2) In the case of a contract with an individual, individually, or 
with the immediate family, material and substantial participation 
requires that the individual provide substantial day- to-day labor and 
management of the farm or ranch, consistent with the practices in the 
county or State where the farm is located.
    (3) In the case of a contract with a legal entity or joint 
operation, all members must materially and substantially participate in 
the operation of the farm or ranch. Material and substantial 
participation requires that each of the members provide some amount of 
the management or labor and management necessary for day-to-day 
activities, such that if each of the members did not provide these 
inputs, operation of the farm or ranch would be seriously impaired.
    Chief means the Chief of NRCS, United States Department of 
Agriculture (USDA), or designee.
    Comprehensive conservation plan means a conservation plan that meets 
or exceeds the stewardship threshold

[[Page 934]]

for each priority resource concern identified by NRCS across all land 
uses included in the operation.
    Conservation activities mean conservation systems, practices, 
enhancements, or management measures, as determined by NRCS, and may 
include--
    (1) Structural measures, vegetative measures, and land management 
measures, including agricultural drainage management systems as 
determined by NRCS;
    (2) Planning needed to address a priority resource concern;
    (3) Development of a comprehensive conservation plan;
    (4) Soil health planning, including planning to increase soil 
organic matter; and
    (5) Activities that will assist a producer to adapt to, or mitigate 
against, increasing weather volatility.
    Conservation district means any district or unit of State, Tribal, 
or local government formed under State, Tribal, or territorial law for 
the express purpose of developing and carrying out a local soil and 
water conservation program. Such district or unit of government may be 
referred to as a ``conservation district,'' ``soil conservation 
district,'' ``soil and water conservation district,'' ``resource 
conservation district,'' ``land conservation committee,'' ``natural 
resource district,'' or similar name.
    Conservation practice means a specified treatment, such as a 
structural, vegetative, or management technique commonly used to meet a 
specific need in planning and carrying out conservation programs for 
which standards and specifications have been developed. Conservation 
practices are in the Field Office Technical Guide (FOTG).
    Conservation stewardship plan means a plan developed in accordance 
with the requirements of Sec.1470.22.
    Conservation system means a combination of conservation practices, 
management measures, and enhancements used to address natural resource 
and environmental concerns in a comprehensive, holistic, and integrated 
manner.
    Contract means a legal document that specifies the rights and 
obligations of any participant who has been accepted into the program. A 
CSP contract is a binding agreement under this part for the transfer of 
assistance from NRCS to the participant for installing, adopting, 
improving, managing, and maintaining conservation activities.
    Effective control means possession of the land by ownership, written 
lease, or other legal agreement and authority to act as decision maker 
for the day-to-day management of the operation both at the time the 
applicant enters into a stewardship contract and for the duration of the 
contract.
    Eligible land means:
    (1) Private and Tribal land upon which:
    (i) Agricultural commodities, livestock, or forest-related products 
are produced; and
    (ii) Priority resource concerns could be addressed through a 
contract under the program. Eligible land includes cropland, grassland, 
rangeland, pastureland, nonindustrial private forest land, and other 
agricultural lands including cropped woodland, marshes, and agricultural 
land used or capable of being used for the production of livestock as 
determined by the Chief; and
    (2) Publicly owned land where the--
    (i) Land is associated with the land described in paragraph (1) of 
this definition and is a working component of the producer's 
agricultural or forestry operation;
    (ii) Producer has control of the land for the term of the contract; 
and
    (iii) Conservation activities the producer will implement on the 
public land are necessary and will address an identified priority 
resource concern.
    Enhancement means a type of conservation activity used to treat 
natural resources and improve conservation performance that allows a 
producer to address levels of conservation beyond what the minimum 
conservation practice standard requires. Enhancements, alone or in 
combination with other enhancements and practices, result in 
conservation systems that are equal to or greater than the performance 
level for the planning criteria identified for a given resource concern. 
Planning criteria are defined for each resource concern in Section III--
Conservation Management Systems, Field Office Technical Guide.

[[Page 935]]

    Field Office Technical Guide (FOTG) means the official local NRCS 
source of resource information and interpretations of guidelines, 
planning criteria, and standards for planning and implementation of 
conservation practices. The FOTG contains detailed information on the 
planning standard to achieve conservation of soil, water, air, plant, 
energy, and animal resources applicable to the local area for which it 
is prepared. (See https://www.nrcs.usda.gov/wps/portal/nrcs/main/
national/technical/fotg/ to access your State FOTG.)
    Historically underserved producer means a person, joint operation, 
legal entity, or Indian Tribe who is a beginning farmer or rancher, 
socially disadvantaged farmer or rancher, limited resource farmer or 
rancher, or veteran farmer or rancher.
    Indian lands mean land held in trust by the United States for 
individual Indians or Indian Tribes, or all land titles held by 
individual Indians or Tribes, subject to Federal restrictions against 
alienation or encumbrance, or land which is subject to the rights of 
use, occupancy, and/or benefit of certain Indian Tribes. This term also 
includes lands for which the title is held in fee status by an Indian, 
Indian family, or Indian Tribe.
    Indian Tribe means any Indian Tribe, band, nation, pueblo, or other 
organized group or community, including any Alaska Native village or 
regional or village corporation as defined in or established pursuant to 
the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.), which 
is recognized as eligible for the special programs and services provided 
by the United States to Indians because of their status as Indians.
    Joint operation means, as defined in 7 CFR part 1400, a general 
partnership, joint venture, or other similar business organization in 
which the members are jointly and severally liable for the obligations 
of the organization.
    Legal entity means, as defined in 7 CFR part 1400, an entity created 
under Federal or State law that owns land or an agricultural commodity, 
product, or livestock; or produces an agricultural commodity, product, 
or livestock.
    Limited resource farmer or rancher means:
    (1) A person with direct or indirect gross farm sales not more than 
the current indexed value in each of the previous 2 fiscal years 
(adjusted for inflation using Prices Paid by Farmer Index as compiled by 
the National Agricultural Statistical Service); and
    (2) Has a total household income at or below the national poverty 
level for a family of four, or less than 50 percent of county median 
household income in each of the previous 2 years (to be determined 
annually using Department of Commerce Data).
    (3) A limited resource farmer or rancher also includes a legal 
entity or joint operation if all individual members independently 
qualify under paragraphs (1) and (2) of this definition.
    Liquidated damages means a sum of money stipulated in the CSP 
contract that the participant agrees to pay NRCS if the participant 
fails to fulfill the terms of the contract. The sum represents an 
estimate of the technical assistance expenses incurred to service the 
contract and reflects the difficulties of proof of loss and the 
inconvenience or nonfeasibility of otherwise obtaining an adequate 
remedy.
    Management-intensive rotational grazing means a strategic, 
adaptively managed multipasture grazing system in which animals are 
regularly and systematically moved to a fresh pasture in a manner that, 
as determined by NRCS:
    (1) Maximizes the quantity and quality of forage growth;
    (2) Improves manure distribution and nutrient cycling;
    (3) Increases carbon sequestration;
    (4) Improves the quality and quantity of cover for wildlife;
    (5) Provides permanent cover to protect the soil from erosion; and
    (6) Improves water quality.
    Management measure means one or more specific actions that is not a 
conservation practice, but which has the effect of alleviating problems 
or improving the treatment of the natural resources.
    National Organic Program means the program established under the 
Organic Foods Production Act of 1990 (7 U.S.C.

[[Page 936]]

6501 et seq.), administered by the Agricultural Marketing Service, which 
regulates the standards for any farm, wild crop harvesting, or handling 
operation that wants to market an agricultural product as organically 
produced.
    Natural Resources Conservation Service means an agency of USDA which 
has responsibility for administering CSP using the funds, facilities, 
and authorities of the Commodity Credit Corporation.
    Nonindustrial private forest land means rural land, as determined by 
NRCS, that has existing tree cover or is suitable for growing trees, and 
is owned by any nonindustrial private individual, group, association, 
corporation, Indian Tribe, or other private legal entity that has 
definitive decision-making authority over the land.
    Operation and maintenance means work performed by the participant to 
maintain existing conservation activities to at least the level of 
conservation performance identified at the time of enrollment, and 
maintain additional conservation activities installed and adopted over 
the contract period. Operation includes the administration, management, 
and performance of nonmaintenance actions needed to keep the completed 
activity functioning as intended. Maintenance includes work to prevent 
deterioration of the activity, repairing damage, and replacement or 
restoration of the activity to its original condition if one or more 
components fail.
    Participant means a producer that has applied for participation and 
has entered into a CSP contract and is receiving payment or is 
responsible for implementing the terms and conditions of a CSP contract.
    Payment means financial assistance provided to the participant under 
the terms of the CSP contract.
    Person means, as defined in 7 CFR part 1400, an individual, natural 
person and does not include a legal entity.
    Priority resource concern means a natural resource concern or 
problem, as determined by NRCS, that is likely to be addressed 
successfully through implementation of conservation activities under 
this program.
    Producer means a person, legal entity, joint operation, or Indian 
Tribe who either has an interest in the agricultural operation or who 
NRCS determines is engaged in agricultural production or forestry 
management on the agricultural operation.
    Resource-conserving crop means a crop that is one of the following, 
as determined by NRCS:
    (1) A perennial grass;
    (2) A legume grown for use as forage, seed for planting, or green 
manure;
    (3) A legume-grass mixture; or
    (4) A small grain or other resource-demanding crop grown in 
combination with a grass, legume, forbs, grass-forbs mixture, whether 
interseeded or planted in rotation.
    Resource-conserving crop means a crop that is one of the following, 
as determined by NRCS:
    (1) A perennial grass;
    (2) A legume grown for use as a cover crop, forage, seed for 
planting, or green manure;
    (3) A legume-grass or diverse grass-forb mixture comprised of 
species selected for climate, rainfall, soil, and other region-specific 
conditions; or
    (4) A small grain or other resource-demanding crop grown in 
combination with a grass, legume, other forbs, or grass-forb mixture, 
whether interseeded, relay-planted into the resource-demanding crop, or 
planted in rotation.
    Secretary means the Secretary of the USDA.
    Socially disadvantaged farmer or rancher means a producer who is a 
member of a group whose members have been subjected to racial or ethnic 
prejudices without regard to its members' individual qualities.
    State technical committee means a committee established by the NRCS 
in a State pursuant to 7 CFR part 610, subpart C.
    Stewardship threshold means the level of management required, as 
determined by NRCS, to conserve and improve the quality and condition of 
a natural resource through the use of--
    (1) Planning criteria under a resource management system;
    (2) Predictive analytics tools or models developed or approved by 
NRCS;
    (3) Data from past and current enrollment in the program; and
    (4) Other methods that measure conservation and improvement in 
priority

[[Page 937]]

resource concerns, as determined by the Chief.
    Technical assistance means technical expertise, information, and 
tools necessary for the conservation of natural resources on land active 
in agricultural, forestry, or related uses. The term includes the 
following:
    (1) Technical services provided directly to farmers, ranchers, 
Indian Tribes, forest producers, and other eligible entities, such as 
conservation planning, technical consultation, and assistance with the 
design and implementation of conservation activities; and
    (2) Technical infrastructure, including processes, tools, and agency 
functions needed to support delivery of technical services; such as 
technical standards, resource inventories, training, data, technology, 
monitoring, and effects analyses.
    Technical service provider (TSP) means an individual, private-sector 
entity, Indian Tribe, or public agency certified pursuant to 7 CFR part 
652 and placed on the approved list to provide technical services to 
participants; or selected by USDA to assist USDA in the implementation 
of conservation programs covered by this part through a procurement 
contract, contribution agreement, or cooperative agreement with USDA.
    Veteran farmer or rancher means a producer who meets the definition 
in section 2501(a)(7) of the Food, Agriculture, Conservation, and Trade 
Act of 1990, as amended (7 U.S.C. 2279).

[84 FR 60891, Nov. 12, 2019, as amended at 85 FR 64002, Oct. 9, 2020]



Sec.1470.4  Allocation and management.

    (a) The Chief will allocate funds to States, and may adjust the 
weighting of the following allocation factors to provide for equitable 
geographic distribution and meet enrollment goals, based on the 
consideration of--
    (1) Each State's proportion of eligible land to the total acreage of 
eligible land in all States;
    (2) The extent and magnitude of the conservation needs associated 
with agricultural production in each State;
    (3) The degree to which implementation of the program in the State 
is, or will be, effective in helping producers address those needs; and
    (4) Other considerations determined by the Chief to achieve 
equitable geographic distribution of program funds.
    (b) The Chief will allocate funding to the States to support organic 
production and transition to organic production based on--
    (1) The number of certified and transitioning organic operations 
within the State; and
    (2) The number of acres of certified and transitioning organic 
production within the State.
    (c) Of the funds made available for each of fiscal years 2019 
through 2023 to carry out CSP, NRCS will, to the maximum extent 
practicable, use at least:
    (1) Five percent to assist beginning farmers or ranchers; and
    (2) Five percent to assist socially disadvantaged farmers or 
ranchers.
    (d) NRCS may adjust State allocations or reallocate funds in any 
fiscal year if a State cannot use their full allocation.

[84 FR 60891, Nov. 12, 2019, as amended at 85 FR 64002, Oct. 9, 2020]



Sec.1470.5  Outreach activities.

    (a) NRCS will establish program outreach activities at the national, 
State, and local levels to inform potential applicants who control 
eligible land that they may be eligible to apply for program assistance.
    (b) NRCS will specifically conduct outreach to historically 
underserved producers.
    (c) NRCS will provide outreach so as not to limit producer 
participation because of size or type of operation or production system, 
including specialty crop and organic production.



Sec.1470.6  Eligibility requirements.

    (a) Eligible applicant. To apply for CSP, a producer must--
    (1) Be the operator, owner, or other tenant of an agricultural 
operation in the Farm Service Agency (FSA) farm records management 
system. Applicants must establish or update records with FSA before NRCS 
will consider an applicant as eligible;
    (2) Share in the risk of producing a crop; share in the crop 
available for marketing from the farm (or would

[[Page 938]]

have shared had the crop been produced); and participate in the daily 
management, administration, and performance of the operation for the 
land included in the contract;
    (3) Have effective control of the land unless an exception is made 
by the Chief in the case of land administered by the Bureau of Indian 
Affairs, Indian lands, or other instances in which NRCS determines that 
there is sufficient assurance of control;
    (4) Be in compliance with the highly erodible land and wetland 
conservation provisions found at 7 CFR part 12;
    (5) Be in compliance with adjusted gross income provisions found at 
7 CFR part 1400;
    (6) Supply information, as required by NRCS, to determine 
eligibility for the program, including but not limited to, information 
related to eligibility requirements and ranking factors; conservation 
activity and production system records; information to verify the 
applicant's status as an historically underserved producer, if 
applicable; and payment eligibility as established by 7 CFR part 1400; 
and
    (7) Provide a list of all members of the legal entity or joint 
operation, as applicable, and embedded entities along with members' tax 
identification numbers and percentage interest in the legal entity or 
joint operation. Where applicable, American Indians, Alaska Natives, and 
Pacific Islanders may use another unique identification number for each 
individual eligible for payments.
    (b) Eligible land. A contract application must include all of the 
eligible land on an applicant's agricultural operation. A participant 
may submit an application(s) to enter into an additional contract(s) for 
newly acquired or newly eligible land, which would then compete with 
other applications in a subsequent ranking period.
    (c) Ineligible land. The following lands (even if covered by the 
definition of eligible land in Sec.1470.3) are part of the 
agricultural operation, but are not eligible for enrollment in CSP:
    (1) Land enrolled in the Conservation Reserve Program (CRP), 7 CFR 
part 1410, unless--
    (i) The conservation reserve contract will expire at the end of the 
fiscal year in which the land is to be enrolled in the program; and
    (ii) Conservation reserve program payments for land enrolled in the 
program cease before the first program payment is made to the applicant 
under this subchapter;
    (2) Land enrolled in a wetland reserve easement through the 
Agricultural Conservation Easement Program, 7 CFR part 1468; and
    (3) Land used for crop production after December 20, 2018, that had 
not been planted, considered to be planted, or devoted to crop 
production for at least 4 of the 6 years preceding that date, unless the 
land does not meet such requirements because that land--
    (i) Had previously been enrolled in CRP;
    (ii) Has been maintained using long-term crop rotation practices as 
determined by the NRCS; or
    (iii) Is incidental land needed for efficient operation of the farm 
or ranch as determined by NRCS.



Sec.1470.7  Conservation activities.

    (a) NRCS will record in the conservation stewardship plan the 
additional conservation activities the participant agrees to implement 
under the conservation stewardship contract.
    (b) NRCS will make available to the public the list of conservation 
activities an applicant may choose to implement and manage through the 
CSP.
    (c) NRCS may make available bundles of conservation activities that 
when implemented together address resource concerns in a more 
comprehensive and cost-effective manner.



Sec.1470.8  Technical and other assistance.

    (a) NRCS may provide technical assistance to an eligible applicant 
or participant either directly or through a TSP as set forth in 7 CFR 
part 652.
    (b) NRCS retains approval authority over certification of work done 
by non-NRCS personnel for the purpose of approving CSP payments.
    (c) NRCS will ensure that technical assistance is available and 
program specifications are appropriate so as not to limit producer 
participation because

[[Page 939]]

of size or type of operation or production system, including specialty 
crop and organic production.
    (d) NRCS will assist potential applicants dealing with the 
requirements of certification under the National Organic Program and CSP 
requirements concerning how to coordinate and simultaneously meet 
eligibility standards under each program.
    (e) NRCS may utilize the services of State foresters and existing 
technical assistance programs such as the Forest Stewardship Program of 
the U.S. Forest Service, in coordinating assistance to NIPF owners.



                    Subpart B_Contracts and Payments



Sec.1470.20  Application for contracts and selecting offers from 
applicants.

    (a) Submission of contract applications. Applicants may submit an 
application for CSP at any time to enroll all of the eligible land 
included in their agricultural operation.
    (b) Stewardship threshold requirement. To be eligible to participate 
in CSP, an applicant must submit to NRCS for approval, a contract offer 
for the agricultural operation that--
    (1) Demonstrates that the applicant's conservation activities, at 
the time of contract offer, meet or exceed the stewardship threshold for 
at least two priority resource concerns; and
    (2) Would, at a minimum, meet or exceed the stewardship threshold 
for at least one additional priority resource concern by the end of the 
conservation stewardship contract by:
    (i) Installing and adopting additional conservation activities; and
    (ii) Improving, maintaining, and managing existing conservation 
activities across the entire agricultural operation in a manner that 
increases or extends the conservation benefits in place at the time the 
contract application is accepted by NRCS; and
    (3) Provides a map, aerial photograph, or overlay that--
    (i) Identifies the applicant's agricultural operation; and
    (ii) Delineates eligible land with associated acreage amounts.
    (c) Evaluation of contract applications. NRCS will conduct one or 
more ranking periods each fiscal year.
    (1) To the extent practicable, one ranking period will occur in the 
last quarter of the previous fiscal year or the first quarter of the 
current fiscal year.
    (2) In evaluating CSP applications for new enrollment or for 
renewal, NRCS will rank applications based on the following factors:
    (i) The natural resource conservation and environmental benefits 
that result from the conservation treatment on all State identified 
priority resource concerns at the time of submission of the application;
    (ii) The degree to which the proposed conservation activities 
increase natural resource conservation and environmental benefits; and
    (iii) Other consistent criteria, as determined by NRCS, including 
criteria the Chief determines are necessary to ensure that national, 
State, and local priority resource concerns are effectively addressed.
    (3) In the event that two or more applications receive the same 
ranking under paragraph (c)(2) of this section, NRCS shall rank those 
contracts based on the extent to which the actual and anticipated 
conservation benefits from each contract are provided at the lowest cost 
relative to other similarly beneficial contract offers.
    (4) NRCS may not assign a higher priority to any application because 
the applicant is willing to accept a lower payment than the applicant 
would otherwise be eligible to receive.
    (d) Ranking pools. States will establish ranking pools in accordance 
with Sec.1470.2(d)(1).
    (1) Nonindustrial private forest land (NIPF) applications will 
compete in separate ranking pools. An applicant with both NIPF and other 
eligible land may submit one application for NIPF and one application 
for all other eligible land.
    (2) Within each State or established ranking pool, NRCS will address 
conservation access for certain farmers or ranchers, including--
    (i) Socially disadvantaged farmers or ranchers;
    (ii) Beginning farmers or ranchers;

[[Page 940]]

    (iii) Producers who are veteran farmers or ranchers; and
    (iv) Organic producers or producers who are transitioning to 
organic.
    (e) Application preapproval. NRCS will make application preapproval 
determinations throughout the fiscal year based on eligibility and 
ranking score.
    (f) Field verification. NRCS will conduct onsite field verification 
prior to entering into a conservation stewardship contract to 
substantiate the accuracy of the information provided by applicants 
during the application process and to verify applicability of planned 
conservation activities.



Sec.1470.21  Contract requirements.

    (a) After NRCS approves the application and develops the 
conservation stewardship plan in accordance with Sec.1470.22, NRCS 
will enter into a conservation stewardship contract with the participant 
to enroll the participant's agricultural operation in the program.
    (b) The conservation stewardship contract will--
    (1) Be for a period of 5 years;
    (2) Incorporate by reference the conservation stewardship plan;
    (3) State the payment amount NRCS agrees to make to the participant 
annually, subject to the availability of funds;
    (4) Incorporate all provisions as required by law or statute, 
including requirements that the participant will--
    (i) Implement the conservation stewardship plan as described in 
Sec.1470.22;
    (ii) Operate and maintain conservation activities on the 
agricultural operation consistent with Sec.1470.23;
    (iii) Comply with the terms of the contract or documents 
incorporated by reference into the contract;
    (iv) Refund as determined by NRCS, any program payments received 
with interest, and forfeit any future payments under the program, upon 
the violation of a term or condition of the contract, consistent with 
Sec.1470.27;
    (v) Refund as determined by NRCS, all program payments received with 
interest, upon the transfer of the right and interest of the 
participant, in land subject to the contract, unless the transferee of 
the right and interest agrees to assume all obligations of the contract, 
consistent with Sec.1470.25;
    (vi) Maintain and supply information as requested by NRCS, to 
determine compliance with the conservation stewardship plan and any 
other requirements of the program; and
    (vii) Not conduct any activities on the agricultural operation that 
would tend to defeat the purposes of the program, as determined by NRCS;
    (5) Permit all economic uses of the eligible land that--
    (i) Maintain the agricultural or forestry nature of the land; and
    (ii) Are consistent with the conservation purposes of the contract;
    (6) Include a provision to ensure that NRCS will not consider a 
participant in violation of the contract for failure to comply with the 
contract due to circumstances beyond the control of the participant, 
including a disaster or related condition, as determined by NRCS; and
    (7) Include such other provisions as NRCS determines necessary to 
ensure the purposes of the program are achieved.



Sec.1470.22  Conservation stewardship plan.

    (a) NRCS will use the conservation planning process as outlined in 
the NRCS ``National Planning Procedures Handbook'' to encourage 
participants to address resource concerns in a comprehensive manner.
    (b) The conservation stewardship plan will contain a record of the 
participant's objectives and decisions to meet or exceed stewardship 
thresholds for identified resource concerns through implementation or 
adoption of one or more conservation activities. The plan will document 
the schedule of conservation activities to be implemented, managed, or 
improved under the conservation stewardship contract.
    (c) Supporting documentation for the participant's plan will 
include--
    (1) Identification and inventory of priority resource concerns;
    (2) Establishing benchmark data on the condition of existing 
conservation activities at the time of enrollment;

[[Page 941]]

    (3) A plan map delineating the agricultural operation included in 
the program contract with associated acreage amounts;
    (4) For organic producers or producers transitioning to organic 
production, documentation that supports the participant's transition to 
or participation in the National Organic Program; and
    (5) Other information as determined appropriate by NRCS.



Sec.1470.23  Conservation activity operation and maintenance.

    Throughout the conservation stewardship contract period, the 
participant will maintain and manage existing conservation activities 
across the entire agricultural operation to at least the benchmark level 
of conservation performance identified at the time of enrollment for the 
conservation stewardship contract period. The participant will also 
maintain and manage additional activities installed and adopted under 
the conservation stewardship contract.



Sec.1470.24  Payments.

    (a) Annual payments. Subject to the availability of funds, NRCS will 
provide, as appropriate, annual payments under the program to compensate 
a participant for installing and adopting additional conservation 
activities, and for improving, maintaining, and managing existing 
conservation activities across the entire agricultural operation in a 
manner that increases or extends the conservation benefits in place at 
the time NRCS accepts the contract offer. A split-rate annual payment 
structure is used to provide separate payments for additional and 
existing conservation activities in order to place emphasis on 
implementing additional conservation.
    (1) NRCS will make equal annual payments for the existing activity 
portion of the payment, specific to the operation, based on the land 
uses and NRCS assessment of existing stewardship. NRCS will make 
payments for the additional conservation activities based on the 
complexity and extent of the individual activities completed by the 
participant during the previous fiscal year. Additional activities 
implemented may vary from year to year, so the total annual payment may 
fluctuate;
    (2) In order to receive an annual payment for a land use, 
participants must schedule, install, and adopt at least one additional 
conservation activity on the land use type;
    (3) At least one additional conservation activity must be 
implemented within the first 12 months of the contract. NRCS may extend 
this timeframe if NRCS determines that the participant is unable to 
complete the conservation activity for reasons beyond their control;
    (4) NRCS will base the annual payment rates, to the maximum extent 
practicable, on the following factors:
    (i) Costs incurred by the participant associated with planning, 
design, materials, installation, labor, management, maintenance, or 
training;
    (ii) Income foregone by the participant;
    (iii) Expected conservation benefits;
    (iv) The extent to which priority resource concerns will be 
addressed through the installation and adoption of conservation 
activities on the agricultural operation;
    (v) The level of stewardship in place at the time of application and 
maintained over the term of the contract;
    (vi) The degree to which the conservation activities will be 
integrated across the entire agricultural operation for all State 
identified priority resource concerns over the term of the contract; and
    (vii) Such other factors as determined by the Chief; and
    (5) Participants will receive payments for cover crop activities at 
not less than 125 percent of the annual payment amount, as determined by 
NRCS.
    (b) Supplemental payments. Subject to the availability of funds, 
NRCS will provide a supplemental payment to a participant receiving 
annual payments, who also agrees to adopt or improve a resource-
conserving crop rotation or adopt advanced grazing management, as 
defined by NRCS, to achieve beneficial crop or grazing rotations as 
appropriate for the eligible land of the participant.
    (1) NRCS will determine whether a resource-conserving crop rotation 
or

[[Page 942]]

advanced grazing management is eligible for supplemental payments based 
on whether the resource-conserving crop rotation or advanced grazing 
management is designed to provide natural resource conservation and 
production benefits;
    (2) A participant must adopt or improve the resource-conserving crop 
rotation or adopt advanced grazing management during the term of the 
contract to be eligible to receive a supplemental payment;
    (3) Supplemental payments will be based, to the maximum extent 
practicable, on the factors from paragraph (a)(4) of this section; and
    (4) Supplemental payments will be not less than 150 percent of the 
annual payment amount, as determined by NRCS.
    (c) Comprehensive conservation plan. Participants choosing to 
develop a comprehensive conservation plan through their conservation 
stewardship contract will receive a one-time payment for this activity. 
NRCS will determine the payment based on the number of priority resource 
concerns addressed in the comprehensive conservation plan and the number 
of types of land uses included in the plan. Participants will not be 
eligible to receive payment for plans developed prior to their 
enrollment in a conservation stewardship contract.
    (d) Minimum contract payment. NRCS may make a minimum contract 
payment to a participant in any fiscal year in which the contract's 
payment amount total is less than a rate determined equitable by the 
Chief based upon the effort required by a participant to comply with the 
terms of the contract.
    (e) Timing of payments. NRCS will make payments as soon as 
practicable after October 1 of each fiscal year for activities carried 
out in the previous fiscal year. For newly enrolled contracts, NRCS will 
make payments as soon as practicable after October 1 following the 
fiscal year of enrollment.
    (f) Noncompensatory matters. NRCS will not provide a CSP payment to 
a participant for--
    (1) New conservation activities applied with financial assistance 
through other USDA conservation programs;
    (2) The design, construction, or maintenance of animal waste storage 
or treatment facilities, or associated waste transport or transfer 
devices for animal feeding operations;
    (3) Conservation activities for which there is no cost incurred or 
income foregone by the participant; or
    (4) New conservation activities initiated or implemented prior to 
contract approval, unless NRCS granted a waiver prior to the participant 
starting the activity.
    (g) Payment limits. A person or legal entity may not receive, 
directly or indirectly, payments that, in the aggregate, exceed $200,000 
under all CSP contracts entered into during fiscal years 2019 through 
2023, excluding funding arrangements with Indian Tribes, regardless of 
the number of contracts entered into under the CSP by the person or 
legal entity.
    (h) Contract limits. Each conservation stewardship contract will be 
limited to $200,000 over the term of the contract period, except that 
conservation stewardship contracts with any joint operation will be 
limited to $400,000 over the term of the contract period.
    (i) Scope of payment and contract limitations for Indian Tribes and 
individual Tribal members. Contracts with Indian Tribes are not subject 
to payment or contract limitations but payment limitations in paragraph 
(f) of this section apply to individual Tribal member(s). Indian Tribes 
and the Bureau of Indian Affairs will certify in writing that no one 
individual, directly or indirectly, will receive more than the payment 
limitation. Certification provided at the time of enrollment will cover 
the entire contract period. The Tribal entity must also provide, upon 
request from NRCS, a listing of individuals and payment made, by Social 
Security number or other unique identification number, during the 
previous year for calculation of overall payment limitations.
    (j) Tax Identification Number. To be eligible to receive a CSP 
payment, all applicants must provide a tax identification number. In 
accordance with 7 CFR part 1400, applicants who participate as a legal 
entity or joint operation must provide a list of all members of the 
legal entity or joint operation and

[[Page 943]]

associated embedded entities, along with the members' Social Security 
numbers and percentage interest in the legal entity or joint operation. 
NRCS attributes payments directly to legal entity members for the 
purpose of complying with paragraph (f) of this section.
    (k) Unique identification numbers. American Indians, Alaska Natives, 
and Pacific Islanders may use another unique identification number for 
each individual eligible for payment. Any participant that uses a unique 
identification number as an alternative to a tax identification number 
will use that identifier for all CSP contracts in which they 
participate.

[84 FR 60891, Nov. 12, 2019, as amended at 85 FR 64002, Oct. 9, 2020]



Sec.1470.25  Contract modifications and transfers of land.

    (a) NRCS may modify a conservation stewardship contract, if--
    (1) The participant agrees to the modification; and
    (2) NRCS determines the modification is in the public interest.
    (b) NRCS may allow modification to a conservation stewardship 
contract to accommodate certain changes in the agricultural operation, 
including--
    (1) Removing contract acres the participant will enroll in CRP, 
protect with a wetland reserve easement through the Agricultural 
Conservation Easement Program (ACEP), or enroll in other Federal or 
State programs that offer greater natural resource protection through an 
easement, long-term contract, land use restrictions, or similar 
authority as determined by NRCS. NRCS may reduce payments for such 
modified contracts to reflect the modified acreage and performance. 
Participants will not be subject to liquidated damages or refund of 
payments received for enrolling land in these programs.
    (2) Accommodating other limited changes, in response to a 
participant's request made prior to implementing the change, that would 
take land out of production or convert an area under contract to a 
different land use. These situations apply only to land for which the 
participant has and will retain effective control, and not for 
situations of involuntary loss of land.
    (3) Allowing a participant to substitute a conservation activity as 
long as the level of conservation performance agreed to at the time of 
enrollment remains the same or is improved with implementation of the 
substitute activity.
    (i) Adjustments to existing activities may occur consistent with 
conservation performance requirements from Sec.1470.23.
    (ii) [Reserved]
    (4) Prior to approval, NRCS must determine that any modification 
under this section is authorized by the provisions of 16 U.S.C. 3838d-
3838g.
    (c) A contract modification under this section will not increase the 
scheduled annual payments under the program, except to make minor 
adjustments to a conservation activity, as determined by NRCS; implement 
an appeal determination; correct an administrative error as approved by 
NRCS; or to adjust payment limitations. Contracts transferred from an 
individual or entity to a joint operation will retain the original 
contract limit outlined in Sec.1470.24(h).
    (d) Within the time specified in the contract, a participant must 
provide NRCS with written notice regarding any voluntary or involuntary 
loss of control of any acreage under the CSP contract, which includes 
changes in a participant's ownership structure or corporate form. 
Failure to provide timely notice may result in termination of the entire 
contract.
    (e) Unless NRCS approves a transfer of contract rights under this 
paragraph (e), a participant losing control of any acreage may 
constitute a violation of the CSP contract and NRCS may terminate the 
contract and require a participant to refund all or a portion of any 
financial assistance provided. NRCS may approve a transfer of the 
contract if--
    (1) NRCS receives written notice that identifies the new producer 
who will take control of the acreage, as required in paragraph (d) of 
this section;
    (2) The new producer meets program eligibility requirements within a 
reasonable time frame, as specified in the CSP contract;

[[Page 944]]

    (3) The new producer agrees to assume the rights and 
responsibilities for the acreage under the contract; and
    (4) NRCS determines that the purposes of the program will continue 
to be met despite the original participant's losing control of all or a 
portion of the land under contract.
    (f) Until NRCS approves the transfer of contract rights, the new 
producer is not a participant in the program and may not receive payment 
for conservation activities commenced prior to approval of the contract 
transfer.
    (g) NRCS may not approve a contract transfer and may terminate the 
contract in its entirety if NRCS determines that the loss of control of 
the land was voluntary, the new producer is not eligible or willing to 
assume responsibilities under the contract, or the purposes of the 
program cannot be met.
    (h) In the case of death, incompetency, or disappearance of any 
participant, NRCS may, as identified in the CSP contract--
    (i) Terminate the contract;
    (ii) Make any payments due under this part pursuant to guidance 
under applicable provisions of 7 CFR parts 707 and 1400 (including 
payment to successor(s)); or
    (iii) Take any further action that the Chief determines is fair and 
reasonable in light of all of the circumstances.

[84 FR 60891, Nov. 12, 2019, as amended at 85 FR 64003, Oct. 9, 2020]



Sec.1470.26  Contract renewal.

    (a) During the first half of the fifth year of the initial contract 
period, NRCS may allow a participant to apply and compete for the 
opportunity under Sec.1470.20 to renew the contract to receive 
payments for an additional 5-year period, subject to the availability of 
funds, if the participant meets criteria from paragraph (b) of this 
section.
    (b) To be considered for contract renewal, the participant must--
    (1) Be in compliance with the terms of their existing contract as 
determined by NRCS;
    (2) Add any newly acquired eligible land that is part of the 
agricultural operation that NRCS determines must be included in the 
renewal contract;
    (3) Agree to adopt and continue to integrate new or improved 
conservation activities across the entire agricultural operation, 
demonstrating continued improvement during the additional 5-year period, 
as determined by NRCS; and
    (4) By the end of the renewal contract period, agree to meet or 
exceed the stewardship threshold of at least two additional priority 
resource concerns on the agricultural operation; or to adopt or improve 
conservation activities, as determined by NRCS, to achieve higher levels 
of conservation performance with respect to not less than two existing 
priority resource concerns that are specified by the Chief in the 
initial contract.
    (c) NRCS will determine a participant ineligible for a new CSP 
contract on an agricultural operation for 2 years following expiration 
of their prior contract if the participant does not enter a renewal 
contract on the agricultural operation at the end of the prior contract 
period.

[84 FR 60891, Nov. 12, 2019, as amended at 85 FR 64003, Oct. 9, 2020]



Sec.1470.27  Contract violations and termination.

    (a) NRCS may terminate a contract:
    (1) Without the consent of the participant where NRCS determines 
that the participant--
    (i) Violated the contract; or
    (ii) Is unable to comply with the terms of the contract as the 
result of conditions beyond their control.
    (2) With the consent of the participant if NRCS determines that the 
termination is in the public interest. NRCS will not assess liquidated 
damages for contracts terminated under this basis.
    (b) When NRCS terminates a contract in accordance with paragraph (a) 
of this section, NRCS may allow a participant to retain payments already 
received based on--
    (1) The level of effort the participant has made to comply with the 
contract. NRCS may require a participant to provide only a partial 
refund of the payments received if a previously installed conservation 
activity has achieved the expected conservation

[[Page 945]]

performance improvement, is not adversely affected by any contract 
violation or the absence of other conservation activities that would 
have been installed under the contract, and has met the associated 
operation and maintenance requirement of the activity; or
    (2) Hardship situations where circumstances beyond the participant's 
control prevented the participant from complying with the contract. Any 
hardship affecting the participant's ability to comply with the contract 
must not have existed at the time the contract was executed by the 
participant. Participants may submit a written request to NRCS, along 
with additional supporting documentation, for NRCS to consider granting 
a waiver of any requested repayment and/or assessment of liquidated 
damages.
    (c) If NRCS determines that a participant is out of compliance with 
the contract terms or incorporated documents, NRCS will notify the 
participant to explain what the participant must do to regain compliance 
and the consequences for not correcting the violation. NRCS will give 
the participant reasonable time to complete all necessary corrective 
actions, not to exceed one year. NRCS may authorize additional time for 
the participant to complete the corrective actions if, during the 
initial period, the participant was unable to complete the corrective 
actions due to circumstances beyond their control. If a participant's 
contract continues in violation, NRCS may:
    (1) Terminate the contract in accordance with paragraph (e) of this 
section; or
    (2) Where NRCS determines the violation does not warrant 
termination, NRCS may require the participant to:
    (i) Refund all or a portion of the payments provided; or
    (ii) Agree to such adjustments to the contact terms as determined 
appropriate by NRCS.
    (d) Notwithstanding the provisions of paragraph (c) of this section, 
NRCS will terminate a contract, effective immediately, upon a 
determination by NRCS that the participant:
    (1) Has submitted false information or filed a false claim;
    (2) Engaged in any act, scheme, or device for which NRCS found the 
participant ineligible for payments as provided in Sec.1470.36; or
    (3) Incurred a contract violation that the participant cannot 
correct in a timeframe established by NRCS.
    (e) If NRCS terminates a contract, the participant will forfeit all 
rights to future payments under the contract, pay liquidated damages, 
and refund all or part of the payments received, plus interest, except 
as otherwise noted in paragraph (b) of this section.



Sec.1470.28  Grassland conservation initiative contracts.

    (a) The purpose of the grassland conservation initiative (GCI) is to 
assist producers in protecting grazing uses, conserving and improving 
soil, water, and wildlife resources, and achieving related conservation 
values by conserving eligible land through grassland conservation 
contracts.
    (b) The GCI is applicable on eligible cropland for which base acres 
have been maintained by the FSA under section 1112(d)(3) of the 
Agricultural Act of 2014 (7 U.S.C. 9012(d)(3)).
    (c) Producers with eligible land will have one-time election to 
enroll in the GCI during fiscal years 2019 through 2023. A producer may 
elect to enroll eligible acres in the GCI or under a general CSP 
contract. A producer with land eligible for the GCI may not have the 
same land enrolled under both a GCI and general CSP contract at the same 
time.
    (d) Participants enrolled in the GCI must agree to meet or exceed 
the stewardship threshold for at least one priority resource concern 
before the end of the contract.
    (e) A GCI plan shall:
    (1) Encompass all enrolled land;
    (2) Require adoption of conservation activities to address grassland 
resource concerns; and
    (3) If crops are grown, require adoption of conservation activities 
that achieve conservation stewardship levels analogous to the land being 
planted or maintained in grass.
    (f) The GCI contract will be for one 5-year term and will not be 
subject to renewal.

[[Page 946]]

    (g) GCI annual payments will be $18 per acre, not to exceed the 
acres enrolled in the GCI contract.
    (1) GCI contracts are not subject to the payment limitations or 
contract limits provided in Sec.1470.24(f) and (g).
    (2) GCI contracts are not eligible for supplemental payments as 
provided in Sec.1470.24(b).
    (h) The participant may request to terminate their GCI contract at 
any time and retain payments already received under the contract.



                    Subpart C_General Administration



Sec.1470.30  Fair treatment of tenants and sharecroppers.

    Participants must divide payments received under this part in the 
manner specified in the applicable contract. NRCS will ensure that 
tenants and sharecroppers who have an interest in acreage being enrolled 
receive equitable treatment, as determined by NRCS. NRCS may refuse to 
enter into a contract when joint applicants seeking enrollment disagree 
on an applicant's eligibility to participate in the contract as a 
tenant.



Sec.1470.31  Appeals.

    A participant may obtain administrative review of an adverse 
decision under this part in accordance with 7 CFR parts 11 and 614. 
Determinations in matters of general applicability, such as payment 
rates, payment limits, the designation of identified priority resource 
concerns, and eligible conservation activities are not subject to 
appeal.



Sec.1470.32  Compliance with regulatory measures.

    Participants will be responsible for obtaining the authorities, 
rights, easements, permits, or other approvals or legal compliance 
necessary for the implementation, operation, and maintenance associated 
with the conservation stewardship plan. Participants will be responsible 
for compliance with all laws and for all effects or actions resulting 
from the implementation of the contract.



Sec.1470.33  Access to agricultural operation.

    NRCS, or its authorized representative, will have the right to enter 
an agricultural operation to ascertain the accuracy of any 
representations, including natural resource information provided by an 
applicant to evaluate a contract application. Access will include the 
right to provide technical assistance, determine eligibility, assess 
natural resource conditions, inspect any work undertaken under the 
contract, and collect information necessary to evaluate the 
implementation of conservation activities in the contract. NRCS, or its 
authorized representative, will try to contact the participant prior to 
the exercise of the provision in this section.



Sec.1470.34  Equitable relief.

    (a) If a participant relied upon the advice or action of NRCS and 
did not know, or have reason to know, that the action or advice was 
improper or erroneous, the participant may be eligible for equitable 
relief under 7 CFR part 635. NRCS will not assume the financial or 
technical liability for any action by a participant that was taken based 
on the advice of a TSP. This liability will remain with the TSP.
    (b) If NRCS finds that a participant is in violation of a provision 
of the conservation stewardship contract or any incorporated document 
through failure to comply fully with that provision, the participant may 
be eligible for equitable relief under 7 CFR part 635.



Sec.1470.35  Offsets and assignments.

    (a) Any payment or portion thereof due to any participant under this 
part will be allowed without regard to any claim or lien in favor of any 
creditor, except agencies of the United States Government. The 
regulations governing offsets and withholdings found at part 3 of this 
title will be applicable to contract payments.
    (b) Any participant entitled to any payment may assign such payments 
in accordance with regulations governing assignment of payment found at 
7 CFR part 1404.

[84 FR 60891, Nov. 12, 2019, as amended at 85 FR 64003, Oct. 9, 2020]

[[Page 947]]



Sec.1470.36  Misrepresentation and scheme or device.

    (a) If NRCS determines that an applicant intentionally 
misrepresented any fact affecting a CSP determination, the application 
will be determined ineligible immediately.
    (b) A participant who is determined to have erroneously represented 
any fact affecting a program determination made in accordance with this 
part will not be entitled to contract payments and must refund to NRCS 
all payments, plus interest determined in accordance with 7 CFR part 
1403.
    (c) A participant will refund to NRCS all payments, plus interest 
determined in accordance with 7 CFR part 1403, received by such 
participant with respect to all CSP contracts if they are determined to 
have--
    (1) Adopted any scheme or device that tends to defeat the purpose of 
the program;
    (2) Made any fraudulent representation;
    (3) Adopted any scheme or device for the purpose of depriving any 
tenant or sharecropper of the payments to which such person would 
otherwise be entitled under the program; or
    (4) Misrepresented any fact affecting a program determination.
    (d) Participants determined to have committed actions identified in 
paragraph (c) of this section will have their interest in all CSP 
contracts terminated.



Sec.1470.37  Environmental credits for conservation improvements.

    (a) NRCS will not prohibit a participant under this part from 
participating in, and receiving compensation from, an environmental 
services market if one of the purposes of the market is the facilitation 
of additional conservation benefits that are consistent with CSP 
purposes, as determined by NRCS. CSP participation may create 
environmental benefits that qualify for environmental credits under an 
environmental credit-trading program. NRCS will not prohibit a 
participant under this part from participating in, or receiving 
compensation from, an environmental credit-trading program, and NRCS 
asserts no direct or indirect interest in these credits. However, in 
addition, any requirements or standards of an environmental market 
program in which a CSP participant simultaneously enrolls to receive 
environmental credits must be compatible with the purposes and 
requirements of the CSP contract and with this part. NRCS retains the 
authority to ensure that CSP purposes are met and that one of the 
purposes of the market is the facilitation of additional conservation 
benefits that are consistent with CSP purposes.
    (b) The participant must meet all operation and maintenance 
requirements for CSP-funded activities, consistent with Sec. Sec.
1470.21 and 1470.23. Where activities required under an environmental 
credit agreement may affect the land and conservation activities under a 
CSP contract, NRCS recommends that CSP participants request assistance 
with the development of a compatibility assessment prior to entering 
into any credit agreement. The CSP contract may be modified in 
accordance with policies outlined in Sec.1470.25 provided the 
modifications meet CSP purposes and is in compliance with this part.
    (c) CSP participants may not use CSP funds to implement conservation 
practices and activities that the participant is required to establish 
because of a court order.



PART 1471_PIMA AGRICULTURE COTTON TRUST FUND (AGRICULTURE PIMA TRUST)
AND AGRICULTURE WOOL APPAREL MANUFACTURERS TRUST FUND (AGRICULTURE
WOOL TRUST)--Table of Contents



                    Subpart A_Agriculture Pima Trust

Sec.
1471.1 Provisions common to this subpart.
1471.2 Pima cotton payments.
1471.3 Affidavit of producers of ring spun pima cotton yarn.
1471.4 Affidavit of manufacturers of pima cotton shirts.
1471.5 Affidavit of pima cotton trade associations.

                    Subpart B_Agriculture Wool Trust

1471.10 Provisions common to this subpart.
1471.11 Payments to manufacturers of certain worsted wool fabrics.

[[Page 948]]

1471.12 Refund of duties paid on imports of certain wool products.
1471.13 Monetization of the wool tariff rate quota.
1471.14 Wool yarn, wool fiber, and wool top duty compensation payment.

    Authority: Sections 501-506, Pub. L. 106-200, (114 Stat. 299-304); 
section 4002, Pub. L. 108-429 (7 U.S.C. 7101 note); section 1633, Pub. 
L. 109-280 (120 Stat. 1166); section 325, Pub. L. 110-343 (122 Stat. 
3875); sections 12314 and 12315, Pub. L. 113-79 (7 U.S.C. 2101 note and 
7101 note); and sections 12602 and 12603, Pub. L. 115-334 (7 U.S.C. 2101 
note).

    Source: 80 FR 12327, Mar. 9, 2015, unless otherwise noted.



                    Subpart A_Agriculture Pima Trust



Sec.1471.1  Provisions common to this subpart.

    (a) Agriculture Pima Trust--(1) Establishment. The Agriculture Pima 
Trust has been established to provide funding for payments under this 
part.
    (2) Purpose. The purpose of the Agriculture Pima Trust is to reduce 
the injury to domestic manufacturers resulting from tariffs on cotton 
fabric that are higher than tariffs on certain apparel articles made of 
cotton fabric.
    (3) Funding availability. $16,000,000 will be available annually for 
eligible payments authorized under subpart A of this part.
    (4) Definitions. As used in this subpart:
    Agriculture Pima Trust means the Pima Agriculture Cotton Trust Fund.
    CCC means the Commodity Credit Corporation.
    FAS means the Foreign Agricultural Service.
    Secretary means the Secretary of Agriculture.
    Agriculture Pima Trust means the Pima Agriculture Cotton Trust Fund.
    U.S. means the United States of America.
    (b) Other provisions common to subpart A of this part--(1) 
Affidavits. FAS shall annually, not later than February 15 of the year 
of the applicable payment, make affidavits available on the FAS Web 
site, which can be found at http://www.fas.usda.gov/. Affidavits must be 
submitted electronically to [email protected].
    (2) Filing deadline. Any person filing an affidavit under this part 
for a particular year must file the affidavit for such calendar year, 
during calendar years 2019 through 2023, not later than March 15 of the 
applicable calendar year.
    (3) Basic information. In addition to information required in 
Sec. Sec.1471.3, 1471.4, and 1471.5, as applicable, every person 
applying for a payment must provide the following information, 
applicable to the year for which a payment is sought:
    (i) The current company name, address, contact, phone number of the 
person;
    (ii) The name and address of each plant or location of the person 
during the calendar year immediately preceding the payment; and
    (iii) A W-9 providing the Federal tax identification number of the 
person (if the information required by Form W-9 has changed since the 
previous application).
    (4) Standard Form 1199A. Every person claiming a payment must 
provide Standard Form 1199A, a direct deposit sign-up form, to 
facilitate any transfer of funds (if the information required by Form 
1199A has changed since the previous application).
    (5) Affirmation. Every person applying for a payment must affirm in 
its affidavit that ``all information contained in the application is 
complete and correct and that the information does not contain a false 
claim, statement, or representation.''
    (6) Document retention. All persons receiving a payment under this 
part must maintain all pertinent documentation for 3 years after the 
year of receipt of the payment.
    (7) False statements. Persons providing false or fraudulent claims, 
or persons making materially false statements or representations in 
their affidavit, are subject to civil or criminal penalties pursuant to 
18 U.S.C. 1001.
    (8) Confidentiality. Specific business information that is marked 
``business confidential'' will be protected from disclosure to the full 
extent permitted by law.
    (9) Review of affidavits. Affidavits will be reviewed to determine 
whether they are complete and responsive to the content and form of 
affidavit requirements under this part.

[[Page 949]]

    (10) Finality of determinations by Secretary. A determination by the 
Secretary about a payment under this part shall be final and is not 
subject to appeal or protest.
    (11) Timing of payments. A payment for which a person is eligible 
under this part will be disbursed in each of calendar years 2015 through 
2018, not later than April 15 of the applicable year.
    (12) Sequester. Payments covered by this part shall be subject to 
sequester of payments, if required by law.

[80 FR 12327, Mar. 9, 2015, as amended at 81 FR 81659, Nov. 18, 2016; 85 
FR 6420, Feb. 5, 2020]



Sec.1471.2  Pima cotton payments.

    From available funds in the Agriculture Pima Trust, CCC will 
annually make payments for each of calendar years 2015 through 2023 as 
follows:
    (a) Twenty-five percent of the amounts in the Agriculture Pima Trust 
shall be paid to one or more nationally recognized associations 
established for the promotion of pima cotton for use in textile and 
apparel goods, as determined by the Secretary, during the calendar year 
immediately preceding the payment.
    (b) Twenty-five percent of the amounts in the Agriculture Pima Trust 
shall be paid to yarn spinners of pima cotton that produce ring spun 
cotton yarns in the U.S. during the calendar year immediately preceding 
the payment, to be allocated to each yarn spinner in an amount that 
bears the same ratio as
    (1) The yarn spinner's production of ring spun cotton yarns in the 
prior calendar year, measuring less than 83.33 decitex (exceeding 120 
metric number) from pima cotton in single and plied form during the 
prior calendar year, bears to
    (2) The production of the yarns described in paragraph (b)(1) of 
this section during the prior calendar year by all yarn spinners that 
qualify under this paragraph (b).
    (c) Fifty percent of the amounts in the Agriculture Pima Trust shall 
be paid to manufacturers that, during the calendar year immediately 
preceding the payment, certify, pursuant to the affidavit under Sec.
1471.4, they used imported pima cotton fabric during the prior calendar 
year to produce such shirts, to be allocated to each manufacturer in an 
amount that bears the same ratio as
    (1) The dollar value (excluding duty, shipping, and insurance) of 
imported woven pima cotton shirting fabric of 80s or higher count and 2-
ply in warp used by the manufacturer during calendar year 2013 to 
produce men's and boys' pima cotton shirts, bears to
    (2) The dollar value (excluding duty, shipping, and insurance) of 
the fabric described in paragraph (c)(1) of this section used to 
manufacture men's and boy's pima cotton shirts in 2013 by all 
manufacturers that qualify under this paragraph (c).
    (3) A yarn spinner will not receive an amount under paragraph (b)(1) 
of this section that exceeds the cost of pima cotton that was:
    (i) Purchased during the prior calendar year; and
    (ii) Used in spinning any cotton yarns.
    (4) The Secretary will reallocate any amounts reduced by reason of 
the limitation under paragraph (b) of this section to spinners using the 
ratio described in paragraph (b) of this section, disregarding 
production of any spinner subject to that limitation.

[80 FR 12327, Mar. 9, 2015, as amended at 81 FR 81659, Nov. 18, 2016; 85 
FR 6420, Feb. 5, 2020]



Sec.1471.3  Affidavit of producers of ring spun pima cotton yarn.

    In addition to reporting and information requirements in Sec.
1471.1, the affidavit of a yarn spinner that is a producer of ring spun 
cotton yarn must be an affidavit provided annually by an officer of the 
yarn spinner that produces ring spun yarns affirming that:
    (a) During the calendar year immediately preceding the payment and 
during the prior calendar year, the yarn spinner used pima cotton to 
produce ring spun cotton yarns in the U.S. measuring less than 83.33 
decitex (exceeding 120 metric number), in single and plied form;
    (b) In the prior calendar year, the yarn spinner actually produced 
the quantity, measured in pounds, of ring spun cotton yarns measuring 
less than

[[Page 950]]

83.33 decitex (exceeding 120 metric number), in single and plied form; 
and
    (c) The yarn spinner continues to maintain supporting documentation 
about such production during the prior calendar year which shows the 
actual quantity of such yarns produced, and evidencing the yarns as ring 
spun pima cotton yarns, measuring less than 83.33 decitex (exceeding 120 
metric number), in single and plied form.
    (d) The dollar amount of pima cotton purchased during the prior 
calendar year that was used in spinning any cotton yarns, and for which 
the producer maintains supporting documentation.

[80 FR 12327, Mar. 9, 2015, as amended at 85 FR 6420, Feb. 5, 2020]



Sec.1471.4  Affidavit of manufacturers of pima cotton shirts.

    (a) In general. In addition to applicable information requirements 
in Sec.1471.1, an affidavit of a manufacturer that is a producer of 
men's and boys' pima cotton shirts must be an affidavit provided 
annually by an officer of the manufacturer which affirms the following 
information
    (1) During the calendar year immediately preceding the payment, the 
manufacturer used imported pima cotton fabric to cut and sew men's and 
boys' pima cotton shirts in the U.S.;
    (2) During the prior calendar year, the dollar value of imported 
woven pima cotton shirting fabric of 80s or higher count and 2-ply in 
warp purchased and used by the manufacturer to cut and sew men's and 
boys' woven pima cotton shirts in the U.S.;
    (3) The manufacturer continues to maintain invoices and other 
supporting documentation (such as price lists and other technical 
descriptions of the fabric qualities) showing the dollar value of such 
fabric purchased, the date of purchase, and evidencing the fabric as 
woven pima cotton fabric of 80s or higher count and 2-ply in warp; and
    (4) The imported pima cotton fabric purchased in the calendar year 
immediately preceding the payment was suitable for use in the 
manufacturing of men's and boys' cotton shirts.
    (b) Date of purchase. For purposes of the affidavit under paragraph 
(a) of this section, the date of purchase shall be the invoice date, and 
the dollar value shall be determined excluding duty, shipping, and 
insurance.

[80 FR 12327, Mar. 9, 2015, as amended at 85 FR 6420, Feb. 5, 2020]



Sec.1471.5  Affidavit of pima cotton trade associations.

    In addition to applicable information requirements in Sec.1471.1, 
trade associations filing a claim for a payment must electronically 
provide a statement which states that during the calendar year 
immediately preceding the payment they were, as determined by the 
Secretary, a domestic nationally recognized association established and 
operating for the promotion of pima cotton for domestic use in textile 
and apparel goods.

[81 FR 81659, Nov. 18, 2016]



                    Subpart B_Agriculture Wool Trust



Sec.1471.10  Provisions common to this subpart.

    (a) Agriculture wool trust--(1) Establishment. The Agriculture Wool 
Trust has been established to provide funding for payments under this 
part.
    (2) Purpose. The purpose of the Agriculture Wool Trust is to reduce 
the injury to domestic manufacturers resulting from tariffs on wool 
fabric that are higher than tariffs on certain apparel articles made of 
wool fabric.
    (3) Funding availability. Not more than $30,000,000 will be 
available annually for payments authorized under this part.
    (4) Definitions. As used in this subpart:
    Agriculture Wool Trust means the Agriculture Wool Apparel 
Manufacturers Trust Fund.
    U.S. means the United States of America.
    CCC means the Commodity Credit Corporation.
    FAS means the Foreign Agricultural Service.
    HTS means the Harmonized Tariff Schedule of the United States.
    Secretary means the Secretary of Agriculture.
    TRQ means Tariff Rate Quota.
    (b) Provisions common to this part--(1) Affidavits. FAS shall 
annually, not later than February 15 of the year of

[[Page 951]]

the applicable payment, make affidavits available on the FAS Web site, 
which can be found at http://www.fas.usda.gov/. Affidavits must be 
submitted electronically to: [email protected].
    (2) Filing deadline. Any person filing an affidavit under this part 
for a particular year must file the affidavit for such calendar year, 
during calendar years 2019 through 2023, not later than March 1 of such 
year.
    (3) Required information. In addition to information required in 
Sec. Sec.1471.11, 1471.13, and 1471.14, as applicable, every person 
applying for a payment under this part must provide the following 
information applicable to the year for which a payment is sought:
    (i) The current company name, address, contact, phone number of the 
person;
    (ii) The name and address of each plant or location of the person in 
the year immediately preceding the payment; and
    (iii) A W-9 providing the Federal tax identification number of the 
person (if the information required by Form W-9 has changed since the 
previous application).
    (4) Every person claiming a payment must provide Standard Form 
1199A, a direct deposit sign-up form, to facilitate any transfer of 
funds (if the information required by Form 1199A has changed since the 
previous application).
    (5) Affirmation. A person filing an affidavit under this part must 
affirm that ``all information contained in the application is complete 
and correct and that the information does not contain a false claim, 
statement, or representation.''
    (6) Document retention. All persons receiving a payment under this 
part must maintain all pertinent documentation for three years after the 
year of receipt of the payment.
    (7) False statements. Persons providing false or fraudulent claims 
or making materially false statements or representations are subject to 
civil or criminal penalties pursuant to 18 U.S.C. 1001.
    (8) Confidential information. Specific business information provided 
in affidavits that is marked ``business confidential'' will be protected 
from disclosure to the full extent permitted by law.
    (9) Review of affidavits. Affidavits will be reviewed to determine 
whether they are complete and responsive to the content and form of 
affidavit requirements in this part.
    (10) Finality of determination by the Secretary. A determination by 
the Secretary about a payment under this part shall be final and is not 
subject to appeal or protest.
    (11) Timing of payments. A payment for which a person eligible under 
this part will be disbursed in each of calendar years 2015 through 2019 
not later than April 15 of the applicable year.
    (12) Proration and sequester. Payments covered by this part will be 
subject to proration in the event that insufficient funds exist in the 
Agriculture Wool Trust during the year of the payment, and will be 
subject to sequester, if required by law.
    (13) HTS subheadings. All references to subheadings of the HTS in 
this part are to the subheadings as described in the HTS in 2014.

[80 FR 12327, Mar. 9, 2015, as amended at 81 FR 81659, Nov. 18, 2016; 85 
FR 6421, Feb. 5, 2020]



Sec.1471.11  Payments to manufacturers of certain worsted wool fabrics.

    (a) Definitions. In this section the following definitions apply:
    Eligible person. The term ``eligible person'' means a manufacturer 
in the U.S. of qualifying worsted wool fabric during the calendar year 
immediately preceding the payment and during each of calendar years 
1999, 2000, and 2001.
    Qualifying worsted wool fabric. The term ``qualifying worsted wool 
fabric'' means a worsted wool fabric containing at least 85% by weight 
worsted wool of the kind described in subheading 9902.51.11 or 
9902.51.15 of the 2014 HTS that, during the calendar year immediately 
preceding the payment and during each of calendar years 1999, 2000, and 
2001, was manufactured by an eligible person in the United States.
    (b) Distribution of funds. From amounts in the Agriculture Wool 
Trust, CCC will annually make payments for each of calendar years 2015 
through 2019 to eligible persons that

[[Page 952]]

manufactured qualifying worsted wool fabric as provided in paragraphs 
(b)(1) or (2) of this section.
    (1) Payments for production under subheading 9902.51.11 of the HTS--
(i) In general. Eligible persons that manufactured qualifying worsted 
wool fabric during calendar years 1999, 2000, and 2001 that is of the 
kind described in subheading 9902.51.11 of the HTS are eligible for a 
payment as provided in paragraph (b)(1)(ii) of this section.
    (ii) Payment amounts. A total of $2,666,000 will be allocated 
annually among eligible persons covered by this paragraph on the basis 
of the percentage of each eligible person's total production (actual 
production, not estimates) of qualifying worsted wool fabric described 
in paragraph (b)(1)(i) of this section for each of the calendar years 
1999, 2000, and 2001 in relation to the total production of such fabric 
by all eligible persons who qualify for payments under this paragraph 
for each of the calendar years 1999, 2000, and 2001.
    (2) Payments for production under subheading 9902.51.15--(i) In 
general. Eligible persons that manufactured qualifying worsted wool 
fabric during calendar years 1999, 2000, and 2001 that conforms in 
composition to subheading 9902.51.15 of the HTS are eligible for a 
payment as provided in paragraph (b)(2)(ii) of this section.
    (ii) Payment amounts. A total of $2,666,000 will be allocated 
annually among eligible persons covered by this paragraph on the basis 
of the percentage of each eligible person's total production (actual 
production, not estimates) of qualifying worsted wool fabric described 
in paragraph (b)(2)(i) of this section for each of the calendar years 
1999, 2000, and 2001 in relation to the total production of such fabric 
by all eligible persons who qualify for payments under this paragraph 
for each of the calendar years 1999, 2000, and 2001.
    (c) Annual affidavit--(1) In general. An eligible person applying 
for a payment under this section shall comply with all applicable 
reporting requirements of this section and of Sec.1471.10.
    (2) Specific business information. An eligible person shall, for the 
calendar year immediately preceding the payment and for each of calendar 
years 1999, 2000, and 2001, annually report the actual dollar value and 
the actual quantity (linear yards) of qualifying worsted wool fabric 
that was manufactured.
    (3) Manufacturing of wool. When reporting the annual dollar value 
and quantity of imports of qualifying worsted wool fabric, and the 
annual dollar value and quantity of the qualifying wool fabric that was 
manufactured, an eligible person may either have manufactured the 
qualifying worsted wool on its own behalf or had another person 
manufacture the qualifying worsted wool fabric, provided the eligible 
person owned the qualifying worsted wool fabric at the time of 
manufacture.

[80 FR 12327, Mar. 9, 2015, as amended at 81 FR 81659, Nov. 18, 2016]



Sec.1471.12  Refund of duties paid on imports of certain wool products.

    (a) Eligible wool. Eligible wool under the Duty Refund program means 
imported wool yarn of the kind described in section 505 of the Trade and 
Development Act of 2000 Public Law 106-200 (May 18, 2000).
    (b) Payments--(1) Eligibility. Persons eligible for a Duty Refund 
payment are manufacturers who, in the year immediately preceding the 
payment, were actively engaged in manufacturing wool (as determined by 
FAS), and in calendar years 2000, 2001, and 2002--
    (i) Imported eligible wool directly or indirectly; and
    (ii) Used the imported wool to make men's or boy's suits; or
    (iii) Further manufactured the eligible imported wool.
    (2) Payment amount. Persons eligible for a Duty Refund payment shall 
be paid the same amounts that were made to the persons by CBP through FY 
2015.

[81 FR 81659, Nov. 18, 2016]



Sec.1471.13  Monetization of the wool tariff rate quota.

    (a) Definitions. In this section the following definitions apply:
    (1) Lower duty rate. The term ``lower duty rate'' means the duty 
rate as codified in the 2014 HTS that would have been applicable to 
qualifying worsted wool fabric of the kind described in subheadings 
9902.51.11, 9902.51.15, and 9902.51.16 of the 2014 HTS prior to the

[[Page 953]]

expiration of the Wool TRQ on December 31, 2014.
    (2) Eligible person--
    (i) In general. The term ``eligible person'' means a manufacturer 
(or a successor-in-interest to the manufacturer) in the U.S. or in a 
Foreign-Trade Zone authorized under the Foreign-Trade Zones Act of 1934 
(19 U.S.C. 81a-81u) during the calendar year immediately preceding the 
payment that:
    (A) Imported qualifying worsted wool fabric; and
    (B) Used the imported qualifying worsted wool fabric directly or had 
another person use the qualifying worsted wool fabric providing the 
eligible person owned the qualifying worsted wool fabric at the time it 
was used:
    (1) In the case of wool of the kind described in subheadings 
9902.51.11 or9902.51.15 of the 2014 HTS, to produce worsted wool suits, 
suit-type jackets and trousers for men and boys; or
    (2) In the case of wool fabric of the kind described in subheading 
9902.51.16 of the 2014 HTS, used such wool fabric in manufacturing.
    (ii) Successor-in-interest. If a person satisfies the criteria for 
becoming a successor-in-interest to an eligible person under paragraph 
(a)(4) of this section, the person shall succeed to the status of the 
eligible person and become eligible for the payment.
    (3) Qualifying worsted wool fabric. The term ``qualifying worsted 
wool fabric'' means imported worsted wool fabric containing at least 85% 
by weight worsted wool of the kind described in subheadings 9902.51.11, 
9902.51.15, or 9902.51.16 of the 2014 HTS that, during the calendar year 
immediately preceding the payment was:
    (i) Imported by an eligible person in the U.S.; and
    (ii) Used by the eligible person in the U.S.
    (A) In the case of wool fabric of the kind described in subheadings 
9902.51.11 or 9902.51.15 of the HTS, to produce worsted wool suits, 
suit-type jackets and trousers for men and boys; or
    (B) In the case of wool fabric of the kind described in subheading 
9902.51.16 of the HTS, was used in manufacturing.
    (4) Successor-in-interest. The term ``successor-in-interest'' means 
a person that is eligible to claim a payment under this section as if 
the person were the original eligible person, without regard to section 
3727, title 31, United States Code because of--
    (i) An assignment of the claim;
    (ii) An assignment of the original eligible person's right to 
manufacture under the same trade name; or
    (iii) A reorganization of the eligible person.
    (b) Purposes. The purposes of a TRQ monetization payment are to 
provide an eligible person--
    (1) Compensation for termination of the TRQ for qualifying worsted 
wool fabric; and
    (2) A payment that is equivalent to the amount the eligible person 
would have saved during the calendar year for imports of qualifying 
worsted wool fabric if the lower duty rate under the applicable 2014 HTS 
subheading(s) of a qualifying worsted wool fabric were in effect.
    (c) Calculation of monetized TRQ payment. A payment will be 
established by calculating, as provided in paragraphs (c)(1) through (4) 
of this section, the savings that would have been realized by the 
eligible person for imports of qualifying worsted wool fabric of the 
kind described in one of the three subheadings 9902.51.11, 9902.51.15, 
or 9902.51.16 of the 2014 HTS (as applicable), had the lower duty rate 
been in effect.
    (1) Payment formula. Except as provided in paragraph (c)(2) of this 
section, a payment shall be calculated by
    (i) Establishing the reported dollar value of imported worsted wool 
fabric, for each of the 2014 HTS subheadings of worsted wool fabric, 
during the calendar year immediately preceding the payment;
    (ii) Subtracting the duty rate (converted to numeric value) for each 
applicable 2014 HTS subheading of worsted wool fabric that would have 
been paid in calendar year 2014 from the duty rate (converted to numeric 
value) that was actually paid in the calendar year immediately preceding 
the payment;
    (iii) For each applicable 2014 HTS subheading of worsted wool 
fabric, multiplying the numeric values described in paragraphs (c)(1)(i) 
and (ii) of this section; and

[[Page 954]]

    (iv) Adding each product obtained in paragraph (c)(1)(iii) of this 
section.
    (2) Exception for 2015 payment. In the case of the payment to be 
made in 2015, for purposes of the calculation component described in 
paragraph (c)(1)(ii) of this section the duty rate applicable in 2015 
shall be deemed the duty rate actually paid in 2014. The reason for this 
exception for the 2015 payment is that 2014 is both the last year in 
which the lower duty rate was still in effect, and is also the calendar 
year immediately preceding the payment (the payment is in 2015). As a 
result, for the 2015 payment, a proxy is necessary for the higher duty 
rate in the calendar year immediately preceding the payment.
    (3) 2015 payment. A payment in 2015 shall be calculated by
    (i) Establishing the reported dollar value of imported worsted wool 
fabric during the calendar year immediately preceding the payment under 
the 2014 HTS subheading of worsted wool fabric;
    (ii) Subtracting the lower duty rate (converted to numeric value) 
that would have been applicable to the 2014 HTS subheading of worsted 
wool fabric from the duty rate applicable to that HTS subheading in 2015 
(converted to numeric value);
    (iii) Multiplying the numeric values described in paragraphs 
(c)(3)(i) and (ii) of this section); and(iv) Adding the product obtained 
in paragraph (c)(3)(iii) of this section to the product obtained for 
every applicable subheading of worsted wool fabric.
    (4) 2016-2019 payments. A payment in each of years 2016-2019 shall 
be calculated by
    (i) Establishing the reported dollar value of imported worsted wool 
fabric during the calendar year immediately preceding the payment under 
the 2014 HTS subheading of worsted wool fabric;
    (ii) Subtracting the lower duty rate (converted to numeric value) 
that would have been applicable to the 2014 HTS subheading of worsted 
wool fabric from the duty rate applicable to the calendar year preceding 
the payment (converted to numeric value);
    (iii) Multiplying the numeric values described in paragraphs 
(c)(4)(i) and (ii) of this section; and
    (iv) Adding the product obtained in paragraph (c)(3)(iii) of this 
section to the product obtained for every applicable subheading of 
worsted wool fabric.
    (d) Annual affidavit--(1) In general. An eligible person applying 
for a payment under this section shall comply with all applicable 
reporting requirements of this section and of Sec.1471.10.
    (2) Specific business information--(i) Imports and production.--An 
eligible person shall, for the entire calendar year immediately 
preceding the payment, report the actual dollar value and the actual 
quantity of
    (A) Imports into the U.S. of qualifying worsted wool fabric (square 
meters); and
    (B) The qualifying worsted wool fabric used by the eligible person 
in the U.S.
    (1) In the case of wool of the kind described in subheadings 
9902.51.11 or 9902.51.15 of the 2014 HTS, to produce worsted wool suits, 
suit-type jackets and trousers for men and boys (units); or
    (2) In the case of wool of the kind described in subheading 
9902.51.16 of the 2014 HTS, such wool that was manufactured (square 
meters).
    (ii) Direct and indirect importers--(A) In general. Eligible persons 
that import qualifying worsted wool fabric through a third party broker 
are considered to be indirect importers of the qualifying worsted wool 
fabric. Persons that directly import qualifying worsted wool fabric and 
pay the import duty for such wool are considered to be direct importers 
of the qualifying worsted wool fabric.
    (B) Reported dollar value. Eligible persons must state in their 
annual affidavit whether, in the calendar year immediately preceding the 
payment, they were direct or indirect importers, and the dollar value of 
the imported qualifying worsted wool fabric. The reported dollar value 
of such imports by indirect importers will be subject to a 10% 
reduction.
    (C) Affirmation. An eligible person shall annually affirm in the 
affidavit that, in the calendar year immediately preceding the payment, 
in the U.S., the eligible person:
    (1) Directly or indirectly imported the qualifying worsted wool 
fabric into the U.S.;

[[Page 955]]

    (2) Used that fabric to produce in the U.S. worsted wool suits, suit 
jackets, and trousers for men and boys (or, in the case of qualifying 
worsted wool fabric of the kind described in the 2014 HTS subheading 
9902.51.16, for manufactured in the U.S.); and
    (3) Imported qualifying worsted wool fabric from the country of 
origin identified in the affidavit.
    (iii) Import documentation--(A) Direct imports. Applicable to the 
calendar year immediately preceding payment, an eligible person that 
directly imported qualifying worsted wool fabric is required to submit 
to FAS as part of the affidavit package scanned copies of CBP Form 7501 
``Entry Summary'' for the relevant calculations made in the affidavit.
    (B) Indirect imports. Applicable to the calendar year immediately 
preceding payment, an eligible person that indirectly imported 
qualifying worsted wool fabric is required to submit to FAS as part of 
the affidavit package invoices from third party brokers as required in 
the affidavit.
    (3) Production of garments or manufacturing of qualifying worsted 
wool fabric--(i) Production of garments--(A) In general. When reporting 
the annual dollar value and quantity of imported qualifying worsted wool 
fabric, an eligible person may either have cut and sewn the wool on its 
own behalf or had another person cut and sew the wool on behalf of the 
eligible person, provided the eligible person owned the wool at the time 
it was cut and sewn.
    (B) Applicability. This paragraph applies to wool of the kind 
described in subheadings 9902.51.11 and 9902.51.15 of the 2014 HTS.
    (ii) Manufacturing of qualifying worsted wool fabric-- (A) In 
general. When reporting the annual dollar value and quantity of imported 
qualifying worsted wool fabric, an eligible person may either have 
manufactured the wool on its own behalf or had another person 
manufacture the wool on behalf of the eligible person, provided the 
eligible person owned the wool at the time of manufacture.
    (B) Applicability. This paragraph applies to wool of the kind 
described in subheading 9902.51.16 of the 2014 HTS.

[80 FR 12327, Mar. 9, 2015, as amended at 81 FR 81660, Nov. 18, 2016]



Sec.1471.14  Wool yarn, wool fiber, and wool top duty compensation
payment.

    (a) Definitions. In this section the following definitions apply:
    (1) Duty. The term ``duty'' means the duty rate codified in the HTS 
for a year that is applicable to qualifying wool of the kind described 
in subheadings 9902.51.13 and 9902.51.14 of the 2014 HTS.
    (2) Eligible person--(i) In general. The term ``eligible person'' 
means a manufacturer (or a successor-in-interest to the manufacturer) in 
the U.S. or in a Foreign-Trade Zone authorized under the Foreign-Trade 
Zones Act of 1934 (19 U.S.C. 81a-81u) during the calendar year 
immediately preceding the payment that
    (A) Imported qualifying wool; and
    (B) Manufactured the qualifying wool directly or had another person 
manufacture the qualifying wool providing the eligible person owned the 
qualifying wool at the time it was manufactured.
    (ii) Successor-in-interest. If a person satisfies the criteria for 
becoming a successor-in-interest to an eligible person under paragraph 
(a)(4) of this section, the person shall succeed to the status of the 
eligible person and become eligible for the payment.
    (3) Qualifying wool. The term ``qualifying wool'' means imported 
wool yarn of the kind described in subheading 9902.51.13 of the 2014 
HTS, and imported wool fiber or wool top of the kind described in 
subheading 9902.51.14 of the 2014 HTS, that, during the calendar year 
immediately preceding the payment was
    (i) Imported, directly or indirectly, by an eligible person (or a 
successor-in-interest) into the U.S.; and
    (ii) Manufactured by the eligible person in the U.S.
    (4) Successor-in-interest. The term ``successor-in-interest'' means 
a person that is eligible to claim a payment under this section as if 
the person were the original eligible manufacturer,

[[Page 956]]

without regard to section 3727, title 31, U.S. Code because of
    (i) An assignment of the claim;
    (ii) An assignment of the eligible person's right to manufacture 
under the same trade name; or
    (iii) A reorganization of the eligible person.
    (b) Import duties. The duties on imports of qualifying wool were 
suspended in their entirety in section 503 of the Trade and Development 
Act of 2000. The suspension of the duties for both HTS subheadings of 
qualifying wool was extended through December 31, 2014. These duties 
were reinstated as of January 1, 2015.
    (c) Duty compensation payment--(1) Calculation of payment. For each 
of the 2015-2019 calendar years the duty compensation payment of an 
eligible person will be established by calculating, as provided in 
paragraphs (c)(2) through (5) of this section, the savings that would 
have been realized by the eligible person for imports of qualifying wool 
had the duty suspension been in effect.
    (2) Savings for each subheading. The savings realized by an eligible 
person for imports of qualifying wool under a HTS subheading covered by 
this section shall be obtained by multiplying
    (i) The reported dollar value of imports under a HTS subheading 
during the calendar year immediately preceding the payment; and
    (ii) Except as provided in paragraph (c)(5) of this section, the 
duty applicable to that HTS subheading in the calendar year preceding 
the payment, converted to numeric value.
    (3) Sum of subheading savings. The product obtained in paragraph 
(c)(2) of this section for imports of qualifying wool previously 
described under each HTS subheading shall be added to the savings 
obtained for imports under the other HTS subheading (as applicable).
    (4) Duty compensation payment amount. The sum obtained in paragraph 
(c)(3) of this section shall equal the annual duty compensation payment 
for the eligible person for the applicable calendar year.
    (5) Exception for 2015 payment. In the case of the 2015 payment, for 
purposes of the calculation component described in paragraph (c)(2) of 
this section the duty rate applicable in 2015 shall be deemed the duty 
rate actually paid in 2014. The reason for this exception for the 2015 
payment is that 2014 is both the last year in which the duty suspension 
was still in effect, and is also the calendar year immediately preceding 
the payment (the payment is in 2015). As a result, for the 2015 payment, 
a proxy is necessary for the higher duty rate in the calendar year 
immediately preceding the payment.
    (d) Annual affidavit required--(1) In general. An eligible person 
applying for a payment under this section shall comply with all 
applicable reporting requirements described in this section and Sec.
1471.10.
    (2) Specific business information--(i) Imports and production. An 
eligible person shall, for the calendar year immediately preceding the 
payment, report the actual dollar value and the actual quantity of:
    (A) Imports into the U.S. of qualifying wool by the eligible person; 
and
    (B) Such qualifying wool that was manufactured in the U.S. by the 
eligible person.
    (ii) Direct and indirect importers--(A) In general. Eligible persons 
that import qualifying wool through a third party broker are considered 
to be indirect importers of the qualifying wool. Persons that directly 
import qualifying wool and pay the import duty for such wool are 
considered to be direct importers of the qualifying wool.
    (B) Reported dollar value. Eligible persons must state in their 
annual affidavit whether, in the calendar year immediately preceding the 
payment, they were direct or indirect importers, and the dollar value of 
the imported qualifying wool. The reported dollar value of imports by 
indirect importers will be subject to a 10% reduction.
    (C) Affirmation. An eligible person shall annually affirm in the 
affidavit that, in the calendar year immediately preceding the payment, 
the eligible person
    (1) Directly or indirectly imported the qualifying wool into the 
U.S.;
    (2) Manufactured the qualifying wool in the U.S.; and
    (3) Imported qualifying wool from the country of origin identified 
in the affidavit.

[[Page 957]]

    (iii) Import documentation--(A) Direct imports. Applicable to the 
calendar year immediately preceding the payment, an eligible person that 
directly imported qualifying wool is required to submit to FAS as part 
of the affidavit package scanned copies of CBP Form 7501 ``Entry 
Summary'' for the relevant calculations made in the affidavit.
    (B) Indirect imports. Applicable to the calendar year immediately 
preceding the payment, an eligible person that indirectly imported 
qualifying wool is required to submit to FAS as part of the affidavit 
package invoices from third party brokers for the relevant calculations 
made in the affidavit.
    (3) Manufacture of qualifying wool. When reporting the annual dollar 
value and quantity of imported qualifying wool, and the annual dollar 
value and quantity of the qualifying wool that was manufactured, an 
eligible person may either have manufactured the qualifying wool on its 
own behalf or had another person manufacture the qualifying wool, 
provided the eligible person owned the qualifying wool at the time of 
manufacture.

[80 FR 12327, Mar. 9, 2015, as amended at 81 FR 81660, Nov. 18, 2016]

[[Page 959]]



                      SUBCHAPTER C_EXPORT PROGRAMS





PART 1484_PROGRAMS TO HELP DEVELOP FOREIGN MARKETS FOR AGRICULTURAL
COMMODITIES--Table of Contents



Sec.

                      Subpart A_General Information

1484.10 General purpose and scope.
1484.11 Definitions.
1484.12 Participation eligibility.

              Subpart B_Application and Funding Allocation

1484.20 Application process.
1484.21 Application review and formation of agreements.
1484.22 Allocation factors.

                      Subpart C_Program Operations

1484.30 Approval decision.
1484.31 Signature cards.
1484.32 Employment practices.
1484.33 Financial management.
1484.34 Ethical conduct.
1484.35 Contracting procedures.
1484.36 Property.
1484.37 Federal Travel Regulations.
1484.38 Program income.
1484.39 Changes to activities and funding.

                Subpart D_Contribution and Reimbursements

1484.50 Contribution rules.
1484.51 Ineligible contribution.
1484.52 Reimbursement rules.
1484.53 Expenditures not reimbursed under the Cooperator program.
1484.54 Reimbursement procedures.
1484.55 Advances.

             Subpart E_Reporting, Evaluation, and Compliance

1484.70 Reports.
1484.71 Disclosure of program information.
1484.72 Evaluation.
1484.73 Failure to make required contribution.
1484.74 Compliance reviews and notices.
1484.75 Cooperator response to compliance report.
1484.76 Cooperator appeals of CCC determinations.
1484.77 Submissions.
1484.78 Amendments.
1484.79 Subrecipients.
1484.80 Audit requirements.
1484.81 Suspension and termination of agreements.
1484.82 Noncompliance with an agreement.

    Authority: 7 U.S.C. 5623, 5662-5663.

    Source: 85 FR 1084, Jan. 9, 2020, unless otherwise noted.



                      Subpart A_General Information



Sec.1484.10  General purpose and scope.

    (a) This part sets forth the general terms and conditions governing 
the Commodity Credit Corporation's (CCC) operation of the Foreign Market 
Development (FMD) Cooperator program.
    (b)(1) The Office of Management and Budget (OMB) issued guidance on 
``Uniform Administrative Requirements, Cost Principles, and Audit 
Requirements for Federal Awards'' in 2 CFR part 200. In 2 CFR 400.1, the 
U.S. Department of Agriculture (USDA) adopted OMB's guidance in subparts 
A through F of 2 CFR part 200, as supplemented by 2 CFR part 400, as 
USDA policies and procedures for uniform administrative requirements, 
cost principles, and audit requirements for Federal awards.
    (2) The OMB guidance at 2 CFR part 200, as supplemented by 2 CFR 
part 400 and this subpart, applies to the Cooperator program.
    (3) In addition to the provisions of this part, other regulations 
that are generally applicable to grants and cooperative agreements of 
USDA, including the applicable regulations set forth in 2 CFR chapters 
I, II, and IV, also apply to the Cooperator program, to the extent that 
these regulations do not directly conflict with the provisions of this 
part. The provisions of the CCC Charter Act (15 U.S.C. 714 et seq.) and 
any other statutory or regulatory provisions that are generally 
applicable to CCC also apply to the Cooperator program.
    (c) Under the Cooperator program, CCC enters into agreements with 
eligible nonprofit U.S. trade organizations to share the costs of 
certain overseas marketing and promotion activities that are intended to 
create, maintain,

[[Page 960]]

or expand foreign markets for U.S. agricultural commodities. When 
considering eligible nonprofit U.S. trade organizations, CCC generally 
gives priority to organizations that are nationwide in membership and 
scope and have the broadest producer representation and affiliated 
industry participation of the commodity being promoted. Agreements 
involve the promotion of agricultural commodities on a generic basis. 
CCC does not provide brand promotion assistance to Cooperators under 
this program. Agreements may not involve activities targeted directly 
toward consumers purchasing as individuals. Activities must contribute 
to the creation, maintenance, or growth of demand for U.S. agricultural 
commodities and must generally address long-term foreign import 
constraints and export growth opportunities by focusing on matters such 
as reducing infrastructural or historical market impediments, improving 
processing capabilities, modifying codes and standards, and identifying 
new markets or new applications or uses for the agricultural commodity 
in the foreign market.
    (d) The Cooperator program generally operates on a reimbursement 
basis.
    (e) CCC policy is to ensure that benefits generated by Cooperator 
agreements are broadly available throughout the relevant agricultural 
sector and no one entity gains an undue advantage or sole benefit from 
program activities. CCC also endeavors to enter into Cooperator 
agreements covering a broad array of agricultural commodity sectors. The 
Cooperator program is administered by the Foreign Agricultural Service 
(FAS) on behalf of CCC.
    (f) The paperwork and recordkeeping requirements imposed by this 
part have been approved by OMB under the Paperwork Reduction Act of 
1980. OMB has assigned control number 0551-0026 for this information 
collection.



Sec.1484.11  Definitions.

    For purposes of this part the following definitions apply:
    Activity means a specific foreign market development effort 
undertaken by a Cooperator to address a constraint or opportunity.
    Administrative expenses or costs means expenses or costs of 
administering, directing, and controlling an organization that is a 
Cooperator. Generally, this would include expenses or costs such as 
those related to:
    (1) Maintaining a physical office (including, but not limited to: 
Rent, office equipment, office supplies, office d[eacute]cor, office 
furniture, computer hardware and software, maintenance, extermination, 
parking, and business cards);
    (2) Personnel (including, but not limited to: Salaries, benefits, 
payroll taxes, individual insurance, and training);
    (3) Communications (including, but not limited to: Phone expenses, 
internet, mobile phones, personal digital assistants, email, mobile 
email devices, postage, courier services, television, radio, and walkie 
talkies);
    (4) Management of an organization or unit of an organization 
(including, but not limited to: Planning, supervision, supervisory 
travel, teambuilding, recruiting, and hiring);
    (5) Utilities (including, but not limited to: Sewer, water, and 
energy); and
    (6) Professional services (including, but not limited to: Accounting 
expenses, financial services, and investigatory services).
    Affiliate means any partnership, association, company, corporation, 
trust, or any other such party in which the Cooperator has an 
investment, other than a mutual fund.
    Agreement means a document entered into between CCC and a Cooperator 
setting forth the terms and conditions of approved activities under the 
Cooperator program, including any subsequent amendments to such 
agreement.
    Approval letter means a document by which CCC informs an applicant 
that its FMD application for a program year has been approved for 
funding. This letter may also approve specific activities and contain 
terms and conditions in addition to the agreement. This letter requires 
a countersignature by the Cooperator before it becomes effective.
    Attach[eacute]/Counselor means the FAS employee representing USDA 
interests in the foreign country in which promotional activities are 
conducted.
    Constraint means a condition in a particular country or region that 
needs

[[Page 961]]

to be addressed in order to develop, expand, or maintain exports of a 
specific eligible commodity.
    Consumer promotion means activities that are designed to directly 
influence consumers by changing attitudes or purchasing behaviors 
towards eligible commodities and that involve activities targeted 
directly toward consumers purchasing as individuals.
    Cooperator means a nonprofit U.S. agricultural trade organization 
that has entered into a foreign market development agreement with CCC.
    Cooperator program means the Foreign Market Development Cooperator 
program.
    Contribution means the funds, e.g., money, personnel, materials, 
services, facilities, or supplies, provided by an FMD Cooperator, State 
agency, or entities in the FMD Cooperator's industry (``U.S. industry'') 
in support of an approved activity as well as funds provided by the FMD 
Cooperator, U.S. industry, or State agency in support of related 
promotion activities in the markets covered by the FMD Cooperator's 
agreement.
    Credit memo means a commercial document, also known as a credit 
memorandum, issued by the Cooperator to a commercial entity that owes 
the Cooperator a certain sum. A credit memo is used when the Cooperator 
owes the commercial entity a sum less than the amount the entity owes 
the Cooperator. The credit memo reflects an offset of the amount the 
Cooperator owes the entity against the amount the entity owes to the 
Cooperator.
    Demonstration projects means activities involving the erection or 
construction of a structure or facility or the installation of 
equipment.
    Eligible commodity means any agricultural commodity or product 
thereof, excluding tobacco, that is comprised of at least 50 percent by 
weight, exclusive of added water, of agricultural commodities grown or 
raised in the United States.
    Expenditure means either payment via the transfer of funds or offset 
reflected in a credit memo in lieu of a transfer of funds.
    Foreign subrecipient means a foreign entity that a Cooperator works 
with, in accordance with this part, to promote the export of an eligible 
commodity under the Cooperator program.
    Generic promotion means a promotion that does not involve the 
exclusive or predominant use of a single company name, logo, or brand 
name, or the brand of a U.S. agricultural cooperative, but rather 
promotes an eligible commodity generally. A generic promotion activity 
may include the promotion of a foreign brand (i.e., a brand owned 
primarily by foreign interests and being used to market an agricultural 
commodity in a foreign market), if the foreign brand uses the promoted 
eligible commodity from multiple U.S. suppliers. A generic promotion 
activity may also involve the use of specific U.S. company names, logos, 
or brand names. However, in that case, the Cooperator must ensure that 
all U.S. companies seeking to promote such eligible commodity in the 
market have an equal opportunity to participate in the activity and that 
at least two U.S. companies participate. In addition, an activity that 
promotes separate items from multiple U.S. companies will be considered 
a generic promotion only if the promotion of the separate items 
maintains a unified theme (i.e., a dominant idea or motif) and style and 
is subordinate to the promotion of the generic theme.
    Market means a country or region targeted by an activity.
    Notification means a document from the Cooperator by which the 
Cooperator proposes to CCC changes to the activities and/or funding 
levels in an approved agreement and/or approval letter.
    Project funds means the funds made available to a Cooperator under 
an agreement and authorized for expenditure in accordance with this 
part.
    Program notice means documents that CCC issues for informational 
purposes. These notices are currently made available electronically 
through the FAS website. These notices have no legal effect. They are 
intended to alert Cooperators of various aspects of CCC's current 
administration of the FMD program. For example, CCC issues notices to 
alert Cooperators of applicable Federal pay scale rates and lists of 
economic and trade sanctions against certain foreign countries.

[[Page 962]]

    Program year means, unless otherwise agreed to in writing between 
CCC and a Cooperator, a 12-month period during which a Cooperator can 
undertake activities consistent with this part and its agreement and 
approval letter with CCC. This is also known as a project period, which 
in multiple year awards will be divided into budget periods.
    Sales and trade relations expenditures (STRE) means expenditures 
made on breakfast, lunch, dinner, receptions, and refreshments at 
approved activities; miscellaneous courtesies such as checkroom fees, 
taxi fares, and tips for approved activities; and decorations for a 
special promotional occasion that is part of an approved activity.
    Trade team means a group of individuals engaged in an approved 
activity intended to promote the interests of an entire agricultural 
sector rather than to result in specific sales by any of its members.
    Unified Export Strategy (UES) means a holistic marketing plan that 
outlines an applicant's proposed foreign market development activities 
and requested funding under each of the FAS market development programs.
    Unified Export Strategy (UES) system means an online internet system 
maintained by FAS through which applicants may apply to the Cooperator 
program and other FAS market development programs. The system is 
currently accessible at https://apps.fas.usda.gov/ues/webapp/. FAS may 
prescribe a different system through which applicants may apply to the 
FMD program and will announce such system in the applicable Notice of 
Funding Opportunity (NOFO).
    U.S. agricultural commodity means any agricultural commodity of U.S. 
origin, including food, feed, fiber, forestry product, livestock, 
insects, and fish harvested from a U.S. aquaculture farm or harvested by 
a vessel (as defined in Title 46 of the United States Code) in waters 
that are not waters (including the territorial sea) of a foreign 
country, and any product thereof.



Sec.1484.12  Participation eligibility.

    (a) To participate in the Cooperator program, an entity must be a 
nonprofit U.S. agricultural trade organization that promotes the exports 
of one or more U.S. agricultural commodities, does not have a business 
interest in or receive remuneration from specific sales of agricultural 
commodities, and contributes at least 50 percent of the value of 
resources reimbursed by CCC for activities conducted under the 
agreement.
    (b) CCC may require that an agreement include a contribution level 
greater than that specified in paragraph (a) of this section. In 
requiring a higher contribution level, CCC will take into account such 
factors as past Cooperator contribution level, previous Cooperator 
program funding levels, the length of time an entity participates in the 
program, and the entity's ability to increase its contribution level.
    (c) CCC will enter into agreements only for the promotion of 
eligible commodities.



              Subpart B_Application and Funding Allocation



Sec.1484.20  Application process.

    (a) General application requirements. CCC will periodically announce 
through a NOFO that it is accepting applications for participation in 
the Cooperator program for a specified program year. This announcement 
will be posted on the U.S. Government website for grant opportunities. 
Applications shall be submitted in accordance with the terms and 
requirements specified in the announcement and in this part. Currently, 
applicants are encouraged to submit applications through the UES system 
but are not required to do so.
    (b) Universal identifier and System for Award Management (SAM). In 
accordance with 2 CFR part 25, each entity that applies to the 
Cooperator program and does not qualify for an exemption under 2 CFR 
25.110 must:
    (1) Be registered in the SAM prior to submitting an application or 
plan;
    (2) Maintain an active SAM registration with current information at 
all times during which it has an active Federal award or an application 
or plan under consideration by CCC; and
    (3) Provide its DUNS number, or a unique identifier designated as a 
DUNS replacement, in each application or plan it submits to CCC.

[[Page 963]]

    (c) Reporting subaward and executive compensation information. In 
accordance with 2 CFR part 170, each entity that applies to the 
Cooperator program and does not qualify for an exception under 2 CFR 
170.110(b) must ensure it has the necessary processes and systems in 
place to comply with the applicable reporting requirements of 2 CFR part 
170 should it receive Cooperator program funding.



Sec.1484.21  Application review and formation of agreements.

    (a) General. CCC will, subject to the availability of funds, approve 
those applications that it considers to present the best opportunity for 
creating, maintaining, or expanding export markets for U.S. agricultural 
commodities. CCC will review all proposals for eligibility and 
completeness. CCC will evaluate and score each proposal against the 
factors described in the NOFO. The purpose of this review is to identify 
meritorious proposals, recommend an appropriate funding level for each 
proposal, and submit the proposals and funding recommendations to 
appropriate officials for decision. CCC may, when appropriate to the 
subject matter of the proposal, request the assistance of other U.S. 
Government experts in evaluating the merits of a proposal. When 
considering eligible nonprofit U.S. trade organizations, CCC may weigh 
which organizations have the broadest producer representation and 
affiliated industry participation of the commodity being promoted. All 
reviewers will be required to sign a conflict of interest form, and when 
conflicts of interests are identified the reviewer will be recused from 
the objective review process.
    (b) Approval review criteria. CCC follows results-oriented 
management principles and considers the following criteria when 
assessing the likelihood of success of the applications it receives, 
determining which applications to recommend for approval, and developing 
preliminary recommended funding levels:
    (1) Strategic planning (25%);
    (2) Program implementation (25%); and
    (3) Program results and evaluation (50%).



Sec.1484.22  Allocation factors.

    CCC determines final funding levels after allocating available funds 
to approved applications on the basis of criteria that will be fully 
described in each program year's Cooperator program announcement. 
Generally, extensions will not be allowable.



                      Subpart C_Program Operations



Sec.1484.30  Approval decision.

    CCC will notify each applicant in writing of the final disposition 
of its application. CCC will send an agreement, an approval letter, and 
a signature card to each approved applicant. The agreement and the 
approval letter will outline which activities and budgets are approved 
and will specify any special terms and conditions applicable to a 
Cooperator's program, including the required level of Cooperator 
contribution and program evaluations. An applicant that decides to 
accept the terms and conditions contained in the agreement and approval 
letter must so indicate by having its Chief Executive Officer (CEO) or 
designee sign the agreement and approval letter and submit them to CCC. 
Final agreement shall occur when the agreement and approval letter are 
signed by both parties. The agreement, the approval letter, and this 
part shall establish the terms and conditions of a Cooperator agreement 
between CCC and the approved applicant. CCC will provide each Cooperator 
with IDs and passwords for the UES, as necessary. Cooperators shall 
protect these IDs and passwords in accordance with USDA's information 
technology policies. Cooperators shall immediately notify CCC whenever a 
person who possesses the ID and password information no longer needs 
such information or a person who is not authorized gains such 
information.



Sec.1484.31  Signature cards.

    The Cooperator shall designate at least two individuals in its 
organization to sign agreements and amendments, approval letters, 
reimbursement claims, and advance requests. The Cooperator shall submit 
the signature card signed by those designated

[[Page 964]]

individuals and by the Cooperator's CEO to CCC prior to the start of the 
program year. The Cooperator shall immediately notify CCC of any changes 
in signatories (e.g., removal or addition of individuals, name changes, 
etc.), and shall submit a revised signature card accordingly.



Sec.1484.32  Employment practices.

    (a) A Cooperator shall enter into written contracts with all 
overseas employees who are paid in whole or in part with project funds 
and shall ensure that all terms, conditions, and related formalities of 
such contracts conform to governing local law.
    (b) A Cooperator shall, in its overseas offices, conform its office 
hours, work week, and holidays to local law and to the custom generally 
observed by U.S. commercial entities in the local business community.
    (c) A Cooperator may pay salaries or fees in any currency (U.S. or 
foreign) in conformance with contract specifications. Cooperators should 
consult local laws regarding currency restrictions.



Sec.1484.33  Financial management.

    (a) A Cooperator shall implement and maintain a financial management 
system that conforms to generally accepted accounting principles and 
complies with the standards in 2 CFR part 200.
    (b) A Cooperator shall institute internal controls and provide 
written guidance to commercial entities participating in its activities 
to ensure their compliance with this part.
    (c) Each Cooperator shall retain all records relating to program 
activities for three calendar years from the date of submission of the 
final financial report and permit authorized officials of the U.S. 
Government to have full and complete access, for such three-year period, 
to such records.
    (d) A Cooperator shall also maintain all documents related to 
employment of any employees whose salaries are reimbursed in whole or in 
part with project funds, such as employment applications, contracts, 
position descriptions, leave records, salary changes, and all records 
pertaining to contractors, whether such employees or contractors are 
based in the United States or overseas.
    (e) A Cooperator shall also maintain adequate documentation related 
to the proper disposition of all personal property having a useful life 
of over one year and an acquisition cost of $500 or more purchased by 
the Cooperator and for which the Cooperator is reimbursed, in whole or 
in part, with project funds.
    (f) A Cooperator shall maintain its records of expenditures and 
contribution in a manner that allows it to provide information by 
program year, country or region, activity number, and cost category (as 
applicable). Such records shall include copies of:
    (1) Receipts for all STRE (actual vendor invoices or restaurant 
checks, rather than credit card receipts);
    (2) Receipts for any other program-related expenditure in excess of 
a minimum level that CCC shall determine and announce in writing to all 
Cooperators via a program notice issued on the FAS website. Receipts for 
all actual meal and incidental expenses (M&IE) reimbursements must be 
maintained, regardless of the amount;
    (3) The exchange rate used to calculate the dollar equivalent of 
each expenditure made in a foreign currency and the basis for such 
calculation;
    (4) Reimbursement claims;
    (5) An itemized list of claims charged to the Cooperator's FMD 
account;
    (6) Documentation, with accompanying English translation, supporting 
each reimbursement claim, including evidence to support the financial 
transactions, such as canceled checks, receipted paid bills, contracts, 
purchase orders, per diem calculations, travel vouchers, and credit 
memos; and
    (7)(i) Each Cooperator must keep records documenting all claimed 
contribution, to include:
    (A) Copies of invoices or receipts for expenses paid by the U.S. 
industry or State agency and not reimbursed by the Cooperator for the 
joint activity; or
    (B) If invoices are not available, an itemized statement from the 
U.S. industry or State agency as to what costs it incurred; or
    (C) If neither of the foregoing is available, a statement from the 
U.S. industry or State agency as to what goods and services it provided; 
or

[[Page 965]]

    (D) If none of the foregoing are available, a memo to the files of 
the Cooperator's estimate of what contribution was made by the U.S. 
industry or State agency, item by item, and the method used to assign a 
value to each.
    (ii) Documentation supporting contribution must include the date(s), 
purpose, and location(s) of each activity for which cash or in-kind 
items were claimed as a contribution; who conducted the activity; the 
participating groups or individuals; and the method of computing the 
claimed contribution. Cooperators must retain and make available for 
compliance reviews and audits documentation related to claimed 
contribution.
    (g) Upon request, a Cooperator shall provide to CCC copies of the 
documents that support the Cooperator's reimbursement claims. CCC may 
deny a claim for reimbursement if the claim is not supported by adequate 
documentation.



Sec.1484.34  Ethical conduct.

    (a) A Cooperator shall conduct its business in accordance with the 
laws and regulations of the country(s) in which each activity is carried 
out and in accordance with applicable U.S. Federal, state, and local 
laws and regulations. A Cooperator shall conduct its business in the 
United States in accordance with applicable Federal, state, and local 
laws and regulations.
    (b) Neither a Cooperator nor its affiliates shall make export sales 
of eligible commodities covered under the terms of an agreement. Neither 
a Cooperator nor its affiliates shall charge a fee for facilitating an 
export sale. A Cooperator may collect check-off funds and membership 
fees that are required for membership in the Cooperator's organization.
    (c) The Cooperator shall not use program activities or project funds 
to promote private self-interests or conduct private business, except as 
members of trade teams.
    (d) A Cooperator shall not limit participation in its FMD activities 
to members of its organization. Cooperators shall ensure that their FMD-
funded programs and activities are open to all otherwise qualified 
individuals and entities on an equal basis and without regard to any 
non-merit factors.
    (e) A Cooperator shall select U.S. agricultural industry 
representatives to participate in activities such as trade teams or 
trade fairs based on criteria that ensure participation on an equitable 
basis by a broad cross section of the U.S. industry. If requested by 
CCC, a Cooperator shall submit such selection criteria to CCC for 
approval.
    (f) All Cooperators should endeavor to ensure fair and accurate 
fact-based advertising. Deceptive or misleading promotions may result in 
cancellation or termination of an agreement and recovery of CCC funds 
related to such promotions from the Cooperator.
    (g) The Cooperator must report any actions or circumstances that may 
have a bearing on the propriety of program activities to the appropriate 
Attach[eacute]/Counselor, and the Cooperator's U.S. office shall report 
such actions or circumstances in writing to CCC.



Sec.1484.35  Contracting procedures.

    (a) Cooperators have full and sole responsibility for the legal 
sufficiency of all contracts and assume financial liability for any 
costs or claims resulting from suits, challenges, or other disputes 
based on contracts entered into by the Cooperator. Neither CCC nor any 
other agency of the United States Government nor any official or 
employee of CCC, FAS, USDA, or the United States Government has any 
obligation or responsibility with respect to Cooperator contracts with 
third parties.
    (b) Cooperators are responsible for ensuring to the greatest extent 
possible that the terms, conditions, and costs of contracts constitute 
the most economical and effective use of project funds.
    (c) All fees for professional and technical services paid in any 
part with project funds must be covered by written contracts.
    (d) A Cooperator shall:
    (1) Ensure that no employee, officer, board member, agent, or the 
employee's, officer's, board member's, or agent's family, partners, or 
an organization that employs or is about to employ any of the parties 
indicated in this paragraph (d)(1) participates in the

[[Page 966]]

review, selection, award, or administration of a contract in which such 
entities or their affiliates have a financial or other interest;
    (2) Conduct all contracting in an openly competitive manner. 
Individuals who develop or draft specifications, requirements, 
statements of work, invitations for bids, or requests for proposals for 
procurement of any goods or services, and such individuals' families or 
partners, or an organization that employs or is about to employ any of 
the aforementioned, shall be excluded from competition for such 
procurement;
    (3) Base each solicitation for professional or technical services on 
a clear and accurate description of and requirements related to the 
services to be procured;
    (4) Perform and document some form of price or cost analysis, such 
as a comparison of price quotations to market prices or other price 
indicia, to determine the reasonableness of the offered prices for 
procurements in excess of the simplified acquisition threshold in 2 CFR 
200.88; and
    (5) Document the decision-making process.



Sec.1484.36  Property.

    (a) A Cooperator shall maintain an inventory of all personal 
property having a useful life of more than one year and an acquisition 
cost of $500 or more that was acquired in furtherance of program 
activities. The inventory shall list and number each item and include 
the date of purchase or acquisition, cost of purchase, replacement 
value, serial number, make, model, and electrical requirements, as 
applicable.
    (b) The Cooperator shall insure all real property and equipment that 
was acquired, in whole or in part, with project funds at a level 
minimally equal to the equivalent insurance coverage for property owned 
by the Cooperator. The Cooperator shall safeguard such property and 
equipment against theft, damage, and unauthorized use. The Cooperator 
shall promptly report any loss, theft, or damage of such property and 
equipment to the insurance company.
    (c) Personal property having a useful life of more than one year and 
an acquisition cost of $500 or more purchased by the Cooperator, and for 
which the Cooperator is reimbursed, in whole or in part, with project 
funds, that is unusable, unserviceable, or no longer needed for project 
purposes shall be disposed of in one of the following ways. The 
Cooperator may:
    (1) Exchange or sell the property, provided that it applies any 
exchange allowance, insurance proceeds, or sales proceeds toward the 
purchase of other property needed in the project;
    (2) With CCC approval, transfer the property to other Cooperators 
for their activities, or to a foreign subrecipient; or
    (3) Upon Attach[eacute]/Counselor approval, donate the property to a 
local charity, or convey the property to the Attach[eacute]/Counselor, 
along with an itemized inventory list and any documents of title.
    (d) The Cooperator is responsible for reimbursing CCC for the value 
of any uninsured property at the time of the loss or theft of the 
property.



Sec.1484.37  Federal Travel Regulations.

    Except as otherwise provided in this part, travel funded by the 
Cooperator program shall conform to the U.S. Federal Travel Regulations 
(41 CFR parts 300 through 304) and 2 CFR part 200, and FMD-funded air 
travel shall conform to the requirements of the Fly America Act (49 
U.S.C. 40118). The Cooperator shall notify the Attach[eacute]/Counselor 
in the destination countries in writing in advance of any proposed 
travel. The timing of such notice should be far enough in advance to 
enable the Attach[eacute]/Counselor to schedule appointments, make 
preparations, or otherwise provide any assistance being requested. 
Failure to provide advance notification of travel generally will result 
in disallowance of the expenses related to the travel, unless CCC 
determines it was impractical to provide such notification.



Sec.1484.38  Program income.

    Program income is gross income earned by the non-Federal entity that 
is directly generated by a supported activity or earned as a result of 
the Federal award during the period of performance. Any income generated 
from

[[Page 967]]

an activity, the expenditures for which have been wholly or partially 
reimbursed with FMD funds, shall be used by the FMD Cooperator in 
furtherance of its approved FMD activities in the program year during 
which the FMD funds are available for obligation by the FMD Cooperator, 
or must be returned to CCC. The use of such income shall be governed by 
this subpart. Interest earned on funds advanced by CCC is not program 
income. Reasonable activity fees or registration fees, if identified as 
such in a project budget, may be charged for approved activities. The 
intent to charge a fee must be part of the original proposal, along with 
an explanation of how such fees are to be used. Any activity fees 
charged must be used to offset activity expenses or returned to FAS. 
Such fees may not be used as profit or counted as contribution.



Sec.1484.39  Changes to activities and funding.

    (a) Adding a new activity. (1) A Cooperator may not conduct a new 
activity without first obtaining an approved activity budget for such 
change. To request approval of such activity budget, the Cooperator 
shall submit a notification to CCC.
    (2) A notification for a new activity shall provide an activity 
justification and identify any related adjustments to the approved 
strategic plan, including changes in the market, constraint, or 
opportunity that the activity proposes to address. The notification 
shall contain the activity description, the proposed budget, and a 
justification for the transfer of funds.
    (3) After receipt of the notification, CCC will inform the 
Cooperator via the UES system whether the requested budget is approved.
    (b) Modifying existing activities and their funding levels. (1) A 
Cooperator desiring to increase the funding level for existing, approved 
activities addressing a single constraint or opportunity by more than 
$25,000 or 25 percent of the approved funding level, whichever is 
greater, must first submit a notification explaining the adjustment to 
CCC before making such change.
    (2) A Cooperator may make significant adjustments below the 
threshold in paragraph (b)(1) of this section to the funding levels for 
existing, approved activities without prior notification to CCC, but 
only if it submits a notification explaining the adjustments to CCC no 
later than 30 calendar days after the change. Minor adjustments to 
existing, approved activities and/or funding levels do not require 
notification.
    (3) Notifications shall describe the activity and any changes to the 
activity, the existing funding level, or the proposed funding level and 
shall include a justification for the transfer of funds, if applicable.



                Subpart D_Contribution and Reimbursements



Sec.1484.50  Contribution rules.

    (a) A Cooperator must use its own funds and may not use FMD program 
funds to pay any administrative costs of the Cooperator's U.S. 
office(s), including legal fees, except as set forth in this subpart. 
Where the Cooperator uses its own funds to pay for administrative costs, 
such costs may be counted in calculating the amount of contribution the 
Cooperator contributes to its FMD program. The contribution amount will 
be reflected in the award budget.
    (b) In calculating the amount of contribution that it will make and 
the contribution that a U.S. industry or a State or local agency will 
make, a Cooperator program applicant may include the costs (or such 
prorated costs) listed under paragraph (c) of this section if:
    (1) Expenditures are necessary and reasonable for accomplishment of 
the Cooperator's overall foreign market development program;
    (2) Expenditures are not included as cost share for any other 
Federal award;
    (3) Expenditures are not paid by the Federal Government under 
another Federal award, except where the Federal statute authorizing a 
program specifically provides that Federal funds made available for such 
program can be applied to matching or cost sharing requirements of other 
Federal programs; and
    (4) The contribution is made during the period covered by the 
agreement.

[[Page 968]]

    (c) Subject to paragraph (b) of this section, as well as the cost 
principles in 2 CFR part 200, to the extent these principles do not 
directly conflict with the provisions of this part, the following are 
eligible contribution:
    (1) Cash;
    (2) Compensation paid to personnel;
    (3) The cost of acquiring materials, supplies, or services;
    (4) The cost of office space, including legal fees;
    (5) A reasonable and justifiable proportion of general 
administrative costs and overhead;
    (6) Payments for indemnity and fidelity bond expenses;
    (7) The cost of business cards that target a foreign audience;
    (8) Fees for office parking;
    (9) The cost of subscriptions to publications that are of a 
technical, economic, or marketing nature and that are relevant to the 
approved activities of the Cooperator's program;
    (10) The cost of activities conducted overseas;
    (11) Credit card fees;
    (12) The cost of any independent evaluation or audit that is not 
required by CCC to ensure compliance with agreement or regulatory 
requirements;
    (13) The cost of giveaways, awards, prizes, and gifts;
    (14) The cost of product samples;
    (15) Fees for participating in U.S. Government sponsored or endorsed 
export promotion activities;
    (16) The cost of air and local travel in the United States related 
to a foreign market development effort;
    (17) Transportation and shipping costs;
    (18) The cost of displays and promotional materials;
    (19) Advertising costs;
    (20) Reasonable travel costs and expenses related to undertaking a 
foreign market development activity;
    (21) The costs associated with trade shows, seminars, and STRE 
conducted in the United States, and costs associated with entertainment 
conducted in the United States where such entertainment costs have a 
programmatic purpose and are authorized in the agreement and/or approval 
letter or are authorized by prior written approval of CCC;
    (22) Product research that is undertaken to benefit an industry and 
has a specific export application;
    (23) Consumer promotions; and
    (24) The cost of any activity expressly listed as reimbursable in 
this part.



Sec.1484.51  Ineligible contribution.

    (a) The following are not eligible contribution:
    (1) Any portion of salary or compensation of an individual who is 
the target of a promotional activity;
    (2) Any expenditure, including that portion of salary and time 
spent, related to promoting membership in the Cooperator's organization;
    (3) Any land costs other than allowable costs for office space;
    (4) The cost of refreshments and related equipment provided to 
office staff;
    (5) The cost of insuring articles owned by private individuals;
    (6) The cost of any arrangement that has the effect of reducing the 
selling price of a U.S. agricultural commodity;
    (7) The cost of product development or product modifications;
    (8) Slotting fees or similar sales expenditures;
    (9) Funds, services, capital goods, or personnel provided by any 
U.S. Government agency;
    (10) The value of any services generated by a Cooperator or third 
party that involve no expenditure by the Cooperator or third party, 
e.g., free publicity;
    (11) Membership fees in clubs and social organizations; and
    (12) Any expenditure for an activity prior to CCC's approval of that 
activity.
    (b) CCC shall determine, at CCC's discretion, whether any cost not 
expressly listed in this section may be included by the Cooperator as 
eligible contribution.



Sec.1484.52  Reimbursement rules.

    (a) A Cooperator may seek reimbursement for an eligible expenditure 
if:
    (1) The expenditure was necessary and reasonable for the performance 
of an approved activity; and

[[Page 969]]

    (2) The Cooperator has not been and will not be reimbursed for such 
expenditure by any other source.
    (b) Subject to paragraph (a) of this section and Sec.1484.53, as 
well as the cost principles in 2 CFR part 200 to the extent these 
principles do not directly conflict with the provisions of this part, 
CCC will reimburse, in whole or in part, the cost of:
    (1) Production and placement of advertising, including in print, 
electronic media, billboards, or posters. Electronic media includes, but 
is not limited to, radio, television, electronic mail, internet, 
telephone, text messaging, and podcasting;
    (2) Production and distribution of banners, recipe cards, table 
tents, shelf talkers, and similar point of sale materials;
    (3) Direct mail advertising;
    (4) Food service promotions, product demonstrations to the trade, 
and distribution of product samples (but not the purchase of the product 
samples);
    (5) Temporary displays and rental of space for temporary displays;
    (6) Subject to paragraph (b)(7) of this section, non-travel 
expenditures, including participation fees, booth construction, 
transportation of related materials, rental of space and equipment, and 
duplication of related printed materials, associated with retail and 
trade exhibits and shows, whether held outside or inside the United 
States. However, non-travel expenditures associated with retail and 
trade exhibits and shows held inside the United States are reimbursable 
only if the exhibit or show is included on the list of approved U.S. 
exhibits and shows announced via a program notice issued on FAS' website 
and the exhibit or show is one that the Cooperator has not participated 
in within the last three calendar years using funds from a source other 
than FMD. Retail and trade exhibits and shows held inside the United 
States may be considered for inclusion on the list of approved exhibits 
and shows if they are:
    (i) A food or agricultural exhibit or show with no less than 30% of 
exhibitors selling food or agricultural products; and
    (ii) An international exhibit or show that targets buyers, 
distributors, and the like from more than one foreign country and no 
less than 15% of its visitors are from countries other than the host 
country;
    (7) Where USDA has sponsored or endorsed a U.S. pavilion at a retail 
or trade exhibit or show, whether held outside or inside the United 
States, project funds may be used to reimburse the travel and/or non-
travel expenditures of only those Cooperators located within the U.S. 
pavilion. Such expenditures must also adhere to the standard terms and 
conditions of the U.S. pavilion organizer. Upon written request, CCC may 
temporarily waive this paragraph (b)(7), on a case by case basis, where 
the trade show is segregated into product pavilions or a company's 
distributor or importer is located outside the U.S. pavilion. Such 
waiver will be provided to the Cooperator in writing;
    (8) Expenditures, other than travel expenditures, associated with 
seminars and educational training, whether conducted in the United 
States or outside the United States, including space rental, equipment 
rental, and duplication of seminar materials;
    (9) Production and distribution of publications;
    (10) Demonstrators, interpreters, translators, receptionists, and 
similar temporary workers who help with the implementation of individual 
promotional activities, such as trade shows, food service promotions, 
and trade seminars;
    (11) Giveaways, awards, prizes, gifts, and other similar promotional 
materials, subject to such reimbursement limitation as CCC may determine 
and announce in writing to Cooperators via a program notice issued on 
FAS' website. Reimbursement is available only when:
    (i) The items are described in detail with a per unit cost in an 
approved strategic plan; and
    (ii) Distribution of the promotional item is not contingent upon the 
target audience purchasing a good or service to receive the promotional 
item;
    (12) Compensation and allowances for housing, educational tuition, 
and cost of living adjustments paid to U.S. citizen employees or U.S. 
citizen contractors stationed overseas, provided such benefits are 
granted under established

[[Page 970]]

written policies, subject to the limitation that CCC shall not reimburse 
that portion of:
    (i) The total of compensation and allowances that exceed 125 percent 
of the level of a GS-15, Step 10 salary for U.S. Government employees; 
or
    (ii) Allowances that exceed the rate authorized for U.S. Embassy 
personnel;
    (13) Foreign transfer, temporary lodging, and post hardship 
differential allowances for U.S. citizen employees, provided such 
benefits are granted under established written policies;
    (14) Approved salaries or compensation for non-U.S. citizen 
employees and non-U.S. contractors stationed overseas. Generally, CCC 
will not reimburse any portion of a non-U.S. citizen employee's 
compensation that exceeds the compensation prescribed for the most 
comparable position in the Foreign Service National (FSN) salary plan 
applicable to the country in which the employee works. However, if the 
local FSN salary plan is inappropriate, a Cooperator may request a 
higher level of reimbursement for a non-U.S. citizen in accordance with 
the annual program announcement;
    (15) Temporary contractor fees for contractors stationed overseas, 
except CCC will not reimburse any portion of any such fee that exceeds 
the daily gross GS-15, Step 10 salary for U.S. Government employees in 
effect on the date the fee is earned, unless a bidding process revels 
that such a contractor is not available at or below that salary rate;
    (16) A retroactive salary adjustment for non-U.S. citizen staff 
employees or non-U.S. contractors stationed overseas that conforms to a 
change in FSN salary plans, effective as of the date of such change;
    (17) Accrued annual leave as of the time employment is terminated or 
as of such time as required by local law;
    (18) Overtime paid to clerical staff of approved FMD-funded overseas 
offices;
    (19) Fees for professional and consultant services;
    (20) Subject to paragraph (b)(7) of this section, international 
travel expenditures, including per diem and any fees for passports, 
visas, inoculations, and modifying the originally purchased airline 
ticket, for activities held outside the United States or in the United 
States, as allowed under the U.S. Federal Travel Regulations (41 CFR 
parts 300 through 304), except that if the activity is participation in 
a retail or trade exhibit or show held inside the United States, 
international travel expenditures are reimbursable only if the exhibit 
or show is included on the list of approved U.S. exhibits and shows 
announced via a program notice issued on FAS' website and the exhibit or 
show is one that the Cooperator has not participated in within the last 
three calendar years using funds from a source other than FMD. Retail 
and trade exhibits and shows held inside the United States may be 
considered for inclusion on the list of approved exhibits and shows if 
they are: A food or agricultural exhibit or show with no less than 30% 
of exhibitors selling food or agricultural products, and an 
international exhibit or show that targets buyers, distributors, and the 
like from more than one foreign country and no less than 15% of its 
visitors are from countries other than the host country;
    (i) CCC generally will not reimburse any portion of air travel, 
including any fees for modifying the originally purchased ticket, in 
excess of the full fare economy rate. If a traveler flies in business 
class or a different premium class, the basis for reimbursement will be 
the full fare economy class rate for the same flight and the Cooperator 
shall provide documentation establishing such full fare economy class 
rate to support its reimbursement claim. If economy class is not offered 
for the same flight or if the traveler flies on a charter flight, the 
basis for reimbursement will be the average of the full fare economy 
class rate for flights offered by three different airlines between the 
same points on the same date and the Cooperator shall provide 
documentation establishing such average of the full fare economy class 
rates to support its reimbursement claim;
    (ii) In very limited circumstances, the Cooperator may be reimbursed 
for air travel up to the business class rate (i.e., a premium class rate 
other than the first-class rate). Such circumstances are:

[[Page 971]]

    (A) Regularly scheduled flights between origin and destination 
points do not offer economy class (or equivalent) airfare and the 
Cooperator receives written documentation to that effect at the time the 
tickets are purchased;
    (B) Business class air travel is necessary to accommodate an 
eligible traveler's disability. Such disability must be substantiated in 
writing by a physician; or
    (C) An eligible traveler's origin and/or destination are outside of 
the continental United States and the scheduled flight time, beginning 
with the scheduled departure time and ending with the scheduled arrival 
time, including stopovers and changes of planes, exceeds 14 hours. In 
such cases, per diem and other allowable expenses will also be 
reimbursable for the day of arrival. However, no expenses will be 
reimbursable for a rest period or for any non-work days (e.g., weekends, 
holidays, personal leave, etc.) immediately following the date of 
arrival. A stopover is the time a traveler spends at an airport, other 
than the originating or destination airport, which is a normally 
scheduled part of a flight. A change of planes is the time a traveler 
spends at an airport, other than the originating or destination airport, 
to disembark from one flight and embark on another. All travel should 
follow a direct or usually traveled route. Under no circumstances should 
a traveler select flights in a manner that extends the scheduled flight 
time to beyond 14 hours in part to secure eligibility for reimbursement 
of business class travel; and
    (iii) Alternatively, in lieu of reimbursing up to the business class 
rate in such circumstances, CCC will reimburse economy class airfare 
plus per diem and other allowable travel expenses related to a rest 
period of up to 24 hours, either en route or upon arrival at the 
destination. For a trip with multiple destinations, each origin/
destination combination will be considered separately when applying the 
14-hour rule for eligibility of reimbursement of business class travel 
or rest period expenses;
    (21) Automobile mileage at the local U.S. Embassy rate, or rental 
cars while in travel status;
    (22) Subject to Sec.1484.37 and paragraph (b)(7) of this section, 
other allowable expenditures while in travel status;
    (23) Organization costs for overseas offices approved in agreements. 
Such costs include incorporation fees, brokers' fees, fees to attorneys, 
accountants, or investment counselors, whether or not employees of the 
organization, incurred in connection with the establishment or 
reorganization of the overseas office, and rent, utilities, 
communications originating overseas, office supplies, accident liability 
insurance premiums (provided the types and extent and cost of coverage 
are in accordance with the Cooperator's policy and sound business 
practice), and routine accounting and legal services required to 
maintain the overseas office;
    (24) With prior CCC approval, the purchase, lease, or repair of, or 
insurance premiums for capital goods that have an expected useful life 
of at least one year, such as furniture, equipment, machinery, removable 
fixtures, draperies, blinds, floor coverings, computer hardware and 
software, and portable electronic communications devices (including 
mobile phones, wireless email devices, and personal digital assistants);
    (25) Premiums for health or accident insurance or other benefits for 
foreign national employees that the employer is required by law to pay, 
provided that such benefits are granted under established written 
policies;
    (26) Accident liability insurance premiums for facilities used 
jointly with third party participants for Cooperator program activities, 
or such insurance premiums for Cooperator program-funded travel of non-
Cooperator personnel, provided the types and extent and cost of coverage 
are in accordance with the Cooperator's policy and sound business 
practice;
    (27) Market research, including research to determine the types of 
products that are desired in a market;
    (28) Independent evaluations and audits, if not otherwise required 
by CCC, to ensure compliance with program requirements;
    (29) Legal fees to obtain advice on the host country's labor laws;
    (30) Employment agency fees;
    (31) STRE incurred outside of the United States, and STRE incurred 
in

[[Page 972]]

conjunction with an approved activity taking place within the United 
States with prior written approval from CCC. Cooperators are required to 
use the appropriate American Embassy representational funding guidelines 
for breakfasts, lunches, dinners, and receptions. Cooperators may exceed 
Embassy guidelines only when they have received written authorization 
from the FAS Attach[eacute]/Counselor at the Embassy. The amount of 
unauthorized STRE expenses that exceed the guidelines will not be 
reimbursed. Cooperators must pay the difference between the total cost 
of STRE events and the appropriate amount as determined by the 
guidelines. For STRE incurred in the United States, the Cooperator 
should provide, in its request for approval, the basis for determining 
its proposed expenses;
    (32) Travel costs for dependents as allowed in 2 CFR part 200 (e.g., 
for travel of duration of six months or more with prior approval of 
CCC);
    (33) Evacuation payments (safe haven) and shipment and storage of 
household goods and motor vehicles for relocations lasting at least 12 
months;
    (34) Approved demonstration projects;
    (35) Purchase of trade and business periodicals containing material 
related to market development activities for use by overseas staffs;
    (36) Training expenses in the United States for FSNs;
    (37) Language training for U.S. citizen employees at the foreign 
post of assignment;
    (38) Forward year financial obligations required by local law or 
custom, such as severance pay, attributable to employment of foreign 
nationals, or forfeiture of rent or deposits, attributable to the 
closure of an office;
    (39) Rental or lease expenditures for storage space for program-
related materials;
    (40) Shipment of samples or other program materials from the United 
States to foreign countries;
    (41) That portion of airtime for wireless phones that is devoted to 
program activities and monthly service fees prorated at the proportion 
of program-related airtime to total airtime;
    (42) Non-travel expenditures associated with conducting 
international staff conferences held either in or outside the United 
States;
    (43) An audit of a Cooperator as required by 2 CFR part 200, subpart 
F, if the Cooperator program is the Cooperator's largest source of 
Federal funding;
    (44) The translation of written materials as necessary to carry out 
approved activities;
    (45) Business cards that target a foreign audience;
    (46) Expenditures associated with developing, updating, and 
servicing websites on the internet that: Contain a message related to 
exporting or international trade, include a discernible ``link'' to the 
FAS/Washington homepage or an FAS overseas homepage, and have been 
specifically approved by FAS. Expenditures related to websites or 
portions of websites that are accessible only to an organization's 
members are not reimbursable. Reimbursement claims for websites that 
include any sort of ``members only'' sections must be prorated to 
exclude the costs associated with those areas subject to restricted 
access;
    (47) Expenditures related to copyright, trademark, or patent 
registration, including attorney fees;
    (48) Expenditures not otherwise prohibited from reimbursement that 
are associated with activities held in the United States or abroad 
designed to improve market access by specifically addressing temporary, 
permanent, or impending technical barriers to trade that prohibit or 
threaten U.S. exports of agricultural commodities;
    (49) Membership fees in professional, industry-related 
organizations; and
    (50) Contracts with U.S.-based organizations when the only 
contracted service such organizations provide to a Cooperator is 
carrying out a specific market promotion activity in the United States 
directed to a foreign audience (e.g., a trade mission of foreign buyers 
coming to the United States to visit U.S. exporters). Such contracts may 
be reimbursable as a direct promotional expense. If a U.S.-based 
organization provides administrative services to the Cooperator's 
domestic home

[[Page 973]]

office during a program year, any direct promotional services such 
organization provides to the Cooperator, whether for the Cooperator's 
domestic or overseas offices, during the same program year are not 
reimbursable.



Sec.1484.53  Expenditures not reimbursed under the Cooperator program.

    (a) CCC will not reimburse unreasonable expenditures or any cost of:
    (1) Expenses, fines, settlements, judgements, or payments relating 
to legal suits, challenges, or disputes, except as otherwise allowed in 
2 CFR part 200;
    (2) Product development, product modification, or product research;
    (3) Product samples;
    (4) Slotting fees or similar sales expenditures;
    (5) The purchase, construction, or lease of space for permanent, 
non-mobile displays, i.e., displays that are constructed to remain 
permanently in the same location beyond one program year. However, CCC 
may, at its discretion, reimburse the construction or purchase of 
permanent displays on a case-by-case, if the Cooperator sought and 
received prior written approval from CCC of such construction or 
purchase;
    (6) Rental, lease, or purchase of warehouse space, except for 
storage space for program-related materials;
    (7) Office parking fees;
    (8) Coupon redemption or price discounts;
    (9) Refundable deposits or advances;
    (10) Giveaways, awards, prizes, gifts, and other similar promotional 
materials in excess of the limitation that CCC will determine. Such 
determination will be announced in writing via a program notice issued 
on FAS' website;
    (11) Alcoholic beverages that are not a promoted commodity and part 
of an approved promotional activity;
    (12) The purchase, lease (except for use in authorized travel 
status), or repair of motor vehicles;
    (13) Travel of applicants for employment interviews;
    (14) Unused non-refundable airline tickets or associated penalty 
fees, except where travel was restricted by U.S. Government action or 
advisory;
    (15) Independent evaluations or audits, including evaluations or 
audits of the activities of a subcontractor, if CCC determines that such 
a review is needed in order to confirm past or to ensure future 
agreement or regulatory compliance;
    (16) Any arrangement that has the effect of reducing the selling 
price of an agricultural commodity;
    (17) Any expenditure on an activity that includes any derogatory 
reference or comparison to other U.S. agricultural commodities;
    (18) Goods, services, and salaries of personnel provided by a third 
party;
    (19) Membership fees in clubs and social organizations;
    (20) Indemnity and fidelity bonds, except as otherwise allowed in 2 
CFR part 200;
    (21) Fees for participating in U.S. Government sponsored activities, 
other than trade fairs, shows, and exhibits;
    (22) Business cards that target a U.S. domestic audience;
    (23) Seasonal greeting cards;
    (24) Subscriptions to publications that are not of a technical, 
economic, or marketing nature or that are not relevant to the approved 
activities of the Cooperator;
    (25) Credit card fees;
    (26) Refreshments, or related equipment, for office staff;
    (27) Insurance on household goods and personal effects, including 
privately-owned automobiles, whether overseas or stored in the United 
States, belonging to U.S. citizen employees;
    (28) Home office domestic administrative expenses, including 
communication costs;
    (29) Payment of a U.S. or foreign employee's or contractor's share 
of personal taxes, except where a foreign country's laws require the 
Cooperator to pay such employee's or contractor's share;
    (30) STRE expenses incurred in the United States, except as 
otherwise provided in Sec.1484.52(b)(31);
    (31) Entertainment (e.g., amusements, diversions, cover charges, 
personal gifts, or tickets to theatrical or sporting events);
    (32) Functions (including receptions and meals at Cooperator staff 
conferences) at which target groups, such

[[Page 974]]

as members of the overseas trade, opinion leaders, foreign government 
officials, and other similar groups, are not present;
    (33) Promotions directed at consumers purchasing in their individual 
capacity; and
    (34) Any expenditure made for an activity prior to CCC's approval of 
that activity.
    (b) The CCC may determine, at CCC's discretion, whether any cost not 
expressly listed in this section will be reimbursed.
    (c) CCC will reimburse for expenditures made after the conclusion of 
the program year provided:
    (1) The activity was approved by CCC prior to the end of the program 
year;
    (2) The activity was completed within 30 calendar days following the 
end of the program year; and
    (3) All expenditures were made for the activity within 6 months 
following the end of the program year.
    (d) A Cooperator shall not use project funds for any activity, or 
any expenses incurred by the Cooperator prior to the date specified in 
the approval letter or after the date the agreement is suspended or 
terminated, except as otherwise permitted by CCC.



Sec.1484.54  Reimbursement procedures.

    (a) Following the implementation of a project for which CCC has 
agreed to provide funding, a Cooperator may submit claims for 
reimbursement of eligible expenses incurred in implementing FMD 
activities, to the extent that CCC has agreed to pay such expenses. Any 
changes to approved activities must be approved in writing by CCC before 
any reimbursable expenses associated with the change can be incurred. A 
Cooperator will be reimbursed after CCC reviews the claim and determines 
that it is complete.
    (b) All claims for reimbursement shall be submitted by the FMD 
Cooperator's U.S. office to CCC. CCC will make all payments to 
Cooperators in U.S. dollars. FAS will initiate payment within 30 days 
after receipt of the billing, unless the billing is improper.
    (c) Cooperators will be authorized to submit requests for 
reimbursement or advance at least monthly when electronic fund transfers 
(EFTs) are not used, and as frequently as desired when electronic 
transfers are used, in accordance with the provisions of the Electronic 
Fund Transfer Act (15 U.S.C. 1693-1693r).
    (d) CCC will not reimburse claims submitted later than 6 months 
after the end of an FMD Cooperator's program year.
    (e) If CCC overpays a reimbursement claim, the FMD Cooperator shall 
repay CCC within 30 calendar days of such overpayment the amount of the 
overpayment either by submitting a check payable to CCC or by offsetting 
its next reimbursement claim. The FMD Cooperator shall make such payment 
in U.S. dollars, unless otherwise approved in advance by CCC.
    (f) If a Cooperator receives a reimbursement or offsets an advanced 
payment which is later disallowed, the Cooperator shall repay CCC within 
30 calendar days of such disallowance the amount disallowed either by 
submitting a check payable to CCC or by offsetting its next 
reimbursement claim. The Cooperator shall make such payment in U.S. 
dollars, unless otherwise approved in advance by CCC.
    (g) FMD funds may be expended by FMD Cooperators only on legitimate, 
approved activities as set forth in the agreement and approval letter. 
If a Cooperator discovers that FMD funds have not been properly spent, 
it shall notify CCC and shall within 30 calendar days of its discovery 
repay CCC the amount owed either by submitting a check payable to CCC or 
by offsetting its next reimbursement claim. The FMD Cooperator shall 
make such payment in U.S. dollars, unless otherwise approved in advance 
by CCC.
    (h) The FMD Cooperator shall report any actions that may have a 
bearing on the propriety of any claims for reimbursement in writing to 
the appropriate Attach[eacute]/Counselor and its U.S. office shall 
report such actions in writing to the appropriate FAS Division Director.



Sec.1484.55  Advances.

    (a) Policy. In general, CCC operates the Cooperator program on a 
reimbursable basis.
    (b) Exception. Upon request, CCC may make two types of advance 
payments

[[Page 975]]

to a Cooperator. The first is a revolving fund operating advance 
provided by CCC only to Cooperators with foreign offices supported with 
project funds. The second is a special advance payment used to pay an 
impending large cost item. CCC will provide this type of advance expense 
payment in lieu of direct payments by CCC to vendors or other third 
parties. All Cooperators, with or without project fund-supported foreign 
offices, are eligible to request special advance payments. CCC will not 
make any special advance payment to a Cooperator where a special advance 
is outstanding from a prior program year. When approving a request for 
an advance, CCC may require the Cooperator to carry adequate fidelity 
bond coverage when the absence of such coverage is considered to create 
an unacceptable risk to the interests of the Cooperator program. Whether 
an ``unacceptable risk'' exists in a particular situation will depend on 
a number of factors, such as, the Cooperator's history of performance in 
the Cooperator program, the Cooperator's perceived financial stability 
and resources, and any other factors presented in the particular 
situation that may reflect on the Cooperator's responsibility or the 
riskiness of its activities.
    (c) Interest. A Cooperator shall deposit and maintain in an insured 
account in the United States all funds advanced by CCC. The account 
shall be interest-bearing, unless the exceptions in 2 CFR part 200 
apply. Interest earned by the Cooperator on funds advanced by CCC is not 
program income. Up to $500 of interest earned per year may be retained 
by the Cooperator for administrative expenses. Any additional interest 
earned on Federal advance payments shall be remitted annually to the 
appropriate entity as required in 2 CFR part 200.
    (d) Refunds due CCC. A Cooperator shall fully expend all advances on 
approved activities within 90 calendar days after the date of 
disbursement by CCC. By the end of the 90 calendar days, the Cooperator 
must submit reimbursement claims to offset the advance and submit a 
check made payable to CCC for any unexpended balance. The Cooperator 
shall make such payment in U.S. dollars, unless otherwise approved in 
advance by CCC.



             Subpart E_Reporting, Evaluation, and Compliance



Sec.1484.70  Reports.

    (a) Cooperators are required to submit regular financial and 
performance reports in accordance with their agreement. Reporting 
requirements and formats for the required financial and performance 
reports will be specified in the agreement between CCC and the 
Cooperator.
    (b)(1) In addition to the information required in 2 CFR 
200.328(b)(2), a Cooperator's performance reports must include pertinent 
information regarding the Cooperator's progress, measured against 
established indicators, baselines, and targets, towards achieving the 
expected results specified in the agreement. This reporting must 
include, for each performance indicator, a comparison of actual 
accomplishments with the baseline and the targets established for the 
period. When actual accomplishments deviate significantly from targeted 
goals, the Cooperator must provide an explanation in the report.
    (2) A Cooperator must ensure the accuracy and reliability of the 
performance data submitted to FAS in performance reports. At any time 
during the period of performance of the agreement, FAS may review the 
Cooperator's performance data to determine whether it is accurate and 
reliable. The Cooperator must comply with all requests made by FAS or an 
entity designated by FAS in relation to such reviews.
    (c) All final performance reports will be made available to the 
public.
    (d) Not later than 45 calendar days after the completion of travel 
(other than local travel), a Cooperator shall submit a trip report. The 
report must be submitted to the appropriate Attach[eacute]/Counselor(s) 
and must include the name(s) of the traveler(s), purpose of travel, 
itinerary, names and affiliations of contacts, and a brief summary of 
findings, conclusions, recommendations, and specific accomplishments.

[[Page 976]]

    (e) Not later than 90 calendar days after the end of its program 
year, a Cooperator shall submit a report on any research conducted 
pursuant to the approved FMD program.
    (f) If requested by FAS, a Cooperator must provide to FAS additional 
information or reports relating to the agreement.
    (g) If a Cooperator requires an extension of a reporting deadline, 
it must ensure that FAS receives an extension request at least five 
business days prior to the reporting deadline. FAS may decline to 
consider a request for an extension that it receives after this time 
period. FAS will consider requests for reporting deadline extensions on 
a case by case basis and will make a decision based on the merits of 
each request. FAS will consider factors such as unforeseen or 
extenuating circumstances and past performance history when evaluating 
requests for extensions.



Sec.1484.71  Disclosure of program information.

    (a) Documents submitted to CCC by Cooperators are subject to the 
provisions of the Freedom of Information Act (FOIA), 5 U.S.C. 552, 7 CFR 
part 1, subpart A, and, specifically, 7 CFR 1.12.
    (b) Upon request, a Cooperator shall provide to any person a copy of 
any document in its possession or control containing market information 
that is developed and produced under the terms of its agreement. The 
Cooperator may charge a fee not to exceed the costs for assembling, 
duplicating, and distributing the materials.
    (c) Any research conducted by a Cooperator pursuant to an agreement 
and/or approval letter shall be subject to the provisions relating to 
intangible property in 2 CFR part 200.



Sec.1484.72  Evaluation.

    (a) The Government Performance and Results Act (GPRA) of 1993 (5 
U.S.C. 306, 31 U.S.C. 1105, 1115-1119, 3515, 9703-9704) requires 
performance measurement of Federal programs, including the Cooperator 
program. Evaluation of the Cooperator program's effectiveness will 
depend on a clear statement by each Cooperator of the constraints and 
opportunities facing U.S. exports, goals to be met within a specified 
time, a schedule of measurable milestones for gauging success, a plan 
for achievement, and reports of activity results at regular intervals. 
The overall goal of Cooperators' programming is to achieve or maintain 
sales that would not have occurred in the absence of FMD funding. A 
Cooperator that can demonstrate such sales, taking into account 
extenuating factors beyond the Cooperator's control, will have met the 
overall objective of the GPRA and the need for evaluation.
    (b) Evaluation is an integral element of program planning and 
implementation, providing the basis for the strategic plan. The 
evaluation results guide the development and scope of a Cooperator's 
program, contribute to program accountability, and provide evidence of 
program effectiveness.
    (c) Cooperators shall complete at least one program evaluation each 
year. A program evaluation is a review of the Cooperator's entire 
program, or an appropriate portion of the program as agreed to by the 
Cooperator and CCC, to determine the effectiveness of the Cooperator's 
strategy in meeting specified goals. The actual scope and timing of the 
program evaluation shall be determined by the Cooperator and CCC and 
specified in the Cooperator's approval letter. A Cooperator may contract 
with an independent evaluator to satisfy this requirement, although CCC 
reserves the right to have direct input and control over the design, 
scope, and methodology of any such evaluation, including direct contact 
with and provision of guidance to the independent evaluator. In addition 
to the requirements set forth in 2 CFR part 200, a program evaluation 
shall contain:
    (1) The name of the party conducting the evaluation;
    (2) The activities covered by the evaluation;
    (3) A concise statement of the constraint(s) and opportunities and 
the goals specified in the approved agreement;
    (4) A description of the evaluation methodology;
    (5) A description of additional export sales achieved, including the 
ratio of additional export sales in relation to Cooperator program 
funding received;

[[Page 977]]

    (6) A summary of the findings, including an analysis of the 
strengths and weaknesses of the program(s); and
    (7) Recommendations for future programs.
    (d) A Cooperator shall submit, via a cover letter to CCC, an 
executive summary that assesses the program evaluation's findings and 
recommendations and proposed changes in program strategy or design as a 
result of the evaluation.
    (e) On an annual basis, or more often when appropriate or required 
by CCC, a Cooperator shall complete and submit program success stories. 
CCC will announce to all Cooperators the detailed requirements for 
completing and submitting program success stories.



Sec.1484.73  Failure to make required contribution.

    A Cooperator's required contribution will be specified in the 
Cooperator's approval letter. If a Cooperator fails to contribute the 
amount specified in its approval letter, the Cooperator shall pay to CCC 
in U.S. dollars the difference between the amount it has contributed, 
and the amount specified in the approval letter. If the Cooperator's 
required contribution is specified as a percentage of the total amount 
reimbursed by CCC, the Cooperator may either return to CCC the necessary 
amount of funds reimbursed by CCC to increase its actual contribution 
percentage to the required level or pay to CCC in dollars the difference 
between the amount actually contributed and the amount of funds 
necessary to increase its actual contribution percentage to the required 
level. A Cooperator shall remit such payment within six months after the 
end of its program year. The Cooperator shall make such payment in U.S. 
dollars, unless otherwise approved in advance by CCC.



Sec.1484.74  Compliance reviews and notices.

    (a) USDA staff may conduct compliance reviews of a Cooperator's 
activities under this program to ensure compliance with this part, 
applicable Federal laws and regulations, and the terms of the agreements 
and approval letters. Cooperators shall cooperate fully with relevant 
USDA staff conducting compliance reviews and shall comply with all 
requests from USDA staff to facilitate the conduct of such reviews. 
Program funds spent inappropriately or on unapproved activities must be 
returned to CCC.
    (b) Any project or activity funded under the program is subject to 
review or audit at any time during the course of implementation or after 
the completion of the project.
    (c) Upon conclusion of the compliance review, USDA staff will 
provide a written compliance report to the Cooperator. The compliance 
report will detail any instances where it appears that the Cooperator is 
not complying with any of the terms or conditions of the agreement, 
approval letter, or the applicable laws and regulations. The report will 
also specify if it appears that CCC may be entitled to recover funds 
from the Cooperator and will explain the basis for any recovery of funds 
from the Cooperator. If, as a result of a compliance review, CCC 
determines that further review is needed in order to ensure compliance 
with the requirements of the Cooperator program, CCC may require the 
Cooperator to contract for an independent audit.
    (d) In addition, CCC may notify a Cooperator in writing at any time 
if CCC determines that CCC may be entitled to recover funds from the 
Cooperator. CCC will explain the basis for any recovery of funds from 
the Cooperator in the written notice. The Cooperator shall, within 30 
calendar days of the date of the notice, repay CCC the amount owed 
either by submitting a check payable to CCC or by offsetting its next 
reimbursement claim. The Cooperator shall make such payment in U.S. 
dollars, unless otherwise approved in advance by CCC. If, however, a 
Cooperator notifies CCC within 30 calendar days of the date of the 
written notice that the Cooperator intends to file an appeal pursuant to 
the provisions of this part, the amount owed to CCC by the Cooperator is 
not due until the appeal procedures are concluded and CCC has made a 
final determination as to the amount owed.
    (e) The fact that a compliance review has been conducted by USDA 
staff does not signify that a Cooperator is in full

[[Page 978]]

compliance with its agreement, approval letter, and/or applicable laws 
and regulations.



Sec.1484.75  Cooperator response to compliance report.

    (a) A Cooperator shall, within 60 calendar days of the date of the 
issuance of a compliance report, submit a written response to CCC. The 
response may include additional documentation for consideration or a 
request for reconsideration of any finding along with supporting 
justification. If the Cooperator does not wish to contest the compliance 
report, the response shall include any money owed to CCC, which may be 
returned by submitting a check payable to CCC or by offsetting a 
reimbursement claim. The Cooperator shall make any payments in U.S. 
dollars, unless otherwise approved in advance by CCC. CCC, at its 
discretion, may extend the period for response.
    (b) After reviewing the response, CCC shall determine whether the 
Cooperator owes any funds to CCC and will inform the Cooperator in 
writing of the basis for the determination. CCC may initiate action to 
collect such amount by providing the Cooperator a written demand for 
payment of the debt pursuant to debt settlement policies and procedures 
in 7 CFR part 1403.



Sec.1484.76  Cooperator appeals of CCC determinations.

    (a) Within 30 calendar days of the date of the issuance of a 
determination, the Cooperator may appeal the determination by making a 
request in writing that includes the basis for such reconsideration. The 
Cooperator may also request a hearing.
    (b) If the Cooperator requests a hearing, CCC will set a date and 
time for the hearing. The hearing will be an informal proceeding. A 
transcript will not ordinarily be prepared unless the Cooperator bears 
the cost of a transcript; however, CCC may, at its discretion, have a 
transcript prepared at CCC's expense.
    (c) CCC will base its final determination upon information contained 
in the administrative record. The Cooperator must exhaust all 
administrative remedies contained in this section before pursuing 
judicial review of a determination by CCC.



Sec.1484.77  Submissions.

    For all permissible methods of delivery, submissions required by 
this part shall be deemed submitted as of the date received by CCC.



Sec.1484.78  Amendments.

    An agreement may be amended in writing with the consent of CCC and 
the Cooperator. All requests for program amendments must be submitted to 
CCC in writing and contain a justification for why the amendment is 
necessary. All amendment requests must be reviewed and approved by CCC 
before an amendment can be issued.



Sec.1484.79  Subrecipients.

    (a) A Cooperator may utilize the services of a subrecipient to 
implement activities under the agreement if this is provided for in the 
agreement. The subrecipient may receive CCC-provided funds, program 
income, or other resources from the Cooperator for this purpose. The 
Cooperator must enter in to a written subaward with the subrecipient and 
comply with the applicable provisions of 2 CFR 200.331 and/or the 
Federal Acquisition Regulation (FAR), if applicable. If required by the 
agreement, the Cooperator must provide a copy of such subaward to FAS, 
in the manner set forth in the agreement, prior to the transfer of CCC-
provided funds or program income to the subrecipient.
    (b) A Cooperator must include the following requirements in a 
subaward:
    (1) The subrecipient is required to comply with the applicable 
provisions of this part and 2 CFR parts 200 and 400 and/or the FAR, if 
applicable. The applicable provisions are those that relate specifically 
to subrecipients, as well as those relating to non-Federal entities that 
impose requirements that would be reasonable to pass through to a 
subrecipient because they directly concern the implementation by the 
subrecipient of one or more activities under the agreement. If there is 
a question about whether a particular provision is applicable, FAS will 
make the determination.

[[Page 979]]

    (2) The subrecipient must pay to the Cooperator the value of CCC-
provided funds, interest, or program income that are not used in 
accordance with the subaward, or that are lost, damaged, or misused as a 
result of the subrecipient's failure to exercise reasonable care.
    (3) In accordance with 2 CFR 200.501(h), subawards must include a 
description of the applicable compliance requirements and the 
subrecipient's compliance responsibility. Methods to ensure compliance 
may include pre-award audits, monitoring during the agreement, and post-
award audits.
    (c) A Cooperator must monitor the actions of a subrecipient as 
necessary to ensure that CCC-provided funds and program income provided 
to the subrecipient are used for authorized purposes in compliance with 
applicable U.S. Federal laws and regulations and the subaward and that 
performance indicator targets are achieved for both activities and 
results under the agreement.



Sec.1484.80  Audit requirements.

    (a) Subpart F of 2 CFR part 200 applies to all Cooperators and 
subrecipients under this part other than those that are for-profit 
entities, foreign public entities, or foreign organizations.
    (b) A Cooperator or subrecipient that is a for-profit entity or a 
subrecipient that is a foreign organization and that expends, during its 
fiscal year, a total of at least the audit requirement threshold in 2 
CFR 200.501 in Federal awards, is required to obtain an audit. Such a 
Cooperator or subrecipient has the following two options to satisfy this 
requirement:
    (1)(i) A financial audit of the agreement or subaward, in accordance 
with the Government Auditing Standards issued by the United States 
Government Accountability Office (GAO), if the Cooperator or 
subrecipient expends Federal awards under only one FAS program during 
such fiscal year; or
    (ii) A financial audit of all Federal awards from FAS, in accordance 
with GAO's Government Auditing Standards, if the Cooperator or 
subrecipient expends Federal awards under multiple FAS programs during 
such fiscal year; or
    (2) An audit that meets the requirements contained in subpart F of 2 
CFR part 200.
    (c) A Cooperator or subrecipient that is a for-profit entity or a 
subrecipient that is a foreign organization and that expends, during its 
fiscal year, a total that is less than the audit requirement threshold 
in 2 CFR 200.501 in Federal awards, is exempt from requirements under 
this section for an audit for that year, except as provided in 
paragraphs (d) and (f) of this section, but it must make records 
available for review by appropriate officials of Federal agencies.
    (d) FAS may require an annual financial audit of an agreement or 
subaward when the audit requirement threshold in 2 CFR 200.501 is not 
met. In that case, FAS must provide funds under the agreement for this 
purpose, and the Cooperator or subrecipient, as applicable, must arrange 
for such audit and submit it to FAS.
    (e) When a Cooperator or subrecipient that is a for-profit entity or 
a subrecipient that is a foreign organization is required to obtain a 
financial audit under this section, it must provide a copy of the audit 
to FAS within 60 days after the end of its fiscal year.
    (f) FAS, the USDA Office of Inspector General, or GAO may conduct or 
arrange for additional audits of any Cooperators or subrecipients, 
including for-profit entities and foreign organizations. Cooperators and 
subrecipients must promptly comply with all requests related to such 
audits. If FAS conducts or arranges for an additional audit, such as an 
audit with respect to a particular agreement, FAS will fund the full 
cost of such an audit, in accordance with 2 CFR 200.503(d).



Sec.1484.81  Suspension and termination of agreements.

    (a) An agreement or subaward may be suspended or terminated in 
accordance with 2 CFR 200.338 or 200.339. FAS may suspend or terminate 
an agreement if it determines that:
    (1) One of the bases in 2 CFR 200.338 or 200.339 for termination or 
suspension by FAS has been satisfied; or
    (2) The continuation of the assistance provided under the agreement 
is no longer necessary or desirable.

[[Page 980]]

    (b) If an agreement is terminated, the Cooperator:
    (1) Is responsible for using or returning any CCC-provided funds, 
interest, or program income that have not been disbursed, as agreed to 
by FAS; and
    (2) Must comply with any closeout and post-closeout procedures 
specified in the agreement and 2 CFR 200.343 and 200.344.



Sec.1484.82  Noncompliance with an agreement.

    (a) If a Cooperator fails to comply with any term in its agreement, 
approval letter, or this part, CCC may take one or more of the 
enforcement actions in 2 CFR part 200 and, if appropriate, initiate a 
claim against the Cooperator, following the procedures set forth in this 
part. CCC may also initiate a claim against a Cooperator if program 
income or CCC-provided funds are lost due to an action or omission of 
the Cooperator. If any Cooperator has engaged in fraud with respect to 
the Cooperator program, or has otherwise violated program requirements 
under this part, CCC may:
    (1) Hold such Cooperator liable for any and all losses to CCC 
resulting from such fraud or violation;
    (2) Require a refund of any assistance provided to such Cooperator 
plus interest as determined by FAS; and
    (3) Collect liquidated damages from such Cooperator in an amount 
determined appropriate by FAS.
    (b) The provisions of this section shall be without prejudice to any 
other remedy that is available under any other provision of law.



PART 1485_GRANT AGREEMENTS FOR THE DEVELOPMENT OF FOREIGN MARKETS 
FOR U.S. AGRICULTURAL COMMODITIES--Table of Contents



Subpart A--[Reserved]

                     Subpart B_Market Access Program

Sec.
1485.10 General purpose and scope.
1485.11 Definitions.
1485.12 Participation eligibility.
1485.13 Application process.
1485.14 Application review and formation of agreements.
1485.15 Operational procedures for brand programs.
1485.16 Contribution and cost share rules.
1485.17 Reimbursement rules.
1485.18 Reimbursement procedures.
1485.19 Advances.
1485.20 Employment practices.
1485.21 Financial management.
1485.22 Reports.
1485.23 Evaluation.
1485.24 Compliance reviews and notices.
1485.25 Failure to make required contribution or cost share.
1485.26 Submissions.
1485.27 Disclosure of program information.
1485.28 Ethical conduct.
1485.29 Subawarding procedures.
1485.30 Property standards.
1485.31 Anti-fraud requirements.
1485.32 Program income.
1485.33 Amendments.
1485.34 Subrecipients.
1485.35 Audit requirements.
1485.36 Suspension and termination of agreements.
1485.37 Noncompliance with an agreement.
1485.38 Paperwork reduction requirements.

    Authority: 7 U.S.C. 5623, 5662-5663

    Source: 85 FR 1732, Jan. 13, 2020, unless otherwise noted.

Subpart A [Reserved]



                     Subpart B_Market Access Program



Sec.1485.10  General purpose and scope.

    (a) This subpart sets forth the general terms and conditions 
governing the Commodity Credit Corporation's (CCC) operation of the 
Market Access Program (MAP).
    (b)(1) The Office of Management and Budget (OMB) issued guidance on 
Uniform Administrative Requirements, Cost Principles, and Audit 
Requirements for Federal Awards in 2 CFR part 200. In 2 CFR 400.1, the 
U.S. Department of Agriculture (USDA) adopted OMB's guidance in subparts 
A through F of 2 CFR part 200, as supplemented by 2 CFR part 400, as 
USDA policies and procedures for uniform administrative requirements, 
cost principles, and audit requirements for Federal awards.
    (2) The OMB guidance at 2 CFR part 200, as supplemented by 2 CFR 
part 400 and this subpart, applies to the Market Access Program (MAP) 
Program.

[[Page 981]]

    (3) In addition to the provisions of this subpart, other regulations 
that are generally applicable to grants and cooperative agreements of 
USDA, including the applicable regulations set forth in 2 CFR chapters 
I, II, and IV, also apply to the MAP, to the extent that these 
regulations do not directly conflict with the provisions of this 
subpart. The provisions of the CCC Charter Act (15 U.S.C. 714 et seq.) 
and any other statutory or regulatory provisions that are generally 
applicable to CCC also apply to the MAP.
    (c) Under the MAP, CCC may provide grants to eligible U.S. entities 
to conduct certain marketing and promotion activities aimed at 
developing, maintaining, or expanding commercial export markets for U.S. 
agricultural commodities. MAP Participants may receive assistance for 
either generic or brand promotion activities. While activities generally 
take place overseas, reimbursable activities may also take place in the 
United States. CCC expects all activities that occur in the United 
States for which MAP reimbursement is sought to develop, maintain, or 
expand the commercial export market for the relevant U.S. agricultural 
commodity in accordance with the MAP Participant's approved MAP program.
    (d) The MAP generally operates on a reimbursement basis.
    (e) CCC's policy is to ensure that benefits generated by MAP 
agreements are broadly available throughout the relevant agricultural 
sector and that no single entity gains an undue advantage or sole 
benefit from program activities. CCC also endeavors to enter into MAP 
agreements covering a broad array of agricultural commodity sectors. The 
MAP is administered by the Foreign Agricultural Service (FAS) acting on 
behalf of CCC.



Sec.1485.11  Definitions.

    For purposes of this subpart the following definitions apply:
    Activity means a specific foreign market development effort 
undertaken by a MAP Participant.
    Administrative expenses or costs means expenses or costs of 
administering, directing, and controlling an organization that is a MAP 
Participant. Generally, this would include expenses or costs such as 
those related to:
    (1) Maintaining a physical office (including, but not limited to: 
Rent, office equipment, office supplies, office d[eacute]cor, office 
furniture, computer hardware and software, maintenance, extermination, 
parking, and business cards);
    (2) Personnel (including, but not limited to: Salaries, benefits, 
payroll taxes, individual insurance, and training);
    (3) Communications (including, but not limited to: Phone expenses, 
internet, mobile phones, personal digital assistants, email, mobile 
email devices, postage, courier services, television, radio, and walkie 
talkies);
    (4) Management of an organization or unit of an organization 
(including, but not limited to: Planning, supervision, supervisory 
travel, teambuilding, recruiting, and hiring);
    (5) Utilities (including, but not limited to: Sewer, water, and 
energy);
    (6) Professional services (including, but not limited to: Accounting 
expenses, financial services, and investigatory services).
    Affiliate means any partnership, association, company, corporation, 
trust, or any other such party in which the Participant has an 
investment, other than a mutual fund.
    Agreement means a legally binding grant entered into between CCC and 
a MAP applicant setting forth the terms and conditions to implement 
approved activities under the MAP program, including any subsequent 
amendments to such agreement.
    Approval letter means a document by which CCC informs an applicant 
that its MAP application for a program year has been approved for 
funding. This letter may also approve specific activities and contain 
terms and conditions in addition to the agreement. This letter requires 
a countersignature by the MAP Participant before it becomes effective.
    Attach[eacute]/Counselor means the FAS employee representing USDA 
interests in the foreign country in which promotional activities are 
conducted.
    Brand participant means a small-sized U.S. for-profit entity or a 
U.S. agricultural cooperative that owns the brand(s) of the eligible 
commodity to

[[Page 982]]

be promoted or has the exclusive rights to use such brand(s) and that is 
participating in the MAP brand promotion program of another MAP 
Participant. This definition does not include any U.S. agricultural 
cooperatives that are MAP Participants that apply for MAP funds to 
implement their own brand programs.
    Brand promotion means an activity that involves the exclusive or 
predominant use of a single U.S. company name, or the logo or brand name 
of a single U.S. company, or the brand of a U.S. agricultural 
cooperative, or any activity undertaken by a MAP Participant in the 
brand program.
    Constraint means a condition in a particular country or region that 
needs to be addressed in order to develop, expand, or maintain exports 
of a specific eligible commodity.
    Contribution means the funds, e.g., money, personnel, materials, 
services, facilities, or supplies, provided by a MAP Participant, State 
agency or entities in the MAP Participant's industry (``U.S. industry'') 
in support of a MAP Participant's generic promotion program as well as 
funds provided by the MAP Participant, U.S. industry, or State agency in 
support of related promotion activities in the markets covered by the 
MAP Participant's agreement.
    Cost share means the funds, e.g., money, personnel, materials, 
services, facilities, or supplies, provided by a MAP Participant, 
entities in the MAP Participant's industry, or State agency in support 
of an approved activity.
    Credit memo means a commercial document, also known as a credit 
memorandum, issued by the MAP Participant to a commercial entity that 
owes the MAP Participant a certain sum. A credit memo is used when the 
MAP Participant owes the commercial entity a sum less than the amount 
the entity owes the Participant. The credit memo reflects an offset of 
the amount the MAP Participant owes the entity against the amount the 
entity owes to the MAP Participant.
    Demonstration projects means activities involving the erection or 
construction of a structure or facility or the installation of 
equipment.
    Eligible commodity means any agricultural commodity or product 
thereof, excluding tobacco, that is comprised of at least 50 percent by 
weight, exclusive of added water, of agricultural commodities grown or 
raised in the United States.
    Expenditure means either payment via the transfer of funds or offset 
reflected in a credit memo in lieu of a transfer of funds.
    FAS website means a website maintained by FAS providing information 
on the MAP. It is currently accessible at www.fas.usda.gov/programs/
market-access-program-map.
    Foreign subrecipient means a foreign entity that a MAP Participant 
works with, in accordance with this subpart, to promote the export of an 
eligible commodity under the MAP program.
    Generic promotion means an activity that is not a brand promotion 
but, rather, promotes an eligible commodity generally. A generic 
promotion activity may include the promotion of a foreign brand (i.e., a 
brand owned primarily by foreign interests and being used to market a 
commodity or product in a foreign market), if the foreign brand uses the 
promoted eligible commodity or product from multiple U.S. suppliers. A 
generic promotion activity may also involve the use of specific U.S. 
company names, logos, or brand names. However, in that case, the MAP 
Participant must ensure that all U.S. companies seeking to promote such 
eligible commodity in the market have an equal opportunity to 
participate in the activity and that at least two U.S. companies 
participate. In addition, an activity that promotes separate items from 
multiple U.S. companies will be considered a generic promotion only if 
the promotion of the separate items maintains a unified theme (i.e., a 
dominant idea or motif) and style and is subordinate to the promotion of 
the generic theme.
    MAP is the acronym for the Market Access Program.
    MAP Participant or Participant means an entity that has entered into 
an agreement with CCC.
    Market means a country or region targeted by an activity.
    Notification means a document from the MAP Participant by which the

[[Page 983]]

MAP Participant proposes to CCC changes to the activities and/or funding 
levels in an approved agreement and/or approval letter.
    Product samples means a representative part of a larger whole 
promoted commodity or group of promoted commodities. Product samples 
include all forms of a promoted commodity (e.g., fresh or processed), 
independent of the ultimate utilization of the sample. Product samples 
might be used in support of international marketing activities 
including, but not limited to: Displays, food process testing, cooking 
demonstrations, or trade and consumer tastings.
    Program notice means documents that CCC issues for informational 
purposes. These notices are currently made available electronically 
through the FAS website. These notices have no legal effect. They are 
intended to alert MAP Participants of various aspects of CCC's current 
administration of the MAP program. For example, CCC issues notices to 
alert Participants of applicable Federal pay scale rates and lists of 
economic and trade sanctions against certain foreign countries.
    Program year means, unless otherwise agreed to in writing between 
CCC and a MAP Participant, a 12-month period during which a MAP 
Participant can undertake activities consistent with this subpart and 
its agreement and approval letter with CCC. This is also known as a 
project period, which in multiple year awards will be divided into 
budget periods.
    Promoted commodity means an eligible commodity the sale of which is 
the intended result of a promotional activity under the MAP.
    Sales and trade relations expenditures (STRE) means expenditures 
made on breakfast, lunch, dinner, receptions, and refreshments at 
approved activities; miscellaneous courtesies such as checkroom fees, 
taxi fares, and tips for approved activities; and decorations for a 
special promotional occasion that is part of an approved activity.
    Sales team means a group of individuals engaged in an approved 
activity intended to result in specific sales.
    Small-sized entity means a U.S. commercial entity that meets the 
small business size standards published at 13 CFR part 121, Small 
Business Size Regulations.
    SRTG is the acronym for State Regional Trade Group. An SRTG is a 
nonprofit association of state-funded agricultural promotion agencies.
    Supergrade means a salary level above the reimbursable salary range 
generally allowable under the MAP, which CCC may approve on a case by 
case basis. This salary level is available only for certain non-U.S. 
employees who direct MAP Participants' overseas offices.
    Temporary contractor means a contractor, typically a consultant or 
other highly paid professional, that is hired on a short-term basis to 
assist in the performance of an activity.
    Trade team means a group of individuals engaged in an approved 
activity intended to promote the interests of an entire agricultural 
sector rather than to result in specific sales by any of its members.
    Unified Export Strategy (UES) means a holistic marketing plan that 
outlines an applicant's proposed foreign market development activities 
and requested funding under each of the FAS market development programs.
    Unified Export Strategy (UES) system means an online internet system 
maintained by FAS through which applicants may currently apply to the 
MAP and other FAS market development programs. The system is currently 
accessible at https://apps.fas.usda.gov/ues/webapp/. FAS may prescribe a 
different system through which applicants may apply to MAP and will 
announce such system in the applicable Notice of Funding Opportunity 
(NOFO).
    U.S. agricultural commodity means any agricultural commodity of U.S. 
origin, including food, feed, fiber, forestry product, livestock, 
insects, and fish harvested from a U.S. aquaculture farm or harvested by 
a vessel (as defined in Title 46 of the United States Code) in waters 
that are not waters (including the territorial sea) of a foreign 
country, and any product thereof.
    U.S. for-profit entity means an organized or incorporated firm, 
association, or other entity that is located and doing business for 
profit in the United States and is engaged in the export or sale of an 
eligible commodity.

[[Page 984]]



Sec.1485.12  Participation eligibility.

    (a) To participate in the MAP, an entity shall be:
    (1) A nonprofit U.S agricultural trade organization;
    (2) A nonprofit SRTG;
    (3) A U.S. agricultural cooperative; or
    (4) A State agency.
    (b) CCC will enter into an agreement only for the promotion of an 
eligible commodity.
    (c) FAS may set forth specific eligibility information, including 
any factors or priorities that will affect the eligibility of an 
applicant or application for selection, in the full text of the 
applicable NOFO posted on the U.S. Government website for grant 
opportunities.



Sec.1485.13  Application process.

    (a) General application requirements. CCC will periodically announce 
through a NOFO that it is accepting applications for participation in 
the MAP for a specified program year. This announcement will be posted 
on the U.S. Government website for grant opportunities. Applications 
shall be submitted in accordance with the terms and requirements 
specified in the announcement and in this part. Currently, applicants 
are encouraged to submit applications through the UES system but are not 
required to do so. Applicants may apply to conduct a generic promotion 
program and/or a brand promotion program that provides MAP funds to 
brand participants for branded promotion. An applicant that is a U.S. 
agricultural cooperative may also apply for funds to conduct its own 
brand promotion program.
    (b) Universal identifier and System for Award Management (SAM). In 
accordance with 2 CFR part 25, each entity that applies to the MAP 
program and does not qualify for an exemption under 2 CFR 25.110 must:
    (1) Be registered in the SAM prior to submitting an application or 
plan;
    (2) Maintain an active SAM registration with current information at 
all times during which it has an active Federal award or an application 
or plan under consideration by CCC; and
    (3) Provide its DUNS number, or a unique identifier designated as a 
DUNS replacement, in each application or plan it submits to CCC.
    (c) Reporting subaward and executive compensation information. In 
accordance with 2 CFR part 170, each entity that applies to the MAP 
program and does not qualify for an exception under 2 CFR 170.110(b) 
must ensure it has the necessary processes and systems in place to 
comply with the applicable reporting requirements of 2 CFR part 170 
should it receive MAP funding.



Sec.1485.14  Application review and formation of agreements.

    (a) General. (1) CCC will, subject to the availability of funds, 
approve those applications that it considers to present the best 
opportunity for developing, maintaining, or expanding export markets for 
U.S. agricultural commodities. CCC will review all proposals for 
eligibility and completeness. CCC will evaluate and score each proposal 
against the factors described in the NOFO. The purpose of this review is 
to identify meritorious proposals, recommend an appropriate funding 
level for each proposal, and submit the proposals and funding 
recommendations to appropriate officials for decision. CCC may, when 
appropriate to the subject matter of the proposal, request the 
assistance of other U.S. Government experts in evaluating the merits of 
a proposal.
    (2) When considering eligible nonprofit U.S. trade organizations, 
CCC may weigh which organizations have the broadest producer 
representation and affiliated industry participation of the commodity 
being promoted. CCC may require that an applicant participate in the MAP 
through another MAP Participant or applicant. All reviewers will be 
required to sign a conflict of interest form, and when conflicts of 
interests are identified the reviewer will be recused from the objective 
review process.
    (b) Application review criteria. CCC follows results-oriented 
management principles and considers the following criteria when 
assessing the likelihood of success of the applications it receives, 
determining which applications to recommend for approval, and developing 
preliminary recommended funding levels:

[[Page 985]]

    (1) Strategic planning (25%);
    (2) Program implementation (25%); and
    (3) Program results and evaluation (50%).
    (c) Allocation factors. CCC determines final funding levels after 
allocating available funds to approved applications on the basis of 
criteria that will be fully described in each program year's MAP 
announcement. Generally, extensions will not be allowable.
    (d) Approval decision--(1) Approval decision. CCC will approve those 
applications that it determines best satisfy the criteria and factors 
specified in paragraphs (a), (b), and (c) of this section.
    (2) Notification of decision. CCC will notify each applicant in 
writing of the final disposition of its application. CCC will send an 
agreement, an approval letter, and a signature card to each approved 
applicant. The agreement and the approval letter will outline which 
activities and budgets are approved and will specify any special terms 
and conditions applicable to a MAP Participant's program, including any 
requirements with respect to contribution, cost share and program 
evaluations. An applicant that decides to accept the terms and 
conditions contained in the agreement and the approval letter must so 
indicate by having its Chief Executive Officer (CEO) or designee sign 
the agreement and the approval letter and submit these to CCC. Final 
agreement shall occur when the agreement and the approval letter are 
signed by both parties. The agreement, approval letter, and this subpart 
shall establish the terms and conditions of a MAP agreement between CCC 
and the approved applicant.
    (e) Signature cards. The MAP Participant shall designate at least 
two individuals in its organization to sign agreements and amendments, 
approval letters, reimbursement claims, and advance requests. The MAP 
Participant shall submit the signature card signed by those designated 
individuals and by the MAP Participant's CEO to CCC prior to the start 
of the program year. The Participant shall immediately notify CCC of any 
changes in signatories (e.g., removal or addition of individuals, name 
changes, etc.), and shall submit a revised signature card accordingly.
    (f) UES ID and passwords. CCC will provide each MAP Participant with 
IDs and passwords for the UES system, as necessary. MAP Participants 
shall protect these IDs and passwords in accordance with USDA's 
information technology policies. MAP Participants shall immediately 
notify CCC whenever a person who possesses the ID and password 
information no longer needs such information or a person who is not 
authorized gains such information.
    (g) Annual size certification. A MAP Participant through which 
small-sized U.S. for-profit entities and/or U.S. agricultural 
cooperatives are participating in the MAP program shall obtain annual 
certifications from all such entities that they are small-sized U.S. 
entities or U.S. agricultural cooperatives as defined in these 
regulations. The Participant shall retain these certifications in 
accordance with the recordkeeping requirements of this subpart.
    (h) Changes to activities and funding--(1) Adding a new activity. 
(i) A MAP Participant may not conduct a new activity without first 
obtaining an approved activity budget for such change. To request 
approval of such activity budget, the MAP Participant shall submit a 
notification to CCC.
    (ii) A notification for a new activity shall provide an activity 
justification and identify any related adjustments to the approved 
strategic plan, including changes in the market, constraint, or 
opportunity that the activity proposes to address. The notification 
shall contain the activity description, the proposed budget, and a 
justification for the transfer of funds.
    (iii) After receipt of the notification, CCC will inform the MAP 
Participant via the UES system whether the requested budget is approved.
    (2) Modifying existing activities and their funding levels. (i) A 
MAP Participant desiring to increase the funding level for existing, 
approved activities addressing a single constraint or opportunity by 
more than $25,000 or 25 percent of the approved funding level, whichever 
is greater, must first submit a notification explaining the adjustment 
to CCC before making such change.

[[Page 986]]

    (ii) A MAP Participant may make significant adjustments below that 
threshold to the funding levels for existing, approved activities 
without prior notification to CCC, but only if it submits a notification 
explaining the adjustments to CCC no later than 30 calendar days after 
the change. Minor adjustments to existing, approved activities and/or 
funding levels do not require notification.
    (iii) Notifications shall describe the activity and any changes to 
the activity, the existing funding level, or the proposed funding level 
and shall include a justification for the transfer of funds, if 
applicable.



Sec.1485.15  Operational procedures for brand programs.

    (a) Where CCC approves an application by a MAP Participant to run a 
brand promotion program that will include brand participants, the MAP 
Participant shall establish brand program operational procedures. The 
MAP Participant annually shall submit to CCC for approval its proposed 
brand program operational procedures for such program year. CCC will 
notify all new and existing MAP Participants in writing in each 
Participant's approval letter and through the FAS website as to 
applicable submission dates for brand program operation procedures. Such 
procedures shall include, at a minimum, a brand program application, 
application procedures, application review criteria, brand participant 
eligibility requirements, a participation agreement, reimbursement 
requirements, compliance requirements, reporting and recordkeeping 
requirements, employment practices, financial management requirements, 
contracting procedures, and evaluation requirements.
    (b) The MAP Participant shall not enter into any participation 
agreements with brand participants nor shall it implement any MAP brand 
activities for the applicable program year unless and until CCC has 
communicated in writing its approval of the proposed operational 
procedures to the MAP Participant.
    (c) Participation agreements between MAP Participants and brand 
participants. Where CCC approves a MAP Participant's application to run 
a brand promotion program that will include brand participants, the MAP 
Participant shall enter into participation agreements with brand 
participants. These agreements must:
    (1) Specify a time period for such brand promotion and require that 
all brand promotion expenditures be made within the MAP Participant's 
approved program year;
    (2) Make no allowance for extension or renewal;
    (3) Limit reimbursable expenditures to those made in countries and 
for activities approved in the brand participant's activity plan;
    (4) Specify the percentage of promotion expenditures that will be 
reimbursed, reimbursement procedures, and documentation requirements;
    (5) Include a written certification by the brand participant that it 
either owns the brand of the product it will promote or has exclusive 
rights to promote the brand in each of the countries in which promotion 
activities will occur;
    (6) Require: That all product labels, promotional material, and 
advertising will identify the origin of the eligible commodity as 
``American,'' ``Product of the United States of America,'' ``Product of 
the U.S.,'' ``Product of the U.S.A.,'' ``Product of America,'' ``Grown 
in the United States of America,'' ``Grown in the U.S.,'' ``Grown in the 
U.S.A.,'' ``Grown in America,'' ``Made in the United States of 
America,'' ``Made in the U.S.,'' ``Made in the U.S.A.,'' ``Made in 
America,'' or product of, grown in, or made in any state or territory of 
the United States of America spelled out in its entirety, or other U.S. 
regional designation if approved in advance by CCC; that such origin 
identification will be conspicuously displayed in a manner easily 
observed as identifying the origin of the product; and that such origin 
identification will conform, to the extent possible, to the U.S. 
standard of 1/6 inch (.42 centimeters) in height based on the lower case 
letter ``o.'' The use of these terms as a descriptor or in the name of 
the product (e.g., Texas style chili, Bob's American Pizza) does not 
satisfy the product origin requirement. Phrases ``product of,'' ``grown 
in,'' or

[[Page 987]]

``made in'' are encouraged, but not required. A MAP Participant may 
request an exemption from this requirement on a case by case basis. All 
such requests shall be in writing and include justification satisfactory 
to CCC that this labeling requirement would hinder a MAP Participant's 
promotional efforts. CCC will determine, on a case by case basis, 
whether sufficient justification exists to grant an exemption from the 
labeling requirement. In addition, CCC may temporarily waive this 
requirement where CCC has determined that such labeling will likely harm 
sales rather than help them. Such determinations will be announced to 
MAP Participants via a program notice issued on FAS' website;
    (7) Include a written certification by the brand participant that it 
is either a small-sized entity as defined in this subpart or a U.S. 
agricultural cooperative;
    (8) Require that the brand participant submit to the MAP Participant 
a statement certifying that any Federal funds received will supplement, 
but not supplant, any private or third-party funds or other contribution 
or cost share to program activities; and
    (9) Require the brand participant to maintain all original records 
and documents relating to program activities for five calendar years 
following the end of the applicable program year and make such records 
and documents available upon request to authorized officials of the U.S. 
Government.



Sec.1485.16  Contribution and cost share rules.

    (a) A MAP Participant implementing a MAP generic promotion program 
shall make contributions equal to at least 10 percent of the total 
amount reimbursed by CCC for all approved generic promotion activities 
undertaken by the MAP Participant. The contribution amount will be 
reflected in the award budget.
    (b) A MAP Participant conducting its own brand promotion or a brand 
participant that is participating in the MAP brand promotion program of 
another MAP Participant shall provide funds for the branded activity in 
an amount that is at least equivalent to the amount of assistance they 
get from MAP for that activity.
    (c) A MAP Participant must use its own funds and may not use MAP 
funds to pay any administrative costs of the MAP Participant's U.S. 
office(s), including legal fees, except as set forth in this subpart. 
Where the MAP Participant uses its own funds to pay for administrative 
costs, such costs may be counted in calculating the amount of 
contribution or cost share the MAP Participant contributes to MAP 
generic or brand promotion programs.
    (d)(1) In calculating the amount of contribution or cost share that 
it will make, and the contribution or cost share that the U.S. industry 
(including expenditures to be made by entities in the applicant's 
industry in support of the entities' related promotion activities in the 
markets covered by the applicant's application) or State or local agency 
will make, the MAP applicant may include the costs (or such prorated 
costs) listed under paragraph (d)(2) of this section if:
    (i) Expenditures are necessary and reasonable for accomplishment of 
an approved activity;
    (ii) Expenditures are not included as cost share for any other 
Federal award;
    (iii) Expenditures are not paid by the Federal Government under 
another Federal award, except where the Federal statute authorizing a 
program specifically provides that Federal funds made available for such 
program can be applied to matching or cost sharing requirements of other 
Federal programs; and
    (iv) The contribution or cost share is made during the period 
covered by the agreement.
    (2) Subject to paragraph (d)(1) of this section, as well as the cost 
principles in 2 CFR part 200 to the extent these principles do not 
directly conflict with the provisions of this subpart, the following are 
eligible contribution or cost share:
    (i) Cash;
    (ii) Compensation paid to personnel;
    (iii) The cost of acquiring materials, supplies, or services;
    (iv) The cost of office space, including legal fees;

[[Page 988]]

    (v) A reasonable and justifiable proportion of general 
administrative costs and overhead;
    (vi) Payments for indemnity and fidelity bond expenses;
    (vii) The cost of business cards that target a foreign audience;
    (viii) Fees for office parking;
    (ix) The cost of subscriptions that are of a technical, economic, or 
marketing nature and that are relevant to the approved activities of the 
MAP Participant;
    (x) The cost of activities conducted overseas;
    (xi) Credit card fees;
    (xii) The cost of any independent evaluation or audit that is not 
required by CCC to ensure compliance with agreement or regulatory 
requirements;
    (xiii) The cost of giveaways, awards, prizes, and gifts;
    (xiv) The cost of product samples;
    (xv) Fees for participating in U.S. Government sponsored or endorsed 
export promotion activities;
    (xvi) The cost of air and local travel in the United States related 
to a foreign market development effort;
    (xvii) Transportation and shipping costs;
    (xviii) The cost of displays and promotional materials;
    (xix) Advertising costs;
    (xx) Reasonable travel costs and expenses related to undertaking a 
foreign market development activity;
    (xxi) The costs associated with trade shows, seminars, and STRE 
conducted in the United States, and costs associated with entertainment 
conducted in the United States where such entertainment costs have a 
programmatic purpose and are authorized in the agreement and/or the 
approval letter or are authorized by prior written approval of CCC;
    (xxii) Product research that is undertaken to benefit an industry 
and has a specific export application;
    (xxiii) Other administrative expenses (e.g., supervisory travel from 
the U.S. to an overseas office); and
    (xxiv) The cost of any activity expressly listed as reimbursable in 
this subpart.
    (3) The following are not eligible contribution or cost share:
    (i) Any portion of salary or compensation of an individual who is 
the target of a promotional activity;
    (ii) Any expenditure, including that portion of salary and time 
spent, related to promoting membership in the Participant's 
organization;
    (iii) Any land costs other than allowable costs for office space;
    (iv) The cost of refreshments and related equipment provided to 
office staff;
    (v) The cost of insuring articles owned by private individuals;
    (vi) The cost of any arrangement that has the effect of reducing the 
selling price of a U.S. agricultural commodity;
    (vii) The cost of product development, product modifications, or 
product research;
    (viii) Slotting fees or similar sales expenditures;
    (ix) Funds, services, capital goods, or personnel provided by any 
U.S. Government agency;
    (x) The value of any services generated by a MAP Participant or 
third party that involve no expenditure by the MAP Participant or third 
party, e.g., free publicity;
    (xi) Membership fees in clubs and social organizations; and
    (xii) Any expenditure for an activity prior to CCC's approval of 
that activity.
    (4) CCC shall determine, at CCC's discretion, whether any cost not 
expressly listed in this section may be included by the MAP Participant 
as an eligible contribution or cost share.



Sec.1485.17  Reimbursement rules.

    (a) A MAP Participant may seek reimbursement for an eligible 
expenditure if:
    (1) The expenditure was necessary and reasonable for the performance 
of an approved activity; and
    (2) The Participant has not been and will not be reimbursed for such 
expenditure by any other source.
    (b) Subject to paragraphs (a) and (d) of this section, as well as 
the cost principles in 2 CFR 200 to the extent these principles do not 
directly conflict with

[[Page 989]]

the provisions of this subpart, for either brand or generic promotion 
activities, CCC will reimburse, in whole or in part, the cost of:
    (1) Production and placement of advertising, including in print, 
electronic media, billboards, or posters, which may include advertising 
the availability of price discounts, except that advertising associated 
with a coupon or price discount for the MAP-promoted product is not 
reimbursable. If advertising is related to both coupons or price 
discounts for products other than the MAP Participant's promoted 
products as well as for MAP-promoted products, expenditures for such 
advertising will not be reimbursed in whole or in part (e.g., 
expenditures may not be prorated and submitted for reimbursement). 
Electronic media includes, but is not limited to, radio, television, 
electronic mail, internet, telephone, text messaging, and podcasting;
    (2) Production and distribution of banners, recipe cards, table 
tents, shelf talkers, and other similar point of sale materials;
    (3) Direct mail advertising;
    (4) In-store and food service promotions, product demonstrations to 
the trade and to consumers, and distribution of product samples (but not 
the purchase of the product samples), including shipment of samples or 
other program materials from the United States to foreign countries;
    (5) Temporary displays and rental of space for temporary displays;
    (6) Expenditures, other than travel expenditures, associated with 
seminars and educational training, whether conducted in the United 
States or outside the United States, including space rental, equipment 
rental, and duplication of seminar materials;
    (7) Subject to paragraph (b)(18) of this section, non-travel 
expenditures, including participation fees, booth construction, 
transportation of related materials, rental of space and equipment, and 
duplication of related printed materials, associated with retail, trade, 
and consumer exhibits and shows, whether held outside or inside the 
United States. However, non-travel expenditures associated with retail, 
trade, and consumer exhibits and shows held inside the United States are 
reimbursable only if the exhibit or show is included on the list of 
approved U.S. exhibits and shows announced via a program notice issued 
on FAS' website and the exhibit or show is one that the MAP Participant 
has not participated in within the last three years using funds from a 
source other than the MAP. Retail, trade, and consumer exhibits and 
shows held inside the United States may be considered for inclusion on 
the list of approved exhibits and shows if they are:
    (i) A food or agricultural exhibit or show with no less than 30% of 
exhibitors selling food or agricultural products; and
    (ii) An international exhibit or show that targets buyers, 
distributors, and the like from more than one foreign country and no 
less than 15% of its visitors are from countries other than the host 
country;
    (8) Subject to paragraph (b)(18) of this section, international 
travel expenditures (with airfare limited to the full fare economy 
rate), including per diem and any fees for passports, visas, 
inoculations, and modifying the originally purchased airline ticket, as 
allowed under the U.S. Federal Travel Regulations (41 CFR parts 300 
through 304), for no more than two representatives of a single brand 
participant (or MAP Participant directly running its own brand program) 
to exhibit their company's (or cooperative's) products at a retail, 
trade, or consumer exhibit or show held outside the United States. 
Representatives may include employees and board members of private 
companies, employees or members of cooperatives, or any broker, 
consultant, or marketing representative contracted by the company or 
cooperative to represent the company or cooperative in sales 
transactions;
    (9) Subscriptions that are of a technical, economic, or marketing 
nature and that are relevant to the approved activities of the MAP 
Participant;
    (10) Demonstrators, interpreters, translators, receptionists, and 
similar temporary workers who help with the implementation of individual 
promotional activities, such as trade shows, in-store promotions, food 
service promotions, and trade seminars;

[[Page 990]]

    (11) Giveaways, awards, prizes, gifts, and other similar promotional 
materials, subject to such reimbursement limitation as CCC may determine 
and announce in writing to MAP Participants via a program notice issued 
on FAS' website. Reimbursement is available only when:
    (i) The items are described in detail with a per unit cost in an 
approved strategic plan; and
    (ii) Distribution of the promotional item is not contingent upon the 
consumer, or other target audience, purchasing a good or service to 
receive the promotional item;
    (12) The design and production of packaging, labeling, or origin 
identification to be used during the program year in which the 
expenditure is made, if such packaging, labeling, or origin 
identification is necessary to meet the importing requirements of a 
foreign country;
    (13) The design, production, and distribution of coupons for 
products other than the MAP Participant's promoted products. If such 
activities include both coupons or price discounts for products other 
than the MAP Participant's promoted products as well as for MAP-promoted 
products, expenditures for such activities will not be reimbursed in 
whole or in part (e.g., expenditures may not be prorated and submitted 
for reimbursement);
    (14) An audit of a MAP Participant as required by 2 CFR part 200, 
subpart F if the MAP is the MAP Participant's largest source of Federal 
funding;
    (15) The translation of written materials as necessary to carry out 
approved activities;
    (16) Expenditures associated with developing, updating, and 
servicing websites on the internet that clearly target a foreign 
audience;
    (17) International travel expenditures (with airfare limited to the 
full fare economy rate), including per diem and any fees for passports, 
visas, inoculations, and modifying the originally purchased airline 
ticket, as allowed under the U.S. Federal Travel Regulations (41 CFR 
parts 300 through 304), incurred for a foreign trade mission conducted 
outside the United States that is an activity under an approved branded 
program and that has met the following conditions:
    (i) Trade mission travel for company (or cooperative) 
representatives was identified as a separate approved activity in the 
MAP Participant's UES;
    (ii) The trade mission included representatives, as defined in 
paragraph (b)(8) of this section, from a minimum of five different 
companies (or cooperatives), and no more than two representatives from 
each participating company (or cooperative);
    (iii) The appropriate FAS overseas office supported the trade 
mission by dedicating meaningful funding or other resources (such as 
facilities or staff time) to the activity; and
    (iv)(A) The MAP Participant with the approved brand program produced 
an itinerary or agenda for the trade mission that demonstrated that 
company (or cooperative) representatives would be engaged for a minimum 
of 6 hours per day (except for the first and last days of the mission) 
in trade mission activities that include, at a minimum, each of the 
following:
    (1) A product showcase where the FAS overseas office approved an 
invitation list of qualified buyers;
    (2) Pre-arranged one-on-one business meetings; and
    (3) Evaluation and feedback sessions with FAS staff and trade 
mission sponsors.
    (B) Reimbursement is conditional on the MAP Participant having 
notified in writing the Attach[eacute]/Counselor in the destination 
country in advance of the travel;
    (18) Where USDA has sponsored or endorsed a U.S. pavilion at a 
retail, trade, or consumer exhibit or show, whether held outside or 
inside the United States, MAP funds may be used to reimburse the travel 
and/or non-travel expenditures of only those MAP Participants located 
within the U.S. pavilion. Such expenditures must also adhere to the 
standard terms and conditions of the U.S. pavilion organizer. Upon 
written request, CCC may temporarily waive this subsection, on a case by 
case basis, where the trade show is segregated into product pavilions or 
a company's distributor or importer is located outside the U.S. 
pavilion. Such

[[Page 991]]

waiver will be provided to the MAP Participant in writing; and
    (19) Contracts with U.S.-based organizations when the only 
contracted service such organizations provide to a MAP Participant is 
carrying out a specific market promotion activity in the United States 
directed to a foreign audience (e.g., a trade mission of foreign buyers 
coming to the United States to visit U.S. exporters). Such contracts may 
be reimbursable as a direct promotional expense. If a U.S.-based 
organization provides administrative services to the MAP Participant's 
domestic home office during a program year, any direct promotional 
services such organization provides to the Participant, whether for the 
Participant's domestic or overseas offices, during the same program year 
are not reimbursable.
    (c) Subject to paragraphs (a) and (d) of this section, as well as 
the cost principles in 2 CFR part 200 to the extent these principles do 
not directly conflict with the provisions of this subpart, but for 
generic promotion activities only, CCC will also reimburse, in whole or 
in part, the cost of:
    (1) Compensation and allowances for housing, educational tuition, 
and cost of living adjustments paid to a U.S. citizen employee or a U.S. 
citizen contractor stationed overseas, provided such benefits are 
granted under established written policies, except CCC will not 
reimburse that portion of:
    (i) The total of compensation and allowances that exceed 125 percent 
of the level of a GS-15 Step 10 salary for U.S. Government employees; or
    (ii) Allowances that exceed the rate authorized for U.S. Embassy 
personnel.
    (2) Approved Supergrade salaries for non-U.S. citizen employees and 
non-U.S. contractors stationed overseas;
    (3) Compensation of non-U.S. citizen staff employees or non-U.S. 
contractors stationed overseas, subject to the following limitations:
    (i) Where there is a local U.S. Embassy Foreign Service National 
(FSN) salary plan, CCC will not reimburse any portion of such 
compensation that exceeds the compensation prescribed for the most 
comparable position in the FSN salary plan, except for approved 
Supergrades; or
    (ii) Where an FSN salary plan does not exist, CCC will not reimburse 
any portion of such compensation that exceeds locally prevailing levels, 
which the MAP Participant shall document by a salary survey or other 
means, except for approved Supergrades;
    (4) A retroactive salary adjustment for non-U.S. citizen staff 
employees or non-U.S. contractors stationed overseas that conforms to a 
change in FSN salary plans, effective as of the date of such change;
    (5) Accrued annual leave as of the time employment is terminated or 
as of such time as required by local law;
    (6) Overtime paid to clerical staff of approved MAP-funded overseas 
offices;
    (7) Temporary contractor fees for contractors stationed overseas, 
except CCC will not reimburse any portion of any such fee that exceeds 
the daily gross GS-15, Step 10 salary for U.S. Government employees in 
effect on the date the fee is earned, unless a bidding process reveals 
that such a contractor is not available at or below that salary rate;
    (8)(i) Subject to paragraph (b)(18) of this section, international 
travel expenditures, including per diem and any fees for passports, 
visas, inoculations, and modifying the originally purchased airline 
ticket, for activities held outside the United States or in the United 
States, as allowed under the U.S. Federal Travel Regulations (41 CFR 
parts 300 through 304), except that if the activity is participation in 
a retail, trade, or consumer exhibit or show held inside the United 
States, international travel expenditures are reimbursable only if the 
exhibit or show is included on the list of approved U.S. exhibits and 
shows announced via a program notice issued on FAS' website and the 
exhibit or show is one that the Participant has not participated in 
within the last three years using funds from a source other than the 
MAP. Retail, trade, and consumer exhibits and shows held inside the 
United States may be considered for inclusion on the list of approved 
exhibits and shows if they are:
    (A) A food or agricultural exhibit or show with no less than 30% of 
exhibitors selling food or agricultural products; and

[[Page 992]]

    (B) An international exhibit or show that targets buyers, 
distributors, and the like from more than one foreign country and no 
less than 15% of its visitors are from countries other than the host 
country.
    (ii) CCC generally will not reimburse any portion of air travel, 
including any fees for modifying the originally purchased ticket, in 
excess of the full fare economy rate. If a traveler flies in business 
class or a different premium class, the basis for reimbursement will be 
the full fare economy class rate for the same flight and the MAP 
Participant shall provide documentation establishing such full fare 
economy class rate to support its reimbursement claim. If economy class 
is not offered for the same flight or if the traveler flies on a charter 
flight, the basis for reimbursement will be the average of the full fare 
economy class rate for flights offered by three different airlines 
between the same points on the same date and the MAP Participant shall 
provide documentation establishing such average of the full fare economy 
class rates to support its reimbursement claim.
    (iii) In very limited circumstances, the MAP Participant may be 
reimbursed for air travel up to the business class rate (i.e., a premium 
class rate other than the first class rate). Such circumstances are:
    (A) Regularly scheduled flights between the origin and destination 
points do not offer economy class (or equivalent) airfare and the MAP 
Participant receives written documentation to that effect at the time 
the tickets are purchased;
    (B) Business class air travel is necessary to accommodate an 
eligible traveler's disability. Such disability must be substantiated in 
writing by a physician; or
    (C) An eligible traveler's origin and/or destination are outside of 
the continental United States and the scheduled flight time, beginning 
with the scheduled departure time and ending with the scheduled arrival 
time, including stopovers and changes of planes, exceeds 14 hours. In 
such cases, per diem and other allowable expenses will also be 
reimbursable for the day of arrival. However, no expenses will be 
reimbursable for a rest period or for any non-work days (e.g., weekends, 
holidays, personal leave, etc.) immediately following the date of 
arrival. A stopover is the time a traveler spends at an airport, other 
than the originating or destination airport, which is a normally 
scheduled part of a flight. A change of planes is the time a traveler 
spends at an airport, other than the originating or destination airport, 
to disembark from one flight and embark on another. All travel should 
follow a direct or usually traveled route. Under no circumstances should 
a traveler select flights in a manner that extends the scheduled flight 
time to beyond 14 hours in part to secure eligibility for reimbursement 
of business class travel;
    (iv) Alternatively, in lieu of reimbursing up to the business class 
rate in such circumstances, CCC will reimburse economy class airfare 
plus per diem and other allowable travel expenses related to a rest 
period of up to 24 hours, either en route or upon arrival at the 
destination. For a trip with multiple destinations, each origin/
destination combination will be considered separately when applying the 
14-hour rule for eligibility of reimbursement of business class travel 
or rest period expenses;
    (9) Automobile mileage at the local U.S. Embassy rate or rental cars 
while in travel status;
    (10) Other allowable expenditures while in travel status as 
authorized by the U.S. Federal Travel Regulations (41 CFR parts 300 
through 304);
    (11) Organization costs for overseas offices approved in agreements. 
Such costs include incorporation fees, brokers' fees, fees to attorneys, 
accountants, or investment counselors, whether or not employees of the 
organization, incurred in connection with the establishment or 
reorganization of the overseas office, and rent, utilities, 
communications originating overseas, office supplies, accident liability 
insurance premiums (provided the types and extent and cost of coverage 
are in accordance with the MAP Participant's policy and sound business 
practice), and routine accounting and legal services required to 
maintain the overseas office;

[[Page 993]]

    (12) With prior CCC approval, the purchase, lease, or repair of, or 
insurance premiums for, capital goods that have an expected useful life 
of at least one year, such as furniture, equipment, machinery, removable 
fixtures, draperies, blinds, floor coverings, computer hardware and 
software, and portable electronic communications devices (including 
mobile phones, wireless email devices, and personal digital assistants);
    (13) Such premiums for health or accident insurance and other 
benefits for foreign national employees that the employer is required by 
law to pay, provided that such benefits are granted under established 
written policies;
    (14) Accident liability insurance premiums for facilities used 
jointly with third-party participants for MAP activities or for MAP-
funded travel of third-party participants, provided the types and extent 
and cost of coverage are in accordance with the MAP Participant's policy 
and sound business practice;
    (15) Market research, including research to determine the types of 
products that are desired in a market;
    (16) Independent evaluations and audits, if not otherwise required 
by CCC, to ensure compliance with program requirements;
    (17) Legal fees to obtain advice on the host country's labor laws;
    (18) Employment agency fees;
    (19) STRE incurred outside of the United States, and STRE incurred 
in conjunction with an approved activity taking place within the United 
States with prior written approval from CCC. MAP Participants are 
required to use the appropriate American Embassy representational 
funding guidelines for breakfasts, lunches, dinners, and receptions. MAP 
Participants may exceed Embassy guidelines only when they have received 
written authorization from the FAS Attach[eacute]/Counselor at the 
Embassy. The amount of unauthorized STRE expenses that exceed the 
guidelines will not be reimbursed. MAP Participants must pay the 
difference between the total cost of STRE events and the appropriate 
amount as determined by the guidelines. For STRE incurred in the United 
States, the MAP Participant should provide, in its request for approval, 
the basis for determining its proposed expenses;
    (20) Evacuation payments (safe haven) and shipment and storage of 
household goods and motor vehicles for relocations lasting at least 12 
months;
    (21) U.S. office(s) administrative support expenses for the National 
Association of State Departments of Agriculture, the SRTGs, and the 
Intertribal Agriculture Council;
    (22) Non-travel expenditures associated with conducting 
international staff conferences held either in or outside the United 
States;
    (23) Subject to paragraph (b)(18) of this section, domestic travel 
expenditures, as allowed under the U.S. Federal Travel Regulations (41 
CFR parts 300 through 304), for international retail, trade, and 
consumer exhibits and shows conducted in the United States. Domestic 
travel expenses to such a show or exhibit are covered only if the 
exhibit or show is included on the list of approved U.S. exhibits and 
shows announced via a program notice issued on FAS' website and the 
exhibit or show is one that the Participant has not participated in 
within the last three years using funds from a source other than the 
MAP. Retail and trade exhibits and shows held inside the United States 
may be considered for inclusion on the list of approved exhibits and 
shows if they are:
    (i) A food or agricultural exhibit or show with no less than 30% of 
exhibitors selling food or agricultural products; and
    (ii) An international exhibit or show that targets buyers, 
distributors, and the like from more than one foreign country and no 
less than 15% of its visitors are from countries other than the host 
country;
    (24) Domestic travel expenditures, as allowed under the U.S. Federal 
Travel Regulations (41 CFR parts 300 through 304), for seminars and 
educational training conducted in the United States;
    (25) Domestic travel expenditures, as allowed under the U.S. Federal 
Travel Regulations (41 CFR parts 300 through 304), for one home office 
MAP Participant employee, one MAP Participant board member, or a state 
department of agriculture employee paid by the

[[Page 994]]

MAP Participant, when such individual accompanies foreign trade missions 
or technical teams while traveling in the United States where the 
following conditions are met:
    (i) Such trade missions or technical team visits are identified in 
the MAP Participant's UES;
    (ii) Such trade missions or technical team visits have been approved 
by CCC; and
    (iii) The MAP-sponsored traveler submits a follow-up trip report to 
CCC that includes the following:
    (A) Purpose for the individual's participation;
    (B) Any pre-arranged business meetings;
    (C) Itinerary and/or agenda for the trip; and
    (D) Feedback from sponsors and trade mission/technical team members 
on the success of the trip.
    (26) Approved demonstration projects;
    (27) Expenditures related to copyright, trademark, or patent 
registration, including attorney fees;
    (28) Rental or lease expenditures for storage space for program-
related materials;
    (29) Business cards that target a foreign audience;
    (30) Expenditures associated with developing, updating, and 
servicing websites on the internet that: Contain a message related to 
exporting or international trade, include a discernible ``link'' to the 
FAS/Washington homepage or an FAS overseas homepage, and have been 
specifically approved by FAS. Expenditures related to websites or 
portions of websites that are accessible only to an organization's 
members are not reimbursable. Reimbursement claims for websites that 
include any sort of ``members only'' sections must be prorated to 
exclude the costs associated with those areas subject to restricted 
access;
    (31) Expenditures not otherwise prohibited from reimbursement that 
are associated with activities held in the United States or abroad 
designed to improve market access by specifically addressing temporary, 
permanent, or impending technical barriers to trade that prohibit or 
threaten U.S. exports of agricultural commodities;
    (32) Membership fees in professional, industry-related 
organizations;
    (33) Travel costs for dependents, as allowed in 2 CFR part 200 
(e.g., for travel of duration of six months or more with prior approval 
of CCC);
    (34) That portion of airtime for wireless phones that is devoted to 
program activities and monthly service fees prorated at the proportion 
of program-related airtime to total airtime; and
    (35) Production and distribution of publications.
    (d) CCC will not reimburse any cost of:
    (1) Forward year financial obligations, such as severance pay, 
attributable to employment of foreign nationals;
    (2) Expenses, fines, settlements, judgments, or payments relating to 
legal suits, challenges, or disputes, except as otherwise allowed in 2 
CFR part 200;
    (3) The design and production of packaging, labeling, or origin 
identification, except as specifically allowed in this subpart;
    (4) Product development, product modification, or product research;
    (5) Product samples;
    (6) Slotting fees or similar sales expenditures;
    (7) The purchase, construction, or lease of space for permanent, 
non-mobile displays, i.e., displays that are constructed to remain 
permanently in the same location beyond one program year. However, CCC 
may, at its discretion, reimburse the construction or purchase of 
permanent displays on a case by case basis, if the Participant sought 
and received prior written approval from CCC of such construction or 
purchase;
    (8) Rental, lease, or purchase of warehouse space, except for 
storage space for program-related material;
    (9) Coupon redemption or price discounts of the promoted commodity;
    (10) Refundable deposits or advances;
    (11) Giveaways, awards, prizes, gifts, and other similar promotional 
materials in excess of the limitation that CCC will determine. Such 
determination will be announced in writing via a program notice issued 
on FAS' website;
    (12) Alcoholic beverages that are not a promoted commodity and part 
of an approved promotional activity;

[[Page 995]]

    (13) The purchase, lease (except for use in authorized travel 
status), or repair of motor vehicles;
    (14) Travel of applicants for employment interviews;
    (15) Unused non-refundable airline tickets or associated penalty 
fees, except where travel was restricted by U.S. Government action or 
advisory;
    (16) Independent evaluations or audits, including evaluations or 
audits of the activities of a subcontractor, if CCC determines that such 
a review is needed in order to confirm past or to ensure future 
agreement or regulatory compliance;
    (17) Any arrangement that has the effect of reducing the selling 
price of an agricultural commodity;
    (18) Goods, services, and salaries of personnel provided by a third 
party;
    (19) Membership fees in clubs and social organizations;
    (20) Indemnity and fidelity bonds, except as otherwise allowed in 2 
CFR part 200;
    (21) Fees for participating in U.S. Government sponsored activities, 
other than trade fairs, shows, and exhibits;
    (22) Business cards that target a U.S. domestic audience;
    (23) Seasonal greeting cards;
    (24) Office parking fees;
    (25) Subscriptions to publications that are not of a technical, 
economic, or marketing nature or that are not relevant to the approved 
activities of the MAP Participant;
    (26) U.S. office(s) administrative expenses, including communication 
costs, except as noted in paragraph (c)(21) of this section and except 
that usage costs for communications devices incurred while on 
reimbursable international or domestic travel for approved MAP brand or 
generic promotion activities are reimbursable as eligible travel 
expenditures as allowed under the U.S. Federal Travel Regulations (41 
CFR parts 300 through 304);
    (27) Any expenditure on an activity that includes any derogatory 
reference or comparison to other U.S. agricultural commodities;
    (28) Payment of U.S. and foreign employees' or contractors' share of 
personal taxes, except where a foreign country's laws require the MAP 
Participant to pay such employees' or contractors' share;
    (29) Any expenditure made for an activity prior to CCC's approval of 
that activity;
    (30) Contributions to a contingency reserve or any similar provision 
made for events the occurrence of which cannot be foretold with 
certainty as to time, intensity, or with an assurance of their 
happening;
    (31) Credit card fees;
    (32) Entertainment, e.g., amusements, diversions, cover charges, 
personal gifts, or tickets to theatrical or sporting events;
    (33) Refreshments, or related equipment, for office staff; and
    (34) Expenditures associated with a MAP Participant's creation or 
review of their fraud prevention program, contracting procedures, or 
brand program operational procedures.
    (e) Paragraphs (e)(1) through (4) of this section shall apply to the 
approval of Supergrades.
    (1) With respect to individuals who are not U.S. citizens and who 
are hired by MAP Participants either as employees or contractors acting 
as employees, CCC will not ordinarily reimburse any portion of such 
individual's compensation that exceeds the compensation prescribed for 
the most comparable position in the FSN salary plan applicable to the 
country in which the employee or contractor works. However, a MAP 
Participant may seek a higher level of reimbursement for a non-U.S. 
citizen employee or contractor who will be employed as a country 
director or regional director by requesting that CCC approve that 
employee or contractor as a Supergrade.
    (2) To request approval of a Supergrade, the MAP Participant shall 
provide CCC with a detailed description of both the duties and 
responsibilities of the position and the qualifications and background 
of the employee or contractor concerned. The Participant shall also 
justify why the comparable FSN salary level is insufficient.
    (3) Where a non-U.S. citizen employee or contractor will be employed 
as a country director, the MAP Participant may request approval for a 
``Supergrade I'' salary level, equivalent

[[Page 996]]

to a single grade increase over the existing top grade of the FSN salary 
plan. The Supergrade I and its step increases are calculated by 
increasing each of the steps in the top FSN grade by the percentage 
difference between the second highest and the highest grade in the FSN 
salary plan. Where the non-U.S. citizen employee or contractor will be 
employed as a regional director, with responsibility for activities and/
or offices in more than one country, the MAP Participant may request 
approval for a ``Supergrade II'' salary level, which is calculated 
relative to a Supergrade I in the same way the latter is calculated 
relative to the highest grade in the FSN salary plan.
    (4) A U.S. citizen with dual citizenship with another foreign 
country or countries shall not be considered a non-U.S. citizen.
    (f) For a brand promotion activity, CCC will reimburse no more than 
50 percent of the total eligible expenditures made on that activity.
    (g) CCC will reimburse for expenditures made after the conclusion of 
a MAP Participant's program year provided:
    (1) The activity was approved by CCC prior to the end of the program 
year;
    (2) The activity was completed within 30 calendar days following the 
end of the program year; and
    (3) All expenditures were made for the activity within 6 months 
following the end of the program year.
    (h) A MAP Participant shall not use MAP funds for any activity, or 
any expenses incurred by the MAP Participant prior to the date specified 
in the approval letter or after the date the agreement is suspended or 
terminated, except as otherwise permitted by CCC.
    (i) Except as otherwise provided in this subpart, MAP-funded travel 
shall conform to the U.S. Federal Travel Regulations (41 CFR parts 300 
through 304) and 2 CFR part 200, and MAP-funded air travel shall conform 
to the requirements of the Fly America Act (49 U.S.C. 40118). The MAP 
Participant shall notify the Attach[eacute]/Counselor in the destination 
country(ies) in writing in advance of any proposed travel. The timing of 
such notice should be far enough in advance to enable the 
Attach[eacute]/Counselor to schedule appointments, make preparations, or 
otherwise provide any assistance being requested. Failure to provide 
advance notification of travel generally will result in disallowance of 
the expenses related to the travel, unless CCC determines it was 
impractical to provide such notification.
    (j) CCC may determine, at CCC's discretion, whether any cost not 
expressly listed in this section will be reimbursed.



Sec.1485.18  Reimbursement procedures.

    (a) Following the implementation of a project for which CCC has 
agreed to provide funding, a Participant may submit claims for 
reimbursement of eligible expenses incurred in implementing MAP 
activities, to the extent that CCC has agreed to pay such expenses. Any 
changes to approved activities must be approved in writing by CCC before 
any reimbursable expenses associated with the change can be incurred. A 
Participant will be reimbursed after CCC reviews the claim and 
determines that it is complete.
    (b) All claims for reimbursement shall be submitted by the MAP 
Participant's U.S. office to CCC. CCC will make all payments to 
Participants in U.S. dollars. FAS will initiate payment within 30 days 
after receipt of the billing, unless the billing is improper.
    (c) Participants will be authorized to submit requests for 
reimbursement or advance at least monthly when electronic fund transfers 
(EFTs) are not used, and as frequently as desired when electronic 
transfers are used, in accordance with the provisions of the Electronic 
Fund Transfer Act (15 U.S.C. 1693-1693r).
    (d) CCC will not reimburse claims submitted later than 6 months 
after the end of a MAP Participant's program year.
    (e) If CCC overpays a reimbursement claim, the MAP Participant shall 
repay CCC within 30 calendar days of such overpayment the amount of the 
overpayment either by submitting a check payable to CCC or by offsetting 
its next reimbursement claim. The MAP Participant shall make such 
payment in U.S. dollars, unless otherwise approved in advance by CCC.

[[Page 997]]

    (f) If a MAP Participant receives a reimbursement or offsets an 
advanced payment which is later disallowed, the MAP Participant shall 
repay CCC within 30 calendar days of such disallowance the amount 
disallowed either by submitting a check payable to CCC or by offsetting 
its next reimbursement claim. The MAP Participant shall make such 
payment in U.S. dollars, unless otherwise approved in advance by CCC.
    (g) MAP funds may be expended by MAP Participants only on 
legitimate, approved activities as set forth in the agreement and 
approval letter. If a MAP Participant discovers that MAP funds have not 
been properly spent, it shall notify CCC and shall within 30 calendar 
days of its discovery repay CCC the amount owed either by submitting a 
check payable to CCC or by offsetting its next reimbursement claim. The 
MAP Participant shall make such payment in U.S. dollars, unless 
otherwise approved in advance by CCC.
    (h) The MAP Participant shall report any actions that may have a 
bearing on the propriety of any claims for reimbursement in writing to 
the appropriate Attach[eacute]/Counselor and its U.S. office shall 
report such actions in writing to the appropriate FAS Division Director.



Sec.1485.19  Advances.

    (a) Policy. In general, CCC operates the MAP on a reimbursable 
basis.
    (b) Exception. A MAP Participant may request an advance of MAP funds 
from CCC for generic promotion activities, provided the MAP Participant 
meets the criteria for advance payments in 2 CFR part 200. CCC will not 
approve any request for an advance submitted after the end of a MAP 
Participant's program year. At any given time, total payments advanced 
shall not exceed 40 percent of a MAP Participant's total approved 
generic activity budget for the program year. CCC will not advance funds 
to a MAP Participant for brand promotion activities. When approving a 
request for an advance, CCC may require the MAP Participant to carry 
adequate fidelity bond coverage when the absence of such coverage is 
considered to create an unacceptable risk to the interests of the MAP. 
Whether an ``unacceptable risk'' exists in a particular situation will 
depend on a number of factors, such as, for example, the Participant's 
history of performance in the MAP, the Participant's perceived financial 
stability and resources, and any other factors presented in the 
particular situation that may reflect on the Participant's 
responsibility or the riskiness of its activities.
    (c) Interest. A MAP Participant shall deposit and maintain all funds 
advanced by CCC in an insured account in the United States. The account 
shall be interest-bearing, unless the exceptions in 2 CFR part 200 
apply. Interest earned by the MAP Participant on funds advanced by CCC 
is not program income. Up to $500 of interest earned per year may be 
retained by the MAP Participant for administrative expenses. Any 
additional interest earned on MAP advances shall be remitted annually to 
the appropriate entity as required in 2 CFR part 200.
    (d) Refunds due CCC. A MAP Participant shall fully expend all 
advances on approved generic promotion activities within 90 calendar 
days after the date of disbursement by CCC. By the end of the 90 
calendar days, the MAP Participant must submit reimbursement claims to 
offset the advance and submit a check made payable to CCC for any 
unexpended balance. The MAP Participant shall make such payment in U.S. 
dollars, unless otherwise approved in advance by CCC.



Sec.1485.20  Employment practices.

    (a) A MAP Participant shall enter into written contracts with all 
overseas employees who are paid in whole or in part with MAP funds and 
shall ensure that all terms, conditions, and related formalities of such 
contracts conform to governing local law.
    (b) A MAP Participant shall, in its overseas offices, conform its 
office hours, work week, and holidays to local law and to the custom 
generally observed by U.S. commercial entities in the local business 
community.
    (c) A MAP Participant may pay salaries or fees in any currency (U.S. 
or foreign) in conformance with contract

[[Page 998]]

specifications. Participants should consult local laws regarding 
currency restrictions.



Sec.1485.21  Financial management.

    (a) A MAP Participant shall implement and maintain a financial 
management system that conforms to generally accepted accounting 
principles and complies with the standards in 2 CFR part 200.
    (b) A MAP Participant shall institute internal controls and provide 
written guidance to commercial entities participating in its activities 
to ensure their compliance with these regulations.
    (c) A MAP Participant shall retain all records concerning a MAP 
program transaction for a period of five years after completion of the 
transaction and permit authorized officials of the U.S. Government to 
have full and complete access, for such five-year period, to such 
records. These records shall include all documents related to employment 
of any employees whose salaries are reimbursed in whole or in part with 
MAP funds, whether such employees are based in the United States or 
overseas, such as employment applications, contracts, position 
descriptions, leave records, salary changes, and all records pertaining 
to contractors.
    (d) A MAP Participant shall also maintain adequate documentation 
related to the proper disposition of all personal property having a 
useful life of more than one year and an acquisition cost of $500 or 
more purchased by the Participant and for which the Participant is 
reimbursed, in whole or in part, with MAP funds.
    (e) A MAP Participant shall maintain its records of expenditures, 
contributions, and cost share in a manner that allows it to provide 
information by program year, activity plan, country or region (as 
applicable), activity number, and cost category. Such records shall 
include copies of:
    (1) Receipts for all STRE (actual vendor invoices or restaurant 
checks, rather than credit card receipts);
    (2) Receipts for any other program-related expenditure in excess of 
a minimum level that CCC shall determine and announce in writing to all 
MAP Participants via a program notice issued on the FAS website. 
Receipts for all actual M&IE reimbursements must be maintained, 
regardless of the amount;
    (3) The exchange rate used to calculate the dollar equivalent of 
expenditures made in a foreign currency and the basis for such 
calculation;
    (4) Reimbursement claims;
    (5) An itemized list of claims charged to each of the MAP 
Participant's MAP accounts;
    (6) Documentation, with accompanying English translation, supporting 
each reimbursement claim, including evidence to support the financial 
transactions, such as canceled checks, receipted paid bills, contracts, 
purchase orders, per diem calculations, travel vouchers, and credit 
memos; and
    (7)(i) Each MAP Participant must keep records documenting all 
claimed contributions and cost share, to include:
    (A) Copies of invoices or receipts for expenses paid by the U.S. 
industry or State agency and not reimbursed by the MAP Participant for 
the joint activity, or
    (B) If invoices are not available, an itemized statement from the 
U.S. industry or State agency as to what costs it incurred pursuant to 
the joint activity, or
    (C) If neither of the foregoing is available, a statement from the 
U.S. industry or State agency as to what goods and services it provided, 
or
    (D) If none of the foregoing are available, a memo to the files of 
the MAP Participant's estimate of what contribution or cost share was 
made by the U.S. industry or State agency, item by item, and the method 
used to assign a value to each.
    (ii) The documentation required in paragraph (e)(7)(i) of this 
section must include the dates, purpose, and location of the activity 
for which the cash or in-kind items were claimed as a contribution or 
cost share, who conducted the activity, the participating groups or 
individuals, and the method of computing the claimed contribution or 
cost share. MAP Participants must retain and make available for 
compliance reviews and audits documentation related to claimed 
contribution or cost share.

[[Page 999]]

    (f) Upon request, a MAP Participant shall provide documents 
supporting reimbursement claims to CCC. CCC may deny a claim for 
reimbursement if the claim is not supported by adequate documentation.



Sec.1485.22  Reports.

    (a) Participants are required to submit regular financial and 
performance reports in accordance with their agreement. Reporting 
requirements and formats for the required financial and performance 
reports will be specified in the agreement between CCC and the 
Participant.
    (b)(1) In addition to the information required in 2 CFR 
200.328(b)(2), a Participant's performance reports must include 
pertinent information regarding the Participant's progress, measured 
against established indicators, baselines, and targets, towards 
achieving the expected results specified in the agreement. This 
reporting must include, for each performance indicator, a comparison of 
actual accomplishments with the baseline and the targets established for 
the period. When actual accomplishments deviate significantly from 
targeted goals, the Participant must provide an explanation in the 
report.
    (2) A Participant must ensure the accuracy and reliability of the 
performance data submitted to FAS in performance reports. At any time 
during the period of performance of the agreement, FAS may review the 
Participant's performance data to determine whether it is accurate and 
reliable. The Participant must comply with all requests made by FAS or 
an entity designated by FAS in relation to such reviews.
    (c) All final performance reports will be made available to the 
public.
    (d) Not later than 45 calendar days after the completion of travel 
(other than local travel), a MAP Participant shall submit a trip report. 
The report must be submitted to the appropriate Attach[eacute]/
Counselor(s) and must include the name(s) of the traveler(s), purpose of 
travel, itinerary, names and affiliations of contacts, and a brief 
summary of findings, conclusions, recommendations, and specific 
accomplishments.
    (e) Not later than 90 calendar days after the end of its program 
year, a MAP Participant shall submit a report on any research conducted 
pursuant to the approved MAP program.
    (f) If requested by FAS, a Participant must provide to FAS 
additional information or reports relating to the agreement.
    (g) If a Participant requires an extension of a reporting deadline, 
it must ensure that FAS receives an extension request at least five 
business days prior to the reporting deadline. FAS may decline to 
consider a request for an extension that it receives after this time 
period. FAS will consider requests for reporting deadline extensions on 
a case by case basis and will make a decision based on the merits of 
each request. FAS will consider factors such as unforeseen or 
extenuating circumstances and past performance history when evaluating 
requests for extensions.



Sec.1485.23  Evaluation.

    (a)(1) The Government Performance and Results Act (GPRA) of 1993 (5 
U.S.C. 306; 31 U.S.C. 1105, 1115-1119, 3515, 9703-9704) requires 
performance measurement of Federal programs, including the MAP. 
Evaluation of the MAP's effectiveness will depend on a clear statement 
by Participants of the constraints and opportunities facing U.S. 
exports, goals to be met within a specified time, schedule of measurable 
milestones for gauging success, plan for achievement, and assessment of 
results of activities at regular intervals. The overall goal of the MAP 
and of individual Participants' programming is to achieve or maintain 
sales that would not have occurred in the absence of MAP funding. A MAP 
Participant that can demonstrate such sales, taking into account 
extenuating factors beyond the Participant's control, will have met the 
overall objective of the GPRA and the need for evaluation.
    (2) Evaluation is an integral element of program planning and 
implementation, providing the basis for the strategic plan. The 
evaluation results guide the development and scope of a MAP 
Participant's program, contribute to program accountability, and provide 
evidence of program effectiveness.

[[Page 1000]]

    (b) A MAP Participant shall complete at least one program evaluation 
each year. A program evaluation is a review of the MAP Participant's 
entire program, or an appropriate portion of the program as agreed to by 
the MAP Participant and CCC, to determine the effectiveness of the MAP 
Participant's strategy in meeting specified goals. The actual scope and 
timing of the program evaluation shall be determined by the MAP 
Participant and CCC and specified in the approval letter. A MAP 
Participant may contract with an independent evaluator to satisfy this 
requirement, although CCC reserves the right to have direct input and 
control over the design, scope, and methodology of any such evaluation, 
including direct contact with and provision of guidance to the 
independent evaluator. A MAP Participant shall submit, via a cover 
letter to CCC, an executive summary that assesses the program 
evaluation's findings and recommendations and proposed changes in 
program strategy or design as a result of the evaluation. In addition to 
the requirements set forth in 2 CFR part 200, a program evaluation shall 
contain:
    (1) The name of the party conducting the evaluation;
    (2) The scope of the evaluation;
    (3) A concise statement of the market constraint(s)/opportunity(ies) 
and the goals specified in the approved strategic plan;
    (4) A description of the evaluation methodology;
    (5) A description of additional export sales achieved, including the 
ratio of additional export sales in relation to the MAP Participant's 
program funding received;
    (6) A summary of the findings, including an analysis of the 
strengths and weaknesses of the program(s); and
    (7) Recommendations for future programs.
    (c) MAP Participants conducting a branded program must also complete 
a brand promotion evaluation. A brand promotion evaluation is a review 
of the U.S. and foreign commercial entities' export sales to determine 
whether the activity achieved the goals specified in the approved MAP 
program. This evaluation shall be completed and submitted to CCC no 
later than 6 months following the end of the Participant's program year.
    (d) On an annual basis, or more often when appropriate or required 
by CCC, a MAP Participant shall complete and submit program success 
stories. CCC will announce to all MAP Participants the detailed 
requirements for completing and submitting program success stories.



Sec.1485.24  Compliance reviews and notices.

    (a) USDA staff may conduct compliance reviews of the Participant's 
activities under this program to ensure compliance with this subpart, 
applicable Federal laws and regulations, and the terms of the agreements 
and approval letters. Participants shall cooperate fully with relevant 
USDA staff conducting compliance reviews and shall comply with all 
requests from USDA staff to facilitate the conduct of such reviews. 
Program funds spent inappropriately or on unapproved activities must be 
returned to CCC.
    (b) Any project or activity funded under the program is subject to 
review or audit at any time during the course of implementation or after 
the completion of the project.
    (c) Upon conclusion of the compliance review, USDA staff will 
provide a written compliance report to the Participant. The compliance 
report will detail any instances where it appears that the Participant 
is not complying with any of the terms or conditions of the agreement, 
approval letter, or the applicable laws and regulations. The report will 
also specify if it appears that CCC may be entitled to recover funds 
from the Participant and will explain the basis for any recovery of 
funds from the Participant. If, as a result of a compliance review, CCC 
determines that further review is needed in order to ensure compliance 
with the requirements of the program, CCC may require the Participant to 
contract for an independent audit.
    (d) In addition, CCC may notify a Participant in writing at any time 
if CCC determines that CCC may be entitled to recover funds from the 
Participant. CCC will explain the basis for any recovery of funds from 
the Participant in the written notice. The Participant

[[Page 1001]]

shall, within 30 calendar days of the date of the notice, repay CCC the 
amount owed either by submitting a check payable to CCC or by offsetting 
its next reimbursement claim. The Participant shall make such payment in 
U.S. dollars, unless otherwise approved in advance by CCC. If, however, 
a Participant notifies CCC within 30 calendar days of the date of the 
written notice that the Participant intends to file an appeal pursuant 
to the provisions of this subpart, the amount owed to CCC by the 
Participant is not due until the appeal procedures are concluded and CCC 
has made a final determination as to the amount owed.
    (e) The fact that a compliance review has been conducted by USDA 
staff does not signify that a Participant is in full compliance with its 
agreement, approval letter, and/or applicable laws and regulations.
    (f) For a Participant response to compliance report:
    (1) A Participant shall, within 60 calendar days of the date of the 
issuance of a compliance report, submit a written response to CCC. The 
response may include additional documentation for consideration or a 
request for reconsideration of any finding along with supporting 
justification. If the Participant does not wish to contest the 
compliance report, the response shall include any money owed to CCC, 
which may be returned by submitting a check payable to CCC or by 
offsetting a reimbursement claim. The Participant shall make any 
payments in U.S. dollars, unless otherwise approved in advance by CCC. 
CCC, at its discretion, may extend the period for response.
    (2) After reviewing the response, CCC shall determine whether the 
Participant owes any funds to CCC and will inform the Participant in 
writing of the basis for the determination. CCC may initiate action to 
collect such amount by providing the Participant a written demand for 
payment of the debt pursuant to debt settlement policies and procedures, 
7 CFR part 1403.
    (g) For Participant appeals of CCC determinations:
    (1) Within 30 calendar days of the date of the issuance of a 
determination, the Participant may appeal the determination by making a 
request in writing that includes the basis for such reconsideration. The 
Participant may also request a hearing.
    (2) If the Participant requests a hearing, CCC will set a date and 
time for the hearing. The hearing will be an informal proceeding. A 
transcript will not ordinarily be prepared unless the Participant bears 
the cost of a transcript; however, CCC may, at its discretion, have a 
transcript prepared at CCC's expense.
    (3) CCC will base its final determination upon information contained 
in the administrative record. The Participant must exhaust all 
administrative remedies contained in this section before pursuing 
judicial review of a determination by CCC.



Sec.1485.25  Failure to make required contribution or cost share.

    A MAP Participant's required contribution or cost share will be 
specified in the approval letter. If the MAP Participant's required 
contribution or cost share is specified as a dollar amount and the MAP 
Participant does not make the required contribution or cost share, the 
MAP Participant shall pay to CCC in dollars the difference between the 
amount actually contributed and the amount specified in the approval 
letter. If the MAP Participant's required contribution or cost share is 
specified as a percentage of the total amount reimbursed by CCC, the MAP 
Participant may either return to CCC the necessary amount of funds 
reimbursed by CCC to increase its actual contribution or cost share 
percentage to the required level or pay to CCC in dollars the difference 
between the amount actually contributed and the amount of funds 
necessary to increase its actual contribution or cost share percentage 
to the required level. A MAP Participant shall remit such payment within 
six months after the end of its program year. The MAP Participant shall 
make such payment in U.S. dollars, unless otherwise approved in advance 
by CCC.



Sec.1485.26  Submissions.

    For all permissible methods of delivery, submissions required by 
this subpart shall be deemed submitted as of the date received by CCC.

[[Page 1002]]



Sec.1485.27  Disclosure of program information.

    (a) Documents submitted to CCC by MAP Participants are subject to 
the provisions of the Freedom of Information Act (FOIA), 5 U.S.C. 552, 7 
CFR part 1, subpart A, and specifically 7 CFR 1.12.
    (b) Upon request, a Participant shall provide to any person a copy 
of any document in its possession or control containing market 
information developed and produced under the terms of its agreement. The 
Participant may charge a fee not to exceed the costs for assembling, 
duplicating, and distributing the materials.
    (c) Any research conducted by a MAP Participant pursuant to an 
agreement and/or approval letter shall be subject to the provisions 
relating to intangible property in 2 CFR part 200.



Sec.1485.28  Ethical conduct.

    (a) A MAP Participant shall conduct its business in accordance with 
the laws and regulations of the country(s) in which an activity is 
carried out and in accordance with applicable U.S. Federal, state, and 
local laws and regulations. A MAP Participant shall conduct its business 
in the United States in accordance with applicable Federal, state, and 
local laws and regulations.
    (b) Except for a U.S. agricultural cooperative or a U.S. for-profit 
entity, neither a MAP Participant nor its affiliates shall make export 
sales of eligible commodities covered under the terms of the applicable 
MAP agreement. Nor shall such entities charge a fee for facilitating an 
export sale. A MAP Participant may, however, collect check-off funds and 
membership fees that are required for membership in the MAP 
Participant's organization.
    (c) A MAP Participant shall not limit participation in its MAP 
activities to members of its organization. Participants shall ensure 
that their MAP-funded programs and activities are open to all otherwise 
qualified individuals and entities on an equal basis and without regard 
to any non-merit factors. The MAP Participant shall publicize its 
program and make participation possible for commercial entities 
throughout the relevant commodity sector or, in the case of SRTGs, 
throughout the corresponding region. This includes providing to such 
commercial entities, upon request, a copy of any document in its 
possession or control containing market information developed and 
produced under the terms of its MAP agreement. The Participant may 
charge a fee not to exceed the costs for assembling, duplicating, and 
distributing the materials. This paragraph does not apply to U.S. 
agricultural cooperatives when implementing their own brand program.
    (d) A MAP Participant shall select U.S. agricultural industry 
representatives to participate in generic MAP activities such as trade 
teams, sales teams, and trade fairs based on criteria that ensure 
participation on an equitable basis by a broad cross section of the U.S. 
industry. If requested by CCC, a MAP Participant shall submit such 
selection criteria to CCC for approval.
    (e) All MAP Participants should endeavor to ensure fair and accurate 
fact-based advertising. Deceptive or misleading promotions may result in 
cancellation or termination of a MAP Participant's agreement and the 
recovery of CCC funds related to such promotions from the Participant.
    (f) The MAP Participant must report any actions or circumstances 
that may have a bearing on the propriety of its MAP program to the 
appropriate Attach[eacute]/Counselor, and its U.S. office shall report 
such actions or circumstances in writing to CCC.



Sec.1485.29  Subawarding procedures.

    (a) MAP Participants have full and sole responsibility for the legal 
sufficiency of all contracts and assume financial liability for any 
costs or claims resulting from suits, challenges, or other disputes 
based on contracts entered into by the MAP Participant. Neither CCC nor 
any other agency of the U.S. Government nor any official or employee of 
CCC, FAS, USDA, or the U.S. Government has any obligation or 
responsibility with respect to MAP Participant contracts with third 
parties.
    (b) A MAP Participant shall comply with the procurement standards 
set forth below and in 2 CFR part 200 when procuring goods and services 
and when

[[Page 1003]]

engaging in construction to implement agreements.
    (c) Each MAP Participant shall establish open, fair, and competitive 
contracting procedures for contracts that are funded, in whole or in 
part, with MAP funds.
    (d) Each MAP Participant shall submit to CCC, for CCC approval, 
written contracting guidelines for contracts that are funded, in whole 
or in part, with MAP funds. CCC will notify all new and existing MAP 
Participants in writing in each Participant's approval letter and 
through the FAS website as to applicable submission dates for and dates 
for approvals of contracting guidelines. CCC's approval of such 
contracting guidelines will remain in place until CCC retracts its 
approval in writing, or until new guidelines are approved that supersede 
them. Once approved by CCC, these contracting guidelines shall govern 
all of a Participant's MAP-funded contracting involving contracts with 
an annual minimum value that CCC shall determine and announce in writing 
to all MAP Participants via a program notice issued on the FAS website. 
The guidelines shall indicate the method for evaluating proposals 
received for all contract competitions, the method for monitoring and 
evaluating performance under contracts, and the method for initiating 
corrective action for unsatisfactory performance under contracts. The 
MAP Participant may modify and resubmit these guidelines for re-approval 
at any time. In addition to the requirements in 2 CFR part 200, these 
guidelines shall include, at a minimum, the following:
    (1) Procedures for developing and publicizing requests for 
proposals, invitations for bids, and similar documents that solicit 
third party offers to provide goods or services. Solicitations for 
professional and technical services shall be based on clear and accurate 
descriptions of and requirements related to the services to be procured. 
Such procedures must include a conflict of interest provision that 
states that no employee, officer, board member, or agent thereof of the 
MAP Participant will participate in the review, selection, award, or 
administration of a contract if a real or apparent conflict of interest 
would arise. Such a conflict would arise when an employee, official, 
board member, agent, or the employee's, officer's, board member's, or 
agent's family, partners, or an organization that employs or is about to 
employ any of these parties or their affiliates has a financial or other 
interest in the contract. Procedures shall provide that officers, 
employees, board members, and agents thereof shall neither solicit nor 
accept gratuities, favors, or anything of monetary value from 
contractors or subcontractors. Procedures shall also provide for 
disciplinary actions to be applied for violations of such standards by 
officers, employees, board members, or agents thereof;
    (2) Procedures for reviewing proposals, bids, or other offers to 
provide goods and services. Separate procedures shall be developed for 
various situations, including, but not limited to: solicitations for 
highly technical services; solicitations for services that are not 
common in a specific market; sole source contracts; solicitations that 
yield receipt of three or more bids; or solicitations that yield receipt 
of fewer than three bids;
    (3) Requirements to conduct all contracting in an openly competitive 
manner. Individuals who develop or draft specifications, requirements, 
statements of work, invitations for bids, and/or requests for proposals 
for procurement of any goods or services, and such individuals' families 
or partners, or an organization that employs or is about to employ any 
of the aforementioned, shall be excluded from competition for such 
procurement. MAP Participants' written contracting guidelines may detail 
special situations where the prohibitions in this subparagraph do not 
apply, such as in situations involving highly specialized technical 
services or situations where the services are not commonly offered in a 
specific market;
    (4) Requirements to perform and document in the procurement files 
some form of price or cost analysis, such as a comparison of price 
quotations to market prices or other price indicia, to determine the 
reasonableness of the offered prices in connection with every 
procurement action that is governed by the contracting guidelines;

[[Page 1004]]

    (5) Requirements to conduct an appropriate form of competition every 
3 years on all multi-year contracts that are governed by the contracting 
guidelines. However, contracts for in-country representation are not 
required to be re-competed after the initial reward. Instead, the 
performance of in-country representation must be evaluated and 
documented by the MAP Participant annually to ensure that the terms of 
the contract are being met in a satisfactory manner; and
    (6) Requirements for written contracts with each provider of goods, 
services, or construction work. Such contracts shall require such 
providers to maintain adequate records to account for funds provided to 
them by the MAP Participant.
    (e) A MAP Participant may undertake MAP promotional activities 
directly or through a domestic or foreign subrecipient. However, the MAP 
Participant shall remain responsible and accountable to CCC for all MAP 
promotional activities and related expenditures undertaken by such 
subrecipient and shall be responsible for reimbursing CCC for any funds 
that CCC determines should be refunded to CCC in relation to such 
subrecipient's promotional activities and expenditures.



Sec.1485.30  Property standards.

    (a) A Participant shall maintain an inventory of all personal 
property having a useful life of more than one year and an acquisition 
cost of $500 or more that was acquired in furtherance of program 
activities. The inventory shall list and number each item and include 
the date of purchase or acquisition, cost of purchase, replacement 
value, serial number, make, model, and electrical requirements, as 
applicable.
    (b) The Participant shall insure all real property and equipment 
that was acquired, in whole or in part, with MAP funds at a level 
minimally equal to the equivalent insurance coverage for property owned 
by the Participant. The Participant shall safeguard such property and 
equipment against theft, damage, and unauthorized use. The Participant 
shall promptly report any loss, theft, or damage of such property and 
equipment to the insurance company.
    (c) Personal property having a useful life of more than one year and 
an acquisition cost of $500 or more purchased by the Participant, and 
for which the Participant is reimbursed, in whole or in part, with MAP 
funds, that is unusable, unserviceable, or no longer needed for project 
purposes shall be disposed of in one of the following ways. The 
Participant may:
    (1) Exchange or sell the property, provided that it applies any 
exchange allowance, insurance proceeds, or sales proceeds toward the 
purchase of other property needed in the project;
    (2) With CCC approval, transfer the property to other Participants 
for their activities, or to a foreign entity; or
    (3) Upon Attach[eacute]/Counselor approval, donate the property to a 
local charity, or convey the property to the Attach[eacute]/Counselor, 
along with an itemized inventory list and any documents of title.
    (d) The Participant is responsible for reimbursing CCC for the value 
of any uninsured property at the time of the loss or theft of the 
property.



Sec.1485.31  Anti-fraud requirements.

    (a) All MAP Participants. (1) All MAP Participants annually shall 
submit to CCC for approval a detailed fraud prevention program. CCC will 
notify all new and existing MAP Participants in writing in each 
Participant's approval letter and through the FAS website as to 
applicable submission dates for and dates for approvals of fraud 
prevention programs. MAP Participants should review their fraud 
prevention programs annually. The fraud prevention program shall, at a 
minimum, include an annual review of physical controls and weaknesses, a 
standard process for investigating and remediation of suspected fraud 
cases, and training in risk management and fraud detection for all 
current and future employees. The MAP Participant shall not conduct or 
permit any MAP promotion activities to occur unless and until CCC has 
communicated in writing approval of the MAP Participant's fraud 
prevention program.
    (2) The MAP Participant, within five business days of receiving an 
allegation or information giving rise to a reasonable suspicion of 
misrepresentation or

[[Page 1005]]

fraud that could give rise to a claim by CCC, shall report such 
allegation or information in writing to such USDA personnel as specified 
in the Participant's agreement and/or approval letter. The MAP 
Participant shall cooperate fully in any USDA investigation of such 
allegation or occurrence of misrepresentation or fraud and shall comply 
with any directives given by CCC or USDA to the MAP Participant for the 
prompt investigation of such allegation or occurrence.
    (b) MAP Participants with brand programs. (1) The MAP Participant 
may charge a fee to brand participants to cover the cost of the fraud 
prevention program.
    (2) The MAP Participant shall repay to CCC funds paid to a brand 
participant through the MAP Participant on claims that the MAP 
Participant or CCC subsequently determines are unauthorized or otherwise 
non-reimbursable expenses within 30 calendar days of the MAP 
Participant's determination or CCC's disallowance. The MAP Participant 
shall repay CCC by submitting a check to CCC or by offsetting the MAP 
Participant's next reimbursement claim. The MAP Participant shall make 
such payment in U.S. dollars, unless otherwise approved in advance by 
CCC. A MAP Participant operating a brand program in strict accordance 
with an approved fraud prevention program, however, will not be liable 
to reimburse CCC for MAP funds paid on such claims if the claims were 
based on misrepresentations or fraud of the brand participant, its 
employees, or agents, unless CCC determines that the MAP Participant was 
grossly negligent in the operation of the brand program regarding such 
claims. CCC shall communicate any such determination to the MAP 
Participant in writing.



Sec.1485.32  Program income.

    Program income is gross income earned by the non-Federal entity that 
is directly generated by a supported activity or earned as a result of 
the Federal award during the period of performance. Any income generated 
from an activity, the expenditures for which have been wholly or 
partially reimbursed with MAP funds, shall be used by the MAP 
Participant in furtherance of its approved MAP activities in the program 
year during which the MAP funds are available for obligation by the MAP 
Participant, or must be returned to CCC. The use of such income shall be 
governed by this subpart. Interest earned on funds advanced by CCC is 
not program income. Reasonable activity fees or registration fees, if 
identified as such in a project budget, may be charged for approved 
activities. The intent to charge a fee must be part of the original 
proposal, along with an explanation of how such fees are to be used. Any 
activity fees charged must be used to offset activity expenses or 
returned to FAS. Such fees may not be used as profit or counted as 
contribution or cost share.



Sec.1485.33  Amendments.

    An agreement may be amended in writing with the consent of CCC and 
the MAP Participant. All requests for program amendments must be 
submitted to CCC in writing and contain a justification for why the 
amendment is necessary. All amendment requests must be reviewed and 
approved by CCC before an amendment can be issued.



Sec.1485.34  Subrecipients.

    (a) A Participant may utilize the services of a subrecipient to 
implement activities under the agreement if this is provided for in the 
agreement. The subrecipient may receive CCC-provided funds, program 
income, or other resources from the Participant for this purpose. The 
Participant must enter in to a written subaward with the subrecipient 
and comply with the applicable provisions of 2 CFR 200.331 and/or the 
Federal Acquisition Regulation (FAR), if applicable. If required by the 
agreement, the Participant must provide a copy of such subaward to FAS, 
in the manner set forth in the agreement, prior to the transfer of CCC-
provided funds or program income to the subrecipient.
    (b) A Participant must include the following requirements in a 
subaward:
    (1) The subrecipient is required to comply with the applicable 
provisions of this part and 2 CFR parts 200 and 400 and/or the FAR, if 
applicable. The applicable provisions are those that relate specifically 
to subrecipients, as

[[Page 1006]]

well as those relating to non-Federal entities that impose requirements 
that would be reasonable to pass through to a subrecipient because they 
directly concern the implementation by the subrecipient of one or more 
activities under the agreement. If there is a question about whether a 
particular provision is applicable, FAS will make the determination.
    (2) The subrecipient must pay to the Participant the value of CCC-
provided funds, interest, or program income that are not used in 
accordance with the subaward, or that are lost, damaged, or misused as a 
result of the subrecipient's failure to exercise reasonable care.
    (3) In accordance with 2 CFR 200.501(h), subawards must include a 
description of the applicable compliance requirements and the 
subrecipient's compliance responsibility. Methods to ensure compliance 
may include pre-award audits, monitoring during the agreement, and post-
award audits.
    (c) A Participant must monitor the actions of a subrecipient as 
necessary to ensure that CCC-provided funds and program income provided 
to the subrecipient are used for authorized purposes in compliance with 
applicable U.S. Federal laws and regulations and the subaward and that 
performance indicator targets are achieved for both activities and 
results under the agreement.



Sec.1485.35  Audit requirements.

    (a) Subpart F of 2 CFR part 200 applies to all Participants and 
subrecipients under this part other than those that are for-profit 
entities, foreign public entities, or foreign organizations.
    (b) A Participant or subrecipient that is a for-profit entity or a 
subrecipient that is a foreign organization and that expends, during its 
fiscal year, a total of at least the audit requirement threshold in 2 
CFR 200.501 in Federal awards, is required to obtain an audit. Such a 
Participant or subrecipient has the following two options to satisfy 
this requirement:
    (1)(i) A financial audit of the agreement or subaward, in accordance 
with the Government Auditing Standards issued by the United States 
Government Accountability Office (GAO), if the Participant or 
subrecipient expends Federal awards under only one FAS program during 
such fiscal year; or
    (ii) A financial audit of all Federal awards from FAS, in accordance 
with GAO's Government Auditing Standards, if the Participant or 
subrecipient expends Federal awards under multiple FAS programs during 
such fiscal year; or
    (2) An audit that meets the requirements contained in subpart F of 2 
CFR part 200.
    (c) A Participant or subrecipient that is a for-profit entity or a 
subrecipient that is a foreign organization and that expends, during its 
fiscal year, a total that is less than the audit requirement threshold 
in 2 CFR 200.501 in Federal awards, is exempt from requirements under 
this section for an audit for that year, except as provided in 
paragraphs (d) and (f) of this section, but it must make records 
available for review by appropriate officials of Federal agencies.
    (d) FAS may require an annual financial audit of an agreement or 
subaward when the audit requirement threshold in 2 CFR 200.501 is not 
met. In that case, FAS must provide funds under the agreement for this 
purpose, and the Participant or subrecipient, as applicable, must 
arrange for such audit and submit it to FAS.
    (e) When a Participant or subrecipient that is a for-profit entity 
or a subrecipiet that is a foreign organization is required to obtain a 
financial audit under this section, it must provide a copy of the audit 
to FAS within 60 days after the end of its fiscal year.
    (f) FAS, the USDA Office of Inspector General, or GAO may conduct or 
arrange for additional audits of any Participants or subrecipients, 
including for-profit entities and foreign organizations. Participants 
and subrecipients must promptly comply with all requests related to such 
audits. If FAS conducts or arranges for an additional audit, such as an 
audit with respect to a particular agreement, FAS will fund the full 
cost of such an audit, in accordance with 2 CFR 200.503(d).

[[Page 1007]]



Sec.1485.36  Suspension and termination of agreements.

    (a) An agreement or subaward may be suspended or terminated in 
accordance with 2 CFR 200.338 or 200.339. FAS may suspend or terminate 
an agreement if it determines that:
    (1) One of the bases in 2 CFR 200.338 or 200.339 for termination or 
suspension by FAS has been satisfied; or
    (2) The continuation of the assistance provided under the agreement 
is no longer necessary or desirable.
    (b) If an agreement is terminated, the Participant:
    (1) Is responsible for using or returning any CCC-provided funds, 
interest, or program income that have not been disbursed, as agreed to 
by FAS; and
    (2) Must comply with any closeout and post-closeout procedures 
specified in the agreement and 2 CFR 200.343 and 200.344.



Sec.1485.37  Noncompliance with an agreement.

    (a) If a MAP Participant fails to comply with any term in its 
agreement or approval letter, CCC may take one or more of the 
enforcement actions in 2 CFR part 200 and, if appropriate, initiate a 
claim against the MAP Participant, following the procedures set forth in 
this subpart. CCC may also initiate a claim against a MAP Participant if 
program income or CCC-provided funds are lost due to an action or 
omission of the MAP Participant. If any MAP Participant has engaged in 
fraud with respect to the MAP, or has otherwise violated program 
requirements under this subpart, CCC may:
    (1) Hold such MAP Participant liable for any and all losses to CCC 
resulting from such fraud or violation;
    (2) Require a refund of any assistance provided to such MAP 
Participant plus interest as determined by FAS; and
    (3) Collect liquidated damages from such MAP Participant in an 
amount determined appropriate by FAS.
    (b) The provisions of this section shall be without prejudice to any 
other remedy that is available under any other provision of law.



Sec.1485.38  Paperwork reduction requirements.

    The paperwork and recordkeeping requirements imposed by this subpart 
have been approved by OMB under the Paperwork Reduction Act of 1980. OMB 
has assigned control number 0551-0026 for this information collection.



PART 1486_EMERGING MARKETS PROGRAM--Table of Contents



                      Subpart A_General Information

Sec.
1486.100 General purpose and scope.
1486.101 Definitions.
1486.102 Regional projects.

            Subpart B_Eligibility, Applications, and Funding

1486.200 Participation eligibility.
1486.201 Eligible commodities.
1486.202 Application process.
1486.203 Application review and formation of agreements.
1486.204 Funding limits.

                      Subpart C_Program Operations

1486.300 Applicant notification.
1486.301 Amendments.
1486.302 Subrecipients.

                 Subpart D_Cost Share and Reimbursements

1486.400 Cost share.
1486.401 Eligible cost share.
1486.402 Ineligible cost share.
1486.403 Reimbursement rules.
1486.404 Ineligible expenditures.
1486.405 Reimbursement procedures.
1486.406 Advances.

             Subpart E_Reporting, Evaluation, and Compliance

1486.500 Reports.
1486.501 Evaluation.
1486.502 Compliance reviews and notices.
1486.503 Records retention.
1486.504 Program income.
1486.505 Audit requirements.
1486.506 Disclosure of program information.
1486.507 Ethical conduct.
1486.508 Suspension and termination.
1486.509 Noncompliance with an agreement.
1486.510 Paperwork reduction requirements.

    Authority: 7 U.S.C. 5623, 5662-5663.

    Source: 84 FR 69986, Dec. 20, 2019, unless otherwise noted.

[[Page 1008]]



                      Subpart A_General Information



Sec.1486.100  General purpose and scope.

    (a) The E (Kika) de la Garza Emerging Markets Program (EMP) is 
established to develop, maintain, or expand markets for exports of 
United States agricultural commodities and to promote cooperation and 
exchange of information between agricultural institutions and 
agribusinesses in the United States and emerging markets. While the 
program is primarily intended to support the export market development 
efforts of the private sector, the program's resources may also be used 
to assist public agricultural organizations.
    (b) This part sets forth the general terms, conditions, and policies 
governing the Commodity Credit Corporation's (CCC) operation of the EMP.
    (c)(1) The Office of Management and Budget (OMB) issued guidance on 
Uniform Administrative Requirements, Cost Principles, and Audit 
Requirements for Federal Awards in 2 CFR part 200. In 2 CFR 400.1, the 
U.S. Department of Agriculture (USDA) adopted OMB's guidance in subparts 
A through F of 2 CFR part 200, as supplemented by 2 CFR part 400, as 
USDA policies and procedures for uniform administrative requirements, 
cost principles, and audit requirements for Federal awards.
    (2) The OMB guidance at 2 CFR part 200, as supplemented by 2 CFR 
part 400 and this part, applies to the EMP.
    (3) In addition to the provisions of this part, other regulations 
that are generally applicable to grants and cooperative agreements of 
USDA, including the applicable regulations set forth in 2 CFR chapters 
I, II, IV, also apply to the EMP, to the extent that these regulations 
do not directly conflict with the provisions of this part. The 
provisions of the CCC Charter Act (15 U.S.C. 714 et seq.) and any other 
statutory or regulatory provisions that are generally applicable to CCC 
also apply to the EMP.
    (d) Under the EMP, CCC provides grants to eligible U.S. private or 
government entities who demonstrate a role or interest in the export of 
U.S. agricultural commodities to conduct assessments of food and rural 
business system needs of emerging markets, make recommendations on 
measures necessary to enhance the effectiveness of such systems, 
including potential reductions in trade barriers, and identify and carry 
out specific opportunities and projects to enhance the effectiveness of 
such systems. The EMP may only be used to support exports of U.S. 
agricultural commodities through generic activities.
    (e) Only initiatives that support the export of U.S. agricultural 
commodities are eligible for assistance under the program. The program's 
resources may not be used to support the export of another country's 
products to the United States or another country, or to promote the 
development of a foreign economy as a primary objective.
    (f) The EMP generally operates on a reimbursement basis. The program 
is administered by the Foreign Agricultural Service (FAS) acting on 
behalf of CCC.
    (g) EMP recipients are responsible for complying with all applicable 
laws and regulations.



Sec.1486.101  Definitions.

    For purposes of this part, the following definitions apply:
    Activities means components of a project that carries out one or 
more statutorily-authorized activities, e.g., activities that assess the 
food and rural business system needs of emerging markets; promote 
information exchange with such markets; and/or carry out 
recommendations, projects, and opportunities in emerging markets to 
enhance the effectiveness of such systems.
    Agreement means a legally binding grant entered into between CCC and 
an EMP applicant setting forth the terms and conditions of approved 
activities under the EMP, including any subsequent amendments to such 
agreement.
    Approval letter means a document by which CCC informs an applicant 
that its EMP proposal has been approved for funding. This letter may 
also approve specific activities and contain terms and conditions in 
addition to the agreement.

[[Page 1009]]

    Attach[eacute]/Counselor means the FAS employee representing United 
States Department of Agriculture interests in a foreign country.
    Cost share means the portion of project costs not paid by Federal 
funds (unless otherwise authorized by Federal statute). In terms of the 
EMP program, cost share is the funds provided by the Recipient, the U.S. 
industry, or a State agency in support of an approved activity.
    Emerging market means generally any country, foreign territory, 
customs union, or other economic market that CCC determines is taking 
steps toward a market-oriented economy through its food, agriculture, or 
rural business sectors of the economy and has the potential to provide a 
viable and significant market for U.S. agricultural commodities. CCC has 
determined that any country that is not designated as a high-income 
country by the World Bank is an eligible emerging market under this 
program. The World Bank periodically redefines the income limits for its 
country classification. Consequently, the list of ``emerging market'' 
countries may change over time. CCC will provide guidance on country 
eligibility in each program announcement.
    Generic activities mean an activity that does not involve or promote 
the exclusive or predominant use of an individual company name, logo, or 
brand name, or the brand of a U.S. agricultural cooperative, but rather 
promotes a U.S. agricultural commodity generally.
    Project means an approach or undertaking made up of one or more 
activities that, taken together, carries out one or more statutorily-
authorized activities under the EMP (e.g., activities that assess the 
food and rural business system needs of emerging markets and develop 
recommendations on measures necessary to enhance the effectiveness of 
such systems; promote information exchange with such markets; or 
identify and carry out specific recommendations, opportunities, or 
projects to enhance the effectiveness of such systems).
    Project funds means the funds made available to a Recipient by CCC 
under an agreement and authorized for expenditure in accordance with 
this part.
    Proposal means an application for funding.
    Recipient means a U.S. entity receiving financial assistance from 
CCC to carry out a project under the EMP.
    SRTG is the acronym for State Regional Trade Group. An STRG is a 
non-profit association of state-funded agricultural promotion agencies.
    STRE is the acronym for sales and trade relations expenditures. 
Expenditures made on breakfast, lunch, dinner, receptions, and 
refreshments at approved activities; miscellaneous courtesies such as 
checkroom fees, taxi fares and tips for approved activities; and 
decorations for a special promotional occasion that is part of an 
approved activity.
    Unified Export Strategy (UES) system means an online internet system 
maintained by FAS through which applicants may apply to the EMP and 
other FAS market development programs. The system is currently 
accessible at https://apps.fas.usda.gov/ues/webapp/. FAS may prescribe a 
different system through which applicants may apply to EMP and will 
announce such system in the applicable Notice of Funding Opportunity 
(NOFO).
    U.S. agricultural commodity means any agricultural commodity of U.S. 
origin, including food, feed, fiber, forestry product, livestock, 
insects, and fish harvested from a U.S. aquaculture farm or harvested by 
a vessel (as defined in Title 46 of the United States Code) in waters 
that are not waters (including the territorial sea) of a foreign 
country, and any product thereof.



Sec.1486.102  Regional projects.

    Projects that focus on regions, such as the Caribbean Basin, rather 
than individual countries are eligible for consideration provided such 
projects target qualifying emerging markets in the specified region. CCC 
may also consider activities that target qualified emerging markets in a 
specific region but are conducted in a non-emerging market because of 
its importance as a central location and ease of access to that region.

[[Page 1010]]



            Subpart B_Eligibility, Applications, and Funding



Sec.1486.200  Participation eligibility.

    (a) To participate in the EMP, U.S. private or government entities 
must demonstrate a role or interest in the exports of U.S. agricultural 
commodities. Government organizations consist of Federal, state, and 
local agencies. Private entities include non-profit trade associations, 
universities, agricultural cooperatives, SRTGs, consulting businesses, 
research institutions, and profit-making entities. Foreign 
organizations, whether government or private, may participate as 
subrecipients in activities carried out by U.S. entities, but are not 
eligible for direct funding assistance from the program.
    (b) Proposals from research and consulting entities will be 
considered for funding assistance only with evidence of substantial 
participation in and financial support to the proposed project by U.S. 
industry. Such support is most credibly demonstrated through actual 
monetary contributions to the cost of the project.
    (c) For-profit entities shall not use program funds to conduct 
private business, promote private self-interests, or promote their own 
products or services beyond specific uses approved in a given project. 
For-profit entities shall not use program funds to supplement the costs 
of normal day-to-day operations.



Sec.1486.201  Eligible commodities.

    Any agricultural commodity or product thereof, excluding tobacco, 
that is comprised of at least 50 percent by weight, exclusive of added 
water, of agricultural commodities grown or raised in the United States 
is eligible for funding. Projects that seek support for multiple 
commodities are also eligible.



Sec.1486.202  Application process.

    (a) Announcement of accepting EMP applicants. CCC will periodically 
announce that it is accepting applications for participation in the EMP. 
All relevant information, including application deadlines and proposal 
content, will be noted in the announcement, and proposals must be 
submitted in accordance with the terms and requirements specified in the 
announcement and in this part. Currently, applicants are encouraged to 
submit applications through the UES system but are not required to do 
so. CCC may request any additional information it deems necessary from 
any applicant in order to properly evaluate any proposal.
    (b) Universal identifier and System for Award Management (SAM). In 
accordance with 2 CFR part 25, each entity that applies to the EMP and 
does not qualify for an exemption under 2 CFR 25.110 must:
    (1) Be registered in the SAM prior to submitting an application or 
plan;
    (2) Maintain an active SAM registration with current information at 
all times during which it has an active Federal award or an application 
or plan under consideration by CCC; and
    (3) Provide its DUNS number, or a unique identifier designated as a 
DUNS replacement, in each application or plan it submits to CCC.
    (c) Reporting subaward and executive compensation information. In 
accordance with 2 CFR part 170, each entity that applies to the EMP and 
does not qualify for an exception under 2 CFR 170.110(b) must ensure it 
has the necessary processes and systems in place to comply with the 
applicable reporting requirements of 2 CFR part 170 should it receive 
EMP funding.



Sec.1486.203  Application review and formation of agreements.

    (a) General. Proposals received in accordance with the announcement 
and this part will undergo a multi-phase review by CCC to determine 
eligibility for the program, the qualifications, quality, and 
appropriateness of proposed projects, and the reasonableness of proposed 
project budgets.
    (b) Evaluation criteria. CCC will review all proposals for 
eligibility and completeness. CCC will evaluate and score each proposal 
against the factors described in the NOFO. All proposals that meet the 
eligibility and completeness criteria described in the NOFO and receive 
a passing score will be recommended for funding to the FAS 
Administrator. The purpose of this review is to identify meritorious 
proposals, recommend an appropriate funding

[[Page 1011]]

level for each proposal, and submit the proposals and funding 
recommendations to appropriate officials for decision. CCC may, when 
appropriate to the subject matter of the proposal, request the 
assistance of other U.S. Government experts in evaluating the merits of 
a proposal. Demonstration of substantial U.S. industry participation in 
or financial or other support of a proposal will be a positive factor in 
the consideration of proposals. The degree of commitment to a proposed 
project, represented by the amount and type of cost share, is used in 
determining which proposals will be approved. Proposals in which the 
private sector is willing to commit funds, rather than in-kind items 
such as staff resources, and those with higher amounts of cost share 
will be given priority consideration. All reviewers will be required to 
sign a conflict of interest form, and when conflicts of interests are 
identified the reviewer will be recused from the objective review 
process.
    (c) Approval decision. CCC will approve those applications that it 
determines best satisfy the criteria and factors specified in the 
announcement and this part. All decisions regarding the disposition of 
an application are final.



Sec.1486.204  Funding limits.

    (a) The EMP is a relatively small program intended to develop, 
maintain, or expand access to qualified emerging markets. Its funds are 
intended for focused projects with specific activities, rather than 
expansive concept papers that contain only broad ideas. Large, overly 
expensive projects (i.e., in excess of $500,000) will not be funded.
    (b) CCC will not reimburse 100 percent of the cost of any project 
undertaken by the private sector. The program is intended to provide 
appropriate assistance to projects that have significant financial 
contributions from other sources, especially U.S. private industry.
    (c) Proposals for projects exceeding one year in duration may be 
considered, but proposals for projects that last longer than five years 
will not be considered. If approved, funding for multi-year projects may 
be provided one year at a time, with commitments beyond the first-year 
subject to interim evaluations intended to assess the progress of the 
project toward meeting its intended objectives.
    (d) Funding for continuing and substantially similar projects is 
generally limited to three calendar years, although FAS will entertain 
requests to extend an agreement's expiration date up to a maximum of 
five calendar years. After that time, the project is assumed to have 
proven its viability and, if necessary, should be continued by the 
Recipient with its own or with alternative sources of funding. 
Recipients must submit in writing a valid justification for why an 
extension is necessary no later than 60 days before the end of the 
period of performance. If warranted, extensions generally will be 
granted in one-year increments. Recipients must wait for written 
approval from FAS before proceeding with the project.



                      Subpart C_Program Operations



Sec.1486.300  Applicant notification.

    (a) CCC will notify each applicant in writing of the final decision 
on its application. CCC will send an agreement and an approval letter to 
each approved applicant. An applicant that accepts the terms and 
conditions contained in the agreement must so indicate by having the 
appropriate authorizing official sign the agreement and return it to 
CCC. The applicant may not begin to implement approved activities until 
the applicant's authorizing official and CCC have signed the agreement. 
The applicant is authorized to begin implementation of the project as of 
the date specified in the approval letter, unless otherwise indicated.
    (b) The approval letter and agreement will outline the activities 
and budgets that are approved and will specify the terms and conditions 
applicable to the project, including the levels of EMP funding and cost-
share requirements.



Sec.1486.301  Amendments.

    (a) Recipients may request to modify approved projects if 
circumstances change in such a way that they would likely affect the 
progress and ultimate success of a project. Such modification

[[Page 1012]]

must be made through a written amendment to the agreement. All requests 
for project modifications must be made in writing to CCC and must 
include:
    (1) A justification as to why changes to the project as originally 
designed are needed;
    (2) An explanation of the necessary adjustments in approach or 
strategy; and
    (3) A description of necessary changes in the project's time line(s) 
and/or budget (e.g., shifting of budgetary resources from one-line item 
to another in order to accommodate the changes).
    (b) All requests for project modifications must be reviewed and 
approved by CCC. Upon approval, CCC will issue an amendment to the 
agreement, which must be signed by CCC and the Recipient.



Sec.1486.302  Subrecipients.

    (a) A Recipient may utilize the services of a subrecipient to 
implement activities under the agreement if this is provided for in the 
agreement. The subrecipient may receive CCC-provided funds, program 
income, or other resources from the Recipient for this purpose. The 
Recipient must enter in to a written subaward with the subrecipient and 
comply with the applicable provisions of 2 CFR 200.331 and/or the 
Federal Acquisition Regulation (FAR), if applicable. If required by the 
agreement, the Recipient must provide a copy of such subaward to FAS, in 
the manner set forth in the agreement, prior to the transfer of CCC-
provided funds or program income to the subrecipient.
    (b) A Recipient must include the following requirements in a 
subaward:
    (1) The subrecipient is required to comply with the applicable 
provisions of this part and 2 CFR parts 200 and 400 and/or the FAR, if 
applicable. The applicable provisions are those that relate specifically 
to subrecipients, as well as those relating to non-Federal entities that 
impose requirements that would be reasonable to pass through to a 
subrecipient because they directly concern the implementation by the 
subrecipient of one or more activities under the agreement. If there is 
a question about whether a particular provision is applicable, FAS will 
make the determination.
    (2) The subrecipient must pay to the Recipient the value of CCC-
provided funds, interest, or program income that are not used in 
accordance with the subaward, or that are lost, damaged, or misused as a 
result of the subrecipient's failure to exercise reasonable care.
    (3) In accordance with 2 CFR 200.501(h), subawards must include a 
description of the applicable compliance requirements and the 
subrecipient's compliance responsibility. Methods to ensure compliance 
may include pre-award audits, monitoring during the agreement, and post-
award audits.
    (c) A Recipient must monitor the actions of a subrecipient as 
necessary to ensure that CCC-provided funds and program income provided 
to the subrecipient are used for authorized purposes in compliance with 
applicable U.S. Federal laws and regulations and the subaward and that 
performance indicator targets are achieved for both activities and 
results under the agreement.
    (d) Recipients have full and sole responsibility for the legal 
sufficiency of all subawards they may enter into with one or more 
subrecipients in order to carry out an approved project and shall assume 
financial liability for any costs or claims resulting from suits, 
challenges, or other disputes based on subawards entered into by the 
Recipient. Neither CCC nor any other agency of the United States 
Government nor any official or employee of CCC, FAS, USDA, or the United 
States Government has any obligation or responsibility with respect to 
Recipient subawards with third parties.
    (e) Recipients are responsible for ensuring to the greatest extent 
possible that the terms, conditions, and costs of subawards constitute 
the most economical and effective use of project funds.
    (f) All fees for professional and technical services paid to 
subrecipients in any part with project funds must be covered by written 
subawards.
    (g) A Recipient shall:

[[Page 1013]]

    (1) Ensure that all expenditures for goods and services in excess of 
$25 reimbursed by CCC are documented by a purchase order or invoice;
    (2) Ensure that no employee, officer, board member, agent, or the 
employee's, officer's, board member's, or agent's family, partners, or 
an organization that employs or is about to employ any of the parties 
indicated herein, participates in the review, selection, award or 
administration of a subaward in which such entities or their affiliates 
have a financial or other interest;
    (3) Conduct all contracting in an openly competitive manner. 
Individuals who develop or draft specifications, requirements, 
statements of work, invitations for bids, or requests for proposals for 
procurement of any goods or services, and such individuals' families or 
partners, or an organization that employs or is about to employ any of 
the aforementioned shall be excluded from competition for such 
procurement;
    (4) Conduct all awarding of grants and agreements in an openly 
competitive manner, except under the following conditions:
    (i) Non-monetary awards of property or services;
    (ii) Awards of less than $75,000;
    (iii) Awards to fund continuing work already started under a 
previous award;
    (iv) Awards that cannot be delayed due to an emergency or a 
substantial danger to health or safety;
    (v) Awards when it is impracticable to secure competition; or
    (vi) Awards to fund unique and innovative unsolicited applications;
    (5) Base each solicitation for professional or technical services on 
a clear and accurate description of and requirements related to the 
services to be procured;
    (6) Perform and document some form of fee, price, or cost analysis, 
such as a comparison of price quotations to market prices or other price 
indicia, to determine the reasonableness of the offered fees or prices 
for procurements in excess of the simplified acquisition threshold 
defined at 2 CFR 200.88; and
    (7) Document the decision-making process.



                 Subpart D_Cost Share and Reimbursements



Sec.1486.400  Cost share.

    (a) The EMP is intended to complement, not supplant, the efforts of 
the U.S. private sector. Therefore, no private sector proposal will be 
considered without the element of cost share from the Recipient and/or 
U.S. partners.
    (b) There is no minimum or maximum required amount of cost share. 
The degree of commitment to a proposed project, represented by the 
amount and type of private funding, is used as one factor in determining 
which proposals will be approved. The type of cost share is also not 
specified, though some contributions are ineligible (see Sec.
1486.402). Cost share may be actual cash invested or professional time 
of staff assigned to the project. Proposals in which the private sector 
is willing to commit funds, rather than in-kind items such as staff 
resources, and those with higher amounts of cost share will be given 
priority consideration.
    (c) Cost share is not required for proposals from Federal, state, or 
local government agencies. It is mandatory from all other eligible 
entities, even when they are party to a joint proposal with a government 
agency.
    (d) Contributions from foreign (non-U.S.) organizations may not be 
counted toward the cost share requirement but may be included in the 
total cost of the project.
    (e) An activity that is undertaken by an entity at the request of 
FAS may be exempted from the cost share requirement. This determination 
is made at the discretion of FAS.
    (f) A Recipient's cost share requirement will be specified in the 
agreement and approval letter. If a Recipient fails to contribute the 
total specified in the agreement, the difference between the amount 
contributed and the total amount required must be repaid to CCC in U.S. 
dollars within six months after the end of the period of performance of 
the agreement. If a Recipient is reimbursed by CCC for less than the 
amount of funds approved in the agreement, then the final required cost 
share shall

[[Page 1014]]

equal, on a percentage basis, the original ratio of cost share to the 
authorized EMP funding level.



Sec.1486.401  Eligible cost share.

    (a) In calculating the amount of cost share that it will make and 
the cost share U.S. entities or a State or local agency will make, a 
Recipient may include those costs (or such prorated costs) not 
proscribed under Sec.1486.402 if:
    (1) The expenditures are necessary and reasonable for accomplishment 
of the Recipient's overall EMP;
    (2) The expenditures are not included as cost share for any other 
Federal award;
    (3) The expenditures are not paid by the Federal Government under 
another Federal award, except where the Federal statute authorizing a 
program specifically provides that Federal funds made available for such 
program can be applied to matching or cost sharing requirements of other 
Federal programs; and
    (4) The cost share is made during the period covered by the 
agreement.
    (b) Cost share must be included in a project's line item budget.



Sec.1486.402  Ineligible cost share.

    (a) The following are not eligible as cost share:
    (1) Normal operating expenses and other costs not directly related 
to the project;
    (2) Any portion of salary or compensation of an individual who is 
the target of an approved project activity;
    (3) The cost of insuring articles owned by private individuals;
    (4) The cost of product development, product modification, or 
product research;
    (5) Slotting fees or similar sales expenditures;
    (6) Funds, services, capital goods, or personnel provided by any 
U.S. Government agency;
    (7) The value of any services generated by a Recipient or a third 
party that involve no expenditure by the Recipient or third party, e.g., 
free publicity;
    (8) The cost of developing any application/proposal for EMP funding;
    (9) Membership fees in clubs and social organizations; and
    (10) Any expenditure for an activity prior to CCC's approval of that 
activity.
    (b) CCC shall determine, at CCC's discretion, whether any cost not 
expressly listed in this section may be included as an eligible cost 
share.



Sec.1486.403  Reimbursement rules.

    (a) A Recipient may seek reimbursement for an eligible expenditure 
if:
    (1) The expenditure was necessary and reasonable for the performance 
of an approved activity; and
    (2) The Recipient has not been and will not be reimbursed for such 
expenditure by any other source.
    (b) Subject to paragraph (a) of this section, as well as applicable 
cost principles in 2 CFR part 200, to the extent these principles do not 
directly conflict with the provisions of this part, CCC will reimburse, 
in whole or in part, the cost of:
    (1) Salaries and benefits of the Recipient's existing personnel or 
any other participating entity that are directly assigned to EMP-funded 
projects. Salaries of administrative and clerical staff should normally 
be treated as indirect costs. Federal, state, and local government 
Recipients may not be reimbursed for salaries and benefits. 
Reimbursement of salaries and benefits for other Recipients is limited 
to:
    (i) The actual daily rate paid by the Recipient for the employee's 
salary or the daily rate of a GS-15, Step 10 U.S. Government employee in 
effect during the calendar year in which the project or activity is 
approved for funding, whichever is less;
    (ii) The actual assigned time of the employee to the project; and
    (iii) Benefits at a maximum rate of 30 percent of the existing 
salary of the employee, prorated to the time assigned to the project, 
provided that such benefits are required and granted pursuant to the 
Recipient's established written policies.
    (2) Consulting fees for professional services, limited to the daily 
rate of a GS-15, Step 10 U.S. Government employee in effect during the 
calendar year in which the project or activity is approved for funding. 
Reimbursement is authorized only for actual days

[[Page 1015]]

worked and is not authorized for travel and rest days. Benefits are not 
reimbursable.
    (3) STRE for social events or receptions that are primarily attended 
by foreign officials and that are held at foreign venues and are part of 
an approved activity. Such expenses must conform to the American Embassy 
representational funding guidelines as the standard for judging the 
appropriateness of the STRE costs. The amount of unauthorized STRE 
expenses that exceed the guidelines will not be reimbursed. Recipients 
must pay the difference between the total cost of STRE events and the 
appropriate amount as determined by the guidelines. STRE incurred in the 
United States is not authorized for reimbursement but may be counted as 
a cost share to the project.
    (4) Travel expenses, subject to the following:
    (i) All expenses while in travel status must conform to the U.S. 
Federal Travel Regulations (41 CFR parts 300 through 304);
    (ii) Air travel must comply with the Fly America Act (49 U.S.C. App. 
1517) and is limited to the full-fare economy class rate;
    (iii) Per diem is limited to the allowable rate for each domestic or 
foreign locale (41 CFR part 301-11). Expenses in excess of the 
authorized per diem rates may be allowed in special or unusual 
circumstances (41 CFR part 301-11), but must be approved in advance; and
    (iv) The Recipient shall notify the Attach[eacute]/Counselor in the 
destination countries in writing in advance of any proposed travel by 
the Recipient or its consultants or other Recipients. The timing of such 
notice should be far enough in advance to enable the Attach[eacute]/
Counselor to schedule appointments, make preparations, or otherwise 
provide any assistance being requested. Failure to provide advance 
notification of travel generally will result in disallowance of the 
expenses related to the travel, unless CCC determines it was impractical 
to provide such notification.
    (5) Direct administrative costs.
    (6) Indirect costs not identified as direct costs, but which are 
necessary for the implementation of a project. Indirect costs must be 
specified to be eligible for reimbursement. Indirect costs may be 
reimbursed up to a maximum of 10 percent of the EMP-funded portion of 
the project budget, excluding indirect costs, except that Recipients in 
FAS' Market Access Program and the Foreign Market Development Cooperator 
Program, SRTGs, for-profit entities, and government Recipients may not 
be reimbursed for indirect costs.
    (7) Rental costs for equipment necessary to carry out approved 
projects. Equipment rentals must be returned by the Recipient to the 
supplier in accordance with the lease agreements, but in no case later 
than 90 calendar days from the completion date of the project.
    (8) Procuring samples of specific agricultural commodities that are 
appropriate and necessary to the success of a technical assistance 
activity.



Sec.1486.404  Ineligible expenditures.

    (a) CCC will not reimburse expenditures made prior to approval of a 
Recipient's proposal, unreasonable expenditures, or any cost of:
    (1) Branded product promotions, e.g., in-store promotions, 
restaurant advertising, labeling, etc.;
    (2) Administrative and operational expenses for trade shows;
    (3) Advertising;
    (4) Preparation and printing of magazines, brochures, flyers, 
posters, etc., except in connection with specific approved activities 
such as training;
    (5) Design, development, and maintenance of information technology 
projects;
    (6) Purchase of equipment, e.g., office equipment or other fixed 
assets;
    (7) Subsidizing or otherwise providing funds for graduate programs 
at colleges and/or universities (salaries or fees for individual 
students who are directly assigned to specific project activities 
appropriate to their backgrounds may be covered on a pro-rated basis);
    (8) Subsidizing normal, day-to-day operating costs of an entity, 
except as allowed under Sec.1486.403(b)(6);
    (9) Honoraria for speakers;
    (10) Costs of product research or new product development;

[[Page 1016]]

    (11) Costs of developing technical assistance proposals submitted to 
the program;
    (12) Refundable deposits or advances;
    (13) STRE expenses within the United States;
    (14) All costs related to the shipping, over land and sea, of 
commodity samples;
    (15) Expenses, fines, settlements, judgments, or payments relating 
to legal suits, challenges, or disputes, including legal fees and costs 
associated with trade disputes, except as otherwise allowed in 2 CFR 
part 200;
    (16) Real estate costs other than allowable rental costs for office 
space whose use is assigned specifically to a project funded by the EMP; 
and
    (17) Any expenditure that has been or will be reimbursed by any 
other source.
    (b) CCC may determine, at CCC's discretion, whether any cost not 
expressly listed in this section will be reimbursed.



Sec.1486.405  Reimbursement procedures.

    (a) Following the implementation of a project for which CCC has 
agreed to provide funding, a Recipient may submit claims for 
reimbursement of eligible expenses incurred in implementing an EMP 
project, to the extent that CCC has agreed to pay such expenses. Any 
changes to approved activities must be approved in writing by CCC before 
any reimbursable expenses associated with the change can be incurred. A 
Recipient will be reimbursed after CCC reviews the claim and determines 
that it is complete.
    (b) CCC will make all payments to the Recipients in U.S. dollars. 
FAS will initiate payment within 30 days after receipt of the billing, 
unless the billing is improper.
    (c) Recipients will be authorized to submit requests for 
reimbursements or advances at least monthly when electronic fund 
transfers (EFTs) are not used, and as frequently as desired when 
electronic transfers are used, in accordance with the provisions of the 
Electronic Fund Transfer Act (15 U.S.C. 1693-1693r).
    (d) Recipients may submit claims for reimbursement of the expenses 
incurred in implementing EMP projects, to the extent CCC has agreed to 
pay for such costs, limited initially to 85 percent of the total amount 
specified in the agreement. The Recipient may be reimbursed for the 
remaining 15 percent of the funds only after the final performance 
report containing the information required by the agreement is submitted 
to and approved by FAS.
    (e) Final claims for reimbursement must be received no later than 90 
calendar days after the completion date of the project or following the 
expiration or termination date of the agreement, whichever is sooner, 
and are subject to FAS approval of the Recipient's final performance 
report. Recipients are required to use a prescribed system to submit 
their claims. This system will be clearly stated in the NOFO. Currently 
the CCC's internet-based UES system is being used to request 
reimbursement for eligible EMP program expenses.
    (f) Recipients shall maintain complete records of all program 
expenditures, identified by EMP agreement number, program year, country 
or region, activity number, and cost category. Such records shall be 
accompanied by documentation that supports the expenditure and shall be 
made available to CCC upon request. CCC may deny a claim for 
reimbursement if the claim is not supported by acceptable documentation.
    (g) In the event that a reimbursement claim is overpaid or is 
disallowed after payment already has been made, the Recipient shall 
repay CCC within 30 calendar days of such overpayment or disallowance 
the amount overpaid or disallowed either by submitting a check payable 
to CCC and referencing the applicable project, or by offsetting its next 
reimbursement claim. The Recipient shall make such payment in U.S. 
dollars, unless otherwise approved in advance by CCC.
    (h) The Recipient shall report any actions that may have a bearing 
on the propriety of any claims for reimbursement in writing to the 
appropriate Attach[eacute]/Counselor and FAS Division Director.



Sec.1486.406  Advances.

    (a) Policy. In general, CCC operates the EMP on a cost reimbursable 
basis.

[[Page 1017]]

    (b) Exception. Upon request, CCC may make advance payments to a 
Recipient against an approved project budget. Up to 40 percent of the 
approved project budget may be provided as an advance, either at one 
time or in incremental payments. Advances should be limited to the 
minimum amounts needed and requested as close as is administratively 
feasible to the actual time of disbursement by the Recipient. 
Reimbursement claims will be used to offset advances. Recipients shall 
deposit and maintain advances in insured, interest-bearing accounts, 
unless the exceptions in 2 CFR part 200 apply. Interest earned by the 
Recipient on funds advanced by CCC is not program income. Up to $500 of 
interest earned per year may be retained by the Recipient for 
administrative expenses. Any additional interest earned on Federal 
advance payments shall be remitted annually to the appropriate entity as 
required in 2 CFR part 200.
    (c) Refunds due CCC. A Recipient shall fully expend all advances on 
approved activities within 90 calendar days after the date of 
disbursement by CCC. By the end of 90 calendar days, the Recipient must 
submit reimbursement claims to offset the advance and submit a check 
made payable to CCC for any unexpended balance. The Recipient shall make 
such payment in U.S. dollars, unless otherwise approved in advance by 
CCC.



             Subpart E_Reporting, Evaluation, and Compliance



Sec.1486.500  Reports.

    (a) Recipients are required to submit regular financial and 
performance reports in accordance with their agreement. Reporting 
requirements and formats for both annual financial and performance 
reports and final financial and performance reports will be specified in 
the agreement between CCC and the Recipient.
    (b)(1) In addition to the information required in 2 CFR 
200.328(b)(2), a Recipient's performance reports must include pertinent 
information regarding the Recipient's progress, measured against 
established indicators, baselines, and targets, towards achieving the 
expected results specified in the agreement. This reporting must 
include, for each performance indicator, a comparison of actual 
accomplishments with the baseline and the targets established for the 
period. When actual accomplishments deviate significantly from targeted 
goals, the Recipient must provide an explanation in the report.
    (2) A Recipient must ensure the accuracy and reliability of the 
performance data submitted to FAS in performance reports. At any time 
during the period of performance of the agreement, FAS may review the 
Recipient's performance data to determine whether it is accurate and 
reliable. The Recipient must comply with all requests made by FAS or an 
entity designated by FAS in relation to such reviews.
    (c) All final performance reports will be made available to the 
public.
    (d) If requested by FAS, a Recipient must provide to FAS additional 
information or reports relating to the agreement.
    (e) If a Recipient requires an extension of a reporting deadline, it 
must ensure that FAS receives an extension request at least five 
business days prior to the reporting deadline. FAS may decline to 
consider a request for an extension that it receives after this time 
period. FAS will consider requests for reporting deadline extensions on 
a case by case basis and will make a decision based on the merits of 
each request. FAS will consider factors such as unforeseen or 
extenuating circumstances and past performance history when evaluating 
requests for extensions.



Sec.1486.501  Evaluation.

    Project evaluations may be carried out by CCC at its option with or 
without Recipients. CCC may also seek outside expertise to conduct or 
participate in evaluations.



Sec.1486.502  Compliance reviews and notices.

    (a) Compliance review process. (1) USDA staff may conduct compliance 
reviews of Recipient's activities under the EMP to ensure compliance 
with this part, applicable Federal laws and regulations, and the terms 
of the

[[Page 1018]]

agreements and approval letters. Recipients shall cooperate fully with 
relevant USDA staff conducting compliance reviews and shall comply with 
all requests from USDA staff to facilitate the conduct of such reviews. 
Program funds spent inappropriately or on unapproved activities must be 
returned to CCC.
    (2) Any project or activity funded under the program is subject to 
review or audit at any time during the course of implementation or after 
the completion of the project.
    (3) Upon conclusion of the compliance review, USDA staff will 
provide a written compliance report to the Recipient. The compliance 
report will detail any instances where it appears that the Recipient is 
not complying with any of the terms or conditions of the agreement, 
approval letter, or the applicable laws and regulations. The report will 
also specify if it appears that CCC may be entitled to recover funds 
from the Recipient and will explain the basis for any recovery of funds 
from the Recipient. If, as a result of a compliance review, CCC 
determines that further review is needed in order to ensure compliance 
with the requirements of the EMP, CCC may require the Recipient to 
contract for an independent audit.
    (4) In addition, CCC may notify a Recipient in writing at any time 
if CCC determines that CCC may be entitled to recover funds from the 
Recipient. CCC will explain the basis for any recovery of funds from the 
Recipient in the written notice. The Recipient shall, within 30 calendar 
days of the date of the notice, repay CCC the amount owed either by 
submitting a check payable to CCC or by offsetting its next 
reimbursement claim. The Recipient shall make such payment in U.S. 
dollars, unless otherwise approved in advance by CCC. If, however, a 
Recipient notifies CCC within 30 calendar days of the date of the 
written notice that the Recipient intends to file an appeal pursuant to 
the provisions of this part, the amount owed to CCC by the Recipient is 
not due until the appeal procedures are concluded and CCC has made a 
final determination as to the amount owed.
    (5) The fact that a compliance review has been conducted by USDA 
staff does not signify that a Recipient is in full compliance with its 
agreement, approval letter, and/or applicable laws and regulations.
    (b) Recipient response to compliance report. (1) A Recipient shall, 
within 60 calendar days of the date of the issuance of a compliance 
report, submit a written response to CCC. The response may include 
additional documentation for consideration or a request for 
reconsideration of any finding along with supporting justification. If 
the Recipient does not wish to contest the compliance report, the 
response shall include any money owed to CCC, which may be returned by 
submitting a check payable to CCC or by offsetting a reimbursement 
claim. The Recipient shall make any payments in U.S. dollars, unless 
otherwise approved in advance by CCC. CCC, at its discretion, may extend 
the period for response.
    (2) After reviewing the response, CCC shall determine whether the 
Recipient owes any funds to CCC and will inform the Recipient in writing 
of the basis for the determination. CCC may initiate action to collect 
such amount by providing the Recipient a written demand for payment of 
the debt pursuant to the debt settlement policies and procedures in 7 
CFR part 1403.
    (c) Recipient appeals of CCC determinations. (1) Within 30 calendar 
days of the date of the issuance of a determination, the Recipient may 
appeal the determination by making a request in writing that includes 
the basis for such reconsideration. The Recipient may also request a 
hearing.
    (2) If the Recipient requests a hearing, CCC will set a date and 
time for the hearing. The hearing will be an informal proceeding. A 
transcript will not ordinarily be prepared unless the Recipient bears 
the cost of a transcript; however, CCC may, at its discretion, have a 
transcript prepared at CCC's expense.
    (3) CCC will base its final determination upon information contained 
in the administrative record. The Recipient must exhaust all 
administrative remedies contained in this section before pursuing 
judicial review of a determination by CCC.

[[Page 1019]]



Sec.1486.503  Records retention.

    Each Recipient shall retain all records relating to the project for 
three calendar years from the date of submission of the final 
expenditure report. All records related to the project, including 
records pertaining to contractors, shall be made available upon request 
to authorized officials of the U.S. Government.



Sec.1486.504  Program income.

    Program income means gross income earned by the Recipient that is 
directly generated by a supported activity or earned as a result of the 
Federal award during the period of performance. Any such income 
generated from an activity, the expenditures for which have been wholly 
or partially reimbursed with EMP funds, shall be used by the Recipient 
in furtherance of its approved activities in the program period during 
which the EMP funds are available for obligation by the Recipient, or 
must be returned to CCC. The use of such income shall be governed by 
this part. Reasonable activity fees or registration fees, if identified 
as such in a project budget, may be charged for projects approved for 
program funding. The intent to charge a fee must be part of the original 
proposal, along with an explanation of how such fees are to be used. Any 
activity fees charged must be used to offset activity expenses or 
returned to CCC. Such fees may not be used as profit or counted as cost 
share.



Sec.1486.505  Audit requirements.

    (a) Subpart F of 2 CFR part 200 applies to all Recipients and 
subrecipients under this part other than those that are for-profit 
entities, foreign public entities, or foreign organizations.
    (b) A Recipient or subrecipient that is a for-profit entity or a 
subrecipient that is a foreign organization and that expends, during its 
fiscal year, a total of at least the audit requirement threshold in 2 
CFR 200.501 in Federal awards, is required to obtain an audit. Such a 
Recipient or subrecipient has the following two options to satisfy the 
requirement in this paragraph (b):
    (1)(i) A financial audit of the agreement or subaward, in accordance 
with the Government Auditing Standards issued by the United States 
Government Accountability Office (GAO), if the Recipient or subrecipient 
expends Federal awards under only one FAS program during such fiscal 
year; or
    (ii) A financial audit of all Federal awards from FAS, in accordance 
with GAO's Government Auditing Standards, if the Recipient or 
subrecipient expends Federal awards under multiple FAS programs during 
such fiscal year; or
    (2) An audit that meets the requirements contained in subpart F of 2 
CFR part 200.
    (c) A Recipient or subrecipient that is a for-profit entity or a 
subrecipient that is a foreign organization and that expends, during its 
fiscal year, a total that is less than the audit requirement threshold 
in 2 CFR 200.501 in Federal awards, is exempt from requirements under 
this section for an audit for that year, except as provided in 
paragraphs (d) and (f) of this section, but it must make records 
available for review by appropriate officials of Federal agencies.
    (d) FAS may require an annual financial audit of an agreement or 
subaward when the audit requirement threshold in 2 CFR 200.501 is not 
met. In that case, FAS must provide funds under the agreement for this 
purpose, and the Recipient or subrecipient, as applicable, must arrange 
for such audit and submit it to FAS.
    (e) When a Recipient or subrecipient that is a for-profit entity or 
a subrecipient that is a foreign organization is required to obtain a 
financial audit under this section, it must provide a copy of the audit 
to FAS within 60 days after the end of its fiscal year.
    (f) FAS, the USDA Office of Inspector General, or GAO may conduct or 
arrange for additional audits of any Recipients or subrecipients, 
including for-profit entities and foreign organizations. Recipients and 
subrecipients must promptly comply with all requests related to such 
audits. If FAS conducts or arranges for an additional audit, such as an 
audit with respect to a particular agreement, FAS will fund the full 
cost of such an audit, in accordance with 2 CFR 200.503(d).

[[Page 1020]]



Sec.1486.506  Disclosure of program information.

    (a) Documents submitted to CCC by Recipients are subject to the 
provisions of the Freedom of Information Act (FOIA), 5 U.S.C. 552, and 7 
CFR part 1, subpart A, including, specifically, 7 CFR 1.11.
    (b) Any research conducted by a Recipient pursuant to an agreement 
and/or approval letter shall be subject to the provisions relating to 
intangible property in 2 CFR part 200.



Sec.1486.507  Ethical conduct.

    (a) The Recipient shall maintain written standards of conduct 
governing the performance of its employees engaged in the award and 
administration of contracts.
    (b) A Recipient shall conduct its business in accordance with the 
laws and regulations of the country(s) in which each activity is carried 
out and in accordance with applicable U.S. Federal, state, and local 
laws and regulations. A Recipient shall conduct its business in the 
United States in accordance with applicable Federal, state, and local 
laws and regulations.
    (c) Neither a Recipient nor its affiliates shall make export sales 
of U.S. agricultural commodities covered under the terms of an 
agreement. Neither a Recipient nor its affiliates shall charge a fee for 
facilitating an export sale. A Recipient may collect check-off funds and 
membership fees that are required for membership in the Recipient's 
organization.
    (d) The Recipient shall not use program activities or project funds 
to promote private self-interests or conduct private business.
    (e) A Recipient shall not limit participation in its EMP activities 
to members of its organization. Recipients shall ensure that their EMP-
funded programs and activities are open to all otherwise qualified 
individuals and entities on an equal basis and without regard to any 
non-merit factors.
    (f) A Recipient shall select U.S. agricultural industry 
representatives to participate in activities based on criteria that 
ensure participation on an equitable basis by a broad cross section of 
the U.S. industry. If requested by CCC, a Recipient shall submit such 
selection criteria to CCC for approval.
    (g) The Recipient must report any actions or circumstances that may 
have a bearing on the propriety of program activities to the appropriate 
Attach[eacute]/Counselor, and the Recipient's U.S. office shall report 
such actions or circumstances in writing to CCC.
    (h) The officers, employees, board members, and agents of the 
Recipient shall neither solicit nor accept gratuities, favors, or 
anything of monetary value from contractors, sub-contractors, or parties 
to sub-agreements. However, Recipients may set standards for situations 
in which the financial interest is not substantial, or the gift is an 
unsolicited item of nominal value. The standards of conduct shall 
provide for disciplinary actions to be applied for violations of such 
standards by officers, employees, board members, or agents of the 
Recipient.



Sec.1486.508  Suspension and termination.

    (a) An agreement or subaward may be suspended or terminated in 
accordance with 2 CFR 200.338 or 200.339. FAS may suspend or terminate 
an agreement if it determines that:
    (1) One of the bases in 2 CFR 200.338 or 200.339 for termination or 
suspension by FAS has been satisfied; or
    (2) The continuation of the assistance provided under the agreement 
is no longer necessary or desirable.
    (b) If an agreement is terminated, the Recipient:
    (1) Is responsible for using or returning any CCC-provided funds, 
interest, or program income that have not been disbursed, as agreed to 
by FAS; and
    (2) Must comply with any closeout and post-closeout procedures 
specified in the agreement and 2 CFR 200.343 and 200.344.



Sec.1486.509  Noncompliance with an agreement.

    (a) If a Recipient fails to comply with any term in its agreement, 
approval letter, or this part, CCC may take one or more of the 
enforcement actions in 2 CFR part 200 and, if appropriate, initiate a 
claim against the Recipient, following the procedures set forth in this 
part. CCC may also initiate a

[[Page 1021]]

claim against a Recipient if program income or CCC-provided funds are 
lost due to an action or omission of the Recipient. If any Recipient has 
engaged in fraud with respect to the EMP program, or has otherwise 
violated program requirements under this part, CCC may:
    (1) Hold such Recipient liable for any and all losses to CCC 
resulting from such fraud or violation;
    (2) Require a refund of any assistance provided to such Recipient 
plus interest as determined by FAS; and
    (3) Collect liquidated damages from such Recipient in an amount 
determined appropriate by FAS.
    (b) The provisions of this section shall be without prejudice to any 
other remedy that is available under any other provision of law.



Sec.1486.510  Paperwork reduction requirements.

    The paperwork and recordkeeping requirements imposed by this part 
have been approved by OMB under the Paperwork Reduction Act of 1980. OMB 
has assigned control number 0551-0048 for this information collection.



PART 1487_TECHNICAL ASSISTANCE FOR SPECIALTY CROPS--Table of Contents



Sec.
1487.1 General purpose and scope.
1487.2 Definitions.
1487.3 Program eligibility.
1487.4 Limits on the scope of proposals.
1487.5 Application process.
1487.6 Application review and formation of agreements.
1487.7 Applicant notification.
1487.8 Reimbursements and advances.
1487.9 Reporting.
1487.10 Notification of international travel.
1487.11 Evaluation.
1487.12 Compliance reviews and notices.
1487.13 Records retention.
1487.14 Program income.
1487.15 Subrecipients.
1487.16 Suspension and termination of agreements.
1487.17 Audit requirements.
1487.18 Disclosure of program information.
1487.19 Ethical conduct.
1487.20 Amendments.
1487.21 Noncompliance with an agreement.
1487.22 Paperwork reduction requirements.

    Authority: 7 U.S.C. 5623, 5662-5663, as amended.

    Source: 84 FR 70394, Dec. 23, 2019, unless otherwise noted.



Sec.1487.1  General purpose and scope.

    (a) Under the Technical Assistance for Specialty Crops (TASC) 
program, the Commodity Credit Corporation (CCC), an agency and 
instrumentality of the United States within the U.S. Department of 
Agriculture (USDA), provides grant funds to eligible organizations to 
implement activities that are intended to address existing or potential 
sanitary, phytosanitary, or technical barriers that prohibit or threaten 
the export of U.S. specialty crops that are currently available on a 
commercial basis. The TASC program is intended to benefit the 
represented industry rather than a specific company or brand.
    (b) This part sets forth the general terms, conditions, and policies 
governing CCC's operation of the TASC program.
    (c)(1) The Office of Management and Budget (OMB) issued guidance on 
Uniform Administrative Requirements, Cost Principles, and Audit 
Requirements for Federal Awards in 2 CFR part 200. In 2 CFR 400.1, the 
U.S. Department of Agriculture (USDA) adopted OMB's guidance in subparts 
A through F of 2 CFR part 200, as supplemented by 2 CFR part 400, as 
USDA policies and procedures for uniform administrative requirements, 
cost principles, and audit requirements for Federal awards.
    (2) The OMB guidance at 2 CFR part 200, as supplemented by 2 CFR 
part 400 and this part, applies to the TASC program.
    (3) In addition to the provisions of this part, other regulations 
that are generally applicable to grants and cooperative agreements of 
USDA, including the applicable regulations set forth in 2 CFR chapters 
I, II, and IV, also apply to the TASC program, to the extent that these 
regulations do not directly conflict with the provisions of this part. 
The provisions of the CCC Charter Act (15 U.S.C. 714 et seq.) and any 
other statutory provisions or regulatory provisions that are generally 
applicable to CCC also apply to the TASC program.

[[Page 1022]]

    (d) The TASC program generally operates on a reimbursement basis. 
The program is administered by the Foreign Agricultural Service (FAS), 
acting on behalf of CCC.



Sec.1487.2  Definitions.

    For purposes of this part, the following definitions apply:
    Activity means a discrete undertaking within a project to be carried 
out by a Participant, directly or through a subrecipient or contractor, 
that is specified in an agreement and is intended to fulfill a specific 
objective of the agreement.
    Agreement means a legally binding grant entered into between CCC and 
a TASC applicant setting forth the terms and conditions to implement an 
approved project under the TASC program, including any subsequent 
amendments to such agreement.
    Approval letter means a document by which CCC informs an applicant 
that its TASC proposal has been approved for funding. This letter may 
also approve specific activities and contain terms and conditions in 
addition to the agreement.
    Attach[eacute]/Counselor means the FAS employee representing United 
States Department of Agriculture interests in a foreign country.
    Eligible organization means any U.S. organization that demonstrates 
a role or interest in the exports of specialty crops, including, but not 
limited to: U.S. Government agencies, State government agencies, non-
profit trade associations, universities, agricultural cooperatives, and 
private companies.
    Participant means an entity that has entered into a TASC agreement 
with CCC.
    Specialty crop means most cultivated plants produced in the United 
States, or the products thereof, except wheat, feed grains, oilseeds, 
cotton, rice, peanuts, sugar, and tobacco.
    Unified Export Strategy (UES) system means the online internet 
system maintained by FAS through which applicants currently may apply to 
TASC and the other FAS market development programs. The system is 
currently accessible at https://apps.fas.usda.gov/ues/webapp/. FAS may 
prescribe a different system through which applicants may apply to TASC 
and will announce such system in the applicable Notice of Funding 
Opportunity (NOFO).
    United States means each of the States, the District of Columbia, 
Puerto Rico, and the territories and possessions of the United States.



Sec.1487.3  Program eligibility.

    (a) An eligible organization can submit an application under this 
part to become a Participant under the TASC Program. FAS will set forth 
specific eligibility information, including any factors or priorities 
that will affect the eligibility of an applicant or application for 
selection, in the full text of the applicable NOFO posted on the U.S. 
Government website for grant opportunities.
    (b) In order to be eligible for funding under the TASC program, 
activities must address existing or potential sanitary, phytosanitary, 
or technical barriers to the export of U.S. specialty crops. Examples of 
expenses that CCC may agree to cover under the TASC program include but 
are not limited to expenses associated with: Initial pre-clearance 
programs, export protocol and work plan support, seminars and workshops, 
study tours, field surveys, development of pest lists, pest and disease 
research, database development, reasonable logistical and administrative 
support, and travel and per diem expenses.
    (c) Eligible projects may take place in the United States or abroad.
    (d) Proposals from research and consulting entities will be 
considered for funding assistance only with evidence of substantial 
participation in and financial support to the proposed project by U.S. 
industry. Such support is most credibly demonstrated through actual 
monetary contributions to the cost of the project.
    (e) Foreign organizations, whether government or private, may 
participate as third parties in activities carried out by U.S. entities, 
but are not eligible for funding assistance from the program.

[[Page 1023]]



Sec.1487.4  Limits on the scope of proposals.

    (a) Funding cap. Proposals that request more than $500,000 of CCC 
funding in a given year will not be considered.
    (b) Length of activities. Awards will generally be granted for a 
project period not exceeding five calendar years. However, FAS will 
entertain requests to extend agreements beyond five years when valid 
justifications are submitted. Participants must submit in writing a 
valid justification for why an extension is necessary no later than 60 
days before the end of the period of performance. Extensions generally 
will be granted in one-year increments, if warranted. A Participant must 
wait for written approval from FAS before proceeding with the project.
    (c) Target countries. Proposals may target barriers in any eligible 
export market, including single countries or reasonable regional 
groupings of countries.
    (d) Multiple proposals. Applicants may submit multiple proposals, 
but no Participant may have more than five approved projects underway at 
any given time.
    (e) Program funds only for specific uses. Participants shall not use 
program funds to supplement the costs of normal day-to-day operations or 
to promote their own products or services beyond specific uses approved 
in a given project.



Sec.1487.5  Application process.

    (a) Announcement for TASC program participant. CCC will periodically 
announce that it is accepting applications for participation in the TASC 
program. All relevant information, including application deadlines and 
proposal content, will be noted in the announcement, and proposals must 
be submitted in accordance with the terms and conditions, as well as 
other requirements specified in the announcement and in this part. 
Currently, applicants are encouraged to submit applications through the 
UES system, but are not required to use the UES system. CCC may request 
any additional information it deems necessary from any applicant in 
order to properly evaluate any proposal
    (b) Universal identifier and System for Award Management (SAM). In 
accordance with 2 CFR part 25, each entity that applies to the TASC 
program and does not qualify for an exemption under 2 CFR 25.110 must:
    (1) Be registered in the SAM prior to submitting an application or 
plan;
    (2) Maintain an active SAM registration with current information at 
all times during which it has an active Federal award or an application 
or plan under consideration by CCC; and
    (3) Provide its DUNS number, or a unique identifier designated as a 
DUNS replacement, in each application or plan it submits to CCC.
    (c) Reporting subaward and executive compensation information. In 
accordance with 2 CFR part 170, each entity that applies to the TASC 
program and does not qualify for an exception under 2 CFR 170.110(b) 
must ensure it has the necessary processes and systems in place to 
comply with the applicable reporting requirements of 2 CFR part 170 
should it receive TASC funding.



Sec.1487.6  Application review and formation of agreements.

    (a) General. Proposals received in accordance with the announcement 
and this part will undergo a multi-phase review by CCC to determine 
eligibility for the program, the qualifications, quality, and 
appropriateness of proposed projects, and the reasonableness of proposed 
project budgets.
    (b) Evaluation criteria. CCC will review all proposals for 
eligibility and completeness. CCC will evaluate and score each proposal 
against the factors described in the NOFO. The purpose of this review is 
to identify meritorious proposals, recommend an appropriate funding 
level for each proposal, and submit the proposals and funding 
recommendations to appropriate officials for decision. CCC may, when 
appropriate to the subject matter of the proposal, request the 
assistance of other U.S. Government experts in evaluating the merits of 
a proposal. Demonstration of substantial U.S. industry participation in 
or financial or other support of a proposal will be a positive factor in 
the consideration of proposals. All reviewers will be required to sign a

[[Page 1024]]

conflict of interest form, and when conflicts of interests are 
identified the reviewer will be recused from the objective review 
process.
    (c) Approval decision. CCC will approve those applications that it 
determines best satisfy the criteria and factors specified in the 
announcement and this part. All decisions regarding the disposition of 
an application are final.



Sec.1487.7  Applicant notification.

    (a) CCC will notify each applicant in writing of the final decision 
on its application. CCC will send an agreement and an approval letter to 
each approved applicant. An applicant that accepts the terms and 
conditions contained in the agreement and approval letter must so 
indicate by having the appropriate authorizing official sign the 
agreement and submit it to CCC. The applicant may not begin to implement 
approved activities until the applicant's authorizing official and CCC 
have signed the agreement. The applicant is authorized to begin 
implementation of the project as of the date specified in the approval 
letter, unless otherwise indicated.
    (b) The approval letter and agreement will outline the activities 
and budgets that are approved and will specify the terms and conditions 
applicable to the project, including the levels of TASC funding and cost 
share requirements.



Sec.1487.8  Reimbursements and advances.

    (a) Reimbursement procedures. (1) Following the implementation of a 
project for which CCC has agreed to provide funding, a Participant may 
submit claims for reimbursement of eligible expenses incurred in 
implementing a TASC project, to the extent that CCC has agreed to pay 
such expenses. Any changes to approved activities must be approved in 
writing by CCC before any reimbursable expenses associated with the 
change can be incurred. A Participant will be reimbursed after CCC 
reviews the claim and determines that it is complete.
    (2) CCC will make all payments to the Participants in U.S. dollars. 
FAS will initiate payment within 30 days after receipt of the billing, 
unless the billing is improper.
    (3) Participants will be authorized to submit requests for 
reimbursements or advances at least monthly when electronic fund 
transfers (EFTs) are not used, and as frequently as desired when 
electronic transfers are used, in accordance with the provisions of the 
Electronic Fund Transfer Act (15 U.S.C. 1693-1693r).
    (4) Participants may submit claims for reimbursement of the expenses 
incurred in implementing TASC projects, to the extent CCC has agreed to 
pay for such costs, limited initially to 85 percent of the total amount 
specified in the agreement. The Participant may be reimbursed for the 
remaining 15 percent of the funds only after the final performance 
report containing the information required by the agreement is submitted 
to and approved by FAS.
    (5) Final claims for reimbursement must be received no later than 90 
calendar days after the completion date of the project or following the 
expiration or termination date of the agreement, whichever is sooner, 
and are subject to FAS approval of the Participant's final performance 
report. Participants are required to use a prescribed system to submit 
their claims. This system will be clearly stated in the NOFO. Currently 
the CCC's internet-based UES system is being used to request 
reimbursement for eligible TASC program expenses.
    (6) Participants shall maintain complete records of all program 
expenditures, identified by TASC agreement number, program year, country 
or region, activity number, and cost category. Such records shall be 
accompanied by documentation that supports the expenditure and shall be 
made available to CCC upon request. CCC may deny a claim for 
reimbursement if the claim is not supported by acceptable documentation.
    (7) In the event that a reimbursement claim is overpaid or is 
disallowed after payment already has been made, the Participant shall 
repay CCC within 30 calendar days of such overpayment or disallowance 
the amount overpaid or disallowed either by submitting a check payable 
to CCC and referencing the applicable project, or by offsetting

[[Page 1025]]

its next reimbursement claim. The Participant shall make such payment in 
U.S. dollars, unless otherwise approved in advance by CCC.
    (8) The Participant shall report any actions that may have a bearing 
on the propriety of any claims for reimbursement in writing to the 
appropriate Attach[eacute]/Counselor and FAS Division Director.
    (b) Advances--(1) Policy. In general, CCC operates the TASC program 
on a cost reimbursable basis.
    (2) Exception. Upon request, CCC may make advance payments to a 
Participant against an approved project budget. Participants may request 
an advance of up to 85 percent of the funding approved in any given 
program year. Advances should be limited to the minimum amounts needed 
and requested as close as is administratively feasible to the actual 
time of disbursement by the Participant. Reimbursement claims will be 
used to offset advances. Participants shall deposit and maintain 
advances in insured, interest-bearing accounts, unless the exceptions in 
2 CFR part 200 apply. Interest earned by the Participant on funds 
advanced by CCC is not program income. Up to $500 of interest earned per 
year may be retained by the Participant for administrative expenses. Any 
additional interest earned on Federal advance payments shall be remitted 
annually to the appropriate entity as required in 2 CFR part 200.
    (3) Refunds due CCC. A Participant shall fully expend all advances 
on approved activities within 90 calendar days after the date of 
disbursement by CCC. By the end of 90 calendar days, the Participant 
must submit reimbursement claims to offset the advance and submit a 
check made payable to CCC for any unexpended balance. The Participant 
shall make such payment in U.S. dollars, unless otherwise approved in 
advance by CCC.



Sec.1487.9  Reporting.

    (a) Participants are required to submit regular financial and 
performance reports in accordance with their agreement. Reporting 
requirements and formats for both annual financial and performance 
reports and final financial and performance reports will be specified in 
the agreement between CCC and the Participant.
    (b)(1) In addition to the information required in 2 CFR 
200.328(b)(2), a Participant's performance reports must include 
pertinent information regarding the Participant's progress, measured 
against established indicators, baselines, and targets, towards 
achieving the expected results specified in the agreement. This 
reporting must include, for each performance indicator, a comparison of 
actual accomplishments with the baseline and the targets established for 
the period. When actual accomplishments deviate significantly from 
targeted goals, the Participant must provide an explanation in the 
report.
    (2) A Participant must ensure the accuracy and reliability of the 
performance data submitted to FAS in performance reports. At any time 
during the period of performance of the agreement, FAS may review the 
Participant's performance data to determine whether it is accurate and 
reliable. The Participant must comply with all requests made by FAS or 
an entity designated by FAS in relation to such reviews.
    (c) All final performance reports will be made available to the 
public.
    (d) If requested by FAS, a Participant must provide to FAS 
additional information or reports relating to the agreement.
    (e) If a Participant requires an extension of a reporting deadline, 
it must ensure that FAS receives an extension request at least five 
business days prior to the reporting deadline. FAS may decline to 
consider a request for an extension that it receives after this time 
period. FAS will consider requests for reporting deadline extensions on 
a case by case basis and will make a decision based on the merits of 
each request. FAS will consider factors such as unforeseen or 
extenuating circumstances and past performance history when evaluating 
requests for extensions.



Sec.1487.10  Notification of international travel.

    The Participant shall notify the Attach[eacute]/Counselor in the 
destination countries in writing in advance of any proposed travel by 
the Participant or

[[Page 1026]]

its consultants or other participants. The timing of such notice should 
be far enough in advance to enable the Attach[eacute]/Counselor to 
schedule appointments, make preparations, or otherwise provide any 
assistance being requested. Failure to provide advance notification of 
travel generally will result in disallowance of the expenses related to 
the travel, unless CCC determines it was impractical to provide such 
notification.



Sec.1487.11  Evaluation.

    Project evaluations may be carried out by CCC at its option with or 
without Participants. CCC may also seek outside expertise to conduct or 
participate in evaluations.



Sec.1487.12  Compliance reviews and notices

    (a) Compliance review process. (1) USDA staff may conduct compliance 
reviews of Participant's activities under the TASC program to ensure 
compliance with this part, applicable Federal laws and regulations, and 
the terms of the agreements and approval letters. Participants shall 
cooperate fully with relevant USDA staff conducting compliance reviews 
and shall comply with all requests from USDA staff to facilitate the 
conduct of such reviews. Program funds spent inappropriately or on 
unapproved activities must be returned to CCC.
    (2) Any project or activity funded under the program is subject to 
review or audit at any time during the course of implementation or after 
the completion of the project.
    (3) Upon conclusion of the compliance review, USDA staff will 
provide a written compliance report to the Participant. The compliance 
report will detail any instances where it appears that the Participant 
is not complying with any of the terms or conditions of the agreement, 
approval letter, or the applicable laws and regulations. The report will 
also specify if it appears that CCC may be entitled to recover funds 
from the Participant and will explain the basis for any recovery of 
funds from the Participant. If, as a result of a compliance review, CCC 
determines that further review is needed in order to ensure compliance 
with the requirements of the TASC program, CCC may require the 
Participant to contract for an independent audit.
    (4) In addition, CCC may notify a Participant in writing at any time 
if CCC determines that CCC may be entitled to recover funds from the 
Participant. CCC will explain the basis for any recovery of funds from 
the Participant in the written notice. The Participant shall, within 30 
calendar days of the date of the notice, repay CCC the amount owed 
either by submitting a check payable to CCC or by offsetting its next 
reimbursement claim. The Participant shall make such payment in U.S. 
dollars, unless otherwise approved in advance by CCC. If, however, a 
Participant notifies CCC within 30 calendar days of the date of the 
written notice that the Participant intends to file an appeal pursuant 
to the provisions of this part, the amount owed to CCC by the 
Participant is not due until the appeal procedures are concluded and CCC 
has made a final determination as to the amount owed.
    (5) The fact that a compliance review has been conducted by USDA 
staff does not signify that a Participant is in full compliance with its 
agreement, approval letter, and/or applicable laws and regulations.
    (b) Participant response to compliance report. (1) A Participant 
shall, within 60 calendar days of the date of the issuance of a 
compliance report, submit a written response to CCC. The response may 
include additional documentation for consideration or a request for 
reconsideration of any finding along with supporting justification. If 
the Participant does not wish to contest the compliance report, the 
response shall include any money owed to CCC, which may be returned by 
submitting a check payable to CCC or by offsetting a reimbursement 
claim. The Participant shall make any payments in U.S. dollars, unless 
otherwise approved in advance by CCC. CCC, at its discretion, may extend 
the period for response.
    (2) After reviewing the response, CCC shall determine whether the 
Participant owes any funds to CCC and will inform the Participant in 
writing of the basis for the determination. CCC may initiate action to 
collect such

[[Page 1027]]

amount by providing the Participant a written demand for payment of the 
debt pursuant to the debt settlement policies and procedures in 7 CFR 
part 1403.
    (c) Participant appeals of CCC determinations. (1) Within 30 
calendar days of the date of the issuance of a determination, the 
Participant may appeal the determination by making a request in writing 
that includes the basis for such reconsideration. The Participant may 
also request a hearing.
    (2) If the Participant requests a hearing, CCC will set a date and 
time for the hearing. The hearing will be an informal proceeding. A 
transcript will not ordinarily be prepared unless the Participant bears 
the cost of a transcript; however, CCC may, at its discretion, have a 
transcript prepared at CCC's expense.
    (3) CCC will base its final determination upon information contained 
in the administrative record. The Participant must exhaust all 
administrative remedies contained in this section before pursuing 
judicial review of a determination by CCC.



Sec.1487.13  Records retention.

    All records related to the project, including records pertaining to 
subawards, shall be made available upon request to authorized officials 
of the U.S. Government.



Sec.1487.14  Program income.

    Program income means gross income earned by the Participant that is 
directly generated by a supported activity or earned as a result of the 
Federal award during the period of performance. Any such income 
generated from an activity, the expenditures for which have been wholly 
or partially reimbursed with TASC funds, shall be used by the 
Participant in furtherance of its approved activities in the program 
period during which the TASC funds are available for obligation by the 
Participant, or must be returned to CCC. The use of such income shall be 
governed by this part. Reasonable activity fees or registration fees, if 
identified as such in a project budget, may be charged for projects 
approved for program funding. The intent to charge a fee must be part of 
the original proposal, along with an explanation of how such fees are to 
be used. Any activity fees charged must be used to offset activity 
expenses or returned to CCC. Such fees may not be used as profit or 
counted as cost share.



Sec.1487.15  Subrecipients.

    (a) A Participant may utilize the services of a subrecipient to 
implement activities under the agreement if this is provided for in the 
agreement. The subrecipient may receive CCC-provided funds, program 
income, or other resources from the Participant for this purpose. The 
Participant must enter in to a written subaward with the subrecipient 
and comply with the applicable provisions of 2 CFR 200.331 and/or the 
Federal Acquisition Regulation (FAR), if applicable. If required by the 
agreement, the Participant must provide a copy of such subaward to FAS, 
in the manner set forth in the agreement, prior to the transfer of CCC-
provided funds or program income to the subrecipient.
    (b) A Participant must include the following requirements in a 
subaward:
    (1) The subrecipient is required to comply with the applicable 
provisions of this part and 2 CFR parts 200 and 400 and/or the FAR, if 
applicable. The applicable provisions are those that relate specifically 
to subrecipients, as well as those relating to non-Federal entities that 
impose requirements that would be reasonable to pass through to a 
subrecipient because they directly concern the implementation by the 
subrecipient of one or more activities under the agreement. If there is 
a question about whether a particular provision is applicable, FAS will 
make the determination.
    (2) The subrecipient must pay to the Participant the value of CCC-
provided funds, interest, or program income that are not used in 
accordance with the subaward, or that are lost, damaged, or misused as a 
result of the subrecipient's failure to exercise reasonable care.
    (3) In accordance with 2 CFR 200.501(h), subawards must include a 
description of the applicable compliance requirements and the 
subrecipient's compliance responsibility. Methods to ensure compliance 
may include pre-

[[Page 1028]]

award audits, monitoring during the agreement, and post-award audits.
    (c) A Participant must monitor the actions of a subrecipient as 
necessary to ensure that CCC-provided funds and program income provided 
to the subrecipient are used for authorized purposes in compliance with 
applicable U.S. Federal laws and regulations and the subaward and that 
performance indicator targets are achieved for both activities and 
results under the agreement.
    (d) Participants have full and sole responsibility for the legal 
sufficiency of all subawards they may enter into with one or more 
subrecipients in order to carry out an approved project and shall assume 
financial liability for any costs or claims resulting from suits, 
challenges, or other disputes based on subawards entered into by the 
Participant. Neither CCC nor any other agency of the United States 
Government nor any official or employee of CCC, FAS, USDA, or the United 
States Government has any obligation or responsibility with respect to 
Participant subawards with third parties.
    (e) Participants are responsible for ensuring to the greatest extent 
possible that the terms, conditions, and costs of subawards constitute 
the most economical and effective use of project funds.
    (f) All fees for professional and technical services paid to 
subrecipients in any part with project funds must be covered by written 
subawards.
    (g) A Participant shall:
    (1) Ensure that all expenditures for goods and services in excess of 
$25 reimbursed by CCC are documented by a purchase order or invoice;
    (2) Ensure that no employee, officer, board member, agent, or the 
employee's, officer's, board member's, or agent's family, partners, or 
an organization that employs or is about to employ any of the parties 
indicated herein, participates in the review, selection, award or 
administration of a subaward in which such entities or their affiliates 
have a financial or other interest;
    (3) Conduct all contracting in an openly competitive manner. 
Individuals who develop or draft specifications, requirements, 
statements of work, invitations for bids, or requests for proposals for 
procurement of any goods or services, and such individuals' families or 
partners, or an organization that employs or is about to employ any of 
the aforementioned shall be excluded from competition for such 
procurement;
    (4) Conduct all awarding of grants and agreements in an openly 
competitive manner, except under the following conditions:
    (i) Non-monetary awards of property or services;
    (ii) Awards of less than $75,000;
    (iii) Awards to fund continuing work already started under a 
previous award;
    (iv) Awards that cannot be delayed due to an emergency or a 
substantial danger to health or safety;
    (v) Awards when it is impracticable to secure competition; or
    (vi) Awards to fund unique and innovative unsolicited applications;
    (5) Base each solicitation for professional or technical services on 
a clear and accurate description of and requirements related to the 
services to be procured;
    (6) Perform and document some form of fee, price, or cost analysis, 
such as a comparison of price quotations to market prices or other price 
indicia, to determine the reasonableness of the offered fees or prices 
for procurements in excess of the simplified acquisition threshold 
defined at 2 CFR 200.88; and
    (7) Document the decision-making process.



Sec.1487.16  Suspension and termination of agreements.

    (a) An agreement or subaward may be suspended or terminated in 
accordance with 2 CFR 200.338 or 200.339. FAS may suspend or terminate 
an agreement if it determines that:
    (1) One of the bases in 2 CFR 200.338 or 200.339 for termination or 
suspension by FAS has been satisfied; or
    (2) The continuation of the assistance provided under the agreement 
is no longer necessary or desirable.
    (b) If an agreement is terminated, the Participant:
    (1) Is responsible for using or returning any CCC-provided funds, 
interest,

[[Page 1029]]

or program income that have not been disbursed, as agreed to by FAS; and
    (2) Must comply with any closeout and post-closeout procedures 
specified in the agreement and 2 CFR 200.343 and 200.344.



Sec.1487.17  Audit requirements.

    (a) Subpart F of 2 CFR part 200 applies to all Participants and 
subrecipients under this part other than those that are for-profit 
entities, foreign public entities, or foreign organizations.
    (b) A Participant or subrecipient that is a for-profit entity or a 
subrecipient that is a foreign organization and that expends, during its 
fiscal year, a total of at least the audit requirement threshold in 2 
CFR 200.501 in Federal awards, is required to obtain an audit. Such a 
Participant or subrecipient has the following two options to satisfy the 
requirement in this paragraph (b):
    (1)(i) A financial audit of the agreement or subaward, in accordance 
with the Government Auditing Standards issued by the United States 
Government Accountability Office (GAO), if the Participant or 
subrecipient expends Federal awards under only one FAS program during 
such fiscal year; or
    (ii) A financial audit of all Federal awards from FAS, in accordance 
with GAO's Government Auditing Standards, if the Participant or 
subrecipient expends Federal awards under multiple FAS programs during 
such fiscal year; or
    (2) An audit that meets the requirements contained in subpart F of 2 
CFR part 200.
    (c) A Participant or subrecipient that is a for-profit entity or a 
subrecipient that is a foreign organization and that expends, during its 
fiscal year, a total that is less than the audit requirement threshold 
in 2 CFR 200.501 in Federal awards, is exempt from requirements under 
this section for an audit for that year, except as provided in 
paragraphs (d) and (f) of this section, but it must make records 
available for review by appropriate officials of Federal agencies.
    (d) FAS may require an annual financial audit of an agreement or 
subaward when the audit requirement threshold in 2 CFR 200.501 is not 
met. In that case, FAS must provide funds under the agreement for this 
purpose, and the Participant or subrecipient, as applicable, must 
arrange for such audit and submit it to FAS.
    (e) When a Participant or subrecipient that is a for-profit entity 
or a subrecipient that is a foreign organization is required to obtain a 
financial audit under this section, it must provide a copy of the audit 
to FAS within 60 days after the end of its fiscal year.
    (f) FAS, the USDA Office of Inspector General, or GAO may conduct or 
arrange for additional audits of any Participants or subrecipients, 
including for-profit entities and foreign organizations. Participants 
and subrecipients must promptly comply with all requests related to such 
audits. If FAS conducts or arranges for an additional audit, such as an 
audit with respect to a particular agreement, FAS will fund the full 
cost of such an audit, in accordance with 2 CFR 200.503(d).



Sec.1487.18  Disclosure of program information.

    (a) Documents submitted to CCC by Participants are subject to the 
provisions of the Freedom of Information Act (FOIA), 5 U.S.C. 552, and 7 
CFR part 1, subpart A, including, specifically, 7 CFR 1.11.
    (b) Any research conducted by a Participant pursuant to an agreement 
and/or approval letter shall be subject to the provisions relating to 
intangible property in 2 CFR part 200.



Sec.1487.19  Ethical conduct.

    (a) The Participant shall maintain written standards of conduct 
governing the performance of its employees engaged in the award and 
administration of contracts.
    (b) A Participant shall conduct its business in accordance with the 
laws and regulations of the country(s) in which each activity is carried 
out and in accordance with applicable U.S. Federal, state, and local 
laws and regulations. A Participant shall conduct its business in the 
United States in accordance with applicable Federal, state, and local 
laws and regulations.
    (c) Neither a Participant nor its affiliates shall make export sales 
of U.S. agricultural commodities covered

[[Page 1030]]

under the terms of an agreement. Neither a Participant nor its 
affiliates shall charge a fee for facilitating an export sale. A 
Participant may collect check-off funds and membership fees that are 
required for membership in the Participant's organization.
    (d) The Participant shall not use program activities or project 
funds to promote private self-interests or conduct private business.
    (e) A Participant shall not limit participation in its TASC 
activities to members of its organization. Participants shall ensure 
that their TASC-funded programs and activities are open to all otherwise 
qualified individuals and entities on an equal basis and without regard 
to any non-merit factors.
    (f) A Participant shall select U.S. agricultural industry 
representatives to participate in activities based on criteria that 
ensure participation on an equitable basis by a broad cross section of 
the U.S. industry. If requested by CCC, a Participant shall submit such 
selection criteria to CCC for approval.
    (g) The Participant must report any actions or circumstances that 
may have a bearing on the propriety of program activities to the 
appropriate Attach[eacute]/Counselor, and the Participant's U.S. office 
shall report such actions or circumstances in writing to CCC.
    (h) The officers, employees, board members, and agents of the 
Participant shall neither solicit nor accept gratuities, favors, or 
anything of monetary value from contractors, sub-contractors, or parties 
to sub-agreements. However, Participants may set standards for 
situations in which the financial interest is not substantial, or the 
gift is an unsolicited item of nominal value. The standards of conduct 
shall provide for disciplinary actions to be applied for violations of 
such standards by officers, employees, board members, or agents of the 
Participant.



Sec.1487.20  Amendments.

    (a) Participants may request to modify approved projects if 
circumstances change in such a way that they would likely affect the 
progress and ultimate success of a project. Such modification must be 
made through a written amendment to the agreement. All requests for 
project modifications must be made in writing to CCC and must include:
    (1) A justification as to why changes to the project as originally 
designed are needed;
    (2) An explanation of the necessary adjustments in approach or 
strategy; and
    (3) A description of necessary changes in the project's time line(s) 
and/or budget (e.g., shifting of budgetary resources from one-line item 
to another in order to accommodate the changes).
    (b) All requests for project modifications must be reviewed and 
approved by CCC. Upon approval, CCC will issue an amendment to the 
agreement, which must be signed by CCC and the Participant.



Sec.1487.21  Noncompliance with an agreement.

    (a) If a Participant fails to comply with any term in its project 
agreement, approval letter, or this part, CCC may take one or more of 
the enforcement actions in 2 CFR part 200 and, if appropriate, initiate 
a claim against the Participant, following the procedures set forth in 
this part. CCC may also initiate a claim against a Participant if 
program income or CCC-provided funds are lost due to an action or 
omission of the Participant. If any Participant has engaged in fraud 
with respect to the TASC program, or has otherwise violated program 
requirements under this part, CCC may:
    (1) Hold such Participant liable for any and all losses to CCC 
resulting from such fraud or violation;
    (2) Require a refund of any assistance provided to such Participant 
plus interest as determined by FAS; and
    (3) Collect liquidated damages from such Participant in an amount 
determined appropriate by FAS.
    (b) The provisions of this section shall be without prejudice to any 
other remedy that is available under any other provision of law.



Sec.1487.22  Paperwork reduction requirements.

    The paperwork and recordkeeping requirements imposed by this part 
have

[[Page 1031]]

been approved by OMB under the Paperwork Reduction Act of 1980. OMB has 
assigned control number 0551-0038 for this information collection.



PART 1488_FINANCING OF SALES OF AGRICULTURAL COMMODITIES--
Table of Contents



  Subpart A_Financing of Export Sales of Agricultural Commodities from 
      Private Stocks Under CCC Export Credit Sales Program (GSM	5)

                                 General

Sec.
1488.1 General statement.
1488.2 Definition of terms.

                         Financing Export Sales

1488.3 General.
1488.4 Submission of requests for sale registrations.
1488.5 Acceptance of sale registrations.
1488.6 Amendments to financing agreement.
1488.7 Expiration of period(s) for delivery and/or export.

                    Documents Required for Financing

1488.8 Documents required after delivery.
1488.9 Evidence of export.
1488.9a Evidence of export for commodities delivered before export.

                   Documents Required After Financing

1488.10 Evidence of entry into country of destination.

                          Delivery Requirements

1488.11 Liquidated damages.

                     Bank Obligations and Repayment

1488.12 Coverage of bank obligations.
1488.13 CCC drafts.
1488.14 Interest charges.
1488.15 Advance payment.
1488.16 Liability for payment.

                        Miscellaneous Provisions

1488.17 Assignment.
1488.18 Covenant against contingent fees.
1488.19 [Reserved]
1488.20 Officials not to benefit.
1488.21 Exporter's records and accounts.
1488.22 Communications.
1488.23 OMB Control Numbers assigned pursuant to the Paperwork Reduction 
          Act.

    Authority: Sec. 5(f), 62 Stat. 1072 (15 U.S.C. 714c) and sec. 4(a), 
80 Stat. 1538, as amended by sec. 101, 92 Stat. 1685 (7 U.S.C. 
1707a(a)).



  Subpart A_Financing of Export Sales of Agricultural Commodities From 
      Private Stocks Under CCC Export Credit Sales Program (GSM	5)

    Source: 42 FR 10999, Feb. 25, 1977, unless otherwise noted.

                                 General



Sec.1488.1  General statement.

    (a) Except as otherwise provided in this paragraph (a), the 
regulations and the supplements thereto contained in this subpart A 
supersede the regulations and supplements revised April 1975, and set 
forth the terms and conditions governing the CCC Export Credit Sales 
Program (GSM-5). The maximum financing period shall be three years. The 
regulations and supplements as revised in April 1971 and April 1975, 
shall remain in effect for all transactions under financing approvals 
issued thereunder.
    (b) Subject to the terms and conditions set forth in this subpart A, 
CCC will purchase for cash, after delivery, the exporter's account 
receivable arising from the export sale.
    (c) The provisions of Pub. L. 83-664 are not applicable to shipments 
under this program.
    (d) The regulations contained in this subpart A may be supplemented 
by such additional terms and conditions, applicable to specified 
agricultural commodities, and, to the extent that they may be in 
conflict or inconsistent with any other provisions of this subpart A, 
such additional terms and conditions shall prevail.



Sec.1488.2  Definition of terms.

    As used in this subpart A and in the forms and documents related 
thereto, the following terms shall have the meanings assigned to them in 
this section:
    (a) Account receivable means the contractual obligation of the 
foreign importer to the exporter for the port value of the commodity 
delivered for which the exporter is extending credit to the importer. 
The account receivable shall be evidenced by documents, in form and 
substance satisfactory to

[[Page 1032]]

CCC, establishing the contractual obligation between the U.S. exporter 
and the foreign importer. The account receivable shall provide for (1) 
payment of principal and interest in U.S. dollars in the United States, 
(2) interest in accordance with Sec.1488.14, and (3) acceleration of 
payment thereunder in accordance with these regulations.
    (b) Agency or branch bank means an agency or branch of a foreign 
bank, supervised by New York State banking authorities or the banking 
authorities of any other State providing similar supervision, and 
approved by the Controller, CCC.
    (c) Assistant Sales Manager means the Assistant Sales Manager, 
Commercial Export Programs, Office of the General Sales Manager.
    (d) Bank obligation means an obligation, acceptable to CCC, of a 
U.S. bank, a foreign bank, an agency or branch bank, to pay to CCC in 
U.S. dollars the amount of the account receivable, plus interest in 
accordance with Sec.1488.14. The bank obligation shall be in the form 
of an irrevocable letter of credit issued by a U.S. bank or a branch 
bank, or confirmed or advised by a U.S. bank or any agency or branch 
bank in accordance with Sec.1488.12. The bank obligation shall provide 
for payment under the terms and conditions of the financing agreement 
and shall be payable not later than the date of expiration of the 
financing period or of the bank obligation, whichever occurs first, if 
payment is not received from other sources.
    (e) CCC means the Commodity Credit Corporation, U.S. Department of 
Agriculture.
    (f) Carrying charges means storage, insurance, and interest charges 
involved in the cost of storing the commodity before delivery as 
provided for in the sales contract, and other incidental costs as may be 
approved by the Assistant Sales Manager.
    (g) Commercial risk means risk of loss due to any cause other than 
specified as noncommercial risk in paragraph (u) of this section.
    (h) Date of delivery means the on-board date of the ocean bill of 
lading, or the date of an airway bill, or, if exported by rail or truck, 
the date of entry shown on an authenticated landing certificate or 
similar document issued by an official of the government of the 
importing country. If delivery is before export, the date of delivery 
means (1) the date(s) of the warehouse receipt(s), or other evidence 
acceptable to CCC, covering the commodity in a warehouse acceptable to 
CCC, or (2) the onboard carrier (truck, rail car or lash or seabee 
barge) date of a through bill of lading covering commodities in a 
container or a lash or seabee barge at a U.S. inland or coastal point.
    (i) Date of sale means the earliest date the exporter has knowledge 
that a contractual obligation exists with the foreign buyer under which 
a firm dollar and cent price has been established or a mechanism to 
establish the price has been agreed upon.
    (j) Delivery means the delivery required by the export sale contract 
to transfer to the importer full or conditional title to the 
agricultural commodity. Delivery before export may be (1) in a warehouse 
in the United States acceptable to CCC by issuance or transfer of the 
warehouse receipt to the importer, or (2) f.a.s. or f.o.b. U.S. inland 
or coastal loading point, if the commodity is loaded in a container on a 
truck or rail car, or in a lash or seabee barge for shipment to a point 
of export under a through bill of lading. Delivery at point of export 
shall be f.a.s. or f.o.b. export carrier at U.S. ports, at U.S. 
airports, at U.S. border points of exit or, if transshipped through 
Canada, at ports on the Great Lakes or the St. Lawrence River.
    (k) Eligible commodities means agricultural commodities, including 
eligible cotton, produced in the United States and designated as 
eligible for export under CCC's Export Credit Sales Program in a USDA 
announcement. Commodities which have been purchased from CCC are 
eligible for export as private stocks. Exports of commodities pursuant 
to any CCC barter contract, Pub. L. 480 or AID agreement, or direct loan 
by the Export-Import Bank are not eligible for financing under this 
program. Commodities delivered prior to CCC receiving the sale 
registration request in accordance with Sec.1488.4 are not eligible 
for financing under this program unless such financing is determined by 
the Vice President, CCC, or

[[Page 1033]]

the Assistant Sales Manager, to be in the interest of CCC.
    (l) Eligible cotton means Upland and Extra Long staple cotton grown 
in the United States: Provided, however, That reginned or repacked 
cotton, as defined in regulations of the U.S. Department of Agriculture 
under the U.S. Cotton Standards Act (7 CFR 28.40), by-products of cotton 
such as cotton mill waste, motes, and linters, and any cotton that 
contains any by-products of cotton are not eligible for export financing 
hereunder. CCC's determination as to the eligibility of cotton shall be 
final.
    (m) Eligible destination means the country which is named in the 
financing agreement and which meets the licensing requirements of the 
U.S. Department of Commerce.
    (n) Eligible exporter or exporter means a person (1) who is engaged 
in the business of buying or selling commodities and for this purpose 
maintains a bona fide business office in the United States, its 
territories or possessions, and has someone on whom service of judicial 
process may be had within the United States, (2) who is financially 
responsible, and (3) who is not suspended or debarred from contracting 
with or participating in any program financed by CCC on the date of 
issuance of the financing approval.
    (o) OGSM means the Office of the General Sales Manager, U.S. 
Department of Agriculture.
    (p) Financing agreement means the exporter's request for a sale 
registration as approved by the Assistant Sales Manager, including the 
terms and conditions of the regulations in effect on the date of 
approval.
    (q) Financing period means the number of months over which repayment 
is to be made. Such period shall start on the date of delivery or the 
weighted average delivery date of the commodities to be exported under 
the financing agreement, and shall expire on the expiration of the bank 
obligation or the specified period over which repayment is to be made, 
whichever occurs first.
    (r) Foreign bank means a bank which is not a U.S. bank or an agency 
or branch bank, and includes a foreign branch of a U.S. bank.
    (s) Foreign importer or importer means the foreign buyer who 
purchases the commodities to be exported under a financing agreement and 
executes the documents evidencing the account receivable assigned to 
CCC.
    (t) GSM-5 means the regulations contained in this subpart A, and 
supplements thereto, setting forth the terms and conditions governing 
the CCC Export Credit Sales Program.
    (u) Noncommercial risk means risk of loss due to (1) inability of 
the foreign bank through no fault of its own to convert foreign currency 
to dollars, or (2) non-delivery into the eligible destination of the 
commodity covered by a financing agreement through no fault of the 
foreign bank or importer or exporter because of the cancellation by the 
government of the eligible destination of previously issued valid 
authority to import such shipment into the eligible destination or 
because of the imposition of any law or of any order, decree, or 
regulation having the force of law, which prevents the import of such 
shipment into the eligible destination, or (3) inability of the foreign 
bank to make payment due to war, hostilities, civil war, rebellion, 
revolution, insurrection, civil commotion, or other like disturbance 
occurring in the eligible destination, expropriation, or confiscation, 
or other like action by the government of the eligible destination 
country, or (4) failure of the foreign bank to make payment for any 
reason if it is an instrumentality of or is wholly owned by the foreign 
government.
    (v) Port value means the net amount of the exporter's sales price of 
the commodity to be exported under the financing agreement, (1) basis 
f.a.s. or f.o.b. export carrier at U.S. ports, at U.S. border points of 
exit, at U.S. airports if shipped by air, or, if transshipped through 
Canada at ports on the Great Lakes, or on the St. Lawrence River, or (2) 
basis U.S. warehouse for commodities delivered to such warehouse before 
export, or (3) basis f.a.s. or f.o.b. U.S. inland or coastal loading 
point for commodities delivered before export under through bill of 
lading. The port value shall not include ocean freight for a c. & f. 
sale or ocean

[[Page 1034]]

freight and marine and war risk insurance for a c.i.f. sale but may 
include carrying charges as provided for in the sales contract. The net 
amount of the exporter's sales price means the exporter's contract price 
for the commodities, on the basis stated above, less any payments made 
to the exporter and less any discounts, credits, or allowances by the 
exporter.
    (w) Sale means a contract to sell on credit U.S. agricultural 
commodities to be financed under GSM-5.
    (x) United States means the 50 States, the District of Columbia, and 
Puerto Rico.
    (y) U.S. bank means a bank organized under the laws of the United 
States, a State, or the District of Columbia.
    (z) USDA announcement means an announcement published monthly by the 
U.S. Department of Agriculture (USDA), and which includes the list of 
eligible commodities and interest rates under GSM-5.
    (aa) Vice President, CCC means the Vice President who is the General 
Sales Manager, Office of the General Sales Manager.

[42 FR 10999, Feb. 25, 1977, as amended at 42 FR 30833, June 17, 1977; 
Amdt. 5, 43 FR 25992, June 16, 1978]

                         Financing Export Sales



Sec.1488.3  General.

    When considering the extension of CCC credit for the purpose of 
financing agricultural commodities, CCC will take into account the 
extent to which CCC credit financing will:
    (a) Permit U.S. exporters to meet competition from other countries.
    (b) Prevent a decline in U.S. commercial export sales.
    (c) Substitute commercial dollar sales for sales made pursuant to 
Pub. L. 480 or other concessional programs.
    (d) Result in a new use of the agricultural commodity in the 
importing country.
    (e) Permit expanded consumption of agricultural commodities in the 
importing country and thereby increase total commercial sales of 
agricultural commodities to the importing country.



Sec.1488.4  Submission of requests for sale registrations.

    (a) An eligible exporter shall submit a request for a sale 
registration for financing to the office specified in Sec.1488.22.
    (b) Requests for sale registrations shall be in writing. If such a 
request is made by telephone, it must be confirmed by letter or wire.
    (c) The total amount requested to be registered under a sale shall 
not exceed the sale contract value, including the upward tolerance, if 
any.
    (d) Requests for sale registration shall incorporate by reference 
all terms and conditions of GSM-5. The following information shall also 
be included in the exporter's request for a sale registration:
    (1) The name, class, grade, or quality, as applicable, and quantity 
of the commodity to be exported.
    (2) The country of destination.
    (3) The port value of the commodity to be exported and the sale 
contract tolerance, if applicable.
    (4) The date of sale and exporter's sale number.
    (5) The date of delivery or the period for delivery and the month in 
which application for payment will be submitted.
    (6) The financing period.
    (7) Whether the bank obligation assuring payment of the account 
receivable will be issued by a U.S. bank, branch bank, or foreign bank. 
If it will be issued by a foreign bank, its name and address, and the 
name of the confirming U.S. bank, branch bank, or agency bank (if 
approved as provided in Sec.1488.12b), and the percentage of 
confirmation.
    (8) The name and address of the foreign importer.
    (9) If delivery of the commodity to be exported is before export in 
a warehouse, the name and address of the warehouse to which delivery is 
to be made.
    (10) If the commodity will be sold through an intervening purchaser, 
the name and address of the intervening purchaser, and a statement that 
the sale of the commodity is or will be conditioned on its resale by the 
intervening purchaser and that the commodity will be shipped directly to 
the

[[Page 1035]]

foreign importer in the destination country specified in paragraph 
(d)(2) of this section pursuant to a contract in which the foreign 
importer agrees to pay the U.S. exporter the amount to be financed in 
accordance with the terms of GSM-5 financing agreement.
    (11) Any additional information as determined by CCC.

[42 FR 10999, Feb. 25, 1977, as amended by Amdt. 5, 43 FR 25992, June 
16, 1978]



Sec.1488.5  Acceptance of sale registrations.

    (a) Upon receiving a request for a sale registration complying with 
the applicable provisions of this subpart, the Assistant Sales Manager 
may approve the registration of the sale. If approved, the exporter will 
be notified in writing of the financing agreement number which will 
constitute notice that the sale is registered and eligible for 
financing.
    (b) [Reserved]
    (c) CCC reserves the right to reject any and all requests for sale 
registration.
    (d) The registration of a sale shall create a financing agreement 
between the exporter and CCC which shall consist of the exporter's 
request for a sale registration, CCC's acceptance of the sale 
registration, the applicable terms and conditions of this subpart, 
including amendments and supplemental announcements hereunder which are 
in effect on the date of approval.
    (e) The financing agreement may contain such terms and conditions, 
not inconsistent with GSM-5, as are deemed necessary in the interest of 
CCC.
    (f) An exporter shall promptly notify the Assistant Sales Manager 
when he is unable to fulfill his obligations under any sale registered 
with CCC.

[42 FR 10999, Feb. 25, 1977, as amended by Amdt. 6, 43 FR 29933, July 
12, 1978]



Sec.1488.6  Amendments to financing agreement.

    The financing agreement may be amended provided such amendment is in 
conformity with GSM-5 at the time of amendment and is determined to be 
in the interest of CCC. Amendments may include extension of the period 
for delivery or the period for export, and change in the interest rate. 
After the commodity has been delivered, CCC will consider requests to 
increase the amount of the sale registration value for any quantity 
within the tolerance in the sales contract and for carrying charges 
provided such requests relate to the same sale as originally registered 
with CCC.



Sec.1488.7  Expiration of period(s) for delivery and/or export.

    (a) Unless delivery by the exporter to the importer is made within 
such period as may be provided in the financing agreement or any 
amendment thereof, or under paragraph (b) of this section, the financing 
agreement will no longer be valid.
    (b) If the Assistant Sales Manager determines that delay in delivery 
was due solely to causes without the fault or negligence of the 
exporter, the period for delivery may be extended by CCC by the period 
of such delay.
    (c) If delivery is made before export under the terms of the 
financing agreement, failure to export within the period specified 
therefor in the financing agreement shall constitute a breach of the 
financing agreement. In such case, if full payment under the bank 
obligation or account receivable has not been received, the account 
receivable and the bank obligation shall, at the option of the Assistant 
Sales Manager, become immediately due and payable, and liquidated 
damages shall be payable in accordance with Sec.1488.11.

                    Documents Required for Financing



Sec.1488.8  Documents required after delivery.

    (a) CCC will purchase an exporter's account receivable only if the 
Treasurer, Commodity Credit Corporation, United States Department of 
Agriculture, Washington, DC 20250, receives the documents specified in 
paragraphs (b) through (e) of this section and any documentation and 
certifications required by any supplements to these regulations within 
forty-five days, or any extension thereof by the Treasurer or Assistant 
Treasurer, CCC, after date of delivery of commodities exported or to be 
exported under the financing agreement.

[[Page 1036]]

    (b) The exporter shall submit a ``Combined Application for 
Disbursement, Assignment of Account Receivable and Certification'' which 
shall include:
    (1) A written application for disbursement, showing the financing 
agreement number and the port value of the commodity delivered.
    (2) An assignment of the account receivable arising from the export 
sale, in form and substance acceptable to CCC.
    (3) The exporter's certification (i) that he has entered into a 
contract to sell an eligible commodity; (ii) of the date of sale, the 
grade, quality, quantity, agreed upon price for the commodity and 
payment terms and interest in accordance with the financing agreement; 
(iii) that he has in his files documents evidencing the export sale 
contract and the obligation of the importer to him for the financed 
portion of the export sale and will retain and furnish them to CCC on 
demand until 3 years after the end of the financing period; (iv) that 
agricultural commodities of the grade, quality, and quantity called for 
in the exporter's sale as registered with CCC have been delivered to the 
foreign importer; and (v) that he knows of no defenses to the account 
receivable assigned to CCC.
    (c) A copy of the sales invoice to the foreign importer, or, if the 
commodity has been sold through an intervening purchaser, a copy of the 
exporter's sales invoice to the intervening purchaser and of the 
intervening purchaser's sales invoice to the foreign importer.
    (d) A copy of the document evidencing export provided for in Sec.
1488.9 and, if the consignee is other than the foreign importer named in 
the financing agreement, such additional information as CCC may request 
to show that export was made in accordance with the instructions of, or 
the export sale contract with, the foreign importer. If delivery is 
before export in a warehouse acceptable to CCC, the warehouse receipt or 
other documents acceptable to CCC evidencing delivery of the commodity 
to the importer or his agent. If delivery is before export in a 
container or a lash or seabee barge at a U.S. inland or coastal point, 
for export shipment under a through bill of lading, one copy of the 
through bill of lading with an onboard (truck, rail car, or lash or 
seabee barge) endorsement, dated and signed or initialed on behalf of 
the export carrier. The through bill of lading must be certified by the 
exporter as being a true copy and must show the quantity, the date, and 
place of loading the commodity on a truck, or rail car, or lash or 
seabee barge, the name of the originating carrier, the destination of 
the commodity, and the name of both the exporter and the importer.
    (e) A bank obligation or obligations in accordance with Sec.
1488.7(c), Sec.1488.10, Sec.1488.12 and paragraph (i) of this 
section, naming CCC as beneficiary, in form and substance acceptable to 
CCC, covering the amount of the application for disbursement, citing the 
financing agreement number; and providing for the payment of interest in 
accordance with Sec.1488.14.
    (f) On receipt of the documents described in paragraphs (b) through 
(e) of this section and any documentation and certifications required by 
any supplements to these regulations, the Treasurer, CCC will pay 
promptly to the exporter the amount of the account receivable or the 
dollar amount of sales registered in accordance with Sec.1488.5, 
whichever is the lesser.
    (g) If an acceptable application for disbursement and the supporting 
documents described in paragraphs (b) through (e) of this section have 
not been received by CCC within 45 days from the date of the delivery, 
or any extension thereof by the Treasurer or Assistant Treasurer, CCC, 
the financing agreement shall be void.
    (h) [Reserved]
    (i) If for any reason a draft drawn under a foreign bank obligation 
is dishonored or if the issuing bank is insolvent, in bankruptcy, in 
receivership, or in liquidation, or has made an assignment for the 
benefit of creditors, or for any other reason discontinues or suspends 
payments to depositors or creditors, or otherwise ceases to operate on 
an unrestricted basis, any balance due on the account receivable assured 
by the obligation issued by such bank shall, at the option of CCC, 
become immediately due and payable. CCC may

[[Page 1037]]

permit the substitution of another acceptable foreign bank obligation 
covering such balance due if confirmed in accordance with Sec.1488.12.

[42 FR 10999, Feb. 25, 1977, as amended at 42 FR 27569, May 31, 1977; 
Amdt. 5, 43 FR 25992, June 16, 1978]



Sec.1488.9  Evidence of export.

    (a) If the commodity is exported by rail or truck, the exporter 
shall furnish to the Treasurer, CCC, one copy of the bill of lading 
covering the commodity exported, certified by the exporter as being a 
true copy, and an authenticated landing certificate or similar document 
issued by an official of the government of the country to which the 
commodity is exported, showing the quantity, the gross landed weight of 
the commodity, the place and date of entry, and the name and address of 
both the exporter and the importer.
    (b) If the commodity is exported by ocean carrier, the exporter 
shall furnish to the Treasurer, CCC, one non-negotiable copy or photo 
copy or other type of copy of either (1) an on-board ocean bill of 
lading or (2) an ocean bill of lading with an onboard endorsement, dated 
and signed or initialed on behalf of the carrier. The bill of lading 
must be certified by the exporter as being a true copy and must show the 
quantity, the date and place of loading the commodity, the name of the 
vessel, the destination of the commodity and the name and address of 
both the exporter and the importer.
    (c) If the commodity is exported by aircraft, the exporter shall 
furnish to the Treasurer, CCC, one non-negotiable copy of an airway 
bill, dated and signed or initialed on behalf of the carrier. The airway 
bill must be certified by the exporter as being a true copy and must 
show the date and place of loading the commodity, the name of the 
airline, the destination of the commodity, and the name and address of 
both the exporter and the importer.
    (d) If the exporter is unable to supply documentary evidence of 
export as specified in this section, he shall submit such other 
documentary evidence as may be acceptable to CCC.
    (e) For commodities transshipped through Canada via the Great Lakes 
or the St. Lawrence River, the exporter shall certify that the commodity 
transshipped was produced in the United States.



Sec.1488.9a  Evidence of export for commodities delivered before
export.

    For commodities delivered before export under a financing agreement 
for which the financial period is 12 months or less, the exporter shall 
furnish a certification to the Treasurer, CCC, within 60 days from the 
date of delivery or such extension of time as may be granted by the 
Treasurer or Assistant Treasurer, CCC, certifying that the commodities 
have been exported. The certification must include the name of the ocean 
carrier, the date the commodities were loaded aboard the ocean carrier 
and the financing agreement number.

[Amdt. 5, 43 FR 25992, June 16, 1978]

                   Documents Required After Financing



Sec.1488.10  Evidence of entry into country of destination.

    (a) Commodities exported under a financing agreement must enter the 
destination country specified in the financing agreement.
    (b) For a financing agreement under which the financing period is in 
excess of 12 months, within 90 days, or such extension of time as may be 
granted in writing by the Assistant Sales Manager, following shipment 
from the United States of any agricultural commodity exported under the 
financing agreement, the exporter shall furnish to the office specified 
in Sec.1488.22, documentary evidence verifying entry of the commodity 
into the country of destination specified in the financing agreement. 
The documentary evidence must:
    (1) Identify the agricultural commodity (or permit identification 
through supplementary documents also furnished) as that exported under 
the financing agreement,
    (2) State the quantity and date of entry of the commodity into the 
destination country, and
    (3) Be signed by (i) a customs official of the destination country, 
or (ii) the importer, or (iii) a representative of an independent 
superintending or controlling firm.

[[Page 1038]]

    (c) When the commodity enters the country of destination in bond, a 
statement by the importer will be acceptable which:
    (1) Identifies the commodity as that exported under the financing 
agreement,
    (2) States the quantity of the commodity entered under bond and date 
of entry into the destination country, and
    (3) Certifies that the commodity will be withdrawn from bonded 
storage at a later date for consumption in the destination country.
    (d) If the evidence of entry is in other than the English language, 
the exporter shall also provide an English translation thereof.
    (e) Failure to furnish, within the time specified, evidence of entry 
of the commodity into the country of destination shall constitute prima 
facie evidence of failure to enter or to cause the entry of the 
commodity into such country as required. In such case, the financing 
agreement may be terminated by the Assistant Sales Manager, and if full 
payment under the bank obligation or account receivable has not yet been 
received, the bank obligation and the account receivable shall at the 
option of CCC, become due and payable and liquidated damages shall be 
payable in accordance with Sec.1488.11. The remedy herein provided 
shall not be exclusive of other rights available to the Federal 
government if the commodity enters a country other than that specified 
in the financing agreement.

                          Delivery Requirements



Sec.1488.11  Liquidated damages.

    Failure of the exporter to export or cause to be exported, within 
the period provided therefor, any agricultural commodity financed, when 
delivery is made before export under the terms of the financing 
agreement, or failure of the exporter to enter or cause the entry of, 
such commodity into the country of destination, shall constitute a 
breach of the financing agreement which will result in serious and 
substantial damage to CCC and to its program. Since it will be 
difficult, if not impossible, to prove the exact amount of such damage, 
the exporter shall pay to CCC promptly on demand, as reasonable 
compensation and not as a penalty, liquidated damages in lieu of 
probable actual damages, as follows:
    (a) For each day of delay in exportation after the final date for 
exportation, when delivery is made before export under the terms of the 
financing agreement, .15 percent of the amount financed under the 
financing agreement for the commodity not exported; (b) for failure to 
export or cause exportation, when delivery is made before export under 
the terms of the financing agreement, 5 percent of the amount financed 
under the financing agreement for the commodity not exported; (c) for 
failure, after exportation, to enter or cause the entry of the commodity 
into the country of destination, at the rate of 5 percent a year of the 
amount financed under the financing agreement for such commodity from 
the start of the financing period until payment to CCC of the amount 
financed; Provided however, That the aggregate of all amounts assessed 
under this Sec.1488.11 with respect to the same commodity shall not 
exceed 5 percent of the amount financed for such commodity. Liquidated 
damages shall not be assessed: Under paragraph (a) of this section if 
the Assistant Sales manager determines that the delay was due to such 
causes as acts of God or government or public enemy, fires, floods, 
epidemics, quarantine restrictions, strikes, freight embargoes, or 
unusually severe weather; under paragraph (b) of this section if the 
Assistant Sales Manager determines that failure to export was due to 
loss, damage, destruction or deterioration of the commodity or act of 
God or government or public enemy; and under paragraph (c) of this 
section if the Assistant Sales Manager determines that failure to enter 
or cause the entry of the commodity into the country of destination was 
due to loss, damage, destruction or deterioration of the commodity or 
act of God or government or public enemy.

                     Bank Obligations and Repayment



Sec.1488.12  Coverage of bank obligations.

    (a) U.S. banks and branch banks shall be liable without regard to 
risk (1) for payment of bank obligations issued by

[[Page 1039]]

them or (2) for payment of bank obligations confirmed by them without 
regard to risk if a requirement for such confirmation is included in the 
financing agreement or (3) as provided in paragraphs (c) and (d) of this 
section.
    (b) An obligation issued by a foreign bank must be confirmed and 
advised, as provided in paragraphs (a), (c), (d), (e), and (f) of this 
section, by a U.S. bank or a branch bank, or may be confirmed by an 
agency bank when determined by the President or Vice President, CCC 
after consultation with the Controller, CCC, to be in the interest of 
CCC.
    (c) A U.S. bank must confirm the full amount of an obligation issued 
by its foreign branch. CCC will hold the U.S. bank liable for payment 
without regard to risks.
    (d) If a branch bank confirms an obligation issued by its home 
office, or by another branch of its home office, it must confirm the 
full amount thereof. CCC will hold the branch bank liable for payment 
without regard to risks.
    (e) If CCC accepts an agency bank confirmation of a foreign bank 
obligation, it must be for the full amount thereof without regard to 
risks and will be subject to such terms and conditions as may be 
contained in the financing agreement. CCC will not accept an agency bank 
confirmation of an obligation issued by its home office, or by a branch 
of its home office.
    (f) Except as provided in paragraphs (a), (c), and (d) of this 
section, if a U.S. bank or a branch bank confirms an obligation issued 
by a foreign bank, it must confirm at least 10 percent pro rata and must 
advise the remainder of the foreign bank obligation. The percentage of 
confirmation shall be the same for both the account receivable and the 
interest portions of the obligation. For the confirmed amount, except as 
provided in paragraph (a)(2) of this section, CCC will hold the U.S. 
bank or branch bank liable for commercial risks but not for non-
commercial risks. For the advised amount, CCC will not hold the U.S. 
bank or branch bank liable for commercial or non-commercial risks. CCC 
will hold the foreign bank liable without regard to risks for all 
amounts not recovered from the U.S. or branch bank.
    (g) Under special circumstances, on application in writing, the Vice 
President, CCC, may reduce or waive requirements for 10 percent 
confirmation by a U.S. or branch bank, but a bank will not be relieved 
of any obligation it undertakes.
    (h) Any bank obligation which provides for a bank acceptance of a 
time draft by CCC (banker's acceptance) shall not be acceptable to CCC.
    (i) CCC will consent to cancellation or reduction of a bank 
obligation to the extent of any payment it receives from other sources 
or amounts otherwise payable under such bank obligation.
    (j) Collection of accounts receivable purchased under GSM-5 will be 
effected through the issuance by CCC of sight drafts against the bank 
obligations, but this method of collection shall not be exclusive of any 
other collection procedures or rights available to CCC.

[42 FR 10999, Feb. 25, 1977, as amended at 42 FR 27569, May 31, 1977; 42 
FR 30833, June 17, 1977; 43 FR 45551, Oct. 3, 1978; 44 FR 51187, Aug. 
31, 1979]



Sec.1488.13  CCC drafts.

    CCC will draw one draft for each payment due under bank obligations. 
If any portion of a CCC draft is dishonored, the U.S. bank or branch 
bank shall return the dishonored draft together with its statement of 
the reason for nonpayment. If a draft which is drawn under a partially 
confirmed bank obligation is dishonored, CCC will replace the draft with 
separate drafts for the confirmed and unconfirmed portions at the 
request of the confirming bank. Such replacement shall not alter the 
confirming bank's obligation for timely payment to CCC of the confirmed 
portion of the credit. For confirmed amounts, except as provided in 
Sec.1488.12(a), (c) and (d), a U.S. or branch bank may request refund 
from CCC of the amount paid if it certifies to CCC that it is unable to 
recover funds from the foreign bank due to a stipulated non-commercial 
risk which existed on the date payment was made to CCC under the draft. 
If CCC finds that inability to recover funds was due to such a non-
commercial risk, the refund shall be promptly made together with 
interest at the Federal Reserve Bank of

[[Page 1040]]

New York discount rate from and including the date payment was 
originally made to CCC but not include the date of refund by CCC. For 
unconfirmed amounts, remittance to CCC shall be considered final, and 
the U.S. bank or branch bank shall not thereafter have recourse to CCC.

[42 FR 10999, Feb. 25, 1977, as amended at 42 FR 27569, May 21, 1977; 42 
FR 30833, June 17, 1977]



Sec.1488.14  Interest charges.

    The account receivable assigned to CCC and the related bank 
obligation(s) shall bear interest as specified in this section. Rates of 
interest applicable to financing agreements shall be published in USDA 
announcement. The interest rate applicable to that portion of an account 
receivable for which payment is assured by a bank obligation issued or 
confirmed for all risks according to Sec.1488.12(a)(ii) or pro rata 
confirmed by a U.S. bank shall be lower than the interest rate 
applicable for the remainder of the account receivable. The interest 
rate applicable to that portion of an account receivable the payment of 
which is assured by a bank obligation issued or pro rata confirmed by a 
branch bank shall, when determined by the President or Vice President, 
CCC after consultation with the Controller, CCC, to be in the interest 
of CCC, be lower than the interest rate applicable for the remainder of 
the account receivable. The interest rates applicable to accounts 
receivable the payment of which is assured by an agency bank 
confirmation may, when determined by the President or Vice President, 
CCC, after consultation with the Controller, CCC, to be in the interest 
of CCC, be lower than the interest rate applicable for the remainder of 
the account receivable. The interest rate applicable will be the rate in 
effect on the date CCC receives the sale registration request under 
Sec.1488.4. Interest shall accrue on the account receivable from the 
date of delivery or the weighted average delivery date of the 
agricultural commodities delivered under the financing agreement to the 
date of payment, or to the date of expiration of the financing period, 
or to the date of expiration of the bank obligation, whichever occurs 
first, and shall be payable as specified in the financing agreement. 
Thereafter, interest shall accrue on any unpaid part of both the 
principal and interest due as of such expiration date.

[42 FR 10999, Feb. 25, 1977, as amended at 42 FR 27569, May 31, 1977]



Sec.1488.15  Advance payment.

    If, before expiration of the financing period, the exporter or the 
U.S. bank or the agency or branch bank accepts payment from or on behalf 
of the foreign importer of any part of the account receivable, it shall 
be remitted promptly to CCC. Such prepayment shall be applied first to 
interest on the unpaid balance of the account receivable to the date CCC 
receives such prepayment and then to the principal.



Sec.1488.16  Liability for payment.

    If delivery is made within the coverage of the bank obligation(s) 
submitted in accordance with Sec.1488.8, CCC will look to the 
obligating bank or banks and the foreign importer, rather than to the 
exporter or intervening purchaser, for payment of all amounts due at 
maturity of the account receivable and of the bank obligation(s), but 
the exporter and the intervening purchaser shall remain liable for any 
loss arising from breach of any contractual obligation, certification or 
warranty made by them pursuant to the financing agreement, and the 
exporter shall remain liable for any amounts not covered by the bank 
obligation which are owing to CCC, and any remittance or refund required 
by Sec.1488.15 and Sec.1488.18, together with interest thereon at 
the rate specified in the documents evidencing the account receivable, 
as well as for any liquidated damages provided for in Sec.1488.11. The 
liability of the bank and the importer under their respective 
obligations shall be several.

                        Miscellaneous Provisions



Sec.1488.17  Assignment.

    The exporter shall not assign any claim or rights or any amounts 
payable under the financing agreement, in whole or in part, without 
written approval of the Vice President, CCC, or the Controller, CCC.

[[Page 1041]]



Sec.1488.18  Covenant against contingent fees.

    The exporter warrants that no person or selling agency has been 
employed or retained to solicit or secure the financing agreement on an 
agreement or understanding for a commission, percentage, brokerage, or 
contingent fee, except bona fide employees or bona fide established 
commercial or selling agencies maintained by the exporter for the 
purpose of securing business. For breach or violation of this warranty, 
CCC shall have the right, without limitation on any other rights it may 
have, to annul the financing agreement without liability to CCC. Should 
the financing agreement be annulled, CCC will promptly consent to the 
reduction or cancellation or related bank obligations except for amounts 
outstanding under a financing agreement. Such amounts shall, on demand, 
be refunded to CCC by the exporter.



Sec.1488.19  [Reserved]



Sec.1488.20  Officials not to benefit.

    No member of or delegate to Congress, or Resident Commissioner, 
shall be admitted to any share or part of the financing agreement or to 
any benefit that may arise therefrom, but this provision shall not be 
construed to extend to the financing agreement if made with a 
corporation for its general benefit.



Sec.1488.21  Exporter's records and accounts.

    CCC shall have access to and the right to examine any directly 
pertinent books, documents, papers and records of the exporter involving 
transactions related to the financed export credit sale until the 
expiration of three years after the end of the financing period.



Sec.1488.22  Communications.

    (a) Unless otherwise provided, written requests, notifications, or 
communications by the applicant pertaining to the financing agreement 
shall be addressed to the Assistant Sales Manager, Commercial Export 
Programs, Office of the General Sales Manager, U.S. Department of 
Agriculture, Washington, DC 20250.
    (b) [Reserved]



Sec.1488.23  OMB Control Numbers assigned pursuant to the Paperwork
Reduction Act.

    The information collection requirements contained in these 
regulations (7 CFR part 1488) have been approved by the Office of 
Management and Budget (OMB) in accordance with the provisions of 44 
U.S.C. Chapter 35 and have been assigned OMB Control Number 0551-0021.

[Amdt. 8, 50 FR 13967, Apr. 9, 1985]



PART 1489_AGRICULTURAL TRADE PROMOTION PROGRAM--Table of Contents



Sec.
1489.10 General purpose and scope.
1489.11 Definitions.
1489.12 Participation eligibility.
1489.13 Application process.
1489.14 Application review and formation of agreements.
1489.15 Operational procedures for brand programs.
1489.16 Contribution rules.
1489.17 Reimbursement rules.
1489.18 Reimbursement procedures.
1489.19 Advances.
1489.20 Financial management.
1489.21 Reports.
1489.22 Evaluation.
1489.23 Compliance reviews and notices.
1489.24 Failure to make required contribution.
1489.25 Submissions.
1489.26 Disclosure of program information.
1489.27 Ethical conduct.
1489.28 Contracting procedures.
1489.29 Property standards.
1489.30 Anti-fraud requirements.
1489.31 Program income.
1489.32 Amendment.
1489.33 Noncompliance with an agreement.
1489.34 Suspension, termination, and closeout of agreements.
1489.35 Paperwork reduction requirements.

    Authority: Section 5(f) of the CCC Charter Act, 15 U.S.C. 714c(f).

    Source: 83 FR 44181, Aug. 30, 2018, unless otherwise noted.



Sec.1489.10  General purpose and scope.

    (a) This part sets forth the general terms, conditions, and policies 
governing the Commodity Credit Corporation's (CCC) operation of the 
Agricultural Trade Promotion Program (ATP). This program will provide 
assistance to

[[Page 1042]]

eligible organizations to conduct market promotion activities, including 
activities to address existing or potential non-tariff barriers to 
trade, that promote U.S. agricultural commodities in foreign markets. 
Specific program requirements will be set forth in future Notices of 
Funds Availability announced through the Grants.gov website.
    (b)(1) In addition to the provisions of this subpart, other 
regulations of general application issued by the U. S. Department of 
Agriculture (USDA), including the regulations set forth in Chapter XXX 
of this title, ``Office of the Chief Financial Officer, Department of 
Agriculture,'' may apply to the ATP and ATP participants, to the extent 
that these regulations of general application do not directly conflict 
with the provisions of this subpart. These include, but are not limited 
to:
    (i) 7 CFR part 1, subpart A--Official Records.
    (ii) 7 CFR part 3--Debt Management.
    (iii) 7 CFR part 15, subpart A--Nondiscrimination.
    (iv) 2 CFR part 417--Government-wide Debarment and Suspension (Non-
procurement).
    (v) 2 CFR part 418--New Restrictions on Lobbying.
    (vi) 2 CFR part 421--Requirements for Drug-Free Workplace (Financial 
Assistance).
    (vii) 48 CFR part 31--Contract Cost Principles and Procedures of the 
Federal Acquisition Regulations.
    (2) In addition, relevant provisions of the CCC Charter Act (15 
U.S.C. 714 et seq.) and any other statutory provisions that are 
generally applicable to the CCC are also applicable to the ATP and the 
regulations set forth in this part.
    (3) ATP Participants must also comply with Title VI of the Civil 
Rights Act of 1964 and related civil rights regulations and policies.
    (4) Other laws and regulations that apply to the ATP and ATP 
Participants include, but are not limited to:
    (i) 2 CFR part 25--Universal Identifier and Central Contractor 
Registration.
    (ii) 2 CFR part 170--Reporting Subaward and Executive Compensation 
Information.
    (iii) 2 CFR part 175--Award Term for Trafficking in Persons.
    (iv) 2 CFR part 180--OMB Guidelines to Agencies on Governmentwide 
Debarment and Suspension (Nonprocurement).
    (v) 2 CFR part 200--Office of Management and Budget Guidance, 
Uniform Administrative Requirements, Cost Principles, and Audit 
Requirements for Federal Awards.
    (vi) 2 CFR part 400--Department of Agriculture, Uniform 
Administrative Requirements, Cost Principles, and Audit Requirements for 
Federal Awards.
    (vii) 37 CFR part 401.1--Rights to Inventions Made by Nonprofit 
Organizations and Small Business Firms Under Government Grants, 
Contracts, and Cooperative Agreements.
    (viii) Executive Order 13224, as amended, Blocking Property and 
Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or 
Support Terrorism.
    (c) Under the ATP, the CCC may provide multi-year grant assistance 
to eligible U.S. entities to conduct certain marketing and promotion 
activities, including activities to address existing or potential non-
tariff trade barriers, aimed at developing, maintaining, or expanding 
commercial export markets for U.S. agricultural commodities. ATP 
Participants may receive assistance for either generic or brand 
promotion activities. While activities generally take place overseas, 
reimbursable activities may also take place in the United States. The 
CCC expects all activities that occur in the United States for which ATP 
reimbursement is sought to develop, maintain, or expand the commercial 
export market for the relevant U.S. agricultural commodity in accordance 
with the ATP Participant's approved ATP program. When considering 
eligible nonprofit U.S. trade organizations, the CCC gives priority to 
organizations that have the broadest producer representation and 
affiliated industry participation of the commodity being promoted.
    (d) The ATP generally operates on a reimbursement basis.
    (e) The CCC's policy is to ensure that benefits generated by ATP 
agreements are broadly available throughout the

[[Page 1043]]

relevant agricultural sector and that no single entity gains an undue 
advantage. The CCC also endeavors to enter into ATP agreements covering 
a broad array of agricultural commodity sectors. The ATP is administered 
by personnel of the Foreign Agricultural Service (FAS) acting on behalf 
of the CCC.



Sec.1489.11  Definitions.

    For purposes of this subpart the following definitions apply:
    Activity means a specific foreign market development effort 
undertaken by an ATP Participant.
    Administrative expenses or costs means expenses or costs of 
administering, directing, and controlling an organization that is an ATP 
Participant. Generally, this would include expenses or costs such as 
those related to:
    (1) Maintaining a physical office (including, but not limited to, 
rent, office equipment, office supplies, office d[eacute]cor, office 
furniture, computer hardware and software, maintenance, extermination, 
parking, business cards);
    (2) Personnel (including, but not limited to, salaries, benefits, 
payroll taxes, individual insurance, training);
    (3) Communications (including, but not limited to, phone expenses, 
internet, mobile phones, personal digital assistants, email, mobile 
email devices, postage, courier services, television, radio, walkie 
talkies);
    (4) Management of an organization or unit of an organization 
(including, but not limited to, planning, supervision, supervisory 
travel, teambuilding, recruiting, hiring);
    (5) Utilities (including, but not limited to, sewer, water, energy);
    (6) Professional services (including, but not limited to, accounting 
expenses, financial services, investigatory services).
    Approval letter means a document by which the CCC informs an 
applicant that its ATP application has been approved for funding. This 
letter may also approve specific activities and contain terms and 
conditions in addition to the program agreement. This letter requires a 
countersignature by the ATP Participant before it becomes effective.
    ATP means the Agricultural Trade Promotion Program.
    ATP Notice means Agricultural Trade Promotion Program notices are 
documents that CCC issues for informational purposes. These ATP notices 
are made available electronically at www.fas.usda.gov/programs/
agricultural-trade-promotion-program-atp. These notices have no legal 
effect. They are intended to alert ATP Participants of various aspects 
of CCC's current administration of the ATP program. For example, CCC 
issues ATP notices to alert ATP Participants of procedures for 
requesting advances, applicable Federal pay scale rates, lists of 
economic and trade sanctions against certain foreign countries, 
reporting formats and computer codes to use with the UES.
    ATP Participant or Participant means an entity that has entered into 
an ATP program agreement with the CCC.
    Attach[eacute]/Counselor means the FAS employee representing USDA 
interests in the foreign country in which promotional activities are 
conducted.
    Brand participant means a U.S. for-profit entity or a U.S. 
agricultural cooperative that owns the brand(s) of the U.S. agricultural 
commodity to be promoted or has the exclusive rights to use such 
brand(s) and that is participating in the ATP brand promotion program of 
an ATP Participant. This definition does not include any U.S. 
agricultural cooperatives that are ATP Participants that apply for ATP 
funds to implement their own brand programs.
    Brand promotion means an activity that involves the exclusive or 
predominant use of a single U.S. company name, or the logo or brand name 
of a single U.S. company, or the brand of a U.S. agricultural 
cooperative, or any activity undertaken by a brand participant in the 
brand program.
    CCC means the Commodity Credit Corporation, including any agency or 
official of the United States delegated the responsibility to act on 
behalf of the CCC.
    Contribution means an expenditure made by an ATP Participant, the 
U.S. industry, or State agency in support of an approved activity. This 
includes expenditures to be made by entities in

[[Page 1044]]

the ATP Participant's industry in support of the entities' related 
promotion activities in the markets covered by the ATP Participant's 
agreement.
    Credit memo means a commercial document, also known as a credit 
memorandum, issued by the ATP Participant to a commercial entity that 
owes the ATP Participant a certain sum. A credit memo is used when the 
ATP Participant owes the commercial entity a sum less than the amount 
the entity owes the Participant. The credit memo reflects an offset of 
the amount the ATP Participant owes the entity against the amount the 
entity owes to the ATP Participant.
    Demonstration projects means activities involving the erection or 
construction of a structure or facility or the installation of 
equipment.
    Expenditure means either payment via the transfer of funds or offset 
reflected in a credit memo in lieu of a transfer of funds.
    FAS means Foreign Agricultural Service, USDA.
    FAS website means a website maintained by FAS providing information 
on ATP. It is currently accessible at www.fas.usda.gov/programs/
agricultural-trade-promotion-program-atp.
    Foreign third party means a foreign entity that an ATP Participant 
works with to promote the export of a U.S. agricultural commodity under 
the ATP program.
    Generic promotion means an activity that is not a brand promotion 
but, rather, promotes a U.S. agricultural commodity generally. A generic 
promotion activity may include the promotion of a foreign brand (i.e., a 
brand owned primarily by foreign interests and being used to market a 
commodity or product in a foreign market), if the foreign brand uses the 
promoted U.S. agricultural commodity from multiple U.S. suppliers. A 
generic promotion activity may also involve the use of specific U.S. 
company names, logos or brand names. However, in that case, the ATP 
Participant must ensure that all U.S. companies seeking to promote such 
U.S. agricultural commodity in the market have an equal opportunity to 
participate in the activity and that at least two U.S. companies 
participate. In addition, an activity that promotes separate items from 
multiple U.S. companies will be considered a generic promotion only if 
the promotion of the separate items maintains a unified theme (i.e., a 
dominant idea or motif) and style and is subordinate to the promotion of 
the generic theme.
    Market means the country or countries targeted by an activity.
    Notification means a document from the ATP Participant by which the 
ATP Participant proposes to CCC changes to the activities and/or funding 
levels in an approved ATP program agreement and/or approval letter.
    Product samples means a representative part of a larger whole 
promoted commodity or group of promoted commodities. Product samples 
include all forms of a promoted commodity (e.g., fresh or processed), 
independent of the ultimate utilization of the sample. Product samples 
must be used in support of international marketing activities including, 
but not limited to, displays, food process testing, cooking 
demonstrations, or trade and consumer tastings.
    Program agreement means a document entered into between CCC and an 
ATP Participant setting forth the terms and conditions of approved 
activities under ATP, including any subsequent amendments to such 
agreement.
    Program period means a 12-month period during which an ATP 
Participant can undertake activities consistent with this subpart and 
its program agreement and approval letter with CCC. Program periods will 
begin on January 1 and end on December 31 of the same year, or begin on 
July 1 and end on June 30 of the subsequent year.
    Promoted commodity means a U.S. agricultural commodity the sale of 
which is the intended result of a promotional activity.
    Sales and trade relations expenditures (STRE) means expenditures 
made on breakfast, lunch, dinner, receptions, and refreshments at 
approved activities; miscellaneous courtesies such as checkroom fees, 
taxi fares and tips for approved activities; and decorations for a 
special promotional occasion that is part of an approved activity.
    Sales team means a group of individuals engaged in an approved 
activity intended to result in specific sales.

[[Page 1045]]

    Small-sized entity means a U.S. for-profit entity that meets the 
small business size standards published at 13 CFR part 121, Small 
Business Size Regulations.
    SRTG means State Regional Trade Group. An SRTG is a nonprofit 
association of state-funded agricultural promotion agencies.
    Temporary contractor means a contractor, typically a consultant or 
other highly paid professional that is hired on a short term basis to 
assist in the performance of an activity.
    Trade team means a group of individuals engaged in an approved 
activity intended to promote the interests of an entire agricultural 
sector rather than to result in specific sales by any of its members.
    UES website means a website maintained by FAS through which 
applicants may apply online to ATP and any other USDA market development 
program. The website is currently accessible to persons with e-
authentication certification at https://apps.fas.usda.gov/ues/webapp/.
    Unified Export Strategy (UES) means a standardized online internet 
application developed by USDA and available for use by entities to apply 
to any USDA market development program, including the ATP.
    U.S. agricultural commodity means any agricultural commodity, 
including any food, feed, fiber, forestry product, livestock, or insect 
of U.S. origin or fish harvested from a U.S. aquaculture farm or 
harvested by a vessel as defined in Title 46 of the United States Code, 
in waters that are not waters (including the territorial sea) of a 
foreign country, and any product thereof, excluding tobacco. An 
agricultural commodity shall be considered to be U.S. origin if it is 
comprised of at least 50 percent by weight, exclusive of added water, of 
agricultural commodities grown or raised in the United States.
    USDA means the United States Department of Agriculture.
    U.S. for-profit entity means a firm, association, or other entity 
organized or incorporated, located and doing business for profit in the 
United States, and engaged in the export or sale of a U.S. agricultural 
commodity.



Sec.1489.12  Participation eligibility.

    To participate in the ATP as an ATP Participant, an entity shall be:
    (a) A nonprofit U.S agricultural trade organization;
    (b) A nonprofit SRTG;
    (c) A U.S. agricultural cooperative; or
    (d) A State agency.



Sec.1489.13  Application process.

    (a) General application requirements. CCC will periodically issue a 
Notice of Funds Availability through the Grants.gov website that it is 
accepting applications for participation in the ATP. Applications shall 
be submitted in accordance with the terms and requirements specified in 
the Notice and in these regulations. Applicants are encouraged to submit 
a UES through the UES internet website, but are not required to do so. 
Applicants may apply to conduct a generic promotion program and/or a 
brand promotion program that provides ATP funds to brand participants 
for branded promotion, as well as to conduct other market promotion 
activities including activities to address existing or potential non-
tariff trade barriers. An applicant that is a U.S. agricultural 
cooperative may also apply for funds to conduct its own brand promotion 
program.
    (1) Applicant and program information. All applications shall 
contain:
    (i) The name, address, and internet location of the home page of the 
applicant organization;
    (ii) The name of the applicant's Chief Executive Officer;
    (iii) The name, telephone number, fax number, and email address of 
the applicant's primary contact person;
    (iv) The name(s) of the person(s) responsible for managing the 
proposed program;
    (v) A description of the applicant organization, including the type 
of organization of the applicant (e.g., nonprofit SRTG), its mission, 
and the statutory authorities by which it is constituted and under which 
it operates, if applicable;
    (vi) Tax exempt identification number of the applicant, if 
applicable;
    (vii) Beginning and ending dates for proposed program period (mm/dd/
yy-mm/dd/yy);

[[Page 1046]]

    (viii) Dollar amount of CCC resources requested for generic 
activities;
    (ix) Dollar amount of CCC resources requested for brand activities;
    (x) Dollar amount of CCC resources requested for other market 
promotion activities, including activities to address existing or 
potential non-tariff trade barriers;
    (xi) Total dollar amount of CCC resources requested;
    (xii) Percentage of CCC resources requested for general 
administrative expenses;
    (xiii) A Dun and Bradstreet DUNS number for the applicant;
    (xiv) A description of the applicant organization's membership and 
membership criteria;
    (xv) A list of organizations affiliated with the applicant, 
including parent organizations, subsidiaries, and partnerships;
    (xvi) A description of the applicant's management and administrative 
capability;
    (xvii) A description of the applicant's prior export promotion 
experience;
    (xviii) Value, in U.S. dollars, of proposed contributions from the 
applicant or the applicant's proposed contribution stated as a 
percentage of the total dollar amount of CCC resources requested; and
    (xix) Value, in U.S. dollars, of proposed contributions from other 
sources.
    (2) Program justification. All applications shall contain:
    (i) A description of the promoted U.S. agricultural commodity(s), 
its harmonized tariff classification, the applicable commodity aggregate 
code (available from the UES website) and the percentage of U.S. origin 
content by weight, exclusive of added water;
    (ii) A description of the anticipated supply and demand situation 
for the promoted U.S. agricultural commodity(s) as well as a 
demonstration of loss suffered as a result of imposed tariffs (reduced 
sales, lost revenue, and decreased market share, etc.);
    (iii) The volume and value of exports of the promoted U.S. 
agricultural commodity(s) to the targeted markets for the most recent 3-
year period;
    (iv) If the proposal is for 2 or more years, an explanation why the 
proposal should be funded on a multi-year basis; and
    (v) A certification and, if requested by CCC, a written explanation 
supporting the certification that any funds received will supplement, 
but not supplant, any private or third-party funds or other 
contributions to program activities. An explanation, if one is 
requested, shall indicate why the applicant is unlikely to carry out the 
activities without Federal financial assistance. In determining whether 
Federal funds would supplement or supplant private or third-party funds 
or contributions, CCC will consider the applicant's prior overall 
marketing budget in CCC market development programs from year-to-year, 
variations in promotional strategies within a country, and new markets.
    (3) Proposed program's strategic plan. (i) All applications shall 
include a strategic plan that contains:
    (A) A description of overall long term strategic goals to be 
advanced by the proposed activities for the ensuing 3-5 years;
    (B) An explanation of the organization's strategic planning process 
and identification of priority target markets, including a summary of 
proposed budgets by country and commodity aggregate code;
    (C) A description of the world market situation for the exported 
U.S. agricultural commodity(s);
    (D) A description of competition from other exporters;
    (E) An evaluation plan describing the applicant's goals and the 
applicant's plans for monitoring and evaluating performance towards 
achieving these goals. This evaluation plan should set forth specific 
goals and benchmarks set at regular intervals to be used to identify 
results against identified constraints and opportunities and to measure 
progress made in the target market. Evaluation of a proposed ATP 
program's effectiveness will depend on a clear statement by the 
applicant of goals, method of achievement, and expected results of 
programming at regular intervals. The overall goal of the ATP and of 
individual Participants' programming is to restore or increase sales 
that would not have occurred in the absence of ATP funding. An ATP

[[Page 1047]]

Participant may modify and resubmit this plan for re-approval at any 
time during the program period.
    (F) For each target country, five years or as many years as are 
available of:
    (1) Historical U.S. export data;
    (2) U.S. market share; and
    (3) CCC market development program funds received by the applicant;
    (G) For each target country, three years of projected U.S. export 
data and U.S. market share;
    (H) Country strategy, including market constraint(s) impeding U.S. 
exports (e.g., trade barriers) or opportunities present and the strategy 
proposed to overcome constraints or take advantage of the opportunities, 
previous activities in the country, and the projected impact of the 
proposed program on U.S. exports;
    (I) A description of any demonstration projects, if applicable;
    (J) Data summarizing the applicant's historical and projected 
exports, market share, and CCC market development program budgets of the 
promoted U.S. agricultural commodity(s);
    (K) A written presentation of all proposed activities including:
    (1) A short description of the relevant market constraint or 
opportunity;
    (2) A budget for each proposed activity, identifying the source of 
funds.
    (ii) Applications for brand promotion assistance shall also include 
in their strategic plans:
    (A) A description of how the brand promotion program will be 
publicized to U.S. industry; and
    (B) The criteria that will be used to allocate funds to U.S. for-
profit entities and U.S. agricultural cooperatives.
    (b) Requests for addition evaluation information. CCC may request 
any additional information that it deems necessary to evaluate an 
application, including, but not limited to, performance measurement 
information.
    (c) Special rules governing demonstration projects funded with CCC 
resources. CCC will consider proposals for demonstration projects, 
provided:
    (1) No more than one such demonstration project per constraint is 
undertaken within a market;
    (2) The constraint to be addressed in the target market is a lack of 
technical knowledge or expertise;
    (3) The demonstration project is a practical and cost effective 
method of overcoming the constraint; and
    (4) A third-party must participate in such project through a written 
agreement with the ATP Participant.
    (d) Universal Identifier and Central Contractor Registration (CCR). 
In accordance with 2 CFR part 25, each entity that applies to the ATP 
program and does not qualify for an exemption under 2 CFR 25.110 must:
    (1) Be registered in the CCR prior to submitting an application or 
plan;
    (2) Maintain an active CCR registration with current information at 
all times during which it has an active Federal award or an application 
or plan under consideration by CCC; and
    (3) Provide its DUNS number in each application or plan it submits 
to CCC.
    (e) Reporting Subaward and Executive Compensation Information. In 
accordance with 2 CFR part 170, each entity that applies to the ATP 
program and does not qualify for an exception under 2 CFR 170.110(b) 
must ensure it has the necessary processes and systems in place to 
comply with the applicable reporting requirements of 2 CFR part 170 
should it receive ATP funding.



Sec.1489.14  Application review and formation of agreements.

    (a) General. CCC will, subject to the availability of funds, approve 
those applications that it considers to present the best opportunity for 
developing, maintaining, or expanding export markets for U.S. 
agricultural commodities. The selection process, by its nature, involves 
the exercise of judgment. CCC's choice of Participants and proposed 
promotion projects requires that it consider and weigh a number of 
factors, some of which cannot be mathematically measured--e.g., market 
opportunity, market strategy, and management capability. CCC may require 
that an applicant participate in the ATP through another ATP 
Participant.
    (b) Application review criteria. In assessing the likelihood of 
success of the applications it receives and deciding which it will 
approve, CCC will follow

[[Page 1048]]

results-oriented management principles and consider the following 
criteria:
    (1) The effectiveness of program management;
    (2) Soundness of accounting procedures;
    (3) The nature of the applicant organization. With respect to 
nonprofit U.S. trade organizations, preference will be given to those 
organizations with the broadest base of producer representation of and 
affiliated industry participation for the commodity being promoted;
    (4) Prior export promotion experience;
    (5) Appropriateness of staffing;
    (6) Adequacy of the applicant's strategic plan in the following 
categories:
    (i) Description of target market conditions;
    (ii) Description of and plan for addressing market constraints and 
opportunities;
    (iii) Breadth of industry participation in strategic planning 
process;
    (iv) Strategic prioritization identified in proposed plan;
    (v) Export volume and value and market share goals in each target 
country;
    (vi) Description of evaluation plan and suitability of the plan for 
performance measurement; and
    (vii) Past CCC market development program results and/or 
evaluations, including program success stories.
    (c) Allocation factors. CCC determines which applications to approve 
and develops preliminary recommended funding levels for each approved 
application based on the following factors, in addition to those in 
paragraph (b) of this section. CCC determines final funding levels after 
allocating available funds to approved applications on the basis of 
criteria that will be fully described in each program period's ATP 
Notice of Funds Availability announcement:
    (1) Size of the budget request in relation to projected value of 
exports;
    (2) Where applicable, size of the budget request in relation to 
actual value of exports in prior years;
    (3) Where applicable, Participant's past projections of exports 
compared with actual exports;
    (4) Level of contributions by the applicant and by all other sources 
to meet minimum cost share requirements;
    (5) Market share goals in target country(ies);
    (6) The percentage by weight, exclusive of added water, of U.S. 
agricultural commodities contained in the promoted products;
    (7) The degree of value-added processing in the United States;
    (8) Proposed ATP-funded general administrative and overhead costs 
compared to proposed ATP-funded direct promotional costs; and
    (d) Approval decision--(1) Approval criteria and factors. CCC will 
approve those applications that it determines best satisfy the criteria 
and factors specified in paragraphs (b) and (c) of this section.
    (2) Notification of decision. CCC will notify each applicant in 
writing of the final disposition of its application.
    (e) Formation of agreements. CCC will send a program agreement (or 
amendment to an existing program agreement), an approval letter, and a 
signature card to each approved applicant. The program agreement or 
amendment and the approval letter will outline which activities and 
budgets are approved and will specify any special terms and conditions 
applicable to an ATP Participant's program, including any requirements 
with respect to contributions and program evaluations. An applicant that 
decides to accept the terms and conditions contained in the program 
agreement or amendment and the approval letter must so indicate by 
having its Chief Executive Officer (CEO) or designee sign the program 
agreement or amendment and the approval letter and submit these to CCC. 
Final agreement shall occur when the program agreement or amendment and 
the approval letter are signed by both parties.
    (f) Signature cards. The ATP Participant shall designate at least 
two individuals in its organization to sign program agreements and 
amendments, approval letters, reimbursement claims, and advance 
requests. The ATP Participant shall submit the signature card signed by 
those designated individuals and by the ATP Participant's CEO to

[[Page 1049]]

CCC. The Participant shall immediately notify CCC of any changes in 
signatories and shall submit a revised signature card accordingly.
    (g) UES ID and passwords. CCC will provide each ATP Participant with 
IDs and passwords for the UES website, as necessary. ATP Participants 
shall protect these IDs and passwords in accordance with USDA's 
information technology policies that CCC will provide to ATP 
Participants. ATP Participants shall immediately notify CCC whenever a 
person who possesses the ID and password information no longer needs 
such information or a person who is not authorized gains such 
information.
    (h) Annual certifications. An ATP Participant through which U.S. 
for-profit entities are participating in the ATP program shall obtain 
annual certifications from all such entities that certify their size or 
their status as U.S. agricultural cooperatives, as defined in these 
regulations. The Participant shall retain these certifications in 
accordance with the recordkeeping requirements of this part.
    (i) Changes to activities and funding--(1) Adding a new activity. 
(i) An ATP Participant may not conduct a new activity without first 
obtaining an approved activity budget for such change. To request 
approval of such activity budget, the ATP Participant shall submit a 
notification to CCC.
    (ii) A notification for a new activity shall provide an activity 
justification and identify any related adjustments to the approved 
strategic plan, including changes in market, constraint, or opportunity 
that the activity proposes to address. The notification shall contain 
the activity description, the proposed budget, and a justification of 
transfer of funds.
    (iii) After receipt of the notification, CCC will inform the ATP 
Participant via the UES website whether the requested budget is 
approved.
    (2) Modifying existing activities and their funding levels. (i) An 
ATP Participant desiring to increase the funding level for existing, 
approved activities addressing a single constraint or opportunity by 
more than $25,000 or 25 percent of the approved funding level, whichever 
is greater, must first submit a notification explaining the adjustment 
to CCC before making such change.
    (ii) An ATP Participant may make significant adjustments below that 
threshold to the funding levels for existing, approved activities 
without prior notification to CCC, only if it submits a notification 
explaining the adjustments to CCC no later than 30 days after the 
change. Minor adjustments to existing, approved activities and/or 
funding levels do not require notification.
    (iii) Notifications shall describe the activity, changes to the 
activity, the existing funding level, the proposed funding level, and a 
justification for transfer of funds, if applicable.



Sec.1489.15  Operational procedures for brand programs.

    (a) Where CCC approves an application by an ATP Participant to run a 
brand promotion program that will include brand participants, the ATP 
Participant shall establish brand program operational procedures. The 
ATP Participant shall submit to CCC for approval its proposed brand 
program operational procedures. CCC will notify all ATP Participants in 
writing in each Participant's approval letter and through the FAS 
website as to applicable submission dates for and dates for approvals of 
brand program operation procedures. Such procedures shall include, at a 
minimum, a brand program application, application procedures, 
application review criteria, brand participant eligibility requirements, 
a participation agreement, reimbursement requirements, compliance 
requirements, reporting and recordkeeping requirements, employment 
practices, financial management requirements, contracting procedures, 
and evaluation requirements. The ATP Participant must submit to CCC for 
approval any proposed changes to already approved brand program 
operational procedures before implementing such proposed changes.
    (b) The ATP Participant shall not enter into any participation 
agreements with brand participants nor shall it implement any ATP brand 
activities unless and until CCC has communicated in writing its approval 
of

[[Page 1050]]

the proposed operational procedures to the ATP Participant.
    (c) Participation agreements between ATP Participants and brand 
participants: Where CCC approves an ATP Participant's application to run 
a brand promotion program that will include brand participants, the ATP 
Participant shall enter into participation agreements with brand 
participants. Brand participants' size may not exceed 300 percent of the 
applicable small business size standard. These agreements must:
    (1) Specify a time period for such brand promotion and require that 
all brand promotion expenditures be made within the ATP Participant's 
approved program period;
    (2) Make no allowance for extension or renewal;
    (3) Limit reimbursable expenditures to those made in countries and 
for activities approved in the brand participant's activity plan;
    (4) Specify the percentage of promotion expenditures that will be 
reimbursed, reimbursement procedures, and documentation requirements;
    (5) Include a written certification by the brand participant that it 
either owns the brand of the product it will promote or has exclusive 
rights to promote the brand in each of the countries in which promotion 
activities will occur;
    (6) Require that all product labels, promotional material, and 
advertising will identify the origin of the U.S. agricultural commodity 
as ``American'', ``Product of the United States of America'', ``Product 
of the U.S.'', ``Product of the U.S.A.'', ``Product of America'', 
``Grown in the United States of America'', ``Grown in the U.S.'', 
``Grown in the U.S.A.'', ``Grown in America'', ``Made in the United 
States of America,'' ``Made in the U.S.'', ``Made in the U.S.A.'', 
``Made in America'', or product of, grown in or made in any state or 
territory of the United States of America spelled out in its entirety, 
or other U.S. regional designation if approved in advance by the CCC; 
that such origin identification will be conspicuously displayed in a 
manner easily observed as identifying the origin of the product; and 
that such origin identification will conform, to the extent possible, to 
the U.S. standard of \1/6\ inch (.42 centimeters) in height based on the 
lower case letter ``o''. The use of the above terms as a descriptor or 
in the name of the product (e.g., Cincinnati style chili, Gina's 
American Pizza) does not satisfy the product origin requirement. Phrases 
``product of'', ``grown in'' or ``made in'' are encouraged, but not 
required. An ATP Participant may request an exemption from this 
requirement on a case-by-case basis. All such requests shall be in 
writing and include justification satisfactory to the CCC that this 
labeling requirement would hinder an ATP Participant's promotional 
efforts. CCC will determine, on a case by case basis, whether sufficient 
justification exists to grant an exemption from the labeling 
requirement. In addition, the CCC may temporarily waive this requirement 
where the CCC has determined that such labeling will likely harm sales 
rather than help them. Such determinations will be announced to ATP 
Participants via an ATP notice issued on the FAS website;
    (7) Include a written certification by the brand participant that 
identifies its size on the date of its application for branded program 
funding or that it is a U.S. agricultural cooperative;
    (8) Require that the brand participant submit to the ATP Participant 
a statement certifying that any Federal funds received will supplement, 
but not supplant, any private or third party funds or other 
contributions to program activities; and
    (9) Require the brand participant to maintain all original records 
and documents relating to program activities for three calendar years 
following the end of the applicable program period and make such records 
and documents available upon request to authorized officials of the U.S. 
Government.



Sec.1489.16  Contribution rules.

    (a) In ATP generic promotion programs, an ATP Participant shall 
contribute a total amount in goods, services, and/or cash equal to at 
least 10 percent of the value of resources to be provided by the CCC for 
all generic promotion activities proposed to be undertaken by the ATP 
Participant.

[[Page 1051]]

    (b) In ATP brand promotion programs, an ATP Participant conducting 
its own brand promotion that is a U.S. agricultural cooperative or a 
small-sized brand participant shall contribute at least 50 percent of 
the total eligible expenditures made on each approved brand promotion.
    (c) An ATP Participant must use its own funds and may not use ATP 
program funds to pay any administrative costs of the ATP Participant's 
U.S. office(s), including legal fees, except as set forth in this 
subpart. Where the ATP Participant uses its own funds to pay for 
administrative costs, such costs may be counted in calculating the 
amount of contributions the ATP Participant contributes to ATP generic 
or brand promotion programs.
    (d) Eligible contributions:
    (1) In calculating the amount of contributions that it will make, 
and the contributions that the U.S. industry (including expenditures to 
be made by entities in the applicant's industry or agricultural sector 
in support of the entities' related promotion activities in the markets 
covered by the applicant's application) or State agency will make, the 
ATP applicant may include the costs listed under paragraph (d)(2) of 
this section if:
    (i) Expenditures are necessary and reasonable for accomplishment of 
an approved activity,
    (ii) Expenditures are not included as contributions for any other 
Federal award;
    (iii) Expenditures are not paid by the Federal Government under 
another Federal award, except where the Federal statute authorizing a 
program specifically provides that Federal funds made available for such 
program can be applied to matching or cost sharing requirements of other 
Federal programs.
    (2) Subject to paragraph (d)(1) of this section, as well as 
applicable cost principles (e.g., 2 CFR part 200) to the extent these 
principles do not directly conflict with the provisions of this subpart, 
eligible contributions are:
    (i) Cash;
    (ii) Compensation paid to personnel;
    (iii) The cost of acquiring materials, supplies or services;
    (iv) The cost of office space;
    (v) A reasonable and justifiable proportion of general 
administrative costs and overhead;
    (vi) Payments for indemnity and fidelity bond expenses;
    (vii) The cost of business cards that target a foreign audience;
    (viii) The cost of subscriptions that are of a technical, economic, 
or marketing nature and that are relevant to the approved activities of 
the ATP Participant;
    (ix) The cost of activities conducted overseas;
    (x) Credit card fees;
    (xi) The cost of any independent evaluation or audit that is not 
required by the CCC to ensure compliance with program agreement or 
regulatory requirements;
    (xii) The cost of giveaways, awards, prizes and gifts;
    (xiii) The cost of product samples;
    (xiv) Fees for participating in U.S. government sponsored or 
endorsed export promotion activities;
    (xv) The cost of air and local travel in the United States;
    (xvi) STRE and the cost associated with trade shows, seminars, and 
entertainment conducted in the United States where the STRE and costs 
associated with trade shows, seminars, and entertainment have a 
programmatic purpose and are authorized in the program agreement and/or 
the approval letter or authorized by prior written approval of the CCC;
    (xvii) Other administrative expenses (e.g., supervisory travel from 
the U.S. to an overseas office); and
    (xviii) The cost of any activity expressly listed as reimbursable in 
this subpart.
    (3) The following are not eligible contributions:
    (i) Any portion of salary or compensation of an individual who is 
the target of an approved promotional activity;
    (ii) Any expenditure, including that portion of salary and time 
spent, related to promoting membership in the Participant organization 
(sometimes referred to in the industry as ``backsell'');
    (iii) Any land costs other than allowable costs for office space;

[[Page 1052]]

    (iv) The cost of refreshments and related equipment provided to 
office staff;
    (v) The cost of insuring articles owned by private individuals;
    (vi) The cost of any arrangement that has the effect of reducing the 
selling price of a U.S. agricultural commodity;
    (vii) The cost of product development, product modifications, or 
product research, except as described in Sec.1489.17(c)(22);
    (viii) Slotting fees or similar sales expenditures;
    (ix) Membership fees in clubs and social organizations; and
    (x) Any expenditure for an activity prior to the CCC's approval of 
that activity.
    (4) The CCC shall determine, at the CCC's discretion, whether any 
cost not expressly listed in this section may be included by the ATP 
Participant as an eligible contribution.



Sec.1489.17  Reimbursement rules.

    (a) An ATP Participant may seek reimbursement for an eligible 
expenditure if:
    (1) The expenditure was necessary and reasonable for accomplishment 
of an approved activity; and
    (2) The Participant has not been and will not be reimbursed for such 
expenditure by any other source.
    (b) Subject to paragraphs (a) and (d) of this section, as well as 
applicable cost principles (e.g., 2 CFR part 200) to the extent these 
principles do not directly conflict with the provisions of this subpart, 
for either brand or generic promotion activities, the CCC will 
reimburse, in whole or in part, the cost of:
    (1) Production and placement of advertising, in print, electronic 
media, billboards, or posters, which may include advertising the 
availability of price discounts, except that advertising associated with 
a coupon or price discount for the ATP-promoted product is not 
reimbursable. If advertising is related to both coupons or price 
discounts for products other than the ATP Participant's promoted 
products as well as for ATP-promoted products, expenditures for such 
advertising will not be reimbursed in whole or in part (e.g., 
expenditures may not be prorated and submitted for reimbursement). 
Electronic media includes, but is not limited to, radio, television, 
electronic mail, internet, telephone, text messaging, and podcasting;
    (2) Production and distribution of banners, recipe cards, table 
tents, shelf talkers, and other similar point of sale materials;
    (3) Direct mail advertising;
    (4) In-store and food service promotions, product demonstrations to 
the trade and to consumers, and distribution of product samples (but not 
the purchase of the product samples, except as authorized in paragraph 
(c)(9) of this section).
    (5) Temporary displays and rental of space for temporary displays;
    (6) Expenditures, other than travel expenditures, associated with 
seminars and educational training, whether conducted in the United 
States or outside the United States;
    (7) Subject to paragraph (b)(18) of this section, expenditures, 
other than travel expenditures, associated with retail, trade and 
consumer exhibits and shows, whether held outside or inside the United 
States, including participation fees, booth construction, transportation 
of related materials, rental of space and equipment, and duplication of 
related printed materials. However, with regard to non-travel 
expenditures associated with retail, trade and consumer exhibits and 
shows held inside the United States, such expenditures are reimbursable 
only if the exhibit or show is: A food or agricultural show with no less 
than 30 percent of exhibitors selling food or agricultural products; and 
an international show that targets buyers, distributors and the like 
from more than one foreign country and no less than 15 percent of its 
visitors are from countries other than the host country. CCC will 
compile a list of approved retail, trade and consumer exhibits and shows 
held inside the United States for which ATP reimbursement is available 
and such list will be announced to ATP Participants via an ATP notice 
issued on FAS' website;
    (8) Subject to paragraph (b)(18) of this section, international 
travel expenditures, not to exceed the full fare

[[Page 1053]]

economy rate, including any fees for modifying the originally purchased 
airline ticket, per diem, passports, visas and inoculations, as allowed 
under the U.S. Federal Travel Regulations (41 CFR parts 301 through 304) 
and 2 CFR part 200, for no more than two representatives of a single 
brand participant (or ATP Participant directly running its own brand 
program) to exhibit their company's (or cooperative's) products at a 
retail, trade, or consumer exhibit or show held outside the United 
States. Representatives may include employees and board members of 
private companies, employees or members of cooperatives, or any broker, 
consultant, or marketing representative contracted by the company or 
cooperative to represent the company or cooperative in sales 
transactions. All travel should follow a direct or usually traveled 
route;
    (9) Subscriptions that are of a technical, economic, or marketing 
nature and that are relevant to the approved activities of the ATP 
Participant;
    (10) Demonstrators, interpreters, translators, receptionists, and 
similar temporary workers who help with the implementation of individual 
promotional activities, such as trade shows, in-store promotions, food 
service promotions, and trade seminars;
    (11) Giveaways, awards, prizes, gifts and other similar promotional 
materials, subject to such reimbursement limitation as CCC may determine 
and announce in writing to ATP Participants via an ATP notice issued on 
FAS' website. Reimbursement is available only when:
    (i) The items are described in detail with a per unit cost in an 
approved strategic plan; and
    (ii) Distribution of the promotional item is not contingent upon the 
consumer, or other target audience, purchasing a good or service to 
receive the promotional item;
    (12) The design and production of packaging, labeling or origin 
identification, to be used during the program period in which the 
expenditure is made, if such packaging, labeling or origin 
identification is necessary to meet the importing requirements of a 
foreign country;
    (13) The design, production, and distribution of coupons for 
products other than the ATP Participant's promoted products. If such 
activities include both coupons or price discounts for products other 
than the ATP Participant's promoted products as well as for ATP-promoted 
products, expenditures for such activities will not be reimbursed in 
whole or in part (e.g., expenditures may not be prorated and submitted 
for reimbursement);
    (14) An audit of an ATP Participant as required by 2 CFR part 200, 
subpart F, if the ATP is the ATP Participant's largest source of Federal 
funding;
    (15) The translation of written materials as necessary to carry out 
approved activities;
    (16) Expenditures associated with developing, updating, and 
servicing websites on the internet that clearly target a foreign 
audience;
    (17) International travel expenditures, not to exceed the full fare 
economy rate, including any fees for modifying the originally purchased 
airline ticket, per diem, passports, visas and inoculations, as allowed 
under the U.S. Federal Travel Regulations (41 CFR parts 301 through 304) 
and 2 CFR part 200, incurred for a foreign trade mission conducted 
outside the United States that is an activity under an approved branded 
program and that has met the following conditions:
    (i) Trade mission travel for company (or cooperative) 
representatives was identified as a separate approved activity in the 
ATP Participant's UES;
    (ii) The trade mission included representatives, as defined in 
paragraph (b)(8) of this section, from a minimum of five different 
companies (or cooperatives), and no more than two representatives from 
each participating company (or cooperative);
    (iii) The appropriate FAS overseas office supported the trade 
mission by dedicating meaningful funding or other resources (such as 
facilities or staff time) to the activity; and
    (iv) The ATP Participant with the approved brand program produced an 
itinerary or agenda for the trade mission that demonstrated that company 
(or cooperative) representatives would be engaged for a minimum of 6 
hours per day (except for the first and last

[[Page 1054]]

days of the mission) in trade mission activities that include, at a 
minimum, each of the following:
    (A) A product showcase where the FAS overseas office approved an 
invitation list of qualified buyers;
    (B) Pre-arranged one-on-one business meetings; and
    (C) Evaluation and feedback sessions with FAS staff and trade 
mission sponsors.
    (v) Reimbursement is conditional on the ATP Participant having 
notified in writing the Attach[eacute]/Counselor in the destination 
country in advance of the travel. All travel should follow a direct or 
usually traveled route;
    (18) Where USDA has sponsored or endorsed a U.S. pavilion at a 
retail, trade and consumer exhibit or show, whether held outside or 
inside the United States, ATP funds may be used to reimburse the travel 
and/or non-travel expenditures of only those ATP Participants located 
within the U.S. pavilion. Such expenditures must also adhere to the 
standard terms and conditions of the U.S. pavilion organizer. All travel 
should follow a direct or usually traveled route. Upon written request, 
the CCC may temporarily waive this subsection, on a case by case basis, 
where:
    (i) The trade show is segregated into product pavilions; or
    (ii) A company's distributor or importer is located outside the U.S. 
pavilion. Such waiver will be provided to the ATP Participant in 
writing; and
    (19) Contracts with U.S.-based organizations when the only 
contracted service such organizations provide to an ATP Participant is 
carrying out a specific market promotion activity in the United States 
directed to a foreign audience (e.g., a trade mission of foreign buyers 
coming to the United States to visit U.S. exporters). Such contracts may 
be reimbursable as a direct promotional expense. If a U.S.-based 
organization provides administrative services to the ATP Participant's 
domestic home office during a program period, any direct promotional 
services such organization provides to the Participant, whether for the 
Participant's domestic or overseas offices, during the same program 
period are not reimbursable.
    (c) Subject to paragraphs (a) and (d) of this section as well as 
applicable cost principles (e.g., 2 CFR part 200), but for generic 
promotion activities only, the CCC will also reimburse, in whole or in 
part, the cost of:
    (1) Temporary contractor fees for contractors stationed overseas, 
except the CCC will not reimburse any portion of any such fee that 
exceeds the daily gross salary of a GS-15, Step 10 for U.S. Government 
employees in effect on the date the fee is earned, unless a bidding 
process reveals that such a contractor is not available at or below that 
salary rate;
    (2) Subject to paragraph (b)(18) of this section, international 
travel expenditures, not to exceed the full fare economy rate, including 
any fees for modifying the originally purchased airline ticket, per 
diem, passports, visas and inoculations, for activities held outside the 
United States or in the United States, as allowed under the U.S. Federal 
Travel Regulations (41 CFR parts 301 through 304) and 2 CFR part 200, 
except that if the activity is participation in a retail, trade, or 
consumer exhibit or show held inside the United States, international 
travel expenditures are covered only if the exhibit or show is: A food 
or agricultural show with no less than 30 percent of exhibitors selling 
food or agricultural products; and an international show that targets 
buyers, distributors and the like from more than one foreign country and 
no less than 15 percent of its visitors are from countries other than 
the United States. The CCC will compile a list of approved retail, trade 
and consumer exhibits and shows held inside the United States for which 
ATP reimbursement is available and such list will be announced to ATP 
Participants via an ATP notice issued on FAS' website.
    (i) The CCC generally will not reimburse any portion of air travel, 
including any fees for modifying the originally purchased ticket, in 
excess of the full fare economy rate or when the ATP Participant fails 
to notify the Attach[eacute]/Counselor in the destination country in 
advance of the travel, unless the CCC determines it was impractical to 
provide such notice. If a traveler flies in business class or a 
different

[[Page 1055]]

premium class, the basis for reimbursement will be the full fare economy 
class rate for the same flight and the ATP Participant shall provide 
documentation establishing such full fare economy class rate to support 
its reimbursement claim. If economy class is not offered for the same 
flight or if the traveler flies on a charter flight, the basis for 
reimbursement will be the average of the full fare economy class rate 
for flights offered by three different airlines between the same points 
on the same date and the ATP Participant shall provide documentation 
establishing such average of the full fare economy class rates to 
support its reimbursement claim.
    (ii) In limited circumstances, the ATP Participant may be reimbursed 
for air travel up to the business class rate (i.e., a premium class rate 
other than the first class rate) upon prior written approval by the CCC. 
Such circumstances are:
    (A) Regularly scheduled flights between origin and destination 
points do not offer economy class (or equivalent) airfare and the ATP 
Participant receives written documentation from its travel agent to that 
effect at the time the tickets are purchased;
    (B) Business class air travel is necessary to accommodate an 
eligible traveler's disability. Such disability must be substantiated in 
writing by a physician; and
    (C) If an eligible traveler is an employee, contractor, or member of 
an ATP participant organization, and the eligible traveler's origin and/
or destination are outside of the continental United States and the 
scheduled flight time, beginning with the scheduled departure time, 
ending with the scheduled arrival time, and including stopovers and 
changes of planes, exceeds 14 hours. In such case, per diem and other 
allowable expenses will also be reimbursable for the day of arrival. 
However, no expenses will be reimbursable for a rest period or for any 
non-work days (e.g., weekends, holidays, personal leave, etc.) 
immediately following the date of arrival.
    (D) If an eligible traveler is the target of a market development 
activity (e.g., a foreign buyer, foreign importer, member of the foreign 
media) the ATP Participant may be reimbursed for air travel up to the 
business class rate when the eligible traveler's origin and/or 
destination are outside of the continental United States and the 
scheduled flight time, beginning with the scheduled departure time, 
ending with the scheduled arrival time, and including stopovers and 
changes of planes, exceeds five hours. In such case, per diem and other 
allowable expenses will also be reimbursable for the day of arrival. 
However, no expenses will be reimbursable for a rest period or for any 
non-work days (e.g., weekends, holidays, personal leave, etc.) 
immediately following the date of arrival.
    (iii) Alternatively, in lieu of reimbursing up to the business class 
rate in such circumstances noted in paragraphs (c)(2)(ii)(C) and (d) of 
this section, the CCC will reimburse economy class airfare plus per diem 
and other allowable travel expenses related to a rest period of up to 24 
hours, either en route or upon arrival at the destination. For a trip 
with multiple destinations, each origin/destination combination will be 
considered separately when applying the 14-hour rule for eligibility of 
reimbursement of business class travel or rest period expenses.
    (iv) A stopover for purposes of this paragraph (c)(2) is the time a 
traveler spends at an airport, other than the originating or destination 
airport, which is a normally scheduled part of a flight. A change of 
planes is the time a traveler spends at an airport, other than the 
originating or destination airport, to disembark from one flight and 
embark on another.
    (v) All travel under this paragraph (c)(2) should follow a direct or 
usually traveled route. Under no circumstances should a traveler select 
flights in a manner that extends the scheduled flight time to beyond 14 
hours in part to secure eligibility for reimbursement of business class 
travel. An eligible traveler that is the target of a market development 
activity is only eligible for a rest period when that traveler flies in 
economy class and meets the 14-hour test;
    (3) Automobile mileage at the local U.S. Embassy rate or rental cars 
while in travel status;

[[Page 1056]]

    (4) Other allowable expenditures while in travel status as 
authorized by the U.S. Federal Travel Regulations (41 CFR parts 301 
through 304) and 2 CFR part 200;
    (5) Accident liability insurance premiums for facilities used 
jointly with third-party participants for ATP activities or for ATP-
funded travel of third-party participants;
    (6) Market research, including research to determine the types of 
products that are desired in a market;
    (7) Legal fees incurred in resolving trade issues with foreign 
countries;
    (8) The sample purchase price, and the cost of transporting samples 
domestically in the United States to the port of export and then to the 
first foreign port or first point of entry, for samples of U.S. 
agricultural commodities used to provide on-site technical assistance to 
the trade necessary to facilitate successful use of the relevant U.S. 
agricultural commodity by importers. The target of such activity must be 
the trade, and not consumers, but any product resulting from the 
technical training can be used to determine consumer preferences;
    (9) STRE incurred outside of the United States and STRE incurred 
within the United States in conjunction with an approved activity where 
the STRE has a programmatic purpose and are authorized with prior 
written approval from the CCC. ATP Participants are required to use the 
appropriate American Embassy representational funding guidelines for 
breakfasts, lunches, dinners and receptions incurred outside of the 
United States as the basis for their calculating eligible expenses. ATP 
Participants may exceed Embassy guidelines by 25 percent without prior 
approval. ATP Participants may only exceed 125 percent of Embassy 
guidelines when they have received written authorization from the FAS 
Agricultural Counselor at the Embassy. The amount of unauthorized STRE 
expenses that exceed 125 percent of the guidelines will not be 
reimbursed. ATP Participants must pay the difference between the total 
cost of STRE events and the appropriate amount as determined by the 
guidelines and these regulations. For STRE incurred in the United 
States, the ATP Participant should provide, in its request for approval, 
the basis for determining its proposed expenses;
    (10) U.S. office(s) administrative support expenses, incurred 
specifically to administer the ATP, for the National Association of 
State Departments of Agriculture, the SRTGs, and the Intertribal 
Agriculture Council. The level of such funding will be established in 
the approval letter.
    (11) U.S. office(s) administrative support expenses, incurred 
specifically to administer the ATP, for any ATP Participants not 
identified in this paragraph (c)(11), will be considered, except for 
agricultural cooperatives. Reimbursement for such expenses shall not 
exceed six percent of the ATP Participant's total ATP budget. The level 
of such funding will be established in the approval letter.
    (13) Non-travel expenditures associated with conducting 
international staff conferences held either in or outside the United 
States;
    (14) Subject to paragraph (b)(18) of this section, domestic travel 
expenditures, as allowed under the U.S. Federal Travel Regulations (41 
CFR parts 301 through 304) and 2 CFR part 200, for international retail, 
trade and consumer exhibits and shows conducted in the United States 
upon prior written approval by CCC. Domestic travel expenses to such a 
show or exhibit are covered only if the exhibit or show is: A food or 
agricultural show with no less than 30 percent of exhibitors selling 
food or agricultural products; and an international show that targets 
buyers, distributors and the like from more than one foreign country and 
no less than 15 percent of its visitors are from countries other than 
the host country. CCC will compile a list of approved retail, trade and 
consumer exhibits and shows held inside the United States for which ATP 
reimbursement is available and such list will be announced to ATP 
Participants via an ATP notice issued on FAS' website;
    (15) Domestic travel expenditures, as allowed under the U.S. Federal 
Travel Regulations (41 CFR parts 301 through 304) and 2 CFR part 200, 
for seminars and educational training conducted in the United States;

[[Page 1057]]

    (16) Domestic travel expenditures, as allowed under the U.S. Federal 
Travel Regulations (41 CFR parts 301 through 304) and 2 CFR part 200, 
for up to two individuals, whether home office ATP Participant 
employees, ATP Participant board members, or state department of 
agriculture employees paid by the ATP Participant, or a combination 
thereof, when such individuals accompany foreign trade missions or 
technical teams while traveling in the United States where the following 
conditions are met:
    (i) Such trade missions or technical team visits are identified in 
the ATP Participant's UES;
    (ii) Such trade missions or technical team visits have been approved 
by CCC; and
    (iii) The ATP-sponsored travelers submit a follow-up trip report to 
CCC that includes the following:
    (A) Purpose for the individuals' participation;
    (B) Any pre-arranged business meetings;
    (C) Itinerary and/or agenda for the trip; and
    (D) Feedback from sponsors and trade mission/technical team members 
on the success of the trip.
    (17) Approved demonstration projects;
    (18) Expenditures related to copyright, trademark, or patent 
registration, including attorney fees;
    (19) Rental or lease expenditures for storage space for program-
related materials;
    (20) Business cards that target a foreign audience;
    (21)(i) Expenditures associated with developing, updating, and 
servicing websites on the internet that:
    (A) Contain a message related to exporting or international trade;
    (B) Include a discernible ``link'' to the FAS website or an FAS 
overseas office website; and
    (C) Have been specifically approved by the appropriate FAS division. 
Expenditures related to websites or portions of websites that are 
accessible only to an organization's members are not reimbursable.
    (ii) Reimbursement claims for websites that include ``members only'' 
sections must be prorated to exclude the costs associated with those 
areas subject to restricted access; and
    (22) Expenditures not otherwise prohibited from reimbursement that 
are associated with activities held in the United States or abroad 
designed to improve market access by specifically addressing temporary, 
permanent, or impending non-tariff barriers to trade that prohibit or 
threaten U.S. exports of agricultural commodities. Examples of such 
expenditures include, but are not limited to: Initial pre-clearance 
programs, educational training, policy advocacy, public relations 
efforts, foreign country audits of U.S. facilities, export protocol and 
work plan support, seminars and workshops, study tours, field surveys, 
development of pest lists, pest and disease research, database 
development, and reasonable logistical and administrative support.
    (d) CCC will not reimburse any cost of:
    (1) Forward year financial obligations, such as severance pay, 
attributable to employment of foreign nationals;
    (2) Expenses, fines, settlements, or judgments relating to legal 
suits, challenges or disputes, except as otherwise allowed in 2 CFR part 
200 and these regulations;
    (3) The design and production of packaging, labeling or origin 
identification, except as specifically allowed in this subpart;
    (4) Product development, product modification or product research, 
except as specified in paragraph (c)(22) of this section;
    (5) Product samples to be distributed to consumers;
    (6) Slotting fees or similar sales expenditures;
    (7) The purchase of, construction of, or lease of space for 
permanent, non-mobile displays, i.e., displays that are constructed to 
remain permanently in the same location beyond one program period. 
However, the CCC may, at its discretion, reimburse the construction or 
purchase of permanent displays on a case-by-case basis, if the 
Participant sought and received prior written approval from the CCC of 
such construction or purchase;

[[Page 1058]]

    (8) Rental, lease or purchase of warehouse space, except for storage 
space for program-related material;
    (9) Coupon redemption or price discounts of the ATP promoted 
commodity;
    (10) Refundable deposits or advances;
    (11) Giveaways, awards, prizes, gifts and other similar promotional 
materials in excess of the limitation that the CCC will determine. Such 
determination will be announced in writing via an ATP notice issued on 
FAS' website;
    (12) Alcoholic beverages that are not an integral part of an 
approved promotional activity;
    (13) The purchase, lease (except for use in authorized travel 
status) or repair of motor vehicles;
    (14) Travel of applicants for employment interviews;
    (15) Unused non-refundable airline tickets or associated penalty 
fees, except where travel was restricted by U.S. Government action or 
advisory;
    (16) Independent evaluations or audits, including evaluations or 
audits of the activities of a subcontractor, if the CCC determines that 
such a review is needed in order to confirm past or to ensure future 
program agreement or regulatory compliance;
    (17) Any arrangement that has the effect of reducing the selling 
price of a U.S. agricultural commodity;
    (18) Goods, services and salaries of personnel provided by U.S. 
industry or foreign third party;
    (19) Membership fees in clubs and social organizations;
    (20) Indemnity and fidelity bonds, except as otherwise allowed in 2 
CFR part 200;
    (21) Fees for participating in U.S. Government sponsored activities, 
other than trade fairs and exhibits;
    (22) Business cards that target a U.S. domestic audience;
    (23) Seasonal greeting cards;
    (24) Office parking fees;
    (25) Subscriptions to publications that are not of a technical, 
economic, or marketing nature or that are not relevant to the approved 
activities of the ATP Participant;
    (26) U.S. office(s) administrative expenses, including communication 
costs, except as noted in paragraphs (c)(11) and (12) of this section 
and except that usage costs for communications devices incurred while on 
reimbursable international or domestic travel for approved ATP brand or 
generic promotion activities are reimbursable as eligible travel 
expenditures as allowed under the U.S. Federal Travel Regulations (41 
CFR parts 301 through 304) and 2 CFR part 200;
    (27) Any expenditure on an activity that includes any derogatory 
reference or comparison to other U.S. agricultural commodities;
    (28) Payment of U.S. and foreign employees' or contractors' share of 
personal taxes;
    (29) Any expenditure made for an activity prior to the CCC's 
approval of that activity;
    (30) Contributions to a contingency reserve or any similar provision 
made for events the occurrence of which cannot be foretold with 
certainty as to time, intensity, or with an assurance of their 
happening; and
    (31) Expenditures associated with an ATP Participant's creation or 
review of their fraud prevention program, contracting procedures, or 
brand program operational procedures.
    (e) For a brand promotion activity, the CCC will reimburse no more 
than 50 percent of the total eligible expenditures made on that activity 
by a brand participant.
    (f) The CCC will reimburse for expenditures made after the 
conclusion of an ATP Participant's program period provided:
    (1) The activity was approved by the CCC prior to the end of the 
program period;
    (2) The activity was completed within 30 calendar days following the 
end of the program period; and
    (3) All expenditures were made for the activity within 6 months 
following the end of the program period.
    (g) An ATP Participant shall not use ATP funds for any activity or 
any expenses incurred by the ATP Participant prior to the date of the 
program agreement or after the date the program agreement is suspended 
or terminated, except as otherwise permitted by the CCC.
    (h) Except as otherwise provided in this subpart, ATP-funded travel 
shall

[[Page 1059]]

conform to U.S. Federal Travel Regulations (41 CFR parts 301 through 
304) and 2 CFR part 200 and ATP-funded air travel shall conform to the 
requirements of the Fly America Act (49 U.S.C. 40118). For international 
travel, the ATP Participant shall notify the Attach[eacute]/Counselor in 
the destination countries in writing in advance of any proposed travel.
    (i) The CCC may determine, at the CCC's discretion, whether any cost 
not expressly listed in this section will be reimbursed.



Sec.1489.18  Reimbursement procedures.

    (a) Participants are required to use the CCC's UES system to request 
reimbursement for eligible ATP expenses. Claims for reimbursement shall 
contain the following information:
    (1) Activity type--brand or generic;
    (2) Activity number;
    (3) Commodity aggregate code;
    (4) Country code;
    (5) Cost category;
    (6) Amount to be reimbursed;
    (7) If applicable, any reduction in the amount of reimbursement 
claimed to offset CCC demand for refund of amounts previously reimbursed 
and reference to the relevant compliance report or written notice; and
    (8) If applicable, any amount previously claimed that has not been 
reimbursed.
    (b) All claims for reimbursement shall be submitted by the ATP 
Participant's U.S. office to the CCC.
    (c) CCC will not reimburse a claim for less than $10,000, except 
that the CCC will reimburse a final claim for an ATP Participant's 
program period for a lesser amount.
    (d) The CCC will not reimburse claims submitted later than 6 months 
after the end of an ATP Participant's program period.
    (e) If the CCC overpays a reimbursement claim, the ATP Participant 
shall repay the CCC within 30 days of such overpayment the amount of the 
overpayment either by submitting a check payable to the CCC or by 
offsetting its next reimbursement claim. The ATP Participant shall make 
such payment in U.S. dollars, unless otherwise approved in advance by 
the CCC.
    (f) If an ATP Participant receives a reimbursement or offsets an 
advanced payment which is later disallowed, the ATP Participant shall 
repay the CCC within 30 days of such disallowance the amount disallowed 
either by submitting a check payable to the CCC or by offsetting its 
next reimbursement claim. The ATP Participant shall make such payment in 
U.S. dollars, unless otherwise approved in advance by the CCC.
    (g) ATP funds may be expended by ATP Participants only on 
legitimate, approved activities as set forth in the program agreement 
and approval letter. If an ATP Participant discovers that ATP funds have 
not been properly spent, it shall notify the CCC and shall within 30 
days of its discovery repay the CCC the amount owed either by submitting 
a check payable to the CCC or by offsetting its next reimbursement 
claim. The ATP Participant shall make such payment in U.S. dollars, 
unless otherwise approved in advance by the CCC.
    (h) The ATP Participant shall report any actions that may have a 
bearing on the propriety of any claims for reimbursement in writing to 
CCC.



Sec.1489.19  Advances.

    (a) Policy. In general, the CCC operates the ATP on a reimbursable 
basis.
    (b) Exception. An ATP Participant for generic promotion activities 
may request an advance of ATP funds from the CCC, provided the ATP 
Participant meets the criteria for advance payments in 2 CFR part 200. 
The CCC will not approve any request for an advance submitted later than 
3 months after the end of an ATP Participant's program period. At any 
given time, total payments advanced shall not exceed 40 percent of an 
ATP Participant's approved generic activity budget for the program 
period. The CCC will not advance funds to an ATP Participant for brand 
promotion activities. When approving a request for an advance, the CCC 
may require the ATP Participant to carry adequate fidelity bond coverage 
when the absence of such coverage is considered to create an 
unacceptable risk to the interests of the ATP. Whether an ``unacceptable 
risk''

[[Page 1060]]

exists in a particular situation will depend on a number of factors, 
such as, for example, the Participant's history of performance in ATP; 
the Participant's perceived financial stability and resources; and any 
other factors presented in the particular situation that may reflect on 
the Participant's responsibility or the riskiness of its activities.
    (c) Interest. An ATP Participant shall deposit and maintain in an 
insured bank account in the United States all funds advanced by the CCC. 
The account shall be interest-bearing, unless the exceptions in 2 CFR 
part 200 apply. Interest earned by the ATP Participant on funds advanced 
by the CCC is not program income. The ATP Participant shall remit any 
interest earned on the advanced funds to the appropriate entity as set 
forth in the applicable parts of this title.
    (d) Refunds due the CCC. An ATP Participant shall fully expend all 
advances on approved generic promotion activities within 90 calendar 
days after the date of disbursement by the CCC. By the end of the 90 
calendar days, the ATP Participant must submit reimbursement claims to 
offset the advance and submit a check made payable to CCC for any 
unexpended balance. The ATP Participant shall make such payment in U.S. 
dollars, unless otherwise approved in advance by the CCC.



Sec.1489.20  Financial management.

    (a) An ATP Participant shall implement and maintain a financial 
management system that conforms to generally accepted accounting 
principles. An ATP Participant's financial management system shall 
comply with the standards in 2 CFR part 200.
    (b) An ATP Participant shall institute internal controls and provide 
written guidance to commercial entities participating in its activities 
to ensure their compliance with these regulations.
    (c) An ATP Participant shall retain all records concerning an ATP 
program transaction for a period of three years after completion of the 
program transaction and permit the CCC to have full and complete access, 
for such three year period, to such records. These records shall include 
all records pertaining to contractors.
    (d) An ATP Participant shall maintain its records of expenditures 
and contributions in a manner that allows it to provide information by 
activity plan, country, activity number, and cost category. Such records 
shall include:
    (1) Receipts for all STRE (actual vendor invoices or restaurant 
checks, rather than credit card receipts);
    (2) Original receipts for any other program-related expenditure in 
excess of a set amount CCC will determine and announce in writing to all 
ATP Participants via an ATP notice issued on the FAS website. The CCC 
may, from time to time, set a different minimum amount. In that case, 
the CCC will announce the new amount in writing to all ATP Participants 
via an ATP notice issued on the FAS website;
    (3) The exchange rate used to calculate the dollar equivalent of 
expenditures made in a foreign currency and the basis for such 
calculation;
    (4) Copies of reimbursement claims;
    (5) An itemized list of claims charged to each of the ATP 
Participant's CCC resources accounts;
    (6) Documentation with accompanying English translation supporting 
each reimbursement claim, including original evidence to support the 
financial transactions such as canceled checks, receipted paid bills, 
contracts or purchase orders, per diem calculations, travel vouchers, 
and credit memos; and
    (7) Documentation supporting contributions. These must include the 
dates, purpose, and location of the activity for which the cash or in-
kind items were claimed as a contribution; who conducted the activity; 
the participating groups or individuals; and, the method of computing 
the claimed contributions. ATP Participants must retain and make 
available for compliance review documentation related to claimed 
contributions.
    (e) Upon request, an ATP Participant shall provide to the CCC 
originals of documents supporting reimbursement claims.

[[Page 1061]]



Sec.1489.21  Reports.

    (a) End-of-Year Contribution Report. Not later than 6 months after 
the end of its program period, an ATP Participant shall submit two 
copies of a report that identifies, by cost category and in U.S. dollar 
equivalent, contributions made by the Participant, the U.S. industry, 
and the States during that program period. A suggested format of a 
contribution report is available from FAS. Foreign third party 
contributions are not included in the end-of-year contribution report.
    (b) Trip reports. Not later than 45 days after completion of travel 
(other than local travel), an ATP Participant shall electronically 
submit a trip report. The report must include the name(s) of the 
traveler(s), purpose of travel, itinerary, names and affiliations of 
contacts, and a brief summary of findings, conclusions, recommendations, 
and specific accomplishments.
    (c) Research reports. Not later than 6 months after the end of its 
program period, an ATP Participant shall submit a report on any research 
conducted pursuant to the approved ATP program.
    (d) Evaluation reports. Not later than 6 months after the end of its 
program period, an ATP Participant shall submit a report on any 
evaluations conducted in accordance with the approved ATP program, 
including the outcome of action taken with ATP funding and the increased 
market access or exports that can be directly attributed to the ATP 
program.
    (e) Annual audits. Where the CCC is designated the cognizant agency 
for audit, the CCC may require the ATP Participant to submit to the CCC 
an annual audit in accordance with 2 CFR part 200. If the CCC requires 
an additional audit with respect to a particular agreement, the ATP 
Participant shall arrange for such audit and shall submit to the CCC, in 
the manner to be specified by the CCC, such audit of the agreement.
    (f) Additional reports. The CCC may require the submission of 
additional reports.
    (g) Approved letters. An ATP Participant's program agreement and/or 
approval letter shall specify to whom the Participant shall submit the 
reports required in this section.
    (h) Program reviews. FAS through its authorized representatives, may 
review project accomplishments, management control systems, and 
administration of funding provided through the program to ensure 
adherence to requirements. During such reviews, FAS will review 
recipients' files related to the grant-funded program and technical 
assistance may be required.



Sec.1489.22  Evaluation.

    (a)(1) The Government Performance and Results Act (GPRA) of 1993 (5 
U.S.C. 306; 31 U.S.C. 1105, 1115-1119, 3515, 9703-9704) requires 
performance measurement of Federal programs, including the ATP. 
Evaluation of the ATP's effectiveness will depend on a clear statement 
by Participants of goals to be met within a specified time, schedule of 
measurable milestones for gauging success, plan for achievement, and 
assessment of results of activities at regular intervals. The overall 
goal of the ATP and of individual Participants' programming is to 
increase sales that would not have occurred in the absence of ATP 
funding. An ATP Participant that can demonstrate such sales, taking into 
account extenuating factors beyond the Participant's control, will have 
met the overall objective of the GPRA and the need for evaluation.
    (2) Evaluation is an integral element of program planning and 
implementation, providing the basis for the strategic plan. The 
evaluation results guide the development and scope of an ATP 
Participant's program, contributing to program accountability, and 
providing evidence of program effectiveness that directly ties program 
funds to increased sales.
    (b) All ATP Participants must report annual results against their 
target market and/or regional constraint/opportunity performance 
measures. These are outcome results usually based on multiple activities 
and should demonstrate progress made in the market. This report shall be 
completed and submitted to the CCC no later than 6 months following the 
end of the Participant's program period.
    (c) ATP Participants conducting a branded program must also complete 
a

[[Page 1062]]

brand promotion evaluation. A brand promotion evaluation is a review of 
the U.S. and foreign commercial entities' export sales to determine 
whether the activity achieved the goals specified in the approved ATP 
program. This evaluation shall be completed and submitted to CCC no 
later than 6 months following the end of the Participant's program 
period.
    (d) When appropriate or required by the CCC, an ATP Participant 
shall complete a program evaluation. A program evaluation is a review of 
the ATP Participant's entire program, or an appropriate portion of the 
program as agreed to by the ATP Participant and CCC, to determine the 
effectiveness of the ATP Participant's strategy in meeting specified 
goals. Actual scope and timing of the program evaluation shall be 
determined by the ATP Participant and CCC and specified in the approval 
letter. An ATP Participant shall submit, via a cover letter to CCC, an 
executive summary that assesses the program evaluation's findings and 
recommendations and proposed changes in program strategy or design as a 
result of the evaluation. In addition to the requirements set forth in 
the applicable parts of this title (for example, 2 CFR part 200), a 
program evaluation shall contain:
    (1) The name of the party conducting the evaluation;
    (2) The scope of the evaluation;
    (3) A concise statement of the market constraint(s)/opportunity(ies) 
and the goals specified in the approved strategic plan;
    (4) A description of the evaluation methodology;
    (5) A description of export sales achieved;
    (6) A summary of the findings, including an analysis of the 
strengths and weaknesses of the program(s); and
    (7) Recommendations for future programs.
    (e) On an annual basis, or more often when appropriate or required 
by the CCC, an ATP Participant shall complete and submit program success 
stories. The CCC will announce to all ATP Participants in writing via an 
ATP notice issued on the FAS website the detailed requirements for 
completing and submitting program success stories.



Sec.1489.23  Compliance reviews and notices.

    (a) USDA staff may conduct compliance reviews of ATP Participants' 
activities under the ATP program. ATP Participants shall cooperate fully 
with relevant USDA staff conducting compliance reviews and shall comply 
with all requests from USDA staff to facilitate the conduct of such 
reviews.
    (b) Upon conclusion of the compliance review, USDA staff will 
provide either a written compliance report or a letter to the ATP 
Participant. USDA staff will issue a compliance report if it appears 
that CCC may be entitled to recover funds from that Participant and/or 
it appears that the Participant is not complying with any of the terms 
or conditions of the program agreement, approval letter, or the 
applicable laws and regulations. The compliance report will explain the 
basis for any recovery of funds from the Participant. Within 30 days of 
the date of the compliance report, the ATP Participant shall repay the 
CCC the amount owed either by submitting a check payable to the CCC or 
by offsetting its next reimbursement claim. The ATP Participant shall 
make such payment in U.S. dollars, unless otherwise approved in advance 
by the CCC. If, however, an ATP Participant notifies the CCC within 30 
days of the date of the compliance report that the Participant intends 
to file an appeal pursuant to paragraph (e) of this section, the amount 
owed to the CCC by the ATP Participant is not due until the appeal 
procedures are concluded and the CCC has made a final determination as 
to the amount owed. In the absence of any finding of funds due to the 
CCC or other non-compliance, the CCC will issue a letter to the ATP 
Participant. If, as a result of a compliance review, the CCC determines 
that further review is needed in order to ensure compliance with the 
requirements of ATP, the CCC may require the Participant to contract for 
an independent audit.
    (c) In addition, the CCC may notify an ATP Participant in writing at 
any time if CCC determines that CCC may be entitled to recover funds 
from the Participant. The CCC will explain the basis for any recovery of 
funds from the Participant in the written notice.

[[Page 1063]]

The ATP Participant shall, within 30 days of the date of the notice, 
repay the CCC the amount owed either by submitting a check payable to 
the CCC or by offsetting its next reimbursement claim. The ATP 
Participant shall make such payment in U.S. dollars, unless otherwise 
approved in advance by the CCC. If, however, an ATP Participant notifies 
the CCC within 30 days of the date of the written notice that the 
Participant intends to file an appeal pursuant to paragraph (e) of this 
section, the amount owed to the CCC by the ATP Participant is not due 
until the appeal procedures are concluded and the CCC has made a final 
determination as to the amount owed.
    (d) The fact that a compliance review has been conducted by USDA 
staff does not signify that an ATP Participant is in compliance with its 
program agreement, approval letter and/or applicable laws and 
regulations.
    (e) Appeals:
    (1) An ATP Participant may, within 60 days of the date of the 
compliance report or written notice from the CCC, submit a written 
response to the CCC appealing the report or notice. CCC, at its 
discretion, may extend the period for response.
    (2) After review of the Participant's response, the CCC shall 
determine whether the Participant owes any funds to the CCC and will 
inform the Participant in writing of the basis for the determination. 
The CCC will initiate action to collect such amount by providing the 
Participant a written demand for payment of the debt pursuant to Debt 
Settlement Policies and Procedures, 7 CFR part 1403.
    (3) Within 30 days of the date of the determination, the Participant 
may request in writing that the CCC reconsider the determination and 
shall submit in writing the basis for such reconsideration. The 
Participant may also request a hearing.
    (4) If the Participant requests a hearing, the CCC will set a date 
and time for the hearing. The hearing will be an informal proceeding. A 
transcript will not ordinarily be prepared unless the Participant bears 
the cost of a transcript; however, the CCC may in its discretion have a 
transcript prepared at the CCC's expense.
    (5) The CCC will base its final determination upon information 
contained in the administrative record. The Participant must exhaust all 
administrative remedies contained in this section before pursuing 
judicial review of a determination by the CCC.



Sec.1489.24  Failure to make required contribution.

    An ATP Participant's required contribution will be specified in the 
approval letter. If the ATP Participant's required contribution is 
specified as a dollar amount and the ATP Participant does not make the 
required contribution, the ATP Participant shall pay to the CCC in 
dollars the difference between the amount actually contributed and the 
amount specified in the approval letter. If the ATP Participant's 
required contribution is specified as a percentage of the total amount 
reimbursed by the CCC, the ATP Participant may either return to the CCC 
the amount of funds reimbursed by the CCC to increase its actual 
contribution percentage to the required level or pay to the CCC in 
dollars the difference between the amount actually contributed and the 
amount of funds necessary to increase its actual contribution percentage 
to the required level. An ATP Participant shall remit such payment 
within six months after the end of its program period. The ATP 
Participant shall make such payment in U.S. dollars, unless otherwise 
approved in advance by the CCC.



Sec.1489.25  Submissions.

    For all permissible methods of delivery, submissions required by 
this subpart shall be deemed submitted as of the date received by the 
CCC.



Sec.1489.26  Disclosure of program information.

    (a) Documents submitted to CCC by ATP Participants are subject to 
the provisions of the Freedom of Information Act (FOIA), 5 U.S.C. 552, 7 
CFR part 1, subpart A--Official Records, and specifically 7 CFR 1.12, 
Handling Information from a Private Business.
    (b) Any research conducted by an ATP Participant pursuant to an ATP 
program agreement and/or approval letter shall be subject to the 
provisions

[[Page 1064]]

relating to intangible property in 2 CFR part 200.



Sec.1489.27  Ethical conduct.

    (a) An ATP Participant shall conduct its business in accordance with 
the laws and regulations of the country in which an activity is carried 
out and in accordance with applicable U.S. Federal, State and local 
laws, and regulations. An ATP Participant shall conduct its business in 
the United States in accordance with applicable Federal, State and local 
laws and regulations. All ATP Participants must comply with the 
regulations in 2 CFR part 200 and this part.
    (b) Except for a U.S. agricultural cooperative or a U.S. for-profit 
entity, neither an ATP Participant nor its affiliates shall make export 
sales of U.S. agricultural commodities and products covered under the 
terms of the applicable ATP agreement. Nor shall such entities charge a 
fee for facilitating an export sale. An ATP Participant may, however, 
collect check-off funds and membership fees that are required for 
membership in the ATP Participant. For the purposes of this paragraph, 
``affiliate'' means any partnership, association, company, corporation, 
trust, or any other such party in which the Participant has an 
investment other than in a mutual fund.
    (c) An ATP Participant shall not limit participation in its ATP 
activities to members of its organization. Participants shall ensure 
that their ATP-funded programs and activities are open to all otherwise 
qualified individuals and entities on an equal basis and without regard 
to any non-merit factors. The ATP Participant shall publicize its 
program and make participation possible for commercial entities 
throughout the relevant commodity sector or, in the case of SRTGs, 
throughout the corresponding region. This includes providing to such 
commercial entities, upon request, a copy of any document in its 
possession or control containing market information developed and 
produced under the terms of its ATP agreement. The Participant may 
charge a fee not to exceed the costs for assembling, duplicating and 
distributing the materials. This paragraph does not apply to any U.S. 
agricultural cooperative when implementing its own brand program.
    (d) An ATP Participant shall select U.S. agricultural industry 
representatives to participate in generic ATP activities such as trade 
teams, sales teams, and trade fairs based on criteria that ensure 
participation on an equitable basis by a broad cross section of the U.S. 
industry. If requested by the CCC, an ATP Participant shall submit such 
selection criteria to the CCC for approval.
    (e) All ATP Participants should endeavor to ensure fair and accurate 
fact-based advertising. Deceptive or misleading promotions may result in 
cancellation or termination of a Participant's ATP agreement and the 
recovery of CCC funds related to such promotions from the Participant.
    (f) The ATP Participant must report any actions or circumstances 
that may have a bearing on the propriety of its ATP program to the 
appropriate Attach[eacute]/Counselor, and its U.S. office shall report 
such actions or circumstances in writing to the CCC.



Sec.1489.28  Contracting procedures.

    (a) Neither the CCC nor any other agency of the U. S. Government nor 
any official or employee of the CCC, FAS, USDA, or the U.S. Government 
has any obligation or responsibility with respect to ATP Participant 
contracts with third parties.
    (b) An ATP Participant shall comply with the procurement standards 
set forth below and in the applicable parts of this title when procuring 
goods and services and when engaging in construction to implement 
program agreements (for example, 2 CFR part 200).
    (c) Each ATP Participant shall establish contracting procedures, for 
contracts that are funded, in whole or in part, with ATP funds, that are 
open, fair, and competitive.
    (d) Each ATP Participant shall submit to the CCC, for CCC approval, 
written contracting guidelines for contracts that are funded, in whole 
or in part, with ATP funds. The CCC will notify all new and existing ATP 
Participants in writing in each Participant's approval letter and 
through the FAS website as to applicable submission dates for and dates 
for approvals of

[[Page 1065]]

contracting guidelines. The CCC's approval of such contracting 
guidelines will remain in place until the CCC retracts its approval in 
writing, or until new guidelines are approved that supersede them. Once 
approved by the CCC, these contracting guidelines shall govern all of a 
Participant's ATP-funded contracting involving contracts with a minimum 
annual value that CCC will determine and announce in writing to all ATP 
Participants via an ATP notice issued on the FAS website. The CCC may, 
from time to time, set a different minimum value. In that case, the CCC 
will announce the new amount in writing to all ATP Participants via an 
ATP notice issued on the FAS website. The guidelines shall indicate the 
method for evaluating proposals received for all contract competitions, 
the method for monitoring and evaluating performance under contracts, 
and the method for initiating corrective action for unsatisfactory 
performance under contracts. The ATP Participant may modify and resubmit 
these guidelines for re-approval at any time. In addition to the 
requirements in 2 CFR part 200, these guidelines shall include, at a 
minimum, the following:
    (1) Procedures for developing and publicizing requests for 
proposals, invitations for bids, and similar documents that solicit 
third party offers to provide goods or services. Solicitations for 
professional and technical services shall be based on clear and accurate 
descriptions of and requirements related to the services to be procured. 
Such procedures must include a conflict-of-interest provision that 
states that no employee, officer, board member, or agent thereof of the 
ATP Participant will participate in the review, selection, award or 
administration of a contract if a real or apparent conflict of interest 
would arise. Such a conflict would arise when an employee, official, 
board member, agent, or the employee's, officer's, board member's, 
agent's family, partners, or an organization that employs or is about to 
employ any of the parties indicated herein, has a financial or other 
interest in the firm selected for an award. Procedures shall provide 
that officers, employees, board members, and agents thereof shall 
neither solicit nor accept gratuities, favors, or anything of monetary 
value from contractors or subcontractors. Procedures shall also provide 
for disciplinary actions to be applied for violations of such standards 
by officers, employees, board members or agents thereof;
    (2) Procedures for reviewing proposals, bids, or other offers to 
provide goods and services. Separate procedures shall be developed for 
various situations, including, but not limited to: Solicitations for 
highly technical services; solicitations for services that are not 
common in a specific market; solicitations that yield receipt of three 
or more bids; solicitations that yield receipt of fewer than three bids;
    (3) Requirements to conduct all contracting in an openly competitive 
manner. Individuals who develop or draft specifications, requirements, 
statements of work, invitations for bids, and/or requests for proposals 
for procurement of any goods or services, and such individuals' families 
or partners, or an organization that employs or is about to employ any 
of the aforementioned, shall be excluded from competition for such 
procurement. ATP Participants' written contracting guidelines may detail 
special situations where the prohibitions in this subparagraph do not 
apply, such as in situations involving highly specialized technical 
services or situations where the services are not commonly offered in a 
specific market;
    (4) Requirements to perform and document in the procurement files 
some form of price or cost analysis, such as a comparison of price 
quotations to market prices or other price indicia, to determine the 
reasonableness of the offered prices in connection with every 
procurement action that is governed by the contracting guidelines;
    (5) Requirements to conduct an appropriate form of competition every 
three years on all multi-year contracts that are governed by the 
contracting guidelines. However, contracts for in-country representation 
are not required to be re-competed after the initial reward. Instead, 
the performance of in-country representation must be evaluated and 
documented by the ATP Participant annually to ensure that

[[Page 1066]]

the terms of the contract are being met in a satisfactory manner; and
    (6) Requirements for written contracts with each provider of goods, 
services, or construction work. Such contracts shall require such 
providers to maintain adequate records to account for funds provided to 
them by the ATP Participant.
    (e) An ATP Participant may undertake ATP promotional activities 
directly or through a domestic or foreign third party. However, the ATP 
Participant shall remain responsible and accountable to the CCC for all 
ATP promotional activities and related expenditures undertaken by such 
third party and shall be responsible for reimbursing CCC for any funds 
that CCC determines should be refunded to the CCC in relation to such 
third party's promotional activities and expenditures.



Sec.1489.29  Property standards.

    The ATP Participant shall insure all ATP-funded property and 
equipment acquired in furtherance of program activities and safeguard 
such against theft, damage and unauthorized use. The Participant shall 
promptly report any loss, theft, or damage of property to the insurance 
company.



Sec.1489.30  Anti-fraud requirements.

    (a) All ATP Participants. (1) All ATP Participants shall submit to 
the CCC for approval a detailed fraud prevention program. The CCC will 
notify all new and existing ATP Participants in writing in each 
Participant's approval letter and through the FAS website as to 
applicable submission dates for and dates for approvals of fraud 
prevention programs. ATP Participants should review their fraud 
prevention programs annually. The fraud prevention program shall, at a 
minimum, include an annual review of physical controls and weaknesses, a 
standard process for investigating and remediation of suspected fraud 
cases, and training in risk management and fraud detection for all 
current and future employees. The ATP Participant shall not conduct or 
permit any ATP promotion activities to occur unless and until the CCC 
has communicated in writing approval of the ATP Participant's fraud 
prevention program.
    (2) The ATP Participant, within five business days of receiving an 
allegation or information giving rise to a reasonable suspicion of 
misrepresentation or fraud that could give rise to a claim by CCC, shall 
report such allegation or information in writing to such USDA personnel 
as specified in the Participant's ATP program agreement and/or approval 
letter. The ATP Participant shall cooperate fully in any USDA 
investigation of such allegation or occurrence of misrepresentation or 
fraud and shall comply with any directives given by the CCC or USDA to 
the ATP Participant for the prompt investigation of such allegation or 
occurrence.
    (b) ATP Participants with brand programs. (1) The ATP Participant 
may charge a fee to brand participants to cover the cost of the fraud 
prevention program.
    (2) The ATP Participant shall repay to the CCC funds paid to a brand 
participant through the ATP Participant on claims that the ATP 
Participant or the CCC subsequently determines are unauthorized or 
otherwise non-reimbursable expenses within 30 days of the ATP 
Participant's determination or CCC's disallowance. The ATP Participant 
shall repay CCC by submitting a check to CCC or by offsetting the ATP 
Participant's next reimbursement claim. The ATP Participant shall make 
such payment in U.S. dollars, unless otherwise approved in advance by 
CCC. An ATP Participant operating a brand program in strict accordance 
with an approved fraud prevention program, however, will not be liable 
to reimburse CCC for ATP funds paid on such claims if the claims were 
based on misrepresentations or fraud of the brand participant, its 
employees or agents, unless the CCC determines that the ATP Participant 
was grossly negligent in the operation of the brand program regarding 
such claims. The CCC shall communicate any such determination to the ATP 
Participant in writing.



Sec.1489.31  Program income.

    Any revenue or refunds generated from an activity, e.g., 
participation fees, proceeds of sales, refunds of value added taxes 
(VAT), the expenditures for which have been wholly or partially

[[Page 1067]]

reimbursed with ATP funds, shall be used by the ATP Participant in 
furtherance of its approved ATP activities in the program period during 
which the ATP funds are available for obligation by the ATP Participant. 
The use of such revenue or refunds shall be governed by 7 CFR part 1489. 
Interest earned on funds advanced by the CCC is not program income.



Sec.1489.32  Amendment.

    A program agreement may be amended in writing with the consent of 
the CCC and the ATP Participant.



Sec.1489.33  Noncompliance with an agreement.

    If an ATP Participant fails to comply with any term in its program 
agreement or approval letter, the CCC may take one or more of the 
enforcement actions in 2 CFR part 200 and, if, appropriate, initiate a 
claim against the ATP Participant, following the procedures set forth in 
this subpart. The CCC may also initiate a claim against an ATP 
Participant if program income or CCC-provided funds are lost due to an 
action or omission of the ATP Participant.



Sec.1489.34  Suspension, termination, and closeout of agreements.

    A program agreement may be suspended or terminated in accordance 
with the suspension and termination procedures in 2 CFR part 200. If an 
agreement is terminated, the applicable regulations in 2 CFR part 200 
will apply to the closeout of the agreement.



Sec.1489.35  Paperwork reduction requirements.

    The paperwork and record keeping requirements imposed by this 
subpart have been submitted for review by OMB under the Paperwork 
Reduction Act of 1980. OMB has not yet assigned a control number for 
this information collection.



PART 1491_FARM AND RANCH LANDS PROTECTION PROGRAM--Table of Contents



                      Subpart A_General Provisions

Sec.
1491.1 Applicability.
1491.2 Administration.
1491.3 Definitions.
1491.4 Program requirements.
1491.5 Application procedures.
1491.6 Ranking considerations and proposal selection.

    Subpart B_Cooperative Agreements and Conservation Easement Deeds

1491.20 Cooperative agreements.
1491.21 Funding.
1491.22 Conservation easement deeds.

                    Subpart C_General Administration

1491.30 Violations and remedies.
1491.31 Appeals.
1491.32 Scheme or device.

    Authority: 16 U.S.C. 3838h-3838i.

    Source: 76 FR 4039, Jan. 24, 2011, unless otherwise noted.



                      Subpart A_General Provisions



Sec.1491.1  Applicability.

    (a) The regulations in this part set forth requirements, policies, 
and procedures for implementation of the Farm and Ranch Lands Protection 
Program (FRPP) as administered by the Natural Resources Conservation 
Service (NRCS). FRPP cooperative agreements will be administered under 
the regulations in effect at the time the cooperative agreement is 
signed.
    (b) The NRCS Chief may implement FRPP in any of the 50 States, the 
District of Columbia, Commonwealth of Puerto Rico, Guam, the Virgin 
Islands of the United States, American Samoa, and the Commonwealth of 
the Northern Mariana Islands.



Sec.1491.2  Administration.

    (a) The regulations in this part will be administered under the 
general supervision and direction of the NRCS Chief.
    (b) NRCS will--
    (1) Provide overall program management and implementation leadership 
for FRPP;
    (2) Develop, maintain, and ensure that policies, guidelines, and 
procedures are carried out to meet program goals and objectives;
    (3) Ensure that the FRPP share of the cost of an easement or other 
deed restrictions in eligible land will not exceed 50 percent of the 
appraised fair

[[Page 1068]]

market value of the conservation easement;
    (4) Determine eligibility of the land, landowner, State government, 
local government, Indian Tribe, or nongovernmental organization;
    (5) Ensure a conservation plan is developed in accordance with 7 CFR 
part 12;
    (6) Make funding decisions and determine allocations of program 
funds;
    (7) Coordinate with the Office of the General Counsel to ensure the 
legal sufficiency of the cooperative agreement and the easement deed or 
other legal instrument;
    (8) Sign and monitor cooperative agreements for the Commodity Credit 
Corporation (CCC) with the selected eligible entity;
    (9) Monitor and ensure conservation plan compliance with highly 
erodible land and wetland provisions in accordance with 7 CFR part 12; 
and
    (10) Provide leadership for establishing, implementing, and 
overseeing administrative processes for easements, easement payments, 
and administrative and financial performance reporting.
    (c) NRCS will enter into cooperative agreements with eligible 
entities to assist NRCS with implementation of this part.



Sec.1491.3  Definitions.

    The following definitions will apply to this part, and all documents 
issued in accordance with this part, unless specified otherwise:
    Agricultural uses are defined by the State's FRPP or equivalent, or 
where no program exists. Agricultural uses should be defined by the 
State agricultural use tax assessment program. However, if NRCS finds 
that a State definition of agriculture is so broad that an included use 
could lead to the degradation of soils and agriculture productivity, 
NRCS reserves the right to impose greater deed restrictions on the 
property than allowable under that State definition of agriculture in 
order to protect agricultural use and related conservation values.
    Certified entity means an eligible entity that NRCS has determined 
to meet the requirements of Sec.1491.4(d) of this part.
    Chief means the Chief of NRCS or designee.
    Commodity Credit Corporation is a government-owned and operated 
entity that was created to stabilize, support, and protect farm income 
and prices. The CCC is managed by a Board of Directors, subject to the 
general supervision and direction of the Secretary of Agriculture, who 
is an ex-officio director and chairperson of the Board. The CCC provides 
the funding for FRPP, and NRCS administers FRPP on its behalf.
    Conservation easement means a voluntary, legally recorded 
restriction, in the form of a deed, on the use of property, in order to 
protect resources such as agricultural lands, historic structures, open 
space, and wildlife habitat.
    Conservation plan is the document that--
    (1) Applies to highly erodible cropland;
    (2) Describes the conservation system applicable to the highly 
erodible cropland and describes the decisions of the person with respect 
to location, land use, tillage systems, and conservation treatment 
measures and schedules;
    (3) Is developed by NRCS in consultation with the landowner through 
the local soil conservation district, in consultation with the local 
committees, established under section 8(b)(5) of the Soil Conservation 
and Domestic Allotment Act (16 U.S.C. 5909h(b)(5)) and the Secretary, or 
by the Secretary.
    Cooperative agreement means the document that specifies the 
obligations and rights of NRCS and eligible entities participating in 
the program.
    Dedicated fund means an account held by a nongovernmental 
organization which is sufficiently capitalized for the purpose of 
covering expenses associated with the management, monitoring, and 
enforcement of conservation easements and where such account cannot be 
used for other purposes.
    Eligible entity means Indian Tribe, State government, local 
government, or a nongovernmental organization which has a farmland 
protection program that purchases agricultural conservation easements 
for the purpose of protecting agriculture use and related

[[Page 1069]]

conservation values by limiting conversion to non-agricultural uses of 
the land.
    Eligible land means privately owned land on a farm or ranch that 
NRCS has determined to meet the requirements of Sec.1491.4(f) of this 
part.
    Fair market value means the value of a conservation easement as 
ascertained through standard real property appraisal methods, as 
established in Sec.1491.4(g).
    Farm and ranch land of local importance means farm or ranch land 
used to produce food, feed, fiber, forage, bio-fuels, and oilseed crops 
that are not identified as having national or statewide importance. 
Where appropriate, these lands are to be identified by the local agency 
or agencies concerned. Farmlands of local importance may include tracts 
of land that have been designated for agriculture by local ordinance.
    Farm and ranch land of statewide importance means, in addition to 
prime and unique farmland, land that is of statewide importance for the 
production of food, feed, fiber, forage, bio-fuels, and oil seed crops. 
Criteria for defining and delineating this land are to be determined by 
the appropriate State agency or agencies. Generally, additional 
farmlands of statewide importance include those that are nearly prime 
farmland and that economically produce high yields of crops when treated 
and managed according to acceptable farming methods. Some may produce as 
high a yield as prime farmlands if conditions are favorable. In some 
States, additional farmlands of statewide importance may include tracts 
of land that have been designated for agriculture by State law in 
accordance with 7 CFR part 657.
    Farm or ranch succession plan means a general plan to address the 
continuation of some type of agricultural business on the conserved 
land. The farm or ranch succession plan may include specific intra-
family succession agreements or strategies to address business asset 
transfer planning to create opportunities for beginning farmers or 
ranchers.
    Field Office Technical Guide means the official local NRCS source of 
resource information and interpretations of guidelines, criteria, and 
requirements for planning and applying conservation practices and 
conservation management systems. The Field Office Technical Guide (FOTG) 
contains detailed information on the conservation of soil, water, air, 
plant, and animal resources applicable to the local area for which it is 
prepared.
    Forest land means a land cover or use category that is at least 10 
percent stocked by single-stemmed woody species of any size that will be 
at least 13 feet tall at maturity. Also included is land bearing 
evidence of natural regeneration of tree cover (cutover forest or 
abandoned farmland) that is not currently developed for non-forest use. 
Ten percent stocked, when viewed from a vertical direction, equates to 
an aerial canopy cover of leaves and branches of 25 percent or greater.
    Forest land of statewide importance means forest land that the State 
Conservationist, in consultation with the State Technical Committee, 
identifies as having ecological or economic significance within the 
State, and may include forested areas or regions of the State that have 
been identified through statewide assessments and strategies conducted 
pursuant to State or Federal law.
    Forest management plan means a site-specific plan that is prepared 
by a professional resource manager, in consultation with the 
participant, and is approved by the State Conservationist. Forest 
management plans may include a forest stewardship plan, as specified in 
section 5 of the Cooperative Forestry Assistance Act of 1978 (16 U.S.C. 
2103a), another practice plan approved by the State Forester, or another 
plan determined appropriate by the State Conservationist. The plan 
complies with applicable Federal, State, Tribal, and local laws, 
regulations, and permit requirements.
    Historical and archaeological resources mean resources that are:
    (1) Listed in the National Register of Historic Places (established 
under the National Historic Preservation Act (NHPA), 16 U.S.C. 470, et 
seq.);
    (2) Formally determined eligible for listing in the National 
Register of Historic Places (by the State Historic Preservation Officer 
(SHPO) or Tribal

[[Page 1070]]

Historic Preservation Officer (THPO) and the Keeper of the National 
Register in accordance with section 106 of the NHPA);
    (3) Formally listed in the State or Tribal Register of Historic 
Places of the SHPO (designated under section 101(b)(1)(B) of the NHPA) 
or the THPO (designated under section 101(d)(1)(C) of the NHPA); or
    (4) Included in the SHPO or THPO inventory with written 
justification as to why it meets National Register of Historic Places 
criteria.
    Imminent harm means easement violations or threatened violations 
that, as determined by the Chief, would likely cause immediate and 
significant degradation to the conservation values; for example, those 
violations that would adversely impact agriculture use, productivity, 
and related conservation values or result in the erosion of topsoil 
beyond acceptable levels as established by NRCS.
    Impervious surface means surfaces that are covered by asphalt, 
concrete, roofs, or any other surface that does not allow water to 
percolate into the soil.
    Indian Tribe means any Indian Tribe, band, nation, or other 
organized group or community, including any Alaska Native village or 
regional or village corporation as defined in or established pursuant to 
the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.) that is 
eligible for the special programs and services provided by the United 
States to Indians because of their status as Indians.
    Land Evaluation and Site Assessment System means the land evaluation 
system approved by the State Conservationist used to rank land for farm 
and ranch land protection purposes, based on soil potential for 
agriculture, as well as social and economic factors, such as location, 
access to markets, and adjacent land use. For additional information see 
the Farmland Protection Policy Act regulation at 7 CFR part 658.
    Landowner means a person, legal entity, or Indian Tribe having legal 
ownership of land and those who may be buying eligible land under a 
purchase agreement. The term landowner may include all forms of 
collective ownership including joint tenants, tenants-in-common, and 
life tenants. State governments, local governments, and nongovernmental 
organizations that qualify as eligible entities are not eligible as 
landowners, unless otherwise determined by the Chief.
    Natural Resources Conservation Service means an agency of the 
Department of Agriculture.
    Nongovernmental organization means any organization that:
    (1) Is organized for, and at all times since, the formation of the 
organization, and has been operated principally for one or more of the 
conservation purposes specified in clause (i), (ii), (iii), or (iv) of 
section 170(h)(4)(A) of the Internal Revenue Code of 1986;
    (2) Is an organization described in section 501(c)(3) of that Code 
that is exempt from taxation under 501(a) of that Code; and
    (3) Is described--
    (i) In section 509(a)(1) and (2) of that Code, or
    (ii) Is described in section 509(a)(3) of that Code and is 
controlled by an organization described in section 509(a)(2) of that 
Code.
    Other interests in land include any right in real property other 
than easements that are recognized by State law. FRPP funds will only be 
used to purchase other interests in land with prior approval from the 
Chief.
    Other productive soils means farm and ranch land soils, in addition 
to prime farmland soils, that include unique farmland and farm and ranch 
land of statewide and local importance.
    Parcel means a farm or ranch submitted for consideration for funding 
under this part.
    Pending offer means a written bid, contract, or option extended to a 
landowner by an eligible entity to acquire a conservation easement 
before the legal title to these rights has been conveyed for the purpose 
of limiting non-agricultural uses of the land.
    Prime farmland means land that has the best combination of physical 
and chemical characteristics for producing food, feed, fiber, forage, 
oilseed, and other agricultural crops with minimum inputs of fuel, 
fertilizer, pesticides, and labor without intolerable soil erosion, as 
determined by the Secretary.

[[Page 1071]]

    Purchase price means the appraised fair market value of the easement 
minus the landowner donation.
    Right of enforcement means a vested right set forth in the 
conservation easement deed, equal in scope to the right of inspection 
and enforcement granted to the grantee, that the Chief, on behalf of the 
United States, may exercise under specific circumstances in order to 
enforce the terms of the conservation easement when not enforced by the 
holder of the easement.
    Secretary means the Secretary of the United States Department of 
Agriculture.
    State Conservationist means the NRCS employee authorized to direct 
and supervise NRCS activities in a State, the Caribbean Area (Puerto 
Rico and the Virgin Islands), or the Pacific Islands Area (Guam, 
American Samoa, and the Commonwealth of the Northern Mariana Islands).
    State Technical Committee means a committee established by the 
Secretary in a State pursuant to 16 U.S.C. 3861 and 7 CFR part 610, 
subpart C.
    Unique farmland means land other than prime farmland that is used 
for the production of specific high-value food and fiber crops, as 
determined by the Secretary. It has the special combination of soil 
quality, location, growing season, and moisture supply needed to 
economically produce sustained high quality or high yields of specific 
crops when treated and managed according to acceptable farming methods. 
Examples of such crops include citrus, tree nuts, olives, cranberries, 
fruits, and vegetables. Additional information on the definition of 
prime, unique, or other productive soil can be found in 7 CFR part 657 
and 7 CFR part 658.



Sec.1491.4  Program requirements.

    (a) Under FRPP, the Chief, on behalf of the CCC, will facilitate and 
provide funding for the purchase of conservation easements or other 
interests in eligible land that is subject to a pending offer from an 
eligible entity for the purpose of protecting the agricultural use and 
related conservation values of the land by limiting non-agricultural 
uses of the land. Eligible entities submit applications to NRCS State 
offices to partner with NRCS to acquire conservation easements on farm 
and ranch land. NRCS enters into cooperative agreements with selected 
entities and provides funds for up to 50 percent of the fair market 
value of the easement. In return, the eligible entity agrees to acquire, 
hold, manage, and enforce the easement. A Federal right of enforcement 
must also be included in each FRPP funded easement deed for the 
protection of the Federal investment.
    (b) The term of all easements or other interests in land will be in 
perpetuity unless prohibited by State law. In States that limit the term 
of the easement or other interest in land, the term of the easement or 
other interest in land must be the maximum allowed by State law.
    (c) To be eligible to receive FRPP funding, an Indian Tribe, State, 
unit of local government, or a nongovernmental organization must meet 
the definition of eligible entity as listed in Sec.1491.3. In 
addition, eligible entities interested in receiving FRPP funds must 
demonstrate:
    (1) A commitment to long-term conservation of agricultural lands;
    (2) A capability to acquire, manage, and enforce easements;
    (3) Sufficient number of staff dedicated to monitoring and easement 
stewardship; and
    (4) The availability of funds.
    (d) To be considered for certification, an entity must submit a 
written request for certification to NRCS, and must:
    (1) Meet the requirements identified in paragraph (c) of this 
section;
    (2) Use or agree to use for FRPP funded acquisitions, the Uniform 
Standards for Professional Appraisal Practice or the Uniform Appraisal 
Standards for Federal Land Acquisitions in conducting appraisals;
    (3) Hold, manage, and monitor a minimum of 25 agricultural land 
conservation easements, unless the entity requests and receives a waiver 
of this requirement from the Chief;
    (4) Hold, manage, and monitor a minimum of five FRPP or Farmland 
Protection Program conservation easements;

[[Page 1072]]

    (5) Have the demonstrated ability to complete acquisition of 
easements in a timely fashion;
    (6) Have the capacity to enforce the provisions of easement deeds;
    (7) For nongovernmental organizations, possess a dedicated fund for 
the purposes of easement management, monitoring, and enforcement where 
such fund is sufficiently capitalized in accordance with NRCS standards. 
The dedicated fund must be dedicated to the purposes of managing, 
monitoring, and enforcing each easement held by the eligible entity;
    (8) Be willing to adjust procedures to ensure that the conservation 
easements acquired meet FRPP purposes and are enforceable; and
    (9) Have a plan for administering easements enrolled under this 
part, as determined by the Chief.
    (e) NRCS will notify an entity in writing whether they have been 
certified and the rationale for the agency's decision. Once NRCS 
determines an entity qualifies as certified:
    (1) NRCS will enter into a cooperative agreement with the certified 
entity through which NRCS may obligate funding for up to 5 years. New 
parcels or prior-year unfunded parcels submitted for funding by 
certified entities must compete for funding each year. Selected parcels 
and funding will be added to the existing cooperative agreement using an 
amendment to the cooperative agreement. Funding expiration dates for the 
added parcels will be in the amendment to the cooperative agreement;
    (2) NRCS will accept applications from certified entities 
continuously throughout the fiscal year;
    (3) Certified entities may elect to close easements without NRCS 
approving the conservation easement deeds, titles, or appraisals before 
closing;
    (4) Certified entities will prepare the conservation easement deeds, 
titles, and appraisals according to NRCS requirements as identified in 
the cooperative agreement;
    (5) NRCS will conduct quality assurance reviews of a percentage of 
the conservation easement transactions submitted by the certified entity 
for payment. The review will include whether the deed, title review, or 
appraisals were conducted in accordance with the requirements set forth 
by NRCS in its certification of the eligible entity or in the 
cooperative agreement entered into with the certified entity; and
    (6) If a certified entity closes on the easement without a pre-
closing NRCS review, and the conservation easement deed, title, or 
appraisal fails the NRCS quality assurance review, NRCS will provide the 
certified entity an opportunity to correct the errors. If the certified 
entity fails to correct the errors to NRCS satisfaction, NRCS may 
consider decertification of the entity in accordance with paragraph (f) 
of this section.
    (f) Review and decertification of the certified entity. (1) The 
Chief will conduct a review of the certified entity a minimum of once 
every 3 years to ensure that the certified entities are meeting the 
certification criteria established in Sec.1491.4(d).
    (2) If the Chief finds that the certified entity no longer meets the 
criteria in Sec.1491.4(d), the Chief will:
    (i) Allow the certified entity a specified period of time, at a 
minimum 180 days, in which to take such actions as may be necessary to 
correct the identified deficiencies, and
    (ii) If the State Conservationist has determined the certified 
entity does not meet the criteria established in Sec.1491.4(d) after 
the 180 days, the State Conservationist will send, by certified mail, 
return receipt requested, written notice of proposed decertification of 
the entity's certification status or eligibility for future FRPP 
funding. This notice will contain what actions have not been completed 
to retain certification status, what actions the entity must take to 
request certification status, the status of funds in the cooperative 
agreement, and the eligibility of the entity to apply for future FRPP 
funds. The entity may contest the Notice of Decertification in writing 
to the State Conservationist within 20 calendar days of receipt of the 
notice of proposed decertification.
    (3) The period of decertification may not exceed 3 years in 
duration, with duration of decertification based upon the seriousness of 
the facts; and

[[Page 1073]]

    (4) The entity may be recertified upon application to NRCS, after 
the decertification period has expired, and when the entity has met the 
requirements as outlined under Sec.1491.4(d).
    (g) Eligible land:
    (1) Must be privately owned land on a farm or ranch and contain at 
least 50 percent prime, unique, statewide, or locally important 
farmland, unless otherwise determined by the State Conservationist; 
contain historical or archaeological resources; furthers a State or 
local policy consistent with the purposes of the program; and is subject 
to a pending offer by an eligible entity;
    (2) Must be cropland, rangeland, grassland, pastureland, or forest 
land that contributes to the economic viability of an agricultural 
operation or serves as a buffer to protect an agricultural operation 
from development;
    (3) May include land that is incidental to the cropland, rangeland, 
grassland, pastureland, or forest land if the incidental land is 
determined by the Secretary to be necessary for the efficient 
administration of a conservation easement;
    (4) May include parts of or entire farms or ranches;
    (5) Must not include forest land of greater than two-thirds of the 
easement area. Land with contiguous forest that exceeds the greater of 
40 acres or 20 percent of the easement area will have a forest 
management plan before closing, unless the Chief has reviewed and 
approved an alternative means by which the forest land's contribution to 
the economic viability of the land has been demonstrated;
    (6) NRCS will not provide FRPP funds for the purchase of an easement 
or other interest in land on land owned in fee title by an agency of the 
United States, a State or local government, or by a nongovernmental 
organization whose purpose is to protect agricultural use and related 
conservation values, including those listed in the statute under 
eligible land, or land that is already subject to an easement or deed 
restriction that limits the conversion of the land to non-agricultural 
use;
    (7) Must be owned by landowners who certify that they do not exceed 
the adjusted gross income limitation eligibility requirements set forth 
in part 1400 of this title;
    (8) Must possess suitable onsite and offsite conditions which will 
allow the easement to be effective in achieving the purposes of the 
program. Unsuitable conditions may include, but are not limited to, 
hazardous substances on or in the vicinity of the parcel, land use 
surrounding the parcel that is not compatible with agriculture, and 
highway or utility corridors that are planned to pass through or 
immediately adjacent to the parcel; and
    (9) May be land on which gas, oil, earth, or other mineral rights 
exploration has been leased or is owned by someone other than the 
applicant and may be offered for participation in the program. However, 
if an applicant submits an offer for an easement project, the Department 
of Agriculture (USDA) will assess the potential impact that the third 
party rights may have upon achieving the program purposes. USDA reserves 
the right to deny funding for any application where there are exceptions 
to clear title on any property.
    (h) Prior to closing, the value of the conservation easement must be 
appraised. Appraisals must be completed and signed by a State-certified 
general appraiser and must contain a disclosure statement by the 
appraiser. The appraisal must conform to the Uniform Standards of 
Professional Appraisal Practices or the Uniform Appraisal Standards for 
Federal Land Acquisitions, as selected by the eligible entity. State 
Conservationists will provide the guidelines through which NRCS will 
review appraisals for quality assurance purposes. Entities must provide 
a copy of the appraisal to NRCS.
    (i) The landowner will be responsible for complying with the Highly 
Erodible Land and Wetland Conservation provisions of the Food Security 
Act of 1985 (1985 Act), as amended and 7 CFR part 12.
    (j) The entity may substitute acres within a pending offer. 
Substituted acres must not decrease the value of the offered easement or 
the value of the parcel in meeting program purposes. With the State 
Conservationist's approval, a cooperating entity may substitute pending 
offers within their cooperative agreement. The landowner

[[Page 1074]]

and parcel must meet eligibility criteria as described in Sec.
1491.4(e). The State Conservationist may require re-ranking of 
substituted acres and substituted parcels.

[76 FR 4039, Jan. 24, 2011, as amended at 77 FR 6944, Feb. 10, 2012]



Sec.1491.5  Application procedures.

    (a) An Indian Tribe, State, unit of local government, or a 
nongovernmental organization will submit an application to the State 
Conservationist in the State where parcels are located.
    (b) The State Conservationist will determine whether the Indian 
Tribe, State, unit of local government, or a nongovernmental 
organization is eligible to participate in FRPP based on the criteria 
set forth in Sec.1491.4(c).
    (c) The Chief will determine whether an eligible entity is a 
certified entity based on the criteria set forth in Sec.1491.4(d), 
information provided by the application, and data in the national FRPP 
database.
    (d) The State Conservationist will notify each Indian Tribe, State, 
unit of local government, or a nongovernmental organization if it has 
been determined eligible, certified, or ineligible.
    (e) Eligible entities with cooperative agreements entered into after 
the effective date of this part will not have to resubmit an annual 
application for the duration of the cooperative agreement. Entities may 
reapply for eligibility when their cooperative agreements expire.
    (f) Throughout the fiscal year, eligible entities may submit to the 
appropriate State Conservationist applications for parcels, in that 
State, with supporting information to be scored, ranked, and considered 
for funding.
    (g) At the end of each fiscal year, the lists of pending, unfunded 
parcels will be cancelled unless the eligible entity requests that 
specific parcels be considered for funding in the next fiscal year. 
Entities must submit a new list of parcels each fiscal year in order to 
be considered for funding unless they request that parcels from the 
previous fiscal year be considered.



Sec.1491.6  Ranking considerations and proposal selection.

    (a) Before the State Conservationist can score and rank the parcels 
for funding, the eligibility of the landowner and the land must be 
assessed.
    (b) The State Conservationist will use national and State criteria 
to score and rank parcels. The national ranking criteria will be 
established by the Chief, and the State criteria will be determined by 
the State Conservationist, with advice from the State Technical 
Committee. The national criteria will comprise at least half of the 
ranking system score.
    (c) At least 30 days before the ranking of parcels, the State 
Conservationist will announce the date on which ranking of parcels will 
occur. A State Conservationist may announce more than one date of 
ranking in a fiscal year.
    (d) All parcels submitted throughout the fiscal year will be scored. 
All parcels will be ranked together in accordance with the national and 
State ranking criteria before parcels are selected for funding.
    (e) The parcels selected for funding will be listed on the 
agreements of the entities that submitted the parcels, and the 
agreements will be signed by the State Conservationist and the eligible 
entity. Funds for each fiscal year's parcels will be obligated with a 
new signature each year on an amendment to the agreement. Parcels funded 
on each fiscal year's amendment will have a separate deadline for 
closing and requesting reimbursement.
    (f) The national ranking criteria are:
    (1) Percent of prime, unique, and important farmland in the parcel 
to be protected;
    (2) Percent of cropland, pastureland, grassland, and rangeland in 
the parcel to be protected;
    (3) Ratio of the total acres of land in the parcel to be protected 
to average farm size in the county according to the most recent USDA 
Census of Agriculture;
    (4) Decrease in the percentage of acreage of farm and ranch land in 
the county in which the parcel is located between the last two USDA 
Censuses of Agriculture;

[[Page 1075]]

    (5) Percent population growth in the county as documented by the 
United States Census;
    (6) Population density (population per square mile) as documented by 
the most recent United States Census;
    (7) Proximity of the parcel to other protected land, such as 
military installations, land owned in fee title by the United States or 
an Indian Tribe, State government or local government, or by a 
nongovernmental organization whose purpose is to protect agricultural 
use and related conservation values, or land that is already subject to 
an easement or deed restriction that limits the conversion of the land 
to non-agricultural use;
    (8) Proximity of the parcel to other agricultural operations and 
infrastructure; and
    (9) Other additional criteria as determined by the Chief.
    (g) State or local criteria as determined by the State 
Conservationist, with advice of the State Technical Committee, may 
include:
    (1) The location of a parcel in an area zoned for agricultural use;
    (2) The performance of an eligible entity's experience in managing 
and enforcing easements. Performance must be measured by the closing 
efficiency or percentage of parcels that have been monitored and the 
percentage of monitoring results that have been reported. The number of 
years of an eligible entity's existence, budget, or staffing level will 
not be used as a ranking factor;
    (3) Multifunctional benefits of farm and ranch land protection 
including social, economic, historical and archaeological, and 
environmental benefits;
    (4) Geographic regions where the enrollment of particular lands may 
help achieve national, State, and regional conservation goals and 
objectives, or enhance existing government or private conservation 
projects;
    (5) Diversity of natural resources to be protected;
    (6) Score in the Land Evaluation and Site Assessment system. This 
score serves as a measure of agricultural viability (access to markets 
and infrastructure); and
    (7) Existence of a farm or ranch succession plan or similar plan 
established to encourage farm viability for future generations.
    (h) State ranking criteria will be developed on a State-by-State 
basis. The State Conservationist will make available a full listing of 
applicable national and State ranking criteria.



    Subpart B_Cooperative Agreements and Conservation Easement Deeds



Sec.1491.20  Cooperative agreements.

    (a) NRCS, on behalf of the CCC, will enter into a cooperative 
agreement with entities selected for funding. Once a proposal is 
selected by the State Conservationist, the eligible entity must work 
with the State Conservationist to finalize and sign the cooperative 
agreement, incorporating all necessary FRPP requirements. The 
cooperative agreement must address:
    (1) The interests in land to be acquired, including the United 
States' right of enforcement, as well as the form and other terms and 
conditions of the easement deed;
    (2) The management and enforcement of the rights on lands acquired 
with FRPP funds;
    (3) The responsibilities of NRCS;
    (4) The responsibilities of the eligible entity on lands acquired 
with FRPP funds;
    (5) The allowance of parcel substitution upon mutual agreement of 
the parties; and
    (6) Other requirements deemed necessary by NRCS to meet the purposes 
of this part or protect the interests of the United States.
    (b) The term of cooperative agreements will be 5 years for certified 
entities and 3 years for other eligible entities.
    (c) The cooperative agreement will include an attachment listing the 
parcels accepted by the State Conservationist. This list will include 
landowners' names and addresses, acreage, the estimated fair market 
value, the estimated Federal contribution, and other relevant 
information. The cooperative agreement template will be made available 
by the State Conservationist.
    (d) The cooperative agreement will incorporate the provisions 
necessary

[[Page 1076]]

for the eligible entity to comply with applicable registration and 
reporting requirements of the Federal Funding Accountability and 
Transparency Act of 2006 (Pub. L. 109-282, as amended) and 2 CFR parts 
25 and 170.



Sec.1491.21  Funding.

    (a) Subject to the statutory limits, the State Conservationist, in 
coordination with the eligible entity, will determine the NRCS share of 
the cost of purchasing a conservation easement or other interest in the 
land.
    (b) NRCS may provide up to 50 percent of the appraised fair market 
value of the conservation easement consistent with Sec.1491.4(g). An 
eligible entity will share in the cost of purchasing a conservation 
easement in accordance with the limitations of this part.
    (c) A landowner may make donations toward the acquisition of the 
conservation easement.
    (d) The eligible entity must provide a minimum of 25 percent of the 
purchase price of the conservation easement.
    (e) FRPP funds may not be used for expenditures such as appraisals, 
surveys, title insurance, legal fees, costs of easement monitoring, and 
other related administrative and transaction costs incurred by the 
eligible entity.
    (f) NRCS will conduct its technical and administrative review of 
appraisals and its hazardous materials reviews with FRPP funds.
    (g) If the State Conservationist determines that the purchase of two 
or more conservation easements are comparable in achieving FRPP goals, 
the State Conservationist will not assign a higher priority to any one 
of these conservation easements solely on the basis of lesser cost to 
FRPP.
    (h) Environmental Services Credits:
    (1) NRCS asserts no direct or indirect interest in environmental 
credits that may result from or be associated with an FRPP easement;
    (2) NRCS retains the authority to ensure that the requirements for 
FRPP-funded easements are met and maintained consistent with this part; 
and
    (3) If activities required under an environmental credit agreement 
may affect land covered under a FRPP easement, landowners are encouraged 
to request a compatibility assessment from the eligible entity prior to 
entering into such agreements.



Sec.1491.22  Conservation easement deeds.

    (a) Under FRPP, a landowner grants an easement to an eligible entity 
with which NRCS has entered into an FRPP cooperative agreement. The 
easement will require that the easement area be maintained in accordance 
with FRPP goals and objectives for the term of the easement.
    (b) Pending offers by an eligible entity must be for acquiring an 
easement in perpetuity, except where State law prohibits a permanent 
easement. In such cases where State law limits the term of a 
conservation easement, the easement term will be for the maximum allowed 
under State law.
    (c) The eligible entity may use its own terms and conditions in the 
conservation easement deed, but the conservation easement deed must be 
reviewed and approved by National Headquarters in advance of use. 
Individual conservation easement deeds used by the eligible entity will 
be submitted to National Headquarters at least 90 days before the 
planned closing date. Eligible entities with multiple parcels in a 
cooperative agreement may submit a conservation easement deed template 
for review and approval. The deed templates must be reviewed and 
approved by National Headquarters in advance of use. For eligible 
entities that have not been certified, the NRCS State offices will 
review prior to closing the conservation easement deeds for individual 
parcels to ensure that they contain the same language as approved by the 
national office and that the appropriate site-specific information has 
been included. NRCS reserves the right to require additional specific 
language or to remove language in the conservation easement deed to 
protect the interests of the United States. The Chief may exercise the 
option to promulgate standard minimum conservation deed requirements as 
a condition for receiving FRPP funds.
    (d) The conveyance document must include a right of enforcement 
clause. NRCS will specify the terms for the right of enforcement clause 
to read as set forth in the FRPP cooperative

[[Page 1077]]

agreement. This right is a vested property right and cannot be condemned 
by State or local government.
    (e) As a condition for participation, a conservation plan will be 
developed by NRCS in consultation with the landowner and implemented 
according to the FOTG. NRCS may work through the local conservation 
district in the development of the conservation plan. The conservation 
plan will be developed and managed in accordance with the 1985 Act, 7 
CFR part 12 or subsequent regulations, and other requirements as 
determined by the State Conservationist. To ensure compliance with this 
conservation plan, the easement will grant to the United States, through 
NRCS, its successors or assigns, a right of access to the easement area.
    (f) The eligible entity will acquire, hold, manage, and enforce the 
easement. The eligible entity may have the option to enter into an 
agreement with governmental or private organizations to carry out 
easement stewardship responsibilities.
    (g) NRCS will sign an acceptance of the conservation easement, 
concurring with the terms of the conservation easement and accepting its 
interest in the conservation easement deed.
    (h) All conservation easement deeds acquired with FRPP funds must be 
recorded. Proof of recordation will be provided to NRCS by the eligible 
entity.
    (i) Impervious surfaces will not exceed 2 percent of the FRPP 
easement area, excluding NRCS-approved conservation practices. The State 
Conservationist may waive the 2 percent impervious surface limitation on 
a parcel-by-parcel basis, provided that no more than 10 percent of the 
easement area is covered by impervious surfaces. Before waiving the 2 
percent limitation, the State Conservationist must consider, at a 
minimum, population density, the ratio of open prime other important 
farmland versus impervious surfaces on the easement area, the impact to 
water quality concerns in the area, the type of agricultural operation, 
and parcel size. Eligible entities may submit an impervious surface 
limitation waiver process to the State Conservationist for review and 
consideration. The eligible entities must apply approved impervious 
surface limitation waiver processes on a parcel-by-parcel basis. State 
Conservationists will not approve blanket waivers of the impervious 
surface limitation for all parcels administered by the eligible entity 
without regard for the characteristics of individual parcels. All FRPP 
easements must include language limiting the amount of impervious 
surfaces within the easement area.
    (j) The conservation easement deed must include an indemnification 
clause requiring the landowner to indemnify and hold harmless the United 
States from any liability arising from or related to the property 
enrolled in FRPP.
    (k) The conservation easement deed must include an amendment clause 
requiring that any changes to the easement deed after its recordation 
must be consistent with the purposes of the conservation easement and 
this part. The conservation easement deed must require that NRCS approve 
any substantive amendment.



                    Subpart C_General Administration



Sec.1491.30  Violations and remedies.

    (a) In the event of a violation of the easement terms, the eligible 
entity will notify the landowner. The landowner may be given reasonable 
notice and, where appropriate, an opportunity to voluntarily correct the 
violation in accordance with the terms of the conservation easement.
    (b) In the event that the eligible entity fails to enforce any of 
the terms of the conservation easement as determined by the Chief, the 
Chief or his or her successors or assigns may exercise the United 
States' rights to enforce the terms of the conservation easement through 
any and all authorities available under Federal or State law.
    (c) Notwithstanding paragraph (a) of this section, NRCS, upon 
notification to the landowner, reserves the right to enter upon the 
easement area at any time to monitor conservation plan implementation or 
remedy deficiencies or easement violations as it relates to the 
conservation plan. The entry may be made at the discretion of NRCS when 
the actions are deemed necessary to

[[Page 1078]]

protect highly erodible soils and wetland resources. The landowner will 
be liable for any costs incurred by NRCS as a result of the landowner's 
negligence or failure to comply with the easement requirements as it 
relates to conservation plan violations.
    (d) The United States will be entitled to recover any and all 
administrative and legal costs from the participating eligible entity, 
including attorney's fees or expenses, associated with any enforcement 
or remedial action as it relates to the enforcement of the FRPP 
easement.
    (e) In instances where an easement is terminated or extinguished, 
NRCS will collect CCC's share of the conservation easement based on the 
appraised fair market value of the conservation easement at the time the 
easement is extinguished or terminated. The CCC's share will be in 
proportion to its percentage of original investment.
    (f) In the event NRCS determines it must exercise its rights 
identified under a conservation easement or other interest in land, NRCS 
will provide written notice by certified mail, return receipt requested, 
to the eligible entity at the eligible entity's last known address. The 
notice will set forth the nature of the noncompliance by the eligible 
entity and a 60-day period to cure. If the eligible entity fails to cure 
within the 60-day period, NRCS will take the action specified under the 
notice. NRCS reserves the right to decline to provide a period to cure 
if NRCS determines that imminent harm may result to the conservation 
values or other interest in land it seeks to protect.



Sec.1491.31  Appeals.

    (a) A person or eligible entity which has submitted an FRPP proposal 
and is therefore participating in FRPP, may obtain a review of any 
administrative determination concerning eligibility for participation 
utilizing the administrative appeal regulations provided in 7 CFR part 
614.
    (b) Before a person or eligible entity may seek judicial review of 
any administrative action taken under this part, the person or eligible 
entity must exhaust all administrative appeal procedures set forth in 
paragraph (a) of this section, and for the purposes of judicial review, 
no decision will be a final agency action except a decision of the Chief 
under these provisions.
    (c) Enforcement action undertaken by NRCS in furtherance of its 
vested property rights are under the jurisdiction of the Federal 
District Court and not subject to review under administrative appeal 
regulations.



Sec.1491.32  Scheme or device.

    (a) If it is determined by NRCS that a eligible entity has employed 
a scheme or device to defeat the purposes of this part, any part of any 
program payment otherwise due or paid to such an eligible entity during 
the applicable period may be withheld or be required to be refunded, 
with interest, as determined appropriate by NRCS on behalf of the CCC.
    (b) A scheme or device includes, but is not limited to, coercion, 
fraud, misrepresentation, and depriving any other person or entity of 
payments for easements for the purpose of obtaining a payment to which a 
person would otherwise not be entitled.

                          PART 1492 [RESERVED]



PART 1493_CCC EXPORT CREDIT GUARANTEE PROGRAMS--Table of Contents



 Subpart A_Restrictions and Criteria for Export Credit Guarantee Program

Sec.
1493.1 General statement.
1493.2 Purposes of programs.
1493.3 Restrictions on programs and cargo preference statement.
1493.4 Criteria for country and regional allocations.
1493.5 Criteria for agricultural commodity allocations.

   Subpart B_CCC Export Credit Guarantee (GSM	102) Program Operations

1493.10 General statement.
1493.20 Definition of terms.
1493.30 Information required for Exporter participation.
1493.40 Information required for U.S. Financial Institution 
          participation.
1493.50 Information required for Foreign Financial Institution 
          participation.
1493.60 Certification requirements for program participation.
1493.70 Application for Payment Guarantee.

[[Page 1079]]

1493.80 Certification requirements for obtaining Payment Guarantee.
1493.90 Special requirements of the Foreign Financial Institution Letter 
          of Credit and the Terms and Conditions Document, if 
          applicable.
1493.100 Terms and requirements of the Payment Guarantee.
1493.110 Guarantee fees.
1493.120 Assignment of the Payment Guarantee.
1493.130 Evidence of export.
1493.140 Certification requirements for the evidence of export.
1493.150 Proof of entry.
1493.160 Notice of default.
1493.170 Claims for default.
1493.180 Payment for default.
1493.190 Recovery of defaulted payments.
1493.191 Additional obligations and requirements
1493.192 Dispute resolution and appeals.
1493.195 Miscellaneous provisions.

        Subpart C_CCC Facility Guarantee Program (FGP) Operations

1493.200 General statement.
1493.210 Definition of terms.
1493.220 Information required for seller participation.
1493.230 Information required for U.S. financial institution 
          participation.
1493.240 Information required for foreign financial institution 
          participation.
1493.250 Certification requirements for program participation.
1493.260 Application for payment guarantee.
1493.270 Certifications required for obtaining payment guarantee.
1493.280 Special requirements of the foreign financial institution 
          letter of credit and terms and conditions document, if 
          applicable.
1493.290 Terms and requirements of the payment guarantee.
1493.300 Fees.
1493.310 Assignment of the payment guarantee.
1493.320 Evidence of performance.
1493.330 Certification requirements for the evidence of performance.
1493.340 Proof of entry.
1493.350 Notice of default.
1493.360 Claims for default.
1493.370 Payment for default.
1493.380 Recovery of defaulted payments.
1493.385 Additional obligations and requirements.
1493.390 Dispute resolution and appeals.
1493.395 Miscellaneous provisions.

       Subpart D_CCC Supplier Credit Guarantee Program Operations

1493.400 General statement.
1493.410 Definition of terms.
1493.420 Information required for program participation.
1493.430 Application for a payment guarantee.
1493.440 Certification requirements for payment guarantee.
1493.450 Payment guarantee.
1493.460 Guarantee rates and fees.
1493.470 Evidence of export.
1493.480 Certification requirements for the evidence of export.
1493.490 Proof of entry.
1493.500 Notice of default and claims for loss.
1493.510 Payment for loss.
1493.520 Recovery of losses.
1493.530 Miscellaneous provisions.

    Authority: 7 U.S.C. 5602, 5622, 5661, 5662, 5663, 5664, 5676; 15 
U.S.C. 714b(d), 714c(f).

    Source: 59 FR 52876, Oct. 19, 1994, unless otherwise noted.



Subpart A_Restrictions and Criteria for Export Credit Guarantee Programs

    Source: 79 FR 68595, Nov. 18, 2014, unless otherwise noted.



Sec.1493.1  General statement.

    This subpart sets forth the restrictions that apply to the issuance 
and use of Payment Guarantees under the Commodity Credit Corporation 
(CCC) Export Credit Guarantee (GSM-102) Program and Facility Guarantee 
Program (FGP), the criteria considered by CCC in determining the annual 
allocations of Payment Guarantees to be made available with respect to 
each participating country and region, and the criteria considered by 
CCC in the review and approval of proposed allocation levels for 
specific U.S. Agricultural Commodities to these countries and regions.



Sec.1493.2  Purposes of programs.

    CCC is authorized to issue Payment Guarantees:
    (a) To increase exports of U.S. Agricultural Commodities and expand 
access to trade finance;
    (b) To assist countries, particularly developing countries and 
emerging markets, in meeting their food and fiber needs;

[[Page 1080]]

    (c) To establish or improve facilities and infrastructure in 
emerging markets to expand exports of U.S. Agricultural Commodities; or
    (d) For such other purposes as the Secretary of Agriculture 
determines appropriate.



Sec.1493.3  Restrictions on programs and cargo preference statement.

    (a) Restrictions on use of Payment Guarantees. (1) Payment 
Guarantees authorized under these regulations shall not be used for 
foreign aid, foreign policy, or debt rescheduling purposes.
    (2) CCC shall not make Payment Guarantees available in connection 
with sales of U.S. Agricultural Commodities to any country that the 
Secretary determines cannot adequately service the debt associated with 
such sale.
    (3) CCC shall not make Payment Guarantees available in connection 
with sales of U.S. Agricultural Commodities financed by any Foreign 
Financial Institution that CCC determines cannot adequately service the 
debt associated with such sale.
    (b) Cargo preference laws. The provisions of the cargo preference 
laws do not apply to export sales with respect to which Payment 
Guarantees are issued under these programs.



Sec.1493.4  Criteria for country and regional allocations.

    The criteria considered by CCC in reviewing proposals for country 
and regional allocations will include, but not be limited to, the 
following:
    (a) Potential benefits that the extension of Payment Guarantees 
would provide for the development, expansion, or maintenance of the 
market for particular U.S. Agricultural Commodities in the importing 
country;
    (b) Financial and economic ability and/or willingness of the country 
of obligation to adequately service CCC guaranteed debt (``country of 
obligation'' is the country whose Foreign Financial Institution 
obligation is guaranteed by CCC);
    (c) Financial status of participating Foreign Financial Institutions 
in the country of obligation as it would affect their ability to 
adequately service CCC guaranteed debt;
    (d) Political stability of the country of obligation as it would 
affect its ability and/or willingness to adequately service CCC 
guaranteed debt; and
    (e) Current status of debt either owed by the country of obligation 
or by the participating Foreign Financial Institutions to CCC or to 
lenders protected by CCC's Payment Guarantees.



Sec.1493.5  Criteria for agricultural commodity allocations.

    The criteria considered by CCC in determining U.S. Agricultural 
Commodity allocations within a specific country or regional allocation 
will include, but not be limited to, the following:
    (a) Potential benefits that the extension of Payment Guarantees 
would provide for the development, expansion or maintenance of the 
market in the importing country for the particular U.S. Agricultural 
Commodity under consideration;
    (b) The best use to be made of the Payment Guarantees in assisting 
the importing country in meeting its particular needs for food and 
fiber, as may be determined through consultations with private buyers 
and/or representatives of the government of the importing country; and
    (c) Evaluation, in terms of program purposes, of the relative 
benefits of providing Payment Guarantee coverage for sales of the U.S. 
Agricultural Commodity under consideration compared to providing 
coverage for sales of other U.S. Agricultural Commodities.



   Subpart B_CCC Export Credit Guarantee Program (GSM	102) Operations

    Source: 79 FR 68596, Nov. 18, 2014, unless otherwise noted.



Sec.1493.10  General statement.

    (a) Overview. The Export Credit Guarantee (GSM-102) Program of the 
Commodity Credit Corporation (CCC) was developed to expand U.S. 
Agricultural Commodity exports by making available Payment Guarantees to 
encourage U.S. private sector financing of foreign

[[Page 1081]]

purchases of U.S. Agricultural Commodities on credit terms. The Payment 
Guarantee issued under GSM-102 is an agreement by CCC to pay the 
Exporter, or the U.S. Financial Institution that may take assignment of 
the Payment Guarantee, specified amounts of principal and interest in 
case of default by the Foreign Financial Institution that issued the 
Letter of Credit for the export sale covered by the Payment Guarantee. 
Under the GSM-102 program, maximum repayment terms may vary based on 
risk of default, as determined by CCC. The program operates in a manner 
intended not to interfere with markets for cash sales and is targeted 
toward those countries that have sufficient financial strength so that 
foreign exchange will be available for scheduled payments. In providing 
this program, CCC seeks to expand and/or maintain market opportunities 
for U.S. agricultural exporters and assist long-term market development 
for U.S. Agricultural Commodities.
    (b) Program administration. The GSM-102 program is administered 
under the direction of the General Sales Manager and Vice President of 
CCC, pursuant to this subpart, subpart A, and any Program Announcements 
issued by CCC. From time to time, CCC may issue a notice to participants 
on the USDA Web site to remind participants of the requirements of the 
GSM-102 program or to clarify the program requirements contained in 
these regulations in a manner not inconsistent with this subpart and 
subpart A. Program information, such as eligible U.S. Agricultural 
Commodities and approved U.S. and Foreign Financial Institutions, is 
available on the USDA Web site.
    (c) Country and regional program announcements. From time to time, 
CCC will issue a Program Announcement on the USDA Web site to announce a 
GSM-102 program for a specific country or region. The Program 
Announcement for a country or region will designate specific U.S. 
Agricultural Commodities or products thereof, or designate that all 
eligible U.S. Agricultural Commodities are available under the 
announcement. The Program Announcement will contain any requirements 
applicable to that country or region as determined by CCC.



Sec.1493.20  Definition of terms.

    Terms set forth in this subpart, on the USDA Web site (including in 
Program Announcements and notices to participants), and in any CCC-
originated documents pertaining to the GSM-102 Program will have the 
following meanings:
    Affiliate. Entities are affiliates of each other if, directly or 
indirectly, either one controls or has the power to control the other or 
a third person controls or has the power to control both. Control may 
include, but is not limited to: Interlocking management or ownership; 
identity of interests among family members; shared facilities and 
equipment; or common use of employees.
    Assignee. A U.S. Financial Institution that has obtained the legal 
right to make a claim and receive the payment of proceeds under the 
Payment Guarantee.
    Business Day. A day during which employees of the U.S. Department of 
Agriculture in the Washington, DC metropolitan area are on official duty 
during normal business hours.
    CCC. The Commodity Credit Corporation, an agency and instrumentality 
of the United States within the Department of Agriculture, authorized 
pursuant to the Commodity Credit Corporation Charter Act (15 U.S.C. 714 
et seq).
    CCC Late Interest. Interest payable by CCC pursuant to Sec.
1493.180(c).
    Cost and Freight (CFR). A customary trade term for sea and inland 
waterway transport only, as defined by the International Chamber of 
Commerce, Incoterms 2010 (or as superseded).
    Cost Insurance and Freight (CIF). A customary trade term for sea and 
inland waterway transport only, as defined by the International Chamber 
of Commerce, Incoterms 2010 (or as superseded).
    Date of Export. One of the following dates, depending upon the 
method of shipment: The on-board date of an ocean bill of lading or the 
on-board ocean carrier date of an intermodal bill of lading; the on-
board date of an airway bill; or, if exported by rail or truck, the date 
of entry shown on an entry certificate or similar document issued and 
signed by an official of the government of the importing country.

[[Page 1082]]

    Date of Sale. The earliest date on which a Firm Export Sales 
Contract exists between the Exporter, or an Intervening Purchaser, if 
applicable, and the Importer.
    Director. The Director, Credit Programs Division, Office of Trade 
Programs, Foreign Agricultural Service, or the Director's designee.
    Discounts and Allowances. Any consideration provided directly or 
indirectly, by or on behalf of the Exporter or an Intervening Purchaser, 
to the Importer in connection with an Eligible Export Sale, above and 
beyond the commodity's value, stated on the appropriate FOB, FAS, FCA, 
CFR or CIF basis (or other basis specified in Incoterms 2010, or as 
superseded), which includes, but is not limited to, the provision of 
additional goods, services or benefits; the promise to provide 
additional goods, services or benefits in the future; financial rebates; 
the assumption of any financial or contractual obligations; commissions 
where the Importer requires the Exporter to employ and compensate a 
specified agent as a condition of concluding the Eligible Export Sale; 
the whole or partial release of the Importer from any financial or 
contractual obligations; or settlements made in favor of the Importer 
for quality or weight.
    Eligible Export Sale. An export sale of U.S. Agricultural 
Commodities in which the obligation of payment for the portion 
registered under the GSM-102 program arises solely and exclusively from 
a Foreign Financial Institution Letter of Credit or Terms and Conditions 
Document issued in connection with a Payment Guarantee.
    Eligible Interest. The amount of interest that CCC agrees to pay the 
Holder of the Payment Guarantee in the event that CCC pays a claim for 
default of Ordinary Interest. Eligible Interest shall be the lesser of:
    (1) The amount calculated using the interest rate specified between 
the Holder of the Payment Guarantee and the Foreign Financial 
Institution; or
    (2) The amount calculated using the specified percentage of the 
Treasury bill investment rate set forth on the face of the Payment 
Guarantee.
    Exported Value. (1) Where CCC announces Payment Guarantee coverage 
on a FAS, FCA, or FOB basis and:
    (i) Where the U.S. Agricultural Commodity is sold on a FAS, FCA, or 
FOB basis, the value, FAS, FCA, or FOB basis, port of shipment, of the 
export sale, reduced by the value of any Discounts and Allowances 
granted to the Importer in connection with such sale; or
    (ii) Where the U.S. Agricultural Commodity was sold on a CFR or CIF 
basis, point of entry, the value of the export sale, FAS, FCA or FOB, 
port of shipment, is measured by the CFR or CIF value of the U.S. 
Agricultural Commodity less the cost of ocean freight, as determined at 
the time of application and, in the case of CIF sales, less the cost of 
marine and war risk insurance, as determined at the time of application, 
reduced by the value of any Discounts and Allowances granted to the 
Importer in connection with the sale of the commodity; or
    (2) Where CCC announces coverage on a CFR or CIF basis, and where 
the U.S. Agricultural Commodity is sold on a CFR or CIF basis, port of 
destination, the total value of the export sale, CFR or CIF basis, port 
of destination, reduced by the value of any Discounts and Allowances 
granted to the Importer in connection with the sale of the commodity; or
    (3) When a CFR or CIF U.S. Agricultural Commodity export sale 
involves the performance of non-freight services to be performed outside 
the United States (e.g., services such as bagging bulk cargo) which are 
not normally included in ocean freight contracts, the value of such 
services and any related materials not exported from the U.S. with the 
commodity must also be deducted from the CFR or CIF sales price in 
determining the Exported Value.
    Exporter. A seller of U.S. Agricultural Commodities that is both 
qualified in accordance with the provisions of Sec.1493.30 and the 
applicant for the Payment Guarantee.
    Firm Export Sales Contract. The written sales contract entered into 
between the Exporter and the Importer (or, if applicable, the written 
sales contracts between the Exporter and the Intervening Purchaser and 
the Intervening

[[Page 1083]]

Purchaser and the Importer) which sets forth the terms and conditions of 
an Eligible Export Sale of the eligible U.S. Agricultural Commodity from 
the Exporter to the Importer (or, if applicable, the sale of the 
eligible U.S. Agricultural Commodity from the Exporter to the 
Intervening Purchaser and from the Intervening Purchaser to the 
Importer). Written evidence of a sale may be in the form of a signed 
sales contract, a written offer and acceptance between parties, or other 
documentary evidence of sale. The written evidence of sale for the 
purposes of the GSM-102 program must, at a minimum, document the 
following information: The eligible U.S. Agricultural Commodity, 
quantity, quality specifications, delivery terms (FOB, C&F, FCA, etc.) 
to the eligible country or region, delivery period, unit price, payment 
terms, Date of Sale, and evidence of agreement between Importer (and 
Intervening Purchaser, if applicable) and Exporter. The Firm Export 
Sales Contract between the Exporter and the Importer (or, if applicable, 
between the Exporter and the Intervening Purchaser and between the 
Intervening Purchaser and the Importer) may be conditioned upon CCC's 
approval of the Exporter's application for a Payment Guarantee.
    Foreign Financial Institution. A financial institution (including 
foreign branches of U.S. financial institutions):
    (1) Organized and licensed under the laws of a jurisdiction outside 
the United States;
    (2) Not domiciled in the United States; and
    (3) Subject to the banking or other financial regulatory authority 
of a foreign jurisdiction (except for multilateral and sovereign 
institutions).
    Foreign Financial Institution Letter of Credit or Letter of Credit. 
An irrevocable documentary letter of credit, subject to the current 
revision of the Uniform Customs and Practices (UCP) for Documentary 
Credits (International Chamber of Commerce Publication No. 600, or 
latest revision), and, if electronic documents are to be utilized, the 
current revision of the Supplement to the Uniform Customs and Practice 
for Documentary Credits for Electronic Presentation (eUCP) providing for 
payment in U.S. dollars against stipulated documents and issued in favor 
of the Exporter by a CCC-approved Foreign Financial Institution.
    Free Alongside Ship (FAS). A customary trade term for sea and inland 
waterway transport only, as defined by the International Chamber of 
Commerce, Incoterms 2010 (or as superseded).
    Free Carrier (FCA). A customary trade term for all modes of 
transportation, as defined by the International Chamber of Commerce, 
Incoterms 2010 (or as superseded).
    Free on Board (FOB). A customary trade term for sea and inland 
waterway transport only, as defined by the International Chamber of 
Commerce, Incoterms 2010 (or as superseded).
    GSM. The General Sales Manager, Foreign Agricultural Service, USDA, 
acting in his or her capacity as Vice President, CCC, or designee.
    Guaranteed Value. The maximum amount indicated on the face of the 
Payment Guarantee, exclusive of interest, that CCC agrees to pay the 
Holder of the Payment Guarantee.
    Holder of the Payment Guarantee. The Exporter or the Assignee of the 
Payment Guarantee with the legal right to make a claim and receive the 
payment of proceeds from CCC under the Payment Guarantee in case of 
default by the Foreign Financial Institution.
    Importer. A foreign buyer that enters into a Firm Export Sales 
Contract with an Exporter or with an Intervening Purchaser for the sale 
of the U.S. Agricultural Commodities to be shipped from the United 
States to the destination country or region under the Payment Guarantee.
    Importer's Representative. An entity having a physical office and 
that is either organized under the laws of or registered to do business 
in the destination country or region specified in the Payment Guarantee 
and that is authorized to act on the Importer's behalf with respect to 
the sale described in the Firm Export Sales Contract.
    Incoterms. Trade terms developed by the International Chamber of 
Commerce in Incoterms 2010 (or latest revision) which define the 
respective obligations of the buyer and seller in a sales contract.

[[Page 1084]]

    Intervening Purchaser. A party that is not located in the country or 
region of destination specified in the Payment Guarantee and that enters 
into a Firm Export Sales Contract to purchase U.S. Agricultural 
Commodities from an Exporter and sell the same U.S. Agricultural 
Commodities to an Importer.
    Ordinary Interest. Interest (other than Post Default Interest) 
charged on the principal amount identified in the Foreign Financial 
Institution Letter of Credit or, if applicable, the Terms and Conditions 
Document.
    Payment Guarantee. An agreement under the GSM-102 program by which 
CCC, in consideration of a fee paid, and in reliance upon the statements 
and declarations of the Exporter, subject to the terms set forth in the 
written guarantee, this subpart, and any applicable Program 
Announcements, agrees to pay the Holder of the Payment Guarantee in the 
event of a default by a Foreign Financial Institution on its Repayment 
Obligation under the Foreign Financial Institution Letter of Credit 
issued in connection with a guaranteed sale or, if applicable, under the 
Terms and Conditions Document.
    Port Value. (1) Where CCC announces coverage on a FAS, FCA, or FOB 
basis and:
    (i) Where the U.S. Agricultural Commodity is sold on a FAS, FCA, or 
FOB basis, port of shipment, the value, FAS, FCA, or FOB basis, port of 
shipment, of the export sale, including the upward loading tolerance, if 
any, as provided by the Firm Export Sales Contract, reduced by the value 
of any Discounts and Allowances granted to the Importer in connection 
with such sale; or
    (ii) Where the U.S. Agricultural Commodity was sold on a CFR or CIF 
basis, port of destination, the value of the export sale, FAS, FCA, or 
FOB, port of shipment, including the upward loading tolerance, if any, 
as provided by the Firm Export Sales Contract, is measured by the CFR or 
CIF value of the U.S. Agricultural Commodity less the value of ocean 
freight and, in the case of CIF sales, less the value of marine and war 
risk insurance, reduced by the value of any Discounts and Allowances 
granted to the Importer in connection with the sale of the commodity.
    (2) Where CCC announces coverage on a CFR or CIF basis and where the 
U.S. Agricultural Commodity was sold on CFR or CIF basis, port of 
destination, the total value of the export sale, CFR or CIF basis, port 
of destination, including the upward loading tolerance, if any, as 
provided by the Firm Export Sales Contract, reduced by the value of any 
Discounts and Allowances granted to the Importer in connection with the 
sale of the commodity.
    (3) When a CFR or CIF U.S. Agricultural Commodity export sale 
involves the performance of non-freight services to be performed outside 
the United States (e.g., services such as bagging bulk cargo), which are 
not normally included in ocean freight contracts, the value of such 
services and any related materials not exported from the U.S. with the 
commodity must also be deducted from the CFR or CIF sales price in 
determining the Port Value.
    Post Default Interest. Interest charged on amounts in default that 
begins to accrue upon default of payment, as specified in the Foreign 
Financial Institution Letter of Credit or, if applicable, in the Terms 
and Conditions Document.
    Principal. A principal of a corporation or other legal entity is an 
individual serving as an officer, director, owner, partner, or other 
individual with management or supervisory responsibilities for such 
corporation or legal entity.
    Program Announcement. An announcement issued by CCC on the USDA Web 
site that provides information on specific country and regional programs 
and may identify eligible U.S. Agricultural Commodities and countries, 
length of credit periods which may be covered, and other information.
    Repayment Obligation. A contractual commitment by the Foreign 
Financial Institution issuing the Letter of Credit in connection with an 
Eligible Export Sale to make payment(s) on principal amount(s), plus any 
Ordinary Interest and Post Default Interest, in U.S. dollars, to an 
Exporter or U.S. Financial Institution on deferred payment terms 
consistent with those permitted under CCC's Payment Guarantee. The 
Repayment Obligation must be documented

[[Page 1085]]

using one of the methods specified in Sec.1493.90.
    Repurchase Agreement. A written agreement under which the Holder of 
the Payment Guarantee may from time to time enter into transactions in 
which the Holder of the Payment Guarantee agrees to sell to another 
party Foreign Financial Institution Letter(s) of Credit and, if 
applicable, Terms and Conditions Document(s), secured by the Payment 
Guarantee, and repurchase the same Foreign Financial Institution 
Letter(s) of Credit and Terms and Conditions Documents secured by the 
Payment Guarantee, on demand or date certain at an agreed upon price.
    SAM (System for Award Management). A Federal Government owned and 
operated free Web site that contains information on parties excluded 
from receiving Federal contracts or certain subcontracts and excluded 
from certain types of Federal financial and nonfinancial assistance and 
benefits.
    Terms and Conditions Document. A document specifically identified 
and referred to in the Foreign Financial Institution Letter of Credit 
which may contain the Repayment Obligation and other special 
requirements specified in Sec.1493.90.
    United States or U.S. Each of the States of the United States, the 
District of Columbia, Puerto Rico, and the territories and possessions 
of the United States.
    U.S. Agricultural Commodity or U.S. Agricultural Commodities. (1)(i) 
An agricultural commodity or product entirely produced in the United 
States; or
    (ii) A product of an agricultural commodity--
    (A) 90 percent or more of the agricultural components of which by 
weight, excluding packaging and added water, is entirely produced in the 
United States; and
    (B) That the Secretary determines to be a high value agricultural 
product.
    (2) For purposes of this definition, fish entirely produced in the 
United States include fish harvested by a documented fishing vessel as 
defined in title 46, United States Code, in waters that are not waters 
(including the territorial sea) of a foreign country.
    USDA. United States Department of Agriculture.
    U.S. Financial Institution. A financial institution (including U.S. 
branches of Foreign Financial Institutions):
    (1) Organized and licensed under the laws of a jurisdiction within 
the United States;
    (2) Domiciled in the United States; and
    (3) Subject to the banking or other financial regulatory authority 
jurisdiction within the United States.
    Weighted Average Export Date. The mean Date of Export for all 
exports within a 30 calendar day period, weighted by the guaranteed 
portion of the Exported Value of each export.



Sec.1493.30  Information required for Exporter participation.

    Exporters must apply and be approved by CCC to be eligible to 
participate in the GSM-102 Program.
    (a) Qualification requirements. To qualify for participation in the 
GSM-102 program, an applicant must submit the following information to 
CCC in the manner specified on the USDA Web site:
    (1) For the applicant:
    (i) The name and full U.S. address (including the full 9-digit zip 
code) of the applicant's office, along with an indication of whether the 
address is a business or private residence. A post office box is not an 
acceptable address. If the applicant has multiple offices, the address 
included in the information should be that which is pertinent to the 
GSM-102 export sales contemplated by the applicant;
    (ii) Dun and Bradstreet (DUNS) number;
    (iii) Employer Identification Number (EIN--also known as a Federal 
Tax Identification Number);
    (iv) Telephone and fax numbers;
    (v) Email address (if applicable);
    (vi) Business Web site (if applicable);
    (vii) Contact name;
    (viii) Statement indicating whether the applicant is a U.S. domestic 
entity or a foreign entity domiciled in the United States; and
    (ix) The form of business entity of the applicant (e.g., sole 
proprietorship, partnership, corporation, etc.) and the U.S. 
jurisdiction under which such entity is organized and authorized to 
conduct business. Such jurisdictions are a

[[Page 1086]]

U.S. State, the District of Columbia, Puerto Rico, and the territories 
and possessions of the United States. Upon request by CCC, the applicant 
must provide written evidence that such entity has been organized in a 
U.S. State, the District of Columbia, Puerto Rico, or a territory or 
possession of the United States.
    (2) For the applicant's headquarters office:
    (i) The name and full address of the applicant's headquarters 
office. A post office box is not an acceptable address; and
    (ii) Telephone and fax numbers.
    (3) For the applicant's agent for the service of process:
    (i) The name and full U.S. address of the applicant's agent's 
office, along with an indication of whether the address is a business or 
private residence;
    (ii) Telephone and fax numbers;
    (iii) Email address (if applicable); and
    (iv) Contact name.
    (4) A description of the applicant's business. Applicants must 
provide the following information:
    (i) Nature of the applicant's business (e.g., agricultural producer, 
commodity trader, consulting firm, etc.);
    (ii) Explanation of the applicant's experience/history with U.S. 
Agricultural Commodities for the preceding three years, including a 
description of such commodities;
    (iii) Explanation of the applicant's experience/history exporting 
U.S. Agricultural Commodities, including number of years involved in 
exporting, types of products exported, and destination of exports for 
the preceding three years; and
    (iv) Whether or not the applicant is a ``small or medium 
enterprise'' (SME) as defined on the USDA Web site;
    (5) A listing of any related companies (e.g., Affiliates, 
subsidiaries, or companies otherwise related through common ownership) 
currently qualified to participate in CCC export programs;
    (6) A statement describing the applicant's participation, if any, 
during the past three years in U.S. Government programs, contracts or 
agreements; and
    (7) A statement that: ``All certifications set forth in 7 CFR 
1493.60(a) are hereby made in this application'' which, when included in 
the application, will constitute a certification that the applicant is 
in compliance with all of the requirements set forth in Sec.
1493.60(a). The applicant will be required to provide further 
explanation or documentation if not in compliance with these 
requirements or if the application does not include this statement.
    (b) Qualification notification. CCC will promptly notify applicants 
that have submitted information required by this section whether they 
have qualified to participate in the program or whether further 
information is required by CCC. Any applicant failing to qualify will be 
given an opportunity to provide additional information for consideration 
by the Director.
    (c) Previous qualification. Any Exporter not submitting an 
application to CCC for a Payment Guarantee for two consecutive U.S. 
Government fiscal years must resubmit a qualification application 
containing the information specified in Sec.1493.30(a) to CCC to 
participate in the GSM-102 program. If at any time the information 
required by paragraph (a) of this section changes, the Exporter must 
promptly contact CCC to update this information and certify that the 
remainder of the information previously provided pursuant to paragraph 
(a) has not changed.
    (d) Ineligibility for program participation. An applicant may be 
ineligible to participate in the GSM-102 program if such applicant 
cannot provide all of the information and certifications required by 
paragraph (a) of this section.



Sec.1493.40  Information required for U.S. Financial Institution
participation.

    U.S. Financial Institutions must apply and be approved by CCC to be 
eligible to participate in the GSM-102 Program.
    (a) Qualification requirements. To qualify for participation in the 
GSM-102 Program, a U.S. Financial Institution must submit the following 
information to CCC in the manner specified on the USDA Web site:
    (1) Legal name and address of the applicant;
    (2) Dun and Bradstreet (DUNS) number;

[[Page 1087]]

    (3) Employer Identification Number (EIN--also known as a Federal Tax 
Identification Number);
    (4) Year-end audited financial statements for the applicant's most 
recent fiscal year;
    (5) Breakdown of the applicant's ownership as follows:
    (i) Ten largest individual shareholders and ownership percentages;
    (ii) Percentage of government ownership, if any; and
    (iii) Identity of the legal entity or person with ultimate control 
or decision making authority, if other than the majority shareholder.
    (6) Organizational structure (independent, or a subsidiary, 
Affiliate, or branch of another financial institution);
    (7) Documentation from the applicable United States Federal or State 
agency demonstrating that the applicant is either licensed or chartered 
to do business in the United States;
    (8) Name of the agency that regulates the applicant and the name and 
telephone number of the primary contact for such regulator; and
    (9) A statement that: ``All certifications set forth in 7 CFR 
1493.60 are hereby made in this application'' which, when included in 
the application, will constitute a certification that the applicant is 
in compliance with all of the requirements set forth in Sec.1493.60. 
The applicant will be required to provide further explanation or 
documentation if not in compliance with these requirements or if the 
application does not include this statement.
    (b) Qualification notification. CCC will notify applicants that have 
submitted information required by this section whether they have 
qualified to participate in the program or whether further information 
is required by CCC. Any applicant failing to qualify will be given an 
opportunity to provide additional information for consideration by the 
Director.
    (c) Previous qualification. Any U.S. Financial Institution not 
participating in the GSM-102 program for two consecutive U.S. Government 
fiscal years must resubmit a qualification application containing the 
information specified in paragraph (a) of this section to CCC to 
participate in the GSM-102 program. If at any time the information 
required by paragraph (a) of this section changes, the U.S. Financial 
Institution must promptly contact CCC to update this information and 
certify that the remainder of the information previously provided 
pursuant to paragraph (a) has not changed.
    (d) Ineligibility for program participation. A U.S. Financial 
Institution may be deemed ineligible to participate in the GSM-102 
Program if such applicant cannot provide all of the information and 
certifications required by paragraph (a) of this section.



Sec.1493.50  Information required for Foreign Financial Institution 
participation.

    Foreign Financial Institutions must apply and be approved by CCC to 
be eligible to participate in the GSM-102 Program.
    (a) Qualification requirements. To qualify for participation in the 
GSM-102 program, a Foreign Financial Institution must submit the 
following information to CCC in the manner specified on the USDA Web 
site:
    (1) Legal name and address of the applicant;
    (2) Year end, audited financial statements in accordance with the 
accounting standards established by the applicant's regulators, in 
English, for the applicant's three most recent fiscal years. If the 
applicant is not subject to a banking or other financial regulatory 
authority, year-end, audited financial statements in accordance with 
prevailing accounting standards, in English, for the applicant's three 
most recent fiscal years;
    (3) Breakdown of applicant's ownership as follows:
    (i) Ten largest individual shareholders and ownership percentages;
    (ii) Percentage of government ownership, if any; and
    (iii) Identity of the legal entity or person with ultimate control 
or decision making authority, if other than the majority shareholder.
    (4) Organizational structure (independent, or a subsidiary, 
Affiliate, or branch of another legal entity);
    (5) Name of foreign government agency that regulates the applicant; 
and

[[Page 1088]]

    (6) A statement that: ``All certifications set forth in 7 CFR 
1493.60 are hereby made in this application'' which, when included in 
the application, will constitute a certification that the applicant is 
in compliance with all of the requirements set forth in Sec.1493.60. 
The applicant will be required to provide further explanation or 
documentation if not in compliance with these requirements or if the 
application does not include this statement.
    (b) Qualification notification. CCC will notify applicants that have 
submitted information required by this section whether they have 
qualified to participate in the program or whether further information 
is required by CCC. Any applicant failing to qualify will be given an 
opportunity to provide additional information for consideration by the 
Director.
    (c) Participation limit. If, after review of the information 
submitted and other publicly available information, CCC determines that 
the Foreign Financial Institution is eligible for participation, CCC 
will establish a dollar participation limit for the institution. This 
limit will be the maximum amount of exposure CCC agrees to undertake 
with respect to this Foreign Financial Institution at any point in time. 
CCC may change or cancel this dollar participation limit at any time 
based on any information submitted or any publicly available 
information.
    (d) Previous qualification and submission of annual financial 
statements. Each qualified Foreign Financial Institution shall submit 
annually to CCC the certifications in Sec.1493.60 and its audited 
fiscal year-end financial statements in accordance with the accounting 
standards established by the applicant's regulators, in English, so that 
CCC may determine the continued ability of the Foreign Financial 
Institution to adequately service CCC guaranteed debt. If the Foreign 
Financial Institution is not subject to a banking or other financial 
regulatory authority, it should submit year-end, audited financial 
statements in accordance with prevailing accounting standards, in 
English, for the applicant's most recent fiscal year. Failure to submit 
this information annually may cause CCC to decrease or cancel the 
Foreign Financial Institution's dollar participation limit. Any Foreign 
Financial Institution not participating in the GSM-102 program for two 
consecutive U.S. Government fiscal years may have its dollar 
participation limit cancelled. If this participation limit is cancelled, 
the Foreign Financial Institution must resubmit the information and 
certifications requested in paragraph (a) of this section to CCC when 
reapplying for participation. Additionally, if at any time the 
information required by paragraph (a) of this section changes, the 
Foreign Financial Institution must promptly contact CCC to update this 
information and certify that the remainder of the information previously 
provided under paragraph (a) has not changed.
    (e) Ineligibility for program participation. A Foreign Financial 
Institution may be deemed ineligible to participate in the GSM-102 
program if:
    (1) Such applicant cannot provide all of the information and 
certifications required in paragraph (a) of this section; or
    (2) Based upon information submitted by the applicant or other 
publicly available sources, CCC determines that the applicant cannot 
adequately service the debt associated with the Payment Guarantees 
issued by CCC.



Sec.1493.60  Certifications required for program participation.

    (a) When making the statement required by Sec. Sec.1493.30(a)(7), 
1493.40(a)(9), or 1493.50(a)(6), each Exporter, U.S. Financial 
Institution and Foreign Financial Institution applicant for program 
participation is certifying that, to the best of its knowledge and 
belief:
    (1) The applicant and any of its principals (as defined in 2 CFR 
180.995) are not presently debarred, suspended, proposed for debarment, 
declared ineligible, or excluded from covered transactions by any U.S. 
Federal department or agency;
    (2) The applicant and any of its principals (as defined in 2 CFR 
180.995) have not within a three-year period preceding this application 
been convicted of or had a civil judgment rendered against them for 
commission of fraud or a criminal offense in connection with obtaining, 
attempting to obtain,

[[Page 1089]]

or performing a public (Federal, State, or local) transaction or 
contract under a public transaction; violation of Federal or State 
antitrust statues or commission of embezzlement, theft, forgery, 
bribery, falsification or destruction of records, making false 
statements, or receiving stolen property;
    (3) The applicant and any of its principals (as defined in 2 CFR 
180.995) are not presently indicted for or otherwise criminally or 
civilly charged by a governmental entity (Federal, State or local) with 
commission of any of the offenses enumerated in paragraph (a)(2) of this 
section;
    (4) The applicant and any of its principals (as defined in 2 CFR 
180.995) have not within a three-year period preceding this application 
had one or more public transactions (Federal, State or local) terminated 
for cause or default;
    (5) The applicant does not have any outstanding nontax debt to the 
United States that is in delinquent status as provided in 31 CFR 285.13;
    (6) The applicant is not controlled by a person owing an outstanding 
nontax debt to the United States that is in delinquent status as 
provided in 31 CFR 285.13 (e.g., a corporation is not controlled by an 
officer, director, or shareholder who owes a debt); and
    (7) The applicant does not control a person owing an outstanding 
nontax debt to the United States that is in delinquent status as 
provided in 31 CFR 285.13 (e.g., a corporation does not control a 
wholly-owned or partially-owned subsidiary which owes a debt).
    (b) Additional certifications for U.S. and Foreign Financial 
Institution applicants. When making the statement required by Sec.
1493.40(a)(9) or Sec.1493.50(a)(6), each U.S. and Foreign Financial 
Institution applicant for program participation is certifying that, to 
the best of its knowledge and belief:
    (1) The applicant and its Principals are in compliance with all 
requirements, restrictions and guidelines as established by the 
applicant's regulators; and
    (2) All U.S. operations of the applicant and its U.S. Principals are 
in compliance with U.S. anti-money laundering and terrorist financing 
statutes including, but not limited to, the USA Patriot Act of 2001, and 
the Foreign Corrupt Practices Act of 1977.

[79 FR 68596, Nov. 18, 2014, as amended at 84 FR 28186, June 18, 2019]



Sec.1493.70  Application for Payment Guarantee.

    (a) A Firm Export Sales Contract for an Eligible Export Sale must 
exist before an Exporter may submit an application for a Payment 
Guarantee. Upon request by CCC, the Exporter must provide evidence of a 
Firm Export Sales Contract. An application for a Payment Guarantee must 
be submitted in writing to CCC in the manner specified on the USDA Web 
site. An application must identify the name and address of the Exporter 
and include the following information:
    (1) Name of the destination country or region. If the destination is 
a region, indicate the country or countries within the region to which 
the U.S. Agricultural Commodity will be exported.
    (2) Name and address of the Importer. If the Importer is not 
physically located in the country or region of destination, it must have 
an Importer's Representative in the country or region of destination. If 
applicable, provide the name and address of the Importer's 
Representative.
    (3) A statement that the U.S. Agricultural Commodity will be shipped 
to the destination country or region.
    (4) Name and address of the party on whose request the Letter of 
Credit is issued, if other than the Importer.
    (5) Name and address of the Intervening Purchaser, if any.
    (6) Date of Sale.
    (7) Exporter's sale number.
    (8) Delivery period as agreed between the Exporter and the Importer.
    (9) A full description of the U.S. Agricultural Commodity (including 
packaging, if any). The description must include the applicable six-
digit Harmonized System commodity classification code. The commodity 
grade and quality specified in the Exporter's application for the 
Payment Guarantee must correspond with the commodity grade and quality 
specified in the Firm Export Sales Contract and the Foreign Financial 
Institution Letter of Credit.
    (10) Mean quantity, contract loading tolerance and, if necessary, a 
request

[[Page 1090]]

for CCC to reserve coverage up to the maximum quantity permitted.
    (11) Unit sales price of the U.S. Agricultural Commodity, or a 
mechanism to establish the price, as agreed between the Exporter and the 
Importer. If the commodity was sold on the basis of CFR or CIF, the 
actual (if known at the time of application) or estimated value of 
freight and, in the case of sales made on a CIF basis, the actual (if 
known at the time of application) or estimated value of marine and war 
risk insurance, must be specified.
    (12) Description and value of Discounts and Allowances, if any.
    (13) Port Value (includes upward loading tolerance, if any).
    (14) Guaranteed Value.
    (15) Guarantee fee, either as announced on the Web site per Sec.
1493.110(a)(1), or the competitive fee bid per Sec.1493.110(a)(2), 
depending on the type of fee charged by CCC for the country or region.
    (16) Name and location of the Foreign Financial Institution issuing 
the Letter of Credit and, upon request by CCC, written evidence that the 
Foreign Financial Institution has agreed to issue the Letter of Credit.
    (17) The term length for the credit being extended and the intervals 
between principal payments for each shipment to be made under the export 
sale.
    (18) The Exporter's statement, ``All certifications set forth in 7 
CFR 1493.80 are hereby being made by the Exporter in this application.'' 
which, when included in the application by the Exporter, will constitute 
a certification that it is in compliance with all the requirements set 
forth in Sec.1493.80.
    (b) An application for a Payment Guarantee may be approved as 
submitted, approved with modifications agreed to by the Exporter, or 
rejected by the Director. In the event that the application is approved, 
the Director will cause a Payment Guarantee to be issued in favor of the 
Exporter. Such Payment Guarantee will become effective at the time 
specified in Sec.1493.100(b). If, based upon a price review, the unit 
sales price of the commodity does not fall within the prevailing 
commercial market level ranges, as determined by CCC, the application 
will not be approved.



Sec.1493.80  Certification requirements for obtaining Payment 
Guarantee.

    By providing the statement in Sec.1493.70(a)(18), the Exporter is 
certifying that the information provided in the application is true and 
correct and, further, that all requirements set forth in this section 
have been met. The Exporter will be required to provide further 
explanation or documentation with regard to applications that do not 
include this statement. If the Exporter makes false certifications with 
respect to a Payment Guarantee, CCC will have the right, in addition to 
any other rights provided under this subpart or otherwise as a matter of 
law, to revoke guarantee coverage for any commodities not yet exported 
and/or to commence legal action and/or administrative proceedings 
against the Exporter. The Exporter, in submitting an application for a 
Payment Guarantee and providing the statement set forth in Sec.
1493.70(a)(18), certifies that:
    (a) The commodity or product covered by the Payment Guarantee is a 
U.S. Agricultural Commodity;
    (b) There have not been any corrupt payments or extra sales services 
or other items extraneous to the transaction provided, financed, or 
guaranteed in connection with the transaction, and the transaction 
complies with applicable United States law, including the Foreign 
Corrupt Practices Act of 1977 and other anti-bribery measures;
    (c) If the U.S. Agricultural Commodity is vegetable oil or a 
vegetable oil product, that none of the agricultural commodity or 
product has been or will be used as a basis for a claim of a refund, as 
drawback, pursuant to section 313 of the Tariff Act of 1930, 19 U.S.C. 
1313, of any duty, tax or fee imposed under Federal law on an imported 
commodity or product;
    (d) At the time of submission of the application for Payment 
Guarantee, neither the Importer nor the Intervening Purchaser, if 
applicable, is present as an excluded party on the SAM list;
    (e) The Exporter is fully in compliance with the requirements of

[[Page 1091]]

Sec.1493.130(b) for all existing Payment Guarantees issued to the 
Exporter or has requested and been granted an extension per Sec.
1493.130(b)(3); and
    (f) The information provided pursuant to Sec.1493.30 has not 
changed and the Exporter still meets all of the qualification 
requirements of Sec.1493.30.



Sec.1493.90  Special requirements of the Foreign Financial Institution
Letter of Credit and the Terms and Conditions Document, if applicable.

    (a) Permitted mechanisms to document special requirements. (1) A 
Foreign Financial Institution Letter of Credit is required in connection 
with the export sale to which CCC's Payment Guarantee pertains.
    (i) The Letter of Credit must stipulate presentation of at least one 
original clean on board bill of lading as a required document, unless:
    (A) The Exporter, or a related company previously reported to CCC by 
the Exporter pursuant to Sec.1493.30(a)(5), is named as the shipper on 
the clean on board bill of lading. If the Exporter or a related company 
is named the shipper on the bill of lading, the Letter of Credit may 
stipulate a copy or photocopy of an original clean on board bill of 
lading; or
    (B) The Letter of Credit stipulates presentation of electronic 
documents per paragraph (a)(1)(ii) of this section.
    (ii) If the Letter of Credit will allow for presentation of 
electronic documents, the Letter of Credit must so stipulate.
    (2) The use of a Terms and Conditions Document is optional. The 
Terms and Conditions Document, if any, must be specifically identified 
and referred to in the Foreign Financial Institution Letter of Credit.
    (3) The special requirements in paragraph (b) of this section must 
be documented in one of the two following ways:
    (i) The special requirements may be set forth in the Foreign 
Financial Institution Letter of Credit as a special instruction from the 
Foreign Financial Institution; or
    (ii) The special requirements may be set forth in a separate Terms 
and Conditions Document.
    (b) Special requirements. The following provisions are required and 
must be documented in accordance with paragraph (a) of this section:
    (1) The terms of the Repayment Obligation, including a specific 
promise by the Foreign Financial Institution issuing the Letter of 
Credit to pay the Repayment Obligation;
    (2) The following language: ``In the event that the Commodity Credit 
Corporation (``CCC'') is subrogated to the position of the obligee 
hereunder, this instrument shall be governed by and construed in 
accordance with the laws of the State of New York, excluding its 
conflict of laws principles. In such case, any legal action or 
proceeding arising under this instrument will be brought exclusively in 
the U.S. District Court for the Southern District of New York or the 
U.S. District Court for the District of Columbia, as determined by CCC, 
and such parties hereby irrevocably consent to the personal jurisdiction 
and venue therein.'';
    (3) A provision permitting the Holder of the Payment Guarantee to 
declare all or any part of the Repayment Obligation, including accrued 
interest, immediately due and payable, in the event a payment default 
occurs under the Letter of Credit or, if applicable, the Terms and 
Conditions Document; and
    (4) Post Default Interest terms.



Sec.1493.100  Terms and requirements of the Payment Guarantee.

    (a) CCC's obligation. The Payment Guarantee will provide that CCC 
agrees to pay the Holder of the Payment Guarantee an amount not to 
exceed the Guaranteed Value, plus Eligible Interest, in the event that 
the Foreign Financial Institution fails to pay under the Foreign 
Financial Institution Letter of Credit and, if applicable, the Terms and 
Conditions Document. Payment by CCC will be in U.S. dollars.
    (b) Period of guarantee coverage. (1) The Holder of the Payment 
Guarantee may, with respect to a series of shipments made within a 30 
calendar day period, elect to have the Payment Guarantee coverage being 
on the Weighted Average Export Date for such

[[Page 1092]]

shipments. The first allowable 30 calendar day period for bundling of 
shipments to compute the Weighted Average Export Date for such shipments 
begins on the first Date of Export for transactions covered by the 
Payment Guarantee. Shipments within each subsequent 30 calendar day 
period may be bundled with other shipments made within the same 30 
calendar period to determine the Weighted Average Export Date for such 
shipments.
    (2)(i) The period of coverage under the Payment Guarantee begins on 
the earlier of the following dates and will continue during the credit 
term specified on the Payment Guarantee or any amendments thereto:
    (A) The Date(s) of Export or the Weighted Average Export Date(s), as 
selected by the Holder of the Payment Guarantee consistent with 
paragraph (b)(1) of this section; or
    (B) The date when Ordinary Interest begins to accrue, or the 
weighted average date when interest begins to accrue.
    (ii) However, the Payment Guarantee becomes effective on the Date(s) 
of Export of the U.S. Agricultural Commodities specified in the 
Exporter's application for the Payment Guarantee.
    (c) Terms of the CCC Payment Guarantee. The terms of CCC's coverage 
will be set forth in the Payment Guarantee, as approved by CCC, and will 
include the provisions of this subpart, which may be supplemented by any 
Program Announcements and notices to participants in effect at the time 
the Payment Guarantee is approved by CCC.
    (d) Final date to export. The final date to export shown on the 
Payment Guarantee will be one month, as determined by CCC, after the 
contractual deadline for shipping.
    (e) Reserve coverage for loading tolerances. The Exporter may apply 
for a Payment Guarantee and, if coverage is available, pay the guarantee 
fee, based on the mean of the lower and upper loading tolerances of the 
Firm Export Sales Contract; however, the Exporter may also request that 
CCC reserve additional guarantee coverage to accommodate up to the 
amount of the upward loading tolerance specified in the Firm Export 
Sales Contract. The amount of coverage that can be reserved to 
accommodate the upward loading tolerance is limited to ten (10) percent 
of the Port Value of the sale. If such additional guarantee coverage is 
available at the time of application and the Director determines to make 
such reservation, CCC will so indicate to the Exporter. In the event 
that the Exporter ships a quantity greater than the amount on which the 
guarantee fee was paid (i.e., the mean of the upper and lower loading 
tolerances), it may obtain the additional coverage from CCC, up to the 
amount of the upward loading tolerance, by filing for an application for 
amendment to the Payment Guarantee, and by paying the additional amount 
of fee applicable. If such application for an amendment to the Payment 
Guarantee is not filed with CCC by the Exporter and the additional fee 
not received by CCC within 30 calendar days after the date of the last 
export against the Payment Guarantee, CCC may cancel the reserve 
coverage originally set aside for the Exporter.
    (f) Certain export sales are ineligible for GSM-102 Payment 
Guarantees. (1) An export sale (or any portion thereof) is ineligible 
for Payment Guarantee coverage if at any time CCC determines that:
    (1) The commodity is not a U.S. Agricultural Commodity;
    (2) The export sale includes corrupt payments or extra sales or 
services or other items extraneous to the transactions provided, 
financed, or guaranteed in connection with the export sale;
    (3) The export sale does not comply with applicable U.S. law, 
including the Foreign Corrupt Practices Act of 1977 and other anti-
bribery measures;
    (4) If the U.S. Agricultural Commodity is vegetable oil or a 
vegetable oil product, any of the agricultural commodity or product has 
been or will be used as a basis for a claim of a refund, as drawback, 
pursuant to section 313 of the Tariff Act of 1930, 19 U.S.C. 1313, of 
any duty, tax or fee imposed under Federal law on an imported commodity 
or product;
    (5) Either the Importer or the Intervening Purchaser, if any, is 
excluded or disqualified from participation in U.S. government programs; 
or

[[Page 1093]]

    (6) The sale is not an Eligible Export Sale.
    (g) Certain exports of U.S. Agricultural Commodities are ineligible 
for Payment Guarantee coverage. The following exports are ineligible for 
coverage under a GSM-102 Payment Guarantee except where it is determined 
by the Director to be in the best interest of CCC to provide guarantee 
coverage on such exports:
    (1) Exports of U.S. Agricultural Commodities with a Date of Export 
prior to the date of receipt by CCC of the Exporter's written 
application for a Payment Guarantee;
    (2) Exports of U.S. Agricultural Commodities with a Date of Export 
later than the final date to export shown on the Payment Guarantee or 
any amendments thereof;
    (3) Exports of U.S. Agricultural Commodities where the date of 
issuance of a Foreign Financial Institution Letter of Credit is later 
than 30 calendar days after:
    (i) The Date of Export, or
    (ii) The Weighted Average Export Date, if the Holder of the Payment 
Guarantee has elected to have the Payment Guarantee coverage begin on 
the Weighted Average Export Date; or
    (4) Exports of U.S. Agricultural Commodities that have been 
guaranteed by CCC under another Payment Guarantee. If CCC determines 
that an export of U.S. Agricultural Commodities has been guaranteed 
under multiple Payment Guarantees (or coverage has been requested under 
multiple Payment Guarantees), CCC will determine which Payment Guarantee 
(or application for Payment Guarantee), if any, corresponds to an 
Eligible Export Sale.
    (h) Additional requirements. The Payment Guarantee may contain such 
additional terms, conditions, and limitations as deemed necessary or 
desirable by the Director. Such additional terms, conditions or 
qualifications as stated in the Payment Guarantee are binding on the 
Exporter and the Assignee.
    (i) Amendments. A request for an amendment of a Payment Guarantee 
may be submitted only by the Exporter, with the written concurrence of 
the Assignee, if any. The Director will consider such a request only if 
the amendment sought is consistent with this subpart and any applicable 
Program Announcements and sufficient budget authority exists. Any 
amendment to the Payment Guarantee, particularly those that result in an 
increase in CCC's liability under the Payment Guarantee, may result in 
an increase in the guarantee fee. CCC reserves the right to request 
additional information from the Exporter to justify the request and to 
charge a fee for amendments. Such fees will be announced and available 
on the USDA Web site. Any request to amend the Foreign Financial 
Institution on the Payment Guarantee will require that the Holder of the 
Payment Guarantee resubmit to CCC the certifications in Sec.
1493.120(c)(1)(i) or Sec.1493.140(d).



Sec.1493.110  Guarantee fees.

    (a) Guarantee fee rates. Payment Guarantee fee rates charged may be 
one of the following two types:
    (1) Those that are announced on the USDA Web site and are based upon 
the length of the payment terms provided for in the Firm Export Sales 
Contract, the degree of risk that CCC assumes, as determined by CCC, and 
any other factors which CCC determines appropriate for consideration.
    (2) Those where Exporters are invited to submit a competitive bid 
for coverage. If CCC determines to offer coverage on a competitive fee 
bid basis, instructions for bidding, and minimum fee rates, if 
applicable, will be made available on the USDA Web site.
    (b) Calculation of fee. The guarantee fee will be computed by 
multiplying the Guaranteed Value by the guarantee fee rate.
    (c) Payment of fee. The Exporter shall remit, with his application, 
the full amount of the guarantee fee. Applications will not be accepted 
until the guarantee fee has been received by CCC. The Exporter's wire 
transfer or check for the guarantee fee shall be made payable to CCC and 
be submitted in the manner specified on the USDA Web site.
    (d) Refunds of fee. Guarantee fees paid in connection with 
applications that are accepted by CCC will ordinarily not be refundable. 
Once CCC notifies an Exporter of acceptance of an application, the fee 
for that application will not be

[[Page 1094]]

refunded unless the Director determines that such refund will be in the 
best interest of CCC, even if the Exporter withdraws the application 
prior to CCC's issuance of the Payment Guarantee. If CCC does not accept 
an application for a Payment Guarantee or accepts only part of the 
guarantee coverage requested, a full or pro rata refund of the fee will 
be made.



Sec.1493.120  Assignment of the Payment Guarantee.

    (a) Requirements for assignment. The Exporter may assign the Payment 
Guarantee only to a U.S. Financial Institution approved for 
participation by CCC. The assignment must cover all amounts payable 
under the Payment Guarantee not already paid, may not be made to more 
than one party, and may not, unless approved in advance by CCC, be:
    (1) Made to one party acting for two or more parties, or
    (2) Subject to further assignment.
    (b) CCC to receive notice of assignment of payment guarantee. A 
notice of assignment signed by the parties thereto must be filed with 
CCC by the Assignee in the manner specified on the USDA Web site. The 
name and address of the Assignee must be included on the written notice 
of assignment. The notice of assignment should be received by CCC within 
30 calendar days of the date of assignment.
    (c) Required certifications. (1) The U.S. Financial Institution must 
include the following certification on the notice of assignment: ``I 
certify that:
    (i) [Name of Assignee] has verified that the Foreign Financial 
Institution, at the time of submission of the notice of assignment, is 
not present as an excluded party on the SAM list; and
    (ii) To the best of my knowledge and belief, the information 
provided pursuant to Sec.1493.40 has not changed and [name of 
Assignee] still meets all of the qualification requirements of Sec.
1493.40.''
    (2) If the Assignee makes a false certification with respect to a 
Payment Guarantee, CCC may, in its sole discretion, in addition to any 
other action available as a matter of law, rescind and cancel the 
Payment Guarantee, reject the assignment of the Payment Guarantee, and/
or commence legal action and/or administrative proceedings against the 
Assignee.
    (d) Notice of eligibility to receive assignment. In cases where a 
U.S. Financial Institution is determined to be ineligible to receive an 
assignment, in accordance with paragraph (e) of this section, CCC will 
provide notice thereof to the U.S. Financial Institution and to the 
Exporter issued the Payment Guarantee.
    (e) Ineligibility of U.S. Financial Institutions to receive an 
assignment and proceeds. A U.S. Financial Institution will be ineligible 
to receive an assignment of a Payment Guarantee or the proceeds payable 
under a Payment Guarantee if such U.S. Financial Institution:
    (1) At the time of assignment of a Payment Guarantee, is not in 
compliance with all requirements of 1493.40(a); or
    (2) Is the branch, agency, or subsidiary of the Foreign Financial 
Institution issuing the Letter of Credit; or
    (3) Is owned or controlled by an entity that owns or controls the 
Foreign Financial Institution issuing the Letter of Credit; or
    (4) Is the U.S. parent of the Foreign Financial Institution issuing 
the Foreign Financial Institution Letter of Credit; or
    (5) Is owned or controlled by the government of a foreign country 
and the Payment Guarantee has been issued in connection with export 
sales of U.S. Agricultural Commodities to Importers located in such 
foreign country.
    (f) Repurchase agreements. (1) The Holder of the Payment Guarantee 
may enter into a Repurchase Agreement, to which the following 
requirements apply:
    (i) Any repurchase under a Repurchase Agreement by the Holder of the 
Payment Guarantee must be for the entirety of the outstanding balance 
under the associated Repayment Obligation;
    (ii) In the event of a default with respect to the Repayment 
Obligation subject to a Repurchase Agreement, the Holder of the Payment 
Guarantee must immediately effect such repurchase; and

[[Page 1095]]

    (iii) The Holder of the Payment Guarantee must file all 
documentation required by Sec. Sec.1493.160 and 1493.170 in case of a 
default by the Foreign Financial Institution under the Payment 
Guarantee.
    (2) The Holder of the Payment Guarantee shall, within five Business 
Days of execution of a transaction under the Repurchase Agreement, 
notify CCC of the transaction in writing in the manner specified on the 
USDA Web site. Such notification must include the following information:
    (i) Name and address of the other party to the Repurchase Agreement;
    (ii) A statement indicating whether the transaction executed under 
the Repurchase Agreement is for a fixed term or if it is terminable upon 
demand by either party. If fixed, provide the purchase date and the 
agreed upon date for repurchase. If terminable on demand, provide the 
purchase date only; and
    (iii) The following written certification: ``[Name of Holder of the 
Payment Guarantee] has entered into a Repurchase Agreement that meets 
the provisions of 7 CFR 1493.120(f)(1) and, prior to entering into this 
agreement, verified that [name of other party to the Repurchase 
Agreement] is not present as an excluded party on the SAM list.''
    (3) Failure of the Holder of the Payment Guarantee to comply with 
any of the provisions of paragraph (f) of this section may result in CCC 
annulling coverage on the Foreign Financial Institution Letter of Credit 
and Terms and Conditions Document, if applicable, covered by the Payment 
Guarantee.



Sec.1493.130  Evidence of export.

    (a) Report of export. The Exporter is required to provide CCC an 
evidence of export report for each shipment made under the Payment 
Guarantee. This report must include the following information:
    (1) Payment Guarantee number;
    (2) Evidence of export report number (e.g., Report 1, Report 2) 
reflecting the report's chronological order of submission under the 
particular Payment Guarantee;
    (3) Date of Export;
    (4) Destination country or region. If the sale was registered under 
a regional program, the Exporter must indicate the specific country or 
countries within the region to which the goods were shipped;
    (5) Exporter's sale number;
    (6) Exported Value;
    (7) Quantity;
    (8) A full description of the commodity exported, including the 
applicable six-digit Harmonized System commodity classification code;
    (9) Unit sales price received for the commodity exported and the 
Incoterms 2010 basis (e.g., FOB, CFR, CIF). Where the unit sales price 
at export differs from the unit sales price indicated in the Exporter's 
application for a Payment Guarantee, the Exporter is also required to 
submit a statement explaining the reason for the difference;
    (10) Description and value of Discounts and Allowances, if any;
    (11) The Exporter's statement, ``All certifications set forth in 7 
CFR 1493.140 are hereby being made by the Exporter in this Evidence of 
Export.'' which, when included in the evidence of export by the 
Exporter, will constitute a certification that it is in compliance with 
all the requirements set forth in Sec.1493.140; and
    (12) In addition to all of the above information, the final evidence 
of export report for the Payment Guarantee must include the following:
    (i) The statement ``Exports under the Payment Guarantee have been 
completed.''
    (ii) A statement summarizing the total quantity and value of the 
commodity exported under the Payment Guarantee (i.e., the cumulative 
totals on all numbered evidence of export reports).
    (b) Time limit for submission of evidence of export. (1) The 
Exporter must provide a written report to the CCC in the manner 
specified on the USDA Web site within 30 calendar days of the Date of 
Export.
    (2) If at any time the Exporter determines that no shipments are to 
be made under a Payment Guarantee, the Exporter is required to notify 
CCC in writing no later than the final date to

[[Page 1096]]

export specified on the Payment Guarantee by furnishing the Payment 
Guarantee number and stating ``no exports will be made under the Payment 
Guarantee.''
    (3) Requests for an extension of the time limit for submitting an 
evidence of export report must be submitted in writing by the Exporter 
to the Director and must include an explanation of why the extension is 
needed. An extension of the time limit may be granted if such extension 
is requested prior to the expiration of the time limit for filing and is 
determined by the Director to be in the best interests of CCC.
    (c) Failure to comply with time limits for submission. CCC will not 
accept any new applications for Payment Guarantees from an Exporter 
under Sec.1493.70 until the Exporter is fully in compliance with the 
requirements of paragraph (b) of this section for all existing Payment 
Guarantees issued to the Exporter or has requested and been granted an 
extension per paragraph (b)(3) of this section.
    (d) Export sales reporting. Exporters have a mandatory reporting 
responsibility under Section 602 of the Agricultural Trade Act of 1978 
(7 U.S.C. 5712), for exports of certain agricultural commodities and 
products thereof.



Sec.1493.140  Certification requirements for the evidence of export.

    By providing the statement contained in Sec.1493.130(a)(11), the 
Exporter is certifying that the information provided in the evidence of 
export report is true and correct and, further, that all requirements 
set forth in this section have been met. The Exporter will be required 
to provide further explanation or documentation with regard to reports 
that do not include this statement. If the Exporter makes false 
certifications with respect to a Payment Guarantee, CCC will have the 
right, in addition to any other rights provided under this subpart or 
otherwise as a matter of law, to annul guarantee coverage for any 
commodities not yet exported and/or to commence legal action and/or 
administrative proceedings against the Exporter. The Exporter, in 
submitting the evidence of export and providing the statement set forth 
in Sec.1493.130(a)(11), certifies that:
    (a) The agricultural commodity or product exported under the Payment 
Guarantee is a U.S. Agricultural Commodity;
    (b) The U.S. Agricultural Commodity was shipped directly to the 
country or region specified on the Payment Guarantee;
    (c) There have not been any corrupt payments or extra sales services 
or other items extraneous to the transaction provided, financed, or 
guaranteed in connection with the export sale, and that the export sale 
complies with applicable United States law, including the Foreign 
Corrupt Practices Act of 1977 and other anti-bribery measures;
    (d) If the Exporter has not assigned the Payment Guarantee to a U.S. 
Financial Institution, the Exporter has verified that the Foreign 
Financial Institution, at the time of submission of the evidence of 
export report, is not present as an excluded party on the SAM list;
    (e) The transaction is an Eligible Export Sale; and
    (f) The information provided pursuant to Sec. Sec.1493.30 and 
1493.70 has not changed (except as agreed to and amended by CCC) and the 
Exporter still meets all of the qualification requirements of Sec.
1493.30.



Sec.1493.150  Proof of entry.

    (a) Diversion. The diversion of U.S. Agricultural Commodities 
covered by a Payment Guarantee to a country or region other than that 
shown on the Payment Guarantee is prohibited, unless expressly 
authorized in writing by the Director.
    (b) Records of proof of entry. (1) Exporters must obtain and 
maintain records of an official or customary commercial nature that 
demonstrate the arrival of the U.S. Agricultural Commodities exported in 
connection with the GSM-102 program in the country or region that was 
the intended country or region of destination of such commodities. At 
the Director's request, the Exporter must submit to CCC records 
demonstrating proof of entry. Records demonstrating proof of

[[Page 1097]]

entry must be in English or be accompanied by a certified or other 
translation acceptable to CCC. Records acceptable to meet this 
requirement include an original certification of entry signed by a duly 
authorized customs or port official of the importing country, by an 
agent or representative of the vessel or shipline that delivered the 
U.S. Agricultural Commodity to the importing country, or by a private 
surveyor in the importing country, or other documentation deemed 
acceptable by the Director showing:
    (i) That the U.S. Agricultural Commodity entered the importing 
country or region;
    (ii) The identification of the export carrier;
    (iii) The quantity of the U.S. Agricultural Commodity;
    (iv) The kind, type, grade and/or class of the U.S. Agricultural 
Commodity; and
    (v) The date(s) and place(s) of unloading of the U.S. Agricultural 
Commodity in the importing country or region.
    (2) Where shipping documents (e.g., bills of lading) clearly 
demonstrate that the U.S. Agricultural Commodities were shipped to the 
destination country or region, proof of entry verification may be 
provided by the Importer.



Sec.1493.160  Notice of default.

    (a) Notice of default. If the Foreign Financial Institution issuing 
the Letter of Credit fails to make payment pursuant to the terms of the 
Letter of Credit or the Terms and Conditions Document, the Holder of the 
Payment Guarantee must submit a notice of default to CCC as soon as 
possible, but not later than 5 Business Days after the date that payment 
was due from the Foreign Financial Institution (the due date). A notice 
of default must be submitted in writing to CCC in the manner specified 
on the USDA Web site and must include the following information:
    (1) Payment Guarantee number;
    (2) Name of the country or region as shown on the Payment Guarantee;
    (3) Name of the defaulting Foreign Financial Institution;
    (4) Payment due date;
    (5) Total amount of the defaulted payment due, indicating separately 
the amounts for principal and Ordinary Interest, and including a copy of 
the repayment schedule with due dates, principal amounts and Ordinary 
Interest rates for each installment;
    (6) Date of the Foreign Financial Institution's refusal to pay, if 
applicable;
    (7) Reason for the Foreign Financial Institution's refusal to pay, 
if known, and copies of any correspondence with the Foreign Financial 
Institution regarding the default.
    (b) Failure to comply with time limit for submission. If the Holder 
of the Payment Guarantee fails to notify CCC of a default within 5 
Business Days, CCC may deny the claim for that default.
    (c) Impact of a default on other existing Payment Guarantees. (1) In 
the event that a Foreign Financial Institution defaults under a 
Repayment Obligation, CCC may declare that such Foreign Financial 
Institution is no longer eligible to provide additional Letters of 
Credit under the GSM-102 Program. If CCC determines that such defaulting 
Foreign Financial Institution is no longer eligible for the GSM-102 
Program, CCC shall provide written notice of such ineligibility to all 
Exporters and Assignees, if any, having Payment Guarantees covering 
transactions with respect to which the defaulting Foreign Financial 
Institution is expected to issue a Letter of Credit. Receipt of written 
notice from CCC that a defaulting Foreign Financial Institution is no 
longer eligible to provide additional Letters of Credit under the GSM-
102 Program shall constitute withdrawal of coverage of that Foreign 
Financial Institution under all Payment Guarantees with respect to any 
Letter of Credit issued on or after the date of receipt of such written 
notice. CCC will not withdraw coverage of the defaulting Foreign 
Financial Institution under any Payment Guarantee with respect to any 
Letter of Credit issued before the date of receipt of such written 
notice.
    (2) If CCC withdraws coverage of the defaulting Foreign Financial 
Institution, CCC will permit the Exporter (with concurrence of the 
Assignee, if any) to utilize another approved Foreign Financial 
Institution, and will

[[Page 1098]]

consider other requested amendments to the Payment Guarantee, for the 
balance of the export sale covered by the Payment Guarantee. If no 
alternate Foreign Financial Institution is identified to issue the 
Letter of Credit within 30 calendar days, CCC will cancel the Payment 
Guarantee and refund the Exporter's guarantee fees corresponding to any 
unutilized portion of the Payment Guarantee.



Sec.1493.170  Claims for default.

    (a) Filing a claim. A claim by the Holder of the Payment Guarantee 
for a defaulted payment will not be paid if it is made later than 180 
calendar days from the due date of the defaulted payment. A claim must 
be submitted in writing to CCC in the manner specified on the USDA Web 
site. The claim must include the following documents and information:
    (1) An original cover document signed by the Holder of the Payment 
Guarantee and containing the following information:
    (i) Payment Guarantee number;
    (ii) A description of:
    (A) Any payments from or on behalf of the defaulting party or 
otherwise related to the defaulted payment that were received by the 
Exporter or the Assignee prior to submission of the claim; and
    (B) Any security, insurance, or collateral arrangements, whether or 
not any payment has been realized from such security, insurance, or 
collateral arrangement as of the time of claim, from or on behalf of the 
defaulting party or otherwise related to the defaulted payment.
    (iii) The following certifications:
    (A) A certification that the scheduled payment has not been 
received, listing separately scheduled principal and Ordinary Interest;
    (B) A certification of the amount of the defaulted payment, 
indicating separately the amounts for defaulted principal and Ordinary 
Interest;
    (C) A certification that all documents submitted under paragraph 
(a)(3) of this section are true and correct copies; and
    (D) A certification that all documents conforming with the 
requirements for payment under the Foreign Financial Institution Letter 
of Credit have been submitted to the negotiating bank or directly to the 
Foreign Financial Institution under such Letter of Credit.
    (2) An original instrument, in form and substance satisfactory to 
CCC, subrogating to CCC the respective rights of the Holder of the 
Payment Guarantee to the amount of payment in default under the 
applicable export sale. The instrument must reference the applicable 
Foreign Financial Institution Letter of Credit and, if applicable, the 
Terms and Conditions Document; and
    (3) A copy of each of the following documents:
    (i) The repayment schedule with due dates, principal amounts and 
Ordinary Interest rates for each installment (if the Ordinary Interest 
rates for future payments are unknown at the time the claim for default 
is submitted, provide estimates of such rates);
    (ii)(A) The Foreign Financial Institution Letter of Credit securing 
the export sale; and
    (B) If applicable, the Terms and Conditions Document;
    (iii) Depending upon the method of shipment, the ocean carrier or 
intermodal bill(s) of lading signed by the shipping company with the 
onboard ocean carrier date for each shipment, the airway bill, or, if 
shipped by rail or truck, the bill of lading and the entry certificate 
or similar document signed by an official of the importing country. If 
the transaction utilizes electronic bill(s) of lading (e-BL), a print-
out of the e-BL from electronic system with an electronic signature is 
acceptable;
    (iv)(A) The Exporter's invoice showing, as applicable, the FAS, FCA, 
FOB, CFR or CIF values; or
    (B) If there was an Intervening Purchaser, both the Exporter's 
invoice to the Intervening Purchaser and the Intervening Purchaser's 
invoice to the Importer;
    (v) The evidence of export report(s) previously submitted by the 
Exporter to CCC in conformity with the requirements of Sec.
1493.130(a); and
    (vi) If the defaulted payment was part of a transaction executed 
under a Repurchase Agreement, written evidence that the repurchase 
occurred as required under Sec.1493.120(f)(1)(ii).

[[Page 1099]]

    (b) Additional documents. If a claim is denied by CCC, the Holder of 
the Payment Guarantee may provide further documentation to CCC to 
establish that the claim is in good order.
    (c) Subsequent claims for defaults on installments. If the initial 
claim is found in good order, the Holder of the Payment Guarantee need 
only provide all of the required claims documents with the initial claim 
relating to a covered transaction. For subsequent claims relating to 
failure of the Foreign Financial Institution to make scheduled 
installments on the same export shipment, the Holder of the Payment 
Guarantee need only submit to CCC a notice of such failure containing 
the information stated in paragraph (a)(1)(i) and (ii) and 
(a)(1)(iii)(A) and (B) of this section; an instrument of subrogation as 
per paragraph (a)(2) of this section; and the date the original claim 
was filed with CCC.
    (d) Alternative satisfaction of Payment Guarantees. CCC may 
establish procedures, terms and/or conditions for the satisfaction of 
CCC's obligations under a Payment Guarantee other than those provided 
for in this subpart if CCC determines that those alternative procedures, 
terms, and/or conditions are appropriate in rescheduling the debts 
arising out of any transaction covered by the Payment Guarantee and 
would not result in CCC paying more than the amount of CCC's obligation.



Sec.1493.180  Payment for default.

    (a) Determination of CCC's liability. Upon receipt in good order of 
the information and documents required under Sec.1493.170, CCC will 
determine whether or not a default has occurred for which CCC is liable 
under the applicable Payment Guarantee. Such determination shall 
include, but not be limited to, CCC's determination that all 
documentation conforms to the specific requirements contained in this 
subpart, and that all documents submitted for payment conform to the 
requirements of the Letter of Credit and, if applicable, the Terms and 
Conditions Document. If CCC determines that it is liable to the Holder 
of the Payment Guarantee, CCC will pay the Holder of the Payment 
Guarantee in accordance with paragraphs (b) and (c) of this section.
    (b) Amount of CCC's liability. CCC's maximum liability for any 
claims submitted with respect to any Payment Guarantee, not including 
any CCC Late Interest payments due in accordance with paragraph (c) of 
this section, will be limited to the lesser of:
    (1) The Guaranteed Value as stated in the Payment Guarantee, plus 
Eligible Interest, less any payments received or funds realized from 
insurance, security or collateral arrangements prior to claim by the 
Exporter or the Assignee from or on behalf of the defaulting party or 
otherwise related to the obligation in default (other than payments 
between CCC, the Exporter or the Assignee); or
    (2) The guaranteed percentage (as indicated in the Payment 
Guarantee) of the Exported Value indicated in the evidence of export, 
plus Eligible Interest, less any payments received or funds realized 
from insurance, security or collateral arrangements prior to claim by 
the Exporter or the Assignee from or on behalf of the defaulting party 
or otherwise related to the obligation in default (other than payments 
between CCC, the Exporter or the Assignee).
    (c) CCC Late Interest. If CCC does not pay a claim within 15 
Business Days of receiving the claim in good order, CCC Late Interest 
will accrue in favor of the Holder of the Payment Guarantee beginning 
with the sixteenth Business Day after the day of receipt of a complete 
and valid claim found by CCC to be in good order and continuing until 
and including the date that payment is made by CCC. CCC Late Interest 
will be paid on the guaranteed amount, as determined by paragraphs 
(b)(1) and (2) of this section, and will be calculated at a rate equal 
to the average investment rate of the most recent Treasury 91-day bill 
auction as announced by the Department of Treasury as of the due date. 
If there has been no 91-day auction within 90 calendar days of the date 
CCC Late Interest begins to accrue, CCC will apply an alternative rate 
in a manner to be described on the USDA Web site.
    (d) Accelerated payments. CCC will pay claims only on amounts not 
paid as scheduled. CCC will not pay claims for

[[Page 1100]]

amounts due under an accelerated payment clause in the Firm Export Sales 
Contract, the Foreign Financial Institution Letter of Credit, the Terms 
and Conditions Document (if applicable), or any obligation owed by the 
Foreign Financial Institution to the Holder of the Payment Guarantee 
that is related to the Letter of Credit issued in favor of the Exporter, 
unless it is determined to be in the best interests of CCC. 
Notwithstanding the foregoing, CCC at its option may declare up to the 
entire amount of the unpaid balance, plus accrued Ordinary Interest, in 
default, require the Holder of the Payment Guarantee to invoke the 
acceleration provision in the Foreign Financial Institution Letter of 
Credit or, if applicable, in the Terms and Conditions Document, require 
submission of all claims documents specified in Sec.1493.170, and make 
payment to the Holder of the Payment Guarantee in addition to such other 
claimed amount as may be due from CCC.
    (e) Action against the Assignee. If an Assignee submits a claim for 
default pursuant to Section 1493.170 and all documents submitted appear 
on their face to conform with the requirements of such section, CCC will 
not hold the Assignee responsible or take any action or raise any 
defense against the Assignee for any action, omission, or statement by 
the Exporter of which the Assignee has no knowledge.



Sec.1493.190  Recovery of defaulted payments.

    (a) Notification. Upon claim payment to the Holder of the Payment 
Guarantee, CCC will notify the Foreign Financial Institution of CCC's 
rights under the subrogation agreement to recover all monies in default.
    (b) Receipt of monies. (1) In the event that monies related to the 
obligation in default are recovered by the Exporter or the Assignee from 
or on behalf of the defaulting party, the Importer, or any source 
whatsoever (excluding payments among CCC, the Exporter, and the 
Assignee), such monies shall be immediately paid to CCC. Any monies 
derived from insurance or through the liquidation of any security or 
collateral after the claim is filed with CCC shall be deemed recoveries 
that must be paid to CCC. If such monies are not received by CCC within 
15 Business Days from the date of recovery by the Exporter or the 
Assignee, such party will owe to CCC interest from the date of recovery 
to the date of receipt by CCC. This interest will be calculated at a 
rate equal to the latest average investment rate of the most recent 
Treasury 91-day bill auction, as announced by the Department of 
Treasury, in effect on the date of recovery and will accrue from such 
date to the date of payment by the Exporter or the Assignee to CCC. Such 
interest will be charged only on CCC's share of the recovery. If there 
has been no 91-day auction within 90 calendar days of the date interest 
begins to accrue, CCC will apply an alternative rate in a manner to be 
described on the USDA Web site.
    (2) If CCC recovers monies that should be applied to a Payment 
Guarantee for which a claim has been paid by CCC, CCC will pay the 
Holder of the Payment Guarantee its pro rata share, if any, provided 
that the required information necessary for determining pro rata 
distribution has been furnished. If a required payment is not made by 
CCC within 15 Business Days from the date of recovery or 15 business 
days from receiving the required information for determining pro rata 
distribution, whichever is later, CCC will pay interest calculated at a 
rate equal to the latest average investment rate of the most recent 
Treasury 91-day bill auction, as announced by the Department of 
Treasury, in effect on the date of recovery and interest will accrue 
from such date to the date of payment by CCC. The interest will apply 
only to the portion of the recovery payable to the Holder of the Payment 
Guarantee.
    (c) Allocation of recoveries. Recoveries received by CCC from any 
source whatsoever that are related to the obligation in default will be 
allocated by CCC to the Holder of the Payment Guarantee and to CCC on a 
pro rata basis determined by their respective interests in such 
recoveries. The respective interest of each party will be determined on 
a pro rata basis, based on the combined amount of principal and interest 
in default on the date the claim is paid by CCC. Once CCC has paid a

[[Page 1101]]

particular claim under a Payment Guarantee, CCC pro-rates any 
collections it receives and shares these collections proportionately 
with the Holder of the Payment Guarantee until both CCC and the Holder 
of the Payment Guarantee have been reimbursed in full.
    (d) Liabilities to CCC. Notwithstanding any other terms of the 
Payment Guarantee, under the following circumstances the Exporter or the 
Assignee will be liable to CCC for any amounts paid by CCC under the 
Payment Guarantee:
    (1) The Exporter will be liable to CCC when and if it is determined 
by CCC that the Exporter has engaged in fraud, or has been or is in 
material breach of any contractual obligation, certification or warranty 
made by the Exporter for the purpose of obtaining the Payment Guarantee 
or for fulfilling obligations under the GSM-102 program; and
    (2) The Assignee will be liable to CCC when and if it is determined 
by CCC that the Assignee has engaged in fraud or otherwise violated 
program requirements.
    (e) Cooperation in recoveries. Upon payment by CCC of a claim to the 
Holder of the Payment Guarantee, the Holder of the Payment Guarantee and 
the Exporter will cooperate with CCC to effect recoveries from the 
Foreign Financial Institution and/or the Importer. Cooperation may 
include, but is not limited to, submission of documents to the Foreign 
Financial Institution (or its representative) to establish a claim; 
participation in discussions with CCC regarding the appropriate course 
of action with respect to a default; actions related to accelerated 
payments as specified in Sec.1493.180(d); and other actions that do 
not increase the obligation of the Holder of the Payment Guarantee or 
the Exporter under the Payment Guarantee.



Sec.1493.191  Additional obligations and requirements.

    (a) Maintenance of records, access to premises, and responding to 
CCC inquiries. For a period of five years after the date of expiration 
of the coverage of a Payment Guarantee, the Exporter and the Assignee, 
if applicable, must maintain and make available all records and respond 
completely to all inquiries pertaining to sales and deliveries of and 
extension of credit for U.S. Agricultural Commodities exported in 
connection with a Payment Guarantee, including those records generated 
and maintained by agents, Intervening Purchasers, and related companies 
involved in special arrangements with the Exporter. The Secretary of 
Agriculture and the Comptroller General of the United States, through 
their authorized representatives, must be given full and complete access 
to the premises of the Exporter and the Assignee, as applicable, during 
regular business hours from the effective date of the Payment Guarantee 
until the expiration of such five-year period to inspect, examine, 
audit, and make copies of the Exporter's, Assignee's, agent's, 
Intervening Purchaser's or related company's books, records and accounts 
concerning transactions relating to the Payment Guarantee, including, 
but not limited to, financial records and accounts pertaining to sales, 
inventory, processing, and administrative and incidental costs, both 
normal and unforeseen. During such period, the Exporter and the Assignee 
may be required to make available to the Secretary of Agriculture or the 
Comptroller General of the United States, through their authorized 
representatives, records that pertain to transactions conducted outside 
the program, if, in the opinion of the Director, such records would 
pertain directly to the review of transactions undertaken by the 
Exporter in connection with the Payment Guarantee.
    (b) Responsibility of program participants. It is the responsibility 
of all Exporters and U.S. and Foreign Financial Institutions to review, 
and fully acquaint themselves with, all regulations, Program 
Announcements, and notices to participants relating to the GSM-102 
program, as applicable. All Exporters and U.S. and Foreign Financial 
Institutions participating in the GSM-102 program are hereby on notice 
that they will be bound by this subpart and any terms contained in the 
Payment Guarantee and in applicable Program Announcements.

[[Page 1102]]

    (c) Submission of documents by Principals. All required submissions, 
including certifications, applications, reports, or requests (i.e., 
requests for amendments) by Exporters, Assignees, or Foreign Financial 
Institutions under this subpart must be signed by a Principal of the 
Exporter, Assignee, or Foreign Financial Institution or their authorized 
designee(s). In cases where the designee is acting on behalf of the 
Principal, the signature must be accompanied by: Wording indicating the 
delegation of authority or, in the alternative, by a certified copy of 
the delegation of authority; and the name and title of the authorized 
person or officer. Further, the Exporter, Assignee, or Foreign Financial 
Institution must ensure that all information and reports required under 
these regulations are timely submitted.
    (d) Misstatements or noncompliance by Exporter may lead to 
rescission of Payment Guarantee. CCC may cancel a Payment Guarantee in 
the event that an Exporter makes a willful misstatement in the 
certifications in Sec. Sec.1493.80(b) and 1493.140(c) or if the 
Exporter fails to comply with the provisions of Sec.1493.150 or 
paragraph (a) of this section. However, notwithstanding the foregoing, 
CCC will not cancel its Payment Guarantee, if it determines, in its sole 
discretion, that an Assignee had no knowledge of the Exporter's 
misstatement or noncompliance at the time of assignment of the Payment 
Guarantee.



Sec.1493.192  Dispute resolution and appeals.

    (a) Dispute resolution. (1) The Director and the Exporter or the 
Assignee will attempt to resolve any disputes, including any adverse 
determinations made by CCC, arising under the GSM-102 program, this 
subpart, the applicable Program Announcements and notices to 
participants, or the Payment Guarantee.
    (2) The Exporter or the Assignee may seek reconsideration of a 
determination made by the Director by submitting a letter requesting 
reconsideration to the Director within 30 calendar days of the date of 
the determination. For the purposes of this section, the date of a 
determination will be the date of the letter or other means of 
notification to the Exporter or the Assignee of the determination. The 
Exporter or the Assignee may include with the letter requesting 
reconsideration any additional information that it wishes the Director 
to consider in reviewing its request. The Director will respond to the 
request for reconsideration within 30 calendar days of the date on which 
the request or the final documentary evidence submitted by the Exporter 
or the Assignee is received by the Director, whichever is later, unless 
the Director extends the time permitted for response. If the Exporter or 
the Assignee fails to request reconsideration of a determination by the 
Director, then the determination of the Director will be deemed final.
    (3) If the Exporter or the Assignee requests reconsideration of a 
determination by the Director pursuant to paragraph (a)(2) of this 
section, and the Director upholds the original determination, then the 
Exporter or the Assignee may appeal the Director's final determination 
to the GSM in accordance with the procedures set forth in paragraph (b) 
of this section. If the Exporter or the Assignee fails to appeal the 
Director's final determination within 30 calendar days as provided in 
paragraph (b)(1) of this section, then the Director's decision becomes 
the final determination of CCC.
    (b) Appeal procedures. (1) An Exporter or Assignee that has 
exhausted the procedures set forth in paragraph (a) of this section may 
appeal to the GSM for a determination of the Director. An appeal to the 
GSM must be made in writing and filed with the office of the GSM no 
later than 30 calendar days following the date of the final 
determination by the Director. If the Exporter or Assignee requests an 
administrative hearing in its appeal letter, it shall be entitled to a 
hearing before the GSM or the GSM's designee.
    (2) If the Exporter or Assignee does not request an administrative 
hearing, the Exporter or Assignee must indicate in its appeal letter 
whether or not it will submit any additional written information or 
documentation for the GSM to consider in acting upon its appeal. This 
information or documentation must be submitted to the GSM

[[Page 1103]]

within 30 calendar days of the date of the appeal letter to the GSM. The 
GSM will make a decision regarding the appeal based upon the information 
contained in the administrative record. The GSM will issue his or her 
written decision within 60 calendar days of the latter of the date on 
which the GSM receives the appeal or the date that final documentary 
evidence is submitted by the Exporter or Assignee to the GSM.
    (3) If the Exporter or the Assignee has requested an administrative 
hearing, the GSM will set a date and time for the hearing that is 
mutually convenient for the GSM and the Exporter or Assignee. This date 
will ordinarily be within 60 calendar days of the date on which the GSM 
receives the request for a hearing. The hearing will be an informal 
procedure. The Exporter or Assignee and/or its counsel may present any 
relevant testimony or documentary evidence to the GSM. A transcript of 
the hearing will not ordinarily be prepared unless the Exporter or 
Assignee bears the costs involved in preparing the transcript, although 
the GSM may decide to have a transcript prepared at the expense of the 
Government. The GSM will make a decision regarding the appeal based upon 
the information contained in the administrative record. The GSM will 
issue his or her written decision within 60 calendar days of the latter 
of the date of the hearing or the date of receipt of the transcript, if 
one is to be prepared.
    (4) The decision of the GSM will be the final determination of CCC. 
The Exporter or Assignee will be entitled to no further administrative 
appellate rights.
    (c) Failure to comply with determination. If the Exporter or 
Assignee has violated the terms of this subpart or the Payment Guarantee 
by failing to comply with a determination made under this section, and 
the Exporter or Assignee has exhausted its rights under this section or 
has failed to exercise such rights, then CCC will have the right to take 
any measures available to CCC under applicable law.
    (d) Exporter's obligation to perform. The Exporter will continue to 
have an obligation to perform pursuant to the provisions of these 
regulations and the terms of the Payment Guarantee pending the 
conclusion of all procedures under this section.



Sec.1493.195  Miscellaneous provisions.

    (a) Officials not to benefit. No member of or delegate to Congress, 
or Resident Commissioner, shall be admitted to any share or part of the 
Payment Guarantee or to any benefit that may arise therefrom, but this 
provision shall not be construed to extend to the Payment Guarantee if 
made with a corporation for its general benefit.
    (b) OMB control number assigned pursuant to the Paperwork Reduction 
Act. The information collection requirements contained in this part (7 
CFR part 1493) have been approved by the Office of Management and Budget 
(OMB) in accordance with the provisions of 44 U.S.C. Chapter 35 and have 
been assigned OMB Control Number 0551-0004.



        Subpart C_CCC Facility Guarantee Program (FGP) Operations

    Source: 81 FR 65515, Sept. 22, 2016, unless otherwise noted.



Sec.1493.200  General statement.

    (a) Overview. The FGP of the Commodity Credit Corporation (CCC) was 
developed to expand U.S. agricultural commodity exports by making 
available payment guarantees to encourage U.S. private sector financing 
to establish or improve facilities or provide services or goods in 
emerging markets to improve handling, marketing, processing, storage, or 
distribution of imported agricultural commodities and products. Such 
guarantees will primarily promote the export of U.S. agricultural 
commodities. CCC will give priority to transactions that encourage 
privatization of the agricultural sector or that benefit private farms 
and cooperatives in emerging markets, and for which nongovernmental 
persons agree to assume a relatively larger share of costs. The payment 
guarantee issued under FGP is an agreement by CCC to pay the seller, or 
the U.S. financial institution that may take assignment of the payment 
guarantee,

[[Page 1104]]

specified amounts of principal and interest in case of default by the 
foreign financial institution that issued the letter of credit for the 
sale covered by the payment guarantee. The program is targeted toward 
those countries that have sufficient financial strength so that foreign 
exchange will be available for scheduled payments. In providing this 
program, CCC seeks to expand and/or maintain market opportunities for 
U.S. agricultural exporters and producers and assist long-term market 
development for U.S. agricultural commodities.
    (b) Program administration. The FGP is administered under the 
direction of the General Sales Manager and Vice President, CCC, pursuant 
to this subpart, subpart A of this part, any program announcements 
issued by CCC, and, as applicable, the Organisation for Economic Co-
operation and Development's (OECD) Arrangement on Officially Supported 
Export Credits. From time to time, CCC may issue a notice to 
participants on the USDA Web site to remind participants of the 
requirements of the FGP or to clarify the program requirements contained 
in these regulations in a manner not inconsistent with this subpart and 
subpart A of this part. Program information, including available program 
amounts, eligible countries, and approved U.S. and foreign financial 
institutions, is available on the USDA Web site.



Sec.1493.210  Definition of terms.

    Terms set forth in this part, on the USDA Web site (including in 
program announcements and notices to participants), and in any CCC-
originated documents pertaining to the FGP will have the following 
meanings:
    Affiliate. Entities are affiliates of each other if, directly or 
indirectly, either one controls or has the power to control the other, 
or a third person controls or has the power to control both. Control may 
include, but is not limited to: Interlocking management or ownership; 
identity of interests among family members; shared facilities and 
equipment; or common use of employees.
    Assignee. A U.S. financial institution that has obtained the legal 
right to make a claim and receive the payment of proceeds under the 
payment guarantee.
    Business day. A day during which employees of the U.S. Department of 
Agriculture in the Washington, DC metropolitan area are on official duty 
during normal business hours.
    Buyer. A foreign purchaser that enters into a firm sales contract 
with a seller for the sale of goods to be shipped to the destination 
country and/or U.S. services to be provided in the destination country.
    Buyer's representative. An entity having a physical office that is 
either organized under the laws of or registered to do business in the 
destination country specified in the payment guarantee and that is 
authorized to act on the buyer's behalf with respect to the sale 
described in the firm sales contract.
    CCC. The Commodity Credit Corporation, an agency and instrumentality 
of the United States within the Department of Agriculture, authorized 
pursuant to the Commodity Credit Corporation Charter Act (15 U.S.C. 714 
et seq.).
    CCC late interest. Interest payable by CCC pursuant to Sec.
1493.370(c).
    Contractual event. A specific deliverable (activity or milestone) 
measured by objective or quantifiable methods within the firm sales 
contract which, when met by the seller, results in an obligation to make 
payment in accordance with the agreed contractual terms without 
recourse, and triggers the start of coverage under the payment 
guarantee. Such events may include, but are not limited to, exports of 
goods, completion of services, or commissioning date of equipment or a 
facility.
    Cost of services. The price for services as stipulated in the firm 
sales contract.
    Coverage waiver. A determination by CCC, upon request of the seller, 
to allow guarantee coverage of non-U.S. goods and/or to waive the U.S. 
content test in Sec.1493.290(e).
    Date of performance. The date that a contractual event occurs in 
accordance with the firm sales contract. The date of performance may be, 
but is not limited to, an installation date, the date of completion of 
the service, the commissioning date of equipment or a facility, or the 
date of export of goods (one of the following dates, depending

[[Page 1105]]

upon the method of shipment: The on-board date of an ocean bill of 
lading or the on-board ocean carrier date of an intermodal bill of 
lading; the on-board date of an airway bill; or, if exported by rail or 
truck, the date of entry shown on an entry certificate or similar 
document issued and signed by an official of the government of the 
importing country).
    Date of sale. The earliest date on which a firm sales contract 
exists between the seller and the buyer.
    Destination country. The emerging market (location) of the 
agricultural-related facility that will use the goods and/or services 
covered by the payment guarantee. If the payment guarantee covers goods 
not intended for a specific facility, then the country where the goods 
will be delivered and utilized.
    Director. The Director, Credit Programs Division, Office of Trade 
Programs, Foreign Agricultural Service, or designee.
    Discounts and allowances. Any consideration provided directly or 
indirectly, by or on behalf of the seller, to the buyer in connection 
with a sale of a good or service, above and beyond its value. Discounts 
and allowances include, but are not limited to, the provision of 
additional goods, services or benefits; the promise to provide 
additional goods, services or benefits in the future; financial rebates; 
the assumption of any financial or contractual obligations; commissions 
where the buyer requires the seller to employ and compensate a specified 
agent as a condition of concluding the sale; the whole or partial 
release of the buyer from any financial or contractual obligations; or 
settlements made in favor of the buyer for quality or weight.
    Eligible export sale. A transaction in which the obligation of 
payment for the portion registered under the FGP arises solely and 
exclusively from a foreign financial institution letter of credit or 
terms and conditions document issued in connection with a payment 
guarantee.
    Eligible imported components. Imported components in U.S. goods that 
are eligible for coverage because either:
    (1) The transaction meets the U.S. content test in Sec.
1493.290(e); or
    (2) A coverage waiver of the U.S. content test has been requested by 
the seller and approved by CCC.
    Eligible non-U.S. goods. Goods, including local costs, that are not 
U.S. goods but for which a coverage waiver has been requested by the 
seller and approved by CCC.
    Eligible interest. The amount of interest that CCC agrees to pay the 
holder of the payment guarantee in the event that CCC pays a claim for 
default of ordinary interest. Eligible interest shall be the lesser of:
    (1) The amount calculated using the interest rate agreed by the 
holder of the payment guarantee and the foreign financial institution; 
or
    (2) The amount calculated using the specified percentage of the 
Treasury bill investment rate set forth on the face of the payment 
guarantee.
    Emerging market. Any country that CCC determines:
    (1) Is taking steps toward a market-oriented economy through the 
food, agriculture, or rural business sectors of the economy of the 
country; and
    (2) has the potential to provide a viable and significant market for 
U.S. agricultural commodities or products.
    Environmental and Social Impact Assessment (ESIA). A report that 
identifies the environmental and social risks and impacts of a project/
transaction and proposed measures to avoid, minimize, mitigate and/or 
offset adverse environmental and social impacts. The report must address 
the items set out in the most recent Organisation for Economic Co-
operation and Development's ``Recommendation of the Council on Common 
Approaches for Officially Supported Export Credits and Environmental and 
Social Due Diligence.''
    Firm sales contract. The written sales contract entered into between 
the seller and the buyer which sets forth the terms and conditions of an 
eligible export sale from the seller to the buyer. Written evidence of a 
sale may be in the form of a signed sales contract, a written offer and 
acceptance between parties, or other documentary evidence of sale. The 
firm sales contract between the seller and the buyer may be conditioned 
upon CCC's approval of the seller's application for a payment guarantee. 
The written evidence of sale for

[[Page 1106]]

the purposes of the FGP must, at a minimum, document the following 
information:
    (1) Date of sale;
    (2) A complete description of all goods associated with the 
transaction. For goods to be covered by the payment guarantee, include 
the brand name and model number, country where the good was manufactured 
and country from which the good will be exported (if applicable), 
quantity, value, and Incoterms (if applicable);
    (3) A complete description of all services associated with the 
transaction. For services to be covered by the payment guarantee, 
include the supplier and cost;
    (4) The date of performance of each contractual event; and
    (5) Evidence of agreement between buyer and seller.
    Foreign financial institution. A financial institution (including 
foreign branches of U.S. financial institutions):
    (1) Organized and licensed under the laws of a jurisdiction outside 
the United States;
    (2) Not domiciled in the United States; and
    (3) Subject to the banking or other financial regulatory authority 
of a foreign jurisdiction (except for multilateral and sovereign 
institutions).
    Foreign financial institution letter of credit or letter of credit. 
An irrevocable documentary letter of credit, subject to the current 
revision of the Uniform Customs and Practices (UCP) for Documentary 
Credits (International Chamber of Commerce Publication No. 600, or 
latest revision), and if electronic documents are to be utilized, the 
current revision of the Supplement to the Uniform Customs and Practice 
for Documentary Credits for Electronic Presentation (eUCP), providing 
for payment in U.S. dollars against stipulated documents and issued in 
favor of the seller by a CCC-approved foreign financial institution.
    GSM. The General Sales Manager, Foreign Agricultural Service (FAS), 
USDA, acting in his or her capacity as Vice President, CCC, or designee.
    Guaranteed value. The maximum amount indicated on the face of the 
payment guarantee, exclusive of interest, that CCC agrees to pay the 
holder of the payment guarantee. The guaranteed value is calculated by 
deducting the initial payment and any discounts and allowances from the 
net contract value and adding to that result the value of local costs 
that CCC has approved for coverage. The resulting figure is then 
multiplied by the guaranteed percentage (up to the maximum percentage 
allowable for that country).
    Holder of the payment guarantee. The seller or the assignee of the 
payment guarantee with the legal right to make a claim and receive the 
payment of proceeds from CCC under the payment guarantee in case of 
default by the foreign financial institution.
    Incoterms. Trade terms developed by the International Chamber of 
Commerce in Incoterms 2010 (or latest revision), which define the 
respective obligations of the buyer and the seller in a sales contract.
    Initial payment. The minimum amount that the buyer is required to 
pay the seller prior to CCC's approval of the payment guarantee, 
expressed as a percentage (specified on the USDA Web site) of the net 
contract value.
    Letter of interest. Information that the seller may provide to CCC 
prior to applying for a payment guarantee to obtain feedback on the 
potential eligibility of a transaction. Information to be submitted in a 
letter of interest is set out on the USDA Web site.
    Local costs. Expenditures for goods in the destination country that 
are included in the firm sales contract.
    Net contract value. The aggregate value of goods and cost of 
services (exclusive of local costs) that are eligible for guarantee 
coverage and for which coverage is requested.
    North American Industry Classification System (NAICS). Standard used 
by Federal statistical agencies in classifying business establishments 
for the purpose of collecting, analyzing, and publishing statistical 
data related to the U.S. business economy.
    Ordinary interest. Interest (other than post default interest) 
charged on the principal amount identified in the foreign financial 
institution letter of credit or, if applicable, the terms and conditions 
document.
    Payment guarantee. An agreement under which CCC, in consideration of 
a

[[Page 1107]]

fee paid, and in reliance upon the statements and declarations of the 
seller, subject to the terms set forth in the written guarantee, this 
subpart, and any applicable program announcements, agrees to pay the 
holder of the payment guarantee in the event of a default by a foreign 
financial institution on its repayment obligation under the foreign 
financial institution letter of credit issued in connection with a 
guaranteed sale or, if applicable, under the terms and conditions 
document.
    Post default interest. Interest charged on amounts in default that 
begins to accrue upon default of payment, as specified in the foreign 
financial institution letter of credit or, if applicable, in the terms 
and conditions document.
    Preliminary environmental and social screening document or Screening 
document. A document in which the seller provides basic information 
about a transaction to allow CCC to determine whether the transaction 
may entail potentially adverse environmental and/or social impacts. The 
screening document is available on the USDA Web site.
    Principal. A principal of a corporation or other legal entity is an 
individual serving as an officer, director, owner, partner, or other 
individual with management or supervisory responsibilities for such 
corporation or legal entity.
    Program announcement. An announcement issued by CCC on the USDA Web 
site that provides information on policies, procedures, specific country 
programs and other information relevant to the operation of the FGP.
    Repayment obligation. A contractual commitment by the foreign 
financial institution issuing the letter of credit in connection with an 
eligible export sale to make payment(s) on principal amount(s), plus any 
ordinary interest and post default interest, in U.S. dollars, to a 
seller or U.S. financial institution on deferred payment terms 
consistent with those permitted under CCC's payment guarantee. The 
repayment obligation must be documented using one of the methods 
specified in Sec.1493.280.
    Repurchase agreement. A written agreement under which the holder of 
the payment guarantee may from time to time enter into transactions in 
which the holder of the payment guarantee agrees to sell to another 
party foreign financial institution Letter(s) of Credit and, if 
applicable, terms and conditions document(s) secured by the payment 
guarantee, and repurchase the same foreign financial institution 
Letter(s) of Credit and terms and conditions documents secured by the 
payment guarantee, on demand or date certain at an agreed upon price.
    SAM (System for Award Management). A Federal Government owned and 
operated free Web site that contains information on parties excluded 
from receiving Federal contracts or certain subcontracts and excluded 
from certain types of Federal financial and nonfinancial assistance and 
benefits.
    Seller. A supplier of goods and/or services that is both qualified 
in accordance with the provisions of Sec.1493.220 and the applicant 
for the payment guarantee.
    Service. Any business activity classified in any of the 13 NAICS 
services sectors (NAICS chapters 22 and 48-49 through 81). For the 
shipment of goods, freight and insurance costs to the port of entry that 
are included in the price of the goods (in accordance with the specified 
Incoterms) are not considered services under this subpart.
    Terms and conditions document. A document specifically identified 
and referred to in the foreign financial institution letter of credit 
which may contain the repayment obligation and the special requirements 
specified in Sec.1493.280.
    Total FGP transaction value. The aggregate value of goods and cost 
of services (including local costs) to be covered by the payment 
guarantee. It is the net contract value plus eligible local costs, less 
the initial payment and less any discounts and allowances.
    United States or U.S. Each of the States of the United States, the 
District of Columbia, Puerto Rico, and the territories and possessions 
of the United States.
    U.S. agricultural commodity or U.S. agricultural commodities.
    (1) (i) An agricultural commodity or product entirely produced in 
the United States; or
    (ii) A product of an agricultural commodity--

[[Page 1108]]

    (A) 90 percent or more of the agricultural components of which by 
weight, excluding packaging and added water, is entirely produced in the 
United States; and
    (B) That the Secretary determines to be a high value agricultural 
product.
    (2) For purposes of this definition, fish entirely produced in the 
United States include fish harvested by a documented fishing vessel as 
defined in title 46, United States Code, in waters that are not waters 
(including the territorial sea) of a foreign country.
    U.S. content test. A determination of the total value of eligible 
non-U.S. goods and value of imported components as a percentage of the 
sum of the net contract value and the value of approved local costs as 
specified in Sec.1493.290(e).
    USDA. United States Department of Agriculture.
    U.S. financial institution. A financial institution (including 
branches of foreign financial institutions):
    (1) Organized and licensed under the laws of a jurisdiction within 
the United States;
    (2) Domiciled in the United States; and
    (3) Subject to the banking or other financial regulatory authority 
jurisdiction within the United States.
    U.S. goods. Goods that are assembled, processed or manufactured in, 
and exported from, the United States, including goods which contain 
imported raw materials or imported components. Minor or cosmetic 
procedures (e.g., affixing labels, cleaning, painting, polishing) do not 
qualify as assembling, processing or manufacturing.
    U.S. person. One of the following:
    (1) An individual who is a citizen or legal resident of the United 
States; or
    (2) An entity constituted or organized in the United States, 
including any corporation, trust partnership, sole proprietorship, joint 
venture, or other association with business activities in the United 
States.
    U.S. services. Services performed by U.S. persons, including those 
temporarily residing outside the United States. Costs for hotels, meals, 
transportation, and other similar services incurred in the destination 
country are not U.S. services.
    Value of components (also value of U.S. components, value of 
imported components). The price derived for components in goods, 
determined by:
    (1) The price stipulated in the firm sales contract or, if such 
price is not available;
    (2) The declared customs value or, if the customs value is not 
available; then
    (3) The fair market wholesale value in the United States.
    Value of goods (also value of U.S. goods, value of non-U.S. goods, 
or value of Eligible non-U.S. goods). The price derived for goods, 
determined by:
    (1) The price stipulated in the firm sales contract or, if such 
price is not available;
    (2) The declared customs value or, if the customs value is not 
available; then
    (3) The fair market wholesale value in the United States.



Sec.1493.220  Information required for seller participation.

    (a) Qualification requirements. Sellers must apply and be approved 
by CCC to be eligible to participate in the FGP. To qualify for 
participation in the FGP, an applicant must submit the following 
information to CCC in the manner specified on the USDA Web site:
    (1) For the applicant:
    (i) The name and full U.S. address (including the full 9-digit zip 
code) of the applicant's office, along with an indication of whether the 
address is a business or private residence. A post office box is not an 
acceptable address. If the applicant has multiple offices, the address 
included in the information should be that which is pertinent to the FGP 
sales contemplated by the applicant;
    (ii) Dun and Bradstreet (DUNS) number;
    (iii) Employer Identification Number (EIN--also known as a Federal 
Tax Identification Number);
    (iv) Telephone and fax numbers;
    (v) Email address (if applicable);
    (vi) Business Web site (if applicable);
    (vii) Contact name;
    (viii) Statement indicating whether the applicant is a U.S. domestic 
entity or a foreign entity domiciled in the United States; and

[[Page 1109]]

    (ix) The form of business entity of the applicant, (e.g., sole 
proprietorship, partnership, corporation, etc.) and the U.S. 
jurisdiction under which such entity is organized and authorized to 
conduct business. Such jurisdictions are a U.S. State, the District of 
Columbia, Puerto Rico, and the territories or possessions of the United 
States. Upon request by CCC, the applicant must provide written evidence 
that such entity has been organized in a U.S. State, the District of 
Columbia, Puerto Rico, or a territory or possession of the United 
States.
    (2) For the applicant's headquarters office:
    (i) The name and full address of the applicant's headquarters office 
(a post office box is not an acceptable address); and
    (ii) Telephone and fax numbers.
    (3) For the applicant's agent for the service of process:
    (i) The name and full U.S. address of the applicant's agent's 
office, along with an indication of whether the address is a business or 
private residence;
    (ii) Telephone and fax numbers;
    (iii) Email address (if applicable); and
    (iv) Contact name.
    (4) A description of the applicant's business. Applicants must 
provide the following information:
    (i) Nature of the applicant's business (i.e., producer, service 
provider, trader, consulting firm, etc.);
    (ii) Explanation of the applicant's experience/history selling the 
goods or services to be sold under the FGP, including number of years 
involved in selling, types of goods or services sold, and destination of 
sales for the preceding three years;
    (iii) Whether or not the applicant is a ``small or medium 
enterprise'' (SME) as defined on the USDA Web site.
    (5) A listing of any related companies (e.g., affiliates, 
subsidiaries, or companies otherwise related through common ownership) 
currently qualified to participate in CCC export programs;
    (6) A statement describing the applicant's participation, if any, 
during the past three years in U.S. Government programs, contracts or 
agreements; and
    (7) A statement that: ``All certifications set forth in 7 CFR 
1493.250(a) are hereby made in this application'' which, when included 
in the application, will constitute a certification that the applicant 
is in compliance with all of the requirements set forth in Sec.
1493.250(a). The applicant will be required to provide further 
explanation or documentation if not in compliance with these 
requirements or if the application does not include this statement.
    (b) Qualification notification. CCC will promptly notify applicants 
that have submitted information required by this section whether they 
have qualified to participate in the program or whether further 
information is required by CCC. Any applicant failing to qualify will be 
given an opportunity to provide additional information for consideration 
by the Director.
    (c) Previous qualification. Any seller that is currently qualified 
under subpart B of this part, Sec.1493.30, need only provide the 
information requested in Sec.1493.220(a)(4). Once CCC receives that 
information, CCC will notify the seller that the seller is qualified 
under this section to submit applications for an FGP payment guarantee, 
and the other information provided by the seller pursuant to Sec.
1493.30 will be deemed to also have been provided under this section. 
Any seller not submitting an application for a GSM-102 or FGP payment 
guarantee for two consecutive U.S. Government fiscal years must resubmit 
a qualification application containing the information specified in 
Sec.1493.220(a) to CCC to participate in the FGP. If at any time the 
information required by paragraph (a) of this section changes, the 
seller must promptly contact CCC to update this information and certify 
that the remainder of the information previously provided under 
paragraph (a) of this section has not changed.
    (d) Ineligibility for program participation. An applicant may be 
ineligible to participate in the FGP if such applicant cannot provide 
all of the information and certifications required in Sec.1493.220(a).



Sec.1493.230  Information required for U.S. financial institution
participation.

    (a) Qualification requirements. U.S. financial institutions must 
apply and be

[[Page 1110]]

approved by CCC to be eligible to participate in the FGP. To qualify for 
participation in the FGP, a U.S. financial institution must submit the 
following information to CCC in the manner specified on the USDA Web 
site:
    (1) Legal name and address of the applicant;
    (2) Dun and Bradstreet (DUNS) number;
    (3) Employer Identification Number (EIN--also known as a Federal Tax 
Identification Number);
    (4) Year-end audited financial statements for the applicant's most 
recent fiscal year;
    (5) Breakdown of the applicant's ownership as follows:
    (i) Ten largest individual shareholders and ownership percentages;
    (ii) Percentage of government ownership, if any; and
    (iii) Identity of the legal entity or person with ultimate control 
or decision making authority, if other than the majority shareholder.
    (6) Organizational structure (independent, or a subsidiary, 
affiliate, or branch of another financial institution);
    (7) Documentation from the applicable United States Federal or State 
agency demonstrating that the applicant is either licensed or chartered 
to do business in the United States;
    (8) Name of the agency that regulates the applicant and the name and 
telephone number of the primary contact for such regulator; and
    (9) A statement that: ``All certifications set forth in 7 CFR 
1493.250 are hereby made in this application'' which, when included in 
the application, will constitute a certification that the applicant is 
in compliance with all of the requirements set forth in Sec.1493.250. 
The applicant will be required to provide further explanation or 
documentation if not in compliance with these requirements or if the 
application does not include this statement.
    (b) Qualification notification. CCC will notify applicants that have 
submitted information required by this section whether they have 
qualified to participate in the program or whether further information 
is required by CCC. Any applicant failing to qualify will be given an 
opportunity to provide additional information for consideration by the 
Director.
    (c) Previous qualification. Any U.S. financial institution that is 
qualified under subpart B, Sec.1493.40 is qualified under this 
section, and the information provided by the U.S. financial institution 
pursuant to Sec.1493.40 will be deemed to also have been provided 
under this section. Any U.S. financial institution participating in 
neither the GSM-102 nor FGP programs for two consecutive U.S. Government 
fiscal years must resubmit the information and certifications specified 
in paragraph (a) of this section to CCC to participate in the FGP. If at 
any time the information required by paragraph (a) of this section 
changes, the U.S. financial institution must promptly notify CCC to 
update this information and certify that the remainder of the 
information previously provided under paragraph (a) of this section has 
not changed.
    (d) Ineligibility for program participation. A U.S. financial 
institution may be ineligible to participate in the FGP if such 
applicant cannot provide all of the information and certifications 
required in Sec.1493.230(a).



Sec.1493.240  Information required for foreign financial institution
participation.

    (a) Qualification requirements. Foreign financial institutions must 
apply and be approved by CCC to be eligible to participate in the FGP. 
To qualify for participation in the FGP, a foreign financial institution 
must submit the following information to CCC in the manner specified on 
the USDA Web site:
    (1) Legal name and address of the applicant;
    (2) Year-end, audited financial statements in accordance with the 
accounting standards established by the applicant's regulators, in 
English, for the applicant's three most recent fiscal years. If the 
applicant is not subject to a banking or other financial regulatory 
authority, year-end, audited financial statements in accordance with 
prevailing accounting standards, in English, for the applicant's three 
most recent fiscal years;

[[Page 1111]]

    (3) Breakdown of applicant's ownership as follows:
    (i) Ten largest individual shareholders and ownership percentages;
    (ii) Percentage of government ownership, if any; and
    (iii) Identity of the legal entity or person with ultimate control 
or decision making authority, if other than the majority shareholder.
    (4) Organizational structure (independent, or a subsidiary, 
affiliate, or branch of another legal entity);
    (5) Name of foreign government agency that regulates the applicant; 
and
    (6) A statement that: ``All certifications set forth in 7 CFR 
1493.250 are hereby made in this application'' which, when included in 
the application, will constitute a certification that the applicant is 
in compliance with all of the requirements set forth in Sec.1493.250. 
The applicant will be required to provide further explanation or 
documentation if not in compliance with these requirements or if the 
application does not include this statement.
    (b) Qualification notification. CCC will notify applicants that have 
submitted information required by this section whether they have 
qualified to participate in the program or whether further information 
is required by CCC. Any applicant failing to qualify will be given an 
opportunity to provide additional information for consideration by the 
Director.
    (c) Participation limit. If, after review of the information 
submitted and other publicly available information, CCC determines that 
the foreign financial institution is eligible for participation in the 
FGP, CCC will establish a dollar participation limit for the 
institution. This limit will be the maximum amount of exposure CCC 
agrees to undertake with respect to this foreign financial institution 
at any point in time. CCC may change or cancel this dollar participation 
limit at any time based on any information submitted or any publicly 
available information.
    (d) Previous qualification and submission of annual financial 
statements. Each qualified foreign financial institution shall submit 
annually to CCC the certifications in Sec.1493.250 and its audited 
fiscal year-end financial statements in accordance with the accounting 
standards established by the applicant's regulators, in English, so that 
CCC may determine the continued ability of the foreign financial 
institution to adequately service CCC guaranteed debt. If the foreign 
financial institution is not subject to a banking or other financial 
regulatory authority, it must submit year-end, audited financial 
statements in accordance with prevailing accounting standards, in 
English, for the applicant's most recent fiscal year. Failure to submit 
this information annually may cause CCC to decrease or cancel the 
foreign financial institution's dollar participation limit. Any foreign 
financial institution participating in neither the FGP nor the GSM-102 
Program for two consecutive U.S. Government fiscal years may have its 
dollar participation limit cancelled. If this participation limit is 
cancelled, the foreign financial institution must resubmit the 
information and certifications requested in paragraph (a) of this 
section to CCC when reapplying for participation. Additionally, if at 
any time the information required by paragraph (a) of this section 
changes, the foreign financial institution must promptly contact CCC to 
update this information and certify that the remainder of the 
information previously provided under paragraph (a) of this section has 
not changed.
    (e) Ineligibility for program participation. A foreign financial 
institution:
    (1) May be deemed ineligible to participate in the FGP if such 
applicant cannot provide all of the information and certifications 
required in Sec.1493.240(a); and
    (2) Will be deemed ineligible to participate in the FGP if, based 
upon information submitted by the applicant or other publicly available 
sources, CCC determines that the applicant cannot adequately service the 
debt associated with the payment guarantees issued by CCC.



Sec.1493.250  Certifications required for program participation.

    (a) When making the statement required by Sec. Sec.1493.220(a)(7), 
1493.230(a)(9), or 1493.240(a)(6), each seller, U.S. financial 
institution and foreign financial

[[Page 1112]]

institution applicant for program participation is certifying that, to 
the best of its knowledge and belief:
    (1) The applicant and any of its principals (as defined in 2 CFR 
180.995) are not presently debarred, suspended, proposed for debarment, 
declared ineligible, or excluded from covered transactions by any U.S. 
Federal department or agency;
    (2) The applicant and any of its principals (as defined in 2 CFR 
180.995) have not within a three-year period preceding this application 
been convicted of or had a civil judgment rendered against them for 
commission of fraud or a criminal offense in connection with obtaining, 
attempting to obtain, or performing a public (Federal, State, or local) 
transaction or contract under a public transaction; violation of Federal 
or State antitrust statues or commission of embezzlement, theft, 
forgery, bribery, falsification or destruction of records, making false 
statements, or receiving stolen property;
    (3) The applicant and any of its principals (as defined in 2 CFR 
180.995) are not presently indicted for or otherwise criminally or 
civilly charged by a governmental entity (Federal, State or local) with 
commission of any of the offenses enumerated in paragraph (a)(2) of this 
section;
    (4) The applicant and any of its principals (as defined in 2 CFR 
180.995) have not within a three-year period preceding this application 
had one or more public transactions (Federal, State or local) terminated 
for cause or default;
    (5) The applicant does not have any outstanding nontax debt to the 
United States that is in delinquent status as provided in 31 CFR 285.13;
    (6) The applicant is not controlled by a person owing an outstanding 
nontax debt to the United States that is in delinquent status as 
provided in 31 CFR 285.13 (e.g., a corporation is not controlled by an 
officer, director, or shareholder who owes such a debt); and
    (7) The applicant does not control a person owing an outstanding 
nontax debt to the United States that is in delinquent status as 
provided in 31 CFR 285.13 (e.g., a corporation does not control a 
wholly-owned or partially-owned subsidiary which owes such a debt).
    (b) Additional certifications for U.S. and foreign financial 
institution applicants. When making the statement required by Sec.
1493.230(a)(9) or Sec.1493.240(a)(6), each U.S. and foreign financial 
institution applicant for program participation is certifying that, to 
the best of its knowledge and belief:
    (1) The applicant and its principals are in compliance with all 
requirements, restrictions and guidelines as established by the 
applicant's regulators; and
    (2) All U.S. operations of the applicant and its U.S. principals are 
in compliance with U.S. anti-money laundering and terrorist financing 
statutes including, but not limited to, the USA Patriot Act of 2001 and 
the Foreign Corrupt Practices Act of 1977.

[81 FR 65515, Sept. 22, 2016, as amended at 84 FR 28186, June 18, 2019]



Sec.1493.260  Application for payment guarantee.

    (a) Letter of interest. Prior to submitting an initial application 
for a payment guarantee in accordance with paragraph (b) of this 
section, the seller may, solely at the seller's option, submit a letter 
of interest to CCC describing a transaction for which FGP coverage may 
be sought. The letter of interest must contain all of the information 
specified on the USDA Web site and must be accompanied by a completed 
preliminary environmental and social screening document. A letter of 
interest fee, which will be specified on the USDA Web site, must 
accompany the letter of interest. CCC will review the letter of interest 
and provide preliminary feedback to the seller on whether the 
transaction may be eligible for coverage under the FGP. However, CCC's 
determination whether to issue a payment guarantee will be based on the 
seller's applications submitted pursuant to paragraphs (b) and (d) of 
this section.
    (b) Initial application for payment guarantee. A firm sales contract 
must exist before a seller may submit an initial application for a 
payment guarantee. An initial application for a payment guarantee must 
be submitted in writing to CCC in the manner specified

[[Page 1113]]

on the USDA Web site, and be accompanied by the application fee in 
accordance with Sec.1493.300(b). Each initial application for a 
payment guarantee must also include a completed Preliminary 
Environmental and Social Screening Document. If the seller previously 
submitted the screening document with a letter of interest, the seller 
is required to re-submit it with the initial application only if 
revisions are needed to the screening document. An initial application 
must identify the name and address of the seller and include the 
following information:
    (1) Destination country.
    (2) The name and address of the buyer. If the buyer is not 
physically located in the destination country, it must have a buyer's 
representative in the destination country taking receipt of the goods 
and services covered by the payment guarantee. If applicable, provide 
the name and address of the buyer's representative.
    (3) The name and address of the party on whose request the letter of 
credit is issued, if other than the buyer.
    (4) The name and address of the end-user of the goods or services, 
if other than the buyer.
    (5) The seller's sales number pertinent to the application and a 
copy of the firm sales contract.
    (6) A description (including location, i.e., address, city, port, 
and/or GPS coordinates, if available) of the agriculture-related 
facility that will use the goods and/or services to be covered by the 
payment guarantee and an explanation of how the goods and/or services 
will be used to improve handling, marketing, processing, storage, or 
distribution of U.S. agricultural commodities. If the payment guarantee 
covers goods not intended for a specific facility, describe where the 
goods will be delivered in the destination country.
    (7) List of all agricultural commodities or products (inputs) to be 
handled, marketed, processed, stored, or distributed by the proposed 
transaction after completion, and an explanation of why and how the 
facility or goods and/or services will specifically benefit exporters of 
U.S. agricultural commodities.
    (8) Total value of the firm sales contract.
    (9) A full description of each good to be covered by the payment 
guarantee. The goods specified in the seller's application for the 
payment guarantee must correspond with the description of the goods 
specified in the firm sales contract and the foreign financial 
institution letter of credit. The description must include each of the 
following:
    (i) Brand name and model number;
    (ii) Applicable 10-digit Harmonized System classification code;
    (iii) Description of the good;
    (iv) Country where the good was manufactured and from which the good 
will be exported;
    (v) For U.S. goods, the value of imported components used in the 
U.S. good's manufacture. If requesting guarantee coverage of only the 
U.S. components in U.S. goods, provide the value of U.S. components;
    (vi) For goods that are local costs, the name of the local supplier;
    (vii) Quantity;
    (viii) Value of the good; and
    (ix) Incoterms (if the sale of the goods is based on Incoterms 
delivery).
    (10) A full description of each U.S. service to be covered by the 
payment guarantee. The U.S. services specified in the seller's 
application for the payment guarantee must correspond with the 
description of the U.S. services specified in the firm sales contract 
and the foreign financial institution letter of credit. The description 
must include each of the following:
    (i) Description of the U.S. service;
    (ii) Supplier of the U.S. service;
    (iii) Cost of the U.S. service; and
    (iv) NAICS classification number.
    (11) A description and date of performance (or timeframe of 
performance if the exact date is unknown) of each contractual event, as 
specified in the firm sales contract.
    (12) Indication of whether a coverage waiver is requested in 
accordance with Sec.1493.290(f). If a coverage waiver is requested, 
the applicant must indicate the nature of the waiver requested per Sec.
1493.290(f)(1) and provide the justification and explanation required by 
Sec.1493.290(f)(2).
    (13) Name and location of the foreign financial institution issuing 
the letter of credit and, upon request by CCC,

[[Page 1114]]

written evidence that the foreign financial institution has agreed to 
issue the letter of credit.
    (14) The term length of the credit being extended and the intervals 
between principal payments for each contractual event under the payment 
guarantee.
    (15) If applicable, a description of any arrangements or 
understandings with other U.S. or foreign government agencies, or with 
financial institutions or entities, private or public, providing 
guarantees or financing to the seller or other competing sellers in 
connection with this sale, whether or not the goods or services are of 
U.S. origin or would otherwise qualify for a payment guarantee under 
this subpart. Copies of any documents relating to such arrangements must 
be provided.
    (16) A statement of how this transaction may encourage privatization 
of the agricultural sector, or benefit private farms or cooperatives, in 
the destination country. Include in the statement the share of any 
private sector ownership in the transaction.
    (17) An estimate of how many U.S. persons will be or have been hired 
because of the firm sales contract and/or how many U.S. persons are 
required to fulfill the firm sales contract.
    (18) FGP tracking number assigned to previously submitted letter of 
interest, if applicable.
    (c) Review of initial application. (1) An initial application may 
receive conditional approval from CCC as submitted, be conditionally 
approved with modifications agreed to by the seller, or be rejected by 
CCC. CCC's review will include, but not be limited to, the following 
criteria:
    (i) CCC will only consider an initial application in connection with 
a transaction that CCC determines will benefit primarily exports of U.S. 
agricultural commodities.
    (ii) If, based upon a price review the unit sales price of any good 
and/or service(s) does not fall within the prevailing commercial market 
level ranges, as determined by CCC, the initial application will not be 
approved as submitted.
    (iii) CCC will review the preliminary environmental and social 
screening document submitted by the seller and, if necessary, request 
additional information from the seller to determine whether the 
transaction could have potentially significant adverse environmental 
and/or social impacts. If CCC determines that a transaction may have 
such significant adverse impacts, the seller must submit an 
Environmental and Social Impact Assessment (ESIA) with the final 
application for the payment guarantee. Alternatively, CCC may reject an 
initial application for payment guarantee based on the screening 
document and any additional information provided by the seller.
    (2) Once CCC indicates its approval of the initial application to 
the seller, the seller must submit a final application as specified in 
paragraph (d) of this section before CCC will make a final determination 
of whether to issue a payment guarantee.
    (d) Final application for payment guarantee. Once CCC approves an 
initial application, CCC must receive the seller's final application for 
a payment guarantee within the timeframe specified by CCC. This 
timeframe will be a minimum of 30 calendar days. The final application 
for payment guarantee must be submitted in writing to CCC in the manner 
specified on the USDA Web site and be accompanied by the full guarantee 
fee (less any previous letter of interest or initial application fees 
paid toward the payment guarantee) and the environmental and social 
impact assessment, if required by CCC. The final application must 
identify the name and address of the seller and include the following 
information:
    (1) FGP tracking number assigned by CCC.
    (2) Destination country.
    (3) The name and address of the buyer.
    (4) A description of each good and U.S. service, along with the 
value of the Good and Cost of the service, for which guarantee coverage 
is requested, based on CCC's feedback on the seller's initial 
application. If the seller is seeking guarantee coverage on only the 
U.S. components used in the assembly of U.S. goods, provide the value of 
the U.S. Components.
    (5) Net contract value.
    (6) Amount of the initial payment and evidence that the initial 
payment

[[Page 1115]]

has been paid by the buyer to the seller.
    (7) Description and value of any discounts and allowances.
    (8) Value of approved local costs.
    (9) Total FGP transaction value.
    (10) Guaranteed value.
    (11) Guarantee fee.
    (12) The seller's statement, ``All certifications set forth in Sec.
1493.270 are hereby being made by the seller in this application'' 
which, when included in the application by the seller, will constitute a 
certification that it is in compliance with all the requirements set 
forth in Sec.1493.270 with respect to both the initial and final 
applications.
    (e) Public comment. To provide the public opportunity to review and 
comment on the potential environmental and social impacts of a 
transaction, CCC will make available on its Web site a list of pending 
transactions for which an ESIA is required. Interested parties will have 
a minimum of 30 business days to request and provide input on an ESIA 
prior to CCC's final decision. CCC will not disclose any confidential 
business information associated with a transaction unless such 
disclosure is authorized by law.
    (f) Reporting. The seller may be required to submit reports to CCC 
on a quarterly, biannual, or annual basis to allow CCC to monitor 
transactions in which there is a potential for negative environmental 
and/or social impact. Reporting frequency will be based on the extent of 
the transaction's impact and any mitigation required. CCC and the seller 
will agree upon any reporting requirements, including the elements of 
reporting and the frequency, prior to issuance of a payment guarantee.
    (g) Approval of final application. A final application for a payment 
guarantee may be approved as submitted, approved with modifications 
agreed to by the seller, or rejected by CCC. CCC shall have the right to 
request the seller to furnish any other information and documentation it 
deems pertinent to the evaluation of the seller's application. In the 
event that the final application is approved, the Director will cause a 
payment guarantee to be issued in favor of the seller. Such payment 
guarantee will become effective at the time specified in Sec.
1493.290(b).



Sec.1493.270  Certification requirements for obtaining payment 
guarantee.

    By providing the statement in Sec.1493.260(d)(12), the seller is 
certifying that the information provided in the initial and final 
applications is true and correct and, further, that all requirements set 
forth in this section have been met. The seller will be required to 
provide further explanation or documentation with regard to final 
applications that do not include this statement. If the seller makes 
false certifications with respect to a payment guarantee, CCC will have 
the right, in addition to any other rights provided under this subpart 
or otherwise as a matter of law, to revoke guarantee coverage for any 
goods not yet exported and services not yet performed and/or to commence 
legal action and/or administrative proceedings against the seller. The 
seller, in submitting an application for a payment guarantee and 
providing the statement set forth in Sec.1493.260(d)(12), certifies 
that:
    (a) There have not been any corrupt payments or extra sales services 
or other items extraneous to the transaction provided, financed, or 
guaranteed in connection with the transaction, and the transaction 
complies with applicable United States law, including the Foreign 
Corrupt Practices Act of 1977 and other anti-bribery measures;
    (b) At the time of submission of the final application for payment 
guarantee, the buyer does not appear as an excluded party on the SAM 
list;
    (c) The seller is fully in compliance with the requirements of Sec.
1493.320(b) for all existing payment guarantees issued to the seller or 
has requested and been granted an extension per Sec.1493.320(b)(3); 
and
    (d) The information provided pursuant to Sec.1493.220 has not 
changed and the seller still meets all of the qualification requirements 
of Sec.1493.220.

[[Page 1116]]



Sec.1493.280  Special requirements of the foreign financial 
institution letter of credit and the terms and conditions 
document, if applicable.

    (a) Permitted mechanisms to document special requirements. (1) A 
foreign financial institution letter of credit is required in connection 
with the sale to which CCC's payment guarantee pertains.
    (i) If the obligation to pay by the foreign financial institution is 
conditioned on shipment documentation, the letter of credit must 
stipulate presentation of at least one original clean on board bill of 
lading as a required document, unless:
    (A) The seller, or a related company previously reported to CCC by 
the seller pursuant to 1493.220(a)(5), is named as the shipper on the 
clean, on-board bill of lading. If the seller or a related company is 
named the shipper on the bill of lading, the letter of credit may 
stipulate a copy or photocopy of an original, clean, on-board bill of 
lading; or
    (B) The letter of credit stipulates presentation of electronic 
documents per paragraph (a)(1)(ii) of this section.
    (ii) If the letter of credit will allow for presentation of 
electronic documents, the letter of credit must so stipulate.
    (iii) If the obligation to pay by the foreign financial institution 
is conditioned on a contractual event requiring other than shipment 
documentation, the contractual event must be clearly stipulated in 
either the letter of credit or the terms and conditions document.
    (2) The use of a terms and conditions document is optional. The 
terms and conditions document, if any, must be specifically identified 
and referred to in the foreign financial institution letter of credit.
    (3) The special requirements in paragraph (b) of this section must 
be documented in one of the two following ways:
    (i) The special requirements may be set forth in the foreign 
financial institution letter of credit as a special instruction from the 
foreign financial institution; or
    (ii) The special requirements may be set forth in a separate terms 
and conditions document.
    (b) Special requirements. The following provisions are required and 
must be documented in accordance with paragraph (a) of this section:
    (1) The terms of the repayment obligation, including a specific 
promise by the foreign financial institution issuing the letter of 
credit to pay the repayment obligation;
    (2) The following language: ``In the event that the Commodity Credit 
Corporation (``CCC'') is subrogated to the position of the obligee 
hereunder, this instrument shall be governed by and construed in 
accordance with the laws of the State of New York, excluding its 
conflict of laws principles. In such case, any legal action or 
proceeding arising under this instrument will be brought exclusively in 
the U.S. District Court for the Southern District of New York or the 
U.S. District Court for the District of Columbia, as determined by CCC, 
and such parties hereby irrevocably consent to the personal jurisdiction 
and venue therein.'';
    (3) A provision permitting the holder of the payment guarantee to 
declare all or any part of the repayment obligation, including accrued 
interest, immediately due and payable, in the event a payment default 
occurs under the letter of credit or, if applicable, the terms and 
conditions document; and
    (4) Post default interest terms.



Sec.1493.290  Terms and requirements of the payment guarantee.

    (a) CCC's obligation. The payment guarantee will provide that CCC 
agrees to pay the holder of the payment guarantee an amount not to 
exceed the guaranteed value, plus Eligible interest, in the event that 
the foreign financial institution fails to pay under the foreign 
financial institution letter of credit and, if applicable, the terms and 
conditions document. Payment by CCC will be in U.S. dollars.
    (b) Period of guarantee coverage. The payment guarantee becomes 
effective on the Date(s) of Performance. For goods, the period of 
coverage will apply from the date on which interest begins to accrue, if 
earlier than the date of performance. The payment guarantee will apply 
to the period beginning with the Date(s) of Performance and will

[[Page 1117]]

continue during the credit term specified in the payment guarantee or 
amendments thereto.
    (c) Terms of the CCC payment guarantee. The terms of CCC's coverage 
will be set forth in the payment guarantee, as approved by CCC, and will 
include the provisions of this subpart, which may be supplemented by any 
program announcements and notices to participants in effect at the time 
the payment guarantee is approved by CCC.
    (d) Final date of performance. The final allowable date of 
performance will be specified on the payment guarantee.
    (e) U.S. content test. (1) Except as allowed under Sec.
1493.290(f), CCC will issue a payment guarantee only if the following 
items collectively represent less than 50 percent of the sum of the net 
contract value and the value of approved local costs:
    (i) The value of eligible non-U.S. goods; and
    (ii) The value of imported components.
    (2) Imported raw materials and basic manufactured items (such as 
iron, steel, nuts, bolts, etc.) which are processed, assembled or 
manufactured in the United States are automatically included in CCC's 
coverage and are not counted as imported components for the purpose of 
determining U.S. content.
    (f) Coverage waiver. (1) The seller may request a coverage waiver 
for any of the following:
    (i) To allow for guarantee coverage of non-U.S. goods; and/or
    (ii) The U.S. content test, allowing for guarantee coverage of non-
U.S. goods and imported components in U.S. goods in excess of the value 
permitted under the U.S. content test.
    (2) To request a coverage waiver on one of the bases specified in 
paragraph (f)(1) of this section, the seller must submit with the 
initial application for a payment guarantee a justification of why the 
non-U.S. goods and/or imported components in U.S. goods are essential to 
the completion of the FGP transaction. This justification must be based 
on one of the following:
    (i) The goods and/or components are no longer manufactured in or 
provided by the United States;
    (ii) The use of U.S. goods and/or components is not cost effective; 
or
    (iii) U.S. goods and/or components are not compatible with the 
existing infrastructure in the destination country.
    (3) In determining whether to grant a coverage waiver, CCC will 
consider the following factors:
    (i) Whether information obtained by CCC from industry sources, 
government agencies, or any other sources supports the justification 
provided by the seller;
    (ii) Whether the non-U.S. goods (and/or imported components in U.S. 
goods) are essential to the completion of the transaction; and
    (iii) Any other information CCC determines is relevant.
    (g) Certain transactions are ineligible for payment guarantees. A 
transaction (or any portion thereof) is ineligible for payment guarantee 
coverage if at any time CCC determines that:
    (1) The sale includes corrupt payments or extra sales or services or 
other items extraneous to the transactions provided, financed, or 
guaranteed in connection with the transaction;
    (2) The sale does not comply with applicable U.S. law, including the 
Foreign Corrupt Practices Act of 1977 and other anti-bribery measures;
    (3) The buyer is excluded or disqualified from participation in U.S. 
government programs;
    (4) The goods, services, and/or facility being financed will not 
primarily benefit U.S. agricultural commodity exports;
    (5) The sale is not an eligible export sale.
    (h) Certain contractual events are ineligible for payment guarantee 
coverage. The following contractual events are ineligible for coverage 
under an FGP payment guarantee, except where it is determined by the 
Director to be in the best interest of CCC to provide guarantee coverage 
on such contractual events:
    (1) Contractual events with a date of performance prior to the date 
of receipt by CCC of the seller's written initial application for a 
payment guarantee;

[[Page 1118]]

    (2) Contractual events with a date of performance later than the 
final date of performance shown on the payment guarantee or any 
amendments thereof;
    (3) Contractual events where the date of issuance of a foreign 
financial institution letter of credit is later than the date of 
performance; or
    (4) Contractual events that have been guaranteed by CCC under 
another payment guarantee. If CCC determines that the contractual event 
has been guaranteed under multiple payment guarantees (or coverage has 
been requested under multiple payment guarantees), CCC will determine 
which payment guarantee (or application for payment guarantee), if any, 
corresponds to an eligible export sale.
    (i) Additional requirements. The payment guarantee may contain such 
additional terms, conditions, and limitations as deemed necessary or 
desirable by the Director. Such additional terms, conditions or 
qualifications as stated in the payment guarantee are binding on the 
seller and the assignee.
    (j) Amendments to the firm sales contract. Any amendments to the 
firm sales contract that impact contractual event(s) covered by the 
payment guarantee must be submitted to CCC for approval for coverage 
prior to the date of performance of the contractual event.
    (k) Amendments to the payment guarantee. A request for an amendment 
of a payment guarantee may be submitted only by the seller, with the 
written concurrence of the assignee, if any, and must be accompanied by 
the revised firm sales contract, if applicable. The Director will 
consider such a request only if the amendment sought is consistent with 
this subpart and any applicable program announcements and sufficient 
budget authority exists. Any amendment to the payment guarantee, 
particularly those that result in an increase in CCC's liability under 
the payment guarantee, may result in an increase in the guarantee fee. 
CCC reserves the right to request additional information from the seller 
to justify the request and to charge a fee for amendments. Such fees 
will be announced and available on the USDA Web site. Any request to 
amend the foreign financial institution on the payment guarantee will 
require that the holder of the payment guarantee resubmit to CCC the 
certification in Sec.1493.310(c)(1)(i) or Sec.1493.330(d).



Sec.1493.300  Fees.

    (a) Letter of interest fee. A letter of interest fee, as specified 
on the USDA Web site, must be received by CCC before CCC will consider 
the seller's letter of interest.
    (b) Initial application fee. An initial application fee, as 
specified on the USDA Web site, must be received by CCC before CCC will 
consider the seller's initial application for a payment guarantee.
    (c) Guarantee fee rates. Guarantee fee rates will be based upon the 
length of the payment terms provided for in the firm sales contract, the 
degree of risk that CCC assumes, as determined by CCC, and any other 
factors that CCC determines appropriate for consideration.
    (d) Calculation of guarantee fee. The guarantee fee will be computed 
by multiplying the guaranteed value by the guarantee fee rate.
    (e) Payment of guarantee fee. The seller shall remit, with his final 
application, the full amount of the guarantee fee, less the previously 
paid letter of interest fee, if applicable, and the initial application 
fee. CCC will not issue a payment guarantee until the full amount of the 
guarantee fee has been received by CCC. The seller's wire transfer or 
check for the guarantee fee shall be made payable to CCC and be 
submitted in the manner specified on the USDA Web site.
    (f) Refunds of fees. Letter of interest fees, initial application 
fees, and guarantee fees will ordinarily not be refundable unless the 
Director determines that such refund will be in the best interest of 
CCC.



Sec.1493.310  Assignment of the payment guarantee.

    (a) Requirements for assignment. The seller may assign the payment 
guarantee only to a U.S. financial institution approved for 
participation by CCC. The assignment must cover all amounts payable 
under the payment guarantee not already paid, may not be

[[Page 1119]]

made to more than one party, and, unless approved in advance by CCC, may 
not be:
    (1) Made to one party acting for two or more parties; or
    (2) Subject to further assignment.
    (b) CCC to receive notice of assignment of payment guarantee. A 
notice of assignment signed by the parties thereto must be filed with 
CCC by the assignee in the manner specified on the USDA Web site. The 
name and address of the assignee must be included on the written notice 
of assignment. The notice of assignment should be received by CCC within 
30 calendar days of the date of assignment.
    (c) Required certifications. (1) The U.S. financial institution must 
include the following certifications on the notice of assignment: ``I 
certify, that:
    (i) [Name of Assignee] has verified that the foreign financial 
institution, at the time of submission of the notice of assignment, does 
not appear as an excluded party on the SAM list; and
    (ii) To the best of my knowledge and belief, the information 
provided pursuant to Sec.1493.230 has not changed and [name of 
Assignee] still meets all of the qualification requirements of Sec.
1493.230.''
    (2) If the assignee makes a false certification with respect to a 
payment guarantee, CCC may, in its sole discretion, in addition to any 
other action available as a matter of law, rescind and cancel the 
payment guarantee, reject the assignment of the payment guarantee, and/
or commence legal action and/or administrative proceedings against the 
assignee.
    (d) Notice of ineligibility to receive assignment. In cases where a 
U.S. financial institution is determined to be ineligible to receive an 
assignment, in accordance with paragraph (e) of this section, CCC will 
provide notice thereof to the U.S. financial institution and to the 
seller issued the payment guarantee.
    (e) Ineligibility of U.S. financial institutions to receive an 
assignment and proceeds. A U.S. financial institution will be ineligible 
to receive an assignment of a payment guarantee or the proceeds payable 
under a payment guarantee if such U.S. financial institution:
    (1) At the time of assignment of a payment guarantee, is not in 
compliance with all requirements of Sec.1493.230(a); or
    (2) Is the branch, agency, or subsidiary of the foreign financial 
institution issuing the letter of credit; or
    (3) Is owned or controlled by an entity that owns or controls the 
foreign financial institution issuing the letter of credit; or
    (4) Is the U.S. parent of the foreign financial institution issuing 
the foreign financial institution letter of credit; or
    (5) Is owned or controlled by the government of a foreign country 
and the payment guarantee has been issued in connection with sales of 
goods or services to buyers located in such foreign country.
    (f) Repurchase agreements. (1) The holder of the payment guarantee 
may enter into a repurchase agreement, to which the following 
requirements apply:
    (i) Any repurchase under a repurchase agreement by the holder of the 
payment guarantee must be for the entirety of outstanding balance under 
the associated repayment obligation;
    (ii) In the event of default with respect to the repayment 
obligation subject to a repurchase agreement, the holder of the payment 
guarantee must immediately effect such repurchase; and
    (iii) The holder of the payment guarantee must file all 
documentation required by Sec. Sec.1493.350 and 1493.360 in case of a 
default by the foreign financial institution under the payment 
guarantee.
    (2) The holder of the payment guarantee shall, within five business 
days of execution of a transaction under the repurchase agreement, 
notify CCC of the transaction in writing in the manner specified on the 
USDA Web site. Such notification must include the following information:
    (i) Name and address of the other party to the repurchase agreement;
    (ii) A statement indicating whether the transaction executed under 
the repurchase agreement is for a fixed term or if it is terminable upon 
demand by either party. If fixed, provide the purchase date and the 
agreed upon date for

[[Page 1120]]

repurchase. If terminable on demand, provide the purchase date only; and
    (iii) The following written certification: ``[Name of holder of the 
payment guarantee] has entered into a repurchase agreement that meets 
the provisions of 7 CFR 1493.310(f)(1) and, prior to entering into this 
agreement, verified that [name of other party to the repurchase 
agreement] does not appear as an excluded party on the SAM list.''
    (3) Failure of the holder of the payment guarantee to comply with 
any of the provisions of Sec.1493.310(f) may result in CCC annulling 
coverage on the foreign financial institution letter of credit and Terms 
and Condition Document, if applicable, covered by the payment guarantee.



Sec.1493.320  Evidence of performance.

    (a) Report of performance. The seller is required to provide CCC an 
evidence of performance report for each contractual event occurring 
under the payment guarantee. This report must include the following 
information:
    (1) Payment guarantee number;
    (2) Evidence of performance report number (e.g., Report 1, Report 2) 
reflecting the report's chronological order of submission under the 
particular payment guarantee;
    (3) Date of performance;
    (4) Seller's firm sales contract number;
    (5) Detailed description of the contractual event. For goods, 
include the applicable 10-digit Harmonized System classification code 
and the quantity;
    (6) Net contract value of the contractual event covered by the 
payment guarantee;
    (7) Amount of initial payment corresponding to the contractual 
event;
    (8) Description and value of discounts and allowances, if any;
    (9) Value of approved local costs corresponding to the contractual 
event, if any;
    (10) Total FGP transaction value;
    (11) Guaranteed value of contractual event;
    (12) The seller's statement, ``All certifications set forth in Sec.
1493.330 are hereby made by the seller in this evidence of performance'' 
which, when included in the evidence of performance by the seller, will 
constitute a certification that it is in compliance with all the 
requirements set forth in Sec.1493.330; and
    (13) In addition to all of the above information, the final evidence 
of performance report for the payment guarantee must include the 
following:
    (i) The statement ``All contractual events under the payment 
guarantee have been completed.''
    (ii) A statement summarizing the total value of all contractual 
events covered under the payment guarantee (i.e., the cumulative totals 
on all numbered reports).
    (b) Time limit for submission of evidence of performance. (1) The 
seller must provide a written report to CCC in the manner specified on 
the USDA Web site within 30 calendar days from the date of performance.
    (2) If at any time the seller determines that no contractual events 
are to occur under a payment guarantee, the seller is required to notify 
CCC in writing no later than the final date of performance specified on 
the payment guarantee by furnishing the payment guarantee number and 
stating ``No contractual events will occur under the payment 
guarantee.''
    (3) Requests for an extension of the time limit for submitting an 
evidence of performance report must be submitted in writing by the 
seller to the Director and must include an explanation of why the 
extension is needed. An extension of the time limit may be granted if 
such extension is requested prior to the expiration of the time limit 
for filing and is determined by the Director to be in the best interests 
of CCC.
    (c) Failure to comply with time limits for submission. CCC will not 
accept any new applications for payment guarantees from a seller under 
Sec.1493.260 until the seller is fully in compliance with the 
requirements of Sec.1493.320(b) for all existing payment guarantees 
issued to that seller or has requested and been granted an extension in 
accordance with Sec.1493.320(b)(3).



Sec.1493.330  Certification requirements for the evidence 
of performance.

    By providing the statement contained in Sec.1493.320(a)(12), the 
seller is

[[Page 1121]]

certifying that the information provided in the evidence of performance 
report is true and correct and, further, that all requirements set forth 
in this section have been met. The seller will be required to provide 
further explanation or documentation with regard to reports that do not 
include this statement. If the seller makes false certifications with 
respect to a payment guarantee, CCC will have the right, in addition to 
any other rights provided under this subpart or otherwise as a matter of 
law, to annul guarantee coverage for any contractual events that have 
not yet occurred and/or to commence legal action and/or administrative 
proceedings against the seller. The seller, in submitting the evidence 
of performance and providing the statement set forth in Sec.
1493.320(a)(12), certifies that:
    (a) The specifications and/or quantity of the contractual event 
conform with the information contained in the seller's application for 
payment guarantee and firm sales contract, or if different, CCC has 
approved such changes;
    (b) A foreign financial institution letter of credit has been opened 
in favor of the seller by the foreign financial institution shown on the 
payment guarantee to cover the dollar amount of the contractual event 
covered by the payment guarantee, less the initial payment and less 
discounts and allowances;
    (c) There have not been any corrupt payments or extra sales services 
or other items extraneous to the transaction provided, financed, or 
guaranteed in connection with the transaction, and that the transaction 
complies with applicable United States law, including the Foreign 
Corrupt Practices Act of 1977 and other anti-bribery measures;
    (d) If the seller has not assigned the payment guarantee to a U.S. 
financial institution, the seller has verified that the foreign 
financial institution, at the time of submission of the evidence of 
performance report, does not appear as an excluded party on the SAM 
list; and
    (e) The information provided pursuant to Sec. Sec.1493.220 and 
1493.260 has not changed (except as agreed to and amended by CCC) and 
the seller still meets all of the qualification requirements of Sec.
1493.220.



Sec.1493.340  Proof of entry.

    (a) Diversion. The diversion of goods covered by an FGP payment 
guarantee to a destination country other than that shown on the payment 
guarantee is prohibited, unless expressly authorized in writing by the 
Director.
    (b) Records of proof of entry. (1) Sellers must obtain and maintain 
records of an official or customary commercial nature that demonstrate 
the arrival of the goods sold in connection with the FGP in the 
destination country. At the Director's request, the seller must submit 
to CCC records demonstrating proof of entry. Records demonstrating proof 
of entry must be in English or be accompanied by a certified or other 
translation acceptable to CCC. Records acceptable to meet this 
requirement include an original certification of entry signed by a duly 
authorized customs or port official of the destination country, by an 
agent or representative of the vessel or shipline that delivered the 
goods to the destination country, or by a private surveyor in the 
destination country, or other documentation deemed acceptable by the 
Director showing:
    (i) That the good(s) entered the destination country;
    (ii) The identification of the export carrier;
    (iii) The quantity of the good(s);
    (iv) A description of the good(s); and
    (v) The date(s) and place(s) of unloading of the good(s) in the 
destination country.
    (2) Where shipping documents (e.g., bills of lading) clearly 
demonstrate that the goods were shipped to the destination country, 
proof of entry verification may be provided by the buyer.



Sec.1493.350  Notice of default.

    (a) Notice of default. If the foreign financial institution issuing 
the letter of credit fails to make payment pursuant to the terms of the 
letter of credit or the terms and conditions document, the holder of the 
payment guarantee must submit a notice of default to CCC as soon as 
possible, but not later than

[[Page 1122]]

5 business days after the date that payment was due from the foreign 
financial institution (the due date). A notice of default must be 
submitted in writing to CCC in the manner specified on the USDA Web site 
and must include the following information:
    (1) Payment guarantee number;
    (2) Name of the destination country as shown on the payment 
guarantee;
    (3) Name of the defaulting foreign financial institution;
    (4) Payment due date;
    (5) Total amount of the defaulted payment due, indicating separately 
the amounts for principal and ordinary interest, and including a copy of 
the repayment schedule with due dates, principal amounts and ordinary 
interest rates for each installment;
    (6) Date of foreign financial institution's refusal to pay, if 
applicable;
    (7) Reason for foreign financial institution's refusal to pay, if 
known, and copies of any correspondence with the foreign financial 
institution regarding the default.
    (b) Failure to comply with time limit for submission. If the holder 
of the payment guarantee fails to notify CCC of a default within 5 
business days, CCC may deny the claim for that default.
    (c) Impact of a default on other existing payment guarantees.
    (1) In the event that a foreign financial institution defaults under 
a repayment obligation under this subpart or under 7 CFR 1493, subpart 
B, CCC may declare that such foreign financial institution is no longer 
eligible to provide additional Letters of Credit under the FGP. If CCC 
determines that such defaulting foreign financial institution is no 
longer eligible for the FGP, CCC shall provide written notice of such 
ineligibility to all sellers and assignees, if any, having payment 
guarantees covering transactions with respect to which the defaulting 
foreign financial institution is expected to issue a letter of credit. 
Receipt of written notice from CCC that a defaulting foreign financial 
institution is no longer eligible to provide additional Letters of 
Credit under the FGP shall constitute withdrawal of coverage of that 
foreign financial institution under all payment guarantees with respect 
to any letter of credit issued on or after the date of receipt of such 
written notice. CCC will not withdraw coverage of the defaulting foreign 
financial institution under any payment guarantee with respect to any 
letter of credit issued before the date of receipt of such written 
notice.
    (2) If CCC withdraws coverage of the defaulting foreign financial 
institution, CCC will permit the seller (with concurrence of the 
assignee, if any) to utilize another approved foreign financial 
institution, and will consider other requested amendments to the payment 
guarantee, for the balance of the transaction covered by the payment 
guarantee. If no alternate foreign financial institution is identified 
to issue the letter of credit within 30 calendar days, CCC will cancel 
the payment guarantee and refund the seller's guarantee fees 
corresponding to any unutilized portion of the payment guarantee.



Sec.1493.360  Claims for default.

    (a) Filing a claim. A claim by the holder of the payment guarantee 
for a defaulted payment will not be paid if it is made later than 180 
calendar days from the due date of the defaulted payment. A claim must 
be submitted in writing to CCC in the manner specified on the USDA Web 
site. The claim must include the following documents and information:
    (1) An original cover letter signed by the holder of the payment 
guarantee and containing the following information:
    (i) Payment guarantee number;
    (ii) A description of:
    (A) Any payments from or on behalf of the defaulting party or 
otherwise related to the defaulted payment that were received by the 
seller or the assignee prior to submission of the claim; and
    (B) Any security, insurance, or collateral arrangements, whether or 
not any payment has been realized from such security, insurance, or 
collateral arrangement as of the time of claim, from or on behalf of the 
defaulting party or otherwise related to the defaulted payment.
    (iii) The following certifications:
    (A) A certification that the defaulted payment has not been received 
(or, alternatively, specifying the portion of the scheduled payment that 
has not

[[Page 1123]]

been received), listing separately scheduled principal and ordinary 
interest;
    (B) A certification of the amount of the defaulted payment, 
indicating separately the amounts for defaulted principal and ordinary 
interest;
    (C) A certification that all documents submitted under paragraph 
(a)(3) of this section are true and correct copies; and
    (D) A certification that all documents conforming with the 
requirements for payment under the foreign financial institution letter 
of credit have been submitted to the negotiating bank or directly to the 
foreign financial institution under such letter of credit.
    (2) An original instrument, in form and substance satisfactory to 
CCC, subrogating to CCC the respective rights of the holder of the 
payment guarantee to the amount of payment in default under the 
applicable sale. The instrument must reference the applicable foreign 
financial institution letter of credit and, if applicable, the terms and 
conditions document; and
    (3) A copy of each of the following documents:
    (i) The repayment schedule with due dates, principal amounts and 
ordinary interest rates for each installment (if the ordinary interest 
rates for future payments are unknown at the time of the claim for 
default is submitted, provide estimates of such rates);
    (ii) (A) The foreign financial institution letter of credit securing 
the sale; and
    (B) If applicable, the terms and conditions document;
    (iii) For goods, depending upon the method of shipment, the ocean 
carrier or intermodal bill(s) of lading signed by the shipping company 
with the onboard ocean carrier date for each shipment, the airway bill, 
or, if shipped by rail or truck, the bill of lading and the entry 
certificate or similar document signed by an official of the destination 
country. If the transaction utilizes electronic bill(s) of lading (e-
BL), a print-out of the e-BL from electronic system with an electronic 
signature is acceptable;
    (iv) The seller's invoice. For shipment of goods, the invoice must 
show the applicable Incoterms;
    (v) The evidence of performance report(s) previously submitted by 
the seller to CCC in conformity with the requirements of Sec.
1493.320(a); and
    (vi) If the defaulted payment was part of a transaction executed 
under a repurchase agreement, written evidence that the repurchase 
occurred as required under Sec.1493.310(f)(1)(ii).
    (b) Additional documents. If a claim is denied by CCC, the holder of 
the payment guarantee may provide further documentation to CCC to 
establish that the claim is in good order.
    (c) Subsequent claims for defaults on installments. If the initial 
claim is found in good order, the holder of the payment guarantee need 
only provide all of the required claims documents with the initial claim 
relating to a covered transaction. For subsequent claims relating to 
failure of the foreign financial institution to make scheduled 
installments on the same contractual event, the holder of the payment 
guarantee need only submit to CCC a notice of such failure containing 
the information stated in paragraph (a)(1)(i), (a)(1)(ii), and 
(a)(1)(iii)(A) and (B) of this section; an instrument of subrogation as 
per paragraph (a)(2) of this section, and the date the original claim 
was filed with CCC.
    (d) Alternative satisfaction of payment guarantees. CCC may 
establish procedures, terms and/or conditions for the satisfaction of 
CCC's obligations under a payment guarantee other than those provided 
for in this subpart if CCC determines that those alternative procedures, 
terms, and/or conditions are appropriate in rescheduling the debts 
arising out of any transaction covered by the payment guarantee and 
would not result in CCC paying more than the amount of CCC's obligation.



Sec.1493.370  Payment for default.

    (a) Determination of CCC's liability. Upon receipt in good order of 
the information and documents required under Sec.1493.360, CCC will 
determine whether or not a default has occurred for which CCC is liable 
under the applicable payment guarantee. Such determination shall 
include, but not be limited to,

[[Page 1124]]

CCC's determination that all documentation conforms to the specific 
requirements contained in this subpart, and that all documents submitted 
for payment conform to the requirements of the letter of credit and, if 
applicable, the terms and conditions document. If CCC determines that it 
is liable to the holder of the payment guarantee, CCC will pay the 
holder of the payment guarantee in accordance with paragraphs (b) and 
(c) of this section.
    (b) Amount of CCC's liability. CCC's maximum liability for any 
claims submitted with respect to any payment guarantee, not including 
any CCC late interest Payments due in accordance with paragraph (c) of 
this section, will be limited to the lesser of:
    (1) The guaranteed value as stated in the payment guarantee, plus 
Eligible interest, less any payments received or funds realized from 
insurance, security or collateral arrangements prior to claim by the 
seller or the assignee from or on behalf of the defaulting party or 
otherwise related to the obligation in default (other than payments 
between CCC, the seller or the assignee); or
    (2) The guaranteed percentage (as indicated in the payment 
guarantee) of the value of the contractual event indicated in the 
evidence of performance, plus eligible interest, less any payments 
received or funds realized from insurance, security or collateral 
arrangements prior to claim by the seller or the assignee from or on 
behalf of the defaulting party or otherwise related to the obligation in 
default (other than payments between CCC, the seller or the assignee).
    (c) CCC late interest. If CCC does not pay a claim within 15 
business days of receiving the claim in good order, CCC late interest 
will accrue in favor of the holder of the payment guarantee beginning 
with the sixteenth business day after the day of receipt of a complete 
and valid claim found by CCC to be in good order and continuing until 
and including the date that payment is made by CCC. CCC late interest 
will be paid on the guaranteed amount, as determined by paragraph (b) of 
this section, and will be calculated at a rate equal to the average 
investment rate of the most recent Treasury 91-day bill auction as 
announced by the Department of Treasury as of the due date. If there has 
been no 91-day auction within 90 calendar days of the date CCC late 
interest begins to accrue, CCC will apply an alternative rate in a 
manner to be described on the USDA Web site.
    (d) Accelerated payments. CCC will pay claims only on amounts not 
paid as scheduled. CCC will not pay claims for amounts due as a result 
of the claimant invoking an accelerated payment clause in the firm sales 
contract, the foreign financial institution letter of credit, the terms 
and conditions document (if applicable), or any obligation owed by the 
foreign financial institution to the holder of the payment guarantee 
that is related to the letter of credit issued in favor of the seller, 
unless it is determined to be in the best interests of CCC. 
Notwithstanding the foregoing, CCC at its option may declare up to the 
entire amount of the unpaid balance, plus accrued ordinary interest, in 
default, require the holder of the payment guarantee to invoke the 
acceleration provision in the foreign financial institution letter of 
credit or, if applicable, in the terms and conditions document, require 
submission of all claims documents specified in Sec.1493.360, and make 
payment to the holder of the payment guarantee in addition to such other 
claimed amount as may be due from CCC.
    (e) Action against the assignee. If an assignee submits a claim for 
default pursuant to Sec.1493.360 and all documents submitted appear on 
their face to conform with the requirements of such section, CCC will 
not hold the assignee responsible or take any action or raise any 
defense against the assignee for any action, omission, or statement by 
the seller of which the assignee has no knowledge.



Sec.1493.380  Recovery of defaulted payments.

    (a) Notification. Upon claim payment to the holder of the payment 
guarantee, CCC will notify the foreign financial institution of CCC's 
rights under the subrogation agreement to recover all monies in default.
    (b) Receipt of monies. (1) In the event that monies related to the 
obligation in default are recovered by the seller or the assignee from 
or on behalf of the

[[Page 1125]]

defaulting party, the buyer, or any source whatsoever (excluding 
payments between CCC, the seller and the assignee), such monies shall be 
immediately paid to CCC. Any monies derived from insurance or through 
the liquidation of any security or collateral after the claim is filed 
with CCC shall be deemed recoveries that must be paid by the seller and/
or assignee to CCC. If such monies are not received by CCC within 15 
business days from the date of recovery by the seller or the assignee, 
such party will also owe to CCC interest from the date of recovery of 
such funds to the date of CCC's receipt of such funds. This interest 
will be calculated at a rate equal to the latest average investment rate 
of the most recent Treasury 91-day bill auction, as announced by the 
Department of Treasury, in effect on the date of recovery and will 
accrue from such date to the date of payment by the seller or the 
assignee to CCC. Such interest will be charged only on CCC's share of 
the recovery. If there has been no 91-day auction within 90 calendar 
days of the date interest begins to accrue, CCC will apply an 
alternative rate in a manner to be described on the USDA Web site.
    (2) If CCC recovers monies that should be applied to a payment 
guarantee for which a claim has been paid by CCC, CCC will pay the 
holder of the payment guarantee its pro rata share if any, provided that 
the required information necessary for determining pro rata distribution 
has been furnished. If a required payment is not made by CCC within 15 
business days from the date of recovery or 15 business days from 
receiving the required information for determining pro rata 
distribution, whichever is later, CCC will pay interest calculated at a 
rate equal to the latest average investment rate of the most recent 
Treasury 91-day bill auction, as announced by the Department of 
Treasury, in effect on the date of recovery, and interest will accrue 
from such date to the date of payment by CCC. The interest will apply 
only to the portion of the recovery payable to the holder of the payment 
guarantee.
    (c) Allocation of recoveries. Recoveries received by CCC from any 
source whatsoever that are related to the obligation in default will be 
allocated by CCC to the holder of the payment guarantee and to CCC on a 
pro rata basis determined by their respective interests in such 
recoveries. The respective interest of each party will be determined on 
a pro rata basis, based on the combined amount of principal and interest 
in default on the date the claim is paid by CCC. Once CCC has paid out a 
particular claim under a payment guarantee, CCC prorates any collections 
it receives and shares these collections proportionately with the holder 
of the payment guarantee until both CCC and the holder of the payment 
guarantee have been reimbursed in full.
    (d) Liabilities to CCC. Notwithstanding any other terms of the 
payment guarantee, under the following circumstances the seller or the 
assignee will be liable to CCC for any amounts paid by CCC under the 
payment guarantee:
    (1) The seller will be liable to CCC when and if it is determined by 
CCC that the seller has engaged in fraud, or has been or is in material 
breach of any contractual obligation, certification or warranty made by 
the seller for the purpose of obtaining the payment guarantee or for 
fulfilling obligations under the FGP; and
    (2) The assignee will be liable to CCC when and if it is determined 
by CCC that the assignee has engaged in fraud or otherwise violated 
program requirements.
    (e) Cooperation in recoveries. Upon payment by CCC of a claim to the 
holder of the payment guarantee, the holder of the payment guarantee and 
the seller will cooperate with CCC to affect recoveries from the foreign 
financial institution and/or the buyer. Cooperation may include, but is 
not limited to, submission of documents to the foreign financial 
institution (or its representative) to establish a claim; participation 
in discussions with CCC regarding the appropriate course of action with 
respect to a default; actions related to accelerated payments as 
specified in Sec.1493.370(d); and other actions that do not increase 
the obligation of the holder of the payment guarantee or the seller 
under the payment guarantee.

[[Page 1126]]



Sec.1493.385  Additional obligations and requirements.

    (a) Maintenance of records and access to premises, and responding to 
CCC inquiries. For a period of five years after the date of expiration 
of the coverage of a payment guarantee, the seller and the assignee, if 
applicable, must maintain and make available all records and respond 
completely to all inquiries pertaining to sales and deliveries of and 
extension of credit for goods and services sold in connection with a 
payment guarantee, including those records generated and maintained by 
agents and related companies involved in special arrangements with the 
seller. The Secretary of Agriculture and the Comptroller General of the 
United States, through their authorized representatives, must be given 
full and complete access to the premises of the seller and the assignee, 
as applicable, during regular business hours from the effective date of 
the payment guarantee until the expiration of such five-year period to 
inspect, examine, audit, and make copies of the seller's, assignee's, 
agent's, or related company's books, records and accounts concerning 
transactions relating to the payment guarantee, including, but not 
limited to, financial records and accounts pertaining to sales, 
inventory, processing, and administrative and incidental costs, both 
normal and unforeseen. During such period, the seller and the assignee 
may be required to make available to the Secretary of Agriculture or the 
Comptroller General of the United States, through their authorized 
representatives, records that pertain to transactions conducted outside 
the program, if, in the opinion of the Director, such records would 
pertain directly to the review of transactions undertaken by the seller 
in connection with the payment guarantee.
    (b) Responsibility of program participants. It is the responsibility 
of all sellers and U.S. and foreign financial institutions to review, 
and fully acquaint themselves with, all regulations, program 
announcements, and notices to participants relating to the FGP, as 
applicable. All sellers and U.S. and foreign financial institutions 
participating in the FGP are hereby on notice that they will be bound by 
this subpart and any terms contained in the payment guarantee and in 
applicable program announcements.
    (c) Submission of documents by principals. All required submissions, 
including certifications, applications, reports, or requests (i.e., 
requests for amendments), by sellers, assignees, or foreign financial 
institutions under this subpart must be signed by a principal of the 
seller, assignee, or foreign financial institution or their authorized 
designee(s). In cases where the designee is acting on behalf of the 
principal, the signature must be accompanied by wording indicating the 
delegation of authority or, in the alternative, by a certified copy of 
the delegation of authority, and the name and title of the authorized 
person or officer. Further, the seller, assignee, or foreign financial 
institution must ensure that all information and reports required under 
these regulations are timely submitted.
    (d) Misstatements or noncompliance by seller may lead to rescission 
of payment guarantee. CCC may cancel a payment guarantee in the event 
that a seller makes a willful misstatement in the certifications in 
Sec. Sec.1493.270(a) and 1493.330(c) or if the seller fails to comply 
with the provisions of Sec.1493.340 or Sec.1493.385(a). However, 
notwithstanding the foregoing, CCC will not cancel its payment guarantee 
if it determines, in its sole discretion, that an assignee had no 
knowledge of the seller's misstatement or noncompliance at the time of 
assignment of the payment guarantee.



Sec.1493.390  Dispute resolution and appeals.

    (a) Dispute resolution. (1) The Director and the seller or the 
assignee will attempt to resolve any disputes, including any adverse 
determinations made by CCC, arising under the FGP, this subpart, the 
applicable program announcements and notices to participants, or the 
payment guarantee.
    (2) The seller or the assignee may seek reconsideration of a 
determination made by the Director by submitting a letter requesting 
reconsideration to the Director within 30 calendar days of the date of 
the determination. For

[[Page 1127]]

the purposes of this section, the date of a determination will be the 
date of the letter or other means of notification to the seller or the 
assignee of the determination. The seller or the assignee may include 
with the letter requesting reconsideration any additional information 
that it wishes the Director to consider in reviewing its request. The 
Director will respond to the request for reconsideration within 30 
calendar days of the date on which the request or the final documentary 
evidence submitted by the seller or the assignee is received by the 
Director, whichever is later, unless the Director extends the time 
permitted for response. If the seller or the assignee fails to request 
reconsideration of a determination by the Director within 30 calendar 
days of the date of the determination, then the determination of the 
Director will be deemed final.
    (3) If the seller or the assignee requests reconsideration of a 
determination by the Director pursuant to subparagraph (a)(2) of this 
section, and the Director upholds the original determination, then the 
seller or the assignee may appeal the Director's final determination to 
the GSM in accordance with the procedures set forth in paragraph (b) of 
this section. If the seller or the assignee fails to appeal the 
Director's final determination within 30 calendar days, as provided in 
Sec.1493.390(b)(1), then the Director's decision becomes the final 
determination of CCC.
    (b) Appeal procedures. (1) A seller or assignee that has exhausted 
the procedures set forth in paragraph (a) of this section may appeal a 
final determination of the Director to the GSM. An appeal to the GSM 
must be made in writing and filed with the office of the GSM no later 
than 30 calendar days following the date of the final determination by 
the Director. If the seller or the assignee requests an administrative 
hearing in its appeal letter, it shall be entitled to a hearing before 
the GSM or the GSM's designee.
    (2) If the seller or the assignee does not request an administrative 
hearing, the seller or the assignee must indicate in its appeal letter 
whether or not it will submit any additional written information or 
documentation for the GSM to consider in acting upon its appeal. This 
information or documentation must be submitted to the GSM within 30 
calendar days of the date of the appeal letter to the GSM. The GSM will 
make a decision regarding the appeal based upon the information 
contained in the administrative record. The GSM will issue his or her 
written decision within 60 calendar days of the latter of the date on 
which the GSM receives the appeal or the date that final documentary 
evidence is submitted by the seller or the assignee to the GSM.
    (3) If the seller or the assignee has requested an administrative 
hearing, the GSM will set a date and time for the hearing that is 
mutually convenient for the GSM and the seller or the assignee. This 
date will ordinarily be within 60 calendar days of the date on which the 
GSM receives the request for a hearing. The hearing will be an informal 
procedure. The seller or the assignee and/or its counsel may present any 
relevant testimony or documentary evidence to the GSM. A transcript of 
the hearing will not ordinarily be prepared unless the seller or the 
assignee bears the costs involved in preparing the transcript, although 
the GSM may decide to have a transcript prepared at the expense of the 
Government. The GSM will make a decision regarding the appeal based upon 
the information contained in the administrative record. The GSM will 
issue his or her written decision within 60 calendar days of the latter 
of the date of the hearing or the date of receipt of the transcript, if 
one is to be prepared.
    (4) The decision of the GSM will be the final determination of CCC. 
The seller or the assignee will be entitled to no further administrative 
appellate rights.
    (c) Failure to comply with determination. If the seller or the 
assignee has violated the terms of this subpart or the payment guarantee 
by failing to comply with a determination made under this section, and 
the seller or the assignee has exhausted its rights under this section 
or has failed to exercise such rights, then CCC will have the right to 
exercise any remedies available to CCC under applicable law.

[[Page 1128]]

    (d) Seller's obligation to perform. The seller will continue to have 
an obligation to perform pursuant to the provisions of these regulations 
and the terms of the payment guarantee pending the conclusion of all 
procedures under this section.



Sec.1493.395  Miscellaneous provisions.

    (a) Officials not to benefit. No member of or delegate to Congress, 
or Resident Commissioner, shall be admitted to any share or part of the 
payment guarantee or to any benefit that may arise therefrom, but this 
provision shall not be construed to extend to the payment guarantee if 
made with a corporation for its general benefit.
    (b) OMB control number assigned pursuant to the Paperwork Reduction 
Act. The information collection requirements contained in this part (7 
CFR part 1493) have been approved by the Office of Management and Budget 
(OMB) in accordance with the provisions of 44 U.S.C. chapter 35 and have 
been assigned OMB Control Number 0551-0032.



       Subpart D_CCC Supplier Credit Guarantee Program Operations

    Source: 61 FR 33831, July 1, 1996, unless otherwise noted.



Sec.1493.400  General statement.

    (a) Overview. (1) This subpart contains the regulations governing 
the operations of the Supplier Credit Guarantee Program (SCGP). The 
restrictions and criteria set forth at subpart A for the Commodity 
Credit Corporation (CCC) Export Credit Guarantee Program (GSM-102) and 
the Intermediate Credit Guarantee Program (GSM-103) will apply to this 
subpart. The SCGP was developed to expand U.S. agricultural exports by 
making available payment guarantees to encourage U.S. exporters to 
extend financing on credit terms of not more than 180 days to importers 
of U.S. agricultural commodities.
    (2) The SCGP operates in cases where credit is necessary to increase 
or maintain U.S. exports to a foreign market and where private U.S. 
exporters would be unwilling to provide financing without CCC's 
guarantee. The program is operated in a manner intended not to interfere 
with markets for cash sales. The program is targeted toward those 
countries where the guarantees are necessary to secure financing of the 
exports but which have sufficient financial strength so that foreign 
exchange will be available for scheduled payments. In providing this 
credit guarantee facility, CCC seeks to expand market opportunities for 
U.S. agricultural exporters and assist long-term market development for 
U.S. agricultural commodities.
    (3) The credit facility created by this program is the SCGP payment 
guarantee (payment guarantee). The payment guarantee is an agreement by 
CCC to pay the exporter, or the U.S. financial institution that may take 
assignment of the exporter's right to proceeds, specified amounts of 
principal and, where applicable, interest due from, but not paid by, the 
importer incurring the obligation in connection with the export sale to 
which CCC's guarantee coverage pertains. By approving an exporter's 
application for a payment guarantee, CCC encourages private sector, 
rather than government, financing and incurs a substantial portion of 
the risk of default by the importer. CCC assumes this risk, in order to 
be able to operate the program for the purposes specified in Sec.
1493.2.
    (b) Credit facility mechanism. (1) For the purpose of the SCGP, CCC 
will consider applications for payment guarantees only in connection 
with export sales of U.S. agricultural commodities where the payment for 
the agricultural commodities will be made under an unconditional and 
irrevocable importer obligation to a U.S. exporter payable in U.S. 
dollars, as defined in Sec.1493.410(n).
    (2) The exporter may assign the right to proceeds under the importer 
obligation to a U.S. bank or other financial institution so that the 
exporter may realize the proceeds of the sale prior to the deferred 
payment date(s) as set forth in the importer obligation.
    (3) The SCGP payment guarantee is designed to protect the exporter 
or the exporter's assignee against those losses specified in the payment 
guarantee resulting from defaults, whether for commercial or 
noncommercial reasons, by

[[Page 1129]]

the importer under the importer's obligation.
    (c) Program administration. The SCGP will be administered pursuant 
to subpart A and this subpart and any Program Announcements and Notices 
to Participants issued by CCC pursuant to, and not inconsistent with, 
this subpart. This program is under the general administrative 
responsibility of the General Sales Manager (GSM), Foreign Agricultural 
Service (FAS/USDA). The review and payment of claims for loss will be 
administered by the Office of the Controller, CCC. Information regarding 
specific points of contact for the public, including names, addresses, 
and telephone and facsimile numbers of particular USDA or CCC offices, 
will be announced by a public press release (see Sec.1493.410(c), 
``Contacts P/R'').
    (d) Country allocations and program announcements. From time to 
time, CCC will issue a Program Announcement to announce a SCGP 
allocation for a specific country. The Program Announcement for a 
country allocation will designate specific allocations for U.S. 
agricultural commodities or products thereof, will indicate the form of 
promissory note required by CCC, and will provide other pertinent 
information. Exporters may negotiate export sales to importers in that 
country for one of the commodities specified in the Program Announcement 
and seek payment guarantee coverage within the dollar amounts of 
specified coverage for that commodity. The Program Announcement will 
contain a requirement that the exporter's sales contract contain a 
shipping deadline within the applicable program year. The final date for 
a contractual shipping deadline will be stated in the Program 
Announcement. Program Announcements may also contain a specified 
``undesignated'' or ``unallocated'' dollar amount for the purpose that 
if dollar amounts specified for a specific commodity for a country 
become fully used, an additional allocation from the ``unallocated'' or 
``undesignated'' portion of the total country allocation may then be 
designated for a specific commodity. Program Announcements that include 
an ``unallocated'' or ``undesignated'' dollar amount will contain 
further information on the ``unallocated'' or ``undesignated'' portion 
of the country allocation.



Sec.1493.410  Definition of terms.

    Terms set forth in this subpart and in CCC Program Announcements, 
Notices to Participants, and any other CCC-originated documents 
pertaining to the SCGP will have the following meanings:
    (a) Assignee. A financial institution in the United States which, 
for adequate consideration given, has obtained the legal rights to 
receive the payment of proceeds under the payment guarantee.
    (b) CCC. The Commodity Credit Corporation, an agency and 
instrumentality of the United States within the Department of 
Agriculture, authorized pursuant to the Commodity Credit Corporation 
Charter Act of 1948 (15 U.S.C. 714 et seq.), and subject to the general 
supervision and direction of the Secretary of Agriculture.
    (c) Contacts P/R. A notice issued by FAS/USDA by public press 
release which contains specific names, addresses, and telephone and 
facsimile numbers of contacts within FAS/USDA and CCC for use by persons 
interested in obtaining information concerning the operations of the 
SCGP. The Contacts P/R also contains details about where to submit 
information required to qualify for program participation, to apply for 
payment guarantees, to request amendments of payment guarantees, to 
submit evidence of export reports, and to give notices of default and 
file claims for loss.
    (d) Date of export. One of the following dates, depending upon the 
method of shipment: the on-board date of an ocean bill of lading or the 
on-board ocean carrier date of an intermodal bill of lading; the on-
board date of an airway bill; or, if exported by rail or truck, the date 
of entry shown on an entry certificate or similar document issued and 
signed by an official of the Government of the importing country.
    (e) Date of sale. The earliest date on which a contractual 
obligation exists between the exporter, or an intervening purchaser, if 
applicable, and the importer under which a firm dollar-and-cent price 
for the sale of agricultural commodities to the importer has

[[Page 1130]]

been established or a mechanism to establish such price has been agreed 
upon.
    (f) Discounts and allowances. Any consideration provided directly or 
indirectly, by or on behalf of the exporter, or an intervening 
purchaser, to the importer in connection with a sale of an agricultural 
commodity, above and beyond the commodity's value, stated on the 
appropriate FOB, FAS, CFR or CIF basis. Discounts and allowances 
include, but are not limited to, the provision of additional goods, 
services or benefits; the promise to provide additional goods, services 
or benefits in the future; financial rebates; the assumption of any 
financial or contractual obligations; the whole or partial release of 
the importer from any financial or contractual obligations; or 
settlements made in favor of the importer for quality or weight.
    (g) Eligible interest. The maximum amount of interest, based on the 
interest rate indicated in CCC's payment guarantee or any amendments to 
such payment guarantee, which CCC agrees to pay the exporter or the 
exporter's assignee in the event that CCC pays a claim for loss. The 
maximum interest rate stated in the payment guarantee, when determined 
or adjusted by CCC, will not exceed the average investment rate of the 
most recent Treasury 52-week bill auction in effect at that time.
    (h) Exported value. (1) Where CCC announces coverage on a FAS or FOB 
basis and:
    (i) Where the commodity is sold on a FAS or FOB basis, the value, 
FAS or FOB basis, U.S. point of export, of the export sale, reduced by 
the value of any discounts or allowances granted to the importer in 
connection with such sale; or
    (ii) Where the commodity was sold on a CFR or CIF basis, point of 
entry, the value of the export sale, FAS or FOB, point of export, is 
measured by the CFR or CIF value of the agricultural commodity less the 
cost of ocean freight, as determined at the time of application and, in 
the case of CIF sales, less the cost of marine and war risk insurance, 
as determined at the time of application, reduced by the value of any 
discounts or allowances granted to the importer in connection with the 
sale of the commodity; or
    (2) Where CCC announces coverage on a CFR or CIF basis, and where 
the commodity is sold on a CFR or CIF basis, point of entry, the total 
value of the export sale, CFR or CIF basis, point of entry, reduced by 
the value of any discounts or allowances granted to the importer in 
connection with the sale of the commodity.
    (3) When a CFR or CIF commodity export sale involves the performance 
of non-freight services to be performed outside the United States (e.g., 
services such as bagging bulk cargo) which are not normally included in 
ocean freight contracts, the value of such services and any related 
materials not exported from the U.S. with the commodity must also be 
deducted from the CFR or CIF sales price in determining the exported 
value.
    (i) Exporter. A seller of U.S. agricultural commodities or products 
thereof that has qualified in accordance with the provisions of Sec.
1493.420.
    (j) FAS/USDA. The Foreign Agricultural Service, U.S. Department of 
Agriculture.
    (k) GSM. The General Sales Manager, FAS/USDA, acting in his capacity 
as Vice President, CCC, or his designee.
    (l) Guaranteed value. The maximum amount, exclusive of interest, 
that CCC agrees to pay the exporter or assignee under CCC's payment 
guarantee, as indicated on the face of the payment guarantee.
    (m) Importer. A foreign buyer that enters into a contract with an 
exporter, or with an intervening purchaser, for an export sale of 
agricultural commodities to be shipped from the U.S. to the foreign 
buyer.
    (n) Importer obligation. A promissory note or notes that conform(s) 
with the requirements for such note(s) specified in the applicable 
country or regional Program Announcement(s).
    (o) Incoterms. The following customary terms, as defined by the 
International Chamber of Commerce, Incoterms (copyright) 
current revision):
    (1) Free Alongside Ship (FAS);
    (2) Free on Board (FOB);
    (3) Cost and Freight (CFR, or alternatively, C&F, C and F, or CNF); 
and
    (4) Cost Insurance and Freight (CIF).

[[Page 1131]]

    (p) Intervening purchaser. A party that agrees to purchase U.S. 
agricultural commodities from an exporter and sell the same agricultural 
commodities to an importer.
    (q) Late interest. Interest, in addition to the interest due under 
the payment guarantee, which CCC agrees to pay in connection with a 
claim for loss, accruing during the period beginning on the first day 
after receipt of a claim which CCC has determined to be in good order 
and ending on the day on which payment is made on such claim for loss.
    (r) Notice to participants. A notice issued by CCC by public press 
release which serves one or more of the following functions: to remind 
participants of the requirements of the program; to clarify the program 
requirements contained in these regulations in a manner which is not 
inconsistent with the regulations; to instruct exporters to provide 
additional information in applications for payment guarantees under 
specific country and/or commodity allocations; and to supplement the 
provisions of a payment guarantee, in a manner not inconsistent with 
these regulations, before the exporter's application for such payment 
guarantee is approved.
    (s) Payment guarantee. An agreement under which CCC, in 
consideration of a fee paid, and in reliance upon the statements and 
declarations of the exporter, subject to the terms set forth in the 
written guarantee (including the required form of promissory note), this 
subpart, and any applicable Program Announcements or Notices to 
Participants, agrees to pay the exporter or the exporter's assignee in 
the event of a default by an importer under the importer obligation.
    (t) Port value. (1) Where CCC announces coverage on a FAS or FOB 
basis and:
    (i) Where the commodity is sold on a FAS or FOB basis, U.S. point of 
export, the value, FAS or FOB basis, U.S. point of export, of the export 
sale, including the upward tolerance, if any, as provided by the export 
sales contract, reduced by the value of any discounts or allowances 
granted to the importer in connection with such sale; or
    (ii) Where the commodity was sold on a CFR or CIF basis, point of 
entry, the value of the export sale, FAS or FOB, point of export, 
including the upward tolerance, if any, as provided by the export sales 
contract, is measured by the CFR or CIF value of the agricultural 
commodity less the value of ocean freight and, in the case of CIF sales, 
less the value of marine and war risk insurance, reduced by the value of 
any discounts or allowances granted to the importer in connection with 
the sale of the commodity; or
    (2) Where CCC announces coverage on a CFR or CIF basis and where the 
commodity was sold on CFR or CIF basis, point of entry, the total value 
of the export sale, CFR or CIF basis, point of entry, including the 
upward tolerance, if any, as provided by the export sales contract, 
reduced by the value of any discounts or allowances granted to the 
importer in connection with the sale of the commodity.
    (3) When a CFR or CIF commodity export sale involves the performance 
of non-freight services to be performed outside the United States (e.g., 
services such as bagging bulk cargo), which are not normally included in 
ocean freight contracts, the value of such services and any related 
materials not exported from the U.S. with the commodity must also be 
deducted from the CFR or CIF sales price in determining the port value.
    (u) Program announcement. An announcement issued by CCC which 
provides information on specific country and commodity allocations and 
may identify eligible agricultural commodities and countries, length of 
credit periods which may be covered, specify dollar limitations for CCC 
exposure in particular countries, the form of promissory note required 
for a particular country or region, and include other information and 
requirements.
    (v) SCGP. The Supplier Credit Guarantee Program described by this 
subpart.
    (w) United States or U.S. All of the 50 states, the District of 
Columbia, and the territories and possessions of the United States.
    (x) U.S. agricultural commodity. (1) An agricultural commodity or 
product entirely produced in the United States; or
    (2) A product of an agricultural commodity--

[[Page 1132]]

    (i) 90 percent or more of the agricultural components of which by 
weight, excluding packaging and added water, is entirely produced in the 
United States; and
    (ii) That the Secretary determines to be a high value agricultural 
product. For purposes of this definition, fish entirely produced in the 
United States include fish harvested by a documented fishing vessel as 
defined in title 46, United States Code, in waters that are not waters 
(including the territorial sea) of a foreign country.
    (y) USDA. United States Department of Agriculture.

[61 FR 33831, July 1, 1996, as amended at 62 FR 24561, May 6, 1997]



Sec.1493.420  Information required for program participation.

    Before CCC will accept an application for a payment guarantee under 
the SCGP, the applicant must qualify for participation in this program. 
Based upon the information submitted by the applicant and other publicly 
available sources, CCC will determine whether the applicant is eligible 
for participation in the program.
    (a) Submission of documentation. In order to qualify for 
participation in the SCGP, an applicant must submit to CCC, at the 
address specified in the Contacts P/R, the following information:
    (1) The address of the applicant's headquarters office and the name 
and address of an agent in the U.S. for the service of process;
    (2) The legal form of doing business of the applicant, e.g., sole 
proprietorship, partnership, corporation, etc.;
    (3) The place of incorporation of the applicant, if the applicant is 
a corporation;
    (4) The name and U.S. address of the office(s) of the applicant, and 
statement indicating whether the applicant is a U.S. domestic 
corporation, a foreign corporation or another foreign entity. If the 
applicant has multiple offices, the address included in the information 
should be that which is pertinent to the particular export sale 
contemplated by the applicant under this subpart;
    (5) A certified statement describing the applicant's participation, 
if any, during the past three years in U.S. Government programs, 
contracts or agreements; and
    (6) A certification that: ``I certify, to the best of my knowledge 
and belief, that neither [name of applicant] nor any of its principals 
has been debarred, suspended, or proposed for debarment from contracting 
with or participating in programs administered by any U.S. Government 
agency. [''Principals,'' for the purpose of this certification, means 
officers; directors; owners of five percent or more of stock; partners; 
and persons having primary management or supervisory responsibility 
within a business entity (e.g., general manager, plant manager, head of 
a subsidiary division, or business segment, and similar positions).] I 
further agree that, should any such debarment, suspension, or notice of 
proposed debarment occur in the future, [name of applicant] will 
immediately notify CCC.''
    (b) Previous qualification. Any exporter that is qualified under 
subpart B, Sec.1493.30 is qualified under this section to submit 
applications for a SCGP payment guarantee, and the information provided 
by the exporter pursuant to Sec.1493.30 will be deemed to also have 
been provided under this section. Each application must include the 
statement required by Sec.1493.430(a)(17) incorporating the 
certifications of Sec.1493.440, including the certification in Sec.
1493.440(e) that the information previously provided pursuant to Sec.
1493.420 has not changed. If the exporter is unable to provide such 
certification, such exporter must update the information required by 
paragraph (a) of this section which has changed and certify that the 
remainder of the information previously provided has not changed.
    (c) Additional submissions. CCC will promptly notify applicants that 
have submitted information required by this section whether they have 
qualified to participate in the program. Any applicant failing to 
qualify will be given an opportunity to provide additional information 
for consideration by CCC.
    (d) Ineligibility for program participation. An applicant may be 
ineligible to participate in the SCGP if:
    (1) Such applicant is currently debarred, suspended, or proposed for 
debarment from contracting with or

[[Page 1133]]

participating in any program administered by a U.S. Government agency; 
or
    (2) Such applicant is controlled or can be controlled, in whole or 
in part, by any individuals or entities currently debarred, suspended or 
proposed for debarment from contracting with or participating in 
programs administered by any U.S. Government agency.



Sec.1493.430  Application for a payment guarantee.

    (a) A firm export sale must exist before an exporter may submit an 
application for a payment guarantee. An application for a payment 
guarantee may be submitted in writing or may be made by telephone, but, 
if made by telephone, it must be confirmed in writing to the office 
specified in the Contacts P/R. An application must identify the name and 
address of the exporter and include the following information:
    (1) Name of the destination country;
    (2) Name and address of the importer;
    (3) Name and address of the intervening purchaser, if any, and a 
statement that the commodity will be shipped directly to the importer in 
the destination country;
    (4) Date of sale;
    (5) Exporter's sale number;
    (6) Delivery period as agreed between the exporter and the importer;
    (7) A full description of the commodity (including packaging, if 
any);
    (8) Mean quantity, contract loading tolerance and, if the exporter 
chooses, a request for CCC to reserve coverage up to the maximum 
quantity permitted by the contract loading tolerance;
    (9) Unit sales price of the commodity, or a mechanism to establish 
the price, as agreed between the exporter and the importer. If the 
commodity was sold on the basis of CFR or CIF, the actual (if known at 
the time of application) or estimated value of freight and, in the case 
of sales made on a CIF basis, the actual (if known at the time of 
application) or estimated value of marine and war risk insurance, must 
be specified;
    (10) Description and value of discounts and allowances, if any;
    (11) Port value (includes upward loading tolerance, if any);
    (12) Guaranteed value;
    (13) Guarantee fee;
    (14) The term length for the credit being extended and the intervals 
between principal payments for each shipment to be made under the export 
sale;
    (15) A statement indicating whether any portion of the export sale 
for which the exporter is applying for a payment guarantee is also being 
used as the basis for an application for participation in any of the 
following CCC or USDA export programs: Export Enhancement Program, Dairy 
Export Incentive Program, Sunflowerseed Oil Assistance Program, or 
Cottonseed Oil Assistance Program. The number of the Agreement assigned 
by USDA under one of these programs should be included, as applicable;
    (16) Other information as requested by CCC or specified in Program 
Announcements and Notices to Participants, as applicable; and
    (17) The exporter's statement, ``ALL SECTION 1493.440 CERTIFICATIONS 
ARE BEING MADE IN THIS APPLICATION'' which, when included in the 
application by the exporter, will constitute a certification that it is 
in compliance with all the requirements set forth in Sec.1493.440.
    (b) An application for a payment guarantee may be approved as 
submitted, approved with modifications agreed to by the exporter, or 
rejected by the GSM. In the event that the application is approved, the 
GSM will cause a payment guarantee to be issued in favor of the 
exporter. Such payment guarantee will become effective at the time 
specified in Sec.1493.450(b). If, based upon a price review, the unit 
sales price of the commodity does not fall within the prevailing 
commercial market level ranges, as determined by CCC, the application 
will not be approved.
    (c) Ineligible exporter. An exporter will be ineligible to obtain a 
payment guarantee if such exporter:
    (1) Directly or indirectly owns or controls the importer;
    (2) Is directly or indirectly owned or controlled by the importer; 
or
    (3) Is directly or indirectly owned or controlled by a person(s) or 
entity(ies) which also owns or controls the importer.

[[Page 1134]]



Sec.1493.440  Certification requirements for payment guarantee.

    By providing the statement in Sec.1493.430(a)(17), the exporter is 
certifying that the information provided in the application is true and 
correct and, further, that all requirements set forth in this section 
have been or will be met. The exporter will be required to provide 
further explanation or documentation with regard to applications that do 
not include this statement. The exporter, in submitting an application 
for a payment guarantee and providing the statement set forth in Sec.
1493.430(a)(17), certifies that:
    (a) The agricultural commodity or product to be exported under the 
payment guarantee is a U.S. agricultural commodity as defined by Sec.
1493.410(x).
    (b) There have not been and will not be any corrupt payments or 
extra sales services or other items extraneous to the transaction 
provided, financed, or guaranteed in connection with the transaction, 
and that the transaction complies with applicable United States law;
    (c) If the agricultural commodity is vegetable oil or a vegetable 
oil product, that none of the agricultural commodity or product has been 
or will be used as a basis for a claim of a refund, as drawback, 
pursuant to section 313 of the Tariff Act of 1930, 19 U.S.C. 1313, of 
any duty, tax or fee imposed under Federal law on an imported commodity 
or product;
    (d) No person or selling agency has been employed or retained to 
solicit or secure the payment guarantee, and that there is no agreement 
or understanding for a commission, percentage, brokerage, or contingent 
fee, except in the case of bona fide employees or bona fide established 
commercial or selling agencies maintained by the exporter for the 
purpose of securing business; and
    (e) The information provided pursuant to Sec.1493.420 has not 
changed, the exporter still meets all of the qualification requirements 
of Sec.1493.420, and the exporter will immediately notify CCC if there 
is a change of circumstances which would cause it to fail to meet such 
requirements. If the exporter breaches or violates these certifications 
with respect to a SCGP payment guarantee, CCC will have the right, 
notwithstanding any other rights provided under this subpart, to annul 
guarantee coverage for any commodities not yet exported and/or to 
proceed against the exporter.

[61 FR 33831, July 1, 1996, as amended at 62 FR 24561, May 6, 1997]



Sec.1493.450  Payment guarantee.

    (a) CCC's obligation. The payment guarantee will provide that CCC 
agrees to pay the exporter or the exporter's assignee an amount not to 
exceed the guaranteed value, plus eligible interest, in the event that 
the importer fails to pay under the importer obligation. unless CCC 
determines with respect to the particular transaction and claim that the 
guaranteed portion of the port value exceeded the prevailing U.S. market 
value for the same, or same type of agricultural commodity or product. 
In making this determination, CCC will adjust the prevailing U.S. market 
value for estimated freight and/or insurance costs if the export sale 
was made on a CFR or CIF basis. Payment by CCC will be in U.S. dollars.
    (b) Period of guarantee coverage. The payment guarantee will apply 
to a credit period not exceeding 180 days beginning either on the 
date(s) of export(s) or from the date when interest begins to accrue 
whichever is earlier, and will continue during the credit term specified 
in the payment guarantee or amendments thereto. However, the payment 
guarantee becomes effective on the date(s) of export(s) of the 
agricultural commodities or products thereof specified in the exporter's 
application for a payment guarantee.
    (c) Terms of the CCC payment guarantee. The terms of CCC's coverage 
will be set forth in the payment guarantee, as approved by CCC, and will 
include the provisions of this subpart, which may be supplemented by any 
Program Announcements and/or Notices to Participants in effect at the 
time the payment guarantee is approved by CCC.
    (d) Final date to export. The final date to export shown on the 
payment guarantee will be one month, as determined by CCC, after the 
contractual deadline for shipping.
    (e) Reserve coverage for loading tolerances. The exporter may apply 
for a

[[Page 1135]]

payment guarantee and, if coverage is available, pay the guarantee fee, 
based at least on, the amount of the lower loading tolerance of the 
export sales contract; however, the exporter may also request that CCC 
reserve additional guarantee coverage to accommodate up to the amount of 
the upward loading tolerance specified in the export sales contract. If 
such additional guarantee coverage is available at the time of 
application and CCC determines to make such reservation, it will so 
indicate to the exporter. In the event that the exporter ships a 
quantity greater than the amount on which the guarantee fee was paid 
(i.e., lower loading tolerance), it may obtain the additional coverage 
from CCC, up to the amount of the upward loading tolerance, by filing 
for an amendment to the payment guarantee, and by paying the additional 
amount of fee applicable. If such amendment to the payment guarantee is 
not filed with CCC by the exporter within 30 days after the date of the 
last export against the sales contract, CCC may determine not to reserve 
the coverage originally set aside for the exporter.
    (f) Ineligible exports. Commodities with a date of export prior to 
the date of receipt by CCC of the exporter's telephonic or written 
application for a payment guarantee, or with a date of export made after 
the final date for export shown on the payment guarantee or any 
amendments thereof, are ineligible for guarantee coverage under this 
subpart, except where it is determined by the GSM to be in the best 
interests of CCC to provide guarantee coverage on such commodities.
    (g) Foreign agricultural component. CCC may approve payment 
guarantees under this subpart only in connection with sales of United 
States agricultural commodities as defined in Sec.1493.410(x). CCC may 
not provide guarantee coverage under this subpart on credit extended for 
the value of any foreign agricultural component.
    (h) Additional requirements. The payment guarantee may contain such 
additional terms, conditions, and limitations as deemed necessary or 
desirable by the GSM. Such additional terms, conditions or 
qualifications, as stated in the payment guarantee are binding on the 
exporter or the exporter's assignee.
    (i) Amendments. A request for an amendment of a payment guarantee 
may be submitted only by the exporter (with the concurrence of the 
assignee, if any). CCC will consider such a request only if the 
amendment sought is consistent with this subpart and any applicable 
Program Announcements and Notices to Participants. Amendments may 
include, but will not be limited to, a change in the credit period and 
an extension of time to export. Any amendment to the payment guarantee, 
particularly those that result in an increase in CCC's liability under 
the payment guarantee, may result in an increase in the guarantee fee. 
(Technical corrections or corrections of a clerical error which may be 
submitted by the exporter or the exporter's assignee are not viewed as 
amendments.)



Sec.1493.460  Guarantee rates and fees.

    (a) Guarantee fee rates. The current payment guarantee fee rate(s) 
will be available by Program Announcement.
    (b) Calculation of fee. The guarantee fee will be computed by 
multiplying the guaranteed value by the guarantee fee rate.
    (c) Payment of fee. The exporter shall remit, with his written 
application, the full amount of the guarantee fee. Applications will not 
be approved until the guarantee fee has been received by CCC. The 
exporter's check for the guarantee fee shall be made payable to CCC and 
mailed or delivered by courier to the office specified in the Contacts 
P/R.
    (d) Refunds of fee. Guarantee fees paid in connection with approved 
applications will ordinarily not be refundable. CCC's approval of the 
application will be final and refund of the guarantee fee will not be 
made after approval unless the GSM determines that such refund will be 
in the best interest of CCC. If the application for a payment guarantee 
is not approved or is approved only for a part of the guarantee coverage 
requested, a full or pro rata refund of the fee remittance will be made.



Sec.1493.470  Evidence of export.

    (a) Report of export. The exporter is required to provide CCC an 
evidence of

[[Page 1136]]

export report for each shipment made under the payment guarantee. This 
report must include the following:
    (1) Payment guarantee number;
    (2) Date of export;
    (3) Exporter's sale number;
    (4) Exported value;
    (5) Quantity;
    (6) A full description of the commodity exported;
    (7) Unit sales price received for the commodity exported and the 
basis (e.g., FOB, CFR, CIF). Where the unit sales price at export 
differs from the unit sales price indicated in the exporter's 
application for a payment guarantee, the exporter is also required to 
submit a statement explaining the reason for the difference;
    (8) Description and value of discounts and allowances, if any;
    (9) Number of the Agreement assigned by USDA under any other program 
if any portion of the export sale was also approved for participation in 
any of the following CCC or USDA export program: Export Enhancement 
Program, Dairy Export Incentive Program, Sunflowerseed Oil Assistance 
Program, or Cottonseed Oil Assistance Program; and
    (10) The exporter's statement, ``ALL SECTION 1493.480 CERTIFICATIONS 
ARE BEING MADE IN THIS EVIDENCE OF EXPORT'' which, when included in the 
evidence of export by the exporter, will constitute a certification that 
it is in compliance with all the requirements set forth in Sec.
1493.480.
    (b) Time limit for submission of evidence of export. The exporter 
must provide a written report to the office specified in the Contacts P/
R within 60 calendar days if the export was by rail or truck; or 30 
calendar days if the export was by any other carrier. The time period 
for filing a report of export will commence upon each date of export of 
the commodity covered under a payment guarantee. If the evidence of 
export report is not received by CCC within the time period for filing, 
the payment guarantee will become null and void only if and only to the 
extent that failure to make timely filing resulted, or would be likely 
to result, in:
    (1) Significant financial harm to CCC;
    (2) The undermining of an essential regulatory purpose of the 
program;
    (3) Obstruction of the fair administration of the program; or
    (4) A threat to the integrity of the program. The time limit for 
submission of an evidence of export report may be extended if such 
extension is determined by the GSM to be in the best interests of CCC.
    (c) Export sales reporting. Exporters may have a mandatory reporting 
responsibility under section 602 of the Agricultural Trade Act of 1978, 
as amended (7 U.S.C. 5712) for exports of wheat and wheat flour, feed 
grains, oilseeds, cotton, and other agricultural commodities and 
products thereof.



Sec.1493.480  Certification requirements for the evidence of export.

    By providing the statement contained in Sec.1493.470(a)(10), the 
exporter is certifying that the information provided in the evidence of 
export report is true and correct and, further, that all requirements 
set forth in this section have been or will be met. The exporter will be 
required to provide further explanation or documentation with regard to 
reports that do not include this statement. If the exporter breaches or 
violates these certifications with respect to a SCGP payment guarantee, 
CCC will have the right, notwithstanding any other rights provided under 
this subpart, to annul guarantee coverage for any commodities not yet 
exported and/or to proceed against the exporter. The exporter, in 
submitting the evidence of export and providing the statement set forth 
in Sec.1493.470(a)(10), certifies that:
    (a) The agricultural commodity or product exported under the payment 
guarantee is a U.S. agricultural commodity as defined by Sec.
1493.410(x).
    (b) Agricultural commodities of the grade, quality and quantity 
called for in the exporter's sales contract with the importer have been 
exported to the country specified in the payment guarantee;
    (c) There is an importer obligation as defined in Sec.1493.410(n) 
to cover the exported value of the commodity exported;
    (d) There have not been and will not be any corrupt payments or 
extra sales

[[Page 1137]]

services or other items extraneous to the transaction provided, 
financed, or guaranteed in connection with the transaction, and that the 
transaction complies with applicable United States law; and
    (e) The information provided pursuant to Sec.1493.420 has not 
changed, the exporter still meets all of the qualification requirements 
of Sec.1493.420 and the exporter will immediately notify CCC if there 
is a change of circumstances which would cause it to fail to meet such 
requirements.

[61 FR 33831, July 1, 1996, as amended at 62 FR 24561, May 6, 1997]



Sec.1493.490  Proof of entry.

    (a) Diversion. The diversion of commodities covered by a SCGP 
payment guarantee to a country other than that shown on the payment 
guarantee is prohibited, unless expressly authorized by the GSM.
    (b) Records of proof of entry. Exporters must obtain and maintain 
records of an official or customary commercial nature and grant 
authorized USDA officials access to such documents or records as may be 
necessary to demonstrate the arrival of the agricultural commodities 
exported in connection with the SCGP in the country that was the 
intended country of destination of such commodities. Records 
demonstrating proof of entry must be in English or be accompanied by a 
certified or other translation acceptable to CCC. Records acceptable to 
meet this requirement include an original certification of entry signed 
by a duly authorized customs or port official of the importing country, 
by the importer, by an agent or representative of the vessel or shipline 
which delivered the agricultural commodity to the importing country, or 
by a private surveyor in the importing country, or other documentation 
deemed acceptable by the GSM showing:
    (1) That the agricultural commodity entered the importing country;
    (2) The identification of the export carrier;
    (3) The quantity of the agricultural commodity;
    (4) The kind, type, grade and/or class of the agricultural 
commodity; and
    (5) The date(s) and place(s) of unloading of the agricultural 
commodity in the importing country. (Records of proof of entry need not 
be submitted with a claim for loss, except as may be provided in Sec.
1493.500(b)(4)(ii).)



Sec.1493.500  Notice of default and claims for loss.

    (a) Notice of default. If the importer fails to make payment 
pursuant to the terms of the importer obligation, the exporter or the 
exporter's assignee must submit a notice of default to CCC as soon as 
possible, but not later than 10 calendar days after the date that 
payment was due from the importer (the due date). A notice of default 
must be submitted in writing to the Treasurer, CCC, at the address 
specified in the Contacts P/R. If the exporter or the exporter's 
assignee fails to promptly notify CCC of defaults in accordance with 
this paragraph, CCC may make the payment guarantee null and void with 
respect to any payment(s) applicable to such default. This time limit 
may be extended only under extraordinary circumstances and if such 
extension is determined by the Controller, CCC, to be in the best 
interests of CCC. The notice of default must include:
    (1) Payment guarantee number;
    (2) Name of the country;
    (3) Name of the defaulting importer;
    (4) Due date;
    (5) Total amount of the defaulted payment due, indicating separately 
the amounts for principal and interest;
    (6) Date of importer's refusal to pay, if applicable; and
    (7) Reason for importer's refusal to pay, if known.
    (b) Filing a claim for loss. A claim for a loss by the exporter or 
the exporter's assignee will not be paid if it is made later than six 
months from the due date of the defaulted payment. A claim for loss must 
be submitted in writing to the Treasurer, CCC, at the address specified 
in the Contacts P/R. The claim for loss must include the following 
information and documents:
    (1) Payment guarantee number;
    (2) A certification that the scheduled payment has not been 
received;

[[Page 1138]]

    (3) A certification of the amount of accrued interest in default, 
the date interest began to accrue, and the interest rate on the importer 
obligation applicable to the claim;
    (4) A copy of each of the following documents, with a cover document 
containing a signed certification by the exporter or the exporter's 
assignee that each page of each document is a true and correct copy:
    (i) The importer obligation;
    (ii) Depending upon the method of shipment, the negotiable ocean 
carrier or intermodal bill(s) of lading signed by the shipping company 
with the onboard ocean carrier date for each shipment, the airway bill, 
or, if shipped by rail or truck, the entry certificate or similar 
document signed by an official of the importing country;
    (iii)(A) The exporter's invoice showing, as applicable, the FAS, 
FOB, CFR or CIF values; or
    (B) If there was an intervening purchaser, both the exporter's 
invoice to the intervening purchaser and the intervening purchaser's 
invoice to the importer;
    (iv) An instrument, in form and substance satisfactory to CCC, 
subrogating to CCC the respective rights of the exporter and the 
exporter's assignee, if applicable, to the amount of payment in default 
under the applicable export sale. The instrument must reference the 
applicable importer obligation; and
    (v) A copy of the report(s) of export previously submitted by the 
exporter to CCC pursuant to Sec.1493.470(a).
    (c) Subsequent claims for defaults on installments. If the initial 
claim is found in good order, the exporter or an exporter's assignee 
need only provide all of the required claims documents with the initial 
claim relating to a covered transaction. For subsequent claims relating 
to failure of the importer to make scheduled installments on the same 
export shipment, the exporter or the exporter's assignee need only 
submit to CCC a notice of such failure containing the information stated 
in paragraph (b) (1), (2), and (3) of this section; an instrument of 
subrogation as per paragraph (b)(4)(iv) of this section, and including 
the date the original claim was filed with CCC.



Sec.1493.510  Payment for loss.

    (a) Determination of CCC's liability. Upon receipt in good order of 
the information and documents required under Sec.1493.500, CCC will 
determine whether or not a loss has occurred for which CCC is liable 
under the applicable payment guarantee, this subpart and any applicable 
supplemental Program Announcements and Notices to Participants. If CCC 
determines that it is liable to the exporter and/or the exporter's 
assignee, CCC will pay the exporter or the exporter's assignee in 
accordance with paragraphs (b) and (c) of this section.
    (b) Amount of CCC's liability. Subject to a determination by CCC 
with respect to prevailing U.S. market value pursuant to Sec.
1493.450(a) of this part, CCC's maximum liability for any claims for 
loss submitted with respect to any payment guarantee, not including any 
late interest payments due in accordance with paragraph (c) of this 
section, will be limited to the lesser of:
    (1) The guaranteed value as stated in the payment guarantee, plus 
eligible interest; or
    (2) The guaranteed percentage (as indicated in the payment 
guarantee) of the exported value indicated in the evidence of export, 
plus eligible interest.
    (c) Late interest payment. If a claim is not paid within one day of 
receipt of a claim which CCC has determined to be in good order, late 
interest will accrue in favor of the exporter or the exporter's assignee 
beginning with the first day after the day of receipt of a claim found 
by CCC to be in good order and continuing until and including the date 
that payment is made by CCC. Late interest will be paid on the 
guaranteed amount, as determined by paragraphs (b)(1) and (2) of this 
section, and will be calculated based on the average investment rate of 
the most recent Treasury 91-day bill auction as announced by the 
Department of Treasury as of the due date.
    (d) Accelerated payments. CCC will pay claims only for losses on 
amounts not paid as scheduled. CCC will not pay claims for amounts due 
under an accelerated payment clause in the export sales contract or the 
importer obligation unless it is determined to be in the best interests 
of CCC by the Controller,

[[Page 1139]]

CCC. Notwithstanding the foregoing, CCC at its option may declare the 
entire amount of the unpaid balance, plus accrued interest, in default 
and make payment to the exporter or the exporter's assignee in addition 
to such other claimed amount as may be due from CCC.
    (e) Action against the assignee. Notwithstanding any other provision 
in this subpart to the contrary, with regard to commodities covered by a 
payment guarantee, CCC will not, except pursuant to a determination 
under Sec.1493.450(a) of this part, hold the assignee responsible or 
take any action or raise any defense against the assignee for any 
action, omission, or statement by the exporter of which the assignee has 
no knowledge, provided that:
    (1) The exporter complies with the reporting requirements under 
Sec. Sec.1493.470 and 1493.480, excluding post-export adjustments 
(i.e., corrections to evidence of export reports); and
    (2) The exporter or the exporter's assignee furnishes the statements 
and documents specified in Sec.1493.500.



Sec.1493.520  Recovery of losses.

    (a) Notification. Upon payment of loss to the exporter or the 
exporter's assignee, CCC will notify the importer of CCC's rights under 
the subrogation agreement to recover all moneys in default.
    (b) Receipt of monies. (1) In the event that monies for a defaulted 
payment are recovered by the exporter or the exporter's assignee from 
the importer or any other source whatsoever, such monies shall be 
immediately paid to the Treasurer, CCC. If such monies are not received 
by CCC within 15 business days from the date of recovery by the exporter 
or the exporter's assignee, the exporter or the exporter's assignee will 
owe to CCC interest from the date of recovery to the date of receipt by 
CCC. This interest will be calculated based on the latest average 
investment rate of the most recent Treasury 91-day bill auction, as 
announced by the Department of Treasury, in effect on the date of 
recovery and will accrue from such date to the date of payment by the 
exporter or the exporter's assignee to CCC. Such interest will be 
charged only on CCC's share of the recovery.
    (2) If CCC recovers monies that should be applied to a payment 
guarantee for which a claim has been paid by CCC, CCC will pay the 
holder of the payment guarantee its pro rata share immediately, provided 
that the required information necessary for determining pro rata 
distribution has been furnished. If payment is not made by CCC within 15 
business days from the date of recovery or 15 business days from 
receiving the required information for determining pro rata 
distribution, whichever is later, CCC will pay interest calculated on 
the latest average investment rate of the most recent Treasury 91-day 
bill auction, as announced by the Department of Treasury, in effect on 
the date of recovery and such interest will accrue from such date to the 
date of payment by CCC. The interest will apply only to the portion of 
the recovery payable to the holder of the payment guarantee.
    (c) Allocation of recoveries. Recoveries made by CCC from the 
importer, and recoveries received by CCC from the exporter, the 
exporter's assignee, or any other source whatsoever, will be allocated 
by CCC to the exporter or the exporter's assignee and to CCC on a pro 
rata basis determined by their respective interests in such recoveries. 
The respective interest of each party will be determined on a pro rata 
basis, based on the combined amount of principal and interest in 
default. Once CCC has paid out a particular claim under a payment 
guarantee, CCC pro rates any collections it receives and shares these 
collections proportionately with the holder of the guarantee until both 
CCC and the holder of the guarantee have been reimbursed in full. 
Appendix A to Sec.1493.520--Illustration of Pro Rata Allocation of 
Recoveries--provides an example of the methodology used by CCC in 
applying this paragraph (c).
    (d) Liabilities to CCC. Notwithstanding any other terms of the 
payment guarantee, the exporter may be liable to CCC for any amounts 
paid by CCC under the payment guarantee when and if it is determined by 
CCC that the exporter has engaged in fraud, or has been or is in 
material breach of

[[Page 1140]]

any contractual obligation, certification or warranty made by the 
exporter for the purpose of obtaining the payment guarantee or for 
fulfilling obligations under SCGP. Further, the exporter's assignee may 
be liable to CCC for any amounts paid by CCC under the payment guarantee 
when and if it is determined by CCC that the exporter's assignee has 
engaged in fraud or otherwise violated program requirements.
    (e) Good faith. The violation by an exporter of the certifications 
in Sec. Sec.1493.440(b) and 1493.480(d) or the failure of an exporter 
to comply with the provisions of Sec. Sec.1493.490 or 1493.530(e) will 
not affect the validity of any payment guarantee with respect to an 
assignee which had no knowledge of such violation or failure to comply 
at the time such exporter applied for the payment guarantee or at the 
time of assignment of the payment guarantee.
    (f) Cooperation in recoveries. Upon payment by CCC of a claim to the 
exporter or the exporter's assignee, the exporter or the exporter's 
assignee will cooperate with CCC to effect recoveries from the importer.

  Appendix A to Sec.1493.520--Illustration of Pro Rata Allocation of 
                               Recoveries

    The following example illustrates CCC's policy, as set forth in 
Sec.1493.520(c), regarding pro rata sharing of recoveries made for 
claims filed under the SCGP. A typical case might be as follows:
    1. The U.S. exporter enters into a $200,000, 180 day credit 
arrangement with the importer calling for two equal payments of 
principal and two equal payments of interest at a rate of 10 percent per 
annum and a penalty interest rate of 12 percent per annum (basis 360 
days) on overdue amounts until the overdue amount is paid. (Basis for 
interest calculation may be 360 or 365 days.)
    2. The importer fails to make the final principal payment of 
$100,000 and an interest payment of $2,500.00 (10% per annum for 90 days 
on $100,000), both due on January 31.
    3. On February 10, the U.S. exporter files a claim in good order 
with CCC.
    4. CCC's guarantee states that CCC's maximum liability is limited to 
60 percent of the principal amount due ($60,000) and interest at a rate 
of 8 percent per annum (basis 365 days) on 60 percent of the principal 
outstanding ($1,183.56) (8% per annum for 90 days on $60,000). (CCC's 
basis for interest calculation is 365 days.)
    5. CCC pays the claim on February 22.
    6. The average investment rate of the most recent 91-day Treasury 
Bill auction average which has been published by the Department of 
Treasury in effect on the date of nonpayment by CCC (January 31) is 7 
percent. (CCC's late interest rate.)

                       Computation of Obligations

    Using the above case, CCC's payment to the holder of the payment 
guarantee would be computed as follows:

1. CCC's Obligation under the Payment Guarantee:
    (a) Principal coverage--(60% $100,000)...........         $60,000.00
    (b) Interest coverage--(8% per annum for 90 days            1,183.56
     on $60,000, basis 365 days).....................
                                                      ------------------
                                                              $61,183.56
    (c) Late interest due from CCC (7% per annum for              129.07
     11 days on $61,183.56, basis 365 days)..........
                                                      ------------------
    (d) Amount paid by CCC on February 22............         $61,312.63
                                                      ==================
2. Importer's obligation under the importer
 obligation:
    (a) Principal due January 31.....................        $100,000.00
        Interest due January 31 (10% per annum for 90           2,500.00
         days on $100,000, basis 360 days)...........
                                                      ------------------
        Amount owed by importer as of January 31.....        $102,500.00
    (b) Penalty interest due (12% per annum for 22                751.67
     days on $102,500.00, basis 360 days)............
                                                      ------------------
    (c) Amount owed by importer as of February 22....        $103,251.67
3. Amount of importer's obligation not covered by
 CCC's payment guarantee: $41,939.04 ($103,251.67-
 $61,312.63).........................................
 


[[Page 1141]]

          Computation of Pro Rata Sharing in Recovery of Losses

    In establishing each party's respective interest in any recovery of 
losses, the total amount due under the importer obligation would be 
determined as of the date the claim is paid by CCC (February 22). Using 
the above example in which the amount owed by the importer is 
$103,251.67, CCC would be entitled to 59.38 percent ($61,312.63 divided 
by $103,251.67) and the holder of the payment guarantee would be 
entitled to 40.62 percent ($41,939.04 divided by $103,251.67) of any 
recoveries of losses after settlement of the claim. Since in this 
example, the losses were recovered after the claim has been paid by CCC, 
Sec.1493.520(b) would apply.



Sec.1493.530  Miscellaneous provisions.

    (a) Assignment. (1) The exporter may assign the proceeds which are, 
or may become, payable by CCC under a payment guarantee or the right to 
such proceeds only to a financial institution in the U.S. The assignment 
must cover all amounts payable under the payment guarantee not already 
paid, may not be made to more than one party, and may not, unless 
approved in advance by CCC, be:
    (i) Made to one party acting for two or more parties; or
    (ii) Subject to further assignment.
    (2) An original and two copies of the written notice of assignment 
signed by the parties thereto must be filed by the assignee with the 
Treasurer, CCC, at the address specified in the Contacts P/R.
    (3) Receipt of the notice of assignment will ordinarily be 
acknowledged to the exporter and its assignee in writing by an officer 
of CCC. In cases where a financial institution is determined to be 
ineligible to receive an assignment, in accordance with paragraph (b) of 
this section, CCC will provide notice thereof, to the financial 
institution and to the exporter issued the payment guarantee, in lieu of 
an acknowledgment of assignment.
    (4) The name and address of the assignee must be included on the 
written notice of assignment.
    (b) Ineligibility of financial institutions to receive an 
assignment. A financial institution will be ineligible to receive an 
assignment of proceeds which may become payable under a payment 
guarantee if, at the time of assignment, such financial institution:
    (1) Is not in sound financial condition, as determined by the 
Treasurer of CCC;
    (2) Owns or controls the entity issuing the importer obligation; or
    (3) Is owned or controlled by an entity that owns or controls the 
entity issuing the importer obligation.
    (c) Ineligibility of financial institutions to receive proceeds. A 
financial institution will be ineligible to receive proceeds payable 
under a payment guarantee approved by CCC if such financial institution:
    (1) At the time of assignment of a payment guarantee, is not in 
sound financial condition, as determined by the Treasurer of CCC;
    (2) Owns or controls the entity issuing the importer obligation; or
    (3) Is owned or controlled by an entity that owns or controls the 
entity issuing the importer obligation.
    (d) Alternative satisfaction of payment guarantees. CCC may, with 
the agreement of the exporter (or if the right to proceeds payable under 
the payment guarantee has been assigned, with the agreement of the 
exporter's assignee), establish procedures, terms and/or conditions for 
the satisfaction of CCC's obligations under a payment guarantee other 
than those provided for in this subpart if CCC determines that those 
alternative procedures, terms, and/or conditions are appropriate in 
rescheduling the debts arising out of any transaction covered by the 
payment guarantee and would not result in CCC paying more than the 
amount of CCC's obligation.
    (e) Maintenance of records and access to premises. (1) For a period 
of five years after the date of expiration of the coverage of a payment 
guarantee, the exporter or the exporter's assignee, as applicable, must 
maintain and make available all records pertaining to sales and 
deliveries of and extension of credit for agricultural commodities 
exported in connection with a payment guarantee, including those records 
generated and maintained by agents, intervening purchasers, and related 
companies involved in special arrangements with the exporter. The 
Secretary of Agriculture and the Comptroller General of the United 
States,

[[Page 1142]]

through their authorized representatives, must be given full and 
complete access to the premises of the exporter or the exporter's 
assignee, as applicable, during regular business hours from the 
effective date of the payment guarantee until the expiration of such 
five-year period to inspect, examine, audit, and make copies of the 
exporter's, exporter's assignee's, agent's, intervening purchaser's, or 
related company's books, records and accounts concerning transactions 
relating to the payment guarantee, including, but not limited to, 
financial records and accounts pertaining to sales, inventory, 
processing, and administrative and incidental costs, both normal and 
unforeseen. During such period, the exporter or the exporter's assignee 
may be required to make available to the Secretary of Agriculture or the 
Comptroller General of the United States, through their authorized 
representatives, records that pertain to transactions conducted outside 
the program, if, in the opinion of the GSM, such records would pertain 
directly to the review of transactions undertaken by the exporter in 
connection with the payment guarantee.
    (2) The exporter must maintain the proof of entry required by Sec.
1493.490(b), and must provide access to such documentation if requested 
by the Secretary of Agriculture or his authorized representative for the 
five-year period specified in paragraph (e)(1) of this section.
    (f) Responsibility of program participants. It is the responsibility 
of all program participants to review, and fully acquaint themselves 
with, all regulations, Program Announcements, and Notices to 
Participants issued pursuant to this subpart. Applicants for payment 
guarantees are hereby on notice that they will be bound by any terms 
contained in applicable Program Announcements or Notices to Participants 
issued prior to the date of approval of a payment guarantee.
    (g) Submission of documents by principal officers. All required 
submissions, including certifications, applications, reports, or 
requests (i.e., requests for amendments), by exporters or exporters' 
assignees under this subpart must be signed by a principal or officer of 
the exporter or exporter's assignee or their authorized designee(s). In 
cases where the designee is acting on behalf of the principal or the 
officer, the signature must be accompanied by: Wording indicating the 
delegation of authority or, in the alternative, by a certified copy of 
the delegation of authority; and the name and title of the authorized 
person or officer. Further, the exporter or exporter's assignee must 
ensure that all information/reports required under these regulations are 
submitted within the required time limits. If requested in writing, CCC 
will acknowledge receipt of a submission by the exporter or the 
exporter's assignee. If acknowledgment of receipt is requested, the 
exporter or exporter's assignee must submit an extra copy of each 
document and a stamped self-addressed envelope for return by U.S. mail. 
If courier services are desired for the return receipt, the exporter or 
exporter's assignee must also submit a self-addressed courier service 
order which includes the recipient's billing code for such service.
    (h) Officials not to benefit. No member of or delegate to Congress, 
or Resident Commissioner, shall be admitted to any share or part of the 
payment guarantee or to any benefit that may arise therefrom, but this 
provision shall not be construed to extend to the payment guarantee if 
made with a corporation for its general benefit.
    (i) OMB control number assigned pursuant to the Paperwork Reduction 
Act. The information requirements contained in this part (7 CFR part 
1493, subpart D) have been approved by the Office of Management and 
Budget (OMB) in accordance with the provisions of 44 U.S.C. Chapter 35 
and have been assigned OMB Control Number 0551-0037.

                       PARTS 1494	1495 [RESERVED]



PART 1499_FOOD FOR PROGRESS PROGRAM--Table of Contents



Sec.
1499.1 Purpose and applicability.
1499.2 Definitions.
1499.3 Eligibility and conflicts of interest.
1499.4 Application process.
1499.5 Agreements.
1499.6 Payments.

[[Page 1143]]

1499.7 Transportation of donated commodities.
1499.8 Entry, handling, and labeling of donated commodities and 
          notification requirements.
1499.9 Damage to or loss of donated commodities.
1499.10 Claims for damage to or loss of donated commodities.
1499.11 Use of donated commodities, sale proceeds, CCC-provided funds, 
          and program income.
1499.12 Monitoring and evaluation requirements.
1499.13 Reporting and record keeping requirements.
1499.14 Subrecipients.
1499.15 Noncompliance with an agreement.
1499.16 Suspension and termination of agreements.
1499.17 Opportunities to object and appeals.
1499.18 Audit requirements.
1499.19 Paperwork Reduction Act.

    Authority: 7 U.S.C. 1736o; and 15 U.S.C. 714b and 714c.

    Source: 81 FR 62605, Sept. 12, 2016, unless otherwise noted.



Sec.1499.1  Purpose and applicability.

    (a) This part sets forth the general terms and conditions governing 
the award of donated commodities and funds by the Commodity Credit 
Corporation (CCC) to recipients under the Food for Progress (FFPr) 
Program. Under the FFPr Program, recipients use the donated commodities, 
proceeds from any sale of such commodities, CCC-provided funds, and 
program income to implement a project in a foreign country pursuant to 
an agreement with CCC. The Foreign Agricultural Service (FAS) of the 
United States Department of Agriculture (USDA) administers the FFPr 
Program on behalf of CCC.
    (b)(1) The Office of Management and Budget (OMB) issued guidance on 
Uniform Administrative Requirements, Cost Principles, and Audit 
Requirements for Federal Awards in 2 CFR part 200. In 2 CFR 400.1, USDA 
adopted OMB's guidance in subparts A through F of 2 CFR part 200, as 
supplemented by 2 CFR part 400, as USDA policies and procedures for 
uniform administrative requirements, cost principles, and audit 
requirements for Federal awards.
    (2) The OMB guidance at 2 CFR part 200, as supplemented by 2 CFR 
part 400 and this part, applies to the FFPr Program, except as provided 
in paragraphs (e), (f) and (g) of this section.
    (c) Except as otherwise provided in this part, other regulations 
that are generally applicable to grants and cooperative agreements of 
USDA, including the applicable regulations set forth in 2 CFR chapters 
I, II, and IV, also apply to the FFPr Program. The provisions of the CCC 
Charter Act (15 U.S.C. 714 et seq.) and any other statutory or 
regulatory provisions that are generally applicable to CCC apply to the 
FFPr Program.
    (d) In accordance with 7 U.S.C. 1736o(b)(5), assistance under the 
FFPr Program may be provided to governments of emerging agricultural 
countries, intergovernmental organizations, private voluntary 
organizations, nonprofit agricultural organizations or cooperatives, 
nongovernmental organizations, colleges or universities, and any other 
private entities.
    (e) The OMB guidance at 2 CFR part 200, and the provisions of 2 CFR 
part 400 and of this part, do not apply to an award by CCC under the 
FFPr Program to a recipient that is a foreign public entity, as defined 
in 2 CFR 200.46, and, therefore, they do not apply to a foreign 
government or an intergovernmental organization.
    (f)(1) The OMB guidance at subparts A through E of 2 CFR part 200, 
as supplemented by 2 CFR part 400 and this part, applies to all awards 
by CCC under the FFPr Program to all recipients that are private 
voluntary organizations, including a private voluntary organization that 
is a foreign organization, as defined in 2 CFR 200.47; nonprofit 
agricultural organizations or cooperatives, including a nonprofit 
agricultural organization or cooperative that is a foreign organization; 
nongovernmental organizations, including a nongovernmental organization 
that is a for-profit entity or a foreign organization; colleges or 
universities; or other private entities, including a private entity that 
is a for-profit entity or a foreign organization.
    (2) The OMB guidance at subparts A through E of 2 CFR part 200, as 
supplemented by 2 CFR part 400 and this part, applies to all subawards 
to all subrecipients under this part, except in cases:

[[Page 1144]]

    (i) Where the subrecipient is a foreign public entity; or
    (ii) Where CCC determines that the application of these provisions 
to a subaward to a subrecipient that is a foreign organization would be 
inconsistent with the international obligations of the United States or 
the statutes or regulations of a foreign government or would not be in 
the best interest of the United States.
    (g)(1) The OMB guidance at subpart F of 2 CFR part 200, as 
supplemented by 2 CFR part 400 and this part, applies only to awards by 
CCC to recipients that are private voluntary organizations, agricultural 
organizations or cooperatives, nongovernmental organizations, colleges 
or universities, or other private entities, but that are not for-profit 
entities or foreign organizations.
    (2) The OMB guidance at subpart F of 2 CFR part 200, as supplemented 
by 2 CFR part 400 and this part, applies to subawards to subrecipients 
under this part, except where the subrecipient is a for-profit entity, 
foreign public entity, or foreign organization.
    (3) Audit requirements for recipients and subrecipients that are 
for-profit entities or foreign organizations are set forth in Sec.
1499.18.

[81 FR 62605, Sept. 12, 2016, as amended at 84 FR 45058, Aug. 28, 2019]



Sec.1499.2  Definitions.

    These are definitions for terms used in this part. The definitions 
in 2 CFR part 200, as supplemented in 2 CFR part 400, are also 
applicable to this part, with the exception that, if a term that is 
defined in this section is defined differently in 2 CFR part 200 or part 
400, the definition in this section will apply to such term as used in 
this part.
    Activity means a discrete undertaking within a project to be carried 
out by a recipient, directly or through a subrecipient, that is 
specified in an agreement and is intended to fulfill a specific 
objective of the agreement.
    Agreement means a legally binding grant or cooperative agreement 
entered into between CCC and a recipient to implement a project under 
the FFPr Program.
    CCC means the Commodity Credit Corporation, an agency and 
instrumentality of the United States within USDA, and includes any 
official of the United States delegated the responsibility to act on 
behalf of CCC.
    CCC-provided funds means U.S. dollars provided under an agreement to 
a recipient, or through a subagreement to a subrecipient, for expenses 
authorized in the agreement, such as expenses for the internal 
transportation, storage and handling of the donated commodities; 
expenses involved in the administration, monitoring, and evaluation of 
the activities under the agreement; and technical assistance related to 
the monetization of the donated commodities.
    College or university means an educational institution in any State 
which admits as regular students only persons having a certificate of 
graduation from a school providing secondary education, or the 
recognized equivalent of such a certificate; is legally authorized 
within such State to provide a program of education beyond secondary 
education; provides an educational program for which a bachelor's degree 
or any other higher degree is awarded; is a public or other nonprofit 
institution; and is accredited by a nationally recognized accrediting 
agency or association. The terms include a research foundation 
maintained by such a college or university. As used in this definition, 
State will have the meaning given in 7 U.S.C. 3103(16).
    Commodities mean agricultural commodities, or products of 
agricultural commodities, that are produced in the United States.
    Cooperative means a private sector organization whose members own 
and control the organization and share in its services and its profits 
and that provides business services and outreach in cooperative 
development for its membership.
    Cost sharing or matching means the portion of project expenses, or 
necessary goods and services provided to carry out a project, not paid 
or acquired with Federal funds. The term may include cash or in-kind 
contributions provided by recipients, subrecipients, foreign public 
entities, foreign organizations, or private donors.
    Disburse means to make a payment to liquidate an obligation.

[[Page 1145]]

    Donated commodities means the commodities donated by CCC to a 
recipient under an agreement. The term may include donated commodities 
that are used to produce a further processed product for use under the 
agreement.
    FAS means the Foreign Agricultural Service of the United States 
Department of Agriculture.
    FFPr Program means the Food for Progress Program.
    Nongovernmental organization means an organization that works at the 
local level to solve development problems in a foreign country in which 
the organization is located, except that the term does not include an 
organization that is primarily an agency or instrumentality of the 
government of the foreign country.
    Private voluntary organization means a not-for-profit, 
nongovernmental organization (in the case of a United States 
organization, an organization that is exempt from Federal income taxes 
under section 501(c)(3) of the Internal Revenue Code of 1986) that 
receives funds from private sources, voluntary contributions of money, 
staff time, or in-kind support from the public, and that is engaged in 
or is planning to engage in voluntary, charitable, or development 
assistance activities (other than religious activities).
    Program income means interest earned on proceeds from the sale of 
donated commodities, as well as funds received by a recipient or 
subrecipient as a direct result of carrying out an approved activity 
under an agreement. The term includes but is not limited to income from 
fees for services performed, the use or rental of real or personal 
property acquired under a Federal award, the sale of items fabricated 
under a Federal award, license fees and royalties on patents and 
copyrights, and principal and interest on loans made with Federal award 
funds. Program income does not include proceeds from the sale of donated 
commodities; CCC-provided funds or interest earned on such funds; or 
funds provided for cost sharing or matching contributions, refunds or 
rebates, credits, discounts, or interest earned on any of them.
    Project means the totality of the activities to be carried out by a 
recipient, directly or through a subrecipient, to fulfill the objectives 
of an agreement.
    Recipient means an entity that enters into an agreement with CCC and 
receives donated commodities and CCC-provided funds to carry out 
activities under the agreement. The term recipient does not include a 
subrecipient.
    Sale proceeds means funds received by a recipient from the sale of 
donated commodities.
    Subrecipient means an entity that enters into a subagreement with a 
recipient for the purpose of implementing in the target country 
activities described in an agreement. The term does not include an 
individual that is a beneficiary under the agreement.
    Target country means the foreign country in which activities are 
implemented under an agreement.
    USDA means the United States Department of Agriculture.
    Voluntary committed cost sharing or matching contributions means 
cost sharing or matching contributions specifically pledged on a 
voluntary basis by an applicant or recipient, which become binding as 
part of an agreement. Voluntary committed cost sharing or matching 
contributions may be provided in the form of cash or in-kind 
contributions.

[81 FR 62605, Sept. 12, 2016, as amended at 84 FR 45059, Aug. 28, 2019]



Sec.1499.3  Eligibility and conflicts of interest.

    (a) A private voluntary organization, a nonprofit agricultural 
organization or cooperative, a nongovernmental organization, a colleges 
or university, or any other private entity is eligible to submit an 
application under this part to become a recipient under the Food for 
Progress Program. CCC will set forth specific eligibility information, 
including any factors or priorities that will affect the eligibility of 
an applicant or application for selection, in the full text of the 
applicable notice of funding opportunity posted on the U.S. Government 
website for grant opportunities.
    (b) Applicants, recipients, and subrecipients must comply with 
policies established by CCC pursuant to 2 CFR 400.2(a), and with the 
requirements in 2

[[Page 1146]]

CFR 400.2(b), regarding conflicts of interest.

[81 FR 62605, Sept. 12, 2016, as amended at 84 FR 45059, Aug. 28, 2019]



Sec.1499.4  Application process.

    (a) An applicant seeking to enter into an agreement with CCC must 
submit an application, in accordance with this section, that sets forth 
its proposal to carry out activities under the FFPr Program in a 
proposed target country(ies). An application must contain the items 
specified in paragraph (b) of this section as well as any other items 
required by the notice of funding opportunity and must be submitted 
electronically to CCC at the address set forth in the notice of funding 
opportunity.
    (b) An applicant must include the following items in its 
application:
    (1) A completed Form SF-424, which is a standard application for 
Federal assistance;
    (2) An introduction and a strategic analysis, which includes an 
impact analysis, as specified in the notice of funding opportunity;
    (3) A plan of operation that contains the elements specified in the 
notice of funding opportunity;
    (4) A summary line item budget and a detailed budget narrative that 
indicate:
    (i) The amounts of any sale proceeds, CCC-provided funds, interest, 
program income, and voluntary committed cost sharing or matching 
contributions that the applicant proposes to use to fund:
    (A) Administrative costs;
    (B) Inland and internal transportation, storage and handling (ITSH) 
costs; and
    (C) Activity costs;
    (ii) Where applicable, how the applicant's indirect cost rate will 
be applied to each type of expense; and
    (iii) The amount of funding that will be provided to each proposed 
subrecipient under the agreement;
    (5) A project-level results framework that outlines the changes that 
the applicant expects to accomplish through the proposed project and is 
based on the FFPr Program-level results framework, as set forth in the 
notice of funding opportunity;
    (6) Unless otherwise specified in the notice of funding opportunity, 
an evaluation plan that describes the proposed design, methodology, and 
time frame of the project's evaluation activities, and how the applicant 
intends to manage these activities, and that will include a baseline 
study, interim evaluation, final evaluation, and any applicable special 
studies; and
    (7) Any additional required items set forth in the notice of funding 
opportunity.
    (c) Each applicant (unless the applicant has an exception approved 
by CCC under 2 CFR 25.110(d)) is required to:
    (1) Be registered in the System for Award Management (SAM) before 
submitting its application;
    (2) Provide a valid unique entity identifier in its application; and
    (3) Continue to maintain an active SAM registration with current 
information at all times during which it has an active Federal award or 
an application or plan under consideration by a Federal awarding agency.



Sec.1499.5  Agreements.

    (a) After CCC approves an application by an applicant, CCC will 
negotiate an agreement with the applicant. The agreement will set forth 
the obligations of CCC and the recipient.
    (b) The agreement will specify the general information required in 2 
CFR 200.210(a), as applicable.
    (c) The agreement will incorporate general terms and conditions, 
pursuant to 2 CFR 200.210(b), as applicable.
    (d) To the extent that this information is not already included in 
the agreement pursuant to paragraphs (b) and (c) of this section, the 
agreement will also include the following:
    (1) The kind, quantity, and use of the donated commodities and an 
estimated commodity call forward schedule, with the month and year 
indicated for each expected commodity shipment;
    (2) A plan of operation, which will include the following:
    (i) The objectives to be accomplished under the project;
    (ii) A detailed description of each activity to be implemented;
    (iii) The target country(ies) and the areas of the target 
country(ies) in

[[Page 1147]]

which the activities will be implemented;
    (iv) The methods and criteria for selecting the beneficiaries of the 
activities;
    (v) Any contributions for cost sharing or matching, including cash 
and non-cash contributions, that the recipient expects to receive from 
non-CCC sources that:
    (A) Are critical to the implementation of the activities; or
    (B) Enhance the implementation of the activities;
    (vi) Any subrecipient that will be involved in the implementation of 
the activities, and the criteria for selecting a subrecipient that has 
not yet been identified;
    (vii) Any other governmental or nongovernmental entities that will 
be involved in the implementation of the activities; and
    (viii) Any processing, packaging, or repackaging of the donated 
commodities that will take place prior to their distribution, sale, or 
barter by the recipient;
    (3) A budget, which will set forth the maximum amounts of sale 
proceeds, CCC-provided funds, interest, program income, and voluntary 
committed cost sharing or matching contributions that may be used for 
each line item, as well as other applicable budget requirements;
    (4) Performance goals for the agreement, including a list of 
results, with long-term benefits where applicable, to be achieved by the 
activities and corresponding indicators, targets, and time frames; and
    (5) Any additional provisions specified by CCC during the 
negotiation of the agreement.
    (e) The agreement will also include specific terms and conditions, 
and certifications and representations, including the following:
    (1) The agreement will prohibit the sale or transshipment of the 
donated commodities by the recipient to a country not specified in the 
agreement, or the use of the donated commodities for other than domestic 
purposes, for as long as the recipient has title to such donated 
commodities;
    (2) The recipient will assert that it has taken action to ensure 
that any donated commodities that will be distributed to beneficiaries 
will be imported and distributed free from all customs, duties, tolls, 
and taxes. The recipient must submit information to CCC to support this 
assertion;
    (3) The recipient will assert that, to the best of its knowledge, 
the importation and distribution of the donated commodities in the 
target country will not result in a substantial disincentive to or 
interference with domestic production or marketing in that country. The 
recipient must submit information to CCC to support this assertion;
    (4) The recipient will assert that, to the best of its knowledge, 
any sale or barter of the donated commodities will not displace or 
interfere with any sales of United States commodities that may otherwise 
be made to or within the target country. The recipient must submit 
information to CCC to support this assertion; and
    (5) The recipient will assert that adequate transportation and 
storage facilities will be available in the target country at the time 
of the arrival of the donated commodities to prevent spoilage or waste 
of the donated commodities. The recipient must submit information to CCC 
to support this assertion.
    (f) CCC may enter into a multicountry agreement in which donated 
commodities are delivered to one country and activities are carried out 
in another.
    (g) CCC may provide donated commodities and CCC-provided funds under 
a multiyear agreement contingent upon the availability of commodities 
and funds.

[81 FR 62605, Sept. 12, 2016, as amended at 84 FR 45059, Aug. 28, 2019]



Sec.1499.6  Payments.

    (a) If a recipient arranges for transportation in accordance with 
Sec.1499.7(b)(2), CCC will, as specified in the agreement, pay the 
costs of such transportation to the ocean carrier or to the recipient. 
The recipient must, as specified in the agreement, submit to CCC, 
arrange to be submitted to CCC, or maintain on file and make available 
to CCC, the following documents:
    (1) The original, or a true copy of, each on board bill of lading 
indicating

[[Page 1148]]

the freight rate and signed by the originating ocean carrier;
    (2) For all non-containerized cargoes:
    (i) A signed copy of the Federal Grain Inspection Service (FGIS) 
Official Stowage Examination Certificate;
    (ii) A signed copy of the National Cargo Bureau Certificate of 
Readiness; and
    (iii) A signed copy of the Certificate of Loading issued by the 
National Cargo Bureau or a similar qualified independent surveyor;
    (3) For all containerized cargoes, a copy of the FGIS Container 
Condition Inspection Certificate;
    (4) A signed copy of the U.S. Food Aid Booking Note or charter party 
covering ocean transportation of the cargo;
    (5) In the case of charter shipments, a signed notice of arrival at 
the first discharge port, unless CCC has determined that circumstances 
that could not have been reasonably anticipated or controlled (force 
majeure) have prevented the ocean carrier's arrival at the first port of 
discharge; and
    (6) A request for payment of freight, survey costs other than at 
load port, and other expenses approved by CCC.
    (b) If the agreement specifies that some or all of the documents 
listed in paragraph (a) of this section will be submitted to CCC, then 
CCC will not render payment for transportation services until it has 
received all of the specified documents.
    (c) If a recipient arranges for transportation in accordance with 
Sec.1499.7(b)(2), and the recipient uses a freight forwarder, the 
recipient must ensure that the freight forwarder is registered in the 
SAM and require the freight forwarder to submit the documents specified 
in paragraph (a) of this section. The recipient will ensure that the 
total commission or fees paid to intermediaries in the transportation 
procurement process will not exceed two and a half percent of the total 
transportation costs.
    (d) In no case will CCC provide payment to a recipient for demurrage 
costs or pay demurrage to any other entity.
    (e) If CCC has agreed to be responsible for the costs of 
transporting, storing, and distributing the donated commodities from the 
designated discharge port or point of entry, and if the recipient will 
bear or has borne any of these costs, in accordance with the agreement, 
CCC will either provide an advance payment or a reimbursement to the 
recipient in the amount of such costs, in the manner set forth in the 
agreement.
    (f) If the agreement authorizes the payment of CCC-provided funds, 
CCC will generally provide the funds to the recipient on an advance 
payment basis, in accordance with 2 CFR 200.305(b). In addition, the 
following procedures will apply to advance payments:
    (1) A recipient may request advance payments of CCC-provided funds, 
up to the total amount specified in the agreement. When making an 
advance payment request, a recipient must provide, for each agreement 
for which it is requesting an advance, total expenditures to date; an 
estimate of expenses to be covered by the advance; total advances 
previously requested, if any; the amount of cash on hand from the 
preceding advance; and, if necessary, a request to roll over any unused 
funds from the preceding advance to the current request period. The 
advance payment request must take into account any program income earned 
since the preceding advance.
    (2) Whenever possible, a recipient should consolidate advance 
payment requests to cover anticipated cash needs for all food assistance 
program awards made by CCC to the recipient. A recipient may request 
advance payments with no minimum time required between requests.
    (3) A recipient must minimize the amount of time that elapses 
between the transfer of funds by CCC and the disbursement of funds by 
the recipient. A recipient must fully disburse funds from the preceding 
advance before it submits a new advance request for the same agreement, 
with the exception that the recipient may request to retain the balance 
of any funds that have not been disbursed and roll it over into a new 
advance request if the new advance request is made within 90 days after 
the preceding advance was made.
    (4) CCC will review all requests to roll over funds from the 
preceding advance that have not been disbursed and

[[Page 1149]]

make a decision based on the merits of the request. CCC will consider 
factors such as the amount of funding that a recipient is requesting to 
roll over, the length of time that the recipient has been in possession 
of the funds, any unforeseen or extenuating circumstances, the 
recipient's history of performance, and findings from recent financial 
audits or compliance reviews.
    (5) CCC will not approve any request for an advance or rollover of 
funds if the most recent financial report, as specified in the 
agreement, is past due, or if any required report, as specified in any 
open agreement between the recipient and CCC or FAS, is more than three 
months in arrears.
    (6)(i) A recipient must return to CCC any funds advanced by CCC that 
have not been disbursed as of the 91st day after the advance was made; 
provided, however, that paragraphs (f)(6)(ii) and (iii) of this section 
will apply if the recipient submits a request to CCC before that date to 
roll over the funds into a new advance.
    (ii) If a recipient submits a request to roll over funds into a new 
advance, and CCC approves the rollover of funds, such funds will be 
considered to have been advanced on the date that the recipient receives 
the approval notice from CCC, for the purposes of complying with the 
requirement in paragraph (f)(6)(i) of this section.
    (iii) If a recipient submits a request to roll over funds into a new 
advance, and CCC does not approve the rollover of some or all of the 
funds, such funds must be returned to CCC.
    (iv) If a recipient must return funds to CCC in accordance with 
paragraph (f)(6) of this section, the recipient must return the funds by 
the later of five business days after the 91st day after the funds were 
advanced, or five business days after the date on which the recipient 
receives notice from CCC that it has denied the recipient's request to 
roll over the funds; provided, however, that CCC may specify a different 
date for the return of funds in a written communication to the 
recipient.
    (7) Except as may otherwise be provided in the agreement, a 
recipient must deposit and maintain in an insured bank account located 
in the United States all funds advanced by CCC. The account must be 
interest-bearing, unless one of the exceptions in 2 CFR 200.305(b)(8) 
applies or CCC determines that this requirement would constitute an 
undue burden. A recipient will not be required to maintain a separate 
bank account for advance payments of CCC-provided funds. However, a 
recipient must be able to separately account for the receipt, 
obligation, and expenditure of funds under each agreement.
    (8) A recipient may retain, for administrative purposes, up to $500 
per Federal fiscal year of any interest earned on funds advanced under 
an agreement. The recipient must remit to the U.S. Department of Health 
and Human Services, Payment Management System, any additional interest 
earned during the Federal fiscal year on such funds, in accordance with 
the procedures in 2 CFR 200.305(b)(9).
    (g) If a recipient is required to pay funds to CCC in connection 
with an agreement, the recipient must make such payment in U.S. dollars, 
unless otherwise approved in advance by CCC.

[81 FR 62605, Sept. 12, 2016, as amended at 84 FR 45059, Aug. 28, 2019]



Sec.1499.7  Transportation of donated commodities.

    (a) Shipments of donated commodities are subject to the requirements 
of 46 U.S.C. 55305, regarding carriage on U.S.-flag vessels.
    (b) Transportation of donated commodities and other goods such as 
bags that may be provided by CCC under the FFPr Program will be arranged 
for under a specific agreement in the manner determined by CCC. Such 
transportation will be arranged for by:
    (1) CCC in accordance with the Federal Acquisition Regulation (FAR) 
in chapter 1 of title 48, the Agriculture Acquisition Regulation (AGAR) 
in chapter 4 of title 48, and directives issued by the Director, Office 
of Procurement and Property Management, USDA; or
    (2) The recipient, with payment by CCC, in the manner specified in 
the agreement.
    (c) A recipient that is responsible for transportation under 
paragraph (b)(2) of this section must declare in the transportation 
contract the point at

[[Page 1150]]

which the ocean carrier will take custody of donated commodities to be 
transported.
    (d) A recipient that arranges for transportation in accordance with 
paragraph (b)(2) of this section may only use the services of a freight 
forwarder that is licensed by the Federal Maritime Commission and that 
would not have a conflict of interest in carrying out the freight 
forwarder duties. To assist CCC in determining whether there is a 
potential conflict of interest, the recipient must submit to CCC a 
certification indicating that the freight forwarder:
    (1) Is not engaged in, and will not engage in, supplying commodities 
or furnishing ocean transportation or ocean transportation-related 
services for commodities provided under any FFPr Program agreement to 
which the recipient is a party; and
    (2) Is not affiliated with the recipient and has not made 
arrangements to give or receive any payment, kickback, or illegal 
benefit in connection with its selection as an agent of the recipient.



Sec.1499.8  Entry, handling, and labeling of donated commodities 
and notification requirements.

    (a) A recipient must make all necessary arrangements for receiving 
the donated commodities in the target country, including obtaining 
appropriate approvals for entry and transit. The recipient must make 
arrangements with the target country government for all donated 
commodities that will be distributed to beneficiaries to be imported and 
distributed free from all customs duties, tolls, and taxes. A recipient 
is encouraged to make similar arrangements, where possible, with the 
government of a country where donated commodities to be sold or bartered 
are delivered.
    (b) A recipient must, as provided in the agreement, arrange for 
transporting, storing, and distributing the donated commodities from the 
designated point and time where title to the donated commodities passes 
to the recipient.
    (c) A recipient must store and maintain the donated commodities in 
good condition from the time of delivery at the port of entry or the 
point of receipt from the originating carrier until their distribution, 
sale or barter.
    (d)(1) If a recipient arranges for the packaging or repackaging of 
donated commodities that are to be distributed, the recipient must 
ensure that the packaging:
    (i) Is plainly labeled in the language of the target country;
    (ii) Contains the name of the donated commodities;
    (iii) Includes a statement indicating that the donated commodities 
are furnished by the United States Department of Agriculture; and
    (iv) Includes a statement indicating that the donated commodities 
must not be sold, exchanged or bartered.
    (2) If a recipient arranges for the processing and repackaging of 
donated commodities that are to be distributed, the recipient must 
ensure that the packaging:
    (i) Is plainly labeled in the language of the target country;
    (ii) Contains the name of the processed product;
    (iii) Includes a statement indicating that the processed product was 
made with commodities furnished by the United States Department of 
Agriculture; and
    (iv) Includes a statement indicating that the processed product must 
not be sold, exchanged or bartered.
    (3) If a recipient distributes donated commodities that are not 
packaged, the recipient must display a sign at the distribution site 
that includes the name of the donated commodities, a statement 
indicating that the donated commodities are being furnished by the 
United States Department of Agriculture, and a statement indicating that 
the donated commodities must not be sold, exchanged, or bartered.
    (e) A recipient must ensure that signs are displayed at all activity 
implementation and commodity distribution sites to inform beneficiaries 
that funding for the project was provided by the United States 
Department of Agriculture.
    (f) A recipient must also ensure that all public communications 
relating to the project, the activities, or the donated commodities, 
whether made through print, broadcast, digital, or

[[Page 1151]]

other media, include a statement acknowledging that funding was provided 
by the United States Department of Agriculture.
    (g) CCC may waive compliance with one or more of the labeling and 
notification requirements in paragraphs (d), (e) and (f) of this section 
if a recipient demonstrates to CCC that the requirement presents a 
safety and security risk in the target country. If a recipient 
determines that compliance with a labeling or notification requirement 
poses an imminent threat of destruction of property, injury, or loss of 
life, the recipient must submit a waiver request to CCC as soon as 
possible. The recipient will not have to comply with such requirement 
during the period prior to the issuance of a waiver determination by 
CCC. A recipient may submit a written request for a waiver at any time 
after the agreement has been signed.
    (h) In exceptional circumstances, CCC may, on its own initiative, 
waive one or more of the labeling and notification requirements in 
paragraphs (d), (e) and (f) of this section for programmatic reasons.



Sec.1499.9  Damage to or loss of donated commodities.

    (a) CCC will be responsible for the donated commodities prior to the 
transfer of title to the commodities to the recipient. The recipient 
will be responsible for the donated commodities following the transfer 
of title to the donated commodities to the recipient. The title will 
transfer as specified in the agreement.
    (b) A recipient must inform CCC, in the manner and within the time 
period set forth in the agreement, of any damage to or loss of the 
donated commodities that occurs following the transfer of title to the 
donated commodities to the recipient. The recipient must take all steps 
necessary to protect its interests and the interests of CCC with respect 
to any damage to or loss of the donated commodities that occurs after 
title has been transferred to the recipient.
    (c) A recipient will be responsible for arranging for an independent 
cargo surveyor to inspect the donated commodities upon discharge from 
the ocean carrier and prepare a survey or outturn report. The report 
must show the quantity and condition of the donated commodities 
discharged from the ocean carrier and must indicate the most likely 
cause of any damage noted in the report. The report must also indicate 
the time and place when the survey took place. All discharge surveys 
must be conducted contemporaneously with the discharge of the ocean 
carrier, unless CCC determines that failure to do so was justified under 
the circumstances. For donated commodities shipped on a through bill of 
lading, the recipient must also obtain a delivery survey. All surveys 
obtained by the recipient must, to the extent practicable, be conducted 
jointly by the surveyor, the recipient, and the carrier, and the survey 
report must be signed by all three parties. The recipient must obtain a 
copy of each discharge or delivery survey report within 45 days after 
the completion of the survey. The recipient must make each such report 
available to CCC upon request, or in the manner specified in the 
agreement. CCC will reimburse the recipient for the reasonable costs of 
these services, as determined by CCC, in the manner specified in the 
agreement.
    (d) If donated commodities are damaged or lost during the time that 
they are in the care of the ocean carrier:
    (1) The recipient must ensure that any reports, narrative 
chronology, or other commentary prepared by the independent cargo 
surveyor, and any such documentation prepared by a port authority, 
stevedoring service, or customs official, or an official of the transit 
or target country government or the transportation company, are provided 
to CCC;
    (2) The recipient must provide to CCC the names and addresses of any 
individuals known to be present at the time of discharge or unloading, 
or during the survey, who can verify the quantity of damaged or lost 
donated commodities;
    (3) If the damage or loss occurred with respect to a bulk shipment 
on an ocean carrier, the recipient must ensure that the independent 
cargo surveyor:
    (i) Observes the discharge of the cargo;

[[Page 1152]]

    (ii) Reports on discharging methods, including scale type, 
calibrations and any other factors that may affect the accuracy of scale 
weights, and, if scales are not used, states the reason therefor and 
describes the actual method used to determine weight;
    (iii) Estimates the quantity of cargo, if any, lost during discharge 
through carrier negligence;
    (iv) Advises on the quality of sweepings;
    (v) Obtains copies of port or ocean carrier records, if possible, 
showing the quantity discharged; and
    (vi) Notifies the recipient immediately if the surveyor has reason 
to believe that the correct quantity was not discharged or if additional 
services are necessary to protect the cargo; and
    (4) If the damage or loss occurred with respect to a container 
shipment on an ocean carrier, the recipient must ensure that the 
independent cargo surveyor lists the container numbers and seal numbers 
shown on the containers, indicates whether the seals were intact at the 
time the containers were opened, and notes whether the containers were 
in any way damaged.
    (e) If a recipient has title to the donated commodities, and donated 
commodities valued in excess of $5,000 are damaged at any time prior to 
their distribution or sale under the agreement, regardless of the party 
at fault, the recipient must immediately arrange for an inspection by a 
public health official or other competent authority approved by CCC and 
provide to CCC a certification by such public health official or other 
competent authority regarding the exact quantity and condition of the 
damaged donated commodities. The value of damaged donated commodities 
must be determined on the basis of the commodity acquisition, 
transportation, and related costs incurred by CCC with respect to such 
commodities, as well as such costs incurred by the recipient and paid by 
CCC. The recipient must inform CCC of the results of the inspection and 
indicate whether the damaged donated commodities are:
    (1) Fit for the use authorized in the agreement and, if so, whether 
there has been a diminution in quality; or
    (2) Unfit for the use authorized in the agreement.
    (f)(1) If a recipient has title to the donated commodities, the 
recipient must arrange for the recovery of that portion of the donated 
commodities designated as fit for the use authorized in the agreement. 
The recipient must dispose of donated commodities that are unfit for 
such use in the following order of priority:
    (i) Sale for the most appropriate use, i.e., animal feed, 
fertilizer, industrial use, or another use approved by CCC, at the 
highest obtainable price;
    (ii) Donation to a governmental or charitable organization for use 
as animal feed or another non-food use; or
    (iii) Destruction of the donated commodities if they are unfit for 
any use, in such manner as to prevent their use for any purpose.
    (2) A recipient must arrange for all U.S. Government markings to be 
obliterated or removed before the donated commodities are transferred by 
sale or donation under paragraph (f)(1) of this section.
    (g) A recipient may retain any proceeds generated by the disposal of 
the donated commodities in accordance with paragraph (f)(1) of this 
section and must use the retained proceeds for expenses related to the 
disposal of the donated commodities and for activities specified in the 
agreement.
    (h) A recipient must notify CCC immediately and provide detailed 
information about the actions taken in accordance with paragraph (f) of 
this section, including the quantities, values and dispositions of 
donated commodities determined to be unfit.



Sec.1499.10  Claims for damage to or loss of donated commodities.

    (a) CCC will be responsible for claims arising out of damage to or 
loss of a quantity of the donated commodities prior to the transfer of 
title to the donated commodities to the recipient. The recipient will be 
responsible for claims arising out of damage to or loss of a quantity of 
the donated commodities after the transfer of title to the donated 
commodities.
    (b) If a recipient has title to donated commodities that have been 
damaged or lost, and the value of the damaged

[[Page 1153]]

or lost donated commodities is estimated to be in excess of $20,000, the 
recipient must:
    (1) Notify CCC immediately and provide detailed information about 
the circumstances surrounding such damage or loss, the quantity of 
damaged or lost donated commodities, and the value of the damage or 
loss;
    (2) Promptly upon discovery of the damage or loss, initiate a claim 
arising out of such damage or loss, including, if appropriate, 
initiating an action to collect pursuant to a commercial insurance 
contract;
    (3) Take all necessary action to pursue the claim diligently and 
within any applicable periods of limitations; and
    (4) Provide to CCC copies of all documentation relating to the 
claim.
    (c) If a recipient has title to donated commodities that have been 
damaged or lost, and the value of the damaged or lost donated 
commodities is estimated to be $20,000 or less, the recipient must 
notify CCC in accordance with the agreement and provide detailed 
information about the damage or loss in the next report required to be 
filed under Sec.1499.13(f)(1) or (2).
    (d)(1) The value of a claim for lost donated commodities will be 
determined on the basis of the commodity acquisition, transportation, 
and related costs incurred by CCC with respect to such commodities, as 
well as such costs incurred by the recipient and paid by CCC.
    (2) The value of a claim for damaged donated commodities will be 
determined on the basis of the commodity acquisition, transportation, 
and related costs incurred by CCC with respect to such commodities, as 
well as such costs incurred by the recipient and paid by CCC, less any 
funds generated if such commodities are sold in accordance with Sec.
1499.9(f)(1).
    (e) If CCC determines that a recipient has not initiated a claim or 
is not exercising due diligence in the pursuit of a claim, CCC may 
require the recipient to assign its rights to initiate or pursue the 
claim to CCC. Failure by the recipient to initiate a claim or exercise 
due diligence in the pursuit of a claim will be considered by CCC during 
the review of applications for subsequent food assistance awards.
    (f)(1) A recipient may retain any funds obtained as a result of a 
claims collection action initiated by it in accordance with this 
section, or recovered pursuant to any insurance policy or other similar 
form of indemnification, but such funds must be expended in accordance 
with the agreement or for other purposes approved in advance by CCC.
    (2) CCC will retain any funds obtained as a result of a claims 
collection action initiated by it under this section; provided, however, 
that if the recipient paid for the transportation of the donated 
commodities or a portion thereof, CCC will use a portion of such funds 
to reimburse the recipient for such expense on a prorated basis.



Sec.1499.11  Use of donated commodities, sale proceeds, CCC-provided
funds, and program income.

    (a) A recipient must use the donated commodities, any sale proceeds, 
CCC-provided funds, interest, and program income in accordance with the 
agreement.
    (b) A recipient must not use donated commodities, sale proceeds, 
CCC-provided funds, interest, or program income for any activity or any 
expense incurred by the recipient or a subrecipient prior to the start 
date of the period of performance of the agreement or after the 
agreement is suspended or terminated, without the prior written approval 
of CCC.
    (c) A recipient must not permit the distribution, handling, or 
allocation of donated commodities on the basis of political affiliation, 
geographic location, or the ethnic, tribal or religious identity or 
affiliation of the potential consumers or beneficiaries.
    (d) A recipient must not permit the distribution, handling, or 
allocation of donated commodities by the military forces of any 
government or insurgent group without the specific authorization of CCC.
    (e) A recipient must not use sale proceeds, CCC-provided funds, 
interest, or program income to acquire goods and services, either 
directly or indirectly through another party, in a manner that violates 
a U.S. Government economic sanction program, as specified in the 
agreement.

[[Page 1154]]

    (f) A recipient may sell or barter donated commodities only if such 
sale or barter is provided for in the agreement or the recipient is 
disposing of damaged donated commodities as specified in Sec.
1499.9(f). The recipient must sell donated commodities at a reasonable 
market price. The recipient must obtain approval of its proposed sale 
price from CCC before selling donated commodities. The recipient must 
use any sale proceeds, interest, program income, or goods or services 
derived from the sale or barter of the donated commodities only as 
provided in the agreement.
    (g) A recipient must deposit and maintain all sale proceeds, CCC-
provided funds, and program income in a bank account until they are used 
for a purpose authorized under the agreement or the CCC-provided funds 
are returned to CCC in accordance with Sec.1499.6(f)(6). The account 
must be insured unless it is in a country where insurance is 
unavailable. The account must be interest-bearing, unless one of the 
exceptions in 2 CFR 200.305(b)(8) applies or CCC determines that this 
requirement would constitute an undue burden. The recipient must comply 
with the requirements in Sec.1499.6(f)(7) with regard to the deposit 
of advance payments by CCC.
    (h)(1) Except as provided in paragraph (h)(2) of this section, a 
recipient may make adjustments within the agreement budget between 
direct cost line items without further approval, provided that the total 
amount of adjustments does not exceed the amount specified in the 
agreement. Adjustments beyond these limits require the prior approval of 
CCC.
    (2) A recipient must not transfer any funds budgeted for participant 
support costs, as defined in 2 CFR 200.75, to other categories of 
expense without the prior approval of CCC.
    (i) A recipient may use sale proceeds, CCC-provided funds, or 
program income to purchase real or personal property only if local law 
permits the recipient to retain title to such property. However, a 
recipient must not use sale proceeds, CCC-provided funds, or program 
income to pay for the acquisition, development, construction, alteration 
or upgrade of real property that is:
    (1) Owned or managed by a church or other organization engaged 
exclusively in religious pursuits; or
    (2) Used in whole or in part for sectarian purposes, except that a 
recipient may use sale proceeds, CCC-provided funds, or program income 
to pay for repairs to or rehabilitation of a structure located on such 
real property to the extent necessary to avoid spoilage or loss of 
donated commodities, but only if the structure is not used in whole or 
in part for any religious or sectarian purposes while the donated 
commodities are stored in it. If the use of sale proceeds, CCC-provided 
funds, or program income to pay for repairs to or rehabilitation of such 
a structure is not specifically provided for in the agreement, the 
recipient must not use the sale proceeds, CCC-provided funds, or program 
income for this purpose until it receives written approval from CCC.
    (j) A recipient must comply with 2 CFR 200.321 when procuring goods 
and services in the United States. When procuring goods and services 
outside of the United States, a recipient should endeavor to comply with 
2 CFR 200.321 where practicable.
    (k) A recipient must enter into a written contract with each 
provider of goods, services, or construction work that is valued at or 
above the Simplified Acquisition Threshold. Each such contract must 
require the provider to maintain adequate records to account for all 
donated commodities, funds, or both furnished to the provider by the 
recipient and to comply with any other applicable requirements that may 
be specified by CCC in the agreement. The recipient must submit a copy 
of each signed contract to CCC, as specified in the agreement.

[81 FR 62605, Sept. 12, 2016, as amended at 84 FR 45059, Aug. 28, 2019]



Sec.1499.12  Monitoring and evaluation requirements.

    (a) A recipient will be responsible for designing a performance 
monitoring plan for the project, obtaining written approval of the plan 
from CCC before putting it into effect, and managing and implementing 
the plan, unless otherwise specified in the agreement.

[[Page 1155]]

    (b) A recipient must establish baseline values, annual targets, and 
life of activity targets for each performance indicator included in the 
recipient's approved performance monitoring plan, unless otherwise 
specified in the agreement.
    (c) A recipient must inform CCC, in the manner and within the time 
period specified in the agreement, of any problems, delays, or adverse 
conditions that materially impair the recipient's ability to meet the 
objectives of the agreement. This notification must include a statement 
of any corrective actions taken or contemplated by the recipient, and 
any additional assistance requested from CCC to resolve the situation.
    (d) A recipient will be responsible for designing an evaluation plan 
for the project, obtaining written approval of the plan from CCC before 
putting it into effect, and arranging for an independent third party to 
implement the evaluation, unless otherwise specified in the agreement. 
This evaluation plan will detail the evaluation purpose and scope, key 
evaluation questions, evaluation methodology, time frame, evaluation 
management, and cost. This plan will generally be based upon the 
evaluation plan that the recipient submitted to CCC as part of its 
application, pursuant to Sec.1499.4(b)(6), unless the notice of 
funding opportunity specified that an evaluation plan was not required 
to be included in the application. The recipient must ensure that the 
evaluation plan:
    (1) Is designed using the most rigorous methodology that is 
appropriate and feasible, taking into account available resources, 
strategy, current knowledge and evaluation practices in the sector, and 
the implementing environment;
    (2) Is designed to inform management, activity implementation, and 
strategic decision-making;
    (3) Utilizes analytical approaches and methodologies, based on the 
questions to be addressed, project design, budgetary resources 
available, and level of rigor and evidence required, which may be 
implemented through methods such as case studies, surveys, quasi-
experimental designs, randomized field experiments, cost-effectiveness 
analyses, implementation reviews, or a combination of methods;
    (4) Adheres to generally accepted evaluation standards and 
principles;
    (5) Uses participatory approaches that seek to include the 
perspectives of diverse parties and all relevant stakeholders; and
    (6) Where possible, utilizes local consultants and seeks to build 
local capacity in evaluation.
    (e)(1) Unless otherwise provided in the agreement, a recipient must 
arrange for evaluations of the project to be conducted by an independent 
third party that:
    (i) Is financially and legally separate from the recipient's 
organization; and
    (ii) Has staff with demonstrated methodological, cultural and 
language competencies, and specialized experience in conducting 
evaluations of international development programs involving agriculture, 
trade, education, and nutrition, provided that CCC may determine that, 
for a particular agreement, the staff of the independent third party 
evaluator is not required to have specialized experience in conducting 
evaluations of programs involving one or more of these four areas.
    (2) A recipient must provide a written certification to CCC that 
there is no real or apparent conflict of interest on the part of any 
recipient staff member or third party entity designated or hired to play 
a substantive role in the evaluation of activities under the agreement.
    (f) CCC will be considered a key stakeholder in all evaluations 
conducted as part of the agreement.
    (g)(1) A recipient is responsible for establishing the required 
financial and human capital resources for monitoring and evaluation of 
activities under the agreement. The recipient must maintain a separate 
budget for monitoring and evaluation, with separate budget line items 
for dedicated recipient monitoring and evaluation staff and independent 
third-party evaluation contracts.
    (2) Personnel at a recipient's headquarters offices and field 
offices with specialized expertise and experience in monitoring and 
evaluation may be used

[[Page 1156]]

by the recipient for dedicated monitoring and evaluation. Unless 
otherwise specified in the agreement or approved evaluation plan, all 
evaluations must be managed by the recipient's evaluation experts 
outside of the recipient's line management for the activities.
    (h) CCC may independently conduct or commission an evaluation of a 
single agreement or an evaluation that includes multiple agreements. A 
recipient must cooperate, and comply with any demands for information or 
materials made in connection, with any evaluation conducted or 
commissioned by CCC. Such evaluations may be conducted by CCC internally 
or by a CCC-hired external evaluation contractor.



Sec.1499.13  Reporting and record keeping requirements.

    (a) A recipient must comply with the performance and financial 
monitoring and reporting requirements in the agreement and 2 CFR 200.327 
through 200.329.
    (b) A recipient must submit financial reports to CCC, by the dates 
and for the reporting periods specified in the agreement. Such reports 
must provide an accurate accounting of sale proceeds, CCC-provided 
funds, interest, program income, and voluntary committed cost sharing or 
matching contributions.
    (c)(1) A recipient must submit performance reports to CCC, by the 
dates and for the reporting periods specified in the agreement. These 
reports must include the information required in 2 CFR 200.328(b)(2), 
including additional pertinent information regarding the recipient's 
progress, measured against established indicators, baselines, and 
targets, towards achieving the expected results specified in the 
agreement. This reporting must include, for each performance indicator, 
a comparison of actual accomplishments with the baseline and the targets 
established for the period. When actual accomplishments deviate 
significantly from targeted goals, the recipient must provide an 
explanation in the report.
    (2) A recipient must ensure the accuracy and reliability of the 
performance data submitted to CCC in performance reports. At any time 
during the period of performance of the agreement, CCC may review the 
recipient's performance data to determine whether it is accurate and 
reliable. The recipient must comply with all requests made by CCC or an 
entity designated by CCC in relation to such reviews.
    (d) Baseline, interim, and final evaluation reports are required for 
all agreements, unless otherwise specified in the agreement. The reports 
must be submitted in accordance with the timeline in the CCC-approved 
evaluation plan. Evaluation reports submitted to CCC may be made public 
in an effort to increase accountability and transparency and share 
lessons learned and best practices.
    (e) A recipient must, within 30 days after export of all or a 
portion of the donated commodities, submit evidence of such export to 
CCC, in the manner set forth in the agreement. The evidence may be 
submitted through an electronic media approved by CCC or by providing 
the carrier's on board bill of lading. The evidence of export must show 
the kind and quantity of commodities exported, the date of export, and 
the country where the commodities will be delivered. The date of export 
is the date that the ocean carrier carrying the donated commodities 
sails from the final U.S. load port.
    (f)(1) The recipient must submit reports to CCC, using a form 
prescribed by CCC, covering the receipt, handling, and disposition of 
the donated commodities. Such reports must be submitted to CCC, by the 
dates and for the reporting periods specified in the agreement, until 
all of the donated commodities have been distributed, sold or bartered, 
and such disposition has been reported to CCC.
    (2) If the agreement authorizes the sale or barter of donated 
commodities, the recipient must submit to CCC, using a form prescribed 
by CCC, reports covering the receipt and use of the sale proceeds when 
the donated commodities were sold, the goods and services derived from 
barter when the donated commodities were bartered, and program income. 
Such reports must be submitted to CCC, by the dates and for the 
reporting periods specified in the agreement, until all of the sale 
proceeds and program income have been

[[Page 1157]]

disbursed and reported to CCC. When reporting financial information, the 
recipient must include the amounts in U.S. dollars and the exchange rate 
if proceeds are held in local currency.
    (g) If requested by CCC, a recipient must provide to CCC additional 
information or reports relating to the agreement.
    (h) If a recipient requires an extension of a reporting deadline, it 
must ensure that CCC receives an extension request at least five 
business days prior to the reporting deadline. CCC may decline to 
consider a request for an extension that it receives after this time 
period. CCC will consider requests for reporting deadline extensions on 
a case by case basis and make a decision based on the merits of each 
request. CCC will consider factors such as unforeseen or extenuating 
circumstances and past performance history when evaluating requests for 
extensions.
    (i) The recipient must retain records and permit access to records 
in accordance with the requirements of 2 CFR 200.333 through 200.337. 
The date of submission of the final expenditure report, as referenced in 
2 CFR 200.333, will be the final date of submission of the reports 
required by paragraphs (f)(1) and (2) of this section, as prescribed by 
CCC. The recipient must retain copies of and make available to CCC all 
sales receipts, contracts, or other documents related to the sale or 
barter of donated commodities and any goods or services derived from 
such barter, as well as records of dispatch received from ocean 
carriers.



Sec.1499.14  Subrecipients.

    (a) A recipient may utilize the services of a subrecipient to 
implement activities under the agreement if this is provided for in the 
agreement. The subrecipient may receive donated commodities, sale 
proceeds, CCC-provided funds, program income, or other resources from 
the recipient for this purpose. The recipient must enter into a written 
subagreement with the subrecipient and comply with the applicable 
provisions of 2 CFR 200.331. The recipient must provide a copy of each 
subagreement to CCC, in the manner set forth in the agreement, prior to 
the transfer of any donated commodities, sale proceeds, CCC-provided 
funds, or program income to the subrecipient.
    (b) A recipient must include the following requirements in a 
subagreement:
    (1) The subrecipient is required to comply with the applicable 
provisions of this part and 2 CFR parts 200 and 400. The applicable 
provisions are those that relate specifically to subrecipients, as well 
as those relating to non-Federal entities that impose requirements that 
would be reasonable to pass through to a subrecipient because they 
directly concern the implementation by the subrecipient of one or more 
activities under the agreement. If there is a question about whether a 
particular provision is applicable, CCC will make the determination.
    (2) The subrecipient is prohibited from using sale proceeds, CCC-
provided funds, interest, or program income to acquire goods and 
services, either directly or indirectly through another party, in a 
manner that violates a U.S. Government economic sanction program, as 
specified in the agreement.
    (3) The subrecipient must pay to the recipient the value of any 
donated commodities, sale proceeds, CCC-provided funds, interest, or 
program income that are not used in accordance with the subagreement, or 
that are lost, damaged, or misused as a result of the subrecipient's 
failure to exercise reasonable care.
    (4) In accordance with Sec.1499.18 and 2 CFR 200.501(h), a 
description of the applicable compliance requirements and the 
subrecipient's compliance responsibility. Methods to ensure compliance 
may include pre-award audits, monitoring during the agreement, and post-
award audits.
    (c) A recipient must monitor the actions of a subrecipient as 
necessary to ensure that donated commodities, sale proceeds, CCC-
provided funds, and program income provided to the subrecipient are used 
for authorized purposes in compliance with applicable U.S. Federal laws 
and regulations and the subagreement and that performance indicator 
targets are achieved for both activities and results under the 
agreement.

[81 FR 62605, Sept. 12, 2016, as amended at 84 FR 45060, Aug. 28, 2019]

[[Page 1158]]



Sec.1499.15  Noncompliance with an agreement.

    If a recipient fails to comply with a Federal statute or regulation 
or the terms and conditions of the agreement, and CCC determines that 
the noncompliance cannot be remedied by imposing additional conditions, 
CCC may take one or more of the actions set forth in 2 CFR 200.338, 
including initiating a claim as a remedy. CCC may also initiate a claim 
against a recipient if the donated commodities are damaged or lost, or 
the sale proceeds, goods received through barter, CCC-provided funds, 
interest, or program income are misused or lost, due to an action or 
omission of the recipient.



Sec.1499.16  Suspension and termination of agreements.

    (a) An agreement or subagreement may be suspended or terminated in 
accordance with 2 CFR 200.338 or 200.339. CCC may suspend or terminate 
an agreement if it determines that:
    (1) One of the bases in 2 CFR 200.338 or 200.339 for termination or 
suspension by CCC has been satisfied;
    (2) The continuation of the assistance provided under the agreement 
is no longer necessary or desirable; or
    (3) Storage facilities are inadequate to prevent spoilage or waste, 
or distribution of the donated commodities will result in substantial 
disincentive to, or interference with, domestic production or marketing 
in the target country.
    (b) If an agreement is terminated, the recipient:
    (1) Is responsible for the security and integrity of any 
undistributed donated commodities and must dispose of such commodities 
only as agreed to by CCC;
    (2) Is responsible for any sale proceeds, CCC-provided funds, 
interest, or program income that have not been disbursed and must use or 
return them only as agreed to by CCC; and
    (3) Must comply with any closeout and post-closeout provisions 
specified in the agreement and 2 CFR 200.343 and 200.344.

[81 FR 62605, Sept. 12, 2016, as amended at 84 FR 45060, Aug. 28, 2019]



Sec.1499.17  Opportunities to object and appeals.

    (a) CCC will provide an opportunity to a recipient to object to, and 
provide information and documentation challenging, any action taken by 
CCC pursuant to Sec.1499.15. CCC will comply with any requirements for 
hearings, appeals, or other administrative proceedings to which the 
recipient is entitled under any other statute or regulation applicable 
to the action involved. For example, if the action taken by CCC pursuant 
to Sec.1499.15 is to initiate suspension or debarment proceedings as 
authorized under 2 CFR parts 180 and 417, then the requirements in 2 CFR 
parts 180 and 417 will apply instead of the requirements in this 
section. In the absence of other applicable statutory or regulatory 
requirements, the requirements set forth in this section will apply.
    (b) The recipient must submit its objection in writing, along with 
any documentation, to the official specified in the agreement within 30 
days after the date of CCC's written notification to the recipient of 
the CCC action being challenged. This official will endeavor to notify 
the recipient of his or her determination (the initial determination) 
within 60 days after the date that CCC received the recipient's written 
objection.
    (c) The recipient may appeal the initial determination to the 
Administrator, FAS. An appeal must be in writing and be submitted to the 
Office of the Administrator within 30 days after the date of the initial 
determination. The recipient may submit additional documentation with 
its appeal.
    (d) The Administrator will base the determination on appeal upon 
information contained in the administrative record and will endeavor to 
make a determination within 60 days after the date that CCC received the 
appeal. The determination of the Administrator will be the final 
determination of CCC. The recipient must exhaust all administrative 
remedies contained in this section before pursuing judicial review of a 
determination by the Administrator.

[81 FR 62605, Sept. 12, 2016, as amended at 84 FR 45060, Aug. 28, 2019]

[[Page 1159]]



Sec.1499.18  Audit requirements.

    (a) Subpart F, Audit Requirements, of 2 CFR part 200 applies to 
recipients and subrecipients under this part other than those that are 
for-profit entities, foreign public entities, or foreign organizations.
    (b) A recipient or subrecipient that is a for-profit entity or a 
foreign organization, and that expends, during its fiscal year, a total 
of at least the audit requirement threshold in 2 CFR 200.501 in Federal 
awards, is required to obtain an audit. Such a recipient or subrecipient 
has the following two options to satisfy this requirement:
    (1)(i) A financial audit of the agreement or subagreement, in 
accordance with the Government Auditing Standards issued by the United 
States Government Accountability Office (GAO), if the recipient or 
subrecipient expends Federal awards under only one CCC program during 
such fiscal year; or
    (ii) A financial audit of all Federal awards from CCC, in accordance 
with GAO's Government Auditing Standards, if the recipient or 
subrecipient expends Federal awards under multiple CCC programs during 
such fiscal year; or
    (2) An audit that meets the requirements contained in subpart F of 2 
CFR part 200.
    (c) A recipient or subrecipient that is a for-profit entity or a 
foreign organization, and that expends, during its fiscal year, a total 
that is less than the audit requirement threshold in 2 CFR 200.501 in 
Federal awards, is exempt from requirements under this section for an 
audit for that year, except as provided in paragraphs (d) and (f) of 
this section, but it must make records available for review by 
appropriate officials of Federal agencies.
    (d) CCC may require an annual financial audit of an agreement or 
subagreement when the audit requirement threshold in 2 CFR 200.501 is 
not met. In that case, CCC must provide funds under the agreement for 
this purpose, and the recipient or subrecipient, as applicable, must 
arrange for such audit and submit it to CCC.
    (e) When a recipient or subrecipient that is a for-profit entity or 
a foreign organization is required to obtain a financial audit under 
this section, it must provide a copy of the audit to CCC within 60 days 
after the end of its fiscal year.
    (f) CCC, the USDA Office of Inspector General, or GAO may conduct or 
arrange for additional audits of any recipients or subrecipients, 
including for-profit entities and foreign organizations. Recipients and 
subrecipients must promptly comply with all requests related to such 
audits. If CCC conducts or arranges for an additional audit, such as an 
audit with respect to a particular agreement, CCC will fund the full 
cost of such an audit, in accordance with 2 CFR 200.503(d).



Sec.1499.19  Paperwork Reduction Act.

    The information collection requirements contained in this regulation 
have been submitted for approval by OMB under the Paperwork Reduction 
Act of 1995, 44 U.S.C. Chapter 35, and have been assigned OMB control 
number 0551-0035. A person is not required to respond to a collection of 
information unless it displays a currently valid OMB control number.

[[Page 1161]]



   CHAPTER XV--FOREIGN AGRICULTURAL SERVICE, DEPARTMENT OF AGRICULTURE




  --------------------------------------------------------------------
Part                                                                Page
1500-1519       [Reserved]

1520            Availability of information to the public...        1163
1530            The Refined Sugar Re-Export Program, the 
                    Sugar Containing Products Re-Export 
                    Program, and the Polyhydric Alcohol 
                    Program.................................        1163
1540            International agricultural trade............        1170
1560            Procedures to monitor Canadian fresh fruit 
                    and vegetable imports...................        1175
1570            Export bonus programs.......................        1176
1580            Trade adjustment assistance for farmers.....        1177
1590            United States Department of Agriculture 
                    Local and Regional Food Aid Procurement 
                    Program.................................        1185
1599            McGovern-Dole International Food for 
                    Education and Child Nutrition Program...        1202

[[Page 1163]]

                       PARTS 1500	1519 [RESERVED]



PART 1520_AVAILABILITY OF INFORMATION TO THE PUBLIC--Table of Contents



Sec.
1520.1 General statement.
1520.2 Location and hours.
1520.3 Indexes/Record Systems.
1520.4 Agency FOIA Officer.
1520.5 Agency Appeal Official.
1520.6 Other information.

    Authority: 5 U.S.C. 552

    Source: 67 FR 45895, July 11, 2002, unless otherwise noted.



Sec.1520.1  General statement.

    This part is issued in accordance with the regulations of the 
Secretary of Agriculture 7 CFR, part 1--Administrative Regulations, 
Subpart A--Official Records, Sec.1.3, Agency Implementing Regulations, 
for the Freedom of Information Act (5 U.S.C. 552). The Secretary's 
Regulations, as implemented by the regulations in this part govern the 
availability of records of the Foreign Agricultural Service (FAS) to the 
public.



Sec.1520.2  Location and hours.

    Members of the public should contact the FAS FOIA Officer to arrange 
a place and time to review documents. Contact the U.S. Department of 
Agriculture, Foreign Agriculture Service, Public Affairs Division, 1400 
Independence Avenue SW., Washington, DC 20250-1004. The office will be 
open from 8:30 a.m. to 5 p.m. Monday through Friday, except national 
holidays, Tel.: 202-720-3448, Fax: 202-720-1727.



Sec.1520.3  Indexes/Record systems.

    5 U.S.C. 552(a)(2) required that each agency publish or otherwise 
make available a current index of all materials for public inspection 
and copying. The Foreign Agricultural Service maintains the following 
record systems. FAS regulations, manuals, and notices; attache reports; 
general publications; and statements of policy and procedures for 
various FAS programs. Copies of the FAS index may be obtained free of 
charge by contacting the office specified in Sec.1520.2.



Sec.1520.4  Agency FOIA Officer.

    Requests for records shall be made to the Freedom of Information 
Officer, Public Affairs Division, Foreign Agricultural Service, Ag Box 
1004, U.S. Department of Agriculture, 1400 Independence Avenue, SW., 
Washington, DC 20250-1004. Tel.: 202-720-3448, Fax: 202-720-1727.



Sec.1520.5  Agency Appeal Official.

    Any person whose request under Sec.1520.4 is denied shall have the 
right to appeal such a denial. For appeals, write to the following 
official and mark your letters ``FOIA Appeal'': Administrator, Foreign 
Agricultural Service, U.S. Department of Agriculture, 1400 Independence 
Avenue SW., Washington, DC 20250-1004, Attn: FOIA Appeal.



Sec.1520.6  Other information.

    Many documents are available to the public without having to file an 
FOIA request. These include press releases, speeches, congressional 
testimony, program regulations, and some letters and memoranda. Some of 
this information can be found on the FAS web site, www.fas.usda.gov. 
Also, the FAS annual FOIA report is available on the agency's web site 
at www.fas.usda.gov. Click on FOIA at the bottom of the page. To request 
a paper copy of the FAS FOAI annual report, write to: Foreign 
Agricultural Service, U.S. Department of Agriculture, 1400 Independence 
Ave. SW., Ag Box 1004, Washington, DC 20250-1004, Attn: Freedom on 
Information Officer.



PART 1530_THE REFINED SUGAR RE-EXPORT PROGRAM, THE SUGAR CONTAINING 
PRODUCTS RE-EXPORT PROGRAM, AND THE POLYHYDRIC ALCOHOL PROGRAM--
Table of Contents



Sec.
1530.100 General statement.
1530.101 Definitions.
1530.102 Nature of the license.
1530.103 License eligibility.
1530.104 Application for a license.
1530.105 Terms and conditions.
1530.106 License charges and credits.
1530.107 Bond or letter of credit requirements.
1530.108 Revocation or surrender of licenses.

[[Page 1164]]

1530.109 Reporting.
1530.110 Records, certification, and documentation.
1530.111 Enforcement and penalties.
1530.112 Administrative appeals.
1530.113 Waivers.
1530.114 Implementation.
1530.115 Paperwork Reduction Act assigned number.

    Authority: Additional U.S. note 6 to chapter 17 of the Harmonized 
Tariff Schedule of the United States (19 U.S.C. 1202); 19 U.S.C. 3314; 
Proc. 6641, 58 FR 66867, 3 CFR, 1994 Comp., p. 172; Proc. 6763, 60 FR 
1007, 3 CFR, 1995 Comp., p. 146.

    Source: 64 FR 7062, Feb. 12, 1999, unless otherwise noted.



Sec.1530.100  General statement.

    This part provides regulations for the Refined Sugar Re-Export 
Program, the Sugar Containing Products Re-Export Program, and the 
Polyhydric Alcohol Program. Under these provisions, refiners may enter 
raw sugar unrestricted by the quantitative limit established for the raw 
sugar tariff-rate quota or the requirements of certificates of quota 
eligibility provided for in 15 CFR part 2011, as long as licensees under 
the programs export an equivalent quantity of refined sugar, either as 
refined sugar or as an ingredient in sugar containing products, or use 
the refined sugar in the production of certain polyhydric alcohols.



Sec.1530.101  Definitions.

    Affiliated persons means two or more persons where one or more of 
said persons directly or indirectly controls or has the power to control 
the other(s), or, a third person controls or has the power to control 
the others. Indications of control include, but are not limited to: 
interlocking management or ownership, identity of interests among family 
members, shared facilities and equipment, and common use of employees.
    Agent means a person who represents the licensee in any program 
transaction. An agent shall not, at any time, own any of the product 
produced by the program licensee. Agents may include brokers, shippers, 
freight forwarders, expediters, and co-packers.
    Bond or letter of credit means an insurance agreement pledging 
surety for the entry of foreign sugar without the required re-export 
within the program guidelines.
    Certain polyhydric alcohols means any polyhydric alcohol, except 
polyhydric alcohol produced by distillation or polyhydric alcohol used 
as a substitute for sugar as a sweetener in human food.
    Co-packer means a person who adds value to a licensed manufacturer's 
product, or produces a product for export by a licensed manufacturer.
    Date of entry means the date raw sugar enters the U.S. Customs 
Territory.
    Date of export means the date refined sugar or sugar containing 
products are exported from the U.S. Customs Territory, or, if exported 
to a restricted foreign trade zone, the date shown on the U.S. Customs 
Service form designating the product as restricted for export.
    Date of transfer means the date that ownership of program sugar is 
conveyed from a refiner to a manufacturer or producer licensee.
    Day means calendar day. When the day for complying with an 
obligation under this part falls on a weekend or Federal holiday, the 
obligation may be completed on the next business day.
    Documentation agreement means a signed and notarized letter from a 
licensee specifying certain documentation that the licensee shall obtain 
and maintain on file before said licensee requests from USDA updating of 
a license balance.
    Enter or entry means importation into the U.S. Customs Territory, or 
withdrawal from warehouse for consumption, as those terms are used by 
the U.S. Customs Service.
    Export means the conveyance (shipment) of sugar or a sugar 
containing product from a licensee under this part to a country outside 
the U.S. Customs Territory, or to a restricted foreign trade zone.
    Licensing Authority means a person designated by the Director, 
Import Policies and Programs Division, Foreign Agricultural Service, 
USDA.
    Manufacturer means a person who produces or causes to be produced on 
their behalf a sugar containing product for export under the provisions 
of this part.

[[Page 1165]]

    Person means any individual, partnership, corporation, association, 
estate, trust, or any other business enterprise or legal entity.
    Program sugar means sugar that has been charged or credited to the 
license of a licensee in conformity with the provisions of this part.
    Program transaction means an appropriate entry, transfer, use, or 
export of program sugar.
    Refined sugar means any product that is produced by a refiner by 
refining raw cane sugar and that can be marketed as commercial, 
industrial or retail sugar.
    Refiner means any person in the U.S. Customs Territory that refines 
raw cane sugar through affination or defecation, clarification, and 
further purification by absorption or crystallization.
    Sugar containing product means any product, other than those 
products normally marketed by cane sugar refiners, that is produced from 
refined sugar or to which refined sugar has been added as an ingredient.
    Transfer means the transfer of legal title of program sugar from a 
licensed refiner to a licensed manufacturer of a sugar containing 
product or a licensed producer of certain polyhydric alcohols for the 
production of sugar containing products or the production of certain 
polyhydric alcohols.
    Unique number means a tracking number established by a licensee for 
a transaction (entry, transfer, export, or use). A unique number is 
established for a transaction to or from a specific country or licensee. 
The unique number is also assigned by the licensee to a file that 
contains all of the supporting documentation for the transaction for 
which it was established. The unique number is the means by which 
program transactions will be tracked.



Sec.1530.102  Nature of the license.

    (a) A person who wishes to participate in the Refined Sugar Re-
export Program, the Sugar Containing Products Re-export Program, or the 
Polyhydric Alcohol Program must first obtain a license from the USDA, 
through the Licensing Authority.
    (b) A license under the Refined Sugar Re-export Program permits a 
refiner to enter raw cane sugar under subheading 1701.11.20 of the HTS, 
and export an equivalent quantity of refined sugar onto the world market 
or transfer an equivalent quantity of refined sugar to licensees under 
the Sugar Containing Products Re-export Program or the Polyhydric 
Alcohol Program.
    (c) A license under the Sugar Containing Products Re-export Program 
or Polyhydric Alcohol Program permits licensees to receive transfers and 
export an equivalent quantity of sugar as an ingredient in sugar 
containing products, or use an equivalent quantity of sugar in the 
production of certain polyhydric alcohols.
    (d) All refining, manufacturing, and production shall be 
accomplished in the U.S. Customs Territory, and within time-frames and 
quantity limitations prescribed in this part. Program sugar and non-
program sugar are substitutable.
    (e) A licensee must establish a bond or a letter of credit in favor 
of the U.S. Department of Agriculture to charge program sugar in 
anticipation of the export or transfer of refined sugar, the export of 
sugar in sugar containing products, or the production of certain 
polyhydric alcohols.



Sec.1530.103  License eligibility.

    (a) A raw cane sugar refiner, a manufacturer of sugar containing 
products, or a producer of certain polyhydric alcohols, that owns and 
operates a facility within the U.S. Customs Territory, is eligible for a 
license to participate in the Refined Sugar Re-export Program, the Sugar 
Containing Products Re-export Program, or the Polyhydric Alcohol 
Program, respectively.
    (b) No person may apply for or hold more than one license, including 
a license held by an affiliated person.
    (c) Notwithstanding paragraph (b) of this section, a person who owns 
one or more wholly-owned subsidiary corporations manufacturing sugar 
containing products or producing certain polyhydric alcohols, which 
would otherwise qualify for an individual license, is eligible for a 
consolidated license to cover the program transactions and other program 
activities of both the parent corporation and the subsidiary

[[Page 1166]]

corporation(s). The program transactions and other program activities of 
the subsidiary corporation(s) covered by a consolidated license shall be 
treated as the activities of the corporation holding the consolidated 
license.
    (d) Notwithstanding paragraph (c) of this section, each wholly-owned 
subsidiary manufacturing sugar containing products or producing certain 
polyhydric alcohols may establish a license for program activities 
instead of the parent corporation establishing a consolidated license. 
The sum total of license limits for the parent corporation and its 
wholly-owned subsidiary corporation(s) shall not exceed the quantitative 
limits established in Sec.1530.105 of this part.



Sec.1530.104  Application for a license.

    (a) A person seeking a license shall apply in writing to the 
Licensing Authority and shall submit the following information:
    (1) The name and address of the applicant;
    (2) The address at which the applicant will maintain the records 
required under Sec.1530.110;
    (3) The address(es) of the applicant's processing plant(s), 
including any wholly-owned subsidiary(s) and plant(s) in the case of a 
consolidated license, and including those of any co-packer(s);
    (4) In the case of a refined sugar product, the polarity of the 
product and the formula proposed by the refiner for calculating the 
refined sugar in the product;
    (5) In the case of a sugar containing product, the percentage of 
refined sugar (100 degree polarity), on a dry weight basis, contained in 
such product(s);
    (6) In the case of polyhydric alcohol, the quantity of refined sugar 
used producing certain polyhydric alcohols; and
    (7) A certification explaining that the applicant is not affiliated 
with any other licensee, or explaining any affiliations, should they 
exist.
    (b) A documentation agreement must be concluded with the Licensing 
Authority.
    (c) If any of the information required by paragraph (a) of this 
section changes, the licensee shall promptly apply to the Licensing 
Authority to amend the application to include such changes.



Sec.1530.105  Terms and conditions.

    (a) A licensed refiner (refiner) shall, not later than 90 days after 
entering a quantity of raw cane sugar under subheading 1701.11.20 of the 
HTS, export or transfer an equivalent quantity of refined sugar if the 
entry results in a positive license balance.
    (b) A licensed sugar containing products manufacturer (manufacturer) 
or a licensed polyhydric alcohol producer (producer) shall, not later 
than 18 months from the date of transfer of a quantity of refined sugar 
from a refiner, export an equivalent quantity of refined sugar as an 
ingredient in a sugar containing product if the transfer results in a 
positive license balance, or use an equivalent quantity of refined sugar 
in the production of certain polyhydric alcohols if the transfer results 
in a positive license balance, respectively.
    (c) Notwithstanding paragraphs (a) and (b) of this section, 
licensees may receive credit for the exportation or transfer of refined 
sugar, the exportation of a sugar containing product, or the production 
of certain polyhydric alcohols prior to the corresponding date of entry 
of raw cane sugor the date of transfer of refined sugar.
    (d) Licensees are encouraged to submit monthly program transaction 
reports, but shall report no later than 90 days from the date of entry, 
transfer, export, or use.
    (e) A refiner may enter raw sugar, or a manufacturer or producer may 
receive a transfer of refined sugar, in anticipation of the transfer or 
export of refined sugar (refiner), the export of sugar in sugar 
containing products (manufacturer) or the production of a polyhydric 
alcohol (producer) not to exceed the value of a bond or letter of 
credit, which must be established pursuant to Sec.1530.107 of this 
part. The value of a bond or letter of credit shall not exceed the 
license limits established in this section.
    (f) A refiner shall not exceed a license balance of 50,000 metric 
tons, raw value for the sum of all charges and credits.

[[Page 1167]]

    (g) A refiner may enter raw sugar from Mexico and re-export, within 
30 days of entry, refined sugar to Mexico without a charge against the 
refiner's license balance. If the refined sugar is not re-exported to 
Mexico within 30 days of entry, the license shall be charged the 
quantity that has not been re-exported.
    (h) A manufacturer or a producer shall not exceed a license balance 
of 10,000 short tons, refined value for the sum of all charges and 
credits.
    (i) A manufacturer's or a producer's consolidated license balance, 
or the sum of a parent company and wholly-owned subsidiary license 
balances if held separately, shall not exceed a license balance of 
25,000 short tons, refined value for the sum of all charges and credits.
    (j) For the purposes of the programs governed by this part, sugar is 
fully substitutable. The refined sugar transferred, exported, or used 
does not need to be the same sugar produced by refining raw sugar 
entered under subheading 1701.11.20 of the HTS.
    (k) A licensee may use an agent to carry out the requirements of 
participation in the program. The licensee must retain ownership of and 
responsibility for the product until exported from the U.S. Customs 
Territory, to a restricted foreign trade zone, or used in the production 
of certain polyhydric alcohols, and must establish and maintain 
sufficient documentation, as agreed in the documentation agreement 
pursuant to Sec.1530.110, to substantiate export of the product or the 
production of certain polyhydric alcohols.
    (l) A license may be assigned only with the written permission of 
the Licensing Authority and subject to such terms and conditions as the 
Licensing Authority may impose.
    (m) The Licensing Authority may impose such conditions, limitations 
or restrictions in connection with the use of a license at such time and 
in such manner as the Licensing Authority, at his or her discretion, 
determines to be necessary or appropriate to achieve the purposes of the 
relevant program.



Sec.1530.106  License charges and credits.

    (a) A license shall be charged or credited for the quantity of sugar 
entered, transferred, exported, or used, adjusted to a dry weight basis. 
Refiner quantities shall be adjusted to raw value, using the formulas 
set forth in paragraphs (a) (1), (2), and (3) of this section. 
Manufacturer and producer quantities shall be adjusted to 100 degrees 
polarity on a dry weight basis.
    (1) To adjust the raw value for sugar with a polarization of less 
than 92 degrees, divide the total sugar content by 0.972 (polarization x 
outturn weight/.972).
    (2) To adjust the raw value for sugar with polarization of 92 
degrees or above, multiply the polarization times 0.0175, subtract 0.68, 
and multiply the difference by the outturn weight (((polarization x 
0.0175)-0.68) x outturn weight).
    (3) To determine the quantity of refined sugar that must be 
transferred or exported to equal a corresponding quantity of entered raw 
sugar charged to a license, divide the quantity of entered raw sugar by 
1.07 (raw quantity/1.07).
    (b) [Reserved]



Sec.1530.107  Bond or letter of credit requirements.

    (a) The licensee may charge program sugar in anticipation of the 
transfer or export of refined sugar, the export of sugar in sugar 
containing products, or the production of certain polyhydric alcohols, 
if the licensee establishes a performance bond or a letter of credit 
with the U.S. Department of Agriculture, which meets the criteria set 
forth in this section.
    (b) The bond or letter of credit may cover entries made either 
during the period of time specified in the bond (a term bond) or for a 
specified entry (a single entry bond).
    (c) Only the licensee who will refine the sugar, manufacture the 
sugar containing product, or produce certain polyhydric alcohols may be 
the principal on the bond or letter of credit covering such sugar to be 
re-exported or used in the production of certain polyhydric alcohols. 
The surety or sureties shall be among those listed by the Secretary of 
the Treasury as acceptable on Federal bonds.
    (d) The obligation under the bond or letter of credit shall be made 
effective

[[Page 1168]]

no later than the date of entry of the sugar for refiners or the date of 
transfer of the corresponding sugar for manufacture into a sugar 
containing product or certain polyhydric alcohols.
    (e) The amount of the bond or letter of credit shall be equal to 20 
cents per pound of sugar to be entered under the license.
    (f) If a licensee fails to qualify for credit to a license within 
the specified time period of the date of export or use of corresponding 
sugar in an amount sufficient to offset the charge to the license for 
that corresponding sugar, payment shall be made to the U.S. Treasury. 
The payment shall be equal to the difference between the Number 11 
contract price and the Number 14 contract price (New York Coffee, Sugar 
and Cocoa Exchange) in effect on the last market day before the date of 
entry of the sugar or the last market day before the end of the period 
during which export or use was required, whichever difference is 
greater. The difference shall be multiplied by the quantity of refined 
sugar, converted to raw value, that should have been exported in 
compliance with this part. If there was not a Number 11, or a Number 14 
contract price for the relevant market day, the Licensing Authority may 
estimate such price as he or she deems appropriate.



Sec.1530.108  Revocation or surrender of licenses.

    (a) A license may be revoked upon written notice by the Licensing 
Authority.
    (b) A licensee may surrender a license when the sum of all credits 
is equal to or greater than the sum of all charges.



Sec.1530.109  Reporting.

    (a) A licensee may submit as often as monthly for charges and 
credits against a license balance, but must submit at least a quarterly 
report to the Licensing Authority not later than 90 days after the 
earliest transaction in the report for which credits or charges are 
being submitted. The licensee need not report when there have not been 
transactions during the reporting period.
    (b) Reports may be submitted by e-mail, U.S. mail, private courier, 
or in person, but must be in an integrated database format acceptable to 
the Licensing Authority. A copy of this format may be obtained from the 
Licensing Authority. Applicants unable to submit a report in the 
specified electronic format may seek a temporary waiver to permit them 
to submit the report on paper.
    (c) The reports must include the following for all program 
transactions:
    (1) A unique number associated with the transaction;
    (2) The date of the entry, transfer (only a refiner shall report 
transfers to the Licensing Authority), export, or use;
    (3) The quantity of program sugar entered, transferred, exported as 
refined sugar, or used in the production of certain polyhydric alcohols;
    (4) The licensee's license number, or if a transfer is being 
reported, the licensee's license number as well as the transfer 
recipient's license number;
    (5) The country of origin (entry of raw sugar) or final destination 
(refined exports), using the exact country code designated in the HTS; 
and
    (6) The initial and final polarization, and final weight (when 
available) for entries of raw sugar.
    (d) Licensees have an affirmative and continuing duty to maintain 
the accuracy of the information contained in previously submitted 
reports.
    (1) The licensee shall immediately notify the Licensing Authority 
and promptly request that previously claimed credits be charged back 
upon discovery that previously claimed exports of refined sugar, refined 
sugar in sugar containing products, or refined sugar used in the 
production of polyhydric alcohol were re-entered into the U.S. Customs 
Territory without substantial transformation, not used in the production 
of certain polyhydric alcohols, made under a false underlying proof of 
export, or made but previously submitted exports do not otherwise 
satisfy the requirements of regulations or the documentation agreement.
    (2) Charge backs shall be as of the date of the erroneously claimed 
credit.

[[Page 1169]]



Sec.1530.110  Records, certification, and documentation.

    (a) A licensee shall establish a documentation agreement with the 
Licensing Authority before submitting for credit against a license. The 
licensee shall propose to the Licensing Authority a list of documents to 
substantiate entries, transfers, exports, or use as appropriate. The 
Licensing Authority shall consider the licensee's proposal to assure 
that it provides that a program transaction is fully substantiated, and 
shall then respond in writing to the licensee in a timely fashion 
outlining any deficiencies. Once agreed, the licensee shall submit a 
notarized letter specifying the documents to be maintained on file and 
certifying that the charges and credits made pursuant to Sec.1530.106 
will be kept on file, identifiable by a unique number, and available for 
inspection pursuant to Sec.1530.110.
    (b) For all transactions, the documentation shall:
    (1) Substantiate the information required in Sec.1530.109 (c), and 
the completion of the reported transaction;
    (2) Establish the buyer and seller specifications for a transaction;
    (3) Include all U.S. Customs forms submitted in the entry or export 
process;
    (4) Provide the correct telephone numbers and addresses of any 
agents, consignees, foreign purchasers, and non-vessel operating common 
carriers used in completing the transaction;
    (5) Indicate the port of entry or export for the program 
transaction;
    (6) Provide the percentage of sugar in a sugar containing product or 
certain polyhydric alcohols; and
    (7) Provide the name of export carrier, vessel name, and container 
number.
    (c) The licensee shall maintain the documentation established in the 
documentation agreement for 5 years from the date of such program 
transaction.
    (d) Upon request, the licensee shall make the records, outlined by 
the documentation agreement and identified (associated) by the unique 
number assigned by the licensee to the program transaction as reported 
to the Licensing Authority for posting against a license balance, 
available for inspection and copying by the Licensing Authority, the 
Compliance Review Staff of the Foreign Agricultural Service, and/or the 
Office of the Inspector General, USDA, the U.S. Department of Justice, 
or any U.S. Government regulatory or investigative office.



Sec.1530.111  Enforcement and penalties.

    (a) The Licensing Authority may revoke credits granted on a license 
if the credits granted do not meet the requirements set forth in the 
regulations of this part, or if the licensee does not voluntarily charge 
back credits erroneously claimed in accordance with these regulations. 
The Licensing Authority may also recommend revocation of a license, if 
the licensee has been in violation of Sec.1530.109 (c) of this part.
    (b) The Administrator of the Foreign Agricultural Service, USDA, may 
suspend or revoke a license upon recommendation of the Licensing 
Authority. Suspension of a license will be governed by 2 CFR part 417, 
subpart G, and debarment will be governed by 2 CFR part 417, subpart H.

[64 FR 7062, Feb. 12, 1999, as amended at 85 FR 31938, May 28, 2020]



Sec.1530.112  Administrative appeals.

    (a) The licensee may appeal the Licensing Authority's determination 
by filing a written notice of appeal, signed by the licensee or the 
licensee's agent, with the Director, Import Policies and Programs 
Division, Foreign Agricultural Service (Director), or his or her 
designee. The decision on such an appeal shall be made by the Director, 
and will be governed by Sec.3017.515 of this title. The appeal must be 
filed not later than 30 days after the date of the Licensing Authority's 
determination, and shall contain the licensee's written argument.
    (b) The licensee may request an informal hearing. The Director shall 
arrange a place and time for the hearing, except that it shall be held 
within 30 days of the filing date of the notice of appeal if the 
licensee so requests.
    (c) The licensee may be represented by counsel, and shall have full 
opportunity to present any relevant evidence, documentary or 
testimonial. The Director may permit other individuals to present 
evidence at the hearing

[[Page 1170]]

and the licensee shall have an opportunity to question those witnesses.
    (d) The licensee may request a verbatim transcript of the hearing, 
and shall be responsible for arranging for a professional reporter and 
shall pay all attendant expenses.
    (e) The Director shall make the determination on appeal, and may 
affirm, reverse, modify or remand the Licensing Authority's 
determination. The Director shall notify the licensee in writing of the 
determination on appeal and of the basis thereof. The determination on 
appeal exhausts the licensee's administrative remedies.



Sec.1530.113  Waivers.

    Upon written application of the licensee or at the discretion of the 
Licensing Authority, and for good cause, the Licensing Authority may 
extend the period for transfer, export, or production, and/or may 
temporarily increase a maximum license limit, may extend the period for 
submitting regularly scheduled reports, or may temporarily waive or 
modify any other requirement imposed by this part if the Licensing 
Authority determines that such a waiver will not undermine the purpose 
of the relevant program or adversely affect domestic sugar policy 
objectives. The Licensing Authority may specify additional requirements 
or procedures in place of the requirements or procedures waived or 
modified.



Sec.1530.114  Implementation.

    Current program participants may qualify under this rule upon 
concluding a documentation agreement with the Licensing Authority, but 
must conclude a documentation agreement within 24 months of the 
effective date of this rule. Participant license balances, as of the 
effective date of this rule, shall continue under this rule.



Sec.1530.115  Paperwork Reduction Act assigned number.

    Licensees are not required to respond to requests for information 
unless the form for collecting information displays a currently valid 
Office of Management and Budget (OMB) control number. OMB has approved 
the information collection requirements contained in this part in 
accordance with 44 U.S.C. chapter 35. OMB number 0551-0015 has been 
assigned and will expire November 30, 1999.



PART 1540_INTERNATIONAL AGRICULTURAL TRADE--Table of Contents



Subpart A_Emergency Relief From Duty-Free Imports of Perishable Products

Sec.
1540.1 Applicability of subpart.
1540.2 Definitions.
1540.3 Who may file request.
1540.4 Contents of request.
1540.5 Submission of recommendations.
1540.6 Information.
1540.7 Paperwork Reduction Act assigned number.

  Subpart B_Emergency Relief From Certain Perishable Products Imported 
                               From Israel

1540.20 Applicability of subpart.
1540.21 Definition.
1540.22 Who may file request.
1540.23 Contents of request.
1540.24 Determination of the Secretary of Agriculture.
1540.25 Information.
1540.26 Paperwork Reduction Act assigned number.

Subpart C_Emergency Relief From Duty-Free Imports of Perishable Products 
                      From Certain Andean Countries

1540.40 Applicability of subpart.
1540.41 Definitions.
1540.42 Who may file request.
1540.43 Contents of request.
1540.44 Submission of recommendations by the Secretary of Agriculture.
1540.45 Information.

    Authority: Sec. 213(f), Pub. L. 98-67, 97 Stat. 391 (19 U.S.C. 
2703(f)); 5 U.S.C. 301; sec. 404, Pub. L. 98-573, 98 Stat. 3016, as 
amended (19 U.S.C. 2112 note); 5 U.S.C. 301.



Subpart A_Emergency Relief From Duty-Free Imports of Perishable Products

    Authority: Sec. 213(f), Pub. L. 98-67, 97 Stat. 391 (19 U.S.C. 
2703(f); 5 U.S.C. 301.

    Source: 49 FR 22265, May 29, 1984, unless otherwise noted.

    Cross Reference: For United States International Trade Commission 
regulations on investigations of import injury and the rules pertaining 
to the filing of a section 201 petition, see 19 CFR part 206.

[[Page 1171]]



Sec.1540.1  Applicability of subpart.

    This subpart applies to requests for emergency relief from duty-free 
imports of perishable products filed with the Department of Agriculture 
under section 213(f) of the Caribbean Basin Economic Recovery Act of 
1983, title II of Pub. L. 98-67, 97 Stat. 384 (19 U.S.C. 2701 et seq.) 
(the Act).



Sec.1540.2  Definitions.

    (a) Perishable product means:
    (1) Live plants provided for in subpart A of part 6 of schedule 1 of 
the Tariff Schedules of the United States (TSUS);
    (2) Fresh or chilled vegetables provided for in items 135.10 through 
138.42 of the TSUS;
    (3) Fresh mushrooms provided for in item 144.10 of the TSUS;
    (4) Fresh fruit provided for in items 146.10, 146.20, 146.30, 146.50 
through 146.62, 146.90, 146.91, 147.03 through 147.33, 147.50 through 
149.21 and 149.50 of the TSUS;
    (5) Fresh cut flowers provided for in items 192.17, 192.18, and 
192.21 of the TSUS; and
    (6) Concentrated citrus fruit juice provided for in items 165.25 and 
165.35 of the TSUS.
    (b) Beneficiary country means any country listed in section 212(b) 
of the Act with respect to which there is in effect a proclamation by 
the President designating such country as a beneficiary country for 
purposes of the Act.



Sec.1540.3  Who may file request.

    A request under this subpart may be filed by an entity, including a 
firm, or group or workers, trade association, or certified or recognized 
union which is representative of a domestic industry producing a 
perishable product like or directly competitive with a perishable 
product that such entity claims is being imported into the United States 
duty-free under the provisions of the Act from a beneficiary 
country(ies) in such increased quantities as to be a substantial cause 
of serious injury, or the threat thereof, to such domestic industry.



Sec.1540.4  Contents of request.

    A request for emergency action under section 213(f) of the Act shall 
be submitted in duplicate to the Administrator, Foreign Agricultural 
Service, United States Department of Agriculture, Washington, DC 20250. 
Such requests shall be supported by appropriate information and data and 
shall include to the extent possible:
    (a) A description of the imported perishable product(s) allegedly 
causing, or threatening to cause, serious injury;
    (b) The beneficiary country(ies) of origin of the allegedly 
injurious imports;
    (c) Data showing that the perishable product allegedly causing, or 
threatening to cause, serious injury is being imported from the 
designated beneficiary country(ies) in increased quantities as compared 
with imports of the same product from the designated beneficiary 
country(ies) during a previous representative period of time (including 
a statement of why the period used should be considered to be 
representative);
    (d) Evidence of serious injury or threat thereof to the domestic 
industry substantially caused by the increased quantities of imports of 
the product from the beneficiary country(ies); and
    (e) A statement indicating why emergency action would be warranted 
under section 213(f) of the Act (including all available evidence that 
the injury caused by the increased quantities of imports from the 
beneficiary country(ies) would be relieved by the suspension of the 
duty-free treatment accorded under the Act).

A copy of the petition and the supporting evidence filed with the United 
States International Trade Commission under section 201 of the Trade Act 
of 1974, as amended, must be provided with the request for emergency 
action.



Sec.1540.5  Submission of recommendations.

    If the Secretary has reason to believe that the perishable product 
which is the subject of a petition under Sec.1540.4 of this subpart is 
being imported into the United States in such increased quantities as to 
be a substantial cause of serious injury, or the threat thereof, to the 
domestic industry producing a perishable product like or directly

[[Page 1172]]

competitive with the imported perishable product and that emergency 
action is warranted, the Secretary, within 14 days after the filing of 
the petition under Sec.1540.4 of this subpart, shall recommend to the 
President that the President take emergency action. If the Secretary 
determines not to recommend the imposition of emergency action, the 
Secretary shall publish a notice of such determination and will so 
advise the petitioner within 14 days after the filing of the petition.



Sec.1540.6  Information.

    Persons desiring information from the Department of Agriculture 
regarding the Department's implementation of section 213(f) of the Act 
should address such inquiries to the Administrator, Foreign Agricultural 
Service, United States Department of Agriculture, Washington, DC 20250.



Sec.1540.7  Paperwork Reduction Act assigned number.

    The Office of Management and Budget has approved the information 
collection requirements contained in these regulations in accordance 
with 44 U.S.C. chapter 25, and OMB number 0551-0018 has been assigned.



  Subpart B_Emergency Relief From Certain Perishable Products Imported 
                               From Israel

    Authority: Sec. 404, Pub. L. 98-573, 98 Stat. 3016, as amended (19 
U.S.C. 2112 note); 5 U.S.C. 301.

    Source: 50 FR 43692, Oct. 29, 1985, unless otherwise noted.

    Cross Reference: For U.S. International Trade Commission regulations 
concerning investigations of import injury and the rules pertaining to 
the filing of a section 201 petition, see 19 CFR part 206.



Sec.1540.20  Applicability of subpart.

    This subpart applies to requests filed with the Department of 
Agriculture under section 404 of the Trade and Tariff Act of 1984, Pub. 
L. 98-573, for emergency relief from imports of certain perishable 
products from Israel entering the United States at a reduced rate of 
duty or duty-free pursuant to a trade agreement between the United 
States and Israel entered into under section 102(b)(1) of the Trade Act 
of 1974, as amended.



Sec.1540.21  Definition.

    Perishable product means:
    (a) Live plants provided for in subpart A of part 6 of schedule 1 of 
the 1985 Tariff Schedules of the United States (the ``TSUS'');
    (b) Fresh or chilled vegetables provided for in items 135.03 through 
138.46 of the TSUS;
    (c) Fresh mushrooms provided for in item 144.10 of the TSUS;
    (d) Fresh fruits provided for in items 146.10, 146.20, 146.30, 
146.50 through 146.62, 146.90, 146.91, 147.03 through 147.44, 147.50 
through 149.21 and 149.50 of the TSUS;
    (e) Fresh cut flowers provided for in items 192.17, 192.18, and 
192.21 of the TSUS; and
    (f) Concentrated citrus fruit juice provided for in items 165.25, 
165.29 and 165.36 of the TSUS.



Sec.1540.22  Who may file request.

    A request under this subpart may be filed by an entity, including a 
firm, or group or workers, trade association, or certified or recognized 
union which is representative of a domestic industry producing a 
perishable product like or directly competitive with a perishable 
product that such entity claims is being imported from Israel into the 
United States at a reduced duty or duty-free under the provisions of a 
trade agreement between the United States and Israel entered into under 
section 102(b)(1) of the Trade Act of 1974, as amended, in such 
increased quantities as to be a substantial cause of serious injury, or 
the threat thereof, to such domestic industry.



Sec.1540.23  Contents of request.

    A request for emergency action under section 404 of the Trade and 
Tariff Act of 1984 shall be submitted in duplicate to the Administrator, 
Foreign Agricultural Service, United States Department of Agriculture, 
Washington, DC 20250. Such request shall be supported by appropriate 
information and data and shall include to the extent possible:

[[Page 1173]]

    (a) A description of the imported perishable product(s) allegedly 
causing, or threatening to cause, serious injury;
    (b) Data showing that the perishable product allegedly causing, or 
threatening to cause, serious injury is being imported from Israel in 
increased quantities as compared with imports of the same product from 
Israel during a previous representative period of time (including a 
statement of why the period selected by the petitioner should be 
considered to be representative);
    (c) Evidence of serious injury or threat thereof to the domestic 
industry substantially caused by the increased quantities of imports of 
the product from Israel; and
    (d) A statement indicating why emergency action would be warranted 
under section 404 (including all available evidence that the injury 
caused by the increased quantities of imports from Israel would be 
relieved by the withdrawal of the reduction of the duty or elimination 
of the duty-free treatment provided to the product under the trade 
agreement). A copy of the petition and the supporting evidence filed 
with the United States International Trade Commission under section 201 
of the Trade Act of 1974, as amended, must be provided with the request 
for emergency action.



Sec.1540.24  Determination of the Secretary of Agriculture.

    If the Secretary of Agriculture has reason to believe that the 
perishable product(s) which is the subject of a petition under this 
subpart is being imported into the United States in such increased 
quantities as to be a substantial cause of serious injury, or the threat 
thereof, to the domestic industry producing a perishable product like or 
directly competitive with the imported perishable product and that 
emergency action is warranted, the Secretary, within 14 days after the 
filing of the petition under Sec.1540.23 shall recommend to the 
President that the President take emergency action. If the Secretary 
determines not to recommend the imposition of emergency action, the 
Secretary, within 14 days after the filing of the petition, will publish 
in the Federal Register a notice of such determination and will so 
advise the petitioner.



Sec.1540.25  Information.

    Persons desiring information from the Department of Agriculture 
regarding the Department's implementation of section 404 of the Trade 
and Tariff Act of 1984 should address such inquiries to the 
Administrator, Foreign Agricultural Service, United States Department of 
Agriculture, Washington, DC 20250.



Sec.1540.26  Paperwork Reduction Act assigned number.

    The Office of Management and Budget has approved the information 
collection requirements contained in these regulations in accordance 
with 44 U.S.C. chapter 25, and OMB number 0551-0023 has been assigned.



Subpart C_Emergency Relief From Duty-Free Imports of Perishable Products 
                      From Certain Andean Countries

    Authority: Title II, sec. 204(e), Pub. L. 102-182, 105 Stat. 1239 
(19 U.S.C. 3203(e)); 5 U.S.C. 301.

    Source: 58 FR 16104, Mar. 25, 1993, unless otherwise noted.

    Cross Reference: For United States International Trade Commission 
regulations on investigations of import injury and the rules pertaining 
to the filing of a section 201 petition, see 19 CFR part 206.



Sec.1540.40  Applicability of subpart.

    This subpart applies to requests for emergency relief from duty-free 
imports of perishable products filed with the Department of Agriculture 
under section 204(e) of the Andean Trade Preference Act, title II of 
Public Law 102-182, 105 Stat. 1236 (19 U.S.C. 3201 et seq.) (the 
``Act'').



Sec.1540.41  Definitions.

    (a) Perishable product means:
    (1) Live plants and fresh cut flowers provided for in chapter 6 of 
the Harmonized Tariff Schedule (HTS);
    (2) Fresh or chilled vegetables provided in heading 0701 through 
0709 (except subheading 0709.52.00) and heading 0714 of the HTS;

[[Page 1174]]

    (3) Fresh fruit provided for in subheadings 0804.20 through 0810.90 
(except citrons of subheadings 0805.90.00, tamarinds and kiwi fruit of 
subheading 0810.90.20, and cashew apples, mameyes colorados, sapodillas, 
soursops and sweetsops of subheading 0810.90.40) of the HTS; or
    (4) Concentrated citrus fruit juice provided for in subheadings 
2009.11.00, 2009.19.40, 2009.20.40, 2009.30.20, and 2009.30.60 of the 
HTS.
    (b) Beneficiary country means any country listed in subsection 
203(b)(1) of the Act with respect to which there is in effect a 
proclamation by the President designating such country as a beneficiary 
country for purposes of the Act.



Sec.1540.42  Who may file request.

    A request under this subpart may be filed by an entity, including a 
firm, or group of workers, trade association, or certified or recognized 
union which is representative of a domestic industry producing a 
perishable product like or directly competitive with a perishable 
product that such entity claims is being imported into the United States 
duty-free under the provisions of the Act from a beneficiary 
country(ies) in such increased quantities as to be a substantial cause 
of serious injury, or the threat thereof, to such domestic industry.



Sec.1540.43  Contents of request.

    (a) A request for emergency action under section 204(e) of the Act 
shall be submitted in duplicate to the Administrator, Foreign 
Agricultural Service, United States Department of Agriculture, 
Washington, DC 20250. Such request shall be supported by appropriate 
information and data and shall include to the extent possible:
    (1) A description of the imported perishable product(s) allegedly 
causing, or threatening to cause, serious injury;
    (2) The beneficiary country(ies) of origin of the allegedly 
injurious imports;
    (3) Data showing that the perishable product allegedly causing, or 
threatening to cause, serious injury is being imported from the 
designated beneficiary country(ies) in increased quantities as compared 
with imports of the same product from the designated beneficiary 
country(ies) during a previous representative period of time (including 
a statement of why the period used should be considered to be 
representative);
    (4) Evidence of serious injury or threat thereof to the domestic 
industry substantially caused by the increased quantities of imports of 
the product from the beneficiary country(ies); and
    (5) A statement indicating why emergency action would be warranted 
under section 204(e) of the Act (including all available evidence that 
the injury caused by the increased quantities of imports from the 
beneficiary country(ies) would be relieved by the suspension of duty-
free treatment accorded under the Act).
    (b) A copy of the petition and the supporting evidence filed with 
the United States International Trade Commission under Section 201 of 
the Trade Act of 1974, as amended, must be provided with the request for 
emergency action.



Sec.1540.44  Submission of recommendations by the 
Secretary of Agriculture.

    If the Secretary has reason to believe that the perishable 
product(s) which is the subject of a petition under Sec.1504.43 of 
this subpart is being imported into the United States in such increased 
quantities as to be a substantial cause of serious injury, or the threat 
thereof, to the domestic industry producing a perishable product like or 
directly competitive with the imported perishable product and that 
emergency action is warranted, the Secretary, within 14 days after the 
filing of the petition under Sec.1540.43 of this subpart, shall 
recommend to the President that the President take emergency action. If 
the Secretary determines not to recommend the imposition of emergency 
action, the Secretary within 14 days after the filing of the petition 
shall publish a notice of such determination and so advise the 
petitioner.



Sec.1540.45  Information.

    Persons desiring information from the Department of Agriculture 
regarding the Department's implementation

[[Page 1175]]

of section 204(e) of the Act should address such inquiries to the 
Administrator, Foreign Agricultural Service, United States Department of 
Agriculture, Washington, DC 20250. Issued at Washington, DC this 19th 
day of March, 1993.



PART 1560_PROCEDURES TO MONITOR CANADIAN FRESH FRUIT AND VEGETABLE 
IMPORTS--Table of Contents



Sec.
1560.1 Scope.
1560.2 Definitions.
1560.3 Determination of fresh fruit or vegetable.
1560.4 Calculation of data to support imposition of temporary duty.
1560.5 Calculation of data to support removal of temporary duty.

    Authority: Secs. 105 and 301(a) of the United States-Canada Free-
Trade Agreement Implementation Act of 1988, Pub. L. 100-449 (102 Stat. 
1855 and 1865-67).

    Source: 54 FR 1327, Jan. 13, 1989, unless otherwise noted.



Sec.1560.1  Scope.

    This part outlines the procedures that will be used by the 
Administrator of the Foreign Agricultural Service to monitor and inform 
the Secretary of Agriculture of data regarding the importation of fresh 
fruits and vegetables from Canada.



Sec.1560.2  Definitions.

    The following definitions shall be applicable to this part:
    (a) Administrator means the Administrator of the Foreign 
Agricultural Service, United States Department of Agriculture.
    (b) Average Monthly Import Price means the average unit value for 
all shipments of a particular Canadian fresh fruit or vegetable imported 
into the United States from Canada during a particular calendar month 
based on official data from the U.S. Customs Service and/or the Bureau 
of Census, and shall be calculated by dividing the total value of the 
fresh fruit or vegetable imported in that month by the total quantity of 
the fresh fruit or vegetable imported in that month.
    (c) Average Planted Acreage means the average of the annual planted 
acreage in the U.S. for a particular fresh fruit or vegetable for the 
preceding five years excluding the years with the highest and lowest 
acreages based on available data from agencies within the United States 
Department of Agriculture and data from appropriate state agencies, as 
required.
    (d) Canadian fresh fruit or vegetable means a fresh fruit or 
vegetable that is a product of Canada as determined in accordance with 
the rules of origin set forth in section 202 of the U.S.-Canada Free-
Trade Agreement Implementation Act of 1988.
    (e) Corresponding Five-Year Average Monthly Import Price for a 
particular day means the average import price of a Canadian fresh fruit 
or vegetable imported into the United States from Canada, for the 
calendar month in which that day occurs, for that month in each of the 
preceding 5 years, excluding the years with the highest and lowest 
monthly averages.
    (f) F.O.B. Point of Shipment Price in Canada means the daily average 
of prices of a particular Canadian fresh fruit or vegetable imported 
into the United States from Canada that are reported to the U.S. Customs 
Service at the U.S. border as part of the official documentation 
accompanying such shipments less freight costs where applicable.
    (g) Fresh Fruit or Vegetable means a fruit or vegetable determined 
in accordance with Sec.1560.3 within one of the HS headings.
    (h) HS heading means any of the following tariff headings of the 
Harmonized System (HS) as modified by the description for each heading:

------------------------------------------------------------------------
         HS tariff heading                       Description
------------------------------------------------------------------------
07.01.............................  Potatoes, fresh or chilled.
07.02.............................  Tomatoes, fresh or chilled.
07.03.............................  Onions, shallots, garlic, leeks, and
                                     other alliaceous vegetables, fresh
                                     or chilled.
07.04.............................  Cabbages, cauliflowers, kohlrabi,
                                     kale and similar edible brassicas,
                                     fresh or chilled.
07.05.............................  Lettuce (lactica sativa) and chicory
                                     (cichorium spp.), fresh or chilled.
07.06.............................  Carrots, salad beets or beetroot,
                                     salsify, celeriac, radishes and
                                     similar edible roots (excluding
                                     turnips), fresh or chilled.
07.07.............................  Cucumbers and gherkins, fresh or
                                     chilled.
07.08.............................  Leguminous vegetables, shelled or
                                     unshelled, fresh or chilled.
07.09.............................  Other vegetables (excluding
                                     truffles), fresh or chilled.
08.06.10..........................  Grapes, fresh.

[[Page 1176]]

 
08.08.20..........................  Pears and quinces, fresh.
08.09.............................  Apricots, cherries, peaches
                                     (including nectarines), plums and
                                     sloes, fresh.
08.10.............................  Other fruit (excluding cranberries
                                     and blueberries), fresh.
------------------------------------------------------------------------

    (i) Import Price means the unit value based on data available from 
the U.S. Customs Service of a particular Canadian fresh fruit or 
vegetable imported into the U.S. from Canada taking into account any 
other relevant data, as necessary.
    (j) Secretary means the Secretary of Agriculture.
    (k) United States means the United States Customs Territory which 
includes the fifty states, the District of Columbia and Puerto Rico.
    (l) Wine Grape means grapes of labrusca, vinifera or hybrid vinifera 
varieties used for making wine.
    (m) Working Day means a day which falls on a Monday through Friday, 
excluding holidays observed by the United States Government and days in 
which the U.S. Customs Service is not operating.



Sec.1560.3  Determination of fresh fruit or vegetable.

    The specific group of articles that will be monitored as a 
particular fresh fruit or vegetable will be determined based on the 
practicability of monitoring at the eight digit subheading level of the 
Harmonized Tariff Schedule of the United States. The determination of 
practicability will be made by the Administrator taking into account: 
(a) The availability of reliable volume and price data on imports from 
Canada and data on U.S. planted acreage, (b) market differentiation for 
the group of articles, and (c) such other factors as the Administrator 
determines to be appropriate.



Sec.1560.4  Calculation of data to support imposition of temporary
duty.

    The Administrator will inform the Secretary when the following 
conditions are met with respect to a particular fresh fruit or vegetable 
imported into the United States from Canada:
    (a) If for each of five consecutive working days the import price of 
the fresh fruit or vegetable is below ninety percent of the 
corresponding five-year average monthly import price for such fresh 
fruit or vegetable excluding the years with the highest and lowest 
corresponding monthly import price; and
    (b) The planted acreage in the United States for such fresh fruit or 
vegetable based on the most recent data available is no higher than the 
average planted acreage over the preceding five years excluding the 
years with the highest and lowest planted acreages. For the purposes of 
calculating any planted acreage increase attributed directly to a 
reduction in wine grape planted acreage existing on October 4, 1987 
shall be excluded.



Sec.1560.5  Calculation of data to support removal of temporary duty.

    During the time a temporary duty on a particular fresh fruit or 
vegetable is imposed pursuant to section 301(a) of the United States-
Canada Free-Trade Agreement Implementation Act of 1988, the 
Administrator will inform the Secretary if the F.O.B. point of shipment 
price in Canada of such fresh fruit or vegetable exceeds, for five 
consecutive working days, ninety percent of the corresponding five-year 
average monthly import price excluding the years with the highest and 
lowest average corresponding monthly import price, adjusted to an F.O.B. 
point of shipment price, if necessary, for that fresh fruit or 
vegetable.



PART 1570_EXPORT BONUS PROGRAMS--Table of Contents



   Subpart A_Sunflowerseed Oil Assistance Program and Cottonseed Oil 
                       Assistance Program Criteria

Sec.
1570.10 General statement.
1570.20 Criteria.

             Subpart B_SOAP and COAP Drawback Certification

1570.1100 Drawback certification.

    Source: 56 FR 42223, Aug. 27, 1991, unless otherwise noted.

[[Page 1177]]



   Subpart A_Sunflowerseed Oil Assistance Program and Cottonseed Oil 
                       Assistance Program Criteria

    Authority: 7 U.S.C. 5663.



Sec.1570.10  General statement.

    This subpart sets forth the criteria to be considered in evaluating 
and approving proposals for initiatives to facilitate export sales under 
the Sunflowerseed Oil Assistance Program (SOAP) and Cottonseed Oil 
Assistance Program (COAP) administered by the Foreign Agricultural 
Service (FAS). These criteria are interrelated and will be considered 
together in order to select eligible countries for SOAP and COAP 
initiatives which will best meet the programs' objective. The objective 
of the programs is to encourage the sale of additional quantities of 
sunflowerseed oil and cottonseed oil in world markets at competitive 
prices. Under the SOAP and the COAP, bonuses are made available by FAS 
to enable exporters to meet prevailing world prices for sunflowerseed 
oil and cottonseed oil in targeted destinations. In the operation of the 
SOAP and the COAP, FAS will make reasonable efforts to avoid the 
displacement of usual marketings of U.S. agricultural commodities.



Sec.1570.20  Criteria.

    The criteria considered by FAS in reviewing proposals for SOAP and 
COAP initiatives will include, but not be limited to, the following:
    (a) The expected contribution which initiatives will make toward 
realizing U.S. agricultural export goals and, in particular, in 
developing, expanding, or maintaining markets for U.S. sunflowerseed 
and/or cottonseed oil;
    (b) The subsidy requirements of proposed initiatives in relation to 
the sums made available to operate the programs in any given fiscal 
year; and
    (c) The likelihood that sales facilitated by initiatives would have 
the unintended effect of displacing normal commercial sales of 
sunflowerseed and/or cottonseed oil.



             Subpart B_SOAP and COAP Drawback Certification

    Authority: 7 U.S.C. 5676.



Sec.1570.1100  Drawback certification.

    An offer submitted by an exporter to FAS for an export bonus under 
the SOAP or the COAP must contain, in addition to any other information 
required by FAS, a certification stating the following: ``None of the 
eligible commodity (sunflowerseed oil and/or cottonseed oil) has been or 
will be used as the basis for a claim of a refund, as drawback, pursuant 
to section 313 of the Tariff Act of 1930 (19 U.S.C. 1313) of any duty, 
tax, or fee imposed under Federal law on an imported commodity or 
product.'' This certification must be signed by the exporter, if the 
exporter is an individual, or by a partner or officer of the exporter, 
if the exporter is a partnership or a corporation, respectively. FAS 
will reject any offer that does not contain the prescribed 
certification.



PART 1580_TRADE ADJUSTMENT ASSISTANCE FOR FARMERS--Table of Contents



Sec.
1580.101 General statement.
1580.102 Definitions.
1580.201 Petitions for trade adjustment assistance.
1580.202 Hearings, petition reviews, and amendments.
1580.203 Determination of eligibility and certification by the 
          Administrator (FAS).
1580.301 Application for trade adjustment assistance.
1580.302 Technical assistance and services.
1580.303 Adjustment assistance payments.
1580.401 Subsequent year petition recertification.
1580.501 Administration.
1580.502 Maintenance of records, audits, and compliance.
1580.503 Recovery of overpayments.
1580.504 Debarment, suspension, and penalties.
1580.505 Appeals.
1580.506 Judicial review.
1580.602 Paperwork Reduction Act assigned number.

    Authority: 19 U.S.C. 2401.

    Source: 75 FR 9089, Mar. 1, 2010, unless otherwise noted.

[[Page 1178]]



Sec.1580.101  General statement.

    This part provides regulations for the Trade Adjustment Assistance 
(TAA) for Farmers program as authorized by the Trade Act of 1974, 
amended by Subtitle C of Title I of the Trade Act of 2002 (Pub. L. 107-
210), and re-authorized and modified by the American Recovery and 
Reinvestment Act of 2009 (Pub. L. 111-5). The regulations establish 
procedures by which a group of producers of raw agricultural commodities 
or fishermen (jointly referred to as ``producers'') can petition for 
certification of eligibility and through which individual producers 
covered by a certified petition can apply for technical assistance and 
cash benefits for the development and implementation of approved 
business adjustment plans.



Sec.1580.102  Definitions.

    As used in the part, the following terms mean:
    Agricultural commodity means any commodity in its raw or natural 
state; found in chapters 1, 3, 4, 5, 6, 7, 8, 10, 12, 14, 23, 24, 41, 
51, and 52 of the Harmonized Tariff Schedule of the United States (HTS).
    Articles like or directly competitive generally means products 
falling under the same HTS number used to identify the agricultural 
commodity in the petition. A ``like'' product means substantially 
identical in inherent or intrinsic characteristics, and the term 
``directly competitive'' means articles that are substantially 
equivalent for commercial purposes (i.e., adapted to the same uses and 
essentially interchangeable therefore). For fishery products, 
competition could be either from farm-raised or wild-caught products.
    Authorized representative means an entity that represents a group of 
agricultural commodity producers or fishermen.
    Average price received by the producer means the average of the 3 
marketing year prices per unit received by the producer from the first 
level of sales for the commodity.
    Cash receipts mean the value of commodity marketings during the 
calendar year, irrespective of the year of production, as calculated by 
the Economic Research Service of the USDA.
    Certification of eligibility means the date on which the 
Administrator (FAS) announces in the Federal Register or by Department 
news release, whichever comes first, a certification of eligibility to 
apply for trade adjustment assistance.
    Contributed importantly means a cause which is important, but not 
necessarily more important than any other cause.
    County price maintained by the Secretary means a daily price 
obtained from a USDA agency for the commodity and producer location, 
except that weekly or monthly prices may be used if daily prices are 
unavailable.
    Department means the U.S. Department of Agriculture.
    Deputy Administrator means the Deputy Administrator for Farm 
Programs of the Farm Service Agency (FSA).
    Family member means an individual to whom a producer is related as 
spouse, lineal ancestor, lineal descendent, or sibling, including:
    (1) Great grandparent;
    (2) Grandparent;
    (3) Parent;
    (4) Children, including legally adopted children;
    (5) Grandchildren;
    (6) Great grandchildren;
    (7) Sibling of the family member in the farming operation; and
    (8) Spouse of a person listed in paragraphs (1) through (7) of this 
definition.
    Filing period means the dates during which petitions may be 
submitted, as published in the Federal Register.
    FSA means the Farm Service Agency of the U.S. Department of 
Agriculture.
    Group means three or more producers who are not members of the same 
family.
    Impacted area means one or more States of the United States.
    Marketing year means the marketing season or year designated by the 
Administrator (FAS) with respect to an agricultural commodity. In the 
case of an agricultural commodity that does not have a designated 
marketing year, a calendar year will be used.
    National average price means the average price paid to producers for 
an agricultural commodity in a marketing year as determined by the 
National Agricultural Statistics Service (NASS) of the U.S. Department 
of Agriculture, or

[[Page 1179]]

the National Marine Fisheries Service of the National Oceanic and 
Atmospheric Administration, when available, or when unavailable, as 
determined by the Administrator (FAS).
    NIFA means the National Institute of Food and Agriculture, the 
Federal agency within the U.S. Department of Agriculture which 
administers the Federal agricultural extension programs.
    Producer means a person who shares in the risk of producing an 
agricultural commodity and is entitled to a share of the commodity for 
marketing; including an operator, a sharecropper, or a person who owns 
or rents the land on which the commodity is produced; or a person who 
reports gain or loss from the trade or business of fishing on the 
person's annual Federal income tax return for the taxable year that most 
closely corresponds to the marketing year with respect to which a 
petition is filed.
    Raw or natural state means unaltered by any process other than 
cleaning, grading, coating, sorting, trimming, mixing, conditioning, 
drying, dehulling, shelling, chilling, cooling, blanching, irradiating, 
or fumigating.
    State Cooperative Extension Service means an organization 
established at the land-grant college or university under the Smith-
Lever Act of May 8, 1914, as amended (7 U.S.C. 341-349); section 209(b) 
of the Act of October 26, 1974, as amended (D.C. Code, through section 
31-1719(b)); or section 1444 of the National Agricultural Research, 
Extension, and Teaching Policy Act of 1977, as amended (7 U.S.C. 3221).
    United States means the 50 States of the United States, the District 
of Columbia, and Puerto Rico.
    Value of production means the value of commodities produced during 
the crop year calculated as production times the marketing year average 
price. This may be equal to cash receipts when the crop year for the 
commodity runs from January through December.



Sec.1580.201  Petitions for trade adjustment assistance.

    (a) A group of producers in the United States or its authorized 
representative may file a petition for trade adjustment assistance.
    (b) Filings may be written or electronic, as provided for by the 
Administrator (FAS), and submitted to FAS no later than the last day of 
the filing period announced in the Federal Register. Petitions received 
after this date will be returned to the sender.
    (c) Petitions shall include the following information.
    (1) Name, business address, phone number, and e-mail address (if 
available) of each producer in the group, or its authorized 
representative. The petition shall identify a contact person for the 
group.
    (2) The agricultural commodity and its Harmonized Tariff Schedule of 
the United States (HTS) number.
    (3) The production area represented by the group or its authorized 
representative. The petition shall indicate if the group is filing on 
behalf of all producers in the United States, or if it is filing solely 
on behalf of all producers in a specifically identified impacted area. 
In the latter case, at least one member of the group must reside in each 
State within the impacted area.
    (4) The beginning and ending dates for the marketing year upon which 
the petition is based. A petition may be filed for only the most recent 
full marketing year for which data are available for national average 
prices, or quantity of production, or value of production, or cash 
receipts.
    (5) A justification statement explaining why the petitioners should 
be considered eligible for adjustment assistance.
    (6) Supporting information justifying the basis of the petition, 
including required data for the petitioned marketing year and the 
previous 3 marketing years.
    (i) Whenever possible, the petitioners shall use national average 
data compiled by the National Agricultural Statistics Service (NASS) or 
the National Marine Fisheries Service (NMFS), to determine national 
average prices, or quantity of production, or value of production, or 
cash receipts. If NASS or NMFS has not compiled such data for the 
commodity, the petitioners shall provide alternative data for the 
marketing year under review and for the

[[Page 1180]]

previous 3 marketing years, and identify the source of the data. In such 
cases the Administrator (FAS) shall determine if the alternative data is 
acceptable.
    (ii) If the petition is filed on behalf of producers in a 
specifically identified impacted area, the petitioners shall provide the 
national average prices or county prices if applicable, or quantity of 
production or value of production, or cash receipts for the petitioned 
commodity in the impacted area for the marketing year under review and 
for the previous 3 marketing years, and identification of the data 
source.
    (iii) The Administrator (FAS) may request petitioners to provide 
records to support their data.
    (d) Once the petition is received, the Administrator (FAS) shall 
determine if it meets the requirements of Sec.1580.201(c) of this 
part, and if so, publish notice in the Federal Register that a petition 
has been filed and that an investigation is being initiated. The notice 
shall identify the agricultural commodity, including any like or 
directly competitive commodities, the marketing year being investigated, 
the data being used, and the production area covered by the petition. 
The notice may also announce the scheduling of a public hearing, if 
requested by the petitioner. If the petition does not meet the 
requirements of Sec.1580.201(c) of this part, the Administrator (FAS) 
shall notify as soon as practicable the contact person or the authorized 
representative for the group of the deficiencies.



Sec.1580.202  Hearings, petition reviews, and amendments.

    (a) If the petitioner, or any other person found by the 
Administrator (FAS) to have a substantial interest in the proceedings, 
submits not later than 10 days after the date of publication of notice 
in the Federal Register under Sec.1580.201(d) of this part, a request 
in writing for a hearing, the Administrator (FAS) shall provide for a 
public hearing and afford such interested person an opportunity to be 
present, to produce evidence, and to be heard.
    (b) If the petitioner or any other person having an interest in the 
proceedings takes issue with any of the information published in the 
Federal Register concerning the petition, such person may submit to the 
Administrator (FAS) their comments in writing or electronically for 
consideration by the Administrator (FAS) not later than 10 days after 
the date of publication of notice in the Federal Register under Sec.
1580.201(d) of this part.
    (c) A producer or group of producers that resides outside of the 
State or region identified in the petition filed under paragraph (a) of 
this section, may file a request to become a party to that petition not 
later than 15 days after the date that the notice is published in the 
Federal Register under Sec.1580.201(d) of this part. The Administrator 
(FAS) may amend the original petition to expand the impacted area and 
include the additional filer, or consider it a separate filing.
    (d) The Administrator (FAS) shall publish in the Federal Register as 
soon as practicable any changes to the original notice resulting from 
any actions taken under this section.



Sec.1580.203  Determination of eligibility and certification by the
Administrator (FAS).

    (a) As soon as practicable after the petition has been filed, but in 
any event not later than 40 days after that date, the Administrator 
(FAS) shall certify a group of producers as eligible to apply for 
adjustment assistance under this chapter if the Administrator (FAS) 
determines:
    (1) At least one of the following:
    (i) The national average price of the agricultural commodity 
produced by the group during the most recent marketing year for which 
data are available is less than 85 percent of the average of the 
national average price for the commodity in the 3 marketing years 
preceding such marketing year; or
    (ii) The quantity of production of the agricultural commodity 
produced by the group during such marketing year is less than 85 percent 
of the average of the quantity of production of the commodity produced 
by the group in the 3 marketing years preceding such marketing year; or
    (iii) The value of production of the agricultural commodity produced 
by

[[Page 1181]]

the group during such marketing year is less than 85 percent of the 
average value of production of the commodity produced by the group in 
the 3 marketing years preceding such marketing year; or
    (iv) The cash receipts for the agricultural commodity produced by 
the group during such marketing year are less than 85 percent of the 
average of the cash receipts for the commodity produced by the group in 
the 3 marketing years preceding such marketing year;
    (2) The volume of imports of articles like or directly competitive 
with the agricultural commodity produced by the group in the marketing 
year with respect to which the group files the petition increased 
compared to the average volume of such imports during the 3 marketing 
years preceding such marketing year; and
    (3) The increase in such imports contributed importantly to the 
decrease in the national average price, or quantity of production, or 
value of production, or cash receipts for, the agricultural commodity.
    (b) In any case in which there are separate classes of goods within 
an agricultural commodity, the Administrator (FAS) shall treat each 
class as a separate commodity in determining:
    (1) Group eligibility;
    (2) The national average price, or quantity of production, or value 
of production, or cash receipts; and
    (3) The volume of imports.
    (c) Upon making a determination, whether affirmative or negative, 
the Administrator (FAS) shall promptly publish in the Federal Register a 
summary of the determination, together with the reasons for making the 
determination.
    (d) In addition, the Administrator (FAS) shall notify producers 
covered by a certification how to apply for adjustment assistance. 
Notification methods may include direct mailings to known producers, 
messages to directly affected producer groups and organizations, 
electronic communications, Web site notices on the Internet, use of 
broadcast print media, and transmittal through local USDA offices.
    (e) Whenever a group of agricultural producers is certified as 
eligible to apply for assistance, the Administrator (FAS) shall notify 
NIFA, the Agricultural Marketing Service, and FSA who will assist in 
informing other producers about the TAA for Farmers program and how they 
may apply for trade adjustment assistance.



Sec.1580.301  Application for trade adjustment assistance.

    (a) Only producers covered by a certification of eligibility under 
Sec.1580.203 of this title, may apply for adjustment assistance.
    (b) An eligible producer may submit an application for adjustment 
assistance by submitting to FSA a designated application form at any 
time after the certification date but not later than 90 days after the 
certification date. If the 90-day application period ends on a weekend 
or legal holiday, the producer may apply the following business day.
    (c) When submitting an application, the producer shall provide 
sufficient documentation to establish that:
    (1) The producer produced the agricultural commodity in the 
marketing year for which the petition is filed and in at least 1 of the 
3 marketing years preceding that marketing year;
    (2) There has been a decrease in the quantity of the agricultural 
commodity produced by the producer in the marketing year for which the 
petition is certified from the most recent prior marketing year 
preceding that marketing year for which data is available; or
    (3) There has been a decrease in the price of the agricultural 
commodity based on:
    (i) The price received for the agricultural commodity by the 
producer during the marketing year with respect to which the petition is 
filed from the average price for the commodity received by the producer 
in the 3 marketing years preceding that marketing year; or
    (ii) The effective posted county price maintained by the Secretary 
for the agricultural commodity on the date on which the Administrator 
(FAS) accepts a petition for consideration as published in the Federal 
Register from

[[Page 1182]]

the average effective posted county level price for the commodity in the 
3 marketing years preceding that date. If USDA prices are not available, 
prices from verifiable sources, including universities, cooperatives, or 
local markets, may be used.
    (4) If a petition is certified with respect to a commodity not 
produced by the producer every year, the producer may establish the 
average price received by the producer for the commodity in the 3 
marketing years preceding the year in which the petition is filed by 
using annual price data for the 3 most recent marketing years in which 
the producer produced the commodity.
    (5) The producer must certify that the producer has not received 
cash benefits under the Trade Adjustment Assistance for Workers or Trade 
Adjustment Assistance for Firms programs; or TAA for Farmers benefits 
based on the production of an agricultural commodity covered by another 
TAA for Farmers petition.
    (d) The producer must certify that:
    (1) For petitions certified for 2008 crops, their compliance with 
person determinations set forth in part 1400 of this title, subpart B 
and average adjusted gross income limitation requirements set forth in 
subpart G, effective July 18, 1996.
    (2) For petitions certified for 2009 and subsequent crops, their 
average gross nonfarm income and average adjusted gross farm income meet 
requirements set forth in part 1400 of this title, subpart F, and 
payment limitation requirements set forth in part 1400 of this title, 
subparts A and B, effective December 29, 2008; and,
    (e) The total amount of payments made to a producer for which the 
application was approved may not exceed the limitations on payments 
applicable to:
    (1) For petitions certified for 2008 crops, counter-cyclical 
payments, set forth in part 1400 of this title, subpart A, effective 
July 18, 1996.
    (2) For petitions certified for 2009 and subsequent crops, the 
counter-cyclical payments, including the Average Crop Revenue Election 
(ACRE) set forth in part 1400 of this title, subparts A and B, effective 
December 29, 2008; and
    (f) If requested by FSA, a producer must provide documentation 
regarding average adjusted gross income and payment limitations.



Sec.1580.302  Technical assistance and services.

    (a) Initial Technical Assistance: A producer covered by a 
certification who has been determined by FSA to meet the requirements of 
Sec.1580.301 of this part, is eligible to receive Initial Technical 
Assistance through NIFA to be completed within 180 days of petition 
certification. Such assistance shall include information regarding:
    (1) Improving the yield and marketing of that agricultural 
commodity, and
    (2) The feasibility and desirability, of substituting one or more 
agricultural commodities for that agricultural commodity.
    (b) Intensive Technical Assistance: Upon completion of Initial 
Technical Assistance, a producer is eligible to participate in Intensive 
Technical Assistance. Intensive Technical Assistance shall consist of:
    (1) A series of courses to further assist the producer in improving 
the competitiveness of producing the agricultural commodity certified 
under Sec.1580.203 of this part, or another agricultural commodity, 
and
    (2) Assistance in developing an initial business plan based on the 
courses completed under paragraph (a) of this section.
    (c) During Intensive Technical Assistance: NIFA shall deliver and 
the producer shall be required to attend a series of Intensive Technical 
Assistance workshops relevant to the circumstances of the producer.
    (d) Initial Business Plan: Upon completion of the Initial and 
Intensive Technical Assistance, the producer shall be required to 
develop an Initial Business Plan recommended by NIFA and approved by the 
Administrator (FAS) before receiving an adjustment assistance payment. 
The Initial Business Plan will:
    (1) Reflect the skills gained by the producer through the courses 
described in paragraph (c) of this section; and

[[Page 1183]]

    (2) Demonstrate how the producer will apply those skills to the 
circumstances of the producer.
    (e) Upon approval of the Initial Business Plan, the producer will 
receive an amount not to exceed $4,000 to implement the Initial Business 
Plan or develop a Long-Term Business Adjustment Plan.
    (f) A producer who completes the Intensive Technical Assistance and 
whose Initial Business Plan has been approved shall be eligible, in 
addition to the amount under paragraph (e) of this section, for 
assistance in developing a Long-Term Business Adjustment Plan.
    (g) Long-Term Business Adjustment Plan: The Long-Term Business 
Adjustment Plan shall:
    (1) Include steps reasonably calculated to materially contribute to 
the economic adjustment of the producer to changing market conditions;
    (2) Take into consideration the interests of the workers employed by 
the producer; and
    (3) Demonstrate that the producer will have sufficient resources to 
implement the business plan.
    (h) Upon recommendation by NIFA and approval of the producer's Long-
Term Business Adjustment Plan by the Administrator (FAS), the producer 
shall be entitled to receive an amount not to exceed $8,000 to implement 
their Long-Term Business Adjustment Plan.
    (i) The Initial Business Plan and Long-Term Business Adjustment Plan 
must be completed and approved within 36 months after a petition is 
certified.
    (j) A producer shall not receive a combined total of more than 
$12,000 for the Initial Business Plan and the Long Term Business 
Adjustment Plan in the 36-month period following petition certification.
    (k) The Administrator (FAS) may authorize supplemental assistance 
necessary to defray reasonable transportation and subsistence expenses 
incurred by a producer in connection with the initial technical 
assistance, if such initial technical assistance is provided at 
facilities that are not within normal commuting distance of the regular 
place of residence of the producer. NIFA and FSA will work with the 
producer and the Administrator (FAS) to facilitate application for and 
proper payment of reasonable allowable supplemental expenses. The 
Administrator (FAS) will not authorize payments to a producer:
    (1) For subsistence expenses that exceed the lesser of:
    (i) The actual per diem expenses for subsistence incurred by a 
producer; or
    (ii) The prevailing per diem allowance rate authorized under Federal 
travel regulations; or
    (2) For travel expenses that exceed the prevailing mileage rate 
authorized under the Federal travel regulations.



Sec.1580.303  Adjustment assistance payments.

    (a) If the Administrator (FAS) determines that insufficient 
appropriated fiscal year funds are available to provide maximum cash 
benefits to all eligible applicants, after having deducted estimated 
transportation and substance payments and administrative and technical 
assistance costs, the Administrator (FAS) shall prorate cash payments to 
producers for the approved initial and long-term business plans.
    (b) Any producer who may be entitled to a payment may assign their 
rights to such payment in accordance with 7 CFR part 1404 or successor 
regulations as designated by the Department.
    (c) In the case of death, incompetency, disappearance, or 
dissolution of a producer that is eligible to receive benefits in 
accordance with this part, such producer or producers specified in 7 CFR 
part 707 may receive such benefits.



Sec.1580.401  Subsequent year petition recertification.

    (a) Prior to the anniversary of the petition certification date:
    (1) Groups or authorized representatives that provided the data to 
justify their initial petition shall provide the Administrator (FAS) 
data for the most recent marketing year, and
    (2) The Administrator (FAS) shall make a determination with respect 
to the re-certification of petitions for the subsequent year by applying 
criteria as set forth in Sec.1580.203 of this part for the most recent 
marketing year.

[[Page 1184]]

    (b) The Administrator (FAS) will promptly publish in the Federal 
Register the determination with the reasons for the determination.
    (c) If a petition is re-certified, only eligible producers who did 
not receive training and cash benefits under this program may apply.



Sec.1580.501  Administration.

    (a) The petition process will be administered by FAS. FAS will 
publish in the Federal Register the filing dates for commodity groups to 
file petitions.
    (b) FSA will administer the producer application and payment 
process.
    (c) State and county FSA committees and representatives do not have 
the authority to modify or waive any of the provisions of this part.
    (d) The technical assistance process and the recommendation for 
approval of all producer business plans will be under the general 
supervision of NIFA. NIFA may award the technical assistance and 
services to a state cooperative extension service.
    (e) The Deputy Administrator may, in consultation with the 
Administrator, FAS, authorize the State and County committees to waive 
or modify non-statutory deadlines or other program requirements in cases 
where lateness or failure to meet such other requirements by applicants 
does not adversely affect the operation of the program.



Sec.1580.502  Maintenance of records, audits, and compliance.

    (a) Producers making application for benefits under this program 
must maintain accurate records and accounts that will document that they 
meet all eligibility requirements specified herein, as may be requested. 
Such records and accounts must be retained for 2 years after the date of 
the final payment to the producer under this program.
    (b) At all times during regular business hours, authorized 
representatives of the U.S. Department of Agriculture or any agency 
thereof, the Comptroller General of the United States shall have access 
to the premises of the producer in order to inspect, examine, and make 
copies of the books, records, and accounts, and other written data as 
specified in paragraph (a) of this section.
    (c) Audits of certifications of average adjusted gross income may be 
conducted as necessary to determine compliance with the requirements of 
this subpart. As a part of this audit, income tax forms may be requested 
and if requested, must be supplied. If a producer has submitted 
information to FSA, including a certification from a certified public 
accountant or attorney, that relied upon information from a form 
previously filed with the Internal Revenue Service, such producer shall 
provide FSA a copy of any amended form filed with the Internal Revenue 
Service within 30 days of the filing.
    (d) If requested in writing by the U.S. Department of Agriculture or 
any agency thereof, or the Comptroller General of the United States, the 
producer shall provide all information and documentation the reviewing 
authority determines necessary to verify any information or 
certification provided under this subpart, including all documents 
referred to in Sec.1580.301(c) of this part, within 30 days. 
Acceptable production documentation may be submitted by facsimile, in 
person, or by mail and may include copies of receipts, ledgers, income 
statements, deposit slips, register tapes, invoices for custom 
harvesting, records to verify production costs, contemporaneous 
measurements, truck scale tickets, fish tickets, landing reports, and 
contemporaneous diaries that are determined acceptable. Failure to 
provide necessary and accurate information to verify compliance, or 
failure to comply with this part's requirements, will result in 
ineligibility for all program benefits subject to this part for the year 
or years subject to the request.



Sec.1580.503  Recovery of overpayments.

    (a) If the Administrator (FAS) determines that any producer has 
received any payment under this program to which the producer was not 
entitled, or has expended funds received under this program for purpose 
that was not approved by the Administrator (FAS) such producer will be 
liable to repay such amount. The Administrator (FAS) may waive such 
repayment if it is determined that:

[[Page 1185]]

    (1) The payment was made without fault on the part of the producer; 
and
    (2) Requiring such repayment would be contrary to equity and good 
conscience.
    (b) Unless an overpayment is otherwise recovered, or waived under 
paragraph (a) of this section, the Administrator (FAS), shall recover 
the overpayment as a debt following the procedures in 7 CFR part 3. The 
requirement for demand and notice and opportunity for a hearing under 
the debt collection procedures in 7 CFR part 3 shall satisfy the notice 
and hearing requirements under 19 U.S.C. 2401f(c), and the appeal 
procedures in Sec.1580.505 of this part shall not apply to collection 
of overpayments



Sec.1580.504  Debarment, suspension, and penalties.

    (a) Generally. The regulations governing nonprocurement debarment 
and suspension, 2 CFR part 417, and requirements for drug-free workplace 
(financial assistance), 2 CFR part 421, apply to this part.
    (b) Additional specific suspension and debarment provision for this 
program. In addition to any other debarment or suspension of a producer 
under paragraph (a) of this section, in connection with this program, if 
the Administrator (FAS) or a court of competent jurisdiction, determines 
that a producer:
    (1) Knowingly has made, or caused another to make, a false statement 
or representation of a material fact, or
    (2) Knowingly has failed, or caused another to fail, to disclose a 
material fact; and, as a result of such false statement or 
representation, or of such nondisclosure, such producer has received any 
payment under this program to which the producer was not entitled, the 
Administrator (FAS) shall suspend and debar such producer from any 
future payments under this program, as provided in 19 U.S.C. 2401f(b).
    (c) Criminal penalty. Whoever makes a false statement of a material 
fact knowing it to be false, or knowingly fails to disclose a material 
fact, for the purpose of obtaining or increasing for himself or for any 
other producer any payments authorized to be furnished under this 
program shall be fined not more that $10,000 or imprisoned for not more 
than 1 year, or both.

[75 FR 9089, Mar. 1, 2010, as amended at 85 FR 31938, May 28, 2020]



Sec.1580.505  Appeals.

    (a) A producer adversely affected by a determination with respect to 
their application for trade adjustment assistance under Sec.1580.301 
of this part or with respect to the receipt of technical assistance or 
payments under Sec.1580.302 of this part may file a notice of appeal 
within 30 days of the date that the notification of the adverse 
determination was sent.
    (b) A producer may not seek judicial review of any adverse decision 
under this paragraph without receiving a final determination pursuant to 
this paragraph.



Sec.1580.506  Judicial review.

    Any producer aggrieved by a final agency determination under this 
part may appeal to the U.S. Court of International Trade for a review of 
such determination in accordance with its rules and procedures.



Sec.1580.602  Paperwork Reduction Act assigned number.

    The information collection requirements contained in this part have 
been approved by the Office of Management and Budget (OMB) under the 
provisions of 44 U.S.C. Chapter 35 and been assigned OMB control number 
0551-0040.



PART 1590_UNITED STATES DEPARTMENT OF AGRICULTURE LOCAL AND REGIONAL
FOOD AID PROCUREMENT PROGRAM--Table of Contents



Sec.
1590.1 Purpose and applicability.
1590.2 Definitions.
1590.3 Eligibility and conflicts of interest.
1590.4 Application process.
1590.5 Agreements.
1590.6 Procurement of eligible commodities.
1590.7 Payments.
1590.8 Transportation of procured commodities.
1590.9 Entry, handling, and labeling of commodities and notification 
          requirements.
1590.10 Damage to or loss of procured commodities.
1590.11 Claims for damage to or loss of procured commodities.

[[Page 1186]]

1590.12 Use of procured commodities, FAS-provided funds, and program 
          income.
1590.13 Monitoring and evaluation requirements.
1590.14 Reporting and record keeping requirements.
1590.15 Subrecipients.
1590.16 Noncompliance with an agreement.
1590.17 Suspension and termination of agreements.
1590.18 Opportunities to object and appeals.
1590.19 Audit requirements.

    Authority: 7 U.S.C. 1726c.

    Source: 81 FR 43009, July 1, 2016, unless otherwise noted.



Sec.1590.1  Purpose and applicability.

    (a)(1) This part sets forth the general terms and conditions 
governing the award of funds by the Foreign Agricultural Service (FAS) 
to recipients under the U.S. Department of Agriculture (USDA) Local and 
Regional Food Aid Procurement Program (USDA LRP Program). Under the USDA 
LRP Program, recipients use FAS-provided funds to purchase eligible 
commodities in developing countries and pay for associated 
administrative and operational costs related to the implementation of 
field-based projects in a foreign country pursuant to an agreement with 
FAS.
    (2) Funds provided by FAS under the USDA LRP Program may be used to 
provide food assistance in the form of development assistance, an 
emergency response, or both through a field-based project. Field-based 
projects intended to provide development assistance will be implemented 
for a period of not less than one year. Food assistance may be provided 
under the USDA LRP Program through local and regional procurement, food 
vouchers, and cash transfers.
    (3) FAS will consult with the United States Agency for International 
Development in the development and implementation of field-based 
projects that will provide food assistance in the form of an emergency 
response.
    (b)(1) The Office of Management and Budget (OMB) issued guidance on 
Uniform Administrative Requirements, Cost Principles, and Audit 
Requirements for Federal Awards at 2 CFR part 200. In 2 CFR 400.1, USDA 
adopted OMB's guidance in subparts A through F of 2 CFR part 200, as 
supplemented by 2 CFR part 400, as USDA's policies and procedures for 
uniform administrative requirements, cost principles, and audit 
requirements for federal awards.
    (2) The OMB guidance at 2 CFR part 200, as supplemented by 2 CFR 
part 400 and by this part, applies to the USDA LRP Program, except as 
provided in paragraph (e) of this section.
    (c) Except as otherwise provided in this part, other regulations 
that are generally applicable to grants and cooperative agreements of 
USDA, including the applicable regulations set forth in 2 CFR chapters 
I, II, and IV, also apply to the USDA LRP Program.
    (d) In accordance with 7 U.S.C. 1726c(a)(4), assistance under the 
USDA LRP Program may be provided to a private voluntary organization or 
a cooperative that is, to the extent practicable, registered with the 
Administrator of the U.S. Agency for International Development or to an 
intergovernmental organization, such as the World Food Program.
    (e)(1) The OMB guidance at subparts A through E of 2 CFR part 200, 
and the corresponding provisions of 2 CFR part 400 and of this part, 
apply to all awards by FAS under the USDA LRP Program to all recipients 
that are private voluntary organizations or cooperatives, including a 
private voluntary organization that is a foreign organization, as 
defined in 2 CFR 200.47, and a cooperative that is a for-profit entity 
or a foreign organization. Subpart F of 2 CFR part 200, and the 
corresponding provisions of 2 CFR part 400 and this part, apply only to 
awards by FAS to recipients that are private voluntary organizations or 
non-profit cooperatives but that are not foreign organizations. The OMB 
guidance at 2 CFR part 200, and the provisions of 2 CFR part 400 and of 
this part, do not apply to an award by FAS under the USDA LRP Program to 
a recipient that is a foreign public entity, as defined in 2 CFR 200.46, 
and, therefore, they do not apply to an intergovernmental organization.
    (2) The OMB guidance at subparts A through E of 2 CFR part 200, and 
the corresponding provisions of 2 CFR part 400 and of this part, apply 
to all subawards to all subrecipients under this part, except in cases:

[[Page 1187]]

    (i) Where the subrecipient is a foreign public entity; or
    (ii) Where FAS determines that the application of these provisions 
to a subaward to a subrecipient that is a foreign organization would be 
inconsistent with the international obligations of the United States or 
the statutes or regulations of a foreign government or would not be in 
the best interest of the United States.



Sec.1590.2  Definitions.

    These are definitions for terms used in this part. The definitions 
in 2 CFR part 200, as supplemented in 2 CFR part 400, are also 
applicable to this part, with the exception that, if a term that is 
defined in this section is defined differently in 2 CFR part 200 or part 
400, the definition in this section will apply to such term as used in 
this part.
    Activity means a discrete undertaking within a project to be carried 
out by a recipient, directly or through a subrecipient, that is 
specified in an agreement and is intended to fulfill a specific 
objective of the agreement.
    Agreement means a legally binding grant or cooperative agreement 
entered into between FAS and a recipient to implement a field-based 
project under the USDA LRP Program.
    Codex Alimentarius means the program of the United Nations Food and 
Agriculture Organization and the World Health Organization that was 
created to develop food standards, guidelines, and related texts, such 
as codes of practice to protect the health of consumers, ensure fair 
trade practices in the food trade, and promote the coordination of all 
food standards work undertaken by international governmental and 
nongovernmental organizations.
    Cooperative means a private sector organization whose members own 
and control the organization and share in its services and its profits 
and that provides business services and outreach in cooperative 
development for its membership.
    Cost sharing or matching means the portion of project expenses, or 
necessary goods and services provided to carry out the project, not paid 
or acquired with Federal funds. The term may include cash or in-kind 
contributions provided by recipients, subrecipients, foreign public 
entities, foreign organizations, or private donors.
    Country of origin means the country in which the procured 
commodities were produced.
    Developing country means a country that has a shortage of foreign 
exchange earnings and has difficulty meeting all of its food needs 
through commercial channels.
    Development assistance means an activity or activities that will 
enhance the availability of, access to, or the utilization of adequate 
food to meet the caloric and nutritional needs of populations suffering 
from chronic food insecurity, or enhance the ability of such populations 
to build assets to protect against chronic food insecurity.
    Disaster means an event or a series of events that creates a need 
for emergency food assistance by threatening or resulting in 
significantly decreased availability of, or access to, food or the 
erosion of the ability of populations to meet food needs. Disasters 
include, but are not limited to, natural events such as floods, 
earthquakes, and drought; crop failure; disease; civil strife and war; 
and economic turmoil. Disasters can be characterized as slow or rapid-
onset. The situation caused by a disaster is a ``food crisis.''
    Disburse means to make a payment to liquidate an obligation.
    Eligible commodity means an agricultural commodity, or the product 
of an agricultural commodity, that is produced in and procured from a 
developing country, and that meets each nutritional, quality, and 
labeling standard of the target country, as determined by the Secretary 
of Agriculture, as well as any other criteria specified in section Sec.
1590.6(b).
    Emergency response means an activity that is designed to meet the 
urgent food and nutritional needs of those affected by acute or 
transitory food insecurity as a result of a disaster.
    FAS means the Foreign Agricultural Service of the United States 
Department of Agriculture.
    FAS-provided funds means U.S. dollars provided under an agreement to 
a recipient, or through a subagreement to a subrecipient, for expenses 
for the

[[Page 1188]]

purchase, ocean and overland transportation, and storage and handling of 
the procured commodities; expenses involved in the administration, 
monitoring, and evaluation of the activities under the agreement; and 
operational costs related to the implementation of the field-based 
project under the agreement.
    Field-based project or project means the totality of the activities 
to be carried out by a recipient, directly or through a subrecipient, to 
fulfill the objectives of an agreement. It can either stand alone or be 
an add-on component to another program that provides other forms of 
assistance to the food insecure.
    Food assistance means assistance that is provided to members of a 
targeted vulnerable group to meet their food needs.
    Local procurement means the procurement of food by a recipient, 
directly or through a subrecipient, in the target country to assist 
beneficiaries within that same country. The use of food vouchers to 
obtain food under an agreement is a form of local procurement.
    Overland transportation means any transportation other than ocean 
transportation. It includes internal transportation within the target 
country and regional transportation within the target region.
    Private voluntary organization means a not-for-profit, 
nongovernmental organization (in the case of a United States 
organization, an organization that is exempt from Federal income taxes 
under section 501(c)(3) of the Internal Revenue Code of 1986) that 
receives funds from private sources, voluntary contributions of money, 
staff time, or in-kind support from the public, and that is engaged in 
or is planning to engage in voluntary, charitable, or development 
assistance activities (other than religious activities).
    Procured commodities means the eligible commodities that are 
procured by a recipient, directly or through a subrecipient, under an 
agreement.
    Program Income means funds received by a recipient or subrecipient 
as a direct result of carrying out an approved activity under an 
agreement. The term includes but is not limited to income from fees for 
services performed, the use or rental of real or personal property 
acquired under a Federal award, the sale of items fabricated under a 
Federal award, license fees, and royalties on patents and copyrights, 
and principal and interest on loans made with Federal award funds. 
Program income does not include FAS-provided funds or interest earned on 
such funds; or funds provided for cost sharing or matching 
contributions, refunds or rebates, credits, discounts, or interest 
earned on any of them.
    Purchase country means a developing country in which the procured 
commodities are purchased.
    Recipient means an entity that enters into an agreement with FAS and 
receives FAS-provided funds to carry out activities under the agreement. 
The term recipient does not include a subrecipient.
    Regional procurement means the procurement of food by a recipient, 
directly or through a subrecipient, in a developing country that is 
located on the same continent as the target country. Regional 
procurement does not include the purchase of food in the target country.
    Subrecipient means an entity that enters into a subagreement with a 
recipient for the purpose of implementing in the target country 
activities described in an agreement. The term does not include an 
individual that is a beneficiary under the agreement.
    Target country means the developing country in which activities are 
implemented under an agreement.
    Target region means the continent on which the target country is 
located or nearby.
    USDA means the United States Department of Agriculture.
    Voluntary committed cost sharing or matching contributions means 
cost sharing or matching contributions specifically pledged on a 
voluntary basis by an applicant in its proposal, which become binding as 
part of an agreement. Voluntary committed cost sharing or matching 
contributions may be provided in the form of cash or in-kind 
contributions.

[[Page 1189]]



Sec.1590.3  Eligibility and conflicts of interest.

    (a)(1) A private voluntary organization or a cooperative is eligible 
to submit an application under this part to become a recipient under the 
USDA LRP Program if it is either registered with the Administrator of 
the U.S. Agency for International Development or FAS has determined that 
such registration is impracticable. FAS will set forth specific 
eligibility information, including any factors or priorities that will 
affect the eligibility of an applicant or application for selection, in 
the full text of the applicable notice of funding opportunity posted on 
the U.S. Government Web site for grant opportunities.
    (2) FAS may give preference for funding to eligible entities that 
have, or are working toward, projects under the McGovern-Dole 
International Food for Education and Child Nutrition Program established 
under section 3107 of the Farm Security and Rural Investment Act of 2002 
(7 U.S.C. 1736o-1).
    (b) Applicants, recipients, and subrecipients must comply with 
policies established by FAS pursuant to 2 CFR 400.2(a), and with the 
requirements in 2 CFR 400.2(b), regarding conflicts of interest.



Sec.1590.4  Application process.

    (a) An applicant seeking to enter into an agreement with FAS must 
submit an application, in accordance with this section, that sets forth 
its proposal to carry out activities under the USDA LRP Program in a 
proposed target country(ies). An application must contain the items 
specified in paragraph (b) of this section and any other items required 
by the notice of funding opportunity and must be submitted 
electronically to FAS at the address set forth in the notice of funding 
opportunity.
    (b) An applicant must include the following items in its 
application:
    (1) A completed Form SF-424, which is a standard application for 
Federal assistance;
    (2) An introduction and impact analysis, as specified in the notice 
of funding opportunity;
    (3) A plan of operation that contains the elements specified in the 
notice of funding opportunity;
    (4) A summary line item budget and a budget narrative that indicate:
    (i) The amount(s) of any FAS-provided funds, program income, and 
voluntary committed cost sharing or matching contributions that the 
applicant proposes to use to fund:
    (A) Administrative costs;
    (B) Commodity procurement costs, including costs for locally and 
regionally procured commodities, and food vouchers;
    (C) Transportation, storage, and handling costs; and
    (D) Activity costs;
    (ii) Where applicable, how the applicant's indirect cost rate will 
be applied to each type of expense; and
    (iii) The amount of funding that will be provided to each proposed 
subrecipient under the agreement;
    (5) A project-level results framework that outlines the changes that 
the applicant expects to accomplish through the proposed project and is 
based on the USDA LRP Program-level results framework;
    (6) Unless otherwise specified in the notice of funding opportunity, 
an evaluation plan that describes the proposed design, methodology, and 
time frame of the project's evaluation activities, and how the applicant 
intends to manage these activities, and that will include a baseline 
study, interim evaluation, final evaluation, and any applicable special 
studies; and
    (7) Any additional required items set forth in the notice of funding 
opportunity.
    (c) Each applicant (unless the applicant has an exception approved 
by FAS under 2 CFR 25.110(d)) is required to:
    (1) Be registered in the System for Award Management (SAM) before 
submitting its application;
    (2) Provide a valid unique entity identifier in its application; and
    (3) Continue to maintain an active SAM registration with current 
information at all times during which it has an active Federal award or 
an application or plan under consideration by a Federal awarding agency.

[[Page 1190]]



Sec.1590.5  Agreements.

    (a) After FAS approves a proposal by an applicant, FAS will 
negotiate an agreement with the applicant. The agreement will set forth 
the obligations of FAS and the recipient.
    (b) The agreement will specify the general information required in 2 
CFR 200.210(a), as applicable.
    (c) The agreement will incorporate general terms and conditions, 
pursuant to 2 CFR 200.210(b), as applicable.
    (d) To the extent that this information is not already included in 
the agreement pursuant to paragraphs (b) and (c) of this section, the 
agreement will also include the following:
    (1) A plan of operation, which will include the following:
    (i) The objectives to be accomplished under the project;
    (ii) A detailed description of each activity to be implemented;
    (iii) The target country(ies) and the areas of the target 
country(ies) in which the activities will be implemented;
    (iv) The method(s) and criteria for selecting the beneficiaries of 
the activities;
    (v) Any contributions for cost sharing or matching, including cash 
and non-cash contributions, that the recipient expects to receive from 
non-FAS sources that:
    (A) Are critical to the implementation of the activities; or
    (B) Enhance the implementation of the activities;
    (vi) Any subrecipient that will be involved in the implementation of 
the activities, and the criteria for selecting a subrecipient that has 
not yet been identified;
    (vii) Any other governmental or nongovernmental entities that will 
be involved in the implementation of the activities; and
    (viii) Any additional items specified by FAS during the negotiation 
of the agreement;
    (2) Requirements relating to the procurement of the eligible 
commodities, as set forth in Sec.1590.6;
    (3) A budget, which will set forth the maximum amounts of FAS-
provided funds, program income, and voluntary committed cost sharing or 
matching contributions that may be used for each line item; and
    (4) Performance goals for the agreement, including a list of results 
to be achieved by the activities and corresponding indicators, targets, 
and time frames.
    (e) The agreement will also include specific terms and conditions, 
and certifications and representations, including the following:
    (1) The agreement will prohibit the use of the procured commodities, 
food vouchers, or cash transfers for any purpose other than food 
assistance;
    (2) The agreement will prohibit the resale or transshipment of the 
procured commodities by the recipient to a country other than the target 
country specified in the agreement for so long as the recipient has 
title to such commodities;
    (3) The recipient will assert that it has taken action to ensure 
that any eligible commodities that will be procured regionally will be 
imported free from all customs, duties, tolls, and taxes. The recipient 
must submit information to FAS to support this assertion;
    (4) The recipient will assert that, to the best of its knowledge, 
the eligible commodities can be procured locally or regionally without a 
disruptive impact on farmers located in, or the economy of, the target 
country or any country in the target region. The recipient will also 
assert that, to the best of its knowledge, the eligible commodities can 
be procured without unduly disrupting world prices for agricultural 
commodities or normal patterns of commercial trade with foreign 
countries. The recipient must submit information to FAS to support these 
assertions; and
    (5) The recipient will assert that adequate transportation and 
storage facilities are available in the target country to prevent 
spoilage or waste of the eligible commodities. The recipient must submit 
information to FAS to support these assertions.
    (f) FAS may enter into a multicountry agreement.
    (g) FAS may provide funds under a multiyear agreement contingent 
upon the availability of funds.

[[Page 1191]]



Sec.1590.6  Procurement of eligible commodities.

    (a)(1) When using funds provided by FAS under the USDA LRP Program 
to make a local or regional procurement of food, including through the 
use of food vouchers, the recipient, or a subrecipient, must procure 
eligible commodities.
    (2) The agreement will specify the types of eligible commodities 
approved for procurement; the approved purchase country(ies); and the 
approved method(s) of procurement (local procurement, regional 
procurement, food vouchers, or a combination of these methods). The 
agreement will prohibit the recipient from procuring eligible 
commodities from any country not specified in the agreement or utilizing 
methods of procurement that differ from those approved in the agreement.
    (b) In carrying out an agreement, the recipient must comply with the 
following requirements, as applicable, relating to the procurement of 
eligible commodities under the agreement:
    (1) The recipient must procure eligible commodities at a reasonable 
market price with respect to the economy of the purchase country, as 
determined by FAS.
    (2) If the recipient procures eligible commodities that are grains, 
legumes, and pulses, the commodities must meet the food safety standards 
of the target country; provided, however, that if the target country 
does not have food safety standards for grains, legumes, and pulses, 
then the recipient must ensure that such commodities meet the Codex 
Alimentarius Recommended International Code of Practice: General 
Principles of Food Hygiene CAC/RCP 1-1969 Rev 4-2003, including Annex 
Hazard Analysis and Critical Control Point (HACCP) System and 
Guidelines.
    (3) If the recipient procures eligible commodities that are food 
products other than grains, legumes or pulses, such as processed foods, 
fortified blended foods, and enriched foods, the commodities must 
comply, in terms of raw materials, composition, or manufacture, unless 
otherwise specified in the agreement, with the Codex Alimentarius 
Recommended International Code of Practice: General Principles of Food 
Hygiene CAC/RCP 1-1969 Rev 4-2003 including Annex Hazard Analysis and 
Critical Control Point (HACCP) System and Guidelines.
    (4) If the recipient procures eligible commodities that are cereals, 
groundnuts, or tree nuts, or food products derived from or containing 
cereals, groundnuts, or tree nuts, the commodities must be tested for 
aflatoxin and have their moisture content certified. The maximum 
acceptable total aflatoxin level is 20 parts per billion, the U.S. Food 
and Drug Administration action level for aflatoxin in human foods.
    (5) If the recipient procures an unprocessed commodity, it must 
ensure that the commodity has been produced either in the target country 
or in another developing country within the target region.
    (6) If the recipient purchases a processed commodity, it must ensure 
that the processing took place, and the primary ingredient has been 
produced, either in the target country or in another developing country 
within the target region. The primary ingredient is determined on the 
basis of weight in the case of solid foods, or volume in the case of 
liquids.
    (7) If the recipient purchases eligible commodities through a 
competitive tender, the recipient must specify the minimally acceptable 
commodity specifications and food safety and quality assurance standards 
in the tender. Purchases that are made from commercial wholesalers in a 
local or regional market must meet the food safety and quality assurance 
standards specified in paragraphs (b)(2), (3) and (4) of this section.
    (8) The recipient must enter into a contract that complies with this 
paragraph for every local or regional procurement of eligible 
commodities, other than through food vouchers, from a commodity vendor. 
The recipient must ensure that the contract between the recipient and 
the commodity vendor clearly specifies the country of origin and 
specific market(s) in which the procurement will take place, commodity 
safety and quality assurance standards, product specifications, price 
per metric ton, and delivery terms. Recipients will be required to make 
such

[[Page 1192]]

contracts available to FAS upon request.
    (9) The recipient must enter into a contract with an established 
inspection service to survey and report on the safety, quality, and 
condition of all procured commodities, other than those procured through 
food vouchers, prior to their shipment and distribution. The recipient 
will be required to submit any survey reports or certificates issued by 
such inspection service to FAS upon request.
    (10) The recipient must enter into a contract with each vendor 
expected to redeem food vouchers distributed under an agreement that 
specifies the conditions under which the vouchers will be redeemed for 
food. The recipient must ensure that beneficiaries use food vouchers to 
purchase eligible commodities that meet the food safety and quality 
assurance standards specified in paragraphs (b)(2), (3) and (4) of this 
section.
    (c) The agreement will require the recipient to submit a procurement 
plan for FAS's approval within the time period specified in the 
agreement. The procurement plan will include time periods, broken down 
by month, for commodity procurement, delivery, and distribution and, 
where applicable, the distribution of food vouchers. The agreement will 
require the recipient to comply with the procurement plan, as approved 
by FAS, and will prohibit the recipient from making any changes to the 
procurement plan without obtaining the prior written approval of FAS.



Sec.1590.7  Payments.

    (a) If the agreement authorizes the payment of FAS-provided funds, 
FAS will generally provide the funds to the recipient on an advance 
payment basis, in accordance with 2 CFR 200.305(b). In addition, the 
following procedures will apply to advance payments:
    (1) A recipient may request advance payments of FAS-provided funds, 
up to the total amount specified in the agreement. When making an 
advance payment request, a recipient must provide, for each agreement 
for which it is requesting an advance, total expenditures to date; an 
estimate of expenses to be covered by the advance; total advances 
previously requested, if any; the amount of cash on hand from the 
preceding advance; and, if necessary, a request to roll over any unused 
funds from the preceding advance to the current request period. The 
advance payment request must take into account any program income earned 
since the preceding advance.
    (2) Whenever possible, the recipient should consolidate advance 
payment requests to cover anticipated cash needs for all food assistance 
program awards made by FAS to the recipient. A recipient may request 
advance payments with no minimum time required between requests.
    (3) A recipient must minimize the amount of time that elapses 
between the transfer of funds by FAS and the disbursement of funds by 
the recipient. A recipient must fully disburse funds from the preceding 
advance before it submits a new advance request for the same agreement, 
with the exception that the recipient may request to retain the balance 
of any funds that have not been disbursed and roll it over into a new 
advance request if the new advance request is made within 90 days after 
the preceding advance was made.
    (4) FAS will review all requests to roll over unexpended funds from 
the preceding advance that have not been disbursed and make a decision 
based on the merits of the request. FAS will consider factors such as 
the amount of funding that the recipient is requesting to roll over, the 
length of time that the recipient has been in possession of the funds, 
any unforeseen or extenuating circumstances, the recipient's history of 
performance, and findings from recent financial audits or compliance 
reviews.
    (5) FAS will not approve any request for an advance or rollover of 
funds if the most recent financial report, as specified in the 
agreement, is past due, or if any required report, as specified in any 
open agreement between the recipient and FAS or the Commodity Credit 
Corporation (CCC), is more than three months in arrears.
    (6)(i) A recipient must return to FAS any funds advanced by FAS that 
have not been disbursed as of the 91st day after the advance was made; 
provided, however, that paragraphs (a)(6)(ii) and

[[Page 1193]]

(iii) of this section will apply if the recipient submits a request to 
FAS before that date to roll over the funds into a new advance.
    (ii) If a recipient submits a request to roll over funds into a new 
advance, and FAS approves the rollover of funds, such funds will be 
considered to have been advanced on the date that the recipient receives 
the approval notice from FAS, for the purposes of complying with the 
requirement in paragraph (a)(6)(i) of this section.
    (iii) If a recipient submits a request to roll over funds into a new 
advance, and FAS does not approve the rollover of some or all of the 
funds, such funds must be returned to FAS.
    (iv) If the recipient must return funds to FAS in accordance with 
paragraph (a)(6) of this section, the recipient must return the funds on 
the later of five business days after the 91st day after the funds were 
advanced, or five business days after the date on which the recipient 
receives notice from FAS that it has denied the recipient's request to 
roll over the funds; provided, however, that FAS may specify a different 
date for the return of funds in a written communication to the 
recipient.
    (7) Except as may otherwise be provided in the agreement, the 
recipient must deposit and maintain in an insured bank account located 
in the United States all funds advanced by FAS. The account must be 
interest-bearing, unless one of the exceptions in 2 CFR 200.305(b)(8) 
applies, or FAS determines that this requirement would constitute an 
undue burden. A recipient will not be required to maintain a separate 
bank account for advance payments of FAS-provided funds. However, a 
recipient must be able to separately account for the receipt, 
obligation, and expenditure of funds under each agreement.
    (8) A recipient may retain, for administrative purposes, up to $500 
per Federal fiscal year of any interest earned on funds advanced under 
an agreement. The recipient must remit to the U.S. Department of Health 
and Human Services, Payment Management System, any additional interest 
earned during the Federal fiscal year on such funds, in accordance with 
the procedures in 2 CFR 200.305(b)(9).
    (b) If a recipient is required to pay funds to FAS in connection 
with an agreement, the recipient must make such payment in U.S. dollars, 
unless otherwise approved in advance by FAS.



Sec.1590.8  Transportation of procured commodities.

    (a) The recipient must acquire all transportation of procured 
commodities under the USDA LRP Program. FAS will pay for the 
transportation, as provided for in the agreement, through an advance 
payment or reimbursement to the recipient.
    (b) A recipient that acquires ocean transportation in accordance 
with paragraph (a) of this section must comply with the requirements of 
46 U.S.C. 55305, regarding carriage on U.S.-flag vessels.
    (c) The recipient may only use the services of a transportation 
company that is legally operating in the target country or another 
country within the target region, and that would not have a conflict of 
interest in transporting the commodities.
    (d) The recipient must declare in the transportation contract the 
point at which the ocean carrier or overland transportation company will 
take custody of the eligible commodities to be transported.



Sec.1590.9  Entry, handling, and labeling of procured commodities 
and notification requirements.

    (a) The recipient must make all necessary arrangements for receiving 
regionally procured commodities in the target country, including 
obtaining appropriate approvals for entry and transit. The recipient 
must make arrangements with the target country government for all 
regionally procured commodities to be imported and distributed free from 
all customs duties, tolls, and taxes, unless otherwise specified in the 
agreement.
    (b) The recipient must, as provided in the agreement, arrange for 
transporting, storing, and distributing the procured commodities from 
the designated point and time where title to the commodities passes to 
the recipient.

[[Page 1194]]

    (c) The recipient must store and maintain all of the procured 
commodities in good condition from the time of delivery at the port of 
entry or the point of receipt from the commodity vendor(s) until their 
distribution.
    (d)(1) If a recipient arranges for the packaging or repackaging of 
the procured commodities, the recipient must ensure that the packaging:
    (i) Is plainly labeled in the language of the target country;
    (ii) Contains the name of the procured commodities;
    (iii) Contains the name of the country of origin;
    (iv) Includes a statement indicating that the procured commodities 
are being furnished through a project funded by the United States 
Department of Agriculture; and
    (v) Includes a statement indicating that the procured commodities 
must not be sold, bartered, or exchanged.
    (2) If a recipient distributes procured commodities that are 
prepackaged or not packaged, the recipient must display a sign at the 
distribution site that includes the name of the procured commodities, 
the country of origin, a statement indicating that the procured 
commodities are being furnished through a project funded by the United 
States Department of Agriculture, and a statement indicating that the 
procured commodities must not be sold, bartered, or exchanged.
    (3) If a recipient distributes food vouchers or cash transfers, the 
recipient must display a sign at the distribution site that includes a 
statement indicating that the food vouchers or cash transfers are being 
furnished through a project funded by the United States Department of 
Agriculture. The recipient must ensure that all paper vouchers or 
receipts for electronic vouchers are printed with a statement indicating 
that the vouchers are being furnished through a project funded by the 
United States Department of Agriculture. The vouchers must also include 
a statement indicating that they must not be sold, bartered, or 
exchanged.
    (e) The recipient must ensure that signs are displayed at all 
activity implementation and commodity, food voucher, or cash transfer 
distribution sites to inform beneficiaries that funding for the project 
was provided by the United States Department of Agriculture.
    (f) The recipient must also ensure that all public communications in 
relation to the project, the activities, or the procured commodities, 
whether made through print, broadcast, digital, or other media, include 
a statement acknowledging that funding was provided by the United States 
Department of Agriculture.
    (g) FAS may waive compliance with one or more of the labeling and 
notification requirements in paragraphs (d), (e) and (f) of this section 
if a recipient demonstrates to FAS that the requirement presents a 
safety or security risk in the target country. If a recipient determines 
that compliance with a labeling or notification requirement poses an 
imminent threat of destruction of property, injury, or loss of life, the 
recipient must submit a waiver request to FAS as soon as possible. The 
recipient will not have to comply with such requirement during the 
period prior to the issuance of a waiver determination by FAS. A 
recipient may submit a written request for a waiver at any time after 
the agreement has been signed.
    (h) In exceptional circumstances, FAS may, on its own initiative, 
waive one or more of the labeling and notification requirements in 
paragraphs (d), (e) and (f) of this section for programmatic reasons.



Sec.1590.10  Damage to or loss of procured commodities.

    (a) The recipient will be responsible for the procured commodities 
following the transfer of title to the procured commodities from the 
commodity vendor(s) to the recipient. FAS may require the recipient to 
purchase transportation insurance against commodity loss or damage.
    (b) A recipient must inform FAS, in the manner and within the time 
period set forth in the agreement, of any damage to or loss of the 
procured commodities that occurs following the transfer of title to the 
procured commodities to the recipient. The recipient must take

[[Page 1195]]

all steps necessary to protect its interests and the interests of FAS 
with respect to any damage to or loss of the procured commodities that 
occurs after title has been transferred to the recipient.
    (c) The recipient will be responsible for arranging for an 
independent cargo surveyor to inspect any procured commodities 
transported by ocean upon discharge from the vessel and to prepare a 
survey or outturn report. The report must show the quantity and 
condition of the procured commodities discharged from the vessel and 
must indicate the most likely cause of any damage noted in the report. 
The report must also indicate the time and place when the survey took 
place. All discharge surveys must be conducted contemporaneously with 
the discharge of the vessel, unless FAS determines that failure to do so 
was justified under the circumstances. For procured commodities shipped 
on a through bill of lading, the recipient must also obtain a delivery 
survey. All surveys obtained by the recipient must, to the extent 
practicable, be conducted jointly by the surveyor, the recipient, and 
the carrier, and the survey report must be signed by all three parties. 
The recipient must obtain a copy of each discharge or delivery survey 
report within 45 days after the completion of the survey. The recipient 
must make each such report available to FAS upon request, or in the 
manner specified in the agreement. FAS will reimburse the recipient for 
the reasonable costs of these services, as determined by FAS, in the 
manner specified in the agreement.
    (d) When procured commodities are transported overland, the 
recipient will ensure that overland transportation contracts include a 
requirement that a loading and offloading report be prepared and 
provided to the recipient. The report must show the quantity and 
condition of the procured commodities loaded on the overland conveyance, 
as well as the time and place that the loading and offloading occurred. 
The recipient must obtain a copy of the report from the overland 
transportation company within 45 days after the completion of the 
commodity delivery. The recipient must make each such report available 
to FAS upon request, or in the manner specified in the agreement. FAS 
will reimburse the recipient for the reasonable costs of these services, 
as determined by FAS, in the manner specified in the agreement.
    (e) If procured commodities are damaged or lost during the time that 
they are in the care of an ocean carrier or overland transportation 
company:
    (1) The recipient must ensure that any reports, narrative 
chronology, or other commentary prepared by the independent cargo 
surveyor, and any such documentation prepared by a port authority, 
stevedoring service, or customs official, or an official of the transit 
or target country government or the transportation company, are provided 
to FAS;
    (2) The recipient must provide to FAS the names and addresses of any 
individuals known to be present at the time of discharge or unloading, 
or during the survey, who can verify the quantity of damaged or lost 
procured commodities;
    (3) If the damage or loss occurred with respect to a bulk shipment 
on an ocean carrier, the recipient must ensure that the independent 
cargo surveyor:
    (i) Observes the discharge of the cargo;
    (ii) Reports on discharging methods, including scale type, 
calibrations, and any other factors that may affect the accuracy of 
scale weights, and, if scales are not used, states the reason therefor 
and describes the actual method used to determine weight;
    (iii) Estimates the quantity of cargo, if any, lost during discharge 
through carrier negligence;
    (iv) Advises on the quality of sweepings;
    (v) Obtains copies of port or vessel records, if possible, showing 
the quantity discharged; and
    (vi) Notifies the recipient immediately if the surveyor has reason 
to believe that the correct quantity was not discharged or if additional 
services are necessary to protect the cargo; and
    (4) If the damage or loss occurred with respect to a container 
shipment on an ocean carrier, the recipient must ensure that the 
independent cargo surveyor lists the container numbers and

[[Page 1196]]

seal numbers shown on the containers, indicates whether the seals were 
intact at the time the containers were opened, and notes whether the 
containers were in any way damaged.
    (e) If the recipient has title to the procured commodities, and 
procured commodities valued in excess of $5,000 are damaged at any time 
prior to their distribution under the agreement, regardless of the party 
at fault, the recipient must immediately arrange for an inspection by a 
public health official or other competent authority approved by FAS and 
provide to FAS a certification by such public health official or other 
competent authority regarding the exact quantity and condition of the 
damaged commodities. The value of damaged procured commodities must be 
determined on the basis of the commodity acquisition, transportation, 
and related costs incurred by the recipient and paid by FAS with respect 
to such commodities. The recipient must inform FAS of the results of the 
inspection and indicate whether the damaged procured commodities are:
    (1) Fit for the use authorized in the agreement and, if so, whether 
there has been a diminution in quality; or
    (2) Unfit for the use authorized in the agreement.
    (f)(1) If the recipient has title to the procured commodities, the 
recipient must arrange for the recovery of that portion of the procured 
commodities designated as suitable for the use authorized in the 
agreement. The recipient must dispose of procured commodities that are 
unfit for such use in the following order of priority:
    (i) Sale for the most appropriate use, i.e., animal feed, 
fertilizer, industrial use, or another use approved by FAS, at the 
highest obtainable price;
    (ii) Donation to a governmental or charitable organization for use 
as animal feed or another non-food use; or
    (iii) Destruction of the procured commodities if they are unfit for 
any use, in such manner as to prevent their use for any purpose.
    (2) The recipient must arrange for all U.S. Government markings to 
be obliterated or removed before the procured commodities are 
transferred by sale or donation under paragraph (f)(1) of this section.
    (g) A recipient may retain any proceeds generated by the disposal of 
the procured commodities in accordance with paragraph (f)(1) of this 
section and must use the retained proceeds for expenses related to the 
disposal of the procured commodities and for activities specified in the 
agreement.
    (h) The recipient must notify FAS immediately and provide detailed 
information about the actions taken in accordance with paragraph (f) of 
this section, including the quantities, values, and dispositions of 
procured commodities determined to be unfit.



Sec.1590.11  Claims for damage to or loss of procured commodities.

    (a) The recipient will be responsible for claims arising out of 
damage to or loss of a quantity of the procured commodities after the 
transfer of title to the procured commodities from the commodity 
vendor(s) to the recipient.
    (b) If the recipient has title to procured commodities that have 
been damaged or lost, and the value of the damaged or lost procured 
commodities is estimated to be in excess of $20,000, the recipient must:
    (1) Notify FAS immediately and provide detailed information about 
the circumstances surrounding such damage or loss, the quantity of 
damaged or lost procured commodities, and the value of the damage or 
loss;
    (2) Promptly upon discovery of the damage or loss, initiate a claim 
arising out of such damage or loss, including, if appropriate, 
initiating an action to collect pursuant to a commercial insurance 
contract;
    (3) Take all necessary action to pursue the claim diligently and 
within any applicable periods of limitations; and
    (4) Provide to FAS copies of all documentation relating to the 
claim.
    (c) If the recipient has title to procured commodities that have 
been damaged or lost, and the value of the damaged or lost procured 
commodities is estimated to be $20,000 or less, the recipient must 
notify FAS in accordance with the agreement and provide detailed 
information about the damage or loss in the next report required to be 
filed under Sec.1590.14(e).

[[Page 1197]]

    (d)(1) The value of a claim for lost procured commodities will be 
determined on the basis of the commodity acquisition, transportation, 
and related costs incurred by the recipient and paid by FAS with respect 
to such commodities.
    (2) The value of a claim for damaged procured commodities will be 
determined on the basis of the commodity acquisition, transportation, 
and related costs incurred by the recipient and paid by FAS with respect 
to such commodities, less any funds generated if such commodities are 
sold in accordance with Sec.1590.10(f)(1).
    (e) If FAS determines that a recipient has not initiated a claim or 
is not exercising due diligence in the pursuit of a claim, FAS may 
require the recipient to assign its rights to pursue the claim to FAS. 
Failure by the recipient to initiate a claim or exercise due diligence 
in the pursuit of a claim will be considered by FAS during the review of 
proposals for subsequent food assistance awards.
    (f)(1) The recipient may retain any funds obtained as a result of a 
claims collection action initiated by it in accordance with this 
section, or recovered pursuant to any insurance policy or other similar 
form of indemnification, but such funds must be expended as provided for 
in the agreement or for other purposes approved in advance by FAS.
    (2) FAS will retain any funds obtained as a result of a claims 
collection action initiated by it under this section; provided, however, 
that if the recipient paid for the transportation of the procured 
commodities or a portion thereof, FAS will use a portion of such funds 
to reimburse the recipient for such expense on a prorated basis.



Sec.1590.12  Use of procured commodities, FAS-provided funds,
and program income.

    (a) A recipient must use the procured commodities, FAS-provided 
funds, interest, and program income in accordance with the agreement.
    (b) A recipient must not use procured commodities, FAS-provided 
funds, interest, or program income for any activity or any expense 
incurred by the recipient or a subrecipient prior to the start date of 
the period of performance of the agreement or after the agreement is 
suspended or terminated, without the prior written approval of FAS.
    (c) A recipient must not permit the distribution, handling, or 
allocation of procured commodities on the basis of political 
affiliation, geographic location, or the ethnic, tribal or religious 
identity or affiliation of the potential consumers or beneficiaries.
    (d) A recipient must not permit the distribution, handling, or 
allocation of procured commodities by the military forces of any 
government or insurgent group without the specific authorization of FAS.
    (e) A recipient must not use FAS-provided funds to acquire goods and 
services, either directly or indirectly through another party, in a 
manner that violates country-specific economic sanction programs, as 
specified in the agreement.
    (f) A recipient may sell the procured commodities only if the 
recipient is disposing of damaged procured commodities as specified in 
Sec.1590.10.
    (g) A recipient must deposit and maintain all FAS-provided funds and 
program income in a bank account until they are used for a purpose 
authorized under the agreement or the FAS-provided funds are returned to 
FAS in accordance with Sec.1590.7(a)(6). The account must be insured 
unless it is in a country where insurance is unavailable. The account 
must be interest-bearing, unless one of the exceptions in 2 CFR 
200.305(b)(8) applies or FAS determines that this requirement would 
constitute an undue burden. The recipient must comply with the 
requirements in Sec.1590.7(a)(7) with regard to the deposit of advance 
payments by FAS.
    (h)(1) Except as provided in paragraph (h)(2) of this section, a 
recipient may make adjustments within the agreement budget between 
direct cost line items without further approval, provided that the total 
amount of adjustments does not exceed ten percent of the Grand Total 
Costs, excluding any voluntary committed cost sharing or matching 
contributions, in the agreement budget. Adjustments beyond these limits 
require the prior approval of FAS.

[[Page 1198]]

    (2) A recipient must not transfer any funds budgeted for participant 
support costs, as defined in 2 CFR 200.75, to other categories of 
expense without the prior approval of FAS.
    (i) A recipient may use FAS-provided funds or program income to 
purchase real or personal property only if local law permits the 
recipient to retain title to such property. However, the recipient must 
not use FAS-provided funds or program income to pay for the acquisition, 
development, construction, alteration or upgrade of real property that 
is:
    (1) Owned or managed by a church or other organization engaged 
exclusively in religious pursuits; or
    (2) Used in whole or in part for sectarian purposes, except that a 
recipient may use FAS-provided funds or program income to pay for 
repairs to or rehabilitation of a structure located on such real 
property to the extent necessary to avoid spoilage or loss of procured 
commodities, but only if the structure is not used in whole or in part 
for any religious or sectarian purposes while the procured commodities 
are stored in it. If the use of FAS-provided funds or program income to 
pay for repairs to or rehabilitation of such a structure is not 
specifically provided for in the agreement, the recipient must not use 
the FAS-provided funds or program income for this purpose until it 
receives written approval from FAS.
    (j) The recipient must comply with 2 CFR 200.321 when procuring 
goods and services in the United States. When procuring goods and 
services outside of the United States, the recipient should endeavor to 
comply with 2 CFR 200.321 where practicable.
    (k) As provided for in the agreement, the recipient must enter into 
a written contract with each provider of goods, services, or 
construction work that is valued in excess of the Simplified Acquisition 
Threshold. Each such contract must require the provider to maintain 
adequate records to account for all donated commodities, funds, or both 
furnished to the provider by the recipient. The recipient must submit a 
copy of the signed contracts to FAS upon request.



Sec.1590.13  Monitoring and evaluation requirements.

    (a) The recipient will be responsible for designing a performance 
monitoring plan for the project, obtaining written approval of the plan 
from FAS before putting it into effect, and managing and implementing 
the plan, unless otherwise specified in the agreement.
    (b) The recipient must establish baseline values, annual targets, 
and life of activity targets for each performance indicator included in 
the recipient's approved performance monitoring plan, unless otherwise 
specified in the agreement.
    (c) The recipient must inform FAS, in the manner and within the time 
period specified in the agreement, of any problems, delays, or adverse 
conditions that materially impair the recipient's ability to meet the 
objectives of the agreement. This notification must include a statement 
of any corrective actions taken or contemplated by the recipient, and 
any additional assistance requested from FAS to resolve the situation.
    (d) The recipient will be responsible for designing an evaluation 
plan for the project, obtaining written approval of the plan from FAS 
before putting it into effect, and arranging for an independent third 
party to implement the evaluation, unless otherwise specified in the 
agreement. This evaluation plan will detail the evaluation purpose and 
scope, key evaluation questions, evaluation methodology, time frame, 
evaluation management, and cost. This plan will generally be based upon 
the evaluation plan that the recipient submitted to FAS as part of its 
application, pursuant to Sec.1590.4(b)(6), unless the notice of 
funding opportunity specified that an evaluation plan was not required 
to be included in the application. The recipient must ensure that the 
evaluation plan:
    (1) Is designed using the most rigorous methodology that is 
appropriate and feasible, taking into account available resources, 
strategy, current knowledge and evaluation practices in the sector, and 
the implementing environment;

[[Page 1199]]

    (2) Is designed to inform management, activity implementation, and 
strategic decision-making;
    (3) Utilizes analytical approaches and methodologies, based on the 
questions to be addressed, project design, budgetary resources 
available, and level of rigor and evidence required, which may be 
implemented through methods such as case studies, surveys, quasi-
experimental designs, randomized field experiments, cost-effectiveness 
analyses, implementation reviews, or a combination of methods;
    (4) Adheres to generally accepted evaluation standards and 
principles;
    (5) Uses participatory approaches that seek to include the 
perspectives of diverse parties and all relevant stakeholders; and
    (6) Where possible, utilizes local consultants and seeks to build 
local capacity in evaluation.
    (e)(1) Unless otherwise provided in the agreement, the recipient 
must arrange for evaluations of the project to be conducted by an 
independent third party that:
    (i) Is financially and legally separate from the recipient's 
organization; and
    (ii) Has staff with demonstrated methodological, cultural and 
language competencies, and specialized experience in conducting 
evaluations of international development programs involving agriculture, 
trade, education, and nutrition.
    (2) The recipient must provide a written certification to FAS that 
there is no real or apparent conflict of interest on the part of any 
recipient staff member or third party entity designated or hired to play 
a substantive role in the evaluation of activities under the agreement.
    (f) FAS will be considered a key stakeholder in all evaluations 
conducted as part of the agreement.
    (g)(1) The recipient is responsible for establishing the required 
financial and human capital resources for monitoring and evaluation of 
activities under the agreement. The recipient must maintain separate 
budgets for monitoring and evaluation, and separate budget line items 
for dedicated recipient monitoring and evaluation staff and independent 
third-party evaluation contracts.
    (2) Personnel at the recipient's headquarters offices and field 
offices with specialized expertise and experience in monitoring and 
evaluation may be used by the recipient for dedicated monitoring and 
evaluation. Unless otherwise specified in the agreement or approved 
evaluation plan, all evaluations must be managed by the recipient's 
evaluation experts outside of the recipient's line management for the 
activities.
    (h) FAS may independently conduct or commission an evaluation of a 
single agreement or an evaluation that includes multiple agreements. A 
recipient must cooperate, and comply with any demands for information or 
materials made in connection with any evaluation conducted or 
commissioned by FAS. Such evaluations may be conducted by FAS internally 
or by an FAS-hired external evaluation contractor.



Sec.1590.14  Reporting and recordkeeping requirements.

    (a) A recipient must comply with the performance and financial 
monitoring and reporting requirements in the agreement and 2 CFR 200.327 
through 200.329.
    (b) The recipient must submit financial reports to FAS in accordance 
with the schedule provided in the agreement. Such reports must provide 
an accurate accounting of FAS-provided funds, interest earned, program 
income, and voluntary committed cost sharing or matching contributions.
    (c)(1) The recipient must submit performance reports to FAS, in the 
manner specified in the agreement. These reports must include the 
information required in 2 CFR 200.328(b)(2), including additional 
pertinent information regarding the recipient's progress, measured 
against established indicators, baselines, and targets, towards 
achieving the expected results specified in the agreement. This 
reporting must include, for each performance indicator, a comparison of 
actual accomplishments with the baseline and the targets established for 
the period. When actual accomplishments deviate significantly from 
targeted goals, the recipient must provide an explanation in the report.

[[Page 1200]]

    (2) The recipient must ensure the accuracy and reliability of the 
performance data submitted to FAS in performance reports. At any time 
during the period of performance of the agreement, FAS may review the 
recipient's performance data to determine whether it is accurate and 
reliable. A recipient must comply with all requests made by FAS or an 
entity designated by FAS in relation to such reviews.
    (d) Baseline, interim, and final evaluation reports are required for 
all agreements for development assistance projects, unless otherwise 
specified in the agreement. A rapid needs assessment and a final 
evaluation report are required for all agreements for emergency response 
projects, unless otherwise specified in the agreement. An interim 
evaluation report is not required for emergency response projects, 
unless otherwise specified in the agreement. The reports must be 
submitted in accordance with the timeline provided in the FAS-approved 
evaluation plan. Evaluation reports submitted to FAS will be made public 
in an effort to increase accountability and transparency and share 
lessons learned and best practices.
    (e) A recipient must submit reports to FAS, using a form as 
prescribed by FAS, covering the receipt, handling, and disposition of 
the procured commodities and, if applicable, food vouchers and cash 
transfers. Such reports must be submitted to FAS, by the dates and for 
the reporting periods specified in the agreement, until all of the 
procured commodities and, if applicable, food vouchers and cash 
transfers have been distributed and such disposition has been reported 
to FAS.
    (f) If requested by FAS, the recipient must provide to FAS 
additional information or reports relating to the agreement.
    (g) If a recipient requires an extension of a reporting deadline, it 
must ensure that FAS receives an extension request at least five 
business days prior to the reporting deadline. FAS may decline to 
consider a request for an extension that it receives after this time 
period. FAS will consider requests for reporting deadline extensions on 
a case by case basis and make a decision based on the merits of each 
request. FAS will consider factors such as unforeseen or extenuating 
circumstances and past performance history when evaluating requests for 
extensions.
    (h) A recipient must retain records and permit access to records in 
accordance with the requirements of 2 CFR 200.333 through 200.337. The 
date of submission of the final expenditure report, as referenced in 2 
CFR 200.333, will be the final date of submission of the reports 
required by paragraph (e) of this section, as prescribed by FAS. The 
recipient must retain copies of and make available to FAS all sales 
receipts, contracts, or other documents related to the procurement of 
eligible commodities, as well as records of dispatch received from ocean 
carriers or overland transportation companies.



Sec.1590.15  Subrecipients.

    (a) A recipient may utilize the services of a subrecipient to 
implement activities under the agreement if this is provided for in the 
agreement. The subrecipient may receive procured commodities, FAS-
provided funds, program income, or other resources from the recipient 
for this purpose. The recipient must enter into a written subagreement 
with the subrecipient and comply with the applicable provisions of 2 CFR 
200.331. The recipient must provide a copy of each subagreement to FAS, 
in the manner set forth in the agreement, prior to the transfer of any 
procured commodities, FAS-provided funds, or program income to the 
subrecipient.
    (b) The recipient must include the following requirements in the 
subagreement:
    (1) The subrecipient is required to comply with the applicable 
provisions of this part and 2 CFR parts 200 and 400. The applicable 
provisions are those that relate specifically to subrecipients, as well 
as those relating to non-Federal entities that impose requirements that 
would be reasonable to pass through to subrecipients because they 
directly concern the implementation of one or more activities under the 
agreement. If there is a question about whether a particular provision 
is applicable, FAS will make the determination.

[[Page 1201]]

    (2) The subrecipient is prohibited from using FAS-provided funds to 
acquire goods and services, either directly or indirectly through 
another party, in a manner that violates country-specific economic 
sanction programs, as specified in the agreement.
    (3) The subrecipient must pay to the recipient the value of any 
procured commodities, FAS-provided funds, or program income that are not 
used in accordance with the subagreement, or that are lost, damaged, or 
misused as a result of the subrecipient's failure to exercise reasonable 
care.
    (4) In accordance with Sec.1590.19 and 2 CFR 200.501(h), a 
description of the applicable compliance requirements and the 
subrecipient's compliance responsibility. Methods to ensure compliance 
may include pre-award audits, monitoring during the agreement, and post-
award audits.
    (c) The recipient must monitor the actions of a subrecipient as 
necessary to ensure that procured commodities, FAS-provided funds, and 
program income provided to the subrecipient are used for authorized 
purposes in compliance with applicable U.S. Federal laws and regulations 
and the subagreement and that performance indicator targets are achieved 
for both activities and results under the agreement.



Sec.1590.16  Noncompliance with an agreement.

    If a recipient fails to comply with a Federal statute or regulation 
or the terms and conditions of the agreement, and FAS determines that 
the noncompliance cannot be remedied by imposing additional conditions, 
FAS may take one or more of the actions set forth in 2 CFR 200.338, 
including initiating a claim as a remedy. FAS may also initiate a claim 
against a recipient if the procured commodities are damaged or lost, or 
the FAS-provided funds, interest, or program income are misused or lost, 
due to an action or omission of the recipient.



Sec.1590.17  Suspension and termination of agreements.

    (a) An agreement or subagreement may be suspended or terminated in 
accordance with 2 CFR 200.338 or 200.339. FAS may suspend or terminate 
an agreement if it determines that:
    (1) One of the bases in 2 CFR 200.338 or 200.339 for termination or 
suspension by FAS has been satisfied;
    (2) The continuation of the assistance provided under the agreement 
is no longer necessary or desirable; or
    (3) Storage facilities are inadequate to prevent spoilage or waste, 
or distribution of the procured commodities will result in substantial 
disincentive to, or interference with, domestic production or marketing 
in the target country.
    (b) If an agreement is terminated, the recipient:
    (1) Is responsible for the security and integrity of any 
undistributed procured commodities and must dispose of such commodities 
only as agreed to by FAS; and
    (2) Must comply with the closeout and post-closeout procedures 
specified in the agreement and 2 CFR 200.343 and 200.344.



Sec.1590.18  Opportunities to object and appeals.

    (a) FAS will provide an opportunity to a recipient to object to, and 
provide information and documentation challenging, any action taken by 
FAS pursuant to Sec.1590.16. FAS will comply with any requirements for 
hearings, appeals, or other administrative proceedings to which the 
recipient is entitled under any other statute or regulation applicable 
to the action involved. In the absence of such other requirements, the 
requirements set forth in this section will apply.
    (b) The recipient must submit its objection in writing, along with 
any documentation, to the FAS official specified in the agreement within 
30 days after the date that FAS notified the recipient that FAS was 
taking the action being challenged. This official will endeavor to 
notify the recipient of his or her determination within 60 days after 
the date that FAS received the recipient's written objection.
    (c) The recipient may appeal the determination of the official to 
the Administrator, FAS. An appeal must be in writing and be submitted to 
the Office of the Administrator within 30

[[Page 1202]]

days after the date of the initial determination by the FAS official. 
The recipient may submit additional documentation with its appeal.
    (d) The Administrator will base the determination on appeal upon 
information contained in the administrative record and will endeavor to 
make a determination within 60 days after the date that FAS received the 
appeal. The determination of the Administrator will be the final 
determination of FAS. The recipient must exhaust all administrative 
remedies contained in this section before pursuing judicial review of a 
determination by the Administrator.



Sec.1590.19  Audit requirements.

    (a) Subpart F, Audit requirements, of 2 CFR part 200 applies to 
recipients and subrecipients under this part other than those that are 
for-profit entities, foreign public entities, or foreign organizations.
    (b) A recipient or subrecipient that is a for-profit entity or a 
foreign organization, and that expends, during its fiscal year, a total 
of at least the audit requirement threshold in 2 CFR 200.501 in Federal 
awards from FAS, is required to obtain an audit. Such a recipient or 
subrecipient has the following two options to satisfy this requirement:
    (1)(i) A financial related audit (as defined in the Government 
Auditing Standards, GPO Stock 020-000-00-265-4) of the agreement or 
subagreement, in accordance with Government Auditing Standards, if the 
recipient or subrecipient receives Federal awards under only one FAS 
program; or
    (ii) A financial related audit of all Federal awards from FAS, in 
accordance with Government Auditing Standards, if the recipient or 
subrecipient receives Federal awards under multiple FAS programs; or
    (2) An audit that meets the requirements contained in subpart F of 2 
CFR part 200.
    (c) A recipient or subrecipient that is a for-profit entity or a 
foreign organization, and that expends, during its fiscal year, a total 
that is less than the audit requirement threshold in 2 CFR 200.501 in 
Federal awards from FAS, is exempt from requirements for a non-Federal 
audit for that year, except as provided in paragraph (d) of this 
section, but it must make records available for review by appropriate 
officials of Federal agencies.
    (d) FAS may require an annual financial audit of an agreement or 
subagreement when the audit requirement threshold in 2 CFR 200.501 is 
not met. In that case, FAS must provide funds under the agreement for 
this purpose, and the recipient or subrecipient, as applicable, must 
arrange for such audit and submit it to FAS.
    (e) When a recipient or subrecipient that is a for-profit entity or 
a foreign organization is required to obtain a financial audit under 
this section, it must provide a copy of the audit to FAS within 60 days 
after the end of its fiscal year.
    (f) FAS, the USDA Office of Inspector General, or the U.S. 
Government Accountability Office may conduct or arrange for additional 
audits of any recipients or subrecipients, including for-profit entities 
and foreign organizations. Recipients and subrecipients must promptly 
comply with all requests related to such audits. If FAS conducts or 
arranges for an additional audit, such as an audit with respect to a 
particular agreement, FAS will fund the full cost of such an audit, in 
accordance with 2 CFR 200.503(d).



PART 1599_McGOVERN-DOLE INTERNATIONAL FOOD FOR EDUCATION AND CHILD
NUTRITION PROGRAM--Table of Contents



Sec.
1599.1 Purpose and applicability.
1599.2 Definitions.
1599.3 Eligibility and conflicts of interest.
1599.4 Application process.
1599.5 Agreements.
1599.6 Local and regional procurement of commodities.
1599.7 Payments.
1599.8 Transportation of donated or procured commodities.
1599.9 Entry, handling, and labeling of donated or procured commodities 
          and notification requirements.
1599.10 Damage to or loss of donated or procured commodities.
1599.11 Claims for damage to or loss of donated or procured commodities.

[[Page 1203]]

1599.12 Use of donated or procured commodities, sale proceeds, FAS-
          provided funds, and program income.
1599.13 Monitoring and evaluation requirements.
1599.14 Reporting and recordkeeping requirements.
1599.15 Subrecipients.
1599.16 Noncompliance with an agreement.
1599.17 Suspension and termination of agreements.
1599.18 Opportunities to object and appeals.
1599.19 Audit requirements.
1599.20 Paperwork Reduction Act.

    Authority: 7 U.S.C. 1736o-1.

    Source: 84 FR 64973, Nov. 26, 2019, unless otherwise noted.



Sec.1599.1  Purpose and applicability.

    (a) This part sets forth the general terms and conditions governing 
the award of donated commodities and funds by the Foreign Agricultural 
Service (FAS) to recipients under the McGovern-Dole International Food 
for Education and Child Nutrition Program (McGovern-Dole Program). Under 
the McGovern-Dole Program, recipients use the donated commodities, 
proceeds from any sale of such commodities, FAS-provided funds, and 
program income to implement a project in a foreign country pursuant to 
an agreement with FAS. When authorized by an agreement, a recipient may 
use FAS-provided funds to make a local or regional procurement of 
qualified commodities to implement such a project.
    (b)(1) The Office of Management and Budget (OMB) issued guidance on 
Uniform Administrative Requirements, Cost Principles, and Audit 
Requirements for Federal Awards in 2 CFR part 200. In 2 CFR 400.1, the 
United States Department of Agriculture (USDA) adopted OMB's guidance in 
subparts A through F of 2 CFR part 200, as supplemented by 2 CFR part 
400, as USDA policies and procedures for uniform administrative 
requirements, cost principles, and audit requirements for Federal 
awards.
    (2) The OMB guidance at 2 CFR part 200, as supplemented by 2 CFR 
part 400 and this part, applies to the McGovern-Dole Program, except as 
provided in paragraphs (e), (f), and (g) of this section.
    (c) Except as otherwise provided in this part, other regulations 
that are generally applicable to grants and cooperative agreements of 
USDA, including the applicable regulations set forth in 2 CFR chapters 
I, II, and IV, also apply to the McGovern-Dole Program.
    (d) In accordance with 7 U.S.C. 1736o-1(e), assistance under the 
McGovern-Dole Program may be provided to private voluntary 
organizations, cooperatives, intergovernmental organizations, 
governments of developing countries and their agencies, and other 
organizations.
    (e) The OMB guidance at 2 CFR part 200, and the provisions of 2 CFR 
part 400 and of this part, do not apply to an award by FAS under the 
McGovern-Dole Program to a recipient that is a foreign public entity, as 
defined in 2 CFR 200.46, and, therefore, they do not apply to a foreign 
government or its agency or an intergovernmental organization.
    (f)(1) The OMB guidance at subparts A through E of 2 CFR part 200, 
as supplemented by 2 CFR part 400 and this part, applies to all awards 
by FAS under the McGovern-Dole Program to all recipients that are 
private voluntary organizations, including a private voluntary 
organization that is a foreign organization, as defined in 2 CFR 200.47; 
cooperatives, including a cooperative that is a for-profit entity or a 
foreign organization; or other organizations, including organizations 
that are for-profit entities or foreign organizations, but not including 
intergovernmental organizations.
    (2) The OMB guidance at subparts A through E of 2 CFR part 200, as 
supplemented by 2 CFR part 400 and this part, applies to all subawards 
to all subrecipients under this part, except in cases:
    (i) Where the subrecipient is a foreign public entity; or
    (ii) Where FAS determines that the application of the provisions in 
this part to a subaward to a subrecipient that is a foreign organization 
would be inconsistent with the international obligations of the United 
States or the statutes or regulations of a foreign government or would 
not be in the best interest of the United States.
    (g)(1) The OMB guidance at subpart F of 2 CFR part 200, as 
supplemented by 2 CFR part 400 and this part, applies

[[Page 1204]]

only to awards by FAS to recipients that are private voluntary 
organizations, cooperatives, or other organizations, but that are not 
for-profit entities or foreign organizations.
    (2) The OMB guidance at subpart F of 2 CFR part 200, as supplemented 
by 2 CFR part 400 and this part, applies to subawards to subrecipients 
under this part, except where the subrecipient is a for-profit entity, 
foreign public entity, or foreign organization.
    (3) Audit requirements for recipients and subrecipients that are 
for-profit entities or foreign organizations are set forth in Sec.
1599.19.



Sec.1599.2  Definitions.

    These are definitions for terms used in this part. The definitions 
in 2 CFR part 200, as supplemented in 2 CFR part 400, are also 
applicable to this part, with the exception that, if a term that is 
defined in this section is defined differently in 2 CFR part 200 or 400, 
the definition in this section will apply to such term as used in this 
part.
    Activity means a discrete undertaking within a project to be carried 
out by a recipient, directly or through a subrecipient, that is 
specified in an agreement and is intended to fulfill a specific 
objective of the agreement.
    Agreement means a legally binding grant or cooperative agreement 
entered into between FAS and a recipient to implement a project under 
the McGovern-Dole Program.
    Commodities means agricultural commodities, or products of 
agricultural commodities, that:
    (1) Are produced in the United States; or
    (2)(i) Are produced in and procured from:
    (A) A developing country that is a target country; or
    (B) A developing country in the target region; and
    (ii) At a minimum, meet each nutritional, quality, and labeling 
standard of the target country, as determined by the Secretary of 
Agriculture.
    Cooperative means a private sector organization whose members own 
and control the organization and share in its services and its profits 
and that provides business services and outreach in cooperative 
development for its membership.
    Cost sharing or matching means the portion of project expenses, or 
necessary goods and services provided to carry out a project, not paid 
or acquired with Federal funds. The term may include cash or in-kind 
contributions provided by recipients, subrecipients, foreign public 
entities, foreign organizations, or private donors.
    Country of origin means the country in which procured commodities 
were produced.
    Developing country means a country that has a shortage of foreign 
exchange earnings and has difficulty meeting all of its food needs 
through commercial channels.
    Disburse means to make a payment to liquidate an obligation.
    Donated commodities means the commodities produced in the United 
States that are donated by FAS to a recipient under an agreement. The 
term may include donated commodities that are used to produce a further 
processed product for use under the agreement.
    FAS means the Foreign Agricultural Service of the United States 
Department of Agriculture.
    FAS-provided funds means U.S. dollars provided under an agreement to 
a recipient, or through a subagreement to a subrecipient, for expenses 
authorized in the agreement, such as expenses for the purchase of 
qualified commodities; any ocean transportation of the procured 
commodities; overland transportation, storage, and handling of the 
donated commodities or procured commodities; expenses involved in the 
administration, monitoring, and evaluation of the activities under the 
agreement; and the costs of activities conducted in the target country 
that would enhance the effectiveness of the activities implemented under 
the McGovern-Dole Program.
    Food assistance means assistance that is provided to members of a 
targeted vulnerable group to meet their food needs.
    Local procurement means the procurement of qualified commodities by 
a recipient, directly or through a subrecipient, in the target country 
to assist beneficiaries within that same country.

[[Page 1205]]

    McGovern-Dole Program means the McGovern-Dole International Food for 
Education and Child Nutrition Program.
    Overland transportation means any transportation other than ocean 
transportation. It includes internal transportation within the target 
country and regional transportation within the target region.
    Private voluntary organization means a not-for-profit, 
nongovernmental organization (in the case of a United States 
organization, an organization that is exempt from Federal income taxes 
under section 501(c)(3) of the Internal Revenue Code of 1986) that 
receives funds from private sources, voluntary contributions of money, 
staff time, or in-kind support from the public, and that is engaged in 
or is planning to engage in voluntary, charitable, or development 
assistance activities (other than religious activities).
    Procured commodities means the qualified commodities that are 
procured by a recipient, directly or through a subrecipient, under an 
agreement.
    Program income means interest earned on proceeds from the sale of 
donated commodities, as well as funds received by a recipient or 
subrecipient as a direct result of carrying out an approved activity 
under an agreement. The term includes but is not limited to income from 
fees for services performed, the use or rental of real or personal 
property acquired under a Federal award, the sale of items fabricated 
under a Federal award, license fees and royalties on patents and 
copyrights, and principal and interest on loans made with Federal award 
funds. Program income does not include proceeds from; FAS-provided funds 
or interest earned on such funds; or funds provided for cost sharing or 
matching contributions, refunds or rebates, credits, discounts, or 
interest earned on any of them.
    Project means the totality of the activities to be carried out by a 
recipient, directly or through a subrecipient, to fulfill the objectives 
of an agreement.
    Purchase country means a developing country in which procured 
commodities are purchased.
    Qualified commodities means commodities that are produced in a 
developing country that is the target country or in the target region 
under an agreement, and that meet each nutritional, quality, and 
labeling standard of the target country, as determined by the Secretary 
of Agriculture, as well as any other criteria specified in Sec.
1599.6(b).
    Recipient means an entity that enters into an agreement with FAS and 
receives donated commodities, FAS-provided funds, or both to carry out 
activities under the agreement. The term recipient does not include a 
subrecipient.
    Regional procurement means the procurement of qualified commodities 
by a recipient, directly or through a subrecipient, in a developing 
country in the target region, other than the target country, to assist 
beneficiaries within the target country.
    Sale proceeds means funds received by a recipient from the sale of 
donated commodities.
    Subrecipient means an entity that enters into a subagreement with a 
recipient for the purpose of implementing in the target country 
activities described in an agreement. The term does not include an 
individual that is a beneficiary under the agreement.
    Target country means the foreign country in which activities are 
implemented under an agreement.
    Target region means the continent on which the target country is 
located.
    USDA means the United States Department of Agriculture.
    Voluntary committed cost sharing or matching contributions means 
cost sharing or matching contributions specifically pledged on a 
voluntary basis by an applicant or recipient, which become binding as 
part of an agreement. Voluntary committed cost sharing or matching 
contributions may be provided in the form of cash or in-kind 
contributions.



Sec.1599.3  Eligibility and conflicts of interest.

    (a) A private voluntary organization, a cooperative, or another 
organization

[[Page 1206]]

that is not an intergovernmental organization is eligible to submit an 
application under this part to become a recipient under the McGovern-
Dole Program. FAS will set forth specific eligibility information, 
including any factors or priorities that will affect the eligibility of 
an applicant or application for selection, in the full text of the 
applicable notice of funding opportunity posted on the U.S. Government 
website for grant opportunities.
    (b) Applicants, recipients, and subrecipients must comply with 
policies established by FAS pursuant to 2 CFR 400.2(a), and with the 
requirements in 2 CFR 400.2(b), regarding conflicts of interest.



Sec.1599.4  Application process.

    (a) An applicant seeking to enter into an agreement with FAS must 
submit an application, in accordance with this section, that sets forth 
its proposal to carry out activities under the McGovern-Dole Program in 
a proposed target country(ies). An application must contain the items 
specified in paragraph (b) of this section and any other items required 
by the notice of funding opportunity and must be submitted 
electronically to FAS at the address set forth in the notice of funding 
opportunity.
    (b) An applicant must include the following items in its 
application:
    (1) A completed Form SF-424, which is a standard application for 
Federal assistance;
    (2) An introduction and a strategic analysis, which includes an 
impact analysis, as specified in the notice of funding opportunity;
    (3) A plan of operation that contains the elements specified in the 
notice of funding opportunity;
    (4) A summary line item budget and a budget narrative that indicate:
    (i) The amounts of any sale proceeds, FAS-provided funds, interest, 
program income, and voluntary committed cost sharing or matching 
contributions that the applicant proposes to use to fund:
    (A) Administrative costs;
    (B) Commodity procurement costs, where applicable, for qualified 
commodities obtained through local or regional procurement;
    (C) Overland transportation, storage, and handling costs; and
    (D) Activity costs;
    (ii) Where applicable, how the applicant's indirect cost rate will 
be applied to each type of expense; and
    (iii) The amount of funding that will be provided to each proposed 
subrecipient under the agreement;
    (5) A project-level results framework that outlines the changes that 
the applicant expects to accomplish through the proposed project and is 
based on the McGovern-Dole Program-level results framework, as set forth 
in the notice of funding opportunity;
    (6) Unless otherwise specified in the notice of funding opportunity, 
an evaluation plan that describes the proposed design, methodology, and 
time frame of the project's evaluation activities, and how the applicant 
intends to manage these activities, and that will include a baseline 
study, interim evaluation, final evaluation, and any applicable special 
studies; and
    (7) Any additional required items set forth in the notice of funding 
opportunity.
    (c) Each applicant (unless the applicant has an exception approved 
by FAS under 2 CFR 25.110(d)) is required to:
    (1) Be registered in the System for Award Management (SAM) before 
submitting its application;
    (2) Provide a valid unique entity identifier in its application; and
    (3) Continue to maintain an active SAM registration with current 
information at all times during which it has an active Federal award or 
an application or plan under consideration by a Federal awarding agency.



Sec.1599.5  Agreements.

    (a) After FAS approves an application by an applicant, FAS will 
negotiate an agreement with the applicant. The agreement will set forth 
the obligations of FAS and the recipient.
    (b) The agreement will specify the general information required in 2 
CFR 200.210(a), as applicable.
    (c) The agreement will incorporate general terms and conditions, 
pursuant to 2 CFR 200.210(b), as applicable.
    (d) To the extent that this information is not already included in 
the agreement pursuant to paragraphs (b)

[[Page 1207]]

and (c) of this section, the agreement will also include the following:
    (1) The kind, quantity, and use of the donated commodities and an 
estimated commodity call forward schedule, with the month and year 
indicated for each expected commodity shipment;
    (2) A plan of operation, which will include the following:
    (i) The objectives to be accomplished under the project;
    (ii) A detailed description of each activity to be implemented;
    (iii) The target country(ies) and the areas of the target 
country(ies) in which the activities will be implemented;
    (iv) The methods and criteria for selecting the beneficiaries of the 
activities;
    (v) Any contributions for cost sharing or matching, including cash 
and non-cash contributions, that the recipient expects to receive from 
non-FAS sources that:
    (A) Are critical to the implementation of the activities; or
    (B) Enhance the implementation of the activities;
    (vi) Any subrecipient that will be involved in the implementation of 
the activities, and the criteria for selecting a subrecipient that has 
not yet been identified;
    (vii) Any other governmental or nongovernmental entities that will 
be involved in the implementation of the activities; and
    (viii) Any processing, packaging, or repackaging of the donated 
commodities or procured commodities that will take place prior to the 
distribution, sale, or barter of the donated commodities, or the 
distribution of the procured commodities, by the recipient;
    (3) A budget, which will set forth the maximum amounts of sale 
proceeds, FAS-provided funds, interest, program income, and voluntary 
committed cost sharing or matching contributions that may be used for 
each line item, as well as other applicable budget requirements;
    (4) Performance goals for the agreement, including a list of 
results, with long-term benefits where applicable, to be achieved by the 
activities and corresponding indicators, targets, and time frames;
    (5) Requirements relating to any local or regional procurement of 
qualified commodities authorized in the agreement, as set forth in Sec.
1599.6; and
    (6) Any additional provisions specified by FAS during the 
negotiation of the agreement.
    (e) The agreement will also include specific terms and conditions, 
and certifications and representations, including the following:
    (1) The agreement will prohibit the sale, resale, or transshipment 
of the donated commodities or procured commodities by the recipient to a 
country not specified in the agreement, or the use of the donated 
commodities for other than domestic purposes, for as long as the 
recipient has title to such donated commodities or procured commodities;
    (2) The agreement will prohibit the use of procured commodities, if 
applicable, for any purpose other than food assistance;
    (3) The recipient will assert that it has taken action to ensure 
that any donated commodities that will be distributed to beneficiaries, 
and any qualified commodities that will be obtained through regional 
procurement, will be imported free from all customs, duties, tolls, and 
taxes; and all donated commodities and procured commodities will be 
distributed free from all customs, duties, tolls, and taxes. The 
recipient must submit information to FAS to support this assertion;
    (4) The recipient will assert that, to the best of its knowledge, 
the importation, if applicable, and distribution of the donated 
commodities or procured commodities in the target country will not 
result in a substantial disincentive to or interference with domestic 
production or marketing in that country. The recipient must submit 
information to FAS to support this assertion;
    (5) The recipient will assert that, to the best of its knowledge, 
any sale or barter of the donated commodities will not displace or 
interfere with any sales of United States commodities that may otherwise 
be made to or within the target country. The recipient must submit 
information to FAS to support this assertion; and

[[Page 1208]]

    (6) The recipient will assert that adequate transportation and 
storage facilities will be available in the target country at the time 
of the arrival of the donated commodities, or any procured commodities 
obtained through regional procurement, to prevent spoilage or waste of 
the donated commodities or procured commodities. The recipient must 
submit information to FAS to support this assertion.
    (f) FAS may enter into a multicountry agreement in which donated 
commodities are delivered to one country and activities are carried out 
in another.
    (g) FAS may provide donated commodities and FAS-provided funds under 
a multiyear agreement contingent upon the availability of commodities 
and funds.



Sec.1599.6  Local and regional procurement of commodities.

    (a)(1) An agreement may authorize a recipient to use FAS-provided 
funds to procure qualified commodities, through a local or regional 
procurement or both, to implement a project. The provisions of this 
section will apply in such a situation.
    (2) The agreement will specify the types of qualified commodities 
approved for procurement; the approved purchase country(ies); and the 
approved method(s) of procurement (local procurement, regional 
procurement, or a combination of these methods). The agreement will 
prohibit the recipient from procuring qualified commodities from any 
country not specified in the agreement or utilizing methods of 
procurement that differ from those approved in the agreement.
    (b) In carrying out an agreement, the recipient must comply with the 
following requirements, as applicable, relating to the procurement of 
qualified commodities under the agreement:
    (1) The recipient must procure qualified commodities at a reasonable 
market price with respect to the economy of the purchase country, as 
determined by FAS.
    (2) If the recipient procures qualified commodities that are grains, 
legumes, or pulses, the commodities must meet the food safety standards 
of the target country; provided, however, that if the target country 
does not have food safety standards for grains, legumes, or pulses, as 
applicable, then the recipient must ensure that such commodities meet 
the food safety standards specified in the agreement.
    (3) If the recipient procures qualified commodities that are food 
products other than grains, legumes or pulses, such as processed foods, 
fortified blended foods, and enriched foods, the commodities must 
comply, in terms of raw materials, composition, or manufacture, with the 
food safety standards specified in the agreement.
    (4) If the recipient procures qualified commodities that are 
cereals, groundnuts, or tree nuts, or food products derived from or 
containing cereals, groundnuts, or tree nuts, the commodities must be 
tested for aflatoxin and have their moisture content certified. The 
maximum acceptable total aflatoxin level is 20 parts per billion, the 
U.S. Food and Drug Administration action level for aflatoxin in human 
foods.
    (5) If the recipient procures an unprocessed commodity, it must 
ensure that the commodity has been produced either in the target country 
or in another developing country within the target region.
    (6) If the recipient procures a processed commodity, it must ensure 
that the processing took place, and the primary ingredient has been 
produced, either in the target country or in another developing country 
within the target region. The primary ingredient is determined on the 
basis of weight in the case of solid foods, or volume in the case of 
liquids.
    (7) If the recipient procures qualified commodities through a 
competitive tender, the recipient must specify the minimally acceptable 
commodity specifications and food safety and quality assurance standards 
in the tender. Purchases that are made from commercial wholesalers in a 
local or regional market must meet the food safety and quality assurance 
standards specified in paragraphs (b)(2), (3), and (4) of this section.
    (8) The recipient must enter into a contract that complies with this 
paragraph (b) for every local or regional procurement of qualified 
commodities

[[Page 1209]]

from a commodity vendor. The recipient must ensure that the contract 
between the recipient and the commodity vendor clearly specifies the 
country of origin and the specific market(s) in which the procurement 
will take place, commodity safety and quality assurance standards, 
product specifications, price per metric ton, and delivery terms. The 
recipient will be required to make such contract available to FAS upon 
request.
    (9) The recipient must enter into a contract with an established 
inspection service to survey and report on the safety, quality, and 
condition of all procured commodities, prior to their shipment and 
distribution. The recipient will be required to submit any survey 
reports or certificates issued by such inspection service to FAS upon 
request.
    (c) The agreement will require the recipient to submit a procurement 
plan for FAS's approval within the time period specified in the 
agreement. The procurement plan will include time periods, broken down 
by month, for commodity procurement, delivery, and distribution. The 
agreement will require the recipient to comply with the procurement 
plan, as approved by FAS, and will prohibit the recipient from making 
any changes to the procurement plan without obtaining the prior written 
approval of FAS.



Sec.1599.7  Payments.

    (a) If a recipient arranges for transportation in accordance with 
Sec.1599.8(b)(2), FAS will, as specified in the agreement, pay the 
costs of such transportation to the ocean carrier or to the recipient. 
The recipient must, as specified in the agreement, submit to FAS, 
arrange to be submitted to FAS, or maintain on file and make available 
to FAS, the following documents:
    (1) The original, or a true copy, of each on board bill of lading 
indicating the freight rate and signed by the originating ocean carrier;
    (2) For all non-containerized cargoes:
    (i) A signed copy of the Federal Grain Inspection Service (FGIS) 
Official Stowage Examination Certificate;
    (ii) A signed copy of the National Cargo Bureau Certificate of 
Readiness; and
    (iii) A signed copy of the Certificate of Loading issued by the 
National Cargo Bureau or a similar qualified independent surveyor;
    (3) For all containerized cargoes, a copy of the FGIS Container 
Condition Inspection Certificate;
    (4) A signed copy of the U.S. Food Aid Booking Note or charter party 
covering ocean transportation of the cargo;
    (5) In the case of charter shipments, a signed notice of arrival at 
the first discharge port, unless FAS has determined that circumstances 
that could not have been reasonably anticipated or controlled (force 
majeure) have prevented the ocean carrier's arrival at the first port of 
discharge; and
    (6) A request for payment of freight, survey costs other than at 
load port, and other expenses approved by FAS.
    (b) If the agreement specifies that some or all of the documents 
listed in paragraph (a) of this section will be submitted to FAS, then 
FAS will not render payment for transportation services until it has 
received all of the specified documents.
    (c) If a recipient arranges for transportation in accordance with 
Sec.1599.8(b)(2), and the recipient uses a freight forwarder, the 
recipient must ensure that the freight forwarder is registered in the 
SAM and require the freight forwarder to submit the documents specified 
in paragraph (a) of this section. The recipient will ensure that the 
total commission or fees paid to intermediaries in the transportation 
procurement process will not exceed two and a half percent of the total 
transportation costs.
    (d) In no case will FAS provide payment to a recipient for demurrage 
costs or pay demurrage to any other entity.
    (e) If FAS has agreed to be responsible for the costs of 
transporting, storing, and distributing the donated commodities from the 
designated discharge port or point of entry, and if the recipient will 
bear or has borne any of these costs, in accordance with the agreement, 
FAS will either provide an advance payment or a reimbursement to the 
recipient in the amount of such costs, in the manner set forth in the 
agreement.

[[Page 1210]]

    (f) If the agreement authorizes the payment of FAS-provided funds, 
FAS will generally provide the funds to the recipient on an advance 
payment basis, in accordance with 2 CFR 200.305(b). In addition, the 
following procedures will apply to advance payments:
    (1) A recipient may request advance payments of FAS-provided funds, 
up to the total amount specified in the agreement. When making an 
advance payment request, a recipient must provide, for each agreement 
for which it is requesting an advance, total expenditures to date; an 
estimate of expenses to be covered by the advance; total advances 
previously requested, if any; the amount of cash on hand from the 
preceding advance; and, if necessary, a request to roll over any unused 
funds from the preceding advance to the current request period. The 
advance payment request must take into account any program income earned 
since the preceding advance.
    (2) Whenever possible, a recipient should consolidate advance 
payment requests to cover anticipated cash needs for all food assistance 
program awards made by FAS to the recipient. A recipient may request 
advance payments with no minimum time required between requests.
    (3) A recipient must minimize the amount of time that elapses 
between the transfer of funds by FAS and the disbursement of funds by 
the recipient. A recipient must fully disburse funds from the preceding 
advance before it submits a new advance request for the same agreement, 
with the exception that the recipient may request to retain a reasonable 
(minimal) balance of any funds that have not been disbursed and roll it 
over into a new advance request if the new advance request is made 
within 90 days after the preceding advance was made.
    (4) FAS will review all requests to roll over funds from the 
preceding advance that have not been disbursed and make a decision based 
on the merits of the request. FAS will consider factors such as the 
amount of funding that a recipient is requesting to roll over, the 
length of time that the recipient has been in possession of the funds, 
any unforeseen or extenuating circumstances, the recipient's history of 
performance, and findings from recent financial audits or compliance 
reviews.
    (5) FAS will not approve any request for an advance or rollover of 
funds if the most recent financial report, as specified in the 
agreement, is past due, or if any required report, as specified in any 
open agreement between the recipient and FAS or the Commodity Credit 
Corporation (CCC), is more than three months in arrears.
    (6)(i) A recipient must return to FAS any funds advanced by FAS that 
have not been disbursed as of the 91st day after the advance was made; 
provided, however, that paragraphs (f)(6)(ii) and (iii) of this section 
will apply if the recipient submits a request to FAS before that date to 
roll over the funds into a new advance.
    (ii) If a recipient submits a request to roll over funds into a new 
advance, and FAS approves the rollover of funds, such funds will be 
considered to have been advanced on the date that the recipient receives 
the approval notice from FAS, for the purposes of complying with the 
requirement in paragraph (f)(6)(i) of this section.
    (iii) If a recipient submits a request to roll over funds into a new 
advance, and FAS does not approve the rollover of some or all of the 
funds, such funds must be returned to FAS.
    (iv) If a recipient must return funds to FAS in accordance with 
paragraph (f)(6) of this section, the recipient must return the funds by 
the later of five business days after the 91st day after the funds were 
advanced, or five business days after the date on which the recipient 
receives notice from FAS that it has denied the recipient's request to 
roll over the funds; provided, however, that FAS may specify a different 
date for the return of funds in a written communication to the 
recipient.
    (7) Except as may otherwise be provided in the agreement, a 
recipient must deposit and maintain in an insured bank account located 
in the United States all funds advanced by FAS. The account must be 
interest-bearing, unless one of the exceptions in 2 CFR 200.305(b)(8) 
applies or FAS determines that the requirement in this paragraph (f)(7) 
would constitute an undue burden. A recipient will not be

[[Page 1211]]

required to maintain a separate bank account for advance payments of 
FAS-provided funds. However, a recipient must be able to separately 
account for the receipt, obligation, and expenditure of funds under each 
agreement.
    (8) A recipient may retain, for administrative expenses, up to $500 
per Federal fiscal year of any interest earned on funds advanced under 
an agreement. The recipient must remit to the U.S. Department of Health 
and Human Services, Payment Management System, any additional interest 
earned during a Federal fiscal year on such funds, in accordance with 
the procedures in 2 CFR 200.305(b)(9).
    (g) If a recipient is required to pay funds to FAS in connection 
with an agreement, the recipient must make such payment in U.S. dollars, 
unless otherwise approved in advance by FAS.



Sec.1599.8  Transportation of donated or procured commodities.

    (a) Shipments of donated commodities and procured commodities 
requiring ocean transportation are subject to the requirements of 46 
U.S.C. 55305, regarding carriage on U.S.-flag vessels.
    (b) Transportation of donated commodities and other goods such as 
bags that may be provided by FAS under the McGovern-Dole Program will be 
arranged for under a specific agreement in the manner determined by FAS. 
Such transportation will be arranged for by:
    (1) FAS in accordance with the Federal Acquisition Regulation (FAR) 
in 48 CFR chapter 1, the Agriculture Acquisition Regulation (AGAR) in 48 
CFR chapter 4, and directives issued by the Director, Office of 
Procurement and Property Management, USDA; or
    (2) The recipient, with payment by FAS, in the manner specified in 
the agreement.
    (c) A recipient must arrange for all transportation of procured 
commodities. FAS will pay for the transportation, as provided for in the 
agreement, through an advance payment or reimbursement to the recipient.
    (d) A recipient that is responsible for arranging for the 
transportation of donated commodities or procured commodities must 
declare in the transportation contract the point at which the ocean 
carrier or overland transportation company will take custody of the 
donated commodities or procured commodities to be transported.
    (e) A recipient may only use the services of a transportation 
company that is legally operating in the country in which it will be 
transporting the donated commodities or procured commodities and that 
would not have a conflict of interest in transporting such donated 
commodities or procured commodities.
    (f) A recipient that arranges for transportation in accordance with 
paragraph (b)(2) of this section may only use the services of a freight 
forwarder that is licensed by the Federal Maritime Commission and that 
would not have a conflict of interest in carrying out the freight 
forwarder duties. To assist FAS in determining whether there is a 
potential conflict of interest, the recipient must submit to FAS a 
certification indicating that the freight forwarder:
    (1) Is not engaged in, and will not engage in, supplying commodities 
or furnishing ocean transportation or ocean transportation-related 
services for commodities provided under any McGovern-Dole Program 
agreement to which the recipient is a party; and
    (2) Is not affiliated with the recipient and has not made 
arrangements to give or receive any payment, kickback, or illegal 
benefit in connection with its selection as an agent of the recipient.



Sec.1599.9  Entry, handling, and labeling of donated or procured 
commodities and notification requirements.

    (a) A recipient must make all necessary arrangements for receiving 
in the target country the donated commodities and any procured 
commodities obtained through regional procurement, including obtaining 
appropriate approvals for entry and transit. The recipient must make 
arrangements with the target country government for all donated 
commodities that will be distributed to beneficiaries, and all procured 
commodities, to be imported and distributed free from all customs 
duties, tolls, and taxes. A recipient is

[[Page 1212]]

encouraged to make similar arrangements, where possible, with the 
government of a country where donated commodities to be sold or bartered 
are delivered.
    (b) A recipient must, as provided in the agreement, arrange for 
transporting, storing, and distributing the donated commodities or 
procured commodities from the designated point and time where title to 
the donated commodities or procured commodities passes to the recipient.
    (c)(1) A recipient must store and maintain the donated commodities 
in good condition from the time of delivery at the port of entry or the 
point of receipt from the originating carrier until their distribution, 
sale, or barter.
    (2) A recipient must store and maintain the procured commodities in 
good condition from the time of delivery at the port of entry or the 
point of receipt from the commodity vendor(s) until their distribution.
    (d)(1) If a recipient arranges for the packaging or repackaging of 
donated commodities that are to be distributed, the recipient must 
ensure that the packaging:
    (i) Is plainly labeled in the language of the target country;
    (ii) Contains the name of the donated commodities;
    (iii) Includes a statement indicating that the donated commodities 
are furnished by the United States Department of Agriculture; and
    (iv) Includes a statement indicating that the donated commodities 
must not be sold, exchanged, or bartered.
    (2) If a recipient arranges for the processing and repackaging of 
donated commodities that are to be distributed, the recipient must 
ensure that the packaging:
    (i) Is plainly labeled in the language of the target country;
    (ii) Contains the name of the processed product;
    (iii) Includes a statement indicating that the processed product was 
made with commodities furnished by the United States Department of 
Agriculture; and
    (iv) Includes a statement indicating that the processed product must 
not be sold, exchanged, or bartered.
    (3) If a recipient arranges for the packaging or repackaging of 
procured commodities, the recipient must ensure that the packaging:
    (i) Is plainly labeled in the language of the target country;
    (ii) Contains the name of the procured commodities;
    (iii) Contains the name of the country of origin;
    (iv) Includes a statement indicating that the procured commodities 
are furnished through a project funded by the United States Department 
of Agriculture; and
    (v) Includes a statement indicating that the procured commodities 
must not be sold, bartered, or exchanged.
    (4)(i) If a recipient distributes donated commodities that are not 
packaged, the recipient must display a sign at the distribution site 
that includes the name of the donated commodities, a statement 
indicating that the commodities are being furnished by the United States 
Department of Agriculture, and a statement indicating that the donated 
commodities must not be sold, bartered, or exchanged.
    (ii) If a recipient distributes procured commodities that are 
prepackaged or not packaged, the recipient must display a sign at the 
distribution site that includes the name of the procured commodities, 
the country of origin, a statement indicating that the procured 
commodities are being furnished through a project funded by the United 
States Department of Agriculture, and a statement indicating that the 
procured commodities must not be sold, bartered, or exchanged.
    (e) A recipient must ensure that signs are displayed at all activity 
implementation and commodity distribution sites to inform beneficiaries 
that funding for the project was provided by the United States 
Department of Agriculture.
    (f) A recipient must also ensure that all public communications 
relating to the project, the activities, or the donated commodities or 
procured commodities, whether made through print, broadcast, digital, or 
other media, include a statement acknowledging that funding was provided 
by the United States Department of Agriculture.

[[Page 1213]]

    (g) FAS may waive compliance with one or more of the labeling and 
notification requirements in paragraphs (d), (e), and (f) of this 
section if a recipient demonstrates to FAS that the requirement presents 
a safety or security risk in the target country. If a recipient 
determines that compliance with a labeling or notification requirement 
poses an imminent threat of destruction of property, injury, or loss of 
life, the recipient must submit a waiver request to FAS as soon as 
possible. The recipient will not have to comply with such requirement 
during the period prior to the issuance of a waiver determination by 
FAS. A recipient may submit a written request for a waiver at any time 
after the agreement has been signed.
    (h) In exceptional circumstances, FAS may, on its own initiative, 
waive one or more of the labeling and notification requirements in 
paragraphs (d), (e), and (f) of this section for programmatic reasons.



Sec.1599.10  Damage to or loss of donated or procured commodities.

    (a)(1) FAS will be responsible for the donated commodities prior to 
the transfer of title to the donated commodities to the recipient. The 
recipient will be responsible for the donated commodities following the 
transfer of title to the donated commodities to the recipient. The title 
will transfer as specified in the agreement.
    (2) A recipient will be responsible for the procured commodities 
following the transfer of title to the procured commodities from the 
commodity vendor(s) to the recipient. FAS may require the recipient to 
purchase transportation insurance against commodity loss or damage.
    (b) A recipient must inform FAS, in the manner and within the time 
period set forth in the agreement, of any damage to or loss of the 
donated commodities or procured commodities that occurs following the 
transfer of title to the donated commodities or procured commodities to 
the recipient. The recipient must take all steps necessary to protect 
its interests and the interests of FAS with respect to any damage to or 
loss of the donated commodities or procured commodities that occurs 
after title has been transferred to the recipient.
    (c) A recipient will be responsible for arranging for an independent 
cargo surveyor to inspect the donated commodities, and any procured 
commodities transported by ocean, upon discharge from the ocean carrier 
and to prepare a survey or outturn report. The report must show the 
quantity and condition of the donated commodities or procured 
commodities discharged from the ocean carrier and must indicate the most 
likely cause of any damage noted in the report. The report must also 
indicate the time and place when the survey took place. All discharge 
surveys must be conducted contemporaneously with the discharge of the 
ocean carrier, unless FAS determines that failure to do so was justified 
under the circumstances. For donated commodities or procured commodities 
shipped on a through bill of lading, the recipient must also obtain a 
delivery survey. All surveys obtained by the recipient must, to the 
extent practicable, be conducted jointly by the surveyor, the recipient, 
and the carrier, and the survey report must be signed by all three 
parties. The recipient must obtain a copy of each discharge or delivery 
survey report within 45 days after the completion of the survey. The 
recipient must make each such report available to FAS upon request, or 
in the manner specified in the agreement. FAS will reimburse the 
recipient for the reasonable costs of these services, as determined by 
FAS, in the manner specified in the agreement.
    (d) When procured commodities are transported overland, the 
recipient will ensure that the overland transportation contract includes 
a requirement that a loading and offloading report be prepared and 
provided to the recipient. The report must show the quantity and 
condition of the procured commodities loaded on the overland conveyance, 
as well as the time and place that the loading and offloading occurred. 
The recipient must obtain a copy of the report from the overland 
transportation company within 45 days after the completion of the 
commodity delivery. The recipient must make each such report available 
to FAS upon request, or in

[[Page 1214]]

the manner specified in the agreement. FAS will reimburse the recipient 
for the reasonable costs of these services, as determined by FAS, in the 
manner specified in the agreement.
    (e) If donated commodities or procured commodities are damaged or 
lost during the time that they are in the care of the ocean carrier or 
overland transportation company:
    (1) The recipient must ensure that any reports, narrative 
chronology, or other commentary prepared by the independent cargo 
surveyor, and any such documentation prepared by a port authority, 
stevedoring service, or customs official, or an official of the transit 
or target country government or the transportation company, are provided 
to FAS;
    (2) The recipient must provide to FAS the names and addresses of any 
individuals known to be present at the time of discharge or unloading, 
or during the survey, who can verify the quantity of damaged or lost 
donated commodities or procured commodities;
    (3) If the damage or loss occurred with respect to a bulk shipment 
on an ocean carrier, the recipient must ensure that the independent 
cargo surveyor:
    (i) Observes the discharge of the cargo;
    (ii) Reports on discharging methods, including scale type, 
calibrations, and any other factors that may affect the accuracy of 
scale weights, and, if scales are not used, states the reason therefor 
and describes the actual method used to determine weight;
    (iii) Estimates the quantity of cargo, if any, lost during discharge 
through carrier negligence;
    (iv) Advises on the quality of sweepings;
    (v) Obtains copies of port or ocean carrier records, if possible, 
showing the quantity discharged; and
    (vi) Notifies the recipient immediately if the surveyor has reason 
to believe that the correct quantity was not discharged or if additional 
services are necessary to protect the cargo; and
    (4) If the damage or loss occurred with respect to a container 
shipment on an ocean carrier, the recipient must ensure that the 
independent cargo surveyor lists the container numbers and seal numbers 
shown on the containers, indicates whether the seals were intact at the 
time the containers were opened, and notes whether the containers were 
in any way damaged.
    (f) If a recipient has title to the donated commodities or procured 
commodities, and commodities valued in excess of $5,000 are damaged at 
any time prior to their distribution or sale under the agreement, 
regardless of the party at fault, the recipient must immediately arrange 
for an inspection by a public health official or other competent 
authority approved by FAS and provide to FAS a certification by such 
public health official or other competent authority regarding the exact 
quantity and condition of the damaged donated commodities or procured 
commodities. The value of damaged donated commodities must be determined 
on the basis of the commodity acquisition, transportation, and related 
costs incurred by FAS with respect to such commodities, as well as such 
costs incurred by the recipient and paid by FAS. The value of damaged 
procured commodities must be determined on the basis of the commodity 
acquisition, transportation, and related costs incurred by the recipient 
and paid by FAS with respect to such commodities. The recipient must 
inform FAS of the results of the inspection and indicate whether the 
damaged donated commodities or procured commodities are:
    (1) Fit for the use authorized in the agreement and, if so, whether 
there has been a diminution in quality; or
    (2) Unfit for the use authorized in the agreement.
    (g)(1) If a recipient has title to the donated commodities or 
procured commodities, the recipient must arrange for the recovery of 
that portion of the donated commodities or procured commodities 
designated as fit for the use authorized in the agreement. The recipient 
must dispose of donated commodities or procured commodities that are 
unfit for such use in the following order of priority:
    (i) Sale for the most appropriate use, i.e., animal feed, 
fertilizer, industrial use, or another use approved by FAS, at the 
highest obtainable price;

[[Page 1215]]

    (ii) Donation to a governmental or charitable organization for use 
as animal feed or another non-food use; or
    (iii) Destruction of the donated commodities or procured commodities 
if they are unfit for any use, in such manner as to prevent their use 
for any purpose.
    (2) A recipient must arrange for all U.S. Government markings to be 
obliterated or removed before the donated commodities or procured 
commodities are transferred by sale or donation under paragraph (g)(1) 
of this section.
    (h) A recipient may retain any proceeds generated by the disposal of 
the donated commodities or procured commodities in accordance with 
paragraph (g)(1) of this section and must use the retained proceeds for 
expenses related to the disposal of the donated commodities or procured 
commodities and for activities specified in the agreement.
    (i) A recipient must notify FAS immediately and provide detailed 
information about the actions taken in accordance with paragraph (g) of 
this section, including the quantities, values, and dispositions of 
donated commodities or procured commodities determined to be unfit.



Sec.1599.11  Claims for damage to or loss of donated or procured 
commodities.

    (a)(1) FAS will be responsible for claims arising out of damage to 
or loss of a quantity of the donated commodities prior to the transfer 
of title to the donated commodities to the recipient. The recipient will 
be responsible for claims arising out of damage to or loss of a quantity 
of the donated commodities after the transfer of title to the donated 
commodities.
    (2) The recipient will be responsible for claims arising out of 
damage to or loss of a quantity of the procured commodities after the 
transfer of title to the procured commodities from the commodity 
vendor(s) to the recipient.
    (b) If a recipient has title to donated commodities or procured 
commodities that have been damaged or lost, and the value of the damaged 
or lost commodities is estimated to be in excess of $20,000, the 
recipient must:
    (1) Notify FAS immediately and provide detailed information about 
the circumstances surrounding such damage or loss, the quantity of 
damaged or lost commodities, and the value of the damage or loss;
    (2) Promptly upon discovery of the damage or loss, initiate a claim 
arising out of such damage or loss, including, if appropriate, 
initiating an action to collect pursuant to a commercial insurance 
contract;
    (3) Take all necessary action to pursue the claim diligently and 
within any applicable periods of limitations; and
    (4) Provide to FAS copies of all documentation relating to the 
claim.
    (c) If a recipient has title to donated commodities or procured 
commodities that have been damaged or lost, and the value of the damaged 
or lost commodities is estimated to be $20,000 or less, the recipient 
must notify FAS in accordance with the agreement and provide detailed 
information about the damage or loss in the next report required to be 
filed under Sec.1599.14(f)(1) or (2).
    (d)(1) The value of a claim for lost donated commodities will be 
determined on the basis of the commodity acquisition, transportation, 
and related costs incurred by FAS with respect to such commodities, as 
well as such costs incurred by the recipient and paid by FAS. The value 
of a claim for lost procured commodities will be determined on the basis 
of the commodity acquisition, transportation, and related costs incurred 
by the recipient and paid by FAS with respect to such commodities.
    (2) The value of a claim for damaged donated commodities will be 
determined on the basis of the commodity acquisition, transportation, 
and related costs incurred by FAS with respect to such commodities, as 
well as such costs incurred by the recipient and paid by FAS, less any 
funds generated if such commodities are sold in accordance with Sec.
1599.10(g)(1). The value of a claim for damaged procured commodities 
will be determined on the basis of the commodity acquisition, 
transportation, and related costs incurred by the recipient and paid by 
FAS with respect to such commodities, less any funds generated if such 
commodities are sold in accordance with Sec.1599.10(g)(1).

[[Page 1216]]

    (e) If FAS determines that a recipient has not initiated a claim or 
is not exercising due diligence in the pursuit of a claim, FAS may 
require the recipient to assign its rights to initiate or pursue the 
claim to FAS. Failure by the recipient to initiate a claim or exercise 
due diligence in the pursuit of a claim will be considered by FAS during 
the review of applications for subsequent food assistance awards.
    (f)(1) A recipient may retain any funds obtained as a result of a 
claims collection action initiated by it in accordance with this 
section, or recovered pursuant to any insurance policy or other similar 
form of indemnification, but such funds must be expended in accordance 
with the agreement or for other purposes approved in advance by FAS.
    (2) FAS will retain any funds obtained as a result of a claims 
collection action initiated by it under this section; provided, however, 
that if the recipient paid for the transportation of the donated 
commodities or procured commodities or a portion thereof, FAS will use a 
portion of such funds to reimburse the recipient for such expense on a 
prorated basis.



Sec.1599.12  Use of donated or procured commodities, sale proceeds,
FAS-provided funds, and program income.

    (a) A recipient must use the donated commodities or procured 
commodities, any sale proceeds, FAS-provided funds, interest, and 
program income in accordance with the agreement.
    (b) A recipient must not use donated commodities or procured 
commodities, sale proceeds, FAS-provided funds, interest, or program 
income for any activity or any expense incurred by the recipient or a 
subrecipient prior to the start date of the period of performance of the 
agreement or after the agreement is suspended or terminated, without the 
prior written approval of FAS.
    (c) A recipient must not permit the distribution, handling, or 
allocation of donated commodities or procured commodities on the basis 
of political affiliation, geographic location, or the ethnic, tribal, or 
religious identity or affiliation of the potential consumers or 
beneficiaries.
    (d) A recipient must not permit the distribution, handling, or 
allocation of donated commodities or procured commodities by the 
military forces of any government or insurgent group without the 
specific authorization of FAS.
    (e) A recipient must not use sale proceeds, FAS-provided funds, 
interest, or program income to acquire goods and services, either 
directly or indirectly through another party, in a manner that violates 
a U.S. Government economic sanction program, as specified in the 
agreement.
    (f)(1) A recipient may sell or barter donated commodities only if 
such sale or barter is provided for in the agreement or the recipient is 
disposing of damaged donated commodities as specified in Sec.
1599.10(g). The recipient must sell donated commodities at a reasonable 
market price. The recipient must obtain approval of its proposed sale 
price from FAS before selling donated commodities. The recipient must 
use any sale proceeds, interest, program income, or goods or services 
derived from the sale or barter of the donated commodities only as 
provided in the agreement.
    (2) A recipient may sell procured commodities only if the recipient 
is disposing of damaged procured commodities as specified in Sec.
1599.10(g).
    (g) A recipient must deposit and maintain all sale proceeds, FAS-
provided funds, and program income in a bank account until they are used 
for a purpose authorized under the agreement or the FAS-provided funds 
are returned to FAS in accordance with Sec.1599.7(f)(6). The account 
must be insured unless it is in a country where insurance is 
unavailable. The account must be interest-bearing, unless one of the 
exceptions in 2 CFR 200.305(b)(8) applies or FAS determines that the 
requirement in this paragraph (g) would constitute an undue burden. The 
recipient must comply with the requirements in Sec.1599.7(f)(7) with 
regard to the deposit of advance payments by FAS.
    (h)(1) Except as provided in paragraph (h)(2) of this section, a 
recipient may make adjustments within the agreement budget between 
direct cost line items without further approval, provided that the total 
amount of adjustments does not exceed the amount

[[Page 1217]]

specified in the agreement. Adjustments beyond the limits in this 
paragraph (h) require the prior approval of FAS.
    (2) A recipient must not transfer any funds budgeted for participant 
support costs, as defined in 2 CFR 200.75, to other categories of 
expense without the prior approval of FAS.
    (i) A recipient may use sale proceeds, FAS-provided funds, or 
program income to purchase real or personal property only if local law 
permits the recipient to retain title to such property. However, a 
recipient must not use sale proceeds, FAS-provided funds, or program 
income to pay for the acquisition, development, construction, alteration 
or upgrade of real property that is:
    (1) Owned or managed by a church or other organization engaged 
exclusively in religious pursuits; or
    (2) Used in whole or in part for sectarian purposes, except that a 
recipient may use sale proceeds, FAS-provided funds, or program income 
to pay for repairs to or rehabilitation of a structure located on such 
real property to the extent necessary to avoid spoilage or loss of 
donated commodities or procured commodities, but only if the structure 
is not used in whole or in part for any religious or sectarian purposes 
while the donated commodities or procured commodities are stored in it. 
If the use of sale proceeds, FAS-provided funds, or program income to 
pay for repairs to or rehabilitation of such a structure is not 
specifically provided for in the agreement, the recipient must not use 
the sale proceeds, FAS-provided funds, or program income for this 
purpose until it receives written approval from FAS.
    (j) A recipient must comply with 2 CFR 200.321 when procuring goods 
and services in the United States. When procuring goods and services 
outside of the United States, a recipient should endeavor to comply with 
2 CFR 200.321 where practicable.
    (k) A recipient must enter into a written contract with each 
provider of goods, services, or construction work that is valued at or 
above the Simplified Acquisition Threshold. Each such contract must 
require the provider to maintain adequate records to account for all 
donated commodities, funds, or both furnished to the provider by the 
recipient and to comply with any other applicable requirements that may 
be specified by FAS in the agreement. The recipient must submit a copy 
of each signed contract to FAS, as specified in the agreement.



Sec.1599.13  Monitoring and evaluation requirements.

    (a) A recipient will be responsible for designing a performance 
monitoring plan for the project, obtaining written approval of the plan 
from FAS before putting it into effect, and managing and implementing 
the plan, unless otherwise specified in the agreement.
    (b) A recipient must establish baseline values, annual targets, and 
life of activity targets for each performance indicator included in the 
recipient's approved performance monitoring plan, unless otherwise 
specified in the agreement.
    (c) A recipient must inform FAS, in the manner and within the time 
period specified in the agreement, of any problems, delays, or adverse 
conditions that materially impair the recipient's ability to meet the 
objectives of the agreement. This notification must include a statement 
of any corrective actions taken or contemplated by the recipient, and 
any additional assistance requested from FAS to resolve the situation.
    (d) A recipient will be responsible for designing an evaluation plan 
for the project, obtaining written approval of the plan from FAS before 
putting it into effect, and arranging for an independent third party to 
implement the evaluation, unless otherwise specified in the agreement. 
This evaluation plan will detail the evaluation purpose and scope, key 
evaluation questions, evaluation methodology, time frame, evaluation 
management, and cost. This plan will generally be based upon the 
evaluation plan that the recipient submitted to FAS as part of its 
application, pursuant to Sec.1599.4(b)(6), unless the notice of 
funding opportunity specified that an evaluation plan was not required 
to be included in the application. The recipient must ensure that the 
evaluation plan:

[[Page 1218]]

    (1) Is designed using the most rigorous methodology that is 
appropriate and feasible, taking into account available resources, 
strategy, current knowledge and evaluation practices in the sector, and 
the implementing environment;
    (2) Is designed to inform management, activity implementation, and 
strategic decision-making;
    (3) Utilizes analytical approaches and methodologies, based on the 
questions to be addressed, project design, budgetary resources 
available, and level of rigor and evidence required, which may be 
implemented through methods such as case studies, surveys, quasi-
experimental designs, randomized field experiments, cost-effectiveness 
analyses, implementation reviews, or a combination of methods;
    (4) Adheres to generally accepted evaluation standards and 
principles;
    (5) Uses participatory approaches that seek to include the 
perspectives of diverse parties and all relevant stakeholders; and
    (6) Where possible, utilizes local consultants and seeks to build 
local capacity in evaluation.
    (e)(1) Unless otherwise provided in the agreement, a recipient must 
arrange for evaluations of the project to be conducted by an independent 
third party that:
    (i) Is financially and legally separate from the recipient's 
organization; and
    (ii) Has staff with demonstrated methodological, cultural, and 
language competencies, and specialized experience in conducting 
evaluations of international development programs involving agriculture, 
trade, education, and nutrition, provided that FAS may determine that, 
for a particular agreement, the staff of the independent third party 
evaluator is not required to have specialized experience in conducting 
evaluations of programs involving one or more of these four areas.
    (2) A recipient must provide a written certification to FAS that 
there is no real or apparent conflict of interest on the part of any 
recipient staff member or third party entity designated or hired to play 
a substantive role in the evaluation of activities under the agreement.
    (f) FAS will be considered a key stakeholder in all evaluations 
conducted as part of the agreement.
    (g)(1) A recipient is responsible for establishing the required 
financial and human capital resources for monitoring and evaluation of 
activities under the agreement. The recipient must maintain a separate 
budget for monitoring and evaluation, with separate budget line items 
for dedicated recipient monitoring and evaluation staff and independent 
third party evaluation contracts.
    (2) Personnel at the recipient's headquarters offices and field 
offices with specialized expertise and experience in monitoring and 
evaluation may be used by the recipient for dedicated monitoring and 
evaluation. Unless otherwise specified in the agreement or approved 
evaluation plan, all evaluations must be managed by the recipient's 
evaluation experts outside of the recipient's line management for the 
activities.
    (h) FAS may independently conduct or commission an evaluation of a 
single agreement or an evaluation that includes multiple agreements. A 
recipient must cooperate, and comply with any demands for information or 
materials made in connection, with any evaluation conducted or 
commissioned by FAS. Such evaluations may be conducted by FAS internally 
or by an FAS-hired external evaluation contractor.



Sec.1599.14  Reporting and record keeping requirements.

    (a) A recipient must comply with the performance and financial 
monitoring and reporting requirements in the agreement and 2 CFR 200.327 
through 200.329.
    (b) A recipient must submit financial reports to FAS, by the dates 
and for the reporting periods specified in the agreement. Such reports 
must provide an accurate accounting of sale proceeds, FAS-provided 
funds, interest, program income, and voluntary committed cost sharing or 
matching contributions.
    (c)(1) A recipient must submit performance reports to FAS, by the 
dates and for the reporting periods specified in the agreement. These 
reports must

[[Page 1219]]

include the information required in 2 CFR 200.328(b)(2), including 
additional pertinent information regarding the recipient's progress, 
measured against established indicators, baselines, and targets, towards 
achieving the expected results specified in the agreement. This 
reporting must include, for each performance indicator, a comparison of 
actual accomplishments with the baseline and the targets established for 
the period. When actual accomplishments deviate significantly from 
targeted goals, the recipient must provide an explanation in the report.
    (2) A recipient must ensure the accuracy and reliability of the 
performance data submitted to FAS in performance reports. At any time 
during the period of performance of the agreement, FAS may review the 
recipient's performance data to determine whether it is accurate and 
reliable. The recipient must comply with all requests made by FAS or an 
entity designated by FAS in relation to such reviews.
    (d) Baseline, interim, and final evaluation reports are required for 
all agreements, unless otherwise specified in the agreement. The reports 
must be submitted in accordance with the timeline provided in the FAS-
approved evaluation plan. Evaluation reports submitted to FAS may be 
made public in an effort to increase accountability and transparency and 
share lessons learned and best practices.
    (e)(1) A recipient must, within 30 days after export of all or a 
portion of the donated commodities, submit evidence of such export to 
FAS, in the manner set forth in the agreement. The evidence may be 
submitted through an electronic media approved by FAS or by providing 
the carrier's on board bill of lading. The evidence of export must show 
the kind and quantity of commodities exported, the date of export, and 
the country where the commodities will be delivered. The date of export 
is the date that the ocean carrier carrying the donated commodities 
sails from the final U.S. load port.
    (2) A recipient must, if it has obtained procured commodities 
requiring ocean transportation, within 30 days after export of all or a 
portion of the procured commodities, submit evidence of such export to 
FAS, in the manner set forth in the agreement. The evidence may be 
submitted through an electronic media approved by FAS or by providing 
the carrier's on board bill of lading. The evidence of export must show 
the kind and quantity of commodities exported, the date of export, and 
the country where the commodities will be delivered. The date of export 
is the date that the ocean carrier carrying the procured commodities 
sails from the load port in the target region.
    (f)(1) A recipient must submit reports to FAS, using a form 
prescribed by FAS, covering the receipt, handling, and disposition of 
the donated commodities or procured commodities. Such reports must be 
submitted to FAS, by the dates and for the reporting periods specified 
in the agreement, until all of the donated commodities or procured 
commodities have been distributed, sold or bartered and such disposition 
has been reported to FAS.
    (2) If the agreement authorizes the sale or barter of donated 
commodities, the recipient must submit to FAS, using a form prescribed 
by FAS, reports covering the receipt and use of the sale proceeds when 
the donated commodities were sold, the goods and services derived from 
barter when the donated commodities were bartered, and program income. 
Such reports must be submitted to FAS, by the dates and for the 
reporting periods specified in the agreement, until all of the sale 
proceeds and program income have been disbursed and reported to FAS. 
When reporting financial information, the recipient must include the 
amounts in U.S. dollars and the exchange rate if proceeds are held in 
local currency.
    (g) If requested by FAS, a recipient must provide to FAS additional 
information or reports relating to the agreement.
    (h) If a recipient requires an extension of a reporting deadline, it 
must ensure that FAS receives an extension request at least five 
business days prior to the reporting deadline. FAS may decline to 
consider a request for an extension that it receives after this time 
period. FAS will consider requests for reporting deadline extensions on 
a case by case basis and make a decision

[[Page 1220]]

based on the merits of each request. FAS will consider factors such as 
unforeseen or extenuating circumstances and past performance history 
when evaluating requests for extensions.
    (i) A recipient must retain records and permit access to records in 
accordance with the requirements of 2 CFR 200.333 through 200.337. The 
date of submission of the final expenditure report, as referenced in 2 
CFR 200.333, will be the final date of submission of the reports 
required by paragraphs (f)(1) and (2) of this section, as prescribed by 
FAS. The recipient must retain copies of and make available to FAS all 
sales receipts, contracts, or other documents related to the procurement 
of qualified commodities, the sale or barter of donated commodities, and 
any goods or services derived from such barter, as well as records of 
dispatch received from ocean carriers or overland transportation 
companies.



Sec.1599.15  Subrecipients.

    (a) A recipient may utilize the services of a subrecipient to 
implement activities under the agreement if this is provided for in the 
agreement. The subrecipient may receive donated commodities or procured 
commodities, sale proceeds, FAS-provided funds, program income, or other 
resources from the recipient for this purpose. The recipient must enter 
into a written subagreement with the subrecipient and comply with the 
applicable provisions of 2 CFR 200.331. The recipient must provide a 
copy of such subagreement to FAS, in the manner set forth in the 
agreement, prior to the transfer of any donated commodities or procured 
commodities, sale proceeds, FAS-provided funds, or program income to the 
subrecipient.
    (b) A recipient must include the following requirements in a 
subagreement:
    (1) The subrecipient is required to comply with the applicable 
provisions of this part and 2 CFR parts 200 and 400. The applicable 
provisions are those that relate specifically to subrecipients, as well 
as those relating to non-Federal entities that impose requirements that 
would be reasonable to pass through to a subrecipient because they 
directly concern the implementation by the subrecipient of one or more 
activities under the agreement. If there is a question about whether a 
particular provision is applicable, FAS will make the determination.
    (2) The subrecipient is prohibited from using sale proceeds, FAS-
provided funds, interest, or program income to acquire goods and 
services, either directly or indirectly through another party, in a 
manner that violates a U.S. Government economic sanction program, as 
specified in the agreement.
    (3) The subrecipient must pay to the recipient the value of any 
donated commodities or procured commodities, sale proceeds, FAS-provided 
funds, interest, or program income that are not used in accordance with 
the subagreement, or that are lost, damaged, or misused as a result of 
the subrecipient's failure to exercise reasonable care.
    (4) In accordance with Sec.1599.19 and 2 CFR 200.501(h), a 
description of the applicable compliance requirements and the 
subrecipient's compliance responsibility. Methods to ensure compliance 
may include pre-award audits, monitoring during the agreement, and post-
award audits.
    (c) A recipient must monitor the actions of a subrecipient as 
necessary to ensure that donated commodities or procured commodities, 
sale proceeds, FAS-provided funds, and program income provided to the 
subrecipient are used for authorized purposes in compliance with 
applicable U.S. Federal laws and regulations and the subagreement and 
that performance indicator targets are achieved for both activities and 
results under the agreement.



Sec.1599.16  Noncompliance with an agreement.

    If a recipient fails to comply with a Federal statute or regulation 
or the terms and conditions of the agreement, and FAS determines that 
the noncompliance cannot be remedied by imposing additional conditions, 
FAS may take one or more of the actions set forth in 2 CFR 200.338, 
including initiating a claim as a remedy. FAS may also initiate a claim 
against a recipient if the donated commodities or procured commodities 
are damaged or lost, or the sale proceeds, goods received through 
barter, FAS-provided

[[Page 1221]]

funds, interest, or program income are misused or lost, due to an action 
or omission of the recipient.



Sec.1599.17  Suspension and termination of agreements.

    (a) An agreement or subagreement may be suspended or terminated in 
accordance with 2 CFR 200.338 or 200.339. FAS may suspend or terminate 
an agreement if it determines that:
    (1) One of the bases in 2 CFR 200.338 or 200.339 for termination or 
suspension by FAS has been satisfied;
    (2) The continuation of the assistance provided under the agreement 
is no longer necessary or desirable; or
    (3) Storage facilities are inadequate to prevent spoilage or waste, 
or distribution of the donated commodities or procured commodities will 
result in substantial disincentive to, or interference with, domestic 
production or marketing in the target country.
    (b) If an agreement is terminated, the recipient:
    (1) Is responsible for the security and integrity of any 
undistributed donated commodities or procured commodities and must 
dispose of such commodities only as agreed to by FAS;
    (2) Is responsible for any sale proceeds, FAS-provided funds, 
interest, or program income that have not been disbursed and must use or 
return them only as agreed to by FAS; and
    (3) Must comply with any closeout and post-closeout procedures 
specified in the agreement and 2 CFR 200.343 and 200.344.



Sec.1599.18  Opportunities to object and appeals.

    (a) FAS will provide an opportunity to a recipient to object to, and 
provide information and documentation challenging, any action taken by 
FAS pursuant to Sec.1599.16. FAS will comply with any requirements for 
hearings, appeals, or other administrative proceedings to which the 
recipient is entitled under any other statute or regulation applicable 
to the action involved. For example, if the action taken by FAS pursuant 
to Sec.1599.16 is to initiate suspension or debarment proceedings as 
authorized under 2 CFR parts 180 and 417, then the requirements in 2 CFR 
parts 180 and 417 will apply instead of the requirements in this 
section. In the absence of other applicable statutory or regulatory 
requirements, the requirements set forth in this section will apply.
    (b) The recipient must submit its objection in writing, along with 
any documentation, to the official specified in the agreement within 30 
days after the date of FAS's written notification to the recipient of 
the FAS action being challenged. This official will endeavor to notify 
the recipient of his or her determination (the initial determination) 
within 60 days after the date that FAS received the recipient's written 
objection.
    (c) The recipient may appeal the initial determination to the 
Administrator, FAS. An appeal must be in writing and be submitted to the 
Office of the Administrator within 30 days after the date of the initial 
determination. The recipient may submit additional documentation with 
its appeal.
    (d) The Administrator will base the determination on appeal upon 
information contained in the administrative record and will endeavor to 
make a determination within 60 days after the date that FAS received the 
appeal. The determination of the Administrator will be the final 
determination of FAS. The recipient must exhaust all administrative 
remedies contained in this section before pursuing judicial review of a 
determination by the Administrator.



Sec.1599.19  Audit requirements.

    (a) The audit requirements in subpart F of 2 CFR part 200 apply to 
recipients and subrecipients under this part other than those that are 
for-profit entities, foreign public entities, or foreign organizations.
    (b) A recipient or subrecipient that is a for-profit entity or a 
foreign organization, and that expends, during its fiscal year, a total 
of at least the audit requirement threshold in 2 CFR 200.501 in Federal 
awards, is required to obtain an audit. Such a recipient or subrecipient 
has the following two options to satisfy the requirement in this 
paragraph (b):
    (1)(i) A financial audit of the agreement or subagreement, in 
accordance

[[Page 1222]]

with the Government Auditing Standards issued by the United States 
Government Accountability Office (GAO), if the recipient or subrecipient 
expends Federal awards under only one FAS program during such fiscal 
year; or
    (ii) A financial audit of all Federal awards from FAS, in accordance 
with GAO's Government Auditing Standards, if the recipient or 
subrecipient expends Federal awards under multiple FAS programs during 
such fiscal year; or
    (2) An audit that meets the requirements contained in subpart F of 2 
CFR part 200.
    (c) A recipient or subrecipient that is a for-profit entity or a 
foreign organization, and that expends, during its fiscal year, a total 
that is less than the audit requirement threshold in 2 CFR 200.501 in 
Federal awards, is exempt from requirements under this section for an 
audit for that year, except as provided in paragraphs (d) and (f) of 
this section, but it must make records available for review by 
appropriate officials of Federal agencies.
    (d) FAS may require an annual financial audit of an agreement or 
subagreement when the audit requirement threshold in 2 CFR 200.501 is 
not met. In that case, FAS must provide funds under the agreement for 
this purpose, and the recipient or subrecipient, as applicable, must 
arrange for such audit and submit it to FAS.
    (e) When a recipient or subrecipient that is a for-profit entity or 
a foreign organization is required to obtain a financial audit under 
this section, it must provide a copy of the audit to FAS within 60 days 
after the end of its fiscal year.
    (f) FAS, the USDA Office of Inspector General, or GAO may conduct or 
arrange for additional audits of any recipients or subrecipients, 
including for-profit entities and foreign organizations. Recipients and 
subrecipients must promptly comply with all requests related to such 
audits. If FAS conducts or arranges for an additional audit, such as an 
audit with respect to a particular agreement, FAS will fund the full 
cost of such an audit, in accordance with 2 CFR 200.503(d).



Sec.1599.20  Paperwork Reduction Act.

    The information collection requirements contained in this part have 
been approved by OMB under the Paperwork Reduction Act of 1995, 44 
U.S.C. Chapter 35, and have been assigned OMB control number 0551-0035. 
A person is not required to respond to a collection of information 
unless it displays a currently valid OMB control number.

[[Page 1223]]



                              FINDING AIDS




  --------------------------------------------------------------------

  A list of current CFR titles, subtitles, chapters, subchapters and 
parts and an alphabetical list of agencies publishing in the CFR are 
included in the CFR Index and Finding Aids volume to the Code of Federal 
Regulations which is published separately and revised annually.


  Table of CFR Titles and Chapters
  Alphabetical List of Agencies Appearing in the CFR
  List of CFR Sections Affected

[[Page 1225]]



                    Table of CFR Titles and Chapters




                     (Revised as of January 1, 2021)

                      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--599)
        VI  National Capital Planning Commission (Parts 600--699)

                    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  Department of Housing and Urban Development (Parts 
                2400--2499)
       XXV  National Science Foundation (Parts 2500--2599)
      XXVI  National Archives and Records Administration (Parts 
                2600--2699)

[[Page 1226]]

     XXVII  Small Business Administration (Parts 2700--2799)
    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)

[[Page 1227]]

    XXVIII  Department of Justice (Parts 3800--3899)
      XXIX  Federal Communications Commission (Parts 3900--3999)
       XXX  Farm Credit System Insurance Corporation (Parts 4000--
                4099)
      XXXI  Farm Credit Administration (Parts 4100--4199)
    XXXIII  U.S. International Development Finance 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)

[[Page 1228]]

     LXXIV  Federal Mine Safety and Health Review Commission 
                (Parts 8400--8499)
     LXXVI  Federal Retirement Thrift Investment Board (Parts 
                8600--8699)
    LXXVII  Office of Management and Budget (Parts 8700--8799)
      LXXX  Federal Housing Finance Agency (Parts 9000--9099)
   LXXXIII  Special Inspector General for Afghanistan 
                Reconstruction (Parts 9300--9399)
    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 (Parts 10000--10049)
        CI  National Mediation Board (Part 10101)

                      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  Agricultural Marketing Service (Federal Grain 
                Inspection Service, Fair Trade Practices Program), 
                Department of Agriculture (Parts 800--899)

[[Page 1229]]

        IX  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Fruits, Vegetables, Nuts), Department 
                of Agriculture (Parts 900--999)
         X  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Milk), Department of Agriculture 
                (Parts 1000--1199)
        XI  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Miscellaneous Commodities), Department 
                of Agriculture (Parts 1200--1299)
       XIV  Commodity Credit Corporation, Department of 
                Agriculture (Parts 1400--1499)
        XV  Foreign Agricultural Service, Department of 
                Agriculture (Parts 1500--1599)
       XVI  [Reserved]
      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  [Reserved]
       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)

[[Page 1230]]

         L  Rural Business-Cooperative Service, Rural Housing 
                Service, and Rural Utilities Service, Department 
                of Agriculture (Parts 5001--5099)

                    Title 8--Aliens and Nationality

         I  Department of Homeland Security (Parts 1--499)
         V  Executive Office for Immigration Review, Department of 
                Justice (Parts 1000--1399)

                 Title 9--Animals and Animal Products

         I  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 1--199)
        II  Agricultural Marketing Service (Federal Grain 
                Inspection Service, Fair Trade Practices Program), 
                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  (Parts 500--599) [Reserved]
        VI  Farm Credit Administration (Parts 600--699)
       VII  National Credit Union Administration (Parts 700--799)
      VIII  Federal Financing Bank (Parts 800--899)
        IX  (Parts 900--999) [Reserved]

[[Page 1231]]

         X  Bureau of Consumer Financial Protection (Parts 1000--
                1099)
        XI  Federal Financial Institutions Examination Council 
                (Parts 1100--1199)
       XII  Federal Housing Finance Agency (Parts 1200--1299)
      XIII  Financial Stability Oversight Council (Parts 1300--
                1399)
       XIV  Farm Credit System Insurance Corporation (Parts 1400--
                1499)
        XV  Department of the Treasury (Parts 1500--1599)
       XVI  Office of Financial Research (Parts 1600--1699)
      XVII  Office of Federal Housing Enterprise Oversight, 
                Department of Housing and Urban Development (Parts 
                1700--1799)
     XVIII  Community Development Financial Institutions Fund, 
                Department of the Treasury (Parts 1800--1899)

               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)

[[Page 1232]]

      VIII  Bureau of Economic Analysis, Department of Commerce 
                (Parts 800--899)
        IX  National Oceanic and Atmospheric Administration, 
                Department of Commerce (Parts 900--999)
        XI  National Technical Information Service, Department of 
                Commerce (Parts 1100--1199)
      XIII  East-West Foreign Trade Board (Parts 1300--1399)
       XIV  Minority Business Development Agency (Parts 1400--
                1499)
            Subtitle C--Regulations Relating to Foreign Trade 
                Agreements
        XX  Office of the United States Trade Representative 
                (Parts 2000--2099)
            Subtitle D--Regulations Relating to Telecommunications 
                and Information
     XXIII  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                2300--2399) [Reserved]

                    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) [Reserved]

[[Page 1233]]

                     Title 20--Employees' Benefits

         I  Office of Workers' Compensation Programs, Department 
                of Labor (Parts 1--199)
        II  Railroad Retirement Board (Parts 200--399)
       III  Social Security Administration (Parts 400--499)
        IV  Employees' Compensation Appeals Board, Department of 
                Labor (Parts 500--599)
         V  Employment and Training Administration, Department of 
                Labor (Parts 600--699)
        VI  Office of Workers' Compensation Programs, Department 
                of Labor (Parts 700--799)
       VII  Benefits Review Board, Department of Labor (Parts 
                800--899)
      VIII  Joint Board for the Enrollment of Actuaries (Parts 
                900--999)
        IX  Office of the Assistant Secretary for Veterans' 
                Employment and Training Service, Department of 
                Labor (Parts 1000--1099)

                       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)

[[Page 1234]]

                          Title 23--Highways

         I  Federal Highway Administration, Department of 
                Transportation (Parts 1--999)
        II  National Highway Traffic Safety Administration and 
                Federal Highway Administration, Department of 
                Transportation (Parts 1200--1299)
       III  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 1300--1399)

                Title 24--Housing and Urban Development

            Subtitle A--Office of the Secretary, Department of 
                Housing and Urban Development (Parts 0--99)
            Subtitle B--Regulations Relating to Housing and Urban 
                Development
         I  Office of Assistant Secretary for Equal Opportunity, 
                Department of Housing and Urban Development (Parts 
                100--199)
        II  Office of Assistant Secretary for Housing-Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 200--299)
       III  Government National Mortgage Association, Department 
                of Housing and Urban Development (Parts 300--399)
        IV  Office of Housing and Office of Multifamily Housing 
                Assistance Restructuring, Department of Housing 
                and Urban Development (Parts 400--499)
         V  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 500--599)
        VI  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 600--699) [Reserved]
       VII  Office of the Secretary, Department of Housing and 
                Urban Development (Housing Assistance Programs and 
                Public and Indian Housing Programs) (Parts 700--
                799)
      VIII  Office of the Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Section 8 Housing Assistance 
                Programs, Section 202 Direct Loan Program, Section 
                202 Supportive Housing for the Elderly Program and 
                Section 811 Supportive Housing for Persons With 
                Disabilities Program) (Parts 800--899)
        IX  Office of Assistant Secretary for Public and Indian 
                Housing, Department of Housing and Urban 
                Development (Parts 900--1699)
       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 1235]]

                           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--899)
         V  Bureau of Indian Affairs, Department of the Interior, 
                and Indian Health Service, Department of Health 
                and Human Services (Part 900--999)
        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--799)

                   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 1236]]

        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 1237]]

      VIII  Office of Investment Security, 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  Department of Defense, 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, Department 
                of Defense (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)

[[Page 1238]]

       III  Office of Special Education and Rehabilitative 
                Services, Department of Education (Parts 300--399)
        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  (Parts 1100--1199) [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  National Institute of Standards and Technology, 
                Department of Commerce (Parts 400--599)

[[Page 1239]]

           Title 38--Pensions, Bonuses, and Veterans' Relief

         I  Department of Veterans Affairs (Parts 0--199)
        II  Armed Forces Retirement Home (Parts 200--299)

                       Title 39--Postal Service

         I  United States Postal Service (Parts 1--999)
       III  Postal Regulatory Commission (Parts 3000--3099)

                  Title 40--Protection of Environment

         I  Environmental Protection Agency (Parts 1--1099)
        IV  Environmental Protection Agency and Department of 
                Justice (Parts 1400--1499)
         V  Council on Environmental Quality (Parts 1500--1599)
        VI  Chemical Safety and Hazard Investigation Board (Parts 
                1600--1699)
       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  (Parts 103-001--104-099) [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]

[[Page 1240]]

            Subtitle E--Federal Information Resources Management 
                Regulations System [Reserved]
            Subtitle F--Federal Travel Regulation System
       300  General (Parts 300-1--300-99)
       301  Temporary Duty (TDY) Travel Allowances (Parts 301-1--
                301-99)
       302  Relocation Allowances (Parts 302-1--302-99)
       303  Payment of Expenses Connected with the Death of 
                Certain Employees (Part 303-1--303-99)
       304  Payment of Travel Expenses from a Non-Federal Source 
                (Parts 304-1--304-99)

                        Title 42--Public Health

         I  Public Health Service, Department of Health and Human 
                Services (Parts 1--199)
   II--III  [Reserved]
        IV  Centers for Medicare & Medicaid Services, Department 
                of Health and Human Services (Parts 400--699)
         V  Office of Inspector General-Health Care, Department of 
                Health and Human Services (Parts 1000--1099)

                   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)

[[Page 1241]]

       III  Office of Child Support Enforcement (Child Support 
                Enforcement Program), Administration for Children 
                and Families, Department of Health and Human 
                Services (Parts 300--399)
        IV  Office of Refugee Resettlement, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 400--499)
         V  Foreign Claims Settlement Commission of the United 
                States, Department of Justice (Parts 500--599)
        VI  National Science Foundation (Parts 600--699)
       VII  Commission on Civil Rights (Parts 700--799)
      VIII  Office of Personnel Management (Parts 800--899)
        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 of Fine Arts (Parts 2100--2199)
     XXIII  Arctic Research Commission (Parts 2300--2399)
      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)

[[Page 1242]]

        IV  National Telecommunications and Information 
                Administration, Department of Commerce, and 
                National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 400--499)
         V  The First Responder Network Authority (Parts 500--599)

           Title 48--Federal Acquisition Regulations System

         1  Federal Acquisition Regulation (Parts 1--99)
         2  Defense Acquisition Regulations System, Department of 
                Defense (Parts 200--299)
         3  Department of Health and Human Services (Parts 300--
                399)
         4  Department of Agriculture (Parts 400--499)
         5  General Services Administration (Parts 500--599)
         6  Department of State (Parts 600--699)
         7  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) [Reserved]
        52  Department of the Navy Acquisition Regulations (Parts 
                5200--5299)
        53  Department of the Air Force Federal Acquisition 
                Regulation Supplement (Parts 5300--5399) 
                [Reserved]

[[Page 1243]]

        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)
        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)

[[Page 1244]]

        VI  Fishery Conservation and Management, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 600--699)

[[Page 1245]]





           Alphabetical List of Agencies Appearing in the CFR




                     (Revised as of January 1, 2021)

                                                  CFR Title, Subtitle or 
                     Agency                               Chapter

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, VIII, IX, X, XI; 9, 
                                                  II
Agricultural Research Service                     7, V
Agriculture, Department of                        2, IV; 5, LXXIII
  Advocacy and Outreach, Office of                7, XXV
  Agricultural Marketing Service                  7, I, VIII, IX, X, XI; 9, 
                                                  II
  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
  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 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 of                          32, VII
  Federal Acquisition Regulation Supplement       48, 53
Air Transportation Stabilization Board            14, VI
Alcohol and Tobacco Tax and Trade Bureau          27, I
Alcohol, Tobacco, Firearms, and Explosives,       27, II
     Bureau of
AMTRAK                                            49, VII
American Battle Monuments Commission              36, IV
American Indians, Office of the Special Trustee   25, VII
Animal and Plant Health Inspection Service        7, III; 9, I
Appalachian Regional Commission                   5, IX
Architectural and Transportation Barriers         36, XI
   Compliance Board
[[Page 1246]]

Arctic Research Commission                        45, XXIII
Armed Forces Retirement Home                      5, XI; 38, II
Army, Department of                               32, V
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 51
Benefits Review Board                             20, VII
Bilingual Education and Minority Languages        34, V
     Affairs, Office of
Blind or Severely Disabled, Committee for         41, 51
     Purchase from People Who Are
Broadcasting Board of Governors                   22, V
  Federal Acquisition Regulation                  48, 19
Career, Technical, and Adult Education, Office    34, IV
     of
Census Bureau                                     15, I
Centers for Medicare & Medicaid Services          42, IV
Central Intelligence Agency                       32, XIX
Chemical Safety and Hazard Investigation Board    40, VI
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
Coast Guard                                       33, I; 46, I; 49, IV
Coast Guard (Great Lakes Pilotage)                46, III
Commerce, Department of                           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; 37, IV
  National Marine Fisheries Service               50, II, IV
  National Oceanic and Atmospheric                15, IX; 50, II, III, IV, 
       Administration                             VI
  National Technical Information Service          15, XI
  National Telecommunications and Information     15, XXIII; 47, III, IV
       Administration
  National Weather Service                        15, IX
  Patent and Trademark Office, United States      37, I
  Secretary of Commerce, Office of                15, Subtitle A
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
Council of the Inspectors General on Integrity    5, XCVIII
     and Efficiency
Court Services and Offender Supervision Agency    5, LXX; 28, VIII
     for the District of Columbia
Customs and Border Protection                     19, I
Defense, Department of                            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

[[Page 1247]]

  Defense Logistics Agency                        32, I, XII; 48, 54
  Engineers, Corps of                             33, II; 36, III
  National Imagery and Mapping Agency             32, I
  Navy, Department of                             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
Disability, National Council on                   5, C; 34, XII
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
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 Policy, National Commission for        1, IV
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
  National Drug Control Policy, Office of         2, XXXVI; 21, III
  National Security Council                       32, XXI; 47, II
  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

[[Page 1248]]

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 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 of                          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
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

[[Page 1249]]

  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, Office of, and Multifamily Housing       24, IV
     Assistance Restructuring, Office 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
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

[[Page 1250]]

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 of                           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 Development Finance Corporation,    5, XXXIII; 22, VII
     U.S.
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 of                            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 of                              2, XXIX; 5, XLII
  Benefits Review Board                           20, VII
  Employee Benefits Security Administration       29, XXV
  Employees' Compensation Appeals Board           20, IV
  Employment Standards Administration             20, VI
  Employment and Training Administration          20, V
  Federal Acquisition Regulation                  48, 29
  Federal Contract Compliance Programs, Office    41, 60
       of
  Federal Procurement Regulations System          41, 50

[[Page 1251]]

  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, VI
Labor-Management Standards, Office of             29, II, IV
Land Management, Bureau of                        43, II
Legal Services Corporation                        45, XVI
Libraries and Information Science, National       45, XVII
     Commission on
Library of Congress                               36, VII
  Copyright Royalty Board                         37, III
  U.S. Copyright Office                           37, II
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, VI
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; 37, IV
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                          5, CI; 29, X
National Oceanic and Atmospheric Administration   15, IX; 50, II, III, IV, 
                                                  VI
National Park Service                             36, I
National Railroad Adjustment Board                29, III
National Railroad Passenger Corporation (AMTRAK)  49, VII
National Science Foundation                       2, XXV; 5, XLIII; 45, VI
  Federal Acquisition Regulation                  48, 25
National Security Council                         32, XXI; 47, II
National Security Council and Office of Science   47, II
   and Technology Policy
[[Page 1252]]

National Technical Information Service            15, XI
National Telecommunications and Information       15, XXIII; 47, III, IV, V
     Administration
National Transportation Safety Board              49, VIII
Natural Resource Revenue, Office of               30, XII
Natural Resources Conservation Service            7, VI
Navajo and Hopi Indian Relocation, Office of      25, IV
Navy, Department of                               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
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, IV, XXXV; 45, VIII
  Federal Acquisition Regulation                  48, 17
  Federal Employees Group Life Insurance Federal  48, 21
       Acquisition Regulation
  Federal Employees Health Benefits Acquisition   48, 16
       Regulation
  Human Resources Management and Labor Relations  5, XCVII
       Systems, Department of Homeland Security
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
Public and Indian Housing, Office of Assistant    24, IX
     Secretary for
Public Contracts, Department of Labor             41, 50
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 Utilities Service                           7, XVII, XVIII, XLII
Safety and Environmental Enforcement, Bureau of   30, II
Saint Lawrence Seaway Development Corporation     33, IV
Science and Technology Policy, Office of          32, XXIV
Science and Technology Policy, Office of, and     47, II
     National Security Council
Secret Service                                    31, IV
Securities and Exchange Commission                5, XXXIV; 17, II
Selective Service System                          32, XVI
Small Business Administration                     2, XXVII; 13, I
Smithsonian Institution                           36, V
Social Security Administration                    2, XXIII; 20, III; 48, 23
Soldiers' and Airmen's Home, United States        5, XI

[[Page 1253]]

Special Counsel, Office of                        5, VIII
Special Education and Rehabilitative Services,    34, III
     Office of
State, Department of                              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
Tennessee Valley Authority                        5, LXIX; 18, XIII
Trade Representative, United States, Office of    15, XX
Transportation, Department of                     2, XII; 5, L
  Commercial Space Transportation                 14, III
  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 of the                       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
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
Veterans Affairs, Department of                   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 1255]]



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, 2016 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.govinfo.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.govinfo.gov.

                                  2016

7 CFR
                                                                   81 FR
                                                                    Page
Chapter XI
1205.12 Revised....................................................38894
1205.510 (b)(3) revised............................................38894
    (b)(2) and (3) table revised...................................51784
1214.5 Revised.....................................................38897
1214.8 Revised.....................................................38897
1214.520 (Subpart C) Added.........................................38897
1217 Policy statement...............................................8822
    Regulation at 81 FR 8822 withdrawn.............................47004
1217.81 (b)(2) revised; interim....................................59427
1250.542 Revised; eff. 1-13-17.....................................90186
Chapter XIV
1407.2 Regulation at 79 FR 75997 confirmed..........................7696
1430.102 Amended...................................................21704
1430.104 (b)(1), (c)(1), (e) introductory text and (2) amended.....21704
1430.105 (d) revised; (g) added....................................21704
1430.106 (a) revised; (b) and (c) amended..........................21705
1430.107 (a) introductory text, (1) and (l) amended; (d), (g) 
        introductory text, (2), (h), (i) and (j) revised; (m) 
        added......................................................21705
1430.108 Revised...................................................21706
1430.109 (a)(2) revised............................................21706
1430.111 Revised...................................................21706
1430.112 (b) revised...............................................21706
1436 Authority citation revised....................................51296
1436.1 Existing text designated as (a); (b) added..................25592
1436.2 (g) revised.................................................25592
1436.3 Amended.....................................................25592
1436.4 (a) revised; (e) added......................................25593
1436.6 (c)(1), (3), (6), (f)(3)(i) and (iii) removed; (c)(2), (4), 
        (5), (f)(3)(ii), (iv) and (v) redesignated as new (c)(1), 
        (2), (3), new (f)(3)(i), (ii) and (iii); (a), (b)(1), (d), 
        (e), (g)(2)(i) through (iv), (3) and (4) revised; (b) 
        introductory text, (c) introductory text, new (2), new 
        (3), (f)(1)(i), (ii), (iii), new (3)(ii), (g) introductory 
        text and (1) amended; (h) and (i) added....................25593
1436.7 (a) and (b) revised.........................................25594
1436.8 (a) introductory text, (2), (b) introductory text and (c) 
        introductory text amended; (a)(3) added; (b)(1) revised....25594
1436.9 (b) introductory text, (c), (d)(3)(i), (4) and (h) revised; 
        (b)(1), (d)(1) introductory text and (3) introductory text 
        amended; (d)(5) added......................................25595
1436.10 (a) amended; (d) added.....................................25595
1436.11 (a)(3) amended.............................................25595
1436.15 (a) revised; (b), (d) and (e) amended......................25595
1436.16 (c) amended................................................25595

[[Page 1256]]

1436.17 Removed....................................................51296
1466 Regulation at 79 FR 73966 confirmed...........................29482
1466.2 (c) revised.................................................29482
1466.7 (e) revised.................................................29482
1466.20 (b) introductory text, (1) introductory text and (5) 
        revised....................................................29482
1466.21 (b)(3)(v) revised..........................................29482
1466.25 (b), (c) and (d) revised; (e) redesignated as (f); new (e) 
        added......................................................29483
1468.1 (a) revised.................................................71850
1468.3 Amended.....................................................71850
1468.4 (c) revised.................................................71852
1468.5 (a) revised.................................................71852
1468.6 (b)(4)(ii), (6), (d), (f), (g) and (i) revised..............71852
1468.10 (c) added..................................................71852
1468.20--1468.28 (Subpart B) Nomenclature change...................71852
1468.20 (a)(1), (2), (d)(1)(ii) and (3) revised....................71852
1468.21 (c) revised................................................71852
1468.22 (b)(1), (8), (10), (12), (13), (c)(3), (4) and (5) revised
                                                                   71853
1468.23 (a)(1) revised.............................................71853
1468.24 (b)(4)(ii)(H) through (K) added; (b)(4)(vi)(G) revised.....71853
1468.25 Revised....................................................71853
1468.27 (a)(1) and (b)(3) introductory text revised................71854
1468.28 (f) revised................................................71854
1468.32 (a)(3) revised.............................................71854
1468.33 (d)(3) and (4) revised.....................................71854
1470 Regulation at 79 FR 65843 confirmed...........................12582
1470.24 (a)(1)(i), (3), (b)(2) and (c) revised.....................12582
1470.25 (d) revised; (e), (f) and (g) added........................12583
1471.1 (b)(3)(iii) and (4) revised.................................81659
1471.2 (c)(1) and (2) amended......................................81659
1471.5 Revised.....................................................81659
1471.10 (b)(3)(iii) and (4) revised................................81659
1471.11 (b)(1)(ii) and (2)(ii) revised.............................81659
1471.12 Added......................................................81659
1471.13 (a)(2)(i), (d)(3)(i)(A) and (ii)(A) revised................81660
1471.14 (a)(2)(i) revised..........................................81660
1485.10 Regulation at 79 FR 75997 confirmed.........................7696
1485.19 Regulation at 79 FR 75997 confirmed.........................7696
1485.21 Regulation at 79 FR 75997 confirmed.........................7696
1485.22 Regulation at 79 FR 75997 confirmed.........................7696
1485.23 Regulation at 79 FR 75997 confirmed.........................7696
1485.27 Regulation at 79 FR 75997 confirmed.........................7696
1485.28 Regulation at 79 FR 75997 confirmed.........................7696
1485.29 Regulation at 79 FR 75997 confirmed.........................7696
1485.34 Regulation at 79 FR 75997 confirmed.........................7696
1485.35 Regulation at 79 FR 75997 confirmed.........................7696
1493.200--1493.395 (Subpart C) Revised.............................65515
1499 Revised.......................................................62605
Chapter XV
1590 Added.........................................................43009
1599 Revised.......................................................62616

                                  2017

7 CFR
                                                                   82 FR
                                                                    Page
Chapter XI
1200 Technical correction..........................................60281
1200.2 (f) revised.................................................58098
1200.51 (g) revised................................................58098
1205 Authority citation correctly revised..........................38595
1205.29 Correctly amended..........................................38595
1205.510 (b)(2) and (3) table revised..............................41831
1217 Policy statement..............................................49485
1260.121 Revised...................................................24456
1260.141 (a) revised...............................................27612
1260.172 (b)(2) revised............................................24457
Chapter XIV
1436.15 (b) correctly amended......................................16101

                                  2018

7 CFR
                                                                   83 FR
                                                                    Page
Chapter XI
1200 Authority citation revised....................................27682
1200.100--1200.101 (Subpart C) Added...............................27682
1205.510 (b)(2) revised; (b)(3) table amended......................40933
1210.500--1210.540 (Subpart C) Heading revised......................4420

[[Page 1257]]

1210.501 (a), (b), (d), and (g) revised.............................4420
1212.40 Revised....................................................11139
1212.520 (Subpart C) Heading and section added.....................11139
1216.11 Revised....................................................27686
1216.51 (c) and (d) revised; (e) removed; (f) through (j) 
        redesignated as (e) through (i)............................27686
1220.201 (a) table amended.........................................53366
1221.112 (g) and (h) removed; (i) through (m) redesignated as new 
        (g) through (k)............................................35106
1221.118 Removed...................................................35106
1221.119 Removed...................................................35106
1221.120 Removed...................................................35106
1221.128 (a) revised...............................................35106
1280.214 Removed...................................................35106
1280.215 Removed...................................................35106
1280.216 Removed...................................................35106
1280.403 Removed...................................................35106
Chapter XIV
1400 Authority citation revised....................................49463
1400.1 (f) table amended...........................................49463
1409 Removed.......................................................22190
1409 Added.........................................................44176
1412.1 (a), (c), (d), and (e) amended; (b) revised.................40656
1412.2 (a) amended; (e) and (f) revised............................40656
1412.3 Amended.....................................................40657
1412.23 Heading revised; (a), (b), and (c) amended.................40657
1412.24 Heading and (b) revised; (a)(1), (d)(1), and (f) amended 
                                                                   40657
1412.25 Revised....................................................40657
1412.31 (b) redesignated as (c); new (b) added; (a) and new (c) 
        amended....................................................40658
1412.32 Heading revised; (a) and (e) amended.......................40658
1412.33 Redesignated as 1412.34; new 1412.33 added.................40658
1412.34 Redesignated as 1412.35; new (b)(2)(i) and (c) amended.....40658
1412.35 Redesignated as 1412.36....................................40658
1412.36 Designated from 1412.35....................................40658
1412.41 (a)(2) revised; (b) and (e) amended; (f) added.............40658
1412.44 Removed....................................................40659
1412.45 Removed....................................................40659
1412.46 (f) amended................................................40659
1412.51 (b) removed; (c), (d), and (e) redesignated as new (b), 
        (c), and (d); new (d) amended..............................40659
1412.52 (a) amended................................................40659
1412.53 (a) introductory text and (b) introductory text amended; 
        (e) revised................................................40659
1412.54 (a), (b), (c), (d)(4), (f) introductory text, (2), and (h) 
        amended....................................................40659
1412.55 (a)(1) amended.............................................40659
1412.61 Amended....................................................40659
1412.63 Amended....................................................40659
1412.64 (a), (b) introductory text, and (3) amended................40659
1412.66 (a) amended................................................40659
1412.69 Amended....................................................40659
1412.71 (c) removed; (d) redesignated as new (c); new (c) amended; 
        new (d) added..............................................40659
1412.74 (c) added..................................................40659
1415.6 (c) and (d) revised; (e) removed............................23209
1416 Authority citation revised....................................49463
1416.2 (f) added...................................................49463
1416.3 (a), (b) introductory text, and (4) revised.................49463
1416.6 Revised.....................................................49463
1416.7 Revised.....................................................49464
1416.9 (a) and (b) amended.........................................49464
1416.13 Revised....................................................49464
1416.14 (a) amended................................................49464
1416.102 Amended...................................................49464
1416.103 (a) and (c) revised.......................................49465
1416.104 (a) through (f) revised...................................49465
1416.105 (a)(1) and (b)(1) amended.................................49466
1416.106 (b) introductory text and (e) amended; (f) removed; (g) 
        redesignated as new (f)....................................49466
1416.107 Revised...................................................49466
1416.108 Removed...................................................49466
1416.202 Amended...................................................49466
1416.203 Heading and (a) introductory text revised.................49467
1416.204 (a)(1), (4), (b), and (c)(2) through (6) revised; (c)(7), 
        (8), and (9) added.........................................49467
1416.205 First (a)(2) amended; second 1416.205 redesignated as new 
        1416.206...................................................49467

[[Page 1258]]

1416.206 Redesignated from second 1416.205; (a), (b), and (c) 
        redesignated as (b), (c), and (d); new (a) added; new 
        (b)(1) and new (2) revised; new (c)(5)(iii) removed; 
        (c)(5)(iv) redesignated as (c)(5)(iii); new (c)(5)(ii)(B) 
        and new (c)(5)(iii) amended................................49467
1416.207 (a), (f) introductory text, (1), (2), (i)(2), (3), 
        (l)(3), (m)(1) introductory text, and (3) amended..........49468
1416.301 Revised...................................................49468
1416.302 Amended...................................................49468
1416.303 (a)(1) and (b) revised; (c) and (d) added.................49469
1416.304 Revised...................................................49469
1416.305 (a) through (e), (f), (g), and (h) redesignated as (b) 
        through (f), (h), (i), and (k); new (a), new (g), and (j) 
        added; new (b) through (f), new (h) introductory text, and 
        new (i)(1) introductory text revised.......................49470
1416.306 (a) and (c) revised; (e) added............................49471
1416.400 (a) amended; (c) added....................................49471
1416.402 Amended...................................................49471
1416.403 Revised...................................................49471
1416.404 (a) amended...............................................49472
1416.405 (a) through (d) redesignated as (b) through (e); new (a) 
        added; new (b) revised.....................................49472
1416.406 (a) introductory text, (b), (h), and (j) amended; (d)(3) 
        added......................................................49472
1465.5 (c)(10) and (11) revised; (c)(12) removed...................23209
1466.6 (b)(7) removed; (b)(8) redesignated as new (b)(7); (b)(6) 
        and new (7) revised........................................23209
1468.30 (c)(3) removed; second (c)(4) redesignated as (c)(5); 
        (c)(4) and new (5) redesignated as (c)(3) and (4)..........23209
1470.6 (a)(6) removed; (a)(7) redesignated as new (a)(6); (a)(5) 
        and new (6) revised........................................23209
1489 Added.........................................................44181

                                  2019

7 CFR
                                                                   84 FR
                                                                    Page
Chapter XI
1205.510 (b)(2) and (3) table revised..............................55022
1206.2 Revised......................................................5344
1206.6 Revised......................................................5344
1206.8 Heading revised; introductory text, (1), and (2) 
        redesignated as (a) introductory text, (1), and (2); (b) 
        added.......................................................5344
1206.9 Revised......................................................5344
1206.11 Revised.....................................................5345
1206.30--1206.37 Undesignated center heading revised................5345
1206.30 (a) and (b) revised.........................................5345
1206.31 (e) revised; (h) redesignated as (k); new (h), (i), and 
        (j) added...................................................5345
1206.32 Revised.....................................................5345
1206.34 (a) revised.................................................5345
1206.42 (b), (d)(1), (2), and (3) revised; (d)(4) added.............5345
1206.43 (a) and (b) revised.........................................5345
1206.78 Revised.....................................................5346
1206.101 (c), (d), and (e) revised..................................5346
1208 Removed.......................................................49944
1208.52 Note added..................................................4952
1209.200--1209.280 (Subpart B) Heading revised.....................17062
1209.230 Added.....................................................17062
1212.2 Revised......................................................1345
1212.12 Removed.....................................................1345
1212.22 Revised.....................................................1345
1212.40--1212.48 Undesignated center heading revised................1345
1212.40 Revised.....................................................1345
1212.41 Revised.....................................................1345
1212.42 (b) revised.................................................1345
1217.40 Revised....................................................50299
1217.41 Revised....................................................50299
1217.44 Revised....................................................50300
1217.52 (h) revised................................................50300
1217.81 (b)(1) and (2) revised.....................................50300
1217.88 Revised....................................................50300
1217.101 (l) revised...............................................50300
1217.108 Revised...................................................50300
1220.223 (a)(3) revised............................................20771
1220.228 (e) added.................................................20771
1222.40 (b) revised................................................31462
1222.41 (c) revised................................................31462
1222.88 Revised....................................................31462
1222.108 Revised...................................................31462
1260.172 (a)(7) added..............................................20771
1260.181 Heading and (b)(4) revised; (b)(8) and (9) added..........20771
1260.312 (c) revised...............................................20771

[[Page 1259]]

1260.315 Revised...................................................20771
Chapter XIV
1409 Heading revised...............................................36461
1409.1--1409.7 Redesignated as Subpart A; heading added............36461
1409.1 Amended.....................................................36461
1409.101--1409.107 (Subpart B) Added...............................36461
1409.201--1409.207 (Subpart C) Added...............................36463
1410 Revised; interim..............................................66819
1412.1 (b) removed; (c), (d), and (e) redesignated as new (b), 
        (c), and (d); (a), new (b), and (c) amended; (d) revised 
                                                                   45887
1412.3 Amended.....................................................45888
1412.23 (a) amended................................................45889
1412.24 (b) and (c) amended........................................45889
1412.25 (a) introductory text, (b), (c), (d), (f), (g), and (h) 
        revised....................................................45889
1412.26 Added......................................................45890
1412.32 (a) revised; (b), (d), and (f) amended.....................45890
1412.33 (a) revised; (b), (d), and (f) amended.....................45890
1412.41 Revised....................................................45890
1412.46 (d) through (h) redesignated as (e) through (i); (d) 
        added; (c), (e), (h) introductory text, (1), and (2) 
        amended; (f) revised.......................................45891
1412.46 (f)(28) revised; (g) amended...............................53579
1412.49 (a) amended................................................45893
1412.51 (b) and (c) amended; (d) revised; (e) added................45893
1412.52 (a) introductory text, (1), (c), and (e) introductory text 
        amended....................................................45893
1412.53 Revised....................................................45893
1412.54 (b) revised; (d)(4) amended................................45894
1412.71 (d) removed; (e) and (f) redesignated as new (d) and (e); 
        new (f) added; (a) introductory text and (e) revised; 
        (a)(2), (b) introductory text, and new (d) amended.........45894
1412.72 (a), (d), and (e) revised; (b), (c), and (f) amended.......45894
1412.73 (b) amended................................................45895
1412.74 (a) amended; (b) revised; (c) removed......................45895
1416 Authority citation revised....................................48537
1416.400 (c) revised...............................................48537
1423.2 Revised.....................................................29033
1423.3 Amended.....................................................29033
1423.7 (c) amended; (d) revised....................................29033
1423.8 (b) revised.................................................29033
1423.11 (a)(2) and (b)(1) revised..................................29033
1423.13 (a) revised................................................29033
1430 Authority citation revised....................................28176
1430.400--1430.425 (Subpart D) Added...............................28176
1455.20 (c)(5) amended; interim....................................19703
1466 Revised; interim..............................................69280
1470 Revised; interim..............................................60891
1486 Revised.......................................................69986
1487 Revised.......................................................70394
1493.60 (a)(1) through (4) revised.................................28186
1493.250 (a)(1) through (4) revised................................28186
1499.1 (c), (d), (f)(1), (g)(1), and (2) revised...................45058
1499.2 Amended.....................................................45059
1499.3 (a) revised.................................................45059
1499.5 (d)(2)(vii), (viii), (3), (4), (e)(1), (4), and (5) 
        revised; (d)(2)(ix) removed; (d)(5) added..................45059
1499.6 (f)(6)(iv) revised..........................................45059
1499.11 (e), (h)(1), and (k) revised...............................45059
1499.14 (b)(2) revised.............................................45060
1499.16 (b)(3) revised.............................................45060
1499.17 (b) and (c) revised........................................45060
Chapter XV
1599 Revised.......................................................64973

                                  2020

7 CFR
                                                                   85 FR
                                                                    Page
Chapter XI
1200.200--1200.206 (Subpart D) Added...............................45305
1205.510 (b)(2) and (3) table revised..............................62547
1210.321 (f)(1) revised............................................56474
1210.403 (c) revised...............................................56474
1210.501 Revised...................................................56475
1210.502 Revised...................................................56475
1216.15 Revised....................................................16231
1216.21 Revised....................................................16231
1216.40 (a) introductory text and (1) revised......................16231
1217.40 (b)(1) and (i) through (iii) revised.......................45059

[[Page 1260]]

1250.510 Revised...................................................62945
1260.141 (a) revised...............................................39463
1260.172 (b)(2) revised..............................................826
1260.172 Correction: Table 2 revised................................4191
Chapter XIV
1400.1 (a)(1) and (f) revised; (a)(8) redesignated as (a)(9); 
        (a)(6), (7), new (9), (b)(1), (3), and (4) amended; (a)(8) 
        and (b)(5) added...........................................52036
1400.2 (c) introductory text, (1), (f), and (h) amended............52036
1400.3 (b) amended.................................................52037
1400.3 Correction: (b) amended.....................................73602
1400.5 (b) introductory text, (3) introductory text, and (c) 
        amended; (d) introductory text revised.....................52038
1400.6 (a) revised.................................................52038
1400.7 Added.......................................................52038
1400.8 Amended.....................................................52038
1400.9 (a) introductory text amended...............................52038
1400.100 Removed...................................................52038
1400.101 (a), (b)(2), (3) introductory text, and (c) amended.......52038
1400.102 (a), (b) introductory text, and (c) amended...............52038
1400.103 (a) amended...............................................52038
1400.104 (a) introductory text, (1), (3) introductory text, (i), 
        (ii), (4), (i) through (iv), (5) introductory text, (i) 
        through (v), and (b) amended...............................52038
1400.105 (d) introductory text removed.............................52039
1400.106 (a) amended...............................................52039
1400.201 (a) and (d)(3) amended....................................52039
1400.202 (c) introductory text amended; (c)(1) removed.............52039
1400.203 (a)(1)(ii)C), (b) introductory text, (2), and (c) 
        amended; (b)(1) revised....................................52039
1400.204 (a)(2)(iii) and (d) introductory text amended; (d)(1) 
        revised....................................................52039
1400.205 (e) introductory text amended; (e)(1) revised.............52039
1400.206 (b) introductory text amended; (b)(1) revised.............52039
1400.207 (a) introductory text, (1), and (b) amended...............52039
1400.208 (b)(1) and (2) amended....................................52039
1400.209 (a), (b)(2), and (3) amended..............................52039
1400.210 Amended...................................................52039
1400.212 Amended...................................................52039
1400.213 Amended...................................................52039
1400.214 Added.....................................................52040
1400.301 (Subpart D) Removed.......................................52040
1400.401 (a), (b)(1), (2) introductory text, and (3) through (5) 
        amended....................................................52040
1400.402 (a)(1), (2), and (b) amended..............................52040
1400.500 (c) amended; (f) added....................................52040
1400.501 (a)(2) and (b) amended....................................52040
1400.503 Amended...................................................52040
1400.601 Removed...................................................52040
1400.601 Correction: added.........................................73602
1400.602 (a)(1), (2) introductory text, (3) introductory text, 
        (b), and (e) amended.......................................52040
1403 Removed.......................................................36714
1412.3 Amended.....................................................16232
1416.2 (a) and (f) amended.........................................10963
1416.3 (b)(3) and (4) amended; (b)(5) added........................10963
1416.6 (a) revised; (c) amended....................................10963
1416.7 (a) amended.................................................10963
1416.14 (b) added..................................................10963
1416.102 Amended...................................................10963
1416.103 (d)(5)(iii) amended; (g) removed; (h) through (j) 
        redesignated as new (g) through (i); (d)(5) introductory 
        text, (i), (ii), (f), and new (h) revised..................10964
1416.104 (a)(5), (d), (e)(1), (2), and (f) removed; (e), (g), and 
        (h) redesignated as new (d), (e), and new (f); (a)(3), 
        (4), (c)(7), and new (d) amended...........................10964
1416.105 (c) removed; (d) through (f) redesignated as new (c) 
        through (e)................................................10964
1416.106 (a) introductory text revised; (a)(2)(i), (7), (b) 
        introductory text, and (d) amended; (e) removed; (f) 
        redesignated as new (e)....................................10964
1416.107 Revised...................................................10965
1416.109 (a) and (c) amended.......................................10965
1416.110 (b) introductory text, (f) introductory text, and (2) 
        amended; (n) removed; (o) redesignated as new (n)..........10965
1416.201 (b) revised...............................................10965
1416.202 Amended...................................................10965
1416.203 (a)(2) introductory text and (i) amended..................10965

[[Page 1261]]

1416.204 (a)(5) and (c)(9) amended; (c)(7) revised.................10965
1416.205 (b)(2) amended............................................10966
1416.206 (a) removed; (b) and (c) redesignated as new (a) and (b); 
        new (a) revised; new (b)(2) removed; new (b)(3) through 
        (7) redesignated as (b)(2) through (6); new (b)(6) amended
                                                                   10966
1416.207 (a) amended...............................................10966
1416.301 (a) revised...............................................10966
1416.302 Amended...................................................10966
1416.304 (c)(1)(ii), (2), (4), and (e) revised; (d)(14) through 
        (36) and (37) through (39) redesignated as (d)(16) through 
        (38) and (40) and (42); (c)(3), new (d)(36) through new 
        (38), and (f) amended; new (d)(14), new (15), and new (39) 
        added......................................................10966
1416.305 (a), (c), (f), (g) introductory text, (h) introductory 
        text, (i) introductory text, (1) introductory text, 
        (2)(ii), and (i)(4)(i) through (iv) revised; (b)(1), (2), 
        (d)(4), (h)(1)(i), (i)(1)(i), (ii), (2) introductory text, 
        (i), (3), and (4) introductory text amended; (k) removed 
                                                                   10967
1416.400 (a) amended...............................................10968
1416.402 Amended...................................................10968
1416.403 (g) amended...............................................10968
1416.404 (a)(2) amended............................................10968
1416.405 (a) removed; (b) through (e) redesignated as new (a) 
        through (d); new (a) amended...............................10968
1416.406 (a)(1)(i), (2)(i), and (j) amended........................10968
1437.1 (b) revised; (c) amended....................................12218
1437.3 Amended.....................................................12218
1437.4 (a)(4)(i) and (c) revised; (a)(4)(ii) removed; (a)(4)(iii), 
        (iv), (d), and (e) redesignated as new (a)(4)(ii), (iii), 
        (e), and (f); new (d) added; new (e) amended...............12218
1437.5 (b) introductory text and (d)(1) amended; (e) and (f) 
        redesignated as (f) and (g); new (e) added.................12219
1437.6 (a) introductory text, (2), (b)(1)(i), (c), (d), (f), and 
        (g) amended; (e) and (h) revised...........................12219
1437.7 Heading, (b), (e), and (i) revised; (g), (j), (k), and (l) 
        amended....................................................12219
1437.8 (a) introductory text, (b)(1), (c)(1), and (2) amended; 
        (c)(3) and (4) added.......................................12220
1437.8 (a) introductory text amended...............................16232
1437.10 (b)(1)(viii), (ix), and (3)(v) redesignated as (b)(1)(ix), 
        (x), and (3)(iv); new (b)(1)(viii) added; new (b)(1)(ix), 
        (3)(iv), new (v), (d)(15), and (16) amended; (d)(17) added
                                                                   12220
1437.11 (a), (b) introductory text, and (2) amended; (d)(2)(iii) 
        revised....................................................12220
1437.12 (b)(1) and (4) amended.....................................12220
1437.16 (d) amended................................................12220
1437.108 Added.....................................................12220
1437.301 (d) removed...............................................12221
1437.401 (f)(2) amended; (g) added.................................12221
1437.502 (b) and (c) amended.......................................12221
1437.503 (a) amended...............................................12221
1464 Added; interim.................................................8137
1464.5 Correction: (c)(4) revised; (c)(5), (d), and (e) added; 
        interim....................................................15051
1466.1 (a)(2) through (4) revised..................................67647
1466.3 Amended.....................................................67647
1466.4 (a) revised.................................................67647
1466.6 (d)(1) revised..............................................67647
1466.7 (d) revised.................................................67647
1466.20 (b)(2)(viii) amended; (b)(2)(ix) added; (b)(2)(xi) 
        redesignated as (b)(2)(x)..................................67647
1466.31 (a) revised................................................67647
1466.32 (c) and (d) redesignated as (d) and (e); new (c) added.....67648
1468 Revised; interim................................................571
1468 Regulation at 85 FR 571 comment period extended to 3-20-20.....4191
1470.2 (c)(3) added; (d) introductory text revised.................64002
1470.3 Amended.....................................................64002
1470.4 (c) introductory text revised...............................64002
1470.24 (a)(3) and (f)(4) revised..................................64002
1470.25 (c) amended................................................64003
1470.26 (a) and (c) revised........................................64003
1470.35 (a) amended................................................64003
1471 Authority citation revised.....................................6420
1471.1 (b)(2) amended...............................................6420

[[Page 1262]]

1471.2 Introductory text, (b) introductory text, (1), (2), and (c) 
        introductory text amended; (c)(3) and (4) added.............6420
1471.3 (a) through (c) amended; (d) added...........................6420
1471.4 (a)(1), (2), and (4) amended.................................6420
1471.10 (b)(2) amended..............................................6421
1484 Revised........................................................1084
1485 Revised........................................................1732
Chapter XV
1530.111 (b) revised...............................................31938
1580.504 (a) revised...............................................31938


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