[Federal Register Volume 61, Number 252 (Tuesday, December 31, 1996)]
[Rules and Regulations]
[Pages 69004-69011]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-33264]


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DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation

7 CFR Part 404

Commodity Credit Corporation

7 CFR Part 1437

RIN 0560-AE85


Implementation of the Noninsured Crop Disaster Assistance Program 
Provisions of the Federal Agriculture Improvement and Reform Act of 
1996

AGENCIES: Commodity Credit Corporation, Federal Crop Insurance 
Corporation, USDA.

ACTION: Final rule.

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SUMMARY: This final rule moves the noninsured crop disaster assistance 
program (NAP) provisions currently in 7 CFR part 404 to 7 CFR part 
1437, and implements the amendments to NAP made in Title I of the 
Federal Agriculture Improvement and Reform Act of 1996 (the 1996 Act). 
The 1996 Act changes the administration of the program from the Federal 
Crop Insurance Corporation (FCIC) to the Secretary through the 
Commodity Credit Corporation. The NAP program will continue to be 
operated through the Farm Service Agency (FSA). Other amendments 
include the addition of seed crops and aquaculture (including 
ornamental fish) as crops eligible for benefits under this part, and 
relaxes the acreage and production reporting requirements.

EFFECTIVE DATE: December 31, 1996.

FOR FURTHER INFORMATION CONTACT: Leona Dittus, Director, Emergency and 
Noninsured Assistance Program Division, FSA, USDA, AG Box 0526, P. O. 
Box 2415, Washington, D.C. 20013-2415. Telephone (202) 720-3168.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This final rule is issued in conformance with Executive Order 12866 
and has been determined to be significant and has been reviewed by the 
Office of Management and Budget.

Regulatory Flexibility Act

    It has been determined that the Regulatory Flexibility Act is not 
applicable to this rule because neither FSA nor the CCC is required by 
5 U.S.C. 553 or any other provision of law to publish a notice of 
proposed rulemaking with respect to the subject matter of this rule.

Environmental Evaluation

    It has been determined by an environmental evaluation that this 
action will have no significant impact on the quality of the human 
environment. Therefore, neither an environmental assessment nor an 
environmental impact statement is needed.

Executive Order 12778

    The final rule has been reviewed in accordance with Executive Order 
12778. The provisions of this final rule preempt State laws to the 
extent such laws are inconsistent with the provisions of this rule. The 
provisions of this rule are not retroactive. Before any judicial action 
may be brought concerning the provisions of this rule, the 
administrative remedies must be exhausted.

Executive Order 12372

    This program is not subject to the provisions of Executive Order 
12372, which require intergovernmental consultation with State and 
local officials. See the Notice related to 7 CFR part 3015, subpart V, 
published at 48 FR 29115 (June 24, 1983).

Unfunded Mandates

    The provisions of the Unfunded Mandates Reform Act of 1995 are not 
applicable to this rule because neither FSA nor CCC is required by 5 
U.S.C. 553 or any other provision of the law to publish a notice of 
proposed rulemaking with respect to the subject matter of this rule.

Small Business Regulatory Enforcement Fairness Act of 1996

    The Agency gave notice of the proposed rule and accepted comments 
from the public prior to the publication of the final rule. After the 
publication of the final rule, Congress passed both the 1996 Act and 
the Small Business Regulatory Enforcement Fairness Act of 1996. Due to 
fact that this rule makes slight changes to a rule that was already 
final when Congress passed these two Acts, it has been determined in 
accordance with section 808 of the Small Business Regulatory 
Enforcement Fairness Act of 1996, that it is impracticable, unnecessary 
and contrary to the public interest to require this rule to conform to 
the requirements of section 801 of that Act. Accordingly, this rule is 
effective upon publication in the Federal Register.

Paperwork Reduction Act

    The amendments to 7 CFR 1437 set forth in this final rule involve a 
change in the existing information collection requirements. In 
accordance with the Paperwork Reduction Act of 1995, CCC received 
approval from OMB for the

[[Page 69005]]

collection of information in this rule that is not related to acreage 
reports. That collection was cleared as a revision to OMB docket number 
0563-0016 at the time this rule was proposed. No comments were received 
regarding information collections contained in OMB docket 0563-0016.
    Upon analysis of the current clearances of information collections 
associated with the Noninsured Crop Disaster Assistance Program (NAP), 
CCC found that information collection of acreage reports for this 
program are not currently approved by OMB. The agency has submitted an 
emergency information collection request (ICR) to OMB for the approval 
of these reports as necessary for the proper functioning of the 
program.
    A copy of this emergency ICR, with applicable supporting 
documentation, may be obtained from Sean O'Neill, FSA, ENAPD, NAB, room 
6701-S, STOP 0526, P.O. Box 2415, Washington, DC 20013-2415. Comments 
and questions about the ICR listed below should be directed to the 
Office of Information and Regulatory Affairs, Attn. OMB Desk Officer 
for Agriculture, Office of Management and Budget, Room 10202, 
Washington, DC 20503 ((202) 395-7340).
    Title: Annual Certification Requirements, Assignment of Payments, 
and Power of Attorney (7 CFR Parts 12, 718, 1437, and 720).
    OMB Control Number: 0560-0004.
    Description: To be eligible for NAP benefits, producers must report 
all acreage in the county of the eligible crop (for each planting in 
the event of multiple planting) in which the producer has a share. 
Because NAP assistance is calculated on a unit basis, similar to 
catastrophic risk protection, it is necessary that producers report all 
acreage of the crop in which they have an interest in the county, not 
just the acreage which suffered a loss. The 1996 Act mandates the use 
of a producer's actual production history over a four to ten year 
period, necessitating precise records. The FSA-578 acreage report form 
is used under the NAP to collect data used to determine a producer's 
production of a crop and loss of production (on a yield basis) in the 
event a disaster occurs. The acreage report is also used in determining 
the estimated NAP area loss for a crop. If the annual planted acreage 
were not known the task of determining area, crop, crop production, and 
producer eligibility for the NAP could be difficult.

Executive Order 12612

    It has been determined that this rule does not have sufficient 
federalism implications to warrant the preparation of a Federalism 
Assessment. The provisions contained in this rule will not have a 
substantial direct effect on States or their political subdivisions, or 
on the distribution of power and responsibilities among the various 
levels of government.

Federal Assistance Programs

    This program is listed in the Catalog of Federal Domestic 
Assistance under No. 10.450.

Background

    Title I of the Federal Agriculture Improvement and Reform Act of 
1996 (the 1996 Act) enacted on April 4, 1996, changes the 
administration of the noninsured crop disaster assistance program (NAP) 
from Federal Crop Insurance (FCIC) to the Secretary of Agriculture 
through the Commodity Credit Corporation. NAP will continue to be 
operated through the Farm Service Agency. Because the program will now 
be administered by the Commodity Credit Corporation (CCC), the NAP 
regulations will be moved from 7 CFR part 404 to 7 CFR part 1437. Upon 
publication of this rule, the current provision for NAP will be removed 
from part 404 and that part will be reserved.
    The regulation reflects a change in references from FCIC and FCIC 
Manager to CCC and Executive Vice President, CCC, or a designee. Other 
major changes include:
    (1) Section 1437.11 is amended to include seed crops and 
aquacultural species (including ornamental fish) as crops eligible for 
benefits under this part.
    (2) Section 1437.17 is amended to provide that producers are 
required to report production for acreage previously reported to CCC as 
being planted by the immediately subsequent crop year acreage reporting 
date for the crop.

List of Subjects in 7 CFR Parts 404 and 1437

    Agricultural commodities, Disaster assistance, reporting and 
recordkeeping requirements.
    For reasons set out in the Preamble and under the authority of 5 
U.S.C. 553, 7 CFR Chapters IV and XIV are amended as set forth below:

CHAPTER XIV--[AMENDED]

    1. Chapter XIV is amended by adding part 1437 to read as follows:

Part 1437--NONINSURED CROP DISASTER ASSISTANCE PROGRAM REGULATIONS 
FOR THE 1996 AND SUCCEEDING CROP YEARS

Sec.
1437.1  Applicability.
1437.2  Administration.
1437.3  Definitions.
1437.4  Eligibility.
1437.5  Assistance
1437.6  Area.
1437.7  Yield Determinations.
1437.8  Acreage and Production Reports.
1437.9  Loss Requirements.
1437.10  Application for Payment and Notice of Loss.
1437.11  Payments for Reduced Yield and Prevented Planting.
1437.12  Multiple Benefits.
1437.13  Payment and income limitations.
1437.14  Violations of Highly Erodible Land and Wetland Conservation 
Provisions
1437.15  Violations Regarding Controlled Substances.
1437.16  Misrepresentation and scheme or device.
1437.17  Refunds to the Corporation.
1437.18  Offsets and assignments.
1437.19  Cumulative Liability.
1437.20  Appeals.
1437.21  Estates, trusts, and minors.
1437.22  Death, incompetence, or disappearance.
1437.23  OMB control numbers.

    Authority: 15 U.S.C. 714b and 714c; and 7 U.S.C. 7333


Sec. 1437.1  Applicability.

    For the 1996 and susbsequent crop years, NAP is intended to provide 
eligible producers of eligible crops with protection comparable to the 
catastrophic risk protection plan of crop insurance. NAP is also 
designed to help reduce production risks faced by producers of crops 
for which Federal crop insurance under the Federal Crop Insurance Act, 
as amended, is not available. NAP will reduce financial losses that 
occur when natural disasters cause a catastrophic loss of production or 
prevented planting of an eligible crop. Payment eligibility is based on 
an expected yield for the area and the producer's approved yield based 
on actual production history, or a transitional yield if sufficient 
production records are not available. Production for both the 
applicable area expected yield and the individual producer approved 
yield for the unit must fall below specified percentages in order to be 
eligible for payments under this part.
    The provisions contained in this part are applicable to each 
eligible producer and each eligible crop for which catastrophic 
coverage is not otherwise available.

[[Page 69006]]

Sec. 1437.2  Administration.

    (a) NAP is administered under the general supervision of the 
Executive Vice-President, CCC (Administrator, Farm Service Agency), and 
shall be carried out by State and county FSA committees (State and 
county committees).
    (b) State and county committees, and representatives and their 
employees, do not have authority to modify or waive any of the 
provisions of the regulations of this part.
    (c) The State committee shall take any action required by these 
regulations that the county committee has not taken. The State 
committee shall also:
    (1) Correct, or require a county committee to correct any action 
taken by such county committee that is not in accordance with the 
regulations of this part; or
    (2) Require a county committee to withhold taking any action that 
is not in accordance with this part.
    (d) No provision or delegation to a State or county committee shall 
preclude the Executive Vice President, CCC, or a designee, from 
determining any question arising under the program or from reversing or 
modifying any determination made by a State or county committee.
    (e) The Deputy Administrator may authorize State and county 
committees to waive or modify deadlines, except statutory deadlines, 
and other program requirements in cases where lateness or failure to 
meet such other requirements does not adversely affect operation of the 
program.
    (f) The State committee will, in accordance with this part, 
recommend the geographical size and shape of the area where a natural 
disaster has occurred, and whether the area eligibility requirement has 
been satisfied. The recommendation of eligibility must be approved by 
the Executive Vice President, CCC, or a designee.
    (g) The Executive Vice President, CCC, or a designee, will 
determine all yields and prices under this part.


Sec. 1437.3  Definitions.

    The definitions set forth in this section shall be applicable for 
all purposes of administering the noninsured crop disaster assistance 
program. The terms defined in part 718 of this title and 1400 of this 
chapter shall also be applicable, except where those definitions 
conflict with the definitions set forth in this section.
    Act means the Federal Agriculture Improvement and Reform Act of 
1996, Public Law 104-127 (7 U.S.C. 7201 et seq).
    Actual production history means the history determined in 
accordance with part 400, subpart G, of this title, except that when 
referring to NAP the terms of subpart G will mean as follows:

------------------------------------------------------------------------
              Insurance terms                         NAP terms         
------------------------------------------------------------------------
Agent.....................................  Local office representative.
Claim.....................................  Application for payment.    
Claim for indemnity.......................  Application for payment.    
Indemnity payment.........................  NAP payment.                
Insurable acreage.........................  Eligible acreage.           
Insurable cause...........................  Natural disaster.           
Insurable crop............................  Eligible crop.              
Insurance company.........................  Provider.                   
Insurance purposes........................  NAP purposes.               
Insured...................................  Eligible producer.          
Insured producer..........................  Eligible producer.          
Uninsurable acreage.......................  Ineligible acreage.         
Uninsurable production....................  Ineligible production.      
Uninsured cause of loss...................  Assigned production         
                                             appraisal                  
Uninsured production......................  Ineligible production       
------------------------------------------------------------------------

    Approved yield means an actual production history yield calculated 
and approved by CCC, used to determine any NAP payment in accordance 
with part 400, subpart G, of this title.
    Aquacultural species means any species of aquatic organism grown as 
food for human consumption, or 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.
    Area means the geographic region recommended by the State FSA 
committee, and approved by CCC in accordance with Sec. 1437.6, where a 
natural disaster has occurred which may qualify producers in the area 
for NAP payments.
    Assigned yield means a yield assigned for a crop year in the base 
period, in accordance with part 400, subpart G, of this title, if the 
producer does not file an acceptable production report by the 
production reporting date.
    Average market price means the price, or dollar equivalent on an 
appropriate basis; for example, pound, bushel, ton, for an eligible 
crop established by CCC for determining NAP payments. Such price will 
be on a harvested basis without the inclusion of transportation, 
storage, processing, packing, marketing or other post-harvest expenses 
and will be based, in part, on historical data.
    Catastrophic coverage means a catastrophic risk protection plan of 
insurance offered by FCIC in accordance with part 402 of this title.
    CCC means the Commodity Credit Corporation, a wholly owned 
Government corporation within the United States Department of 
Agriculture.
    County expected yield means the eligible crop yield established by 
the State FSA committee and approved by CCC for the county. Such yield 
information may be obtained from National Agricultural Statistics 
Service, Cooperative States Research, Education, and Extension Service, 
credible nongovernmental studies, yields in similar areas, and similar 
reference material. For planted annual crops, such yield will be based 
on the acreage planted for harvest.
    Crop year means the period of time within which the crop is 
normally grown and designated by the calendar year in which the crop is 
normally harvested in the area. For crops harvested over two calendar 
years, the crop year will be the calendar year in which the majority of 
the crop would have been harvested. For crops grown over more than two 
calendar years, each year in the growing period will be considered as a 
separate crop year designated by the calendar year in which the crop 
sustained a loss. For crops for which catastrophic coverage is 
available, the crop year will be as defined by such coverage.
    Eligible crop means an agricultural commodity for which 
catastrophic coverage is not available and which is commercially 
produced for food or fiber as specified in this part. Eligible crop 
shall also include floricultural, ornamental nursery, and Christmas 
tree crops, turfgrass sod, seed crops, aquaculture (including 
ornamental fish), and industrial crops. In the case of a crop that 
historically has multiple plantings in the same crop year that are 
planted or are prevented from being planted, each planting may be 
considered a different crop for determining payments under this part. 
In the case of a crop that has different varieties or types, each 
variety or type may be considered a separate crop for determining 
payments under this part, if CCC determines there is a significant 
difference in price or yield between the varieties or types.
    Expected area yield means the eligible crop yield established and 
approved by CCC for the geographic area.
    Forage means land covered with grass or other vegetation, produced 
under such range management practices as are necessary to sustain 
sufficient quality and quantity of grass or vegetation each year to be 
suitable for grazing or mechanical harvest to feed livestock in a 
commercial operation. NAP benefits

[[Page 69007]]

for forage produced on any Federal or state owned lands are available 
only for seeded forage.
    Good farming practices means the cultural practices generally used 
in the area for the crop to make normal progress toward maturity and 
produce at least the individual unit approved yield. The practices are 
normally those recognized by Cooperative State Research, Education, and 
Extension Service as compatible with agronomic and weather conditions 
in the area.
    Harvested means a single harvest crop is considered harvested when 
the producer has, by hand or mechanically, removed the crop from the 
field. Crops with multiple harvests in one year or harvested over 
multiple years are considered harvested when the producer has, by hand 
or mechanically, removed at least one mature crop from the field. The 
crop is considered harvested once it is removed from the field and 
placed in a truck or other conveyance, except:
    (1) Hay is considered harvested when in the bale, whether removed 
from the field or not; and
    (2) Grazing is not considered harvesting for the purpose of 
determining a payment rate factor.
    Livestock means any farm or other animal excluding aquacultural 
species and, including but not limited to domestic avian, ruminant, 
equine, and swine species grown or maintained for any purpose.
    Local office means the FSA office or other USDA office designated 
by CCC.
    Native forage means grass or other vegetation occurring naturally 
without seeding.
    Natural disaster means damaging weather, including but not limited 
to drought, hail, excessive moisture, freeze, tornado, hurricane, 
excessive wind, or any combination thereof; or adverse natural 
occurrence such as earthquake, flood, or volcanic eruption; or related 
condition, including but not limited to heat, insect infestation, or 
disease, which occurs as a result of an adverse natural occurrence or 
damaging weather occurring prior to or during harvest that directly 
causes, accelerates, or exacerbates the destruction or deterioration of 
an eligible crop, as determined by the Secretary.
    Ornamental fish means a decorative fish produced in a commercial 
fishery for sale.
    Ornamental nursery crop means a decorative plant grown in a 
container or controlled environment for commercial sale.
    Prevented planting means the inability to plant a crop with proper 
equipment during the planting period for the crop or commodity. A 
producer must prove that the producer intended to plant the eligible 
crop and that such crop could not be planted due to natural disaster 
reasonably related to the basis for the area designation under 
Sec. 1437.6, as determined by the Executive Vice President. The natural 
disaster that caused the prevented planting must have occurred after 
the final planting date for the previous crop year and before the final 
planting date for the crop year in which a request for NAP payment was 
made. For crops with multiple plantings in a single crop year and one 
crop has been harvested, the natural disaster must occur, after the 
harvest of the harvested crop and before the end of the planting period 
for the next planting of the crop.
    Production report means a written record showing the commodity's 
annual production and used to determine the producer's yield for NAP 
purposes. The report contains yield history by unit, if applicable, 
including planted acreage for annual crops, eligible acreage for 
perennial crops, and harvested and FCIC or CCC appraised production for 
the previous crop years. This report must be supported by verifiable 
written records, measurement of farm-stored production, or by other 
records of production approved by CCC. Information contained in an 
application for payment is considered a production report for the unit 
for the crop year for which the application was filed.
    Qualifying gross revenues means:
    (1) With respect to a person who receives more than 50 percent of 
such person's gross income from farming, ranching, and forestry 
operations, the annual gross income for the taxable year from such 
operations; and
    (2) With respect to a person who receives 50 percent or less of 
such person's gross income from farming, ranching, and forestry 
operations, the person's total gross income for the taxable year from 
all sources.
    Reseeded or replanted crop means the same crop planted on the same 
acreage after the first planting of the crop has failed.
    Seed crop means a crop produced for the purpose of, or intended for 
use as, commercial propagation for sale.
    Seeded forage means acreage which is mechanically seeded with 
grasses or other vegetation at regular intervals, at least every 7 
years, in accordance with good farming practices.
    Share means the producer's percentage of interest in the eligible 
crop as an owner, operator, or tenant. For the purpose of determining 
eligibility for payments under this part, the producer's share will not 
exceed the producer's share at the earlier of the time of loss or the 
beginning of harvest. Acreage or interest attributed to a spouse, 
child, or member of the same household may be considered part of the 
producer's share unless such individual is considered to be a separate 
person under part 1400 of this chapter.
    Type or Variety means a scientifically recognized subspecies of a 
crop or commodity having a particular characteristic or set of 
characteristics.
    Unit means, for NAP, all acreage of the eligible crop in the county 
for the crop year:
    (1) In which the person has 100 percent crop share; or
    (2) Which is owned by one person and operated by another person on 
a share basis.
    Land rented for cash, a fixed commodity payment, or any 
consideration other than a share in the crop on such land will be 
considered as owned by the lessee. No unit other than that stated 
herein will be permitted.


Sec. 1437.4  Eligibility.

    (a) Eligible crops are any commercial agricultural crop (excluding 
livestock and their by-products), commodity, or acreage of a commodity 
grown for food or fiber for which catastrophic coverage is not 
available under part 402 of this title. Different types or varieties of 
a crop or commodity may be treated as a separate eligible crop, if CCC 
determines there is a significant difference in price or yield.
    (b) NAP payments will be made available for:
    (1) Any commercial crop grown for food;
    (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;
    (4) Any commercially produced aquacultural species (including 
ornamental fish);
    (5) Floriculture crops;
    (6) Ornamental nursery crops;
    (7) Christmas tree crops;
    (8) Turfgrass sod;
    (9) Industrial crops;
    (10) Seed Crops; and
    (11) Any crop, for which crop insurance under the Federal Crop 
Insurance Act is available in the county, that is affected by a natural 
disaster that is not named as an insurable peril under the producer's 
crop insurance policy.
    (c) NAP payments will not be available for any acreage in any area 
for any crop for which catastrophic coverage is available, unless the 
loss

[[Page 69008]]

was caused by a natural disaster that is not covered by catastrophic 
coverage and all other eligibility requirements under this part are 
satisfied.


Sec. 1437.5  Assistance.

    (a) Producers who are eligible to receive NAP payments for crop 
years 1996 through 1998 will receive assistance against loss in yield 
greater than 50 percent of the producer's approved yield for the 
eligible crop payable at 60 percent of the established average market 
price for the crop.
    (b) Producers who are eligible to receive NAP payments after crop 
year 1998 will receive assistance against loss in yield greater than 50 
percent of the producer's approved yield for the eligible crop payable 
at 55 percent of the established average market price for the crop.
    (c) CCC will adjust the NAP payment rate for crops that are 
produced with significant and variable expenses that are not incurred 
because the crop acreage was prevented from being planted or planted 
but not harvested.
    (d) NAP payments will be determined by unit based on all the 
acreage and production of the crop and eligible prevented from being 
planted acreage of the crop.
    (e) Each producer's NAP payment will be based on the producer's 
share of the eligible crop.


Sec. 1437.6  Area.

     (a) For the purposes of this part, acreage affected by a natural 
disaster, or any adjustment thereto, will be included in the area 
recommended by the state FSA committee and submitted to CCC for 
approval, regardless of whether the commodity produced on the affected 
acreage suffered a loss.
    (b) Except for eligible areas identified in paragraph (f) of this 
section, an approved area shall include at least five producers of 
crops on separate and distinct farms for which the area has been 
approved for NAP payments. Notwithstanding this provision, CCC may 
approve an area having fewer than five producers if the Executive Vice 
President, or a designee, determines that such area will suffer 
significant economic consequences as a result of the disaster.
    (c) An area may be designated as follows:
    (1) A county;
    (2) Aggregated acreage that is at least 320,000 acres; or
    (3) Aggregated acreage with not less than $80 million average value 
for all crops produced annually.
    (d) If the aggregated acreage affected by the natural disaster does 
not meet the minimum requirement specified in paragraph (c) (2) or (3) 
of this section, the aggregated acreage will be expanded by adding 
acres from around the affected acreage, until the minimum requirement 
is met.
    (e) The area may not be defined in any manner that intentionally 
includes or excludes producers or crops.
    (f) Notwithstanding the provisions of paragraphs (a) and (c) of 
this section, for areas outside the 50 states of the United States, the 
area shall include 10 or more producers of the crop except CCC may 
approve an area outside the 50 United States having fewer than 10 
producers of the crop for which the area is requested if the Executive 
Vice President determines that such area will suffer significant 
economic consequences as a result of the disaster.


Sec. 1437.7  Yield determinations.

    (a) CCC will establish expected area yields for eligible crops for 
each county or area for which the NAP is available, using available 
information, which may include, but is not limited to, National 
Agricultural Statistics Service data, Cooperative State Research, 
Education, and Extension Service records, Federal Crop Insurance 
Corporation data, credible nongovernment studies, yields in similar 
areas, and reported approved yield data. For planted annual crops, such 
yields will be based on the acreage planted for harvest.
    (b) CCC may make county yield adjustments taking into consideration 
different yield variations due to different farming practices in the 
county such as: irrigated, nonirrigated, organic, nonorganic, different 
types and varieties of a crop and intended use.
    (c) In establishing expected area yields for eligible crops:
    (1) If the approved area corresponds to a single county, the 
expected area yield will be the yield established by CCC for that 
county, including any adjustments permitted by this section;
    (2) If the approved area encompasses portions of counties or more 
than one county, the expected area yield will be the weighted average 
of the yields established by CCC for those counties in the area, 
including any adjustments permitted by this section; and
    (3) CCC may adjust expected area yields if:
    (i) The cultural practices, including the age of the planting or 
plantings, are different from those used to establish the yield; or
    (ii) The expected area yield established on a state or county level 
is determined to be incorrect for the area.
    (d) CCC will establish approved yields for purposes of providing 
assistance under this part. Approved yields for the eligible crop will 
be based on the producer's actual production history in accordance with 
the provisions of part 400, subpart G, of this title.
    (e) The approved yield established for the producer for the year in 
which the NAP payments are offered will be equal to the average of the 
consecutive crop year yields, as established by CCC, reported and 
certified by that producer for that eligible crop.
    (f) If a producer receives an assigned yield for a year of natural 
disaster because production records were not submitted by the 
production reporting deadline, the producer will be ineligible to 
receive an assigned yield for the year of the next natural disaster 
unless adequate production records for the eligible crop from all the 
interim crop years are provided to the local office. The producer shall 
receive a zero yield for those years the producer is ineligible to 
receive an assigned yield.
    (g) CCC will select certain producers on a random or targeted basis 
and require those selected to provide records acceptable to CCC to 
support the information provided. Producers may also be required to 
support the yield certification at the time of loss adjustment or on 
post-audit. Each certification must be supported by records acceptable 
to CCC. Failure to produce records acceptable to CCC will result in CCC 
establishing the yield in accordance with actual production history and 
may subject the producer to criminal and civil false claims actions 
under various Federal statutes as well as refund of any amount 
received. In addition, sanctions, as set out at Sec. 1437.16, may be 
imposed for false certification.
    (h) Records acceptable to CCC may include:
    (1) commercial receipts, settlement sheets, warehouse ledger 
sheets, or load summaries if the eligible crop was sold or otherwise 
disposed of through commercial channels provided the records are 
reliable or verifiable; and
    (2) Such documentary evidence as is necessary in order to verify 
the information provided by the producer if the eligible crop has been 
sold, fed to livestock, or otherwise disposed of other than through 
commercial channels such as contemporaneous measurements, truck scale 
tickets, and contemporaneous diaries, provided the records are reliable 
or verifiable.
    (i) Any producer who has a contract to receive a guaranteed payment 
for production, as opposed to delivery, of an eligible crop will have 
the production adjusted upward by the amount of the production 
corresponding

[[Page 69009]]

to the amount of the contract payment received.
    (j)(1) Producers will not be eligible to receive an assigned yield 
if the acreage of the crop in a county for the crop year has increased 
by more than 100 percent over any year in the preceding seven crop 
years, unless:
    (i) The producer provides adequate records of production costs, 
acres planted, and yield for the crop year for which NAP payments are 
being sought; or
    (ii) CCC determines that the records provided under this paragraph 
are inadequate. CCC may require proof that the eligible crop could have 
been marketed at a reasonable price had the crop been harvested.
    (2) The provisions of this section will not apply if:
    (i) The crop has been inspected prior to the occurrence of a loss 
by a third party acceptable to CCC; or
    (ii) The FSA county executive director, with the concurrence of the 
FSA state director, makes a recommendation for an exemption from the 
requirements and such recommendation is approved by CCC.


Sec. 1437.8  Acreage and production reports.

    (a) Producers must file one or more acreage reports at the local 
office no later than the date specified by CCC for each crop the 
producer wants to insure future eligibility for the NAP program. The 
acreage report may be filed by the farm operator. Any producer will be 
bound by the acreage report filed by the farm operator unless the 
producer files a separate acreage report prior to the acreage reporting 
date.
    (b) Acreage reports required by paragraph (a) must include all of 
the following information:
    (1) All acreage in the county of the eligible crop (for each 
planting in the event of multiple planting) in which the producer has a 
share;
    (2) The producer's share at the time of planting or the beginning 
of the crop year;
    (3) The FSA farm serial number;
    (4) The crop, practice, and intended use;
    (5) All persons sharing in the crop (including the identity of any 
person having an interest in the crop as producer) and the person's 
employer identification number or social security number, if the person 
wishes to receive any payment under the Act;
    (6) The date the crop was planted; and
    (7) Acreage prevented from being planted.
    (c) For each crop for which an acreage report is filed in 
accordance with this section, the producer must report the production 
for that acreage by the immediately subsequent crop year acreage 
reporting date for the crop.
    (d) A person's failure to submit the required information by the 
designated acreage reporting dates may result in the denial of payments 
under this part. If there is a change of ownership, operation, or share 
within the farming operation after the acreage reporting date, the 
local office must be notified not later than 30 calendar days after the 
change and proof of the change must be provided to maintain eligibility 
for payments under this part.


Sec. 1437.9  Loss requirements.

    (a) To qualify for payment under this part, the loss or prevented 
planting of the eligible crop must be due to a natural disaster.
    (b) Assistance under this part will not cover losses due to:
    (1) The neglect or malfeasance of the producer;
    (2) The failure of the producer to reseed or replant to the same 
crop in the county where it is customary to reseed or replant;
    (3) The failure of the producer to follow good farming practices 
for the commodity and practice;
    (4) Water contained or released by any governmental, public, or 
private dam or reservoir project, if an easement exists on the acreage 
affected for the containment or release of the water;
    (5) Failure or breakdown of irrigation equipment or facilities; or
    (6) Except for tree crops and perennials, inadequate irrigation 
resources at the beginning of the crop year.
    (c) A producer of an eligible crop will not receive payments under 
this part unless the projected average or actual yield for the crop, or 
an equivalent measurement if yield information is not available, in the 
area falls below 65 percent of the expected area yield. Once this area, 
and all other, eligibility requirements have been satisfied:
    (1) A reduced yield payment will be made to a producer if the total 
quantity of the eligible crop that the producer is able to harvest on 
the unit is less than 50 percent of the approved yield for the crop due 
to natural disaster reasonably related to the basis for the area 
designation under Sec. 1437.6, factored for the share of the producer 
for the crop. Production from the entire unit will be used to determine 
whether the producer qualifies for a payment under this part. The 
quantity will not be reduced for any quality consideration unless a 
zero value is established; and
    (2) A prevented planting payment under this part will be made if 
the producer is prevented from planting more than 35 percent of the 
total eligible acreage intended for planting to the eligible crop. 
Producers must have intended to plant the crop and prove that they were 
prevented from planting the crop due to natural disaster reasonably 
related to the basis for the area designation under Sec. 1437.6, and 
the producer may be required to prove that such producer had the 
resources available to plant, grow, and harvest the crop, as 
applicable.
    (d) NAP payments under this part for prevented planting will not be 
available for:
    (1) Tree crops and other perennials, unless the producer can prove 
resources were available to plant, grow, and harvest the crop, as 
applicable;
    (2) Land that planting history or conservation plans indicate would 
remain fallow for crop rotation purposes; or
    (3) Land used for conservation purposes or intended to be or 
considered to have been left unplanted under any program administered 
by USDA, including the Conservation Reserve Program and Wetland Reserve 
Program.


Sec. 1437.10  Application for payment and notice of loss.

    (a) Any person with a share in the eligible crop who would be 
entitled to a payment under this part must provide a notice of damage 
or loss within 15 calendar days after the occurrence of the prevented 
planting (the end of the planting period) or recognizable damage to the 
crop. The notice must be filed at the local office serving the area 
where the producer's unit is located. The farm operator may provide the 
notice for all producers with an interest in the crop. All producers on 
a farm will be bound by the operator's filing or failure to file the 
application for payment unless the individual producers elect to timely 
file their notice.
    (b)(1) Applications for payments under this part must be filed, on 
Form FCI-74, by the applicant with the local office no later than the 
first acreage reporting date for the crop in the crop year immediately 
following the crop year in which the loss occurred.
    (2) If the producer chooses not to harvest the crop, all eligible 
acres and crop units for which the producer intends to make an 
application for payment must be left intact until the units have been 
appraised or released by an FCIC or CCC approved loss adjuster.
    (3) If the producer harvests the crop, the producer must provide 
such documentary evidence of crop production as CCC may require which

[[Page 69010]]

may include leaving representative samples of the crop for inspection.
    (c) Failure to make timely application or to supply the required 
documentary evidence shall result in the denial of payments under this 
part.


Sec. 1437.11  Payments for reduced yields and prevented planting.

    In the event that the area loss requirement has been satisfied for 
the crop and either:
    (a) The producer has sustained a loss in yield in excess of 50 
percent of the producer's approved yield established for the crop, the 
NAP low yield payment will be determined by:
    (1) Multiplying the producer's approved yield by the total eligible 
acreage planted to the eligible crop;
    (2) Multiplying the product of paragraph (a)(1) by 50 percent;
    (3) Subtracting the total production from the total eligible 
acreage from the result in paragraph (a)(2);
    (4) Multiplying the product of paragraph (a)(3) by the producer's 
share of the eligible crop;
    (5) Multiplying the result of paragraph (a)(4) by the applicable 
payment factor in accordance with Sec. 1437.5(c); and
    (6) Multiplying the result in paragraph (a)(5) by:
    (i) For the 1996 through 1998 crop years, 60 percent of the average 
market price, as determined by CCC, or any comparable coverage, as 
determined by CCC; or
    (ii) For the 1999 and subsequent years, 55 percent of the average 
market price, as determined by CCC, or any comparable coverage, as 
determined by CCC; or
    (b) The producer has been unable to plant at least 35 percent of 
the acreage intended for the eligible crop, the NAP payment will be 
determined by:
    (1) Multiplying the producer's acreage intended to be planted to 
the eligible crop by 35 percent;
    (2) Subtracting the result in (b)(1) from the number of eligible 
prevented planting acres as determined in Sec. 1437.9(c)(2);
    (3) Multiplying the result of (b)(2) by the producer's share of the 
eligible crop;
    (4) Multiplying the producer's approved yield by the result of 
(b)(3);
    (5) Multiplying the result of (b)(4) by the approved prevented 
planting payment factor in accordance with Sec. 1437.5(c); and
    (6) Multiplying the result of (b)(5) by:
    (i) For the 1996 through 1998 crop years, 60 percent of the average 
market price, as determined by CCC, or any comparable coverage, as 
determined by CCC; or
    (ii) For the 1999 and subsequent years, 55 percent of the average 
market price, as determined by CCC, or any comparable coverage, as 
determined by CCC.


Sec. 1437.12  Multiple benefits.

    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. The producer is not 
eligible for both. Such election does not relieve the producer from the 
requirements of making a production and acreage report. However, if the 
other USDA program benefits are not available until after an 
application for benefits has been filed under this part, the producer 
may refund the total amount of the payment to the local office from 
which the payment was received.


Sec. 1437.13  Payment and income limitations.

    (a) NAP payments shall not be made:
    (1) In excess of $100,000 per person per crop year under this part, 
or
    (2) To a person who has qualifying gross revenues in excess of $2 
million for the most recent tax year preceding the year for which 
assistance is requested.
    (b) Simple interest on payments to the producer which are delayed 
will be computed on the net payments ultimately found to be due, from 
and including the 31st day after the latter of the date the producer 
signs, dates, and submits a properly completed application for payment 
on the designated form, the date disputed applications are adjudicated, 
or the date the area and crop is approved for NAP payments. 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 or payment.


Sec. 1437.14  Violations of Highly Erodible Land and Wetland 
Conservation Provisions.

    The provisions of part 12 of this title, apply to this part.


Sec. 1437.15  Violations Regarding Controlled Substances.

    The provisions of Sec. 718.11 of this title apply to this part.


Sec. 1437.16  Misrepresentation and scheme or device.

    (a) If CCC determines that any producer has misrepresented any fact 
or has knowingly adopted, participated in, or benefitted from, any 
scheme or device that has the effect of defeating, or is designed to 
defeat the purpose of this part, such producer will not be eligible to 
receive any payments applicable to the crop year for which the scheme 
or device was adopted.
    (b) If any misrepresentation, scheme or device, or practice has 
been employed for the purpose of causing CCC to make a payment which 
otherwise would not make under this part:
    (1) CCC will withhold all or part of the payment that would 
otherwise be due.
    (2) All amounts paid by CCC to any such producer, applicable to the 
crop year in which the offense occurred, must be refunded to CCC 
together with interest and other amounts as determined in accordance 
with this part.
    (3) CCC may impose such other penalties or administrative sanctions 
as authorized by section Sec. 1437.19.
    (c) Scheme and device may include, but is not limited to:
    (1) Concealing any information having a bearing on the application 
of the rules of this part;
    (2) Submitting false information to the CCC or any county or state 
FSA committee; or
    (3) Creating fictitious entities for the purpose of concealing the 
interest of a person in the farming operation.


Sec. 1437.17  Refunds to the CCC.

    In the event that there is a failure to comply with any term, 
requirement, or condition for payment made in accordance with this 
part, or the payment was established as a result of erroneous 
information provided by any person, or was erroneously computed, all 
such payments or overpayments will be refunded to CCC on demand, plus 
interest determined in accordance with part 1403 of this chapter.


Sec. 1437.18  Offsets and assignments.

    (a) Except as provided in paragraph (b), any payment or portion 
thereof to any person shall be made without regard to questions of 
title under State law and without regard to any claim or lien against 
the crop, or proceeds thereof, in favor of the owner or any other 
creditor except agencies of the U.S. Government. The regulations 
governing offsets and withholdings found at part 1403 of this chapter 
shall be applicable to payments under this part.
    (b) Any producer entitled to any payment may assign any payments in 
accordance with regulations governing assignment of payment found at 
part 1404 of this chapter.


Sec. 1437.19  Cumulative liability.

    (a) The liability of any producer for any payment or refunds, which 
is

[[Page 69011]]

determined in accordance with this part to be due to CCC will be in 
addition to any other liability of such producer under any civil or 
criminal fraud statute or any other statute or provision of law 
including, but not limited to, 15 U.S.C. 714; 18 U.S.C. 286, 287, 371, 
641, 651, 1001, 1014; 15 U.S.C. 714m; and 31 U.S.C. 3729.
    (b) All producers on the unit receiving payments under this part 
will be jointly and severally liable to repay any unearned payments 
under this part.


Sec. 1437.20  Appeals.

    The appeal, reconsideration, or review of all determinations made 
under this part, except the eligibility provisions for crops, areas, or 
producers for which there are no appeal rights because they are 
determined rules of general applicability, must be in accordance with 
part 780 of this title.


Sec. 1437.21  Estates, trusts, and minors.

    (a) Program documents executed by persons legally authorized to 
represent estates or trusts will be accepted only if such person 
furnishes evidence of the authority to execute such documents.
    (b) A minor who is otherwise eligible will be eligible for payments 
under this part only if such person meets one of the following 
requirements:
    (1) The minor establishes that the right of majority has been 
conferred on the minor by court proceedings or by statute;
    (2) A guardian has been appointed to manage the minor's property 
and the applicable program documents are executed by the guardian; or
    (3) A bond is furnished under which the surety guarantees any loss 
incurred for which the minor would be liable had the minor been an 
adult.


Sec. 1437.22  Death, incompetence, or disappearance.

     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 18 of this title.


Sec. 1437.23  OMB control numbers.

     These regulations amend the information collection requirements 
previously approved by the Office of Management and Budget (``OMB'') 
under OMB control number 0563-0016.

Chapter IV [AMENDED]

Part 404 [REMOVED]

    2. 7 CFR part 404 is removed.

    Signed at Washington, D.C., on December 24, 1996.
Bruce R. Weber,
Acting Executive Vice President, Commodity Credit Corporation.
    Signed at Washington, D.C., on December 27, 1996.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 96-33264 Filed 12-30-96; 8:45 am]
BILLING CODE 3410-05-P