[Federal Register Volume 63, Number 109 (Monday, June 8, 1998)]
[Rules and Regulations]
[Pages 31102-31104]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-15000]


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

DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1412


Amendment to the Production Flexibility Contract Regulations

RIN 0560-AF25
AGENCY: Commodity Credit Corporation, USDA.

ACTION: Final rule.

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

SUMMARY: The Commodity Credit Corporation (CCC) is issuing its final 
rule with respect to the amendments to the production flexibility 
contract regulations published as an interim final rule in the Federal 
Register on October 23, 1997. After considering the comments received 
from the public, this rule adopts the interim rule as final with 
changes as indicated. The rule also incorporates a specific change 
required by the Agriculture, Rural Development, Food and Drug 
Administration, and Related Agencies Appropriations Act, 1998, which 
provides that if wild rice is planted on contract acreage, the contract 
payment shall be reduced in an amount reflecting each contract acre 
planted to wild rice.

EFFECTIVE DATE: June 8, 1998.

FOR FURTHER INFORMATION CONTACT: Lynn H. Tjeerdsma, Farm Service 
Agency, United States Department of Agriculture, STOP 0517, 1400 
Independence Avenue, SW., Washington, DC 20250-0517, telephone 202-720-
6602, Internet address: [email protected].

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This rule has been determined to be not significant and was not 
reviewed by the Office of Management and Budget (OMB).

Regulatory Flexibility Act

    It has been determined that the Regulatory Flexibility Act is not 
applicable because CCC is not 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

    An Environmental Evaluation with respect to the proposed rule has 
been completed. It has been determined that this action will not have 
significant adverse effects on environmental factors such as wildlife 
habitat, water quality, air quality, land use, or appearance. 
Therefore, neither an Environmental Assessment nor an Environmental 
Impact Statement is needed.

Executive Order 12988

    This rule has been reviewed in accordance with Executive Order 
12988. The provisions of this proposed 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/activity is not subject to the provisions of Executive 
Order 12372, which requires 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).

Paperwork Reduction Act

    The amendments to 7 CFR part 1412 set forth in this rule were 
previously approved under OMB Control Number 0560-0092. An information 
collection notice was published in the Federal Register (62 FR 27216) 
on May 19, 1997. No comments were received regarding this notice. A 
revised information collection package has been submitted to OMB.

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.

Unfunded Mandates Reform Act of 1995

    This rule contains no Federal mandates under the regulatory 
provisions of Title II of the Unfunded Mandates Reform Act of 1995 
(UMBRA) for State, local, and tribal governments or the private sector. 
Therefore, this rule is not subject to the requirements of sections 202 
and 205 of the UMBRA.

Background

    On October 23, 1997, CCC published an interim rule in the Federal 
Register (62 FR 55150) to add a final date for producers to designate 
payment shares and provide supporting documentation to be eligible to 
earn contract payments in a fiscal year when payment shares have not 
been designated in such fiscal year; change the dates by which a 
producer or owner must inform county committee of changes in interest; 
add a final date for producers to request advance payments; clarify 
cash lease provisions; change the provisions for determining whether a 
lease is a cash lease or a share lease with respect to combination 
leases; and change the date by which all landowners, tenants, and 
sharecroppers failing to reach an agreement regarding the division of 
contract payments for a fiscal year must execute a contract to be 
eligible to receive the contract payment for that

[[Page 31103]]

fiscal year. Following publication of the interim rule, the public was 
afforded 30 days to submit comments. CCC extended the comment period to 
December 1, 1997 (62 FR 63441). There were 101 comments received in 
response to the notice during the comment period that ended on December 
1, 1997. The comments were received from 74 producers, 19 commodity 
groups and eight Members of Congress. Five respondents were opposed to 
the amendment to Sec. 1412.302(b). One hundred respondents were opposed 
to, and one respondent was in favor of, the amendment to 
Sec. 1412.303(a)(4). The comments received and CCC responses are as 
follows:
    Comment: Section 1412.302(b) Respondents were concerned that the 
timing of the announcement allowed landlords and tenants a minimal 
amount of time to negotiate leases to be eligible for the December 
advance payment, and that the deadlines for requesting advance payments 
were provided in legislation that did not envision USDA eliminating the 
options through administrative changes. Respondents urged the 
Department to suspend implementation of the new deadlines relating to 
advance payments to ensure that the Department's implementation of the 
Federal Agriculture Improvement and Reform Act of 1996 (1996 Act) is 
consistent with the intent of Congress.
    Response: The 1996 Act specifies that at the option of the owner or 
producer for fiscal year 1997 and each subsequent year, 50 percent of 
the annual contract payment shall be made on December 15 or January 15 
of the fiscal year. Section 1412.302(b) does not change the statutory 
deadline for issuing advance payments. This amendment to the regulation 
was made to ensure that requests for advance payments are received in a 
timely manner to enable CCC to issue the payments by the statutory 
deadlines. The provision will not be changed from the interim rule.
    Comment: Section 1412.303(a)(4) Respondents were concerned that 
this provision was announced at an inappropriate time. Respondents were 
also concerned that the provision would result in higher fixed cash 
rents, reduced contract payments for tenants, limited crop financing 
for tenants, increased financial exposure of tenants, renegotiation of 
rental arrangements, minimal or no savings to the Government, 
elimination of cash rent flexibility provisions under combination 
leases, decreased land values because of limited improvements being 
made to the land resulting in job losses and reduced tax bases in rural 
communities, and elimination of the planting flexibility provisions in 
the 1996 Act. Respondents were also concerned that the Department did 
not explain the basis for the change.
    Response: The amendment to Sec. 1412.303(a)(4) relates to 
combination leases that are partially paid in cash and partially paid 
in the crop. Prior to the amendment to this section, most combination 
leases result in a determination that the lease is a share lease unless 
there is a disaster. Changing this provision provides uniformity in 
determining whether a lease is a cash or share lease. The substance of 
Sec. 1412.303(a)(4) will not be changed, but the timing of the 
implementation of this section has been modified as indicated below so 
that producers who had made long-term commitments prior to the 
publication of the interim rule will be unaffected. In addition, 
Sec. 1412.303(a)(6) has been amended to comport with these changes.
    Changes from the interim rule include:

Section 1412.206  Planting Flexibility

    This rule incorporates the change required by the Agriculture, 
Rural Development, Food and Drug Administration, and Related Agencies 
Appropriations Act, 1998, which provides that if wild rice is planted 
on contract acreage, the contract payment shall be reduced by an acre 
for each contract acre planted to wild rice.

Section 1412.303  Sharing of Contract Payments

    Combination leases are leases that contain provisions for both a 
guaranteed amount such as a fixed dollar amount, or quantity and a 
share of a crop or crop proceeds. Combination leases include those 
leases that provide for the greater of a guaranteed amount, or share of 
the crop or crop proceeds. The amendment provides that all combination 
leases shall be considered share leases for fiscal years 1999 and later 
fiscal years except for those producers who had made leasing and share-
designation decisions prior to the interim rule.
    This rule amends Sec. 1412.303:
    (1) by adding language that for fiscal year 1999 and subsequent 
fiscal years, except as provided in (2) where producers had already 
made leasing and share-designation decisions prior to the interim rule, 
that a ``combination'' lease shall be considered a share lease if the 
lease provides for both a guaranteed amount, such as a fixed dollar 
amount or quantity, and a share of a crop or crop proceeds, including 
leases which provide for the greater of a guaranteed amount or share of 
the crop or crop proceeds; and
    (2) by adding language that for producers who had already made 
leasing and share-designation decisions prior to the interim rule that 
for the years which had been designated and a lease executed, those 
leases will continue to be considered cash leases.

List of Subjects in 7 CFR Part 1412

    Contract acreage, Contract payments, Planting flexibility, Price 
support programs.

    Accordingly, the interim rule amending 7 CFR part 1412, which was 
published at 62 FR 55150 on October 23, 1997, is adopted as a final 
rule with the following changes:

PART 1412--PRODUCTION FLEXIBILITY CONTRACTS FOR WHEAT, FEED GRAINS, 
RICE, AND UPLAND COTTON

    1. The authority citation for part 1412 continues to read as 
follows:

    Authority: 7 U.S.C. 7201 et seq.; 15 U.S.C. 714b and 714c; and 
Sec. 734 of Pub. L. 105-86.

    2. Section 1412.201 is amended by revising paragraph (c) to read as 
follows:


Sec. 1412.201  Production flexibility contract.

* * * * *
    (c) All producers sharing in the contract payments on a farm whose 
payment shares have not been designated for a fiscal year must sign the 
contract designating payment shares and provide supporting 
documentation as specified in parts 12, 1400, and 1405 of this title no 
later than August 1 of the fiscal year to be eligible to earn a 
contract payment in that fiscal year. If all producers have not signed 
the contract by this deadline, no producers on the contract will be 
eligible for a payment for that farm for that fiscal year.
    3. Section 1412.206 is amended by revising paragraph (a) to read as 
follows:


Sec. 1412.206  Planting flexibility.

    (a) For the 1996 through 2002 crop years, any crop may be planted 
on contract acreage on a farm, except as limited elsewhere in this 
section. For fiscal year 1998, for each acre a producer plants wild 
rice on contract acreage, 1 acre will not be used in determining the 
contract payment. Any crop may be planted on cropland in excess of the 
contract acreage.
* * * * *
    4. Section 1412.207 paragraphs (d)(1) and (d)(2) are revised to 
read as follows:

[[Page 31104]]

Sec. 1412.207  Succession-in-interest to a production flexibility 
contract.

* * * * *
    (d) * * *
    (1) August 1 of the fiscal year in which the change occurs if 
producers on the contract acreage remain the same, but payment shares 
change; or
    (2) August 1 of the fiscal year in which the change occurs, if a 
new producer is being added to the contract.
* * * * *
    5. Section 1412.302 paragraph (b) is revised to read as follows:
* * * * *


Sec. 1412.302  Contract payment provisions.

* * * * *
    (b) At the option of the producer, for fiscal year 1997 and each 
subsequent fiscal year, 50 percent of the annual contract payment shall 
be paid on December 15 or January 15, as requested by the producer. To 
receive the advance payment the producers on the farm must be in 
compliance with all requirements of the contract at the time of the 
advance payment. For fiscal year 1998 and each subsequent fiscal year, 
all producers sharing in the contract payment on the farm must no later 
than 15 days prior to the final date to issue the advance payment, sign 
the contract designating payment shares and provide supporting 
documentation as specified in parts 12, 1400, and 1405 of this title, 
if applicable; and request the advance payment. If all producers on the 
farm have not signed the contract designating payment shares according 
to this paragraph, then no producers will be eligible for a payment for 
that farm for that fiscal year.
* * * * *
    6. Section 1412.303 is amended by adding paragraph (a)(6) and 
revising paragraphs (a)(2) and (a)(4) to read as follows:


Sec. 1412.303  Sharing of contract payments.

    (a) * * *
    (2) A lease will be considered a cash lease if the lease provides 
for only a guaranteed sum certain cash payment, or a fixed quantity of 
the crop (for example, cash, pounds, or bushels per acre).
* * * * *
    (4) Beginning on October 1, 1998, for years in which payment shares 
had not been designated prior to October 23, 1997, a producer's lease, 
including a lease which provides for the greater of a guaranteed amount 
or share of the crop or crop proceeds, shall be considered a share 
lease if the lease provides for both:
    (i) A guaranteed amount such as a fixed dollar amount or quantity; 
and
    (ii) A share of the crop proceeds.
* * * * *
    (6) A lease that the county committee determined to be a cash lease 
under Sec. 1412.303 as contained in the 7 CFR, parts 1200 to 1499, 
edition revised as of January 1, 1997, will be considered a cash lease 
for the years in which payment shares were designated if, prior to 
October 23, 1997:
    (i) The designation of shares was executed; and
    (ii) The county committee was provided a copy of the lease 
applicable for the designated years.
* * * * *
    7. Section 1412.304 paragraph (b) is revised to read as follows:


Sec. 1412.304  Provisions relating to tenants and sharecroppers.

* * * * *
    (b) Notwithstanding the provisions set forth at Sec. 1412.302(c), 
if the landowners, tenants and sharecroppers on a farm fail to reach an 
agreement regarding the division of contract payments for a fiscal 
year, the county committee shall make the payment at a later date if 
all persons eligible to receive a share of the contract payment have 
executed a contract not later than August 1 of the applicable fiscal 
year and subsequently agree to the division of contract payment.

    Signed at Washington, DC, on June 1, 1998.
Keith Kelly,
Executive Vice President, Commodity Credit Corporation.
[FR Doc. 98-15000 Filed 6-5-98; 8:45 am]
BILLING CODE 3410-05-P