[Federal Register Volume 64, Number 27 (Wednesday, February 10, 1999)]
[Rules and Regulations]
[Pages 6495-6498]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-3260]



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 Rules and Regulations
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  Federal Register / Vol. 64, No. 27 / Wednesday, February 10, 1999 / 
Rules and Regulations  

[[Page 6495]]


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DEPARTMENT OF AGRICULTURE

Farm Service Agency

7 CFR Part 761

RIN 0560-AF70


Small Hog Operation Payment Program

AGENCY: Farm Service Agency, USDA.

ACTION: Interim Rule with request for comments.

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SUMMARY: This interim rule sets forth the regulations for the Small Hog 
Operation Payment Program as authorized by clause (3) of section 32 of 
the Act of August 24, 1935 (7 USC 612c). Producers of hogs may receive 
a direct payment of up to $5 for each eligible hog to help offset 
producers' financial losses on hogs sold during the 6-month period from 
July 1, 1998, through December 31, 1998. This action is designed to 
provide immediate financial assistance to hog producers who recently 
experienced the lowest market prices in over five decades.

DATES: Effective February 5, 1999. Comments on this rule must be 
received by March 12, 1999, in order to be assured of consideration. 
Comments on the information collections in this rule must be received 
by April 12, 1999, in order to be assured of consideration.

ADDRESSES: Comments should be mailed to Grady Bilberry, Director, Price 
Support Division (PSD), Farm Service Agency (FSA), United States 
Department of Agriculture (USDA), STOP 0512, 1400 Independence Avenue, 
SW., Washington, DC 20250-0512; telephone: (202) 720-7901; e-mail: 
[email protected]. Comments may be inspected in the 
Office of the Director, PSD, FSA, USDA, Room 4095 South Building, 
Washington, D.C., between 7:30 a.m. and 4:30 p.m., Monday through 
Friday, except holidays. A copy of this interim rule is available on 
the PSD home page at http://www.fsa.usda.gov/dafp/psd/.

FOR FURTHER INFORMATION CONTACT: Candace Thompson, (202) 720-4584.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This interim rule is in conformance with Executive Order 12866 and 
has been determined to be significant and therefore 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 the Farm Service Agency (FSA) 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

    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 12988

    This rule has been reviewed in accordance with Executive Order 
12988. The provisions of this rule preempt State laws to the extent 
such laws are inconsistent with the provisions of this rule. Before any 
legal action may be brought regarding determinations of this rule, the 
administrative appeal provisions set forth at 7 CFR part 780 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 3014, subpart V, 
published at 48 FR 29115 (June 24, 1983).

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 
(UMRA) for State, local, and tribal governments or the private sector. 
Thus, this rule is not subject to the requirements of sections 202 and 
205 of the UMRA.

Paperwork Reduction Act of 1995

    In accordance with the Paperwork Reduction Act of 1995, FSA 
submitted an emergency information collection request (ICR) to OMB 
which was approved and assigned OMB Control Number 0560-0193.
    Title: Small Hog Operation Payment Program.
    OMB Control Number: 0560-0193.
    Type of Request: Request for Extension of a Currently Approved 
Information Collection Package.
    Abstract: Hog operations are eligible to receive direct payments 
provided they make certifications that attest to their eligibility to 
receive such payment. These operations must certify: (1) the number of 
hogs marketed; (2) that the hogs were marketed during the last 6 months 
of 1998; (3) that the hogs were not marketed under a fixed-price or 
cost-plus contract; and (4) that the operation was still in the 
business of farming at the time of the Small Hog Operation Payment 
Program request. The information collection will be used by FSA to 
approve Form FSA-1042 or to determine the program eligibility of the 
hog operation in accordance with this subpart. FSA considers the 
information collected essential to prudent eligibility determinations 
and payment calculations. The eligibility requirements have been 
established to target the direct payments towards smaller operations. 
Additionally, without accurate information on slaughter hog and feeder 
pig operations, the national payment rate would be inaccurate resulting 
in payments being made to ineligible recipients, and compromising the 
integrity and accuracy of the program.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 15 minutes per response.
    Respondents: Hog Operations.
    Estimated number of Respondents: 100,000.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 26,250.
    Proposed topics for comment include: (a) whether the collection of 
information is necessary for the proper performance of the functions of 
the agency, including whether the information will have practical 
utility; (b) the accuracy of the agency's estimate of burden including

[[Page 6496]]

the validity of the methodology and assumptions used; (c) ways to 
enhance the quality, utility, and clarity of the information collected; 
or (d) ways to minimize the burden of the collection of the information 
on those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology. Comments should be 
sent to the Desk Officer for Agriculture, Office of Regulatory Affairs, 
Office of Management and Budget, Washington, D.C. 20503 and to Grady 
Bilberry, Director, Price Support Division, Farm Service Agency, United 
States Department of Agriculture, STOP 0512, 1400 Independence Avenue. 
S.W., Washington, D.C. 20250-0512, telephone (202) 720-7901.

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.

Background

    Clause (3) of section 32 of the Act of August 24, 1935, as amended 
(7 U.S.C. 612c) authorizes the Secretary of Agriculture to: 
``Reestablish farmers' purchasing power by making payments in 
connection with the normal production of any agricultural commodity for 
domestic consumption.''
    During the past 18 months, a number of factors have produced a 
serious economic crisis which threatens the existence of small hog 
producers throughout the United States. The estimated 114,000 hog 
operations in the United States account for about $10 billion in hog 
production annually or about 5 percent of the total U.S. farm 
production. Hog prices declined steadily since June 1997, falling below 
$20 per hundredweight in late 1998. At these disastrously low prices 
many producers have lost $50-$75 per head because sale prices are below 
actual cost of production.
    Payments to hog operations will offset a portion of the per-head 
losses small producers incurred marketing their hogs. These payments 
will provide those eligible with an immediate infusion of cash to help 
pay operating expenses and meet other financial obligations. Payments 
will be limited to hog operations which produced in the United States 
and sold less than 1,000 head of hogs during the specified marketing 
period. Eligible hog operations can receive up to $5 per slaughter-
weight hog, or the equivalent for feeder pigs, which were owned and 
marketed from July 1, 1998, through December 31, 1998. Maximum payments 
to these operations will be limited to $2,500. If the hog operation is 
owned by one or more individuals or entities who have an annual gross 
revenue of $2.5 million or more in farming and ranching operations in 
calendar year 1998, the payment to the operation will be reduced by a 
pro rata share based upon the ownership interest of such entity or 
individual.
    Two classes of hogs will be eligible, slaughter hogs or feeder 
pigs. Slaughter hogs include barrows, gilts, sows, and boars that are 
sold for immediate slaughter. Feeder pigs are young pigs that are sold 
to another person for further feeding for a period of more than 1 
month. The per-head payment is established at $5 for slaughter hogs and 
$1.80 for feeder pigs, but will be less if a national factor is 
required to be applied so that total outlays would not exceed the 
amount of funds available under this program. Hog operations making 
application for the benefits under this part shall self-certify the 
number of hogs in each class marketed during the specified marketing 
period.
    Eligible hog operations must also: (1) have sold the hogs on a 
negotiated cash basis or on an eligible contract basis as provided by 
the program regulations during the marketing period; (2) be engaged in 
the business of producing and marketing agricultural products at the 
time of application; and (3) apply for cash payments during the 
application period. Hog producers shall self-certify that they meet all 
eligibility requirements.
    Hog operations may apply in person at county FSA offices during 
regular business hours and at that time complete the Small Hog 
Operation Payment Program application on Form FSA-1042. Alternatively, 
hog operations may request the Small Hog Operations Payment Program 
application by mail, telephone, facsimile from their designated county 
FSA office or obtain the application via the Internet. The Internet 
website is located at www.fsa.usda.gov/dafp/psd/. The completed 
application, Form FSA-1042, must be received by the hog operations' 
local county FSA office by the due date as specified in the program 
regulations and can be returned in person, by mail, or by facsimile.
    At payment rates of $5 for slaughter hogs and $1.80 for feeder 
pigs, the total number of eligible applications may result in potential 
outlays that exceed the $50 million authorized for the program. 
Accordingly, if necessary, a national payment factor will be 
established per head so that the total outlays will not exceed the $50 
million in funds made available under this program.
    This rule is being made effective immediately. Because of the poor 
market conditions that have recently faced hog operations, particularly 
small hog operations, a delay in making this assistance available would 
be contrary to the public interest and the purpose of the authorizing 
statute.

List of Subjects in 7 CFR Part 761

    Direct payments to small hog operations, Reporting and record 
keeping requirements.

    Accordingly, 7 CFR chapter VII is amended by adding Part 761 to 
read as follows:

PART 761--SMALL HOG OPERATION PAYMENT PROGRAM

Sec.
761.1  Applicability.
761.2  Administration.
761.3  Definitions.
761.4  Time and Method for Application.
761.5  Eligibility.
761.6  Rate of Payment and Limitations on Funding.
761.7  Appeals.
761.8  Misrepresentation and scheme or device.
761.9  Estates, trusts, and minors.
761.10  Death, incompetency, or disappearance.
761.11  Maintaining records.
761.12  Refunds; joint and several liability.

    Authority: 7 U.S.C. 612c


Sec. 761.1  Applicability.

    This part establishes the Small Hog Operations Program. The purpose 
of this program is to provide benefits to hog operations under clause 
(3) of section 32 of the Act of August 24, 1935 (7 U.S.C. 612c) in 
order to reestablish their purchasing power in connection with the 
normal production of hogs for domestic consumption.


Sec. 761.2  Administration.

    (a) This part shall be administered by the Farm Service Agency 
(FSA) under the general direction and supervision of the Deputy 
Administrator for Farm Programs, FSA. The program shall be carried out 
in the field by FSA State and county committees (State and county 
committees).
    (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

[[Page 6497]]

regulations in this part, as amended or supplemented.
    (c) The State committee shall take any action required by this part 
which has not been taken by the county committee. The State committee 
shall also:
    (1) Correct, or require a county committee to correct, any action 
taken by such county committee which is not in accordance with the 
regulations of this part; or
    (2) Require a county committee to withhold taking any action which 
is not in accordance with the regulations of this part.
    (d) No delegation herein to a State or county committee shall 
preclude the Deputy Administrator for Farm Programs, FSA, or a 
designee, from determining any question arising under the program or 
from reversing or modifying any determination made by a State or county 
committee.
    (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 adversely affect the operation of the 
program.


Sec. 761.3  Definitions

    The definitions set forth in this section shall be applicable for 
all purposes of administering the Small Hog Operation Payment Program 
established by this part.
    Application means the Small Hog Operation Payment Program 
Application, FSA-1042.
    Cost-plus contract means an agreement between a hog operation and a 
purchaser which bases payment to the hog operation on the estimated 
cost of production of a hog plus a profit margin.
    Department means the United States Department of Agriculture.
    Eligible hogs means feeder pigs and slaughter hogs.
    Farm Service Agency or FSA means the Farm Service Agency of the 
Department.
    Feeder pigs means young pigs that are sold to another person for 
further feeding for a period of more than 1 month.
    Fixed-price contract means an agreement between a hog operation and 
a purchaser which bases payment at a negotiated fixed price and 
includes contracts that may specify the duration and minimum and/or 
maximum number of hogs to be delivered during the contract period.
    Hog operation means any person or group of persons who as a single 
unit raises hogs and whose production and facilities are located in the 
United States.
    Marketing period means the period beginning on July 1, 1998, and 
ending on December 31, 1998.
    Negotiated cash sales means a sale in which the price is determined 
by interactions between the hog operation and the purchaser during the 
current day, for delivery within the next 7 slaughter days, and does 
not include hogs which are sold under contract.
    Person means any individual, group of individuals, partnership, 
corporation, estate, trust, association, cooperative, or other business 
enterprise or other legal entity who is, or whose members are, a 
citizen or citizens of, or legal resident alien or aliens in the United 
States.
    Secretary means the Secretary of the United States Department of 
Agriculture or any other officer or employee of the Department who has 
been delegated the authority to act in the Secretary's stead with 
respect to the program established in this part.
    Slaughter hogs means barrows, gilts, sows, and boars that are sold 
for immediate slaughter.
    United States means the 50 States of the United States of America, 
the District of Columbia, and the Commonwealth of Puerto Rico.


Sec. 761.4  Time and Method for Application.

    (a) Hog operations may obtain an application, Form FSA-1042 (Small 
Hog Operation Payment Program Application), in person, by mail, by 
telephone, or by facsimile from any county FSA office. In addition, 
applicants may download a copy of the FSA-1042 at http://
www.fsa.usda.gov/dafp/psd/.
    (b) A request for benefits under this part must be submitted on a 
completed Form FSA-1042. The Form FSA-1042 should be submitted to the 
FSA county office serving the county where the hog operation is located 
but, in any case, must be received by the FSA County Office by the 
close of business on February 12, 1999. Applications not received by 
the close of business on February 12, 1999, will be returned as not 
having been timely filed and the hog operation will not be eligible for 
benefits under this program.
    (c) The hog operation requesting benefits under this part must 
certify with respect to the accuracy and truthfulness of the 
information provided in their application for benefits. All information 
provided is subject to verification and spot checks by FSA. Refusal to 
allow FSA or any other agency of the Department of Agriculture to 
verify any information provided will result in a determination of 
ineligibility. Data furnished by the applicant will be used to 
determine eligibility for program benefits. Furnishing the data is 
voluntary; however, without it program benefits will not be approved. 
Providing a false certification to the Government is punishable by 
imprisonment, fines and other penalties.


Sec. 761.5  Eligibility.

    (a) If a hog operation is owned by one or more individuals or 
entities who have an annual gross revenue of $2.5 million or more in 
farming and ranching operations in calendar year 1998, the payment to 
the operation will be reduced by a pro rata share based upon the 
ownership interest of such entity or individual.
    (b) To be eligible to receive cash payments under this part, a hog 
operation must:
    (1) Have sold fewer than 1,000 hogs (produced in the United States) 
during the period of July 1, 1998, through December 31, 1998;
    (2) Have sold hogs on a negotiated cash basis or under a contract 
other than a fixed-price or cost-plus contract during the marketing 
period;
    (3) Be engaged in the business of producing and marketing 
agricultural products at the time of filing the application; and
    (4) Apply for payments during the application period.
    (c) Hogs marketed during the marketing period under fixed-price 
contracts, cost-plus contracts, or under any circumstance not 
equivalent to be eligible for benefits under this part with respect to 
hogs subject to such sales.
    (d) A hog operation must submit a timely application and comply 
with all other terms and conditions of this part and those that are 
otherwise contained in the application to be eligible for benefits 
under this part.


Sec. 761.6  Rate of payment and limitations on funding.

    (a) Benefits under this part may be made to hog operations for the 
quantity of eligible slaughter hogs and feeder pigs actually marketed 
during the marketing period in accordance with the limitations set 
forth in this section. Payments will be calculated after the conclusion 
of the sign-up period, and shall be made in an amount determined by:
    (1) Multiplying $1.80 by the number of eligible feeder pigs 
marketed during the marketing period; plus
    (2) Multiplying $5 by the number of eligible slaughter hogs 
marketed during the marketing period;
    (3) Limiting the payment per hog operation to $2,500; and
    (4) Reducing the amount paid to a hog operation because of 
limitations in

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funding as provided under paragraph (b) of this section.
    (b) In the event that approval of all eligible applications would 
result in expenditures in excess of the $50 million, FSA shall reduce 
the payment for each slaughter hog and feeder pig in such manner as 
FSA, in its sole discretion, finds fair and reasonable.


Sec. 761.7  Appeals.

    Any hog operation which is dissatisfied with a determination made 
with respect to this part may make a request for reconsideration or 
appeal of such determination in accordance with the appeal regulations 
set forth at part 11 of this title and part 780 of this title.


Sec. 761.8  Misrepresentation and scheme or device.

    (a) A hog operation shall be ineligible to receive assistance under 
this program if it is determined by the State committee or the county 
committee to have:
    (1) Adopted any scheme or device which tends to defeat the purpose 
of this program;
    (2) Made any fraudulent representation; or
    (3) Misrepresented any fact affecting a program determination.
    (b) Any funds disbursed pursuant to this part to a hog operation 
engaged in a misrepresentation, scheme, or device, or to any other 
person as a result of the hog operation's actions, shall be refunded 
with interest together with such other sums as may become due. Any hog 
operation or person engaged in acts prohibited by this section and any 
hog operation or person receiving payment under this part shall be 
jointly and severally liable for any refund due under this section and 
for related charges. The remedies provided in this part shall be in 
addition to other civil, criminal, or administrative remedies which may 
apply.


Sec. 761.9  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 an otherwise eligible operator of a hog 
operation shall be eligible for assistance under this part only if such 
operation 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. 761.10  Death, incompetency, or disappearance.

    In the case of death, incompetency, disappearance or dissolution of 
a hog operation that is eligible to receive benefits in accordance with 
this part, such hog operation may receive such benefits.


Sec. 761.11  Maintaining records.

    Hog operations making application for benefits under this program 
must maintain accurate records and accounts that will document that 
they meet all eligibility requirements specified herein and the number 
of head of slaughter hogs and feeder pigs sold during the marketing 
period. Such records and accounts must be retained for at least 3 years 
after the date of the cash payment to hog operations under this 
program.


Sec. 761.12  Refunds; joint and several liability.

    (a) In the event there is a failure to comply with any term, 
requirement, or condition for payment arising under the application, or 
this part, and if any refund of a payment to FSA shall otherwise become 
due in connection with the application, or this part, all payments made 
under this part to any hog operation shall be refunded to FSA together 
with interest as determined in accordance with paragraph (c) of this 
section and late-payment charges as provided for in part 1403 of this 
chapter.
    (b) All persons listed on a hog operation's application shall be 
jointly and severally liable for any refund, including related charges, 
which is determined to be due for any reason under the terms and 
conditions of the application or this part.
    (c) Interest shall be applicable to refunds required of the hog 
operation if FSA determines that payments or other assistance were 
provided to the producer was not eligible for such assistance. Such 
interest shall be charged at the rate of interest which the United 
States Treasury charges the Commodity Credit Corporation (CCC) for 
funds, as of the date FSA made such benefits available. Such interest 
shall accrue from the date such benefits were made available to the 
date of repayment or the date interest increases as determined in 
accordance with applicable regulations. FSA may waive the accrual of 
interest if FSA determines that the cause of the erroneous 
determination was not due to any action of the hog operation.
    (d) Interest determined in accordance with paragraph (c) of this 
section shall not be applicable to refunds required of the hog 
operation because of unintentional misaction on the part of the hog 
operation, as determined by FSA.
    (e) Late payment interest shall be assessed on all refunds in 
accordance with the provisions of, and subject to the rates prescribed 
in, 7 CFR part 792.
    (f) Hog operations must refund to FSA any excess payments made by 
FSA with respect to such application.
    (g) In the event that a benefit under this subpart was provided as 
the result of erroneous information provided by any person, the benefit 
must be repaid with any applicable interest.

    Signed at Washington, DC, on February 4, 1999.
Parks Shackelford,
Acting Administrator, Farm Service Agency.
[FR Doc. 99-3260 Filed 2-5-99; 3:11 pm]
BILLING CODE 3410-05-P