[Federal Register Volume 64, Number 86 (Wednesday, May 5, 1999)]
[Proposed Rules]
[Pages 24091-24092]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-11229]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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  Federal Register / Vol. 64, No. 86 / Wednesday, May 5, 1999 / 
Proposed Rules  

[[Page 24091]]


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DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1412

RIN 0560-AF79


Production Flexibility Contracts for Wheat, Feed Grains, Rice, 
and Upland Cotton

AGENCY: Commodity Credit Corporation, USDA.

ACTION: Advance notice of proposed rulemaking.

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SUMMARY: Commodity Credit Corporation (CCC) is issuing this Advance 
Notice of Proposed Rulemaking (ANPRM) to invite comment from all 
interested parties on reductions of Production Flexibility Contract 
(PFC) payments that were affected by the planting of fruits or 
vegetables in violation of section 118 (b)(1) of the Federal 
Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7218 (b)(1).

DATES: Comments must be received on or before June 2, 1999 to be 
assured consideration.

ADDRESSES: Comments should be directed to Sharon Biastock, Farm Service 
Agency (FSA), STOP 0517, 1400 Independence Avenue, S.W., Washington DC 
20250-0517.

FOR FURTHER INFORMATION CONTACT: Sharon Biastock, (202) 720-6336.

SUPPLEMENTARY INFORMATION:

Background

    The Federal Agriculture Improvement and Reform Act of 1996 (the 
1996 Act) provided producers the opportunity to enter into Production 
Flexibility Contracts (PFC's). The 1996 Act prohibited the planting of 
fruits and vegetables on PFC acreage except as provided by specific 
exceptions. Two exceptions require the application of an acre-for-acre 
payment reduction for each acre of fruit or vegetables planted on PFC 
acreage. A violation of the PFC occurs when producers do not comply 
with the fruit and vegetable provisions and the exceptions unless it is 
determined that the violation is not serious enough to warrant 
termination of the PFC. The 1996 Act provides that if the Secretary 
determines that a violation does not warrant termination of the PFC, 
the Secretary may require the owner or producer subject to the contract 
to: (1) refund to the Secretary that part of the contract payments 
received by the owner or producer during the period of the violation, 
together with interest on the contract payments as determined by the 
Secretary; or (2) to accept a reduction in the amount of future 
contract payments that is proportionate to the severity of the 
violation, as determined by the Secretary.
    Under current regulations, if the county FSA committee determines 
that a planting violation does not warrant termination of the PFC, a 
reduction may be made in the current or future contract payments, 
proportionate to the severity of the violation and equal to the sum of 
either or both: (1) The market value of the fruits and vegetables 
planted on contract acreage, and (2) the contract payment for each 
contract acre. The market value is determined by the State committee 
for the specific fruit or vegetable without any adjustment to reflect 
costs associated with planting, cultivating or harvesting the fruit or 
vegetable. If the number of acres on the farm planted to fruits or 
vegetables exceeds the total PFC acreage and more than one fruit or 
vegetable has been planted on the farm, the calculation is based on the 
fruit or vegetable determined to have the highest value. If the acreage 
of fruit or vegetable with the highest value is less than the acres in 
violation, the calculation for the remaining acres in violation is 
based on the fruit or vegetable with the next highest value. The 
payment reduction is applied to current PFC payments and any future PFC 
payments for the farm on which the violation occurred and any other 
farm in which the producers who share in PFC payments on the violating 
farm have an interest.
    For example, if the county committee determines that 25 acres of 
fruit or vegetables were planted on PFC acreage in violation of the 
PFC, but the violation did not warrant termination of the PFC, a 
payment reduction for the planting violation would be assessed in 
addition to an acre for acre reduction for each of the 25 acres. If, on 
the farm in this example, the producer planted 100 acres of green peas, 
which the State committee determined had a value of $500 per acre, and 
1 acre of celery, which the State committee determined had a value of 
$3,000 per acre, the payment reduction for the planting violation in 
this example would be $15,000 plus a PFC payment reduction for 25 
acres. The $15,000 payment reduction for the planting violation 
represents the value of the 1 acre of celery and 24 acres of green 
peas, as determined by the State committee. This payment reduction 
would be applied to the current year PFC payments and any future PFC 
payments for the farm on which the planting violation occurred and any 
other farm in which the producers sharing in the PFC payments for the 
farm on which the planting violation occurred have an interest.
    The payment reductions calculated in accordance with the current 
implementing regulations and procedure are viewed by some to be out of 
proportion to the severity of the fruit or vegetable planting 
violation. Accordingly, as indicated below, the public is invited to 
comment on PFC violations for planting fruits and vegetables.

Purpose

    The purpose of this ANPRM is to seek comments on: (1) the 
appropriateness of the current method of calculating PFC payment 
reductions as a result of a fruit or vegetable planting violation as 
set forth in 7 CFR 1412.206; (2) alternative methods for calculating 
PFC payment reductions for fruit or vegetable planting violations, if 
the current method of calculation is considered inappropriate; (3) the 
retroactivity of any change in the method of calculating payment 
reductions; and (4) the effect any change in the method of calculating 
payment reductions should have on PFC's which have been terminated, or 
for which contract acreage was reduced, because of the current method 
of calculating payment reductions for fruit or vegetable planting 
violations.


[[Page 24092]]


    Signed at Washington, DC, on April 28, 1999.
Keith Kelly,
Executive Vice President, Commodity Credit Corporation.
[FR Doc. 99-11229 Filed 5-4-99; 8:45 am]
BILLING CODE 3410-05-P