[Federal Register Volume 65, Number 24 (Friday, February 4, 2000)]
[Proposed Rules]
[Pages 5444-5447]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-1967]


 ========================================================================
 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. 65, No. 24 / Friday, February 4, 2000 / 
Proposed Rules  

[[Page 5444]]



DEPARTMENT OF AGRICULTURE

Farm Service Agency

7 CFR Part 718

RIN 0560-AF36


Amendment to the Farm Reconstitution Regulations for Acreages, 
Allotments, and Quotas

AGENCY:  Farm Service Agency, USDA.

ACTION:  Proposed rule with requests for comments.

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

SUMMARY:  This proposed rule would amend regulations that are used to 
determine whether separate tracts of land will be considered separate 
farms for certain commodity programs. The regulations also set generic 
terms and definitions for those programs. This rule, if adopted, would 
modify several definitions, change the effective date for certain farm 
reconstitutions, and add new provisions governing farm divisions. These 
changes are expected to improve the administration of farm programs.

DATES:  Comments must be received on or before March 6, 2000 to be 
assured of consideration.

ADDRESSES:  Submit comments to: Loretta Baxa, Production, Emergencies 
and Compliance Division (PECD), Farm Service Agency (FSA), USDA, STOP 
0517, 1400 Independence Avenue, SW, Washington, D.C. 20250-0517, 
telephone (202) 720-7602, e-mail [email protected].

FOR FURTHER INFORMATION CONTACT:  Loretta Baxa at (202) 720-7602.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This rule has been determined to be not significant for purposes of 
Executive Order 12866 and therefore has not been reviewed by the Office 
of Management and Budget (OMB).

Regulatory Flexibility Act

    It has been determined that the Regulatory Flexibility Act is not 
applicable to this proposed rule because FSA is not required by 5 
U.S.C. 533 or any other provision of the 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 proposed 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).

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 UMRA.

Paperwork Reduction Act

    Information collected in this rule has been approved by OMB and 
assigned OMB Control Number 0560-0025. This rule does not contain any 
new collection information requirements.

Executive Order 12612

    It has been determined that this rule does not have significant 
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.

Discussion of the Proposed Rule

    A number of commodity programs are administered on a farm-by-farm 
basis. Rules in 7 CFR part 718 govern what is considered to be a 
``farm'' for certain commodity programs and sets out other generic 
definitions and rules for those programs. This proposed rule would 
amend part 718 in several respects. First, a number of definitions 
found at Sec. 718.2 would be amended. Among these, the ``agricultural 
use'' definition in that section would be revised in its entirety. 
Under the rules in part 718 in certain instances the division of a 
farm's ``contract acreage'' (acreage enrolled in the Production 
Flexibility Contract program administered under 7 CFR part 1412) will 
be made on the basis of each separate tract's agricultural use acreage. 
Currently, the Sec. 718.2 ``agricultural use'' definition refers to 
certain specific crop, forage and conserving uses. To avoid being 
unduly restrictive, the definition would, by this rule, be modified to 
more generally provide that it includes any agricultural activity. 
Also, Sec. 718.2 would be amended to add a definition for ``common 
ownership unit''. That term and concept is used in connection with 
tobacco farm divisions under 7 CFR part 723 in which production 
histories may be assigned to those units. The added definition follows 
that which already appears in part 723. Further, the ``cropland'' 
definition in Sec. 718.2 is important for a number of program matters 
including the establishment of how much land on the farm can be 
enrolled in the Production Flexibility Contract program and the 
Conservation Reserve Program. This rule would clarify the definition to 
specify that: (1) newly broken out land will be considered ``cropland'' 
for part 718 purposes so long as the land is capable of, and is 
intended to be harvested using normal harvesting and production 
techniques and (2) land devoted to ponds, tanks, or trees will not 
generally be considered ``cropland'' for part 718 purposes. In 
addition, the ``farm'' definition contained in Sec. 718.2 will be 
modified. Currently, that term is defined to mean a unit operated by 
one producer

[[Page 5445]]

with equipment, labor, accounting system and management separate from 
other production units. To comport more plainly with current practice 
and more clearly incorporate the other conditions that apply to the 
constitution of a farm under part 718, the ``farm'' definition would be 
clarified to specify that a farm must (in addition to meeting other 
requirements) consist of tracts that: (1) Have both the same owner and 
operator or (2) have the same operator but have multiple owners who 
have agreed in writing to have the tracts treated as one farm. Also, as 
indicated, in the current definition it is provided that the farm's 
equipment, labor, accounting system and management must be separate 
from that of other units. That provision would, in the proposed rule be 
moved to Sec. 718.201. Further, the current ``farmland'' definition 
specifies that ``farmland'' includes cropland, forest, and other land 
on the farm. That which is ``farmland'' and which is not ``farmland'', 
can be important for some program determinations. In this rule, the 
part 718 ``farmland'' definition will be clarified to match other 
definition changes proposed in this rule. Finally, with respect to the 
definitions, the term ``operator'' is currently defined in Sec. 718.2 
to mean the person who is determinated by the local Farm Service Agency 
(FSA) county committee to be the person in charge of the farm for the 
current year. Since those determinations (of who is the ``operator'' on 
the farm) are sometimes on-going determinations rather than 
determinations that are made every year, the new definition would 
remove the reference to the ``current year.''
    Also, this rule would amend provisions of Sec. 710.201 relating to 
those instances in which the combination of farms is prohibited. Under 
the current regulations, a PFC farm and non-PFC farm cannot be combined 
because to do so could unduly expand the eligibility of the producer 
for certain commodity loans which are, by statute, intended to be 
limited to PFC farms only. However, that concern may not come into play 
when the non-PFC farm has potential PFC eligibility because of an 
existing CRP contract and the entirety of that farm is enrolled in the 
CRP. Accordingly, the rule would allow such combinations to occur in 
those limited circumstances despite the fact that one farm is a PFC 
farm and the other is not. The rule contemplates, however, that if on 
the termination of the CRP contract the new PFC eligibility is not 
exercised, the two farms would have to be divided back into separate 
farms. Further, the rule would also amend Sec. 718.204. Specifically, 
that section would be revised to add a provision that specifies for 
farms in the PFC program that a requested farm reconstitution will 
become effective for the current year only if initiated before the 
earlier of June 1 of the fiscal year or the date on which PFC payments 
for the farm for that year are issued. This will help avoid having a 
change in farm organization that may raise a dispute over the proper 
distribution of current PFC monies. Also, under the current provisions 
of Sec. 718.204, the county FSA committee, with the concurrence of the 
State FSA committee, can allow extension of the deadlines otherwise 
provided for in Sec. 718.204 so long as the extension would not serve 
to foster a scheme to avoid substantive program requirements. In this 
rule that allowance would no longer apply to the special deadline that 
applies to PFC contracts. This change would be made to further assure 
that there is no interference and confusion over the making of current 
PFC payments and to assure uniformity. That section also contains a 
provision with a special rule for farms with tobacco or peanuts which 
provides that the farm reconstitutions for those farms will be 
effective for the current year only if the reconstitution is initiated 
before the crop is planted or would have been planted. To assure 
clarity in the application of the rules, Sec. 718.204 would be amended 
to add an additional provision which addresses the situation where the 
reconstitution involves both: (1) a PFC and (2) tobacco or peanut 
farms. In such case, the earlier of the two deadlines (the one for PFC 
farms and the one for tobacco and peanut farms) would establish the 
last date by which a farm reconstitution could be effective for the 
current year. Finally, there would be one additional provision added to 
Sec. 718.204(e) to specify that the division of or combination of farm 
acreage would also include the division or combination of any potential 
PFC eligibility that may be associated with a current CRP contract. 
That is, when the PFC was initiated, farms with certain preexisting 
``crop acreage bases'' were given a one-time opportunity to enroll in 
the PFC. Eligible farms had to have a ``crop acreage base'' under a 
preexisting program. Producers had to enroll their acreage in the 
program by a set date in 1996, the only exception being that a later 
sign-up was allowed for farms that had a crop acreage base in 
suspension under a CRP contract. Those farms, on a one-time only basis, 
can enroll acreage into the PFC upon termination of the CRP contract, 
subject to certain conditions.
    Amendments are also proposed for Sec. 718.205. That section sets 
out, in an order of priority, the various calculation methods that are 
used to divide up or reconstitute a farm. To improve program 
performance, amendments are proposed here to Sec. 718.205. The current 
priority list calls for using the following division and reconstitution 
methods in the following order or priority as applicable: (1) Estate 
method; (2) designation by owner method; (3) contribution method; (4) 
agricultural use method; (5) cropland method and (6) history method. 
This rule would add a new method which is to be called the ``default 
method'' and which will, as a matter of priority, be added between the 
``agricultural use'' and ``cropland'' methods. Under the ``default'' 
method the tracts would be divided away from the parent farm based on 
the attributes of the individual tracts at the time of the division. 
Also, because of the addition of this new method, other technical 
revisions have been needed so as to reorganize Sec. 718.205. In 
addition, Sec. 718.205 has been further revised to specify that the 
agency can adjust the results of any reconstitution when it believes 
that to do so would be more equitable or would further the purposes of 
the program which are impacted by decisions made under part 718. Still 
further, a provision is added to Sec. 718.205 to specify that where the 
division of the farm is going to be made using the landowner 
designation method, those persons with a security interest in the land 
itself must agree to the disposition. This is designed to insure 
fairness and thus, in addition, avoid having the reconstitution 
regulations serve as an impediment to the ability of farmers to obtain 
financing. Also, the provision in Sec. 718.205 regarding the 
contribution method have been changed as they regard the current 
provisions which provide that this method will be used to separate 
farms only if the contribution took place within the last 6 years or if 
there are adequate records to allow the determination to be made. In 
the end, that provision merely establishes that which would be implied 
anyway; namely, that the contribution method will only be used to the 
extent that the contribution can actually be determined. Even with the 
6 year period mentioned in the current rule, the contribution method 
could not be used effectively unless there were sufficient records 
available to allow the determination to be made. Hence, that provision, 
in this rule, would be eliminated.

[[Page 5446889.]]

    Further, the provisions dealing with the ``agricultural use'' 
method would be amended. Currently the regulations call for, when using 
that method, dividing the tract based on land involved in 
``agricultural and related activity.'' Because of the expansive new 
definition of ``agricultural use'' which would be adopted in this rule, 
those references in this rule would be changed to references to land in 
``agricultural use.'' That change would not be expected to change in a 
material way the application of the agricultural use method of 
proration. In addition, this part of the regulations is modified to 
make another clarifying change in its text.
    Finally, it is proposed that the authority citation for part 718 be 
amended to add references to 7 U.S.C. 1375, 1378, and 1379. These are 
generic provisions of the Agricultural Adjustment Act of 1938 which 
generally provide for the Secretary to issue regulations governing the 
making available of quotas and allotments under that Act and other 
matters relating to that Act. Also those provisions deal with the 
disposition of allotments when there is an exercise of eminent domain 
over a farm and, 7 U.S.C. 1379 specifically provides the Secretary with 
the authority to undertake farm reconstitutions. Further, this rule 
would add a section that would set out in part 718 the control numbers 
assigned by the Office of Management and Budget for Paperwork Reduction 
Act purposes.
    Comments are requested on all of these matters.

List of Subjects in 7 CFR Part 718

    Acreage allotments, marketing quotas.

    Accordingly, 7 CFR part 718 is proposed to be amended as follows:

PART 718--PROVISIONS APPLICABLE TO MULTIPLE PROGRAMS

    1. Revise the authority citation for part 718 to read as follows:

    Authority:  7 U.S.C. 1373, 1374, 1375, 1378, 1379, and 7201 et 
seq.; 15 U.S.C. 714a et seq; and 21 U.S.C. 889.

    2. Amend Sec. 718.2 by:
    a. Removing the definition of ``Agricultural use'';
    b. Adding new definitions of ``Agricultural use land'' and ``Common 
ownership unit'' in alphabetical order;
    c. Revising paragraphs (1)(v), (1)(vi) and (2)(v) and adding 
paragraph (1)(vii) in the definition of ``Cropland''; and
    d. Revising the definitions of ``Farm'', ``Farmland'' and 
``Operator''.
    The additions and revisions read as follows:


Sec. 718.2  Definitions.

* * * * *
    Agricultural use land means land that was devoted to cropland at 
the time it was enrolled in a production flexibility contract in 
accordance with part 1412 of this title and continues to be used for 
agricultural purposes or land that met the definition of cropland on or 
after April 4, 1996, and continues to be used for agricultural purposes 
but not for nonagricultural commercial or industrial use.
* * * * *
    Common ownership unit means a distinguishable parcel of land, 
consisting of one or more tracts of land with the same owners, as 
determined by FSA.
* * * * *
    Cropland. (1) * * *
    (v) Is in sod waterways or filter strips planted to a perennial 
cover;
    (vi) Is preserved as cropland in accordance with 1410 of this 
title; or
    (vii) Is land that has newly been broken out for purposes of being 
planted to a crop that the producer intends to, and is capable of, 
carrying through to harvest, using tillage and cultural practices that 
are consistent with normal practices in the area; provided further 
that, in the event that such practices are not utilized other than for 
reasons beyond the producer's control, the cropland determination shall 
be void retroactive to the time at which the land was broken out.
    (2) * * *
    (v) Converted to ponds, tanks or trees (other than those trees 
planted in compliance with a Conservation Reserve Program contract 
executed pursuant to parts 704 or 1410 of this title, or trees which 
are used in one- or two-row shelterbelt plantings, or are part of an 
orchard or vineyard).
* * * * *
    Farm shall generally mean a tract, or tracts, of land which are 
considered to be a separate operation under the terms of this part 
provided further that where multiple tracts are to be treated as one 
farm, the tracts must have the same operator and must also have the 
same owner, or, if not the same owner, all owners must agree to the 
treatment of the multiple tracts as one farm for these purposes.
* * * * *
    Farmland means the sum of the agricultural use land, forest, 
acreage planted to an eligible crop acreage as specified in 7 CFR 
1437.3 (noninsured crop disaster assistance program) and other land on 
the farm.
* * * * *
    Operator means an individual, entity, or joint operation who is 
determined by the county committee, or considered by the county 
committee, to be in general control of the farming operations on the 
farm.
* * * * *
    3. Amend Sec. 718.201 by revising paragraphs (a)(1) and (a)(2) to 
read as follows:


Sec. 718.201  Farm constitution.

    (a) * * *
    (1) After August 1, 1996, land subject, under 7 CFR part 1412, to a 
production flexibility contract with land not subject to a production 
flexibility contract unless the farm not subject to a production 
flexibility contract is a farm on which the entirety of the cropland is 
enrolled in the CRP and on which the cropland can, and will, become 
contract acreage for purposes of the production flexibility contract 
program upon the termination of the CRP contract;
    (2) Land under separate ownership unless the owners agree in 
writing and the labor, equipment, accounting system, and management are 
operated in common by the operator but separate from that of any other 
tracts;
* * * * *
    4. Amend Sec. 718.204 by revising paragraphs (b) and (d) and adding 
paragraph (e) to read as follows:


Sec. 718.204  Reconstitution of allotments, quotas, and acreage.

* * * * *
    (b) Reconstitutions of farms subject to a production flexibility 
contract under part 1412 of this title will be effective for the 
current year only if initiated before the earlier of June 1 of the 
fiscal year or prior to the issuance of production flexibility contract 
payments for the farm or farms being reconstituted.
* * * * *
    (d) Notwithstanding the provisions of paragraph (c) of this 
section, a reconstitution may be effective for the current year if the 
county committee, with the concurrence of the State committee, 
determines that the purpose of the request for reconstitution is not to 
perpetrate a scheme or device the effect of which is to avoid the 
statutes and regulations governing commodity programs impacted by this 
part. Further, however, in the event that a farm is subject to both 
paragraphs (b) and (c) then the farm reconstitution will be effective 
for the current year only if the conditions of both paragraphs are met.
    (e) Throughout this subpart, when referring to combining or 
dividing acreage, such acreages will include production flexibility 
contract acres and any conditional production flexibility contract 
eligibility that may be held under an existing CRP contract.

[[Page 5447]]

    5. Amend Sec. 718.205 by:
    a. Revising paragraph (a);
    b. Revising paragraph (b)(1); to
    c. Revising paragraphs (b)(4), (c)(2), and (c)(3);
    d. Redesignating paragraph (c)(4)(ii) as paragraph (c)(4)(iii);
    e. Adding a new paragraph (c)(4)(ii);
    f. Revising newly redesignated paragraph (c)(4)(iii);
    g. Revising paragraph (d)(1);
    h. Revising paragraph (e);
    i. Redesignating paragraphs (f) through (i) as paragraphs (g) 
through (j);
    j. Adding a new paragraph (f);
    k. Revising newly redesignated paragraph (i)(1) introductory text; 
and
    l. Revising newly redesignated paragraph (i)(2).
    The revisions and additions read as follows:


Sec. 718.205  Rules for determining farms, allotments, quotas, and 
acreage when reconstitution is made by division.

    (a) The methods for dividing farms, allotments, quotas, and 
acreages in order of precedence, when applicable, are estate, 
designation by landowner, contribution, agricultural use, default, 
cropland, and history. The proper method shall be determined on a crop-
by-crop basis.
    (b)(1) The estate method is the proration of allotments, quotas, 
and acreages for a parent farm among the heirs in settling an estate. 
If the estate sells a tract of land before the farm is divided among 
the heirs, the allotments, quotas, and acreages for that tract shall be 
determined by using one of the methods provided in paragraphs (c) 
through (h) of this section.
* * * * *
    (4) If allotments, quotas, and acreages are not apportioned in 
accordance with the provisions of paragraph (b)(2) or (3) of this 
section, the allotments, quotas, and acreages shall be divided pursuant 
to paragraphs (d) through (h) of this section, as applicable.
    (c)(1) * * *
    (2) If the county committee determines that allotments, quotas, and 
acreages cannot be divided in the manner designated by the owner 
because of the conditions set forth in paragraph (c)(4) of this 
section, the owner shall be notified and permitted to revise the 
designation so as to meet the conditions in paragraph (c)(4) of this 
section. If the owner does not furnish a revised designation of 
allotments, quotas, and acreages within a reasonable time after such 
notification, or if the revised designation does not meet the 
conditions of paragraph (c)(4) of this section, the county committee 
will prorate the allotments, quotas, and acreages in accordance with 
paragraphs (d) through (h) of this section.
    (3) If a parent farm is composed of tracts, under separate 
ownership, each separately owned tract being transferred in part shall 
be considered a separate farm and shall be constituted separately from 
the parent farm using the rules in paragraphs (d) through (h) of this 
section, as applicable, prior to application of the provisions of this 
paragraph.
    (4) * * *
    (ii) Where the land of the parent farm is subject to deed of trust, 
lien, or mortgage, the holder of the deed of trust, lien, or mortgage 
must agree to the division of allotments, quotas, or acreage.
    (iii) Where the part of the farm from which the ownership is being 
transferred was owned for a period of less than 3 years, the 
designation by landowner method shall not be available with respect to 
the transfer unless the county committee determines that the primary 
purpose of the ownership transfer was other than to retain or sell 
allotments, quotas, or acreages. In the absence of such a 
determination, and if the farm contains land which has been owned for 
less than 3 years, that part of the farm which has been owned for less 
than 3 years shall be considered as a separate farm and the allotments, 
quotas or acreages shall be assigned to that part of the farm in 
accordance with paragraphs (d) through (h) of this section. Such 
apportionment shall be made prior to any designation of allotments, 
quotas or acreages with respect to the part of the farm which has been 
owned for 3 years or more.
* * * * *
    (d) (1) The contribution method is the proration of a parent farm's 
allotments or quotas to each tract as the tract contributed to the 
allotments or quotas at the time of combination. The contribution 
method may be used when the provisions of paragraphs (b) and (c) of 
this section do not apply.
* * * * *
    (e) The agricultural use method is the proration of the acreage to 
the resulting tracts in the same proportion that the agricultural use 
land for each resulting tract relates to the agricultural use land for 
the parent tract. This method of division shall be used if the 
provisions of paragraphs (b) and (c) of this section do not apply.
    (f) The default method is the separation of tracts from a farm with 
each tract maintaining the acreage attributed to the tract when the 
reconstitution is initiated.
* * * * *
    (i) (1) Allotments, quotas, and acreages apportioned among the 
divided tracts pursuant to paragraphs (d) through (h) of this section 
may be increased or decreased with respect to a tract by as much as 10 
percent of the allotment, quota, or acreage determined under such 
subsections for the parent farm if:
* * * * *
    (2) Farm program payment yields calculated for the resulting farms 
of a division may be increased or decreased if the county committee 
determines the method used did not provide an equitable distribution 
considering available land, cultural operations, and changes in the 
type of farming conducted on the farm. Any increase in a farm program 
payment yield on a resulting farm shall be offset by a corresponding 
decrease on another resulting farm of the division.
* * * * *
    6. Add a new Sec. 718.210, to read as follows:


Sec. 718.210  OMB control numbers assigned pursuant to the Paperwork 
Reduction Act.

    The information collection requirements contained in this part have 
been approved by the Office of Management and Budget (OMB) under the 
provisions of 44 U.S.C. Chapter 35 and have been assigned OMB control 
numbers 0560-0025.

    Signed at Washington, DC, on January 19, 2000.
Keith Kelly,
Administrator, Farm Service Agency.
[FR Doc. 00-1967 Filed 2-3-00; 8:45 am]
BILLING CODE 3410-05-P