[Federal Register Volume 66, Number 49 (Tuesday, March 13, 2001)]
[Rules and Regulations]
[Pages 14479-14483]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-6179]



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  Federal Register / Vol. 66, No. 49 / Tuesday, March 13, 2001 / Rules 
and Regulations  

[[Page 14479]]



DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1481

RIN 0560-AG41


Limited California Cooperative Insolvency Payment Program

AGENCY: Commodity Credit Corporation, USDA.

ACTION: Final Rule.

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SUMMARY: This rule sets forth the regulations for the Limited 
California Cooperative Insolvency Payment Program authorized by the 
Agriculture, Rural Development, Food and Drug Administration, and 
Related Agencies Appropriations Act, 2001 (the Act). Fruit and 
vegetable producers who are members of a large California cooperative 
recently suffered losses due to the insolvency of that cooperative. 
Congress has designated $20 million for their benefit. This rule 
implements that program.

DATES: Effective March 8, 2001.

FOR FURTHER INFORMATION CONTACT: Toni D. Williams, Price Support 
Division (PSD), Farm Service Agency (FSA), United States Department of 
Agriculture (USDA), STOP 0512, 1400 Independence Avenue, SW, 
Washington, D.C. 20250-0512; telephone (202) 720-2270 or e-mail: 
[email protected]. A copy of this final rule is available 
on the PSD homepage at http://www.fsa.usda.gov/dafp/psd/.

SUPPLEMENTARY INFORMATION:

Notice and Comment

    Section 840 of the Agriculture, Rural Development, Food and Drug 
Administration, and Related Agencies Appropriations Act, 2001 (Pub. L. 
106-387), requires that the regulations necessary to implement these 
provisions be issued as soon as practicable and without regard to the 
notice and comment provisions of 5 U.S.C. 553 or the Statement of 
Policy of the Secretary of Agriculture (the Secretary) effective July 
24, 1971 (36 FR 13804) relating to notices of proposed rulemaking and 
public participation in rulemaking. These provisions are thus issued as 
final and are effective immediately.

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

    The Regulatory Flexibility Act is not applicable to this rule 
because USDA 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 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).

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 
judicial action may be brought concerning the provisions of this rule, 
the administrative remedies must be exhausted.

Unfunded Mandates

    The provisions of Title II of the Unfunded Mandates Reform Act of 
1995 are not applicable to this rule because the USDA 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. 
Further, in any case, these provisions do not impose any mandates on 
state, local or tribal governments, or the private sector.

Small Business Regulatory Enforcement Fairness Act of 1996

    Section 840 of Pub. L. 106-387 requires that the regulations 
necessary to implement these provisions be issued as soon as 
practicable and without regard to the notice and comment provisions of 
5 U.S.C. 553 or the Statement of Policy of the Secretary of Agriculture 
effective July 24, 1971 (36 FR 13804) relating to notices of proposed 
rulemaking and public participation in rulemaking. It also requires 
that the Secretary use the provisions of 5 U.S.C. 808 (the Small 
Business Regulatory Enforcement Fairness Act (SBREFA)), which provides 
that a rule may take effect at such time as the agency may determine if 
the agency finds for good cause that public notice is impracticable, 
unnecessary, or contrary to the public purpose, and thus does not have 
to meet the requirements of Sec. 801 of SBREFA requiring a 60-day delay 
for Congressional review of a major regulation before the regulation 
can go into effect. In addition, this rule is not considered a major 
rule for the purposes of SBREFA. Accordingly, because it would be, as 
expressed in Pub. L. 106-387, contrary to the public interest to delay 
those provisions of this rule is issued as final and are effective 
immediately.

Paperwork Reduction Act

    Section 840 of Pub. L. 106-387 requires that the regulations 
implementing these provisions be promulgated without regard to the 
Paperwork Reduction Act. This means that the normal 60-day public 
comment period and OMB approval of the information collections required 
by this rule are not required before the regulations may be made 
effective. However, the 60-day public comment period and OMB approval 
under the provisions of 44 U.S.C. chapter 35 are still required after 
the rule is published. An emergency request for approval of an 
Information Collection has been submitted to OMB.

Background

    Section 843 of the Act (Pub. L. 106-387) as further amended in the

[[Page 14480]]

Consolidated Appropriations Act, 2001 (Pub. L. No. 106-554, enacted on 
Dec. 21, 2000), authorizes the Secretary of Agriculture to provide up 
to $20 million of funds of the Commodity Credit Corporation (CCC) to 
make payments to producers of tomatoes, pears, peaches, and apricots 
who suffered a loss because of the insolvency of an agriculture 
cooperative. Payments cannot, under the terms of the legislation, 
exceed 50 percent of the loss.
    In particular, the legislation provides in full:

    The Secretary of Agriculture shall use no more than $20,000,000 
of funds of the Commodity Credit Corporation to make payments to 
producers of tomatoes, pears, peaches, and apricots that suffered a 
loss because of the insolvency of an agriculture cooperative in the 
State of California; Provided, that the amount of a payment made to 
a producer under this section shall not exceed 50 percent of the 
loss referred to in this section.

    Recently, Tri-Valley Growers (TVG), a California fruit and 
vegetable processing cooperative, became insolvent. TVG at its high 
point had approximately 500 members and TVG members produced more than 
50 percent of the canned peaches and 10 percent of the canned tomato 
products sold in the United States. Because of the insolvency, TVG was 
not able to fulfill its contract with its grower members who, as a 
result, suffered large 2000-crop losses. Given the timing of that 
insolvency in relation to the timing of the statute, the unusual and 
emergency nature of the relief (as reflected in the exemptions from the 
usual requirements of rulemaking), the geographic limitation in the 
statute, and the size of this well-known insolvency and its broad and 
significant effect on members and, through them, on local economies, it 
appears clear that this relief is intended to be limited to TVG members 
alone. There are no comparable insolvencies. While there may be other 
farmers who were impacted by the market effect of the insolvency, this 
legislation by its nature is not directed at the myriad of market 
events that can affect growers in all parts of the country. Rather, it 
is directed at one event (insolvency), in one place (California). To 
broaden the reach of the program would be to dilute the benefits that 
would otherwise go to those who lost their contracts because of the 
failure of their cooperative. For such persons the relief would not be 
simply relief from external market conditions like the many external 
conditions that can affect growers of all types of commodities. Such a 
dilution, for the reasons given, does not seem consistent with the 
nature and, what appears to be, intent of the legislation. In fact, the 
original provisions of the statute limited relief to those who could 
not market their crop because of the insolvency, which indicates an 
intent to limit payment to members with contracts. The amendment, as it 
is understood, was undertaken because it was realized that without the 
amendment cooperative members would be excluded from participation if 
they made use of a secondary market or a distress sale for their crops 
no matter how small a return their crop might have brought. In fact, it 
is understood that it has been the intent of this legislation from the 
beginning to address the special needs of the TVG members. For that 
reason, even assuming that the statute could be read more broadly, the 
statute does not compel the agency to grant all possible claims but 
rather allows the Secretary to determine, as a matter of discretion, 
which claims to allow, the only limitation being that no more than $20 
million be spent. Given that discretion, it would in any event be 
appropriate, and the determination of the agency, to limit 
participation to TVG members because of the special impact on them, 
because of the insolvency, and because of the desire to avoid possibly 
diluting the assistance that is available to them. The insolvency 
occurred early in 2000 had its greatest impact on farms who could not 
then deliver commodities under the 2000-crop contracts these farmers 
had with TVG. In order that the relief may be concentrated where the 
need is the greatest. This program will be limited to those claims for 
that crop year understanding that those claims will be more than enough 
to use all of the $20 million allotted. The program, it should be 
emphasized, is also limited only to that production which was under a 
2000 crop year contract with TVG and not any additional production 
which the producer may have had.
    Accordingly, for these reasons, the program provided for in this 
rule will be limited to the claims of members of TVG and the 2000 crop 
year production which had been under contract. In order to effectuate 
the terms of the statue in a manner that is faithful to the limit on 
the amount of the grower's total loss that is compensable, payments 
shall not exceed 50 percent of the member's contract production 
multiplied by the final base price for that production less proceeds 
from any other source. The final base prices are fixed and no other 
price will be used to calculate the payments. The final base prices per 
ton to be used are $330 for apricots, $233 for yellow cling peaches, 
$243 for pears, and $48.50 for tomatoes. Contract production and final 
base price data have been obtained from TVG. As the total dollar amount 
of eligible claims may exceed the $20 million authorized for the 
program, the rules allow for a factoring of claims, if needed. To 
receive payments, members must: (1) have been a member of TVG; (2) have 
produced eligible commodities during crop year 2000 under contract with 
TVG; and (3) apply for a payment during the application period.
    Program applications will be mailed to members of TVG who had a 
contract to produce an eligible commodity during crop year 2000 by the 
Price Support Division located in Washington, D.C. The mailed 
application form, CCC-870, will have preprinted information obtained 
from TVG and the member will need to verify and/or the correct provided 
information if necessary. The application form has a correction line 
and a remarks section so that the member may make changes and explain 
the reason(s) for any changes in the remarks section. Names, addresses, 
TVG member identification numbers, contract production and a final base 
price per commodity and 2000 crop year payments made to members of TVG 
have been obtained from TVG.
    Members of TVG may contact the California State FSA Office seven 
business days after the start of the application period to obtain an 
application form, CCC-870, if an application is not received by mail. 
Members of TVG requesting the application form from the California 
State FSA Office will have the choice of receiving the application form 
by mail or facsimile. Members may obtain an application form from the 
USDA eForms website at www.sc.egov.usda.gov seven business days after 
the start of the application period if an application is not received 
by mail. The application form on the USDA eForms website should only be 
used if members have not received an application by mail. The 
application downloaded from the USDA eForms website will not have 
preprinted information; therefore, members will need to provide the 
appropriate information. The California State FSA Office will only need 
to receive one application per TVG member. FSA will verify the 
information provided. To participate in the program, members of TVG 
must complete the application form and return it by mail to the 
California State FSA Office within the announced application period. 
The address for the California State FSA Office is located in section 
12A and 12B on the application form.

[[Page 14481]]

List of Subjects in 7 CFR Part 1481

    California, Cooperatives, Fruits and vegetables, Insolvency, 
Payments

    Accordingly, a new part 1481 is added to7 CFR chapter XIV, 
subchapter B, as set forth below:

PART 1481--LIMITED CALIFORNIA COOPERATIVE INSOLVENCY PAYMENT 
PROGRAM

Sec.
1481.1   Applicability.
1481.2   Administration.
1481.3   Definitions.
1481.4   Time and method of application.
1481.5   Eligibility.
1481.6   Availability of funds.
1481.7   Rate of Payment and limitations on funding.
1481.8   Offsets.
1481.9   Appeals.
1481.10   Misrepresentation.
1481.11   Maintaining records.
1481.12   Estates, trust, and minors.
1481.13   Death, incompetency, or disappearance.
1481.14   Refunds; joint and several liability.

    Authority: Sec. 843, Pub. L. 106-387, 114 Stat. 1549.


Sec. 1481.1  Applicability.

    (a) The regulations in this part set forth the terms and conditions 
under which the Commodity Credit Corporation (CCC) shall provide 
payments to certain producers who suffered a loss because of the 
insolvency of an agriculture cooperative in the State of California as 
provided for in section 843 of Pub. L. 106-387. Additional terms and 
conditions may be set forth in the payment application form that must 
be executed by participants to receive a market loss payment.
    (b) Payments shall be available only for eligible commodities 
produced during crop year 2000, and only to members of the Tri-Valley 
Growers cooperative of California who contracted with the cooperative 
for the sale of eligible commodities authorized in section 843 of Pub. 
L. 106-387. Such payments must meet all the conditions for payment set 
out in this part.


Sec. 1481.2  Administration.

    (a) This program shall be administered under the general 
supervision of the Executive Vice President, CCC, or designee and shall 
be carried out by the Farm Service Agency (FSA) office under the 
Executive Vice President's direction.
    (b) FSA employees do not have the authority to modify or waive any 
of the provisions of the regulations of this part.
    (c) The Deputy Administrator, Farm Programs, FSA, may authorize the 
waiver or modification of deadlines in cases where lateness or failure 
to meet such other requirements does not adversely affect the operation 
of this program and the action does not violate statutory limitations 
on the program.
    (d) Payment applications and related documents not executed in 
accordance with the terms and conditions determined and announced by 
CCC, including any purported execution outside of the dates authorized 
by CCC, shall be null and void unless the Executive Vice President, 
CCC, shall otherwise allow.


Sec. 1481.3  Definitions.

    The definitions set forth in this section shall be applicable for 
all purposes of administering the Limited California Cooperative 
Insolvency Payment Program established by this part.
    Administrator means the FSA Administrator.
    Application means Form CCC-870, the program application form.
    Application period means March 8, 2001 through April 6, 2001.
    Commodity Credit Corporation or CCC means the Commodity Credit 
Corporation.
    Department or USDA means the United States Department of 
Agriculture.
    Deputy Administrator means the Deputy Administrator for Farm 
Programs (DAFP), Farm Service Agency (FSA) or a designee.
    Eligible commodities means apricots, yellow cling peaches, pears, 
and tomatoes.
    Farm Service Agency or FSA means the Farm Service Agency of the 
Department.
    Members means a grower that grew or produced, under a contract, an 
eligible commodity for TVG as a member of that cooperative during crop 
year 2000.
    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.
    Tri Valley Growers or TVG means the insolvent agriculture 
cooperative that operated in the State of California under that name 
and contracted with members for the marketing of 2000 crop year fruits 
and vegetables.
    United States means the 50 States of the United States of America, 
the District of Columbia, and the Commonwealth of Puerto Rico.


Sec. 1481.4  Time and method of application.

    (a) FSA will mail an application form, CCC-870, from the Price 
Support Division located in Washington, D.C. to members of TVG that had 
a contract to produce an eligible commodity during crop year 2000. The 
mailed application will contain preprinted information obtained from 
TVG. Members of TVG may request an application form, CCC-870, from the 
California State FSA Office if an application is not received by mail 
seven business days after the start of the application period in 
person, by phone, by mail, or by facsimile. Members may obtain an 
application form, CCC-870, from the USDA eForms website at 
www.sc.egov.usda.gov seven business days after the start of the 
application period if an application is not received by mail. The 
application downloaded from the USDA eForms website will not have 
preprinted information; therefore, members will need to provide the 
appropriate information. The California State FSA Office will only need 
to receive one application per TVG member. The address for the 
California State FSA Office is in section 12A and 12B of the 
application form. FSA will verify the information provided.
    (b) A request for payments under this part must be submitted on a 
completed application form. That application should be submitted to the 
California State FSA Office and must be received by the California 
State FSA office by close of business on April 6, 2001. Applications 
not received by the close of business on April 6, 2001, will be 
returned as not having been timely filed and the member will not be 
eligible for payments under this program.
    (c) The members of TVG requesting payments under this part must 
certify with respect to the accuracy and truthfulness of the 
information provided in their application for payments. All information 
provided is subject to a spot check and other verification 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. Furnishing the data is voluntary; 
however, without it program payments will not be approved. Providing a 
false certification to the Government is punishable by imprisonment, 
fines and other penalties.


Sec. 1481.5  Eligibility.

    (a) To be eligible to receive a payment under this part, a member 
of TVG must:
    (1) Have suffered financial losses during crop year 2000 on 
eligible commodities under contract with TVG.
    (2) Apply for a payment during the application period.
    (b) Payments may be made for losses suffered by an eligible member 
who is

[[Page 14482]]

now deceased or is a dissolved entity if a representative who currently 
has authority to act on behalf of the members, to the extent permitted 
by provisions of rules common to CCC programs. Proof of authority to 
sign for the deceased producer or dissolved entity must be provided. 
All members of a partnership or joint venture seeking benefits, or 
their duly authorized representatives, must sign the application for 
payment. If the entity has been dissolved all persons seeking payment 
because of the activities of that entity, or their representatives, 
must sign the application.
    (c) Members must submit a timely application and comply with all 
other terms and conditions of this part and instructions issued by CCC, 
as well as comply with those instructions that are otherwise contained 
in the application form to be eligible for a payment under this part.


Sec. 1481.6  Availability of funds.

    The total available program funds shall not exceed $20 million as 
provided by section 843, as amended, of Public Law 106-387.


Sec. 1481.7  Rate of payment and limitations on funding.

    (a) Subject to the availability of funds, payments under this part 
may be made to members who suffered eligible 2000-crop year financial 
losses, because of the insolvency of TVG. Information that was provided 
to FSA by TVG will be preprinted on the application form, CCC-870. 
Payments will be calculated after the conclusion of the application 
period, and shall be made in an amount determined by:
    (1) Having the member verify the eligible contracted commodities, 
the original dollar amount expected from TVG (calculated from TVG's 
final base price per commodity and the producer's contract production 
per commodity). The final base prices are fixed and no other price will 
be used to calculate the payments. The final base prices per ton to be 
used are $330 for apricots, $233 for yellow cling peaches, $243 for 
pears, and $48.50 for tomatoes. Contract production, final base price 
data and payments made to members of TVG for their 2000 crop year 
contract have been obtained from TVG.
    (2) Having the member verify the dollar amount received from TVG 
and the dollar amount received from any other source for the production 
that was under contract for the 2000 crop year with TVG.
    (3) Once the member verifies the relevant dollar amounts, FSA will 
calculate payments to individual members. Payments will be calculated 
by subtracting both the dollar amount received from TVG and the dollar 
amount received from any other source from the original dollar amount 
expected from TVG (calculated from TVG's final base price per commodity 
and the producer's contract production per commodity) on the contracted 
commodities. The difference will be considered to be the member's gross 
total loss for program purposes.
    (4) The gross payment amount for the producer shall not exceed 50 
percent of the member's gross total loss (authorized by the Act). At 
the close of the application period, if necessary, a uniform payment 
factor will be established so that total outlays will not exceed the 
$20 million in funds available under this program. The uniform payment 
factor will be determined based on the factoring of the available funds 
of $20 million divided by the total eligible losses suffered.
    (b) [Reserved]


Sec. 1481.8  Offsets.

    (a) Any payment or portion thereof due any person under this part 
shall be allowed without regard to questions of title under State law, 
and without regard to any claim or lien against the member, the 
member's commodity, or proceeds thereof, in favor of the producer or 
any other creditors, including agencies of the U.S. Government.
    (b) The regulations governing offsets and withholdings found at 7 
CFR part 1403 shall not be applicable to this part.
    (c) Any payments received by a member of TVG are not subject to 
assignments, administrative offsets or withholdings, including 
administrative offset under chapter 37 of title 31, United States Code, 
as provided by P.L. 106-387.


Sec. 1481.9  Appeals.

    Any member who is dissatisfied with a determination made pursuant 
to this part may make a request for reconsideration or appeal of such 
determination in accordance with the appeal regulations set forth at 7 
CFR parts 11 and 780.


Sec. 1481.10  Misrepresentation.

    (a) Whoever issues a false document or otherwise acts in violation 
of the provisions of this program so as to enable a member to obtain a 
payment to which such member is not entitled, shall become liable to 
CCC for any payment which CCC may have made in reliance on such sales 
document or as a result of such other action.
    (b) The issuance of, or assistance in the issuance of, a false 
document or the making of, or assistance in the making of, a false 
statement in an application for payment or other document, for the 
purpose of enabling a person to obtain a payment to which such person 
is not entitled, may subject the person issuing such document or making 
such statement, or assisting in such acts, or benefitting from such 
acts, to liability under applicable Federal civil and criminal 
statutes. Such person shall also be liable for a refund of all program 
payments made along with any other person who is also liable for such 
repayments.


Sec. 1481.11  Maintaining records.

    Members making application for a payment under this program must 
maintain accurate records and accounts that will document that they 
meet all eligibility requirements specified for the program. Such 
records and accounts are subject to spot-checks and must be retained 
for three years after the date of payment to the producer under this 
program and any disposition after that time is at the risk of the 
producer if there is cause to believe that there are program matters at 
issue or which could become at issue.


Sec. 1481.12  Estates, trust, and minors.

    (a) Program documents purportedly executed by a person 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 producer of the eligible 
commodities shall be eligible for assistance under this part only if 
such producer 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 has executed the applicable program documents; 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. 1481.13  Death, incompetency, or disappearance.

    In the case of death, incompetency, disappearance or dissolution of 
a producer that is eligible to receive benefits in accordance with this 
part, such person or persons specified in part 707 of this title may 
receive such benefits, as determined appropriate by FSA.

[[Page 14483]]

Sec. 1481.14  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 CCC shall otherwise become 
due in connection with the application or this part, all payments made 
under this part to any member shall be refunded to CCC together with 
interest as determined in accordance with this section and late payment 
charges as provided in part 1403 of this chapter.
    (b) All members signing an application for payment as having an 
interest in such payments shall be jointly and severally liable for any 
refund, including related charges, that is determined to be due for any 
reason under the terms and conditions of the application or this part. 
Reference in this part to ``application'' and ``form application'' 
shall be taken to be interchangeable.
    (c) Interest shall be applicable to refunds required of any 
producer under this part if CCC determines that payments or other 
assistance were provided to a producer who was not eligible for such 
assistance or determines that a refund is due for any other reason. 
Such interest shall be charged at the rate of interest that the United 
States Treasury charges the CCC for funds, as of the date CCC made 
benefits available. Such interest shall accrue from the date of 
repayment or the date interest increases as determined in accordance 
with applicable regulations. CCC may waive the accrual of interest if 
CCC determines that the cause of the erroneous determination was not 
due to any action of the producer.
    (d) In addition, late payment interest shall be assessed on all 
refunds in accordance with the provisions of part 1403 of this chapter.
    (e) Members must refund to CCC any excess payments made by CCC with 
respect to such application.

    Signed in Washington, D.C., on March 6, 2001.
James R. Little,
Executive Vice President, Commodity Credit Corporation.
[FR Doc. 01-6179 Filed 3-8-01; 3:28 pm]
BILLING CODE 3410-05-P