[Federal Register Volume 67, Number 58 (Tuesday, March 26, 2002)]
[Rules and Regulations]
[Pages 13707-13714]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-7220]



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  Federal Register / Vol. 67, No. 58 / Tuesday, March 26, 2002 / Rules 
and Regulations  

[[Page 13707]]



DEPARTMENT OF AGRICULTURE

Farm Service Agency

7 CFR Part 784

RIN 0560--AG17


Lamb Meat Adjustment Assistance Program

AGENCY: Farm Service Agency, USDA.

ACTION: Final rule.

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

SUMMARY: This rule finalizes an interim rule implementing the Farm 
Service Agency's (FSA) Lamb Meat Adjustment Assistance Program (LMAAP). 
The program is designed to help restore purchasing power and enable 
producers to make significant changes in production practices to adjust 
to import competition by providing financial assistance to sheep and 
lamb producers who have recently experienced low prices and poor market 
conditions. On the basis of comments and suggestions received, FSA is 
making several changes to the program provisions in the interim rule 
and is adding other provisions.

EFFECTIVE DATE: March 21, 2002.

FOR FURTHER INFORMATION CONTACT: Danielle Cooke, (202) 720-1919 or e-
mail [email protected].

SUPPLEMENTARY INFORMATION:   

Executive Order 12866

    This final rule is 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

    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. 533 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

    A notice with request for comments on the information collection 
was part of the interim rule. No comments were received from the public 
during the 60-day comment period regarding the information collection. 
A regular submission of an information collection package was approved 
by OMB for use through the year 2003 and assigned OMB control number 
0560-0205. The amendments to 7 CFR part 784, contained in this rule 
involve a change in existing information collection requirements that 
was previously approved by OMB. In accordance with the Paperwork 
Reduction Act of 1995, FSA has submitted an emergency information 
collection request to OMB for the approval of a revision to a currently 
approved collection as necessary for the proper functioning of the 
program. A regular information collection package will be submitted to 
OMB.

Discussion of Final Rule

    The interim rule published in the Federal Register on June 21, 2000 
(65 FR 38409), set forth regulations to allow direct payments to 
provide immediate financial assistance to sheep and lamb producers who 
have recently experienced low prices and poor market conditions. The 
background provisions of that rule described, in addition, the 
statutory underpinnings of the program, those being provisions of the 
Act of August 24, 1935, as amended. One of those provisions is clause 
(3) of section 32, which authorizes the Secretary of Agriculture to 
``reestablish farmers purchasing power in connection with the normal 
production of any agricultural commodity for domestic consumption.'' 
Under the program, eligible producers of sheep and lambs may receive 
direct payments towards the production segment of the industry to share 
expenses for productivity improvement projects. In the second and third 
year, under the original rule direct payments to producers are based on 
quality incentives that will assist the industry's competitiveness in 
the marketplace. To enhance the competitiveness of the domestic lamb 
and sheep industry, the program is extended by this rule through July 
2003 and the rule contemplates that an additional $37.7 million of 
Fiscal Year 2002 Section 32 funds will be available for the program. Of 
the $37.7 million in additional funds, $26 million will be allocated to 
the new ewe lamb incentive payment for Year 3 and Year 4, while the 
remaining funds will go towards continuing feeder lamb and slaughter 
lamb payments during Year 2, Year 3, and Year 4 of the program.
    Comments regarding the provisions of the program were accepted 
until July 21, 2000. Comments were received from 48 entities or 
persons, which includes 28 sheep producers and ranchers, 13 
agricultural associations, two farm bureaus, two United States 
Congressmen, one agricultural university, and two Agency employees.
    Most of the comments addressed particular provisions of the interim 
rule. These are discussed below on a section-

[[Page 13708]]

by-section basis, along with the changes that have been made to the 
interim rule. Changes to each section based on the experience of 
operating the program under the interim rule are also discussed on a 
section-by-section basis.

General

    Five respondents commented that the program does not benefit the 
industry and excludes the small farmer. Prior to publishing the interim 
rule, USDA provided several opportunities for public participation in 
the rulemaking process through highly publicized meetings. Comments and 
program proposals were solicited after the President's announcement of 
the assistance package to assess their needs and obtain regulatory 
guidance. We believe the interests of small producers have been duly 
addressed and considered, as all elements of the industry will be able 
to share in the elements of this program without an increase in payment 
rates.

Section 784.1 Applicability; Available Payments

    Most of the comments concerned the lack of an incentive or a 
payment to encourage the purchase or retention of ewe lambs for 
breeding stock to replenish the lambing inventory. By this rule, FSA, 
in conjunction with AMS, will add a ewe lamb incentive payment to the 
program. This will provide incentives for producers to purchase or 
retain their breeding ewes, expand herds, and increase the available 
supply of domestic lamb meat. Payments for the new ewe lamb incentive 
payment program cover purchases back to August 1, 2001, and then 
continue for two payment years through July 31, 2003. An additional $26 
million is authorized for the ewe lamb incentive payment with a target 
of $13 million per year.
    Also in this section, slaughter and feeder lamb payments have been 
extended one year through July 31, 2003. This will enable domestic lamb 
and sheep producers to compete more effectively in the marketplace. A 
total of $10 million has been authorized to make payments available for 
marketings of eligible feeder and slaughter lambs during Year 4. In 
addition, $1.7 million has been allocated to cover the anticipated 
short fall of funds for marketings of eligible feeder and slaughter 
lambs during Year 3.

Section 784.3 Definitions

    Three respondents believed the ``feeder lamb definition'' provided 
for in section 784.3 should be changed to allow for lambs fed using a 
high protein diet or other appropriate diet. That comment was accepted, 
as the original definition may be too narrow.
    As there is a one year extension of the LMAAP, a definition for 
Year 4 was added. A definition for ``ewe lamb'' was also added to 
reflect the expansion of the program.

Section 784.4 Year 1 Time and Method for Application

    Some of the commenters believed that the time periods between the 
program announcement and the program deadlines were too short, and that 
the eligibility period should be retroactive from the 1999 marketing 
season. FSA, however, established the dates of the program to coincide 
with the dates in the President's announcement of the $100 million 
assistance plan to help U.S. sheep and lamb farmers. Therefore, the 
comment was not adopted and no such changes were made in this final 
rule.

Section 784.5 Year 1 Eligibility

    There were several public comments received regarding Year 1 
payments. Specifically, seven respondents felt the use of a gross 
annual revenue level was too restrictive and precluded many from 
qualifying for a payment during Year 1 or a feeder lamb payment during 
Year 2. FSA, however, established the use of a gross annual revenue of 
$2.5 million or less to help ensure that the Federal financial benefits 
of this rule are distributed to farmers of more modest financial means. 
Therefore, the comments are not adopted into this final rule.
    Although no comments on this issue were received, while operating 
under the interim rule, FSA decided to establish a deadline date for 
producers to complete facility improvements. This provision was added 
to ensure producer timely compliance with eligibility requirements 
provided in Sec. 784.5(b)(3). Sheep and lamb operations that do not 
complete the facility improvements by the deadline date will be 
determined ineligible for benefits and must immediately refund the 
payment made and with interest.
    Three comments were received from the public who felt that farm 
raised rams for breeding up to yearling age should be eligible to 
generate a payment. Other suggestions included that to be eligible to 
generate a ram payment, the ram should show evidence of various traits 
of above average genetic potential; another suggested that a provision 
be added for payments for ram semen and embryo purchases. No change was 
made as the current incentives appear sufficient to accomplish the 
program purposes and more directly aimed at the desired result. For the 
time period covered, the genetic potential of a ram, ewe or lamb was 
evaluated and payment made through enrolling in the National Sheep 
Improvement Program (NSIP), or a similar FSA approved program, that 
evaluates animals in a flock for maternal, growth, and wool traits. We 
think these guidelines were sufficient, and at this point the ram 
portion of the program is over.
    Two comments received opposed the sheep improvement program payment 
by stating this payment does not address the entire industry and should 
be eliminated. Another comment suggested that Government funds should 
not be used to solicit membership in voluntary programs such as the 
NSIP. Comments also suggested that the sheep improvement program 
payment should include payments with respect to a scrapie program.
    The NSIP was approved by USDA because of its recognition in the 
industry, but the rule allowed for other programs to be approved as 
well. Scrapie programs were not included in the sheep improvement 
program because funds under the alternative Domestic Lamb Industry 
Adjustment Assistance Program were specifically appropriated for animal 
health issues that included scrapie eradication. Further, scrapie 
eradication programs are not genetically based and would, therefore not 
qualify as a genetic evaluation program.
    Five of the received comments directed concern toward the 
ineligibility of facility improvements begun and not completed by the 
end of the sign-up period. One respondent believed that the facility 
improvement eligibility requirements were too broad, and more specific 
guidelines were needed. One respondent was concerned that the facility 
improvement payment was not designed to make a difference because it 
was geared more towards small producers and not the entire industry. In 
response to these concerns, policy and procedure was established in 
this final rule to provide specific guidelines for facility 
improvements and a deadline date was established to have facility 
improvements completed beyond the deadline established for producers to 
apply for program payments.

Section 784.6 Year 1 Rate of Payment and Limitations on Funding

    Three comments were received from the public who believed that the 
maximum ram payment rate for Year 1 payments should be increased. The 
payment limitations in Year 1 were

[[Page 13709]]

imposed to assure fair distribution of available funds for all eligible 
producers with the total available funding and we believe were set at 
appropriate levels to cover the program goals. No changes were made.

Section 784.8 Year 2 and Year 3 Time and Method for Application

    The majority of the comments received were regarding Year 2 and 
Year 3 eligibility requirements. Four comments indicated that Year 2 
and Year 3 payments should be based on actual sales receipts from the 
market place because the eligibility requirements for payments with 
respect to slaughter and feeder lambs and the paperwork involved were 
too complicated and cumbersome. In response to this concern, FSA has 
revised operating procedure to allow producers to self-certify feeder 
lambs by fax by faxing the last page of the LMAAP application form to 
AMS at least two working days prior to a designated 24-hour viewing 
period. Then USDA agents, based on their availability, would randomly 
select sheep and lamb operations to verify the claims. Following that, 
the producer to receive payment would submit to their FSA county office 
the completed Form FSA-383 and supporting documentation, as proof of 
the faxed information.
    Also, in the final rule, the provision in Sec. 784.5 allowing a 
payment to a sheep and lamb operation that owned a feeder lamb 
continuously for 30 days prior to marketing has been changed to require 
the operation to own the feeder lamb continuously from birth to the 
time of marketing. The interim rule led to attempted abuse by a few 
producers who falsified lamb sales records to circumvent the regulation 
in order to receive multiple payments.
    Several comments received with respect to the slaughter lamb 
carcass requirements in this section suggested that the 55 to 75 pound 
dressed hot carcass weight requirement be increased to 80 pounds. Other 
comments suggested that the 55 to 75 pound dressed hot carcass weight 
should be eliminated, to accommodate northeastern producers. These 
producers typically do not qualify for a feeder or slaughter lamb 
payment because they sell to restaurant and ethnic markets where lamb 
carcasses average 20 to 45 pounds dressed hot carcass weights. 
Respondents felt that fine wool sheep would not meet the muscling 
criteria because the fine wool breeds of the northeastern region are 
slower to develop muscling. Two comments were received that suggested a 
gradual phase in of program standards that would allow breeding 
programs to adjust to a policy that favors breeds suited to meat 
production rather than wool production. There were also three comments 
that suggested Yield grade 3 slaughter lamb carcasses be eligible for 
payment.
    USDA uses the standard of a hot carcass weight of 55 to 75 pounds 
to provide lamb consumers with a more appealing product. This standard 
also serves to improve profitability by increasing the efficiency of 
the lamb production cycle and to encourage the production of more 
consistently palatable and higher yielding lamb products. Lamb 
processors want larger carcasses because there is less labor involved 
for the amount of meat that is realized. Additionally, the weight range 
and yield grade were not changed in the final rule because the industry 
wants a more uniform carcass that yields a consistent product in size, 
weight, and appearance. Finally, the concept of plate coverage was 
considered in making this determination. The food service industry 
prefers fewer ribs with larger portions when preparing meals from 
middle meats. Therefore, these comments are not adopted in this final 
rule.
    Seven comments received from the public expressed concerns about 
AMS certification, particularly whether AMS has the resources to 
certify to the feeder and slaughter lambs for the qualifying factors. 
Eleven comments were received suggesting that AMS simplify the 
certification procedures by allowing USDA inspectors and small USDA 
processing plants to certify the carcass criteria. Other suggestions 
included allowing a waiver of slaughter lamb carcass requirements to 
producers that marketed less than 500 lambs per year and allowing the 
use of a Statewide average grade score as a proxy for individual 
slaughter lamb carcass data. Five respondents believed that a provision 
should be established to allow producers who sell lambs on a live 
weight basis to be eligible for payments in Year 2 and Year 3. Some 
comments suggested that the slaughter lamb payments be based on 100 
pounds per lamb with a 145 pound cap. The producer would have to 
produce receipts for the pounds of lambs sold to the packer and 
receipts for the pounds of lambs purchased from the sheep producer, and 
the payment would be based on the difference. To address these 
situations, the Agency will allow slaughter facilities that process 
less than 50 market lambs per week to certify the slaughter lamb 
carcass requirements, provided they are approved by AMS and meet the 
established guidelines. Otherwise, the rules appear to be appropriate 
and efficient with respect to the accomplishment of the goals of the 
program and administrative necessities.
    Three respondents felt that slaughter lambs placed on a truck along 
with those of several other producers for transport to a slaughter 
facility would be a major problem and that payments should not be based 
on a producer's pro rata share. In response to this concern, the LMAAP 
application form has been revised to assist the sellers of slaughter 
lambs to identify and trace their lambs placed on a commingled truck 
load and sold to a slaughter facility. Otherwise the slaughter facility 
could not identify the number of lambs from a particular producer. This 
form must accompany lambs to the slaughter facility and be presented to 
the USDA grader for certification and payment. However, these payments 
will still be based on a pro-rata share.

Section 784.10 Availability of Funds for Year 1 through Year 3

    There were no comments on this section, however, an additional $1.7 
million has been authorized to cover an anticipated shortfall in the 
$10 million allocated to FSA for the feeder and slaughter lamb direct 
payment in Year 3. Payments for eligible slaughter and feeder lambs 
will continue through July 31, 2003, to further provide those eligible 
for the payments with an immediate infusion of funds to help pay 
operating expenses and meet other financial obligations. An additional 
$10 million will be provided to extend the direct payments for eligible 
feeder and slaughter lambs into 2003. In addition, $26 million is 
authorized for the new ewe lamb incentive payment during Year 3 and 
Year 4. These changes will increase the total available funds for the 
program in the final rule from $30 million to $67.7 million and 
establish a program for Year 4.

Section 784.13 Estates, Trusts, and Minors

    One public comment was received from a surety association regarding 
the participation of minors in the program and the enforceability of a 
surety contract with a minor. However, provisions exist that allow a 
minor who meets the LMAAP program eligibility requirements to 
participate in the program, provided the applicable program documents 
are signed by the minor and co-signed by a person determined by the FSA 
County Committee to be financially responsible.
    Section 784.17 was added to provide offset and withholding 
provisions and

[[Page 13710]]

Sec. 784.18 was added for assignment of payments. Also, minor changes 
are made throughout this part to improve structure, clarity, and 
readability. Also, internal agency administrative procedures are 
removed.
    Finally, changes were made in the proration language of the rule to 
cover possible over-subscription. The rule contemplates that Year 4 
payments will be prorated in advance to comply with expected demand and 
then paid first-come, first-served, until exhausted. Also the rule 
specifies that monies committed to ewe incentives may be used only for 
those purposes and that no other program money will be used for those 
purposes.
    The Department of Agriculture plans to evaluate this program's 
effectiveness through a review of the impact of several key components. 
The performance measures will include an annual review of the change in 
the following: (1) U.S. flock size; (2) quality and yield of slaughter 
lambs; (3) number of feeder lambs qualifying for payments; and (4) 
number and quality of ewes retained. These evaluations will continue 
for the duration of the program.

List of Subjects in 7 CFR Part 784

    Administrative practice and procedure, Direct payments to sheep and 
lamb operations, Reporting and record keeping requirements.

    Accordingly, for the reasons set forth in the preamble, 7 CFR part 
784 is revised to read as follows:

PART 784--LAMB MEAT ADJUSTMENT ASSISTANCE PROGRAM

Sec.
784.1   Applicability; available payments.
784.2   Administration.
784.3   Definitions.
784.4   Year 1 time and method for application.
784.5   Year 1 eligibility.
784.6   Year 1 rate of payment and limitations on funding.
784.7   Year 2, Year 3, and Year 4 time and method for application.
784.8   Year 2, Year 3, and Year 4 eligibility.
784.9   Year 2, Year 3, and Year 4 rate of payment and limitations 
on funding.
784.10   Availability of funds for Year 1 through Year 4.
784.11   Appeals.
784.12   Misrepresentation and scheme or device.
784.13   Estates, trusts, and minors.
784.14   Death, incompetency, or disappearance.
784.15   Maintenance and inspection of records.
784.16   Refunds; joint and several liability.
784.17   Offsets and withholdings.
784.18   Assignments.

    Authority: Clause (3) of section 32 of the Act of August 24, 
1935, as amended; 7 U.S.C. 612c.


Sec. 784.1  Applicability; available payments.

    (a) This part establishes the Lamb Meat Adjustment Assistance 
Program pursuant to Clause (3) of section 32 of the Act of August 24, 
1935, as amended (7 U.S.C. 612c). The purpose of this program is to 
provide benefits to sheep and lamb operations to reestablish their 
purchasing power in connection with the normal production of sheep and 
lambs for domestic consumption and boost the long-term development and 
growth of sheep and lamb production in the United States.
    (b) Under and subject to this part, FSA will provide with respect 
to sheep and lamb operations: Year 1 payments in which sheep and lamb 
operations will receive payments for, during the time period 
encompassing Year 1 as defined in Sec. 784.3, purchasing eligible rams 
for breeding, enrolling their herd in a sheep improvement program, and 
for making improvements to their production facilities; Year 2, Year 3, 
and Year 4 payments for marketings of eligible slaughter lambs or 
feeder lambs during the period encompassing those time periods; and 
Year 3 and Year 4 payments for retaining or purchasing ewe lambs for 
breeding stock to replenish the lamb inventory during the period 
encompassing those time periods. Unless otherwise determined by the 
agency in accordance with the provisions of this part, the amount that 
may be expended under this part shall not exceed $67.7 million. Claims 
that exceed that amount will be prorated in accordance with the 
provisions for proration that are contained in this part.
    (c) To be eligible for any payments under this part, the sheep and 
lamb operation must be engaged in the business of producing and 
marketing agricultural products at the time of filing the application.


Sec. 784.2  Administration.

    This part shall be administered by the Farm Service Agency (FSA) 
under the general direction and supervision of the Administrator, FSA, 
or his designee and the employees of the Agency.


Sec. 784.3  Definitions.

    The definitions set forth in this section shall be applicable for 
all purposes of administering the Lamb Meat Adjustment Assistance 
Program established by this part.
    Agricultural Marketing Service or AMS means the Agricultural 
Marketing Service of the Department.
    Application means the Lamb Meat Adjustment Assistance Program 
Application, Forms FSA-382 and FSA-383.
    Average Choice Confirmation means a muscling score of that 
designation assigned in accordance with official USDA standards and 
procedures.
    Department means the United States Department of Agriculture.
    Eligible lambs means feeder lambs and slaughter lambs during Year 2 
through Year 4 and also ewe lambs during Year 3 through Year 4.
    Ewe lamb means a female lamb no more than 18 months of age that has 
not produced an offspring.
    Farm Service Agency or FSA means the Farm Service Agency of the 
Department.
    Feeder lamb means a ewe or wether of less than one year of age that 
when sold is intended to be further fed a high protein diet or other 
appropriate diet to reach an acceptable slaughter market weight.
    Foot rot means an infectious, contagious disease of sheep that 
causes severe lameness and economic loss from decreased flock 
production.
    Lambing cycle means the period of time from birth to weaning.
    Parrot mouth means a genetic defect resulting in the failure of the 
incisor teeth to meet the dental pad correctly.
    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.
    Sheep and lamb operation means any self-contained, separate 
enterprise operated as an independent unit exclusively within the 
United States in which a person or group of persons raise sheep and/or 
lambs.
    Sheep improvement program means the ``National Sheep Improvement 
Program'' operated by the American Sheep Industry Association or other 
similar program for herd improvement approved by the FSA with respect 
to payments under this part.
    Slaughter lamb means a lamb that is 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.
    USDA Choice, USDA Prime, USDA Yield Grade 2 mean, respectively, the 
classifications for lamb carcasses so

[[Page 13711]]

designated under the Official United States Standards for Grades of 
Lamb, Yearling, Mutton, and Mutton Carcasses promulgated by the 
Secretary of Agriculture under the Agricultural Marketing Act of 1946, 
as amended (60 Stat. 1087; 7 U.S.C. 1621-1627) and related authorities.
    Year 1 means the period of time beginning July 22, 1999, and ending 
September 30, 2000.
    Year 2 means the period of time beginning August 1, 2000, and 
ending July 31, 2001.
    Year 3 means the period of time beginning August 1, 2001, and 
ending July 31, 2002.
    Year 4 means the period of time beginning August 1, 2002, and 
ending July 31, 2003.


Sec. 784.4  Year 1 time and method for application.

    (a) A request for Year 1 benefits under this part must be submitted 
on a Lamb Meat Adjustment Assistance Program Payment Application. The 
form may be obtained from and must be submitted to the FSA county 
office serving the county where the sheep and lamb operation is 
located. The completed form must be received by the FSA county office 
by the close of business on October 13, 2000. Applications not received 
by the close of business on October 13, 2000, will be returned as not 
having been timely filed and the sheep and lamb operation filing the 
application will not be eligible for benefits under this program.
    (b) The sheep and lamb operation requesting Year 1 benefits under 
this part must certify to the accuracy of the information provided in 
their application for benefits. All information provided is subject to 
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. 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 may result in 
additional civil and criminal sanctions.
    (c) Not withstanding any other provisions of this section, payments 
will not be made under this section for the acquisition of rams to the 
extent that any such purchase, at any time during Year 1, created, or 
help create, a ratio of rams to ewes for the operation that was less 
than 1 ram to 15 ewes. However, the limitation on payments provided for 
in the preceding sentence shall not apply to the extent that the 
operation establishes to the satisfaction of the FSA County Office 
Committee that a lower ratio of rams to ewes is customary for the 
operation for breeding purposes.


Sec. 784.5  Year 1 eligibility.

    (a) To be eligible to receive the Year 1 payments under this part, 
as described in Sec. 784.1, at the rates provided in Sec. 784.6, a 
sheep and lamb operation must:
    (1) Be engaged in the business of producing and marketing 
agricultural products at the time of filing the application;
    (2) Have in 1999 gross annual revenue of $2.5 million or less; and
    (3) During Year 1,
    (i) Purchased rams for breeding purposes within that operation, 
provided that such rams must have been at least 90 days of age when 
purchased and must have been, or will be, maintained by the operation 
for at least 90 days continuously after the date of purchase; or
    (ii) Enrolled sheep in an eligible sheep improvement program; or
    (iii) Made sheep and lamb operation facility improvements with 
respect to their operation.
    (b) To be eligible for payments for facility improvements made 
under paragraph (a)(3)(iii) of this section, the sheep and lamb 
operation must do the following:
    (1) Submit supporting documentation of the cost of the improvements 
made to the facility during program Year 1. Supporting documentation 
must be dated during Year 1. Materials purchased prior to Year 1 are 
ineligible.
    (2) Use facility improvements for sheep and lamb production 
activities continuously for at least the next three consecutive years, 
and
    (3) Must complete the facility improvement by a date determined by 
the Administrator of FSA, or his designee. The Deputy Administrator for 
Farm Programs, FSA may authorize State and county committees to waive 
or modify the facility improvement completion date in cases where 
timeliness or failure to meet such other requirements does not 
adversely affect the operation of the program.
    (c) Upon a failure to maintain the facility for the full three 
years or complete the facility improvement by the established deadline, 
the operation must refund the Year 1 facility payment immediately plus 
interest at the rate of interest determined by the Agency, from the 
date FSA made such benefits available to the date of repayment.
    (d) With respect to payments made for activities addressed in 
paragraph (a)(3)(i) of this section, upon any failure to maintain a ram 
for the full required 90-day period after payment, unless the 90-day 
period referred to in paragraph (a)(3)(i) of this section has already 
expired, the operation must immediately refund the payment plus 
interest at a rate determined by the Agency.


Sec. 784.6  Year 1 rate of payment and limitations on funding.

    Subject to the availability of funds and to the proration rules of 
Sec. 784.10, Year 1 payments for qualifying operations shall be at the 
following rates:
    (a) Up to $100 for each eligible ram purchased, with a maximum of 
$2,500 per sheep and lamb operation;
    (b) $.50 for each qualifying sheep enrolled in a qualifying sheep 
improvement program, up to $500 per sheep and lamb operation; plus
    (c) 20% of the cost of the qualifying facility improvements up to 
$2,500 per sheep and lamb operation.


Sec. 784.7  Year 2, Year 3, and Year 4 time and method for application.

    (a) A request for Year 2, Year 3, and Year 4 benefits under this 
part must be submitted on a completed Lamb Meat Adjustment Assistance 
Program Payment Application. The application must be submitted to the 
FSA county office serving the county where the sheep and lamb operation 
is located but, in any case, must be received by the FSA county office 
by the close of business on August 15, 2001, if applying for Year 2 
benefits, by the close of business on August 15, 2002, if applying for 
Year 3 benefits, and by the close of business August 15, 2003, if 
applying for Year 4 benefits. The certification section of the 
application must be completed prior to submission. Applications not 
received by the respective deadlines will be rejected and returned.
    (b) The sheep and lamb operation requesting benefits under this 
part must certify to the accuracy of the information provided in their 
application for benefits. All information provided is subject to 
verification by FSA. Refusal to allow any agency of the Department of 
Agriculture to verify any information provided will result in rejection 
of the application or an obligation to return payments. 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.

[[Page 13712]]

Sec. 784.8  Year 2, Year 3, Year 4 eligibility.

    (a) Subject to the availability of funds, Year 2, Year 3, and Year 
4 payments will, as described to in Sec. 784.1, be made for eligible 
marketings of slaughter lambs. Payments for slaughter lambs can be 
received by an operation at the rates described in Sec. 784.9 for those 
eligible lambs slaughtered in Year 2, Year 3, and Year 4 if the lambs 
were owned continuously for 30 days prior to the marketing for 
slaughter and if the carcass produced meets the criteria set out in 
paragraph (b) of this section. Other criteria, as set out in this part, 
may also apply as a condition for, or limitation on, payment. See 
paragraphs (d) and (g) of this section for feeder lamb and purchased or 
retained ewe lamb payment eligibility.
    (b) In order for a marketing of a slaughter lamb to qualify for 
payment under paragraph (a) of this section, the carcass produced by 
the slaughter must meet and be certified by an AMS agent to meet the 
following criteria:
    (1) Meet the requirements of USDA Quality Grade Choice or Prime for 
lamb carcasses;
    (2) Meet the requirements of USDA Yield Grade 2;
    (3) Have a muscling confirmation score of ``Average Choice'' or 
better; and
    (4) Have a 55-75 pound dressed hot carcass weight.
    (c) Slaughter facilities that process less than 50 market lambs per 
week on a yearly basis can request approval from AMS to certify the 
slaughter lamb carcass requirements according to paragraph (b) of this 
section. To obtain approval from AMS, the slaughter facility must 
submit a written request for AMS approval to the address provided by 
FSA.
    (d) Eligible slaughter lambs commingled on a pooled load for 
transport to a slaughter facility must complete the applicable 
information on the LMAAP application form. Producers with lambs on 
these pooled loads can receive a pro-rata portion of payment for 
eligible slaughter lambs that meet the criteria for payment according 
to paragraph (b) of this section. The LMAAP application must accompany 
lambs to the slaughter facility and be presented to the USDA grader for 
certification. The seller must comply with all other FSA guidelines to 
be eligible for such benefits for this program.
    (e) Subject to the availability of funds, sheep and lamb operations 
may be eligible for the Year 2, Year 3, and Year 4 feeder lamb 
payments, as specified in Sec. 784.9, if:
    (1) The operation had gross sales of no more than $2.5 million in 
the year preceding the year for which payment is requested; and
    (2) The feeder lambs sold were owned by the operation from birth to 
the time of marketing and, when marketed, were certified by AMS, as 
thick-muscled and large-framed.
    (f) An eligible sheep and lamb operation can self-certify to the 
eligibility criteria described in paragraph (e) of this section, if 
they do the following:
    (1) Certify to the number of feeder lambs that meet the criteria in 
paragraph (e)(2);
    (2) Maintain identification with the farm or ranch of origin of the 
feeder lambs for a 24-hour viewing period to allow AMS agents or their 
assigned representatives an opportunity to verify qualifying feeder 
lambs;
    (3) Complete and fax page 4 of the LMAAP application to a number 
provided by FSA or AMS at least 2 workdays prior to a 24-hour period 
when lambs can be viewed for verification, providing on the form the 
location and contact person for USDA verification purposes;
    (4) Submit an LMAAP Application for payment;
    (5) Submit supporting documentation to the local county office to 
prove that page 4 of the LMAAP application was completed and faxed 
according to paragraph (f)(3) of this section.
    (g) Sheep and lamb operations that elect not to self-certify 
according to paragraph (f) of this section, can self-certify to the 
eligibility criteria described in paragraph (e) of this section when 
lambs lose ownership identification by doing the following:
    (1) Provide unique identification for all marketed lambs by:
    (i) Requesting program ear tags in writing from USDA (the address 
is available at any local FSA office); or
    (ii) Uniquely identifying or tagging each qualifying self-certified 
feeder lamb that meets the eligibility requirements clearly described 
in paragraph (e)(2) of this section before transferring ownership. 
Alternative methods of identification may be used such as other unique 
ear tags or paint brands;
    (2) Complete and fax page 4 of the LMAAP application to a number 
provided by FSA including the location of the lambs for 30 days after 
FAX notification and the type of animal identification;
    (3) Submit LMAAP Application to the local county office for 
payment; and
    (4) Submit supporting documentation to the local county office to 
prove that page 4 of the LMAAP application was completed and faxed 
according to paragraph (g)(2).
    (5) Applicable FSA program forms, office addresses, and fax number 
information is available on the internet at www.sc.egov.usda.gov.
    (h) In order for an eligible sheep and lamb operation to receive a 
ewe lamb incentive payment, the producer must certify that the ewe 
lamb, at the time of certification is:
    (1) Not older than 18 months of age;
    (2) Has not produced an offspring;
    (3) Does not possess the following characteristics:
    (i) Parrot mouth; or
    (ii) foot rot.
    (i) In addition, to qualify for ewe lamb incentive payment, the 
sheep and lamb operation must:
    (1) Certify that it will maintain the qualifying ewe lambs in the 
herd for at least one complete offspring lambing cycle and actually 
maintain the lambs for that period in accord with that certification.
    (2) Upon request by an AMS agent, agree to allow the AMS agent to 
verify that the ewe lambs meet qualifying characteristics. These 
qualifying characteristics inter alia, must be certified by an AMS 
agent as equal or superior to those required for lamb incentive 
payments, as described in paragraphs (b) and (e) of this section.
    (3) Maintain documentation of any death loss of qualifying ewe 
lambs.
    (4) Agree to refund any payments made with respect to any ewe lamb 
which has died before completing the full program requirements where 
said deaths for the operation exceed 10 percent per program year.
    (5) Be in compliance with all requirements relating to Scrapie, as 
described in 9 CFR part 79; and
    (j) To be eligible for any payments addressed under this section, 
sheep and lamb operation must be engaged in the business of producing 
and marketing agricultural products at the time of filing the 
application.
    (k) In addition, to be eligible for Year 2, Year 3, and Year 4 
payments, a sheep and lamb operation must submit a timely application 
during the application period for Year 2, Year 3, and Year 4 benefits 
and comply with all other terms and conditions of this part or which 
are contained in the application to be eligible for such benefits.


Sec. 784.9  Year 2, Year 3, and Year 4 rate of payment and limitations 
on funding.

    Subject to the availability of funds, and the proration rules set 
out in Sec. 784.10, Year 2, Year 3, and Year 4 payments may be made to 
sheep and lamb operations at the following rates:

[[Page 13713]]

    (a) $3 for each qualifying feeder lamb; plus
    (b) $5 for each qualifying slaughter lamb marketed in any covered 
month except for June or July of the applicable program year, and
    (c) $8 for each qualifying slaughter lamb marketed in June or July 
of the applicable program year.
    (d) $18 for each qualifying ewe lamb retained or purchased for 
breeding purposes for Year 3 and Year 4 only.


Sec. 784.10  Availability of funds for Year 1 through Year 4.

    (a) Total payments under this part, unless otherwise determined by 
the FSA, cannot exceed $67.7 million. At the close of Year 3, FSA will 
determine if the remaining available funds will be sufficient for 
program Year 4. In the event that funds should be insufficient to 
complete the expected payments to eligible producers during program 
Year 4, then the payment rates for that program year shall be prorated 
by a national factor so as to reduce the expected payments to be made 
to the amount available and payment shall be made at those rates until 
monies are expended. Payments made during a prorated program year shall 
be made first-come, first-served so long as there are monies available 
in the manner set for in these regulations. Payments for preceding 
years will not be affected.
    (b) A national factor shall be determined, if necessary for 
slaughter lamb and feeder lamb payments based on the factoring of the 
remaining available funds at the conclusion of Year 3 divided by the 
average number of slaughter and feeder lambs that qualified for 
benefits during Year 2 and Year 3.
    (c) Of the $67.7 million of total funds under this part, $26 
million is specifically earmarked for the ewe lamb incentive payments, 
with a target of $13 million per year for Year 3 and Year 4. Those 
monies ($26 million) should be used only for the ewe incentive payments 
and no other funds shall be used for those payments. A national factor 
shall be determined, if necessary for ewe lamb payments based on the 
factoring of the remaining available funds at the conclusion of Year 3 
divided by the number of ewe lambs that qualified for ewe lamb payments 
during Year 3.
    (d) In the event that approval of all eligible applications would 
result in expenditures in excess of the amount available, FSA shall 
reduce the national factor in such manner as FSA, in its sole 
discretion, finds fair and reasonable.


Sec. 784.11  Appeals.

    Any sheep and lamb operation which 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 parts 11 and 780 of this title or 
otherwise applicable.


Sec. 784.12  Misrepresentation and scheme or device.

    (a) A person or operation shall be ineligible to receive assistance 
under this program if it is determined by FSA 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 any person or 
operation engaged in a misrepresentation, scheme, or device, shall be 
refunded with interest together with such other sums as may become due. 
Any sheep and lamb operation or person engaged in acts prohibited by 
this section and any sheep and lamb operation or person receiving 
payment under this part shall be jointly and severally liable with 
other persons or operations involved in such claim for benefits for any 
refund due under this part 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. 784.13  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 otherwise eligible for assistance under this 
part must, also:
    (1) Establish that the right of majority has been conferred on the 
minor by court proceedings or by statute;
    (2) Show a guardian has been appointed to manage the minor's 
property and the applicable program documents are executed by the 
guardian; or
    (3) Furnish a bond under which the surety guarantees any loss 
incurred for which the minor would be liable had the minor been an 
adult.


Sec. 784.14  Death, incompetency, or disappearance.

    In the case of death, incompetency, disappearance or dissolution of 
a person 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.


Sec. 784.15  Maintenance and inspection of records.

    (a) Persons making application for benefits under this program must 
maintain accurate records and accounts that will document that they 
meet all eligibility requirements specified herein. Such records and 
accounts must be retained for 3 years after the date of payment to the 
sheep and lamb operations under this program. Destruction of the 
records 3 years after the date of payment shall be the risk of the 
party undertaking the destruction.
    (b) At all times during the regular business hours, authorized 
representatives of USDA shall have access to the premises of the sheep 
and lamb operation in order to inspect, examine, and make copies of the 
books, records, and accounts, and other written data as specified in 
paragraph (a) of this section.
    (c) Any funds disbursed pursuant to this part to any person or 
operation who does not comply with the provisions of paragraphs (a) or 
(b) of this section shall be refunded with interest.


Sec. 784.16  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, then all such 
payments made under this part to any sheep and lamb operation or person 
shall be refunded to FSA together with interest as determined in 
accordance with paragraph (c) of this section and late payment charges 
as provided in part 1403 of this title.
    (b) All persons signing an application for payment as having an 
interest in an operation or payment 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 with respect to such operation or payment.
    (c) Interest shall be applicable to refunds required of any person 
under this part if FSA determines that payments or other assistance was 
provided to a person who 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 for funds, 
from the date FSA made such benefits available to the

[[Page 13714]]

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 person.
    (d) Interest determined in accordance with paragraph (c) of this 
section may be waived at the discretion of FSA alone for refunds 
resulting from those violations determined by FSA to have been beyond 
the control of the person committing the violation.
    (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) Any excess payments made by FSA with respect to any application 
under this part must be refunded.
    (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.


Sec. 784.17  Offsets and withholdings.

    FSA may offset or withhold any amounts due FSA under this subpart 
in accordance with the provisions of 7 CFR part 792, or successor 
regulations, as designated by the Department.


Sec. 784.18  Assignments.

    Any person who may be entitled to a payment may assign his rights 
to such payment in accordance with 7 CFR part 1404 or successor 
regulations as designated by the Department.

    Signed at Washington, DC, on March 20, 2002.
James R. Little,
Administrator, Farm Service Agency.
[FR Doc. 02-7220 Filed 3-21-02; 3:52 pm]
BILLING CODE 3410-05-P