[Federal Register Volume 67, Number 190 (Tuesday, October 1, 2002)]
[Rules and Regulations]
[Pages 61468-61470]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-24817]


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

DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1400

RIN 0560-AG77


Payment Limits

AGENCY: Commodity Credit Corporation, USDA.

ACTION: Final rule.

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

SUMMARY: This rule implements provisions of the Farm Security and Rural 
Investment Act of 2002 regarding per person payment limitations on 
certain programs. This rule will limit the amount of payments that may 
be received by one person for direct and counter-cyclical payments, 
marketing loan and loan deficiency payments, and conservation and 
environmental programs.

EFFECTIVE DATE: September 27, 2002.

FOR FURTHER INFORMATION CONTACT: Dan McGlynn, Production, Emergencies 
and Compliance Division, United States Department of Agriculture 
(USDA), Stop 0517, 1400 Independence Ave. SW., Washington, DC 20250-
0517. Telephone: (202) 720-3463. Electronic mail: [email protected]. Persons with disabilities who require alternative 
means for communication (Braille, large print, audio tape, etc.) should 
contact the USDA Target Center at (202) 720-2600 (voice and TDD).

SUPPLEMENTARY INFORMATION: 

Notice and Comment

    Section 1601(c) of the Farm Security and Rural Investment Act of 
2002 (the 2002 Act) requires that the regulations needed to implement 
Title I of the 2002 Act, including those involved here, are to be 
promulgated 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. These regulations 
are thus issued as final.

Executive Order 12866

    This final rule has been determined to be significant under 
Executive Order 12866 and has been reviewed by the Office of Management 
and Budget (OMB). A cost-benefit assessment was completed and is 
summarized after the background section explaining the rule.

Federal Assistance Programs

    This rule has a potential impact on all programs listed in the 
Catalog of Federal Domestic Assistance in the Agency Program Index 
under the Department of Agriculture, Farm Service Agency and Natural 
Resources Conservation Service. Other assistance programs are also 
impacted.

Regulatory Flexibility Act

    The Regulatory Flexibility Act is not applicable to this rule 
because the Commodity Credit Corporation (CCC) is not required by 5 
U.S.C. 553 or any other law to publish a notice of proposed rulemaking 
for the subject matter of this rule.

Environmental Assessment

    The environmental impacts of this final rule have been considered 
under the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 
4321 et seq., the regulations of the Council on Environmental Quality 
(40 CFR parts 1500-1508), and regulations of the Farm Service Agency 
(FSA) of the Department of Agriculture (USDA) for compliance with NEPA, 
7 CFR part 799. It has been concluded that the rule will have no 
significant impacts upon the human environment as documented by an 
environmental evaluation. A copy of the environmental evaluation is 
available for inspection and review upon request. Therefore, the agency 
has determined that this rule is a categorical exclusion and no further 
environmental review is required.

Executive Order 12778

    The final rule has been reviewed under Executive Order 12778. This 
rule preempts State laws that are inconsistent with it, however, this 
rule is not retroactive. Before judicial action may be brought 
concerning this rule, all administrative remedies 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 3015, subpart V, 
published at 48 FR 29115 (June 24, 1983).

Unfunded Mandates

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) does 
not apply to this rule because CCC is not required by 5 U.S.C. 553 or 
any other law to publish a notice of proposed rulemaking about this 
rule. Also, this rule contains no mandates as defined in sections 202 
and 205 of UMRA.

[[Page 61469]]

Small Business Regulatory Enforcement Fairness Act of 1996

    Section 1601(c) of the 2002 Act requires that the regulations 
necessary to implement Title I of the 2002 Act should be issued within 
90 days of enactment and that such regulations shall be issued without 
regard to the notice and comment provisions of 5 U.S.C. 553. Section 
1601(c) also requires that the Secretary use the authority in section 
808 of the Small Business Regulatory Enforcement Fairness Act of 1996, 
Public Law 104-121 (SBREFA), which allows an agency to forgo SBREFA's 
usual 60-day Congressional review delay of the effective date of a 
major regulation if the agency finds that there is a good cause to do 
so. These regulations affect the planting and marketing decisions of a 
large number of agricultural producers. Accordingly, this rule is 
effective upon the date of filing for public inspection by the Office 
of the Federal Register.

Paperwork Reduction Act

    Section 1601(c) of the 2002 Act provides that the promulgation of 
regulations and the administration of Title I of the 2002 Act shall be 
done without regard to chapter 5 of title 44 of the United States Code 
(the Paperwork Reduction Act). Accordingly, these regulations and the 
forms and other information collection activities need to administer 
the program authorized by these regulations are not subject to review 
by the Office of Management and Budget under the Paperwork Reduction 
Act.

Background

    The 2002 Act authorized new programs and benefits, including direct 
payments and counter-cyclical payments. In section 1603 of that Act, by 
amendment to Section 1001 of the Food Security Act of 1985 (7 U.S.C. 
1308), Congress limited the amount of such payments that could be 
received by one person. The per person payment limits are for direct 
payments, counter-cyclical payments, marketing loan gains, and loan 
deficiency payments of $40,000, $65,000, and $75,000 respectively for 
the ``covered commodities'' of corn, grain sorghum, barley, oats, 
wheat, soybeans, minor oilseeds, cotton and rice. Separate limits for 
comparable peanut payments are set; however, the $75,000 limits for 
marketing loan gain and loan deficiency payments includes payments for 
wool, mohair and honey.

Summary of Cost Benefit Analysis

    The 2002 Act carries over from previous legislation an ``actively 
engaged in farming requirement'' and ``person'' rules for a producer to 
be eligible to receive program benefits. The definition of ``person'' 
includes individuals and also encompasses certain partnerships, 
corporations and other types of organizations. The 2002 Act establishes 
per ``person'' payment limitations for direct payments, counter-
cyclical payments, marketing loan gains, and loan deficiency payments 
for the covered commodities. There are also per ``person'' payment 
limitations for the various conservation and environmental programs. 
Some diversified producers may be able to pool several payment limits 
from the same program, such as peanuts, which have a limit of $75,000, 
and corn and soybeans, which have separate payment limits, to earn an 
additional $75,000 in loan deficiency payments. Plus, this producer 
could receive $40,000 and $65,000 in direct and counter-cyclical 
payments from the corn, soybeans and peanuts.
    Payment limits are further relaxed by the availability of commodity 
certificates for marketing assistance repayment. Commodity certificates 
are available to producers with outstanding recourse marketing 
assistance loans and may be used by producers or their agents to 
acquire commodities pledged as collateral for those loans. The producer 
may purchase a commodity certificate, exchange the certificate for the 
loan collateral, the loan is considered liquidated, and the producer 
has no more obligation for that portion of the collateral. Moreover, 
the payment limit does not apply to any indirect benefit the producer 
may realize from such a transaction because there is no marketing gain. 
An eligible producer, however, must have an outstanding commodity loan 
that has not matured.
    In May 2002, the Congressional Budget Office (CBO) estimated that 
the 2002 Act would change expenditures compared to the previous 
legislation. They compared two sets of policies using the same 
commodity prices and macroeconomic variables. CBO found that in fiscal 
year 2002 through 2006 the new set of payment limits would save $92 
million more than the payment limits for programs in previous 
legislation. This amount does not establish that limits in the 2002 Act 
are more effective since the available programs have changed. Part of 
the available savings may be credited to the effects of the limits on 
the counter-cyclical payments which did not exist under the previous 
legislation. Contact the information contact list in the address 
section of this rule for additional questions on the expected impacts.

List of Subjects in 7 CFR Part 1400

    Agriculture, Grant programs--agriculture, Loan programs--
agriculture, Price support programs, Reporting and recordkeeping 
requirements.

    For the reasons stated in the preamble, 7 CFR part 1400 is amended 
as follows:

PART 1400--PAYMENT LIMITATION AND PAYMENT ELIGIBILITY

    1. The authority citation for part 1400 is revised to read as 
follows:

    Authority: 7 U.S.C. 1308 et seq.

    2. Section 1400.1 is revised to read as follows:


Sec.  1400.1  Applicability.

    (a) Together with any additional coverage as may apply with respect 
to Subpart G of this part or other subpart of this part as provided in 
such subpart, this part is applicable to the following programs 
(together with any other programs which adopt this part by reference):
    (1) The program governed by part 1413 of this chapter;
    (2) All programs governed by parts 1421 and 1427 of this chapter 
under which a producer realizes a gain from repaying a marketing 
assistance loan at a lower rate than the commodity's original loan 
rate, and any program that authorizes a loan deficiency payment for a 
commodity;
    (3) The Conservation Reserve Program (CRP) as governed by part 1410 
of this chapter.
    (b) This part does not apply to:
    (1) CRP rental payments if they are made to a State, including a 
political subdivision or agency thereof, under a special conservation 
reserve enhancement program the Secretary approves.
    (2) CRP rental payments made to an individual heir who succeeded to 
a contract on inherited land, if the land was subject to the CRP 
contract at the time it was inherited.
    (c) This part applies to the programs specified in paragraph (a)(1) 
and (2) of this section on a crop year basis, and those in paragraph 
(a)(3) of this section based on each fiscal year.
    (d) This part is used to determine whether individuals and entities 
are to be treated as one person or as separate persons regarding the 
application of statutory provisions that limit the amount of payments a 
specific person may receive.
    (e) Where more than one provision of this part may apply, the 
provision most restrictive on the program participant shall apply.

[[Page 61470]]

    (f) Payments made to the following are not subject to payment 
limitations under this part:
    (1) Public schools for land a public school district owns; and
    (2) A State for land a State owns that is used to maintain a public 
school.
    (g) Unless otherwise noted, the following amounts are the payment 
limitations per person per applicable period for each payment or 
benefit:

------------------------------------------------------------------------
                                                              Limitation
                                                             per person,
                                                              per crop,
                     Payment or benefit                        program
                                                               year or
                                                             fiscal year
------------------------------------------------------------------------
1. Direct Payments for covered commodities.................      $40,000
2. Direct Payment for peanuts..............................       40,000
3. Counter-Cyclical Payments for covered commodities.......       65,000
4. Counter-Cyclical Payment for peanuts....................       65,000
5. Loan Deficiency Payments and Marketing Loan Gains for          75,000
 loan commodities..........................................
6. Total Loan Deficiency Payments and Marketing Loan Gains        75,000
 for peanuts, wool, mohair and honey.......................
7. Conservation Reserve Program............................       50,000
8. Non-Insured Crop Disaster Assistance Program (NAP)            100,000
 payments..................................................
9. Environmental Quality Incentives Program (EQIP) payments  \1\ 450,000
10. Agricultural Management Assistance Program.............       50,000
11. Conservation Security Program (CSP):
  Tier 1...................................................   \2\ 20,000
  Tier 2...................................................   \2\ 35,000
  Tier 3...................................................   \2\ 45,000
------------------------------------------------------------------------
\1\ This statutory limit is applied on a ``direct attribution'' method
  with respect to the individual or entity.
\2\ This limitation is attributed to an individual or entity covered by
  a Conservation Security Program contract.


    3. Section 1400.3(b) is amended to add a new definition for ``Loan 
commodity'' in alphabetical order, to revise the definition for 
``Payment'', and to remove the definition for ``Payment, loan or 
benefit'', to read as follows:


Sec.  1400.3  Definitions.

* * * * *
    (b) * * *
* * * * *
    Loan commodity means wheat, corn, grain sorghum, barley, oats, 
upland cotton, extra long staple cotton, rice, soybeans, other 
oilseeds, dry peas, lentil, small chickpeas, wool, mohair, peanuts and 
honey.
* * * * *
    Payment means:
    (1) Payments made in accordance with part 1412 of this chapter;
    (2) Loan gains and loan deficiency payments made in accordance with 
parts 1421 and 1427 of this chapter;
    (3) CRP annual rental payments made in accordance with part 1410 of 
this chapter;
    (4) Non-Insured Crop Disaster Assistance Program (NAP) payments 
made in accordance with part 1437 of this chapter; and
    (5) For other programs, any payments designated in individual 
program regulations or elsewhere in this part.
* * * * *


Sec.  1400.5  [Amended]

    4. Section 1400.5(b) is amended to revise ``1985 Act'' to read 
``Food Security Act of 1985, as amended (7 U.S.C. 1281 note)''.

    Signed in Washington, DC, on September 12, 2002.
James R. Little,
Executive Vice President, Commodity Credit Corporation.
[FR Doc. 02-24817 Filed 9-27-02; 11:20 am]
BILLING CODE 3410-05-P