[Federal Register Volume 67, Number 203 (Monday, October 21, 2002)]
[Rules and Regulations]
[Pages 64748-64764]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-26692]



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Part IV





Department of Agriculture





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Commodity Credit Corporation



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7 CFR Parts 1405 and 1412



Direct and Counter-Cyclical Program; Final Rule

  Federal Register / Vol. 67, No. 203 / Monday, October 21, 2002 / 
Rules and Regulations  

[[Page 64748]]


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DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Parts 1405, 1412

RIN 0560-AG71


Direct and Counter-Cyclical Program

AGENCY: Commodity Credit Corporation, Agriculture.

ACTION: Final rule.

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SUMMARY: This rule implements the provisions of the Farm Security and 
Rural Investment Act of 2002 (the 2002 Act) regarding direct and 
counter-cyclical payments for the crop years 2002 through 2007. These 
payments provide income support to producers of eligible commodities 
and are based on historically-based acreage and yields and do not 
depend on the current production choices of the farmer. They replace 
the Production Flexibility Contract (PFC) payments made under the 
Federal Agriculture Improvement and Reform Act of 1996 for the crop 
years 1996 through 2002. In addition to the commodities that were 
eligible for PFC payments, the 2002 Act also provides for direct and 
counter-cyclical payments for peanuts, soybeans, sunflower seed and 
other oilseeds.

EFFECTIVE DATE: October 16, 2002.

FOR FURTHER INFORMATION CONTACT: Lynn Tjeerdsma, Production, 
Emergencies and Compliance Division, United States Department of 
Agriculture (USDA), Stop 0517, 1400 Independence Ave, SW, Washington, 
DC 20250-0517. Phone: (202) 720-6602. E-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 2002 Act requires that the regulations 
needed to implement Title I of the 2002 Act 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 economically 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

    The title and number of the Federal assistance program, as found in 
the Catalog of Federal Domestic Assistance, to which this final rule 
applies are: Direct and Counter-Cyclical Program, 10.055.

Regulatory Flexibility Act

    It has been determined that the Regulatory Flexibility Act is not 
applicable to this rule because CCC 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 Review

    An environmental assessment is being completed to consider the 
potential impacts of this proposed action on the human environment in 
accordance with the provisions of 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 FSA's 
regulations for compliance with NEPA, 7 CFR part 799. Section 1601 of 
the 2002 Act mandated that these regulations be promulgated no later 
than 90 days after enactment. Further, this rule affects a large number 
of agricultural producers who are dependent upon its provisions for 
income support and need to know of its details as soon as possible 
because it has an effect on their planting and marketing decisions. 
Thus, CCC is attempting to satisfy both the Congressional mandate and 
its public missions by publishing this rule now, while continuing a 
good faith effort to comply with NEPA in as timely a fashion as 
possible, given the above-mentioned statutory and mission requirements. 
A copy of the draft environmental assessment will be made available for 
public review and comment upon request.

Executive Order 12778

    The final rule has been reviewed in accordance with Executive Order 
12778. The provisions of this final rule preempt State laws to the 
extent such laws are inconsistent with the provisions of this rule. The 
provisions of this rule are not retroactive. Before any judicial action 
may be brought concerning the provisions of this rule, the 
administrative remedies must be exhausted.

Executive Order 12372

    This program 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

    The provisions of Title II of the Unfunded Mandates Reform Act of 
1995 are not applicable to this rule because CCC 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.

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 must 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, 
Pub. L. 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 incomes of an extraordinarily 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 requires that these regulations be 
promulgated and the programs administered without regard to the 
Paperwork Reduction Act. This means that the information to be 
collected from the public to implement these programs and the burden, 
in time and money, the collection of the information would have on the 
public does not have to be approved by the Office of Management and 
Budget or be subject to the normal requirement for a 60-day public 
comment period.

Government Paperwork Elimination Act

    FSA is committed to compliance with the Government Paperwork 
Elimination Act (GPEA) and the Freedom to E-File Act, which require 
Government agencies in general and FSA in particular to provide the 
public the option of submitting information or

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transacting business electronically to the maximum extent possible. The 
forms and other information collection activities required by 
participation in the 2002 Direct and Counter-Cyclical Program for 
historic peanut producers, and Direct and Counter-Cyclical Program for 
covered commodities are not yet fully implemented for the public to 
conduct business with FSA electronically.
    Applications for all programs may be submitted at the FSA county 
offices by mail or FAX. At this time, electronic submission is not 
available. Full implementation of electronic submission is underway.

Background

    In addition to implementing the Direct and Counter-Cyclical Program 
(DCP), this rule also codifies a provision of the 2002 Act related to 
benefit reductions due to Uruguay Round Agreements.

7 CFR Part 1405--Benefit Reductions Due to Uruguay Round Agreements

    Section 1601(e) of the 2002 Act provides that if the Secretary of 
Agriculture determines that outlays under subtitles A through E of 
Title I of the 2002 Act will, in any required reporting period, result 
in expenditures of the United States exceeding the levels for domestic 
measures of support that were agreed to in the Uruguay Round 
Agreements, as defined in section 2 of the Uruguay Round Agreements 
Act, then the Secretary shall, to the maximum extent practicable, make 
adjustments in the amount of such expenditures to ensure compliance 
with these commitments. Accordingly, 7 CFR part 1405 is revised to set 
forth this obligation under the aforementioned circumstances for CCC to 
reduce, or to collect refunds of, payments and benefits made under 
these subtitles of the 2002 Act.

7 CFR Part 1412--Direct and Counter-Cyclical Program

    The Federal Agriculture Improvement and Reform Act of 1996 (FAIR), 
which was authorized for the crop years 1996 through 2002, contained 
several important changes to U.S. farm policy. The most important 
change was the replacement of deficiency payments under previous 
programs, which made up the difference between the market price and a 
target price, with fixed annual Production Flexibility Contract (PFC) 
payments for producers of grains and upland cotton. PFC payments were 
based on historical yields and acreage. They were received whether or 
not a crop was planted, and did not depend on what crop was planted, 
(except for fruit and vegetable restrictions). This decoupling of 
payments from production controls was a departure from the earlier 
Acreage Reduction Program (ARP), which mandated strict acreage 
limitations and mandatory acreage idling or set-aside requirements.
    The 2002 Act authorized for crop years 2002 through 2007 not only 
fixed, direct payments for wheat, corn, barley, grain sorghum, oats, 
upland cotton and rice, (the same crops eligible for PFC payments and 
same type of payment as the PFC payment), but also included oilseed 
crops, including soybeans, sunflower seed, rapeseed, canola, safflower, 
flaxseed, mustard seed, as additional crops eligible for fixed direct 
payment. Additionally, the 2002 Act authorized counter-cyclical 
payments (counter-cyclical payments are similar to the deficiency 
payments authorized under ARP) for the crop years 2002 through 2007 for 
these same crops. Because authorization expired September 30, 2002, for 
PFC payments issued under AMTA, the direct and counter-cyclical 
payments authorized under the 2002 Act replace the PFC payments that 
were made to producers on farms with 1996 wheat, corn, barley, grain 
sorghum, oats, upland cotton and rice crop acreage bases who entered 
into Production Flexibility contracts with the Commodity Credit 
Corporation (CCC) for the crop years 1996 through 2002.
    The 2002 Act set a precedent, in that soybeans and other oilseeds 
are eligible for the same program as wheat, feedgrains, cotton, and 
rice. Peanuts are also eligible for direct and counter-cyclical 
payments, but have slightly different requirements. The acreage bases 
used to calculate the 2002 through 2007 direct DCP payments for wheat, 
feedgrains, cotton, and rice are those that were considered the 
contract acreage (as defined in section 102 of FAIR) used by the 
Secretary to calculate the fiscal year 2002 payment authorized under 
section 114 of FAIR. The yields used to calculate the 2002 through 2007 
direct DCP payments for wheat, feedgrains, cotton and rice shall be the 
farm program payment yield established for the 1995 crop of the crops. 
If a 1995 yield is unavailable for one of these crops on a farm, the 
FSA county Committee will establish a direct payment yield for that 
crop by using three similar farms. Additionally, a farm owner has the 
opportunity to update the yields for counter-cyclical payments for all 
applicable crops, provided acceptable production evidence is provided 
to the county committee for the years 1998 through 2001 for a crop on 
the farm; and, the owner has selected the base option allowed under the 
2002 Act which determines the applicable bases for a farm by using the 
four-year average of 1998 through 2001 planted or approved prevented-
planted acreage of a covered commodity.
    The 2002 Act also set forth provisions that allow farm owners 
multiple options for establishing bases and yields for covered 
commodities that will be used to calculate 2002 through 2007 direct and 
counter-cyclical payments. Because of the numerous options available 
for establishing bases and yields, FSA utilized existing records to 
determine each applicable covered commodity's 1998 through 2001 acreage 
history for every farm on record at the FSA county office. This 
information was provided to farm owners and operators so they could 
verify the information on record at FSA, and update, or correct, if the 
county committee determined that sufficient proof of the correct 
acreage was provided.
    The 2002 Act set forth certain requirements to which the producer 
shall agree to be eligible for direct and counter-cyclical payments. 
Included in these requirements is the requirement to effectively 
control noxious weeds and otherwise maintain the land in accordance 
with sound agricultural practices.
    The following table provides information regarding the notification 
processes FSA has undergone to ensure that farm owners are aware of the 
provisions of the 2002 Act and that farm owners have all applicable 
information available on record at FSA to assist them in making base 
and yield selections for 2002 through 2007 direct and counter-cyclical 
payments.

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------------------------------------------------------------------------
             Date                              FSA action
------------------------------------------------------------------------
April 25, 2002...............  Issued Notices to State and County
                                Offices to prepare for implementation of
                                the 2002 Farm Bill. These notices:
                               [sbull] Provided instructions to produce
                                an acreage history report for every
                                producer to ensure 1998 through 2001
                                acreage history for each farm is
                                correct.
                               [sbull] Instructed County Offices to send
                                each farm owner and operator a letter
                                asking them to review the acreage
                                history report for accuracy and
                                completeness and providing instructions
                                on making necessary corrections and
                                additions.
                               [sbull] Provided authorization and
                                instructions for producers to correct
                                previously filed acreage reports or to
                                late-file acreage reports.
May 24, 2002.................  Began mailing of a letter to all farm
                                owners, operators, and producers which
                                contained provisions of the 2002 Act.
July 3, 2002.................  Issued a DCP Notice which notified County
                                Offices that software was available to
                                print notification letters to historic
                                peanut producers. The letters were
                                printed and mailed to all historic
                                peanut producers on record in FSA County
                                Offices. This letter notified each
                                historic peanut producer of acreage and
                                actual yields for each farm in the
                                county, as recorded with the County
                                Office of origin. Producers were
                                instructed in the letter to notify the
                                county office of any errors or omissions
                                in, or corrections to, the data in the
                                letter.
July 16, 2002................  Issued a DCP Notice which notified County
                                Offices that software was available that
                                allowed them to print and mail to each
                                farm owner and operator a Summary
                                Acreage History Report, along with a
                                notification letter, which contained the
                                following information:
                               [sbull] 2002 PFC crops and contract
                                acreage.
                               [sbull] Acreage history by crop for each
                                of the years 1998 through 2001 for
                                commodities covered under the 2002 Act.
August 9, 2002...............  Authorization provided to County Offices
                                to process 2002 farm divisions and tract
                                divisions to accommodate need of all
                                owners on a farm to agree to base and
                                yield selections for the Direct and
                                Counter-cyclical Program (DCP).
September 2002...............  Began accepting production evidence for
                                DCP payment yields.
October 2002.................  Begin mailing notification letter giving
                                owners and producers base options and
                                minimum yield for their farms.
------------------------------------------------------------------------

    As provided in the rule, an annual signup deadline of June 1 has 
been established. Under the AMTA program, producers who did not sign 
the contract by the established deadline often requested relief to 
allow the acceptance of the late-filed signature. The processing of 
those requests involved a great expenditure of time at the county, 
state, and national levels. Using an average personnel cost of $26.65 
per hour at the county level, $28.99 at the State level, and $39.77 at 
the National level, each case would involve a minimum of $94.91 in 
associated processing costs if only one hour was expended in processing 
the case at each level. Most such cases involved more than one hour at 
each level. Some may have consumed as much as several days in case 
preparation and review time. In lieu of incurring these costs a $100 
fee will be assessed if a producer has not signed a DCP contract by 
June 1. This fee will cover costs of any necessary site visits to 
establish that the farm has been in compliance for the months 
retroactive to the signing of the contract, additional work on the part 
of the COC and county office, and possibly the State office to ensure 
that the contract should in fact be approved and to process the 
approval.
    Another important change in Federal farm programs, as a result of 
the 2002 Act, is that section 1309 of the 2002 Act repealed the 
marketing quota program for peanuts authorized by Title III of the 
Agricultural Adjustment Act of 1938 (the 1938 Act). Other provisions of 
the 2002 Act set forth payment and marketing assistance loan programs 
for the 2002 through 2007 crops of peanuts that are similar to other 
major CCC commodity programs. Section 1309 also provides for CCC to pay 
eligible peanut quota holders as part of the transition from the 
repealed market quota program to the new programs. The rules for the 
Peanut Quota Buyout Program were published October 1, 2002, for 
codification at 7 CFR part 1412. Sections 1301 through 1308 of the 2002 
Act set forth direct and counter-cyclical payment provisions for 
peanuts, beginning with the 2002 crop. For only the 2002 crop of 
peanuts, direct and counter-cyclical payments will be issued to 
historic peanut producers. A historic peanut producer is defined in 
section 1301 of the 2002 Act, and in this rule, as ``a producer on a 
farm in the United States that produced or was prevented from planting 
peanuts during any or all of the 1998 through 2001 crop years.'' The 
2002 Act set forth provisions for establishing a peanut base and yield 
for each historic peanut producer that were to be used to calculate the 
2002 peanut direct and counter-cyclical payments to 2002 historic 
peanut producers. Because the previous Peanut Program regulations at 7 
CFR part 729, as it was codified on January 1, 2002, required extensive 
record keeping by peanut producers concerning their prior production of 
peanuts and related information necessary for the establishment of 
previous years' quotas, FSA has highly accurate records of 1998 through 
2001 peanut planting history and production for each peanut producer. 
To further ensure that these records are correct, all historic peanut 
producers on record at FSA were sent a letter with peanut acreage and 
yield data on file at the FSA office. If more than one historic peanut 
producer shared in the risk of producing the crop on the farm, the 
historic peanut producers shall receive their proportional share of the 
number of acres planted (or prevented from being planted) to peanuts 
for harvest on the farm based on the sharing arrangement that was in 
effect among the producers for the crop.
    Before March 1, 2003, each historic peanut producer must assign the 
average peanut yield and average peanut acreage determined for that 
producer to the cropland on a farm. Beginning with the 2003 crop, after 
applicable peanut bases and yields are assigned to a farm, peanuts will 
be included on the Direct and Counter-Cyclical Program (DCP) contract 
for that farm along with the applicable covered commodities.
    In summary, FSA has, in administering the provisions of the 2002 
Act, utilized every available means to ensure that farm owners and 
operators have all necessary information from FSA that FSA is capable 
of providing to

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them, and in such a manner that owners can make educated decisions when 
determining appropriate DCP base and yield selections for a farm. 
Because the 2002 Act very explicitly set forth many of the terms and 
provisions of the DCP, administration of the program is subject to very 
little variation or flexibility from the statutory authority.

Cost/Benefit Assessment Summary

    The underlying policy structure under the 2002 Act is largely 
unchanged from the policy structure under the 1996 Act. The 2002 Act 
continues planting flexibility, continues marketing assistance loan 
provisions at higher levels (except for soybeans, oil-type sunseed, 
flaxseed, and rice) compared with 2001 levels, replaces production 
flexibility contract (PFC) payments with direct payments, adds counter-
cyclical payments, and includes oilseeds and peanuts as a covered 
commodity eligible for direct and counter-cyclical payments. The net 
fiscal impact of the changes made by the 2002 Act and promulgated by 
this rule compared with continuing PFC payments under the 1996 Act will 
be to increase governmental outlays as shown in the following table.

  Average Annual Change in Government Outlays by Program, Fiscal Years
                                2002-2007
------------------------------------------------------------------------
                                                        Average Annual
                      Program                         Outlay Change \1\
                                                      (billion dollars)
------------------------------------------------------------------------
Direct Payments \2\................................                  0.8
Counter-cyclical Payments \2\......................                  4.3
    Total..........................................                 5.1
------------------------------------------------------------------------
\1\ For direct payments represents the difference between direct
  payments under 2002 Act provisions compared with PFC payments assuming
  1996 Act provisions are extended.
\2\ Includes payments for wheat, corn, grain sorghum, barley, oats,
  upland cotton, rice, soybeans, other oilseeds, and peanuts.

    Direct and counter-cyclical payments will increase farm income, but 
will have little impact on planting decisions because these payments 
are decoupled from the production decisions of individual farmers. 
These benefits are paid on historically-based acreage and yields and do 
not depend on the current production choices of the farmer. 
Nonetheless, there could be some production effects due to increased 
wealth resulting from these payments as well as reduced revenue risk 
associated with counter-cyclical payments. However, direct payments and 
counter-cyclical payments were assumed in this analysis to have no 
impact on production.
    Direct payments are projected to total $3.8 billion in FY 2003 and 
rise to $5.2 billion in FY 2004 and each of the subsequent fiscal years 
until the legislation expires with the 2007 crops. These payments 
represent an increase of about $1.2 billion each crop year compared 
with PFC payments if the provisions of the 1996 Act were extended 
during the same period.
    Counter-cyclical payments are projected to total $5.8 billion in FY 
2003 and increase to $6.6 billion in FY 2004, but then to decline in 
the remaining years of the 2002 Act, reflecting expected price 
strengthening in crop year 2004 and until the end of the program in 
2007.

For further information contact: Phil Sronce, 202-720-2711, Phil 
[email protected].

List of Subjects

7 CFR Part 1405

    Loan programs-agricultural; Price support programs.

7 CFR 1412

    Direct and counter-cyclical payments, Grains, Oilseeds, Peanuts.

    Accordingly, 7 CFR parts 1405 and 1412 are amended as set forth 
below.

PART 1405--LOANS, PURCHASES, AND OTHER OPERATIONS

    1. The authority citation for part 1405 is revised to read as 
follows:


    Authority: 7 U.S.C. 7991(e); 15 U.S.C. 714b and 714c.

    2. Add Sec.  1405.7 to read as follows:


Sec.  1405.7  Uruguay Round Agreements Act

    In the event the outlays by the United States for domestic support 
measures will exceed, in any required reporting period, the allowable 
levels under the Uruguay Round Agreements (as defined in section 2 of 
the Uruguay Round Agreements Act), CCC will, as determined by the 
Secretary of Agriculture, reduce the amount of payments and benefits to 
be made in any such reporting period, and/or collect a refund of 
payments or benefits previously made with respect to such reporting 
period, under parts 1412, 1413, 1421, 1427, 1430, 1434 and 1435 of this 
chapter in order to ensure that the level of domestic support provided 
by the United States complies with the commitments of the United States 
in the Uruguay Round Agreements.

PART 1412--DIRECT AND COUNTER-CYCLICAL PROGRAM AND PEANUT QUOTA 
BUYOUT PROGRAM

    3. The authority citation for Part 1412 is revised to read as set 
forth below.
    3a. Redesignate subpart A (Sec. Sec.  1412.1 through 1412.11) as 
subpart H (Sec. Sec.  1412.801 through 1412.811, respectively).

    4. Amend part 1412 by revising the part heading and by adding new 
subparts A and G and by revising subparts B through F to read as 
follows:

PART 1412--DIRECT AND COUNTER-CYCLICAL PROGRAM AND PEANUT QUOTA 
BUYOUT PROGRAM

Subpart A--General Provisions
Sec.
1412.101 Applicability.
1412.102 Administration.
1412.103 Definitions.
1412.104 Appeals.
Subpart B--Establishment of Base Acres for a Farm for Covered 
Commodities
1412.201 Election of base acres.
1412.202 Failure to make election.
1412.203 Base acres and Conservation Reserve Program.
1412.204 Limitation of total base acreage on a farm.
Subpart C--Establishment of Yields for Direct and Counter-Cyclical 
Payments
1412.301 Direct payment yields for covered commodities, except 
soybeans and other oilseeds.
1412.302 Direct payment yield for soybeans and other oilseeds.
1412.303 Payment yield for counter-cyclical payments for covered 
commodities.
1412.304 Submitting production evidence.
1412.305 Incorrect or false production evidence.

[[Page 64752]]

Subpart D--Direct and Counter-Cyclical Program Contract Terms and 
Enrollment Provisions for Covered Commodities 2002 through 2007 and for 
Peanuts 2003 through 2007.
1412.401 Direct and counter-cyclical program contract.
1412.402 Eligible producers.
1412.403 Reconstitutions.
1412.404 Notification of base acres.
1412.405 Reducing base acreage.
1412.406 Succession-in-interest to a direct and counter-cyclical 
program contract.
1412.407 Planting flexibility.
Subpart E--Financial Considerations Including Sharing Direct and 
Counter-Cyclical Payments.
1412.501 Limitation of direct and counter-cyclical payments.
1412.502 Direct payment provisions.
1412.503 Counter-cyclical payment provisions.
1412.504 Sharing of contract payments.
1412.505 Provisions relating to tenants and sharecroppers.
Subpart F--Contract Violations and Diminution in Payments
1412.601 Contract Violations.
1412.602 Fruit, vegetable and wild rice acreage reporting 
violations.
1412.603 Contract Liability.
1412.604 Misrepresentation and scheme or device.
1412.605 Offsets and assignments.
1412.606 Acreage reports.
1412.607 Compliance with highly erodible land and wetland 
conservation provisions.
1412.608 Controlled substance violations.
Subpart G--Establishment and Assignment of Peanut Base Acres and Yields 
for a Farm
1412.701 Determination of 4-year peanut acreage average.
1412.702 Determination of average peanut yield
1412.703 Assignment of average peanut yields and average peanut 
acreages to farms.
* * * * *

    Authority: 7 U.S.C. 7911-7918, 7951-7956; 15 U.S.C. 714b and 
714c.

Subpart A--General Provisions


Sec.  1412.101  Applicability.

    This part governs: how crop acreage bases and farm program payment 
yields are established or updated by owners of a farm for the purpose 
of calculating direct and counter-cyclical payments for wheat, corn, 
grain sorghum, barley, oats, upland cotton, rice, peanuts, soybeans, 
sunflower seed, rapeseed, canola, safflower, flaxseed, mustard seed, 
and other oilseeds as determined and announced by the Commodity Credit 
Corporation (CCC), for the years 2002 through 2007; the month in which 
producers on a farm may enter into annual Direct and Counter-cyclical 
Program (DCP) contracts with CCC for each of the years 2002 through 
2007; the month in which peanut producers may establish such bases and 
yields in order to receive 2002 direct and counter-cyclical payments; 
and the month in which peanut producers may assign such bases and 
yields to a farm for each of the years 2003 through 2007.


Sec.  1412.102  Administration.

    (a) The program is administered under the general supervision of 
the Executive Vice-President, CCC, and shall be carried out by Farm 
Service Agency (FSA) State and county committees (State and county 
committees).
    (b) State and county committees, and representatives and their 
employees, do not have authority to modify or waive any of the 
provisions of the regulations of this part.
    (c) The State committee shall take any action required by the 
regulations of this part that the county committee has not taken. The 
State committee shall also:
    (1) Correct, or require a county committee to correct any action 
taken by such county committee that is not in accordance with the 
regulations of this part; or
    (2) Require a county committee to withhold taking any action that 
is not in accordance with this part.
    (d) No provision or delegation to a State or county committee shall 
preclude the Executive Vice President, or a designee, from determining 
any question arising under the program or from reversing or modifying 
any determination made by a State or county committee.
    (e) The Deputy Administrator may authorize State and county 
committees to waive or modify deadlines, except statutory deadlines, 
and other non-statutory requirements in cases where lateness or failure 
to meet such other requirements does not adversely affect operation of 
the program.
    (f) A representative of CCC may execute the FSA forms entitled 
``Direct and Counter-Cyclical Program Contract''; and ``2002 Peanut 
Direct and Counter-Cyclical Program Contract'' only under the terms and 
conditions determined and announced by the Executive Vice President, 
CCC. Any contract that is not executed in accordance with such terms 
and conditions, including any purported execution prior to the date 
authorized by the Executive Vice President, CCC, is null and void and 
shall not be considered to be a contract between CCC and the operator 
or any other producer on the farm.


Sec.  1412.103  Definitions

    The definitions set forth in this section shall be applicable for 
all purposes of administering the DCP. The terms defined in part 718 of 
this title and part 1400 of this chapter shall also be applicable, 
except where those definitions conflict with the definitions set forth 
in this section.
    Base acres means the number of acres established with respect to a 
covered commodity on a farm by the election made by the owner of the 
farm in accordance with subpart B of this part.
    Base acres for peanuts means the number of acres assigned to a farm 
by historic peanut producers in accordance with subpart G of this part.
    Contract means the CCC-approved standard, uniform forms and 
appendixes specified by CCC which constitute the agreement for 
participation in the Direct and Counter-Cyclical Program, and the 2002 
Peanut Direct and Counter-Cyclical Program.
    Counter-cyclical payment means a payment made to eligible producers 
on a farm in accordance with subpart E of this part for covered 
commodities and peanuts and subpart G of this part for 2002 historic 
peanut producers.
    Covered commodity means wheat, corn, grain sorghum, barley, oats, 
upland cotton, rice, soybeans, sunflower seed, rapeseed, canola, 
safflower, flaxseed, mustard seed, and other oilseeds as determined by 
the Secretary.
    DCP cropland means DCP cropland as defined in part 718 of this 
title.
    Deputy Administrator means the Deputy Administrator for Farm 
Programs, FSA, or a designee.
    Direct payment means a payment made to eligible producers on a farm 
for peanuts and covered commodities in accordance with subpart E and 
for 2002 historic peanut producers under subpart G.
    Dry peas means Austrian, wrinkled seed, yellow, Umatilla, and 
green, excluding peas grown for the fresh, canning, or frozen market.
    Effective price means the price calculated by the Secretary in 
accordance with Sec.  1412.503 for covered commodities and peanuts to 
determine whether counter-cyclical payments are required to be made 
under that section for a crop year.
    Excess base acres means the number of base acres established on the 
farm that exceeds the total 2002 Production Flexibility Contract acres 
on the farm established under the Federal Agriculture Improvement and 
Reform Act of 1996.
    Historic peanut producer means a producer on a farm in the United 
States that planted or was prevented from

[[Page 64753]]

planting peanuts during any or all of the 1998 through 2001 crop years.
    Marketing year means the 12-month period beginning in the calender 
year the crop is normally harvested as follows:
    (1) Barley, oats, wheat, canola, flax, and rapeseed: June 1-May 31;
    (2) Upland cotton, peanuts, and rice: August 1-July 31; and
    (3) Corn, grain sorghum, soybeans, sunflowers, safflower, and 
mustard: September 1-August 31.
    Other oilseeds means a crop of sunflower seed, rapeseed, canola, 
safflower, flaxseed, mustard seed, or, if determined and announced by 
CCC, another oilseed.
    Payment acres means:
    (1) For the 2002 crop year, 85 percent of the average acres 
determined in accordance with Sec.  1412.701 for a historic peanut 
producer.
    (2) For the 2003 through 2007 crop years, 85 percent of the base 
acres for peanuts assigned to a farm in accordance with Sec.  1412.703.
    (3) For the 2002 through 2007 crop years, 85 percent of the base 
acres of a covered commodity on a farm, as established in accordance 
with subpart B.
    Payment yield means:
    (1) For peanuts, the yield determined in accordance with Sec.  
1412.702.
    (2) For covered commodities, the yield established in accordance 
with subpart C for a farm for a covered commodity.
    Prevented planted means, for the purpose of establishing base acres 
under Sec.  1412.201, the inability to plant a crop with proper 
equipment during the established planting period for the crop or 
commodity. A producer must prove that the producer intended to plant 
the crop and that such crop could not be planted due to a natural 
disaster rather than managerial decisions. The natural disaster that 
caused the prevented planting must have occurred during the established 
planting period for the crop.
    Target price means, for peanuts, the price per ton; and for covered 
commodities, the price per bushel (or other appropriate unit in the 
case of upland cotton, rice, and other oilseeds) used to determine the 
payment rate for counter-cyclical payments.
    Updated payment yield means the payment yield of covered 
commodities, elected by the owner of a farm under Sec.  1412.303, to be 
used in calculating the counter-cyclical payments for the farm.


Sec.  1412.104  Appeals.

    A producer may obtain reconsideration and review of any adverse 
determination made under this part in accordance with the appeal 
regulations found at parts 11 and 780 of this title.

Subpart B--Establishment of Base Acres for a Farm for Covered 
Commodities


Sec.  1412.201  Election of base acres.

    (a) No later than April 1, 2003, owners on a farm may select one of 
the following methods to establish base acres for all covered 
commodities on the farm:
    (1) Subject to the limitations in accordance with paragraph (d) of 
this section and Sec.  1412.204, the base acres for each covered 
commodity shall be equal to the sum of the following:
    (i) For each covered commodity, the 4-year average of the acreage 
planted to the covered commodity during each of the 1998 through 2001 
crop years for harvest, grazing, haying, silage, or other similar 
purposes, as determined by the Secretary, plus
    (ii) For each covered commodity, the 4-year average of the acreage 
prevented from being planted to covered commodities during each of the 
1998 through 2001 crop years, for reasons beyond the control of the 
producer, as determined by the Deputy Administrator.
    (2) The sum of the following:
    (i) For each covered commodity, the contract acreage used to 
calculate the fiscal year 2002 Production Flexibility Contract payment 
for the covered commodity on the farm in accordance with the 
regulations of this part in effect on January 1, 2002 (see 7 CFR part 
1412 revised as of January 1, 2002), plus
    (ii) Subject to paragraphs (b) and (c) of this section, the 4-year 
average of eligible oilseed acreage on the farm for the 1998 through 
2001 crop years, as determined in a manner provided in paragraph (a)(1) 
of this section, except that the limitation in paragraph (d) of this 
section shall not apply.
    (b) Subject to paragraph (c) of this section, the total acreage of 
soybeans and other oilseeds on the farm calculated in accordance with 
paragraph (a)(2)(ii) of this section shall not exceed:
    (1) The total acreage determined in accordance with paragraph 
(a)(1) of this section for the crop year, minus
    (2) The total contract acreage for all covered commodities 
determined in accordance with paragraph (a)(2)(i) of this section.
    (c) If the calculation in paragraph (b) of this section results in 
a negative number, the soybean and other oilseed acreage on the farm 
for that crop year shall be zero for the purposes of determining the 4-
year average, in accordance with paragraph (a)(2)(ii) of this section.
    (d) If the acreage planted or prevented from being planted was 
devoted to a different covered commodity in the same crop year (other 
than a covered commodity produced under an established practice of 
double-cropping), the owner may select the commodity to be used for 
base purposes for that crop year in determining the 4-year average, but 
shall not select both the initial commodity and subsequent commodity.
    (e)(1) An owner may increase the eligible acres of soybeans and 
other oilseeds on a farm by reducing the contract acreage determined in 
accordance with paragraph (a)(2)(i) of this section for one or more 
covered commodities on an acre-for-acre basis, except that the total 
base acreage for soybeans and each other oilseed on the farm may not 
exceed the four-year average of each oilseed determined under paragraph 
(a)(2)(ii) of this section.
    (2) For the purpose of determining a 4-year average acreage for a 
farm under this section, any crop year in which a covered commodity was 
not planted shall not be excluded.


Sec.  1412.202  Failure to make election.

    If an owner fails to make an election for establishing base acres 
on a farm by April 1, 2003 in accordance with Sec.  1412.201, that 
owner shall be deemed to have made the election to determine all base 
acres for all covered commodities on the farm as set forth in Sec.  
1412.201(a)(2).


Sec.  1412.203  Base acres and Conservation Reserve Program.

    (a) Subject to paragraphs (d) and (e) of this section, eligible 
producers may, at the beginning of each fiscal year, adjust the base 
acres for covered commodities and peanuts with respect to the farm by 
the number of crop acreage base acres protected by a Conservation 
Reserve Program contract entered into under section 1231 of the Food 
Security Act of 1985 (1985 Act) that expired or was voluntarily 
terminated on or after May 13, 2002.
    (b) Subject to paragraphs (d) and (e) of this section, eligible 
producers may, at the beginning of each fiscal year, adjust the base 
acres for covered commodities and peanuts with respect to the farm by 
the number of cropland acres reduced by a producer on a CCC-approved 
standard, uniform form designated by CCC in order to enroll such acres 
in a conservation reserve program contract entered into under section 
1231 of the 1985 Act. Eligible producers may adjust base acres only

[[Page 64754]]

when the Conservation Reserve Program contract entered into under 
section 1231 of the 1985 Act expires or is voluntarily terminated on or 
after May 13, 2002.
    (c) Subject to paragraphs (d) and (e) of this section, if neither 
paragraphs (a) nor (b) of this section apply, the Deputy Administrator 
may allow eligible producers to adjust base acres for covered 
commodities and peanuts with respect to the farm in a manner determined 
acceptable by the Deputy Administrator when a Conservation Reserve 
Program contract entered into under section 1231 of the 1985 Act 
expires or is voluntarily terminated on or after May 13, 2002.
    (d) The total base acreage on a farm shall not exceed the 
limitation in accordance with Sec.  1412.204.
    (e) Adjustments to base acreage on a farm in accordance with this 
section must be completed by no later than April 1 of the fiscal year 
following the fiscal year the conservation reserve program contract 
expired or was voluntarily terminated.
    (f) For the fiscal year in which an adjustment to base acres under 
this section is made, the owner of the farm shall elect to receive 
either direct payments and counter-cyclical payments with respect to 
the base acres added to the farm under this section or a prorated 
payment under the conservation reserve contract, but not both.


Sec.  1412.204  Limitation of total base acreage on a farm.

    (a) The sum of the following shall not exceed the total DCP 
cropland acreage on the farm, plus approved double-cropped acreage for 
the farm:
    (1) The sum of all base acres established for the farm in 
accordance with this subpart, plus
    (2) Any base acres established for the farm for peanuts in 
accordance with subpart G of this part, plus
    (3) Any cropland acreage on the farm enrolled in a conservation 
reserve program contract in accordance with part 1410 of this chapter, 
plus
    (4) Any cropland acreage on the farm enrolled in a wetland reserve 
program contract in accordance with part 1467 of this chapter, plus
    (5) Any other acreage on the farm enrolled in a conservation 
program for which payments are made in exchange for not producing an 
agricultural commodity on the acreage.
    (b) The Deputy Administrator shall give the owner of the farm the 
opportunity to select the covered commodity base acres or peanut base 
acres, against which the reduction required in this section will be 
made.
    (c) In applying paragraph (a) of this section, CCC will take into 
account the practice of double cropping on a farm, as determined by 
CCC.

Subpart C--Establishment of Yields for Direct and Counter-Cyclical 
Payments


Sec.  1412.301  Direct payment yields for covered commodities, except 
soybeans and other oilseeds.

    (a)(1) The direct payment yield for each covered commodity, except 
soybeans and other oilseeds, shall be the payment yield established for 
the commodity for the farm in accordance with the regulations for feed 
grain, rice, upland cotton and extra long staple cotton, wheat and 
related programs at part 1413 of this chapter in effect on January 1, 
1996 (see 7 CFR part 1413, revised as of January 1, 1996). CCC shall 
adjust the payment yield to reflect the additional payments made in 
accordance with 7 CFR 1413.15.
    (2) In the case of a farm for which a payment yield in accordance 
with paragraph (a)(1) of this section is unavailable for a covered 
commodity, except soybeans and other oilseeds, the county committee 
shall assign a payment yield for such covered commodity on the farm 
based upon the direct payment yield for such covered commodity on at 
least three similar farms physically located in the county with similar 
yield capability, including similar land and cultural practices.
    (i) If fewer than three similar farms are physically located in the 
county, the State committee shall assign a payment yield for such 
covered commodity based upon the direct payment yield for such covered 
commodity on at least three similar farms in the surrounding area with 
similar yield capability, including similar land and cultural 
practices, or as determined by the Deputy Administrator.
    (ii) Payment yields of similar farms shall be based on the farms' 
payment yields before such yields are updated in accordance with this 
section.
    (b) [Reserved]


Sec.  1412.302  Direct payment yield for soybeans and other oilseeds.

    (a) The direct payment yield for soybeans and each other oilseed 
for the farm shall be determined by multiplying the weighted average 
yield per planted acre for the crop on the farm, as determined in 
accordance with paragraph (b) of this section, times the ratio 
resulting from:
    (1) The national average yield for the crop for the 1981 through 
1985 crop years, as determined by CCC, divided by
    (2) The national average yield for the crop for the 1998 through 
2001 crop years, as determined by CCC.
    (b)(1) The yield per planted acre for soybeans and each other 
oilseed on the farm, to be used for direct payment purposes, is 
calculated as follows:
    (i) The sum of the production of the crop for the 1998 through 2001 
crop years, as determined in accordance with paragraph (b)(2) of this 
section; divided by
    (ii) The sum of the total planted acres of the crop for the 1998 
through 2001 crop years.
    (2) The production of the crop for each of the 1998 through 2001 
crop years shall be the higher of the following, except in a year in 
which the acreage planted to the crop was zero, in which case the 
production for the crop for such year shall be zero:
    (i) The total production for the applicable year based on the 
production evidence submitted in accordance with Sec.  1412.304; or
    (ii) The amount equal to the product of:
    (A) The total planted acres for the crop, times
    (B) 75 percent of the harvested average county yield for that crop 
determined, where practicable, by calculating the weighted 4-year 
average of the National Agricultural Statistics Service (NASS) 
harvested acreage yields for the crop using the 1998 through 2001 crop 
years.
    (3) The NASS harvested acreage yield to be used in paragraph (b)(2) 
of this section shall be based on:
    (i) NASS harvested irrigated yield for the crop, if available, for 
producers who irrigated the crop in the applicable years;
    (ii) NASS harvested non-irrigated yield for the crop, if available, 
for producers who did not irrigate the crop in the applicable years; or
    (iii) NASS harvested blended yield for all acreage, regardless of 
whether or not the acres were irrigated or non-irrigated, for all crops 
in all counties for which the yields in paragraphs (b)(3)(i) and (ii) 
of this section are unavailable.
    (4) If NASS harvested acreage yield data is not available, the 
Deputy Administrator shall assign a yield to be used in paragraph 
(b)(2)(ii)(B) of this section.


Sec.  1412.303  Payment yield for counter-cyclical payments for covered 
commodities.

    (a)(1) The counter-cyclical payment yield for covered commodities 
on the farm shall be equal to the direct payment yield for the covered 
commodity on the farm unless the owner elects to partially update the

[[Page 64755]]

yield for all covered commodities on the farm in accordance with 
paragraph (b) of this section.
    (2) Only owners who establish base acres for the farm in accordance 
with Sec.  1412.201(a)(1) shall have the opportunity to partially 
update the counter-cyclical payment yield for the covered commodities 
on the farm.
    (3) The partially updated yield shall be used for the calculation 
of the counter-cyclical payments only. The partially updated counter-
cyclical yield shall not be used for the calculation of any direct 
payments for any covered commodity.
    (4) Owners who elect to partially update counter-cyclical payment 
yields in accordance with this section must:
    (i) Make such election at the same time such owner makes the base 
election in accordance with Sec.  1412.201; and
    (ii) Update counter-cyclical payment yields for all covered 
commodities on the farm using the same method. Updating counter-
cyclical payment yields for fewer than all covered commodities on the 
farm is not allowed. Updating counter-cyclical payment yields for 
covered commodities on a farm using different methods for different 
covered commodities is not allowed.
    (b) Owners on a farm who established base acres for the farm in 
accordance with Sec.  1412.201(a)(1) may select one of the following 
methods to partially update counter-cyclical payment yields for all 
covered commodities on the farm. The same method must be used to 
partially update the counter-cyclical payment yield for all covered 
commodities on the farm.
    (1) The sum of the following:
    (i) The payment yield calculated for the covered commodity in 
accordance with Sec. Sec.  1412.301 or 1412.302, as applicable, plus
    (ii) 70 percent of the result of:
    (A) The average yield per planted acre for the crop on the farm, as 
determined in accordance with paragraph (c) of this section, minus
    (B) The payment yield calculated for the covered commodity in 
accordance with Sec. Sec.  1412.301 or 1412.302, as applicable.
    (2) 93.5 percent of the average yield per planted acre for the crop 
on the farm, as determined in accordance with paragraph (c) of this 
section.
    (c)(1) The yield per planted acre for covered commodities on the 
farm is calculated as follows:
    (i) The sum of the production of the crop for 1998 through 2001 
crop years, as determined in accordance with paragraph (c)(2) of this 
section, divided by
    (ii) The sum of the total planted acres of the crop for the 1998 
through 2001 crop years.
    (2) The production of the crop for each of the 1998 through 2001 
crop years shall be the higher of the following, except in a year in 
which the acreage planted to the crop was zero, in which case, the 
production for the crop for such year shall be zero:
    (i) The total production for the applicable year based on the 
production evidence submitted in accordance with Sec.  1412.304; or
    (ii) The amount equal to the product of:
    (A) The total planted acres for the crop, times
    (B) 75 percent of the harvested average county yield for that crop 
determined, where practicable, by calculating the weighted 4-year 
average of the National Agricultural Statistics Service (NASS) 
harvested acreage yields for the crop using the 1998 through 2001 crop 
years.
    (3) The NASS harvested acreage yield to be used in paragraph (c)(2) 
of this section shall be based on:
    (i) NASS harvested irrigated yield for the crop, if available, for 
producers who irrigated the crop in the applicable years;
    (ii) NASS harvested non-irrigated yield for the crop, if available, 
for producers who did not irrigate the crop in the applicable years; or
    (iii) NASS harvested blended yield for all acreage, regardless of 
whether or not the acres were irrigated or non-irrigated, for all crops 
in all counties where the yields in paragraphs (c)(3)(i) and (ii) of 
this section are unavailable.
    (4) If NASS harvested acreage yield data is not available, the 
Deputy Administrator shall assign a yield to be used in paragraph 
(c)(2)(ii)(B) of this section.


Sec.  1412.304  Submitting production evidence.

    (a)(1) Reports of production evidence must be submitted by 
producers when the owner elects to:
    (i) Partially update the yield for all covered commodities on the 
farm in accordance with Sec.  1412.303; or
    (ii) Establish a direct payment yield for soybeans or other 
oilseeds for the farm in accordance with Sec.  1412.302.
    (2) Producer or third-party certification shall not be accepted as 
proof of production evidence.
    (3) Reports of production evidence for all covered commodities 
shall be provided to the county committee of the county where the farm 
is administratively located, by farm and crop in such manner as 
required by CCC on a CCC-approved standard, uniform form designated by 
CCC.
    (b)(1) When disposition of production has been through commercial 
channels, CCC may require the producer to furnish documentary evidence 
in order to verify the information provided on the report of 
production. Acceptable evidence may include, but is not limited to, 
such items as:
    (i) Production approved by the county committee for Loan Deficiency 
Payments;
    (ii) Commercial receipts;
    (iii) Gin records;
    (iv) Settlement sheets;
    (v) Warehouse ledger sheets;
    (vi) Elevator receipts or load summaries, supported by other 
evidence showing disposition, such as sales documents;
    (vii) Evidence from harvested or appraised acreage, approved for 
FCIC or multi-peril crop insurance loss adjustment settlement; or
    (viii) Other production evidence determined acceptable by the 
Deputy Administrator.
    (2) Such production evidence must show:
    (i) The producer's name,
    (ii) The commodity,
    (iii) The buyer or name of storage facility,
    (iv) The Date of transaction or delivery, and
    (v) The quantity.
    (c) When production of a covered commodity has been disposed of 
through non-commercial channels, such as used for feed, grazing, or 
silage, if Loan Deficiency Payments are not available, but crop 
insurance records or other FSA records indicate that the use of the 
crop was for silage, hay, or grazing, then county committee will assign 
production for that year based on the actual grain yield of three 
similar farms for the applicable year. If producers cannot meet any of 
these requirements or their crop suffered a low yield, then 75 percent 
of the county average yield as determined in accordance with Sec.  
1412.302(b)(4) will be used.
    (d) CCC may verify the production evidence submitted with records 
on file at the warehouse, gin, or other entity which received or may 
have received the reported production.


Sec.  1412.305  Incorrect or false production evidence.

    (a) If production evidence is false or incorrect, as determined by 
the county committee, the county committee shall determine whether the 
owner or

[[Page 64756]]

producer submitting the production evidence for a farm acted in good 
faith or took action to defeat the purpose of the program.
    (b)(1) If the county committee determines the production evidence 
submitted is false, incorrect, or unacceptable, and the owner or 
producer who submitted the evidence did not act in good faith or took 
action to defeat the purpose of the program, the county committee 
shall:
    (i) Require a refund of all direct and counter-cyclical payments 
earned for the farm for the first year such payments were made;
    (ii) Reduce the counter-cyclical payment yields for all crops on 
the farm to equal the direct payment yield for all crops except 
oilseeds. For all oilseeds on the farm, both the direct and counter-
cyclical payment yields shall be reduced to 75 percent of the county 
average yield as determined in accordance with Sec.  1412.302(b)(4). 
That yield shall then be reduced by the applicable direct payment yield 
factor in accordance with Sec.  1412.302(a)(1); and
    (iii) Subject to paragraph (a)(2)(i) of this section, require a 
refund of an amount equal to the following for each covered commodity 
and peanuts for each year the false, incorrect or unacceptable yield 
was used to make payments under the contract:
    (A) The sum of the direct and counter-cyclical payments made using 
the false, incorrect or unacceptable evidence, minus
    (B) The sum of the direct and counter-cyclical payments that would 
have been made based on the yields established in paragraph (b)(1)(ii) 
of this section.
    (2) Notwithstanding paragraph (b)(1) of this section, if the county 
committee determines that the production evidence submitted is false, 
incorrect, or unacceptable, and the owner or producer who submitted the 
evidence did not act in good faith or took action to defeat the purpose 
of the program, the Deputy Administrator may take further action, 
including but not limited to any or all of the following:
    (i) Make a further yield reduction for part or all of the covered 
commodities and peanuts on the farm;
    (ii) Make further payment reductions or refunds;
    (iii) Determine that the owner or producer who submitted the 
evidence is ineligible for participation in future contracts; or
    (iv) Take other legal action.
    (c) If the county committee determines the production evidence 
submitted is false, incorrect, or unacceptable, and the owner or 
producer who submitted the evidence acted in good faith and did not 
take action to defeat the purpose of the program, the county committee 
shall:
    (1) Correct the counter-cyclical yield for the applicable crop to 
equal the yield that would have been calculated in accordance with 
Sec.  1412.303 based on accurate production evidence; and
    (2) Require a refund of an amount equal to the following for each 
covered commodity and peanuts for each year the false, incorrect or 
unacceptable yield was used to make payments under the contract:
    (i) The sum of the direct and counter-cyclical payments made using 
the false, incorrect or unacceptable evidence, minus
    (ii) The sum of the direct and counter-cyclical payments that would 
have been made based on the yields established in paragraph (c)(1) of 
this section.

Subpart D--Direct and Counter-Cyclical Program Contract Terms and 
Enrollment Provisions for Covered Commodities 2002 through 2007 and 
for Peanuts 2003 through 2007


Sec.  1412.401  Direct and counter-cyclical program contract.

    (a)(1) With respect to Fiscal Year 2002 payments, CCC will offer to 
enter into a contract with eligible producers of covered commodities 
and historical peanut producers on October 1, 2002 through the date 
announced by CCC. With respect to Fiscal Years 2003 through 2007, CCC 
shall offer to annually enter into a contract with an eligible producer 
on a farm having base acreage with respect to a covered commodity; and 
for a farm with peanut base acreage and yield assigned in accordance 
with subpart G of this part, at the beginning of each such fiscal year 
2003 through 2007 through the date announced by CCC for each such year.
    (2)(i) Eligible producers may execute and submit a contract to the 
county FSA office where the records for the farm are administratively 
maintained not later than June 1 of the fiscal year in which the direct 
and counter-cyclical payments are requested.
    (ii) Because CCC will incur additional expenses which may not be 
possible to quantify with certainty, including the additional cost to 
ensure payments are issued timely to all producers, a late signup fee 
in the amount of $100 per farm will be assessed by CCC for any farm 
enrolled after June 1 of the fiscal year in which the direct and 
counter-cyclical payments are requested unless the Deputy Administrator 
determines a waiver of the late signup fee is appropriate. Enrollment 
is not allowed after September 30 of the fiscal year in which the 
direct and counter-cyclical payments are requested.
    (3) Eligible producers who elect to enter into a contract with CCC 
must enroll all base acres on the farm. Enrollment of fewer than all 
base acres on the farm is not allowed.
    (b) Eligible producers may withdraw from a contract at any time on 
or before September 30 of the year of the contract provided all 
signatories to the contract, including CCC, agree to the withdraw.
    (c) All contracts shall expire on September 30 of the fiscal year 
of the contract unless:
    (1) Withdrawn in accordance with paragraph (b) of this section;
    (2) Terminated in accordance with paragraphs (d) or (e) of this 
section; or
    (3) Terminated at an earlier date by mutual consent of all parties, 
including CCC.
    (d) A transfer or change in the interest of an owner or producer in 
the farm or in acreage on the farm subject to a contract shall result 
in the termination of the contract, and a refund of all direct and 
counter-cyclical payments issued for the farm. The contract termination 
shall be effective on the date of the transfer or change. Successors to 
the interest in the farm or crops on the farm subject to the contract 
may enroll the farm in a new contract and assume all obligations under 
the contract, only after all direct and counter-cyclical payments 
previously issued for the farm have been refunded to CCC.
    (e) In the event a farm reconstitution is completed in accordance 
with part 718 of this title, all producers with an interest in the base 
acres on the farm must sign a new contract and provide supporting 
documentation as specified in part 12 of this title, and parts 1400, 
and 1412 of this chapter not later than September 30 of the fiscal year 
direct and counter-cyclical payments are requested, after receiving 
written notification by the county committee indicating the 
reconstitution is completed. If all producers have not signed the new 
contract by September 30, no producers on the contract will be eligible 
for a direct or counter-cyclical payment for that farm for the year the 
contract was terminated.


Sec.  1412.402  Eligible producers.

    Producers eligible to enter into a contract are:
    (a)(1) An owner of a farm who assumes all or a part of the risk of 
producing a crop;
    (2) A producer, other than an owner, on a farm with a share-rent 
lease for such farm, regardless of the length of the lease, if the 
owner of the farm enters into the same contract;

[[Page 64757]]

    (3) A producer, other than an owner, on a farm who cash rents such 
farm under a lease expiring on or after September 30 of the year of the 
contract in which case the owner is not required to enter into the 
contract;
    (4) A producer, other than an owner, on an eligible farm who cash 
rents such farm under a lease expiring before September 30 of the year 
of the contract. The owner of such farm must also enter into the same 
contract; or
    (5) An owner of an eligible farm who cash rents such farm and the 
lease term expires before September 30 of the year of the contract, if 
the tenant declines to enter into a contract for the applicable year. 
In the case of an owner covered by this paragraph, direct and counter-
cyclical payments shall not begin under the contract until the lease 
held by the tenant ends.
    (b) A minor child shall be eligible to enter into a contract only 
if one of the following conditions exist:
    (1) The right of majority has been conferred upon the minor by 
court proceedings or statute;
    (2) A guardian has been appointed to manage the minor's property, 
and the applicable program documents are executed by the guardian; or
    (3) A bond is furnished under which a surety guarantees any loss 
incurred for which the minor would be liable had the minor been an 
adult.


Sec.  1412.403  Reconstitutions.

    Farms shall be reconstituted in accordance with part 718 of this 
title.


Sec.  1412.404  Notification of base acres.

    The owner and all producers on a farm shall be notified in writing 
of the number of base acres eligible for enrollment in a contract, 
unless such owner or producer requests in writing that such owner or 
producer not be furnished with the notice.


Sec.  1412.405  Reducing base acreage.

    (a)(1) Subject to the limitation in paragraph (a)(ii) of this 
section, a permanent reduction of all or a portion of a farm's base 
acreage shall be allowed when all owners of the farm execute and submit 
a written request for such reduction on a CCC-approved standard, 
uniform form designated by CCC to the FSA county office where the 
records for the farm are administratively maintained.
    (2) A permanent reduction of all or a portion of a farm's base 
acreage to negate or reduce a program violation is not allowed.
    (b) When base acres on a farm are converted to a non-agricultural 
commercial or industrial use, the total base acreage on the farm shall 
be reduced accordingly regardless of the submission of a request for 
such reduction.


Sec.  1412.406  Succession-in-interest to a direct and counter-cyclical 
program contract.

    (a) A succession in interest to a contract may be permitted if 
there has been a change in the operation of a farm, such as:
    (1) A sale of land;
    (2) A change of operator or producer, including a change in a 
partnership that increases or decreases the number of partners;
    (3) A foreclosure, bankruptcy, or involuntary loss of the farm;
    (4) A change in producer shares to reflect changes in the 
producer's share of the crop(s) that were originally approved on the 
contract; or
    (5) As otherwise determined by the Deputy Administrator, if the 
succession will not adversely affect nor defeat the purpose of the 
program.
    (b) A succession in interest to the contract is not permitted if 
CCC determines that the change:
    (1) Results in a violation of the landlord-tenant provisions set 
forth in Sec.  1412.505; or
    (2) Adversely affects or otherwise defeats the purpose of the 
program.
    (c) If a producer who is entitled to receive direct and counter-
cyclical payments dies, becomes incompetent, or is otherwise unable to 
receive the payment, CCC will make the payment in accordance with part 
707 of this title.
    (d) A producer or owner must inform the county committee of changes 
in interest in base acres on the farm not later than:
    (1) August 1 of the fiscal year in which the change occurs if the 
change requires a reconstitution be completed in accordance with part 
718 of this title; or
    (2) September 30 of the fiscal year in which the change occurs if 
the change does not require a reconstitution be completed in accordance 
with part 718 of this title.
    (e)(1) In any case in which either a direct or counter-cyclical 
payment has previously been made to a predecessor, such payment shall 
not be paid to the successor, unless such payment has been refunded in 
full by the predecessor, in accordance with Sec.  1412.401(d). If the 
predecessor refunds such payments, such producer shall not be assessed 
interest in accordance with part 1403 of this chapter.
    (2) A succession in interest shall not increase the liability of 
CCC.


Sec.  1412.407  Planting flexibility.

    (a) Any crop may be planted and harvested on base acreage on a 
farm, except as limited elsewhere in this section. Any crop may be 
planted on DCP cropland in excess of the base acreage on a farm.
    (b) Base acreage may be hayed or grazed at any time.
    (c) Harvesting non-perennial fruits, vegetables (except lentils, 
mung beans, and dry peas) or wild rice, as determined by the Deputy 
Administrator, or designee, is prohibited on base acreage of a farm 
enrolled in a contract. Planting perennial fruits, vegetables (except 
lentils, mung beans, and dry peas) or wild rice, as determined by the 
Deputy Administrator, is prohibited on base acreage of a farm enrolled 
in a contract.
    (d) Notwithstanding the provisions of paragraph (c) of this 
section, perennial fruits, vegetables and wild rice may be planted on 
base acreage of a farm enrolled in a contract, and non-perennial 
fruits, vegetables and wild rice may be harvested on base acreage of a 
farm enrolled in a contract if:
    (1) A producer double-crops fruits, vegetables or wild rice with a 
covered commodity or peanuts in any region described in paragraph (e) 
of this section, in which case direct and counter-cyclical payments 
will not be reduced for the planting or harvesting of the fruit, 
vegetable or wild rice;
    (2) The farm has a history of planting fruits, vegetables or wild 
rice, as determined by CCC, in which case the payment acres for the 
farm shall be reduced on an acre-for-acre basis ; or
    (3) The producer has a history of planting a specific fruit, 
specific vegetable or wild rice, as determined by CCC, the producer may 
plant and harvest the specific fruit, specific vegetable or wild rice 
for which the producer has a planting history, subject to the 
following:
    (i) The acreage harvested shall not exceed the simple average of 
the sum of acreage of the specific fruit, specific vegetable or wild 
rice planted for harvest by the producer during the crop years 1991 
through 1995 or 1998 through 2001, but not both, as determined by the 
producer, excluding any year in which the specific fruit, specific 
vegetable or wild rice was not planted; and
    (ii) The payment acres for the farm shall be reduced on an acre-
for-acre basis;
    (e) Double-cropping for purposes of this section means planting for 
harvest fruits, vegetables or wild rice on the same acres in cycle with 
a covered commodity or peanuts planted and

[[Page 64758]]

harvested for grain or lint in a 12-month period under normal growing 
conditions for the region and being able to repeat the same cycle in 
the following 12-month period. For purposes of this part, the following 
counties have been determined to be regions having a history of double-
cropping covered commodities or peanuts with fruits, vegetables or wild 
rice. State committees have established the following counties as 
regions within their respective States:

Alabama

    Baldwin, Barbour, Butler, Chambers, Chilton, Clarke, Covington, 
Cullman, Geneva, Greene, Jackson, Jefferson, Lee, Madison, Mobile, 
Montgomery, Randolph, Sumter, Talladega, Walker, and Washington.

Alaska

    None.

Arkansas

    Ashley, Benton, Clay, Crawford, Cross, Faulkner, Franklin, 
Independence, Jackson, Jefferson, Lee, Lincoln, Logan, Lonoke, 
Phillips, Pulaski, St. Francis, Sebastian, Woodruff, and Yell.

Arizona

    Cochise, Graham, Greenlee, LaPaz, Maricopa, Pima, Pinal, and 
Yuma..

California

    Alameda, Amador, Butte, Colusa, Contra Costa, Fresno, Glenn, 
Imperial, Kern, Kings, Madera, Merced, Riverside, Sacramento, San 
Benito, San Joaquin, Santa Clara, Siskiyou, Solano, Sonoma, 
Stanislaus, Sutter, Tehama, Tulare, Yolo, and Yuba.

Caribbean Office

    None.

Connecticut

    None.

Colorado

    None.

Delaware

    Kent, New Castle, and Sussex.

Florida

    All counties except Monroe.

Georgia

    All counties.

Hawaii

    None.

Idaho

    None.

Illinois

    Bureau, Calhoun, Cass, Clark, Crawford, DeKalb, Edgar, 
Effingham, Gallatin, Iroquois, Jersey, Kankakee, Lawrence, LaSalle, 
Lee, Madison, Marion, Mason, Monroe, Randolf, St. Clair, Union, 
Vermilion, White, and Whiteside.

Indiana

    Allen, Bartholemew, Gibson, Hamilton, Jackson, Knox, LaGrange, 
Lake, LaPorte, Madison, Miami, Posey, Sullivan, Vandenberg, and 
Warrick.

Iowa

    Kossuth, Mitchell, Palo Alto, and Winnebago.

Kansas

    None.

Kentucky

    Daviess.

Louisiana

    Avoyelles, Franklin, Grant, Morehouse, Rapides, and West 
Carroll.

Maine

    None.

Maryland

    Baltimore, Calvert, Caroline, Carroll, Dorchester, Harford, 
Kent, Queen Annes, St. Mary's, Somerset, Talbot, Wicomico, and 
Worcester.

Massachusetts

    None.

Michigan

    None.

Minnesota

    Blue Earth, Brown, Carver, Cottonwood, Dakota, Dodge, Faribault, 
Fillmore, Freeborn, Goodhue, Houston, Kandiyohi, Le Sueur, Martin, 
McLeod, Meeker, Mower, Nicollet, Olmsted, Redwood, Renville, Rice, 
Scott, Sibley, Steele, Waseca, Wabasha, Watonwan, and Winona.

Mississippi

    Calhoun, Carroll, Coahoma, Covington, DeSota, Georgia, 
Humphreys, Jefferson Davis, Lowndes, Marshall, Monroe, Montgomery, 
Prentiss and Rankin.

Missouri

    Barton, Butler, Cape Girardeau, Dade, Dunklin, Jasper, Lawrence, 
Mississippi, New Madrid, Newton, Ripley, Scott, and Stoddard.

Montana

    None.

Nebraska

    None.

Nevada

    None.

New Jersey

    Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, 
Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean, Salem, 
Somerset, Sussex, and Warren.

New Hampshire

    None.

New Mexico

    Chaves, Curry, Dona Ana, Eddy, Hidalgo, Lea, Luna, Quay, 
Roosevelt, San Juan, and Sierra.

New York

    Orange and Suffolk.

North Carolina

    Beaufort, Bertie, Bladen, Brunswick, Cabarrus, Camden, Carteret, 
Caswell, Catawba, Chatham, Chowan, Cleveland, Columbus, Craven, 
Cumberland, Currituck, Dare, Duplin, Edgecombe, Franklin, Gaston, 
Gates, Granville, Greene, Halifax, Harnett, Hertford, Hoke, Hyde, 
Johnston, Jones, Lee, Lenoir, Lincoln, Martin, Mecklenburg, 
Montgomery, Moore, Nash, New Hanover, Northampton, Onslow, Pamlico, 
Pasquotank, Pender, Perquimans, Pitt, Richmond, Robeson, Rockingham, 
Rutherford, Sampson, Scotland, Stokes, Tyrell, Union, Wake, Warren, 
Washington, Wayne, Wilkes, Wilson, and Yadkin.

North Dakota

    None.

Ohio

    Champaign, Clermont, Fulton, Lucas, Miami, Morgan, Muskingham, 
Scioto, and Stark.

Oklahoma

    Adair, Alfalfa, Beckham, Blaine, Bryan, Caddo, Canadian, Carter, 
Cherokee, Cleveland, Cotton, Custer, Delaware, Dewey, Ellis, 
Garfield, Garvin, Grady, Grant, Greer, Harmon, Haskell, Hughes, 
Jackson, Jefferson, Kay, Kingfisher, Kiowa, LeFlore, Logan, Love, 
McClain, McIntosh, Major, Marshall, Mayes, Muskogee, Noble, Nowata, 
Okmulgee, Osage, Pawnee, Payne, Pittsburg, Pottawatomie, Roger 
Mills, Rogers, Sequoyah, Stephens, Tillman, Tulsa, Wagoner, Washita, 
Woods, and Woodward.

Oregon

    Benton, Clackamas, Columbia, Jackson, Josephine, Lane, Linn, 
Marion, Morrow, Multnomah, Polk, Umatilla, Washington, and Yamhill.

Pennsylvania

    Adams, Bucks, Centre, Chester, Cumberland, Delaware, Franklin, 
Indiana, Lancaster, Montgomery, Northumberland, Schuylkill, and 
York.

Puerto Rico

    None.

Rhode Island

    None.

South Carolina

    All counties.

South Dakota

    None.

Tennessee

    Bledsoe, Cannon, Cocke, Coffee, Crockett, Dickson, Dyer, 
Fayette, Gibson, Giles, Greene, Grundy, Hardeman, Haywood, 
Jefferson, Knox, Lake, Lauderdale, Lawrence, Lincoln, Madison, 
Maury, Obion, Overton, Pickett, Rhea, Robertson, Rutherford, Sumner, 
Unicoi, VanBuren, Warren, Washington, Wayne, White, Williamson, and 
Wilson.

[[Page 64759]]

Texas

    Atascosa, Bailey, Baylor, Brooks, Cameron, Castro, Cochran, 
Cottle, Dallam, Dawson, Deaf Smith, Dimmit, Duval, Floyd, Foard, 
Frio, Gaines, Hale, Hartley, Haskell, Hidalgo, Hockley, Jim Wells, 
Kleberg, Knox, Lamb, LaSalle, Lubbock, Lynn, Maverick, Medina, 
Moore, Parmer, Presidio, San Patricio, Sherman, Starr, Swisher, 
Terry, Uvalde, Webb, Willacy, Wilson, Yoakum, and Zavala.

Utah

    None.

Vermont

    None.

Virginia

    Accomack, Albemarle, Alleghany, Amelia, Amherst, Appomattox, 
Augusta, Bath, Bedford, Bland, Botetourt, Brunswick, Buchanan, 
Buckingham, Campbell, Caroline, Carroll, Charles City, Charlotte, 
Chesapeake, Chesterfield, Clarke, Craig, Culpeper, Cumberland, 
Dickenson, Dinwiddie, Essex, Fairfax, Fauquier, Floyd, Fluvanna, 
Franklin, Frederick, Giles, Gloucester, Goochland, Grayson, Greene, 
Greensville, Halifax, Hanover, Henrico, Henry, Highland, Isle of 
Wight, James City, King and Queen, King George, King William, 
Lancaster, Lee, Loudoun, Louisa, Lunenburg, Madison, Mathews, 
Mecklenburg, Middlesex, Montgomery, Nelson, New Kent, Northampton, 
Northumberland, Nottoway, Orange, Page, Patrick, Pittsylvania, 
Powhatan, Prince Edward, Prince George, Prince William, Pulaski, 
Rappahannock, Richmond, Roanoke, Rockbridge, Rockingham, Russell, 
Scott, Shenandoah, Smyth, Southampton, Spotsylvania, Stafford, 
Suffolk, Surry, Sussex, Tazewell, Virginia Beach, Warren, 
Washington, Westmoreland, Wise, Wythe, and York.

Washington

    Yakima.

West Virginia

    None.

Wisconsin

    Adams, Calumet, Columbia, Dane, Dodge, Dunn, Fond du Lac, Green, 
Green Lake, Iowa, Kenosha, Milwaukee, Portage, Racine, Richland, 
Rock, St. Croix, Sauk, Walworth, Waukesha, Waushara, and Winnebago.

Wyoming

    None.

    (f) Any acreage reduction required by paragraph (d) of this section 
will be applied beginning with the covered commodity with lowest direct 
payment amount per acre until the acreage reduction amount is 
satisfied. Producers may agree to adjust the acre reduction between 
covered commodities on the farm, only to the extent the total acre 
reduction amount does not change for the farm, and all producers 
affected by the adjustment agree to the adjustment in writing.
    (g) For the purposes of this part, fruits, vegetables and wild rice 
planted on base acreage of a farm under contract:
    (1) Shall be considered harvested at the time of planting, unless 
the producer pays a fee to cover the cost of a farm visit, in 
accordance with part 718 of this title, to verify that the fruit, 
vegetable or wild rice has been destroyed before harvest, as determined 
by the Deputy Administrator.
    (2) Shall not be considered as planted to a fruit, vegetable or 
wild rice when reported by a producer on the farm with an intended use 
of green manure or forage, as determined by the Deputy Administrator, 
and a fee to cover the cost of a farm visit is paid by the producer, in 
accordance with part 718 of this title, to verify that the crop has not 
been harvested.
    (h) Fruits and vegetables include but are not limited to all nuts 
except peanuts, certain fruit-bearing trees and: acerola (barbados 
cherry), antidesma, apples, apricots, aragula, artichokes, asparagus, 
atemoya (custard apple), avocados, babaco papayas, bananas, beans 
(except soybeans, mung, adzuki, faba, and lupin), beets--other than 
sugar, blackberries, blackeye peas, blueberries, bok spare choy, 
boysenberries, breadfruit, broccoflower, broccolo-cavalo, broccoli, 
brussel sprouts, cabbage, cailang, caimito, calabaza, carambola (star 
fruit), calaboose, carob, carrots, cascadeberries, cauliflower, 
celeriac, celery, chayote, cherimoyas (sugar apples), canary melon, 
cantaloupes, cardoon, casaba melon, cassava, cherries, chickpeas/
garbanzo beans, chinese bitter melon, chicory, chinese cabbage, chinese 
mustard, chinese water chestnuts, chufes, citron, citron melon, coffee, 
collards, cowpeas, crabapples, cranberries, cressie greens, crenshaw 
melons, cucumbers, currants, cushaw, daikon, dasheen, dates, dry edible 
beans, dunga, eggplant, elderberries elut, endive, escarole, etou, 
feijoas, figs, gai lien, gailon, galanga, genip, gooseberries, 
grapefruit, grapes, guambana, guavas, guy choy, honeydew melon, 
huckleberries, jackfruit, jerusalem artichokes, jicama, jojoba, kale, 
kenya, kiwifruit, kohlrabi, kumquats, leeks, lemons, lettuce, 
limequats, limes, lobok, loganberries, longon, loquats, lotus root, 
lychee (litchi), mandarins, mangos, marionberries, mar bub, melongene, 
mesple, mizuna, mongosteen, moqua, mulberries, murcotts, mushrooms, 
mustard greens, nectarines, ny Yu, okra, olallieberries, olives, 
onions, opo, oranges, papaya, paprika, parsnip, passion fruits, 
peaches, pears, peas, all peppers, persimmon, persian melon, pimentos, 
pineapple, pistachios, plantain, plumcots, plums, pomegranates, 
potatoes, prunes, pummelo, pumpkins, quinces, radiochio, radishes, 
raisins, raisins (distilling), rambutan, rape greens, rapini, 
raspberries, recao, rhubarb, rutabaga, santa claus melon, salsify, 
saodilla, sapote, savory, scallions, shallots, shiso, spinach, squash, 
strawberries, suk gat, swiss chard, sweet corn, sweet potatoes, 
tangelos, tangerines, tangos, tangors, taniers, taro root, tau chai, 
teff, tindora, tomatillos, tomatoes, turnips, turnip greens, 
watercress, watermelons, white sapote, yam, and yam yu choy.
    (i) For 2002 contracts only, fruits, vegetables, and wild rice may 
be planted on excess base acres. Such plantings shall:
    (1) Not be a violation of the contract
    (2) Result in a reduction of direct and counter-cyclical payments 
in accordance with paragraph (f) of this section.

Subpart E--Financial Considerations Including Sharing Direct and 
Counter-Cyclical Payments


Sec.  1412.501  Limitation of direct and counter-cyclical payments.

    (a) The sum total of all annual direct payment amounts shall not 
exceed the amounts specified in part 1400 of this chapter.
    (b) The sum total of all annual counter-cyclical payment amounts 
shall not exceed the amounts specified in part 1400 of this chapter.
    (c) The amount of 2002 direct and counter-cyclical payments for a 
farm shall not exceed the maximum amount that would have been paid 
based on the number of persons as determined in accordance with part 
1400 of this chapter on the farm as of May 13, 2002.
    (d) The provisions of part 1400 of this chapter apply to this part.


Sec.  1412.502  Direct payment provisions.

    (a) For 2003 through 2007 contracts, a final direct payment shall 
be made to eligible producers on a farm enrolled in a contract with 
respect to covered commodities and peanuts for which payment yields and 
base acres are established on or after October 1 of the fiscal year 
following the fiscal year of the contract in which the direct payment 
was earned.
    (b) For 2003 through 2007 contracts, at the option of the producer, 
50 percent of the direct payment for the farm with respect to covered 
commodities and peanuts for which payment yields and base acres are 
established, shall be paid in any month from December through September 
of the fiscal year of the

[[Page 64760]]

contract, as requested by the producer, as an advance direct payment. 
For any producer to receive an advance direct payment, all producers 
sharing in the direct payments for the farm must:
    (1) Be in compliance with all requirements of the contract and the 
requirements in this part at the time of the advance payment; and
    (2) Sign the contract designating payment shares and provide 
supporting documentation as specified in part 12 of this title and 
parts 1400 and 1405 of this chapter, if applicable. If all producers on 
the farm have not signed the contract designating payment shares in 
accordance with this paragraph, then no producer shall be eligible for 
any payment for that farm for that contract.
    (c) If a producer declines to accept, or is determined to be 
ineligible for all or any part of the producer's share of the direct 
payment computed for the farm in accordance with the provisions of this 
section:
    (1) The payment or portions thereof shall not become available for 
any other producer; and
    (2) The producer shall refund to CCC any amounts representing 
payments that exceed the payments determined by CCC to have been earned 
under the program authorized by this part. Part 1403 of this chapter 
shall be applicable to all unearned payments.
    (d) The payment rates used to calculate direct payments with 
respect to covered commodities and peanuts on a farm enrolled in a 
contract shall be as follows:

(1) Wheat--$0.52/bu.
(2) Corn--$0.28/bu.
(3) Grain sorghum--$0.35/bu.
(4) Barley--$0.24/bu.
(5) Oats--$0.024/bu.
(6) Upland cotton--$0.0667/lb.
(7) Rice--$2.35/cwt.
(8) Soybeans--$0.44/bu.
(9) Other oilseeds--$0.0080/lb.
(10) Peanuts--$36.00/ton.

    (e) For 2003 through 2007 contracts, subject to the limitation in 
accordance with Sec.  1412.501 and part 1400 of this chapter, the final 
direct payment amount to be paid to the producers on a farm enrolled in 
a contract with respect to the covered commodities and peanuts for 
which payment yields and base acres are established shall be equal to 
the product of:

    (1) The payment rate specified in paragraph (d) of this section, 
multiplied by
    (2) The payment acres of the covered commodity and peanuts on the 
farm enrolled in a contract, minus any acre reduction in accordance 
with Sec.  1412.407(g), multiplied by
    (3) The payment yield for the covered commodity and peanuts on the 
farm enrolled in a contract as determined in accordance with Sec.  
1412.301, Sec.  1412.302 and subpart G of this part, minus
    (4) Any reduction calculated in accordance with subpart F of this 
part, minus
    (5) Any advance payment received in accordance with paragraph (b) 
of this section.

    (f) For 2002 contracts, the direct payment amount to be paid to the 
producers on a farm enrolled in a contract with respect to the covered 
commodities for which payment yields and base acres are established 
shall be equal to the result of the amount calculated in accordance 
with paragraphs (e)(1) through (3) of this section minus all of the 
following:
    (1) Any amount of payment received under a production flexibility 
contract for fiscal year 2002 in accordance with the Federal 
Agriculture Improvement and Reform Act of 1996;
    (2) Any reduction calculated in accordance with subpart F of this 
part, with credit for any amount reduced under the production 
flexibility contract for the farm for fiscal year 2002 for the same 
contract violation; and
    (3) Any reduction calculated in accordance with Sec.  1412.407(j).
    (g)(1) The payment of any amount due any producer on a farm 
enrolled in a contract shall be made only after all the producers 
subject to the contract are determined to be in full compliance with 
the contract and the requirements in this part.
    (2) A producer on a farm enrolled in a contract may receive a 
payment amount due without respect to the eligibility of other 
producers on the farm if:
    (i) The producer is in full compliance with the contract and the 
requirements in this part;
    (ii) The payment of such amount does not affect adversely nor 
defeat the purpose of the program, as determined by the Deputy 
Administrator; and
    (iii) The payment is approved by the Deputy Administrator.
    (h) For 2002 contracts, the direct payment amount to be paid to the 
historical peanut producer shall be made to the historical peanut 
producer on the base and yield established for the historical peanut 
producer, in accordance with subpart G of this part.


Sec.  1412.503  Counter-cyclical payment provisions.

    (a) For the 2002 through 2007 contracts, a counter-cyclical payment 
shall be made to eligible producers on a farm enrolled in a contract 
with respect to covered commodities for which payment yield and base 
acres are established, and with respect to peanuts on a farm enrolled 
in a contract for 2003 through 2007:
    (1) Only if the effective price for the covered commodity or 
peanuts, as determined in accordance with paragraph (b) of this 
section, is less than the target price of the covered commodity or 
peanuts, respectively, as determined in accordance with paragraph (c) 
of this section.
    (2) As soon as practical, as determined by the Deputy 
Administrator, after the end of the 12-month marketing year for the 
covered commodity or peanuts, as applicable.
    (b) For the purposes of paragraphs (a) and (g) of this section, the 
effective price for a covered commodity and peanuts, respectively, is 
equal to the sum of the following:
    (1) The higher of:
    (i) The national average market price received by producers during 
the 12-month marketing year for the covered commodity or peanuts, as 
applicable, as determined by the Secretary; or
    (ii) For 2002 and 2003 crop years the following rates:

(A) Wheat--$2.80/bu.
(B) Corn--$1.98/bu.
(C) Grain sorghum--$1.98/bu.
(D) Barley--$1.88/bu.
(E) Oats--$1.35/bu.
(F) Upland cotton--$0.52/lb.
(G) Rice--$6.50/cwt.
(H) Soybeans--$5.00/bu.
(I) Other oilseeds--$0.0960/lb.
(J) Peanuts--$355.00/ton.

    (iii) For 2004 through 2007 crop years the following rates:

(A) Wheat--$2.75/bu.
(B) Corn--$1.95/bu.
(C) Grain sorghum--$1.95/bu.
(D) Barley--$1.85/bu.
(E) Oats--$1.33/bu.
(F) Upland cotton--$0.52/lb.
(G) Rice--$6.50/cwt.
(H) Soybeans--$5.00/bu.
(I) Other oilseeds--$0.0930/lb.
(J) Peanuts--$355.00/ton.

    (2) The direct payment rate for the covered commodity as provided 
in Sec.  1412.502(d).
    (c) For the purposes of paragraphs (a) and (g) of this section, the 
target prices are as follows:
    (1) For 2002 and 2003 crop years:

(i) Wheat--$3.86/bu.
(ii) Corn--$2.60/bu.
(iii) Grain sorghum--$2.54/bu.
(iv) Barley--$2.21/bu.
(v) Oats--$1.40/bu.
(vi) Upland cotton--$0.7240/lb.
(vii) Rice--$10.50/cwt.
(viii) Soybeans--$5.80/bu.

[[Page 64761]]

(ix) Other oilseeds--$0.0980/lb.
(x) Peanuts--$495.00/ton.
    (2) For 2004 through 2007 crop years:

(i) Wheat--$3.92/bu.
(ii) Corn--$2.63/bu.
(iii) Grain sorghum--$2.57/bu.
(iv) Barley--$2.24/bu.
(v) Oats--$1.44/bu.
(vi) Upland cotton--$0.7240/lb.
(vii) Rice--$10.50/cwt.
(viii) Soybeans--$5.80/bu.
(ix) Other oilseeds--$0.1010/lb.
(x) Peanuts--$495.00/ton.

    (d) The payment rate used to calculate counter-cyclical payments 
with respect to covered commodities and peanuts for which payment 
yields and base acres are established on a farm enrolled in a contract 
is equal to the result of:
    (1) The target price of the covered commodity as determined in 
accordance with paragraph (c) of this section, minus
    (2) The effective price of the covered commodity as determined in 
accordance with paragraph (b) of this section.
    (e) For 2002 through 2007 contracts, when counter-cyclical payments 
are required in accordance with paragraph (a) of this section, subject 
to the limitation in accordance with Sec.  1412.501 and part 1400 of 
this chapter, the final counter-cyclical payment amount to be paid to 
producers on a farm enrolled in a contract with respect to the covered 
commodities and peanuts for which payment yields and base acres are 
established shall be equal to the product of:
    (1) The payment rate determined in accordance with paragraph (d) of 
this section, multiplied by
    (2) The payment acres of the covered commodity and peanuts, as 
applicable, minus any acre reduction in accordance with Sec.  
1412.407(g), multiplied by
    (3)(i) The payment yield for the covered commodity or peanuts on 
the farm enrolled in a contract as determined in accordance with Sec.  
1412.303 and subpart G of this part if the owner of the farm elected 
base acreage for the farm in accordance with Sec.  1412.201(a)(2), or 
the owner elected to not update the payment yields for the covered 
commodities on the farm, or
    (ii) The updated payment yield for the covered commodity on the 
farm enrolled in a contract as determined in accordance with Sec.  
1412.303 if the owner of the farm elected base acreage for the farm in 
accordance with Sec.  1412.201(a)(1) and elected to update the yields 
for the covered commodities on the farm in accordance with Sec.  
1412.303, minus
    (4) Any reduction calculated in accordance with subpart F of this 
part that was not satisfied by a reduction in the direct payments for 
the farm calculated in accordance with Sec.  1412.502(e), minus
    (5) Any partial advance payment received in accordance with 
paragraphs (f) or (g) of this section.
    (f) For 2002 through 2006 contracts, advance counter-cyclical 
payments shall be paid, at the request of the producer, if the 
Secretary determines that a counter-cyclical payment for the covered 
commodity or peanuts, respectively, will be required in accordance with 
paragraph (a)(1) of this section.
    (1) The first advance counter-cyclical payment shall:
    (i) Be calculated in accordance with paragraphs (e)(1) through (4) 
of this section;
    (ii) Be an amount determined by the Secretary not to exceed 35 
percent of the projected counter-cyclical payment for the covered 
commodity or peanuts, respectively;
    (iii) Not be made earlier than October 1 after the end of the 
contract year in which the counter-cyclical payment was earned; and
    (iv) To the maximum extent practical, be made no later than October 
31 after the end of the contract year in which the counter-cyclical 
payment was earned.
    (2) The second partial advance counter-cyclical payment shall:
    (i) Be calculated in accordance with paragraphs (e)(1) through (4) 
of this section.
    (ii) Be an amount determined by the Secretary not to exceed the 
result of:
    (A) 70 percent of the projected counter-cyclical payment, including 
any revision thereof, for the covered commodity or peanuts, 
respectively, minus
    (B) The amount of payment made under paragraph (f)(1) of this 
section; and
    (iii) Not be made earlier than February 1 after the end of the 
contract year in which the counter-cyclical payment was earned.
    (g) For 2002 contract, the counter-cyclical payment amount to be 
paid to the historic peanut producer shall be made using the base and 
yield established for the historic peanut producer, in accordance with 
subpart G of this part.
    (h) For 2007 contracts, an advance counter-cyclical payment shall 
be paid, at the request of the producer, if the Secretary determines 
that a counter-cyclical payment for the covered commodity or peanuts 
will be required in accordance with paragraph (a)(1) of this section. 
The advance payment shall:
    (1) Be calculated in accordance with paragraphs (e)(1) through 
(e)(4) of this section;
    (2) Not exceed 40 percent of the projected counter-cyclical payment 
for the covered commodity or peanuts, respectively, as determined by 
the Secretary; and
    (3) Be made after the first 6 months of the marketing year of the 
covered commodity or peanuts, as applicable.
    (i) If a producer declines to accept, or is determined to be 
ineligible for all or any part of the producer's share of the counter-
cyclical payment computed for the farm in accordance with the 
provisions of this section:
    (1) The payment or portions thereof shall not become available for 
any other producer; and
    (2) The producer shall refund to CCC any amounts representing 
payments that exceed the payments determined by CCC to have been earned 
under the program authorized by this part. Part 1403 of this chapter 
shall be applicable to all unearned payments.
    (i)(A) The payment of any amount due any producer on a farm 
enrolled in a contract shall be made only after all the producers 
subject to the contract are determined to be in full compliance with 
the contract and the requirements in this part.
    (B) A producer on a farm enrolled in a contract may receive a 
payment amount due without regard to the eligibility of other producers 
on the farm if:
    (1) The producer is in full compliance with the contract and the 
requirements in this part;
    (2) The payment of such amount does not adversely affect nor defeat 
the purpose of the program, as determined by the Deputy Administrator, 
or designee; and
    (3) The payment is approved by the Deputy Administrator, or 
designee.
    (j) The producers on a farm who receive any advance counter-
cyclical payment shall refund the portion of such advance payments that 
exceeds the actual counter-cyclical payment to be made for the covered 
commodity or peanuts, as applicable.


Sec.  1412.504  Sharing of contract payments.

    (a) Each eligible producer on a farm shall be given the opportunity 
to annually enroll in a contract and receive direct and counter-
cyclical payments determined to be fair and equitable as agreed to by 
all the producers on the farm and approved by the county committee.
    (1) Each producer must provide a copy of their written lease to the 
county committee and, in the absence of a

[[Page 64762]]

written lease, must provide to the county committee a complete written 
description of the terms and conditions of any oral agreement or lease.
    (2) A lease will be considered to be a cash lease if the lease 
provides for only a guaranteed sum certain cash payment, or a fixed 
quantity of the crop (for example, cash, pounds, or bushels per acre).
    (3) If a lease contains provisions that require the payment of rent 
on the basis of the amount of crop produced or the proceeds derived 
from the crop, or the interest such producer would have had if the crop 
had been produced, or combination thereof, such agreement shall be 
considered to be a share lease. The leasing of grazing or haying 
privileges is not considered cash leasing.
    (4) If a lease provides for the greater of a guaranteed amount or 
share of the crop or crop proceeds, such agreement shall be considered 
a share lease if the lease provides for both:
    (i) A guaranteed amount such as a fixed dollar amount or quantity; 
and
    (ii) A share of the crop proceeds.
    (5) If the lease is a cash lease, the landlord is not eligible for 
direct or counter-cyclical payments.
    (b) When contract acreage is leased on a share basis, neither the 
landlord nor the tenant shall receive 100 percent of the contract 
payment for the farm.
    (c) CCC will approve a contract for enrollment and approve the 
division of payment when all of the following apply:
    (1) The landlords, tenants and sharecroppers sign the contract and 
agree to the payment shares shown on the contract;
    (2) CCC determines that the interests of tenants and sharecroppers 
are being protected; and
    (3) CCC determines that the payment shares shown on the contract do 
not circumvent the provisions of part 1400 of this chapter.


Sec.  1412.505  Provisions relating to tenants and sharecroppers.

    Neither direct nor counter-cyclical payments shall be made by CCC 
if:
    (a) The landlord or operator has adopted a scheme or device for the 
purpose of depriving any tenant or sharecropper of the payments to 
which such person would otherwise be entitled under the program. If any 
of such conditions occur or are discovered after payments have been 
made, all or any such part of the payments as the State committee may 
determine shall be refunded to CCC; or
    (b) The landlord terminated a lease in violation of state law as 
determined by a state court.

Subpart F--Contract Violations and Diminution in Payments


Sec.  1412.601  Contract violations.

    (a) Except as provided in paragraph (b) of this section, violations 
of contract requirements shall result in the termination of the 
contract. Upon such termination, all producers subject to the contract 
shall forfeit all rights to receive direct and counter-cyclical 
payments on the farm for the contract year and shall refund all direct 
and counter-cyclical payments received, plus interest, as determined in 
accordance with part 1403 of this chapter.
    (b)(1) If there is a violation of Sec.  1412.407 and CCC determines 
that a violation is not serious enough to warrant termination of the 
contract under paragraph (a) of this section, direct and counter-
cyclical payments may be made to the producers specified on the 
contract, but in an amount that is reduced by an amount equal to the 
sum of:
    (i) The per-acre market value of the fruits, vegetables, and wild 
rice, as determined by the State Committee, times the number of acres 
in violation, plus
    (ii) The direct and counter-cyclical payments for each such acre.
    (2) Producers must protect land enrolled in DCP from weeds, 
including noxious weeds, and erosion, including providing sufficient 
cover if determined necessary by the county committee. The first 
violation of this provision will result in a reduction in the direct 
payments for the farm by an amount equal to three times the cost of 
maintenance of the acreage, but not to exceed 50 percent of the total 
direct payments for the farm. The second violation of this provision 
will result in a reduction in the direct payments for the farm by an 
amount equal to three times the cost of maintenance of the acreage, not 
to exceed the total direct payments for the farm.


Sec.  1412.602  Fruit, vegetable and wild rice acreage reporting 
violations.

    (a)(1) If an acreage report of fruits, vegetables or wild rice 
planted on base acreage of a farm enrolled in DCP is inaccurate but 
within tolerance as provided in paragraph (b) of this section and CCC 
determines the producer made a good faith effort to comply with the 
provisions of this section, the producers shall accept a reduction in 
the direct and counter-cyclical payments for each such acre.
    (2) If an acreage report of fruits, vegetables or wild rice planted 
on base acreage of a farm enrolled in DCP is inaccurate and exceeds the 
tolerance as provided in paragraph (b) of this section, but CCC 
determines the producer made a good faith effort to comply with the 
provisions of this section, the producers shall accept a reduction in 
the direct and counter-cyclical payments for the farm in an amount 
equal to the sum of:
    (i) The direct and counter-cyclical payments for each such acre, 
plus
    (ii) Twice the average dollar value of the direct payment for the 
covered commodity and peanut base acreage reduced because of the fruit, 
vegetable, and wild rice plantings on such acreage, multiplied by the 
total number of acres in violation.
    (3) The contract shall be terminated if an acreage report of 
fruits, vegetables or wild rice planted on base acreage of a farm 
enrolled in DCP is inaccurate, and the county committee determines the 
producer did not make a good faith effort to comply with the provisions 
of this section. Upon such termination, producers subject to such 
contract shall:
    (i) Forfeit all rights to receive direct and counter-cyclical 
payments for the farm;
    (ii) Refund all direct and counter-cyclical payments received for 
the farm, plus interest as determined in accordance with part 1403 of 
this chapter; and
    (iii) Be ineligible for all program benefits according to part 718 
of this title.
    (b) For the purposes of this section, tolerance is the amount by 
which the determined acreage may differ from the reported acreage and 
still be considered in compliance with program requirements. Tolerance 
for fruits, vegetables and wild rice plantings is 5 percent of the 
reported fruit, vegetable and wild rice acreage, not to exceed 50 
acres.


Sec.  1412.603  Contract liability.

    All signatories to a contract are jointly and severally liable for 
contract violations and resulting repayments and penalties.


Sec.  1412.604  Misrepresentation and scheme or device.

    (a) A producer who is determined to have erroneously represented 
any fact affecting a program determination made in accordance with this 
part shall not be entitled to either direct or counter-cyclical 
payments and must refund all such payments received, plus interest as 
determined in accordance with part 1403 of this chapter.
    (b) A producer shall refund to CCC all direct and counter-cyclical 
payments, plus interest as determined in accordance with part 1403 of 
this

[[Page 64763]]

chapter, received by such producer with respect to all contracts if the 
producer is determined to have knowingly done any of the following. In 
addition, the producer's interest in all such contracts shall be 
terminated.
    (1) Adopted any scheme or device that tends to defeat the purpose 
of the program;
    (2) Made any fraudulent representation; or
    (3) Misrepresented any fact affecting a program determination.


Sec.  1412.605  Offsets and assignments.

    (a) Except as provided in paragraph (b) of this section, any 
payment or portion thereof to any person shall be made without regard 
to questions of title under State law and without regard to any claim 
or lien against the crop, or proceeds thereof, in favor of the owner or 
any other creditor except agencies of the U.S. Government. The 
regulations governing offsets and withholdings found at part 1403 of 
this chapter shall be applicable to contract payments.
    (b) Any producer entitled to any payment may assign any payments in 
accordance with regulations governing the assignment of payments found 
at part 1404 of this chapter.


Sec.  1412.606  Acreage reports.

    As a condition of eligibility for direct and counter-cyclical 
payments, the operator or owner must submit a report of all cropland 
acreage on the farm in accordance with part 718 of this title. If such 
operator or owner does not report all cropland acreage on the farm in 
accordance with part 718 of this title, the contract shall be 
terminated with respect to such farm unless the provisions part 718 of 
this title are applicable.


Sec.  1412.607  Compliance with highly erodible land and wetland 
conservation provisions.

    The provisions of part 12 of this title apply to this part.


Sec.  1412.608  Controlled substance violations.

    The provisions of part 718 of this title apply to this part.

Subpart G--Establishment and Assignment of Peanut Base Acres and 
Yields for a Farm


Sec.  1412.701  Determination of 4-year peanut acreage average.

    (a) The Deputy Administrator shall determine, for each historic 
peanut producer under this part, the 4-year average of the following:
    (1) The acreage planted to peanuts on each farm on which the 
historic peanut producer planted peanuts for harvest for the 1998 
through 2001 crop years; and
    (2) Any acreage on each farm that the historic peanut producer was 
prevented from planting to peanuts during the 1998 through 2001 crop 
years because of natural disaster, or any other condition beyond the 
control of the historic peanut producers, as determined by the Deputy 
Administrator.
    (b) For the purposes of determining the 4-year acreage average for 
a historic peanut producer under this part, the Deputy Administrator 
shall not exclude any crop year in which the producer did not plant 
peanuts.
    (c) If more than one historic peanut producer shared in the risk of 
producing the crop on a farm, the historic peanut producers shall 
receive the proportional share of the number of acres planted or 
prevented from being planted to peanuts for harvest on the farm, based 
on the sharing arrangement that was in effect among the producers for 
the crop.
    (d) When a historic peanut producer is no longer living or when an 
entity composed of historic peanut producers has been dissolved, and in 
other similar situations, the Deputy Administrator shall make the base 
determinations under this subpart in the manner determined to be fair 
and reasonable.


Sec.  1412.702  Determination of average peanut yield.

    (a) The Deputy Administrator shall determine, for each historic 
peanut producer, the average yield for peanuts on each farm the 
historic peanut producer planted peanuts for harvest for the 1998 
through 2001 crop years, excluding any crop year in which the producer 
did not plant or was prevented from planting peanuts. Production 
information reported according to part 729 of this chapter will be used 
by the Deputy Administrator for determining yields under this section.
    (b)(1) For the purposes of determining the 4-year average yield for 
a historic peanut producer under paragraph (a) of this section, the 
historic peanut producer may elect to substitute for a farm for not 
more than 3 of the 1998 through 2001 crop years in which the historic 
peanut producer planted peanuts on the farm, the average harvested 
yield for peanuts produced in the county in which the farm is located 
for the 1990 through 1997 crop years.
    (2) The average harvested yield for peanuts produced in a county 
which will be used in paragraph (b)(1) of this section shall be the 
NASS irrigated and non-irrigated yields or, in States and counties 
where the irrigated and non-irrigated NASS data is unavailable, the 
NASS blended yield for the county.
    (3) If NASS harvested peanut yield data is unavailable, for the 
purposes set forth in paragraph (b)(1) of this section, the harvested 
county average peanut yield, determined according to peanut production 
information reported according to part 729 of this chapter, shall be 
used.
    (c) The average harvested yield, to be used at the producer's 
option in paragraph (b)(1) of this section, shall be determined by 
calculating the weighted 7-year average for each type of yield for the 
years 1990 through 1997 of:
    (1) The NASS harvested peanut irrigated yield for the county for 
each year;
    (2) The NASS harvested peanut non-irrigated yield for the county 
for each year;
    (3) The NASS harvested peanut blended yield for all counties where 
the yields in paragraphs (c)(1) and (c)(2) of this section are 
unavailable for each year for all acreage regardless of whether or not 
the acres were irrigated or nonirrigated;
    (4) The average yield for the county, determined in accordance with 
paragraph (b)(3) of this section for each year.


Sec.  1412.703  Assignment of average peanut yields and average peanut 
acreages to farms.

    (a) The Deputy Administrator shall give each historical peanut 
producer an opportunity to assign the average peanut yield determined 
in accordance with Sec.  1412.702 and average acreage determined in 
accordance with Sec.  1412.701 for each farm of the historic peanut 
producer to cropland on that farm or another farm in the same State or 
a contiguous State.
    (b) Notwithstanding paragraph (a) of this section, the average 
acreage determined under Sec.  1412.701 for a farm may be assigned to a 
farm in a contiguous county only if either of the following apply:
    (1) The historic peanut producer making the assignment produced 
peanuts in that State during at least one of the 1998 through 2001 crop 
years; or
    (2) As of March 31, 2003, the historic peanut producer is a 
producer on a farm in that State.
    (c) The Deputy Administrator shall provide notice to historic 
peanut producers regarding the opportunity to assign average peanut 
yields and average acreages to farms under paragraph (a) of this 
section. The notice shall provide the following information:
    (1) Notice that the opportunity to make the assignments is being 
provided only once;

[[Page 64764]]

    (2) A description of the limitations in paragraph (b) of this 
section on their ability to make their assignments; and
    (3) Information regarding the manner in which the assignments must 
be made and the time periods and manner in which notice of the 
assignments must be submitted to the Deputy Administrator.
    (d) Not later than March 31, 2003, an historic peanut producer 
shall submit to the Deputy Administrator notice of the assignments made 
by the producer under this section. If a historic peanut producer fails 
to submit such notice by that date, that base and yield shall be 
assigned to the most recent farm associated with such base and yield, 
as determined by FSA records.
    (e) The average of all yields assigned by a historic peanut 
producer under paragraph (a) of this section to a farm shall be 
considered to be the payment yield for that farm for the purpose of 
making direct and payments and counter-cyclical payments under this 
part, beginning with crop year 2003.
    (f) Subject to paragraph (g) of this section, the total number 
acres assigned by historic peanut producers under paragraph (b) of this 
section to a farm shall be considered to be the farm's base acres for 
peanuts for the purpose of making direct payments and counter-cyclical 
payments under this part, beginning with crop year 2003.

Subpart H--Peanut Quota Buyout Program

* * * * *

    Signed in Washington, DC, October 15, 2002.
Verle E. Lanier,
Executive Vice President, Commodity Credit Corporation.
[FR Doc. 02-26692 Filed 10-16-02; 3:05 pm]
BILLING CODE 3410-05-P