[Federal Register Volume 68, Number 64 (Thursday, April 3, 2003)]
[Rules and Regulations]
[Pages 16170-16185]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-8025]


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DEPARTMENT OF AGRICULTURE

Farm Service Agency

7 CFR 718 and 723

Commodity Credit Corporation

7 CFR 1412 and 1413

RIN 0560-AG79


Acreage Reporting and Common Provisions

AGENCY: Commodity Credit Corporation and Farm Service Agency, USDA.

ACTION: Final rule.

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SUMMARY: This rule implements provisions of the Farm Security and Rural 
Investment Act of 2002 (the 2002 Act) by making changes to Agency 
regulations that govern provisions common to multiple programs, 
including acreage report requirements, farm constitution, and 
monitoring compliance with those provisions. Other provisions of the 
2002 Act will be implemented under separate rules. The intent of this 
rule is to implement statutory requirements for reports of acreage and 
conform the regulations with changes in other Agency programs.

EFFECTIVE DATE: March 31, 2003.

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

SUPPLEMENTARY INFORMATION:

Notice and Comment

    Section 1601(c) of the 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 not significant under 
Executive Order 12866 and has not been reviewed by the Office of 
Management and Budget (OMB).

Federal Assistance Programs

    This final rule has a potential impact on all programs listed in 
the Catalog of Federal Domestic Assistance in the Agency program index 
under the Department of Agriculture, Farm Service Agency.

Regulatory Flexibility Act

    The Regulatory Flexibility Act does not apply to this rule because 
FSA and CCC are not required by 5 U.S.C. 553 or any law to publish a 
notice of proposed rulemaking for this rule.

Environmental Assessment

    The environmental impacts of this final rule have been considered 
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. FSA has concluded 
the rule is categorically excluded from further environmental review 
and documentation as evidenced by the completion of an environmental 
evaluation. No extraordinary circumstances or other unforeseeable 
factors exist which would require preparation of an environmental 
assessment or environmental impact statement. A copy of the 
environmental evaluation is available for inspection and review upon 
request.

Executive Order 12778

    The final rule has been reviewed in accordance with Executive Order 
12778. This rule preempts State laws that are inconsistent with it. 
This rule is not retroactive. Before judicial action may be brought 
concerning this rule, administrative remedies must be exhausted.

[[Page 16171]]

Executive Order 12372

    The provisions of this rule are not subject to Executive Order 
12372, which required intergovernmental consultation with State and 
local officials. See the notice related to 7 CFR part 3015, subpart V, 
published at 48 FR 29115 (June 24, 1983).

Unfunded Mandates

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) does 
not apply to this rule because CCC and FSA are not required by 5 U.S.C. 
553 or any other law to publish a notice of proposed rulemaking for 
this rule. Further, this rule imposes no mandates, as defined in 
sections 202 and 205 of UMRA, on State, local or tribal governments, or 
the private sector.

Paperwork Reduction Act

    Sections 1601(c) and 2702(b) of the 2002 Act provide that the 
promulgation of regulations and the administration of Title I and II of 
the 2002 Act shall be done without regard to chapter 35 of title 44 of 
the United States Code (the Paperwork Reduction Act). Accordingly, 
these regulations and the forms and other information collection 
activities needed to administer the program authorized by these 
regulations are not subject to review by the Office of Management and 
Budget under the Paperwork Reduction Act.

Background

    This rule amends CCC and FSA regulations that govern how marketing 
quotas, allotments, and base acres are maintained, monitored, divided, 
and reallocated. These regulations determine an agricultural producer's 
ability to market certain crops and their eligibility to receive 
marketing loans, support prices, and other CCC and FSA program 
benefits.
    The 2002 Act authorizes the establishment of base acres on a farm 
and the issuance of direct payments and counter-cyclical payments for 
covered commodities and peanuts. Requirements are provided that must be 
met as a condition of receipt of these payments. Among other changes, 
the 2002 Act also terminates marketing quota programs for peanuts.
    Sections 1105(c) and 1305(c) of the 2002 Act require producers on a 
farm to submit annual acreage reports with respect to all cropland on 
the farm as a condition of the receipt of any direct payments, counter-
cyclical payments, marketing assistance loans and loan deficiency 
payments. In the recent past, the reporting of only certain planted 
acres by a farmer has been required for some FSA and CCC programs. In 
addition, sections 1105(a)(2) and 1305(a)(2) authorize the Secretary to 
issue such rules as the Secretary considers necessary to ensure 
producer compliance with the following requirements: subtitles B and C 
of title XII the Food Security Act of 1985; planting flexibility 
requirements of sections 1106 and 1306; the requirement to use farmland 
in a quantity equal to the attributable base acres for the farm for an 
agricultural or conserving use; the requirement to control noxious 
weeds and maintain the land using sound agricultural practices, if the 
agricultural or conserving use involves the non-cultivation of any base 
acres.
    Under section 1101 of the 2002 Act, owners of a farm will be 
provided a one-time opportunity to elect the method by which base acres 
are to be calculated. This election applies to the farm, as it is 
constituted for CCC program purposes. Many FSA farms are comprised of 
land with divided ownership held by multiple owners. All owners of a 
farm must agree to the method by which base acres on the farm are 
calculated. Therefore, what constitutes a distinct farm operation for 
these purposes (the constitution of a ``farm'') is vital to the ability 
of CCC to implement the 2002 Act.
    The regulations at 7 CFR part 718 are being amended in their 
entirety to make the changes required by the 2002 Act, and to 
incorporate the use of Geographic Information Systems. The changes made 
in this rule are expected to improve overall program administration, 
provide requirements and procedures for program participants, and allow 
for increased program support from new technologies.
    The amendments to part 718 do not impact farm program participation 
or payment levels. Also, there are no expected impacts on acres 
planted, prices, or program payments. Therefore, net farm income and 
consumer costs will be unchanged and Federal outlays will remain within 
parameters established in the 2002 Act.
    Additions to the regulations have also been made to cover ownership 
questions where current public records may be inadequate or where there 
is some other dispute about ownership. The rule will allow 
certifications to be used and allow claims to be barred where there is 
such a certification and there has been a failure of other claimants to 
act promptly or where the current public records are inadequate to 
readily resolve ownership issues. Not allowing such certifications 
would make it difficult for a number of small farms to receive prompt 
payments due to changes in ownership over the years which may not be 
reflected in the current public records and which may not be easily be 
corrected. While the rule could result in a bar to some claims that 
might otherwise be established, the rule in effect imposes a burden on 
all owners to ensure that their interests in the property are made 
known to FSA so that programs can be run in a timely manner and without 
excessive research and effort with the many farms that have to be 
serviced.
    In addition, the rule provides for the Bureau of Indian Affairs of 
the Department of Interior to make certain decisions on behalf of farms 
entrusted to them or under their management. This follows current 
practice. The rule also provides that in the event of the need to 
collect a refund or claim in connection with these BIA-related farms, 
the sum, among other remedies, may be collected by an offset against 
the particular beneficiaries or by an offset against the farm itself. 
This collection provision reflects that the FSA may not, on many 
occasions, know who the beneficiaries of such farms are and that such 
adjustment as may be needed among individual interested parties can 
best be made by the BIA. This rule also makes a corrections to the hard 
white wheat regulations of 7 CFR Part 1413 published on February 3, 
2003, 68 FR 5205. Specifically the applicability section of that rule 
is changed in this rule in keeping with the intent of that rulemaking 
so as not to limit 1413 to only ``winter'' varieties of hard white 
wheat. Further, a numbering correction is made to another section. 
These changes are exempt from comment for the same reasons as exempted 
the original rules from comment and because they are corrective in 
nature.

List of Subjects

7 CFR Part 718

    Acreage allotments, Agricultural commodities, Marketing quotas.

7 CFR Part 723

    Acreage allotments, Agricultural commodities, Marketing quotas, 
Price support programs, Tobacco.

7 CFR Part 1412

    Agriculture, Feed Grains, Grains, Oilseeds, Price support programs.

7 CFR Part 1413

    Agricultural commodities, Feed grains, Grains.

0
Accordingly, 7 CFR parts 718, 723, 1412 and 1413 are amended as set 
forth below.

[[Page 16172]]

PART 718--PROVISIONS APPLICABLE TO MULTIPLE PROGRAMS

0
1. The authority for part 718 is revised to read as follows:

    Authority: 7 U.S.C. 1311 et seq., 1501 et seq., 1921 et seq., 
7201 et seq., 15 U.S.C. 714b.

0
2. Subpart A is revised to read as follows:

Subpart A--General Provisions

Sec.
718.1 Applicability.
718.2 Definitions.
718.3 State committee responsibilities.
718.4 Authority for farm entry and providing information.
718.5 Rule of fractions.
718.6 Controlled substance.
718.7 Furnishing maps.
718.8 Administrative county.
718.9 Signature requirements.
718.10 Time limitations.


Sec.  718.1  Applicability.

    (a) This part is applicable to all programs set forth in chapters 
VII and XIV of this title which are administered by the Farm Service 
Agency (FSA). This rule governs how FSA monitors marketing quotas, 
allotments, base acres and acreage reports. The regulations affected 
are those that establish procedures for measuring allotments and 
program eligible acreage, and determining program compliance.
    (b) The provisions of this part will be administered under the 
general supervision of the Administrator, FSA, and shall be carried out 
in the field by State and county FSA committees (State and county 
committees).
    (c) State and county committees, and representatives and employees 
thereof, do not have authority to modify or waive any regulations in 
this part.
    (d) No provisions or delegation herein to a State or county 
committee shall preclude the Administrator, FSA, 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 and other requirements in cases 
where lateness or failure to meet such other requirements does not 
adversely affect the operation of the program.


Sec.  718.2  Definitions.

    Except as provided in individual parts of chapters VII and XIV of 
this title, the following terms shall be as defined herein:
    Administrative variance (AV) means the amount by which the 
determined acreage of tobacco may exceed the effective allotment and be 
considered in compliance with program regulations.
    Allotment means an acreage for a commodity allocated to a farm in 
accordance with the Agricultural Adjustment Act of 1938, as amended.
    Allotment crop means any tobacco crop for which acreage allotments 
are established pursuant to part 723 of this chapter.
    Barley means barley that follows the standard planting and 
harvesting practice of barley for the area in which the barley is 
grown.
    Base acres means the quantity of acres established according to 
part 1413 of this title.
    CCC means the Commodity Credit Corporation.
    Combination means consolidation of two or more farms or parts of 
farms, having the same operator, into one farm.
    Common ownership unit means a distinguishable parcel of land 
consisting of one or more tracts of land with the same owners, as 
determined by FSA.
    Constitution means the make-up of the farm before any change is 
made because of change in ownership or operation.
    Controlled substances means the term set forth in 21 CFR part 1308.
    Corn means field corn or sterile high-sugar corn that follows the 
standard planting and harvesting practices for corn for the area in 
which the corn is grown. Popcorn, corn nuts, blue corn, sweet corn, and 
corn varieties grown for decoration uses are not corn.
    County means the county or parish of a state. For Alaska, Puerto 
Rico and the Virgin Islands, a county shall be an area designated by 
the State committee with the concurrence of the Deputy Administrator.
    County committee means the FSA county committee.
    Crop reporting date means the latest date the Administrator, FSA 
will allow the farm operator, owner, or their agent to submit a crop 
acreage report in order for the report to be considered timely.
    Cropland. (a) Means land which the county committee determines 
meets any of the following conditions:
    (1) Is currently being tilled for the production of a crop for 
harvest. Land which is seeded by drilling, broadcast or other no-till 
planting practices shall be considered tilled for cropland definition 
purposes;
    (2) Is not currently tilled, but it can be established that such 
land has been tilled in a prior year and is suitable for crop 
production;
    (3) Is currently devoted to a one-row or two-row shelter belt 
planting, orchard, or vineyard;
    (4) Is in terraces that, were cropped in the past, even though they 
are no longer capable of being cropped;
    (5) Is in sod waterways or filter strips planted to a perennial 
cover;
    (6) Is preserved as cropland in accordance with part 1410 of this 
title; or
    (7) Is land that has newly been broken out for purposes of being 
planted to a crop that the producer intends to, and is capable of, 
carrying through to harvest, using tillage and cultural practices that 
are consistent with normal practices in the area; provided further 
that, in the event that such practices are not utilized other than for 
reasons beyond the producer's control, the cropland determination shall 
be void retroactive to the time at which the land was broken out.
    (b) Land classified as cropland shall be removed from such 
classification upon a determination by the county committee that the 
land is:
    (1) No longer used for agricultural production;
    (2) No longer suitable for production of crops;
    (3) Subject to a restrictive easement or contract that prohibits 
its use for the production of crops unless otherwise authorized by the 
regulation of this chapter;
    (4) No longer preserved as cropland in accordance with the 
provisions of part 1410 of this title and does not meet the conditions 
in paragraphs (a)(1) through (a)(6) of this definition; or
    (5) Converted to ponds, tanks or trees other than those trees 
planted in compliance with a Conservation Reserve Program contract 
executed pursuant to part 1410 of this title, or trees that are used in 
one-or two-row shelterbelt plantings, or are part of an orchard or 
vineyard.
    Current year means the year for which allotments, quotas, acreages, 
and bases, or other program determinations are established for that 
program. For controlled substance violations, the current year is the 
year of the actual conviction.
    Deputy Administrator means Deputy Administrator for Farm Programs, 
Farm Service Agency, U.S. Department of Agriculture or their designee.
    Determination means a decision issued by a State, county or area 
FSA committee or its employees that affects a participant's status in a 
program administered by FSA.
    Determined acreage means that acreage established by a 
representative of the Farm Service Agency by use of official acreage, 
digitizing or planimetering areas on the photograph or other 
photographic image, or

[[Page 16173]]

computations from scaled dimensions or ground measurements.
    Direct and counter-cyclical program (DCP) cropland means land that 
currently meets the definition of cropland, land that was devoted to 
cropland at the time it was enrolled in a production flexibility 
contract in accordance with part 1413 of this title and continues to be 
used for agricultural purposes, or land that met the definition of 
cropland on or after April, 4, 1996, and continues to be used for 
agricultural purposes and not for nonagricultural commercial or 
industrial use.
    Division means the division of a farm into two or more farms or 
parts of farms.
    Entity means a corporation, joint stock company, association 
limited partnership, irrevocable trust, estate, charitable 
organization, or other similar organization including any such 
organization participating in the farming operation as a partner in a 
general partnership, a participant in a joint venture, a grantor of a 
revocable trust, or as a participant in a similar organization.
    Extra Long Staple (ELS) Cotton means cotton that meets all of the 
following conditions:
    (1) American-Pima, Sea Island, Sealand, all other varieties of the 
Barbandense species of cotton and any hybrid thereof, and any other 
variety of cotton in which 1 or more of these varieties is predominant; 
and,
    (2) The acreage is grown in a county designated as an ELS county by 
the Secretary; and,
    (3) The production from the acreage is ginned on a roller-type gin.
    Family member means an individual to whom a person is related as 
spouse, lineal ancestor, lineal descendant, or sibling, including:
    (1) Great grandparent;
    (2) Grandparent;
    (3) Parent;
    (4) Child, including a legally adopted child;
    (5) Grandchild
    (6) Great grandchildren;
    (7) Sibling of the family member in the farming operation; and
    (8) Spouse of a person listed in paragraphs (1) through (7) of this 
definition.
    Farm means a tract, or tracts, of land that are considered to be a 
separate operation under the terms of this part provided further that 
where multiple tracts are to be treated as one farm, the tracts must 
have the same operator and must also have the same owner except that 
tracts of land having different owners may be combined if all owners 
agree to the treatment of the multiple tracts as one farm for these 
purposes.
    Farm inspection means an inspection by an authorized FSA 
representative using aerial or ground compliance to determine the 
extent of producer adherence to program requirements.
    Farm number means a number assigned to a farm by the county 
committee for the purpose of identification.
    Farmland means the sum of the DCP cropland, forest, acreage planted 
to an eligible crop acreage as specified in 1437.3 of this title and 
other land on the farm.
    Field means a part of a farm which is separated from the balance of 
the farm by permanent boundaries such as fences, permanent waterways, 
woodlands, and croplines in cases where farming practices make it 
probable that such cropline is not subject to change, or other similar 
features.
    GIS means Geographic Information System or a system that stores, 
analyzes, and manipulates spatial or geographically referenced data. 
GIS computes distances and acres using stored data and calculations.
    GPS means Global Positioning System or a positioning system using 
satellites that continuously transmit coded information. The 
information transmitted from the satellites is interpreted by GPS 
receivers to precisely identify locations on earth by measuring 
distance from the satellites.
    Grain sorghum means grain sorghum of a feed grain or dual purpose 
variety (including any cross that, at all stages of growth, having 
characteristics of a feed grain or dual purpose variety) that follows 
the standard planting and harvesting practice for grain sorghum for the 
area in which the grain sorghum was planted. Sweet sorghum is not 
considered a grain sorghum.
    Ground measurement means the distance between 2 points on the 
ground, obtained by actual use of a chain tape, GPS with an minimum 
accuracy level as determined by the Deputy Administrator, or other 
measuring device.
    Joint operation means a general partnership, joint venture, or 
other similar business organization.
    Landlord means one who rents or leases farmland to another.
    Measurement service means a measurement of acreage or farm-stored 
commodities performed by a representative of FSA and paid for by the 
producer requesting the measurement.
    Measurement service after planting means determining a crop or 
designated acreage after planting but before the farm operator files a 
report of acreage for the crop.
    Measurement service guarantee means a guarantee provided when a 
producer requests and pays for an authorized FSA representative to 
measure acreage for FSA and CCC program participation unless the 
producer takes action to adjust the measured acreage. If the producer 
has taken no such action, and the measured acreage is later discovered 
to be incorrect, the acreage determined pursuant to the measurement 
service will be used for program purposes for that program year.
    Minor child means an individual who is under 18 years of age. State 
court proceedings conferring majority on an individual under 18 years 
of age will not change such an individual's status as a minor.
    Nonagricultural commercial or industrial use means land that is no 
longer suitable for producing annual or perennial crops, including 
conserving uses, or forestry products.
    Normal planting period means that period during which the crop is 
normally planted in the county, or area within the county, with the 
expectation of producing a normal crop.
    Normal row width means the normal distance between rows of the crop 
in the field, but not less than 30 inches for all crops.
    Oats means oats that follows the standard planting and harvesting 
practice of oats for the area in which the oats are grown.
    Operator means an individual, entity, or joint operation who is 
determined by the FSA county committee to be in control of the farming 
operations on the farm.
    Owner means one who has legal ownership of farmland, including:
    (1) Any agency of the Federal Government, however, such agency 
shall not be eligible to receive any payment pursuant to such contract;
    (2) One who is buying farmland under a contract for deed;
    (3) One who has a life-estate in the property; or
    (4) For purposes of enrolling a farm in a program authorized by 
chapters VII and XIV of this title:
    (i) One who has purchased a farm in a foreclosure proceeding; and
    (A) The redemption period has not passed; and
    (B) The original owner has not redeemed the property.
    (ii) One who meets the provisions of paragraph (d)(1)(i) of this 
definition shall be entitled to receive benefits in accordance with an 
agency program only to the extent the owner complies with all program 
requirements.

[[Page 16174]]

    (5) One who is an heir to property but cannot provide legal 
documentation to confirm ownership of the property, if such heir 
certifies to the ownership of the property and the certification is 
considered acceptable, as determined by the Deputy Administrator. Upon 
a false or inaccurate certification the Deputy Administrator may impose 
liability on the certifying party for additional cost that results--
however such a certification may be taken by the Deputy Administrator 
as a bar to other claims where there has been a failure of other 
persons claiming an interest in the property to act promptly to protect 
or declare their interest or where the current public records do not 
accurately set out the current ownership of the farm.
    Partial reconstitution means a reconstitution that is made 
effective in the current year for some crops, but is not made effective 
in the current year for other crops. This results in the same farm 
having two or more farm numbers in one crop year.
    Participant means one who participates in, or receives payments or 
benefits in accordance with any of the programs administered by FSA.
    Pasture means land that is used to, or has the potential to, 
produce food for grazing animals.
    Person means an individual, or an individual participating as a 
member of a joint operation or similar operation, a corporation, joint 
stock company, association, limited stock company, limited partnership, 
irrevocable trust, revocable trust together with the grantor of the 
trust, estate, or charitable organization including any entity 
participating in the farming operation as a partner in a general 
partnership, a participant in a joint venture, a grantor of a revocable 
trust, or a participant in a similar entity, or a State, political 
subdivision or agency thereof. To be considered a separate person for 
the purpose of this part, the individual or other legal entity must:
    (1) Have a separate and distinct interest in the land or the crop 
involved;
    (2) Exercise separate responsibility for such interest; and
    (3) Be responsible for the cost of farming related to such interest 
from a fund or account separate from that of any other individual or 
entity.
    Producer means an owner, operator, landlord, tenant, or 
sharecropper, who shares in the risk of producing a crop and who is 
entitled to share in the crop available for marketing from the farm, or 
would have shared had the crop been produced. A producer includes a 
grower of hybrid seed.
    Quota means the pounds allocated to a farm for a commodity in 
accordance with the Agricultural Adjustment Act of 1938, as amended.
    Random inspection means an examination of a farm by an authorized 
representative of FSA selected as a part of an impartial sample to 
determine the adherence to program requirements.
    Reconstitution means a change in the land constituting a farm as a 
result of combination or division.
    Reported acreage means the acreage reported by the farm operator, 
farm owner, farm producer, or their agent on a Form prescribed by the 
FSA.
    Required inspection means an examination by an authorized 
representative of FSA of a farm specifically selected by application of 
prescribed rules to determine adherence to program requirements or to 
verify the farm operator's, farm owner's, farm producer, or agent's 
report.
    Rice means rice excluding sweet, glutinous, or candy rice such as 
Mochi Gomi.
    Secretary means the Secretary of Agriculture of the United States, 
or a designee.
    Sharecropper means one who performs work in connection with the 
production of a crop under the supervision of the operator and who 
receives a share of such crop for its labor.
    Skip-row or strip-crop planting means a cultural practice in which 
strips or rows of the crop are alternated with strips of idle land or 
another crop.
    Staking and referencing means determining an acreage before 
planting by:
    (1) Measuring or computing a delineated area from ground 
measurements and documenting the area measured; and, (2) Staking and 
referencing the area on the ground.
    Standard deduction means an acreage that is excluded from the gross 
acreage in a field because such acreage is considered as being used for 
farm equipment turn-areas. Such acreage is established by application 
of a prescribed percentage of the area planted to the crop in lieu of 
measuring the turn area.
    State means each of the 50 States, the District of Columbia, the 
Commonwealth of Puerto Rico, Guam, the Virgin Islands of the United 
States, American Samoa, the Commonwealth of the Northern Mariana 
Islands, or the Trust Territory of the Pacific Islands.
    Subdivision means a part of a field that is separated from the 
balance of the field by temporary boundary, such as a cropline which 
could be easily moved or will likely disappear.
    Tenant means:
    (1) One who rents land from another in consideration of the payment 
of a specified amount of cash or amount of a commodity; or
    (2) One (other than a sharecropper) who rents land from another 
person in consideration of the payment of a share of the crops or 
proceeds therefrom.
    Tolerance means a prescribed amount within which the reported 
acreage and/or production may differ from the determined acreage and/or 
production and still be considered as correctly reported.
    Tract means a unit of contiguous land under one ownership, which is 
operated as a farm, or part of a farm.
    Tract combination means the combining of two or more tracts if the 
tracts have common ownership and are contiguous.
    Tract division means the dividing of a tract into two or more 
tracts because of a change in ownership or operation.
    Turn-area means the area across the ends of crop rows which is used 
for operating equipment necessary to the production of a row crop (also 
called turn row, headland, or end row).
    Upland cotton means planted and stub cotton that is produced from 
other than pure strain varieties of the Barbadense species, any hybrid 
thereof, or any other variety of cotton in which one or more of these 
varieties predominate. For program purposes, brown lint cotton is 
considered upland cotton.
    Wheat means wheat for feed or dual purpose variety that follows the 
standard planting and harvesting practice of wheat for the area in 
which the wheat is grown.


Sec.  718.3  State committee responsibilities.

    (a) The State committee shall, with respect to county committees:
    (1) Take any action required of the county committee, which the 
county committee fails to take in accordance with this part;
    (2) Correct or require the county committee to correct any action 
taken by such committee, which is not in accordance with this part;
    (3) Require the county committee to withhold taking any action 
which is not in accordance with this part;
    (4) Review county office rates for producer services to determine 
equity between counties;
    (5) Determine, based on cost effectiveness, which counties will use 
aerial compliance methods and which counties will use ground 
measurement compliance methods; or
    (6) Adjust the per acre rate for acreage in excess of 25 acres to 
reflect the actual

[[Page 16175]]

cost involved when performing measurement service from aerial slides or 
digital images.
    (b) The State committee shall submit to the Deputy Administrator 
requests to deviate from deductions prescribed in Sec.  718.108, or the 
error amount or percentage for refunds of redetermination costs as 
prescribed in Sec.  718.111.


Sec.  718.4  Authority for farm entry and providing information.

    (a) This section applies to all farms that have a tobacco allotment 
or quota under part 723 of this chapter and all farms that are 
currently participating in programs administered by FSA.
    (b) A representative of FSA may enter any farm that participates in 
an FSA or CCC program in order to conduct a farm inspection as defined 
in this part. A program participant may request that the FSA 
representative present written authorization for the farm inspection 
before granting access to the farm. If a farm inspection is not allowed 
within 30 days of written authorization:
    (1) All FSA and CCC program benefits for that farm shall be denied;
    (2) The person preventing the farm inspection shall pay all costs 
associated with the farm inspection;
    (3) The entire crop production on the farm will be considered to be 
in excess of the quota established for the farm; and
    (4) For tobacco, the farm operator must furnish proof of 
disposition of:
    (i) All tobacco which is in addition to the production shown on the 
marketing card issued with respect to such farm; and
    (ii) No credit will be given for disposing of excess tobacco other 
than that identified by a marketing card unless disposed of in the 
presence of FSA in accordance with Sec.  718.109 of this part.
    (c) If a program participant refuses to furnish reports or data 
necessary to determine benefits in accordance with paragraph (a) of 
this section, or FSA determines that the report or data was erroneously 
provided through the lack of good faith, all program benefits relating 
to the report or data requested will be denied.


Sec.  718.5  Rule of fractions.

    (a) Fractions shall be rounded after completion of the entire 
associated computation. All mathematical calculations shall be carried 
to two decimal places beyond the number of decimal places required by 
the regulations governing each program. In rounding, fractional digits 
of 49 or less beyond the required number of decimal places shall be 
dropped; if the fractional digits beyond the required number of decimal 
places are 50 or more, the figure at the last required decimal place 
shall be increased by ``1'' as follows:

------------------------------------------------------------------------
          Required decimal                 Computation          Result
------------------------------------------------------------------------
Whole numbers......................  6.49 (or less)........            6
                                     6.50 (or more)........            7
Tenths.............................  7.649 (or less).......          7.6
                                     7.650 (or more).......          7.7
Hundredths.........................  8.8449 (or less)......         8.84
                                     8.8450 (or more)......         8.85
Thousandths........................  9.63449 (or less).....        9.634
                                     9.63450 (or more).....        9.635
0 thousandths......................  10.993149 (or less)...      10.9931
                                     10.993150 (or more)...      10.9932
------------------------------------------------------------------------

    (b) The acreage of each field or subdivision computed for tobacco 
and CCC disaster assistance programs shall be recorded in acres and 
hundredths of an acre, dropping all thousandths of an acre. The acreage 
of each field or subdivision computed for crops, except tobacco, shall 
be recorded in acres and tenths of an acre, rounding all hundredths of 
an acre to the nearest tenth.


Sec.  718.6  Controlled substance.

    (a) The following terms apply to this section:
    (1) USDA benefit means the issuance of any grant, contract, loan, 
or payment by appropriated funds of the United States.
    (2) Person means an individual.
    (b) Notwithstanding any other provision of law, any person 
convicted under Federal or State law of:
    (1) Planting, cultivating, growing, producing, harvesting, or 
storing a controlled substance in any crop year shall be ineligible for 
any payment made under any Act, with respect to any commodity produced 
during the crop year of conviction and the four succeeding crop years, 
by such person.
    (2) Trafficking a controlled substance shall be, at the discretion 
of the court, ineligible for any or all USDA benefits as follows:
    (i) For up to 5 years after the first conviction;
    (ii) For up to 10 years after a second conviction; and
    (iii) Permanently for a third conviction.
    (3) Possession of a controlled substance shall be ineligible for 
any or all UDSA benefits for:
    (i) Up to one year upon the first conviction;
    (ii) For up to 5 years after a second or subsequent conviction for 
such an offense as determined by the court.
    (c) USDA benefits subject to paragraph (b) of this section include:
    (1) Any payments or benefits under the Direct and Counter Cyclical 
Program (DCP) in accordance with part 1413 of this title;
    (2) Any payments or benefits for losses to trees, crops, or 
livestock covered under disaster programs administered by FSA;
    (3) Any price support loan available in accordance with part 1464 
of this title;
    (4) Any price support or payment made under the Commodity Credit 
Corporation Charter Act;
    (5) A farm storage facility loan made under section 4(h) of the 
Commodity Credit Corporation Charter Act or any other Act;
    (6) Crop Insurance under the Federal Crop Insurance Act;
    (7) A loan made or guaranteed under the Consolidated Farm and Rural 
Development Act or any other law formerly administered by the Farmers 
Home Administration; or
    (d) If a person denied benefits under this section is a 
shareholder, beneficiary, or member of an entity or joint operation, 
benefits for which the entity or joint operation is eligible shall be 
reduced, for the appropriate period, by a percentage equal to the total 
interest of the shareholder, beneficiary, or member.


Sec.  718.7  Furnishing maps.

    A reasonable number, as determined by FSA, of reproductions of 
photographs, mosaics and maps shall be available to the owner of a farm 
insurance companies reinsured by the Federal Crop Insurance Corporation 
(FCIC), private party contractors performing their official duties on 
behalf of FSA, CCC, and other USDA agencies. To all others, 
reproductions shall be made available at the rate FSA determines will 
cover the cost of making such items available.


Sec.  718.8  Administrative county.

    (a) If all land on the farm is physically located in one county, 
the farm shall be administratively located in such county. If there is 
no FSA office in the county or the county offices have been 
consolidated, the farm shall be administratively located in the 
contiguous county most convenient for the farm operator.
    (b) If the land on the farm is located in more than one county, the 
farm shall

[[Page 16176]]

be administratively located in either of such counties as the county 
committees and the farm operator agree. If no agreement can be reached, 
the farm shall be administratively located in the county where the 
principal dwelling is situated, or where the major portion of the farm 
is located if there is no dwelling.
    (c) The State committee shall submit all requests to deviate from 
regulations specified in this section to the Deputy Administrator.


Sec.  718.9  Signature requirements.

    (a) When a program authorized by this chapter and parts 1410 and 
1413 of this title requires the signature of a producer; landowner; 
landlord; or tenant, a husband or wife may sign all such FSA or CCC 
documents on behalf of the other spouse, unless such other spouse has 
provided written notification to FSA and CCC that such action is not 
authorized. The notification must be provided to FSA with respect to 
each farm.
    (b) Except a husband or wife may not sign a document on behalf of a 
spouse with respect to:
    (1) Program document required to be executed in accordance with 
part 3 of this title;
    (2) Easements entered into under part 1410 of this title;
    (3) Power of attorney;
    (4) Such other program documents as determined by FSA or CCC.
    (c) An individual; duly authorized officer of a corporation; duly 
authorized partner of a partnership; executor or administrator of an 
estate; trustee of a trust; guardian; or conservator may delegate to 
another the authority to act on their behalf with respect to FSA and 
CCC programs administered by USDA service center agencies by execution 
of a Power of Attorney, or such other form as approved by the Deputy 
Administrator. FSA and CCC may, at their discretion, allow the 
delegations of authority by other individuals through use of the Power 
of Attorney or such other form as approved by the Deputy Administrator.
    (d) Notwithstanding another provision of this regulation or any 
other FSA or CCC regulation in this title, a parent may execute 
documents on behalf of a minor child unless prohibited by a statute or 
court order.
    (e) Notwithstanding any other provision in this title, an 
authorized agent of the Bureau of Indian Affairs (BIA) of the United 
States Department of Interior may sign as agent for landowners with 
properties affiliated with or under the management or trust of the BIA. 
For collection purposes, such payments will be considered as being made 
to the persons who are the beneficiaries of the payment or may, 
alternatively, be considered as an obligation of all persons on the 
farm in general. In the event of a need for a refund or other claim may 
be collected, among other means, by other monies due such persons or 
the farm.


Sec.  718.10  Time limitations.

    Whenever the final date prescribed in any of the regulations in 
this title for the performance of any act falls on a Saturday, Sunday, 
national holiday, State holiday on which the office of the county or 
State Farm Service Agency committee having primary cognizance of the 
action required to be taken is closed, or any other day on which the 
cognizant office is not open for the transaction of business during 
normal working hours, the time for taking required action shall be 
extended to the close of business on the next working day. Or in case 
the action required to be taken may be performed by mailing, the action 
shall be considered to be taken within the prescribed period if the 
mailing is postmarked by midnight of such next working day. Where the 
action required to be taken is with a prescribed number of days after 
the mailing of notice, the day of mailing shall be excluded in 
computing such period of time.

0
3. Subpart B is revised to read as follows:

Subpart B--Determination of Acreage and Compliance

Sec.
718.101 Measurements.
718.102 Acreage reports.
718.103 Late-filed reports.
718.104 Revised reports.
718.105 Tolerances, variances, and adjustments.
718.106 Inaccurate acreage reports.
718.107 Acreages.
718.108 Measuring acreage including skip row acreage
718.109 Deductions.
718.110 Adjustments.
718.111 Notice of measured acreage.
718.112 Redetermination.


Sec.  718.101  Measurements.

    (a) Measurement services include, but are not limited to, measuring 
land and crop areas, quantities of farm-stored commodities, and 
appraising the yields of crops in the field when required for program 
administration purposes. The county committee shall provide measurement 
service if the producer requests such service and pays the cost, except 
that service shall not be provided to determine total acreage or 
production of a crop when the request is made:
    (1) After the established final reporting date for the applicable 
crop, unless a late filed report is accepted as provided in Sec.  
718.103;
    (2) After the farm operator has furnished production evidence when 
required for program administration purposes except as provided in this 
subpart; or
    (3) In connection with a late-filed report of acreage, unless there 
is evidence of the crop's existence in the field and use made of the 
crop, or the lack of the crop due to a disaster condition affecting the 
crop.
    (b) The acreage requested to be measured by staking and referencing 
shall not exceed the effective farm allotment for marketing quota crops 
or acreage of a crop that is limited to a specific number of acres to 
meet any program requirement.
    (c) When a producer requests, pays for, and receives written notice 
that measurement services have been furnished, the measured acreage 
shall be guaranteed to be correct and used for all program purposes for 
the current year even though an error is later discovered in the 
measurement thereof, if the producer has taken action with an economic 
significance based on the measurement service, and the entire crop 
required for the farm was measured. If the producer has not taken 
action with an economic significance based on the measurement service, 
the producer shall be notified in writing that an error was discovered 
and the nature and extent of such error. In such cases, the corrected 
acreage will be used for determining program compliance for the current 
year.
    (d) When a measurement service reveals acreage in excess of the 
permitted acreage and the allowable tolerance as defined in this part, 
the producer must destroy the excess acreage and pay for FSA to verify 
destruction, in order to keep the measurement service guarantee.


Sec.  718.102  Acreage reports.

    (a) In order to be eligible for benefits, participants in the 
programs specified in paragraphs (b)(1) through (b)(6) of this section 
must annually submit accurate information as required by these 
provisions.
    (b)(1) Participants in the programs governed by part 1412 of this 
title must report the acreage of fruits and vegetables planted for 
harvest on a farm enrolled in such program;
    (2) Participants in the programs governed by parts 1421 and 1427 of 
this title must report the acreage planted to a commodity for harvest 
for which a

[[Page 16177]]

marketing assistance loan or loan deficiency payment is requested;
    (3) Participants in the programs governed by part 1410 of this 
title must report the use of land enrolled in such programs;
    (4) All participants in the programs governed by part 1437 of this 
title must report all acreage in the county of the eligible crop in 
which the producer has a share;
    (5) Participants in the programs governed by part 723 of this 
chapter and part 1464 of this title must report the acreage planted to 
tobacco by kind on all farms that have an effective allotment or quota 
greater than zero;
    (6) All participants in the programs governed by parts 1412, 1421, 
and 1427 of this title must report the use of all cropland on the farm.
    (c) The reports required under paragraph (a) of this section shall 
be timely filed by the farm operator, farm owner, producer of the crop 
on the farm, or a duly authorized representative with the county 
committee by the final reporting date applicable to the crop as 
established by the county committee and State committee.


Sec.  718.103  Late-filed reports.

    (a) A report may be accepted after the required date if the crop or 
identifiable crop residue is in the field.
    (b) The farm operator shall pay the cost of a farm inspection 
unless the County Committee determines that failure to report in a 
timely manner was beyond the producer's control.


Sec.  718.104  Revised reports.

    (a) The farm operator may revise a report of acreage with respect 
to 2002 and subsequent years to change the acreage reported if:
    (1) The county committee determines that the revision does not have 
an adverse impact on the program;
    (2) The acreage has not already been determined by FSA; and
    (3) Actual crop or residue is present in the field.
    (b) Revised reports shall be filed and accepted:
    (1) At any time for all crops if the crop or residue still exists 
in the field for inspection to verify its existence and use made of the 
crop, the lack of the crop, or a disaster condition affecting the crop; 
and
    (2) If the requirements of paragraph (a) of this section have been 
met and the producer was in compliance with all other program 
requirements at the reporting date.


Sec.  718.105  Tolerances, variances, and adjustments.

    (a) Tolerance is the amount by which the determined acreage for a 
crop may differ from the reported acreage or allotment for the crop and 
still be considered in compliance with program requirements under 
Sec. Sec.  718.102(b)(1), (b)(3) and (b)(5).
    (b) Tolerance rules apply to those fields for which a staking and 
referencing was performed but such acreage was not planted according to 
those measurements or when a measurement service is not requested for 
acreage destroyed to meet program requirements.
    (c) Tolerance rules do not apply to:
    (1) Program requirements of Sec. Sec.  718.102(b)(2), (b)(4) and 
(b)(6);
    (2) Official fields when the entire field is devoted to one crop;
    (3) Those fields for which staking and referencing was performed 
and such acreage was planted according to those measurements; or
    (4) The adjusted acreage for farms using measurement after planting 
which have a determined acreage greater than the marketing quota crop 
allotment.
    (d) An administrative variance is applicable to all allotment crop 
acreages. Allotment crop acreages as determined in accordance with this 
part shall be deemed in compliance with the effective farm allotment or 
program requirement when the determined acreage does not exceed the 
effective farm allotment by more than an administrative variance 
determined as follows:
    (1) For all kinds of tobacco subject to marketing quotas, except 
dark air-cured and fire-cured the larger of 0.1 acre or 2 percent of 
the allotment; and
    (2) For dark air-cured and fire-cured tobacco, an acreage based on 
the effective acreage allotment as provided in the table as follows:

------------------------------------------------------------------------
                                                         Administrative
   Effective acreage allotment is within this range         variance
------------------------------------------------------------------------
0.01 to 0.99.........................................               0.01
1.00 to 1.49.........................................               0.02
1.50 to 1.99.........................................               0.03
2.00 to 2.49.........................................               0.04
2.50 to 2.99.........................................               0.05
3.00 to 3.49.........................................               0.06
3.50 to 3.99.........................................               0.07
4.00 to 4.49.........................................               0.08
4.50 and up..........................................               0.09
------------------------------------------------------------------------

    (e) A tolerance applies to tobacco, other than flue-cured or 
burley, if the measured acreage exceeds the allotment by more than the 
administrative variance but by not more than the tolerance. Such excess 
acreage of tobacco may be adjusted to the effective farm acreage 
allotment to avoid marketing quota penalties or receive price support.
    (f) If the acreage report for a crop is outside the tolerance for 
that crop:
    (1) FSA may consider the requirements of Sec. Sec.  718.102 (b)(1), 
(b)(3) and (b)(5) not to have been met, and;
    (2) Participants may be ineligible for all or a portion of payments 
or benefits subject to the requirements of Sec. Sec.  718.102 (b)(1), 
(b)(3) and (b)(5).


Sec.  718.106  Non-compliance and fraudulent acreage reports.

    Participants that knowingly and willfully provide false or 
inaccurate acreage reports may be ineligible for some or all payments 
or benefits subject to the requirements of Sec. Sec.  718.102 (b)(1), 
(b)(3) and (b)(5):
    (a) The county committee determines that the acreage report filed 
according to Sec. Sec.  718.102 (b)(1), (b)(3) and (b)(5) is 
inaccurate, and;
    (b) A good-faith effort to accurately report the acreage was not 
made because the report was knowingly and willfully falsified.


Sec.  718.107  Acreages.

    (a) If an acreage has been established by FSA for an area 
delineated on an aerial photograph or within a GIS, such acreage will 
be recognized by the county committee as the acreage for the area until 
such time as the boundaries of such area are changed. When boundaries 
not visible on the aerial photograph are established from data 
furnished by the producer, such acreage shall not be recognized as 
official acreage until an authorized representative of FSA verifies the 
boundaries.
    (b) Measurements of any row crop shall extend beyond the planted 
area by the larger of 15 inches or one-half the distance between the 
rows.
    (c) The entire acreage of a field or subdivision of a field devoted 
to a crop shall be considered as devoted to the crop subject to a 
deduction or adjustment except as otherwise provided in this part.


Sec.  718.108  Measuring acreage including skip row acreage.

    (a) When one crop is alternating with another crop, whether or not 
both crops have the same growing season, only the acreage that is 
actually planted to the crop being measured will be considered to be 
acreage devoted to the measured crop.
    (b) Subject to the provisions of this paragraph and section, 
whether planted in a skip row pattern or without a pattern of skipped 
rows, the entire

[[Page 16178]]

acreage of the field or subdivision may be considered as devoted to the 
crop only where the distance between the rows, for all rows, is 40 
inches or less. If there is a skip that creates idle land wider than 40 
inches, or if the distance between any rows is more than 40 inches, 
then the area planted to the crop shall be considered to be that area 
which would represent the smaller of; a 40 inch width between rows, or 
the normal row spacing in the field for all other rows in the field--
those that are not more than 40 inches apart. The allowance for 
individual rows would be made based on the smaller of actual spacing 
between those rows or the normal spacing in the field. For example, if 
the crop is planted in single, wide rows that are 48 inches apart, only 
20 inches to either side of each row (for a total of 40 inches between 
the two rows) could, at a maximum, be considered as devoted as the crop 
and normal spacing in the field would control. Half the normal distance 
between rows will also be allowed beyond the outside planted rows not 
to exceed 20 inches and will reflect normal spacing in the field.
    (c) In making calculations under this section, further reductions 
may be made in the acreage considered planted if it is determined that 
the acreage is more sparsely planted than normal using reasonable and 
customary full production planting techniques.
    (d) The Deputy Administrator has the discretionary authority to 
allow row allowances other than those specified in this section in 
those instances in which crops are normally planted with spacings 
greater or less than 40 inches, such as in case of tobacco, or where 
other circumstances are present which the Deputy Administrator finds 
justifies that allowance.
    (e) Paragraphs (a) through (d) of this section shall apply with 
respect to the 2003 and subsequent crops. For preceding crops, the 
rules in effect on January 1, 2002, shall apply.


Sec.  718.109  Deductions.

    (a) Any contiguous area which is not devoted to the crop being 
measured and which is not part of a skip-row pattern under Sec.  
718.108 shall be deducted from the acreage of the crop if such area 
meets the following minimum national standards or requirements:
    (1) A minimum width of 30 inches;
    (2) For tobacco--three-hundredths (.03) acre. Turn areas, terraces, 
permanent irrigation and drainage ditches, sod waterways, non-cropland, 
and subdivision boundaries each of which is at least 30 inches in width 
may be combined to meet the 0.03-acre minimum requirement; or
    (3) For all other crops and land uses--one-tenth (.10) acre. Turn 
areas, terraces, permanent irrigation and drainage ditches, sod 
waterways, non-cropland, and subdivision boundaries each of which is at 
least 30 inches in width and each of which contain 0.1 acre or more may 
be combined to meet any larger minimum prescribed for a State in 
accordance with this subpart.
    (b) If the area not devoted to the crop is located within the 
planted area, the part of any perimeter area that is more than 217.8 
feet (33 links) in width will be considered to be an internal deduction 
if the standard deduction is used.
    (c) A standard deduction of 3 percent of the area devoted to a row 
crop and zero percent of the area devoted to a close-sown crop may be 
used in lieu of measuring the acreage of turn areas.


Sec.  718.110  Adjustments.

    (a) The farm operator or other interested producer having excess 
tobacco acreage (other than flue-cured or burley) may adjust an acreage 
of the crop in order to avoid a marketing quota penalty if such person:
    (1) Notifies the county committee of such election within 15 
calendar days after the date of mailing of notice of excess acreage by 
the county committee; and
    (2) Pays the cost of a farm inspection to determine the adjusted 
acreage prior to the date the farm visit is made.
    (b) The farm operator may adjust an acreage of tobacco (except 
flue-cured and burley) by disposing of such excess tobacco prior to the 
marketing of any of the same kind of tobacco from the farm. The 
disposition shall be witnessed by a representative of FSA and may take 
place before, during, or after the harvesting of the same kind of 
tobacco grown on the farm. However, no credit will be allowed toward 
the disposition of excess acreage after the tobacco is harvested but 
prior to marketing, unless the county committee determines that such 
tobacco is representative of the entire crop from the farm of the kind 
of tobacco involved.


Sec.  718.111  Notice of measured acreage.

    Notice of measured acreage shall be provided by FSA and mailed to 
the farm operator. This notice shall constitute notice to all parties 
who have ownership, leasehold interest, or other, in such farm.


Sec.  718.112  Redetermination.

    (a) A redetermination of crop acreage, appraised yield, or farm-
stored production for a farm may be initiated by the county committee, 
State committee, or Deputy Administrator at any time. Redetermination 
may be requested by a producer with an interest in the farm if they pay 
the cost of the redetermination. The request must be submitted to FSA 
within 15 calendar days after the date of the notice described in 
Sec. Sec.  718.110 or 718.111, or within 5 calendar days after the 
initial appraisal of the yield of a crop, or before the farm-stored 
production is removed from storage. A redetermination shall be 
undertaken in the manner prescribed by the Deputy Administrator. A 
redetermination shall be used in lieu of any prior determination.
    (b) The county committee shall refund the payment of the cost for a 
redetermination when, because of an error in the initial determination:
    (1) The appraised yield is changed by at least the larger of:
    (i) Five percent or 5 pounds for cotton;
    (ii) Five percent or 1 bushel for wheat, barley, oats, and rye; or
    (iii) Five percent or 2 bushels for corn and grain sorghum; or
    (2) The farm stored production is changed by at least the smaller 
of 3 percent or 600 bushels; or
    (3) The acreage of the crop is:
    (i) Changed by at least the larger of 3 percent or 0.5 acre; or
    (ii) Considered to be within program requirements.

0
4. Subpart C is revised to read as follows:

Subpart C--Reconstitution of Farms, Allotments, Quotas, and Bases

Sec.
718.201 Farm constitution.
718.202 Determining the land constituting a farm.
718.203 County committee action to reconstitute a farm.
718.204 Reconstitution of allotments, quotas, and bases.
718.205 Substantive change in farming operation, and changes in 
related legal entities.
718.206 Determining farms, tracts, allotments, quotas, and bases 
when reconstitution is made by division.
718.207 Determining allotments, quotas, and bases when 
reconstitution is made by combination.


Sec.  718.201  Farm constitution.

    (a) In order to implement agency programs and monitor farmer 
compliance with regulations, the agency must have records on what land 
is being farmed by a particular producer. This is accomplished by a 
determination of what land or groups of land `constitute' an individual 
unit or farm. Land, which

[[Page 16179]]

has been properly constituted under prior regulations, shall remain so 
constituted until a reconstitution is required under paragraph (c) of 
this section. The constitution and identification of land as a farm for 
the first time and the subsequent reconstitution of a farm made 
hereafter, shall include all land operated by an individual entity or 
joint operation as a single farming unit except that it shall not 
include:
    (1) Land under separate ownership unless the owners agree in 
writing and the labor, equipment, accounting system, and management are 
operated in common by the operator but separate from other tracts;
    (2) Land under a lease agreement of less than 1 year duration;
    (3) Land in different counties when the tobacco allotments or 
quotas established for the land involved cannot be transferred from one 
county to another county by lease, sale, or owner. However, this 
paragraph shall not apply if:
    (i) All of the land is contiguous;
    (ii) The land is located in counties that are contiguous in the 
same State if:
    (A) A burley or flue-cured tobacco quota is established for one or 
more of the tracts; and
    (B) The county committee determines that the tracts will be 
operated as a single farming unit as set forth in Sec.  718.202; or
    (iii) Because of a change in operation, tracts or parts of tracts 
will be divided from the parent farm that currently has land in more 
than one county, and there is no change in operation and ownership of 
the remainder of the farm, or if there is a change in ownership, the 
new owner agrees in writing to the constitution of the farm.
    (4) Federally-owned land;
    (5) State-owned wildlife lands unless the former owner has 
possession of the land under a leasing agreement; and
    (6) Land constituting a farm which is declared ineligible to be 
enrolled in a program under the regulations governing the program; and
    (7) For acreage base crops, land located in counties that are not 
contiguous. However, this paragraph shall not apply if:
    (i) Counties are divided by a river;
    (ii) Counties do not touch because of a correction line adjustment; 
or
    (iii) The land is within 20 miles, by road, of other land that will 
be a part of the farming unit.
    (b)(1) If all land on the farm is physically located in one county, 
the farm shall be administratively located in such county. If there is 
no FSA office in the county or the county offices have been 
consolidated, the farm shall be administratively located in the 
contiguous county most convenient for the farm operator.
    (2) If the land on the farm is located in more than one county, the 
farm shall be administratively located in either of such counties as 
the county committees and the farm operator agree. If no agreement can 
be reached, the farm shall be administratively located in the county 
where the principal dwelling is situated, or where the major portion of 
the farm is located if there is no dwelling.
    (c) A reconstitution of a farm either by division or by combination 
shall be required whenever:
    (1) A change has occurred in the operation of the land after the 
last constitution or reconstitution and as a result of such change the 
farm does not meet the conditions for constitution of a farm as set 
forth in paragraph (a) of this section except that no reconstitution 
shall be made if the county committee determines that the primary 
purpose of the change in operation is to establish eligibility to 
transfer allotments subject to sale or lease, or increase amount of 
program benefits received;
    (2) The farm was not properly constituted the previous time;
    (3) An owner requests in writing that the land no longer be 
included in a farm composed of tracts under separate ownership;
    (4) The county committee determines that the farm was reconstituted 
on the basis of false information;
    (5) The county committee determines that tracts included in a farm 
are not being operated as a single farming unit.
    (d) Reconstitution shall not be approved if the county committee 
determines that the primary purpose of the reconstitution is to:
    (1) Circumvent the provisions of part 12 of this title; or
    (2) Circumvent any other chapter of this title.


Sec.  718.202  Determining the land constituting a farm.

    (a) In determining the constitution of a farm, consideration shall 
be given to provisions such as ownership and operation. For purposes of 
this part, the following rules shall be applicable to determining what 
land is to be included in a farm.
    (b) A minor shall be considered to be the same owner or operator as 
the parent, court-appointed guardian, or other person responsible for 
the minor child, unless the parent or guardian has no interest in the 
minor's farm or production from the farm, and the minor:
    (1) Is a producer on a farm;
    (2) Maintains a separate household from the parent or guardian;
    (3) Personally carries out the farming activities; and
    (4) Maintains a separate accounting for the farming operation.
    (c) A minor shall not be considered to be the same owner or 
operator as the parent or court-appointed guardian if the minor's 
interest in the farming operation results from being the beneficiary of 
an irrevocable trust and ownership of the property is vested in the 
trust or the minor.
    (d) A life estate tenant shall be considered to be the owner of the 
property for their life.
    (e) A trust shall be considered to be an owner with the beneficiary 
of the trust; except a trust can be considered a separate owner or 
operator from the beneficiary, if the trust:
    (1) Has a separate and distinct interest in the land or crop 
involved;
    (2) Exercises separate responsibility for the separate and distinct 
interest; and
    (3) Maintains funds and accounts separate from that of any other 
individual or entity for the interest.
    (f) The county committee shall require specific proof of ownership.
    (g) Land owned by different persons of an immediate family living 
in the same household and operated as a single farming unit shall be 
considered as being under the same ownership in determining a farm.
    (h) All land operated as a single unit and owned and operated by a 
parent corporation and subsidiary corporations of which the parent 
corporation owns more than 50 percent of the value of the outstanding 
stock, or where the parent is owned and operated by subsidiary 
corporations, shall be constituted as one farm.


Sec.  718.203  County committee action to reconstitute a farm.

    Action to reconstitute a farm may be initiated by the county 
committee, the farm owner, or the operator with the concurrence of the 
owner of the farm. Any request for a farm reconstitution shall be filed 
with the county committee.


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

    (a) Farms shall be reconstituted in accordance with this subpart 
when it is determined that the land areas are not properly constituted 
and, to the extent practicable, shall be based on the facts and 
conditions existing at the time the change requiring the reconstitution 
occurred.

[[Page 16180]]

    (b) Reconstitutions of farms subject to a direct and counter-
cyclical program contract in accordance with part 1413 of this title 
will be effective for the current year if initiated on or before August 
1 or prior to the issuance of DCP payments for the farm or farms being 
reconstituted.
    (c) For tobacco farms, a reconstitution will be effective for the 
current year for each crop for which the reconstitution is initiated 
before the planting of such crop begins or would have begun.
    (d) Notwithstanding the provisions of paragraph (c) of this 
section, a reconstitution may be effective for the current year if the 
county committee determines, and the State committee concurs, that the 
purpose of the request for reconstitution is not to perpetrate a scheme 
or device designed to evade the requirements governing programs found 
in this title.


Sec.  718.205  Substantive change in farming operation, and changes in 
related legal entities.

    (a) Land that is properly constituted as a farm shall not be 
reconstituted if:
    (1) The reconstitution request is based upon the formation of a 
newly established legal entity which owns or operates the farm or any 
part of the farm and the county committee determines there is not a 
substantive change in the farming operation;
    (2) The county committee determines that the primary purpose of the 
request for reconstitution is to:
    (i) Obtain additional benefits under one or more commodity 
programs;
    (ii) Avoid damages or penalties under a contract or statute;
    (iii) Correct an erroneous acreage report; or
    (iv) Circumvent any other program provisions. In addition, no farm 
shall remain as constituted when the county committee determines that a 
substantive change in the farming operation has occurred which would 
require a reconstitution, except as otherwise approved by the State 
committee with the concurrence of the Deputy Administrator.
    (b) In determining whether a substantive change has occurred with 
respect to a farming operation, the county committee shall consider 
factors such as the composition of the legal entities having an 
interest in the farming operation with respect to management, 
financing, and accounting. The county committee shall also consider the 
use of land, labor, and equipment available to the farming operations 
and any other relevant factors that bear on the determination.
    (c) Unless otherwise approved by the State committee with the 
concurrence of the Deputy Administrator, when the county committee 
determines that a corporation, trust, or other legal entity is formed 
primarily for the purpose of obtaining additional benefits under the 
commodity programs of this title, the farm shall remain as constituted, 
or shall be reconstituted, as applicable, when the farm is owned or 
operated by:
    (1) A corporation having more than 50 percent of the stock owned by 
members of the same family living in the same household;
    (2) Corporations having more than 50 percent of the stock owned by 
stockholders common to more than one corporation; or
    (3) Trusts in which the beneficiaries and trustees are family 
members living in the same household.
    (d) Application of the provisions of paragraph (c) of this section 
shall not limit or affect the application of paragraphs (a) and (b) of 
this section.


Sec.  718.206  Determining farms, tracts, allotments, quotas, and bases 
when reconstitution is made by division.

    (a) The methods for dividing farms, tracts, allotments, quotas, and 
bases in order of precedence, when applicable, are estate, designation 
by landowner, contribution, cropland, DCP cropland, default, and 
history. The proper method shall be determined on a crop by crop basis.
    (b)(1) The estate method is the pro-rata distribution of 
allotments, quotas, and bases for a parent farm among the heirs in 
settling an estate. If the estate sells a tract of land before the farm 
is divided among the heirs, the allotments, quotas, and bases for that 
tract shall be determined according to paragraphs (c) through (h) of 
this section.
    (2) Allotments, quotas, and bases shall be divided in accordance 
with a will, but only if the county committee determines that the terms 
of the will are such that a division can reasonably be made by the 
estate method.
    (3) If there is no will or the county committee determines that the 
terms of a will are not clear as to the division of allotments, quotas, 
and bases, such allotments, quotas, and bases shall be apportioned in 
the manner agreed to in writing by all interested heirs or devisees who 
acquire an interest in the property for which such allotments, quotas, 
and bases have been established. An agreement by the administrator or 
executor shall not be accepted in lieu of an agreement by the heirs or 
devisees.
    (4) If allotments, quotas, and bases are not apportioned in 
accordance with the provisions of paragraphs (b)(2) or (b)(3) of this 
section, the allotments, quotas, and bases shall be divided pursuant to 
paragraphs (d) through (h) of this section, as applicable.
    (c)(1) If the ownership of a tract of land is transferred from a 
parent farm, the transferring owner may request that the county 
committee divide the allotments, quotas, and bases, including 
historical acreage that has been double cropped, between the parent 
farm and the transferred tract, or between the various tracts if the 
entire farm is sold to two or more purchasers, in a manner designated 
by the owner of the parent farm subject to the conditions set forth in 
paragraph (c)(3) of this section.
    (2) If the county committee determines that allotments, quotas, and 
bases cannot be divided in the manner designated by the owner because 
of the conditions set forth in paragraph (c)(3) of this section, the 
owner shall be notified and permitted to revise the designation so as 
to meet the conditions in paragraph (c)(3) of this section. If the 
owner does not furnish a revised designation of allotments, quotas, and 
bases within a reasonable time after such notification, or if the 
revised designation does not meet the conditions of paragraph (c)(3) of 
this section, the county committee will divide the allotments, quotas, 
and bases in a pro-rata manner in accordance with paragraphs (d) 
through (h) of this section.
    (3) A landowner may designate a manner in which allotments, quotas, 
and bases are divided according to this paragraph.
    (i) The transferring owner and transferee shall file a signed 
written memorandum of understanding of the designation with the county 
committee before any CCC or FSA prescribed form, letter or contract 
providing an allotment, base or quota is issued and before a subsequent 
transfer of ownership of the land. The landowner shall designate the 
allotments, quotas, and bases that shall be permanently reduced when 
the sum of the allotments, quotas, and bases exceeds the cropland for 
the farm.
    (ii) Where the part of the farm from which the ownership is being 
transferred was owned for a period of less than 3 years, the 
designation by landowner method shall not be available with respect to 
the transfer unless the county committee determines that the primary 
purpose of the ownership transfer was other than to retain or to sell 
allotments, quotas, or bases. In the absence of such a determination, 
and if the farm contains land which has been owned for less than 3 
years, that part of the farm which has been owned for less than 3 years 
shall be considered as a separate farm

[[Page 16181]]

and the allotments, quotas, or bases, shall be assigned to that part in 
accordance with paragraphs (d) through (h) of this section. Such 
apportionment shall be made prior to any designation of allotments, 
quotas, and bases with respect to the part that has been owned for 3 
years or more.
    (4) The designation by landowner method is not applicable to crop 
allotments or quotas which are restricted to transfer within the county 
by lease, sale, or by owner, when the land on which the farm is located 
is in two or more counties.
    (5) The designation by landowner method may be applied at the 
owner's request to land owned by any Indian Tribal Council which is 
leased to two or more producers for the production of any crop of a 
commodity for which an allotment, quota, or base has been established. 
If the land is leased to two or more producers, an Indian Tribal 
Council may request that the county committee divide the allotments, 
quotas, and bases between the applicable tracts in the manner 
designated by the Council. The use of this method shall not be subject 
to the conditions of paragraph (c)(3) of this section.
    (d)(1) The contribution method is the pro-rata distribution of a 
parent farm's allotments and quotas to each tract as the tract 
contributed to the allotments and quotas at the time of combination and 
may be used when the provisions of paragraphs (b) and (c) of this 
section do not apply.
    (2) The county committee determines and the State committee or a 
representative thereof concurs, that the use of the contribution method 
would not result in an equitable distribution of allotments and quotas, 
considering available land, cultural operations, and changes in type of 
farming.
    (e) The cropland method is the pro-rata distribution of allotments 
and quotas to separate tracts proportionately to the tract's 
contribution to the cropland for the parent tract. This method shall be 
used if paragraphs (b) through (d) of this section do not apply unless 
the county committee determines that division by the history method 
would result in more representative allotments and quotas than the 
cropland method, taking into consideration the operation normally 
carried out on each tract for the commodities produced on the farm.
    (f)(1) The history method is the pro-rata distribution of 
allotments and quotas to separate tracts on the basis of the operation 
normally carried out on each tract of the parent farm. The county 
committee may use the history method of dividing allotments and quotas 
when it:
    (i) Determines that this method would result in a more accurate 
pro-rata distribution of allotments and quotas based on actual 
contribution of the tract to the totals of the parent farm than the 
cropland method would; and
    (ii) Obtains written consent of all owners to use the history 
method.
    (2) The county committee may waive the requirement for written 
consent of the owners for dividing allotments and quotas if the county 
committee determines that the use of the cropland method would result 
in an inequitable division of the parent farm's allotments and quotas 
and the use of the history method would provide more favorable results 
for all owners.
    (g) The DCP cropland method is the pro-rata distribution of bases 
to the resulting tracts in the same proportion to the DCP cropland that 
each resulting tract bears to the DCP cropland for the parent tract. 
This method of division shall be used if paragraphs (b) and (c) of this 
section do not apply.
    (h) The default method is the separation of tracts from a farm with 
each tract maintaining the bases attributed to the tract when the 
reconstitution is initiated. (i)(1) Allotments, quotas, and bases 
apportioned among the resulting farms pursuant to paragraphs (d) 
through (h) of this section may be increased or decreased with respect 
to a farm by as much as 10 percent of the parent farm's allotment, 
quota, or base determined under such subsections for the parent farm 
if:
    (i) The owners agree in writing; and
    (ii) The county committee determines the method used did not 
provide an equitable distribution considering available land, cultural 
operations, and changes in the type of farming conducted on the farm. 
Any increase in an allotment, quota, or base with respect to a tract 
pursuant to this paragraph shall be offset by a corresponding decrease 
for such allotments, quotas or bases established with respect to the 
other tracts which constitute the farm.
    (2) Farm program payment yields calculated for the resulting farms 
of a division may be increased or decreased if the county committee 
determines the method used did not provide an equitable distribution 
considering available land, cultural operations, and changes in the 
type of farming conducted on the farm. Any increase in a farm program 
payment yield on a resulting farm shall be offset by a corresponding 
decrease on another resulting farm of the division.
    (j) If a farm with burley tobacco quota is divided through 
reconstitution and one or more of the farms resulting from the division 
are apportioned less than 1,000 pounds of burley tobacco quota, the 
owners of such farms shall take action as provided in part 723 of this 
chapter to comply with the 1,000 pound minimum by July 1 of the current 
year or the quota shall be dropped. Exceptions to this are farms 
divided:
    (1) Among family members;
    (2) By the estate method; and
    (3) When no sale or change in ownership of land occurs; or
    (4) With one resulting farm receiving all of the quota.


Sec.  718.207  Determining allotments, quotas, and bases when 
reconstitution is made by combination.

    When two or more farms or tracts are combined for a year, that 
year's allotments, quotas, and bases, with respect to the combined farm 
or tract, as required by applicable commodity regulations, shall not be 
greater than the sum of the allotments, quotas, and bases for each of 
the farms or tracts comprising the combination, subject to the 
provisions of Sec.  718.204.

PART 723--TOBACCO

0
5. The authority citation for part 723 continues to read as follows:

    Authority: 7 U.S.C. 1301 et seq.; 7 U.S.C. 1421; 7 U.S.C. 1445-1 
and 1445-2.


0
6. Subpart B is amended by adding Sec. Sec.  723.221, 723.222, and 
723.223 to read as follows:

Subpart B--Allotments, Quotas, Yields, Transfers, Release and 
Reapportionment, History Acreages, and Forfeitures

* * * * *


Sec.  723.221  Eminent domain acquisitions.

    (a) This section provides a uniform method for reallocating tobacco 
with respect to land involved in eminent domain acquisitions. An 
eminent domain acquisition is a taking of title to land, an easement to 
impound water on the land (impoundment), or an easement to flood the 
land (flowage), under the power of a Federal, State, or other agency. 
Acquisition may be by court condemnation of the land or by negotiation 
between the agency and the owner. This section does not apply to 
acquisition of land by an agency by a method other than eminent domain 
acquisition. All land acquired, including surrounding land acquired as 
a package acquisition, shall be considered an eminent domain

[[Page 16182]]

acquisition if the agency expended funds using its power of eminent 
domain.
    (b) In this section, owner means a person having title to the land 
for a period of at least 12 months immediately before the date of 
transfer of title or grant of the impoundment or flowage easement under 
the eminent domain acquisition. If a person has owned the land for less 
than such 12-month period, they may still be considered the owner if 
the State committee determines they acquired the land for farming and 
not for obtaining status as an owner under this section. However, no 
person shall be considered the owner if he acquired the land subject to 
a pending eminent domain acquisition contract to an agency or an option 
by an agency or subject to pending condemnation proceedings. When the 
current titleholders are not the owner according to this section, the 
State committee shall determine who previously had title to the land 
and who is the owner according to this paragraph.
    (c) Tobacco may be pooled for the benefit of an owner whose farm is 
acquired by eminent domain. Pooling shall be for a 3-year period from 
the date of displacement or during a period. The displaced owner may 
request transfer of allotments and quotas from the pool to other farms 
owned by such person.
    (d) The owner shall be considered displaced from a farm by eminent 
domain acquisition on the date:
    (1) The owner loses possession of the land;
    (2) The owner is voluntarily displaced if a binding contract for 
acquisition has been executed;
    (3) The owner, in the case of a flowage easement, determines it is 
no longer practical to conduct farming operations on the land; or
    (4) The owner loses possession of the land as lessee under a lease 
from the agency that provided uninterrupted possession to the owner 
from the date of acquisition to the end of the lease.
    (e) The owner shall notify the county committee in writing of the 
eminent domain acquisition and furnish the date of displacement within 
30 days so that tobacco may be pooled in accordance with this section. 
Failure to so notify the county committee shall result in the loss of 
the ability of the owner to extend the 3-year period provided in 
paragraph (c) of this section.
    (f) If the county committee is notified or otherwise determines 
that an owner has been displaced from the farm, the county committee 
shall establish a pool for the tobacco eligible under this section for 
a 3-year period beginning on the date of displacement. Pooled tobacco 
shall be considered fully planted and, for each year in the pool, shall 
be established in accordance with applicable regulations.
    (g) There shall be no pooling of an tobacco if:
    (1) The county committee determines that an agency has eminent 
domain power to acquire a farm for the continued production of an 
tobacco, and
    (i) The agency acquires a farm only for such purpose; and
    (ii) The agency files a written notice with the county committee 
designating the tobacco to be produced on the farm.
    (2) An agency acquires and retains the land in an agricultural or 
related activity. The tobacco for such land will be in accordance with 
applicable regulations.
    (3) A displaced owner voluntarily waives the right to have all the 
tobacco or any part pooled and requests that the tobacco be retained on 
the agency acquired land;
    (4) Agency acquired cropland will not be farmed and represents less 
than 15 percent of the total cropland on the farm. The tobacco shall be 
retained on the portion of the farm not acquired by the agency.
    (5) An agency acquires land that will not be farmed and the 
cropland it contains is less than 15 percent of the total on the farm, 
the entire tobacco for the acquired land shall be retained on the land 
not acquired by the agency. The owner must file a written request with 
the county committee for such retention. The tobacco to be retained on 
the farm cannot exceed the land devoted to an agriculture related 
activity. Tobacco that is not retained shall be pooled; or
    (6) If, prior to pooling, an owner requests transfer of the tobacco 
to other farms they own in the same county, the county committee may 
approve a transfer without establishment of a pool, subject to the 
requirements of paragraph (j) of this section. This paragraph shall 
govern the release and reapportionment of pooled tobacco 
notwithstanding other provisions of applicable commodity regulations.
    (h) Pooled tobacco may be released on an annual basis by the owner 
to a county committee during any year in which tobacco is pooled and 
not otherwise transferred from the pool. The county committee may 
reapportion the released tobacco to other farms in the same county that 
have tobacco for the same commodity. Pooled tobacco shall not be 
released on a permanent basis or surrendered after release to the State 
committee for reapportionment in other counties. Reapportionment shall 
be on the basis of past acreage of the commodity, land, labor, and 
equipment available for the production of the commodity, crop rotation 
practices, and other physical factors affecting the production of the 
commodity. Pooled tobacco that is released shall be considered to have 
been fully planted in the pool and not on the farm to which such 
tobacco is reapportioned.
    (i) Pooled tobacco that may be transferred on a permanent or 
temporary basis by sale, lease, or by owner designation may be 
transferred permanently from the pool by the owner or temporarily for 
the duration of the pooled tobacco, subject to the terms and conditions 
for such transfers in the applicable commodity regulations. The 
transfer of tobacco acreage allotment or marketing quota shall be 
approved acre for acre.
    (j)(1) Displaced owners may request a transfer of all or part of 
the pooled tobacco to any other farm in the United States that is owned 
by the displaced owner, but only if there are farms in the receiving 
county with tobacco, for the particular commodity or, if there are no 
such farms, the county committee determines that farms in the receiving 
county are suited for the production of the commodity. For purposes of 
this paragraph:
    (i) Receiving farm means the farm to which transfer from the pool 
is to be made;
    (ii) Receiving State and county committee mean those committees for 
the State and county in which the receiving farm is located; and
    (iii) Transferring State and county committees mean those 
committees for the State and county in which the agency acquired farm 
is located.
    (2) The displaced owner shall file with the receiving county 
committee written application for transfer of tobacco from the pool 
within 3 years after the date of displacement. The application shall 
contain a certification from the owner that no agreement has been made 
with any person for the purpose of obtaining tobacco from the pool for 
a person other than for the displaced owner. The owner shall attach to 
the application all pertinent documents pertaining to the current 
ownership or purchase of land and any leasing arrangements, such as the 
deed of trust or mortgage, a warranty deed, a note, sales agreement, 
and lease.
    (3) The receiving county committee shall consider each application 
and determine whether the transfer from the pool shall be approved. 
Before an application is acted upon by the receiving county committee, 
the owner shall personally appear before the

[[Page 16183]]

receiving county committee after reasonable notice, bring any 
additional pertinent documents as may be requested for examination by 
the receiving county committee, and answer all pertinent questions 
bearing on the proposed transfer. Such personal appearance requirement 
may be waived if the receiving county committee determines from facts 
presented to it on behalf of the owner that such personal appearance 
would unduly inconvenience the owner on account of illness or other 
good cause and such personal appearance would serve no useful purpose. 
Any action by the receiving county committee shall be subject to the 
approval required under paragraph (j)(5) of this section.
    (4) The transfer from the pool will be approved by the receiving 
county committee only if the county committee determines that the owner 
has made a normal acquisition of the receiving farm for the purpose of 
bona fide ownership to reestablish farming operations. The elements of 
such an acquisition shall include, but are not limited to, the 
following:
    (i) Appropriate legal documents must establish title to the 
receiving farm;
    (ii) If the displaced owner was the operator of the acquired farm 
at the date of displacement, such owner must personally operate and be 
the operator of the receiving farm for the first year that the tobacco 
is transferred;
    (iii) If the displaced owner was not the operator of the acquired 
farm at the date of displacement and was not a producer on that farm 
because the leasing or rental agreement provided for cash, fixed rent, 
or standing rent payment, such owner shall not be required to operate 
personally and be the operator of the receiving farm, but at least 75 
percent of the allotments for the receiving farm must be planted on the 
receiving farm during the first year of the transfer. With respect to a 
commodity for which a quota is applicable but for which there is no 
acreage allotment, an acreage that is equal to the result of dividing 
the quota transferred to the receiving farms by the receiving farm's 
yield, multiplied by 75 percent must be planted during the first year 
of the transfer;
    (iv) If the displaced owner was not the operator of the acquired 
farm at the date of displacement but was a producer on that farm at the 
date of displacement as the result of having received a share of the 
crops produced on the acquired farm, such displaced owner shall not be 
required to be the operator of the receiving farm but must be a 
producer on the receiving farm during the first year that tobacco is 
transferred;
    (v) The agreement between the displaced owner and the seller of the 
receiving farm must not contain a requirement that the receiving farm 
be leased to the seller or a person designated by or subject to the 
control of the seller. The seller or a person designated by or subject 
to the control of the seller may not lease the receiving farm for the 
first year the tobacco is transferred; and
    (vi) The agreement under which the receiving farm was purchased or 
leased must be customary in the community where the receiving farm is 
located with respect to purchase price and timing and amount of 
purchase or rental payments.
    (5) The approval by the receiving county committee of a transfer 
from the pool under this paragraph shall be effective upon concurrence 
by the State committee of the receiving State. The receiving State 
committee may authorize a transfer from the pool in any case where the 
owner presents evidence satisfactory to the receiving State committee 
that:
    (i) The eligibility requirements of paragraphs (j)(4)(ii) through 
(j)(4)(iv) of this section cannot be met without substantial hardship 
because of illness, old age, multiple farm ownership, or lack of a 
dwelling on the farm to which an allotment or quota is to be 
transferred; or
    (ii) The owner has made a normal acquisition of the receiving farm 
for the purpose of bona fide ownership to reestablish farming 
operations for the displaced owner, even if the farm is leased to the 
seller of the farm for the first year for which the tobacco is 
transferred.
    (6) Upon approval under this paragraph, the receiving county 
committee shall issue a notice of tobacco under the applicable 
commodity regulations, taking into consideration the land, labor, and 
equipment available for the production of the commodity, crop rotation 
practices, and the soil and other physical factors. In determining the 
tobacco available for transfer, the receiving county committee shall 
consider the receiving tract as a separate ownership. The acreage 
transferred from the pool shall not exceed the tobacco most recently 
established for the acquired farm placed in the pool. When all or a 
part of the tobacco placed in the pool is transferred and used to 
establish or increase the tobacco for other farms owned or purchased by 
the owner, all of the proportionate part of the past acreage history 
for the acquired farm shall be transferred to and considered for 
purposes of future tobacco to have been planted on the receiving farm 
for which tobacco, are established or increased under this section. If 
only a part of the available tobacco is transferred from the pool, the 
remaining part of the tobacco, shall remain in the pool for transfer to 
other farms of the owner until all such tobacco has been transferred or 
until the period of eligibility for establishing or increasing tobacco 
under this section has expired.
    (7) If any tobacco is transferred under this section and it is 
later determined by the receiving county or State committee, or by the 
Deputy Administrator, that the transfer was obtained by 
misrepresentation, or that the conditions of paragraph (j)(4) of this 
section are not met, the tobacco for the receiving farm shall be 
reduced for each year the transfer purportedly was in effect by the 
amount attributable to the tobacco transferred from the pool. If the 
time for the transfer of the tobacco from the pool has not expired, the 
tobacco initially transferred from the pool shall be returned to the 
pool after the period of time has expired in which the displaced owner 
could request administrative review. Cancellation of the transfer of 
tobacco by the receiving county committee requires approval by the 
receiving State committee. The receiving county committee shall issue a 
notice of marketing quota and penalty in accordance with applicable 
commodity regulations.
    (8) If the displaced owner requests transfer of pooled tobacco, 
within the prescribed period, but the request for transfer is filed 
during a year or a part of the pooled tobacco was released to the 
transferring county committee pursuant to paragraph (h), the request 
will be processed in the usual manner but the amount released shall not 
be effective until the succeeding year. When a request for transfer of 
pooled tobacco involves a transfer from one State to another, the 
receiving State committee shall ask the transferring State committee 
whether any of the tobacco for which transfer is requested has been 
released to the transferring county committee for the current year.
    (k)(1) When the displaced owner leases part but not all of the 
agency acquired land, such part shall be constituted as a separate farm 
on the date of the displacement of the owner from the land not so 
leased.
    (2) If a parent farm consists of separate ownership tracts, each 
such tract being acquired in whole or in part shall be considered as a 
separate farm for purposes of paragraphs (g)(3) and (g)(4) of this 
section.
    (3) If a portion of a farm is acquired by an agency and the owner 
is displaced

[[Page 16184]]

therefrom, the acquired portion shall be constituted as a separate farm 
on the date of displacement unless the tobacco is retained on the 
portion not acquired as provided in paragraphs (g)(3) and (g)(4) of 
this section, in which case the farm shall not be reconstituted but the 
farmland and cropland data shall be corrected on all appropriate 
records for the parent farm.
    (l)(1) The displaced owner may request from the county committee a 
written designation of beneficiary of the rights in the tobacco 
attributable to the acquired land in the event of the death of the 
displaced owner, and may revise such designation from time to time. The 
beneficiary of a deceased owner may continue a lease or negotiate a 
lease with the agency, transfer rights with respect to farms owned by 
the beneficiary, and release, sale, lease, and owner transfer rights 
under this section.
    (2) If the displaced owner does not file a designation of 
beneficiary under paragraph (l)(1) of this section and the displaced 
owner dies before displacement or after pooling occurs, the following 
persons shall be considered the beneficiary with applicable rights:
    (i) The surviving joint owner of the farm where two persons own the 
farm as joint tenants with right of survivorship; and
    (ii) The persons who succeed to the deceased displaced owner's 
interest under a will or by intestate succession. However, in the case 
of intestate succession, the person shall be limited to the surviving 
spouse, parent, sibling or child of the deceased displaced owner. In 
the settlement of the estate of the deceased displaced owner, the heirs 
may file a written agreement with the county committee for the division 
of the deceased displaced owner's rights under this section.
    (m)(1) No transfer from the pool under paragraphs (h), (i), or (j) 
of this section shall be approved if there remains any unpaid marketing 
quota penalty due with respect to the marketing of the commodity from 
the acquired farm by the displaced owner, or if any of the commodity 
produced on the agency acquired farm has not been accounted for as 
required under applicable regulations.
    (2) If tobacco for an acquired farm next established after the date 
of displacement would have been reduced because of false or improper 
identification of the commodity produced on or marketed from the farm, 
or as the result of a false acreage report, the tobacco shall be 
reduced in the pool accordance to applicable regulations.


Sec.  723.222  Exempting Federal prison farms and Federal wildlife 
refuges.

    A marketing penalty shall not be assessed with respect to any 
commodity that is produced on a Federal prison farm or Federal wildlife 
refuge. This exception does not apply to penalties incurred by an 
individual who has a separate interest in a crop that is subject to 
marketing quotas and was produced on a Federal prison farm or Federal 
wildlife refuge.


Sec.  723.223  Transfer of allotments and quotas--State public lands.

    (a) Transfers of allotments and quotas between farms in the same 
county may be permitted where both farms are lands owned by the State.
    (b) An application requesting the transfer of one or more of the 
allotments and quotas on a farm entirely comprised of lands owned by a 
State shall be filed with the county committee by the State. The 
application shall identify the farms as being within the same county, 
show that each farm is entirely comprised of lands owned by the State, 
and list the allotments and quotas requested to be transferred. 
Additional information about the farm operations, including leases, 
shall also be included in the application.
    (c) The State committee shall establish the closing date for filing 
applications under paragraph (b) of this section, for each year, which 
shall be no later than the general planting date in the county for the 
commodity involved in the transfer.
    (d)(1) Each transfer of an allotment and quota shall be adjusted 
for differences in farm productivity if the yield projected for the 
year the transfer is to take effect for the farm to which transfer is 
made exceeds by more than ten percent the yield projected for the year 
the transfer is to take effect for the farm from which transfer is 
made. The county committee shall determine the amount of the allotment 
and quota to be transferred where a productivity adjustment is required 
to be made by dividing:
    (i) The product of the yield for the farm from which the transfer 
is made and the acreage to be transferred from such farm, by
    (ii) The yield for the farm to which the transfer is made.
    (2) Acreage for the farm receiving the allotment or quota shall be 
adjusted by the same percentage as the allotment or quota being 
transferred is adjusted. The allotment and quota and related acreage 
transferred from the farm from which the transfer is made shall be the 
full amount, but the amount of all allotment or quota and related 
acreage for the farm to which the transfer is made shall be the 
adjusted amount.
    (e) The amount of allotment and quota on a farm after a transfer 
under this section is made shall not exceed the average amount of 
allotment or quota of at least three farms with acreage of cropland 
similar to the farm receiving the transfer in the community having the 
applicable allotment acreage and quota on these farms.
    (f) Each transfer of any allotment and quota shall be require that 
acreage equal to the allotment and quota transferred shall be devoted 
to and maintained in permanent vegetative cover on the farm from which 
the transfer is made before any productivity adjustment. The acreage to 
be devoted to and maintained in permanent vegetative cover with respect 
to quota crops shall be determined by dividing the quota transferred by 
the yield of the farm from which the quota is transferred.
    (g) Transfer of an allotment and quota under this section shall 
only be approved if:
    (1) The county committee determines that a timely filed application 
has been received and that the provisions of this section have been 
met; and
    (2) A representative of the State committee also determines that 
the provisions of this section have been met. If a transfer is 
approved, the county committee shall issue revised notices of the 
allotment or quota for each farm affected. If a county committee 
determines that requirements for a transfer were not met, a report 
shall be provided to the State committee. If the State committee agrees 
that requirements were not met, the transfer will be canceled, and the 
allotment and quota shall be transferred back to the original farm. 
Where a cancellation and transfer back is required, the county 
committee shall issue revised notices of the allotment or quota showing 
the reasons for the cancellation.

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

    7. Amend Sec.  1412.407 as follows:

0
A. By revising paragraph (d)(2) to read as set forth below.
0
B. Amend paragraph (e) by adding Houston County, Alabama, Tazewell 
County, Illinois, and Clinton County, Pennsylvania as State Committee-
established regions within the respective states.


Sec.  1412.407  Planting flexibility.

* * * * *
    (d) * * *
    (2) The farm has a history of planting fruits, vegetables, or wild 
rice, as

[[Page 16185]]

determined by the CCC, in any one of the crop years 1991 through 1995 
or 1998 through 2001, in which case the payment acres for the farm 
shall be reduced on an acre-for-acre basis; or
* * * * *

PART 1413--HARD WHITE WHEAT INCENTIVE PROGRAM

0
8. Amend Sec.  1413.101 by revising paragraph (b) to read as follows:


Sec.  1413.101  Applicability.

* * * * *
    (b) A production payment incentive shall be available only for hard 
white wheat that grades U.S.  2 grade or higher, established 
by the Federal Grain Inspection Service, that is produced and harvested 
in the United States.
* * * * *


Sec.  1413.105  [Amended]

0
9. Amend Sec.  1413.105 by redesignating the second paragraph (c)(1) 
and paragraph (c)(2) as paragraphs (c)(2) and (c)(3) respectively.

    Signed in Washington, DC, on February 19, 2003.
James R. Little,
Administrator, Farm Service Agency and Executive Vice-President, 
Commodity Credit Corporation.
[FR Doc. 03-8025 Filed 3-31-03; 3:45 pm]
BILLING CODE 3410-05-P