[Federal Register Volume 71, Number 210 (Tuesday, October 31, 2006)]
[Rules and Regulations]
[Pages 63668-63674]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-18247]


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DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1430

RIN 0560-AH59


2005 Dairy Disaster Assistance Payment Program

AGENCIES: Commodity Credit Corporation, USDA.

ACTION: Final rule.

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SUMMARY: This rule sets forth the regulations for the 2005 Dairy 
Disaster Assistance Payment Program. This program will assist dairy 
producers by providing payments to those who suffered dairy production 
and milk spoilage losses due to hurricanes or a related condition in 
2005.

DATES: This rule is effective October 31, 2006.

FOR FURTHER INFORMATION CONTACT: Danielle Cooke, Price Support 
Division, Farm Service Agency, United States Department of Agriculture, 
STOP 0512, 1400 Independence Avenue, SW., Washington, DC 20250-0512. 
Telephone: (202) 720-1919; e-mail: [email protected].

SUPPLEMENTARY INFORMATION:

Notice and Comment

    Section 3034 of the Emergency Agricultural Disaster Assistance Act 
of 2006 (the 2006 Act) requires that the regulations necessary to 
implement Title III of the 2006 Act, which includes the regulations for 
this program, are to be promulgated without regard to the notice and 
comment provisions of 5 U.S.C. 553 or the Statement of Policy of the 
Secretary of Agriculture effective July 24, 1971 (36 FR 13804), 
relating to notices of proposed rulemaking and public participation in 
rulemaking. These regulations are thus issued as final.

Executive Order 12866

    This final rule has been determined to be significant under 
Executive Order 12866 and has been reviewed by the Office of Management 
and Budget.

Regulatory Flexibility Act

    The Regulatory Flexibility Act does not apply to this rule because 
CCC is not required by 5 U.S.C. 553 or any other law to publish a 
notice of proposed rulemaking with respect to the subject of this rule.

Environmental Assessment

    The environmental impacts of this rule have been considered 
consistent 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. To the extent 
these authorities may apply, CCC has concluded that this rule is 
categorically excluded from further environmental review 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 12988

    The rule has been reviewed in accordance with Executive Order 
12998. This final rule preempts State laws to the extent such laws are 
inconsistent with it. This rule is not retroactive. Before judicial 
action may be brought concerning this rule, all administrative remedies 
set forth at 7 CFR parts 11 and 780 must be exhausted.

Executive Order 12612

    This rule does not have Federalism implications that warrant the 
preparation of a Federalism Assessment. This rule will not have a 
substantial direct effect on States or their political subdivisions, or 
on the distribution of power and responsibilities among the various 
levels of government.

Executive Order 12372

    This program is not subject to Executive Order 12372, which 
requires intergovernmental consultation with State and local officials. 
See the notice related to 7 CFR part 3015, subpart V, published at 48 
FR 29115 (June 24, 1983).

Unfunded Mandates

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

Paperwork Reduction Act of 1995

    Section 3034 of the 2006 Act provides that the promulgation of 
regulations and the administration of Title III of the 2006 Act shall 
be made without regard to chapter 5 of title 44 of the Untied 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 OMB under the Paperwork Reduction Act.

Government Paperwork Elimination Act

    CCC is committed to compliance with the Government Paperwork 
Elimination Act (GPEA) and the Freedom to E-File Act, which require 
Government agencies in general, and FSA in particular, to provide the 
public the option of submitting information or transacting business 
electronically to the maximum extent possible. The forms and other 
information collection activities required to be utilized by a person 
subject to this rule are not yet fully implemented in a way that would 
allow the public to conduct business with CCC electronically. 
Accordingly, at this time, all forms required to be submitted under 
this rule may be submitted to CCC by mail or FAX.

Background

    Section 3014 of the 2006 Act requires the Secretary of Agriculture 
to use $17 million to make payments to dairy producers for losses in 
counties affected by 2005 hurricanes. Hurricanes Katrina, Ophelia, 
Rita, and Wilma severely impacted dairy producers in certain areas of 
the Gulf region of the United States during the months of August 
through October of 2005. As a result, several dairy producers incurred 
devastating decreases in production due to cattle losses and milk that 
had to be dumped because of closed milk plants and damaged containment 
equipment. Also, the loss of electricity, the shortage of fuel, and 
infrastructure damage temporarily interrupted the flow of dairy 
products to markets.
    Pursuant to the legislation, this rule addresses the situation by 
establishing a program similar to the 2004 Dairy Disaster Assistance 
Payment (DDAP-I) Program authorized by section 103 of Division B of 
Public Law 108-324, for dairy production and spoilage losses incurred 
by producers in the southeastern region of the United States, due to 
2004 Hurricanes Charley, Frances, Ivan, and Jeanne. The final rule for 
DDAP-I was published on

[[Page 63669]]

September 26, 2005 (70 FR 56113). As with DDAP-I, the payments provided 
by this rule will offset a portion of the per-pound losses dairy 
producers have incurred commercially marketing milk in the United 
States.
    Dairy producers who suffered production losses and dairy spoilage 
losses, as a result of Hurricanes Katrina, Ophelia, Rita, and Wilma 
disaster, or a condition related to those hurricanes, may apply for 
compensation for losses incurred during the 2005 calendar year. 
Benefits will be provided to eligible dairy producers in those counties 
declared a natural disaster by the Secretary of Agriculture or 
designated a major disaster or emergency by the President of the United 
States, who meet all program eligibility requirements, and are 
subsequently approved for participation in the 2005 Dairy Disaster 
Assistance Payment Program. This program is similar to a program 
operated with respect to 2004 programs (DDAP-I) and will be referred to 
as DDAP-II. Dairy producers in counties contiguous to a directly 
eligible county are also eligible for DDAP-II benefits. Eligible dairy 
producers will receive an immediate payment to help pay operating 
expenses and meet other financial obligations.
    To be eligible, dairy producers must have produced milk in the 
United States during the 2005 calendar year as part of a dairy 
operation located in a county declared a natural disaster in 2005, or a 
contiguous county, because of Hurricane Katrina, Ophelia, Rita, or 
Wilma. Losses and declarations associated with Hurricane Dennis or 
other disasters are not covered. As a result of the hurricanes or 
related condition, the producer must have suffered dairy production 
losses and dairy spoilage losses in the eligible months. In addition, 
adequate evidence of dairy production losses and dairy spoilage losses 
must be provided to FSA to substantiate the losses suffered and 
certified by each producer. Payments will be made according to a 
formula and will be subject to funding and other limitations. Further, 
payments will not be reduced as a result of payments from a milk buyer 
or marketing cooperative for dumped or spoiled milk.
    Applicants must apply for benefits during the sign-up period 
announced by the Deputy Administrator for Farm Programs. At the close 
of the sign-up period, the total production and spoilage losses from 
all eligible applicants will be determined. Payment eligibilities will 
be separately calculated on an operation by operation basis. An 
individual may be involved in more than one operation. Payments to 
eligible producers will be calculated by multiplying the eligible 
pounds by the average price received for commercial milk production in 
the affected areas during the eligible months. If the total amount of 
available funding ($17 million, less any reserve established to account 
for disputed claims) is insufficient to compensate eligible producers 
for eligible losses, then CCC will pay losses at two levels in an 
effort to more equitably distribute the limited funds and maximize the 
effectiveness of the program.
    Specifically, in case of inadequate funds for all eligible losses, 
CCC will calculate each operation's overall quarterly percentage 
reduction for the full disaster claim period that corresponds with the 
applicable hurricane, from the calculated base for the operation for 
the full quarter for the applicable hurricane. The disaster claim 
period applicable to: (1) Hurricane Katrina and Hurricane Rita are the 
months of August through December 2005; and (2) Hurricane Ophelia and 
Hurricane Wilma are the months of October through December 2005. If a 
reduced payment is needed due to funding constraints, calculated losses 
over the applicable disaster claim period greater than 20 percent of a 
producer's normal production will be paid at the maximum per-pound 
payment rate. A loss over 20 percent in one or two of the eligible 
months will not qualify for the maximum per-pound payment. Payments for 
eligible losses below the 20-percent threshold will be made at a rate 
that will exhaust the available funds that remain following payment of 
eligible losses at the higher level. The 20 percent threshold mirrors 
that of DDAP-I and some other disaster programs. An example of how the 
apportionment might affect producers is set out below. If funds are 
adequate for all eligible losses, all eligible producers will be paid 
at the ``maximum rate'' which amounts to the average price received for 
commercial milk production in their area during the applicable months 
of August through December of 2005. The apportionment example is as 
follows:
    Example:

----------------------------------------------------------------------------------------------------------------
                                    Producer A           Producer B           Producer C
                                   (Louisiana)           (Florida)            (Alabama)       Producer D (Texas)
----------------------------------------------------------------------------------------------------------------
Total Base Production........  800,000              2,000,000            1,500,000            600,000
                              ==================================================================================
Actual Production............  485,000              1,820,000            1,070,000            490,000
Pounds Dumped or Spoiled.....  5,000                20,000               20,000               10,000
                              ----------------------------------------------------------------------------------
    Total Eligible `Loss.....  320,000              200,000              450,000              120,000
                              ==================================================================================
20% of Base Production.......  160,000              400,000              300,000              120,000
Pounds of loss above 20% loss  160,000              0                    150,000              0
 level.
Payment Rate.................  $0.1647/lb.          $0.1819/lb.          $0.1649/lb.          $0.1419/lb.
DDAP for loss above 20%......  $26,352              $0                   $24,735              $0
DDAP for under 20% loss @      $19,200              $24,000              $36,000              $14,400
 $0.12/lb. (example only).
                              ----------------------------------------------------------------------------------
    Total DDAP...............  $45,552              $24,000              $60,735              $14,400
                              ==================================================================================
Eligible Losses x average      $52,704              $36,380              $74,205              $17,028
 price.
Percent production loss        40                   10                   30                   20
 suffered.
Percent financial losses       86                   66                   82                   85
 recovered from DDAP.
----------------------------------------------------------------------------------------------------------------

    Dairy producers who have received a payment for the loss under the 
Dairy Indemnity Payment Program (7 CFR part 760) shall be ineligible 
for payments under this rule. Gross revenue and per-person payment 
limits do not apply. Payments are subject to all requirements of the 
regulations and program documents. Information provided on

[[Page 63670]]

applications and supporting documentation will be subject to 
verification by FSA. False certifications by producers carry strict 
penalties and FSA will verify applications with random spot-checks. 
Dairy producers determined to have made any false certifications or 
adopted any misrepresentation, scheme, or device that defeats the 
program's purpose will be required to refund any payments issued under 
this program with interest, and may be subject to other civil, 
criminal, or administrative remedies. Payments will be made according 
to a formula and will be subject to limitations. During the application 
period, dairy producers may apply in person at FSA county offices 
during regular business hours. Applications may also be submitted to 
CCC by mail or FAX. Program applications may be obtained in person, by 
mail, telephone, and facsimile from producers' designated FSA county 
office or via the Internet at www.fsa.usda.gov/dafp/psd/.

List of Subjects in 7 CFR Part 1430

    Dairy, Disaster assistance, Reporting and recordkeeping 
requirements.

0
Accordingly, for the reasons set out in the preamble, 7 CFR part 1430 
is amended as follows:

PART 1430--DAIRY PRODUCTS

0
1. The authority citation for part 1430 is revised to read as follows:

    Authority: 7 U.S.C. 7981 and 7982; 15 U.S.C. 714b and 714c; Sec. 
3014 of Pub. L. 109-234, 16 U.S.C. 3801 note, 120 Stat. 474.


0
2. Add subpart E to read as follows:

Subpart E--2005 Dairy Disaster Assistance Payment Program (DDAP-II)

Sec.
1430.300 Applicability.
1430.301 Administration.
1430.302 Definitions.
1430.303 Time and method of application.
1430.304 Eligibility.
1430.305 Proof of production.
1430.306 Determination of losses incurred.
1430.307 Rate of payment and limitations on funding.
1430.308 Availability of funds.
1430.309 Appeals.
1430.310 Misrepresentation and scheme or device.
1430.311 Death, incompetence, or disappearance.
1430.312 Maintaining records.
1430.313 Refunds; joint and several liability.
1430.314 Miscellaneous provisions.

Subpart E--2005 Dairy Disaster Assistance Payment Program II (DDAP-
II)


Sec.  1430.300  Applicability.

    (a) Subject to the availability of funds, this subpart sets forth 
the terms and conditions applicable to DDAP-II authorized by section 
3014 of Public Law 109-234. Benefits are available to eligible United 
States producers who have suffered in 2005 dairy production losses and 
dairy spoilage losses in eligible counties as a result of Hurricanes 
Katrina, Ophelia, Rita, and Wilma or conditions related to those 
hurricanes.
    (b) To be eligible for this program, a producer must have been a 
milk producer in 2005 in a county declared a natural disaster by the 
Secretary of Agriculture or declared a major disaster or emergency 
designated by the President of the United States due to a 2005 
hurricane or related condition thereof, or in a contiguous county to a 
county that is directly eligible by way of a natural disaster 
declaration. Only losses occurring in these counties are eligible for 
payment under this program.
    (c) Subject to the availability of funds, benefits shall be 
provided by the Commodity Credit Corporation (CCC) to eligible dairy 
producers. Additional terms and conditions may be set forth in the 
payment application that must be executed by participants to receive a 
disaster assistance payment for dairy production losses and dairy 
spoilage losses.
    (d) To be eligible for payments, producers must comply with the 
provisions of, and their losses must meet the conditions of, this 
subpart and any other conditions imposed by CCC.


Sec.  1430.301  Administration.

    (a) DDAP-II shall be administered under the general supervision of 
the Executive Vice President, CCC, or a designee, and shall be carried 
out in the field by FSA State and county committees (State and county 
committees) and FSA employees.
    (b) State and county committees, and representatives and employees 
thereof, do not have the authority to modify or waive any of the 
provisions of the regulations of this subpart.
    (c) The State committee shall take any action required by the 
regulations of this subpart that has not been taken by the county 
committee. The State committee shall also:
    (1) Correct, or require the county committee to correct, any action 
taken by such county committee that is not in accordance with the 
regulations of this subpart; and
    (2) Require a county committee to withhold taking any action that 
is not in accordance with the regulations of this subpart.
    (d) No provision of delegation in this subpart to a State or county 
committee shall preclude the Executive Vice President, CCC, or a 
designee, from determining any question arising under the program or 
from reversing or modifying any determination made by the State or 
county committee.
    (e) The Deputy Administrator, Farm Programs, FSA, may authorize 
State and county committees to waive or modify deadlines in cases where 
lateness or failure to meet such requirements do not adversely affect 
the operation of the 2005 Dairy Disaster Assistance Payment Program II 
and does not violate statutory limitations on the program.
    (f) Data furnished by the applicants is used to determine 
eligibility for program benefits. Although participation in DDAP-II is 
voluntary, program benefits are not provided unless the participant 
furnishes all requested data.


Sec.  1430.302  Definitions.

    The definitions in 7 CFR part 718 shall apply to this subpart 
except to the extent they are inconsistent with the provisions of this 
subpart. In addition, for the purpose of this subpart, the following 
definitions shall apply.
    Application means DDAP-II Application.
    Application period means the time period established by the Deputy 
Administrator for producers to apply for program benefits.
    Base month means the base month for the particular 2005 hurricane 
assigned in Sec.  1430.304.
    CCC means the Commodity Credit Corporation of the Department.
    Claim period means as assigned in this subpart the qualifying 
months of calendar year 2005, following the base month, in which the 
loss occurred.
    County committee means the FSA county committee.
    County office means the FSA office responsible for administering 
FSA programs for farms located in a specific area in a State.
    Dairy operation means any person or group of persons who, as a 
single unit, as determined by CCC, produces and markets milk 
commercially from cows and whose production facilities are located in 
the United States.
    Department or USDA means the United States Department of 
Agriculture.
    Deputy Administrator means the Deputy Administrator for Farm 
Programs (DAFP), FSA, or a designee.

[[Page 63671]]

    Farm Service Agency or FSA means the Farm Service Agency of the 
Department.
    Hundredweight or cwt. means 100 pounds.
    Hurricane-affected county means a county included in the geographic 
area covered by a natural disaster declaration related to Hurricane 
Katrina, Hurricane Ophelia, Hurricane Rita, Hurricane Wilma or 
conditions related to those hurricanes, and includes counties which 
qualify because they are contiguous to a county that qualifies by a 
natural disaster declaration.
    Milk handler or cooperative means the marketing agency to, or 
through which, the producer commercially markets whole milk.
    Milk marketings means a marketing of milk for which there is a 
verifiable sales or delivery record of milk marketed for commercial 
use. In counting milk toward production amounts, dumped milk will not 
be considered as marketed for commercial use. Such dumped milk shall be 
counted toward production but will be accounted for separately from 
milk that is marketed for normal commercial use as determined by the 
Deputy Administrator. All production in the months for which loss 
coverage is available will be counted in making determinations under 
this part, as determined by the Deputy Administrator, with care to 
avoid double counting, and with care to avoid a calculated loss that 
overstates the actual losses. Adjustments may be made as appropriate to 
accomplish these objectives.
    Natural disaster declaration means a natural disaster declaration 
issued by the Secretary of Agriculture during calendar year 2005 under 
section 321(a) of the Consolidated Farm and Rural Development Act (7 
U.S.C. 1961 (a)), or a major disaster or emergency designation by the 
President of the United States during calendar year 2005 under the 
Robert T. Stafford Disaster Relief and Emergency Assistance Act, 
including declarations and designations by both the President and 
Secretary made during calendar year 2006 for which a request was 
pending as of December 31, 2005.
    Payment pounds means the pounds of milk production from a dairy 
operation for which the dairy producer is eligible to be paid under 
this subpart.
    Producer means any individual, group of individuals, partnership, 
corporation, estate, trust association, cooperative, or other business 
enterprise or other legal entity who is, or whose members are, citizens 
of, or legal resident aliens in the United States, and who directly or 
indirectly, as determined by the Secretary, share in the risk of 
producing milk, and make contributions (including land, labor, 
management, equipment, or capital) to the dairy farming operation of 
the individual or entity.
    Reliable production records means evidence provided by the producer 
that is used to substantiate the amount of production reported when 
verifiable records are not available, including copies of receipts, 
ledgers of income, income statements of deposit slips, register tapes, 
and records to verify production costs, contemporaneous measurements, 
and contemporaneous diaries that are determined acceptable by the 
county committee.
    Starting base production means actual commercial production 
marketed by the dairy operation during the base month applicable to the 
2005 hurricane disaster, or alternative period established by the 
Deputy Administrator.
    Verifiable production records means evidence that is used to 
substantiate the amount of production including any part marketed 
normally, dumped, or otherwise disposed of, and that can be verified by 
CCC through an independent source.


Sec.  1430.303  Time and method of application.

    (a) Dairy producers may obtain an Application, in person, by mail, 
by telephone, or by facsimile from any county FSA office. In addition, 
applicants may download a copy of the Application at http://www.sc.egov.usda.gov.
    (b) A request for benefits under this subpart must be submitted on 
a completed Application as defined in Sec.  1430.302. Applications and 
any other supporting documentation shall be submitted to the FSA county 
office serving the county where the dairy operation is located but, in 
any case, must be received by the FSA county office by the close of 
business on the date established by the Deputy Administrator. The 
closing date shall be no sooner than November 30, 2006. Applications 
not received by the close of business on such date will be disapproved 
as not having been timely filed and the dairy producer will not be 
eligible for benefits under this program.
    (c) All persons who share in the risk of a dairy operation's total 
production must certify to the information on the Application before 
the Application is considered complete.
    (d) Each dairy producer requesting benefits under this subpart must 
certify to the accuracy and truthfulness of the information provided in 
their application and any supporting documentation. All information 
provided is subject to verification by CCC. Refusal to allow CCC or any 
other agency of the Department of Agriculture to verify any information 
provided will result in a denial of eligibility. Furnishing the 
information is voluntary; however, without it program benefits will not 
be approved.


Sec.  1430.304  Eligibility.

    (a) Producers in the United States are eligible to receive 
hurricane-related dairy disaster benefits under this part only if they 
have suffered dairy production or dairy spoilage losses in 2005 as a 
result of a hurricane disaster or related condition, in a hurricane-
affected county. To be eligible to receive payments under this subpart, 
producers in a dairy operation must:
    (1) Have produced and commercially marketed milk in the United 
States and commercially marketed the milk produced during the 2005 
calendar year;
    (2) Be a producer on a dairy farm operation physically located in 
an eligible county where dairy production and milk spoilage losses were 
incurred as a result of 2005 hurricanes, or a related condition, in and 
limiting their claims to losses occurring in those counties and 
contiguous counties;
    (3) Provide adequate proof, to the satisfaction of the County 
Committee, of monthly milk production dumped and commercially marketed 
by all persons in the eligible dairy operation during the base month 
and claim period that corresponds with the applicable hurricane-related 
disaster during the 2005 milk marketing year, or other period as 
determined by CCC, to determine the total pounds of eligible losses 
that will be used for payment; and
    (4) Apply for payments during the application period established by 
the Deputy Administrator.
    (b) Payments may be made for losses suffered by an otherwise 
eligible producer who is now deceased or is a dissolved entity if a 
representative who currently has authority to enter into a contract for 
the producer or the producer's estate signs the application for 
payment. Proof of authority to sign for the deceased producer's estate 
or a dissolved entity must be provided. If a producer is now a 
dissolved general partnership or joint venture, all members of the 
general partnership or joint venture at the time of dissolution or 
their duly-authorized representatives must sign the application for 
payment.
    (c) Producers associated with a dairy operation must submit a 
timely application and comply with terms and conditions of this 
subpart, instructions

[[Page 63672]]

issued by CCC and instructions contained in the Application to be 
eligible for benefits under this subpart.
    (d) As a condition to receive benefits under this part, a producer 
must have been in compliance with the Highly Erodible Land Conservation 
and Wetland Conservation provisions of 7 CFR part 12 for the 2005 
calendar year, as applicable, and must not otherwise be barred from 
receiving benefits under 7 CFR part 12 or any other law or regulation.
    (e) Payments are limited to losses in eligible counties, in 
eligible months.
    (f) All payments under this part are subject to the availability of 
funds.
    (g) Eligible losses are determined from the applicable base month 
that corresponds to the hurricane disaster or related condition and 
must have occurred during the claim periods applicable to the disaster 
as follows:
    (1) For Hurricane Katrina and Hurricane Rita the base month is July 
2005 and the corresponding claim period are the 2005 calendar months of 
August through December; and
    (2) For Hurricane Ophelia and Hurricane Wilma the base month is 
September 2005 and the corresponding claim period are the 2005 calendar 
months of October through December.


Sec.  1430.305  Proof of production.

    (a) Evidence of production is required to establish the commercial 
marketing and production history of the dairy operation so that dairy 
production and spoilage losses can be computed in accordance with Sec.  
1430.306.
    (b) A dairy producer must, based on the instructions issued by the 
Deputy Administrator, provide adequate proof of the dairy operation's 
commercial production, including any dumped production and dairy cow 
purchases, for each month of the applicable base month and claim period 
that corresponds with the applicable 2005 hurricane disaster or related 
condition, and must specifically identify any production during the 
applicable claim period that is dumped. If a month other than the 
applicable base month is used for base creation purposes, records for 
that month must be provided.
    (1) A producer must certify and provide such proof as requested 
that losses for which compensation is claimed were hurricane-related 
and occurred in an eligible county in an eligible month.
    (2) Additional supporting documentation may be requested by CCC as 
necessary to verify production or spoilage losses and dairy herd 
increases or decreases to the satisfaction of CCC.
    (c) Adequate proof of production history of the dairy operation 
under paragraph (b) of this section must be based on milk marketing 
statements obtained from the dairy operation's milk handler or 
marketing cooperative. Supporting documents may include, but are not 
limited to: Tank records, milk handler records, daily milk marketings, 
copies of any payments received from other sources for production or 
spoilage losses, or any other documents available to confirm or adjust 
the production history and losses incurred by the dairy operation.
    (d) Adequate proof of dairy cow additions to the milking herd 
during the eligible months can include, but is not limited to sales 
receipts, invoices, State health certificates, or any other documents 
available to confirm the cow purchases.
    (e) If adequate proof of normally marketed production, dumped 
production, and any other production for relevant periods is not 
presented to the satisfaction of CCC, the request for benefits will be 
rejected. In the case of a new producer that had no verifiable, actual, 
commercial production marketed by the dairy operation during the 
applicable base month, but which suffered eligible losses, an alternate 
base period may be established by the Deputy Administrator.


Sec.  1430.306  Determination of losses incurred.

    (a) Eligible payable losses are calculated on a dairy operation by 
dairy operation basis and are limited to those occurring during the 
applicable claim period, as provided by Sec.  1430.304(g), that 
corresponds with the hurricane-related disaster. Specifically, dairy 
production and spoilage losses incurred by producers under this subpart 
are determined on the established history of the dairy operation's 
actual commercial production marketed during the applicable claim 
period that corresponds with the hurricane-related disaster, and actual 
production dumped or otherwise not marketed during that same claim 
period, as provided by the dairy operation consistent with Sec.  
1430.305. Except as otherwise provided in these regulations, the 
starting base production, as defined in Sec.  1430.302 and established 
in Sec.  1430.304(g), is adjusted downward by a percentage determined 
by CCC to determine the base production for the applicable claim period 
that corresponds to the hurricane-related disaster. These adjustments 
are made to account for the seasonal declines that can occur during the 
months within the claim period. The base production for each of the 
applicable claim period months is calculated by reducing the starting 
base production of the applicable base month, or alternate month 
approved by the Deputy Administrator for new producers, as follows:
    (1) August 2005 base production is the starting base production 
reduced by 8 percent;
    (2) September 2005 base production is the starting base production 
reduced by 17 percent;
    (3) October 2005 base production is the starting base production 
reduced by 11 percent. However, if losses occurred only as a result of 
Hurricanes Ophelia and Wilma, for October 2005, base production is not 
reduced.
    (4) November 2005 base production is the starting base production 
reduced by 6 percent, unless eligible losses occurred only as a result 
of Hurricanes Ophelia and Wilma, in which case, for November 2005, base 
production is not reduced.
    (5) December 2005 base production is not reduced by a downward 
adjustment percentage.
    (b) The eligible dairy production losses for a dairy operation for 
each of the claim period months of August through December 2005, as 
applicable, will be:
    (1) The new base production for the dairy operation calculated 
under paragraph (a) of this section less,
    (2) For each such month for each dairy operation, the total of:
    (i) Actual commercially-marketed production (not counting dumped 
production counted under paragraph (b)(1)(ii) of this section); plus
    (ii) The pounds of milk production dumped (whether related to the 
hurricane or not), or otherwise not commercially marketed (whether 
related to the hurricane or not). For dumping losses to be eligible for 
payment, however, they must, as with other program losses, be hurricane 
related, as described under paragraphs (c) and (d) of this section.
    (c) Actual production losses may be adjusted to the extent the 
reduction in production is not certified by the producer to be the 
result of the hurricane or is determined by CCC not to be hurricane-
related. Actual production, as adjusted, that exceeds the adjusted base 
production will mean that the dairy operation incurred no eligible 
production losses for the corresponding month as a result of the 
hurricane disaster, and that the production level for that month does 
not qualify for a production loss payment under this program.

[[Page 63673]]

    (d) Eligible dairy spoilage losses incurred by producers under this 
subpart for each of the months August through December 2005, as 
applicable to the claim period that corresponds with the hurricane-
related disaster, will be determined based on actual milk produced in 
those months that was dumped on the farm as a result of the 2005 
hurricanes, or other related condition. Proper documentation of milk 
dumped on the farm as a result of spoilage due to a hurricane must be 
provided to CCC as provided in Sec.  1430.305.
    (e) Calculated production losses may be adjusted by CCC based on 
the monthly average of daily dairy cow additions or reductions to the 
milking herd during the applicable claim period that corresponds with 
the hurricane-related disaster, to account for production adjustments 
as a result of dairy cow purchases, sales, or death losses. Production 
adjustments can be calculated using the average number of dairy cows in 
a dairy operation's milking herd and the average production per cow 
during each applicable month. Per-cow production averages during the 
applicable claim period months will be determined based on the actual 
per-cow production average during the base month applicable to the 
hurricane-related disaster and reduced downward according to the 
seasonal decline percentages provided in paragraph (a) of this section, 
to determine the total production that may be credited back to the 
dairy operation's total production losses. To qualify for the 
production adjustment credit:
    (1) Producers in eligible dairy operations must report any 
increases to the dairy cow milking herd during the applicable base 
month and claim period that corresponds to the hurricane disaster 
condition to the eligible hurricane.
    (2) Adequate supporting documentation according to Sec.  1430.305 
must be provided to the satisfaction of the COC to verify any claims of 
herd increases during the eligible period.
    (3) Any cows purchased during the eligible period that would 
increase the dairy cow milking herd must have been to offset production 
losses as a result of the 2005 hurricanes, or other related condition.
    (f) Eligible production and spoilage losses as otherwise determined 
under paragraphs (a) through (e) of this section are added together to 
determine total eligible losses incurred by the dairy operation subject 
to all other eligibility requirements as may be included in this part 
or elsewhere.
    (g) Payment on eligible dairy operation losses is calculated using 
whole pounds of milk. No double counting is permitted, and only one 
payment will be made for each pound of milk calculated as an eligible 
loss after the distribution of the operation's eligible production loss 
among the producers of the dairy operation according to Sec.  
1420.307(b). Payments under this part will not be affected by any 
payments for dumped or spoiled milk that the dairy operation may have 
received from its milk handler, or marketing cooperative, or any other 
private party.
    (h) If a producer is eligible to receive payments under this part 
and benefits under any other program administered by the Department of 
Agriculture (USDA) for the same losses, the producer must choose 
whether to receive the other program benefits or payments under this 
part, but shall not be eligible for both. The limitation on multiple 
benefits prohibits a producer from being compensated more than once for 
the same losses. If the other USDA program benefits are not available 
until after an application for benefits has been filed under this part, 
the producer may, to avoid this restriction on such other benefits, 
refund the total amount of the payment to the FSA administrative office 
from which the payment was received.


Sec.  1430.307  Rate of payment and limitations on funding.

    (a) Subject to the availability of funds, the payment rate for 
eligible production and spoilage losses determined according to Sec.  
1430.306 is, depending on the State, the amount set forth below which 
is derived from the monthly Mailbox milk price for the Florida, the 
Southeast, Western Texas or the Appalachian States Marketing Orders as 
reported by the Agricultural Marketing Service. Maximum payment rates 
for eligible losses for dairy operations located in specific states are 
as follows:
    (1) Florida--$18.19 per hundredweight ($0.1819 per pound), which is 
averaged to account for the mailbox price during the months of August 
2005 and October 2005 when the hurricane disasters occurred.
    (2) Louisiana--$16.47 per hundredweight ($0.1647 per pound), which 
is averaged to account for the mailbox price during the months of 
August 2005 and September 2005 when the hurricane disasters occurred.
    (3) Alabama, Arkansas, Georgia and Mississippi--$16.49 per 
hundredweight ($0.1649 per pound).
    (4) North Carolina--$15.39 per hundredweight ($0.1539 per pound).
    (5) Texas--$14.19 per hundredweight ($0.1419 per pound).
    (6) Tennessee--$15.38 per hundredweight ($0.1538 per pound).
    (b) Subject to the availability of funds, each eligible dairy 
operation's payment is calculated by multiplying the applicable payment 
rate under paragraph (a) of this section by the operation's total 
eligible losses. Where there are multiple producers in the dairy 
operation, individual producers' payments are disbursed according to 
each producer's share of the dairy operation's production as specified 
in the Application.
    (c) If the total value of losses claimed under paragraph (b) of 
this section exceeds the $17 million available for DDAP-II, less any 
reserve that may be created under paragraph (e) of this section, total 
eligible losses of individual dairy operations that, as calculated as 
an overall percentage for the full disaster claim period that 
corresponds with the applicable hurricane-related disaster (not a 
monthly average for any one month), are greater than 20 percent of the 
total base production for those applicable claim period months will be 
paid at the maximum rate under paragraph (a) of this section to the 
extent available funding allows. A loss of over 20 percent in only one 
or two of the eligible months does not itself qualify for the maximum 
per-pound payment. Total eligible losses for a producer, as calculated 
under Sec.  1430.306, of less than or equal to 20 percent during the 
eligible claim period will then be paid at a rate determined by 
dividing the eligible losses of less than 20 percent by the funds 
remaining after making payments for all eligible losses above the 20-
percent threshold.
    (d) In no event shall the payment exceed the value determined by 
multiplying the producer's total eligible loss times the average price 
received for commercial milk production in their area as defined in 
paragraph (a) of this section.
    (e) A reserve may be created to handle pending or disputed claims, 
but claims shall not be payable once the available funding is expended.


Sec.  1430.308  Availability of funds.

    The total available program funds shall be $17 million as provided 
by section 3014 of Title III of Public Law 109-234.


Sec.  1430.309  Appeals.

    Any producer who is dissatisfied with a determination made pursuant 
to this subpart may request reconsideration or appeal of such 
determination in

[[Page 63674]]

accordance with the appeal regulations set forth at 7 CFR parts 11 and 
780. Appeals of determinations of ineligibility or payment amounts are 
subject to the limitations in Sec. Sec.  1430.307 and 1430.308 and 
other limitations as may apply.


Sec.  1430.310  Misrepresentation and scheme or device.

    (a) In addition to other penalties, sanctions or remedies as may 
apply, a dairy producer shall be ineligible to receive assistance under 
this program if the producer is determined by CCC to have:
    (1) Adopted any scheme or device that tends to defeat the purpose 
of this program;
    (2) Made any fraudulent representation; or
    (3) Misrepresented any fact affecting a program determination.
    (b) Any funds disbursed pursuant to this part to any person or 
operation engaged in a misrepresentation, scheme, or device, must be 
refunded with interest together with such other sums as may become due. 
Any dairy operation or person engaged in acts prohibited by this 
section and any dairy operation or person receiving payment under this 
subpart shall be jointly and severally liable with other persons or 
operations involved in such claim for benefits for any refund due under 
this section and for related charges. The remedies provided in this 
subpart shall be in addition to other civil, criminal, or 
administrative remedies that may apply.


Sec.  1430.311  Death, incompetence, or disappearance.

    In the case of death, incompetency, disappearance, or dissolution 
of a person that is eligible to receive benefits in accordance with 
this subpart, such alternate person or persons specified in 7 CFR part 
707 may receive such benefits, as determined appropriate by CCC.


Sec.  1430.312  Maintaining records.

    Persons applying for benefits under this program must maintain 
records and accounts to document all eligibility requirements specified 
herein. Such records and accounts must be retained for 3 years after 
the date of payment to the dairy operations under this program. 
Destruction of the records after such date shall be at the risk of the 
party imposed with the recordkeeping requirements by this subpart.


Sec.  1430.313  Refunds; joint and several liability.

    (a) Excess payments, payments provided as the result of erroneous 
information provided by any person, or payments resulting from a 
failure to comply with any requirement or condition for payment under 
the application or this subpart, must be refunded to CCC.
    (b) A refund required under this section shall be due with interest 
determined in accordance with paragraph (d) of this section and late 
payment charges as provided in 7 CFR part 1403.
    (c) Persons signing a dairy operation's application as having an 
interest in the operation shall be jointly and severally liable for any 
refund and related charges found to be due under this section.
    (d) In accord with parts 792 and 1403 of this title, interest shall 
be applicable to any refunds required under this subpart. Such interest 
shall be charged at the rate the United States Department of the 
Treasury charges CCC for funds, and shall accrue from the date FSA or 
CCC made the erroneous payment to the date of repayment.
    (e) CCC may waive the accrual of interest if it determines that the 
cause of the erroneous determination was not due to any action of the 
person, or was beyond the control of the person committing the 
violation. Any waiver is at the discretion of CCC alone.


Sec.  1430.314  Miscellaneous provisions.

    (a) CCC may offset or withhold any amount due CCC under this 
subpart in accordance with 7 CFR part 1403.
    (b) Payments or any portion thereof due under this subpart shall be 
made without regard to questions of title under State law and without 
regard to any claim or lien against the livestock or property of any 
kind, or proceeds thereof, in favor of the owner or any other creditor 
except agencies and instrumentalities of the U.S. Government.
    (c) Any producer entitled to any payment under this part may assign 
any payments in accordance with the provisions of 7 CFR part 1404.

    Signed at Washington, DC, on October 25, 2006.
Thomas B. Hofeller,
Acting Executive Vice President, Commodity Credit Corporation.
 [FR Doc. E6-18247 Filed 10-30-06; 8:45 am]
BILLING CODE 3410-05-P