[Federal Register Volume 72, Number 226 (Monday, November 26, 2007)]
[Proposed Rules]
[Pages 65889-65897]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-22904]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
 ========================================================================
 

  Federal Register / Vol. 72, No. 226 / Monday, November 26, 2007 / 
Proposed Rules  

[[Page 65889]]



DEPARTMENT OF AGRICULTURE

Farm Service Agency

7 CFR Part 786

RIN 0560-AH74


Dairy Disaster Assistance Payment Program III

AGENCY: Farm Service Agency, USDA.

ACTION: Proposed rule.

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SUMMARY: This document proposes a new program, the Dairy Disaster 
Assistance Payment Program III, as authorized by the U.S. Troop 
Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability 
Appropriations Act, 2007. The proposed program would provide $16 
million in assistance for producers in counties designated as a major 
disaster or emergency area by the President, or those declared a 
natural disaster area by the Secretary of Agriculture. Counties 
declared disasters by the President may be eligible, even though 
agricultural loss was not covered by the declaration, if there has been 
a Farm Service Agency Administrator's Physical Loss Notice covering 
such losses. The natural disaster declarations by the Secretary or the 
President must have been issued between January 1, 2005 and February 
28, 2007, that is, after January 1, 2005, and before February 28, 2007. 
Counties contiguous to such counties will also be eligible. This 
proposed program is designed to provide financial assistance to 
producers who suffered dairy production losses due to natural disasters 
in the eligible counties.

DATES: We will consider comments that we receive by December 26, 2007.

ADDRESSES: We invite you to submit comments on this proposed rule. In 
your comment, include the volume, date, and page number of this issue 
of the Federal Register. You may submit comments by any of the 
following methods:
     E-Mail: [email protected].
     Fax: (202) 690-1536.
     Mail: Grady Bilberry, Director, Price Support Division 
(PSD), Farm Service Agency (FSA), United States Department of 
Agriculture (USDA), STOP 0512, Room 4095-S, 1400 Independence Avenue, 
SW., Washington, DC 20250-0512.
     Hand Delivery or Courier: Deliver comments to the above 
address.
     Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting 
comments.
    Comments may be inspected in the Office of the Director, PSD, FSA, 
USDA, Room 4095 South Building, Washington, DC, between 8 a.m. and 4:30 
p.m., Monday through Friday, except holidays. A copy of this proposed 
rule is available through the FSA home page at http://www.fsa.usda.gov/
.

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

SUPPLEMENTARY INFORMATION:

Background

    Section 9007 of the U.S. Troop Readiness, Veterans' Care, Katrina 
Recovery, and Iraq Accountability Appropriations Act, 2007 (Pub. L. 
110-28), enacted May 25, 2007, provides the Secretary of Agriculture 
with $16 million to make payments to dairy producers for losses in 
counties declared or designated a natural disaster during the period of 
January 2, 2005 through February 27, 2007, by the President or 
Secretary of Agriculture. For timely Presidential declarations that do 
not cover agricultural loss, the subject counties may still be covered 
if the county was the subject of a Farm Service Agency (FSA) 
Administrator's Loss Notice. Counties contiguous to such declared 
counties are also eligible. Each of these counties is referred to as a 
disaster county in this document. The period from January 2, 2005 
through February 27, 2007, is referred to as the eligible period.
    Since 2005 dairy production in many counties throughout the United 
States has been severely impacted by widespread and significant 
destruction caused by various natural disasters such as hurricanes, 
wildfires, ice storms, heavy rainfalls, floods, and severe blizzard 
conditions. As a result, many dairy producers may have incurred 
decreases in production due to cattle losses and milk that had to be 
dumped because of closed milk plants and damaged containment equipment 
caused by the widespread destruction by the natural disasters. Also, 
the loss of electricity, the shortage of fuel, and infrastructure 
damage temporarily interrupted the flow of dairy products to markets.
    The proposed regulations for the new program would allow dairy 
producers who suffered production losses, for which relief has not been 
previously provided, that are the result of natural disasters declared 
during the eligible period to apply for compensation for losses 
incurred during that period. This rule would offset a portion of the 
per-pound losses dairy producers have incurred commercially marketing 
milk in the United States.
    Benefits would be provided to eligible dairy producers in those 
disaster counties who meet all program eligibility requirements, and 
are subsequently approved for participation in the Dairy Disaster 
Assistance Payment Program III (DDAP-III). This program is similar to 
previous programs: The 2004 program (DDAP-I) and 2005 program (DDAP-
II). Dairy producers in counties contiguous to a directly eligible 
county are also eligible for DDAP-III benefits. Eligible dairy 
producers would receive payments to help pay operating expenses and 
meet other financial obligations.
    To be eligible under the proposed program, dairy producers must 
have produced milk in the United States any time during the eligible 
period as part of a dairy operation located in an eligible disaster 
county. Production losses suffered by the dairy operation must have 
occurred during the specified eligibility period and must have been as 
a result of the disaster declaration specific to the county in which 
the dairy operation is located. FSA may, as appropriate, make 
adjustments to calculated production losses not resulting from the 
applicable disaster specified in the declaration for an eligible 
disaster county. Production losses incurred in each authorized program 
year, during the eligible period specified, are eligible for benefits, 
if a disaster declaration was issued for a county for such program year 
and no

[[Page 65890]]

previous disaster payment has been made.
    A dairy producer must provide the number of cows in the operation's 
dairy herd for each month of the calendar year in which a disaster 
declaration was issued to determine the average number of cows in the 
dairy herd for the operation per applicable year. In addition, adequate 
evidence of dairy production losses must be provided to FSA to 
substantiate the losses suffered and certified by each producer. 
Payments would be made according to a formula, which would estimate 
expected production based on herd size, and would be subject to funding 
and other limitations. Subject to comment and further consideration, 
payments would 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. FSA expects to 
announce the sign-up period following the publication of this proposed 
rule. At the close of the sign-up period, the total production losses 
from all eligible applicants would be determined. Payment eligibilities 
would be separately calculated on an operation by operation basis. An 
individual may be involved in more than one operation.
    Payments to eligible producers would be calculated by multiplying 
the eligible pounds by the average price received for commercial milk 
production in the affected areas during the calendar year specific to 
the disaster for 2005 and 2006, and for the months of January and 
February during calendar year 2007 for 2007 claims. A producer may have 
a claim for more than one year; however, a deduction would be made for 
payments made under DDAP-II or other disaster programs.
    If the total amount of available funding ($16 million, less any 
reserve established to account for disputed claims) is insufficient to 
compensate eligible producers for eligible losses, then FSA would, 
under this proposal, pay losses at two levels in an effort to more 
equitably distribute the limited funds and maximize the effectiveness 
of the program.
    Specifically, in the case of inadequate funds for all eligible 
losses, FSA would calculate each operation's overall annual percentage 
reduction for each full disaster claim period that corresponds with the 
applicable declared disaster from the calculated base year production 
for the operation for the calendar year of the declared disaster, or 
first two months of 2007 for disasters in 2007. The disaster claim 
period applicable to: (1) Disaster declarations for calendar year 2005 
are all months contained in the 2005 calendar year; (2) disaster 
declarations for calendar year 2006, are all months contained in the 
2006 calendar year, and (3) disaster declarations for 2007, the first 
two months of the year only. Again, losses would only be covered for 
operations in counties with timely disaster declarations as set out in 
the proposed regulation and above.
    Annual base year production for each dairy operation would be 
computed based on annual data obtained from the National Agricultural 
Statistics Service of milk production per cow for each applicable State 
in which the disaster county is located.
    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 would be paid at the 
maximum per-pound payment rate. Payments for eligible losses below the 
20-percent threshold would be made at a rate not to exceed the maximum 
rate for other losses that would exhaust the available funds that 
remain following payment of eligible losses at the higher level.
    FSA proposes to establish the minimum loss level for the priority 
at 20 percent for DDAP-III in order to be consistent with other 
disaster programs. For example, the 20-percent threshold mirrors that 
of DDAP-I and DDAP-II.
    Different payments for differing degrees of losses would distribute 
the limited funds provided under this program in a manner that provides 
greater assistance to producers who suffered greater losses from the 
subject disasters. An example of how the apportionment might affect 
producers is set out in the following table. If funds are adequate for 
all eligible losses, all eligible producers would be paid at the 
``maximum rate,'' which amounts to the average price, as determined 
under the proposed regulation, received for commercial milk production 
in their area during the disaster claim period applicable to the 
declared disaster. FSA encourages comments on these provisions and the 
appropriate loss-level percentage.
    Apportionment example:

----------------------------------------------------------------------------------------------------------------
                                                    Producer A      Producer B      Producer C      Producer D
                                                    (Louisiana      (California    (Kansas 2006    (Georgia 2006
                                                   2005 losses)    2005 losses)       losses)         losses)
----------------------------------------------------------------------------------------------------------------
Total Estimated Base Production.................         620,000      11,339,500       1,046,000       1,367,550
----------------------------------------------------------------------------------------------------------------
Actual Production...............................         485,000      10,000,000         600,000       1,100,000
Total Eligible Loss.............................         135,000       1,339,500         446,000         267,550
----------------------------------------------------------------------------------------------------------------
20% of Base Production..........................         124,000       2,267,900         209,000         273,510
Pounds of loss above 20% loss level.............          11,000               0         237,000               0
Payment Rate....................................     $0.1596/lb.     $0.1388/lb.     $0.1214/lb.     $0.1443/lb.
DDAP-III for loss above 20%.....................          $1,756              $0         $28,772              $0
DDAP-III for under 20% loss @ $0. 05/lb.                  $6,200        $113,395         $10,450         $13,676
 (example only).................................
Total DDAP-III..................................          $7,956        $113,395         $39,222         $13,676
----------------------------------------------------------------------------------------------------------------
Eligible Losses x average price.................         $21,546        $185,923         $54,144         $38,608
Percent production loss suffered................              22              12              43              20
Percent financial losses recovered from DDAP-III              37              61              72              35
----------------------------------------------------------------------------------------------------------------

    Gross revenue and per-person payment limits do not apply. However, 
consistent with other FSA disaster programs, the total assistance 
provided to a participant for a disaster year under DDAP-III, plus the 
value of the production that was not lost, may not exceed 95 percent of 
the value of the production in the absence of a loss, as estimated by 
the Secretary.
    Information provided on applications and supporting documentation 
will, under the proposal, be subject to verification by FSA. False 
certifications by producers carry strict penalties and

[[Page 65891]]

FSA will validate 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.
    During the application period, dairy producers may apply in person 
at FSA county offices during regular business hours. Applications may 
also be submitted to FSA 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 http://www.fsa.usda.gov.

Differences Between DDAP-II and DDAP-III

    DDAP-III would provide payments related to dairy production losses, 
as required by the legislation. DDAP-II was required to provide 
payments related to both dairy production losses and spoilage losses. 
As proposed, DDAP-III would basically follow regulations for DDAP-II, 
but it was determined that only production losses would be covered. 
Spoilage losses, in accordance with the legislation, will not be 
covered by DDAP-III.
    DDAP-III applies to dairy producers who suffered dairy production 
losses in disaster counties during natural disasters declarations 
issued during the eligible period. DDAP-II applied to producers who 
suffered dairy losses in hurricane affected counties during 2005, which 
included a county included in the geographic area covered by a natural 
disaster declaration related to Hurricane Katrina, Hurricane Ophelia, 
Hurricane Rita, Hurricane Wilma, or a related condition. The new 
program has a greater coverage in time and in counties. Provisions 
would, however, avoid double payment under DDAP-II and DDAP-III. Both 
DDAP-II and DDAP-III include contiguous counties.
    The regulations describe DDAP-III, addressing applications, 
eligibility, verification of information, payment information, appeals, 
conditions causing ineligibility, recordkeeping requirements, and 
refund requirements. In addition the DDAP-III regulations include a 
section on the termination of the program.

Notice and Comment

    In order to expedite the availability of funds it has been 
determined to be in the public interest to limit the comment period to 
30 days.

Executive Order 12866

    This proposed rule has been determined to be significant under 
Executive Order 12866 and was reviewed by the Office of Management and 
Budget (OMB). A cost-benefit assessment of this rule was completed and 
is available from Ms. Cooke using the contact information above.

Summary of Economic Impacts

    Program payments will provide eligible producers funds to help pay 
operating expenses and meet other financial obligations. Program 
payments are expected to total and increase both Federal outlays and 
aggregate farm revenue by $16 million. This assistance will help dairy 
producers affected by natural disasters to recover some lost income and 
additional repair expenses to aid in continuing their agricultural 
production businesses.
    The States with the largest expected claims are: Idaho (33 
percent), California (16 percent), New Mexico (13 percent), Indiana and 
Michigan (7-8 percent), Washington and Arizona (5 percent), and 
Wisconsin (3 percent). Expected claims totaled 3.1 million hundred 
weight (cwt).
    The average payment rate will be determined by dividing the $16 
million available funding by the total milk pounds eligible for 
payment. The resulting payment rate is projected to be $5.15 per cwt., 
substantially below average mailbox prices.\1\ The average mailbox 
price for all Federal Orders in the United States was $12.87 in 2006 
and $11.28 in California, which is outside the Federal Order system. 
The lowest mailbox price in the Federal Order system in 2006 was $11.13 
in New Mexico.
---------------------------------------------------------------------------

    \1\ The mailbox price is the net price producers receive for 
their milk, after all marketing costs, discounts, and premiums are 
accounted for. The Agricultural Marketing Service collects and 
publishes monthly mailbox prices.
---------------------------------------------------------------------------

    Producers who can demonstrate a loss exceeding 20 percent of their 
production will receive compensation equal to the average mailbox price 
prevailing in their region during the period of the disaster. To the 
extent that payments equal to the mailbox price are made to some 
producers, the otherwise-average payment rate of $5.15 will be reduced. 
In theory, it is possible that enough producers could claim a 20-
percent-or-greater loss and receive payments equal to the mailbox 
price, that payments to the remaining producers with lower losses could 
be considerably less than $5.15. However, FSA does not have sufficient 
data to estimate how many producers might have losses exceeding 20 
percent of their production, or how much milk such losses might 
represent.
    Payments are expected to increase producer income and defray repair 
and cattle replacement costs. Outlays will be monitored to ensure that 
they do not exceed the actual loss.
    The $16 million is a small share of federal farm assistance. For 
example, CCC made $15.3 billion in direct cash payments to farmers and 
ranchers in fiscal 2005, excluding all payments made for disasters, 
with the largest category of payments being $8 billion paid under the 
Direct and Counter Cyclical Program. CCC direct cash payments for 
fiscal 2005 through estimated fiscal 2007 total $43.7 billion, 
averaging $14.6 billion, annually.

Regulatory Flexibility Act

    The Regulatory Flexibility Act does not apply to this rule because 
FSA 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

    FSA has determined that this proposed rule does not constitute a 
major State or Federal action that would significantly affect the human 
or natural environment consistent with the National Environmental 
Policy Act 40 CFR 1502.4, Major Federal actions requiring the 
preparation of Environmental Impact Statements, and 7 CFR Part 799: 
Environmental Quality and Related Environmental Concerns--Compliance 
with NEPA implementing the regulations of the Council on Environmental 
Quality, 40 CFR parts 1500-1508. Therefore no environmental assessment 
or environmental impact statement will be prepared.

Executive Order 12988

    This rule has been reviewed in accordance with Executive Order 
12998. This rule would preempt State laws to the extent such laws are 
inconsistent with it. This rule would not be 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 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).

[[Page 65892]]

Unfunded Mandates

    Although we are publishing this as a proposed rule, Title II of the 
Unfunded Mandates Reform Act of 1995 (UMRA) does not apply to this rule 
because FSA 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

    In accordance with the Paperwork Reduction Act of 1995, FSA is 
submitting a request for approval to the Office of Management and 
Budget (OMB) of an information collection required to support this 
proposed rule for the DDAP-III. A notice was published in the Federal 
Register on August 23, 2007 (72 FR 48254) with estimates of the 
information collection burden required to implement this program and a 
request for comments on those requirements as required by 5 CFR 
1320.8(d)(1). No comments were received. The notice referred to the 
program as the 2005-2006 Dairy Disaster Assistance Payment program. The 
program was subsequently renamed DDAP-III. The information Collection 
is described below:
    Title: 2005-2006 Dairy Disaster Assistance Payment Program.
    OMB Control Number: 0560-0252.
    Type of Request: Revision of a currently approved collection.
    Abstract: Dairy operations are eligible to receive direct payments 
provided they make certifications that attest to their eligibility to 
receive such payments. As appropriate, these operations must certify 
and identify:
    (1) That the dairy operation is physically located in a county 
declared a natural disaster after January 1, 2005 and before February 
28, 2007 (that is the period of January 2, 2005 through February 27, 
2007);
    (2) The identity of actual persons associated with that operation 
during that period;
    (3) The pounds of dairy production losses incurred as a result of 
the declared natural disaster;
    (4) The number of cows in the dairy operation during the calendar 
year applicable to the disaster declaration;
    (5) That they understand the dairy operation must provide adequate 
proof of annual milk production commercially marketed by all persons in 
the dairy operation during the period specified by the FSA to determine 
the total pounds of eligible losses incurred by the operation.
    The information collection is used by FSA to determine the program 
eligibility of the dairy operations. FSA considers the information 
collected essential to prudent eligibility determinations and payment 
calculations. The revision on the information collection covers only 
the dairy production losses this time, and the number of respondents 
increases in this information collection. Additionally, without 
accurate information on dairy operations, the national payment rate 
would be inaccurate, resulting in payments being made to ineligible 
recipients, and the integrity and accuracy of the program could be 
compromised.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 15 minutes (0.25 hour) per 
response. The average travel time, which is included in the total 
annual burden, is estimated to be 1 hour per respondent. Approximately 
37 percent of respondents (14,750) are expected to choose to submit the 
form on-line. Therefore, the burden estimate includes travel time for 
25,250 respondents.
    Respondents: Dairy Operations.
    Estimated Number of Respondents: 40,000.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 35,250 hours.

E-Government Act Compliance

    FSA is committed to complying with the E-Government Act, to promote 
the use of the Internet and other information technologies to provide 
increased opportunities for citizen access to Government information 
and services, and for other purposes. The forms, regulations, and other 
information collection activities required to be utilized by a person 
subject to this rule are available at http://www.fsa.usda.gov. 
Applications may be submitted at the FSA county offices.

List of Subjects in 7 CFR Part 786

    Dairy products, Disaster assistance, Fraud, Penalties, Price 
support programs, Reporting and recordkeeping requirements.

    For the reasons set out in the preamble, 7 CFR part 786 is proposed 
to be added to read as follows:

PART 786--DAIRY DISASTER ASSISTANCE PAYMENT PROGRAM III (DDAP-III)

Sec.
786.100 Applicability.
786.101 Administration.
786.102 Definitions.
786.103 Time and method of application.
786.104 Eligibility.
786.105 Proof of production.
786.106 Determination of losses incurred.
786.107 Rate of payment and limitations on funding.
786.108 Availability of funds.
786.109 Appeals.
786.110 Misrepresentation, scheme, or device.
786.111 Death, incompetence, or disappearance.
786.112 Maintaining records.
786.113 Refunds; joint and several liability.
786.114 Miscellaneous provisions.
786.115 Termination of program.

    Authority: Pub. L. 110-28, 121 Stat. 112.

PART 786--DAIRY DISASTER ASSISTANCE PAYMENT PROGRAM III (DDAP-III)


Sec.  786.100  Applicability.

    (a) Subject to the availability of funds, this part specifies the 
terms and conditions applicable to the Dairy Disaster Assistance 
Payment Program (DDAP-III) authorized by section 9007 of Public Law 
110-28. Benefits are available to eligible United States producers who 
have suffered dairy production losses in eligible counties as a result 
of a natural disaster declared during the period between January 1, 
2005, and February 28, 2007, (that is, after January 1, 2005, and 
before February 28, 2007).
    (b) To be eligible for this program, a producer must have been a 
milk producer anytime during the period of January 2, 2005, through 
February 27, 2007, in a county declared a natural disaster by the 
Secretary of Agriculture, declared a major disaster or emergency 
designated by the President of the United States. For a county for 
which there was a timely Presidential declaration, but the declaration 
did not cover the loss, the county may still be eligible if the county 
is one for which an appropriate determination of a Farm Service Agency 
(FSA) Administrator's Physical Loss Notice applies. Counties contiguous 
to a county that is directly eligible by way of a natural disaster 
declaration are also eligible. Only losses occurring in eligible 
counties are eligible for payment in this program.
    (c) Subject to the availability of funds, FSA will provide benefits 
to eligible dairy producers. Additional terms and conditions may be 
specified in the payment application that must be completed and 
submitted by producers to receive a disaster assistance payment for 
dairy production losses.
    (d) To be eligible for payments, producers must meet the provisions 
of, and their losses must meet the conditions of, this part and any 
other conditions imposed by FSA.

[[Page 65893]]

Sec.  786.101  Administration.

    (a) DDAP-III will be administered under the general supervision of 
the Administrator, FSA, or a designee, and 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 part.
    (c) The State committee will take any action required by the 
regulations of this part that has not been taken by the county 
committee. The State committee will 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 part; and
    (2) Require a county committee to withhold taking any action that 
is not in accordance with the regulations of this part.
    (d) No provision of delegation in this part to a State or county 
committee will preclude the Administrator, FSA, 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 DDAP-III and does not violate statutory 
limitations of the program.
    (f) Data furnished by the applicants is used to determine 
eligibility for program benefits. Although participation in DDAP-III is 
voluntary, program benefits will not be provided unless the producer 
furnishes all requested data.


Sec.  786.102  Definitions.

    The definitions in 7 CFR part 718 apply to this part except to the 
extent they are inconsistent with the provisions of this part. In 
addition, for the purpose of this part, the following definitions 
apply.
    Administrator means the FSA Administrator, or a designee.
    Application means DDAP-III application.
    Application period means the time period established by the Deputy 
Administrator for producers to apply for program benefits.
    Base year production means the applicable National Agriculture 
Statistics Service (NASS) average of milk produced per cow for a dairy 
operation in the applicable State of the eligible disaster county 
during the period assigned in Sec.  786.104(g), or other measure 
approved by the Administrator if a suitable NASS average is not 
available.
    Claim period means, as assigned in this part, the qualifying months 
during the period of January 2, 2005 through February 27, 2007, 
following the base month, during 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 FSA, 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.
    Disaster county means a county included in the geographic area 
covered by a natural disaster declaration, and any county contiguous to 
a county that qualifies by a natural disaster declaration.
    Farm Service Agency or FSA means the Farm Service Agency of the 
Department.
    Hundredweight or cwt. means 100 pounds.
    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 sale or delivery record of milk marketed for commercial use.
    Natural disaster declaration means a natural disaster declaration 
issued by the Secretary of Agriculture after January 1, 2005, but 
before February 28, 2007, under section 321(a) of the Consolidated Farm 
and Rural Development Act (7 U.S.C. 1961(a)), a major disaster or 
emergency designation by the President of the United States in that 
period under the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act, or a determination of a Farm Service Agency 
Administrator's Physical Loss Notice for a county covered in an 
otherwise eligible Presidential declaration.
    Payment pounds means the pounds of milk production from a dairy 
operation for which the dairy producer is eligible to be paid under 
this part.
    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, a 
citizen of, or a legal resident alien in, the United States, and who 
directly or indirectly, as determined by the Secretary, shares in the 
risk of producing milk, and makes contributions (including land, labor, 
management, equipment, or capital) to the dairy farming operation of 
the individual or entity.
    Reliable production evidence means satisfactory records provided by 
the producer that are used to substantiate the amount of production 
reported when verifiable records are not available; the records may 
include 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.
    Verifiable production records means evidence that is used to 
substantiate the amount of production marketed, including any dumped 
production, and that can be verified by FSA through an independent 
source.


Sec.  786.103  Time and method of application.

    (a) Dairy producers may obtain an application, in person, by mail, 
by telephone, or by facsimile from any FSA county 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 part must be submitted on a 
completed DDAP-III application. Applications and any other supporting 
documentation must 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. 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 will be considered complete.
    (d) Each dairy producer requesting benefits under this part 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

[[Page 65894]]

FSA. Refusal to allow FSA or any other agency of the Department of 
Agriculture to verify any information provided may result in a denial 
of eligibility. Furnishing the information is voluntary; however, 
without it program benefits will not be approved. Providing a false 
certification to the Government may be punishable by imprisonment, 
fines, and other penalties or sanctions.


Sec.  786.104  Eligibility.

    (a) Producers in the United States will be eligible to receive 
dairy disaster benefits under this part only if they have suffered 
dairy production losses, previously uncompensated by disaster payments 
including any previous dairy disaster payment program, during the claim 
period applicable to a natural disaster declaration in a disaster 
county. To be eligible to receive payments under this part, producers 
in a dairy operation must:
    (1) Have produced and commercially marketed milk in the United 
States and commercially marketed the milk produced anytime during the 
period of January 2, 2005 through February 27, 2007;
    (2) Be a producer on a dairy farm operation physically located in 
an eligible county where dairy production losses were incurred as a 
result of a disaster for which an applicable natural disaster 
declaration was issued between January 1, 2005 and February 28, 2007, 
and limit their claims to losses that occurred in those counties, 
specific to conditions resulting from the declared disaster as 
described in the natural disaster declaration;
    (3) Provide adequate proof, to the satisfaction of the FSA county 
committee, of monthly milk production commercially marketed by all 
persons in the eligible dairy operation during the applicable milk 
marketing calendar year and claim period that corresponds with the 
issuance date of the applicable natural disaster declaration, or other 
period as determined by FSA, 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 satisfy the terms and conditions of this part, 
instructions issued by FSA, and instructions contained in the 
application to be eligible for benefits under this part.
    (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 calendar 
year applicable to the natural disaster declaration and loss claim 
period, 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 year 
production (see definition in Sec.  786.102) that corresponds to the 
natural disaster declaration and must have occurred during that same 
period as follows:
    (1) For disaster declarations for disasters during calendar year 
2005, the base period and the corresponding claim period are the 2005 
calendar year months of January through December;
    (2) For disaster declarations issued for disasters during calendar 
year 2006, the base period and corresponding claim period are the 2006 
calendar year months of January through December; and
    (3) For disaster declarations issued for disasters in January and 
February of 2007, the base period and corresponding claim period are 
the 2007 calendar year months of January and February.
    (h) Deductions in eligibility will be made for any disaster 
payments previously received for the loss including any made under a 
previous dairy disaster assistance payment program for 2005.


Sec.  786.105  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 losses can be computed in accordance with Sec.  786.106.
    (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 dairy herd inventory records for 
the operation, for each month of the applicable base period and claim 
period that corresponds with the issuance date of the applicable 
natural disaster declaration.
    (1) A producer must certify and provide such proof as requested 
that losses for which compensation is claimed were related to the 
disaster declaration issued and occurred in an eligible county during 
the eligible claim period.
    (2) Additional supporting documentation may be requested by FSA as 
necessary to verify production losses to the satisfaction of FSA.
    (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 
losses, or any other documents available to confirm or adjust the 
production history losses incurred by the dairy operation. All 
information provided is subject to verification, spot check, and audit 
by FSA.
    (d) As specified in Sec.  786.106, loss calculations will be based 
on comparing the expected base production using herd figures and NASS 
yield data consistent with this part and the actual production. Such 
calculations are subject to adjustments as may be appropriate such as a 
correction for losses not due to the disaster. If adequate proof of 
normally marketed production and any other production for relevant 
periods is not presented to the satisfaction of FSA, the request for 
benefits will be rejected. Special adjustments for new producers may be 
made as determined necessary by the Administrator.


Sec.  786.106  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.  786.104(g), that 
corresponds with the applicable natural disaster declaration. 
Specifically, dairy production losses incurred by producers under this 
part are determined on the established history of the dairy operation's 
actual commercial production marketed during the applicable claim 
period that corresponds with the applicable natural disaster 
declaration, as provided by the dairy operation consistent with Sec.  
786.105. Except as otherwise provided

[[Page 65895]]

in this part, the base year production, as defined in Sec.  786.102 and 
established in Sec.  786.104(g) is determined based on the number of 
cows in a dairy operations herd during the relevant period and data 
obtained from NASS for milk production per cow during the relevant 
period for the State in which the eligible disaster county is 
geographically located.
    (b) The eligible dairy production losses for a dairy operation for 
each of the authorized claim periods will be:
    (1) The relevant periods' base year production for the dairy 
operation calculated under paragraph (a) of this section less,
    (2) For each such claim period for each dairy operation the actual 
commercially-marketed production relevant to that period.
    (c) Spoiled or dumped milk must be counted as production for the 
relevant claim period. 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 disaster identified in the natural disaster 
declaration or is determined by FSA not to be related to the natural 
disaster identified in the natural disaster declaration. FSA county 
committees will determine production losses that are not caused by the 
disaster associated with the natural disaster declaration. The 
calculated production loss determined in Sec.  786.106(b) will be 
adjusted to account for production losses determined by the county 
committee to not have been associated with the declared natural 
disaster for an eligible disaster county. The production adjustment may 
be calculated on a monthly basis according to the number of cows in the 
dairy operation's dairy herd during the applicable month or months 
determined to be ineligible to generate claims for benefits, multiplied 
by the milk produced per cow for the month as determined from monthly 
data obtained from NASS, as available. If monthly NASS data is 
unavailable for the State in which the eligible disaster county is 
located, an alternative method of determining the expected milk 
produced per cow for that State may be established by the Deputy 
Administrator. Other appropriate adjustments will be made on such basis 
as the Deputy Administrator finds to be consistent with the objectives 
of the program.
    (d) Actual production, as adjusted, that exceeds the base year 
production will mean that the dairy operation incurred no eligible 
production losses for the corresponding claim period as a result of the 
natural disaster.
    (e) Eligible production losses as otherwise determined under 
paragraphs (a) through (d) of this section for each authorized year of 
the program are added together to determine total eligible losses 
incurred by the dairy operation under DDAP-III subject to all other 
eligibility requirements as may be included in this part or elsewhere, 
including the deduction for previous payments including those made 
under a previous DDAP program.
    (f) Payment on eligible dairy operation losses will be 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.  786.107(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, marketing cooperative, or any other 
private party; however, produced milk that was dumped or spoiled will 
still count as production.


Sec.  786.107  Rate of payment and limitations on funding.

    (a) Subject to the availability of funds, the payment rate for 
eligible production losses determined according to Sec.  786.106 is, 
depending on the State, the annual average Mailbox milk price for the 
Marketing Order, applicable to the State where the eligible disaster 
county is located, as reported by the Agricultural Marketing Service 
during the relevant period. States not regulated under a Marketing 
Order will be assigned a payment rate based on contiguous or nearby 
State's mailbox price. Maximum per pound payment rates for eligible 
losses for dairy operations located in specific states during the 
relevant period are as follows:

----------------------------------------------------------------------------------------------------------------
                                                              Mailbox price     Mailbox price     Mailbox price
                           State                                  2005              2006          Jan-Feb 2007
----------------------------------------------------------------------------------------------------------------
Alabama...................................................            0.1596            0.1443            0.1615
Alaska....................................................            0.2040            0.2010            0.0000
Arizona...................................................            0.1388            0.1128            0.1282
Arkansas..................................................            0.1596            0.1443            0.1615
California................................................            0.1388            0.1128            0.1282
Connecticut...............................................            0.1539            0.1344            0.1538
Delaware..................................................            0.1539            0.1344            0.1538
Florida...................................................            0.1758            0.1603            0.1739
Georgia...................................................            0.1596            0.1443            0.1615
Idaho.....................................................            0.1402            0.1215            0.1388
Illinois..................................................            0.1514            0.1283            0.1476
Indiana...................................................            0.1503            0.1294            0.1460
Iowa......................................................            0.1507            0.1285            0.1479
Kansas....................................................            0.1403            0.1214            0.1407
Kentucky..................................................            0.1527            0.1349            0.1545
Louisiana.................................................            0.1596            0.1443            0.1615
Maine.....................................................            0.1539            0.1344            0.1538
Maryland..................................................            0.1539            0.1344            0.1538
Massachusetts.............................................            0.1539            0.1344            0.1538
Michigan..................................................            0.1478            0.1264            0.1438
Minnesota.................................................            0.1512            0.1277            0.1502
Mississippi...............................................            0.1596            0.1443            0.1615
Missouri (Northern).......................................            0.1403            0.1214            0.1407
Missouri (Southern).......................................            0.1467            0.1254            0.1445
Montana...................................................            0.1512            0.1277            0.1502
Nebraska..................................................            0.1403            0.1214            0.1407
Nevada....................................................            0.1388            0.1128            0.1282
New Hampshire.............................................            0.1539            0.1344            0.1538

[[Page 65896]]

 
New Jersey................................................            0.1539            0.1344            0.1538
New Mexico................................................            0.1323            0.1108            0.1324
New York..................................................            0.1539            0.1303            0.1489
North Carolina............................................            0.1527            0.1349            0.1545
North Dakota..............................................            0.1512            0.1277            0.1502
Ohio......................................................            0.1506            0.1302            0.1496
Oregon....................................................            0.1402            0.1215            0.1388
Pennsylvania (Eastern)....................................            0.1539            0.1340            0.1538
Pennsylvania (Western)....................................            0.1539            0.1302            0.1487
Puerto Rico...............................................            0.2550            0.2570            0.0000
Rhode Island..............................................            0.1539            0.1344            0.1538
South Carolina............................................            0.1527            0.1349            0.1545
South Dakota..............................................            0.1512            0.1277            0.1502
Tennessee.................................................            0.1527            0.1349            0.1545
Texas.....................................................            0.1405            0.1194            0.1398
Vermont...................................................            0.1539            0.1344            0.1538
Virginia..................................................            0.1527            0.1349            0.1545
Washington................................................            0.1402            0.1215            0.1388
West Virginia.............................................            0.1506            0.1302            0.1496
Wisconsin.................................................            0.1535            0.1305           0.1505
----------------------------------------------------------------------------------------------------------------
Note: Calculations are rounded to 7 decimal places.

    (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 as adjusted pursuant to this part. 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 nationwide under paragraph 
(b) of this section exceeds the $16 million available for the DDAP-III, 
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 each full claim period 
applicable to the disaster declaration, are greater than 20 percent of 
the total base year production 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 months during the applicable 
claim period does not of itself qualify for the maximum per-pound 
payment. Rather, the priority level must be reached as an average over 
the whole claim period for the relevant calendar year. Total eligible 
losses for a producer, as calculated under Sec.  786.106, of less than 
or equal to 20 percent during the eligible claim period will then be 
paid at a rate, not to exceed the rate allowed in paragraph (a) of this 
section, 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 will the payment exceed the value determined by 
multiplying the producer's total eligible loss times the average price 
received for commercial milk production in the producer's area as 
defined in paragraph (a) of this section.
    (e) No participant will receive disaster benefits under this part 
that in combination with the value of production not lost would result 
in an amount that exceeds 95 percent of the value of the expected 
production for the relevant period as estimated by the Secretary. The 
sum of the value of the production not lost, if any, and the disaster 
payment received under this part cannot exceed 95 percent of what the 
production's value would have been if there had been no loss.
    (f) A reserve may be created to handle pending or disputed claims, 
but claims will not be payable once the available funding is expended.


Sec.  786.108  Availability of funds.

    The total available program funds are $16 million as provided by 
section 9007 of Title IX of Public Law 110-28.


Sec.  786.109  Appeals.

    Provisions of the appeal regulations set forth at 7 CFR parts 11 
and 780 apply to this part. Appeals of determinations of ineligibility 
or payment amounts are subject to the limitations in Sec. Sec.  786.107 
and 786.108 and other limitations that may apply.


Sec.  786.110  Misrepresentation, scheme, or device.

    (a) In addition to other penalties, sanctions, or remedies that may 
apply, a dairy producer is ineligible to receive assistance under this 
program if the producer is determined by FSA to have:
    (1) Adopted any scheme or device that tends to defeat the purpose 
of this program,
    (2) Made any fraudulent representation,
    (3) Misrepresented any fact affecting a program determination, or
    (4) Violated 7 CFR 795.17 and thus be ineligible for the year(s) of 
violation and the subsequent year.
    (b) Any funds disbursed pursuant to this part to any person or 
dairy operation engaged in a misrepresentation, scheme, or device must 
be refunded with interest together with such other sums as may become 
due. Interest will run from the date of the disbursement to the 
producer or other recipient of the payment from FSA. Any person or 
dairy operation engaged in acts prohibited by this section and any 
person or dairy operation receiving payment under this part is jointly 
and severally liable with other persons or dairy operations involved in 
such claim for benefits for any refund due under this section and for 
related charges. The remedies provided in this part are in addition to 
other civil, criminal, or administrative remedies that may apply.


Sec.  786.111  Death, incompetence, or disappearance.

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

[[Page 65897]]

Sec.  786.112  Maintaining records.

    Persons applying for benefits under this program must maintain 
records and accounts to document all eligibility requirements specified 
herein and must keep such records and accounts for 3 years after the 
date of payment to their dairy operations under this program. 
Destruction of the records after such date is at the risk of the party 
required, by this part, to keep the records.


Sec.  786.113  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 meet any requirement or condition for payment under the 
application or this part, must be refunded to FSA.
    (b) A refund required under this section is due with interest 
determined in accordance with paragraph (d) of this section and late 
payment charges as provided in 7 CFR part 792. Notwithstanding any 
other regulation, interest will be due from the date of the 
disbursement to the producer or other recipient of the funds.
    (c) Persons signing a dairy operation's application as having an 
interest in the operation will be jointly and severally liable for any 
refund and related charges found to be due under this section.
    (d) In the event FSA determines a participant owes a refund under 
this part, FSA will charge program interest from the date of 
disbursement of the erroneous payment. Such interest will accrue at the 
rate that the United States Department of the Treasury charges FSA for 
funds plus additional charges as deemed appropriate by the 
Administrator or provided for by regulation or statute.
    (e) The debt collection provisions of part 792 of this chapter 
applies to this part except as is otherwise provided in this part.


Sec.  786.114  Miscellaneous provisions.

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


Sec.  786.115  Termination of program.

    This program will be terminated after payment has been made to 
those applicants certified as eligible pursuant to the application 
period established in Sec.  786.104. All eligibility determinations 
will be final except as otherwise determined by the Deputy 
Administrator. Any claim for payment may be denied once the allowed 
funds are expended, irrespective of any other provision of this part.

    Signed at Washington, DC, on November 19, 2007.
Glen L. Keppy,
Acting Administrator, Farm Service Agency.
 [FR Doc. E7-22904 Filed 11-23-07; 8:45 am]
BILLING CODE 3410-05-P