[Federal Register Volume 73, Number 249 (Monday, December 29, 2008)]
[Rules and Regulations]
[Pages 79284-79306]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-30763]


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DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1412

RIN 0560-AH84


Direct and Counter-Cyclical Program and Average Crop Revenue 
Election Program

AGENCY: Commodity Credit Corporation, Agriculture.

ACTION: Final rule.

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SUMMARY: This rule implements the provisions of the Food, Conservation, 
and Energy Act of 2008 (the 2008 Farm Bill) regarding the direct and 
counter-cyclical payment program (DCP) for the 2008 through 2012 crop 
years as well as Average Crop Revenue Election (ACRE) program payments 
for the 2009 through 2012 crop years. The 2008 Farm Bill further 
authorizes payments, with some changes, that were previously authorized 
under the Farm Security and Rural Investment Act of 2002 (the 2002 Farm 
Bill) regarding direct and counter-cyclical payments for the crop years 
2002 through 2007. The payments provide income support to producers of 
eligible commodities and are based on historically-based acreage and 
yields and do not depend on the current production choices of the 
farmer. In general, the 2008 Farm Bill provides payments to eligible 
producers of covered commodities and peanuts and beginning in 2009, 
pulse crops as well. Additionally, the 2008 Farm Bill provides for the 
establishment of a yield for each farm for any designated oilseed or 
eligible pulse crop for which a payment yield was not established under 
the 2002 Farm Bill.

DATES: Effective Date: December 23, 2008.

FOR FURTHER INFORMATION CONTACT: Salomon Ramirez, Director, Production, 
Emergencies and Compliance Division, United States Department of 
Agriculture (USDA), Stop 0517, 1400 Independence Ave, SW., Washington, 
DC 20250-0517; phone: (202) 720-7641; e-mail: 
[email protected]. Persons with disabilities who require 
alternative means for communication (Braille, large print, audio tape, 
etc.) should contact the USDA Target Center at (202) 720-2600 (voice 
and TDD).

SUPPLEMENTARY INFORMATION:

Direct and Counter-Cyclical Program and Average Crop Revenue Election 
Program

    For crop years 2002 through 2007, pursuant to the 2002 Farm Bill 
(Pub. L.

[[Page 79285]]

107-171), wheat, corn, barley, grain sorghum, oats, upland cotton and 
rice, (the same crops that were previously eligible for fixed annual 
Production Flexibility Contract (PFC) payments for producers under 
prior law) oilseed crops, including soybeans, sunflower seed, rapeseed, 
canola, safflower, flaxseed, mustard seed, crambe, sesame seed, and 
peanuts were crops eligible for a fixed direct payment. (PFC payments 
were based on historical yields and acreage. Direct payments were 
received whether or not a crop was planted, and did not depend on what 
crop was planted, (except for fruit and vegetable restrictions)). The 
2008 Farm Bill further authorizes these types of direct payments for 
the 2008 through 2012 crop years, with some changes, and adds pulse 
crops beginning with the 2009 crop year. Counter-cyclical payments 
(counter-cyclical payments are similar to the deficiency payments 
authorized under the earlier Acreage Reduction Program (ARP), which 
mandated strict acreage limitations and mandatory acreage idling or 
set-aside requirements) were authorized for the 2002 through 2007 crop 
years pursuant to the 2002 Farm Bill for these same crops. Under the 
2008 Farm Bill, peanuts continue to be eligible for direct and counter-
cyclical payments, and continue to have slightly different statutory 
requirements than for other crops.

Base Acres and Payment Yields

    Section 1001 of the 2008 Farm Bill provides that the base acres and 
yields established by the 2002 Farm Bill that were effective September 
30, 2007, will constitute the base acres and yields for the 2008 
through 2012 crop years. The 2008 Farm Bill, however, requires 
adjustments to base acres for various reasons including, but not 
limited to, land no longer being devoted to agricultural uses. In 
addition to changes required by the 2008 Farm Bill, this rule provides 
that for the 2009 and subsequent crop years, crop acreage bases will be 
terminated with respect to land owned by Federal agencies. A transition 
provision is provided with respect to Federal land that was subject to 
a lease agreement entered into prior to the effective date of this 
rule. In such cases, the termination of the crop acreage bases will 
become effective when the lease expires.
    As to payment yields, the 2008 Farm Bill requires that the payment 
yield for direct and counter cyclical payments under the 2002 Farm 
Bill, as in effect on September 30, 2007, be used. Section 1102 of the 
2008 Farm Bill further requires the Secretary to establish a payment 
yield for direct and counter-cyclical payments for each farm for any 
designated oilseed or eligible pulse crop for which a payment yield was 
not established under the 2002 Farm Bill. This will involve a 
determination of an average yield per planted acre (designated oilseeds 
or pulse crop) on a farm for the 1998 through 2001 crop years, 
excluding any crop year in which the acreage planted was zero. An 
adjustment to the payment yield will equal the product of the average 
yield and the ratio resulting from dividing the national average yield 
for the 1981 through 1985 crops by the national average yield for the 
1998 through 2001 crops. If the yield for a farm for any of the 1998 
through 2001 crop years was less than 75 percent of the county yield 
for that designated oilseed or pulse crop, then the Secretary will 
assign a yield equal to 75 percent of the county yield to determine the 
average.
    As with the 2002 Farm Bill, the 2008 Farm Bill specifies certain 
requirements to which the participant must agree to be eligible for 
direct and counter-cyclical payments. One such requirement is to 
effectively control noxious weeds and otherwise maintain the land in 
accordance with sound agricultural practices.
    Sections 1101 and 1302 of the 2008 Farm Bill directed that base 
acres for covered commodities and peanuts would be reduced for land 
that has been subdivided and developed for multiple residential units 
or other non-farming uses if the size of the tracts and the density of 
the subdivision is such that the land is unlikely to return to the 
previous agricultural use, unless the producers on the farm demonstrate 
that the land remains devoted to commercial agricultural production or 
is likely to be returned to the previous agricultural use. Accordingly, 
these regulations detail the procedures under which land will be 
considered subdivided and developed for multiple residential units or 
other non-farming uses, whether such land remains devoted to commercial 
agricultural production, and whether such land is likely to be returned 
to the previous agricultural use.
    Additionally, beginning with the 2009 crop year, except for farm 
owners who are socially disadvantaged or limited resource farmers, 
section 1101 of the 2008 Farm Bill, as amended by Public Law 110-398, 
specifically precludes issuance of payments to producers on farms that 
have 10 or less total base acres of covered commodities or peanuts.
    Section 1107 of the 2008 Farm Bill authorizes the Secretary to 
carry out a pilot project to permit the planting of cucumbers, green 
peas, lima beans, pumpkins, snap beans, sweet corn, and tomatoes grown 
for processing on base acres in certain States during each of the 2009 
through 2012 crop years. The number of base acres eligible during each 
crop year for the pilot project will be: 9,000 acres in Illinois, 9,000 
acres in Indiana, 1,000 acres in Iowa, 9,000 acres in Michigan, 34,000 
acres in Minnesota, 4,000 acres in Ohio, and 9,000 acres in Wisconsin. 
Contract and managerial requirements for this pilot project will be 
outlined in the regulations. Generally, to be eligible for selection to 
participate in the pilot project, the producers on a farm must 
demonstrate to the Secretary that they have entered into a contract to 
produce a crop of one of the specified commodities for processing and 
that they agree to produce the crop as part of a program of crop 
rotation on the farm to achieve agronomic and pest and disease 
management benefits. The base acres on a farm for a crop year will be 
reduced by an acre for each acre planted under the pilot program. 
Implementation of this program will commence with the 2009 crop year.
    Additionally, subject to subsections (b) and (c) of section 1108 of 
the 2008 Farm Bill, for the purposes of determining the amount of the 
counter-cyclical payments to be paid to the producers on a farm for 
long grain rice and medium grain rice under section 1104 of the 2008 
Farm Bill, base acres on the farm will be apportioned based on the 
percentage of acreage planted in the applicable State to long grain 
rice and medium grain rice during the 2003 through 2006 crop years. 
Section 1108 requires that the Secretary use the same total base acres, 
payment acres, and payment yields established with respect to rice 
under sections 1101 and 1102. Although the provisions of the 2008 Farm 
Bill are effective with the 2008 crop year, the election and 
apportionment cannot be performed before the 2009 crop year. We do not 
anticipate this being a problem, however, as counter-cyclical payments 
are not anticipated for rice in 2008. In the event that changes due to 
some circumstance, measures will be taken to implement the 
effectiveness of the change earlier.
    In response to concerns regarding the sharing of contract payments 
and various forms of cash and share leases (such as traditional cash 
leases, traditional share leases, and combination or flex leases that 
have features of both traditional cash and traditional share leases), 
these regulations will clarify for the purpose of determining payments 
under these

[[Page 79286]]

regulations only, that for the 2009 through 2012 crop years, 
combination or ``flex'' leases will be viewed as cash leases. A 
combination or ``flex'' lease is one that provides for the greater of a 
determinable amount or determinable share of a crop or crop proceeds. 
For 2008, these leases are deemed to be share leases. For 2009, these 
leases are deemed cash leases.

ACRE

    As an alternative to receiving counter-cyclical payments, section 
1105 of the 2008 Farm Bill provides that ACRE is a farm program option 
for all covered commodities and peanuts that is available during each 
of the 2009, 2010, 2011, and 2012 crop years. A key feature of ACRE is 
to provide revenue protection based on several factors such as recent 
market prices as well as actual production and revenue of the covered 
commodity or peanuts at the farm and State levels. Unlike counter-
cyclical payments, ACRE payments are not solely determined based on 
comparing national average prices to loan rates or other predetermined 
rates. When certain program standards are met, payments are based on 
the crop's actual planted acres and actual yield instead of historical 
yields and crop base acres, except when the crop's actual planted acres 
exceed the total base acreage on the farm.
    Producers will give up a fixed amount of revenue, 20 percent of 
their direct payment, in exchange for a possible ACRE payment in a year 
when gross revenue is low, at which time payments could be greater than 
counter-cyclical payments. ACRE provides participating producers a 
revenue guarantee each year based on market prices and average yields 
for the respective commodities. The guarantee is based on State-level 
yields and national market prices, but payments are dependent upon 
State- and farm-level yields and national market prices. ACRE's policy 
objective is to assist farmers with managing the systemic risk of a 
decline in revenue of a crop over a short period of years.
    However, once made on a farm, the election of ACRE is irrevocable, 
and the farm will remain in ACRE from the crop year in which 
participation was initially elected through the duration of the 2012 
crop year. The election applies to all covered commodities and peanuts 
grown on the farm. If ACRE is not elected by all producers on the farm 
or if an ACRE election is not made, program participation defaults to 
the traditional DCP (provided DCP signup requirements are met).
    Enrollment in an ACRE contract is a two-step process and first 
requires producers on a farm to elect the ACRE option. Election does 
not automatically enroll the producers or the farm, however. Following 
the irrevocable election, the producers will have the option to choose 
whether or not to participate in the annual ACRE contract.
    For producers on farms that have elected and enrolled in ACRE, 
direct payments will be reduced by 20 percent such that they equal 80 
percent of direct payments under the traditional direct payment program 
and marketing assistance loan rates will be reduced by 30 percent such 
that the loan rates will be equal to 70 percent of marketing loan 
rates.
    ACRE payments equal the lesser of either:

         ACRE state revenue guarantee minus state actual revenue
                                   or
                   25% of ACRE state revenue guarantee
                                  times
  83.3 percent of the farm's acres planted to the covered commodity or
                 peanuts (85 percent for the 2012 crop)
                                  times
  the farm's Olympic average yield (removes high and low yield) for the
    most recent 5 years divided by the State's ACRE benchmark yield.
 

    The ACRE state revenue guarantee for a crop for a crop year equals 
the ACRE benchmark state yield per planted acre times ACRE price 
guarantee times 90 percent. The benchmark yield is Olympic average of 
state's yields for 5 most recent crop years. The price guarantee is the 
simple average of U.S. market year price for 2 most recent crop years. 
For example, for the purpose of establishing the guarantee for the 2009 
crop year, the 2 most recent crop years are 2007 and 2008. For 2010 
through 2012, the revenue guarantee cannot increase or decrease more 
than 10 percent from the guarantee for the previous crop year. The 
increase or decrease in the state revenue guarantee for a covered 
commodity or peanuts will be applicable to all ACRE program 
participants in a State, regardless of the year the participant first 
elected ACRE or enrolled. Separate state revenue guarantees are 
established for irrigated and non-irrigated land if a state's planted 
acres of a covered commodity or peanuts are at least 25 percent 
irrigated and at least 25 percent non-irrigated.
    ACRE actual state revenue for a crop for a crop year equals state 
yield per planted acre times the national average market price (which 
equals higher of U.S. average cash price for the crop year or 70 
percent of the crop's marketing assistance loan rate). While the 
statutory provisions regarding state revenue are not crystal clear, 
interpretation of the statute would not provide a reasonable result 
consistent with the nature of the statute unless it were read to lead 
to, in effect, a per acre amount.
    The total number of planted acres that receive an ACRE payment 
cannot exceed a farm's total base acres for all covered commodities and 
peanuts on the farm. If a farm's total planted acres exceed the farm's 
total base acres, the farmer may choose which planted acres to enroll 
in ACRE.
    ACRE payments are only available if a farm's actual revenue for the 
crop is less than the farm's ACRE benchmark revenue for that crop year. 
A farm's actual revenue for a crop equals the farm's actual yield times 
the U.S market year price for the crop for the crop year. A farm's ACRE 
benchmark revenue equals:

   (Olympic average of farm's yields for the 5 most recent crop years
                                  times
                          ACRE guarantee price)
                                  plus
 per acre crop insurance premium paid by the farmer for the crop for the
                               crop year.
 

    Producers electing the ACRE option and enrollment, as a condition 
of payment eligibility, must report production of reported acreage of 
covered commodities and peanuts on the farm no later than the crop 
reporting date for the crop in the year following the year the crop was 
reported as planted for harvest. The regulations specify the 
information and documentation requirements for these production 
reports.
    The 2008 Farm Bill provides a $65,000 per person or legal entity 
payment limit for counter-cyclical payments, a reduced direct payment 
limit for participants in the ACRE program to reflect the amount the 
direct payment is reduced as a condition to participate in ACRE, and a 
limit in the amount of counter-cyclical and ACRE payments that reflect 
the $65,000 limit plus the amount that the direct payment limit is 
reduced. The counter-cyclical limits and ACRE limits are combined for 
those producers who participate in ACRE because producers are eligible 
to receive the counter-cyclical payments on one farm and the ACRE 
payments on a separate farm.

FSA Notifications of Farm Bill Provisions

    The following provides information regarding the notification 
processes FSA has undergone to ensure that farm owners are aware of the 
provisions of the 2008 Farm Bill and that participants have all 
applicable information available on record at FSA to assist them in 
making participation elections.

[[Page 79287]]



------------------------------------------------------------------------
             Date                              FSA action
------------------------------------------------------------------------
June 4, 2008.................  Issued a DCP Notice to State and County
                                Offices to prepare for implementation of
                                the 2008 Farm Bill. The notice:
                                Provided an overview of the 2008
                                Farm Bill as it relates to 2008 through
                                2012.
                                Compared 2008 through 2012 DCP
                                provisions and covered commodities with
                                provisions effective for 2007 under the
                                2002 Farm Bill.
                                Clarified statutory definitions
                                of long grain and medium rice.
                                Announced the inclusion of pulse
                                crops as a covered commodity in 2009.
                                Discussed provisions for base
                                acre adjustments permitted under the
                                2008 Farm Bill and explained how payment
                                yields would be determined.
                                Discussed the percent of base
                                acres used to calculate direct payments
                                for each year under the 2008 Farm Bill.
                                Announced the direct payment
                                rates and target prices for the 2008
                                through 2012 years.
                                Stated the payment limitations
                                applicable to direct and counter
                                cyclical payments.
                                Discussed the availability of
                                the option to elect participation in the
                                ACRE program starting with the 2009 crop
                                year.
                                Announced planting flexibility
                                as it existed under the 2002 Farm Bill,
                                the 2008 Farm Bill, and the availability
                                of a Planting Transferability Pilot
                                Project for certain crops and States
                                beginning in 2009.
                                Discussed compliance provisions
                                of DCP.
                                Announced the prohibition of DCP
                                and ACRE payments to producers on farms
                                having 10 or less base acres.
                                Discussed how policy is being
                                developed to address how base acres will
                                need to be reduced when land has been
                                subdivided and developed for multiple
                                residential units or other nonfarming
                                uses.
                                Announced the direct payment
                                rates and target prices for the 2008
                                through 2012 years.
                                Stated the payment limitations
                                applicable to direct and counter
                                cyclical payments.
                                Discussed the availability of
                                the option to elect participation in the
                                ACRE program starting with the 2009 crop
                                year.
                                Announced planting flexibility
                                as it existed under the 2002 Farm Bill,
                                the 2008 Farm Bill, and the availability
                                of a Planting Transferability Pilot
                                Project for certain crops and States
                                beginning in 2009.
                                Discussed compliance provisions
                                of DCP.
June 24, 2008................  Issued a DCP Notice Concerning the 2008
                                DCP and Availability of Software. The
                                notice:
                                Announced the 2008 DCP
                                enrollment period.
                                Outlined the provisions that
                                differentiate 2007 DCP from 2008 DCP.
                                Provided information regarding a
                                revised CCC-509 and CCC-509 Appendix,
                                and the need for their use in 2008
                                signup.
                                Discussed the availability of
                                2008 DCP Contract software.
                                Instructed FSA offices to
                                publicize DCP provisions using all
                                available means.
                                Announced the availability of
                                2008 advance direct payments.
                                Issued clarification for
                                handling DCP contracts for farms having
                                10 or less base acres (prior to the
                                amendment in Public Law 110-398).
                                Issued a notice regarding
                                establishing fruit and vegetable (FAV)
                                and Wild Rice Double-Cropping Regions.
June 27, 2008................  Issued a notice in the Federal Register
                                announcing implementation of DCP
                                provisions for the 2008 crop year based
                                on the current regulation in 7 CFR part
                                1412, Direct and Counter-cyclical
                                Program, except as otherwise noted in
                                the Notice and as otherwise required by
                                the 2008 Farm Bill.
------------------------------------------------------------------------

Signup Fees and Enrollment Deadlines

    As provided in this rule, a signup deadline of June 1 has been 
established. Under the 2002 Farm Bill DCP provisions, a $100 fee was 
assessed if a participant did not sign a DCP contract by June 1 of the 
crop year. For the 2008 crop year, this fee did not apply. Instead, a 
final signup deadline of September 30, 2008, applied. For the 2009 and 
subsequent crop years, a final enrollment deadline of June 1 will apply 
and there will be no late enrollment period or fee. Producers 
interested in participating must complete enrollment of the farm by 
June 1 of the applicable crop year.
    Prior to DCP and PFC, producers were required to decide whether to 
annually enroll in Acreage Reduction Program contracts and under those 
contracts there were defined signup periods that often closed much 
earlier than June 1. In other words, producers generally did not have 
an entire contract period to enroll or enroll late and pay a late filed 
fee. In some respects, a ``late-file'' enrollment period ending later 
in a contract year actually caused FSA and producers more problems 
because many producers who thought they had enrolled often had not. 
Further, a later enrollment deadline or ``late-file'' enrollment period 
raised questions of program integrity because compliance activities 
could not be performed during the contract period on farms that were 
not yet enrolled. Additionally, it has been determined that an 
enrollment deadline of June 1 is necessary because of the complexities 
involved in administering new payment limitation provisions which 
provide for attribution of payments to individuals within entities. 
Therefore, for the 2009 and each of the subsequent crop years, an 
enrollment deadline of June 1 of each such year will apply and all 
producers interested in annually participating must enroll by June 1 of 
such year.

Payments

    Payments in the programs covered in this part are subject to 
statutory changes in conditions, rates, limitations, and eligibilities. 
Under a separate rulemaking, CCC will publish changes relevant to 
payment limitations.

Summary

    In summary, FSA has, in administering the provisions of the 2008 
Farm Bill, utilized available means to ensure that farm owners and 
operators have all necessary information from FSA that FSA is capable 
of providing to them, and in such a manner that owners can make 
educated decisions when determining appropriate DCP base and yield 
elections for a farm. As was the case with the 2002 Farm Bill, the 2008 
Farm Bill explicitly sets forth many of the terms and provisions of the 
DCP. Accordingly, administration of the program is subject to little 
variation or flexibility from the statutory authority.

[[Page 79288]]

Notice and Comment

    These regulations are exempt from the notice and comment 
requirements of the Administrative Procedure Act (5 U.S.C. 553), as 
specified in section 1601(c) of the 2008 Farm Bill, which requires that 
the regulations be promulgated and administered without regard to the 
notice and comment provisions of section 553 of title 5 of the United 
States Code 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.

Executive Order 12866

    The Office of Management and Budget (OMB) designated this rule as 
economically significant under Executive Order 12866 and, therefore, 
OMB reviewed this final rule. A cost benefit assessment of this rule is 
summarized below and is available from the contact listed above.

Cost Benefit Analysis Summary

    The underlying policy structure for the 2008 Farm Bill is largely 
unchanged from the policy structure for the 2002 Farm Bill. The 2008 
Farm Bill continues planting flexibility, continues marketing 
assistance loan provisions at higher levels (for some crops in some 
years. The net fiscal impacts of the changes made by the 2008 Farm Bill 
and implemented by this rule are estimated to be as shown in the 
following table:

  Average Annual Change in Government Outlays by Program, Fiscal Years
                                2008-2012
------------------------------------------------------------------------
                                                          Average annual
                                                           outlay change
                         Program                             (billion
                                                             dollars)
------------------------------------------------------------------------
Direct Payments.........................................         $-0.484
Counter-cyclical Payments...............................          -0.043
ACRE Payments...........................................           1.014
                                                         ---------------
    Total...............................................           0.487
------------------------------------------------------------------------

    Direct and counter-cyclical payments will increase farm income, but 
will have little impact on planting decisions because these payments 
are decoupled from the production decisions of individual farmers. 
These benefits are paid on historically-based acreage and yields and do 
not depend on the current production choices of the farmer. Direct 
payments and counter-cyclical payments were assumed in this analysis to 
have no impact on production. Direct payments are projected to average 
$4.749 billion in fiscal years (FY) 2008 through 2014 for crop years 
2008 through 2012. These payments represent an decrease of about $0.484 
billion each crop year compared with direct payments issued under the 
2002 Farm Bill. Counter-cyclical payments are projected to average 
$0.089 billion in FY 2008 through 2014 for crop years 2008 through 
2012. These payments represent a decrease of $0.043 billion compared 
with counter-cyclical payments under the 2002 Farm Bill. ACRE payments 
are projected to average $1.014 billion each crop year.

Regulatory Flexibility Act

    This rule is not subject to the Regulatory Flexibility Act because 
CCC is not required to publish a notice of proposed rulemaking for this 
rule.

Environmental Review

    The environmental impacts of this rule have been considered in 
accordance with the provisions of the National Environmental Policy Act 
of 1969 (NEPA), 42 U.S.C. 4321 et seq., the regulations of the Council 
on Environmental Quality (40 CFR parts 1500-1508), and FSA's 
regulations for compliance with NEPA, 7 CFR part 799. After a thorough 
environmental review, FSA has determined that the changes to the 
program authorized by the 2008 Act and promulgated by this final rule, 
are considered categorically excluded from further environmental review 
as evidenced by the completion of an environmental evaluation (7 CFR 
799.10(b)(2)(xvi)). Therefore, no environmental assessment or 
environmental impact statement shall be prepared on this rule. A copy 
of the environmental evaluation is available for inspection and review 
upon request.

Executive Order 12372

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

Executive Order 12988

    This rule has been reviewed under Executive Order 12988. This rule 
is not retroactive and it does not preempt State or local laws, 
regulations, or policies unless they present an irreconcilable conflict 
with this rule. Before any judicial action may be brought regarding the 
provisions of this rule the administrative appeal provisions of 7 CFR 
parts 11 and 780 must be exhausted.

Executive Order 13132

    The policies contained in this rule do not have any substantial 
direct effect on states, on the relationship between the national 
government and the states, or on the distribution of power and 
responsibilities among the various levels of government. Nor does this 
rule impose substantial direct compliance costs on state and local 
governments. Therefore, consultation with the states is not required.

Unfunded Mandates

    This rule contains no Federal mandates under the regulatory 
provisions of Title II of the Unfunded Mandates Reform Act of 1995 
(UMRA) for State, local, and tribal government or the private sector. 
In addition, CCC was not required to publish a notice of proposed 
rulemaking for this rule. Therefore, this rule is not subject to the 
requirements of sections 202 and 205 of UMRA.

Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA)

    Section 1601(c)(3) of the 2008 Farm Bill requires that the 
Secretary use the authority in section 808 of the Small Business 
Regulatory Enforcement Fairness Act of 1996, Public Law 104-121 
(SBREFA), which allows an agency to forgo SBREFA's usual 60-day 
Congressional Review delay of the effective date of a major regulation 
if the agency finds that there is a good cause to do so. These 
regulations affect the incomes of an extraordinarily large number of 
agricultural producers. In any event, section 1601(c)(3) provides 
cause. Accordingly, this rule is effective upon the date of filing for 
public inspection at the Office of the Federal Register.

Federal Assistance Programs

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

Paperwork Reduction Act

    The regulations in this rule are exempt from the requirements of 
the Paperwork Reduction Act (44 U.S.C. Chapter 35), as specified in 
section 1601(c)(2) of the 2008 Farm Bill, which provides that these 
regulations be promulgated and administered without regard to the 
Paperwork Reduction Act.

E-Government Act Compliance

    CCC 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.

[[Page 79289]]

List of Subjects in 7 CFR Part 1412

    Cotton, Feed grains, Oilseeds, Peanuts, Price support programs, 
Reporting and recordkeeping requirements, Rice, Soil conservation, 
Wheat.


0
For the reasons discussed above, revise 7 CFR part 1412 to read as 
follows:

PART 1412--DIRECT AND COUNTER-CYCLICAL PROGRAM AND AVERAGE CROP 
REVENUE ELECTION PROGRAM FOR THE 2008 AND SUBSEQUENT CROP YEARS

Subpart A--General Provisions
Sec.
1412.1 Applicability, statutory changes, interest, and contract 
provisions.
1412.2 Administration.
1412.3 Definitions.
1412.4 Appeals.
Subpart B--Establishment of Base Acres for a Farm for Covered 
Commodities
1412.21 Base acres.
1412.22 Failure to make pulse crop election.
1412.23 Base acres and Conservation Reserve Program.
1412.24 Limitation of total base acreage on a farm.
Subpart C--Establishment of Yields for Direct and Counter-Cyclical 
Payments
1412.31 Direct payment yields for covered commodities, except pulse 
crops.
1412.32 Direct payment yield for designated oilseed and pulse crops.
1412.33 Payment yield for counter-cyclical payments for covered 
commodities.
1412.34 Submitting production evidence for establishing direct 
payment yields for oilseeds and pulse crops.
1412.35 Incorrect or false production evidence of oilseeds and pulse 
crops.
Subpart D--Direct and Counter-Cyclical Program Contract and ACRE 
Program Contract Terms and Enrollment Provisions for Covered 
Commodities and Peanuts for 2008 Through 2012
1412.41 Direct and counter-cyclical program contract or ACRE program 
contract.
1412.42 Eligible producers.
1412.43 Reconstitutions.
1412.44 Notification of base acres.
1412.45 Reducing or terminating base acreage.
1412.46 Succession-in-interest.
1412.47 Planting flexibility.
1412.48 Planting Transferability Pilot Project.
1412.49 Apportionment of long and medium grain rice.
1412.50 Matters of general applicability.
Subpart E--Financial Considerations Including Sharing Payments
1412.51 Limitation of payments.
1412.52 Direct payment provisions.
1412.53 Counter-cyclical payment provisions.
1412.54 Sharing of contract payments.
1412.55 Provisions relating to tenants and sharecroppers.
Subpart F--Contract Violations and Reduction in Payments
1412.61 Contract violations.
1412.62 Fruit, vegetable and wild rice acreage reporting violations.
1412.63 Contract liability.
1412.64 Inaccurate representation, misrepresentation, and scheme or 
device.
1412.65 Offsets and assignments.
1412.66 Acreage and production reports.
1412.67 Notices of loss.
1412.68 Compliance with highly erodible land and wetland 
conservation provisions.
1412.69 Controlled substance violations.
Subpart G--Average Crop Revenue Election (ACRE) Program
1412.71 Administration.
1412.72 Availability and election of alternative approach.
1412.73 Sharing of ACRE payments.
1412.74 Prior Enrollment in DCP.
1412.75 Notice of election.
1412.76 Payments.
1412.77 Transfer of land and succession-in-interest.
1412.78 Violations.
1412.79 Executed ACRE contract not in conformity with regulations.
1412.80 Division of program payments and provisions relating to 
tenants and sharecroppers.

    Authority: 7 U.S.C. 7911-7918, 7951-7956, 8711-8719, 8751-8756, 
and 8781; and 15 U.S.C. 714b and 714c.

Subpart A--General Provisions


Sec.  1412.1  Applicability, statutory changes, interest, and contract 
provisions.

    This part governs: How base acres and farm program payment yields 
are established or adjusted for the purpose of calculating direct and 
counter-cyclical payments for wheat, corn, grain sorghum, barley, oats, 
upland cotton, rice, peanuts, soybeans, sunflower seed, rapeseed, 
canola, safflower, flaxseed, mustard seed, crambe, sesame seed, pulse 
crops, and other designated oilseeds as determined and announced by the 
Commodity Credit Corporation (CCC), for the years 2008 through 2012; 
the month when producers on a farm may enter into annual Direct and 
Counter-cyclical Program (DCP) or Average Crop Revenue Election (ACRE) 
program contracts with CCC for each of the years 2008 through 2012, as 
applicable; and the peanut crop acreage bases and yields in order to 
receive 2008 through 2012 direct and counter-cyclical payments. 
Payments otherwise provided for in this part are subject to changes 
made by statute in rates, conditions, and eligibility notwithstanding 
any contract made under this part. However, any such modification may, 
as determined by the Deputy Administrator, allow producers the 
opportunity to withdraw from the contract. Also, if any refund comes 
due to CCC under this part, interest will be due from the date of the 
CCC disbursement except as determined by the Deputy Administrator. The 
provisions of this section will apply notwithstanding any other 
provision of this or any other part. In order to receive payment under 
this part a participant must comply with the regulations in this part 
and any additional requirements imposed by the program contract.


Sec.  1412.2  Administration.

    (a) The program is administered under the general supervision of 
the Executive Vice-President, CCC, and will be carried out by Farm 
Service Agency (FSA) State and county committees (State and county 
committees).
    (b) State and county committees, and representatives and their 
employees, do not have authority to modify or waive any of the 
provisions of the regulations of this part.
    (c) The State committee may take any action required by the 
regulations of this part that the county committee has not taken. The 
State committee will also:
    (1) Correct, or require a county committee to correct, any action 
taken by such county committee that is not in accordance with the 
regulations of this part; or
    (2) Require a county committee to withhold taking any action that 
is not in accordance with this part.
    (d) No provision or delegation to a State or county committee will 
preclude the Executive Vice President, or the Deputy Administrator, or 
a designee, from determining any question arising under the program or 
from reversing or modifying any determination made by a State or county 
committee.
    (e) The Deputy Administrator has the authority in individual cases 
to authorize State and county committees to waive or modify deadlines 
(except statutory deadlines) and other non-statutory requirements, in 
cases where lateness or failure to meet such other requirements does 
not adversely affect operation of the program. Producers and 
participants have no right to seek an exception under this provision. 
The Deputy Administrator's refusal to consider cases or circumstances 
or decisions not to exercise this discretionary authority under this 
provision will not be considered an adverse decision and is not 
appealable.
    (f) A representative of CCC may execute the FSA forms entitled 
``Direct

[[Page 79290]]

and Counter-Cyclical Program Contract'' and ``Average Crop Revenue 
Election Program Contract'' only under the terms and conditions 
determined and announced by the Executive Vice President, CCC. Any 
contract that is not executed in accordance with such terms and 
conditions, including any purported execution prior to or after the 
dates authorized by the Executive Vice President, CCC, is null and void 
and will not be considered to be a contract between CCC and the 
operator or any other producer on the farm.


Sec.  1412.3  Definitions.

    The definitions set forth in this section are applicable for all 
purposes of administering the DCP. The terms defined in part 718 of 
this title and part 1400 of this chapter are also applicable, except 
where those definitions conflict with the definitions set forth in this 
section.
    Where there is a conflict or a difference in definitions specified 
in this part and those that apply to the Average Crop Revenue Election 
(ACRE) program specified in subpart G of this part, the regulations of 
subpart G of this part will apply to the ACRE program.
    Average Crop Revenue Election (ACRE) means the program authorized 
by section 1105 of the Food, Conservation, and Energy Act of 2008 (7 
U.S.C. 8715) according to subpart G of this part. Participation in the 
ACRE program requires a two-step process by the producer, specifically 
step 1 an election according to subpart G of this part followed by step 
2 enrollment according to this part.
    Base acres means the number of acres established with respect to a 
covered commodity and peanuts on a farm pursuant to sections 1101 and 
1302 of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 
7911) as in effect on September 30, 2007, subject to any adjustment in 
accordance with subpart B of this part.
    Commercial agricultural production means the propagation and 
raising of agricultural products for commercial sale or barter having 
gross receipts or sales annually in excess of $1,000. The term includes 
pastures and land devoted to approved conserving uses.
    Considered planted means acreage approved as prevented planted in 
accordance with Sec.  718.103 of this title or the acreage considered 
planted to a covered commodity pursuant to Sec.  1412.48.
    Contract means the CCC-approved standard, uniform forms and 
appendixes specified by CCC that constitute the agreement for 
participation in the Direct and Counter-Cyclical Program or ACRE 
program, as applicable.
    Contract year means the particular year of the particular contract 
based on the compliance period for the contract. The compliance year 
will run from October 1 to the following September 30 and will have the 
same name as the corresponding fiscal year. For example, the 2009 
contract year will be October 1, 2008, through September 30, 2009, and 
that year will be considered, too, the 2009 crop year. The contract for 
the 2009 crop year will be considered the contract for the 2009 crop. 
The same references will apply to all other years.
    Counter-cyclical payment means a payment made to eligible producers 
on a farm in accordance with subpart E of this part for covered 
commodities and peanuts.
    Covered commodity means wheat, corn, grain sorghum, barley, oats, 
upland cotton, long grain rice, medium grain rice, soybeans, sunflower 
seed, rapeseed, canola, safflower, flaxseed, mustard seed, crambe, 
sesame seed, pulse crops, and other oilseeds as determined by the 
Secretary.
    Crop year means the relevant contract year. For example, the 2009 
crop year is the year that runs from October 1, 2008, through September 
30, 2009, and references to payments for that year refer to payments 
made under contracts with the compliance year that runs during those 
dates.
    DCP cropland means DCP cropland as defined in part 718 of this 
title.
    Deputy Administrator means the Deputy Administrator for Farm 
Programs, FSA, or a designee.
    Developed means:
    (1) Land has been approved by the local government for uses other 
than commercial agricultural uses; and
    (2) Construction activity has begun to install any aspect of the 
development, for example utilities or roadways.
    Direct payment means a payment made to eligible producers on a farm 
for peanuts and covered commodities in accordance with subpart E of 
this part.
    Dry peas means Austrian, wrinkled seed, yellow, Umatilla, and 
green, excluding peas grown for the fresh, canning, or frozen market.
    Effective price means the price calculated by the Secretary in 
accordance with Sec.  1412.53 for covered commodities and peanuts to 
determine whether counter-cyclical payments are required to be made 
under that section for a crop year.
    Excess base acres means the number of base acres of covered 
commodities and peanuts on the farm that exceed the farm's total DCP 
cropland.
    Fiscal year means the year running from October 1 to the following 
September 30 and will be designated by the same calendar year in which 
it ends. For example, the 2009 fiscal year ends September 30, 2009.
    Harvested means the producer has removed the crop from the field by 
hand, mechanically, or by grazing of livestock. The crop is considered 
harvested once it is removed from the field and placed in or on a truck 
or other conveyance or is consumed by livestock through the act of 
grazing. Crops normally placed in a truck or other conveyance and taken 
off the crop acreage, such as hay, are considered harvested when in the 
bale, whether removed from the field or not.
    Marketing year means the 12-month period beginning in the calendar 
year the crop is normally harvested as follows:
    (1) Barley, oats, and wheat: June 1-May 31;
    (2) Canola, flax and rapeseed, lentils, and dry edible peas: July 
1-June 30;
    (3) Upland cotton, peanuts, and rice: August 1-July 31; and
    (4) Corn, grain sorghum, soybeans, sunflowers, safflower, mustard, 
crambe, sesame, and chickpeas: September 1-August 31.
    Oilseeds means a crop of soybeans, sunflower seed, rapeseed, 
canola, crambe, safflower, flaxseed, mustard seed, sesame seed, or, if 
determined and announced by CCC, another oilseed.
    Payment acres means:
    (1) Except as provided for in paragraph (2) of this definition, 85 
percent of the base acres of a covered commodity or peanuts on a farm 
in accordance with Sec.  1412.71 or subpart B of this part, as 
applicable, for which direct or counter-cyclical or ACRE payments are 
made.
    (2) For each of the 2009 through 2011 crop years, 83.3 percent of 
the base acres for a covered commodity or peanuts on a farm in 
accordance with Sec.  1412.71 or subpart B of this part, as applicable, 
for which direct or ACRE payments are made.
    Payment yield means:
    (1) For peanuts, the yield established pursuant to section 1302 of 
the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 7911) as 
in effect on September 30, 2007.
    (2) For covered commodities, the yield established in accordance 
with subpart C of this part for a farm for a covered commodity.
    (3) For designated oilseeds or pulse crops, the yield established 
in accordance with subpart C of this part for a farm for a crop of a 
designated oilseed and pulse crop.

[[Page 79291]]

    Processing means with respect to uses of a crop, non-fresh intended 
uses of crops enrolled in the project referred to in Sec.  1412.48 for 
crops being grown pursuant to a contract for canning, pickling, frozen, 
juice, dry edible bean or pea, or such other uses deemed by CCC not to 
be fresh intended uses of crops mentioned in Sec.  1412.48.
    Pulse crop means dry peas, lentils, small chickpeas, and large 
chickpeas. Pulse crop bases will not generate direct payments and may 
only create counter-cyclical payments for the 2009 and subsequent crop 
years.
    Subdivided means land has been approved or designated by the local 
government, or a unit thereof, for development or use as something 
other than commercial agricultural production or other non-agricultural 
use.
    Supportive and necessary contractual documents means those 
documents including, but not limited to, those items substantiating the 
DCP contract such as leases, deeds, signatures of contract 
participants, owners, operators, and other tenant signatures, as 
determined by the Secretary.
    Target price means, for peanuts, the price per ton; and for covered 
commodities, the price per bushel (or other appropriate unit in the 
case of upland cotton, rice, and other oilseeds) used to determine the 
payment rate for counter-cyclical payments.


Sec.  1412.4   Appeals.

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

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


Sec.  1412.21   Election of base acres.

    (a) Subject to adjustments in paragraph (b) of this section, base 
acres for covered commodities and peanuts are as defined in Sec.  
1412.3.
    (b) No later than April 1, 2009, owners on a farm may establish 
base acres for pulse crops.
    (1) Subject to the limitations in accordance with paragraph (d) of 
this section and Sec.  1412.24, the base acres for pulse crops are 
equal to the sum of the following:
    (i) The 4-year average of the acreage planted or prevented planted 
to the pulse crops during each of the 1998 through 2001 crop years for 
harvest, grazing, haying, silage, or other similar purposes, as 
determined by the Secretary, plus
    (ii) The 4-year average of the acreage prevented from being planted 
to covered commodities during each of the 1998 through 2001 crop years, 
for reasons beyond the control of the producer, as determined by the 
Deputy Administrator.
    (c) Subject to paragraph (d) of this section, the total acreage of 
a pulse crop on the farm calculated in accordance with paragraph (b) of 
this section must not exceed:
    (1) The total acreage of cropland on the farm minus
    (2) The total acreage for all covered commodities, peanut, and 
other pulse crops determined in accordance with paragraphs (a) and (b) 
of this section.
    (d) If the calculation in paragraph (c) of this section results in 
a negative number, the pulse crop acreage on the farm for that crop 
year will be zero for the purposes of determining the 4-year average, 
in accordance with paragraph (b) of this section. Further, no prevented 
planning credit or other base credit may be allowed for a pulse crop 
for any planting activity for which base credit was allowed or will be 
allowed for another commodity.
    (e) If the acreage planted or prevented from being planted was 
devoted to a different covered commodity in the same crop year (other 
than a covered commodity or pulse crops produced under an established 
practice of double-cropping), the owner may select the commodity to be 
used for base purposes for that crop year in determining the 4-year 
average, but may not select both the initial commodity and subsequent 
commodity.
    (f)(1) An owner may increase the eligible acres of pulse crops on a 
farm by reducing the acreage of covered commodities and peanuts 
determined in accordance with paragraphs (a) and (b) of this section 
for one or more covered commodities on an acre-for-acre basis, except 
that the total base acres for pulse crops on the farm may not exceed 
the four-year average of pulse crops determined under paragraph (b) of 
this section.
    (2) For the purpose of determining a 4-year average acreage for a 
farm under this section, any crop year in which a pulse crop was not 
planted or prevented planted will be excluded.


Sec.  1412.22   Failure to make pulse crop election.

    If an owner fails to make an election for establishing pulse crop 
base acres on a farm by April 1, 2009, in accordance with Sec.  
1412.21, that owner will be deemed to have made the election to 
determine all base acres for all covered commodities and peanuts on the 
farm as set forth in Sec.  1412.21.


Sec.  1412.23  Base acres and Conservation Reserve Program.

    (a) Subject to paragraphs (b) and (c) of this section, eligible 
producers may, at the beginning of each fiscal year, adjust the base 
acres for covered commodities and peanuts with respect to the farm by 
the number of production flexibility contract acres or base acres 
protected by a Conservation Reserve Program contract entered into under 
section 1231 of the Food Security Act of 1985 (1985 Farm Bill, Pub. L. 
99-198) that expired, was voluntarily terminated, or was early released 
on or after September 30, 2007.
    (b) The total base acreage on a farm must not exceed the limitation 
of Sec.  1412.24.
    (c) Adjustments to base acreage on a farm in accordance with this 
section must be completed by no later than June 1 of the fiscal year 
following the fiscal year the conservation reserve program contract 
expired or was voluntarily terminated.
    (d) For the fiscal year in which an adjustment to base acres under 
this section is made, the owner of the farm may elect to receive either 
direct payments and counter-cyclical payments or ACRE payments, as 
applicable, with respect to the base acres added to the farm under this 
section or a prorated payment under the conservation reserve contract, 
but not both.


Sec.  1412.24  Limitation of total base acreage on a farm.

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

[[Page 79292]]

practice of double cropping on a farm, as determined by CCC.

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


Sec.  1412.31  Direct payment yields for covered commodities, except 
pulse crops.

    (a) The direct payment yield for each covered commodity, except 
pulse crops, will be the payment yield established for the commodity 
for the farm in accordance with the regulations for covered commodities 
at part 1412 of this chapter in effect on January 1, 2008 (see 7 CFR 
part 1412, revised as of January 1, 2008).
    (b) [Reserved]


Sec.  1412.32  Direct payment yield for designated oilseed and pulse 
crops.

    (a) The direct payment yield for designated oilseeds for which a 
yield was not established by September 30, 2007, and pulse crops for 
the farm will be determined by multiplying the weighted average yield 
per planted acre for the crop on the farm, as determined in accordance 
with paragraph (b) of this section, times the ratio resulting from:
    (1) The national average yield for the crop for the 1981 through 
1985 crop years, as determined by CCC, divided by
    (2) The national average yield for the crop for the 1998 through 
2001 crop years, as determined by CCC.
    (b)(1) The yield per planted acre for such designated oilseed for 
which a yield was not established by September 30, 2007, and for pulse 
crops on the farm, to be used for direct payment purposes, is 
calculated as follows:
    (i) The sum of the production of the crop for the 1998 through 2001 
crop years, as determined in accordance with paragraph (b)(2) of this 
section; divided by
    (ii) The sum of the total planted acres of the crop for the 1998 
through 2001 crop years.
    (2) The production of the crop for each of the 1998 through 2001 
crop years will be the higher of the following, except in a year in 
which the acreage planted to the crop was zero, in which case the 
production for the crop for such year will be zero:
    (i) The total production for the applicable year based on the 
production evidence submitted in accordance with Sec.  1412.34; or
    (ii) The amount equal to the product of:
    (A) The total planted acres for the crop, times
    (B) 75 percent of the harvested average county yield for that crop 
determined, where practicable, by calculating the weighted 4-year 
average of the National Agricultural Statistics Service (NASS) 
harvested acreage yields for the crop using the 1998 through 2001 crop 
years.
    (3) The NASS harvested acreage yield to be used in paragraph (b)(2) 
of this section will be based on:
    (i) NASS harvested irrigated yield for the crop, if available, for 
producers who irrigated the crop in the applicable years;
    (ii) NASS harvested non-irrigated yield for the crop, if available, 
for producers who did not irrigate the crop in the applicable years; or
    (iii) NASS harvested blended yield for all acreage, regardless of 
whether or not the acres were irrigated or non-irrigated, for all crops 
in all counties for which the yields in paragraphs (b)(3)(i) and (ii) 
of this section are unavailable.
    (4) If NASS harvested acreage yield data is not available, the 
Deputy Administrator will assign a yield to be used in paragraph 
(b)(2)(ii)(B) of this section.


Sec.  1412.33  Payment yield for counter-cyclical payments for covered 
commodities.

    The counter-cyclical payment yield for covered commodities on the 
farm will be equal to the counter-cyclical payment yield established 
for the covered commodity on the farm that was effective September 30, 
2007. Counter cyclical payment yields for designated oilseeds or 
eligible pulse crops for which direct payment yields were not 
established as of September 30, 2007, will be equal to the direct 
payment yield established in accordance with Sec. Sec.  1412.32 or 
1412.34, as applicable.


Sec.  1412.34  Submitting production evidence for establishing direct 
payment yields for oilseeds and pulse crops.

    (a)(1) Reports of production evidence must be submitted when the 
owner elects to establish a direct payment yield for designated 
oilseeds for which a yield was not established by September 30, 2007, 
and pulse crops for the farm in accordance with Sec.  1412.32.
    (2) Producer or third-party certification will not be accepted as 
proof of production evidence.
    (3) Reports of production evidence for designated oilseeds for 
which a yield was not established by September 30, 2007, and for pulse 
crops must be provided to the county committee of the county where the 
farm is administratively located, by farm and crop in such manner as 
required by CCC on a CCC-approved standard, uniform form designated by 
CCC.
    (b)(1) When disposition of production has been through commercial 
channels, CCC may require the producer to furnish documentary evidence 
in order to verify the information provided on the report of 
production. Acceptable evidence may include, but is not limited to, 
such items as:
    (i) Production approved by the county committee for Loan Deficiency 
Payments;
    (ii) Commercial receipts;
    (iii) Settlement sheets;
    (iv) Warehouse ledger sheets;
    (v) Elevator receipts or load summaries, supported by other 
evidence showing disposition, such as sales documents;
    (vi) Evidence from harvested or appraised acreage, approved for 
FCIC or multi-peril crop insurance loss adjustment settlement; or
    (vii) Other production evidence determined acceptable by the Deputy 
Administrator.
    (2) Such production evidence must show:
    (i) The producer's name,
    (ii) The commodity,
    (iii) The buyer or name of storage facility,
    (iv) The date of transaction or delivery, and
    (v) The quantity.
    (c) When production of a designated oilseed for which a yield was 
not established by September 30, 2007, and pulse crops has been 
disposed of through non-commercial channels, then 75 percent of the 
county average yield as determined in accordance with Sec.  
1412.32(b)(4) will be used.
    (d) CCC may verify the production evidence submitted with records 
on file at the warehouse, gin, or other entity which received or may 
have received the reported production.


Sec.  1412.35   Incorrect or false production evidence of oilseeds and 
pulse crops.

    (a) If production evidence submitted in accordance with Sec.  
1412.34 is false or incorrect, as determined by the county committee, 
the county committee will determine whether the owner or producer 
submitting the production evidence for a farm acted in good faith or 
took action to defeat the purpose of the program.
    (b)(1) If the county committee determines the production evidence 
submitted is false, incorrect, or unacceptable, and the owner or 
producer who submitted the evidence did not act in good faith or took 
any action to defeat or undermine the purpose of the program, the 
county committee will:
    (i) Require a refund of all direct and counter-cyclical payments 
earned for the farm for the first year such payments were made;

[[Page 79293]]

    (ii) For designated oilseeds or pulse crops, reduce both the direct 
and counter-cyclical payment yields to 75 percent of the county average 
yield as determined in accordance with Sec.  1412.32(b)(4). That yield 
will then be reduced by the applicable direct payment yield factor in 
accordance with Sec.  1412.32(a)(1); and
    (iii) Subject to paragraph (a)(2)(i) of this section, regarding the 
first year of payments, require a refund of an amount equal to the 
following for designated oilseeds or pulse crops for each year the 
false, incorrect, or unacceptable yield was used to make payments under 
the contract:
    (A) The sum of the direct and counter-cyclical payments made using 
the false, incorrect or unacceptable evidence, minus
    (B) The sum of the direct and counter-cyclical payments that would 
have been made based on the yields established in paragraph (b)(1)(ii) 
of this section.
    (2) Notwithstanding paragraph (b)(1) of this section, if the county 
committee determines that the production evidence submitted is false, 
incorrect, or unacceptable, and the owner or producer who submitted the 
evidence did not act in good faith or took action to defeat the purpose 
of the program, the Deputy Administrator may take further action, 
including but not limited to, any or all of the following:
    (i) Make a further yield reduction for part or all of the 
designated oilseeds or pulse crops on the farm;
    (ii) Make further payment reductions or refunds;
    (iii) Determine that the owner or producer who submitted the 
evidence is ineligible for participation in future contracts unless the 
Deputy Administrator determines otherwise; or
    (iv) Take other legal action.
    (c) If the county committee determines the production evidence 
submitted is false, incorrect, or unacceptable, and the owner or 
producer who submitted the evidence acted in good faith and did not 
take action to defeat the purpose of the program, the county committee 
will:
    (1) Correct the counter-cyclical yield for the applicable covered 
commodity or peanuts to equal the yield that would have been calculated 
in accordance with Sec.  1412.33 based on accurate production evidence; 
and
    (2) Require a refund of an amount equal to the following for each 
covered commodity and peanuts for each year the false, incorrect, or 
unacceptable yield was used to make payments under the contract:
    (i) The sum of the direct and counter-cyclical payments made using 
the false, incorrect, or unacceptable evidence, minus
    (ii) The sum of the direct and counter-cyclical payments that would 
have been made based on the yields established in paragraph (c)(1) of 
this section.

Subpart D--Direct and Counter-Cyclical Program and ACRE Program 
Contract Terms and Enrollment Provisions for Covered Commodities 
and Peanuts 2008 through 2012


Sec.  1412.41  Direct and counter-cyclical program contract or ACRE 
program contract.

    (a) Except as specified in subpart G of this part, the following 
provisions apply to DCP and ACRE program contracts:
    (1) With respect to Fiscal Year 2008 payments, CCC will offer to 
enter into an annual DCP contract with eligible producers of covered 
commodities and peanut producers through the date announced by CCC. 
With respect to Fiscal Years 2009 through 2012, CCC will offer to 
annually enter into a DCP or ACRE program contract with an eligible 
producer on a farm having base acres with respect to a covered 
commodity or peanuts, at the beginning of each such fiscal year 2009 
through 2012 through June 1 of each such year.
    (2)(i) Eligible producers must execute and submit a DCP or ACRE 
program contract and furnish supportive and necessary contractual 
documents to the county FSA office where the records for the farm are 
administratively maintained not later than June 1 of the fiscal year in 
which the direct and counter-cyclical or ACRE payments are requested.
    (ii) Except as may otherwise be provided in statute for 2008, 
enrollment is not allowed after September 30 of the fiscal year in 
which the direct and counter-cyclical payments or ACRE program payments 
are requested.
    (3) Under no circumstances will enrollment be permitted except as 
specified in this section. Contracts will not be approved unless all 
producers sharing in contract acreage with more than a zero share have 
submitted all applicable contracts and documentation necessary to make 
such approval, as determined by the Deputy Administrator. For those 
producers with an interest but a zero share of contract acreage, the 
contract will not be approved before all producers have signed the 
contract or furnished supportive and necessary contractual documents 
(such as cash leases in lieu of signing for a zero share). A contract 
not having all requisite signatures of producers having more than a 
zero share of contract acreage on or before the enrollment deadline 
will not be considered submitted to CCC for any purpose and will not be 
acted on or approved. Those contracts enrolled by a producer on or 
before June 1 that were not signed by other producers according to this 
section will be deemed withdrawn and will not be approved. Producers on 
a farm are solely responsible for ensuring that enrollment occurs.
    (4) Eligible producers who elect to enter into a contract with CCC 
must enroll all base acres on the farm. Enrollment of fewer than all 
base acres on the farm is not allowed.
    (b) Eligible producers may withdraw from a contract at any time on 
or before June 1 of the year of the contract provided all signatories 
to the contract, including CCC, agree to the withdrawal in writing. DCP 
contracts enrolled prior to the decision of producers on a farm to 
elect the ACRE option for a fiscal year are considered withdrawn as 
specified in Sec.  1412.72. Producers electing the ACRE option 
according to Sec.  1412.72(d) must subsequently decide whether or not 
to enroll the farm in an ACRE program contract in accordance with the 
rules of this part.
    (c) All contracts expire on September 30 of the fiscal year of the 
contract unless:
    (1) Withdrawn in accordance with paragraph (b) of this section;
    (2) Terminated in accordance with paragraphs (d) or (e) of this 
section; or
    (3) Terminated at an earlier date by mutual consent of all parties, 
including CCC.
    (d) A transfer or change in the interest of an owner or producer in 
the farm or in acreage on the farm subject to a contract will result in 
the termination of the contract and a refund of all direct and counter-
cyclical and ACRE payments issued for the farm. The contract 
termination will be effective on the date of the transfer or change. 
Successors to the interest in the farm or crops on the farm subject to 
the contract may enroll the farm in a new contract and assume all 
obligations under the contract, only after all payments previously 
issued for the farm have been refunded to CCC.
    (e) In the event a farm reconstitution is completed of a properly 
enrolled farm or farms in accordance with part 718 of this title, FSA 
will issue notices to the operator and owners of record on a farm that 
all producers with an interest in the base acres on the farm must sign 
a new DCP or ACRE program contract and provide supporting documentation 
such as leases and other contractual supportive documents not later 
than September 30 of the fiscal year direct

[[Page 79294]]

and counter-cyclical or ACRE program payments are requested, after 
receiving written notification by the county committee indicating the 
reconstitution is completed. It is the responsibility of the operator 
and owners on a farm that producers with an interest in base acres are 
notified of the reconstitution and requirement for a new contract. If 
all producers have not signed the new contract by September 30, then no 
producers on the contract will be eligible for a direct or counter-
cyclical payment or ACRE program payment for that farm for the year the 
contract was terminated.


Sec.  1412.42   Eligible producers.

    (a) Producers eligible to enter into a contract are:
    (1) An owner of a farm who assumes all or a part of the risk of 
producing a crop;
    (2) A producer, other than an owner, on a farm with a share-rent 
lease for such farm, regardless of the length of the lease, if the 
owner of the farm enters into the same contract;
    (3) A producer, other than an owner, on a farm who cash rents such 
farm under a lease expiring on or after September 30 of the year of the 
contract in which case the owner is not required to enter into the 
contract;
    (4) A producer, other than an owner, on a farm who cash rents such 
farm under a lease expiring before September 30 of the year of the 
contract. The owner of such farm must also enter into the same 
contract; or
    (5) An owner of an eligible farm who cash rents such farm and the 
lease term expires before September 30 of the year of the contract, if 
the tenant declines to enter into a contract for the applicable year. 
In the case of an owner covered by this paragraph, direct and counter-
cyclical payments will not begin under the contract until the lease 
held by the tenant ends.
    (b) A minor child will be eligible to enter into a contract only if 
one of the following conditions exist:
    (1) The right of majority has been conferred upon the minor by 
court proceedings or statute;
    (2) A guardian has been appointed to manage the minor's property 
and the applicable program documents are executed by the guardian; or
    (3) A bond is furnished under which a surety guarantees any loss 
incurred for which the minor would be liable had the minor been an 
adult.
    (c) The owner of the farm may be considered the ``producer'' if 
there is no other producer, but the owner could have shared in the crop 
had a crop been produced, but only if the farm otherwise meets all the 
requirements for payment.


Sec.  1412.43  Reconstitutions.

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


Sec.  1412.44  Notification of base acres.

    The operator and owners of record of a farm will be notified in 
writing of the number of base acres eligible for enrollment in a 
contract, unless such operator or owners of record of a farm requests 
in writing not to be furnished with the notice. The operator and owners 
of record are responsible for notifying all other producers of a farm 
of the notice.


Sec.  1412.45  Reducing or terminating base acreage.

    (a)(1) Subject to the limitation in paragraph (a)(2) of this 
section, a permanent reduction of all or a portion of a farm's base 
acreage will be allowed when all owners of the farm execute and submit 
a written request for such reduction on a CCC-approved standard, 
uniform form designated by CCC to the FSA county office where the 
records for the farm are administratively maintained.
    (2) A permanent reduction of all or a portion of a farm's base 
acres to negate or reduce a program violation is not allowed.
    (b) When base acres on a farm are converted to a non-agricultural 
commercial or industrial use, the total base acres on the farm will be 
reduced accordingly regardless of the submission of a request for such 
reduction.
    (c) The base acres of covered commodities and peanuts on a farm 
will be proportionately reduced when it is determined that the land has 
been subdivided and developed for multiple residential units or other 
nonfarming uses if, in the judgment of the county committee, the size 
of the tracts and the density of the subdivision is such that the land 
is unlikely to return to the previous agricultural use, unless either 
of the following applies:
    (1) The producers on the farm demonstrate that the land remains 
devoted to commercial agricultural production or is likely to be 
returned to the previous agricultural use and such land has not been 
divided from the farm with a farm reconstitution performed according to 
part 718 of this title or
    (2) A properly constituted or reconstituted farm contains 
sufficient land that has not yet been subdivided and developed for 
multiple residential units or other nonfarming uses, and the producers 
on the farm demonstrate that the land remains devoted to commercial 
agricultural production or is likely to be returned to the previous 
agricultural use.
    (d)(1) Except as provided in paragraph (d)(2) of this section, for 
the 2009 and subsequent crop years, crop acreage bases will be not be 
established with respect to land owned by Federal agencies and any crop 
acreage base previously established with respect to such land will be 
terminated.
    (2) Paragraph (d)(1) of this section will not apply to Federally-
owned land that was subject to a lease agreement entered into prior to 
December 23, 2008 during the length of the lease agreement. Upon 
termination of such agreement, all crop acreage bases established with 
respect to Federally-owned land will be terminated. To the extent a 
lease contains an option to extend the terms of the lease, crop acreage 
bases will be terminated as of the date the original lease would expire 
without regard to any exercise of such an option.
    (3) In the event a Federal agency transfers of ownership of land to 
another party, crop acreage bases will not be re-established with 
respect to such land.


Sec.  1412.46  Succession-in-interest.

    (a) A succession in interest to a DCP or ACRE program contract is 
required if there has been a change in the operation of a farm, such 
as:
    (1) A sale of land;
    (2) A change of operator or producer, including a change in a 
partnership that increases or decreases the number of partners or 
changes who are partners;
    (3) A foreclosure, bankruptcy, or involuntary loss of the farm;
    (4) A change in producer shares to reflect changes in the 
producer's share of the crop(s) that were originally approved on the 
contract; or
    (5) An other change determined by the Deputy Administrator to be a 
succession that will not adversely affect nor defeat the purpose of the 
program.
    (b) A succession in interest to the contract is not permitted if 
CCC determines that the change:
    (1) Results in a violation of the landlord-tenant provisions 
specified in Sec.  1412.55; or
    (2) Adversely affects or otherwise defeats the purpose of the 
program.
    (c) If a producer who is entitled to receive direct and counter-
cyclical payments dies, becomes incompetent, or is otherwise unable to 
receive the payment, CCC will make the payment in accordance with part 
707 of this title.
    (d) A producer or owner of an enrolled farm must inform the county 
committee of changes in interest in base acres on the farm not later 
than:

[[Page 79295]]

    (1) August 1 of the fiscal year in which the change occurs if the 
change requires a reconstitution be completed in accordance with part 
718 of this title or
    (2) September 30 of the fiscal year in which the change occurs if 
the change does not require a reconstitution be completed in accordance 
with part 718 of this title.
    (e) In any case in which either a direct or counter-cyclical 
payment has previously been made to a predecessor, such payment will 
not be paid to the successor, unless such payment has been refunded in 
full by the predecessor, in accordance with Sec.  1412.41(d).
    (f) The failure of the party eligible to succeed to the contract to 
do so will be considered a contract violation.


Sec.  1412.47  Planting flexibility.

    (a) Any crop may be planted and harvested on base acreage on a 
farm, except as limited elsewhere in this section. Any crop may be 
planted on DCP cropland in excess of the base acreage on a farm.
    (b) Base acreage may be hayed or grazed at any time.
    (c) Planting perennial fruits, vegetables (except mung beans, and 
pulse crops), or wild rice, as determined by the Deputy Administrator, 
is prohibited on base acreage of a farm enrolled in a DCP or ACRE 
program contract. Harvesting non-perennial fruits, vegetables (except 
mung beans and pulse crops), or wild rice, as determined by the Deputy 
Administrator, is prohibited on base acreage of a farm enrolled in a 
DCP or ACRE program contract.
    (d) Notwithstanding the provisions of paragraph (c) of this 
section, perennial fruits, vegetables, and wild rice may be planted on 
base acreage of a farm enrolled in a contract, and non-perennial 
fruits, vegetables, and wild rice may be harvested on base acreage of a 
farm enrolled in a contract if:
    (1) A producer double-crops fruits, vegetables, or wild rice with a 
covered commodity or peanuts in any region described in paragraph (e) 
of this section, in which case direct and counter-cyclical payments 
will not be reduced for the planting or harvesting of the fruit, 
vegetable, or wild rice;
    (2) The farm has a history of planting fruits, vegetables, or wild 
rice, as determined by CCC, in which case the payment acres for the 
farm will be reduced on an acre-for-acre basis; or
    (3) The producer has a history of planting a specific fruit, 
specific vegetable, or wild rice, as determined by CCC, the producer 
may plant and harvest the specific fruit, specific vegetable, or wild 
rice for which the producer has a planting history, subject to the 
following:
    (i) The acreage harvested must not exceed the simple average of the 
sum of acreage of the specific fruit, specific vegetable, or wild rice 
planted for harvest by the producer during the crop years 1991 through 
1995 or 1998 through 2001, as designated by the producer, excluding any 
year in which the specific fruit, specific vegetable, or wild rice was 
not planted; and
    (ii) The payment acres for the farm will be reduced on an acre-for-
acre basis.
    (e) Double-cropping for purposes of this section means planting for 
harvest fruits, vegetables, or wild rice on the same acres in cycle 
with a covered commodity or peanuts planted and harvested for peanuts, 
grain, or lint in a 12-month period under normal growing conditions for 
the region and being able to repeat the same cycle in the following 12-
month period. For purposes of this part, the following counties have 
been determined to be regions having a history of double-cropping 
covered commodities or peanuts with fruits, vegetables, or wild rice. 
State committees have established the following counties as regions 
within their respective States:
Alabama
    Baldwin, Barbour, Butler, Chambers, Chilton, Clarke, Covington, 
Cullman, Geneva, Greene, Houston, Jackson, Jefferson, Lee, Madison, 
Mobile, Montgomery, Randolph, Sumter, Talladega, Walker, and 
Washington.
Alaska
    None.
Arizona
    Cochise, Graham, Greenlee, LaPaz, Maricopa, Mohave, Pima, Pinal, 
and Yuma.
Arkansas
    Ashley, Benton, Clay, Craighead, Crawford, Cross, Faulkner, 
Franklin, Greene, Independence, Jackson, Jefferson, Lee, Lincoln, 
Logan, Lonoke, Mississippi, Phillips, Pulaski, St. Francis, Sebastian, 
Woodruff, and Yell.
California
    Alameda, Amador, Butte, Colusa, Contra Costa, Fresno, Glenn, 
Imperial, Kern, Kings, Madera, Merced, Riverside, Sacramento, San 
Benito, San Joaquin, Santa Clara, Siskiyou, Solano, Sonoma, Stanislaus, 
Sutter, Tehama, Tulare, Yolo, and Yuba.
Caribbean Office
    None.
Colorado
    Otero.
Connecticut
    None.
Delaware
    All counties.
Florida
    All counties except Monroe.
Georgia
    All counties.
Hawaii
    None.
Idaho
    None.
Illinois
    Bureau, Calhoun, Cass, Clark, Crawford, DeKalb, Edgar, Effingham, 
Gallatin, Iroquois, Jersey, Kankakee, Lawrence, LaSalle, Lee, Madison, 
Marion, Mason, Monroe, Randolph, St. Clair, Tazewell, Union, Vermilion, 
White, and Whiteside.
Indiana
    Allen, Bartholemew, Daviess, Gibson, Hamilton, Jackson, Johnson, 
Knox, LaGrange, Lake, LaPorte, Madison, Marion, Martin, Miami, Posey, 
Ripley, Shelby, Sullivan, Vandenberg, and Warrick.
Iowa
    Kossuth, Mitchell, Palo Alto, and Winnebago.
Kansas
    None.
Kentucky
    Daviess.
Louisiana
    Avoyelles, Franklin, Grant, Morehouse, Rapides, Richland, and West 
Carroll.
Maine
    None.
Maryland
    Baltimore, Calvert, Caroline, Carroll, Dorchester, Harford, Kent, 
Queen Anne's, St. Mary's, Somerset, Talbot, Wicomico, and Worcester.
Massachusetts
    None.
Michigan
    None.

[[Page 79296]]

Minnesota
    Blue Earth, Brown, Carver, Chippewa, Cottonwood, Dakota, Dodge, 
Faribault, Fillmore, Freeborn, Goodhue, Houston, Kandiyohi, Le Sueur, 
Martin, McLeod, Meeker, Mower, Nicollet, Olmsted, Pope, Redwood, 
Renville, Rice, Scott, Sibley, Steele, Swift, Waseca, Wabasha, 
Watonwan, and Winona.
Mississippi
    Adams, Calhoun, Carroll, Coahoma, Covington, DeSoto, George, 
Humphreys, Jefferson Davis, Lowndes, Madison, Marshall, Monroe, 
Montgomery, Prentiss and Rankin.
Missouri
    Barton, Butler, Cape Girardeau, Dade, Dunklin, Jasper, Lawrence, 
Mississippi, New Madrid, Newton, Pemiscot, Ripley, Scott, and Stoddard.
Montana
    None.
Nebraska
    None.
Nevada
    None.
New Hampshire
    None.
New Jersey
    Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, 
Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean, Salem, Somerset, 
Sussex, and Warren.
New Mexico
    Chaves, Curry, Dona Ana, Eddy, Hidalgo, Lea, Luna, Quay, Roosevelt, 
San Juan, and Sierra.
New York
    Cayuga, Genesee, Livingston, Monroe, Ontario, Orange, Orleans, 
Suffolk, Wayne, and Wyoming.
North Carolina
    Beaufort, Bertie, Bladen, Brunswick, Cabarrus, Camden, Carteret, 
Caswell, Catawba, Chatham, Chowan, Cleveland, Columbus, Craven, 
Cumberland, Currituck, Dare, Duplin, Edgecombe, Franklin, Gaston, 
Gates, Granville, Greene, Halifax, Harnett, Hertford, Hoke, Hyde, 
Johnston, Jones, Lee, Lenoir, Lincoln, Martin, Mecklenburg, Montgomery, 
Moore, Nash, New Hanover, Northampton, Onslow, Pamlico, Pasquotank, 
Pender, Perquimans, Pitt, Richmond, Robeson, Rockingham, Rutherford, 
Sampson, Scotland, Stokes, Tyrell, Union, Wake, Warren, Washington, 
Wayne, Wilkes, Wilson, and Yadkin.
North Dakota
    None.
Ohio
    Champaign, Clermont, Fulton, Lucas, Miami, Morgan, Muskingum, 
Scioto, and Stark.
Oklahoma
    Adair, Alfalfa, Beckham, Blaine, Bryan, Caddo, Canadian, Carter, 
Cherokee, Cleveland, Cotton, Custer, Delaware, Dewey, Ellis, Garfield, 
Garvin, Grady, Grant, Greer, Harmon, Haskell, Hughes, Jackson, 
Jefferson, Kay, Kingfisher, Kiowa, LeFlore, Logan, Love, McClain, 
McIntosh, Major, Marshall, Mayes, Muskogee, Noble, Nowata, Okmulgee, 
Osage, Pawnee, Payne, Pittsburg, Pottawatomie, Roger Mills, Rogers, 
Sequoyah, Stephens, Tillman, Tulsa, Wagoner, Washita, Woods, and 
Woodward.
Oregon
    Morrow and Umatilla.
Pennsylvania
    Adams, Bucks, Centre, Chester, Clinton, Columbia, Cumberland, 
Delaware, Franklin, Indiana, Lancaster, Montgomery, Montour, 
Northumberland, Schuylkill, Synder, Union, and York.
Puerto Rico
    None.
Rhode Island
    None.
South Carolina
    All counties.
South Dakota
    None.
Tennessee
    Bledsoe, Cannon, Chester, Cocke, Coffee, Crockett, Dickson, Dyer, 
Fayette, Gibson, Giles, Greene, Grundy, Hardeman, Haywood, Jefferson, 
Knox, Lake, Lauderdale, Lawrence, Lincoln, Madison, Maury, McNairy, 
Obion, Overton, Pickett, Putnam, Rhea, Robertson, Rutherford, Sumner, 
Unicoi, VanBuren, Warren, Washington, Wayne, White, Williamson, and 
Wilson.
Texas
    Atascosa, Bailey, Baylor, Brooks, Cameron, Castro, Cochran, Cottle, 
Dallam, Dawson, Deaf Smith, Dimmit, Duval, Floyd, Foard, Frio, Gaines, 
Hale, Hartley, Haskell, Hidalgo, Hockley, Jim Wells, Kleberg, Knox, 
Lamb, LaSalle, Lubbock, Lynn, Maverick, Medina, Moore, Parmer, 
Presidio, San Patricio, Sherman, Starr, Swisher, Terry, Uvalde, Webb, 
Willacy, Wilson, Yoakum, and Zavala.
Utah
    None.
Vermont
    None.
Virginia
    Accomack, Albemarle, Alleghany, Amelia, Amherst, Appomattox, 
Augusta, Bath, Bedford, Bland, Botetourt, Brunswick, Buchanan, 
Buckingham, Campbell, Caroline, Carroll, Charles City, Charlotte, 
Chesapeake, Chesterfield, Clarke, Craig, Culpeper, Cumberland, 
Dickenson, Dinwiddie, Essex, Fairfax, Fauquier, Floyd, Fluvanna, 
Franklin, Frederick, Giles, Gloucester, Goochland, Grayson, Greene, 
Greensville, Halifax, Hanover, Henrico, Henry, Highland, Isle of Wight, 
James City, King and Queen, King George, King William, Lancaster, Lee, 
Loudoun, Louisa, Lunenburg, Madison, Mathews, Mecklenburg, Middlesex, 
Montgomery, Nelson, New Kent, Northampton, Northumberland, Nottoway, 
Orange, Page, Patrick, Pittsylvania, Powhatan, Prince Edward, Prince 
George, Prince William, Pulaski, Rappahannock, Richmond, Roanoke, 
Rockbridge, Rockingham, Russell, Scott, Shenandoah, Smyth, Southampton, 
Spotsylvania, Stafford, Suffolk, Surry, Sussex, Tazewell, Virginia 
Beach, Warren, Washington, Westmoreland, Wise, Wythe, and York.
Washington
    Yakima.
West Virginia
    None.
Wisconsin
    Adams, Calumet, Columbia, Dane, Dodge, Fond du Lac, Green, Green 
Lake, Iowa, Kenosha, Milwaukee, Ozaukee, Portage, Racine, Richland, 
Rock, Sauk, Trempealeau, Walworth, Washington, Waukesha, Waushara, and 
Winnebago.
Wyoming
    None.
    (f) Any acreage reduction required by paragraph (d) of this section 
will be applied beginning with the covered commodity or peanuts with 
lowest direct payment amount per acre until the acreage reduction 
amount is satisfied. Producers may agree to adjust the acre reduction 
between covered commodities and peanuts on the farm, only to the extent 
the total acre reduction amount does not change for the farm, and all 
producers affected by the adjustment agree to the adjustment in 
writing.

[[Page 79297]]

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


Sec.  1412.48   Planting Transferability Pilot Project.

    (a) Notwithstanding Sec.  1412.47, for each of the 2009 and 
subsequent crop years, the Planting Transferability Pilot Project 
(Project) will permit, in accordance with the limitations and 
provisions of this section only, the planting of certain crops in 
certain States on base acres without violating the DCP or ACRE 
contract. Base acres on farms participating in the Project will be 
reduced an acre (or portion thereof) for every acre (or portion 
thereof) planted in the Project, for the year in which the farm is 
participating in the Project.
    (b) Producers interested in participating in the Project must first 
be enrolled in either a DCP or ACRE program contract and submit an 
offer for participation in the Project accompanied by a copy of the 
contract mentioned in paragraph (f) of this section no later than March 
1 of the fiscal year in which participation in the Project is desired. 
At the conclusion of the signup period, CCC will determine if it 
received more offers than the acreage limitation paragraph (e) of this 
section allows. If the offers exceed the acreage limitation in the 
State, CCC will conduct a lottery style selection process and approve 
offers for participation in the Project that will ensure that the 
number of base acres eligible for each year under the Project are not 
exceeded. In the event that CCC cannot approve an offer in its 
entirety, at CCC's discretion, CCC may give the producers the 
opportunity to enroll less acres in the Project. CCC will also notify 
producers of the results of the selection process. Under no 
circumstances can producers challenge either the selection process 
itself or the results via administrative appeal. Producers in each of 
the States mentioned in this section can elect to participate in the 
Project with their offer as accepted by CCC, or, if CCC elects to offer 
approval of part of an offer, participate with their offer as reduced 
by CCC, or the producers can elect not to participate in the Project.
    (c) Signup for the Project will be conducted as announced by the 
Deputy Administrator.
    (d) Under the Project, crops permitted on DCP base acres are 
cucumbers, green peas, lima beans, pumpkins, snap beans, sweet corn, 
and tomatoes. These crops eligible for participation in this Project 
must be grown for processing.
    (e) The States and the number of base acres eligible during each 
crop year for the Project under paragraph (a) of this section are:
    (i) 9,000 acres in Illinois,
    (ii) 9,000 acres in Indiana,
    (iii) 1,000 acres in Iowa,
    (iv) 9,000 acres in Michigan,
    (v) 34,000 acres in Minnesota,
    (vi) 4,000 acres in Ohio, and
    (vii) 9,000 acres in Wisconsin.
    (f) To be eligible to participate in the Project, producers on a 
farm must do all of the following for the commodity specified in 
paragraph (d) of this section:
    (i) Enter into a contract to produce the commodity for processing;
    (ii) Agree to produce the crop as part of a program of crop 
rotation on the farm to achieve agronomic and pest and disease 
management benefits;
    (iii) Report acreage and production of the crop according to Sec.  
1412.66 and provide evidence of disposition of the crop; and
    (iv) File a notice of loss according to Sec.  1412.67, if the crop 
is either prevented from being planted or is impacted by disaster after 
planting.
    (g) If base acres are recalculated while a farm is participating in 
this Project, the planting and production of a crop of a commodity 
specified in paragraph (d) of this section on base acres for which a 
temporary reduction was made under this section will be considered to 
be the same as the planting and production of the covered commodity or 
peanuts that was reduced.
    (h) Reports will be prepared for Congress to periodically evaluate 
the supply and price of fresh and processed fruits and vegetables and 
evaluate if producers of fresh fruits and vegetables are being 
negatively impacted or existing production capacities are being 
supplanted.
    (i) If DCP payments were issued prior to enrollment in this 
Project, the participants acknowledge that for the particular year of 
participation in the Project according to this section, DCP payments 
will be based on temporarily reduced base acres.

[[Page 79298]]

    (j) In the event an ACRE program contract was approved either 
before or after enrollment in this Project according to this section, 
the ACRE program contract participants acknowledge that for the 
particular year of participation in the Project according to this 
section, ACRE payments will be based on the temporarily reduced base 
acres.


Sec.  1412.49  Apportionment of long and medium grain rice.

    (a) Rice base acres are established pursuant to section 1101 of the 
Farm Security and Rural Investment Act of 2002 (7 U.S.C. 7911) in 
effect on September 30, 2007, specified in Sec.  1412.3.
    (b) Owners will designate the rice base acres in paragraph (a) of 
this section into two categories:
    (i) Long grain rice, and
    (ii) Medium grain rice. Medium grain rice includes short grain 
rice.
    (c) Owners on a farm will elect rice base acres according to 
paragraph (b) of this section, based on the 4-year average of the 
percentages of:
    (i) Acreage planted on the farm to long grain rice and medium grain 
rice during the 2003 through 2006 crop years, plus
    (ii) Any acreage on the farm that producers were prevented from 
planting to long grain and medium grain rice during the 2003 through 
2006 crop years because of drought, flood, other natural disaster, or 
other condition beyond the control of the producers.
    (d) If long grain or medium grain rice was not planted on the farm 
in one or more years during the 2003 through 2006 crop years, the 
percentages of acreage planted in the applicable State to long grain 
and medium grain rice will be substituted for the ``not planted'' years 
on the farm in paragraph (c) of this section.
    (e) If an election is not made according to this section, the 
percentages of acreage planted in the applicable State to long grain 
and medium grain rice will be used in determining the base acres 
required in paragraph (b) of this section for the farm.
    (f) The purpose of this section is to determine long grain rice 
base and medium grain rice base on the farm. This section will not 
increase or decrease the:
    (i) Number of base acres on the farm;
    (ii) Number of payment acres on the farm; or
    (iii) Payment yield on the farm from that for rice under sections 
1101 and 1102 of the Farm Security and Rural Investment Act of 2002 (7 
U.S.C. 7911, 7912), as in effect on September 30, 2007, subject to any 
adjustment required in this part.


Sec.  1412.50  Matters of general applicability.

    These regulations and CCC's interpretation of the regulations and 
internal agency directives issued to State and county FSA offices are 
matters of general applicability and are not individually appealable in 
administrative appeals according to Sec. Sec.  11.3 and 780.5 of this 
title. Additionally, these rules and any decisions of CCC and FSA that 
are not based on facts derived from an individual participant's 
application, contract, or file, including but not limited to, decisions 
of whether or not to conduct a lottery, lottery selection process and 
results, signup deadlines, direct payment rates, counter-cyclical 
payment rates, or any other generally applicable payment rate or rates, 
national average market prices, determinations of production of crops 
produced in a State or States, actual State yields, benchmark State 
yields, program guarantee price or prices, or determinations of CCC 
regarding the percentage of acreage of a crop in State that is 
irrigated or non-irrigated, or any other similar determination that is 
made by CCC or FSA for use in all similarly situated applications, are 
not appealable under part 11 or part 780 of this title. The only extent 
by which the matters referenced in this section, and like similar 
generally applicable matters, are reviewable administratively in an 
appeal forum is whether FSA's or CCC's decision to apply the generally 
applicable matter is factually accurate and in conformance with the 
regulations in this part.

Subpart E--Financial Considerations Including Sharing Payments


Sec.  1412.51  Limitation of payments.

    (a) The provisions of part 1400 of this chapter apply to this part. 
Payments under this part will not exceed the amounts specified in part 
1400 of this chapter. As determined under that part, no person may 
receive more than $40,000 in direct payments or $65,000 in counter-
cyclical payments with respect to any contract or crop year. For ACRE 
participants, no person may receive more than in ACRE and counter-
cyclical payments and direct payments combined, more than the sum of:
    (1) $65,000 and
    (2) The amount of the reduction in direct payments required by the 
ACRE contract.
    (b) The amount of 2008 direct and counter-cyclical payments for a 
farm will not exceed the maximum amount that would have been paid based 
on the number of persons as determined in accordance with part 1400 of 
this chapter on the farm as of May 22, 2008.
    (c) Except as provided in this section, notwithstanding any other 
provision of this part, for the 2009 and subsequent crops, a producer 
on a farm will not receive direct payments, counter-cyclical payments, 
or ACRE payments if the sum of the base acres of covered commodities 
and peanuts on the farm is 10 acres or less. The 10-acre limitation of 
this subsection will not apply to a farm that is wholly-owned by a 
socially disadvantaged farmer or rancher (as defined in section 355(e) 
of the Consolidated Farm and Rural Development Act (7 U.S.C. 2003 (e))) 
or a limited resource farmer or rancher, as defined by the Secretary. 
If such farm is owned by a legal entity, such as a corporation, each 
individual or entity with any interest in the entity must be a socially 
disadvantaged or limited resource farmer or rancher.


Sec.  1412.52  Direct payment provisions.

    (a) For 2008 through 2012 contracts, a final direct payment will be 
made to eligible producers on a farm enrolled in a contract with 
respect to covered commodities and peanuts for which payment yields and 
base acres are established on or after October 1 of the fiscal year 
following the fiscal year of the contract in which the direct payment 
was earned.
    (b) For 2008 through 2011 contracts, at the option of the producer, 
22 percent of the direct payment for the farm with respect to covered 
commodities and peanuts for which payment yields and base acres are 
established will be paid in any month from December through September 
of the fiscal year of the contract, as requested by the producer, as an 
advance direct payment. Advance direct payments are not available for 
the 2012 crop year. For any participant on the contract to receive an 
advance direct payment, all producers sharing in the direct payments 
for the farm must:
    (1) Be in compliance with all requirements of the contract and the 
requirements in this part at the time of the advance payment;
    (2) Sign the DCP or ACRE program contract designating payment 
shares and provide supporting and necessary contractual documentation. 
If all producers on the farm have not signed the contract designating 
payment shares in accordance with this paragraph, the contract will not 
be considered approved and no contract participant will be eligible for 
any payment for that farm for that contract. FSA has no

[[Page 79299]]

obligation or responsibility to obtain signatures or requisite 
documents for DCP or ACRE program contract participants; and
    (3) Comply with the provisions of parts 12 and 1400 of this title.
    (c) If a producer declines to accept, or is determined to be 
ineligible for all or any part of the producer's share of the direct 
payment computed for the farm in accordance with the provisions of this 
section:
    (1) The payment or portions thereof will not become available to or 
for any other producer and
    (2) The producer must refund to CCC any amounts representing 
payments that exceed the payments determined by CCC to have been earned 
under the program authorized by this part. Part 1403 of this chapter is 
applicable to all unearned payments.
    (d) The payment rates used to calculate direct payments with 
respect to covered commodities and peanuts on a farm enrolled in a 
contract are:
    (1) Wheat--$0.52/bu.
    (2) Corn--$0.28/bu.
    (3) Grain sorghum--$0.35/bu.
    (4) Barley--$0.24/bu.
    (5) Oats--$0.024/bu.
    (6) Upland cotton--$0.0667/lb.
    (7) Long grain rice--$2.35/cwt.
    (8) Medium grain rice--$2.35/cwt.
    (9) Soybeans--$0.44/bu.
    (10) Other oilseeds--$0.80/cwt.
    (11) Peanuts--$36.00/ton.
    (e) For 2008 through 2012 contracts, subject to the limitations of 
Sec.  1412.51 and part 1400 of this chapter, the final direct payment 
amount to be paid to participants on a farm enrolled in a contract with 
respect to the covered commodities or peanuts for which payment yields 
and base acres are established is equal to the product of:
    (1) The payment rate specified in paragraph (d) of this section, 
multiplied by
    (2) The relevant payment acres of the covered commodity or peanuts 
on the farm enrolled in a contract, minus any acre reduction in 
accordance with Sec.  1412.76(g), multiplied by
    (3) The payment yield for the covered commodity or peanuts on the 
farm enrolled in a contract as determined in accordance with Sec. Sec.  
1412.31 and 1412.32, minus
    (4) Any reduction calculated in accordance with subpart F of this 
part, minus
    (5) Any advance payment received in accordance with paragraph (b) 
of this section.
    (f)(1) The payment of any amount due any participant on a farm 
enrolled in a contract will be made only after all participants subject 
to the contract are determined to be in full compliance with the 
contract and the requirements of this part.
    (2) A producer on a farm enrolled in a contract may receive a 
payment amount due without respect to the payment eligibility of other 
producers on the farm if all the following apply:
    (i) The contract participant is in compliance with all contractual 
provisions;
    (ii) The participant is in full compliance with the contract and 
the requirements in this part;
    (iii) The payment of such amount does not affect adversely nor 
defeat the purpose of the program, as determined by the Deputy 
Administrator; and
    (iv) The payment is approved by the Deputy Administrator.


Sec.  1412.53   Counter-cyclical payment provisions.

    (a) For the 2008 through 2012 contracts, except as provided in 
subpart G of this part, a counter-cyclical payment will be made to 
eligible participants on a farm enrolled in a DCP contract with respect 
to covered commodities and peanuts for which payment yield and base 
acres are established:
    (1) Only if the effective price for the covered commodity or 
peanuts, as determined in accordance with paragraph (b) of this 
section, is less than the target price of the covered commodity or 
peanuts, respectively, as determined in accordance with paragraph (c) 
of this section and
    (2) As soon as practical, as determined by the Deputy 
Administrator, after the end of the 12-month marketing year for the 
covered commodity or peanuts, as applicable.
    (b) For the purposes of paragraphs (a) and (g) of this section, the 
effective price for a covered commodity or peanuts, respectively, is 
equal to the sum of the following:
    (1) The higher of:
    (i) The national average market price received by producers during 
the 12-month marketing year for the covered commodity or peanuts, as 
applicable, as determined by the Secretary, or
    (ii) For the 2008 crop year the following rates:
    (A) Wheat--$2.75/bu.
    (B) Corn--$1.95/bu.
    (C) Grain sorghum--$1.95/bu.
    (D) Barley--$1.85/bu.
    (E) Oats--$1.33/bu.
    (F) Upland cotton--$0.52/lb.
    (G) Extra long staple cotton--$0.7977/lb.
    (H) Long grain rice--$6.50/cwt.
    (I) Medium grain rice--$6.50/cwt.
    (J) Soybeans--$5.00/bu.
    (K) Other oilseeds--$.30/cwt.
    (L) Peanuts--$355.00/ton.
    (2) The direct payment rate for the covered commodity as provided 
in Sec.  1412.52(d).
    (c) For the purposes of paragraphs (a) and (g) of this section, the 
target prices are as follows:
    (1) For the 2008 and 2009 crop years (except as indicated):
    (i) Wheat--$3.92/bu.
    (ii) Corn--$2.63/bu.
    (iii) Grain sorghum--$2.57/bu.
    (iv) Barley--$2.24/bu.
    (v) Oats--$1.44/bu.
    (vi) Upland cotton--$0.7125/lb.
    (vii) Long grain rice--$10.50/cwt.
    (viii) Medium grain rice--$10.50/cwt.
    (ix) Soybeans--$5.80/bu.
    (x) Other oilseeds--$10.10/cwt.
    (xi) Peanuts--$495.00/ton.
    (xii) Dry peas--$8.32/cwt. (2009 crop only).
    (xiii) Lentils--$12.81/cwt. (2009 crop only).
    (xiv) Small chickpeas--$10.36/cwt. (2009 crop only).
    (xv) Large chickpeas--$12.81/cwt. (2009 crop only).
    (2) For each of the 2010 through 2012 crop years, the target prices 
are as follows:
    (i) Wheat--$4.17/bu.
    (ii) Corn-- $2.63/bu.
    (iii) Grain sorghum--$2.63/bu.
    (iv) Barley--$2.63/bu.
    (v) Oats--$1.79/bu.
    (vi) Upland cotton--$0.7125/lb.
    (vii) Long grain rice--$10.50/cwt.
    (viii) Medium grain rice--$10.50/cwt.
    (ix) Soybeans--$6.00/bu.
    (x) Other oilseeds--$12.68/cwt.
    (xi) Peanuts--$495.00/ton
    (xii) Dry peas--$8.32/cwt.
    (xiii) Lentils--$12.81/cwt.
    (xiv) Small chickpeas--$10.36/cwt.
    (xv) Large chickpeas--$12.81/cwt.
    (d) The payment rate used to calculate counter-cyclical payments 
with respect to covered commodities and peanuts for which payment 
yields and base acres are established on a farm enrolled in a contract 
is equal to the result of:
    (1) The target price of the covered commodity or peanuts as 
determined in accordance with paragraph (c) of this section, minus
    (2) The effective price of the covered commodity or peanuts as 
determined in accordance with paragraph (b) of this section.
    (e) For 2008 through 2012 DCP contracts, when counter-cyclical 
payments are required in accordance with paragraph (a) of this section, 
subject to the limitation in accordance with Sec.  1412.51 and part 
1400 of this chapter, the final counter-cyclical payment amount to be 
paid to producers

[[Page 79300]]

on a farm enrolled in a contract with respect to the covered 
commodities or peanuts for which payment yields and base acres are 
established is equal to the product of:
    (1) The payment rate determined in accordance with paragraph (d) of 
this section, multiplied by
    (2) The relevant payment acres of the covered commodity or peanuts, 
as applicable, minus any acre reduction in accordance with Sec.  
1412.47(g), multiplied by
    (3) The payment yield for the covered commodity or peanuts on the 
farm enrolled in a contract as determined in accordance with Sec.  
1412.33, minus
    (4) Any reduction calculated in accordance with subpart F of this 
part that was not satisfied by a reduction in the direct payments for 
the farm calculated in accordance with Sec.  1412.52(e), minus
    (5) Any partial payment received in accordance with paragraphs (f) 
or (g) of this section.
    (f) For 2008 through 2012 DCP contracts, partial counter-cyclical 
payments will be paid, at the request of the producer, if the Secretary 
determines that a counter-cyclical payment for the covered commodity or 
peanuts, respectively, will be required in accordance with paragraph 
(a)(1) of this section. The first partial counter-cyclical payment 
will:
    (1) Be calculated in accordance with paragraphs (e)(1) through (4) 
of this section;
    (2) Be an amount determined by the Secretary not to exceed 40 
percent of the projected counter-cyclical payment for the covered 
commodity or peanuts, respectively; and
    (3) Be made after completion of the first 180 days of the marketing 
year for that crop;
    (g) To the extent practicable, the final partial payment will be 
made beginning on October 1 of the fiscal year starting in the same 
calendar year as the end of the marketing year for that crop.
    (1) If a producer declines to accept, or is determined to be 
ineligible for all or any part of the producer's share of the counter-
cyclical payment computed for the farm in accordance with the 
provisions of this section:
    (i) The payment or portions thereof will not become available for 
any other producer and
    (ii) The producer will refund to CCC any amounts representing 
payments that exceed the payments determined by CCC to have been earned 
under the program authorized by this part. Part 1403 of this chapter is 
applicable to all unearned payments.
    (2)(i) The payment of any amount due any producer on a farm 
enrolled in a contract will be made only after all the producers 
subject to the contract are determined to be in full compliance with 
the contract and the requirements in this part.
    (ii) A participant on a farm enrolled in a contract may receive a 
payment amount due without regard to the eligibility of other 
participants on the enrolled and in compliance with contract farm if:
    (A) The participant is in full compliance with the contract and the 
requirements in this part;
    (B) The payment of such amount does not adversely affect or defeat 
the purpose of the program, as determined by the Deputy Administrator, 
or designee; and
    (C) The payment is approved by the Deputy Administrator, or 
designee.
    (h) The participants on a farm who receive any advance counter-
cyclical payment must refund the portion of such advance payments that 
exceeds the actual counter-cyclical payment actually earned for the 
covered commodity or peanuts, as applicable.


Sec.  1412.54  Sharing of contract payments.

    (a) Each eligible producer on a farm will be given the opportunity 
to annually enroll in a DCP or ACRE program contract, as applicable, 
and receive payments determined to be fair and equitable as agreed to 
by all the producers on the farm and approved by the county committee.
    (b) Each producer leasing a farm must provide a copy of their 
written lease to the county committee and, in the absence of a written 
lease, must provide to the county committee a complete written 
description of the terms and conditions of any oral agreement or lease. 
An owner's or landlord's signature, as applicable, affirming a zero 
share on a contract may be accepted as evidence of a cash lease between 
the owner or landlord and tenant, as applicable, as determined by CCC. 
Such signature or signatures, if entered on the contract to satisfy the 
requirement of furnishing a written lease, must be entered on the 
contract no later than as prescribed in Sec.  1412.41.
    (c) When base acres are leased on a share basis, neither the 
landlord nor the tenant will receive 100 percent of the contract 
payment for the farm.
    (d) CCC will approve a contract for enrollment and approve the 
division of payment when all of the following apply:
    (1) The landlords, tenants, and sharecroppers sign the contract and 
agree to the payment shares shown on the contract;
    (2) CCC determines that the interests of tenants and sharecroppers 
are being protected; and
    (3) CCC determines that the payment shares shown on the contract do 
not circumvent either the provisions of this part or the provisions of 
part 1400 of this chapter.
    (e) For the 2008 crop year only:
    (1) A lease will be considered to be a cash lease if the lease 
provides for only a guaranteed cash payment for a specified amount or a 
fixed quantity of the crop (for example, cash, pounds, or bushels per 
acre).
    (2) If a lease contains provisions that require the payment of rent 
on the basis of the amount of crop produced or the proceeds derived 
from the crop, or the interest such producer would have had if the crop 
had been produced, or combination thereof, such agreement will be 
considered to be a share lease.
    (3) If a lease provides for the greater of a determinable 
guaranteed amount or determinable share of the crop or crop proceeds, 
such agreement will be considered a share lease.
    (4) If the lease is a cash lease, the landlord is not eligible for 
direct or counter-cyclical payments. The leasing of grazing or haying 
privileges is not considered cash leasing.
    (f) For the 2009 through 2012 crop years:
    (1) A lease will be considered to be a cash lease if the lease 
provides for only a guaranteed cash payment for a specified amount, or 
a fixed quantity of the crop (for example, cash, pounds, or bushels per 
acre).
    (2) If a lease contains provisions that require the payment of rent 
on the basis of the amount of crop produced or the proceeds derived 
from the crop, or the interest such producer would have had if the crop 
had been produced, or combination thereof, such agreement will be 
considered to be a share lease.
    (3) If a lease provides for the greater of a determinable 
guaranteed amount or determinable share of the crop or crop proceeds, 
such agreement will be considered a cash lease.
    (4) If the lease is a cash lease, the landlord is not eligible for 
direct, counter-cyclical, or ACRE program payments. The leasing of 
grazing or haying privileges is not considered cash leasing.


Sec.  1412.55  Provisions relating to tenants and sharecroppers.

    (a) Neither direct nor counter-cyclical nor ACRE program payments 
will be made by CCC if:
    (1) The landlord or operator has adopted a scheme or device for the

[[Page 79301]]

purpose of depriving any tenant or sharecropper of the payments to 
which such person would otherwise be entitled under the program. If any 
of such conditions occur or are discovered after payments have been 
made, all or any such part of the payments as the State committee may 
determine must be refunded to CCC; or
    (2) The landlord terminated a lease in violation of state law as 
determined by a state court.
    (b) [Reserved]

Subpart F--Contract Violations and Reduction in Payments


Sec.  1412.61  Contract violations.

    (a) Except as provided in paragraph (b) of this section, violations 
of contract requirements will result in the termination of the 
contract. Upon such termination, all producers subject to the contract 
forfeit all rights to receive direct, counter-cyclical, and ACRE 
program payments on the farm for the contract and must refund all 
payments received, plus interest, to run from the date of the CCC 
disbursement, as determined in accordance with part 1403 of this 
chapter.
    (b)(1) If there is a violation of Sec.  1412.47 and CCC determines 
that a violation is not serious enough to warrant termination of the 
contract under paragraph (a) of this section, payments may be made to 
the producers specified on the contract, but in an amount that is 
reduced by an amount equal to the sum of:
    (i) The per-acre market value of the fruits, vegetables, and wild 
rice, as determined by the State Committee, times the number of acres 
in violation, plus
    (ii) The direct, counter-cyclical, and ACRE program payments for 
each such acre.
    (2) Producers must protect land enrolled in DCP from weeds, 
including noxious weeds, and erosion, including providing sufficient 
cover if determined necessary by the county committee. The first 
violation of this provision will result in a reduction in the direct 
payments for the farm by an amount equal to three times the cost of 
maintenance of the acreage, but not to exceed 50 percent of the total 
direct payments for the farm. The second violation of this provision 
will result in a reduction in the direct payments for the farm by an 
amount equal to three times the cost of maintenance of the acreage, not 
to exceed the total direct payments for the farm. For the 2009 and 
subsequent crop years, a third violation of this provision will result 
in a complete reduction of all payments under the DCP or ACRE program 
contract.


Sec.  1412.62  Fruit, vegetable, and wild rice acreage reporting 
violations.

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


Sec.  1412.63  Contract liability.

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


Sec.  1412.64  Inaccurate representation, misrepresentation, and scheme 
or device.

    (a) Producers must report and certify program matters accurately. 
Errors in reporting may impact eligibility or extent of eligibility. 
Benefits under this part will be based on the most correct information 
available. Producers are responsible for refunding, with interest from 
the date of the CCC disbursement, any program benefits that were paid 
based on incorrect program information.
    (b) For those cases in which FSA determines that an inaccurate 
representation or certification is a misrepresentation or scheme or 
device, such person will be ineligible to receive DCP or ACRE payments 
and will have the person's interest in all contracts terminated if it 
is determined that such person has done any of the following:
    (1) Adopted any scheme or device that tends to defeat the purpose 
of this part;
    (2) Made any fraudulent representation;
    (3) Misrepresented any fact affecting a DCP, ACRE program, or 
determination made pursuant to part 1400 of this chapter; or
    (4) Violated or been determined ineligible under Sec.  1400.5 of 
this chapter.
    (c) Any remedies taken by FSA or CCC in accordance with this 
section will be in addition to any other civil or other remedies that 
may be available, including, but not limited to, those provided in part 
1400 of this chapter.


Sec.  1412.65  Offsets and assignments.

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


Sec.  1412.66  Acreage and production reports.

    (a) As a condition of eligibility for payments under this part, the 
operator

[[Page 79302]]

or owner must accurately submit a report of all cropland acreage on the 
farm in accordance with part 718 of this title.
    (b) Producers enrolled in the Project according to Sec.  1412.48 
and those seeking payments under subpart G of this part, must 
accurately submit a report of production, no later than the acreage 
reporting date for the crop in the year immediately following the crop 
year of the reported crop acreage, for each crop either enrolled in the 
Project according to Sec.  1412.48 or for each covered commodity or 
peanuts on a farm enrolled in an ACRE program contract for which an 
acreage report greater than zero acres was filed according to paragraph 
(a) of this section. The report of production must be accompanied by 
documentation acceptable to CCC. The report must include the date 
harvest was completed. Records of production acceptable to CCC may 
include those specified in:
    (1) Commercial receipts, settlement sheets, warehouse ledger 
sheets, or load summaries of the crop that was sold or otherwise 
disposed of through commercial channels provided the records are 
reliable or verifiable as determined by CCC; and
    (2) Such documentary evidence such as contemporaneous measurements, 
truck scale tickets, and contemporaneous diaries, as is necessary in 
order to verify the information provided if the crop has been fed to 
livestock or otherwise disposed of other than through commercial 
channels, provided the records are reliable or verifiable as determined 
by CCC. If the crop will be disposed of through retail sales, such as 
roadside stands, u-pick, etc. and the producer will not be able to 
certify acceptable records of production, the producer must request an 
appraisal of the crop acreage prior to harvest.


Sec.  1412.67  Notices of loss.

    (a) Provided that a notice of loss pursuant to part 1437 of this 
chapter has not already been filed, at least one producer having a 
share of a crop planted either pursuant to Sec.  1412.48 or a producer 
with a share of crop of each covered commodity or peanuts on a farm 
enrolled in an ACRE program contract must provide a notice of loss to 
CCC in the administrative FSA office for the farm, within:
    (1) For prevented planting claims, 15 calendar days after the final 
planting date,
    (2) For low yield claims and allowable value loss, the earlier of:
    (i) 15 calendar days after the damaging weather or adverse natural 
occurrence or date loss of the crop or commodity becomes apparent for 
low yield claims or
    (ii) 15 calendar days after the normal harvest date.
    (b) For each crop for which a notice of loss is filed, producers 
must provide the following information:
    (1) Crop by type or variety, as applicable;
    (2) The cause of the crop damage;
    (3) Date the loss occurred, as applicable;
    (4) Date the damage or loss became apparent;
    (5) The existence of a guaranteed payment through a contract or 
agreement for planted acreage as opposed to delivery of production, if 
one exists;
    (6) Type of crop loss occurred, for example, prevented planting or 
low yield;
    (7) Practices employed to grow the crop, for example, irrigated or 
non-irrigated;
    (8) For prevented planting:
    (i) Total acreage intended to be planted to the crop in the 
administrative county;
    (ii) Total acreage planted by the producer to the crop in the 
administrative county;
    (iii) Whether a purchase, delivery, or arrangement for purchase or 
delivery was made for seed, chemicals, fertilizer, etc.; and
    (iv) What and when land preparation measures, for example, 
cultivation, etc. were completed and indicate what has been done or 
will be done with the acreage, for example, abandoned, replanted, etc.
    (9) For low yield:
    (i) Total acreage planted by the producer to the crop in the 
administrative county;
    (ii) Total acreage of the crop in the administrative county 
affected;
    (iii) What and when land preparation measures and practices, for 
example, cultivation, planting, irrigated, etc. were completed before 
and after the loss; and
    (iv) What will be done with the affected crop acreage, for example, 
harvested, destroyed and replanted to a different crop, abandoned, etc.
    (10) Any such other information requested by CCC to establish the 
loss.
    (c) A notice of loss provided beyond the time specified in 
paragraph (a) of this section may be considered timely filed if, at the 
discretion of CCC, provided at such time to permit an authorized CCC 
representative the opportunity to:
    (1) Verify the information on the notice of loss by inspection of 
the specific acreage or crop involved; and
    (2) Determine, based on information obtained by inspection of the 
specific acreage or crop involved, that an eligible cause of loss, as 
opposed to other circumstance, caused the claimed damage or loss.
    (d) Crop acreage that will not be harvested, that is acreage that 
is to be abandoned or destroyed, must be left intact and producers must 
request, in the administrative FSA office for the acreage, a crop 
appraisal and release of crop acreage by a FCIC- or CCC-approved loss 
adjustor:
    (1) Prior to destruction or abandonment of the crop acreage or
    (2) No later than the normal harvest date, as determined by CCC.


Sec.  1412.68  Compliance with highly erodible land and wetland 
conservation provisions.

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


Sec.  1412.69  Controlled substance violations.

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

Subpart G--Average Crop Revenue Election (ACRE) Program


Sec.  1412.71  Administration.

    (a) All of the provisions of this part apply to this subpart. To 
the extent that there is a conflict with the provisions of this part 
and subpart G of this part, the provisions of subpart G of this part 
apply.
    (b) [Reserved]


Sec.  1412.72  Availability and election of alternative approach.

    (a) As an alternative to receiving counter-cyclical payments under 
Sec.  1412.53, and in exchange for a 20-percent reduction in direct 
payments under Sec.  1412.52, as well as 30-percent reduction in 
established marketing assistance loan rates with respect to all covered 
commodities and peanuts on a farm, during each of the 2009, 2010, 2011, 
and 2012 crop years, as applicable, depending on the year the producer 
initially elects the ACRE option, producers, including owners, on a 
farm will have until June 1 of 2009 to make an irrevocable election to 
instead receive ACRE program payments, computed in accordance with the 
regulations of this part, for the 2009 crop year through and including 
the 2012 crop year. During each of the 2010, 2011, and 2012, crop 
years, as applicable, depending on the year the producer initially 
elects the ACRE option, producers, including owners, on a farm will 
have until June 1, or such earlier date as may be determined and 
announced at the discretion of the Deputy Administrator, of 2010, 2011,

[[Page 79303]]

and 2012, as applicable, to make an irrevocable election to instead 
receive ACRE program payments, computed in accordance with the 
regulations of this part, for the initial crop year for which the 
election is made through and including the 2012 crop year.
    (b) If producers elect the ACRE option for a farm in accordance 
with paragraphs (a) and (d) of this section, any DCP contract enrolled 
prior to a timely election in a fiscal year will be considered 
withdrawn according to Sec.  1412.41(b). The producers must still 
choose whether or not to enroll the ACRE elected farm in an ACRE 
program contract. DCP payments issued for the fiscal year of such 
election, including advance and partial program payments, must be 
refunded. No payments will be made available to participants under an 
ACRE program contract until such time as refunds have been remitted and 
enrollment has occurred as provided in this part, unless the Deputy 
Administrator determines to collect the refund instead by a setoff 
against the ACRE payment. Under no circumstances will election be 
construed to be an intent to enroll or an enrollment in the ACRE 
program.
    (c) If a marketing assistance loan (including marketing assistance 
loans that have been repaid or immediately repaid) or loan deficiency 
payment has been computed prior to election of the ACRE option, the 
persons electing the ACRE option:
    (1) Acknowledge that such marketing assistance loan (including any 
loan repayments) and loan deficiency payments will be recomputed based 
on reduced marketing assistance loan rates,
    (2) Agree to immediately refund to CCC the difference in the amount 
of marketing assistance loan (including loan repayments) and loan 
deficiency payments as a result of the ACRE election.
    (d) Eligible producers, including owners, on a farm electing ACRE 
participation by June 1 of:
    (1) 2009, will be considered to have irrevocably elected the ACRE 
option for the 2009, 2010, 2011, and 2012 crop years and, if 
applicable, withdrew prior enrolled 2009 DCP contracts according to 
Sec.  1412.41(b);
    (2) 2010, or such earlier date determined and announced at the 
discretion of the Deputy Administrator, will be considered to have 
irrevocably elected the ACRE option for the 2010, 2011, and 2012 crop 
years and, if applicable, withdrew prior enrolled 2010 DCP contracts 
according to Sec.  1412.41(b);
    (3) 2011, or such earlier date determined and announced at the 
discretion of the Deputy Administrator, will be considered to have 
irrevocably elected the ACRE option for the 2011 and 2012 crop years 
and, if applicable, withdrew prior enrolled 2011 DCP contracts 
according to Sec.  1412.41(b); or
    (4) 2012, or such earlier date determined and announced at the 
discretion of the Deputy Administrator, will be considered to have 
irrevocably elected the ACRE option for the 2012 crop year and, if 
applicable, withdrew prior enrolled 2012 DCP contracts according to 
Sec.  1412.41(b).
    (e) If all of the producers on a farm fail to make an election 
under paragraphs (a) and (d), make different elections under paragraph 
(a), or fail to timely elect as required by paragraph (d), all of the 
producers on the farm will be deemed to have not made the ACRE election 
option and instead, provided DCP contract enrollment was previously 
made pursuant to this part, receive counter-cyclical payments under 
Sec.  1412.53 for all covered commodities and peanuts on the farm, and 
to otherwise not have made the election described in paragraph (a), for 
the applicable crop years.
    (f) Eligible producers on a farm who elect the ACRE option 
according to this section are making the irrevocable election for all 
of the farm as constituted on the date of election irrespective of 
whether the same producers are present on the farm in subsequent years 
and irrespective of whether there is a change of ownership. That is, 
the producer election is binding on the farm, not just the producers on 
the farm at the time of the election. An election is for the entire 
farm and not for part of a farm. If the total number of planted and 
considered planted acres to all covered commodities and peanuts of the 
producers on the farm exceeds the total base acreage of the farm that 
is enrolled pursuant to this part, the producers on the farm may choose 
which commodity or commodities the ACRE option will apply to under this 
section. Although the election according to paragraph (b) of this 
section is irrevocable, for a farm enrolled as specified in this part, 
each year following the election by the final acreage reporting date 
for the crop the producers on a farm already having the ACRE option 
elected may choose the commodity or commodities the ACRE option will 
apply to under this section.
    (g) ``Timely elected'' under this section means all requisite 
signatures of eligible producers on a farm are entered on the election 
form and accompanied by supportive and necessary contractual documents 
according to Sec.  1412.3.
    (h) Unless an earlier date is determined and announced at the 
discretion of the Deputy Administrator, the election deadline for the 
ACRE option is June 1 as specified in Sec.  1412.72(d) and there is no 
late file election period. The enrollment deadlines specified in this 
part and Sec.  1412.41 apply to enrollments of farms under DCP 
contracts or ACRE program contracts. For election of ACRE in a fiscal 
year, all requisite signatures and supportive documentary evidence must 
be furnished by June 1, or such earlier date determined and announced 
at the discretion of the Deputy Administrator. ACRE elections will not 
be construed to be ACRE contract enrollments. Participants must enroll 
in an ACRE contract to participate in ACRE following election.
    (i) Under no circumstances will the ACRE election option be 
permitted except as provided in this section. ACRE elections will not 
be approved unless all producers, including owners, on a farm at time 
of election have signed the form electing the option. The ACRE election 
will not be approved before all producers, including owners, on a farm 
have signed the ACRE election form. A producer's signature with other 
producers on a DCP contract enrolled prior to the submission of an 
election form will not be deemed evidence of the producer's agreement 
with those other producers with regard to election. An election of the 
ACRE option not having all requisite signatures of producers on a farm 
by the election deadline of the year in which election is made will not 
be considered submitted to CCC for the purpose of election in that 
fiscal year and will not be acted on or approved. In all cases, it is 
the responsibility of the operator and owners of a farm to submit all 
requisite signatures of producers necessary for election.
    (j) Except as provided in paragraph (k) of this section, electing 
the ACRE option is irrevocable. Eligible producers may not withdraw an 
ACRE election option at any time. The provisions of Sec.  1412.41(b) do 
not apply to ACRE elections.
    (k) Any producer with an interest in a farm having made the ACRE 
election according to this section may unilaterally revoke the election 
for all of the farm if the election and revocation are both filed by 
the producer prior to the election deadline established for the initial 
year of election. The revocation must be submitted in writing to CCC no 
later than close of business on the date of the election deadline of 
the initial year of election. There are no late file provisions 
available for revocation of the ACRE election. No other revocations of 
the ACRE election will be permitted under this part in order to comply 
with

[[Page 79304]]

the irrevocability mandated in law. Accordingly, relief provisions in 
part 718, subpart D, of this title are not applicable to revocation of 
the ACRE election.
    (l) In the event an ACRE election is revoked according to paragraph 
(k) of this section, the ACRE program contract, if enrolled, will be 
considered likewise withdrawn according to Sec.  1412.41(b) and any and 
all payments issued under such contract must be refunded according to 
part 1403 of this chapter.


Sec.  1412.73  Sharing of ACRE payments.

    (a) Each eligible producer on a farm will be given the opportunity 
to elect the ACRE option and receive payments determined to be fair and 
equitable as agreed to by all producers on the farm and approved by the 
county committee.
    (b) The provisions of Sec.  1412.54(f) regarding the classification 
of leases apply to ACRE.


Sec.  1412.74  Prior enrollment in DCP.

    (a) If a farm was enrolled in a DCP contract according to subpart D 
of this part in a crop year prior to the time in which the producer 
elected the ACRE option according to Sec.  1412.72:
    (1) The ACRE election option in such crop year will be considered a 
request to have the DCP contract withdrawn for that crop year. To 
participate in an annual ACRE program contract following election, the 
farm must be enrolled under an ACRE program contract by the producers 
according to this part. The election will in no way be construed by CCC 
to be an enrollment.
    (2) All direct and counter-cyclical payments issued to any 
participant on that farm must be refunded to CCC.
    (b) [Reserved]


Sec.  1412.75  Notice of Election.

    (a) CCC will provide notice to operators and owners of record 
regarding the opportunity to make each of the elections described in 
Sec.  1412.72. The notice will include information:
    (1) On the opportunity of the producers on a farm to make the 
election and
    (2) Regarding the manner in which the election must be made and the 
time periods and manner in which notice of the election must be 
submitted to the CCC.
    (b) CCC will provide the notice mentioned in paragraph (a) of this 
section to the operator and owners of record. The operator and owners 
are responsible for notifying all producers on the farm of the 
information contained in the notice.


Sec.  1412.76  Payments.

    In the case of producers on a farm who make an election to receive 
ACRE payments for any of the 2009 through 2012 crop years for all 
covered commodities and peanuts and where enrollment according to this 
part has subsequently occurred, and where all other eligibility 
provisions have been satisfied, CCC will make ACRE payments available 
to the producers on a farm in accordance with this subpart. For each of 
the 2009 through 2012 crop years, as applicable when enrollment has 
occurred following election, CCC will make ACRE payments beginning 
October 1, or as soon as practicable thereafter, after the end of the 
applicable marketing year for the covered commodity or peanuts.
    (a) CCC will make ACRE payments available to the producers on a 
farm for each crop year if the farm was enrolled according to this part 
following the election and:
    (1) The actual State revenue for the crop year for the covered 
commodity or peanuts in the State determined under paragraph (c) of 
this section is less than
    (2) The ACRE program guarantee for the crop year for the covered 
commodity or peanuts in the State determined under paragraph (d) of 
this section.
    (b) Provided that the farm is enrolled following election and all 
other eligibility provisions are met, CCC will make ACRE payments 
available to the producers on a farm in a State for a crop year only if 
(as determined by CCC):
    (1) The actual farm revenue for the crop year for the covered 
commodity or peanuts, as determined under paragraph (h) of this section 
is less than
    (2) The farm ACRE benchmark revenue for the crop year for the 
covered commodity or peanuts, as determined under paragraph (i) of this 
section.
    (c) The amount of the actual State revenue for a crop year of a 
covered commodity or peanuts will equal the product obtained by 
multiplying the average actual State yield for each planted acre for 
the crop year for the covered commodity or peanuts determined under 
paragraph (c)(1) of this section and the national average market price 
for the crop year for the covered commodity or peanuts determined under 
paragraph (c)(2) of this section.
    (1) The average actual State yield for each planted acre for a crop 
year for a covered commodity or peanuts in a State will equal, as 
determined by CCC,
    (i) The quantity of the covered commodity or peanuts that is 
produced in the State during the crop year, divided by
    (ii) The number of acres that are planted to the covered commodity 
or peanuts in the State during the crop year and
    (2) The national average market price for a crop year for a covered 
commodity or peanuts in a State will equal the greater of
    (i) The national average market price received by producers during 
the 12-month marketing year for the covered commodity or peanuts, as 
determined by the Secretary, or
    (ii) The established marketing assistance loan rate for the covered 
commodity or peanuts as reduced according to Sec.  1412.72.
    (d) The ACRE program guarantee for a crop year for a covered 
commodity or peanuts in a State will equal 90 percent of the product 
obtained by multiplying
    (1) The average benchmark State yield for each planted acre for the 
crop year for the covered commodity or peanuts in a State determined 
under paragraph (e) of this section and
    (2) The ACRE program guarantee price for the crop year for the 
covered commodity or peanuts determined under paragraph (f) of this 
section.
    (i) In the case of each of the 2010 through 2012 crop years, the 
ACRE program guarantee for a crop year for a covered commodity or 
peanuts in paragraph (d) of this section will not decrease or increase 
more than 10 percent from the guarantee for the preceding crop year. 
The increase or decrease in the state revenue guarantee for a covered 
commodity or peanuts will be applicable to all ACRE program 
participants in a State, regardless of the year the participant first 
elected ACRE or enrolled.
    (ii) [Reserved]
    (e) The average benchmark State yield for each planted acre for a 
crop year for a covered commodity or peanuts in a State is equal to the 
average yield per planted acre for the covered commodity or peanuts in 
the State for the most recent 5 crop year yields, excluding each of the 
crop years with the highest and lowest yields, using National 
Agricultural Statistics Service data to the extent possible.
    (1) If CCC cannot establish the average benchmark State yield for 
each planted acre for a crop year for a covered commodity or peanuts in 
a State in accordance with this paragraph or if the yield determined is 
an unrepresentative average yield for the State (as determined by the 
CCC), CCC will assign a benchmark State yield for each planted acre for 
the crop year for the covered commodity or peanuts in the State on the 
basis of:

[[Page 79305]]

    (i) Previous average yields for a period of 5 crop years, excluding 
each of the crop years with the highest and lowest yields or
    (ii) Average benchmark State yields for planted acres for the crop 
year for the covered commodity or peanuts in similar States.
    (2) [Reserved]
    (f) The ACRE program guarantee price for a crop year for a covered 
commodity or peanuts in a State is the simple average of the national 
average market price received by producers of the covered commodity or 
peanuts for the most recent 2 crop years, as determined by CCC.
    (g) In the case of a State in which at least 25 percent of the 
acreage planted to a covered commodity or peanuts in the State is 
irrigated and at least 25 percent of the acreage planted to the covered 
commodity or peanuts in the State is not irrigated, CCC will calculate 
a separate ACRE program guarantee for the irrigated and non-irrigated 
areas of the State for the covered commodity or peanuts.
    (h) The amount of the actual farm revenue for a crop year for a 
covered commodity or peanuts will equal the amount determined by 
multiplying:
    (1) The actual yield for the covered commodity or peanuts of the 
producers on the farm and
    (2) The national average market price for the crop year for the 
covered commodity or peanuts.
    (i) The farm ACRE benchmark revenue for the crop year for a covered 
commodity or peanuts will equal the sum obtained by adding:
    (1) The amount determined by multiplying
    (i) The average yield per planted acre for the covered commodity or 
peanuts of the producers on the farm for the most recent 5 crop years, 
excluding each of the crop years with the highest and lowest yields and
    (ii) The ACRE program guarantee price for the applicable crop year 
for the covered commodity or peanuts in a State and
    (2) The amount of the per acre crop insurance premium required to 
be paid by the producers on the farm for the applicable crop year for 
the covered commodity or peanuts on the farm.
    (j) If ACRE payments are required to be paid for any of the 2009 
through 2012 crop years of a covered commodity or peanuts under this 
section, the amount of the ACRE payment to be paid to the producers on 
the farm for the crop year under this section will be equal to the 
product obtained by multiplying:
    (1) The lesser of--
    (i) The difference between--
    (A) The ACRE program guarantee for the crop year for the covered 
commodity or peanuts in the State and
    (B) The actual State revenue from the crop year for the covered 
commodity or peanuts in the State and
    (ii) 25 percent of the ACRE program guarantee for the crop year for 
the covered commodity or peanuts in the State;
    (2)(i) For each of the 2009 through 2011 crop years, 83.3 percent 
of the acreage planted or considered planted to the covered commodity 
or peanuts for harvest on the farm in the crop year and
    (ii) For the 2012 crop year, 85 percent of the acreage planted or 
considered planted to the covered commodity or peanuts for harvest on 
the farm in the crop year; and
    (3) The quotient obtained by dividing--
    (i) The average yield per planted acre for the covered commodity or 
peanuts of the producers on the farm for the most recent 5 crop years, 
excluding each of the crop years with the highest and lowest yields, by
    (ii) The benchmark State yield for the crop year.


Sec.  1412.77  Transfer of land and succession-in-interest.

    (a) Land subject to an ACRE election will continue to be subject to 
the election even if there is a transfer of land or change in interest 
of any producer on the farm. If a new owner or operator or producer 
purchases or obtains the right and interest in, or right to occupancy 
of, the land subject to an ACRE election option, such new owner or 
operator or producer, upon the approval of CCC, may choose to become a 
participant to a new ACRE contract with CCC with respect to such 
transferred land in accordance with Sec.  1412.41.
    (b) A succession in interest to an ACRE program contract may be 
permitted if there has been a change in the operation of a farm such 
as:
    (1) A sale of land;
    (2) A change of operator or producer, including a change in a 
partnership that increases or decreases the number or changes who are 
partners;
    (3) A foreclosure, bankruptcy, or involuntary loss of the farm;
    (4) A change in the producer shares to reflect changes in the 
producer's share of the crop(s) that were originally approved on the 
contract; or
    (5) Another change as otherwise determined by the Deputy 
Administrator by which the succession will not adversely affect nor 
defeat the purpose of the program.
    (c) A succession in interest to an ACRE program contract is not 
permitted if CCC determines that the change:
    (1) Is not for all the time remaining under the ACRE program 
contract;
    (2) Results in a violation of the landlord-tenant provisions 
specified in Sec.  1412.55; or
    (3) Adversely affects or otherwise defeats the purpose of the 
program.
    (d) The provisions of Sec.  1412.46(c) and (d) apply to ACRE 
participation.
    (e) In any case in which a payment or payments have previously been 
made to a predecessor, such payment will not be paid to the successor, 
unless such payment has been refunded in full by the predecessor, in 
accordance with Sec.  1412.41(d).


Sec.  1412.78  Violations.

    (a)(1) If a participant fails to carry out the terms and conditions 
of an ACRE contract, CCC may terminate the ACRE contract.
    (2) If the ACRE contract is terminated by CCC in accordance with 
this paragraph:
    (i) The participant will forfeit all rights to further payments 
under such contract and refund all payments previously received 
together with interest;
    (ii) Pay liquidated damages to CCC in such amount as specified in 
such contract.
    (iii) The acreage is ineligible for further DCP and ACRE 
participation from the time of termination through 2012 regardless of 
the reason or reasons for such termination; and
    (b) If the Deputy Administrator determines such failure does not 
warrant termination of such contract, the Deputy Administrator may 
authorize relief as the Deputy Administrator deems appropriate. 
Participants are not entitled to either relief or even the 
consideration of relief under this paragraph. Relief under this 
paragraph is solely discretionary by the Deputy Administrator.
    (c) CCC may reduce a demand for a refund under this section to the 
extent CCC determines that such relief would be appropriate and will 
not deter the accomplishment of the goals of the program.


Sec.  1412.79  Executed ACRE contract not in conformity with 
regulations.

    If, after an ACRE contract is approved by CCC, it is discovered 
that such ACRE contract is not in conformity with the provisions of 
this part, the provisions of this part will prevail.

[[Page 79306]]

Sec.  1412.80  Division of program payments and provisions relating to 
tenants and sharecroppers.

    (a) Payments received under this subpart will be divided in the 
manner specified in the applicable contract or agreement and CCC will 
ensure that producers, who would have an interest in acreage being 
offered, receive treatment that CCC deems to be equitable, as 
determined by the Deputy Administrator. CCC may refuse to enter into a 
contract when there is a disagreement among persons seeking enrollment 
as to a person's eligibility to participate in the contract as a tenant 
and there is insufficient evidence to indicate whether the person 
seeking participation as a tenant does or does not have an interest in 
the acreage offered for enrollment in ACRE.
    (b) CCC may remove an operator or tenant from an ACRE contract when 
the operator or tenant:
    (1) Requests, in writing to be removed from the ACRE contract;
    (2) Files for bankruptcy and the trustee or debtor in possession 
fails to affirm the contract, to the extent permitted by the provisions 
of applicable bankruptcy laws;
    (3) Dies during the contract period and the Administrator of the 
estate fails to succeed to the contract within a period of time 
determined by the Deputy Administrator; or
    (4) Is the subject of an order of a court of competent jurisdiction 
requiring the removal from the ACRE contract of the operator or tenant 
and such order is received by FSA, as determined by the Deputy 
Administrator.
    (c) In addition to the provisions in paragraph (b) of this section, 
tenants must maintain their tenancy throughout the contract period in 
order to remain on a contract. Tenants who fail to maintain tenancy on 
the acreage under contract, including failure to comply with provisions 
under applicable State law, may be removed from a contract by CCC. CCC 
will assume the tenancy is being maintained unless notified otherwise 
by a ACRE participant specified in the applicable contract.

    Signed in Washington, DC, December 19, 2008.
Glen L. Keppy,
Acting Executive Vice President, Commodity Credit Corporation.
[FR Doc. E8-30763 Filed 12-23-08; 11:15 am]
BILLING CODE 3410-05-P