[Federal Register Volume 74, Number 243 (Monday, December 21, 2009)]
[Rules and Regulations]
[Pages 67805-67811]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-30264]



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  Federal Register / Vol. 74, No. 243 / Monday, December 21, 2009 / 
Rules and Regulations  

[[Page 67805]]



DEPARTMENT OF AGRICULTURE

Farm Service Agency

7 CFR Part 760

RIN 0560-AI07


Dairy Economic Loss Assistance Payment Program

AGENCY: Farm Service Agency, USDA.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This rule implements the new Dairy Economic Loss Assistance 
Payment (DELAP) program. The DELAP program will assist dairy producers 
by providing payments to producers who produced and marketed milk in 
the United States at some time from February through July 2009. The 
payments provided by the DELAP program are intended to offset a portion 
of the dairy producers' losses resulting from milk prices that were far 
below production costs.

DATES: Effective Date: December 17, 2009.

FOR FURTHER INFORMATION CONTACT: Danielle Cooke, Special Programs 
Manager, Farm Service Agency (FSA), U.S. Department of Agriculture 
(USDA), STOP 0512, 1400 Independence Avenue, SW., Washington, DC 20250-
0512; telephone (202) 720-1919; fax (202) 690-1536; e-mail, 
[email protected]. Persons with disabilities who require 
alternative means for communications (Braille, large print, audio tape, 
etc.) should contact the USDA Target Center at (202) 720-2600 (voice 
and TDD).

SUPPLEMENTARY INFORMATION:

Background

    The Agriculture, Rural Development, Food and Drug Administration, 
and Related Agencies Appropriations Act, 2010 (2010 Agriculture 
Appropriations Bill, Pub. L. 111-80) provides funds for the Secretary 
of Agriculture to assist dairy producers. This financial assistance is 
authorized by section 10104 of the Farm Security and Rural Investment 
Act of 2002 (Pub. L. 107-171, commonly known as the 2002 Farm Bill), to 
cover economic losses incurred by dairy producers. The statute provides 
that the Secretary may provide assistance for economic losses in such 
manner as the Secretary considers appropriate and thus provides a wide 
discretion in that regard, subject to appropriations. Until now, no 
funds have been appropriated for the program. However, the 2010 
Agriculture Appropriations Bill provides $290 million for payments to 
dairy producers. This, in fact, is the first time funds have been 
appropriated to implement section 10104 and the appropriations bill 
provides that the program can be implemented without regard to certain 
procedural requirements that might otherwise apply such as requirements 
dealing with comment. That is, the appropriations bill specifically 
exempts this rule from prior comment and thus allows the rule to become 
final without prior comment.
    Farm commodity prices are always volatile and milk production is 
cyclical. In 2009, dairy producers experienced the lowest prices for 
milk in recent history, when prices fell from near record highs that 
had encouraged the expansion of the dairy herd. Dairy producers 
continue to experience severe economic pressure that started in late 
2008 and continued into 2009 due to declining demand caused by the 
world-wide recession. Milk prices have declined substantially in 2009, 
with the national price for milk averaging $16.80 per hundredweight 
(cwt.) in the fourth quarter of 2008 and averaging $12.23 per cwt. in 
the first quarter of 2009, a 27 percent decline. USDA estimates current 
national average total production costs at $22.32 per cwt. and average 
operating costs at $13.86 per cwt. On average, the price U.S. dairy 
producers received for milk marketed in the summer of 2009 was about 
half of what it costs them to produce milk.
    The Secretary of Agriculture is implementing the DELAP program to 
assist producers in this time of economic hardship. The DELAP program 
will be implemented immediately upon the effective date of this rule. 
In order that this assistance might be provided as quickly and 
efficiently as possible to the benefit of those to whom the relief is 
directed, this rule will make benefits using the data already reported 
by dairy operations to the Farm Service Agency under the existing 
program. Like existing assistance programs, DELAP will provide 
assistance to producer on an operation by operation basis, and DELAP 
will use existing data, where possible, so that payments may be made in 
many cases immediately after the publication of this rule. Benefit 
limits, based on amounts of production, are by operation. Producers of 
milk may be eligible for benefits with respect to more than one 
operation. Other limits, such as a disallowance of benefits to persons 
with an adjusted gross income limit over a certain amount are described 
below and in the rule. Those parties (State and local governments and 
their political subdivisions and related agencies) excluded, by statute 
from some existing programs, will also be excluded from the DELAP 
program so as to provide consistency between programs and general 
Congressional directives with respect to dairy programs.

Eligibility and Request for Benefits

    As implemented in this rule, dairy producers that both produced 
milk in the United States and commercially marketed it from February 
through July 2009 may be eligible for DELAP. For a dairy producer to be 
eligible for DELAP, the producer and the dairy operation in which the 
producer has a share must:
    (1) Have produced milk in the United States and marketed milk 
commercially at some time from February through July 2009;
    (2) Have milk production data, submitted for MILC, for the 
applicable months recorded at the local Farm Service Agency (FSA) 
county office or provide a request for DELAP benefits with such data; 
and
    (3) Certify to all milk production produced and marketed from 
February through July 2009 by the dairy operation.
    In addition, the dairy producer must meet the average adjusted 
gross income (``AGI'') limitations in 7 CFR part 1400 to be eligible 
for DELAP. Any dairy producer who has annual average adjusted gross 
nonfarm income in excess of $500,000 for calendar years 2005 through 
2007 is not eligible for

[[Page 67806]]

DELAP. The use of AGI limits for many programs, are provided for by 
statute and include rules of ``attribution'' such that the ``AGI'' 
limits apply through multiple layers of organization. For example if 
Individual A is over the limit and owns 100 percent of Corporation C 
which had a 20 percent interest in Corporation B which had a 50 percent 
interest in milk producer Corporation A, the AGI of Individual A would 
result in a 10 percent (100 percent times 20 percent times 50 percent) 
loss in benefits to Corporation A. No statute as such requires the 
application of the AGI limits to DELAP. However, in order that existing 
data can be the basis for DELAP without further application and to 
reflect the general principles of farm programs reflected in the 
application of the AGI test to many other programs, it is has been 
decided to apply the same AGI limits that apply to existing programs. 
In addition, thereby helping to insure that benefits go to those with 
greater need. The Secretary's DELAP discretion has been utilized 
accordingly.
    Restrictions also apply to this program including, but not limited 
to, those pertaining to highly erodible land and wetland conservation 
provisions in 7 CFR part 12. Any dairy producer that violates highly 
erodible land and wetland conservation provisions will be ineligible 
for program benefits; if it is determined after a payment is issued for 
the DELAP program that a violation occurred, then repayment of the 
benefit plus interest would be required.
    FSA will use existing MILC records for production data for February 
through July 2009 to calculate and issue payments. The period February 
to July was chosen because it allows for six months of data, and 
February was the first month of the calendar year in which MILC 
payments were made, thus providing a greater likelihood of actual data 
in the county offices. Producers were incentivized by the payments to 
provide the data. Six months of data should provide a fair picture of 
the size of the operation. Based on current information, FSA estimates 
that more than 95 percent of eligible producers will have a full data 
set so to be able to receive benefits automatically and will not need 
to request benefits.
    Dairy producers that do not have production records at the FSA 
county office, specifically for the months of February through July 
2009, will need to request benefits during the DELAP application 
period. The application period for DELAP will be 30 days, beginning 
December 17, 2009.
    During the application period, dairy producers may submit the 
request for benefits to FSA by mail, email, or fax. There is not a 
specific application form that is required for this program. The 
request for benefits may be in the form of a letter or memo that 
includes the production data FSA needs to determine payment eligibility 
and payment amount. In addition to production data, the request for 
benefits must include:
     The name and location of the dairy operation;
     Contact information for the dairy operation, including 
telephone number; and
     Name, share percentage, and tax identification number for 
each entity or individual producer receiving a share of the payment.
    FSA will not approve any requests for benefits received by FSA 
after the application period closes. A specific application period with 
a cutoff date is needed because FSA will need to know the total 
production quantity of requests to calculate the payments. A limited 
amount of funds will be held in reserve for new applications, appeals, 
and errors. In order to expedite the availability of funds, it has been 
determined to be in the public interest to limit the application period 
to 30 days.

Payments

    Qualifying by operation, eligible dairy producers can receive a 
one-time payment based on the amount of milk both produced and 
commercially marketed by the dairy operation during the months of 
February through July 2009. FSA will use the production information 
from February through July 2009 to estimate a full year's production 
amount and use that amount of annual production to calculate the 
payments. In other words, the dairy operation's actual production for 
the whole year is not specifically relevant to the payment calculation. 
Rather, a dairy operation's eligible payment quantity for DELAP 
purposes will be two times the commercially marketed milk production 
from February through July 2009, up to a maximum of six million pounds 
per dairy operation. The six million pound limit is intended to insure, 
in light of the funding limit, that funding is distributed equitably in 
a way that does not unduly dilute the amount of assistance that would 
be available to smaller dairies. Such a limit has been applied in 
several predecessor programs. Challenges were made in some prior 
programs to the Secretary's use of discretion to set such limits in 
programs with limited funds and those limits were upheld as being valid 
exercises of the Secretary's authority. FSA will make payments to each 
dairy producer for the dairy operation based on the dairy operation's 
eligible payment quantity and the dairy producer's share in the dairy 
operation. For each dairy producer in a dairy operation that exceeds 
the average adjusted gross income limit, the payment to that dairy 
operation will be reduced commensurately because that dairy producer 
will not receive a payment and therefore, no producer in the dairy 
operation will receive a payment for that share of the production.

Payment Rate

    A national per cwt. payment rate will be determined based on the 
factoring of the available $290 million, less the reserve established 
for new applications, appeals, and errors, divided by the total pounds 
of eligible milk production from all eligible dairy operations. As 
noted earlier, there will be an eligibility cap per operation of six 
million pounds of milk production. Because the funds appropriated for 
this program are a fixed amount set in the 2010 Agricultural 
Appropriations Bill, the national payment rate and individual payments 
can only be calculated after the total eligible quantity of milk 
production has been determined from eligible program participants. 
Payment eligibilities will be calculated on an operation by operation 
basis. A dairy producer may be involved in more than one eligible dairy 
operation and the production cap is per operation (using the same 
definition for ``operation'' as used in the MILC program), not per 
individual. Payments to eligible producers will be calculated by 
multiplying the eligible payment quantity in pounds by the national 
payment rate.
    Based on current information, FSA estimates that 875 million cwt. 
of milk production will be eligible for payment. FSA will establish a 
reserve of $10 million. Therefore, the expected payment rate is 
approximately $0.32 per cwt. ($280 million divided by 875 million 
cwt.). FSA will calculate the payment rate and begin payments shortly 
after publishing this rule for dairy producers where payment data is 
based on existing records and as soon as possible, perhaps in January 
or February 2010 for dairy producers that request benefits during the 
application period. Producers who believe that they are entitled to a 
payment who have not received a payment should contact their FSA county 
office. Persons who believe that they are entitled to a higher payment 
should also contact that office.
    If a participant in the DELAP program succeeds through the appeal 
processes in 7 CFR parts 11 or 780 in obtaining a

[[Page 67807]]

determination that additional payments are due to that participant, the 
participant will be paid only to the extent that funding under the 
DELAP program remains available.

Verification and Penalties

    Information recorded in the FSA county office or provided on 
requests for benefits and supporting documentation will be subject to 
verification by FSA. False certifications by producers will carry 
strict penalties and FSA will validate information provided with random 
spot-checks. Dairy producers determined to have made any false 
certifications or adopted any misrepresentation, scheme, or device that 
defeats the program's purpose will be required to refund any payments 
issued under this program with interest, and may be subject to other 
civil, criminal, or administrative remedies.

Notice and Comment

    These regulations are exempt from the notice and comment 
requirements of the Administrative Procedures Act (5 U.S.C. 553), as 
specified in section 748 (b)(2) of the 2010 Agriculture Appropriations 
Bill, which requires that these 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. Therefore, these regulations are issued as 
final.

Executive Order 12866

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

Summary of Economic Impacts

    The DELAP program is expected to provide $290 million in payments 
to dairy producers during fiscal year 2010. That is the full amount 
authorized to be appropriated for DELAP. These are direct payments; the 
cost to the government is equivalent to the total payments (benefits) 
to producers. All of the payments are expected to be made in FY 2010.
    The DELAP program provides payment to dairy producers in FY 2010 
based on production in February through July 2009. It is not expected 
to result in a significant change in the price of milk for consumers, 
because it is not subsidizing the cost of current production or 
providing price support. Rather, it is providing financial assistance 
for economic losses in the past. The payment is estimated to be less 
than one-third of one cent per pound of milk (less than three cents per 
gallon), so it is unlikely to result in a noticeable change in consumer 
milk prices. In fact, the opposite is possible, the DELAP program could 
result in a slight decrease in milk prices by keeping more cows in milk 
production than would be the case without the DELAP program.

Regulatory Flexibility Act

    This rule is not subject to the Regulatory Flexibility Act because 
FSA 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 a 
manner consistent with the provisions of the National Environmental 
Policy Act (NEPA, 42 U.S.C. 4321-4347), the regulations of the Council 
on Environmental Quality (40 CFR parts 1500-1508), and FSA regulations 
for compliance with NEPA (7 CFR part 799). While DELAP eligibility 
decisions involve choices, the decision to make DELAP payments in some 
fashion, and the amount of payments to make, is non-discretionary in 
nature and the actual payment to be made under this rule will be based 
on actions that have already occurred. That being the case, FSA has 
determined that no environmental assessment or environmental impact 
statement need be prepared.

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, Civil 
Justice Reform. This final rule is not retroactive and does not preempt 
State or local laws, regulations, or policies unless they represent an 
irreconcilable conflict with this rule. Before any judicial action may 
be brought regarding 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.

Executive Order 13175

    The policies contained in this rule do not impose substantial 
unreimbursed direct compliance costs on Indian tribal governments or 
have tribal implications that preempt tribal law.

Unfunded Mandates

    Title II of the Unfunded Mandate Reform Act of 1995 (UMRA, Pub. L. 
104-4) establishes requirements for Federal agencies to assess the 
effects of their regulatory actions that impose ``Federal Mandates'' 
that may result in expenditures to State, local, or tribal governments, 
in the aggregate, or the private sector, of $100 million or more in any 
one year. This rule contains no Federal mandates as defined by Title II 
of UMRA for State, local, or tribal governments or for the private 
sector. In addition, FSA 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 748(b)(3) of the 2010 Agriculture Appropriations Bill 
requires that the Secretary use the authority in section 808 of title 
5, United States Code, 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. 
Accordingly and given the current economic situation in the dairy 
industry, it is appropriate to make this rule effective as soon as 
possible so that benefits may be provided. Therefore, this rule is 
effective upon public display by the Office of the Federal Register.

Federal Assistance Programs

    This rule applies to the following Federal assistance program that 
is not in the Catalog of Domestic Federal Assistance: DELAP.

Paperwork Reduction Act

    The regulations in this rule are exempt from requirements of the 
Paperwork Reduction Act (44 U.S.C.

[[Page 67808]]

Chapter 35), as specified in section 748(b)(2)(C) of the 2010 
Agriculture Appropriations Bill, which provides that these regulations 
be promulgated and administered without regard to the Paperwork 
Reduction Act.

E-Government Act Compliance

    FSA is committed to complying with the E-Government Act, to promote 
the use of the Internet and other Information technologies to provide 
increased opportunities for citizen access to Government Information 
and services, and for other purposes.

List of Subjects in 7 CFR Part 760

    Dairy products, Indemnity payments, Pesticide and pests, Reporting 
and recordkeeping requirements.


0
For the reasons discussed above, this rule amends 7 CFR part 760 as 
follows:

PART 760--INDEMNITY PAYMENT PROGRAMS

0
1. Revise the authority citation for part 760 to read as follows:

    Authority:  7 U.S.C. 4501, 7 U.S.C. 1531, 16 U.S.C. 3801, note, 
and 19 U.S.C. 2497; Title III, Pub. L. 109-234, 120 Stat. 474; Title 
IX, Pub. L. 110-28, 121 Stat. 211; and Sec. 748, Pub. L. 111-80, 123 
Stat. 2131.


0
2. Add subpart N to read as follows:

Subpart N--Dairy Economic Loss Assistance Payment Program

Sec.
760.1301 Administration.
760.1302 Definitions and acronyms.
760.1303 Requesting benefits.
760.1304 Eligibility.
760.1305 Proof of production.
760.1306 Availability of funds.
760.1307 Dairy operation payment quantity.
760.1308 Payment rate.
760.1309 Appeals.
760.1310 Misrepresentation and scheme or device.
760.1311 Death, incompetence, or disappearance.
760.1312 Maintaining records.
760.1313 Refunds; joint and several liability.
760.1314 Miscellaneous provisions.

Subpart N--Dairy Economic Loss Assistance Payment Program


Sec.  760.1301  Administration.

    (a) This subpart establishes, subject to the availability of funds, 
the terms and conditions under which the Dairy Economic Loss Assistance 
Payments (DELAP) program as authorized by section 10104 of the Farm 
Security and Rural Investment Act of 2002 (Pub. L. 107-171) will be 
administered with respect to funds appropriated under Section 748 of 
the Agriculture, Rural Development, Food and Drug Administration, and 
Related Agencies Appropriations Act, 2010 (2010 Agriculture 
Appropriations Bill, Pub. L. 111-80).
    (b) The DELAP program will be administered under the general 
supervision of the Administrator, FSA, and the Deputy Administrator for 
Farm Programs, FSA (who is referred to as the ``Deputy Administrator'' 
in this part), and will be carried out by FSA's Price Support Division 
(PSD) and Kansas City Management Office (KCMO).
    (c) FSA representatives do not have authority to modify or waive 
any of the provisions of the regulations of this subpart, except as 
provided in paragraph (d) of this section.
    (d) The State committee will take any action required by the 
provisions of this subpart that has not been taken by the county 
committee. The State committee will also:
    (1) Correct or require the county committee to correct any action 
taken by the county committee that is not in compliance with the 
provisions of this subpart.
    (2) Require a county committee to not take an action or implement a 
decision that is not in compliance with the provisions of this subpart.
    (e) No provision or delegation of this subpart to PSD, KCMO, a 
State committee, or a county committee will preclude the Administrator, 
FSA, or a designee, from determining any question arising under the 
program or from reversing or modifying any determination made by PSD, 
KCMO, a State committee, or a county committee.
    (f) The Deputy Administrator may waive or modify non-statutory 
deadlines and other program requirements of this part in cases where 
lateness or failure to meet other requirements does not adversely 
affect the operation of the program. Participants have no right to seek 
an exception under this provision. The Deputy Administrator's refusal 
to consider cases or circumstances or decision not to exercise the 
discretionary authority of this provision will not be considered an 
adverse decision and is not appealable.


Sec.  760.1302  Definitions and acronyms.

    The following definitions apply to this subpart. The definitions in 
parts 718 and 1400 of this title also apply, except where they may 
conflict with the definitions in this section.
    County office or FSA county office means the FSA offices 
responsible for administering FSA programs in a specific areas, 
sometimes encompassing more than one county, in a State.
    Dairy operation means any person or group of persons who, as a 
single unit, as determined by FSA, produce and market milk commercially 
produced from cows, and whose production facilities are located in the 
United States. In any case, however, dairy operation may be given by 
the agency the same meaning as the definition of dairy operation as 
found in part 1430 of this title for other dairy assistance programs.
    Department or USDA means the U. S. Department of Agriculture.
    Deputy Administrator means the Deputy Administrator for Farm 
programs (DAFP), FSA, or a designee.
    Eligible production means milk from cows that was produced during 
February through July 2009, by a dairy producer in the United States 
and marketed commercially by a producer in a participating State.
    Farm Service Agency or FSA means the Farm Service Agency of the 
USDA.
    Fiscal year or FY means the year beginning October 1 and ending the 
following September 30. The fiscal year will be designated for this 
subpart by year reference to the calendar year in which it ends. For 
example, FY 2009 is from October 1, 2008, through September 30, 2009 
(inclusive).
    Marketed commercially means sold to the market to which the dairy 
operation normally delivers whole milk and receives a monetary amount 
and in any case this term will be construed to allow the use of MILC 
records in making DELAP payments.
    Milk handler means the marketing agency to or through which the 
dairy operation commercially markets whole milk.
    Milk marketing means a marketing of milk for which there is a 
verifiable sales or delivery record of milk marketed for commercial 
use.
    Participating State means each of the 50 States in the United 
States of America, the District of Columbia, and the Commonwealth of 
Puerto Rico, or any other territory or possession of the United States.
    Payment quantity means the pounds of milk production for which an 
operation is eligible to be paid under this subpart.
    Producer means any individual, group of individuals, partnership, 
corporation, estate, trust association, cooperative, or other business 
enterprise or other legal entity, as defined in 7 CFR 1400.3, who is, 
or whose members are, a citizen of or legal resident alien in the 
United States, and who directly or indirectly, as determined by the 
Secretary, shares in the risk of producing milk, and who is entitled to 
a share of the commercial

[[Page 67809]]

production available for marketing from the dairy operation. This term, 
and other terms in this subpart, will in any case be applied in a way 
that allows MILC records to be used to make DELAP payments.
    United States means the 50 States of the United States of America, 
the District of Columbia, the Commonwealth of Puerto Rico, and any 
other territory or possession of the United States.
    Verifiable production records means evidence that is used to 
substantiate the amount of production marketed commercially by a dairy 
operation and its producers and that can be verified by FSA through an 
independent source.


Sec.  760.1303  Requesting benefits.

    (a) If as a dairy operation or producer, your records are currently 
available in the FSA county office from previous participation in a 
fiscal year 2009 dairy program administered by FSA, you do not need to 
request benefits under this subpart to receive payments. FSA will make 
payments as specified in this subpart to eligible dairy producers based 
on production data maintained by the FSA county office for the months 
of February through July 2009.
    (b) If records are not available in the FSA county office, dairy 
producers may request benefits. The request for benefits may be a 
letter or email; no specific form is required.
    (1) Submit your request for DELAP to: Deputy Administrator for Farm 
Programs, FSA, USDA, STOP 0512, 1400 Independence Avenue, SW., 
Washington, DC 20250-0512; Attention: DELAP Program. Or you may send 
your request for DELAP via fax to (202) 690-1536 or e-mail to 
[email protected].
    (2) The complete request as described in this subpart must be 
received by FSA by the close of business on January 19, 2010.
    (3) The complete request for benefits must include all of the 
following:
    (i) The name and location of the dairy operation;
    (ii) Contact information for the dairy operation, including 
telephone number;
    (iii) Name, percentage share, and tax identification number for the 
entity or individual producer's receiving a share of the payment; and
    (iv) Proof of production (acceptable documentation as specified in 
Sec.  760.1305).
    (4) Requests for benefits and related documents not provided to FSA 
as required by this subpart, will not be approved.
    (5) If not already provided and available to FSA, the dairy 
producer or dairy operation must provide documentation to support:
    (i) The amount (quantity in pounds) of milk produced by the dairy 
operation during the months of February 2009 through July 2009;
    (ii) Percentage share of milk production during February through 
July 2009 attributed to each producer in the dairy operation; and
    (iii) Average adjusted gross income for each individual or entity 
with a share in the operation and any additional entities or 
individuals as needed to apply the adjusted gross income rules of these 
regulations.
    (6) Each dairy producer requesting benefits under this subpart is 
responsible for providing accurate and truthful information and any 
supporting documentation. If the dairy operation provides the required 
information, each dairy producer who shares in the risk of a dairy 
operation's total production is responsible for the accuracy and 
truthfulness of the information submitted for the request for benefits 
before the request will be considered complete. Providing a false 
statement, request, or certification to the Government may be 
punishable by imprisonment, fines, other penalties, or sanctions.
    (c) All information provided by the dairy producer or dairy 
operation is subject to verification, spot check, and audit by FSA. 
Further verification information may be obtained from the dairy 
operation's milk handler or marketing cooperative if necessary for FSA 
to verify provided information. Refusal to allow FSA or any other USDA 
agency to verify any information provided or the inability of FSA to 
verify such information will result in a determination of ineligibility 
for benefits under this subpart.
    (d) Data furnished by dairy producers and dairy operations, subject 
to verification, will be used to determine eligibility for program 
benefits. Although participation in the DELAP program is voluntary, 
program benefits will not be provided unless a producer or operation 
furnishes all requested data or such data is already recorded at the 
FSA county office.


Sec.  760.1304  Eligibility.

    (a) Payment under DELAP will only be made to producers, but the 
dairy ``operation'' must first qualify its production within limits 
provided for in this subpart in order to have the individuals or 
entities that qualify as ``producers'' receive payment subject to 
whatever additional limits (such as the adjusted gross income 
provisions of these regulations) apply. As needed the agency may 
construe the terms of this regulation in any manner needed to 
facilitate and expedite payments using existing data and records from 
other assistance programs. Further, those parties (State and local 
governments and their political subdivisions and related agencies) 
excluded from the MILC program will not be eligible for DELAP payments 
notwithstanding any other provision of these regulation. That said, to 
be eligible to receive payments under this subpart, a dairy producer in 
the United States must:
    (1) Have produced milk in the United States and commercially 
marketed the milk produced any time during February 2009 through July 
2009;
    (2) Be a producer, as defined in Sec.  760.1302;
    (3) Provide FSA with proof of milk production commercially marketed 
by all dairy producers in the dairy operation during February 2009 
through July 2009; and
    (4) Submit an accurate and complete request for benefits as 
specified in Sec.  760.1303, if production data is not available in the 
FSA county office.
    (b) To be eligible to receive a payment, each producer in an 
eligible dairy operation must meet the average adjusted gross income 
eligibility requirements of 7 CFR part 1400. No person or entity will 
be eligible to receive any payment or direct or indirect benefit under 
this subpart if their annual average adjusted nonfarm income is over 
$500,000 as determined under 7 CFR part 1400. In the case of indirect 
benefits, direct benefits to other parties will be reduced accordingly. 
This will mean that all of the attribution rules of part 1400 will 
apply. For example if Individual A is over the limit and owns 100 
percent of Corporation C which had a 20 percent interest in Corporation 
B which had a 50 percent interest in milk producer Corporation A, the 
AGI of Individual A would result in a 10 percent (100 percent times 20 
percent times 50 percent) loss in benefits to Corporation A. For DELAP, 
the relevant period for the annual average adjusted nonfarm income is 
2005 through 2007.
    (1) Individual dairy producers in a dairy operation that is an 
entity are only eligible for a payment based on their share of the 
dairy operation.
    (2) No payment will be made to any other producer based on the 
share of any dairy producer who exceeds the income limit or who, 
because of the attribution rules, has their payment reduced.

[[Page 67810]]

Sec.  760.1305  Proof of production.

    (a) Dairy producers requesting benefits must, as required by this 
subpart, provide adequate proof of the dairy operation's eligible 
production during the months of February through July 2009, if those 
records are not already available at the FSA county office. The dairy 
operation must also provide proof that the eligible production was also 
commercially marketed during the same period.
    (b) To be eligible for payment, dairy producers marketing milk 
during February through July 2009 must provide any required supporting 
documents to assist FSA in verifying production. Supporting 
documentation may be provided by either the dairy producer or by the 
dairy operation for each of its producers. Examples of supporting 
documentation may include, but are not limited to: Milk marketing 
payment stubs, tank records, milk handler records, daily milk 
marketings, copies of any payments received as compensation from other 
sources, or any other documents available to confirm the production and 
production history of the dairy operation. Dairy operations and 
producers may also be required to allow FSA to examine the herd of 
cattle as production evidence. If supporting documentation requested is 
not presented to FSA, the request for benefits will be denied.


Sec.  760.1306  Availability of funds.

    (a) Payments under this subpart are subject to the availability of 
funds. The total available program funds are $290,000,000.
    (b) FSA will prorate the available funds by a national factor to 
ensure payments do not exceed $290,000,000. The payment will be made 
based on the national payment rate as determined by FSA. FSA will 
prorate the payments based on the amount of milk production eligible 
for payments in a fair and reasonable manner.
    (c) A reserve will be created to handle new applications, appeals, 
and errors.


Sec.  760.1307  Dairy operation payment quantity.

    (a) A dairy operation's payment quantity (the quantity of milk on 
which the ``operation'' can generate payments for ``producers'' 
involved in the operation) will be determined by FSA, based on the 
pounds of production of commercially marketed milk during the months of 
February 2009 through July 2009, multiplied by two.
    (b) The maximum payment quantity for which a dairy operation can 
generate payments for its dairy producers under this subpart will be 
6,000,000 pounds.
    (c) The dairy operation's payment quantity will be used to 
determine the amount of DELAP payments made to dairy producers.


Sec.  760.1308  Payment rate.

    (a) A national per-hundredweight payment rate will be calculated by 
dividing the available funding, less a reserve established by FSA, by 
the total pounds of eligible production approved for payment.
    (b) Each eligible dairy producer's payment with respect to an 
operation will be calculated by multiplying the payment rate determined 
in paragraph (a) of this section by the dairy producer's share in the 
dairy operation's eligible production payment quantity as determined in 
accordance with section Sec.  760.1307.
    (c) In the event that approval of all eligible requests for 
benefits would result in expenditures in excess of the amount 
available, FSA will reduce the payment rate in a manner that FSA 
determines to be fair and reasonable.


Sec.  760.1309  Appeals.

    The appeal regulations set forth at 7 CFR parts 11 and 780 apply to 
determinations made under this subpart.


Sec.  760.1310  Misrepresentation and scheme or device.

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


Sec.  760.1311  Death, incompetence, or disappearance.

    (a) In the case of the death, incompetency, or disappearance of a 
person or the dissolution of an entity that is eligible to receive 
benefits in accordance with this subpart, such alternate person or 
persons specified in 7 CFR part 707 may receive such benefits, as 
determined appropriate by FSA.
    (b) Payments may be made to an otherwise eligible dairy producer 
who is now deceased or to a dissolved entity if a representative who 
currently has authority to enter into an application for the producer 
or the producer's estate makes the request for benefits as specified in 
Sec.  760.1303. Proof of authority over the deceased producer's estate 
or a dissolved entity must be provided.
    (c) If a dairy producer is now a dissolved general partnership or 
joint venture, all members of the general partnership or joint venture 
at the time of dissolution or their duly authorized representatives 
must be identified in the request for benefits.


Sec.  760.1312  Maintaining records.

    (a) Persons requesting benefits under this subpart must maintain 
records and accounts to document all eligibility requirements specified 
in this subpart. Such records and accounts must be retained for 3 years 
after the date of payment to the dairy producer under this subpart.
    (b) Destruction of the records after 3 years from the date of 
payment will be at the decision and risk of the party undertaking the 
destruction.


Sec.  760.1313  Refunds; joint and several liability.

    (a) Any dairy producer that receives excess payment, payment as the 
result of erroneous information provided by any person, or payment 
resulting from a failure to comply with any requirement or condition 
for payment under this subpart, must refund the amount of that payment 
to FSA.
    (b) Any refund required will be due from the date of the 
disbursement by the agency with interest determined in accordance with 
paragraph (d) of this section and late payment charges as provided in 7 
CFR part 1403.
    (c) Each dairy producer that has an interest in the dairy operation 
will be jointly and severally liable for any refund and related charges 
found to be due to FSA.
    (d) Interest will be applicable to any refunds to FSA required in 
accordance with 7 CFR parts 792 and 1403. Such interest will be charged 
at the rate that the U.S. Department of the Treasury charges FSA for 
funds, and will accrue from the date FSA made the payment to the date 
the refund is repaid.

[[Page 67811]]

    (e) FSA may waive the accrual of interest if it determines that the 
cause of the erroneous payment was not due to any action of the person 
or entity, or was beyond the control of the person or entity committing 
the violation. Any waiver is at the discretion of FSA alone.


Sec.  760.1314  Miscellaneous provisions.

    (a) Offset. FSA may offset or withhold any amount due to FSA from 
any benefit provided under this subpart in accordance with the 
provisions of 7 CFR part 1403.
    (b) Claims. Claims or debts will be settled in accordance with the 
provisions of 7 CFR part 1403.
    (c) Other interests. Payments or any portion thereof due under this 
subpart will be made without regard to questions of title under State 
law and without regard to any claim or lien against the milk 
production, or proceeds thereof, in favor of the owner or any other 
creditor except agencies and instrumentalities of the U.S. Government.
    (d) Assignments. Any dairy producer entitled to any payment under 
this part may assign any payments in accordance with the provisions of 
7 CFR part 1404.
    (e) Violations of highly erodible land and wetland conservation 
provisions. The provisions of part 12 of this title apply to this 
subpart. That part sets out certain conservation requirements as a 
general condition for farm benefits.
    (f) Violations regarding controlled substances. The provisions of 
Sec.  718.6 of this title, which generally limit program payment 
eligibility for persons who have engaged in certain offenses with 
respect to controlled substances, will apply to this subpart.

    Signed in Washington, DC, on December 16, 2009.
Jonathan W. Coppess,
Administrator, Farm Service Agency.
[FR Doc. E9-30264 Filed 12-17-09; 11:15 am]
BILLING CODE 3410-05-P