[Federal Register Volume 79, Number 187 (Friday, September 26, 2014)]
[Rules and Regulations]
[Pages 57703-57721]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-22879]



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  Federal Register / Vol. 79, No. 187 / Friday, September 26, 2014 / 
Rules and Regulations  

[[Page 57703]]



DEPARTMENT OF AGRICULTURE

Farm Service Agency

7 CFR Part 718

Commodity Credit Corporation

7 CFR Parts 1412 and 1416

RIN 0560-AI24


Agriculture Risk Coverage and Price Loss Coverage Programs

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

ACTION: Final rule.

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

SUMMARY: This rule implements the new Agriculture Risk Coverage (ARC) 
and Price Loss Coverage (PLC) Programs authorized by the Agricultural 
Act of 2014 (the 2014 Farm Bill). It also includes conforming changes 
to certain Farm Service Agency (FSA) regulations that apply to multiple 
programs. ARC and PLC provide producers a choice between a program that 
provides counter-cyclical type of payment support--PLC, and a revenue 
support type of program--ARC. During a defined election period, current 
producers can elect different programs for different covered 
commodities on a farm, for example, choosing PLC for corn and ARC 
county option for soybeans on the same farm. ARC offers the additional 
choice of a revenue guarantee based on average revenue for a county or 
on actual historical revenue for an individual farm. If a producer 
elects ARC individual coverage based on historical revenue for that 
specific farm, however, all the farm's covered commodities are elected 
with that option, with no option for PLC on that farm. This rule 
specifies the eligibility requirements, enrollment procedures, and 
payment calculations for ARC and PLC.

DATES: Effective date: September 26, 2014.
    First annual enrollment date: By June 1, 2015, for the 2014 and 
2015 crop years.

FOR FURTHER INFORMATION CONTACT: Brent Orr; telephone: (202) 720-7641. 
Persons with disabilities who require alternative means for 
communication should contact the USDA Target Center at (202) 720-2600.

SUPPLEMENTARY INFORMATION: 

Background

    The 2014 Farm Bill (Pub. L. 113-79) authorizes the new ARC and PLC 
Programs. ARC and PLC are Commodity Credit Corporation (CCC) programs 
operated for CCC by FSA. This rule discusses:
     The basic structure for all payments to farms and 
producers under the ARC and PLC Programs;
     The one-time opportunity owners will have to reallocate 
base acres;
     The one-time opportunity for owners to update yields;
     The one-time irrevocable program election that is required 
from all producers on a farm for the 2014 through 2018 crop years; and
     The opportunity for producers to annually enroll farms in 
ARC and PLC each year from 2014 through 2018.
    As specified in the 2014 Farm Bill, the following are covered 
commodities under ARC and PLC: wheat, oats, and barley (including 
wheat, oats, and barley used for haying and grazing); corn; grain 
sorghum; long grain rice; medium grain rice; pulse crops; soybeans; 
other oilseeds; and peanuts. This is the same list of commodities that 
were previously eligible for Average Crop Revenue Election (ACRE) 
Program and the counter-cyclical payments portion of the previous 
Direct and Counter-cyclical Payment Program (commonly known as DCP), 
which were repealed by the 2014 Farm Bill, except that cotton is not a 
covered commodity. In separate rulemaking implementing the Cotton 
Transition Assistance Payment (CTAP) Program, published on August 8, 
2014 (79 FR 46335-46348), FSA previously explained that what were 
upland cotton base acres under the 2008 Farm Bill are now ``generic 
base acres'' under ARC and PLC. Provisions for generic base acres are 
described in detail later in this document. In that separate 
rulemaking, FSA also implemented some of the general provisions 
applicable to ARC and PLC (such as the requirement to report all 
cropland acres on a farm, and planting flexibility provisions), so 
those provisions are already in the regulation in 7 CFR part 1412.
    The rule specifies what farms are eligible for ARC and PLC, what 
producers are eligible, actions that owners and producers must perform 
to be eligible for payments, election periods, and enrollment periods. 
Enrollment for both the 2014 and 2015 crop year will take place by June 
1, 2015. That means that producers will have planted and harvested 
their 2014 crops before:
    (1) Farm owners update their farm's planting history and yields;
    (2) Farm owners reallocate base acres;
    (3) Producers make election; and
    (4) Producers make annual enrollment decisions.
    Producers will know their 2014 planted acres and actual yields 
before they decide whether to elect and subsequently enroll for ARC or 
PLC. Several universities have partnered with USDA to provide web-based 
decision tools and calculators to help producers evaluate the available 
options under these programs for their farm, and these tools and 
calculators will be available in time for election decisions.
    Any payments under ARC or PLC for the 2014 crop year will not be 
issued until late 2015 because, as specified in the 2014 Farm Bill, 
payments cannot be made until after October 1, 2015.

Overview of ARC and PLC

    Both the 2014 Farm Bill and the Food, Conservation, and Energy Act 
of 2008 (Pub. L. 110-246, referred to as the 2008 Farm Bill) included a 
choice between two types of commodity programs. Both the 2008 and 2014 
Farm Bills give producers a choice between a revenue program whose 
revenue target can move up and down with the market and a price program 
whose target price is fixed for the duration of the respective Farm 
Bill. In nearly all cases, eligible producers for ARC and PLC would 
also have been eligible for DCP and ACRE, the previous programs 
authorized by the 2008 Farm Bill that were repealed by the 2014 Farm 
Bill.
    ARC and ACRE both establish revenue targets, not price targets. The 
guarantee for ARC elected with county option (ARC-CO) is based on 
average

[[Page 57704]]

yields and U.S. crop market year average (MYA) prices as was the 
guarantee revenue target for ACRE. A 5-year Olympic average is used for 
yields (removing high and low) of the past 5 years under both ARC-CO 
and ACRE. ARC-CO uses a 5-year Olympic average (removing high and low) 
for price while ACRE used a 2-year average. This means that under ARC-
CO as with ACRE, the guarantee moves with the market (increasing when 
market revenue is increasing and decreasing when market revenue is 
decreasing).
    The guarantee for ARC elected with individual farm coverage option 
(ARC-IC) is based on average revenues at the farm level. The guarantee 
for ARC-IC is the farm's individual benchmark revenue based on the 5-
year average of the annual benchmark revenues excluding the years with 
the highest and lowest annual revenues then averaging against all crops 
on the farm. (Benchmark revenue calculations are described in more 
detail later in this document.) Under ACRE, producers who elected ACRE 
agreed to a reduction in direct payments on the farm. The 2014 Farm 
Bill contains no direct payments.
    Under the 2008 Farm Bill, the yield for the State was used to 
determine the ACRE guarantee. Under the 2014 Farm Bill, the yield for 
the county is used for ARC-CO. ARC is likely to provide better 
protection against low yield than ACRE did because producer yields are 
likely to be better represented by yields in their farm's county than 
in their State, because of similar growing conditions in the smaller 
geographic area of a county. Under ACRE, producers agreed to a 
reduction in a crop's loan rate for marketing assistance loans (MALs) 
and loan deficiency payments (LDPs); no similar loan rate reduction 
applies to producers on farms that elect ARC (loan rates for 
commodities are the same regardless of election).
    PLC prices are set in the 2014 Farm Bill for the duration of the 
2014 Farm Bill, as was the case with DCP with respect to the 2008 Farm 
Bill. For PLC, these are called reference prices. PLC makes payments 
based on historical base acres, although the base acres of covered 
commodities under the 2014 Farm Bill may differ from those under the 
2008 Farm Bill based on the option owners have to reallocate base acres 
of covered commodities, upland cotton not being a covered commodity, 
and the use of generic base acres. (Base acre reallocation is described 
in more detail later in this document.) Under ARC and PLC, generic base 
acres planted to a covered commodity will be recognized as base acres 
of the planted covered commodity in certain instances (without regard 
to the base acres of that covered commodity that may be on the farm). 
In other words, when there are generic base acres on a farm and covered 
commodities are planted or there are eligible subsequently planted crop 
acreage, the acres planted to the covered commodity or eligible 
subsequently planted crop acreage that are attributed to the generic 
base acres become base acres of the covered commodity for the purposes 
of ARC and PLC, thereby increasing the base acres of that covered 
commodity on the farm (by virtue of planting covered commodities, or 
eligible subsequently planted crop acreage on generic base acres) only 
in the year of planting. As specified in Sec.  1412.45, generic base 
acres on a farm will be attributed to a covered commodity as follows:

    1. If a single covered commodity is planted or is eligible 
subsequently planted crop acreage and the total planted or eligible 
subsequently planted crop acreage exceeds the generic base acres on 
the farm, the generic base acres are attributed to that covered 
commodity in an amount equal to the total number of generic base 
acres on the farm.
    2. If multiple covered commodities are planted or are eligible 
subsequently planted crop acreage and the total number of acres 
planted or eligible subsequently planted crop acreage to all covered 
commodities on the farm exceeds the generic base acres on the farm, 
the generic base acres will be attributed to each of the covered 
commodities on the farm on a pro rata basis to reflect the ratio of:
     The planted and eligible subsequently planted crop 
acreage to a covered commodity on the farm; to
     The total planted and eligible subsequently planted 
crop acreage to all covered commodities on the farm.
    3. If the total number of planted and eligible subsequently 
planted crop acreage to all covered commodities on the farm does not 
exceed the generic base acres on the farm, the number of planted and 
eligible subsequently planted crop acreage to a covered commodity is 
attributed to that covered commodity.

    In the 2014 Farm Bill, there is the one-time program irrevocable 
election between the ARC and PLC Programs that must be made by all 
current producers on a farm (current owners who have a share of crops 
on the farm are included as current producers). In contrast, under the 
2008 Farm Bill, once a farm's producers and owners elected ACRE, the 
decision was irrevocable from the year of election through the 2012 
crop year and an election for only the 2013 crop year was required for 
the 1-year extension of the 2008 Farm Bill. If ACRE was not elected in 
a crop year, the producers and owners on the farm could elect ACRE in 
the next crop year. Under the 2014 Farm Bill, all current producers on 
a farm are required to affirmatively and unanimously elect PLC or ARC 
during the single election period, and, if an election is not made, the 
farm will be ineligible for payments in the 2014 crop year and default 
to PLC for the 2015 through 2018 crop years. This provision is 
specified in the 2014 Farm Bill and neither FSA nor CCC has any 
discretion to specify a different policy for farms that do not have a 
valid election made during the election period. Farms with producers 
who do not make a valid election in the election period announced in 
this rule will not be eligible for 2014 crop year payments.
    Under the 2008 Farm Bill, producers were ineligible for payments 
under the DCP and ACRE if the sum of base acres of covered commodities 
and peanuts on a farm was 10 acres or less. The 10-acre limitation did 
not apply to producers on a farm that was at least 50 percent owned by 
a socially disadvantaged farmer or rancher or a limited resource farmer 
or rancher. The 2014 Farm Bill likewise has a 10-acre limitation; 
however, producer payment eligibility on a farm having 10 or less base 
acres (including generic base acres) is no longer contingent upon the 
ownership of the farm. Rather, it depends solely on the number of base 
acres. A producer is not eligible for ARC or PLC payments on a farm 
having a sum total of 10 or less base acres; however, if that producer 
is a socially disadvantaged farmer or rancher or a limited resource 
farmer or rancher, such limitation does not apply.

ARC and PLC Decisions Must Be Made by Current Owners and Current 
Producers

    This rule includes specific actions that must be made by owners and 
producers. The timing of enactment of the 2014 Farm Bill and 
publication of this regulation require FSA to distinguish ``current 
owners'' and ``current producers'' under this rule from ``owners'' and 
``producers'' as defined in 7 CFR part 718. Many of the actions 
required under ARC and PLC (updating of planted and considered planted 
(P&CP) acres, reallocation of base acres, and yield updates) can only 
be made by the farm's current owners as of the date of those actions. 
As is discussed in greater detail below, current producers will be 
required to unanimously elect ARC or PLC during the specified election 
period and such election is irrevocable. That election period will be 
announced in a press release. The terms ``current owner'' and ``current 
producer'' are defined in this rule to mean the person or legal entity 
who is the owner or producer, as

[[Page 57705]]

applicable, on the date the action, which is required by this rule, is 
actually made (during a prescribed period). Defining these terms is a 
clarification necessary to determine who is included as the relevant 
owner or producer eligible for the actions required under the ARC and 
PLC Programs.
    Following the election period, enrollment will occur. Producers who 
were producers in 2014 (2014 producers on the farm) are eligible for 
2014 enrollment; 2015 and subsequent crop year producers on a farm are 
eligible for 2015 and subsequent crop year enrollment. The core 
principle is that if the producers change from year to year, the 
producers who were on the farm in a given year are the ones who make 
the enrollment for that year, even if they are different from last 
year, and different from the ones who made the election.

Base Acres

    Base acres are a key part of the payment formulas for CTAP, ARC, 
and PLC. Section 1111 of the 2014 Farm Bill specifies that the base 
acres in effect under sections 1001 and 1301 of the 2008 Farm Bill (7 
U.S.C. 8702 and 8751), as adjusted, as of September 30, 2013, and used 
for DCP and ACRE constitute the base acres for CTAP, ARC, and PLC, 
subject to any reallocation, adjustment, or reduction as specified in 
Section 1112 of the 2014 Farm Bill. The 2014 Farm Bill requires 
adjustments to base acres for various reasons including, but not 
limited to, land no longer being devoted to agricultural uses. The term 
base acres includes generic base acres, which are the same as upland 
cotton base acres (upland cotton base acres are used only for CTAP; 
generic base acres are used in ARC and PLC).
    As is discussed in more detail later in this document, ARC has two 
options, a county option--ARC-CO, and an individual farm option--ARC-
IC. Base acres are key to payment eligibility for both programs. For 
ARC-CO, the benchmark revenue is based on average revenues at the 
county level for covered commodities; for ARC-IC, the guarantee is 
based on the average revenue for that specific farm. For ARC-CO, the 
``payment acres'' used to calculate payments are equal to 85 percent of 
the base acres for a covered commodity; for ARC-IC, ``the payment 
acres'' used to calculate payments are equal to 65 percent of base 
acres on the farm. The farm's current producers can elect either ARC-CO 
or PLC on a covered commodity by covered commodity basis. In other 
words, they do not have to elect ARC-CO or PLC for all of the covered 
commodities; they can elect ARC-CO for some covered commodities and PLC 
for others. If the farm's current producers elect ARC-IC, however, the 
election applies to all the covered commodities on the farm.

ARC and PLC Programs Election

    During the election period that will be announced in a press 
release, all of the current producers on a farm must make an 
irrevocable, one-time, unanimous election of either of the two 
following options:
     ARC-CO or PLC on a covered commodity-by-covered commodity 
basis (the election for each covered commodity on the farm can be for 
ARC-CO or PLC); or
     ARC-IC for all covered commodities on a farm.
    The election made, if valid as prescribed in this rule, will apply 
to the farm for the 2014 through 2018 crop years. There are 
consequences of not making a unanimous or timely election. In the 
absence of a valid election on the farm, producers will be deemed to 
have elected PLC for all covered commodities on the farm for the 2015 
through 2018 crop years and are not eligible for any 2014 crop year 
payment.
    There are several factors that affect payments and therefore, the 
decision whether to elect ARC, PLC, or both. ARC and PLC are intended 
to supplement, not replace, regular crop insurance, so ARC payments are 
capped at 10 percent of the benchmark revenue. The PLC calculation does 
not include current yields, so if market year prices are above the 
reference price but current yields are low, no PLC payment would 
trigger. Both programs are subject to a $125,000 annual payment limit. 
That means that the total payments received, directly or indirectly by 
a person or legal entity (except for a joint venture or general 
partnership) for any crop year for ARC, PLC, LDPs, and marketing loan 
gains combined for all commodities except peanuts cannot exceed 
$125,000. Peanuts have a separate $125,000 payment limit for payments 
received from those same programs. Producers who enroll in PLC also 
have the option of purchasing Supplemental Coverage Option (SCO) 
through the USDA Risk Management Agency (RMA). Producers of covered 
commodities on farms that have elected and enrolled under ARC are 
ineligible for SCO on all ARC commodities. A separate regulation for 
SCO was published on July 1, 2014 (79 FR 37155-37166).

Base Acre Reallocation and Opportunity To Update Records

    Current owners of farms will have a one-time opportunity to either 
retain the farm's 2013 base acres or reallocate base acres (except for 
cotton base acres, which, as discussed in the next section, become 
generic base acres for the purposes of ARC and PLC and cannot be 
reallocated) to reflect actual planting history for 2009 through 2012. 
Partial reallocations are not allowed; the only choice for reallocation 
is to reallocate the base acres on the farm to reflect actual planted 
and considered planted (P&CP) or subsequently planted crop acreage 
history for 2009-2012. The reallocation cannot increase the total 
number of base acres on the farm. A current owner can only reallocate 
base acres based on the actual P&CP or subsequently planted crop 
acreage history for 2009 through 2012; the owner cannot reallocate base 
acres to covered commodities that were not P&CP or subsequently planted 
crop acreage to a covered commodity on the farm in those years, or in 
proportions other than those reflected in the actual history. For 
example, if a farm has 100 percent corn base acres, but it planted 50 
percent corn and 50 percent soybeans, on average, in 2009 through 2012, 
it can keep all corn base acres for ARC and PLC, or choose a 50 percent 
corn and 50 percent soybean reallocation, but it cannot reallocate to 
other covered commodities or other percentage allocations.
    As required by the 2014 Farm Bill, FSA will provide current owners 
of farms with base acres a one-time opportunity to update planting 
records, including records of yields. Previously, base acres for DCP 
and ACRE eligibility were based on historical plantings that dated back 
several decades in most cases. Actual P&CP and subsequently planted 
crop acreage in 2009 through 2012 may differ greatly from the history 
that was the basis for establishment of the base acres. In advance of 
this reallocation opportunity provided for ARC and PLC, FSA will 
provide the farm operator and farm owners of record with a summary of 
the history of all covered commodities for their farm during the 2009 
through 2012 crop years (as reported to FSA on acreage reports in each 
of those years). Acreage not reported to FSA will not be included in 
the summary. Although farm operators are not eligible to reallocate 
base acres or update yields unless they are also the owner, FSA will 
send a copy of this information to the farm operator who may assist the 
current owner with analyzing this information. Current owners will be 
provided an opportunity to update the records, provided that there are 
crop insurance records or other verifiable documentation available to

[[Page 57706]]

support the updates. Updating the records to provide accurate 
information on P&CP acreage for covered commodities is independent of 
the decision whether or not to reallocate--a farm may decide to update 
the records, but then not reallocate.
    Owners that update records should be aware that updating 2009 
through 2012 records could adversely impact previously earned payments 
from other FSA or CCC programs that were conducted in those years based 
on those records (before any update). If a farm record is updated to 
reflect a new crop other than the one already recorded, any prior year 
program benefit under a variety of programs that may have been 
conducted in that year may be impacted. If, for example, a farm has 
recorded soybeans as an initial crop in 2010 and the farm owner updates 
the record to show that corn was the initial planted crop instead of 
soybeans, then if an amendment is made to change the previously 
recorded acreage of soybeans to corn, that change could impact benefits 
in 2010.
    In the event that an update to a farm's records for 2009 through 
2012 causes any payment under another FSA or CCC program to become 
unearned, the overpayment must be refunded to FSA or CCC in accordance 
with the rules for that program and FSA or CCC's rules governing the 
overpayment (7 CFR parts 718 and 1403). That would include payments to 
producers who may not be current owners, payments that were issued to 
either current or previous owners who were producers at the time those 
payments were made, as well as other current producers and previous 
producers.
    Persons responsible for refunding any unearned payments will be 
determined using the rules for the program under which the overpayment 
was issued as well as either FSA or CCC's debt settlement rules (7 CFR 
parts 792 or 1403). Current owners are under no obligation to update 
records, but if they wish to do so, they must to do so before 
reallocating base acres because record updates cannot be made after 
reallocation.
    Once records have been updated, the owner(s) will have the 
opportunity to reallocate the farm's base acres based on a proration of 
each covered commodity's P&CP acres in crop years 2009 through 2012 to 
the total P&CP acres of all covered commodities during that time. As 
discussed above, the reallocation of the farm's base acres will be 
based on a proration of each covered commodity's P&CP or subsequently 
planted crop acreage in crop years 2009 through 2012 to the total P&CP 
acres and subsequently planted crop acreage of all covered commodities 
on the farm during that time. The table provides an example of base 
acre reallocation for a farm with 500 acres of cropland and shows the 
relevant information required to see how an owner decided to reallocate 
the farm's base acres.

                                                          Base Acre Reallocation Example Table
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Average
                                             2013 Base    2009 P&CP                                           P&CP 2009    Reallocation   2014 Base acre
                   Crop                        acres         \1\       2010 P&CP    2011 P&CP    2012 P&CP     through      percentage     reallocation
                                                                                                                 2012
--------------------------------------------------------------------------------------------------------------------------------------------------------
Wheat.....................................          200          150          150          150          200        162.5           41.94          167.76
Barley....................................            0           50           50           50           50           50            12.9           51.60
Dry Peas..................................          100          200          150          200          150          175           45.16          180.64
Canola....................................          100            0            0            0            0            0               0               0
                                           -------------------------------------------------------------------------------------------------------------
    Subtotal..............................          400          400          350          400          400        387.5             100          400.00
Upland Cotton.............................          100          100           50          100          150          N/A             N/A             100
Generic Base Acres \2\....................          N/A          N/A          N/A          N/A          N/A          N/A             N/A             100
                                           -------------------------------------------------------------------------------------------------------------
    Total.................................          500          400          350          400          400        387.5             100             500
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\``For the purpose of the example shown in this table, P&CP history shown reflects either P&CP or subsequently planted crop acreage.
\2\ The 100 upland cotton base acres that were in existence as of September 30, 2013, become generic base acres for the purposes of ARC and PLC and are
  not included in the reallocation or in the proration of P&CP or subsequently planted crop acreage of each covered commodity to the P&CP or
  subsequently planted crop acreage of all covered commodities.

    In the base acre reallocation example table above, the owner has 
the following options:
     Retain the 2013 base acres of 200 wheat, 100 dry peas, 100 
canola and 100 acres of generic (do not reallocate any acres); or
     Retain 100 acres of generic base acres, and reallocate 
base acres of covered commodities (based on the farm's P&CP or 
subsequently planted crop acreage history) to 167.76 wheat base acres 
(400 total base acres times 41.94 reallocation percentage), 51.6 barley 
base acres (400 total base acres times 12.9 reallocation percentage), 
180.64 dry peas base acres (400 total base acres times 45.16 
reallocation percentage). Therefore, the total base acres are 100 
generic base acres and 400 reallocated base acres, for a total of 500 
base acres.

Generic Base Acres

    The 2014 Farm Bill does not include upland cotton as a covered 
commodity for ARC and PLC. Upland cotton base acres that were in 
existence as of September 30, 2013, are generic base acres for the 
purposes of ARC and PLC as of October 1, 2013 (fiscal year 2014).
    Generic base acres are treated for the purposes of ARC and PLC like 
other base acres, except that they cannot be reallocated. Generic base 
acres may:
     Be planted to any crop including covered commodities, 
fruits, vegetables, minor oilseeds, or other crops;
     Receive payment for the acres planted to a covered 
commodity
     Be reduced for CRP participation;
     Be reduced when taken out of agriculture production;
     Be reduced on farms having more base acres than available 
cropland.
    As stated in an example above, if generic base acres are planted to 
a covered commodity or eligible subsequently planted crop acreage, the 
covered commodity's crop acreage will be treated as base acres for that 
crop year for ARC and PLC payment calculations.

Payment Yields

    The 2014 Farm Bill specifies that the payment yield for PLC is 
either the counter-cyclical yield from the previous DCP program, or 90 
percent of the farm's average yield from 2008 through 2012 for that 
commodity. The farm owner must choose which yield applies

[[Page 57707]]

to the farm. (Note that, as specified in the 2014 Farm Bill, planted 
acres can be updated, and if that is done, the updated acres will be 
based on 2009 through 2012 data, while payment yield can be updated, 
and if done, the updated yields will be based on 2008 through 2012 
data.) Therefore, FSA is providing owners of farms an opportunity to 
update, for each covered commodity on the farm, the payment yield that 
will be used for calculating PLC. The opportunity to update yields will 
occur before the election period. A current owner's decision to update 
yields is independent of subsequent decisions of current producers on 
that farm as to what program(s) to elect or subsequent enrollment 
decisions. In other words, a current owner can update yields for PLC 
and then the current producers on that farm may later elect and enroll 
in ARC.
    If the Secretary at any time designates an oilseed or pulse crop as 
a covered commodity for PLC and there is not a counter-cyclical yield 
already established for that commodity, this rule specifies how an 
equivalent average yield will be established for that type of commodity 
for the purposes of PLC in section Sec.  1412.33.
    A press release will announce specific periods for yield updates 
and it is only during those periods that current owners of a farm can 
update yields.

Current Owners Make Yield Updates and Base Acre Reallocation Decisions; 
Current Producers Elect and Producers Enroll

    As discussed above, current owners are allowed to update acreage 
records incidental to reallocating base acres and yield updates for a 
farm. Current producers on the farm elect ARC or PLC or a combination 
of ARC-CO and PLC. If during the established periods for yield updates 
or base reallocation which occur before the election period, current 
owners exercise the option to update yields or reallocate base acres, 
that yield update and base reallocation will apply to the farm and to 
any subsequent election unless the yield update or base reallocation is 
either withdrawn during the yield update or base reallocation period by 
any current owner, or rescinded, modified, or withdrawn by a current 
owner on the farm in the established yield update or base reallocation 
period. Neither FSA nor CCC is under any obligation to notify owners on 
a farm if a yield update or base reallocation has been filed, 
rescinded, modified, or withdrawn during the base reallocation period 
or yield update period. If a person or legal entity acquires ownership 
of a farm before the end of the election period and that farm already 
had an election of ARC or PLC made by current producers, FSA will 
provide the election status to the new owner on request, but is under 
no obligation to notify new owners or new producers whether an election 
has previously been made on that particular farm.
    All current producers on a farm must unanimously make the one-time 
election of ARC or PLC for each covered commodity on the farm. If the 
current producers on the farm do not make a unanimous election, then 
the current producers on the farm are deemed to have elected PLC from 
2015 through 2018. Although the 2014 Farm Bill provides that the 
current producers on the farm are deemed to have elected PLC commencing 
with the 2015 crop year, for administrative purposes, the farm will be 
deemed to have elected PLC commencing with the 2014 crop year. 
Nevertheless, per the 2014 Farm Bill, the farm is not eligible for any 
2014 payments. To deem such election to occur commencing with the 2014 
crop year serves to resolve any potential ambiguity with respect to 
eligibility for SCO.
    Election is not enrollment. In order to be eligible for payments, 
producers on the farm must annually enroll their respective share 
interest of base acres or interest of covered commodities. Only 
producers that annually enroll are eligible to receive payments. The 
role of owners versus the roles for producers is specified in the 2014 
Farm Bill; FSA does not have discretion to do otherwise for these 
actions.

PLC Payment Calculations

    As noted above, PLC makes a payment when the ``effective price'' 
for a covered crop is less than its ``reference price'' specified in 
the 2014 Farm Bill. The reference prices are already specified in 7 CFR 
part 1412. The ``effective price'' is the higher of the national 
average market price received by producers during the 12 month 
marketing year for that covered commodity, or the national average loan 
rate (the MAL rate) for that crop year. The reference price for each 
covered commodity is set through 2018 and does not change from year to 
year.
    As authorized by the 2014 Farm Bill and as specified in 7 CFR part 
1412, temperate japonica rice will have a separate reference price set 
by USDA for high altitude or high latitude areas versus other areas of 
the United States where rice is grown. The Secretary has determined 
that the applicable high altitude or high latitude areas of the United 
States for which this applies is California. Therefore, this rule 
specifies a separate reference price for temperate japonica rice in 
Sec.  1412.52.
    Since neither the effective price nor the reference price is based 
on the price the individual producer receives, the producer does not 
need to provide FSA any price or yield data to qualify for PLC payment.
    As specified in the 2014 Farm Bill, payments for a given crop year 
will be made after October 1 of the following year. So, for example, 
2014 crop year payments will be made after October 1, 2015. The 2015 
crop year payments will be made after October 1, 2016.
    An example of a PLC payment calculation using the corn reference 
price is as follows:

                            PLC Example--Corn
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Reference price...........................  $3.70/bu.
Effective price...........................  $3.55/bu.
Payment rate (reference price minus         $0.15/bu.
 effective price).
Payment yield.............................  150 bu./acre.
Base acres (including any corn planted and  100
 attributed to generic base acres).
Payment (payment rate times payment yield   $0.15 x 150 bu. x 85 percent
 times 85 percent of base acres).            = $1,913.
------------------------------------------------------------------------

    As noted above, the payment is based on a reference price ($3.70/
bu.) and payment yield (150 bu./acre). In the example above, the 
producer would receive a payment of $1,913 for 100 base acres of corn 
($3.70/bu. reference price minus $3.55/bu. effective price = $0.15 
payment rate times 85 percent of the 100 corn base acres times the 150 
bushels per acre payment yield. Corn base acres are always included for 
payment, even if the corn base acres

[[Page 57708]]

were planted to another covered commodity. Corn planted or eligible 
subsequently planted crop acreage that is attributed to generic base 
acres become corn base acres for PLC payment purposes. Therefore, PLC 
payment is made on corn base acres and not necessarily corn planted on 
the farm. In the above example, the number of corn base acres 
attributed from generic base acres is not broken out or specified.

ARC Payment Calculations

    ARC is a revenue-based program that is designed to cover a portion 
of a farmer's out-of-pocket loss when crop revenues fall below the 
guarantee, with the benchmark revenue based on either county level 
historic revenue for ARC-CO or the individual farm's historic revenue 
for ARC-IC. For both PLC and ARC-CO, the payment calculation is based 
on base acres including any base acres attributed to a covered 
commodity from generic base acres based on P&CP or eligible 
subsequently planted crop acreage.
    Under ARC-CO, payments are triggered when actual county crop 
revenue of a covered commodity is less than the ARC-CO guarantee for 
the covered commodity. Since payment is not based on the revenue or 
yield of the individual farm, the producer does not need to provide FSA 
any additional price or yield data to qualify for ARC-CO payment. The 
data used in the calculation is national data for prices and county 
data for yields, not individual farm data. The ARC-CO guarantee is 86 
percent of the crop's benchmark revenue. Under ARC-CO, benchmark 
revenue is calculated by multiplying the 5-year average county yield, 
excluding the years with the highest and lowest yields (the ARC-CO 
guaranteed yield) times the previous 5-year MYA price, excluding years 
with the highest and lowest prices. The ARC-CO payment for a covered 
commodity is 85 percent of the farm's base acres of the covered 
commodity times the difference between the county guarantee and the 
actual county revenue for the covered commodity.
    The ARC-CO payment cannot exceed 10 percent of the county benchmark 
revenue (the ARC-CO guaranteed price times the ARC-CO average 
historical benchmark yield). An example of an ARC-CO payment 
calculation using estimated 2014 soybean prices and yields is as 
follows:

              ARC-CO Payment Calculation Example--Soybeans
------------------------------------------------------------------------
 
------------------------------------------------------------------------
2014 MYA price (estimate only).................  $9.65/bu.
2014 Actual average county yield (bu./acre)....  56
Benchmark revenue (average historical county     $670
 yield x average MYA for 2009 through 2013).
Base acres (including any generic base acres     100
 attributed to soybeans).
2014 Actual crop revenue (2014 MYA times 2014    $540
 actual county yield).
ARC-CO guarantee (86 percent times benchmark     $575
 revenue).
Maximum payment (benchmark revenue times 10      $67
 percent).
Payment rate (ARC-CO guarantee of $575 minus     $35
 actual crop revenue of $540, not to exceed
 maximum payment of $67).
Payment (payment rate of $35 times 85 percent    $2,975
 of 100 base acres).
------------------------------------------------------------------------

    Under ARC-IC, payments are triggered when the actual crop revenue, 
averaged across all covered commodities planted or eligible 
subsequently planted crop acreage on the ARC-IC farm, is less than ARC-
IC guarantee, averaged across those covered commodities planted or 
eligible subsequently planted crop acreage on the farm. The farm for 
ARC-IC purposes is the sum of all of that producer's interests in all 
ARC-IC farms in the State, meaning that if a producer has an interest 
in multiple farms that have elected and enrolled in ARC-IC, the ARC-IC 
benchmark revenue for that producer will be a weighted average of the 
benchmark revenue for all of those farms. The farm's ARC-IC guarantee 
equals 86 percent of the farm's individual benchmark revenue (5-year 
average of the annual benchmark revenues), excluding the years with the 
highest and lowest annual benchmark revenues, then averaging across all 
covered commodities planted or eligible subsequently planted crop 
acreage on the farm. The actual revenue is similarly computed, with 
both the guarantee and actual revenue computed using planted acreage on 
the farm. The ARC-IC payment equals 65 percent of the sum of the base 
acres of all covered commodities on the farm, times the difference 
between the individual guarantee revenue and the actual individual crop 
revenue across all covered commodities planted or eligible subsequently 
planted crop acreage on the farm. Payments cannot exceed 10 percent of 
the individual's benchmark revenue. Since the payment is based on 
yields for that individual farm, the producers enrolled in ARC-IC 
elected farms must report acreage and yield data to qualify for 
payment. Producers of covered commodities enrolled in ARC-IC elected 
farms must, as a condition of payment eligibility, file a report of 
production by the crop reporting date the immediate year after the 
production and contract year. The failure to report production will 
render the producers sharing in any of the covered commodities on that 
farm ineligible for payments on all ARC-IC elected and enrolled farms 
for which the producer has an interest in covered commodities in the 
State.
    In the case of a total prevented planting situation, USDA has made 
a discretionary decision to calculate ARC-IC payments as if the 
producer had planted some acreage to each covered commodity on the 
farm. The reason for this decision is as follows: If a producer who has 
elected ARC-IC has all of their acreage prevented from being planted 
across their entire farm for a crop year, the ARC-IC calculation 
without this planting provision would result in a zero payment, an 
unintended result. The purpose of ARC-IC is to provide a safety net 
payment to a producer based on the individual's actual farm revenue. To 
preclude any payment if the producer suffered a complete prevented 
planting on all of the farm's acreage in which the producer has an 
interest would defeat the safety net purposes of ARC, particularly when 
compared to the theoretical example of a producer who suffered an 
almost complete prevented planting, which would trigger a payment. 
Therefore, if a producer has all prevented planted acreage across all 
acres of their farm, FSA will deem sufficient acres as being planted 
for each covered commodity in proportion to the approved prevented 
planted acreage of covered commodities on the farm to trigger an ARC-IC 
payment. This is being done within the Secretary's general discretion 
to operate the ARC program, as it is reasonably related to the purposes 
of ARC.

[[Page 57709]]

    An example of an ARC-IC payment calculation is shown in the 
following table:

  ARC-IC Payment Calculation Example--Corn and Soybeans--100 base acres
     [60 acres planted with corn and 40 acres planted with soybeans]
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Benchmark revenue corn *...................................         $826
Benchmark revenue soybean..................................          687
Benchmark revenue total for the farm ((0.6 x $826) + (0.4 x          770
 $687))....................................................
Guarantee (86 percent of total benchmark revenue)..........          662
Actual revenue (2014 MYA price of each commodity times each          637
 commodity's actual yield times ratio of planted covered
 commodity to farm's base acres 0.6 corn and 0.4 soybeans--
 in this case (0.6 x $702) + (0.4 x $540)).................
Payment rate (difference between guarantee and actual                 25
 revenue)..................................................
Maximum payment (10 percent of benchmark revenue of $770)..           77
Payment rate (ARC-IC Guarantee minus Actual Crop Revenue;             25
 adjusted, if needed to not exceed maximum payment)........
Payment (payment rate times 65 percent of total base acres)        1,625
------------------------------------------------------------------------
* The benchmark revenue numbers are calculated as the 5-year Olympic
  average of the annual revenue for the farm, excluding the high and low
  years.

Election of ARC and PLC

    The specified period in which producers may elect ARC or PLC will 
be announced in a press release. Current producers, as defined in this 
rule, will make the election. The election will be based on the farm 
structure that is in effect as of September 30, 2014. Reconstitutions 
of farms initiated after August 1, 2014 will not be considered by FSA 
until after the election period has ended. The election of ARC and PLC 
for a farm will apply to that farm in all years 2014 through 2018 and, 
in the case of that farm being reconstituted, the farms resulting from 
that reconstitution. Neither the requesting of a farm reconstitution 
nor the reconstitution of any farm will change either the requirement 
that all current producers on a farm must unanimously agree to the 
irrevocable election during the election period or that a valid 
election was made by those current producers.
    If no election is made, or if all producers on the farm cannot 
unanimously agree, the farm will default to a PLC election, and 
producers on that farm will not be eligible for 2014 crop year payments 
(even if the farm is enrolled in 2014 PLC). During the election period, 
all current producers on a farm must unanimously make the irrevocable 
election as discussed in this rule in order to preserve the payment 
eligibility of all producers on the farm for 2014. If a valid election 
is made by all current producers on a farm during the election period, 
that election will be recognized as valid for the farm in the 2014 
through 2018 crop years unless that election is rescinded or terminated 
by any current producer on the farm during the election period, or 
unless the valid election is modified and replaced by another valid 
election by all current producers during the election period. At any 
time during the election period, a current producer can rescind an 
election or terminate an election by providing FSA with written notice 
of the current producer's withdrawing from the election or by providing 
written notice to FSA requesting to have the election rescinded.
    If a producer acquires an interest in a farm on or after a valid 
election has been made in the election period by all of a farm's 
current producers, that producer will be subject to any previously 
valid election made in the election period unless that producer changes 
the election during the remaining time in the election period by either 
withdrawing the election or getting all of the producers to agree to 
the new election in writing. While FSA will respond to inquiries 
submitted by such producers, neither FSA nor CCC has any obligation to 
notify owners or producers of whether or not a valid election exists or 
is in place or whether a producer has rescinded or terminated a 
previously made valid election. Additionally, neither FSA nor CCC have 
any role or responsibility of advising any producers on a farm of who 
all the farm's current producers are in the election period. The 
identity of all current producers for a farm may only be known to each 
of the current producers and that information may or may not be on file 
with FSA during the election period. It is the responsibility of the 
current producers on a farm to ensure that a valid election is made in 
the prescribed election period.
    The election itself, its irrevocability, and the requirement that 
the election be made unanimously by all the current producers on a farm 
are required by the 2014 Farm Bill and neither FSA nor CCC has any 
discretion to waive these requirements. Additionally, election does not 
result in enrollment in ARC or PLC. Current producers on farms that 
have made a valid election (and those that have not completed an 
election and producers who might want to participate in PLC for the 
2015 and subsequent crop years) must still annually enroll the farm 
with that election (or default election) in order to be eligible for 
ARC and PLC payments on farms in those crop years, as applicable.
    The election made is important--it affects eligibility for some 
forms of crop insurance. Specifically, section 11003 of the 2014 Farm 
Bill amends the Federal Crop Insurance Act (7 U.S.C. 1508(c)) to 
authorize SCO. SCO covers a portion of the deductible for regular crop 
insurance on either a yield or revenue basis. As with other forms of 
crop insurance offered through RMA, SCO premiums are subsidized, and no 
payment limit or AGI limit applies. Additional details regarding SCO 
and benefits available under SCO can be obtained from an approved 
insurance provider. SCO coverage is available for crops subject to a 
PLC election. Producers of covered commodities on farms with a valid 
ARC election and enrollment, as well as acres that are enrolled in the 
stacked income protection plan for cotton under section 508B of the 
Federal Crop Insurance Act (7 U.S.C. 1508b), are not eligible for SCO 
coverage.

Sharing ARC and PLC Payments on Enrolled Farms Between Producers on a 
Farm

    FSA will determine eligibility for shared payments similarly to how 
FSA made those determinations for DCP and ACRE. Each eligible producer 
on a farm will be given the opportunity to enroll and receive payments 
determined to be fair and equitable as agreed to by all the producers 
on the farm and approved by the FSA county committee. Each

[[Page 57710]]

producer leasing a farm is required to provide a copy of their written 
lease to the county committee and, in the absence of a written lease, 
is required to provide to the county committee a complete written 
description of the terms and conditions of any oral agreement or lease, 
to the satisfaction of the county committee in order to make any 
determinations necessary under these programs.
    An owner's or landlord's signature, as applicable, affirming a zero 
owner or landlord 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 FSA. This would allow the producer with the cash lease to 
claim 100 percent of any payments made, assuming all eligibility 
requirements and other conditions have been met. Such signature or 
signatures, if entered on the contract to satisfy the requirement of 
furnishing a written lease, is required to be entered on the contract 
by June 1, 2015, for the 2014 and 2015 contract year and for subsequent 
crop years, June 1 of each subsequent year.

Deadlines for ARC and PLC Actions

    After the conclusion of the election period, the enrollment period 
begins. Starting with the 2015 crop year, the enrollment period ends 
June 1 of the relevant crop year. This means that enrollment of farms 
for the 2015 crop year will occur at the same time as the 2014 crop 
year enrollment.
    The contract year is based on the fiscal year, October 1 to 
September 30 of each year, with the enrollment period occurring in the 
middle of the contract year. For 2014, the producer will enroll by June 
1, 2015, for a retroactive contract that ends September 30, 2014. For 
each subsequent year, the June 1 enrollment deadline will be for a 
contract that began on October 1 of the previous year. For example, the 
producer must enroll by June 1, 2015 to be eligible to receive payments 
for a 2015 contract that runs from October 1, 2014 to September 30, 
2015.
    The June 1 enrollment deadline is consistent with the deadline for 
similar types of programs since 2002. The June 1 date is also in 
advance of compliance activities that are required to occur for the 
crop year (acreage and production reporting), and the final date for 
seeking reconstitution of farms. After the one-time election period 
ends, in each crop year or program year the producers on the farm in 
that crop year or program year may choose whether or not to enroll the 
farm.
    When a farm's base acres are leased on a share basis, neither the 
landlord nor the tenant will receive 100 percent of payments for the 
farm. FSA will approve an ARC and PLC contract and approve the division 
of payment when all the following, as applicable, occur or have been 
determined to have occurred:
     Landlords, tenants, and sharecroppers sign the application 
and agree to the payment shares shown;
     FSA determines that the interests of tenants and 
sharecroppers are being protected; and
     FSA determines that the payment shares do not circumvent 
either the provisions of this rule or the payment limitation provisions 
of 7 CFR part 1400.
    The general order of activities associated with participation in 
ARC and PLC is:
     Current owner updates P&CP acres and subsequently planted 
crop acreage and reallocation of base acres during acreage update and 
reallocation periods;
     Current owner updates PLC yield during yield update 
period;
     Current producers unanimously make ARC and PLC election 
during the election period; and
     Producers enroll the farm during enrollment periods.
    The following table provides a summary of deadlines for ARC and 
PLC.

------------------------------------------------------------------------
                Activity                             Deadline
------------------------------------------------------------------------
2014 acreage reports by 2014 operator    Not later than July 15, 2014,
 or producers on farm.                    for covered commodities. For
                                          all other cropland on the
                                          farm, the acreage reporting
                                          date for the crop or crops in
                                          the State (Note: This deadline
                                          is unchanged by this rule.)
Update acreage history.................  To be announced in a press
                                          release.
PLC yield update.......................  To be announced in a press
                                          release.
Base acres reallocation................  To be announced in a press
                                          release.
Election of ARC and PLC by current       To be announced in a press
 producers on farms in election period.   release.
2014 contract year enrollment by 2014    June 1, 2015.
 producers on farms and 2015 contract
 enrollment by 2015 producers on farms.
2014 production report of covered        July 15, 2015.
 commodities by ARC-IC producers.
2015 and subsequent crop year acreage    Not later than July 15 for
 reports by 2015 and subsequent           covered commodities. For all
 operator or producers on farm.           other cropland on the farm,
                                          the acreage reporting date for
                                          the crop or crops in the
                                          State.
2016 and subsequent years contract       June 1 of applicable program
 enrollment by 2016 and subsequent year   year.
 producers.
2015 and subsequent year production      July 15 of the year following
 report of covered commodities by ARC-    the program year (for example,
 IC producers.                            the 2015 production report is
                                          due July 15, 2016).
------------------------------------------------------------------------

General Provisions That Apply to ARC and PLC

    As noted above, the rule published on August 8, 2014, to implement 
the CTAP program implemented some general provisions that also apply to 
ARC and PLC. The regulations in 7 CFR part 1412 specify certain 
requirements to which the participant must agree to be eligible for 
payments. One such requirement is to effectively control noxious weeds 
and otherwise maintain the land in accordance with sound agricultural 
practices. Since that rule was published, the Secretary has determined 
to amend the applicable regulations to remove P&CP acreage and specify 
that only planted and eligible subsequently planted crop acreage of 
covered commodities will attribute generic base acres to covered 
commodities.
    Base acres for covered commodities for ARC and PLC will be reduced 
for cropland that is on 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. The regulation for the reductions in base 
acres is already in 7 CFR 1412.24,

[[Page 57711]]

and was implemented through the CTAP final rule.
    ARC and PLC have provisions for planting flexibility and reductions 
for plantings of fruits, vegetables, and wild rice on base acres. These 
reductions are already specified in 7 CFR part 1412.
    Common provisions in 7 CFR part 718 that apply to all FSA and CCC 
programs, including those for base acres and farm reconstitutions, 
apply to CTAP and ARC and PLC.

Miscellaneous

    As specified in the 2014 Farm Bill and in 7 CFR part 1400, payment 
limits and average adjusted gross income (AGI) limits apply to ARC and 
PLC. A person or legal entity is ineligible for payments if the 
person's or legal entity's AGI for the applicable ARC and PLC contract 
or AGI compliance program year exceeds $900,000.
    Producers eligible for ARC and PLC are required to be a person or 
legal entity who is actively engaged in farming and otherwise eligible 
for payment, as specified in 7 CFR part 1400; and who complies with 
other general program eligibility requirements including, but not 
limited to, those pertaining to highly erodible land and wetland 
conservation provisions specified in 7 CFR part 12.
    Appeal regulations specified in 7 CFR parts 11 and 780 apply. FSA 
program requirements and determinations that are not in response to, or 
result from, an individual disputable set of facts in an individual 
participant's application for assistance are not matters that can be 
appealed.
    Neither crop insurance nor coverage under noninsured crop disaster 
assistance program is required as a condition of eligibility for ARC or 
PLC. Additionally, ARC and PLC benefits are not subject to the multiple 
benefit exclusion provisions of the catastrophic plan of insurance or 
noninsured crop disaster assistance.

FSA Notifications of General 2014 Farm Bill Information for FSA 
Programs and ARC and PLC Provisions

    The following provides information regarding the notifications FSA 
made to ensure that farm owners are aware of the provisions of the 2014 
Farm Bill and that participants have all applicable information 
available on record at FSA to assist them in making participation 
elections. (Note: The FSA notices are available on FSA's public Web 
site.)

------------------------------------------------------------------------
                   Date                              FSA action
------------------------------------------------------------------------
March 11, 2014............................  Issued a 2014 Farm Bill Fact
                                             Sheet discussing what is in
                                             the 2014 Farm Bill for Farm
                                             Service Agency customers.
March 28, 2014............................  Published an extension of
                                             authorization rule in the
                                             Federal Register (79 FR
                                             17388-17390) regarding
                                             Continuation of Certain
                                             Benefit and Loan Programs,
                                             Acreage Reporting, Average
                                             Adjusted Gross Income, and
                                             Payment Limit.
April 7, 2014.............................  Issued FSA Notice ARCPLC-1
                                             to FSA State and county
                                             offices discussing Fruits
                                             and Vegetables and Wild
                                             Rice (FAV) provisions for
                                             2014 through 2018 crop
                                             years.
April 7, 2014.............................  Issued FSA Notice ARCPLC-2
                                             to FSA State and county
                                             offices regarding
                                             establishing FAV and Wild
                                             Rice (WR) double-cropping
                                             regions.
May 23, 2014..............................  Issued FSA Notice ARCPLC-4
                                             to FSA State and county
                                             office regarding 2014 Farm
                                             Bill information regarding
                                             ARC and PLC.
May 29, 2014..............................  Issued a press release
                                             concerning $6 million award
                                             for educational efforts to
                                             prepare farmers for new ARC
                                             and PLC programs.
May 29, 2014..............................  FSA posted ARC and PLC
                                             information and several
                                             links to: http://fsa.usda.gov/FSA/webapp?area=home&subject=arpl&topic=landing
June 18, 2014.............................  Issued FSA Notice ARCPLC-5
                                             to FSA State and county
                                             office regarding ARC and
                                             PLC P&CP and subsequently
                                             planted crop acreage
                                             history update.
July 18, 2014.............................  Issued FSA Notice ARCPLC-6
                                             to FSA State and county
                                             office regarding
                                             maintaining base acres.
September 25, 2014........................  FSA issues a document
                                             entitled ARC and PLC
                                             Backgrounder and makes the
                                             document available in FSA
                                             service centers and on the
                                             FSA public website.
August 8, 2014............................  Published the final rule
                                             implementing CTAP and
                                             announced some general ARC
                                             and PLC provisions.
September 26, 2014........................  This rule specifies the
                                             implementing regulations
                                             for ARC and PLC.
------------------------------------------------------------------------

Structure of the Regulation

    This rule revises 7 CFR part 1412 to add the specific requirements 
for ARC and PLC. Subpart A covers general administration; subpart B 
cover base acres; subpart C covers yields and production for ARC and 
PLC; subpart D covers ARC and PLC contract terms and enrollment 
provisions; subpart E covers financial considerations including sharing 
payments; subpart F covers violations; subpart G covers PLC and ARC 
election; and subpart H covers CTAP. This rule amends subparts A, B, D, 
and E, and adds subparts C and G.
    This rule also makes minor clarifications and amendments to 7 CFR 
part 718 to clarify how FSA determines a farm's administrative county, 
how and when a farm's administrative county can, or needs to, be 
changed, and a producer's options regarding the selection of an 
administrative county. The rule also amends farm reconstitution 
provisions in part 718 to remove references to obsolete programs, 
clarifies the deadline for initiating farm reconstitutions, and 
provides the effective date of farms that are reconstituted. These 
amendments and clarifications, which are not required by the 2014 Farm 
Bill, will help to ensure that ARC and PLC are implemented effectively. 
This rule also moves some terms and definitions from part 1416 to part 
718 because those terms and definitions are used in multiple programs, 
including ARC and PLC.

Notice and Comment

    In general, the Administrative Procedure Act (5 U.S.C. 553) 
requires that a notice of proposed rulemaking be published in the 
Federal Register and interested persons be given an opportunity to 
participate in the rulemaking through submission of written data, 
views, or arguments with or without opportunity for oral presentation, 
except when the rule involves a matter relating to public property, 
loans, grants, benefits, or contracts. The regulations to implement the 
provisions of Title I and the administration of Title I of the 2014 
Farm Bill are exempt from the notice and comment provisions of 5 U.S.C. 
553 and the Paperwork Reduction Act (44 U.S.C. chapter 35), as 
specified in section 1601(c)(2) of the 2014 Farm Bill.

Effective Date

    The Administrative Procedure Act (5 U.S.C. 553) provides generally 
that before rules are issued by Government agencies, the rule is 
required to be published in the Federal Register, and the required 
publication of a substantive rule is to be not less than 30 days before

[[Page 57712]]

its effective date. One of the exceptions is when the agency finds good 
cause for not delaying the effective date. Subsection 1601(c)(2) of the 
2014 Farm Bill makes this final rule exempt from notice and comment. 
Therefore, using the administrative procedure provisions in 5 U.S.C. 
553, FSA finds that there is good cause for making this rule effective 
less than 30 days after publication in the Federal Register. This rule 
allows FSA to provide adequate notice to producers about the new ARC 
and PLC regulation so they will have time to update base acres and 
yields and make the required election before the enrollment period for 
ARC and PLC in spring 2015. Therefore, to begin providing benefits to 
producers in a timely fashion, this final rule is effective when 
published in the Federal Register.

Executive Orders 12866 and 13563

    Executive Order 12866, ``Regulatory Planning and Review,'' and 
Executive Order 13563, ``Improving Regulation and Regulatory Review,'' 
direct agencies to assess all costs and benefits of available 
regulatory alternatives and, if regulation is necessary, to select 
regulatory approaches that maximize net benefits (including potential 
economic, environmental, public health and safety effects, distributive 
impacts, and equity). Executive Order 13563 emphasized the importance 
of quantifying both costs and benefits, of reducing costs, of 
harmonizing rules, and of promoting flexibility.
    The Office of Management and Budget (OMB) designated this rule as 
economically significant under Executive Order 12866, ``Regulatory 
Planning and Review,'' and therefore, OMB has reviewed this rule. This 
regulatory action is being taken to implement a major budgetary program 
required by the 2014 Farm Bill. Consistent with OMB guidance, this type 
of action is considered a budgetary transfer representing a payment 
from taxpayers to program beneficiaries unrelated to the provision of 
any goods or services in exchange for the payment. As such, the 
benefits and payments to those who receive such a transfer are matched 
by the costs borne by taxpayers. The estimated transfer payments for 
ARC and PLC provided by this rule are summarized below. The full cost 
benefit analysis is available on regulations.gov.

Cost Benefit Analysis Summary

    ARC and PLC payments are estimated to total $28.6 billion for crop 
years 2014 through 2018 based on supply, demand and price conditions as 
of May, 2014. Nearly all producers on farms with base acres are 
expected to participate in PLC or ARC or both. Annual payments are 
projected at $0.8 billion for crop year 2014, $10.1 billion for crop 
year 2015, $10.9 billion for crop year 2016, $3.9 billion for crop year 
2017, and $2.9 billion for 2018.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601-612), as amended by 
the Small Business Regulatory Enforcement Fairness Act of 1996 
(SBREFA), generally requires an agency to prepare a regulatory 
flexibility analysis of any rule whenever an agency is required by the 
Administrative Procedure Act (5 U.S.C. 553) or any other law to publish 
a proposed rule, unless the agency certifies that the rule will not 
have a significant economic impact on a substantial number of small 
entities. This rule is not subject to the Regulatory Flexibility Act 
because neither FSA nor CCC is required by any law to publish a 
proposed rule for public comment for this rulemaking initiative.

Environmental Review

    The environmental impacts of this final 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 
the FSA regulations for compliance with NEPA (7 CFR part 799). While 
ARC and PLC are new, their creation is mandated by the 2014 FB, and is 
therefore not subject to review under NEPA. The legislative intent for 
creating these new programs is to provide revenue support to the same 
group of producers eligible for the earlier and now-discontinued 
programs, DCP and ACRE. The discretionary provisions defined by FSA for 
ARC and PLC were administrative clarifications of the mandatory 
elements and FSA determined that they would not alter any environmental 
impacts resulting from implementing the mandatory programs. Therefore, 
FSA will not prepare an environmental assessment or environmental 
impact statement for this regulatory action.

Executive Order 12372

    Executive Order 12372, ``Intergovernmental Review of Federal 
Programs,'' requires consultation with State and local officials. The 
objectives of the Executive Order are to foster an intergovernmental 
partnership and a strengthened Federalism, by relying on State and 
local processes for State and local government coordination and review 
of proposed Federal Financial assistance and direct Federal 
development. For reasons specified in the final rule related notice 
regarding 7 CFR part 3015, subpart V (48 FR 29115, June 24, 1983), the 
programs and activities within this rule are excluded from the scope of 
Executive Order 12372, which requires intergovernmental consultation 
with State and local officials.

Executive Order 12988

    This rule has been reviewed under Executive Order 12988, ``Civil 
Justice Reform.'' This rule will not preempt State or local laws, 
regulations, or policies unless they represent an irreconcilable 
conflict with this rule. The rule has retroactive effect in that the 
contracts will include a retroactive period. Before any judicial action 
may be brought regarding the provisions of this rule, the 
administrative appeal provisions of 7 CFR parts 11 and 780 are to be 
exhausted.

Executive Order 13132

    This rule has been reviewed under Executive Order 13132, 
``Federalism.'' The policies contained in this rule do not have any 
substantial direct effect on States, on the relationship between the 
Federal government and the States, or on the distribution of power and 
responsibilities among the various levels of government, except as 
required by law. 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

    This rule has been reviewed in accordance with the requirements of 
Executive Order 13175, ``Consultation and Coordination with Indian 
Tribal Governments.'' Executive Order 13175 requires Federal agencies 
to consult and coordinate with tribes on a government-to-government 
basis on policies that have tribal implications, including regulations, 
legislative comments or proposed legislation, and other policy 
statements or actions that have substantial direct effects on one or 
more Indian tribes, on the relationship between the Federal Government 
and Indian tribes or on the distribution of power and responsibilities 
between the Federal Government and Indian tribes.
    FSA has assessed the impact of this rule on Indian tribes and 
determined that this rule does not, to our knowledge, have tribal 
implications that require tribal consultation under Executive Order 
13175. If a Tribe requests consultation, FSA will work with the USDA 
Office of Tribal

[[Page 57713]]

Relations to ensure meaningful consultation is provided where changes, 
additions, and modifications identified in this rule are not expressly 
mandated by the 2014 Farm Bill.

The Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA, Pub. L. 
104-4) requires Federal agencies to assess the effects of their 
regulatory actions on State, local, and Tribal governments, or the 
private sector. Agencies generally need to prepare a written statement, 
including a cost benefit analysis, for proposed and final rules with 
Federal mandates that may result in expenditures of $100 million or 
more in any 1 year for State, local, or Tribal governments, in the 
aggregate, or to the private sector. UMRA generally requires agencies 
to consider alternatives and adopt the more cost effective or least 
burdensome alternative that achieves the objectives of the rule. This 
rule contains no Federal mandates, as defined in Title II of UMRA, for 
State, local, and Tribal governments or the private sector. 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)

    This rule is a major rule under the Small Business Regulatory 
Enforcement Fairness Act of 1996, (Pub. L. 104-121, SBREFA). SBREFA 
normally requires that an agency delay the effective date of a major 
rule for 60 days from the date of publication to allow for 
Congressional review. Section 808 of SBREFA allows an agency to make a 
major regulation effective immediately if the agency finds there is 
good cause to do so. Section 1601(c)(3) of the 2014 Farm Bill provides 
that the authority in Section 808 of SBREFA be used in implementing the 
changes required by Title I of the 2014 Farm Bill, such as for the 
changes being made by this rule. Consistent with section 1601(c)(3) of 
the 2014 Farm Bill, FSA therefore finds that it would be contrary to 
the public interest to delay the effective date of this rule because it 
would delay implementation ARC and PLC as required by the 2014 Farm 
Bill. The regulation needs to be effective to provide adequate time for 
producers to update base acres and yields in preparation for enrollment 
in spring 2015. Therefore, this rule is effective when published in the 
Federal Register.

Federal Assistance Programs

    The title and number of the Federal Domestic Assistance Program 
found in the Catalog of Federal Domestic Assistance to which this rule 
applies are:
10.112--Price Loss Coverage
10.113--Agriculture Risk Coverage
10.114--Cotton Transition Assistance Program

Paperwork Reduction Act of 1995

    The regulations in this rule are exempt from the requirements of 
the Paperwork Reduction Act (44 U.S.C. Chapter 35), as specified in 
subsection 1601(c)(2)(B) of the 2014 Farm Bill, which provides that 
these regulations be promulgated and administered without regard to the 
Paperwork Reduction Act.

E-Government Act Compliance

    FSA and CCC are 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

7 CFR Part 718

    Acreage allotments, Drug traffic control, Loan programs-
agriculture, Marketing quotas, Price support programs, Reporting and 
recordkeeping requirements.

7 CFR Part 1412

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

7 CFR Part 1416

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

    For the reasons discussed above, CCC and FSA amend 7 CFR parts 718, 
1412, and 1416 as follows:

PART 718--PROVISIONS APPLICABLE TO MULTIPLE PROGRAMS

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

    Authority:  7 U.S.C. 1501-1531, 1921-2008v, 7201-7334, and 15 
U.S.C. 714b.

Subpart A--General Provisions

0
2. In Sec.  718.2, add definitions in alphabetical order for ``limited 
resource farmer or rancher'' and ``socially disadvantaged farmer or 
rancher'' to read as follows:


Sec.  718.2  Definitions.

* * * * *
    Limited resource farmer or rancher means a farmer or rancher who is 
both of the following:
    (1) A person whose direct or indirect gross farm sales do not 
exceed $176,800 (2014 program year) in each of the 2 calendar years 
that precede the most immediately preceding complete taxable year 
before the relevant program year that corresponds to the relevant 
program year (for example, for the 2014 program year, the two years 
would be 2011 and 2012), adjusted upwards in later years for any 
general inflation; and
    (2) A person whose total household income was at or below the 
national poverty level for a family of four in each of the same two 
previous years referenced in paragraph (1) of this definition. (Limited 
resource farmer or rancher status can be determined using a Web site 
available through the Limited Resource Farmer and Rancher Online Self 
Determination Tool through National Resource and Conservation Service 
at http://www.lrftool.sc.egov.usda.gov.)
* * * * *
    Socially disadvantaged farmer or rancher means a farmer or rancher 
who is a member of a socially disadvantaged group whose members have 
been subjected to racial, ethnic, or gender prejudice because of their 
identity as members of a group without regard to their individual 
qualities. Socially disadvantaged groups include the following and no 
others unless approved in writing by the Deputy Administrator:
    (1) American Indians or Alaskan Natives,
    (2) Asians or Asian-Americans,
    (3) Blacks or African-Americans,
    (4) Hispanics or Hispanic-Americans,
    (5) Native Hawaiians or other Pacific Islanders, and
    (6) Women.
* * * * *

0
3. Revise Sec.  718.8 to read as follows:


Sec.  718.8  Administrative county.

    (a) If all land on the farm is physically located in one county, 
the farm will be administratively located in that county, except as 
provided in the rest of this section.
    (b) In cases where there is no FSA office in the county in which 
the farm is physically located or FSA county offices have been 
consolidated, the farm will be administratively located in a county 
contiguous to the physical county in the same State that is most 
convenient for the farm operator and owner.
    (c) If a county contiguous to the county in which the farm is 
physically

[[Page 57714]]

located in the same State does not have an FSA county office, the farm 
will be administratively located in a contiguous county in another 
contiguous State that is convenient to the farm operator and owner. 
Requests for changes made to administrative county under this paragraph 
must be made to FSA by August 1 of each year for the change to take 
effect that calendar year.
    (d) When land on the farm is physically located in more than one 
county, the farm will be administered in one county office responsible 
for administration of programs for one or more of the physical counties 
involved in the farm's constitution as determined by FSA. Paragraph (b) 
or (c) of this section apply if changes occur to that administrative 
county.
    (e) The operator and owner of a farm administered in any county can 
request a change of administrative county to another county in the same 
State by August 1 for the change to take effect that calendar year. 
Requests for change in administrative county will be reviewed and 
approved by COC if all the following can be determined to apply:
    (1) The requested change does not impact the constitution of a 
farm; and
    (2) The requested change will not result in increased program 
eligibility or additional benefits for the farm's producers that would 
not be earned absent the change in administrative county being made.
    (f) The change is not to circumvent any of the provisions of other 
program regulations to which this part applies.
    (g) The State committee will submit all requests for exceptions 
from regulations specified in this section to the Deputy Administrator.

0
4. Revise Sec.  718.204 to read as follows:


Sec.  718.204  Reconstitution of base acres.

    (a) Farms will be reconstituted in accordance with this subpart 
when it is determined that the land areas are not properly constituted 
and, to the extent practicable as determined by county committee, the 
reconstitution will be based on the facts and conditions existing at 
the time the change requiring the reconstitution occurred.
    (b) Reconstitutions will be effective for the calendar year if 
initiated by August 1 of that year. Any reconstitution initiated after 
August 1 will not be effective for that year; it will be effective for 
the subsequent year.
    (c) The Deputy Administrator may approve an exception to permit a 
reconstitution initiated after August 1 to be effective for the same 
year, if FSA determines that the failure is due to administrative 
problems as determined by FSA at the local or national level. Producers 
have no right to seek an exception under this paragraph. When such 
situations exist, FSA will establish procedures under which 
reconstitutions will be accepted.

PART 1412--AGRICULTURE RISK COVERAGE, PRICE LOSS COVERAGE, AND 
COTTON TRANSITION ASSISTANCE PROGRAMS

    Authority: 7 U.S.C. 1508b, 7911-7912, 7916, 8702, 8711-8712, 
8751-8752, and 15 U.S.C. 714b and 714c.

Subpart A--General Provisions

0
5. Amend Sec.  1412.3 as follows:
0
a. Add definitions in alphabetical order for ``2014 farm structure'', 
``actual average county yield'', ``actual crop revenue'', ``ARC 
guarantee'', ``ARC-IC farm'', ``average historical county yield'', 
``benchmark revenue for ARC-CO'', ``benchmark revenue for ARC-IC'', 
``current owner'', ``current producer'', ``effective price'', ``farm 
structure'', ``marketing year'', ``market year average (MYA) price'', 
``national average loan rate'', and ``transitional yield''; and
0
b. In the definition of ``base acres'', remove the term ``P&CP'' and 
add the word ``planted'' in its place.
    The additions read as follows:


Sec.  1412.3  Definitions.

* * * * *
    2014 farm structure means the farm as it was last constituted 
effective as of September 30, 2014.
    Actual average county yield is calculated as the crop year 
production of a covered commodity in the county divided by the 
commodity's total planted acres for a crop year in the county, as 
determined by FSA. Separate irrigated and non-irrigated yields will be 
established in a county having a sufficient number of farms with P&CP 
acreage history of a covered commodity in 2009 through 2012, as 
determined by FSA. These separate yields will only be established where 
at least an average of 25 percent of a covered commodity's P&CP acreage 
was irrigated in 2009 through 2012 and at least an average of 25 
percent of the same covered commodity's P&CP acreage in that county was 
non-irrigated in 2009 through 2012.
    Actual crop revenue is calculated as follows for:
    (1) ARC-CO, for a crop year of a covered commodity: The actual 
average county yield per planted acre of the covered commodity times 
the higher of either the market year average (MYA) price of the covered 
commodity or the national average loan rate for the covered commodity.
    (2) ARC-IC, for a producer on a farm for a crop year, which is 
based on the producer's enrolled share of planted acres of all covered 
commodities on all farms for which ARC-IC has been elected and in which 
the producer has an interest for which the producer enrolled: the sum 
of the results of the following calculation for each covered commodity 
on the farm:
    (i) The total production of the covered commodity for all farms in 
the State in which the producer has an interest; times
    (ii) The higher of either the MYA price or national loan rate for 
the covered commodity; divided by
    (iii) The producer's share of the planted acres of the covered 
commodity in the State.
* * * * *
    ARC guarantee is calculated for a crop year for a covered 
commodity, and is equal to 86 percent of the benchmark revenue for ARC-
CO and 86 percent of the benchmark revenue for ARC-IC, as defined in 
this part.
* * * * *
    ARC-IC farm is calculated as the sum of the producer's interests in 
all of the producer's farms having an ARC-IC election and enrollment in 
the State.
    Average historical county yield means the 5-year Olympic average of 
actual average county yields for the most recent 5 years (substituting 
70 percent of the county transitional yield as defined in this part in 
each year where the actual average county yield is less than 70 percent 
of the county transitional yield). Separate irrigated and non-irrigated 
yields will be established in a county having a sufficient number of 
farms with P&CP acreage history of a covered commodity in 2009 through 
2012, as determined by FSA. These separate yields will only be 
established where at least an average of 25 percent of a covered 
commodity's P&CP acreage was irrigated in 2009 through 2012 and at 
least an average of 25 percent of the same covered commodity's P&CP 
acreage in that county was non-irrigated in 2009 through 2012.
* * * * *
    Benchmark revenue for ARC-CO is calculated as the product obtained 
by multiplying the average historical county yield times the MYA price 
for the most recent 5 crop years, excluding each of the crop years with 
the highest and lowest prices and substituting the reference price in 
each year where the MYA price is less than the reference price.

[[Page 57715]]

    Benchmark revenue for ARC-IC means a producer's share of all 
covered commodities planted on all farms in the State for which 
individual ARC has been elected and enrolled and in which the producer 
has an interest. FSA will calculate the benchmark revenue for ARC-IC 
using the following three steps, based on the producer's planted 
commodities:
    (1) For each covered commodity for each of the most recent 5 crop 
years:
    (i) Yield per planted acre (substituting 70 percent of the county 
transitional yield in each year where the yield per planted acre is 
less than 70 percent of the county transitional yield); times
    (ii) The MYA price for the most recent 5 crop years, excluding each 
of the crop years with the highest and lowest prices and substituting 
the reference price in each year where the MYA price is less than the 
reference price.
    (2) For each covered commodity, the average of the revenues 
determined under paragraph (1) of this definition for the most recent 5 
crop years, excluding each of the crop years with the highest and 
lowest revenues; and
    (3) For each of the 2014 through 2018 crop years, the benchmark 
revenue for the ARC-IC farm is the sum of the amounts determined under 
paragraph (2) of this definition for all covered commodities on such 
farms, adjusted to reflect the ratio between the total number of P&CP 
acres and eligible subsequently planted crop acreage on such farms to a 
covered commodity and the total P&CP acres and eligible subsequently 
planted crop acreage of all covered commodities planted on such farms. 
If a producer has an interest in multiple farms that have enrolled in 
ARC-IC, the ARC-IC benchmark revenue for that producer will be a 
weighted average of the benchmark revenue for those multiple farms.
* * * * *
    Current owner means the person or legal entity meeting the 
definition of owner in 7 CFR part 718 on the day that person or legal 
entity is signing any form or performing any action required under this 
part. For example, if a signature of a ``current owner'' is required 
under this part, the person or legal entity must be an owner on the day 
the person or legal entity is signing the form or performing the action 
required under this part.
    Current producer means the person or legal entity meeting the 
definition of producer in 7 CFR part 718 on the day that person or 
legal entity is signing any form or performing any action required 
under this part. For example, if a signature of a ``current producer'' 
is required under this part, the person or legal entity must be a 
producer on the day the person or legal entity is signing the form or 
performing the action required under this part.
* * * * *
    Effective price is, the higher of the--
    (1) National average market price received by producers during the 
12-month marketing year for the covered commodity (also known as the 
MYA price), as determined by FSA; or
    (2) National average loan rate as defined in this part for the 
covered commodity in effect for the crop year, which is the same as the 
loan rate for a marketing assistance loan for the commodity for that 
crop year.
* * * * *
    Farm structure means the constitution of the farm. References to 
``farm structure'' can be by date or crop year. When references to farm 
structure are by crop year, that means the farm as was last constituted 
as specified in 7 CFR part 718 subpart C in that crop year.
* * * * *
    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 through May 31;
    (2) Canola, flax and rapeseed, lentils, and dry edible peas: July 1 
through June 30;
    (3) Peanuts and rice: August 1 through July 31; and
    (4) Corn, grain sorghum, soybeans, sunflowers, safflower, mustard, 
crambe, sesame, and chickpeas: September 1 through August 31.
    Market year average (MYA) price means the national average price 
received by producers during the 12-month marketing year (as defined in 
this part), as determined by FSA for the relevant crop of the covered 
commodity.
* * * * *
    National average loan rate means the loan rate established for a 
crop year of the covered commodity as specified in 7 CFR part 1421.
* * * * *
    Transitional yield means the yield determined according to section 
502(b) of the Federal Crop Insurance Act (7 U.S.C. 1502(b)).
* * * * *

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

0
6. Add Sec.  1412.25 to read as follows:


Sec.  1412.25  Reallocation of base acres on a farm and updating of 
records.

    (a) Any or all of the current owners of a farm with base acres of 
covered commodities as of September 30, 2013, as adjusted, will have a 
one-time opportunity in a reallocation period as announced by FSA to:
    (1) Reallocate the farm's base acres of covered commodities (upland 
cotton is not a covered commodity) based on P&CP and subsequently 
planted crop acreage as specified in this section; or
    (2) Retain the farm's base acres as of September 30, 2013.
    (b) Under no circumstances will reallocation of base acres of 
covered commodities on a farm as specified in paragraph (a) of this 
section result in any increase in total base acres on a farm. 
Additionally, if any current owner submits a written conflicting 
reallocation request or expresses written disagreement with a 
reallocation filed in according to paragraph (a), no reallocations will 
be approved for the farm unless all the current owners of the farm 
provide CCC with written evidence of the dispute resolution during the 
reallocation period.
    (c) FSA will provide the farm operator and owners of record with a 
summary of all covered commodities P&CP acres and subsequently planted 
crop acreage for the 2009 through 2012 crop years (as reported to FSA 
on acreage reports filed with FSA in each of those years). Acreage not 
reported to FSA by producers will not be included in the summary. The 
summary will reflect the 2014 farm structure.
    (d) Current owners will be provided a one-time opportunity to 
update the records identified in paragraph (c) of this section during 
the reallocation period specified in paragraph (a) of this section, 
provided that there are crop insurance records (or other verifiable 
documentation available to support those requested updates). In the 
event that an update to a farm's P&CP acres of a covered commodity for 
2009 through 2012 causes any payment under another FSA or CCC program 
to become unearned, the overpayment must be refunded to FSA or CCC in 
accordance with the rules for that program and the FSA or CCC 
regulations governing overpayment (7 CFR parts 718 and 1403).
    (e) After an update as specified in paragraph (d) of this section, 
the owner may redistribute the farm's base acres during the 
reallocation period, based on a proration of each covered commodity's 
P&CP acres or subsequently planted crop acreage in crop years 2009 
through 2012 to the total P&CP acres or subsequently

[[Page 57716]]

planted crop acreage of all covered commodities during that time.
    (f) Upland cotton base acres that were in existence as of September 
30, 2013, are considered generic base acres for the purposes of ARC and 
PLC. Generic base acres cannot be reallocated to a covered commodity, 
but will be eligible for ARC and PLC payments as specified in in this 
part.
    (g) The summary of records specified in paragraph (c) of this 
section is intended to assist current owners of farms with the one-time 
opportunity for base acre reallocation as provided in this section. Any 
current owner of a farm may also at any time visit the FSA county 
office and request to obtain a copy of the summary referenced in 
paragraph (c) of this section. Current owners can reallocate base acres 
at any time during the reallocation period without receiving or 
requesting the summary records, and, therefore, failure to receive a 
summary record from FSA is not grounds for appeal or extension of the 
reallocation period.
    (h) The option to retain or reallocate base acres is an ``all or 
nothing'' decision for the farm. Partial retention of base acres or 
partial reallocation of base acres is not permissible. A decision by 
any current owner to reallocate base acres on a farm in accordance with 
this section is final and binding if made according to this section 
during the reallocation period unless that reallocation is withdrawn in 
writing by that current owner or another current owner. If another 
current owner subsequently files a different reallocation request in 
whatever time remains in the stated reallocation period or if there are 
conflicting reallocation requests of current owners in the reallocation 
period, FSA will deem no reallocation to have been performed unless the 
conflict is resolved via written agreement between the current owners 
who filed the conflicting requests. In the case of submitting evidence 
of resolution, the written agreement must be filed with FSA in the 
reallocation period. Any and all updates and reallocation requests 
mentioned in this section are subject to review and approval or 
disapproval by FSA for CCC.

0
7. Add subpart C to read as follows:
Subpart C--Establishment of Price Loss Coverage Yields and Submitting 
Production
Sec.
1412.31 PLC yields for covered commodities.
1412.32 Updating PLC yield.
1412.33 PLC yield for additional oilseeds.
1412.34 Submitting production evidence.
1412.35 Incorrect or false production evidence.


Sec.  1412.31  PLC yields for covered commodities.

    (a) The PLC yield for covered commodities on the farm is equal to 
the counter-cyclical payment yield established for each covered 
commodity on the farm that was effective September 30, 2013, unless the 
PLC yield is updated as specified in Sec.  1421.32. If the Secretary 
designates an additional oilseed or pulse crop as a covered commodity 
that does not have a counter-cyclical payment yield, the PLC yield for 
that commodity will be established as specified in Sec.  1412.33 or 
Sec.  1412.34, whichever is applicable.
    (b) If a PLC yield is not already established for a covered 
commodity on a farm for which base acres are allocated through the base 
acres reallocation process or for which a covered commodity is planted 
on generic base acres, a yield will be established for the covered 
commodity on the farm using the yield on similarly situated farms, as 
determined by FSA. The yield on similarly situated farms will then be 
used as the 2013 county average counter-cyclical yield for the covered 
commodity.


Sec.  1412.32  Updating PLC yield.

    (a) For any covered commodity on the farm that has base acres 
(except generic base acres), as adjusted, in excess of zero acres, a 
current owner of the farm has a one-time opportunity in a specified 
period, as announced by FSA to update PLC yields on a covered 
commodity-by-covered commodity basis equal to 90 percent of each 
covered commodity's 2008 through 2012 average yield per planted acre, 
excluding from the average any year when no acreage was planted to the 
covered commodity. If the yield per planted acre in any of the years 
2008 through 2012 is less than 75 percent of the average of the county 
yield, then 75 percent of the average of the 2008 through 2012 county 
yield will be substituted for that year.
    (b) The current owner of the farm may retain the counter-cyclical 
yield as the PLC yield or update the PLC yield, on a covered commodity-
by-covered commodity basis.
    (c) PLC yields are exclusively used for PLC. However, any owner of 
a farm can update the PLC yields, regardless of program election or 
decision on enrollment or participation.
    (d) A decision by any current owner of a farm to update any PLC 
yield as specified in this section is final and binding unless that 
decision to update the yield is withdrawn by that current owner or a 
different yield update is made by that current owner or another current 
owner. If that current owner or another current owner requests a 
different PLC yield update for the covered commodity during the yield 
update period specified in paragraph (a) of this section that update 
will become final.
    (e) All PLC yield updates are subject to review and approval by FSA 
as specified in Sec.  1412.35. FSA's decision to issue payments based 
on the PLC yield updated by an owner is subject to verification and 
spot check by FSA at any time.
    (f) Yield updates in this section will be permitted using the 
current owner's certification of yield. The certification is subject to 
spot check or verification by FSA at any time. If selected for spot 
check or verification, the owner must submit evidence specified in 
Sec.  1412.34 to support the certified yield.


Sec.  1412.33  PLC yield for additional oilseeds.

    (a) The PLC yield for the farm for additional oilseeds designated 
by the Secretary will be determined by multiplying the weighted average 
yield per planted acre for the crop on the farm, as determined in 
paragraph (b) of this section, times the ratio resulting from:
    (1) The national average yield for the crop, as determined by FSA, 
divided by
    (2) The national average yield for the crop for the 1998 through 
2001 crop years, as determined by FSA.
    (b)(1) The yield per planted acre for such designated oilseed on 
the farm is calculated as follows:
    (i) The sum of the production of the crop for the 1998 through 2001 
crop years, as determined in 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.

[[Page 57717]]

    (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.
    (c) The establishment of PLC yield for an additional oilseed in 
this section will be permitted using a producer certification of yield. 
The certification is subject to spot check or verification by FSA at 
any time. If selected for spot check or verification, the producer must 
submit evidence as specified in in Sec.  1412.34 to support the 
certified yield.


Sec.  1412.34  Submitting production evidence.

    (a) When required by FSA as specified in this part, documentary 
evidence supporting any certification of yield or production must be 
provided to the county committee of the county where the farm is 
administratively located.
    (b) Documentary evidence acceptable to FSA includes, but is not 
limited to:
    (1) Production approved by the county committee for some other FSA 
program purpose;
    (2) Commercial receipts;
    (3) Settlement sheets;
    (4) Warehouse ledger sheets;
    (5) Elevator receipts or load summaries, supported by other 
evidence showing disposition, such as sales documents;
    (6) Evidence from harvested or appraised acreage, approved for FCIC 
or multi-peril crop insurance; or
    (7) Other production evidence determined acceptable by the Deputy 
Administrator.
    (c) Production evidence specified in paragraph (b) of this section 
must show:
    (1) The producer's name,
    (2) The commodity,
    (3) The buyer or name of storage facility,
    (4) The date of transaction or delivery, and
    (5) The quantity.
    (d) FSA may verify the production evidence submitted with records 
on file at the warehouse, Risk Management Agency, or other entity that 
received or may have received the reported production.


Sec.  1412.35  Incorrect or false production evidence.

    (a) If a certification of production and yield or production 
evidence submitted in support of that certification is false or 
incorrect, as determined by the county committee, the county committee 
will determine whether the owner, operator, or producer submitting the 
certification or production evidence for a farm acted in good faith or 
took action to defeat the purpose of ARC or PLC.
    (b) If the county committee determines the owner or producer who 
submitted the certification or production evidence referenced in 
paragraph (a) of this section acted in good faith and did not take 
action to defeat the purpose of ARC or PLC, the county committee will, 
as applicable:
    (1) Correct the PLC yield for the applicable covered commodity to 
equal the yield that would have been calculated as specified in Sec.  
1412.32 based on accurate production evidence; and
    (2) Recalculate any payments based on the correct yield and require 
refunds of any payments that were issued as a result of the incorrect 
yield. Unearned payments must be refunded together with interest from 
the date of disbursement and are due from any producers who received 
payments that would not have issued absent the error or incorrect 
yield.
    (c) If the county committee determines the owner, operator, or 
producer who submitted the false or incorrect evidence did not act in 
good faith or took any action to defeat or undermine the purpose of ARC 
or PLC, the county committee will require a full refund of any 
payments, with interest, that were issued to any persons based on that 
false or erroneous certification or production evidence and the yield 
update request is invalid.

Subpart D--ARC and PLC Contract Terms and Enrollment Provisions for 
Covered Commodities

0
8. In subpart D, add Sec. Sec.  1412.41, 1412.42, and 1412.43 to read 
as follows:


Sec.  1412.41  ARC or PLC program contract.

    (a) The following provisions apply to ARC and PLC program 
contracts:
    (1) Eligible producers (as specified in Sec.  1412.42) of covered 
commodities with base acres may enroll in ARC and PLC contracts during 
the enrollment period announced by FSA.
    (i) For program year 2014, the enrollment period will end June 1, 
2015.
    (ii) The 2014 contract period ends September 30, 2014. Accordingly, 
the enrollment for 2014 is the only program year a retroactive contract 
can be approved.
    (iii) If a 2014 farm did not have a valid election made by 
producers in accordance with subpart G, no producer on that farm is 
eligible for any 2014 ARC or PLC payment for that farm. This is not an 
adverse decision for any enrolled producer on that farm; rather, the 
farm's producers are simply not eligible for payments on the enrolled 
farm because the farm does not have a valid election.
    (2) For program years 2015 through 2018, the enrollment period will 
end on June 1 of each such fiscal year. This means that the enrollment 
period for both 2014 and 2015 will end on June 1, 2015.
    (i) Eligible producers must execute and submit an ARC or PLC 
program contract not later than June 1, 2015, for 2014 and 2015 fiscal 
year contracts and not later than June 1 of the applicable year for 
2016 through 2018 fiscal year contracts.
    (ii) Except as may otherwise be provided for the 2014 crop year as 
stated in this section, enrollment is not allowed after September 30 of 
the fiscal year in which the ARC or PLC payments are requested. Except 
as specifically stated for the 2014 crop year, FSA will not process 
offers of enrollment for a contract period after the contract period 
has ended. This is not a compliance provision but a rule of general 
applicability and will apply to every offer to contract in each 
contract year.
    (3) Except as discussed in this section for PLC and ARC-CO 
enrollments, contracts will not be approved unless all producers 
sharing in contract acreage with more than a zero share have submitted 
all applicable signatures on the contract and documentation necessary 
for FSA 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 are deemed incomplete and will not be 
considered submitted to CCC for any purpose and will not be acted on or 
approved. For ARC-IC contracts there are no exceptions to this 
provision. Additionally, contracts enrolled by a

[[Page 57718]]

producer by the date specified in paragraph (a)(2)(i) of this section 
that were not signed by other producers according to this section will 
be deemed withdrawn and will not be approved. An exception to this 
applies to PLC and ARC-CO offers of enrollment. In those instances, at 
the discretion of the Deputy Administrator and where no dispute of 
shares or other disagreement between producers is evident or suspected, 
PLC and ARC-CO offers of enrollment can be approved to permit payment 
to only those eligible producers who did enroll and without regard to 
shares that do not have signatures. This exception will be made only 
if, in the sole judgment and discretion of FSA, FSA is satisfied that 
those producers who did sign in accordance with this section ensure 
compliance with all contract provisions and requirements of this part. 
Producers have no right to payment on any farm that is not enrolled in 
ARC or PLC and they are not entitled to a decision to authorize the 
exception for PLC and ARC-CO enrollments as discussed above, as that is 
discretionary. CCC and FSA are not responsible for ensuring that 
producers annually enroll in ARC or PLC. Producers on a farm are solely 
responsible for ensuring that enrollment occurs.
    (4) Eligible producers who choose to enter into a contract with FSA 
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 by 
June 1 of the applicable contract year provided all producer 
signatories to the contract, including FSA, agree to the withdrawal in 
writing.
    (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. 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 for the current and assume all 
obligations under the contract.
    (e) In the event a 2015 or subsequent crop year farm reconstitution 
is completed on a properly enrolled farm or farms in accordance with 
part 718 of this title, FSA will issue notices to the 2015 and 
subsequent crop year farm 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 ARC or PLC program contract within the later of 30 days of the 
notice or September 30 of the fiscal year 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.


Sec.  1412.42  Eligible producers.

    (a) Producers eligible to enter into a contract are:
    (1) An owner of a farm who has an ownership share of a crop and who 
assumes all or a part of the risk of producing a crop that is 
commensurate with that claimed ownership share of the crop; or
    (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; or
    (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; or
    (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, failing which the farm is not enrolled; 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, 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 law;
    (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 and owner otherwise meet 
all the requirements for payment.


Sec.  1412.43  Reconstitutions.

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


Sec.  1412.45  [Amended]

0
9. In Sec.  1412.45, remove the term ``P&CP'' each time it appears and 
add the word ``planted'' in its place.


Sec.  1412.46  [Amended]

0
10. In Sec.  1412.46, paragraph (c)(2), remove the words ``percent of a 
farm'' and add the words ``percent of the base acres of a farm'' in 
their place.

0
11. Add Sec.  1412.50 to subpart D to read as follows:


Sec.  1412.50  Transfer of land and succession-in-interest.

    (a) Land subject to an election in subpart G will continue to be 
subject to the election even if there is a transfer of land or change 
in interest of any producer or owners 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 election option, such new 
owner or operator or producer, upon the approval of FSA, may enroll and 
participate under a new contract with FSA with respect to such 
transferred land in accordance with Sec.  1412.41.
    (b) A succession in interest to an ARC or PLC 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 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 ARC program contract is not 
permitted if FSA determines that the change:
    (1) Is not for all the time remaining under the ARC or PLC program 
contract;

[[Page 57719]]

    (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) If a producer who is entitled to receive ARC or PLC 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.
    (e) 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:
    (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.
    (f) In any case in which either an ARC or PLC 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).

Subpart E--Financial Considerations Including Sharing Payments

0
12. In Sec.  1412.51, add paragraph (e) to read as follows:


Sec.  1412.51  Limitation of payments.

* * * * *
    (e) Notwithstanding any other provision of this part, a producer on 
a farm is not eligible to receive ARC and PLC payments if the sum of 
the base acres including any generic base acres on the farm is 10 acres 
or less. The 10-acre limitation of this subsection will not apply to a 
socially disadvantaged farmer or rancher or a limited resource farmer 
or rancher as specified in this part.

0
13. Add Sec. Sec.  1412.52 and 1412.53 to read as follows:


Sec.  1412.52  PLC payment provisions.

    (a) Provided all provisions of this part including but not limited 
to election have been satisfied for each of the 2014 through 2018 
contract years, a PLC payment will be made to eligible participants on 
a farm enrolled in PLC with respect to covered commodities for which a 
PLC yield and base acres are established:
    (1) When the effective price for a covered commodity in a crop year 
is less than the reference price for the PLC enrolled covered commodity 
for that crop year as specified in this part; and
    (2) As soon as practical, as determined by the Deputy 
Administrator, after October 1 following the end of the 12-month 
marketing year for the covered commodity as applicable.
    (b) The effective price for a covered commodity is equal to the 
higher of the:
    (1) MYA price received by producers during the 12-month marketing 
year for the crop year of the covered commodity, as determined by FSA, 
or
    (2) National loan rate for a marketing assistance loan for the 
covered commodity for such crop year.
    (c) The payment rate used to calculate PLC payments with respect to 
covered commodity for which PLC yields and base acres are attributed to 
the covered commodity on a farm enrolled in a PLC contract is the 
reference price of the covered commodity minus the effective price of 
the covered commodity for a crop year, as determined in accordance with 
paragraph (b) of this section.
    (d) For PLC contracts, when PLC payments are triggered in 
accordance with paragraph (a) of this section, subject to the 
limitation in Sec.  1412.51 and in part 1400 of this chapter, the PLC 
payment to be paid to producers on a farm enrolled in a contract with 
respect to a covered commodity for which a PLC yield and base acres are 
attributed is equal to the product of:
    (1) The payment rate determined in accordance with paragraph (c) of 
this section, multiplied by
    (2) The relevant payment acres of the covered commodity, as 
applicable, minus any payment acre reduction in accordance with Sec.  
1412.46, multiplied by
    (3) The PLC payment yield for the covered commodity on the farm 
enrolled in a PLC contract as determined in accordance with Sec.  
1412.31, minus
    (4) Any reduction calculated in accordance with subpart F of this 
part.
    (e) If a producer declines to accept, or is determined to be 
ineligible for all or any part of the producer's share of the PLC 
payment computed for the farm in accordance with the provisions of this 
section, the:
    (1) Payment or portions thereof will not become available for any 
other producer and
    (2) Producer is required to refund to CCC any amounts representing 
payments that exceed the payments determined by FSA to have been earned 
under the program authorized by this part. Part 1403 of this chapter is 
applicable to all unearned payments.
    (f) The payment of any amount due any producer on a farm enrolled 
in a PLC 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 or any other applicable part.
    (g) 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 farm if the:
    (1) Participant is in full compliance with the contract and the 
requirements in this part or any other applicable part;
    (2) Payment of such amount does not adversely affect or defeat the 
purpose of the program, as determined by the Deputy Administrator, or 
designee; and
    (3) Payment is approved by the Deputy Administrator, or designee.
    (h) Temperate japonica rice or medium and short grain rice grown:
    (1) In California will receive the effective price and guarantee 
for medium and short grain based only on the prices that temperate 
japonica or medium and short grain rice receives in California.
    (2) Outside of California will receive the effective price and 
guarantee for medium and short grain rice based only on the prices that 
temperate japonica or medium and short grain rice receives outside of 
California.


Sec.  1412.53  ARC payment provisions.

    (a) Provided all provisions of this part including but not limited 
to ARC-CO election and enrollment have been satisfied for each of the 
2014 through 2018 contract years, CCC will issue, as applicable and 
consistent with the election and enrollment:
    (1) An ARC-CO payment beginning October 1, or as soon as 
practicable thereafter, after the end of the applicable marketing year 
for the covered commodity to the producers on a farm for a covered 
commodity in each crop year if the farm was enrolled in ARC-CO and the 
ARC-CO actual crop revenue was less than the ARC-CO guarantee.
    (2) Payment is equal to the result of multiplying the payment acres 
for the covered commodity times the difference between the actual crop 
revenue and the ARC-CO guarantee, not to exceed 10 percent of the ARC-
CO benchmark revenue.
    (b) Provided all provisions of this part including but not limited 
to ARC-IC election and enrollment have been satisfied for each of the 
2014 through 2018 contract years, CCC will issue, as applicable and 
consistent with the election and enrollment:
    (1) An ARC-IC payment beginning October 1, or as soon as 
practicable thereafter, after the end of the applicable marketing year 
for the farm if the farm

[[Page 57720]]

was enrolled in ARC-IC and the ARC-IC actual crop revenue for that farm 
is less than the ARC-IC guarantee.
    (2) Payment is equal to the result of multiplying the payment acres 
for the covered commodities times the difference between actual crop 
revenue and the ARC-IC guarantee, not to exceed 10 percent of benchmark 
revenue for ARC-IC.
    (c) If a producer has an interest in multiple farms that have 
enrolled in ARC-IC, the ARC-IC benchmark revenue for that producer used 
in the payment calculation will be a weighted average of the benchmark 
revenue for those multiple farms.
    (d) In a county having a sufficient number of farms with P&CP 
acreage history of a covered commodity in 2009 through 2012, as 
determined by FSA, where at least an average of 25 percent of a covered 
commodity's P&CP acreage was irrigated in 2009 through 2012 and at 
least an average of 25 percent of the same covered commodity's P&CP 
acreage in that county was non-irrigated in 2009 through 2012, a 
separate irrigated and non-irrigated benchmark revenue, guarantee, and 
actual revenue will be maintained by FSA for the affected county. For 
farms in these counties with covered commodities enrolled in ARC-CO and 
ARC-IC, the average 2009 through 2012 reported acreage of each covered 
commodity on the farm with irrigated and non-irrigated status will be 
used to calculate a percentage of each applicable covered commodity 
that will be applied against the irrigated and non-irrigated benchmark 
revenue, guarantee, and actual revenue as determined by FSA.
    (e) FSA will determine the irrigated and non-irrigated counties and 
crops prior to the 2014 enrollment period and that determination will 
be effective through the 2018 program year, unless there is a 
substantial change in the irrigated and non-irrigated practices in the 
county, as determined by the FSA.
    (f) The effective price and guarantee for temperate japonica rice 
will be based on the price that all medium and short grain (including 
glutinous) rice receives in California. The effective price and 
guarantee for medium grain rice outside California will be based on the 
price that all medium and short grain rice receives outside California.


Sec.  1412.54  [Amended]

0
14. In Sec.  1412.54(f) introductory text, remove the term ``P&CP'' 
each time it appears and add the word ``planted'' in its place.

0
15. Amend Sec.  1412.66 by adding paragraph (c) to read as follows:


Sec.  1412.66  Acreage and production reports, prevented planting, and 
notices of loss.

* * * * *
    (c) As a condition of producer payment eligibility for all ARC-IC 
payments under this part, all producers of all covered commodities on 
enrolled ARC-IC elected farms must accurately submit a report of 
production by the acreage reporting date for the crop in the year 
immediately following the crop year of the reported crop acreage for 
all the covered commodities elected and enrolled in ARC-IC. The report 
is due for each covered commodity for which an acreage report greater 
than zero planted acres was filed for the farm according to paragraph 
(a) of this section. The report of production for all of such covered 
commodity or covered commodities can be submitted by any of the 
producers of the covered commodity or covered commodities on the farm, 
the farm operator, or an owner on the farm. The absence of the required 
production report of any covered commodity being filed on an enrolled 
ARC-IC elected farm will cause all of the producers who share in any of 
the covered commodities on that farm to be ineligible for payment on 
that farm and on any other ARC-IC elected and enrolled farm in the 
State for the crop year for which the production report was not filed 
or is missing. At the discretion of CCC, 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.

0
16. Add subpart G to read as follows:
Subpart G--ARC and PLC Election
Sec.
1412.71 Election of ARC or PLC.
1412.72 Election period.
1412.73 Reconstitutions of farms and election.
1412.74 Failure to make election.


Sec.  1412.71  Election of ARC or PLC.

    (a) All of the current producers on a farm must make a one-time 
election that is both:
    (1) Unanimous, and
    (2) Irrevocable.
    (b) The election by current producers is to obtain--
    (1) Either PLC or ARC-CO on a covered commodity-by-covered-
commodity basis on the farm; or
    (2) ARC-IC for all covered commodities on the farm.
    (c) The election will be based on the 2014 farm structure 
(including any reconstitutions of farms that were initiated by August 
1, 2014).
    (d) Valid elections specified in paragraphs (a) and (b) of this 
section by current producers will apply to the 2014 farm structure and 
2014 producers on the farm. The valid election will also apply to any 
subsequent year parent to the farm reconstitution as well as farms 
resulting from the parent farm as specified in Sec.  1412.73. Neither 
the requesting of a farm reconstitution nor the reconstitution of any 
farm will impact either the requirement that all current producers on a 
farm must make the unanimous irrevocable election in the defined 
election period or the valid election that was previously made by those 
current producers.
    (e) FSA will process elections from current producers on a farm 
based on the election as submitted. For example, if the current 
producers of a farm attest that they are all or the only current 
producers on the farm and FSA later learns that there was another 
current producer at the time of election who did not agree to the 
election, the election is invalid. If at any time FSA determines that 
an election fails to satisfy the requirements of this subpart because 
it did not include the unanimous agreement of all current producers on 
the farm at the time of election, the election will immediately be 
invalid. This is not a compliance provision. Only valid elections by 
all current producers will be recognized and used by CCC. All ARC and 
PLC payments that were issued to any producers on a farm based on an 
election later determined by CCC to be invalid, for whatever reason, 
regardless of whether those producers who were issued unearned payments 
personally made or participated in the invalid election, must be 
refunded with interest.
    (f) Election is separate from enrollment; producers on farms that

[[Page 57721]]

have validly completed an election by the current producers in the 
prescribed election period must still annually enroll as specified in 
subpart D for PLC and ARC payments, as applicable.


Sec.  1412.72  Election period.

    (a) The election period will be conducted in a defined period as 
announced by FSA. During the election period, all current producers on 
a farm must unanimously make the irrevocable election as described in 
Sec.  1412.71 to preserve the payment eligibility of all producers on 
the farm for 2014 and determine whether the default election (PLC) or 
elected option (either a combination of ARC-CO and PLC or ARC-IC) will 
apply to the farm.
    (b) If an election is submitted by all current producers on a farm 
as specified in Sec.  1412.71 and paragraph (a) of this section, that 
election will be recognized as valid for the farm in all 2014 through 
2018 crop years unless any of the following occur:
    (1) The election is rescinded or terminated by any current producer 
on the farm in accordance with paragraph (c) of this section during the 
election period;
    (2) The valid election is modified and replaced by another valid 
election by all current producers during the election period;
    (3) A subsequent valid election by all current producers is made 
with FSA during the election period; or
    (4) FSA determines the election at the time it was made was invalid 
for any reason.
    (c) At any time during the election period, a current producer can 
rescind or terminate an election by providing written notice to FSA 
during the election period. The written notice to rescind or terminate 
must be physically received by FSA for CCC during the election period 
in order to be recognized. Immediately following receipt of such notice 
to rescind or terminate, the farm will be viewed as not having any 
effective valid election (in other words, no valid election will be 
determined to exist--even if there was another previous election in 
effect before the election that is rescinded, or terminated as 
specified in with this paragraph).
    (d) FSA is under no obligation to notify producers, owners, current 
producers, or current owners on a farm that an election has been 
rescinded or terminated. Current producers of a farm are solely 
responsible for filing a valid election during the election period or 
in whatever time remains in an election period following the rescission 
or termination of an election.
    (e) FSA is under no obligation to notify current producers, current 
owners, producers, or owners or new producers or owners of whether or 
not a valid election exists or is in place or whether any current 
producer has rescinded or terminated an election. However, FSA will 
respond to inquiries regarding the status of election of a farm by any 
current producer or current owner on a farm including a producer or 
owner who gains a producer or owner interest on the farm during the 
election period.
    (f) The election period and final day in that election period in 
which current producers can unanimously and irrevocably elect are not a 
compliance requirement or provision. The requirement of an election is 
mandated in the 2014 Farm Bill and as such is not subject to any of the 
equitable relief provisions of 7 CFR part 718, subpart D. Further, 
because the requirement of a unanimous irrevocable election and 
ramifications for not having a valid election are specified in the 2014 
Farm Bill, FSA will not consider any equitable relief. There are no 
late-file provisions for election.


1412.73  Reconstitutions of farms and election.

    (a) If a new producer or new owner gains an interest in a farm 
after the filing of a valid election on that farm during the election 
period, that new producer or new owner, whether or not known to FSA or 
the other producers or owners on the farm, will be subject to any 
previously submitted valid election under Sec. Sec.  1412.71 and 
1412.72 unless that new producer or new owner modifies, rescinds, or 
terminates the election as a producer or owner as specified in Sec.  
1412.72(c) during the remaining time in the election period.
    (b) Any reconstitution request initiated after August 1, 2014, will 
not be made until after the end of the election period specified in 
Sec.  1412.72. Following the close of the election period in Sec.  
1412.72, a valid election on any farm cannot be changed by any 
reconstitution. This means that valid elected farms can only be 
combined with farms having an identical election for each and every 
covered commodity on the farm regardless of whether there are any base 
acres for any and all covered commodities on the farm. Reconstitutions 
will not be permitted to alter a valid election or the default election 
that may apply to a farm.


Sec.  1412.74  Failure to make election.

    (a) If all current producers on a farm do not make a unanimous 
election during the period specified in Sec.  1412.72, that farm will 
not have a valid election and any producer on the farm is not eligible 
for 2014 ARC or PLC enrollment or payments.
    (b) If a valid election is not made for a farm, FSA will not make 
any payments with respect to the farm for the 2014 crop year and the 
producers on the farm will default to a PLC election for all covered 
commodities on the farm for the 2015 through 2018 crop years.

PART 1416--EMERGENCY AGRICULTURAL DISASTER ASSISTANCE PROGRAMS

0
17. The authority for part 1416 continues to read as follows:


    Authority:  Title III, Pub. L. 109-234, 120 Stat. 474; 16 U.S.C. 
3801, note.


Sec.  1416.102  [Amended]

0
18. In Sec.  1416.102, remove the definitions for ``limited resource 
farmer or rancher'' and ``socially disadvantaged farmer or rancher''.

    Signed on September 17, 2014.
Val Dolcini,
Executive Vice President, Commodity Credit Corporation, and 
Administrator, Farm Service Agency.
[FR Doc. 2014-22879 Filed 9-25-14; 8:45 am]
BILLING CODE 3410-05-P