[Federal Register Volume 85, Number 41 (Monday, March 2, 2020)]
[Rules and Regulations]
[Pages 12213-12221]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-04103]


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DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1437

[Docket No. CCC-2019-0005]
RIN 0560-AI48


Noninsured Crop Disaster Assistance Program

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

ACTION: Final rule.

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SUMMARY: This rule implements changes to the Noninsured Crop Disaster 
Assistance Program (NAP) as required by the Agriculture Improvement Act 
of 2018 (the 2018 Farm Bill). The rule makes buy-up coverage levels 
available for 2019 and future years, increases service fees, and 
extends the service fee waiver and premium reduction to eligible 
veterans. The rule includes the changes to the payment limitation and 
native sod provisions and clarifies when NAP coverage is available for 
crops when certain crop insurance is available under the Federal Crop 
Insurance Act. This rule is adding provisions for eligibility and 
program requirements for new producers or producers with less than 1-
year growing experience with a new crop (for example, most hemp 
producers). This rule also makes some additional minor changes to 
clarify existing NAP requirements and improve program integrity.

DATES: Effective: March 2, 2020.

FOR FURTHER INFORMATION CONTACT: Tona Huggins, (202) 720-7641; 
[email protected]. Persons with disabilities who require 
alternative means for communication should contact the USDA Target 
Center at (202) 720-2600 (voice).

SUPPLEMENTARY INFORMATION: 

Background

    NAP provides financial assistance to producers of noninsurable 
crops to protect against natural disasters that result in crop losses 
or prevent crop planting. FSA administers NAP for the Commodity Credit 
Corporation (CCC) as authorized by section 196 of the Federal 
Agriculture Improvement and Reform Act of 1996, as amended (7 U.S.C. 
7333). NAP is administered under the general supervision of the FSA 
Administrator and is carried out by FSA State and county committees.
    NAP is available for crops for which catastrophic risk protection 
and additional coverage under the Federal Crop Insurance Act (7 U.S.C. 
1508(b) and (c), and (h)) are not available or, if such coverage is 
available, it is only available under a policy that is in a ``pilot'' 
program category, provides coverage for specific intervals based on 
weather indexes or under a whole farm plan of insurance. The 
eligibility for NAP coverage is limited to:
     Crops other than livestock that are commercially produced 
for food and fiber, and
     Other specific crops including floricultural, ornamental 
nursery, and Christmas tree crops, turfgrass sod, seed crops, 
aquaculture (including ornamental fish), sea grass and sea oats, 
camelina, sweet sorghum, biomass sorghum, and industrial crops 
(including those grown expressly for the purpose of producing a 
feedstock for renewable biofuel, renewable electricity, or biobased 
products).
    Qualifying losses to eligible NAP crops must be due to an eligible 
cause of loss as specified in 7 CFR part 1437, which includes damaging 
weather (drought, hurricane, freeze, etc.) or adverse natural 
occurrence (volcanic eruption, flood, etc.). In order to be eligible 
for a NAP payment, producers must first apply for NAP coverage and 
submit the required NAP service fee or service fee waiver to their FSA 
county office by the application closing date for their crop. The NAP 
application for coverage must be completed, including submission of the 
service fee or a service fee waiver, before NAP coverage can begin. 
Losses occurring outside a coverage period are not eligible for NAP 
assistance. Producers who choose not to obtain NAP coverage for a crop 
are not eligible for NAP assistance for the crop. This rule does not 
change the core provisions of NAP.
    The 2018 Farm Bill (Pub. L. 115-334) made several changes to NAP. 
This rule amends the NAP regulations to be consistent with those 
changes. The mandatory changes make ``buy-up'' coverage available for 
2019 and later crop years, allowing producers to buy additional NAP 
coverage for a premium, resulting in a risk management product that has 
equivalent coverage levels to some types of crop insurance offered by 
the Risk Management Agency (RMA). This rule also implements the 2018 
Farm Bill's provisions regarding payment limitation, increased service 
fees, a service fee waiver and a premium

[[Page 12214]]

reduction for eligible veterans, the beginning of the coverage period, 
benefit restrictions for crops grown on native sod acreage, and the 
availability of NAP coverage for crops for which crop insurance is 
available under the Federal Crop Insurance Act. This rule also makes 
some additional minor changes to clarify existing NAP requirements and 
improve program integrity.

Eligibility of Crops Not Covered by Federal Crop Insurance

    This rule implements changes required by the 2018 Farm Bill with 
regard to NAP crop eligibility. The 2018 Farm Bill specifies that NAP 
is available for crops for which catastrophic risk protection is not 
available under section 508(b) of the Federal Crop Insurance Act and 
additional coverage under subsections 508(c) and 508(h) is not 
available or, if such coverage is available, it is only available under 
a policy that is in a ``pilot'' program category, provides coverage for 
specific intervals based on weather indexes or under a whole farm plan 
of insurance. This rule amends provisions at Sec. Sec.  1437.1 and 
1437.4 to be consistent with the 2018 Farm Bill.

Buy-Up Coverage Levels and Premiums

    Prior to the 2014 Farm Bill, NAP provided only catastrophic 
coverage (basic 50/55 coverage), which is based on the amount of loss 
that exceeds 50 percent of expected production at 55 percent of the 
average market price for the crop. The 2014 Farm Bill changes 
authorized additional higher levels of coverage (``buy-up'' coverage) 
ranging from 50 to 65 percent of production, in 5 percent increments, 
at 100 percent of the average market price. However, that buy-up 
coverage was only available for 2015 through 2018. The 2018 Farm Bill 
makes buy-up coverage available for 2019 and future crop years. This 
rule amends Sec.  1437.5 to remove the reference to 2015 through 2018 
program years to be consistent with the 2018 Farm Bill. As under the 
2014 Farm Bill, crops and grasses intended for grazing are specifically 
excluded from buy-up coverage.
    To obtain buy-up coverage, producers are required to pay a premium, 
equal to 5.25 percent times the level of coverage, in addition to the 
NAP service fee. The 50 percent premium reduction for beginning, 
limited resource, and socially disadvantaged farmers or ranchers 
specified in the regulation continues to apply for 2019 and future 
years. The 2018 Farm Bill and this rule also extend the premium 
reduction to eligible veteran farmer or ranchers as defined in 7 CFR 
718.2. To qualify for the waiver, a veteran must have either been 
farming for 10 years or less or achieved veteran status in the past 10 
years.
    Because the application closing dates for all 2019 crops and some 
2020 crops passed prior to the announcement of 2018 Farm Bill 
provisions that authorized the availability of buy-up NAP coverage, FSA 
allowed producers of those crops to retroactively obtain buy-up 
coverage for 2019 and 2020. On April 8, 2019, FSA announced an extended 
application period for buy-up coverage for those crops through a press 
release and extensive outreach efforts. Producers were required to 
submit an application for coverage requesting buy-up coverage and pay 
the applicable service fee by May 24, 2019. Basic 50/55 coverage was 
not affected by the 2018 Farm Bill and was available prior to the 
application closing dates; therefore, the application closing dates for 
basic 50/55 coverage were not extended.

Service Fees

    This rule amends the NAP service fees in Sec.  1437.7 as required 
by the 2018 Farm Bill. The service fee has increased from $250 to $325 
per crop, from $750 to $825 maximum per producer per county, and from 
$1,875 to $1,950 maximum per producer for all counties. FSA implemented 
the service fee increase administratively on April 8, 2019.
    Prior to this rule, the NAP service fee was waived for beginning, 
limited resource, and socially disadvantaged farmers. That waiver 
continues to apply for those groups for 2019 and future years, and is 
also made available to eligible veteran farmers as defined in 7 CFR 
718.2.

Payment and Income Limitation

    The 2018 Farm Bill establishes payment and income limitations that 
apply to 2018 and subsequent crop, program, or fiscal year benefits. 
FSA is implementing the payment and income limitations through a 
separate final rule to be published in the Federal Register. The 
payment and income limitations are specified in 7 CFR part 1400.
    The 2018 Farm Bill established separate payment limitations for NAP 
assistance. The total NAP payment amount for all crops with basic 50/55 
coverage is limited to $125,000 per person or legal entity, directly or 
indirectly. The total NAP payment amount for all crops with buy-up 
coverage is limited to $300,000 per person or legal entity, directly or 
indirectly. A producer may elect different coverage levels for 
different crops; therefore, both payment limitations may apply to the 
same person or legal entity. For example, a person or legal entity that 
is a producer may elect basic 50/55 coverage for green peppers, a buy-
up coverage level of 55/100 for cantaloupe, and a buy-up coverage level 
of 65/100 for tomatoes. In that case, the producer could receive an 
annual per person or legal entity payment of up to $125,000 for 
eligible losses to green peppers, and a total payment of up to $300,000 
for eligible losses to cantaloupe and tomatoes.
    Attribution of payments specified in 7 CFR part 1400 applies in 
administering the payment limitation. The average adjusted gross income 
(AGI) limit for most FSA and CCC programs, including NAP, is $900,000.

Native Sod

    The 2014 Farm Bill introduced native sod provisions that required 
increased NAP service fees and premiums and also reduced the actual 
production history and only applied, per the 2014 Farm Bill, to certain 
producers in Iowa, Minnesota, Montana, Nebraska, North Dakota, and 
South Dakota. The 2014 Farm Bill applied those provisions to native sod 
tilled for production of annual crops after February 7, 2014, in any 
year in the first 4 years of cropping. The 2018 Farm Bill continues the 
previous policy under the 2014 Farm Bill for native sod tilled for 
annual crop production from February 7, 2014, through December 20, 
2018. It also applies the provisions to native sod tilled for 
production of any crop enrolled in NAP after December 20, 2018, for no 
more than 4 years during the first 10 years of cropping. As under the 
2014 Farm Bill, the NAP service fee and premiums for crops planted on 
acreage subject to these provisions will be 200 percent of the amount 
calculated according to Sec.  1437.7, with the premium not to exceed 
the maximum amount of 5.25 percent times the payment limitation. This 
rule also amends the definition of native sod to be consistent with the 
new provisions. The 2018 Farm Bill does not change the de minimis 
acreage exemption, which applies to areas of 5 acres or less, meaning 
that for these areas are exempt from the native sod provision.

Coverage Period

    Prior to the 2018 Farm Bill, the NAP coverage period could not 
begin earlier than 30 days after a producer filed a NAP application for 
coverage. The 2018 Farm Bill changed this requirement to specify that 
the application for coverage must be filed ``by an appropriate

[[Page 12215]]

deadline before the beginning of the coverage period, as determined by 
the Secretary.'' This rule amends Sec.  1437.6 to specify that a 
coverage period could now begin as soon as one calendar day after an 
application for coverage is filed, provided that the NAP-covered crop 
has an otherwise defined coverage period that would ordinarily 
accommodate that start date. This rule also specifies that the coverage 
period for honey will begin the later of one calendar day after the 
date the application for coverage is filed, one calendar day after the 
application closing date, or the date the colonies are set in place for 
honey production.

Hemp Eligibility

    The 2018 Farm Bill defines ``hemp'' as the plant species Cannabis 
sativa L. and any part of that plant, including the seeds thereof and 
all derivatives, extracts, cannabinoids, isomers, acids, salts, and 
salts of isomers, whether growing or not, with a delta-9 
tetrahydrocannabinol (THC) concentration of not more than 0.3 percent 
on a dry weight basis. The 2018 Farm Bill allows commercial hemp 
production if the crop is grown in compliance with a State, Tribal, or 
federal plan. Beginning with the 2020 crop year, hemp will be 
considered an eligible crop under NAP similar other NAP crops for which 
catastrophic risk protection and additional coverage under the Federal 
Crop Insurance Act (7 U.S.C. 1508(b) and (c), and (h)) are not 
available or, if such coverage is available, it is only available under 
a policy that provides coverage for specific intervals based on weather 
indexes or under a whole farm plan of insurance. This rule adds a new 
section containing hemp eligibility and program requirements at Sec.  
1437.108 and defines ``hemp,'' ``hemp processor,'' ``hemp processor 
contract,'' and ``THC'' in Sec.  1437.3.
    NAP only offers coverage to eligible hemp, which must be grown 
under a Federal, State, or Tribal plan. Those plans require a license. 
Therefore, to be eligible for NAP coverage, the hemp must be grown 
under an official certification or license issued by the applicable 
governing authority, the producer must have a hemp processor contract 
for the crop by the acreage reporting date, and the crop must be 
planted for harvest as hemp in accordance with that contract. If a 
producer is also a hemp processor, a corporate resolution including an 
adoption of the terms specified in this rule for a hemp processor 
contract by the Board of Directors or officers will be considered a 
hemp processor contract.
    Hemp producers must provide the certification or license number and 
a copy of the certificate or license, and copies of all hemp processor 
contracts by the acreage reporting date. As for all crops, one of the 
NAP eligibility requirements is proof of marketability. To be marketed, 
hemp must be processed. Therefore, proof of marketability of the hemp 
crop is shown by the contract the producer has with a hemp processor. 
Hemp is not eligible for NAP benefits if the crop has a THC level above 
0.3 percent; therefore, producers must also submit copies of THC test 
results taken at harvest, which are required under applicable State, 
Tribal, and federal plans. Due to the risk of transmission of crop 
diseases that do not have adequate treatment options for hemp, hemp is 
not eligible for NAP if it is grown on acres on which Cannabis, canola, 
dry beans, dry peas, mustard, rapeseed, soybeans in certain states 
specified by FSA, or sunflowers were grown the preceding crop year. 
Hemp is not eligible for NAP benefits if the producer's certification 
or license is terminated or suspended during the crop year.

Growing History Requirement for Buy-Up Coverage

    FSA is making an additional change to Sec.  1437.5 to limit buy-up 
coverage to crops with at least one year of successful growing history. 
The 2018 Farm Bill re-authorized buy-up NAP coverage and at the same 
time increased the payment limitation for crops with buy-up coverage 
levels from $125,000 to $300,000 per crop year. Therefore, and 
consistent with how some crop insurance products are first made 
available to producers of new crops, to safeguard against potential 
program abuse and ensure that the higher level of coverage and 
increased payment limitation is only made available to those who have 
at least demonstrated an ability to produce the crop successfully 
absent disaster, FSA is making this change. Such ability is reflected 
in their previous successful production of the crop. Accordingly, the 
producer must have successfully produced the crop in a prior crop year 
in order to be eligible to purchase buy-up NAP coverage for that crop. 
Production of a crop is ``successful'' if there is some documented 
record that proves that the producer was able to produce at least 50 
percent of the county expected yield of the crop in the county in a 
prior crop year, unless the producer's crop suffered a loss due to an 
eligible cause of loss in Sec.  1437.10.

Additional Changes

    In addition to the changes required by the 2018 Farm Bill, this 
rule makes several additional changes to improve program integrity and 
clarify NAP requirements. FSA is making changes to specify that 
lightning is an eligible cause of loss and wildfire is an eligible 
related condition when it occurs with an eligible cause of loss listed 
in Sec.  1437.10(b)(1) or (2). It also specifies that failure to 
harvest and market a crop due to lack of a sufficient plan for 
harvesting and marketing given the kind of crop, amount of crop, and 
time that all production may be mature and ready for harvest, the 
perishability of the crop, and the means or the resources to carry out 
that plan is an ineligible cause of loss. These changes to eligible and 
ineligible causes of loss are intended to clarify existing policy and 
do not change how FSA administers NAP.
    This rule clarifies in Sec.  1437.7 that the premium for buy-up 
coverage for value loss crops will be based on the lesser of the 
maximum dollar value for which a producer requests coverage, subject to 
the applicable payment limitation, times the coverage level, times the 
5.25 percent premium. This change corrects the regulation to conform to 
the statute and current NAP policy. It removes duplicate provisions for 
the premium calculation for value loss crops in Sec.  1437.301.
    Throughout this rule, FSA is clarifying that the certain 
requirements specific to hand-harvested crops that require notification 
of damage or loss within 72 hours of the date damage or loss first 
becomes apparent will as well as certain appraisal requirements will 
also apply to rapidly deteriorating crops. Because hand-harvested crops 
are typically also crops that deteriorate quickly in the field, this 
change does not substantially alter the crops subject to these 
requirements. This rule amends Sec.  1437.11 to require that for hand-
harvested or rapidly deteriorating crops, a producer must request an 
appraisal and release of unharvested acreage within 72 hours after the 
acreage is abandoned. This change is needed in order for FSA to obtain 
an accurate appraisal of potential production before the crop begins to 
deteriorate. This rule does not change the current provision for crops 
that are not hand-harvested or rapidly deteriorating, which requires 
the producer to request an appraisal within 15 calendar days. This rule 
corrects Sec.  1437.11 to apply the requirement for filing a notice of 
loss to producers of value loss crops, in addition to producers of 
yield-based crops. This correction is needed to ensure that all

[[Page 12216]]

crop losses are timely reported and FSA has adequate time to ensure 
that an appraisal is completed.
    For clarity, this rule also adds a definition of ``abandoned'' in 
Sec.  1437.3, which is consistent with how FSA has previously 
interpreted this term.
    This rule adds provisions to Sec.  1437.7 to specify when an 
acreage report must be filed. These requirements reflect current NAP 
policy. This rule adds provisions to Sec.  1437.8 to require producers 
to provide acceptable evidence of their risk in the crop and ability 
and intent to harvest, transport, and market their expected production 
determined based on the approved yield of the crop, or their inventory 
for value loss crops. Acceptable evidence includes documentation such 
as receipts for seed and fertilizer and contracts for harvest labor or 
transport of the crop. FSA is making this clarifying change to be 
consistent with the intent of NAP, which is to provide assistance to 
producers who have a legitimate risk in their crops based on what they 
would have reasonably been expected to successfully produce and market.
    This rule amends Sec.  1437.12 to specify that FSA will establish 
the average market price for a crop by obtaining market prices for the 
5 consecutive crop years beginning with the most recent year for which 
price data is available. This change is consistent with current 
implementation of NAP and is intended to provide flexibility when price 
data for a crop is unavailable for the immediately preceding crop year.
    Under Sec.  1437.16, when a producer has adopted a scheme or device 
or made fraudulent misrepresentations or misrepresented facts to FSA, 
that producer must refund a NAP payment with interest and other amounts 
as determined appropriate to the circumstances by FSA. This rule amends 
those provisions to specify that FSA may assess liquidated damages of 
10 percent of an expected NAP payment in those situations.
    FSA has become aware that there are locations for which there are 
no independent assessors or assessments available from which collective 
loss determinations can be made for the geographical area. Therefore, 
to provide flexibility when two independent assessments of grazed 
forage acreage conditions cannot be obtained, this rule clarifies in 
Sec.  1437.401 that when there is no similar mechanically harvested 
forage acreage on a farm or similar farms in the area and no 
independent assessments, FSA may use alternative methods for 
establishing the collective percentage of loss as, determined by the 
Deputy Administrator. Additionally, FSA is amending Sec.  1437.401 to 
specify that if a NAP-covered producer seeks a NAP payment for forage 
crop acreage intended for grazing determined based on the collective 
percentage of loss, the producer is only required to file an 
application for payment. A notice of loss will not be required unless 
the NAP-covered producer wants a NAP payment determined based on the 
NAP-covered producer's unit production similar to any other NAP-covered 
crop.
    This rule removes provisions in Sec.  1437.503 that made prevented 
planting coverage available in Hawaii, Puerto Rico, and other tropical 
areas approved by the Deputy Administrator for Farm Programs. Common 
program provisions in Sec.  718.103(a) provide that in order to be 
eligible for coverage for prevented planting, an eligible cause of loss 
must have occurred before the final planting date for the crop or, in 
the case of multiple plantings, the harvest date of the first planting 
in the applicable planting period. Multiple planting periods and final 
planting dates are not applicable to covered tropical crops; therefore, 
tropical crops cannot be eligible for prevented planting coverage. This 
rule also amends Sec.  1437.502 to refer to the maximum service fee per 
crop per administrative county provided in Sec.  1437.7.
    This rule also specifies that the regulation is applicable to the 
2019 and subsequent crop years, and makes minor technical corrections 
to Sec.  1437.5.

Streamlining Reporting and Premium Prices

    The 2018 Farm Bill directed FSA to establish a streamlined process 
for the submission of records and acreage reports for diverse 
production systems, such as those typical of urban production systems, 
other small-scale production systems, and direct-to-consumer production 
systems. FSA is currently reviewing its existing policies to determine 
how the process can be simplified while continuing to meet all other 
statutory requirements. Any changes made will be announced in separate 
rulemaking.
    The 2018 Farm Bill also amended the payment provisions for crops 
with buy-up coverage levels to specify that payments will be based on 
``the average market price, contract price, or other premium price 
(such as a local, organic, or direct market price, as elected by the 
producer).'' The average market price has been typically established on 
a state-by-state basis, meaning that all NAP payments for a crop and, 
if applicable, for an intended use within a state would be based on the 
same average market price. Average market prices are based on the best 
available data (including National Agricultural Statistics Service 
(NASS) data, National Institute of Food and Agriculture (NIFA) data, 
knowledge of local markets, etc.) and are comparable (though not 
required to be equal) to established Federal Crop Insurance Corporation 
(FCIC) prices.
    Beginning with the 2015 crop year, FSA had the ability to establish 
separate average market prices within a State that more closely 
reflected the prices obtained by producers based on specific 
situations, such as the use of different farming practices 
(conventional or organic) and sales to different markets (such as 
direct sales to consumers at farm stands or farmer's markets). An 
organic price option is currently available for crops regardless of 
whether they have basic 50/55 NAP coverage or buy-up NAP coverage, and 
a direct market option is currently available for crops with buy-up 
coverage. FSA currently offers a contract marketing percentage option 
for producers with buy-up coverage, which results in a payment based on 
an established average market price for fresh and processed intended 
uses. This is based on a producer's contracted uses of the crop for 
that crop year, but does not use a producer's individual contract price 
to calculate a NAP payment.

Effective Date, Notice and Comment, and Paperwork Reduction Act

    As specified in 7 U.S.C. 9091, the regulations to implement the 
provisions of Title I and the administration of Title I of the 2018 
Farm Bill are:
     Exempt from the notice and comment provisions of 5 U.S.C. 
553,
     Exempt from the Paperwork Reduction Act (44 U.S.C. chapter 
35), and
     To use the authority in 5 U.S.C. 808 related to 
Congressional review and any potential delay in the effective date.
    The APA provides that the 30-day delay in the effective date and 
notice and comment provisions do not apply when the rule involves 
specified actions, including matters relating to benefits. This rule 
governs NAP payments and therefore falls within that exemption.
    The authority provided in 5 U.S.C. 808 provides that when an agency 
finds for good cause that notice and public procedure are 
impracticable, unnecessary, or contrary to the public interest, that 
the rule may take effect at such time as the agency determines. Due to 
the nature of the rule, the mandatory requirements of the 2018 Farm 
Bill, and the need to implement the regulations

[[Page 12217]]

expeditiously to provide assistance to producers, FSA and CCC find that 
notice and public procedure are contrary to the public interest.
    The Office of Management and Budget (OMB) designated this rule as 
not major under the Congressional Review Act, as defined by 5 U.S.C. 
804(2). Therefore, FSA is not required to delay the effective date for 
60 days from the date of publication to allow for Congressional review.
    Accordingly, this rule is effective upon publication in the Federal 
Register.

Executive Orders 12866, 13563, 13771 and 13777

    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 requirements in 
Executive Orders 12866 and 13573 for the analysis of costs and benefits 
to loans apply to rules that are determined to be significant. 
Executive Order 13777, ``Enforcing the Regulatory Reform Agenda,'' 
established a federal policy to alleviate unnecessary regulatory 
burdens on the American people.
    The Office of Management and Budget (OMB) designated this rule as 
not significant under Executive Order 12866, ``Regulatory Planning and 
Review,'' and therefore, OMB has not reviewed this rule and an analysis 
of costs and benefits to loans is not required under either Executives 
Orders 12866 or 13563.
    Executive Order 13771, ``Reducing Regulation and Controlling 
Regulatory Costs,'' requires that in order to manage the private costs 
required to comply with Federal regulations that for every new 
significant or economically significant regulation issued, the new 
costs must be offset by the elimination of at least two prior 
regulations. As this rule is designated not significant, it is not 
subject to Executive Order 13771. In general response to the 
requirements of Executive Order 13777, USDA created a Regulatory Reform 
Task Forces, and USDA agencies were directed to remove barriers, reduce 
burdens, and provide better customer service both as part of the 
regulatory reform of existing regulations and as an on-going approach. 
FSA reviewed this regulations and made changes to improve any provision 
that was determined to be outdated, unnecessary, or ineffective.

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 analysis 
of any rule whenever an agency is required by APA 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 as noted above, this rule is exempt from notice and comment 
rulemaking requirements of the APA and no other law requires that a 
proposed rule be published for this rulemaking initiative.

Environmental Review

    In general, the environmental impacts of rules are to be considered 
in a manner consistent with the provisions of the National 
Environmental Policy Act (NEPA, 42 U.S.C. 4321-4347), the regulations 
of the Council on Environmental Quality (40 CFR parts 1500-1508), and 
FSA regulations for compliance with NEPA (7 CFR part 799). Some of the 
changes being made in the rule were self-enacting and have already been 
implemented administratively. FSA has determined that participation in 
programs similar to those found in 7 CFR 1437 will not significantly 
affect the quality of the human environment (7 CFR part 799.9(d)). In 
addition, most of these changes are mandatory with limited or no 
discretionary decisions regarding implementation. Therefore, they are 
not subject to review under NEPA.
    Additional changes will not have a significant impact on the 
quality of the human environment either individually or cumulatively. 
The environmental responsibilities for each prospective farmers will 
not change from the current process followed for all farm program 
actions. Therefore, FSA will not prepare an environmental assessment or 
environmental impact statement on this rule.
    The changes proposed include clarifications regarding eligible 
losses and causes of loss (types of natural disasters). FSA has 
likewise determined that these efforts do not constitute major Federal 
actions that would significantly affect the quality of the human 
environment, individually or cumulatively, because of their context and 
the anticipated intensity of impacts.

Executive Order 12372

    Executive Order 12372, ``Intergovernmental Review of Federal 
Programs,'' requires consultation with State and local officials that 
would be directly affected by proposed Federal financial assistance. 
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 in this rule are excluded from 
the scope of Executive Order 12372.

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. This rule does not have retroactive effect. 
Before any judicial actions 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

[[Page 12218]]

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 has Tribal implications that require Tribal 
consultation under Executive Order 13175. Tribal consultation for this 
rule was included in the 2018 Farm Bill consultation held on May 1, 
2019, at the National Museum of American Indian, in Washington DC. USDA 
Under Secretary for the Farm Production and Conservation mission area, 
as part of Title I session. There were no specific comments from Tribes 
on this rule during Tribal consultation. If a Tribe requests additional 
consultation, FSA will work with the USDA Office of Tribal Relations to 
ensure meaningful consultation is provided where changes, additions, 
and modifications identified in this rule are not expressly mandated by 
law.

Unfunded Mandates

    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 of State, local, and Tribal governments or the 
private sector. Agencies generally must prepare a written statement, 
including cost benefits 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.

Federal Assistance Programs

    The title and number of the Federal Assistance Program found in the 
Catalog of Federal Domestic Assistance, to which this rule applies, is: 
10.451--Noninsured Assistance.

E-Government Act Compliance

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

List of Subjects in 7 CFR part 1437

    Acreage allotments, Agricultural commodities, Crop insurance, 
Disaster assistance, Fraud, Penalties, Reporting and recordkeeping 
requirements.

    For the reasons as stated in the preamble, CCC amends 7 CFR part 
1437 as follows:

PART 1437--NONINSURED CROP DISASTER ASSISTANCE PROGRAM

0
 1. The authority citation for part 1437 continues to read as follows:

    Authority: 7 U.S.C. 1501-1508 and 7333; 15 U.S.C. 714-714m; 19 
U.S.C. 2497, and 48 U.S.C. 1469a.

Subpart A--General Provisions

0
2. Amend Sec.  1437.1 as follows:
0
a. Revise paragraph (b); and
0
b. In paragraph (c), remove ``2015'' and add ``2019'' in its place.
    The revision reads as follows:


Sec.  1437.1   Applicability.

* * * * *
    (b) The provisions in this part are applicable to eligible 
producers and eligible crops for which catastrophic risk protection is 
not available under subsection (b) of section 508 of the Federal Crop 
Insurance Act (7 U.S.C. 1508) and additional coverage under subsections 
(c) and (h) of section 508 or, if coverage is available, it is only 
available under a policy that provides coverage for specific intervals 
based on weather indexes or under a whole farm plan of insurance.
* * * * *

0
3. Amend Sec.  1437.3 as follows:
0
a. Add the definitions of ``Abandoned'', ``Hemp'', ``Hemp processor'', 
``Hemp processor contract'', and ``THC'' in alphabetical order; and
0
b. In the definition of ``Native sod'', remove the words ``for the 
production of an annual crop through February 7, 2014''.
    The additions read as follows:


Sec.  1437.3   Definitions.

* * * * *
    Abandoned means to have discontinued care for a crop or provided 
care so insignificant as to provide no benefit to the crop, or failed 
to harvest in a timely manner.
* * * * *
    Hemp means the plant Cannabis sativa L. and any part of that plant, 
including the seeds thereof and all derivatives, extracts, 
cannabinoids, isomers, acids, salts, and salts of isomers, whether 
growing or not, with a THC concentration of not more than 0.3 percent 
on a dry weight basis.
    Hemp processor means any business enterprise regularly engaged in 
processing hemp that possesses all licenses and permits for processing 
hemp required by the applicable state or Federal governing authority, 
and that possesses facilities, or has contractual access to such 
facilities with enough equipment to accept and process contracted hemp 
within a reasonable amount of time after harvest.
    Hemp processor contract means a legal written agreement executed 
between the producer and hemp processor engaged in the production and 
processing of hemp containing at a minimum:
    (1) The producer's promise to plant and grow hemp and to deliver 
all hemp to the hemp processor;
    (2) The hemp processor's promise to purchase the hemp produced by 
the producer; and
    (3) A base contract price, or method to derive a value that will be 
paid to the producer for the production as specified in the processor's 
contract.
    (4) For a producer who is also a hemp processor, a corporate 
resolution by the Board of Directors or officers of the hemp processor 
will be considered a hemp processor contract if it contains the 
required terms listed in this definition.
* * * * *
    THC means delta-9 tetrahydrocannabinol.
* * * * *

0
4. Amend Sec.  1437.4 as follows:
0
a. Revise paragraph (a)(4)(i);
0
b. Remove paragraph (a)(4)(ii);
0
c. Redesignate paragraphs (a)(4)(iii) and (a)(4)(iv) as (a)(4)(ii) and 
(a)(4)(iii), respectively;
0
d. Revise paragraph (c);
0
e. Redesignate paragraphs (d) and (e) as (e) and (f), respectively;
0
f. Add new paragraph (d); and
0
g. In newly redesignated paragraph (e), remove ``paragraph (c)'' and 
add ``paragraph (d)'' in its place.
    The revisions and addition read as follows.


Sec.  1437.4   Eligibility.

    (a) * * *
    (4) * * *
    (i) Catastrophic risk protection and additional coverage under the 
Federal Crop Insurance Act (7 U.S.C. 1508(b), (c), and (h)) are not 
available or, if coverage is available, it is only available under a 
policy that provides coverage for specific intervals based on weather 
indexes or under a whole farm plan of insurance; or
* * * * *
    (c) Except as specified in paragraph (e) of this section, paragraph 
(d) of this

[[Page 12219]]

section will apply to native sod acreage in Iowa, Minnesota, Montana, 
Nebraska, North Dakota, and South Dakota that has been tilled:
    (1) During the first 4 crop years of planting for native sod 
acreage that has been tilled for the production of an annual crop 
during the period beginning on February 8, 2014, and ending on December 
20, 2018; and
    (2) For not more than any 4 crop years for native sod acreage that 
has been tilled for the production of any crop after December 20, 2018:
    (i) During the first 10 crop years after the initial tillage; and
    (ii) For which a NAP applicant must submit a service fee or NAP 
premium for a crop on that acreage.
    (d) For acreage specified in paragraph (c) of this section:
    (1) The approved yield will be determined by using a yield equal to 
65 percent of the producer's T-yield for the annually planted crop; and
    (2) The service fee or premium for the annual covered crop planted 
on native sod will be equal to 200 percent of the amount determined in 
Sec.  1437.7, as applicable, but the premium will not exceed the 
maximum amount specified in Sec.  1437.7(d)(2).
* * * * *

0
5. Amend Sec.  1437.5 as follows:
0
a. In paragraph (d) introductory text, remove the words ``For 2015 
through 2018 crop years, producers'' and add the words ``Subject to 
paragraph (e) of this section, producers'' in their place; and
0
b. In paragraph (d)(1), remove the word ``your'' and add the word 
``the'' in its place;
0
c. Redesignate paragraphs (e) and (f) as paragraphs (f) and (g), 
respectively;
0
d. Add new paragraph (e).
    The addition reads as follows:


Sec.  1437.5   Coverage levels.

* * * * *
    (e) A producer cannot obtain buy-up coverage for a crop if the 
producer has not successfully produced the crop in a previous year for 
which documentation exists and that documentation shows that the crop 
can be successfully grown by the producer in the county. Production of 
the crop is considered to be successful if the producer produced at 
least 50 percent of the county expected yield for the same county for 
which buy-up coverage is sought, unless the producer suffered a loss on 
the crop due to an eligible cause of loss in Sec.  1437.10. If not 
already provided to FSA for any reason including NAP coverage or 
assistance, the producer must submit documentation showing successful 
growing of the crop in a previous year and, in the event a loss due to 
an eligible cause of loss was sustained, submit documentation of that 
loss satisfying the requirements of Sec.  1437.11.
* * * * *

0
6. Amend Sec.  1437.6 as follows:
0
a. In paragraph (a) introductory text, remove the phrase ``30 days'' 
and add the phrase ``1 calendar day'' in its place;
0
b. In paragraph (a)(2), remove the phrase ``30 days'' and add the 
phrase ``30 calendar days'' in its place;
0
c. In paragraphs (b)(1)(i), (c), and (d), remove the phrase ``30 
calendar days'' each time it appears and add the phrase ``1 calendar 
day'' in its place;
0
d. Revise paragraph (e);
0
e. In paragraph (f), remove the phrase ``30 calendar days'' and add the 
phrase ``1 calendar day'' in its place both times it appears;
0
f. In paragraph (g), remove the phrase ``30 calendar days'' and add the 
phrase ``1 calendar day'' in its place, and remove the phrase ``30 
days'' and add the phrase ``1 calendar day'' in its place; and
0
g. Revise paragraph (h).
    The revisions read as follows:


Sec.  1437.6   Coverage period.

* * * * *
    (e) Honey. Except as provided in paragraph (h) of this section, the 
coverage period for honey begins the later of 1 calendar day after the 
date of the application for coverage is filed; 1 calendar day after the 
application closing date; or the date the colonies are set in place for 
honey production. The coverage ends the last day of the crop year.
* * * * *
    (h) 2019 and 2020 crop years. For the 2019 and 2020 crop years 
only, if a crop's application closing date is before April 8, 2019, the 
coverage period of the crop will be as specified in paragraphs (a) 
through (g) of this section except that the date coverage begins will 
be retroactive as long as the application for coverage is filed by the 
application closing date as specified in Sec.  1437.7(i). This limited 
retroactive coverage for the 2019 and 2020 crop years only will begin 1 
calendar day after the established application closing date, which 
would be the same as if they had filed by the deadlines as specified in 
paragraphs (a) through (g) of this section.

0
7. Amend Sec.  1437.7 as follows:
0
 a. Revise the section heading and paragraphs (b) and (e);
0
 b. In paragraph (g), remove the words ``and socially'' and add the 
word ``socially'' in their place, and remove the words ``ranchers 
will'' and add the words ``ranchers, and veteran farmers and ranchers 
will'' in their place;
0
c. Revise paragraph (i); and
0
 d. Add paragraphs (j), (k), and (l).
    The revisions and additions read as follows:


Sec.  1437.7   Application for coverage, service fee, premium, 
transfers of coverage, and acreage report.

* * * * *
    (b) The service fee or request for service fee waiver specified in 
paragraph (g) of this section must accompany the application for 
coverage in order for it to be considered filed. The service fee is:
    (1) For applications filed by April 7, 2019, $250 per crop per 
administrative county, up to $750 per producer per administrative 
county, not to exceed $1,875 per producer; and
    (2) For applications filed on or after April 8, 2019, $325 per crop 
per administrative county, up to $825 per producer per administrative 
county, not to exceed $1,950 per producer.
* * * * *
    (e) For value loss crops, premiums will be equal to the lesser of:
    (1) The product obtained by multiplying:
    (i) A 5.25-percent premium fee; and
    (ii) The applicable payment limit; or
    (2) The sum of the premiums for each eligible crop, with the 
premium for each eligible crop obtained by multiplying:
    (i) The maximum dollar value for which coverage is sought by the 
applicant;
    (ii) The coverage level elected by the producer; and
    (iii) A 5.25-percent premium fee.
* * * * *
    (i) For the 2019 and 2020 crop years, if a crop's application 
closing date is before April 8, 2019, FSA will accept applications for 
coverage without regard to whether or not the application for coverage 
was filed by the crop's application closing date, provided that the 
application for coverage includes buy-up coverage according to Sec.  
1437.5(d) and is filed by May 24, 2019. Except as specifically stated 
in this rule, the provisions of this paragraph do not apply to crops 
having an application closing date established on or after April 8, 
2019, or to applications for coverage that do not include buy-up 
coverage as an option selected by the applicant. The coverage period 
for applications for coverage filed according to this paragraph will be 
as specified in Sec.  1437.6.
    (j) An accurate acreage report must be filed for each crop included 
on an application for coverage by the earliest of:

[[Page 12220]]

    (1) The acreage reporting date for the crop announced by FSA;
    (2) 15 calendar days before the onset of harvest or grazing of the 
crop acreage being reported; or
    (3) The established normal harvest date for the end of the coverage 
period.
    (k) Applications for coverage for hemp are governed by this part.
    (l) Applications for coverage that were filed with FSA for all 
crops other than hemp that were covered under the regulations in effect 
at the time of filing and which meet all the other requirements of this 
section will be recognized by FSA.

0
 8. Amend Sec.  1437.8 as follows:
0
a. In paragraph (a) introductory text, remove the words ``records of 
crop acreage'' and add the words ``accurate records of crop acreage'' 
in their place and revise the last sentence.
0
b. In paragraph (b)(1), remove the words ``crops must'' and add the 
words ``or rapidly deteriorating crops, as determined by the Deputy 
Administrator, must'' in their place, and remove the words ``hand-
harvested crop acreage'' and add the words ``acreage of hand-harvested 
or rapidly deteriorating crops'' in their place;
0
 c. In paragraph (c)(1), remove the word ``and'';
0
 d. In paragraph (c)(2), remove the period at the end of the paragraph 
and add a semicolon in its place; and
0
 e. Add paragraphs (c)(3) and (c)(4).
    The revision and additions read as follows:


Sec.  1437.8   Records.

    (a)* * * A certification of an amount of production itself is not a 
record of production. Certifications must be accompanied by a record of 
production; records of production'' in their place;
* * * * *
    (c) * * *
    (3) The producer's risk in the crop; and
    (4) The producer's ability and intent to harvest, transport, and 
market the crop's expected production determined by using the approved 
yield or inventory of the crop or commodity.
* * * * *

0
9. Amend Sec.  1437.10 as follows:
0
a. Redesignate paragraphs (b)(1)(viii) and (b)(1)(ix) as paragraphs 
(b)(1)(ix) and (b)(1)(x), respectively;
0
b. Add new paragraph (b)(1)(viii);
0
c. In newly redesignated paragraph (b)(1)(ix), remove the cross 
reference ``(viii)'' and add the reference ``(ix)'' in its place;
0
d. In paragraph (b)(3)(iv), remove the word ``or'';
0
e. Redesignate paragraph (b)(3)(v) as paragraph (b)(3)(vi);
0
f. Add new paragraph (b)(3)(v);
0
g. In paragraph (d)(15), remove the words ``practices; or'' and add the 
word ``practices;'' in their place;
0
 h. In paragraph (d)(16), remove the ``.'' and add ``; or'' in its 
place; and
0
 i. Add paragraph (d)(17).
    The additions read as follows:


Sec.  1437.10   Causes of loss.

* * * * *
    (b) * * *
    (1) * * *
    (viii) Lightning;
* * * * *
    (3) * * *
    (v) Wildfire; or
* * * * *
    (d) * * *
    (17) Failure to harvest or market the crop due to lack of a 
sufficient plan or resources.
* * * * *

0
 10. Amend Sec.  1437.11 as follows:
0
a. In paragraph (a) and paragraph (b) introductory text, remove the 
word ``hand-harvested'' and add the words ``hand-harvested or rapidly 
deteriorating'' both times they appear;
0
b. In paragraph (b)(2), remove the word ``claims'' add the words 
``claims and value loss claims'' in its place; and
0
c. Revise paragraph (d)(2)(ii).
    The revision reads as follows:


Sec.  1437.11   Notice of loss, appraisal requirements, and application 
for payment.

* * * * *
    (d) * * *
    (2) * * *
    (ii) Within 72 hours after the acreage is abandoned for hand-
harvested or rapidly deteriorating crops, or within 15 calendar days 
after the acreage is abandoned for all other crops;
* * * * *


Sec.  1437.12   [Amended]

0
11. Amend Sec.  1437.12 as follows:
0
a. In paragraph (b)(1), remove the words ``immediately preceding the 
crop year of coverage, if available'' and add the words ``beginning 
with the most recent year for which price data is available'' in their 
place; and
0
b. In paragraph (b)(4), remove the words ``immediately preceding the 
previous crop year'' and add the words ``beginning with the most recent 
year for which price data is available'' in their place.

0
 12. In Sec.  1437.16, amend paragraph (d) by adding two sentences to 
the end of the paragraph to read as follows:


Sec.  1437.16   Miscellaneous provisions.

* * * * *
    (d) * * *
    FSA may assess liquidated damages of 10 percent of the projected or 
received NAP payment for the crop or commodity in violation. Liquidated 
damages are in addition to any refund of program benefits and are not 
considered a penalty.
* * * * *

Subpart B--Determining Yield Coverage Using Actual Production 
History

0
 13. Add Sec.  1437.108 to read as follows.


Sec.  1437.108   Hemp.

    (a) Hemp is eligible for NAP coverage only if the hemp is:
    (1) Grown under an official certification or license issued by the 
applicable governing authority that permits the production of the hemp;
    (2) Grown under a hemp processor contract executed by the 
applicable acreage reporting date; and
    (3) Planted for harvest as hemp in accordance with the requirements 
of the hemp processor contract and the production management practices 
of the hemp processor.
    (b) In addition to all other requirements under this part, a 
producer who obtains NAP coverage for hemp must submit by the acreage 
reporting date:
    (1) The certification or license number;
    (2) A copy of the certification form or official license issued by 
the applicable governing authority authorizing the producer to produce 
hemp; and
    (3) A copy of each fully executed hemp processor contract.
    (c) A producer must submit THC test results taken at harvest of the 
hemp crop. If the producer does not submit the THC test results, that 
production will not be included in the producer's actual yield for the 
purpose of determining a producer's APH under Sec.  1437.101.
    (d) Hemp is not eligible for NAP coverage if it is planted on acres 
on which Cannabis, canola, dry beans, dry peas, mustard, rapeseed, 
soybeans in states as determined by the Deputy Administrator, or 
sunflowers were grown the preceding crop year.
    (e) Hemp that has a THC level above 0.3 percent:
    (1) Is not eligible for NAP benefits; and
    (2) Is not included in the producer's actual yield for the purpose 
of determining a producer's APH under Sec.  1437.101.
    (f) Hemp will be ineligible for NAP payment for that NAP crop year 
if the producer's certification or license is

[[Page 12221]]

terminated or suspended during that NAP crop year.

Subpart D--Determining Coverage Using Value


Sec.  1437.301   [Amended]

0
14. In Sec.  1437.301, remove paragraph (d).

Subpart E--Determining Coverage of Forage Intended for Animal 
Consumption

0
 15. Amend Sec.  1437.401 as follows:
0
 a. In paragraph (f)(2), remove the word ``conditions'' and add the 
words ``conditions, or by alternative methods as determined by the 
Deputy Administrator'' in its place; and
0
 b. Add paragraph (g).
    The addition reads as follows:


Sec.  1437.401   Forage.

* * * * *
    (g) For those NAP covered participants who seek to have a NAP 
payment determined based on paragraph (f)(2) of this section, a notice 
of loss under Sec.  1437.11 will not be required; only an application 
for payment must be filed. Unless otherwise expressed by the NAP 
covered participant, FSA will presume the participant to want 
assistance for grazed forage determined according to paragraph (f)(2) 
of this section.

Subpart F--Determining Coverage in the Tropical Region


Sec.  1437.502   [Amended]

0
 16. Amend Sec.  1437.502 as follows:
0
 a. In paragraph (b), remove ``December 1'' and add ``December 31'' in 
its place.
0
b. In paragraph (c), remove the words ``per county per crop year, a 
maximum service fee of $250'' and add the words ``the maximum service 
fee per crop per county provided at Sec.  1437.7'' in their place.


Sec.  1437.503   [Amended]

0
17. In Sec.  1437.503(a), remove the words ``crops, other than in 
Hawaii, Puerto Rico, and other areas approved by the Deputy 
Administrator, except as approved by the Deputy Administrator in 
special cases'' and add the word ``crops'' in their place.

Richard Fordyce,
Administrator, Farm Service Agency.
Robert Stephenson,
Executive Vice President, Commodity Credit Corporation.
[FR Doc. 2020-04103 Filed 2-28-20; 8:45 am]
 BILLING CODE 3410-05-P