[Federal Register Volume 86, Number 3 (Wednesday, January 6, 2021)]
[Rules and Regulations]
[Pages 439-451]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-28914]



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 Rules and Regulations
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 This section of the FEDERAL REGISTER contains regulatory documents 
 having general applicability and legal effect, most of which are keyed 
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  Federal Register / Vol. 86, No. 3 / Wednesday, January 6, 2021 / 
Rules and Regulations  

[[Page 439]]



DEPARTMENT OF AGRICULTURE

Farm Service Agency

7 CFR Part 760

[Docket ID: FSA-2020-0011]
RIN 0560-AI55


Agricultural Disaster Indemnity Programs

AGENCY: Farm Service Agency (FSA), Department of Agriculture (USDA).

ACTION: Final rule.

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SUMMARY: This rule establishes the Quality Loss Adjustment (QLA) 
Program to provide assistance to producers who suffered eligible crop 
quality losses due to hurricanes, excessive moisture, floods, drought, 
tornadoes, typhoons, volcanic activity, snowstorms, and wildfires 
occurring in calendar years 2018 and 2019. It also amends the 
provisions for the Wildfire and Hurricane Indemnity Program Plus 
(WHIP+) to be consistent with the Further Consolidated Appropriations 
Act, 2020, by adding excessive moisture and drought occurring in 2018 
and 2019 as qualifying disaster events and clarifying eligibility of 
sugar beets. The changes to WHIP+ were self-enacting and were 
previously implemented by FSA.

DATES: 
    Effective date: January 6, 2021.
    Comment due date: Comments are due by March 8, 2021.

ADDRESSES: We invite you to submit comments on this rule. You may 
submit comments by either of the following methods, although FSA 
prefers that you submit comments electronically through the Federal 
eRulemaking Portal:
     Federal eRulemaking Portal: Go to http://www.regulations.gov and search for Docket ID FSA-2020-0011. Follow the 
instructions for submitting comments.
     Mail: Director, SND, FSA, U.S. Department of Agriculture, 
1400 Independence Avenue SW, Stop 0522, Washington, DC 20250-0522. In 
your comment, specify the docket ID FSA-2020-0011.
    Comments will be available for viewing online at http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Kimberly Graham at (202) 720-6825 
(voice); or by email at: [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

    The Additional Supplemental Appropriations for Disaster Relief Act, 
2019 (``Disaster Relief Act,'' Pub. L. 116-20) provided disaster 
assistance for necessary expenses related to losses of crops (including 
milk, on-farm stored commodities, crops prevented from planting in 
2019, and harvested adulterated wine grapes), trees, bushes, and vines, 
as a consequence of hurricanes, floods, tornadoes, typhoons, volcanic 
activity, snowstorms, and wildfires occurring in calendar years 2018 
and 2019. The Further Consolidated Appropriations Act, 2020 (Pub. L. 
116-94), makes several changes to the provisions of the Disaster Relief 
Act, including:
     Specifying that assistance would be provided for crop 
quality losses;
     Adding excessive moisture as a qualifying disaster event;
     Adding drought as a qualifying disaster event if an area 
within the county was rated by the U.S. Drought Monitor as having a D3 
(extreme drought) or higher level of drought intensity during the 
applicable calendar year; and
     Providing that sugar beet losses in 2018 and 2019 would be 
paid through cooperative processors (to be paid to producer members as 
determined by such processors).
    This rule implements those provisions of the Further Consolidated 
Appropriations Act, 2020, by establishing the QLA Program to provide 
assistance for crop quality losses and amending the WHIP+ regulations 
to be consistent with the changes to qualifying disaster events and 
eligibility of sugar beet losses.

QLA Program

    This rule establishes the QLA Program to provide disaster 
assistance for crop quality losses that were a consequence of 
hurricanes, excessive moisture, floods, qualifying drought, tornadoes, 
typhoons, volcanic activity, snowstorms, or wildfires occurring in 
calendar years 2018 and 2019. Eligible crops generally include crops 
for which FCIC crop insurance coverage or Noninsured Crop Disaster 
Assistance Program (NAP) coverage is available; however, value loss 
crops,\1\ honey, and maple sap are not eligible. The QLA Program 
provides assistance for losses to crops that were sold or fed to 
livestock or are in storage; crops that were destroyed are not 
eligible. Assistance will be based on a producer's harvested affected 
production of an eligible crop that had a quality loss due to a 
qualifying disaster event and had at least a 5 percent quality loss due 
to all eligible disaster events.
---------------------------------------------------------------------------

    \1\ Value loss crops include aquaculture, floriculture, 
mushrooms, ginseng root, ornamental nursery, sea grass and sea oats, 
Christmas trees, and turfgrass sod.
---------------------------------------------------------------------------

    Qualifying disaster events include hurricanes, floods, tornados, 
typhoons, volcanic activity, snowstorms, wildfires, excessive moisture, 
qualifying drought, and related conditions that occurred in the 2018 or 
2019 calendar year. Assistance is available for eligible producers in 
counties that received a qualifying Presidential Emergency Disaster 
Declaration (declaration) or Secretarial Disaster Designation 
(designation) due to one or more of the qualifying disaster events or a 
related condition. As required by the Further Consolidated 
Appropriations Act, 2020, drought is only a qualifying disaster event 
if an area within the county was rated by the U.S. Drought Monitor as 
having a D3 (extreme drought) or higher level of drought intensity 
during the applicable calendar year (referred to as ``qualifying 
drought'' in this rule). Only producers in those counties that received 
a disaster declaration or designation qualify for the QLA Program based 
on the declaration or designation. Producers in counties that did not 
receive a qualifying declaration or designation may still apply; 
however, they must also provide supporting documentation to establish 
that the crop was directly affected by a qualifying disaster event and 
suffered the same

[[Page 440]]

minimum loss as required by a crop in a disaster declared or designated 
county. Lists of counties with Presidential Emergency Disaster 
Declarations and Secretarial Disaster Designations for all qualifying 
disaster events for 2018 and 2019 are available at farmers.gov/quality-loss.
    FSA recognizes that a crop may suffer quality losses due to 
multiple disaster events in a single crop year, and the portion of a 
crop's quality loss that can be attributed to a specific disaster event 
may be difficult to determine. Therefore, while a qualifying disaster 
event must have caused at least a portion of the affected production's 
quality loss, FSA will consider the total quality loss caused by all 
eligible disaster events for eligibility and payment calculation 
purposes. Eligible disaster events for the QLA Program include those 
listed for NAP in 7 CFR 1437.10, except that the QLA Program does not 
cover losses due to insect infestation.
    The QLA Program does not cover losses due to disaster events 
occurring after a crop was harvested or due to crop deterioration while 
in storage. Quality losses that could have been mitigated using good 
farming practices are not eligible. For example, if a producer's corn 
crop received a quality discount due to high moisture content, the 
producer could have mitigated that quality loss by using best practices 
for drying and storing the crop; therefore, that producer's quality 
loss due to high moisture is not eligible. The QLA Program does not 
provide assistance for losses that cannot be determined to have 
occurred or for losses for which a notice of loss was previously 
disapproved by FSA, RMA, or an approved insurance provider selling and 
servicing Federal crop insurance policies unless that notice of loss 
was disapproved solely because it was filed after the applicable 
deadline.
    The QLA Program does not provide assistance for certain quality 
losses that were already compensated under a Federal crop insurance 
plan, NAP, or WHIP+. This includes losses to affected production of:
     Multiple market crops already compensated under crop 
insurance or WHIP+;
     Crops for which production used to calculate a crop 
insurance indemnity or WHIP+ payment was adjusted based on a comparison 
of the producer's sale price to the FCIC established price;
     Crops that received a crop insurance indemnity, NAP 
payment, or WHIP+ payment based on the quantity of production that was 
considered unmarketable; and
     Crops for which production was reported as salvage value 
or secondary use.
    The QLA Program also excludes quality losses to sugar beets that 
were compensated through cooperative agreements with cooperative 
processors.
    Affected production of a subsequent crop grown on double cropped 
acreage is only eligible if the crop has been approved as an eligible 
double cropping practice by the FSA State committee.

Application

    FSA will accept QLA Program applications from January 6, 2021, 
through March 5, 2021. To apply, producers must submit a completed QLA 
Program application either in person, by mail, email, or facsimile to 
an FSA county office. To be eligible, a producer must submit a complete 
application, which includes all of the following:
     FSA-898, Quality Loss Adjustment (QLA) Program 
Application;
     FSA-899, Historical Nutritional Value Weighted Average 
Worksheet (only for forage crops with verifiable documentation of 
historical nutrient factors from the 3 preceding crop years);
     FSA-578, Report of Acreage;
     FSA-895, Crop Insurance and/or NAP Coverage Agreement; and
     Required documentation, as discussed below.
    The FSA-578, FSA-895, and FSA-899 forms, and other required 
documentation must be submitted to the producer's county office by 
March 19, 2021.
    If not already on file with FSA, producers must also submit the 
following eligibility forms for each crop year within 60 days of the 
date the producer signs the application:
     AD-1026, Highly Erodible Land Conservation (HELC) and 
Wetland Conservation (WC) Certification;
     CCC-902, Farm Operating Plan for Payment Eligibility;
     CCC-941 Average Adjusted Gross Income (AGI) Certification 
and Consent to Disclosure of Tax Information; and
     CCC-942 Certification of Income from Farming, Ranching and 
Forestry Operations, if applicable.
    Payments will not be made until all necessary eligibility 
documentation is received. Failure of an applicant to submit 
documentation timely may result in FSA not issuing a payment or, in the 
case of legal entities, a reduced payment if the required documentation 
for one or more members of the entity is not submitted timely.

Required Documentation

    To support their applications, producers must submit documentation 
showing the quality loss and quantity of affected production by March 
19, 2021. Documentation of the quality loss (total dollar value loss, 
grading factors, and nutrient factors, as applicable), must be 
verifiable. Verifiable documentation is documentation that can be 
verified by FSA through an independent source; FSA may verify the 
submitted records with records on file at the warehouse, gin, 
laboratory, or other entity that received or tested the reported 
production. Examples of acceptable, verifiable documentation include 
warehouse grading sheets, settlement sheets, sales receipts, and 
laboratory test results. Except for grain crops that have been sold, 
the documentation must be from laboratory tests or analysis completed 
within 30 days of harvest to be considered acceptable, unless the FSA 
county committee determines that the record is representative of the 
condition of the affected production within 30 days of harvest. For 
grain crops that were sold, the verifiable documentation can be from 
any time from harvest through the time of sale, unless the FSA county 
committee determines the record is not representative of the condition 
within 30 days of harvest. Producers who do not have acceptable, 
verifiable documentation are ineligible for the QLA Program.
    For forage crops, all producers must submit verifiable 
documentation showing the nutrient factors for the affected production 
of the crop. Producers must also submit verifiable documentation of the 
historical nutrient factors for the 3 preceding crop years if 
available. The type of nutrient factors (such as relative feed value or 
total digestible nutrients) that must be documented for a particular 
crop will be determined by the FSA county committee based on the 
standard practice for the crop in that county. For all crops other than 
forage crops, producers must submit verifiable documentation of the 
total dollar value loss due to quality, if available, and verifiable 
documentation of grading factors due to quality.
    Documentation to support the quantity of affected production 
included on the application must be verifiable for non-forage crops 
that receive a QLA payment based on the producer's total dollar value 
loss. For all other crops (non-forage crops without a producer's total 
dollar value loss and all forage crops), records to support the 
quantity of affected production must be reliable. Reliable production 
records means evidence provided by the participant that is used to 
substantiate the amount of production reported when verifiable

[[Page 441]]

records are not available, including copies of receipts, ledgers of 
income, income statements of deposit slips, register tapes, invoices 
for custom harvesting, and records to verify production costs, 
contemporaneous measurements, truck scale tickets, and contemporaneous 
diaries that are determined acceptable by the FSA county committee. To 
determine whether the records are acceptable, the FSA county committee 
will consider whether they are consistent with the records of other 
producers of the crop in that area.

Payment Calculation

    QLA Program payments will be calculated using different formulas 
based on the type of crop (forage or non-forage) and based on the type 
of documentation submitted. All QLA payments, regardless of whether 
they are forage or non-forage, and the type of documentation submitted, 
will be calculated using a 70 percent payment factor. Payments 
calculated based on a county average loss, as described below, will be 
subject to an additional payment factor of 50 percent.
    For forage crops with verifiable documentation of both the nutrient 
factors for the affected production and historical nutrient factors for 
the 3 preceding crop years, payment will be equal to the amount of the 
producer's total affected production multiplied by the producer's 
verifiable percentage of loss, multiplied by the average market price 
determined by FSA, multiplied by 70 percent. The producer's verifiable 
percentage of loss is determined by comparing the nutrient factor test 
results for the affected production to the average from the 3 preceding 
crop years, as documented on the FSA-899, Historical Nutritional Value 
Weighted Average Worksheet. The average market price for the QLA 
Program is the price used for NAP established according to 7 CFR 
1437.12.
    For forage crops with verifiable documentation of nutrient factors 
for the affected production but without historical nutrient factors for 
the 3 preceding crop years, the payment will be equal to the amount of 
the producer's total affected production multiplied by the county 
average percentage of loss, multiplied by the average market price 
determined by FSA, multiplied by 70 percent, multiplied by 50 percent.
    For affected production of non-forage crops with verifiable 
documentation of the total dollar value loss due to quality, the QLA 
Program payment is equal to the producer's total dollar value loss on 
the affected production of the crop, multiplied by a payment factor of 
70 percent.
    For non-forage crops without verifiable documentation of a total 
dollar value loss but with verifiable documentation of grading factors 
due to quality, the payment will be equal to the amount of producer's 
affected production multiplied by the county average loss per unit of 
measure, multiplied by 70 percent, multiplied by 50 percent.
    To determine the county average percentage of loss (for forage 
crops) or the county average loss per unit of measure (for non-forage 
crops), FSA will calculate the average loss for a crop based on losses 
of producers applying with verifiable documentation of historical 
nutritional factors (for forage crops) or the total dollar value loss 
(for non-forage crops) if at least 5 eligible producers submitted that 
documentation in the county. If less than 5 eligible producers in a 
county submit verifiable documentation of their historical nutritional 
factors or their total dollar value loss, FSA will determine a county 
average percentage of loss or county average loss per unit of measure 
based on the best available data, including losses of other QLA Program 
participants in contiguous counties. If sufficient data is still not 
available after considering other sources, FSA may determine that a 
county average cannot be calculated and producers in that county 
applying for payment under the applicable calculation are ineligible.
    Payments for the QLA Program will not be issued until the 
application period has ended in order to allow FSA to determine the 
county average losses, as well as the total payments requested under 
the QLA Program. The Further Consolidated Appropriations Act, 2020 
provides funding for the QLA Program to be available until December 31, 
2021, in an amount equal to the remaining funds provided under the 
Bipartisan Budget Act of 2018 (Pub. L. 115-123) for losses due to 
Hurricanes Harvey, Irma, Maria, and other hurricanes and wildfires 
occurring in calendar year 2017,\2\ and remaining funds provided under 
the Disaster Relief Act for losses due to Hurricanes Michael and 
Florence, other hurricanes, floods, tornadoes, typhoons, volcanic 
activity, snowstorms, and wildfires occurring in calendar years 2018 
and 2019.\3\ If the total amount of calculated QLA Program payments 
exceeds the amount of funding available, FSA will prorate all payments 
by a national factor.
---------------------------------------------------------------------------

    \2\ FSA provided assistance for losses due to Hurricanes Harvey, 
Irma, Maria, and other hurricanes and wildfires occurring in 
calendar year 2017 through the 2017 Wildfires and Hurricanes 
Indemnity Program (2017 WHIP) (final rule published July 18, 2018, 
83 FR 33795-33809) and the Florida Citrus Recovery Grant Program.
    \3\ FSA has previously provided assistance for losses due to 
Hurricanes Michael and Florence, other hurricanes, floods, 
tornadoes, typhoons, volcanic activity, snowstorms, and wildfires 
occurring in calendar years 2018 and 2019 through the Wildfires and 
Hurricanes Indemnity Program Plus (WHIP+), On-Farm Storage Loss 
Program, and Milk Loss Program (final rule published September 13, 
2019, 84 FR 48518-48537), as well as through several grants and 
cooperative agreements with sugar beet cooperatives.
---------------------------------------------------------------------------

    A person or legal entity, other than a joint venture or general 
partnership, is eligible to receive, directly or indirectly, up to 
$125,000 per crop year in QLA Program payments. FSA will use the 
notification of interest provisions in 7 CFR 1400.107 and payment 
attribution provisions in 7 CFR 1400.105 for attributing and limiting 
payments to persons and legal entities. FSA will also use provisions in 
7 CFR 1400.104 when changes in a farming operation result in an 
increase in persons to which payment limitation applies. Payments made 
to a joint operation (including a general partnership or joint venture) 
cannot exceed $250,000 per person or legal entity that comprise the 
ownership of the joint operation. Payments made to a legal entity will 
be reduced proportionately by an amount that represents the direct or 
indirect ownership in the legal entity by any person or legal entity 
that has otherwise reached the maximum payment limitation. These rules 
for attributing and limiting payments are consistent with the programs 
FSA administers on behalf of the Commodity Credit Corporation.
    A person or legal entity, other than a joint venture or general 
partnership, is ineligible for a 2018, 2019, or 2020 payment if the 
person's or legal entity's average adjusted gross income (AGI) is more 
than $900,000, unless at least 75 percent of that person's or legal 
entity's average AGI is derived from farming, ranching, or forestry-
related activities. The average AGI for each of the program years 2018, 
2019, or 2020, is determined using the average of the adjusted gross 
incomes for the 3 taxable years preceding the most immediately 
preceding taxable year. For example, for the 2019 program year, the 
producer's AGI would be based on the 2015, 2016, and 2017 tax years. If 
at least 75 percent of the person's or legal entity's AGI is derived 
from farming, ranching, or forestry-related activities and the 
participant provides the required certification and documentation, the 
person or legal entity is eligible to

[[Page 442]]

receive QLA Program payments up to the applicable payment limitation 
noted above. With respect to joint ventures and general partnerships, 
this AGI provision will be applied to each member of the joint venture 
and general partnership.

Requirement to Purchase Crop Insurance or NAP Coverage

    The Disaster Relief Act requires all participants who receive QLA 
Program payments to purchase crop insurance or NAP coverage for the 
next 2 available crop years. The latest year for meeting compliance 
with this provision will be the 2023 crop year. In other words, if the 
2 consecutive years of coverage are not met by 2023 coverage year, the 
participant is ineligible for and must refund QLP Program payments. 
Participants must obtain crop insurance or NAP, as may be applicable, 
at the 60 percent coverage level or higher. In situations where crop 
insurance is unavailable for a crop, the Disaster Relief Act requires 
that a QLA Program participant obtain NAP coverage. Section 1001D of 
the Food Security Act of 1985 (1985 Farm Bill) provides that a person 
or entity with AGI in amount greater than $900,000 is not eligible to 
participate in NAP; however, producers with an AGI greater than 
$900,000 may be eligible for the QLA Program if at least 75 percent of 
that person's or legal entity's average AGI is derived from farming, 
ranching, or forestry-related activities. Accordingly, in order to 
reconcile this restriction in the 1985 Farm Bill and the Disaster 
Relief Act's requirement to obtain NAP or crop insurance coverage, QLA 
Program participants may meet the Disaster Relief Act's purchase 
requirement by purchasing Whole-Farm Revenue Protection crop insurance 
coverage, if eligible, or they may pay the applicable NAP service fee 
and premium for the 60 percent coverage level despite their 
ineligibility for a NAP payment. In other words, the service fee and 
premium must be paid even though no NAP payment may be made because the 
AGI of the person or entity exceeds the 1985 Farm Bill limitation.
    The crop insurance and NAP coverage requirements are specific to 
the crop and county (county where the crop is physically located for 
insurance and administrative county for NAP) for which QLA Program 
payments are paid. This means that a producer is required to purchase 
crop insurance or NAP coverage for the crop in the county for which the 
producer was issued a QLA Program payment. Producers who receive a 
payment on a crop in a county and who have the crop or crop acreage in 
subsequent years, as provided in this rule, and who fail to obtain the 
2 years of crop insurance or NAP coverage must refund all QLA Program 
payments for that crop in that county with interest from the date of 
disbursement. This is a condition of payment eligibility specified by 
Disaster Relief Act and is therefore not subject to partial payment 
eligibility or other types of equitable relief. Producers who were paid 
under the QLA Program for a crop in a county but do not plant that crop 
in a subsequent year are not subject to the crop insurance or NAP 
purchase requirement. WHIP+ participants who already met the 
requirement to purchase crop insurance or NAP coverage as specified in 
7 CFR 760.1517 are considered to have also met the requirement to 
purchase crop insurance or NAP coverage for QLA Program purposes, and 
they are not required to obtain additional years of crop insurance or 
NAP coverage as a result of also receiving a QLA Program payment for 
that crop.
    Applicable general eligibility requirements, including 
recordkeeping requirements and required compliance with HELC and 
Wetland Conservation provisions, are similar to those for the previous 
ad hoc crop disaster programs and current permanent disaster programs. 
All information provided to FSA for program eligibility and payment 
calculation purposes, including production records, is subject to spot 
check.

WHIP+

    FSA, on behalf of the Secretary of Agriculture, previously 
implemented provisions of the Disaster Relief Act by establishing WHIP+ 
through a final rule published on September 19, 2019 (84 FR 48518-
48537). The Disaster Relief Act provided assistance for losses of 
crops, trees, bushes, and vines, as a consequence of hurricanes, 
floods, tornadoes, typhoons, volcanic activity, snowstorms, and 
wildfires occurring in calendar years 2018 and 2019. WHIP+ covers only 
production losses of crops except in specific circumstances discussed 
previously in this document when the producer may have also been 
compensated for quality losses.
    This rule amends 7 CFR 760.1500(c) and the definition of 
``qualifying disaster event'' in Sec.  760.1502 to include excessive 
moisture and qualifying drought. As under the QLA Program, drought is 
only considered a qualifying disaster event if an area within the 
county was rated by the U.S. Drought Monitor as having a D3 (extreme 
drought) or higher level of drought intensity during the applicable 
calendar year. This rule adds definitions of ``qualifying drought'' and 
``U.S. Drought Monitor'' in Sec.  760.1502.
    The addition of these qualifying disaster events for WHIP+ was 
self-enacting as the text in the law clearly specified the required 
changes without need for interpretation; therefore, FSA began the sign-
up period for losses due to excessive moisture and qualifying drought 
on March 23, 2020, and sign-up ended on October 30, 2020. Producers 
applying for WHIP+ assistance for losses due to excessive moisture or 
qualifying drought were required to meet all requirements in 7 CFR part 
760, subpart O, including the requirement to purchase crop insurance 
for 2 years as specified in Sec.  760.1517.
    The Further Consolidated Appropriations Act, 2020 also directed the 
Secretary to pay sugar beet losses in 2018 and 2019 through cooperative 
processors. FSA has established cooperative agreements with sugar beet 
processors; those processors will be responsible for distributing 
assistance to their members. This rule amends the eligibility 
provisions in Sec.  760.1517 to specify that members of cooperatives 
are not eligible for a WHIP+ payment for sugar beet losses.
    FSA is also updating Sec.  760.1510(a) to reflect the application 
deadline of October 30, 2020, and correcting references in Sec. Sec.  
760.1508(c) and (f) and 760.1511(a)(6).

Notice and Comment and Effective Date

    The Administrative Procedure Act (5 U.S.C. 553) provides that the 
notice and comment and 30-day delay in the effective date provisions do 
not apply when the rule involves a matter relating to agency management 
or personnel or to public property, loans, grants, benefits, or 
contracts. This rule involves programs for payments to certain 
agricultural commodity producers and therefore falls within that 
exemption. Due to the nature of the rule and the need to implement the 
regulations expeditiously to provide assistance to agricultural 
producers, FSA finds that notice and public procedure are contrary to 
the public interest. Therefore, even though this rule is a major rule 
for purposes of the Congressional Review Act, FSA is not required to 
delay the effective date for 60 days from the date of publication to 
allow for Congressional review. Therefore, 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

[[Page 443]]

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. 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 
economically significant under Executive Order 12866, and therefore, 
OMB has reviewed this rule. The costs and benefits of this rule are 
summarized below. The full cost benefit analysis is available on 
regulations.gov.
    Executive Order 13771, titled Reducing Regulation and Controlling 
Regulatory Costs, was issued on January 30, 2017. The OMB guidance in 
M-17-21, dated April 5, 2017, specifies that ``transfers'' are not 
covered by Executive Order 13771 but that requirements imposed apart 
from transfers in transfer rules may qualify as costs or cost savings 
under Executive Order 13771, for example the information collection 
requirements in this rule. This rule is not subject to the requirements 
of E.O. 13771 because this rule results in no more than de minimis 
costs.

Cost Benefit Analysis Summary

    WHIP+ initially provided approximately $3 billion in supplemental 
assistance to producers for qualifying agricultural production losses. 
In the Further Consolidated Appropriations Act, 2020, Congress changed 
provisions of the Disaster Relief Act as follows:
    1. Extended eligibility under WHIP+ to also cover \4\--
---------------------------------------------------------------------------

    \4\ The addition of excessive moisture and certain drought 
conditions as qualifying causes of loss under WHIP+ is specific, not 
open to interpretation, and is therefore self-enacting. Accordingly, 
the provision was previously implemented. FSA began the sign-up 
period on March 23, 2020, and sign-up ended on October 30, 2020.
---------------------------------------------------------------------------

    a. Crop production losses due to excessive moisture in calendar 
years 2018 and 2019;
    b. Crop production losses due to drought in calendar years 2018 and 
2019 if the area within the county in which the loss occurred was rated 
by the U.S. Drought Monitor as having a D3 (extreme drought) or higher 
level of drought intensity during the applicable calendar year;
    2. Provided assistance for sugar beet losses in 2018 and 2019 to be 
paid through cooperative processors; \5\ and
---------------------------------------------------------------------------

    \5\ Assistance for sugar beet losses for members of cooperative 
processors is provided through a separate program.
---------------------------------------------------------------------------

    3. Authorized assistance for crop quality losses that occurred in 
calendar years 2018 and 2019 through the QLA Program (implemented by 
this rule).
    Eligible crops under the QLA Program include crops for which 
Federal crop insurance or NAP coverage is available. To be eligible for 
the QLA Program, a crop must have suffered a quality loss due to a 
qualifying disaster event and had at least a 5 percent quality discount 
due to a combination of the qualifying disaster event and any other 
QLA-eligible causes of loss. Eligible crops may have been sold, fed on 
farm to livestock, or been in storage at the time of application.
    USDA estimates the Further Consolidated Appropriations Act, 2020 
will provide approximately $950 million for the continuation of 
disaster assistance program delivery, including payments to eligible 
producers for production losses due to excessive moisture and extreme 
drought under WHIP+ and for quality losses covered by the QLA Program. 
Of that amount, USDA anticipates that an estimated $500 million will be 
available for QLA Program payments. However, the amount of funding 
ultimately available for the QLA Program will not be known until other 
payments, for example for excessive moisture and drought under WHIP+, 
are finalized.
    The QLA Program payment calculation depends on several factors, as 
shown in Figure 1. A producer is ineligible for a QLA Program payment 
if they received a crop insurance indemnity, NAP payment, or WHIP+ 
payment for a crop that was unmarketable, sold for salvage value or 
secondary use, or if the payment was based on a comparison of the sales 
price of the affected production and the applicable reference price. 
Otherwise, payments or benefits received under the Federal crop 
insurance, NAP or WHIP+ do not affect a producer's eligibility or 
payment received from the QLA Program. The payment calculation depends 
on the use of production (non-forage or forage) and evidence at hand of 
the crop quality loss. Producers who do not have evidence of the 
quality loss are ineligible.

[[Page 444]]

[GRAPHIC] [TIFF OMITTED] TR06JA21.000

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, 
Pub. L. 104-121), generally requires an agency to prepare a regulatory 
flexibility analysis of any rule whenever an agency is required by the 
Administrative Procedure Act 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 USDA 
is not required by Administrative Procedure Act or any law to publish a 
proposed rule for this rulemaking.

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 regulation for compliance with NEPA (7 CFR part 799). The 
legislative intent for implementing the QLA Program is to provide 
assistance to producers who suffered eligible crop quality losses due 
to hurricanes, excessive moisture, floods, drought, tornadoes, 
typhoons, volcanic activity, snowstorms, and wildfires occurring in 
calendar years 2018 and 2019.
    While OMB has designated this rule as ``economically significant'' 
under Executive Order 12866, ``economic or social effects are not 
intended by themselves to require preparation of an environmental 
impact statement'' (see 40 CFR 1502.16(b)), when not interrelated to 
natural or physical environmental effects.
    For this rule, the FSA Categorical Exclusions found in 7 CFR 799.31 
apply, specifically 7 CFR 799.31(b)(6)(iii), (iv), and (vi) (that is, 
Sec.  799.31(b)(6)(iii) Financial assistance to supplement income, 
manage the supply of agricultural commodities, or influence the cost or 
supply of such commodities or programs of a similar nature or intent 
(that is, price support programs); Sec.  799.31(b)(6)(iv) Individual 
farm participation in FSA programs where no ground disturbance or 
change in land use occurs as a result of the proposed action or 
participation; and Sec.  799.31(b)(6)(vi) Safety net programs 
administered by FSA). No Extraordinary Circumstances (7 CFR 799.33) 
exist.
    For the outlined reasons, FSA has determined that the 
implementation of the QLA Program and the participation in the QLA 
Program does not constitute a major Federal action that would 
significantly affect the quality of the human environment, individually 
or cumulatively. 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 that 
would be directly affect 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 to 
7 CFR part 3015, subpart V (48 FR 29115, June 24, 1983), the programs 
and activities

[[Page 445]]

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 will not have retroactive effect. 
Before any judicial action may be brought regarding the provisions of 
this rule, the administrative appeal provisions of 7 CFR parts 11 and 
780 must be exhausted.

Executive Order 13132

    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.
    The USDA's Office of Tribal Relations (OTR) has assessed the impact 
of this rule on Indian Tribes and determined that this rule may have 
significant Tribal implications that require ongoing adherence to 
Executive Order 13175. OTR notes that the programs are similar to 
programs that have been administered by FSA and RMA in the past; having 
not heard any concerns regarding the administration of these in the 
past, and the fact that provisions are mandated in the Disaster Relief 
Act, OTR recommended that consultation is not required at this time. 
Tribes can request consultation at any time. FSA will work with OTR to 
ensure meaningful consultation is provided where changes, additions, 
and modifications identified in this rule are not expressly mandated by 
law.

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 must 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.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995, FSA 
submitted the QLA Program information collection request to OMB for 
emergency approval. OMB approved the 6-month emergency information 
collection.

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.

Federal Assistance Programs

    The titles and numbers of the Federal Domestic Assistance Program 
found in the Catalog of Federal Domestic Assistance to which this rule 
applies are:
10.129--Wildfire and Hurricanes Indemnity Program Plus
10.133--Quality Loss Adjustment Program

List of Subjects in 7 CFR Part 760

    Dairy products, Indemnity payments, Reporting and recordkeeping 
requirements.

    For the reasons discussed above, FSA amends 7 CFR part 760 as 
follows:

PART 760--INDEMNITY PAYMENT PROGRAMS

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

    Authority:  7 U.S.C. 4501 and 1531; 16 U.S.C. 3801, note; 19 
U.S.C. 2497; Title III, Pub. L. 109-234, 120 Stat. 474; Title IX, 
Pub. L. 110-28, 121 Stat. 211; Sec. 748, Pub. L. 111-80, 123 Stat. 
2131; Title I, Pub. L. 115-123, 132 Stat. 65; Title I, Pub. L. 116-
20, 133 Stat. 871; and Division B, Title VII, Pub. L. 116-94, 133 
Stat. 2658.

Subpart O--Agricultural Disaster Indemnity Programs


Sec.  760.1500   [Amended]

0
2. In Sec.  760.1500(c), remove the words ``and wildfires'' and add 
``wildfires, excessive moisture, and qualifying drought'' in their 
place.

0
3. Amend Sec.  760.1502 as follows:
0
a. In the definition of ``Qualifying disaster event'', in paragraph (2) 
of remove the word ``wildfire'' and add ``wildfire, excessive moisture, 
qualifying drought'' in its place; and
0
b. Add the definitions of ``Qualifying drought'' and ``U.S. Drought 
Monitor'' in alphabetical order.
    The additions read as follows:


Sec.  760.1502   Definitions.

* * * * *
    Qualifying drought means an area within the county was rated by the 
U.S. Drought Monitor as having a D3 (extreme drought) or higher level 
of drought intensity during the applicable calendar year.
* * * * *
    U.S. Drought Monitor is a system for classifying drought severity 
according to a range of abnormally dry to exceptional drought. It is a 
collaborative effort between Federal and academic partners, produced on 
a weekly basis, to synthesize multiple indices, outlooks, and drought 
impacts on a map and in narrative form. This synthesis of indices is 
reported by the National Drought Mitigation Center at http://droughtmonitor.unl.edu.
* * * * *

0
4. In Sec.  760.1503, add paragraph (j) to read as follows.


Sec.  760.1503   Eligibility.

* * * * *
    (j) Members of cooperative processors are not eligible for WHIP+ 
assistance for sugar beet losses.


Sec.  760.1508   [Amended]

0
5. Amend Sec.  760.1508 as follows:
0
a. In paragraph (c), remove the cross reference ``paragraph (b)(1)'' 
and add the cross reference ``paragraph (b)'' in its place; and

[[Page 446]]

0
b. In paragraph (f), remove the cross reference ``paragraph (b)(1)'' 
and add cross reference ``paragraph (e)'' in its place.


Sec.  760.1510   [Amended]

0
6. In Sec.  760.1510(a), remove the words ``a date that will be 
announced by the Deputy Administrator'' and add ``October 30, 2020'' in 
their place.


Sec.  760.1511   [Amended]

0
7. In Sec.  760.1511(a)(6), remove the cross reference ``paragraph 
(f)'' and add cross reference ``paragraph (g)'' in its place.

0
8. Add subpart R, consisting of Sec. Sec.  760.1800 through 760.1814, 
to read as follows:

Subpart R--Quality Loss Adjustment Program

Sec.
760.1800 Applicability.
760.1801 Administration.
760.1802 Definitions.
760.1803 Participant eligibility.
760.1804 Eligibility of affected production.
760.1805 Qualifying disaster events.
760.1806 Ineligible losses.
760.1807 Miscellaneous provisions.
760.1808 General provisions.
760.1809 Payment and adjusted gross income limitation.
760.1810 Time and method of application.
760.1811 Required documentation and verification.
760.1812 Payment calculation.
760.1813 Availability of funds and timing of payments.
760.1814 Requirement to purchase crop insurance or NAP coverage.


Sec.  760.1800   Applicability.

    This subpart specifies the terms and conditions for the Quality 
Loss Adjustment (QLA) Program. The QLA Program provides disaster 
assistance for crop quality losses that were a consequence of 
hurricanes, excessive moisture, floods, qualifying drought, tornadoes, 
typhoons, volcanic activity, snowstorms, and wildfires occurring in 
calendar years 2018 and 2019.


Sec.  760.1801   Administration.

    (a) The QLA Program is administered under the general supervision 
of the Administrator, Farm Service Agency (FSA), and the Deputy 
Administrator for Farm Programs, FSA. The QLA Program is carried out by 
FSA State and county committees with instructions issued by the Deputy 
Administrator.
    (b) FSA State and county committees, and representatives and their 
employees, do not have authority to modify or waive any of the 
provisions of the regulations in this subpart or instructions issued by 
the Deputy Administrator.
    (c) The FSA State committee will take any action required by the 
regulations in this subpart that the FSA county committee has not 
taken. The FSA State committee will also:
    (1) Correct, or require an FSA county committee to correct, any 
action taken by the FSA county committee that is not in accordance with 
the regulations in this subpart; or
    (2) Require an FSA county committee to withhold taking any action 
that is not in accordance with this subpart.
    (d) No delegation to an FSA State or county committee precludes the 
FSA Administrator or the Deputy Administrator from determining any 
question arising under this subpart or from reversing or modifying any 
determination made by an FSA State or county committee.
    (e) The Deputy Administrator has the authority to:
    (1) Permit State and county committees to waive or modify a non-
statutory deadline specified in this subpart; and
    (2) Delegate authority to FSA State or county committees to make 
determinations under Sec.  760.1812(f) and (g).
    (f) Items of general applicability to program participants, 
including, but not limited to, application periods, application 
deadlines, internal operating guidelines issued to FSA State and county 
offices, prices, and payment factors established under this subpart, 
are not subject to appeal in accordance with part 780 of this chapter.


Sec.  760.1802   Definitions.

    The following definitions apply to this subpart. The definitions in 
Sec. Sec.  718.2 and 1400.3 of this title also apply, except where they 
conflict with the definitions in this section. In the event of 
conflict, the definitions in this section apply.
    Affected production means the producer's ownership share of 
harvested production of an eligible crop, adjusted to standard moisture 
as established by the U.S. Grains Standards Act, a State regulatory 
agency, or industry standard, that had both:
    (1) A quality loss due to a qualifying disaster event; and
    (2) At least a 5 percent quality loss due to all eligible disaster 
events.
    Average market price means the average market price determined 
according to Sec.  1437.12 of this title.
    Coverage level means the percentage determined by multiplying the 
elected yield percentage under a crop insurance policy or NAP coverage 
by the elected price percentage.
    Crop insurance means an insurance policy reinsured by FCIC under 
the provisions of the Federal Crop Insurance Act, as amended. It does 
not include private plans of insurance.
    Crop insurance indemnity means, for the purpose of this subpart, 
the payment to a participant for crop losses covered under crop 
insurance administered by RMA in accordance with the Federal Crop 
Insurance Act (7 U.S.C. 1501-1524).
    Crop year means:
    (1) For insurable crops, the crop year as defined according to the 
applicable crop insurance policy; and
    (2) For NAP-eligible crops, the crop year as defined in Sec.  
1437.3 of this title.
    Eligible crop means a crop for which coverage was available either 
from FCIC under part 400 of this title, or through NAP under Sec.  
1437.4 of this title.
    Eligible disaster event means a disaster event that is an eligible 
cause of loss specified in Sec.  1437.10 of this title, excluding 
insect infestation.
    FCIC means the Federal Crop Insurance Corporation, a wholly owned 
Government Corporation of USDA, administered by RMA.
    FSA means the Farm Service Agency, an agency of USDA.
    Grading factor means a factor that describes the physical condition 
or a feature that is evaluated to determine the quality of the 
production, such as broken kernels and low-test weight.
    Good farming practices means the cultural practices generally 
recognized as compatible with agronomic and weather conditions and used 
for the crop to make normal progress toward maturity, as determined by 
FSA. These practices are:
    (1) For conventional farming practices, those generally recognized 
by agricultural experts for the area, which could include one or more 
counties; or
    (2) For organic farming practices, those generally recognized by 
the organic agricultural experts for the area or contained in the 
organic system plan that is in accordance with the National Organic 
Program specified in part 205 of this title.
    Harvested means:
    (1) For insurable crops, harvested as defined according to the 
applicable crop insurance policy;
    (2) For NAP-eligible single harvest crops, that a crop has been 
removed from the field, either by hand or mechanically;
    (3) For NAP-eligible crops with potential multiple harvests in 1 
year or harvested over multiple years, that the producer has, by hand 
or mechanically, removed at least 1 mature crop from the field during 
the crop year; and
    (4) For mechanically harvested NAP-eligible crops, that the crop 
has been

[[Page 447]]

removed from the field and placed in a truck or other conveyance, 
except hay is considered harvested when in the bale, whether removed 
from the field or not.
    Insurable crop means an agricultural crop (excluding livestock) for 
which the producer on a farm is eligible to obtain a policy or plan of 
insurance under the Federal Crop Insurance Act (7 U.S.C. 1501-1524).
    Multiple market crop means a crop that is delivered to a single 
market but can have fresh and processed prices based on grading. For 
example, a producer may intend to sell all production of an apple crop 
as fresh production; however, based on grading of the crop at the 
market, the producer is compensated for some production at the fresh 
price and for some production at the processing price.
    Multiple planting means the planting for harvest of the same crop 
in more than one planting period in a crop year on different acreage.
    NAP means the Noninsured Crop Disaster Assistance Program under 
section 196 of the Federal Agriculture Improvement and Reform Act of 
1996 (7 U.S.C. 7333) and part 1437 of this title.
    NAP-eligible crop means an agricultural crop for which the producer 
on a farm is eligible to obtain NAP coverage.
    NAP service fee means the amount specified in Sec.  1437.7 of this 
title that the producer must pay to obtain NAP coverage.
    Nutrient factor means a factor determined by a test that measures 
the nutrient value of a crop to be fed to livestock. Examples include, 
but are not limited to, relative feed value and total digestible 
nutrients.
    Production means quantity of the crop produced, which is expressed 
in a specific unit of measure including, but not limited to, bushels or 
pounds.
    QLA Program means the Quality Loss Adjustment Program.
    Qualifying disaster event means a hurricane, flood, tornado, 
typhoon, volcanic activity, snowstorm, wildfire, excessive moisture, 
qualifying drought, or a related condition that occurred in the 2018 or 
2019 calendar year.
    Qualifying drought means an area within the county was rated by the 
U.S. Drought Monitor as having a D3 (extreme drought) or higher level 
of drought intensity during the applicable calendar year.
    Quality loss means:
    (1) For forage crops, a reduction in an applicable nutrient factor 
for the crop; and
    (2) For crops other than forage, a reduction in the total dollar 
value of the crop due to reduction in the physical condition of the 
crop indicated by an applicable grading factor.
    Related condition means damaging weather or an adverse natural 
occurrence that occurred as a direct result of a specified qualifying 
disaster event, such as excessive rain, high winds, flooding, 
mudslides, and heavy smoke, as determined by the Deputy Administrator. 
The term does not include insect infestation.
    Reliable production record means evidence provided by the 
participant that is used to substantiate the amount of production 
reported when verifiable records are not available, including copies of 
receipts, ledgers of income, income statements of deposit slips, 
register tapes, invoices for custom harvesting, and records to verify 
production costs, contemporaneous measurements, truck scale tickets, 
and contemporaneous diaries that are determined acceptable by the FSA 
county committee. To determine whether the records are acceptable, the 
FSA county committee will consider whether they are consistent with the 
records of other producers of the crop in that area.
    RMA means the Risk Management Agency, an agency of USDA.
    Salvage value means the dollar amount or equivalent for the 
quantity of the commodity that cannot be marketed or sold in any 
recognized market for the crop.
    Secondary use means the harvesting of a crop for a use other than 
the intended use.
    Unit of measure means:
    (1) For insurable crops, the FCIC-established unit of measure; and
    (2) For NAP-eligible crops, the established unit of measure used 
for the NAP price and yield.
    USDA means the U.S. Department of Agriculture.
    U.S. Drought Monitor is a system for classifying drought severity 
according to a range of abnormally dry to exceptional drought. It is a 
collaborative effort between Federal and academic partners, produced on 
a weekly basis, to synthesize multiple indices, outlooks, and drought 
impacts on a map and in narrative form. This synthesis of indices is 
reported by the National Drought Mitigation Center at http://droughtmonitor.unl.edu.
    Value loss crop has the meaning specified in subpart D of part 1437 
of this title.
    Verifiable documentation means evidence that can be verified by FSA 
through an independent source.
    Verifiable percentage of loss is the percentage of loss determined 
by comparing the applicable nutrient factors for a producer's affected 
production of a forage crop with the average of such nutrient factors 
from the 3 preceding crop years, as documented on FSA-899, Historical 
Nutritional Value Weighted Average Worksheet.
    WHIP+ means the Wildfires and Hurricanes Indemnity Program Plus 
under subpart O of this part.


Sec.  760.1803   Participant eligibility.

    (a) Participants will be eligible to receive a payment under this 
subpart only if they incurred a loss to an eligible crop due to a 
qualifying disaster event, as further specified in this subpart.
    (b) To be an eligible participant under this subpart, a person or 
legal entity must be a:
    (1) Citizen of the United States;
    (2) Resident alien; for purposes of this subpart, resident alien 
means ``lawful alien'' (see Sec.  1400.3 of this title);
    (3) Partnership consisting solely of citizens of the United States 
or resident aliens; or
    (4) Corporation, limited liability company, or other similar 
organizational structure organized under State law consisting solely of 
citizens or resident aliens of the United States.
    (c) If any person who would otherwise be eligible to receive a 
payment dies before the payment is received, payment may be released as 
specified in Sec.  707.3 of this chapter. Similarly, if any person or 
legal entity who would otherwise have been eligible to apply for a 
payment dies or is dissolved, respectively, before the payment is 
applied for, payment may be released in accordance with this subpart if 
a timely application is filed by an authorized representative. Proof of 
authority to sign for the deceased producer or dissolved entity must be 
provided. If a participant is now a dissolved general partnership or 
joint venture, all members of the general partnership or joint venture 
at the time of dissolution or their duly authorized representatives 
must sign the application. Eligibility of such participant will be 
determined, as it is for other participants, based upon ownership share 
and risk in producing the crop.
    (d) An ownership share is required to be eligible for a payment 
under this subpart. Growers growing eligible crops under contract for 
crop owners are not eligible for a payment under this subpart unless 
the grower is also determined to have an ownership share of the crop. 
Any verbal or written contract that precludes the grower from having an 
ownership share renders the

[[Page 448]]

grower ineligible for payments under this subpart.
    (e) A person or legal entity is not eligible to receive assistance 
under this subpart if FSA determines that the person or legal entity:
    (1) Adopted any scheme or other device that tends to defeat the 
purpose of this subpart or any of the regulations applicable to this 
subpart;
    (2) Made any fraudulent representation; or
    (3) Misrepresented any fact affecting a program determination under 
any or all of the following: This subpart and parts 12, 400, 1400, and 
1437 of this title.
    (f) A person who is ineligible for crop insurance or NAP under 
Sec.  400.458 or Sec.  1437.16 of this title, respectively, for any 
year is ineligible for payments under this subpart for the same year.
    (g) The provisions of Sec.  718.11 of this chapter, providing for 
ineligibility for payments for offenses involving controlled 
substances, apply.
    (h) As a condition of eligibility to receive payments under this 
subpart, the participant must have been in compliance with the Highly 
Erodible Land Conservation and Wetland Conservation provisions of part 
12 of this title for the applicable crop year for which the producer is 
applying for benefits under this subpart, and must not otherwise be 
precluded from receiving payments under part 12, 400, 1400, or 1437 of 
this title or any law.


Sec.  760.1804   Eligibility of affected production.

    (a) To be eligible for the QLA Program, an eligible crop's affected 
production must have suffered a quality loss due to a qualifying 
disaster event and had at least a 5 percent quality loss due to all 
eligible disaster events. Whether affected production of a crop had a 5 
percent loss will be determined separately for crops with different 
crop types, intended uses, certified organic or conventional status, 
county, and crop year.
    (b) Affected production of the following is not eligible for the 
QLA Program:
    (1) Crops that were not grown commercially;
    (2) Crops that were intended for grazing or were grazed;
    (3) Crops not intended for harvest;
    (4) Volunteer crops;
    (5) Value loss crops;
    (6) Maple sap;
    (7) Honey;
    (8) By-products resulting from processing or harvesting a crop, 
such as, but not limited to, cotton seed, peanut shells, wheat or oat 
straw, or corn stalks or stovers;
    (9) First-year seeding for forage production;
    (10) Immature fruit crops;
    (11) Crops for which FCIC coverage or NAP coverage is unavailable;
    (12) Multiple market crops for which the producer previously 
received a crop insurance indemnity or WHIP+ payment for a quality 
loss;
    (13) Crops for which production used to calculate a crop insurance 
indemnity or WHIP+ payment was adjusted based on a comparison of the 
producer's sale price to FCIC established price;
    (14) Crops that received a crop insurance indemnity, NAP payment, 
or WHIP+ payment based on the quantity of production that was 
considered unmarketable;
    (15) Crops for which the producer previously received a crop 
insurance indemnity, NAP payment, or WHIP+ payment for which production 
was reported as salvage value or secondary use;
    (16) Sugar beets for which a member of a cooperative processor 
received a payment through a cooperative agreement; and
    (17) Crops that were destroyed.
    (c) Only affected production from initial crop acreage will be 
eligible for a QLA Program payment, unless the provisions for 
subsequent crops in this section are met. All plantings of an annual or 
biennial crop are considered the same as a planting of an initial crop 
in tropical regions as defined in part 1437, subpart F, of this title.
    (d) In cases where there is double cropped acreage, affected 
production of each crop may be eligible only if the specific crops are 
approved by the FSA State committee as eligible double cropping 
practices in accordance with procedures approved by the Deputy 
Administrator.
    (e) Participants having affected production from multiple plantings 
may receive payments for each planting only if the planting meets the 
requirements of part 1437 of this title and all other provisions of 
this subpart are satisfied.


Sec.  760.1805  Qualifying disaster events.

    (a) A producer is eligible for payments under this subpart only if 
the producer's affected production of an eligible crop suffered a crop 
quality loss due to a qualifying disaster event.
    (b) A crop quality loss due to a qualifying disaster event must 
have occurred on acreage that was physically located in a county that 
received a:
    (1) Presidential Emergency Disaster Declaration authorizing public 
assistance for categories C through G or individual assistance due to a 
qualifying disaster event occurring in the 2018 or 2019 calendar years; 
or
    (2) Secretarial Disaster Designation for a qualifying disaster 
event occurring in the 2018 or 2019 calendar years.
    (c) A producer with a crop quality loss on acreage not physically 
located in a county that was eligible under paragraph (b) of this 
section will be eligible for the QLA Program for losses due to 
qualifying disaster events only if the producer provides supporting 
documentation from which the FSA county committee determines that the 
crop quality loss on the unit was reasonably related to a qualifying 
disaster event as specified in this subpart. Supporting documentation 
may include furnishing climatological data from a reputable source or 
other information substantiating the claim of loss due to a qualifying 
disaster event.


Sec.  760.1806  Ineligible losses.

    (a) A loss is not eligible under this subpart if any of the 
following apply:
    (1) The cause of loss is determined by FSA to be the result of poor 
management decisions, poor farming practices, or drifting herbicides;
    (2) The loss could have been mitigated using good farming 
practices, including losses due to high moisture content that could be 
mitigated by following best practices for drying and storing the crop;
    (3) The qualifying disaster event occurred after the crop was 
harvested;
    (4) FSA or RMA have previously disapproved a notice of loss for the 
crop and disaster event, unless that notice of loss was disapproved 
solely because it was filed after the applicable deadline; or
    (5) The cause of loss was due to:
    (i) Conditions or events occurring outside of the applicable 
growing season for the crop;
    (ii) Insect infestation;
    (iii) Water contained or released by any governmental, public, or 
private dam or reservoir project if an easement exists on the acreage 
affected by the containment or release of the water;
    (iv) Failure of a power supply or brownout; or
    (v) Failure to harvest or market the crop due to lack of a 
sufficient plan or resources.
    (b) [Reserved]


Sec.  760.1807   Miscellaneous provisions.

    (a) All persons with a financial interest in a legal entity 
receiving payments under this subpart are jointly and severally liable 
for any refund, including related charges, that is determined to be due 
to FSA for any reason.
    (b) In the event that any application under this subpart resulted 
from

[[Page 449]]

erroneous information or a miscalculation, the payment will be 
recalculated and any excess refunded to FSA with interest to be 
calculated from the date of the disbursement.
    (c) Any payment to any participant under this subpart will be made 
without regard to questions of title under State law, and without 
regard to any claim or lien against the commodity, or proceeds, in 
favor of the owner or any other creditor except agencies of the U.S. 
Government. The regulations governing offsets and withholdings in part 
3 of this chapter apply to payments made under this subpart.
    (d) Any participant entitled to any payment may assign any 
payment(s) in accordance with regulations governing the assignment of 
payments in part 3 of this chapter.
    (e) The regulations in parts 11 and 780 of this title apply to 
determinations under this subpart.


Sec.  760.1808   General provisions.

    (a) Eligibility and payments under this subpart will be determined 
based on the county where the affected production was harvested.
    (b) FSA county committees will make any necessary adjustments to 
the applicant's affected production and other information on the 
application form used to calculate a payment when the county committee 
determines:
    (1) Additional documentation has been requested by FSA but has not 
been provided by the participant;
    (2) The loss is due to an ineligible cause; or
    (3) The participant has a contract providing a guaranteed payment 
for all or a portion of the crop.
    (c) Unless otherwise specified, all eligibility provisions of part 
1437 of this title also apply to tropical crops for eligibility under 
this subpart.
    (d) FSA will use the most reliable data available at the time 
payments under this subpart are calculated. If additional data or 
information is provided or becomes available after a payment is issued, 
FSA will recalculate the payment amount and the producer must return 
any overpayment amount to FSA. In all cases, payments can only issue 
based on the payment formula for losses that affirmatively occurred.
    (e) Production that is commingled between counties, crop years, or 
ineligible and eligible acres before it was a matter of record or 
combination of record and cannot be separated by using records or other 
means acceptable to FSA will be prorated to each respective year, 
county, or type of acreage, respectively.


Sec.  760.1809   Payment and adjusted gross income limitation.

    (a) A person or legal entity, other than a joint venture or general 
partnership, is eligible to receive, directly or indirectly, payments 
of not more than $125,000 for each of the 2018, 2019, and 2020 crop 
years under this subpart.
    (b) Payments made to a joint operation, including a joint venture 
or general partnership, cannot exceed the amount determined by 
multiplying the maximum payment amount specified in paragraph (a) of 
this section by the number of persons and legal entities, other than 
joint operations, that comprise the ownership of the joint operation.
    (c) The direct attribution provisions in Sec.  1400.105 of this 
title apply to payments under this subpart.
    (d) The notification of interest provisions in Sec.  1400.107 of 
this title apply to payments under this subpart.
    (e) The provisions for recognizing persons added to a farming 
operation for payment limitation purposes as described in Sec.  
1400.104 of this title apply to payments under this subpart.
    (f) The $900,000 average AGI limitation provisions in part 1400 of 
this title relating to limits on payments for persons or legal 
entities, excluding joint ventures and general partnerships, apply to 
each applicant for the QLA Program unless at least 75 percent of the 
person or legal entity's average AGI is derived from farming, ranching, 
or forestry-related activities. A person's or legal entity's average 
AGI for each of the program years 2018, 2019 or 2020, is determined by 
using the average of the adjusted gross incomes for the 3 taxable years 
preceding the most immediately preceding taxable year. If the person's 
or legal entity's average AGI is below $900,000 or at least 75 percent 
of the person or legal entity's average AGI is derived from farming, 
ranching, or forestry-related activities, the person or legal entity, 
is eligible to receive payments under this subpart.


Sec.  760.1810   Time and method of application.

    (a) A completed FSA-898, Quality Loss Adjustment (QLA) Program 
Application, must be submitted in person, by mail, email, or facsimile 
to any FSA county office by the close of business on March 5, 2020.
    (b) An application submitted in accordance with paragraph (a) of 
this section is not considered valid and complete for issuance of 
payment under this subpart unless FSA determines all the applicable 
eligibility provisions have been satisfied and the producer has 
submitted all of following by March 19, 2020:
    (1) Documentation required by Sec.  760.1811;
    (2) FSA-578, Report of Acreage, for all acreage for any crop for 
which payments under this subpart are requested;
    (3) FSA-895, Crop Insurance and/or NAP Coverage Agreement; and
    (4) For forage crops, FSA-899, Historical Nutritional Value 
Weighted Average Worksheet, if verifiable documentation of historical 
nutrient factors is available.
    (c) In addition to the forms listed in paragraph (b) of this 
section, applicants must also submit all the following eligibility 
forms within 60 days from the date of signing the QLA Program 
application if not already on file with FSA:
    (1) AD-1026, Highly Erodible Land Conservation (HELC) and Wetland 
Conservation Certification;
    (2) CCC-902 Automated, Farm Operating Plan for Payment Eligibility 
2009 and Subsequent Program Years;
    (3) CCC-941 Average Adjusted Gross Income (AGI) Certification and 
Consent to Disclosure of Tax Information; and
    (4) CCC-942 Certification of Income from Farming, Ranching and 
Forestry Operations, if applicable.
    (d) Failure to submit all required forms by the applicable 
deadlines in paragraphs (b) and (c) of this section may result in no 
payment or a reduced payment.
    (e) Application approval and payment by FSA does not relieve a 
participant from having to submit any form required, but not filed, 
according to this section.
    (f) Once signed by a producer, the application is considered to 
contain information and certifications of and pertaining to the 
producer regardless of who entered the information on the application.
    (g) The producer applying for payment under this subpart certifies 
the accuracy and truthfulness of the information provided in the 
application as well as any documentation filed with or in support of 
the application. All information is subject to verification or spot 
check by FSA at any time, either before or after payment is issued. 
Refusal to allow FSA or any agency of the USDA to verify any 
information provided will result in the participant's forfeiting 
eligibility for payment under this subpart. FSA may at any time, 
including before, during, or after processing and paying an 
application, require the producer to submit any additional information 
necessary to implement or determine any eligibility

[[Page 450]]

provision of this subpart. Furnishing information specified in this 
subpart is voluntary; however, FSA may choose not to act on the 
application or approve payment if the required information is not 
provided. Providing a false certification will result in ineligibility 
and can also be punishable by imprisonment, fines, and other penalties.


Sec.  760.1811   Required documentation and verification.

    (a) If requested by FSA, an applicant must provide documentation 
that establishes the applicant's ownership share and value at risk in 
the crop.
    (b) The applicant must provide acceptable documentation that is 
dated and contains all information required to substantiate the 
applicant's certification to the satisfaction of the FSA county 
committee. Verifiable documentation is required to substantiate the 
total dollar value loss and associated affected production, grading 
factors, and nutritional factors. FSA may verify the records with 
records on file at the warehouse, gin, or other entity that received or 
may have received the reported production. Reliable production records 
are required to substantiate the reported amount of affected production 
for applications not based on the total dollar value loss.
    (c) To be considered acceptable, verifiable documentation for grain 
crops that were sold may come from any time between harvest and sale of 
the affected production, unless the FSA county committee determines the 
record is not representative of the condition within 30 days of 
harvest. For all other crops, the verifiable documentation must come 
from tests or analysis completed within 30 days of harvest, unless the 
FSA county committee determines that the record is representative of 
the condition of the affected production at time of harvest. Examples 
of acceptable records for purposes of this paragraph (c) include:
    (1) Warehouse grading sheets;
    (2) Settlement sheets;
    (3) Sales receipts showing grade and price or disposition to 
secondary market due to quality; and
    (4) Laboratory test results.
    (d) For forage crops, producers must submit verifiable 
documentation showing the nutrient factors for the affected production. 
Producers must also submit verifiable documentation of the historical 
nutrient factors for the 3 preceding crop years if available. The 
nutrient factors that must be documented for a crop will determined by 
the FSA county committee based on the standard practice for the crop in 
that county.
    (e) For all crops other than forage crops, producers must submit 
verifiable documentation of the total dollar value loss due to quality, 
if available, and verifiable documentation of grading factors due to 
quality.
    (f) The participant is responsible for:
    (1) Retaining, providing, and summarizing, at time of application 
and whenever required by FSA, the best available verifiable production 
records for the crop;
    (2) Providing the information in a manner that can be easily 
understood by the FSA county committee; and
    (3) Providing supporting documentation about the disaster event if 
the FSA county committee has reason to question the disaster event.
    (e) Participants must provide all records for any production of a 
crop that is grown with an arrangement, agreement, or contract for 
guaranteed payment.
    (f) Participants are required to retain documentation in support of 
their application for 3 years after the date of approval.
    (g) Participants receiving QLA Program payments or any other person 
who furnishes such information to USDA must permit authorized 
representatives of USDA or the Government Accountability Office, during 
regular business hours, to enter the agricultural operation and to 
inspect, examine, and make copies of books, records, or other items for 
the purpose of confirming the accuracy of the information provided by 
the participant.


Sec.  760.1812   Payment calculation.

    (a) Payments will be calculated separately for crops based on the 
crop type, intended use, certified organic or conventional status, 
county, and crop year.
    (b) For forage crops with verifiable documentation of nutrient 
factors for the affected production and for the 3 preceding crop years, 
the payment will be equal to the producer's total affected production 
multiplied by the producer's verifiable percentage of loss, multiplied 
by the average market price, multiplied by 70 percent.
    (c) For forage crops with verifiable documentation of nutrient 
factors for the affected production but not for the 3 preceding crop 
years, the payment will be equal to the producer's total affected 
production multiplied by the county average percentage of loss in 
paragraph (f) of this section, multiplied by the average market price, 
multiplied by 70 percent, multiplied by 50 percent.
    (d) For crops other than forage with verifiable documentation of 
the total dollar value loss due to quality, the payment will be equal 
to the producer's total dollar value loss on the affected production, 
multiplied by 70 percent.
    (e) For crops other than forage without verifiable documentation of 
the total dollar value loss but with verifiable documentation of 
grading factors, the payment will be equal to the producer's affected 
production multiplied by the county average loss per unit of measure in 
paragraph (g) of this section, multiplied by 70 percent, multiplied by 
50 percent.
    (f) The county average percentage of loss is the average percentage 
of loss from producers eligible for payment under paragraph (b) of this 
section if at least 5 producers in a county are eligible for payment 
for a crop under paragraph (b) of this section. If less than 5 
producers in a county are eligible for payment for a crop under 
paragraph (b) of this section, the Deputy Administrator will:
    (1) Determine a county average percentage of loss based on the best 
available data, including, but not limited to, evidence of losses in 
contiguous counties; or
    (2) If a county average percentage of loss cannot be determined due 
to insufficient data, not issue payments to applicants under paragraph 
(c) of this section.
    (g) The county average loss per unit of measure is based on the 
weighted average sales price from producers eligible for payment under 
paragraph (d) of this section if at least 5 producers in a county are 
eligible for payment for a crop under paragraph (d) of this section. If 
less than 5 producers are eligible for payment in a county under 
paragraph (d) of this section, the Deputy Administrator will:
    (1) Determine a county average loss per unit of measure based on 
the best available data, including, but not limited to, evidence of 
losses in contiguous counties; or
    (2) If a county average loss per unit of measure cannot be 
determined due to insufficient data, not issue payments to applicants 
under paragraph (e) of this section.


Sec.  760.1813   Availability of funds and timing of payments.

    (a) Payments will be issued after the application period has ended 
and all applications have been reviewed by FSA.
    (b) In the event that, within the limits of the funding made 
available by the Secretary, approval of eligible applications would 
result in payments

[[Page 451]]

in excess of the amount available, FSA will prorate payments by a 
national factor to reduce the payments to an amount that is less than 
available funds as determined by the Secretary.
    (c) Applications and claims that are unpaid or prorated for any 
reason will not be carried forward for payment under other funds for 
later years or otherwise, but will be considered, as to any unpaid 
amount, void and nonpayable.


Sec.  760.1814   Requirement to purchase crop insurance or NAP 
coverage.

    (a) For the first 2 consecutive crop years for which crop insurance 
or NAP coverage is available after the enrollment period for the QLA 
Program ends, a participant who receives payment under this subpart for 
a crop loss in a county must obtain:
    (1) For an insurable crop, crop insurance with at least a 60 
percent coverage level for that crop in that county; or
    (2) For a NAP-eligible crop, NAP coverage with a coverage level of 
60 percent.
    (b) Participants who exceed the average adjusted gross income 
limitation for NAP payment eligibility \1\ for the applicable crop year 
may meet the purchase requirement specified in paragraph (a)(2) of this 
section by purchasing Whole-Farm Revenue Protection crop insurance 
coverage, if eligible, or paying the NAP service fee and premium even 
though the participant will not be eligible to receive a NAP payment 
due to the average adjusted gross income limit.
---------------------------------------------------------------------------

    \1\ See Sec. Sec.  1400.500(a) and 1400.1(a)(4) of this title.
---------------------------------------------------------------------------

    (c) The final crop year to purchase crop insurance or NAP coverage 
to meet the requirements of paragraph (a) of this section is the 2023 
crop year.
    (d) A participant who obtained crop insurance or NAP coverage for 
the crop in accordance with the requirements for WHIP+ in Sec.  
760.1517 is considered to have met the requirement to purchase crop 
insurance or NAP coverage for the QLA Program.
    (e) If a producer fails to obtain crop insurance or NAP coverage as 
required in this section, the producer must reimburse FSA for the full 
amount of QLA Program payment plus interest. A producer will only be 
considered to have obtained NAP coverage for the purposes of this 
section if the participant submitted a NAP application for coverage and 
paid the requisite NAP service fee and any applicable premium by the 
applicable deadline and completed all program requirements required 
under the coverage agreement, including filing an acreage report.

Richard Fordyce,
Administrator, Farm Service Agency.
[FR Doc. 2020-28914 Filed 1-5-21; 8:45 am]
BILLING CODE 3410-05-P