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The Code of Federal Regulations is a codification of the general and permanent rules published in the Federal Register by the Executive departments and agencies of the Federal Government. The Code is divided into 50 titles which represent broad areas subject to Federal regulation. Each title is divided into chapters which usually bear the name of the issuing agency. Each chapter is further subdivided into parts covering specific regulatory areas.
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Title 7—
The Food and Nutrition Service current regulations in the volume containing parts 210-299, include the Child Nutrition Programs and the Food Stamp Program. The regulations of the Federal Crop Insurance Corporation are found in the volume containing parts 400-699.
All marketing agreements and orders for fruits, vegetables and nuts appear in the one volume containing parts 900-999. All marketing agreements and orders for milk appear in the volume containing parts 1000-1199.
For this volume, Rob Sheehan was Chief Editor. The Code of Federal Regulations publication program is under the direction of Michael L. White, assisted by Ann Worley.
(This book contains parts 700 to 899)
1. Nomenclature changes to chapter VII appear at 59 FR 60299, Nov. 23, 1994, as corrected at 59 FR 66438, Dec. 27, 1994, and at 60 FR 64297, Dec. 15, 1995.
Pub. L. 95-334, 92 Stat. 420, 16 U.S.C. 2201-2205; Pub. L. 109-148, Division B, sec. 101; and Pub. L. 110-28, secs. 9003-9004.
(a) Subject to the availability of funds, this part provides the terms, conditions and requirements of the Emergency Conservation Program (ECP) administered by the Farm Service Agency (FSA).
(b) ECP is administered by the Administrator, FSA through the Deputy Administrator, FSA, and shall be carried out in the field by State and county FSA committees (State and county committees), subject to the availability of funds. Except as otherwise provided in this rule, discretionary determinations to be made under this rule will be made by the Deputy Administrator. Matters committed to the discretion of the Deputy Administrator shall be considered in all cases to be permissive powers and no person shall, under any circumstances, be considered to be entitled to an exercise of such power in their favor.
(c) State and county committees, and representatives and employees, do not have authority to modify or waive any regulations in this part.
(d) The State committee may take any action authorized or required of the county committee by this part, but which the county committee has not taken, such as:
(1) Correct or require a county committee to correct any action taken by such county committee that is not in accordance with this part; or
(2) Require a county committee to withhold taking any action that is not in accordance with this part.
(e) No provision or delegation herein to a State or county committee shall preclude the Administrator, FSA, or a designee, from determining any question arising under the program or from reversing or modifying any determination made by a State or county committee.
(f) The Deputy Administrator may authorize State and county committees to waive or modify deadlines and other requirements in cases where lateness or failure to meet such other requirements does not adversely affect the operation of the program.
(g) The Deputy Administrator may limit the authority of state and county committees to approve cost share in excess of specified amounts.
(h) Data furnished by the applicants will be used to determine eligibility for program benefits. Furnishing the data is voluntary; however, the failure to provide data could result in program benefits being withheld or denied.
(i) FSA may consult with any other USDA agency for such assistance as is determined by FSA to be necessary to implement the ECP. FSA is responsible for the technical aspects of ECP but may enter into a Memorandum of Agreement with another party to provide technical assistance. If this limitation results in significant hardship to producers in a county the State committee may request in writing that the Deputy Administrator waive this requirement for that county.
(j) The provisions in this part shall not create an entitlement in any person to any ECP cost share or claim or any particular notice or form or procedure.
(k) Additional terms and conditions may be set forth in the application or the forms participants will be required to sign for participation in the ECP.
(a) The terms defined in part 718 of this chapter shall be applicable to this part and all documents issued in accordance with this part, except as otherwise provided in this section.
(b) The following definitions shall apply to this part:
(a) FSA will provide cost-share assistance to farmers and ranchers to rehabilitate farmland damaged by wind erosion, floods, hurricanes, or other natural disasters as determined by the Deputy Administrator, and to carry out emergency water conservation measures during periods of severe drought.
(b) The objective of the ECP is to make cost-share assistance available to eligible participants on eligible land for certain practices, to rehabilitate farmland damaged by floods, hurricanes, wind erosion, or other natural disasters, and for the installation of
(c) Payments may also be made under this part for:
(1) Emergency water conservation or water enhancement measures (including measures to assist confined livestock) during periods of severe drought; and
(2) Floodplain easements for runoff and other emergency measures that the Deputy Administrator determines is necessary to safeguard life and property from floods, drought, and the products of erosion on any watershed whenever fire, flood, or other natural occurrence is causing or has caused, a sudden impairment of the watershed.
(d) Payments under this part are subject to the availability of appropriated funds and any limitations that may otherwise be provided for by Congress.
(a) To be eligible to participate in the ECP the Deputy Administrator must determine that a person is an agricultural producer with an interest in the land affected by the natural disaster, and that person must be liable for or have paid the expense that is the subject of the cost share. The applicant must be a landowner or user in the area where the qualifying event has occurred, and must be a party who will incur the expense that is the subject of the cost share.
(b) Federal agencies and States, including all agencies and political subdivisions of a State, are ineligible to participate in the ECP.
(c) All producer eligibility is subject to the availability of funds and an application may be denied for any reason.
(a) For land to be eligible, the Deputy Administrator must determine that land that is the subject of the cost share:
(1) Will have new conservation problems caused as a result of a natural disaster that, if not treated, would:
(i) Impair or endanger the land;
(ii) Materially affect the productive capacity of the land;
(iii) Represent unusual damage that, except for wind erosion, is not of the type likely to recur frequently in the same area; and
(iv) Be so costly to repair that Federal assistance is or will be required to return the land to productive agricultural use. Conservation problems existing prior to the disaster are not eligible for cost-share assistance.
(2) Be physically located in a county in which the ECP has been implemented; and
(3) Be one of the following:
(i) Land expected to have annual agricultural production,
(ii) A field windbreak or a farmstead shelterbelt on which the ECP practice to be implemented involves removing debris that interferes with normal farming operations on the farm and correcting damage caused by the disaster; or
(iii) A farm access road on which debris interfering with the normal farming operation needs to be removed.
(b) Land is ineligible for cost share if the Deputy Administrator determines that it is, as applicable:
(1) Owned or controlled by the United States;
(2) Owned or controlled by States, including State agencies or other political subdivisions of a State;
(3) Protected by a levee or dike that was not effectively and properly functioning prior to the disaster, or is protected, or intended to be protected, by a levee or dike not built to U.S. Army Corps of Engineers, NRCS, or comparable standards;
(4) Adjacent to water impoundment reservoirs that are subject to inundation when the reservoir is filled to capacity;
(5) Land on which levees or dikes are located;
(6) Subject to frequent damage or susceptible to severe damage according to paragraph (c) of this section;
(7) Subject to flowage or flood easements and inundation when water is released in normal operations;
(8) Between any levee or dike and a stream, river, or body of water, including land between two or more levees or dikes;
(9) Located in an old or new channel of a stream, creek, river or other similar body of water, except that land located within or on the banks of an irrigation canal may be eligible if the Deputy Administrator determines that the canal is not a channel subject to flooding;
(10) In greenhouses or other confined areas, including but not limited to, land in corrals, milking parlors, barn lots, or feeding areas;
(11) Land on which poor farming practices, such as failure to farm on the contour, have materially contributed to damaging the land;
(12) Unless otherwise provided for, not considered to be in annual agricultural production, such as land devoted to stream banks, channels, levees, dikes, native woodland areas, roads, and recreational uses; or
(13) Devoted to trees including, but not limited to, timber production.
(c) To determine the likely frequency of damage and of the susceptibility of the land to severe damage under paragraph (b)(6) of this section, FSA will consider all relevant factors, including, but not limited to, the location of the land, the history of damage to the land, and whether the land was or could have been protected by a functioning levee or dike built to U. S. Army Corps of Engineers, NRCS, or comparable standards. Further, in making such determinations, information may be obtained and used from the Federal Emergency Management Agency or any other Federal, State (including State agencies or political subdivisions), or other entity or individual providing information regarding, for example, flood susceptibility for the land, soil surveys, aerial photographs, or flood plain data or other relevant information.
(a) To qualify for assistance under § 701.3(a), the eligible damage must be so costly that Federal assistance is or will be required to return the land to productive agricultural use or to provide emergency water for livestock.
(b) The Deputy Administrator shall establish the minimum qualifying cost of restoration. Each affected State may be allowed to establish a higher minimum qualifying cost of restoration.
(c) A producer may request a waiver of the qualifying minimum cost of restoration. The waiver request shall document how failure to grant the waiver will result in environmental damage or hardship to the producer and how the waiver will accomplish the goals of the program.
(a)
(1) The Wetland Reserve Program (WRP) provided for in 7 CFR part 1467;
(2) The Emergency Wetland Reserve Program (EWRP) provided for in 7 CFR part 623;
(3) The Emergency Watershed Protection Program (EWP), provided for in 7 CFR part 624, for the same or similar expenses.
(4) Any other program that covers the same or similar expenses so as to create duplicate payments, or, in effect, a higher rate of cost share than is allowed under this part.
(b)
(a) Cost-share assistance may be offered for ECP practices to replace or restore farmland, fences, or conservation structures to a condition similar to that existing before the natural disaster. No relief under this part shall be allowed to address conservation problems existing before the disaster.
(b) The practice or practices made available when the ECP is implemented shall be only those practices authorized by FSA for which cost-share
(c) Cost-share assistance may be provided for permanent vegetative cover, including establishment of the cover where needed, only in conjunction with eligible structures or installations where cover is needed to prevent erosion and/or siltation or to accomplish some other ECP purpose.
(d) Practice specifications shall represent the minimum levels of performance needed to address the ECP need.
(a) Subject to the availability of funds, the Deputy Administrator shall provide for an enrollment period for submitting ECP cost-share requests.
(b) Requests may be accepted after the announced enrollment period, if such acceptance is approved by the Deputy Administrator and is in accordance with the purposes of the program.
An onsite inspection must be made before approval of any request for ECP assistance.
(a) Subject to paragraphs (b) and (c) of this section, costs will not be shared for practices or components of practices that are started before a request for cost share under this part is submitted with the applicable county FSA office.
(b) Costs may be shared for drought and non-drought ECP practices or components of practices that are started before a request is submitted with the county FSA office, only if:
(1) Considered and approved on a case-by-case basis in accordance with instructions of the Deputy Administrator;
(2) The disaster that is the basis of a claim for cost-share assistance created a situation that required the producer to take immediate action to prevent further losses;
(3) The Deputy Administrator determines that the request for assistance was filed within a reasonable amount of time after the start of the enrollment period; and
(4) The practice was started no more than 60 days before the ECP designation was approved for the applicable county office.
(c) Any action taken prior to approval of a claim is taken at the producer's own risk.
(d) An application for relief may be denied for any reason.
(e) All payments under this part are subject to the availability of funds.
(a) Requests shall be prioritized before approval based on factors deemed appropriate by FSA, which include, but are not limited to:
(1) Type and degree of damage;
(2) Type of practices needed to address the problem;
(3) Availability of funds;
(4) Availability of technical assistance;
(5) Environmental concerns;
(6) Safety factors; or
(7) Welfare of eligible livestock.
(b) Requests for cost-share assistance may be approved if:
(1) Funds are available; and
(2) The requested practice is determined eligible.
To be eligible for payments issued from the $16 million provided under the U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007 (Pub. L. 110-28, section 9003), each applicant must meet the provisions of the Adjusted Gross Income Limitations at 7 CFR part 1400 subpart G.
Cost-share assistance is conditioned upon the availability of funds and the performance of the practice in compliance with all applicable specifications and program regulations.
(a)
(b)
(c)
Any eligible participant, as defined in this part, who paid part of the cost of an approved practice may file an application for cost-share payment.
(a) Cost-share assistance may be authorized for all reasonable costs incurred in the completion of the practice, up to the maximums provided in §§ 701.26 and 701.27.
(b) Eligible costs shall be limited as follows:
(1) Costs for use of personal equipment shall be limited to those incurred beyond the normal operation of the farm or ranch.
(2) Costs for personal labor shall be limited to personal labor not normally required in the operation of the farm or ranch.
(3) Costs for the use of personal equipment and labor must be less than that charged for such equipment and labor by commercial contractors regularly employed in such areas.
(4) Costs shall not exceed those needed to achieve the minimum performance necessary to resolve the problem being corrected by the practice. Any costs above those levels shall not be considered to be eligible costs for purposes of calculations made under this part.
(c) Costs shall not exceed the practice specifications in § 701.12(d) for cost-share calculations.
(d) The gross amount on which the cost-share eligibility may be computed will not include any costs that were reimbursed by a third party including, but not limited to, an insurance indemnity payment.
(e) Total cost-share payments from all sources shall not exceed the total of eligible costs of the practice to the applicant.
(a) For qualifying cost-share assistance under this part, the cost shall be credited to the participant who personally performed the practice or who paid to have it performed by a third party. If a payment or credit was made by one participant to another potential participant, paragraph (c) of this section shall apply.
(b) If more than one participant contributed to the performance of the practice, the cost-share assistance for the practice shall be divided among those eligible participants in the proportion they contributed to the performance of the practice. FSA may determine what proportion was contributed by each participant by considering the value of the labor, equipment, or material contributed by each participant and any other factors deemed relevant toward performance.
(c) Allowance by a participant of a credit to another participant through adjustment in rent, cash or other consideration, may be considered as a cost of a practice to the paying party only if FSA determines that such credit is directly related to the practice. An applicant who was fully reimbursed shall be considered as not having contributed to the practice performance.
Any assistance provided by someone other than the eligible participant, including assistance from a State or Federal agency, shall be deducted from the participant's total costs incurred for
(a) In addition to other restrictions that may be applied by FSA, an ECP participant shall not receive more than 75 percent of the lesser of the participant's total actual cost or of the total allowable costs, as determined by this part, to perform the practice.
(b) However, notwithstanding paragraph (a) of this section, a qualified limited resource producer that participates in the ECP may receive no more than 90 percent of the participant's actual cost to perform the practice or 90 percent of the total allowable costs for the practice as determined under this part.
(c) In addition to other limitations that apply, in no case shall the ECP payment exceed 50 percent of what the Deputy Administrator has determined is the agricultural value of the affected land.
A person, as defined in part 1400 of this title, is limited to a maximum cost-share of $200,000 per person, per disaster.
(a) Each participant receiving cost-share assistance is responsible for the required maintenance and proper use of the practice. Some practices have an established life span or minimum period of time during which they are expected to function as a conservation practice with proper maintenance. Cost-share assistance shall not be authorized for normal upkeep or maintenance of any practice.
(b) If a practice is not properly maintained for the established life span, the participant may be required to refund all or part of cost-share assistance received. The Deputy Administrator will determine what constitutes failure to maintain a practice and the amount that must be refunded.
Costs may be shared for performance actually rendered even though the minimum requirements otherwise established for a practice have not been satisfied if a reasonable effort was made to satisfy the minimum requirements and if the practice, as performed, will adequately address the need for the practice.
In case of death, incompetency, or disappearance of any participant, any cost-share payment due shall be paid to the successor, as determined in accordance with part 707 of this chapter.
Part 11 of this title and part 780 of this chapter apply to determinations made under this part.
Participants who perform practices shall be responsible for obtaining the authorities, permits, rights, easements, or other approvals necessary to the performance and maintenance of the practices according to applicable laws and regulations. The ECP participant shall be wholly responsible for any actions taken with respect to the project and shall, in addition, be responsible for returning and refunding any ECP cost shares made, where the purpose of the project cannot be accomplished because of the applicants' lack of clearances or other problems.
(a) If FSA determines that a participant has taken any action designed to defeat, or has the effect of defeating, the purposes of this program, the participant shall be required to refund all or part of any of the program payments otherwise due or paid that participant or related person for that particular disaster. These actions include, but are
(b) All or any part of cost-share assistance that otherwise would be due any participant may be withheld, or required to be refunded, if the participant has adopted, or participated in, any scheme or device designed to evade the maximum cost-share limitation that applies to the ECP or to evade any other requirement or provision of the program or this part.
(c) If FSA determines that a participant has employed any scheme or device to deprive any other person of cost-share assistance, or engaged in any actions to receive payments under this part that also were designed to avoid claims of the United States or its instrumentalities or agents against that party, related parties, or third parties, the participant shall refund all or part of any of those program payments paid to that participant for the project.
(d) For purposes of this section, a scheme or device can include, but is not limited to, instances of coercion, fraud, or misrepresentation regarding the claim for ECP assistance and the facts and circumstances surrounding such claim.
(e) A participant who has knowingly supplied false information or filed a false claim shall be ineligible for cost-share assistance related to the disaster for which the false information was filed, or for any period of time FSA deems appropriate. False information or a false claim includes, but is not limited to, a request for payment for a practice not carried out, a false billing, or a billing for practices that do not meet required specifications.
In the event of voluntary or involuntary loss of control of the land by the ECP cost-share recipient during the practice life-span, if the person acquiring control elects not to become a successor to the ECP agreement and the practice is not maintained, each participant who received cost-share assistance for the practice may be jointly and severally liable for refunding any ECP cost-share assistance related to that practice. The practice life span, for purposes of this section, includes any maintenance period that is essential to its success.
Any cost-share assistance or portion thereof due any participant under this part shall be allowed without regard to questions of title under State law, and without regard to any claim or lien against any crop or property, or proceeds thereof, except liens and other claims of the United States or its instrumentalities. The regulations governing offsets and withholdings at parts 792 and 1403 of this title shall be applicable to this program and the provisions most favorable to a collection of the debt shall control.
Participants may assign ECP cost-share assistance payments, in whole or in part, according to part 1404 of this title.
Information collection requirements contained in this part have been approved by the Office of Management and Budget under the provisions at 44 U.S.C. Chapter 35 and have been assigned OMB Number 0560-0082.
Contracts for ACP that are, or were, administered under this part or similar contracts executed in connection with the Interim Environmental Quality Incentives Program, shall, unless the Deputy Administrator determines otherwise, be administered under, and be subject to, the regulations for ACP contracts and the ACP program that were contained in the 7 CFR, parts 700 to 899, edition revised as of January 1,
The regulations governing the FIP as of July 31, 2002, and contained in the 7 CFR, parts 700 to 899, edition revised as of January 1, 2002, shall continue to apply to FIP contracts in effect as of that date, except as provided in accord with a delegation of the administration of that program and such delegation and actions taken thereunder shall apply to any other FIP matters as may be at issue or in dispute.
In addition benefits elsewhere allowed by this part, claims related to calendar year 2005 hurricane losses may be allowed to the extent provided for in §§ 701.50 through 701.57. Such claims under those sections will be limited to losses in counties that were declared disaster counties by the President or the Secretary because of 2005 hurricanes and to losses to oyster reefs. Claims under §§ 701.51 through 701.57 shall be subject to all normal ECP limitations and provisions except as explicitly provided in those sections.
The following definitions apply to §§ 701.52 through 701.57:
Payments under §§ 701.53 through 701.57 are subject to the availability of funds under Public Law 109-149.
Subject to the other eligibility provisions of this part, an ECP participant addressing damage in an eligible county from hurricanes during calendar year 2005 may be allowed up to 90 percent of the participant's actual cost or of the total allowable cost for cleaning up structures such as barns, shade
(a) Notwithstanding § 701.5(b), but otherwise subject to the other eligibility provisions of this part except as provided explicitly in this section, assistance may be made available under this section for the eligible cost of refurbishing public or private oyster reefs damaged in calendar year 2005 by a 2005 hurricane. Oyster bed refurbishing consists of removing mud from public and private oyster beds, staking out the leased areas, reestablishing the oyster beds using crushed limestone, recycled oyster shells, or other available and suitable approved cultch materials, reseeding the oyster beds, and related actions approved by FSA.
(b) Notwithstanding § 701.26, an ECP participant shall not receive more than 90 percent of the participant's actual cost or of the total allowable cost described in paragraph (a) of this section.
(c) The provisions of § 701.26(c) limiting ECP payments to 50 percent of the agricultural value of the land do not apply to oyster bed rehabilitation and refurbishing.
(a) Subject to the other eligibility provisions of this part except as provided explicitly in this section, assistance may be made available in an eligible county under this section for the cost of removing nursery debris such as nursery structures, shade houses, and above ground irrigation facilities, where such debris was created in calendar year 2005 by a 2005 hurricane.
(b) Notwithstanding § 701.26, an otherwise eligible ECP participant may be allowed up to 90 percent of the participant's actual cost or of the total allowable cost for losses described in paragraph (a) of this section.
(a) Subject to the other eligibility provisions of this part except as provided explicitly in this section, assistance may be allowed under this section for uninsured losses in calendar year 2005 to a poultry house in an eligible county due to a 2005 hurricane.
(b) Claimants under this section may be allowed an amount up to the lesser of:
(1) The lesser of 50 percent of the participant's actual or the total allowable cost of the reconstruction or repair of a poultry house, or
(2) $50,000 per poultry house.
(c) The total amount of assistance provided under this section and any indemnities for losses to a poultry house paid to a poultry grower, may not exceed 90 percent of the total costs associated with the reconstruction or repair of a poultry house.
(d) Poultry growers must provide information on insurance payments on their poultry houses. Copies of contracts between growers and poultry integrators may be required.
(e) Assistance under this section is limited to amounts necessary for reconstruction and/or repair of a poultry house to the same size as before the hurricane.
(f) Assistance is limited to poultry houses used to house poultry for commercial enterprises. A commercial poultry enterprise is one with a dedicated structure for poultry and a number of poultry that exceeds actual non-commercial uses of poultry and their products at all times, and from which poultry or related products are actually, and routinely, sold in commercial quantities for food, fiber, or eggs. Unless otherwise approved by FSA, a commercial quantity is a quantity per week that would normally exceed $100 in sales.
(g) Poultry houses with respect to which claims are made under this section must be reconstructed or repaired to meet current building standards.
(a) Subject to the other eligibility provisions of this part except as provided explicitly in this section, assistance made available under this section with respect to private, non-industrial forest land in an eligible county for
(b) During the 5-year period beginning on the date of the loss, the eligible private non-industrial forest landowner must:
(1) Reforest the eligible damaged forest acres in accordance with a forest management plan approved by FSA that is appropriate for the forest type where the forest management plan is developed by a person with appropriate forestry credentials, as determined by the Deputy Administrator;
(2) Use the best management practices included in the forest management plan; and
(3) Exercise good stewardship on the forest land of the landowner while maintaining the land in a forested state.
(c) Notwithstanding § 701.26, an ECP participant shall not receive under this section more than 75 percent of the participant's actual cost or of the total allowable cost of reforestation, rehabilitation, and related measures.
(d) Payments under this section shall not exceed a maximum of $150 per acre for any acre.
(e) Requests will be prioritized based upon planting tree species best suited to the site as stated in the forest management plan.
54 Stat. 728, as amended, sec. 121, 70 Stat. 197, sec. 375, 52 Stat. 66, as amended, sec. 124(i), 75 Stat. 300, sec. 307(h), 76 Stat. 617, sec. 318, 76 Stat. 622, sec. 324(2), 76 Stat. 630, sec. 704, 68 Stat. 911, secs. 4, 8(b), 49 Stat. 164, 1149, as amended, sec. 101(4), 76 Stat. 606, sec. 3, 77 Stat. 45, sec. 4, 62 Stat. 1070; 5 U.S.C. 301, 7 U.S.C. 1334 note, 1339, 1375, 1379j, 1385, 1783, 1809; 16 U.S.C. 590d, 590h(b), 590(e), 590p(h), 15 U.S.C. 714b(d)(j)(k).
This part applies to all programs in title 7 of the Code of Federal Regulations which are administered by the Farm Service Agency under which payments are made to eligible program participants. This part also applies to all other programs to which this part is applicable by the individual program regulations.
“Person” when relating to one who dies, disappears, or becomes incompetent, prior to receiving payment, means a person who has earned a payment in whole or in part pursuant to any of the programs to which this part is applicable. “Children” shall include legally adopted children who shall be entitled to share in any payment in the same manner and to the same extent as legitimate children of natural parents. “Brother” or “sister”, when relating to one who, pursuant to the regulations in this part, is eligible to apply for the payment which is due a person who dies, disappears, or becomes incompetent prior to the receipt of such payment, shall include brothers and sisters of the half blood who shall be considered the same as brothers and sisters of the whole blood. “Payment” means a payment by draft, check or certificate pursuant to any of the Programs to which this part is applicable. Payments shall not be considered received for the purposes of this part until such draft, check or certificate has been negotiated or used.
(a) Where any person who is otherwise eligible to receive a payment dies before the payment is received, payment may be made upon proper application therefor, without regard to claims of creditors other than the United States, in accordance with the following order of precedence:
(1) To the administrator or executor of the deceased person's estate.
(2) To the surviving spouse, if there is no administrator or executor and none is expected to be appointed, or if an administrator or executor was appointed but the administration of the estate is closed (i) prior to application by the administrator or executor for such payment or (ii) prior to the time when a check, draft, or certificate issued for such payment to the administrator or executor is negotiated or used.
(3) If there is no surviving spouse, to the sons and daughters in equal shares. Children of a deceased son or daughter of a deceased person shall be entitled to their parent's share of the payment, share and share alike. If there are no surviving direct descendants of a deceased son or daughter of such deceased person, the share of the payment which otherwise would have been made to such son or daughter shall be divided equally among the surviving sons and daughters of such deceased person and the estates of any deceased sons or daughters where there are surviving direct descendants.
(4) If there is no surviving spouse and no direct descendant, payment shall be made to the father and mother of the deceased person in equal shares, or the whole thereof to the surviving father or mother.
(5) If there is no surviving spouse, no direct descendant, and no surviving parent, payment shall be made to the brothers and sisters of the deceased person in equal shares. Children of a deceased brother or sister shall be entitled to their parent's share of the payment, share and share alike. If there are no surviving direct descendants of the deceased brother or sister of such deceased person, the share of the payment which otherwise would have been made to such brother or sister shall be divided equally among the surviving brothers and sisters of such deceased person and the estates of any deceased brothers or sisters where there are surviving direct descendants.
(6) If there is no surviving spouse, direct descendant, parent, or brothers or sisters or their descendants, the payment shall be made to the heirs-at-law in accordance with the law of the State of domicile of the deceased person.
(b) If any person who is entitled to payment under the above order of precedence is a minor, payment of his share shall be made to his legal guardian, but if no legal guardian has been appointed payment shall be made to his natural guardian or custodian for his benefit, unless the minor's share of the payment exceeds $1,000, in which event payment shall be made only to his legal guardian.
(c) Any payment which the deceased person could have received may be made jointly to the persons found to be entitled to such payment or shares thereof under this section or, pursuant to instructions issued by the Farm Service Agency, a separate payment may be issued to each person entitled to share in such payment.
(a) In case any person otherwise eligible to receive payment disappears before receiving the payment, such payment may be made upon proper application therefor, without regard to claims of creditors other than the United States, to one of the following in the order mentioned:
(1) The conservator or liquidator of his estate, if one be duly appointed.
(2) The spouse.
(3) An adult son or daughter or grandchild for the benefit of his estate.
(4) The mother or father for the benefit of his estate.
(5) An adult brother or sister for the benefit of his estate.
(6) Such person as may be authorized under State law to receive payment for the benefit of his estate.
(b) A person shall be deemed to have disappeared if (1) he has been missing for a period of more than 3 months, (2) a diligent search has failed to reveal his whereabouts, and (3) such person has not communicated during such period with other persons who would be
(a) Where any person who is otherwise eligible to receive a payment is adjudged incompetent by a court of competent jurisdiction before the payment is received, payment may be made, upon proper application therefor, without regard to claims of creditors other than the United States, to the guardian or committee legally appointed for such incompetent person. In case no guardian or committee has been appointed, payment, if not more than $1,000, may be made without regard to claims of creditors other than the United States, to one of the following in the order mentioned for the benefit of the incompetent person:
(1) The spouse.
(2) An adult son, daughter, or grandchild.
(3) The mother or father.
(4) An adult brother or sister.
(5) Such person as may be authorized under State law to receive payment for him (see standard procedure prescribed for the respective region).
(b) In case payment is more than $1,000, payment may be made only to such person as may be authorized under State law to receive payment for the incompetent.
In case any person entitled to apply for a payment pursuant to the provisions of § 707.3, § 707.4, § 707.5, or this section, dies, disappears, or is adjudged incompetent, as the case may be, after he has applied for such payment but before the payment is received, payment may be made upon proper application therefor, without regard to claims of creditors other than the United States, to the person next entitled thereto in accordance with the order of precedence set forth in § 707.3, § 707.4, or § 707.5, as the case may be.
Persons desiring to claim payment in accordance with this part 707 may do so on Form FSA-325, “Application for Payment of Amounts Due Persons Who Have Died, Disappeared, or Have Been Declared Incompetent”. If the person who died, disappeared, or was declared incompetent did not apply for payment by filing the applicable program application for payment form, such program application for payment must also be filed in accordance with applicable regulations. If the payment is made under the Naval Stores Conservation Program, Part II of the Form FSA-325 shall be executed by the local District Supervisor of the U.S. Forest Service. In connection with applications for payment under all other programs itemized in § 707.1, Form FSA-325, and program applications for payments where required, shall be filed with the FSA county office where the person who earned the payment would have been required to file his application.
Sec. 4, 49 Stat. 164, secs. 7-17, 49 Stat. 1148, as amended; 16 U.S.C. 590d, 590g-590q.
For the purposes of the programs in this chapter, no receipt, invoice, or other record required to be retained by any agricultural producer as evidence tending to show performance of a practice under any such program needs to be retained by such producer more than two years following the close of the program year of the program.
Secs. 372, 375, 52 Stat. 65, as amended, 66, as amended; 7 U.S.C. 1372, 1375.
(a)
(b)
(a)
(b)
(1) “Act” means the Agricultural Adjustment Act of 1938, and any amendments or supplements thereto.
(2) “Claim” means a written request for refund of penalty.
(3) “Claimant” means a person who makes a claim for refund of penalty as provided in this part.
(4) “County Office” means the office of the Agricultural Stabilization and Conservation County Committee.
(5) “Penalty” means an amount of money collected, including setoff, from or on account of any person with respect to any commodity to which this part is applicable, which has been covered into the general fund of the Treasury of the United States, as provided in section 372(b) of the Act.
(6) “State office” means the office of the Agricultural Stabilization and Conservation State Committee.
The Deputy Administrator shall cause to be prepared and issued such
Claim for refund may be made by:
(a) Any person who was entitled to share in the price or consideration received by the producer with respect to the marketing of a commodity from which a deduction was made for the penalty and bore the burden of such deduction in whole or in part.
(b) Any person who was entitled to share in the commodity or the proceeds thereof, paid the penalty thereon in whole or in part and has not been reimbursed therefor.
(c) Any person who was entitled to share in the commodity or the proceeds thereof and bore the burden of the penalty because he has reimbursed the person who paid such penalty.
(d) Any person who, as buyer, paid the penalty in whole or in part in connection with the purchase of a commodity, was not required to collect or pay such penalty, did not deduct the amount of such penalty from the price paid the producer, and has not been reimbursed therefor.
(e) Any person who paid the penalty in whole or in part as a surety on a bond given to secure the payment of penalties and has not been reimbursed therefor.
(f) Any person who paid the whole or any part of the sum paid as a penalty with respect to a commodity included in a transaction which in fact was not a marketing of such commodity and has not been reimbursed therefor.
Claim for refund shall be filed in the county office on a form prescribed by the Deputy Administrator. If more than one person is entitled to file a claim, a joint claim may be filed by all such persons. If a separate claim is filed by a person who is a party to a joint claim, such separate claim shall not be approved until the interest of each person involved in the joint claim has been determined.
Claim shall be filed within 2 years after the date payment was made to the Secretary. The date payment was made shall be deemed to be the date such payment was deposited in the general fund of the Treasury as shown on the certificate of deposit on which such payment was scheduled.
The claim shall show fully the facts constituting the basis of the claim; the name and address of and the amount claimed by every person who bore or bears any part or all of the burden of such penalty; and the reasons why such penalty is claimed to have been erroneously, illegally, or wrongfully collected. It shall be the responsibility of the county committee to determine that any person who executes a claim as agent or fiduciary is properly authorized to act in such capacity. There should be attached to the claim all pertinent documents with respect to the claim or duly authenticated copies thereof.
Where there is more than one claimant and all the claimants desire to appoint a trustee to receive and disburse any payment to be made to them with respect to the claim, they shall be permitted to appoint a trustee. The person designated as trustee shall execute the declaration of trust.
Immediately upon receipt of a claim, the date of receipt shall be recorded on the face thereof. The county committee shall determine, on the basis of all available information, if the data and representations on the claim are correct. The county committee shall recommend approval or disapproval of the claim, and attach a statement to the claim, signed by a member of the committee, giving the reasons for their action. After the recommendation of approval or disapproval is made by the county committee, the claim shall be promptly sent to the State committee.
A representative of the State committee shall review each claim referred by the county committee. If a claim is
The Deputy Administrator shall review each claim forwarded to him by the State committee to determine whether, (a) the penalty was erroneously, illegally, or wrongfully collected, (b) the claimant bore the burden of the payment of the penalty, (c) the claim was timely filed, and (d) under the applicable law and regulations the claimant is entitled to a refund. If a claim is filed initially with the Deputy Administrator, he shall obtain the recommendations of the county committee and the State committee if he deems such action necessary in arriving at a proper determination of the claim. The claimant shall be advised in writing of the action taken by the Deputy Administrator. If disapproved, the claimant shall be notified with an explanation of the reasons for such disapproval.
An officer or employee of the Department of Agriculture authorized to certify public vouchers for payment shall, for and on behalf of the Secretary of Agriculture, certify to the Secretary of the Treasury of the United States for payment all claims for refund which have been approved.
7 U.S.C. 1311
(a) This part:
(1) Is applicable to all programs set forth in chapters VII and XIV of this title which are administered by the Farm Service Agency (FSA), except that only §§ 718.6 and 718.11 are applicable to parts 761 through 774 of this chapter;
(2) Governs how FSA monitors marketing quotas, allotments, base acres and acreage reports. The regulations affected are those that establish procedures for measuring allotments and program eligible acreage, and determining program compliance.
(b) For all programs, except for those administered under parts 761 through 774 of this chapter:
(1) The provisions of this part will be administered under the general supervision of the Administrator, FSA, and carried out in the field by State and county FSA committees (State and county committees);
(2) State and county committees, and representatives and employees thereof, do not have authority to modify or waive any regulations in this part;
(3) No provisions or delegation herein to a State or county committee will preclude the Administrator, FSA, or a designee, from determining any question arising under the program or from reversing or modifying any determination made by a State or county committee;
(4) The Deputy Administrator, FSA, may authorize State and county committees to waive or modify deadlines and other requirements in cases where lateness or failure to meet such other requirements does not adversely affect the operation of the program.
(c) The programs under parts 761 through 774 will be administered according to the part, or parts, applicable to the specific program.
Except as provided in individual parts of chapters VII and XIV of this title, the following terms shall be as defined herein:
(1) Is currently being tilled for the production of a crop for harvest. Land which is seeded by drilling, broadcast or other no-till planting practices shall be considered tilled for cropland definition purposes;
(2) Is not currently tilled, but it can be established that such land has been tilled in a prior year and is suitable for crop production;
(3) Is currently devoted to a one-row or two-row shelter belt planting, orchard, or vineyard;
(4) Is in terraces that, were cropped in the past, even though they are no longer capable of being cropped;
(5) Is in sod waterways or filter strips planted to a perennial cover;
(6) Is preserved as cropland in accordance with part 1410 of this title; or
(7) Is land that has newly been broken out for purposes of being planted to a crop that the producer intends to, and is capable of, carrying through to harvest, using tillage and cultural practices that are consistent with normal practices in the area; provided further that, in the event that such practices are not utilized other than for reasons beyond the producer's control, the cropland determination shall be void retroactive to the time at which the land was broken out.
(b) Land classified as cropland shall be removed from such classification upon a determination by the county committee that the land is:
(1) No longer used for agricultural production;
(2) No longer suitable for production of crops;
(3) Subject to a restrictive easement or contract that prohibits its use for the production of crops unless otherwise authorized by the regulation of this chapter;
(4) No longer preserved as cropland in accordance with the provisions of part 1410 of this title and does not meet the conditions in paragraphs (a)(1) through (a)(6) of this definition; or
(5) Converted to ponds, tanks or trees other than those trees planted in compliance with a Conservation Reserve Program contract executed pursuant to part 1410 of this title, or trees that are used in one-or two-row shelterbelt plantings, or are part of an orchard or vineyard.
(1) American-Pima, Sea Island, Sealand, all other varieties of the Barbandense species of cotton and any hybrid thereof, and any other variety of cotton in which 1 or more of these varieties is predominant; and,
(2) The acreage is grown in a county designated as an ELS county by the Secretary; and,
(3) The production from the acreage is ginned on a roller-type gin.
(1) Great grandparent;
(2) Grandparent;
(3) Parent;
(4) Child, including a legally adopted child;
(5) Grandchild
(6) Great grandchildren;
(7) Sibling of the family member in the farming operation; and
(8) Spouse of a person listed in paragraphs (1) through (7) of this definition.
(1) Any agency of the Federal Government, however, such agency shall not be eligible to receive any payment pursuant to such contract;
(2) One who is buying farmland under a contract for deed;
(3) One who has a life-estate in the property; or
(4) For purposes of enrolling a farm in a program authorized by chapters VII and XIV of this title:
(i) One who has purchased a farm in a foreclosure proceeding; and
(A) The redemption period has not passed; and
(B) The original owner has not redeemed the property.
(ii) One who meets the provisions of paragraph (d)(1)(i) of this definition shall be entitled to receive benefits in accordance with an agency program only to the extent the owner complies with all program requirements.
(5) One who is an heir to property but cannot provide legal documentation to confirm ownership of the property, if such heir certifies to the ownership of the property and the certification is considered acceptable, as determined by the Deputy Administrator. Upon a false or inaccurate certification the Deputy Administrator may impose liability on the certifying party for additional cost that results—however such a certification may be taken by the Deputy Administrator as a bar to other claims where there has been a failure of other persons claiming an interest in the property to act promptly to protect or declare their interest or where the current public records do not accurately set out the current ownership of the farm.
(1) Have a separate and distinct interest in the land or the crop involved;
(2) Exercise separate responsibility for such interest; and
(3) Be responsible for the cost of farming related to such interest from a
(1) Measuring or computing a delineated area from ground measurements and documenting the area measured; and, (2) Staking and referencing the area on the ground.
(1) One who rents land from another in consideration of the payment of a specified amount of cash or amount of a commodity; or
(2) One (other than a sharecropper) who rents land from another person in consideration of the payment of a share of the crops or proceeds therefrom.
(a) The State committee shall, with respect to county committees:
(1) Take any action required of the county committee, which the county committee fails to take in accordance with this part;
(2) Correct or require the county committee to correct any action taken by such committee, which is not in accordance with this part;
(3) Require the county committee to withhold taking any action which is not in accordance with this part;
(4) Review county office rates for producer services to determine equity between counties;
(5) Determine, based on cost effectiveness, which counties will use aerial compliance methods and which counties will use ground measurement compliance methods; or
(6) Adjust the per acre rate for acreage in excess of 25 acres to reflect the actual cost involved when performing measurement service from aerial slides or digital images.
(b) The State committee shall submit to the Deputy Administrator requests to deviate from deductions prescribed in § 718.108, or the error amount or percentage for refunds of redetermination costs as prescribed in § 718.111.
(a) This section applies to all farms that have a tobacco allotment or quota under part 723 of this chapter and all farms that are currently participating in programs administered by FSA.
(b) A representative of FSA may enter any farm that participates in an FSA or CCC program in order to conduct a farm inspection as defined in this part. A program participant may request that the FSA representative present written authorization for the farm inspection before granting access to the farm. If a farm inspection is not allowed within 30 days of written authorization:
(1) All FSA and CCC program benefits for that farm shall be denied;
(2) The person preventing the farm inspection shall pay all costs associated with the farm inspection;
(3) The entire crop production on the farm will be considered to be in excess of the quota established for the farm; and
(4) For tobacco, the farm operator must furnish proof of disposition of:
(i) All tobacco which is in addition to the production shown on the marketing card issued with respect to such farm; and
(ii) No credit will be given for disposing of excess tobacco other than that identified by a marketing card unless disposed of in the presence of FSA in accordance with § 718.109 of this part.
(c) If a program participant refuses to furnish reports or data necessary to determine benefits in accordance with paragraph (a) of this section, or FSA determines that the report or data was erroneously provided through the lack of good faith, all program benefits relating to the report or data requested will be denied.
(a) Fractions shall be rounded after completion of the entire associated computation. All mathematical calculations shall be carried to two decimal places beyond the number of decimal places required by the regulations governing each program. In rounding, fractional digits of 49 or less beyond the required number of decimal places shall be dropped; if the fractional digits beyond the required number of decimal places are 50 or more, the figure at the last required decimal place shall be increased by “1” as follows:
(b) The acreage of each field or subdivision computed for tobacco and CCC disaster assistance programs shall be recorded in acres and hundredths of an acre, dropping all thousandths of an acre. The acreage of each field or subdivision computed for crops, except tobacco, shall be recorded in acres and tenths of an acre, rounding all hundredths of an acre to the nearest tenth.
(a) The following terms apply to this section:
(1)
(2)
(b) Notwithstanding any other provision of law, any person convicted under Federal or State law of:
(1) Planting, cultivating, growing, producing, harvesting, or storing a controlled substance in any crop year is ineligible during the crop year of conviction and the four succeeding crop years, for any of the following USDA benefits:
(i) Any payments or benefits under the Direct and Counter Cyclical Program (DCP) in accordance with part 1412 of this title;
(ii) Any payments or benefits for losses to trees, crops, or livestock covered under disaster programs administered by FSA;
(iii) Any price support loan available in accordance with part 1421 of this title;
(iv) Any price support or payment made under the Commodity Credit Corporation Charter Act;
(v) A farm storage facility loan made under section 4(h) of the Commodity Credit Corporation Charter Act or any other Act;
(vi) Crop Insurance under the Federal Crop Insurance Act;
(vii) A loan made or guaranteed under the Consolidated Farm and Rural Development Act or any other law administered by FSA's Farm Loan Programs.
(2) Possession or trafficking of a controlled substance, is ineligible for any or all USDA benefits:
(i) At the discretion of the court,
(ii) To the extent and for a period of time the court determines.
(c) If a person denied benefits under this section is a shareholder, beneficiary, or member of an entity or joint operation, benefits for which the entity or joint operation is eligible will be reduced, for the appropriate period, by a percentage equal to the total interest of the shareholder, beneficiary, or member.
A reasonable number, as determined by FSA, of reproductions of photographs, mosaics and maps shall be available to the owner of a farm insurance companies reinsured by the Federal Crop Insurance Corporation (FCIC), private party contractors performing their official duties on behalf of FSA, CCC, and other USDA agencies. To all others, reproductions shall be made available at the rate FSA determines will cover the cost of making such items available.
(a) If all land on the farm is physically located in one county, the farm shall be administratively located in such county. If there is no FSA office in the county or the county offices have been consolidated, the farm shall be administratively located in the contiguous county most convenient for the farm operator.
(b) If the land on the farm is located in more than one county, the farm shall be administratively located in either of such counties as the county committees and the farm operator agree. If no agreement can be reached, the farm shall be administratively located in the county where the principal dwelling is situated, or where the major portion of the farm is located if there is no dwelling.
(c) The State committee shall submit all requests to deviate from regulations specified in this section to the Deputy Administrator.
(a) When a program authorized by this chapter or Chapter XIV of this title requires the signature of a producer; landowner; landlord; or tenant, a husband or wife may sign all such FSA or CCC documents on behalf of the other spouse, unless such other spouse has provided written notification to FSA and CCC that such action is not authorized. The notification must be provided to FSA with respect to each farm.
(b) Except a husband or wife may not sign a document on behalf of a spouse with respect to:
(1) Program document required to be executed in accordance with part 3 of this title;
(2) Easements entered into under part 1410 of this title;
(3) Power of attorney;
(4) Such other program documents as determined by FSA or CCC.
(c) An individual; duly authorized officer of a corporation; duly authorized partner of a partnership; executor or administrator of an estate; trustee of a trust; guardian; or conservator may delegate to another the authority to act on their behalf with respect to FSA and CCC programs administered by USDA service center agencies by execution of a Power of Attorney, or such other form as approved by the Deputy Administrator. FSA and CCC may, at their discretion, allow the delegations of authority by other individuals through use of the Power of Attorney or such other form as approved by the Deputy Administrator.
(d) Notwithstanding another provision of this regulation or any other FSA or CCC regulation in this title, a parent may execute documents on behalf of a minor child unless prohibited by a statute or court order.
(e) Notwithstanding any other provision in this title, an authorized agent of the Bureau of Indian Affairs (BIA) of the United States Department of Interior may sign as agent for landowners with properties affiliated with or under the management or trust of the BIA. For collection purposes, such payments will be considered as being made to the persons who are the beneficiaries of the payment or may, alternatively, be considered as an obligation of all persons on the farm in general. In the event of a need for a refund or other claim may be collected, among other means, by other monies due such persons or the farm.
Whenever the final date prescribed in any of the regulations in this title for the performance of any act falls on a Saturday, Sunday, national holiday, State holiday on which the office of the county or State Farm Service Agency committee having primary cognizance of the action required to be taken is closed, or any other day on which the cognizant office is not open for the transaction of business during normal working hours, the time for taking required action shall be extended to the close of business on the next working day. Or in case the action required to be taken may be performed by mailing, the action shall be considered to be taken within the prescribed period if the mailing is postmarked by midnight of such next working day. Where the action required to be taken is with a prescribed number of days after the mailing of notice, the day of mailing shall be excluded in computing such period of time.
(a) Section 515(h) of the Federal Crop Insurance Act (FCIA) provides that a person who willfully and intentionally provides false or inaccurate information to the Federal Crop Insurance Corporation (FCIC) or to an approved insurance provider with respect to a policy or plan of FCIC insurance, after notice and an opportunity for a hearing on the record, will be subject to one or more of the sanctions described in section 515(h)(3). In section 515(h)(3), the FCIA specifies that in the case of a violation committed by a producer, the producer may be disqualified for a period of up to 5 years from receiving any monetary or non-monetary benefit under a number of programs. The list includes, but is not limited to, benefits under:
(1) The FCIA.
(2) The Agricultural Market Transition Act (7 U.S.C. 7201
(3) The Agricultural Act of 1949 (7 U.S.C. 1421
(4) The Commodity Credit Corporation Charter Act (15 U.S.C. 714
(5) The Agricultural Adjustment Act of 1938 (7 U.S.C. 1281
(6) Title XII of the Food Security Act of 1985 (16 U.S.C. 3801
(7) The Consolidated Farm and Rural Development Act (7 U.S.C. 1921
(8) Any law that provides assistance to a producer of an agricultural commodity affected by a crop loss or a decline in prices of agricultural commodities.
(b) Violation determinations are made by FCIC. However, upon notice from FCIC to FSA that a producer has been found to have committed a violation to which paragraph (a) of this section applies, that person will be ineligible for payments under the programs specified in paragraph (a) of this section that are funded by FSA for the same period of time for which, as determined by FCIC, the producer will be ineligible for crop insurance benefits of the kind referred to in paragraph (a)(1) of this section. Appeals of the determination of ineligibility will be administered under the rules set by FCIC.
(c) Other sanctions may also apply.
(a) Measurement services include, but are not limited to, measuring land and crop areas, quantities of farm-stored commodities, and appraising the yields of crops in the field when required for program administration purposes. The county committee shall provide measurement service if the producer requests such service and pays the cost, except that service shall not be provided to determine total acreage or production of a crop when the request is made:
(1) After the established final reporting date for the applicable crop, unless a late filed report is accepted as provided in § 718.103;
(2) After the farm operator has furnished production evidence when required for program administration purposes except as provided in this subpart; or
(3) In connection with a late-filed report of acreage, unless there is evidence of the crop's existence in the field and use made of the crop, or the lack of the crop due to a disaster condition affecting the crop.
(b) The acreage requested to be measured by staking and referencing shall not exceed the effective farm allotment for marketing quota crops or acreage of a crop that is limited to a specific number of acres to meet any program requirement.
(c) When a producer requests, pays for, and receives written notice that measurement services have been furnished, the measured acreage shall be guaranteed to be correct and used for all program purposes for the current year even though an error is later discovered in the measurement thereof, if the producer has taken action with an economic significance based on the measurement service, and the entire crop required for the farm was measured. If the producer has not taken action with an economic significance based on the measurement service, the producer shall be notified in writing that an error was discovered and the nature and extent of such error. In such cases, the corrected acreage will be used for determining program compliance for the current year.
(d) When a measurement service reveals acreage in excess of the permitted acreage and the allowable tolerance as defined in this part, the producer must destroy the excess acreage and pay for FSA to verify destruction, in order to keep the measurement service guarantee.
(a) In order to be eligible for benefits, participants in the programs specified in paragraphs (b)(1) through (b)(6) of
(b)(1) Participants in the programs governed by part 1412 of this title must report the acreage of fruits and vegetables planted for harvest on a farm enrolled in such program;
(2) Participants in the programs governed by parts 1421 and 1427 of this title must report the acreage planted to a commodity for harvest for which a marketing assistance loan or loan deficiency payment is requested;
(3) Participants in the programs governed by part 1410 of this title must report the use of land enrolled in such programs;
(4) All participants in the programs governed by part 1437 of this title must report all acreage in the county of the eligible crop in which the producer has a share;
(5) Participants in the programs governed by part 723 of this chapter and part 1464 of this title must report the acreage planted to tobacco by kind on all farms that have an effective allotment or quota greater than zero;
(6) All participants in the programs governed by parts 1412, 1421, and 1427 of this title must report the use of all cropland on the farm.
(7) All producers requesting to report acreage as prevented planted or failed must provide documentation to FSA where the farm is administered that meets the provisions of § 718.103.
(c) The reports required under paragraph (a) of this section shall be timely filed by the farm operator, farm owner, producer of the crop on the farm, or a duly authorized representative with the county committee by the final reporting date applicable to the crop as established by the county committee and State committee.
(a) Prevented planting is the inability to plant an eligible crop with proper equipment during the planting period as a result of an eligible cause of loss, as determined by CCC. The eligible cause of loss that prevented the planting must have:
(1) Occurred after a previous planting period for the crop;
(2) Occurred before the final planting date for the crop in the applicable crop year or, in the case of multiple plantings, the harvest date of the first planting in the applicable planting period, and
(3) Similarly affected other producers in the area, as determined by CCC.
(b) To be approved by FSA as prevented planted acreage:
(1) The acreage must have been reported within 15 calendar days after the latter of
(i) The occurrence of prevented planting, or
(ii) The end of the planting period;
(2) The acreage must have been prevented from being planted as the result of a natural disaster and not a management decision; and
(3) The prevented planted acreage report must be acted on by the COC. The COC will deny the acreage report if it is not satisfied with the documentation provided.
(c) To receive prevented planted credit for acreage:
(1) The producer must show there was the intent to plant the acreage by providing documentation of field preparation, seed purchase and any other information that shows the acreage could have been planted and harvested under normal weather conditions, and
(2) The producer must show that the amount of the prevented planted acreage credit is consistent with prior years' planting history for the farm.
(d) Eligible prevented planting acreage will be determined on the basis of the producer's intent to plant the crop acreage and possession of, or access to, resources to plant, grow, and harvest the crop, as applicable.
(e) Prevented planting acreage credit is not provided on acreage that had either a previous or subsequent crop planted on the acreage, unless the COC determines that all of the following conditions are met:
(1) There is an established practice of planting two or more crops for harvest on the same acreage in the same crop year;
(2) Both crops could have reached maturity if each planting was harvested or would have been harvested;
(3) Both the initial and subsequent planted crops were planted or prevented-planted within the normal planting period for that crop; and
(4) Both the initial and subsequent planted crops meet all other eligibility provisions of this part including good farming practices.
(f) Prevented planted acreage credit will not be given to crops where the prevented-planted acreage was affected by drought, unless:
(1) On the final planting date for non-irrigated acreage, the area that is prevented from being planted has insufficient soil moisture for germination of seed and progress toward crop maturity because of a prolonged period of dry weather, as determined by CCC; and
(2) Prolonged precipitation deficiencies exceeded the D2 level as determined using the U.S. Drought Monitor; and
(3) Verifiable information is collected from sources whose business or purpose it is to record weather conditions, as determined by CCC, and including but not limited to the local weather reporting stations of the U.S. National Weather Service.
(g) Prevented planted acreage credit under this part shall apply to irrigated crops where the acreage was prevented from being planted due to a lack of water resulting from drought conditions or contamination by saltwater intrusion of an irrigation supply resulting from drought conditions if there was not a reasonable probability of having adequate water to carry out an irrigation practice.
(h) Acreage ineligible for prevented planting coverage includes, but is not limited to acreage:
(1) Which planting history or conservation plans indicate would remain fallow for crop rotation purposes;
(2) Used for conservation purposes or intended to be or considered to have been left unplanted under any program administered by USDA, including the Conservation Reserve and Wetland Reserve Programs; and
(3) Not planted because of a management decision.
(i) Failed acreage is acreage that was planted with the proper equipment during the planting period but failed as a result of an eligible cause of loss, as determined by CCC.
(j) To be approved by CCC as failed acreage the acreage must have been reported as failed acreage before disposition of the crop, and the acreage must have been planted under normal conditions but failed as the result of a natural disaster and not a management decision. Producers who file a failed acreage report must have the request acted on by the COC. The COC will deny the acreage report if it is not satisfied with the documentation provided.
(k) To receive failed acreage credit the producer must show all of the following:
(1) That the acreage was planted under normal conditions using the proper equipment with the intent to harvest the acreage.
(2) Provide documentation that the crop was planted using farming practices consistent for the crop and area, but could not be brought to harvest because of disaster-related conditions.
(l) The eligible cause for failed acreage must have:
(1) Occurred after the crop was planted, and
(2) Before the normal harvest date for the crop in the applicable crop year or in the case of multiple plantings, the harvest date of the first planting in the applicable planting period, and
(3) Other producers in the area were similarly affected as determined by CCC.
(m) Eligible failed acreage will be determined on the basis of the producer planting the crop under normal conditions with the expectation to take the crop to harvest.
(n) Acreage ineligible for failed acreage credit includes, but is not limited to acreage:
(1) Which was planted using methods that could not be considered normal for the area and without the expectation of harvest;
(2) Used for conservation purposes or intended to be or considered to have been un-harvested under any program administered by USDA, including the Conservation Reserve and Wetland Reserve Programs; and
(3) That failed because of a management decision.
(a) Late-filed acreage reports may be accepted after the final reporting date, and be considered timely filed, if both of the following apply:
(1) The crop or identifiable crop residue is in the field, and
(2) The acreage has not already been determined by FSA.
(b) The farm operator filing a report late shall pay the cost of a farm inspection unless FSA determines that failure to report in a timely manner was beyond the producer's control.
(c) Revised acreage reports may be filed with respect to 2005 and subsequent years to change the acreage reported if:
(1) The acreage has not already been determined by FSA; and
(2) Actual crop or residue is present in the field.
(d) Revised reports shall be filed and accepted:
(1) At any time for all crops if the crop or residue still exists in the field for inspection to verify the existence and use made of the crop, the lack of the crop, or a disaster condition affecting the crop; and
(2) If the producer was in compliance with all other program requirements at the reporting date.
(a) Tolerance is the amount by which the determined acreage for a crop may differ from the reported acreage or allotment for the crop and still be considered in compliance with program requirements under §§ 718.102(b)(1), (b)(3) and (b)(5).
(b) Tolerance rules apply to those fields for which a staking and referencing was performed but such acreage was not planted according to those measurements or when a measurement service is not requested for acreage destroyed to meet program requirements.
(c) Tolerance rules do not apply to:
(1) Program requirements of §§ 718.102(b)(2), (b)(4) and (b)(6);
(2) Official fields when the entire field is devoted to one crop;
(3) Those fields for which staking and referencing was performed and such acreage was planted according to those measurements; or
(4) The adjusted acreage for farms using measurement after planting which have a determined acreage greater than the marketing quota crop allotment.
(d) An administrative variance is applicable to all allotment crop acreages. Allotment crop acreages as determined in accordance with this part shall be deemed in compliance with the effective farm allotment or program requirement when the determined acreage does not exceed the effective farm allotment by more than an administrative variance determined as follows:
(1) For all kinds of tobacco subject to marketing quotas, except dark air-cured and fire-cured the larger of 0.1 acre or 2 percent of the allotment; and
(2) For dark air-cured and fire-cured tobacco, an acreage based on the effective acreage allotment as provided in the table as follows:
(e) A tolerance applies to tobacco, other than flue-cured or burley, if the measured acreage exceeds the allotment by more than the administrative variance but by not more than the tolerance. Such excess acreage of tobacco may be adjusted to the effective farm acreage allotment to avoid marketing quota penalties or receive price support.
(f) If the acreage report for a crop is outside the tolerance for that crop:
(1) FSA may consider the requirements of §§ 718.102 (b)(1), (b)(3) and (b)(5) not to have been met, and;
(2) Participants may be ineligible for all or a portion of payments or benefits
Participants that knowingly and willfully provide false or inaccurate acreage reports may be ineligible for some or all payments or benefits subject to the requirements of §§ 718.102 (b)(1), (b)(3) and (b)(5):
(a) The county committee determines that the acreage report filed according to §§ 718.102 (b)(1), (b)(3) and (b)(5) is inaccurate, and;
(b) A good-faith effort to accurately report the acreage was not made because the report was knowingly and willfully falsified.
(a) If an acreage has been established by FSA for an area delineated on an aerial photograph or within a GIS, such acreage will be recognized by the county committee as the acreage for the area until such time as the boundaries of such area are changed. When boundaries not visible on the aerial photograph are established from data furnished by the producer, such acreage shall not be recognized as official acreage until an authorized representative of FSA verifies the boundaries.
(b) Measurements of any row crop shall extend beyond the planted area by the larger of 15 inches or one-half the distance between the rows.
(c) The entire acreage of a field or subdivision of a field devoted to a crop shall be considered as devoted to the crop subject to a deduction or adjustment except as otherwise provided in this part.
(a) When one crop is alternating with another crop, whether or not both crops have the same growing season, only the acreage that is actually planted to the crop being measured will be considered to be acreage devoted to the measured crop.
(b) Subject to the provisions of this paragraph and section, whether planted in a skip row pattern or without a pattern of skipped rows, the entire acreage of the field or subdivision may be considered as devoted to the crop only where the distance between the rows, for all rows, is 40 inches or less. If there is a skip that creates idle land wider than 40 inches, or if the distance between any rows is more than 40 inches, then the area planted to the crop shall be considered to be that area which would represent the smaller of; a 40 inch width between rows, or the normal row spacing in the field for all other rows in the field—those that are not more than 40 inches apart. The allowance for individual rows would be made based on the smaller of actual spacing between those rows or the normal spacing in the field. For example, if the crop is planted in single, wide rows that are 48 inches apart, only 20 inches to either side of each row (for a total of 40 inches between the two rows) could, at a maximum, be considered as devoted as the crop and normal spacing in the field would control. Half the normal distance between rows will also be allowed beyond the outside planted rows not to exceed 20 inches and will reflect normal spacing in the field.
(c) In making calculations under this section, further reductions may be made in the acreage considered planted if it is determined that the acreage is more sparsely planted than normal using reasonable and customary full production planting techniques.
(d) The Deputy Administrator has the discretionary authority to allow row allowances other than those specified in this section in those instances in which crops are normally planted with spacings greater or less than 40 inches, such as in case of tobacco, or where other circumstances are present which the Deputy Administrator finds justifies that allowance.
(e) Paragraphs (a) through (d) of this section shall apply with respect to the 2003 and subsequent crops. For preceding crops, the rules in effect on January 1, 2002, shall apply.
(a) Any contiguous area which is not devoted to the crop being measured and which is not part of a skip-row pattern under § 718.108 shall be deducted from the acreage of the crop if such area
(1) A minimum width of 30 inches;
(2) For tobacco—three-hundredths (.03) acre. Turn areas, terraces, permanent irrigation and drainage ditches, sod waterways, non-cropland, and subdivision boundaries each of which is at least 30 inches in width may be combined to meet the 0.03-acre minimum requirement; or
(3) For all other crops and land uses—one-tenth (.10) acre. Turn areas, terraces, permanent irrigation and drainage ditches, sod waterways, non-cropland, and subdivision boundaries each of which is at least 30 inches in width and each of which contain 0.1 acre or more may be combined to meet any larger minimum prescribed for a State in accordance with this subpart.
(b) If the area not devoted to the crop is located within the planted area, the part of any perimeter area that is more than 217.8 feet (33 links) in width will be considered to be an internal deduction if the standard deduction is used.
(c) A standard deduction of 3 percent of the area devoted to a row crop and zero percent of the area devoted to a close-sown crop may be used in lieu of measuring the acreage of turn areas.
(a) The farm operator or other interested producer having excess tobacco acreage (other than flue-cured or burley) may adjust an acreage of the crop in order to avoid a marketing quota penalty if such person:
(1) Notifies the county committee of such election within 15 calendar days after the date of mailing of notice of excess acreage by the county committee; and
(2) Pays the cost of a farm inspection to determine the adjusted acreage prior to the date the farm visit is made.
(b) The farm operator may adjust an acreage of tobacco (except flue-cured and burley) by disposing of such excess tobacco prior to the marketing of any of the same kind of tobacco from the farm. The disposition shall be witnessed by a representative of FSA and may take place before, during, or after the harvesting of the same kind of tobacco grown on the farm. However, no credit will be allowed toward the disposition of excess acreage after the tobacco is harvested but prior to marketing, unless the county committee determines that such tobacco is representative of the entire crop from the farm of the kind of tobacco involved.
Notice of measured acreage shall be provided by FSA and mailed to the farm operator. This notice shall constitute notice to all parties who have ownership, leasehold interest, or other, in such farm.
(a) A redetermination of crop acreage, appraised yield, or farm-stored production for a farm may be initiated by the county committee, State committee, or Deputy Administrator at any time. Redetermination may be requested by a producer with an interest in the farm if they pay the cost of the redetermination. The request must be submitted to FSA within 15 calendar days after the date of the notice described in §§ 718.110 or 718.111, or within 5 calendar days after the initial appraisal of the yield of a crop, or before the farm-stored production is removed from storage. A redetermination shall be undertaken in the manner prescribed by the Deputy Administrator. A redetermination shall be used in lieu of any prior determination.
(b) The county committee shall refund the payment of the cost for a redetermination when, because of an error in the initial determination:
(1) The appraised yield is changed by at least the larger of:
(i) Five percent or 5 pounds for cotton;
(ii) Five percent or 1 bushel for wheat, barley, oats, and rye; or
(iii) Five percent or 2 bushels for corn and grain sorghum; or
(2) The farm stored production is changed by at least the smaller of 3 percent or 600 bushels; or
(3) The acreage of the crop is:
(i) Changed by at least the larger of 3 percent or 0.5 acre; or
(ii) Considered to be within program requirements.
(a) In order to implement agency programs and monitor farmer compliance with regulations, the agency must have records on what land is being farmed by a particular producer. This is accomplished by a determination of what land or groups of land ‘constitute’ an individual unit or farm. Land, which has been properly constituted under prior regulations, shall remain so constituted until a reconstitution is required under paragraph (c) of this section. The constitution and identification of land as a farm for the first time and the subsequent reconstitution of a farm made hereafter, shall include all land operated by an individual entity or joint operation as a single farming unit except that it shall not include:
(1) Land under separate ownership unless the owners agree in writing and the labor, equipment, accounting system, and management are operated in common by the operator but separate from other tracts;
(2) Land under a lease agreement of less than 1 year duration;
(3) Land in different counties when the tobacco allotments or quotas established for the land involved cannot be transferred from one county to another county by lease, sale, or owner. However, this paragraph shall not apply if:
(i) All of the land is contiguous;
(ii) The land is located in counties that are contiguous in the same State if:
(A) A burley or flue-cured tobacco quota is established for one or more of the tracts; and
(B) The county committee determines that the tracts will be operated as a single farming unit as set forth in § 718.202; or
(iii) Because of a change in operation, tracts or parts of tracts will be divided from the parent farm that currently has land in more than one county, and there is no change in operation and ownership of the remainder of the farm, or if there is a change in ownership, the new owner agrees in writing to the constitution of the farm.
(4) Federally-owned land;
(5) State-owned wildlife lands unless the former owner has possession of the land under a leasing agreement; and
(6) Land constituting a farm which is declared ineligible to be enrolled in a program under the regulations governing the program; and
(7) For acreage base crops, land located in counties that are not contiguous. However, this paragraph shall not apply if:
(i) Counties are divided by a river;
(ii) Counties do not touch because of a correction line adjustment; or
(iii) The land is within 20 miles, by road, of other land that will be a part of the farming unit.
(b)(1) If all land on the farm is physically located in one county, the farm shall be administratively located in such county. If there is no FSA office in the county or the county offices have been consolidated, the farm shall be administratively located in the contiguous county most convenient for the farm operator.
(2) If the land on the farm is located in more than one county, the farm shall be administratively located in either of such counties as the county committees and the farm operator agree. If no agreement can be reached, the farm shall be administratively located in the county where the principal dwelling is situated, or where the major portion of the farm is located if there is no dwelling.
(c) A reconstitution of a farm either by division or by combination shall be required whenever:
(1) A change has occurred in the operation of the land after the last constitution or reconstitution and as a result of such change the farm does not meet the conditions for constitution of a farm as set forth in paragraph (a) of this section except that no reconstitution shall be made if the county committee determines that the primary purpose of the change in operation is to establish eligibility to transfer allotments subject to sale or lease, or increase amount of program benefits received;
(2) The farm was not properly constituted the previous time;
(3) An owner requests in writing that the land no longer be included in a farm composed of tracts under separate ownership;
(4) The county committee determines that the farm was reconstituted on the basis of false information;
(5) The county committee determines that tracts included in a farm are not being operated as a single farming unit.
(d) Reconstitution shall not be approved if the county committee determines that the primary purpose of the reconstitution is to:
(1) Circumvent the provisions of part 12 of this title; or
(2) Circumvent any other chapter of this title.
(a) In determining the constitution of a farm, consideration shall be given to provisions such as ownership and operation. For purposes of this part, the following rules shall be applicable to determining what land is to be included in a farm.
(b) A minor shall be considered to be the same owner or operator as the parent, court-appointed guardian, or other person responsible for the minor child, unless the parent or guardian has no interest in the minor's farm or production from the farm, and the minor:
(1) Is a producer on a farm;
(2) Maintains a separate household from the parent or guardian;
(3) Personally carries out the farming activities; and
(4) Maintains a separate accounting for the farming operation.
(c) A minor shall not be considered to be the same owner or operator as the parent or court-appointed guardian if the minor's interest in the farming operation results from being the beneficiary of an irrevocable trust and ownership of the property is vested in the trust or the minor.
(d) A life estate tenant shall be considered to be the owner of the property for their life.
(e) A trust shall be considered to be an owner with the beneficiary of the trust; except a trust can be considered a separate owner or operator from the beneficiary, if the trust:
(1) Has a separate and distinct interest in the land or crop involved;
(2) Exercises separate responsibility for the separate and distinct interest; and
(3) Maintains funds and accounts separate from that of any other individual or entity for the interest.
(f) The county committee shall require specific proof of ownership.
(g) Land owned by different persons of an immediate family living in the same household and operated as a single farming unit shall be considered as being under the same ownership in determining a farm.
(h) All land operated as a single unit and owned and operated by a parent corporation and subsidiary corporations of which the parent corporation owns more than 50 percent of the value of the outstanding stock, or where the parent is owned and operated by subsidiary corporations, shall be constituted as one farm.
Action to reconstitute a farm may be initiated by the county committee, the farm owner, or the operator with the concurrence of the owner of the farm. Any request for a farm reconstitution shall be filed with the county committee.
(a) Farms shall be reconstituted in accordance with this subpart when it is determined that the land areas are not properly constituted and, to the extent practicable, shall be based on the facts and conditions existing at the time the change requiring the reconstitution occurred.
(b) Reconstitutions of farms subject to a direct and counter-cyclical program contract in accordance with part 1413 of this title will be effective for the current year if initiated on or before August 1 or prior to the issuance of DCP payments for the farm or farms being reconstituted.
(c) For tobacco farms, a reconstitution will be effective for the current
(d) Notwithstanding the provisions of paragraph (c) of this section, a reconstitution may be effective for the current year if the county committee determines, and the State committee concurs, that the purpose of the request for reconstitution is not to perpetrate a scheme or device designed to evade the requirements governing programs found in this title.
(a) Land that is properly constituted as a farm shall not be reconstituted if:
(1) The reconstitution request is based upon the formation of a newly established legal entity which owns or operates the farm or any part of the farm and the county committee determines there is not a substantive change in the farming operation;
(2) The county committee determines that the primary purpose of the request for reconstitution is to:
(i) Obtain additional benefits under one or more commodity programs;
(ii) Avoid damages or penalties under a contract or statute;
(iii) Correct an erroneous acreage report; or
(iv) Circumvent any other program provisions. In addition, no farm shall remain as constituted when the county committee determines that a substantive change in the farming operation has occurred which would require a reconstitution, except as otherwise approved by the State committee with the concurrence of the Deputy Administrator.
(b) In determining whether a substantive change has occurred with respect to a farming operation, the county committee shall consider factors such as the composition of the legal entities having an interest in the farming operation with respect to management, financing, and accounting. The county committee shall also consider the use of land, labor, and equipment available to the farming operations and any other relevant factors that bear on the determination.
(c) Unless otherwise approved by the State committee with the concurrence of the Deputy Administrator, when the county committee determines that a corporation, trust, or other legal entity is formed primarily for the purpose of obtaining additional benefits under the commodity programs of this title, the farm shall remain as constituted, or shall be reconstituted, as applicable, when the farm is owned or operated by:
(1) A corporation having more than 50 percent of the stock owned by members of the same family living in the same household;
(2) Corporations having more than 50 percent of the stock owned by stockholders common to more than one corporation; or
(3) Trusts in which the beneficiaries and trustees are family members living in the same household.
(d) Application of the provisions of paragraph (c) of this section shall not limit or affect the application of paragraphs (a) and (b) of this section.
(a) The methods for dividing farms, tracts, allotments, quotas, and bases in order of precedence, when applicable, are estate, designation by landowner, contribution, cropland, DCP cropland, default, and history. The proper method shall be determined on a crop by crop basis.
(b)(1) The estate method is the pro-rata distribution of allotments, quotas, and bases for a parent farm among the heirs in settling an estate. If the estate sells a tract of land before the farm is divided among the heirs, the allotments, quotas, and bases for that tract shall be determined according to paragraphs (c) through (h) of this section.
(2) Allotments, quotas, and bases shall be divided in accordance with a will, but only if the county committee determines that the terms of the will are such that a division can reasonably be made by the estate method.
(3) If there is no will or the county committee determines that the terms of a will are not clear as to the division of allotments, quotas, and bases, such allotments, quotas, and bases shall be apportioned in the manner agreed to in
(4) If allotments, quotas, and bases are not apportioned in accordance with the provisions of paragraphs (b)(2) or (b)(3) of this section, the allotments, quotas, and bases shall be divided pursuant to paragraphs (d) through (h) of this section, as applicable.
(c)(1) If the ownership of a tract of land is transferred from a parent farm, the transferring owner may request that the county committee divide the allotments, quotas, and bases, including historical acreage that has been double cropped, between the parent farm and the transferred tract, or between the various tracts if the entire farm is sold to two or more purchasers, in a manner designated by the owner of the parent farm subject to the conditions set forth in paragraph (c)(3) of this section.
(2) If the county committee determines that allotments, quotas, and bases cannot be divided in the manner designated by the owner because of the conditions set forth in paragraph (c)(3) of this section, the owner shall be notified and permitted to revise the designation so as to meet the conditions in paragraph (c)(3) of this section. If the owner does not furnish a revised designation of allotments, quotas, and bases within a reasonable time after such notification, or if the revised designation does not meet the conditions of paragraph (c)(3) of this section, the county committee will divide the allotments, quotas, and bases in a pro-rata manner in accordance with paragraphs (d) through (h) of this section.
(3) A landowner may designate a manner in which allotments, quotas, and bases are divided according to this paragraph.
(i) The transferring owner and transferee shall file a signed written memorandum of understanding of the designation with the county committee before any CCC or FSA prescribed form, letter or contract providing an allotment, base or quota is issued and before a subsequent transfer of ownership of the land. The landowner shall designate the allotments, quotas, and bases that shall be permanently reduced when the sum of the allotments, quotas, and bases exceeds the cropland for the farm.
(ii) Where the part of the farm from which the ownership is being transferred was owned for a period of less than 3 years, the designation by landowner method shall not be available with respect to the transfer unless the county committee determines that the primary purpose of the ownership transfer was other than to retain or to sell allotments, quotas, or bases. In the absence of such a determination, and if the farm contains land which has been owned for less than 3 years, that part of the farm which has been owned for less than 3 years shall be considered as a separate farm and the allotments, quotas, or bases, shall be assigned to that part in accordance with paragraphs (d) through (h) of this section. Such apportionment shall be made prior to any designation of allotments, quotas, and bases with respect to the part that has been owned for 3 years or more.
(4) The designation by landowner method is not applicable to crop allotments or quotas which are restricted to transfer within the county by lease, sale, or by owner, when the land on which the farm is located is in two or more counties.
(5) The designation by landowner method may be applied at the owner's request to land owned by any Indian Tribal Council which is leased to two or more producers for the production of any crop of a commodity for which an allotment, quota, or base has been established. If the land is leased to two or more producers, an Indian Tribal Council may request that the county committee divide the allotments, quotas, and bases between the applicable tracts in the manner designated by the Council. The use of this method shall not be subject to the conditions of paragraph (c)(3) of this section.
(d)(1) The contribution method is the pro-rata distribution of a parent farm's allotments and quotas to each tract as the tract contributed to the allotments and quotas at the time of combination
(2) The county committee determines and the State committee or a representative thereof concurs, that the use of the contribution method would not result in an equitable distribution of allotments and quotas, considering available land, cultural operations, and changes in type of farming.
(e) The cropland method is the pro-rata distribution of allotments and quotas to separate tracts proportionately to the tract's contribution to the cropland for the parent tract. This method shall be used if paragraphs (b) through (d) of this section do not apply unless the county committee determines that division by the history method would result in more representative allotments and quotas than the cropland method, taking into consideration the operation normally carried out on each tract for the commodities produced on the farm.
(f)(1) The history method is the pro-rata distribution of allotments and quotas to separate tracts on the basis of the operation normally carried out on each tract of the parent farm. The county committee may use the history method of dividing allotments and quotas when it:
(i) Determines that this method would result in a more accurate pro-rata distribution of allotments and quotas based on actual contribution of the tract to the totals of the parent farm than the cropland method would; and
(ii) Obtains written consent of all owners to use the history method.
(2) The county committee may waive the requirement for written consent of the owners for dividing allotments and quotas if the county committee determines that the use of the cropland method would result in an inequitable division of the parent farm's allotments and quotas and the use of the history method would provide more favorable results for all owners.
(g) The DCP cropland method is the pro-rata distribution of bases to the resulting tracts in the same proportion to the DCP cropland that each resulting tract bears to the DCP cropland for the parent tract. This method of division shall be used if paragraphs (b) and (c) of this section do not apply.
(h) The default method is the separation of tracts from a farm with each tract maintaining the bases attributed to the tract when the reconstitution is initiated.
(i)(1) Allotments, quotas, and bases apportioned among the resulting farms pursuant to paragraphs (d) through (h) of this section may be increased or decreased with respect to a farm by as much as 10 percent of the parent farm's allotment, quota, or base determined under such subsections for the parent farm if:
(i) The owners agree in writing; and
(ii) The county committee determines the method used did not provide an equitable distribution considering available land, cultural operations, and changes in the type of farming conducted on the farm. Any increase in an allotment, quota, or base with respect to a tract pursuant to this paragraph shall be offset by a corresponding decrease for such allotments, quotas or bases established with respect to the other tracts which constitute the farm.
(2) Farm program payment yields calculated for the resulting farms of a division may be increased or decreased if the county committee determines the method used did not provide an equitable distribution considering available land, cultural operations, and changes in the type of farming conducted on the farm. Any increase in a farm program payment yield on a resulting farm shall be offset by a corresponding decrease on another resulting farm of the division.
(j) If a farm with burley tobacco quota is divided through reconstitution and one or more of the farms resulting from the division are apportioned less than 1,000 pounds of burley tobacco quota, the owners of such farms shall take action as provided in part 723 of this chapter to comply with the 1,000 pound minimum by July 1 of the current year or the quota shall be dropped. Exceptions to this are farms divided:
(1) Among family members;
(2) By the estate method; and
(3) When no sale or change in ownership of land occurs; or
(4) With one resulting farm receiving all of the quota.
When two or more farms or tracts are combined for a year, that year's allotments, quotas, and bases, with respect to the combined farm or tract, as required by applicable commodity regulations, shall not be greater than the sum of the allotments, quotas, and bases for each of the farms or tracts comprising the combination, subject to the provisions of § 718.204.
(a) This subpart is applicable to programs administered by the Farm Service Agency under chapters VII and XIV of this title, except for an agricultural credit program carried out under the Consolidated Farm and Rural Development Act (7 U.S.C. 1921
(b) Sections 718.303, 718.304, and 718.307 do not apply where the action for which relief is requested occurred before May 13, 2002. In such cases, authority that was effective prior to May 13, 2002, may be applied.
(c) Section 718.306 does not apply to a function performed under either section 376 of the Consolidated Farm and Rural Development Act (7 U.S.C. 1921
In addition to the definitions provided in § 718.2 of this part, the following terms apply to this subpart:
(a) Notwithstanding any other law, action or inaction by a participant in a covered program that is to the detriment of the participant, and that is based upon good faith reliance on the action or advice of an authorized representative of a County or State FSA Committee, may be approved by the Administrator, FSA or the Executive Vice President, CCC, as applicable, or their designee, as meeting the requirements of the program, and benefits may be extended or payments made in accordance with § 718.305.
(b) This section applies only to a participant who relied upon the action of, or information provided by, a county or State FSA committee or an authorized representative of such committee and the participant acted, or failed to act, as a result of the Agency action or information. This part does not apply to cases where the participant had sufficient reason to know that the action or information upon which they relied was improper or erroneous or where the participant acted in reliance on their own misunderstanding or misinterpretation of program provisions, notices or information.
(a) Under a covered program, when the failure of a participant to fully comply with the terms and conditions of a program authorized by this chapter precludes the providing of payments or benefits, relief may be authorized in accordance with § 718.305 if
(b) This section only applies to participants who are determined by the FSA approval official to have made a good faith effort to comply fully with the terms and conditions of the program and rendered substantial performance.
(a) The Administrator of FSA, Executive Vice President of CCC, or their designee, may authorize a participant in a covered program to:
(1) Retain loans, payments, or other benefits received under the covered program;
(2) Continue to receive loans, payments, and other benefits under the covered program;
(3) Continue to participate, in whole or in part, under any contract executed under the covered program;
(4) In the case of a conservation program, re-enroll all or part of the land covered by the program; and
(5) Receive such other equitable relief as determined to be appropriate.
(b) As a condition of receiving relief under this subpart, the participant may be required to remedy their failure to meet the program requirement, or mitigate its affects.
(a) A determination by a State or county FSA committee made on or after October 13, 1994, becomes final and binding 90 days from the date the application for benefits has been filed, and supporting documentation required to be supplied by the producer as a condition for eligibility for the particular program has been filed, unless one of the following conditions exist:
(1) The participant has requested an administrative review of the determination in accordance with part 780 of this chapter;
(2) The determination was based on misrepresentation, false statement, fraud, or willful misconduct by or on behalf of the participant;
(3) The determination was modified by the Administrator, FSA, or in the case of CCC programs conducted under Chapter XIV of this title, the Executive Vice President, CCC; or
(4) The participant had reason to know that the determination was erroneous.
(b) Should an erroneous determination become final under the provisions of this section, it shall only be effective through the year in which the error was found and communicated to the participant.
(a)
(1) The program matter with respect to which the relief is sought is a program matter in a covered program which is operated within the State under the control of the SED;
(2) The total amount of relief which will be provided to the person (that is, to the individual or entity that applies for the relief) by that SED under this special authority for errors during that year is less than $20,000 (including in that calculation, any loan amount or other benefit of any kind payable for that year and any other year);
(3) The total amount of such relief which has been previously provided to the participant using this special authority for errors in that year, as calculated above, is not more than $5,000;
(4) The total amount of loans, payments, and benefits of any kind for which relief is provided to similarly situated participants by the SED (or the SED's predecessor) for errors for any year under the authority provided in this section, as calculated above, is not more than $1,000,000.
(b)
(c)
(1) The administration of payment limitations under part 1400 of this chapter (§§ 1001 to 1001F of 7 U.S.C. 1308
(2) The administration of payment limitations under a conservation program administered by the Secretary; or
(3) Highly erodible land and wetland conservation requirements under subtitles B or C of Title XII of the Food Security Act of 1985 (16 U.S.C. 3811
(d) Relief may not be provided by the SED under this section until a written opinion or written acknowledgment is obtained from OGC that grounds exist for determination that the program participant has, in good faith, detrimentally relied on the guidance or actions of an authorized FSA representative in accordance with the provisions of this subpart, or that the producer otherwise failed, in good faith, to fully comply with the requirements of the program and that the granting of the relief is within the lawful authority of the SED.
(e)
7 U.S.C. 241
(a) The regulations of this part set forth the terms and conditions under which the Secretary of Agriculture through the Farm Service Agency (FSA) will administer the United States Warehouse Act (USWA or the Act) and sets forth the standards and the terms and conditions a participant must meet for eligibility to act under the USWA. The extent the provisions of this part are more restrictive, or more lenient, with respect to the same activities governed by State law, the provisions of this part shall prevail.
(b) Additional terms and conditions may be set forth in applicable licensing agreements, provider agreements and other documents.
(c) Compliance with State laws relating to the warehousing, grading, weighing, storing, merchandising or other similar activities is not required with respect to activities engaged in by a warehouse operator in a warehouse subject to a license issued in accordance with this part.
(a) FSA will administer all provisions and activities regulated under the Act under the general direction and supervision of the FSA's Deputy Administrator, Commodity Operations (DACO), or a designee.
(b) DACO may waive or modify the licensing or authorization requirements or deadlines in cases where lateness or
(c) DACO will provide affected licensees or authorized providers with changes to their licensing or provider agreements before the effective date.
(d) Licensing and authorization agreement updates will be available at:
(1) DACO's USWA website, and
(2) The following address: Deputy Administrator, Commodity Operations, Farm Service Agency, United States Department of Agriculture, STOP 0550, 1400 Independence Avenue, SW, Washington, DC 20250-0550.
Words used in this part will be applicable to the activities authorized by this part and will be used in all aspects of administering the Act.
(a) FSA will assess persons covered by the Act fees to cover the costs of administering the Act.
(b) Warehouse operators, licensees, applicants, or providers must pay:
(1) An annual fee as provided in the applicable licensing or provider agreement; and
(2) Fees that FSA assesses for specific services, examinations and audits, or as provided in the applicable licensing or provider agreement.
(c) The schedule of fees showing the current fees or any annual fee changes will be provided as an addendum to the applicable licensing or provider agreement or/and:
(1) Will be available at DACO's USWA Web site, or
(2) May be requested at the following address: Deputy Administrator, Commodity Operations, Farm Service Agency, United States Department of
(d) At the sole discretion of DACO, these fees may be waived.
If a person fails to comply with any requirement of the Act, the regulations set forth in this part or any applicable licensing or provider agreement, DACO may assess, after an opportunity for a hearing as provided in § 735.8, a civil penalty:
(a) Of not more than $25,000 per violation, if an agricultural product is not involved in the violation; or
(b) Of not more than 100 percent of the value of the agricultural product, if an agricultural product is involved in the violation.
(a) DACO may, after an opportunity for a hearing as provided in § 735.8, suspend, revoke or liquidate any license or agreement issued under the Act, for any violation of or failure to comply with any provision of the Act, regulations or any applicable licensing or provider agreement.
(b) The reasons for a suspension, revocation or liquidation under this part include, but are not limited to:
(1) Failure to perform licensed or authorized services as provided in this part or in the applicable licensing or provider agreement;
(2) Failure to maintain minimum financial requirements as provided in the applicable licensing or provider agreement;
(3) Failure to submit a proper annual financial statement within the established time period as provided in the applicable licensing or provider agreement.
(4) Failure to maintain control of the warehouse or provider system.
(5) The warehouse operator or provider requests closure, cancellation or liquidation. and
(6) Commission of fraud against FSA, any depositor, EWR or OED holder or user, or any other function or operation under this part.
(c) FSA retains USWA's full authority over a warehouse operator or provider for one year after such license revocation or provider agreement termination or until satisfaction of any claims filed against such warehouse operator or provider are resolved, whichever is later.
(d) Upon DACO's determination that continued operation of a warehouse by a warehouse operator or an electronic provider system by a provider is likely to result in probable loss of assets to storage depositors, or loss of data integrity to EWR or OED holders and users. DACO may immediately suspend, close, or take control and begin an orderly liquidation of such warehouse inventory or provider system data as provided in this part or in the applicable licensing or provider agreement.
(e) Any disputes involving probable loss of assets to storage depositors, or loss of data integrity to EWR or OED holders and users will be determined by DACO for the benefit of the depositors, or EWR or OED holders and users and such determinations shall be final.
(a) When a license issued to a warehouse operator or service license ends or is suspended or revoked by DACO, such certificates of licensing and applicable licensing agreement and certificates of authorization must be immediately surrendered and returned to DACO.
(b) When an agreement with a provider ends or is suspended or revoked by DACO, such certificates of authorization and applicable provider agreement must be immediately surrendered to DACO
(a) Any person who is subject to an adverse determination made under the Act may appeal the determination by filing a written request with DACO at the following address: Deputy Administrator, Commodity Operations, Farm Service Agency, United States Department of Agriculture, STOP 0550, 1400 Independence Avenue, SW., Washington, DC 20250-0550.
(b) Any person who believes that they have been adversely affected by a
(c) The appeal process set forth in this part is applicable to all licensees and providers under any provision of the Act, regulations or any applicable licensing agreement as follows:
(1) DACO will notify the person in writing of the nature of the suspension, revocation or liquidation action;
(2) The person must notify DACO of any appeal of its action within twenty-eight calendar days;
(3) The appeal and request must state whether:
(i) A hearing is requested,
(ii) The person will appear in person at such hearing, or
(iii) Such hearing will be held by telephone;
(4) DACO will provide the person a written acknowledgment of their request to pursue an appeal;
(5) When a person requests an appeal and does not request a hearing DACO will allow that person:
(i) To submit in writing the reasons why they believe DACO's determination to be in error,
(ii) Twenty-eight calendar days from the receipt of the acknowledgment to file any statements and documents in support of their appeal, unless provided with notice by DACO of a different deadline, and
(iii) An additional fourteen calendar days to respond to any new issues raised by DACO in response to the person's initial submission, unless provided with notice by DACO of a different deadline;
(6) If the person requests to pursue an appeal and requests a hearing, DACO will:
(i) Notify the person of the date of the hearing,
(ii) Determine the location of the hearing, when the person asks to appear in person,
(iii) Notify the person of the location of the hearing,
(iv) Afford the person twenty-eight calendar days from the receipt of the notification of the scheduling of the hearing to submit any statements and documents in support of the appeal, unless provided with notice by DACO of a different deadline, and
(v) Allow the person an additional fourteen calendar days from the date of the hearing to submit any additional material, unless provided with notice by DACO of a different deadline;
(7) Determinations of DACO will be final and no further appeal within USDA will be available except as may be specified in the final determination of DACO; and
(8) A person may not initiate an action in any court of competent jurisdiction concerning a determination made under the Act prior to the exhaustion of the appeal process set forth in this section.
(a) A person may initiate legal action in any court of competent jurisdiction concerning a claim for noncompliance or an unresolved dispute with respect to activities authorized under the Act.
(b) Any claim for noncompliance or an unresolved dispute between a warehouse operator or provider and another party with respect to activities authorized under the Act may be resolved by the parties through mutually agreed-upon arbitration procedures or as may be prescribed in the applicable licensing or provider agreement. No arbitration determination or award will affect DACO's authority under the Act.
(c) In no case will USDA provide assistance or representation to parties involved in an arbitration proceeding arising with respect to activities authorized under the Act.
(a) The warehouse operator must post, in a conspicuous place in the principal place where warehouse receipts are issued, any applicable certificate furnished by DACO that the warehouse operator is an authorized licensee under the Act.
(b) Immediately upon receipt of their certificate of service licensing or any modification or extension thereof under the Act, the licensee and warehouse operator must jointly post the
(c) The provider must post, in a conspicuous place in the principal place of business, any applicable certificate of authorization furnished by DACO that the provider is authorized to offer and provide specific services under the Act.
FSA will replace lost or destroyed certificates of licensing, certificate of authorization or applicable agreement upon satisfactory proof of loss or destruction. FSA will mark such certificates or agreements as duplicates.
Each warehouse operator or provider must take necessary precautions to safeguard all records, either paper or electronic format, from destruction.
Every person licensed or authorized under the Act must immediately furnish DACO any information they may have indicating that any provision of the Act or the regulations in this part has been violated.
(a) As a condition of receiving a license or authorization under the Act, the person applying for the license or authorization must execute and file with DACO a bond or provide such other financial assurance as DACO determines appropriate to secure the person's compliance with the Act.
(b) Such bond or assurance must be for a period of not less than one year and in such amount as required by DACO.
(c) Failure to provide for, or renew, a bond or a financial assurance instrument will result in the immediate and automatic revocation of the warehouse operator's license or provider's agreement.
(d) If DACO determines that a previously accepted bond or other financial assurance is insufficient, DACO may immediately suspend or revoke the license or authorization covered by the bond or other financial assurance if the person that filed the bond or other financial assurance does not provide such additional bond or other financial assurance as DACO determines appropriate.
(e) To qualify as a suitable bond or other financial assurance, the entity issuing the bond or other financial assurance must be subject to service of process in lawsuits or legal actions on the bond or other financial assurance in the State in which the warehouse is located.
(a) An applicant for a license must submit to DACO information and documents determined by DACO to be sufficient to conclude that the applicant can comply with the provisions of the Act. Such documents must include a current review or an audit-level financial statement prepared according to generally accepted accounting standards as defined by the American Institute of Certified Public Accountants. For any entity that is not an individual, a document that establishes proof of the existence of the entity, such as:
(1) For a partnership, an executed partnership agreement; and
(2) For a corporation:
(i) Articles of incorporation certified by the Secretary of State of the applicable State of incorporation;
(ii) Bylaws; and
(iii) Permits to do business; and
(3) For a limited partnership, an executed limited partnership agreement; and
(4) For a limited liability company:
(i) Articles of organization or similar documents; and
(ii) Operating agreement or similar agreement.
(b) The warehouse facilities of an operator licensed under the Act must, as determined by DACO, be:
(1) Physically and operationally suitable for proper storage of the applicable agricultural product or agricultural products specified in the license;
(2) Operated according to generally accepted warehousing activities and practices in the industry for the applicable agricultural product or agricultural products stored in the facility; and
(3) Subject to the warehouse operator's control of the facility including all contiguous storage space with respect to such facilities.
(c) As specified in individual licensing agreements, a warehouse operator must:
(1) Meet the basic financial requirements determined by DACO; and
(2) Meet the net worth requirements determined by DACO;
(d) In order to obtain a license, the warehouse operator must correct any exceptions made by the warehouse examiner at the time of the original warehouse examination.
(e) DACO may issue a license for the storage of two or more agricultural products in a single warehouse as provided in the applicable licensing agreements. The amount of the bond or financial assurance, net worth, and inspection and license fees will be determined by DACO in accordance with the licensing agreements applicable to the specific agricultural product, based upon the warehouses' total capacity for storing such product, that would require:
(1) The largest bond or financial assurance;
(2) The greatest amount of net worth; and
(3) The greatest amount of fees.
(a) Warehouse operators must maintain complete, accurate, and current financial records that must be available to DACO for review or audit at DACO's request as may be prescribed in the applicable licensing agreement.
(b) Warehouse operators must, annually, present a financial statement as may be prescribed in the applicable licensing agreement to DACO.
(a) Warehouse operators must file with DACO financial assurances approved by DACO consisting of:
(1) A warehouse operator's bond; or
(2) Obligations that are unconditionally guaranteed as to both interest and principal by the United States, in a sum equal at their par value to the amount of the bond otherwise required to be furnished, together with an irrevocable power of attorney authorizing DACO to collect, sell, assign and transfer such obligations in case of any default in the performance of any of the conditions required in the licensing agreement; or
(3) An irrevocable letter of credit issued in the favor of DACO with a term of not less than two years; or
(4) A certificate of participation in, and coverage by, an indemnity or insurance fund as approved by DACO, established and maintained by a State, backed by the full faith and credit of the applicable State, which guarantees depositors of the licensed warehouse full indemnification for the breach of any obligation of the licensed warehouse operator under the terms of the Act. If a warehouse operator files a bond or financial assurance in the form of a certification of participation in an indemnity or insurance fund, the certification may only be used to satisfy any deficiencies in assets above the minimum net worth requirement as prescribed in the applicable licensing agreement. A certificate of participation and coverage in this fund must be furnished to DACO annually; or
(5) Other alternative instruments and forms of financial assurance approved by DACO as may be prescribed in the applicable licensing agreement.
(b) The warehouse operator may not withdraw obligations required under this section until one year after license termination or until satisfaction of any claims against the obligations, whichever is later.
FSA will issue an amended license upon:
(a) Receipt of forms prescribed and furnished by DACO outlining the requested changes to the license;
(b) Payment of applicable licensing and examination fees;
(c) Receipt of bonding or other financial assurance if required in the applicable licensing agreement; and
(d) Receipt of a report on the examination of the proposed facilities pending inclusion or exclusion, if determined necessary by DACO.
Each warehouse operator must comply fully with the terms of insurance policies or contracts covering their licensed warehouse and all products stored therein, and must not commit any acts, nor permit others to do anything, that might impair or invalidate such insurance.
Each warehouse operator must at all times, including during any period of suspension of their license, exercise such care in regard to stored and non-storage agricultural products in their custody as required in the applicable licensing agreement.
(a) If at any time a warehouse operator stores an agricultural product in a warehouse subject to a license issued under the Act in excess of the warehouse capacity for which it is licensed, such warehouse operator must immediately notify DACO of such excess storage and the reason for the storage.
(b) A warehouse operator who desires to transfer stored agricultural products to another warehouse may do so either by physical movement, by other methods as may be provided in the applicable licensing agreement, or as authorized by DACO.
(a) A warehouse operator must not make any unreasonable or exorbitant charge for services rendered.
(b) A warehouse operator must follow the terms and conditions for each new or revised warehouse tariff or schedule of charges and rates as prescribed in the applicable licensing agreement.
(a) Warehouse operators must permit any agent of the Department to enter and inspect or examine, on any business day during the usual hours of business, any licensed warehouse, the offices of the warehouse operator, the books, records, papers, and accounts.
(b) Routine and special inspections and examinations will be unannounced.
(c) Warehouse operators must provide safe access to all storage facilities.
(d) Warehouse operators must inform any agent of the Department, upon arrival, of any hazard.
(e) Agents of the Department must accomplish inspections and examinations of warehouses in a manner that is efficient and cost-effective without jeopardizing any inspection and examination integrity.
If at any time a disaster or loss occurs at or within any licensed warehouse, the warehouse operator must report immediately the occurrence of the disaster or loss and the extent of damage, to DACO.
(a) In the absence of a lawful excuse, a warehouse operator will, without unnecessary delay, deliver the agricultural product stored or handled in the warehouse on a demand made by:
(1) The holder of the warehouse receipt for the agricultural product; or
(2) The person that deposited the agricultural product, if no warehouse receipt has been issued.
(b) Prior to delivery of the agricultural product, payment of the accrued charges associated with the storage or handling of the agricultural product, including satisfaction of the warehouse operator's lien, must be made if requested by the warehouse operator.
(c) When the holder of a warehouse receipt requests delivery of an agricultural product covered by the warehouse receipt, the holder must surrender the warehouse receipt to the warehouse operator before obtaining the agricultural product.
(d) A warehouse operator must cancel each warehouse receipt surrendered to
(e) For the purpose of this part, unless prevented from doing so by force majeure, a warehouse operator will deliver or ship such agricultural products stored or handled in their warehouse as prescribed in the applicable licensing agreement.
(a) Contingent upon the capacity of a warehouse, a warehouse operator will deal in a fair and reasonable manner with persons storing, or seeking to store, an agricultural product in the warehouse if the agricultural product is:
(1) Of the kind, type, and quality customarily stored or handled in the area in which the warehouse is located;
(2) Tendered to the warehouse operator in a suitable condition for warehousing; and
(3) Tendered in a manner that is consistent with the ordinary and usual course of business.
(b) Nothing in this section will prohibit a warehouse operator from entering into an agreement with a depositor of an agricultural product to allocate available storage space.
(a) DACO may issue service licenses to weigh-masters or their deputies to perform services relating to warehouse receipts that are deliverable in satisfaction of futures contracts in such contract markets or as may be prescribed in any applicable licensing agreement.
(b) DACO may authorize a registrar of warehouse receipts issued for an agricultural product in a warehouse licensed under the Act that operates in any terminal market or in any futures contract market the official designated by officials of the State in which such market is located if such individual is not:
(1) An owner or employee of the licensed warehouse;
(2) The owner of, or an employee of the owner of, such agricultural product deposited in any such licensed warehouse; or
(3) As may be prescribed in any applicable licensing or provider agreement.
(a) FSA may issue to a person a license for:
(1) Inspection of any agricultural product stored or handled in a warehouse subject to the Act;
(2) Sampling of such an agricultural product;
(3) Classification of such an agricultural product according to condition, grade, or other class and certify the condition, grade, or other class of the agricultural product;
(4) Weighing of such an agricultural product and certify the weight of the agricultural product; or
(5) Performing two or more services specified in paragraphs (a)(1), (a)(2), (a)(3) or (a)(4) of this section.
(b) Each person seeking a license to perform activities described in this section must submit an application on forms furnished by DACO that contain, at a minimum, the following information:
(1) The name, location and license number of the warehouses where the applicant would perform such activities;
(2) A statement from the warehouse operator that the applicant is competent and authorized to perform such activities at specific locations; and
(3) Evidence that the applicant is competent to inspect, sample, classify, according to grade or weigh the agricultural product.
(c) The warehouse operator will promptly notify DACO in writing of any changes with respect to persons authorized to perform such activities at the licensed warehouse.
Each inspection, grade, class, weight or combination certificate issued under the Act by a licensee to perform such services must be:
(a) In a format prescribed by DACO;
(b) Issued and maintained in a consecutive order; and
(c) As prescribed in the applicable licensing or provider agreement and authorized by DACO.
Official Standards of the United States for any kind, class or grade of an agricultural product to be inspected must be used if such standards exist. Until Official Standards of the United States are fixed and established for the kind of agricultural product to be inspected, the kind, class and grade of the agricultural product must be stated, subject to the approval of DACO. If such standards do not exist for such an agricultural product, the following will be used:
(a) State standards established in the State in which the warehouse is located, (b) In the absence of any State standards, in accordance with the standards, if any, adopted by the local board of trade, chamber of commerce, or by the agricultural product trade generally in the locality in which the warehouse is located, or
(c) In the absence of the standards set forth in paragraphs (a) and (b) of this section, in accordance with any standards approved for the purpose by DACO.
(a) Warehouse receipts may be:
(1) Negotiable or non-negotiable;
(2) For a single unit, multiple units, identity preserved or commingled lot; and
(3) In a paper or electronic format that, besides complying with the requirements of the Act, must be in a format as prescribed in the applicable licensing or provider agreement and authorized by DACO.
(b) The warehouse operator must:
(1) At the request of a depositor of an agricultural product stored or handled in a warehouse licensed under the Act, issue a warehouse receipt to the depositor;
(2) Not issue a warehouse receipt for an agricultural product unless the agricultural product is actually stored in their warehouse at the time of issuance;
(3) Not issue a warehouse receipt until the quality, condition and weight of such an agricultural product is ascertained by a licensed inspector and weigher;
(4) Not directly or indirectly compel or attempt to compel the depositor to request the issuance of a warehouse receipt omitting the statement of quality or condition;
(5) Not issue an additional warehouse receipt under the Act for a specific identity-preserved or commingled agricultural product lot (or any portion thereof) if another warehouse receipt representing the same specific identity-preserved or commingled lot of the agricultural product is outstanding. No two warehouse receipts issued by a warehouse operator may have the same warehouse receipt number or represent the same agricultural product lot;
(6) When issuing a warehouse receipt and purposefully omitting any information, notate the blank to show such intent;
(7) Not deliver any portion of an agricultural product for which they have issued a negotiable warehouse receipt until the warehouse receipt has been surrendered to them and canceled as prescribed in the applicable licensing agreement;
(8) Not deliver more than 90% of the receipted quantity of an agricultural product for which they have issued a non-negotiable warehouse receipt until such warehouse receipt has been surrendered or the depositor or the depositor's agent has provided a written order for the agricultural product and the warehouse receipt surrendered upon final delivery; and
(9) Deliver, upon proper presentation of a warehouse receipt for any agricultural product, and payment or tender of all advances and charges, to the depositor or lawful holder of such warehouse receipt the agricultural product of such identity, quantity, grade and condition as set forth in such warehouse receipt.
(c) In the case of a lost or destroyed warehouse receipt, a new warehouse receipt upon the same terms, subject to the same conditions, and bearing on its
Warehouse operators must file with DACO the name and genuine signature of each person authorized to sign warehouse receipts for the licensed warehouse operator, and will promptly notify DACO of any changes with respect to persons authorized to sign.
Paper warehouse receipts must be issued as follows:
(a) On distinctive paper specified by DACO;
(b) Printed by a printer authorized by DACO; and
(c) Issued, identified and maintained in a consecutive order.
(a) Warehouse operators issuing EWR under the Act may issue EWR's for the agricultural product stored in their warehouse. Warehouse operators issuing EWR's under the Act must:
(1) Only issue EWR's through one FSA-authorized provider annually;
(2) Inform DACO of the identity of their provider, when they are a first time user of EWR's, 60 calendar days in advance of issuing an EWR through that provider. DACO may waive or modify this 60-day requirement as set forth in § 735.2(b);
(3) Before issuing an EWR, request and receive from FSA a range of consecutive warehouse receipt numbers that the warehouse will use consecutively for issuing their EWR's;
(4) When using an authorized provider, issue and cancel all warehouse receipts as EWR's;
(5) Cancel an EWR only when they are the holder of the warehouse receipt;
(6) Be the holder of an EWR to correct information contained within any required data field;
(7) Receive written authorization from FSA at least 30 calendar days before changing providers. Upon authorization, they may request their current provider to transfer their EWR data from its Central Filing System (CFS) to the CFS of the authorized provider whom they select; and
(8) Notify all holders of EWR's by inclusion in the CFS at least 30 calendar days before changing providers, unless otherwise required or allowed by FSA.
(b) An EWR establishes the same rights and obligations with respect to an agricultural product as a paper warehouse receipt and possesses the following attributes:
(1) The holder of an EWR will be entitled to the same rights and privileges as the holder of a paper warehouse receipt.
(2) Only the current holder of the EWR may transfer the EWR to a new holder.
(3) The identity of the holder must be confidential and included as information for every EWR.
(4) Only one person may be designated as the holder of an EWR at any one time.
(5) A warehouse operator may not issue an EWR on a specific identity-preserved or commingled lot of agricultural product or any portion thereof while another valid warehouse receipt representing the same specific identity-preserved or commingled lot of agricultural product remains not canceled. No two warehouse receipts issued by a warehouse operator may have the same warehouse receipt number or represent the same agricultural product lot.
(6) An EWR may only be issued to replace a paper warehouse receipt if requested by the current holder of the paper warehouse receipt.
(7) Holders and warehouse operators may authorize any other user of their provider or the provider itself to act on their behalf with respect to their activities with this provider. This authorization must be in writing, and acknowledged and retained by the warehouse operator and provider.
(c) A warehouse operator not licensed under the Act may, at the option of the warehouse operator, issue EWRs in accordance with this subpart, except this option does not apply to a warehouse operator that is licensed under State law to store agricultural products in a warehouse if the warehouse operator elects to issue an EWR under State law.
This subpart sets forth the regulations under which DACO may authorize one or more electronic systems under which:
(a) Electronic documents relating to the shipment, payment, and financing of the sale of agricultural products may be issued or transferred; or
(b) Electronic receipts may be issued and transferred.
(a) To establish a USWA-authorized system to issue and transfer EWR's and USWA electronic documents, each applicant must submit to DACO information and documents determined by DACO to be sufficient to determine that the applicant can comply with the provisions of the Act. Each provider operating pursuant to this section must meet the following requirements:
(1) Have and maintain a net worth as specified in the applicable provider agreement;
(2) Maintain two insurance policies; one for “errors and omissions” and another for “fraud and dishonesty.” Each policy's minimum coverage and maximum deductible amounts and applicability of other forms of financial assurances as set forth in § 735.14 will be prescribed in the applicable provider agreement. Each policy must contain a clause requiring written notification to FSA 30 days prior to cancellation or as prescribed by FSA;
(3) Submit a current review or an audit level financial statement prepared according to generally accepted accounting standards as defined by the American Institute of Certified Public Accountants;
(4) For any entity that is not an individual, a document that establishes proof of the existence, such as:
(i) For a partnership, an executed partnership agreement; and
(ii) For a corporation:
(A) Articles of incorporation certified by the Secretary of State of the applicable State of incorporation;
(B) Bylaws; and
(C) Permits to do business; and
(iii) For a limited partnership, an executed limited partnership agreement; and
(iv) For a limited liability company:
(A) Articles of organization or similar documents; and
(B) Operating agreement or similar agreement.
(5) Meet any additional financial requirements as set forth in the applicable provider agreement;
(6) Pay user fees annually to FSA, as set and announced annually by FSA prior to April 1 of each calendar year; and
(7) Operate a CFS as a neutral third party in a confidential and secure fashion independent of any outside influence or bias in action or appearance.
(b) The provider agreement will contain, but not be limited to, these basic elements:
(1) Scope of authority;
(2) Minimum document and warehouse receipt requirements;
(3) Liability;
(4) Transfer of records protocol;
(5) Records;
(6) Conflict of interest requirements;
(7) USDA common electronic information requirements;
(8) Financial requirements
(9) Terms of insurance policies or assurances;
(10) Provider's integrity statement;
(11) Security audits; and
(12) Submission, authorization, approval, use and retention of documents.
(c) DACO may suspend or terminate a provider's agreement for cause at any time.
(1) Hearings and appeals will be conducted in accordance with procedures as set forth in §§ 735.6 and 735.8.
(2) Suspended or terminated providers may not execute any function pertaining to USDA, USWA documents, or USWA or State EWR's during the pendency of any appeal or subsequent to this appeal if the appeal is denied, except as authorized by DACO.
(3) The provider or DACO may terminate the provider agreement without cause solely by giving the other party written notice 60 calendar days prior to termination.
(d) Each provider agreement will be automatically renewed annually on
(a) To establish a USWA-authorized system to issue and transfer OED, each applicant must submit to DACO information and documents determined by DACO to be sufficient to determine that the applicant can comply with the provisions of the Act. Each provider operating pursuant to this section must meet the following requirements:
(1) Have and maintain a net worth as specified in the applicable provider agreement;
(2) Maintain two insurance policies; one for 'errors and omissions' and another for 'fraud and dishonesty'. Each policy's minimum coverage and maximum deductible amounts and applicability of other forms of financial assurances as set forth in § 735.14 will be prescribed in the applicable provider agreement. Each policy must contain a clause requiring written notification to FSA 30 days prior to cancellation or as prescribed by FSA;
(3) Submit a current review or an audit level financial statement prepared according to generally accepted accounting standards as defined by the American Institute of Certified Public Accountants;
(4) For any entity that is not an individual, a document that establishes proof of the existence, such as:
(i) For a partnership, an executed partnership agreement; and
(ii) For a corporation:
(A) Articles of incorporation certified by the Secretary of State of the applicable State of incorporation;
(B) Bylaws; and
(C) Permits to do business; and
(iii) For a limited partnership, an executed limited partnership agreement; and
(iv) For a limited liability company:
(A) Articles of organization or similar documents; and
(B) Operating agreement or similar agreement.
(5) Meet any additional financial requirements as set forth in the applicable provider agreement;
(6) Pay user fees annually to FSA, as set and announced annually by FSA prior to April 1 of each calendar year; and
(7) Operate a CFS as a neutral third party in a confidential and secure fashion independent of any outside influence or bias in action or appearance.
(b) The provider agreement will contain, but not be limited to, these basic elements:
(1) Scope of authority;
(2) Minimum document and warehouse receipt requirements;
(3) Liability;
(4) Transfer of records protocol;
(5) Records;
(6) Conflict of interest requirements;
(7) USDA common electronic information requirements;
(8) Financial requirements;
(9) Terms of insurance policies or assurances;
(10) Provider's integrity statement;
(11) Security audits; and
(12) Submission, authorization, approval, use and retention of documents.
(c) DACO may suspend or terminate a provider's agreement for cause at any time.
(1) Hearings and appeals will be conducted in accordance with procedures as set forth in §§ 735.6 and 735.8.
(2) Suspended or terminated providers may not execute any function pertaining to USDA, USWA documents, USWA or State EWR's or OED's during the pendency of any appeal or subsequent to this appeal if the appeal is denied, except as authorized by DACO.
(d) Each provider agreement will be automatically renewed annually on April 30th as long as the provider complies with the terms contained in the provider agreement, the regulations in this subpart, and the Act.
(e) In addition to audits prescribed in this section the provider must submit a copy of any audit, examination or investigative report prepared by any Federal regulatory agency with respect to the provider including agencies such as, but not limited to, the Comptroller of the Currency, Department of the Treasury, the Federal Trade Commission, and the Commodity Futures Trading Commission.
(a) No later than 120 calendar days following the end of the provider's fiscal year, the provider authorized under §§ 735.401 and 735.402 must submit to FSA an annual audit level financial statement and an electronic data processing audit that meets the minimum requirements as provided in the applicable provider agreement. The electronic data processing audit will be used by DACO to evaluate current computer operations, security, disaster recovery capabilities of the system, and compatibility with other systems authorized by DACO.
(b) Each provider will grant the Department unlimited, free access at any time to all records under the provider's control relating to activities conducted under this part and as specified in the applicable provider agreement.
(a) A provider authorized under §§ 735.401 or 735.402 must furnish FSA with copies of its current schedule of charges and rates for all services as they become effective.
(b) Charges and rates assessed any user by the provider must be in effect for a minimum period of one year.
(c) Providers must furnish FSA and all users a 60-calendar day advance notice of their intent to change any charges and rates.
Part 750 (formerly part 485 of title 6), published at 21 FR 6289, Aug. 22, 1956, and redesignated at 26 FR 5788, June 29, 1961, is no longer carried in the Code of Federal Regulations. This deletion does not relieve any person of any obligation or liability incurred under these regulations, nor deprive any person of any rights received or accrued under the provisions of this part. For
7 U.S.C. 612c; Pub. L. 106-387, 114 Stat. 1549; Pub. L. 107-76, 115 Stat. 704; Title III, Pub. L. 109-234, 120 Stat. 474; 16 U.S.C. 3801, note; and Title IX, Pub.L. 110-28.
Pub. L. 106-387, 114 Stat. 1549, and Pub. L. 107-76, 115 Stat. 704.
This indemnity payment program will be carried out by FSA under the direction and supervision of the Deputy Administrator. In the field, the program will be administered by the State and county committees.
For purposes of this subject, the following terms shall have the meanings specified:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(1) Pursuant to the direction of a public agency because of the detection of pesticide residues in such whole milk by tests made by a public agency or under a testing program deemed adequate for the purpose by a public agency, or
(2) Pursuant to the direction of a public agency because of the detection of other residues of chemicals or toxic substances residues, or contamination from nuclear radiation or fallout in such whole milk by tests made by a public agency or under a testing program deemed adequate for the purpose by a public agency.
(l)
(m)
(n)
(o)
(p)
(q)
(r)
(s)
(t)
(u)
An indemnity payment for milk may be made to an affected farmer who is determined by the county committee to be in compliance with all the terms and conditions of this subpart in the amount of the fair market value of his normal marketings for the application period, as determined in accordance with §§ 760.4 and 760.5, less (a) any amount he received for whole milk marketed during the applications period, and (b) any payment not subject to refund which he received from a milk handler with respect to whole milk removed from the commercial market during the application period.
(a) The county committee shall determine the affected farmer's normal marketings which, for the purposes of this subpart, shall be the sum of the quantities of whole milk which such farmer would have sold in the commercial market in each of the pay periods in the application period but for the removal of his whole milk from the commercial market because of the detection of a residue of a violating substance.
(b) Normal marketings for each pay period are based on the average daily production during the base period.
(c) Normal marketings determined in paragraph (b) of this section are adjusted for any change in the daily average number of cows milked during each pay period the milk is off the market compared with the average number of cows milked daily during the base period.
(d) If only a portion of a pay period falls within the application period, normal marketings for such pay period shall be reduced so that they represent only that part of such pay period which is within the application period.
(a) The county committee shall determine the fair market value of the affected farmer's normal marketings, which, for the purposes of this subpart, shall be the sum of the net proceeds such farmer would have received for his normal marketings in each of the pay periods in the application period.
(b) The county committee shall determine the net proceeds the affected farmer would have received in each of the pay periods in the application period (1) in the case of an affected farmer who markets his whole milk through a milk handler, by multiplying the affected farmer's normal marketings for each such pay period by the average net price per hundred-weight of whole milk paid during the pay period by such farmer's milk handler in the same area for whole milk similar in quality and butterfat test to that marketed by the affected farmer in the base period used to determine his normal marketings, or (2) in the case of an affected farmer whose commercial market consists of direct retail sales to consumers, by multiplying the affected farmer's normal marketings for each such pay period by the average net price per hundredweight of whole milk, as determined by the county committee, which other producers in the same area who marketed their whole milk through milk handlers received for whole milk similar in quality and butterfat test to that marketed by the affected farmer during the base period used to determine his normal marketings.
(c) In determining the net price for whole milk, the county committee shall deduct from the gross price therefor any transportation, administrative, and other costs of marketing which it determines are normally incurred by the affected farmer but which were not incurred because of the removal of his whole milk from the commercial market.
The affected farmer shall furnish to the county committee complete and accurate information sufficient to enable the county committee or the Deputy Administrator to make the determinations required in this subpart. Such information shall include, but is not limited to:
(a) A copy of the notice from, or other evidence of action by, the public agency which resulted in the removal of the affected farmer's whole milk from the commercial market.
(b) The specific name of the violating substance causing the removal of his whole milk from the commercial market, if not included in the notice or other evidence of action furnished under paragraph (a) of this section.
(c) The quantity and butterfat test of whole milk produced and marketed during the base period. This information must be a certified statement from the affected farmer's milk handler or any other evidence the county committee accepts as an accurate record of milk production and butterfat tests during the base period.
(d) The average number of cows milked during the base period and during each pay period in the application.
(e) If the affected farmer markets his whole milk through a milk handler, a statement from the milk handler showing, for each pay period in the application period, the average price per hundred-weight of whole milk similar in quality to that marketed by the affected farmer during the base period used to determine his normal marketings. If the milk handler has information as to the transportation, administrative, and other costs of marketing which are normally incurred by producers who market through the milk handler but which the affected farmer did not incur because of removal of his whole milk from the market, the average price stated by the milk handler shall be the average gross price paid producers less any such costs. If the milk handler does not have such information, the affected farmer shall furnish a statement setting forth such costs, if any.
(f) The amount of proceeds, if any, received by the affected farmer from the marketing of whole milk produced during the application period.
(g) The amount of any payments not subject to refund made to the affected farmer by the milk handler with respect to the whole milk produced during the application period and remove from the commercial market.
(h) To the extent that such information is available to the affected farmer, the name of any pesticide, chemical, or toxic substance used on the farm within 24 months prior to the application period, the use made of the pesticide, chemical, or toxic substance, the approximate date of such use, and the name of the manufacturer and the registration number, if any, on the label on the container of the pesticide, chemical, or toxic substance.
(i) To the extent possible, the source of the pesticide, chemical, or toxic substance that caused the contamination of the whole milk, and the results of any laboratory tests on the feed supply.
(j) Such other information as the county committee may request to enable the county committee or the Deputy Administrator to make the determinations required in this subpart.
An indemnity payment for milk may be made under this subpart to an affected farmer only under the following conditions:
(a) If the pesticide, chemical, or toxic substance, contaminating the milk was used by the affected farmer, he established each of the following:
(1) That the pesticide, chemical or toxic substance, when used, was registered (if applicable) and approved for use as provided in § 760.2(f);
(2) That the contamination of his milk was not the result of his failure to use the pesticide, chemical, or toxic substance, according to the directions and limitations stated on the label;
(3) That the contamination of his milk was not otherwise his fault.
(b) If the pesticide, chemical, or toxic substance contaminating the milk was not used by the affected farmer, he establishes each of the following:
(1) He did not know or have reason to believe that any feed which he purchased and which contaminated his milk contained a harmful residue of a pesticide, a chemical, or a toxic substance or was contaminated by nuclear radiation or fallout.
(2) None of the milk was produced by dairy cattle which he knew, or had reason to know at the time he acquired them, were contaminated with residues of pesticides, chemicals or toxic substances, or by nuclear radiation or fallout.
(3) The contamination of his milk was not otherwise his fault.
(c) The affected farmer has adopted recommended practices for eliminating residues of pesticides, chemicals, or toxic substances or contamination from nuclear radiation or fallout from his milk as soon as practicable following the discovery of the initial contamination.
The affected farmer or his legal representative, as provided in §§ 760.25 and 760.29, must sign and file an application for payment on a form which is approved for that purpose by the Deputy Administrator. The form must be filed with the county FSA office for the county where the farm headquarters are located no later than December 31 following the end of the fiscal year in which the loss occurred, or such later date as the Deputy Administrator may specify. The application for payment shall cover application periods of at least 28 days, except that, if the entire application period, or the last application period, is shorter than 28 days, applications for payment may be filed for such shorter period. The application for payment shall be accompanied by the information required by § 760.6 as well as any other information which will enable the county committee to determine whether the making of an indemnity payment is precluded for any of the reasons set forth in § 760.7. Such information shall be submitted on forms approved for the purpose by the Deputy Administrator.
(a) No indemnity payment shall be made for contaminated milk resulting from residues of chemicals or toxic substances if, within 30 days after receiving a complete application, the Deputy Administrator determines that other legal recouse is available to the farmer. An application shall not be deemed complete unless it contains all information necessary to make a determination as to whether other legal recourse is available to the farmer. However, notwithstanding such a determination, the Deputy Administrator may reopen the case at a later date and make a new determination on the merits of the case as may be just and equitable.
(b) In the event that a farmer receives an indemnity payment under this subpart, and such farmer is later compensated for the same loss by the person (or the representative or successor in interest of such person) responsible for such loss, the indemnity payment shall be refunded by the farmer to the Department of Agriculture:
An indemnity payment may be made to the affected manufacturer who is determined by the Deputy Administrator to be in compliance with all the terms and conditions of this subpart in the amount of the fair market value of the product removed from the commercial market because of pesticide residues, less any amount the manufacturer receives for the product in the form of salvage.
Manufacturers are not eligible for payment when dairy products are contaminated by chemicals, toxic substances (other
The affected manufacturer, or his legal representatives, shall file an application for payment with the Deputy Administrator, FSA, Washington, D.C., through the county office serving the county where the contaminated product is located. The application for payment may be in the form of a letter or memorandum. Such letter or memorandum, however, must be accompanied by acceptable documentation to support such application for payment.
The affected manufacturer shall furnish the Deputy Administrator, through the county committee, complete and accurate information sufficient to enable him to make the determination as to the manufacturer's eligibility to receive an indemnity payment. Such information shall include, but is not limited to:
(a) A copy of the notice or other evidence of action by the public agency which resulted in the product being removed from the commerical market.
(b) The name of the pesticide causing the removal of the product from the commerical market and, to the extent possible, the source of the pesticide.
(c) A record of the quantity of milk or butterfat used to produce the product for which an indemnity payment is requested.
(d) The identity of any pesticide used by the affected manufacturer.
(e) Such other information as the Deputy Administrator may request to enable him to make the determinations required in this subpart.
An indemnity payment may be made under this subpart to an affected manufacturer only under the following conditions:
(a) If the pesticide contaminating the product was used by the affected manufacturer, he establishes each of the following: (1) That the pesticide, when used, was registered and recommended for such use as provided in § 760.2(f); (2) that the contamination of his product was not the result of his failure to use the pesticide in accordance with the directions and limitations stated on the label of the pesticide; and (3) that the contamination of his product was not otherwise his fault.
(b) If the pesticide contaminating the product was not used by the affected manufacturer: (1) He did not know or have reason to believe that the milk from which the product was processed contained a harmful level of pesticide residue, and (2) the contamination of his product was not otherwise his fault.
(c) In the event that a manufacturer receives an indemnity payment under this subpart, and such manufacturer is later compensated for the same loss by the person (or the representative or successor in interest of such person) responsible for such loss, the indemnity payment shall be refunded by the manufacturer to the Department of Agriculture:
(a) County executive directors and State and county committees do not have authority to modify or waive any of the provisions of the regulations in this subpart.
(b) The State committee may take any action authorized or required by the regulations in this subpart to be taken by the county committee when such action has not been taken by the county committee. The State committee may also:
(1) Correct, or require a county committee to correct, any action taken by such county committee which is not in accordance with the regulations in this subpart, or (2) require a county committee to withhold taking any action which is not in accordance with the regulations in this subpart.
(c) No delegation herein to a State or county committee shall preclude the Deputy Administrator or his designee from determining any question arising under the regulations in this subpart or from reversing or modifying any determination made by a State or county committee.
(a) A receiver of an insolvent debtor's estate and the trustee of a trust estate shall, for the purpose of this subpart, be considered to represent an insolvent affected farmer or manufacturer and the beneficiaries of a trust, respectively, and the production of the receiver or trustee shall be considered to be the production of the person or manufacturer he represents. Program documents executed by any such person will be accepted only if they are legally valid and such person has the authority to sign the applicable documents.
(b) An affected dairy farmer or manufacturer who is a minor shall be eligible for indemnity payments only if he meets one of the following requirements:
(1) The right of majority has been conferred on him by court proceedings or by statute; (2) a guardian has been appointed to manage his property and the applicable program documents are signed by the guardian; or (3) a bond is furnished under which the surety guarantees any loss incurred for which the minor would be liable had he been an adult.
(2) [Reserved]
The appeal regulations issued by the Administrator, FSA, part 780 of this chapter, shall be applicable to appeals by dairy farmers or manufacturers from determinations made pursuant to the regulations in this subpart.
(a) If the affected farmer or manufacturer is indebted to any agency of the United States and such indebtedness is listed on the county debt record, indemnity payments due the affected farmer or manufacturer under the regulations in this part shall be applied, as provided in the Secretary's setoff regulations, part 13 of this title, to such indebtedness.
(b) Compliance with the provisions of this section shall not deprive the affected farmer or manufacturer of any right he would otherwise have to contest the justness of the indebtedness involved in the setoff action, either by administrative appeal or by legal action.
If the indemnity payment disbursed to an affected farmer or to a manufacturer exceeds the amount authorized under the regulations in this subpart, the affected farmer or manufacturer shall be personally liable for repayment of the amount of such excess.
In the case of the death, incompetency, or disappearance of any affected farmer or manufacturer who would otherwise receive an indemnity payment, such payment may be made to the person or persons specified in the regulations contained in part 707 of this chapter. The person requesting such payment shall file Form FSA-325, “Application for Payment of Amounts Due Persons Who Have Died, Disappeared, or Have Been Declared Incompetent,” as provided in that part.
(a) The affected farmer, as well as his milk handler and any other person who furnished information to such farmer or to the county committee for the purpose of enabling such farmer to receive a milk indemnity payment under this subpart, shall maintain any existing books, records, and accounts supporting any information so furnished for 3 years following the end of the year during which the application for payment was filed. The affected farmer, his milk handler, and any other person who furnishes such information to the affected farmer or to the county committee shall permit authorized representatives of the Department of Agriculture and the General Accounting Office, during regular business hours, to
(b) The affected manufacturer or any other person who furnishes information to the Deputy Administrator for the purposes of enabling such manufacturer to receive an indemnity payment under this subpart shall maintain any books, records, and accounts supporting any information so furnished for 3 years following the end of the year during which the application for payment was filed. The affected manufacturer or any other person who furnishes such information to the Deputy Administrator shall permit authorized representatives of the Department of Agriculture and the General Accounting Office, during regular business hours, to inspect, examine, and make copies of such books, records, and accounts.
No assignment shall be made of any indemnity payment due or to come due under the regulations in this subpart. Any assignment or attempted assignment of any indemnity payment due or to come due under this subpart shall be null and void.
The Deputy Administrator shall cause to be prepared such forms and instructions as are necessary for carrying out the regulations in this subpart. Affected farmers and manufacturers may obtain information necessary to make application for a dairy indemnity payment from the county FSA office. Form FSA-373—Application for Indemnity Payment, is available at the county ASC office.
Payment of indemnity claims will be contingent upon the availability of funds to the Department to pay such claims. With respect to claims filed after October 1, 1982, if the Department determines that the amount of claims to be filed under the program will exceed the funds available to the Department, to pay such claims payments will be made so that each eligible claimant will receive a pro rata share of the remaining funds available to the Department to pay dairy indemnity claims.
The information collection requirements contained in these regulations (7 CFR part 760) have been approved by the Office of Management and Budget (OMB) under the provisions of 44 U.S.C. Chapter 35 and have been assigned OMB control number 0560-0045.
Producers who have suffered certain losses due to 2005 Hurricanes Dennis, Katrina, Ophelia, Rita, and Wilma (2005 hurricanes) in the following counties (eligible counties) are eligible to enroll in the programs made available under subparts B through F of this part. The ‘Disaster Period' is the time period in which losses occurred that would be considered eligible for the programs under subparts B through F of this part. Funds for the programs in subparts B through G are made available under Section 32 of the Act of August 24, 1935, as amended (Section 32).
(a) This part establishes the terms and conditions under which the following programs will be administered with respect to producers affected by 2005 hurricanes in eligible counties:
(1) Hurricane Indemnity Program (HIP);
(2) Feed Indemnity Program (FIP);
(3) Livestock Indemnity Program (LIP);
(4) Tree Indemnity Program (TIP); and
(5) Aquaculture grants to States.
(b) The amount that may be expended for payments under subparts B through G of this part shall not exceed the amount of Section 32 funds made available by the Secretary for the administration of these programs.
(c) To be eligible for payments under these programs, producers must comply with all applicable provisions under subparts B through G of this part and, in the case of State grants, by the State.
(a) These programs are administered under the general supervision of the Administrator, FSA.
(b) FSA representatives do not have authority to modify or waive any of the provisions of the regulations of subparts B through F of this part.
(c) The State FSA committee shall take any action required by the regulations of subparts B through F of this part that the county FSA committee has not taken. The State committee shall also:
(1) Correct, or require a county committee to correct, any action taken by such county committee that is not in accordance with the regulations of subparts B through F of this part; or
(2) Require a county committee to withhold taking any action that is not in accordance with subparts B through F of this part.
(d) No provision or delegation to a State or county FSA committee shall preclude the Administrator, FSA, Deputy Administrator for Farm Programs, FSA or a designee or other such person, from determining any question arising under the program or from reversing or modifying any determination made by a State or county FSA committee.
The following definitions in this section apply to the programs in subparts B through G of this part. The terms defined in part 718 of this chapter and parts 1400 and 1437 of this title shall also be applicable, except where they conflict with the definitions set forth in this section.
(a) A producer who applies for any program under subparts B through F shall file an application and any required supporting documentation in the county FSA office serving the county where the eligible loss occurred; or in the case of FIP, where the eligible livestock were physically located on the applicable date.
(b) The application must be filed during the application period announced by FSA.
(c) Payments may be made for eligible losses suffered by an eligible producer who is now deceased or is a dissolved entity if a representative who currently has authority to enter into a contract for the producer signs the application for payment. Proof of authority to sign for the deceased producer or dissolved entity must be provided. If a producer is now a dissolved general partnership or joint venture, all members of the general partnership or joint venture at the time of dissolution or their duly authorized representatives must sign the application for payment.
(d) Data furnished by the applicant will be used to determine eligibility for program benefits. Furnishing the data is voluntary; however, without all required data program benefits will not be approved or provided.
(e) A minor child shall be eligible to apply for program benefits so long as all eligibility requirements are met and one of the following conditions exist:
(1) The right of majority has been conferred upon the minor by court proceedings or statute;
(2) A guardian has been appointed to manage the minor's property, and the applicable program documents are executed by the guardian; or
(3) A bond is furnished under which a surety guarantees any loss incurred for which the minor would be liable had the minor been an adult.
(a) Separate payment limitations apply to HIP, FIP, LIP, and TIP. No ‘person' as determined under part 1400 of this title shall receive more than $80,000 under each of these programs.
(b) An individual or entity whose adjusted gross income is in excess of $2.5 million, as determined under part 1400 of this title, shall not be eligible to receive benefits under this part for HIP, FIP, LIP, and TIP; except that the individual or entity may be considered to meet the adjusted gross income requirement if not less than 75 percent of the individual's or entity's average adjusted gross income for the three tax years immediately preceding the applicable crop year is derived from farming or ranching operations.
(c) As a condition to receive benefits under subparts B through F, a producer must have been in compliance with the provisions of parts 12 and 718 of this title for the 2005 crop year and must not otherwise be barred from receiving benefits under any law.
(d) An individual or entity determined to be a foreign person under part 1400 of this title shall not be eligible to receive benefits under subparts B through F of this part.
The appeal regulations set forth at parts 11 and 780 of this title apply to determinations made pursuant to subparts B through F of this part.
(a) Except as provided in paragraph (b) of this section, any payment or portion thereof to any producer shall be made without regard to questions of title under State law and without regard to any claim or lien against the commodity, or proceeds thereof, in favor of the owner or any other creditor except agencies of the U.S. Government. The regulations governing offsets and withholdings found at part 792 of this chapter apply to payments
(b) Any producer entitled to any payment may assign any payments in accordance with regulations governing the assignment of payments found at part 1404 of this title.
Producers receiving payments under the programs in subparts B through F or any other person who furnishes information for the purposes of enabling such producer to receive a payment under subparts B through F of this part shall maintain any books, records, and accounts supporting any information so furnished for 3 years following the end of the year during which the application for payment was filed. Producers receiving payments or any other person who furnishes such information to FSA shall permit authorized representatives of USDA and the General Accounting Office during regular business hours to inspect, examine, and to allow such persons to make copies of such books, records, and to enter upon, inspect and verify all applicable livestock and acreage in which the applicant has an interest for the purpose of confirming the accuracy of the information provided by the applicant.
In the event there is a failure to comply with any term, requirement, or condition for payment or assistance arising under subparts B through F of this part, and if any refund of a payment to FSA shall otherwise become due in connection with this part, all payments made in regard to such matter shall be refunded to FSA together with interest and late-payment charges as provided for in part 792 of this chapter.
The information collection required to support the regulations of subparts B through F of this part has been approved by OMB and assigned OMB control number 0560-0257.
This subpart sets forth the terms and conditions applicable to the Hurricane Indemnity Program (HIP). Benefits will be provided under this subpart to producers who have received a crop insurance indemnity from the Risk Management Agency (RMA) based on the associated loss criteria set forth in § 760.202(a)(1) as provided to FSA by RMA; and to producers who have received Noninsured Crop Disaster Assistance Program (NAP) payments under part 1437 of this title based on the provisions of § 760.202(a)(1). HIP benefits will be provided under this subpart to eligible producers who suffered losses due to 2005 hurricanes as set forth in § 760.101.
A producer who applies for benefits under this subpart will be eligible to receive a payment if both of the following apply:
(a) The producer received a crop insurance indemnity from RMA or a NAP payment under part 1437 of this title for crop losses:
(1) In an eligible county;
(2) Recorded by RMA or FSA as being due to a 2005 hurricane and the loss occurred during a disaster period as set forth in § 760.101; and
(3) Were due to any of the following causes of loss:
(i) Excessive moisture, precipitation, and/or rain;
(ii) Flood;
(iii) Excessive wind;
(iv) Cyclone;
(v) Tornado;
(vi) Tropical depression;
(vii) Storm surge; or
(viii) Salinity due to salt water intrusion; and
(b) An application is filed in accordance with § 760.105.
The disaster benefits under this subpart will be equal to the smaller of:
(a) 30 percent of the RMA crop insurance indemnity or 30 percent of the NAP payment for eligible crop losses as provided in § 760.202(a)(1), and adding the crop insurance premium for the indemnity as provided in § 760.202(a)(1); or
(b) 95 percent of the expected value of the crop in the absence of a disaster, as determined by RMA for insured crops, using information from the crop policy; and by FSA for NAP crops, using the producer's price and yield, minus the following:
(1) The value of the production as counted by RMA for insured crops to establish the indemnity and by FSA for NAP crops to establish the NAP payment;
(2) The crop's eligible indemnity or NAP payment for eligible crop losses determined in accordance with § 760.202(a)(1); and
(3) Adding the crop insurance premium for the indemnity as provided in § 760.202(a)(1).
This subpart sets forth the terms and conditions applicable to the Feed Indemnity Program (FIP). FIP benefits will be provided under this subpart to eligible owners and cash lessees, but not both, for the same livestock, for feed losses or increased feed costs that occurred in eligible counties during the disaster period as set forth in § 760.101.
The following definitions are applicable for all purposes of administering FIP.
(a) To be considered eligible, livestock must meet all the following conditions:
(1) Be adult or non-adult dairy cattle, beef cattle, buffalo, beefalo, horses, sheep, goats or deer as defined in § 760.302;
(2) Been physically located in an eligible county on the beginning date of the applicable disaster period as set forth in § 760.101;
(3) Been maintained for commercial use as part of a farming operation on the beginning date of the applicable disaster period as set forth in § 760.101;
(4) Not have been produced and maintained for reasons other than commercial use as part of a farming operation. Such excluded uses include, but are not limited to wild free roaming animals or animals used for recreational purposes, such as pleasure, hunting, pets, or for show.
(b) To be considered an eligible livestock producer, a producer must have:
(1) Owned or cash-leased, but not both for the same livestock, eligible livestock on the beginning date of the applicable disaster period as provided in § 760.101; and
(2) Suffered a feed loss or an increased feed cost during the applicable disaster period as set forth in § 760.101 with respect to feed used for the eligible livestock.
(a) Applicants must submit to FSA a completed application in accordance with § 760.105, and any other supporting documentation as determined by FSA to be necessary to make a determination of the eligibility of the applicant. Supporting documents include but are not limited to: Purchase records; veterinarian records; bank or other loan papers; rendering truck receipts; Federal Emergency Management Agency and National Guard records; written contracts; production records; Internal Revenue Service (IRS) records; property tax records; private insurance documents; and other similar documents.
(a) FIP payments are calculated by multiplying the national payment rate for each of the following livestock categories by the number of eligible livestock in each category. The payment rate represents the cost of the amount of corn needed to maintain 1 animal unit for a specified period of time.
(b) The eligible livestock categories are:
(1) Adult beef cows or bulls;
(2) Non-adult beef cattle;
(3) Adult buffalo or beefalo cows or bulls;
(4) Non-adult buffalo or beefalo;
(5) Adult dairy cows or bulls;
(6) Non-adult dairy cattle;
(7) Goats;
(8) Sheep;
(9) Horses; and
(10) Deer.
(a) This subpart sets forth the terms and conditions applicable to the Livestock Indemnity Program (LIP). Benefits will be provided under this subpart to eligible livestock owners and contract growers, but not both for the same livestock loss, for certain livestock deaths that occurred in eligible counties during the disaster period as set forth in § 760.101.
(b) Eligible livestock owners and contract growers will be compensated in accordance with § 760.405 for eligible livestock deaths that occurred in eligible counties during the disaster period as set forth in § 760.101.
The following definitions are applicable for all purposes of administering LIP.
(a) To be considered eligible, a livestock owner must have had legal ownership of the eligible livestock on the day the livestock died.
(b) To be considered eligible, a contract grower on the day the livestock died must have had:
(1) A written agreement with the owner of eligible livestock setting the specific terms, conditions and obligations of the parties involved regarding the production of livestock; and
(2) Control of the livestock that died.
(c) To be considered eligible, livestock must meet all the following:
(1) Be adult or non-adult dairy cattle, beef cattle, buffalo, beefalo, equine, sheep, goats, swine, poultry or deer.
(2) Died as a direct result of an applicable disaster, in an eligible county and during the applicable disaster period as set forth in § 760.101;
(3) Been maintained for commercial use as part of a farming operation on the day they died; and before dying;
(4) Not have been produced or maintained for reasons other than commercial use as part of a farming operation, including but not limited to wild free roaming animals or animals used for recreational purposes, such as pleasure, hunting, pets, or for show.
(a) Applicants must submit to FSA a completed application in accordance with § 760.105 and other supporting documents as determined by FSA to be necessary for making determinations of the eligibility of the applicant. Supporting documents must show: evidence of loss; current physical location of livestock in inventory; and physical location of claimed livestock at the time of death.
(b) Applicants must provide adequate proof that the death of the eligible livestock occurred during the applicable disaster period, and the death was a direct result of the occurrence of a 2005 hurricane as provided in § 760.101. The quantity and kind of livestock that died as a direct result of the applicable disaster may be documented by: Purchase records; veterinarian records; bank or other loan papers; rendering truck receipts; Federal Emergency Management Agency and National Guard records; written contracts; production records; IRS records; property tax records; private insurance documents; and any other similar documents.
(c) Certifications of livestock deaths by third parties may be accepted only if both the following conditions are met:
(1) The livestock owner or livestock contract grower, as applicable, certifies in writing:
(i) That there is no other documentation of death available;
(ii) The number of livestock, by category as determined by the Deputy Administrator, in inventory at the time the applicable disaster occurred;
(iii) Other details necessary for FSA to determine the certification acceptable; and
(2) The third party has provided to FSA their telephone number and address, and a statement containing:
(i) Specific details about their knowledge of the livestock deaths;
(ii) Their affiliation to the livestock owner or contract grower; and
(iii) The accuracy of the deaths claimed by the livestock owner or contract grower; and
(iv) Other details necessary for FSA to determine the certification acceptable.
(a) Under LIP, separate payment rates are established for eligible livestock owners and eligible contract growers in accordance with paragraphs (b) and (c) of this section. LIP payments are calculated by multiplying the national payment rate, as determined in paragraphs (b) and (c) of this section, by the number of eligible livestock in each category, as provided in paragraph (d) of this section. The payment calculated for an eligible contract grower for an eligible livestock category shall be reduced by the amount of any compensation received from the contractor for the loss of income from the dead livestock.
(b) The LIP payment rate for eligible livestock owners is based on 75 percent of the average fair market value of the livestock.
(c) The LIP payment rates for eligible contract growers is based on 75 percent of the average income loss sustained by the contract grower with respect to the dead livestock.
(d) The categories of eligible livestock are as follows:
(1) Adult beef cows;
(2) Adult beef bulls;
(3) Non-adult beef cattle;
(4) Adult buffalo or beefalo cows;
(5) Adult buffalo or beefalo bulls;
(6) Non-adult buffalo/beefalo;
(7) Adult dairy cows;
(8) Adult dairy bulls;
(9) Non-adult dairy cattle;
(10) Swine, sows, boars, barrows, gilts over 150 pounds;
(11) Swine, sows, boars, barrows, gilts 50 to 150 pounds;
(12) Swine, feeder pigs under 50 pounds;
(13) Goats, bucks;
(14) Goats, does;
(15) Goats, kids;
(16) Sheep, rams;
(17) Sheep, ewes;
(18) Sheep, lambs;
(19) Deer;
(20) Chickens, layers, roasters;
(21) Chickens, broilers, pullets;
(22) Chickens, chicks;
(23) Turkeys, toms, fryers, roasters;
(24) Turkeys, poults;
(25) Ducks;
(26) Ducks, ducklings;
(27) Geese, goose;
(28) Geese, gosling; and
(29) Equine.
(a) This subpart sets forth the terms and conditions applicable to the Tree Indemnity Program (TIP). Benefits will be provided under this subpart for eligible fruit trees, bushes, and vines that were lost or damaged during the disaster period as set forth in § 760.101.
(b) Compensation will be based on expenses incurred for replanting, rehabilitation, cleanup, and debris removal.
(c) No benefits shall be provided when the loss:
(1) Occurred in any county other than an eligible county, or
(2) Was not the result of an eligible disaster as set forth in § 760.101.
(a) An eligible fruit tree, bush, and/or vine producer is one who bears financial responsibility and who has incurred costs of at least $90 per acre for replanting, rehabilitation, cleanup, or debris removal, excluding crop production.
(b) An eligible stand must:
(1) Be physically located in an eligible county;
(2) Have been impacted during a 2005 hurricane as set forth in § 760.101; and
(3) Be grown for commercial use.
(a) Applicants must submit a completed application and report of acreage identifying the geographic location and number of acres in the disaster-affected stand of claimed fruit trees, bushes, and vines in accordance with part 718 of this chapter, and any other supporting documentation for FSA to determine the eligibility of the applicant.
(b) Applicants must certify and provide adequate proof that the expenses incurred to eligible fruit trees, bushes, or vines occurred during the applicable disaster period and that the loss or damage was a direct result of a 2005 hurricane, as set forth in § 760.101.
(c) The quantity and kind of fruit trees, bushes, or vines that died or were damaged as a result of the applicable disaster may be documented by; purchase records; bank or other loan documents; Federal Emergency Management Agency and National Guard records; IRS records; property tax records; private insurance documents; and similar documents.
(a) TIP payments shall be calculated by multiplying the following national payment rate for the applicable tier by the number of eligible acres, excluding but not limited to such things as drainage ditches and canals, in a stand of fruit trees, bushes, or vines by the producer's share in such crop:
(1) Tier I—$750;
(2) Tier II—$300;
(3) Tier III—$200; and
(4) Tier IV—$90.
(b) If the actual expenses incurred for damage are greater than the value associated with the tier based on the location of the stand, the applicant may submit documentation to FSA to request the stand be placed in the next lower-numbered tier which represents a greater level of loss and a higher payment rate. Regardless of the expenses incurred the stand can only be placed in the next lower-numbered tier.
FSA will provide block grants to the states of Alabama, Florida, Louisiana, Mississippi, North Carolina and Texas where aquaculture was adversely affected by 2005 hurricanes as set forth in § 760.101. Producers in eligible counties in those states who raise aquaculture species in a controlled environment as part of a farming operation and who have not received assistance under other disaster programs for the same aquaculture losses are eligible to receive these funds. Funds provided by a State to a farming operation under such a grant shall not exceed $80,000.
FSA will administer a limited program to provide assistance to livestock producers where forage was adversely affected by drought in counties reaching D3 or D4 Drought on the U.S. Drought Monitor, during March 7 to August 31, 2006, in the States of: Alabama, Arizona, Arkansas, Colorado, Florida, Georgia, Kansas, Louisiana, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, South Dakota, Texas, Wisconsin and Wyoming. Under the Livestock Assistance Grant Program, FSA will provide grants to the State governments of these States to assist livestock producers who suffered forage losses as part of a farming operation in eligible counties. The amount of each grant will be based on the number of adult beef cattle and sheep from each eligible county uniformly prorated to insure that available funding is not exceeded. Producers in eligible counties in those States who suffered forage losses as part of a farming operation are eligible for assistance under these grants. Among other conditions of these grants, assistance provided by a State under such a grant to an applicant shall not exceed $10,000, except for general partnerships and joint ventures in which case assistance shall not exceed $10,000 times the number of members that constitute the general partnership or joint venture.
This part sets forth the terms and conditions for the 2005-2007 Crop Disaster Program (2005-2007 CDP). CDP makes emergency financial assistance available to producers who have incurred crop losses in quantity or quality for eligible 2005, 2006, or 2007 crop years due to disasters as determined by the Secretary under provisions of Title IX of the U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007 (Pub. L. 110-28). However, to be eligible for assistance, the crop subject to the loss must have been planted or existed before February 28, 2007, or, in the case of prevented planting, would have been planted before February 28, 2007.
(a) The program will be administered under the general supervision of the Deputy Administrator for Farm Programs and will be carried out in the field by FSA State and county committees.
(b) State and county committees and representatives do not have the authority to modify or waive any of the provisions of this part.
(c) The State committee will take any action required by this part that has not been taken by a county committee. The State committee will also:
(1) Correct, or require a county committee to correct, any action taken by that FSA county committee that is not in accordance with this part; and
(2) Require a county committee to withhold taking or reverse any action that is not in accordance with this part.
(d) No provision or delegation to a State or county committee will prevent the Deputy Administrator for Farm Programs from determining any
(e) The Deputy Administrator for Farm Programs may authorize State and county committees to waive or modify non-statutory deadlines or other program requirements in cases where lateness or failure to meet such does not adversely affect the operation of the program.
The following definitions apply to this part. The definitions in parts 718 and 1400 of this title also apply, except where they conflict with the definitions in this section.
(1) For insured crops, the crop year as defined according to the applicable crop insurance policy;
(2) For NAP covered crops, as provided in part 1437 of this title.
(1) For aquaculture species, placing the aquaculture facility in an area not prone to flood;
(2) In the case of raceways, devices or structures designed for the control of water level; and
(3) With respect to nursery crops, placing containerized stock in a raised area above expected flood level and providing draining facilities, such as drainage ditches or tile, gravel, cinder, or sand base.
(1) For aquaculture species, media that provides nutrients necessary for the production of the aquaculture species and protects the aquaculture species from harmful species or chemicals or
(2) For nursery crops, a well-drained media with a minimum 20 percent air pore space and pH adjustment for the type of plant produced designed to prevent “root rot.”
(1) For insured crops, harvested as defined according to the applicable crop insurance policy;
(2) For NAP covered single harvest crops, that a crop has been removed from the field, either by hand or mechanically, or by grazing of livestock;
(3) For NAP covered crops with potential multiple harvests in 1 year or harvested over multiple years, that the producer has, by hand or mechanically, removed at least one mature crop from the field during the crop year;
(4) For mechanically-harvested NAP covered crops, that the crop has been 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. Grazed land will not be considered harvested for the purpose of determining an unharvested or prevented planting payment factor. A crop that is intended for mechanical harvest, but subsequently grazed and not mechanically harvested, will have an unharvested factor applied.
(1) An insured participant's yield will be the higher of the county average yield listed or the approved federal crop insurance APH, for the disaster year.
(2) NAP participant's yield will be the higher of the county average or approved NAP APH for the disaster year.
(1) The price(s) designated in the marketing contract; or
(2) If not designated in a marketing contract, the rate established for quantity payments under § 760.811.
(1) For all insured crops, the FCIC-established unit of measure;
(2) For all NAP covered crops, the established unit of measure, if available, used for the 2005, 2006, or 2007 NAP price and yield;
(3) For aquaculture species, a standard unit of measure such as gallons, pounds, inches, or pieces, established by the State committee for all aquaculture species or varieties;
(4) For turfgrass sod, a square yard;
(5) For maple sap, a gallon;
(6) For honey, pounds; and
(7) For all other crops, the smallest unit of measure that lends itself to the greatest level of accuracy with minimal use of fractions, as determined by the State committee.
(1) For quantity losses, evidence that is used to substantiate the amount of production reported and that can be verified by FSA through an independent source; or
(2) For quality losses, evidence that is used to substantiate the amount of production reported and that can be verified by FSA through an independent source including determined quality factors and the specific quantity covered by those factors.
(a) Participants will be eligible to receive disaster benefits under this part only if they incurred qualifying quantity or quality losses for the 2005, 2006, or 2007 crops, as further specified in this part, as a result of damaging weather or any related condition. Participants may not receive benefits with respect to volunteer stands of crops.
(b) Payments may be made for losses suffered by an eligible participant who, at the time of application, is a deceased individual or is a dissolved entity if a representative, who currently has authority to enter into a contract for the participant, signs the 2005, 2006, or 2007 Crop Disaster Program application. Participants must provide proof of the authority to sign legal documents for the deceased individual or dissolved entity. 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 for payment.
(c) As a condition to receive benefits under this part, 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 2005, 2006, or 2007 crop year, as applicable, and must not otherwise be precluded from receiving benefits under parts 12 or 1400 of this title or any law.
(a) The 2005, 2006, 2007 Crop Disaster Program application must be submitted on a completed FSA-840, or such other form designated for such application purpose by FSA, in the FSA county office in the participant's control county office before the close of business on a date that will be announced by the Deputy Administrator.
(b) Once signed by a participant, the application for benefits is considered to contain information and certifications of and pertaining to the participant regardless of who entered the information on the application.
(c) The participant requesting benefits under this program 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 by FSA. For example, as specified in § 760.818(f), the participant may be required to provide documentation to substantiate and validate quality standards and marketing contract prices. Refusal to allow FSA or any agency of the Department of Agriculture to verify any information provided will result in the participant's forfeiting eligibility under this program. Furnishing required information is voluntary; however without it, FSA is under no obligation to act on the application or approve benefits. Providing a false certification to the government is punishable by imprisonment, fines, and other penalties.
(d) FSA may require the participant to submit any additional information it deems necessary to implement or determine any eligibility provision of this part. For example, as specified in § 760.818(f), the participant may be required to provide documentation to substantiate and validate quality standards and marketing contract prices.
(e) The application submitted in accordance with paragraph (a) of this section is not considered valid and complete for issuance of payment under this part unless FSA determines all the applicable eligibility provisions have been satisfied and the participant has submitted all of following completed forms:
(1) If Item 16 on FSA-840 is answered “YES,” FSA-840M, Crop Disaster Program for Multiple Crop—Same Acreage Certification;
(2) CCC-502, Farm Operating Plan for Payment Eligibility;
(3) CCC-526, Payment Eligibility Average Adjusted Gross Income Certification;
(4) AD-1026, Highly Erodible Land Conservation (HELC) and Wetland Conservation Certification; and
(5) FSA-578, Report of Acreage.
(f) Application approval and payment by FSA does not relieve a participant
(a) A participant may receive benefits for crop losses for only one of the 2005, 2006, or 2007 crop years as specified under this part.
(b) Payments will not be made under this part for grazing losses.
(c) Payments determined to be issued are considered due and payable not later than 60 days after a participant's application is completed with all information necessary for FSA to determine producer eligibility for benefits.
(d) FSA may divide and classify crops based on loss susceptibility, yield, and other factors.
(e) No person, as defined by part 1400 subpart B of this title, may receive more than a total of $80,000 in disaster benefits under this part. In applying the $80,000 per person payment limitation, regardless of whether 2005, 2006, or 2007 crop year benefits are at issue or sought, the most restrictive “person” determination for the participant in the years 2005, 2006, and 2007, will be used to limit benefits.
(f) No participant may receive disaster benefits under this part in an amount that exceeds 95 percent of the value of the expected production for the relevant period as determined by FSA. Accordingly, the sum of the value of the crop not lost, if any; the disaster payment received under this part; and any crop insurance payment or payments received under the NAP for losses to the same crop, cannot exceed 95 percent of what the crop's value would have been if there had been no loss.
(g) An individual or entity whose adjusted gross income is in excess of $2.5 million, as defined by and determined under part 1400 subpart G of this title, is not eligible to receive disaster benefits under this part.
(h) Any participant in a county eligible for either of the following programs must complete a duplicate benefits certification. If the participant received a payment authorized by either of the following, the amount of that payment will be reduced from the calculated 2005-2007 CDP payment:
(1) The Hurricane Indemnity Program (subpart B of this part);
(2) The Hurricane Disaster Programs (subparts D, E, F, and G of part 1416 of this title);
(3) The 2005 Louisiana Sugarcane Hurricane Disaster Assistance Program; or
(4) The 2005 Crop Florida Sugarcane Disaster Program.
(a) A participant on a farm is eligible for assistance under this section with respect to losses to an insurable commodity or NAP if the participant:
(1) In the case of an insurable commodity, obtained a policy or plan of insurance under the Federal Crop Insurance Act for the crop incurring the losses; or
(2) In the case of a NAP covered crop, filed the required paperwork and paid the administrative fee by the applicable filing deadline, for the noninsurable commodity under section 196 of the Federal Agriculture Improvement and Reform Act of 1996 for the crop incurring the losses.
(b) The reasons a participant either elected not to have coverage or did not have coverage mentioned in paragraphs (a)(1) or (2) of this section are not relevant to the determination of the participant's ineligibility under this section. In addition, such reasons for not having crop insurance coverage have no bearing for consideration under part 718, subpart D of this chapter.
(a) A person is not eligible to receive disaster assistance under this part if it is determined by FSA that the person has:
(1) Adopted any scheme or other device that tends to defeat the purpose of this part;
(2) Made any fraudulent representation;
(3) Misrepresented any fact affecting a program determination;
(4) Is ineligible under § 1400.5 of this title; or
(5) Does not have entitlement to an ownership share of the crop.
(i) Growers growing eligible crops under contract for crop owners are not eligible unless the grower can be determined to have a share of the crop.
(ii) Any verbal or written contract that precludes the grower from having an ownership share renders the grower ineligible for benefits under this part.
(b) A person ineligible under § 1437.15(c) of this title for any year is likewise ineligible for benefits under this part for that year or years.
(c) A person ineligible under § 400.458 of this title for any year is likewise ineligible for benefits under this part for that year or years.
(d) All persons with a financial interest in the operation receiving benefits under this part are jointly and severally liable for any refund, including related charges, which is determined to be due FSA for any reason.
(e) In the event that any request for assistance or payment under this part resulted from erroneous information or a miscalculation, the assistance or payment will be recalculated and any excess refunded to FSA with interest to be calculated from the date of the disbursement to the producer.
(f) The liability of anyone for any penalty or sanction under or in connection with this part, or for any refund to FSA or related charge is in addition to any other liability of such person under any civil or criminal fraud statute or any other provision of law including, but not limited to: 18 U.S.C. 286, 287, 371, 641, 651, 1001, and 1014; 15 U.S.C. 714; and 31 U.S.C. 3729.
(g) The regulations in parts 11 and 780 of this title apply to determinations under this part.
(h) Any payment to any person will be made without regard to questions of title under State law and without regard to any claim or lien against the crop, or its proceeds.
(i) For the purposes of the effect of lien on eligibility for Federal programs (28 U.S.C. 3201(e)), FSA waives the restriction on receipt of funds or benefits under this program but only as to beneficiaries who, as a condition of such waiver, agree to apply the benefits received under this part to reduce the amount of the judgment lien.
(j) Under this program, participants are either eligible or ineligible. Participants in general, do not render performance or need to comply. They either suffered eligible losses or they did not. Accordingly, the provisions of § 718.304 of this chapter do not apply to this part.
(a) For calculations of loss, the participant's existing unit structure will be used as the basis for the calculation established in accordance with:
(1) For insured crops, part 457 of this title; or
(2) For NAP covered crops, part 1437 of this title.
(b) County average yield for loss calculations will be the average of the 2001 through 2005 official county yields established by FSA, excluding the years with the highest and lowest yields, respectively.
(c) County committees will assign production or reduce the historic yield when the county committee determines:
(1) An acceptable appraisal or record of harvested production does not exist;
(2) The loss is due to an ineligible cause of loss or practices, soil type, climate, or other environmental factors that cause lower yields than those upon which the historic yield is based;
(3) The participant has a contract providing a guaranteed payment for all or a portion of the crop; or
(4) The crop was planted beyond the normal planting period for the crop.
(d) The county committee will establish a maximum average loss level that reflects the amount of production producers would have produced if not for the eligible damaging weather or related conditions in the area or county for the same crop. The maximum average loss level for the county will be expressed as either a percent of loss or yield per acre. The maximum average loss level will apply when:
(1) Unharvested acreage has not been appraised by FSA, or a company reinsured by FCIC; or
(2) Acceptable production records for harvested acres are not available from any source.
(e) Assignment of production or reduction in yield will apply for practices that result in lower yields than those for which the historic yield is based.
(a) Except as provided in paragraphs (b) and (c) of this section, to be eligible for benefits under this part the loss of the crop, or reduction in quality, or prevented planting must be due to damaging weather or related conditions as defined in § 760.802.
(b) Benefits are not available under this part for any losses in quantity or quality, or prevented planting due to:
(1) Poor farming practices;
(2) Poor management decisions; or
(3) Drifting herbicides.
(c) With the exception of paragraph (d) of this section, in all cases, the eligible damaging condition must have directly impacted the specific crop or crop acreage during its planting or growing period.
(d) If FSA has determined that there has been an eligible loss of surface irrigation water due to drought and such loss of surface irrigation water impacts eligible crop acreage, FSA may approve assistance to the extent permitted by section 760.814.
(a) To receive benefits under this part, the county committee must determine that because of eligible damaging weather or related condition specifically impacting the crop or crop acreage, the participant with respect to the 2005, 2006, or 2007 crop:
(1) Was prevented from planting a crop;
(2) Sustained a loss in excess of 35 percent of the expected production of a crop; or
(3) Sustained a loss in excess of 35 percent of the value for value loss crops.
(b) Qualifying losses under this part do not include losses:
(1) For the 2007 crop, those acres planted, or in the case of prevented planting, would have been planted, on or after February 28, 2007;
(2) That are determined by FSA to be the result of poor management decisions, poor farming practices, or drifting herbicides;
(3) That are the result of the failure of the participant to re-seed or replant the same crop in the county where it is customary to re-seed or replant after a loss;
(4) That are not as a result of a damaging weather or a weather related condition specifically impacting the crop or crop acreage;
(5) To crops not intended for harvest in crop year 2005, 2006, or 2007;
(6) Of by-products resulting from processing or harvesting a crop, such as cottonseed, peanut shells, wheat, or oat straw;
(7) To home gardens;
(8) That are a result of water contained or released by any governmental, public, or private dam or reservoir project if an easement exists on the acreage affected for the containment or release of the water; or
(9) If losses could be attributed to conditions occurring outside of the applicable crop year growing season.
(c) Qualifying losses under this part for nursery stock will not include losses:
(1) For the 2007 crop, that nursery inventory acquired on or after February 28, 2007;
(2) Caused by a failure of power supply or brownouts;
(3) Caused by the inability to market nursery stock as a result of lack of compliance with State and local commercial ordinances and laws, quarantine, boycott, or refusal of a buyer to accept production;
(4) Caused by fire unless directly related to an eligible natural disaster;
(5) Affecting crops where weeds and other forms of undergrowth in the vicinity of the nursery stock have not been controlled; or
(6) Caused by the collapse or failure of buildings or structures.
(d) Qualifying losses under this part for honey, where the honey production by colonies or bees was diminished, will not include losses:
(1) For the 2007 crop, for production from those bees acquired on or after February 28, 2007;
(2) Where the inability to extract was due to the unavailability of equipment, the collapse or failure of equipment, or apparatus used in the honey operation;
(3) Resulting from storage of honey after harvest;
(4) To honey production because of bee feeding;
(5) Caused by the application of chemicals;
(6) Caused by theft, fire, or vandalism;
(7) Caused by the movement of bees by the producer or any other person; or
(8) Due to disease or pest infestation of the colonies.
(e) Qualifying losses for other value loss crops, except nursery, will not include losses for the 2007 crop that were acquired on or after February 28, 2007.
(f) Loss calculations will take into account other conditions and adjustments provided for in this part.
(a)(1) Payments made under this part to a participant for a loss of quantity on a unit with respect to yield-based crops are determined by multiplying the average market price times 42 percent, times the loss of production which exceeds 35 percent of the expected production, as determined by FSA, of the unit.
(2) Payments made under this part to a participant for a quantity loss on a unit with respect to value-based crops are determined by multiplying the payment rate established for the crop by FSA times the loss of value that exceeds 35 percent of the expected production value, as determined by FSA, of the unit.
(3) As determined by FSA, additional quality loss payments may be made using a 25 percent quality loss threshold. The quality loss threshold is determined according to § 760.817.
(b) Payment rates for the 2005, 2006, or 2007 year crop losses will be 42 percent of the average market price.
(c) Separate payment rates and yields for the same crop may be established by the State committee as authorized by the Deputy Administrator, when there is supporting data from NASS or other sources approved by FSA that show there is a significant difference in yield or value based on a distinct and separate end use of the crop. Despite potential differences in yield or values, separate rates or yields will not be established for crops with different cultural practices, such as those grown organically or hydroponically.
(d) Production from all end uses of a multi-use crop or all secondary uses for multiple market crops will be calculated separately and summarized together.
(e) Each eligible participant's share of a disaster payment will be based on the participant's ownership entitlement share of the crop or crop proceeds, or, if no crop was produced, the share of the crop the participant would have received if the crop had been produced. If the participant has no ownership share of the crop, the participant is ineligible for assistance under this part.
(f) When calculating a payment for a unit loss:
(1) An unharvested payment factor will be applied to crop acreage planted but not harvested;
(2) A prevented planting factor will be applied to any prevented planted acreage eligible for payment; and
(3) Unharvested payment factors may be adjusted if costs normally associated with growing the crop are not incurred.
(a) Where available and determined accurate by FSA, RMA loss records will be used for insured crops.
(b) If RMA loss records are not available, or if the FSA county committee determines the RMA loss records are inaccurate or incomplete, or if the FSA county committee makes inquiry, participants are responsible for:
(1) Retaining or providing, when required, the best verifiable or reliable production records available for the crop;
(2) Summarizing all the production evidence;
(3) Accounting for the total amount of unit production for the crop, whether or not records reflect this production;
(4) Providing the information in a manner that can be easily understood by the county committee; and
(5) Providing supporting documentation if the county committee has reason to question the damaging weather event or question whether all production has been accounted for.
(c) In determining production under this section, the participant must supply verifiable or reliable production records to substantiate production to the county committee. If the eligible crop was sold or otherwise disposed of through commercial channels, production records include: commercial receipts; settlement sheets; warehouse ledger sheets; load summaries; or appraisal information from a loss adjuster acceptable to FSA. If the eligible crop was farm-stored, sold, fed to livestock, or disposed of in means other than commercial channels, production records for these purposes include: truck scale tickets; appraisal information from a loss adjuster acceptable to FSA; contemporaneous diaries; or other documentary evidence, such as contemporaneous measurements.
(d) Participants must provide all records for any production of a crop that is grown with an arrangement, agreement, or contract for guaranteed payment.
(a) Production under this part includes all harvested production, unharvested appraised production, and assigned production for the total planted acreage of the crop on the unit.
(b) The harvested production of eligible crop acreage harvested more than once in a crop year includes the total harvested production from all these harvests.
(c) If a crop is appraised and subsequently harvested as the intended use, the actual harvested production must be taken into account to determine benefits. FSA will analyze and determine whether a participant's evidence of actual production represents all that could or would have been harvested.
(d) For all crops eligible for loan deficiency payments or marketing assistance loans with an intended use of grain but harvested as silage, ensilage, cobbage, hay, cracked, rolled, or crimped, production will be adjusted based on a whole grain equivalent as established by FSA.
(e) For crops with an established yield and market price for multiple intended uses, a value will be calculated by FSA with respect to the intended use or uses for disaster purposes based on historical production and acreage evidence provided by the participant and FSA will determine the eligible acres for each use.
(f) For crops sold in a market that is not a recognized market for the crop with no established county average yield and average market price, 42 percent of the salvage value received will be deducted from the disaster payment.
(g) If a participant does not receive compensation based upon the quantity of the commodity delivered to a purchaser, but has an agreement or contract for guaranteed payment for production, the determination of the production will be the greater of the actual production or the guaranteed payment converted to production as determined by FSA.
(h) Production that is commingled between units 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 unit by FSA. Commingled production may be attributed to the applicable unit, if the participant made the unit production of a commodity a matter of record before commingling and does any of the following, as applicable:
(1) Provides copies of verifiable documents showing that production of the commodity was purchased, acquired, or otherwise obtained from beyond the unit;
(2) Had the production measured in a manner acceptable to the county committee; or
(3) Had the current year's production appraised in a manner acceptable to the county committee.
(i) The county committee will assign production for the unit when the county committee determines that:
(1) The participant has failed to provide adequate and acceptable production records;
(2) The loss to the crop is because of a disaster condition not covered by this part, or circumstances other than natural disaster, and there has not otherwise been an accounting of this ineligible cause of loss;
(3) The participant carries out a practice, such as multiple cropping, that generally results in lower yields than the established historic yields;
(4) The participant has a contract to receive a guaranteed payment for all or a portion of the crop;
(5) A crop was late-planted;
(6) Unharvested acreage was not timely appraised; or
(7) Other appropriate causes exist for such assignment as determined by the Deputy Administrator.
(j) For peanuts, the actual production is all peanuts harvested for nuts, regardless of their disposition or use, as adjusted for low quality.
(k) For tobacco, the actual production is the sum of the tobacco: marketed or available to be marketed; destroyed after harvest; and produced but unharvested, as determined by an appraisal.
(a) Payment acreage of a crop is limited to the lesser of insured acreage or NAP covered acreage of the crop, as applicable, or actual acreage of the crop planted for harvest.
(b) In cases where there is a repeat crop or a multiple planted crop in more than one planting period, or if there is multiple cropped acreage meeting criteria established in paragraph (c) or (d) of this section, each of these crops may be considered separate crops if the county committee determines that all of the following conditions are met:
(1) Were planted with the intent to harvest;
(2) Were planted within the normal planting period for that crop;
(3) Meet all other eligibility provisions of this part including good farming practices; and
(4) Could reach maturity if each planting was harvested or would have been harvested.
(c) In cases where there is multiple-cropped acreage, each crop may be eligible for disaster assistance separately if both of the following conditions are met:
(1) The specific crops are approved by the State committee as eligible multiple-cropping practices in accordance with procedures approved by the Deputy Administrator and separately meet all requirements, including insurance or NAP requirements ; and
(2) The farm containing the multiple-cropped acreage has a history of successful multiple cropping more than one crop on the same acreage in the same crop year, in the year previous to the disaster, or at least 2 of the 4 crop years immediately preceding the disaster crop year based on timely filed crop acreage reports.
(d) A participant with multiple-cropped acreage not meeting the criteria in paragraph (c) of this section may be eligible for disaster assistance on more than one crop if the participant has verifiable records establishing a history of carrying out a successful multiple-cropping practice on the specific crops for which assistance is requested. All required records acceptable to FSA as determined by the Deputy Administrator must be provided before payments are issued.
(e) A participant with multiple-cropped acreage not meeting the criteria in paragraphs (c) or (d) of this section must select the crop for which assistance will be requested. If more than one participant has an interest in the multiple cropped acreage, all participants must agree to the crop designated for payment by the end of the application period or no payment will be approved for any crop on the multiple-cropped acreage.
(f) Benefits under this part apply to irrigated crops where, in cases determined by the Deputy Administrator, acreage was affected by a lack of surface irrigation water due to drought or contamination of ground water or surface irrigation water due to saltwater intrusion. In no case is a loss of ground water, for any reason, an eligible cause of loss.
(a) When determining losses under this part, prevented planted acreage will be considered separately from planted acreage of the same crop.
(b) For insured crops, or NAP covered crops, as applicable, disaster payments under this part for prevented planted acreage will not be made unless RMA or FSA, as applicable, documentation indicates that the eligible participant received a prevented planting payment
(c) The participant must prove, to the satisfaction of the county committee, an intent to plant the crop and that such crop could not be planted because of an eligible disaster. The county committee must be able to determine the participant was prevented from planting the crop by an eligible disaster that:
(1) Prevented other producers from planting on acreage with similar characteristics in the surrounding area;
(2) Occurred after the previous planting period for the crop; and
(3) Unless otherwise approved by the Deputy Administrator, began no earlier than the planting season for that crop.
(d) Prevented planted disaster benefits under this part do not apply to:
(1) Acreage not insured or NAP covered;
(2) Any acreage on which a crop other than a cover crop was harvested, hayed, or grazed during the crop year;
(3) Any acreage for which a cash lease payment is received for the use of the acreage the same crop year, unless the county committee determines the lease was for haying and grazing rights only and was not a lease for use of the land;
(4) Acreage for which the participant or any other person received a prevented planted payment for any crop for the same acreage, excluding share arrangements;
(5) Acreage for which the participant cannot provide verifiable proof to the county committee that inputs such as seed, chemicals, and fertilizer were available to plant and produce a crop with the expectation of producing at least a normal yield; and
(6) Any other acreage for which, for whatever reason, there is cause to question whether the crop could have been planted for a successful and timely harvest, or for which prevented planting credit is not allowed under the provisions of this part.
(e) Prevented planting payments are not provided on acreage that had either a previous or subsequent crop planted in the same crop year on the acreage, unless the county committee determines that all of the following conditions are met:
(1) There is an established practice of planting two or more crops for harvest on the same acreage in the same crop year;
(2) Both crops could have reached maturity if each planting was harvested or would have been harvested;
(3) Both the initial and subsequent planted crops were planted or prevented planting within the normal planting period for that crop;
(4) Both the initial and subsequent planted crops meet all other eligibility provisions of this part including good farming practices; and
(5) The specific crops meet the eligibility criteria for a separate crop designation as a repeat or approved multiple cropping practice set out in § 760.814.
(f)(1) Disaster benefits under this part do not apply to crops where the prevented planted acreage was affected by a disaster that was caused by drought unless on the final planting date or the late planting period for non-irrigated acreage, the area that was prevented from being planted had insufficient soil moisture for germination of seed and progress toward crop maturity because of a prolonged period of dry weather;
(2) Verifiable information collected by sources whose business or purpose is to record weather conditions, including, but not limited to, local weather reporting stations of the U.S. National Weather Service.
(g) Prevented planting benefits under this part apply to irrigated crops where adequate irrigation facilities were in place before the eligible disaster and the acreage was prevented from being planted due to a lack of water resulting from drought conditions or contamination by saltwater intrusion of an irrigation supply resulting from drought conditions.
(h) For NAP covered crops, prevented planting provisions apply according to part 718 of this chapter.
(i) Late-filed crop acreage reports for prevented planted acreage in previous years are not acceptable for CDP purposes.
(a) Notwithstanding any other provisions of this part, this section applies to value loss crops and tropical crops. Unless otherwise specified, all the eligibility provisions of part 1437 of this title apply to value loss crops and tropical crops under this part.
(b) For value loss crops, benefits under this part are calculated based on the loss of value at the time of the damaging weather or related condition, as determined by FSA.
(c) For tropical crops:
(1) CDP benefits for 2005 are calculated according to general provisions of part 1437, but not subpart F, of this title.
(2) CDP benefits for 2006 and 2007 are calculated according to part 1437, subpart F of this title.
(a) Subject to other provisions of this part, assistance will be made available to participants determined eligible under this section for crop quality losses of 25 percent or greater of the value that all affected production of the crop would have had if the crop had not suffered a quality loss.
(b) The amount of payment for a quality loss will be equal to 65 percent of the quantity of the crop affected by the quality loss, not to exceed expected production based on harvested acres, multiplied by 42 percent of the per unit average market value based on percentage of quality loss for the crop as determined by the Deputy Administrator.
(c) This section applies to all crops eligible for 2005, 2006, and 2007 crop disaster assistance under this part, with the exceptions of value loss crops, honey, and maple sap, and applies to crop production that has a reduced economic value due to the reduction in quality.
(d) Participants may not be compensated under this section to the extent that such participants have received assistance under other provisions of this part, attributable in whole or in part to diminished quality.
(a) A marketing contract must meet all of the conditions outlined in paragraphs (b), (c), and (d) of this section.
(b) A marketing contract, at a minimum, must meet all of the following conditions:
(1) Be a legal contract in the State where executed;
(2) Specify the commodity under contract;
(3) Specify crop year;
(4) Be signed by both the participant, or legal representative, and the purchaser of the specified commodity;
(5) Include a commitment to deliver the contracted quantity;
(6) Include a commitment to purchase the contracted quantity that meets specified minimum quality standards and other criteria as specified;
(7) Define a determinable quantity by containing either a:
(i) Specified production quantity or
(ii) A specified acreage for which production quantity can be calculated;
(8) Define a determinable price by containing either a:
(i) Specified price or
(ii) Method to determine such a price;
(9) Contain a relationship between the price and the quality using either:
(i) Specified quality standards or
(ii) A method to determine such quality standards from published third party data; and
(10) Have been executed within 10 days after:
(i) End of insurance period for insured crops or
(ii) Normal harvest date for NAP covered crops as determined by FSA.
(c) The purchaser of the commodity specified in the marketing contract must meet at least one of the following:
(1) Be a licensed commodity warehouseman;
(2) Be a business enterprise regularly engaged in the processing of a commodity, that possesses all licenses and permits for marketing the commodity required by the State in which it operates, and that possesses or has contracted for facilities with enough equipment to accept and process the
(3) Is able to physically receive the harvested production.
(d) In order for the commodity specified in the marketing contract to be considered sold pursuant to the marketing contract, the commodity must have been produced by the participant in the crop year specified in the contract, and at least one of the following conditions must be met:
(1) Commodity was sold under the terms of the contract or
(2) Participant attempted to deliver the commodity to the purchaser, but the commodity was rejected due to quality factors as specified in the contract.
(e) The amount of payment for affected production, as determined in § 760.817(b), sold pursuant to one or more marketing contracts will take into consideration the marketing contract price as determined by FSA.
(f) County committees have the authority to require a participant to provide necessary documentation, which may include, but is not limited to, previous marketing contracts fulfilled, to substantiate and validate quality standards in paragraph (b)(9) of this section and marketing contract price received for the commodity for which crop quality loss assistance is requested. In cases where the county committee has reason to believe the participant lacks the capacity or history to fulfill the quality provisions of the marketing contract the county committee will require such documentation.
(a) A person is ineligible to receive assistance under this part if it is determined that such person has:
(1) Adopted any scheme or device that tends to defeat the purpose of this program;
(2) Made any fraudulent representation under this program;
(3) Misrepresented any fact affecting a program or person determination; or
(4) Has violated or been determined ineligible under § 1400.5 of this title.
(a) Except as provided in paragraph (b) of this section, any payment to any person will be made without regard to questions of title under State law and without regard to any claim or lien against the crop, or proceeds, in favor of the owner or any other creditor except agencies of the U.S. Government. The regulations governing offsets and withholdings found at part 1403 of this title apply to any payments made under this part.
(b) Any participant entitled to any payment may assign any payments in accordance with regulations governing the assignment of payments found at part 1404 of this title.
(c) A debt or claim may be settled according to part 792 of this chapter.
(a) The highly erodible land and wetland conservation provisions of part 12 of this title apply to the receipt of disaster assistance for 2005, 2006, and 2007 crop losses made available under this authority.
(b) Eligible participants must be in compliance with the highly erodible land and wetland conservation compliance provisions for the year for which financial assistance is requested.
(a) The regulations in this subpart specify the terms and conditions applicable to the 2005-2007 Livestock Indemnity Program (2005-2007 LIP), which will be administered under the general supervision and direction of the Administrator, FSA.
(b) FSA representatives do not have authority to modify or waive any of the provisions of the regulations of this subpart.
(c) The State FSA committee will take any action required by the regulations of this subpart that the county
(1) Correct, or require a county committee to correct, any action taken by such county committee that is not in accordance with the regulations of this subpart; or
(2) Require a county committee to withhold taking any action that is not in accordance with this subpart.
(d) No delegation to a State or county FSA committee will preclude the Deputy Administrator for Farm Programs from determining any question arising under the program or from reversing or modifying any determination made by a State or county FSA committee.
(a) This subpart establishes the terms and conditions under which the 2005-2007 LIP will be administered under Title IX of the U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007 (Pub. L. 110-28) for eligible counties as specified in § 760.902(a).
(b) Eligible livestock owners and contract growers will be compensated in accordance with § 760.909 for eligible livestock deaths that occurred in eligible counties as a direct result of an eligible disaster event. Drought is not an eligible disaster event except when anthrax, as a related condition that occurs as a result of drought, results in the death of eligible livestock.
Counties are eligible for agricultural assistance under the 2005-2007 LIP if they received a timely Presidential designation, a timely Secretarial declaration, or a qualifying Administrator's Physical Loss Notice (APLN) determination in a county otherwise the subject of a timely Presidential declaration, or are counties contiguous to such counties. Presidential designations and Secretarial declarations will be considered timely only if made after January 1, 2005, and before February 28, 2007. Eligible counties, disaster events, and disaster periods are listed at
The following definitions apply to this subpart. The definitions in parts 718 and 1400 of this title also apply, except where they conflict with the definitions in this section.
(a) A participant may receive benefits for livestock losses for only one of the 2005, 2006, or 2007 calendar years as specified under this part.
(b) A “person” as determined under part 1400 of this title may receive no more than $80,000 under this subpart. In applying the $80,000 per person payment limitation, regardless of whether 2005, 2006, or 2007 calendar year benefits are at issue or sought, the most restrictive “person” determination for the participant in the years 2005, 2006, and 2007, will be used to limit benefits.
(c) The provisions of part 1400, subpart G, of this title relating to limits to payments for individuals or entities with certain levels of adjusted gross income apply to this program.
(d) As a condition to receive benefits under this subpart, a participant must have been in compliance with the provisions of parts 12 and 718 of this title and must not otherwise be precluded from receiving benefits under any law.
(e) An individual or entity determined to be a foreign person under part 1400 of this title is not eligible to receive benefits under this subpart.
(a) To be considered eligible, a livestock owner must have had legal ownership of the eligible livestock, as provided in § 760.906(a), on the day the livestock died.
(b) To be considered eligible, a contract grower on the day the livestock died must have had:
(1) A written agreement with the owner of eligible livestock setting the specific terms, conditions, and obligations of the parties involved regarding the production of livestock; and
(2) Control of the eligible livestock, as provided in § 760.906(b), on the day the livestock died.
(a) To be considered eligible livestock for livestock owners, livestock must be adult or non-adult dairy cattle, beef cattle, buffalo, beefalo, catfish, crawfish, equine, sheep, goats, swine, poultry, deer, or reindeer and meet all the conditions in paragraph (c) of this section.
(b) To be considered eligible livestock for contract growers, livestock must be poultry or swine as defined in § 760.903 and meet all the conditions in paragraph (c) of this section.
(c) To be considered eligible, livestock must meet all of the following conditions:
(1) Died in an eligible county as a direct result of an eligible disaster event;
(i) After January 1, 2005, but before February 28, 2007;
(ii) No later than 60 calendar days from the ending date of the applicable disaster period, but before February 28, 2007; and
(iii) In the calendar year for which benefits are being requested.
(2) The disaster event that caused the loss must be the same event for which a natural disaster was declared or designated.
(3) Been maintained for commercial use as part of a farming operation on the day they died; and
(4) Before dying, not have been produced or maintained for reasons other than commercial use as part of a farming operation, including, but not limited to, wild free roaming animals or animals used for recreational purposes, such as pleasure, hunting, roping, pets, or for show.
(d) In those counties in § 760.902, the following types of animals owned by a livestock owner are eligible livestock:
(1) Adult beef bulls;
(2) Adult beef cows;
(3) Adult buffalo or beefalo bulls;
(4) Adult buffalo or beefalo cows;
(5) Adult dairy bulls;
(6) Adult dairy cows;
(7) Catfish;
(8) Chickens, broilers, pullets;
(9) Chickens, chicks;
(10) Chickens, layers, roasters;
(11) Crawfish;
(12) Deer;
(13) Ducks;
(14) Ducks, ducklings;
(15) Equine;
(16) Geese, goose;
(17) Geese, gosling;
(18) Goats, bucks;
(19) Goats, does;
(20) Goats, kids;
(21) Non-adult beef cattle;
(22) Non-adult buffalo/beefalo;
(23) Non-adult dairy cattle;
(24) Reindeer
(25) Sheep, ewes;
(26) Sheep, lambs;
(27) Sheep, rams;
(28) Swine, feeder pigs under 50 pounds;
(29) Swine, sows, boars, barrows, gilts 50 to 150 pounds;
(30) Swine, sows, boars, barrows, gilts over 150 pounds;
(31) Turkeys, poults; and
(32) Turkeys, toms, fryers, and roasters.
(e) In those counties in § 760.902, the following types of animals are eligible livestock for contract growers:
(1) Chickens, broilers, pullets;
(2) Chickens, layers, roasters;
(3) Geese, goose;
(4) Swine, boars, sows;
(5) Swine, feeder pigs;
(6) Swine, lightweight barrows, gilts;
(7) Swine, sows, boars, barrows, gilts; and
(8) Turkeys, toms, fryers, and roasters.
(a) To apply for 2005-2007 LIP, submit a completed application to the administrative county FSA office that maintains the farm records for your agricultural operation, a copy of your grower contract, if you are a contract grower, and other supporting documents required for determining your eligibility as an applicant. Supporting documents must show:
(1) Evidence of loss,
(2) Current physical location of livestock in inventory, and
(3) Physical location of claimed livestock at the time of death.
(b) The application must be filed during the application period announced by the Deputy Administrator.
(c) A minor child is eligible to apply for program benefits if all eligibility requirements are met and one of the following conditions exists:
(1) The right of majority has been conferred upon the minor by court proceedings or statute;
(2) A guardian has been appointed to manage the minor's property, and the applicable program documents are executed by the guardian; or
(3) A bond is furnished under which a surety guarantees any loss incurred for which the minor would be liable had the minor been an adult.
(d) The participant must provide adequate proof that the death of the eligible livestock occurred in an eligible county as a direct result of an eligible disaster event during the applicable disaster period. The quantity and kind of livestock that died as a direct result of the eligible disaster event may be documented by: purchase records; veterinarian records; bank or other loan papers; rendering truck receipts; Federal Emergency Management Agency records; National Guard records; written contracts; production records; Internal Revenue Service records; property tax records; private insurance documents; and other similar verifiable documents as determined by FSA.
(e) Certification of livestock deaths by third parties may be accepted only if both the following conditions are met:
(1) The livestock owner or livestock contract grower, as applicable, certifies in writing:
(i) That there is no other documentation of death available;
(ii) The number of livestock, by category determined by FSA, were in inventory at the time the applicable disaster event occurred; and
(iii) Other details required for FSA to determine the certification acceptable; and
(2) The third party provides their telephone number, address, and a written statement containing:
(i) Specific details about their knowledge of the livestock deaths;
(ii) Their affiliation with the livestock owner;
(iii) The accuracy of the deaths claimed by the livestock owner; and
(iv) Other details required by FSA to determine the certification acceptable.
(f) Data furnished by the participant will be used to determine eligibility for program benefits. Furnishing the data is voluntary; however, without all required data program benefits will not be approved or provided.
(a) Payments may be made for eligible losses suffered by an eligible participant who is now a deceased individual or is a dissolved entity if a representative, who currently has authority to enter into a contract, on behalf of the participant, signs the application for payment.
(b) Legal documents showing proof of authority to sign for the deceased individual or dissolved entity must be provided.
(c) 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 for payment.
(a) Under this subpart separate payment rates are established for eligible livestock owners and eligible livestock contract growers in accordance with paragraphs (b) and (c) of this section. Payments for the 2005-2007 LIP are calculated by multiplying the national payment rate for each livestock category, as determined in paragraphs (b)
(b) The 2005-2007 LIP national payment rate for eligible livestock owners is based on 26 percent of the average fair market value of the livestock.
(c) The 2005-2007 LIP national payment rate for eligible livestock contract growers is based on 26 percent of the average income loss sustained by the contract grower with respect to the dead livestock.
(d) The 2005 payment calculated under 2005-2007 LIP for eligible livestock owners will be reduced by the amount the participant received under:
(1) The Livestock Indemnity Program (subpart E of this part);
(2) The Aquaculture Grant Program (subpart G of this part); and
(3) The Livestock Indemnity Program II (part 1416, subpart C of this title).
(e) The 2005 payment calculated under 2005-2007 LIP for eligible livestock contract growers will be reduced by the amount the participant received:
(1) Under the Livestock Indemnity Program (subpart E of this part);
(2) For the loss of income from the dead livestock from the party who contracted with the producer to grow the livestock; and
(3) Under the Livestock Indemnity Program II (part 1416, subpart C of this title).
The appeal regulations set forth at parts 11 and 780 of this title apply to determinations made pursuant to this subpart.
(a) Any payment to any participant 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 found at part 792 of this chapter apply to payments made under this subpart.
(b) Any participant entitled to any payment may assign any payment in accordance with regulations governing the assignment of payments found at part 1404 of this title.
Participants receiving payments under this subpart or any other person who furnishes information for the purposes of enabling such participant to receive a payment under this subpart must maintain any books, records, and accounts supporting any information so furnished for 3 years following the end of the year during which the application for payment was filed. Participants receiving payments or any other person who furnishes such information to FSA must allow authorized representatives of USDA and the General Accountability Office, during regular business hours, to inspect, examine, and make copies of such books or records, and to enter upon, inspect and verify all applicable livestock and acreage in which the participant has an interest for the purpose of confirming the accuracy of information provided by or for the participant.
In the event there is a failure to comply with any term, requirement, or condition for payment or assistance arising under this subpart, and if any refund of a payment to FSA will otherwise become due in connection with this subpart, all payments made in regard to such matter must be refunded to FSA together with interest and late-payment charges as provided for in part 792 of this chapter.
(a) This subpart establishes the terms and conditions under which the
(1) The 2005-2007 Livestock Compensation Program (2005-2007 LCP); and
(2) The 2005-2007 Catfish Grant Program (2005-2007 CGP).
(b) Farm Service Agency (FSA) funds as are necessary for the programs in subparts L and M of this part are available under Title IX of the U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007.
(a) Except as provided in this subpart, FSA will provide assistance under the programs listed in § 760.1000 to eligible participants who have suffered certain losses due to eligible disaster events in eligible disaster counties provided in paragraph (c) of this section.
(b) The “Disaster Period” is the time period in which losses occurred for the particular disaster that may be considered eligible for the programs under subparts L and M of this part. The start and end dates for each eligible disaster period are specified at
(c) Eligible counties are those primary counties declared by the Secretary or designated for the applicable loss by the President, including counties contiguous to those counties, between January 1, 2005, and February 28, 2007 (that is after January 1, 2005 and before February 28, 2007). The listing is provided at
The following definitions apply to the programs in subpart L and M of this part. The definitions in parts 718 and 1400 of this title also apply, except where they conflict with the definitions in this section.
(a) A participant may receive benefits for eligible livestock feed losses, including additional feed costs, for only one of the 2005, 2006, or 2007 calendar years under 2005-2007 LCP, subpart L of this part, or under the CGP of subpart M of this part.
(b) As specified in § 760.1106(c), the payment under the 2005-2007 LCP may not exceed the smaller of the calculated payment in § 760.1106(a) or the value of the producer's eligible feed loss, increased feed costs, or forage or grazing loss.
(c) A person may receive no more than $80,000 under 2005-2007 LCP, subpart L of this part. In applying the $80,000 per person payment limitation, regardless of whether the 2005, 2006, or 2007 calendar year benefits are at issue or sought, the most restrictive “person” determination for the participant in the years 2005, 2006, and 2007, will be used to limit benefits. The rules and definitions of part 1400 of this title apply in construing who is a qualified separate “person” for purposes of this limit. All payment eligibility requirements of part 1400 as they apply to any other payments, also apply to payments under subpart L of this part.
(d) For payments under 2005-2007 CGP, a farming operation may receive no more than $80,000, except for general partnerships and joint ventures, in which case assistance will not exceed $80,000 times the number of eligible members of the general partnership or joint venture. This limit must be enforced by the state government administering the grant program.
(e) The provisions of part 1400, subpart G, of this title apply to these programs. That is the rules that limit the eligibility for benefits of those individuals or entities with an adjusted gross income greater than a certain limit will be applied in the same manner to payments under subparts L and M of this part.
(f) As a condition to receive benefits under subparts L and M of this part, a participant must have been in compliance with the provisions of parts 12 and 718 of this title for the calendar year for which benefits are being requested and must not otherwise be precluded from receiving benefits under any law.
(g) An individual or entity determined to be a foreign person under part 1400 of this title is not eligible to receive benefits under subparts L and M of this part.
(h) In addition to limitations provided in subparts L and M of this part, participants cannot receive duplicate benefits under subparts L and M of this part for the same loss or any similar loss under:
(1) An agricultural disaster assistance provision contained in the announcement of the Secretary on January 26, 2006, or August 29, 2006;
(2) The Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Hurricane Recovery, 2006 (Pub. L. 109-234; 120 Stat. 418); or
(3) Any other disaster assistance program.
This subpart sets forth the terms and conditions applicable to the 2005-2007 Livestock Compensation Program (LCP).
(a) This program is administered under the general supervision of the Administrator, Farm Service Agency (FSA).
(b) FSA representatives do not have authority to modify or waive any of the provisions of the regulations of this subpart.
(c) The State FSA committee must take any action required by the regulations of this subpart that the county FSA committee has not taken. The State committee must also:
(1) Correct, or require a county committee to correct, any action taken by such county committee that is not in accordance with the regulations of this subpart; or
(2) Require a county committee to withhold taking any action that is not in accordance with this subpart.
(d) No provision or delegation to a State or county FSA committee will preclude the FSA Deputy Administrator for Farm Programs (Deputy Administrator), or a designee of such, from determining any question arising under the program or from reversing or modifying any determination made by a State or county FSA committee.
(e) The Deputy Administrator for Farm Programs may authorize state and county committees to waive or modify nonstatutory deadlines or other program requirements in cases where lateness or failure to meet such does not adversely affect the operation of the program.
The following definitions apply to this subpart.
(a) To be considered eligible livestock to generate benefits under this subpart, livestock must meet all the following conditions:
(1) Be adult or non-adult dairy cattle, beef cattle, buffalo, beefalo, equine, poultry, elk, reindeer, sheep, goats, swine, or deer;
(2) Been physically located in the eligible disaster county on the beginning date of the disaster period;
(3) Been maintained for commercial use as part of the producer's farming operation on the beginning date of the disaster period; and
(4) Not have been produced and maintained for reasons other than commercial use as part of a farming operation. Such excluded uses include, but are not limited to, wild free roaming animals or animals used for recreational purposes, such as pleasure, roping, hunting, pets, or for show.
(b) To be considered an eligible livestock producer, the participant's eligible livestock must have been located in the eligible disaster county on the beginning date of the disaster period. To be eligible, also, the livestock producer must have:
(1) Owned or cash-leased eligible livestock on the beginning date of the disaster period (provided that if there is a cash lease, only the cash lessee and not the owner will be eligible); and
(2) Suffered any of the following:
(i) A grazing loss on eligible grazing lands physically located in the eligible disaster county, where the forage was damaged or destroyed by an eligible disaster event, and intended for use as feed for the participant's eligible livestock;
(ii) A loss of feed from forage or feedstuffs physically located in the eligible disaster county, that was mechanically harvested and intended for use as feed for the participant's eligible livestock, that was damaged or destroyed after harvest as the result of an eligible disaster event;
(iii) A loss of feed from purchased forage or feedstuffs physically located in the eligible disaster county, intended for use as feed for the participant's eligible livestock, that was damaged or destroyed by an eligible disaster event; or
(iv) Increased feed costs incurred in the eligible disaster county, due to an eligible disaster event, to feed the participant's eligible livestock.
(c) The eligible livestock categories are:
(1) Adult beef cows or bulls;
(2) Non-adult beef cattle;
(3) Adult buffalo or beefalo cows or bulls;
(4) Non-adult buffalo or beefalo;
(5) Adult dairy cows or bulls;
(6) Non-adult dairy cattle;
(7) Goats;
(8) Sheep;
(9) Equine;
(10) Reindeer;
(11) Elk;
(12) Poultry; and
(13) Deer.
(d) Ineligible livestock include, but are not limited to, livestock:
(1) Livestock that were or would have been in a feedlot regardless of whether there was a disaster or where such livestock were in a feedlot as part of a participant's normal business operation, as determined by FSA;
(2) Emus;
(3) Yaks;
(4) Ostriches;
(5) Llamas;
(6) All beef and dairy cattle, and buffalo and beefalo that weighed less than 500 pounds on the beginning date of the disaster period;
(7) Any wild free roaming livestock, including horses and deer;
(8) Livestock produced or maintained for reasons other than commercial use as part of a farming operation, including, but not limited to, livestock produced or maintained for recreational purposes, such as:
(i) Roping,
(ii) Hunting,
(iii) Show,
(iv) Pleasure,
(v) Use as pets, or
(vi) Consumption by owner.
(a) To apply for 2005-2007 LCP, an application and required supporting documentation must be submitted to the administrative county FSA office.
(b) The application must be filed during the application period announced by the Deputy Administrator for Farm Programs.
(c) Payments may be made for eligible losses suffered by an eligible livestock producer who is now a deceased individual or is a dissolved entity if a representative who currently has authority to enter into a contract, on behalf of the livestock producer, signs the application for payment. Legal documents showing proof of authority to sign for the deceased individual 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 for payment.
(d) Data furnished by the participant will be used to determine eligibility for program benefits. Furnishing the data is voluntary; however, without all required data program benefits will not be approved or provided.
(e) A minor child is eligible to apply for program benefits if all eligibility requirements are met and one of the following conditions exists:
(1) The right of majority has been conferred upon the minor by court proceedings or statute;
(2) A guardian has been appointed to manage the minor's property, and the applicable program documents are executed by the guardian; or
(3) A bond is furnished under which a surety guarantees any loss incurred for which the minor would be liable had the minor been an adult.
(a) Participants must submit to FSA:
(1) A completed application in accordance with § 760.1104;
(2) Adequate proof, as determined by FSA, that the feed lost:
(i) Was for the claimed eligible livestock;
(ii) Was lost as a direct result of an eligible disaster event during an eligible disaster period specified in § 760.1001;
(iii) Was lost after January 1, 2005, but before February 28, 2007; and
(iv) Occurred in the calendar year for which benefits are being requested; and
(3) Any other supporting documentation as determined by FSA to be necessary to make a determination of eligibility of the participant. Supporting documents include, but are not limited to: verifiable purchase records; veterinarian records; bank or other loan papers; rendering truck receipts; Federal Emergency Management Agency records; National Guard records; written contracts; production records; Internal Revenue Service records; property tax records; private insurance documents; sales records, and similar documents determined acceptable by FSA.
(b) [Reserved]
(a) Preliminary, unadjusted LCP payments are calculated for a producer by multiplying the national payment rate for each livestock category, as provided in paragraph (c) of this section, by the number of eligible livestock for the producer in each category. The national payment rate represents the cost of the amount of corn needed to maintain the specific livestock for 30 days, as determined by FSA. As provided in subpart K of this part, a producer may receive benefits for only one of the three program years, 2005, 2006, or 2007. The producer must indicate which year has been chosen. Payments are available only with respect to disaster-related fees losses in the period from January 2, 2005 through February 27, 2007, in eligible counties for losses during the times specified for the disaster periods as specified in § 760.1001(b).
(b) The preliminary LCP payment calculated in accordance with paragraph (a) of this section:
(1) For 2005 LCP provided for under this subpart will be reduced by the amount the participant received for the specific livestock under the Feed Indemnity Program in accordance with subpart D of this part and LCP for the 2005 hurricanes under subpart B of part 1416 of this title; and
(2) For 2006 LCP under this subpart will be reduced by the amount the participant received for the same or similar loss under the Livestock Assistance Grant Program in accordance with subpart H of this part.
(c) Subject to such other limitations as may apply, including those in paragraph (b) of this section, the payment under the 2005-2007 LCP may not exceed for the relevant year chosen by the producer the smaller of either the:
(1) Payment calculated in paragraph (a) of this section for that year; or
(2) Value of the producer's eligible feed loss, increased feed costs, or forage or grazing loss as determined by FSA for that year.
(d) The actual payment to the producer will be the amount provided for in paragraph (c) of this section subject to the adjustments and limits provided for in this section or in this part.
The appeal regulations in parts 11 and 780 of this title apply to determinations made under this subpart.
(a) Any payment to any participant will be made 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 parts 792 and 1403 of this title apply to payments made under this subpart.
(b) Any participant entitled to any payment may assign any payments in accordance with regulations governing the assignment of payments in part 1404 of this chapter.
Participants receiving payments under this subpart or any other person who furnishes information for the purposes of enabling the participant to receive a payment under this subpart must maintain any books, records, and
In the event there is a failure to comply with any term, requirement, or condition for payment or assistance arising under this subpart, and if any refund of a payment to FSA will otherwise become due in connection with this subpart, all payments made in regard to such matter must be refunded to FSA together with interest and late-payment charges as provided for in part 792 of this title, provided that interest will run from the date of the disbursement of the refund to the producer.
FSA will administer a limited 2005-2007 CGP to provide assistance to catfish producers in eligible counties that suffered catfish feed and related losses between January 1, 2005, and February 28, 2007, that is after January 1, 2005, and before February 28, 2007. Under the 2005-2007 CGP, FSA will provide grants to State governments in those States that have catfish producers that are located in eligible counties and that have agreed to participate in the 2005-2007 CGP. The amount of each grant will be based on the total value of catfish feed and related losses suffered in eligible counties in the subject state. Each State must submit a work plan providing a summary of how the State will implement the 2005-2007 CGP.
Application procedures for 2005-2007 CGP will be as determined by the State governments.
(a) To be considered an eligible catfish producer, an participant must:
(1) Raise catfish in a controlled environment and be physically located in an eligible county on the beginning date of the disaster period;
(2) Maintain the catfish for commercial use as part of a farming operation;
(3) Have a risk in production of such catfish; and
(4) Have suffered one of the following types of losses relating to catfish feed as a direct result of the county's disaster event that occurred in that year:
(i) Physical loss of feed that was damaged or destroyed,
(ii) Cost to the extent allowed by FSA, associated with lost feeding days, or
(iii) Cost associated with increased feed prices.
(b) [Reserved]
(a) Producers must be paid for feed losses of higher costs only for one of the three years, 2005, 2006, or 2007, and the loss must be for eligible catfish feed losses in an eligible county, as determined pursuant to subpart K of this part. Further, the feed loss or higher costs must be caused by the disaster that caused the county to qualify as an eligible county. The loss, moreover, to qualify for payment, must have occurred during the allowable time period provided in this part, namely the period beginning on January 2, 2005 and ending February 27, 2007. The producer must pick the year of the benefits sought.
(b) Subject to all adjustments and limits provided for in this part the amount of assistance provided to each participant from the State will be equal to the smaller of:
(1) Depending on the year chosen by the producer, the value of the participant's 2005, 2006, or 2007 catfish feed and related losses as a direct result of an
(2) Result of multiplying:
(i) Total tons of catfish feed purchased by the participant in depending on the year chosen by the producer 2005 (entire year), 2006 (entire year), or 2007 (through February 27, 2007, only), times,
(ii) Catfish feed payment rate for 2005, 2006, or 2007, as applicable, as set by FSA.
(c) The catfish feed rate represents 61 percent of the normal cost of a ton of feed for a year divided by six to reflect the normal feeding price for catfish.
5 U.S.C. 301 and 7 U.S.C. 1989.
(a) The Administrator delegates the responsibility to administer Farm Loan Programs of the Consolidated Farm and Rural Development Act (7 U.S.C. 1921
(b) The Deputy Administrator may:
(1) Redelegate authorities received under subparagraph (a); and
(2) Establish procedures for further redelegation of authority.
(c) Parts 761 through 767 describe the Agency's policies for its Farm Loan Programs. The objective of these programs is to provide supervised credit and management assistance to eligible farmers to become owners or operators, or both, of family farms, to continue such operations when credit is not available elsewhere, or to return to normal farming operations after sustaining substantial losses as a result of a designated or declared disaster. These regulations apply to loan applicants, borrowers, lenders, holders, Agency personnel, and other parties involved in making, guaranteeing, holding, servicing, or liquidating such loans.
(d) This part describes the Agency's general and administrative policies for its guaranteed and direct Farm Loan Programs. In general, this part addresses issues that affect both guaranteed and direct loan programs.
The following abbreviations and definitions are applicable to the Farm
(a)
(b)
(1) Meets applicable Agency requirements; and
(2) Is accurate outside the requirements of standard 3 of USPAP.
(1) Meets the loan eligibility requirements for a direct or guaranteed OL or FO loan, as applicable;
(2) Has not operated a farm for more than 10 years. This requirement applies to all members of an entity;
(3) Will materially and substantially participate in the operation of the farm:
(i) In the case of a loan made to an individual, individually or with the family members, material and substantial participation requires that the individual provide substantial day-to-day labor and management of the farm, consistent with the practices in the county or State where the farm is located.
(ii) In the case of a loan made to an entity, all members must materially and substantially participate in the operation of the farm. Material and substantial participation requires that the member provide some amount of the management, or labor and management necessary for day-to-day activities, such that if the individual did not provide these inputs, operation of the farm would be seriously impaired;
(4) Agrees to participate in any loan assessment and borrower training required by Agency regulations;
(5) Except for an OL applicant, does not own real farm property or who, directly or through interests in family farm entities owns real farm property, the aggregate acreage of which does not exceed 30 percent of the median farm acreage of the farms in the county where the property is located. If the farm is located in more than one county, the median farm acreage of the county where the applicant's residence is located will be used in the calculation. If the applicant's residence is not located on the farm or if the applicant is an entity, the median farm acreage of the county where the major portion of the farm is located will be used. The median county farm acreage will be determined from the most recent Census of Agriculture;
(6) Demonstrates that the available resources of the applicant and spouse (if any) are not sufficient to enable the applicant to enter or continue farming on a viable scale; and
(7) In the case of an entity:
(i) All the members are related by blood or marriage; and
(ii) All the members are beginning farmers.
(1) Writing down or writing off a debt pursuant to 7 U.S.C. 2001;
(2) Compromising, adjusting, reducing, or charging off a debt or claim pursuant to 7 U.S.C. 1981; or
(3) Paying a loss pursuant to 7 U.S.C. 2005 on a FLP loan guaranteed by the Agency.
Debt forgiveness does not include:
(1) Debt reduction through a conservation contract;
(2) Any writedown provided as part of the resolution of a discrimination complaint against the Agency;
(3) Prior debt forgiveness that has been repaid in its entirety; and
(4) Consolidation, rescheduling, reamortization, or deferral of a loan.
(1) Are those that are basic, crucial or indispensable.
(2) Are determined by the Agency based on the following considerations:
(i) The specific borrower's operation;
(ii) What is typical for that type of operation in the area; and
(iii) What is an efficient method of production considering the borrower's resources.
(3) Include, but are not limited to, essential: Household operating expenses; food, including lunches; clothing and personal care; health and medical expenses, including medical insurance; house repair and sanitation; school and religious expenses; transportation; hired labor; machinery repair; farm building and fence repair; interest on loans and credit or purchase agreement; rent on equipment, land, and buildings; feed for animals; seed, fertilizer, pesticides, herbicides, spray materials and other necessary farm supplies; livestock expenses, including medical supplies, artificial insemination, and veterinarian bills; machinery hire; fuel and oil; taxes; water charges; personal, property and crop insurance; auto and truck expenses; and utility payments.
(1) Actively participated in the operation and the management, including, but not limited to, exercising control over, making decisions regarding, and establishing the direction of, the farming operation at the time of the disaster;
(2) Spends a substantial portion of time in carrying out the farming operation;
(3) Planted the crop, or purchased or produced the livestock on the farming operation;
(4) In the case of an entity, is primarily engaged in farming and has over 50 percent of its gross income from all sources from its farming operation based on the operation's projected cash flow for the next crop year or the next 12-month period, as mutually determined; and
(5) Is not:
(i) An entity whose members are themselves entities;
(ii) An integrated livestock, poultry, or fish processor who operates primarily and directly as a commercial business through contracts or business arrangements with farmers, except a grower under contract with an integrator or processor may be considered an established farmer, provided the farming operation is not managed by an outside full-time manager or management service and Agency loans shall be based on the applicant's share of the agricultural production as set forth in the contract; or
(iii) An operation which employs a full time farm manager.
(1) Produces agricultural commodities for sale in sufficient quantities so that it is recognized as a farm rather than a rural residence;
(2) Has both physical labor and management provided as follows:
(i) The majority of day-to-day, operational decisions, and all strategic management decisions are made by:
(A) The borrower and persons who are either related to the borrower by blood or marriage, or are a relative, for an individual borrower; or
(B) The members responsible for operating the farm, in the case of an entity.
(ii) A substantial amount of labor to operate the farm is provided by:
(A) The borrower and persons who are either related to the borrower by blood or marriage, or are a relative, for an individual borrower; or
(B) The members responsible for operating the farm, in the case of an entity.
(3) May use full-time hired labor in amounts only to supplement family labor.
(4) May use reasonable amounts of temporary labor for seasonal peak workload periods or intermittently for labor intensive activities.
(1) Meet annual operating expenses and debt payments as they become due;
(2) Meet essential family living expenses to the extent they are not met by dependable non-farm income;
(3) Provide for replacement of capital items; and
(4) Provide for long-term financial growth.
(1) FO or OL loan assistance under part 764 of this title; or
(2) Primary loan servicing on an FO, OL, or SW loan under part 766 of this title.
(1) Produces exotic animals, birds, or aquatic organisms or their products which may be agricultural in nature, but are not normally associated with agricultural production, e.g., there is no established or stable market for them or production is speculative in nature.
(2) Produces non-farm animals, birds, or aquatic organisms ordinarily used for pets, companionship, or pleasure and not typically associated with human consumption, fiber, or draft use.
(3) Markets non-farm goods or provides services which might be agriculturally related, but are not produced by the farming operation.
(4) Processes or markets farm products when the majority of the commodities processed or marketed are not produced by the farming operation.
(1) Do not contribute to:
(i) Income to pay essential family living expenses, or
(ii) The farming operation; and
(2) Are not exempt from judgment creditors or in a bankruptcy action.
(1) The per acre actual production history of the crops produced by the farming operation used to determine Federal crop insurance payments or payment under the Noninsured Crop Disaster Assistance Program for the production year during which the disaster occurred;
(2) The applicant's own production records, or the records of production on which FSA Farm Program payments are made contained in the applicant's Farm Program file, if available, for the previous 3 years, when the actual production history in paragraph (1) of this definition is not available;
(3) The county average production yield, when the production records outlined in paragraphs (1) and (2) of this definition are not available.
(1) Been the owner, manager or operator of a farming operation for the year's complete production cycle as evidenced by tax returns, FSA farm records or similar documentation;
(2) Been employed as a farm manager or farm management consultant for the year's complete production cycle; or
(3) Participated in the operation of a farm by virtue of being raised on a farm or having worked on a farm with significant responsibility for the day-to-day decisions for the year's complete production cycle, which may include selection of seed varieties, weed control programs, input suppliers, or livestock feeding programs or decisions to replace or repair equipment.
(1) Loan consolidation and rescheduling, or reamortization;
(2) Interest rate reduction, including use of the limited resource rate program;
(3) Deferral;
(4) Write-down of the principal or accumulated interest; or
(5) Any combination of paragraphs (1) through (4) of this definition.
At 73 FR 74344, Dec. 8, 2008, in § 761.2, paragraph(b) was amended by removing the definitions for “Beginning Farmer Downpayment Loan” and “Socially disadvantaged applicant,” by adding definitions for “Downpayment loan” and “Socially disadvantaged applicant or farmer,” and in the definition of “Farm Ownership loan,” by removing the words “Beginning Farmer,” effective January 7, 2009. For the convenience of the user, the added text is set forth as follows:
(b) * * *
Part 15d of this title contains applicable regulations pertaining to civil rights and filing of discrimination complaints by program participants.
The Agency enforces conflict of interest policies to maintain high standards of honesty, integrity, and impartiality in the making and servicing of direct and guaranteed loans. These requirements are established in 5 CFR parts 2635 and 8301.
A person who applies for or receives a loan made or guaranteed by the Agency must comply with the restrictions on lobbying in 7 CFR part 3018.
Except as provided in 7 CFR part 762, appeal of an adverse decision made by the Agency will be handled in accordance with 7 CFR parts 11 and 780.
(a)
(1) Real estate and chattel appraisals made in connection with the making and servicing of direct FLP and Non-program loans; and
(2) Appraisal reviews conducted on appraisals made in connection with the making and servicing of direct and guaranteed FLP and Non-program loans.
(b)
(2) When a chattel appraisal is required, it must be completed on an applicable Agency form (available in each Agency State Office) or other format containing the same information.
(c)
(1) The appraisal was completed within the previous 12 months and the Agency determines that:
(i) The appraisal meets the provisions of this section and the applicable Agency loan making or servicing requirements; and
(ii) Market values have remained stable since the appraisal was completed; or
(2) The appraisal was not completed in the previous 12 months, but has been updated by the appraiser or appraisal firm that completed the appraisal, and both the update and the original appraisal were completed in accordance with USPAP.
(d)
(2) With respect to a chattel appraisal, the Agency may conduct an administrative appraisal review.
(a)
(1) Farm Ownership loans, Beginning Farmer Down payment loans and Soil and Water loans:
(i) Direct—$200,000;
(ii) Guaranteed—$700,000 (for fiscal year 2000 and increased at the beginning of each fiscal year in accordance with paragraph (b) of this section);
(iii) Any combination of a direct Soil and Water loan, direct Farm Ownership loan, guaranteed Soil and Water loan, and guaranteed Farm Ownership loan—$700,000 (for fiscal year 2000 and increased each fiscal year in accordance with paragraph (b) of this section);
(2) Operating loans:
(i) Direct—$200,000;
(ii) Guaranteed—$700,000 (for fiscal year 2000 and increased each fiscal year in accordance with paragraph (b) of this section);
(iii) Any combination of a direct Operating loan and guaranteed Operating loan—$700,000 (for fiscal year 2000 and increased each fiscal year in accordance with paragraph (b) of this section);
(3) Any combination of guaranteed Farm Ownership loan, guaranteed Soil and Water loan, and guaranteed Operating loan—$700,000 (for fiscal year 2000 and increased each fiscal year in accordance with paragraph (b) of this section);
(4) Any combination of direct Farm Ownership loan, direct Soil and Water loan, direct Operating loan, guaranteed Farm Ownership loan, guaranteed Soil and Water loan, and guaranteed Operating loan—the amount in paragraph (a)(1)(ii) of this section plus $200,000;
(5) Emergency loans—$500,000;
(6) Any combination of direct Farm Ownership loan, direct Soil and Water loan, direct Operating loan, guaranteed Farm Ownership loan, guaranteed Soil and Water loan, guaranteed Operating loan, and Emergency loan—the amount in paragraph (a)(1)(ii) of this section plus $700,000.
(b)
(c)
At 73 FR 74345, Dec. 8, 2008, § 761.8 was amended by removing the words “Beginning Farmer” in paragraph (a)(1), by removing the amount “$200,000” and adding in its place, the amount “$300,000” in paragraphs (a)(1)(i), (2)(i) and (4), and by removing the amount “$700,000” and adding in its place, the amount “$800,000” in paragraph (a)(6), effective January 7, 2009.
Interest rates for all direct loans are set in accordance with the Act. A copy of the current interest rates may be obtained in any Agency office.
(a)
(1) Direct FLP loan funds; or
(2) Insurance or other proceeds resulting from damage or loss to direct loan security.
(b)
(1) Must provide the Agency with an estimate of the total cash cost of all planned development prior to loan approval;
(2) Must show proof of sufficient funds to pay for the total cash cost of all planned development at or before loan closing;
(3) Must not incur any debts for materials or labor or make any expenditures for development purposes prior to loan closing with the expectation of being reimbursed from Agency loan funds.
(c)
(1) Is responsible for scheduling and planning development work in a manner acceptable to the Agency and must furnish the Agency information fully describing the planned development, the proposed schedule, and the manner in which it will be accomplished;
(2) Is responsible for obtaining all necessary State and local construction approvals and permits prior to loan closing;
(3) Must ensure that all development work meets the environmental requirements established in subpart G of 7 CFR part 1940;
(4) Must schedule development work to start as soon as feasible after the loan is closed and complete work as quickly as practicable;
(5) Is responsible for obtaining any required technical services from qualified technicians, tradespeople, and contractors.
(d)
(2) All improvements to a property must conform to applicable laws, ordinances, codes, and regulations.
(3) The applicant or borrower is responsible for selecting a design standard that meets all applicable local and state laws, ordinances, codes, and regulations, including building, plumbing, mechanical, electrical, water, and waste management.
(4) The Agency will require drawings, specifications, and estimates to fully describe the work as necessary to protect the Agency's financial interests. The drawings and specifications must identify any specific development standards being used. Such information must be sufficiently complete to avoid any misunderstanding as to the extent, kind, and quality of work to be performed.
(5) The Agency will require technical data, tests, or engineering evaluations to support the design of the development as necessary to protect its financial interests.
(6) The Agency will require the applicant or borrower to provide written certification that final drawings and specifications conform with the applicable development standard as necessary to protect its financial interests. Certification must be obtained from individuals or organizations trained and experienced in the compliance, interpretation, or enforcement of the applicable development standards, such as licensed architects, professional engineers, persons certified by a relevant national model code organization, authorized local building officials, or national code organizations.
(e)
(2) The applicant or borrower must provide the Agency written certification that the development conforms to the plans and good construction practices, and complies with applicable laws, ordinances, codes, and regulations.
(3) The Agency will require the applicant or borrower to obtain professional inspection services during construction as necessary to protect its financial interests.
(4) Agency inspections do not create or imply any duty or obligation of the Agency to the applicant or borrower.
(f)
(g)
(h)
(1) It will not reduce the value of the Agency's security;
(2) It will not adversely affect the soundness of the farming operation;
(3) It complies with all applicable laws and regulations;
(4) It is for an authorized loan purpose;
(5) It is within the scope of the original loan proposal;
(6) If required, documentation that sufficient funding for the full amount of the planned development is approved and available;
(7) If required, surety to cover the full revised development amount has been provided; and
(8) The modification is certified in accordance with paragraph (d) (6) of this section.
(a) Supervised bank accounts will be used to:
(1) Assure correct use of funds planned for capital purchases or debt refinancing and perfection of the Agency's security interest in the assets purchased or refinanced when electronic funds transfer or treasury check processes are not practicable;
(2) Protect the Agency's security interest in insurance indemnities or other loss compensation resulting from loss or damage to loan security; or
(3) Assist borrowers with limited financial skills with cash management, subject to the following conditions:
(i) Use of a supervised bank for this purpose will be temporary and infrequent;
(ii) The need for a supervised bank account in this situation will be determined on a case-by-case basis; and
(iii) The borrower agrees to the use of a supervised bank account for this purpose by executing the deposit agreement.
(b) The borrower may select the financial institution in which the account will be established, provided the institution is Federally insured. If the borrower does not select an institution, the Agency will choose one.
(c) Only one supervised bank account will be established for any borrower.
(d) If both spouses sign an FLP note and security agreement, the supervised bank account will be established as a joint tenancy account with right of survivorship from which either borrower can withdraw funds.
(e) If the funds to be deposited into the account cause the balance to exceed $100,000, the financial institution must agree to pledge acceptable collateral with the Federal Reserve Bank for the excess over $100,000, before the deposit is made.
(1) If the financial institution is not a member of the Federal Reserve System, the institution must pledge acceptable collateral with a correspondent bank that is a member of the Federal Reserve System. The correspondent bank must inform the Federal Reserve Bank that it is holding securities pledged for the supervised bank account in accordance with 31 CFR part 202 (Treasury Circular 176).
(2) When the balance in the account has been reduced, the financial institution may request a release of part or all of the collateral, as applicable, from the Agency.
(a) Checks or money orders may be deposited into a supervised bank account provided they are not payable:
(1) Solely to the Federal Government or any agency thereof; or
(2) To the Treasury of the United States as a joint payee.
(b) Loan proceeds may be deposited electronically.
(a) A supervised bank account, if possible, will be established as an interest bearing deposit account provided that the funds will not be immediately disbursed, and the account is held jointly by the borrower and the Agency if this arrangement will benefit the borrower.
(b) Interest earned on a supervised bank account will be treated as normal income security.
(a) The Agency will authorize a withdrawal from the supervised bank account for an approved purpose after ensuring that:
(1) Sufficient funds in the supervised bank account are available;
(2) No loan proceeds are disbursed prior to confirmation of proper lien position, except to pay for lien search if needed;
(3) No checks are issued to “cash;” and
(4) The use of funds is consistent with the current farm operating plan or other agreement with the Agency.
(b) A check must be signed by the borrower with countersignature of the Agency, except as provided in paragraph (c) of this section. All checks must bear the legend “countersigned, not as co-maker or endorser.”
(c) The Agency will withdraw funds from a supervised bank account without borrower counter-signature only for the following purposes:
(1) For application on Agency indebtedness;
(2) To refund Agency loan funds;
(3) To protect the Agency's lien or security;
(4) To accomplish a purpose for which such advance was made; or
(5) In the case of a deceased borrower, to continue to pay necessary farm expenses to protect Agency security in conjunction with the borrower's estate.
(a) If the supervised bank account is no longer needed and the loan account is not paid in full, the Agency will determine the source of the remaining funds in the supervised bank account. If the funds are determined to be:
(1) Loan funds:
(i) From any loan type, except Youth loan, and the balance is less than $1,000, the Agency will provide the balance to the borrower to use for authorized loan purposes;
(ii) From a Youth loan, and the balance is less than $100, the Agency will provide the balance to the borrower to use for authorized loan purposes;
(2) Loan funds:
(i) From any loan type, except Youth loan, and the balance is $1,000 or greater, the Agency will apply the balance to the FLP loan;
(ii) From a Youth loan, and the balance is $100 or greater, the Agency will apply the balance to the FLP loan;
(3) Normal income funds, the Agency will apply the balance to the remaining current year's scheduled payments and pay any remaining balance to the borrower; and
(4) Basic security funds, the Agency will apply the balance to the FLP loan as an extra payment or the borrower may apply the balance toward the purchase of basic security, provided the Agency obtains a lien on such security and its security position is not diminished.
(b) If the borrower is uncooperative in closing a supervised bank account, the Agency will make written demand to the financial institution for the balance and apply it in accordance with paragraph (a) of this section.
(c) In the event of a borrower's death, the Agency may:
(1) Apply the balance to the borrower's FLP loan;
(2) Continue with a remaining borrower, provided the supervised bank account was established as a joint tenancy with right of survivorship account;
(3) Refund unobligated balances from other creditors in the supervised bank account for specific operating purposes in accordance with any prior written agreement between the Agency and the deceased borrower; or
(4) Continue to pay expenses from the supervised bank account in conjunction with the borrower's estate.
This subpart applies to all direct applicants and borrowers, except borrowers with only Non-program loans.
(a) A borrower must maintain accurate records sufficient to make informed management decisions and to allow the Agency to render loan making and servicing decisions in accordance with Agency regulations. These records must include the following:
(1) Production (e.g., total and per unit for livestock and crops);
(2) Revenues, by source;
(3) Other sources of funds, including borrowed funds;
(4) Operating expenses;
(5) Interest;
(6) Family living expenses;
(7) Profit and loss;
(8) Tax-related information;
(9) Capital expenses;
(10) Outstanding debt; and
(11) Debt repayment.
(b) A borrower also must agree in writing to:
(1) Cooperate with the Agency and comply with all supervisory agreements, farm assessments, farm operating plans, year-end analyses, and all other loan-related requirements and documents;
(2) Submit financial information and an updated farm operating plan when requested by the Agency;
(3) Immediately notify the Agency of any proposed or actual significant change in the farming operation, any significant changes in family income, expenses, or the development of problem situations, or any losses or proposed significant changes in security.
(c) If the borrower fails to comply with these requirements, unless due to reasons outside the borrower's control, the non-compliance may adversely impact future requests for assistance.
(a) The Agency assesses each farming operation to determine the applicant's financial condition, organizational structure, management strengths and weaknesses, appropriate levels of Agency oversight, credit counseling needs, and training needs. The applicant will participate in developing the assessment.
(b) The initial assessment must evaluate, at a minimum, the:
(1) Farm organization and key personnel qualifications;
(2) Type of farming operation;
(3) Goals for the operation;
(4) Adequacy of real estate, including facilities, to conduct the farming operation;
(5) Adequacy of chattel property used to conduct the farming operation;
(6) Historical performance;
(7) Farm operating plan;
(8) Loan evaluation;
(9) Supervisory plan; and
(10) Training plan.
(c) An assessment update must be prepared for each subsequent loan. The update must include a farm operating plan, a loan evaluation, and any other items discussed in paragraph (b) of this section that have significantly changed since the initial assessment.
(d) The Agency reviews the assessment to determine a borrower's progress at least annually. The review will be in the form of an office visit, field visit, letter, phone conversation, or year-end analysis, as determined by the Agency.
(a) An applicant or borrower must submit a farm operating plan to the Agency, upon request, for loan making or servicing purposes.
(b) An applicant or borrower may request Agency assistance in developing the farm operating plan.
(c) The farm operating plan will be based on accurate and verifiable information.
(1) Historical information will be used as a guide.
(2) Positive and negative trends, mutually agreed upon changes and improvements, and current input prices will be taken into consideration when arriving at reasonable projections.
(3) Projected yields will be calculated according to the following priorities:
(i) The applicant or borrower's own production records for the previous 3 years;
(ii) The per-acre actual production history of the crops produced by the farming operation used to determine Federal crop insurance payments, if available;
(iii) FSA Farm Program actual yield records;
(iv) County averages;
(v) State averages.
(4) If the applicant or borrower's production history has been substantially affected by a disaster declared by the President or designated by the Secretary of Agriculture, or the applicant or borrower has had a qualifying loss from such disaster but the farming operation was not located in a declared or designated disaster area, the applicant or borrower may:
(i) Use county average yields, or state average yields if county average yields are not available, in place of the disaster year yields; or
(ii) Exclude the production year with the lowest actual or county average yield if their yields were affected by disasters during at least 2 of the 3 years.
(d) Unit prices for agricultural commodities established by the Agency will generally be used. Applicants and borrowers that provide evidence that they will receive a premium price for a commodity may use a price above the price established by the Agency.
(e) Except as provided in paragraph (f) of this section, the applicant or borrower must sign the final farm operating plan prior to approval of any loan or servicing action.
(f) If the Agency believes the applicant or borrower's farm operating plan is inaccurate, or the information upon which it is based cannot be verified, the Agency will discuss and try to resolve the concerns with the applicant or borrower. If an agreement cannot be reached, the Agency will make loan approval and servicing determinations based on the Agency's revised farm operating plan.
(a) The Agency conducts a year-end analysis at its discretion or if the borrower:
(1) Has received any direct loan, chattel subordination, or primary loan servicing action within the last year;
(2) Is financially distressed or delinquent;
(3) Has a loan deferred, excluding deferral of an installment under subpart B of part 766; or
(4) Is receiving a limited resource interest rate on any loan.
(b) To the extent practicable, the year-end analysis will be completed within 60 days after the end of the business year or farm budget planning period and must include:
(1) An analysis comparing actual income, expenses, and production to projected income, expenses, and production for the preceding production cycle; and
(2) An updated farm operating plan.
(a) This subpart addresses:
(1) The allocation of funds for direct and guaranteed FO and OL loans;
(2) The establishment of socially disadvantaged target participation rates; and
(3) The reservation of loan funds for beginning farmers.
(b) The Agency does not allocate EM loan funds to State Offices but makes funds available following a designated or declared disaster. EM loan funds are available on a first-come first-served basis.
(c) State funding information is available for review in any State Office.
The Agency's National Office allocates funds for FO and OL loans to the
(a)
(b)
FO and OL loan funds are allocated to State Offices using one or more of the following allocation methods:
(a) Formula allocation, if data, as specified in § 761.205, is available to use the formula for the State.
(b) Administrative allocation, if the Agency cannot adequately meet program objectives with a formula allocation. The National Office determines the amount of an administrative allocation on a case-by-case basis.
(c) Base allocation, to ensure funding for at least one loan in each State, District, or County Office. In making a base allocation, the National Office may use criteria other than those used in the formula allocation, such as historical Agency funding information.
(a) The formula allocation for FO or OL loan funds is equal to:
(1) The amount available for allocation by the Agency minus the amounts held in the National Office reserve and distributed by base and administrative allocation, multiplied by
(2) The State Factor, which represents the percentage of the total amount of the funds for a loan program that the National Office allocates to a State Office.
(b) To calculate the State Factor, the Agency:
(1) Uses the following criteria, data sources, and weights:
(2) Determines each State's percentage of the national total for each criterion;
(3) Multiplies the percentage for each State determined in paragraph (b)(2) of this section by the applicable weight for that criterion;
(4) Sums the weighted criteria for each State to obtain the State factor.
The Agency periodically pools unobligated FO and OL loan funds that have been allocated to State Offices. When pooling these funds, the Agency places all unobligated funds in the appropriate National Office reserve. The
A State Office may distribute its allocation of loan funds to District or County level using the same allocation methods that are available to the National Office. State Offices may reserve a portion of the funds to meet unexpected or justifiable program needs during the fiscal year.
(a)
(2) The Agency sets the target participation rates for State and County levels annually.
(3) When distributing loan funds in counties within Indian reservations, the Agency will allocate the funds on a reservation-wide basis.
(4) The Agency reserves and allocates sufficient loan funds to achieve these target participation rates. The Agency may also use funds that are not reserved and allocated for socially disadvantaged groups to make or guarantee loans to members of socially disadvantaged groups.
(b)
(1) State is equal to the percent of the total rural population in the State who are members of such socially disadvantaged groups.
(2) County is equal to the percent of rural population in the county who are members of such socially disadvantaged groups.
(c)
(1) State is equal to the percent of the total number of farmers in the State who are members of such socially disadvantaged groups.
(2) County is equal to the percent of the total number of farmers in the county who are members of socially disadvantaged ethnic groups.
(d)
(i) State is equal to the percent of farmers in the State who are women.
(ii) County is equal to the percent of farmers in the county who are women.
(2) In developing target participation rates for women, the Agency will consider the number of women who are current farmers and potential farmers.
Each fiscal year, the Agency reserves a portion of direct and guaranteed FO and OL loan funds for beginning farmers in accordance with section 346(b)(2) of the Act.
If sufficient unsubsidized guaranteed OL funds are available, then beginning on:
(a) August 1 of each fiscal year, the Agency will use available unsubsidized guaranteed OL loan funds to make approved direct FO loans to beginning farmers under the Beginning Farmer Downpayment loan program; and
(b) September 1 of each fiscal year the Agency will use available unsubsidized guaranteed OL loan funds to make approved direct FO loans to beginning farmers.
At 73 FR 74345, Dec. 8, 2008, § 761.210 was amended by revising paragraph (a), effective January 7, 2009. For the convenience of the user, the revised text is set forth as follows:
(a) August 1 of each fiscal year, the Agency will use available unsubsidized guaranteed OL loan funds to make approved direct FO loans to beginning farmers and socially disadvantaged farmers under the Downpayment loan program; and
5 U.S.C. 301, 7 U.S.C. 1989.
Nomenclature changes to part 762 appear at 72 FR 63297, Nov. 8, 2007.
(a)
(b)
(c)
(1) Standard Eligible Lender under § 762.105;
(2) Certified Lender, or
(3) Preferred Lender under § 762.106.
(d)
(e)
(1) Upon full payment of the guaranteed loan. A zero balance within the period authorized for advances on a line of credit will not terminate the guarantee;
(2) Upon payment of a final loss claim; or
(3) Upon written notice from the lender to the Agency that a guarantee is no longer desired provided the lender holds all of the guaranteed portion of the loan. The loan guarantee will be returned to the Agency office for cancellation within 30 days of the date of the notice by the lender.
Abbreviations and definitions for terms used in this part are provided in § 761.2 of this chapter.
(a)
(1) The lender or holder had actual knowledge of the fraud or misrepresentation at the time it became the lender or holder, or
(2) The lender or holder participated in or condoned the fraud or misrepresentation.
(b)
(1) Violation of usury laws;
(2) Negligent servicing;
(3) Failure to obtain the required security; or,
(4) Failure to use loan funds for purposes specifically approved by the Agency.
(c)
(1) The loan guarantee is contestable based on the lender's fraud or misrepresentation; or
(2) The loan note guarantee is unenforceable by the lender based on a lender violation.
(a) A decision made by the lender adverse to the borrower is not a decision by the Agency, whether or not concurred in by the Agency, and may not be appealed.
(b) The lender or Agency may request updated information from the borrower to implement an appeal decision.
(c) Appeals will be handled in accordance with parts 11 and 780 of this title.
(a)
(b)
(2) The lenders must not have losses or deficiencies in processing and servicing guaranteed loans above a level which would indicate an inability to properly process and service a guaranteed agricultural loan.
(3) A lender must be subject to credit examination and supervision by an acceptable State or Federal regulatory agency;
(4) The lender must maintain an office near enough to the collateral's location so it can properly and efficiently discharge its loan making and loan servicing responsibilities or use Agency approved agents, correspondents, branches, or other institutions or persons to provide expertise to assist in carrying out its responsibilities. The lender must be a local lender unless it:
(i) Normally makes loans in the region or geographic location in which the applicant's operation being financed is located, or
(ii) Demonstrates specific expertise in making and servicing loans for the proposed operation.
(5) The lender, its officers, or agents must not be debarred or suspended from participation in Government contracts or programs or be delinquent on a Government debt.
(c)
(1) The Agency approves of the substitution in writing by executing a modification of the guarantee to identify the new lender, the amount of debt at the time of the substitution and any new loan terms if applicable.
(2) The new lender agrees in writing to:
(i) Assume all servicing and other responsibilities of the original lender and to acquire the unguaranteed portion of the loan;
(ii) Execute a lender's agreement if one is not in effect;
(iii) [Reserved]
(iv) Give any holder written notice of the substitution. If the rate and terms are changed, written concurrence from the holder is required.
(3) The original lender will:
(i) Assign their promissory note, lien instruments, loan agreements, and other documents to the new lender.
(ii) If the loan is subject to an existing interest assistance agreement, submit a request for subsidy for the partial year that it has owned the loan.
(d)
(2) The lender's CLP or PLP status is subject to reconsideration when ownership changes.
(3) The lender will execute a new lender's agreement when ownership changes.
(a)
(i) The States in which they desire to receive PLP or CLP status and their branch offices which they desire to be considered by the Agency for approval; and
(ii) Each item of the eligibility criteria for PLP or CLP approval in this section, as appropriate.
(2) The lender may include any additional supporting evidence or other information the lender believes would be helpful to the Agency in making its determination.
(3) The lender must send its request to the Agency State office for the State in which the lender's headquarters is located.
(4) The lender must provide any additional information requested by the Agency to process a PLP or CLP request if the lender continues with the approval process.
(b)
(1) Qualify as a standard eligible lender under § 762.105;
(2) Have a lender loss rate not in excess of the maximum CLP loss rate established by the Agency and published periodically in a
(3) Have proven an ability to process and service Agency guaranteed loans by showing that the lender:
(i) Submitted substantially complete and correct guaranteed loan applications; and
(ii) Serviced all guaranteed loans according to Agency regulations;
(4) Have made the minimum number of guaranteed OL, FO, or Soil and Water (SW) loans established by the Agency and published periodically in a
(5) Not be under any regulatory enforcement action such as a cease and desist order, written agreement, or an appointment of conservator or receiver, based upon financial condition;
(6) Designate a qualified person or persons to process and service Agency guaranteed loans for each of the lender offices which will process CLP loans. To be qualified, the person must meet the following conditions:
(i) Have attended Agency sponsored training in the past 12 months or will attend training in the next 12 months; and
(ii) Agree to attend Agency sponsored training each year;
(7) Use forms acceptable to the Agency for processing, analyzing, securing, and servicing Agency guaranteed loans and lines of credit;
(c)
(1) Meet the CLP eligibility criteria under this section.
(2) Have a credit management system, satisfactory to the Agency, based on the following:
(i) The lender's written credit policies and underwriting standards;
(ii) Loan documentation requirements;
(iii) Exceptions to policies;
(iv) Analysis of new loan requests;
(v) Credit file management;
(vi) Loan funds and collateral management system;
(vii) Portfolio management;
(viii) Loan reviews;
(ix) Internal credit review process;
(x) Loan monitoring system; and
(xi) The board of director's responsibilities.
(3) Have made the minimum number of guaranteed OL, FO, or SW loans established by the Agency and published periodically in a
(4) Have a lender loss rate not in excess of the rate of the maximum PLP loss rate established by the Agency and published periodically in a
(5) Show a consistent practice of submitting applications for guaranteed loans containing accurate information supporting a sound loan proposal.
(6) Show a consistent practice of processing Agency guaranteed loans without recurring major or minor deficiencies.
(7) Demonstrate a consistent, above average ability to service guaranteed loans based on the following:
(i) Borrower supervision and assistance;
(ii) Timely and effective servicing; and
(iii) Communication with the Agency.
(8) Designate a person or persons, either by name, title, or position within the organization, to process and service PLP loans for the Agency.
(d)
(2) The Agency will determine which branches of the lender have the necessary experience and ability to participate in the CLP or PLP program based on the information submitted in the lender application and on Agency experience.
(3) Lenders who meet the criteria will be granted CLP or PLP status for a period not to exceed 5 years.
(4) PLP status will be conditioned on the lender carrying out its credit management system as proposed in its request for PLP status and any additional loan making or servicing requirements agreed to and documented the PLP lender's agreement. If the PLP lender's agreement does not specify any agreed upon process for a particular action, the PLP lender will act according to regulations governing CLP lenders.
(e)
(f)
(2) Renewal of PLP or CLP status is not automatic. A lender must submit a written request for renewal of a lender's agreement with PLP or CLP status which includes information:
(i) Updating the material submitted in the initial application; and,
(ii) Addressing any new criteria established by the Agency since the initial application.
(3) PLP or CLP status will be renewed if the applicable eligibility criteria under this section are met, and no cause exists for denying renewal under paragraph (g) of this section.
(g)
(2) Any of the following instances constitute cause for revoking or not renewing PLP or CLP status:
(i) Violation of the terms of the lender's agreement;
(ii) Failure to maintain PLP or CLP eligibility criteria. The Agency may allow a PLP lender with a loss rate which exceeds the maximum PLP loss rate, to retain its PLP status for a two-year period, if:
(A) The lender documents in writing why the excessive loss rate is beyond their control;
(B) The lender provides a written plan that will reduce the loss rate to the PLP maximum rate within two years from the date of the plan, and
(C) The Agency determines that exceeding the maximum PLP loss rate standard was beyond the control of the
(D) The Agency will revoke PLP status if the maximum PLP loss rate is not met at the end of the two-year period, unless a second two year extension is granted under this subsection.
(iii) Knowingly submitting false or misleading information to the Agency;
(iv) Basing a request on information known to be false;
(v) Deficiencies that indicate an inability to process or service Agency guaranteed farm loan programs loans in accordance with this subpart;
(vi) Failure to correct cited deficiencies in loan documents upon notification by the Agency;
(vii) Failure to submit status reports in a timely manner;
(viii) Failure to use forms, or follow credit management systems (for PLP lenders) accepted by the Agency; or
(ix) Failure to comply with the reimbursement requirements of § 762.144(c)(7).
(3) A lender which has lost PLP or CLP status must be reconsidered for eligibility to continue as a Standard Eligible Lender (for former PLP and CLP lenders), or as a CLP lender (for former PLP lenders) in submitting loan guarantee requests. They may reapply for CLP or PLP status when the problem causing them to lose their status has been resolved.
(a)
(1) A complete application for loans of $125,000 or less must, at least, consist of:
(i) The application form;
(ii) Loan narrative;
(iii) Balance sheet;
(iv) Cash flow budget;
(v) Credit report;
(vi) A plan for servicing the loan.
(2) In addition to the minimum requirements, the lender will perform at least the same level of evaluation and documentation for a guaranteed loan that the lender typically performs for non-guaranteed loans of a similar type and amount.
(3) The $125,000 threshold includes any single loan, or package of loans submitted for consideration at any one time. A lender must not split a loan into two or more parts to meet the threshold thereby avoiding additional documentation.
(4) The Agency may require lenders with a lender loss rate in excess of the rate for CLP lenders to assemble additional documentation from paragraph (b) of this section.
(b)
(1) Verification of income;
(2) Verification of debts over $1,000;
(3) Three years financial history;
(4) Three years of production history (for standard eligible lenders only);
(5) Proposed loan agreements; and,
(6) If construction or development is planned, a copy of the plans, specifications, and development schedule.
(c)
(1) An application form;
(2) A loan narrative; and
(3) Any other items agreed to during the approval of the PLP lender's status and contained in the PLP lender agreement.
(d)
(2) The Agency will notify CLP lenders which items to submit to the Agency.
(3) PLP lenders will submit applications in accordance with their agreement with the Agency for PLP status.
(4) CLP and PLP lenders must certify that the required items, not submitted, are in their files.
(5) The Agency may request additional information from any lender or
(e)
(f)
(2) Relationships include:
(i) The lender or its officers, directors, principal stockholders (except stockholders in a Farm Credit System institution that have stock requirements to obtain a loan), or other principal owners having a financial interest (other than lending relationships in the normal course of business) in the applicant or borrower.
(ii) The applicant or borrower, a relative of the applicant or borrower, anyone residing in the household of the applicant or borrower, any officer, director, stockholder or other owner of the applicant or borrower holds any stock or other evidence of ownership in the lender.
(iii) The applicant or borrower, a relative of the applicant or borrower, or anyone residing in the household of the applicant or borrower is an Agency employee.
(iv) The officers, directors, principal stockholders (except stockholders in a Farm Credit System institution that have stock requirements to obtain a loan), or other principal owners of the lender have substantial business dealings (other than in the normal course of business) with the applicant or borrower.
(v) The lender or its officers, directors, principal stockholders, or other principal owners have substantial business dealings with an Agency employee.
(3) The lender must furnish additional information to the Agency upon request.
(4) The Agency will not approve the application until the lender develops acceptable safeguards to control any actual or potential conflicts of interest.
(g)
Applicants must meet all of the following requirements to be eligible for a guaranteed OL or a guaranteed FO:
(a)
(i) More than three occasions on or prior to April 4, 1996; or
(ii) Any occasion after April 4, 1996.
(2) The applicant may receive a guaranteed OL to pay annual farm and ranch operating and family living expenses, provided the applicant meets all other requirements for the loan, if the applicant and anyone who will execute the promissory note:
(i) Received a write-down under section 353 of the Act;
(ii) Is current on payments under a confirmed reorganization plan under chapter 11, 12, or 13 of title 11 of the United States Code; or
(iii) Received debt forgiveness on not more than one occasion after April 4, 1996, resulting directly and primarily from a Presidentially-designated emergency for a county or contiguous county in which the applicant operates.
(b)
(c)
(d)
(2) United States non-citizen nationals and qualified aliens must provide the appropriate documentation as to their immigration status as required by the United States Department of Homeland Security, Bureau of Citizenship and Immigration Services.
(e)
(f)
(g)
(2) A history of failures to repay past debts as they came due when the ability to repay was within their control will demonstrate unacceptable credit history.
(3) Unacceptable credit history will not include:
(i) Isolated instances of late payments which do not represent a pattern and were clearly beyond their control; or,
(ii) Lack of credit history.
(h)
(2) The potential for sale of any significant nonessential assets will be considered when evaluating the availability of other credit.
(3) Ownership interests in property and income received by an individual or entity applicant, and any entity members as individuals will be considered when evaluating the availability of other credit to the applicant.
(i)
(1) The individual or entity applicant must be an operator of not larger than a family farm after the loan is closed.
(2) In the case of an entity borrower:
(i) The entity must be authorized to operate, and own if the entity is also an owner, a farm in the State or States in which the farm is located; and
(ii) If the entity members holding a majority interest are related by marriage or blood, at least one member of the entity must operate the family farm; or,
(iii) If the entity members holding a majority interest are not related by marriage or blood, the entity members holding a majority interest must also operate the family farm.
(j)
(1) The individual must be the operator and owner of not larger than a family farm after the loan is closed.
(2) In the case of an entity borrower:
(i) The entity must be authorized to own and operate a farm in the state or states in which the farm is located; and
(ii) If the entity members holding a majority interest are related by marriage or blood, at least one member of the entity also must operate the family farm and at least one member of the entity or the entity must own the family farm; or,
(iii) If the entity members holding a majority interest are not related by marriage or blood, the entity members holding a majority interest must operate the family farm and the entity members holding a majority interest or the entity must own the family farm.
(k)
(1) Each entity member's ownership interest may not exceed the family farm definition limits;
(2) The collective ownership interest of all entity members may exceed the family farm definition limits only if the following conditions are met:
(i) All of the entity members are related by blood or marriage;
(ii) All of the members are or will be operators of the entity; and,
(iii) The majority interest holders of the entity must meet the requirements of paragraphs (d), (f), (g), and (i) through (j) of this section;
(3) The entity must be controlled by farmers engaged primarily and directly in farming or ranching in the United States after the loan is made; and
(4) The entity members are not themselves entities.
(l)
(a)
(i) Payment of costs associated with reorganizing a farm to improve its profitability;
(ii) Purchase of livestock, including poultry, and farm equipment or fixtures, quotas and bases, and cooperative stock for credit, production, processing or marketing purposes;
(iii) Payment of annual farm operating expenses, examples of which include feed, seed, fertilizer, pesticides, farm supplies, repairs and improvements which are to be expensed, cash rent and family subsistence;
(iv) Payment of scheduled principal and interest payments on term debt provided the debt is for authorized FO or OL purposes;
(v) Other farm and ranch needs;
(vi) Payment of costs associated with land and water development for conservation or use purposes;
(vii) Refinancing indebtedness incurred for any authorized OL purpose, when the lender and applicant can demonstrate the need to refinance;
(viii) Payment of loan closing costs;
(ix) Payment of costs associated with complying with Federal or State-approved standards under the Occupational Safety and Health Act of 1970 (29 U.S.C. 655, 667). This purpose is limited to applicants who demonstrate that compliance with the standards will cause them substantial economic injury; and
(x) Payment of training costs required or recommended by the Agency.
(2) Loan funds under a line of credit may be advanced only for the following purposes:
(i) Payment of annual operating expenses, family subsistence, and purchase of feeder animals;
(ii) Payment of current annual operating debts advanced for the current operating cycle; (Under no circumstances can carry-over operating debts from a previous operating cycle be refinanced);
(iii) Purchase of routine capital assets, such as replacement of livestock, that will be repaid within the operating cycle;
(iv) Payment of scheduled, non-delinquent, term debt payments provided the debt is for authorized FO or OL purposes.
(v) Purchase of cooperative stock for credit, production, processing or marketing purposes; and
(vi) Payment of loan closing costs.
(b)
(1) Acquire or enlarge a farm; examples include, but are not limited to, providing down payments, purchasing easements for the applicant's portion
(2) Make capital improvements; examples include, but are not limited to, the construction, purchase, and improvement of a farm dwelling, service buildings and facilities that can be made fixtures to the real estate, (Capital improvements to leased land may be financed subject to the limitations in § 762.122);
(3) Promote soil and water conservation and protection; examples include the correction of hazardous environmental conditions, and the construction or installation of tiles, terraces and waterways;
(4) Pay closing costs, including but not limited to, purchasing stock in a cooperative and appraisal and survey fees; and
(5) Refinancing indebtedness incurred for authorized FO and OL purposes, provided the lender and applicant demonstrate the need to refinance the debt.
(c)
(d)
At 73 FR 74345, Dec. 8, 2008, § 762.121 was amended by removing the words “beginning farmer” in paragraph (b)(1), effective January 7, 2009.
(a)
(b)
(2) Notwithstanding paragraph (c)(1) of this section, if a borrower had any combination of direct or guaranteed OL closed in 10 or more prior calendar years prior to October 28, 1992, eligibility to receive new guaranteed OL is extended for 5 additional years from October 28, 1992, and the years need not run consecutively. However, in the case of a line of credit, each year in which an advance is made after October 28, 1992, counts toward the 5 additional years. Once determined eligible, a loan or line of credit may be approved for any authorized term.
(c)
(d)
(e)
At 73 FR 74345, Dec. 8, 2008, § 762.122 was amended by removing the reference to “(c)(1) of this section” and adding in its place a reference to “(b)(1) of this
(a)
(2) By loan closing, applicants must either:
(i) Obtain at least the catastrophic risk protection (CAT) level of crop insurance coverage, if available, for each crop of economic significance, as defined by part 402 of this title, or
(ii) Waive eligibility for emergency crop loss assistance in connection with the uninsured crop. EM loan assistance under part 764 of this chapter is not considered emergency crop loss assistance for purposes of this waiver and execution of the waiver does not render the borrower ineligible for EM loans.
(3) Applicants must purchase flood insurance if buildings are or will be located in a special flood hazard area as defined by FEMA flood hazard area maps and if flood insurance is available.
(4) Insurance, including crop insurance, must be obtained as required by the lender or the Agency based on the strengths and weaknesses of the loan.
(b)
(a)
(2) If a variable rate is used, it must be tied to a rate specifically agreed to between the lender and borrower in the loan instruments. Variable rates may change according to the normal practices of the lender for its average agricultural loan customer, but the frequency of change must be specified in the loan or line of credit instrument.
(3) Neither the interest rate on the guaranteed portion nor the unguaranteed portion may exceed the rate the lender charges its average agricultural loan customer. At the request of the Agency, the lender must provide evidence of the rate charged the average agricultural loan customer. This evidence may consist of average yield data, or documented administrative differential rate schedule formulas used by the lender.
(4) Interest must be charged only on the actual amount of funds advanced and for the actual time the funds are outstanding. Interest on protective advances made by the lender to protect the security will be charged at the note rate but limited to paragraph (a)(3) of this section.
(5) The lender and borrower may collectively obtain a temporary reduction in the interest rate through the interest assistance program in accordance with § 762.150.
(b)
(2) The final maturity date for each loan cannot exceed 7 years from the date of the promissory note or line of credit agreement. Advances for purposes other than for annual operating expenses will be scheduled for repayment over the minimum period necessary considering the applicant's ability to repay and the useful life of the security, but not in excess of 7 years.
(3) All advances on a line of credit must be made within 5 years from the date of the Loan Guarantee.
(c)
(d)
(1) Extended repayment schedules may include equal, unequal, or balloon installments if needed on any guaranteed loan to establish a new enterprise, develop a farm, or recover from a disaster or an economical reversal.
(2) Loans with balloon installments must have adequate collateral at the time the balloon installment comes due. Crops, livestock other than breeding livestock, or livestock products produced are not sufficient collateral for securing such a loan.
(3) The borrower must be projected to be able to refinance the remaining debt at the time the balloon payment comes due based on the expected financial condition of the operation, the depreciated value of the collateral, and the principal balance on the loan.
(e)
(2) Late payment charges (including default interest charges) are not covered by the guarantee. These charges may not be added to the principal and interest due under any guaranteed note or line of credit. However, late payment charges may be made outside of the guarantee if they are routinely made by the lender in similar types of loan transactions.
(3) Lenders may not charge a loan origination and servicing fee greater than 1 percent of the loan amount for the life of the loan when a guaranteed loan is made in conjunction with a down payment FO for beginning farmers under part764 of this chapter.
At 73 FR 74345, Dec. 8, 2008, § 762.124 was amended by removing the words “for beginning farmers” from paragraph (e)(3), effective January 7, 2009.
(a)
(2) The applicant's proposed operation must project a feasible plan as defined in § 762.102(b).
(3) For standard eligible lenders, the projected income and expenses of the borrower and operation used to determine a feasible plan must be based on the applicant's proven record of production and financial management.
(4) For CLP lenders, the projected income and expenses of the borrower and the operation must be based on the applicant's financial history and proven record of financial management.
(5) For those farmers without a proven history, a combination of any actual history and any other reliable source of information that are agreeable with the lender, the applicant, and the Agency will be used.
(6) The cash flow budget analyzed to determine a feasible plan must represent the predicted cash flow of the operating cycle.
(7) Lenders must use price forecasts that are reasonable and defensible. Sources must be documented by the lender and acceptable to the Agency.
(8) When a feasible plan depends on income from other sources in addition to income from owned land, the income must be dependable and likely to continue.
(9) The lender will analyze business ventures other than the farm operation to determine their soundness and contribution to the operation. Guaranteed loan funds will not be used to finance a nonfarm enterprise. Nonfarm enterprises include, but are not limited to: raising earthworms, exotic birds, tropical fish, dogs, or horses for nonfarm purposes; welding shops; boarding horses; and riding stables.
(10) When the applicant has or will have a cash flow budget developed in conjunction with a proposed or existing
(b)
(2) Deviations from historical performance may be acceptable, if specific to changes in operation and adequately justified and acceptable to the Agency.
(3) For existing farmers, actual production for the past 3 years will be utilized.
(4) For those farmers without a proven history, a combination of any actual history and any other reliable source of information that are agreeable with the lender, the applicant, and the Agency will be used.
(5) When the production of a growing commodity can be estimated, it must be considered when projecting yields.
(6) When the applicant's production history has been so severely affected by a declared disaster that an accurate projection cannot be made, the following applies:
(i) County average yields are used for the disaster year if the applicant's disaster year yields are less than the county average yields. If county average yields are not available, State average yields are used. Adjustments can be made, provided there is factual evidence to demonstrate that the yield used in the farm plan is the most probable to be realized.
(ii) To calculate a historical yield, the crop year with the lowest actual or county average yield may be excluded, provided the applicant's yields were affected by disasters at least 2 of the previous 5 consecutive years.
(c)
(a)
(2) The lender will obtain a lien on additional security when necessary to protect the Agency's interest.
(b)
(2) The lender may not require compensating balances or certificates of deposit as means of eliminating the lender's exposure on the unguaranteed portion of the loan or line of credit. However, compensating balances or certificates of deposit as otherwise used in the ordinary course of business are allowed for both the guaranteed and unguaranteed portions.
(c)
(d)
(2) For loans with terms greater than 7 years, a lien must be taken on real estate.
(3) Loans can be secured by a mortgage on leasehold properties if the lease has a negotiable value and is subject to being mortgaged.
(4) The lender or Agency may require additional personal and corporate guarantees to adequately secure the loan. These guarantees are separate from, and in addition to, the personal obligations arising from members of an entity signing the note as individuals.
(e)
(1) Any chattel-secured guaranteed loan must have a higher lien priority (including purchase money interest) than an unguaranteed loan secured by the same chattels and held by the same lender.
(2) Junior lien positions are acceptable only if the total amount of debt with liens on the security, including the debt in junior lien position, is less than or equal to 85 percent of the value of the security. Junior liens on crops or livestock products will not be relied upon for security unless the lender is involved in multiple guaranteed loans to the same borrower and also has the first lien on the collateral.
(3) When taking a junior lien, prior lien instruments will not contain future advance clauses (except for taxes, insurance, or other reasonable costs to protect security), or cancellation, summary forfeiture, or other clauses that jeopardize the Government's or the lender's interest or the borrower's ability to pay the guaranteed loan, unless any such undesirable provisions are limited, modified, waived or subordinated by the lienholder for the benefit of the Agency and the lender.
(f) Additional security, or any loan of $10,000 or less may be secured by the best lien obtainable on real estate without title clearance or legal services normally required, provided the lender believes from a search of the county records that the applicant can give a mortgage on the farm and provided that the lender would, in the normal course of business, waive the title search. This exception to title clearance will not apply when land is to be purchased.
(g)
(h)
(a)
(b)
(c)
(d)
(1)
(2)
(a)
(b)
(1) The information supplied with the application;
(2) The Agency Official's personal knowledge of the operation;
(3) Environmental resources available to the Agency including, but not limited to, documents, third parties, and governmental agencies;
(4) A visit to the farm operation when the available information is insufficient to make a determination;
(5) Other information supplied by the lender or applicant upon Agency request. If necessary, information not supplied with the application will be requested by the Agency.
(c)
(1) A determination must be made as to whether there are any potential impacts to a 100 year floodplain as defined by Federal Emergency Management Agency floodplain maps, Natural Resources Conservation Service data, or other appropriate documentation.
(2) The lender will assist the borrower in securing any applicable permits or waste management plans. The lender may consult with the Agency for guidance on activities which require consultation with State regulatory agencies, special permitting or waste management plans.
(3) The lender will examine the security property to determine if there are any structures or archeological sites which are listed or may be eligible for listing in the National Register of Historic Places. The lender may consult with the Agency for guidance on which situations will need further review in accordance with the National Historical Preservation Act and part 1940, subpart G.
(4) The applicant must certify they will not violate the provisions of § 363 of the Act, the Food Security Act of 1985, and Executive Order 11990 relating to Highly Erodible Land and Wetlands.
(5) All lenders are required to ensure that due diligence is performed in conjunction with a request for guarantee of a loan involving real estate. Due diligence is the process of evaluating real estate in the context of a real estate transaction to determine the presence of contamination from release of hazardous substances, petroleum products, or other environmental hazards and determining what effect, if any, the contamination has on the security value of the property. The Agency will accept as evidence of due diligence the most current version of the American Society of Testing Materials (ASTM) transaction screen questionnaire available from 100 Barr Harbor Drive, West Conshohocken, Pennsylvania 19428-2959, or similar documentation, approved for use by the Agency, supplemented as necessary by the ASTM phase I environmental site assessments form.
(d)
(2) Where the guaranteed loan involves construction, the contractor or subcontractor must file all compliance reports, equal opportunity and nondiscrimination forms, and otherwise comply with all regulations prescribed by the Secretary of Labor pursuant to Executive Orders 11246 and 11375.
(e)
(a)
(b)
(1) The sole purpose of a guaranteed FO or OL is to refinance an Agency direct farm loan. When only a portion of the loan is used to refinance a direct Agency loan, a weighted percentage of a guarantee will be provided;
(2) When the purpose of an FO guarantee is to participate in the downpayment loan program;
(3) When a guaranteed OL is made to a farmer who is participating in the Agency's down payment loan program. The guaranteed OL must be made during the period that a borrower has the down payment loan outstanding; or
(4) When a guaranteed OL is made to a farmer whose farm land is subject to the jurisdiction of an Indian tribe and whose loan is secured by one or more security instruments that are subject to the jurisdiction of an Indian tribe.
(c)
(d)
(1) The pro rata share of principal and interest indebtedness as evidenced by the note or by assumption agreement;
(2) Any loan subsidy due and owing;
(3) The pro rata share of principal and interest indebtedness on secured protective and emergency advances made in accordance with this subpart; and
(4) Principal and interest indebtedness on recapture debt pursuant to a shared appreciation agreement. Provided that the lender has paid the Agency its pro rata share of the recapture amount due.
(a)
(2) CLP and PLP lenders.
(i) Complete applications from CLP or PLP lenders will be approved or rejected not later than 14 calendar days after receipt.
(ii) For PLP lenders, if this time frame is not met, the proposed guaranteed loan will automatically be approved, subject to funding, and receive an 80 or 95 percent guarantee, as appropriate.
(3) Complete applications. For purposes of determining the application processing timeframes, an application will be not be considered complete until all information required to make an approval decision, including the information for an environmental review, is received by the Agency.
(4) The Agency will confirm the date an application is received with a written notification to the lender.
(b)
(1) An application from a veteran
(2) An application from an Agency direct loan borrower
(3) An application from a applicant who:
(i) Has a dependent family,
(ii) Is an owner of livestock and farm implements necessary to successfully carry out farming operations, or
(iii) Is able to make down payments.
(4) Any other approved application.
(c)
(2) The lender, after reviewing the conditions listed on the conditional commitment, will complete, execute, and return the form to the Agency. If the conditions are not acceptable to the lender, the Agency may agree to alternatives or inform the lender and the applicant of their appeal rights.
(d)
(i) No major changes have been made in the lender's loan or line of credit conditions and requirements since submission of the application (except those approved in the interim by the Agency in writing);
(ii) Required hazard, flood, crop, worker's compensation, and personal life insurance (when required) are in effect;
(iii) Truth in lending requirements have been met;
(iv) All equal employment and equal credit opportunity and nondiscrimination requirements have been or will be met at the appropriate time;
(v) The loan or line of credit has been properly closed, and the required security instruments have been obtained, or will be obtained, on any acquired property that cannot be covered initially under State law;
(vi) The borrower has marketable title to the collateral owned by the borrower, subject to the instrument securing the loan or line of credit to be guaranteed and subject to any other exceptions approved in writing by the Agency. When required, an assignment on all USDA crop and livestock program payments has been obtained;
(vii) When required, personal, joint operation, partnership, or corporate guarantees have been obtained;
(viii) Liens have been perfected and priorities are consistent with requirements of the conditional commitment;
(ix) Loan proceeds have been, or will be disbursed for purposes and in amounts consistent with the conditional commitment and as specified on the loan application. In line of credit cases, if any advances have occurred, advances have been disbursed for purposes and in amounts consistent with the conditional commitment and line of credit agreements;
(x) There has been no material adverse change in the borrower's condition, financial or otherwise, since submission of the application; and
(xi) All other requirements specified in the conditional commitment have been met.
(2) Inspections. The lender must notify the Agency of any scheduled inspections during construction and after the guarantee has been issued. The Agency may attend these field inspections. Any inspections or review performed by the Agency, including those with the lender, are solely for the benefit of the Agency. Agency inspections do not relieve any other parties of their inspection responsibilities, nor can these parties rely on Agency inspections for any purpose.
(3) Execution of lender's agreement. The lender must execute the Agency's lender's agreement and deliver it to the Agency.
(4) Closing report and guarantee fees.
(i) The lender must complete an Agency closing report form and return it to the Agency along with any guarantee fees.
(ii) Guarantee fees are 1 percent and are calculated as follows: Fee=Loan Amount×% Guaranteed×.01. The nonrefundable fee is paid to the Agency by the lender. The fee may be passed on to the borrower and included in loan funds.
(iii) The following guaranteed loan transactions are not charged a fee:
(A) Loans involving interest assistance;
(B) Loans where a majority of the funds are used to refinance an Agency direct loan; and
(C) Loans to beginning farmers involved in the direct beginning farmer downpayment program.
(e)
(1) The forms meet Agency requirements;
(2) Documents comply with State law and regulation;
(3) The principal and interest repayment schedules are stated clearly in the notes and are consistent with the conditional commitment;
(4) The note is executed by the individual liable for the loan. For entities, the note is executed by the member who is authorized to sign for the entity, and by all members of the entity as individuals. Individual liability can be waived by the Agency for members holding less than 10 percent ownership in the entity if the collectability of the loan will not be impaired; and
(5) When the loan purpose is to refinance or restructure the lender's own debt, the lender may continue to use the existing debt instrument and attach an allonge that modifies the terms of the original note.
(f)
At 73 FR 74345, Dec. 8, 2008, § 762.130 was amended by revising paragraph (d)(4)(iii)(C), effective January 7, 2009. For the convenience of the user, the revised text is set forth as follows:
(d) * * *
(4) * * *
(iii) * * *
(C) Loans to farmers involved in the direct downpayment program.
(a)
(2) The lender cannot enforce the guarantee to the extent that a loss results from a violation of usury laws or negligent servicing.
(b)
(1) Ensuring loan funds are not used for unauthorized purposes.
(2) Ensuring borrower compliance with the covenants and provisions contained in the promissory note, loan agreement, mortgage, security instruments, any other agreements, and this part. Any violations which indicate non-compliance on the part of the borrower must be reported, in writing, to both the Agency and the borrower.
(3) Ensuring the borrower is in compliance with all laws and regulations applicable to the loan, the collateral, and the operations of the farm.
(4) Receiving all payments of principal and interest on the loan as they fall due and promptly disbursing to any holder its pro-rata share according to the amount of interest the holder has in the loan, less only the lender's servicing fee.
(5) Performing an annual analysis of the borrower's financial condition to determine the borrower's progress. The annual analysis will include:
(i) For loans secured by real estate only, the analysis for standard eligible lenders must include an analysis of the borrower's balance sheet. CLP lenders
(ii) For loans secured by chattels, all lenders will review the borrower's progress regarding business goals, trends and changes in financial performance, and compare actual to planned income and expenses for the past year.
(iii) An account of the whereabouts or disposition of all collateral.
(iv) A discussion of any observations about the farm business with the borrower.
(c)
(1) Determining that all construction is completed as proposed in the loan application;
(2) Making periodic inspections during construction to ensure that any development is properly completed within a reasonable period of time; and
(3) Verification that the security is free of any mechanic's, materialmen's, or other liens which would affect the lender's lien or result in a different lien priority from that proposed in the request for guarantee.
(d)
Lenders are responsible for providing the local Agency credit officer with all of the following information on the loan and the borrower:
(a) When the guaranteed loan becomes 30 days past due, and following the lender's meeting or attempts to meet with the borrower, all lenders will submit the appropriate Agency form showing guaranteed loan borrower default status. The form will be resubmitted every 60 days until the default is cured either through restructuring or liquidation.
(b) All lenders will submit the appropriate guaranteed loan status reports as of March 31 and September 30 of each year;
(c) CLP lenders also must provide the following:
(1) A written summary of the lender's annual analysis of the borrower's operation. This summary should describe the borrower's progress and prospects for the upcoming operating cycle. This annual analysis may be waived or postponed if the borrower is financially strong. The summary will include a description of the reasons an analysis was not necessary.
(2) For lines of credit, an annual certification stating that a cash flow projecting at least a feasible plan has been developed, that the borrower is in compliance with the provisions of the line of credit agreement, and that the previous year income and loan funds and security proceeds have been accounted for.
(d) In addition to the requirements of paragraphs (a), (b), and (c) of this section, the standard eligible lender also will provide:
(1) Borrower's balance sheet, and income and expense statement for the previous year.
(2) For lines of credit, the cash flow for the borrower's operation that projects a feasible plan or better for the upcoming operating cycle. The standard eligible lender must receive approval from the Agency before advancing future years' funds.
(3) An annual farm visit report or collateral inspection.
(e) PLP lenders will submit additional reports as required in their lender's agreement.
(f) A lender receiving a final loss payment must complete and return an annual report on its collection activities for each unsatisfied account for 3 years following payment of the final loss claim.
(a)
(1) Obtain income and insurance assignments when required.
(2) Ensure the borrower has or obtains marketable title to the collateral.
(3) Inspect the collateral as often as deemed necessary to properly service the loan.
(4) Ensure the borrower does not convert loan security.
(5) Ensure the proceeds from the sale or other disposition of collateral are accounted for and applied in accordance with the lien priorities on which the guarantee is based or used for the purchase of replacement collateral.
(6) Ensure the loan and the collateral are protected in the event of foreclosure, bankruptcy, receivership, insolvency, condemnation, or other litigation.
(7) Ensure taxes, assessments, or ground rents against or affecting the collateral are paid.
(8) Ensure adequate insurance is maintained.
(9) Ensure that insurance loss payments, condemnation awards, or similar proceeds are applied on debts in accordance with lien priorities on which the guarantee was based, or used to rebuild or acquire needed replacement collateral.
(b)
(i) When the security item is being sold for market value and the proceeds will be applied to the loan in accordance with lien priorities. In the case of term loans, proceeds will be applied as extra payments and not as a regular installment on the loan.
(ii) The security item will be used as a trade-in or source of down payment funds for a like item that will be taken as security.
(iii) The security item has no present or prospective value.
(2) A partial release of security may be approved in writing by the Agency upon the lender's request when:
(i) Proceeds will be used to make improvements to real estate that increase the value of the security by an amount equal to or greater than the value of the security being released.
(ii) Security will be released outright with no consideration, but the total unpaid balance of the guaranteed loan is less than or equal to 75 percent of the value of the security for the loan after the release, excluding the value of growing crops or planned production, based on a current appraisal of the security.
(iii) Significant income generating property will not be released unless it is being replaced and business assets will not be released for use as a gift or any similar purpose.
(iv) Agency concurrence is provided in writing to the lender's written request. Standard eligible lenders and CLP lenders will submit the following to the Agency:
(A) A current balance sheet on the borrower; and
(B) A current appraisal of the security. Based on the level of risk and estimated equity involved, the Agency will determine what security needs to be appraised. Any required security appraisals must meet the requirements of § 762.127; and
(C) A description of the purpose of the release; and
(D) Any other information requested by the Agency to evaluate the proposed servicing action.
(3) The lender will provide the Agency copies of any agreements executed to carry out the servicing action.
(4) PLP lenders will request servicing approval in accordance with their agreement with the Agency at the time of PLP status certification.
(c)
(i) To permit a guaranteed lender to advance funds and perfect a security interest in crops, feeder livestock, livestock offspring, or livestock products;
(ii) When the lender requesting the guarantee needs the subordination of the Agency's lien position to maintain
(iii) When the lender requesting the guarantee is refinancing the debt of another lender and the Agency's position on real estate security will not be adversely affected; or
(iv) To permit a line of credit to be advanced for annual operating expenses.
(2) The Agency may subordinate its basic security in a direct loan to permit guaranteed line of credit only when both of the following additional conditions are met:
(i) The total unpaid balance of the direct loans is less than or equal to 75 percent of the value of all of the security for the direct loans, excluding the value of growing crops or planned production, at the time of the subordination. The direct loan security value will be determined by an appraisal. The lender requesting the subordination and guarantee is responsible for providing the appraisal and may charge the applicant a reasonable appraisal fee.
(ii) The applicant cannot obtain sufficient credit through a conventional guaranteed loan without a subordination.
(3) The lender may not subordinate its interest in property which secures a guaranteed loan except as follows:
(i) The lender may subordinate its security interest in crops, feeder livestock, livestock offspring, or livestock products when no funds have been advanced from the guaranteed loan for their production, so a lender can make a loan for annual production expenses; or
(ii) The lender may, with written Agency approval, subordinate its interest in basic security in cases where the subordination is required to allow another lender to refinance an existing prior lien, no additional debt is being incurred, and the lender's security position will not be adversely affected by the subordination.
(iii) The Agency's national office may provide an exception to the subordination prohibition if such action is in the Agency's best interest. However, in no case can the loan made under the subordination include tax exempt financing.
(d)
(1) For standard eligible and CLP lenders, the servicing action must be approved by the Agency in writing.
(2) For standard eligible and CLP lenders, the transferee must apply for a loan in accordance with § 762.110, including a current appraisal, unless the lien position of the guaranteed loan will not change, and any other information requested by the Agency to evaluate the transfer and assumption.
(3) PLP lenders may process transfers and assumptions in accordance with their agreement with the Agency.
(4) Any required security appraisals must meet the requirements of § 762.127.
(5) The Agency will review, approve or reject the request in accordance with the time frames in § 762.130.
(6) The transferee must meet the eligibility requirements and loan limitations for the loan being transferred, all requirements relating to loan rates and terms, loan security, feasibility, and environmental and other laws applicable to a applicant under this part.
(7) The lender will use its own assumption agreements or conveyance instruments, providing they are legally sufficient to obligate the transferee for the total outstanding debt. The lender will provide the Agency copies of any agreements executed to carry out the servicing action.
(8) The Agency approves the transfer and assumption by executing a modification of the guarantee to designate the party that assumed the guaranteed debt, the amount of debt at the time of the assumption, including interest that is being capitalized, and any new loan terms, if applicable.
(9) The lender must give any holder notice of the transfer. If the rate and terms are changed, written concurrence from the holder is required.
(10) The Agency will agree to releasing the transferor or any guarantor from liability only if the requirements of § 762.146(c) are met.
(a) A borrower is in default when 30 days past due on a payment or in violation of provisions of the loan documents.
(b) In the event of a borrower default, SEL and CLP lenders will:
(1) Report to the Agency in accordance with § 762.141.
(2) Determine whether it will repurchase the guaranteed portion from the holder in accordance with § 762.144, if the guaranteed portion of the loan was sold on the secondary market.
(3) Arrange a meeting with the borrower within 15 days of default (45 days after payment due date for monetary defaults) to identify the nature of the delinquency and develop a course of action that will eliminate the delinquency and correct the underlying problems. Non-monetary defaults will be handled in accordance with the lender's note, loan agreements and any other applicable loan documents.
(i) The lender and borrower will prepare a current balance sheet and cash flow projection in preparation for the meeting. If the borrower refuses to cooperate, the lender will compile the best financial information available.
(ii) The lender or the borrower may request the attendance of an Agency official. If requested, the Agency official will assist in developing solutions to the borrower's financial problems.
(iii) The lender will summarize the meeting and proposed solutions on the Agency form for guaranteed loan borrower default status completed after the meeting. The lender will indicate the results on this form for the lender's consideration of the borrower for interest assistance in conjunction with rescheduling under § 762.145(b).
(iv) The lender must decide whether to restructure or liquidate the account within 90 days of default, unless the lender can document circumstances that justify an extension by the Agency.
(v) The lender may not initiate foreclosure action on the loan until 60 days after eligibility of the borrower to participate in the interest assistance programs has been determined by the Agency. If the lender or the borrower does not wish to consider servicing options under this section, this should be documented, and liquidation under § 762.149 should begin.
(vi) If a borrower is current on a loan, but will be unable to make a payment, a restructuring proposal may be submitted in accordance with § 762.145 prior to the payment coming due.
(c) PLP lenders will service defaulted loans according to their lender's agreement.
(a)
(1) The borrower has not made a payment of principal and interest due on the loan for at least 60 days; or
(2) The lender has failed to remit to the holder its pro-rata share of any payment made by the borrower within 30 days of receipt of a payment.
(b)
(2) The repurchase by the lender will be for an amount equal to the portion of the loan held by the holder plus accrued interest.
(3) The guarantee will not cover separate servicing fees that the lender accrues after the repurchase.
(c)
(2) With its demand on the Agency, the holder must include:
(i) A copy of the written demand made upon the lender.
(ii) Originals of the guarantee and note properly endorsed to the Agency, or the original of the assignment of guarantee.
(iii) A copy of any written response to the demand of the holder by the lender.
(iv) An account to which the Agency can forward the purchase amount via electronic funds transfer.
(3) The amount due the holder from the Agency includes unpaid principal, unpaid interest to the date of demand, and interest which has accrued from the date of demand to the proposed payment date.
(i) Upon request by the Agency, the lender must furnish upon Agency request a current statement, certified by a bank officer, of the unpaid principal and interest owed by the borrower and the amount due the holder.
(ii) Any discrepancy between the amount claimed by the holder and the information submitted by the lender must be resolved by the lender and the holder before payment will be approved by the Agency. The Agency will not participate in resolution of any such discrepancy. When there is a discrepancy, the 30 day Agency payment requirement to the holder will be suspended until the discrepancy is resolved.
(iii) In the case of a request for Agency purchase, the Agency will only pay interest that accrues for up to 90 days from the date of the demand letter to the lender requesting the repurchase. However, if the holder requested repurchase from the Agency within 60 days of the request to the lender and for any reason not attributable to the holder and the lender, the Agency cannot make payment within 30 days of the holder's demand to the Agency, the holder will be entitled to interest to the date of payment.
(4) At the time of purchase by the Agency, the original assignment of guarantee will be assigned by the holder to the Agency without recourse, including all rights, title, and interest in the loan.
(5) Purchase by the Agency does not change, alter, or modify any of the lender's obligations to the Agency specified in the lender's agreement or guarantee; nor does the purchase waive any of the Agency's rights against the lender.
(6) The Agency succeeds to all rights of the holder under the Guarantee including the right of set-off against the lender.
(7) Within 180 days of the Agency's purchase, the lender will reimburse the Agency the amount of repurchase, with accrued interest, through one of the following ways:
(i) By liquidating the loan security and paying the Agency its pro-rata share of liquidation proceeds; or
(ii) Paying the Agency the full amount the Agency paid to the holder plus any accrued interest.
(8) The lender will be liable for the purchase amount and any expenses incurred by the Agency to maintain the loan in its portfolio or liquidate the security. While the Agency holds the guaranteed portion of the loan, the lender will transmit to the Agency any payment received from the borrower, including the pro-rata share of liquidation or other proceeds.
(9) If the borrower files for reorganization under the provisions of the bankruptcy code or pays the account current while the purchase by the Government is being processed, the Agency may hold the loan as long it determines this action to be in the Agency's interest. If the lender is not proceeding expeditiously to collect the loan or reimbursement is not waived under this paragraph, the Agency will demand payment by the lender and collect the purchase amount through administrative offset of any claims due the lender.
(10) The Agency may sell a purchased guaranteed loan on a non-recourse basis if it determines that selling the portion of the loan that it holds is in the Government's best interest. A non-
(d)
(2) The lender will not repurchase from the holder for arbitrage purposes. With its request for Agency concurrence, the lender will notify the Agency of its plans to resell the guaranteed portion following servicing.
(3) The holder will sell the guaranteed portion of the loan to the lender for an amount agreed to between the lender and holder.
(a)
(i) Obtain prior written approval of the Agency for all restructuring actions; and,
(ii) Provide the items in paragraph (b) and (e) of this section to the Agency for approval.
(2) If the standard eligible lender's proposal for servicing is not agreed to by the Agency, the Agency approval official will notify the lender in writing within 14 days of the lender's request.
(3) To restructure guaranteed loans CLP lenders must:
(i) Obtain prior written approval of the Agency only for debt write down under this section.
(ii) Submit all calculations required in paragraph (e) of this section for debt writedown.
(iii) For restructuring other than write down, provide FSA with a certification that each requirement of this section has been met, a narrative outlining the circumstances surrounding the need for restructuring, and copies of any applicable calculations.
(4) PLP lenders will restructure loans in accordance with their lender's agreement.
(5) All lenders will submit copies of any restructured notes or lines of credit to the Agency.
(b)
(1) The borrower meets the eligibility criteria of § 762.120, except the provisions regarding prior debt forgiveness and delinquency on a federal debt do not apply.
(2) The borrower's ability to make the amended payment is documented by the following:
(i) A feasible plan as defined in § 762.102(b).
(ii) Current financial statements from all liable parties.
(iii) Verification of nonfarm income.
(iv) Verification of all debts of $1,000 or more.
(v) Applicable credit reports.
(vi) Financial history (and production history for standard eligible lenders) for the past 3 years to support the cash flow projections.
(3) A final loss claim may be reduced, adjusted, or rejected as a result of negligent servicing after the concurrence with a restructuring action under this section.
(4) Loans secured by real estate and/or equipment can be restructured using a balloon payment, equal installments, or unequal installments. Under no circumstances may livestock or crops alone be used as security for a loan to be rescheduled using a balloon payment. If a balloon payment is used, the projected value of the real estate and/or equipment security must indicate that the loan will be fully secured when the balloon payment becomes due. The projected value will be derived from a current appraisal adjusted for depreciation of depreciable property, such as buildings and other improvements, that occurs until the balloon payment is due. For equipment security, a current appraisal is required. The lender is required to project the security value of the equipment at the time the balloon payment is due based on the remaining life of the equipment, or the depreciation schedule on the borrower's Federal income tax return.
(5) If a borrower is current on a loan, but will be unable to make a payment, a restructuring proposal may be submitted prior to the payment coming due.
(6) The lender may capitalize the outstanding interest when restructuring the loan as follows:
(i) As a result of the capitalization of interest, a rescheduled promissory note may increase the amount of principal the borrower is required to pay. However, in no case will such principal amount exceed the statutory loan limits contained in § 761.8 of this chapter.
(ii) When accrued interest causes the loan amount to exceed the statutory loan limits, rescheduling may be approved without capitalization of the amount that exceeds the limit. Noncapitalized interest may be scheduled for repayment over the term of the rescheduled note.
(iii) Only interest that has accrued at the rate indicated on the borrower's original promissory notes may be capitalized. Late payment fees or default interest penalties that have accrued due to the borrower's failure to make payments as agreed are not covered under the guarantee and may not be capitalized.
(iv) The Agency will execute a modification of guarantee form to identify the new loan principal and the guaranteed portion if greater than the original loan amounts, and to waive the restriction on capitalization of interest, if applicable, to the existing guarantee documents. The modification form will be attached to the original guarantee as an addendum.
(v) Approved capitalized interest will be treated as part of the principal and interest that accrues thereon, in the event that a loss should occur.
(7) The lender's security position will not be adversely affected because of the restructuring. New security instruments may be taken if needed, but a loan does not have to be fully secured in order to be restructured, unless it is restructured with a balloon payment. When a loan is restructured using a balloon payment the lender must take a lien on all assets and project the loan to be fully secured at the time the balloon payment becomes due, in accordance with paragraph (b)(4) of this section.
(8) Any holder agrees to any changes in the original loan terms. If the holder does not agree, the lender must repurchase the loan from the holder for any loan restructuring to occur.
(9) After a guaranteed loan is restructured, the lender must provide the Agency with a copy of the restructured promissory note.
(c)
(1) Payments will be rescheduled within the following terms:
(i) FO and existing SW may be amortized over the remaining term of the note or rescheduled with an uneven payment schedule. The maturity date cannot exceed 40 years from the date of the original note.
(ii) OL notes must be rescheduled over a period not to exceed 15 years from the date of the rescheduling. An OL line of credit may be rescheduled over a period not to exceed 7 years from the date of the rescheduling or 10 years from the date of the original note, whichever is less. Advances cannot be made against a line of credit loan that has had any portion of the loan rescheduled.
(2) The interest rate for a rescheduled loan is the negotiated rate agreed upon by the lender and the borrower at the time of the action, subject to the loan limitations for each type of loan.
(3) A new note is not necessary when rescheduling occurs. However, if a new note is not taken, the existing note or line of credit agreement must be modified by attaching an allonge or other legally effective amendment, evidencing the revised repayment schedule and any interest rate change. If a new note is taken, the new note must reference
(d)
(1) Payments may be deferred up to 5 years, but the loan may not be extended beyond the final due date of the note.
(2) The principal portion of the payment may be deferred either in whole or in part.
(3) Interest may be deferred only in part. Payment of a reasonable portion of accruing interest as indicated by the borrower's cash flow projections is required for multi-year deferrals.
(4) There must be a reasonable prospect that the borrower will be able to resume full payments at the end of the deferral period.
(e)
(1) A lender may only write down a delinquent guaranteed loan or line of credit in an amount sufficient to permit the borrower to develop a feasible plan as defined in § 762.102(b).
(2) The lender will request other creditors to negotiate their debts before a writedown is considered.
(3) The borrower cannot develop a feasible plan after consideration is given to rescheduling and deferral under this section.
(4) The present value of the loan to be written down, based on the interest rate of the rescheduled loan, will be equal to or exceed the net recovery value of the loan collateral.
(5) The loan will be restructured with regular payments at terms no shorter than 5 years for a line of credit and OL note and no shorter than 20 years for FO, unless required to be shorter by § 762.145(c)(1)(i) and (ii).
(6) No further advances may be made on a line of credit that is written down.
(7) Loans may not be written down with interest assistance. If a borrower's loan presently on interest assistance requires a writedown, the writedown will be considered without interest assistance.
(8) The writedown is based on writing down the shorter-term loans first.
(9) When a lender requests approval of a writedown for a borrower with multiple loans, the security for all of the loans will be cross-collateralized and continue to serve as security for the loan that is written down. If a borrower has multiple loans and one loan is written off entirely through debt writedown, the security for that loan will not be released and will remain as security for the other written down debt. Additional security instruments will be taken if required to cross-collateralize security and maintain lien priority.
(10) The writedown will be evidenced by an allonge or amendment to the existing note or line of credit reflecting the writedown.
(11) The borrower executes an Agency shared appreciation agreement for loans which are written down and secured by real estate.
(i) The lender will attach the original agreement to the restructured loan document.
(ii) The lender will provide the Agency a copy of the executed agreement, and
(iii) Security instruments must ensure future collection of any appreciation under the agreement.
(12) The lender will prepare and submit the following to the Agency:
(i) A current appraisal of all security in accordance with § 762.127.
(ii) A completed report of loss on the appropriate Agency form for the proposed writedown loss claim.
(iii) Detailed writedown calculations as follows:
(A) Calculate the present value.
(B) Determine the net recovery value.
(C) If the net recovery value exceeds the present value, writedown is unavailable; liquidation becomes the next servicing consideration. If the present value equals or exceeds the net recovery value, the debt may be written down to the present value.
(iv) The lender will make any adjustment in the calculations as requested by the Agency.
(a)
(2) SEL and CLP lenders must not make additional loans or advances without prior written approval of the Agency, except as provided in the borrower's loan or line of credit agreement.
(3) In cases of a guaranteed line of credit, lenders may make an emergency advance when a line of credit has reached its ceiling. The emergency advance will be made as an advance under the line and not as a separate note. The lender's loan documents must contain sufficient language to provide that any emergency advance will constitute a debt of the borrower to the lender and be secured by the security instrument. The following conditions apply:
(i) The loan funds to be advanced are for authorized operating loan purposes;
(ii) The financial benefit to the lender and the Government from the advance will exceed the amount of the advance; and
(iii) The loss of crops or livestock is imminent unless the advance is made.
(4) Protective advance requirements are found in § 762.149.
(b)
(1) The individual to be released has withdrawn from the farming or ranching operation;
(2) A divorce decree or final property settlement does not hold the withdrawing party responsible for the loan payments;
(3) The withdrawing party's interest in the security is conveyed to the individual or entity with whom the loan will be continued;
(4) The ratio of the amount of debt to the value of the remaining security is less than or equal to .75, or the withdrawing party has no income or assets from which collection can be made; and
(5) Withdrawal of the individual does not result in legal dissolution of the entity to which the loans are made. Individually liable members of a general or limited partnership may not be released from liability.
(6) The remaining liable party projects a feasible plan (see § 762.102(b)).
(c)
(1) The Agency agrees to the release in writing;
(2) The lender documents its consideration of the following factors concerning the borrower or guarantors:
(i) The likelihood that the borrower or guarantor will have a sufficient level of income in the reasonably near future to contribute to a meaningful reduction of the debt;
(ii) The prospect that the borrower or guarantor will inherit assets in the near term that may be attached by the Agency for payment of a significant portion of the debt;
(iii) Whether collateral has been properly accounted for, and whether liability should be retained in order to take action against the borrower or a third party for conversion of security;
(iv) The availability of other income or assets which are not security;
(v) The possibility that assets have been concealed or improperly transferred;
(vi) The effect of other guarantors on the loan; and
(vii) Cash consideration or other collateral in exchange for the release of liability.
(3) The lender will use its own release of liability documents.
(d)
(2) If the loan has been sold on the secondary market, the lender must repurchase the loan or obtain the holder's written consent.
(3) To change a fixed rate of interest to a variable rate of interest or vice versa, the lender and the borrower must execute a legally effective allonge or amendment to the existing note.
(4) If a new note is taken, it will be attached to and refer to the original note.
(5) The lender will inform the Agency of the rate change.
(e)
(1) The borrower must project a feasible plan after the consolidation. See § 762.102(b) for definition of feasible plan.
(2) Only OL may be consolidated.
(3) Existing lines of credit may only be consolidated with a new line of credit if the final maturity date and conditions for advances of the new line of credit are made the same as the existing line of credit.
(4) Guaranteed OL may not be consolidated with a line of credit, even if the line of credit has been rescheduled.
(5) Guaranteed loans made prior to October 1, 1991, cannot be consolidated with those loans made on or after October 1, 1991.
(6) OL secured by real estate or with an outstanding interest assistance agreement or shared appreciation agreement cannot be consolidated.
(7) A new note or line of credit agreement will be taken. The new note or line of credit agreement must describe the note or line of credit agreement being consolidated and must state that the indebtedness evidenced by the note or line of credit agreement is not satisfied. The original note or line of credit agreement must be retained.
(8) The interest rate for a consolidated OL loan is the negotiated rate agreed upon by the lender and the borrower at the time of the action, subject to the loan limitations for each type of loan.
(9) The Agency approves the consolidation by executing a modification of guarantee. The modification will indicate the consolidated loan amount, new terms, and percentage of guarantee, and will be attached to the originals of the guarantees being consolidated. If loans with a different guarantee percentage are consolidated, the new guarantee will be at the lowest percentage of guarantee being consolidated
(10) Any holders must consent to the consolidation, or the guaranteed portion must be repurchased by the lender.
(a)
(1) Monitoring the borrower's compliance with the shared appreciation agreement;
(2) Notifying the borrower of the amount of recapture due; and,
(3) Beginning October 1, 1999, a notice of the agreement's provisions not later than 12 months before the end of the agreement; and
(4) Reimbursing the Agency for its pro-rata share of recapture due.
(b)
(i) On the conveyance of the real estate security (or a portion thereof) by the borrower.
(A) If only a portion of the real estate is conveyed, recapture will only be triggered against the portion conveyed. Partial releases will be handled in accordance with § 762.141(b).
(B) Transfer of title to the spouse of the borrower on the death of such borrower will not be treated as a conveyance under the agreement.
(ii) On repayment of the loan; or
(iii) If the borrower ceases farming.
(2) Calculating recapture.
(i) The amount of recapture will be based on the difference between the value of the security at the time recapture is triggered and the value of the security at the time of writedown, as shown on the shared appreciation agreement.
(ii) Security values will be determined through appraisals obtained by the lender and meeting the requirements of § 762.127.
(iii) All appraisal fees will be paid by the lender.
(iv) The amount of recapture will not exceed the amount of writedown shown on the shared appreciation agreement.
(v) If recapture is triggered within 4 years of the date of the shared appreciation agreement, the lender shall recapture 75 percent of any positive appreciation in the market value of the property securing the loan or line of credit agreement.
(vi) If recapture is triggered after 4 years from the date of the shared appreciation agreement, the lender shall recapture 50 percent of any positive appreciation in the market value of the property securing the loan or line of credit agreement.
(3) Servicing recapture debt.
(i) If recapture is triggered under the shared appreciation agreement and the borrower is unable to pay the recapture in a lump sum, the lender may:
(A) Reschedule the recapture debt with the consent of the Agency, provided the lender can document the borrower's ability to make amortized payments on the recapture debt, plus pay all other obligations. In such case, the recapture debt will not be covered by the guarantee;
(B) Pay the Agency its pro rata share of the recapture due. In such case, the recapture debt of the borrower will be covered by the guarantee; or
(C) Service the account in accordance with § 762.149.
(ii) If recapture is triggered, and the borrower is able but unwilling to pay the recapture in a lump sum, the lender will service the account in accordance with § 762.149.
(4) Paying the Agency. Any shared appreciation recaptured by the lender will be shared on a pro-rata basis between the lender and the Agency.
(a)
(1) Filing a proof of claim where required and all the necessary papers and pleadings;
(2) Attending, and where necessary, participating in meetings of the creditors and court proceedings;
(3) Protecting the collateral securing the guaranteed loan and resisting any adverse changes that may be made to the collateral;
(4) Seeking a dismissal of the bankruptcy proceeding when the operation as proposed by the borrower to the bankruptcy court is not feasible;
(5) When permitted by the bankruptcy code, requesting a modification of any plan of reorganization if it appears additional recoveries are likely.
(6) Monitor confirmed plans under chapters 11, 12 and 13 of the bankruptcy code to determine borrower compliance. If the borrower fails to comply, the lender will seek a dismissal of the reorganization plan; and
(7) Keeping the Agency regularly informed in writing on all aspects of the proceedings.
(i) The lender will submit a default status report when the borrower defaults and every 60 days until the default is resolved or a final loss claim is paid.
(ii) The default status report will be used to inform the Agency of the bankruptcy filing, the reorganization plan confirmation date and effective date, when the reorganization plan is complete, and when the borrower is not in compliance with the reorganization plan.
(b)
(i) Expenses, such as legal fees and the cost of appraisals incurred by the lender as a direct result of the borrower's chapter 11, 12, or 13 reorganization, are covered under the guarantee, provided they are reasonable, customary, and provide a demonstrated economic benefit to the lender and the Agency.
(ii) Lender's in-house expenses, which are those expenses which would normally be incurred for administration of the loan, including in-house lawyers, are not covered by the guarantee.
(2) Liquidation expenses in bankruptcy.
(i) Reasonable and customary liquidation expenses may be deducted from the proceeds of the collateral in liquidation bankruptcy cases.
(ii) In-house expenses are not considered customary liquidation expenses, may not be deducted from collateral proceeds, and are not covered by the guarantee.
(c)
(i) The estimated loss payment will cover the guaranteed percentage of the principal and accrued interest written off, plus any allowable costs incurred as of the effective date of the plan.
(ii) The lender will submit supporting documentation for the loss claim, and any additional information requested by the Agency, including justification for the legal fees included on the claim.
(iii) The estimated loss payment may be revised as consistent with a court-approved reorganization plan.
(iv) Protective advances made and approved in accordance with § 762.149 may be included in an estimated loss claim associated with a reorganization, if:
(A) They were incurred in connection with the initiation of liquidation action prior to bankruptcy filing; or
(B) The advance is required to provide repairs, insurance, etc. to protect the collateral as a result of delays in the case, or failure of the borrower to maintain the security.
(2) Interest only losses. The lender may submit an estimated loss claim for interest only after confirmation of the reorganization plan in accordance with the following:
(i) The loss claims may cover interest losses sustained as a result of a court-ordered, permanent interest rate reduction.
(ii) The loss claims will be processed annually on the anniversary date of the effective date of the reorganization plan.
(iii) If the borrower performs under the terms of the reorganization plan, annual interest reduction loss claims will be submitted on or near the same date, beyond the period of the reorganization plan.
(3) Actual loss.
(i) Once the reorganization plan is complete, the lender will provide the Agency with documentation of the actual loss sustained.
(ii) If the actual loss sustained is greater than the prior estimated loss payment, the lender may submit a revised estimated loss claim to obtain payment of the additional amount owed by the Agency under the guarantee.
(iii) If the actual loss is less than the prior estimated loss, the lender will reimburse the Agency for the overpayment plus interest at the note rate from the date of the payment of the estimated loss.
(4) Payment to holder. In reorganization bankruptcy, if a holder makes demand upon the Agency, the Agency will pay the holder interest to the plan's effective date. Accruing interest thereafter will be based upon the provisions of the reorganization plan.
(d)
(2) If the property is abandoned by the trustee, the lender will conduct the liquidation according to § 762.149.
(3) Proceeds received from partial sale of collateral during bankruptcy may be used by the lender to pay reasonable costs, such as freight, labor and sales commissions, associated with the partial sale. Reasonable use of proceeds for this purpose must be documented with the final loss claim in accordance with § 762.149(a)(vi).
(a)
(1) Participate in mediation according to the rules and regulations of any State which has a mandatory farmer-creditor mediation program;
(2) Consider private mediation services in those States which do not have a mandatory farmer-creditor mediation program; and
(3) Not agree to any proposals to rewrite the terms of a guaranteed loan which do not comply with this part.
(b)
(1) Within 150 days after the payment due date, all lenders will prepare a liquidation plan. Standard eligible and CLP lenders will submit a written liquidation plan to the Agency which includes:
(i) Current balance sheets from all liable parties or, if the parties are not cooperative, the best information available, or in liquidation bankruptcies, a copy of the bankruptcy schedules or discharge notice;
(ii) A proposed method of maximizing the collection of debt which includes specific plans to collect any remaining loan balances on the guaranteed loan after loan collateral has been liquidated, including possibilities for judgment;
(A) If the borrower has converted loan security, the lender will determine whether litigation is cost effective. The lender must address, in the liquidation plan, whether civil or criminal action will be pursued. If the lender does not pursue the recovery, the reason must be documented when an estimated loss claim is submitted.
(B) Any proposal to release the borrower from liability will be addressed in the liquidation plan in accordance with § 762.146(c)(2);
(iii) An independent appraisal report on all collateral securing the loan that meets the requirements of § 762.127 and a calculation of the net recovery value of the security as defined in § 762.102. The appraisal requirement may be waived by the Agency in the following cases:
(A) The bankruptcy trustee is handling the liquidation and the lender has submitted the trustee's determination of value;
(B) The lender's proposed method of liquidation rarely results in receipt of less than market value for livestock and used equipment; or
(C) A purchase offer has already been received for more than the debt;
(iv) An estimate of time necessary to complete the liquidation;
(v) An estimated loss claim must be filed no later than 150 days past the payment due date unless the account has been completely liquidated and then a final loss claim must be filed.
(vi) An estimate of reasonable liquidation expenses; and
(vii) An estimate of any protective advances.
(2) PLP lenders will submit a liquidation plan as required by their lender's agreement.
(c)
(2) If, within 20 calendar days of the Agency's receipt of the liquidation plan, the Agency fails to approve it or fails to request that the lender make revisions, the lender may assume the plan is approved. The lender may then proceed to begin liquidation actions at its discretion as long as it has been at least 60 days since the borrower's eligibility for interest assistance was considered.
(3) At its option, the Agency may liquidate the guaranteed loan as follows:
(i) Upon Agency request, the lender will transfer to the Agency all rights and interests necessary to allow the Agency to liquidate the loan. The Agency will not pay the lender for any loss until after the collateral is liquidated and the final loss is determined; and
(ii) If the Agency conducts the liquidation, interest accrual will cease on the date the Agency notifies the lender in writing that it assumes responsibility for the liquidation.
(d)
(1) The Agency will pay the lender the guaranteed percentage of the total outstanding debt, less the net recovery
(2) The lender will discontinue interest accrual on the defaulted loan at the time the estimated loss claim is paid by the Agency. The Agency will not pay interest beyond 210 days from the payment due date. If the lender estimates that there will be no loss after considering the costs of liquidation, an estimated loss of zero will be submitted and interest accrual will cease upon the approval of the estimated loss and never later than 210 days from the payment due date. The following exceptions apply:
(i) In the case of a Chapter 7 bankruptcy, in cases where the lender filed an estimated loss claim, the Agency will pay the lender interest that accrues during and up to 45 days after the discharge on the portion of the chattel only secured debt that was estimated to be secured, but upon final liquidation was found to be unsecured, and up to 90 days after the date of discharge on the portion of real estate secured debt that was estimated to be secured, but was found to be unsecured upon final disposition.
(ii) The Agency will pay the lender interest that accrues during and up to 90 days after the time period the lender is unable to dispose of acquired property due to state imposed redemption rights on any unsecured portion of the loan during the redemption period, if an estimated loss claim was paid by the Agency during the liquidation action.
(3) Packager fees and outside consultant fees for servicing of guaranteed loans are not covered by the guarantee, and will not be paid in an estimated loss claim.
(e)
(2) The lender may claim recovery for the guaranteed portion of any loss of monies advanced as protective advances as allowed in this part, plus interest that accrues on the protective advances.
(3) Payment for protective advances is made by the Agency when the final loss claim is approved, except in bankruptcy actions.
(4) Protective advances are used only when the borrower is in liquidation, liquidation is imminent, or when the lender has taken title to real property in a liquidation action.
(5) Legal fees are not a protective advance.
(6) Protective advances may only be made when the lender can demonstrate the advance is in the best interest of the lender and the Agency.
(7) Protective advances must constitute a debt of the borrower to the lender and be secured by the security instrument.
(8) Protective advances must not be made in lieu of additional loans.
(f)
(g)
(2) The loan cannot be accelerated until after the borrower has been considered for interest assistance and the conclusion of mandatory mediation in accordance with § 762.149.
(3) The lender will submit a copy of the acceleration notice or other document to the Agency.
(h)
(2) When the property is liquidated, the lender will apply the net proceeds to the guaranteed loan debt.
(3) When it is necessary to enter a bid at a foreclosure sale, the lender may bid the amount that it determines is
(i)
(2) If a lender acquires title to property either through voluntary conveyance or foreclosure proceeding, the lender will submit a final loss claim after disposing of the property. The lender may pay reasonable maintenance expenses to protect the value of the property while it is owned by the lender. These may be paid as protective advances or deducted as liquidation expenses from the sales proceeds when the lender disposes of the property. The lender must obtain Agency written concurrence before incurring maintenance expenses which exceed the amounts allowed in § 762.149(e)(1). Packager fees and outside consultant fees for servicing of guaranteed loans are not covered by the guarantee, and will not be paid in a final loss claim.
(3) The lender will make its records available to the Agency for the Agency's audit of the propriety of any loss payment.
(4) All lenders will submit the following documents with a final loss claim:
(i) An accounting of the use of loan funds;
(ii) An accounting of the disposition of loan security and its proceeds;
(iii) A copy of the loan ledger indicating loan advances, interest rate changes, protective advances, and application of payments, rental proceeds, and security proceeds, including a running outstanding balance total; and
(iv) Documentation, as requested by the Agency, concerning the lender's compliance with the requirements of this part.
(5) The Agency will notify the lender of any discrepancies in the final loss claim or, approve or reject the claim within 40 days. Failure to do so will result in additional interest being paid to the lender for the number of days over 40 taken to process the claim.
(6) The Agency will reduce a final loss claim based on its calculation of the dollar amount of loss caused by the lender's negligent servicing of the account. Loss claims may be reduced or rejected as a result of the following:
(i) A loss claim may be reduced by the amount caused by the lender's failure to secure property after a default, and will be reduced by the amount of interest that accrues when the lender fails to contact the borrower or takes no action to cure the default, once it occurs. Losses incurred as a result of interest accrual during excessive delays in collection, as determined by the Agency, will not be paid.
(ii) Unauthorized release of security proceeds, failure to verify ownership or possession of security to be purchased, or failure to inspect collateral as often required so as to ensure its maintenance.
(7) Losses will not be reduced for the following:
(i) Servicing deficiencies that did not contribute materially to the dollar amount of the loss.
(ii) Unaccounted security, as long as the lender's efforts to locate and recover the missing collateral was equal to that which would have been expended in the case of an unguaranteed loan in the lender's portfolio.
(8) Default interest, late charges, and loan servicing fees are not payable under the loss claim.
(9) The final loss will be the remaining outstanding balance after application of the estimated loss payment and the application of proceeds from the liquidation of the security.
(10) If the final loss is less than the estimated loss, the lender will reimburse the Agency for the overpayment, plus interest at the note rate from the date of the estimated loss payment.
(11) The lender will return the original guarantee marked paid after receipt of a final loss claim.
(j)
(k)
(l)
(m)
(a)
(b)
(1) A feasible plan cannot be achieved without interest assistance, but can be achieved with interest assistance.
(2) If significant changes in the borrower's cash flow budget are anticipated after the initial 12 months, then the typical cash flow budget must demonstrate that the borrower will still have a feasible plan following the anticipated changes, with or without interest assistance.
(3) The typical cash flow budget must demonstrate that the borrower will have a feasible plan throughout the term of the loan.
(4) The borrower, including members of an entity borrower, does not own any significant assets that do not contribute directly to essential family living or farm operations. The lender must determine the market value of any such non-essential assets and prepare a cash flow budget and interest assistance calculations based on the assumption that these assets will be sold and the market value proceeds used for debt reduction. If a feasible plan can then be achieved, the borrower is not eligible for interest assistance.
(5) A borrower may only receive interest assistance if their total debts (including personal debts) prior to the new loan exceed 50 percent of their total assets (including personal assets). An entity's debt to asset ratio will be based upon a financial statement that consolidates business and personal debts and assets of the entity and its members. Beginning farmers and ranchers, as defined in § 762.102, are excluded from this requirement.
(c)
(d)
(2) Beginning farmers and ranchers, as defined in § 762.102, however, may be considered for two 5-year periods. The applicant must meet the definition of a beginning farmer and meet the other eligibility requirements outlined in paragraph (b) of this section at the onset of each 5-year period. A needs
(3) Notwithstanding the limitation of paragraph (d)(1) of this section, a new interest assistance agreement may be approved for eligible borrowers to provide interest assistance through June 8, 2009, provided the total period does not exceed 10 years from the effective date of the original interest assistance agreement.
(e)
(f)
(g)
(h)
(i)
(1) Interest assistance payments will be four (4) percent of the average daily principal loan balance prorated over the number of days the loan has been outstanding during the payment period. For loans with a note rate less than four (4) percent, interest assistance payments will be the weighted average interest rate multiplied by the average daily principal balance.
(2) The lender may select at the time of loan closing the date that they wish to receive an interest assistance payment. That date will be included in the interest assistance agreement.
(i) The initial and final claims submitted under an agreement may be for a period less than 12 months. All other claims will be submitted for a 12-month period, unless there is a lender substitution during the 12-month period in accordance with this section.
(ii) In the event of liquidation, the final interest assistance claim will be submitted with the estimated loss claim or the final loss claim if an estimated loss claim was not submitted. Interest will not be paid beyond the interest accrual cutoff dates established in the loss claims according to § 762.149(d)(2).
(3) A claim should be filed within 60 days of its due date. Claims not filed within 1 year from the due date will not be paid, and the amount due the lender will be permanently forfeited.
(4) All claims will be supported by detailed calculations of average daily principal balance during the claim period.
(5) Requests for continuation of interest assistance for agreements dated prior to June 8, 2007 will be supported by the lender's analysis of the applicant's farming operation and need for continued interest assistance as set out in their Interest Assistance Agreements. The following information will be submitted to the Agency:
(i) A summary of the operation's actual financial performance in the previous year, including a detailed income and expense statement.
(ii) A narrative description of the causes of any major differences between the previous year's projections and actual performance, including a detailed income and expense statement.
(iii) A current balance sheet.
(iv) A cash-flow budget for the period being planned. A monthly cash-flow budget is required for all lines of credit and operating loans made for annual operating purposes. All other loans may include either an annual or monthly cash-flow budget.
(v) A copy of the interest assistance needs analysis portion of the application form which has been completed based on the planned period's cash-flow budget.
(6) Interest Assistance Agreements dated June 8, 2007 or later do not require a request for continuation of interest assistance. The lender will only be required to submit an Agency IA payment form and the average daily principal balance for the claim period, with supporting documentation.
(7) Lenders may not charge or cause a borrower with an interest assistance agreement to be charged a fee for preparation and submission of the items required for an annual interest assistance claim.
(j)
(k)
(l)
(m)
(n)
(o)
(p)
(1) Interest assistance will continue automatically with the new lender.
(2) The new lender must follow paragraph (i) of this section to receive their initial and subsequent interest assistance payments.
(q)
A lender may pledge all or part of the guaranteed or unguaranteed portion of the loan as security to a Federal Home Loan Bank, a Federal Reserve Bank, a Farm Credit System Bank, or any other funding source determined acceptable by the Agency.
(a) The following general requirements apply to assigning guaranteed loans:
(1) Subject to Agency concurrence, the lender may assign all or part of the guaranteed portion of the loan to one or more holders at or after loan closing, if the loan is not in default. However, a line of credit cannot be assigned. The lender must always retain the unguaranteed portion in their portfolio, regardless of how the loan is funded.
(2) The Agency may refuse to execute the Assignment of Guarantee and prohibit the assignment in case of the following:
(i) The Agency purchased and is holder of a loan that was assigned by the lender that is requesting the assignment.
(ii) The lender has not complied with the reimbursement requirements of § 762.144(c)(7), except when the 180 day reimbursement or liquidation requirement has been waived by the Agency.
(3) The lender will provide the Agency with copies of all appropriate forms used in the assignment.
(4) The guaranteed portion of the loan may not be assigned by the lender until the loan has been fully disbursed to the borrower.
(5) The lender is not permitted to assign any amount of the guaranteed or unguaranteed portion of the loan to the applicant or borrower, or members of their immediate families, their officers, directors, stockholders, other owners, or any parent, subsidiary, or affiliate.
(6) Upon the lender's assignment of the guaranteed portion of the loan, the lender will remain bound to all obligations indicated in the Guarantee, Lender's Agreement, the Agency program regulations, and to future program regulations not inconsistent with the provisions of the Lenders Agreement. The lender retains all rights under the security instruments for the protection of the lender and the United States.
(b) The following will occur upon the lender's assignment of the guaranteed portion of the loan:
(1) The holder will succeed to all rights of the Guarantee pertaining to the portion of the loan assigned.
(2) The lender will send the holder the borrower's executed note attached to the Guarantee.
(3) The holder, upon written notice to the lender and the Agency, may assign the unpaid guaranteed portion of the loan. The holder must assign the guaranteed portion back to the original lender if requested for servicing or liquidation of the account.
(4) The Guarantee or Assignment of Guarantee in the holder's possession does not cover:
(i) Interest accruing 90 days after the holder has demanded repurchase by the lender, except as provided in the Assignment of Guarantee and § 762.144(c)(3)(iii).
(ii) Interest accruing 90 days after the lender or the Agency has requested the holder to surrender evidence of debt repurchase, if the holder has not previously demanded repurchase.
(c) Negotiations concerning premiums, fees, and additional payments for loans are to take place between the holder and the lender. The Agency will participate in such negotiations only as a provider of information.
5 U.S.C. 301 and 7 U.S.C. 1989.
(a)
(b)
(1) FO, including Beginning Farmer Downpayment loans;
(2) OL, including Youth loans; and
(3) EM.
At 73 FR 74345, Dec. 8, 2008, § 764.1 was amended by removing the words “Beginning Farmer” from paragraph (b)(1), effective January 7, 2009.
Abbreviations and definitions for terms used in this part are provided in § 761.2 of this chapter.
(a) A loan application must be submitted in the name of the actual operator of the farm. Two or more applicants applying jointly will be considered an entity applicant. The Agency will consider tax filing status and other business dealings as indicators of the operator of the farm.
(b) A complete loan application, except as provided in paragraphs (c) through (e) of this section, will include:
(1) The completed Agency application form;
(2) If the applicant is an entity:
(i) A complete list of entity members showing the address, citizenship, principal occupation, and the number of shares and percentage of ownership or stock held in the entity by each member, or the percentage of interest in the entity held by each member;
(ii) A current personal financial statement from each member of the entity;
(iii) A current financial statement from the entity itself;
(iv) A copy of the entity's charter or any entity agreement, any articles of incorporation and bylaws, any certificate or evidence of current registration (good standing), and a resolution adopted by the Board of Directors or entity members authorizing specified officers of the entity to apply for and obtain the desired loan and execute required debt, security and other loan instruments and agreements;
(v) In the form of married couples applying as a joint operation, items (i) and (iv) will not be required. The Agency may request copies of the marriage license, prenuptial agreement or similar documents as needed to verify loan eligibility and security. Items (ii) and (iii) are only required to the extent needed to show the individual and joint finances of the husband and wife without duplication.
(3) A written description of the applicant's farm training and experience, including each entity member who will be involved in managing or operating the farm;
(4) The last 3 years of farm financial records, including tax returns, unless the applicant has been farming less than three years;
(5) The last 3 years of farm production records, unless the applicant has been farming less than 3 years;
(6) Documentation that the applicant and each member of an entity applicant cannot obtain sufficient credit elsewhere on reasonable rates and terms, including a loan guaranteed by the Agency;
(7) Documentation of compliance with the Agency's environmental regulations contained in subpart G of 7 CFR part 1940;
(8) Verification of all non-farm income;
(9) A current financial statement and the operation's farm operating plan, including the projected cash flow budget reflecting production, income, expenses, and loan repayment plan;
(10) A legal description of the farm property owned or to be acquired and, if applicable, any leases, contracts, options, and other agreements with regard to the property;
(11) Payment to the Agency for ordering a credit report on the applicant;
(12) Verification of all debts;
(13) Any additional information deemed necessary by the Agency to effectively evaluate the applicant's eligibility and farm operating plan; and
(14) For EM loans, a statement of loss or damage on the appropriate Agency form.
(c) For a Lo-Doc OL request, the applicant must:
(1) Be current on all payments to all creditors including the Agency (if an Agency borrower);
(2) Have not received primary loan servicing on any FLP debt within the past 5 years; and
(3) Meet one of the following sets of criteria:
(i) The loan requested is $50,000 or less and the total outstanding Agency OL loan debt at the time of loan closing will be less than $100,000; or
(ii) The loan requested is to pay annual operating expenses and the applicant is an existing Agency borrower who has received and timely repaid at least two previous annual OL loans from the Agency.
(4) Submit items (1), (2), (7), (9), and (11) of paragraph (b) of this section. The Agency may require a Lo-Doc applicant to submit any other information listed in paragraph (b) of this section as needed to make a determination on the loan application.
(d) For a youth loan request:
(1) The applicant must submit items (1), (7), and (9) of paragraph (b) of this section.
(2) Applicants 18 years or older, must also provide items (11) and (12) of paragraph (b) of this section.
(3) The Agency may require a youth loan applicant to submit any other information listed in paragraph (b) of this section as needed to make a determination on the loan application.
(e) The applicant need not submit any information under this section that already exists in the applicant's Agency file and is still current.
(a) Within 10 days of receipt of an incomplete application, the Agency will provide the applicant written notice of any additional information which must be provided. The applicant must provide the additional information within 20 calendar days of the date of this notice.
(b) If the additional information is not received, the Agency will provide written notice that the application will be withdrawn if the information is not received within 10 calendar days of the date of this second notice.
Upon receiving a complete loan application, the Agency will:
(a) Consider the loan application in the order received, based on the date the application was determined to be complete.
(b) Provide written notice to the applicant that the application is complete.
(c) Within 60 calendar days after receiving a complete loan application, the Agency will complete the processing of the loan request and notify the applicant of the decision reached, and the reason for any disapproval.
(d) If, based on the Agency's review of the application, it appears the applicant's credit needs could be met through the guaranteed loan program, the Agency will assist the applicant in securing guaranteed loan assistance under the market placement program in accordance with § 762.110(g) of this chapter.
(e) In the absence of funds for a direct loan, the Agency will keep an approved loan application on file until funding is available. At least annually, the Agency will contact the applicant to determine if the Agency should retain the application or if the applicant wants the application withdrawn.
(f) If funding becomes available, the Agency will resume processing of approved loans in accordance with this part.
(a)
(b)
(1) First, an applicant who is a veteran of any war;
(2) Second, an applicant who is not a veteran, but:
(i) Has a dependent family;
(ii) Is able to make a downpayment; or
(iii) Owns livestock and farm implements necessary to farm successfully.
(3) Third, to other eligible applicants.
The following requirements must be met unless otherwise provided in the eligibility requirements for the particular type of loan.
(a)
(b)
(c)
(d)
(1) As part of the credit history, the Agency will determine whether the applicant will carry out the terms and conditions of the loan and deal with the Agency in good faith. In making this determination, the Agency may examine whether the applicant has properly fulfilled its obligations to other parties, including other agencies of the Federal Government.
(2) When the applicant caused the Agency a loss by receiving debt forgiveness, the applicant may be ineligible for assistance in accordance with eligibility requirements for the specific loan type. If the debt forgiveness is cured by repayment of the Agency's loss, the Agency may still consider the debt forgiveness in determining the applicant's credit worthiness.
(3) A history of failures to repay past debts as they came due when the ability to repay was within the applicant's control will demonstrate unacceptable credit history. The following circumstances, for example, do not automatically indicate an unacceptable credit history:
(i) Foreclosures, judgments, delinquent payments of the applicant which occurred more than 36 months before the application, if no recent similar situations have occurred, or Agency delinquencies that have been resolved through loan servicing programs available under 7 CFR part 766.
(ii) Isolated incidents of delinquent payments which do not represent a general pattern of unsatisfactory or slow payment.
(iii) “No history” of credit transactions by the applicant.
(iv) Recent foreclosure, judgment, bankruptcy, or delinquent payment when the applicant can satisfactorily demonstrate that the adverse action or delinquency was caused by circumstances that were of a temporary nature and beyond the applicant's control; or the result of a refusal to make full payment because of defective goods or services or other justifiable dispute relating to the purchase or contract for goods or services.
(e)
(1) Loan amounts, rates, and terms available in the marketplace; and
(2) Property interests, income, and significant non-essential assets.
(f)
(g)
(h)
(i)
(1) Education. For example, the applicant obtained a 4-year college degree in agricultural business, horticulture, animal science, agronomy, or other agricultural-related field.
(2) On-the-job training. For example, the applicant is currently working on a farm as part of an apprenticeship program.
(3) Farming experience. For example, the applicant has been an owner, manager, or operator of a farm business for at least one entire production cycle. The farming experience must have been obtained within the last 5 years.
(j)
(k)
(2) For an entity applicant, if the entity members holding a majority interest are:
(i) Related by blood or marriage, at least one member must be the operator of a family farm;
(ii) Not related by blood or marriage, the entity members holding a majority interest must be operators of a family farm.
(3) Except for EM loans, the collective interests of the members may be larger than a family farm only if:
(i) Each member's ownership interest is not larger than a family farm;
(ii) All of the members of the entity are related by blood or marriage; and
(iii) All of the members are or will become operators of the family farm; and
(4) If the entity applicant has an operator and ownership interest for farm ownership loans and emergency loans for farm ownership loan purposes, in any other farming operation, that farming operation must not exceed the requirements of a family farm.
(l)
(a) Limitations specific to each loan program are contained in subparts D through H of this part.
(b) The total principal balance owed to the Agency at any one time by the applicant, or any one who will sign the promissory note, cannot exceed the limits established in § 761.8 of this chapter.
(c) The funds from the FLP loan must be used for farming operations located in the United States.
(d) The Agency will not make a loan if the proceeds will be used:
(1) For any purpose that contributes to excessive erosion of highly erodible land, or to the conversion of wetlands;
(2) To drain, dredge, fill, level, or otherwise manipulate a wetland; or
(3) To engage in any activity that results in impairing or reducing the flow, circulation, or reach of water, except in the case of activity related to the maintenance of previously converted wetlands as defined in the Food Security Act of 1985.
(e) Any construction financed by the Agency must comply with the standards established in § 761.10 of this chapter.
(f) Loan funds will not be used to establish or support a non-eligible enterprise, even if the non-eligible enterprise contributes to the farm.
(a) Security requirements specific to each loan program are outlined in subparts D through H of this part.
(b) All loans must be secured by assets having a security value of at least 100 percent of the loan amount, except for EM loans as provided in subpart H of this part. If the applicant's assets do not provide adequate security, the Agency may accept:
(1) A pledge of security from a third party; or
(2) Interests in property not owned by the applicant (such as leases that provide a mortgageable value, water rights, easements, mineral rights, and royalties).
(c) An additional amount of security up to 150 percent of the loan amount will be taken when available, except for beginning farmer downpayment loans and youth loans.
(d) The Agency will choose the best security available when there are several alternatives that meet the Agency's security requirements.
(e) The Agency will take a lien on all assets that are not essential to the
At 73 FR 74345, Dec. 8, 2008, § 764.103 was amended by removing the words “beginning farmer” from paragraphs (c) and (e), effective January 7, 2009.
(a)
(1) The prior lien does not contain any provisions that may jeopardize the Agency's interest or the applicant's ability to repay the FLP loan;
(2) Prior lienholders agree to notify the Agency prior to foreclosure;
(3) The applicant must agree not to increase an existing prior lien without the written consent of the Agency; and
(4) Equity in the collateral exists.
(b)
(1) The applicant must provide a security interest in the real estate;
(2) The applicant and the purchase contract holder must agree in writing that any insurance proceeds received for real estate losses will be used only for one or more of the following purposes:
(i) To replace or repair the damaged real estate improvements which are essential to the farming operation;
(ii) To make other essential real estate improvements; or
(iii) To pay any prior real estate lien, including the purchase contract.
(3) The purchase contract must provide the applicant with possession, control and beneficial use of the property, and entitle the applicant to marketable title upon fulfillment of the contract terms.
(4) The purchase contract must not:
(i) Be subject to summary cancellation upon default;
(ii) Contain provisions which jeopardize the Agency's security position or the applicant's ability to repay the loan.
(5) The purchase contract holder must agree in writing to:
(i) Not sell or voluntarily transfer their interest without prior written consent of the Agency;
(ii) Not encumber or cause any liens to be levied against the property;
(iii) Not take any action to accelerate, forfeit, or foreclose the applicant's interest in the security property until a specified period of time after notifying the Agency of the intent to do so;
(iv) Consent to the Agency making the loan and taking a security interest in the applicant's interest under the purchase contract as security for the FLP loan;
(v) Not take any action to foreclose or forfeit the interest of the applicant under the purchase contract because the Agency has acquired the applicant's interest by foreclosure or voluntary conveyance, or because the Agency has subsequently sold or assigned the applicant's interest to a third party who will assume the applicant's obligations under the purchase contract;
(vi) Notify the Agency in writing of any breach by the applicant; and
(vii) Give the Agency the option to rectify the conditions that amount to a breach within 30 days after the date the Agency receives written notice of the breach.
(6) If the Agency acquires the applicant's interest under the purchase contract by foreclosure or voluntary conveyance, the Agency will not be deemed to have assumed any of the applicant's obligations under the contract, provided that if the Agency fails to perform the applicant's obligations while it holds the applicant's interest is grounds for terminating the purchase contract.
(c)
(d)
(e)
The same chattel may be pledged as security for more than one direct or guaranteed loan.
Notwithstanding any other provision of this part, the Agency will not take a security interest:
(a) When adequate security is otherwise available and the lien will prevent the applicant from obtaining credit from other sources;
(b) When the property could have significant environmental problems or costs as described in subpart G of 7 CFR part 1940;
(c) When the Agency cannot obtain a valid lien;
(d) When the property is the applicant's personal residence and appurtenances and:
(1) They are located on a separate parcel; and
(2) The real estate that serves as security for the FLP loan plus crops and chattels are greater than or equal to 150 percent of the unpaid balance due on the loan;
(e) When the property is subsistence livestock, cash, working capital accounts the applicant uses for the farming operation, retirement accounts, personal vehicles necessary for family living, household contents, or small equipment such as hand tools and lawn mowers; or
(f) On marginal land and timber that secures an outstanding ST loan.
(a)
(b)
(1)
(2)
The applicant must obtain and maintain insurance, equal to the lesser of the value of the security at the time of loan closing or the principal of all FLP and non-FLP loans secured by the property, subject to the following:
(a) All security, except growing crops, must be covered by hazard insurance if it is readily available (sold by insurance agents in the applicant's normal trade area) and insurance premiums do not exceed the benefit. The Agency must be listed as loss payee for the insurance indemnity payment or as a beneficiary in the mortgagee loss payable clause.
(b) Real estate security located in flood or mudslide prone areas must be covered by flood or mudslide insurance. The Agency must be listed as a beneficiary in the mortgagee loss payable clause.
(c) Growing crops used to provide adequate security must be covered by crop insurance if such insurance is available. The Agency must be listed as loss payee for the insurance indemnity payment.
(d) Prior to closing the loan, the applicant must have obtained at least the catastrophic risk protection level of crop insurance coverage for each crop which is a basic part of the applicant's total operation, if such insurance is
FO loan funds may only be used to:
(a) Acquire or enlarge a farm or make a down payment on a farm;
(b) Make capital improvements to a farm owned by the applicant, for construction, purchase or improvement of farm dwellings, service buildings or other facilities and improvements essential to the farming operation. In the case of leased property, the applicant must have a lease to ensure use of the improvement over its useful life or to ensure that the applicant receives compensation for any remaining economic life upon termination of the lease;
(c) Promote soil and water conservation and protection;
(d) Pay loan closing costs;
(e) Refinance a bridge loan if the following conditions are met:
(1) The applicant obtained the loan to be refinanced to purchase a farm after a direct FO was approved;
(2) Direct FO funds were not available to fund the loan at the time of approval;
(3) The loan to be refinanced is temporary financing; and
(4) The loan was made by a commercial or cooperative lender.
The applicant:
(a) Must comply with the general eligibility requirements established at § 764.101;
(b) And anyone who will sign the promissory note, must not have received debt forgiveness from the Agency on any direct or guaranteed loan;
(c) Must be the owner-operator of the farm financed with Agency funds after the loan is closed. In the case of an entity:
(1) The entity is controlled by farmers engaged primarily and directly in farming in the United States, after the loan is made;
(2) The entity must be authorized to own and operate the farm in the State in which the farm is located;
(3) If the entity members holding a majority interest are:
(i) Related by blood or marriage, at least one member of the entity must operate the farm;
(ii) Not related by blood or marriage, the entity members holding a majority interest must own and operate the farm.
(d) And in the case of an entity, one or more members constituting a majority interest, must have participated in the business operations of a farm for at least 3 years out of the 10 years prior to the date the application is submitted.
(e) And anyone who will sign the promissory note, must satisfy at least one of the following conditions:
(1) Meet the definition of a beginning farmer;
(2) Have not had a direct FO loan outstanding for more than a total of 10 years prior to the date the new FO loan is closed;
(3) Have never received a direct FO loan.
The applicant must:
(a) Comply with the general limitations established at § 764.102;
(b) Have dwellings and other buildings necessary for the planned operation of the farm available for use after the loan is made.
(a)
(2) The limited resource Farm Ownership interest rate is available to applicants who are unable to develop a feasible plan at regular interest rates.
(3) If the FO loan is part of a joint financing arrangement and the amount of the Agency's loan does not exceed 50 percent of the total amount financed, the Agency will use the Farm Ownership participation rate, available in each Agency office.
(4) The interest rate charged will be the lower of the rate in effect at the time of loan approval or loan closing.
(b)
An FO loan must be secured:
(a) In accordance with §§ 764.103 through 764.106;
(b) At a minimum, by the real estate being purchased or improved.
At 73 FR 74345, Dec. 8, 2008, the heading for subpart E was revised to read “Downpayment Loan Program,” effective January 7, 2009.
Beginning Farmer Downpayment loan funds may be used to partially finance the purchase of a family farm by an eligible beginning farmer.
At 73 FR 74345, Dec. 8, 2008, § 764.201 was amended by removing the words “Beginning Farmer” from the heading and by removing the words “Beginning Farmer” the first time they appear in the undesignated paragraph and by adding the words “or socially disadvantaged farmer” at the end, effective January 7, 2009.
The applicant must:
(a) Comply with the general eligibility requirements established at § 764.101 and the FO eligibility requirements of § 764.152; and
(b) Be a beginning farmer.
At 73 FR 74345, Dec. 8, 2008, § 764.202 was amended by adding the words “or socially disadvantaged farmer” to the end of paragraph (b), effective January 7, 2009.
(a) The applicant must:
(1) Comply with the general limitations established at § 764.102; and
(2) Provide a minimum downpayment of 10 percent of the purchase price of the farm.
(b) The purchase price or appraised value of the farm, whichever is lower, must not exceed $250,000.
(c) Beginning Farmer Downpayment loans will not exceed 40 percent of the lesser of the purchase price or appraised value of the farm to be acquired.
(d) Financing provided by the Agency and all other creditors must not exceed 90 percent of the lesser of the purchase price or appraised value of the farm and may be guaranteed by the Agency under part 762 of this chapter.
At 73 FR 74345, Dec. 8, 2008, § 764.203 was amended by removing the number “10” and adding in its place, the number “5” in paragraph (a)(2), by revising paragraphs (b) and (c), and by removing paragraph (d), effective January 7, 2009. For the convenience of the user, the revised text is set forth as follows:
(b) Downpayment loans will not exceed 45 percent of the lesser of:
(1) The purchase price,
(2) The appraised value of the farm to be acquired, or
(3) $500,000.
(c) Financing provided by the Agency and all other creditors must not exceed 95 percent of the purchase price. Financing provided by eligible lenders may be guaranteed by the Agency under part 762 of this chapter.
(a)
(b)
(2) The non-Agency financing must have an amortization period of at least 30 years and cannot have a balloon payment due within the first 15 years of the loan.
At 73 FR 74345, Dec. 8, 2008, § 764.204 was amended by revising paragraph (a), by remove the words “Beginning Farmer” from paragraph (b)(1), and by removing the number “15” and adding in its place, the number “20” in paragraphs (b)(1) and (2), effective January 7, 2009. For the convenience of the user, the revised text is set forth as follows:
(a)
A Beginning Farmer Downpayment loan must:
(a) Be secured in accordance with §§ 764.103 through 764.106;
(b) Be secured by a lien on the property being acquired with the loan funds and junior only to the party financing the balance of the purchase price.
At 73 FR 74345, Dec. 8, 2008, § 764.205 was amended by removing the words “Beginning Farmer” from the introductory text, effective January 7, 2009.
(a) Except as provided in paragraph (b), OL loan funds may only be used for:
(1) Costs associated with reorganizing a farm to improve its profitability;
(2) Purchase of livestock, including poultry, farm equipment, quotas and bases, and cooperative stock for credit, production, processing or marketing purposes;
(3) Farm operating expenses, including, but not limited to, feed, seed, fertilizer, pesticides, farm supplies, repairs and improvements which are to be expensed, cash rent and family living expenses;
(4) Scheduled principal and interest payments on term debt provided the debt is for authorized FO or OL purposes;
(5) Other farm needs;
(6) Costs associated with land and water development, use, or conservation;
(7) Loan closing costs;
(8) Costs associated with Federal or State-approved standards under the Occupational Safety and Health Act of 1970 (29 U.S.C. 655 and 667) if the applicant can show that compliance or non-compliance with the standards will cause substantial economic injury;
(9) Borrower training costs required or recommended by the Agency;
(10) Refinancing farm-related debts other than real estate to improve the farm's profitability provided the applicant has refinanced direct or guaranteed OL loans four times or fewer and one of the following conditions is met:
(i) A designated or declared disaster caused the need for refinancing; or
(ii) The debts to be refinanced are owed to a creditor other than the USDA;
(11) Costs for minor real estate repairs or improvements, provided the loan can be repaid within 7 years.
(b) Lo-Doc funds approved under:
(1) Section 764.51(c)(3)(i) may be used for any OL purpose except for refinancing debt under paragraph (a)(10);
(2) Section 764.51(c)(3)(ii) may only be used for expenses under paragraph (a)(3).
The applicant:
(a) Must comply with the general eligibility requirements established at § 764.101.
(b) And anyone who will sign the promissory note, except as provided in paragraph (c) of this section, must not have received debt forgiveness from the Agency on any direct or guaranteed loan.
(c) And anyone who will sign the promissory note, may receive direct OL loans to pay annual farm operating and family living expenses, provided that the applicant meets all other applicable requirements under this part, if the applicant:
(1) Received a write-down under section 353 of the Act;
(2) Is current on payments under a confirmed reorganization plan under Chapter 11, 12, or 13 of Title 11 of the United States Code; or
(3) Received debt forgiveness on not more than one occasion after April 4, 1996, resulting directly and primarily from a Presidentially-designated emergency for the county or contiguous county in which the applicant operates. Only applicants who were current on all existing direct and guaranteed FLP loans prior to the beginning date
(d) And in the case of an entity, the entity must be:
(1) Controlled by farmers engaged primarily and directly in farming in the United States; and
(2) Authorized to operate the farm in the State in which the farm is located.
(e) And anyone who will sign the promissory note, may close an OL loan in no more than 7 calendar years, either as an individual or as a member of an entity, except as provided in paragraphs (e)(1) through (4) of this section. The years may be consecutive or nonconsecutive, and there is no limit on the number of loans closed in a year. Youth loans are not counted toward this limitation. The following exceptions are applicable.
(1) This limitation does not apply if the applicant and anyone who will sign the promissory note is a beginning farmer.
(2) This limitation does not apply if the applicant's land is subject to the jurisdiction of an Indian tribe, the loan is secured by one or more security instruments subject to the jurisdiction of an Indian tribe, and commercial credit is generally not available to such farm operations.
(3) If the applicant, and anyone who will sign the promissory note, has closed direct OL loans in four or more previous calendar years as of April 4, 1996, the applicant is eligible to close OL loans in any three additional years after that date.
(4) On a case-by-case basis, may be granted a one-time waiver of OL term limits for a period of 2 years, not subject to administrative appeal, if the applicant:
(i) Has a financially viable operation;
(ii) And in the case of an entity, the members holding the majority interest, applied for commercial credit from at least two lenders and were unable to obtain a commercial loan, including an Agency-guaranteed loan; and
(iii) Has successfully completed, or will complete within one year, borrower training. Previous waivers to the borrower training requirements are not applicable under this paragraph.
The applicant must comply with the general limitations established at § 764.102.
(a)
(2) The limited resource Operating Loan interest rate is available to applicants who are unable to develop a feasible plan at regular interest rates.
(3) The interest rate charged will be the lower rate in effect at the time of loan approval or loan closing.
(b)
(i) The term of the loan may not exceed 18 months from the date of the note.
(ii) The term of the loan may exceed 18 months in unusual situations such as establishing a new enterprise, developing a farm, purchasing feed while crops are being established, marketing plans, or recovery from a disaster or economic reverse. In no event will the term of the loan exceed 7 years from the date of the note. Crops and livestock produced for sale will not be considered adequate security for such loans.
(2) The Agency schedules the repayment of all other OL loans based on the applicant's ability to repay and the useful life of the security. In no event will the term of the loan exceed 7 years from the date of the note. Repayment schedules may include equal, unequal, or balloon installments if needed to establish a new enterprise, develop a farm, or recover from a disaster or economic reversal. Loans with balloon installments:
(i) Must have adequate security at the time the balloon installment comes due. Crops, livestock other than breeding stock, or livestock products produced are not adequate collateral for such loans;
(ii) Are only authorized when the applicant can project the ability to refinance the remaining debt at the time the balloon payment comes due based on the expected financial condition of the operation, the depreciated value of the collateral, and the principal balance on the loan;
(iii) Are not authorized when loan funds are used for real estate repairs or improvements.
An OL loan must be secured:
(a) In accordance with §§ 764.103 through 764.106.
(b) By a:
(1) First lien on all property or products acquired or produced with loan funds;
(2) Lien of equal or higher position of that held by the creditor being refinanced with loan funds.
Youth loan funds may only be used to finance a modest, income-producing, agriculture-related, educational project while participating in 4-H, FFA, or a similar organization.
The applicant:
(a) Must comply with the general eligibility requirements established at § 764.101(a) through (g);
(b) And anyone who will sign the promissory note, must not have received debt forgiveness from the Agency on any direct or guaranteed loan;
(c) Must be at least 10 but not yet 21 years of age at the time the loan is closed;
(d) Must reside in a rural area, city or town with a population of 50,000 or fewer people;
(e) Must be recommended and continuously supervised by a project advisor, such as a 4-H Club advisor, a vocational teacher, a county extension agent, or other agriculture-related organizational sponsor; and
(f) Must obtain a written recommendation and consent from a parent or guardian if the applicant has not reached the age of majority under state law.
(a) The applicant must comply with the general limitations established at § 764.102.
(b) The total principal balance owed by the applicant to the Agency on all Youth loans at any one time cannot exceed $5,000.
(a)
(2) The limited resource Operating Loan interest rate is not available for Youth loans.
(3) The interest rate charged will be the lower rate in effect at the time of loan approval or loan closing.
(b)
A first lien will be obtained on property or products acquired or produced with loan funds.
(a)
(i) For any FO purpose, as specified in § 764.151, except subparagraph (e) of that section;
(ii) To establish a new site for farm dwelling and service buildings outside of a flood or mudslide area; and
(iii) To replace land from the farm that was sold or conveyed, if such land is necessary for the farming operation to be effective.
(2)
(i) Purchase livestock, farm equipment, quotas and bases, and cooperative stock for credit, production, processing, or marketing purposes;
(ii) Pay customary costs associated with obtaining and closing a loan that an applicant cannot pay from other sources (e.g., fees for legal, architectural, and other technical services, but not fees for agricultural management consultation, or preparation of Agency forms);
(iii) Repair or replace household contents damaged in the disaster;
(iv) Pay the costs to restore perennials, which produce an agricultural commodity, to the stage of development the damaged perennials had obtained prior to the disaster;
(v) Pay essential family living and farm operating expenses, in the case of an operation that has suffered livestock losses not from breeding stock, or losses to stored crops held for sale; and
(vi) Refinance farm-related debts other than real estate to improve farm profitability, if the applicant has refinanced direct or guaranteed loans four times or fewer and one of the following conditions is met:
(A) A designated or declared disaster caused the need for refinancing; or
(B) The debts to be refinanced are owed to a creditor other than the USDA.
(b)
(1) Pay costs associated with reorganizing the farm to improve its profitability except that such costs must not include the payment of bankruptcy expenses;
(2) Pay annual operating expenses, which include, but are not limited to, feed, seed, fertilizer, pesticides, farm supplies, and cash rent;
(3) Pay costs associated with Federal or State-approved standards under the Occupational Safety and Health Act of 1970 (29 U.S.C. 655 and 667) if the applicant can show that compliance or non-compliance with the standards will cause substantial economic injury;
(4) Pay borrower training costs required or recommended by the Agency;
(5) Pay essential family living expenses;
(6) Refinance farm-related debts other than real estate to improve farm profitability, if the applicant has refinanced direct or guaranteed loans four times or fewer and one of the following conditions is met:
(i) A designated or declared disaster caused the need for refinancing; or
(ii) The debts to be refinanced are owed to a creditor other than the USDA; and
(7) Replace lost working capital.
The applicant:
(a) Must comply with the general eligibility requirements established at § 764.101;
(b) Must be an established farmer;
(c) Must be the owner-operator or tenant-operator as follows:
(1) For a loan made under § 764.351(a)(1), must have been:
(i) The owner-operator of the farm at the time of the disaster; or
(ii) The tenant-operator of the farm at the time of the disaster whose lease on the affected real estate exceeds the term of the loan. The operator will provide prior notification to the Agency if the lease is proposed to terminate during the term of the loan. The lessor will provide the Agency a mortgage on the real estate as security for the loan;
(2) For a loan made under § 764.351(a) (2) or (b), must have been the operator of the farm at the time of the disaster; and
(3) In the case of an entity, the entity must be:
(i) Engaged primarily and directly in farming in the United States;
(ii) Authorized to operate and own the farm, if the funds are used for farm ownership loan purposes, in the State in which the farm is located;
(d) Must demonstrate the intent to continue the farming operation after the designated or declared disaster;
(e) And all entity members must be unable to obtain sufficient credit elsewhere at reasonable rates and terms. To establish this, the applicant must obtain written declinations of credit, specifying the reasons for declination, from legally organized commercial
(1) In the case of a loan in excess of $300,000, two written declinations of credit are required;
(2) In the case of a loan of $300,000 or less, one written declination of credit is required; and
(3) In the case of a loan of $100,000 or less, the Agency may waive the requirement for obtaining a written declination of credit, if the Agency determines that it would pose an undue burden on the applicant, the applicant certifies that they cannot get credit elsewhere, and based on the applicant's circumstances credit is not likely to be available;
(4) Notwithstanding the applicant's submission of the required written declinations of credit, the Agency may contact other commercial lending institutions within reasonable proximity of the applicant and make an independent determination of the applicant's ability to obtain credit elsewhere;
(f) And all entity members in the case of an entity, must not have received debt forgiveness from the Agency on more than one occasion on or before April 4, 1996, or any time after April 4, 1996.
(g) Must submit an application to be received by the Agency no later than 8 months after the date the disaster is declared or designated in the county of the applicant's operation.
(h) For production loss loans, must have a disaster yield that is at least 30 percent below the normal production yield of the crop, as determined by the Agency, which comprises a basic part of an applicant's total farming operation.
(i) For physical loss loans, must have suffered disaster-related damage to chattel or real estate essential to the farming operation, or to household contents that must be repaired or replaced, to harvested or stored crops, or to perennial crops.
(j) Must meet all of the following requirements if the ownership structure of the family farm changes between the time of a qualifying loss and the time an EM loan is closed:
(1) The applicant, including all owners must meet all of the eligibility requirements;
(2) The individual applicant, or all owners of a entity applicant, must have had an ownership interest in the farming operation at the time of the disaster; and
(3) The amount of the loan will be based on the percentage of the former farming operation transferred to the applicant and in no event will the individual portions aggregated equal more than would have been authorized for the former farming operation.
(k) Must agree to repay any duplicative Federal assistance to the agency providing such assistance. An applicant receiving Federal assistance for a major disaster or emergency is liable to the United States to the extent that the assistance duplicates benefits available to the applicant for the same purpose from another source.
(a) EM loans must comply with the general limitations established at § 764.102.
(b) EM loans may not exceed the lesser of:
(1) The amount of credit necessary to restore the farming operation to its pre-disaster condition;
(2) In the case of a physical loss loan, the total eligible physical losses caused by the disaster; or
(3) In the case of a production loss loan, 100 percent of the total actual production loss sustained by the applicant as calculated in paragraph (c) of this section.
(c) For production loss loans, the applicant's actual crop production loss will be calculated as follows:
(1) Subtract the disaster yield from the normal yield to determine the per acre production loss;
(2) Multiply the per acre production loss by the number of acres of the farming operation devoted to the crop to determine the volume of the production loss;
(3) Multiply the volume of the production loss by the market price for such crop as determined by the Agency to determine the dollar value for the production loss; and
(4) Subtract any other disaster related compensation or insurance indemnities received or to be received by the applicant for the production loss.
(d) For a physical loss loan, the applicant's total eligible physical losses will be calculated as follows:
(1) Add the allowable costs associated with replacing or repairing chattel covered by hazard insurance (excluding labor, machinery, equipment, or materials contributed by the applicant to repair or replace chattel);
(2) Add the allowable costs associated with repairing or replacing real estate, covered by hazard insurance;
(3) Add the value of replacement livestock and livestock products for which the applicant provided:
(i) Written documentation of inventory on hand immediately preceding the loss;
(ii) Records of livestock product sales sufficient to allow the Agency to establish a value;
(4) Add the allowable costs to restore perennials to the stage of development the damaged perennials had obtained prior to the disaster;
(5) Add, in the case of an individual applicant, the allowable costs associated with repairing or replacing household contents, not to exceed $20,000; and
(6) Subtract any other disaster related compensation or insurance indemnities received or to be received by the applicant for the loss or damage to the chattel or real estate.
(e) EM loan funds may not be used for physical loss purposes unless:
(1) The physical property was covered by general hazard insurance at the time that the damage caused by the natural disaster occurred. The level of the coverage in effect at the time of the disaster must have been the tax or cost depreciated value, whichever is less. Chattel property must have been covered at the tax or cost depreciated value, whichever is less, when such insurance was readily available and the benefit of the coverage was greater than the cost of the insurance; or
(2) The loan is to a poultry farmer to cover the loss of a chicken house for which the applicant did not have hazard insurance at the time of the loss and the applicant:
(i) Applied for, but was unable to obtain hazard insurance for the chicken house;
(ii) Uses the loan to rebuild the chicken house in accordance with industry standards in effect on the date the applicant submits an application for the loan;
(iii) Obtains, for the term of the loan, hazard insurance for the full market value of the chicken house; and
(iv) Meets all other requirements for the loan.
(f) EM loan funds may not be used to refinance consumer debt, such as automobile loans, or credit card debt unless such credit card debt is directly attributable to the farming operation.
(a)
(2) The interest rate charged will be the lower rate in effect at the time of loan approval or loan closing.
(b)
(2) The repayment schedule must include at least one payment every year.
(3) EM loans for annual operating expenses, except expenses associated with establishing a perennial crop that are subject to paragraph (b)(4), must be repaid within 12 months. The Agency may extend this term to not more than 18 months to accommodate the production cycle of the agricultural commodities.
(4) EM loans for production losses or physical losses to chattel (including, but not limited to, assets with an expected life between one and 7 years) may not exceed 7 years. The Agency may extend this term up to a total length not to exceed 20 years, if necessary to improve the applicant's repayment ability and real estate security is available.
(5) The repayment schedule for EM loans for physical losses to real estate is based on the applicant's repayment ability and the useful life of the security, but in no case will the term exceed 40 years.
(a) EM loans made under § 764.351(a)(1) must comply with the general security requirements established at §§ 764.103, 764.104 and 764.155(b).
(b) EM loans made under § 764.351(a)(2) and (b) must comply with the general security requirements established at §§ 764.103, 764.104 and 764.255(b).
(c) Notwithstanding the requirements of paragraphs (a) and (b) of this section, when adequate security is not available because of the disaster, the loan may be approved if the Agency determines, based on an otherwise feasible plan, there is a reasonable assurance that the applicant has the ability to repay the loan provided:
(1) The applicant has pledged as security for the loan all available personal and business security, except as provided in § 764.106;
(2) The farm operating plan, approved by the Agency, indicates the loan will be repaid based upon the applicant's production and income history; addresses applicable pricing risks through the use of marketing contracts, hedging, options, or other revenue protection mechanisms, and includes a marketing plan or similar risk management practice;
(3) The applicant has had positive net cash farm income in at least 3 of the past 5 years; and
(4) The applicant has provided the Agency an assignment on any USDA program payments to be received.
(d) For loans over $25,000, title clearance is required when real estate is taken as security.
(e) For loans of $25,000 or less, when real estate is taken as security, a certification of ownership in real estate is required. Certification of ownership may be in the form of an affidavit which is signed by the applicant, names the record owner of the real estate in question and lists the balances due on all known debts against the real estate. Whenever the Agency is uncertain of the record owner or debts against the real estate security, a title search is required.
(a) In the case of physical losses associated with livestock, the applicant must have written documentation of the inventory of livestock and records of livestock product sales sufficient to allow the Agency to value such livestock or livestock products just prior to the loss.
(b) In the case of farm assets damaged by the disaster, the value of such security shall be established as of the day before the disaster occurred.
(a)
(i) The applicant's farm operating plan reflects a feasible plan, which includes repayment of the proposed loan and demonstrates that all other credit needs can be met;
(ii) The proposed use of loan funds is authorized for the type of loan requested;
(iii) The applicant has been determined eligible for the type of loan requested;
(iv) All security requirements for the type of loan requested have been, or will be met before the loan is closed;
(v) The applicant's total indebtedness to the Agency, including the proposed loan, will not exceed the maximum limits established in § 761.8 of this chapter;
(vi) There have been no significant changes in the farm operating plan or the applicant's financial condition since the time the Agency received a complete application; and
(vii) All other pertinent requirements have been, or will be met before the loan is closed.
(2) The Agency will place conditions upon loan approval it determines necessary to protect its interest and maximize the applicant's potential for success.
(b)
(1) The applicant's farm operating plan does not reflect a feasible plan;
(2) The proposed use of loan funds is not authorized for the type of loan requested;
(3) The applicant does not meet the eligibility requirements for the type of loan requested;
(4) There is inadequate security for the type of loan requested;
(5) Approval of the loan would cause the applicant's total indebtedness to the Agency to exceed the maximum limits established in § 761.8 of this chapter;
(6) The applicant's circumstances may not permit continuous operation and management of the farm; or
(7) The applicant, the farming operation, or other circumstances surrounding the loan are inconsistent with the authorizing statutes, other Federal laws, or Federal credit policies.
(c)
(1) Request current financial information from the applicant as necessary to determine whether any changes in the applicant's financial condition or agricultural conditions which occurred after the Agency's adverse decision was made will adversely affect the applicant's farming operation;
(2) Approve a loan for crop production:
(i) Only if the Agency can determine that the applicant will be able to produce a crop in the production cycle for which the loan is requested; or
(ii) For the next production cycle, upon review of current financial data and a farm operating plan for the next production cycle, if the Agency determines the loan can be repaid. The new farm operating plan must reflect any financial issues resolved in the appeal.
(3) Determine whether the applicant's farm operating plan, as modified based on the appeal decision, reflects a feasible plan, which includes repayment of the proposed loan and demonstrates that all other credit needs can be met.
(a)
(1) For individual applicants, only the applicant is required to sign the promissory note.
(2) For entity applicants, the promissory note will be executed to evidence the liability of the entity and the individual liability of all members of the entity.
(3) Despite minority status, a youth executing a promissory note for a Youth loan will incur full personal liability for the debt.
(4) A cosigner will be required to sign the promissory note if they assist the applicant in meeting the repayment requirements for the loan requested.
(5) All signatures needed for the Agency to acquire the required security interests will be obtained according to State law.
(b)
(c)
(1) The Agency will close a chattel loan only when it determines the Agency requirements for the loan have been satisfied;
(2) A financing statement is required for every loan except when a filed financing statement covering the applicant's property is still effective, covers all types of chattel property that will serve as security for the loan, describes the land on which crops and fixtures are or will be located, and complies with the law of the jurisdiction where filed;
(3) A new security agreement is required for new loans, as necessary to secure the loan under State law, prior to the disbursement of loan funds.
(d)
(i) For loans of $10,000 or less;
(ii) As provided in § 764.355 for EM loans;
(iii) When the real estate is considered additional security by the Agency; or
(iv) When the real estate is a non-essential asset.
(2) The title insurance or final title opinion must show title vested as required by the Agency, the lien of the Agency's security instrument in the priority required by the Agency, and title to the security property, subject only to those exceptions approved in writing by the Agency.
(3) The Agency must approve agents who will close FLP loans. Closing agents must meet all of the following requirements to the Agency's satisfaction:
(i) Be licensed in the state where the loan will be closed;
(ii) Not be debarred or suspended from participating in any Federal programs;
(iii) Maintain liability insurance;
(iv) Have a fidelity bond that covers all employees with access to loan funds;
(v) Have current knowledge of the requirements of State law in connection with the loan closing and title clearance;
(vi) Not represent both the buyer and seller in the transaction;
(vii) Not be related as a family member or business associate with the applicant; and
(viii) Act promptly to provide required services.
(e)
(2) If the loan is not closed within 90 days of loan approval or if the applicant's financial condition changes significantly, the Agency must reconfirm the requirements for loan approval prior to loan closing. The applicant may be required to provide updated information for the Agency to reconfirm approval and proceed with loan closing.
(3) The Agency or closing agent will be responsible for disbursing loan funds. The electronic funds transfer process, followed by Treasury checks, are the Agency's preferred methods of loan funds disbursement. The Agency will use these processes on behalf of borrowers to disburse loan proceeds directly to creditors being refinanced with loan funds or to sellers of chattel property that is being acquired with loan funds. A supervised bank account will be used according to subpart B of part 761 of this chapter when these processes are not practicable.
The purpose of production and financial management training is to help an applicant develop and improve skills necessary to:
(a) Successfully operate a farm;
(b) Build equity in the operation; and
(c) Become financially successful and prepared to graduate from Agency financing to commercial sources of credit.
(a) The applicant must agree to complete production and financial management training, unless the Agency provides a waiver in accordance with § 764.453, or the applicant has previously satisfied the training requirements. In the case of an entity:
(1) Any individual member holding a majority interest in the entity or who is operating the farm must complete training on behalf of the entity, except as provided in paragraph (a)(2) of this section;
(2) If one entity member is solely responsible for production or financial management, then only that member will be required to complete training.
(b) When the Agency determines that production training is required, the applicant must agree to complete course work covering production management in each crop or livestock enterprise the Agency determines necessary.
(c) When the Agency determines that financial management training is required, the applicant must agree to complete course work covering all aspects of farm accounting and integrating accounting elements into a financial management system.
(d) An applicant who applies for a loan to finance a new enterprise, such as a new crop or a new type of livestock, must agree to complete production training with regard to that enterprise, even if production training requirements were waived or satisfied under a previous loan request, unless the Agency provides a waiver in accordance with § 764.453.
(e) Even if a waiver is granted, the borrower must complete borrower training as a condition for future loans if and when Agency supervision provided in 7 CFR part 761 subpart C reflects that such training is needed.
(f) The Agency cannot reject a request for a direct loan based solely on an applicant's need for training.
(g) The Agency will provide written notification of required training or waiver of training.
(a) The applicant must request the waiver in writing.
(b) The Agency will grant a waiver for training in production, financial management, or both, under the following conditions:
(1) The applicant submits evidence of successful completion of a course similar to a course approved under section § 764.457 and the Agency determines that additional training is not needed; or
(2) The applicant submits evidence which demonstrates to the Agency's satisfaction the applicant's experience and training necessary for a successful and efficient operation.
(c) If the production and financial functions of the operation are shared among individual entity members, the Agency will consider the collective knowledge and skills of those individuals when determining whether to waive training requirements.
(a)
(2) The Agency will grant a one-year extension to complete training if the applicant is unable to complete training within the 2-year period due to circumstances beyond the applicant's control.
(3) The Agency will grant an extension longer than one year for extraordinary circumstances as determined by the Agency.
(4) An applicant who does not complete the required training within the specified time-period will be ineligible for additional direct FLP loans until the training is completed.
(b)
(c)
(2) The payment of training fees is an authorized use of OL funds.
(3) The Agency is not a party to fee or other agreements between the applicant and the vendor.
(d)
The Agency will contract for training services with State or private providers of production and financial management training services.
(a) A vendor for borrower training services must apply to the Agency for approval.
(b) The vendor application must include:
(1) A sample of the course materials and a description of the vendor's training methods;
(2) Specific training objectives for each section of the course;
(3) A detailed course agenda specifying the topics to be covered, the time devoted to each topic, and the number of sessions to be attended;
(4) A list of instructors and their qualifications;
(5) The criteria by which additional instructors will be selected;
(6) The proposed locations where training will take place;
(7) The cost per participant, including cost for additional members of a farming operation;
(8) The minimum and maximum class size;
(9) The vendor's experience in developing and administering training to farmers;
(10) The monitoring and quality control methods the vendor will use;
(11) The policy on allowing Agency employees to attend the course for monitoring purposes;
(12) A plan of how the needs of applicants with physical, mental, or learning disabilities will be met; and
(13) A plan of how the needs of applicants who do not speak English as their primary language will be met.
(a)
(b)
(1) Describe the specific goals of the farming operation, any changes required to attain the goals, and outline how these changes will occur using present and projected cash flow budgets;
(2) Maintain and use a financial management information system to make financial decisions;
(3) Understand and use an income statement;
(4) Understand and use a balance sheet;
(5) Understand and use a cash flow budget; and
(6) Use production records and other production information to identify problems, evaluate alternatives, and correct current production practices to improve efficiency and profitability.
(c)
(1) Business planning courses, covering general goal setting, risk management, and planning.
(2) Financial management courses, covering all aspects of farm accounting and focusing on integrating accounting elements into a financial management system.
(3) Crop and livestock production courses focusing on improving the profitability of the farm.
(d)
(1) Sufficient knowledge of the material and experience in adult education;
(2) A bachelor's degree or comparable experience in the subject area to be taught; and
(3) A minimum of 3 years experience in conducting training courses or teaching.
(a)
(2) The agreement to conduct training is valid for 3 years.
(3) Any changes in curriculum, instructor, or cost require prior approval by the Agency.
(4) The vendor may revoke the agreement by giving the Agency a written 30-day notice.
(5) The Agency may revoke the agreement if the vendor does not comply with the responsibilities listed in the agreement by giving the vendor a written 30-day notice.
(b)
(i) A request to renew the agreement;
(ii) Any changes in curricula, instructor, or cost; and
(iii) Documentation that the vendor is providing effective training.
(2) The Agency will review renewal requests in accordance with § 764.457.
(a) The vendor must provide the Agency with a periodic progress report for each borrower enrolled in training in accordance with the agreement to complete training. The reports will indicate whether the borrower is attending sessions, completing the training program, and demonstrating an understanding of the course material.
(b) Upon borrower completion of the training, the vendor must provide the Agency with an evaluation of the borrower's knowledge of the course material and assign a score. The following table lists the possible scores, the criteria used to assign each score, and Agency consideration of each score:
5 U.S.C. 301 and 7 U.S.C. 1989.
(a)
(b)
(1) Limited resource reviews;
(2) Graduation to commercial credit;
(3) Application of payments;
(4) Maintaining and disposing of security;
(5) Transfer of security and assumption of debt; and
(6) Servicing accounts of deceased borrowers.
(c)
Abbreviations and definitions for terms used in this part are provided in § 761.2 of this chapter.
(a) A borrower with limited resource interest rate loans is required to provide the Agency annually the operation's financial information to determine if the borrower can afford to pay a higher interest rate on the loan. The Agency will review the information provided in accordance with § 761.105 of this chapter.
(b) If the borrower's farm operating plan shows that the debt service margin exceeds 110 percent, the Agency will increase the interest rate on the loans with a limited resource interest rate until:
(1) A further increase in the interest rate results in a debt service margin of less than 110 percent; or
(2) The interest rate is equal to the interest rate currently in effect for the type of loan.
(c) Except as provided in paragraph (d) of this section, the Agency will increase the limited resource interest rate to the current interest rate for the type of loan, if the borrower:
(1) Purchases items not planned during the term of the loan;
(2) Refuses to submit information the Agency requests for use in reviewing the borrower's financial condition;
(3) Ceases farming, as described in § 765.253; or
(4) Is ineligible due to disqualification resulting from Federal crop insurance violation according to 7 CFR part 718.
(d) If the borrower has limited resource interest rate loans that are deferred, the Agency will not change the interest rate during the deferral period.
(a) In accordance with the promissory note and security instruments, the borrower must graduate to another source of credit if the Agency determines that:
(1) The borrower has the ability to obtain credit from other sources; and
(2) Adequate credit is available from other sources at reasonable rates and terms.
(b) The Agency may require partial or full graduation.
(1) In a partial graduation, all FLP loans of one type (i.e. all chattel loans or all real estate loans) must be paid in full by refinancing with other credit with or without an Agency guarantee.
(2) In a full graduation, all FLP loans are paid in full by refinancing with other credit with or without an Agency guarantee.
(3) A loan made for chattel and real estate purposes will be categorized according to how the majority of the loan's funds are expended.
(c) The borrower must submit all information that the Agency requests in conjunction with the review of the borrower's financial condition.
(d) The Agency may provide a borrower's prospectus to lenders in an attempt to identify sources of non-Agency credit and assess the lenders' interest in refinancing the borrower's loan. The Agency will notify the borrower when the borrower's prospectus is provided to one or more lenders.
(e) If a lender expresses an interest in refinancing the borrower's FLP loan, the borrower must:
(1) Apply for a loan from the interested lender within 30 days of notice; or
(2) Seek guaranteed loan assistance under the market placement program in accordance with § 762.110(g) of this chapter.
(f) The borrower will be responsible for any application fees or purchase of stock in conjunction with graduation.
Borrower failure to fulfill all graduation requirements within the time-period specified by the Agency constitutes default on the loan. The Agency will accelerate the borrower's loan without offering servicing options provided in 7 CFR part 766.
The Agency may assign its lien to the new lender when the borrower is graduating and all FLP debt will be paid in full.
(a)
(b)
(a)
(1) The sale of normal income security;
(2) The sale of farm products;
(3) Lease income, including mineral lease signing bonus;
(4) Program or disaster-related disbursements from USDA or crop insurance entities; and
(5) Non-farm income.
(b)
(1) Sale of chattel security other than normal income security;
(2) Sale of real estate security;
(3) Refinancing of FLP debt;
(4) Cash proceeds of insurance claims received on Agency security, if not being used to repair or replace the security;
(5) Any transaction that results in a loss in the value of any Agency basic security;
(6) Refunds of duplicate disaster program benefits to be applied on an EM loan; or
(7) Refunds of unused loan funds.
(c)
(a)
(1) Annual operating loan;
(2) Delinquent FLP installments, paying least secured loans first;
(3) Non-delinquent FLP installments due in the current production cycle in order of security priority, paying least secured loans first;
(4) Any future installments due.
(b)
The Agency applies both regular and extra payments to each loan in the following order, as applicable:
(a) Recoverable costs and protective advances plus interest;
(b) Deferred non-capitalized interest;
(c) Accrued deferred interest;
(d) Interest accrued to date of payment; and
(e) Loan principal.
(a)
(i) Cash;
(ii) U.S. Treasury check;
(iii) Cashier's check; or
(iv) Certified check.
(2) Security instruments will only be released when all loans secured by the instruments have been paid in full or otherwise satisfied.
(3) The Agency will return the paid note and satisfied security instruments to the borrower after the Agency processes the final payment and determines that the total indebtedness is paid in full.
(b)
(c)
(d)
All Agency servicing actions regarding preservation and protection of Agency security will be consistent with the covenants and agreements contained in all loan agreements and security instruments.
The borrower must:
(a) Comply with all provisions of the loan agreements;
(1) Non-compliance with the provisions of loan agreements and documents, other than failure to meet scheduled loan repayment installments contained in the promissory note, constitutes non-monetary default on FLP loans by the borrower;
(2) Borrower non-compliance will be considered by the Agency when making eligibility determinations for future requests for assistance and may adversely impact such requests;
(b) Maintain, protect, and account for all security;
(c) Pay the following, unless State law requires the Agency to pay:
(1) Fees for executing, filing or recording financing statements, continuation statements or other security instruments; and
(2) The cost of lien search reports;
(d) Pay taxes on property securing FLP loans when they become due;
(e) Maintain insurance coverage in an amount specified by the Agency;
(f) Protect the interests of the Agency when a third party brings suit or takes other action that could affect Agency security.
When necessary to protect the Agency's security interest, costs incurred for the following actions will be charged to the borrower's account:
(a) Maintain abandoned security property;
(b) Preserve inadequately maintained security;
(c) Pay real estate taxes and assessments;
(d) Pay property, hazard, or flood insurance;
(e) Pay harvesting costs;
(f) Maintain Agency security instruments;
(g) Pay ground rents;
(h) Pay expenses for emergency measures to protect the Agency's collateral; and
(i) Protect the Agency from actions by third parties.
(a)
(b)
(a)
(1) Completed Agency application for subordination form;
(2) A current financial statement, including, in the case of an entity, financial statements from all entity members;
(3) Documentation of compliance with the Agency's environmental regulations contained in subpart G of 7 CFR part 1940;
(4) Verification of all non-farm income;
(5) The farm's operating plan, including a projected cash flow budget reflecting production, income, expenses, and debt repayment plan; and
(6) Verification of all debts.
(b)
(1) The borrower is not in default or will not be in default on FLP loans by the time the subordination closing is complete;
(2) The loan will be used for an authorized loan purpose or is made in conjunction with a guaranteed loan;
(3) The credit is essential to the farming operation, and the borrower cannot obtain the credit without a subordination;
(4) The borrower can demonstrate, through a current farm operating plan,
(5) The FLP loan is still adequately secured after the subordination, or the value of the loan security will be increased by an amount at least equal to the advance to be made under the subordination;
(6) The borrower is not able to graduate;
(7) If the borrower is an entity and the Agency has taken real estate as additional security on property owned by a member, a subordination for any authorized loan purpose may be approved when it is needed for the entity member to finance a separate farming operation, provided the subordination does not cause the unpaid principal and interest on the FLP loans to exceed the value of loan security or otherwise adversely affect the security;
(8) The borrower must not be ineligible as a result of a conviction for controlled substances according to 7 CFR part 718 of this chapter;
(9) The borrower must not be ineligible due to disqualification resulting from Federal crop insurance violation according to 7 CFR part 718 of this chapter;
(10) The borrower will not use loan funds in a way that will contribute to erosion of highly erodible land or conversion of wetlands as described in subpart G of 7 CFR part 1940;
(11) There is no other subordination outstanding with another lender in connection with the same security;
(12) The subordination is limited to a specific amount; the loan made in conjunction with the subordination will be closed within a reasonable time and has a definite maturity date;
(13) In the case of real property purchase or exchange, the Agency will obtain a valid mortgage and the required lien position on the real property. The Agency will require title clearance and loan closing for the property in accordance with § 764.402 of this chapter;
(14) Any planned development of real estate security will be performed as directed by the creditor, approved by the Agency, and will comply with the terms and conditions of § 761.10 of this chapter;
(15) Subordinations of SAA mortgages may only be approved when there is no increase in the debt which is prior to the SAA debt; and
(16) If a borrower has only a Non-program loan, the Agency does not permit subordination. The Agency may subordinate Non-program security when it is also security for a program loan with the same borrower in accordance with this section.
(c)
(2) The Agency will approve a request for a second subordination to enable a borrower to obtain crop insurance, if the following conditions are met:
(i) The creditor to whom the first subordination was given did not provide for payment of the current year's crop insurance premium, and consents in writing to the provisions of the second subordination to pay insurance premiums from the crop or insurance proceeds;
(ii) The borrower assigns the insurance proceeds to the Agency or names the Agency in the loss payable clause of the policy; and
(iii) The subordination meets the conditions under paragraphs (b)(1) through (12) of this section.
(d)
(a)
(b)
(1) The borrower's ability to make scheduled loan payments is not jeopardized;
(2) The borrower provides the Agency a copy of the farm operating plan submitted to the junior lienholder, and the plan is consistent with the Agency operating plan;
(3) The total debt against the security does not exceed the security's market value;
(4) The junior lienholder agrees in writing not to foreclose the security instrument unless written notice is provided to the Agency;
(5) The borrower is unable to graduate; and
(6) The junior lien will not otherwise adversely impact the Agency's financial interests.
For loans secured by real estate, a borrower may request Agency consent to a severance agreement or similar instrument so that future chattel acquired by the borrower will not become part of the real estate securing the FLP debt. The Agency will consent to severance agreements if all of the following conditions are met:
(a) The financing arrangements are in the financial interest of the Agency and the borrower;
(b) The transaction will not adversely affect the Agency's security position;
(c) The borrower is unable to graduate;
(d) The transaction will not jeopardize the borrower's ability to pay all outstanding debts to the Agency and other creditors; and
(e) The property acquired is consistent with authorized loan purposes.
(a) A borrower is required to be the operator of Agency security in accordance with loan purposes, loan agreements, and security instruments.
(b) A borrower who fails to operate the security without Agency consent is in violation of loan agreements and security instruments.
(c) The Agency will consider a borrower's request to lease or cease to operate the security as provided in §§ 765.252 and 765.253.
(a)
(1) The Agency approves the borrower's request;
(2) The term of consecutive leases does not exceed 3 years, or 5 years if the borrower and the lessee are related by blood or marriage;
(3) The lease does not contain an option to purchase; and
(4) The requirements of § 765.253 have been met.
(b)
(1) For loans secured by real estate before December 23, 1985, the Agency has a security interest in any mineral rights the borrower has on the real estate pledged as collateral.
(2) For loans secured by real estate on or after December 23, 1985, the Agency has a security interest in any mineral rights if the mineral rights were included in an appraisal.
(3) The Agency may consent to a mineral lease if the proposed use of the leased rights will not adversely affect either:
(i) The Agency's security interest; or
(ii) Compliance with any applicable environmental requirements of subpart G of 7 CFR part 1940.
(c)
(d)
(e)
(2) The borrower must assign all rental proceeds from an allotment lease to the Agency.
If the borrower requests Agency consent to cease operating the security or
(a) Such action is in the Agency's best interests;
(b) The borrower is unable to graduate;
(c) The borrower is not ineligible as a result of disqualification for Federal crop insurance violation according to 7 CFR part 718;
(d) The borrower has leased the security according to § 765.252(a)(2); and
(e) Any one of the following conditions is met:
(1) The borrower is involved in the day-to-day operational activities, management decisions, costs and returns of the farming operation, and will continue to reside in the immediate farming community for reasonable management and operation involvement;
(2) The borrower's failure to operate the security is due to age or poor health, and the borrower continues to reside in the immediate farming community for reasonable management and operation involvement; or
(3) The borrower's failure to operate the security is beyond the borrower's control, and the borrower will resume the farming operation within 3 years.
(a) The borrower must account for all security.
(b) The borrower may not dispose of chattel security for an amount less than its market value. All proceeds, including any amount in excess of the market value, must be distributed to lienholders for application to the borrower's account in the order of lien priority.
(1) The Agency considers the market value of normal income security to be the prevailing market price of the commodity in the area in which the farm is located.
(2) The market value for basic security is determined by an appraisal obtained in accordance with § 761.7 of this chapter.
(c) When the borrower sells chattel security, the property and proceeds remain subject to the Agency lien until the lien is released by the Agency.
(d) The Agency and all other lienholders must provide written consent before a borrower may use proceeds for a purpose other than payment of lienholders in the order of lien priority.
(e) The transaction must not interfere with the borrower's farming operation or jeopardize the borrower's ability to repay the FLP loan.
(f) The disposition must enhance the program objectives of the FLP loan.
(g) When the borrower exchanges security property for other property or purchases new property with sale proceeds, the acquisition must be essential to the farming operation as well as meet the program objectives, purposes, and limitations for the type of loan.
(h) All checks, drafts, or money orders which the borrower receives from the sale of Agency security must be payable to the borrower and the Agency. If all FLP loan installments and any past due installments, for the period of the agreement for the use of proceeds have been paid, however, these payments from the sale of normal income security may be payable solely to the borrower.
(a) The borrower and the Agency will execute an agreement for the use of proceeds for each production cycle, including proceeds from the sale of milk, crops on hand or in storage, planned proceeds from Government payments, crop insurance and insurance proceeds derived from the loss of security.
(b) The agreement for the use of proceeds will remain in effect until the proper disposition of all listed chattel security has been accomplished, or the remaining chattel security has been transferred to a new agreement for the use of proceeds.
(c) The borrower must report any disposition of basic or normal income security immediately to the Agency.
(d) If a borrower wants to dispose of chattel security not listed or in a way
(e) If the borrower sells security to a purchaser not listed in the agreement for the use of proceeds, the borrower must immediately notify the Agency of what property has been sold and of the name and business address of the purchaser.
(f) The borrower must provide the Agency with the necessary information to update the farm operating plan and the agreement for the use of proceeds in accordance with § 761.102 of this chapter.
(g) Changes to the agreement on the use of proceeds will be recorded, dated and initialed by the borrower and the Agency.
(h) The borrower must maintain records of dispositions of chattel security and the actual use of proceeds. The borrower must make these records available to the Agency at the end of the period covered by the agreement for the use of proceeds.
(a)
(2) Proceeds remitted to the Agency may be used as follows:
(i) Applied to the FLP loan;
(ii) Pay customary costs appropriate to the transaction.
(3) With the concurrence of all lienholders, proceeds may be used to preserve the security because of a natural disaster or other severe catastrophe, when funds cannot be obtained by other means in time to prevent the borrower and the Agency from suffering a substantial loss.
(4) Security may be consumed as follows:
(i) Livestock may be used by the borrower's family for subsistence;
(ii) If crops serve as security and usually would be marketed, the Agency may allow such crops to be fed to the borrower's livestock, if this is preferable to marketing, provided the Agency obtains a lien or assignment on the livestock, and livestock products, at least equal to the lien on the crops.
(b)
(c)
(1) Proceeds from the sale of basic security may not be used for any family living and farm operating expenses.
(2) Security may be exchanged for chattel property better suited to the borrower's needs if the Agency will acquire a lien on the new property at least equal in value to the lien held on the property exchanged.
(3) Proceeds may be used to purchase chattel property better suited to the borrower's needs if the Agency will acquire a lien on the purchased property. The value of the purchased property, together with any proceeds applied to the FLP loan, must at least equal the value of the Agency lien on the old security.
(a) If a borrower disposes of chattel security without Agency approval, or misuses proceeds, the borrower must:
(1) Make restitution to the Agency within 30 days of Agency notification; or
(2) Provide disposition or use information to enable the Agency to consider post-approval within 30 days of Agency notification.
(b) Failure to cure the first unauthorized disposition in accordance with paragraph (a) of this section, or a second unauthorized disposition, whether or not cured, constitutes a non-monetary default, will be considered by the Agency when making eligibility determinations for future requests for assistance, may adversely impact such requests, and may result in civil or criminal action.
(a) When Agency security is sold, exchanged, or consumed in accordance with the agreement for the use of proceeds, the Agency will release its security interest to the extent of the value of the security disposed.
(b) Security interests on wool and mohair may be released when the security is marketed by consignment, provided all of the following conditions are met:
(1) The borrower assigns to the Agency the proceeds of any advances made, or to be made, on the wool or mohair by the broker, less shipping, handling, processing, and marketing costs;
(2) The borrower assigns to the Agency the proceeds of the sale of the wool or mohair, less any remaining costs in shipping, handling, processing, and marketing, and less the amount of any advance (including any interest which may have accrued on the advance) made by the broker against the wool or mohair; and
(3) The borrower and broker agree that the net proceeds of any advances on, or sale of, the wool or mohair will be paid by checks made payable jointly to the borrower and the Agency.
The borrower must obtain prior consent from the Agency for any transactions affecting the real estate security, including, but not limited to, sale or exchange of security, a right-of-way across security, and a partial release. The Agency may consent to such transactions provided the conditions in this section are met.
(a)
(1) The transaction will enhance the objectives for which the FLP loan or loans were made;
(2) The transaction will not jeopardize the borrower's ability to repay the FLP loan, or is necessary to place the borrower's farming operation on a sound basis;
(3) The amount received for the security being disposed of or the rights being granted is not less than the market value;
(4) Any proceeds in excess of the market value are remitted to lienholders in the order of lien priority;
(5) The transaction must not interfere with the borrower's farming operation;
(6) The market value of the remaining security is adequate to secure the FLP loans, or if the market value of the security before the transaction was inadequate to fully secure the FLP loans, the Agency's equity in the security is not diminished;
(7) The environmental requirements of subpart G of 7 CFR part 1940 must be met;
(8) The borrower cannot graduate to other credit;
(9) The borrower must not be ineligible due to disqualification resulting from Federal crop insurance violation according to 7 CFR part 718; and
(10) The disposition of real estate security for an outstanding ST loan will only be authorized if the transaction will result in full repayment of the loan.
(b)
(i) The sale of timber from real estate that secures an FLP loan will be considered a disposition of a portion of the security.
(ii) For loans secured by real estate before December 23, 1985, the Agency has a security interest in mineral products, gravel, oil, gas, coal, or other resources and the sale by unit or lump sum payment will be considered a disposition of security.
(iii) For loans secured by real estate on or after December 23, 1985, the Agency has a security interest in mineral products, gravel, oil, gas, coal, or other resources if the value of such products was included in an appraisal. When the Agency has a security interest, the sale
(2) Any compensation the borrower may receive for damages to the surface of the real estate security resulting from exploration for, or recovery of, minerals must be assigned to the Agency. Such proceeds will be used to repair the damage, and any remaining funds must be remitted to lienholders in the order of lien priority or, with all lienholders' consent, used for an authorized loan purpose.
(c)
(2) Property acquired by the borrower must meet program objectives, purposes and limitations relating to the type of loan involved as well as applicable requirements for appraisal, title clearance and security.
(d)
(1) Not less than 10 percent of the purchase price will be paid as a down payment and remitted to lienholders in the order of lien priority;
(2) Payments will not exceed 10 annual installments of principal plus interest or the remaining term of the FLP loan, whichever is less. The interest rate will be the current rate being charged on a regular FO loan plus 1 percent or the rate on the borrower's notes, whichever is greater. Payments may be in equal or unequal installments with a balloon final installment;
(3) The Agency's security rights, including the right to foreclose on either the portion being sold or retained, will not be impaired;
(4) Any subsequent payments must be assigned to the lienholders and remitted in order of lien priority, or with lienholder's approval, used in accordance with § 765.352;
(5) The mortgage on the property sold will not be released prior to either full payment of the borrower's account or receipt of the full amount of sale proceeds;
(6) The sale proceeds applied to the borrower's loan accounts will not relieve the borrower from obligations under the terms of the note or other agreements approved by the Agency;
(7) All other requirements of this section are met.
(e)
(2) The sale of an allotment must comply with all conditions of this subpart.
(3) The borrower may transfer crop allotments to another farm owned or controlled by the borrower. Such transfer will be treated as a lease under § 765.252.
(a) Proceeds from transactions affecting the real estate security may only be used as follows:
(1) Applied on liens in order of priority;
(2) To pay customary costs appropriate to the transaction, which meet the following conditions:
(i) Are reasonable in amount;
(ii) Cannot be paid by the borrower;
(iii) Will not be paid by the purchaser;
(iv) Must be paid to consummate the transaction; and
(v) May include postage and insurance when it is necessary for the Agency to present the promissory note to the recorder to obtain a release of a portion of the real estate from the mortgage.
(3) For development or enlargement of real estate owned by the borrower as follows:
(i) Development or enlargement must be necessary to improve the borrower's debt repayment ability, place the borrower's farming operation on a sound basis, or otherwise enhance the objectives of the loan;
(ii) Such use will not conflict with the loan purposes, restrictions or requirements of the type of loan involved;
(iii) Funds will be deposited in a supervised bank account in accordance with subpart B of part 761 of this chapter;
(iv) The Agency has, or will obtain, a lien on the real estate developed or enlarged;
(v) Construction and development will be completed in accordance with § 761.10 of this chapter.
(b) After acceleration, the Agency may approve transactions only when all the proceeds will be applied to the liens against the security in the order of their priority, after deducting customary costs appropriate to the transaction. Such approval will not cancel or delay liquidation, unless all loan defaults are otherwise cured.
(a)
(2) The Agency may waive the appraisal requirement when the estimated value is less than $25,000.
(b)
(c)
(a)
(2) All transferees will become personally liable for the debt and assume the full responsibilities and obligations of the debt transferred when the transfer and assumption is complete. If the transferee is an entity, the entity and each member must assume personal liability for the loan.
(3) A transfer and assumption will only be approved if the Agency determines it is in the Agency's financial interest.
(b)
An eligible applicant may assume an FLP loan on the same rates and terms as the original note if:
(a) The original borrower has died and the spouse, other relative, or joint tenant who is not obligated on the note inherits the security property;
(b) A family member of the borrower or an entity comprised solely of family members of the borrower assumes the debt along with the original borrower;
(c) An individual with an ownership interest in the borrower entity buys the entire ownership interest of the other members and continues to operate the farm in accordance with loan requirements. The new owner must assume personal liability for the loan;
(d) A new entity buys the borrower entity and continues to operate the farm in accordance with loan requirements; or
(e) The original loan is an EM loan for physical or production losses and persons who were directly involved in the farm's operation at the time of the loss will assume the loan. If the original loan was made to:
(1) An individual borrower, the transferee must be a family member of the original borrower or an entity that is comprised solely of family members of the original borrower.
(2) A trust, partnership or joint operation, the transferee must have been a member, partner or joint operator when the Agency made the original loan or remain an entity comprised solely of people who were original members, partners or joint operators when the entity received the original loan.
(3) A corporation, including limited liability company, or cooperative, the transferee must:
(i) Have been a corporate stockholder or a cooperative member when the Agency made the original loan or will be an entity comprised solely of people who were corporate stockholders or cooperative members when the entity received the loan; and
(ii) Assume only the portion of the physical or production loss loan equal
(a)
(1) The transferee meets all loan and security requirements in part 764 of this chapter for the type of loan being assumed; and
(2) The outstanding loan balance (principal and interest) does not exceed the maximum loan limit for the type of loan as contained in § 761.8 of this chapter.
(b)
(c)
(d)
(1) The outstanding balance of the transferor's loan; or
(2) The market value of the security, less prior liens and authorized costs, if the outstanding loan balance exceeds the market value of the property.
(e)
(a)
(2) The Agency will reclassify the assumed loan as a Non-program loan.
(b)
(1) Provide written documentation verifying their credit worthiness and debt repayment ability;
(2) Not have received debt forgiveness from the Agency;
(3) Not be ineligible for loans as a result of a conviction for controlled substances according to 7 CFR part 718; and
(4) Not be ineligible due to disqualification resulting from Federal crop insurance violation according to 7 CFR part 718.
(c)
(d)
(e)
(f)
(2) For a Non-program loan secured by chattel property only, the Agency schedules repayment in 5 years or less, based on the applicant's repayment ability.
The transferor and transferee are responsible for paying transfer costs such
(a) Any cash equity due the transferor is applied first to payment of costs and the transferor does not receive any cash payment above these costs;
(b) The transferee's payoff of any junior liens does not exceed $5,000;
(c) Fees are customary and reasonable;
(d) The transferee can verify that personal funds are available to pay transferor and transferee fees; and
(e) Any equity due the transferor is held in escrow by an Agency designated closing agent and is disbursed at closing.
(a)
(b)
(2) If an outstanding debt balance will remain and only part of the transferor's Agency security is transferred, the written request for release of liability will not be approved, unless the deficiency is otherwise resolved to the Agency's satisfaction.
(3) If an outstanding balance will remain and all of the transferor's security has been transferred, the transferor may pay the remaining balance or request debt settlement in accordance with subpart B of 7 CFR part 1956.
(4) Except for loans in default being serviced under 7 CFR part 766, if an individual who is jointly liable for repayment of an FLP loan withdraws from the farming operation and conveys all of their interest in the security to the remaining borrower, the withdrawing party may be released from liability under the following conditions:
(i) A divorce decree or property settlement states that the withdrawing party is no longer responsible for repaying the loan;
(ii) All of the withdrawing party's interests in the security are conveyed to the persons with whom the loan will be continued; and
(iii) The persons with whom the loan will be continued can demonstrate the ability to repay all of the existing and proposed debt obligations.
(a)
(b)
(a)
(2) The Agency may continue the loan with an individual who inherits title to the property and is not liable for the indebtedness provided the individual makes payments as scheduled and fulfills all other responsibilities of the borrower according to the loan and security instruments.
(b)
(c)
(2) The Agency treats any subsequent transfer of title as a sale subject to requirements listed in subpart I of this part.
On an individual case basis, the Agency may consider granting an exception to any regulatory requirement or policy of this part if:
(a) The exception is not inconsistent with the authorizing statute or other applicable law; and
(b) The Agency's financial interest would be adversely affected by acting in accordance with published regulations or policies and granting the exception would resolve or eliminate the adverse effect upon the Agency's financial interest.
5 U.S.C. 301 and 7 U.S.C. 1981d and 1989.
(a) This part describes the Agency's servicing policies for direct loan borrowers who:
(1) Are financially distressed;
(2) Are delinquent in paying direct loans or otherwise in default;
(3) Have received unauthorized assistance;
(4) Have filed bankruptcy or are involved in other civil or criminal cases affecting the Agency; or
(5) Have loan security being liquidated voluntarily or involuntarily.
(b) The Agency services direct FLP loans under the policies contained in this part.
(1) Youth loans:
(i) May not receive Disaster Set-Aside under subpart B of this part;
(ii) Will only be considered for rescheduling according to § 766.107 and deferral according to § 766.109.
(2) The Agency does not service Non-program loans under this part except where noted.
(c) The Agency requires the borrower to make every reasonable attempt to make payments and comply with loan agreements before the Agency considers special servicing.
Abbreviations and definitions for terms used in this part are provided in § 761.2 of this chapter.
(a) DSA is available to borrowers with program loans who suffered losses as a result of a natural disaster.
(b) DSA is not intended to circumvent other servicing available under this part.
(c) Non-program loans may be serviced under this subpart for borrowers who also have program loans.
(a)
(1) The borrower must have operated the farm in a county designated or declared a disaster area or a contiguous county at the time of the disaster. Farmers who have rented out their land base for cash are not operating the farm.
(2) The borrower must have acted in good faith, and the borrower's inability to make the upcoming scheduled loan payments must be for reasons not within the borrower's control.
(3) The borrower cannot have more than one installment set aside on each loan.
(4) As a direct result of the natural disaster, the borrower does not have sufficient income available to pay all family living and farm operating expenses, other creditors, and debts to the Agency. This determination will be based on:
(i) The borrower's actual production, income and expense records for the year the natural disaster occurred;
(ii) Any other records required by the Agency;
(iii) Compensation received for losses; and
(iv) Increased expenses incurred because of the natural disaster.
(5) For the next production cycle, the borrower must develop a feasible plan showing that the borrower will at least be able to pay all operating expenses
(6) The borrower must not be in non-monetary default.
(7) The borrower must not be ineligible due to disqualification resulting from Federal crop insurance violation according to 7 CFR part 718.
(8) The borrower must not become 165 days past due before the appropriate Agency DSA documents are executed.
(b)
(2) All of the borrower's program and non-program loans must be current after the Agency completes a DSA of the scheduled installment.
(3) All FLP loans must be current or less than 90 days past due at the time the application for DSA is complete.
(4) The Agency has not accelerated or applied any special servicing action under this part to the loan since the natural disaster occurred.
(5) For any loan that will receive a DSA, the remaining term of the loan must equal or exceed 2 years from the due date of the installment set-aside.
(6) The loan must not have a DSA in place.
(a) The DSA amount is limited to the lesser of:
(1) The first or second scheduled annual installment on the FLP loans due after the disaster occurred; or
(2) The amount the borrower is unable to pay the Agency due to the disaster. Borrowers are required to pay any portion of an installment they are able to pay.
(b) The amount set aside will be the unpaid balance remaining on the installment at the time the DSA is complete. This amount will include the unpaid interest and any principal that would be credited to the account as if the installment were paid on the due date, taking into consideration any payments applied to principal and interest since the due date.
(c) Recoverable cost items may not be set aside.
(a)
(2) All borrowers must sign the DSA request.
(b)
(2) The Agency may request other information needed to make an eligibility determination.
Within 30 days of a complete DSA application, the Agency will determine if the borrower meets the eligibility requirements for DSA.
If, prior to executing the appropriate DSA Agency documents, the borrower is not current on all FLP loans, the borrower must execute and provide to the Agency a best lien obtainable on all of their assets except those listed under § 766.112(b).
The borrower must execute the appropriate Agency documents within 45 days after the borrower receives notification of Agency approval of DSA.
(a) The Agency will set-aside the first installment due immediately after the disaster occurred.
(b) If the borrower has already paid the installment due immediately after the disaster occurred, the Agency will set-aside the next annual installment.
(a)
(2) If the borrower's set-aside installment is for a loan with a limited resource rate and the Agency modifies that limited resource rate, the interest rate on the set-aside portion will be modified concurrently.
(b)
(c)
The Agency will cancel a DSA if:
(a) The Agency takes any primary loan servicing action on the loan;
(b) The borrower pays the current market value buyout in accordance with § 766.113; or
(c) The borrower pays the set-aside installment.
If the Agency determines that the borrower received an unauthorized DSA, the Agency will reverse the DSA after all appeals are concluded.
(a)
(1) Have a current farm operating plan that demonstrates the borrower is financially distressed;
(2) Are 90 days or more past due on loan payments, even if the borrower has submitted an application for loan servicing as a financially distressed borrower;
(3) Are in non-monetary default on any loan agreements;
(4) Have filed bankruptcy;
(5) Request this information;
(6) Request voluntary conveyance of security;
(7) Have only delinquent SA; or
(8) Are subject to any other collection action, except when such action is a result of failure to graduate. Borrowers who fail to graduate when required and are able to do so, will be accelerated without providing notification of loan servicing options.
(b)
(1) A borrower who is financially distressed, or current and requesting servicing will be provided FSA-2512 (Appendix A to this subpart);
(2) A borrower who is 90 days past due will be sent FSA-2510 (Appendix B to this subpart);
(3) A borrower who is in non-monetary or both monetary and non-monetary default will receive FSA-2514 (Appendix C to this subpart);
(4) A borrower who has only delinquent SA will be notified of available loan servicing;
(5) Notification to a borrower who files bankruptcy will be provided in accordance with subpart G of this part.
(c)
(d)
(1) Current or financially distressed may submit a complete application any time prior to becoming 90 days past due;
(2) Ninety (90) days past due must submit a complete application within 60 days from receipt of FSA-2510;
(3) In non-monetary default with or without monetary default must submit a complete application within 60 days from receipt of FSA-2514.
(a) Except as provided in paragraph (e) of this section, an application for primary loan servicing, conservation contract, current market value buyout, homestead protection, or some combination of these options, must include the following to be considered complete:
(1) Completed acknowledgment form provided with the Agency notification and signed by all borrowers;
(2) Completed Agency application form;
(3) Financial records for the 3 most recent years, including income tax returns;
(4) The farming operation's production records for the 3 most recent years or the years the borrower has been farming, whichever is less;
(5) Documentation of compliance with the Agency's environmental regulations contained in subpart G of 7 CFR part 1940;
(6) Verification of all non-farm income;
(7) A current financial statement and the operation's farm operating plan, including the projected cash flow budget reflecting production, income, expenses, and debt repayment plan. In the case of an entity, the entity and all entity members must provide current financial statements; and
(8) Verification of all debts and collateral.
(b) In addition to the requirements contained in paragraph (a) of this section, the borrower must submit an aerial photo delineating any land to be considered for a conservation contract.
(c) To be considered for debt settlement, the borrower must provide the appropriate Agency form, and any additional information required under subpart B of 7 CFR part 1956.
(d) If a borrower who submitted a complete application while current or financially distressed is renotified as a result of becoming 90 days past due, the borrower must only submit a request for servicing in accordance with paragraph (a)(1) of this section, provided all other information is less than 90 days old and is based on the current production cycle. Any information 90 or more days old or not based on the current production cycle must be updated.
(e) The borrower need not submit any information under this section that already exists in the Agency's file and is still current as determined by the Agency.
(f) When jointly liable borrowers have been divorced and one has withdrawn from the farming operation, the Agency may release the withdrawing individual from liability, provided:
(1) The remaining individual submits a complete application in accordance with this section;
(2) Both parties have agreed in a divorce decree or property settlement that only the remaining individual will be responsible for all FLP loan payments;
(3) The withdrawing individual has conveyed all ownership interest in the security to the remaining individual; and
(4) The withdrawing individual does not have repayment ability and does not own any non-essential assets.
(a) If a borrower, who is financially distressed or current, requested loan servicing and received FSA-2512, but fails to respond timely and subsequently becomes 90 days past due, the Agency will notify the borrower in accordance with § 766.101(a)(2).
(b) If a borrower who is 90 days past due and received FSA-2510, or is in non-monetary, or both monetary and non-monetary default and received FSA-2514, and fails to timely respond or does not submit a complete application within the 60-day timeframe, the Agency will notify the borrower by certified mail of the following:
(1) The Agency's intent to accelerate the loan; and
(2) The borrower's right to request reconsideration, mediation and appeal in accordance with 7 CFR parts 11 and 780.
(a) A borrower must meet the following eligibility requirements to be considered for primary loan servicing:
(1) The delinquency or financial distress is the result of reduced repayment ability due to one of the following circumstances beyond the borrower's control:
(i) Illness, injury, or death of a borrower or other individual who operates the farm;
(ii) Natural disaster, adverse weather, disease, or insect damage which caused severe loss of agricultural production;
(iii) Widespread economic conditions such as low commodity prices;
(iv) Damage or destruction of property essential to the farming operation; or
(v) Loss of, or reduction in, the borrower or spouse's essential non-farm income.
(2) The borrower does not have non-essential assets for which the net recovery value is sufficient to resolve the financial distress or pay the delinquent portion of the loan.
(3) If the borrower is in non-monetary default, the borrower will resolve the non-monetary default prior to closing the servicing action.
(4) The borrower has acted in good faith.
(5) Financially distressed or current borrowers requesting servicing must pay a portion of the interest due on the loans.
(6) The borrower must not be ineligible due to disqualification resulting from Federal crop insurance violation according to 7 CFR part 718.
(b) Debtors with SA only must:
(1) Be delinquent due to circumstances beyond their control;
(2) Have acted in good faith.
(a)
(1) Conservation Contract, if requested;
(2) Consolidation and rescheduling or reamortization;
(3) Deferral;
(4) Writedown; and
(5) Current market value buyout.
(b)
(2) If the borrower cannot develop a feasible plan with the 110 percent debt service margin, the Agency will reduce the debt service margin by one percent and reconsider all available servicing authorities. This process will be repeated until a feasible plan has been developed or it has been determined that a feasible plan is not possible with a 100 percent margin.
(3) The borrower must be able to develop a feasible plan with at least a 100 percent debt service margin to be considered for the servicing options listed in paragraphs (a)(1) through (4) of this section.
(c)
(1) All Agency security, non-essential assets, and real property unencumbered by the Agency that does not meet the criteria established in § 766.112(b), when:
(i) A writedown is required to develop a feasible plan;
(ii) The borrower will be offered current market value buyout.
(2) The borrower's non-essential assets when their net recovery value may be adequate to bring the delinquent loans current.
The Agency will send the borrower notification of the Agency's decision within 60 calendar days after receiving a complete application for loan servicing.
(a)
(i) The borrower will have 45 days to accept the offer of servicing. After accepting the Agency's offer, the borrower must execute loan agreements
(ii) If the borrower does not accept the offer, the Agency will send the borrower another notification of the availability of loan servicing if the borrower becomes 90 days past due in accordance with § 766.101(a)(2).
(2) If the borrower cannot develop a feasible plan, or is not eligible for loan servicing, the Agency will send the borrower the calculations used and the reasons for the adverse decision.
(i) The borrower may request reconsideration, mediation and appeal in accordance with 7 CFR parts 11 and 780 of this title.
(ii) The Agency will send the borrower another notification of the availability of loan servicing if the borrower becomes 90 days past due in accordance with § 766.101(a)(2).
(b)
(i) The borrower will have 45 days to accept the offer of servicing. After accepting the Agency's offer, the borrower must execute loan agreements and security instruments, as appropriate.
(ii) If the borrower does not timely accept the offer, or fails to respond, the Agency will notify the borrower of its intent to accelerate the account.
(2) If the borrower cannot develop a feasible plan, or is not eligible for loan servicing, the Agency will send the borrower notification within 15 days, including the calculations used and reasons for the adverse decision, of its intent to accelerate the account in accordance with subpart H of this part, unless the account is resolved through any of the following options:
(i) The borrower may request reconsideration, mediation or voluntary meeting of creditors, or appeal in accordance with 7 CFR parts 11 and 780.
(ii) The borrower may request negotiation of appraisal within 30 days in accordance with § 766.115.
(iii) If the net recovery value of non-essential assets is sufficient to pay the account current, the borrower has 90 days to pay the account current.
(iv) The borrower, if eligible in accordance with § 766.113, may buy out the loans at the current market value within 90 days.
(v) The borrower may request homestead protection if the borrower's primary residence was pledged as security by providing the information required under § 766.151.
(a)
(1) The borrower meets the loan servicing eligibility requirements in § 766.104;
(2) The Agency determines that consolidation will assist the borrower to repay the loans;
(3) Consolidating the loans will bring the borrower's account current or prevent the borrower from becoming delinquent;
(4) The Agency has not referred the borrower's account to OGC or the U.S. Attorney, and the Agency does not plan to refer the account to either of these two offices in the near future;
(5) The borrower is in compliance with the Highly Erodible Land and Wetland Conservation requirements of 7 CFR part 12, if applicable;
(6) The loans are not secured by real estate;
(7) The Agency holds the same lien position on each loan;
(8) The Agency has not serviced the loans for unauthorized assistance under subpart F of this part; and
(9) The loan is not currently deferred, as described in § 766.109, or set-aside, as described in subpart B of this part. The Agency may consolidate loans upon cancellation of the deferral or DSA.
(b)
(1) The borrower meets the loan servicing eligibility requirements in § 766.104;
(2) Rescheduling the loans will bring the borrower's account current or prevent the borrower from becoming delinquent;
(3) The Agency determines that rescheduling will assist the borrower to repay the loans;
(4) The Agency has not referred the borrower's account to OGC or the U.S. Attorney, and the Agency does not plan to refer the account to either of these two offices in the near future;
(5) The borrower is in compliance with the Highly Erodible Land and Wetland Conservation requirements of 7 CFR part 12, if applicable; and
(6) The loan is not currently deferred, as described in § 766.109, or set-aside, as described in subpart B of this part. The Agency may reschedule loans upon cancellation of the deferral or DSA.
(c)
(2) The repayment period cannot exceed 15 years from the date of the consolidation and rescheduling, except that the repayment schedule for RL loans may not exceed 7 years from the date of rescheduling.
(d)
(1) The interest rate for loans made at the regular interest rate will be the lesser of:
(i) The interest rate for that type of loan on the date a complete servicing application was received;
(ii) The interest rate for that type of loan on the date of restructure; or
(iii) The lowest original loan note rate on any of the original notes being consolidated and rescheduled.
(2) The interest rate for loans made at the limited resource interest rate will be the lesser of:
(i) The limited resource interest rate for that type of loan on the date a complete servicing application was received;
(ii) The limited resource interest rate for that type of loan on the date of restructure; or
(iii) The lowest original loan note rate on any of the original notes being consolidated and rescheduled.
(3) At the time of consolidation and rescheduling, the Agency may reduce the interest rate to a limited resource rate, if available, if:
(i) The borrower meets the requirements for the limited resource interest rate; and
(ii) A feasible plan cannot be developed at the regular interest rate and maximum terms permitted in this section.
(4) Loans consolidated and rescheduled at the limited resource interest rate will be subject to annual limited resource review in accordance with § 765.51 of this chapter.
(e)
(2) The Agency adds protective advances for the payment of real estate taxes to the principal balance at the time of consolidation and rescheduling.
(3) The borrower must resolve all other protective advances not capitalized prior to closing the servicing actions.
(f)
(a)
(1) The borrower meets the loan servicing eligibility requirements in § 766.104;
(2) Reamortization will bring the borrower's account current or prevent the borrower from becoming delinquent;
(3) The Agency determines that reamortization will assist the borrower to repay the loan;
(4) The Agency has not referred the borrower's account to OGC or the U.S. Attorney, and the Agency does not plan to refer the account to either of these two offices in the near future;
(5) The borrower is in compliance with the Highly Erodible Land and Wetland Conservation requirements of 7 CFR part 12, if applicable; and
(6) The loan is not currently deferred, as described in § 766.109, or set-aside, as described in subpart B of this part. The Agency may reamortize loans upon cancellation of the deferral or DSA.
(b)
(2) If the Agency extends the loan term, the repayment period from the original loan date may not exceed the maximum number of years for the type of loan being reamortized in paragraphs (2)(i) through (iv), or the useful life of the security, whichever is less.
(i) FO, SW, RL, EE real estate-type, and EM loans made for real estate purposes may not exceed 40 years from the date of the original note or assumption agreement.
(ii) EE real estate-type loans secured by chattels only may not exceed 20 years from the date of the original note or assumption agreement.
(iii) RHF loans may not exceed 33 years from the date of the original note or assumption agreement.
(iv) SA loans may not exceed 25 years from the date of the original Shared Appreciation note.
(c)
(1) The interest rate for loans made at the regular interest rate will be the lesser of:
(i) The interest rate for that type of loan on the date a complete servicing application was received;
(ii) The interest rate for that type of loan on the date of restructure; or
(iii) The original loan note rate of the note being reamortized.
(2) The interest rate for loans made at the limited resource interest rate will be the lesser of:
(i) The limited resource interest rate for that type of loan on the date a complete servicing application was received;
(ii) The limited resource interest rate for that type of loan on the date of restructure; or
(iii) The original loan note rate of the note being reamortized.
(3) At the time of reamortization, the Agency may reduce the interest rate to a limited resource rate, if available, if:
(i) The borrower meets the requirements for the limited resource interest rate; and
(ii) A feasible plan cannot be developed at the regular interest rate and maximum terms permitted in this section.
(4) Loans reamortized at the limited resource interest rate will be subject to annual limited resource review in accordance with § 765.51 of this chapter.
(5) SA payment agreements will be reamortized at the current SA amortization rate in effect on the date of approval or the rate on the original payment agreement, whichever is less.
(d)
(2) The Agency adds protective advances for the payment of real estate taxes to the principal balance at the time of reamortization.
(3) The borrower must resolve all other protective advances not capitalized prior to closing the reamortization.
(e)
(a)
(1) The borrower meets the loan servicing eligibility requirements in § 766.104;
(2) Rescheduling, consolidation, and reamortization of all the borrower's loans, will not result in a feasible plan with 110 percent debt service margin;
(3) The need for deferral is temporary; and
(4) The borrower develops feasible first-year deferral and post-deferral farm operating plans subject to the following:
(i) The deferral will not create excessive net cash reserves beyond that necessary to develop a feasible plan.
(ii) The Agency will consider a partial deferral if deferral of the total Agency payment would result in the borrower developing more cash availability than necessary to meet debt repayment obligations.
(b)
(i) Greatest improvement over the first year cash available to service FLP debt;
(ii) The shortest possible deferral period.
(2) The Agency will distribute interest accrued on the deferred principal portion of the loan equally to payments over the remaining loan term after the deferral period ends.
(c)
(2) If the Agency determines that the borrower's improved repayment ability will allow graduation, the Agency will require the borrower to graduate in accordance with part 765, subpart C of this chapter.
(d)
(2) Loans deferred will also be serviced in accordance with §§ 766.107, 766.108 and 766.111, as appropriate.
(a)
(2) A current or financially distressed borrower may request a Conservation Contract at any time prior to becoming 90 days past due.
(3) A delinquent borrower may request a Conservation Contract during the same 60-day time period in which the borrower may apply for primary loan servicing. The borrower eligibility requirements in § 766.104 will apply.
(4) A Conservation Contract may be established for conservation, recreation, and wildlife purposes.
(5) The land under a Conservation Contract cannot be used for the production of agricultural commodities during the term of the contract.
(6) Only loans secured by the real estate that will be subject to the easement, may be considered for a Conservation Contract.
(b)
(1) Wetlands or highly erodible lands; and
(2) Uplands that meet any one of the following criteria:
(i) Land containing aquatic life, endangered species, or wildlife habitat of local, State, tribal, or national importance;
(ii) Land in 100-year floodplains;
(iii) Areas of high water quality or scenic value;
(iv) Historic or cultural properties listed in or eligible for the National Register of Historic Places;
(v) Aquifer recharge areas of local, regional, State, or tribal importance;
(vi) Buffer areas necessary for the adequate protection of proposed Conservation Contract areas;
(vii) Areas that contain soils generally not suited for cultivation; or
(viii) Areas within or adjacent to Federal, State, tribal, or locally administered conservation areas.
(c)
(1) It is not suited or eligible for the program due to legal restrictions;
(2) It has on-site or off-site conditions that prohibit the use of the land for conservation, wildlife, or recreational purposes; or
(3) The Conservation Contract review team determines that the land is not suitable for conservation, wildlife, or recreational purposes.
(d)
(e)
(f)
(g)
(1) Result in a feasible plan for current borrowers; or
(2) Result in a feasible plan with or without primary loan servicing for financially distressed or delinquent borrowers; and
(3) Improve the borrower's ability to repay the remaining balance of the loan.
(h)
(1) Divide the contract acres by the total acres that secure the borrower's FLP loans to determine the contract acres percentage.
(2) Multiply the borrower's total unpaid FLP loan balance (principal, interest, and recoverable costs already paid by the Agency) by the percentage calculated under paragraph (h)(1) of this section to determine the amount of FLP debt that is secured by the contract acreage.
(3) Multiply the borrower's total unpaid FLP loan balance (principal, interest, and recoverable costs already paid by the Agency) by 33 percent.
(4) The lesser of the amounts calculated in paragraphs (h)(2) and (h)(3) of this section is the maximum amount of debt reduction for a 50-year contract.
(5) The borrower will receive 60 percent of the amount calculated in paragraph (h)(4) of this section for a 30-year contract.
(6) The borrower will receive 20 percent of the amount calculated in paragraph (h)(4) of this section for a 10-year contract.
(i)
(1) Divide the contract acres by the total acres that secure the borrower's FLP loans to determine the contract acres percentage.
(2) Multiply the borrower's total unpaid FLP loan balance (principal, interest, and recoverable costs already paid by the Agency) by the percentage calculated in paragraph (i)(1) of this section to determine the amount of FLP debt that is secured by the contract acreage.
(3) Multiply the market value of the total acres, less contributory value of any structural improvements, that secure the borrower's FLP loans by the percent calculated in paragraph (i)(1) of this section to determine the current value of the acres in the contract.
(4) Subtract the market value of the contract acres calculated in paragraph (i)(3) of this section from the FLP debt secured by the contract acres as calculated in paragraph (i)(2) of this section.
(5) Select the greater of the amounts calculated in either paragraphs (i)(3) and (i)(4) of this section.
(6) The lesser of the amounts calculated in paragraphs (i)(2) and (i)(5) of this section will be the maximum amount of debt reduction for a 50-year contract term.
(7) The borrower will receive 60 percent of the amount calculated in paragraph (i)(6) of this section for a 30-year contract term.
(8) The borrower will receive 20 percent of the amount calculated in paragraph (i)(6) of this section for a 10-year contract term.
(j)
(k)
(l)
(a)
(1) Meets the eligibility criteria in § 766.104;
(2) Is delinquent;
(3) Has not previously received debt forgiveness on any FLP direct loan; and
(4) Complies with the Highly Erodible Land and Wetland Conservation requirements of 7 CFR part 12.
(b)
(2) The present value of the restructured loan must be greater than or equal to the net recovery value of Agency security and any non-essential assets.
(3) The writedown amount, excluding debt reduction received through Conservation Contract, does not exceed $300,000.
(4) A borrower who owns real estate must execute an SAA in accordance with § 766.201.
(c)
(a) If the borrower is delinquent prior to restructuring, the borrower, and all
(b) The Agency will take the best lien obtainable on all assets the borrower owns, except:
(1) When taking a lien on such property will prevent the borrower from obtaining credit from other sources;
(2) When the property could have significant environmental problems or costs as described in subpart G of 7 CFR part 1940;
(3) When the Agency cannot obtain a valid lien;
(4) When the property is subsistence livestock, cash, special collateral accounts the borrower uses for the farming operation, retirement accounts, personal vehicles necessary for family living, household contents, or small equipment such as hand tools and lawn mowers; or
(5) When a contractor holds title to a livestock or crop enterprise, or the borrower manages the enterprise under a share lease or share agreement.
(a)
(1) The borrower has not previously received debt forgiveness on any other FLP direct loan;
(2) The borrower has acted in good faith;
(3) The borrower does not have non-essential assets for which the net recovery value is sufficient to pay the account current;
(4) The borrower is unable to develop a feasible plan through primary loan servicing programs or a Conservation Contract, if requested;
(5) The present value of the restructured loans is less than the net recovery value of Agency security;
(6) The borrower pays the amount required in a lump sum without guaranteed or direct credit from the Agency; and
(7) The amount of debt forgiveness does not exceed $300,000.
(b)
(a) A borrower who is unable to develop a feasible plan but is otherwise eligible for primary loan servicing may request:
(1) State-certified mediation; or
(2) Voluntary meeting of creditors when a State does not have a certified mediation program.
(b) Any negotiation of the Agency's appraisal must be completed before State-certified mediation or voluntary meeting of creditors.
(a) A borrower considered for primary loan servicing who does not agree with the Agency's appraisal of the borrower's assets may:
(1) Obtain a technical appraisal review of the Agency's appraisal and provide it at the reconsideration or appeal hearing;
(2) Obtain an independent appraisal completed in accordance with § 761.7 as part of the appeals process. The borrower must:
(i) Pay for this appraisal;
(ii) Choose which appraisal will be used in Agency calculations, if the difference between the two appraisals is five percent or less.
(3) Negotiate the Agency's appraisal by obtaining a second appraisal.
(i) If the difference between the two appraisals is five percent or less, the borrower will choose the appraisal to be used in Agency calculations.
(ii) If the difference between the two appraisals is greater than five percent, the borrower may request a third appraisal. The Agency and the borrower will share the cost of the third appraisal equally. The average of the two appraisals closest in value will serve as the final value.
(iii) A borrower may request a negotiated appraisal only once in connection with an application for primary loan servicing.
(iv) The borrower may not appeal a negotiated appraisal.
(b) If the appraised value of the borrower's assets changes as a result of the appealed appraisal or the negotiated appraisal, the Agency will reconsider its previous loan servicing decision using the new appraisal value.
(c) If the appeal process results in a determination that the borrower is eligible for primary loan servicing, the Agency will use the information utilized to make the appeal decision, unless stated otherwise in the appeal decision letter.
(a)
(2)
(3)
(i) Updates to items required under § 766.102;
(ii) Information required under § 766.353; and
(iii) Identification of land and buildings to be considered.
(b)
(2)
(3)
(i) Updates to items required under § 766.102; and
(ii) Identification of land and buildings to be considered.
(a)
(2) The applicant may propose a homestead protection site. Any proposed site is subject to Agency approval.
(3) The proposed homestead protection site must meet all State and local requirements for division into a separate legal lot.
(4) Where voluntary conveyance of the property to the Agency is required to process the homestead protection request, the Agency will process any request for voluntary conveyance according to § 766.353.
(b)
(1) Must be the owner, or former owner from whom the Agency acquired title of the property pledged as security for an FLP loan. For homestead protection purposes, an owner or former owner includes:
(i) A member of an entity who is or was personally liable for the FLP loan secured by the homestead protection
(ii) A member of an entity who is or was personally liable for the FLP loan that possessed and occupied a separate dwelling on the security property;
(2) Must have earned gross farm income commensurate with:
(i) The size and location of the farm; and
(ii) The local agricultural conditions in at least 2 calendar years during the 6-year period immediately preceding the calendar year in which the applicant applied for homestead protection;
(3) Must have received 60 percent of gross income from farming in at least two of the 6 years immediately preceding the year in which the applicant applied for homestead protection;
(4) Must have lived in the home during the 6-year period immediately preceding the year in which the applicant applied for homestead protection. The applicant may have left the home for not more than 12 months if it was due to circumstances beyond their control;
(5) Must demonstrate sufficient income to make rental payments on the homestead property for the term of the lease, and maintain the property in good condition. The lessee will be responsible for any normal maintenance; and
(6) Must not be ineligible due to disqualification resulting from Federal crop insurance violation according to 7 CFR part 718.
Homestead protection rights are not transferable or assignable, unless the eligible party dies or becomes legally incompetent, in which case the homestead protection rights may be transferred to the spouse only, upon the spouse's agreement to comply with the terms and conditions of the lease.
(a)
(2) If a third party obtains title to the property:
(i) The applicant and the property are no longer eligible for homestead protection;
(ii) The Agency will not implement any outstanding lease-purchase agreement.
(3) The borrower may request homestead protection for property subject to third party redemption rights. In such case, homestead protection will not begin until the Agency obtains title to the property.
(b)
(2) All leases will include an option to purchase the homestead protection property as described in paragraph (c) of this section.
(3) The lease term will not be less than 3 years and will not exceed 5 years.
(4) The lessee must agree to make lease payments on time and maintain the property.
(5) The lessee must cooperate with Agency efforts to sell the remaining portion of the farm.
(c)
(2) The purchase price is the market value of the property when the option is exercised as determined by a current appraisal obtained by the Agency.
(3) The lessee may purchase homestead protection property with cash or other credit source.
(4) The lessee may receive Agency Non-program financing provided:
(i) The lessee has not received previous debt forgiveness;
(ii) The Agency has funds available to finance the purchase of homestead protection property; and
(iii) The lessee demonstrates an ability to repay such an FLP loan.
(d)
(e)
If there is a conflict between a borrower's homestead protection rights and any provisions of State law relating to redemption rights, the State law prevails.
(a)
(1) Owns any real estate that serves or will serve as loan security; and
(2) Accepts a writedown in accordance with § 766.111.
(b)
(1) The borrower sells or conveys all or a portion of the Agency's real estate security, unless real estate is conveyed upon the death of a borrower to a spouse who will continue farming;
(2) The borrower repays or satisfies all FLP loans;
(3) The borrower ceases farming; or
(4) The Agency accelerates the borrower's loans.
(a) The value of the real estate security at the time of maturity of the SAA (market value) will be the appraised value of the security at the highest and best use, less the increase in the value of the security resulting from capital improvements added during the term of the SAA (contributory value). The market value of the real estate security property will be determined based on a current appraisal completed within the previous 12 months in accordance with § 761.7 of this chapter, and subject to the following:
(1) Prior to completion of the appraisal, the borrower will identify any capital improvements that have been added to the real estate security since the execution of the SAA.
(2) The appraisal must specifically identify the contributory value of capital improvements made to the real estate security during the term of the SAA to make deductions for that value.
(3) For calculation of shared appreciation recapture, the contributory value of capital improvements added during the term of the SAA will be deducted from the market value of the property. Such capital improvements must also meet at least one of the following criteria:
(i) It is the borrower's primary residence. If the new residence is affixed to the real estate security as a replacement for a residence which existed on the security property when the SAA was originally executed, or, the living area square footage of the original residence was expanded, only the value added to the real property by the new or expanded portion of the original residence (if it added value) will be deducted from the market value.
(ii) It is an improvement to the real estate with a useful life of over one year and is affixed to the property, the following conditions must be met:
(A) The item must have been capitalized and not taken as an annual operating expense on the borrower's Federal income tax returns. The borrower must provide copies of appropriate tax returns to verify that capital improvements claimed for shared appreciation recapture reduction are capitalized.
(B) If the new item is affixed to the real estate as a replacement for an item that existed on the real estate at the time the SAA was originally executed, only the value added by the new item will be deducted from the market value.
(b) In the event of a partial sale, an appraisal of the property being sold may be required to determine the market value at the time the SAA was
(a) The borrower must pay on the due date or 30 days from Agency notification, whichever is later:
(1) Seventy-five percent of the appreciation in the real estate security if the agreement is triggered within 4 years or less from the date of the writedown; or
(2) Fifty percent of such appreciation if the agreement is triggered more than 4 years from the date of the writedown or when the agreement matures.
(b) If the borrower sells a portion of the security, the borrower must pay shared appreciation only on the portion sold. Shared appreciation on the remaining portion will be due in accordance with paragraph (a) of this section.
(c) The amount of recapture cannot exceed the amount of the debt written off through debt writedown.
(a) The Agency will amortize the recapture into a Shared Appreciation Payment Agreement provided the borrower:
(1) Has not ceased farming and the borrower's account has not been accelerated;
(2) Provides a complete application in accordance with § 764.51(b), by the recapture due date or within 60 days of Agency notification of the amount of recapture due, whichever is later;
(3) Is unable to pay the recapture and cannot obtain funds from any other source;
(4) Develops a feasible plan that includes repayment of the shared appreciation amount;
(5) Provides a lien on all assets, except those listed in § 766.112(b); and
(6) Signs loan agreements and security instruments as required.
(b) If the borrower later becomes delinquent or financially distressed, reamortization of the Shared Appreciation Payment Agreement can be considered under subpart C of this part.
(a) The interest rate for Shared Appreciation Payment Agreements is the Agency's SA amortization rate.
(b) The term of the Shared Appreciation Payment Agreement is based on the borrower's repayment ability and the useful life of the security. The term will not exceed 25 years.
(a)
(b)
(2) If the former borrower sells or conveys real estate within the 10-year term, the former borrower must repay the Agency the lesser of:
(i) The market value of the real estate parcel at the time of sale or conveyance, as determined by an Agency appraisal, minus the portion of the recovery value of the real estate paid to the Agency in the buyout;
(ii) The market value of the real estate parcel at the time of the sale or conveyance, as determined by an Agency appraisal, minus:
(A) The unpaid balance of prior liens at the time of the sale or conveyance; and
(B) The net recovery value of the real estate the borrower paid to the Agency in the buyout if this amount has not been accounted for as a prior lien;
(iii) The total amount of the FLP debt the Agency wrote off for loans secured by real estate.
(3) If the former borrower does not pay the amount due, the Agency will liquidate the Net Recovery Buyout account in accordance with subpart H of this part.
(4) If the former borrower does not sell or convey the real estate within the 10-year term, no recapture is due.
(a) Except where otherwise specified, the borrower is responsible for repaying any unauthorized assistance in full within 90 days of Agency notice. The Agency may reverse any unauthorized loan servicing actions, when possible.
(b) The borrower has the opportunity to meet with the Agency to discuss or refute the Agency's findings.
A borrower is ineligible for continued Agency assistance if the borrower, or a third party on the borrower's behalf, submits information to the Agency that the borrower knows to be false.
(a)
(2) If the borrower is unable to repay the entire amount in a lump sum, the Agency will accept partial repayment of the unauthorized assistance within 90 days of Agency notice to the extent of the borrower's ability to repay.
(3) If the borrower is unable to repay all or part of the unauthorized amount, the loan will be converted to a Non-program loan under the following conditions:
(i) The borrower did not provide false information;
(ii) It is in the interest of the Agency;
(iii) The debt will be subject to the interest rate for Non-program loans;
(iv) The debt will be serviced as a Non-program loan;
(v) The term of the Non-program loan will be as short as feasible, but in no case will exceed:
(A) The remaining term of the FLP loan;
(B) Twenty-five (25) years for real estate loans; or
(C) The life of the security for chattel loans.
(b)
If a borrower files for bankruptcy, the Agency will provide written notification to the borrower's attorney with a copy to the borrower as follows:
(a)
(b)
(a)
(b)
(1) Sixty days after the borrower's attorney received the notification of any remaining loan servicing options; or
(2) The remaining time from the Agency's previous notification of all servicing options that the Agency suspended when the borrower filed bankruptcy.
(c)
(a)
(b)
(c)
(a)
(2) The Agency will charge protective advances against the borrower's account as necessary to protect the Agency's interests during liquidation in accordance with § 765.203 of this chapter.
(3) When no surviving family member or third party assumes or repays a deceased borrower's loan in accordance with part 765, subpart J, of this chapter, or when the estate does not otherwise fully repay or sell loan security to repay a deceased borrower's FLP loans, the Agency will liquidate the security as quickly as possible in accordance with State and local requirements.
(b)
(2) Borrowers may voluntarily liquidate their security in accordance with §§ 766.352, 766.353 and 766.354. In such case, the Agency will:
(i) Not delay involuntary liquidation action.
(ii) Notify the borrower in accordance with subpart C of this part, prior to acting on the request for voluntary liquidation, if the conditions of paragraph (b)(1) of this section have not been met.
(c)
(1) The Agency may delay involuntary liquidation actions when in the Agency's financial interest for a period not to exceed 60 days.
(2) The borrower must obtain the Agency's consent prior to the sale of the property.
(3) If the borrower will not pay the Agency in full, the minimum sales price must be the market value of the property as determined by the Agency.
(4) The Agency will accept a conveyance offer only when it is in the Agency's financial interest.
(5) If a Non-program borrower does not cure the default, or cannot or will not voluntarily liquidate, the Agency will accelerate the loan.
(a)
(1) The borrower must sell all real property and chattel that secure FLP debt until the debt is paid in full or until all security has been liquidated.
(2) The Agency must approve the sale and approve the use of proceeds.
(3) The sale proceeds are applied in order of lien priority, except that proceeds may be used to pay customary costs appropriate to the transaction provided:
(i) The costs are reasonable in amount;
(ii) The borrower is unable to pay the costs from personal funds or have the purchaser pay;
(iii) The costs must be paid to complete the sale;
(iv) Costs are not for postage and insurance of the note while in transit when required for the Agency to present the promissory note to the recorder to obtain a release of a portion of the real property from the mortgage.
(4) The Agency will approve the sale of property when the proceeds do not cover the borrower's full debt only if:
(i) The sales price must be equal to or greater than the market value of the property; and
(ii) The sale is in the Agency's financial interest.
(5) If an unpaid loan balance remains after the sale, the Agency will continue to service the loan in accordance with subpart B of 7 CFR part 1956.
(b)
(1) Public sale if the borrower obtains the agreement of lienholders as necessary to complete the public sale; or
(2) Private sale if the borrower:
(i) Sells all of the security for not less than the market value;
(ii) Obtains the agreement of lienholders as necessary to complete the sale;
(iii) Has a buyer who is ready and able to purchase the property; and
(iv) Obtains the Agency's agreement for the sale.
(a)
(1) An Agency application form;
(2) A current financial statement. If the borrower is an entity, all entity members must provide current financial statements;
(3) Information on present and future income and potential earning ability;
(4) A warranty deed or other deed acceptable to the Agency;
(5) A resolution approved by the governing body that authorizes the conveyance in the case of an entity;
(6) Assignment of all leases to the Agency. The borrower must put all oral leases in writing;
(7) Title insurance or title record for the security, if available;
(8) Complete debt settlement application in accordance with subpart B of 7 CFR part 1956 before or in conjunction with the voluntary conveyance offer if the value of the property to be conveyed is less than the FLP debt; and
(9) Any other documentation required by the Agency to evaluate the request.
(b)
(1) Conveyance is in the Agency's financial interest;
(2) The borrower conveys all real property securing the FLP loan; and
(3) The borrower has received prior notification of the availability of loan servicing in accordance with subpart C of this part.
(c)
(2) Before conveyance, the borrower must pay or obtain releases of all junior liens, real estate taxes, judgments, and other assessments. If the borrower is unable to pay or obtain a release of the liens, the Agency may attempt to negotiate a settlement with the
(d)
(2) The Agency will credit the borrower's account for the amount of the market value of the property less any prior liens, or the debt, whichever is less. In the case of an American Indian borrower whose loans are secured by real estate located within the boundaries of a Federally recognized Indian reservation, however, the Agency will credit the borrower's account with the greater of the market value of the security or the borrower's FLP debt.
(e)
(a)
(1) An Agency application form;
(2) A current financial statement. If the borrower is an entity, all entity members must provide current financial statements;
(3) Information on present and future income and potential earning ability;
(4) A bill of sale including each item and titles to all vehicles and equipment, as applicable;
(5) A resolution approved by the governing body that authorizes the conveyance in the case of an entity borrower;
(6) Complete debt settlement application in accordance with subpart B of 7 CFR part 1956 before or in conjunction with the voluntary conveyance offer if the value of the property to be conveyed is less than the debt.
(b)
(1) The borrower has made every possible effort to sell the property voluntarily;
(2) The borrower can convey the chattel free of other liens;
(3) The conveyance is in the Agency's financial interest;
(4) The borrower conveys all chattel securing the FLP loan; and
(5) The borrower has received prior notification of the availability of loan servicing in accordance with subpart C of this part.
(c)
(2) The Agency will credit the borrower's account in the amount of the market value of the chattel.
(a)
(i) State law imposes separate restrictions on accelerations;
(ii) The borrower is American Indian, whose real estate is located on an Indian reservation.
(2) The Agency accelerates all of the borrower's loans at the same time, regardless of whether each individual loan is delinquent or not.
(3) All borrowers must receive prior notification in accordance with subpart C of this part, except for borrowers who fail to graduate in accordance with § 766.101(a)(8).
(b)
(c)
(1) Pay cash;
(2) Transfer the security to a third party in accordance with part 765, subpart I of this chapter;
(3) Sell the security property in accordance with § 766.352; or
(4) Voluntarily convey the security to the Agency in accordance with §§ 766.353 and 766.354, as appropriate.
(d)
(e)
(a)
(2) The Agency accelerates all of the borrower's loans at the same time, regardless of whether each individual loan is delinquent or not.
(3) All borrowers must receive prior notification in accordance with subpart C of this part, except for borrowers who fail to graduate in accordance with § 766.101(a)(8).
(4) At the time of acceleration, the Agency will notify the borrower and the Tribe that has jurisdiction over the Indian reservation of:
(i) The possible outcomes of a foreclosure sale and the potential impacts of those outcomes on rights established under paragraphs (a)(4)(ii) and (iii) of this section;
(ii) The priority for purchase of the property acquired by the Agency through voluntary conveyance or foreclosure;
(iii) Transfer of acquired property to the Secretary of the Interior if the priority of purchase of the property established under paragraph (a)(4)(ii) of this section is not exercised.
(b)
(1) Request the Tribe, having jurisdiction over the Indian reservation in which the real property is located, be assigned the loan;
(i) The Tribe will have 30 calendar days after the Agency notification of such request to accept the assignment of the loan.
(ii) The Tribe must pay the Agency the lesser of the outstanding Agency indebtedness secured by the real estate or the market value of the property.
(iii) The Tribe may pay the amount in a lump sum or according to the rates, terms and requirements established in part 770 of this chapter, subject to the following:
(A) The Tribe must execute the promissory note and loan documents within 90 calendar days of receipt from the Agency;
(B) Such loan may not be considered for debt writedown under 7 CFR part 770.
(iv) The Tribe's failure to respond to the request for assignment of the loan or to finalize the assignment transaction within the time provided, shall be treated as the Tribe's denial of the request.
(2) Request the loan be assigned to the Secretary of the Interior. The Secretary of the Interior's failure to respond to the request for assignment of the loan or to finalize the assignment transaction, shall be treated as denial of the request;
(3) Voluntarily convey the real estate property to the Agency;
(i) The Agency will conduct a environmental review before accepting voluntary conveyance.
(ii) The Agency will credit the account with the greater of the market value of the real estate or the amount of the debt.
(4) Sell the real estate;
(i) The buyer must have the financial ability to buy the property.
(ii) The sale of the property must be completed within 90 calendar days of the Agency's notification.
(iii) The loan can be transferred and assumed by an eligible buyer.
(5) Pay the FLP debt in full.
(6) Consult with the Tribe that has jurisdiction over the Indian reservation to determine if State or Tribal law provides rights and protections that are more beneficial than those provided under this section.
(c)
(1) Sale of the American Indian borrower's property;
(2) Market value of the property;
(3) Amount the Tribe would be required to pay the Agency for assignment of the loan.
(d)
(e)
(1) The borrower does not pay the account in full within the time period specified in the acceleration notice;
(2) The borrower does not voluntarily convey the property to the Agency;
(3) Neither the Tribe nor the Secretary of the Interior accepts assignment of the borrower's loan.
(a)
(1) The borrower does not satisfy the account in accordance with §§ 766.355 and 766.356, as appropriate;
(2) The involuntary liquidation is in the Agency's financial interest.
(b)
(2) If the Agency acquires the foreclosed property, the Agency will credit the borrower's account in the amount of the Agency's bid except when incremental bidding was used, in which case the amount of credit will be the maximum bid that was authorized. If the Agency does not acquire the foreclosed property, the Agency will credit the borrower's account in accordance with State law and guidance from the Regional OGC.
(3) Notwithstanding paragraph (b)(2), for an American Indian borrower whose real property secures an FLP loan and is located within the confines of a Federally-recognized Indian reservation, the Agency will credit the borrower's account in the amount that is the greater of:
(i) The market value of the security; or
(ii) The amount of the FLP debt against the property.
(4) After the date of foreclosure, the borrower or former owner retains no statutory, implied, or inherent right of possession to the property beyond those rights granted by State law.
(5) If an unpaid balance on the FLP loan remains after the foreclosure sale of the property, the Agency may debt settle the account in accordance with subpart B of 7 CFR part 1956.
(c)
(2) The Agency will apply the proceeds from the repossession sale to the borrower's account less prior liens and all authorized liquidation costs.
(3) If an unpaid balance on the FLP loan remains after the sale of the repossessed property, the Agency may debt settle the account in accordance with subpart B of 7 CFR part 1956.
On an individual case basis, the Agency may consider granting an exception to any regulatory requirement or policy of this part if:
(a) The exception is not inconsistent with the authorizing statute or other applicable law; and
(b) The Agency's financial interest would be adversely affected by acting in accordance with published regulations or policies and granting the exception would resolve or eliminate the adverse effect upon its financial interest.
5 U.S.C. 301 and 7 U.S.C. 1989.
(a)
(1) Managing inventory property;
(2) Selling inventory property;
(3) Leasing inventory property;
(4) Managing real and chattel property the Agency takes into custody after abandonment by the borrower;
(5) Selling or leasing inventory property with important resources, or located in special hazard areas; and
(6) Conveying interest in real property for conservation purposes.
(b)
Abbreviations and definitions for terms used in this part are provided in § 761.2 of this chapter.
The Agency will take actions necessary to secure, maintain, preserve, manage, and operate the abandoned security property, including marketing perishable security property on behalf of the borrower when such action is in the Agency's financial interest. If the security is in jeopardy, the Agency will take the above actions prior to completing servicing actions contained in 7 CFR part 766.
(a)
(b)
(c)
(1) To lienholders in order of lien priority less a pro rata share of the sale expenses;
(2) To the inventory account up to the amount of expenses incurred by the Agency in connection with the sale of personal property;
(3) To the outstanding balance on the FLP loan; and
(4) To the borrower, if the borrower's whereabouts are known.
(a) The Agency may lease real estate inventory property:
(1) To the former owner under the Homestead Protection Program;
(2) To a beginning farmer selected to purchase the property but who was unable to purchase it because of a lack of Agency direct or guaranteed loan funds;
(3) When the Agency is unable to sell the property because of lengthy litigation or appeal processes.
(b) The Agency will lease real estate inventory property in an “as is” condition.
(c) The Agency will lease property for:
(1) Homestead protection in accordance with part 766, subpart D, of this chapter.
(2) A maximum of 18 months to a beginning farmer the Agency selected as purchaser when no Agency loan funds are available; or
(3) The shortest possible duration for all other cases subject to the following:
(i) The maximum lease term for such a lease is 12 months.
(ii) The lease is not subject to renewal or extension.
(d) The lessee may pay:
(1) A lump sum;
(2) On an annual installment basis; or
(3) On a crop-share basis, if the lessee is a beginning farmer under paragraph (a) of this section.
(e) The Agency leases real estate inventory property for a market rent amount charged for similar properties in the area.
(f) The Agency may require the lessee to provide a security deposit.
(g) Only leases to a beginning farmer or Homestead Protection Program participant will contain an option to purchase the property.
At 73 FR 74345, Dec. 8, 2008, § 762.101 was amended by by adding the words “or socially disadvantaged farmer” immediately after the words “beginning farmer” in paragraphs (a)(2), (c)(2), (d)(3) and (g), effective January 7, 2009.
The Agency does not lease non-real estate property unless it is attached as a fixture to real estate inventory property that is being leased and it is essential to the farming operation.
(a) The Agency will pay for repairs to leased real estate inventory property only when necessary to protect the Agency's interest.
(b) If the lessee purchases the real estate inventory property, the Agency will not credit lease payments to the purchase price of the property.
Subject to § 767.152, the Agency will attempt to sell its inventory property as follows:
(a) The Agency will combine or divide inventory property, as appropriate, to maximize the opportunity for beginning farmers to purchase real property.
(b) The Agency will advertise all real estate inventory property that can be used for any authorized FO loan purpose for sale to beginning farmers no later than 15 days after the Agency obtains title to the property.
(c) If more than one eligible beginning farmer applies, the Agency will select a purchaser by a random selection process open to the public.
(1) All applicants will be advised of the time and place of the selection.
(2) All drawn offers will be numbered.
(3) Offers drawn after the first will be held in suspense pending sale to the successful applicant.
(4) Random selection is final and not subject to administrative appeal.
(d) If there are no offers from beginning farmers, the Agency will sell inventory property by auction or sealed bid to the general public no later than 165 days after the Agency obtains title to the property. All bidders will be required to submit a 10 percent deposit with their bid.
(e) If the Agency receives no acceptable bid through an auction or sealed bid, the Agency will attempt to sell the property through a negotiated sale at the best obtainable price.
(f) If the Agency is not able to sell the property through negotiated sale, the Agency may list the property with a real estate broker. The broker must be properly licensed in the State in which the property is located.
At 73 FR 74345, Dec. 8, 2008, § 767.151 was amended by adding the words “or socially disadvantaged farmers” immediately after “beginning farmers” in paragraphs (a), (b), and (d) and by adding the words “or socially disadvantaged farmer” immediately after the words “beginning farmer” in paragraph (c), effective January 7, 2009.
The Agency's disposition procedure under § 767.151 is subject to the following:
(a) If the Agency leases real estate inventory property to a beginning farmer in accordance with § 767.101(a)(2), and the lease expires, the Agency will not advertise the property if the Agency has direct or guaranteed loan funds available to finance the transaction.
(b) The Agency will not advertise a property for sale until the homestead protection rights have terminated in accordance with part 766, subpart D of this chapter.
(c) The Agency may allow an additional 60 days if needed for conservation easements or environmental reviews.
(d) If the property was owned by an American Indian borrower and is located on an Indian reservation, the Agency will:
(1) No later than 90 days after acquiring the property, offer the opportunity to purchase or lease the property in accordance with:
(i) The priorities established by the Indian Tribe having jurisdiction over the Indian reservation;
(ii) In cases where priorities have not been established, the following order:
(A) A member of the Indian Tribe that has jurisdiction over the Indian reservation;
(B) An Indian entity;
(C) The Indian Tribe.
(2) Transfer the property to the Secretary of the Interior if the property is not purchased or leased under paragraph (1) of this section.
(e) If Agency analysis of farm real estate market conditions indicates the sale of the Agency's inventory property will have a negative effect on the value of farms in the area, the Agency may withhold inventory farm properties in the affected area from the market until further analysis indicates otherwise.
At 73 FR 74345, Dec. 8, 2008, § 767.152 was amended by adding the words “or socially disadvantaged farmer” immediately after the words “beginning farmer” in paragraph (a), effective January 7, 2009.
(a)
(2) Property sold by auction or sealed bid will be sold for the best obtainable price. The Agency reserves the right to reject any and all bids.
(b)
(1) The Agency has direct or guaranteed FO loan funds available;
(2) All applicable loan making requirements are met; and
(3) All non-beginning farmer purchasers make a 10 percent down payment.
(c)
(2) The purchaser is responsible for paying all taxes and assessments after the Agency conveys title to the purchaser.
(d)
(e)
(f)
At 73 FR 74345, Dec. 8, 2008, § 767.153 was amended by removing the words “non-beginning farmer purchasers” and adding, in their place, the words “purchasers who are not beginning farmers or socially disadvantaged farmers” in paragraph (b)(3), effective January 7, 2009.
(a)
(b)
(2) The Agency may sell an easement or right-of-way by negotiation for market value to any purchaser for cash without giving public notice if:
(i) The sale would not prevent the Agency from selling the property; and
(ii) The sale would not decrease the value of the property by an amount greater than the price received.
(3) In the case of condemnation proceedings by a State or political subdivision, the transfer of title will not be completed until adequate compensation and damages have been determined and paid.
(c)
(2) If the Agency sells the land in separate parcels, any rights or interests that apply to each parcel are included with the sale.
(3) The Agency will assign lease or royalty interests not passing by deed to the purchaser at the time of sale.
(4) Appraisals of property will reflect the value of such rights, interests, or leases.
(a)
(2) The Agency may sell chattel inventory property, including fixtures, concurrently with real estate inventory property if, by doing so, the Agency can obtain a higher aggregate price. The Agency may accept an offer for chattel based upon the combined final sales price of both the chattel and real estate.
(b)
In addition to the requirements established in subpart G of 7 CFR part 1940, the following apply to inventory property with important resources:
(a)
(1) The Agency establishes conservation easements on all wetlands or converted wetlands located on real estate inventory property that:
(i) Were not considered cropland on the date the property was acquired by the Agency; and
(ii) Were not used for farming at any time during the 5 years prior to the date of acquisition by the Agency.
(A) The Agency will consider property to have been used for farming if it was used for agricultural purposes including, but not limited to, cropland, pastures, hayland, orchards, vineyards, and tree farming.
(B) In the case of cropland, hayland, orchards, vineyards, or tree farms, the Agency must be able to demonstrate that the property was harvested for crops.
(C) In the case of pastures, the Agency must be able to demonstrate that the property was actively managed for grazing by documenting practices such as fencing, fertilization, and weed control.
(2) The wetland conservation easement will provide for access to other portions of the property as necessary for farming or other uses.
(b)
(1) Listed or proposed endangered or threatened species;
(2) Listed or proposed critical habitats for endangered or threatened species;
(3) Designated or proposed wilderness areas;
(4) Designated or proposed wild or scenic rivers;
(5) Historic or archeological sites listed or eligible for listing on the National Register of Historic Places;
(6) Coastal barriers included in Coastal Barrier Resource Systems;
(7) Natural landmarks listed on National Registry of Natural Landmarks; and
(8) Sole source aquifer recharge areas as designated by EPA.
(c)
(1) The Agency may grant or sell discretionary easements separate from the underlying fee or property rights.
(2) The Agency may convey property interests under this paragraph by negotiation to any eligible recipient without giving public notice if the conveyance does not change the intended use of the property.
(d)
(1) The transfer of title must serve a conservation purpose;
(2) A predominance of the property must:
(i) Have marginal value for agricultural production;
(ii) Be environmentally sensitive; or
(iii) Have special management importance;
(3) The homestead protection rights of the previous owner have been exhausted;
(4) The Agency will notify the public of the proposed transfer; and
(5) The transfer is in the Agency's financial interest.
(e)
(2) Lessees and purchasers of property with important resources or real property interests must allow the Agency or its representative to periodically inspect the property to determine if it is being used for conservation purposes.
(a) The Agency considers the following to be special hazard areas:
(1) Mudslide hazard areas;
(2) Special flood areas; and
(3) Earthquake areas.
(b) The Agency will use deed restrictions to prohibit residential use of properties determined to be unsafe in special hazard areas.
(c) The Agency will incorporate use restrictions in its leases of property in special hazard areas.
On an individual case basis, the Agency may consider granting an exception to any regulatory requirement or policy of this part if:
(a) The exception is not inconsistent with the authorizing statute or other applicable law; and
(b) The Agency's financial interest would be adversely affected by acting in accordance with published regulations or policies and granting the exception would reduce or eliminate the adverse effect upon the its financial interest.
5 U.S.C. 301, 25 U.S.C. 488.
This part contains the Agency's policies and procedures for making and servicing loans to assist a Native American tribe or tribal corporation with the acquisition of land interests within the tribal reservation or Alaskan community.
(a)
(b)
(1) An Indian tribe recognized by the Department of the Interior; or
(2) A community in Alaska incorporated by the Department of the Interior pursuant to the Indian Reorganization Act.
(1) The Native American tribe's reservation as determined by the Department of the Interior; or
(2) A community in Alaska incorporated by the Department of the Interior pursuant to the Indian Reorganization Act.
An applicant must:
(a) Submit a completed Agency application form;
(b) Except for refinancing activities authorized in § 770.4(c), obtain an option or other acceptable purchase agreement for land to be purchased with loan funds;
(c) Be a Native American tribe or a tribal corporation of a Native American tribe without adequate uncommitted funds, based on Generally Accepted Accounting Principles, or another financial accounting method acceptable to Secretary of Interior to acquire lands or interests therein within the Native American tribe's reservation for the use of the Native American tribe or tribal corporation or the members of either;
(d) Be unable to obtain sufficient credit elsewhere at reasonable rates and terms for purposes established in § 770.4;
(e) Demonstrate reasonable prospects of success in the proposed operation of the land to be purchased with funds provided under this part by providing:
(1) A feasibility plan for the use of the Native American tribe's land and other enterprises and funds from any other source from which payment will be made;
(2) A satisfactory management and repayment plan; and
(3) A satisfactory record for paying obligations.
(f) Unless waived by the FSA Administrator, not have any outstanding debt with any Federal Agency (other than debt under the Internal Revenue Code of 1986) which is in a delinquent status.
(g) Not be subject to a judgment lien against the tribe's property arising out of a debt to the United States.
(h) Have not received a write-down as provided in § 770.10(e) within the preceding 5 years.
Loan funds may only be used to:
(a) Acquire land and interests therein (including fractional interests, rights-of-way, water rights, easements, and other appurtenances (excluding improvements) that would normally pass with the land or are necessary for the proposed operation of the land) located within the Native American tribe's reservation which will be used for the benefit of the tribe or its members.
(b) Pay costs incidental to land acquisition, including but not limited to, title clearance, legal services, land surveys, and loan closing.
(c) Refinance non-United States Department of Agriculture preexisting debts the applicant incurred to purchase the land provided the following conditions exist:
(1) Prior to the acquisition of such land, the applicant filed a loan application regarding the purchase of such land and received the Agency's approval for the land purchase;
(2) The applicant could not acquire an option on such land;
(3) The debt for such land is a short term debt with a balloon payment that cannot be paid by the applicant and that cannot be extended or modified to enable the applicant to satisfy the obligation; and
(4) The purchase of such land is consistent with all other applicable requirements of this part.
(d) Pay for the costs of any appraisal conducted pursuant to this part.
(a) Loan funds may not be used for any land improvement or development purposes, acquisition or repair of buildings or personal property, payment of operating costs, payment of finder's fees, or similar costs, or for any purpose that will contribute to excessive erosion of highly erodible land or to the conversion of wetlands to produce an agriculture commodity as further established in exhibit M to subpart G of part 1940 of this title.
(b) The amount of loan funds used to acquire land may not exceed the market value of the land (excluding the value of any improvements) as determined by a current appraisal.
(c) Loan funds for a land purchase must be disbursed over a period not to exceed 24 months from the date of loan approval.
(d) The sale of assets that are not renewable within the life of the loan will require a reduction in loan principal equal to the value of the assets sold.
(a)
(b)
(a) The applicant will take appropriate action to obtain and provide security for the loan.
(b) A mortgage or deed of trust on the land to be purchased by the applicant will be taken as security for a loan, except as provided in paragraph (c) of this section.
(1) If a mortgage or deed of trust is to be obtained on trust or restricted land and the applicant's constitution or charter does not specifically authorize mortgage of such land, the mortgage must be authorized by tribal referendum.
(2) All mortgages or deeds of trust on trust or restricted land must be approved by the Department of the Interior.
(c) The Agency may take an assignment of income in lieu of a mortgage or deed of trust provided:
(1) The Agency determines that an assignment of income provides as good or better security; and
(2) Prior approval of the Administrator has been obtained.
(a)
(1) The Agency provides prior written approval of the action;
(2) The Agency determines that the borrower's loan obligations to the Agency are adequately secured; and
(3) The borrower's ability to repay the loan is not impaired.
(b)
(a) The applicant or the borrower, as appropriate, will pay the cost of any appraisal required under this part.
(b) Appraisals must be completed in accordance with § 761.7 of this chapter.
(a)
(i) The borrower submits a completed Agency application form; and
(ii) The account is delinquent due to circumstances beyond the borrower's control and cannot be brought current within 1 year; or
(iii) The account is current, but due to circumstances beyond the borrower's control, the borrower will be unable to meet the annual loan payments.
(2)
(i) Reamortization within the remaining term of the loan will be predicated on a projection of the tribe's operating expenses indicating the ability to meet the new payment schedule; and
(ii) No intervening lien exists on the security for the loan which would jeopardize the Government's security priority.
(3)
(b)
(1) The borrower submits a completed Agency application form;
(2) The loan was made more than 5 years prior to the application for the interest reduction; and
(3) The Department of the Interior and the borrower certify that the borrower meets at least one of the criteria contained in paragraph (e)(2) of this section.
(c)
(1) The borrower submits a completed Agency application form;
(2) The borrower presents a plan which demonstrates that due to circumstances beyond their control, they will be unable to meet all financial commitments unless the Agency payment is deferred; and
(3) The borrower will be able to meet all financial commitments, including the Agency payments, after the deferral period has ended.
(d)
(e)
(i) The borrower must submit a completed Agency application form;
(ii) If the borrower applies and is determined eligible for a land value and a rental value write-down, the borrower will receive a write-down based on the write-down option that provides the greatest debt reduction.
(2)
(i) Be located in a county which is identified as a persistent poverty county by the United States Department of Agriculture, Economic Research Service pursuant to the most recent data from the Bureau of the Census; and
(ii) Have a socio-economic condition over the immediately preceding 5 year period that meets the following two factors as certified by the Native American tribe and the Department of the Interior:
(A) The Native American tribe has a per capita income for individual enrolled tribal members which is less than 50 percent of the Federally established poverty income rate established by the Department of Health and Human Services;
(B) The tribal unemployment rate exceeds 50 percent;
(3)
(i) The market value of such land has declined by at least 25 percent since the land was purchased as established by a current appraisal;
(ii) Land value decrease is not attributed to the depletion of resources contained on or under the land;
(iii) The loan was made more than 5 years prior to the application for land value write-down;
(iv) The loan has not previously been written down under paragraph (e)(4) of this section and has not been written down within the last 5 years under this paragraph, and
(v) The borrower must meet the eligibility requirements of paragraphs (a)(1)(ii) or (iii) of this section.
(4)
(i) The loan was made more than 5 years prior to the rental value writedown;
(ii) The description of the land purchased with the loan funds and the rental values used to calculate the 5 year average annual rental value of the land have been certified by the Department of the Interior;
(iii) The borrower provides a record of any actual rents received for the land for the preceding 5 years, which will be used to calculate the average
(iv) The borrower has not previously received a write-down under this paragraph and has not had a loan written down within the last 5 years under paragraph (e)(3) of this section, and
(v) The borrower must meet the eligibility requirements of paragraph (a)(1)(ii) or (iii) of this section.
(f)
(1) A written request is received providing details of the use of the funds;
(2) The loan is not delinquent;
(3) The loan adequately secured by a general assignment of tribal income.
5 U.S.C. 301; 7 U.S.C. 1989; and Pub. L. 104-180, 110 Stat. 1569.
The regulations in this part set forth the terms and conditions under which loans are made through the Boll Weevil Eradication Loan Program. The regulations in this part are applicable to applicants, borrowers, and other parties involved in the making, servicing, and liquidation of these loans. The program's objective is to assist producers and state government agencies in the eradication of boll weevils from cotton producing areas.
The following abbreviations and definitions apply to this part:
(a) Abbreviations:
(b) Definitions:
(a) An eligible applicant must:
(1) Meet all requirements prescribed by APHIS to qualify for cost-share grant funds as determined by APHIS, (FSA will accept the determination by APHIS as to an organization's qualification);
(2) Have the appropriate charter and/or legal authority as a non-profit corporation or as a State organization specifically organized to operate the boll weevil eradication program in any State, biological, or geographic region of any State in which it operates;
(3) Possess the legal authority to enter into contracts, including debt instruments;
(4) Operate in an area in which producers have approved a referendum authorizing producer assessments and in which an active eradication or post-eradication program is underway or scheduled to begin no later than the fiscal year following the fiscal year in which the application is submitted;
(5) Have the legal authority to pledge producer assessments as security for loans from FSA.
(b) Individual producers are not eligible for loans.
(a) Loan funds may be used for any purpose directly related to boll weevil eradication activities, including, but not limited to:
(1) Purchase or lease of supplies and equipment;
(2) Operating expenses, including but not limited to, travel and office operations;
(3) Salaries and benefits.
(b) Loan funds may not be used to pay expenses incurred for lobbying, public relations, or related activities, or to pay interest on loans from the Agency.
No loan will be made until all Federal and state statutory and regulatory environmental requirements have been complied with.
No recipient of a boll weevil eradication loan shall directly, or through contractual or other arrangement, subject any person or cause any person to be subjected to discrimination on the basis of race, religion, color, national origin, gender, or other prohibited basis. Borrowers must comply with all applicable Federal laws and regulations regarding equal opportunity in hiring, procurement, and related matters.
(a) In addition to the specific requirements in this subpart, loan applications will be coordinated with all appropriate Federal, State, and local agencies.
(b) Borrowers are required to comply with all applicable:
(1) Federal, State, or local laws;
(2) Regulatory commission rules; and
(3) Regulations which are presently in existence, or which may be later adopted including, but not limited to, those governing the following:
(i) Borrowing money, pledging security, and raising revenues for repayment of debt;
(ii) Accounting and financial reporting; and
(iii) Protection of the environment.
(a)
(b)
(c)
(i) Assignments of assessments, taxes, levies, or other sources of revenue as authorized by State law;
(ii) Investments and deposits of the applicant; and
(iii) Capital assets or other property of the applicant or its members.
(2) In those cases in which FSA and another lender will hold assignments of the same revenue as collateral, the other lender must agree to a prorated distribution of the assigned revenue. The distribution will be based upon the proportionate share of the applicant's debt the lender holds for the eradication zone from which the revenue is derived at the time of loan closing.
(d)
A complete application will consist of the following:
(a) An application for Federal assistance (available in any FSA office);
(b) Applicant's financial projections including a cash flow statement showing the plan for loan repayment;
(c) Copies of the applicant's authorizing State legislation and organizational documents;
(d) List of all directors and officers of the applicant;
(e) Copy of the most recent audited financial statements along with updates through the most recent quarter;
(f) Copy of the referendum used to establish the assessments and a certification from the Board of Directors that the referendum passed;
(g) Evidence that the officers and employees authorized to disburse funds are covered by an acceptable fidelity bond;
(h) Evidence of acceptable liability insurance policies;
(i) Statement from the applicant addressing any current or pending litigation against the applicant as well as any existing judgments;
(j) A copy of a resolution passed by the Board of Directors authorizing the officers to incur debt on behalf of the borrower;
(k) Any other information deemed to be necessary by FSA to render a decision.
Loan requests will be processed based on the date FSA receives the application. Loan approval is subject to the availability of funds. However, when multiple applications are received on the same date and available funds will not cover all applications received, applications from active eradication areas, which FSA determines to be most critical for the accomplishment of program objectives, will be funded first.
(a)
(b)
(c)
(1) The borrower must submit audited financial statements to FSA at least annually;
(2) The borrower will immediately notify FSA of any adverse actions such as:
(i) Anticipated default on FSA debt;
(ii) Potential recall vote of an assessment referendum; or
(iii) Being named as a defendant in litigation;
(3) Submission of other specific financial reports for the borrower;
(4) The right of deferral under 7 U.S.C. 1981a; and
(5) Applicable liquidation procedures upon default.
(d)
(a)
(b)
(a)
(b)
(c)
(1) The Government's interest will be protected;
(2) The restructuring will be performed within FSA budgetary restrictions; and
(3) The loan objectives cannot be met unless the loan is restructured.
(d)
5 U.S.C. 301, 7 U.S.C. 1989, 25 U.S.C. 490.
(a)
(b)
(a)
(b)
(a)
(b)
(c)
(d)
Servicing activities such as transfers, assumptions, subordinations, sale or exchange of security property, and leasing of security will be reviewed for compliance with 7 CFR part 1940, subpart G and the exhibits to that subpart and 7 CFR part 799.
(a)
(b)
(c)
(1) For chattel security, service the account according to 7 part 1962, subpart A. If any normal income security as defined in that subpart secures a
(2) For real estate security for AMP loans, contact the Regional Office of General Counsel for advice on the appropriate servicing including liquidation if warranted.
(3) For real estate security for IMP loans, service the account according to 7 CFR part 1965, subpart A.
(a)
(1) The loan will still be adequately secured after the subordination, or the value of the loan security will be increased by the amount of advances to be made under the terms of the subordination.
(2) The borrower can document the ability to pay all debts including the new loan.
(3) The action does not change the nature of the borrower's activities to the extent that they would no longer be eligible for a Minor Program loan.
(4) The subordination is for a specific amount.
(5) The borrower is unable, as determined by the Agency, to refinance its loan and graduate in accordance with this subpart.
(6) The loan funds will not be used in such a way that will contribute to erosion of highly erodible land or conversion of wetlands for the production of an agricultural commodity according to 7 CFR part 1940, subpart G.
(7) The borrower has not been convicted of planting, cultivating, growing, producing, harvesting or storing a controlled substance under Federal or state law. “Borrower,” for purposes of this subparagraph, specifically includes an individual or entity borrower and any member of an entity borrower. “Controlled substance,” for the purpose of this subparagraph, is defined at 21 CFR part 1308. The borrower will be ineligible for a subordination for the crop year in which the conviction occurred and the four succeeding crop years. An applicant must attest on the Agency application form that it, and its members if an entity, have not been convicted of such a crime.
(b)
(1) The specific amount of debt for which a subordination is needed;
(2) An appraisal prepared in accordance with § 761.7 of this chapter, if the request is for a subordination of more than $10,000, unless a sufficient appraisal report, as determined by the Agency, that is less than one year old, is on file with the Agency; and
(3) Consent and subordination, as necessary, of all other creditors' security interests.
(a)
(1) Leasing is the only feasible way to continue to operate the enterprise and is a customary practice;
(2) The lease will not interfere with the purpose for which the loan was made;
(3) The borrower retains ultimate responsibility for the operation, maintenance and management of the facility or service for its continued availability and use at reasonable rates and terms;
(4) The lease prohibits amendments to the lease or subleasing arrangements without prior written approval from the Agency;
(5) The lease terms provide that the Agency is a lienholder on the subject property and, as such, the lease is subordinate to the rights and claims of the Agency as lienholder; and
(6) The lease is for less than 3 years and does not constitute a lease/purchase arrangement, unless the transfer and assumption provisions of this subpart are met.
(b)
(a) For AMP loans.
(1) Sale of all or a portion of the security property may be approved when all of the following conditions are met:
(i) The property is sold for market value based on a current appraisal prepared in accordance with § 761.7 of this chapter.
(ii) The sale will not prevent carrying out the original purpose of the loan. The borrower must execute an Assurance Agreement as prescribed by the Agency. The covenant involved will remain in effect as long as the property continues to be used for the same or similar purposes for which the loan was made. The instrument of conveyance will contain the following nondiscrimination covenant:
(iii) The remaining security for the loan is adequate or will not change after the transaction.
(iv) Sale proceeds remaining after paying any reasonable and necessary selling expenses are applied to the Minor Program loan according to lien priority.
(2) Exchange of all or a portion of security property for an AMP loan may be approved when:
(i) The Agency will obtain a lien on the property acquired in the exchange;
(ii) Property more suited to the borrower's needs related to the purposes of the loan is to be acquired in the exchange;
(iii) The AMP loan will be as adequately secured after the transaction as before; and
(iv) It is necessary to develop or enlarge the facility, improve the borrower's debt-paying ability, place the operation on a more sound financial basis or otherwise further the loan objectives and purposes, as determined by the Agency.
(b) For IMP loans.
(1) A sale or exchange of chattel that is serving as security is governed by 7 CFR part 1962, subpart A.
(2) A sale or exchange of real estate that is serving as security for an IMP loan is governed by 7 CFR part 1965, subpart A.
(a)
(1) The debt is paid in full;
(2) Security property is sold for market value and sale proceeds are received and applied to the borrower's creditors according to lien priority; or
(3) An exchange in accordance with § 772.8 has been concluded.
(b)
(c)
(a)
(1) The present borrower is unable or unwilling to accomplish the objectives of the loan;
(2) The transfer will not harm the Government or adversely affect the Agency's security position;
(3) The transferee will continue with the original purpose of the loan;
(4) The transferee will assume an amount at least equal to the present market value of the loan security;
(5) The transferee documents the ability to pay the AMP loan debt as provided in the assumption agreement and has the legal capacity to enter into the contract;
(6) If there is a lien or judgment against the Agency security being transferred, the transferee is subject to such claims. The transferee must document the ability to repay the claims against the land; and
(7) If the transfer is to one or more members of the borrower's organization and there is no new member, there must not be a loss to the Government.
(b)
(1) The entire unpaid balance of the withdrawing member's share of the AMP loan must be assumed by the new member;
(2) In accordance with the Association's governing articles, the required number of remaining members must agree to accept any new member; and
(3) The transfer will not adversely affect collection of the AMP loan.
(c)
(1) The written consent of any other lienholder, if applicable.
(2) A current balance sheet and cash flow statement.
(d)
(e)
(1) The full amount of the loan is assumed; or
(2) Less than the full amount of the debt is assumed, and the balance remaining will be serviced in accordance with § 772.9(c).
Transfers and assumptions for IMP loans are processed in accordance with 7 CFR part 765. Any remaining transferor liability will be serviced in accordance with § 772.9(c) of this subpart.
(a)
(b)
(1) AMP loans shall be reviewed at least every two years. In the year to be reviewed, each borrower must submit, at a minimum, a year-end balance sheet and cash flow projection for the current year.
(2) All IMP borrowers classified as “commercial” or “standard” by the agency must be reviewed at least every 2 years. In the year to be reviewed, each borrower must submit a year-end balance sheet, actual financial performance for the most recent year, and a projected budget for the current year.
(c)
(1) Borrowers with IMP loans that are classified as “commercial” or “standard” must apply for private financing within 30 days from the date the borrower is notified of lender interest, if an application is required by the lender. For good cause, the Agency may grant the borrower a reasonable amount of additional time to apply for refinancing.
(2) Borrowers with AMP loans will be considered for graduation at least every two years or more frequently if the Agency determines that the borrower's financial condition has significantly improved.
(a)
(b)
The Agency may approve reamortization of AMP loans provided:
(a) There is no extension of the final maturity date of the loan;
(b) No intervening lien exists on the security for the loan which would jeopardize the Government's security position;
(c) If the account is delinquent, it cannot be brought current within one year and the borrower has presented a cash flow budget which demonstrates the ability to meet the proposed new payment schedule; and
(d) If the account is current, the borrower will be unable to meet the annual loan payments due to circumstances beyond the borrower's control.
(a) The Agency may approve, without regard to any loan or total indebtedness limitation, vouchers to pay costs, including insurance and real estate taxes, to preserve and protect the security, the lien, or the priority of the lien securing the debt owed to the Agency if the debt instrument provides that the Agency may voucher the account to protect its lien or security.
(b) The Agency may pay protective advances only when it determines it to be in the Government's best financial interest.
(c) Protective advances are immediately due and payable.
When the Agency determines that continued servicing will not accomplish the objectives of the loan and the delinquency or financial distress cannot be cured by the options in § 772.13, or the loan is in non-monetary default, the borrower will be encouraged to dispose of the Agency security voluntarily through sale or transfer and assumption in accordance with this part. If such a transfer or voluntary sale is not carried out, the loan will be liquidated according to 7 CFR part 766. For AMP loans, appeal rights under 7 CFR part 11 are provided in the notice of acceleration. For IMP loans, appeal rights must be exhausted before acceleration, and the notice of acceleration is not appealable.
With respect to any aspect of a credit transaction, the Agency will comply with the requirements of the Equal Credit Opportunity Act and the Department's civil rights policy in 7 CFR part 15d.
Exceptions to any requirement in this subpart can be approved in individual cases by the Administrator if application of any requirement or failure to take action would adversely affect the Government's financial interest. Any exception must be consistent with the authorizing statute and other applicable laws.
Pub. L. 106-224.
This part contains the terms and conditions for loans made under the Special Apple Loan Program. These regulations are applicable to applicants, borrowers, and other parties involved in making, servicing, and liquidating these loans. The program objective is to assist producers of apples suffering from economic loss as a result of low apple prices.
As used in this part, the following definitions apply:
A loan applicant or borrower may request an appeal or review of an adverse decision made by the Agency in accordance with 7 CFR part 11.
Loan applicants must meet all of the following requirements to be eligible for a Special Apple Program Loan:
(a) The loan applicant must be an apple producer;
(b) The loan applicant must be a citizen of the United States or an alien lawfully admitted to the United States for permanent residence under the Immigration and Nationalization Act. For a business entity applicant, the majority of the business entity must be owned by members meeting the citizenship test or, other entities that are domestically owned. Aliens must provide the appropriate Immigration and Naturalization Service forms to document their permanent residency;
(c) The loan applicant and anyone who will execute the promissory note must possess the legal capacity to enter into contracts, including debt instruments;
(d) At loan closing the loan applicant and anyone who will execute the promissory note must not be delinquent on any Federal debt, other than a debt under the Internal Revenue Code of 1986;
(e) At loan closing the loan applicant and anyone who will execute the promissory note must not have any outstanding unpaid judgments obtained by the United States in any court. Such judgments do not include those filed as a result of action in the United States Tax Courts;
(f) The loan applicant, in past or present dealings with the Agency, must not have provided the Agency with false information; and
(g) The individual or business entity loan applicant and all entity members must have acceptable credit history demonstrated by debt repayment. A history of failure to repay past debts as they came due (including debts to the Internal Revenue Service) when the ability to repay was within their control will demonstrate unacceptable credit history. Unacceptable credit history will not include isolated instances of late payments which do not represent a pattern and were clearly beyond the applicant's control or lack of credit history.
Loan funds may be used for any of the following purposes related to the production or marketing of apples:
(a) Payment of costs associated with reorganizing a farm to improve its profitability;
(b) Payment of annual farm operating expenses;
(c) Purchase of farm equipment or fixtures;
(d) Acquiring, enlarging, or leasing a farm;
(e) Making capital improvements to a farm;
(f) Refinancing indebtedness;
(g) Purchase of cooperative stock for credit, production, processing or marketing purposes; or
(h) Payment of loan closing costs.
(a) The maximum loan amount any individual or business entity may receive under the Special Apple Loan Program is limited to $500,000.
(b) The maximum loan is further limited to $300 per acre of apple trees in production in 1999 or 2000, whichever is greater.
(c) Loan funds may not be used to pay expenses incurred for lobbying or related activities.
(d) Loans may not be made for any purpose which contributes to excessive erosion of highly erodible land or to the conversion of wetlands to produce an agricultural commodity.
(a) Except as otherwise specified in this section, prior to approval of any loan, an environmental evaluation will be completed by the Agency to determine if the proposed action will have any adverse impacts on the human environment and cultural resources. Loan applicants will provide all information necessary for the Agency to make its evaluation.
(b) The following loan actions were reviewed for the purpose of compliance with the National Environmental Policy Act (NEPA), 40 CFR parts 1500 through 1508, and determined not to have a significant impact on the quality of the human environment, either individually or cumulatively. Therefore the following loan actions are categorically excluded from the requirements of an environmental evaluation:
(1) Payment of legal costs associated with reorganizing a farm to improve its profitability as long as there will be no changes in the land's use or character;
(2) Purchase of farm equipment which will not be affixed to a permanent mount or position;
(3) Acquiring or leasing a farm;
(4) Refinancing an indebtedness not greater than $30,000;
(5) Purchase of stock in a credit association or in a cooperative which deals with the production, processing or marketing of apples; and
(6) Payment of loan closing costs.
(c) The loan actions listed in paragraph (b) of this section were also reviewed in accordance with section 106 of the National Historic Preservation Act (NHPA). It was determined that these loan actions are non-undertakings with no potential to affect or
(d) If adverse environmental impacts, either direct or indirect, are identified, the Agency will complete an environmental assessment in accordance with the Council on Environmental Quality's Regulations for Implementing the Procedural Provisions of NEPA to the extent required by law.
(e) In order to minimize the financial risk associated with contamination of real property from hazardous waste and other environmental concerns, the Agency will complete an environmental risk evaluation of the environmental risks to the real estate collateral posed by the presence of hazardous substances and other environmental concerns.
(1) The Agency will not accept real estate as collateral which has significant environmental risks.
(2) If the real estate offered as collateral contains significant environmental risks, the Agency will provide the applicant with the option of properly correcting or removing the risk, or offering other non-contaminated property as collateral.
Borrowers are required to comply with all applicable:
(a) Federal, State, or local laws;
(b) Regulatory commission rules; and
(c) Regulations which are presently in existence, or which may be later adopted including, but not limited to, those governing the following:
(1) Borrowing money, pledging security, and raising revenues for repayment of debt;
(2) Accounting and financial reporting; and
(3) Protection of the environment.
(a) A complete application will consist of the following:
(1) A completed Agency application form;
(2) If the applicant is a business entity, any legal documents evidencing the organization and any State recognition of the entity;
(3) Documentation of compliance with the Agency's environmental regulations contained in 7 CFR part 1940, subpart G;
(4) A balance sheet on the applicant;
(5) The farm's operating plan, including the projected cash flow budget reflecting production, income, expenses, and loan repayment plan;
(6) The last 3 years of production and income and expense information;
(7) Payment to the Agency for ordering a credit report; and
(8) Any additional information required by the Agency to determine the eligibility of the applicant, the feasibility of the operation, or the adequacy and availability of security.
(b) Except as required in § 773.19(e), the Agency will waive requirements for a complete application, listed in paragraphs (a)(5) and (a)(6) of this section, for requests of $30,000 or less.
(a)
(b)
(c)
(1) Real estate;
(2) Chattels;
(3) Crops;
(4) Other assets owned by the applicant; and
(5) Assets owned and pledged by a third party.
(d)
(2) For loans of greater than $30,000 where the applicant's balance sheet shows a net worth of three times the loan amount or greater, collateral
(3) For loans of greater than $30,000 where the applicant's balance sheet shows a net worth of less than three times the loan amount, collateral value will be based on an appraisal. Such appraisals must be obtained by the applicant, at the applicant's expense and acceptable to the Agency. Appraisals of real estate must be completed in accordance with USPAP.
(e)
(2) For loans that are for $30,000 or less where the applicant's balance sheet shows a net worth of three times the loan amount or greater, repayment ability will be considered adequate without further documentation.
(3) For loans that are for $30,000 or less where the applicant's balance sheet shows a net worth of less than three times the loan amount, repayment ability must be demonstrated using the farm's operating plan, including a projected cash flow budget based on historical performance. Such operating plan is required notwithstanding § 773.18 of this part.
(4) For loans that are for more than $30,000, repayment ability must be demonstrated using the farm's operating plan, including a projected cash flow budget based on historical performance.
(f)
Loan requests will be funded based on the date the Agency approves the application. Loan approval is subject to the availability of funds.
(a)
(i) The loan can be repaid;
(ii) The proposed use of loan funds is authorized;
(iii) The applicant has been determined eligible;
(iv) All security requirements have been, or will be met at closing;
(vi) All other pertinent requirements have been, or will be met at closing.
(2) The Agency will place conditions upon loan approval as necessary to protect its interest.
(b)
(2) There must have been no significant changes in the plan of operation or the applicant's financial condition since the loan was approved; and
(2) The applicant will execute all loan instruments and legal documents required by the Agency to evidence the debt, perfect the required security interest in property securing the loan, and protect the Government's interests, in accordance with applicable State and Federal laws. In the case of an entity applicant, all officers or partners and any board members also will be required to execute the promissory notes as individuals.
(c)
Loans will be serviced as a Non-program loan in accordance with 7 CFR part 766 during the term of the loan. If the loan is not paid in full during this term, servicing will proceed in accordance with 7 CFR part 766, subpart H.
The Agency may grant an exception to the security requirements of this section, if the proposed change is in the best financial interest of the Government and not inconsistent with the authorizing statute or other applicable law.
Pub. L. 106-224
The regulations of this part contain the terms and conditions under which loans are made under the Emergency Loan for Seed Producers Program. These regulations are applicable to applicants, borrowers, and other parties involved in making, servicing, and liquidating these loans. The program objective is to assist certain seed producers adversely affected by the bankruptcy filing of AgriBiotech.
As used in this part, the following definitions apply:
A loan applicant or borrower may request an appeal or review of an adverse decision made by the Agency in accordance with 7 CFR part 11.
Loan applicants must meet all of the following requirements to be eligible under the Emergency Loan for Seed Producers Program;
(a) The loan applicant must be a seed producer;
(b) The individual or entity loan applicant must have a timely filed proof of claim in the Chapter XI bankruptcy proceedings involving AgriBiotech and the claim must have arisen from acontract to grow seeds in the United States;
(c) The loan applicant must be a citizen of the United States or an alien lawfully admitted to the United States for permanent residence under the Immigration and Nationalization Act. For a business entity applicant, the majority of the business entity must be owned by members meeting the citizenship test or, other entities that are domestically owned. Aliens must provide the appropriate Immigration and Naturalization Service forms to document their permanent residency;
(d) The loan applicant and anyone who will execute the promissory note
(e) At loan closing, the applicant and anyone who will execute the promissory note must not be delinquent on any Federal debt, other than a debt under the Internal Revenue Code of 1986;
(f) At loan closing, the applicant and anyone who will execute the promissory note must not have any outstanding unpaid judgments obtained by the United States in any court. Such judgments do not include those filed as a result of action in the United States Tax Courts;
(g) The loan applicant, in past and current dealings with the Agency, must not have provided the Agency with false information.
(a) The maximum loan amount any individual or business entity may receive will be 65% of the value of the timely filed proof of claim against AgriBiotech in the bankruptcy proceeding as determined by the Agency.
(b) Loan funds may not be used to pay expenses incurred for lobbying or related activities.
(c) Loans may not be made for any purpose which contributes to excessive erosion of highly erodible land or to the conversion of wetlands to produce an agricultural commodity.
The loan actions in this part were reviewed for the purpose of compliance with the National Environmental Policy Act (NEPA), 40 CFR parts 1500 through 1508, and determined not to have a significant impact on the quality of the human environment, either individually or cumulatively. These loan actions are categorically excluded from the requirements of an environmental evaluation due to the fact that the loan funds would be utilized to replace operating capital the applicant would have had if AgriBiotech had not filed bankruptcy.
Borrowers are required to comply with all applicable:
(a) Federal, State, or local laws;
(b) Regulatory commission rules; and
(c) Regulations which are presently in existence, or which may be later adopted including, but not limited to, those governing the following:
(1) Borrowing money, pledging security, and raising revenues for repayment of debt;
(2) Accounting and financial reporting; and
(3) Protection of the environment.
A complete application will consist of the following:
(a) A completed Agency application form;
(b) Proof of a bankruptcy claim in the AgriBiotech bankruptcy proceedings;
(c) If the applicant is a business entity, any legal documents evidencing the organization and any State recognition of the entity;
(d) Documentation of compliance with the Agency's environmental regulations contained in 7 CFR part 1940, subpart G;
(e) A balance sheet on the applicant; and
(f) Any other additional information the Agency needs to determine the eligibility of the applicant and the application of any Federal, State or local laws.
(a)
(2) Thereafter interest will begin to accrue at the regular rate for an Agency Farm operating-direct loan (available in any Agency office).
(b)
(2) However, any principal remaining thereafter will be amortized over a term of 7 years at the Farm operating-direct loan interest rate (available in any Agency office). If the loan is not paid in full during this time and default occurs, servicing will proceed in accordance with 7 CFR part 766, subpart H.
(c)
(2) If the applicant has seed remaining in their possession that was produced under contract to AgriBiotech, the applicant also will provide the Agency with a first lien position on this seed. It is the responsibility of the applicant to negotiate with any existing lienholders to secure the Agency's first lien position.
Applications will be processed until such time that funds are exhausted, or all claims have been paid and the bankruptcy involving AgriBiotech has been discharged. When all loan funds have been exhausted or the bankruptcy is discharged, no further applications will be accepted and any pending applications will be considered withdrawn.
Loan requests will be funded based on the date the Agency approves an application. Loan approval is subject to the availability of funds.
(a)
(b)
(c)
Loans will be serviced as a Non-program loan in accordance with 7 CFR part 766. If the loan is not repaid as agreed and default occurs, servicing will proceed in accordance with 7 CFR part 766, subpart H.
The Agency may grant an exception to any of the requirements of this section, if the proposed change is in the best financial interest of the Government and not inconsistent with the authorizing statute or other applicable law.
5 U.S.C. 301 and 574; 7 U.S.C. 6995; 15 U.S.C. 714b and 714c; 16 U.S.C. 590h.
This part sets forth rules applicable to appealability reviews, reconsiderations, appeals and alternative dispute resolution procedures comprising in aggregate the informal appeals process of FSA. FSA will apply these rules to facilitate and expedite participants' submissions and FSA reviews of documentary and other evidence material to resolution of disputes arising under agency program regulations.
For purposes of this part:
(a) Representatives of FSA and CCC may correct all errors in data entered on program contracts, loan agreements, and other program documents and the results of the computations or calculations made pursuant to the contract or agreement. FSA and CCC will
(b) Nothing contained in this part shall preclude the Secretary, or the Administrator of FSA, Executive Vice President of CCC, the Chief of NRCS, if applicable, or a designee, from determining at any time any question arising under the programs within their respective authority or from reversing or modifying any decision made by a subordinate employee of FSA or its county and State committees, or CCC.
(a)(1) Except as provided in other regulations, this part applies to decisions made under programs and by agencies, as set forth herein:
(i) Decisions in programs administered by FSA to make, guarantee or service farm loans set forth in chapters VII and XVIII of this title relating to farm loan programs;
(ii) Decisions in those domestic programs administered by FSA on behalf of CCC through State and county committees, or itself, which are generally set forth in chapters VII and XIV of this title, or in part VII relating to conservation or commodities;
(iii) Appeals from adverse decisions, including technical determinations, made by NRCS under title XII of the Food Security Act of 1985, as amended;
(iv) Penalties assessed by FSA under the Agricultural Foreign Investment Disclosure Act of 1978, 5 U.S.C. 501
(v) Decisions on equitable relief made by a State Executive Director or State Conservationist pursuant to section 1613 of the Farm Security and Rural Investment Act of 2002, Pub. L. 107-171; and
(vi) Other programs to which this part is made applicable by specific program regulations or notices in the
(2) The procedures contained in this part may not be used to seek review of statutes or regulations issued under Federal law or review of FSA's generally applicable interpretations of such laws and regulations.
(3) For covered programs, this part is applicable to any decision made by an employee of FSA or of its State and county committees, CCC, the personnel of FSA, or CCC, and by the officials of NRCS to the extent otherwise provided in this part, and as otherwise may be provided in individual program requirements or by the Secretary.
(b) With respect to matters identified in paragraph (a) of this section, participants may request appealability review, reconsideration, mediation, or appeal under the provisions of this part, of decisions made with respect to:
(1) Denial of participation in a program;
(2) Compliance with program requirements;
(3) Issuance of payments or other program benefits to a participant in a program; and
(4) Determinations under Title XII of the Food Security Act of 1985, as amended, made by NRCS.
(c) Only a participant directly affected by a decision may seek administrative review under § 780.5(c).
(a) Decisions that are not appealable under this part shall include the following:
(1) Any general program provision or program policy or any statutory or regulatory requirement that is applicable to similarly situated participants;
(2) Mathematical formulas established under a statute or program regulation and decisions based solely on the application of those formulas;
(3) Decisions made pursuant to statutory provisions that expressly make agency decisions final or their implementing regulations;
(4) Decisions on equitable relief made by a State Executive Director or State Conservationist pursuant to Section 1613 of the Farm Security and Rural Investment Act of 2002, Pub. L. 107-171;
(5) Decisions of other Federal or State agencies;
(6) Requirements and conditions designated by law to be developed by agencies other than FSA.
(7) Disapprovals or denials because of a lack of funding.
(8) Decisions made by the Administrator or a Deputy Administrator.
(b) A participant directly affected by an adverse decision that is determined
(c) Decisions that FSA renders under this part may be reviewed by NAD under part 11 of this title to the extent otherwise allowed by NAD under its rules and procedures. An appealability determination of the State Executive Director in an administrative review is considered by FSA to be a new decision.
(a) For covered programs administered by FSA for CCC, the following procedures are available:
(1) Appeal to the county committee of decisions of county committee subordinates;
(2) Reconsideration by the county committee;
(3) Appeal to the State committee;
(4) Reconsideration by the State committee;
(5) Appeal to NAD;
(6) Mediation under guidelines specified in § 780.9.
(b) For decisions in agricultural credit programs administered by FSA, the following procedures are available:
(1) Reconsideration under § 780.7;
(2) Mediation under § 780.9;
(3) Appeal to NAD.
(c) For programs and regulatory requirements under Title XII of the Food Security Act of 1985, as amended, to the extent not covered by paragraph (a) of this section, the following procedures are available:
(1) Appeal to the county committee;
(2) Appeal to the State committee;
(3) Mediation under § 780.9;
(4) Appeal to NAD.
(a) A request for reconsideration must be submitted in writing by a participant or by a participant's authorized representative and addressed to the FSA decision maker as will be instructed in the adverse decision notification.
(b) A participant's right to request reconsideration is waived if, before requesting reconsideration, a participant:
(1) Has requested and begun mediation of the adverse decision;
(2) Has appealed the adverse decision to a higher reviewing authority in FSA; or
(3) Has appealed to NAD.
(c) Provided a participant has not waived the right to request reconsideration, FSA will consider a request for reconsideration of an adverse decision under these rules except when a request concerns a determination of NRCS appealable under the procedures in § 780.11, the decision has been mediated, the decision has previously been reconsidered, or the decision-maker is the Administrator, Deputy Administrator, or other FSA official outside FSA's informal appeals process.
(d) A request for reconsideration will be deemed withdrawn if a participant requests mediation or appeals to a higher reviewing authority within FSA or requests an appeal by NAD before a request for reconsideration has been acted upon.
(e) The Federal Rules of Evidence do not apply to reconsiderations. Proceedings may be confined to presentations of evidence to material facts, and evidence or questions that are irrelevant, unduly repetitious, or otherwise inappropriate may be excluded.
(f) The official decision on reconsideration will be the decision letter that is issued following disposition of the reconsideration request.
(g) A decision on reconsideration is a new decision that restarts applicable time limitations periods under § 780.15 and part 11 of this title.
(a) A request for appeal to a county committee concerning a decision of a subordinate of the county committee must be submitted by a participant or by a participant's authorized representative in writing and must be addressed to the office in which the subordinate is employed.
(b) The Federal Rules of Evidence do not apply to appeals to a county committee. However, a county committee may confine presentations of evidence
(c) The official county committee decision on an appeal will be the decision letter that is issued following disposition of the appeal.
(d) Deliberations shall be in confidence except to the extent that a county committee may request the assistance of county committee or FSA employees during deliberations.
(a) Any request for mediation must be submitted after issuance of an adverse decision but before any hearing in an appeal of the adverse decision to NAD.
(b) An adverse decision and any particular issues of fact material to an adverse decision may be mediated only once:
(1) If resolution of an adverse decision is not achieved in mediation, a participant may exercise any remaining appeal rights under this part or appeal to NAD in accordance with part 11 of this title and NAD procedures.
(2) If an adverse decision is modified as a result of mediation, a participant may exercise any remaining appeal rights as to the modified decision under this part or appeal to NAD, unless such appeal rights have been waived pursuant to agreement in the mediation.
(c) Any agreement reached during, or as a result of, the mediation process shall conform to the statutory and regulatory provisions governing the program and FSA's generally applicable interpretation of those statutes and regulatory provisions.
(d) FSA will participate in mediation in good faith and to do so will take steps that include the following:
(1) Designating a representative in the mediation;
(2) Instructing the representative that any agreement reached during, or as a result of, the mediation process must conform to the statutes, regulations, and FSA's generally applicable interpretations of statutes and regulations governing the program;
(3) Assisting as necessary in making pertinent records available for review and discussion during the mediation; and
(4) Directing the representative to forward any written agreement proposed in mediation to the appropriate FSA official for approval.
(e) Mediations will be treated in a confidential manner consistent with the purposes of the mediation.
(f) For requests for mediation in a Certified State, if the factual issues implicated in an adverse decision have not previously been mediated, notice to a participant of an adverse decision will include notice of the opportunity for mediation, including a mailing address and facsimile number, if available, that the participant may use to submit a written request for mediation.
(1) If the participant desires mediation, the participant must request mediation in writing by contacting the certified mediation program or such other contact as may be designated by FSA in an adverse decision letter. The request for mediation must include a copy of the adverse decision to be mediated.
(2) Participants in mediation may be required to pay fees established by the mediation program.
(3) A listing of certified State mediation programs and means for contact may be found on the FSA Web site at
(g) For requests for mediation in a Non-certified State, if the factual issues implicated in an adverse decision have not previously been mediated, notice to a participant of an adverse decision will, as appropriate, include notice of the opportunity for mediation, including the mailing address of the State Executive Director and a facsimile number, if available, that the participant may use to submit a written request for mediation.
(1) It is the duty of the participant to contact the State Executive Director in writing to request mediation. The request for mediation must include a copy of the adverse decision to be mediated.
(2) If resources are available for mediation, the State Executive Director will select a qualified mediator and
(3) If the participant accepts such mediation, FSA may give notice of the mediation to interested parties and third parties whose interests are known to FSA.
(h) Mediation will be considered to be at an end on that date set out in writing by the mediator or mediation program, as applicable, or when the participant receives written notice from the State Executive Director that the State Executive Director believes the mediation is at an impasse, whichever is earlier.
(i) To provide for mediator impartiality:
(1) No person shall be designated as mediator in an adverse program dispute who has previously served as an advocate or representative for any party in the mediation.
(2) As a condition of retention to mediate in an adverse program dispute under this part, the mediator shall agree not to serve thereafter as an advocate or representative for a participant or party in any other proceeding arising from or related to the mediated dispute, including, without limitation, representation of a mediation participant before an administrative appeals entity of USDA, or any other Federal Government department.
(a) A request for appeal to the State committee from a decision of a county committee must be submitted by a participant or by a participant's authorized representative in writing and addressed to the State Executive Director.
(b) A participant's right to appeal a decision to a State committee is waived if a participant has appealed the adverse decision to NAD before requesting an appeal to the State Committee.
(c) If a participant requests mediation or requests an appeal to NAD before a request for an appeal to the State Committee has been acted upon, the appeal to the State Committee will be deemed withdrawn. The deemed withdrawal of a participant's appeal to the State Committee will not preclude a subsequent request for a State Committee hearing on appealable matters not resolved in mediation.
(d) The Federal Rules of Evidence do not apply in appeals to a State committee. Notwithstanding, a State committee may confine presentations of evidence to material facts and exclude evidence or questions as irrelevant, unduly repetitious, or otherwise inappropriate.
(e) The official record of a State committee decision on an appeal will be the decision letter that is issued following disposition of the appeal.
(f) Deliberations shall be in confidence except to the extent that a State committee may request the assistance of FSA employees during deliberations.
(a) Notwithstanding any other provision of this part, a determination of NRCS issued to a participant pursuant to Title XII of the Food Security Act of 1985, as amended, including a wetland determination, may be appealed to the county committee in accordance with the procedures in this part.
(b) If the county committee hears the appeal and believes that the challenge to the NRCS determination is not frivolous, the county committee shall refer the case with its findings on other issues to the NRCS State Conservationist to review the determination, or may make such a referral in advance of resolving other issues.
(c) A decision of the county committee not to refer the case with its findings to the NRCS State Conservationist may be appealed to the State Committee.
(d) The county or State committee decision must incorporate, and be based upon, the results of the NRCS State Conservationist's review and subsequent determination.
(a) Requests for appeals of penalties assessed under the Agricultural Foreign Investment Disclosure Act of 1978 must be addressed to: Administrator, Farm Service Agency, Stop 0572, 1400 Independence Avenue, SW., Washington, DC 20250-0572.
(b) Decisions in appeals under this section are not subject to reconsideration and are administratively final.
(a) Appellants and their representatives are precluded from making any electronic recording of any portion of a hearing or other proceeding conducted in accordance with this part. Appellants interested in obtaining an official recording of a hearing or other proceeding may request a verbatim transcript in accordance with paragraph (b) of this section.
(b) Any party to an appeal or request for reconsideration under this part may request that a verbatim transcript be made of the hearing proceedings and that such transcript be made the official record of the hearing. The party requesting a verbatim transcript shall pay for the transcription service, provide a copy of the transcript to FSA free of charge, and allow any other party in the proceeding desiring to purchase a copy of the transcript to order it from the transcription service.
(a) To the extent practicable, no later than 10 business days after an agency decision maker renders an adverse decision that affects a participant, FSA will provide the participant written notice of the adverse decision and available appeal rights.
(b) A participant requesting an appealability review by the State Executive Director of an agency decision made at the county, area, district or State level that is otherwise determined by FSA not to be appealable must submit a written request for an appealability review to the State Executive Director that is received no later than 30 calendar days from the date a participant receives written notice of the decision.
(c) A participant requesting reconsideration, mediation or appeal must submit a written request as instructed in the notice of decision that is received no later than 30 calendar days from the date a participant receives written notice of the decision. A participant that receives a determination made under part 1400 of this title will be deemed to have consented to an extension of the time limitation for a final determination as provided in part 1400 of this title if the participant requests mediation.
(d) Notwithstanding the time limits in paragraphs (b) and (c) of this section, a request for an appealability review, reconsideration, or appeal may be accepted if, in the judgment of the reviewing authority with whom such request is filed, exceptional circumstances warrant such action. A participant does not have the right to seek an exception under this paragraph. FSA's refusal to accept an untimely request is not appealable.
(e) Decisions appealable under this part are final unless review options available under this part or part 11 are timely exercised.
(1) Whenever the final date for any requirement of this part falls on a Saturday, Sunday, Federal holiday, or other day on which the pertinent FSA office is not open for the transaction of business during normal working hours, the time for submission of a request will be extended to the close of business on the next working day.
(2) The date when an adverse decision or other notice pursuant to these rules is deemed received is the earlier of physical delivery by hand, by facsimile with electronic confirmation of receipt, actual stamped record of receipt on a transmitted document, or 7 calendar days following deposit for delivery by regular mail.
To the extent practicable, no later than 30 calendar days after an agency
(a) Decisions of the Administrator in appeals under this part from Agriculture Foreign Investment Disclosure Act penalties are administratively final decisions of USDA.
(b) The decision of a State Executive Director or State Conservationist on equitable relief made under § 718.307 of this title is administratively final and also not subject to judicial review.
Sec. 1-10, 92 Stat. 1266 (7 U.S.C. 3501
The purpose of these regulations is to set forth the requirements designed to implement the Agricultural Foreign Investment Disclosure Act of 1978. The regulations require that a foreign person who acquires, disposes of, or holds an interest in United States agricultural land shall disclose such transactions and holdings to the Secretary of Agriculture. In particular, the regulations establish a system for the collection of information by the Agricultural Stablization and Conservation Service (FSA) pertaining to foreign investment in United States agricultural land. The information collected will be utilized in the preparation of periodic reports to Congress and the President by the Economic Research Service (ERS) concerning the effect of such holdings upon family farms and rural communities.
In determining the meaning of the provisions of this part, unless the context indicates otherwise, words importing the singular include and apply to several persons or things, words importing the plural include the singular, and words used in the present tense include the future as well as the present. The following terms shall have the following meanings:
(a)
(b)
(c)
(1) Security interests;
(2) Leaseholds of less than 10 years;
(3) Contingent future interests;
(4) Noncontingent future interests which do not become possessory upon the termination of the present possessory estate;
(5) Surface or subsurface easements and rights of way used for a purpose unrelated to agricultural production; and
(6) An interest solely in mineral rights.
(d)
(e)
(f)
(g)
(1) Any individual:
(i) Who is not a citizen or national of the United States; or
(ii) Who is not a citizen of the Northern Mariana Islands or the Trust Territory of the Pacific Islands; or
(iii) Who is not lawfully admitted to the United States for permanent residence or paroled into the United States under the Immigration and Nationality Act;
(2) Any person, other than an individual or a government, which is created or organized under the laws of a foreign government or which has its principal place of business located outside of all the States;
(3) Any foreign government;
(4) Any person, other than an individual or a government:
(i) Which is created or organized under the laws of any State; and
(ii) In which a significant interest or substantial control is directly or indirectly held:
(A) By any individual referred to in paragraph (g)(1) of this section; or
(B) By any person referred to in paragraph (g)(2) of this section; or
(C) By any foreign government referred to in paragraph (g)(3) of this section; or
(D) By any numerical combination of such individuals, persons, or governments, which combination need not have a common objective.
(h)
(i)
(j)
(k)
(1) An interest of 10 percent or more held by a person referred to in paragraph (g)(4) of this section, by a single individual referred to in paragraph (g)(1) of this section, by a single person referred to in paragraph (g)(2) of this section, by a single government referred to in paragraph (g)(3) of this section; or
(2) An interest of 10 percent or more held by persons referred to in paragraph (g)(4) of this section, by individuals referred to in paragraph (g)(1) of this section, by persons referred to in paragraph (g)(2) of this section, or by governments referred to in paragraph (g)(3) of this section, whenever such persons, individuals, or governments are acting in concert with respect to such interest even though no single individual, person, or government holds an interest of 10 percent or more; or
(3) An interest of 50 percent or more, in the aggregate, held by persons referred to in paragraph (g)(4) of this section, by individuals referred to in paragraph (g)(1) of this section, by persons referred to in paragraph (g)(2) of this section, or by governments referred to in paragraph (g)(3) of this section, even though such individuals, persons, or governments may not be acting in concert.
(l)
(a) All reports required to be filed pursuant to this part shall be filed with the FSA County office in the county where the land with respect to which such report must be filed is located or where the FSA County office administering programs carried out on such land is located; Provided, that the FSA
(b) Any foreign person who held, holds, acquires, or transfers any interest in United States agricultural land is subject to the requirement of filing a report on form FSA-153 by the following dates:
(1) August 1, 1979, if the interest in the agricultural land was held on the day before February 2, 1979, or
(2) Ninety days after the date of acquisition or transfer of the interest in the agricultural land, if the interest was acquired or transferred on or after February 2, 1979.
(c) Any person who holds or acquires any interest in United States agricultural land at a time when such person is not a foreign person and who subsequently becomes a foreign person must submit, not later than 90 days after the date on which such person becomes a foreign person, a report containing the information required to be submitted under paragraph (e) of this section.
(d) Any foreign person who holds or acquires any interest in United States land at a time when such land is not agricultural land and such land subsequently becomes agricultural land must submit, not later than 90 days after the date on which such land becomes agricultural, a report containing the information required to be submitted under paragraph (e) of this section.
(e) Any foreign person required to submit a report under this regulation, except under paragraph (g) of this section, shall file an FSA-153 report containing the following information:
(1) The legal name and the address of such foreign person;
(2) In any case in which such foreign person is an individual, the citizenship of such foreign person;
(3) In any case in which such foreign person is not an individual or a government, the nature and name of the person holding the interest, the country in which such foreign person is created or organized, and the principal place of business of such foreign person;
(4) The type of interest held by a foreign person who acquired or transferred an interest in agricultural land;
(5) The legal description and acreage of such agricultural land;
(6) The purchase price paid for, or any other consideration given for, such interest; the amount of the purchase price or the value of the consideration yet to be given; the current estimated value of the land reported;
(7) In any case in which such foreign person transfers such interest, the legal name and the address of the person to whom such interest is transferred; and
(i) In any case in which such transferee is an individual, the citizenship of such transferee; and
(ii) In any case in which such transferee is not an individual, or a government, the nature of the person holding the interest, the country in which such transferee is created or organized, and the principal place of business;
(8) The agricultural purposes for which such foreign person intends, on the date on which such report is submitted, to use such agricultural land;
(9) When applicable, the name, address and relationship of the representative of the foreign person who is completing the FSA-153 form for the foreign person;
(10) How the tract of land was acquired or transferred, the relationship of the foreign person to the previous owner, producer, manager, tenant or sharecropper, and the rental agreement; and
(11) The date the interest in the land was acquired or transferred.
(f)(1) Any foreign person, other than an individual or government, required to submit a report under paragraphs (b), (c), and (d) of this section, must submit, in addition to the report required under paragraph (e) of this section, a report containing the following information:
(i) The legal name and the address of each foreign individual or government holding significant interest or substantial control in such foreign person;
(ii) In any case in which the holder of such interest is an individual, the citizenship of such holder; and
(iii) In any case in which the holder of significant interest or substantial
(2) In addition, any such foreign person required to submit a report under paragraph (f)(1) of this section may also be required, upon request, to submit a report containing:
(i) The legal name and the address of each individual or government whose legal name and address did not appear on the report required to be submitted under paragraph (f)(1) of this section, if such individual or government holds any interest in such foreign person:
(ii) In any case in which the holder of such interest is an individual, the citizenship of such holder; and
(iii) In any case in which the holder of such interest is not an individual or a government, the nature and name of the person holding the interest, the country in which such holder is created or organized, and the principal place of business of such holder.
(g) Any foreign person, other than an individual or a government, whose legal name is contained on any report submitted in satisfaction of paragraph (f) of this section may also be required, upon request, to:
(1) Submit a report containing:
(i) The legal name and the address of each foreign individual or government holding significant interest or substantial control in such foreign person;
(ii) In any case in which the holder of such interest is an individual, the citizenship of such holder; and
(iii) In any case in which the holder of such interest in such foreign person is not an individual or a government, the nature and name of the foreign person holding such interest, the country in which each holder is created or organized, and the principal place of business of such holder.
(2) Submit a report containing:
(i) The legal name and address of each individual or government whose legal name and address did not appear on the report required to be submitted under paragraph (g)(1) of this section if such individual or government holds any interest in such foreign person and, except in the case of a request which involves a foreign person, a report was required to be submitted pursuant to paragraph (f)(2) of this section, disclosing information relating to nonforeign interest holders;
(ii) In any case in which the holder of such interest is an individual, the citizenship of such holder; and
(iii) In any case in which the holder of such interest is not an individual or government and, except in a situation where the information is requested from a foreign person, a report was required to be submitted pursuant to paragraph (f)(2) of this section disclosing information relating to nonforeign interest holders, the nature and name of the person holding the interest, the country in which such holder is created or organized, and the principal place of business of such holder.
(h)(1) Any person which has issued fewer than 100,000 shares of common and preferred stock and instruments convertible into equivalents thereof shall be considered to have satisfactorily determined that it has no obligation to file a report pursuant to § 781.3 if, in addition to information within its knowledge, a quarterly examination of its business records fails to reveal that persons with foreign mailing addresses hold significant interest or substantial control in such person.
(2) Any person which has issued 100,000 or more shares of common and preferred stock and instruments convertible into equivalents thereof shall be considerd to have satisfactorily determined that it has no obligation to file a report pursuant to § 781.3 if, in addition to information within its knowledge, a quarterly examination of its business records fails to reveal that the percentage of shares held in such person both by persons with foreign mailing addresses and investment institutions which manage shares does not equal or exceed significant interest or substantial control in such person.
(3) If the person in paragraph (h)(2) of this section determines that the percentage of shares, which is held in it both by persons with foreign mailing addresses and investment institutions which manage shares, equals or exceeds significant interest or substantial control in such persons, then such person
(i) Any foreign person, who submitted a report under paragraph (b), (c), or (d) of this section at a time when such land was agricultural, and such agricultural land later ceases to be agricultural, must submit, not later than 90 days after the date on which such land ceases being agricultural, a revised report from FSA-153 or a written notification of the change of status of the land to the FSA office where the report form was originally filed. The report form and notification must contain the following information:
(1) The legal name and the address of such foreign person;
(2) The legal description, which includes the State and county where the land is located, and the acreage of such land;
(3) The date the land ceases to be agricultural;
(4) The use of the land while agricultural.
(j) If any foreign person who submitted a report under paragraph (b), (c), or (d) of this section ceases to be a foreign person, such person must submit, not later than 90 days after the date such person ceases being a foreign person, a written notification of the change of status of the person to the FSA office where the report form FSA-153 was originally filed. The notification must contain the following information:
(1) The legal name of such person;
(2) The legal description and acreage of such land;
(3) The date such person ceases to be foreign.
(k) Any foreign person who submitted a report under paragraph (b), (c), or (d) of this section must submit, not later than 90 days after the change of information contained on the report, a written notification of the change to the FSA office where the report form FSA-153 was originally filed. The following information must be kept current on the report:
(1) The legal address of such foreign person;
(2) The legal name and the address required to be submitted under (f)(1) of this section;
(3) The legal name and the address required to be submitted under (g)(1) of this section.
(a) Violation of the reporting obligations will consist of:
(1) Failure to submit any report in accordance with § 781.3;
(2) Failure to maintain any submitted report with accurate information; or
(3) Submission of a report which the foreign person knows:
(i) Does not contain, initially or within thirty days from the date of a letter returning for completion such incomplete report, all the information required to be in such report; or
(ii) Contains misleading or false information.
(b) Any foreign person who violates the reporting obligation as described in paragraph (a) of this section shall be subject to the following penalties:
(1) Late-filed reports: One-tenth of one percent of the fair market value, as determined by the Farm Service Agency, of the foreign person's interest in the agricultural land, with respect to which such violation occurred, for each week or portion thereof that such violation continues, but the total penalty imposed shall not exceed 25 percent of the fair market value of the foreign person's interest in such land.
(2) Submission of an incomplete report or a report containing misleading or false information, failure to submit a report or failure to maintain a submitted report with accurate information: 25 percent of the fair market
(3) Penalties prescribed above are subject to downward adjustments based on factors including:
(i) Total time the violation existed.
(ii) Method of discovery of the violation.
(iii) Extenuating circumstances concerning the violation.
(iv) Nature of the information misstated or not reported.
(c) The fair market value for the land, with respect to which such violation occurred, shall be such value on the date the penalty is assessed, or if the land is no longer agricultural, on the date it was last used as agricultural land. The price or current estimated value reported by the foreign person, as verified and/or adjusted by the County Agricultural Stabilization and Conservation Committee for the County where the land is located, will be considered to be the fair market value.
(a) Whenever it appears that a foreign person has violated the reporting obligation as described in paragraph (a) of § 781.4, a written notice of apparent liability will be sent to the foreign person's last known address by the Farm Service Agency. This notice will set forth the facts which indicate apparent liability, identify the type of violation listed in paragraph (a) of § 781.4 which is involved, state the amount of the penalty to be imposed, include a statement of fair market value of the foreign person's interest in the subject land, and summarize the courses of action available to the foreign person.
(b) The foreign person involved shall respond to a notice of apparent liability within 60 days after the notice is mailed. If a foreign person fails to respond to the notice of apparent liability, the proposed penalty shall become final. Any of the following actions by the foreign person shall constitute a response meeting the requirements of this paragraph.
(1) Payment of the proposed penalty in the amount specified in the notice of apparent liability and filing of a report, if required, in compliance with § 781.3. The amount shall be paid by check or money order drawn to the Treasurer of the United States and shall be mailed to the U.S. Department of Agriculture, P.O. Box 2415, Washington, DC 20013. The Department is not responsible for the loss of currency sent through the mails.
(2) Submission of a written statement denying liability for the penalty in whole or in part. Allegations made in any such statement must be supported by detailed factual data. The statement should be mailed to the Administrator, Farm Service Agency, U.S. Department of Agriculture, P.O. Box 2415, Washington, DC 20013.
(3) A request for a hearing on the proposed penalty may be filed in accordance with part 780 of this title.
(c) After a final decision is issued pursuant to an appeal under part 780 of this title, the Administrator or Administrator's designee shall mail the foreign person a notice of the determination on appeal, stating whether a report must be filed or amended in compliance with § 781.3, the amount of the penalty (if any), and the date by which it must be paid. The foreign person shall file or amend the report as required by the Administrator. The penalty in the amount stated shall be paid by check or money order drawn to the Treasurer of the United States and shall be mailed to the United States Department of Agriculture, P.O. Box 2415, Washington, DC 20013. The Department is not responsible for the loss of currency sent through the mails.
(d) If the foreign person contests the notice of apparent liability by submitting a written statement or a request for a hearing thereon, the foreign person may elect either to pay the penalty or decline to pay the penalty pending resolution of the matter by the Administrator. If the Administrator determines that the foreign person is not liable for the penalty or is liable for less than the amount paid, the payment will be wholly or proportionally refunded. If the Administrator ultimately determines that the foreign person is liable, the penalty finally imposed shall not exceed the amount imposed in the notice of apparent liability.
(e) If a foreign person fails to respond to the notice of apparent liability as required by paragraph (b) of this section, or fails to pay the penalty imposed by the Administrator under paragraph (d) of this section, the case will, without further notice, be referred by the Department to the Department of Justice for prosecution in the appropriate District Court to recover the amount of the penalty.
(f) Any amounts approved by the U.S. Department of Agriculture for disbursement to a foreign person under the programs administered by the Department may be setoff against penalties assessed hereunder against such person, in accordance with the provisions of 7 CFR part 13.
The information collection requirements contained in these regulations (7 CFR part 781) have been approved by the Office of Management and Budget (OMB) under the provisions of 44 U.S.C. Chapter 35 and have been assigned OMB control number 0560-0097.
19 U.S.C. 3391(f).
Nomenclature changes to part 782 appear at 61 FR 32643, June 25, 1996.
The regulations contained in this part are issued pursuant to and in accordance with Section 321(f) of the North American Free Trade Agreement Implementation Act. These regulations govern the establishment of the end-use certificate program, the completion of end-use certificates, the identification of commodities requiring end-use certificates, the submission of reports, and the keeping of records and making of reports incident thereto.
As used in this part and in all instructions, forms, and documents in connection therewith, the words and phrases defined in this section shall have the meanings herein assigned to them unless the context or subject matter requires otherwise. References contained herein to other parts of this chapter or title shall be construed as references to such parts and amendments now in effect or later issued.
The end-use certificate program will be administered under the general supervision and direction of the Administrator, Farm Service Agency (FSA), U.S. Department of Agriculture (USDA), through the Office of the Deputy Administrator for Commodity Operations (DACO), FSA, Washington, D.C., and the Kansas City Commodity Office (KCCO), FSA, Kansas City, MO, in coordination with the Commissioner of Customs pursuant to a Memorandum of Understanding.
The information collection requirements in this part have been approved by the Office of Management and Budget and assigned OMB control number 0560-0151.
(a) The regulations in this part are applicable to wheat and barley, respectively, imported into the U.S. from any foreign country, as defined in 19 CFR 134.1, or instrumentality of such foreign country that, as of April 8, 1994, required end-use certificates for imports of U.S.-produced wheat or barley.
(b) Because Canada is the only country with such requirements on wheat, and no country has an end-use certificate requirement for barley, only wheat originating in Canada is affected by the regulations in this part.
(a) In the event that Canada eliminates the requirement for end-use certificates on imports from the U.S., the provisions of the regulations in this part shall be suspended 30 calendar days following the date Canada eliminates its end-use certificate requirement, as determined by the Secretary.
(b) The provisions of the regulations in this part may be suspended if the Secretary, after consulting with domestic producers, determines that the program has directly resulted in the:
(1) Reduction of income to U.S. producers of agricultural commodities, or
(2) Reduction of the competitiveness of U.S. agricultural commodities in world export markets.
(a) Each entity that imports wheat originating in Canada shall, for each entry into the U.S., obtain form FSA-750, End-Use Certificate for Wheat, from Kansas City Commodity Office, Warehouse Contract Division, P.O. Box 419205, Kansas City, MO 64141-6205, and submit the completed original form FSA-750 to KCCO within 10 workdays following the date of entry or release. Each form FSA-750 shall set forth, among other things, the:
(1) Name, address, and telephone number of the importer,
(2) Customs entry number,
(3) Date of entry,
(4) Importer number,
(5) Class of wheat being imported,
(6) Grade, protein content, moisture content, and dockage level of wheat being imported,
(7) If imported as a result of a contract for sale, the date of such contract.
(8) Quantity imported, in net metric tons, rounded to the nearest hundredth of a metric ton, per conveyance,
(9) Storage location of the wheat,
(10) Mode of transportation and the name of the transportation company used to import the wheat, and
(11) A certification that the identity of the Canadian-produced wheat will be preserved until such time as the wheat is either delivered to a subsequent buyer or end-user, or loaded onto a conveyance for direct delivery to an end user.
(b) Importers may provide computer generated form FSA-750, provided such computer generated forms:
(1) Are approved in advance by KCCO,
(2) Contain a KCCO-assigned serial number, and
(3) Contain all of the information required in paragraphs (a)(1) through (a)(9).
(c) KCCO will accept form FSA-750 submitted through the following methods:
(1) Mail service, including express mail,
(2) Facsimile machine, and
(3) Other electronic transmissions, provided such transmissions are approved in advance by KCCO. The importer remains responsible for ensuring that electronically transmitted forms are received in accordance with paragraph (a).
(d) The original form FSA-750 and one copy of form FSA-750 shall be signed and dated by the importer.
(e) Distribution of form FSA-750 will be as follows:
(1) If form FSA-750 is submitted to KCCO in accordance with paragraph (c)(1);
(i) The original shall be forwarded to Kansas City Commodity Office, Warehouse License and Contract Division, P.O. Box 419205, Kansas City, MO 64141-6205, by the importer,
(ii) One copy shall be retained by the importer.
(2) If form FSA-750 is submitted to KCCO in accordance with paragraphs (c)(2) or (c)(3), the original form FSA-750 that is signed and dated by the importer in accordance with paragraph (d) shall be maintained by the importer,
(3) The importer shall provide a photocopy to the end user or, if the wheat is purchased for purposes of resale, the subsequent buyer(s).
(f) The completion and filing of an end-use certificate does not relieve the importer of other legal requirements, such as those imposed by other U.S. agencies, pertaining to the importation.
The importer shall:
(a) File form FSA-750 in accordance with § 782.12.
(b) Immediately notify each subsequent buyer, grain handler, or end user that the wheat being purchased or handled originated in Canada and may only be commingled with U.S.-produced wheat by the end user or when loaded onto a conveyance for direct delivery to the end user or a foreign country.
(c) Provide each subsequent buyer or end user with a copy of form FSA-750 that was filed when the Canadian wheat entered the U.S.
(d) Submit to KCCO, within 15 workdays following the date of sale, form FSA-751, Wheat Consumption and Resale Report, in accordance with § 782.15.
(a) The importer and all subsequent buyers of the imported wheat shall preserve the identity of the Canadian-produced wheat.
(b) Canadian-produced wheat may only be commingled with U.S.-produced wheat by the end user, or when loaded onto a conveyance for direct delivery to the end user or foreign country.
(c) Failure to meet the requirements in paragraphs (a) and (b) of this section shall constitute noncompliance by the importer or subsequent buyer for the purposes of this part.
(a) For purposes of providing information relating to the consumption and resale of Canadian-produced wheat, form FSA-751, Wheat Consumption and Resale Report, shall be filed with KCCO by each:
(1) Importer and subsequent buyer, for each sale to a subsequent buyer or end user, within 15 workdays following the date of sale.
(2) End user and exporter, for full and partial consumption or export, within 15 workdays following:
(i) March 31,
(ii) June 30,
(iii) September 30, and
(iv) December 31.
(b) Each form FSA-751 shall set forth, among other things, the:
(1) Name, address, and telephone number of the filer,
(2) Storage location of the wheat,
(3) Name and address of the importer,
(4) Form FSA-750, End-Use Certificate for Wheat, serial number,
(5) Class of wheat,
(6) Date the wheat was received at the filer's facility,
(7) Quantity of wheat received, in net metric tons, rounded to the nearest hundredth of a metric ton,
(8) Certification to be completed by end users and exporters that requires the end user or exporter to provide, among other things:
(i) A certification of compliance with these regulations,
(ii) The quantity consumed or exported,
(iii) The quantity remaining,
(iv) The manner in which the commodity was used.
(v) The signature of an authorized representative of the end user or exporter.
(9) Certification to be completed by subsequent buyers and importers that requires the subsequent buyer or importer to provide, among other things:
(i) A certification of compliance with the regulations in this part,
(ii) The quantity resold,
(iii) The name, address, and telephone number of the buyer, and
(iv) The signature of an authorized representative of the subsequent buyer or importer.
(c) End user and exporter shall submit form FSA-751 to KCCO quarterly until the wheat has been fully utilized or exported in accordance with the regulations in this part.
(d) Importers and subsequent buyers shall, for each individual sale, submit form FSA-751 to KCCO until the imported wheat has been fully resold.
(e) Filers may provide computer generated form FSA-751, provided such computer generated forms:
(1) Are approved in advance by KCCO, and
(2) Contain the information required in paragraphs (b)(1) through (b)(9) of this section.
(f) KCCO will accept form FSA-751 submitted through the following methods:
(1) Mail service, including express mail,
(2) Facsimile machine, and
(3) Other electronic transmissions, provided such transmissions are approved in advance by KCCO. The importer, end user, exporter, or subsequent buyer remains responsible for ensuring that electronically transmitted forms are received in accordance with this section.
(g) Distribution of form FSA-751 will be as follows:
(1) If form FSA-751 is submitted to KCCO in accordance with paragraph (f)(1) of this section:
(i) The original shall be forwarded to Kansas City Commodity Office, Warehouse License and Contract Division, P.O. Box 419205, Kansas City, MO 64141-6205, by the importer, end user, exporter, or subsequent buyer.
(ii) One copy shall be retained by the importer, end user, exporter, or subsequent buyer.
(2) If form FSA-751 is submitted to KCCO in accordance with paragraphs (f)(2) or (f)(3) of this section, the original form FSA-751 shall be maintained by the importer, end user, exporter, or subsequent buyer.
(a) If the end use specified on the applicable form FSA-751, Wheat Consumption and Resale Report, is “export,” the exporter must specify the final destination, by country, on form FSA-751.
(b) If the end user utilizes the wheat for purposes other than milling, brewing, malting, distilling, export, or manufacturing, such use must be specifically designated on form FSA-751.
(a) This section applies to an importer or subsequent buyer who imports or purchases Canadian-produced wheat for the purpose of reselling the wheat.
(b) The importer or subsequent buyer shall immediately notify each subsequent buyer, grain handler, exporter, or end user that the wheat being purchased or handled originated in Canada and may only be commingled with U.S.-produced wheat by the end user or when loaded onto a conveyance for direct delivery to the end user or a foreign country.
(c) The importer or subsequent buyer shall provide all purchasers of Canadian-produced wheat with a photocopy of the form FSA-750 submitted to KCCO by the importer in accordance with § 782.12(a).
(a) This section applies to an importer or subsequent buyer who imports or purchases Canadian-produced wheat for the purpose of export to a foreign country or instrumentality.
(b) Wheat that is purchased for the purpose of export must be stored identity preserved while the importer or subsequent buyer maintains control of the wheat, except that such wheat may be commingled when loaded onto a conveyance for delivery to the foreign country or instrumentality.
(c) Importers or subsequent buyers that purchase wheat for export to a foreign country or instrumentality must complete form FSA-751 quarterly, in accordance with § 782.15.
It shall be a violation of 18 U.S.C. 1001 for any entity to engage in fraud with respect to, or to knowingly violate, the provisions set forth in this part.
(a) The importer shall retain a copy of each form:
(1) FSA-750, End-Use Certificate for Wheat, that is submitted to KCCO in accordance with § 782.12(a); and
(2) FSA-751, Wheat Consumption and Resale Report, that is submitted to KCCO in accordance with § 782.15(a)(1).
(b) The importer shall maintain records to verify that the wheat was identity preserved until such time as the wheat was:
(1) Loaded onto the conveyance for direct delivery to an end user, or
(2) Delivered to an end user, or
(3) Delivered to a subsequent buyer.
(c) Copies of the documents, information, and records required in paragraphs (a) and (b) of this section shall be kept on file at the importer's headquarters office or other location designated by the importer for the period specified in § 782.25.
(a) The end user or exporter shall retain a copy of each form FSA-751, Wheat Consumption and Resale Report, that is filed with KCCO in accordance with § 782.15(a)(2).
(b) The end user or exporter shall retain a copy of each form FSA-750, End-Use Certificate for Wheat, provided to the end-user or exporter in accordance with § 782.17(b).
(c) The exporter shall maintain records to verify that wheat purchased for the purpose of export was stored identity preserved until such time as the wheat was loaded onto a conveyance for delivery to the foreign country or instrumentality.
(d) Copies of the documents required in paragraphs (a), (b), and (c) of this section shall be kept on file at the end-user's or exporter's headquarters office or other location designated by the end
(a) The subsequent buyer shall retain a copy of each form FSA-751, Wheat Consumption and Resale Report, that is filed with KCCO in accordance with § 782.15(a)(1).
(b) The subsequent buyer shall retain a copy of each form FSA-750, End-Use Certificate for Wheat, provided to the subsequent buyer in accordance with § 782.17(b).
(c) The subsequent buyer shall maintain records to verify that the wheat specified on the end-use certificate was identity preserved during the time that the subsequent buyer maintained control of the wheat, or until the wheat was loaded onto a conveyance for direct delivery to an end user.
(d) Copies of the documents and records required in paragraphs (a) through (c) of this section shall be kept on file at the subsequent buyer's headquarters office or other location designated by the subsequent buyer for the period specified in § 782.25.
Failure by importers, end users, exporters, and subsequent buyers to file form FSA-750, End-Use Certificate for Wheat, and form FSA-751, Wheat Consumption and Resale Report, as applicable, and retain or maintain related copies and records shall constitute noncompliance for the purposes of § 782.19.
(a)
(b)
The records required to be kept under this part shall be retained for 3 years following the filing date of the applicable record. Records shall be kept for such longer period of time as may be requested in writing by USDA representatives.
7 U.S.C. 8201
This part governs and provides the requirements and authorities for administration of the Tree Assistance Program (TAP) of the Farm Service Agency. This program shall operate only to the extent funds are appropriated for this program. Payments will be limited to lost eligible trees, bushes or vines, and all claims are subject to the availability of funds.
(a) The program will be administered under the general supervision and direction of the Administrator, Farm Service Agency (FSA), and the Deputy Administrator for Farm Programs, FSA. In the field, the regulations in this part will be administered by the FSA State and county committees.
(b) State and county committees, and representatives and their employees, do not have authority to modify or waive any of the provisions of the regulations of this part.
(c) The State committee shall take any action required by the regulations of this part that the county committee has not taken. The State committee shall also:
(1) Correct, or require a county committee to correct any action taken by such county committee that is not in accordance with the regulations of this part; or
(2) Require a county committee to withhold taking any action that is not in accordance with this part.
(d) No provision or delegation to a State or county committee shall preclude the Deputy Administrator, FSA, or a designee, from determining any question arising under the program or from reversing or modifying any determination made by a State or county committee.
(e) The Deputy Administrator may authorize State and county committees to waive or modify deadlines, except statutory deadlines, and other non-statutory requirements in cases where lateness or failure to meet such other requirements does not adversely affect operation of the program.
(f) Data furnished by the applicants will be used to determine eligibility for program benefits. Although participation in TAP is voluntary, program benefits will not be provided unless the participant furnishes all requested data.
(a) The definitions in part 718 of this chapter apply to TAP except when they conflict with paragraph (b) of this section.
(b) The following definitions apply to TAP:
(a) To be considered an eligible loss:
(1) Eligible trees, bushes or vines must have been located and lost as a result of natural disasters determined and announced by FSA as set forth in the TAP application.
(2) The individual stand must have sustained a loss in excess of 15 percent after adjustment for normal mortality;
(3) The loss could not have been prevented through reasonable and available measures; and
(4) The tree, bush or vine, in the absence of a qualifying disaster, would not normally have been rehabilitated or replanted within the 12-month period following the loss.
(b)(1) The damage must be visible and obvious to the county committee except that if the damage is no longer visible, the county committee may accept other evidence of the loss as it determines is reasonable.
(2) The county committee may require information from an expert in the case of plant disease or insect infestation.
(c)(1) To be eligible for TAP benefits the eligible orchardist must:
(i) Own the stand on which the claim for benefits is based;
(ii) Have owned the stand at the time the natural disaster occurred;
(iii) Have continuously owned the stand until the TAP application is submitted; and
(iv) Not exceed or be in violation of any other limitations on payments.
(2) Federal, State, and local governments and agencies and political subdivisions thereof are not eligible for benefits under this part.
(d)(1) A new owner of an orchard is allowed to receive TAP benefits in an amount not to exceed those approved for the predecessor owner of the orchard and not paid to the predecessor owner, if the predecessor owner of the orchard agrees to the succession in writing and if the new owner:
(i) Acquires ownership of trees, bushes or vines for which benefits have been approved;
(ii) Agrees to complete all approved practices which the original owner has not completed; and
(iii) Otherwise meets and assumes full responsibility for all provisions of this part, including refund of payments made to the previous owner, if applicable.
(2) In the case of death, incompetence or disappearance of an eligible orchardist, successors may be eligible to receive TAP payments as specified in part 707 of this chapter.
(a) A complete application for TAP benefits and related supporting documentation must be submitted to the county office prior to the deadline FSA announces.
(b) A complete application includes all of the following:
(1) A form provided by FSA;
(2) A written estimate of the number of trees, bushes or vines lost or damaged which is prepared by the owner or someone who is a qualified expert, as determined by the county committee;
(3) The number of acres on which the loss was suffered; and
(4) Sufficient evidence of the loss to allow the county committee to calculate whether an eligible loss occurred.
(c) Before requests will be approved, the county committee:
(1) Must make recommendations and an eligibility determination based on a complete application on those requests that it wants to refer to a higher approval official.
(2) Must verify actual qualifying losses and the number of acres involved by on-site visual inspection of the land and trees, bushes or vines.
(3) May request additional information and may consider all relevant information in making its determination, including its members own knowledge about the applicant's normal operations.
(a) Subject to the availability of TAP funds, an approved eligible orchardist shall be reimbursed in an amount not to exceed 75 percent of the eligible costs for the qualifying loss (that loss over and above the calculated 15% mortality). The payment shall be the lesser of the 75% of actual costs for the replanting or the amount calculated using rates established by the State committee (not to exceed the maximum amount the Deputy Administrator establishes). The costs permitted shall only be approved for:
(1) Seedlings or cuttings, for tree, bush or vine replanting;
(2) Site preparation and debris handling within normal cultural practices for the type of individual stand being re-established and necessary to ensure successful plant survival;
(3) Chemicals and nutrients necessary for successful establishment;
(4) Labor to plant seedlings or cuttings as determined reasonable by the county committee; and
(5) Labor used to transplant existing seedlings established through natural regeneration into a productive tree stand.
(b) Costs for fencing, irrigation, irrigation equipment, protection of seedlings from wildlife, general improvements, re-establishing structures, windscreens and other costs as determined by the Deputy Administrator are not eligible for reimbursement benefits.
(c) When lost stands are replanted, the types planted may be different than those originally planted if the new types have the same general end use, as the county committee determines and approves. Payments will be based on the lesser of rates established to plant the types actually lost or the cost to establish the alternative used. If the species of plantings, seedlings or cuttings differs significantly from the species lost then, except as the county committee determines, the costs may not be reimbursed.
(d) Eligible orchardists may elect not to replant the entire eligible stand. If so, the county committee shall calculate payment based on the number of qualifying trees, bushes or vines actually replanted.
(e) The cumulative total quantity of acres planted to trees, bushes or vines for which a person may receive assistance at any time under this part shall not exceed 500 acres.
(f) The cumulative amount of TAP benefits which any person, as defined in accordance with part 1400 of this title, may receive under this part shall not exceed $75,000.
(g) In the event the total amount of claims submitted under this part during a sign-up period exceeds the applicable funds available for such period, such payments shall be reduced by a uniform national percentage or by such other method deemed appropriate by the Deputy Administrator. Such payment reductions shall be applied after the imposition of applicable payment limitation provisions.
(a) Eligible orchardists must execute all required documents and complete the TAP funded practice within 12 months of application approval.
(b) If a person was erroneously determined to be eligible or becomes ineligible for all or part of a TAP benefit, the person and successor shall refund any payment paid under this part together with interest from the date of disbursement at a rate in accordance with part 1403 of this title.
(c) Participants must allow representatives of FSA to visit the site for the purposes of certifying compliance with TAP requirements.
Persons may not receive or retain payments for production losses from trees, vines and bushes under this part if they have been compensated under another program for the same loss. However, this restriction does not apply to emergency Federal loans or payments resulting from purchase of the additional coverage insurance, as defined in 7 CFR 400.651. However, in no
(a) Any payment or portion thereof due any person under this part shall be allowed without regard to questions of title under State law, and without regard to any claim or lien in favor of any person except agencies of the U.S. Government.
(b) Persons shall be ineligible to receive or retain assistance under this program if they have:
(1) Adopted any scheme or device intended to defeat the purpose of this program;
(2) Made any fraudulent representation; or
(3) Misrepresented any fact affecting a program determination.
(c) TAP benefits paid to a person as a result of misrepresentation shall be refunded to FSA with interest and costs of collection. The party engaged in acts prohibited by this part and the party receiving payment and their successors shall be jointly and severally liable for any amount due. The remedies provided to FSA in this part shall be in addition to other civil, criminal, or administrative remedies which may apply.
(d) Program documents executed by persons legally authorized to represent estates or trusts will be accepted only if such person furnishes evidence of the authority to execute such documents.
(e) A minor who is an owner that has met all other eligibility criteria shall be eligible for TAP assistance if:
(1) The minor establishes that the right of majority has been conferred on the minor by court proceedings or by statute; or
(2) A guardian has been appointed to manage the minor's property and the applicable program documents are executed by the guardian; or
(3) A bond is furnished under which the surety guarantees any loss incurred for which the minor would be liable had the minor been an adult.
(f) The regulations regarding reconsideration's and appeals at part 11 of this title and part 780 of this chapter apply to this part.
Clause (3) of section 32 of the Act of August 24, 1935, as amended; 7 U.S.C. 612c.
(a) Subject to the availability of funds, this part establishes terms and conditions under which the 2004 Ewe Lamb Replacement and Retention Payment Program will be administered.
(b) Unless otherwise determined by the Farm Service Agency (FSA) in accordance with the provisions of this part, the amount that may be expended under this part for program payments shall not exceed $18 million. Claims that exceed that amount will be prorated in accordance with § 784.7.
(c) To be eligible for payments, producers must comply with all provisions of this part and with any other conditions imposed by FSA.
(a) This part shall be administered by FSA under the general direction and supervision of the Deputy Administrator for Farm Programs, FSA. The program shall be carried out in the field by FSA State and county committees (State and county committees) in
(b) The Deputy Administrator for Farm Programs, FSA, or a designee, may reverse or modify a determination made by a State or county committee.
(c) The Deputy Administrator for Farm Programs, FSA, may waive or modify deadlines and other program requirements in cases where timeliness or failure to meet such other requirements does not adversely affect the operation of the program.
(d) The program described under this part is a one-time program to be administered with respect to eligibility and qualifying factors occurring during or related to the base period of August 1, 2003 through July 31, 2004, as specified in this part.
The definitions in this section shall apply to the 2004 Ewe Lamb Replacement and Retention Payment Program and this part.
(a) A request for benefits under this part must be submitted on the Ewe Lamb Replacement and Retention Program Application. The application form may be obtained in person, by mail, by telephone, or by facsimile from any county FSA office. In addition, applicants may download a copy of the form at
(b) The form may be obtained from and must be submitted to the FSA county office serving the county where the sheep and lamb operation is located. The completed form must be received by the FSA county office by the date established by FSA. Applications not received by that date will be disapproved and returned as not having been timely filed and the sheep and lamb operation filing the application will not be eligible for benefits under this program.
(c) The sheep and lamb operation requesting benefits under this part must certify to the accuracy of the information provided in their application for benefits. All information provided is subject to verification and spot checks by FSA. Refusal to allow FSA or any other agency of the Department of Agriculture to verify any information provided will result in a determination of ineligibility. Data furnished by the applicant will be used to determine eligibility for program benefits. Providing a false certification will lead to ineligibility for payments and may be subject to additional civil and criminal sanctions.
(d) The sheep and lamb operation requesting benefits under this part must maintain accurate records that document that they meet all eligibility requirements specified herein, as may be requested by FSA. Acceptable forms of supporting documentation include, but are not limited to: Sales receipts, farm management records, veterinarian certifications, scrapie program forms and identification numbers, as well as, other types of documents that prove the eligibility of the qualifying ewe lambs and the sheep and lamb operation. The supporting documentation provided must, at a minimum, include: date of lamb purchase or date of birth, date of lamb death (if applicable), lamb identification and control information, number of ewe lambs purchased or retained, and scrapie program identification numbers.
(a) Payments can be made, as agreed to by FSA and subject to the availability of funds, for eligible ewe lambs considered by FSA, as determined by FSA only, to have been acquired or held during the base period by eligible sheep and lamb operations for breeding purposes. Payments may be made for eligible ewe lambs held continuously by the operation, through the end of the compliance period, from the time of the first possession of the ewe lamb in the base period. The payment rate cannot exceed the rate provided for in § 784.6 and may be prorated pursuant to § 784.7. For purposes of this section, the “base period” is the period from August 1, 2003, through July 31, 2004. A purchase in the base period without possession in the base period will not be considered an acquisition in the base period for purposes of this section unless otherwise allowed by FSA.
(b) For the ewe lamb to be eligible, a sheep and lamb operation must certify that the ewe lamb:
(1) During at least part of the base period was a ewe lamb which was both, at the same time, not older than 18 months of age and had not produced an offspring; and
(2) At the time of certification, does not possess any of the following characteristics:
(i) Parrot mouth; or
(ii) Foot rot.
(c) The sheep and lamb operation must certify and agree to:
(1) Maintain the qualifying ewe lambs in the herd for at least one complete, normal offspring lambing cycle, the end of which shall constitute the end of the compliance period for the purposes of paragraph (a) of this section, and actually maintain the lambs for that period in accord with that certification. The “offspring” lambing cycle refers to the time in which the qualifying ewe lamb's own offspring would be weaned, in a normal course, from that qualifying ewe if the ewe were to have offspring, irrespective of whether the ewe actually produces offspring.
(2) Upon request by an AMS agent or FSA representative, allow the AMS agent or FSA Representative to verify that the ewe lambs meet qualifying characteristics. Spot checks will be conducted by FSA within 30 days of the end of the sign-up period. Any animal showing evidence of parrot mouth, foot rot, or scrapie in such spot checks will be considered to have had those conditions at the time of certification. Other spot checks may be conducted as needed.
(3) Maintain documentation of any death loss of qualifying ewe lambs.
(4) Agree to refund any payments made with respect to any ewe lamb or offspring that has died before completing the full program requirements where said deaths for the operation exceed 10 percent.
(5) Be in compliance with all requirements relating to scrapie, as described in 9 CFR parts 54 and 79.
(d) To be eligible for any payments addressed under this section, a sheep and lamb operation must be engaged in the business of producing and marketing agricultural products at the time of filing the application.
(e) In addition, to be eligible for payment, a sheep and lamb operation must submit a timely application during the application period for benefits and comply with all other terms and conditions of this part or that are contained in the application for such benefits, and such other conditions as may be imposed by FSA.
(f) Proof that each lamb was held during and through the end of the base period as required by paragraph (a) of this section, as must be determined individually for each lamb, shall be provided in such manner, and with such access to the operation and the documents and information related to the operation, as FSA may request.
(a) Subject to the availability of funds and to the proration provisions of § 784.7, payments for qualifying operations shall be $18 for each qualifying ewe lamb retained or purchased for breeding purposes.
Total payments under this part, unless otherwise determined by the FSA, cannot exceed $18 million. In the event that approval of all eligible applications would result in expenditures in excess of the amount available, FSA shall prorate the available funds by a national factor to reduce the expected payments to be made to the amount available. The payment shall be made based on the national factored rate as determined by FSA. FSA shall prorate the payments in such manner as it, in its sole discretion, finds appropriate and reasonable.
The appeal regulations set forth at parts 11 and 780 of this title apply to determinations made pursuant to this part.
(a) A sheep and lamb operation shall be ineligible to receive assistance under this program if it is determined by the State committee or the county committee to have:
(1) Adopted any scheme or device that tends to defeat the purpose of this program;
(2) Made any fraudulent representation; or
(3) Misrepresented any fact affecting a program determination.
(b) Any funds disbursed pursuant to this part to any person or operation engaged in a misrepresentation, scheme, or device, shall be refunded with interest together with such other sums as may become due. Any sheep and lamb operation or person engaged in acts prohibited by this section and any sheep and lamb operation or person receiving payment under this part shall be jointly and severally liable with other persons or operations involved in such claim for benefits for any refund due under this section and for related charges. The remedies provided in this part shall be in addition to other civil, criminal, or administrative remedies that may apply.
(a) Program documents executed by persons legally authorized to represent estates or trusts will be accepted only if such person furnishes evidence of the authority to execute such documents.
(b) A minor who is otherwise eligible for assistance under this part must, also:
(1) Establish that the right of majority has been conferred on the minor by court proceedings or by statute;
(2) Show a guardian has been appointed to manage the minor's property and the applicable program documents are executed by the guardian; or
(3) Furnish a bond under which the surety guarantees any loss incurred for which the minor would be liable had the minor been an adult.
In the case of death, incompetence, disappearance or dissolution of a person that is eligible to receive benefits in accordance with this part, such person or persons specified in 7 CFR part 707 may receive such benefits, as determined appropriate by FSA.
Persons making application for benefits under this program must maintain accurate records and accounts that will document that they meet all eligibility requirements specified herein. Such records and accounts must be retained for 3 years after the date of payment to the sheep and lamb operations under this program. Destruction of the records after such date shall be at the
(a) In the event there is an inaccurate certification or a failure to comply with any term, requirement, or condition for payment arising under the application, or this part, and if any refund of a payment to FSA shall otherwise become due in connection with the application, or this part, all related payments made under this part to any sheep and lamb operation shall be refunded to FSA together with interest as determined in accordance with paragraph (c) of this section and late payment charges as provided in part 1403 of this title.
(b) All persons signing a sheep and lamb operation's application for payment as having an interest in the operation shall be jointly and severally liable for any refund, including related charges, that is determined to be due for any reason under the terms and conditions of the application or this part with respect to such operation.
(c) Interest shall be charged on refunds required of any person under this part if FSA determines that payments or other assistance was provided to a person who was not eligible for such assistance. Such interest shall be charged at the rate of interest that the United States Treasury charges the Commodity Credit Corporation for funds, from the date FSA made such benefits available to the date of repayment or the date interest increases as determined in accordance with applicable regulations. FSA may waive the accrual of interest if FSA determines that the cause of the erroneous determination was not due to any action of the person.
(d) Interest determined in accordance with paragraph (c) of this section may be waived at the discretion of FSA alone for refunds resulting from those violations determined by FSA to have been beyond the control of the person committing the violation.
(e) Late payment interest shall be assessed on all refunds in accordance with the provisions of, and subject to the rates prescribed in 7 CFR part 792.
(f) Any excess payments made by FSA with respect to any application under this part must be refunded.
(g) In the event that a benefit under this subpart was provided as the result of erroneous information provided by any person, the benefit must be repaid with any applicable interest.
FSA may offset or withhold any amounts due FSA under this subpart in accordance with the provisions of 7 CFR part 792, or successor regulations, as designated by the Department.
Any person who may be entitled to a payment may assign his rights to such payment in accordance with 7 CFR part 1404, or successor regulations, as designated by the Department.
This program will be terminated after payment has been made to those applications certified as eligible pursuant to the application period established in § 784.4.
5 U.S.C. 301; 7 U.S.C. 1989; and 7 U.S.C. 5101-5104.
(a) States meeting conditions specified in this part may have their mediation programs certified by the Farm
(b) USDA agencies participate in mediations pursuant to agency rules governing their informal appeals processes. Where mediation of an agency decision by a certified State mediation program is available to participants in an agency program as part of the agency's informal appeal process, the agency will offer a participant receiving notice of an agency decision the opportunity to mediate the decision under the State's certified mediation program, in accordance with the agency's informal appeals regulations.
(c) USDA agencies making mediation available as part of the agency informal appeals process may execute memoranda of understanding with a certified mediation program concerning procedures and policies for mediations during agency informal appeals that are not inconsistent with this part or other applicable regulations. Each such memorandum of understanding will be deemed part of the grant agreement governing the operation and administration of a State certified mediation program receiving Federal grant funds under this part.
(d) A mediator in a program certified under this part has no authority to make decisions that are binding on parties to a dispute.
(e) No person may be compelled to participate in mediation provided through a mediation program certified under this part. This provision shall not affect a State law requiring mediation before foreclosure on agricultural land or property.
(1) Wetlands determinations;
(2) Compliance with farm programs, including conservation programs;
(3) Agricultural loans (regardless of whether the loans are made or guaranteed by the USDA or are made by a third party);
(4) Rural water loan programs;
(5) Grazing on National Forest System lands;
(6) Pesticides; or
(7) Such other issues as the Secretary may consider appropriate.
To obtain FSA certification of the State's mediation program, the State must meet the requirements of this section.
(a)
(1)
(i) A summary of the program;
(ii) An identification of issues available for mediation under the program;
(iii) Management of the program;
(iv) Mediation services offered by the program;
(v) Program staffing and staffing levels;
(vi) Uses of contract mediation services in the program describing both services provided by contractors and costs of such services;
(vii) State statutes and regulations in effect that are applicable to the State's mediation program; and
(viii) A description of the State program's education and training requirements for mediators including:
(A) Training in mediation skills and in USDA programs;
(B) Identification and compliance with any State law requirements; and
(C) Other steps by the State's program to recruit and deploy qualified mediators.
(ix) Any other information requested by FSA;
(2)
(i) That the State's mediation program provides mediation services to covered persons with the aim of reaching mutually agreeable decisions between the parties under the program;
(ii) That the State's mediation program is authorized or administered by an agency of the State government or by the Governor of the State;
(iii) That the State's mediation program provides for training of mediators in mediation skills and in all issues covered by the State's mediation program;
(iv) That the State's mediation program shall provide confidential mediation as defined in § 785.2;
(v) That the State's mediation program ensures, in the case of agricultural loans, that all lenders and borrowers of agricultural loans receive adequate notification of the mediation program;
(vi) That the State's mediation program ensures, in the case of other issues covered by the mediation program, that persons directly affected by actions of the USDA receive adequate notification of the mediation program; and
(vii) That the State's mediation program prohibits discrimination in its programs on the basis of race, color, national origin, sex, religion, age, disability, political beliefs, and marital or familial status.
(b)
(a)
(1) Be certified as described in § 785.3; and
(2) Submit an application for a grant with its certification or re-certification request as set forth in this section.
(b)
(1) Application for Federal Assistance, Standard Form 424 (available in any FSA office and on the Internet,
(2) A budget with supporting details providing estimates of the cost of operation and administration of the program. Proposed direct expenditures will be grouped in the categories of allowable direct costs under the program as set forth in paragraph (c)(1) of this section;
(3) Other information pertinent to the funding criteria specified in § 785.7(b); and
(4) Any additional supporting information requested by FSA in connection with its review of the grant request.
(c)
(1)
(i) Staff salaries and fringe benefits;
(ii) Reasonable fees and costs of mediators;
(iii) Office rent and expenses, such as utilities and equipment rental;
(iv) Office supplies;
(v) Administrative costs, such as workers' compensation, liability insurance, employer's share of Social Security, and travel that is necessary to provide mediation services;
(vi) Education and training of participants and mediators involved in mediation;
(vii) Security systems necessary to assure confidentiality of mediation sessions and records of mediation sessions;
(viii) Costs associated with publicity and promotion of the program; and
(ix) Financial advisory and counseling services for parties requesting mediation (as reasonable and necessary to prepare parties for mediation) that are performed by a person other than a state mediation program mediator and as approved under guidelines established by the state mediation program and reported to FSA.
(2)
(i) Purchase of capital assets, real estate, or vehicles and repair, or maintenance of privately-owned property;
(ii) Political activities;
(iii) Routine administrative activities not allowable under OMB Cost Principles found in part 3015, subpart T, of this title and OMB Circular No. A-87; and
(iv) Services provided by a State mediation program that are not consistent with the features of the mediation program certified by the State, including advocacy services on behalf of a mediation participant, such as representation of a mediation client before an administrative appeals entity of the USDA or other Federal Government department or Federal or State Court proceeding.
A requirement that non-USDA parties who elect to participate in mediation pay a fee for mediation services will not preclude certification of a certified State mediation program or its eligibility for a grant; however, if participation in mediation is mandatory for a USDA agency, a certified State mediation program may not require the USDA agency to pay a fee to participate in a mediation.
(a)
(2)
(3)
(b)
(a)
(b)
(1) Demand for and use of mediation services (historical and projected);
(2) Scope of mediation services;
(3) Service record of the State program, as evidenced by:
(i) Number of inquiries;
(ii) Number of requests for and use of mediation services, historical and projected, as applicable;
(iii) Number of mediations resulting in signed mediation agreements;
(iv) Timeliness of mediation services; and
(v) Activities promoting awareness and use of mediation;
(4) Historic use of program funds (budgeted versus actual); and
(5) Material changes in the State program.
(c)
(2) Payment of grant funds will be by electronic funds transfer to the designated account of each certified State mediation program, as approved by FSA.
(d)
(1) Subject to paragraph (a) of this section and the availability of funds, the Administrator will allocate and disburse sums from the administrative reserve in the following priority order:
(i) Disbursements to cover additional, unbudgeted demands for mediation services in qualifying States eligible for grant funding as of the beginning of the fiscal year;
(ii) Grants to qualifying States whose requests for new certification or re-certification were received between August 2 and March 1. A previously qualifying State that submits a request for re-certification received after August 1 may receive a grant award effective as of the beginning of the fiscal year. A newly qualifying State that submits a request for certification received after August 1 may receive a grant award effective March 31 of the fiscal year.
(iii) Any balance remaining in the administrative reserve will be allocated pro rata to certified State mediation programs based on their initial fiscal year grant awards.
(2) All funds from the administrative reserve will be made available on or before March 31 of the fiscal year.
(e)
(2) Grant funds not spent in accordance with this part will be subject to de-obligation and must be returned to the USDA.
(a)
(1) A review of mediation services provided by the certified State mediation program during the preceding Federal fiscal year providing information concerning the following matters:
(i) A narrative review of the goals and accomplishments of the certified State mediation program in providing intake and scheduling of cases; the provision of background and selected information regarding the mediation process; financial advisory and counseling services, training, notification, public education, increasing resolution rates, and obtaining program funding from sources other than the grant under this part.
(ii) A quantitative summary for the preceding fiscal year, and for prior fiscal years, as appropriate, for comparisons of program activities and outcomes of the cases opened and closed during the reporting period; mediation services provided to clients grouped by program and subdivided by issue, USDA agency, types of covered persons and other participants; and the resolution rate for each category of issue reported for cases closed during the year;
(2) An assessment of the performance and effectiveness of the State's certified mediation program considering:
(i) Estimated average costs of mediation services per client with estimates furnished in terms of the allowable costs set forth in § 785.4(b)(1).
(ii) Estimated savings to the State as a result of having the State mediation program certified including:
(A) Projected costs of avoided USDA administrative appeals based on projections of the average costs of such appeals furnished to the State by FSA, with the assistance of the USDA National Appeals Division and other agencies as appropriate;
(B) In agricultural credit mediations that do not result from a USDA adverse program decision, projected cost savings to the various parties as a result of resolution of their dispute in mediation. Projected cost savings will be based on such reliable statistical data as may be obtained from State statistical sources including the certified State's bar association, State Department of Agriculture, State court system or Better Business Bureau, or other reliable State or Federal sources;
(iii) Recommendations for improving the delivery of mediation services to covered persons, including:
(A) Increasing responsiveness to needs for mediation services.
(B) Promoting increases in dispute resolution rates.
(C) Improving assessments of training needs.
(D) Improving delivery of training.
(E) Reducing costs per mediation.
(3) Such other matters relating to the program as the State may elect to include, or as the Administrator may require.
(b)
Notwithstanding § 3015.24 of this title, the State must maintain and provide the Government access to pertinent records regarding services delivered by the certified State mediation program for purposes of evaluation, audit and monitoring of the certified State mediation program as follows:
(a) For purposes of this section, pertinent records consist of: the names and addresses of applicants for mediation services; dates mediations opened and closed; issues mediated; dates of sessions with mediators; names of mediators; mediation services furnished to participants by the program; the sums charged to parties for each mediation service; records of delivery of services to prepare parties for mediation (including financial advisory and counseling services); and the outcome of the mediation services including formal settlement results and supporting documentation.
(b) State mediators will notify all participants in writing at the beginning of the mediation session that the USDA, including the USDA Inspector General, the Comptroller General of the United States, the Administrator, and any of their representatives will have access to pertinent records as necessary to monitor and to conduct audits, investigations, or evaluations of mediation services funded in whole or in part by the USDA.
(c) All participants in a mediation must sign and date an acknowledgment of receipt of such notice from the mediator. The certified State mediation program shall maintain originals of such acknowledgments in its mediation files for at least 5 years.
(a) The Administrator is authorized to withdraw certification of a State mediation program, terminate or suspend the grant to such program, require a return of unspent grant funds, a reimbursement of grant funds on account of expenditures that are not allowed, and may impose any other penalties or sanctions authorized by law if the Administrator determines that:
(1) The State's mediation program, at any time, does not meet the requirements for certification;
(2) The mediation program is not being operated in a manner consistent with the features of the program certified by the State, with applicable regulations, or the grant agreement;
(3) Costs that are not allowed under § 785.4(b) are being paid out of grant funds;
(4) The mediation program fails to grant access to mediation records for purposes specified in § 785.8; or
(5) Reports submitted by the State pursuant to § 785.7 are false, contain misrepresentations or material omissions, or are otherwise misleading.
(b) In the event that FSA gives notice to the State of its intent to enforce any withdrawal of certification or other penalty for non-compliance, USDA agencies will cease to participate in any mediation conducted by the State's mediation program immediately upon delivery of such notice to the State.
(a) A State mediation program may request that the Administrator reconsider any determination that a State is not a qualifying State under § 785.3 and any penalty decision made under § 785.10. The decision of the Administrator upon reconsideration shall be the final administrative decision of FSA.
(b) Nothing in this part shall preclude action to suspend or debar a
The provisions of parts 15, 15b and 1901, subpart E, of this title and part 90 of title 45 apply to activities financed by grants made under this part.
The information collection requirements in this regulation have been approved by the Office of Management and Budget and assigned OMB control number 0560-0165.
Sec. 9007, Pub. L. 110-28, 121 Stat. 112; and Sec. 743, Pub. L. 110-161.
(a) Subject to the availability of funds, this part specifies the terms and conditions applicable to the Dairy Disaster Assistance Payment Program (DDAP-III) authorized by section 9007 of Public Law 110-28 (extended by Pub. L. 110-161). Benefits are available to eligible United States producers who have suffered dairy production losses in eligible counties as a result of a natural disaster declared during the period between January 1, 2005, and December 31, 2007, (that is, after January 1, 2005, and before December 31, 2007).
(b) To be eligible for this program, a producer must have been a milk producer anytime during the period of January 2, 2005, through December 30, 2007, in a county declared a natural disaster by the Secretary of Agriculture, declared a major disaster or emergency designated by the President of the United States. For a county for which there was a timely Presidential declaration, but the declaration did not cover the loss, the county may still be eligible if the county is one for which an appropriate determination of a Farm Service Agency (FSA) Administrator's Physical Loss Notice applies. Counties contiguous to a county that is directly eligible by way of a natural disaster declaration are also eligible. Only losses occurring in eligible counties are eligible for payment in this program.
(c) Subject to the availability of funds, FSA will provide benefits to eligible dairy producers. Additional terms and conditions may be specified in the payment application that must be completed and submitted by producers to receive a disaster assistance payment for dairy production losses.
(d) To be eligible for payments, producers must meet the provisions of, and their losses must meet the conditions of, this part and any other conditions imposed by FSA.
(a) DDAP-III will be administered under the general supervision of the Administrator, FSA, or a designee, and be carried out in the field by FSA State and county committees (State and county committees) and FSA employees.
(b) State and county committees, and representatives and employees thereof, do not have the authority to modify or waive any of the provisions of the regulations of this part.
(c) The State committee will take any action required by the regulations of this part that has not been taken by the county committee. The State committee will also:
(1) Correct, or require the county committee to correct, any action taken by such county committee that is not
(2) Require a county committee to withhold taking any action that is not in accordance with the regulations of this part.
(d) No provision of delegation in this part to a State or county committee will preclude the Administrator, FSA, or a designee, from determining any question arising under the program or from reversing or modifying any determination made by the State or county committee.
(e) The Deputy Administrator, Farm Programs, FSA, may authorize State and county committees to waive or modify deadlines in cases where lateness or failure to meet such requirements do not adversely affect the operation of the DDAP-III and does not violate statutory limitations of the program.
(f) Data furnished by the applicants is used to determine eligibility for program benefits. Although participation in DDAP-III is voluntary, program benefits will not be provided unless the producer furnishes all requested data.
The definitions in 7 CFR part 718 apply to this part except to the extent they are inconsistent with the provisions of this part. In addition, for the purpose of this part, the following definitions apply.
(a) Dairy producers may obtain an application, in person, by mail, by telephone, or by facsimile from any FSA county office. In addition, applicants may download a copy of the application at
(b) A request for benefits under this part must be submitted on a completed DDAP-III application. Applications and any other supporting documentation must be submitted to the FSA county office serving the county where the dairy operation is located, but, in any case, must be received by the FSA county office by the close of business on the date established by the Deputy Administrator. Applications not received by the close of business on such date will be disapproved as not having been timely filed and the dairy producer will not be eligible for benefits under this program.
(c) All persons who share in the milk production of the dairy operation and risk of the dairy operation's total production must certify to the information on the application before the application will be considered complete.
(d) Each dairy producer requesting benefits under this part must certify to the accuracy and truthfulness of the information provided in their application and any supporting documentation. Any information entered on the application will be considered information from the applicant regardless of who entered the information on the application. All information provided is subject to verification by FSA. Refusal to allow FSA or any other agency of the Department of Agriculture to verify any information provided may result in a denial of eligibility. Furnishing the information is voluntary; however, without it program benefits will not be approved. Providing a false certification to the Government may be punishable by imprisonment, fines, and other penalties or sanctions.
(a) Producers in the United States will be eligible to receive dairy disaster benefits under this part only if they have suffered dairy production losses, previously uncompensated by disaster payments including any previous dairy disaster payment program, during the claim period applicable to a natural disaster declaration in a disaster county. To be eligible to receive payments under this part, producers in a dairy operation must:
(1) Have produced and commercially marketed milk in the United States and commercially marketed the milk produced anytime during the period of January 2, 2005 through December 30, 2007;
(2) Be a producer on a dairy farm operation physically located in an eligible county where dairy production losses were incurred as a result of a disaster for which an applicable natural disaster declaration was issued between January 1, 2005 and December 31, 2007, and limit their claims to losses that occurred in those counties, specific to conditions resulting from the
(3) Provide adequate proof, to the satisfaction of the FSA county committee, of the average number of cows in the dairy herd and annual milk production commercially marketed by all persons in the eligible dairy operation during the years of the base period (2003 and 2004 calendar years) and applicable disaster year that corresponds with the issuance date of the applicable natural disaster declaration, or other period as determined by FSA, to determine the total pounds of eligible losses that will be used for payment; and
(4) Apply for payments during the application period established by the Deputy Administrator.
(b) Payments may be made for losses suffered by an otherwise eligible producer who is now deceased or is a dissolved entity if a representative who currently has authority to enter into a contract for the producer or the producer's estate signs the application for payment. Proof of authority to sign for the deceased producer's estate or a dissolved entity must be provided. If a producer is now a dissolved general partnership or joint venture, all members of the general partnership or joint venture at the time of dissolution or their duly-authorized representatives must sign the application for payment.
(c) Producers associated with a dairy operation must submit a timely application and satisfy the terms and conditions of this part, instructions issued by FSA, and instructions contained in the application to be eligible for benefits under this part.
(d) As a condition to receive benefits under this part, a producer must have been in compliance with the Highly Erodible Land Conservation and Wetland Conservation provisions of 7 CFR part 12 for the calendar year applicable to the natural disaster declaration and loss claim period, and must not otherwise be barred from receiving benefits under 7 CFR part 12 or any other law or regulation.
(e) Payments are limited to losses in eligible counties, in eligible disaster years.
(f) All payments under this part are subject to the availability of funds.
(g) Eligible losses are determined from the applicable base annual production, as defined in § 786.102, that corresponds to the natural disaster declaration and must have occurred during that same period as follows:
(1) For disaster declarations for disasters during a calendar year (2005, 2006, or 2007), the disaster claim period is the full calendar year and
(2) For disaster declarations issued during one calendar year that ends in another calendar year, the producer will be eligible for both disaster years.
(h) Deductions in eligibility will be made for any disaster payments previously received for the loss including any made under a previous dairy disaster assistance payment program for 2005.
(a) Evidence of production is required to establish the commercial marketing and production history of the dairy operation so that dairy production losses can be computed in accordance with § 786.106.
(b) A dairy producer must, based on the instructions issued by the Deputy Administrator, provide adequate proof of the dairy operation's commercial production, including any dairy herd inventory records available for the operation, for the years of the base period (2003 and 2004 calendar years) and disaster claim period that corresponds with the issuance date of the applicable natural disaster declaration.
(1) A producer must certify and provide such proof as requested that losses for which compensation is claimed were related to the disaster declaration issued and occurred in an eligible county during the eligible claim period.
(2) A producer must certify to the average number of cows in the dairy herd during the base period and applicable disaster claim period when there is insufficient documentation available for verification.
(3) Additional supporting documentation may be requested by FSA as necessary to verify production losses to the satisfaction of FSA.
(c) Adequate proof of production history of the dairy operation under paragraph (b) of this section must be based
(d) As specified in § 786.106, loss calculations will be based on comparing the expected base annual production consistent with this part and the actual production during the applicable disaster claim year. Such calculations are subject to adjustments as may be appropriate such as a correction for losses not due to the disaster. If adequate proof of normally marketed production and any other production for relevant periods is not presented to the satisfaction of FSA, the request for benefits will be rejected. Special adjustments for new producers may be made as determined necessary by the Administrator.
(a) Eligible payable losses are calculated on a dairy operation by dairy operation basis and are limited to those occurring during the applicable disaster claim period, as provided by § 786.104(g), that corresponds with the applicable natural disaster declaration. Specifically, dairy production losses incurred by producers under this part are determined on the established history of the dairy operation's average number of cows in the dairy herd and actual commercial production marketed during the base period and applicable disaster claim period that corresponds with the applicable natural disaster declaration, as provided by the dairy operation consistent with § 786.105. Except as otherwise provided in this part, the base annual production, as defined in § 786.102 and established in § 786.104(g) is determined for each applicable disaster year based on the average annual production per cow determined according to the following:
(1) The average of annual marketed production during the base period calendar years of 2003 and 2004, divided by;
(2) The average number of cows in the dairy operation's herd during the base period calendar years of 2003 and 2004.
(b) If relevant information to calculate the average annual production per cow for one or both of the base period calendar years of 2003 and 2004, is not available, an alternative method of determining the average annual production per cow may be established by the FSA Administrator. For example, for new dairies not in operation during 2003 and 2004, information from three similar farms may be obtained by FSA to estimate base annual production.
(c) The average annual production per cow, as determined according to paragraphs (a)(1) and (a)(2) of this section, is multiplied by the average number of cows in the dairy operation's herd during the applicable disaster year (excluding cow losses resulting from the disaster occurrence), to determine base annual production for the dairy operation for each applicable disaster claim period year.
(d) The eligible dairy production losses for a dairy operation for each of the authorized disaster claim period years will be:
(1) The relevant period's base annual production for the dairy operation calculated under paragraph (c) of this section less,
(2) For each such disaster claim period for each dairy operation the actual commercially-marketed production relevant to that period.
(e) Spoiled or dumped milk, disposed of for reasons unrelated to the disaster occurrence, must be counted as production for the relevant disaster claim period. Actual production losses may be adjusted to the extent the reduction in production is not certified by the producer to be the result of the disaster identified in the natural disaster declaration or is determined by FSA not to be related to the natural disaster identified in the natural disaster declaration. FSA county committees will determine production losses that are not caused by the disaster associated with the natural disaster declaration.
(f) Actual production, as adjusted, that exceeds the base annual production will mean that the dairy operation incurred no eligible production losses for the corresponding claim period as a result of the natural disaster.
(g) Eligible production losses as otherwise determined under paragraphs (a) through (f) of this section for each authorized year of the program are added together to determine total eligible losses incurred by the dairy operation under DDAP-III subject to all other eligibility requirements as may be included in this part or elsewhere, including the deduction for previous payments including those made under a previous DDAP program.
(h) Payment on eligible dairy operation losses will be calculated using whole pounds of milk. No double counting is permitted, and only one payment will be made for each pound of milk calculated as an eligible loss after the distribution of the dairy operation's eligible production loss among the producers of the dairy operation according to § 786.107(b). Payments under this part will not be affected by any payments for dumped or spoiled milk that the dairy operation may have received from its milk handler, marketing cooperative, or any other private party; however, produced milk that was dumped or spoiled for reasons unrelated to the disaster occurrence will still count as production.
(a) Subject to the availability of funds, the payment rate for eligible production losses determined according to § 786.106 is, depending on the State, the annual average Mailbox milk price for the Marketing Order, applicable to the State where the eligible disaster county is located, as reported by the Agricultural Marketing Service during the relevant period. States not regulated under a Marketing Order will be assigned a payment rate based on contiguous or nearby State's Mailbox milk price. Maximum per pound payment rates for eligible losses for dairy operations located in specific states during the relevant period are as follows:
(b) Subject to the availability of funds, each eligible dairy operation's payment is calculated by multiplying the applicable payment rate under paragraph (a) of this section by the operation's total eligible losses as adjusted pursuant to this part. Where there are multiple producers in the dairy operation, individual producers' payments are disbursed according to each producer's share of the dairy operation's production as specified in the application.
(c) If the total value of losses claimed nationwide under paragraph (b) of this section exceeds the $16 million available for the DDAP-III, less any reserve that may be created under paragraph (e) of this section, total eligible losses of individual dairy operations that, as calculated as an overall percentage for each full disaster claim period applicable to the disaster declaration, are greater than 20 percent of the total base annual production will be paid at the maximum rate under paragraph (a) of this section to the extent available funding allows. A loss of over 20 percent in only one or two months during the applicable disaster claim period does not of itself qualify for the maximum per-pound payment. Rather, the priority level must be reached as an average over the whole disaster claim period for the relevant calendar year. Total eligible losses for a producer, as calculated under § 786.106, of less than or equal to 20 percent during the eligible claim period will then be paid at a rate, not to exceed the rate allowed in paragraph (a) of this section, determined by dividing the eligible losses of less than 20 percent by the funds remaining after making payments for all eligible losses above the 20-percent threshold.
(d) In no event will the payment exceed the value determined by multiplying the producer's total eligible loss times the average price received for commercial milk production in the producer's area as defined in paragraph (a) of this section.
(e) No participant will receive disaster benefits under this part that in combination with the value of production not lost would result in an amount that exceeds 95 percent of the value of
(f) A reserve may be created to handle pending or disputed claims, but claims will not be payable once the available funding is expended.
The total available program funds are $16 million as provided by section 9007 of Title IX of Public Law 110-28.
Provisions of the appeal regulations set forth at 7 CFR parts 11 and 780 apply to this part. Appeals of determinations of ineligibility or payment amounts are subject to the limitations in §§ 786.107 and 786.108 and other limitations that may apply.
(a) In addition to other penalties, sanctions, or remedies that may apply, a dairy producer is ineligible to receive assistance under this program if the producer is determined by FSA to have:
(1) Adopted any scheme or device that tends to defeat the purpose of this program,
(2) Made any fraudulent representation,
(3) Misrepresented any fact affecting a program determination, or
(4) Violated 7 CFR 795.17 and thus be ineligible for the year(s) of violation and the subsequent year.
(b) Any funds disbursed pursuant to this part to any person or dairy operation engaged in a misrepresentation, scheme, or device, must be refunded with interest together with such other sums as may become due. Interest will run from the date of the disbursement to the producer or other recipient of the payment from FSA. Any person or dairy operation engaged in acts prohibited by this section and any person or dairy operation receiving payment under this part is jointly and severally liable with other persons or dairy operations involved in such claim for benefits for any refund due under this section and for related charges. The remedies provided in this part are in addition to other civil, criminal, or administrative remedies that may apply.
In the case of death, incompetency, disappearance, or dissolution of an individual or entity that is eligible to receive benefits in accordance with this part, such alternate person or persons specified in 7 CFR part 707 may receive such benefits, as determined appropriate by FSA.
Persons applying for benefits under this program must maintain records and accounts to document all eligibility requirements specified herein and must keep such records and accounts for 3 years after the date of payment to their dairy operations under this program. Destruction of the records after such date is at the risk of the party required, by this part, to keep the records.
(a) Excess payments, payments provided as the result of erroneous information provided by any person, or payments resulting from a failure to meet any requirement or condition for payment under the application or this part, must be refunded to FSA.
(b) A refund required under this section is due with interest determined in accordance with paragraph (d) of this section and late payment charges as provided in 7 CFR part 792. Notwithstanding any other regulation, interest will be due from the date of the disbursement to the producer or other recipient of the funds.
(c) Persons signing a dairy operation's application as having an interest in the operation will be jointly and
(d) In the event FSA determines a participant owes a refund under this part, FSA will charge program interest from the date of disbursement of the erroneous payment. Such interest will accrue at the rate that the United States Department of the Treasury charges FSA for funds plus additional charges as deemed appropriate by the Administrator or provided for by regulation or statute.
(e) The debt collection provisions of part 792 of this chapter applies to this part except as is otherwise provided in this part.
(a) Payments or any portion thereof due under this part must be made without regard to questions of title under State law and without regard to any claim or lien against the livestock, or proceeds thereof, in favor of the owner or any other creditor except agencies and instrumentalities of the U.S. Government.
(b) Any producer entitled to any payment under this part may assign any payments in accordance with the provisions of 7 CFR part 1404.
This program will be terminated after payment has been made to those applicants certified as eligible pursuant to the application period established in § 786.104. All eligibility determinations will be final except as otherwise determined by the Deputy Administrator. Any claim for payment may be denied once the allowed funds are expended, irrespective of any other provision of this part.
31 U.S.C. 3701, 3711, 3716-3719, 3728; 4 CFR parts 101-105; 7 CFR 3.21(b).
Except as may otherwise be provided by statute, this part sets forth the manner in which the Farm Service Agency (FSA) will settle and collect debts by FSA. The provisions of part 1403 of this title are applicable to actions of FSA regarding the settlement and collection of debts on the behalf of the Commodity Credit Corporation (CCC).
The regulations in this part will be administered under the general supervision and direction of the Administrator, FSA.
The following definitions shall be applicable to this part:
(2) Any entity which has entered into an agreement with USDA concerning the referral of credit information.
(2) Any debt that has not been paid by the date of an initial notification of indebtedness mailed or hand-delivered pursuant to § 792.4.
(a) When a debt is due FSA, an initial written demand for payment of such amount shall be mailed or hand-delivered to the debtor. If the debt is not paid in full by the date specified in the initial demand letter, or if a repayment schedule acceptable to FSA has not been arranged with the debtor, the initial demand may be followed by two subsequent written demands at approximately 30-day intervals, unless it is determined by FSA that further demands would be futile and the debtor's response does not require rebuttal. The initial or subsequent demand letters shall specify the following:
(1) The basis for and the amount of the debt determined to be due FSA, including the principal, applicable interest, costs, and other charges;
(2) FSA' intent to establish an account on a debt record 30 days after the date of the letter, or other applicable period of time, if the debt is not paid within that time;
(3) The applicable late payment interest rate.
(i) If a late payment interest rate is specified in the contract, agreement or program regulation, the debtor shall be informed of that rate and the date from which the late payment interest has been accruing;
(ii) If a late payment interest rate is not specified in the contract, agreement or program regulation, the debtor shall be informed of the applicable late payment interest rate set out in § 792.10.
(4) FSA' intent, if applicable, to collect the debt 30 days from the date of the initial demand letter, or other applicable period of time, by administrative offset from any CCC or FSA payments due or to become due to the debtor, and that the claim may be reported to other agencies of the Federal government for offset from any amounts due or to become due to the debtor;
(5) FSA' intent, if applicable, under § 792.17, to report any delinquent debt to a credit reporting agency no sooner than 60 days from the date of the letter;
(6) FSA' intent, if applicable, under § 792.19, to refer any delinquent debt to the IRS, no sooner than 60 days from the date of the letter, to be considered for offset against any tax refund due or to become due the debtor.
(7) If not previously provided, the debtor's right to request administrative review by an authorized FSA official, and the proper procedure for making such request. If the request relates to the:
(i) Existence or amount of the debt, it must be made within 15 days from the date of the letter, unless a different time period is specified in the contract, agreement or program regulation;
(ii) Appropriateness of reporting to a credit reporting agency, it must be made within 30 days from the date of the letter; or
(iii) Appropriateness of referral to IRS for tax refund offset, it must be made within 60 days from the date of the letter, if applicable.
(8) The debtor's right to a full explanation of the debt and to dispute any information in the records of FSA concerning the debt;
(9) The opportunity afforded the debtor to enter into a written agreement which is acceptable to FSA for the repayment of the debt;
(10) That FSA maintains the right to initiate legal action to collect the amount of the debt;
(11) That if any portion of the debt remains unpaid or if a repayment schedule satisfactory to FSA has not been arranged 90 days after the due date, a penalty charge shall be assessed on the unpaid balance of the debt as prescribed in § 792.10(e);
(b) When FSA deems it necessary to protect the Government's interest, written demand may be preceded by other appropriate actions.
Except as FSA may provide, FSA shall collect debts owed to the Government, including applicable interest, penalties, and administrative costs, in full, whenever feasible whether the debt is being collected by administrative offset or by another method, including voluntary payment. If a debt is paid in one lump sum after the due date, FSA will impose late payment interest, as provided in § 792.10, unless such interest is waived as provided in § 792.11.
(a) Payments in installments may be arranged, at FSA' discretion, if a debtor furnishes satisfactory evidence of inability to pay a claim in full by the specified date. The size and frequency of installment payments shall:
(1) Bear a reasonable relation to the size of the debt and the debtor's ability to pay; and
(2) Normally be of sufficient size and frequency to liquidate the debt in not more than three years.
(b) Except as otherwise determined by FSA, no installment arrangement will be considered unless the debtor submits a certified financial statement which reflects the debtor's assets, liabilities, income, and expenses. The financial statement shall not be required to be submitted sooner than 15 workdays following its request by FSA.
(c) All installment payment agreements shall be in writing and require the payment of interest at the late payment interest rate in effect on the date such agreement is executed, unless such interest is waived or reduced by FSA. The installment agreement shall specify all the terms of the arrangement and include provision for accelerating the debt in the event the debtor defaults.
(d) FSA may deem a repayment plan to be abrogated if the debtor fails to comply with its terms.
(e) If the debtor's financial statement or other information discloses the ownership of assets which are not encumbered, the debtor may be required to secure the payment of an installment note by executing a security agreement and financing agreement which provides FSA a security interest in the assets until the debt is paid in full.
(f) If the debtor owes more than one debt to FSA, FSA may allow the debtor to designate the manner in which a voluntary installment payment is to be
(a) The provisions of this section shall apply to all debts due FSA except as otherwise provided in this part and part 1404 of this title. This section is not applicable to:
(1) FSA requests for administrative offset against money payable to a debtor from the Civil Service Retirement and Disability Fund and FSA requests for salary offset against a present, former or retired employee of the Federal Government which shall be made in accordance with regulations at part 3 of this title;
(2) FSA requests for administrative offset against a Federal income tax refund payable to a debtor which shall be made in accordance with § 792.19;
(3) Cases in which FSA must adjust, by increasing or decreasing, a payment which is to be paid under a contract in order to properly make other payments due by FSA; and
(4) Any case in which a statute explicitly provides for or prohibits using administrative offset to collect the debt for the type of debt involved.
(b) Debts due FSA or CCC may be collected by administrative offset from amounts payable by FSA when:
(1) The debtor has been provided written notification of the basis and amount of the debt and has been given an opportunity to make payment. Such written notification and opportunity includes notice of the right to pursue an administrative appeal in accordance with part 780 of this chapter or any other applicable appeal procedures, if not previously provided;
(2) The debtor has been provided an opportunity to request to inspect and copy the records of FSA related to the debt;
(3) The debtor has been given the opportunity to enter into a written agreement which is acceptable to FSA for repayment of the debt;
(4) The debtor has been notified in writing that the debt will be collected by administrative offset if not paid; and
(5) The debt has not been delinquent for more than ten years or legal action to enforce the debt has not been barred by an applicable period of limitation, whichever is later.
(c) Administrative offset shall also be effected against amounts payable by FSA:
(1) When requested or approved by the Department of Justice; or
(2) When a person is indebted under a judgment in favor of FSA or the United States.
(d) A payment due any person may be offset when there is a breach of a contract or a violation of FSA program requirements, and offset is considered necessary by FSA to protect the financial interests of the Government.
(e) FSA may effect administrative offset against a payment to be made to a debtor prior to completion of the procedures required by paragraphs (b)(1) through (b)(4) of this section if:
(1) Failure to take the offset would substantially prejudice FSA' ability to collect the debt; and
(2) The time before the payment is to be made does not reasonably permit the completion of those procedures.
(f)(1) Judgments in favor of the United States may be offset against any amounts payable by FSA based on information provided by or obtained from the Department of Justice. Debts due any agency other than FSA which have not been reduced to judgment shall be offset against amounts payable by FSA to a debtor when an agency of the U.S. Government has submitted a written request for offset which is mailed or hand-delivered to the appropriate FSA State office, Kansas City Financial Management Office, Kansas City Management Office, or Kansas City Commodity Office. Such written request must:
(i) Bear the signature of an authorized representative of the requesting agency;
(ii) Include a certification that all requirements of the law and the regulations for collection of the debt and for requesting offset have been complied with;
(iii) State the name, address (including county), and, where legally available, the Social Security number or employer ID number of the debtor, and a brief description of the basis of the debt, including identification of the judgment, if any;
(iv) State the amount of the debt separately as to principal, interest, penalties, and administrative costs. Interest, if any, shall be computed on a daily basis to a date shown in the request. The amount to be offset shall not exceed the principal sum owed by the debtor, plus interest computed in accordance with the request, and any late payment interest, penalties and administrative costs that have been assessed;
(v) Certify that the debtor has not filed for bankruptcy. If the debtor has filed for bankruptcy, a copy of the order of the bankruptcy court relieving the agency from the automatic stay must be included; and
(vi) State the name, address, and telephone number of a contact person within the agency and the address to which payment should be sent.
(2) Unless prohibited by law, the head of an agency, or a designee, may defer or subordinate in whole or in part the right of the agency to recover through offset all or part of any indebtedness to such agency, or may withdraw a request for offset. Notice of such action must be sent to the appropriate FSA office.
(g)(1) After FSA has complied with the provisions of this part, FSA may request other agencies of the Government to offset amounts payable by them to persons indebted to FSA.
(2) In the case of a request to IRS for a tax refund offset, the provisions at § 792.19 shall apply.
(h)(1) Debts shall be collected by offset in the following order of priority without regard to the date of the request for such collection:
(i) Debts to FSA.
(ii) Debts to other agencies of USDA as determined by FSA.
(iii) Debts to other government agencies as determined by FSA.
(2) In the case of multiple debts involving the same debtor, FSA may, at its discretion, deviate from the usual order of priority in applying recovered amounts to debts owed other agencies when considered to be in the Government's best interest. Such decision shall be made by FSA based on the facts and circumstances of the particular case.
(i) Amounts recovered by offset for FSA and CCC debts but later found not to be owed to the Government shall be promptly refunded.
(j) The debtor shall be notified whenever any offset action has been taken.
(k) Offsets made pursuant to this section shall not deprive a debtor of any right he or she might otherwise have to contest the debt involved in the offset action either by administrative appeal or by legal action.
(l) Any action authorized by the provisions of this section may be taken:
(1) Against a debtor's pro rata share of payments due any entity which the debtor participates in, either directly or indirectly, as determined by FSA.
(2) When FSA determines that the debtor has established an entity, or reorganized, transferred ownership of, or changed in some other manner, their operation, for the purpose of avoiding the payment of the claim or debt.
(m) The amount to be offset shall not exceed the actual or estimated amount of the debt, including interest, administrative charges, and penalties, unless the Department of Justice requests that a larger specified amount be offset.
(n) Offset action will not be taken against payments when:
(1) A debt has been discharged as provided in § 792.16.
(2) FSA determines such action will unduly interfere with the administration of an FSA or CCC program.
(3) The debt has been delinquent for more than ten years or legal action to enforce the debt due FSA is barred by an applicable period of limitation, whichever is later.
(a) No amounts payable to a debtor by FSA shall be paid to an assignee until there have been collected any amounts owed by the debtor except as provided in this section.
(b) A payment which is assigned in accordance with part 1404 of this title by execution of Form CCC-36 shall be subject to offset for any debt owed to FSA or CCC or any judgment in favor of the United States without regard to the date notice of assignment was accepted by FSA or CCC.
(c) A payment which is assigned in accordance with part 1404 of this title by execution of Form CCC-252 shall be offset:
(1) Against any debt of the assignor entered on the debt record of the applicable FSA office prior to the filing of such form with FSA or CCC, or
(2) At anytime, regardless of the date of filing of such form with FSA or CCC, if the debt which is the basis for the offset arises from a judgment in favor of the United States, or under the same contract under which the payment is earned by the assignor.
(d) With respect to all other Federal agencies, offset shall be made of any amounts due any other Federal agency which have not been reduced to judgment, and which are entered on the debt record of the appropriate FSA office prior to the date the notice of assignment was accepted by FSA or CCC.
(e) Any amount due and payable to the assignor which remains after deduction of amounts paid to the assignee shall be available for offset.
(a) Withholding of a payment prior to the completion of an applicable offset procedure may be made from amounts payable to a debtor by FSA to ensure that the interests of FSA and the United States will be protected as provided in this section.
(b) A payment may be withheld to protect the interests of FSA or the United States only if FSA determines that:
(1) There has been a serious breach of contract or violation of program requirements and the withholding action is considered necessary to protect the financial interests of FSA;
(2) There is substantial evidence of violations of criminal or civil frauds statutes and criminal prosecution or civil frauds action is of primary importance to program operations of FSA;
(3) Prior experience with the debtor indicates that collection will be difficult if amounts payable to the debtor are not withheld;
(4) There is doubt that the debtor will be financially able to pay a judgment on the claim of FSA;
(5) The facts available to FSA are insufficient to determine the amount to be offset or the proper payee;
(6) A judgment on a claim of FSA has been obtained; or
(7) Such action has been requested by the Department of Justice.
(c) Except for debts due FSA or CCC, withholding action by FSA on amounts payable to debtors of other Government agencies may not be made unless requested by the Department of Justice.
(a) Late payment interest provisions of this section shall not apply:
(1) To debts owed by Federal agencies and State and local governments. Interest on debts owed by such entities shall be charged to the extent authorized under the common law or applicable statutory authority.
(2) If an applicable statute, regulation, agreement, or contract either prohibits the charging of such interest or specifies the interest or charges applicable to the debt involved;
(3) If the late payment interest is waived by FSA in accordance with § 792.11.
(4) To administrative charges as set forth in paragraph (f) of this section.
(b) FSA will assess late payment interest on the full amount of delinquent debts. For purposes of this section, the term “full amount of the delinquent debt” means the sum of the principal, accrued program interest, and any other charges which are otherwise due and owing to FSA on the delinquent debt at the time the late payment interest is assessed, except as provided in paragraphs (a)(2) and (d)(3) of this section.
(c) The late payment interest shall be expressed as an annual rate of interest which FSA charges on delinquent debts. The late payment interest rate shall be equal to the higher of the Treasury Department's current value
(d)(1) When a debt results from a statute, regulation, contract, or other agreement with specific provisions for late payment interest and payment due date, late payment interest shall accrue on the amount of the debt from the first day the debt became delinquent, unless otherwise provided by statute.
(2) With respect to debts not resulting from a statute, regulation, contract, or agreement containing specific provisions for late payment interest and payment due date, late payment interest shall begin to accrue from the date on which notice of the debt, including notice of late payment interest, is first mailed or hand-delivered to the debtor.
(3) The rate of late payment interest initially assessed will be fixed for the duration of the indebtedness, except when a debtor has defaulted on a repayment agreement and seeks to enter into a new agreement. FSA may then set a new rate of interest which reflects the late payment interest rate in effect at the time the new agreement is executed. All charges which accrued, but which were not collected under the defaulted agreement, shall be added to the principal to be paid under a new repayment agreement.
(4) The late payment interest on delinquent debts will accrue on a daily basis.
(e) Except as specified in paragraph (a)(2) of this section, a penalty charge of three (3) percent per annum will be assessed on any portion of a debt which remains unpaid ninety (90) days after the date described in paragraph (d)(1) or (d)(2) of this section, if no repayment schedule satisfactory to FSA has been agreed upon. Such penalty charge will be assessed retroactively from the date late payment interest began to accrue and applied on a daily basis. Such rate shall continue to accrue until the delinquent debt has been paid.
(f) FSA shall assess as administrative charges the additional costs of processing delinquent debts against the debtor, to the extent such costs are attributable to the delinquency. Such costs include, but are not limited to, costs incurred in obtaining a credit report, costs of employing commercial firms to locate debtor, costs of employing contractors for collection services, costs of selling collateral or property to satisfy the debt.
(g) When a debt is paid in partial or installment payments, payments will be applied first to administrative charges, second to the penalty charge assessed in accordance with paragraph (e) of this section and late payment interest, and third to outstanding principal.
(a) FSA shall waive the collection of late payment interest and administrative charges on a debt or any portion of a debt which is paid within 30 days after the date on which late payment interest began to accrue.
(b) FSA may waive the assessment and collection of all or a portion of the penalty charge on debts which are appealed in accordance with 7 CFR part 780 or other applicable appeal procedures from either the date of the appeal or the date such interest began to accrue, whichever is later, until the date a final administrative determination is issued. Such waiver shall not apply for any delay due to:
(1) The appellant's request for a postponement of the scheduled hearing;
(2) The appellant's request for an additional time following the hearing to present additional information or a written closing statement; or
(3) The appellant's failure to timely present information to the reviewing authority.
(c) Assessment and collection of late payment interest, the penalty charge and administrative charges under this part may be waived by FSA in full, or in part, if it is determined by the Controller, FSA, or his or her designee,
If the opportunity to appeal the determination has not previously been provided under part 24 of this title or part 780 of this chapter or any other appeal procedure, a debtor may obtain an administrative review under part 780 of this chapter, or other applicable appeal procedures, of FSA' determination concerning the existence or amount of a debt, if a request is filed with the authority who made the determination within 15 days of the date of FSA' initial demand letter, unless a longer period is specified in the initial demand letter.
Nothing contained in this part shall preclude the use of any other administrative or contractual remedy which may be available to FSA to collect debts owed to the Government.
When a debtor is employed by the Federal Government or is a member of the military establishment or the Coast Guard, and collection by offset cannot be accomplished in accordance with 5 U.S.C. 5514, FSA may contact the employing agency to arrange for payment of the debt by allotment or otherwise, in accordance with section 206 of Executive Order No. 11222, May 8, 1965, 30 FR 6469, 3 CFR, 1964-1965 Comp., p 306.
FSA will not provide an administrative appeal with respect to issues which were raised or should have been raised at any administrative review requested by the debtor as provided under another statute or regulation before:
(a) Effecting administrative offset;
(b) Referring the debt to private collection or credit reporting agencies;
(c) Referring the debt for salary offset against the current pay of a present or former Government employee; or
(d) Referring the debt to IRS for tax refund offset.
(a) Except as required by other applicable regulation or statute, a debt or part thereof owed FSA shall be discharged with the concurrence of the Department of Justice, if applicable, and the records and accounts on that debt closed in the following situations:
(1) When an obligation or part thereof is discharged in bankruptcy;
(2) When an obligation or part thereof is the subject of a final judgment entered by a court of competent jurisdiction which is adverse to FSA and no appeal will be taken by FSA;
(3) When a debt or part thereof is compromised and paid, the amount of such compromise;
(4) When collection of a debt by administrative offset is barred in accordance with § 792.7(b)(5).
(b) Debts discharged in accordance with this section may be reported to the Internal Revenue Service pursuant to § 792.20.
(a) This section specifies the procedures that will be followed by FSA and the rights that will be afforded to debtors when FSA reports delinquent debts to credit reporting agencies.
(b) Before disclosing information to a credit reporting agency in accordance with this part, FSA shall review the claim and determine that it is valid and delinquent.
(c) Before a debt may be referred to a credit reporting agency, the debtor must be notified, pursuant to § 792.4, of FSA' intent to make such a report. Such notification shall include:
(1) FSA' intent to disclose to a credit reporting agency that the debtor is responsible for the debt, and that such disclosure will be made not less than 60 days after notification to such debtor.
(2) The information intended to be disclosed to the credit reporting agency under paragraph (g)(1) of this section.
(3) The debtor's right to enter a repayment agreement on the debt, including, at the discretion of FSA, installment payments, and that if such
(4) The debtor's right to review of this action in accordance with paragraph (i) of this section.
(d) The debtor shall be notified, in writing at the debtor's last known address, when FSA has reported any delinquent debt to a credit reporting agency.
(e)(1) FSA shall notify each credit reporting agency to which an original disclosure of delinquent debt information was made of any substantial change in the condition or amount of the claim.
(2) FSA shall promptly verify or correct, as appropriate, information about the debt on request of a credit reporting agency. The records of the debtor shall reflect any correction resulting from such request.
(f) Information reported to a credit reporting agency on delinquent debts shall be derived from the system of records maintained by FSA.
(g) FSA shall limit delinquent debt information disclosed to credit reporting agencies to:
(1) The name, address, taxpayer identification number, and other information necessary to establish the identity of the debtor;
(2) The amount, status, and history of the claim; and
(3) The program under which the claim arose.
(h) Reasonable action shall be taken to locate a debtor for whom FSA does not have a current address before reporting delinquent debt information to a credit reporting agency.
(i)(1) Before disclosing delinquent debt information to a credit reporting agency, FSA shall, upon request of the debtor, provide for a review of the debt in accordance with § 792.12. This review shall only consider defenses or arguments which were not available or could not have been available at any previous appeal proceeding permitted under § 792.12.
(2) Upon receipt of a request for review within 30 days from the date of notice to the debtor of intent to refer delinquent debt information to a credit reporting agency, FSA shall suspend its schedule for disclosure to a credit reporting agency until a final decision regarding the appropriateness of disclosure to a credit reporting agency is made.
(3) Upon completion of the review, the reviewing official shall transmit to the debtor a written notification of the decision. If appropriate, the debtor shall be notified of the scheduled date on or after which the debt will be referred to the credit reporting agency. The debtor will also be notified of any changes from the initial notification in the information to be disclosed.
(j)(1) In accordance with guidelines established by the Administrator, FSA, the responsible claims official shall report to credit reporting agencies delinquent debt information specified in paragraph (g) of this section.
(2) The agreements entered into by USDA and credit reporting agencies shall provide the necessary assurances to FSA that the credit reporting agencies to which information will be provided are in compliance with the provisions of all the laws and regulations of the United States relating to providing credit information.
(3) FSA shall not report delinquent debt information to credit reporting agencies when: (i) The debtor has entered a repayment agreement covering the debt with FSA, and such agreement is still valid; or
(ii) FSA has suspended its schedule for disclosure of delinquent debt information pursuant to paragraph (i)(2) of this section.
(k) Disclosures made under this section shall be in accordance with the requirements of the Privacy Act, as amended (5 U.S.C. 552a).
(l) The provisions of paragraphs (a) through (k) of this section apply to commercial debts owed by farm producers and all personal debts. All commercial debts owed by debtors other than farm producers may be reported to credit reporting agencies without following the provisions of paragraphs (a) through (k) of this section.
(a) Debts that exceed $100,000.00 exclusive of interest, penalties, and administrative charges, or such higher amount as may be prescribed, shall be
(b) Debts which cannot be compromised or on which collection action cannot be suspended or terminated, may be referred to the Department of Justice for collection action. Claims of less than $600.00 exclusive of interest, penalties, and administrative costs will not be referred to the Department of Justice unless:
(1) Referral is important to a significant enforcement policy, or
(2) The debtor not only has the clear ability to pay the claim, but the Government can effectively enforce payment, having due regard for the exemptions available to the debtor under State and Federal law and the judicial remedies available to the Government.
FSA may refer legally enforceable delinquent debts to IRS to be offset against tax refunds due to debtors under 26 U.S.C. 6402, in accordance with the provisions of 31 U.S.C. 3720A and Treasury Department regulations.
(a) In accordance with IRS regulations, FSA may report to IRS as discharged debts on IRS Form 1099-G the amounts specified in paragraph (b) of this section.
(b) The following discharged debts may be reported to IRS: (1) The amount of a debt discharged under a compromise agreement between FSA and the debtor, except for compromises made due to doubt about the Government's ability to prove its case in court for the full amount of the debt.
(2) The amount of a debt discharged by the running of the statutory period of limitation for collecting the debt by administrative offset specified in 31 U.S.C. 3716.
If FSA' collection efforts have been unsuccessful after 90 days from the date of delinquency, the head of the agency or his designee may enter into a contract with any person or organization, under such terms and conditions as the head of the agency or his designee considers appropriate for collection services to recover debts owed to FSA.
The Administrator, FSA, or his designee may compromise any claim of the Government of not more than $100,000.00 exclusive of interest, penalties, and administrative charges, or such higher amount as may be prescribed, that has not been referred to another executive or legislative agency for further collection action.
Sec. 1001 of the Food Security Act of 1985, as amended, 99 Stat, 1444, as amended, 7 U.S.C 1308; Pub. L. 99-500 and Pub. L. 99-591.
(a) The provisions of this part are applicable to payments when so provided by the individual program regulations
(b) The limitation shall be applied to the payments for a commodity for a crop year.
(c) The limitation shall not be applicable to payments made to States, political subdivisions, or agencies thereof for participation in the programs on lands owned by such States, political subdivisions, or agencies thereof so long as such lands are farmed primarily in the direct furtherance of a public function. However, the limitation is applicable to persons who rent or lease land owned by States, political subdivisions, or agencies thereof.
(d) The limitation shall not be applicable to payments made to Indian tribal ventures participating in the programs where a responsible official of the Bureau of Indian Affairs or the Indian Tribal Council certifies that no more than the program payment limitation shall accrue directly or indirectly to any individual Indian and the State committee reviews and approves the exemption.
(e) Except as provided in part 1497 of this title, this part shall not be applicabie to contracts entered into on or after August 1, 1988 in accordance with part 704 of this chapter.
(a) The terms defined in part 719 of this chapter, governing reconstitutions of farms, shall be applicable to this part and all documents issued in accordance with this part, except as otherwise provided in this section.
(b)(1) Subject to the provisions of this part, the term “person” shall mean an individual, joint stock company, corporation, association, trust, estate, or other legal entity. In order to be considered to be a separate person for the purposes of this part with respect to any crop, in addition to any other provision of this part, an individual or other legal; entity must:
(i) Have a separate and distinct interest in the crop or the land on which the crop is produced;
(ii) Exercise separate responsibility for such interest; and
(iii) Be responsible for payment of the cost of farming related to such interest from a fund or account separate from that of any other individual or entity.
(2) The term “person” shall not include any cooperative association of producers that markets commodities for producers with respect to the commodities so marketed for producers.
(c) The term “family member” shall mean the individual, the great-grandparent, grand-parent, child, grandchild, and great-grandchild of such individual and the spouses of all such individuals.
(d) The term “separate unit” shall mean an individual who, prior to December 31, 1985: (1) Had been engaged in a separate farming operation and (2) in accordance with the provisions of this part, had been determined to be a separate person or could have so determined under the circumstances existing at such time.
Effective for the 1987 through 1990 crops, an individual shall not be denied a determination that such individual was a “person” solely on the basis that:
(a) A family member cosigns for, or makes a loan to, such individual and leases, loans or gives equipment, land or labor to such an individual; and
(b) Such family members were organized as separate units prior to December 31, 1985.
Except as otherwise set forth in this part, the status of individuals or entities as of March 1, or such other date as may be determined and announced by the Administrator shall be the basis on which determinations are made in accordance with this part for the year for which the determination is made.
The rules in §§ 795.5 through 795.16 shall be used to determine whether certain multiple individuals or legal entities are to be treated as one person or as separate persons for the purpose of applying the limitation. In cases in which more than one rule would appear to be applicable, the rule which is most restrictive on the number of persons shall apply.
A partnership, joint venture, tenants-in-common, or joint tenants shall not be considered as a person but, notwithstanding the provisions of § 795.3, each individual or other legal entity who shares in the proceeds derived from farming by such joint operations shall be considered a separate person, except as otherwise provided in this part, and shall be listed as a producer for payment purposes on program documents. The payment shares listed on the program documents for each individual or other legal entity shall be the same as each individual or other legal entity shares in the proceeds derived from farming by such joint operation. Notwithstanding the foregoing, each individual or other legal entity who shares in the proceeds derived from farming by such joint operation shall not be considered as a separate person unless the individual or other legal entity is actively engaged in the farming operations of the partnership or other joint operation. An individual or other legal entity shall be considered as actively engaged in the farming operation only if its contribution to the joint operation is commensurate with its share in the proceeds derived from farming by such joint operation. Members of the partnership or joint venture must furnish satisfactory evidence that their contributions of land, labor, management, equipment, or capital to the joint operation are commensurate with their claimed shares of the proceeds. A capital contribution may be a direct out-of-pocket input of a specified sum or an amount borrowed by the individual. If the contribution consists substantially of capital, such capital must have been contributed directly to the joint operation by the individual or other legal entity and not acquired as a result of (a) a loan made to the joint operation, (b) a loan which was made to such individual or other legal entity by the joint operation or any of its members or related entities, or (c) a loan made to such individual or other legal entity which was guaranteed by the joint operation or any of its members or related entities.
(a) A corporation (including a limited partnership) shall be considered as one person, and an individual stockholder of the corporation may be considered as a separate person to the extent that such stockholder is engaged in the production of the crop as a separate producer and otherwise meets the requirements of § 795.3, except that a corporation in which more than 50 percent of the stock is owned by an individual (including the stock owned by the individual's spouse, minor children, and trusts for the benefit of such minor children), or by a legal entity, shall not be considered as a separate person from such individual or legal entity.
(b) Where the same two or more individuals or other legal entities own more than 50 percent of the stock in each of two or more corporations, all such corporations shall be considered as one person.
(c) The percentage share of the value of the stock owned by an individual or other legal entity shall be determined as of March 1 of the crop year, except that where a stockholder voluntarily acquires stock after March 1 and before the harvest of the crop, the amount of any stock so acquired shall be included in determining the percentage share of the value of the stock owned by the stockholder. Where there is only one class of stock, a stockholder's percentage share of the value of the outstanding stock shall be equal to the percentage of the outstanding stock owned by the stockholder. If the corporation has more than one class of stock the percentage share of the value of the stock owned by a stockholder shall be determined by the Deputy Administrator on the basis of market quotations, and if market quotations
(a) An estate or irrevocable trust shall be considered as one person except that, where two or more estates or irrevocable trusts have common beneficiaries or heirs (including spouses and minor children) with more than a 50-percent interest, all such estates or irrevocable trusts shall be considered as one person.
(b) An individual heir of an estate or beneficiary of a trust may be considered as a separate person to the extent that such heir or beneficiary is engaged in the production of crops as a separate producer and otherwise meets the requirements of § 795.3, except that an estate or irrevocable trust which has a sole heir or beneficiary shall not be considered as a separate person from such heir or beneficiary.
(c) Where an irrevocable trust or an estate is a producer on a farm and one or more of the beneficiaries or heirs of such trust or estate are minor children, the minor children's pro rata share of the program payments to the trust or estate shall be attributed to the parent of the minor children except as otherwise provided in § 795.12.
(d) A revocable trust shall not be considered as a separate person from the grantor.
Each individual club, society, fraternal or religious organization may be considered as a separate person to the extent that each such club, society, fraternal or religious organization is engaged in the production of crops as a separate producer and otherwise meets the requirements of § 795.3.
With respect to the 1988 crop year, a husband and wife shall be considered to be one person except that such individuals who, prior to their marriage, were separately engaged in unrelated farming operations will be determined to be separate persons with respect to such farming operations so long as the operations remain separate and distinct from any farming operation conducted by the other spouse if such individuals have executed a Contract to Participate in the 1988 Price Support and Production Adjustment Programs by April 15, 1988. Such individuals must file a form FSA-561 with the county committee for each such farming operation by July 8, 1988, if they desire to be considered as separate persons under this section.
(a) A minor child and his parents or guardian (or other person responsible for him) shall be considered as one person, except that the minor child may be considered as a separate person if such minor child is a producer on a farm in which the parents or guardian or other person responsible for him (including any entity in which the parents or guardian or other person responsible for him has a substantial interest, i.e., more than a 20-percent interest) takes no part in the operation of the farm (including any activities as a custom farmer) and owns no interest in the farm or allotment or in any portion of the production on the farm, and if such minor child:
(1) Is represented by a court-appointed guardian who is required by law to make a separate accounting for the minor and ownership of the farm is vested in the minor, or
(2) Has established and maintains a different household from his parents or guardian and personally carries out the actual farming operations on the farm for which there is a separate accounting, or
(3) Has a farming operation resulting from his being the beneficiary of an irrevocable trust and ownership of the property is vested in the trust or the minor.
(b) A person shall be considered a minor until he reaches 18 years of age. Court proceedings conferring majority on a person under 18 years of age will not change such person's status as a minor for purposes of applying the regulations.
Where the county committee is unable to determine whether certain individuals or legal entities involved in the production of a commodity are to be treated as one person or separate persons, all the facts regarding the arrangement under which the commodity is produced shall be submitted to the State committee for decision. Where the State committee is unable to determine whether such individuals or legal entities are to be treated as one person or separate persons, all the facts regarding the arrangement under which the farming operation is conducted shall be submitted to the Deputy Administrator for decision.
(a) Subject to the provisions of this part, a person may exercise his or her right heretofore existing under law, to divide, sell, transfer, rent, or lease his or her property if such division, sale, transfer, rental arrangement, or lease is legally binding as between the parties thereto. However, any document representing a division, sale, transfer, rental arrangement, or lease which is fictitious or not legally binding as between the parties thereto shall be considered to be for the purpose of evading the payment limitation and shall be disregarded for the purpose of applying the payment limitation. Any change in farming operations that would otherwise serve to increase the number of persons for application of the payment limitation must be bona fide and substantive.
(b) A substantive change includes, for example, a substantial increase or decrease in the size of the farm by purchase, sale, or lease; a substantial increase or decrease in the size of allotment by purchase, sale, or lease; a change from a cash lease to a share lease or vice versa; and dissolution of an entity such as a corporation or partnership.
(c) Examples of the types of changes that would not be considered as substantive are the following:
A corporation is owned equally by four shareholders. The corporation owns land, buildings, and equipment and in the prior year carried out substantial farming operations. Three of the shareholders propose forming a partnership which they would own equally. The partnership would cash lease land and equipment from the corporation with the objective of having the three partners considered as separate persons for purposes of applying the payment limitation under the provisions of § 795.7 of the regulations.
The formation of such a partnership and the leasing of land from a corporation in which they hold a major interest would not constitute a substantive and bona fide change in operations. Therefore, the corporation and the partners would be limited to a single payment limitation.
Three individuals each have individual farming operations which, if continued unchanged, would permit them to have a total of three payment limitations.
The three individuals propose forming a corporation which they would own equally. The corporation would then cash lease a portion of the farmland owned and previously operated by the individuals with the objective of having the corporation considered as a separate person for purposes of applying the payment limitation under the provisions of § 795.8 of the regulations. The formation of such a corporation and the leasing of land from the stockholders would not constitute a substantive and bona fide change in operations. Therefore, the corporation and the three individuals would be limited to three payment limitations.
(a)
(b)
(a) Custom farming is the performance of services on a farm such as land preparation, seeding, cultivating, applying pesticides, and harvesting for hire with remuneration on a unit of work basis, except that, for the purpose of applying the provisions of this section, the harvesting of crops and the application of agricultural chemicals by firms regularly engaged in such businesses shall not be regarded as custom farming. A person performing custom farming shall be considered as being separate from the person for whom the custom farming is performed only if:
(1) The compensation for the custom farming is paid at a unit of work rate customary in the area and is in no way dependent upon the amount of the crop produced, and (2) the person performing the custom farming (and any other entity in which such person has more than a 20-percent interest) has no interest, directly or indirectly, (i) in the crop on the farm by taking any risk in the production of the crop, sharing in the proceeds of the crop, granting or guaranteeing the financing of the crop, (ii) in the allotment on the farm, or (iii) in the farm as landowner, landlord, mortgage holder, trustee, lienholder, guarantor, agent, manager, tenant, sharecropper, or any other similar capacity.
(b) A person having more than a 20-percent interest in any legal entity performing custom farming shall be considered as being separate from the person for whom the custom farming is performed only if:
(1) The compensation for the custom farming service is paid at a unit of work rate customary in the area and is in no way dependent upon the amount of the crop produced, and (2) the person having such interest in the legal entity performing the custom farming has no interest, directly or indirectly, (i) in the crop on the farm by taking any risk in the production of the crop, sharing in the proceeds of the corp, granting or guaranteeing the financing of the crop, (ii) in the allotment on the farm, or (iii) in the farm as landowner, landlord, mortgage holder, trustee, lienholder, guarantor, agent, manager, tenant, sharecropper, or in any other similar capacity.
All or any part of the payments otherwise due a person under the upland cotton, wheat, feed grain and rice programs on all farms in which the person has an interest may be withheld or required to be refunded if the person adopts or participates in adopting any scheme or device designed to evade or which has the effect of evading the rules of this part. Such acts shall include, but are not limited to, concealing from the county committee any information having a bearing on the application of the rules of this part or submitting false information to the county committee (for example, a set-aside agreement which is entered into that differs from information furnished to the county committee concerning the manner in which program payments are actually shared, concerning the actual facts of a sale, or concerning the transfer of property) or creating fictitious entities for the purpose of concealing the interest of a person in a farming operation.
Where two or more individuals or legal entities, who are treated as one person hereunder, receive payments which in the aggregate exceed the limitation, such individuals or legal entities shall be liable, jointly and severally, for any liability arising therefrom. The provisions of this part requiring the refund of payments shall be applicable in addition to any liability under criminal and civil fraud statutes.
Any person may obtain reconsideration and review of determinations made under this part in accordance with the appeal regulations, part 780 of this chapter, as amended.
In interpretations previously issued pursuant to the payment limitation regulations and published at 36 FR 16569, 37 FR 3049, 39 FR 15021 and 41 FR 17527 shall be applicable in construing the provisions of this part.
The information collection requirements contained in these regulations (7 CFR part 795) have been approved by the Office of Management and Budget under the provisions of 44 U.S.C. Chapter 35 and have been assigned OMB control number 0560-0096.
If a producer relied on a county committee and/or State committee “person” determination for a crop year and higher reviewing authority makes a more restrictive determination, the Deputy Administrator may grant relief only for such crop year if the producer was not afforded an opportunity to exercise other alternatives with respect to the producer's farming operation and the program provisions and the county committee has determined that the producers acted in good faith based upon the original “person” determination.
5 U.S.C. 301, 552; 7 CFR 1.1 through 1.16.
This part is issued in accordance with the regulations of the Secretary of Agriculture at 7 CFR 1.1 through 1.16, and appendix A, implementing the Freedom of Information Act (5 U.S.C. 552). The Secretary's regulations as implemented by the regulations in this part, govern the availability of records of the FSA and Commodity Credit Corporation (CCC) to the public.
5 U.S.C. 552(a)(2) requires that certain materials be made available for public inspection and copying. Members of the public may request access to such materials maintained by FSA and/or CCC at the Office of the Director, Information Division, Farm Service Agency, Room 3608 South Building, P.O. Box 2415, Washington, D.C. 20013, between the hours of 8:15 and 4:45 p.m., Monday through Friday.
5 U.S.C. 552(a)(2) requires that each agency publish or otherwise make available a current index of all materials required to be made available for public inspection and copying. FSA maintains an index of FSA National Handbooks, CCC Board Dockets, decisions of the Board of Contract Appeals of the Department of Agriculture affecting FSA or CCC, and Marketing Quota Review Committee determinations. In view of the small number of public requests for such index, publication of the index is unnecessary and impractical. The index is maintained and available to the public at the office shown in § 798.2 and copies of the index are available upon request in person or by mail to that office.
Request for records under 5 U.S.C. 552(a)(3) shall be made in accordance with 7 CFR 1.3. Reasonable requests for material not in existence may also be honored where their compilation will not unduly interfere with FSA operations and programs. Each FSA office in the field and each FSA office and division in Washington (see statement of Organization and Functions of FSA, 40 FR 18815, and of CCC, 35 FR 14951, and any amendments thereto) is designated as an “information center” and shall make space available to inspect and copy records in their custody not exempted from disclosure. Copies of records shall also be made available upon request. The head of each office or division is authorized to receive requests for records and to make determinations regarding requests for records in the office's custody in accordance with 7 CFR 1.4(c). Requests to Washington divisions and offices shall be addressed to USDA, FSA, P.O. Box 2415, Washington, D.C. 20013. The heads of FSA field offices shall be addressed as listed in the local telephone directory under “U.S. Government, Department of Agriculture, FSA”. Names and addresses of heads of field offices may also be obtained from the office indicated in § 798.2.
Any person whose request under § 798.4 of this part is denied shall have the right to appeal such denial. This appeal shall be submitted in accordance with 7 CFR 1.3(e) and addressed to the Administrator, FSA (Executive Vice-President, CCC), USDA, FSA, P.O. Box 2415, Washington, D.C. 20013.
This schedule supplements the fee schedule in 7 CFR, part 1, subpart A,
(a) Records, materials and services furnished without cost.
(1) One copy each of related directives, or blank forms required by FSA for program participation, if requester is a program participant.
(2) List of names and addresses of county and/or community committee members, and names of county employees in the county.
(3) One copy of an investigation report furnished to an appellant for a program appeal.
(b) Records, materials and services for which fees are charged.
(1)
(2)
(3)
Pub. L. 91-190, 83 Stat. 852, as amended (42 U.S.C. 4321); E.O. 11514; E.O. 11991; 40 CFR 1507.3, 7 CFR 3100.
The National Environmental Policy Act (NEPA) of 1969 (42 U.S.C. 4321
The purpose of this part is to establish agency procedures which supplement NEPA regulations issued by CEQ and USDA. This regulation, together with such NEPA regulations issued by CEQ and USDA, will supersede regulations issued by the Farm Service Agency (FSA) on December 20, 1974 (39 FR 43996).
This part, together with NEPA regulations issued by CEQ and USDA, applies to all programs administered by FSA which might have significant impacts on the environment.
(a) The term
(b) In the regulations in this part and in all instructions, forms, and documents in connection therewith, all other words and phrases shall, unless the context or subject matter otherwise requires, have the meanings assigned to them in the regulations governing reconstitution of farms, allotments and bases, part 719 of this chapter, as amended.
(a)
(b)
(2)
(3)
(c) All environmental assessments, environmental impact statements (EISs) and similar documents will be forwarded through the appropriate agency channels to the FSA representative on the USDA Environmental Quality Committee for review and submission to the Administrator.
In addition to provisions provided for in this part 799, FSA adopts the NEPA regulations issued by CEQ (40 CFR parts 1500 through 1508) and NEPA regulations issued by USDA (7 CFR part 3100).
(a) The NEPA regulations at 40 CFR 1501.2(d) require agencies to provide for early involvement in actions which, while planned by private applicants or other non-Federal entities, require some form of Federal involvement.
(b) To implement the requirements of 40 CFR 1501.2(d) with respect to these actions FSA shall:
(1) Prepare, where practicable, generic guidelines describing the scope and level of environmental information required from applicants seeking assistance from FSA as a basis for evaluating their proposed actions, and make these guidelines available upon request.
(2) Provide such guidance on a project-by-project basis to applicants seeking assistance from FSA.
(3) Upon receipt of an application for agency approval, or notification that an application will be filed, consult as required with other appropriate parties to initiate and coordinate the necessary environmental analyses.
(c) The responsibilities under this section shall be coordinated by the Conservation and Environmental Protection Division of the Farm Service Agency, Washington, D.C.
(d) To facilitate compliance with paragraph (a) of this section, private applicants seeking assistance from FSA and other non-Federal entities are expected to:
(1) Contact FSA as early as possible in the planning process for guidance on the scope and level of environmental
(2) Conduct any studies which are deemed necessary and appropriate by FSA to determine the impact of the proposed action on the human environment;
(3) Consult with appropriate Federal, regional, State and local agencies and other potentially interested parties during preliminary planning stages to ensure that all environmental factors are identified;
(4) Submit applications for all Federal, regional, State and local approvals as early as possible in the planning process;
(5) Notify FSA as early as possible of all other Federal, regional, State, local and Indian tribe actions required for project completion so that FSA may coordinate all Federal environmental reviews; and
(6) Notify FSA of all known parties potentially affected by or interested in the proposed action.
Where FSA evaluates a proposal on the basis of a formal administrative record and an EIS on the proposal has been prepared, any supplement to the EIS shall be made a part of the formal record before a final decision on the proposal is made.
(a) The NEPA regulations at 40 CFR 1501.1 contain requirements to ensure adequate consideration of environmental factors in decisionmaking. To fulfill these requirements, FSA officials shall:
(1) Consider all relevant environmental factors in evaluating proposals for agency action;
(2) Make all relevant environmental documents, comments and responses part of the record in formal rulemaking or adjudicatory proceedings.
(3) Ensure that all relevant environmental documents, comments and responses accompany the proposal through existing review processes;
(4) Consider only those alternatives encompassed by the range of alternatives discussed in the relevant environmental documents when evaluating proposals for agency action.
(5) Where an EIS has been prepared, consider the specific alternatives analyzed in the EIS when evaluating the proposal which is the subject of the EIS.
(b) The four categories of FSA activities that have or are likely to have significant environment impacts on the human environment are:
(1) Legislative proposals.
(2) Initial program implementation.
(3) Major changes in ongoing programs.
(4) Major environmental concerns with ongoing programs.
(c) Initial NEPA involvement in program categories in paragraph (b) of this section shall begin at the time FSA begins developing proposed legislation, begins the planning stage for implementing a new or changed program or receives notice that an ongoing program may have a significant adverse impact on the quality of the human environment. Where a legislative EIS or environmental assessment is part of the formal transmittal of a legislative program proposal to Congress, such legislative EIS or assessment may negate the need for the subsequent preparation of a program impact statement when FSA implements the resulting program. The decision whether such additional statement is needed will be made by an interdisciplinary team. The NEPA process on legislative proposals and FSA programs is carried out at the national level.
(d) Individual farm participation in FSA programs will normally not require any major involvement with the NEPA process. The practices carried out under FSA programs that might have impacts on the quality of the human environment will normally have been discussed in environmental assessments or impact statements on the applicable programs. However, for those practices that might significantly affect the quality of the human environment, the county committee
(e) Pooling agreements and special projects carried out under several FSA programs involving two or more farmers in a local geographic area will not normally require any major involvement with the NEPA process. However, the county committee shall, with the assistance of a local interdisciplinary team, as necessary, make an environmental evaluation of proposed pooling agreements or special projects that have a potential for significantly affecting the quality of the human environment. The NEPA process shall begin with the initial involvement of FSA personnel in the planning or development of pooling agreements or special projects. If it is determined from an environmental evaluation that the implementation of a proposed pooling agreement or a proposed special project will have a significant adverse impact on the quality of the human environment, the completion of the NEPA-EIS process in accordance with these regulations will be necessary before approval. For those actions for which technical assistance is provided by an agency other than FSA and such technical agency is required by its regulations to implement NEPA when providing such assistance the county committee shall use the environmental determinations and considerations of such agency instead of duplicating the NEPA-EIS process.
(a) FSA will for each of its legislative proposals, initial program implementations, program changes or any actions under its ongoing programs make a determination by the use of an environmental evaluation as to whether or not an environmental assessment or EIS is required.
(b) The NEPA regulations issued by CEQ at 40 CFR 1507.3(b)(2) in conjunction with the regulations at 40 CFR 1508.4 require agencies to determine those typical classes of actions for treatment under NEPA. The typical classes of FSA actions for treatment under NEPA are set forth as follows:
(1) Actions normally requiring an EIS are:
(i) Production adjustment programs to balance supply and demand of specified commodities, through cropland set-aside or other acreage diversion.
(ii) Agricultural Conservation Program.
(iii) Rural Clean Water Program.
(iv) Other major actions that are determined after an environmental evaluation and/or an environmental assessment to significantly affect the quality of the human environment.
(2) Actions normally not requiring an assessment or an EIS are:
(i) Individual farm participation in FSA programs.
(ii) Pooling agreements and special projects under FSA programs.
(iii) Production adjustment programs for tobacco, peanuts and extra long staple cotton.
(iv) Emergency Conservation Program.
(v) Water Bank Program.
(vi) Forestry Incentives Program.
(vii) Sugar Program.
(viii) Wool and Mohair Incentives Program.
(ix) Bee and Dairy Indemnity Programs.
(x) Commodity Income and Support and Disaster Protection Programs.
(xi) Facility Loan Program.
(xii) Grain Reserve Program.
(xiii) Livestock Feed Program.
(xiv) Naval Stores Program.
(xv) Indian Acute Distress Donation Program.
(xvi) Other major actions that are determined after an environmental evaluation not to significantly affect the quality of the human environment.
(c) FSA will independently determine by an environmental evaluation whether an environmental assessment or an EIS is required on actions included in paragraph (b) of this section where the presence of extraordinary circumstances or other unforseeable factors indicate that some other level of environmental review may be appropriate.
(d) If an environmental evaluation indicates that an action will significantly affect the quality of the human environment, the preparation of an environmental assessment and/or an EIS will be necessary before the action is carried out.
Where emergency circumstances make it necessary to take action with significant environmental impact without following the provisions of the NEPA regulations issued by CEQ, USDA, and FSA, FSA will, by working through the USDA Office of Environmental Quality, consult with CEQ and/or EPA about alternative arrangements (7 CFR 3100.35).
An environmental assessment or an EIS will not be needed when a program or part of a program is discontinued because of a mandatory legislative requirement where the enabling legislation for such program does not provide authority to ameliorate or mitigate any resulting environmental effects on the quality of the human environment.
Interested persons may contact the Conservation and Environmental Protection Division, FSA, for information regarding FSA compliance with NEPA.
7 U.S.C. 71-87k.
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The mission of the Federal Grain Inspection Service is to facilitate the marketing of grain, oilseeds, pulses, rice, and related commodities by:
(a) Establishing descriptive standards and terms,
(b) Accurately and consistently certifying quality,
(c) Providing for uniform official inspection and weighing,
(d) Carrying out assigned regulatory and service responsibilities, and
(e) Providing the framework for commodity quality improvement incentives to both domestic and foreign buyers.
The Administrator is delegated, from the Secretary, responsibility for administration of the United States Grain Standards Act and responsibilities under the Agricultural Marketing Act of 1946 (7 U.S.C. 1621
In implementing, administering, and enforcing the Act and the regulations, standards, and instructions, it is the policy of the Service to promote adherence to the provisions of the Civil Rights Act of 1964 (42 U.S.C. 2000a
Notice of proposals to prescribe, amend, or revoke regulations, official standards, and official criteria under the Act shall be published in accordance with applicable provisions of the Administrative Procedure Act (5 U.S.C. 551,
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Opportunities will be provided for hearings prescribed or authorized by sections 7(g)(3), 7A(c)(2), 9, 10(d), and 17A(d) of the Act, and the hearings shall be conducted in accordance with the Rules of Practice Governing Formal Adjudicatory Administrative Proceedings Instituted by the Secretary
Information about the Grain Inspection, Packers and Stockyards Administration, Service, Act, regulations, official standards, official criteria, rules of practice, instructions, and other matters related to the official inspection or Class X or Class Y weighing of grain may be obtained by telephoning or writing the U.S. Department of Agriculture, Grain Inspection, Packers and Stockyards Administration, P.O. Box 96454, Washington, D.C. 20090-6454, or any field office or agency of the Service.
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(8) High Quality Specialty Grain Shipped in Containers. Official inspection and weighing requirements do not apply to high quality specialty grain exported in containers. Records generated during the normal course of business that pertain to these shipments shall be made available to the Service upon request, for review or copying. These records shall be maintained for a period of 3 years. This waiver expires July 31, 2010.
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“Foreign commerce grain business” is defined as the business of buying grain for sale in foreign commerce or the business of handling, weighing, or transporting grain for sale in foreign commerce. This provision shall not include:
(a) Any person who only incidentally or occasionally buys for sale, or handles, weighs, or transports grain for sale and is not engaged in the regular business of buying grain for sale, or handling, weighing, or transporting grain for sale;
(b) Any producer of grain who only incidentally or occasionally sells or transports grain which the producer has purchased;
(c) Any person who transports grain for hire and does not own a financial interest in such grain; or
(d) Any person who buys grain for feeding or processing and not for the
Each person who has engaged in foreign commerce grain business totaling 15,000 or more metric tons during the preceding or current calendar year must register with the Service and shall be deemed to be regularly engaged in foreign commerce grain business. This includes foreign-based firms operating in the United States but does not include foreign governments or their agents. The Service will, upon request, register persons not required to register under this section if they comply with the requirements of §§ 800.33 and 800.34.
A person shall submit an application for registration to the Service at least 30 calendar days before regularly engaging in foreign commerce grain business according to § 800.31. For good cause shown, the Service may waive this 30-day requirement.
Any person who is required or desires to register must submit an application for registration to the Service. Application forms can be obtained from the Service. Each application shall: (a) Be typewritten or legibly written in English; (b) include all information required by the application form; and (c) be signed by the applicant. The information required by this paragraph may be submitted to the Service via telephone, subject to written confirmation. An applicant shall furnish any additional information requested by the Service for consideration of the application.
An applicant shall submit the registration fee prescribed in § 800.71 with the completed application. If an application is dismissed, the fee shall be refunded by the Service. No fee or portion of a fee shall be refunded if a person is registered and the registration is subsequently suspended or revoked under § 800.39.
(a) The Service shall review each application to determine if it complies with §§ 800.32, 800.33, and 800.34. If the application complies and the fee has been paid, the applicant shall be registered.
(b) If the application does not comply with §§ 800.32, 800.33, and 800.34 and the omitted information prevents a satisfactory review by the Service, the applicant shall be provided an opportunity to submit the needed information. If the needed information is not submitted within a reasonable time, the application may be dismissed. The Service shall promptly notify the applicant, in writing, of the reasons for the dismissal.
The Service shall furnish the applicant with an original and three copies of the registration certificate. The registration shall be effective on the issue date shown on the certificate. Each certificate of registration is issued on the condition that the registrant will comply with all provisions of the Act, regulations, and instructions. The Service shall charge a fee, in accordance with § 800.71, for each additional copy of a certificate of registration requested by a registrant.
Each registrant shall notify the Service within 30 days of any change in the information contained in the application for registration. If the notice is submitted orally, it shall be promptly confirmed in writing.
Each certificate of registration shall terminate on December 31 of the calendar year for which it is issued. The Service shall send a letter to each registrant notifying the registrant of the impending termination of the registration and providing instructions for requesting renewal. The registration may be renewed in accordance with §§ 800.33 and 800.34. Failure to receive the letter shall not exempt registrants from the responsibility of renewing their registration if required by § 800.31.
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An applicant may withdraw a request for official services any time before official personnel release results, either verbally or in writing. See § 800.51 for reimbursement of expenses, if any.
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For any request that has been dismissed or withdrawn under § 800.47, § 800.48, or § 800.49, respectively, each applicant shall pay expenses incurred by the agency or the Service.
Subject to the provisions of §§ 800.48, 800.49, and 800.50, no person entitled to official services under the Act shall be denied or deprived of the right thereto by reason of any rule, regulation, bylaw, or custom of any market, board of trade, chamber of commerce, exchange, inspection department, or similar organization; or by any contract, agreement, or other understanding.
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Section 13 of the Act contains certain prohibitions with respect to the use of official grade designations, official marks, and other representations with respect to grain.
(a) The use of an official grade designation, with or without factor information, or of official criteria information, or of the term “official grain standards,” shall not, without additional information, be considered to be a representation that the grain was officially inspected.
(b) The use of any symbol or term listed as an official mark, at § 800.0(b)(68), with respect to grain shall be considered to be a representation of official service under the Act: Provided however, that the use of the official marks “official certificate;” “officially inspected;” “official inspection;” “officially weighed;” “official weight;” and “official weighing” shall not be considered to be a representation of official service under the Act if it is clearly shown that the activity occurred under the U.S. Warehouse Act (7 U.S.C. 241
In the absence of prior adequate notice to appropriate official personnel, any action or practice, including the loading, weighing, handling, or sampling of grain that knowingly causes or is an attempt to cause the issuance by official personnel of a false or incorrect official certificate or other official form, is deemed to be deceptive and, as such, is a violation of section 13(a)(3) of the Act. For the purposes of this paragraph, adequate notice is written or oral notice given to an agency or the Service, as applicable, before official personnel begin to perform official inspection or weighing services. If oral notice is given, it must be confirmed in writing within 2 business days. To be adequate, the notice must explain the nature and extent of the action or practice in question and must identify
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(1) Defined for export elevators at export port locations as set forth in 7 CFR part 810 and as dust removed from grain and collected in a bin/container and as dust settling on floors, equipment, and other areas, commonly referred to as dust sweepings; and
(2) Defined for other than export elevators as set forth in 7 CFR part 810.
(b)
(1) Recombine or add dockage or foreign material to any grain, or
(2) Blend different kinds of grain except when such blending will result in grain being designated as Mixed grain in accordance with subpart E of the Official United States Standards for Grain.
(3) Add water to grain for purposes other than milling, malting, or similar processing operations.
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(2) Grain sold under an exemption shall be consumed or processed into a product(s) by the purchaser and not resold into the grain market.
(3) Products or byproducts from grain sold under an exemption shall not be blended with or added to grain in commercial channels, except for vegetable oil which may be used as a dust suppressant in accordance with (d)(4) of this section.
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(2) In the case of a State or local governmental agency, fees shall not be used for any purpose other than to finance the cost of the official inspection and Class X or Class Y weighing service and inspection equipment testing service performed by the agency or the cost of other closely related programs administered by the agency.
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(2) The schedule shall be published and made available by the agency to all users of its services.
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The supervision fee is charged at $0.011 per metric ton inspected and/or weighed.
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(2) Requests for extra copies of registration certificates shall be accompanied by a fee of $2.50 for each copy.
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(d) Each application for approval to operate as a scale testing organization shall be accompanied by a fee of $250.
For
(a) When transportation of the service representative to the service location (at other than a specified duty point) is more than 25 miles from an FGIS office, the actual transportation cost in addition to the applicable hourly rate for each service representative will be assessed from the FGIS office to the service point and return. When commercial modes of transportation (e.g., airplanes) are required, the actual expense incurred for the round-trip travel will be assessed. When services are provided to more than one applicant, the travel and other related charges will be prorated between applicants.
(b) In addition to a 2-hour minimum charge for service on Saturdays, Sundays, and holidays, an additional charge will be assessed when the revenue from the services in § 800.71, schedule A, table 2, does not equal or exceed what would have been collected at the applicable hourly rate. The additional charge will be the difference between the actual unit fee revenue and the hourly fee revenue. Hours accrued for travel and standby time shall apply in determining the hours for the minimum fee.
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(1) Travel from the FGIS field office or assigned duty station to the service point and return;
(2) The performance of the requested service, less mealtime.
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(1) Service has been requested at a specified location;
(2) A service representative is on duty and ready to provide service but is unable to do so because of a delay not caused by the Service; and
(3 FGIS officials determine that the service representative cannot be utilized to provide service elsewhere without cost to the Service.
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(2) A stowage examination may be obtained as a separate service or with one or more other services. Approval of the stowage space is required for official sample-lot inspection services on all export lots of grain and all official sample-lot inspection services performed on outbound domestic lots of grain which are sampled and inspected at the time of loading. Also, approval of the stowage space is required for any weighing services performed on all outbound land carriers.
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(i) Samples which contain toxic substances or materials shall be kept out of food and feed channels, and
(ii) Official personnel shall dispose of samples obtained or submitted to them according to procedures established by the Service. Complete and accurate records of disposition shall be maintained.
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(1) When grain is inspected in a combined lot under § 800.85;
(2) When grain is inspected under paragraph (d) of this section; or
(3) When certification is at the option of the applicant in accordance with instructions.
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(1) Be filed in advance of loading or unloading;
(2) Show the estimated quantity of grain to be certificated;
(3) Show the contract grade and official criteria if applicable; and
(4) Identify the carrier and stowage area into which the grain is being loaded, or from which the grain is being unloaded, or in which the grain is at rest.
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(i) Removing the material portion from the carrier; or
(ii) Requesting the material portion be separately certificated; or
(iii) Requesting either a reinspection or an appeal inspection of the material portion; or
(iv) Requesting a reinspection service and/or an appeal inspection service on the entire lot.
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(i) Unloading the portion of infested grain from the lot and an additional amount of other grain in common stowage with the infested grain; or
(ii) When applicable, completing the loading and treating all infested grain in the lot; or
(iii) When applicable, treating the infested grain for the purpose of destroying the insects, subject to subsequent examination by official personnel; or
(iv) Continue loading without treating the infested grain, in which case all of the infested grain in the lot and all grain in common stowage areas with the infested grain will be officially certificated as infested according to the provisions of the Official U.S. Standards for Grain.
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(i) A statement that the grain has been loaded aboard with grain of other quality;
(ii) The grade, location, or other identification and approximate quanity of grain in the portions; and
(iii) Other information required by the regulations and the instructions.
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Official certificates shall be issued according to § 800.160. Upon request, a combination inspection and Class X weighing certificate may be issued when both services are performed in a reasonably continuous operation at the same location by the same agency or field office. An official certificate shall not be issued unless the information as
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Reinspection or review of weighing services shall be performed by the agency or field office that performed the original service.
Official personnel cannot perform or participate in performing or issue an official certificate for a reinspection or a review of weighing service if they participated in the original service unless there is only one qualified person available at the time and place of the reinspection or review of weighing.
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(1) Each reinspection certificate must clearly show (i) the term “Reinspection” and (ii) a statement identifying the superseded certificate. The superseded certificate will be considered null and void as of the date of the reinspection certificate.
(2) When official grade or official factors, Class X weighing results, and official criteria are reported on the same certificate, the reinspection certificate shall show a statement indicating that the reinspection results are based on official grade, or official factors, or official criteria and that all other results are those of the original service.
(3) If the superseded certificate is in the custody of the agency or field office, the superseded certificate shall be marked “Void.” If the superseded certificate is not in the custody of the agency or field office at the time the reinspection certificate is issued, a statement indicating that the superseded certificate has not been surrendered shall be shown on the reinspection certificate.
(4) As of the date of issuance of the official certificate, the superseded certificate for the original service will be void and shall not be used to represent the grain.
(5) When certificates are issued under paragraph (a)(1) of this section, the reinspection certificate shall show a statement indicating that the results replaced the original results and that
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Official personnel cannot perform or participate in performing or issue an official certificate for an appeal inspection if they participated in the original inspection, reinspection, or, in the case of a Board appeal inspection, the appeal inspection service unless there is only one qualified person available at the time and place of the appeal inspection.
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(1) Each appeal inspection certificate shall clearly show (i) the term “Appeal” or “Board appeal” and (ii) a statement identifying the superseded certificate. The superseded certificate will be considered null and void as of the date of the appeal inspection certificate.
(2) When official grade or official factors, Class X weighing results, and official criteria are reported on the same certificate, the appeal inspection certificate shall show a statement indicating that appeal or Board appeal inspection results are based on official grade, official factors, or official criteria and that all other results are those of the original, reinspection, or, in the case of a Board appeal, the appeal inspection results.
(3) Superseded certificates held by the Service shall be marked “Void.” If the superseded certificate is not in the custody of the Service at the time the appeal certificate is issued, a statement indicating that the superseded certificate has not been surrendered shall be shown on the appeal certificate.
(4) As of the date of issuance of the appeal or Board appeal certificate, the superseded certificate for the original, reinspection, or appeal inspection service will be void and shall not be used to represent the grain.
(5) When certificates are issued under paragraph (b) of this section, the appeal inspection certificate shall show a
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Agencies, contractors, and approved scale testing organizations shall maintain complete records of the Act, regulations, the standards, any instructions issued by the Service, and all amendments and revisions thereto. These records shall be maintained until superseded or revoked.
Agencies, contractors, and approved scale testing organizations shall maintain complete records of their delegation, designation, contract, or approval. These records consist of a copy of the delegation or designation documents, a copy of the current contract, or a copy of the notice of approval, respectively, and all amendments and revisions thereto. These records shall be maintained until superseded, terminated, revoked, or cancelled.
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Agencies, contractors, and approved scale testing organizations shall maintain complete records on fee schedules. These records consist of (a) a copy of the current fee schedule; (b) in the case of an agency, data showing how the fees in the schedule were developed; (c) superseded fee schedules; and (d) related information required by the Service. These records shall be maintained for 5 years.
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Agencies and approved scale testing organizations shall maintain complete detailed official inspection work records, copies of official certificates, and equipment testing work records for 5 years.
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The record for each official equipment testing service or activity consists of an official equipment testing report as prescribed in the instructions. Upon completion of each official equipment test, one or more copies of the completed testing report may, upon request, be issued to the owner or operator of the equipment. The testing
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(1) The grade and factor information required by the Official U.S. Standards for Grain;
(2) The test weight of the grain, if applicable;
(3) The moisture content of the grain;
(4) The results for each official factor for which a determination was made;
(5) The results for each official factor that determined the grade when the grain is graded other that U.S. No. 1;
(6) Any other factor information considered necessary to describe the grain; and
(7) Any additional factor results requested by the applicant for official factors defined in the Official U.S. Standards for Grain.
(b)
(c) Test weight for canola and soybeans. Official canola inspection certificates will show, in addition to the requirements of paragraphs (a) and (b) of this section, the official test weight per bushel only upon request by the applicant. Official soybean inspection certificates will show, in addition to the requirements of paragraphs (a) and (b) of this section, the official test weight per bushel unless the applicant requests that test weight not be determined. Upon request, soybean test weight results will not be determined
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Upon request, a duplicate certificate may be issued for a lost or destroyed official certificate.
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Official certificates may be photo copied or similarly reproduced.
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Upon request by a licensee, the Service may cancel a license or suspend a license for a period of time not to exceed 1 year. A license that has been voluntarily suspended shall be returned by the Service upon request by the licensee within 1 year, subject to the provisions of § 800.172; a license that has been cancelled shall be considered void and shall not be subject to return or renewal.
A license issued to an individual who is employed by an agency shall be automatically suspended when the individual ceases to be employed by the agency. If the individual is reemployed by the agency or employed by another agency within 1 year of the suspension date and the license has not terminated in the interim, upon request of the licensee, the license will be reinstated subject to the provisions of §§ 800.172 and 800.173.
Licenses may be summarily revoked upon a finding that the licensee has been convicted of any offense either prohibited by section 13 of the Act or prohibited by Title 18 of the United States Code, with respect to the performance of services under the Act.
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A license may be summarily canceled when (a) the license has been under voluntary or automatic suspension for a period of 1 year and there has been no request for return of the license or a request for return of the license has been dismissed in accordance with § 800.172; or (b) the licensee has died or fails to surrender the license in accordance with § 800.175(f).
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(1) Perform any official inspection, Class X or Class Y weighing, or equipment testing service unless licensed or authorized to do so;
(2) Engage in criminal, dishonest, or notoriously disgraceful conduct, or other conduct prejudicial to the Department or the Service;
(3) Report for duty in an intoxicated or drugged condition, or consume intoxicating beverages or incapacitating drugs while on duty;
(4) Smoke in prohibited areas in elevators or perform official services in an unsafe manner that could endanger official personnel working on or about the premises;
(5) Make unwarranted criticisms or accusations against other official personnel, warehouse samplers, or employees of the Department; and
(6) Refuse to testify or respond to questions in connection with official inquiries or investigations.
(7) Coerce or attempt to coerce any person into providing any special or undue benefit to official personnel, approved weighers, or warehouse samplers.
(c)
(1) Solicit contributions from other official personnel or warehouse samplers for an employee of the Service, or make such a contribution. Nothing in this paragraph shall preclude the occasional voluntary giving or acceptance of gifts of a nominal value on special occasions;
(2) Take any action that might (i) create the appearance of a loss of impartiality or (ii) adversely affect the confidence of the public in the integrity of the inspection, weighing, or equipment testing services performed under the Act;
(3) Except as provided in § 800.76(a), engage in any outside (unofficial) work or activity that:
(i) May impair their efficiency in performing official functions; or
(ii) Consists in whole or in part of unofficial acts of sampling, stowage examination, inspection testing, equipment testing, inspection, or weighing services similar to the official services for which the employing agency is designated; or
(iii) May result in the acquisition of property interests that could create a conflict of interest as defined in section 11 of the Act; or
(iv) May tend to bring criticism on or otherwise embarrass the Department or the Service;
(4) Issue to other official personnel, warehouse samplers, or approved weighers any instructions or directives inconsistent with the Act, the regulations, the Official U.S. Standards for Grain, or the instructions;
(5) Organize or help establish a general or specialized farm organization, or act as an officer or business agency in, recruit members for, or accept office space or contributions from such an organization;
(6) Advocate that any general or specialized farm organization better represents the interest of farmers than any other organization or individual, or recommend that the responsibilities of any government agency be carried out through a general or specialized farm organization. Nothing in paragraph (c)(5) of this section shall prevent official personnel from holding membership in a general or specialized farm organization or prohibit official personnel from participating in the operation of local groups or organizations that conduct government-authorized programs.
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(c)
(1) Accept any gratuity.
(2) Accept any fee or charge or other thing of monetary value, in addition to the published fee or charge, for the performance of official inspection or weighing services under circumstances in which the acceptance could result, or create the appearance of resulting, in (i) the use of their office or position for undue private gain, (ii) an undertaking to give undue preferential treatment to any group or any person, or (iii) any other loss of independence or impartiality in the performance of official inspection or Class X or Class Y weighing services.
(3) Knowingly perform, or participate in performing, an inspection or weighing service on grain in which they have a direct or indirect financial interest.
(4) Engage in the business by buying, selling, transporting, cleaning, elevating, storing, binning, mixing, blending, drying, treating, fumigating, or other preparation of grain (other than a grower of grain, or in the disposition of inspection samples); or in the business of cleaning, treating, or fitting carriers or containers for transporting or storing grain; the merchandising for nonfarm use of equipment for cleaning, drying, treating, fumigating, or otherwise processing, handling, or storing grain; or the merchandising of grain inspection or weighing equipment (other than buying or selling by official personnel of the equipment for use in the performance of their official services).
(5) Seek or hold any appointive or elective office in a grain industry organization or association. This provision does not apply to organizations of official inspectors or official weighers.
(6) Participate in any transaction involving the purchase or sale of corporate stocks or bonds, grain or grain-related commodities, or other property for speculative or income purposes if the transaction could reasonably be construed to interfere with the proper and impartial performance of official inspection for Class X or Class Y
(d)
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No official personnel shall certify or otherwise state in writing (a) the year of production of grain, including use of terms such as “new crop” or “old crop”; (b) the place or geographical area where the grain was grown; or (c) the variety of the grain.
(a)
(b)
(2)
Sections 800.195 through 800.199 were issued under secs. 8, 9, 10, 13, and 18, Pub. L. 94-582, 90 Stat. 2870, 2875, 2877, 2880, and 2884, 7 U.S.C. 79, 79a, 79b, 84, 87, and 87e.
(a)
(b)
(c)
(d)
(e)
(f)
(2)
(3)
(4)
(5)
(ii)
(6)
(7)
(ii)
(8)
(9)
(10)
(g)
(2)
(3)
(ii)
(h)
(a)
(b)
(2)
(ii)
(c)
(d)
(e)
(2)
(f)
(2)
(3)
(g)
(2)
(3)
(ii)
(4)
(5)
(6)
(ii)
(7)
(ii)
(8)
(9)
(10)
(h)
(ii)
(2)
(3)
(4)
(ii)
(iii)
(i)
(a)
(b)
(c)
(d)
(2)
(ii)
(iii)
(a)
(b)
(2)
(3)
(c)
(d)
(e)
(a)
(1)
(2)
(3)
(4)
(b)
(1)
(2)
(3)
(4)
(5)
(c)
(2)
(3)
(d)
(a)
(b)
(c)
(2)
(3)
(4)
(a)
(b)
(c)
(d)
(e)
(a)
(b)
(c)
(d)
(2)
Any person desiring to complain of a rejection or disapproval of equipment by official personnel or of any alleged discrepancy in the testing of equipment under the Act by official personnel or by approved scale testing organizations may file a complaint with the Service.
(a)
(b)
7 U.S.C. 71-87k
The requirements set forth in this part 801 describe certain specifications, tolerances, and other technical requirements for official grain inspection equipment and related sample handling systems used in performing inspection services under the Act.
(a)
(b)
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(15)
(16)
(17)
(18)
(19)
(20)
(21)
The maintenance tolerances for barley pearlers used in performing official inspection services shall be:
The maintenance tolerances for dockage testers used in performing official inspection services shall be:
The maintenance tolerance for diverter-type mechanical samplers (primary, or primary and secondary in combination) used in performing official inspection services shall be ±10 percent, mean deviation from standard sampling device using corn or the same type of grain that the system will be used to sample.
(a) The maintenance tolerances for Motomco 919 moisture meters used in performing official inspection services shall be:
(1) Headquarters standard meters:
(2) All other than Headquarters standard meters:
(b) The maintenance tolerances for GAC 2100 moisture meters used in performing official inspection services shall be:
(1) Headquarters standard meters. By direct comparison using mid-range Hard Red Winter wheat, ±0.05% mean deviation for the average of the Headquarters standard moisture meters.
(2) All other than Headquarters standard meters. By sample exchange using mid-range Hard Red Winter
(a)
(2) The chemical reference starch determination used to reference and calibrate official NIRS instruments shall be performed in accordance with the Corn Refiners Association Method A-20, Analysis for Starch in Corn, Second revision, April 15, 1986, Standard Analytical Methods of the Member Companies of the Corn Refiners Association, Inc. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies may be obtained from Director, Technical Services Division, Federal Grain Inspection Service, 10383 North Executive Hills Blvd., Kansas City, MO 64153-1394. Copies may be inspected at the above address or at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to:
(b)
(2)
(3)
(4) NIRS barley protein analyzers. The maintenance tolerances for the NIRS analyzers used in performing official inspections for determination of barley protein content are 0.20 percent mean deviation from the national standard NIRS instruments, which are
The maintenance tolerances for sieves used in performing official inspection services shall be:
(a) Thickness of metal: ±0.0015 inch.
(b) Accuracy of perforation: ±0.001 inch from design specification.
(c) Sieving accuracy:
The maintenance tolerances for test weight per bushel apparatuses used in performing official inspection services shall be:
(a)
(b)
(c)
(d)
(e)
(f)
(a)
The NIST Handbook is for sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20403. It is also available for inspection at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to:
The following Handbook 44 requirements are not incorporated by reference:
(b) [Reserved]
Pub. L. 94-582, 90 Stat. 2867, as amended (7 U.S.C. 71
(a) The requirements set forth in this part 802 describe certain specifications, tolerances, and other technical requirements for grain weighing equipment and related grain handling systems used in performing Class X and Class Y weighing services, official inspection services, and commercial services under the Act. All scales used for official grain weight and inspection certification services provided by FGIS shall meet applicable requirements contained in the FGIS Weighing Handbook, the General Code, the Scales Code, the Automatic Bulk Weighing Systems Code, and the Weights Code of the 2002 edition of National Institute of Standards and Technology (NIST) Handbook 44, “Specifications, Tolerances, and Other Technical Requirements for Weighing and Measuring Devices” (Handbook 44); and NIST Handbook 105-1 (1990 Edition), “Specifications and Tolerances for Reference Standards and Field Standard Weights and Measures,” (Handbook 105-1). These requirements are confirmed to be met by having National Type Evaluation Program or Federal Grain Inspection Service type approval. Scales used for commercial purposes will be required to meet only the applicable requirements of the 2002 edition of the NIST Handbook 44. Pursuant to the provisions of 5 U.S.C. 552(a), with the exception of the Handbook 44 requirements listed in paragraph (b) of this section, the materials in Handbooks 44 and 105-1 are incorporated by reference as they exist on the date of approval and a notice of any change in these materials will be published in the
(b) The following Handbook 44 requirements are not incorporated by reference:
(a)
(2) Any county or city weights and measures jurisdiction approved by NBS or by their respective NBS-Certified State laboratory as being equipped with appropriate traceable standards and trained staff to provide valid calibration is approved by the Service. The State approval may be documented by a certificate or letter. The jurisdiction must be equipped to provide suitable certification documentation.
(3) Any commercial industrial laboratory primarily involved in the business of sealing and calibrating test weights (standards) will be approved by the Service provided:
(i) It requests written authority to perform tolerance testing of weights used within the Service's program(s) through their approved State jurisdiction. Copies of its request and written reference regarding the State decision shall be provided to the Service. A positive decision by the State will be required as a prerequisite to the Service's granting approval to any commercial laboratory to tolerance test the weights used in testing scales under the jurisdiction of the Service;
(ii) It has NBS traceable standards (through the State) and trained staff to perform calibrations in a manner prescribed by NBS and/or the State;
(iii) It is equipped to provide suitable certification documentation;
(iv) It permits the Service to make onsite visits to laboratory testing space.
(4) Approval of the commercial industrial laboratory will be at the Service's discretion. Once it has obtained approval, the commercial industrial laboratory maintains its site in a manner prescribed by the State and the Service.
(b)
7 U.S.C. 71-87k.
Compliance with the provisions of these standards does not excuse failure to comply with the provisions of the Federal Food, Drug, and Cosmetic Act, or other Federal laws.
Grain refers to barley, canola, corn, flaxseed, mixed grain, oats, rye, sorghum, soybeans, sunflower seed, triticale, and wheat. Standards for these food grains, feed grains, and oilseeds are established under the United States Grain Standards Act.
Unless otherwise stated, the definitions in this section apply to all grains. All other definitions unique to a particular grain are contained in the appropriate subpart for that grain.
(a)
(b)
(c)
(d)
(e)
(a)
(b)
(c)
(a)
(1) When the figure to be rounded is followed by a figure greater than or equal to 5, round to the next higher figure; e.g., report 6.36 as 6.4, 0.35 as 0.4, and 2.45 as 2.5.
(2) When the figure to be rounded is followed by a figure less than 5, retain the figure; e.g., report 8.34 as 8.3, and 1.22 as 1.2.
(b)
The grades and grade requirements for each grain (except mixed grain) and shown in the grade table(s) of the respective standards. Mixed grain grade requirements are not presented in tabular form.
(a)
(1) The letters “U.S.”;
(2) The abbreviation “No.” and the number of the grade or the words “Sample grade”;
(3) When applicable, the subclass;
(4) The class or kind of grain;
(5) When applicable, the special grade(s) except in the case of bright, extra heavy, and heavy oats or plump rye, the special grades, “bright”, “extra heavy”, “heavy” and “plump” will precede the word “oats” or “rye” as applicable; and
(6) When applicable, the word “dockage” together with the percentage thereof.
(b)
A special grade serves to draw attention to a special factor or condition present in the grain and, when applicable, is supplemental to the grade assigned under § 810.106. Except for the special grade “infested,” the special grades are identified and requirements are established in each respective grain standards.
(a)
(1)
(2)
(3)
(b)
(1)
(2)
(3)
Special grade designations are shown as prescribed in § 810.106. Multiple special grade designations will be listed in alphabetical order. In the case of treated wheat, the official certificate shall show whether the wheat has been scoured, limed, washed, sulfured, or otherwise treated.
Grain that, before the removal of dockage, consists of 50 percent or more of whole kernels of cultivated barley (
(a)
(b)
(c)
(1)
(i)
(ii)
(iii)
(2)
(i)
(ii)
(iii)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(m)
(n)
(o)
(p)
(2) 5-
(3)
(q)
(r)
(s)
(t)
(1)
(2)
(u)
Malting barley shall not be infested in accordance with § 810.107(b) and shall not contain any special grades as defined in § 810.206. Two-rowed Malting barley varieties not meeting the requirements of this section shall be graded in accordance with standards established for the class Barley.
(a)
(b)
(c)
(d)
Seeds of the genus
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
Each determination of conspicuous admixture, ergot, sclerotinia, stones, damaged kernels, heat-damaged kernels, distinctly green kernels, and inconspicuous admixture is made on the basis of the sample when free from
Grain that consists of 50 percent or more of whole kernels of shelled dent corn and/or shelled flint corn (
(a)
(b)
(c)
(1)
(2)
(3)
(d)
(e)
(f)
(g)
(2)
Each determination of class, damaged kernels, heat-damaged kernels, waxy corn, flint corn, and flint and dent corn is made on the basis of the grain after the removal of the broken corn and foreign material. Other determinations not specifically provided for under the general provisions are made on the basis of the grain as a whole, except the determination of odor is made on either the basis of the grain as a whole or the grain when free from broken corn and foreign material.
(a)
(b)
(c)
Grain that, before the removal of dockage, consists of 50 percent or more of common flaxseed (
(a)
(b)
(c)
(d)
Other determinations not specifically provided for under the general provisions are made on the basis of the grain when free from dockage, except the determination of odor is made on either the basis of the grain as a whole or the grain when free from dockage.
Any mixture of grains for which standards have been established under the United States Grain Standards Act, provided that such mixture does not come within the requirements of any of the standards for such grains; and that such mixture consists of 50 percent or more of whole kernels of grain and/or whole or broken soybeans which will not pass through a
(a)
(b)
(c)
(d)
(e)
Each determination of damaged and heat-damaged kernels, and the percentage of each kind of grain in the mixture is made on the basis of the sample after removal of foreign material and fines. Other determinations not specifically provided for under the general provisions are made on the basis of the grain as a whole, except the determination of odor is made on either the basis of the grain as a whole or the grain when free from foreign material and fines.
(a)
(b)
(1) Does not meet the requirements for the grade U.S. Mixed Grain; or
(2) Contains more than 16.0 percent moisture; or
(3) Contains 8 or more stones that have an aggregate weight in excess of 0.2 percent of the sample weight, 2 or more pieces of glass, 3 or more Crotalaria seeds (
(4) Is musty, sour, or heating; or
(5) Has any commercially objectionable foreign odor except smut or garlic; or
(6) Is otherwise of distinctly low quality.
(a)
(b)
(2) Any other mixed grain that contains more than 0.10 percent ergot.
(c)
(2) Any other mixed grain that contains 4 or more green garlic bulblets, or an equivalent quantity of dry or partly dry bulblets, in 500 grams of mixed grain.
(d)
(2) Any other mixed grain that has the kernels covered with smut spores to give a smutty appearance in mass, or that contains more than 0.2 percent smut balls.
(e)
Grain that consists of 50 percent or more of oats (
(a)
(b)
(c)
(d)
(e)
(2)
(f)
(g)
Other determinations not specifically provided for under the general provisions are made on the basis of the grain as a whole.
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
Grain that, before the removal of dockage, consists of 50 percent or more of common rye (
(a)
(b)
(c)
(d)
(e)
(f)
(g)
Other determinations not specifically provided for under the general provisions are made on the basis of the grain when free from dockage, except the determination of odor is made on either the basis of the grain as a whole or the grain when free from dockage.
(a)
(b)
(c)
(d)
(e)
(f)
Grain that, before the removal of dockage, consists of 50 percent or more of whole kernels of sorghum (
(a)
(b)
(c)
(1)
(2)
(3)
(4)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(2)
Each determination of broken kernels and foreign material is made on the basis of the grain when free from dockage. Each determination of class, damaged kernels, heat-damaged kernels, and stones is made on the basis of the grain when free from dockage and that portion of the broken kernels, and foreign material that will pass through a 1.98 mm (5/64 inches) triangular-hole sieve. Other determinations not specifically provided for in the general provisions are made on the basis of the grain as a whole except the determination of odor is made on either the basis of the grain as a whole or the grain when free from dockage, broken kernels, and foreign material removed by the 1.98 mm (5/64 inches) triangular-hole sieve.
Grain that consists of 50 percent or more of whole or broken soybeans (
(a)
(1)
(2)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
Each determination of class, heat-damaged kernels, damaged kernels, splits, and soybeans of other colors is made on the basis of the grain when free from foreign material. Other determinations not specifically provided for under the general provisions are made on the basis of the grain as a whole.
(a)
(b)
Grain that, before the removal of foreign material, consists of 50.0 percent or more of cultivated sunflower seed (
(a)
(b)
(c)
(d)
(e)
(f)
(g)
Each determination of heat-damaged kernels, damaged kernels, test weight per bushel, and dehulled seed is made on the basis of the grain when free from foreign material. Other determinations not specifically provided for in the general provisions are made on the basis of the grain as a whole, except the determination of odor is made on either the basis of the grain as a whole or the grain when free from foreign material.
Grain that, before the removal of dockage, consists of 50 percent or more of triticale (
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
Each determination of heat-damaged kernels, damaged kernels, material other than wheat or rye, and foreign material (total) is made on the basis of the grain when free from dockage and shrunken and broken kernels. Other determinations not specifically provided for under the general provisions are made on the basis of the grain when free from dockage except the determination of odor is made on either the basis of the grain as a whole or the grain when free from dockage.
(a)
(b)
(c)
(d)
(e)
Grain that, before the removal of dockage, consists of 50 percent or more common wheat (
(a)
(1)
(i)
(ii)
(iii)
(2)
(i)
(ii)
(iii)
(3)
(4)
(5)
(6)
(i)
(ii)
(iii)
(7)
(8)
(b)
(1) Durum wheat, Soft White wheat, and Unclassed wheat in the classes Hard Red Spring wheat and Hard Red Winter wheat.
(2) Hard Red Spring wheat, Hard Red Winter wheat, Hard White wheat, Soft Red Winter wheat, Soft White wheat, and Unclassed wheat in the class Durum wheat.
(3) Durum wheat and Unclassed wheat in the class Soft Red Winter wheat.
(4) Durum wheat, Hard Red Spring wheat, Hard Red Winter wheat, Soft Red Winter wheat, and Unclassed wheat, in the classes Hard White wheat and Soft White wheat.
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
Each determination of heat-damaged kernels, damaged kernels, foreign material, wheat of other classes, contrasting classes, and subclasses is made on the basis of the grain when free from dockage and shrunken and broken kernels. Other determinations not specifically provided for under the general provisions are made on the basis of the grain when free from dockage, except the determination of odor is made on either the basis of the grain as a whole or the grain when free from dockage.
(a) Grades and grade requirements for all classes of wheat, except Mixed wheat.
(b)
(a)
(b)
(c)
(d)
(e)
7 U.S.C. 1621-1627.
(a)
(b)
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(15)
(16)
(17)
(18)
(19)
(20)
(21)
(22)
(23)
(24)
(25)
(26)
(27)
(28)
(29)
(30)
(31)
(32)
(33)
(34)
(35)
(36)
(37)
(38)
(39)
(40)
(41)
(42)
(43)
(44)
(45)
(46)
(47)
(48)
The Administrator, under the authority delegated by the Secretary, is charged with administering the programs and functions authorized under the Act and the regulations concerning those commodities assigned by the Secretary to the Service.
In implementing, administering, and enforcing the Act and the regulations, standards, and instructions, it is the policy of the Service to promote adherence to the provisions of the Civil Rights Act of 1964 (42 U.S.C. 2000a
Notice of proposals to prescribe, amend, or revoke regulations and standards shall be published in accordance with applicable provisions of the Administrative Procedures Act (5 U.S.C. 551
(a)
(b)
Opportunities shall be provided for hearings either in accordance with the Rules of Practice Governing Formal Adjudicatory Proceedings Instituted by the Secretary under Various Statutes (7 CFR part 1, subpart H) or in accordance with FGIS procedures as appropriate.
Information about the Service, Act, regulations, standards, rules of practice, instructions, and other matters related to the inspection of commodities may be obtained by telephoning or writing the U.S. Department of Agriculture, Federal Grain Inspection Service, P.O. Box 96454, Washington, DC 20090-6454, or any field office or cooperator.
(a)
(b)
(c)
(d)
(e)
(f)
All official personnel shall have in their possession and present upon request, while on duty, the means of identification furnished to them by the Department.
These regulations do not apply to the inspection of grain under the United States Grain Standards Act, as amended (7 U.S.C. 71
(a)
(b)
(c)
(a)
(b)
(1) The date filed;
(2) The identification, quantity, and location of the commodity;
(3) The type of service(s) requested;
(4) The name and mailing address of the applicant and, if made by an authorized agent, the agent's name and mailing address; and
(5) Any other relevant information that the official with whom the application is filed may request.
(c)
(d)
(e)
(2)
(f)
(g)
(h)
(1) Loading and unloading areas and the truck and railroad holding areas;
(2) Pier or dock areas;
(3) Deck and stowage areas of a carrier;
(4) Other service areas; and
(5) Equipment used in loading or unloading, processing, and handling the commodity.
(i)
(j)
An applicant may withdraw a request for inspection service any time before official personnel release results, either verbally or in writing. Reimbursement of expenses, if any, shall be made pursuant to § 868.26.
(a)
(i) Performing the requested service is not practicable or possible.
(ii) The cooperator or the Service lacks authority under the Act or regulations to provide the inspection service requested or is unable to comply with the Act, regulations, standards, or instructions.
(iii) Sufficient information is not available to make an accurate determination.
(2)
(3)
(i) The factor requested was not tested during the original inspection;
(ii) The condition of the commodity has undergone a material change;
(iii) A representative file sample is not available;
(iv) The applicant requests that a new sample be obtained;
(v) The request is for a graded commodity; or
(vi) The reasons for the retest inspection are frivolous.
(4)
(i) The scope is different from the scope of the original inspection service;
(ii) The condition of the commodity has undergone a material change;
(iii) The request specifies a file sample and a representative file sample is not available;
(iv) The applicant requests that a new sample be obtained and a new sample cannot be obtained; or
(v) The reasons for the appeal inspection are frivolous.
(5)
(i) The scope is different from the scope of the original inspection service;
(ii) The condition of the commodity has undergone a material change;
(iii) A representative file sample is not available;
(iv) The applicant requests that a new sample be obtained; or
(v) The reasons for the Board appeal inspection are frivolous.
(b)
(a)
(b)
(a)
(b) The Rules of Practice Governing Formal Adjudicatory Proceedings Instituted by the Secretary under Various Statutes (7 CFR part 1, subpart H) shall be followed in the denial or withdrawal of service.
For any request that has been withdrawn, dismissed, or withheld under §§ 868.22, 868.23, or 868.24, respectively, each applicant shall pay expenses incurred by the cooperator or the Service.
(a)
(2)
(3)
(b)
(c)
(d)
(2) Official personnel shall not perform, participate in performing, or issue a certificate if the official personnel participated in a previous inspection or certification of the lot unless there is only one authorized person available at the time and place of the requested inspection service.
(a)
(1) Standards of class, grade, other quality designation, quantity, or condition for such commodities promulgated by the Administrator; or
(2) Specifications prescribed by Federal agencies; or
(3) Specifications of trade associations or organizations; or
(4) Other specifications as requested by applicant; or
(5) The instructions.
(b)
(1) Obtaining representative sample(s) of an identified commodity lot;
(2) Examining, grading, or testing the sample(s);
(3) Examining relevant records for the lot; and
(4) Certifying the results.
(c)
(d)
(e)
(1) Weighing a selected number of containers from a commodity lot;
(2) Determining the estimated total gross, tare, and net weights or the estimated average gross or net weight per filled container; and
(3) Certifying the results.
(f)
(1) Completely supervising the loading or the unloading of an identified lot of bulk or containerized commodity,
(2) Physically weighing or completely supervising the weighing of the commodity; and
(3) Certifying the results.
(g)
(1) Performing a stowage examination;
(2) Computing the number of filled commodity containers loaded aboard the carrier;
(3) Observing the condition of commodity containers loaded aboard the carrier;
(4) If practicable, sealing the carrier; and
(5) Certifying the results.
(h)
(i)
(j)
(k)
(l)
(m)
Official commodity inspections shall be performed only by official personnel.
(a)
(i) Obtained by official personnel;
(ii) Representative of the commodity in the lot;
(iii) Protected by official personnel from manipulation, substitution, and improper or careless handling; and
(iv) Obtained within the prescribed area of responsibility of the cooperator or field office performing the inspection service.
(2)
(3)
(4)
(b)
(c)
(1) Has been obtained by official personnel;
(2) Is of the size prescribed in the instructions; and
(3) Has been obtained, handled, and submitted in accordance with the instructions.
(d)
When the entire lot is not accessible for examination or a representative sample cannot be obtained from the entire lot, the certificate shall state the estimated quantity of the commodity in the accessible portion and the quantity of the entire lot. The inspection shall be limited to the accessible portion. In addition, the words “Partial Inspection” shall be printed or stamped on the certificate.
(a)
(2)
(b)
(c)
(2)
(d)
(e)
(2)
(a)
(1) A portion of the commodity is unloaded, transferred, or otherwise removed from the carrier or location after the time of original inspection, unless the identity is preserved; or
(2) More commodity or other material, including a fumigant or insecticide, is added to the lot after the original inspection was performed, unless the addition of the fumigant or insecticide was performed in accordance with the instructions; or
(3) At the option of official personnel performing an appeal inspection or Board appeal inspection service, the identity of a commodity in a closed carrier or container may be considered lost if the carrier or container is not sealed or the seal record is incomplete.
(b)
(c)
(1) The identifying number, mark, or symbol for the sample is lost or destroyed; or
(2) The sample has not been retained and protected by official personnel as prescribed in the regulations and the instructions.
Any interested person may apply for inspection service.
Any interested person may enter into a contract with a cooperator or the Service whereby the cooperator or Service will provide original inspection services for a specified period, and the applicant will pay a specific fee.
(a)
(b)
When circumstances prevent a retest inspection, appeal inspection, or Board appeal inspection, an applicant may request a new original inspection on any previously inspected lot; except that a new original inspection may not be performed on an identifiable commodity lot which, as a result of a previous inspection, was found to be contaminated with filth, other than insect fragments in nongraded processed products, or to contain a deleterious substance. A new original inspection shall be based on a new sample and shall not be restricted to the scope of any previous inspection. A new original inspection certificate shall not supersede any previously issued certificate.
(a)
(b)
(a)
(b)
(a)
(b)
(1) Each retest inspection certificate shall clearly show the term “Retest” and a statement identifying the superseded original certificate. The superseded certificate shall be considered null and void as of the date of the retest certificate. When applicable, the certificate shall also show a statement as to which factor(s) result is based on the retest inspection service and that all other results are those of the original inspection service.
(2) If the superseded certificate is in the custody of the Service, the superseded certificate shall be marked “Void.” If the superseded certificate is not in the custody of the Service at the time the retest certificate is issued, a statement indicating that the superseded certificate has not been surrendered shall be shown on the retest certificate.
(a)
(b)
(a)
(b)
(2) Subject to the limitations of paragraph (b)(3) of this section, the applicant may request that an appeal inspection be based on: (i) The file sample or (ii) a new sample. However, an appeal inspection shall be based on a new sample only if the lot can positively be identified by official personnel as the one that was previously inspected and the entire lot is available and accessible for sampling and inspection. Board appeals shall be on the basis of the file sample.
(3) An appeal inspection shall be limited to a review of the sampling procedure and an analysis of the file sample when, as a result of a previous inspection, the commodity was found to be contaminated with filth (other than insect fragments in nongraded processed products) or to contain a deleterious substance. If it is determined that the sampling procedures were improper, a new sample shall be obtained if the lot can be positively identified as the lot which was previously inspected and the entire lot is available and accessible for sampling and inspection.
(a)
(b)
(a)
(b)
(1) Each appeal inspection certificate shall clearly show: (i) The term “Appeal” or “Board Appeal” and (ii) a statement identifying the superseded certificate. The superseded certificate shall be considered null and void as of the date of the appeal inspection or Board appeal inspection certificate.
(2) When the results for more than one kind of service are reported on a certificate, the appeal or Board appeal inspection certificate shall show a statement of which kind of service(s) results are based on the appeal or Board appeal inspection service and that all other results are those of the original inspection, retest inspection, or appeal inspection service.
(3) If the superseded certificate is in the custody of the Service, the superseded certificate shall be marked “Void.” If the superseded original inspection, retest inspection, or appeal inspection certificate is not in the custody of the Service at the time the appeal certificate is issued, a statement indicating that the superseded certificate has not been surrendered shall be shown on the appeal certificate.
(c)
(a)
(b)
(2)
(3)
(c)
(d)
(2)
(e)
(f)
(2)
(g)
(h)
Official certificates shall—
(a) Be on standard printed forms prescribed in the instructions;
(b) Be in English;
(c) Be typewritten or handwritten in ink and be clearly legible;
(d) Show the results of inspection services in a uniform, accurate, and concise manner;
(e) Show the information required by §§ 868.70-868.75; and
(f) Show only such other information and statements of fact as are provided in the instructions authorized by the Administrator.
(a)
(b)
(1) The class, grade, or any other quality designation according to the official grade standards;
(2) All factor information requested by the applicant; and
(3) All grade determining factors for commodities graded below the highest quality grade.
(a)
(b)
(c)
(1) The corrections are neat and legible;
(2) Each correction is initialed by the individual who corrects the certificate; and
(3) The corrections and initials are shown on the original and all copies.
(d)
(2)
(i) The terms “Corrected Original” and “Corrected Copy,”
(ii) A statement identifying the superseded certificate and the corrections,
(iii) A statement indicating the superseded certificate was not surrendered when the incorrect certificate was not submitted; and
(iv) A new serial number.
(e)
(a)
(b)
(1) In writing;
(2) By the applicant who made the initial request;
(3) To the office that issued the outstanding certificate;
(4) Within 5 business days of the outstanding certificate date; and
(5) Before the identity of the commodity has been lost.
(c)
(d)
(1) Be in the custody of the cooperator or the Service;
(2) Be marked “Void,” and
(3) Show the identification of the divided-lot certificates.
(e)
(1) A statement indicating the commodity was inspected as an undivided lot;
(2) The terms “Divided-Lot Original,” and the copies shall show “Divided-Lot Copy;”
(3) The same serial number with numbered suffix (for example, 1764-1, 1764-2, 1764-3, and so forth); and
(4) The quantity specified by the request.
(f)
(g)
Upon request, a duplicate certificate may be issued for a lost or destroyed official certificate.
(a)
(1) In writing;
(2) By the applicant who requested the service covered by the lost or destroyed certificate; and
(3) With the office that issued the initial certificate.
(b)
(c)
(d)
(a)
(1) Is employed by a cooperator, is a contractor, or is employed by a contractor;
(2) Possesses the qualifications prescribed in the instructions; and
(3) Has no interest, financial or otherwise, direct or indirect in merchandising, handling, storing, or processing the kind of commodities or related products to be inspected.
(b)
(a)
(b)
(c)
(2)
(d)
Upon request by a licensee, the Service may cancel a license or suspend a license for a period of time not to exceed 1 year. A license that has been voluntarily suspended shall be returned by the Service upon request by the licensee within 1 year, subject to the provisions of § 868.81(a) and (b); a license that has been cancelled shall be considered void and shall not be subject to return or renewal.
A license issued to an individual shall be automatically suspended when the individual ceases to be employed by the cooperator. If the individual is reemployed by the cooperator or employed by another cooperator within 1 year of the suspension date and the license has not terminated in the interim, upon request of the licensee, the license will be reinstated subject to the provisions of § 868.81(a) and (b).
(a)
(2) A license may not be suspended or revoked until the individual: (i) Has been served notice, in person or by registered mail, that suspension or revocation of the license is under consideration for reasons set out in the notice and (ii) has been given an opportunity for a hearing.
(b)
(c)
(a) The fees shown in Table 1 apply to Federal Commodity Inspection Services specified below.
(b) In addition to the fees, if any, for sampling or other requested service, a fee will be assessed for each laboratory test (original, retest, or appeal) listed in table 2 of this section.
(c) If a requested test is to be reported on a specified moisture basis, a fee for a moisture test will also be assessed.
(d) Laboratory tests referenced in table 2 of this section will be charged at the applicable laboratory fee.
The fees shown in Tables 1 and 2 apply to Federal rice inspection services. Fees for other services not referenced in Table 2 will be based on the non-contract hourly rate listed in § 868.91, Table 1.
(a)
(1) The cost of performing the service and related supervision and administrative costs;
(2) The cost of per diem, subsistence, mileage, or commercial transportation to perform the service for rice inspection only in § 868.91, table 1. See § 868.90, table 1, footnote 1, for fees for inspection of commodities other than rice.
(3) The cost of first-class mail service;
(4) The cost of overtime and premium pay; and
(5) The cost of certification except as provided in § 868.92(c).
(b)
(1) Travel from the FGIS field office or assigned duty location to the service point and return; and
(2) The performance of the requested service, less mealtime.
(c)
(1) An applicant requests more than the original and three copies of a certificate;
(2) An applicant requests onsite typing of certificates or typing of certificates at the FGIS field office during other than normal working hours; and
(3) An applicant requests the use of express-type mail or courier service.
(d)
(1) Service has been requested at a specified location;
(2) A Service representative is on duty and ready to provide service but is unable to do so because of a delay not caused by the Service; and
(3) FGIS officials determine that the Service representative(s) cannot be utilized elsewhere or cannot be released without cost to the Service.
(e)
(f)
(g)
(h)
(2)
The Grain Inspection, Packers and Stockyards Administration (GIPSA) of the U.S. Department of Agriculture (USDA) facilitates the fair and efficient marketing of agricultural products by maintaining voluntary grade standards for Beans, Whole Dry Peas, Split Peas, and Lentils, which provide a uniform language for describing the quality of these commodities in the
(a) GIPSA will develop, revise, suspend, or terminate grade standards if it determines that such action is in the public interest. GIPSA encourages interested parties to participate in the review, development, and revision of grade standards. Interested parties include growers, producers, processors, shippers, distributors, consumers, trade associations, companies, and State or Federal agencies. Such persons may at any time recommend that GIPSA develop, revise, suspend, or terminate a grade standard. Requests for action should be in writing, and should be accompanied by a draft of the suggested change, as appropriate.
(b) GIPSA will:
(1) Determine the need for new or revised standards;
(2) Collect technical, marketing, or other appropriate data;
(3) Conduct research regarding new or revised standards, as appropriate; and
(4) Draft the proposed standards.
(c) If GIPSA determines that new standards are needed, existing standards need to be revised, or the suspension or termination of existing standards is justified, GIPSA will undertake the action with input from interested parties.
(a) After developing a standardization proposal, GIPSA will publish a notice in the
(b) GIPSA will simultaneously issue a news release about these actions, notifying the affected industry and general public. GIPSA will also distribute copies of proposals to anyone requesting a copy or to anyone it believes may be interested, including other Federal, State, or local government agencies.
(c) All comments received within the comment period will be made part of the public record maintained by GIPSA, will be available to the public for review, and will be considered by GIPSA before final action is taken on the proposal.
(d) Based on the comments received, GIPSA's knowledge of standards, grading, marketing, and other technical factors, and any other relevant information, GIPSA will decide whether the proposed actions should be implemented.
(e) If GIPSA concludes that the changes as proposed or with appropriate modifications should be adopted, GIPSA will publish the final changes in the
(f) If GIPSA determines that proposed changes are not warranted, or otherwise are not in the public interest, GIPSA will either publish in the
Compliance with the provisions of these standards does not excuse failure to comply with the provisions of the Federal Food, Drug, and Cosmetic Act, or other Federal laws.
Rice (
For the purposes of these standards, the following terms shall have the meanings stated below:
(a)
(b)
(c)
(1) “Long grain rough rice” shall consist of rough rice which contains more than 25 percent of whole kernels and which after milling to a well-milled degree, contains not more than 10 percent of whole or broken kernels of medium or short grain rice.
(2) “Medium grain rough rice” shall consist of rough rice which contains more than 25 percent of whole kernels and which after milling to a well-milled degree, contains not more than 10 percent of whole or large broken kernels of long grain rice or whole kernels of short grain rice.
(3) “Short grain rough rice” shall consist of rough rice which contains more than 25 percent of whole kernels and which, after milling to a well-milled degree, contains not more than 10 percent of whole or large broken kernels of long grain rice or whole kernels of medium grain rice.
(4) “Mixed rough rice” shall consist of rough rice which contains more than 25 percent of whole kernels and which, after milling to a well-milled degree, contains more than 10 percent of “other types” as defined in paragraph (h) of this section.
(d)
(e)
(f)
(g)
(h)
Broken kernels of medium grain rice in short grain rice and large broken kernels of short grain rice in medium grain rice shall not be considered other types.
(i)
(j)
(k)
(l)
(m)
(n)
(o)
(p)
(q)
(r)
The determination of seeds, objectionable seeds, heat-damaged kernels, red rice and damaged kernels, chalky kernels, other types, color, and the special grade Parboiled rough rice shall be on the basis of the whole and large broken kernels of milled rice that are produced in the milling of rough rice to a well-milled degree. When determining class, the percentage of (a) whole kernels of rough rice shall be determined on the basis of the original sample, and (b) types of rice shall be determined on the basis of the whole and large broken kernels of milled rice that are produced in the milling of rough rice to a well-milled degree. Smutty kernels shall be determined on the basis of the rough rice after it has been cleaned and shelled as prescribed in FGIS instructions, or by any method that is approved by the Administrator as giving equivalent results. All other determinations shall be on the basis of the original sample. Mechanical sizing of kernels shall be adjusted by handpicking as prescribed in FGIS instructions, or by any method that is approved by the Administrator as giving equivalent results.
Interpretive line samples showing the official scoring line for factors that are determined by visual examinations shall be maintained by the Federal Grain Inspection Service, U.S. Department of Agriculture, and shall be available for reference in all inspection offices that inspect and grade rice.
In determining milling yield (see § 868.202(f)) in rough rice, the degree of milling shall be equal to, or better than, that of the interpretive line sample for “well-milled” rice.
Milling yield shall be determined by the use of an approved device in accordance with procedures prescribed in FGIS instructions. For the purpose of this paragraph, “approved device” shall include the McGill Miller No. 3 and any other equipment that is approved by the Administrator as giving equivalent results.
Milling yield shall not be determined when the moisture content of the rough rice exceeds 18.0 percent.
Water content in rough rice as determined by an approved device in accordance with procedures prescribed in the FGIS instructions. For the purpose of this paragraph, “approved device”
(a)
(1) When the figure to be rounded is followed by a figure greater than or equal to 5, round to the next higher figure; e.g., report 6.36 as 6.4, 0.35 as 0.4, and 2.45 as 2.5.
(2) When the figure to be rounded is followed by a figure less than 5, retain the figure; e.g., report 8.34 as 8.3 and 1.22 as 1.2.
(b)
Requests for the Rice Inspection Handbook, Equipment Handbook, or for information concerning approved devices and procedures, criteria for approved devices, and requests for approval of devices should be directed to the U.S. Department of Agriculture, Federal Grain Inspection Service, P.O. Box 96454, Washington, DC 20090-6454, or any field office or cooperator.
(a) The grade designation for all classes of rough rice, except Mixed Rough Rice, shall include in the following order: (1) The letters “U.S.”; (2) the number of the grade or the words “Sample grade,” as warranted; (3) the words “or better” when applicable and requested by the applicant prior to inspection; (4) the class; (5) each applicable special grade (see § 868.213); and (6) a statement of the milling yield.
(b) The grade designation for the class Mixed Rough Rice shall include, in the following order: (1) The letters “U.S.”; (2) the number of the grade or the words “Sample grade,” as warranted; (3) the words “or better,” when applicable and requested by the applicant prior to inspection; (4) the class; (5) each applicable special grade (see § 868.213); (6) the percentage of whole kernels of each type in the order of predominance; (7) the percentage of large broken kernels of each type in the order of predominance; (8) the percent of material removed by the No. 6 sieve or the No. 6 sizing plate; (9) when applicable, the percentage of seeds; and (10) a statement of the milling yield.
Large broken kernels other than long grain, in Mixed Rough Rice, shall be certificated as “medium or short grain.”
A special grade, when applicable, is supplemental to the grade assigned under § 868.210. Such special grades for rough rice are established and determined as follows:
(a)
(1)
(2)
(3)
(b)
The maximum limits for “Chalky kernels,” “Heat-damaged kernels,” “Kernels damaged by heat,” and the “Color requirements” shown in § 868.210 are not applicable to the special grade “Parboiled rough rice.”
(c)
(d)
The maximum limits for “Chalky kernels” in § 868.210 are not applicable to the special grade “Glutinous rough rice.”
(e)
The grade designation for infested, parboiled, smutty, glutinous, or aromatic rough rice shall include, following the class, the word(s) “Infested,” “Parboiled Light,” “Parboiled,” “Parboiled Dark,” “Smutty,” “Glutinous,” or “Aromatic,” as warranted, and all other information prescribed in § 868.211.
Compliance with the provisions of these standards does not excuse failure to comply with the provisions of the Federal Food, Drug, and Cosmetic Act, or other Federal laws.
Rice (
For the purposes of these standards, the following terms shall have the meanings stated below:
(a)
(b)
(c)
(d)
(1) “Long-grain brown rice for processing” shall consist of brown rice for processing which contains more than 25.0 percent of whole kernels of brown rice and not more than 10.0 percent of whole or broken kernels of medium- or short-grain rice.
(2) “Medium-grain brown rice for processing” shall consist of brown rice for processing which contains more than 25.0 percent of whole kernels of brown rice and not more than 10.0 percent of whole or broken kernels of long-grain rice or whole kernels of short-grain rice.
(3) “Short-grain brown rice for processing” shall consist of brown rice for processing which contains more than 25.0 percent of whole kernels of brown rice and not more than 10.0 percent of whole or broken kernels of long-grain rice or whole kernels of medium-grain rice.
(4) “Mixed brown rice for processing” shall be brown rice for processing
(e)
(f)
(g)
(h)
(i)
Broken kernels of medium grain rice in short grain rice and broken kernels of short grain rice in medium grain rice shall not be considered other types.
(j)
(k)
(l)
(m)
(n)
(o)
(p)
(q)
(r)
(s)
(t)
(u)
The determination of kernels damaged by heat, heat-damaged kernels, parboiled kernels in nonparboiled rice, and the special grade Parboiled brown rice for processing shall be on the basis of the brown rice for processing after it has been milled to a well-milled degree. All other determinations shall be on
Broken kernels shall be determined by the use of equipment and procedures prescribed in FGIS instructions, or by any method which gives equivalent results.
Interpretive line samples showing the official scoring line for factors that are determined by visual observation shall be maintained by the Federal Grain Inspection Service, U.S. Department of Agriculture, and shall be available for reference in all inspection offices that inspect and grade rice.
In determining milling yield (see § 868.252(g)) in brown rice for processing, the degree of milling shall be equal to, or better than, that of the interpretive line sample for “well-milled” rice.
Milling yield shall be determined by the use of an approved device in accordance with procedures prescribed in FGIS instructions. For the purpose of this paragraph, “approved device” shall include the McGill Miller No. 3 and any other equipment that is approved by the Administrator as giving equivalent results.
Milling yield shall not be determined when the moisture content of the brown rice for processing exceeds 18.0 percent.
Water content in brown rice for processing as determined by an approved device in accordance with procedures prescribed in FGIS instructions. For the purpose of this paragraph, “approved device” shall include the Motomco Moisture Meter and any other equipment that is approved by the Administrator as giving equivalent results.
(a)
(1) When the figure to be rounded is followed by a figure greater than or equal to 5, round to the next higher figure; e.g., report 6.36 as 6.4, 0.35 as 0.4, and 2.45 as 2.5.
(2) When the figure to be rounded is followed by a figure less than 5, retain the figure, e.g., report 8.34 as 8.3 and 1.22 and 1.2.
(b)
Requests for the Rice Inspection Handbook, Equipment Handbook, or for information concerning approved devices and procedures, criteria for approved devices, and requests for approval of devices should be directed to the U.S. Department of Agriculture, Federal Grain Inspection Service, P.O.
(a) The grade designation for all classes of brown rice for processing, except Mixed Brown Rice for Processing, shall include in the following order: (1) The letters “U.S.”; (2) the number of the grade or the words “Sample grade,” as warranted; (3) the words “or better,” when applicable and requested by the applicant prior to inspection; (4) the class; and (5) each applicable special grade (see § 868.264).
(b) The grade designation for the class Mixed Brown Rice for Processing shall include in the following order: (1) The letters “U.S.”; (2) the number of the grade or the words “Sample grade,” as warranted; (3) the words “or better,” when applicable and requested by the applicant prior to inspection; (4) the class; (5) each applicable special grade (see § 868.264); (6) the percentage of whole kernels of each type in the order of predominance; and when applicable; (7) the percentage of broken kernels of each type in the order of predominance; and (8) the percentage of seeds, related material, and unrelated material.
Broken kernels other than long grain, in Mixed Brown Rice for Processing, shall be certificated as “medium or short grain.”
A special grade, when applicable, is supplemental to the grade assigned under § 868.262. Such special grades for
(a)
The maximum limits for “chalky kernels,” “Heat-damaged kernels,” and “Kernels damaged by heat” shown in § 868.261 are not applicable to the special grade “Parboiled brown rice for processing.”
(b)
(c)
The maximum limits for “Chalky kernels” in § 868.261 are not applicable to the special grade “Glutinous brown rice for processing.”
(d)
The grade designation for parboiled, smutty, glutinous, or aromatic brown rice for processing shall include, following the class, the word(s) “Parboiled,” “Smutty,” “Glutinous,” or “Aromatic,” as warranted, and all other information prescribed in § 868.262.
Compliance with the provisions of these standards does not excuse failure to comply with the provisions of the Federal Food, Drug, and Cosmetic Act, or other Federal laws.
Whole or broken kernels of rice (
For the purposes of these standards, the following terms shall have the meanings stated below:
(a)
(b)
(c)
(d)
(1) “Long grain milled rice” shall consist of milled rice which contains more than 25.0 percent of whole kernels of milled rice and in U.S. Nos. 1 through 4 not more than 10.0 percent of whole or broken kernels of medium or short grain rice. U.S. No. 5 and U.S. No. 6 long grain milled rice shall contain not more than 10.0 percent of whole kernels of medium or short grain milled rice (broken kernels do not apply).
(2) “Medium grain milled rice” shall consist of milled rice which contains more than 25.0 percent of whole kernels of milled rice and in U.S. Nos. 1 through 4 not more than 10.0 percent of whole or broken kernels of long grain rice or whole kernels of short grain rice. U.S. No. 5 and U.S. No. 6 medium grain milled rice shall contain not more than 10.0 percent of whole kernels of long or short grain milled rice (broken kernels do not apply).
(3) “Short grain milled rice” shall consist of milled rice which contains more than 25.0 percent of whole kernels of milled rice and in U.S. Nos. 1 through 4 not more than 10.0 percent of whole or broken kernels of long grain rice or whole kernels of medium grain rice. U.S. No. 5 and U.S. No. 6 short grain milled rice shall contain not more than 10.0 percent of whole kernels of long or medium grain milled rice (broken kernels do not apply).
(4) “Mixed milled rice” shall consist of milled rice which contains more than 25.0 percent of whole kernels of milled rice and more than 10.0 percent of “other types” as defined in paragraph (i) of this section. U.S. No. 5 and U.S. No. 6 mixed milled rice shall contain more than 10.0 percent of whole kernels of “other types” (broken kernels do not apply).
(5) “Second head milled rice” shall consist of milled rice which, when determined in accordance with § 868.303, contains:
(i) Not more than (
(ii) Not more than (
(6) “Screenings milled rice” shall consist of milled rice which, when determined in accordance with § 868.303, contains:
(i) Not more than (
(ii) Not more than (
(7) “Brewers milled rice” shall consist of milled rice which, when determined in accordance with § 868.303, contains not more than 25.0 percent of whole kernels and which does not meet the kernel-size requirements for the class Second Head Milled Rice or Screenings Milled Rice.
(e)
(f)
(g)
(h)
(i)
Broken kernels of medium grain rice in short grain rice and broken kernels of short grain rice in medium grain rice shall not be considered other types.
(j)
(k)
(l)
(m)
(n)
(o)
This factor is determined on an individual kernel basis and applies to the special grade Undermilled milled rice only.
(p)
(q)
(r)
(s)
(t)
(u)
(v)
(w)
(x)
(y)
All determinations shall be on the basis of the original sample. Mechanical sizing of kernels shall be adjusted by handpicking, as prescribed in FGIS instructions, or by any method which gives equivalent results.
Broken kernels shall be determined by the use of equipment and procedures prescribed in FGIS instructions or by any method which gives equivalent results.
Interpretive line samples showing the official scoring line for factors that are determined by visual observation shall be maintained by the Federal Grain Inspection Service, U.S. Department of Agriculture, and shall be available for reference in all inspection offices that inspect and grade rice.
The degree of milling for milled rice;
Water content in milled rice as determined by an FGIS approved device in accordance with procedures prescribed in FGIS instructions.
(a)
(1) When the figure to be rounded is followed by a figure greater than or equal to 5, round to the next higher figure; e.g., report 6.36 as 6.4, 0.35 as 0.4, and 2.45 as 2.5.
(2) When the figure to be rounded is followed by a figure less than 5, retain the figure, e.g., report 8.34 as 8.3 and 1.22 and 1.2.
(b)
Requests for the Rice Inspection Handbook, Equipment Handbook, or for information concerning approved devices and procedures, criteria for approved devices, and requests for approval of devices should be directed to the U.S. Department of Agriculture, Federal Grain Inspection Service, P.O. Box 96454, Washington, DC 20090-6454, or any field office or cooperator.
(a) The grade designation for all classes of milled rice, except Mixed Milled Rice, shall include in the following order: (1) The letters “U.S.”; (2) the number of the grade or the words “Sample grade”, as warranted; (3) the words “or better,” when applicable and requested by the applicant prior to inspections; (4) the class; and (5) each applicable special grade (see § 868.316).
(b) The grade designation for the class Mixed Milled Rice shall include, in the following order: (1) The letters “U.S.”; (2) the number of the grade or the words “Sample grade”, as warranted; (3) the words “or better,” when applicable and requested by the applicant prior to inspection; (4) the class; (5) each applicable special grade (see § 868.316); (6) the percentage of whole kernels of each type in the order of predominance and when applicable; (7) the percentage of broken kernels of each type in the order of predominance; and (8) the percentage of seeds and foreign material.
Broken kernels other than long grain, in Mixed Milled Rice, shall be certificated as “medium or short grain.”
A special grade, when applicable, is supplemental to the grade assigned under § 868.314. Such special grades for milled rice are established and determined as follows:
(a)
(b)
(c)
The maximum limits for “Chalky kernels,” “Heat-damaged kernels,” “Kernels damaged by heat,” and the “Color requirements” in §§ 868.310, 868.311, 868.312, and 868.313 are not applicable to the special grade “Parboiled milled rice.”
(d)
(e)
The maximum limits for “Chalky kernels,” shown in §§ 868.310, 868.311, and 868.312 are not applicable to the special grade “Glutinous milled rice.”
(f)
The grade designation for coated, granulated brewers, parboiled, undermilled, glutinous, or aromatic milled rice shall include, following the class, the word(s) “Coated,” “Granulated,” “Parboiled Light,” “Parboiled,” “Parboiled Dark,” “Undermilled,” “Glutinous,” or “Aromatic,” as warranted, and all other information prescribed in § 868.314.
A list of CFR titles, subtitles, chapters, subchapters and parts and an alphabetical list of agencies publishing in the CFR are included in the CFR Index and Finding Aids volume to the Code of Federal Regulations which is published separately and revised annually.
Table of CFR Titles and Chapters
Alphabetical List of Agencies Appearing in the CFR
List of CFR Sections Affected
All changes in this volume of the Code of Federal Regulations that were made by documents published in the
For the period before January 1, 2001, see the “List of CFR Sections Affected, 1949-1963, 1964-1972, 1973-1985, and 1986-2000” published in 11 separate volumes.