[Federal Register Volume 77, Number 135 (Friday, July 13, 2012)]
[Rules and Regulations]
[Pages 41248-41256]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-17137]



Farm Service Agency

7 CFR Parts 759 and 762

Rural Utilities Service

Rural Housing Service

Rural Business-Cooperative Service

Farm Service Agency

7 CFR Part 1945

RIN 0560-AH17

Disaster Designation Process

AGENCY: Farm Service Agency, Rural Business-Cooperative Service, Rural 
Housing Service, and Rural Utilities Service, USDA.

ACTION: Final rule.


SUMMARY: The Farm Service Agency (FSA) is revising its disaster 
designation regulations, with minor changes from the proposed rule. The 
rule simplifies procedures for Secretarial designations of disaster 
areas. This rule includes provisions for nearly automatic disaster 
designation in the case of severe drought. The rule also provides 
procedures FSA may use to delegate disaster designation authority to 
FSA State level officials. The rule removes the requirement that a 
State Governor or Indian Tribal Council must request a Secretarial 
disaster designation before a designation can be made. Also, this rule 
moves the disaster designation regulations to the same chapter of the 
Code of Federal Regulations (CFR) as the FSA Emergency Loan (EM) 
Program regulations. FSA expects that the simplified process will 
result in faster designations of disaster areas, and result in more 
timely disaster assistance.

DATES: This rule is effective on July 12, 2012.

FOR FURTHER INFORMATION CONTACT: Steve Peterson; telephone: (202) 720-
7641. Persons with disabilities who require alternative means for 
communications (Braille, large print, audio tape, etc.) should contact 
the USDA Target Center at (202) 720-2600 (voice and TDD).



    This final rule amends procedures for designating counties as 
disaster areas. Some USDA programs past and present, administered by 
FSA have eligibility criteria that include whether losses occurred 
within a disaster area. For example, the Secretary of Agriculture is 
authorized to make emergency loans available (7 U.S.C. 1961) to farmers 
whose operations have been substantially affected by a natural disaster 
in a designated disaster county. Disaster designations have been used 
to qualify producers in those counties for other programs, such as 
certain crop disaster payment programs under past legislation and it is 
possible that future legislation will also tie program eligibility to 
Secretarial designations. The authority to make those designations and 
administer the designation system has been delegated to FSA. Until now, 
FSA regulations regarding the disaster designation process were in 7 
CFR part 1945.
    On November 14, 2011, FSA published a proposed rule to amend the 
disaster designation regulations to provide for changes in the 
designation process (76 FR 70368-70374). In general, that rule proposed 
to simplify the disaster designation process and to delegate the 
authority for designation to the State level of FSA. It also proposed 
to move the disaster designation regulations from 7 CFR part 1945 to 7 
CFR part 759. The latter (part 759) is in a part of the CFR where there 
are general regulations that apply to multiple programs administered by 
FSA. We received 18 comments during the 60-day comment period. 
Commenters included individuals, State agencies, universities, FSA 
employees, and producer associations. Almost all of the comments 
supported the rule. Some supporting comments asked for minor 
clarifications or changes. The comments opposing the rule included 
suggestions that are beyond FSA's authority, such as a suggestion 
requiring State agencies to participate in our disaster designation 
process. In response to comments, we are removing a proposed definition 
because it is not actually used in the other parts of the regulations, 
and we are clarifying the Secretary's delegation authority in several 
respects with minor changes to those in the proposed rule. For example, 
some references to the eligibility of contiguous counties are amended 
to refer to the separate regulations that apply to the disaster 
assistance programs. The delegation authority change clarifies that the 
delegation authority for disaster declarations may be delegated to the 
State level of FSA but that such a delegation is not automatic, or 
assumed, but is discretionary and will require specific delegation 
action. That is a change from the proposed rule, which proposed a 
delegation to the FSA State level as the default procedure. There were 
also a few comments asking for clarification of internal FSA 
procedures. We will provide clarification on internal FSA procedures in 
the handbooks, because we believe that in this instance that is the 
appropriate location for the level of detail about internal procedures 
reflected in the comments. FSA handbooks are available to the public.
    This document first discusses the disaster designation process as 
specified in this rule, and then discusses our responses to the 
comments received. Except for the changes in response to comments noted 
above (removing a definition not used, changing delegation of authority 
from a default process to an optional process, and clarifying 
contiguous county applicability), the disaster designation process 
specified in this rule is the same as in the proposed rule.

Disaster Designation Process Background

    There are four types of disaster determinations that can affect the 
administration of benefits by FSA:
    (1) USDA Secretarial disaster designations,
    (2) Presidential major disaster and Presidential emergency 
    (3) FSA Administrator's Physical Loss Notifications, and
    (4) Quarantine designations by the Secretary under the Plant 
Protection Act or animal quarantine laws as defined in section 2509 of 
the Food, Agriculture, Conservation and Trade Act of 1990 (referenced 
in 7 CFR part 761, which includes a definition of ``quarantine'' in 
accordance with 7 U.S.C. 1961).
    FSA administers the making of USDA Secretarial disaster 
designations. Those declarations specify:
    (1) The specific disaster that resulted in the designation,

[[Page 41249]]

    (2) The incidence period (dates) of that disaster, and
    (3) The specific counties that are included in the designation.
    Of the four types of disaster determinations listed above, the USDA 
Secretarial disaster designation is the one that most often impacts FSA 
programs. Previously, its process was the most complicated of the four. 
This rule simplifies the process of making those determinations.
    This rule reduces the number of steps in the process. Before, the 
process required actions by the Secretary of Agriculture, a State 
Governor or Indian Tribal Council, FSA National office, the FSA State 
Executive Director (SED), FSA county offices, the County Emergency 
Board (CEB), and the State Emergency Board (SEB). This process 
specified in this rule will in the most complex case only require 
action by the Secretary (or the Secretary's designee), the CEB, the 
SEB, and the SED. In the case of a severe drought, it will only require 
action by the Secretary (or the Secretary's designee). While the 
Secretary retains the authority to make any and all determinations, 
this rule provides procedures for that responsibility to be delegated 
to FSA at the State level. If the Secretary chooses, the SED will be 
delegated authority to make the designation on behalf of the Secretary, 
based on a recommendation from the SEB. (The SED is the chairperson of 
the SEB.) The Secretary retains the authority and flexibility to 
determine which SEDs will be delegated authority and when.
    The rule eliminates the requirement that a request from a State 
Governor or Indian Tribal Council is needed before a disaster 
designation can be made. Under this rule, an Indian Tribal Council or 
Governor may still initiate a request for designation to the County 
Emergency Board (CEB), SEB, or Secretary, but that request would no 
longer be required to initiate the process. In response to a request by 
a Governor or Tribal Council for information about pending potential 
disaster designations with respect to a specific disaster, the 
Secretary will advise the Governor or Indian Tribal Council(s) of any 
designation requests that are under review in their State or Tribal 
region. This rule also eliminates the requirement for FSA National 
office review of the information submitted by the SEB to justify a 
disaster designation for a county. However, the FSA National office 
will perform spot check reviews.
    This rule provides for a nearly automatic designation of any county 
in which drought conditions as reported in the U.S. Drought Monitor 
(http://www.droughtmonitor.unl.edu) meet the drought intensity value of 
at least D2 (Drought--Severe) for 8 consecutive weeks in any portion of 
the county. Further, any county that has a portion of its area in a 
drought intensity value of D3 (Drought--Extreme) or higher at any time 
during the growing season of the affected crops would be considered a 
disaster area.
    This rule also revises the definition of ``natural disaster'' to be 
consistent with other existing FSA regulations that use that term.
    In addition to the substantive changes to the disaster designation 
process, this rule implements the provisions specified in the proposed 
rule that reorganize the disaster designation regulations. This rule 
moves the disaster designation regulations from 7 CFR part 1945 to 7 
CFR part 759. This rule also makes the clarifying changes that were in 
the proposed rule, including changes to remove internal FSA processes 
that are not needed in the rule, but are instead made in the handbook, 
where they more properly belong. A conforming change is made to amend 7 
CFR part 762, ``Guaranteed Farm Loans,'' to remove a reference to 7 CFR 
part 1945 and replace it with a reference to new part 759.

Discussion of Comments

    The following provides a summary of public comments received on the 
proposed rule and FSA's response, including changes we are making in 
response to the comments.


    Comment: Removing the list of examples of unusual and adverse 
weather conditions from the definition of ``natural disaster'' could 
lead to potential program abuse and fraud. It would allow nearly any 
simple event like a spring rain during hay cutting to be considered a 
natural disaster. Therefore, that change should not be made. The 
definition and list of examples should not be modified or removed.
    Response: The definition of ``natural disaster'' in this rule 
adequately describes a disaster as an unusual or severe weather 
condition or other natural phenomena that causes severe losses. The 
definition in this rule is consistent with other FSA regulations that 
use that term. A list of examples could be problematic if it was 
interpreted to mean that only those disaster conditions listed were 
possible eligible disaster situations. In those cases where the 
designation is not automatic (that is, not based on officially-
published drought data), the rule provides an ample opportunity for 
review. No change is made in response to this comment.
    Comment: The definition of CEB should be amended to specify that 
local Cooperative Extension agents or educators who have 
responsibilities for reporting the occurrence of a disaster, assessing 
the extent of a disaster, and for requesting approval in declaring a 
county a disaster are included as members of the CEB. Similarly, the 
term SEB should likewise be amended to include Cooperative Extension 
agents having program responsibilities at the State level.
    Response: The CEB and SEB do consider input from State and local 
experts on local disaster conditions. Extension agents can and do 
attend meetings and provide input. However, USDA does not have the 
authority to require Extension agents or other local non-federal 
partners to participate or attend as members of the CEB or SEB. Even if 
they were willing to participate, the determination must remain within 
USDA and it has been deemed best to limit the CEB and SEB membership 
accordingly. This will also assure consistency in the makeup of the 
CEBs and the SEBs. No change is made in response to this comment.
    Comment: FSA should include State government agriculture and 
emergency management agency representatives on the SEB. They must 
receive communications about disaster designations, and must be allowed 
to provide input on the approval process.
    Response: FSA agrees that State level persons who are engaged in 
work related to identifying and reporting disasters and other State or 
local government work can provide valuable information and input that a 
CEB or SEB may consider in making a CEB or SEB recommendation. Such 
representatives are invited to attend and provide input. However, as 
with the previous comments, FSA believe that the actual boards should 
be comprised of USDA staff only. This is particularly with respect to 
nonfederal persons as the designation is a federal function. Also, it 
is relevant to note that the boards are not outside advisory boards and 
therefore not subject to the special procedures that can apply to such 
    Comment: The definition of contiguous county should be amended to 
specify how rivers, lakes, and other bodies of water are viewed. For 
example, if counties are separated by a large body of water (Lake 
Michigan), are the counties on each side of the lake contiguous?

[[Page 41250]]

    Response: The definition of ``contiguous county'' already provides 
for the inclusion of a county whose boundary touches a ``primary 
county.'' The rule makes no distinction for boundaries that touch in 
water, and is not defining county boundaries in a different way than 
those boundaries are legally defined by States and local jurisdictions. 
In the past, counties on each side and separated by a wide body of 
water, such as Lake Michigan or the Pacific Ocean, have not been viewed 
as contiguous by USDA because the legal boundaries of those counties 
are not contiguous. No change in the definition is necessary.
    Comment: The definition of ``production losses (severe)'' needs to 
be clarified because it is unclear whether production losses include 
physical losses. If the intention is to limit production losses to only 
losses of production, the definition should state that physical losses 
are not included. There is a difference between physical and production 
losses resulting from natural disaster.
    Response: In the context of the rule ``physical losses'' means 
losses to a building or to stored goods and the like. Production 
losses--losses of growing crops--as defined in this rule do not include 
physical losses. The definition of ``production losses (severe)'' is 
clear that a loss of at least 30 percent or more of at least one crop 
(not property or things included in the rule's definition of physical 
losses) is a severe production loss for purposes of the rule. FSA does 
not believe that either the definition of production losses (severe) or 
the definition of severe physical losses require further amendment or 
    Comment: The definition for ``normal year's dollar value'' is 
unnecessary as the term is not used in the rule. Additionally, the 
definition is in conflict with other FSA regulations.
    Response: In response to this comment, the proposed definition has 
been removed and is not in this final rule.

Disaster Area Determination and Notification Process

    Comment: Of the methods in Sec.  759.5 for declaring a disaster 
(automatic process for drought, SEB recommendation, production losses 
of at least 30 percent, and Secretarial discretion for exceptions), 
only that in paragraph (b) (regarding recommendations by CEBs and 
SEBs), seems to require review by the FSA Deputy Administrator for Farm 
Programs. If the intent is not to use the method in paragraph (b) most 
of the time, but always use the other more lenient methods whenever 
possible, then there is no point in having that method, so paragraph 
(b) should be removed.
    Response: The CEB and SEB criteria requires the finding of a 30 
percent production loss and will likely be the most used option. By 
nature, those recommendations require review of some kind and therefore 
the rule provides for review by the Deputy Administrator. However, the 
rule allows for delegation of that review to the SED. Any SED disaster 
designation action may be reviewed by the Deputy Administrator for Farm 
Programs (DAFP) as appropriate. The special discretion for special 
cases where production losses are not at least 30 percent or where the 
automatic drought criteria are not met is intended for special cases 
only. We think that the review provisions are necessary and appropriate 
to assure as much consistency as possible. No change is made in 
response to this comment.
    Comment: USDA should notify Governors and State personnel when it 
receives a request for a designation from a CEB. It is important for 
Governors and States to have real time knowledge of agricultural 
disaster information and to ensure effective coordination and sharing 
of information. FSA should also notify Governors and State personnel 
when a disaster declaration is about to be made, before the general 
publication notification is made by USDA.
    Response: FSA will provide that notice when requested once the 
disaster has occurred with respect to designations for that particular 
disaster. Because of the streamlined procedures and the desire for a 
quick determination where such a determination is warranted and 
possible, FSA does not anticipate that every Governor and State 
personnel will ask for pre-notification. FSA will amend internal 
operating guidelines and handbooks to provide procedures for responding 
to requests for information about pending disaster designations from 
interested parties, including Governors and Tribal Councils. The 
procedure will be in the handbooks and internal guidelines rather than 
in the rule.
    Comment: The CEB does not meet regularly and in most cases the FSA 
County Executive Director (CED) compiles the information necessary for 
supporting designation requests. Recommend making CEB interchangeable 
with the CED.
    Response: FSA recognizes the valuable contribution by the CED in 
obtaining the information that will be used by a CEB or SEB to 
recommend the disaster designation. However, the CEB is comprised of 
representatives of several USDA agencies, including but not limited to 
FSA, that have responsibilities for reporting disasters and assessing 
the resulting damage caused. It provides a valuable coordination 
function between USDA agencies. CEB will meet as needed to promptly 
implement the procedures in this rule. No change is made to the rule in 
response to this comment.
    Comment: The regulation does not specify how information required 
by the CEB and SEB is collected and documented. There should be more 
specifics about what is required. For example, GIS maps should be 
required for all disaster designation requests, not just for drought.
    Response: The proposed rule provides procedure for the nearly 
automatic designations based on the Drought Monitor as well as the 
reliance upon the Loss Assessment Report (LAR) for those designation 
requests not meeting the automatic designation criteria. Information 
from which a LAR can be developed or produced can come from various 
sources. FSA does not intend to restrict or mandate the sources of 
information that may be considered by a CEB or SEB in assessing losses. 
However, FSA will issue internal operating guidelines that will provide 
instructions regarding necessary information and documentation that 
will be necessary to support recommendations. In the case of drought, 
the process will be nearly automatic, based on documentation provided 
by the Drought Monitor itself. We say ``nearly'' automatic because of 
the function that will be performed by FSA to identify eligible 
counties from the official reports and to prepare the notice. No change 
is made to the rule in response to this comment, but the subject matter 
will be addressed in FSA handbooks.
    Comment: The streamlined automatic designation process for drought 
could create designations for multiple counties in times of regional 
disasters. That could be confusing and cause disaster designations when 
one is not appropriate because the entire county was not impacted.
    Response: A disaster declaration is not the only eligibility 
requirement for FSA disaster assistance programs that depend on a 
declaration. Most also require some threshold of documented losses. 
While it is possible that a drought will not impact an entire county 
that has been declared a disaster, in that case the producers in the 
county who were not impacted will be unlikely to meet the other 
criteria for benefit

[[Page 41251]]

eligibility. The rules for designating a county as a disaster area when 
requirements are met based on information that may only be applicable 
to part of the county are not being modified by this rule. Generally, 
there is no requirement that the peril or perils that cause a county to 
be designated a disaster area have impacted all or most of a county. 
The authorizing legislation for FSA programs that rely on disaster 
designations consistently refer to county level disaster declarations, 
with no provisions to make designations for smaller areas. Furthermore, 
even if a more discrete declaration were permitted, attempting to 
identify specific affected locations within a county would be time-
consuming, uncertain, and would slow the process of making aid 
available without a justifiable and substantial countervailing benefit. 
Individual producers must still establish their loss and must establish 
that it is related to the disaster. No change is made in response to 
this comment.
    Comment: In the case of drought, the regulation should specify that 
when large areas of a State are impacted, counties affected should be 
combined as much as possible. The regulations should permit the SED to 
combine declarations, even if that means a 30- to 60-day delay until 
the data from the additional counties are known. That would make the 
disaster response process easier for States.
    Response: The current regulations permit a disaster declaration 
that includes multiple counties. That is not changing with this rule. 
However, in the case of a drought, the Secretary will designate that 
area a disaster area when the drought intensity threshold is met, 
without waiting to see if nearby counties reach the severe or extreme 
drought threshold. We see no persuasive point in delaying the process 
to see if other counties qualify. No change is made in response to this 
    Comment: The Drought Monitor is a valid tool; however, the problem 
is defining the line location for the drought area as it relates to a 
whole county. There may be instances where the Drought Monitor may 
accurately show that a small percent of a county has suffered due to 
drought; however, based on that data, an entire county may get the 
designation (based on drought). Recommend the CEB or CED determine if 
drought monitor conditions are reflective of conditions for the county 
and not just for the location of the monitor.
    Response: As specified in Sec.  759.5(a) of this rule, a loss 
assessment report (LAR) developed by the CEB is not required for 
disaster designation in the case of severe drought. Also, as noted 
above, a disaster declaration is not the only eligibility requirement 
for most FSA disaster assistance programs, and the authorizing 
legislation for FSA programs that rely on disaster designations 
consistently refer to county level disaster declarations, with no 
provisions to make designations for smaller areas. No change is made in 
response to this comment.
    Comment: The rule is unclear how an individual farmer, State 
Governor, Indian tribal council, or local governing body will initiate 
a request for designation.
    Response: Anyone can contact the Secretary or FSA and request a 
designation using any means, including a phone call, letter, or email, 
to report production losses or drought conditions to the CEB, as 
specified in this rule in Sec.  759.5. Time and prudent considerations 
may govern how that contact is made. In any case, we do not believe 
that it is necessary to specify the method of contact in the rule 
itself to allow flexibility.
    Comment: If anyone can request a disaster designation, this could 
greatly increase the workload for local staff. Recommend keeping the 
requirement for a request by the Governor or Indian Tribal Council.
    Response: The benefits to producers of allowing anyone to report 
losses, facilitating a more expedited disaster designation process, 
outweigh any perceived or alleged increases in workload.
    Comment: The new process will be more objective for drought. In the 
past, it was possible that some people could try to use undue influence 
to force the CEB to request a disaster even though conditions may not 
warrant a county-wide declaration process. What is being done to ensure 
that will not happen with the new process?
    Response: The general drought authority will rely on published 
reports. Where the CEB is involved in the process, there will be review 
of the disaster recommendation by the SEB and by the Secretary's 
designee. We believe that the provisions for review are sufficient and 
persons concerned about any disaster declaration are always free to 
make that feeling known to generate greater review in particular cases. 
No change is made in response to this comment.
    Comment: Governors or Indian tribal councils should have to seek 
designations. State governments and Indian tribal councils should not 
be removed from the process. A State may not want a designation 
approved. The drought might not be as severe as the Drought Monitor 
makes it seem, and a disaster declaration could scare away tourists.
    Response: USDA has the responsibility to designate disasters using 
consistent criteria for the entire nation, so that producers in all 
States and counties have an opportunity to be eligible for disaster 
assistance if they suffered losses in a disaster area. No change is 
made in response to this comment.
    Comment: The proposed designation process could compromise the 
integrity of the designation process by removing safeguards realized 
with a National review of designation requests. By removing the FSA 
National office review by impartial reviewers, politically appointed 
SEDs will be under increasing pressure to approve disaster 
designations, perhaps wrongly.
    Response: The FSA National office will still be responsible for 
oversight and spot check of the process as needed and we believe that 
the opportunity for review in the regulations is sufficient. Also, as 
indicated, problems with individual determination can always be raised 
to generate additional review. In this rule, Sec.  759.5 specifies that 
if the Secretary so chooses, authority may be delegated to make the 
designation at the State level, but that delegation is not automatic. 
At the State level, the SED may act based on a recommendation from the 
SEB. Such delegations may be limited to particular disasters. Section 
759.6 has also been changed from the proposed rule to remove proposed 
language referring to a disaster designation made by the SED to reflect 
that there must be a specific delegation as no SED is empowered by the 
regulations themselves to make the designation.
    Comment: Keep the old more complex process. Simplifying the process 
will result in more fraud, increasing the total government deficit.
    Response: As noted above, the FSA National office will conduct spot 
checks of disaster designations to ensure program integrity. The 
revised process is expected to result in faster disaster designations, 
but not more eligible disaster designations, as the rule does not 
materially change the conditions under which a designation could be 
    Comment: Need clarification on the discretionary exceptions from 
the definition of production losses 7 CFR 1945.6(c)(3)(iii)(C). Are 
they being removed? The previous definition allowed a disaster 
declaration if production losses have not met the 30 percent loss 
threshold, but other

[[Page 41252]]

conditions exist, including producers unable to get financing. 
According to the table in the preamble to the proposed rule, and the 
proposed new definition of production losses, it looks like the 
discretionary exceptions for production losses are removed from the 
definition section. Does that mean that the lack of getting a lender to 
finance is no longer included in the definition of production losses, 
and that we will be unable to obtain a disaster declaration based on 
financial hardship?
    Response: This rule does not remove the provisions allowing the 
Secretary discretionary authority to declare a disaster even if the 30 
percent production loss threshold has not been met. The discretionary 
exception provisions have been moved, not removed. The discretionary 
authority disaster designation process is specified in Sec.  759.5, 
rather than in the definitions section. It includes the number of 
farmers unable to obtain emergency financing as one of the factors the 
Secretary may consider in determining whether to use this discretionary 
authority. This rule does not modify EM procedures or policies. No 
change is made in response to this comment.
    Comment: The current designation process enables a Governor to best 
manage an agricultural disaster, including taking the necessary steps 
within the State in determining how and where the State is best served 
by seeking Federal relief through a disaster designation. Do not take 
the Governors out of the process. If each county has to independently 
advocate relief, the larger counties with more resources will be able 
to more vigorously and expeditiously make disaster designation 
requests, at the expense of more rural counties. This would not be 
fair, and would disable the Governor's ability to prioritize statewide 
    Response: The simplified and streamlined process does not remove 
authority of Governors to seek designations for any of the counties 
located in their respective State. The proposed rule also does not 
prohibit a Governor from taking any State level action in response to 
whatever concerns or needs that might arise following an emergency. In 
fact, the expedited designation process should be able to assist all 
localities with a faster disaster designation process. Local emergency 
response resources and their distribution are outside the scope of this 
rule. FSA will designate counties based on factual information about 
disaster conditions in counties large and small. No change is made in 
response to this comment.
    Comment: What if the same disaster causes both production and 
physical losses? Does the rule mean that both a Secretarial declaration 
and an Administrator's declaration of physical loss would be required 
in that case? If so, that seems more complicated, not less complicated, 
than the current procedure.
    Response: As specified in this rule in Sec.  759.6, the 
Administrator's declaration of physical loss process is used when only 
physical losses occur. When both production and physical losses occur, 
the Secretarial disaster designation process is used. No change is made 
in response to this comment.
    Comment: Eliminate the Presidential, Secretarial, and Administrator 
designations processes for the FSA EM and the FSA Supplemental Revenue 
Assistance Payments (SURE) Program. The current process is complicated 
and time consuming. Proposed rule is unclear if there will be any 
reduction of paperwork or other time requirements on county FSA 
offices. The rule does not appear to have very many benefits for 
individual producers.
    Response: USDA does not have authority to modify the disaster 
designation eligibility requirements for the SURE (should it be 
reauthorized) or EM program because these requirements are specified in 
authorizing laws. The streamlined process of processing requests for 
designations should benefit producers by providing disaster benefits 
more quickly. No change is made in response to this comment.

General Comments

    Comment: USDA should consider increasing the maximum income levels 
for benefit eligibility to allow farmers and ranchers in high cost 
areas to take advantage of more FSA program benefits.
    Response: USDA does not have authority to change the adjusted gross 
income provisions that apply to FSA program benefit eligibility to the 
extent that they are mandated by law and in other instances use of 
those provisions may help target benefits to those whose need is the 
greatest. In any event, this comment and issue are outside the scope of 
this rule. No change is made in response to this comment.
    Comment: Benefits for adjoining counties should be discontinued to 
help reduce potential fraud or less than credible claims. Disaster 
designations should only apply to the county and not other adjoining 
    Response: The proposed rule was meant to address only the process 
by which designations are made and hence this comment goes beyond the 
scope of this rule. The program specific rules include contiguous 
counties when specifically authorized for that program by law. However, 
some additional language has been added to clarify that the rules about 
contiguous counties should be resolved by the regulations particular to 
each program. That said, the designation regulations have traditionally 
carried provisions dealing with that issue specifically for the EM 
program and this rule continues that practice. As some point we will 
consider moving the substantive EM provisions to the EM regulations 
themselves. The EM regulations are found in 7 CFR part 764. The EM 
regulations require a disaster as a predicate for an EM loan and under 
the general definitions in 7 CFR part 761 a ``disaster'' requires an 
FSA designation. This rule specifies that the FSA designation will 
include not only those that involve a Secretarial designation under 
these rules but the EM Program will also consider as designated 
counties eligible to trigger EM loans those counties that are the 
subject of the other kinds of disaster determinations noted above. The 
provisions addressing EM qualifications appear in 7 CFR 759.6 of the 
regulations adopted in this rule. To avoid confusion, 7 CFR part 759 as 
clarified in this rule will specify that unless otherwise indicated in 
the regulations for the actual benefit program, or in 7 CFR 759.6, for 
purpose of administering disaster assistance only the primary county 
will be considered the disaster county. That is, producers in the 
contiguous county will only be able to qualify for disaster assistance 
if the disaster assistance regulations or, in the case of EM, 7 CFR 
759.6, provide for such eligibility. This is consistent with long-
standing practice, and provisions in authorizing laws, and involves no 
change in policy.
    Comment: The more timely designations may place an even greater 
burden on local governments who have limited staff to help with 
disaster response and the recovery process.
    Response: This rule does not require any specific action by a local 
government to assist with USDA's disaster designation process. In fact, 
it removes the requirement for a request for disaster designation by 
the Governor or Tribal Council. The more rapid designation of disasters 
should help identify where response is most urgently needed, allowing 
local governments to focus resources on where it is needed the most. No 
change is made in response to this comment.

[[Page 41253]]

Miscellaneous Change

    This rule also removes the abbreviation for NASS, the USDA National 
Agricultural Statistics Service, which only appeared in a definition in 
the proposed rule that is not included in this final rule.

Effective Date

    The administrative procedure provisions in 5 U.S.C. 553(d) require 
that a substantive rule be published ``not less than 30 days before its 
effective date.'' As specified in 5 U.S.C. 553(d), exceptions to the 
30-day post publication effective period include: (1) A substantive 
rule which grants or recognizes an exemption or relieves a restriction; 
(2) interpretative rules and statements of policy; and (3) as otherwise 
provided by the agency for good cause found and published with the 
rule. Here, however, the substance of this final rule was published in 
the proposed rule that was published more than 30 days prior to the 
publication of this final rule. Moreover, even if that should not be 
deemed to suffice, FSA finds that all of the exceptions apply. In fact, 
the rule relieves restrictions that the Secretary had placed on USDA's 
own internal processes, policy, and rules in order to expedite and make 
more efficient timely designations. Also, this rule makes substantive 
changes only with respect to USDA's own operations and thus involves 
matters of agency policy not of regulations in the normal sense. This 
rule accordingly involves, in terms of its changes, an agency statement 
of policy. Further, this rule will, with no negative countervailing 
considerations, provide a benefit to the public by providing more 
timely disaster relief. For that reason, any delay in implementing this 
rule is in the opinion of the agency, contrary to the public interest. 
Accordingly, this rule is made effective immediately upon filing for 
public inspection.

Executive Order 12866 and 13563

    Executive Order 12866, ``Regulatory Planning and Review,'' and 
Executive Order 13563, ``Improving Regulation and Regulatory Review,'' 
direct agencies to assess all costs and benefits of available 
regulatory alternatives and, if regulation is necessary, to select 
regulatory approaches that maximize net benefits (including potential 
economic, environmental, public health and safety effects, distributive 
impacts, and equity). Executive Order 13563 emphasized the importance 
of quantifying both costs and benefits, of reducing costs, of 
harmonizing rules, and of promoting flexibility.
    The Office of Management and Budget (OMB) designated this rule as 
not significant under Executive Order 12866 and, therefore, OMB has not 
reviewed this final rule.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601-612), as amended by 
the Small Business Regulatory Enforcement Fairness Act of 1996 
(SBREFA), generally requires an agency to prepare a regulatory 
flexibility analysis of any rule subject to the notice and comment 
rulemaking requirements under the Administrative Procedure Act (5 
U.S.C. 553) or any other statute, unless the agency certifies that the 
rule will not have a significant economic impact on a substantial 
number of small entities. FSA has determined that this rule will not 
have a significant impact on a substantial number of small entities. 
New provisions of this rule will not impact a substantial number of 
small entities to a greater extent than large entities. FSA anticipates 
that the rule will not require submission of any additional information 
by the public. It is expected to be revenue neutral, neither increasing 
nor decreasing benefits for producers as a whole. Therefore, FSA 
certifies that this rule will not have a significant economic impact on 
a substantial number of small entities.

Environmental Review

    FSA has determined that these changes would not constitute a major 
Federal action that would significantly affect the quality of the human 
environment. Therefore, in accordance with the provisions of the 
National Environmental Policy Act (NEPA), 42 U.S.C. 4321-4347, the 
regulations of the Council on Environmental Quality (40 CFR parts 1500-
1508), and FSA regulations for compliance with NEPA (7 CFR part 799), 
no environmental assessment or environmental impact statement will be 

Executive Order 12372

    Executive Order 12372, ``Intergovernmental Review of Federal 
Programs,'' requires consultation with State and local officials. The 
objectives of the Executive Order are to foster an intergovernmental 
partnership and a strengthened Federalism, by relying on State and 
local processes for State and local government coordination and review 
of proposed Federal Financial assistance and direct Federal 
development. This rule neither provides Federal financial assistance or 
direct Federal development; it does not provide either grants or 
cooperative agreements. Therefore, this rule is not subject to 
Executive Order 12372.

Executive Order 12988

    This rule has been reviewed in accordance with Executive Order 
12988, ``Civil Justice Reform.'' This rule preempts State and local 
laws, regulations, or policies that are in conflict with the provisions 
of this rule. The rule will not have retroactive effect.

Executive Order 13132

    This rule has been reviewed under Executive Order 13132, 
``Federalism.'' As this rule does not require any action by any State, 
the policies contained in this rule do not have any substantial direct 
effect on States, the relationship between the Federal government and 
the States, or the distribution of power and responsibilities among the 
various levels of government. Nor does this final rule impose 
substantial direct compliance costs on State and local governments. 
Therefore, consultation with the States is not required.

Executive Order 13175

    This rule has been reviewed for compliance with Executive Order 
13175, ``Consultation and Coordination with Indian Tribal 
Governments.'' This Executive Order imposes requirements on the 
development of regulatory policies that have Tribal implications or 
preempt Tribal laws. The USDA Office of Tribal Relations has concluded 
that the policies contained in this rule do not, to our knowledge 
conflict with any Tribal law and therefore does not preempt Tribal law. 
Were there a conflict, the provisions of the regulations would prevail 
as far as administering the federal programs that are affected by the 
    Before publishing the proposed rule, FSA consulted with the USDA 
Office of Tribal Relations and has concluded that this rule will not, 
to our knowledge, have a substantial direct effect on Indian tribes and 
no formal Tribal consultation under E.O. 13175 is required. FSA will 
conduct an informational forum (telephone call or webinar) to answer 
questions about this rule from all interested Indian Tribes soon after 
this rule has been published.

The Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA, Pub. L. 
104-4) requires Federal agencies to assess the effects of their 
regulatory actions on State, local, and Tribal governments or the 
private sector. Agencies generally must prepare a written statement, 
including a cost

[[Page 41254]]

benefit analysis, for proposed and final rules with Federal mandates 
that may result in expenditures of $100 million or more in any 1 year 
for State, local, or Tribal governments, in the aggregate, or to the 
private sector. UMRA generally requires agencies to consider 
alternatives and adopt the more cost effective or least burdensome 
alternative that achieves the objectives of the rule. This final rule 
contains no Federal mandates, as defined under title II of the UMRA, 
for State, local, and Tribal governments or the private sector. Thus, 
this proposed rule does not trigger the requirements of sections 202 
and 205 of UMRA.

Paperwork Reduction Act of 1995

    The amendments in this final rule require no revision to the 
information collection that was previously approved by OMB under 
control number 0560-0170. Although this rule streamlines the disaster 
designation process, including removing the requirement for a State 
Governor or Indian Tribal Council to initiate a request for a 
Secretarial disaster designation, it does not prohibit that action and 
may therefore not result in a reduction in burden hours. Any change in 
burden hours will be documented in the next information collection 

E-Government Act Compliance

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

Federal Assistance Program

    These changes affect the following FSA program listed in the 
Catalog of Federal Domestic Assistance:
    10.404--Emergency Loans

List of Subjects

7 CFR Part 759

    Administrative practice and procedure, Agriculture, Authority 
delegations, Disaster assistance, Loan programs--Agriculture, Reporting 
and recordkeeping requirements.

7 CFR Part 762

    Agriculture, Credit, Loan programs--Agriculture.

7 CFR Part 1945

    Agriculture, Disaster assistance, Drug traffic control, Loan 
programs--Agriculture, Reporting and recordkeeping requirements.

    For the reasons discussed above, FSA adds 7 CFR part 759, amends 7 
CFR part 762, and under the authority of 7 U.S.C. 1989, removes 7 CFR 
part 1945 as follows:


1. Add a new part 759 to read as follows:


759.1 Administration.
759.2 Purpose.
759.3 Abbreviations and definitions.
759.5 Secretarial disaster area determination and notification 
759.6 EM to be made available.

    Authority: 5 U.S.C. 301, 7 U.S.C. 1961 and 1989.

Sec.  759.1  Administration.

    (a) This part will be administered under the general supervision 
and direction 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 part as amended or 
    (c) The Administrator will take any action required by the 
regulations of this part that the Administrator determines has not 
already been taken. The Administrator will also:
    (1) Correct or require correction of any action taken that is not 
in accordance with the regulations of this part; or
    (2) Require withholding taking any action that is not in accordance 
with this part.
    (d) No provision or delegation in these regulations will preclude 
the Administrator or a designee or other such person, from determining 
any question arising under this part, or from reversing or modifying 
any determination made under this part.
    (e) Absent a delegation to the contrary, this part will be 
administered by the Deputy Administrator for Farm Programs of FSA on 
behalf of the Administrator of FSA or the Secretary, but nothing in 
this part will inhibit the ability of the Administrator of FSA or the 
person holding the equivalent position in the event of a reorganization 
to delegate the functions of DAFP under these regulations to another 
person. Likewise, nothing shall inhibit the ability of the Secretary to 
reassign any duties with respect to the designations of disasters under 
this part.

Sec.  759.2  Purpose.

    (a) This part specifies the types of incidents that can result in 
an area being determined a disaster area, which under other regulations 
makes qualified farmers in such areas eligible for Emergency loans (EM) 
or eligible for such other assistance that may be available, based on 
Secretarial disaster designations. Nothing in this part overrides 
provision of those regulations that govern the actual administration 
and availability of the disaster assistance regulations.
    (b) This part specifies the responsibility of the County Emergency 
Board (CEB), State Emergency Board (SEB), and the State Executive 
Director (SED) in regard to Secretarial Designations with regards to 
disasters. It also addresses matters relating to the handling of a 
Presidential declaration of disaster or the imposition of a USDA 
quarantine by the Secretary with respect to triggering the availability 
of EM loans.

Sec.  759.3  Abbreviations and definitions.

    (a) Abbreviations. The following abbreviations apply to this part.
    CEB means the County Emergency Board.
    CED means the County Executive Director.
    DAFP means the Deputy Administrator for Farm Programs of the Farm 
Service Agency.
    EM means Emergency loan administered under 7 CFR part 764.
    FSA means the Farm Service Agency.
    LAR means the Loss Assessment Report.
    SEB means the State Emergency Board.
    SED means the State Executive Director.
    USDA means the United States Department of Agriculture.
    (b) Definitions. The following definitions apply to this part.
    Administrator means the Administrator of FSA.
    Contiguous county is used in reference to a primary county as 
defined in this section. A contiguous county is any county whose 
boundary touches at any point with that of the primary county. For 
programs other than the EM Program, disaster assistance regulations 
will specify whether benefits will be available only in the primary 
counties or also in the contiguous counties. For the EM Program that 
issue is addressed in Sec.  759.6, unless specified otherwise in the 
disaster assistance regulations for other programs or in Sec.  759.6 
for the EM Program, only the ``primary'' county will be considered the 
qualifying ``disaster county.'' Therefore, if the disaster assistance 
regulations specify that they cover the disaster area and contiguous 
counties, then the only eligible counties would be the primary county 
and those contiguous to that

[[Page 41255]]

county. Coverage would not include coverage of those counties that are 
in turn contiguous to those counties that are contiguous to the primary 
    County is used when referring to a geographical area, a local 
administrative subdivision of a State or a similar political 
subdivision of the United States generally considered to be in county 
usage, for example, it includes an area referred to as a ``county'' or 
``parish.'' Except where otherwise specified, the use of the term 
county or similar political subdivision is for administrative purposes 
    CEB is comprised of the representatives of several USDA agencies 
that have responsibilities for reporting the occurrence of, and 
assessing the damage caused by, a natural disaster, and for requesting 
approval in declaring a county a disaster area.
    CED is the person in charge of administering the local FSA county 
office for a particular county.
    Disaster area is the county or counties declared or designated as a 
disaster area as a result of natural disaster related losses. The 
disaster area only includes the primary counties, but benefits may be 
available in the counties contiguous to the primary county if so 
provided by the disaster assistance regulations or, in the case of the 
EM Program, in Sec.  759.6.
    LAR is a loss assessment report prepared by the CEB relating to the 
State and county where the potential disaster occurred and for which 
county or counties the CEB is responsible. The LAR includes as 
applicable, but is not limited to, starting and ending dates of the 
disaster, crop year affected, type of disaster incident, area of county 
affected by disaster; total number of farms affected, crop loss or 
pasture loss data associated with the applicable disaster (or both 
types of losses), livestock destroyed, and other property losses.
    Natural disaster is a disaster in which unusual and adverse weather 
conditions or other natural phenomena have substantially affected 
farmers by causing severe physical losses, severe production losses, or 
    Primary county is a county determined to be a disaster area.
    Presidential declaration is a declaration of a disaster by the 
President under the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act (42 U.S.C. 5121-2) requiring Federal emergency 
assistance to supplement State and local efforts to save lives and 
protect property, public health and safety, or to avert or lessen the 
threat of a disaster.
    Production losses (severe) within a county are those in which there 
has been a reduction county-wide of at least a 30 percent or more loss 
of production of at least one crop in the county.
    SEB means the State Emergency Board which is comprised of the 
representatives of several USDA agencies having emergency program 
responsibilities at the State level. The board is required to respond 
to emergencies and carry out the Secretary's emergency preparedness 
    SED is the person who serves as the Chairperson of the USDA SEB in 
each State, is responsible for providing the leadership and 
coordination for all USDA emergency programs at the State level, and is 
subject to the supervision of DAFP.
    Severe physical losses means, for the purpose of determining an 
Administrator's declaration of physical loss, losses that consist of 
severe damage to, or destruction of: Physical farm property including 
farmland (except sheet erosion); structures on the land including, but 
not limited to, building, fences, dams; machinery, equipment, supplies, 
and tools; livestock, livestock products, poultry and poultry products; 
harvested crops and stored crops.
    Substantially affected when used to refer to producers and to the 
relationship of a particular producer to a particular disaster means a 
producer who has sustained qualifying physical or production losses, as 
defined in this section, as a result of the natural disaster.
    U.S. Drought Monitor is a system for classifying drought severity 
according to a range of abnormally dry to exceptional drought. It is a 
collaborative effort between Federal and academic partners that is 
produced on a weekly basis to synthesize multiple indices, outlooks, 
and drought impacts on a map and in narrative form. This synthesis of 
indices is reported by the National Drought Mitigation Center.
    United States means each of the several States, the Commonwealth of 
Puerto Rico, the Virgin Islands of the United States, Guam, American 
Samoa, and the Commonwealth of the Northern Mariana Islands. Extension 
of disaster assistance, following a disaster designation, to insular 
areas of the United States not covered by this definition of ``United 
States'' will be only as authorized by law, and as determined by the 
Administrator on behalf of the Secretary to be appropriate.

Sec.  759.5  Secretarial disaster area determination and notification 

    (a) U.S. Drought Monitor. With respect to drought and without 
requiring an LAR:
    (1) If any portion of a county is physically located in an area 
with a Drought Monitor Intensity Classification value of D3 (drought-
extreme) or higher during any part of the growing season of the crops 
affected by the disaster in the county, then the county will be 
designated a disaster area by the Secretary.
    (2) If any portion of a county meets the threshold Drought Monitor 
Intensity Classification value of D2 (drought-severe) for at least 8 
consecutive weeks during the growing season of affected crops, then the 
county will be designated a disaster area by the Secretary.
    (b) CEB and SEB recommendations. In instances where counties have 
been impacted by a disaster but the county has not been designated a 
disaster area under the provisions of paragraph (a) of this section, 
CEB will make a disaster designation recommendation request to SEB when 
a disaster has resulted in severe production losses. The determination 
of the sufficiency of the production losses will be governed by the 
provisions in paragraph (c) of this section. The CEB may make such 
efforts as are needed to identify counties that have been impacted and 
had such production losses. A farmer, Indian Tribal Council, or local 
governing body may initiate the process by reporting production losses 
or drought conditions to CEB and suggesting that there be a 
recommendation in favor of designating a county as a disaster area. 
Recommendations by a CEB in favor of a disaster designation by a CEB 
under this paragraph are subject to the following:
    (1) A LAR is required as part of a CEB disaster designation 
request. CEB will submit a disaster designation request with a LAR to 
SEB for review and recommendation for approval by the Secretary. CEB's 
written request and SEB recommendation must be submitted within three 
months of the last day of the occurrence of a natural disaster.
    (2) If SEB determines a qualifying natural disaster and loss have 
occurred, SEB will forward the recommendation to the Administrator. The 
natural disaster may include drought conditions that were not 
sufficiently severe to meet the criteria in paragraph (a) of this 
section. Since the U.S. Drought Monitor tracks only drought conditions, 
not specifically agricultural losses resulting from those conditions, 
it is possible for

[[Page 41256]]

a drought that does not meet the criteria in paragraph (a) of this 
section to result in production losses that constitute a natural 
    (3) The Secretary or the Secretary's designee will make disaster 
area determinations. The Secretary may delegate the authority to the 
SED. In such case, the SED will act on behalf of the Secretary, subject 
to review by DAFP as may be appropriate and consistent with the 
delegation. The delegation of authority to the SED may be revoked by 
the authority making that delegation or by other authorized person. In 
all cases, DAFP may reverse any SED determination made in accordance 
with this section unless the delegation to the SED specifies that such 
review is not allowed.
    (c) Eligible production losses. For purposes of making 
determinations under paragraph (b) of this section, in order for an 
area to be declared a disaster area under paragraph (b) of this section 
based on production losses, the county must have had production losses 
of 30 percent of at least one crop in the county as the result of a 
natural disaster.
    (d) Discretionary exception to production losses for designating a 
county as a disaster county. For purposes of the EM program only, 
unless otherwise specified in the designation, a county may be 
designated by DAFP as a designated disaster county even though the 
conditions specified in paragraphs (a) through (c) of this section are 
not present so long as the disaster has otherwise produced such 
significant production losses, or other such extenuating circumstances 
so as to justify, in the opinion of the Secretary, the designation of a 
county as a disaster area. In making this determination, the Secretary 
may consider all relevant factors including such factors as the nature 
and extent of production losses; the number of farmers who have 
sustained qualifying production losses; the number of farmers that 
other lenders in the county indicate they will not be in position to 
provide emergency financing; whether the losses will cause undue 
hardship to a certain segment of farmers in the county; whether damage 
to particular crops has resulted in undue hardship; whether other 
Federal or State benefit programs, which are being made available due 
to the same disaster, will consequently lessen undue hardship and the 
demand for EM; and any other factors considered relevant.

Sec.  759.6  EM to be made available.

    (a) For purposes of the EM Program under part 764, subpart I, of 
this chapter, a county will be considered an eligible disaster area as 
designated by FSA for coverage of the EM Program as follows:
    (1) Secretarial designations. When production losses meet the 
requirements in Sec.  759.5 and the county has been designated as a 
disaster area for that reason, or when the discretionary exception to 
production losses for EM under Sec.  759.5(d) has been exercised, the 
primary and contiguous counties will be areas in which otherwise 
eligible producers can receive EM loans.
    (2) Physical loss notification. When only qualifying physical 
losses occur, the SED will submit a request to the FSA Administrator to 
make a determination that a natural disaster has occurred in a county, 
resulting in severe physical losses. If the FSA Administrator 
determines that such a natural disaster has occurred, then EM can be 
made available to eligible farmers for physical losses only in the 
primary county (the county that was the subject of that determination) 
and the counties contiguous to that county.
    (3) USDA quarantine. Any quarantine imposed by the Secretary of 
Agriculture under the Plant Protection Act or the animal quarantine 
laws, as defined in section 2509 of the Food, Agriculture, 
Conservation, and Trade Act of 1990, automatically authorizes EM for 
production and physical losses resulting from the quarantine in a 
primary county (the county in which the quarantine was in force) and 
(where the quarantine effects extend beyond that county) the counties 
contiguous to that primary county.
    (4) Presidential declaration. Whenever the President declares a 
Major Disaster Declaration or an Emergency Declaration, FSA will make 
EM available to eligible applicants in declared and contiguous 
counties, provided:
    (i) The Presidential declaration is not solely for Category A or 
Category B Public Assistance or Hazard Mitigation Grant Assistance, and
    (ii) The Presidential Major Disaster declaration is for losses due 
to severe, general disaster conditions including but not limited to 
conditions such as flood, hurricane, or earthquake.
    (b) [Reserved]


2. The authority citation for part 762 would continue to read as 

    Authority:  5 U.S.C. 301 and 7 U.S.C. 1989.

Sec.  762.106  [Amended]

3. Amend Sec.  762.106(b)(2) and (c)(4) by removing the reference 
``part 1945, subpart A of this title'' and adding in its place each 
time it appears ``Sec.  761.2(b) and part 759 of this chapter''.



4. Remove part 1945.

    Signed on July 10, 2012.
Karis T. Gutter,
Under Secretary, Farm and Foreign Agricultural Services.
    Signed on July 10, 2012.
Dallas Tonsager,
Under Secretary, Rural Development.
[FR Doc. 2012-17137 Filed 7-12-12; 8:45 am]