Agriculture Risk Coverage and Price Loss Coverage Programs, 57703-57721 [2014-22879]

Download as PDF 57703 Rules and Regulations Federal Register Vol. 79, No. 187 Friday, September 26, 2014 This section of the FEDERAL REGISTER contains regulatory documents having general applicability and legal effect, most of which are keyed to and codified in the Code of Federal Regulations, which is published under 50 titles pursuant to 44 U.S.C. 1510. The Code of Federal Regulations is sold by the Superintendent of Documents. Prices of new books are listed in the first FEDERAL REGISTER issue of each week. DEPARTMENT OF AGRICULTURE Farm Service Agency 7 CFR Part 718 Commodity Credit Corporation 7 CFR Parts 1412 and 1416 RIN 0560–AI24 Agriculture Risk Coverage and Price Loss Coverage Programs Commodity Credit Corporation and Farm Service Agency, USDA. ACTION: Final rule. AGENCY: This rule implements the new Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) Programs authorized by the Agricultural Act of 2014 (the 2014 Farm Bill). It also includes conforming changes to certain Farm Service Agency (FSA) regulations that apply to multiple programs. ARC and PLC provide producers a choice between a program that provides counter-cyclical type of payment support—PLC, and a revenue support type of program—ARC. During a defined election period, current producers can elect different programs for different covered commodities on a farm, for example, choosing PLC for corn and ARC county option for soybeans on the same farm. ARC offers the additional choice of a revenue guarantee based on average revenue for a county or on actual historical revenue for an individual farm. If a producer elects ARC individual coverage based on historical revenue for that specific farm, however, all the farm’s covered commodities are elected with that option, with no option for PLC on that farm. This rule specifies the eligibility requirements, enrollment procedures, and payment calculations for ARC and PLC. asabaliauskas on DSK5VPTVN1PROD with RULES SUMMARY: VerDate Sep<11>2014 17:52 Sep 25, 2014 Jkt 232001 Effective date: September 26, 2014. First annual enrollment date: By June 1, 2015, for the 2014 and 2015 crop years. FOR FURTHER INFORMATION CONTACT: Brent Orr; telephone: (202) 720–7641. Persons with disabilities who require alternative means for communication should contact the USDA Target Center at (202) 720–2600. SUPPLEMENTARY INFORMATION: DATES: Background The 2014 Farm Bill (Pub. L. 113–79) authorizes the new ARC and PLC Programs. ARC and PLC are Commodity Credit Corporation (CCC) programs operated for CCC by FSA. This rule discusses: • The basic structure for all payments to farms and producers under the ARC and PLC Programs; • The one-time opportunity owners will have to reallocate base acres; • The one-time opportunity for owners to update yields; • The one-time irrevocable program election that is required from all producers on a farm for the 2014 through 2018 crop years; and • The opportunity for producers to annually enroll farms in ARC and PLC each year from 2014 through 2018. As specified in the 2014 Farm Bill, the following are covered commodities under ARC and PLC: wheat, oats, and barley (including wheat, oats, and barley used for haying and grazing); corn; grain sorghum; long grain rice; medium grain rice; pulse crops; soybeans; other oilseeds; and peanuts. This is the same list of commodities that were previously eligible for Average Crop Revenue Election (ACRE) Program and the counter-cyclical payments portion of the previous Direct and Counter-cyclical Payment Program (commonly known as DCP), which were repealed by the 2014 Farm Bill, except that cotton is not a covered commodity. In separate rulemaking implementing the Cotton Transition Assistance Payment (CTAP) Program, published on August 8, 2014 (79 FR 46335–46348), FSA previously explained that what were upland cotton base acres under the 2008 Farm Bill are now ‘‘generic base acres’’ under ARC and PLC. Provisions for generic base acres are described in detail later in this document. In that separate rulemaking, FSA also PO 00000 Frm 00001 Fmt 4700 Sfmt 4700 implemented some of the general provisions applicable to ARC and PLC (such as the requirement to report all cropland acres on a farm, and planting flexibility provisions), so those provisions are already in the regulation in 7 CFR part 1412. The rule specifies what farms are eligible for ARC and PLC, what producers are eligible, actions that owners and producers must perform to be eligible for payments, election periods, and enrollment periods. Enrollment for both the 2014 and 2015 crop year will take place by June 1, 2015. That means that producers will have planted and harvested their 2014 crops before: (1) Farm owners update their farm’s planting history and yields; (2) Farm owners reallocate base acres; (3) Producers make election; and (4) Producers make annual enrollment decisions. Producers will know their 2014 planted acres and actual yields before they decide whether to elect and subsequently enroll for ARC or PLC. Several universities have partnered with USDA to provide web-based decision tools and calculators to help producers evaluate the available options under these programs for their farm, and these tools and calculators will be available in time for election decisions. Any payments under ARC or PLC for the 2014 crop year will not be issued until late 2015 because, as specified in the 2014 Farm Bill, payments cannot be made until after October 1, 2015. Overview of ARC and PLC Both the 2014 Farm Bill and the Food, Conservation, and Energy Act of 2008 (Pub. L. 110–246, referred to as the 2008 Farm Bill) included a choice between two types of commodity programs. Both the 2008 and 2014 Farm Bills give producers a choice between a revenue program whose revenue target can move up and down with the market and a price program whose target price is fixed for the duration of the respective Farm Bill. In nearly all cases, eligible producers for ARC and PLC would also have been eligible for DCP and ACRE, the previous programs authorized by the 2008 Farm Bill that were repealed by the 2014 Farm Bill. ARC and ACRE both establish revenue targets, not price targets. The guarantee for ARC elected with county option (ARC–CO) is based on average E:\FR\FM\26SER1.SGM 26SER1 asabaliauskas on DSK5VPTVN1PROD with RULES 57704 Federal Register / Vol. 79, No. 187 / Friday, September 26, 2014 / Rules and Regulations yields and U.S. crop market year average (MYA) prices as was the guarantee revenue target for ACRE. A 5year Olympic average is used for yields (removing high and low) of the past 5 years under both ARC–CO and ACRE. ARC–CO uses a 5-year Olympic average (removing high and low) for price while ACRE used a 2-year average. This means that under ARC–CO as with ACRE, the guarantee moves with the market (increasing when market revenue is increasing and decreasing when market revenue is decreasing). The guarantee for ARC elected with individual farm coverage option (ARC– IC) is based on average revenues at the farm level. The guarantee for ARC–IC is the farm’s individual benchmark revenue based on the 5-year average of the annual benchmark revenues excluding the years with the highest and lowest annual revenues then averaging against all crops on the farm. (Benchmark revenue calculations are described in more detail later in this document.) Under ACRE, producers who elected ACRE agreed to a reduction in direct payments on the farm. The 2014 Farm Bill contains no direct payments. Under the 2008 Farm Bill, the yield for the State was used to determine the ACRE guarantee. Under the 2014 Farm Bill, the yield for the county is used for ARC–CO. ARC is likely to provide better protection against low yield than ACRE did because producer yields are likely to be better represented by yields in their farm’s county than in their State, because of similar growing conditions in the smaller geographic area of a county. Under ACRE, producers agreed to a reduction in a crop’s loan rate for marketing assistance loans (MALs) and loan deficiency payments (LDPs); no similar loan rate reduction applies to producers on farms that elect ARC (loan rates for commodities are the same regardless of election). PLC prices are set in the 2014 Farm Bill for the duration of the 2014 Farm Bill, as was the case with DCP with respect to the 2008 Farm Bill. For PLC, these are called reference prices. PLC makes payments based on historical base acres, although the base acres of covered commodities under the 2014 Farm Bill may differ from those under the 2008 Farm Bill based on the option owners have to reallocate base acres of covered commodities, upland cotton not being a covered commodity, and the use of generic base acres. (Base acre reallocation is described in more detail later in this document.) Under ARC and PLC, generic base acres planted to a covered commodity will be recognized as base acres of the planted covered VerDate Sep<11>2014 17:52 Sep 25, 2014 Jkt 232001 commodity in certain instances (without regard to the base acres of that covered commodity that may be on the farm). In other words, when there are generic base acres on a farm and covered commodities are planted or there are eligible subsequently planted crop acreage, the acres planted to the covered commodity or eligible subsequently planted crop acreage that are attributed to the generic base acres become base acres of the covered commodity for the purposes of ARC and PLC, thereby increasing the base acres of that covered commodity on the farm (by virtue of planting covered commodities, or eligible subsequently planted crop acreage on generic base acres) only in the year of planting. As specified in § 1412.45, generic base acres on a farm will be attributed to a covered commodity as follows: 1. If a single covered commodity is planted or is eligible subsequently planted crop acreage and the total planted or eligible subsequently planted crop acreage exceeds the generic base acres on the farm, the generic base acres are attributed to that covered commodity in an amount equal to the total number of generic base acres on the farm. 2. If multiple covered commodities are planted or are eligible subsequently planted crop acreage and the total number of acres planted or eligible subsequently planted crop acreage to all covered commodities on the farm exceeds the generic base acres on the farm, the generic base acres will be attributed to each of the covered commodities on the farm on a pro rata basis to reflect the ratio of: • The planted and eligible subsequently planted crop acreage to a covered commodity on the farm; to • The total planted and eligible subsequently planted crop acreage to all covered commodities on the farm. 3. If the total number of planted and eligible subsequently planted crop acreage to all covered commodities on the farm does not exceed the generic base acres on the farm, the number of planted and eligible subsequently planted crop acreage to a covered commodity is attributed to that covered commodity. In the 2014 Farm Bill, there is the one-time program irrevocable election between the ARC and PLC Programs that must be made by all current producers on a farm (current owners who have a share of crops on the farm are included as current producers). In contrast, under the 2008 Farm Bill, once a farm’s producers and owners elected ACRE, the decision was irrevocable from the year of election through the 2012 crop year and an election for only the 2013 crop year was required for the 1-year extension of the 2008 Farm Bill. If ACRE was not elected in a crop year, the producers and owners on the farm could elect ACRE in the next crop year. PO 00000 Frm 00002 Fmt 4700 Sfmt 4700 Under the 2014 Farm Bill, all current producers on a farm are required to affirmatively and unanimously elect PLC or ARC during the single election period, and, if an election is not made, the farm will be ineligible for payments in the 2014 crop year and default to PLC for the 2015 through 2018 crop years. This provision is specified in the 2014 Farm Bill and neither FSA nor CCC has any discretion to specify a different policy for farms that do not have a valid election made during the election period. Farms with producers who do not make a valid election in the election period announced in this rule will not be eligible for 2014 crop year payments. Under the 2008 Farm Bill, producers were ineligible for payments under the DCP and ACRE if the sum of base acres of covered commodities and peanuts on a farm was 10 acres or less. The 10-acre limitation did not apply to producers on a farm that was at least 50 percent owned by a socially disadvantaged farmer or rancher or a limited resource farmer or rancher. The 2014 Farm Bill likewise has a 10-acre limitation; however, producer payment eligibility on a farm having 10 or less base acres (including generic base acres) is no longer contingent upon the ownership of the farm. Rather, it depends solely on the number of base acres. A producer is not eligible for ARC or PLC payments on a farm having a sum total of 10 or less base acres; however, if that producer is a socially disadvantaged farmer or rancher or a limited resource farmer or rancher, such limitation does not apply. ARC and PLC Decisions Must Be Made by Current Owners and Current Producers This rule includes specific actions that must be made by owners and producers. The timing of enactment of the 2014 Farm Bill and publication of this regulation require FSA to distinguish ‘‘current owners’’ and ‘‘current producers’’ under this rule from ‘‘owners’’ and ‘‘producers’’ as defined in 7 CFR part 718. Many of the actions required under ARC and PLC (updating of planted and considered planted (P&CP) acres, reallocation of base acres, and yield updates) can only be made by the farm’s current owners as of the date of those actions. As is discussed in greater detail below, current producers will be required to unanimously elect ARC or PLC during the specified election period and such election is irrevocable. That election period will be announced in a press release. The terms ‘‘current owner’’ and ‘‘current producer’’ are defined in this rule to mean the person or legal entity who is the owner or producer, as E:\FR\FM\26SER1.SGM 26SER1 Federal Register / Vol. 79, No. 187 / Friday, September 26, 2014 / Rules and Regulations asabaliauskas on DSK5VPTVN1PROD with RULES applicable, on the date the action, which is required by this rule, is actually made (during a prescribed period). Defining these terms is a clarification necessary to determine who is included as the relevant owner or producer eligible for the actions required under the ARC and PLC Programs. Following the election period, enrollment will occur. Producers who were producers in 2014 (2014 producers on the farm) are eligible for 2014 enrollment; 2015 and subsequent crop year producers on a farm are eligible for 2015 and subsequent crop year enrollment. The core principle is that if the producers change from year to year, the producers who were on the farm in a given year are the ones who make the enrollment for that year, even if they are different from last year, and different from the ones who made the election. Base Acres Base acres are a key part of the payment formulas for CTAP, ARC, and PLC. Section 1111 of the 2014 Farm Bill specifies that the base acres in effect under sections 1001 and 1301 of the 2008 Farm Bill (7 U.S.C. 8702 and 8751), as adjusted, as of September 30, 2013, and used for DCP and ACRE constitute the base acres for CTAP, ARC, and PLC, subject to any reallocation, adjustment, or reduction as specified in Section 1112 of the 2014 Farm Bill. The 2014 Farm Bill requires adjustments to base acres for various reasons including, but not limited to, land no longer being devoted to agricultural uses. The term base acres includes generic base acres, which are the same as upland cotton base acres (upland cotton base acres are used only for CTAP; generic base acres are used in ARC and PLC). As is discussed in more detail later in this document, ARC has two options, a county option—ARC–CO, and an individual farm option—ARC–IC. Base acres are key to payment eligibility for both programs. For ARC–CO, the benchmark revenue is based on average revenues at the county level for covered commodities; for ARC–IC, the guarantee is based on the average revenue for that specific farm. For ARC–CO, the ‘‘payment acres’’ used to calculate payments are equal to 85 percent of the base acres for a covered commodity; for ARC–IC, ‘‘the payment acres’’ used to calculate payments are equal to 65 percent of base acres on the farm. The farm’s current producers can elect either ARC–CO or PLC on a covered commodity by covered commodity basis. In other words, they do not have to elect ARC–CO or PLC for all of the covered commodities; they can elect VerDate Sep<11>2014 17:52 Sep 25, 2014 Jkt 232001 ARC–CO for some covered commodities and PLC for others. If the farm’s current producers elect ARC–IC, however, the election applies to all the covered commodities on the farm. ARC and PLC Programs Election During the election period that will be announced in a press release, all of the current producers on a farm must make an irrevocable, one-time, unanimous election of either of the two following options: • ARC–CO or PLC on a covered commodity-by-covered commodity basis (the election for each covered commodity on the farm can be for ARC– CO or PLC); or • ARC–IC for all covered commodities on a farm. The election made, if valid as prescribed in this rule, will apply to the farm for the 2014 through 2018 crop years. There are consequences of not making a unanimous or timely election. In the absence of a valid election on the farm, producers will be deemed to have elected PLC for all covered commodities on the farm for the 2015 through 2018 crop years and are not eligible for any 2014 crop year payment. There are several factors that affect payments and therefore, the decision whether to elect ARC, PLC, or both. ARC and PLC are intended to supplement, not replace, regular crop insurance, so ARC payments are capped at 10 percent of the benchmark revenue. The PLC calculation does not include current yields, so if market year prices are above the reference price but current yields are low, no PLC payment would trigger. Both programs are subject to a $125,000 annual payment limit. That means that the total payments received, directly or indirectly by a person or legal entity (except for a joint venture or general partnership) for any crop year for ARC, PLC, LDPs, and marketing loan gains combined for all commodities except peanuts cannot exceed $125,000. Peanuts have a separate $125,000 payment limit for payments received from those same programs. Producers who enroll in PLC also have the option of purchasing Supplemental Coverage Option (SCO) through the USDA Risk Management Agency (RMA). Producers of covered commodities on farms that have elected and enrolled under ARC are ineligible for SCO on all ARC commodities. A separate regulation for SCO was published on July 1, 2014 (79 FR 37155–37166). Base Acre Reallocation and Opportunity To Update Records Current owners of farms will have a one-time opportunity to either retain the PO 00000 Frm 00003 Fmt 4700 Sfmt 4700 57705 farm’s 2013 base acres or reallocate base acres (except for cotton base acres, which, as discussed in the next section, become generic base acres for the purposes of ARC and PLC and cannot be reallocated) to reflect actual planting history for 2009 through 2012. Partial reallocations are not allowed; the only choice for reallocation is to reallocate the base acres on the farm to reflect actual planted and considered planted (P&CP) or subsequently planted crop acreage history for 2009–2012. The reallocation cannot increase the total number of base acres on the farm. A current owner can only reallocate base acres based on the actual P&CP or subsequently planted crop acreage history for 2009 through 2012; the owner cannot reallocate base acres to covered commodities that were not P&CP or subsequently planted crop acreage to a covered commodity on the farm in those years, or in proportions other than those reflected in the actual history. For example, if a farm has 100 percent corn base acres, but it planted 50 percent corn and 50 percent soybeans, on average, in 2009 through 2012, it can keep all corn base acres for ARC and PLC, or choose a 50 percent corn and 50 percent soybean reallocation, but it cannot reallocate to other covered commodities or other percentage allocations. As required by the 2014 Farm Bill, FSA will provide current owners of farms with base acres a one-time opportunity to update planting records, including records of yields. Previously, base acres for DCP and ACRE eligibility were based on historical plantings that dated back several decades in most cases. Actual P&CP and subsequently planted crop acreage in 2009 through 2012 may differ greatly from the history that was the basis for establishment of the base acres. In advance of this reallocation opportunity provided for ARC and PLC, FSA will provide the farm operator and farm owners of record with a summary of the history of all covered commodities for their farm during the 2009 through 2012 crop years (as reported to FSA on acreage reports in each of those years). Acreage not reported to FSA will not be included in the summary. Although farm operators are not eligible to reallocate base acres or update yields unless they are also the owner, FSA will send a copy of this information to the farm operator who may assist the current owner with analyzing this information. Current owners will be provided an opportunity to update the records, provided that there are crop insurance records or other verifiable documentation available to E:\FR\FM\26SER1.SGM 26SER1 57706 Federal Register / Vol. 79, No. 187 / Friday, September 26, 2014 / Rules and Regulations support the updates. Updating the records to provide accurate information on P&CP acreage for covered commodities is independent of the decision whether or not to reallocate— a farm may decide to update the records, but then not reallocate. Owners that update records should be aware that updating 2009 through 2012 records could adversely impact previously earned payments from other FSA or CCC programs that were conducted in those years based on those records (before any update). If a farm record is updated to reflect a new crop other than the one already recorded, any prior year program benefit under a variety of programs that may have been conducted in that year may be impacted. If, for example, a farm has recorded soybeans as an initial crop in 2010 and the farm owner updates the record to show that corn was the initial planted crop instead of soybeans, then if an amendment is made to change the previously recorded acreage of soybeans to corn, that change could impact benefits in 2010. In the event that an update to a farm’s records for 2009 through 2012 causes any payment under another FSA or CCC program to become unearned, the overpayment must be refunded to FSA or CCC in accordance with the rules for that program and FSA or CCC’s rules governing the overpayment (7 CFR parts 718 and 1403). That would include payments to producers who may not be current owners, payments that were issued to either current or previous owners who were producers at the time those payments were made, as well as other current producers and previous producers. Persons responsible for refunding any unearned payments will be determined using the rules for the program under which the overpayment was issued as well as either FSA or CCC’s debt settlement rules (7 CFR parts 792 or 1403). Current owners are under no obligation to update records, but if they wish to do so, they must to do so before reallocating base acres because record updates cannot be made after reallocation. Once records have been updated, the owner(s) will have the opportunity to reallocate the farm’s base acres based on a proration of each covered commodity’s P&CP acres in crop years 2009 through 2012 to the total P&CP acres of all covered commodities during that time. As discussed above, the reallocation of the farm’s base acres will be based on a proration of each covered commodity’s P&CP or subsequently planted crop acreage in crop years 2009 through 2012 to the total P&CP acres and subsequently planted crop acreage of all covered commodities on the farm during that time. The table provides an example of base acre reallocation for a farm with 500 acres of cropland and shows the relevant information required to see how an owner decided to reallocate the farm’s base acres. BASE ACRE REALLOCATION EXAMPLE TABLE 2013 Base acres Crop 2010 P&CP 2009 P&CP 1 2011 P&CP 2012 P&CP Average P&CP 2009 through 2012 Reallocation percentage 2014 Base acre reallocation Wheat ....................... Barley ....................... Dry Peas .................. Canola ...................... 200 0 100 100 150 50 200 0 150 50 150 0 150 50 200 0 200 50 150 0 162.5 50 175 0 41.94 12.9 45.16 0 167.76 51.60 180.64 0 Subtotal ............. Upland Cotton .......... Generic Base Acres 2 400 100 N/A 400 100 N/A 350 50 N/A 400 100 N/A 400 150 N/A 387.5 N/A N/A 100 N/A N/A 400.00 100 100 Total .................. 500 400 350 400 400 387.5 100 500 1‘‘For the purpose of the example shown in this table, P&CP history shown reflects either P&CP or subsequently planted crop acreage. 100 upland cotton base acres that were in existence as of September 30, 2013, become generic base acres for the purposes of ARC and PLC and are not included in the reallocation or in the proration of P&CP or subsequently planted crop acreage of each covered commodity to the P&CP or subsequently planted crop acreage of all covered commodities. asabaliauskas on DSK5VPTVN1PROD with RULES 2 The In the base acre reallocation example table above, the owner has the following options: • Retain the 2013 base acres of 200 wheat, 100 dry peas, 100 canola and 100 acres of generic (do not reallocate any acres); or • Retain 100 acres of generic base acres, and reallocate base acres of covered commodities (based on the farm’s P&CP or subsequently planted crop acreage history) to 167.76 wheat base acres (400 total base acres times 41.94 reallocation percentage), 51.6 barley base acres (400 total base acres times 12.9 reallocation percentage), 180.64 dry peas base acres (400 total base acres times 45.16 reallocation percentage). Therefore, the total base acres are 100 generic base acres and 400 VerDate Sep<11>2014 17:52 Sep 25, 2014 Jkt 232001 reallocated base acres, for a total of 500 base acres. Generic Base Acres The 2014 Farm Bill does not include upland cotton as a covered commodity for ARC and PLC. Upland cotton base acres that were in existence as of September 30, 2013, are generic base acres for the purposes of ARC and PLC as of October 1, 2013 (fiscal year 2014). Generic base acres are treated for the purposes of ARC and PLC like other base acres, except that they cannot be reallocated. Generic base acres may: • Be planted to any crop including covered commodities, fruits, vegetables, minor oilseeds, or other crops; • Receive payment for the acres planted to a covered commodity • Be reduced for CRP participation; PO 00000 Frm 00004 Fmt 4700 Sfmt 4700 • Be reduced when taken out of agriculture production; • Be reduced on farms having more base acres than available cropland. As stated in an example above, if generic base acres are planted to a covered commodity or eligible subsequently planted crop acreage, the covered commodity’s crop acreage will be treated as base acres for that crop year for ARC and PLC payment calculations. Payment Yields The 2014 Farm Bill specifies that the payment yield for PLC is either the counter-cyclical yield from the previous DCP program, or 90 percent of the farm’s average yield from 2008 through 2012 for that commodity. The farm owner must choose which yield applies E:\FR\FM\26SER1.SGM 26SER1 Federal Register / Vol. 79, No. 187 / Friday, September 26, 2014 / Rules and Regulations to the farm. (Note that, as specified in the 2014 Farm Bill, planted acres can be updated, and if that is done, the updated acres will be based on 2009 through 2012 data, while payment yield can be updated, and if done, the updated yields will be based on 2008 through 2012 data.) Therefore, FSA is providing owners of farms an opportunity to update, for each covered commodity on the farm, the payment yield that will be used for calculating PLC. The opportunity to update yields will occur before the election period. A current owner’s decision to update yields is independent of subsequent decisions of current producers on that farm as to what program(s) to elect or subsequent enrollment decisions. In other words, a current owner can update yields for PLC and then the current producers on that farm may later elect and enroll in ARC. If the Secretary at any time designates an oilseed or pulse crop as a covered commodity for PLC and there is not a counter-cyclical yield already established for that commodity, this rule specifies how an equivalent average yield will be established for that type of commodity for the purposes of PLC in section § 1412.33. A press release will announce specific periods for yield updates and it is only during those periods that current owners of a farm can update yields. Current Owners Make Yield Updates and Base Acre Reallocation Decisions; Current Producers Elect and Producers Enroll As discussed above, current owners are allowed to update acreage records incidental to reallocating base acres and yield updates for a farm. Current producers on the farm elect ARC or PLC or a combination of ARC–CO and PLC. If during the established periods for yield updates or base reallocation which occur before the election period, current owners exercise the option to update yields or reallocate base acres, that yield update and base reallocation will apply to the farm and to any subsequent election unless the yield update or base reallocation is either withdrawn during the yield update or base reallocation period by any current owner, or rescinded, modified, or withdrawn by a current owner on the farm in the established yield update or base reallocation period. Neither FSA nor CCC is under any obligation to notify owners on a farm if a yield update or base reallocation has been filed, rescinded, modified, or withdrawn during the base reallocation period or yield update period. If a person or legal entity acquires ownership of a farm before the end of the election period and that farm already had an election of ARC or PLC made by current producers, FSA will provide the election status to the new owner on request, but is under no obligation to notify new owners or new producers whether an election has previously been made on that particular farm. All current producers on a farm must unanimously make the one-time election of ARC or PLC for each covered commodity on the farm. If the current producers on the farm do not make a unanimous election, then the current producers on the farm are deemed to have elected PLC from 2015 through 2018. Although the 2014 Farm Bill provides that the current producers on the farm are deemed to have elected PLC commencing with the 2015 crop year, for administrative purposes, the farm will be deemed to have elected PLC commencing with the 2014 crop year. Nevertheless, per the 2014 Farm Bill, the farm is not eligible for any 2014 payments. To deem such election to occur commencing with the 2014 crop year serves to resolve any potential ambiguity with respect to eligibility for SCO. Election is not enrollment. In order to be eligible for payments, producers on the farm must annually enroll their respective share interest of base acres or interest of covered commodities. Only 57707 producers that annually enroll are eligible to receive payments. The role of owners versus the roles for producers is specified in the 2014 Farm Bill; FSA does not have discretion to do otherwise for these actions. PLC Payment Calculations As noted above, PLC makes a payment when the ‘‘effective price’’ for a covered crop is less than its ‘‘reference price’’ specified in the 2014 Farm Bill. The reference prices are already specified in 7 CFR part 1412. The ‘‘effective price’’ is the higher of the national average market price received by producers during the 12 month marketing year for that covered commodity, or the national average loan rate (the MAL rate) for that crop year. The reference price for each covered commodity is set through 2018 and does not change from year to year. As authorized by the 2014 Farm Bill and as specified in 7 CFR part 1412, temperate japonica rice will have a separate reference price set by USDA for high altitude or high latitude areas versus other areas of the United States where rice is grown. The Secretary has determined that the applicable high altitude or high latitude areas of the United States for which this applies is California. Therefore, this rule specifies a separate reference price for temperate japonica rice in § 1412.52. Since neither the effective price nor the reference price is based on the price the individual producer receives, the producer does not need to provide FSA any price or yield data to qualify for PLC payment. As specified in the 2014 Farm Bill, payments for a given crop year will be made after October 1 of the following year. So, for example, 2014 crop year payments will be made after October 1, 2015. The 2015 crop year payments will be made after October 1, 2016. An example of a PLC payment calculation using the corn reference price is as follows: asabaliauskas on DSK5VPTVN1PROD with RULES PLC EXAMPLE—CORN Reference price ....................................................................................................................................................................... Effective price .......................................................................................................................................................................... Payment rate (reference price minus effective price) ............................................................................................................. Payment yield .......................................................................................................................................................................... Base acres (including any corn planted and attributed to generic base acres) ..................................................................... Payment (payment rate times payment yield times 85 percent of base acres) ..................................................................... As noted above, the payment is based on a reference price ($3.70/bu.) and payment yield (150 bu./acre). In the example above, the producer would VerDate Sep<11>2014 17:52 Sep 25, 2014 Jkt 232001 receive a payment of $1,913 for 100 base acres of corn ($3.70/bu. reference price minus $3.55/bu. effective price = $0.15 payment rate times 85 percent of the PO 00000 Frm 00005 Fmt 4700 Sfmt 4700 $3.70/bu. $3.55/bu. $0.15/bu. 150 bu./acre. 100 $0.15 × 150 bu. × 85 percent = $1,913. 100 corn base acres times the 150 bushels per acre payment yield. Corn base acres are always included for payment, even if the corn base acres E:\FR\FM\26SER1.SGM 26SER1 57708 Federal Register / Vol. 79, No. 187 / Friday, September 26, 2014 / Rules and Regulations were planted to another covered commodity. Corn planted or eligible subsequently planted crop acreage that is attributed to generic base acres become corn base acres for PLC payment purposes. Therefore, PLC payment is made on corn base acres and not necessarily corn planted on the farm. In the above example, the number of corn base acres attributed from generic base acres is not broken out or specified. ARC Payment Calculations ARC is a revenue-based program that is designed to cover a portion of a farmer’s out-of-pocket loss when crop revenues fall below the guarantee, with the benchmark revenue based on either county level historic revenue for ARC– CO or the individual farm’s historic revenue for ARC–IC. For both PLC and ARC–CO, the payment calculation is based on base acres including any base acres attributed to a covered commodity from generic base acres based on P&CP or eligible subsequently planted crop acreage. Under ARC–CO, payments are triggered when actual county crop revenue of a covered commodity is less than the ARC–CO guarantee for the covered commodity. Since payment is not based on the revenue or yield of the individual farm, the producer does not need to provide FSA any additional price or yield data to qualify for ARC– CO payment. The data used in the calculation is national data for prices and county data for yields, not individual farm data. The ARC–CO guarantee is 86 percent of the crop’s benchmark revenue. Under ARC–CO, benchmark revenue is calculated by multiplying the 5-year average county yield, excluding the years with the highest and lowest yields (the ARC–CO guaranteed yield) times the previous 5-year MYA price, excluding years with the highest and lowest prices. The ARC– CO payment for a covered commodity is 85 percent of the farm’s base acres of the covered commodity times the difference between the county guarantee and the actual county revenue for the covered commodity. The ARC–CO payment cannot exceed 10 percent of the county benchmark revenue (the ARC–CO guaranteed price times the ARC–CO average historical benchmark yield). An example of an ARC–CO payment calculation using estimated 2014 soybean prices and yields is as follows: ARC–CO PAYMENT CALCULATION EXAMPLE—SOYBEANS asabaliauskas on DSK5VPTVN1PROD with RULES 2014 MYA price (estimate only) ............................................................................................................................................................ 2014 Actual average county yield (bu./acre) ......................................................................................................................................... Benchmark revenue (average historical county yield × average MYA for 2009 through 2013) ........................................................... Base acres (including any generic base acres attributed to soybeans) ............................................................................................... 2014 Actual crop revenue (2014 MYA times 2014 actual county yield) ............................................................................................... ARC–CO guarantee (86 percent times benchmark revenue) ............................................................................................................... Maximum payment (benchmark revenue times 10 percent) ................................................................................................................. Payment rate (ARC–CO guarantee of $575 minus actual crop revenue of $540, not to exceed maximum payment of $67) ............ Payment (payment rate of $35 times 85 percent of 100 base acres) .................................................................................................. Under ARC–IC, payments are triggered when the actual crop revenue, averaged across all covered commodities planted or eligible subsequently planted crop acreage on the ARC–IC farm, is less than ARC–IC guarantee, averaged across those covered commodities planted or eligible subsequently planted crop acreage on the farm. The farm for ARC–IC purposes is the sum of all of that producer’s interests in all ARC–IC farms in the State, meaning that if a producer has an interest in multiple farms that have elected and enrolled in ARC–IC, the ARC–IC benchmark revenue for that producer will be a weighted average of the benchmark revenue for all of those farms. The farm’s ARC–IC guarantee equals 86 percent of the farm’s individual benchmark revenue (5-year average of the annual benchmark revenues), excluding the years with the highest and lowest annual benchmark revenues, then averaging across all covered commodities planted or eligible subsequently planted crop acreage on the farm. The actual revenue is similarly computed, with both the guarantee and actual revenue computed using planted acreage on the farm. The ARC–IC payment equals 65 percent of the sum of the base acres of all covered VerDate Sep<11>2014 17:52 Sep 25, 2014 Jkt 232001 commodities on the farm, times the difference between the individual guarantee revenue and the actual individual crop revenue across all covered commodities planted or eligible subsequently planted crop acreage on the farm. Payments cannot exceed 10 percent of the individual’s benchmark revenue. Since the payment is based on yields for that individual farm, the producers enrolled in ARC–IC elected farms must report acreage and yield data to qualify for payment. Producers of covered commodities enrolled in ARC– IC elected farms must, as a condition of payment eligibility, file a report of production by the crop reporting date the immediate year after the production and contract year. The failure to report production will render the producers sharing in any of the covered commodities on that farm ineligible for payments on all ARC–IC elected and enrolled farms for which the producer has an interest in covered commodities in the State. In the case of a total prevented planting situation, USDA has made a discretionary decision to calculate ARC–IC payments as if the producer had planted some acreage to each covered commodity on the farm. The reason for this decision is as follows: If PO 00000 Frm 00006 Fmt 4700 Sfmt 4700 $9.65/bu. 56 $670 100 $540 $575 $67 $35 $2,975 a producer who has elected ARC–IC has all of their acreage prevented from being planted across their entire farm for a crop year, the ARC–IC calculation without this planting provision would result in a zero payment, an unintended result. The purpose of ARC–IC is to provide a safety net payment to a producer based on the individual’s actual farm revenue. To preclude any payment if the producer suffered a complete prevented planting on all of the farm’s acreage in which the producer has an interest would defeat the safety net purposes of ARC, particularly when compared to the theoretical example of a producer who suffered an almost complete prevented planting, which would trigger a payment. Therefore, if a producer has all prevented planted acreage across all acres of their farm, FSA will deem sufficient acres as being planted for each covered commodity in proportion to the approved prevented planted acreage of covered commodities on the farm to trigger an ARC–IC payment. This is being done within the Secretary’s general discretion to operate the ARC program, as it is reasonably related to the purposes of ARC. E:\FR\FM\26SER1.SGM 26SER1 Federal Register / Vol. 79, No. 187 / Friday, September 26, 2014 / Rules and Regulations 57709 An example of an ARC–IC payment calculation is shown in the following table: ARC–IC PAYMENT CALCULATION EXAMPLE—CORN AND SOYBEANS—100 BASE ACRES [60 acres planted with corn and 40 acres planted with soybeans] Benchmark revenue corn * ...................................................................................................................................................................... Benchmark revenue soybean .................................................................................................................................................................. Benchmark revenue total for the farm ((0.6 × $826) + (0.4 × $687)) ..................................................................................................... Guarantee (86 percent of total benchmark revenue) .............................................................................................................................. Actual revenue (2014 MYA price of each commodity times each commodity’s actual yield times ratio of planted covered commodity to farm’s base acres 0.6 corn and 0.4 soybeans—in this case (0.6 × $702) + (0.4 × $540)) ................................................ Payment rate (difference between guarantee and actual revenue) ........................................................................................................ Maximum payment (10 percent of benchmark revenue of $770) ........................................................................................................... Payment rate (ARC–IC Guarantee minus Actual Crop Revenue; adjusted, if needed to not exceed maximum payment) .................. Payment (payment rate times 65 percent of total base acres) ............................................................................................................... $826 687 770 662 637 25 77 25 1,625 asabaliauskas on DSK5VPTVN1PROD with RULES * The benchmark revenue numbers are calculated as the 5-year Olympic average of the annual revenue for the farm, excluding the high and low years. Election of ARC and PLC The specified period in which producers may elect ARC or PLC will be announced in a press release. Current producers, as defined in this rule, will make the election. The election will be based on the farm structure that is in effect as of September 30, 2014. Reconstitutions of farms initiated after August 1, 2014 will not be considered by FSA until after the election period has ended. The election of ARC and PLC for a farm will apply to that farm in all years 2014 through 2018 and, in the case of that farm being reconstituted, the farms resulting from that reconstitution. Neither the requesting of a farm reconstitution nor the reconstitution of any farm will change either the requirement that all current producers on a farm must unanimously agree to the irrevocable election during the election period or that a valid election was made by those current producers. If no election is made, or if all producers on the farm cannot unanimously agree, the farm will default to a PLC election, and producers on that farm will not be eligible for 2014 crop year payments (even if the farm is enrolled in 2014 PLC). During the election period, all current producers on a farm must unanimously make the irrevocable election as discussed in this rule in order to preserve the payment eligibility of all producers on the farm for 2014. If a valid election is made by all current producers on a farm during the election period, that election will be recognized as valid for the farm in the 2014 through 2018 crop years unless that election is rescinded or terminated by any current producer on the farm during the election period, or unless the valid election is modified and replaced by another valid election by all current producers during the election period. At any time during the election period, a VerDate Sep<11>2014 17:52 Sep 25, 2014 Jkt 232001 current producer can rescind an election or terminate an election by providing FSA with written notice of the current producer’s withdrawing from the election or by providing written notice to FSA requesting to have the election rescinded. If a producer acquires an interest in a farm on or after a valid election has been made in the election period by all of a farm’s current producers, that producer will be subject to any previously valid election made in the election period unless that producer changes the election during the remaining time in the election period by either withdrawing the election or getting all of the producers to agree to the new election in writing. While FSA will respond to inquiries submitted by such producers, neither FSA nor CCC has any obligation to notify owners or producers of whether or not a valid election exists or is in place or whether a producer has rescinded or terminated a previously made valid election. Additionally, neither FSA nor CCC have any role or responsibility of advising any producers on a farm of who all the farm’s current producers are in the election period. The identity of all current producers for a farm may only be known to each of the current producers and that information may or may not be on file with FSA during the election period. It is the responsibility of the current producers on a farm to ensure that a valid election is made in the prescribed election period. The election itself, its irrevocability, and the requirement that the election be made unanimously by all the current producers on a farm are required by the 2014 Farm Bill and neither FSA nor CCC has any discretion to waive these requirements. Additionally, election does not result in enrollment in ARC or PLC. Current producers on farms that PO 00000 Frm 00007 Fmt 4700 Sfmt 4700 have made a valid election (and those that have not completed an election and producers who might want to participate in PLC for the 2015 and subsequent crop years) must still annually enroll the farm with that election (or default election) in order to be eligible for ARC and PLC payments on farms in those crop years, as applicable. The election made is important—it affects eligibility for some forms of crop insurance. Specifically, section 11003 of the 2014 Farm Bill amends the Federal Crop Insurance Act (7 U.S.C. 1508(c)) to authorize SCO. SCO covers a portion of the deductible for regular crop insurance on either a yield or revenue basis. As with other forms of crop insurance offered through RMA, SCO premiums are subsidized, and no payment limit or AGI limit applies. Additional details regarding SCO and benefits available under SCO can be obtained from an approved insurance provider. SCO coverage is available for crops subject to a PLC election. Producers of covered commodities on farms with a valid ARC election and enrollment, as well as acres that are enrolled in the stacked income protection plan for cotton under section 508B of the Federal Crop Insurance Act (7 U.S.C. 1508b), are not eligible for SCO coverage. Sharing ARC and PLC Payments on Enrolled Farms Between Producers on a Farm FSA will determine eligibility for shared payments similarly to how FSA made those determinations for DCP and ACRE. Each eligible producer on a farm will be given the opportunity to enroll and receive payments determined to be fair and equitable as agreed to by all the producers on the farm and approved by the FSA county committee. Each E:\FR\FM\26SER1.SGM 26SER1 57710 Federal Register / Vol. 79, No. 187 / Friday, September 26, 2014 / Rules and Regulations producer leasing a farm is required to provide a copy of their written lease to the county committee and, in the absence of a written lease, is required to provide to the county committee a complete written description of the terms and conditions of any oral agreement or lease, to the satisfaction of the county committee in order to make any determinations necessary under these programs. An owner’s or landlord’s signature, as applicable, affirming a zero owner or landlord share on a contract may be accepted as evidence of a cash lease between the owner or landlord and tenant, as applicable, as determined by FSA. This would allow the producer with the cash lease to claim 100 percent of any payments made, assuming all eligibility requirements and other conditions have been met. Such signature or signatures, if entered on the contract to satisfy the requirement of furnishing a written lease, is required to be entered on the contract by June 1, 2015, for the 2014 and 2015 contract year and for subsequent crop years, June 1 of each subsequent year. Deadlines for ARC and PLC Actions After the conclusion of the election period, the enrollment period begins. Starting with the 2015 crop year, the enrollment period ends June 1 of the relevant crop year. This means that enrollment of farms for the 2015 crop year will occur at the same time as the 2014 crop year enrollment. The contract year is based on the fiscal year, October 1 to September 30 of each year, with the enrollment period occurring in the middle of the contract year. For 2014, the producer will enroll by June 1, 2015, for a retroactive contract that ends September 30, 2014. For each subsequent year, the June 1 enrollment deadline will be for a contract that began on October 1 of the previous year. For example, the producer must enroll by June 1, 2015 to be eligible to receive payments for a 2015 contract that runs from October 1, 2014 to September 30, 2015. The June 1 enrollment deadline is consistent with the deadline for similar types of programs since 2002. The June 1 date is also in advance of compliance activities that are required to occur for the crop year (acreage and production reporting), and the final date for seeking reconstitution of farms. After the onetime election period ends, in each crop year or program year the producers on the farm in that crop year or program year may choose whether or not to enroll the farm. When a farm’s base acres are leased on a share basis, neither the landlord nor the tenant will receive 100 percent of payments for the farm. FSA will approve an ARC and PLC contract and approve the division of payment when all the following, as applicable, occur or have been determined to have occurred: • Landlords, tenants, and sharecroppers sign the application and agree to the payment shares shown; • FSA determines that the interests of tenants and sharecroppers are being protected; and • FSA determines that the payment shares do not circumvent either the provisions of this rule or the payment limitation provisions of 7 CFR part 1400. The general order of activities associated with participation in ARC and PLC is: • Current owner updates P&CP acres and subsequently planted crop acreage and reallocation of base acres during acreage update and reallocation periods; • Current owner updates PLC yield during yield update period; • Current producers unanimously make ARC and PLC election during the election period; and • Producers enroll the farm during enrollment periods. The following table provides a summary of deadlines for ARC and PLC. Activity Deadline 2014 acreage reports by 2014 operator or producers on farm ............... Not later than July 15, 2014, for covered commodities. For all other cropland on the farm, the acreage reporting date for the crop or crops in the State (Note: This deadline is unchanged by this rule.) To be announced in a press release. To be announced in a press release. To be announced in a press release. To be announced in a press release. Update acreage history ............................................................................ PLC yield update ...................................................................................... Base acres reallocation ............................................................................ Election of ARC and PLC by current producers on farms in election period. 2014 contract year enrollment by 2014 producers on farms and 2015 contract enrollment by 2015 producers on farms. 2014 production report of covered commodities by ARC–IC producers 2015 and subsequent crop year acreage reports by 2015 and subsequent operator or producers on farm. 2016 and subsequent years contract enrollment by 2016 and subsequent year producers. 2015 and subsequent year production report of covered commodities by ARC–IC producers. asabaliauskas on DSK5VPTVN1PROD with RULES General Provisions That Apply to ARC and PLC As noted above, the rule published on August 8, 2014, to implement the CTAP program implemented some general provisions that also apply to ARC and PLC. The regulations in 7 CFR part 1412 specify certain requirements to which the participant must agree to be eligible for payments. One such requirement is to effectively control noxious weeds and otherwise maintain the land in VerDate Sep<11>2014 17:52 Sep 25, 2014 Jkt 232001 June 1, 2015. July 15, 2015. Not later than July 15 for covered commodities. For all other cropland on the farm, the acreage reporting date for the crop or crops in the State. June 1 of applicable program year. July 15 of the year following the program year (for example, the 2015 production report is due July 15, 2016). accordance with sound agricultural practices. Since that rule was published, the Secretary has determined to amend the applicable regulations to remove P&CP acreage and specify that only planted and eligible subsequently planted crop acreage of covered commodities will attribute generic base acres to covered commodities. Base acres for covered commodities for ARC and PLC will be reduced for cropland that is on land that has been PO 00000 Frm 00008 Fmt 4700 Sfmt 4700 subdivided and developed for multiple residential units or other non-farming uses if the size of the tracts and the density of the subdivision is such that the land is unlikely to return to the previous agricultural use, unless the producers on the farm demonstrate that the land remains devoted to commercial agricultural production or is likely to be returned to the previous agricultural use. The regulation for the reductions in base acres is already in 7 CFR 1412.24, E:\FR\FM\26SER1.SGM 26SER1 Federal Register / Vol. 79, No. 187 / Friday, September 26, 2014 / Rules and Regulations and was implemented through the CTAP final rule. ARC and PLC have provisions for planting flexibility and reductions for plantings of fruits, vegetables, and wild rice on base acres. These reductions are already specified in 7 CFR part 1412. Common provisions in 7 CFR part 718 that apply to all FSA and CCC programs, including those for base acres and farm reconstitutions, apply to CTAP and ARC and PLC. Miscellaneous As specified in the 2014 Farm Bill and in 7 CFR part 1400, payment limits and average adjusted gross income (AGI) limits apply to ARC and PLC. A person or legal entity is ineligible for payments if the person’s or legal entity’s AGI for the applicable ARC and PLC contract or AGI compliance program year exceeds $900,000. Producers eligible for ARC and PLC are required to be a person or legal entity who is actively engaged in farming and otherwise eligible for payment, as specified in 7 CFR part 1400; and who complies with other general program eligibility requirements including, but not limited to, those pertaining to highly erodible land and wetland conservation provisions specified in 7 CFR part 12. Appeal regulations specified in 7 CFR parts 11 and 780 apply. FSA program requirements and determinations that are not in response to, or result from, an individual disputable set of facts in an individual participant’s application for assistance are not matters that can be appealed. 57711 Neither crop insurance nor coverage under noninsured crop disaster assistance program is required as a condition of eligibility for ARC or PLC. Additionally, ARC and PLC benefits are not subject to the multiple benefit exclusion provisions of the catastrophic plan of insurance or noninsured crop disaster assistance. FSA Notifications of General 2014 Farm Bill Information for FSA Programs and ARC and PLC Provisions The following provides information regarding the notifications FSA made to ensure that farm owners are aware of the provisions of the 2014 Farm Bill and that participants have all applicable information available on record at FSA to assist them in making participation elections. (Note: The FSA notices are available on FSA’s public Web site.) Date FSA action March 11, 2014 .................. March 28, 2014 .................. Issued a 2014 Farm Bill Fact Sheet discussing what is in the 2014 Farm Bill for Farm Service Agency customers. Published an extension of authorization rule in the Federal Register (79 FR 17388–17390) regarding Continuation of Certain Benefit and Loan Programs, Acreage Reporting, Average Adjusted Gross Income, and Payment Limit. Issued FSA Notice ARCPLC–1 to FSA State and county offices discussing Fruits and Vegetables and Wild Rice (FAV) provisions for 2014 through 2018 crop years. Issued FSA Notice ARCPLC–2 to FSA State and county offices regarding establishing FAV and Wild Rice (WR) double-cropping regions. Issued FSA Notice ARCPLC–4 to FSA State and county office regarding 2014 Farm Bill information regarding ARC and PLC. Issued a press release concerning $6 million award for educational efforts to prepare farmers for new ARC and PLC programs. FSA posted ARC and PLC information and several links to: https://fsa.usda.gov/FSA/ webapp?area=home&subject=arpl&topic=landing Issued FSA Notice ARCPLC–5 to FSA State and county office regarding ARC and PLC P&CP and subsequently planted crop acreage history update. Issued FSA Notice ARCPLC–6 to FSA State and county office regarding maintaining base acres. FSA issues a document entitled ARC and PLC Backgrounder and makes the document available in FSA service centers and on the FSA public website. Published the final rule implementing CTAP and announced some general ARC and PLC provisions. This rule specifies the implementing regulations for ARC and PLC. April 7, 2014 ....................... April 7, 2014 ....................... May 23, 2014 ..................... May 29, 2014 ..................... May 29, 2014 ..................... June 18, 2014 .................... July 18, 2014 ...................... September 25, 2014 ........... asabaliauskas on DSK5VPTVN1PROD with RULES August 8, 2014 ................... September 26, 2014 ........... Structure of the Regulation This rule revises 7 CFR part 1412 to add the specific requirements for ARC and PLC. Subpart A covers general administration; subpart B cover base acres; subpart C covers yields and production for ARC and PLC; subpart D covers ARC and PLC contract terms and enrollment provisions; subpart E covers financial considerations including sharing payments; subpart F covers violations; subpart G covers PLC and ARC election; and subpart H covers CTAP. This rule amends subparts A, B, D, and E, and adds subparts C and G. This rule also makes minor clarifications and amendments to 7 CFR part 718 to clarify how FSA determines a farm’s administrative county, how and when a farm’s administrative county can, or needs to, be changed, and a producer’s options regarding the selection of an administrative county. VerDate Sep<11>2014 17:52 Sep 25, 2014 Jkt 232001 The rule also amends farm reconstitution provisions in part 718 to remove references to obsolete programs, clarifies the deadline for initiating farm reconstitutions, and provides the effective date of farms that are reconstituted. These amendments and clarifications, which are not required by the 2014 Farm Bill, will help to ensure that ARC and PLC are implemented effectively. This rule also moves some terms and definitions from part 1416 to part 718 because those terms and definitions are used in multiple programs, including ARC and PLC. Notice and Comment In general, the Administrative Procedure Act (5 U.S.C. 553) requires that a notice of proposed rulemaking be published in the Federal Register and interested persons be given an opportunity to participate in the PO 00000 Frm 00009 Fmt 4700 Sfmt 4700 rulemaking through submission of written data, views, or arguments with or without opportunity for oral presentation, except when the rule involves a matter relating to public property, loans, grants, benefits, or contracts. The regulations to implement the provisions of Title I and the administration of Title I of the 2014 Farm Bill are exempt from the notice and comment provisions of 5 U.S.C. 553 and the Paperwork Reduction Act (44 U.S.C. chapter 35), as specified in section 1601(c)(2) of the 2014 Farm Bill. Effective Date The Administrative Procedure Act (5 U.S.C. 553) provides generally that before rules are issued by Government agencies, the rule is required to be published in the Federal Register, and the required publication of a substantive rule is to be not less than 30 days before E:\FR\FM\26SER1.SGM 26SER1 57712 Federal Register / Vol. 79, No. 187 / Friday, September 26, 2014 / Rules and Regulations asabaliauskas on DSK5VPTVN1PROD with RULES its effective date. One of the exceptions is when the agency finds good cause for not delaying the effective date. Subsection 1601(c)(2) of the 2014 Farm Bill makes this final rule exempt from notice and comment. Therefore, using the administrative procedure provisions in 5 U.S.C. 553, FSA finds that there is good cause for making this rule effective less than 30 days after publication in the Federal Register. This rule allows FSA to provide adequate notice to producers about the new ARC and PLC regulation so they will have time to update base acres and yields and make the required election before the enrollment period for ARC and PLC in spring 2015. Therefore, to begin providing benefits to producers in a timely fashion, this final rule is effective when published in the Federal Register. Executive Orders 12866 and 13563 Executive Order 12866, ‘‘Regulatory Planning and Review,’’ and Executive Order 13563, ‘‘Improving Regulation and Regulatory Review,’’ direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasized the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. The Office of Management and Budget (OMB) designated this rule as economically significant under Executive Order 12866, ‘‘Regulatory Planning and Review,’’ and therefore, OMB has reviewed this rule. This regulatory action is being taken to implement a major budgetary program required by the 2014 Farm Bill. Consistent with OMB guidance, this type of action is considered a budgetary transfer representing a payment from taxpayers to program beneficiaries unrelated to the provision of any goods or services in exchange for the payment. As such, the benefits and payments to those who receive such a transfer are matched by the costs borne by taxpayers. The estimated transfer payments for ARC and PLC provided by this rule are summarized below. The full cost benefit analysis is available on regulations.gov. Cost Benefit Analysis Summary ARC and PLC payments are estimated to total $28.6 billion for crop years 2014 through 2018 based on supply, demand and price conditions as of May, 2014. Nearly all producers on farms with base VerDate Sep<11>2014 17:52 Sep 25, 2014 Jkt 232001 acres are expected to participate in PLC or ARC or both. Annual payments are projected at $0.8 billion for crop year 2014, $10.1 billion for crop year 2015, $10.9 billion for crop year 2016, $3.9 billion for crop year 2017, and $2.9 billion for 2018. Regulatory Flexibility Act The Regulatory Flexibility Act (5 U.S.C. 601–612), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), generally requires an agency to prepare a regulatory flexibility analysis of any rule whenever an agency is required by the Administrative Procedure Act (5 U.S.C. 553) or any other law to publish a proposed rule, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. This rule is not subject to the Regulatory Flexibility Act because neither FSA nor CCC is required by any law to publish a proposed rule for public comment for this rulemaking initiative. Environmental Review The environmental impacts of this final rule have been considered in a manner consistent with the provisions of the National Environmental Policy Act (NEPA, 42 U.S.C. 4321–4347), the regulations of the Council on Environmental Quality (40 CFR parts 1500–1508), and the FSA regulations for compliance with NEPA (7 CFR part 799). While ARC and PLC are new, their creation is mandated by the 2014 FB, and is therefore not subject to review under NEPA. The legislative intent for creating these new programs is to provide revenue support to the same group of producers eligible for the earlier and now-discontinued programs, DCP and ACRE. The discretionary provisions defined by FSA for ARC and PLC were administrative clarifications of the mandatory elements and FSA determined that they would not alter any environmental impacts resulting from implementing the mandatory programs. Therefore, FSA will not prepare an environmental assessment or environmental impact statement for this regulatory action. Executive Order 12372 Executive Order 12372, ‘‘Intergovernmental Review of Federal Programs,’’ requires consultation with State and local officials. The objectives of the Executive Order are to foster an intergovernmental partnership and a strengthened Federalism, by relying on State and local processes for State and local government coordination and review of proposed Federal Financial PO 00000 Frm 00010 Fmt 4700 Sfmt 4700 assistance and direct Federal development. For reasons specified in the final rule related notice regarding 7 CFR part 3015, subpart V (48 FR 29115, June 24, 1983), the programs and activities within this rule are excluded from the scope of Executive Order 12372, which requires intergovernmental consultation with State and local officials. Executive Order 12988 This rule has been reviewed under Executive Order 12988, ‘‘Civil Justice Reform.’’ This rule will not preempt State or local laws, regulations, or policies unless they represent an irreconcilable conflict with this rule. The rule has retroactive effect in that the contracts will include a retroactive period. Before any judicial action may be brought regarding the provisions of this rule, the administrative appeal provisions of 7 CFR parts 11 and 780 are to be exhausted. Executive Order 13132 This rule has been reviewed under Executive Order 13132, ‘‘Federalism.’’ The policies contained in this rule do not have any substantial direct effect on States, on the relationship between the Federal government and the States, or on the distribution of power and responsibilities among the various levels of government, except as required by law. Nor does this rule impose substantial direct compliance costs on State and local governments. Therefore, consultation with the States is not required. Executive Order 13175 This rule has been reviewed in accordance with the requirements of Executive Order 13175, ‘‘Consultation and Coordination with Indian Tribal Governments.’’ Executive Order 13175 requires Federal agencies to consult and coordinate with tribes on a governmentto-government basis on policies that have tribal implications, including regulations, legislative comments or proposed legislation, and other policy statements or actions that have substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes or on the distribution of power and responsibilities between the Federal Government and Indian tribes. FSA has assessed the impact of this rule on Indian tribes and determined that this rule does not, to our knowledge, have tribal implications that require tribal consultation under Executive Order 13175. If a Tribe requests consultation, FSA will work with the USDA Office of Tribal E:\FR\FM\26SER1.SGM 26SER1 Federal Register / Vol. 79, No. 187 / Friday, September 26, 2014 / Rules and Regulations Relations to ensure meaningful consultation is provided where changes, additions, and modifications identified in this rule are not expressly mandated by the 2014 Farm Bill. asabaliauskas on DSK5VPTVN1PROD with RULES The Unfunded Mandates Reform Act of 1995 Title II of the Unfunded Mandates Reform Act of 1995 (UMRA, Pub. L. 104–4) requires Federal agencies to assess the effects of their regulatory actions on State, local, and Tribal governments, or the private sector. Agencies generally need to prepare a written statement, including a cost benefit analysis, for proposed and final rules with Federal mandates that may result in expenditures of $100 million or more in any 1 year for State, local, or Tribal governments, in the aggregate, or to the private sector. UMRA generally requires agencies to consider alternatives and adopt the more cost effective or least burdensome alternative that achieves the objectives of the rule. This rule contains no Federal mandates, as defined in Title II of UMRA, for State, local, and Tribal governments or the private sector. Therefore, this rule is not subject to the requirements of sections 202 and 205 of UMRA. Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) This rule is a major rule under the Small Business Regulatory Enforcement Fairness Act of 1996, (Pub. L. 104–121, SBREFA). SBREFA normally requires that an agency delay the effective date of a major rule for 60 days from the date of publication to allow for Congressional review. Section 808 of SBREFA allows an agency to make a major regulation effective immediately if the agency finds there is good cause to do so. Section 1601(c)(3) of the 2014 Farm Bill provides that the authority in Section 808 of SBREFA be used in implementing the changes required by Title I of the 2014 Farm Bill, such as for the changes being made by this rule. Consistent with section 1601(c)(3) of the 2014 Farm Bill, FSA therefore finds that it would be contrary to the public interest to delay the effective date of this rule because it would delay implementation ARC and PLC as required by the 2014 Farm Bill. The regulation needs to be effective to provide adequate time for producers to update base acres and yields in preparation for enrollment in spring 2015. Therefore, this rule is effective when published in the Federal Register. Federal Assistance Programs The title and number of the Federal Domestic Assistance Program found in VerDate Sep<11>2014 17:52 Sep 25, 2014 Jkt 232001 the Catalog of Federal Domestic Assistance to which this rule applies are: 10.112—Price Loss Coverage 10.113—Agriculture Risk Coverage 10.114—Cotton Transition Assistance Program Paperwork Reduction Act of 1995 The regulations in this rule are exempt from the requirements of the Paperwork Reduction Act (44 U.S.C. Chapter 35), as specified in subsection 1601(c)(2)(B) of the 2014 Farm Bill, which provides that these regulations be promulgated and administered without regard to the Paperwork Reduction Act. E-Government Act Compliance FSA and CCC are committed to complying with the E-Government Act, to promote the use of the Internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes. List of Subjects 7 CFR Part 718 Acreage allotments, Drug traffic control, Loan programs-agriculture, Marketing quotas, Price support programs, Reporting and recordkeeping requirements. 7 CFR Part 1412 Cotton, Feed grains, Oilseeds, Peanuts, Price support programs, Reporting and recordkeeping requirements, Rice, Soil conservation, Wheat. 7 CFR Part 1416 Dairy products, Indemnity payments, Pesticide and pests, Reporting and recordkeeping requirements. For the reasons discussed above, CCC and FSA amend 7 CFR parts 718, 1412, and 1416 as follows: PART 718—PROVISIONS APPLICABLE TO MULTIPLE PROGRAMS 1. Revise the authority citation to read as follows: ■ Authority: 7 U.S.C. 1501–1531, 1921– 2008v, 7201–7334, and 15 U.S.C. 714b. Subpart A—General Provisions 2. In § 718.2, add definitions in alphabetical order for ‘‘limited resource farmer or rancher’’ and ‘‘socially disadvantaged farmer or rancher’’ to read as follows: ■ § 718.2 * PO 00000 * Definitions. * Frm 00011 * Fmt 4700 * Sfmt 4700 57713 Limited resource farmer or rancher means a farmer or rancher who is both of the following: (1) A person whose direct or indirect gross farm sales do not exceed $176,800 (2014 program year) in each of the 2 calendar years that precede the most immediately preceding complete taxable year before the relevant program year that corresponds to the relevant program year (for example, for the 2014 program year, the two years would be 2011 and 2012), adjusted upwards in later years for any general inflation; and (2) A person whose total household income was at or below the national poverty level for a family of four in each of the same two previous years referenced in paragraph (1) of this definition. (Limited resource farmer or rancher status can be determined using a Web site available through the Limited Resource Farmer and Rancher Online Self Determination Tool through National Resource and Conservation Service at https:// www.lrftool.sc.egov.usda.gov.) * * * * * Socially disadvantaged farmer or rancher means a farmer or rancher who is a member of a socially disadvantaged group whose members have been subjected to racial, ethnic, or gender prejudice because of their identity as members of a group without regard to their individual qualities. Socially disadvantaged groups include the following and no others unless approved in writing by the Deputy Administrator: (1) American Indians or Alaskan Natives, (2) Asians or Asian-Americans, (3) Blacks or African-Americans, (4) Hispanics or Hispanic-Americans, (5) Native Hawaiians or other Pacific Islanders, and (6) Women. * * * * * ■ 3. Revise § 718.8 to read as follows: § 718.8 Administrative county. (a) If all land on the farm is physically located in one county, the farm will be administratively located in that county, except as provided in the rest of this section. (b) In cases where there is no FSA office in the county in which the farm is physically located or FSA county offices have been consolidated, the farm will be administratively located in a county contiguous to the physical county in the same State that is most convenient for the farm operator and owner. (c) If a county contiguous to the county in which the farm is physically E:\FR\FM\26SER1.SGM 26SER1 57714 Federal Register / Vol. 79, No. 187 / Friday, September 26, 2014 / Rules and Regulations located in the same State does not have an FSA county office, the farm will be administratively located in a contiguous county in another contiguous State that is convenient to the farm operator and owner. Requests for changes made to administrative county under this paragraph must be made to FSA by August 1 of each year for the change to take effect that calendar year. (d) When land on the farm is physically located in more than one county, the farm will be administered in one county office responsible for administration of programs for one or more of the physical counties involved in the farm’s constitution as determined by FSA. Paragraph (b) or (c) of this section apply if changes occur to that administrative county. (e) The operator and owner of a farm administered in any county can request a change of administrative county to another county in the same State by August 1 for the change to take effect that calendar year. Requests for change in administrative county will be reviewed and approved by COC if all the following can be determined to apply: (1) The requested change does not impact the constitution of a farm; and (2) The requested change will not result in increased program eligibility or additional benefits for the farm’s producers that would not be earned absent the change in administrative county being made. (f) The change is not to circumvent any of the provisions of other program regulations to which this part applies. (g) The State committee will submit all requests for exceptions from regulations specified in this section to the Deputy Administrator. ■ 4. Revise § 718.204 to read as follows: asabaliauskas on DSK5VPTVN1PROD with RULES § 718.204 Reconstitution of base acres. (a) Farms will be reconstituted in accordance with this subpart when it is determined that the land areas are not properly constituted and, to the extent practicable as determined by county committee, the reconstitution will be based on the facts and conditions existing at the time the change requiring the reconstitution occurred. (b) Reconstitutions will be effective for the calendar year if initiated by August 1 of that year. Any reconstitution initiated after August 1 will not be effective for that year; it will be effective for the subsequent year. (c) The Deputy Administrator may approve an exception to permit a reconstitution initiated after August 1 to be effective for the same year, if FSA determines that the failure is due to administrative problems as determined VerDate Sep<11>2014 17:52 Sep 25, 2014 Jkt 232001 by FSA at the local or national level. Producers have no right to seek an exception under this paragraph. When such situations exist, FSA will establish procedures under which reconstitutions will be accepted. PART 1412—AGRICULTURE RISK COVERAGE, PRICE LOSS COVERAGE, AND COTTON TRANSITION ASSISTANCE PROGRAMS Authority: 7 U.S.C. 1508b, 7911–7912, 7916, 8702, 8711–8712, 8751–8752, and 15 U.S.C. 714b and 714c. Subpart A—General Provisions 5. Amend § 1412.3 as follows: a. Add definitions in alphabetical order for ‘‘2014 farm structure’’, ‘‘actual average county yield’’, ‘‘actual crop revenue’’, ‘‘ARC guarantee’’, ‘‘ARC–IC farm’’, ‘‘average historical county yield’’, ‘‘benchmark revenue for ARC– CO’’, ‘‘benchmark revenue for ARC–IC’’, ‘‘current owner’’, ‘‘current producer’’, ‘‘effective price’’, ‘‘farm structure’’, ‘‘marketing year’’, ‘‘market year average (MYA) price’’, ‘‘national average loan rate’’, and ‘‘transitional yield’’; and ■ b. In the definition of ‘‘base acres’’, remove the term ‘‘P&CP’’ and add the word ‘‘planted’’ in its place. The additions read as follows: ■ ■ § 1412.3 Definitions. * * * * * 2014 farm structure means the farm as it was last constituted effective as of September 30, 2014. Actual average county yield is calculated as the crop year production of a covered commodity in the county divided by the commodity’s total planted acres for a crop year in the county, as determined by FSA. Separate irrigated and non-irrigated yields will be established in a county having a sufficient number of farms with P&CP acreage history of a covered commodity in 2009 through 2012, as determined by FSA. These separate yields will only be established where at least an average of 25 percent of a covered commodity’s P&CP acreage was irrigated in 2009 through 2012 and at least an average of 25 percent of the same covered commodity’s P&CP acreage in that county was non-irrigated in 2009 through 2012. Actual crop revenue is calculated as follows for: (1) ARC–CO, for a crop year of a covered commodity: The actual average county yield per planted acre of the covered commodity times the higher of either the market year average (MYA) price of the covered commodity or the PO 00000 Frm 00012 Fmt 4700 Sfmt 4700 national average loan rate for the covered commodity. (2) ARC–IC, for a producer on a farm for a crop year, which is based on the producer’s enrolled share of planted acres of all covered commodities on all farms for which ARC–IC has been elected and in which the producer has an interest for which the producer enrolled: the sum of the results of the following calculation for each covered commodity on the farm: (i) The total production of the covered commodity for all farms in the State in which the producer has an interest; times (ii) The higher of either the MYA price or national loan rate for the covered commodity; divided by (iii) The producer’s share of the planted acres of the covered commodity in the State. * * * * * ARC guarantee is calculated for a crop year for a covered commodity, and is equal to 86 percent of the benchmark revenue for ARC–CO and 86 percent of the benchmark revenue for ARC–IC, as defined in this part. * * * * * ARC–IC farm is calculated as the sum of the producer’s interests in all of the producer’s farms having an ARC–IC election and enrollment in the State. Average historical county yield means the 5-year Olympic average of actual average county yields for the most recent 5 years (substituting 70 percent of the county transitional yield as defined in this part in each year where the actual average county yield is less than 70 percent of the county transitional yield). Separate irrigated and nonirrigated yields will be established in a county having a sufficient number of farms with P&CP acreage history of a covered commodity in 2009 through 2012, as determined by FSA. These separate yields will only be established where at least an average of 25 percent of a covered commodity’s P&CP acreage was irrigated in 2009 through 2012 and at least an average of 25 percent of the same covered commodity’s P&CP acreage in that county was non-irrigated in 2009 through 2012. * * * * * Benchmark revenue for ARC–CO is calculated as the product obtained by multiplying the average historical county yield times the MYA price for the most recent 5 crop years, excluding each of the crop years with the highest and lowest prices and substituting the reference price in each year where the MYA price is less than the reference price. E:\FR\FM\26SER1.SGM 26SER1 asabaliauskas on DSK5VPTVN1PROD with RULES Federal Register / Vol. 79, No. 187 / Friday, September 26, 2014 / Rules and Regulations Benchmark revenue for ARC–IC means a producer’s share of all covered commodities planted on all farms in the State for which individual ARC has been elected and enrolled and in which the producer has an interest. FSA will calculate the benchmark revenue for ARC–IC using the following three steps, based on the producer’s planted commodities: (1) For each covered commodity for each of the most recent 5 crop years: (i) Yield per planted acre (substituting 70 percent of the county transitional yield in each year where the yield per planted acre is less than 70 percent of the county transitional yield); times (ii) The MYA price for the most recent 5 crop years, excluding each of the crop years with the highest and lowest prices and substituting the reference price in each year where the MYA price is less than the reference price. (2) For each covered commodity, the average of the revenues determined under paragraph (1) of this definition for the most recent 5 crop years, excluding each of the crop years with the highest and lowest revenues; and (3) For each of the 2014 through 2018 crop years, the benchmark revenue for the ARC–IC farm is the sum of the amounts determined under paragraph (2) of this definition for all covered commodities on such farms, adjusted to reflect the ratio between the total number of P&CP acres and eligible subsequently planted crop acreage on such farms to a covered commodity and the total P&CP acres and eligible subsequently planted crop acreage of all covered commodities planted on such farms. If a producer has an interest in multiple farms that have enrolled in ARC–IC, the ARC–IC benchmark revenue for that producer will be a weighted average of the benchmark revenue for those multiple farms. * * * * * Current owner means the person or legal entity meeting the definition of owner in 7 CFR part 718 on the day that person or legal entity is signing any form or performing any action required under this part. For example, if a signature of a ‘‘current owner’’ is required under this part, the person or legal entity must be an owner on the day the person or legal entity is signing the form or performing the action required under this part. Current producer means the person or legal entity meeting the definition of producer in 7 CFR part 718 on the day that person or legal entity is signing any form or performing any action required under this part. For example, if a signature of a ‘‘current producer’’ is VerDate Sep<11>2014 17:52 Sep 25, 2014 Jkt 232001 required under this part, the person or legal entity must be a producer on the day the person or legal entity is signing the form or performing the action required under this part. * * * * * Effective price is, the higher of the— (1) National average market price received by producers during the 12month marketing year for the covered commodity (also known as the MYA price), as determined by FSA; or (2) National average loan rate as defined in this part for the covered commodity in effect for the crop year, which is the same as the loan rate for a marketing assistance loan for the commodity for that crop year. * * * * * Farm structure means the constitution of the farm. References to ‘‘farm structure’’ can be by date or crop year. When references to farm structure are by crop year, that means the farm as was last constituted as specified in 7 CFR part 718 subpart C in that crop year. * * * * * Marketing year means the 12-month period beginning in the calendar year the crop is normally harvested as follows: (1) Barley, oats, and wheat: June 1 through May 31; (2) Canola, flax and rapeseed, lentils, and dry edible peas: July 1 through June 30; (3) Peanuts and rice: August 1 through July 31; and (4) Corn, grain sorghum, soybeans, sunflowers, safflower, mustard, crambe, sesame, and chickpeas: September 1 through August 31. Market year average (MYA) price means the national average price received by producers during the 12month marketing year (as defined in this part), as determined by FSA for the relevant crop of the covered commodity. * * * * * National average loan rate means the loan rate established for a crop year of the covered commodity as specified in 7 CFR part 1421. * * * * * Transitional yield means the yield determined according to section 502(b) of the Federal Crop Insurance Act (7 U.S.C. 1502(b)). * * * * * Subpart B—Establishment of Base Acres for a Farm for Covered Commodities ■ 6. Add § 1412.25 to read as follows: PO 00000 Frm 00013 Fmt 4700 Sfmt 4700 57715 § 1412.25 Reallocation of base acres on a farm and updating of records. (a) Any or all of the current owners of a farm with base acres of covered commodities as of September 30, 2013, as adjusted, will have a one-time opportunity in a reallocation period as announced by FSA to: (1) Reallocate the farm’s base acres of covered commodities (upland cotton is not a covered commodity) based on P&CP and subsequently planted crop acreage as specified in this section; or (2) Retain the farm’s base acres as of September 30, 2013. (b) Under no circumstances will reallocation of base acres of covered commodities on a farm as specified in paragraph (a) of this section result in any increase in total base acres on a farm. Additionally, if any current owner submits a written conflicting reallocation request or expresses written disagreement with a reallocation filed in according to paragraph (a), no reallocations will be approved for the farm unless all the current owners of the farm provide CCC with written evidence of the dispute resolution during the reallocation period. (c) FSA will provide the farm operator and owners of record with a summary of all covered commodities P&CP acres and subsequently planted crop acreage for the 2009 through 2012 crop years (as reported to FSA on acreage reports filed with FSA in each of those years). Acreage not reported to FSA by producers will not be included in the summary. The summary will reflect the 2014 farm structure. (d) Current owners will be provided a one-time opportunity to update the records identified in paragraph (c) of this section during the reallocation period specified in paragraph (a) of this section, provided that there are crop insurance records (or other verifiable documentation available to support those requested updates). In the event that an update to a farm’s P&CP acres of a covered commodity for 2009 through 2012 causes any payment under another FSA or CCC program to become unearned, the overpayment must be refunded to FSA or CCC in accordance with the rules for that program and the FSA or CCC regulations governing overpayment (7 CFR parts 718 and 1403). (e) After an update as specified in paragraph (d) of this section, the owner may redistribute the farm’s base acres during the reallocation period, based on a proration of each covered commodity’s P&CP acres or subsequently planted crop acreage in crop years 2009 through 2012 to the total P&CP acres or subsequently E:\FR\FM\26SER1.SGM 26SER1 57716 Federal Register / Vol. 79, No. 187 / Friday, September 26, 2014 / Rules and Regulations asabaliauskas on DSK5VPTVN1PROD with RULES planted crop acreage of all covered commodities during that time. (f) Upland cotton base acres that were in existence as of September 30, 2013, are considered generic base acres for the purposes of ARC and PLC. Generic base acres cannot be reallocated to a covered commodity, but will be eligible for ARC and PLC payments as specified in in this part. (g) The summary of records specified in paragraph (c) of this section is intended to assist current owners of farms with the one-time opportunity for base acre reallocation as provided in this section. Any current owner of a farm may also at any time visit the FSA county office and request to obtain a copy of the summary referenced in paragraph (c) of this section. Current owners can reallocate base acres at any time during the reallocation period without receiving or requesting the summary records, and, therefore, failure to receive a summary record from FSA is not grounds for appeal or extension of the reallocation period. (h) The option to retain or reallocate base acres is an ‘‘all or nothing’’ decision for the farm. Partial retention of base acres or partial reallocation of base acres is not permissible. A decision by any current owner to reallocate base acres on a farm in accordance with this section is final and binding if made according to this section during the reallocation period unless that reallocation is withdrawn in writing by that current owner or another current owner. If another current owner subsequently files a different reallocation request in whatever time remains in the stated reallocation period or if there are conflicting reallocation requests of current owners in the reallocation period, FSA will deem no reallocation to have been performed unless the conflict is resolved via written agreement between the current owners who filed the conflicting requests. In the case of submitting evidence of resolution, the written agreement must be filed with FSA in the reallocation period. Any and all updates and reallocation requests mentioned in this section are subject to review and approval or disapproval by FSA for CCC. ■ 7. Add subpart C to read as follows: Subpart C—Establishment of Price Loss Coverage Yields and Submitting Production Sec. 1412.31 PLC yields for covered commodities. 1412.32 Updating PLC yield. 1412.33 PLC yield for additional oilseeds. 1412.34 Submitting production evidence. 1412.35 Incorrect or false production evidence. VerDate Sep<11>2014 17:52 Sep 25, 2014 Jkt 232001 § 1412.31 PLC yields for covered commodities. (a) The PLC yield for covered commodities on the farm is equal to the counter-cyclical payment yield established for each covered commodity on the farm that was effective September 30, 2013, unless the PLC yield is updated as specified in § 1421.32. If the Secretary designates an additional oilseed or pulse crop as a covered commodity that does not have a counter-cyclical payment yield, the PLC yield for that commodity will be established as specified in § 1412.33 or § 1412.34, whichever is applicable. (b) If a PLC yield is not already established for a covered commodity on a farm for which base acres are allocated through the base acres reallocation process or for which a covered commodity is planted on generic base acres, a yield will be established for the covered commodity on the farm using the yield on similarly situated farms, as determined by FSA. The yield on similarly situated farms will then be used as the 2013 county average counter-cyclical yield for the covered commodity. § 1412.32 Updating PLC yield. (a) For any covered commodity on the farm that has base acres (except generic base acres), as adjusted, in excess of zero acres, a current owner of the farm has a one-time opportunity in a specified period, as announced by FSA to update PLC yields on a covered commodity-by-covered commodity basis equal to 90 percent of each covered commodity’s 2008 through 2012 average yield per planted acre, excluding from the average any year when no acreage was planted to the covered commodity. If the yield per planted acre in any of the years 2008 through 2012 is less than 75 percent of the average of the county yield, then 75 percent of the average of the 2008 through 2012 county yield will be substituted for that year. (b) The current owner of the farm may retain the counter-cyclical yield as the PLC yield or update the PLC yield, on a covered commodity-by-covered commodity basis. (c) PLC yields are exclusively used for PLC. However, any owner of a farm can update the PLC yields, regardless of program election or decision on enrollment or participation. (d) A decision by any current owner of a farm to update any PLC yield as specified in this section is final and binding unless that decision to update the yield is withdrawn by that current owner or a different yield update is made by that current owner or another current owner. If that current owner or PO 00000 Frm 00014 Fmt 4700 Sfmt 4700 another current owner requests a different PLC yield update for the covered commodity during the yield update period specified in paragraph (a) of this section that update will become final. (e) All PLC yield updates are subject to review and approval by FSA as specified in § 1412.35. FSA’s decision to issue payments based on the PLC yield updated by an owner is subject to verification and spot check by FSA at any time. (f) Yield updates in this section will be permitted using the current owner’s certification of yield. The certification is subject to spot check or verification by FSA at any time. If selected for spot check or verification, the owner must submit evidence specified in § 1412.34 to support the certified yield. § 1412.33 oilseeds. PLC yield for additional (a) The PLC yield for the farm for additional oilseeds designated by the Secretary will be determined by multiplying the weighted average yield per planted acre for the crop on the farm, as determined in paragraph (b) of this section, times the ratio resulting from: (1) The national average yield for the crop, as determined by FSA, divided by (2) The national average yield for the crop for the 1998 through 2001 crop years, as determined by FSA. (b)(1) The yield per planted acre for such designated oilseed on the farm is calculated as follows: (i) The sum of the production of the crop for the 1998 through 2001 crop years, as determined in paragraph (b)(2) of this section; divided by (ii) The sum of the total planted acres of the crop for the 1998 through 2001 crop years. (2) The production of the crop for each of the 1998 through 2001 crop years will be the higher of the following, except in a year in which the acreage planted to the crop was zero, in which case the production for the crop for such year will be zero: (i) The total production for the applicable year based on the production evidence submitted in accordance with § 1412.34; or (ii) The amount equal to the product of: (A) The total planted acres for the crop, times (B) 75 percent of the harvested average county yield for that crop determined, where practicable, by calculating the weighted 4-year average of the National Agricultural Statistics Service (NASS) harvested acreage yields for the crop using the 1998 through 2001 crop years. E:\FR\FM\26SER1.SGM 26SER1 Federal Register / Vol. 79, No. 187 / Friday, September 26, 2014 / Rules and Regulations (3) The NASS harvested acreage yield to be used in paragraph (b)(2) of this section will be based on: (i) NASS harvested irrigated yield for the crop, if available, for producers who irrigated the crop in the applicable years; (ii) NASS harvested non-irrigated yield for the crop, if available, for producers who did not irrigate the crop in the applicable years; or (iii) NASS harvested blended yield for all acreage, regardless of whether or not the acres were irrigated or non-irrigated, for all crops in all counties for which the yields in paragraphs (b)(3)(i) and (ii) of this section are unavailable. (4) If NASS harvested acreage yield data is not available, the Deputy Administrator will assign a yield to be used in paragraph (b)(2)(ii)(B) of this section. (c) The establishment of PLC yield for an additional oilseed in this section will be permitted using a producer certification of yield. The certification is subject to spot check or verification by FSA at any time. If selected for spot check or verification, the producer must submit evidence as specified in in § 1412.34 to support the certified yield. asabaliauskas on DSK5VPTVN1PROD with RULES § 1412.34 Submitting production evidence. (a) When required by FSA as specified in this part, documentary evidence supporting any certification of yield or production must be provided to the county committee of the county where the farm is administratively located. (b) Documentary evidence acceptable to FSA includes, but is not limited to: (1) Production approved by the county committee for some other FSA program purpose; (2) Commercial receipts; (3) Settlement sheets; (4) Warehouse ledger sheets; (5) Elevator receipts or load summaries, supported by other evidence showing disposition, such as sales documents; (6) Evidence from harvested or appraised acreage, approved for FCIC or multi-peril crop insurance; or (7) Other production evidence determined acceptable by the Deputy Administrator. (c) Production evidence specified in paragraph (b) of this section must show: (1) The producer’s name, (2) The commodity, (3) The buyer or name of storage facility, (4) The date of transaction or delivery, and (5) The quantity. (d) FSA may verify the production evidence submitted with records on file at the warehouse, Risk Management VerDate Sep<11>2014 17:52 Sep 25, 2014 Jkt 232001 Agency, or other entity that received or may have received the reported production. § 1412.35 Incorrect or false production evidence. (a) If a certification of production and yield or production evidence submitted in support of that certification is false or incorrect, as determined by the county committee, the county committee will determine whether the owner, operator, or producer submitting the certification or production evidence for a farm acted in good faith or took action to defeat the purpose of ARC or PLC. (b) If the county committee determines the owner or producer who submitted the certification or production evidence referenced in paragraph (a) of this section acted in good faith and did not take action to defeat the purpose of ARC or PLC, the county committee will, as applicable: (1) Correct the PLC yield for the applicable covered commodity to equal the yield that would have been calculated as specified in § 1412.32 based on accurate production evidence; and (2) Recalculate any payments based on the correct yield and require refunds of any payments that were issued as a result of the incorrect yield. Unearned payments must be refunded together with interest from the date of disbursement and are due from any producers who received payments that would not have issued absent the error or incorrect yield. (c) If the county committee determines the owner, operator, or producer who submitted the false or incorrect evidence did not act in good faith or took any action to defeat or undermine the purpose of ARC or PLC, the county committee will require a full refund of any payments, with interest, that were issued to any persons based on that false or erroneous certification or production evidence and the yield update request is invalid. Subpart D—ARC and PLC Contract Terms and Enrollment Provisions for Covered Commodities 8. In subpart D, add §§ 1412.41, 1412.42, and 1412.43 to read as follows: ■ § 1412.41 ARC or PLC program contract. (a) The following provisions apply to ARC and PLC program contracts: (1) Eligible producers (as specified in § 1412.42) of covered commodities with base acres may enroll in ARC and PLC contracts during the enrollment period announced by FSA. (i) For program year 2014, the enrollment period will end June 1, 2015. PO 00000 Frm 00015 Fmt 4700 Sfmt 4700 57717 (ii) The 2014 contract period ends September 30, 2014. Accordingly, the enrollment for 2014 is the only program year a retroactive contract can be approved. (iii) If a 2014 farm did not have a valid election made by producers in accordance with subpart G, no producer on that farm is eligible for any 2014 ARC or PLC payment for that farm. This is not an adverse decision for any enrolled producer on that farm; rather, the farm’s producers are simply not eligible for payments on the enrolled farm because the farm does not have a valid election. (2) For program years 2015 through 2018, the enrollment period will end on June 1 of each such fiscal year. This means that the enrollment period for both 2014 and 2015 will end on June 1, 2015. (i) Eligible producers must execute and submit an ARC or PLC program contract not later than June 1, 2015, for 2014 and 2015 fiscal year contracts and not later than June 1 of the applicable year for 2016 through 2018 fiscal year contracts. (ii) Except as may otherwise be provided for the 2014 crop year as stated in this section, enrollment is not allowed after September 30 of the fiscal year in which the ARC or PLC payments are requested. Except as specifically stated for the 2014 crop year, FSA will not process offers of enrollment for a contract period after the contract period has ended. This is not a compliance provision but a rule of general applicability and will apply to every offer to contract in each contract year. (3) Except as discussed in this section for PLC and ARC–CO enrollments, contracts will not be approved unless all producers sharing in contract acreage with more than a zero share have submitted all applicable signatures on the contract and documentation necessary for FSA to make such approval, as determined by the Deputy Administrator. For those producers with an interest but a zero share of contract acreage, the contract will not be approved before all producers have signed the contract or furnished supportive and necessary contractual documents (such as cash leases in lieu of signing for a zero share). A contract not having all requisite signatures of producers having more than a zero share of contract acreage on or before the enrollment deadline are deemed incomplete and will not be considered submitted to CCC for any purpose and will not be acted on or approved. For ARC–IC contracts there are no exceptions to this provision. Additionally, contracts enrolled by a E:\FR\FM\26SER1.SGM 26SER1 asabaliauskas on DSK5VPTVN1PROD with RULES 57718 Federal Register / Vol. 79, No. 187 / Friday, September 26, 2014 / Rules and Regulations producer by the date specified in paragraph (a)(2)(i) of this section that were not signed by other producers according to this section will be deemed withdrawn and will not be approved. An exception to this applies to PLC and ARC–CO offers of enrollment. In those instances, at the discretion of the Deputy Administrator and where no dispute of shares or other disagreement between producers is evident or suspected, PLC and ARC–CO offers of enrollment can be approved to permit payment to only those eligible producers who did enroll and without regard to shares that do not have signatures. This exception will be made only if, in the sole judgment and discretion of FSA, FSA is satisfied that those producers who did sign in accordance with this section ensure compliance with all contract provisions and requirements of this part. Producers have no right to payment on any farm that is not enrolled in ARC or PLC and they are not entitled to a decision to authorize the exception for PLC and ARC–CO enrollments as discussed above, as that is discretionary. CCC and FSA are not responsible for ensuring that producers annually enroll in ARC or PLC. Producers on a farm are solely responsible for ensuring that enrollment occurs. (4) Eligible producers who choose to enter into a contract with FSA must enroll all base acres on the farm. Enrollment of fewer than all base acres on the farm is not allowed. (b) Eligible producers may withdraw from a contract at any time by June 1 of the applicable contract year provided all producer signatories to the contract, including FSA, agree to the withdrawal in writing. (c) All contracts expire on September 30 of the fiscal year of the contract unless: (1) Withdrawn in accordance with paragraph (b) of this section; (2) Terminated in accordance with paragraphs (d) or (e) of this section; or (3) Terminated at an earlier date by mutual consent of all parties, including CCC. (d) A transfer or change in the interest of an owner or producer in the farm or in acreage on the farm subject to a contract will result in the termination of the contract. The contract termination will be effective on the date of the transfer or change. Successors to the interest in the farm or crops on the farm subject to the contract may enroll the farm in a new contract for the current and assume all obligations under the contract. (e) In the event a 2015 or subsequent crop year farm reconstitution is VerDate Sep<11>2014 17:52 Sep 25, 2014 Jkt 232001 completed on a properly enrolled farm or farms in accordance with part 718 of this title, FSA will issue notices to the 2015 and subsequent crop year farm operator and owners of record on a farm that all producers with an interest in the base acres on the farm must sign a new ARC or PLC program contract within the later of 30 days of the notice or September 30 of the fiscal year program payments are requested, after receiving written notification by the county committee indicating the reconstitution is completed. It is the responsibility of the operator and owners on a farm that producers with an interest in base acres are notified of the reconstitution and requirement for a new contract. § 1412.42 Eligible producers. Frm 00016 Fmt 4700 Sfmt 4700 § 1412.43 Reconstitutions. Farms will only be reconstituted in accordance with subpart G of this part and part 718 of this title. § 1412.45 [Amended] 9. In § 1412.45, remove the term ‘‘P&CP’’ each time it appears and add the word ‘‘planted’’ in its place. ■ § 1412.46 [Amended] 10. In § 1412.46, paragraph (c)(2), remove the words ‘‘percent of a farm’’ and add the words ‘‘percent of the base acres of a farm’’ in their place. ■ 11. Add § 1412.50 to subpart D to read as follows: ■ (a) Producers eligible to enter into a contract are: (1) An owner of a farm who has an ownership share of a crop and who assumes all or a part of the risk of producing a crop that is commensurate with that claimed ownership share of the crop; or (2) A producer, other than an owner, on a farm with a share-rent lease for such farm, regardless of the length of the lease, if the owner of the farm enters into the same contract; or (3) A producer, other than an owner, on a farm who cash rents such farm under a lease expiring on or after September 30 of the year of the contract in which case the owner is not required to enter into the contract; or (4) A producer, other than an owner, on a farm who cash rents such farm under a lease expiring before September 30 of the year of the contract. The owner of such farm must also enter into the same contract, failing which the farm is not enrolled; or (5) An owner of an eligible farm who cash rents such farm and the lease term expires before September 30 of the year of the contract, if the tenant declines to enter into a contract for the applicable year. In the case of an owner covered by this paragraph, payments will not begin under the contract until the lease held by the tenant ends. (b) A minor child will be eligible to enter into a contract only if one of the following conditions exist: (1) The right of majority has been conferred upon the minor by court proceedings or law; (2) A guardian has been appointed to manage the minor’s property and the applicable program documents are executed by the guardian; or (3) A bond is furnished under which a surety guarantees any loss incurred for which the minor would be liable had the minor been an adult. PO 00000 (c) The owner of the farm may be considered the ‘‘producer’’ if there is no other producer, but the owner could have shared in the crop had a crop been produced, but only if the farm and owner otherwise meet all the requirements for payment. § 1412.50 Transfer of land and successionin-interest. (a) Land subject to an election in subpart G will continue to be subject to the election even if there is a transfer of land or change in interest of any producer or owners on the farm. If a new owner or operator or producer purchases or obtains the right and interest in, or right to occupancy of, the land subject to an election option, such new owner or operator or producer, upon the approval of FSA, may enroll and participate under a new contract with FSA with respect to such transferred land in accordance with § 1412.41. (b) A succession in interest to an ARC or PLC program contract is required if there has been a change in the operation of a farm such as: (1) A sale of land; (2) A change of operator or producer, including a change in a partnership that increases or decreases the number or changes who are partners; (3) A foreclosure, bankruptcy, or involuntary loss of the farm; (4) A change in the producer shares to reflect changes in the producer’s share of the crop(s) that were originally approved on the contract; or (5) Another change as otherwise determined by the Deputy Administrator by which the succession will not adversely affect nor defeat the purpose of the program. (c) A succession in interest to an ARC program contract is not permitted if FSA determines that the change: (1) Is not for all the time remaining under the ARC or PLC program contract; E:\FR\FM\26SER1.SGM 26SER1 Federal Register / Vol. 79, No. 187 / Friday, September 26, 2014 / Rules and Regulations (2) Results in a violation of the landlord-tenant provisions specified in § 1412.55; or (3) Adversely affects or otherwise defeats the purpose of the program. (d) If a producer who is entitled to receive ARC or PLC payments dies, becomes incompetent, or is otherwise unable to receive the payment, CCC will make the payment in accordance with part 707 of this title. (e) A producer or owner of an enrolled farm must inform the county committee of changes in interest in base acres on the farm not later than: (1) August 1 of the fiscal year in which the change occurs if the change requires a reconstitution be completed in accordance with part 718 of this title or (2) September 30 of the fiscal year in which the change occurs if the change does not require a reconstitution be completed in accordance with part 718 of this title. (f) In any case in which either an ARC or PLC payment has previously been made to a predecessor, such payment will not be paid to the successor, unless such payment has been refunded in full by the predecessor, in accordance with § 1412.41(d). Subpart E—Financial Considerations Including Sharing Payments 12. In § 1412.51, add paragraph (e) to read as follows: ■ § 1412.51 Limitation of payments. * * * * * (e) Notwithstanding any other provision of this part, a producer on a farm is not eligible to receive ARC and PLC payments if the sum of the base acres including any generic base acres on the farm is 10 acres or less. The 10acre limitation of this subsection will not apply to a socially disadvantaged farmer or rancher or a limited resource farmer or rancher as specified in this part. ■ 13. Add §§ 1412.52 and 1412.53 to read as follows: asabaliauskas on DSK5VPTVN1PROD with RULES § 1412.52 PLC payment provisions. (a) Provided all provisions of this part including but not limited to election have been satisfied for each of the 2014 through 2018 contract years, a PLC payment will be made to eligible participants on a farm enrolled in PLC with respect to covered commodities for which a PLC yield and base acres are established: (1) When the effective price for a covered commodity in a crop year is less than the reference price for the PLC enrolled covered commodity for that crop year as specified in this part; and VerDate Sep<11>2014 17:52 Sep 25, 2014 Jkt 232001 (2) As soon as practical, as determined by the Deputy Administrator, after October 1 following the end of the 12-month marketing year for the covered commodity as applicable. (b) The effective price for a covered commodity is equal to the higher of the: (1) MYA price received by producers during the 12-month marketing year for the crop year of the covered commodity, as determined by FSA, or (2) National loan rate for a marketing assistance loan for the covered commodity for such crop year. (c) The payment rate used to calculate PLC payments with respect to covered commodity for which PLC yields and base acres are attributed to the covered commodity on a farm enrolled in a PLC contract is the reference price of the covered commodity minus the effective price of the covered commodity for a crop year, as determined in accordance with paragraph (b) of this section. (d) For PLC contracts, when PLC payments are triggered in accordance with paragraph (a) of this section, subject to the limitation in § 1412.51 and in part 1400 of this chapter, the PLC payment to be paid to producers on a farm enrolled in a contract with respect to a covered commodity for which a PLC yield and base acres are attributed is equal to the product of: (1) The payment rate determined in accordance with paragraph (c) of this section, multiplied by (2) The relevant payment acres of the covered commodity, as applicable, minus any payment acre reduction in accordance with § 1412.46, multiplied by (3) The PLC payment yield for the covered commodity on the farm enrolled in a PLC contract as determined in accordance with § 1412.31, minus (4) Any reduction calculated in accordance with subpart F of this part. (e) If a producer declines to accept, or is determined to be ineligible for all or any part of the producer’s share of the PLC payment computed for the farm in accordance with the provisions of this section, the: (1) Payment or portions thereof will not become available for any other producer and (2) Producer is required to refund to CCC any amounts representing payments that exceed the payments determined by FSA to have been earned under the program authorized by this part. Part 1403 of this chapter is applicable to all unearned payments. (f) The payment of any amount due any producer on a farm enrolled in a PLC contract will be made only after all PO 00000 Frm 00017 Fmt 4700 Sfmt 4700 57719 the producers subject to the contract are determined to be in full compliance with the contract and the requirements in this part or any other applicable part. (g) A participant on a farm enrolled in a contract may receive a payment amount due without regard to the eligibility of other participants on the farm if the: (1) Participant is in full compliance with the contract and the requirements in this part or any other applicable part; (2) Payment of such amount does not adversely affect or defeat the purpose of the program, as determined by the Deputy Administrator, or designee; and (3) Payment is approved by the Deputy Administrator, or designee. (h) Temperate japonica rice or medium and short grain rice grown: (1) In California will receive the effective price and guarantee for medium and short grain based only on the prices that temperate japonica or medium and short grain rice receives in California. (2) Outside of California will receive the effective price and guarantee for medium and short grain rice based only on the prices that temperate japonica or medium and short grain rice receives outside of California. § 1412.53 ARC payment provisions. (a) Provided all provisions of this part including but not limited to ARC–CO election and enrollment have been satisfied for each of the 2014 through 2018 contract years, CCC will issue, as applicable and consistent with the election and enrollment: (1) An ARC–CO payment beginning October 1, or as soon as practicable thereafter, after the end of the applicable marketing year for the covered commodity to the producers on a farm for a covered commodity in each crop year if the farm was enrolled in ARC– CO and the ARC–CO actual crop revenue was less than the ARC–CO guarantee. (2) Payment is equal to the result of multiplying the payment acres for the covered commodity times the difference between the actual crop revenue and the ARC–CO guarantee, not to exceed 10 percent of the ARC–CO benchmark revenue. (b) Provided all provisions of this part including but not limited to ARC–IC election and enrollment have been satisfied for each of the 2014 through 2018 contract years, CCC will issue, as applicable and consistent with the election and enrollment: (1) An ARC–IC payment beginning October 1, or as soon as practicable thereafter, after the end of the applicable marketing year for the farm if the farm E:\FR\FM\26SER1.SGM 26SER1 asabaliauskas on DSK5VPTVN1PROD with RULES 57720 Federal Register / Vol. 79, No. 187 / Friday, September 26, 2014 / Rules and Regulations was enrolled in ARC–IC and the ARC– IC actual crop revenue for that farm is less than the ARC–IC guarantee. (2) Payment is equal to the result of multiplying the payment acres for the covered commodities times the difference between actual crop revenue and the ARC–IC guarantee, not to exceed 10 percent of benchmark revenue for ARC–IC. (c) If a producer has an interest in multiple farms that have enrolled in ARC–IC, the ARC–IC benchmark revenue for that producer used in the payment calculation will be a weighted average of the benchmark revenue for those multiple farms. (d) In a county having a sufficient number of farms with P&CP acreage history of a covered commodity in 2009 through 2012, as determined by FSA, where at least an average of 25 percent of a covered commodity’s P&CP acreage was irrigated in 2009 through 2012 and at least an average of 25 percent of the same covered commodity’s P&CP acreage in that county was non-irrigated in 2009 through 2012, a separate irrigated and non-irrigated benchmark revenue, guarantee, and actual revenue will be maintained by FSA for the affected county. For farms in these counties with covered commodities enrolled in ARC–CO and ARC–IC, the average 2009 through 2012 reported acreage of each covered commodity on the farm with irrigated and non-irrigated status will be used to calculate a percentage of each applicable covered commodity that will be applied against the irrigated and non-irrigated benchmark revenue, guarantee, and actual revenue as determined by FSA. (e) FSA will determine the irrigated and non-irrigated counties and crops prior to the 2014 enrollment period and that determination will be effective through the 2018 program year, unless there is a substantial change in the irrigated and non-irrigated practices in the county, as determined by the FSA. (f) The effective price and guarantee for temperate japonica rice will be based on the price that all medium and short grain (including glutinous) rice receives in California. The effective price and guarantee for medium grain rice outside California will be based on the price that all medium and short grain rice receives outside California. § 1412.54 [Amended] 14. In § 1412.54(f) introductory text, remove the term ‘‘P&CP’’ each time it appears and add the word ‘‘planted’’ in its place. ■ 15. Amend § 1412.66 by adding paragraph (c) to read as follows: ■ VerDate Sep<11>2014 17:52 Sep 25, 2014 Jkt 232001 § 1412.66 Acreage and production reports, prevented planting, and notices of loss. * * * * * (c) As a condition of producer payment eligibility for all ARC–IC payments under this part, all producers of all covered commodities on enrolled ARC–IC elected farms must accurately submit a report of production by the acreage reporting date for the crop in the year immediately following the crop year of the reported crop acreage for all the covered commodities elected and enrolled in ARC–IC. The report is due for each covered commodity for which an acreage report greater than zero planted acres was filed for the farm according to paragraph (a) of this section. The report of production for all of such covered commodity or covered commodities can be submitted by any of the producers of the covered commodity or covered commodities on the farm, the farm operator, or an owner on the farm. The absence of the required production report of any covered commodity being filed on an enrolled ARC–IC elected farm will cause all of the producers who share in any of the covered commodities on that farm to be ineligible for payment on that farm and on any other ARC–IC elected and enrolled farm in the State for the crop year for which the production report was not filed or is missing. At the discretion of CCC, the report of production must be accompanied by documentation acceptable to CCC. The report must include the date harvest was completed. Records of production acceptable to CCC may include those specified in: (1) Commercial receipts, settlement sheets, warehouse ledger sheets, or load summaries of the crop that was sold or otherwise disposed of through commercial channels provided the records are reliable or verifiable as determined by CCC; and (2) Such documentary evidence such as contemporaneous measurements, truck scale tickets, and contemporaneous diaries, as is necessary in order to verify the information provided if the crop has been fed to livestock or otherwise disposed of other than through commercial channels, provided the records are reliable or verifiable as determined by CCC. If the crop will be disposed of through retail sales, such as roadside stands, u-pick, etc. and the producer will not be able to certify acceptable records of production, the producer must request an appraisal of the crop acreage prior to harvest. ■ 16. Add subpart G to read as follows: Subpart G—ARC and PLC Election Sec. PO 00000 Frm 00018 Fmt 4700 Sfmt 4700 1412.71 Election of ARC or PLC. 1412.72 Election period. 1412.73 Reconstitutions of farms and election. 1412.74 Failure to make election. § 1412.71 Election of ARC or PLC. (a) All of the current producers on a farm must make a one-time election that is both: (1) Unanimous, and (2) Irrevocable. (b) The election by current producers is to obtain— (1) Either PLC or ARC–CO on a covered commodity-by-coveredcommodity basis on the farm; or (2) ARC–IC for all covered commodities on the farm. (c) The election will be based on the 2014 farm structure (including any reconstitutions of farms that were initiated by August 1, 2014). (d) Valid elections specified in paragraphs (a) and (b) of this section by current producers will apply to the 2014 farm structure and 2014 producers on the farm. The valid election will also apply to any subsequent year parent to the farm reconstitution as well as farms resulting from the parent farm as specified in § 1412.73. Neither the requesting of a farm reconstitution nor the reconstitution of any farm will impact either the requirement that all current producers on a farm must make the unanimous irrevocable election in the defined election period or the valid election that was previously made by those current producers. (e) FSA will process elections from current producers on a farm based on the election as submitted. For example, if the current producers of a farm attest that they are all or the only current producers on the farm and FSA later learns that there was another current producer at the time of election who did not agree to the election, the election is invalid. If at any time FSA determines that an election fails to satisfy the requirements of this subpart because it did not include the unanimous agreement of all current producers on the farm at the time of election, the election will immediately be invalid. This is not a compliance provision. Only valid elections by all current producers will be recognized and used by CCC. All ARC and PLC payments that were issued to any producers on a farm based on an election later determined by CCC to be invalid, for whatever reason, regardless of whether those producers who were issued unearned payments personally made or participated in the invalid election, must be refunded with interest. (f) Election is separate from enrollment; producers on farms that E:\FR\FM\26SER1.SGM 26SER1 Federal Register / Vol. 79, No. 187 / Friday, September 26, 2014 / Rules and Regulations have validly completed an election by the current producers in the prescribed election period must still annually enroll as specified in subpart D for PLC and ARC payments, as applicable. asabaliauskas on DSK5VPTVN1PROD with RULES § 1412.72 Election period. (a) The election period will be conducted in a defined period as announced by FSA. During the election period, all current producers on a farm must unanimously make the irrevocable election as described in § 1412.71 to preserve the payment eligibility of all producers on the farm for 2014 and determine whether the default election (PLC) or elected option (either a combination of ARC–CO and PLC or ARC–IC) will apply to the farm. (b) If an election is submitted by all current producers on a farm as specified in § 1412.71 and paragraph (a) of this section, that election will be recognized as valid for the farm in all 2014 through 2018 crop years unless any of the following occur: (1) The election is rescinded or terminated by any current producer on the farm in accordance with paragraph (c) of this section during the election period; (2) The valid election is modified and replaced by another valid election by all current producers during the election period; (3) A subsequent valid election by all current producers is made with FSA during the election period; or (4) FSA determines the election at the time it was made was invalid for any reason. (c) At any time during the election period, a current producer can rescind or terminate an election by providing written notice to FSA during the election period. The written notice to rescind or terminate must be physically received by FSA for CCC during the election period in order to be recognized. Immediately following receipt of such notice to rescind or terminate, the farm will be viewed as not having any effective valid election (in other words, no valid election will be determined to exist—even if there was another previous election in effect before the election that is rescinded, or terminated as specified in with this paragraph). (d) FSA is under no obligation to notify producers, owners, current producers, or current owners on a farm that an election has been rescinded or terminated. Current producers of a farm are solely responsible for filing a valid election during the election period or in whatever time remains in an election period following the rescission or termination of an election. VerDate Sep<11>2014 17:52 Sep 25, 2014 Jkt 232001 (e) FSA is under no obligation to notify current producers, current owners, producers, or owners or new producers or owners of whether or not a valid election exists or is in place or whether any current producer has rescinded or terminated an election. However, FSA will respond to inquiries regarding the status of election of a farm by any current producer or current owner on a farm including a producer or owner who gains a producer or owner interest on the farm during the election period. (f) The election period and final day in that election period in which current producers can unanimously and irrevocably elect are not a compliance requirement or provision. The requirement of an election is mandated in the 2014 Farm Bill and as such is not subject to any of the equitable relief provisions of 7 CFR part 718, subpart D. Further, because the requirement of a unanimous irrevocable election and ramifications for not having a valid election are specified in the 2014 Farm Bill, FSA will not consider any equitable relief. There are no late-file provisions for election. 1412.73 Reconstitutions of farms and election. (a) If a new producer or new owner gains an interest in a farm after the filing of a valid election on that farm during the election period, that new producer or new owner, whether or not known to FSA or the other producers or owners on the farm, will be subject to any previously submitted valid election under §§ 1412.71 and 1412.72 unless that new producer or new owner modifies, rescinds, or terminates the election as a producer or owner as specified in § 1412.72(c) during the remaining time in the election period. (b) Any reconstitution request initiated after August 1, 2014, will not be made until after the end of the election period specified in § 1412.72. Following the close of the election period in § 1412.72, a valid election on any farm cannot be changed by any reconstitution. This means that valid elected farms can only be combined with farms having an identical election for each and every covered commodity on the farm regardless of whether there are any base acres for any and all covered commodities on the farm. Reconstitutions will not be permitted to alter a valid election or the default election that may apply to a farm. § 1412.74 Failure to make election. (a) If all current producers on a farm do not make a unanimous election during the period specified in § 1412.72, PO 00000 Frm 00019 Fmt 4700 Sfmt 4700 57721 that farm will not have a valid election and any producer on the farm is not eligible for 2014 ARC or PLC enrollment or payments. (b) If a valid election is not made for a farm, FSA will not make any payments with respect to the farm for the 2014 crop year and the producers on the farm will default to a PLC election for all covered commodities on the farm for the 2015 through 2018 crop years. PART 1416—EMERGENCY AGRICULTURAL DISASTER ASSISTANCE PROGRAMS 17. The authority for part 1416 continues to read as follows: ■ Authority: Title III, Pub. L. 109–234, 120 Stat. 474; 16 U.S.C. 3801, note. § 1416.102 [Amended] 18. In § 1416.102, remove the definitions for ‘‘limited resource farmer or rancher’’ and ‘‘socially disadvantaged farmer or rancher’’. ■ Signed on September 17, 2014. Val Dolcini, Executive Vice President, Commodity Credit Corporation, and Administrator, Farm Service Agency. [FR Doc. 2014–22879 Filed 9–25–14; 8:45 am] BILLING CODE 3410–05–P NUCLEAR REGULATORY COMMISSION 10 CFR Part 70 [NRC–2010–0271] RIN 3150–AJ34 Domestic Licensing of Special Nuclear Material—Written Reports and Clarifying Amendments Nuclear Regulatory Commission. ACTION: Direct final rule. AGENCY: The U.S. Nuclear Regulatory Commission (NRC) is amending its regulations related to reportable safety events involving special nuclear material. This rule increases the time licensees are allowed to submit a written follow-up report from within 30 days to within 60 days after the initial report of an event, updates the reporting framework for certain situations, and removes redundant reporting requirements. These amendments affect a licensee or an applicant that is, or plans to be, authorized to possess greater than a critical mass of special nuclear material. This action resulted from a petition for rulemaking (PRM) SUMMARY: E:\FR\FM\26SER1.SGM 26SER1

Agencies

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

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Rules and Regulations
Federal Register
________________________________________________________________________

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having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.

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

[[Page 57703]]

DEPARTMENT OF AGRICULTURE

Farm Service Agency

7 CFR Part 718

Commodity Credit Corporation

7 CFR Parts 1412 and 1416

RIN 0560-AI24

Agriculture Risk Coverage and Price Loss Coverage Programs

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

ACTION: Final rule.

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

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

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

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

SUPPLEMENTARY INFORMATION:

Background

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

Overview of ARC and PLC

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

[[Page 57704]]

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

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

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

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

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

[[Page 57705]]

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

Base Acres

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

ARC and PLC Programs Election

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

Base Acre Reallocation and Opportunity To Update Records

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

[[Page 57706]]

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

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

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

Generic Base Acres

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

Payment Yields

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

[[Page 57707]]

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

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

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

PLC Payment Calculations

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

PLC Example--Corn
------------------------------------------------------------------------

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

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

[[Page 57708]]

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

ARC Payment Calculations

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

ARC-CO Payment Calculation Example--Soybeans
------------------------------------------------------------------------

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

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

[[Page 57709]]

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

ARC-IC Payment Calculation Example--Corn and Soybeans--100 base acres
[60 acres planted with corn and 40 acres planted with soybeans]
------------------------------------------------------------------------

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

Election of ARC and PLC

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

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

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

[[Page 57710]]

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

Deadlines for ARC and PLC Actions

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

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

General Provisions That Apply to ARC and PLC

As noted above, the rule published on August 8, 2014, to implement
the CTAP program implemented some general provisions that also apply to
ARC and PLC. The regulations in 7 CFR part 1412 specify certain
requirements to which the participant must agree to be eligible for
payments. One such requirement is to effectively control noxious weeds
and otherwise maintain the land in accordance with sound agricultural
practices. Since that rule was published, the Secretary has determined
to amend the applicable regulations to remove P&CP acreage and specify
that only planted and eligible subsequently planted crop acreage of
covered commodities will attribute generic base acres to covered
commodities.
Base acres for covered commodities for ARC and PLC will be reduced
for cropland that is on land that has been subdivided and developed for
multiple residential units or other non-farming uses if the size of the
tracts and the density of the subdivision is such that the land is
unlikely to return to the previous agricultural use, unless the
producers on the farm demonstrate that the land remains devoted to
commercial agricultural production or is likely to be returned to the
previous agricultural use. The regulation for the reductions in base
acres is already in 7 CFR 1412.24,

[[Page 57711]]

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

Miscellaneous

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

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

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

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

Structure of the Regulation

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

Notice and Comment

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

Effective Date

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

[[Page 57712]]

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

Executive Orders 12866 and 13563

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

Cost Benefit Analysis Summary

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

Regulatory Flexibility Act

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

Environmental Review

The environmental impacts of this final rule have been considered
in a manner consistent with the provisions of the National
Environmental Policy Act (NEPA, 42 U.S.C. 4321-4347), the regulations
of the Council on Environmental Quality (40 CFR parts 1500-1508), and
the FSA regulations for compliance with NEPA (7 CFR part 799). While
ARC and PLC are new, their creation is mandated by the 2014 FB, and is
therefore not subject to review under NEPA. The legislative intent for
creating these new programs is to provide revenue support to the same
group of producers eligible for the earlier and now-discontinued
programs, DCP and ACRE. The discretionary provisions defined by FSA for
ARC and PLC were administrative clarifications of the mandatory
elements and FSA determined that they would not alter any environmental
impacts resulting from implementing the mandatory programs. Therefore,
FSA will not prepare an environmental assessment or environmental
impact statement for this regulatory action.

Executive Order 12372

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

Executive Order 12988

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

Executive Order 13132

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

Executive Order 13175

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

[[Page 57713]]

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

The Unfunded Mandates Reform Act of 1995

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA, Pub. L.
104-4) requires Federal agencies to assess the effects of their
regulatory actions on State, local, and Tribal governments, or the
private sector. Agencies generally need to prepare a written statement,
including a cost benefit analysis, for proposed and final rules with
Federal mandates that may result in expenditures of $100 million or
more in any 1 year for State, local, or Tribal governments, in the
aggregate, or to the private sector. UMRA generally requires agencies
to consider alternatives and adopt the more cost effective or least
burdensome alternative that achieves the objectives of the rule. This
rule contains no Federal mandates, as defined in Title II of UMRA, for
State, local, and Tribal governments or the private sector. Therefore,
this rule is not subject to the requirements of sections 202 and 205 of
UMRA.

Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA)

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

Federal Assistance Programs

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

Paperwork Reduction Act of 1995

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

E-Government Act Compliance

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

List of Subjects

7 CFR Part 718

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

7 CFR Part 1412

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

7 CFR Part 1416

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

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

PART 718--PROVISIONS APPLICABLE TO MULTIPLE PROGRAMS

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

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

Subpart A--General Provisions

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

Sec. 718.2 Definitions.

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

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

Sec. 718.8 Administrative county.

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

[[Page 57714]]

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

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

Sec. 718.204 Reconstitution of base acres.

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

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

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

Subpart A--General Provisions

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

Sec. 1412.3 Definitions.

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

[[Page 57715]]

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

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

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

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

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

[[Page 57716]]

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

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

Sec. 1412.31 PLC yields for covered commodities.

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

Sec. 1412.32 Updating PLC yield.

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

Sec. 1412.33 PLC yield for additional oilseeds.

(a) The PLC yield for the farm for additional oilseeds designated
by the Secretary will be determined by multiplying the weighted average
yield per planted acre for the crop on the farm, as determined in
paragraph (b) of this section, times the ratio resulting from:
(1) The national average yield for the crop, as determined by FSA,
divided by
(2) The national average yield for the crop for the 1998 through
2001 crop years, as determined by FSA.
(b)(1) The yield per planted acre for such designated oilseed on
the farm is calculated as follows:
(i) The sum of the production of the crop for the 1998 through 2001
crop years, as determined in paragraph (b)(2) of this section; divided
by
(ii) The sum of the total planted acres of the crop for the 1998
through 2001 crop years.
(2) The production of the crop for each of the 1998 through 2001
crop years will be the higher of the following, except in a year in
which the acreage planted to the crop was zero, in which case the
production for the crop for such year will be zero:
(i) The total production for the applicable year based on the
production evidence submitted in accordance with Sec. 1412.34; or
(ii) The amount equal to the product of:
(A) The total planted acres for the crop, times
(B) 75 percent of the harvested average county yield for that crop
determined, where practicable, by calculating the weighted 4-year
average of the National Agricultural Statistics Service (NASS)
harvested acreage yields for the crop using the 1998 through 2001 crop
years.

[[Page 57717]]

(3) The NASS harvested acreage yield to be used in paragraph (b)(2)
of this section will be based on:
(i) NASS harvested irrigated yield for the crop, if available, for
producers who irrigated the crop in the applicable years;
(ii) NASS harvested non-irrigated yield for the crop, if available,
for producers who did not irrigate the crop in the applicable years; or
(iii) NASS harvested blended yield for all acreage, regardless of
whether or not the acres were irrigated or non-irrigated, for all crops
in all counties for which the yields in paragraphs (b)(3)(i) and (ii)
of this section are unavailable.
(4) If NASS harvested acreage yield data is not available, the
Deputy Administrator will assign a yield to be used in paragraph
(b)(2)(ii)(B) of this section.
(c) The establishment of PLC yield for an additional oilseed in
this section will be permitted using a producer certification of yield.
The certification is subject to spot check or verification by FSA at
any time. If selected for spot check or verification, the producer must
submit evidence as specified in in Sec. 1412.34 to support the
certified yield.

Sec. 1412.34 Submitting production evidence.

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

Sec. 1412.35 Incorrect or false production evidence.

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

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

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

Sec. 1412.41 ARC or PLC program contract.

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

[[Page 57718]]

producer by the date specified in paragraph (a)(2)(i) of this section
that were not signed by other producers according to this section will
be deemed withdrawn and will not be approved. An exception to this
applies to PLC and ARC-CO offers of enrollment. In those instances, at
the discretion of the Deputy Administrator and where no dispute of
shares or other disagreement between producers is evident or suspected,
PLC and ARC-CO offers of enrollment can be approved to permit payment
to only those eligible producers who did enroll and without regard to
shares that do not have signatures. This exception will be made only
if, in the sole judgment and discretion of FSA, FSA is satisfied that
those producers who did sign in accordance with this section ensure
compliance with all contract provisions and requirements of this part.
Producers have no right to payment on any farm that is not enrolled in
ARC or PLC and they are not entitled to a decision to authorize the
exception for PLC and ARC-CO enrollments as discussed above, as that is
discretionary. CCC and FSA are not responsible for ensuring that
producers annually enroll in ARC or PLC. Producers on a farm are solely
responsible for ensuring that enrollment occurs.
(4) Eligible producers who choose to enter into a contract with FSA
must enroll all base acres on the farm. Enrollment of fewer than all
base acres on the farm is not allowed.
(b) Eligible producers may withdraw from a contract at any time by
June 1 of the applicable contract year provided all producer
signatories to the contract, including FSA, agree to the withdrawal in
writing.
(c) All contracts expire on September 30 of the fiscal year of the
contract unless:
(1) Withdrawn in accordance with paragraph (b) of this section;
(2) Terminated in accordance with paragraphs (d) or (e) of this
section; or
(3) Terminated at an earlier date by mutual consent of all parties,
including CCC.
(d) A transfer or change in the interest of an owner or producer in
the farm or in acreage on the farm subject to a contract will result in
the termination of the contract. The contract termination will be
effective on the date of the transfer or change. Successors to the
interest in the farm or crops on the farm subject to the contract may
enroll the farm in a new contract for the current and assume all
obligations under the contract.
(e) In the event a 2015 or subsequent crop year farm reconstitution
is completed on a properly enrolled farm or farms in accordance with
part 718 of this title, FSA will issue notices to the 2015 and
subsequent crop year farm operator and owners of record on a farm that
all producers with an interest in the base acres on the farm must sign
a new ARC or PLC program contract within the later of 30 days of the
notice or September 30 of the fiscal year program payments are
requested, after receiving written notification by the county committee
indicating the reconstitution is completed. It is the responsibility of
the operator and owners on a farm that producers with an interest in
base acres are notified of the reconstitution and requirement for a new
contract.

Sec. 1412.42 Eligible producers.

(a) Producers eligible to enter into a contract are:
(1) An owner of a farm who has an ownership share of a crop and who
assumes all or a part of the risk of producing a crop that is
commensurate with that claimed ownership share of the crop; or
(2) A producer, other than an owner, on a farm with a share-rent
lease for such farm, regardless of the length of the lease, if the
owner of the farm enters into the same contract; or
(3) A producer, other than an owner, on a farm who cash rents such
farm under a lease expiring on or after September 30 of the year of the
contract in which case the owner is not required to enter into the
contract; or
(4) A producer, other than an owner, on a farm who cash rents such
farm under a lease expiring before September 30 of the year of the
contract. The owner of such farm must also enter into the same
contract, failing which the farm is not enrolled; or
(5) An owner of an eligible farm who cash rents such farm and the
lease term expires before September 30 of the year of the contract, if
the tenant declines to enter into a contract for the applicable year.
In the case of an owner covered by this paragraph, payments will not
begin under the contract until the lease held by the tenant ends.
(b) A minor child will be eligible to enter into a contract only if
one of the following conditions exist:
(1) The right of majority has been conferred upon the minor by
court proceedings or law;
(2) A guardian has been appointed to manage the minor's property
and the applicable program documents are executed by the guardian; or
(3) A bond is furnished under which a surety guarantees any loss
incurred for which the minor would be liable had the minor been an
adult.
(c) The owner of the farm may be considered the ``producer'' if
there is no other producer, but the owner could have shared in the crop
had a crop been produced, but only if the farm and owner otherwise meet
all the requirements for payment.

Sec. 1412.43 Reconstitutions.

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

Sec. 1412.45 [Amended]

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

Sec. 1412.46 [Amended]

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

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

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

(a) Land subject to an election in subpart G will continue to be
subject to the election even if there is a transfer of land or change
in interest of any producer or owners on the farm. If a new owner or
operator or producer purchases or obtains the right and interest in, or
right to occupancy of, the land subject to an election option, such new
owner or operator or producer, upon the approval of FSA, may enroll and
participate under a new contract with FSA with respect to such
transferred land in accordance with Sec. 1412.41.
(b) A succession in interest to an ARC or PLC program contract is
required if there has been a change in the operation of a farm such as:
(1) A sale of land;
(2) A change of operator or producer, including a change in a
partnership that increases or decreases the number or changes who are
partners;
(3) A foreclosure, bankruptcy, or involuntary loss of the farm;
(4) A change in the producer shares to reflect changes in the
producer's share of the crop(s) that were originally approved on the
contract; or
(5) Another change as otherwise determined by the Deputy
Administrator by which the succession will not adversely affect nor
defeat the purpose of the program.
(c) A succession in interest to an ARC program contract is not
permitted if FSA determines that the change:
(1) Is not for all the time remaining under the ARC or PLC program
contract;

[[Page 57719]]

(2) Results in a violation of the landlord-tenant provisions
specified in Sec. 1412.55; or
(3) Adversely affects or otherwise defeats the purpose of the
program.
(d) If a producer who is entitled to receive ARC or PLC payments
dies, becomes incompetent, or is otherwise unable to receive the
payment, CCC will make the payment in accordance with part 707 of this
title.
(e) A producer or owner of an enrolled farm must inform the county
committee of changes in interest in base acres on the farm not later
than:
(1) August 1 of the fiscal year in which the change occurs if the
change requires a reconstitution be completed in accordance with part
718 of this title or
(2) September 30 of the fiscal year in which the change occurs if
the change does not require a reconstitution be completed in accordance
with part 718 of this title.
(f) In any case in which either an ARC or PLC payment has
previously been made to a predecessor, such payment will not be paid to
the successor, unless such payment has been refunded in full by the
predecessor, in accordance with Sec. 1412.41(d).

Subpart E--Financial Considerations Including Sharing Payments

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

Sec. 1412.51 Limitation of payments.

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

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

Sec. 1412.52 PLC payment provisions.

(a) Provided all provisions of this part including but not limited
to election have been satisfied for each of the 2014 through 2018
contract years, a PLC payment will be made to eligible participants on
a farm enrolled in PLC with respect to covered commodities for which a
PLC yield and base acres are established:
(1) When the effective price for a covered commodity in a crop year
is less than the reference price for the PLC enrolled covered commodity
for that crop year as specified in this part; and
(2) As soon as practical, as determined by the Deputy
Administrator, after October 1 following the end of the 12-month
marketing year for the covered commodity as applicable.
(b) The effective price for a covered commodity is equal to the
higher of the:
(1) MYA price received by producers during the 12-month marketing
year for the crop year of the covered commodity, as determined by FSA,
or
(2) National loan rate for a marketing assistance loan for the
covered commodity for such crop year.
(c) The payment rate used to calculate PLC payments with respect to
covered commodity for which PLC yields and base acres are attributed to
the covered commodity on a farm enrolled in a PLC contract is the
reference price of the covered commodity minus the effective price of
the covered commodity for a crop year, as determined in accordance with
paragraph (b) of this section.
(d) For PLC contracts, when PLC payments are triggered in
accordance with paragraph (a) of this section, subject to the
limitation in Sec. 1412.51 and in part 1400 of this chapter, the PLC
payment to be paid to producers on a farm enrolled in a contract with
respect to a covered commodity for which a PLC yield and base acres are
attributed is equal to the product of:
(1) The payment rate determined in accordance with paragraph (c) of
this section, multiplied by
(2) The relevant payment acres of the covered commodity, as
applicable, minus any payment acre reduction in accordance with Sec.
1412.46, multiplied by
(3) The PLC payment yield for the covered commodity on the farm
enrolled in a PLC contract as determined in accordance with Sec.
1412.31, minus
(4) Any reduction calculated in accordance with subpart F of this
part.
(e) If a producer declines to accept, or is determined to be
ineligible for all or any part of the producer's share of the PLC
payment computed for the farm in accordance with the provisions of this
section, the:
(1) Payment or portions thereof will not become available for any
other producer and
(2) Producer is required to refund to CCC any amounts representing
payments that exceed the payments determined by FSA to have been earned
under the program authorized by this part. Part 1403 of this chapter is
applicable to all unearned payments.
(f) The payment of any amount due any producer on a farm enrolled
in a PLC contract will be made only after all the producers subject to
the contract are determined to be in full compliance with the contract
and the requirements in this part or any other applicable part.
(g) A participant on a farm enrolled in a contract may receive a
payment amount due without regard to the eligibility of other
participants on the farm if the:
(1) Participant is in full compliance with the contract and the
requirements in this part or any other applicable part;
(2) Payment of such amount does not adversely affect or defeat the
purpose of the program, as determined by the Deputy Administrator, or
designee; and
(3) Payment is approved by the Deputy Administrator, or designee.
(h) Temperate japonica rice or medium and short grain rice grown:
(1) In California will receive the effective price and guarantee
for medium and short grain based only on the prices that temperate
japonica or medium and short grain rice receives in California.
(2) Outside of California will receive the effective price and
guarantee for medium and short grain rice based only on the prices that
temperate japonica or medium and short grain rice receives outside of
California.

Sec. 1412.53 ARC payment provisions.

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

[[Page 57720]]

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

Sec. 1412.54 [Amended]

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

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

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

* * * * *
(c) As a condition of producer payment eligibility for all ARC-IC
payments under this part, all producers of all covered commodities on
enrolled ARC-IC elected farms must accurately submit a report of
production by the acreage reporting date for the crop in the year
immediately following the crop year of the reported crop acreage for
all the covered commodities elected and enrolled in ARC-IC. The report
is due for each covered commodity for which an acreage report greater
than zero planted acres was filed for the farm according to paragraph
(a) of this section. The report of production for all of such covered
commodity or covered commodities can be submitted by any of the
producers of the covered commodity or covered commodities on the farm,
the farm operator, or an owner on the farm. The absence of the required
production report of any covered commodity being filed on an enrolled
ARC-IC elected farm will cause all of the producers who share in any of
the covered commodities on that farm to be ineligible for payment on
that farm and on any other ARC-IC elected and enrolled farm in the
State for the crop year for which the production report was not filed
or is missing. At the discretion of CCC, the report of production must
be accompanied by documentation acceptable to CCC. The report must
include the date harvest was completed. Records of production
acceptable to CCC may include those specified in:
(1) Commercial receipts, settlement sheets, warehouse ledger
sheets, or load summaries of the crop that was sold or otherwise
disposed of through commercial channels provided the records are
reliable or verifiable as determined by CCC; and
(2) Such documentary evidence such as contemporaneous measurements,
truck scale tickets, and contemporaneous diaries, as is necessary in
order to verify the information provided if the crop has been fed to
livestock or otherwise disposed of other than through commercial
channels, provided the records are reliable or verifiable as determined
by CCC. If the crop will be disposed of through retail sales, such as
roadside stands, u-pick, etc. and the producer will not be able to
certify acceptable records of production, the producer must request an
appraisal of the crop acreage prior to harvest.

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

Sec. 1412.71 Election of ARC or PLC.

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

[[Page 57721]]

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

Sec. 1412.72 Election period.

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

1412.73 Reconstitutions of farms and election.

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

Sec. 1412.74 Failure to make election.

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

PART 1416--EMERGENCY AGRICULTURAL DISASTER ASSISTANCE PROGRAMS

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

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

Sec. 1416.102 [Amended]

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

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

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