Direct and Counter-Cyclical Program and Average Crop Revenue Election Program, 79284-79306 [E8-30763]

Agencies

• DEPARTMENT OF AGRICULTURE
• Commodity Credit Corporation

[Federal Register Volume 73, Number 249 (Monday, December 29, 2008)]
[Rules and Regulations]
[Pages 79284-79306]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-30763]


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DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1412

RIN 0560-AH84


Direct and Counter-Cyclical Program and Average Crop Revenue 
Election Program

AGENCY: Commodity Credit Corporation, Agriculture.

ACTION: Final rule.

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SUMMARY: This rule implements the provisions of the Food, Conservation, 
and Energy Act of 2008 (the 2008 Farm Bill) regarding the direct and 
counter-cyclical payment program (DCP) for the 2008 through 2012 crop 
years as well as Average Crop Revenue Election (ACRE) program payments 
for the 2009 through 2012 crop years. The 2008 Farm Bill further 
authorizes payments, with some changes, that were previously authorized 
under the Farm Security and Rural Investment Act of 2002 (the 2002 Farm 
Bill) regarding direct and counter-cyclical payments for the crop years 
2002 through 2007. The payments provide income support to producers of 
eligible commodities and are based on historically-based acreage and 
yields and do not depend on the current production choices of the 
farmer. In general, the 2008 Farm Bill provides payments to eligible 
producers of covered commodities and peanuts and beginning in 2009, 
pulse crops as well. Additionally, the 2008 Farm Bill provides for the 
establishment of a yield for each farm for any designated oilseed or 
eligible pulse crop for which a payment yield was not established under 
the 2002 Farm Bill.

DATES: Effective Date: December 23, 2008.

FOR FURTHER INFORMATION CONTACT: Salomon Ramirez, Director, Production, 
Emergencies and Compliance Division, United States Department of 
Agriculture (USDA), Stop 0517, 1400 Independence Ave, SW., Washington, 
DC 20250-0517; phone: (202) 720-7641; e-mail: 
Salomon.Ramirez@wdc.usda.gov. Persons with disabilities who require 
alternative means for communication (Braille, large print, audio tape, 
etc.) should contact the USDA Target Center at (202) 720-2600 (voice 
and TDD).

SUPPLEMENTARY INFORMATION:

Direct and Counter-Cyclical Program and Average Crop Revenue Election 
Program

    For crop years 2002 through 2007, pursuant to the 2002 Farm Bill 
(Pub. L.

[[Page 79285]]

107-171), wheat, corn, barley, grain sorghum, oats, upland cotton and 
rice, (the same crops that were previously eligible for fixed annual 
Production Flexibility Contract (PFC) payments for producers under 
prior law) oilseed crops, including soybeans, sunflower seed, rapeseed, 
canola, safflower, flaxseed, mustard seed, crambe, sesame seed, and 
peanuts were crops eligible for a fixed direct payment. (PFC payments 
were based on historical yields and acreage. Direct payments were 
received whether or not a crop was planted, and did not depend on what 
crop was planted, (except for fruit and vegetable restrictions)). The 
2008 Farm Bill further authorizes these types of direct payments for 
the 2008 through 2012 crop years, with some changes, and adds pulse 
crops beginning with the 2009 crop year. Counter-cyclical payments 
(counter-cyclical payments are similar to the deficiency payments 
authorized under the earlier Acreage Reduction Program (ARP), which 
mandated strict acreage limitations and mandatory acreage idling or 
set-aside requirements) were authorized for the 2002 through 2007 crop 
years pursuant to the 2002 Farm Bill for these same crops. Under the 
2008 Farm Bill, peanuts continue to be eligible for direct and counter-
cyclical payments, and continue to have slightly different statutory 
requirements than for other crops.

Base Acres and Payment Yields

    Section 1001 of the 2008 Farm Bill provides that the base acres and 
yields established by the 2002 Farm Bill that were effective September 
30, 2007, will constitute the base acres and yields for the 2008 
through 2012 crop years. The 2008 Farm Bill, however, requires 
adjustments to base acres for various reasons including, but not 
limited to, land no longer being devoted to agricultural uses. In 
addition to changes required by the 2008 Farm Bill, this rule provides 
that for the 2009 and subsequent crop years, crop acreage bases will be 
terminated with respect to land owned by Federal agencies. A transition 
provision is provided with respect to Federal land that was subject to 
a lease agreement entered into prior to the effective date of this 
rule. In such cases, the termination of the crop acreage bases will 
become effective when the lease expires.
    As to payment yields, the 2008 Farm Bill requires that the payment 
yield for direct and counter cyclical payments under the 2002 Farm 
Bill, as in effect on September 30, 2007, be used. Section 1102 of the 
2008 Farm Bill further requires the Secretary to establish a payment 
yield for direct and counter-cyclical payments for each farm for any 
designated oilseed or eligible pulse crop for which a payment yield was 
not established under the 2002 Farm Bill. This will involve a 
determination of an average yield per planted acre (designated oilseeds 
or pulse crop) on a farm for the 1998 through 2001 crop years, 
excluding any crop year in which the acreage planted was zero. An 
adjustment to the payment yield will equal the product of the average 
yield and the ratio resulting from dividing the national average yield 
for the 1981 through 1985 crops by the national average yield for the 
1998 through 2001 crops. If the yield for a farm for any of the 1998 
through 2001 crop years was less than 75 percent of the county yield 
for that designated oilseed or pulse crop, then the Secretary will 
assign a yield equal to 75 percent of the county yield to determine the 
average.
    As with the 2002 Farm Bill, the 2008 Farm Bill specifies certain 
requirements to which the participant must agree to be eligible for 
direct and counter-cyclical payments. One such requirement is to 
effectively control noxious weeds and otherwise maintain the land in 
accordance with sound agricultural practices.
    Sections 1101 and 1302 of the 2008 Farm Bill directed that base 
acres for covered commodities and peanuts would be reduced for 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. Accordingly, 
these regulations detail the procedures under which land will be 
considered subdivided and developed for multiple residential units or 
other non-farming uses, whether such land remains devoted to commercial 
agricultural production, and whether such land is likely to be returned 
to the previous agricultural use.
    Additionally, beginning with the 2009 crop year, except for farm 
owners who are socially disadvantaged or limited resource farmers, 
section 1101 of the 2008 Farm Bill, as amended by Public Law 110-398, 
specifically precludes issuance of payments to producers on farms that 
have 10 or less total base acres of covered commodities or peanuts.
    Section 1107 of the 2008 Farm Bill authorizes the Secretary to 
carry out a pilot project to permit the planting of cucumbers, green 
peas, lima beans, pumpkins, snap beans, sweet corn, and tomatoes grown 
for processing on base acres in certain States during each of the 2009 
through 2012 crop years. The number of base acres eligible during each 
crop year for the pilot project will be: 9,000 acres in Illinois, 9,000 
acres in Indiana, 1,000 acres in Iowa, 9,000 acres in Michigan, 34,000 
acres in Minnesota, 4,000 acres in Ohio, and 9,000 acres in Wisconsin. 
Contract and managerial requirements for this pilot project will be 
outlined in the regulations. Generally, to be eligible for selection to 
participate in the pilot project, the producers on a farm must 
demonstrate to the Secretary that they have entered into a contract to 
produce a crop of one of the specified commodities for processing and 
that they agree to produce the crop as part of a program of crop 
rotation on the farm to achieve agronomic and pest and disease 
management benefits. The base acres on a farm for a crop year will be 
reduced by an acre for each acre planted under the pilot program. 
Implementation of this program will commence with the 2009 crop year.
    Additionally, subject to subsections (b) and (c) of section 1108 of 
the 2008 Farm Bill, for the purposes of determining the amount of the 
counter-cyclical payments to be paid to the producers on a farm for 
long grain rice and medium grain rice under section 1104 of the 2008 
Farm Bill, base acres on the farm will be apportioned based on the 
percentage of acreage planted in the applicable State to long grain 
rice and medium grain rice during the 2003 through 2006 crop years. 
Section 1108 requires that the Secretary use the same total base acres, 
payment acres, and payment yields established with respect to rice 
under sections 1101 and 1102. Although the provisions of the 2008 Farm 
Bill are effective with the 2008 crop year, the election and 
apportionment cannot be performed before the 2009 crop year. We do not 
anticipate this being a problem, however, as counter-cyclical payments 
are not anticipated for rice in 2008. In the event that changes due to 
some circumstance, measures will be taken to implement the 
effectiveness of the change earlier.
    In response to concerns regarding the sharing of contract payments 
and various forms of cash and share leases (such as traditional cash 
leases, traditional share leases, and combination or flex leases that 
have features of both traditional cash and traditional share leases), 
these regulations will clarify for the purpose of determining payments 
under these

[[Page 79286]]

regulations only, that for the 2009 through 2012 crop years, 
combination or ``flex'' leases will be viewed as cash leases. A 
combination or ``flex'' lease is one that provides for the greater of a 
determinable amount or determinable share of a crop or crop proceeds. 
For 2008, these leases are deemed to be share leases. For 2009, these 
leases are deemed cash leases.

ACRE

    As an alternative to receiving counter-cyclical payments, section 
1105 of the 2008 Farm Bill provides that ACRE is a farm program option 
for all covered commodities and peanuts that is available during each 
of the 2009, 2010, 2011, and 2012 crop years. A key feature of ACRE is 
to provide revenue protection based on several factors such as recent 
market prices as well as actual production and revenue of the covered 
commodity or peanuts at the farm and State levels. Unlike counter-
cyclical payments, ACRE payments are not solely determined based on 
comparing national average prices to loan rates or other predetermined 
rates. When certain program standards are met, payments are based on 
the crop's actual planted acres and actual yield instead of historical 
yields and crop base acres, except when the crop's actual planted acres 
exceed the total base acreage on the farm.
    Producers will give up a fixed amount of revenue, 20 percent of 
their direct payment, in exchange for a possible ACRE payment in a year 
when gross revenue is low, at which time payments could be greater than 
counter-cyclical payments. ACRE provides participating producers a 
revenue guarantee each year based on market prices and average yields 
for the respective commodities. The guarantee is based on State-level 
yields and national market prices, but payments are dependent upon 
State- and farm-level yields and national market prices. ACRE's policy 
objective is to assist farmers with managing the systemic risk of a 
decline in revenue of a crop over a short period of years.
    However, once made on a farm, the election of ACRE is irrevocable, 
and the farm will remain in ACRE from the crop year in which 
participation was initially elected through the duration of the 2012 
crop year. The election applies to all covered commodities and peanuts 
grown on the farm. If ACRE is not elected by all producers on the farm 
or if an ACRE election is not made, program participation defaults to 
the traditional DCP (provided DCP signup requirements are met).
    Enrollment in an ACRE contract is a two-step process and first 
requires producers on a farm to elect the ACRE option. Election does 
not automatically enroll the producers or the farm, however. Following 
the irrevocable election, the producers will have the option to choose 
whether or not to participate in the annual ACRE contract.
    For producers on farms that have elected and enrolled in ACRE, 
direct payments will be reduced by 20 percent such that they equal 80 
percent of direct payments under the traditional direct payment program 
and marketing assistance loan rates will be reduced by 30 percent such 
that the loan rates will be equal to 70 percent of marketing loan 
rates.
    ACRE payments equal the lesser of either:

         ACRE state revenue guarantee minus state actual revenue
                                   or
                   25% of ACRE state revenue guarantee
                                  times
  83.3 percent of the farm's acres planted to the covered commodity or
                 peanuts (85 percent for the 2012 crop)
                                  times
  the farm's Olympic average yield (removes high and low yield) for the
    most recent 5 years divided by the State's ACRE benchmark yield.
 

    The ACRE state revenue guarantee for a crop for a crop year equals 
the ACRE benchmark state yield per planted acre times ACRE price 
guarantee times 90 percent. The benchmark yield is Olympic average of 
state's yields for 5 most recent crop years. The price guarantee is the 
simple average of U.S. market year price for 2 most recent crop years. 
For example, for the purpose of establishing the guarantee for the 2009 
crop year, the 2 most recent crop years are 2007 and 2008. For 2010 
through 2012, the revenue guarantee cannot increase or decrease more 
than 10 percent from the guarantee for the previous crop year. The 
increase or decrease in the state revenue guarantee for a covered 
commodity or peanuts will be applicable to all ACRE program 
participants in a State, regardless of the year the participant first 
elected ACRE or enrolled. Separate state revenue guarantees are 
established for irrigated and non-irrigated land if a state's planted 
acres of a covered commodity or peanuts are at least 25 percent 
irrigated and at least 25 percent non-irrigated.
    ACRE actual state revenue for a crop for a crop year equals state 
yield per planted acre times the national average market price (which 
equals higher of U.S. average cash price for the crop year or 70 
percent of the crop's marketing assistance loan rate). While the 
statutory provisions regarding state revenue are not crystal clear, 
interpretation of the statute would not provide a reasonable result 
consistent with the nature of the statute unless it were read to lead 
to, in effect, a per acre amount.
    The total number of planted acres that receive an ACRE payment 
cannot exceed a farm's total base acres for all covered commodities and 
peanuts on the farm. If a farm's total planted acres exceed the farm's 
total base acres, the farmer may choose which planted acres to enroll 
in ACRE.
    ACRE payments are only available if a farm's actual revenue for the 
crop is less than the farm's ACRE benchmark revenue for that crop year. 
A farm's actual revenue for a crop equals the farm's actual yield times 
the U.S market year price for the crop for the crop year. A farm's ACRE 
benchmark revenue equals:

   (Olympic average of farm's yields for the 5 most recent crop years
                                  times
                          ACRE guarantee price)
                                  plus
 per acre crop insurance premium paid by the farmer for the crop for the
                               crop year.
 

    Producers electing the ACRE option and enrollment, as a condition 
of payment eligibility, must report production of reported acreage of 
covered commodities and peanuts on the farm no later than the crop 
reporting date for the crop in the year following the year the crop was 
reported as planted for harvest. The regulations specify the 
information and documentation requirements for these production 
reports.
    The 2008 Farm Bill provides a $65,000 per person or legal entity 
payment limit for counter-cyclical payments, a reduced direct payment 
limit for participants in the ACRE program to reflect the amount the 
direct payment is reduced as a condition to participate in ACRE, and a 
limit in the amount of counter-cyclical and ACRE payments that reflect 
the $65,000 limit plus the amount that the direct payment limit is 
reduced. The counter-cyclical limits and ACRE limits are combined for 
those producers who participate in ACRE because producers are eligible 
to receive the counter-cyclical payments on one farm and the ACRE 
payments on a separate farm.

FSA Notifications of Farm Bill Provisions

    The following provides information regarding the notification 
processes FSA has undergone to ensure that farm owners are aware of the 
provisions of the 2008 Farm Bill and that participants have all 
applicable information available on record at FSA to assist them in 
making participation elections.

[[Page 79287]]



------------------------------------------------------------------------
             Date                              FSA action
------------------------------------------------------------------------
June 4, 2008.................  Issued a DCP Notice to State and County
                                Offices to prepare for implementation of
                                the 2008 Farm Bill. The notice:
                                Provided an overview of the 2008
                                Farm Bill as it relates to 2008 through
                                2012.
                                Compared 2008 through 2012 DCP
                                provisions and covered commodities with
                                provisions effective for 2007 under the
                                2002 Farm Bill.
                                Clarified statutory definitions
                                of long grain and medium rice.
                                Announced the inclusion of pulse
                                crops as a covered commodity in 2009.
                                Discussed provisions for base
                                acre adjustments permitted under the
                                2008 Farm Bill and explained how payment
                                yields would be determined.
                                Discussed the percent of base
                                acres used to calculate direct payments
                                for each year under the 2008 Farm Bill.
                                Announced the direct payment
                                rates and target prices for the 2008
                                through 2012 years.
                                Stated the payment limitations
                                applicable to direct and counter
                                cyclical payments.
                                Discussed the availability of
                                the option to elect participation in the
                                ACRE program starting with the 2009 crop
                                year.
                                Announced planting flexibility
                                as it existed under the 2002 Farm Bill,
                                the 2008 Farm Bill, and the availability
                                of a Planting Transferability Pilot
                                Project for certain crops and States
                                beginning in 2009.
                                Discussed compliance provisions
                                of DCP.
                                Announced the prohibition of DCP
                                and ACRE payments to producers on farms
                                having 10 or less base acres.
                                Discussed how policy is being
                                developed to address how base acres will
                                need to be reduced when land has been
                                subdivided and developed for multiple
                                residential units or other nonfarming
                                uses.
                                Announced the direct payment
                                rates and target prices for the 2008
                                through 2012 years.
                                Stated the payment limitations
                                applicable to direct and counter
                                cyclical payments.
                                Discussed the availability of
                                the option to elect participation in the
                                ACRE program starting with the 2009 crop
                                year.
                                Announced planting flexibility
                                as it existed under the 2002 Farm Bill,
                                the 2008 Farm Bill, and the availability
                                of a Planting Transferability Pilot
                                Project for certain crops and States
                                beginning in 2009.
                                Discussed compliance provisions
                                of DCP.
June 24, 2008................  Issued a DCP Notice Concerning the 2008
                                DCP and Availability of Software. The
                                notice:
                                Announced the 2008 DCP
                                enrollment period.
                                Outlined the provisions that
                                differentiate 2007 DCP from 2008 DCP.
                                Provided information regarding a
                                revised CCC-509 and CCC-509 Appendix,
                                and the need for their use in 2008
                                signup.
                                Discussed the availability of
                                2008 DCP Contract software.
                                Instructed FSA offices to
                                publicize DCP provisions using all
                                available means.
                                Announced the availability of
                                2008 advance direct payments.
                                Issued clarification for
                                handling DCP contracts for farms having
                                10 or less base acres (prior to the
                                amendment in Public Law 110-398).
                                Issued a notice regarding
                                establishing fruit and vegetable (FAV)
                                and Wild Rice Double-Cropping Regions.
June 27, 2008................  Issued a notice in the Federal Register
                                announcing implementation of DCP
                                provisions for the 2008 crop year based
                                on the current regulation in 7 CFR part
                                1412, Direct and Counter-cyclical
                                Program, except as otherwise noted in
                                the Notice and as otherwise required by
                                the 2008 Farm Bill.
------------------------------------------------------------------------

Signup Fees and Enrollment Deadlines

    As provided in this rule, a signup deadline of June 1 has been 
established. Under the 2002 Farm Bill DCP provisions, a $100 fee was 
assessed if a participant did not sign a DCP contract by June 1 of the 
crop year. For the 2008 crop year, this fee did not apply. Instead, a 
final signup deadline of September 30, 2008, applied. For the 2009 and 
subsequent crop years, a final enrollment deadline of June 1 will apply 
and there will be no late enrollment period or fee. Producers 
interested in participating must complete enrollment of the farm by 
June 1 of the applicable crop year.
    Prior to DCP and PFC, producers were required to decide whether to 
annually enroll in Acreage Reduction Program contracts and under those 
contracts there were defined signup periods that often closed much 
earlier than June 1. In other words, producers generally did not have 
an entire contract period to enroll or enroll late and pay a late filed 
fee. In some respects, a ``late-file'' enrollment period ending later 
in a contract year actually caused FSA and producers more problems 
because many producers who thought they had enrolled often had not. 
Further, a later enrollment deadline or ``late-file'' enrollment period 
raised questions of program integrity because compliance activities 
could not be performed during the contract period on farms that were 
not yet enrolled. Additionally, it has been determined that an 
enrollment deadline of June 1 is necessary because of the complexities 
involved in administering new payment limitation provisions which 
provide for attribution of payments to individuals within entities. 
Therefore, for the 2009 and each of the subsequent crop years, an 
enrollment deadline of June 1 of each such year will apply and all 
producers interested in annually participating must enroll by June 1 of 
such year.

Payments

    Payments in the programs covered in this part are subject to 
statutory changes in conditions, rates, limitations, and eligibilities. 
Under a separate rulemaking, CCC will publish changes relevant to 
payment limitations.

Summary

    In summary, FSA has, in administering the provisions of the 2008 
Farm Bill, utilized available means to ensure that farm owners and 
operators have all necessary information from FSA that FSA is capable 
of providing to them, and in such a manner that owners can make 
educated decisions when determining appropriate DCP base and yield 
elections for a farm. As was the case with the 2002 Farm Bill, the 2008 
Farm Bill explicitly sets forth many of the terms and provisions of the 
DCP. Accordingly, administration of the program is subject to little 
variation or flexibility from the statutory authority.

[[Page 79288]]

Notice and Comment

    These regulations are exempt from the notice and comment 
requirements of the Administrative Procedure Act (5 U.S.C. 553), as 
specified in section 1601(c) of the 2008 Farm Bill, which requires that 
the regulations be promulgated and administered without regard to the 
notice and comment provisions of section 553 of title 5 of the United 
States Code or the Statement of Policy of the Secretary of Agriculture 
effective July 24, 1971, (36 FR 13804) relating to notices of proposed 
rulemaking and public participation in rulemaking.

Executive Order 12866

    The Office of Management and Budget (OMB) designated this rule as 
economically significant under Executive Order 12866 and, therefore, 
OMB reviewed this final rule. A cost benefit assessment of this rule is 
summarized below and is available from the contact listed above.

Cost Benefit Analysis Summary

    The underlying policy structure for the 2008 Farm Bill is largely 
unchanged from the policy structure for the 2002 Farm Bill. The 2008 
Farm Bill continues planting flexibility, continues marketing 
assistance loan provisions at higher levels (for some crops in some 
years. The net fiscal impacts of the changes made by the 2008 Farm Bill 
and implemented by this rule are estimated to be as shown in the 
following table:

  Average Annual Change in Government Outlays by Program, Fiscal Years
                                2008-2012
------------------------------------------------------------------------
                                                          Average annual
                                                           outlay change
                         Program                             (billion
                                                             dollars)
------------------------------------------------------------------------
Direct Payments.........................................         $-0.484
Counter-cyclical Payments...............................          -0.043
ACRE Payments...........................................           1.014
                                                         ---------------
    Total...............................................           0.487
------------------------------------------------------------------------

    Direct and counter-cyclical payments will increase farm income, but 
will have little impact on planting decisions because these payments 
are decoupled from the production decisions of individual farmers. 
These benefits are paid on historically-based acreage and yields and do 
not depend on the current production choices of the farmer. Direct 
payments and counter-cyclical payments were assumed in this analysis to 
have no impact on production. Direct payments are projected to average 
$4.749 billion in fiscal years (FY) 2008 through 2014 for crop years 
2008 through 2012. These payments represent an decrease of about $0.484 
billion each crop year compared with direct payments issued under the 
2002 Farm Bill. Counter-cyclical payments are projected to average 
$0.089 billion in FY 2008 through 2014 for crop years 2008 through 
2012. These payments represent a decrease of $0.043 billion compared 
with counter-cyclical payments under the 2002 Farm Bill. ACRE payments 
are projected to average $1.014 billion each crop year.

Regulatory Flexibility Act

    This rule is not subject to the Regulatory Flexibility Act because 
CCC is not required to publish a notice of proposed rulemaking for this 
rule.

Environmental Review

    The environmental impacts of this rule have been considered in 
accordance with the provisions of the National Environmental Policy Act 
of 1969 (NEPA), 42 U.S.C. 4321 et seq., the regulations of the Council 
on Environmental Quality (40 CFR parts 1500-1508), and FSA's 
regulations for compliance with NEPA, 7 CFR part 799. After a thorough 
environmental review, FSA has determined that the changes to the 
program authorized by the 2008 Act and promulgated by this final rule, 
are considered categorically excluded from further environmental review 
as evidenced by the completion of an environmental evaluation (7 CFR 
799.10(b)(2)(xvi)). Therefore, no environmental assessment or 
environmental impact statement shall be prepared on this rule. A copy 
of the environmental evaluation is available for inspection and review 
upon request.

Executive Order 12372

    This program is not subject to Executive Order 12372, which 
requires consultation with State and local officials. See the notice 
related to 7 CFR part 3015, subpart V, published in the Federal 
Register on June 24, 1983 (48 FR 29115).

Executive Order 12988

    This rule has been reviewed under Executive Order 12988. This rule 
is not retroactive and it does not preempt State or local laws, 
regulations, or policies unless they present an irreconcilable conflict 
with this rule. Before any judicial action may be brought regarding the 
provisions of this rule the administrative appeal provisions of 7 CFR 
parts 11 and 780 must be exhausted.

Executive Order 13132

    The policies contained in this rule do not have any substantial 
direct effect on states, on the relationship between the national 
government and the states, or on the distribution of power and 
responsibilities among the various levels of government. Nor does this 
rule impose substantial direct compliance costs on state and local 
governments. Therefore, consultation with the states is not required.

Unfunded Mandates

    This rule contains no Federal mandates under the regulatory 
provisions of Title II of the Unfunded Mandates Reform Act of 1995 
(UMRA) for State, local, and tribal government or the private sector. 
In addition, CCC was not required to publish a notice of proposed 
rulemaking for this rule. 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)

    Section 1601(c)(3) of the 2008 Farm Bill requires that the 
Secretary use the authority in section 808 of the Small Business 
Regulatory Enforcement Fairness Act of 1996, Public Law 104-121 
(SBREFA), which allows an agency to forgo SBREFA's usual 60-day 
Congressional Review delay of the effective date of a major regulation 
if the agency finds that there is a good cause to do so. These 
regulations affect the incomes of an extraordinarily large number of 
agricultural producers. In any event, section 1601(c)(3) provides 
cause. Accordingly, this rule is effective upon the date of filing for 
public inspection at the Office of the Federal Register.

Federal Assistance Programs

    The title and number of the Federal assistance program, as found in 
the Catalog of Federal Domestic Assistance, to which this final rule 
applies are: Direct and Counter-Cyclical Program, 10.055.

Paperwork Reduction Act

    The regulations in this rule are exempt from the requirements of 
the Paperwork Reduction Act (44 U.S.C. Chapter 35), as specified in 
section 1601(c)(2) of the 2008 Farm Bill, which provides that these 
regulations be promulgated and administered without regard to the 
Paperwork Reduction Act.

E-Government Act Compliance

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

[[Page 79289]]

List of Subjects in 7 CFR Part 1412

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


0
For the reasons discussed above, revise 7 CFR part 1412 to read as 
follows:

PART 1412--DIRECT AND COUNTER-CYCLICAL PROGRAM AND AVERAGE CROP 
REVENUE ELECTION PROGRAM FOR THE 2008 AND SUBSEQUENT CROP YEARS

Subpart A--General Provisions
Sec.
1412.1 Applicability, statutory changes, interest, and contract 
provisions.
1412.2 Administration.
1412.3 Definitions.
1412.4 Appeals.
Subpart B--Establishment of Base Acres for a Farm for Covered 
Commodities
1412.21 Base acres.
1412.22 Failure to make pulse crop election.
1412.23 Base acres and Conservation Reserve Program.
1412.24 Limitation of total base acreage on a farm.
Subpart C--Establishment of Yields for Direct and Counter-Cyclical 
Payments
1412.31 Direct payment yields for covered commodities, except pulse 
crops.
1412.32 Direct payment yield for designated oilseed and pulse crops.
1412.33 Payment yield for counter-cyclical payments for covered 
commodities.
1412.34 Submitting production evidence for establishing direct 
payment yields for oilseeds and pulse crops.
1412.35 Incorrect or false production evidence of oilseeds and pulse 
crops.
Subpart D--Direct and Counter-Cyclical Program Contract and ACRE 
Program Contract Terms and Enrollment Provisions for Covered 
Commodities and Peanuts for 2008 Through 2012
1412.41 Direct and counter-cyclical program contract or ACRE program 
contract.
1412.42 Eligible producers.
1412.43 Reconstitutions.
1412.44 Notification of base acres.
1412.45 Reducing or terminating base acreage.
1412.46 Succession-in-interest.
1412.47 Planting flexibility.
1412.48 Planting Transferability Pilot Project.
1412.49 Apportionment of long and medium grain rice.
1412.50 Matters of general applicability.
Subpart E--Financial Considerations Including Sharing Payments
1412.51 Limitation of payments.
1412.52 Direct payment provisions.
1412.53 Counter-cyclical payment provisions.
1412.54 Sharing of contract payments.
1412.55 Provisions relating to tenants and sharecroppers.
Subpart F--Contract Violations and Reduction in Payments
1412.61 Contract violations.
1412.62 Fruit, vegetable and wild rice acreage reporting violations.
1412.63 Contract liability.
1412.64 Inaccurate representation, misrepresentation, and scheme or 
device.
1412.65 Offsets and assignments.
1412.66 Acreage and production reports.
1412.67 Notices of loss.
1412.68 Compliance with highly erodible land and wetland 
conservation provisions.
1412.69 Controlled substance violations.
Subpart G--Average Crop Revenue Election (ACRE) Program
1412.71 Administration.
1412.72 Availability and election of alternative approach.
1412.73 Sharing of ACRE payments.
1412.74 Prior Enrollment in DCP.
1412.75 Notice of election.
1412.76 Payments.
1412.77 Transfer of land and succession-in-interest.
1412.78 Violations.
1412.79 Executed ACRE contract not in conformity with regulations.
1412.80 Division of program payments and provisions relating to 
tenants and sharecroppers.

    Authority: 7 U.S.C. 7911-7918, 7951-7956, 8711-8719, 8751-8756, 
and 8781; and 15 U.S.C. 714b and 714c.

Subpart A--General Provisions


Sec.  1412.1  Applicability, statutory changes, interest, and contract 
provisions.

    This part governs: How base acres and farm program payment yields 
are established or adjusted for the purpose of calculating direct and 
counter-cyclical payments for wheat, corn, grain sorghum, barley, oats, 
upland cotton, rice, peanuts, soybeans, sunflower seed, rapeseed, 
canola, safflower, flaxseed, mustard seed, crambe, sesame seed, pulse 
crops, and other designated oilseeds as determined and announced by the 
Commodity Credit Corporation (CCC), for the years 2008 through 2012; 
the month when producers on a farm may enter into annual Direct and 
Counter-cyclical Program (DCP) or Average Crop Revenue Election (ACRE) 
program contracts with CCC for each of the years 2008 through 2012, as 
applicable; and the peanut crop acreage bases and yields in order to 
receive 2008 through 2012 direct and counter-cyclical payments. 
Payments otherwise provided for in this part are subject to changes 
made by statute in rates, conditions, and eligibility notwithstanding 
any contract made under this part. However, any such modification may, 
as determined by the Deputy Administrator, allow producers the 
opportunity to withdraw from the contract. Also, if any refund comes 
due to CCC under this part, interest will be due from the date of the 
CCC disbursement except as determined by the Deputy Administrator. The 
provisions of this section will apply notwithstanding any other 
provision of this or any other part. In order to receive payment under 
this part a participant must comply with the regulations in this part 
and any additional requirements imposed by the program contract.


Sec.  1412.2  Administration.

    (a) The program is administered under the general supervision of 
the Executive Vice-President, CCC, and will be carried out by Farm 
Service Agency (FSA) State and county committees (State and county 
committees).
    (b) State and county committees, and representatives and their 
employees, do not have authority to modify or waive any of the 
provisions of the regulations of this part.
    (c) The State committee may take any action required by the 
regulations of this part that the county committee has not taken. The 
State committee will also:
    (1) Correct, or require a county committee to correct, any action 
taken by such county committee that is not in accordance with the 
regulations of this part; or
    (2) Require a county committee to withhold taking any action that 
is not in accordance with this part.
    (d) No provision or delegation to a State or county committee will 
preclude the Executive Vice President, or the Deputy Administrator, or 
a designee, from determining any question arising under the program or 
from reversing or modifying any determination made by a State or county 
committee.
    (e) The Deputy Administrator has the authority in individual cases 
to authorize State and county committees to waive or modify deadlines 
(except statutory deadlines) and other non-statutory requirements, in 
cases where lateness or failure to meet such other requirements does 
not adversely affect operation of the program. Producers and 
participants have no right to seek an exception under this provision. 
The Deputy Administrator's refusal to consider cases or circumstances 
or decisions not to exercise this discretionary authority under this 
provision will not be considered an adverse decision and is not 
appealable.
    (f) A representative of CCC may execute the FSA forms entitled 
``Direct

[[Page 79290]]

and Counter-Cyclical Program Contract'' and ``Average Crop Revenue 
Election Program Contract'' only under the terms and conditions 
determined and announced by the Executive Vice President, CCC. Any 
contract that is not executed in accordance with such terms and 
conditions, including any purported execution prior to or after the 
dates authorized by the Executive Vice President, CCC, is null and void 
and will not be considered to be a contract between CCC and the 
operator or any other producer on the farm.


Sec.  1412.3  Definitions.

    The definitions set forth in this section are applicable for all 
purposes of administering the DCP. The terms defined in part 718 of 
this title and part 1400 of this chapter are also applicable, except 
where those definitions conflict with the definitions set forth in this 
section.
    Where there is a conflict or a difference in definitions specified 
in this part and those that apply to the Average Crop Revenue Election 
(ACRE) program specified in subpart G of this part, the regulations of 
subpart G of this part will apply to the ACRE program.
    Average Crop Revenue Election (ACRE) means the program authorized 
by section 1105 of the Food, Conservation, and Energy Act of 2008 (7 
U.S.C. 8715) according to subpart G of this part. Participation in the 
ACRE program requires a two-step process by the producer, specifically 
step 1 an election according to subpart G of this part followed by step 
2 enrollment according to this part.
    Base acres means the number of acres established with respect to a 
covered commodity and peanuts on a farm pursuant to sections 1101 and 
1302 of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 
7911) as in effect on September 30, 2007, subject to any adjustment in 
accordance with subpart B of this part.
    Commercial agricultural production means the propagation and 
raising of agricultural products for commercial sale or barter having 
gross receipts or sales annually in excess of $1,000. The term includes 
pastures and land devoted to approved conserving uses.
    Considered planted means acreage approved as prevented planted in 
accordance with Sec.  718.103 of this title or the acreage considered 
planted to a covered commodity pursuant to Sec.  1412.48.
    Contract means the CCC-approved standard, uniform forms and 
appendixes specified by CCC that constitute the agreement for 
participation in the Direct and Counter-Cyclical Program or ACRE 
program, as applicable.
    Contract year means the particular year of the particular contract 
based on the compliance period for the contract. The compliance year 
will run from October 1 to the following September 30 and will have the 
same name as the corresponding fiscal year. For example, the 2009 
contract year will be October 1, 2008, through September 30, 2009, and 
that year will be considered, too, the 2009 crop year. The contract for 
the 2009 crop year will be considered the contract for the 2009 crop. 
The same references will apply to all other years.
    Counter-cyclical payment means a payment made to eligible producers 
on a farm in accordance with subpart E of this part for covered 
commodities and peanuts.
    Covered commodity means wheat, corn, grain sorghum, barley, oats, 
upland cotton, long grain rice, medium grain rice, soybeans, sunflower 
seed, rapeseed, canola, safflower, flaxseed, mustard seed, crambe, 
sesame seed, pulse crops, and other oilseeds as determined by the 
Secretary.
    Crop year means the relevant contract year. For example, the 2009 
crop year is the year that runs from October 1, 2008, through September 
30, 2009, and references to payments for that year refer to payments 
made under contracts with the compliance year that runs during those 
dates.
    DCP cropland means DCP cropland as defined in part 718 of this 
title.
    Deputy Administrator means the Deputy Administrator for Farm 
Programs, FSA, or a designee.
    Developed means:
    (1) Land has been approved by the local government for uses other 
than commercial agricultural uses; and
    (2) Construction activity has begun to install any aspect of the 
development, for example utilities or roadways.
    Direct payment means a payment made to eligible producers on a farm 
for peanuts and covered commodities in accordance with subpart E of 
this part.
    Dry peas means Austrian, wrinkled seed, yellow, Umatilla, and 
green, excluding peas grown for the fresh, canning, or frozen market.
    Effective price means the price calculated by the Secretary in 
accordance with Sec.  1412.53 for covered commodities and peanuts to 
determine whether counter-cyclical payments are required to be made 
under that section for a crop year.
    Excess base acres means the number of base acres of covered 
commodities and peanuts on the farm that exceed the farm's total DCP 
cropland.
    Fiscal year means the year running from October 1 to the following 
September 30 and will be designated by the same calendar year in which 
it ends. For example, the 2009 fiscal year ends September 30, 2009.
    Harvested means the producer has removed the crop from the field by 
hand, mechanically, or by grazing of livestock. The crop is considered 
harvested once it is removed from the field and placed in or on a truck 
or other conveyance or is consumed by livestock through the act of 
grazing. Crops normally placed in a truck or other conveyance and taken 
off the crop acreage, such as hay, are considered harvested when in the 
bale, whether removed from the field or not.
    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-May 31;
    (2) Canola, flax and rapeseed, lentils, and dry edible peas: July 
1-June 30;
    (3) Upland cotton, peanuts, and rice: August 1-July 31; and
    (4) Corn, grain sorghum, soybeans, sunflowers, safflower, mustard, 
crambe, sesame, and chickpeas: September 1-August 31.
    Oilseeds means a crop of soybeans, sunflower seed, rapeseed, 
canola, crambe, safflower, flaxseed, mustard seed, sesame seed, or, if 
determined and announced by CCC, another oilseed.
    Payment acres means:
    (1) Except as provided for in paragraph (2) of this definition, 85 
percent of the base acres of a covered commodity or peanuts on a farm 
in accordance with Sec.  1412.71 or subpart B of this part, as 
applicable, for which direct or counter-cyclical or ACRE payments are 
made.
    (2) For each of the 2009 through 2011 crop years, 83.3 percent of 
the base acres for a covered commodity or peanuts on a farm in 
accordance with Sec.  1412.71 or subpart B of this part, as applicable, 
for which direct or ACRE payments are made.
    Payment yield means:
    (1) For peanuts, the yield established pursuant to section 1302 of 
the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 7911) as 
in effect on September 30, 2007.
    (2) For covered commodities, the yield established in accordance 
with subpart C of this part for a farm for a covered commodity.
    (3) For designated oilseeds or pulse crops, the yield established 
in accordance with subpart C of this part for a farm for a crop of a 
designated oilseed and pulse crop.

[[Page 79291]]

    Processing means with respect to uses of a crop, non-fresh intended 
uses of crops enrolled in the project referred to in Sec.  1412.48 for 
crops being grown pursuant to a contract for canning, pickling, frozen, 
juice, dry edible bean or pea, or such other uses deemed by CCC not to 
be fresh intended uses of crops mentioned in Sec.  1412.48.
    Pulse crop means dry peas, lentils, small chickpeas, and large 
chickpeas. Pulse crop bases will not generate direct payments and may 
only create counter-cyclical payments for the 2009 and subsequent crop 
years.
    Subdivided means land has been approved or designated by the local 
government, or a unit thereof, for development or use as something 
other than commercial agricultural production or other non-agricultural 
use.
    Supportive and necessary contractual documents means those 
documents including, but not limited to, those items substantiating the 
DCP contract such as leases, deeds, signatures of contract 
participants, owners, operators, and other tenant signatures, as 
determined by the Secretary.
    Target price means, for peanuts, the price per ton; and for covered 
commodities, the price per bushel (or other appropriate unit in the 
case of upland cotton, rice, and other oilseeds) used to determine the 
payment rate for counter-cyclical payments.


Sec.  1412.4   Appeals.

    A participant may obtain reconsideration and review of any adverse 
determination made under this part in accordance with the appeal 
regulations found at parts 11 and 780 of this title.

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


Sec.  1412.21   Election of base acres.

    (a) Subject to adjustments in paragraph (b) of this section, base 
acres for covered commodities and peanuts are as defined in Sec.  
1412.3.
    (b) No later than April 1, 2009, owners on a farm may establish 
base acres for pulse crops.
    (1) Subject to the limitations in accordance with paragraph (d) of 
this section and Sec.  1412.24, the base acres for pulse crops are 
equal to the sum of the following:
    (i) The 4-year average of the acreage planted or prevented planted 
to the pulse crops during each of the 1998 through 2001 crop years for 
harvest, grazing, haying, silage, or other similar purposes, as 
determined by the Secretary, plus
    (ii) The 4-year average of the acreage prevented from being planted 
to covered commodities during each of the 1998 through 2001 crop years, 
for reasons beyond the control of the producer, as determined by the 
Deputy Administrator.
    (c) Subject to paragraph (d) of this section, the total acreage of 
a pulse crop on the farm calculated in accordance with paragraph (b) of 
this section must not exceed:
    (1) The total acreage of cropland on the farm minus
    (2) The total acreage for all covered commodities, peanut, and 
other pulse crops determined in accordance with paragraphs (a) and (b) 
of this section.
    (d) If the calculation in paragraph (c) of this section results in 
a negative number, the pulse crop acreage on the farm for that crop 
year will be zero for the purposes of determining the 4-year average, 
in accordance with paragraph (b) of this section. Further, no prevented 
planning credit or other base credit may be allowed for a pulse crop 
for any planting activity for which base credit was allowed or will be 
allowed for another commodity.
    (e) If the acreage planted or prevented from being planted was 
devoted to a different covered commodity in the same crop year (other 
than a covered commodity or pulse crops produced under an established 
practice of double-cropping), the owner may select the commodity to be 
used for base purposes for that crop year in determining the 4-year 
average, but may not select both the initial commodity and subsequent 
commodity.
    (f)(1) An owner may increase the eligible acres of pulse crops on a 
farm by reducing the acreage of covered commodities and peanuts 
determined in accordance with paragraphs (a) and (b) of this section 
for one or more covered commodities on an acre-for-acre basis, except 
that the total base acres for pulse crops on the farm may not exceed 
the four-year average of pulse crops determined under paragraph (b) of 
this section.
    (2) For the purpose of determining a 4-year average acreage for a 
farm under this section, any crop year in which a pulse crop was not 
planted or prevented planted will be excluded.


Sec.  1412.22   Failure to make pulse crop election.

    If an owner fails to make an election for establishing pulse crop 
base acres on a farm by April 1, 2009, in accordance with Sec.  
1412.21, that owner will be deemed to have made the election to 
determine all base acres for all covered commodities and peanuts on the 
farm as set forth in Sec.  1412.21.


Sec.  1412.23  Base acres and Conservation Reserve Program.

    (a) Subject to paragraphs (b) and (c) of this section, eligible 
producers may, at the beginning of each fiscal year, adjust the base 
acres for covered commodities and peanuts with respect to the farm by 
the number of production flexibility contract acres or base acres 
protected by a Conservation Reserve Program contract entered into under 
section 1231 of the Food Security Act of 1985 (1985 Farm Bill, Pub. L. 
99-198) that expired, was voluntarily terminated, or was early released 
on or after September 30, 2007.
    (b) The total base acreage on a farm must not exceed the limitation 
of Sec.  1412.24.
    (c) Adjustments to base acreage on a farm in accordance with this 
section must be completed by no later than June 1 of the fiscal year 
following the fiscal year the conservation reserve program contract 
expired or was voluntarily terminated.
    (d) For the fiscal year in which an adjustment to base acres under 
this section is made, the owner of the farm may elect to receive either 
direct payments and counter-cyclical payments or ACRE payments, as 
applicable, with respect to the base acres added to the farm under this 
section or a prorated payment under the conservation reserve contract, 
but not both.


Sec.  1412.24  Limitation of total base acreage on a farm.

    (a) The sum of the following must not exceed the total DCP cropland 
acreage on the farm, plus approved double-cropped acreage for the farm:
    (1) The sum of all base acres established for the farm in 
accordance with this part, plus
    (2) Any cropland acreage on the farm enrolled in a Conservation 
Reserve Program contract in accordance with part 1410 of this chapter, 
plus
    (3) Any cropland acreage on the farm enrolled in a wetland reserve 
program contract in accordance with part 1467 of this chapter, plus
    (4) Any other acreage on the farm enrolled in a Federal 
conservation program for which payments are made in exchange for not 
producing an agricultural commodity on the acreage.
    (b) The Deputy Administrator will give the owner of the farm the 
opportunity to select the covered commodity base acres or peanut base 
acres, against which the reduction required in this section will be 
made.
    (c) In applying paragraph (a) of this section, CCC will take into 
account the

[[Page 79292]]

practice of double cropping on a farm, as determined by CCC.

Subpart C--Establishment of Yields for Direct and Counter-Cyclical 
Payments


Sec.  1412.31  Direct payment yields for covered commodities, except 
pulse crops.

    (a) The direct payment yield for each covered commodity, except 
pulse crops, will be the payment yield established for the commodity 
for the farm in accordance with the regulations for covered commodities 
at part 1412 of this chapter in effect on January 1, 2008 (see 7 CFR 
part 1412, revised as of January 1, 2008).
    (b) [Reserved]


Sec.  1412.32  Direct payment yield for designated oilseed and pulse 
crops.

    (a) The direct payment yield for designated oilseeds for which a 
yield was not established by September 30, 2007, and pulse crops for 
the farm will be determined by multiplying the weighted average yield 
per planted acre for the crop on the farm, as determined in accordance 
with paragraph (b) of this section, times the ratio resulting from:
    (1) The national average yield for the crop for the 1981 through 
1985 crop years, as determined by CCC, divided by
    (2) The national average yield for the crop for the 1998 through 
2001 crop years, as determined by CCC.
    (b)(1) The yield per planted acre for such designated oilseed for 
which a yield was not established by September 30, 2007, and for pulse 
crops on the farm, to be used for direct payment purposes, is 
calculated as follows:
    (i) The sum of the production of the crop for the 1998 through 2001 
crop years, as determined in accordance with 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.
    (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.


Sec.  1412.33  Payment yield for counter-cyclical payments for covered 
commodities.

    The counter-cyclical payment yield for covered commodities on the 
farm will be equal to the counter-cyclical payment yield established 
for the covered commodity on the farm that was effective September 30, 
2007. Counter cyclical payment yields for designated oilseeds or 
eligible pulse crops for which direct payment yields were not 
established as of September 30, 2007, will be equal to the direct 
payment yield established in accordance with Sec. Sec.  1412.32 or 
1412.34, as applicable.


Sec.  1412.34  Submitting production evidence for establishing direct 
payment yields for oilseeds and pulse crops.

    (a)(1) Reports of production evidence must be submitted when the 
owner elects to establish a direct payment yield for designated 
oilseeds for which a yield was not established by September 30, 2007, 
and pulse crops for the farm in accordance with Sec.  1412.32.
    (2) Producer or third-party certification will not be accepted as 
proof of production evidence.
    (3) Reports of production evidence for designated oilseeds for 
which a yield was not established by September 30, 2007, and for pulse 
crops must be provided to the county committee of the county where the 
farm is administratively located, by farm and crop in such manner as 
required by CCC on a CCC-approved standard, uniform form designated by 
CCC.
    (b)(1) When disposition of production has been through commercial 
channels, CCC may require the producer to furnish documentary evidence 
in order to verify the information provided on the report of 
production. Acceptable evidence may include, but is not limited to, 
such items as:
    (i) Production approved by the county committee for Loan Deficiency 
Payments;
    (ii) Commercial receipts;
    (iii) Settlement sheets;
    (iv) Warehouse ledger sheets;
    (v) Elevator receipts or load summaries, supported by other 
evidence showing disposition, such as sales documents;
    (vi) Evidence from harvested or appraised acreage, approved for 
FCIC or multi-peril crop insurance loss adjustment settlement; or
    (vii) Other production evidence determined acceptable by the Deputy 
Administrator.
    (2) Such production evidence must show:
    (i) The producer's name,
    (ii) The commodity,
    (iii) The buyer or name of storage facility,
    (iv) The date of transaction or delivery, and
    (v) The quantity.
    (c) When production of a designated oilseed for which a yield was 
not established by September 30, 2007, and pulse crops has been 
disposed of through non-commercial channels, then 75 percent of the 
county average yield as determined in accordance with Sec.  
1412.32(b)(4) will be used.
    (d) CCC may verify the production evidence submitted with records 
on file at the warehouse, gin, or other entity which received or may 
have received the reported production.


Sec.  1412.35   Incorrect or false production evidence of oilseeds and 
pulse crops.

    (a) If production evidence submitted in accordance with Sec.  
1412.34 is false or incorrect, as determined by the county committee, 
the county committee will determine whether the owner or producer 
submitting the production evidence for a farm acted in good faith or 
took action to defeat the purpose of the program.
    (b)(1) If the county committee determines the production evidence 
submitted is false, incorrect, or unacceptable, and the owner or 
producer who submitted the evidence did not act in good faith or took 
any action to defeat or undermine the purpose of the program, the 
county committee will:
    (i) Require a refund of all direct and counter-cyclical payments 
earned for the farm for the first year such payments were made;

[[Page 79293]]

    (ii) For designated oilseeds or pulse crops, reduce both the direct 
and counter-cyclical payment yields to 75 percent of the county average 
yield as determined in accordance with Sec.  1412.32(b)(4). That yield 
will then be reduced by the applicable direct payment yield factor in 
accordance with Sec.  1412.32(a)(1); and
    (iii) Subject to paragraph (a)(2)(i) of this section, regarding the 
first year of payments, require a refund of an amount equal to the 
following for designated oilseeds or pulse crops for each year the 
false, incorrect, or unacceptable yield was used to make payments under 
the contract:
    (A) The sum of the direct and counter-cyclical payments made using 
the false, incorrect or unacceptable evidence, minus
    (B) The sum of the direct and counter-cyclical payments that would 
have been made based on the yields established in paragraph (b)(1)(ii) 
of this section.
    (2) Notwithstanding paragraph (b)(1) of this section, if the county 
committee determines that the production evidence submitted is false, 
incorrect, or unacceptable, and the owner or producer who submitted the 
evidence did not act in good faith or took action to defeat the purpose 
of the program, the Deputy Administrator may take further action, 
including but not limited to, any or all of the following:
    (i) Make a further yield reduction for part or all of the 
designated oilseeds or pulse crops on the farm;
    (ii) Make further payment reductions or refunds;
    (iii) Determine that the owner or producer who submitted the 
evidence is ineligible for participation in future contracts unless the 
Deputy Administrator determines otherwise; or
    (iv) Take other legal action.
    (c) If the county committee determines the production evidence 
submitted is false, incorrect, or unacceptable, and the owner or 
producer who submitted the evidence acted in good faith and did not 
take action to defea