2021-27015. Notice of Funds Availability; Spot Market Hog Pandemic Program

AGENCY:

Farm Service Agency, USDA.

ACTION:

Notification of funding availability.

SUMMARY:

The Farm Service Agency (FSA) is issuing this notice announcing the availability of $50 million for the new Spot Market Hog Pandemic Program (SMHPP) to provide assistance to producers that sold hogs through a negotiated sale from April 16, 2020, through September 1, 2020, the period in which these producers faced the greatest reduction in market prices due to the COVID-19 pandemic. The eligibility requirements, payment calculation, and application procedure for SMHPP are included in this notice.

DATES:

Funding availability: Implementation will begin December 14, 2021.

Comment Date: We will consider comments on the Paperwork Reduction Act that we receive by: February 14, 2022.

ADDRESSES:

We invite you to submit comments on the information collection request. You may submit comments by any of the following methods, although FSA prefers that you submit comments electronically through the Federal eRulemaking Portal:

• Federal eRulemaking Portal: Go to http://www.regulations.gov and search for Docket ID FSA-2021-0012. Follow the online instructions for submitting comments.

• Mail, Hand-Delivery, or Courier: Director, Safety Net Division, FSA, USDA, 1400 Independence Avenue SW, Stop 0510, Washington, DC 20250-0522. In your comment, specify the docket ID FSA-2021-0012.

You may also send comments to the Desk Officer for Agriculture, Office of Information and Regulatory Affairs, Office of Management and Budget, Washington, DC 20503. All comments received, including those received by mail, will be posted without change and publicly available on http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT:

Kimberly Graham; telephone: [phone]; email: [e-mail]. Persons with disabilities who require alternative means for communication should contact the USDA Target Center at [phone] (voice) or 844-433-2774 (toll-free nationwide).

SUPPLEMENTARY INFORMATION:

Background

The Coronavirus Aid, Relief, Economic Security (CARES) Act (Pub. L. 116-136) provides funding to prevent, prepare for, and respond to the COVID-19 pandemic by providing support for agricultural producers who were impacted. The Secretary announced the USDA Pandemic Assistance for Producers initiative on March 24, 2021. As a part of that initiative, FSA is implementing SMHPP, as directed by the Secretary, to make payments to producers that sold hogs through a negotiated sale from April 16, 2020, through September 1, 2020, the period in which these producers faced the greatest reduction in market prices due to the COVID-19 pandemic.

FSA and USDA's Agricultural Marketing Service (AMS) have identified negotiated hogs as a sector of the agricultural industry significantly impacted by the pandemic that had not been adequately addressed by previous pandemic relief programs and experienced the greatest market price impacts out of all hog purchase types. Using a price analysis of the average daily national negotiated sales during the pandemic compared to the daily 5-year average for years 2015 through 2019. FSA and AMS determined April 16, 2020, through September 1, 2020, to be the period with the greatest market impacts on hogs sold through a negotiated sale due to the pandemic. The reduced market prices were a result of fewer negotiated hogs being procured, packer production decreases due to employee illness, and supply chain issues. This period also generally aligns with the Coronavirus Food Assistance Program (CFAP) 2 eligibility period for swine, which ran from April 16, 2020, through August 31, 2020.

Direct payments will be limited to hog producers located in the United States. This assistance will be available to hog producers through SMHPP as provided in this notice.

FSA is administering SMHPP under the general supervision and direction of the FSA Administrator and AMS. AMS is providing technical assistance to FSA, which includes, but is not limited to, sharing expertise on the hog industry regarding the impact of the COVID-19 pandemic on the industry.

Definitions

The definitions in 7 CFR parts 718 and 1400 apply to SMHPP, except as otherwise provided in this document. The following definitions also apply.

Barrow means a neutered male swine, with the neutering performed before the swine reached sexual maturity.

Boar means a sexually intact male swine.

Breeding stock means sows and boars.

Contract grower means a person or legal entity who grows or produces eligible livestock under contract for or on behalf of another person or entity. The contract grower's income is dependent upon the successful production of livestock or offspring from livestock. The contract grower does not have ownership in the livestock and is not entitled to a share from sales proceeds of the livestock.

Gilt means a young female swine that has not produced a litter.

Hogs means barrows and gilts (excluding breeding stock).

Negotiated sale means a sale by a producer of hogs to a packer under which the base price for the hogs is determined by seller-buyer interaction and agreement on a delivery day. The hog industry also refers to a negotiated sale as a cash or spot market sale. The hogs are scheduled for delivery to the packer not more than 14 days after the date on which the hogs are committed to the packer. A negotiated formula sale is also considered a negotiated sale.

Negotiated formula sale means a hog or pork market formula sale under which:

(1) The formula is determined by negotiation on a lot-by-lot basis; and

(2) The hogs are scheduled for delivery to the packer not later than 14 days after the date on which the formula is negotiated and the hogs are committed to the packer.

Ownership interest means to have either a legal ownership interest or a beneficial ownership interest in a legal entity. For the purposes of administering SMHPP, a person or legal entity that owns a share or stock in a legal entity that is a corporation, limited liability company, limited partnership, or similar type entity where members hold a legal ownership interest, and shares in the profits or losses of such entity is considered to have an ownership interest in such legal entity. A person or legal entity that is a beneficiary of a trust or heir of an estate who benefits from the profits or losses of such entity is considered to have a beneficial ownership interest in such legal entity.

Packer means a packer as defined in section 201 of the Packers and Stockyards Act, 1921 (7 U.S.C. 191). Therefore, packer means any person engaged in the business:

(a) Of buying livestock in commerce for purposes of slaughter;

(b) Of manufacturing or preparing meats or meat food products for sale or shipment in commerce; or

(c) Of marketing meats, meat food products, or livestock products in an unmanufactured form acting as a wholesale broker, dealer, or distributor in commerce.

Producer means a person or legal entity who has ownership of the hogs and whose production and facilities are located in the United States.

Sold means the producer and packer agreed on the negotiated price through a negotiated sale, and the producer delivered the hogs within the time of that agreement. For SMHPP, a hog is considered sold on the date of the agreement, rather than when the hog or payment is delivered.

Sow means an adult female swine that has produced one or more litters.

Swine means domesticated omnivorous pig, hog, or boar.

United States means all 50 states of the United States, the District of Columbia, the Commonwealth of Puerto Rico and any other territory or possession of the United States.

Eligible Hogs

Eligible hogs are hogs sold through a negotiated sale by producers from April 16, 2020, through September 1, 2020. FSA is providing assistance for these hogs because USDA has determined producers that sold hogs through negotiated sales were affected by the greatest reduction in market prices of swine producers due to the COVID-19 pandemic during this period. The hogs must have been physically located in the United States at the time of sale.

Eligible Producers

An eligible producer is a person or legal entity who has ownership of the eligible hogs and whose production and facilities are located in the United States.

To be eligible for SMHPP, a producer must be any of the following:

(1) Citizen of the United States;

(2) Resident alien, which for purposes of this subpart means “lawful alien” as defined in 7 CFR part 1400;

(3) Partnership of citizens or resident aliens of the United States;

(4) Corporation, limited liability company, or other organizational structure organized under State law solely owned by U.S. citizens or resident aliens; or

(5) Indian Tribe or Tribal organization, as defined in section 4(b) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 5304).

Eligible producers must have sold the hogs through negotiated sale contract during the time frame of April 16, 2020, through September 1, 2020.

Ineligible Producers

Ineligible producers include:

(1) Contract growers;

(2) Federal, State, and local governments, including public schools;

(3) Packers; and

(4) Producers for hog purchases through all other purchase types including:

—Other market formula,

—Swine or pork market formula,

—Other purchase arrangements, and

—Packer owned.

Application Process

FSA will accept applications from December 15, 2021, through February 25, 2022. To apply for SMHPP, eligible producers must submit a complete form FSA-940, Spot Market Hog Pandemic Program (SMHPP) Application. Applications may be submitted to any FSA county office in person or by mail, email, facsimile, or other methods announced by FSA.

Producers must also submit all of the following items, if not previously filed with FSA:

• Form AD-2047, Customer Data Worksheet for new customers or existing customers needing to update their customer profile;
• Form CCC-902, Farm Operating Plan for an individual or legal entity as provided in 7 CFR part 1400;
• Form CCC-901, Member Information for Legal Entities (if applicable);
• Form CCC-941, Average Adjusted Gross Income (AGI) Certification and Consent to Disclosure of Tax Information, for the 2020 program year for the person or legal entity, including the legal entity's members, partners, shareholders, heirs, or beneficiaries as provided in 7 CFR part 1400;
• Form FSA-1123, Certification of 2020 Adjusted Gross Income, if applicable; and
• A highly erodible land conservation (sometimes referred to as HELC) and wetland conservation certification as provided in 7 CFR part 12 (form AD-1026 Highly Erodible Land Conservation (HELC) and Wetland Conservation (WC) Certification for the SMHPP producer and applicable affiliates.

Producers must submit all required eligibility documentation specified above, as applicable, no later than 60 days from the date a producer signs and submits the form FSA-940. If the producer does not timely submit the required eligibility forms, or a member who is required to submit the form AD-1026 does not do so, FSA will not issue a payment. When the other required eligibility forms are not timely submitted for a member of a legal entity, FSA will reduce the payment based on the member's ownership interest in the legal entity.

If requested by FSA, the producer must provide supporting documentation to verify the accuracy of information provided on the application, including to substantiate the number of hogs reported on the application. Examples of supporting documentation that may be requested include negotiated sale agreement, veterinarian records, feeding records, inventory records, rendering receipts, purchase receipts, slaughter sheets (kill sheets), invoices, and other records determined acceptable by FSA. If any supporting documentation is requested to verify the sales of hogs sold through a negotiated sale, the documentation must be submitted to FSA within 30 days from the request or the application will be disapproved by FSA.

Payment

SMHPP payments compensate eligible hog producers for hogs sold through a negotiated sale from April 16, 2020, through September 1, 2020. To simplify administration of SMHPP, FSA and AMS has determined a single payment rate of $54 per head.

USDA calculated the average daily difference in the negotiated sales price during the applicable time frame, compared to the daily 5-year average for negotiated sales prices during April 16 through September 1 for years 2015 through 2019. The average daily difference was equal to $77 per hog based on the average carcass weight that was submitted to AMS through livestock mandatory reporting.

The SMHPP payment rate of $54 per head is equal to the $77 per head minus the CFAP 2 rate of $23 per head. CFAP 2 paid for the highest hog inventory from April 16, 2020, through August 31, 2020. CFAP 2 was available to all swine producers who qualified under the terms and conditions of such program and the application period for CFAP 2 was extended, ending October 12, 2021, to allow additional time for all eligible producers to apply. SMHPP is therefore not intended to cover pandemic impacts that were or could have been compensated under CFAP 2; accordingly, the CFAP 2 hog payment rate of $23 per head has been deducted from the calculated payment rate for SMHPP.

SMHPP payments will be calculated by multiplying the number of head of eligible hogs, not to exceed 10,000 head, by the payment rate per head of $54. FSA will issue payments to eligible hog operations as applications are received and approved. SMHPP is not subject to payment limitations.

Provisions Requiring Refund to FSA

In the event that any application for an SMHPP payment resulted from erroneous information reported by the producer, the payment will be recalculated, and the producer must refund any excess payment to FSA, including interest to be calculated from the date of the disbursement to the SMHPP producer. If, for whatever reason, FSA determines that the producer misrepresented the total hogs sold through a negotiated sale, the application will be disapproved, and the producer must refund the full SMHPP payment to FSA with interest from the date of disbursement. Any required refunds must be resolved in accordance with 7 CFR part 3.

Miscellaneous Provisions

A person or legal entity, other than a joint venture or general partnership, is ineligible for SMHPP payments if the person's or legal entity's average adjusted gross income (AGI), using the average of the adjusted gross incomes for the 2016, 2017, and 2018 tax years, exceeds $900,000 as described in 7 CFR part 1400, subpart F, unless the exception described below applies. With respect to joint ventures and general partnerships, this average AGI provision will be applied to members of the joint venture and general partnership. Average AGI provisions are applicable to members, partners, stockholders, heirs, and beneficiaries with an ownership interest in a legal entity, including a general partnership or joint venture who are at or above the fourth tier of ownership in the business structure. The eligible hog producer's payment will be reduced by the portion of a payment attributed to a member who exceeds the average $900,000 AGI limitation or is otherwise ineligible for payment.

A person or legal entity whose average AGI exceeds $900,000 may otherwise be eligible for SMHPP payments if the 2020 AGI alone is less than $900,000. In order to qualify for this exception to the average AGI limitation, persons or legal entities must submit form FSA-1123 to certify that their 2020 AGI is not more than $900,000 and provide a certification from a licensed CPA or attorney attesting to the accuracy of the person's or legal entity's certification.

A payment made to a legal entity will be attributed to those members who have a direct or indirect ownership interest in the legal entity, unless the payment of the legal entity has been reduced by the proportionate ownership interest of the member due to that member's ineligibility.

Attribution of payments made to legal entities will be tracked through four levels of ownership in legal entities as follows:

• First level of ownership—any payment made to a legal entity that is owned in whole or in part by a person will be attributed to the person in an amount that represents the direct ownership interest in the first-tier or payment legal entity;
• Second level of ownership—any payment made to a first-tier legal entity that is owned in whole or in part by another legal entity (referred to as a second-tier legal entity) will be attributed to the second-tier legal entity in proportion to the ownership of the second-tier legal entity in the first-tier legal entity; if the second-tier legal entity is owned in whole or in part by a person, the amount of the payment made to the first-tier legal entity will be attributed to the person in the amount that represents the indirect ownership in the first-tier legal entity by the person;
• Third and fourth levels—except as provided in the second-level of ownership bullet above, any payments made to a legal entity at the third and fourth tiers of ownership will be attributed in the same manner as specified in the second-level of ownership bullet above; and
• Fourth-tier ownership—if the fourth-tier of ownership is that of a legal entity and not that of a person, a reduction in payment will be applied to the first-tier or payment legal entity in the amount that represents the indirect ownership in the first-tier or payment legal entity by the fourth-tier legal entity.

Payments made directly or indirectly to a person who is a minor child will not be combined with the earnings of the minor's parent or legal guardian.

A producer that is a legal entity must provide the names, addresses, ownership share, and valid taxpayer identification numbers of the members holding an ownership interest in the legal entity. Payments to a legal entity will be reduced in proportion to a member's ownership share when a valid taxpayer identification number for a person or legal entity that holds a direct or indirect ownership interest, at or above the fourth level of ownership in the business structure, is not provided to USDA.

If an individual or legal entity is not eligible to receive SMHPP payments due to the individual or legal entity failing to satisfy some other payment eligibility provision such as AGI or conservation compliance provisions, the payment made either directly or indirectly to the individual or legal entity will be reduced to zero. The amount of the reduction for the direct payment to the producer will be commensurate with the direct or indirect ownership interest of the ineligible individual or ineligible legal entity.

General requirements that apply to other FSA-administered commodity programs also apply to SMHPP, including compliance with the provisions of 7 CFR part 12, “Highly Erodible Land and Wetland Conservation,” and the provisions of 7 CFR 718.6, which address ineligibility for benefits for offenses involving controlled substances. Appeal regulations specified in 7 CFR parts 11 and 780 and equitable relief and finality provisions specified in 7 CFR part 718, subpart D, apply to determinations under SMHPP. The determination of matters of general applicability that are not in response to, or result from, an individual set of facts in an individual participant's application for payment are not matters that can be appealed. Such matters of general applicability include, but are not limited to, the determination of applicable time period for eligible negotiated sales and the payment rate for SMHPP.

Participants are required to retain documentation in support of their application for 3 years after the date of approval. Participants receiving SMHPP payments or any other person who furnishes such information to USDA must permit authorized representatives of USDA or the Government Accountability Office, during regular business hours, to enter the agricultural operation and to inspect, examine, and to allow representatives to make copies of books, records, or other items for the purpose of confirming the accuracy of the information provided by the participant.

A producer may file an application with an FSA county office after the SMHPP application deadline, and in such case the application will be considered a request to waive the deadline. The Deputy Administrator for Farm Programs, FSA (Deputy Administrator), has the discretion and authority to consider the case and waive or modify application deadlines and other requirements or program provisions not specified in law, in cases where the Deputy Administrator determines it is equitable to do so and where the Deputy Administrator finds that the lateness or failure to meet such other requirements or program provisions do not adversely affect the operation of SMHPP. Although producers have a right to a decision on whether they filed applications by the deadline or not, producers have no right to a decision in response to a request to waive or modify deadlines or program provisions. The Deputy Administrator's refusal to exercise discretion to consider the request will not be considered an adverse decision and is, by itself, not appealable.

Any payment under SMHPP will be made without regard to questions of title under State law and without regard to any claim or lien. The regulations governing offsets in 7 CFR part 3 apply to SMHPP payments.

In either applying for or participating in SMHPP, or both, the producer is subject to laws against perjury and any penalties and prosecution resulting therefrom, with such laws including but not limited to 18 U.S.C. 1621. If the producer willfully makes and represents as true any verbal or written declaration, certification, statement, or verification that the producer knows or believes not to be true, in the course of either applying for or participating in SMHPP, or both, then the producer is guilty of perjury and, except as otherwise provided by law, may be fined, imprisoned for not more than 5 years, or both, regardless of whether the producer makes such verbal or written declaration, certification, statement, or verification within or outside the United States.

For the purposes of the effect of a lien on eligibility for Federal programs (28 U.S.C. 3201(e)), USDA waives the restriction on receipt of funds under SMHPP but only as to beneficiaries who, as a condition of the waiver, agree to apply the SMHPP payments to reduce the amount of the judgment lien.

In addition to any other Federal laws that apply to SMHPP, the following laws apply: 15 U.S.C. 714; and 18 U.S.C. 286, 287, 371, and 1001.

Paperwork Reduction Act Requirements

In compliance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), FSA is requesting comments from interested individuals and organizations on the information collection request associated with SMHPP. After the 60-day period ends, the information collection request will be submitted to the Office of Management and Budget (OMB) for a 3-year approval to cover SMHPP information collection. To start the SMHPP information collection approval, prior to publishing this notice, FSA received emergency approval from OMB for 6 months. The emergency approval covers SMHPP information collection activities.

Title: SMHPP.

OMB Control Number: 0560-NEW.

Type of Request: New Collection.

Abstract: FSA will make payments to producers that sold hogs through negotiated sale from April 16, 2020, through September 1, 2020, the period in which these producers faced the greatest reduction in market prices as a result of the COVID-19 pandemic. FSA is expected to use an estimated $50 million in funds provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act (Pub. L. 116-136) to assist producers under SMHPP.

For the following estimated total annual burden on respondents, the formula used to calculate the total burden hour is the estimated average time per response multiplied by the estimated total annual responses.

Estimate of Respondent Burden: Public reporting burden for this information collection is estimated to average 0.32 hours per response to include the time for reviewing instructions, searching for information, gathering and maintaining the data, and completing and reviewing the collection of information.

Type of Respondents: Individuals or households, businesses or other for profit farms.

Estimated Annual Number of Respondents: 23,113.

Estimated Number of Reponses per Respondent: 1.965.

Estimated Total Annual Responses: 45,417.

Estimated Average Time per Response: 0.31 hours.

Estimated Total Annual Burden on Respondents: 14,253.

We are requesting comments on all aspects of this information collection to help us to:

(1) Evaluate whether the collection of information is necessary for the proper performance of the functions of the FSA, including whether the information will have practical utility;

(2) Evaluate the accuracy of the FSA's estimate of burden including the validity of the methodology and assumptions used;

(3) Enhance the quality, utility, and clarity of the information to be collected; or

(4) Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology.

All comments received in response to this notice, including names and addresses when provided, will be a matter of public record. Comments will be summarized and included in the submission for Office of Management and Budget approval.

Environmental Review

The environmental impacts have been considered in a manner consistent with the provisions of the National Environmental Policy Act (NEPA, 42 U.S.C. 4321-4347), the regulations of the Council on Environmental Quality (40 CFR parts 1500-1508), and the FSA regulation for compliance with NEPA (7 CFR part 799).

As previously stated, SMHPP is providing payments to qualified hog operations for financial losses of hogs sold through negotiated sale from April 16, 2020, through September 1, 2020, due to low market prices as a result of COVID-19. The limited discretionary aspects of SMHPP do not have the potential to impact the human environment as they are administrative. Accordingly, these discretionary aspects are covered by the FSA Categorical Exclusions specified in 7 CFR 799.31(b)(6)(iii) that applies to price support programs and § 799.31(b)(6)(vi) that applies to safety net programs.

No Extraordinary Circumstances (§ 799.33) exist. As such, the implementation of SMHPP and the participation in SMHPP do not constitute major Federal actions that would significantly affect the quality of the human environment, individually or cumulatively. Therefore, FSA will not prepare an environmental assessment or environmental impact statement for this action and this document serves as documentation of the programmatic environmental compliance decision for this federal action.

Federal Assistance Programs

The title and number of the Federal assistance programs, as found in the Catalog of Federal Domestic Assistance, to which this document applies is 10.144—Spot Market Hog Pandemic Program.

USDA Non-Discrimination Policy

In accordance with Federal civil rights law and U.S. Department of Agriculture (USDA) civil rights regulations and policies, USDA, its Agencies, offices, and employees, and institutions participating in or administering USDA programs are prohibited from discriminating based on race, color, national origin, religion, sex, gender identity (including gender expression), sexual orientation, disability, age, marital status, family or parental status, income derived from a public assistance program, political beliefs, or reprisal or retaliation for prior civil rights activity, in any program or activity conducted or funded by USDA (not all bases apply to all programs). Remedies and complaint filing deadlines vary by program or incident.

Persons with disabilities who require alternative means of communication for program information (for example, braille, large print, audiotape, American Sign Language, etc.) should contact the responsible Agency or USDA TARGET Center at [phone] or 844-433-2774 (toll-free nationwide). Additionally, program information may be made available in languages other than English.

To file a program discrimination complaint, complete the USDA Program Discrimination Complaint Form, AD-3027, found online at https://www.usda.gov/​oascr/​how-to-file-a-program-discrimination-complaint and at any USDA office or write a letter addressed to USDA and provide in the letter all the information requested in the form. To request a copy of the complaint form, call [phone]. Submit your completed form or letter to USDA by mail to: U.S. Department of Agriculture, Office of the Assistant Secretary for Civil Rights, 1400 Independence Avenue SW, Washington, DC 20250-9410 or email: [e-mail].

USDA is an equal opportunity provider, employer, and lender.

Steven Peterson,

Acting Administrator, Farm Service Agency.