[Federal Register Volume 64, Number 44 (Monday, March 8, 1999)]
[Rules and Regulations]
[Pages 10923-10929]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-5557]
[[Page 10923]]
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DEPARTMENT OF AGRICULTURE
Commodity Credit Corporation
7 CFR Part 1434
RIN 0560-AF62
Recourse Loan Regulations for Honey
AGENCY: Commodity Credit Corporation, USDA.
ACTION: Final rule.
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SUMMARY: This final rule is issued pursuant to the provisions of the
Omnibus Consolidated and Emergency Supplemental Appropriations Act,
1999 (the 1999 Act), which amended the Agricultural Market Transition
Act, and provides for the availability of recourse loans to producers
of 1998 crop honey. This rule sets forth the regulations for the
administration of the honey recourse loan program.
DATES: Effective March 3, 1999.
FOR FURTHER INFORMATION CONTACT: Margaret Wright, Program Specialist,
Farm Service Agency (FSA), USDA, STOP 0512, 1400 Independence Avenue,
SW, Washington, D.C. 20250-0512; telephone: (202) 720-8481.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This rule is in conformance with Executive Order 12866 and has been
determined to be significant and therefore has been reviewed by the
Office of Management and Budget.
Federal Assistance Program
The title and number of the Federal Assistance Program, as found in
the Catalog of Federal Domestic Assistance, to which this rule applies,
are Commodity Loans and Purchases--10.051.
Environmental Evaluation
It has been determined by an environmental evaluation that this
action will have no significant impact on the quality of the human
environment. Therefore, neither an environmental assessment nor an
environmental impact statement is needed.
Executive Order 12372
This activity is not subject to the provisions of Executive Order
12372, which requires intergovernmental consultation with State and
local officials. See the notice related to 7 CFR part 3014, subpart V,
published at 48 FR 29115 (June 24, 1983).
Executive Order 12988
This final rule has been reviewed in accordance with Executive
Order 12988. The provisions of this final rule are not retroactive and
preempt State laws to the extent that such laws are inconsistent with
the provisions of the final rule. Before any legal action is brought
regarding determinations made under provisions of 7 CFR part 723, the
administrative appeal provisions set forth at 7 CFR part 780 must be
exhausted.
Regulatory Flexibility Act
It has been determined that the Regulatory Flexibility Act is not
applicable to this final rule since the Commodity Credit Corporation
(CCC) is not required by 5 U.S.C. 553 or any other provision of law to
publish a notice of proposed rule making with respect to the subject
matter of this rule.
Unfunded Federal Mandates
This rule contains no Federal mandates under the regulatory
provisions of Title II of the Unfunded Mandate Reform Act of 1995
(UMRA) for State, local, and tribal governments or the private sector.
Thus, this rule is not subject to the requirements of sections 202 and
205 of the UMRA.
Paperwork Reduction Act and Notice and Comment
Section 1133 of the Omnibus Consolidated and Emergency Supplemental
Appropriations Act, 1999 (the ``1999 Act'') provides that this rule-
making shall be issued without regard to the public notice and comment
provisions of 5 U.S.C. 553 or the Paperwork Reduction Act, and provides
that the provisions of 5 U.S.C. 808 which allows exemption from
layovers for Congressional review shall be applied. Accordingly, this
rule and its information collection requirements are made effective
immediately in accordance with these provisions. Because of the
foregoing provisions and because this rule provides needed time-
sensitive relief, delay in completing this rule would be contrary to
the public interest.
Background
Section 1122 of the 1999 Act provides that in order to assist
producers of honey to market their honey in an orderly manner during a
period of disastrously low prices, the Secretary of Agriculture
``[S]hall make available recourse loans to producers of the 1998 crop
of honey on fair and reasonable terms and conditions, as determined by
the Secretary''. This final rule contains the terms and conditions that
the Secretary has determined are necessary to implement Sec. 1122 of
the 1999 Act. The terms and conditions focus on two critical issues:
(1) eligibility and (2) program administration.
Eligibility
The regulation at 7 CFR Sec. 1434.4 lists the eligibility
requirements for both the persons applying for a recourse loan (loan)
and for the honey being tendered as loan collateral. The essence of the
eligibility requirements is that loan applicants must be ``producers''
of honey and not speculators who have purchased the honey. In general,
a loan applicant must have a separate and identifiable interest in both
the bees and the honey. This means, in part, that the loan applicant
must have been responsible for the financial risk of keeping the bees
and for producing and extracting the honey.
The loan applicant must also hold a beneficial interest in the
honey collateral until the loan is repaid. Under the regulation, such
an interest will require that the producer maintains title and control
over the disposition of the honey, as well as the risk of loss of the
honey.
Persons handling the marketing of the honey through a CCC-approved
cooperative marketing association (CMA) are also eligible to
participate in the loan program, provided the beneficial interest in
the honey remains with the CMA member/loan applicant who shares in the
marketing proceeds realized by the CMA. Two or more applicants may be
eligible for a joint loan if, as individuals, they would fulfill the
eligibility requirements and the commingled honey is not already under
CCC loan.
Program Administration
The program will be administered through the Department's Farm
Service Agency (FSA). Section 1122 of the 1999 Act provides that
recourse loans will be made to producers of 1998 crop honey and will
operate on a no-net-cost basis. To operate the program on a no-net-cost
basis, a service fee will be assessed at time of loan making to cover
administrative costs associated with the honey recourse loan program.
These administrative costs include costs associated with the county
office loan workload, for publishing and distributing program
information and procedures, and salary expenses. The honey recourse
loan program will operate similarly to the way the honey program was
operated in the 1994 and 1995 crop years. CCC has determined that the
final date to request a loan will be 60 calendar days after publication
of the regulation in the Federal Register. The loans will mature 9
months after loan disbursement. Anyone interested
[[Page 10924]]
in applying for a loan or who has questions concerning eligibility or
any other matter covered under this regulation will be able to obtain
assistance from the local FSA county office.
Any producer seeking to sell the honey pledged as collateral to
repay the loan will be required to obtain written authorization from
the county office before moving the honey for sale. If the producer
fails to obtain such authorization, provides incorrect certifications,
or makes fraudulent representations, the producer will be in violation
of the terms and conditions of the loan note and security agreement and
will be subject to liquidated damages and other actions as provided in
Sec. 1434.13 of the regulations. If the loan is not repaid in full by
the loan maturity date, CCC may foreclose on the pledged honey and sell
the honey. CCC's security interest in the honey loan collateral is
first and superior to all other security interests. Also, the
Government may pursue other options open to it including remedies
against persons handling honey in disregard of the security interest.
List of Subjects in 7 CFR Part 1434
Honey, Loan programs/agriculture, Reporting and record keeping
requirements.
Accordingly, 7 CFR part 1434 is added to read as follows:
PART 1434--RECOURSE LOAN REGULATIONS FOR HONEY
Sec.
1434.1 Applicability.
1434.2 Administration.
1434.3 Definitions.
1434.4 Eligibility.
1434.5 Containers and drums.
1434.6 Application, availability, disbursement, and maturity.
1434.7 Eligible storage.
1434.8 Liens.
1434.9 Fees and interest.
1434.10 Determination of quantity.
1434.11 Transfer of producer's interest prohibited.
1434.12 Loss or damage.
1434.13 Personal liability of the producer.
1434.14 Release of the honey pledged as collateral for a loan.
1434.15 Liquidation of loans.
1434.16 Foreclosure.
1434.17 Handling payments and collections not exceeding $9.99.
1434.18 Death, incompetency, or disappearance; appeals; other loan
provisions.
Authority: Section 1122, Pub. L. 105-277, 112 Stat. 2681.
Sec. 1434.1 Applicability.
The regulations of this part provide the terms and conditions under
which the Commodity Credit Corporation (CCC) may issue recourse loans
for the 1998 crop of honey that has remained continuously within the
beneficial interest of the producer. Additional terms and conditions
that must be followed to obtain a loan will be set forth in these
regulations and the applicable note and security agreements. Forms
needed to obtain a loan will be available in State and county Farm
Service Agency (State and county) offices.
Sec. 1434.2 Administration.
(a) The regulations of this part shall be administered under the
general supervision of the Executive Vice President, CCC, and shall be
carried out in the field by State and county committees.
(b) State and county committees, representatives and employees
thereof, do not have the authority to modify or waive any of the
provisions of the regulations of this part.
(c) The State committee shall take any action required by these
regulations that has not been taken by the county committee. The State
committee shall also:
(1) Correct, or require a county committee to correct, any action
taken by such county committee that is not in accordance with the
regulations of this part; or
(2) Require a county committee to withhold taking any action that
is not in accordance with the regulations of this part.
(d) No provision or delegation herein to a State or county
committee shall preclude the Executive Vice President, CCC, 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 for Farm Programs, FSA, may authorize
State and county committees to waive or modify deadlines and other
program requirements in cases where timeliness or failure to meet such
other requirements does not affect adversely the operation of the
program.
(f) An approving official of CCC may execute loans and related
documents only under the terms and conditions determined and announced
by CCC. Any such document that is not executed in accordance with such
terms and conditions, including any purported execution before the date
authorized by CCC, shall be null and void unless affirmed by the
Executive Vice President, CCC.
Sec. 1434.3 Definitions.
The definitions set forth in this section shall be applicable for
all purposes of program administration. The terms defined in part 718
of this title shall also be applicable except where those definitions
conflict with the definitions set forth in this section or in program
instruments created under this part.
Administrator is the FSA Administrator.
Adulterated honey, is for the purpose of this part only, honey
where any foreign substance including water has been substituted in
whole or in part for honey whether or not such substance is poisonous
or deleterious to render honey injurious to health or otherwise makes
the honey unsound, unhealthy, unwholesome, or otherwise unfit for human
or animal consumption.
Approving official is a representative of CCC who is authorized by
the Executive Vice President, CCC, to approve loan documents prepared
under this part.
Charge is a fee, cost, and expense (including foreclosure costs)
incident to insuring, carrying, handling, storing, conditioning, and
marketing the honey and otherwise protecting the honey.
CMA is a cooperative marketing association engaged in marketing
honey.
County office is the local FSA office.
Crop year is the calendar year in which honey is extracted.
Executive Vice President, CCC, is the Administrator, FSA.
FSA is the Farm Service Agency, United States Department of
Agriculture.
Ineligible honey is honey not eligible for a loan under this part
for which ineligibility shall include, but is not limited to, honey
from the following floral sources regardless of whether the honey meets
other eligibility requirements: Andromeda, bitterweed, broomweed,
cajeput (melaleuca), carrot, chinquapin, dog fennel, desert hollyhock,
gumweed, mescal, onion, prickly pear, prune, queen's delight, rabbit
brush, snowbrush (ceanothus), snow-on-the-mountain, spurge (leafy
spurge), tarweed, and similar objectionably-flavored honey or blends of
honey as determined by the Director, Price Support Division, FSA. If
any blends of honey contain such ineligible honey, the lot as a whole
shall be considered ineligibile for loan.
Loan is a recourse loan on honey.
Loan quantity is the quantity on which the loan was disbursed shown
on the note and security agreement.
Nontable honey is honey having a predominant flavor of limited
acceptability for table use even though
[[Page 10925]]
such honey may be considered suitable for table use in areas in which
it is produced and includes honey with a predominant flavor of aster,
athel, avocado, Brazilian pepper, buckwheat (except western wild
buckwheat), cabbage palmetto, Christmas berry, cranberry, dandelion,
eucalyptus, goldenrod, heartsease (smartweed), horsemint, kiawe,
loosestrife, macadamia, mangrove, manzanita, mint, partridge pea,
rattan vine, safflower, salt cedar (Tamarix Gallica) spanish needle,
spikeweed, titi, toyon, tulip popular, wild cherry, yaupon, and
similarly-flavored honey or blends of such honeys as determined by the
Director, Price Support Division, Farm Service Agency.
Ownership is with respect to honey tendered for a loan, control,
title, risk of loss, and the right to make all decisions regarding the
tender of honey to CCC for a loan or for marketing.
Person is an individual, partnership, association, corporation,
estate or trust, or other business enterprise or other legal entity
and, whenever applicable a State, political subdivision of a State, or
any agency thereof.
Program is the administration and issuance of a loan in accordance
with the terms and conditions of this part and of any note and security
agreement which must be executed by a loan recipient under this part.
Table honey is any honey having a good flavor of the predominant
floral source which can be readily marketed for table use in all parts
of the country including honey having the following sources: alfalfa,
apple, basswood, bird's-foot trefoil, blackberry, blueberry, brazil
brush, catsclaw, Chinese tallow, clover, cotton, fireweed, gallberry,
huajillo, knapweed (American), lima bean, mesquite, orange, raspberry,
sage, saw palmetto, snowberry, sourwood, soybean, star thistle
(barnaby's thistle), sunflower, sweet clover, tupelo, vetch, western
wild buckwheat, wild alfalfa, and similar mild flavors or blends of
mild-flavored honeys as determined by the Director, Price Support
Division, FSA.
Representative is a receiver, executor, administrator, guardian, or
trustee representing the interests of a person or an estate.
State committee is the FSA committee so designated for the
applicable State.
Sec. 1434.4 Eligibility.
(a) To be eligible to receive an individual or joint loan under
this part, a person must:
(1) Own, other than through a security interest, mortgage, or lien,
honey that:
(i) Is produced in the United States during the calendar year for
which a loan is requested and extracted on or before December 31 of
such calendar year;
(ii) Does not contain any ineligible honey floral sources;
(iii) Is not adulterated;
(iv) Has not been scorched, burned, or subjected to excessive heat
resulting in objectionable flavor, color deterioration or
carmelization;
(v) Does not contain excessive bees or bee parts, paint chips, wood
chips, or other foreign matter; and
(vi) Is not fermenting.
(2) Share in the risk of producing honey;
(3) Comply with paragraph (h) of this section;
(4) Store the honey pledged as loan collateral in eligible storage
and in eligible metal containers that meet the requirements of
Secs. 1434.7 and 1434.5, respectively;
(5) Adequately protect the interests of CCC by providing security
for a loan in accordance with the requirements in Sec. 1434.8 and by
maintaining in good condition the honey pledged as security for a loan;
(6) Be accurate and truthful and not make any misrepresentations
with respect to any information provided to CCC concerning any activity
covered by this part; and
(7) Not have been convicted of a crime as would render the person
not eligible for the loan because of the provisions of part 718 of this
title.
(b) A person who complies with paragraph (a) of this section, who
enters into a contract to sell the honey used as collateral for a loan
but retains, at a minimum, a beneficial interest in the honey and who
does not receive an advance payment from the purchaser to enter into
the contract unless the purchaser is a cooperative marketing
association (CMA) that is eligible under paragraph (g) of this section,
remains eligible for a loan.
(c) Two or more applicants may be eligible for a joint loan if:
(1) The conditions in paragraphs (a) and (b) of this section are
met with respect to the commingled honey collateral stored in the same
eligible containers they are tendering for a loan; and
(2) The commingled honey is not used as collateral for an
individual loan that has not been repaid.
(d) Heirs who succeed to a beneficial interest in the honey are
eligible for a loan if they:
(1) Assume the decedent's obligation under a loan if such loan has
already been obtained; and
(2) Assure continued safe storage of the honey if such honey has
been pledged as collateral for a loan.
(e) A representative may be eligible to receive a loan on behalf of
a person or estate who or which meets the requirements in paragraphs
(a), (b), (c), and (d) of this section and that the honey tendered as
collateral by the representative, in his capacity as a representative,
shall be considered as tendered by the person or estate being
represented.
(f) A minor who otherwise meets the requirements of this part for a
loan shall be eligible to receive a loan only if the minor meets one of
the following requirements:
(1) A court or statute has conferred the right of majority on the
minor;
(2) A guardian has been appointed to manage the minor's property
and the applicable loan documents are signed by the guardian;
(3) Any note signed by the minor is cosigned by a person determined
by the county committee to be financially responsible; or
(4) A surety, by furnishing a bond, guarantees to protect CCC from
any loss incurred for which the minor would be liable had the minor
been an adult.
(g) A CMA which the Executive Vice President, CCC, determines meets
the requirements for CMA's in part 1425 of this title may be eligible
to obtain a loan on behalf of those members who themselves are eligible
to obtain a loan provided that:
(1) The beneficial interest in the honey must always, until loan
repayment or forfeiture, remain in the member who delivered the honey
to the eligible CMA or its member CMA's, except as otherwise provided
in this part; and
(2) The honey delivered to an eligible CMA shall not be eligible
for a loan if the member who delivered the honey does not retain the
right to share in the proceeds from the marketing of the honey as
provided in part 1425 of this title.
(h)(1) To be eligible to receive loans under this part a producer
must have the beneficial interest in the honey that is tendered to CCC
for a loan. The producer must always have had the beneficial interest
in the honey unless, before the honey was extracted, the producer and a
former producer whom the producer tendering the honey to CCC has
succeeded had such an interest in the honey. Honey obtained by gift or
purchase shall not be eligible to be tendered to CCC for loans. Heirs
who succeed to the beneficial interest of a deceased producer or who
assume the decedent's obligations under an existing loan shall be
eligible to receive loans whether succession to the honey occurs before
or after extraction so long as the
[[Page 10926]]
heir otherwise complies with the provisions of this part.
(2) A producer shall not be considered to have divested the
beneficial interest in the honey if the producer retains control,
title, and risk of loss in the honey including the right to make all
decisions regarding the tender of such honey to CCC for a loan, and the
producer takes one of the following actions:
(i) Executes an option to purchase, whether or not a payment is
made by the potential buyer for such option to purchase, with respect
to such honey if all other eligibility requirements are met and the
option to purchase contains the following provision:
Notwithstanding any other provision of this option to purchase,
title, risk of loss, and beneficial interest in the honey, as
specified in 7 CFR part 1434, shall remain with the producer until
the buyer exercises this option to purchase the honey. This option
to purchase shall expire, notwithstanding any action or inaction by
either the producer or the buyer, at the earlier of: (1) the
maturity of any CCC loan which is secured by such honey; (2) the
date the CCC claims title to such honey; or (3) such other date as
provided in this option.
(ii) Enters into a contract to sell the honey if the producer
retains title, risk of loss, and beneficial interest in the honey and
the purchaser does not pay to the producer any advance payment amount
or any incentive payment amount to enter into such contract except as
provided in part 1425 of this chapter.
(3) If loans are made available to producers through an approved
CMA in accordance with part 1425 of this chapter, the beneficial
interest in the honey must always have been in the producer-member who
delivered the honey to the CMA or its member CMA's, except as otherwise
provided in this section. Honey delivered to such a CMA shall not be
eligible for loans if the producer-member who delivered the honey does
not retain the right to share in the proceeds from the marketing of the
honey as provided in part 1425 of this chapter.
(i) A producer may, before the final date for obtaining a loan for
honey, re-offer as loan honey any honey that has been previously
pledged as loan honey except that the loan on such re-offered honey
shall have the same maturity date as the original loan.
Sec. 1434.5 Containers and drums.
(a)(1) The honey must be packed in metal containers of a capacity
of not less than 5 gallons or greater than 70 gallons. The metal
containers must meet the requirements of the Federal Food, Drug, and
Cosmetic Act, as amended, and regulations issued thereunder and must be
generally fit for the purpose for which they are to be used;
(2) The 5-gallon containers must hold approximately 60 pounds of
honey, and must be new, clean, sound, uncased, and free from
appreciable dents and rust. The handle of each container must be firm
and strong enough to permit carrying the filled container. The cover
and can opening must not be damaged in any way that will prevent a
tight seal. Cans which are punctured or have been punctured and
resealed by soldering will not be acceptable, and
(3) The steel drums must be an open-end type and filled no closer
than 2 inches from the top of the drums. Such drums must be new or must
be used drums which have been reconditioned inside and outside. The
steel drums must be clean, treated inside and outside to prevent
rusting, fitted with gaskets which provide a tight seal and have an
inside coating suitable for honey storage.
(b) Honey shall not be eligible to be pledged as collateral for
loans if such honey is stored in:
(1) 55-gallon steel drums having a tare weight less than 38 pounds,
30-gallon steel drums having a tare weight less than 26 pounds, or
drums having removable liners of polyethylene or other materials;
(2) Bung-type drums;
(3) Bulk tanks;
(4) Plastic buckets and containers;
(5) Steel drums which are severely enough dented as to cause damage
to their lining, improper seal, or stacking capabilities; and
(6) Rusted drums with corroded areas.
Sec. 1434.6 Application, availability, disbursement, and maturity.
(a) The deadline for requesting a loan offered under this part is
May 7, 1999.
(b) Loans mature on demand but not later than the last day of the
ninth calendar month following the month in which the note and security
agreement was approved. When the final maturity date falls on a non-
workday for county offices, CCC shall extend the final date to the next
workday. Before the date determined in paragraph (a) of this section, a
producer may re-offer as loan collateral any eligible honey that has
been offered previously for a CCC loan and the loan has been repaid.
(c) A producer must request loans at the county office of the
county where the honey is stored if the honey is stored at the
producer's farm. A producer who requests a loan on honey stored in
eligible storage other than the producer's farm, may request loans at
either the county office of the county where the storage facility is
located or at the county office of the county where the producer's main
place of business is located. A CMA must request loans at the county
office for the county in which the principal office of the CMA is
located unless the State committee designates another county office. If
the CMA has operations in two or more States, the CMA must file its
loan applications at the county office for the county in which its
principal office for each State is located.
(d) Subject to paragraph (a) of this section, loans for the 1998
crop of honey are available to producers as soon as announced by CCC.
(e) Loans will be made on the honey as declared and certified by
the producer on Form CCC-633 (Honey), (Honey Loan Certification and
Worksheet) at the time the honey is pledged as collateral for a loan.
The producer is also required to declare and certify on Form CCC-633
(Honey) the class (table or nontable) and floral source of the honey at
the time the honey is pledged as collateral for a loan.
(f) The request for a loan shall not be approved until all
producers having an interest in the honey sign the note and security
agreement and CCC approves such note and security agreement. The
disbursement of loans will be made by county offices on behalf of CCC.
(g) The loan documents shall not be presented for disbursement
unless the honey subject to the note and security agreement:
(1) Is eligible to be pledged as collateral for a loan;
(2) Is in existence;
(3) Has been extracted;
(4) Is in eligible storage; and
(5) Has not been blended or mixed with ineligible honey.
(h) If, after a loan is made, CCC determines that the producer or
the honey collateral is not in compliance with any of the provisions of
this part, the producer shall refund the total amount disbursed under
loan and charges plus interest, including late payment interest as
provided in part 1403 of this title.
Sec. 1434.7 Eligible storage.
(a) Loans will be made only on honey in eligible storage which
shall consist of a storage structure located on or off the farm which
is determined by CCC to be under the control of the producer and
affords safe storage for honey pledged as collateral for a loan. If the
honey located in a farm storage structure is pledged as collateral that
secures more than one loan, the honey must be segregated so as to
preserve the identity of the honey
[[Page 10927]]
securing such loan. Honey securing a loan must also be segregated from
any honey not pledged as collateral for a loan which is stored in the
same structure.
(b) Producers may also obtain loans on honey packed in eligible
containers and stored in facilities owned by third parties in which the
honey of more than one person is stored if the honey which is to be
pledged as collateral for a loan and which is stored identity preserved
or is segregated from all other honey. Each container of the segregated
quantity of honey shall be marked with the producer's name, loan
number, and lot number so as to identify the honey from other honey
stored in the structure.
Sec. 1434.8 Liens.
(a) CCC's security interest in the honey pledged as collateral is
first and superior to all other security interests.
(b) The county office shall file or record, as required by State
law, all financing statements needed to perfect a security interest in
honey pledged as collateral for a loan. The cost of filing and
recording shall be for the account of CCC.
(c) If there are any other security interests, liens, or
encumbrances on the honey, CCC shall obtain waivers that fully protect
the interest of CCC even though the security interests, liens, or
encumbrances are satisfied from the loan proceeds. No additional
security interests, liens, or encumbrances shall be placed on the honey
after the loan is approved.
Sec. 1434.9 Fees and interest.
(a) A producer shall pay a nonrefundable loan service fee to CCC at
a rate determined by CCC to operate the program on a no-net-cost basis
as determined by the Executive Vice President, CCC. The amount of such
fees will be available in State and county offices and will be shown on
the note and security agreement.
(b) Interest which accrues with respect to a loan shall be
determined in accordance with part 1405 of this chapter.
Sec. 1434.10 Determination of quantity.
The amount of a loan shall be based on 100 per cent of the net
weight in pounds of such quantity certified by the producer for honey
on Form CCC-633 (Honey) which is pledged as security for the loan and
covered by the note and security agreement. Estimates of the quantity
of honey shall be made on the basis of 12 pounds for each gallon of
rated capacity of the container.
Sec. 1434.11 Transfer of producer's interest prohibited.
Absent written approval from CCC, the producer shall not transfer
either the remaining interest in, or right to redeem, the honey pledged
as collateral for a loan on honey nor shall anyone acquire such
interest or right. Subject to the provisions of Sec. 1434.14, a
producer who wishes to liquidate all or part of a loan by contracting
for the sale of the honey must obtain written approval from the county
office on a form prescribed by CCC to remove a specified quantity of
the honey from storage. Any such approval shall be subject to the terms
and conditions set forth in the applicable form, copies of which may be
obtained by producers at the county office.
Sec. 1434.12 Loss or damage.
The producer is responsible for any loss in quantity or quality of
the honey pledged as collateral for a loan. CCC shall not assume any
loss in quantity or quality of the loan collateral.
Sec. 1434.13 Personal liability of the producer.
(a) When applying for an individual or joint loan, each producer
agrees:
(1) When signing Form CCC-633 (Honey), Honey Loan Certification and
Worksheet and Form CCC-677 Farm Storage Note and Security Agreement,
that the producer will:
(i) Provide correct, accurate, and truthful certifications and
representations of the loan quantity and all other matters of fact and
interest; and
(ii) Not remove or dispose of any amount of the loan quantity
without prior written approval from CCC in accordance with this
section.
(2) That violation of the terms and conditions of this part and
Form CCC-677 will cause harm or damage to CCC in that funds may be
disbursed to the producer for a loan quantity which is not actually in
existence or for a quantity for which the producer is not eligible.
(b) For the purposes of this section, violations include any
failure to comply with this part or the loan agreement, including but
not limited to any incorrect certification or:
(1) Unauthorized removal of honey which shall include but is not
limited to the movement of any loan quantity of honey from the storage
structure in which the commodity was stored when the loan was approved
to any other storage structure whether or not such structure is located
on the producer's farm without prior written authorization from the
county committee in accordance with Sec. 1434.14.
(2) Any unauthorized disposition which shall include, but is not
limited to the conversion of any loan quantity pledged as collateral
for a loan without prior written authorization from the county
committee in accordance with Sec. 1434.14.
(c) The producer and CCC agree that it will be difficult, if not
impossible, to prove the amount of damages to CCC for conduct which is
in violation of this section. Accordingly, if the county committee
determines that the producer has engaged in any such violation,
liquidated damages shall be assessed in addition to any loan refund and
other charges that may be due. The amount of such damages shall be
computed using the quantity of honey that is involved in the violation
and the formula set out below. If CCC determines the producer:
(1) Acted in good faith when the violation occurred, liquidated
damages will be assessed by multiplying the quantity involved in the
violation by:
(i) 10 percent of the loan rate applicable to the loan note for the
first offense; or
(ii) 25 percent of the loan rate applicable to the loan note for
the second offense; or
(2) Did not act in good faith with regard to the violation, or for
cases other than the first or second offense, liquidated damages will
be assessed by multiplying the quantity involved in the violation by 25
percent of the loan rate applicable to the loan note.
(d) For liquidated damages assessed in accordance with paragraph
(c)(1) of this section, the county committee shall:
(1) Require repayment of the loan principal applicable to the loan
quantity involved in the violation plus charges and interest; and
(2) If the producer fails to pay such amount within 30 calendar
days from the date of notification, call the applicable loan for all of
the honey under loan, plus charges and interest.
(e) For liquidated damages assessed in accordance with paragraph
(c)(2) of this section, the county committee shall call the loan
involved in the violation, and charges plus interest.
(f) The county committee:
(1) May waive the administrative actions taken in accordance with
paragraphs (c)(1) and (d) of this section if the county committee
determines that:
(i) The violation occurred inadvertently, accidentally, or
unintentionally; or
(ii) The producer acted to prevent spoilage of the commodity.
(2) Shall not consider the following acts as inadvertent,
accidental, or unintentional:
[[Page 10928]]
(i) Movement of loan collateral off the farm;
(ii) Movement of loan collateral from one storage structure to
another on the farm; and
(iii) Consumption of loan collateral.
(3) Shall furnish a copy of its determination to the State
committee, and the Administrator. If the determination of the county
committee is not disapproved by either the State committee or the
Administrator or a designee, within 60 calendar days from the date the
determination is received, such determination may be considered to have
been approved unless the Administrator issues procedures that allow for
more time or decides in an individual case that more time is needed.
(g) If there is any violation of the loan agreement or this part,
the loan may be terminated in which case there must be a full refund of
the loan plus interest and costs.
(h) If the county committee determines that the producer has
violated this part or the loan agreement, the county committee shall
notify the producer in writing that:
(1) The producer has 30 calendar days to provide evidence and
information regarding the circumstances which caused the violation, to
the county committee, and
(2) Administrative actions will be taken in accordance with
paragraph (d) or (e) of this section.
(i)(1) If a producer:
(i) Makes any fraudulent or misleading representation in obtaining
a loan, maintaining, or settling a loan; or
(ii) Disposes or moves the loan collateral without the approval of
CCC, such loan shall become payable upon demand by CCC. The producer
shall be liable for:
(A) The amount of the loan;
(B) Any additional amounts paid by CCC with respect to the loan;
(C) All other costs which CCC would not have incurred but for the
fraudulent representation, the unauthorized disposition or movement of
the loan collateral;
(D) Interest on such amounts;
(E) Late payment interest as may be provided for in part 1403 of
this title; and
(F) Liquidated damages assessed under paragraph (c) of this
section; and
(2) Notwithstanding any provisions of the note and security
agreement, if a producer has made any such fraudulent or misleading
representation to CCC or if the producer has disposed of, or moved, the
loan collateral without prior written approval from CCC in accordance
with Sec. 1434.14, the value of the settlement for such collateral
removed by CCC shall be determined by CCC according to Sec. 1434.16.
(j) A producer shall be personally liable for any damages resulting
from honey removed by CCC, containing mercurial compounds or other
substances poisonous to humans, animals, or food commodities which are
contaminated.
(k) If the amount disbursed under a loan or in settlement thereof
exceeds the amount authorized under this part, the producer shall be
personally liable for repayment of such excess and charges, plus
interest, and for any other sanction as may be allowed by law.
(l) If the amount collected from the producer in satisfaction of
the loan is less than the amount required in accordance with this part,
the producer shall be personally liable for repayment of the amount of
such deficiency and charges, plus interest.
(m) In the case of joint loans, the personal liability for the
amounts specified in this section shall be joint and several on the
part of each producer signing the loan note. Further, each producer who
is a party to a joint loan will be jointly and severally liable for any
violation of the terms and conditions of the note and security
agreement, and the regulations set forth in this part. Each such
producer shall also remain liable for repayment of the entire loan
amount until the loan is fully repaid without regard to such producer's
claimed share in the honey, or loan proceeds, after execution of the
note and security agreement by CCC.
(n) Any or all of the liquidated damages assessed in accordance
with the provisions of paragraph (c) of this section may be waived as
determined by CCC.
(o) Remedies set out here are in addition to remedies the CCC will
have through its security interest on honey which secures the repayment
of the loan made on the honey.
(p) All remedies provided for in this section or part are in
addition to any remedies as may otherwise be provided for in law.
Sec. 1434.14 Release of the honey pledged as collateral for a loan.
(a)(1) A producer shall not move or dispose of any honey pledged as
collateral for a loan until prior written approval for such removal or
disposition has been received from the county committee in accordance
with this section.
(2) A producer may at any time obtain a release of all or part of
the honey remaining as loan collateral by paying to CCC the amount of
the loan and any charges which had been made by CCC to the producer
with respect to the quantity of the honey released, plus interest.
(3) When the proceeds of a sale of honey are needed to repay all or
part of a loan, the producer must request and obtain prior written
approval of the county office on a form prescribed by CCC in order to
remove a specified quantity of the honey from storage. Any such
approval shall be subject to the terms and conditions set forth in the
applicable form, copies of which may be obtained by producers at the
county office. Any such approval shall not constitute a release of
CCC's security interest in the commodity or release the producer from
liability for any amounts due and owing to CCC with respect to any loan
indebtedness if full payment of such amounts is not received by the
county office.
(b) The note and security agreement shall not be released until all
loan liability has been satisfied in full.
(c) After satisfaction of a loan, CCC shall release CCC's security
interest in the honey at the producer's request. The producer shall be
responsible for payment of any fee for such release if such fee can be
determined.
Sec. 1434.15 Liquidation of loans.
(a) The producer is required to repay the loan on or before
maturity by payment of the amount of loan, plus any charges, plus
interest.
(b) If a producer fails to settle the loan in accordance with
paragraph (a) of this section within 30 calendar days from the maturity
date of such loan, or other reasonable time period as established by
CCC, a claim for the loan amount, plus charges, plus interest shall be
established. CCC shall inform the producer before the maturity date of
the loan of the date by which the loan must be settled or a claim will
be established in accordance with part 1403 of this title.
Sec. 1434.16 Foreclosure.
(a) Upon maturity and nonpayment of the loan, title to the
unredeemed honey securing the loan shall vest in CCC.
(b) If the total amount due on a loan or the unpaid amount of the
note and charges, plus interest is not satisfied upon maturity, CCC may
remove the honey from storage and assign, transfer, and deliver the
honey or documents evidencing title thereto at such time, in such
manner, and upon such terms as CCC may determine at public or private
sale. Any such disposition may also be effected without removing the
honey from storage. The honey may be processed before sale and CCC may
[[Page 10929]]
become the purchaser of the whole or any part of the honey at either a
public or private sale.
(c) If the honey is removed from storage by CCC and is sold, the
value of the settlement shall be the proceeds from the sale of the
honey minus costs associated with the disposition of the honey and
shall be applied to the amount owed CCC by the producer; and
(1) If the value of the collateral computed at settlement is less
than the amount due, the producer shall pay to CCC the amount of such
deficiency and charges, plus interest on such deficiency and CCC may
take any action against the producer to recover the deficiency; or
(2) If the proceeds received from the sale of the honey so computed
are greater than the sum of the amount due plus any cost incurred by
CCC in conducting the sale of the honey, such excess shall be paid to
the producer or, if applicable, to any secured creditor of the
producer.
Sec. 1434.17 Handling payments and collections not exceeding $9.99.
In order to avoid administrative costs of making small payments and
handling small accounts, amounts of $9.99 or less which are due the
producer will be paid only upon the producer's request. Deficiencies of
$9.99 or less, including interest, may be disregarded unless demand for
payment is made by CCC.
Sec. 1434.18 Death, incompetency, or disappearance; appeals; other
loan provisions.
(a) In the case of death, incompetency, or disappearance of any
producer who is entitled to the payment of any sum in settlement of a
loan, payment shall, upon proper application to the county office which
made the loan, be made to the persons who would be entitled to such
producer's share under the regulations contained in part 707 of this
title. Applications for loans may be made upon application of a
representative of the producer as allowed under standard practice for
farm programs.
(b) Appeals of adverse decisions made under this part shall be
subject to the provisions of 7 CFR parts 11 and 780.
(c) The Executive Vice President, CCC, may impose such additional
loan conditions as are determined to be necessary or appropriate to
insure that the purposes and goals of the program provided for in this
part are met.
Signed at Washington, D.C., on March 2, 1999.
Keith Kelly,
Executive Vice President, Commodity Credit Corporation.
[FR Doc. 99-5557 Filed 3-3-99; 12:57 pm]
BILLING CODE 3410-05-P
