[Federal Register Volume 63, Number 109 (Monday, June 8, 1998)]
[Rules and Regulations]
[Pages 31102-31104]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-15000]
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DEPARTMENT OF AGRICULTURE
Commodity Credit Corporation
7 CFR Part 1412
Amendment to the Production Flexibility Contract Regulations
RIN 0560-AF25
AGENCY: Commodity Credit Corporation, USDA.
ACTION: Final rule.
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SUMMARY: The Commodity Credit Corporation (CCC) is issuing its final
rule with respect to the amendments to the production flexibility
contract regulations published as an interim final rule in the Federal
Register on October 23, 1997. After considering the comments received
from the public, this rule adopts the interim rule as final with
changes as indicated. The rule also incorporates a specific change
required by the Agriculture, Rural Development, Food and Drug
Administration, and Related Agencies Appropriations Act, 1998, which
provides that if wild rice is planted on contract acreage, the contract
payment shall be reduced in an amount reflecting each contract acre
planted to wild rice.
EFFECTIVE DATE: June 8, 1998.
FOR FURTHER INFORMATION CONTACT: Lynn H. Tjeerdsma, Farm Service
Agency, United States Department of Agriculture, STOP 0517, 1400
Independence Avenue, SW., Washington, DC 20250-0517, telephone 202-720-
6602, Internet address: ltjeerds@wdc.fsa.usda.gov.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This rule has been determined to be not significant and was not
reviewed by the Office of Management and Budget (OMB).
Regulatory Flexibility Act
It has been determined that the Regulatory Flexibility Act is not
applicable because CCC is not required by 5 U.S.C. 553 or any other
provision of law to publish a notice of proposed rulemaking with
respect to the subject matter of this rule.
Environmental Evaluation
An Environmental Evaluation with respect to the proposed rule has
been completed. It has been determined that this action will not have
significant adverse effects on environmental factors such as wildlife
habitat, water quality, air quality, land use, or appearance.
Therefore, neither an Environmental Assessment nor an Environmental
Impact Statement is needed.
Executive Order 12988
This rule has been reviewed in accordance with Executive Order
12988. The provisions of this proposed rule preempt State laws to the
extent such laws are inconsistent with the provisions of this rule. The
provisions of this rule are not retroactive. Before any judicial action
may be brought concerning the provisions of this rule, the
administrative remedies must be exhausted.
Executive Order 12372
This program/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 3015, subpart
V, published at 48 FR 29115 (June 24, 1983).
Paperwork Reduction Act
The amendments to 7 CFR part 1412 set forth in this rule were
previously approved under OMB Control Number 0560-0092. An information
collection notice was published in the Federal Register (62 FR 27216)
on May 19, 1997. No comments were received regarding this notice. A
revised information collection package has been submitted to OMB.
Executive Order 12612
It has been determined that this rule does not have sufficient
Federalism implications to warrant the preparation of a Federalism
Assessment. The provisions contained in this rule will not have a
substantial direct effect on States or their political subdivisions or
on the distribution of power and responsibilities among the various
levels of Government.
Unfunded Mandates Reform Act of 1995
This rule contains no Federal mandates under the regulatory
provisions of Title II of the Unfunded Mandates Reform Act of 1995
(UMBRA) for State, local, and tribal governments or the private sector.
Therefore, this rule is not subject to the requirements of sections 202
and 205 of the UMBRA.
Background
On October 23, 1997, CCC published an interim rule in the Federal
Register (62 FR 55150) to add a final date for producers to designate
payment shares and provide supporting documentation to be eligible to
earn contract payments in a fiscal year when payment shares have not
been designated in such fiscal year; change the dates by which a
producer or owner must inform county committee of changes in interest;
add a final date for producers to request advance payments; clarify
cash lease provisions; change the provisions for determining whether a
lease is a cash lease or a share lease with respect to combination
leases; and change the date by which all landowners, tenants, and
sharecroppers failing to reach an agreement regarding the division of
contract payments for a fiscal year must execute a contract to be
eligible to receive the contract payment for that
[[Page 31103]]
fiscal year. Following publication of the interim rule, the public was
afforded 30 days to submit comments. CCC extended the comment period to
December 1, 1997 (62 FR 63441). There were 101 comments received in
response to the notice during the comment period that ended on December
1, 1997. The comments were received from 74 producers, 19 commodity
groups and eight Members of Congress. Five respondents were opposed to
the amendment to Sec. 1412.302(b). One hundred respondents were opposed
to, and one respondent was in favor of, the amendment to
Sec. 1412.303(a)(4). The comments received and CCC responses are as
follows:
Comment: Section 1412.302(b) Respondents were concerned that the
timing of the announcement allowed landlords and tenants a minimal
amount of time to negotiate leases to be eligible for the December
advance payment, and that the deadlines for requesting advance payments
were provided in legislation that did not envision USDA eliminating the
options through administrative changes. Respondents urged the
Department to suspend implementation of the new deadlines relating to
advance payments to ensure that the Department's implementation of the
Federal Agriculture Improvement and Reform Act of 1996 (1996 Act) is
consistent with the intent of Congress.
Response: The 1996 Act specifies that at the option of the owner or
producer for fiscal year 1997 and each subsequent year, 50 percent of
the annual contract payment shall be made on December 15 or January 15
of the fiscal year. Section 1412.302(b) does not change the statutory
deadline for issuing advance payments. This amendment to the regulation
was made to ensure that requests for advance payments are received in a
timely manner to enable CCC to issue the payments by the statutory
deadlines. The provision will not be changed from the interim rule.
Comment: Section 1412.303(a)(4) Respondents were concerned that
this provision was announced at an inappropriate time. Respondents were
also concerned that the provision would result in higher fixed cash
rents, reduced contract payments for tenants, limited crop financing
for tenants, increased financial exposure of tenants, renegotiation of
rental arrangements, minimal or no savings to the Government,
elimination of cash rent flexibility provisions under combination
leases, decreased land values because of limited improvements being
made to the land resulting in job losses and reduced tax bases in rural
communities, and elimination of the planting flexibility provisions in
the 1996 Act. Respondents were also concerned that the Department did
not explain the basis for the change.
Response: The amendment to Sec. 1412.303(a)(4) relates to
combination leases that are partially paid in cash and partially paid
in the crop. Prior to the amendment to this section, most combination
leases result in a determination that the lease is a share lease unless
there is a disaster. Changing this provision provides uniformity in
determining whether a lease is a cash or share lease. The substance of
Sec. 1412.303(a)(4) will not be changed, but the timing of the
implementation of this section has been modified as indicated below so
that producers who had made long-term commitments prior to the
publication of the interim rule will be unaffected. In addition,
Sec. 1412.303(a)(6) has been amended to comport with these changes.
Changes from the interim rule include:
Section 1412.206 Planting Flexibility
This rule incorporates the change required by the Agriculture,
Rural Development, Food and Drug Administration, and Related Agencies
Appropriations Act, 1998, which provides that if wild rice is planted
on contract acreage, the contract payment shall be reduced by an acre
for each contract acre planted to wild rice.
Section 1412.303 Sharing of Contract Payments
Combination leases are leases that contain provisions for both a
guaranteed amount such as a fixed dollar amount, or quantity and a
share of a crop or crop proceeds. Combination leases include those
leases that provide for the greater of a guaranteed amount, or share of
the crop or crop proceeds. The amendment provides that all combination
leases shall be considered share leases for fiscal years 1999 and later
fiscal years except for those producers who had made leasing and share-
designation decisions prior to the interim rule.
This rule amends Sec. 1412.303:
(1) by adding language that for fiscal year 1999 and subsequent
fiscal years, except as provided in (2) where producers had already
made leasing and share-designation decisions prior to the interim rule,
that a ``combination'' lease shall be considered a share lease if the
lease provides for both a guaranteed amount, such as a fixed dollar
amount or quantity, and a share of a crop or crop proceeds, including
leases which provide for the greater of a guaranteed amount or share of
the crop or crop proceeds; and
(2) by adding language that for producers who had already made
leasing and share-designation decisions prior to the interim rule that
for the years which had been designated and a lease executed, those
leases will continue to be considered cash leases.
List of Subjects in 7 CFR Part 1412
Contract acreage, Contract payments, Planting flexibility, Price
support programs.
Accordingly, the interim rule amending 7 CFR part 1412, which was
published at 62 FR 55150 on October 23, 1997, is adopted as a final
rule with the following changes:
PART 1412--PRODUCTION FLEXIBILITY CONTRACTS FOR WHEAT, FEED GRAINS,
RICE, AND UPLAND COTTON
1. The authority citation for part 1412 continues to read as
follows:
Authority: 7 U.S.C. 7201 et seq.; 15 U.S.C. 714b and 714c; and
Sec. 734 of Pub. L. 105-86.
2. Section 1412.201 is amended by revising paragraph (c) to read as
follows:
Sec. 1412.201 Production flexibility contract.
* * * * *
(c) All producers sharing in the contract payments on a farm whose
payment shares have not been designated for a fiscal year must sign the
contract designating payment shares and provide supporting
documentation as specified in parts 12, 1400, and 1405 of this title no
later than August 1 of the fiscal year to be eligible to earn a
contract payment in that fiscal year. If all producers have not signed
the contract by this deadline, no producers on the contract will be
eligible for a payment for that farm for that fiscal year.
3. Section 1412.206 is amended by revising paragraph (a) to read as
follows:
Sec. 1412.206 Planting flexibility.
(a) For the 1996 through 2002 crop years, any crop may be planted
on contract acreage on a farm, except as limited elsewhere in this
section. For fiscal year 1998, for each acre a producer plants wild
rice on contract acreage, 1 acre will not be used in determining the
contract payment. Any crop may be planted on cropland in excess of the
contract acreage.
* * * * *
4. Section 1412.207 paragraphs (d)(1) and (d)(2) are revised to
read as follows:
[[Page 31104]]
Sec. 1412.207 Succession-in-interest to a production flexibility
contract.
* * * * *
(d) * * *
(1) August 1 of the fiscal year in which the change occurs if
producers on the contract acreage remain the same, but payment shares
change; or
(2) August 1 of the fiscal year in which the change occurs, if a
new producer is being added to the contract.
* * * * *
5. Section 1412.302 paragraph (b) is revised to read as follows:
* * * * *
Sec. 1412.302 Contract payment provisions.
* * * * *
(b) At the option of the producer, for fiscal year 1997 and each
subsequent fiscal year, 50 percent of the annual contract payment shall
be paid on December 15 or January 15, as requested by the producer. To
receive the advance payment the producers on the farm must be in
compliance with all requirements of the contract at the time of the
advance payment. For fiscal year 1998 and each subsequent fiscal year,
all producers sharing in the contract payment on the farm must no later
than 15 days prior to the final date to issue the advance payment, sign
the contract designating payment shares and provide supporting
documentation as specified in parts 12, 1400, and 1405 of this title,
if applicable; and request the advance payment. If all producers on the
farm have not signed the contract designating payment shares according
to this paragraph, then no producers will be eligible for a payment for
that farm for that fiscal year.
* * * * *
6. Section 1412.303 is amended by adding paragraph (a)(6) and
revising paragraphs (a)(2) and (a)(4) to read as follows:
Sec. 1412.303 Sharing of contract payments.
(a) * * *
(2) A lease will be considered a cash lease if the lease provides
for only a guaranteed sum certain cash payment, or a fixed quantity of
the crop (for example, cash, pounds, or bushels per acre).
* * * * *
(4) Beginning on October 1, 1998, for years in which payment shares
had not been designated prior to October 23, 1997, a producer's lease,
including a lease which provides for the greater of a guaranteed amount
or share of the crop or crop proceeds, shall be considered a share
lease if the lease provides for both:
(i) A guaranteed amount such as a fixed dollar amount or quantity;
and
(ii) A share of the crop proceeds.
* * * * *
(6) A lease that the county committee determined to be a cash lease
under Sec. 1412.303 as contained in the 7 CFR, parts 1200 to 1499,
edition revised as of January 1, 1997, will be considered a cash lease
for the years in which payment shares were designated if, prior to
October 23, 1997:
(i) The designation of shares was executed; and
(ii) The county committee was provided a copy of the lease
applicable for the designated years.
* * * * *
7. Section 1412.304 paragraph (b) is revised to read as follows:
Sec. 1412.304 Provisions relating to tenants and sharecroppers.
* * * * *
(b) Notwithstanding the provisions set forth at Sec. 1412.302(c),
if the landowners, tenants and sharecroppers on a farm fail to reach an
agreement regarding the division of contract payments for a fiscal
year, the county committee shall make the payment at a later date if
all persons eligible to receive a share of the contract payment have
executed a contract not later than August 1 of the applicable fiscal
year and subsequently agree to the division of contract payment.
Signed at Washington, DC, on June 1, 1998.
Keith Kelly,
Executive Vice President, Commodity Credit Corporation.
[FR Doc. 98-15000 Filed 6-5-98; 8:45 am]
BILLING CODE 3410-05-P
