Notice of Funds Availability; 2002 Livestock Compensation Program

SUMMARY: This Notice announces the availability of $752 million under

section 32 of the Act of August 24, 1935 (section 32) to implement the

2002 Livestock Compensation Program (LCP). Livestock feed supplies and

grazing availability have been significantly reduced due to the extreme

drought that has occurred throughout much of the United States during

2001 and 2002. The LCP was created by the United States Department of

Agriculture (USDA) to provide immediate financial assistance to the

producers of eligible beef, dairy, buffalo, beefalo, sheep or goats, or

cash lessees of eligible livestock, in certain States and counties to

offset losses due to drought. Funds will be provided to eligible

applicants in counties declared under a disaster designation made after

January 1, 2001, or submitted to the Secretary of Agriculture, by the

Governor of a State or a Tribal Leader of an Indian Reservation, no

later than September 19, 2002. The county must be approved by the

Secretary to be eligible for the LCP. Complete eligibility criteria and

application procedures are provided in the notice below. The Farm

Service Agency (FSA) will determine eligible producers and the amount

of assistance that will be paid.

DATES: FSA began accepting applications on October 1, 2002. The

application deadline will be determined by the Deputy Administrator for

Farm Programs of FSA. Payments will be issued to applicants meeting all

eligibility requirements beginning October 7, 2002.

FOR FURTHER INFORMATION CONTACT: Lynn Tjeerdsma, Chief, Emergency

Preparedness and Programs Branch, USDA/FSA, 1400 Independence Ave. SW,

STOP 0517, Washington, D.C. 20250-0522; telephone (202) 720-7641;

facsimile (202) 690-3610; electronic mail: Lynn--

[email protected]. Persons with disabilities who require

alternative means for communication of regulatory information (braille,

large print, audiotape, etc.) should contact USDA's TARGET Center at

(202) 720-2600 (voice and TDD).

SUPPLEMENTARY INFORMATION:

Executive Order 12372

This program is not subject to the provisions of Executive Order

12372, which requires consultation with State and local officials.

Environmental Compliance

Due to the drought-related emergency requiring the Agency to

provide immediate relief, sufficient time was not available to complete

an environmental review prior to implementing the proposed action.

Therefore, an environmental assessment is being completed to consider

the potential impacts of this proposed action on the human environment

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. A copy of the

draft environmental assessment will be made available for public review

and comment upon request.

Paperwork Reduction Act

A request for emergency clearance of the information collections

associated with this notice has been approved by the Office of

Management and Budget (OMB) under 5 CFR 1320.13(a)(2)(iii), and been

assigned OMB control number 0560-0223.

I. Definitions

The following definitions are applicable to the 2002 Livestock

Compensation Program:

Adult beef cows are female bovine livestock, of a breed used for

the purpose of providing meat for human consumption, that have

delivered one or more offspring, at any time before June 1, 2002.

Adult beef bulls are male bovine livestock, of a breed used for the

purpose of providing meat for human consumption, to be used for

breeding purposes, that were two years old on or before June 1, 2002.

Adult buffalo and beefalo cows are female livestock of those

breeds, used for the purpose of providing meat for human consumption,

that have delivered one or more offspring, at any time before June 1,

2002.

Adult buffalo and beefalo bulls are male livestock of those breeds,

used for the purpose of providing meat for human consumption, to be

used for breeding purposes that were two years old on or before June 1,

2002.

Adult dairy bulls are male bovine livestock that are two years old

on or before June 1, 2002, of a breed used for producing milk for human

consumption, for breeding dairy cows.

Adult dairy cows are female bovine livestock, used for the purpose

of providing milk for human consumption, that have delivered one or

more offspring, at any time before June 1, 2002.

Agency is the Farm Service Agency, its employees, and any successor

agency.

Applicant is the individual or business entity applying for

assistance.

Application means the Form FSA-553, Livestock Compensation Program

(LCP) Application. The FSA-553 is available at FSA county service

centers and on the Internet.

Beef bulls are male bovine livestock, used for the purpose of

providing meat for human consumption, that as of June 1, 2002, weighed

more than 500 pounds and were less than two years old.

Beef replacement heifers and non-breeding heifers are female bovine

livestock, used for the purpose of providing meat for human

consumption, that as of June 1, 2002, weighed more than 500 pounds and

had never delivered any offspring.

Beef steers are neutered male bovine livestock, used for the

purpose of providing meat for human consumption, that weighed more than

500 pounds on or before June 1, 2002.

Buffalo and beefalo bulls are male livestock of those breeds, used

for the purpose of providing meat for human consumption, that as of

June 1, 2002,

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that weighed more than 500 pounds and were less than two years old.

Buffalo and beefalo replacement heifers and buffalo and beefalo

non-breeding heifers are female livestock of those breeds, used for the

purpose of providing meat for human consumption, that as of June 1,

2002, weighed more than 500 pounds and had never delivered any

offspring.

Buffalo and beefalo steers are neutered male livestock of those

breeds, used for the purpose of providing meat for human consumption,

that weighed more than 500 pounds on or before June 1, 2002.

Business Entity is a corporation, partnership, joint operation,

trust, limited liability company, or cooperative.

Dairy bulls are male bovine livestock, of a breed used for the

purpose of providing milk for human consumption, that as of June 1,

2002, weighed more than 500 pounds and were less than two years old.

Dairy replacement heifers and dairy non-breeding heifers are female

bovine livestock, of a breed used for the purpose of providing milk for

human consumption, that as of June 1, 2002, weighed more than 500

pounds and had never delivered any offspring.

Dairy steers are neutered male bovine livestock, of a breed used

for the purpose of providing milk for human consumption, that weighed

more than 500 pounds on or before June 1, 2002.

Deputy Administrator or DAFP means the Deputy Administrator for

Farm Programs, Farm Service Agency (FSA), or a designee.

Eligible County is a county that was named as a primary county

under a Secretarial disaster designation after January 1, 2001, for

damages and losses due to drought; or for which a Governor of a State

or a Tribal Leader of an Indian Reservation, requested a disaster

designation no later than September 19, 2002, for damages and losses

due to drought, and was subsequently approved by the Secretary as a

primary county.

Eligible livestock are certain beef and dairy cattle, buffalo and

beefalo, sheep, and goats that an eligible livestock producer owned, or

cash-leased for 90 or more days, and that were owned or subject to a

cash lease on June 1, 2002. Certain beef and dairy cattle, buffalo and

beefalo, sheep, and goats, subject to a contract for purchase by the

applicant, that was negotiated prior to June 1, 2002, are eligible

livestock.

Eligible livestock producer is an owner or lessee of eligible

livestock whose livestock operation headquarters is physically located

in an eligible county.

Goats are domesticated, bearded, horned, ruminant mammals of the

genus Capra, including Angora goats.

Ineligible livestock are any beef cattle, buffalo, beefalo, dairy

cattle, sheep and goats that on June 1, 2002, were not owned or subject

to a cash lease or under contract to be purchased by an applicant; and

are any beef cattle, buffalo, and dairy cattle that, as of June 1,

2002, weighed less than 500 pounds; and also include livestock owned by

an ineligible livestock producer.

Ineligible livestock producer is a livestock owner that slaughters,

processes, and packs livestock meat into meat and meat products; and,

as determined by the Deputy Administrator, is also a livestock owner

that, for monetary reimbursement or other gain, provides feed and

facilities for livestock owned by another person on a custom feeding

basis; and is also a livestock owner whose livestock operation

headquarters is not located in an eligible county.

Sheep are domesticated, horned, ruminant mammals of the genus Ovis,

bred for their wool, edible flesh, or skin.

II. Appeals

An applicant may request an appeal or review of an adverse decision

made by the Agency in accordance with 7 CFR parts 11 and 780, or its

successor regulation.

III. Eligibility Requirements

Applicants must meet all of the following requirements to be

eligible for the 2002 Livestock Compensation Program:

1. Timely application. The applicant must submit a signed form FSA-

553 completed to the best of the applicant's ability to the Agency, no

earlier than October 1, 2002, and no later than such date as announced

by the Deputy Administrator.

2. Livestock owner or lessee. The applicant must own, be subject to

a contract to purchase, or cash-lease, eligible livestock.

3. Applicant's operation must be physically located in an eligible

county. The applicant's livestock operation headquarters must be

physically located in an eligible county on June 1, 2002.

IV. Gross Revenue Limitation

A person, as defined in 7 CFR part 1400, who has annual gross

revenue in excess of $2.5 million shall not be eligible to receive

assistance under the 2002 Livestock Compensation Program. For the

purpose of this determination, annual gross revenue means:

(a) With respect to a person who receives more than 50 percent of

such person's gross income from farming and ranching, the total gross

revenue received from such operations; and

(b) With respect to a person who receives 50 percent or less of

such person's gross income from farming and ranching, the total gross

revenue from all sources.

V. Payment Limitation

The total amount of benefits that a person, as determined in

accordance with 7 CFR part 1400, shall be entitled to receive under the

2002 Livestock Compensation Program may not exceed $40,000.

VI. Determining the Amount of Assistance

(a) Analysis of need. The $752 million targeted for the 2002

Livestock Compensation Program is the amount of net income losses

related to livestock production in 2001 and 2002 due to drought

conditions. The analysis was conducted by USDA's Economic Research

Service (ERS). The analysis utilized various models and survey data

from several different sources, and followed procedures used to develop

USDA's regular farm income forecasts.

The drought-affected areas were identified from the U.S. Drought

Monitor (a comprehensive monitoring effort of USDA, National Oceanic

and Atmospheric Administration, National Climate Control, and the

National Drought Mitigation Center) that classifies climate regions by

severity of drought conditions.

Impacts were examined for livestock producers in areas delineated

by severity as moderate, severe, extreme and exceptional drought areas.

The ERS analysis considered the effect of drought both on revenue

and on operating costs to obtain the net income effect related to

livestock production in 2001 and 2002.

(b) Revenue losses. Livestock producers in the drought areas lost

$103 million in gross receipts in 2001 and $583 million in 2002.

Several factors help to explain the level of these revenue losses:

(1) The production impacts modeled in the analysis are associated

with heat stress and water availability. In areas with exceptional

drought, animal deaths due to heat and greater potential for disease

contribute to lost production and revenue.

(2) The analysis does not measure the effect on receipts from early

sale of cattle or herd liquidations. The significant decline in

livestock prices since last year are not attributed to

[[Page 63072]]

drought, but do affect the amount of reduction in potential receipts.

(c) Additional Expenses. In many cases, the response to drought

conditions by livestock producers involves changes in production

practices that create additional and often unanticipated costs to their

business. An example would be extra expenses for utilities such as

electricity and for water. Such short-run increases in the cost of

doing business were examined and their effect on total production

expenses ranged from five percent in exceptional drought areas to less

than one percent in moderate drought areas. Across all drought areas,

total additional expenses were estimated to be $51 million in 2001 and

$415 million in 2002.

(d) Net Impacts. The net impact on income was the combination of

revenue losses plus additional costs incurred and deduction of

government assistance that already has been provided in 2002 through

the FSA Noninsured Assistance Program (NAP) and the 2002 Cattle Feed

Program (See Notice of Funds Availability published September 3, 2002

(67 FR 56260).

Payments for NAP in 2002 are expected to total $250 million, and

USDA made $150 million available for the 2002 Cattle Feed Program. The

net impact of the drought for 2001 and 2002 was $154 million and $598

million, respectively, for a total two-year impact of just over $750

million.

(e) Payment Rates. Payment rates were calculated based on standard

feed relationships among the eligible animal types and then indexed

against beef cattle.For a beef cow, the feed requirement used for

previous FSA-administered feed assistance programs, such as the

Livestock Assistance Program at 7 CFR part 1439 and the 2002 Cattle

Feed Program described in the September 3, 2002 Notice of Funds

Availability, is converted to a corn equivalent of 15.7 pounds of corn

per day. Using an Olympic five-year average (average of five years with

the highest and lowest values excluded) of 1995-2000 corn prices, the

national average price for corn is calculated at $2.07 per bushel or

$0.037 per pound. The support feeding rate of 15.7 pounds of corn

multiplied by $0.037 per pound of corn required per day to support a

beef cow is equivalent to $0.58 per day to feed a beef cow. The

subsistence level of $0.58 per day divided into the $18.00 payment for

an eligible beef cow results in an approximate 30-day period that the

2002 Livestock Compensation Program will provide funds to purchase feed

for a beef cow. A feed relationship factor of 2.6 was used for dairy

because dairy cows typically consume 2.6 times the amount of feed

consumed by a beef cow. This factor assumes enough feed for dairy cows

to continue normal and even increasing levels of milk production.

The payment rate in this program is based on a 1.75 feed

relationship factor for dairy. This lower factor was deemed appropriate

because of the significant payments dairy producers will receive

beginning in October, 2002 under the new Milk Income Loss Contract

program. It also remains high enough to ensure continued milk

production by eligible dairy cows.

VII. Applicant Certification of Eligible Livestock

Eligible livestock must be certified by owner or lessee on the FSA-

553. The applicant will report to FSA and provide proof of the number

of eligible livestock that died or were sold after June 1, 2002.

VIII. Payment Eligibility

To be eligible for payment under the 2002 Livestock Compensation

Program, as determined by the Deputy Administrator, the applicant

shall, as of June 1, 2002, be an owner, lessee, or under contract to

purchase eligible livestock, whose livestock headquarters operation is

physically located in an eligible county; who has submitted and

subsequently received FSA County Committee approval on FSA-553, and who

meets all other eligibility requirements.

IX. Payment Amounts

Adult beef cows and bulls, and adult buffalo and beefalo cows and

bulls, as defined in Part I: $18.00 per head.

Adult dairy cows and bulls, as defined in Part I: $31.50 per head.

Beef, dairy, buffalo and beefalo replacement heifers, steers, non-

breeding heifers, and bulls, as defined in Part I: $13.50 per head.

All sheep and goats, as defined in Part I, born prior to June 1,

2002: $4.50 per head.

X. Contract Liability

All producers receiving a share of the LCP payment are jointly and

severally liable for program violations and resulting repayments, if

applicable.

XI. How the 2002 LCP Will Work

Applications were accepted in FSA county offices beginning on

October 1, 2002. On the LCP application, all owners of livestock in

each livestock operation in an eligible county apply for payment on one

application. Each applicant provides FSA with, and certifies to, the

applicant's name and Tax Identification Number number, address, and

number and type of eligible livestock. After FSA County Committee

approval of the LCP application, payments will be issued beginning

October 7, 2002, from the FSA county office to each approved livestock

producer on the application.

XII. Misrepresentation, Scheme or Device

A person shall be ineligible to receive assistance under this part,

and be subject to such other remedies as may be allowed by law, if,

with respect to such program, it is determined by the FSA State or

county committee, or an official of FSA, that such person has:

(a) Adopted any scheme or other device that tends to defeat the

purpose of the program operated under this Notice;

(b) Made any fraudulent representation with respect to this

program; or

(c) Misrepresented any fact affecting a program determination.

XIII. Liens and Claims of Creditors

Any benefit or portion thereof due any person under this program

shall be allowed without regard to questions of title under State law,

and without regard to any claim or lien in favor of any person, except

agencies of the U.S. Government.

XIV. Power of Attorney

In those instances in which, prior to the issuance of this Notice,

a producer has signed a power of attorney on an approved FSA-211 for a

person or entity indicating that such power shall extend to all

programs listed on the form, without limitation, such power will be

considered to extend to this program unless by October 1, 2002, the

person granting the power notified the local FSA office for the control

county that the grantee of the power is not authorized to handle

transactions for this program for the grantor.

XV. Administration

Where circumstances preclude compliance due to circumstances beyond

the applicant's control, the county or State committee may request that

relief be granted by the Deputy Administrator under this Notice. In

such cases, except for statutory deadlines and other statutory

requirements, the Deputy Administrator may, in order to more equitably

accomplish the goals of this Notice, waive or modify deadlines and

other program requirements if the failure to meet such deadlines or

other

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requirements does not adversely affect operation of the program and are

not prohibited by statute.

The Section 32 funds allocated to FSA to provide assistance under

this program will be monitored by careful review of regular and daily

reports of all payments issued under the program. Upon expenditure of

85 percent of the designated allocation, FSA will mandate a daily

review of expenditures to ensure that payments do not exceed the

allocation.

Signed at Washington, DC, on October 7, 2002.

James R Little,

Administrator, Farm Service Agency.

[FR Doc. 02-25841 Filed 10-7-02; 3:59 pm]

BILLING CODE 3410-05-P