Implementation of the Noninsured Crop Disaster Assistance Program Provisions of the Federal Agriculture Improvement and Reform Act of 1996

DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 404

Commodity Credit Corporation

7 CFR Part 1437

RIN 0560-AE85

Implementation of the Noninsured Crop Disaster Assistance Program

Provisions of the Federal Agriculture Improvement and Reform Act of

1996

AGENCIES: Commodity Credit Corporation, Federal Crop Insurance

Corporation, USDA.

ACTION: Final rule.

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SUMMARY: This final rule moves the noninsured crop disaster assistance

program (NAP) provisions currently in 7 CFR part 404 to 7 CFR part

1437, and implements the amendments to NAP made in Title I of the

Federal Agriculture Improvement and Reform Act of 1996 (the 1996 Act).

The 1996 Act changes the administration of the program from the Federal

Crop Insurance Corporation (FCIC) to the Secretary through the

Commodity Credit Corporation. The NAP program will continue to be

operated through the Farm Service Agency (FSA). Other amendments

include the addition of seed crops and aquaculture (including

ornamental fish) as crops eligible for benefits under this part, and

relaxes the acreage and production reporting requirements.

EFFECTIVE DATE: December 31, 1996.

FOR FURTHER INFORMATION CONTACT: Leona Dittus, Director, Emergency and

Noninsured Assistance Program Division, FSA, USDA, AG Box 0526, P. O.

Box 2415, Washington, D.C. 20013-2415. Telephone (202) 720-3168.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This final rule is issued in conformance with Executive Order 12866

and has been determined to be significant and has been reviewed by the

Office of Management and Budget.

Regulatory Flexibility Act

It has been determined that the Regulatory Flexibility Act is not

applicable to this rule because neither FSA nor the CCC is 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

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 12778

The final rule has been reviewed in accordance with Executive Order

12778. The provisions of this final 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 is not subject to the provisions of Executive Order

12372, which require 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).

Unfunded Mandates

The provisions of the Unfunded Mandates Reform Act of 1995 are not

applicable to this rule because neither FSA nor CCC is required by 5

U.S.C. 553 or any other provision of the law to publish a notice of

proposed rulemaking with respect to the subject matter of this rule.

Small Business Regulatory Enforcement Fairness Act of 1996

The Agency gave notice of the proposed rule and accepted comments

from the public prior to the publication of the final rule. After the

publication of the final rule, Congress passed both the 1996 Act and

the Small Business Regulatory Enforcement Fairness Act of 1996. Due to

fact that this rule makes slight changes to a rule that was already

final when Congress passed these two Acts, it has been determined in

accordance with section 808 of the Small Business Regulatory

Enforcement Fairness Act of 1996, that it is impracticable, unnecessary

and contrary to the public interest to require this rule to conform to

the requirements of section 801 of that Act. Accordingly, this rule is

effective upon publication in the Federal Register.

Paperwork Reduction Act

The amendments to 7 CFR 1437 set forth in this final rule involve a

change in the existing information collection requirements. In

accordance with the Paperwork Reduction Act of 1995, CCC received

approval from OMB for the

[[Page 69005]]

collection of information in this rule that is not related to acreage

reports. That collection was cleared as a revision to OMB docket number

0563-0016 at the time this rule was proposed. No comments were received

regarding information collections contained in OMB docket 0563-0016.

Upon analysis of the current clearances of information collections

associated with the Noninsured Crop Disaster Assistance Program (NAP),

CCC found that information collection of acreage reports for this

program are not currently approved by OMB. The agency has submitted an

emergency information collection request (ICR) to OMB for the approval

of these reports as necessary for the proper functioning of the

program.

A copy of this emergency ICR, with applicable supporting

documentation, may be obtained from Sean O'Neill, FSA, ENAPD, NAB, room

6701-S, STOP 0526, P.O. Box 2415, Washington, DC 20013-2415. Comments

and questions about the ICR listed below should be directed to the

Office of Information and Regulatory Affairs, Attn. OMB Desk Officer

for Agriculture, Office of Management and Budget, Room 10202,

Washington, DC 20503 ((202) 395-7340).

Title: Annual Certification Requirements, Assignment of Payments,

and Power of Attorney (7 CFR Parts 12, 718, 1437, and 720).

OMB Control Number: 0560-0004.

Description: To be eligible for NAP benefits, producers must report

all acreage in the county of the eligible crop (for each planting in

the event of multiple planting) in which the producer has a share.

Because NAP assistance is calculated on a unit basis, similar to

catastrophic risk protection, it is necessary that producers report all

acreage of the crop in which they have an interest in the county, not

just the acreage which suffered a loss. The 1996 Act mandates the use

of a producer's actual production history over a four to ten year

period, necessitating precise records. The FSA-578 acreage report form

is used under the NAP to collect data used to determine a producer's

production of a crop and loss of production (on a yield basis) in the

event a disaster occurs. The acreage report is also used in determining

the estimated NAP area loss for a crop. If the annual planted acreage

were not known the task of determining area, crop, crop production, and

producer eligibility for the NAP could be difficult.

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.

Federal Assistance Programs

This program is listed in the Catalog of Federal Domestic

Assistance under No. 10.450.

Background

Title I of the Federal Agriculture Improvement and Reform Act of

1996 (the 1996 Act) enacted on April 4, 1996, changes the

administration of the noninsured crop disaster assistance program (NAP)

from Federal Crop Insurance (FCIC) to the Secretary of Agriculture

through the Commodity Credit Corporation. NAP will continue to be

operated through the Farm Service Agency. Because the program will now

be administered by the Commodity Credit Corporation (CCC), the NAP

regulations will be moved from 7 CFR part 404 to 7 CFR part 1437. Upon

publication of this rule, the current provision for NAP will be removed

from part 404 and that part will be reserved.

The regulation reflects a change in references from FCIC and FCIC

Manager to CCC and Executive Vice President, CCC, or a designee. Other

major changes include:

(1) Section 1437.11 is amended to include seed crops and

aquacultural species (including ornamental fish) as crops eligible for

benefits under this part.

(2) Section 1437.17 is amended to provide that producers are

required to report production for acreage previously reported to CCC as

being planted by the immediately subsequent crop year acreage reporting

date for the crop.

List of Subjects in 7 CFR Parts 404 and 1437

Agricultural commodities, Disaster assistance, reporting and

recordkeeping requirements.

For reasons set out in the Preamble and under the authority of 5

U.S.C. 553, 7 CFR Chapters IV and XIV are amended as set forth below:

CHAPTER XIV--[AMENDED]

1. Chapter XIV is amended by adding part 1437 to read as follows:

Part 1437--NONINSURED CROP DISASTER ASSISTANCE PROGRAM REGULATIONS

FOR THE 1996 AND SUCCEEDING CROP YEARS

Sec.

1437.1 Applicability.

1437.2 Administration.

1437.3 Definitions.

1437.4 Eligibility.

1437.5 Assistance

1437.6 Area.

1437.7 Yield Determinations.

1437.8 Acreage and Production Reports.

1437.9 Loss Requirements.

1437.10 Application for Payment and Notice of Loss.

1437.11 Payments for Reduced Yield and Prevented Planting.

1437.12 Multiple Benefits.

1437.13 Payment and income limitations.

1437.14 Violations of Highly Erodible Land and Wetland Conservation

Provisions

1437.15 Violations Regarding Controlled Substances.

1437.16 Misrepresentation and scheme or device.

1437.17 Refunds to the Corporation.

1437.18 Offsets and assignments.

1437.19 Cumulative Liability.

1437.20 Appeals.

1437.21 Estates, trusts, and minors.

1437.22 Death, incompetence, or disappearance.

1437.23 OMB control numbers.

Authority: 15 U.S.C. 714b and 714c; and 7 U.S.C. 7333

Sec. 1437.1 Applicability.

For the 1996 and susbsequent crop years, NAP is intended to provide

eligible producers of eligible crops with protection comparable to the

catastrophic risk protection plan of crop insurance. NAP is also

designed to help reduce production risks faced by producers of crops

for which Federal crop insurance under the Federal Crop Insurance Act,

as amended, is not available. NAP will reduce financial losses that

occur when natural disasters cause a catastrophic loss of production or

prevented planting of an eligible crop. Payment eligibility is based on

an expected yield for the area and the producer's approved yield based

on actual production history, or a transitional yield if sufficient

production records are not available. Production for both the

applicable area expected yield and the individual producer approved

yield for the unit must fall below specified percentages in order to be

eligible for payments under this part.

The provisions contained in this part are applicable to each

eligible producer and each eligible crop for which catastrophic

coverage is not otherwise available.

[[Page 69006]]

Sec. 1437.2 Administration.

(a) NAP is administered under the general supervision of the

Executive Vice-President, CCC (Administrator, Farm Service Agency), and

shall be carried out by State and county FSA committees (State and

county committees).

(b) State and county committees, and representatives and their

employees, do not have authority to modify or waive any of the

provisions of the regulations of this part.

(c) The State committee shall take any action required by these

regulations that the county committee has not taken. 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 this part.

(d) No provision or delegation 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 may authorize State and county

committees to waive or modify deadlines, except statutory deadlines,

and other program requirements in cases where lateness or failure to

meet such other requirements does not adversely affect operation of the

program.

(f) The State committee will, in accordance with this part,

recommend the geographical size and shape of the area where a natural

disaster has occurred, and whether the area eligibility requirement has

been satisfied. The recommendation of eligibility must be approved by

the Executive Vice President, CCC, or a designee.

(g) The Executive Vice President, CCC, or a designee, will

determine all yields and prices under this part.

Sec. 1437.3 Definitions.

The definitions set forth in this section shall be applicable for

all purposes of administering the noninsured crop disaster assistance

program. The terms defined in part 718 of this title and 1400 of this

chapter shall also be applicable, except where those definitions

conflict with the definitions set forth in this section.

Act means the Federal Agriculture Improvement and Reform Act of

1996, Public Law 104-127 (7 U.S.C. 7201 et seq).

Actual production history means the history determined in

accordance with part 400, subpart G, of this title, except that when

referring to NAP the terms of subpart G will mean as follows:

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Insurance terms NAP terms

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Agent..................................... Local office representative.

Claim..................................... Application for payment.

Claim for indemnity....................... Application for payment.

Indemnity payment......................... NAP payment.

Insurable acreage......................... Eligible acreage.

Insurable cause........................... Natural disaster.

Insurable crop............................ Eligible crop.

Insurance company......................... Provider.

Insurance purposes........................ NAP purposes.

Insured................................... Eligible producer.

Insured producer.......................... Eligible producer.

Uninsurable acreage....................... Ineligible acreage.

Uninsurable production.................... Ineligible production.

Uninsured cause of loss................... Assigned production

appraisal

Uninsured production...................... Ineligible production

------------------------------------------------------------------------

Approved yield means an actual production history yield calculated

and approved by CCC, used to determine any NAP payment in accordance

with part 400, subpart G, of this title.

Aquacultural species means any species of aquatic organism grown as

food for human consumption, or fish raised as feed for fish that are

consumed by humans, or ornamental fish propagated and reared in an

aquatic medium by a commercial operator on private property in water in

a controlled environment.

Area means the geographic region recommended by the State FSA

committee, and approved by CCC in accordance with Sec. 1437.6, where a

natural disaster has occurred which may qualify producers in the area

for NAP payments.

Assigned yield means a yield assigned for a crop year in the base

period, in accordance with part 400, subpart G, of this title, if the

producer does not file an acceptable production report by the

production reporting date.

Average market price means the price, or dollar equivalent on an

appropriate basis; for example, pound, bushel, ton, for an eligible

crop established by CCC for determining NAP payments. Such price will

be on a harvested basis without the inclusion of transportation,

storage, processing, packing, marketing or other post-harvest expenses

and will be based, in part, on historical data.

Catastrophic coverage means a catastrophic risk protection plan of

insurance offered by FCIC in accordance with part 402 of this title.

CCC means the Commodity Credit Corporation, a wholly owned

Government corporation within the United States Department of

Agriculture.

County expected yield means the eligible crop yield established by

the State FSA committee and approved by CCC for the county. Such yield

information may be obtained from National Agricultural Statistics

Service, Cooperative States Research, Education, and Extension Service,

credible nongovernmental studies, yields in similar areas, and similar

reference material. For planted annual crops, such yield will be based

on the acreage planted for harvest.

Crop year means the period of time within which the crop is

normally grown and designated by the calendar year in which the crop is

normally harvested in the area. For crops harvested over two calendar

years, the crop year will be the calendar year in which the majority of

the crop would have been harvested. For crops grown over more than two

calendar years, each year in the growing period will be considered as a

separate crop year designated by the calendar year in which the crop

sustained a loss. For crops for which catastrophic coverage is

available, the crop year will be as defined by such coverage.

Eligible crop means an agricultural commodity for which

catastrophic coverage is not available and which is commercially

produced for food or fiber as specified in this part. Eligible crop

shall also include floricultural, ornamental nursery, and Christmas

tree crops, turfgrass sod, seed crops, aquaculture (including

ornamental fish), and industrial crops. In the case of a crop that

historically has multiple plantings in the same crop year that are

planted or are prevented from being planted, each planting may be

considered a different crop for determining payments under this part.

In the case of a crop that has different varieties or types, each

variety or type may be considered a separate crop for determining

payments under this part, if CCC determines there is a significant

difference in price or yield between the varieties or types.

Expected area yield means the eligible crop yield established and

approved by CCC for the geographic area.

Forage means land covered with grass or other vegetation, produced

under such range management practices as are necessary to sustain

sufficient quality and quantity of grass or vegetation each year to be

suitable for grazing or mechanical harvest to feed livestock in a

commercial operation. NAP benefits

[[Page 69007]]

for forage produced on any Federal or state owned lands are available

only for seeded forage.

Good farming practices means the cultural practices generally used

in the area for the crop to make normal progress toward maturity and

produce at least the individual unit approved yield. The practices are

normally those recognized by Cooperative State Research, Education, and

Extension Service as compatible with agronomic and weather conditions

in the area.

Harvested means a single harvest crop is considered harvested when

the producer has, by hand or mechanically, removed the crop from the

field. Crops with multiple harvests in one year or harvested over

multiple years are considered harvested when the producer has, by hand

or mechanically, removed at least one mature crop from the field. The

crop is considered harvested once it is removed from the field and

placed in a truck or other conveyance, except:

(1) Hay is considered harvested when in the bale, whether removed

from the field or not; and

(2) Grazing is not considered harvesting for the purpose of

determining a payment rate factor.

Livestock means any farm or other animal excluding aquacultural

species and, including but not limited to domestic avian, ruminant,

equine, and swine species grown or maintained for any purpose.

Local office means the FSA office or other USDA office designated

by CCC.

Native forage means grass or other vegetation occurring naturally

without seeding.

Natural disaster means damaging weather, including but not limited

to drought, hail, excessive moisture, freeze, tornado, hurricane,

excessive wind, or any combination thereof; or adverse natural

occurrence such as earthquake, flood, or volcanic eruption; or related

condition, including but not limited to heat, insect infestation, or

disease, which occurs as a result of an adverse natural occurrence or

damaging weather occurring prior to or during harvest that directly

causes, accelerates, or exacerbates the destruction or deterioration of

an eligible crop, as determined by the Secretary.

Ornamental fish means a decorative fish produced in a commercial

fishery for sale.

Ornamental nursery crop means a decorative plant grown in a

container or controlled environment for commercial sale.

Prevented planting means the inability to plant a crop with proper

equipment during the planting period for the crop or commodity. A

producer must prove that the producer intended to plant the eligible

crop and that such crop could not be planted due to natural disaster

reasonably related to the basis for the area designation under

Sec. 1437.6, as determined by the Executive Vice President. The natural

disaster that caused the prevented planting must have occurred after

the final planting date for the previous crop year and before the final

planting date for the crop year in which a request for NAP payment was

made. For crops with multiple plantings in a single crop year and one

crop has been harvested, the natural disaster must occur, after the

harvest of the harvested crop and before the end of the planting period

for the next planting of the crop.

Production report means a written record showing the commodity's

annual production and used to determine the producer's yield for NAP

purposes. The report contains yield history by unit, if applicable,

including planted acreage for annual crops, eligible acreage for

perennial crops, and harvested and FCIC or CCC appraised production for

the previous crop years. This report must be supported by verifiable

written records, measurement of farm-stored production, or by other

records of production approved by CCC. Information contained in an

application for payment is considered a production report for the unit

for the crop year for which the application was filed.

Qualifying gross revenues means:

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

such person's gross income from farming, ranching, and forestry

operations, the annual gross income for the taxable year from such

operations; and

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

such person's gross income from farming, ranching, and forestry

operations, the person's total gross income for the taxable year from

all sources.

Reseeded or replanted crop means the same crop planted on the same

acreage after the first planting of the crop has failed.

Seed crop means a crop produced for the purpose of, or intended for

use as, commercial propagation for sale.

Seeded forage means acreage which is mechanically seeded with

grasses or other vegetation at regular intervals, at least every 7

years, in accordance with good farming practices.

Share means the producer's percentage of interest in the eligible

crop as an owner, operator, or tenant. For the purpose of determining

eligibility for payments under this part, the producer's share will not

exceed the producer's share at the earlier of the time of loss or the

beginning of harvest. Acreage or interest attributed to a spouse,

child, or member of the same household may be considered part of the

producer's share unless such individual is considered to be a separate

person under part 1400 of this chapter.

Type or Variety means a scientifically recognized subspecies of a

crop or commodity having a particular characteristic or set of

characteristics.

Unit means, for NAP, all acreage of the eligible crop in the county

for the crop year:

(1) In which the person has 100 percent crop share; or

(2) Which is owned by one person and operated by another person on

a share basis.

Land rented for cash, a fixed commodity payment, or any

consideration other than a share in the crop on such land will be

considered as owned by the lessee. No unit other than that stated

herein will be permitted.

Sec. 1437.4 Eligibility.

(a) Eligible crops are any commercial agricultural crop (excluding

livestock and their by-products), commodity, or acreage of a commodity

grown for food or fiber for which catastrophic coverage is not

available under part 402 of this title. Different types or varieties of

a crop or commodity may be treated as a separate eligible crop, if CCC

determines there is a significant difference in price or yield.

(b) NAP payments will be made available for:

(1) Any commercial crop grown for food;

(2) Any commercial crop planted and grown for livestock

consumption, including but not limited to grain and forage crops;

(3) Any commercial crop grown for fiber, excluding trees grown for

wood, paper, or pulp products;

(4) Any commercially produced aquacultural species (including

ornamental fish);

(5) Floriculture crops;

(6) Ornamental nursery crops;

(7) Christmas tree crops;

(8) Turfgrass sod;

(9) Industrial crops;

(10) Seed Crops; and

(11) Any crop, for which crop insurance under the Federal Crop

Insurance Act is available in the county, that is affected by a natural

disaster that is not named as an insurable peril under the producer's

crop insurance policy.

(c) NAP payments will not be available for any acreage in any area

for any crop for which catastrophic coverage is available, unless the

loss

[[Page 69008]]

was caused by a natural disaster that is not covered by catastrophic

coverage and all other eligibility requirements under this part are

satisfied.

Sec. 1437.5 Assistance.

(a) Producers who are eligible to receive NAP payments for crop

years 1996 through 1998 will receive assistance against loss in yield

greater than 50 percent of the producer's approved yield for the

eligible crop payable at 60 percent of the established average market

price for the crop.

(b) Producers who are eligible to receive NAP payments after crop

year 1998 will receive assistance against loss in yield greater than 50

percent of the producer's approved yield for the eligible crop payable

at 55 percent of the established average market price for the crop.

(c) CCC will adjust the NAP payment rate for crops that are

produced with significant and variable expenses that are not incurred

because the crop acreage was prevented from being planted or planted

but not harvested.

(d) NAP payments will be determined by unit based on all the

acreage and production of the crop and eligible prevented from being

planted acreage of the crop.

(e) Each producer's NAP payment will be based on the producer's

share of the eligible crop.

Sec. 1437.6 Area.

(a) For the purposes of this part, acreage affected by a natural

disaster, or any adjustment thereto, will be included in the area

recommended by the state FSA committee and submitted to CCC for

approval, regardless of whether the commodity produced on the affected

acreage suffered a loss.

(b) Except for eligible areas identified in paragraph (f) of this

section, an approved area shall include at least five producers of

crops on separate and distinct farms for which the area has been

approved for NAP payments. Notwithstanding this provision, CCC may

approve an area having fewer than five producers if the Executive Vice

President, or a designee, determines that such area will suffer

significant economic consequences as a result of the disaster.

(c) An area may be designated as follows:

(1) A county;

(2) Aggregated acreage that is at least 320,000 acres; or

(3) Aggregated acreage with not less than $80 million average value

for all crops produced annually.

(d) If the aggregated acreage affected by the natural disaster does

not meet the minimum requirement specified in paragraph (c) (2) or (3)

of this section, the aggregated acreage will be expanded by adding

acres from around the affected acreage, until the minimum requirement

is met.

(e) The area may not be defined in any manner that intentionally

includes or excludes producers or crops.

(f) Notwithstanding the provisions of paragraphs (a) and (c) of

this section, for areas outside the 50 states of the United States, the

area shall include 10 or more producers of the crop except CCC may

approve an area outside the 50 United States having fewer than 10

producers of the crop for which the area is requested if the Executive

Vice President determines that such area will suffer significant

economic consequences as a result of the disaster.

Sec. 1437.7 Yield determinations.

(a) CCC will establish expected area yields for eligible crops for

each county or area for which the NAP is available, using available

information, which may include, but is not limited to, National

Agricultural Statistics Service data, Cooperative State Research,

Education, and Extension Service records, Federal Crop Insurance

Corporation data, credible nongovernment studies, yields in similar

areas, and reported approved yield data. For planted annual crops, such

yields will be based on the acreage planted for harvest.

(b) CCC may make county yield adjustments taking into consideration

different yield variations due to different farming practices in the

county such as: irrigated, nonirrigated, organic, nonorganic, different

types and varieties of a crop and intended use.

(c) In establishing expected area yields for eligible crops:

(1) If the approved area corresponds to a single county, the

expected area yield will be the yield established by CCC for that

county, including any adjustments permitted by this section;

(2) If the approved area encompasses portions of counties or more

than one county, the expected area yield will be the weighted average

of the yields established by CCC for those counties in the area,

including any adjustments permitted by this section; and

(3) CCC may adjust expected area yields if:

(i) The cultural practices, including the age of the planting or

plantings, are different from those used to establish the yield; or

(ii) The expected area yield established on a state or county level

is determined to be incorrect for the area.

(d) CCC will establish approved yields for purposes of providing

assistance under this part. Approved yields for the eligible crop will

be based on the producer's actual production history in accordance with

the provisions of part 400, subpart G, of this title.

(e) The approved yield established for the producer for the year in

which the NAP payments are offered will be equal to the average of the

consecutive crop year yields, as established by CCC, reported and

certified by that producer for that eligible crop.

(f) If a producer receives an assigned yield for a year of natural

disaster because production records were not submitted by the

production reporting deadline, the producer will be ineligible to

receive an assigned yield for the year of the next natural disaster

unless adequate production records for the eligible crop from all the

interim crop years are provided to the local office. The producer shall

receive a zero yield for those years the producer is ineligible to

receive an assigned yield.

(g) CCC will select certain producers on a random or targeted basis

and require those selected to provide records acceptable to CCC to

support the information provided. Producers may also be required to

support the yield certification at the time of loss adjustment or on

post-audit. Each certification must be supported by records acceptable

to CCC. Failure to produce records acceptable to CCC will result in CCC

establishing the yield in accordance with actual production history and

may subject the producer to criminal and civil false claims actions

under various Federal statutes as well as refund of any amount

received. In addition, sanctions, as set out at Sec. 1437.16, may be

imposed for false certification.

(h) Records acceptable to CCC may include:

(1) commercial receipts, settlement sheets, warehouse ledger

sheets, or load summaries if the eligible crop was sold or otherwise

disposed of through commercial channels provided the records are

reliable or verifiable; and

(2) Such documentary evidence as is necessary in order to verify

the information provided by the producer if the eligible crop has been

sold, fed to livestock, or otherwise disposed of other than through

commercial channels such as contemporaneous measurements, truck scale

tickets, and contemporaneous diaries, provided the records are reliable

or verifiable.

(i) Any producer who has a contract to receive a guaranteed payment

for production, as opposed to delivery, of an eligible crop will have

the production adjusted upward by the amount of the production

corresponding

[[Page 69009]]

to the amount of the contract payment received.

(j)(1) Producers will not be eligible to receive an assigned yield

if the acreage of the crop in a county for the crop year has increased

by more than 100 percent over any year in the preceding seven crop

years, unless:

(i) The producer provides adequate records of production costs,

acres planted, and yield for the crop year for which NAP payments are

being sought; or

(ii) CCC determines that the records provided under this paragraph

are inadequate. CCC may require proof that the eligible crop could have

been marketed at a reasonable price had the crop been harvested.

(2) The provisions of this section will not apply if:

(i) The crop has been inspected prior to the occurrence of a loss

by a third party acceptable to CCC; or

(ii) The FSA county executive director, with the concurrence of the

FSA state director, makes a recommendation for an exemption from the

requirements and such recommendation is approved by CCC.

Sec. 1437.8 Acreage and production reports.

(a) Producers must file one or more acreage reports at the local

office no later than the date specified by CCC for each crop the

producer wants to insure future eligibility for the NAP program. The

acreage report may be filed by the farm operator. Any producer will be

bound by the acreage report filed by the farm operator unless the

producer files a separate acreage report prior to the acreage reporting

date.

(b) Acreage reports required by paragraph (a) must include all of

the following information:

(1) All acreage in the county of the eligible crop (for each

planting in the event of multiple planting) in which the producer has a

share;

(2) The producer's share at the time of planting or the beginning

of the crop year;

(3) The FSA farm serial number;

(4) The crop, practice, and intended use;

(5) All persons sharing in the crop (including the identity of any

person having an interest in the crop as producer) and the person's

employer identification number or social security number, if the person

wishes to receive any payment under the Act;

(6) The date the crop was planted; and

(7) Acreage prevented from being planted.

(c) For each crop for which an acreage report is filed in

accordance with this section, the producer must report the production

for that acreage by the immediately subsequent crop year acreage

reporting date for the crop.

(d) A person's failure to submit the required information by the

designated acreage reporting dates may result in the denial of payments

under this part. If there is a change of ownership, operation, or share

within the farming operation after the acreage reporting date, the

local office must be notified not later than 30 calendar days after the

change and proof of the change must be provided to maintain eligibility

for payments under this part.

Sec. 1437.9 Loss requirements.

(a) To qualify for payment under this part, the loss or prevented

planting of the eligible crop must be due to a natural disaster.

(b) Assistance under this part will not cover losses due to:

(1) The neglect or malfeasance of the producer;

(2) The failure of the producer to reseed or replant to the same

crop in the county where it is customary to reseed or replant;

(3) The failure of the producer to follow good farming practices

for the commodity and practice;

(4) Water contained or released by any governmental, public, or

private dam or reservoir project, if an easement exists on the acreage

affected for the containment or release of the water;

(5) Failure or breakdown of irrigation equipment or facilities; or

(6) Except for tree crops and perennials, inadequate irrigation

resources at the beginning of the crop year.

(c) A producer of an eligible crop will not receive payments under

this part unless the projected average or actual yield for the crop, or

an equivalent measurement if yield information is not available, in the

area falls below 65 percent of the expected area yield. Once this area,

and all other, eligibility requirements have been satisfied:

(1) A reduced yield payment will be made to a producer if the total

quantity of the eligible crop that the producer is able to harvest on

the unit is less than 50 percent of the approved yield for the crop due

to natural disaster reasonably related to the basis for the area

designation under Sec. 1437.6, factored for the share of the producer

for the crop. Production from the entire unit will be used to determine

whether the producer qualifies for a payment under this part. The

quantity will not be reduced for any quality consideration unless a

zero value is established; and

(2) A prevented planting payment under this part will be made if

the producer is prevented from planting more than 35 percent of the

total eligible acreage intended for planting to the eligible crop.

Producers must have intended to plant the crop and prove that they were

prevented from planting the crop due to natural disaster reasonably

related to the basis for the area designation under Sec. 1437.6, and

the producer may be required to prove that such producer had the

resources available to plant, grow, and harvest the crop, as

applicable.

(d) NAP payments under this part for prevented planting will not be

available for:

(1) Tree crops and other perennials, unless the producer can prove

resources were available to plant, grow, and harvest the crop, as

applicable;

(2) Land that planting history or conservation plans indicate would

remain fallow for crop rotation purposes; or

(3) Land used for conservation purposes or intended to be or

considered to have been left unplanted under any program administered

by USDA, including the Conservation Reserve Program and Wetland Reserve

Program.

Sec. 1437.10 Application for payment and notice of loss.

(a) Any person with a share in the eligible crop who would be

entitled to a payment under this part must provide a notice of damage

or loss within 15 calendar days after the occurrence of the prevented

planting (the end of the planting period) or recognizable damage to the

crop. The notice must be filed at the local office serving the area

where the producer's unit is located. The farm operator may provide the

notice for all producers with an interest in the crop. All producers on

a farm will be bound by the operator's filing or failure to file the

application for payment unless the individual producers elect to timely

file their notice.

(b)(1) Applications for payments under this part must be filed, on

Form FCI-74, by the applicant with the local office no later than the

first acreage reporting date for the crop in the crop year immediately

following the crop year in which the loss occurred.

(2) If the producer chooses not to harvest the crop, all eligible

acres and crop units for which the producer intends to make an

application for payment must be left intact until the units have been

appraised or released by an FCIC or CCC approved loss adjuster.

(3) If the producer harvests the crop, the producer must provide

such documentary evidence of crop production as CCC may require which

[[Page 69010]]

may include leaving representative samples of the crop for inspection.

(c) Failure to make timely application or to supply the required

documentary evidence shall result in the denial of payments under this

part.

Sec. 1437.11 Payments for reduced yields and prevented planting.

In the event that the area loss requirement has been satisfied for

the crop and either:

(a) The producer has sustained a loss in yield in excess of 50

percent of the producer's approved yield established for the crop, the

NAP low yield payment will be determined by:

(1) Multiplying the producer's approved yield by the total eligible

acreage planted to the eligible crop;

(2) Multiplying the product of paragraph (a)(1) by 50 percent;

(3) Subtracting the total production from the total eligible

acreage from the result in paragraph (a)(2);

(4) Multiplying the product of paragraph (a)(3) by the producer's

share of the eligible crop;

(5) Multiplying the result of paragraph (a)(4) by the applicable

payment factor in accordance with Sec. 1437.5(c); and

(6) Multiplying the result in paragraph (a)(5) by:

(i) For the 1996 through 1998 crop years, 60 percent of the average

market price, as determined by CCC, or any comparable coverage, as

determined by CCC; or

(ii) For the 1999 and subsequent years, 55 percent of the average

market price, as determined by CCC, or any comparable coverage, as

determined by CCC; or

(b) The producer has been unable to plant at least 35 percent of

the acreage intended for the eligible crop, the NAP payment will be

determined by:

(1) Multiplying the producer's acreage intended to be planted to

the eligible crop by 35 percent;

(2) Subtracting the result in (b)(1) from the number of eligible

prevented planting acres as determined in Sec. 1437.9(c)(2);

(3) Multiplying the result of (b)(2) by the producer's share of the

eligible crop;

(4) Multiplying the producer's approved yield by the result of

(b)(3);

(5) Multiplying the result of (b)(4) by the approved prevented

planting payment factor in accordance with Sec. 1437.5(c); and

(6) Multiplying the result of (b)(5) by:

(i) For the 1996 through 1998 crop years, 60 percent of the average

market price, as determined by CCC, or any comparable coverage, as

determined by CCC; or

(ii) For the 1999 and subsequent years, 55 percent of the average

market price, as determined by CCC, or any comparable coverage, as

determined by CCC.

Sec. 1437.12 Multiple benefits.

If a producer is eligible to receive payments under this part and

benefits under any other program administered by the Secretary for the

same crop loss, the producer must choose whether to receive the other

program benefits or payments under this part. The producer is not

eligible for both. Such election does not relieve the producer from the

requirements of making a production and acreage report. However, if the

other USDA program benefits are not available until after an

application for benefits has been filed under this part, the producer

may refund the total amount of the payment to the local office from

which the payment was received.

Sec. 1437.13 Payment and income limitations.

(a) NAP payments shall not be made:

(1) In excess of $100,000 per person per crop year under this part,

or

(2) To a person who has qualifying gross revenues in excess of $2

million for the most recent tax year preceding the year for which

assistance is requested.

(b) Simple interest on payments to the producer which are delayed

will be computed on the net payments ultimately found to be due, from

and including the 31st day after the latter of the date the producer

signs, dates, and submits a properly completed application for payment

on the designated form, the date disputed applications are adjudicated,

or the date the area and crop is approved for NAP payments. Interest

will be paid unless the reason for failure to timely pay is due to the

producer's failure to provide information or other material necessary

for the computation or payment.

Sec. 1437.14 Violations of Highly Erodible Land and Wetland

Conservation Provisions.

The provisions of part 12 of this title, apply to this part.

Sec. 1437.15 Violations Regarding Controlled Substances.

The provisions of Sec. 718.11 of this title apply to this part.

Sec. 1437.16 Misrepresentation and scheme or device.

(a) If CCC determines that any producer has misrepresented any fact

or has knowingly adopted, participated in, or benefitted from, any

scheme or device that has the effect of defeating, or is designed to

defeat the purpose of this part, such producer will not be eligible to

receive any payments applicable to the crop year for which the scheme

or device was adopted.

(b) If any misrepresentation, scheme or device, or practice has

been employed for the purpose of causing CCC to make a payment which

otherwise would not make under this part:

(1) CCC will withhold all or part of the payment that would

otherwise be due.

(2) All amounts paid by CCC to any such producer, applicable to the

crop year in which the offense occurred, must be refunded to CCC

together with interest and other amounts as determined in accordance

with this part.

(3) CCC may impose such other penalties or administrative sanctions

as authorized by section Sec. 1437.19.

(c) Scheme and device may include, but is not limited to:

(1) Concealing any information having a bearing on the application

of the rules of this part;

(2) Submitting false information to the CCC or any county or state

FSA committee; or

(3) Creating fictitious entities for the purpose of concealing the

interest of a person in the farming operation.

Sec. 1437.17 Refunds to the CCC.

In the event that there is a failure to comply with any term,

requirement, or condition for payment made in accordance with this

part, or the payment was established as a result of erroneous

information provided by any person, or was erroneously computed, all

such payments or overpayments will be refunded to CCC on demand, plus

interest determined in accordance with part 1403 of this chapter.

Sec. 1437.18 Offsets and assignments.

(a) Except as provided in paragraph (b), any payment or portion

thereof to any person shall be made without regard to questions of

title under State law and without regard to any claim or lien against

the crop, or proceeds thereof, in favor of the owner or any other

creditor except agencies of the U.S. Government. The regulations

governing offsets and withholdings found at part 1403 of this chapter

shall be applicable to payments under this part.

(b) Any producer entitled to any payment may assign any payments in

accordance with regulations governing assignment of payment found at

part 1404 of this chapter.

Sec. 1437.19 Cumulative liability.

(a) The liability of any producer for any payment or refunds, which

is

[[Page 69011]]

determined in accordance with this part to be due to CCC will be in

addition to any other liability of such producer under any civil or

criminal fraud statute or any other statute or provision of law

including, but not limited to, 15 U.S.C. 714; 18 U.S.C. 286, 287, 371,

641, 651, 1001, 1014; 15 U.S.C. 714m; and 31 U.S.C. 3729.

(b) All producers on the unit receiving payments under this part

will be jointly and severally liable to repay any unearned payments

under this part.

Sec. 1437.20 Appeals.

The appeal, reconsideration, or review of all determinations made

under this part, except the eligibility provisions for crops, areas, or

producers for which there are no appeal rights because they are

determined rules of general applicability, must be in accordance with

part 780 of this title.

Sec. 1437.21 Estates, trusts, and minors.

(a) Program documents executed by persons legally authorized to

represent estates or trusts will be accepted only if such person

furnishes evidence of the authority to execute such documents.

(b) A minor who is otherwise eligible will be eligible for payments

under this part only if such person meets one of the following

requirements:

(1) The minor establishes that the right of majority has been

conferred on the minor by court proceedings or by statute;

(2) A guardian has been appointed to manage the minor's property

and the applicable program documents are executed by the guardian; or

(3) A bond is furnished under which the surety guarantees any loss

incurred for which the minor would be liable had the minor been an

adult.

Sec. 1437.22 Death, incompetence, or disappearance.

In the case of death, incompetence or disappearance of any person

who is eligible to receive payments under this part, such payments will

be disbursed in accordance with part 18 of this title.

Sec. 1437.23 OMB control numbers.

These regulations amend the information collection requirements

previously approved by the Office of Management and Budget (``OMB'')

under OMB control number 0563-0016.

Chapter IV [AMENDED]

Part 404 [REMOVED]

2. 7 CFR part 404 is removed.

Signed at Washington, D.C., on December 24, 1996.

Bruce R. Weber,

Acting Executive Vice President, Commodity Credit Corporation.

Signed at Washington, D.C., on December 27, 1996.

Kenneth D. Ackerman,

Manager, Federal Crop Insurance Corporation.

[FR Doc. 96-33264 Filed 12-30-96; 8:45 am]

BILLING CODE 3410-05-P