Small Hog Operation Payment Program

DEPARTMENT OF AGRICULTURE

Farm Service Agency

7 CFR Part 761

RIN 0560-AF70

Small Hog Operation Payment Program

AGENCY: Farm Service Agency, USDA.

ACTION: Interim Rule with request for comments.

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SUMMARY: This interim rule sets forth the regulations for the Small Hog

Operation Payment Program as authorized by clause (3) of section 32 of

the Act of August 24, 1935 (7 USC 612c). Producers of hogs may receive

a direct payment of up to $5 for each eligible hog to help offset

producers' financial losses on hogs sold during the 6-month period from

July 1, 1998, through December 31, 1998. This action is designed to

provide immediate financial assistance to hog producers who recently

experienced the lowest market prices in over five decades.

DATES: Effective February 5, 1999. Comments on this rule must be

received by March 12, 1999, in order to be assured of consideration.

Comments on the information collections in this rule must be received

by April 12, 1999, in order to be assured of consideration.

ADDRESSES: Comments should be mailed to Grady Bilberry, Director, Price

Support Division (PSD), Farm Service Agency (FSA), United States

Department of Agriculture (USDA), STOP 0512, 1400 Independence Avenue,

SW., Washington, DC 20250-0512; telephone: (202) 720-7901; e-mail:

[email protected]. Comments may be inspected in the

Office of the Director, PSD, FSA, USDA, Room 4095 South Building,

Washington, D.C., between 7:30 a.m. and 4:30 p.m., Monday through

Friday, except holidays. A copy of this interim rule is available on

the PSD home page at http://www.fsa.usda.gov/dafp/psd/.

FOR FURTHER INFORMATION CONTACT: Candace Thompson, (202) 720-4584.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This interim 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.

Regulatory Flexibility Act

It has been determined that the Regulatory Flexibility Act is not

applicable to this rule because the Farm Service Agency (FSA) 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

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 12988

This rule has been reviewed in accordance with Executive Order

12988. The provisions of this rule preempt State laws to the extent

such laws are inconsistent with the provisions of this rule. Before any

legal action may be brought regarding determinations of this rule, the

administrative appeal provisions set forth at 7 CFR part 780 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 3014, subpart V,

published at 48 FR 29115 (June 24, 1983).

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

(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 of 1995

In accordance with the Paperwork Reduction Act of 1995, FSA

submitted an emergency information collection request (ICR) to OMB

which was approved and assigned OMB Control Number 0560-0193.

Title: Small Hog Operation Payment Program.

OMB Control Number: 0560-0193.

Type of Request: Request for Extension of a Currently Approved

Information Collection Package.

Abstract: Hog operations are eligible to receive direct payments

provided they make certifications that attest to their eligibility to

receive such payment. These operations must certify: (1) the number of

hogs marketed; (2) that the hogs were marketed during the last 6 months

of 1998; (3) that the hogs were not marketed under a fixed-price or

cost-plus contract; and (4) that the operation was still in the

business of farming at the time of the Small Hog Operation Payment

Program request. The information collection will be used by FSA to

approve Form FSA-1042 or to determine the program eligibility of the

hog operation in accordance with this subpart. FSA considers the

information collected essential to prudent eligibility determinations

and payment calculations. The eligibility requirements have been

established to target the direct payments towards smaller operations.

Additionally, without accurate information on slaughter hog and feeder

pig operations, the national payment rate would be inaccurate resulting

in payments being made to ineligible recipients, and compromising the

integrity and accuracy of the program.

Estimate of Burden: Public reporting burden for this collection of

information is estimated to average 15 minutes per response.

Respondents: Hog Operations.

Estimated number of Respondents: 100,000.

Estimated Number of Responses per Respondent: 1.

Estimated Total Annual Burden on Respondents: 26,250.

Proposed topics for comment include: (a) whether the collection of

information is necessary for the proper performance of the functions of

the agency, including whether the information will have practical

utility; (b) the accuracy of the agency's estimate of burden including

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the validity of the methodology and assumptions used; (c) ways to

enhance the quality, utility, and clarity of the information collected;

or (d) ways to minimize the burden of the collection of the information

on those who are to respond, including through the use of appropriate

automated, electronic, mechanical, or other technological collection

techniques or other forms of information technology. Comments should be

sent to the Desk Officer for Agriculture, Office of Regulatory Affairs,

Office of Management and Budget, Washington, D.C. 20503 and to Grady

Bilberry, Director, Price Support Division, Farm Service Agency, United

States Department of Agriculture, STOP 0512, 1400 Independence Avenue.

S.W., Washington, D.C. 20250-0512, telephone (202) 720-7901.

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.

Background

Clause (3) of section 32 of the Act of August 24, 1935, as amended

(7 U.S.C. 612c) authorizes the Secretary of Agriculture to:

``Reestablish farmers' purchasing power by making payments in

connection with the normal production of any agricultural commodity for

domestic consumption.''

During the past 18 months, a number of factors have produced a

serious economic crisis which threatens the existence of small hog

producers throughout the United States. The estimated 114,000 hog

operations in the United States account for about $10 billion in hog

production annually or about 5 percent of the total U.S. farm

production. Hog prices declined steadily since June 1997, falling below

$20 per hundredweight in late 1998. At these disastrously low prices

many producers have lost $50-$75 per head because sale prices are below

actual cost of production.

Payments to hog operations will offset a portion of the per-head

losses small producers incurred marketing their hogs. These payments

will provide those eligible with an immediate infusion of cash to help

pay operating expenses and meet other financial obligations. Payments

will be limited to hog operations which produced in the United States

and sold less than 1,000 head of hogs during the specified marketing

period. Eligible hog operations can receive up to $5 per slaughter-

weight hog, or the equivalent for feeder pigs, which were owned and

marketed from July 1, 1998, through December 31, 1998. Maximum payments

to these operations will be limited to $2,500. If the hog operation is

owned by one or more individuals or entities who have an annual gross

revenue of $2.5 million or more in farming and ranching operations in

calendar year 1998, the payment to the operation will be reduced by a

pro rata share based upon the ownership interest of such entity or

individual.

Two classes of hogs will be eligible, slaughter hogs or feeder

pigs. Slaughter hogs include barrows, gilts, sows, and boars that are

sold for immediate slaughter. Feeder pigs are young pigs that are sold

to another person for further feeding for a period of more than 1

month. The per-head payment is established at $5 for slaughter hogs and

$1.80 for feeder pigs, but will be less if a national factor is

required to be applied so that total outlays would not exceed the

amount of funds available under this program. Hog operations making

application for the benefits under this part shall self-certify the

number of hogs in each class marketed during the specified marketing

period.

Eligible hog operations must also: (1) have sold the hogs on a

negotiated cash basis or on an eligible contract basis as provided by

the program regulations during the marketing period; (2) be engaged in

the business of producing and marketing agricultural products at the

time of application; and (3) apply for cash payments during the

application period. Hog producers shall self-certify that they meet all

eligibility requirements.

Hog operations may apply in person at county FSA offices during

regular business hours and at that time complete the Small Hog

Operation Payment Program application on Form FSA-1042. Alternatively,

hog operations may request the Small Hog Operations Payment Program

application by mail, telephone, facsimile from their designated county

FSA office or obtain the application via the Internet. The Internet

website is located at www.fsa.usda.gov/dafp/psd/. The completed

application, Form FSA-1042, must be received by the hog operations'

local county FSA office by the due date as specified in the program

regulations and can be returned in person, by mail, or by facsimile.

At payment rates of $5 for slaughter hogs and $1.80 for feeder

pigs, the total number of eligible applications may result in potential

outlays that exceed the $50 million authorized for the program.

Accordingly, if necessary, a national payment factor will be

established per head so that the total outlays will not exceed the $50

million in funds made available under this program.

This rule is being made effective immediately. Because of the poor

market conditions that have recently faced hog operations, particularly

small hog operations, a delay in making this assistance available would

be contrary to the public interest and the purpose of the authorizing

statute.

List of Subjects in 7 CFR Part 761

Direct payments to small hog operations, Reporting and record

keeping requirements.

Accordingly, 7 CFR chapter VII is amended by adding Part 761 to

read as follows:

PART 761--SMALL HOG OPERATION PAYMENT PROGRAM

Sec.

761.1 Applicability.

761.2 Administration.

761.3 Definitions.

761.4 Time and Method for Application.

761.5 Eligibility.

761.6 Rate of Payment and Limitations on Funding.

761.7 Appeals.

761.8 Misrepresentation and scheme or device.

761.9 Estates, trusts, and minors.

761.10 Death, incompetency, or disappearance.

761.11 Maintaining records.

761.12 Refunds; joint and several liability.

Authority: 7 U.S.C. 612c

Sec. 761.1 Applicability.

This part establishes the Small Hog Operations Program. The purpose

of this program is to provide benefits to hog operations under clause

(3) of section 32 of the Act of August 24, 1935 (7 U.S.C. 612c) in

order to reestablish their purchasing power in connection with the

normal production of hogs for domestic consumption.

Sec. 761.2 Administration.

(a) This part shall be administered by the Farm Service Agency

(FSA) under the general direction and supervision of the Deputy

Administrator for Farm Programs, FSA. The program shall be carried out

in the field by FSA State and county committees (State and county

committees).

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

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

provisions of the

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regulations in this part, as amended or supplemented.

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

which 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 which is not in accordance with the

regulations of this part; or

(2) Require a county committee to withhold taking any action which

is not in accordance with the regulations of this part.

(d) No delegation herein to a State or county committee shall

preclude the Deputy Administrator for Farm Programs, FSA, 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 adversely affect the operation of the

program.

Sec. 761.3 Definitions

The definitions set forth in this section shall be applicable for

all purposes of administering the Small Hog Operation Payment Program

established by this part.

Application means the Small Hog Operation Payment Program

Application, FSA-1042.

Cost-plus contract means an agreement between a hog operation and a

purchaser which bases payment to the hog operation on the estimated

cost of production of a hog plus a profit margin.

Department means the United States Department of Agriculture.

Eligible hogs means feeder pigs and slaughter hogs.

Farm Service Agency or FSA means the Farm Service Agency of the

Department.

Feeder pigs means young pigs that are sold to another person for

further feeding for a period of more than 1 month.

Fixed-price contract means an agreement between a hog operation and

a purchaser which bases payment at a negotiated fixed price and

includes contracts that may specify the duration and minimum and/or

maximum number of hogs to be delivered during the contract period.

Hog operation means any person or group of persons who as a single

unit raises hogs and whose production and facilities are located in the

United States.

Marketing period means the period beginning on July 1, 1998, and

ending on December 31, 1998.

Negotiated cash sales means a sale in which the price is determined

by interactions between the hog operation and the purchaser during the

current day, for delivery within the next 7 slaughter days, and does

not include hogs which are sold under contract.

Person means any individual, group of individuals, partnership,

corporation, estate, trust, association, cooperative, or other business

enterprise or other legal entity who is, or whose members are, a

citizen or citizens of, or legal resident alien or aliens in the United

States.

Secretary means the Secretary of the United States Department of

Agriculture or any other officer or employee of the Department who has

been delegated the authority to act in the Secretary's stead with

respect to the program established in this part.

Slaughter hogs means barrows, gilts, sows, and boars that are sold

for immediate slaughter.

United States means the 50 States of the United States of America,

the District of Columbia, and the Commonwealth of Puerto Rico.

Sec. 761.4 Time and Method for Application.

(a) Hog operations may obtain an application, Form FSA-1042 (Small

Hog Operation Payment Program Application), in person, by mail, by

telephone, or by facsimile from any county FSA office. In addition,

applicants may download a copy of the FSA-1042 at http://

www.fsa.usda.gov/dafp/psd/.

(b) A request for benefits under this part must be submitted on a

completed Form FSA-1042. The Form FSA-1042 should be submitted to the

FSA county office serving the county where the hog operation is located

but, in any case, must be received by the FSA County Office by the

close of business on February 12, 1999. Applications not received by

the close of business on February 12, 1999, will be returned as not

having been timely filed and the hog operation will not be eligible for

benefits under this program.

(c) The hog operation requesting benefits under this part must

certify with respect to the accuracy and truthfulness of the

information provided in their application for benefits. All information

provided is subject to verification and spot checks by FSA. Refusal to

allow FSA or any other agency of the Department of Agriculture to

verify any information provided will result in a determination of

ineligibility. Data furnished by the applicant will be used to

determine eligibility for program benefits. Furnishing the data is

voluntary; however, without it program benefits will not be approved.

Providing a false certification to the Government is punishable by

imprisonment, fines and other penalties.

Sec. 761.5 Eligibility.

(a) If a hog operation is owned by one or more individuals or

entities who have an annual gross revenue of $2.5 million or more in

farming and ranching operations in calendar year 1998, the payment to

the operation will be reduced by a pro rata share based upon the

ownership interest of such entity or individual.

(b) To be eligible to receive cash payments under this part, a hog

operation must:

(1) Have sold fewer than 1,000 hogs (produced in the United States)

during the period of July 1, 1998, through December 31, 1998;

(2) Have sold hogs on a negotiated cash basis or under a contract

other than a fixed-price or cost-plus contract during the marketing

period;

(3) Be engaged in the business of producing and marketing

agricultural products at the time of filing the application; and

(4) Apply for payments during the application period.

(c) Hogs marketed during the marketing period under fixed-price

contracts, cost-plus contracts, or under any circumstance not

equivalent to be eligible for benefits under this part with respect to

hogs subject to such sales.

(d) A hog operation must submit a timely application and comply

with all other terms and conditions of this part and those that are

otherwise contained in the application to be eligible for benefits

under this part.

Sec. 761.6 Rate of payment and limitations on funding.

(a) Benefits under this part may be made to hog operations for the

quantity of eligible slaughter hogs and feeder pigs actually marketed

during the marketing period in accordance with the limitations set

forth in this section. Payments will be calculated after the conclusion

of the sign-up period, and shall be made in an amount determined by:

(1) Multiplying $1.80 by the number of eligible feeder pigs

marketed during the marketing period; plus

(2) Multiplying $5 by the number of eligible slaughter hogs

marketed during the marketing period;

(3) Limiting the payment per hog operation to $2,500; and

(4) Reducing the amount paid to a hog operation because of

limitations in

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funding as provided under paragraph (b) of this section.

(b) In the event that approval of all eligible applications would

result in expenditures in excess of the $50 million, FSA shall reduce

the payment for each slaughter hog and feeder pig in such manner as

FSA, in its sole discretion, finds fair and reasonable.

Sec. 761.7 Appeals.

Any hog operation which is dissatisfied with a determination made

with respect to this part may make a request for reconsideration or

appeal of such determination in accordance with the appeal regulations

set forth at part 11 of this title and part 780 of this title.

Sec. 761.8 Misrepresentation and scheme or device.

(a) A hog operation shall be ineligible to receive assistance under

this program if it is determined by the State committee or the county

committee to have:

(1) Adopted any scheme or device which tends to defeat the purpose

of this program;

(2) Made any fraudulent representation; or

(3) Misrepresented any fact affecting a program determination.

(b) Any funds disbursed pursuant to this part to a hog operation

engaged in a misrepresentation, scheme, or device, or to any other

person as a result of the hog operation's actions, shall be refunded

with interest together with such other sums as may become due. Any hog

operation or person engaged in acts prohibited by this section and any

hog operation or person receiving payment under this part shall be

jointly and severally liable for any refund due under this section and

for related charges. The remedies provided in this part shall be in

addition to other civil, criminal, or administrative remedies which may

apply.

Sec. 761.9 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 an otherwise eligible operator of a hog

operation shall be eligible for assistance under this part only if such

operation 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. 761.10 Death, incompetency, or disappearance.

In the case of death, incompetency, disappearance or dissolution of

a hog operation that is eligible to receive benefits in accordance with

this part, such hog operation may receive such benefits.

Sec. 761.11 Maintaining records.

Hog operations making application for benefits under this program

must maintain accurate records and accounts that will document that

they meet all eligibility requirements specified herein and the number

of head of slaughter hogs and feeder pigs sold during the marketing

period. Such records and accounts must be retained for at least 3 years

after the date of the cash payment to hog operations under this

program.

Sec. 761.12 Refunds; joint and several liability.

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

requirement, or condition for payment arising under the application, or

this part, and if any refund of a payment to FSA shall otherwise become

due in connection with the application, or this part, all payments made

under this part to any hog operation shall be refunded to FSA together

with interest as determined in accordance with paragraph (c) of this

section and late-payment charges as provided for in part 1403 of this

chapter.

(b) All persons listed on a hog operation's application shall be

jointly and severally liable for any refund, including related charges,

which is determined to be due for any reason under the terms and

conditions of the application or this part.

(c) Interest shall be applicable to refunds required of the hog

operation if FSA determines that payments or other assistance were

provided to the producer was not eligible for such assistance. Such

interest shall be charged at the rate of interest which the United

States Treasury charges the Commodity Credit Corporation (CCC) for

funds, as of the date FSA made such benefits available. Such interest

shall accrue from the date such benefits were made available to the

date of repayment or the date interest increases as determined in

accordance with applicable regulations. FSA may waive the accrual of

interest if FSA determines that the cause of the erroneous

determination was not due to any action of the hog operation.

(d) Interest determined in accordance with paragraph (c) of this

section shall not be applicable to refunds required of the hog

operation because of unintentional misaction on the part of the hog

operation, as determined by FSA.

(e) Late payment interest shall be assessed on all refunds in

accordance with the provisions of, and subject to the rates prescribed

in, 7 CFR part 792.

(f) Hog operations must refund to FSA any excess payments made by

FSA with respect to such application.

(g) In the event that a benefit under this subpart was provided as

the result of erroneous information provided by any person, the benefit

must be repaid with any applicable interest.

Signed at Washington, DC, on February 4, 1999.

Parks Shackelford,

Acting Administrator, Farm Service Agency.

[FR Doc. 99-3260 Filed 2-5-99; 3:11 pm]

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