WAIS Document Retrieval[Code of Federal Regulations] [Title 7, Volume 10] [Revised as of January 1, 2005] From the U.S. Government Printing Office via GPO Access [CITE: 7CFR1421] [Page 411-441] TITLE 7--AGRICULTURE CHAPTER XIV--COMMODITY CREDIT CORPORATION, DEPARTMENT OF AGRICULTURE PART 1421_GRAINS AND SIMILARLY HANDLED COMMODITIES_MARKETING ASSISTANCE LOANS AND LOAN DEFICIENCY PAYMENTS FOR THE 2002 THROUGH 2007 CROP YEARS Subpart A_General Sec. 1421.1 Applicability. 1421.2 Administration. 1421.3 Definitions. 1421.4 Eligible producers. 1421.5 Eligible commodities. 1421.6 Beneficial interest. 1421.7 Requesting marketing assistance loans and loan deficiency payments. 1421.8 Eligible quantity. 1421.9 Basic loan rates. 1421.10 Market rates. 1421.11 Spot checks. 1421.12 Production evidence. 1421.13 Handling payments and collections. 1421.14 Obtaining peanut loans. Subpart B_Marketing Assistance Loans 1421.100 Applicability. 1421.101 Maturity dates. 1421.102 Adjustment of basic loan rates. 1421.103 Approved storage. 1421.104 Marketing assistance loan making. 1421.105 Farm-stored marketing assistance loans. 1421.106 Warehouse-stored marketing assistance loan collateral. 1421.107 Warehouse receipts. 1421.108 Transfers and reconcentrations. 1421.109 Personal liability of the producer. 1421.110 Repayments. 1421.111 Commodity certificate exchanges. 1421.112 Loan settlement. 1421.113 Foreclosure. 1421.114 Recourse loans. Subpart C_Loan Deficiency Payments 1421.200 Applicability. 1421.201 Loan deficiency payment rate. 1421.202 Loan deficiency payment quantity. 1421.203 Personal liability of the producer. Subpart D_Grazing Payments for 2002-2007 Crop Years of Wheat, Barley, Oats and Triticale 1421.300 Applicability. 1421.301 Administration. 1421.302 Definitions. 1421.303 Eligible producer and eligible land. 1421.304 Time and method for application. 1421.305 Payment amount. 1421.306 Misrepresentation and scheme or device. 1421.307 Refunds; joint and several liability. Subpart E_Standards for Approval of Warehouses for Grain, and Similarly Handled Commodities 1421.5551 General statement and administration. 1421.5552 Basic standards. 1421.5553 Bonding requirements for net worth. 1421.5554 Examination of warehouses. 1421.5555 Exceptions. 1421.5556 Approval of warehouses, requests for reconsideration. 1421.5557 Exemption from requirements. 1421.5558 Contract and application and inspection fees. 1421.5559 OMB control numbers assigned pursuant to Paperwork Reduction Act. Authority: 7 U.S.C. 7231-7237 and 7931 et seq.; 15 U.S.C. 714b, 714c. Subpart A_General Source: 67 FR 63511, Oct. 11, 2002, unless otherwise noted. Sec. 1421.1 Applicability. (a) The regulations of this subpart are applicable to the 2002 through 2007 crops of barley, small chickpeas, corn, grain sorghum, lentils, oats, dry peas, peanuts, rice, wheat, wool, mohair, oilseeds and other crops designated by Commodity Credit Corporation (CCC). These regulations set forth the general provisions under which marketing assistance loans and loan deficiency payments (LDP) will be administered by the CCC. Additional terms and conditions are in the note and security agreement and the loan deficiency payment application that must be executed by a producer to receive marketing assistance loans and LDP's. (b)(1) The basic loan rates, the schedule of premiums and discounts, and forms applicable to the marketing assistance and loan deficiency payment programs for the commodities specified in paragraph (a) of this section are available in Farm Service Agency (FSA) State and county offices. The forms for use in these programs will be prescribed by CCC. (2) Loan deficiency payments shall be available for unshorn pelts, hay and silage. (c) Marketing assistance loans and loan deficiency payments will not be [[Page 412]] available for any commodity produced on land owned or otherwise in the possession of the United States if such land is occupied without the consent of the United States. (d) Producers who produced eligible loan commodities are eligible for marketing assistance loans or loan deficiency payments. Sec. 1421.2 Administration. (a) The marketing assistance loan and loan deficiency payment program shall be administered under the general supervision of the Executive Vice President, CCC and shall be carried out in the field by FSA State and county committees, respectively. (b) State and county committees, and representatives and employees thereof, cannot modify or waive any requirement of this part, except as provided in paragraph (e) of this section. (c) The State committee shall take any required action not taken by the county committee. The State committee shall also: (1) For the 2001 crop year only, allow producers who violated the terms and conditions of the note and security agreement which resulted in the producer losing beneficial interest in the commodity before repaying the loan and the county committee determined the producer acted in good faith, to repay the loan at a rate that is the lesser of the loan plus interest; or the alternative repayment rate, as determined under Sec. 1421.10, in effect on the date the beneficial interest was lost. In cases, where a locked-in repayment rate under Sec. 1421.110 was applicable, the prescribed form is considered null and void. (2) Correct or require correction of an action taken by a county committee that is not in compliance with this part; or (3) Require a county committee to not take an action or implement a decision that is not under the regulations of this part. (d) The Executive Vice President, CCC, or a designee, may determine any question arising under these programs, or reverse or modify a 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 lateness or failure to meet such other requirements does not adversely affect the operation of the marketing assistance loan and loan deficiency payment program. (f) A representative of CCC may execute marketing assistance loan and loan deficiency payment applications and related documents only under the terms and conditions determined and announced by CCC. Any document not executed under such terms and conditions, including any purported execution before the date authorized by CCC, shall be null and void. Sec. 1421.3 Definitions. The definitions in this section apply for all purposes of program administration. Terms defined in part 718 of this title and parts 1412 and 1425 of this chapter also apply, except where they conflict with the definitions in this section. Basic loan rate means the loan rate established by CCC for a commodity before any adjustment for premiums and discounts. Charges means all fees, costs, and expenses incurred in insuring, carrying, handling, storing, conditioning, and marketing the commodity tendered to CCC for loan. Charges also include any other expenses incurred by CCC in protecting CCC's or the producer's interest in such commodity. Commodity certificate exchange means the exchange, as provided for in part 1401 of this chapter, of commodities pledged as collateral for a marketing assistance loan at a rate determined by CCC in the form of a commodity certificate bearing a dollar denomination. Such certificate may not be transferred or exchanged for the inventory of CCC. Designated marketing association means a marketing association or cooperative, approved by the Secretary, to issue marketing loan benefits on behalf of CCC for peanuts. Field direct loan deficiency payment means a loan deficiency payment issued to producers who: (1) Will lose beneficial interest immediately at harvest or; [[Page 413]] (2) Immediately feed the commodity during harvest. High moisture commodities means corn and grain sorghum normally harvested and intended to be stored or marketed in a high moisture condition. Incorrect certification means the certifying of a quantity of a commodity for the purpose of obtaining a marketing assistance loan or a loan deficiency payment in excess of the quantity eligible for such marketing assistance loan or loan deficiency payment or the making of any fraudulent representation with respect to obtaining loans or loan deficiency payments. Loan commodities means wheat, corn, grain sorghum, barely, oats, rice, soybeans, other oilseeds, peanuts, wool, mohair, dry peas, lentils, and small chickpeas and other crops designated by CCC. Loan deficiency payment means a payment received in lieu of a loan when the CCC-determined value is below the applicable county loan rate. Mohair means the hair sheared from a live Angora goat. Mohair does not include pelts, or hides or mohair shorn from pelts or hides. Oilseeds means any crop of sunflower seed, canola, rapeseed, safflower, flaxseed, mustard seed, crambe, sesame seed, and other oilseeds as determined and announced by CCC. Other crops designated by CCC means with respect to eligibilities for benefits under this part: (1) Those crops harvested as other than grain, such as silage, haulage, earlage; (2) Specific crops designated for grazing; or (3) As otherwise designated by CCC. Pulse crops means any crop of dry peas, lentils, and small chickpeas as defined by CCC. Servicing agent bank means the bank designated as the financial institution for a CMA or a designated marketing association. Small chickpea means any chickpea that meets the definition of a chickpea according to the Grain Inspection, Packers and Stockyards Administration (GIPSA), Federal Grain Inspection Service (FGIS) and falls below a 20/64th sieve. Unauthorized disposition means the conversion of any loan quantity pledged as collateral for a farm-stored loan without prior written authorization from the county committee. Unauthorized removal means the movement of any farm-stored loan quantity from the storage structure in which the commodity was stored or structures that were designated when the loan was approved to any other storage structure, whether or not such structure is located on the producer's farm, without prior written authorization from the county committee. Unshorn pelt means the removed skin and attached wool from a slaughtered lamb that has never been shorn. Warehouse receipt means a receipt containing the required information prescribed in this part and is: (1) A pre-numbered, negotiable warehouse receipt issued under the authority of the U.S. Warehouse Act, a state licensing authority, or by an approved CCC warehouse in such format authorized and approved, in advance, by CCC; (2) An electronic warehouse receipt issued by such warehouse recorded in a central filing system or system maintained in one or more locations which are approved by FSA to operate such system; or (3) Other such acceptable evidence of title, as determined by CCC. Wool means the fiber sheared from a live sheep. [67 FR 63511, Oct. 11, 2002, as amended at 68 FR 37940, June 26, 2003] Sec. 1421.4 Eligible producers. (a) To be an eligible producer, the producer must: (1) Be an individual, partnership, association, corporation, estate, trust, State or political subdivision or agency thereof, or other legal entity that produces an eligible commodity as a landowner, landlord, tenant, or sharecropper, or in the case of rice, furnishes land, labor, water, or equipment for a share of the rice crop. With respect to wool and mohair, the producer must own, other than through a security interest mortgage, or lien, the sheep and goats that produced the wool and mohair respectively for a period of not less than 30 days. [[Page 414]] (2) Comply with all provision of this part and: (i) 7 CFR part 12--Highly Erodible Land and Wetland Conservation; (ii) 7 CFR part 718--Provisions Applicable to Multiple Programs; (iii) 7 CFR part 1400--Payment Limitation & Payment Eligibility; (iv) 7 CFR part 1403--Debt Settlement Policies and Procedures; (v) 7 CFR part 1405--Loans, Purchases and Other Operations. (3) Have made a acreage certification with respect to all the cropland on the farm. (b) A receiver or trustee of an insolvent or bankrupt debtor's estate, an executor or an administrator of a deceased person's estate, a guardian of an estate of a ward or an incompetent person, and trustees of a trust shall be considered to represent the insolvent or bankrupt debtor, the deceased person, the ward or incompetent, and the beneficiaries of a trust, respectively. The production of the receiver, executor, administrator, guardian, or trustee shall be considered to be the production of the person or estate represented by the receiver, executor, administrator, guardian, or trustee. Marketing assistance loans and loan deficiency payment documents executed by any such person will be accepted by CCC only if they are legally valid and such person has the authority to sign the applicable documents. (c) A minor who is otherwise an eligible producer is eligible to receive marketing assistance loans or loan deficiency payments only if the minor meets one of the following requirements: (1) 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 marketing assistance loan or loan deficiency payment documents are signed by the guardian; (3) Any note or loan deficiency payment program application signed by the minor is cosigned by a person determined by the county committee to be financially responsible; or (4) A bond is furnished under which a surety guarantees to protect CCC from any loss incurred for which the minor would be liable had the minor been an adult. (d) If more than one producer executes a note and security agreement with CCC, each such producer shall be jointly and severally liable for the violation of the terms and conditions of the note and the regulations in this part. Each such producer shall also remain liable for repayment of the entire marketing assistance loan amount until the loan is fully repaid without regard to such producer's claimed share in the commodity pledged as collateral for the loan. In addition, such producer may not amend the note and security agreement with respect to the producer's claimed share in such commodities, or loan proceeds, after execution of the note and security agreement by CCC. (e)(1) The county committee may deny a producer a marketing assistance loan on farm-stored commodities if the producer has: (i) Made a misrepresentation in connection with the marketing assistance loan or LDP program; (ii) Previously not allowed a representative access to the site where commodities pledged as collateral for CCC loans were stored or otherwise failed to corporate in the settlement of a marketing assistance loan; or (iii) Failed to adequately protect the interests of CCC in the commodity pledged as collateral for a farm-stored loan. (2) A producer who is denied a farm-stored loan will be eligible to pledge a commodity as collateral for a warehouse-stored loan or provide some other form of financial assurance to obtain a farm-stored loan. (f) A CMA may obtain a marketing assistance loan and loan deficiency payment on eligible production of a loan commodity on behalf of its members who are eligible to receive marketing assistance loans or loan deficiency payments with respect to a crop of a commodity. For purposes of this subpart, the term ``producer'' includes a CMA. (g) In case of the death, incompetency, or disappearance of any producer who is entitled to the payment of any sum in settlement of a marketing [[Page 415]] assistance loan or loan deficiency payment, payment shall, upon proper application to the FSA county service center that disbursed the marketing assistance loan or loan deficiency payment, be made to the persons who would be entitled to such producer's payment under the regulations contained in part 707 of this title. Sec. 1421.5 Eligible commodities. (a) Commodities eligible to be pledged as collateral for a loan made under this part are: (1) Barley, corn, grain sorghum, oats, canola, peanuts, soybeans, oilseeds, wheat, dry peas, lentils, small chickpeas, rice and other crops designated by CCC produced and mechanically harvested in the United States; (2) Dual purpose sorghum varieties as determined by CCC; and (3) Wool and mohair produced and shorn from live animals in the United States. (b) A commodity produced on land owned or otherwise in the possession of the United States that is occupied without the consent of the United States is not an eligible commodity. (c)(1) To be an eligible commodity, the commodity must be merchantable for food, feed, or other uses determined by CCC and must not contain mercurial compounds, toxin producing molds, or other substances poisonous to humans or animals. A commodity containing vomitoxin, aflatoxin or Aspergillus mold may not be pledged for a loan made under this part, except as provided by CCC in the marketing assistance loan note and security agreement. (2) The determination of class, grade, grading factor, milling yields, and other quality factors, including the determination of type, quality, and quantity for peanuts: (i) With respect to barley, canola, corn, flaxseed, grain sorghum, oats, rice, soybeans, sunflower seed for extraction of oil, wheat and other commodities designated by CCC, shall be based upon the Official United States Standards for Grain, United States Standards for Whole Dry Peas, Split Peas, and Lentils for dry peas and lentils, United States Standards for Beans for small chickpeas and the United States Standards for Rice as applied to rough rice whether or not such determinations are made on the basis of an official inspection. (ii) With regard to mustard seed, rapeseed, safflower seed, flaxseed and sunflower seed used for a purpose other than to extract oil, shall be based on quality requirements established and announced by CCC, whether or not such determinations are made on the basis of an official inspection. The costs of an official quality determination may be paid by CCC. The quality requirements that are used in administering marketing assistance loans and loan deficiency payments for the oilseeds in this paragraph are available in USDA State and county FSA service centers. (iii) With regard to farm-stored peanuts, shall be determined at the time of delivery to CCC by a Federal or State Inspector authorized or licensed by the Secretary. (d) Eligible wool and mohair must: (1) Have been produced and sheared from live sheep and goats, of domestic origin and located in the U.S. for a period of not less than 30 calendar days prior to shearing. (2) Be of merchantable quality deemed by CCC to be suitable for loan and must have been shorn in the United States. (e) When certifying acreage on farms in which an interest is held, the producer must provide acceptable evidence of the commodity from which the county committee may determine whether the eligible production claimed by the producer is reasonable for the production practices on such farm or similar farms in the same county; or have either the eligible or ineligible commodity measured by a representative of the county FSA service center at the producer's expense, before commingling. Sec. 1421.6 Beneficial interest. (a)(1) To be eligible to receive marketing assistance loans or loan deficiency payments, a producer must have the beneficial interest in the commodity that is tendered to CCC for a marketing assistance loan or loan deficiency payment. The producer must always have had the beneficial interest in the commodity unless, before the [[Page 416]] commodity was harvested, sheared or slaughtered in the case of unshorn pelts, the producer, and a former producer whom the producer tendering the commodity to CCC has succeeded, had such an interest in the commodity. Commodities obtained by gift, barter or purchase shall not be eligible to be tendered to CCC for marketing assistance loans or loan deficiency payments. Heirs who succeed to the beneficial interest of a deceased producer or who assume the decedent's obligations under an existing marketing assistance loan or loan deficiency payment shall be eligible to receive marketing assistance loans and loan deficiency payments whether succession to the commodity occurs before or after harvest, shearing or slaughter so long as the heir otherwise complies with this part. (2) A producer shall not be considered to have divested the beneficial interest in the commodity if the producer retains control, title, and risk of loss in the commodity, including the right to make all decisions regarding the tender of such commodity to CCC for marketing assistance loans or loan deficiency payments, including those cases where the producer takes either of the actions in paragraph (a)(2)(i) or (a)(2)(ii) of this section as follows: (i) Executes an option to purchase, whether or not a payment is made by the potential buyer for such option to purchase, for such commodity if all other eligibility requirements are met and the option to purchase contains the following: Notwithstanding any other provision of this option to purchase, title; risk of loss; and beneficial interest in the commodity, as specified in 7 CFR 1421.6, shall remain with the producer until the buyer exercises this option to purchase the commodity. This option to purchase shall expire, notwithstanding any action or inaction by either the producer or the buyer, at the earlier of: (1) The maturity of any Commodity Credit Corporation (CCC) loan that is secured by such commodity; (2) The date CCC claims title to such commodity; or (3) Such other date as provided in this option; (ii) Enters into a contract to sell the commodity if the producer retains title, risk of loss, and beneficial interest in the commodity and the purchaser pays no advance payment amount or any incentive payment amount to enter into such contract to the producer, except as provided in part 1425 of this chapter. (3) If marketing assistance loans and loan deficiency payments are made available to producers through an approved CMA under part 1425 of this chapter, the beneficial interest in the commodity must always have been in the producer-member who delivered the commodity to the CMA or its member CMA's, except as otherwise provided in this section. Commodities delivered to such a CMA shall not be eligible to receive marketing assistance loans or loan deficiency payments if the producer- member who delivered the commodity does not retain the right to share in the proceeds from the marketing of the commodity as provided in part 1425 of this chapter. (b) With respect to wool, mohair, dry peas, lentils and small chickpeas produced in the 2002 crop year, producers who lost beneficial interest before October 11, 2002 are eligible for a loan deficiency payment based on the date the producer lost beneficial interest in the applicable commodity. (c) For peanuts produced in the 2002 crop year, producers who lost beneficial interest in the 2002 crop of peanuts are eligible for a loan deficiency payment based on the date the producer lost beneficial interest in the applicable commodity. Sec. 1421.7 Requesting marketing assistance loans and loan deficiency payments. (a) A producer must, unless authorized by CCC, request marketing assistance loans and loan deficiency payments at the county office that, under part 718 of this title, is responsible for administering programs for the farm on which the commodity was produced. (b) A marketing assistance loan or loan deficiency payment may be requested in person, by mail or electronic format designated by CCC. Forms prescribed by CCC may be obtained from the USDA, Farm Service Agency Web site. (c) To receive marketing assistance loans or loan deficiency payments for a crop of a commodity, a producer must [[Page 417]] execute a note and security agreement or loan deficiency payment application on or before the applicable final loan availability date, as follows: (1) March 31 of the year following the year in which the following crops are normally harvested: barley, canola, flaxseed, oats, rapeseed, and wheat. (2) May 31 of the year following the year in which the following crops are normally harvested: corn, grain sorghum, mustard seed, rice, safflower, soybeans, sunflower seed, dry peas, lentils, and small chickpeas. (3) January 31 of the year following the year in which peanuts are normally harvested or wool and mohair are normally sheared. (d) With respect only to loan deficiency payments for eligible loan commodities produced in the 2001 crop year, whether or not produced on a farm covered by a production flexibility contract, the applicable final loan availability for such payment is November 12, 2002. Sec. 1421.8 Eligible quantity. (a) With respect to marketing assistance loans and loan deficiency payments for: (1) Farm-stored commodities, all determinations of weight, and quality, except as otherwise agreed to or required by CCC, shall be determined at the time of delivery of the commodity to CCC or at the time the loan deficiency payment application is filed for measured requests, if applicable or selected for spot-check for certified requests. (2) Warehouse-stored commodities, all determinations of grade, weight and quality, except as otherwise agreed to or required by CCC, shall be determined at the time the loan or LDP is requested when acceptable documentation, under Sec. 1421.106, accompanies the loan or LDP request. (b)(1) A producer may, before the final date for obtaining a marketing assistance loan for a commodity, repledge as collateral for securing a marketing assistance loan any commodity that had been previously pledged as collateral for a marketing assistance loan, except with respect to: (i) Commodities that have been acquired with commodity certificate exchanges under part 1401 of this chapter; (ii) Commodities that have been redeemed at the prevailing world market price for rice, or the alternative repayment rate for all other commodities, as determined by CCC. (iii) Commodities on which a loan deficiency payment has been received. (2) The commodity repledged as security for the subsequent loan shall have the same maturity date, under Sec. 1421.101 as the original loan. (c)(1) The marketing assistance loan documents shall not be presented for disbursement unless the commodity subject to the note and security agreement is an eligible harvested commodity, is in existence, and is in approved farm or warehouse storage, as determined by CCC. If the commodity was not either an eligible commodity, in existence, or in approved storage at the time of disbursement, the total amount disbursed under the marketing assistance loan and charges plus interest shall be refunded promptly by the producer. (2) Marketing assistance loans may be disbursed to eligible producers who store eligible commodities in unlicensed storage facilities only if the producer agrees to redeem the marketing assistance loan on the date in which the loan is disbursed with a commodity certificate exchange. (3) CCC shall limit the total marketing assistance loan quantity for a loan disbursement, or loan deficiency payment quantity for a loan deficiency payment, based on a subsequent increase in the quantity of an eligible commodity by the final loan availability date to 100 percent of the outstanding quantity of such marketing assistance loan or loan deficiency payment application. A producer may obtain a separate marketing assistance loan or loan deficiency payment before the final loan availability date for the commodity for quantities in excess of 100 percent of such quantity if such quantities are an otherwise eligible commodity. [[Page 418]] Sec. 1421.9 Basic loan rates. (a) Basic marketing assistance loan rates for a commodity may be established on a State, regional, county basis or other basis and may be adjusted by CCC to reflect quality and location and other factors applicable to the commodity and as otherwise provided in this section. (b) The basic marketing assistance loan rates for wheat, corn, barley, oats, grain sorghum, rice, peanuts, soybean, canola, flaxseed, mustard seed, rapeseed, safflower, sunflower seed, dry peas, lentils, small chickpeas, wool, mohair and other crops designated by CCC will be determined by CCC and made available at State and county offices. (c)(1) For all commodities except rice, warehouse-stored loans shall be disbursed at levels based on the basic county marketing assistance loan rate for the county where the commodity is stored, adjusted for the schedule of premiums and discounts established for the commodity on the basis of quality factors set forth on warehouse receipts or supplemental certificates and for other quality factors, as determined and announced by CCC. (2) For rice, warehouse-stored loans shall be disbursed at levels based on the milling yields times the whole and broken kernel marketing assistance loan rates, adjusted for the schedule of discounts on the basis of quality factors set forth on warehouse receipts or supplemental certificates and for other quality factors, as determined and announced by CCC. Sec. 1421.10 Market rates. (a)(1) For the 2002 through 2007 crops of barley, corn, grain sorghum, oats, wheat, dry peas, lentils, small chickpeas, oilseeds, and other crops as designated by CCC, a producer may repay a nonrecourse marketing assistance loan at a rate that is the lesser of: (i) The marketing assistance loan rate and charges, plus interest determined for such crop; or (ii) The alternative repayment rate for such crop. (2) To the extent practicable, CCC shall determine and announce the alternative repayment rate, based upon the market prices at appropriate U.S. markets as determined by CCC, to minimize loan forfeitures, minimize the Federal Government-owned inventory of the commodities, minimize the storage costs incurred by the Federal Government domestically and internationally, and minimize discrepancies in marketing loan benefits across State boundaries and across county boundaries. The alternative repayment rate may be adjusted to reflect quality and location for each crop of a commodity as follows: (i) On a weekly basis in each county for oilseeds, except soybeans; (ii) On a daily basis in each county for barley, corn, grain sorghum, oats, soybeans, and wheat; and (iii) On a weekly basis nationally for dry peas, lentils and small chickpeas. (b)(1) For the 2002 through 2007 crops of peanuts, wool and mohair, a producer may repay a nonrecourse loan at a rate that is the lesser of: (i) The loan rate and charges interest, plus interest determined for such crop; or (ii) The alternative repayment rate for such crop. (2) To the extent practicable, CCC shall determine and announce periodically an alternative repayment rate for peanuts, wool, and mohair to minimize loan forfeitures, minimize the Federal Government-owned inventory of the commodities, minimize the storage costs incurred by the Federal Government domestically and internationally, and minimize discrepancies in marketing loan benefits across State boundaries and across county boundaries. (c)(1) The prevailing world market price for a class of rice shall be determined by CCC based upon a review of prices at which rice is being sold in world markets and a weighting of such prices through the use of information such as changes in supply and demand of rice, tender offers, credit concessions, barter sales, government-to-government sales, special processing costs for coatings or premixes, and other relevant price indicators, and shall be expressed in U.S. equivalent values F.O.B. vessel, U.S. port of export, per hundredweight as follows: (i) U.S. grade No. 2, 4 percent broken kernels, long grain milled rice; [[Page 419]] (ii) U.S. grade No. 2, 4 percent broken kernels, medium grain milled rice; and (iii) U.S. grade No. 2, 4 percent broken kernels, short grain milled rice. (2) Export transactions involving rice and all other related market information will be monitored on a continuous basis. Relevant information may be obtained for this purpose from USDA field reports, international organizations, public or private research entities, international rice brokers, and other sources of reliable information. (3) The prevailing world market price for a class of rice adjusted to U.S. quality and location the adjusted world price (AWP), as determined under paragraph (c)(5) of this section, shall apply to this section. (4) The adjusted world price for each class of rice shall equal the prevailing world market price for a class of rice (U.S. equivalent value) as determined under paragraphs (a)(2) and (3) of this section and adjusted to U.S. quality and location as follows: (i) The prevailing world market price for a class of rice shall be adjusted to reflect an F.O.B. mill position by deducting from such calculated price an amount that is equal to the estimated national average costs associated with: (A) The use of bags for the export of U.S. rice, and (B) The transfer of such rice from a mill location to F.O.B. vessel at the U.S. port of export with such costs including, but not limited to, freight, unloading, wharfage, insurance, inspection, fumigation, stevedoring, interest, banking charges, storage, and administrative costs. (ii) The price determined under paragraph (c)(4)(i) of this section shall be adjusted to reflect the market value of the total quantity of whole kernels contained in milled rice by deducting the world value of broken kernels it contains, with the value of the broken kernels determined by multiplying the quantity of broken kernels (4 percent per hundredweight) by the world market value of broken kernels. The world market value of broken kernels shall be based upon the relationship of whole and broken kernel world prices as estimated from observations of prices at which rice is being sold in world markets. (iii) The price determined under paragraph (c)(4)(ii) of this section shall be adjusted to reflect the per-pound market value of whole kernels by dividing the price by the quantity of whole milled kernels contained in the milled rice (96 percent per hundredweight). (iv) The price determined under paragraph (c)(4)(iii) of this section shall be adjusted to reflect the market value of whole kernels contained in 100 pounds of rough rice by multiplying such price by the estimated national average quantity of whole kernel rice by class obtained from milling 100 pounds of rough rice. (v) The price determined under paragraph (c)(4)(iv) of this section shall be adjusted to reflect the total market value of rough rice by: (A) Adding to such price: (1) The market value of bran contained in the rough rice, computed by multiplying the domestic unit market value of bran by the estimated national average quantity of bran produced in milling 100 pounds of rice; and (2) The market value of broken kernels contained in the rough rice, computed by multiplying the estimated world market value of broken kernels by the estimated national average quantity of broken kernels produced in milling 100 pounds of rice; (B) Deducting from such price: (1) An estimated cost of milling rough rice; and (2) An estimated cost of transporting rough rice from farm to mill locations. (vi) The price determined under paragraph (c)(4)(v) of this section may be adjusted to a whole kernel loan rate basis by deducting the estimated world market value of the total quantity of broken kernels contained in such rice and dividing the resulting value by the estimated national average quantity of milled whole kernels produced in milling 100 pounds of rice. (5)(i) The adjusted world price for each class for rice, loan rate basis, shall be determined by CCC and announced, to the extent practicable, on or after 3:00 p.m. Eastern Standard time each Tuesday, or more frequently, as determined necessary by CCC, continuing through the later of: (A) The last Tuesday of July 2007; or [[Page 420]] (B) The last Tuesday of the latest month the 2007-crop rice loans mature. (ii) In the event that Tuesday is a non-workday, the determination will be made on the next workday, on or after 3:00 p.m. Eastern Standard time. (iii) The announced prices will be effective upon announcement and will remain in effect for a period as announced by the CCC. (6) On the day of the announcement of the adjusted world price, applications for loan deficiency payments for rice that specify the payment rate will not be accepted between 2:00 p.m. Eastern Standard time and the time of the world price announcement. Sec. 1421.11 Spot checks. (a) CCC may inspect the collateral for marketing assistance loans, and producers with such loans shall allow CCC access to the farm and storage facility as necessary to conduct collateral inspections, or ``spot checks'' as they are called. Spot checks will verify that the quality and quantity of farm-stored commodities pledged as collateral for marketing assistance loans are maintained by the producer. (b) Loan deficiency payments are selected for spot check to ensure that all eligibility requirements, as required by CCC, are met in order to receive such loan deficiency payment. (c) Producers must present production evidence for commodities acceptable to CCC when a spot check is conducted. Sec. 1421.12 Production evidence. (a) Producers who redeem marketing assistance loan collateral at the prevailing world market price for rice, or the alternative repayment rate for all other commodities, as CCC determines or receives a loan deficiency payment may be required to provide CCC with: (1) Evidence of production of the collateral such as: (i) Evidence of sales, (ii) Delivery evidence, (iii) Load summaries from warehouse, processor, or buyer, (iv) Warehouse receipts (v) Paid measurement service (vi) Spot check measurements with paid measurement service (vii) Cleaning tickets for seed (viii) Scale tickets, if not issued by the producer for the producer's own production (ix) Core tests for wool and mohair (x) Maximum eligible quantity as determined by CCC (2) The storage location of the collateral that has not been otherwise disposed of and access to such collateral; (3) Permission to inspect, examine, and make copies of the records and other written data as deemed necessary to verify the eligibility of the producer and commodity; (4) In the case of wool and mohair, permission to examine and inspect the sheep herd; and (5) Any other evidence requested by the county FSA service center or the Deputy Administrator, FSA. (b) A producer who fails to provide acceptable evidence of production shall be required to repay the market gain or loan deficiency payment and charges, plus interest, as determined by CCC. Sec. 1421.13 Handling payments and collections. (a) Amounts of $9.99 or less due a producer will be paid only upon the producer's request. (b) Deficiencies of $9.99 or less, including interest, may be disregarded unless demand for payment is made by CCC. Sec. 1421.14 Obtaining peanut loans. (a) Peanuts loans to individual producers may be obtained through: (1) County offices; or (2) A designated Marketing Association or a CMA approved by CCC. (b) The loan documents shall not be presented for disbursement unless the peanuts pledged as collateral for the marketing assistance loan is eligible in accordance with Sec. 1421.8. If the peanuts were ineligible at the time of the disbursement, the total amount disbursed under loan, or as an LDP, plus charges and interest shall be refunded promptly. [[Page 421]] Subpart B_Marketing Assistance Loans Source: 67 FR 63511, Oct. 11, 2002, unless otherwise noted. Sec. 1421.100 Applicability. This subpart provides the terms and conditions for marketing assistance loans offered by CCC. Additional terms and conditions are also in the note and security agreement which the producer must sign to receive such marketing assistance loans. Sec. 1421.101 Maturity dates. (a)(1) All marketing assistance loans shall mature on demand by CCC and no later than the last day of the 9th calendar month following the month in which the note and security agreement is filed and approved except, for transferred marketing assistance loan collateral. The maturity date for transferred marketing assistance loan collateral will be the maturity date applicable to the original loan that was transferred. (2) CCC may at any time call the marketing assistance loan by notifying the producer at least 30 days in advance of the accelerated maturity date. Sec. 1421.102 Adjustment of basic loan rates. (a) Basic loan rates are established under Sec. 1421.9 and will be adjusted or not adjusted as follows: (1) For farm-stored commodities, except for peanuts, that exceed acceptable levels of contamination, the loan rate will be discounted to 10 percent of the base county marketing assistance loan rate. (2) For farm-stored commodities where the test weight discounts are on the: (i) Crop year specific schedules of premiums and discounts, the loan rate shall be adjusted for the higher of the discount for test weight or grade based on test weight. (ii) Additional schedule of discounts, the marketing assistance loan rate shall be reduced to 20 percent of the county average marketing assistance loan rate. (3) With respect to commodities harvested, excluding silage or hay, as other than grain and pledged as collateral for a nonrecourse marketing assistance loan, the marketing assistance loan rate shall be discounted to 30 percent of the base county loan rate. (4) With respect to farm-stored wheat, the basic county marketing assistance loan rate shall not be adjusted to reflect the protein content. (5) With respect to Segregation 2 and 3 peanuts as determined by CCC, the marketing assistance loan rate shall be discounted to 35 percent of the applicable loan rate. Sec. 1421.103 Approved storage. (a) Approved farm storage is: (1) A storage structure located on or off the farm, (excluding public warehouses that do not enter into an agreement with CCC), that CCC determines to be controlled by the producer which affords safe storage of collateral pledged for a marketing assistance loan; (2) If determined and announced to be available in a State or county, on ground storage and other temporary storage structures approved by CCC. (3) As determined by CCC, temporary approved storage may also include: (i) On-ground storage or; (ii) Other storage arrangements. (b) CCC may reduce the quantity of a commodity pledged as collateral for a loan made available under paragraph (a)(2) of this section to not more than 75 percent of such otherwise eligible quantity in order to protect the interests of CCC. CCC may also limit the length of time the commodity may be stored on-ground or in temporary structures to not more than 90 days. A marketing assistance loan made with respect to such commodity which is not moved to a structure specified in (a)(2) within 90 days of the date the loan was disbursed may be called by CCC. (c) Approved warehouse storage shall consist of a public warehouse for which a CCC storage agreement for the commodity is in effect that is approved by CCC for price support purposes. Such a warehouse is referred to in this by part as an approved warehouse. The names of approved warehouses may be obtained from the FSA, Kansas City Commodity Office, P.O. Box 419205, [[Page 422]] Kansas City, Missouri 64141-6205, from State and county offices, or at the FSA web site on the Internet. Sec. 1421.104 Marketing assistance loan making. (a)(1) The FSA county service center shall file or record, as required by State law, all security agreements that are issued with respect to commodities pledged as collateral for marketing assistance loans. (i) The cost of filing and recording shall be paid by CCC. (ii) The cost for terminating the financing statement before the end of the term shall be paid by the producer. (2) If there are any liens or encumbrances on the commodity, waivers that fully protect the CCC's interest must be obtained even though the liens or encumbrances are satisfied from the loan proceeds. No additional liens or encumbrances shall be placed on the commodity after the marketing assistance loan is approved. (b) Fees, charges, and interest must be paid by the producer to CCC at a rate CCC determines. Such fees, charges, and interest include: (1) A non-refundable loan service fee; (2) Interest that accrues on a loan under part 1405 of this chapter; (3) For each soybean crop, the producer as defined in the Soybean Promotion, Research and Consumer Information Act (7 U.S.C. Chapter 6301), shall remit to CCC an assessment that CCC determines when it acquires the commodity and shall be equal to one-half of 1 percent of the amount determined under Sec. 1412.112. (c) For peanuts, charges associated with warehouse stored loans including but not limited to storage and in charges, as determined by CCC are paid by CCC to the producer. (d) The cost of terminating a financing statement shall be paid by the producer. Sec. 1421.105 Farm-stored marketing assistance loans. (a) The producer of a commodity pledged as security for a farm- storage loan shall: (1) Certify the quantity of such commodity on the loan application, or; (2) Have such quantity measured by CCC at the measurement service rate established by CCC. (b) The State committee may establish a marketing assistance loan percentage not to exceed a percentage CCC establishes or it may apply quality discounts to the loan rate in each year for each commodity on a Statewide basis or for specified areas within the State. Before approving a county committee request to establish a different loan percentage, or to apply quality discounts, the State committee shall consider conditions in the State or areas within a State to determine if the marketing assistance loan percentage should be reduced below the maximum marketing assistance loan percentage or the quality discounts should be applied to the basic county marketing assistance loan rate to provide CCC with adequate protection. Marketing assistance loans disbursed based upon loan percentages previously lowered and loan rates adjusted for quality shall not be altered if conditions within the State or areas within the State change to substantiate removing such reductions. Percentages established or loan rates adjusted for quality under this section shall apply only to new marketing assistance loans and not to outstanding marketing assistance loans. In determining loan percentages or the necessity to apply quality discounts, the State committee shall consider any factor at its discretion, including the following: (1) General crop conditions; (2) Factors affecting quality peculiar to an area within the State; and (3) Climatic conditions affecting storability. (c) An eligible quantity of a commodity that is commingled with an ineligible quantity of the commodity is not eligible to be collateral for a marketing assistance loan unless the producer, when requesting a marketing assistance loan designates all structures that may be used for storage of the marketing assistance loan collateral. (1) In such cases, the producer is not required to obtain prior written approval from the county committee before moving marketing assistance loan collateral from one designated structure to another designated structure. [[Page 423]] (2) In all other instances, if the producer intends to move marketing assistance loan collateral from a designated structure to another undesignated structure, the producer must request prior approval from the county committee. Such approval shall be written and the eligible or ineligible commodity must be measured by a representative of the county office, at the producer's expense, before commingling. Prior to commingling, with respect to wool and mohair, a representative of the county committee may determine an average production of the wool and mohair in a manner approved by CCC. (d)(1) Two or more producers may obtain: (i) A single joint marketing assistance loan for commodities that are stored in the same farm storage facility; or (ii) Individual marketing assistance loans for their share of the commodity that is commingled in a farm storage facility with commodities owned by other producers if such other producers execute an agreement that provides that such producers shall obtain the permission of a representative of the county committee before removal of any quantity of the commodity from the storage facility. All producers who store a commodity in a farm storage facility in which commodities that have been pledged as collateral for a marketing assistance loan shall be liable for any damage incurred by CCC for the deterioration or unauthorized removal or disposition of such commodities. (2) In such cases, each producer must execute a note and security agreement with CCC, and each such producer shall be jointly and severally liable for the violation of the terms and conditions of the note and the requirements of this part. Each producer is also liable for repayment of the entire marketing assistance loan amount until the marketing assistance loan is fully repaid without regard to their share in the commodity pledged as collateral. In addition, such producer may not amend the note and security agreement for the producer's claimed share in such commodities, or marketing assistance loan proceeds, after execution of the note and security agreement by CCC. (e)(1) A producer, when requesting a marketing assistance loan, shall designate in writing specific storage structures. (2) The producer is not required to request prior approval before moving marketing assistance loan collateral between such designated structures. (3) Movement of marketing assistance loan collateral to any other structures not designated or the disposal of such loan collateral without prior written approval of the county committee, shall subject the producer to administrative actions. (4) The producer is responsible for any loss in quantity or quality of the farm-stored commodity pledged as collateral. (5) CCC shall not assume any loss in quantity or quality of the marketing assistance loan collateral for farm-stored loans. Sec. 1421.106 Warehouse-stored marketing assistance loan collateral. (a) A commodity may be pledged as collateral for a warehouse-stored marketing assistance loan in the quantity delivered to CCC for storage at a warehouse that meets standards for approval at part 1423 of this chapter. Such quantity shall be the net weight specified on the warehouse receipt or supplemental certificate. (b) Two or more producers may obtain a single joint marketing assistance loan for commodities stored in an approved warehouse if the warehouse receipt pledged as collateral is issued jointly to the producers. (c) If more than one producer executes a note and security agreement with CCC, each such producer shall be jointly and severally liable for the violation of the terms and conditions of the note and the regulations in this part. Each such producer shall also remain liable for repayment of the entire marketing assistance loan amount until the marketing assistance loan is fully repaid without regard to such producer's claimed share in the commodity pledged as collateral for the marketing assistance loan. In addition, such producer may not amend the note and security agreement with respect to [[Page 424]] the producer's claimed share in such commodities, or marketing assistance loan proceeds, after execution of the note and security agreement by CCC. (d) Handling and storage rates that CCC has approved to be deducted from marketing assistance loan proceeds are available in USDA State and county FSA service centers. Deductions shall be based upon entries on the warehouse receipt or supplemental certificate, but the storage rate shall not exceed the storage rate CCC has approved. No storage deduction shall be made if written evidence acceptable to CCC is submitted indicating that: (1) Storage charges through the maturity date have been prepaid; or (2) The producer has arranged with the warehouse operator for the payment of storage charges through the maturity date and the warehouse operator enters an endorsement in substantially the following form on the warehouse receipt: Storage arrangements have been made by the depositor of the commodity covered by this receipt through (date through which storage has been provided). No lien will be asserted by the warehouse operator against CCC or any subsequent holder of the warehouse receipt for the storage charges that accrued before the specified date. (e) The beginning date to be used for computing storage deductions on the commodity stored in an approved warehouse shall be the later of the following: (1) The date the commodity was received or deposited in the warehouse; (2) The date the storage charges start; or (3) The day following the date through which storage charges have been paid. (f) For hard red winter and hard red spring wheat tendered to CCC and stored in an approved warehouse, producers must obtain official protein content determinations or, as CCC determines is acceptable, protein content may be determined by mutual agreement between the producer and the warehouse operator. Costs of determinations shall not be paid by CCC. (g) For warehouse-stored peanuts, CCC will pay storage charges and in-charges and other fees as determined by CCC, to ensure proper storage of CCC loan collateral. The beginning date to be used for computing storage deductions on the CCC peanut loan collateral stored in an approved warehouse shall be the later of the following: (1) The date the commodity was received or deposited in the warehouse; (2) The date the storage charges start; or (3) The day following the date through which storage charges have been paid. (4) The date all required marketing assistance loan documents are received in the county office. Sec. 1421.107 Warehouse receipts. (a) Warehouse receipts tendered to CCC under Sec. 1421.3 for marketing assistance loans must meet the provisions of this section and all other provisions of this part, and CCC program documents. (b) Warehouse receipts must be issued in the name of the eligible producer or CCC. If issued in the name of the eligible producer, the receipt must be properly endorsed on its reverse side certifying that the crop is free of encumbrances in order for title to vest in the holder. Receipts must be issued by an approved warehouse and must represent a commodity that is deemed to be stored commingled. The receipts must be negotiable and must represent a commodity that is the same quantity and quality as the eligible commodity actually in storage in the warehouse of the original deposit. (c) If the receipt is issued for a commodity that is owned by the warehouse operator either solely, jointly, or in common with others, the fact of such ownership shall be stated on the receipt. In States where the pledge of warehouse receipts issued by a warehouse operator on the warehouse operator's commodity is invalid, the warehouse operator may offer the commodity to CCC for a marketing assistance loan if such warehouse is licensed under the U.S. Warehouse Act. (d) Each warehouse receipt or accompanying supplemental certificate representing a commodity stored in an approved warehouse that has a storage agreement with CCC shall indicate that the commodity is insured under such [[Page 425]] agreement. CCC shall not be responsible for the cost of such insurance. (e) A separate warehouse receipt must be submitted for each grade and class of any commodity tendered to CCC and, for rice, such receipt must also state the milling yield of the rice, and for wool, such receipts must also state the yield and micron of the wool. (f) With respect to peanuts, a warehouse receipt must be submitted exhibiting grade, type, and segregation for peanuts tendered to CCC. (g)(1) Each warehouse receipt, or a supplemental certificate (in duplicate) that properly identifies the warehouse receipt, must be issued under the applicable CCC storage agreement or the U.S. Warehouse Act, as applicable, and must indicate: (i) The name and location of the storing warehouse; (ii) The warehouse code assigned by CCC; (iii) The warehouse receipt number; (iv) The date the receipt was issued; (v) The type of commodity; (vi) The date the commodity was deposited or received; (vii) The date to which storage has been paid or the storage start date; (viii) Whether the commodity was received by rail, truck or barge; (ix) The amount per bushel, pound, or hundredweight of prepaid in or out charges; (x) The signature of the warehouse operator or the authorized agent; and (xi) For warehouses operating under a merged warehouse code agreement (KC-385), the location and county to which the producer delivered the commodity. (2) In addition to the information specified in paragraph (f)(1) of this section, additional commodity specific requirements shall be determined by CCC and be available at State and county offices and the Kansas City Commodity Office. (h) If a warehouse receipt indicates that the commodity tendered for loan grades ``infested'' or ``contains excess moisture'', or both, the receipt must be accompanied by a supplemental certificate in order for the commodity to be eligible for a marketing assistance loan. The grade, grading factors, and quantity to be delivered must be shown on the certificate as follows: (1) When the warehouse receipt shows ``infested'' and the commodity has been conditioned to correct the infested condition, the supplemental certificate must show the same grade without the ``infested'' designation and the same grading factors and quantity as shown on the warehouse receipt. (2)(i) When the warehouse receipt shows that the commodity contained excess moisture and the commodity has been dried or blended, the supplemental certificate must show the grade, grading factors, and quantity after drying or blending of the commodity. Such entries shall reflect a drying or blending shrinkage as provided in paragraph (g)(2)(iv) of this section. (ii) When a supplemental certificate is issued under paragraphs (g)(1) and (g)(2)(i) of this section, the grade, grading factors and the quantity shown on such certificate shall supersede the entries for such items on the warehouse receipt. (iii) If the commodity has been dried or blended to reduce the moisture content, the quantity specified on the warehouse receipt or the supplemental certificate shall represent the quantity after drying or blending. (iv) For commodities dried or blended under paragraph (g)(2)(iii) of this section, such quantity shall reflect a minimum shrinkage in the receiving weight excluding dockage: (A) For the following commodities, 1.3 times the percentage difference between the moisture content of the commodity received and the following percentages for the specified commodity: (1) Barley: 14.5 percent; (2) Corn: 15.5 percent; (3) Grain sorghum: 14.0 percent; (4) Oats: 14.0 percent; (5) Rice: 14.0 percent; (6) Soybeans: 14.0 percent; (7) Wheat: 13.5 percen; and (8) Peanuts: 10.0 percent. (B) For the following commodities, 1.1 times the percentage difference between the moisture content of the commodity received and the following percentages for the specified commodity: (1) Canola: 10.0 percent; (2) Flaxseed: 9.0 percent; [[Page 426]] (3) Mustard Seed: 10.0 percent; (4) Rapeseed: 10.0 percent; (5) Safflower Seed: 10.0 percent; (6) Sunflower Seed: 10.0 percent; (7) Crambe: 10.0 percent; and (8) Sesame Seed: 10.0 percent. (i)(1) If, under paragraph (g) of this section, a supplemental certificate is issued in connection with a warehouse receipt, such certificate must state that no lien for processing will be asserted by the warehouse operator against CCC or any subsequent holder of such receipt. (2) Warehouse receipts and the commodities represented by such receipts that are stored in an approved warehouse that is operating under a CCC storage agreement may be subject to a lien for warehouse charges as specified in the applicable storage agreement. For all commodities except peanuts, the producer who pledged such a receipt as collateral for a loan under this part shall pay to CCC all costs incurred by CCC as result of the existence of the lien. In no event shall a warehouse operator be entitled to satisfy such a lien by sale of the commodities when CCC is the holder of such receipt. (j) Warehouse receipts representing commodities that have been shipped by rail or by barge, must be accompanied by supplemental certificates completed under paragraph (f) of this section. Sec. 1421.108 Transfers and reconcentrations. (a) Upon request by the producer before transfer, the county committee may approve the transfer of a quantity of a commodity that is pledged as collateral for a farm-stored loan to a warehouse-stored loan at any time during the loan period. (1) Liquidation of the farm-stored loan or part thereof shall be made through the pledge of warehouse receipts for the commodity placed under warehouse-stored loan and the immediate payment by the producer of the amount by which the warehouse-stored loan is less than the farm- stored loan or part thereof and charges plus interest. The loan quantity for the warehouse-stored loan cannot exceed 110 percent of the loan quantity transferred from the farm-stored loan. (2) Any amounts due the producer shall be disbursed by the FSA county service center. (b) Upon request by the producer before the transfer, the county committee may approve the transfer of a warehouse-stored loan or part thereof to a farm-stored loan at any time during the marketing assistance loan period. Quantities pledged as collateral for a farm- stored loan shall be based on a measurement or a calculation of average production of wool and mohair, such measurement or calculation to be made by a representative of the county office before approving the farm- stored loan. The producer must immediately repay the amount by which the farm-stored loan is less than the warehouse-stored loan and charges plus interest on the shortage. The maturity date of the farm-stored loan shall be the maturity date applicable to the warehouse-stored loan that was transferred. (c) Upon the filing of the Reconcentration Agreement and Trust Receipt by the producer and warehouse operator, CCC may, during the marketing assistance loan period, approve the reconcentration in another CCC-approved warehouse for all or part of a commodity that is pledged as collateral for a warehouse-stored loan. Any such approval shall be subject to the terms and conditions in the Reconcentration Agreement and Trust Receipt. A producer may, before the new warehouse receipt is delivered to CCC, pay to CCC: (1) The principal amount of the marketing assistance loan and charges plus interest and applicable charges; or (2) If CCC so announces, an amount less than the principal amount of the marketing assistance loan and charges plus interest under the terms and conditions specified by CCC at the time the producer redeems the commodity pledged as collateral for such marketing assistance loan. Sec. 1421.109 Personal liability of the producer. (a) When a producer obtains a commodity marketing assistance loan, the producer agrees, in writing, not to: (1) Provide an incorrect certification of the quantity or make any fraudulent [[Page 427]] or erroneous representation for the marketing assistance loan; or (2) Remove or dispose of a quantity of commodity that is collateral for a CCC farm-stored loan without prior written approval from CCC. (3) The violation of the terms and conditions of the note and security agreement, will cause harm or damage to CCC in that funds may be disbursed to the producer for a quantity of a commodity that is not actually in existence or for a quantity on which the producer is not eligible. (b) Such violations as are referred to in paragraph (a)(3) of this section may include: (1) Incorrect certification; (2) Unauthorized removal; and (3) Unauthorized disposition. (c) The producer and CCC agree that it will be difficult, if not impossible, to prove the amount of damages to CCC for such violations. Accordingly, if the county committee determines that the producer has committed such violations, liquidated damages shall be assessed on the quantity of the commodity that is involved in the violation. (d) In the case of violations, if CCC determines the producer: (1) Acted in good faith when the violation occurred, liquidated damages will be assessed by multiplying the quantity involved in the violation by: (i) 10 percent of the marketing assistance loan rate applicable to the loan note for the first offense; or (ii) 25 percent of the marketing assistance loan rate applicable to the loan note for the second offense; or (2) Did not act in good faith about the violation, or for cases other than the first or second offense, liquidated damages will be assessed by multiplying the quantity involved in the violation by 25 percent of the marketing assistance loan rate applicable to the loan note. (e) For violations and the liquidated damages under paragraph (d)(1) of this section, the county committee shall: (1) Require repayment of the marketing assistance loan quantity removed or disposed of at the lesser of: (i) The applicable loan principal, and charges, plus interest, or: (ii) The announced alternative repayment rate in effect on date the violation occurred, plus 15 percent of the loan rate, or as otherwise determined by the Deputy Administrator, and (2) If the producer fails to pay such amount within 30 days from the date of notification, accelerate the marketing assistance loan in default and require repayment of all loan principal, charges, and interest. (f) For violations committed and the liquidated damages were assessed under paragraph (d)(2) of this section, the county committee shall call the loan involved in the violation, and require repayment of the entire loan principal, charges and interest. (g) The county committee may waive imposing liquidated damages if it determines that the violation was inadvertent, accidental, or unintentional. (h) If, for any violation, the county committee determines that CCC's interest is not or will not be protected, the county committee shall call all of the producer's farm-stored loans, and deny future farm-stored loans and loan deficiency payments without production evidence for 24 months after the date the violation is discovered. Depending on the severity of the violation, the county committee may deny future farm-stored loans and loan deficiency payments without production evidence for an additional period CCC designates. (i) If the county committee determines that the producer has committed a violation, the county committee shall notify the producer in writing that: (1) The producer has 30 calendar days to provide evidence and information regarding the circumstances that caused the violation, to the county committee; and (2) Administrative actions will be taken. (j) If the loan is accelerated, the producer may not repay the loan at the lower alternative loan repayment rate and may not utilize commodity certificate exchanges, unless authorized by CCC. (k) Producers rejected for a farm-stored loan under this section may apply for a warehouse-stored loan. [[Page 428]] (l) The loan plus other charges shall be payable to CCC upon demand if a producer: (1) Makes any fraudulent representation in obtaining a marketing assistance loan, maintaining, or settling a loan; or (2) Disposes or moves the loan collateral without the approval of CCC. (m) A producer shall be personally liable for damages resulting from a commodity delivered to or removed by CCC containing mercurial compounds, toxin producing molds, or other substances poisonous or harmful to humans or animals or property. (n) If the amount disbursed under a marketing assistance loan or in settlement thereof, exceeds the amount authorized by this part, the producer shall be liable for repayment of such excess and charges, plus interest. (o) If the amount collected from the producer in satisfaction of the marketing assistance loan is less than the amount required under this part, the producer shall be personally liable for repayment of the amount of such deficiency and charges, plus interest. (p) In the case of joint loans or loan deficiency payments, the personal liability for the amounts specified in this section shall be joint and several on the part of each producer signing the note or loan deficiency payment application. (q) Any or all of the liquidated damages assessed may be waived as determined by CCC. [67 FR 63511, Oct. 11, 2002, as amended at 68 FR 67939, Dec. 5, 2003] Sec. 1421.110 Repayments. (a) CCC may allow a producer to repay a nonrecourse marketing assistance loan at a rate that is the lesser of: (1) The loan rate and charges, plus interest determined for a crop; or (2) The prevailing world market price, as determined by CCC, for rice or the alternative repayment rate for all other commodities, as determined by CCC. (b)(1) On a form prescribed by CCC, a producer may request to lock in the applicable repayment rate for a period of: (i) 60 calendar days; or (ii) not less than 14 calendar days before the maturity date of the loan, but not both. (2) The request to lock in the applicable repayment rate must be received in the FSA county service center that disbursed the loan. (3) The repayment rate that is locked in is the rate in effect when the request to lock in is approved. (4) The repayment rate may be locked in on outstanding farm-stored or warehouse-stored loans. (5) The repayment rate that is locked in will expire the earlier of: (i) 60 calendar days from date of approval, or; (ii) 14 calendar days before loan maturity. (6) The requests can only be completed one time for a designated quantity. (7) The requests can be made in person or by facsimile. (8) The requests cannot be canceled, terminated, or changed after approval. (9) The locked-in applicable repayment rate will not transfer to any loan disbursed outside of the originating county where the commodity was stored. (10) Once a repayment rate is locked in it cannot be extended. (c) If a producer fails to repay a marketing assistance loan within the time prescribed by CCC under the terms and conditions of the request to lock in a market loan repayment rate, the producer may repay the loan: (1) On or before maturity, at the lesser of: (i) Principal plus interest as determined by CCC; (ii) The repayment rate in effect on the day the repayment is received in the FSA county service center. (2) After maturity at principal plus interest. (d) When the proceeds of the sale of the commodity are needed to repay all or a part of a farm-stored loan, the producer must request and obtain prior written approval on a CCC approved form and comply with the terms and conditions of such form, to remove a specified quantity of the commodity [[Page 429]] from storage. Approval does not constitute release of CCC's security interest in the commodity or release of producer liability for amounts due CCC for the marketing assistance loan indebtedness if payment in full is not received by the county office. Failure to repay a marketing assistance loan within the time period prescribed by CCC in the case of a farm-stored loan and delivery of the pledged collateral to a buyer, is a violation of the agreement. In the case of such violation, the producer must repay the loan principal and interest or another amount as determined by the Deputy Administrator, FSA, under Sec. 1421.109. (e) The producer may obtain county committee approval of a release of all or part of pledged collateral for a warehouse-stored loan at or before the maturity of such loan by paying to CCC: (1) The principal amount of the marketing assistance loan and charges plus interest, or (2) An amount less than the principal amount of the marketing assistance loan and charges plus interest under the terms and conditions specified by CCC at the time the producer redeems the collateral for such loan. (f) A partial release of marketing assistance loan collateral must cover all of the commodity represented by one warehouse receipt. Warehouse receipts redeemed by repayment of the marketing assistance loan shall be released only to the producer. However, such receipt may be released to persons designated in a written authorization that is filed with the county office by the producer within 15 days before the date of repayment. (g) The note and security agreement shall not be released until the marketing assistance loan has been satisfied in full. (h)(1) If the commodity is moved from storage without obtaining prior approval to move such commodity, such removal shall constitute unauthorized removal or disposition, as applicable under Sec. 1421.109(b), unless the removal occurred on a non-workday and the producer notified the county office on the next workday of such removal. (2) Any loan quantities involved in a violation of Sec. 1421.109 must be repaid under Sec. 1421.109(e). Sec. 1421.111 Commodity certificate exchanges. (a) For any outstanding marketing assistance loan, a producer may purchase a commodity certificate and exchange that commodity certificate for the marketing assistance loan collateral. (b) The exchange rate is the lessor of: (1) The loan rate and charges, plus interest applicable to the loan; (2) The prevailing world market price, as determined by CCC, for rice or the alternative repayment rate for all other commodities, as determined by CCC. (c) Commodity certificate exchanges may not be used when locking in a repayment rate under Sec. 1421.110. (d) Producers must request a commodity certificate exchange in person at the FSA county service center that disbursed the marketing assistance loan by: (1) Completing a written request as CCC determines. (2) Purchasing a commodity certificate for the exact amount required to exchange the marketing assistance loan collateral. (3) Immediately exchanging the purchased commodity certificate for the outstanding loan collateral. Sec. 1421.112 Loan settlement. (a) The value of the settlement of marketing assistance loan shall be made by CCC on the following basis: (1) For nonrecourse marketing assistance loans, the schedule of premiums and discounts for the commodity provided that: (i) If, the value of the collateral at settlement is less than the amount due, the producer shall pay to CCC the amount of such deficiency and charges, plus interest on such deficiency; or (ii) If, the value of the collateral at settlement is greater than the amount due, such excess shall be retained by CCC and CCC shall have no obligation to pay such amount to any party. (2) For recourse marketing assistance loans, the proceeds from the sale of the commodity provided that: [[Page 430]] (i) If, the value of the collateral at settlement is less than the amount due, the producer shall pay to CCC the amount of such deficiency and charges, plus interest on such deficiency; or (ii) If, the proceeds received from the sale of the commodity are greater than the sum of the amount due, plus any cost incurred by CCC in conducting the sale of the commodity, the amount of such excess shall be paid to the producer or, if applicable, to a secured creditor of the producer. (3) If CCC sells the commodity described in paragraphs (a)(1) or (a)(2) of this section in settlement of the marketing assistance loan, the sales proceeds shall be applied to the amount owed CCC by the producer. The producer shall be responsible for any costs incurred by CCC in completing the sale. CCC may deduct such amount from the sales proceeds. (b) Settlements made by CCC for eligible commodities that are acquired by CCC and that are stored in an approved warehouse shall be made on the basis of the entries in the applicable warehouse receipt, supplemental certificate, and accompanying documents. (c) Settlements made by CCC for peanuts acquired by CCC and stored in an approved warehouse shall be based on the settlement value at the time of the loan disbursement and the entries in the applicable warehouse receipt, supplemental certificate, and accompanying documents subject to adjustments for changes in quality and other factors. (1) All eligible commodities that are stored in other than approved warehouses shall be delivered to CCC as CCC instructs. Settlement shall be based on entries in the applicable warehouse receipt, supplemental certificate, and accompanying documents. (2) For eligible loan commodities that are delivered from other than an approved warehouse, settlement shall be made by CCC on the basis of the basic marketing assistance loan rate that is in effect for the commodity at the producer's customary delivery point, as determined by CCC. (d) In all cases, settlements may be adjusted for changes in quality and other factors affecting the value of the commodity. Sec. 1421.113 Foreclosure. (a)(1) Upon maturity and nonpayment of a warehouse-stored loan, title to the unredeemed collateral securing the marketing assistance loan shall immediately vest in CCC. (2) Upon maturity and nonpayment of a farm-stored marketing assistance loan, title to the unredeemed collateral shall automatically transfer to CCC upon CCC demand. (3) When CCC acquires title to the unredeemed collateral, CCC shall not pay for any market value that such collateral may have in excess of the marketing assistance loan indebtedness, (the unpaid amount of the note and charges plus interest). (b) If the total amount due on a farm-stored loan (the unpaid amount of the note plus charges, and interest) is not satisfied upon maturity, CCC may remove the commodity from storage, and assign, transfer, and deliver the commodity or documents evidencing title thereto when, how, and upon terms as CCC determines. Disposition may also be effected without removing the commodity from storage. The commodity may be processed before sale and CCC may become the purchaser of the whole or any part of the commodity at either a public or private sale. (1) The value of settlement for a farm-stored commodity removed by CCC from storage and shall be as provided in Sec. 1421.112. (2) If a deficiency exists after the collateral is sold, a claim for such deficiency will be established in accordance with part 1403 of this title. Sec. 1421.115 Recourse marketing assistance loans. (a) CCC shall make recourse marketing assistance loans available to eligible producers of high moisture corn, high moisture grain sorghum and other eligible loan commodities as determined by the Deputy Administrator, Farm Programs. (b) Repayment must be paid in full on or before the loan maturity date. (c) Recourse marketing assistance loan collateral may not be delivered or forfeited to CCC in satisfaction of the loan indebtedness. [[Page 431]] Subpart C_Loan Deficiency Payments Source: 67 FR 63511, Oct. 11, 2002, unless otherwise noted. Sec. 1421.200 Applicability. (a) During the loan availability period, loan deficiency payments will be made available to eligible producers when the alternative repayment rate is less than the applicable county loan rate. (b) To be eligible to receive loan deficiency payments a producer must: (1) Comply with all marketing assistance loan eligibility including beneficial interest requirements. (2) Agree to forgo obtaining such loan, if applicable; and (3) File in person, by mail or electronically a request for payment on a form prescribed by CCC; and (4) Otherwise comply with all program requirements. (c) A producer must submit a completed request for: (1) A field direct loan deficiency payment to CCC on or before the date of harvesting or shearing a quantity of an eligible commodity, provided further that the producer must have beneficial interest in such quantity on the date the commodity is harvested or sheared. (2) A field direct loan deficiency payment to CCC for unshorn pelts on or before the date of slaughter of the quantity of live lambs, before the loss by the producer of beneficial interest in the lamb and the unshorn pelt produced from such lamb. (3) All other types of loan deficiency payment requests after harvest or shearing and before beneficial interest is lost in the commodity, but not later than the loan availability date. (d) For unshorn pelts, the lamb must be owned for a period of not less than 30 days in advance of the application and sold for immediate slaughter or slaughtered for personal use. Producers must submit acceptable production evidence to CCC under Sec. 1421.12 at the time of request. Producers who do not sell lambs for immediate slaughter are ineligible for a loan deficiency payment. Sec. 1421.201 Loan deficiency payment rate. (a) The loan deficiency payment rate for a crop shall be the amount by which the loan rate for the crop exceeds the rate at which CCC has announced that producers may repay their loans under Sec. 1421.10. (b) Such rate shall be the amount determined: (1) For loan deficiency payments other than field direct: (i) On the day the producer submits a completed request for a loan deficiency payment to the FSA county service center; (ii) Using the rate in effect for the FSA county service center where the commodity is stored. (2) For field direct loan deficiency payments: (i) On the date the commodity was delivered to the processor, buyer, warehouse or CMA; (ii) Using the rate in effect for the FSA county service center where the farm records are kept. (3) For rice loan deficiency payments, the adjusted world price under Sec. 1421.10(c). (c) The loan deficiency payment applicable to such crop shall be computed by multiplying the loan deficiency payment rate, as determined under paragraph (b) of this section, by the quantity of the crop the producer is eligible to pledge as collateral for a nonrecourse loan for which the loan deficiency payment is requested. Sec. 1421.202 Loan deficiency payment quantity. (a) A loan deficiency payment may be based on 100 percent of the net eligible quantity specified on acceptable evidence of production of the commodity certified as eligible for loan deficiency payment if such production evidence is provided for such commodity under Sec. 1421.12. (b) Two or more producers may obtain a single joint loan deficiency payment for commodities that are stored in the same storage facility. Two or more producers may obtain individual loan deficiency payments for their share of the commodity that is stored commingled in a farm storage facility [[Page 432]] with commodities for which a loan deficiency payment has been requested and shall be liable for any damage incurred by CCC for incorrect certification of such commodities under Sec. 1421.203. (c) Two or more producers may obtain a single joint loan deficiency payment for commodities that are stored in an approved or unapproved warehouse if the acceptable documentation representing an eligible commodity for which a loan deficiency payment is requested is completed jointly for such producers. Sec. 1421.203 Personal liability of the producer. (a) When a producer requests a loan deficiency payment, the producer agrees: (1) When signing the Loan Deficiency Payment Application and Certification or the Direct Loan Deficiency Payment Agreement, as applicable, that the producer will not provide an incorrect certification of the quantity or make any fraudulent representation for loan deficiency payment purpose; and (2) That violation of the terms and conditions of the loan deficiency payment request, as applicable, will cause harm or damage to CCC in that funds may be disbursed to the producer for a quantity of a commodity that is not actually in existence or for a quantity on which the producer is not eligible, if CCC determines that the producer has violated the terms and conditions of the applicable forms prescribed by CCC, liquidated damages shall be assessed on the quantity of the commodity that is involved in the violation. (b) If CCC determines that the producer: (1) Acted in good faith when the violation occurred, liquidated damages will be assessed by multiplying the quantity involved in the violation by: (i) 10 percent of the loan deficiency payment rate for the first offense; or (ii) 25 percent of the loan deficiency payment rate for the second offense. (2) Did not act in good faith about the violation, or for cases other than the first or second offense, liquidated damages will be assessed by multiplying the quantity involved in the violation by 25 percent of the loan deficiency payment rate. (c) For violations to which paragraph (b)(1) of this section applies, the producer must repay the loan deficiency payment applicable to the loan deficiency quantity incorrectly certified, and charges, plus interest applicable to the amount repaid. If the producer fails to pay such amounts within 30 days from the date of notification, the producer must repay the entire loan deficiency payment and charges plus interest. (d) For violations to which paragraph (b)(2) of this section applies, the producer shall repay of the entire loan deficiency payment and charges plus interest. (e) CCC may waive the liquidated damages taken applicable to paragraph (b) of this section if the CCC determines that the violation occurred inadvertently, accidentally, or unintentionally. (f) If, for any violation to which paragraph (b) of this section applies, the county committee determines that CCC's interest is not or will not be protected, the county committee shall: (1) Call the producer's farm-stored loans; (2) Deny future farm-stored loans for the current and 2 following crop years; (3) Deny loan deficiency payments for the current and 2 following crop years unless production evidence is presented to CCC. Depending on the severity of the violation, the county committee may deny future farm-stored loan and loan deficiency payments without production evidence. (g) If the county committee determines that the producer has committed a violation, the county committee shall notify the producer in writing that: (1) The producer has 30 calendar days to provide evidence and information regarding the circumstances that caused the violation, to the county committee; and (2) Administrative action will be taken under this section. (h) If the amount disbursed under loan deficiency payments exceeds the amount authorized by this part, the producer shall be liable for repayment [[Page 433]] of such excess and charges, plus interest. (i) In the case of joint loan deficiency payments, the personal liability for the amounts specified in this section shall be joint and several on the part of each producer signing the loan deficiency payment application. (j) Any or all of the liquidated damages assessed under the provisions of paragraph (b) of this section may be waived as determined by CCC. Subpart D_Grazing Payments for 2002-2007 Crop of Wheat, Barley, Oats and Triticale Source: 66 FR 13404, Mar. 6, 2001, unless otherwise noted. Redesignated at 67 FR 63511, Oct. 11, 2002. Sec. 1421.300 Applicability. (a) The regulations in this subpart are applicable to the 2002-2007 crops of eligible acreage planted to wheat, barley, oats or triticale that is grazed by livestock and not harvested in any other manner. This subpart sets forth the terms and conditions under which a grazing payment in lieu of a loan deficiency payment will be made by CCC. (b) The form that is used in administering these payments is available in State and county FSA offices and shall be prescribed by CCC. [66 FR 13404, Mar. 6, 2001. Redesignated and amended at 67 FR 63511, 63523, Oct. 11, 2002] Sec. 1421.301 Administration. (a) This subpart shall be administered by the Farm Service Agency (FSA) under the general direction and supervision of the Executive Vice President, CCC or designee. The program shall be carried out in the field by State and county FSA employees under the general direction and supervision of the State and county FSA 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 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 Executive Vice President, CCC, or a designee, from determining any question arising under the program or from reversing or modifying any determination made by a State or county committee. (e) The Deputy Administrator for Farm Programs (DAFP), 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. In addition, DAFP may establish other conditions for payments that will assist in achieving the goals of the program and may include such provisions in the program agreement or other program documents. Sec. 1421.302 Definitions. The definitions set forth in this section shall be applicable for all purposes of program administration under this subpart: COC means the FSA county office committee. CCC means the Commodity Credit Corporation. Department means the United States Department of Agriculture. Deputy Administrator means the Deputy Administrator for Farm Programs, Farm Service Agency (FSA) or a designee of that person. FSA means the Farm Service Agency of the Department. Secretary means the Secretary of the United States Department of Agriculture, or the Secretary's delegate. STC means the FSA State committee. [[Page 434]] Sec. 1421.303 Eligible producer and eligible land. (a) To be an eligible producer for a payment under this subpart, the person must be a producer of wheat, barley, oats, or triticale in the 2002 through 2007 crop years. Also, to be an eligible producer, the person must meet all other qualifications for payment that are set out in this subpart, set out in parts 12, 718, 1400, and 1405 of this title. A person will not be considered the producer of the crop unless that person was responsible for the planting of the crop and had the risk of loss in the crop at all times, including, at the time of planting and the time of the request for a payment under, this subpart. (b) A minor may participate in the program if the right of majority has been conferred on the minor by court order or by statute, or if the minor participates through a guardian authorized to act on the minor's behalf in these matters. Alternatively, a minor may participate if the program documents are all signed by an acceptable (to CCC) guarantor or if bond, acceptable to CCC, is provided by a surety. (c) For the crop to be eligible, the crop, in addition to other standards that may apply, must be grown on land that is classified as ``cropland'' in FSA farm records or on land that FSA determines has been cropped in the last 3 years except that the land may also qualify if the land is committed to a crop rotation, normal for the locality, that includes harvesting the subject crop for grain. These rules are designed to assure, to the extent practicable, the available payment did not produce plantings that otherwise would not have occurred and the CCC may deny payments in any instance in which there is reason to believe that the planting was done for that purpose. To that end, if the commodity involved has not been previously grown by the producer or is not one which is not predominately produced locally, the producer must submit evidence of seed purchases for planting the commodities and other evidence deemed needed or appropriate by the COC in order to assure that the program goals are made and that the land was not planted to an eligible commodity simply to obtain a payment. Also, the land to be eligible must, for the year involved, be grazed and cannot, during the crop year, be harvested at any time for any purpose, except as determined by the Deputy Administrator to accommodate producers with a history of double-cropping when the crop to be harvested is not the crop for which a payment is to be made under this subpart. Land will be considered grazed only to the extent that the crop on the land is consumed in the field as live plants by livestock for the normal period of time for grazing in the area. (d)(1) A producer must, at the time of the agreement made under this part to obtain a payment, meet all other eligible criteria for obtaining loan deficiency payments. (2) For producers of triticale who obtain a payment under this subpart the producer must enter into an agreement with CCC to forgo any harvesting of triticale on the acreage for which such a payment is made. (e)(1) No payment will be made if the crop could not have been harvested because of weather conditions or any other reason. (2) The producer must retain the control, title and risk of loss in the commodity for which the payment is sought from the date of planting through the date on which mechanical harvesting of the crop would normally occur. (f) Producers who elect to graze 2002-2007 crop wheat, barley, oats, or triticale will not be eligible for an indemnity under the Federal Crop Insurance Program provision of Chapter IV of this title or a payment under Noninsured Crop Assistance Program authorized under part 1437 of this chapter. [66 FR 13404, Mar. 6, 2001. Redesignated and amended at 67 FR 63511, 63523, Oct. 11, 2002] Sec. 1421.304 Time and method for application. Application for the program provided in this subpart must be received, at the county office that is responsible for administering programs for the farm, no earlier than the date on which eligible crops would normally be harvested and no later than the final loan availability date as determined in accordance with [[Page 435]] Sec. 1421.5. The application must describe the land to be grazed and, in accordance with standards set by CCC, the tract/field location. The COC will determine the first harvest date which shall take into account the date on which such crops are, locally, normally harvested for any purpose. Where multiple producers are involved, the form must reflect each producer's share in the crop. No producer must receive payments under this subpart except to the extent that the payments are commensurate with that share. Should a person who is entitled to receive a payment under this subpart die, that payment, as earned, may be made to other persons as provided for in the rules set out in part 707. Third parties may also receive payments to the extent provided for in that part for other situations involving an incapacitation of the producer. Refusals to allow CCC to verify information on any form or report utilized for this subpart can result in program ineligibility and producers must provide CCC and its agent to the property involved and to all records as may be relevant to the making of payments under this subpart. Further, false statements will disqualify the producer from the program and may be subject to other sanctions including criminal sanctions. [66 FR 13404, Mar. 6, 2001. Redesignated and amended at 67 FR 63511, 63524, Oct. 11, 2002] Sec. 1421.305 Payment amount. (a) The grazing payment rate shall be the loan deficiency payment in effect for the farm on the date which the producer submits a complete program application to CCC. For triticale, the loan deficiency payment rate will be equal to the rate for the predominant class of wheat in the county where the farm is located in effect as of the date of the application is filed. (b) The payable units of production shall be computed by multiplying the eligible grazed acres by the applicable yield determined under paragraph (c) of this section. (c) The payment yield shall be the yield in effect for the calculation of direct payments under part 1412 of this chapter. In a case of a farm for which a farm program payment yield is unavailable for a covered commodity, an appropriate payment yield for the covered commodity on the farm will be determined by CCC taking into consideration the farm program payment yields applicable to the commodity using three (3) similar farms. For triticale, the payment yield shall be the yield for wheat from three (3) similar farms in that county. (d) No payment may be received or retained under this subpart to the extent that the payment, were they considered to be LDP's, would place that person over the per person per year payment limit that applies to LDP's. The producer agrees that the CCC may collect any payment considered to be an overpayment by reason of this subsection by withholding LDP payments until the matter is resolved, by treating the LDP as being not payable to the extent that a grazing refund would otherwise be due , by setoff, or by any other means available to CCC. (e) Payments can be withheld until the actual grazed acreage is verified and justified in connection with any other reports filed with FSA with respect to the farm (or filed with some other person or agency) and until all other necessary information is obtained. The CCC may require such other verification as it deems appropriate to assure that the program goals are met. (f) To receive the payment, the eligible producer must submit a request for payment on an application form as prescribed by CCC or FSA. The application may be obtained from the county FSA office, or from the USDA or FSA web site in the Internet. The form must be submitted to the county by the close of business on or before March 31 of the applicable crop year. (g) The producer will ineligible for payments under this subpart if any discrepancies between the reported acreage on the program form and other reports of acreage by the producer are not resolved by a date set by the CCC. (h) Unless otherwise authorized by the Deputy Administrator, all payment shall be made no later than September 28, 2001. [66 FR 13404, Mar. 6, 2001. Redesignated and amended at 67 FR 63511, 63524, Oct. 11, 2002] [[Page 436]] Sec. 1421.306 Misrepresentation and scheme or device. (a) A producer shall be ineligible to receive payments under this subpart if it is determined by DAFP, 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 subpart to a producer engaged in a misrepresentation, scheme, or device, or to any other person as a result of the producer's actions, shall be refunded with interest together with such other sums as may become due. Any producer engaged in acts prohibited by this section and any person receiving payment under this subpart, as a result of such acts, shall be jointly and severally liable for any refund due under this section and for related charges. The remedies provided in this subpart shall be in addition to other civil, criminal, or administrative remedies which may apply. Sec. 1421.307 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 this application, or this subpart, and if any refund of a payment to CCC shall become due for that or other reason in connection with the application, or this subpart, all payments made under this subpart to any producer shall be refunded to CCC together with interest as determined in accordance with paragraph (c) of this section and late-payments charges as provided for in part 1402 of this chapter. (b) All persons listed on an application shall be jointly and severally liable for any refund due in connection with that application and for any related charges which may be determined to be due for any reason. (c) Interest shall be applicable to refunds required of the producer. Such interest shall be charged at the rate of interest which the United States Treasury charges CCC for funds, as of the date CCC made such benefits available. Such interest shall accrue from the date such benefits were made available to the date of repayment but the interest rate shall increase to reflect any increase in the rate charged to CCC by Treasury for any percent of time for which the interest assessment is collected. CCC may waive the accrual of interest if CCC determines that the cause of the erroneous determination was not due to any action of the producer. (d) Late payment interest shall be assessed on refunds in accordance with the provisions of, and subject to the rates in 7 CFR part 1403. (e) Producers must refund to CCC any excess payments made by CCC with respect to any application in which they have an interest. Such refund shall be subject to interest at the same rate that applies to other refunds. Subpart E_Standards for Approval of Warehouses for Grain, and Similarly Handled Commodities Source: 44 FR 67078, Nov. 23, 1979, unless otherwise noted. Redesignated at 67 FR 63511, Oct. 11, 2002. Sec. 1421.5551 General statement and administration. (a) This subpart prescribes the requirements which must be met and the procedures which must be followed by a warehouseman in the United States or Puerto Rico who desires the initial or continuing approval by the Commodity Credit Corporation (hereinafter referred to as ``CCC'') of warehouse(s) for the storage and handling of: (1) Wheat, oats, corn, rye, barley, sorghums, flaxseed, soybeans, sunflower seed, canola, rapeseed, safflower, mustard, and such other oilseeds as the Secretary may determine under a Uniform Grain Storage Agreement (which commodities are hereinafter referred to as ``grain''), (2) Rough rice under a Uniform Rice Storage Agreement, (3) Milled rice under a Milled Rice Storage Agreement, (4) Dry Edible Beans under a Bean Storage Agreement, and [[Page 437]] (5) Seed under a Seed Storage Agreement, which are owned by CCC or held by CCC as security for price support loans. This subpart is not applicable to grain, rough and milled rice, dry edible beans, and seed purchased in store for prompt shipment or to handling operations of a temporary nature. (b) Copies of the CCC storage agreement and forms required for obtaining approval under this subpart may be obtained from the Kansas City Commodity Office, U.S. Department of Agriculture, P.O. Box 205, Kansas City, Missouri 64141 (hereinafter referred to as the ``KCCO''). (c) A warehouse must be approved by KCCO and a storage contract or agreement must be in effect between CCC and the warehouseman before CCC will use such warehouse. The approval of a warehouse or the entering into of a storage contract or agreement does not constitute a commitment that CCC will use the warehouse, and no official or employee of the U.S. Department of Agriculture is authorized to make any such commitment. (d) A warehouseman, when applying for approval under this subpart, shall submit to CCC at KCCO: (1) A completed Form CCC-24, ``Application for Approval of Warehouse for Grain, Rice, Dry Edible Beans, and Seed'', and a completed Form CCC- 24-1, ``Supplement to Application for Approval of Warehouse for Grain, Rice, Dry Edible Beans, and Seed'', (2) A current financial statement prepared in accordance with generally accepted accounting principles meeting the following requirements: (i) Each financial statement shall include, but not be limited to the following: (A) A balance sheet; (B) A statement of income (profit and loss); (C) Statement of retained earnings; and (D) A statement of changes in the financial position. (ii) Each financial statement shall be accompanied by one of the following: (A) A report of audit or review conducted by an independent CPA or an independent public accountant in accordance with standards established by the American Institute of Certified Public Accountants. The accountant's report of audit or review shall include the accountant's certifications, assurances, opinions, comments, and notes with respect to such financial statement, or (B) A compilation report of the financial statement which is prepared by a grain commission firm or a management firm if such firm has been authorized by the Deputy Vice President, CCC (Deputy Administrator, Commodity Operations, FSA) to provide a compilation report of financial statements of warehousemen. (iii) All financial statements shall be accompanied by a certification by the chief executive officer of the warehouseman, under penalty of perjury, that the financial statement(s) accurately reflects the financial condition of the warehouseman for the period specified in such statement. (iv) A current financial statement on Form WA-51-2, ``Financial Statement'', supported by such supplemental schedules as CCC may request. Financial statements may be submitted on forms other than Form WA-51-2 with approval of the Director, KCCO, or the Director's designee. (v) Only one financial statement is required for a chain of warehouses owned or operated by a single business entity. If approved by the Director, KCCO, or the Director's designee, the financial statement of a parent company, which includes the financial position of a wholly- owned subsidiary, may be used to meet the CCC standards for approval for the wholly-owned subsidiary. (3) Evidence that the warehouseman is licensed by the appropriate licensing authority as required under Sec. 1421.5552(a)(2) and such other documents or information as CCC may require. (e) The provisions of paragraph (d)(2) of this section shall also be applicable to warehousemen who have an existing storage contract with CCC. Such warehousemen with existing storage contracts shall submit their financial statements to CCC in the manner prescribed reflecting their financial condition as of the close of the warehouseman's fiscal or calendar [[Page 438]] year's operation, whichever is applicable. Thereafter, the financial statements and the audit, review or compilation reports shall be furnished annually to reflect the warehouseman's fiscal or calendar year's operation, whichever is applicable, and at such other times as may be required by the AMS or CCC. [44 FR 67078, Nov. 23, 1979, as amended at 47 FR 22502, May 25, 1982; Amdt. 4, 50 FR 29640, July 22, 1985; 56 FR 46371, Sept. 12, 1991] Sec. 1421.5552 Basic standards. Unless otherwise provided in this subpart, each warehouseman and each of the warehouses owned or operated by such warehouseman for which CCC approval is sought for the storage or handling of CCC owned or loan commodities shall meet the following standards: (a) The warehouseman shall: (1) Be an individual, partnership, corporation, association, or other legal entity engaged in the business of storing or handling for hire, or both, the applicable commodity. The warehouseman, if a corporation, shall be authorized by its charter to engage in such business, (2) Have a current and valid license for the kind of storage operation for which the warehouseman seeks approval if such a license is required by State or local laws or regulations, (3) Have a net worth which is the greater of $50,000 or an amount which is computed by multiplying the maximum storage capacity of the warehouse (the total quantity of the commodity which the warehouseman desires to store and which the warehouse can accommodate when stored in the customary manner) under the approved contract with CCC times twenty- five (25) cents per bushel in the case of grain, fifty (50) cents per hundredweight in the case of rough rice, eighty-five (85) cents per hundredweight in the case of milled rice, and sixty (60) cents per hundredweight in the case of dry edible beans. In the case of seed, the net worth of the warehouseman shall be at least equal to an amount which is computed by multiplying the estimated number of pounds of seed to be stored times seven (7) cents per pound. If this calculated net worth requirement exceeds $50,000, the warehouseman may satisfy any deficiency in net worth between the $50,000 minimum requirement and such calculated net worth requirement by furnishing bonds, irrevocable letters of credit, or other acceptable substitute security meeting the requirements of Sec. 1421.5553. (4) Have available sufficient funds to meet ordinary operating expenses, (5) Have satisfactorily corrected upon request by CCC, any deficiencies in the performance of any storage contract or agreement with CCC, (6) Maintain accurate and complete inventory and operating records, (7) Use only prenumbered warehouse receipts and scale tickets, (8) Have available at the warehouse adequate and operable firefighting equipment for the type of warehouse and applicable stored commodity, and (9) Have a work force and equipment available to complete load out within sixty (60) working days of that quantity of grain, rice, beans, or seed for which the warehouse is or may be approved under the Uniform Grain Storage Agreement, Uniform Rice Storage Agreement, Milled Rice Storage Agreement, Bean Storage Agreement, or Seed Storage Agreement. Notwithstanding the provisions of this paragraph, the load out capacity of any warehouse at a single location need not exceed the equivalent of 200 railroad cars per day. (b) The warehouseman, officials, or supervisory employees of the warehouseman in charge of the warehouse operations shall have the necessary experience, organization, technical qualifications, and skills in the warehousing business regarding the applicable commodities to enable them to provide proper storage and handling services. (c) Warehouseman, officials, and each of the supervisory employees of the warehouseman in charge of the warehouse operations shall: (1) Have a satisfactory record of integrity, judgment, and performance, and (2) Be neither suspended nor debarred under applicable CCC suspension and debarment regulations. (d) The warehouse shall: (1) Be of sound construction, in good state of repair, and adequately [[Page 439]] equipped to receive, handle, store, preserve, and deliver the applicable commodity, (2) Be under the control of the contracting warehouseman at all times, and (3) Not be subject to greater than normal risk of fire, flood, or other hazards. [44 FR 67078, Nov. 23, 1979, as amended by Amdt. 4, 50 FR 29640, July 22, 1985; 51 FR 32627, Sept. 15, 1986; 55 FR 11572, Mar. 29, 1990] Sec. 1421.5553 Bonding requirements for net worth. A bond furnished by a warehouseman under this subpart must meet the following requirements: (a) Such bond shall be executed by a surety which: (1) Has been approved by the U.S. Treasury Department, and (2) Maintains an officer or representative authorized to accept service of legal process in the State where the warehouse is located. (b) Such bond shall be on Form CCC-33, ``Warehouseman's Bond'', except that a bond furnished under State law (statutory bond) or under operational rules of nongovernmental supervisory agencies may be accepted in an equivalent amount as a substitute for a bond running directly to CCC if: (1) CCC determines that such bond provides adequate protection to CCC, (2) It has been executed by a surety specified in paragraph (a) of this section or has a blanket rider and endorsement executed by such a surety with the liability of the surety under such rider or endorsement being the same as that of the surety under the original bond, and (3) It is noncancellable for not less than ninety (90) days or includes a rider providing for not less than ninety (90) days' notice to CCC before cancellation. Excess coverage on a substitute bond for one warehouse will not be accepted or applied by CCC against insufficient bond coverage on other warehouses. (c) Cash and negotiable securities offered by a warehouseman may be accepted by CCC in lieu of the equivalent amount of required bond coverage. Any such cash or negotiable securities accepted by CCC will be returned to the warehouseman when the period for which coverage was required has ended and there appears to CCC to be no liability under the storage contract or agreement. (d) A legal liability insurance policy may be accepted by CCC in lieu of the required amount of bond coverage provided such policy contains a clause or rider making the policy payable to CCC, CCC determines that it affords protection equivalent to a bond, and the Office of the General Counsel, U.S. Department of Agriculture, approves it for legal sufficiency. (e) An irrevocable letter of credit may be accepted by CCC in lieu of the required amount of bond coverage provided that the issuing bank is a commercial bank insured by the Federal Deposit Insurance Corporation. Such standby letter of credit shall be on Form CCC-33A, ``Irrevocable Letter of Credit'', or on such other form as may be specifically approved by the Director, KCCO, or the Director's designee. [44 FR 67078, Nov. 23, 1979, as amended by Amdt. 4, 50 FR 29640, July 22, 1985] Sec. 1421.5554 Examination of warehouses. Except as otherwise provided in this subpart, a warehouse must be examined by a person designated by CCC before it may be approved by CCC for the storage or handling of commodities and periodically thereafter to determine its compliance with CCC's standards and requirements. Sec. 1421.5555 Exceptions. Notwithstanding any other provisions of this subpart: (a) The financial, bond, and original and periodic warehouse examination provisions of this subpart do not apply to any warehouseman approved or applying for approval for the storage and handling of commodities under CCC programs if the warehouse is licensed under the U.S. Warehouse Act for such commodities but a special examination shall be made of such warehouse whenever CCC determines such action is necessary. (b) A warehouseman who has a net worth of at least $50,000 but who fails or whose warehouse fails to meet one [[Page 440]] or more of the other standards of this subpart may be approved if: (1) CCC determines that the warehouse services are needed and the warehouse storage and handling conditions provide satisfactory protection for the commodity, and (2) The warehouseman furnishes such additional bond coverage (or cash or acceptable negotiable securities or legal liability insurance policy) as may be prescribed by CCC. [44 FR 67078, Nov, 23, 1979, as amended at 51 FR 32627, Sept. 15, 1986] Sec. 1421.5556 Approval of warehouses, requests for reconsideration. (a) CCC will approve a warehouse if it determines that the warehouse meets the standards set forth in this subpart. CCC will send a notice of approval to the warehouseman. Approval under this subpart, however, does not relieve the warehouseman of the responsibility for performing the warehouseman's obligations under any agreement with CCC or any other agency of the United States. (b) Except as otherwise provided in this subpart: (1) CCC will not approve the warehouse if CCC determines that the warehouse does not meet the standards set forth in this subpart, and (2) CCC will send any notice of rejection of approval to the warehouseman. The notice will state the cause(s) for such action. Unless the warehouseman or any officials or supervisory employees of the warehouseman are suspended or debarred, CCC will approve the warehouse if the warehouseman establishes that the causes for CCC's rejection of approval have been remedied. (c) If rejection of approval by CCC is due to the warehouseman's failure to meet the standards set forth: (1) In Sec. 1421.5552, other than the standard set forth in paragraph (c)(2) thereof, the warehouseman may, at any time after receiving notice of such action, request reconsideration of the action and present to the Director, KCCO, in writing, information in support of such request. The Director shall consider such information in making a determination and notify the warehouseman in writing of such determination. The warehouseman may, if dissatisfied with the Director's determination, obtain a review of the determination and an informal hearing thereon by filing an appeal with the Deputy Administrator, Commodity Operations, Farm Service Agency (hereinafter referred to as ``FSA''). The time of filing appeals, forms for requesting an appeal, nature of the informal hearing, determination and reopening of the hearing shall be as prescribed in the FSA regulations governing appeals, 7 CFR part 780. When appealing under such regulations, the warehouseman shall be considered as a ``participant''; and (2) In Sec. 1421.5552(c)(2), the ware house man's administrative appeal rights with respect to suspension and debarment shall be in accordance with applicable CCC regulations. After expiration of a period of suspension or debarment, a warehouseman may, at any time, apply for approval under this subpart. [Amdt. 4, 50 FR 29640, July 22, 1985] Sec. 1421.5557 Exemption from requirements. If warehousing services in any area cannot be secured under the provisions of the subpart and no reasonable and economic alternative is available for securing such services for commodities under CCC programs, the President or Executive Vice President, CCC, may temporarily exempt, in writing, applicants for storage agreements and warehousemen who are currently under contract with CCC in such area from one or more of the standards of this subpart and may establish such other standards as are considered necessary to satisfactorily safeguard the interests of CCC. [53 FR 8746, Mar. 17, 1988] Sec. 1421.5558 Contract and application and inspection fees. (a) Each warehouseman who has a non-federally licensed grain or rice warehouse in States that do not have a Cooperative Agreement with CCC for warehouse examinations must pay an annual contract fee to CCC for each such warehouse which is approved by CCC or for which CCC approval is sought as follows: [[Page 441]] (1) A warehouseman who has an existing agreement with CCC for the storage or handling of CCC-owned commodities or commodities pledged to CCC as loan collateral must pay an annual contract fee for each warehouse approved under that agreement in advance of the renewal date of such agreement. (2) All grain and rice warehousemen who do not have an existing agreement with CCC for the storage and handling of CCC-owned commodities or commodities pledged to CCC as loan collateral but who desire such an agreement must pay an application and inspection fee for each warehouse for which CCC approval is sought prior to CCC conducting the original warehouse examination. The annual contract fee must be paid by the warehouseman to CCC prior to the time that the agreement is entered into. (3) The contract fee will be prorated based upon the total number of months for which the contract is to be effective. (4) CCC may, upon the request of a warehouseman, conduct an examination of a warehouse for the sole benefit of the warehouseman and such warehouseman shall pay to CCC a fee equal to 1\1/2\ times the amount of the warehouseman's annual contract fee for such examination. (b) Any subsequent changes in the contract and application fees shall be announced in the Federal Register. [Amdt. 4, 50 FR 29641, July 22, 1985, as amended at 51 FR 32627, Sept. 15, 1986; 53 FR 10062, Mar. 29, 1988] Sec. 1421.5559 OMB control numbers assigned pursuant to Paperwork Reduction Act. The information collection requirements contained in this regulation (7 CFR part 1421) have been approved by the Office of Management and Budget under provisions of 44 U.S.C. Chapter 35 and have been assigned OMB Numbers 0560-0009 and 0560-0036. [Amdt. 4, 50 FR 29641, July 22, 1985]