Dairy Margin Coverage Program and Dairy Indemnity Payment Program
| Published date | 18 June 2019 |
| Citation | 84 FR 28171 |
| Record Number | 2019-12998 |
| Section | Rules and Regulations |
| Court | Commodity Credit Corporation,Farm Service Agency |
Federal Register, Volume 84 Issue 117 (Tuesday, June 18, 2019)
[Federal Register Volume 84, Number 117 (Tuesday, June 18, 2019)]
[Rules and Regulations]
[Pages 28171-28185]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-12998]
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Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
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Federal Register / Vol. 84, No. 117 / Tuesday, June 18, 2019 / Rules
and Regulations
[[Page 28171]]
DEPARTMENT OF AGRICULTURE
Farm Service Agency
7 CFR Part 760
Commodity Credit Corporation
7 CFR Part 1430
[Docket No. CCC-2019-0004]
RIN 0560-A137
Dairy Margin Coverage Program and Dairy Indemnity Payment Program
AGENCY: Commodity Credit Corporation and Farm Service Agency, USDA.
ACTION: Final rule.
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SUMMARY: This final rule implements the requirements of the dairy
programs administered by the Farm Service Agency (FSA) on behalf of the
Commodity Credit Corporation (CCC). The Dairy Margin Coverage (DMC)
Program, as authorized by the Agriculture Improvement Act of 2018 (2018
Farm Bill), replaces the Margin Protection Program (MPP-Dairy) for
dairy producers and retains much of the structure of MPP-Dairy. DMC is
a margin-based support program for dairy producers that provides risk
management coverage that will pay producers when the difference between
the national price of milk and the national estimated cost of feed (the
margin) falls below a certain level. The rule also extends the Dairy
Indemnity Payment Program (DIPP) through 2023 and amends the
regulations to incorporate a specific period of time for which claims
for the same loss will be eligible for indemnification under DIPP.
DATES: Effective June 18, 2019.
FOR FURTHER INFORMATION CONTACT: Danielle Cooke, telephone: (202) 720-
1919; email: [email protected]. Persons with disabilities who
require alternative means for communication should contact the USDA
Target Center at (202) 720-2600 (voice).
SUPPLEMENTARY INFORMATION:
Background
The 2018 Farm Bill (Pub. L. 115-334) reauthorized DIPP and requires
establishment of regulations for the DMC Program. The changes for each
of the programs are explained below.
DIPP
Section 1402 of the 2018 Farm Bill amends 7 U.S.C. 4553 to
reauthorize DIPP through 2023, and does not make any other changes to
DIPP.
The purpose of DIPP is to indemnify dairy farmers and manufacturers
of dairy products who, through no fault of their own, suffer income
losses with respect to milk or milk products that were removed from
commercial markets because such milk or milk products contained certain
harmful pesticide residues, chemicals, or toxic substances, or were
contaminated by nuclear radiation or fallout.
This rule is adding a specific timeframe that will limit the period
of time that a dairy claimant under DIPP is eligible to receive
indemnification. This is a discretionary change. Current DIPP rules
indemnify losses until such time as the dairy is reinstated to the
commercial market by a State regulatory agency. The large majority of
claims for indemnification to affected farmers under DIPP typically
range from 2 to 10 days for which their milk has been removed from the
commercial market before such milk has been reinstated by a State
regulatory agency. However, some claims submitted for indemnification
could span the course of several months. In these circumstances, FSA
will limit indemnification for the same loss to a period not to exceed
18 months. The current regulation does not have a limit on the time
period for which an eligible dairy can receive DIPP payments for the
same contaminating event. Accordingly, discretionary changes are being
made to DIPP to limit indemnification to not extend past the time
period that the impacted dairy cows in the dairy herd are no longer
lactating or impacted dairy cows in gestation have delivered a calf and
are no longer lactating from its most immediately preceding birth after
the contaminating event, not to exceed 18 months. Claims for milk from
the affected farmer not reinstated to the commercial markets after the
impacted dairy cows in the herd are dry and no longer producing milk
from its most immediately preceding birth after the contaminating
event, or have exceeded the 18-month period will not be eligible for
indemnification for their milk any further, in order to prevent
continued indemnification to an affected farmer for the removal of milk
based upon the same contaminating event, however long that
contaminating event or activity lasts. The 18-month period is based on
a 10-month lactation period after the calf is born, overlapping
breeding period, and a remaining 6-month pregnancy term. The 18-month
period also accounts for approximately 2 months of the 18-month period
the cow may not be producing milk during the dry period between
lactations. At any time when the impacted dairy cows are dry from
lactating from its most immediately preceding birth after the
contaminating event the occurrence will no longer be eligible for
indemnification. Limiting indemnification of a contaminating event to
the maximum 18-month period, during which such dairy cow could be
affected, was determined a fair and reasonable time frame to limit
claims. Otherwise, any indemnification payment beyond this specified
time period would be for milk from cows that have already completed the
gestation period prior to the contaminating event and lactation period
following birth, or from cows that were conceived after the initial
contaminating event that caused the milk to be removed from the market.
Once the dairy is required to remove their milk from the commercial
market, such dairy producer knows or has reason to know the presence of
contamination and it is reasonable that such dairy should take such
actions as to not allow their cows to be further exposed to such
contamination. Claimants will be required to provide inventory of dairy
cows bred and lactating as of the contamination event to determine
eligible livestock producing milk during the contamination period for
which DIPP assistance is provided. Further, once the contaminating
event has occurred and the dairy has been directed to remove their milk
from the commercial market, any subsequently purchased or bred animals
are not eligible for assistance
[[Page 28172]]
under DIPP. The limitation will prevent a claimant from receiving
indemnification in perpetuity for the same contaminating event.
Therefore, this rule specifies a timeframe for which dairies are
eligible to be indemnified for the same contaminating event or activity
under DIPP. Dairy producers that have exceeded the specified timeframe
established by FSA before June 18, 2019 will be allowed to submit one
additional claim after June 18, 2019, since this new provision is being
implemented as of June 18, 2019 and some producers may have already
exceeded the specified timeframe.
DMC Program and MPP-Dairy
This rule establishes a new subpart in the regulations in 7 CFR
part 1430 to establish the new DMC Program for dairy producers as
authorized by Subtitle D of Title I of the 2018 Farm Bill. The DMC
Program regulation is in effect from June 18, 2019, through December
31, 2023; however, the DMC Program is retroactive back to January 1,
2019, as specified in the 2018 Farm Bill.
DMC replaces MPP-Dairy (7 CFR part 1430 subpart A). The 2018 Farm
Bill authorizes retroactive provisions that open eligibility for
certain producers previously determined ineligible under MPP-Dairy and
for MPP-Dairy participants when the total premiums paid exceeded the
total payments received during each of the applicable years of MPP-
Dairy. This rule amends the MPP-Dairy regulations to make these
changes. MPP-Dairy will only remain in effect until retroactive
provisions have been administered and concluded.
The DMC Program is based on a similar framework to MPP-Dairy, with
some changes. The purpose of DMC is to provide eligible dairy producers
risk protection against low margins resulting from a combination of low
milk prices and high feed costs. DMC and MPP-Dairy both provide for
payments to dairy operations that are calculated based on producer
elected margins when the difference between the national ``all-milk''
price of milk and the national average cost of feed falls below that
producer elected margin. However, revisions were made, including
changes to premium rates, additional coverage levels, and a premium
discount option for locking in coverage levels for a 5-year period. FSA
will announce the date on which the DMC Program registration will
begin. Under the 2018 Farm Bill, the DMC Program ends December 31,
2023.
The 2018 Farm Bill expands on the modifications made to MPP-Dairy
by the Bipartisan Budget Act of 2018. DMC is a voluntary program for
producers involving fees and coverage-based premiums at most levels
that provides payments when the calculated national margin for a month
falls below the producer's selected margin trigger. The ``margin'' is
the difference between the average national price of one hundred pounds
(cwt) of milk and the national average price of the feed components
(corn, soymeal, and hay) needed to produce that milk. For example, if
the average price of milk is $20.00 a cwt and the average cost of
soybean meal, corn, and hay needed to produce that milk is $12.00 a
cwt, the margin is $8.00 a cwt. A factored hay price determined by FSA
by averaging the prices of ``premium and supreme'' alfalfa hay and
conventional alfalfa hay will be used in the feed cost calculations for
DMC. Section 1401(c) of the 2018 Farm Bill required the National
Agricultural Statistics Service to revise monthly price survey reports
to include prices for high-quality (premium and supreme) alfalfa hay in
the top 5 milk producing states and to publish that data no later than
120 days after passage of the 2018 Farm Bill. There is no mandate for
USDA to use that data in the DMC feed cost calculation. However, there
are indications that this higher quality alfalfa hay price would better
reflect the quality of hay purchased by dairy operations. Since not all
dairy producers feed high quality hay, a factored price, which assumes
that 50 percent of alfalfa hay that is fed to dairy cows is ``premium
and supreme,'' will more closely reflect the prices paid by dairy
producers.
As authorized by the 2018 Farm Bill, DMC is available for
participating dairy operations. A dairy operation can have one or more
producers and each of the producers on the operation must share in the
risk of production, and must contribute capital, land, labor,
equipment, or management to the operation commensurate with their share
of the proceeds. However, all producers do not have to participate.
Producer payments and premiums will be reduced according to the non-
participating producer's percentage share in the dairy operation.
However, all participating producers in the dairy operation must
unanimously agree to the elected coverage levels and any non-
participating producers from that same dairy operation cannot
independently or separately apply for DMC.
The production history for each dairy operation will be established
in the same manner as MPP-Dairy, using the highest of the operation's
annual milk marketings in any one of 2011, 2012, or 2013 calendar
years. Under DMC, dairy operations that were not in operation prior to
January 1, 2014, and have more than 1 year of production history but
have not previously established a production history under MPP-Dairy,
will establish production history from annual milk marketings during
any 1 calendar year, as specified in this rule. However, dairy
operations with less than a full calendar year of production history
will establish production history using the same options established in
MPP-Dairy, based on either an extrapolation from actual production data
for the first calendar year with at least 1 full month of production
history, adjusted for a seasonality index, or by estimating annual
production based on the herd size of the dairy operation relative to
the national rolling herd average production data.
For DMC, the production history, once established for an operation,
does not change, even for changes in the herd size of the dairy
operation. MPP-Dairy previously allowed for an annual upward adjustment
to established production history that was based on the national annual
increase in milk production. However, under DMC, production history
will be adjusted only for 2019 for certain dairies to reflect any
increase in the national average milk production relative to calendar
year 2017. FSA determined the national average milk production relative
to calendar year 2017 based on the milk production history increase
from April 2016 through March 2017 and applied that adjustment at a
factor of 1.0186 to participating dairy operations under MPP-Dairy for
coverage year 2018. Dairy operations participating in DMC that had
production history previously established under MPP-Dairy but elected
not to participate in MPP-Dairy are not eligible for the production
history adjustment. Additionally, dairy operations that first
participated in MPP-Dairy in 2018, are not eligible for a production
history adjustment and will maintain that same production history.
However, dairy operations that did not previously establish their
production history for the purpose of MPP-Dairy and, consequently did
not participate in MPP-Dairy, will have the same adjustment factor of
1.0186 applied to their established production history upon
registration in the DMC Program. However, unlike in MPP-Dairy, no
additional production history adjustments will be made to the
established production history in subsequent years of participation in
DMC, per changes made by the 2018 Farm Bill.
Provisions regarding production history remain largely unchanged
from MPP-Dairy to DMC. The production
[[Page 28173]]
history is established for the participating dairy operation, and is
assigned to that operation, not to an individual producer or to the
facility location.
The 2018 Farm Bill does not permit a producer to adjust the
proportion of their share of the dairy operation for the production
history that is covered by the premium rate schedule in Tier I and Tier
II, from what is covered for the dairy operation. For example, a
participating dairy operation with two equal partners, each with a 50
percent ownership share in a 20 million pound production history that
elects 60 percent coverage (20,000,000 x 60% = 12,000,000) under DMC,
must cover the full 12,000,000 pounds, as applicable in the premium
rate schedules. If one partner in that operation decides not to
participate, the participating partner is not allowed to only cover
their 50 percent share of the production history, 10 million pounds in
this example, at the 60 percent election.
In some instances for MPP-Dairy, production history was tied to the
facility location if the dairy operation was under a lease agreement.
As such, transfers of production history to a different location and
successions-in-interest of production history to another owner were not
allowed. Similarly, when transfers were allowed for a relocation of the
dairy operation from another facility location of a dairy operation
that previously had MPP-Dairy established production history, the
relocating dairy operation was allowed to merge the two histories
together.
Under new DMC provisions, that in effect untie the production
history from the facility location, the dairy operation, regardless of
who established the production history, will be allowed to transfer the
production history to another dairy operation, as specified by FSA,
when there is no relative break in the continuity in the operation of
the dairy being transferred. FSA has determined that based on its
experience in administering MPP-Dairy that production history of a
dairy operation should remain with the operation rather than with the
facility because production is naturally tied to the animals that
produce the dairy, not the facility; therefore, production should move
with the dairy operation that established the production history.
Although not a provision required by the 2018 Farm Bill, the provisions
for transferring production histories will be implemented using FSA's
discretionary authority to untie production history from the facility
location in all cases as specified in this rule.
The DMC Program eligibility requirements remain the same as MPP-
Dairy, except that producers that participate in the Livestock Gross
Margin for Dairy (LGM-Dairy) insurance program administered by the USDA
Risk Management Agency (RMA) on behalf of the Federal Crop Insurance
Corporation, who under MPP-Dairy could only participate in either LGM-
Dairy or MPP-Dairy, are now eligible to receive benefits from both LGM-
Dairy and the DMC Program, as specified by the 2018 Farm Bill.
The 2018 Farm Bill also authorizes those producers with LGM-Dairy
coverage in 2018, who were previously ineligible to enroll for MPP-
Dairy coverage, the ability to retroactively enroll in MPP-Dairy for
2018. FSA has announced a period for eligible LGM-Dairy producers to
make application and retroactive 2018 coverage elections to qualify for
the payments that triggered in 2018 during the months of February
through August and also December (no other months resulted in MPP-Dairy
payments). The retroactive 2018 MPP-Dairy signup is only for dairy
producers with 2018 LGM-Dairy coverage who produced and commercially
marketed milk in 2018 but did not obtain full year MPP-Dairy coverage.
FSA will notify eligible producers of the retroactive application
signup period.
The 2018 Farm Bill makes significant changes from MPP-Dairy to DMC
in the area of coverage levels. Both the previous MPP-Dairy and the new
DMC Program require the dairy operation to select a margin trigger and
a percentage of production history that will be covered. Coverage level
thresholds under MPP-Dairy ranged from $4 per cwt for basic
catastrophic (CAT) level coverage to an $8 per cwt maximum, in 50 cent
increments. A dairy operation could elect coverage on anywhere from 25
percent to 90 percent of the operation's established production
history. Under DMC, CAT level coverage remains at $4, however, higher
levels of coverage at the $8.50, $9.00, and $9.50 threshold levels have
been added under Tier I. Tier II coverage level thresholds under DMC
remain the same as those under MPP-Dairy ranging from $4 to $8 and at
the same $0.50 increments. However, the percentage of production
history that can be covered also changed. Under MPP-Dairy, coverage was
available from 25 percent to 90 percent, in 5 percent increments,
whereas under DMC, coverage is available from 5 percent up to 95
percent, in 5 percent increments.
MPP-Dairy required producers to select one margin trigger level and
one percentage of production history for both Tier I and Tier II,
however, the new DMC Program allows for a second election of a coverage
level threshold in Tier II that can be different than what the dairy
operation elects under Tier I, but only if the DMC participating dairy
operation elects a Tier I coverage level threshold of $8.50, $9.00, or
$9.50. For example, a dairy operation with a 12 million pound
production history elects to cover 50 percent of the operations'
production history, which is 6 million pounds in this example. The
dairy operation can cover 5 million pounds at $9.00, then can elect to
cover 1 million pounds under Tier II at the $5 margin trigger, or any
other level in Tier II, from $4 to $8. This option was not previously
available under MPP-Dairy and only allows for a second election of a
coverage level threshold, not a different coverage percentage, as
specified in this rule.
As part of the annual coverage election process, the dairy
operation is required to select the levels of coverage and pay an
administrative fee, unless waived for a qualifying exemption, and if
applicable, pay a premium based on the level of coverage (margin
trigger) elected. Premium rates have changed from MPP-Dairy to DMC. The
annual premium rates are specified in the 2018 Farm Bill. The premium
for each participating dairy operation will be determined based on the
dairy operation's election of each of the margin trigger and percentage
of coverage. The method to calculate the premium due for participating
dairy operations selecting coverage above CAT level, are the same in
MPP-Dairy and the new DMC Program, and must be paid by a date
determined by FSA, as specified in this rule.
For DMC, just as in MPP-Dairy, the coverage level threshold and
coverage percentage must be elected by the dairy operation during the
annual coverage election period announced by FSA for the applicable
coverage year. MPP-Dairy required producers to make annual coverage
elections and participate in the program for the duration of the 2014
Farm Bill. However, under DMC, annual participation is not mandatory. A
dairy operation can decide annually during the coverage election period
for the applicable year of coverage if they would like to participate.
To be eligible for DMC, a dairy operation must be in the business
of producing and commercially marketing milk at the time of application
during each annual coverage election period. Because section 1401(m) of
the 2018 Farm Bill requires that the DMC Program take effect on January
1, 2019,
[[Page 28174]]
for the 2019 coverage year only, those dairy operations that have
stopped producing and commercially marketing milk before the coverage
election signup period for 2019 begins, may apply for 2019 coverage and
applicable payments for only the months the operation was still
producing and commercially marketing milk in 2019. These dairy
operations are not eligible for the premium rate discount, however,
premiums will be prorated based on the months such dairy was in
operation for 2019, as such the last marketing statement for the dairy
operation, or other documentation deemed appropriate by FSA will be
required at the time of application.
Payment of a $100 administrative fee is still required under DMC
for each year of participation, unless the dairy operation qualifies
for a waiver exemption based on the dairy operations qualifying status
for socially disadvantaged, limited resource, beginning farmer or
rancher, and veteran farmer or rancher.
DMC also provides an option during the 2019 coverage election
period to make a 1-time election of coverage level and percentage of
coverage, ``locking-in'' those elections for a 5-year period beginning
January 2019 and ending December 2023. After the 2019 coverage election
period, the lock-in option is not available to dairy operations
participating in DMC, except as specified for dairy operations that
have not established a production history. All dairy operations that
elect the lock-in option are required to participate in the DMC Program
at the same elected premium coverage levels for a 5-year period
beginning in January 2019. DMC participating dairy operations locking
in elections for the 5-year period will receive a premium discount of
25 percent off the premium rate per cwt in each applicable Tier table.
For example, a dairy operation elects to lock-in coverage levels at $7
and 70 percent (5.6 million pounds) of the operation's 8 million pound
production history. The applicable premium rate for a $7 margin trigger
is $0.08 per cwt, discounted by 25 percent of the applicable premium
rate will be $0.06, for the first 5 million pounds covered under Tier I
(50,000 cwt x $0.06 = $3,000 premium). Likewise, in Tier II, the
applicable premium rate for a $7 margin trigger is $1.107, discounted
by 25 percent, the applicable premium rate of $0.83025 per cwt will be
applied to the remainder of the covered pounds (5,600,000-5,000,000 =
600,000) above 5 million pounds that fall under Tier II (6,000 cwt x
$0.83025 = $4,981.50). Therefore, in this example, the dairy operation
will pay the same premium for each coverage year 2019 through 2023, in
the amount of $7,981.50 (Tier I $3,000 + Tier II $4,981.50).
New dairy operations will be eligible for the premium rate discount
for locking in coverage for the period beginning with the first
available calendar year and ending in December 2023. Operations that
are determined to be ``new dairy operations'' under this rule are dairy
operations that have never established a production history under MPP-
Dairy, and have begun producing and commercially marketing milk within
60 calendar days prior to registering to participate in DMC.
If there are producers in an operation that want to be considered
new and are also part of another dairy operation participating in DMC,
FSA must determine that the dairy operation is separate and distinct
from the other DMC participating dairy operation. Under MPP-Dairy,
separate participation by a new dairy operation that was purchased or
acquired was subject to an affiliation test, however, under DMC, the
affiliation test will no longer apply. The 2018 Farm Bill specifies
that the Secretary may not make DMC payments to a dairy operation that
is determined by FSA to have reorganized the structure of such
operation for the sole purpose of qualifying as a new dairy operation.
Section 1407(f) of the 2014 Farm Bill, as amended by Section
1401(i) of the 2018 Farm Bill, specifies that dairy operations that
participated in MPP-Dairy during any of calendar years 2014 through
2017 that submit an application on an approved form may receive a
repayment in an amount equal to the difference between the total amount
of premiums paid by the dairy operation for each applicable calendar
year of coverage and the total amount of payments made to the MPP-Dairy
participating dairy operation for that applicable calendar year.
Coverage years that result in payments that exceeded premiums paid for
that coverage year will yield a $0 calculation for that calendar year.
The 2018 Farm Bill further specifies that a dairy operation that is
eligible to receive the calculated repayment must elect to receive the
repayment in either an amount that is equal to:
(1) 75 percent of the calculated repayment as a credit that may be
used by the dairy operation towards DMC premiums; or
(2) 50 percent of the calculated repayment as a direct cash
repayment.
FSA will determine the calculated repayment amounts for each year
for each dairy operation that participated in MPP-Dairy. Adequate proof
must be provided by the dairy operation, to the satisfaction of FSA,
for any repayment amounts calculated by FSA under dispute. FSA will
specify the time and manner to make a MPP-Dairy repayment request.
Once the choice of cash or credit is made by the dairy operation
and approved by FSA, that choice cannot be changed. Dairy operations
that elect the credit option can only use that credit in the DMC
Program. If the entire credit is not used, for any reason, it cannot be
applied as credit to any other USDA program and will have zero cash
value and cannot be redeemed for any purpose.
Both cash and credit elections may be transferred to a dairy
operation that succeeded to the dairy operation through a succession-
in-interest transfer under MPP-Dairy and the successor is currently
participating in DMC. Otherwise, the repayment election is not
transferrable.
Dairy operations that give up their right to elect a premium
repayment option or do not timely make application on a form specified
by FSA are not eligible to receive a cash or credit benefit for
premiums paid under MPP-Dairy.
Dairy operations eligible for the MPP-Dairy premium that elect the
cash repayment option will have cash repayments issued in the same name
as the entity that participated in the MPP-Dairy.
This rule includes provisions for MPP-Dairy in 7 CFR part 1430,
subpart D, specifically to allow eligibility for LGM-Dairy producers
for 2018 and allow for the MPP-Dairy premium repayments. These two
provisions are the final actions for MPP-Dairy.
Effective Date, Notice and Comment, and Paperwork Reduction Act
As specified in 7 U.S.C. 9091, the regulations to implement the
provisions of Title I and the administration of Title I of the 2018
Farm Bill are exempt from:
The Paperwork Reduction Act (44 U.S.C. chapter 35), and
The notice and comment provisions of 5 U.S.C. 553.
In addition, 7 U.S.C. 9091(c)(3) directs the Secretary to use the
authority provided in 5 U.S.C. 808, which provides that when an agency
finds for good cause that notice and public procedure are
impracticable, unnecessary, or contrary to the public interest, that
the rule may take effect at such time as the agency determines. Due to
the nature of the rule, the mandatory requirements of the 2018 Farm
Bill, and the need to implement the dairy
[[Page 28175]]
regulations expeditiously to provide assistance to dairy producers, FSA
and CCC find that notice and public procedure are contrary to the
public interest. Therefore, even though this rule is a major rule for
purposes of the Congressional Review Act of 1996, FSA and CCC are not
required to delay the effective date for 60 days from the date of
publication to allow for Congressional review. Therefore, this rule is
effective on the date of publication in the Federal Register.
Executive Orders 12866, 13563, 13771 and 13777
Executive Order 12866, ``Regulatory Planning and Review,'' and
Executive Order 13563, ``Improving Regulation and Regulatory Review,''
direct agencies to assess all costs and benefits of available
regulatory alternatives and, if regulation is necessary, to select
regulatory approaches that maximize net benefits (including potential
economic, environmental, public health and safety effects, distributive
impacts, and equity). Executive Order 13563 emphasized the importance
of quantifying both costs and benefits, of reducing costs, of
harmonizing rules, and of promoting flexibility. Executive Order 13777,
``Enforcing the Regulatory Reform Agenda,'' established a federal
policy to alleviate unnecessary regulatory burdens on the American
people.
The Office of Management and Budget (OMB) designated this rule as
economically significant under Executive Order 12866, ``Regulatory
Planning and Review,'' and therefore, OMB has reviewed this rule. The
costs and benefits of this rule are summarized below. The full cost
benefit analysis is available on regulations.gov.
As a transfer rule, per OMB guidance, this rule is not covered by
Executive Order 13371, ``Reducing Regulation and Controlling Regulatory
Costs.''
Summary of Economic Impacts
DMC provides a greater subsidized margin protection to producers
compared to the expired MPP-Dairy, which is expected to lead to greater
participation. DMC expands options for dairy operations to buy higher
coverage for margins up to $9.50 per cwt, at incremental premium
increases of $0.50 per cwt. The coverage limit under MPP-Dairy was
$8.00 per cwt. In addition, the premium structure of the DMC Program
favors high coverage levels for Tier I production history. Further,
dairy operations are now able to cover as little as 5 percent of their
production history compared to 25 percent minimum for MPP-Dairy. Dairy
operations are allowed to participate concurrently in DMC and Livestock
Gross Margin Insurance for Dairy (LGM-Dairy), which also has the
potential to increase DMC participation. Finally, operations that were
excluded from participating in MPP-Dairy during 2018 because they were
participating in LGM-Dairy can sign up for 2018 MPP-Dairy coverage
retroactively.
As a result of these changes, payments to producers from DMC are
expected to be greater than for MPP-Dairy. USDA projections as of early
2019 indicate that, over the 10-year baseline period, DMC payments will
be triggered frequently. With national feed costs expected to average
about $9.14 over the life of the DMC Program, margins are expected to
average $8.50 per cwt through 2023, even as milk prices recover from
2018 lows. DMC payments are less likely to trigger in the second half
of the baseline period, 2024-2029, assuming lower feed prices and
higher milk prices bring annual average margins near $10.29 per cwt.
Stochastic modelling results indicate that DMC would trigger
significant outlays under current baseline projections. Allowing
variation around the means for milk prices and feed ingredient costs in
a stochastic model generates annual gross estimates averaging to $1.3
billion per year and collection of $89 million per year in fees and
premiums paid by dairy program participants. For the 5-year life of the
DMC Program, net expenditures through 2023 are projected to average
$1.2 billion annually.
Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601-612), as amended by
Small Business Regulatory Enforcement Fairness Act, generally requires
an agency to prepare a regulatory flexibility analysis of any rule
whenever an agency is required by the Administrative Procedure Act or
any other law to publish a proposed rule, unless the agency certifies
that the rule will not have a significant economic impact on a
substantial number of small entities. This rule is not subject to the
Regulatory Flexibility Act because FSA and CCC are not required by any
law to publish a proposed rule for this rulemaking initiative.
Environmental Review
The environmental impacts of this final rule have been considered
in a manner consistent with the provisions of the National
Environmental Policy Act (NEPA, 42 U.S.C. 4321-4347), the regulations
of the Council on Environmental Quality (40 CFR parts 1500-1508), and
the FSA regulations for compliance with NEPA (7 CFR part 799). FSA has
determined that the provisions identified in this final rule are
administrative in nature, intended to clarify the mandatory
requirements of the programs, as defined in the 2018 Farm Bill, and do
not constitute a major Federal action that would significantly affect
the quality of the human environment, individually or cumulatively. The
few discretionary features of the rules include establishing deadlines,
determinations of eligibility and prices, and have been selected
largely based on pre-existing USDA programs and continuation with
clarification of duration of existing indemnifiation payments.
Accordingly, these discretionary aspects are covered by the Categorical
Exclusion, in Sec. 799.31(b)(6)(iii), that applies to price support
programs, and no Extraordinary Circumstances (Sec. 799.33) exist.
Therefore, as this rule presents only administrative clarifications of
mandatory requirements, FSA will not prepare an environmental
assessment or environmental impact statement for this regulatory
action; this rule serves as documentation of the programmatic
environmental compliance decision for this federal action.
Executive Order 12372
Executive Order 12372, ``Intergovernmental Review of Federal
Programs,'' requires consultation with State and local officials that
would be directly affected by proposed Federal financial assistance.
The objectives of the Executive Order are to foster an
intergovernmental partnership and a strengthened Federalism, by relying
on State and local processes for State and local government
coordination and review of proposed federal financial assistance and
direct federal development. For reasons specified in the final rule
related notice regarding 7 CFR part 3015, subpart V (48 FR 29115, June
24, 1983), the programs and activities in this rule are excluded from
the scope of Executive Order 12372.
Executive Order 12988
This rule has been reviewed under Executive Order 12988, ``Civil
Justice Reform.'' This rule will not preempt State or local laws,
regulations, or policies unless they represent an irreconcilable
conflict with this rule. This rule has retroactive effect for MPP-Dairy
for calendar year 2018. Also, coverage for dairy operations that
register during the 2019 re-enrollment period will be retroactive to
January 1, 2019. Before any judicial actions may be brought regarding
the provisions of this
[[Page 28176]]
rule, the administrative appeal provisions of 7 CFR parts 11 and 780
are to be exhausted.
Executive Order 13132
This rule has been reviewed under Executive Order 13132,
``Federalism.'' The policies contained in this rule do not have any
substantial direct effect on States, on the relationship between the
Federal Government and the States, or on the distribution of power and
responsibilities among the various levels of government, except as
required by law. Nor does this rule impose substantial direct
compliance costs on State and local governments. Therefore,
consultation with the States is not required.
Executive Order 13175
This rule has been reviewed in accordance with the requirements of
Executive Order 13175, ``Consultation and Coordination with Indian
Tribal Governments.'' Executive Order 13175 requires federal agencies
to consult and coordinate with Tribes on a government-to-government
basis on policies that have Tribal implications, including regulations,
legislative comments or proposed legislation, and other policy
statements or actions that have substantial direct effects on one or
more Indian Tribes, on the relationship between the Federal Government
and Indian Tribes or on the distribution of power and responsibilities
between the Federal Government and Indian Tribes.
The USDA's Office of Tribal Relations (OTR) has assessed the impact
of this rule on Indian Tribes and determined that this rule has Tribal
implications that required Tribal consultation under Executive Order
13175. Tribal consultation for this rule was included in the 2018 Farm
Bill Tribal consultation held on May 1, 2019, at the National Museum of
the American Indian, in Washington, DC. The portion of the Tribal
consultation relative to this rule was conducted by Bill Northey, USDA
Under Secretary for the Farm Production and Conservation mission area,
as part of the Title I session. There were no specific comments from
Tribes on the dairy rule during the Tribal consultation. If a Tribe
requests additional consultation, FSA will work with OTR to ensure
meaningful consultation is provided where changes, additions, and
modifications identified in this rule are not expressly mandated by
legislation.
Unfunded Mandates
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA, Pub. L.
104-4) requires federal agencies to assess the effects of their
regulatory actions of State, local, or Tribal governments or the
private sector. Agencies generally must prepare a written statement,
including cost benefits analysis, for proposed and final rules with
federal mandates that may result in expenditures of $100 million or
more in any 1 year for State, local or Tribal governments, in the
aggregate, or to the private sector. UMRA generally requires agencies
to consider alternatives and adopt the more cost effective or least
burdensome alternative that achieves the objectives of the rule. This
rule contains no federal mandates as defined by Title II of UMRA for
State, local, or Tribal governments, or the private sector. In
addition, CCC is not required to publish a notice of proposed
rulemaking for this rule. Therefore, this rule is not subject to the
requirements of sections 202 and 205 of UMRA.
Federal Assistance Programs
The titles and numbers of the Federal assistance programs in the
Catalog of Federal Domestic Assistance to which this rule applies are:
10.053--Dairy Indemnity Program
10.116--Margin Protection Program-Dairy
10.127--Dairy Margin Coverage Program
E-Government Act Compliance
CCC and FSA are committed to complying with the E-Government Act,
to promote the use of the internet and other information technologies
to provide increased opportunities for citizen access to Government
information and services, and for other purposes.
List of Subjects
7 CFR Part 760
Dairy products, Indemnity payments, Reporting and recordkeeping
requirements.
7 CFR Part 1430
Dairy products, Fraud, Penalties, Reporting and recordkeeping
requirements.
For the reasons discussed above, FSA and CCC amend the regulations
in 7 CFR parts 760 and 1430 as follows:
PART 760--INDEMNITY PAYMENT PROGRAMS
Subpart A--Dairy Indemnity Payment Program
0
1. Revise the authority citation for part 760 to read as follows:
Authority: 7 U.S.C. 4551--4553.
0
2. Amend Sec. 760.2 as follows:
0
a. Remove the alphabetical paragraph designations, and arrange the
definitions in alphabetical order; and
0
b. Add a definition for ``Same loss'' in alphabetical order;
The addition reads as follows:
Sec. 760.2 Definitions.
* * * * *
Same loss means the event or trigger that caused the milk to be
removed from the commercial market. For example, if milk is
contaminated, the original cause of the contamination was the trigger
and any loss related to that contamination would be considered the same
loss.
* * * * *
0
3. In Sec. 760.9, add paragraph (c) to read as follows:
Sec. 760.9 Other legal recourse.
* * * * *
(c) The period eligible for DIPP benefits for the same loss may not
extend past the time period that the impacted dairy cows in the dairy
herd are no longer lactating or impacted dairy cows in gestation have
delivered a calf and are no longer lactating from its most immediately
preceding birth after the contaminating event, not to exceed 18 months.
Claims for milk from the affected farmer not reinstated to the
commercial markets after the impacted dairy cows in the herd are dry
and no longer producing milk from its most immediately preceding birth
after the contaminating event, or have exceeded the 18-month period
will not be compensated any further. Dairy producers that have exceeded
the specified period established by FSA before June 18, 2018 will be
allowed to submit one additional claim. Dairy cows purchased or bred
after the occurrence of the contaminating event may not be included in
the claim for benefits.
PART 1430--DAIRY PRODUCTS
0
4. The authority citation for part 1430 is revised to read as follows:
Authority: 7 U.S.C. 9051-9060, and 15 U.S.C. 714B and 714c.
0
5. Add subpart D, consisting of Sec. Sec. 1430.400 through 1430.425,
to read as follows:
Subpart D--Dairy Margin Coverage Program
Sec.
1430.400 Purpose.
1430.401 Administration.
1430.402 Definitions.
1430.403 Eligible dairy operations.
1430.404 Time and method of registration and annual election.
1430.405 Establishment and transfer of production history for a
participating dairy operation.
[[Page 28177]]
1430.406 Administrative fees.
1430.407 Buy-up coverage.
1430.408 MPP-Dairy premium repayments.
1430.409 Dairy margin coverage payments.
1430.410 Effect of failure to pay administrative fees or premiums.
1430.411 Calculation of average feed cost and actual dairy
production margin.
1430.412 Relation to RMA's LGM-Dairy Program.
1430.413 Multi-year contract for lock-in option.
1430.414 Contract modifications.
1430.415 Reconstitutions.
1430.416 Offsets and withholdings.
1430.417 Assignments.
1430.418 Appeals.
1430.419 Misrepresentation and scheme or device.
1430.420 Estates, trusts, and minors.
1430.421 Death, incompetency, or disappearance.
1430.422 Maintenance and inspection of records.
1430.423 Refunds; joint and several liability.
1430.424 Violations of highly erodible and wetland conservation
provisions.
1430.425 Violations regarding controlled substances.
Sec. 1430.400 Purpose.
The regulations in this subpart apply to the Dairy Margin Coverage
(DMC) Program that replaces the Margin Protection Program for Dairy
(MPP-Dairy) in subpart A. The purpose of DMC is to provide eligible
dairy producers risk protection against low margins resulting from a
combination of low milk prices and high feed costs.
Sec. 1430.401 Administration.
(a) The DMC Program is administered by the Farm Service Agency
(FSA) under the general supervision of the Executive Vice President,
CCC, or a designee, and will be carried out by FSA State and county
committees and employees.
(b) FSA State and county committees, and their employees may not
waive or modify any requirement of this subpart, except as provided in
paragraph (e) of this section.
(c) The State committee will take any action required when not
taken by the county committee, require correction of actions not in
compliance, or require the withholding of any action that is not in
compliance with this subpart.
(d) The Executive Vice President, CCC, or a designee, may determine
any question arising under the program or reverse or modify any
decision of the State or county committee.
(e) The Deputy Administrator, Farm Programs, FSA, may waive or
modify non-statutory program deadlines when failure to meet such
deadline does not adversely affect the operation of the DMC Program.
(f) A representative of CCC may execute a contract for
participation in the DMC Program and related documents under the terms
and conditions determined and announced by the Deputy Administrator on
behalf of CCC. Any document not under such terms and conditions,
including any purported execution before the date authorized by CCC,
will be null and void.
Sec. 1430.402 Definitions.
The definitions in this section apply for all purposes of
administering the DMC Program.
Actual dairy production margin means the difference between the
all-milk price and the average feed cost, as calculated under Sec.
1430.411. If the calculation would produce a negative number, the
margin is considered to be zero.
Administrative county office means the county FSA office designated
to make determinations, handle official records, and issue payments for
the producer in accordance with 7 CFR part 718.
All-milk price means the national average price received, per
hundredweight of milk, by dairy operations for all milk sold to dairy
plants and milk dealers in the United States, as determined by the
Secretary.
AMS means the Agricultural Marketing Service of USDA.
Annual election period for DMC means the period, each calendar
year, established by the Deputy Administrator, for a dairy operation to
register to participate in DMC for the following coverage year, pay
associated administrative fees, and make coverage elections for an
applicable calendar year.
Average feed cost means the national average cost of feed used by a
dairy operation to produce a hundredweight of milk, as determined under
the provisions of this subpart.
Beginning farmer or rancher means an individual or entity who has
both not operated a farm or ranch, or who has operated a farm or ranch
for not more than 10 consecutive years; and materially and
substantially participates in the operation of the farm or ranch. For
legal entities to be considered a beginning farmer or rancher, all
members must be related by blood or marriage; and all the members must
be beginning farmers or ranchers.
Buy up coverage means dairy margin coverage for a margin protection
level above $4 per hundredweight of milk.
Calendar year means the year beginning with January 1 and ending
the following December 31.
Catastrophic level coverage means $4 per cwt margin protection
coverage and a coverage percentage of 95 percent, with no premium
assessed.
CCC means the Commodity Credit Corporation of USDA.
Commercially marketed means selling whole milk to either the market
to which the dairy operation normally delivers or other similar markets
and receives monetary compensation.
Contract means the terms and conditions to participate in the DMC
Program as executed on a form prescribed by CCC and required to be
completed by the producers in the dairy operation and accepted by CCC,
including any contract modifications made in an annual election period
before coverage for the applicable calendar year commences.
Covered production history is equal to the production history of
the operation multiplied by the coverage percentage selected by the
participating dairy operation.
County committee means the FSA county committee.
County office means the FSA office responsible for administering
FSA programs for farms located in a specific area in a state.
Dairy margin coverage (or DMC) means the dairy margin coverage
program for dairy producers established under this subpart.
Dairy margin coverage payment (DMC payment) means a payment made to
a participating dairy operation under the DMC Program under the terms
of this subpart.
Dairy operation means, as determined by the Deputy Administrator,
and subject to conditions that the Deputy Administrator may impose to
advance the achievement of the purposes of the DMC Program, any one or
more dairy producers that produce and market milk commercially produced
from cows as a single unit in which each dairy producer:
(1) Shares in the pooling of resources under a common ownership
structure;
(2) Is at risk in the production of milk in the dairy operation;
(3) Contributes land, labor, management, equipment, or capital to
the dairy operation that are at least commensurate to the producer's
share in the operation; and
(4) Has production facilities located in the United States.
Deputy Administrator means the Deputy Administrator for Farm
Programs, Farm Service Agency, or designee.
Farm Service Agency or FSA means the Farm Service Agency of USDA.
Handler or producer handler means the initial individual or entity
making
[[Page 28178]]
payment to a dairy operation for milk produced in the United States and
marketed for commercial use.
Hundredweight or cwt means 100 pounds.
Limited resource farmer or rancher means a farmer or rancher that
is a person with both:
(1) Direct or indirect gross farm sales not more than an amount
determined by FSA in each of the previous 2 years; and
(2) A total household income at or below the national poverty level
for a family of four or less than 50 percent of county median household
income in each of the previous 2 years.
Milk Income Loss Contract Program or MILC means the program
established under section 1506 of the Food, Conservation, and Energy
Act of 2008 (7 U.S.C. 8773) and the regulations in part 1430, subpart B
of this part.
Milk marketing means a sale of milk for which there is a verifiable
production record for milk commercially marketed.
NASS means the National Agricultural Statistics Service of USDA.
New operation means a dairy operation that:
(1) Did not establish a production history under the MPP-Dairy;
(2) Has less than 12 full months in a calendar year of commercial
milk marketings produced by the dairy operation; and
(3) Started commercially marketing milk within 60 days of
submitting a contract application under DMC.
Open enrollment period for DMC means the period, each calendar
year, established by the Deputy Administrator, for a participating
dairy operation to either register to participate in the DMC Program,
pay associated administrative fees, if applicable, and applicable
premiums, or to make annual coverage elections for an applicable
calendar year of participation.
Participating dairy operation means a dairy operation that signs up
to participate in the DMC Program under this part.
Producer means any individual, group of individuals, partnership,
corporation, estate, trust, association, cooperative, or other business
enterprise or other legal entity who is, or whose members are, a
citizen of, or legal resident alien in the United States, and who
directly, or indirectly:
(1) Shares in the risk of producing milk, and
(2) Makes contributions including land, labor, management,
equipment, or capital:
(i) To the dairy operation at least commensurate to the producer's
share of the operation, or
(ii) To the dairy operation of the individual or entity, as
determined by the Deputy Administrator.
Production history means the production history determined for a
participating dairy operation under this subpart when the participating
dairy operation first registers to participate in DMC or previously
established under MPP-Dairy, as determined under the provisions of this
subpart.
RMA means the Risk Management Agency of USDA.
Secretary means the Secretary of USDA.
Socially disadvantaged farmer or rancher means a farmer or rancher
who is a member of a group whose members have been subject to racial,
ethnic, or gender prejudice because of their identity as members of a
group without regard to their individual qualities. Groups include:
American Indians or Alaskan Natives, Asians or Asian Americans, Blacks
or African Americans, Native Hawaiians or other Pacific Islanders,
Hispanics, and women. For legal entities requesting to be considered
Socially Disadvantaged, the majority interest must be held by socially
disadvantaged individuals.
United States means, unless the context suggests otherwise, the 50
States of the United States of America, the District of Columbia,
American Samoa, Guam, the Commonwealth of the Northern Mariana Islands,
the Commonwealth of Puerto Rico, the Virgin Islands of the United
States, and any other territory or possession of the United States.
USDA means the U.S. Department of Agriculture.
Verifiable production records means evidence that is used to
substantiate the amount of production marketed and that can be verified
by CCC through an independent source.
Veteran farmer or rancher means a person who has served in the
United States Army, Navy, Marine Corps, Air Force, and Coast Guard,
including the reserve components, and who has not operated a farm or
ranch; has operated a farm or ranch but not for more than 10 years
total, since becoming a veteran; or has obtained status as a veteran
during the most recent 10-year period. A legal entity or joint
operation will be considered a veteran farmer or rancher entity, if all
members meet this definition.
Sec. 1430.403 Eligible dairy operations.
(a) In order for a dairy operation to be eligible to register for
DMC and receive payments, such dairy operation must:
(1) Produce milk from cows in the United States that is marketed
commercially at the time of each annual election for an applicable
coverage year in DMC, except that dairy operations that have stopped
producing and marketing milk in any month before or during the annual
coverage election period for 2019 are eligible for only those
applicable months;
(2) Submit accurate and complete information as required by this
subpart;
(3) Provide proof of milk production marketed commercially by all
persons in the dairy operation to establish production history;
(4) Pay required administrative fees for participation in DMC as
specified in this subpart and any premiums, if applicable, as specified
in this subpart.
(b) A person or entity covered by Sec. 1400.401 of this chapter
(hereafter ``foreign person'') must meet the eligibility requirements
in that section to receive payments under this subpart. A dairy
operation with ineligible foreign persons as members will have any
payment reduced by the proportional share of such members.
(c) Federal agencies and States, including all agencies and
political subdivisions of a State, are not eligible for payments under
this subpart.
(d) A single dairy operation operated by more than one dairy
producer will be treated as a single dairy operation for purposes of
participating in DMC and can only submit one application. If a producer
owns more than one eligible dairy operation in which each operation is
separate and distinct from each other, such dairy producer may be
eligible to participate separately for each dairy operation, however,
each eligible dairy operation must be separately registered, as
specified in Sec. 1430.404.
(e) The Deputy Administrator or designee will determine additional
dairy operations that operate in a manner that are separate and
distinct from each other according to paragraph (d) of this section and
which may, as determined by the Deputy Administrator, be considered an
operation even though they may not meet the conditions otherwise
imposed in this definition. Also, the Deputy Administrator may require
operations to be combined and considered one operation when there is
close interest by family or otherwise between two operations, to avoid
schemes or devices, or otherwise. Likewise, the Deputy Administrator
may consider other factors as are deemed appropriate to adjust what is
considered a dairy operation to conform with the DMC Program
requirements in an equitable manner, including taking into account a
dairy's status under MPP-Dairy and the
[[Page 28179]]
Milk Income Loss Contract Program formerly operated under this part.
Sec. 1430.404 Time and method of registration and annual election.
(a) A dairy operation may register to participate in DMC by
establishing a production history according to Sec. 1430.405 on a form
prescribed by CCC and also submitting a contract prescribed by CCC.
Dairy operations may obtain a contract in person, by mail, or by
facsimile from any county office. In addition, dairy operations may
download a copy of the forms at http://www.sc.egov.usda.gov.
(b) A dairy operation must submit completed contracts and any other
supporting documentation, during the annual election period established
by the Deputy Administrator, to the administrative county FSA office
serving the dairy operation. However, the production history must be
established only once and approved by CCC before the contract is
submitted and considered complete.
(1) A new dairy operation that has been established after the most
recent election period is required to submit a contract within the
first 60 calendar days from the date of which the dairy operation first
commercially markets milk and may elect coverage that begins the month
and day the dairy operation has commercial marketings.
(2) A new dairy operation that does not meet the 60-day requirement
of paragraph (b)(1) of this section cannot enroll until the next annual
election period for coverage for the following calendar year.
(c) Annual contracts with coverage elections are to be submitted in
time to be received at FSA by the close of business on the last day of
the annual election period, established by the Deputy Administrator.
(1) The applicable year of coverage for contracts received during
an annual election period will be the following calendar year, except
for 2019, where the election and coverage year will be the same, or
unless otherwise specified by the Deputy Administrator for Farm
Programs. Coverage for dairy operations that register during the 2019
election period will be retroactive to January 1, 2019.
(2) Annual contracts with coverage elections submitted after the
applicable allowed time for submission will not be considered.
(d) If the dairy producer operates more than one separate and
distinct operation, the producer must register each operation for each
operation to be eligible for coverage. If the producer moves the same
herd of cattle between two facilities, then the two facilities will not
be regarded as separate and distinct but as one operation unless the
Deputy Administrator determines otherwise. A separate operation must
distinctly, as a single unit, have their own cattle, facilities, milk
marketings, tanks, feed, records, State level licenses, and permits.
All new dairy operations that did not participate in MPP-Dairy must
meet all the requirements of this paragraph. A participating dairy
operation in business prior to January 1, 2019, that participated in
MPP-Dairy will automatically be determined as a ``dairy operation'' for
DMC Program purposes in the same manner as under MPP-Dairy. In disputes
regarding separate dairy operations the Deputy Administrator will
determine what is a separate and distinct operation and that decision
will be final. A dairy operation operated by more than one dairy
producer will be treated as a single dairy operation for purposes of
participating in DMC and may only, submit one contract. Only
participating dairy operations enrolling using contract forms approved
by CCC will be covered by the DMC Program.
(e) A participating dairy operation must elect, during the
applicable annual election period and by using the form prescribed by
CCC, the coverage level threshold and coverage percentage for that
participating dairy operation for the applicable calendar year:
(1) Once the registration for a calendar year of coverage is
submitted and approved by CCC, coverage for subsequent years does not
automatically carry forward. For each calendar year, a dairy operation
that decides to participate in DMC must register for a calendar year of
coverage according to this paragraph (e) during the applicable coverage
election period, except as described in paragraph (e)(2) of this
section;
(2) During the 2019 annual coverage election period only,
participating dairy operations that make a one-time election of
coverage level and percentage of coverage, according to Sec.
1430.407(j), will be locked in at the same coverage level and
percentage of coverage for a 5-year period beginning January 1, 2019,
and ending December 31, 2023. Dairy operations that elect the lock-in
option are required to pay the annual administrative fee and submit an
annual contract during the annual contract election period for each
coverage year to certify that the dairy operation is still in the
business of producing and commercially marketing milk. If the operation
fails to pay the applicable administrative fees or certify the status
of the dairy operation, the dairy operation will remain obligated for
all applicable unpaid administrative and premium fees calculated for
that 5-year period.
(3) All participating producers in the participating dairy
operation must agree to the coverage level threshold and coverage
percentage elected by the operation on the contract. Producers in the
participating dairy operation that elect not to participate may not
submit a separate contract for coverage. All producers that share in
risk of the dairy operations production must be indicated on the
contract with their corresponding share in the dairy operation,
however, a signature from the non-participating member will not be
required for CCC approval.
(f) By registering to participate or receive payment under DMC, all
participating producers in the dairy operation must certify to the
accuracy and truthfulness of the information in their applications and
supporting documentation.
(1) All participating producers who share in the risk of a dairy
operation's production must sign and certify all submissions made under
DMC that relate to the level of coverage and marketed production for
the dairy operation.
(2) All information provided is subject to verification by FSA. FSA
may require a dairy operation to provide documentation that supports
all verifiable records. Furnishing the information is voluntary;
however, without such information DMC Program benefits will not be
approved. Providing a false certification to the Federal Government may
be punishable by imprisonment, fines, and other penalties or sanctions.
(g) At the time the completed contract is submitted to FSA for the
first program year in which the operation is to participate in DMC, the
dairy operation must also submit a separate form, as prescribed by CCC,
to establish the production history for the dairy operation. An
established production history and a completed contract are both
required to have a complete submission that is subject to approval by
FSA. Production histories established for dairy operations under MPP-
Dairy will be used in the DMC Program. A new production history will
only be established for new dairy operations that did not participate
in MPP-Dairy.
Sec. 1430.405 Establishment and transfer of production history for a
participating dairy operation.
(a) Except as provided in paragraphs (b) and (c) of this section,
FSA will
[[Page 28180]]
establish the production history for a dairy operation for DMC as the
highest annual milk marketings of the participating dairy operation
during any one of the 2011, 2012, or 2013 calendar years.
(1) Producers in the participating dairy operation are required to
provide adequate proof of the dairy operation's quantity of milk
commercially marketed, to establish the production history for the
dairy operation.
(2) All information provided is subject to verification, spot
check, and audit by FSA. If the dairy operation does not provide, to
the satisfaction of FSA, documentation requested to substantiate the
production history of the highest annual milk marketings for the
participating dairy operation, then the registration will not be
approved.
(b) A participating dairy operation that was not in operation prior
to January 1, 2014, that has not established a production history will
elect the highest annual milk marketings during any one calendar year
while in operation to determine the production history of the
participating dairy operation.
(c) A participating dairy operation with less than one year of
production history will be considered a new dairy operation. To
establish the production history for such a new dairy operation the new
dairy operation is required to elect one of the following methods:
(1) The volume of the actual milk marketings for the months the
dairy operation has been in operation, extrapolated to a yearly amount
based on a national seasonally adjusted index, as determined by the
Deputy Administrator, to account for differences in milk production
during the year; or
(2) An estimate of the actual milk marketings of the dairy
operation based on the herd size of the dairy operation relative to the
national rolling herd average data published by the Secretary.
(d) If FSA determines that the new enterprise was formed for the
purpose of circumventing DMC provisions, including, but not limited to,
reconstituting a dairy operation to receive additional benefits, or
establishing new production history, that enterprise will not be
considered a new dairy operation for the purpose of establishing
production history.
(e) Once the production history of a participating dairy operation
is established under paragraph (a), (b), or (c) of this section, the
production history will be adjusted by a one-time upward adjustment by
FSA to reflect any increase in the national average milk production
relative to calendar year 2017, as determined by the Deputy
Administrator. Dairy operations participating in DMC, that had
production history previously established under MPP-Dairy but elected
not to participate in MPP-Dairy are not eligible for the production
history adjustment. Dairy operations with approved contracts for 2018
coverage under MPP-Dairy will maintain that same production history, as
in the DMC Program and are not eligible for the production history
adjustment. New dairy operations that participate in DMC, that did not
previously have their production history established nor participate in
MPP-Dairy, will have the same adjustment factor of 1.0186 applied to
their established production history for registration in the DMC
Program as 2018 MPP-Dairy participants. There will be no further
adjustments in subsequent years of participation made to the
established production history under the DMC Program.
(f) The production history must be transferred from one dairy
facility to another as follows:
(1) Producers of a dairy operation relocate the dairy operation to
another location and the production history of the original operation
must be transferred to the new location and subject to the same elected
coverage levels for that year; or
(2) Producers of a dairy operation transfer ownership of a dairy
operation with its associated production history through a succession-
in-interest transfer when there is a spouse, child, heir, or common
member that the dairy operation is being transferred to and there is no
break in the continuity of the dairy operation. However, the successor
operation must submit a separate registration according to Sec.
1430.404, to participate in DMC, but will be subject to the same
elected coverage levels made by the predecessor for that coverage year
or lock-in period, as applicable.
(g) If CCC waives the obligation, under DMC of a participating
dairy operation due to death or retirement of the producer or of the
permanent dissolution of the dairy operation or under other
circumstances as determined by the Deputy Administrator, FSA may
reestablish the production history.
(h) The established production history of a participating dairy
operation may be adjusted upward once during the term of the contract
for an intergenerational transfer based on the purchase of additional
cows by the new family member(s). The increase in the established
production history of the participating dairy operation will be
determined on the basis of the national rolling herd average data for
the current year in effect at the time of the intergenerational
transfer and the quantity of the production history increase will be
limited to an amount not more than 5 million pounds. The additional
quantity of production history will receive coverage at the same
elected coverage threshold and coverage percentage in effect for the
participating dairy operation at the time the production history
increase takes effect. Intergenerational transfers will not be allowed
if the participating dairy operation's current annual production and
the increase in herd size by the new member(s) is less than the
operation's established production history.
(1) The dairy operation must notify FSA, using the appropriate CCC
form(s), of the intergenerational transfer within 60 days of the
purchase of the cows, except that for purchases made for
intergenerational transfers occurring in 2019 before the 2019 annual
coverage election period, the dairy operation must notify FSA during
the registration and annual coverage election period for coverage year
2019, established by the Deputy Administrator. The operation has the
option of the additional production history taking effect beginning
with the month the producer first began to commercially produce and
market milk as part of the dairy operation, or the following January 1.
If the additional production history takes effect between January 1 and
August 31, the premium is due September 1, as specified in Sec.
1430.407(h)(2). If the additional production history takes effect
between September 1 and December 31, the premium is due immediately.
(2) All of the items specified in this paragraph must be documented
in the notification to FSA and self-certified by the current and new
member(s) for the intergenerational transfer to be considered eligible
for additional production history. All of the following information is
subject to verification by CCC. Refusal to allow CCC or any other
agency of USDA to verify any information provided will result in
disapproval of the intergenerational transfer.
(i) Documentation that the new member(s) joining the operation has
purchased the dairy cows being added to the dairy operation;
(ii) Certification that each new member will have a share of the
profits or losses from the dairy operation commensurate with such
person's contributions to the dairy operation;
[[Page 28181]]
(iii) Certification that each new member has a significant equity
ownership in the participating dairy operation at levels determined by
the Deputy Administrator and announced on the FSA website,
www.fsa.usda.gov;
(iv) Certification that each new member is a lineal descendant or
spouse of a current member of the participating dairy operation;
(v) Agreement that each new member will contribute labor in the
dairy operation at a minimum of 35 hours per week or have a plan for
transition to full-time, subject to FSA county committee review and
approval, if only working seasonally or part-time;
(vi) Certification that the dairy operation will be the principal
source of non-investment earned income for each new member; and
(vii) Documentation of the participating dairy operation's current
annual marketings as of the date of the intergenerational transfer.
Sec. 1430.406 Administrative fees.
(a) Except as provided in paragraph (e) of this section, dairy
operations must pay an administrative fee to CCC in the amount of $100
at the time of enrollment during the annual election period for each
applicable coverage year the dairy operation decides to participate in
DMC. Annual administrative fees are due and payable to CCC through the
administrative county FSA office no later than the close of business on
the last day of the annual election period established by the Deputy
Administrator for each applicable calendar year of dairy margin
coverage under DMC. The administrative fee paid is non-refundable.
(b) The required annual administrative fee is per dairy operation.
Therefore, multiple dairy producers in a single participating dairy
operation are required to pay only one annual administrative fee for
the participating dairy operation. Conversely, in the case of a dairy
producer that operates more than one dairy operation, each
participating dairy operation is required to pay a separate
administrative fee annually.
(c) Dairy operations that lock-in coverage according to Sec.
1430.407(j), are required to pay the administrative fee each year
through 2023, except as provided in paragraph (e) in this section.
(d) Failure to pay the administrative fee timely will result in
loss of dairy margin coverage for the applicable calendar year.
(e) A limited resource, beginning, veteran, or socially
disadvantaged farmer or rancher, as defined in Sec. 1430.402, will be
exempt from paying the administrative fee in this section. The
administrative fee waiver for the DMC Program for socially
disadvantaged, beginning, and limited resource farmers and ranchers
must be requested on a form specified by FSA and must accompany the
contract application for coverage under this part in the administrative
county FSA office.
Sec. 1430.407 Buy-up coverage.
(a) For purposes of receiving buy-up dairy margin coverage, a
participating dairy operation may annually elect, except as provided by
paragraph (i) of this section, during an annual election period the
following for the succeeding calendar year:
(1) A coverage level threshold for margins that, per cwt, is equal
to one of the following: $4.50, $5, $5.50, $6, $6.50, $7, $7.50, $8,
$8.50. $9, or $9.50; and
(2) A percentage of coverage for the production history from 5
percent to 95 percent, in 5 percent increments.
(b) In the absence of any such election, the applicable coverage
level provided, with no premium due, is catastrophic level coverage.
(c) A participating dairy operation that elects margin protection
coverage above $4 is required to pay an annual premium based on
coverage level and covered production history in addition to the
administrative fee. Tier 1 applies to covered production history up to
and including 5 million pounds; Tier 2 applies to covered production
history above 5 million pounds.
(d) A participating dairy operation may only select one coverage
level threshold and only one percentage of coverage applicable to both
Tier 1 and Tier 2. However, a participating dairy operation that elects
a coverage level threshold of $8.50, $9, or $9.50, according to
paragraph (a)(1) of this section, on the dairy operation's first 5
million pounds of production history under Tier 1, must choose a
different coverage level threshold that is equal to $4, $4.50, $5,
$5.50, $6, $6.50, $7, $7.50, $8 to apply to production history in
excess of 5 million pounds included in the covered production under
Tier 2 elected by the participating dairy operation.
(e) The premium per cwt of milk, based on the elected percentage of
coverage of production history is specified in the following table:
Table 1 to Sec. 1430.407(e)
------------------------------------------------------------------------
Tier 1 Tier 2
premium per premium per
cwt (for the cwt (for the
covered part of
Coverage level (margin) production covered
history that production
is 5 million history over
pounds or 5 million
less) pounds)
------------------------------------------------------------------------
$4.00................................... None None
4.50.................................... $0.0025 $0.0025
$5.00................................... 0.005 0.005
$5.50................................... 0.030 0.100
6.00.................................... 0.050 0.310
6.50.................................... 0.070 0.650
7.00.................................... 0.080 1.107
7.50.................................... 0.090 1.413
8.00.................................... 0.100 1.813
8.50.................................... 0.105 N/A
9.00.................................... 0.110 N/A
9.50.................................... 0.150 N/A
------------------------------------------------------------------------
(f) The annual premium due for a participating dairy operation is
calculated by multiplying:
(1) The covered production history; and
(2) The premium per cwt of milk specified in paragraph (e) of this
section for the coverage level elected in paragraph (d) of this section
by the dairy operation.
(g) In the case of a new dairy operation that first registers to
participate in DMC for a calendar year after the start of the calendar
year, the participating dairy operation is required to pay a pro-rated
premium for that calendar year based on the portion of the calendar
year for which the participating dairy operation is eligible, and for
which it purchases the coverage.
(h) A participating dairy operation is required to pay the annual
premium in total as specified in paragraphs (d) and (e) of this section
for the applicable calendar year, at time of submission of coverage
election to FSA; but no later than September 1 of the applicable
calendar year of coverage, unless otherwise specified by the Deputy
Administrator.
(i) If the total premium is not paid for an applicable calendar
year of coverage as specified in paragraph (g) of this section, the
participating dairy operation will lose coverage until such time as the
premium has been fully paid.
(j) For each calendar year 2019 through 2023, a participating dairy
operation that makes a one time election of a coverage level threshold
and a percentage of coverage according to this section, for a 5-year
period, will have their elected coverage level, as applicable to each
tier, reduced by 25 percent. The option to lock in for the premium rate
discount must be elected
[[Page 28182]]
during the 2019 annual coverage election period announced by FSA.
Except that, new dairy operations, not in existence during the 2019
annual election period, that elect to participate in DMC according to
Sec. 1430.404(b), are eligible to receive the premium rate discount
for locking coverage for the period beginning with the first available
calendar year and ending in 2023, except that new dairy operations
registering for DMC for the first time for coverage year 2023 and dairy
operations that stop producing and marketing milk in 2019 that are
registering for eligible months in 2019 are not eligible for the multi-
year premium discount. All dairy operations that elect the lock-in
option are subject to full participation in the DMC Program at the same
elected premium coverage levels and calculated premium for the duration
of DMC according to Sec. 1430.413.
(k) Annual premium balances due to CCC from a participating dairy
operation for a calendar year of coverage must be paid in full no later
than September 1 of the applicable calendar year or within a grace
period determined by the Deputy Administrator, if applicable.
(l) The Deputy Administrator may waive the obligation to pay the
premium, or refund the premium paid, of a participating dairy operation
for a calendar year, for death, retirement, permanent dissolution of a
participating dairy operation, or other circumstances determined by the
Deputy Administrator. In these instances, the contract will be
terminated immediately, except with respect to payments accrued to the
benefit of the participating dairy operation under this subpart before
such termination.
(m) DMC administrative fees and premiums are required to be paid by
a negotiable instrument satisfactory to FSA and made payable to CCC and
either mailed to or provided in person to the administrative county
office or other location designated by FSA.
Sec. 1430.408 MPP-Dairy premium repayments.
(a) A dairy operation that participated in MPP-Dairy during any of
calendar years 2014 through 2017 may receive a repayment in an amount
equal to the difference between the total amount of premiums paid by
the dairy operation for each applicable calendar year of coverage and
the total amount of payments made to the MPP-Dairy participating dairy
operation for that applicable calendar year.
(b) FSA will determine the calculated repayment amounts for each
year for each dairy operation that participated in MPP-Dairy during the
years of 2014 through 2017.
(1) Coverage years in which the payments exceeded premiums paid for
that coverage year will yield a $0 calculation for that calendar year.
(2) Dairy operations must provide adequate proof, to the
satisfaction of FSA, for calculated repayment amounts in dispute.
(c) Qualifying dairy operations according to paragraph (a) of this
section, must elect on a form prescribed by CCC, to receive the
repayment in either an amount that is equal to the following:
(1) 75 percent of the calculated repayment as a credit that may be
used by the dairy operation towards DMC premiums; or
(2) 50 percent of the calculated repayment as a direct cash
repayment.
(d) Dairy operations may transfer their premium repayment election
choice in paragraph (c) of this section to a dairy operation that
succeeded to the dairy operation through a succession-in-interest
transfer under MPP-Dairy. However, the dairy operation to which the
election choice is being transferred to must be participating in the
DMC Program if the credit option is elected according to paragraph
(c)(1) of this section. Otherwise, their credit repayment election is
not transferrable. Dairy operations that give up their right to elect a
premium repayment option by designation of such on a form prescribed by
CCC are not eligible to receive a cash or credit benefit, in full or
partially, for premiums paid under MPP-Dairy.
(e) A dairy operation that elects the credit option can only use
the credit in the DMC Program. If the entire credit is not used, for
any reason, it cannot be applied as a credit to any other USDA program
and will have zero cash value that cannot be redeemed for any purpose.
(f) A dairy operation that elects the cash repayment option will
have the repayment issued only in the name of the dairy operation
entity as it existed in MPP-Dairy.
(g) A dairy operation must choose their MPP-Dairy premium repayment
option on a form prescribed by CCC during a period specified by FSA.
Once the premium repayment choice of credit or cash is made by the
dairy operation and approved by FSA, that choice cannot be changed.
Sec. 1430.409 Dairy margin coverage payments.
(a) A DMC payment will be made to a participating dairy operation
for any month when the average actual dairy production margin for that
month falls below the coverage level threshold in effect for the
participating dairy operation.
(b) Payments trigger at the catastrophic level or at the buy-up
level; the payments will be calculated according to this paragraph. If
the dairy operation only has catastrophic coverage or buy-up coverage
at 95 percent, there will be a single calculation. If the dairy
operation purchased buy-up coverage at less than 95 percent and the
catastrophic level also triggers a payment, then there will be two
calculations to determine the payment--first the calculation for the
buy-up coverage percentage and then the calculation for the
catastrophic level percentage, which is the balance of the established
production history up to 95 percent; the result of these two
calculations will be added together to determine the payment amount.
Each calculation multiplies the payment rate times the coverage
percentage times the production history divided by 12 as follows:
(1) Payment rate. The amount by which the coverage level exceeds
the average actual dairy production margin for a month;
(2) Coverage percentage. The coverage percentage; and
(3) Production history. The production history of the dairy
operation, divided by 12.
(c) If the dairy operation purchased buy-up level coverage at less
than 95 percent of production history, then the dairy operation will
receive a payment calculated at the buy-up level, plus the payment at
the catastrophic level, if triggered, for the balance of 95 percent of
its established production history. For example, if a producer
purchased buy-up coverage at the 50 percent level, then that producer
will also receive catastrophic level coverage for the next 45 percent
for total coverage of 95 percent.
Sec. 1430.410 Effect of failure to pay administrative fees or
premiums.
(a) A participating dairy operation that fails to pay a required
administrative fee or premium payment due upon application to DMC or
for a calendar year of coverage:
(1) Remains legally obligated to pay such administrative fee or
premium, as applicable; and
(2) Upon such failure to pay when due, loses coverage under DMC
until such administrative fee or premium is paid in full, and once
paid, coverage will be reinstated beginning with the month coverage was
lost.
[[Page 28183]]
(b) CCC may take such actions as necessary to collect unpaid
administrative fees and premium payments.
Sec. 1430.411 Calculation of average feed cost and actual dairy
production margins.
(a) Payments are made to a participating dairy operation as
specified in this subpart only when the calculated average actual dairy
production margin for a month is below the coverage level in effect for
the participating dairy operation. That margin will be calculated on a
national basis and is the amount by which for the relevant month, the
all milk price exceeds the average feed cost for dairy producers. The
average actual dairy production margin calculation applies to all
participating dairy operations. The calculations are not made on an
operation by operation basis or on their marketings.
(b) For calculating the national average feed cost that dairy
operations use to produce a cwt of milk, the following three items will
be added together:
(1) The product determined by multiplying 1.0728 by the price of
corn per bushel;
(2) The product determined by multiplying 0.00735 by the price of
soybean meal per ton; and
(3) The product determined by multiplying 0.0137 by the price of
alfalfa hay per ton.
(c) To make those feed calculations, the Deputy Administrator on
behalf of CCC will use the following full month data:
(1) For corn, the full month price received by farmers during the
month in the United States as reported in the monthly Agricultural
Prices report by USDA NASS;
(2) For soybean meal, the Central Illinois soybean meal price
delivered by rail as reported in the USDA AMS Market News-Monthly; and
(3) For alfalfa hay, the average of the full month price received
during the month by farmers in the United States for high-quality
(premium and supreme) alfalfa hay and the alfalfa hay price (which was
used to calculate the MPP hay price) for the same month as reported in
the monthly Agricultural Prices report by USDA NASS will be used to
calculate the hay price.
(d) The national average feed cost data for corn, soybean meal, and
alfalfa hay used in the calculation of the national average feed cost
to determine the actual dairy production margin for the relevant
period, will be the data reported in the publication the following
month. (For example, full month May prices will be available in the
June publication, and those will be the prices used).
(e) The actual dairy production margin for each month, will be
calculated by subtracting:
(1) The average feed cost for that month, determined under
paragraph (b) of this section; from
(2) The all-milk price for that same month.
Sec. 1430.412 Relation to RMA's LGM-Dairy Program.
(a) Dairy producers that produced and commercially marketed milk in
2018 and participated in the LGM-Dairy Program operated by RMA in 2018
are eligible to receive retroactive 2018 coverage under MPP-Dairy for
those months in operation. Approved participation for retroactive MPP-
Dairy coverage is subject to verification of LGM-Dairy coverage in 2018
by RMA.
(b) Eligible dairy producers must apply for the retroactive 2018
MPP-Dairy coverage on a CCC-prescribed application form during a signup
period announced by the Deputy Administrator.
(c) Eligible producers that received partial year benefits under
MPP-Dairy are eligible for the full year, less any payments issued for
a month that triggered a payment under MPP-Dairy in 2018.
Sec. 1430.413 Multi-year contract for lock-in option.
(a) Participating dairy operations enrolled in DMC according to
Sec. 1430.407(j) are registered through December 31, 2023. As such, a
participating dairy operation is obligated to pay applicable
administrative fees and applicable premiums each succeeding calendar
year following the date the contract is first entered into through
December 31, 2023. Likewise, any successor to the dairy operation with
lock-in coverage will be bound to the same coverage elections made by
the predecessor and applicable premiums for the duration of the lock-in
period.
(b) A participating dairy operation under a lock-in option that
fails to pay applicable administrative fees and premiums for each year
of the lock-in will remain obligated to pay such applicable
administrative fees and premiums as specified in Sec. 1430.410.
(c) If a participating dairy operation goes out of business as
described in Sec. 1430.407(l) before December 31, 2023, the contract
will be terminated immediately, except with respect to payments accrued
to the benefit of the participating dairy operation under this subpart
before such termination.
Sec. 1430.414 Contract modifications.
(a) Producers in a participating dairy operation must notify FSA
immediately of any changes that may affect their participation in DMC.
Changes include, but are not limited to, death of a producer who is on
the contract, producer joining the operation, producer exiting the
operation, relocation of the dairy operation, transfer of shares by
sale or other transfer action, or dairy operation reconstitutions as
provided in Sec. 1430.415.
(b) Payment of any outstanding premium or administrative fee for a
participating dairy operation must be paid in full before a transfer of
shares by sale or any other change in producers on the contract
originally submitted to FSA may take effect. Otherwise, producer
changes will not be recognized until the following annual election
period, and only if at that time all associated premiums and
administrative fees from any previous calendar year of coverage have
been paid in full.
Sec. 1430.415 Reconstitutions.
(a) Any participating dairy operation that reorganizes or
restructures after enrollment is subject to a review by FSA to
determine if the operation was reorganized or restructured for the sole
purpose of establishing an alternative production history for a
participating dairy operation or was reorganized or restructured to
otherwise circumvent any DMC Program provision under this subpart
(including the tier system for premiums) or otherwise to prevent the
accomplishment of the purpose of the DMC Program.
(b) A participating dairy operation that FSA determines has
reorganized solely to establish a new production history or to
circumvent the determination of applicable fees or premiums based on an
established production history determined under this subpart will be
considered to have failed to meet the DMC Program requirements and, in
addition to other sanctions or penalties that may apply, will not be
eligible for DMC payments.
(c) Under no circumstance, except as approved by the Deputy
Administrator or provided for in these regulations, will the
reconstitution or restructure of a participating dairy operation change
the determined production history for the operation. The Deputy
Administrator may, however, adjust the production history of a
participating dairy operation if there is a calculation error or if
erroneous information has been supplied by or on behalf of the
participating dairy operation.
[[Page 28184]]
Sec. 1430.416 Offsets and withholdings.
FSA may offset or withhold any amount due to FSA or CCC under this
subpart under the provisions of part 1403 of this chapter or any
successor regulations, or any other authorities that may allow for
collection action of that sort.
Sec. 1430.417 Assignments.
Any producer may assign a payment to be made under this subpart in
accordance with part 1404 of this chapter or successor regulations as
designated by the Secretary or as allowed by the Deputy Administrator
in writing.
Sec. 1430.418 Appeals.
Any producer who is dissatisfied with a determination made pursuant
to this subpart may request reconsideration or appeal of such
determination under part 11 or 780 of this title.
Sec. 1430.419 Misrepresentation and scheme or device.
(a) In addition to other penalties, sanctions or remedies as may
apply, all or any part of a payment otherwise due a person or legal
entity on all participating dairy operations in which the person or
legal entity has an interest may be withheld or be required to be
refunded if the person or legal entity fails to comply with the
provisions of this subpart or adopts or participates in adopting a
scheme or device designed to evade this subpart, or that has the effect
of evading this part. Such acts may include, but are not limited to:
(1) Concealing information that affects a registration or coverage
election;
(2) Submitting false or erroneous information; or
(3) Creating a business arrangement using rental agreements or
other arrangements to conceal the interest of a person or legal entity
in a dairy operation for the purpose of obtaining DMC payments the
individual or legal entity would otherwise not be eligible to receive.
Indicators of such business arrangement include, but are not limited to
the following:
(i) No milk is produced and commercially marketed by a
participating dairy operation;
(ii) The participating dairy operation has no appreciable assets;
(iii) The only source of capital for the dairy operation is the DMC
payments; or
(iv) The represented dairy operation exists mainly for the receipt
of DMC payments.
(b) If the Deputy Administrator determines that a person or legal
entity has adopted a scheme or device to evade, or that has the purpose
of evading, the provisions of this subpart, such person or legal entity
will be ineligible to receive DMC payments in the year such scheme or
device was adopted and the succeeding year.
(c) A person or legal entity that perpetuates a fraud, commits
fraud, or participates in equally serious actions for the benefit of
the person or legal entity, or the benefit of any other person or legal
entity, in violation of the requirements of this subpart will be
subject to a 5-year denial of all DMC Program benefits. Such other
equally serious actions may include, but are not limited to:
(1) Knowingly engaging in, or aiding in the creation of a
fraudulent document or statement;
(2) Failing to disclose material information relevant to the
administration of the provisions of this subpart, or
(3) Engaging in any other actions of a person or legal entity
determined by the Deputy Administrator to be designed, or intended to,
circumvent the provisions of this subpart.
(d) Program payments and benefits will be denied on pro-rata basis:
(1) In accordance with the interest held by the person or legal
entity in any other legal entity or joint operations; and
(2) To any person or legal entity that is a cash rent tenant on
land owned or under control of a person or legal entity for which a
determination of this section has been made.
Sec. 1430.420 Estates, trusts, and minors.
(a) DMC Program documents executed by producers legally authorized
to represent estates or trusts will be accepted only if such producers
furnish evidence of the authority to execute such documents.
(b) A minor who is otherwise eligible for benefits under this
subpart is also required to:
(1) Establish that the right of majority has been conferred on the
minor by court proceedings or by law;
(2) Show that a guardian has been appointed to manage the minor's
property and the applicable DMC Program documents are executed by the
guardian; or
(3) Furnish a bond under which the surety guarantees any loss
incurred for which the minor would be liable had the minor been an
adult.
Sec. 1430.421 Death, incompetency, or disappearance.
In the case of death, incompetency, disappearance, or dissolution
of a producer that is eligible to receive benefits under this subpart,
such persons as are specified in part 707 of this title may receive
such benefits, as determined appropriate by FSA.
Sec. 1430.422 Maintenance and inspection of records.
(a) Participating dairy operations are required to maintain
accurate records and accounts that will document that they meet all
eligibility requirements specified in this subpart, as may be requested
by CCC or FSA. Such records and accounts are required to be retained
for 3 years after the date of DMC payments to the participating dairy
operation. Destruction of the records 3 years after the date of payment
will be at the risk of the party undertaking the destruction.
(b) A participating dairy operation is required to allow authorized
representatives of CCC, the Secretary, or the Comptroller General of
the United States to have access to the premises of the dairy operation
in order to inspect the herd of cattle, examine, and make copies of the
books, records, and accounts, and other written data as specified in
paragraph (a) of this section.
(c) Any producer or dairy operation that does not comply with the
provisions of paragraph (a) or (b) of this section, or that otherwise
receives a payment for which it is not eligible, is liable for that
payment and is required to repay it to FSA, with interest to run from
the date of disbursement.
Sec. 1430.423 Refunds; joint and several liability.
(a) Any legal entity, including joint operations, joint ventures
and partnerships, and any member of a legal entity determined to have
knowingly participated in a scheme or device, or other such equally
serious actions to evade, or that has the purpose of evading the
provisions of this part, will be jointly and severally liable for any
amounts determined to be payable as the result of the scheme or device,
or other such equally serious actions, including amounts necessary to
recover the payments.
(b) Any person or legal entity that cooperates in the enforcement
of the provisions of this part may be partially or fully released from
liability, as determined by the Executive Vice President, CCC.
(c) The provisions of this section will be applicable in addition
to any liability that arises under a criminal or civil law, regulation,
or other provision of law.
Sec. 1430.424 Violations of highly erodible and wetland conservation
provisions.
The provisions of 7 CFR part 12 apply to this part.
[[Page 28185]]
Sec. 1430.425 Violations regarding controlled substances.
The provisions of 7 CFR 718.6 apply to this part.
Richard Fordyce,
Administrator, Farm Service Agency.
Robert Stephenson,
Executive Vice President, Commodity Credit Corporation.
[FR Doc. 2019-12998 Filed 6-14-19; 4:15 pm]
BILLING CODE 3410-05-P
