**GAO-03-295R**                      Nov 19, 2002                  

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## Highlights

GAO reviewed the Commodity Credit Corporation's (CCC) new rule on direct and counter-cyclical payments for the crop years 2002 though 2007. GAO found that (1) the rule would provide income support to producers of eligible commodities and are based on historically based acreage and yields and do not depend on the current production choices of the farmer, and (2) CCC complied with the applicable requirements in promulgating the rule.

##  Department of Agriculture, Commodity Credit Corporation: Direct and Counter-Cyclical Program, GAO-03-295R, November 19, 2002

B-291662November 19, 2002The Honorable Tom Harkin     Chairman     The Honorable Richard G. Lugar     Ranking Minority Member     Committee on Agriculture, Nutrition, and Forestry     United States SenateThe Honorable Larry Combest     Chairman     The Honorable Charles W. Stenholm     Ranking Minority Member     Committee on Agriculture     House of Representatives     Subject:*Department of Agriculture, Commodity Credit Corporation: Direct and Counter-Cyclical Program*Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report on a major rule promulgated by the Department of    Agriculture, Commodity Credit Corporation (CCC), entitled Direct and Counter-Cyclical Program (RIN: 0560-AG71).  We received the rule on November 5, 2002.  It was    published in the Federal Register as a final rule on October 21, 2002.  67 Fed. Reg. 64748.     The final rule implements provisions of the Farm Security and Rural Investment Act of 2002 (Pub. L. 107-171)(the 2002 Act) regarding direct and counter-cyclical payments for the crop years 2002    through 2007.  These payments provide income support to producers of eligible commodities and are based on historically based acreage and yields and do not depend on the current production    choices of the farmer.     Enclosed is our assessment of the CCC's compliance with the procedural steps required by section 801(a)(1)(B)(i) through (iv) of title 5 with respect to the rule.  Our review indicates that    the CCC complied with the applicable requirements.     If you have any questions about this report, please contact James W. Vickers, Assistant General Counsel, at (202) 512-8210.  The official responsible for GAO evaluation work relating to the    subject matter of the rule is Robert Robinson, Managing Director, Natural Resources and Environment.  Mr. Robinson can be reached at (202) 512-3841.                 signed     Kathleen E. Wannisky     Managing Associate General Counsel     Enclosurecc: Tom Witzig     Chief, Regulatory Review and       Foreign Investment Disclosure Branch     Department of Agriculture            ENCLOSURE     ANALYSIS UNDER 5 U.S.C.  801(a)(1)(B)(i)-(iv) OF A MAJOR RULE     ISSUED BY THE     DEPARTMENT OF AGRICULTURE,     COMMODITY CREDIT CORPORATION     ENTITLED     "DIRECT AND COUNTER-CYCLICAL PROGRAM"     (RIN: 0560-AG71)(i) Cost-benefit analysis     Direct payments are projected to total $3.8 billion in fiscal year (FY) 2003 and rise to $5.2 billion in FY 2004 and each of the subsequent fiscal years until the legislation expires with the    2007 crops.  These payments represent an increase of about $1.2 billion each crop year compared with the Production Flexibility Contract payments if the provisions of that program were    extended for the same period.     Counter-cyclical payments are projected to total $5.8 billion in FY 2003 and increase to $6.6 billion in FY 2004 but then decline in the remaining years until 2007.(ii) Agency actions relevant to the Regulatory Flexibility Act, 5 U.S.C.  603-605, 607, and 609     Since the final rule was not issued following a notice of proposed rulemaking, the requirements of the Regulatory Flexibility Act do not apply.(iii) Agency actions relevant to sections 202-205 of the Unfunded Mandates Reform Act of 1995, 2 U.S.C.  1532-1535     The final rule does not contain either an intergovernmental or private sector mandate, as defined in title II, of more than $100 million in any one year.(iv) Other relevant information or requirements under acts and executive orders     Administrative Procedure Act, 5 U.S.C.  551 etseq.     Section 1601(c) of the Farm Security and Rural Investment Act of 2002 states that the final rule shall be issued without regard to the requirements of 5 U.S.C. 553.     Paperwork Reduction Act, 44 U.S.C.  3501-3520     Section 1601(c) of the Farm Security and Rural Investment Act of 2002 states that the final rule shall be issued without regard to the requirements of the Paperwork Reduction Act.     Statutory authorization for the rule     The final rule is promulgated under the authority contained in Title I of the Farm Security and Rural Investment Act of 2002 (Pub. L. 107-171), 7 U.S.C. 7911-7918, 7951-7956 and 7991(e), and 15    U.S.C. 714b and 714c.     Executive Order No. 12866     The final rule was reviewed by the Office of Management and Budget and found to be an economically significant regulatory action.

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