114 Federal Register / Vol. 80, No. 1 / Friday, January 2, 2015 / Rules and Regulations 

DEPARTMENT OF AGRICULTURE 

Farm Service Agency 

7 CFR Part 718 

Commodity Credit Corporation 

7 CFR Parts 1400, 1421, 1425, 1427, 

1434, and 1435 

RIN 0560–AI28 

Marketing Assistance Loans, Loan 

Deficiency Payments, and Sugar Loans 

AGENCY: Commodity Credit Corporation 

and Farm Service Agency, USDA. 

ACTION: Final rule. 

SUMMARY: The Farm Service Agency 

(FSA) is revising regulations on behalf 

of the Commodity Credit Corporation 

(CCC) as required by the Agricultural 

Act of 2014 (2014 Farm Bill) to update 

the Marketing Assistance Loan (MAL) 

and Loan Deficiency Payments (LDP) 

Programs for wheat, feed grains, 

soybeans, oilseeds, peanuts, pulse 

crops, cotton, honey, wool and mohair. 

In general, the 2014 Farm Bill extends 

the existing programs with the minor 

changes that are implemented in this 

rule, including a revised formula for 

upland cotton loan rates. This rule also 

amends the regulations for the 

Economic Adjustment Assistance for 

Users of Upland Cotton Program, the 

Extra Long Staple (ELS) Cotton 

Competitiveness Payment Program, and 

the Sugar Program to reflect that the 

programs were extended by the 2014 

Farm Bill. Most of the provisions in this 

rule have already been implemented, 

beginning with the 2014 crop year. 

DATES: Effective Date: January 2, 2015. 

FOR FURTHER INFORMATION CONTACT: 

DeAnn Allen; phone (202) 720–9889. 

Persons with disabilities who require 

alternative means of communication 

(Braille, large print, audio tape, etc.) 

should contact the USDA Target Center 

at (202) 720–2600 (voice). 

SUPPLEMENTARY INFORMATION: 

Background 

FSA administers the MAL and LDP 

Programs for CCC. The 2014 Farm Bill 

(Pub. L. 113–79), extends the existing 

MAL and LDP programs for the 2014 

through 2018 crop years with the minor 

changes that are implemented by this 

rule. Sections 1201 through 1210 and 

1301 of the 2014 Farm Bill authorize the 

continuation of the MAL and LDP 

programs, the related assistance 

programs for cotton, and the Sugar 

Program. The changes required by the 

2014 Farm Bill include a new formula 

for upland cotton base loan rates, 

removing the option to use commodity 

certificates to repay a MAL, and setting 

the payment rate for Economic 

Adjustment Assistance for Users of 

Upland Cotton Program at 3 cents per 

pound. This rule also makes 

discretionary changes to clarify the 

regulations and to remove expired 

provisions. 

This rule updates 7 CFR parts 718, 

1400, 1421, 1425, 1427, 1434, and 1435 

to implement the mandatory changes 

required by the 2014 Farm Bill and the 

discretionary clarifying changes and 

technical corrections. All applicable 

handbooks and forms are also being 

updated with conforming changes. An 

Extension of Authorization was 

published in the Federal Register on 

March 28, 2014 (79 FR 17388–17390), 

announcing the continuation of the 

MAL, LDP, and Sugar Programs for the 

2014 crop year. 

The 2014 Farm Bill changes in this 

rule have already been implemented for 

the 2014 crop year. 

Existing MAL and LDP Program 

Producers of eligible commodities can 

apply for MALs or LDPs, subject to 

terms and conditions as specified in 

applicable regulations; application 

deadlines are specified in FSA 

handbooks. MALs are 9-month loans 

with the commodity pledged as 

collateral for the loan. A producer who 

is eligible for MAL may choose to 

receive LDP in lieu of receiving a MAL. 

LDPs allow the producer to receive a 

payment when the county-level price 

for that commodity is below the loan 

rate, instead of pledging the commodity 

as collateral for MAL. The general 

structure of the MAL and LDP Programs 

are not changing with this rule. The 

2014 Farm Bill does not change core 

eligibility requirements for producers or 

commodities, and it changes the loan 

rate only for upland cotton. 

MALs and LDPs are available 

beginning with harvest or shearing 

season for each commodity and extend 

through the marketing year for that 

particular commodity. Nearly all MALs 

are nonrecourse loans, meaning that the 

commodity is collateral for MALs and 

may be delivered at maturity as full 

payment for an outstanding MAL. 

(Recourse loans are available for a few 

commodities for which long term 

storage is not readily available, meaning 

that the collateral cannot be delivered as 

full payment for MALs.) MALs and 

LDPs must be requested on or before the 

final loan availability date for the 

applicable commodity. Producers may 

repay the MAL at a rate that is the lesser 

of the loan rate plus interest or an 

alternative repayment rate as 

determined and announced by the U.S. 

Department of Agriculture (USDA). The 

repayment rate is based on average 

market prices for the preceding 30 days, 

or an alternative rate set by a similar 

method established by the Secretary. If 

the market price as reflected in the 

repayment rate falls below a loan rate 

specified in the 2014 Farm Bill for that 

commodity, producers can redeem a 

MAL at the repayment rate, or deliver 

the MAL commodity to CCC. 

As an alternative to receiving a MAL, 

a producer can forgo a MAL, and 

instead, may obtain an LDP on their 

crop, if LDP is currently available for 

the applicable commodity and the 

producer is eligible for MAL. LDPs 

allow the producer to receive a payment 

when the repayment rate posted for a 

commodity is below the loan rate for 

that commodity. 

Upland Cotton National Loan Rate 

Change 

The 2014 Farm Bill specifies the 

national loan rates for the 2014 through 

2018 crop years for the eligible loan 

commodities. Except for upland cotton, 

these loan rates are unchanged from the 

most recent rates for the 2013 crop year 

that were authorized by the Food, 

Conservation, and Energy Act of 2008 

(commonly referred to as the 2008 Farm 

Bill), as amended by the American 

Taxpayer Relief Act, (Pub. L. 112–240). 

Section 1202(a)(6) of the 2014 Farm 

Bill (7 U.S.C. 9032(a)(6)) sets the base 

loan rate for upland cotton at no less 

than $0.45/lb. or more than $0.52/lb. 

based on the average of the adjusted 

prevailing world price for the two 

immediately preceding marketing years. 

This change is designed to make the 

loan rate more reflective of prevailing 

market prices, and serves to limit the 

impact of elevated market prices on the 

loan rate while allowing any price 

declines below 52 cents to be reflected 

in lower future base loan rates. 

The average upland cotton adjusted 

world price in recent years has been 

well above 52 cents per pound, so the 

new formula that uses a moving average 

of previous year prices results in a base 

loan rate for cotton MALs of 52 cents 

per pound for 2014 and 2015. 

Commodity Certificate References 

Removed 

The 2014 Farm Bill does not include 

commodity certificates as an option for 

repaying MALs. Therefore, this rule 

removes all references to commodity 

certificates in the regulations and 

removes §§ 1421.110 and 1427.22, 

which included the provisions for 

commodity certificates. 


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The use of commodity certificates was 

previously authorized through 2009, so 

this change should not impact any 

current MAL or LDP program 

participants. 

Sugar Program 

The 2014 Farm Bill reauthorizes the 

Sugar Program without change. This 

rule removes references to specific dates 

and previous legislation in 7 CFR part 

1435, ‘‘Sugar Program.’’ 

Payment Limitations and Adjusted 

Gross Income 

Section 1605 of the 2014 Farm Bill 

establishes payment and income 

limitations that apply to 2014 and 

subsequent crop, program, or fiscal year 

benefits. FSA previously implemented 

the payment and income limitations 

through the final rule published on 

April 14 (79 FR 21086–21118). The 

payment and income limitations are 

specified in 7 CFR part 1400. 

For the 2014 through 2018 crop years, 

the payment limit on the total amount 

of payments received, directly or 

indirectly, from market loan gains and 

LDPs, together with Price Loss Coverage 

and Agriculture Risk Coverage Program 

payments, is $125,000 per person or 

legal entity for all commodities except 

peanuts. Peanuts have a separate 

payment limit of $125,000 per person or 

legal entity for these same programs. 

Attribution of payments under 7 CFR 

part 1400 applies in administering the 

payment limitation. The average 

Adjusted Gross Income (AGI) limit for 

most FSA and CCC programs is 

$900,000. The $900,000 limit is for total 

average AGI, as opposed to the prior 

multiple limits for farm and non-farm 

income, and the separate limit for 

conservation programs. Producers 

exceeding payment limits or AGI can 

apply for and receive a MAL, but the 

MAL must be repaid at principal and 

interest or the producer must forfeit the 

commodity to CCC in satisfaction of the 

loan debt. 

This rule makes conforming changes 

to AGI and payment limitation 

references throughout 7 CFR parts 1421, 

1425, 1427, and 1434. It also makes a 

technical correction to 7 CFR part 1400 

to correctly specify which programs 

require a person to be actively engaged 

in farming for program eligibility. 

Summary of Discretionary and 

Clarifying Changes in This Rule 

In addition to implementing the 2014 

Farm Bill changes, FSA is making 

changes resulting from our retrospective 

review of the regulations. Most of the 

changes are clarifying changes to make 

the regulations clear and consistent. 

Many of the changes in this rule are 

to 7 CFR part 1421, ‘‘Grains and 

Similarly Handled Commodities— 

Marketing Assistance Loans and Loan 

Deficiency Payments for 2008 through 

2012.’’ This rule removes references to 

the DCP and ACRE programs that are no 

longer authorized, removes references to 

specific crop years and certain 

legislation, clarifies a number of 

provisions, and removes the option of 

delivering an additional 10 percent of 

the commodity when transferring farmstored MAL collateral into warehouse 

storage. This rule also removes the 

option of determining a reasonable yield 

by using the yields from 3 similar farms. 

This rule amends other parts primarily 

to be consistent with part 1421, and 

with the current part 1400 regulations. 

In 7 CFR part 1425, ‘‘Cooperative 

Marketing Associations,’’ (CMA) this 

rule clarifies market loan gain and LDP 

distribution to CMA members. 

In 7 CFR part 1427, ‘‘Cotton,’’ this 

rule removes references to obsolete 

programs and clarifies dates for the 

cotton programs that the 2014 Farm Bill 

reauthorizes. 

The 2014 Farm Bill reauthorizes the 

Economic Adjustment Assistance for 

Users of Upland Cotton Program and 

continues the payment rate of 3 cents 

per pound, which it has been since 

August 1, 2012. This rule removes the 

references to the previous 4 cents per 

pound rate. 

In 7 CFR part 1434, ‘‘Nonrecourse 

Marketing Assistance Loan and LDP 

Regulations for Honey,’’ this rule 

removes all references to specific forms. 

New and Revised Definitions 

This rule amends §§ 1421.3 and 

1434.3, ‘‘Definitions,’’ to add a 

definition for ‘‘calling a loan’’ to clarify 

the process of accelerating or moving 

forward the maturity date of an 

outstanding MAL. This is the process 

CCC uses when the terms and 

conditions of the MAL note and security 

agreement are violated, such as when a 

producer incorrectly certifies a loan 

quantity or makes any fraudulent 

representation with respect to obtaining 

a loan, or removes or disposes of a farmstored commodity pledged as collateral 

for a loan without authorization. A loan 

is also called to protect CCC’s interest or 

in emergency situations when there is 

physical damage to the storage structure 

putting the loan collateral at risk. 

FSA is adding definitions for ‘‘market 

loan gain’’ and ‘‘locked in repayment 

rate’’ to § 1421.3 to clarify their 

meaning. Market loan gain is the sum of 

loan rate, minus the repayment rate, on 

loans repaid at an amount that is less 

than the loan rate. The total of market 

loan gains cannot exceed the producer’s 

applicable payment limitation according 

part 1400 of this chapter. Locked in 

repayment rate means an announced 

repayment rate on a disbursed MAL. 

The repayment rate can only be locked 

in one time for a designated quantity; if 

multiple locked in rates were in effect 

for different loan quantities, the oldest 

rate is always applied first. 

The definition of ‘‘Control or 

Recording FSA County Office’’ is 

changed to ‘‘Recording FSA County 

Office.’’ FSA now refers to the FSA 

county offices that control a multi 

county producer’s files as the 

‘‘recording FSA county office.’’ 

In 7 CFR part 1425, ‘‘Cooperative 

Marketing Associations,’’ this rule adds 

definitions for ‘‘LDP’’ and for ‘‘market 

loan gain.’’ These definitions add 

consistency with 7 CFR part 1421. 

In 7 CFR part 1427, ‘‘Cotton,’’ this 

rule clarifies the definition for 

‘‘cooperative marketing association,’’ 

and ‘‘warehouse receipt,’’ and removes 

a definition for ‘‘commodity certificate 

exchange.’’ These changes are being 

made to add consistency with 7 CFR 

part 1421 and with current practice. 

In 7 CFR part 1434, ‘‘Nonrecourse 

Marketing Assistance Loan and LDP 

Regulations for Honey,’’ this rule adds 

definitions for ‘‘LDP’’ and ‘‘calling a 

loan,’’ to add clarity and for consistency 

with 7 CFR part 1421. 

All of these changes are being made 

to add clarity and to add consistency 

within the regulations. 

Requesting MALs and LDPs 

Currently, all MAL and LDP 

applications must be submitted to the 

FSA county office where the farm is 

located or to the producer’s 

administrative county. This amendment 

to § 1421.7 clarifies that producers may 

now submit an MAL or LDP application 

at any FSA county office. This rule 

amends § 1421.7 to specify that a 

producer may submit a request for a 

MAL or LDP at any FSA county office. 

The receiving FSA county office will 

forward the MAL or LDP request to the 

administrative county office that is 

responsible for administering programs 

for the farm on which the commodity is 

produced. The administrative county 

office will process and approve the 

MAL or LDP. This is expected to 

provide better service to producers. 

MAL Service Fees 

A service fee is subtracted from the 

MAL principal at the time of 

disbursement. The service fee is used to 

pay for administrative costs including 

security filings and lien searches. This 

rule does not change the amount of the 


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service fee. There is no service fee for 

LDPs. 

This rule makes a small editorial 

change to reflect that the service fee may 

be paid to either FSA or to the loan 

servicing agent. Therefore, in order to 

allow flexibility in depositing the 

proceeds of these fees, the words ‘‘to 

CCC’’ have been removed from 

§§ 1421.104, 1427.13, 1427.169, and 

1434.11. This is a technical correction 

that clarifies how the funds may be 

deposited, which is consistent with 

current policy. 

Changes to Production Calculations 

For production calculations, this rule 

removes references to using production 

from three similar farms in the same 

county to determine an eligible 

commodity production. Instead there 

will be an option to use production as 

determined reasonable by the county 

committee. The option of using ‘‘similar 

farms in the same county’’ to determine 

an eligible commodity production in 

§ 1421.5(e), and ‘‘3 similar farms’’ in 

§ 1421.304 have been removed to 

implement this change. Section 

1421.304(c) has also been amended to 

include the methods for determining the 

production for a graze-out payment and 

is applicable to subpart D of part 1421. 

Specifically, § 1421.304(c) is being 

revised to specify that the payment 

yield will be: 

(1) The yield for the loan commodity 

on the farm in effect for the calculation 

of Price Loss Coverage as specified in 7 

CFR part 1412; 

(2) For a farm for which Agricultural 

Risk Coverage is elected, the payment 

yield that would otherwise be in effect 

for that loan commodity on the farm in 

the absence of such election as specified 

in 7 CFR part 1412; or 

(3) In the case of a farm for which no 

payment yield is established for the loan 

commodity on the farm, an appropriate 

yield as determined by the COC. 

Maturity Dates and Repayment Using 

Collateral 

This rule revises the maturity date 

provisions for MALs to specify that 

maturity dates are no later than the last 

day of the 9th calendar month following 

the month in which the loan was 

approved. This change to §§ 1421.101 

and 1427.7 is needed so that the 

regulations reflect the current way that 

MALs are made. 

Prior to this change, the MAL 

maturity date was determined by the 

date of disbursement. When all MALs 

were disbursed by checks from the FSA 

county offices, the date of approval and 

date of disbursement were generally the 

same. That is no longer the case. All 

FSA disbursements are now made 

through the National Payment System 

for Electronic Funds Transfers or the 

U.S. Department of Treasury, if a check 

is needed, and are available between 2 

and 7 days following approval. 

Section 1203(b) of the 2014 Farm Bill 

prohibits the Secretary from extending 

the MAL term for any loan commodity. 

Although this provision has been in 

previous farm bills, and is current 

policy, it was not in the regulations. 

This rule adds a provision to specify 

that the maturity date of a MAL may not 

be extended. 

This rule also clarifies how CCC will 

take possession of collateral if MALs are 

not repaid by the maturity date. 

Warehouse stored loan collateral is 

forfeited to CCC on the day following 

maturity if the loan is not repaid. Farmstored loan collateral is handled 

differently because the producer still 

holds the collateral. This rule clarifies 

the procedure for farm-stored MALs to 

specify that if the loan is not repaid, 

CCC has the right to acquire title of the 

MAL collateral and to sell or otherwise 

take possession of such collateral 

without any further action by the 

producer. The producer may deliver the 

MAL collateral in accordance with 

instructions issued by FSA. CCC will 

not accept delivery of any quantity in 

excess of 110 percent of the outstanding 

farm-stored MAL quantity. 

Commingling Eligible and Ineligible 

Commodities 

It will no longer be a requirement that 

FSA verify loan quantity, at the 

producer’s expense, when MAL 

commodities are co-mingled with 

ineligible commodities. The service has 

rarely been required and there are other 

processes in place to verify the loan 

quantity. This rule amends § 1421.105 

to no longer make this a mandatory 

requirement, although the producer may 

still request this service. 

Electronic Warehouse Receipts 

This rule revises multiple sections of 

the regulations to clarify the use of 

electronic warehouse receipts (EWRs). 

Many commodity warehouses have 

moved away from paper warehouse 

receipts and use EWRs issued through a 

provider approved by FSA’s Deputy 

Administrator for Commodity 

Operations (DACO) as provided for in 

the regulations for the United States 

Warehouse Act in 7 CFR part 735. The 

use of EWRs is accepted by most 

financial institutions, and meets current 

commodity marketing industry 

standards. EWRs have been approved 

and used for MALs and LDPs for cotton, 

peanuts, and rice for a number of years. 

DACO has approved a provider of EWRs 

for soybeans and a number of grains 

with the possibility of additional MAL 

and LDP commodities moving towards 

EWRs in the future. Benefits to utilizing 

EWRs for MALs include eliminating the 

storage of paper receipts, improving and 

simplifying the tracking of price support 

benefits, eliminating the mailing of 

paper receipts following loan repayment 

or loan forfeiture, eliminating the 

possibility of losing a paper receipt in 

the mail, and improving turnaround 

time from application to disbursement. 

CCC must be the holder of EWRs for any 

commodity under MAL. EWRs are also 

acceptable production evidence for 

LDPs. 

Transfers of MAL Collateral 

The applicable loan rate for MALs is 

based on the loan rate where the 

commodity is stored when the loan is 

initially disbursed. During the loan 

term, a producer may request 

authorization to move the MAL 

commodity to another storage location. 

A MAL commodity moved from one 

farm location for farm stored MALs to 

another farm location will maintain the 

original loan rate. In the past, 

commodities transferred from farm 

stored to warehouse stored also 

acquired the loan rate to match the rate 

for the new storage location, in addition 

to allowing the producer to transfer up 

to an additional 10 percent and receive 

an additional disbursement of the MAL 

commodity. 

This rule removes the provisions 

allowing a 10 percent extra quantity for 

transfers of collateral from farm to 

warehouse storage during the loan term 

in § 1421.108. This simplifies the 

regulations and will not impact most 

producers; for the 2013 crop year, FSA 

processed 3 farm to warehouse transfers 

out of 30,311 total loans. A producer 

can still obtain a new, separate MAL or 

LDP on any amount delivered that is 

over the loan quantity if it is not beyond 

the MAL or LDP availability date for the 

specific commodity as specified in 

§ 1421.7. 

For example, if the collateral for a 

disbursed farm stored MAL for 10,000 

bushels (Bu.) is moved to a warehouse, 

the loan rate applicable to the 

warehouse loan will be the same as the 

original loan rate no matter which 

county the warehouse is in, and the loan 

quantity of the warehouse loan cannot 

be over 10,000 Bu. If the warehouse 

stored quantity is 9,950 Bu., the 

producer will owe CCC for the 

difference applicable to the 50 Bu. times 

the loan rate. If the warehouse stored is 

more than 10,000, the producer can 

request a new MAL for the additional 


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Federal Register / Vol. 80, No. 1 / Friday, January 2, 2015 / Rules and Regulations 117 

quantity or, if applicable, LDP on any 

amounts over the 10,000 Bu., if the new 

MAL request is within the MAL or LDP 

availability date for the commodity. 

This change which will have minimal 

impact due to the small number of farm 

to warehouse MAL transfers requested. 

Producer Liability 

This rule clarifies that the producer is 

liable for the amount of the MAL. As 

currently stated in 7 CFR 1421.105(e)(5), 

CCC will not assume any loss in 

quantity or quality of the MAL collateral 

for farm-stored MALs. This applies to 

all MALs and therefore this rule adds 

that provision to the regulations for 

honey and cotton loans. This is not a 

change in policy, but FSA is adding to 

the regulations to add clarity and 

consistency. For example, weather 

related damages to a grain bin does not 

exclude the responsibility on the 

producer to repay loan collateral that 

can no longer be safely stored for MAL. 

MAL Settlement 

Commodities that are collateral for 

MALs must be delivered to a warehouse 

with a CCC storage agreement. If a 

warehouse with a CCC storage 

agreement is not locally available, then 

CCC may offer the commodity for local 

sale. This includes isolated farm stored 

lots where a local elevator is not 

available and it is not cost effective for 

CCC to pay excess haul. In these 

situations, CCC deposits the sales 

proceeds but settles with the producer 

using the quantity and quality factors of 

the commodity sold. This rule amends 

7 CFR part 1421 to clarify that for both 

non-recourse and recourse local sales, 

the producer will be responsible for any 

costs incurred by CCC, which will be 

deducted from the sales proceeds. 

Specific changes are being made in 7 

CFR 1421.111. If after the settlement or 

the local sale of a recourse loan is 

finalized, the value is greater than the 

amount owed, that extra will be paid to 

the producer. If an amount is still owed 

CCC, a receivable for such difference 

will be established. These changes are 

consistent with current policy and 

merely add clarification to the 

regulations. 

CMAs 

CMAs can obtain MALs and LDPs on 

behalf of their members. The regulations 

for CMAs are specified in 7 CFR part 

1425. This rule revises the regulations to 

be consistent with the new payment 

limitation and AGI requirements for 

market loan gains and LDPs. 

Specifically, this rule clarifies that 

CMAs are required to monitor LDPs 

they receive on behalf of their members 

for payment limitation and AGI 

amounts applied to market loan gains 

and LDPs. 

Cotton 

The 2014 Farm Bill reauthorizes and 

extends existing cotton MAL and LDP 

provisions, which are located at 7 CFR 

part 1427. It also extends the 

authorization for the Economic 

Adjustment Assistance for Users of 

Upland Cotton Program and ELS Cotton 

Competitiveness Payment Program. 

This rule amends 7 CFR part 1427 to 

remove outdated references, and to 

clarify definitions consistent with the 

changes being made to part 1421. 

Current FSA policy instructs county 

offices to not issue payments for less 

than $10 unless requested by the 

producer, and, in most instances, debts 

of less than $25 are disregarded. FSA is 

revising § 1427.20, which specified a 

limit of $9.99 to disregard debts, to be 

consistent with this policy. 

As specified in section 1207 of the 

2014 Farm Bill, the value of assistance 

provided for the Economic Adjustment 

Assistance to users of upland cotton 

will be 3 cents per pound effective 

beginning on August 1, 2013. Therefore, 

this rule amends the beginning date of 

the program in §§ 1427.100(a) and 

1427.101(a) from ‘‘August 1, 2008’’, to 

‘‘August 1, 2013’’. 

The regulations in 7 CFR 1427 subpart 

E provide the regulations for the 

approval of cotton warehouses. This 

rule amends the subpart to remove 

specific form numbers and OMB control 

numbers for those forms. 

The regulations for the ELS Cotton 

Competitiveness Payment Program are 

revised to remove specific dates for the 

program. The ELS Program is 

reauthorized by the 2014 Farm Bill 

without change. 

Honey 

The 2014 Farm Bill reauthorizes and 

extends existing honey MAL and LDP 

provisions. This rule makes conforming 

changes to make part 1434 consistent 

with other MAL and LDP regulations, 

and to remove specific form numbers. 

This rule also clarifies how producers 

and CCC will be paid if a MAL is not 

repaid by the maturity date. There are 

no CCC approved warehouses for honey 

and all nonrecourse marketing 

assistance loans not repaid by the loan 

maturity date are therefore disposed of 

through local sale. The value of the 

settlement for eligible honey will be 

made on the basis of the color of the 

unprocessed honey as determined by an 

official Agricultural Marketing Service 

grade. If the value of the honey at 

settlement is less than the amount due, 

the producer will pay CCC the amount 

of the difference plus interest on the 

difference. If the value is greater, the 

excess will be paid to the producer. 

Other Miscellaneous Changes 

This rule removes references to 

specific crop years. This rule also 

removes references to the ACRE 

program, which was not reauthorized by 

the 2014 Farm Bill. 

FSA now uses the term ‘‘receivable’’ 

instead of ‘‘claim’’ as the term for 

amounts owed. The term ‘‘claim’’ is 

therefore replaced with ‘‘receivable’’ in 

this rule. 

In addition, nonsubstantive 

housekeeping changes are being made to 

the regulations to fix typographical 

errors and add to the clarity, readability, 

and consistency of the regulations. 

These changes do not represent 

substantive policy or administrative 

changes. For example, these changes 

include replacing the words ‘‘marketing 

assistance loan’’ with the acronym 

‘‘MAL,’’ replacing the words ‘‘loan 

deficiency payment’’ with the acronym 

‘‘LDP,’’ replacing references to ‘‘service 

center’’ with ‘‘county office,’’ and 

replacing ‘‘shall.’’ 

Technical Correction 

In addition to the specific MAL and 

LDP changes, this rule is making a 

technical correction for a minor 

organizational error that relates to MAL 

and other FSA administered programs. 

The correction will renumber 

paragraphs that were published 

incorrectly in the Agriculture Risk 

Coverage (ARC) and Price Loss Coverage 

(PLC) Programs final rule, which was 

published on September 26, 2014 (79 FR 

57703–57721). In 7 CFR 718.8, 

‘‘Administrative County,’’ paragraph (f) 

should be paragraph (e)(3) and 

paragraph (g) should be paragraph (f). 

This rule corrects those inadvertent 

errors. 

Notice and Comment 

In general, the Administrative 

Procedure Act (APA, 5 U.S.C. 553) 

requires that a notice of proposed 

rulemaking be published in the Federal 

Register and interested persons be given 

an opportunity to participate in the 

rulemaking through submission of 

written data, views, or arguments with 

or without opportunity for oral 

presentation, except when the rule 

involves a matter relating to public 

property, loans, grants, benefits, or 

contracts. The regulations to implement 

the provisions of Title I and the 

administration of Title I of the 2014 

Farm Bill are exempt from the notice 

and comment provisions of 5 U.S.C. 553 


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118 Federal Register / Vol. 80, No. 1 / Friday, January 2, 2015 / Rules and Regulations 

and the Paperwork Reduction Act (44 

U.S.C. chapter 35), as specified in 

section 1601(c)(2) of the 2014 Farm Bill. 

Effective Date 

The Administrative Procedure Act (5 

U.S.C. 553) provides generally that 

before rules are issued by Government 

agencies, the rule is required to be 

published in the Federal Register, and 

the required publication of a substantive 

rule is to be not less than 30 days before 

its effective date. One of the exceptions 

is when the agency finds good cause for 

not delaying the effective date. 

Subsection 1601(c)(2) of the 2014 Farm 

Bill makes this final rule exempt from 

notice and comment. Therefore, using 

the administrative procedure provisions 

in 5 U.S.C. 553, FSA finds that there is 

good cause for making this rule effective 

less than 30 days after publication in the 

Federal Register. This rule allows FSA 

to make the changes to the MAL and 

LDP regulations in time for the new loan 

rates to be effective for 2015. Therefore, 

this final rule is effective when 

published in the Federal Register. 

Executive Orders 12866 and 13563 

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. 

The Office of Management and Budget 

(OMB) designated this rule as not 

significant under Executive Order 12866 

and, therefore, OMB has not reviewed 

this final rule. 

Regulatory Flexibility Act 

The Regulatory Flexibility Act (5 

U.S.C. 601–612), as amended by the 

Small Business Regulatory Enforcement 

Fairness Act of 1996 (SBREFA), 

generally requires an agency to prepare 

a regulatory analysis of any rule 

whenever an agency is required by APA 

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 as noted above, this rule is 

exempt from notice and comment 

rulemaking requirements of the APA 

and no other law requires that a 

proposed rule be published 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). The 2014 Farm Bill reauthorizes 

the MAL and LDP Programs and they 

are to be continued with no changes to 

the loan rates except for cotton, and 

there are no other changes to the basic 

structure of the programs. This rule will 

remove the references to the program 

years that previously limited the 

programs to 2008 through 2012, and 

make some other minor discretionary 

changes to add clarity to the regulations. 

As such, FSA has determined that the 

discretionary provisions identified in 

this final rule are minor and 

administrative in nature, intended to 

clarify the mandatory requirements of 

the programs, as defined in the 2014 

Farm Bill, and do not constitute a major 

Federal action that would significantly 

affect the quality of the human 

environment, individually or 

cumulatively. Therefore, FSA will not 

prepare an environmental assessment or 

environmental impact statement for this 

regulatory 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 the 

2014 crop year, and as specified by the 

2014 Farm Bill and explained in this 

rule, certain provisions are effective 

beginning August 1, 2013. Before any 

judicial actions may be brought 

regarding the provisions of this 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 governmentto-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. 

FSA has assessed the impact of this 

rule on Indian tribes and determined 

that this rule does not, to our 

knowledge, have tribal implications that 

require tribal consultation under 

Executive Order 13175. If a Tribe 

requests consultation, FSA will work 

with the USDA Office of Tribal 

Relations to ensure meaningful 

consultation is provided where changes, 

additions, and modifications identified 

in this rule are not expressly mandated 

by the 2014 Farm Bill. 

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, and Tribal 

governments or the private sector. 

Agencies generally must prepare a 

written statement, including cost 

benefits analysis, for proposed and final 


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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 in Title II of UMRA, for State, 

local and Tribal governments or the 

private sector. Therefore, this rule is not 

subject to the requirements of sections 

202 and 205 of UMRA. 

SBREFA 

SBREFA normally requires that an 

agency delay the effective date of a 

major rule for 60 days from the date of 

publication to allow for Congressional 

review. This rule is not a major rule 

under SBREFA (Pub. L. 104–121). 

Therefore, FSA is not required to delay 

the effective date for 60 days from the 

date of publication to allow for 

Congressional review. Accordingly, this 

rule is effective on the date of 

publication in the Federal Register. 

Federal Assistance Programs 

The title and number of the Federal 

Domestic Assistance Program in the 

Catalog of Federal Domestic Assistance, 

to which this rules applies is the 

Commodity Loans and Loan Deficiency 

Payments—10.051. 

Paperwork Reduction Act 

The regulations in this rule are 

exempt from requirements of the 

Paperwork Reduction Act (44 U.S.C. 

Chapter 35), as specified in Section 

1601(c)(2)(B) of the 2014 Farm Bill, 

which provides that these regulations be 

promulgated and administered without 

regard to the Paperwork Reduction Act. 

E-Government Act Compliance 

FSA is 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 718 

Acreage allotments, Drug traffic 

control, Loan programs-agriculture, 

Marketing quotas, Price support 

programs, Reporting and recordkeeping 

requirements. 

7 CFR Part 1400 

Agriculture, Loan programsagriculture, Conservation, Price support 

programs. 

7 CFR Part 1421 

Barley, Feed grains, Grains, Loan 

Programs-agriculture, Oats, Oilseeds, 

Peanuts, Price support programs, 

Reporting and recordkeeping 

requirements, Soybeans, Surety bonds, 

Warehouses and Wheat. 

7 CFR Part 1425 

Agricultural commodities, 

Confidential business information, 

Cooperatives and Reporting and 

recordkeeping requirements. 

7 CFR Part 1427 

Cotton, Cottonseeds, Loan programsagriculture, Packaging and containers, 

Price support programs, Reporting and 

recordkeeping requirements, Surety 

bonds and Warehouses. 

7 CFR Part 1434 

Honey, Loan programs-agriculture, 

Price support programs and Reporting 

and recordkeeping requirements. 

7 CFR part 1435 

Loan programs-agriculture, Penalties, 

Price support programs, Reporting and 

recordkeeping requirements, Sugar. 

For the reasons discussed above, CCC 

and FSA amend 7 CFR parts 718, 1400, 

1421, 1425, 1427, 1434, and 1435 as 

follows: 

PART 718—PROVISIONS APPLICABLE 

TO MULTIPLE PROGRAMS 

■ 1. The authority citation continues to 

read as follows: 

Authority: 7 U.S.C. 1501–1531, 1921– 

2008v, 7201–7334, and 15 U.S.C. 714b. 

Subpart A—General Provisions 

■ 2. Amend § 718.8 as follows: 

■ a. In paragraph (e)(1), remove the 

word ‘‘and’’; 

■ b. In paragraph (e)(2), remove the 

period and add the word and 

punctuation ‘‘; and’’ in its place; and 

■ c. Redesignate paragraph (f) as 

paragraph (e)(3) and redesignate 

paragraph (g) as paragraph (f). 

PART 1400—PAYMENT LIMITATION 

AND PAYMENT ELIGIBILITY 

■ 3. The authority citation for part 1400 

continues to read as follows: 

Authority: 7 U.S.C. 1308, 1308–1, 1308–2, 

1308–3, 1308–3a, 1308–4, and 1308–5. 

§ 1400.1 [Amended] 

■ 4. Amend § 1400.1 as follows: 

■ a. Redesignate paragraphs (a)(2) and 

(3) as paragraphs (a)(3) and (2), 

respectively; 

■ b. In redesignated paragraph (a)(2), 

remove ‘‘1421 and’’ and add ‘‘1421, 

1427, and’’ in their place; 

■ c. In paragraphs (a)(8) and (b)(2), 

remove the reference to ‘‘(a)(2)’’ and add 

a reference to ‘‘(a)(3)’’ in its place; and 

■ d. In paragraph (b)(1), remove the 

reference to ‘‘(3)’’ and add a reference to 

‘‘(2)’’ in its place. 

PART 1421—GRAINS AND SIMILARLY 

HANDLED COMMODITIES— 

MARKETING ASSISTANCE LOANS 

AND LOAN DEFICIENCY PAYMENTS 

■ 5. Revise the authority citation for part 

1421 to read as follows: 

Authority: 7 U.S.C. 7231–7237, 7931–7936, 

and 9031- 40, 15 U.S.C. 714b and c. 

■ 6. Revise the part heading to read as 

shown above. 

Subpart A—General 

■ 7. Amend § 1421.1 as follows: 

■ a. Revise paragraph (a); 

■ b. In paragraph (b)(1), remove the 

words ‘‘marketing assistance’’ and add 

the word ‘‘MAL’’ in their place and 

remove the words ‘‘loan deficiency 

payment programs’’ and add the words 

‘‘LDP Programs’’ in their place; 

■ c. In paragraph (b)(2), remove the 

words ‘‘Loan deficiency payments 

shall’’ and add the words ‘‘LDPs will’’ 

in their place; 

■ d. In paragraph (c), remove the words 

‘‘Marketing assistance loans’’ and add 

the word ‘‘MALs’’ in their place; 

■ e. In paragraph (d), remove the words 

‘‘marketing assistance loans’’ and add 

the word ‘‘MALs’’ in their place; 

■ f. In paragraphs (c) and (d), remove 

the words ‘‘loan deficiency payments’’ 

and add the words ‘‘LDPs’’ in their 

place; and 

■ g. Add paragraph (e). 

The revisions and addition read as 

follows: 

§ 1421.1 Applicability and interest. 

(a) The regulations in this subpart are 

applicable to crops of barley, small and 

large chickpeas, corn, grain sorghum, 

lentils, oats, dry peas, peanuts, rice, 

wheat, wool, mohair, oilseeds and other 

crops designated by Commodity Credit 

Corporation (CCC). These regulations 

specify the general provisions under 

which Marketing Assistance Loans 

(MALs) and Loan Deficiency Payments 

(LDPs) will be administered by CCC. 

Additional terms and conditions are in 

the additional documents required to 

receive MALs and LDPs. In any case in 

which money must be refunded to CCC 

in connection with this part, interest 

will be due to run from the date of 

disbursement of the sum to be refunded. 


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This provision will apply, unless 

waived by the Deputy Administrator, 

irrespective of any other rule. 

* * * * * 

(e) Adjusted Gross Income (AGI) and 

payment limitation provisions specified 

in part 1400 of this chapter apply to this 

part. 

§ 1421.2 [Amended] 

■ 8. Amend 1421.2 as follows: 

■ a. In paragraph (a), remove the words 

‘‘marketing assistance loan’’ and add the 

word ‘‘MAL’’ in their place and remove 

the words ‘‘loan deficiency payment 

program’’ and add the words ‘‘LDP 

Programs’’ in their place and remove the 

word ‘‘shall’’ both times it appears and 

add the word ‘‘will’’ in its place; 

■ b. In paragraph (e), remove the words 

‘‘marketing assistance loan’’ and add the 

word ‘‘MAL’’ in their place and remove 

the words ‘‘loan deficiency payment 

program’’ and add the words ‘‘LDP 

Programs’’ in their place; and 

■ c. In paragraph (f), remove the words 

‘‘marketing assistance loan’’ and add the 

word ‘‘MAL’’ in their place and remove 

the words ‘‘loan deficiency payment’’ 

and add the word ‘‘LDP’’ in their place 

and remove the word ‘‘shall’’ and add 

the word ‘‘will’’ in its place. 

■ 9. Amend § 1421.3 as follows: 

■ a. Add, in alphabetical order, 

definitions for ‘‘Calling a loan’’, 

‘‘Locked in repayment rate’’, ‘‘Market 

loan gain’’, and ‘‘Recording FSA county 

office’’; 

■ b. Remove the definitions 

‘‘Commodity certificate exchange’’ and 

‘‘Control or recording FSA County 

office’’ and ‘‘Crop year’’; 

■ c. Revise the definitions of ‘‘Crop’’, 

‘‘Incorrect certification’’, and ‘‘Loan 

deficiency payment (LDP)’’; 

■ d. In the definition of ‘‘Charges’’, 

remove the word ‘‘loan’’ and add the 

words ‘‘a MAL’’ in its place; 

■ e. In the definition of ‘‘Designated 

Marketing Association’’, remove the 

words ‘‘marketing assistance loans’’ and 

add the word ‘‘MALs’’ in their place and 

remove the words ‘‘loan deficiency 

payments’’ and add the word ‘‘LDPs’’ in 

their place; 

■ f. In the definition of ‘‘Loan 

settlement’’, remove the words 

‘‘effective with the 2009 through 2012’’ 

and add the words ‘‘for the applicable’’ 

in their place; 

■ g. In the terms ‘‘Unauthorized 

disposition’’ and ‘‘Unauthorized 

removal’’, remove the word ‘‘loan’’ each 

time it appears and add the word 

‘‘MAL’’ in its place; and 

■ h. In the definition of ‘‘Warehouse 

receipt’’, paragraph (2), add the word 

and punctuation ‘‘(EWR)’’ after the word 

‘‘receipt’’. 

The revisions and additions read as 

follows: 

§ 1421.3 Definitions. 

* * * * * 

Calling a loan is accelerating or 

moving forward the maturity date of an 

outstanding MAL. A MAL can be called 

when, as determined by CCC, the terms 

and conditions of the MAL note and 

security agreement are violated, a 

producer incorrectly certifies a loan 

quantity or makes any fraudulent 

representation with respect to obtaining 

a loan, removing or disposing of a farmstored commodity pledged as collateral 

for a loan without authorization, to 

protect CCC’s interest, or in emergency 

situations. 

* * * * * 

Crop means with respect to a year, 

commodities harvested in that year. 

Therefore, the referenced crop year of a 

commodity means commodities that 

when planted were intended for harvest 

in that calendar year. 

* * * * * 

Incorrect certification means the 

certifying of a quantity of a commodity 

for the purpose of obtaining a MAL or 

LDP in excess of the quantity eligible for 

such MAL or LDP or the making of any 

fraudulent representation with respect 

to obtaining MALs or LDPs. 

Locked in repayment rate means an 

announced repayment rate on a 

disbursed MAL that the producer has 

locked in for 60 calendar days. All 

locked in repayment rates expire within 

14 calendar days before the loan 

maturity date. MAL can be repaid either 

at principal plus interest or the 

repayment rate in effect on the date the 

repayment is made. The repayment rate 

can only be locked in one time for a 

designated quantity and, if multiple 

locked in repayment rates are in effect 

for quantities under MAL that have not 

had a locked in repayment rate, the 

oldest rate is always applied first. 

* * * * * 

Loan deficiency payment (LDP) means 

a payment made in lieu of a MAL when 

the CCC-determined value, which is 

based on the current local price in a 

county, is below the applicable county 

loan rate. The payment is the difference 

between the two rates times the eligible 

quantity. 

* * * * * 

Market loan gain is the loan rate, 

minus the repayment rate on loans 

repaid at a rate that is less than the loan 

rate. The total of all market loan gains 

received by a producer for an applicable 

crop year cannot exceed the producer’s 

applicable payment limitation as 

specified in part 1400 of this chapter. A 

producer’s adjusted gross income must 

also be below the limit as specified in 

part 1400 of this chapter to receive a 

market loan gain. 

* * * * * 

Recording FSA County Office is the 

FSA County Office that records 

eligibility data for producers designated 

as multi-county producers. 

* * * * * 

■ 10. Amend § 1421.4 as follows: 

■ a. In paragraph (a)(2)(v), remove the 

words ‘‘for 2009 and Subsequent Crops, 

Programs, or Fiscal Years’’; 

■ b. Revise paragraph (a)(2)(ix); 

■ c. In paragraph (b), remove the words 

‘‘shall be’’ both times they appear and 

add the word ‘‘is’’ in their place, remove 

the words ‘‘marketing assistance loans’’ 

and add the word ‘‘MALs’’ in their 

place, and remove the words ‘‘loan 

deficiency payment’’ and add the word 

‘‘LDP’’ in their place; 

■ d. In paragraph (c) introductory text, 

remove the words ‘‘marketing assistance 

loans’’ and add the word ‘‘MALs’’ in 

their place, and remove the words ‘‘loan 

deficiency payments’’ and add the 

words ‘‘LDPs’’ in their place; 

■ e. In paragraph (c)(2), remove the 

words ‘‘marketing assistance loan’’ and 

add the word ‘‘MAL’’ in their place, and 

remove the words ‘‘loan deficiency 

payment’’ and add the words ‘‘LDP’’ in 

their place; 

■ f. Revise paragraph (d); 

■ g. Revise paragraphs (e)(1)(ii) and (f); 

■ h. In paragraphs (e)(1)(iii) and (2) 

remove the word ‘‘loan’’ each time it 

appears and add the word ‘‘MAL’’ in its 

place; 

■ i. In paragraph (g), remove the word 

‘‘shall’’ and add the word ‘‘will’’ in its 

place, remove the words ‘‘marketing 

assistance loan’’ both times it appears 

and add the word ‘‘MAL’’ in their place, 

and remove the words ‘‘loan deficiency 

payment’’ both times it appears and add 

the word ‘‘LDP’’ in their place; and 

■ j. Add paragraph (h). 

The revisions and addition read as 

follows: 

§ 1421.4 Eligible producers. 

(a) * * * 

(2) * * * 

(ix) 7 CFR part 1412—Agriculture 

Risk Coverage, Price Loss Coverage, and 

Cotton Transition Assistance Programs; 

and 

* * * * * 

(d) If more than one producer 

executes a note and security agreement 

with CCC, each such producer is jointly 

and severally liable for any violation of 

the terms and conditions of the note and 

security agreement and the regulations 

in this part. Each such producer also 


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Federal Register / Vol. 80, No. 1 / Friday, January 2, 2015 / Rules and Regulations 121 

remains liable for repayment of the 

entire MAL amount until the MAL is 

fully repaid without regard to such 

producer’s claimed share in the 

commodity pledged as collateral for the 

MAL. In addition, such producer may 

not amend the note and security 

agreement with respect to the 

producer’s claimed share in such 

commodities, or MAL proceeds, after 

execution of the note and security 

agreement by CCC. 

(e) * * * 

(1) * * * 

(ii) Not allowed an FSA representative 

access to the site where commodities 

pledged as collateral for MALs were 

stored, or otherwise failed to cooperate 

in the settlement of MAL; or 

* * * * * 

(f) A CMA may obtain a MAL and 

LDP on eligible production of a MAL 

commodity on behalf of its members 

who are eligible to receive MALs or 

LDPs with respect to a crop of a 

commodity. For purposes of this 

subpart, the term ‘‘producer’’ includes a 

CMA. 

* * * * * 

(h) A producer must meet the 

requirements of actively engaged in 

farming, cash rent tenant, and member 

contribution as specified in part 1400 of 

this chapter to be eligible for LDPs and 

market loan gains. 

■ 11. Amend § 1421.5 as follows: 

■ a. In paragraph (a) introductory text, 

remove the word ‘‘loan’’ and add the 

word ‘‘MAL’’ in its place; 

■ b. In paragraph (c)(1), remove the 

words ‘‘for a loan’’ and add the words 

‘‘for a MAL’’ in its place and remove the 

words ‘‘marketing assistance loan’’ and 

add the word ‘‘MAL’’ in their place; 

■ c. In paragraph (c)(5), remove the 

words ‘‘marketing assistance loans’’ and 

add the word ‘‘MALs’’ in their place and 

remove the words ‘‘loan deficiency 

payments’’ and add the word ‘‘LDPs’’ in 

their place; 

■ d. In paragraph (d)(2), remove the 

word ‘‘loan’’ and add the word ‘‘MAL’’ 

in its place; 

■ e. In paragraph (e), remove the words 

‘‘or similar farms in the same county; 

or’’ and add the word ‘‘or’’ in their 

place; and 

■ f. Revise paragraph (f). 

The revision reads as follows: 

§ 1421.5 Eligible commodities. 

* * * * * 

(f) A commodity that is purchased, 

substituted, or acquired by sale, gift, or 

exchange of an existing harvested, 

sheared, or slaughtered commodity, or 

through any other transaction is 

ineligible to be pledged as collateral for 

a MAL; in addition an LDP will not be 

made with respect to such commodities. 

§ 1421.6 [Amended] 

■ 12. Amend § 1421.6 as follows: 

■ a. In paragraph (a), remove the words 

‘‘marketing assistance loans’’ and add 

the word ‘‘MALs’’ in their place, remove 

the words ‘‘marketing assistance loan’’ 

both times they appear and add the 

word ‘‘MAL’’ in their place, and remove 

the words ‘‘loan deficiency payment’’ 

both times they appear and add the 

word ‘‘LDP’’ in their place; 

■ b. In paragraph (b), introductory text, 

remove the words ‘‘marketing assistance 

loan’’ and add the word ‘‘MAL’’ in their 

place; and remove the words ‘‘the loan’’ 

and add the words ‘‘the MAL’’ in its 

place; 

■ c. In paragraph (b)(2) and (b)(3) 

remove the word ‘‘loan’’ each time it 

appears and add the word ‘‘MAL’’ in its 

place; 

■ d. In paragraph (c) introductory text, 

remove the words ‘‘a loan commodity’’ 

and add the words ‘‘an eligible 

commodity’’ in their place; 

■ e. In paragraph (c)(3), remove the 

words ‘‘loan deficiency rate’’ and add 

the words ‘‘LDP rate’’ in their place; 

■ f. In paragraph (f), remove the words 

‘‘cooperative marketing association’’ 

each time they appear and add the 

acronym ‘‘CMA’’ in their place; 

■ g. In paragraph (h)(2), remove the 

words ‘‘CCC loan’’ and add the word 

‘‘MAL’’ in their place; and 

■ h. Revise paragraph (i) introductory 

text. 

The revision reads as follows: 

§ 1421.6 Beneficial interest. 

* * * * * 

(i) Commodities produced under a 

contract in which the title to the seed 

remains with the entity providing the 

seed to the producer, including 

contracts for the production of hybrid 

seed, genetically modified commodities, 

and other specialty seeds as approved in 

writing by CCC, are eligible to be 

pledged as collateral for a MAL or a LDP 

may be made with respect to such 

production if, at the time of the request 

for such a MAL or LDP, the producer 

has not: 

* * * * * 

■ 13. Amend § 1421.7 as follows: 

■ a. Revise the heading; and 

■ b. Revise paragraphs (a), (b), and (c) 

introductory text. 

The revisions read as follows: 

§ 1421.7 Requesting MALs and LDPs. 

(a) A producer may apply for a MAL 

or LDP at any FSA county office. The 

receiving FSA county office will 

forward the MAL or LDP request to the 

administrative county office, as 

specified in part 718 of this title, that is 

responsible for administrating programs 

for the farm on which the commodity 

was produced. The administrative 

county office will process and approve 

the MAL or LDP. 

(b) A MAL or LDP may be requested 

in person, by mail, or by electronic 

format designated by CCC. Forms 

prescribed by CCC may be obtained 

from the FSA Web site. 

(c) To receive a MAL or LDP for an 

eligible commodity, a producer must 

execute a note and security agreement 

or LDP application on or before the 

applicable final loan availability date, as 

follows: 

* * * * * 

■ 14. Amend § 1421.8 as follows: 

■ a. Revise paragraphs (a), (b)(1) 

introductory text, and (b)(2); 

■ b. Remove paragraph (b)(1)(i) and 

redesignate (b)(1)(ii) and (iii) as (b)(1)(i) 

and (ii), respectively; 

■ c. Revise paragraph (c). 

The revisions read as follows: 

§ 1421.8 Eligible quantity. 

(a) With respect to MALs and LDPs 

for: 

(1) Farm-stored commodities, all 

determinations of weight and quality, 

except as otherwise agreed to or 

required by CCC, will be determined at 

the time of delivery of the commodity 

to CCC or at the time the LDP 

application is filed for measured 

requests, if applicable, or selected for 

spot-check for certified requests. 

(2) Warehouse-stored commodities, 

all determinations of grade, weight and 

quality, except as otherwise agreed to or 

required by CCC, will be determined at 

the time the MAL is forfeited to CCC. 

(b)(1) A producer may, before the final 

MAL availability date for obtaining a 

MAL for a commodity, repledge as 

collateral for securing a MAL any 

commodity that had been previously 

pledged as collateral for a MAL, except 

with respect to: 

* * * 

(2) The commodity repledged as 

security for the subsequent MAL will 

have the same maturity date, under 

§ 1421.101 as the original MAL. 

(c)(1) The MAL documents will not be 

presented for disbursement unless the 

commodity subject to the note and 

security agreement is an eligible 

harvested commodity, is in existence, 

and is in authorized farm or warehouse 

storage, as determined by CCC. If the 

commodity was not either an eligible 

commodity, in existence, or in 

authorized storage at the time of 

disbursement, the total amount 


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122 Federal Register / Vol. 80, No. 1 / Friday, January 2, 2015 / Rules and Regulations 

disbursed under the MAL and charges 

plus interest must be refunded promptly 

by the producer. 

(2) CCC will limit the total quantity 

for MAL or LDP disbursement to 100 

percent of the quantity of such MAL or 

LDP application. A producer may obtain 

a separate MAL or LDP before the final 

loan availability date for the commodity 

for quantities in excess of 100 percent 

of such quantity if such quantities are 

otherwise eligible. 

■ 15. Amend § 1421.9 as follows; 

■ a. Revise paragraphs (c) and (f); and 

■ b. Remove paragraph (g). 

The revisions read as follows: 

§ 1421.9 Basic loan rates. 

* * * * * 

(c) Subject to adjustment as specified 

in paragraph (f) of this section, in case 

of forfeiture, for all commodities except 

rice and peanuts, warehouse-stored 

MALs will be disbursed at levels based 

on the basic county MAL rate for the 

county where the commodity is stored. 

(1) For rice, subject to adjustment as 

specified in paragraph (f) of this section, 

in case of forfeiture, warehouse-stored 

MALs will be disbursed at levels based 

on the milling yields times the whole 

and broken kernel MAL rates. 

(2) For peanuts, warehouse-stored 

MALs will be disbursed at levels based 

on National loan rates by peanut type, 

adjusted for the schedule of premiums 

and discounts on the basis of grade, 

quality, and other factors specified on 

warehouse receipts. 

* * * * * 

(f) For all crop years, premiums and 

discounts will not apply for all eligible 

loan commodities at loan disbursement, 

except for peanuts. However, premiums 

and discounts will apply if the eligible 

loan commodities are forfeited or 

delivered to CCC and any deficiency 

must be repaid to CCC. 

■ 16. Amend § 1421.10 as follows: 

■ a. Revise paragraphs (a) introductory 

text, (c)(1), and (d); 

■ b. Revise paragraphs (h)(5)(i), (ii), and 

(iii); 

■ c. In paragraph (j)(1), (j)(2), (m) 

introductory text, and (p)(2) remove the 

word ‘‘loan’’ each time it appears and 

add the word ‘‘MAL’’ in its place; 

■ d. Revise paragraphs (j)(7) through 

(j)(10) and add paragraph (j)(11); and 

■ e. Revise paragraphs (k) introductory 

text, (l), and (m)(2). 

The revisions and additions read as 

follows: 

§ 1421. 10 Loan repayment rates. 

(a) For the applicable crop years of 

barley, corn, grain sorghum, oats, wheat, 

dry peas, lentils, chickpeas, oilseeds, 

wool, mohair, and other crops as 

designated by CCC (other than peanuts, 

long grain rice, medium grain rice, and 

confectionery and each other kind of 

sunflower seed (other than oil sunflower 

seed)), a producer may repay a 

nonrecourse MAL at a rate that is the 

lesser of: 

* * * * * 

(c) * * * 

(1) A producer may repay a 

nonrecourse MAL for peanuts at a rate 

that is the lesser of: 

* * * * * 

(d) For peanuts, the Secretary will 

require the repayment of handling and 

other associated costs paid under 

§ 1421.104 for all peanuts pledged as 

collateral for a MAL that are redeemed 

under this section. 

* * * * * 

(h) * * * 

(5) * * * 

(i) The last Wednesday of July in the 

calendar year following the year the rice 

crop was harvested, or in which the rice 

MAL matures, 

(ii) The last Wednesday of the latest 

month the rice MAL matures, or 

(iii) If Tuesday is not a normal 

business day, the price determination 

may be made on the next work day and 

announced the following day, on or 

after 7 a.m. Eastern Standard Time. 

* * * * * 

(j) * * * 

(7) For multiple locked in requests, 

the oldest unexpired locked in 

repayment rate is applied first. 

(8) The completed and signed form 

can be submitted in person, by 

facsimile, or electronically. 

(9) The requests cannot be canceled, 

terminated, or changed after approval. 

(10) The locked in applicable 

repayment rate will transfer to any MAL 

disbursed outside of the originating 

county where the commodity was 

stored. 

(11) Once a repayment rate is locked 

in it cannot be extended. 

(k) If a producer fails to repay a MAL 

within the time prescribed by CCC 

under the terms and conditions of the 

request to lock in a market loan 

repayment rate, the producer may repay 

the MAL: 

* * * * * 

(l) When the proceeds of the sale of 

the commodity are needed to repay all 

or a part of a farm-stored MAL, the 

producer must request and obtain prior 

written approval on a CCC-approved 

form and comply with the terms and 

conditions of such form, to remove a 

specified quantity of the commodity 

from storage. Approval does not 

constitute release of CCC’s security 

interest in the commodity or release of 

producer liability for amounts due CCC 

for the MAL indebtedness if payment in 

full is not received by the FSA county 

office. Failure to repay a MAL within 

the time period prescribed by CCC in 

the case of a farm-stored loan and 

delivery of the pledged collateral to a 

buyer is a violation of the agreement. In 

the case of such violation, the producer 

must repay the loan principal and 

interest or another amount as 

determined by the Deputy 

Administrator, FSA, as specified in 

§ 1421.109. 

(m) * * * 

(2) An amount less than the principal 

amount of the MAL and charges plus 

interest under the terms and conditions 

specified by CCC at the time the 

producer redeems the collateral for such 

MAL. 

* * * * * 

■ 17. Revise § 1421.11(a) and (b) to read 

as follows: 

§ 1421.11 Spot checks. 

(a) CCC may inspect the collateral for 

MALs, and producers with such MALs 

must allow CCC reasonable access to the 

farm and storage facility as necessary to 

conduct ‘‘spot check’’ collateral 

inspections. Spot checks are intended to 

verify that the quality and quantity of 

farm-stored commodities pledged as 

collateral for MALs are maintained by 

the producer. 

(b) LDPs are selected for spot check to 

ensure that all eligibility requirements, 

as required by CCC, are met in order to 

receive such LDP. 

* * * * * 

■ 18. Revise § 1412.12(a) introductory 

text, (a)(1)(i) through (x), and (b) to read 

as follows: 

§ 1421.12 Production evidence. 

(a) Producers who redeem MAL 

collateral at the prevailing world market 

price for rice, or the alternative 

repayment rate for all other 

commodities, as CCC determines or 

receives an LDP may be required to 

provide CCC with: 

(1) * * * 

(i) Evidence of sales; 

(ii) Delivery evidence; 

(iii) Load summaries from warehouse, 

processor, or buyer; 

(iv) Warehouse receipts including 

EWRs; 

(v) Paid measurement service; 

(vi) Spot check measurements with 

paid measurement service; 

(vii) Cleaning tickets for seed; 

(viii) Scale tickets, if not issued by the 

producer for the producer’s own 

production; 

(ix) Core tests for wool and mohair; or 


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(x) Maximum eligible quantity as 

determined by CCC. 

* * * * * 

(b) A producer who fails to provide 

acceptable evidence of production is be 

required to repay the market loan gain 

or LDP and charges, plus interest, as 

determined by CCC. 

■ 19. Amend § 1421.14 as follows: 

■ a. Revise the section heading; 

■ b. In paragraph (a) introductory text, 

remove the word ‘‘loans’’ and add the 

word ‘‘MALs’’ in its place; and 

■ c. Revise paragraph (b). 

The revision reads as follows: 

§ 1421.14 Obtaining peanut MALs. 

* * * * * 

(b) The MAL documents will not be 

presented for disbursement unless the 

peanuts pledged as collateral for the 

MAL are eligible as specified in 

§ 1421.8. If the peanuts were ineligible 

at the time of the disbursement, the total 

amount disbursed under MAL, or as an 

LDP, plus charges and interest will be 

refunded promptly. 

Subpart B—Marketing Assistance 

Loans 

■ 20. Amend § 1421.101 as follows: 

■ a. Revise paragraph (a)(1); and 

■ b. Add paragraph (b). 

The revision and addition read as 

follows: 

§ 1421.101 Maturity dates. 

(a)(1) All MALs will mature on 

demand by CCC and no later than the 

last day of the 9th calendar month 

following the month in which the note 

and security agreement is filed and 

approved except for transferred MAL 

collateral. The maturity date for 

transferred MAL collateral will be the 

maturity date applicable to the original 

MAL that was transferred. 

* * * * * 

(b) The maturity date of any MAL may 

not be extended. 

■ 21. Revise § 1421.102(a)(2)(i), (ii), (3), 

and (5) to read as follows. 

§ 1421.102 Adjustment of basic loan rates. 

(a) * * * 

(2) * * * 

(i) Crop year specific schedules of 

premiums and discounts, the MAL rate 

will be adjusted for the higher of the 

discount for test weight or grade based 

on test weight. 

(ii) Additional schedule of discounts, 

the MAL rate will be reduced to 20 

percent of the county loan rate. 

(3) With respect to commodities 

harvested, excluding silage or hay, as 

other than grain and pledged as 

collateral for a nonrecourse MAL, the 

MAL rate will be discounted to 30 

percent of the county loan rate. 

* * * * * 

(5) With respect to Segregation 2 and 

3 peanuts as determined by CCC, the 

MAL rate will be discounted to 35 

percent of the applicable loan rate. 

■ 22. Revise § 1421.103(b) to read as 

follows: 

§ 1421.103 Authorized storage. 

* * * * * 

(b) CCC may reduce the quantity of a 

commodity pledged as collateral for a 

MAL made available under paragraph 

(a)(2) of this section to not more than 75 

percent of such otherwise eligible 

quantity in order to protect the interests 

of CCC. CCC may also limit the length 

of time the commodity may be stored 

on-ground or in temporary structures to 

not more than 90 days. A MAL made 

with respect to such commodity that is 

not moved to a structure specified in 

(a)(2) within 90 days of the date the 

MAL was disbursed may be called by 

CCC. 

* * * * * 

■ 23. Amend § 1421.104 as follows: 

■ a. Revise the section heading and 

paragraphs (a)(2), (3), and (c); 

■ b. In paragraph (b), remove the words 

‘‘to CCC’’; and 

■ c. Remove paragraph (d). 

The revisions read as follows: 

§ 1421.104 Making MALs. 

(a) * * * 

(2) The cost for terminating the 

financing statement for MALs disbursed 

under this part before the end of the 

term will be paid by the producer. 

(3) If there are any liens or 

encumbrances on the commodity 

pledged as collateral for a MAL made 

under this part, waivers that fully 

protect CCC’s interest must be obtained 

even though the liens or encumbrances 

are satisfied from MAL proceeds 

disbursed under this part. No additional 

liens or encumbrances will be placed on 

the commodity after such a MAL is 

approved. 

* * * * * 

(c) To ensure proper storage of 

peanuts for which a MAL is made under 

this section, the Secretary will pay 

reasonable handling and other 

associated costs (other than storage) 

incurred at the time at which the 

peanuts are placed in a warehouse 

stored MAL. Such rates will be available 

in the State and county FSA offices. 

■ 24. Amend § 1421.105 as follows: 

■ a. Revise the section heading; 

■ b. In paragraph (a) introductory text, 

remove the words ‘‘loan shall and add 

the word ‘‘MAL’’ in its place; 

■ c. Revise paragraphs (a)(1), (b) 

introductory text, (c)(2), (d)(1)(ii), (2), 

(e)(1), (3), and (5); 

■ d. In paragraph (a)(2), remove the 

word ‘‘Have’’ and add the word ‘‘Has’’ 

in its place; and 

■ e. Add paragraph (f). 

The revisions and addition read as 

follows: 

§ 1421.105 Farm-stored MALs. 

(a) * * * 

(1) Certifies the quantity of such 

commodity on the MAL application, or; 

* * * * * 

(b) The State committee may establish 

a MAL percentage not to exceed a 

percentage CCC establishes or it may 

apply quality discounts to the loan rate 

in each year for each commodity on a 

statewide basis or for specified areas 

within the State. Before approving a 

county committee request to establish a 

different loan percentage, or to apply 

quality discounts, the State committee 

will consider conditions in the State or 

areas within a State to determine if the 

MAL percentage should be reduced 

below the maximum MAL percentage or 

the quality discounts should be applied 

to the basic county MAL rate to provide 

CCC with adequate protection. MALs 

disbursed based upon loan percentages 

previously lowered and loan rates 

adjusted for quality will not be altered 

if conditions within the State or areas 

within the State change to substantiate 

removing such reductions. Percentages 

established or loan rates adjusted for 

quality under this section will apply 

only to new MALs and not to 

outstanding MALs. In determining loan 

percentages or the necessity to apply 

quality discounts, the State committee 

will consider any factor at its discretion, 

including the following: 

* * * * * 

(c) * * * 

(2) In all other instances, if the 

producer intends to move MAL 

collateral from a designated structure to 

an undesignated structure, the producer 

must request prior approval from the 

county committee in writing. The 

producer may request that the eligible or 

ineligible commodity be measured by a 

representative of the county office, at 

the producer’s expense, before 

commingling, but such measurement is 

not required. Prior to commingling, with 

respect to wool and mohair, a 

representative of the FSA county 

committee may determine an average 

production of the wool and mohair in a 

manner approved by CCC. 

* * * * * 

(d) * * * 

(1) * * * 


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(ii) Individual MALs for their share of 

the commodity that is commingled in a 

farm storage facility with commodities 

owned by other producers if such other 

producers execute an agreement that 

provides that such producers will obtain 

the permission of a representative of the 

county committee before removal of any 

quantity of the commodity from the 

storage facility. All producers who store 

a commodity in a farm storage facility 

in which commodities that have been 

pledged as collateral for a MAL will be 

liable for any damage incurred by CCC 

for the deterioration or unauthorized 

removal or disposition of such 

commodities. 

(2) In such cases, each producer must 

execute a note and security agreement 

with CCC, and each such producer will 

be jointly and severally liable for the 

violation of the terms and conditions of 

the note and the requirements of this 

part. Each producer is also liable for 

repayment of the entire MAL amount 

until the MAL is fully repaid without 

regard to their share in the commodity 

pledged as collateral. In addition, such 

producer may not amend the note and 

security agreement for the producer’s 

claimed share in such commodities, or 

MAL proceeds, after execution of the 

note and security agreement by CCC. 

(e)(1) A producer, when requesting a 

MAL, will designate in writing specific 

storage structures. 

* * * * * 

(3) Movement of MAL collateral to 

any other structures not designated or 

the disposal of such loan collateral 

without prior written approval of the 

county committee, will subject the 

producer to administrative actions. 

* * * * * 

(5) CCC will not assume any loss in 

quantity or quality of the MAL collateral 

for farm-stored MALs. 

(f) If the producer does not pay CCC 

the total amount due in accordance with 

a MAL by the maturity date, CCC has 

the right to acquire title to the MAL 

collateral and to sell or otherwise take 

possession of such collateral without 

any further action by the producer. With 

respect to farm-stored MALs, the 

producer may, as CCC determines, 

deliver the MAL collateral in 

accordance with instructions issued by 

CCC. CCC will not accept delivery of 

any quantity of a commodity in excess 

of 110 percent of the outstanding farmstored MAL quantity. If a quantity in 

excess of 110 percent of the outstanding 

farm-stored MAL quantity is shown on 

the warehouse receipt or other 

documents, the producer must provide 

replacement warehouse receipts and 

delivery documents. If the warehouse 

receipt and such other documents 

applicable to the settlement are not 

replaced to reflect the excess amount, 

CCC will provide for such corrected 

documents and apply charges for such 

service, if any, to the producer’s account 

as charges for settlement on the MAL. 

■ 25. Revise § 1421.106 section heading, 

and paragraphs (a), (c), and (d) 

introductory text to read as follows: 

§ 1421.106 Warehouse-stored MAL 

collateral. 

(a) A commodity may be pledged as 

collateral for a warehouse-stored MAL 

in the quantity delivered to CCC for 

storage at a warehouse that meets 

standards for approval at part 1423 of 

this chapter. Such quantity is the net 

weight specified on the warehouse 

receipt or supplemental certificate. 

* * * * * 

(c) If more than one producer executes 

a note and security agreement with CCC, 

each such producer is jointly and 

severally liable for the violation of the 

terms and conditions of the note and the 

regulations in this part. Each such 

producer also remains liable for 

repayment of the entire MAL amount 

until the MAL is fully repaid without 

regard to such producer’s claimed share 

in the commodity pledged as collateral 

for the MAL. In addition, such producer 

may not amend the note and security 

agreement with respect to the 

producer’s claimed share in such 

commodities, or MAL proceeds, after 

execution of the note and security 

agreement by CCC. 

(d) Storage rates that CCC has 

approved to be deducted from MAL 

proceeds are available in FSA State and 

county offices and other USDA service 

centers. Deductions are based upon 

entries on the warehouse receipt or 

supplemental certificate, but the storage 

rate is not to exceed the storage rate CCC 

has approved. No storage deduction is 

to be made if written evidence 

acceptable to CCC is submitted 

indicating that: 

* * * * * 

■ 26. Amend § 1421.107 as follows: 

■ a. Revise paragraphs (a), (c), (h) 

introductory text, (h)(2)(ii), and (i)(2); 

■ b. In paragraph (h)(2)(iii), remove the 

words ‘‘shall represent’’ and add the 

word ‘‘represents’’ in their place; 

■ c. In paragraphs (h)(2)(i) and (iv), 

remove the word ‘‘shall’’ and add the 

word ‘‘must’’ in its place; and 

■ d. Add paragraph (k). 

The revision and addition read as 

follows: 

§ 1421.107 Warehouse receipts. 

(a) Warehouse receipts for MALs 

tendered to CCC as specified in § 1421.3 

may either be paper or electronic. All 

receipts, whether paper or electronic, 

must meet all the applicable provisions 

of this section and this part, and CCC 

program document requirements. EWRs 

must be issued by a provider approved 

by CCC. 

* * * * * 

(c) If the receipt is issued for a 

commodity that is owned by the 

warehouse operator either solely, 

jointly, or in common with others, the 

fact of such ownership is to be stated on 

the receipt. In States where the pledge 

of warehouse receipts issued by a 

warehouse operator on the warehouse 

operator’s commodity is invalid, the 

warehouse operator may offer the 

commodity to CCC for a MAL if such 

warehouse is licensed under the U.S. 

Warehouse Act. 

* * * * * 

(h) If a warehouse receipt indicates 

that the commodity tendered for MAL 

grades ‘‘infested’’ or ‘‘contains excess 

moisture,’’ or both, the receipt must be 

accompanied by a supplemental 

certificate in order for the commodity to 

be eligible for a MAL. The grade, 

grading factors, and quantity to be 

delivered must be shown on the 

certificate as follows: 

* * * * * 

(2) * * * 

(ii) When a supplemental certificate is 

issued under paragraphs (g)(1) and 

(h)(2)(i) of this section, the grade, 

grading factors, and the quantity shown 

on such certificate will supersede the 

entries for such items on the warehouse 

receipt. 

* * * * * 

(i) * * * 

(2) Warehouse receipts and the 

commodities represented by such 

receipts may be subject to a lien for 

warehouse charges. For all commodities 

except peanuts, the producer who 

pledged such a receipt as collateral for 

a MAL under this part pays to CCC all 

costs incurred by CCC as result of the 

existence of the lien. In no event is a 

warehouse operator entitled to satisfy 

such a lien by sale of the commodities 

when CCC is the holder of such receipt. 

* * * * * 

(k) If the warehouse issues an EWR for 

the commodity, the producer must 

notify the EWR provider to make CCC 

the holder of the EWR and to secure an 

affirmation verifying that CCC has been 

made the holder of the EWR. 

■ 27. Amend § 1421.108 as follows: 

■ a. In paragraph (a), introductory text, 

remove the word ‘‘loan’’ and add the 

word ‘‘MAL’’ in its place both times it 

appears; and 


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■ b. Revise paragraphs (a)(1), (b), and (c) 

introductory text. 

The revisions read as follows: 

§ 1421.108 Transfers and reconciliations. 

(a) * * * 

(1) Transfer of all or part of the farmstored MAL collateral to an authorized 

warehouse will be made through the 

pledge of warehouse receipts for the 

commodity placed under a warehousestored MAL. The loan rate of the 

transferred MAL will be the same as the 

loan rate of the original MAL. The MAL 

quantity for the warehouse-stored MAL 

cannot exceed the loan quantity 

transferred from the farm-stored MAL. 

* * * * * 

(b) The producer must request county 

committee approval before the transfer 

of a warehouse-stored MAL to a farmstored MAL. The county committee may 

approve the transfer of part or all of a 

warehouse-stored MAL at any time 

during the MAL period. Quantities 

pledged as collateral for a farm-stored 

MAL will be based on a measurement or 

a calculation of average production of 

wool and mohair, by a representative of 

the county office before approving the 

farm-stored MAL. The producer must 

immediately repay the amount by which 

the farm-stored MAL is less than the 

warehouse-stored MAL and charges 

plus interest on the shortage. The 

maturity date of the farm-stored MAL is 

the maturity date applicable to the 

warehouse-stored MAL that was 

transferred. 

(c) Upon the filing of the 

Reconcentration Agreement and Trust 

Receipt by the producer and warehouse 

operator, CCC may, during the MAL 

period, approve the reconcentration in 

another authorized warehouse for all or 

part of a commodity that is pledged as 

collateral for a warehouse-stored MAL. 

Any such approval will be subject to the 

terms and conditions in the 

Reconcentration Agreement and Trust 

Receipt. A producer may, before the 

new warehouse receipt is delivered to 

CCC, pay CCC: 

* * * * * 

■ 28. Amend § 1421.109 as follows: 

■ a. Revise paragraphs (a)(1), (2), and 

(3), (d), and (e)(2); 

■ b. In paragraphs (e)(1)(i) and (ii) 

remove the word ‘‘loan’’ and add the 

word ‘‘MAL’’ in its place; 

■ c. Revise paragraphs (f)(1) and (2), (g), 

(h), (j), (l) introductory text, and (l)(1); 

■ d. In paragraphs (k), and (l)(2) remove 

the word ‘‘loan’’ and add the word 

‘‘MAL’’ in its place each time it appears; 

■ e. In paragraph (m), remove the words 

‘‘shall be’’ and add the word ‘‘is’’ in 

their place; and 

■ f. Revise paragraphs (n), (o), and (p). 

The revisions read as follows: 

§ 1421.109 Personal liability of the 

producer. 

(a) * * * 

(1) Provide an incorrect certification 

of the quantity or make any fraudulent 

or erroneous representation for the 

MAL; 

(2) Remove or dispose of a quantity of 

commodity that is collateral for a CCC 

farm-stored MAL without prior written 

approval from CCC in accordance with 

§ 1421.10; or 

(3) Violate the terms and conditions of 

the note and security agreement, which 

will cause harm or damage to CCC in 

that funds may be disbursed to the 

producer for a quantity of a commodity 

that is not actually in existence or for a 

quantity on which the producer is not 

eligible. If CCC determines that the 

producer has violated the terms and 

conditions of the applicable forms 

prescribed by CCC, liquidated damages 

will be assessed on the quantity of the 

commodity that is involved in the 

violation. 

* * * * * 

(d) Liquidated damages assessed in 

accordance with this section will be 

determined by multiplying the quantity 

involved in the violation by 10 percent 

of the MAL rate applicable to the MAL 

note. 

(e) * * * 

(2) Did not act in good faith when the 

violation was committed, liquidated 

damages will be assessed in accordance 

with paragraph (d) of this section, and 

administrative actions will be taken in 

accordance with paragraph (h) of this 

section. The MAL is required to be 

redeemed at the rate at which the MAL 

was disbursed, plus interest and any 

other charges assessed under the note 

and security agreement. 

(f) * * * 

(1) Acted in good faith when the 

violation occurred, liquidated damages 

will be assessed according to paragraph 

(d) of this section, and the commodity 

involved in the violation must be 

redeemed at the rate at which the MAL 

was disbursed, plus interest and any 

other charges assessed under the note 

and security agreement. 

(2) Did not act in good faith about the 

violation, liquidated damages will be 

assessed in accordance with paragraph 

(d) of this section and administrative 

actions will be taken in accordance with 

paragraph (h) of this section. The MAL 

must be redeemed at the rate at which 

the MAL was disbursed, plus interest 

and any other charges assessed under 

the note and security agreement. 

(g) If the producer fails to pay such 

amount within 30 days from the date of 

notification of violations as provided in 

paragraphs (e)(1) and (f)(1) of this 

section, the producer must immediately 

repay the MAL at the rate at which the 

MAL was disbursed plus interest, and 

any other charges assessed under the 

note and security agreement. 

(h) For violations as specified in 

paragraphs (e)(2) and (f)(2) of this 

section, the producer must immediately 

repay the MAL at the rate at which the 

MAL was disbursed plus interest, and 

any other charges assessed under the 

note and security agreement. If the MAL 

has already been repaid, any market 

loan gain previously realized on the 

MAL, plus interest, is immediately due 

to CCC. CCC will demand delivery of 

any remaining MAL collateral if the 

MAL and any other charges and interest 

are not repaid within the 30 calendar 

day notification period specified in 

paragraph (g) of this section. 

* * * * * 

(j) If the MAL is accelerated, the 

producer may not repay the MAL at the 

alternative loan repayment rate, unless 

authorized by CCC. 

* * * * * 

(l) The MAL plus other charges are 

payable to CCC upon demand if a 

producer: 

(1) Makes any fraudulent 

representation in obtaining a MAL, 

maintaining, or settling a MAL; or 

* * * * * 

(n) If the amount disbursed under a 

MAL or in settlement of the MAL, 

exceeds the amount authorized by this 

part, the producer is liable for 

repayment of the excess and charges, 

plus interest. 

(o) If the amount collected from the 

producer in satisfaction of the MAL is 

less than the amount required under 

this part, the producer is personally 

liable for repayment of the amount of 

such difference and charges, plus 

interest. 

(p) In the case of joint MALs, the 

personal liability for the amounts 

specified in this section is joint and 

several on the part of each producer 

signing the note. 

* * * * * 

§ 1421.110 [Removed and Reserved] 

■ 29. Remove and reserve § 1421.110. 

■ 30. Amend § 1421.111 as follows: 

■ a. Revise the section heading; 

■ b. Revise paragraphs (a) and (f); and 

■ c. Add paragraphs (g) and (h). 

The revisions and additions read as 

follows: 


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§ 1421.111 MAL settlement. 

(a) The value of MALs at settlement 

will be determined by CCC on the 

following basis: 

(1) For nonrecourse MALs, the 

schedule of premiums and discounts for 

the commodity, provided that if the 

value of the eligible delivered collateral 

at settlement is: 

(i) Less than the amount due, the 

producer will pay to CCC the amount of 

such deficiency and charges, plus 

interest on such deficiency; or 

(ii) More than the amount due, the 

amount of such excess will be paid to 

the producer or, if applicable, to the 

producer and applicable secured 

creditors of the producer. 

(2) For recourse MALs, full repayment 

of principal plus interest is required. As 

specified in § 1421.113, recourse MAL 

collateral may not be delivered or 

forfeited to CCC in satisfaction of 

indebtedness. 

(3) If CCC sells the commodity 

described in paragraph (a)(1) and (a)(2) 

of this section in settlement of the MAL, 

the sales proceeds will be applied to the 

amount owed as follows: 

(i) For nonrecourse MALs, CCC will 

in all instances retain all proceeds 

obtained from the sale of the eligible 

commodity and will not make any 

payment of any amount of such 

proceeds to any party, including the 

producer who has satisfied their 

obligation under the MAL through 

delivery of the commodity to CCC. CCC 

will settle with the producer based on 

the quality and quantity of the 

commodity; or 

(ii) For recourse MALs, the sales 

proceeds from the eligible collateral will 

be applied to the amount owed CCC by 

the producer. The producer will be 

responsible for any costs incurred by 

CCC in completing the sale and CCC 

will deduct the amount of these costs 

from the sale proceeds. If: 

(A) The amount received from the sale 

of the collateral is less than the amount 

due, the producer will pay to CCC the 

amount of such deficiency and costs, 

plus interest on the remaining amount 

owed; or 

(B) The amount received from the sale 

of the collateral is greater than the sum 

of the amount due, the amount of such 

excess will be paid to the producer or, 

if applicable, to the producer and 

applicable secured creditor of the 

producer. 

* * * * * 

(f) Premiums and discounts will apply 

to all eligible loan commodities that are 

forfeited and delivered to CCC. There 

will not be any additional adjustments 

for peanuts at settlement, because such 

premiums and discounts will be 

accounted for when a peanut MAL is 

made. 

(g) If a deficiency exists after the 

collateral securing a nonrecourse MAL 

has been delivered to CCC or a recourse 

MAL sold under a local sale, a 

receivable for such deficiency will be 

established as specified in part 1403 of 

this chapter. 

(h) CCC will not assume any loss in 

quantity or quality of the loan collateral 

for any farm-stored MALs. 

■ 31. Amend § 1421.112 as follows: 

■ a. Revise paragraph (a); 

■ b. In paragraph (b) introductory text, 

remove the word ‘‘loan’’ and add the 

word ‘‘MAL’’ in its place; and 

■ c. In paragraph (b)(2), remove the 

word ‘‘claim’’ and add the word 

‘‘receivable ’’ in its place. 

The revisions read as follows: 

§ 1421.112 Foreclosure. 

(a)(1) Upon maturity and nonpayment 

of a warehouse-stored MAL, title to the 

unredeemed collateral securing the 

MAL will immediately vest in CCC. 

(2) Upon maturity and nonpayment of 

a farm-stored MAL, title to the 

unredeemed collateral will 

automatically transfer to CCC upon CCC 

demand. 

(3) When CCC acquires title to the 

unredeemed collateral, CCC will not pay 

for any market value that such collateral 

may have in excess of the MAL 

indebtedness, (the unpaid amount of the 

note and charges plus interest). 

* * * * * 

■ 32. Amend § 1421.113 as follows: 

■ a. Revise the section heading and 

paragraph (a); and 

■ b. In paragraph (b), remove the word 

‘‘must’’ and add the words ‘‘is required 

to’’ in its place. 

The revisions read as follows: 

§ 1421.113 Recourse MALs. 

(a) CCC will make recourse MALs 

available to eligible producers of high 

moisture corn, high moisture grain 

sorghum and other eligible loan 

commodities as determined by the 

Deputy Administrator, Farm Programs. 

* * * * * 

Subpart C—Loan Deficiency Payments 

■ 33. Amend § 1421.200 as follows: 

■ a. Revise paragraph (a); 

■ b. In paragraph (b) introductory text, 

remove the words ‘‘loan deficiency 

payments’’ and add the word ‘‘LDPs’’ in 

their place; 

■ c. In paragraph (b)(2), remove the 

word ‘‘loan’’ and add the word ‘‘MAL’’ 

in its place; and 

■ d. Add paragraph (e). 

The revision and addition read as 

follows: 

§ 1421.200 Applicability. 

(a) During the MAL availability 

period, LDPs will be made available to 

eligible producers when the alternative 

repayment rate is less than the 

applicable county loan rate. 

* * * * * 

(e) AGI and payment limitation 

requirements apply as specified in part 

1400 of this chapter. 

■ 34. Revise § 1421.201(a) and (c) to 

read as follows: 

§ 1421.201 LDP rate. 

(a) The LDP rate for a crop will be the 

amount by which the loan rate for the 

crop exceeds the rate at which CCC has 

announced that producers may repay 

their MALs as specified in § 1421.10. 

* * * * * 

(c) The LDP applicable to such crop 

will be computed by multiplying the 

LDP rate, as determined under 

paragraph (b) of this section, by the 

quantity of the crop the producer is 

eligible to pledge as collateral for a 

nonrecourse MAL for which the LDP is 

requested. 

■ 35. Revise § 1421.202(b) to read as 

follows: 

§ 1421.202 LDP quantity. 

* * * * * 

(b) Two or more producers may obtain 

a single joint LDP for commodities that 

are stored in the same storage facility. 

Two or more producers may obtain 

individual LDPs for their share of the 

commodity that is stored commingled in 

a farm storage facility with commodities 

for which an LDP has been requested 

and will be liable for any damage 

incurred by CCC for incorrect 

certification of such commodities under 

§ 1421.203. 

* * * * * 

■ 36. Amend § 1421.203 as follows: 

■ a. Revise paragraphs (a)(2), and (e)(1); 

■ b. In paragraph (e)(2) remove the word 

‘‘loans’’ and add the word ‘‘MALs’’ in 

its place; and 

■ c. Revise paragraphs (e)(3), (g), and 

(h). 

The revisions read as follows: 

§ 1421.203 Personal liability of the 

producer. 

(a) * * * 

(2) That violation of the terms and 

conditions of the LDP request, as 

applicable, will cause harm or damage 

to CCC in that funds may be disbursed 

to the producer for a quantity of a 

commodity that is not actually in 

existence or for a quantity on which the 


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producer is not eligible. If CCC 

determines that the producer has 

violated the terms and conditions of the 

applicable forms prescribed by CCC, 

liquidated damages will be assessed on 

the quantity of the commodity that is 

involved in the violation. 

* * * * * 

(e) * * * 

(1) Accelerate the maturity date on the 

producer’s outstanding farm-stored 

MALs; 

* * * * * 

(3) Deny LDPs for the current and 2 

following crop years unless production 

evidence is presented to CCC. 

Depending on the severity of the 

violation, the county committee may 

deny future farm-stored MALs and LDPs 

without production evidence. 

* * * * * 

(g) If the amount disbursed under 

LDPs exceeds the amount authorized by 

this part, the producer is liable for 

repayment of such excess and 

liquidated damages, plus interest. 

(h) In the case of joint LDPs, the 

personal liability for the amounts 

specified in this section is joint and 

several on the part of each producer 

signing the LDP application. 

* * * * * 

■ 37. Revise the heading for subpart D 

to read as follows: 

Subpart D—Grazing Payments for 

Wheat, Barley, Oats, and Triticale 

■ 38. Revise § 1421.300(a) to read as 

follows: 

§ 1421.300 Applicability. 

(a) The regulations in this subpart are 

applicable to the eligible acreage 

planted to wheat, barley, oats, or 

triticale that is grazed by livestock and 

not harvested in any other manner. This 

subpart specifies the terms and 

conditions under which a grazing 

payment will be made by CCC in lieu 

of an LDP. 

* * * * * 

§ 1421.301 [Amended] 

■ 39. Amend § 1421.301, in paragraph 

(a), by removing the ‘‘shall’’ both times 

it appears and adding the word ‘‘will’’ 

in its place and by removing the words 

‘‘the Farm Service Agency (FSA)’’ and 

adding the word ‘‘FSA’’ in their place. 

■ 40. Amend § 1421.302 as follows: 

■ a. In paragraph (a), remove the words 

‘‘2008 through 2012’’ and add the word 

‘‘applicable’’ in their place; and 

■ b. Revise paragraphs (d)(1) and (f). 

The revisions read as follows: 

§ 1421.302 Eligible producer and eligible 

land. 

* * * * * 

(d)(1) A producer must, at the time 

the LDP agreement is signed, meet all 

other eligibility criteria for obtaining 

LDPs including AGI and payment 

limitation requirements as specified in 

part 1400 of this chapter. 

* * * * * 

(f) Producers who elect to graze their 

wheat, barley, oats, or triticale will not 

be eligible for an indemnity under the 

Federal Crop Insurance Program 

provisions of Chapter IV of this title or 

a payment under the Noninsured Crop 

Assistance Program authorized under 

part 1437 of this chapter. 

■ 41. Revise § 1421.303 to read as 

follows: 

§ 1421.303 Time and method for 

application. 

(a) Application for the program 

provided in this subpart must be 

received, at the FSA county office that 

is responsible for administering 

programs for the farm, no earlier than 

the date on which eligible crops would 

normally be harvested and no later than 

the final loan availability date as 

determined in accordance with § 1421.5. 

(b) The application must describe the 

land to be grazed and, in accordance 

with standards set by CCC, the tract or 

field location. 

(c) The COC will determine the first 

harvest date, taking into account the 

date on which such crops are normally 

harvested locally for any purpose. 

(d) Where multiple producers are 

involved, the application must specify 

each producer’s share in the crop. 

(1) A producer may only receive 

payments under this subpart that are 

commensurate with that producer’s 

share in the crop as specified on the 

application. 

(2) Should a person who is entitled to 

receive a payment under this subpart 

die, that payment, as earned, may be 

made to other persons as provided for 

in the rules specified in part 707 of this 

title. 

(3) Third parties may also receive 

payments to the extent provided for in 

part 707 of this title for other situations 

involving an incapacitation of the 

producer. 

(e) Refusals to allow CCC to verify 

information on any application or report 

used for this subpart can result in 

program ineligibility and producers 

must provide CCC, FSA, and its agent 

access to the property involved and to 

all records as may be relevant to the 

making of payments under this subpart. 

(f) False statements will disqualify the 

producer from the program and may be 

subject to other sanctions including 

criminal sanctions. 

■ 42. Revise § 1421.304(a), (c), and (d) to 

read as set forth below: 

§ 1421.304 Payment amount. 

(a) The grazing payment rate will be 

the LDP in effect for the farm on the date 

which the producer submits a complete 

program application to CCC. For 

triticale, the grazing rate will be equal 

to the LDP rate in effect for the 

predominant class of wheat in the 

county where the farm is located as of 

the date the application is filed. 

* * * * * 

(c) The payment yield will be: 

(1) The yield for the loan commodity 

on the farm in effect for the calculation 

of Price Loss Coverage as specified in 

part 1412 of this chapter; 

(2) For a farm for which Agriculture 

Risk Coverage is elected, the payment 

yield that would otherwise be in effect 

for that loan commodity on the farm in 

the absence of such election as specified 

in part 1412 of this chapter; or 

(3) In the case of a farm for which no 

payment yield is established for the loan 

commodity on the farm, an appropriate 

yield as determined by the COC. 

(d) No payment may be received or 

retained under this subpart to the extent 

that the payment, were they considered 

to be LDPs, would place that person 

over the per person per year payment 

limit that applies to LDPs. The producer 

agrees that the CCC may collect any 

payment considered to be an 

overpayment by reason of this 

subsection by withholding LDPs until 

the matter is resolved, by treating the 

LDP as being not payable to the extent 

that a grazing refund would otherwise 

be due, by setoff, or by any other means 

available to CCC. 

* * * * * 

§ 1421.305 [Amended] 

■ 43. Amend § 1421.305(a) introductory 

text, by removing the words ‘‘shall be’’ 

and adding the word ‘‘is’’ in their place. 

■ 44. Amend § 1421.306 as follows: 

■ a. Revise paragraph (a); 

■ b. In paragraph (b), remove the words 

‘‘shall be’’ and add the word ‘‘are’’ in 

their place; and 

■ c. Revise paragraph (c). 

The revisions read as follows: 

§ 1421.306 Refunds; joint and several 

liability. 

(a) In the event there is a failure to 

comply with any term, requirement, or 

condition for payment arising under this 

application, of this subpart, and if any 

refund of a payment to CCC becomes 

due for that or other reason in 


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128 Federal Register / Vol. 80, No. 1 / Friday, January 2, 2015 / Rules and Regulations 

connection with the application, of this 

subpart, all payments made under this 

subpart to any producer are to be 

refunded to CCC together with interest 

as determined in accordance with 

paragraph (c) of this section and latepayment charges as provided for in part 

1402 of this chapter. 

* * * * * 

(c) Interest is applicable to refunds 

required from the producer. Interest will 

be charged at the rate of interest which 

the United States Treasury charges CCC 

for funds, as of the date CCC made such 

benefits available. Interest will accrue 

from the date such benefits were made 

available to the date of repayment but 

the interest rate will increase to reflect 

any increase in the rate charged to CCC 

by Treasury for any percent of time for 

which the interest assessment is 

collected. CCC may waive the accrual of 

interest if CCC determines that the cause 

of the erroneous determination was not 

due to any action of the producer. 

* * * * * 

Subpart E—Designated Marketing 

Associations for Peanuts 

■ 45. Revise § 1421.400 to read as 

follows: 

§ 1421.400 Applicability. 

(a) This subpart specifies the terms 

and conditions under which an entity 

that is a DMA of peanut producers, or 

a subsidiary of such an entity, may 

qualify as a DMA, as defined in 

§ 1421.3. DMAs may process peanut 

MALs and LDPs on behalf of producers. 

(b) This subpart only applies with 

respect to peanut MALs and peanut 

LDPs. 

■ 46. Amend § 1421.401 as follows: 

■ a. In paragraph (a) introductory text, 

remove the words ‘‘marketing loans’’ 

and add the word ‘‘MALs’’ in their place 

and remove the words ‘‘loan deficiency 

payments’’ and add the word ‘‘LDPs’’ in 

their place; 

■ b. In paragraph (a)(2), remove the 

word ‘‘shall’’; 

■ c. Revise paragraph (a)(7); 

■ d. In paragraph (b) introductory text, 

remove the word ‘‘shall’’; and 

■ e. In paragraph (b)(1), remove the 

words ‘‘program regulations’’ and add 

the words ‘‘MAL and LDP regulations’’ 

in their place. 

The revision reads as follows: 

§ 1421.401 DMA responsibilities. 

(a) * * * 

(7) Collect MAL repayments from 

producers or buyers and transmit those 

funds to CCC; 

* * * * * 

■ 47. Revise § 1421.402 section heading 

and paragraphs (a) introductory text and 

(4), and (b) to read as follows: 

§ 1421.402 DMA eligibility to process 

MALs and LDPs. 

(a) A DMA is eligible to process any 

MAL or LDPs only if approved in 

advance to handle such matters by the 

Farm Service Agency pursuant to this 

part; and 

* * * * * 

(4) The DMA does not take title at any 

time to any peanuts for which it 

processes MALs or LDPs, irrespective of 

whether such title is taken before or 

after those activities are performed. If 

such title or interest is taken, the DMA 

is required to return to CCC the full 

amount of the CCC proceeds disbursed 

with respect to the peanuts; and 

* * * * * 

(b) The DMA’s activities under this 

part are to be conducted only with 

respect to peanuts and only for 

producers and peanuts that meet all the 

eligibility requirements of this part. 

Such requirements include, but are not 

limited to, the requirement of § 1421.6 

that the producer must have the 

beneficial interest in the peanuts while 

the peanuts are under MAL or when the 

LDP is received and must be the only 

person that has had such an interest in 

the peanuts prior to that time except as 

allowed by § 1421.6. 

■ 48. Revise § 1421.403(a) introductory 

text, to read as follows: 

§ 1421.403 DMA approval. 

(a) Entities wishing to apply to be a 

DMA enabled to perform MAL and LDP 

functions under this part for peanuts 

must submit an application for such 

approval to FSA in a form approved by 

CCC. That application will include the 

following: 

* * * * * 

■ 49. Revise § 1421.404 to read as 

follows: 

§ 1421.404 Financial security. 

(a) In order to be approved to handle 

MALs and LDPs, a DMA must: 

(1) Have a current net worth ratio of 

at least 1:1; and 

(2) Provide security equal to $100,000 

or a greater amount as determined by 

CCC. 

(b) [Reserved] 

■ 50. Revise § 1421.405 to read as 

follows: 

§ 1421.405 Liability. 

(a) DMAs must indemnify CCC 

against any claim or loss by CCC in 

connection with the processing of any 

MALs or LDPs or other activity carried 

out by the DMA. If CCC pays any claim 

or suffers a loss as a result of the actions 

of DMA, or if a refund otherwise 

becomes due to CCC, payment in the 

amount of such losses or refund, plus 

interest, may be set-off by CCC from the 

financial security provided by DMA as 

required by this subpart. If the amount 

of the loss exceeds the amount of the 

financial security, such amount is paid 

to CCC by DMA with interest. Interest 

and other charges may be assessed 

consistent with § 1403.9 of this chapter. 

Remedies provided in this section or 

part are in addition to other remedies or 

penalties, whether civil, criminal or 

otherwise, as may apply. 

(b) If a DMA becomes liable to CCC 

under paragraph (a) of this section or 

otherwise in connection with this 

subpart, such DMA is not eligible to 

process an LDP or MAL until the 

receivable amount owed CCC is paid in 

full, and the full amount of financial 

security required by this subpart has 

been restored. 

§ 1421.406 [Amended] 

■ 51. Amend § 1421.406 as follows: 

■ a. In paragraph (a) introductory text, 

remove the word ‘‘shall’’ and add the 

word ‘‘must’’ in its place; 

■ b. In paragraph (a)(2), remove the 

word ‘‘loan’’ and add the word ‘‘MAL’’ 

in its place; 

■ c. In paragraph (b), remove the word 

‘‘loans’’ and add the word ‘‘MALs’’ in 

its place, and remove the word ‘‘shall’’ 

and add the word ‘‘must’’ in its place; 

and 

■ d. In paragraphs (d)(2) and (e), remove 

the word ‘‘shall’’ and add the word 

‘‘must’’ in its place. 

■ 52. Revise § 1421.407(b) to read as 

follows: 

§ 1421.407 Suspension and termination. 

* * * * * 

(b) Termination. The DMA agreement 

may be terminated by the DMA upon 30 

calendar days’ written notice to CCC. 

CCC may cancel the agreement at any 

time. Upon termination DMA must 

immediately cease processing MAL or 

LDP requests and documents except as 

needed to preserve CCC’s position with 

respect to existing MALs or LDPs. 

§ 1421.408 [Amended] 

■ 53. Amend § 1421.408 as follows: 

■ a. In paragraph (a) introductory text, 

remove the word ‘‘loans’’ and add the 

words ‘‘MALs and LDPs’’ in its place; 

and 

■ b. In paragraph (a)(8) remove the word 

‘‘peanuts’’ and add the word ‘‘peanut’’ 

in its place. 

■ 54. Revise § 1421.409 to read as 

follows: 


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Federal Register / Vol. 80, No. 1 / Friday, January 2, 2015 / Rules and Regulations 129 

§ 1421.409 Monitoring AGI and payment 

limitations. 

(a) DMAs are required to monitor 

their producers’ AGIs and may not 

permit repayments with a market loan 

gain on peanut MALs or process peanut 

LDPs for those producers with annual 

AGI over the allowable limit as 

specified in part 1400 of this chapter. 

(b) DMAs are required to monitor 

their producers’ payment limit and not 

process market loan gains on peanut 

MALs or peanut LDPs that would 

produce a gain over the payment limit 

as specified in part 1400 of this chapter. 

§ 1421.410 [Amended] 

■ 55. Amend § 1421.410 by removing 

the word ‘‘shall’’ and adding the word 

‘‘must’’ in its place. 

§ 1421.411 [Amended] 

■ 56. Amend § 1421.411 by removing 

the word ‘‘shall’’ and adding the word 

‘‘may’’ in its place. 

■ 57. Revise § 1421.413 to read as 

follows: 

§ 1421.413 Liens and waivers. 

(a) DMAs performing MAL-related 

functions pursuant to the authority in 

this subpart must determine, to the 

same extent as required for MALs 

handled by FSA county offices, whether 

a lien on the peanuts exists by 

performing or obtaining a lien search for 

all peanuts to be pledged for each MAL, 

except that the cost associated with 

such lien search and any necessary lien 

waivers is borne by the DMA. If a lien 

exists, the DMA must obtain, on an 

approved CCC form, a signed waiver 

from each lienholder with an interest in 

any such lien. 

(b) [Reserved] 

■ 58. Amend § 1421.415 as follows: 

■ a. Redesignate paragraphs (a) through 

(e) as paragraphs (a)(1) through (a)(5), 

redesignate the introductory text as 

paragraph (a), and reserve paragraph (b); 

■ b. In newly redesignated paragraph (a) 

introductory text, remove the word 

‘‘shall’’ and add the word ‘‘must’’ in its 

place; 

■ c. Revise newly redesignated 

paragraph (a)(1); and 

■ d. In newly redesignated paragraph 

(a)(2), remove the words ‘‘electronic 

warehouse receipt’’ both times they 

appear and add the word ‘‘EWR’’ in 

their place. 

The revision reads as follows: 

§ 1421.415 Processing marketing 

assistance loans. 

(a) * * * 

(1) Make all the determinations that 

are a precondition for a MAL, including 

all producer eligibility requirements, 

lien determinations, and if requested by 

the producer, enter into a power of 

attorney agreement with the producer. 

* * * * * 

■ 59. Amend § 1421.416 as follows: 

■ a. In paragraph (a) introductory text, 

remove the word ‘‘shall’’ and add the 

word ‘‘must’’ in its place; 

■ b. Revise paragraph (a)(1); and 

■ c. In paragraph (a)(4) remove the word 

‘‘loan’’ and add the word ‘‘MAL’’ in its 

place. 

The revision reads as follows: 

§ 1421.416 Processing loan deficiency 

payments. 

(a) * * * 

(1) In addition to other determinations 

that are required, the DMA must 

determine whether the producer 

exceeds the AGI limits and has 

sufficient eligibility under the 

applicable payment limit to allow the 

receipt of the LDP. If the producer is 

over the AGI limit or there is not 

sufficient payment limitation eligibility, 

the DMA cannot process the request. 

* * * * * 

§ 1421.417 [Amended] 

■ 60. Amend § 1421.417 as follows: 

■ a. In paragraph (c), remove the words 

‘‘shall be’’ in both places and add the 

words ‘‘are to be’’ in their place; and 

■ b. In paragraph (d), remove the word 

‘‘shall’’ and add the words ‘‘is to’’ in 

their place. 

■ 61. Amend § 1421.418 as follows: 

■ a. Revise paragraph (a) introductory 

text; and 

■ b. In paragraph (b) introductory text, 

remove the word ‘‘shall’’ and add the 

word ‘‘must’’ in its place. 

The revision reads as follows: 

§ 1421.418 Submitting MAL and LDP 

documentation to FSA. 

(a) Until such time as an alternative 

FSA MAL- or LDP-making system is 

made available to DMAs, within 3 

business days of any DMA prepared 

disbursement, the DMA must separately 

group and submit to FSA: 

* * * * * 

§ 1421.419 [Amended] 

■ 62. Amend § 1421.419(a) introductory 

text, by removing the words ‘‘shall be’’ 

and adding the word ‘‘is’’ in their place. 

■ 63. Revise § 1421.420 to read as 

follows: 

§ 1421.420 Inspections and reviews. 

The books, documents, papers, and 

records of the DMA and parent 

company must be maintained for 6 years 

after the applicable crop year and be 

made available to CCC for inspection 

and examination at all reasonable times. 

At any time after an application is 

received, CCC has the right to examine 

all books, documents, papers, and 

determine whether the DMA is 

operating or has operated in accordance 

with the regulations in this part, any 

articles of incorporation, articles of 

association, partnership documents, 

agreements with producers, the 

representations made by the DMA in its 

application for approval, and, where 

applicable, its agreements with CCC. If 

the DMA is determined to be not 

complying with this part or any of its 

agreements, CCC will take appropriate 

action as provided in elsewhere in this 

subpart or other action CCC determines 

appropriate. 

§§ 1421.4, 1421.9, 1421.10, 1421.13, 

1421.101. 1421.102, 1421.103, 1421.105, 

1421.106, 1421.108, 1421.109, 1421.111, 

1421.113, 1421.200 [Amended] 

■ 64. In addition to the amendments set 

forth above, in 7 CFR part 1421, remove 

the words ‘‘marketing assistance loan’’ 

and add, in their place, the word 

‘‘MAL’’ wherever they appear in the 

following places: 

■ a. In § 1421.4 (e)(1) introductory text 

and (e)(1)(i); 

■ b. In § 1421.9 (a) and (b); 

■ c. In § 1421.10 (e) introductory text 

and (i) introductory text; 

■ d. In § 1421.13(a)(2); 

■ e. In § 1421.101(a)(2); 

■ f. In § 1421.102(a)(1); 

■ g. In § 1421.103(a)(1); 

■ h. In § 1421.105 (c) introductory text, 

(c)(1), and (d)(1)(i) ; 

■ i. In § 1421.106(b); 

■ j. In § 1421.108 (c)(1) and (2); 

■ k. In § 1421.109 (a) introductory text, 

(e) introductory text, and (f) 

introductory text; 

■ l. In § 1421.111(b)(2); 

■ m. In § 1421.113(c); and 

■ n. In § 1421.200(b)(1). 

§§ 1421.3, 1421.100 [Amended] 

■ 65. In addition to the amendments set 

forth above, in 7 CFR part 1421, remove 

the words ‘‘marketing assistance loans’’ 

and add, in their place, the word 

‘‘MALs’’ wherever they appear in the 

following places: 

■ a. In § 1421.3 in the definition of 

‘‘high moisture state’’; and 

■ b. In § 1421.100. 

§§ 1421.8, 1421.13, 1421.200, 1421.201, 

1421.202, 1421.203 [Amended] 

■ 66. In addition to the amendments set 

forth above, in 7 CFR part 1421, remove 

the words ‘‘loan deficiency payment’’ 

and add, in their place, the word ‘‘LDP’’ 

wherever they appear in the following 

places: 


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■ a. In § 1421.8 in newly redesignated 

paragraph (b)(1)(ii); 

■ b. In § 1421.13(a)(1); 

■ c. In § 1421.200(c)(1), (2), and (d); 

■ d. In § 1421.201(b); 

■ e. In § 1421.202 (a) and (c); and 

■ f. In § 1421.203 (a) introductory text, 

(a)(1), (b), (c)(1) and (2). 

§§ 1421.2, 1421.102, 1421.106, 1421.107, 

1421.108, 1421.109, 1421.111, 1421.112, 

1421.203, 1421.300, 1421.301, 1421.304, 

1421.305, 1421.306, 1421.417, 1421.418, 

1421.419 [Amended] 

■ 67. In addition to the amendments set 

forth above, in 7 CFR part 1421, remove 

the word ‘‘shall’’ each time it appears 

and add, in its place, the word ‘‘will’’ 

wherever they appear in the following 

places: 

■ a. § 1421.2(c); 

■ b. § 1421.102(a)(4); 

■ c. § 1421.106(e) introductory text and 

(f); 

■ d. § 1421.107(g)(2); 

■ e. § 1421.108(a)(2); 

■ f. § 1421.109(c), (e)(1), and (i) 

introductory text; 

■ g. § 1421.111(c) introductory text and 

(c)(1); 

■ h. § 1421.112(b)(1); 

■ i. § 1421.203(e) introductory text and 

(f) introductory text; 

■ j. § 1421.300(b); 

■ k. § 1421.301(c) introductory text and 

(d); 

■ l. § 1421.304(b); 

■ m. § 1421.305(b); 

■ n. § 1421.306(d) and (e); 

■ o. § 1421.417(e); 

■ p. § 1421.418(d); and 

■ q. § 1421.419(b). 

PART 1425—COOPERATIVE 

MARKETING ASSOCIATIONS 

■ 68. The authority citation for part 

1425 continues to read as follows: 

Authority: 7 U.S.C. 1441 and 1421, 7 

U.S.C. 7931–7939; and 15 U.S.C. 714b, 714c, 

and 714j. 

■ 69. Revise § 1425.1 to read as follows: 

§ 1425.1 Applicability. 

(a) This part specifies the terms and 

conditions an approved Cooperative 

Marketing Association (CMA) must 

meet to obtain marketing assistance 

loans (MALs) and loan deficiency 

payments (LDPs) from CCC on behalf of 

its members. 

(b) A CMA meeting the requirements 

of this part may obtain MALs and LDPs 

for any eligible commodity for which a 

MAL and LDP program is in effect. 

■ 70. Revise § 1425.2 to read as follows: 

§ 1425.2 Administration. 

(a) On behalf of the Commodity Credit 

Corporation (CCC), the Farm Service 

Agency (FSA) will administer the 

provisions of this part under the general 

direction and supervision of the Deputy 

Administrator for Farm Programs. 

(b) In the field, the provisions of this 

part will be administered by the State 

and county FSA committees. 

■ 71. Amend § 1425.3 as follows: 

■ a. Revise the introductory text; 

■ b. In the definition of ‘‘Approved 

cooperative marketing association’’, 

remove the word ‘‘loan’’ and add the 

word ‘‘MAL’’ in its place; 

■ c. In the definition of ‘‘Authorized 

commodity’’, remove the words 

‘‘marketing assistance loans’’ and add 

the word ‘‘MALs’’ in their place and 

remove the words ‘‘Loan deficiency 

payments’’ and add the word ‘‘LDPs’’ in 

their place; 

■ d. In the definition of ‘‘Eligible 

commodity’’, remove the word ‘‘loan’’ 

and add the word ‘‘MALs’’ in its place, 

and remove the word ‘‘LDP’’ and add 

the word ‘‘LDPs’’ in its place; 

■ e. Add, in alphabetical order, a 

definition for ‘‘Loan deficiency 

payment’’; 

■ f. In the definition of ‘‘Loan pool’’, 

remove the word ‘‘loans’’ and add the 

word ‘‘MALs’’ in its place, and remove 

the word ‘‘LDP’s’’ and add the word 

‘‘LDPs’’ in its place; 

■ g. Remove the definition of ‘‘Market 

gain’’; and 

■ h. Add, in alphabetical order, a 

definition of ‘‘Market loan gain’’. 

The revisions and addition read as 

follows: 

§ 1425.3 Definitions. 

The definitions in this section are 

applicable for all purposes of program 

administration. The terms defined in 

parts 718 of this title and parts 1421 and 

1427 of this chapter are also applicable, 

except where those definitions conflict 

with the definitions in this section. 

* * * * * 

Loan deficiency payment (LDP) means 

a payment made in lieu of a MAL when 

the CCC-determined value, which is 

based on the current local price in a 

county, is below the applicable county 

loan rate. The payment is the difference 

between the two rates times the eligible 

quantity. 

* * * * * 

Market loan gain is the loan rate, 

minus the repayment rate on loans 

repaid at a rate that is less than the loan 

rate. The total of all market loan gains 

received by a producer for an applicable 

crop year cannot exceed the producer’s 

applicable payment limitation as 

specified in part 1400 of this chapter. A 

producer’s adjusted gross income must 

also be below the limit as specified in 

part 1400 of this chapter to receive a 

market loan gain. 

* * * * * 

■ 72. Amend § 1425.4 as follows: 

■ a. Revise paragraph (a), introductory 

text; 

■ b. In paragraph (a)(6), remove the 

word ‘‘loan’’ and add the word ‘‘MAL’’ 

in its place; 

■ c. In paragraph (a)(7), remove the 

words ‘‘CCC loan’’ and add the word 

‘‘MAL’’ in their place: 

■ d. In paragraph (b)(1), remove the 

words ‘‘shall disclose’’ and add the 

word ‘‘discloses’’ in their place; 

■ e. In paragraph (c) introductory text, 

remove the word ‘‘shall’’ and add the 

word ‘‘must’’ in its place; and 

■ f. In paragraph (c)(2), remove the word 

‘‘loan’’ and add the word ‘‘MAL’’ in its 

place. 

The revision reads as follows: 

§ 1425.4 Approval. 

(a) For a cooperative to be eligible to 

participate in the MAL and LDP 

Programs as an approved CMA, the 

cooperative must submit an application 

to CCC. The application must include: 

* * * * * 

■ 73. Revise § 1425.6 to read as follows: 

§ 1425.6 Approved CMAs. 

(a) CCC may approve a CMA to 

participate in the MAL and LDP 

program as: 

(1) Unconditionally approved; or 

(2) Conditionally approved. 

(b) If CCC determines a CMA is in 

substantial but not total compliance 

with the requirements of this part, CCC 

may make the approval conditional on 

the CMA achieving full compliance 

within a reasonable period of time, as 

specified in the notification of 

conditional approval. 

(c) A CMA is approved to participate 

in the MAL and LDP program until the 

CMA’s approval is suspended or 

terminated by CCC. 

■ 74. Amend § 1425.7 as follows: 

■ a. Revise paragraphs (a) and (d); and 

■ b. In paragraph (e), remove the word 

‘‘shall’’ and add the word ‘‘will’’ in its 

place wherever it appears. 

The revision reads as follows: 

§ 1425.7 Suspension and termination of 

approval. 

(a) CCC may suspend a CMA from 

obtaining MALs and LDPs when CCC 

determines the CMA has violated any of 

its agreements with CCC or the CMA has 

not: 

(1) Operated according to the CMA’s 

application for approval or its last 

recertification submission; 

(2) Complied with applicable 

regulations; or 


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(3) Corrected deficiencies of the 

CMA’s operation as noted by CCC. 

* * * * * 

(d) If a CMA does not have any MALs 

outstanding, it may voluntarily 

terminate its participation in the MAL 

and LDP program through written notice 

to CCC. 

* * * * * 

§ 1425.9 [Amended] 

■ 75a. Amend § 1425.9(a) by removing 

the word ‘‘shall’’ and adding the word 

‘‘must’’ in its place. 

§ 1425.10 [Amended] 

■ 75b. Amend § 1425.10 by removing 

the word ‘‘shall’’ and adding the word 

‘‘must’’ in its place. 

§ 1425.14 [Amended] 

■ 76. Amend § 1425.14(a) introductory 

text, by removing the word ‘‘loan’’ and 

adding the word ‘‘MAL’’ in its place. 

§ 1425.15 [Amended] 

■ 77. Amend § 1425.15, by removing the 

word ‘‘shall’’ and adding the word 

‘‘will’’ in its place. 

■ 78. Revise § 1425.16 to read as 

follows: 

§ 1425.16 Payment limitation and adjusted 

gross income provisions. 

(a) CMAs must apply any market loan 

gains received on behalf of members to 

the loan pool for distribution. However, 

CMAs must also monitor market loan 

gains they receive from CCC on behalf 

of their members and must not obtain 

market loan gains for a member above 

the member’s payment limitation 

determined as specified in part 1400 of 

this chapter. 

(b) CMAs must monitor LDPs they 

receive from CCC on behalf of their 

members and not obtain LDPs for a 

member whose AGI is above the limit 

specified in part 1400 of this chapter. 

■ 79. Amend § 1425.17 as follows: 

■ a. Revise paragraphs (c) introductory 

text, (1), and (3); 

■ b. Add paragraph (c)(6); 

■ c. In paragraph (d)(2), remove the 

words ‘‘a loan’’ and add the words ‘‘a 

MAL’’ in their place; 

■ d. Revise paragraph (e) ; 

■ e. In paragraphs (f) remove the word 

‘‘loan’’ and add the word ‘‘MAL’’ in its 

place. 

■ f. In paragraph (g) remove the word 

‘‘Loans’’ and add the word ‘‘MALs’’ in 

its place; 

■ g. Revise paragraphs (h) through (m); 

■ h. In paragraph (n) introductory text, 

remove the word ‘‘loan’’ and add the 

word ‘‘MAL’’ in its place; and 

■ i. Add paragraph (o). 

The revisions and additions read as 

follows: 

§ 1425.17 Eligible commodity and pooling. 

* * * * * 

(c) A loan pool is eligible for MALs 

and LDPs if: 

(1) All of the commodity in the loan 

pool is eligible for MALs or LDPs, 

except as provided in paragraphs (d) 

and (e) of this section; 

* * * * * 

(3) The commodity was delivered and 

the members are eligible for MALs and 

LDPs; 

* * * * * 

(6) Members agree to refund to the 

CMA, if requested by the CMA, any 

denied market loan gain or LDP benefit 

realized when the proceeds from the 

loan pool are distributed to the CMA 

members. 

* * * * * 

(e) A CMA may include a commodity 

in a pool that is ineligible based on FSA 

records if the producer has certified to 

the CMA the commodity is eligible. (For 

example, an otherwise eligible 

commodity that is not reflected on a 

timely filed FSA acreage report.) CCC 

will specify a time period during which 

CMAs may obtain MALs or LDPs on the 

applicable quantity while the eligibility 

status is resolved. If the final resolution 

is that the commodity was ineligible, 

the CMA must repay any MALs 

outstanding with principal plus interest 

and any market loan gains obtained plus 

interest from the date of receiving the 

market loan gain through the repayment 

date. 

* * * * * 

(h) A CMA must have identitypreserved loan pool commodities stored 

in approved warehouses while the 

commodities are pledged as collateral 

for MAL. 

(i) Comingled commodities with MAL 

eligibility stored on a farm or in a 

warehouse may be transferred to an 

authorized warehouse. 

(j) Commodities pledged as collateral 

for MALs must be free and clear of all 

liens and encumbrances based on a 

CMA’s financial agreements or the CMA 

must obtain and complete a lien waiver 

form. When liens are applicable based 

on CMA financial agreements, the CMA 

must provide CCC the completed lien 

waiver form. CMAs must not take any 

action to cause a lien or encumbrance to 

be placed on a commodity after a MAL 

is approved. 

(k) If a MAL or LDP is obtained for 

any quantity in a loan pool, allocations 

of costs and expenses among separate 

pools for the commodity in the pool will 

be made according to generally accepted 

accounting principles. 

(l) A CMA must not apply marketing 

losses from a commodity not used to 

obtain a MAL or LDP against the 

marketing proceeds of a commodity 

used to obtain a MAL or LDP. 

(m) CMAs will not carry forward 

losses from one loan pool and apply 

them against a subsequent loan pool 

without CCC’s authorization. CCC may 

grant authorization when it determines 

that carrying forward the loss complies 

with the MAL or LDP Program intent. 

* * * * * 

(o) Denied market loan gain or denied 

LDP benefits will be based on payment 

limitation attribution as specified in 

part 1400 of this chapter, and must be 

repaid to CCC by the CMA receiving the 

MAL or LDP proceeds. 

■ 80. Amend § 1425.18 as follows; 

■ a. In paragraph (a)(1) introductory 

text, remove the word ‘‘shall’’ and add 

the word ‘‘must’’ in its place; 

■ b. In paragraph (a)(1)(ii), remove the 

word ‘‘loans’’ and add the word 

‘‘MALs’’ in its place and remove the 

word ‘‘LDP’s’’ and add the word ‘‘LDPs’’ 

in its place; 

■ c. In paragraphs (a)(1)(iii) and (2), 

remove the word ‘‘loan’’ each time it 

appears and add the word ‘‘MAL’’ in its 

place; 

■ d. In paragraph (b)(1), remove the 

word ‘‘shall’’ both times it appears and 

add the word ‘‘must’’ in its place and 

remove the reference to’’ § 1425.4(b)(7)’’ 

and add a reference to ‘‘§ 1425.4(a)(5)’’ 

in its place; 

■ e. In paragraph (b)(3), remove the 

word ‘‘Loan’’ and add the word ‘‘MAL’’ 

in its place; and remove the word 

‘‘loans’’ and add the word ‘‘MALs’’ in 

its place; 

■ f. Revise paragraph (b)(4); and 

■ g. Add paragraph (c). 

The revision and addition read as 

follows: 

§ 1425.18 Distribution of proceeds. 

* * * * * 

(b) * * * 

(4) When notified by CCC that MAL 

and LDP distributions to a member are 

required to be reduced for a program 

year, farm, or crop, a CMA must not 

make subsequent pool distributions and 

must reimburse CCC for distributions 

previously issued, if applicable. 

(c) CMAs must apply market loan 

gains to the payment limit that is earned 

on date of redemption for their members 

when the CMA distributes the pool 

funds. 

■ 81. Revise § 1425.19 to read as 

follows: 


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§ 1425.19 Member cooperatives. 

(a) A CMA may obtain MALs or LDPs 

on behalf of a member cooperative when 

the member cooperative is itself a CMA 

operating in accordance with this part. 

For example, a cooperative of producers 

may be a member of a CMA that markets 

a commodity. 

(b) If the CMA is approved according 

to § 1425.6, and otherwise meets all the 

requirements of this part, the MALs and 

LDPs submitted by members of that 

CMA will be eligible. 

§ 1425.21 [Amended] 

■ 82. Amend § 1425.21 as follows: 

■ a. In paragraph (a) introductory text, 

remove the word ‘‘loan’’ and add the 

word ‘‘MAL’’ in its place; 

■ b. In paragraph (a)(2), remove the 

words ‘‘loans and LDP’s’’ and add the 

words ‘‘MALs and LDPs’’ in its place; 

and 

■ c. In paragraph (b) introductory text, 

(1), and (2), remove the word ‘‘shall’’ 

and add the word ‘‘must’’ in its place. 

■ 83. Amend § 1425.22 as follows: 

■ a. In paragraph (a), remove the word 

‘‘shall’’ both times it appears and add 

the word ‘‘must’’ in its place; 

■ b. In paragraph (b), remove the words 

‘‘shall have’’ and add the word ‘‘has’’ in 

its place; and 

■ c. Add paragraph (c). 

The addition reads as follows: 

§ 1425.22 Inspection and investigation. 

* * * * * 

(c) CCC reserves the right to 

determine examinations of CMAs based 

on: 

(1) A 3-year rotation; or 

(2) The previous crop year MAL or 

LDP activity if market loan gain and 

LDP activity increases substantially. 

§ 1425.23 [Amended] 

■ 84. In § 1425.23(a) and (b), remove the 

word ‘‘shall’’ and add the word ‘‘must’’ 

in its place. 

§ 1425.24 [Removed and Reserved] 

■ 85. Remove and reserve § 1425.24. 

PART 1427—COTTON 

■ 86. The authority citation for part 

1427 is revised to read as follows: 

Authority: 7 U.S.C. 7231–7237, 7931– 

7936, 9011, and 9031–40, 15 U.S.C. 714b and 

c. 

■ 87. Amend § 1427.1 as follows: 

■ a. Revise paragraphs (a), (b), and (d); 

■ b. In paragraph (c), remove the words 

‘‘Marketing assistance loans and loan 

deficiency payments’’ and add the 

words ‘‘MALs and LDPs’’ in their place; 

and 

■ c. Remove paragraph (e). 

The revisions read as follows: 

§ 1427.1 Applicability. 

(a) The regulations in this subpart are 

applicable to crops of upland cotton and 

extra long staple cotton. This part 

specifies the general provisions under 

which the Marketing Assistance Loans 

(MAL) and Loan Deficiency Payment 

(LDP) Programs will be administered by 

the Commodity Credit Corporation 

(CCC). Eligibility to receive MALs and 

LDPs is subject to additional terms and 

conditions that are in the MAL note and 

security agreement and the LDP 

application. The provisions in this part 

apply to the 2014 and subsequent crops. 

(b) The basic loan rate, the schedule 

of premiums and discounts, and forms 

applicable to the cotton MAL and LDP 

Programs are available from FSA offices. 

The forms for use in connection with 

the programs in this subpart will be 

prescribed by CCC. 

* * * * * 

(d) Adjusted gross income (AGI) and 

payment limitation provisions specified 

in part 1400 of this chapter are 

applicable to MALs and LDPs. 

■ 88. Amend § 1427.2 as follows: 

■ a. Revise paragraph (a); 

■ b. In paragraph (c) introductory text, 

remove the word ‘‘shall’’ both times it 

appears and add the word ‘‘will’’ in its 

place; 

■ c. In paragraph (e), remove the words 

‘‘marketing assistance and loan 

deficiency payment programs’’ and add 

the words ‘‘MAL and LDP Programs’’ in 

their place; and 

■ d. In paragraph (f), remove the words 

‘‘marketing assistance loan and loan 

deficiency payment’’ and add the words 

‘‘MAL and LDP’’ in their place. 

The revision reads as follows: 

§ 1427.2 Administration. 

(a) The MAL and LDP Programs will 

be administered under the general 

supervision of the Executive Vice 

President, CCC, or a designee and will 

be carried out by FSA employees, and 

state and county committees. 

* * * * * 

■ 89. Amend § 1427.3 as follows: 

■ a. Revise the introductory text; 

■ b. Remove the definitions for 

‘‘Approved cooperative marketing 

association’’, ‘‘Commodity certificate 

exchange’’, and ‘‘Loan deficiency 

payment’’; 

■ c. Add, in alphabetical order, 

definitions for ‘‘Cooperative marketing 

association’’, and ‘‘Loan deficiency 

payment (LDP)’’; and 

■ d. Revise the definition of 

‘‘Warehouse receipt’’. 

The revisions and additions read as 

follows: 

§ 1427.3 Definitions. 

The definitions in this section apply 

for all purposes of program 

administration regarding the cotton loan 

and LDP programs. The terms defined in 

part 718 of this title and parts 1412, 

1421, 1423, 1425, and 1434 of this 

chapter also apply, except where they 

conflict with definitions in this section. 

* * * * * 

Cooperative marketing association 

(CMA) means a cooperative marketing 

association, approved as specified in 

part 1425 of this chapter, that has 

executed a Cotton Cooperative Loan 

Agreement. 

* * * * * 

Loan deficiency payment (LDP) means 

a payment made in lieu of a MAL when 

the CCC-determined value, which is 

based on the current local price in a 

county, is below the applicable county 

loan rate. The payment is the difference 

between the two rates times the eligible 

quantity. 

* * * * * 

Warehouse receipt means a receipt 

containing the required information 

specified in this part that may or may 

not be certificated for delivery for a 

futures-pricing contract, and is an 

electronic warehouse receipt record 

issued by such warehouse recorded in a 

central filing system or systems 

maintained in one or more locations 

that are approved by FSA to operate 

such system. 

* * * * * 

■ 90. Amend § 1427.4 as follows: 

■ a. In paragraph (a)(1) remove the 

words and punctuation ‘‘trust,or’’ and 

add the words and punctuation ‘‘trust, 

or’’ in their place; 

■ b. In paragraph (b) remove the words 

‘‘shall be’’ both times it appears and add 

the word ‘‘is’’ in their place; 

■ c. Revise paragraphs (d)(1), (e), and (f); 

and 

■ d. Add paragraph (g). 

The revisions and addition read as 

follows: 

§ 1427.4 Eligible producer. 

* * * * * 

(d)(1) If more than one producer 

executes a note and security agreement 

with CCC, each such producer is jointly 

and severally liable for the violation of 

the terms and conditions of the note and 

the regulations in this part. Each such 

producer also remains liable for 

repayment of the entire MAL amount 

until the MAL is fully repaid without 

regard to such producer’s claimed share 

in the commodity pledged as collateral 

for the MAL. In addition, such producer 

may not amend the note and security 

agreement with respect to the 


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producer’s claimed share in such 

commodities, or loan proceeds, after 

execution of the note and security 

agreement by CCC. 

* * * * * 

(e) A CMA may obtain MALs and 

LDPs on eligible cotton on behalf of its 

members who are eligible to receive 

loans or LDPs for a crop of cotton. For 

purposes of this subpart, the term 

‘‘producer’’ includes a CMA. 

(f) In case of death, incompetency, or 

disappearance of any producer who is 

entitled to the payment of any sum in 

settlement of a MAL or LDP, payment 

will, upon application to CCC, be made 

to the person(s) who would be entitled 

to the producer’s payment under the 

regulations in part 707 of this title. 

(g) Adjusted gross income (AGI) and 

payment limitation provisions specified 

in part 1400 of this chapter apply to 

producer eligibility for MALs and LDPs. 

■ 91. Amend § 1427.5 as follows: 

■ a. In paragraph (a) introductory text, 

remove the words ‘‘loan deficiency 

payments’’ and add the word ‘‘LDPs’’ in 

their place, and remove the words ‘‘loan 

deficiency payment’’ and add the word 

‘‘LDP’’ in their place; 

■ b. In paragraph (a)(1) introductory 

text, remove the words ‘‘loan deficiency 

payment’’ and add the word ‘‘LDP’’ in 

their place, and remove the words ‘‘loan 

deficiency payments’’ and add the word 

‘‘LDPs’’ in their place; 

■ c. In paragraph (a)(1)(i), add the word 

‘‘FSA’’ immediately before the word 

‘‘county’’; 

■ d. Revise paragraph (b) introductory 

text; 

■ e. In paragraph (b)(2), remove the 

words ‘‘a loan deficiency payment’’ and 

add the words ‘‘an LDP’’ in their place; 

■ f. Revise paragraph (b)(5); 

■ g. In paragraphs (b)(6) and (b)(8), 

remove the words ‘‘a loan deficiency 

payment’’ and add the words ‘‘an LDP’’ 

in their place; 

■ h. Revise paragraph (b)(10); 

■ i. Revise paragraph (e); 

■ j. In paragraph (g) introductory text, 

remove the words ‘‘a loan deficiency 

payment’’ and add the words ‘‘an LDP’’ 

in their place; 

■ k. Revise paragraphs (g)(3), the 

undesignated quoted text following 

paragraph (j)(2), and (l) introductory 

text; 

■ l. Remove paragraph (n) and 

redesignate paragraph (o) as paragraph 

(n); and 

■ m. Revise newly redesignated 

paragraph (n). 

The revisions read as follows: 

§ 1427.5 General eligibility requirements. 

* * * * * 

(b) For a bale of cotton to be eligible 

to be pledged as collateral for a MAL or 

a subject of an LDP application, the bale 

must: 

* * * * * 

(5) Not be compressed to universal 

density at a warehouse where side 

pressure has been applied and not be a 

flat or modified flat bale; * * * 

(10) Be packaged in materials that 

meet the specifications adopted by the 

Joint Cotton Industry Bale Packaging 

Committee sponsored by the National 

Cotton Council of America for the 

applicable year or that are identified 

and approved by the Joint Industry Bale 

Packaging Committee as experimental 

packaging materials for the applicable 

crop year, except that producers 

approved for the outside storage of ELS 

cotton as provided for in § 1427.10(e) 

must assure that the packaging materials 

used for bales stored outside must meet 

the materials, sealing, and humidity 

specifications contained in the outsidestorage addendum to their ELS cotton 

MAL agreement. 

* * * * * 

(e) To be eligible to receive MALs and 

LDPs, a producer must have beneficial 

interest in the cotton that is tendered to 

CCC for a MAL or LDP. For the purposes 

of this part, the term ‘‘beneficial 

interest’’ refers to a determination by 

CCC that a person has the requisite title 

to and control of cotton that is tendered 

to CCC as collateral for a MAL or is the 

cotton that will be used to determine an 

LDP. A determination of whether a 

person has beneficial interest in cotton 

is made by CCC in accordance with this 

part and is not based upon a 

determination under any State law or 

any other regulation of a Federal agency. 

* * * * * 

(g) * * * 

(3) Have control of the cotton from the 

time of planting through the date the 

producer has elected to determine the 

LDP rate. To have control of the cotton, 

such person must have complete 

decision making authority regarding 

whether an LDP will be requested with 

respect to the cotton; when the loan 

deficiency rate will be selected; and 

where the cotton will be maintained 

prior to the date on which the LDP rate 

will be determined; 

* * * * * 

(j) * * * 

(2) * * * 

Notwithstanding any other provision 

of this option to purchase or any other 

contract, title and control of the cotton 

and beneficial interest in the cotton as 

specified in 7 CFR 1427.5 will remain 

with the producer until the buyer 

exercises this option to purchase the 

cotton. This option to purchase will 

expire, notwithstanding any action or 

inaction by either the producer or the 

buyer, at the earlier of: 

* * * * * 

(l) Commodities produced under a 

contract in which the title to the seed 

remains with the entity providing the 

seed to the producer, including 

contracts for the production of hybrid 

seed, genetically modified commodities, 

and other specialty seeds as approved in 

writing by CCC, are eligible to be 

pledged as collateral for a MAL and an 

LDP may be made with respect to such 

production if at the time of the request 

for such a loan or payment the producer 

has not: 

* * * * * 

(n) If MALs or LDPs are made 

available to producers through a CMA 

under part 1425 of this chapter, the 

beneficial interest in the cotton must 

always have been held by the producermember who delivered the cotton to the 

CMA or its member, except as otherwise 

provided in this section. Cotton 

delivered to such a CMA will not be 

eligible to receive a MAL or an LDP if 

the producer-member who delivered the 

cotton does not retain the right to share 

in the proceeds from the marketing of 

the cotton as provided in part 1425 of 

this chapter. 

■ 92. Revise the heading for § 1427.6 to 

read as follows: 

§ 1427.6 Disbursement of MALs. 

* * * * * 

■ 93. Amend § 1427.7 as follows: 

■ a. Revise the section heading; 

■ b. In paragraph (a)(1), remove the 

words ‘‘filed under’’ and add the words 

‘‘approved as specified in’’ in their 

place, and 

■ c. Add paragraphs (d) and (e). 

The revision and additions read as 

follows: 

§ 1427.7 Maturity of MALs. 

* * * * * 

(d) CCC will not assume a loss on 

MAL collateral stored in a warehouse 

for any reason. 

(e) The maturity date of any MAL may 

not be extended. 

■ 94. Amend § 1427.8 as follows: 

■ a. Revise the section heading; 

■ b. In paragraph (a), add the word 

‘‘FSA’’ before the word ‘‘State’’; and 

■ c. Remove paragraph (e). 

The revision reads as follows: 

§ 1427.8 Amount of MALs. 

* * * * * 

§ 1427.9 [Amended] 

■ 95. Amend § 1427.9, in paragraph (a), 

by removing the words ‘‘loan deficiency 


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payment’’ and adding the words ‘‘LDP’’ 

in their place and removing the words 

‘‘an AMS’’ and adding the words ‘‘an 

Agricultural Marketing Service (AMS)’’ 

in their place. 

■ 96. Amend § 1427.10 as follows: 

■ a. In paragraph (a)(2), add the word 

‘‘FSA’’ immediately before the word 

‘‘State’’; 

■ b. Revise paragraph (e); and 

■ c. In paragraph (f), remove the word 

‘‘tocrops’’ and add the words ‘‘to crops’’ 

in its place. 

The revision reads as follows: 

§ 1427.10 Approved storage. 

* * * * * 

(e) The approved storage requirements 

provided in this section may be waived 

by CCC if the producer requests an LDP 

pursuant to the LDP provisions in 

§ 1427.23. 

* * * * * 

■ 97. Revise § 1427.13(a), (d) 

introductory text, and (d)(2) to read as 

follows: 

§ 1427.13 Fees, charges and interest. 

(a) A producer must pay a 

nonrefundable loan service fee to CCC at 

the time of loan disbursement or, if 

applicable, to a loan servicing agent, at 

a rate determined by CCC. The fee is in 

addition to a cotton clerk fee specified 

in paragraph (b) of this section. The fee 

amounts are available in FSA State and 

county offices and are shown on the 

note and security agreement. Fees will 

be deducted from the loan proceeds. 

* * * * * 

(d) For each crop of upland cotton, 

the producer, as defined in the Cotton 

Research and Promotion Act (7 U.S.C. 

2101), must remit to CCC an assessment 

that will be transmitted by CCC to the 

Cotton Board and will be deducted from 

the: 

* * * * * 

(2) LDP proceeds for a crop of cotton 

and will be at a rate equal to up to one 

percent of the LDP amount. 

* * * * * 

■ 98. Amend § 1427.15 as follows: 

■ a. Revise paragraphs (a) and (b)(1); 

■ b. In paragraph (b)(2) introductory 

text, remove the words ‘‘marketing 

assistance loan or loan deficiency 

payment’’ and add the words ‘‘MAL or 

LDP’’ in their place; 

■ c. Revise paragraph (c)(1) introductory 

text; 

■ d. In paragraph (c)(1)(ii), remove the 

words ‘‘marketing assistance loan or 

loan deficiency payment’’ and add the 

words ‘‘MAL or LDP’’ in their place; 

■ e. Revise paragraphs (c)(2), (3), and 

(d); and 

■ f. In paragraph (e), remove the words 

‘‘marketing assistance loan or loan 

deficiency payment’’ and add the words 

‘‘MAL or LDP’’ in their place. 

The revisions read as follows: 

§ 1427.15 Special procedure where funds 

are advanced. 

(a) The special procedure in this 

section is provided to assist persons or 

firms that, in the course of their regular 

business of handling cotton for 

producers, have made advances to 

eligible producers on cotton eligible to 

be pledged as collateral for a MAL or to 

receive an LDP. A person, firm, or 

financial institution that has made 

advances to eligible producers on 

eligible cotton may also obtain 

reimbursement for the amounts 

advanced under this procedure. 

(b) * * * 

(1) If such person or firm is entitled 

to reimbursement from the proceeds of 

the MALs or LDPs for the amounts 

advanced and has been authorized by 

the producer to deliver the loan or LDP 

documents to a FSA county office for 

disbursement of the loans or LDPs; and 

* * * * * 

(c)(1) All MAL or LDP documents will 

be mailed, sent electronically, or 

delivered to the appropriate FSA county 

office and will show the entire proceeds 

of the MALs or LDPs, except for CCC 

loan service charges and research and 

promotion fees, for disbursement to: 

* * * 

(2) The documents will be 

accompanied by a Transmittal Schedule 

of Loan and LDP Documents 

(Transmittal) on a form prescribed by 

CCC, in original and two copies, 

numbered serially for each FSA county 

office by the person, firm, or financial 

institution that made the MAL or LDP 

advance. The Transmittal will show the 

amounts invested by the person, firm, or 

financial institution in the MALs or 

LDPs. 

(3) Upon receipt of the MAL or LDP 

documents and Transmittal, the FSA 

county office will stamp one copy of the 

Transmittal to indicate receipt of the 

documents and return this copy to the 

person, firm, or financial institution. 

(d) The person, firm, or financial 

institution will be deemed to have 

invested funds in the loans or LDP as of 

the date MAL or LDP documents 

acceptable to CCC were delivered to a 

FSA county office or, if received by 

mail, the date of mailing as indicated by 

postmark or the date of receipt in a FSA 

county office if no postmark date is 

shown. Patron postage meter date stamp 

will not be recognized as a postmark 

date. 

* * * * * 

■ 99. Amend § 1427.18 as follows: 

■ a. Revise paragraph (a)(1) introductory 

text; 

■ b. In paragraph (a)(1)(i), remove the 

words ‘‘marketing assistance loan or 

loan deficiency payment’’ and add the 

words ‘‘MAL or LDP’’ in their place; 

■ c. Add paragraph (a)(1)(vii); and 

■ d. Revises paragraph (b), (c), (d), (e), 

(g)(2), (k)(1), and (k)(2) introductory 

text. 

The revisions and addition read as 

follows: 

§ 1427.18 Liability of the producer. 

(a)(1) If a producer makes any 

fraudulent representation in obtaining a 

MAL or LDP or in maintaining or 

settling a loan, or disposes of or moves 

the loan collateral without the prior 

written approval of CCC, such loan or 

LDP will be payable upon demand by 

CCC. The producer will be liable for: 

* * * 

(vii) CCC will not assume any loss 

pertaining to cotton stored in a 

warehouse for any reason. 

* * * * * 

(b) If the amount disbursed under a 

MAL, or in settlement thereof, or LDP 

exceeds the amount authorized by this 

subpart, the producer will be liable for 

repayment of the difference, plus 

interest. In addition, the commodity 

pledged as collateral for the loan will 

not be released to the producer until the 

difference is repaid. 

(c) If the amount collected from the 

producer in satisfaction of the MAL or 

LDP is less than the amount required 

under this subpart, the producer will be 

personally liable for repayment of the 

amount of the difference plus applicable 

interest. 

(d) If more than one producer 

executes a note and security agreement 

or LDP application with CCC, each 

producer is jointly and severally liable 

for the violation of the terms and 

conditions of the note and security 

agreement or LDP application and this 

subpart. Each producer also remains 

liable for repayment of the entire loan 

or LDP amount until the loan is fully 

repaid without regard to their share in 

the cotton pledged as collateral for the 

loan or for which the LDP was made. In 

addition, the producer may not amend 

the note and security agreement or LDP 

application for the producer’s claimed 

share in the cotton after execution of the 

note and security agreement or LDP 

application by CCC. 

(e) The producer and CCC agree that 

it will be difficult, if not impossible, to 

prove the amount of damages to CCC if 

a producer makes any fraudulent 

representation in obtaining a loan or 

LDP, in maintaining or settling a loan, 

or disposing of or moving the loan 


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collateral without the prior written 

approval of CCC. Accordingly, if CCC 

determines that the producer has 

violated the terms or conditions of their 

requests for a loan or any applicable 

form required by CCC, liquidated 

damages will be assessed on the 

quantity involved in the violation. 

Liquidated damages assessed in 

accordance with this section will be 

determined by multiplying the quantity 

involved in the violation by 10 percent 

of the MAL rate applicable to the loan 

note. 

* * * * * 

(g) * * * 

(2) Call the applicable MAL involved 

in the violation and require repayment 

of any market loan gain previously 

realized for the applicable loan, plus 

any interest previously waived and any 

storage paid by CCC, and for an LDP, 

require repayment of the LDP and 

charges plus interest from the date the 

LDP was made. 

* * * * * 

(k)(1) Notwithstanding any other 

provision of this part, for ELS cotton 

stored as provided in § 1427.10(f), the 

producer is liable for all costs associated 

with the storage of the cotton while it 

is stored outside. CCC will make no 

storage payment or any other payment 

with respect to ELS cotton stored as 

provided in § 1427.10(f). 

(2) The producer of ELS cotton that is 

stored as provided in § 1427.10(f) must: 

* * * * * 

■ 100. Amend § 1427.19 as follows: 

■ a. Revise the section heading; 

■ b. In paragraph (c)(1)(ii), add the word 

‘‘FSA’’ immediately before the word 

‘‘county’’; 

■ c. In paragraph (e) remove the words 

‘‘market gain’’ both times they appear 

and add the words ‘‘market loan gain’’ 

in their place; 

■ d. Revise paragraph (h)(1), remove 

paragraph (h)(2), and redesignate 

paragraphs (h)(3) and (4) as paragraphs 

(h)(2) and (3); 

■ e. In newly redesignated paragraph 

(h)(3)(i), remove the words ‘‘Farm 

Service Agency’’ and add the word 

‘‘FSA’’ in their place; 

■ f. In newly redesignated paragraph 

(h)(3)(ii), remove the words 

‘‘Cooperative Marketing Association’’ 

and add the word ‘‘CMA’’ in their place; 

and 

■ g. Add paragraph (l). 

The revisions and addition read as 

follows: 

§ 1427.19 Repayment of MALs. 

* * * * * 

(h) * * * 

(1) The warehouse storage rates for 

cotton crops under loan will be the 

lower of: 

(i) The tariff storage rate for the 

warehouse for the 2005 crop or, for any 

warehouse not in existence in 2005, a 

CCC-assigned average 2005 crop tariff 

rate for the county or area; or 

(ii) The storage rate for 2006 crop 

cotton reduced by 10 percent. 

* * * * * 

(l) A producer who receives a market 

loan gain or LDP and later is determined 

to have been ineligible must refund the 

market loan gain or LDP to CCC. 

■ 101. Revise § 1427.20 to read as 

follows: 

§ 1427.20 Handling payments of $9.99 or 

less and collections not exceeding $24.99. 

(a) Amounts of $9.99 or less will be 

paid to the producer only upon request. 

(b) Deficiencies of $24.99 or less, 

including interest, may be disregarded 

unless CCC demands in writing that 

they be paid. 

■ 102. Revise § 1427.21(e) to read as 

follows: 

§ 1427.21 Settlement. 

* * * * * 

(e) If CCC sells the commodity 

described in paragraph (a) of this 

section in settlement of the recourse 

loan, the sales proceeds will be applied 

to the amount owed CCC by the 

producer. The producer is responsible 

for any costs incurred by CCC in 

completing the sale and CCC will 

deduct the amount of these costs from 

the sales proceeds. When CCC sells any 

cotton obtained by forfeiture under a 

MAL, CCC will, in all instances, retain 

all proceeds obtained from the sale of 

the cotton and will not make any 

payment of any amount of such 

proceeds to any party, including the 

producer who had satisfied their 

obligation under the loan through 

forfeiture of the cotton to CCC. 

* * * * * 

§ 1427.22 [Removed and Reserved] 

■ 103. Remove and reserve § 1427.22. 

■ 104. Amend § 1427.23 as follows: 

■ a. Revise the section heading; 

■ b. In paragraph (a)(2), remove the 

words ‘‘a loan deficiency payment’’ and 

add the words ‘‘an LDP’’ in their place; 

■ c. In paragraph (a)(3) introductory 

text, remove the words ‘‘Service Center’’ 

and add the words ‘‘county office’’ in 

their place; 

■ d. In paragraphs (a)(3)(i) and (ii), 

remove the words ‘‘a loan deficiency 

payment’’ and add the words ‘‘an LDP’’ 

in their place; and 

■ e. Revise paragraphs (b), (c), (d), and 

(e) introductory text. 

The revisions read as follows: 

§ 1427.23 Cotton LDPs. 

* * * * * 

(b) The LDP applicable to a crop of 

cotton will be computed by multiplying 

the applicable LDP rate, as determined 

under paragraph (c) of this section, by 

the quantity of the crop the producer is 

eligible to pledge as collateral for a loan, 

excluding any quantity for which the 

producer obtains a MAL. 

(c) The LDP rate for a crop of upland 

cotton will be the amount by which the 

loan rate determined for a bale of such 

crop exceeds the adjusted world price, 

as determined by CCC under § 1427.25, 

in effect on the day the request is 

received by the FSA county office, loan 

servicing agent, or cotton commercial 

bank. In no case will the LDP rate for 

a bale exceed the value of the bale had 

it been pledged as collateral for a MAL. 

(d) The total amount of any LDPs that 

a person may receive is subject to AGI 

and payment limitation requirements 

specified in part 1400 of this chapter. 

(e) If the producer enters into an 

agreement with CCC on or before the 

date of ginning a quantity of eligible 

upland cotton, and the producer has the 

beneficial interest in such quantity as 

specified under § 1427.5(c) on the date 

the cotton was ginned, and the producer 

meets all the other requirements in 

paragraph (a) of this section on or before 

the final date to apply for an LDP under 

§ 1427.5, the LDP rate applicable to such 

cotton will be: 

* * * * * 

§ 1427.25 [Amended] 

■ 105. Amend § 1427.25 as follows: 

■ a. In paragraph (b), remove the words 

‘‘the 2008 through 2012 crops of upland 

cotton and to the 2007 crop to the extent 

provided in § 1427.1’’ and add the 

words ‘‘crops of upland cotton’’ in their 

place; and 

■ b. In paragraph (d), remove the words 

‘‘continuing through the last Thursday 

of March 2014 (March 27, 2014)’’. 

Subpart C—Economic Adjustment 

Assistance to Users of Upland Cotton 

■ 106. Revise § 1427.100 to read as 

follows: 

§ 1427.100 Applicability. 

(a) These regulations specify the terms 

and conditions under which CCC will 

make payments to eligible domestic 

users who have entered into an Upland 

Cotton Domestic User Agreement with 

CCC to participate in the upland cotton 

domestic user program. 

(b) CCC will specify the forms to be 

used in administering the Economic 


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Adjustment Assistance to Users of 

Upland Cotton program. 

§ 1427.101 [Amended] 

■ 107. Amend § 1427.101, in paragraph 

(a) introductory text, by removing the 

words ‘‘on or after August 1, 2008’’. 

§ 1427.104 [Removed and Reserved]. 

■ 108. Remove and reserve § 1427.104. 

■ 109. Amend § 1427.105 as follows: 

■ a. Redesignate paragraphs (a) through 

(d) as paragraphs (b) through (e) and add 

new paragraph (a); 

■ b. In newly designated paragraph (b) 

introductory text, remove the words ‘‘as 

specified in § 1427.104’’ and add the 

words ‘‘of 3 cents per pound’’ in their 

place; and 

■ c. Revise newly redesignated 

paragraph (e). 

The addition and revision read as 

follows: 

§ 1427.105 Payment. 

(a) The payment rate for purposes of 

calculating payments as specified in this 

subpart is 3 cents per pound. 

* * * * * 

(e) All payments received by the 

eligible domestic user of upland cotton 

must be used for purposes specified in 

7 U.S.C. 9037(c)(3), which include but 

are not limited to, acquisition, 

construction, installation, 

modernization, development, 

conversion, or expansion of land, plant, 

buildings, equipment, facilities, or 

machinery. Such capital expenditures 

must be directly attributable and 

certified as such by the user for the 

purpose of manufacturing upland cotton 

into eligible cotton products in the 

United States. 

Subpart D—Recourse Seed Cotton 

Loans 

■ 110. Revise § 1427.160(a) and (c) to 

read as follows: 

§ 1427.160 Applicability. 

(a) This subpart is applicable to crops 

of upland and extra long staple seed 

cotton. This subpart specifies the terms 

and conditions under which recourse 

seed cotton loans will be made available 

by CCC. Such loans will be available 

through March 31 of the year following 

the calendar year in which such crop is 

normally harvested. CCC may change 

the loan availability period to conform 

to State or locally imposed quarantines. 

Additional terms and conditions are in 

the note and security agreement that 

must be executed by a producer in order 

to receive such loans. 

* * * * * 

(c) A producer must, unless otherwise 

authorized by CCC, request the loan at 

the FSA county office that, under part 

718 of this title, is responsible for 

administering programs for the farm on 

which the cotton was produced. All 

note and security agreements and 

related documents necessary for the 

administration of the recourse seed 

cotton loan program will be prescribed 

by CCC and will be available at FSA 

State and county offices. 

* * * * * 

■ 111. Revise § 1427.161(a) to read as 

follows: 

§ 1427.161 Administration. 

(a) The Recourse Seed Cotton Loan 

Program that is applicable to a crop of 

cotton will be administered under the 

general supervision of the Executive 

Vice President, CCC, or a designee and 

will be carried out in the field by FSA 

State and county committees. 

* * * * * 

■ 112. Revise § 1427.163 to read as 

follows: 

§ 1427.163 Disbursement of loans. 

(a) A producer or the producer’s agent 

must request a loan at the FSA county 

office for the county that, under part 718 

of this title, is responsible for 

administering programs for the farm on 

which the cotton was produced and 

which will assist the producer in 

completing the loan documents, except 

that CMAs designated by producers to 

obtain loans on their behalf may, unless 

otherwise authorized by CCC, obtain 

loans through a central FSA county 

office designated by the State 

committee. 

(b) Disbursement of each loan will be 

made by the FSA county office of the 

county that is responsible for 

administering programs for the farm on 

which the cotton was produced, except 

that CMAs designated by producers to 

obtain loans in their behalf may, unless 

otherwise authorized by CCC, obtain 

disbursement of loans at a central FSA 

county office designated by the State 

committee. Service charges will be 

deducted from the loan proceeds. 

(1) The producer or the producer’s 

agent must not present the loan 

documents for disbursement unless the 

cotton is in existence and in good 

condition. 

(2) If the cotton is not in existence and 

in good condition at the time of 

disbursement, the producer or the agent 

must immediately return the check 

issued in payment of the loan or, if the 

check has been negotiated, the total 

amount disbursed under the loan, and 

charges plus interest must be refunded 

promptly. 

■ 113. Revise § 1427.165(b) to read as 

follows: 

§ 1427.165 Eligible seed cotton. 

* * * * * 

(b) The quality of cotton that may be 

pledged as collateral for a loan is the 

estimated quality of lint cotton in each 

lot of seed cotton as determined by the 

FSA county office, except that if a 

control sample of the lot of cotton is 

classed by an AMS Cotton Classing 

Office or other entity approved by CCC, 

the quality for the lot is the quality 

shown on the applicable documentation 

issued for the control sample. 

* * * * * 

■ 114. Revise § 1427.169(a) to read as 

follows: 

§ 1427.169 Fees, charges, and interest. 

(a) A producer must pay a nonrefundable loan service fee at a rate 

determined by CCC. 

* * * * * 

■ 115. Revise § 1427.170(a) to read as 

follows: 

§ 1427.170 Quantity for loan. 

(a) The quantity of lint cotton in each 

lot of seed cotton tendered for loan will 

be determined by the FSA county office 

by multiplying the weight or estimated 

weight of seed cotton by the lint turnout 

factor determined under paragraph (b) 

of this section. 

* * * * * 

■ 116. Revise § 1427.171 to read as 

follows: 

§ 1427.171 Approved storage. 

Approved storage consists of storage 

located on or off the producer’s farm 

(excluding public warehouses) that is 

determined by a county committee 

representative to afford adequate 

protection against loss or damage and is 

located within a reasonable distance, as 

determined by CCC, from an approved 

gin. If the cotton is not stored on the 

producer’s farm, the producer must 

furnish satisfactory evidence that the 

producer has the authority to store the 

cotton on such property and that the 

owner of the property has no lien for 

such storage against the cotton. The 

producer must provide satisfactory 

evidence that the producer and any 

person having an interest in the cotton 

including CCC, have the right to enter 

the premises to inspect and examine the 

cotton and permit a reasonable time to 

such persons to remove the cotton from 

the premises. 

■ 117. Amend § 1427.172 as follows: 

■ a. Revise paragraphs (b)(1) 

introductory text and (b)(4) introductory 

text; 


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■ b. In paragraph (b)(4)(i), add the word 

‘‘FSA’’ immediately before the word 

‘‘county’’; 

■ c. Revise paragraphs (b)(5), (c), and 

(d); and 

■ d. Add paragraph (e). 

The revisions and addition read as 

follows: 

§ 1427.172 Settlement. 

* * * * * 

(b)(1) A producer or the producer’s 

agent must not remove from storage any 

cotton that is pledged as collateral for a 

loan until prior written approval has 

been received from CCC for removal of 

the cotton. If a producer or the 

producer’s agent obtains CCC approval, 

they may remove the cotton from 

storage, sell the seed cotton, have it 

ginned, and sell the resulting lint cotton 

and cottonseed. The ginner must inform 

the FSA county office in writing 

immediately after the seed cotton 

removed from storage has been ginned 

and furnish the county office the loan 

number, producer’s name, and 

applicable gin bale numbers. If the seed 

cotton is removed from storage, the loan 

principal plus interest and charges must 

be paid not later than the earlier of: 

* * * * * 

(4) A CMA must repay the seed cotton 

loan principal, interest, and charges 

before pledging the cotton for a 

nonrecourse loan or before an LDP can 

be approved under subpart A of this 

part, on the lint cotton. If a CMA, which 

is authorized by producers to obtain 

loans in their behalf, removes seed 

cotton from storage before obtaining 

approval to move the cotton, the 

removal will constitute conversion of 

the cotton unless the CMA: 

* * * * * 

(5) Any removal from storage will not 

be deemed to constitute a release of 

CCC’s security interest in the seed 

cotton or to release the producer or 

CMA from liability for the loan 

principal, interest, and charges if full 

payment of such amount is not received 

by the FSA county office. 

(c) If, either before or after maturity, 

the producer discovers that the cotton is 

going out of condition or is in danger of 

going out of condition, the producer 

must immediately notify the FSA 

county office and confirm such notice in 

writing. If the county committee 

determines that the cotton is going out 

of condition or is in danger of going out 

of condition, the county committee will 

accelerate the maturity date and request 

repayment of the loan principal, plus 

interest and charges on or before a 

specified date. If the producer does not 

repay the loan or have the cotton ginned 

and obtain a nonrecourse loan under 

subpart A of this part on the resulting 

lint cotton within the period specified 

by the county committee, the cotton will 

be considered abandoned. 

(d) If the producer has control of the 

storage site and if the producer 

subsequently loses control of the storage 

site or there is danger of flood or 

damage to the seed cotton or storage 

structure making continued storage of 

the cotton unsafe, the producer must 

immediately either repay the loan or 

move the seed cotton to the nearest 

approved gin for ginning and must, at 

the same time, inform the FSA county 

office. If the producer does not do so, 

the seed cotton will be considered 

abandoned. 

(e) CCC will not assume any loss in 

quantity or quality of the loan collateral 

for recourse seed cotton loans. 

■ 118. Revise § 1427.173 to read as 

follows: 

§ 1427.173 Foreclosure. 

Any seed cotton pledged as collateral 

for a loan that is abandoned or has not 

been ginned and pledged as collateral 

for a nonrecourse loan under subpart A 

of this part by the seed cotton loan 

maturity date may be removed from 

storage by CCC and ginned and the 

resulting lint cotton warehoused for the 

account of CCC. The lint cotton and 

cottonseed may be sold at such time, in 

such manner and upon such terms as 

CCC may determine, at public or private 

sale. CCC may become the purchaser of 

the whole or any part of such cotton and 

cottonseed. If the proceeds received 

from the sales of the cotton are less than 

the amount due on the loan (including 

principal, interest, ginning charges, and 

any other charges incurred by CCC), the 

producer is liable for such difference. If 

the proceeds received from sale of the 

cotton are greater than the sum of the 

amount due plus any cost incurred by 

CCC in conducting the sale of the 

cotton, the amount of such excess will 

be paid to the producer or, if applicable, 

to any secured creditor of the producer. 

■ 119. Amend § 1427.175 as follows: 

■ a. Revise paragraphs (a)(1) 

introductory text and (b); 

■ b. In paragraph (c), remove the words 

‘‘shall be’’ and add the word ‘‘is’’ in 

their place; and 

■ c. Revise paragraphs (d) and (e). 

The revision reads as follows: 

§ 1427.175 Liability of the producer. 

(a)(1) If a producer makes any 

fraudulent representation in obtaining a 

loan, maintaining a loan, or settling a 

loan or if the producer disposes of or 

moves the loan collateral without the 

prior approval of CCC, such loan 

amount must be refunded upon demand 

by CCC. The producer will be liable for: 

* * * * * 

(b) If the amount disbursed under a 

loan, or in settlement thereof, exceeds 

the amount authorized by this subpart, 

the producer is liable for repayment of 

such excess, plus interest. In addition, 

seed cotton pledged as collateral for 

such loan will not be released to the 

producer until such excess is repaid. 

* * * * * 

(d) If more than one producer 

executes a note and security agreement 

with CCC, each such producer is jointly 

and severally liable for the violation of 

the terms and conditions of the note and 

security agreement and the regulations 

in this subpart. Each such producer also 

remains liable for repayment of the 

entire loan amount until the loan is 

fully repaid without regard to such 

producer’s claimed share in the seed 

cotton pledged as collateral for the loan. 

In addition, such producer may not 

amend the note and security agreement 

for the producer’s claimed share in such 

seed cotton, after execution of the note 

and security agreement by CCC. 

(e) If a producer makes any fraudulent 

representation in obtaining a loan, in 

maintaining or settling a loan, or 

disposing of or moving the collateral 

without the prior approval of CCC, that 

is a violation of the terms or conditions 

of the note and security agreement. If 

CCC or the county committee 

determines that the producer has 

violated the terms or conditions of the 

note and security agreement, liquidated 

damages will be assessed on the 

quantity of the seed cotton that is 

involved in the violation by multiplying 

the quantity involved in the violation by 

10 percent of the loan rate applicable to 

the loan note. This amount will apply 

for both good faith and not good faith 

determinations. 

* * * * * 

Subpart E—Standards for Approval of 

Warehouse for Cotton and Cotton 

Linters 

■ 120. Amend § 1427.1081 as follows: 

■ a. In paragraph (b), remove the 

number ‘‘205’’ and add in its place the 

number ‘‘419205’’; 

■ b. In paragraph (d) introductory text, 

remove the word ‘‘shall’’ and add the 

word ‘‘must’’ in its place; 

■ c. In paragraph (d)(1), remove the 

words ‘‘Form CCC–49,’’; and 

■ d. Revise paragraph (d)(2). 

The revision reads as follows: 

§ 1427.1081 General statement and 

administration. 

* * * * * 


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(d) * * * 

(2) A current financial statement on a 

‘‘Financial Statement’’ form, supported 

by such supplemental schedules as CCC 

may request. Financial statements may 

be submitted on forms other than a 

‘‘Financial Statement’’ form with 

approval of the Director, KCCO, or the 

Director’s designee. Financial 

statements must show the financial 

condition of the warehouseman as of a 

date no earlier than 90 days prior to the 

date of the warehouseman’s application, 

or such other date as CCC may 

prescribe. Additional financial 

statements must be furnished annually 

and at such other times as CCC may 

require. CCC also may require that 

financial statements prepared by the 

warehouseman or by a public 

accountant be examined by an 

independent certified public accountant 

in accordance with generally accepted 

auditing standards. Only one financial 

statement is required for a chain of 

warehouses owned or operated by a 

single business entity. If approved by 

the Director, KCCO, or the Director’s 

designee, the financial statement of a 

parent company, which includes the 

financial position of a wholly-owned 

subsidiary, may be used to meet the 

CCC standards for approval for the 

wholly-owned subsidiary. 

* * * * * 

§ 1427.1082 [Amended] 

■ 121. Amend § 1427.1082 as follows: 

■ a. Redesignate paragraphs (a) 

introductory text through (d)(3) as 

follows: 

Old paragraph New paragraph 

(a) introductory text ... (a)(1) introductory 

text. 

(a)(1) ......................... (a)(1)(i). 

(a)(2) ......................... (a)(1)(ii). 

(a)(3) ......................... (a)(1)(iii). 

(a)(4) ......................... (a)(1)(iv). 

(a)(5) ......................... (a)(1)(v). 

(a)(6) ......................... (a)(1)(vi). 

(a)(7) ......................... (a)(1)(vii). 

(a)(8) ......................... (a)(1)(viii). 

(a)(9) ......................... (a)(1)(ix). 

(b) .............................. (a)(2). 

(c) introductory text ... (a)(3) introductory 

text. 

(c)(1) .......................... (a)(3)(i). 

(c)(2) .......................... (a)(3)(ii). 

(d) introductory text ... (a)(4) introductory 

text. 

(d)(1) ......................... (a)(4)(i). 

(d)(2) ......................... (a)(4)(ii). 

(d)(3) ......................... (a)(4)(iii). 

■ b. Redesignate the introductory text as 

paragraph (a) introductory text; 

■ c. In newly designated paragraphs (a) 

introductory text, (a)(1) introductory 

text, (a)(1)(i), (a)(2), (a)(3) introductory 

text, and (a)(4), remove the word ‘‘shall’’ 

and add the word ‘‘must’’ in its place; 

and 

■ d. Add and reserve paragraph (b). 

§ 1427.1083 [Amended] 

■ 122. Amend § 1427.1083 as follows: 

■ a. Redesignate paragraphs (a) 

introductory text through (e) as follows: 

Old paragraph New paragraph 

(a) introductory text ... (a)(1) introductory 

text. 

(a)(1) ......................... (a)(1)(i). 

(a)(2) ......................... (a)(1)(ii). 

(b) introductory text ... (a)(2) introductory 

text. 

(b)(1) ......................... (a)(2)(i). 

(b)(2) ......................... (a)(2)(ii). 

(b)(3) ......................... (a)(2)(iii). 

(c) .............................. (a)(3). 

(d) .............................. (a)(4). 

(e) .............................. (a)(5). 

■ b. Redesignate the introductory text as 

paragraph (a) introductory text; 

■ c. In newly designated paragraph 

(a)(1) introductory text, remove the 

word ‘‘shall’’ and add the word ‘‘must’’ 

in its place; 

■ d. Revise newly designated 

paragraphs (a)(2) introductory text and 

(a)(5); and 

■ e. Add and reserve paragraph (b). 

The revisions read as follows: 

§ 1427.1083 Bonding requirements for net 

worth. 

(a) * * * 

(2) Such bond must be on the 

Warehouseman’s Bond form, except that 

a bond furnished under State law 

(statutory bond) or under operational 

rules of nongovernmental supervisory 

agencies may be accepted in an 

equivalent amount as a substitute for a 

bond running directly to CCC if: 

* * * * * 

(5) An irrevocable letter of credit may 

be accepted by CCC in lieu of the 

required amount of bond coverage 

provided that the issuing bank is a 

commercial bank insured by the Federal 

Deposit Insurance Corporation. Such 

standby letter of credit must be on the 

Irrevocable Letter of Credit form, or on 

such other form as may be specifically 

approved by the Director, KCCO, or the 

Director’s designee. 

* * * * * 

■ 123. Revise § 1427.1086(c)(1) to read 

as follows: 

§ 1427.1086 Approval of warehouse, 

requests for reconsideration. 

* * * * * 

(c) * * * 

(1) In § 1427.1082, other than the 

standard specified in § 1427.1082(c)(2), 

the warehouseman may, at any time 

after receiving notice of such action, 

request reconsideration of the action 

and present to the Director, KCCO, in 

writing, information in support of such 

request. The Director will consider such 

information in making a determination 

and notify the warehouseman in writing 

of such determination. The 

warehouseman may, if dissatisfied with 

the Director’s determination, obtain a 

review of the determination and an 

informal hearing by filing an appeal 

with the Deputy Administrator, 

Commodity Operations, Farm Service 

Agency (FSA). The time of filing 

appeals, forms for requesting an appeal, 

nature of the informal hearing, 

determination and reopening of the 

hearing will be as prescribed in the FSA 

regulations governing appeals, 7 CFR 

part 780. When appealing under such 

regulations, the warehouseman will be 

considered as a ‘‘participant’’; and 

* * * * * 

■ 124. Revise § 1427.1088(b) to read as 

follows: 

§ 1427.1088 Contract fees. 

* * * * * 

(b) The amount of the contract fee will 

be determined and announced annually. 

§ 1427.1089 [Removed and Reserved] 

■ 125. Remove and reserve § 1427.1089. 

Subpart G—Extra Long Staple (ELS) 

Cotton Competitiveness Payment 

Program 

■ 126. Revise § 1427.1200(a) and (c) to 

read as follows: 

§ 1427.1200 Applicability. 

(a) This subpart specifies the terms 

and conditions under which CCC will 

make payments to eligible domestic 

users and exporters of extra long staple 

cotton who have entered into an ELS 

Cotton Domestic User/Exporter 

Agreement with CCC. 

* * * * * 

(c) CCC will prescribe the forms and 

information collections necessary in 

administering the ELS cotton 

competitiveness payment program. 

Additional terms and conditions for the 

program are specified in the ELS Cotton 

Domestic User/Exporter Agreement. 

§ 1427.1203 [Amended] 

■ 127. Amend § 1427.1203(a)(1) and (2), 

by removing the date ‘‘June 18, 2008’’ 

both times it appears and adding the 

date ‘‘February 7, 2014’’ in its place. 

§ 1427.1204 [Amended] 

■ 128. Amend § 1427.1204, in paragraph 

(a)(2), by removing the words ‘‘a 


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cooperative marketing association’’ and 

adding the word ‘‘CMA’’ in their place. 

§ 1427.1206 [Removed and Reserved] 

■ 129. Remove and reserve § 1427.1206. 

§§ 1427.5, 1427.7, 1427.16, 1427.18, 1427.19, 

1427.23 [Amended] 

■ 130. In addition to the amendments 

set forth above, in 7 CFR part 1427, 

remove the words ‘‘marketing assistance 

loan’’ and add, in their place, the word 

‘‘MAL’’ in the following places: 

■ a. In § 1427.5(f); 

■ b. In § 1427.7(c) introductory text; 

■ c. In § 1427.16(b)(4); 

■ d. In § 1427.18(f); 

■ e. In § 1427.19(c) introductory text; 

and 

■ f. In § 1427.23(a)(1). 

§§ 1427.3, 1427.4, 1427.5, 1427.13, 1427.15, 

1427.18, 1427.172 [Amended] 

■ 131. In addition to the amendments 

set forth above, in 7 CFR part 1427, 

remove the words ‘‘loan deficiency 

payment’’ and add, in their place, the 

word ‘‘LDP’’ in the following places: 

■ a. In § 1427.3 in the introductory text 

and in the definition of ‘‘Loan servicing 

agent’’ each time it appears, 

■ b. In § 1427.4(c)(2) and (3); 

■ c. In § 1427.5(g)(2); 

■ d. In § 1427.13(b); 

■ e. In § 1427.15(c)(1)(i); 

■ f. In § 1427. 18(a)(1)(ii); and 

■ g. In § 1427.172(b)(3) introductory text 

and (b)(3)(i). 

§§ 1427.5, 1427.23 [Amended] 

■ 132. In addition to the amendments 

set forth above, in 7 CFR part 1427, 

remove the words ‘‘loan deficiency 

payments’’ and add, in their place, the 

word ‘‘LDPs’’ in the following places: 

■ a. In § 1427.5(a)(2); and 

■ b. In § 1427.23(a) introductory text 

and (a)(5). 

§§ 1427.2, 1427.5, 1427.6, 1427.7, 1427.8, 

1427.9, 1427.10, 1427.13, 1427.13, 1427.15, 

1427.18, 1427.19, 1427.21, 1427.160, 

1427.161, 1427.169, 1427.170, 1427.175, 

1427.1085, 1427.1086, 1427.1207, 

1427.1208 [Amended] 

■ 133. In addition to the amendments 

set forth above, in 7 CFR part 1427, 

remove the word ‘‘shall’’ each time it 

appears and add, in its place, the word 

‘‘will’’ in the following places: 

■ a. In § 1427.2(c); 

■ b. In § 1427.5(m); 

■ c. In § 1427.6(c); 

■ d. In § 1427.7(b); 

■ e. In § 1427.8(b); 

■ f. In § 1427.9(d); 

■ g. In § 1427.10(b); 

■ h. In § 1427.13(c); 

■ i. In § 1427.13(d)(1); 

■ j. In § 1427.15(b) introductory text; 

■ k. In § 1427.18(g) introductory text, (h) 

introductory text, and (k)(2)(iv); 

■ l. In § 1427.19(b) and (d); 

■ m. In § 1427.21(c) and (d); 

■ n. In § 1427.160(d); 

■ o. In § 1427.161(c) introductory text, 

(d), and (f); 

■ p. In § 1427.169(b); 

■ q. In § 1427.170(b) and (c) 

introductory text; 

■ r. In § 1427.175 (a)(2), (f) introductory 

text, and (g) introductory text; 

■ s. In § 1427.1085(a); 

■ t. In § 1427.1086(c)(1); 

■ u. In § 1427.1207(a) introductory text, 

(a)(1) and (2), (b), (c)(2), and (d); and 

■ v. In § 1427.1208(a) introductory text, 

(b) introductory text, and (d). 

PART 1434—NONRECOURSE 

MARKETING ASSISTANCE LOANS 

AND LOAN DEFICIENCY PAYMENTS 

FOR HONEY 

■ 134. Revise the authority citation for 

part 1434 to read as follows: 

Authority: 7 U.S.C. 7231–7237, 7931– 

7936, and 9031–40; and 15 U.S.C. 714b and 

c. 

■ 135. Revise the heading for part 1434 

to read as shown above. 

■ 136. Revise § 1434.1(a) to read as 

follows: 

§ 1434.1 Applicability. 

(a) This part specifies the terms and 

conditions of Commodity Credit 

Corporation (CCC) nonrecourse 

marketing assistance loan (MAL) and 

loan deficiency payment (LDP) 

Programs for honey. MAL gains and 

LDPs for honey are limited by the 

payment limitation and adjusted gross 

income provisions specified in part 

1400 of this chapter. 

* * * * * 

■ 137. Amend § 1434.2(a) to read as 

follows: 

§ 1434.2 Administration. 

(a) The regulations of this part will be 

administered under the general 

supervision of the Executive Vice 

President, CCC, and are carried out in 

the field by Farm Service Agency (FSA) 

State and county committees. 

* * * * * 

■ 138. Amend § 1434.3 as follows: 

■ a. Revise the introductory text; 

■ b. Add, in alphabetical order, 

definitions for ‘‘Calling a loan’’ and 

‘‘Loan deficiency payment’’; and 

■ c. Revise the definition for ‘‘Ineligible 

honey’’. 

The revisions and addition read as 

follows: 

§ 1434.3 Definitions. 

The definitions in this section are 

applicable for all purposes of program 

administration. The terms defined in 

part 718 of this title are also applicable 

except where those definitions are 

inconsistent with the definitions in this 

section or for purpose of program 

instruments created under this part. 

* * * * * 

Calling a loan is accelerating or 

moving forward the maturity date of an 

outstanding MAL. A MAL can be called 

when the terms and conditions of the 

MAL note and security agreement are 

violated, a producer incorrectly certifies 

a loan quantity or makes any fraudulent 

representation with respect to obtaining 

a loan, removing or disposing of a farmstored commodity pledged as collateral 

for a loan without authorization, to 

protect CCC’s interest, or in emergency 

situations. 

* * * * * 

Ineligible honey is honey not eligible 

for a MAL under this part for which 

ineligibility will include, but is not 

limited to, honey from ineligible floral 

sources regardless of whether the honey 

meets other eligibility requirements. 

* * * * * 

Loan deficiency payment (LDP) means 

a payment made in lieu of a MAL when 

the CCC-determined value, which is 

based on the current local price in a 

county, is below the applicable county 

loan rate. The payment is the difference 

between the two rates times the eligible 

quantity. 

* * * * * 

§ 1434.4 [Amended] 

■ 139. Amend § 1434.4 as follows: 

■ a. In paragraph (a) introductory text, 

by removing the words ‘‘loan deficiency 

payments’’ and adding the word ‘‘LDP’’ 

in their place; and 

■ b. In paragraph (f) introductory text, 

by removing the words ‘‘shall be’’ and 

adding the word ‘‘is’’ in their place. 

§ 1434.6 [Amended] 

■ 140. Amend § 1434.6 as follows: 

■ a. In paragraph (a), remove the words 

‘‘marketing assistance loans’’ and add 

the word ‘‘MALs’’ in their place; and 

■ b. In paragraphs (b) introductory text 

and (c), remove the words ‘‘shall not be’’ 

and add the words ‘‘is not’’ in their 

place. 

§ 1434.7 [Amended] 

■ 141. Amend § 1434.7(b) by removing 

the word ‘‘shall’’ and adding the word 

‘‘must’’ in its place. 

§ 1434.8 [Amended] 

■ 142. Amend § 1434.8(b) introductory 

text by removing the words ‘‘shall not 

be’’ and adding the words ‘‘is not’’ in 

their place. 


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■ 143. Revise § 1434.9 to read as 

follows: 

§ 1434.9 Determination of quantity. 

The amount of a marketing assistance 

loan or loan deficiency payment will be 

based on 100 percent of the net weight 

in pounds of such quantity that is 

eligible to be pledged as security for the 

MAL or LDP and is certified by the 

producer and verified by the county 

office representative in the manner 

prescribed by CCC. Estimates of the 

quantity of honey will be made on the 

basis of 12 pounds for each gallon of the 

rated capacity of the container. 

■ 144. Amend § 1434.10 as follows: 

■ a. Revise paragraphs (a), (c), and (e); 

and 

■ b. In paragraph (f), remove the word 

‘‘shall’’ and add the word ‘‘must’’ in its 

place. 

The revisions read as follows: 

§ 1434.10 Application, availability, 

disbursements, and maturity. 

(a) A producer must, unless otherwise 

authorized by CCC, request MALs and 

LDPs at the appropriate FSA county 

office responsible for administering the 

program as provided under part 718 of 

this title. To receive MALs and LDPs for 

honey, a producer must execute a note 

and security agreement or LDP 

application on or before March 31 of the 

year following the year in which the 

honey was extracted. 

* * * * * 

(c) MALs will be made on the honey 

as declared and certified by the 

producer in the manner specified by 

CCC at the time the honey is pledged as 

collateral for a MAL. The producer is 

also required to declare and certify the 

class of honey (table or non-table) and 

floral source of the honey in the manner 

specified by CCC when the honey is 

pledged as collateral for a MAL. 

* * * * * 

(e) MALs mature on demand, but not 

later than the last day of the ninth 

calendar month following the month in 

which the note and security agreement 

was approved. 

(1) When the maturity date falls on a 

non-workday for county offices, CCC 

will extend the final date to the next 

workday. Before the date specified in 

paragraph (a) of this section, a producer 

may re-offer as MAL collateral any 

eligible honey that has been offered 

previously for a MAL if the previous 

MAL has been repaid at principal plus 

interest only. 

(2) The maturity date of any MAL may 

not be extended. 

* * * * * 

■ 145. Revise § 1434.11(a) to read as 

follows: 

§ 1434.11 Fees and interest. 

(a) A producer must pay a 

nonrefundable MAL service fee. The 

MAL service fee will be the smaller of 

one-half of 1 percent (.005) times the 

gross MAL amount or $45 per MAL plus 

$3 for each storage structure over one. 

* * * * * 

■ 146. Revise § 1434.13 to read as 

follows: 

§ 1434.13 Transfer of producer’s interest 

prohibited. 

Absent written approval from CCC, 

the producer may not transfer either the 

remaining interest in, or right to redeem, 

the honey pledged as collateral for a 

MAL on honey nor may anyone acquire 

such interest or right. Subject to the 

provisions of § 1434.17, a producer who 

wishes to liquidate all or part of a MAL 

by contracting for the sale of the honey 

must obtain written approval from the 

county office on a form prescribed by 

CCC to remove a specified quantity of 

the honey from storage. Any such 

approval will be subject to the terms 

and conditions in the applicable form, 

copies of which may be obtained by 

producers at the FSA county office. 

■ 147. Amend § 1434.15 as follows: 

■ a. Revise paragraphs (a) introductory 

text, (a)(1) introductory text, and (2); 

■ b. In paragraphs (b)(1) and (2), remove 

the words ‘‘shall include’’ and add the 

word ‘‘includes’’ in their place; 

■ c. In paragraphs (i)(1)(ii), (2), (j), (k), 

and (l), remove the words ‘‘shall be’’ 

and add the word ‘‘is’’ in their place; 

and 

■ d. Revise paragraph (m). 

The revisions read as follows: 

§ 1434.15 Personal liability. 

(a) As part of the application for an 

individual or joint MAL or LDP, each 

producer agrees that: 

(1) By signing the MAL note and 

security agreement, the producer must: 

* * * * * 

(2) That violation of the terms and 

conditions of this part and the MAL 

note and security agreement will cause 

harm or damage to CCC in that funds 

may be disbursed to the producer for a 

MAL quantity that is not actually in 

existence or for a quantity for which the 

producer is not eligible. 

* * * * * 

(m) In the case of joint MALs, the 

personal liability for the amounts 

specified in this section are joint and 

several on the part of each producer 

signing the MAL note. Further, each 

producer who is a party to a joint MAL 

will be jointly and severally liable for 

any violation of the terms and 

conditions of the note and security 

agreement, and the regulations in this 

part. Each such producer also remains 

liable for repayment of the entire MAL 

amount until the MAL is fully repaid 

without regard to such producer’s 

claimed share in the honey, or MAL 

proceeds, after execution of the note and 

security agreement by CCC. 

* * * * * 

§ 1434.16 [Amended] 

■ 148. Amend § 1434.16 as follows: 

■ a. Revise the section heading; 

■ b. In paragraph (a)(1), remove the 

word ‘‘shall’’ and add the word ‘‘may’’ 

in its place; and 

■ c. Revise paragraphs (a)(3) and (c). 

The revisions read as follows: 

§ 1434.16 Release of the honey pledged as 

collateral for a MAL. 

(a) * * * 

(3) When the proceeds of a sale of 

honey are needed to repay all or part of 

a farm stored MAL, the producer must 

request and obtain prior written 

approval of the county office on a form 

prescribed by CCC in order to remove a 

specified quantity of the honey from 

storage. Any such approval will be 

subject to the terms and conditions in 

the applicable form, copies of which 

may be obtained by producers at the 

county office. Any such approval will 

not constitute a release of CCC’s security 

interest in the commodity or release the 

producer from liability for any amounts 

due and owing to CCC with respect to 

any MAL indebtedness if full payment 

of such amounts is not received by the 

county office. 

* * * * * 

(c) After satisfaction of a MAL, CCC 

will release CCC’s security interest in 

the honey at the producer’s request. The 

producer is responsible for payment of 

any fee for such release if such fee can 

be determined. 

§ 1434.18 [Amended] 

■ 149. Amend § 1434.18 as follows: 

■ a. In paragraph (a) introductory text, 

remove the words ‘‘marketing assistance 

loan’’ and add the word ‘‘MAL’’ in their 

place; and 

■ b. In paragraph (a)(3), remove the 

words ‘‘marketing assistance loans’’ 

both times they appear and add the 

word ‘‘MALs’’ in their place. 

■ 150. Amend § 1434.19 as follows: 

■ a. Redesignate paragraphs (a) and (b) 

as follows: 

Old paragraph New paragraph 

(a) introductory text ... (a)(1) introductory 

text. 

(a)(1) ......................... (a)(1)(i). 

(a)(2) ......................... (a)(1)(ii). 


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Federal Register / Vol. 80, No. 1 / Friday, January 2, 2015 / Rules and Regulations 141 

Old paragraph New paragraph 

(b) .............................. (a)(2). 

■ b. Redesignate the introductory text as 

paragraph (a) introductory text; 

■ c. In newly redesignated paragraph 

(a)(1)(i), remove the word ‘‘shall’’ and 

add the word ‘‘must’’ in its place; 

■ d. Revise newly redesignated 

paragraph (a)(1)(ii); and 

■ e. Add paragraph (b). 

The revision and addition read as 

follows: 

§ 1434.19 Settlement. 

(a) * * * 

(1) * * * 

(ii) If the value of the collateral at 

settlement is greater than the amount 

due, the excess will be paid to the 

producer or, if applicable, to the 

producer and any secured creditor of 

the producer. 

* * * * * 

(b) CCC will not assume any loss in 

quantity or quality of the loan collateral 

for honey MALs. 

§ 1434.20 [Amended] 

■ 151. Amend § 1434.20(b)(1), by 

removing the word ‘‘shall’’ and adding 

the word ‘‘must’’ in its place. 

■ 152. Amend § 1434.21 as follows: 

■ a. Revise paragraph (a) introductory 

text; 

■ b. In paragraph (a)(3) remove the 

words ‘‘Loan deficiency payment’’ and 

add the word ‘‘LDP’’ in their place; 

■ c. Revise paragraphs (c), (d), and (e); 

and 

■ d. In addition to the amendments set 

forth above, in paragraphs (b), (f) 

introductory text, and (f)(1), remove the 

words ‘‘loan deficiency payment’’ each 

time they appear and add the word 

‘‘LDP’’ in their place. 

The revisions read as follows: 

§ 1434.21 Loan deficiency payments. 

(a) LDPs will be available for honey. 

* * * * * 

(c) The LDP rate for a crop will be the 

amount by which the MAL rate exceeds 

the rate at which CCC has announced 

that producers may repay their MAL as 

specified in § 1434.18. 

(d) The LDP applicable to a crop of 

honey will be computed by multiplying 

the LDP rate, as determined as specified 

in paragraph (c) of this section, by the 

quantity of honey the producer is 

eligible to pledge as collateral for a price 

support MAL for which an LDP is 

requested. 

(e) Notwithstanding any provisions in 

this section, LDPs may be based on 100 

percent of the net quantity specified on 

acceptable evidence of disposition of 

the honey certified as eligible for an 

LDP if CCC determines that such 

quantity represented the quantity for the 

number of containers of honey initially 

certified for the LDP when the payment 

was made. 

* * * * * 

§§ 1434.2, 1434.4, 1434.5, 1434.6, 1434.7, 

1434.10, 1434.11, 1434.12, 1434.14, 1434.15, 

1434.16, 1434.17, 1434.18, 1434.19, 1434.20, 

1434.22 [Amended] 

■ 153. In addition to the amendments 

set forth above, in 7 CFR part 1434, 

remove the word ‘‘shall’’ each time it 

appears and add, in its place, the word 

‘‘will’’ in the following places: 

■ a. In § 1434.2(c), (d), and (f); 

■ b. In § 1434.4(e) and (g)(2); 

■ c. In § 1434.5(c)(3); 

■ d. In § 1434.6(d); 

■ e. In § 1434.7(a); 

■ f. In § 1434.10(d); 

■ g. In § 1434.11(b); 

■ h. In § 1434.12(b) and (c); 

■ i. In § 1434.14; 

■ j. In § 1434.15(c) introductory text, (d) 

introductory text, (e), (f)(2) introductory 

text, (h) introductory text, and (i)(2); 

■ k. In § 1434.16(b); 

■ l. In § 1434.17(b); 

■ m. In § 1434.18(b); 

■ n. In § 1434.19 newly redesignated 

paragraphs (a) introductory text and 

(a)(2); 

■ o. In § 1434.20(a) and (b)(2); and 

■ p. In § 1434.22 (a) and (b). 

PART 1435—SUGAR PROGRAM 

■ 154. The authority citation for part 

1435 continues to read as follows: 

Authority: 7 U.S.C. 1359aa-1359jj, 7272, 

and 8110; 15 U.S.C. 714b and 714c. 

■ 155. Amend § 1435.1 as follows: 

■ a. Redesignate paragraphs (a) through 

(d) as paragraphs (a)(1) through (4), 

redesignate the introductory text as 

paragraph (a) introductory text, and 

reserve paragraph (b); and 

■ b. Revise newly designated paragraph 

(a) introductory text. 

The revision reads as follows: 

§ 1435.1 Applicability. 

(a) The regulations in this part specify 

the terms and conditions under which 

the Farm Service Agency (FSA) will 

administer the Sugar Program for the 

Commodity Credit Corporation (CCC) to: 

* * * * * 

■ 156. Amend § 1435.101 by revising 

paragraphs (a) and (b) to read as follows: 

§ 1435.101 Loan rates. 

(a) The national average loan rate for 

raw cane sugar produced from 

domestically grown sugarcane is 18.75 

cents per pound. 

(b) The national average loan rate for 

refined beet sugar from domestically 

grown sugar beets is equal to 128.5 

percent of the loan rate per pound of 

raw cane sugar. 

* * * * * 

Signed on December 23, 2014. 

Val Dolcini, 

Administrator, Farm Service Agency, and 

Executive Vice President, Commodity Credit 

Corporation. 

[FR Doc. 2014–30530 Filed 12–31–14; 8:45 am] 

BILLING CODE 3410–05–P 


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