SUBCHAPTER VIII—MISCELLANEOUS COMMODITY PROVISIONS

§7331. Options pilot program

(a) Pilot programs authorized

Until December 31, 2002, the Secretary of Agriculture may conduct a pilot program for 1 or more agricultural commodities supported under this chapter to ascertain whether futures and options contracts can provide producers with reasonable protection from the financial risks of fluctuations in price, yield, and income inherent in the production and marketing of the commodities. The pilot program shall be an alternative to other related programs of the Department of Agriculture.

(b) Distribution of pilot program

For each agricultural commodity included in the pilot program, the Secretary may operate the pilot program in not more than 300 counties, except that not more than 25 of the counties may be located in any 1 State. The pilot program for a commodity shall not be operated in any county for more than 3 of the 1996 through 2002 calendar years.

(c) Eligible participants

In operating the pilot program, the Secretary may enter into contract with a producer who—

(1) is eligible for a production flexibility contract, a marketing assistance loan, or other assistance under this chapter;

(2) volunteers to participate in the pilot program during any calendar year in which a county in which the farm of the producer is located is included in the pilot program;

(3) operates a farm located in a county selected for the pilot program; and

(4) meets such other eligibility requirements as the Secretary may establish.

(d) Notice to producers

The Secretary shall provide notice to each producer participating in the pilot program that—

(1) the participation of the producer is voluntary; and

(2) neither the United States, the Commodity Credit Corporation, the Federal Crop Insurance Corporation, the Department of Agriculture, nor any other Federal agency is authorized to guarantee that participants in the pilot program will be better or worse off financially as a result of participation in the pilot program than the producer would have been if the producer had not participated in the pilot program.

(e) Contracts

The Secretary shall set forth in each contract under the pilot program the terms and conditions for participation in the pilot program and the notice required by subsection (d) of this section.

(f) Eligible markets

Trades for futures and options contracts under the pilot program shall be carried out on commodity futures and options markets designated as contract markets under the Commodity Exchange Act (7 U.S.C. 1 et seq.).

(g) Recordkeeping

A producer participating in the pilot program shall compile, maintain, and submit (or authorize the compilation, maintenance, and submission) of such documentation as the regulations governing the pilot program require.

(h) Use of Commodity Credit Corporation

The Secretary shall fund and operate the pilot program through the Commodity Credit Corporation, except that the amount of Commodity Credit Corporation funds used to carry out this section shall not exceed, to the maximum extent practicable, $9,000,000 for fiscal year 2001, $15,000,000 for fiscal year 2002, and $2,000,000 for fiscal year 2003. To the maximum extent practicable, the Secretary shall operate the pilot program in a budget neutral manner.

(Pub. L. 104–127, title I, §191, Apr. 4, 1996, 110 Stat. 941; Pub. L. 106–224, title I, §134, June 20, 2000, 114 Stat. 388.)

References in Text

For definition of "this chapter", referred to in subsecs. (a) and (c)(1), see note set out under section 7201 of this title.

The Commodity Exchange Act, referred to in subsec. (f), is act Sept. 21, 1922, ch. 369, 42 Stat. 998, as amended, which is classified generally to chapter 1 (§1 et seq.) of this title. For complete classification of this Act to the Code, see section 1 of this title and Tables.

Codification

Section is comprised of section 191 of Pub. L. 104–127. Subsec. (i) of section 191 of Pub. L. 104–127 repealed provisions set out as a note under section 1421 of this title.

Amendments

2000—Subsec. (b). Pub. L. 106–224, §134(1), substituted "300 counties, except that not more than 25" for "100 counties, except that not more than 6" in first sentence.

Subsec. (c)(2). Pub. L. 106–224, §134(2), inserted before semicolon at end "during any calendar year in which a county in which the farm of the producer is located is included in the pilot program".

Subsec. (h). Pub. L. 106–224, §134(3), inserted before period at end of first sentence ", except that the amount of Commodity Credit Corporation funds used to carry out this section shall not exceed, to the maximum extent practicable, $9,000,000 for fiscal year 2001, $15,000,000 for fiscal year 2002, and $2,000,000 for fiscal year 2003".

Effective Date of 2000 Amendment

Amendment by Pub. L. 106–224 effective Oct. 1, 2000, see section 171(b)(1)(A) of Pub. L. 106–224, set out as a note under section 1501 of this title.

§7332. Risk management education

In consultation with the Commodity Futures Trading Commission, the Secretary shall provide such education in management of the financial risks inherent in the production and marketing of agricultural commodities as the Secretary considers appropriate. As part of such educational activities, the Secretary may develop and implement programs to facilitate the participation of agricultural producers in commodity futures trading programs, forward contracting options, and insurance protection programs by assisting and training producers in the usage of such programs. In implementing this authority, the Secretary may use existing research and extension authorities and resources of the Department of Agriculture.

(Pub. L. 104–127, title I, §192, Apr. 4, 1996, 110 Stat. 942.)

§7333. Administration and operation of noninsured crop assistance program

(a) Operation and administration of program

(1) In general

In the case of an eligible crop described in paragraph (2), the Secretary of Agriculture shall operate a noninsured crop disaster assistance program to provide coverage equivalent to the catastrophic risk protection otherwise available under section 1508(b) of this title. The Secretary shall carry out this section through the Consolidated Farm Service Agency (in this section referred to as the "Agency").

(2) Eligible crops

(A) In general

In this section, the term "eligible crop" means each commercial crop or other agricultural commodity (except livestock)—

(i) for which catastrophic risk protection under section 1508(b) of this title is not available; and

(ii) that is produced for food or fiber.

(B) Crops specifically included

The term "eligible crop" shall include floricultural, ornamental nursery, and Christmas tree crops, turfgrass sod, seed crops, aquaculture (including ornamental fish), and industrial crops.

(C) Combination of similar types or varieties

At the option of the Secretary, all types or varieties of a crop or commodity, described in subparagraphs (A) and (B), may be considered to be a single eligible crop under this section.

(3) Cause of loss

To qualify for assistance under this section, the losses of the noninsured commodity shall be due to drought, flood, or other natural disaster, as determined by the Secretary.

(b) Application for noninsured crop disaster assistance

(1) Timely application

To be eligible for assistance under this section, a producer shall submit an application for noninsured crop disaster assistance at a local office of the Department. The application shall be in such form, contain such information, and be submitted not later than 30 days before the beginning of the coverage period, as determined by the Secretary.

(2) Records

To be eligible for assistance under this section, a producer shall provide annually to the Secretary records of crop acreage, acreage yields, and production for each crop, as required by the Secretary.

(3) Acreage reports

A producer shall provide annual reports on acreage planted or prevented from being planted, as required by the Secretary, by the designated acreage reporting date for the crop and location as established by the Secretary.

(c) Loss requirements

(1) Cause

To be eligible for assistance under this section, a producer of an eligible crop shall have suffered a loss of a noninsured commodity as the result of a cause described in subsection (a)(3) of this section.

(2) Assistance

On making a determination described in subsection (a)(3) of this section, the Secretary shall provide assistance under this section to producers of an eligible crop that have suffered a loss as a result of the cause described in subsection (a)(3) of this section.

(3) Prevented planting

Subject to paragraph (1), the Secretary shall make a prevented planting noninsured crop disaster assistance payment if the producer is prevented from planting more than 35 percent of the acreage intended for the eligible crop because of drought, flood, or other natural disaster, as determined by the Secretary.

(4) Area trigger

The Secretary shall provide assistance to individual producers without any requirement of an area loss.

(d) Payment

The Secretary shall make available to a producer eligible for noninsured assistance under this section a payment computed by multiplying—

(1) the quantity that is less than 50 percent of the established yield for the crop; by

(2)(A) in the case of each of the 1996 through 1998 crop years, 60 percent of the average market price for the crop (or any comparable coverage determined by the Secretary); or

(B) in the case of each of the 1999 and subsequent crop years, 55 percent of the average market price for the crop (or any comparable coverage determined by the Secretary); by

(3) a payment rate for the type of crop (as determined by the Secretary) that—

(A) in the case of a crop that is produced with a significant and variable harvesting expense, reflects the decreasing cost incurred in the production cycle for the crop that is—

(i) harvested;

(ii) planted but not harvested; and

(iii) prevented from being planted because of drought, flood, or other natural disaster (as determined by the Secretary); and

(B) in the case of a crop that is not produced with a significant and variable harvesting expense, as determined by the Secretary.

(e) Yield determinations

(1) Establishment

The Secretary shall establish farm yields for purposes of providing noninsured crop disaster assistance under this section.

(2) Actual production history

The Secretary shall determine yield coverage using the actual production history of the producer over a period of not less than the 4 previous consecutive crop years and not more than 10 consecutive crop years. Subject to paragraph (3), the yield for the year in which noninsured crop disaster assistance is sought shall be equal to the average of the actual production history of the producer during the period considered.

(3) Assignment of yield

If a producer does not submit adequate documentation of production history to determine a crop yield under paragraph (2), the Secretary shall assign to the producer a yield equal to not less than 65 percent of the transitional yield of the producer (adjusted to reflect actual production reflected in the records acceptable to the Secretary for continuous years), as specified in regulations issued by the Secretary based on production history requirements.

(4) Prohibition on assigned yields in certain counties

(A) In general

(i) Documentation

If sufficient data are available to demonstrate that the acreage of a crop in a county for the crop year has increased by more than 100 percent over any year in the preceding 7 crop years or, if data are not available, if the acreage of the crop in the county has increased significantly from the previous crop years, a producer must provide such detailed documentation of production costs, acres planted, and yield for the crop year for which benefits are being claimed as is required by the Secretary. If the Secretary determines that the documentation provided is not sufficient, the Secretary may require documenting proof that the crop, had the crop been harvested, could have been marketed at a reasonable price.

(ii) Prohibition

Except as provided in subparagraph (B), a producer who produces a crop on a farm located in a county described in clause (i) may not obtain an assigned yield.

(B) Exception

A crop or a producer shall not be subject to this subsection if—

(i) the planted acreage of the producer for the crop has been inspected by a third party acceptable to the Secretary; or

(ii)(I) the County Executive Director and the State Executive Director recommend an exemption from the requirement to the Administrator of the Agency; and

(II) the Administrator approves the recommendation.

(5) Limitation on receipt of subsequent assigned yield

A producer who receives an assigned yield for the current year of a natural disaster because required production records were not submitted to the local office of the Department shall not be eligible for an assigned yield for the year of the next natural disaster unless the required production records of the previous 1 or more years (as applicable) are provided to the local office.

(6) Yield variations due to different farming practices

The Secretary shall ensure that noninsured crop disaster assistance accurately reflects significant yield variations due to different farming practices, such as between irrigated and nonirrigated acreage.

(f) Contract payments

A producer who has received a guaranteed payment for production, as opposed to delivery, of a crop pursuant to a contract shall have the production of the producer adjusted upward by the amount of the production equal to the amount of the contract payment received.

(g) Use of Commodity Credit Corporation

The Secretary may use the funds of the Commodity Credit Corporation to carry out this section.

(h) Exclusions

Noninsured crop disaster assistance under this section shall not cover losses due to—

(1) the neglect or malfeasance of the producer;

(2) the failure of the producer to reseed to the same crop in those areas and under such circumstances where it is customary to reseed; or

(3) the failure of the producer to follow good farming practices, as determined by the Secretary.

(i) Payment and income limitations

(1) Definitions

In this subsection:

(A) Person

The term "person" has the meaning provided the term in regulations issued by the Secretary. The regulations shall conform, to the extent practicable, to the regulations defining the term "person" issued under section 1308 of this title.

(B) Qualifying gross revenues

The term "qualifying gross revenues" means—

(i) if a majority of the gross revenue of the person is received from farming, ranching, and forestry operations, the gross revenue from the farming, ranching, and forestry operations of the person; and

(ii) if less than a majority of the gross revenue of the person is received from farming, ranching, and forestry operations, the gross revenue of the person from all sources.

(2) Payment limitation

The total amount of payments that a person shall be entitled to receive annually under this section may not exceed $100,000.

(3) Limitation on multiple benefits for same loss

(A) In general

Except as provided in subparagraph (B), if a producer who is eligible to receive benefits under this section is also eligible to receive assistance for the same loss under any other program administered by the Secretary, the producer shall be required to elect whether to receive benefits under this section or under the other program, but not both.

(B) Exception

Subparagraph (A) shall not apply to emergency loans under subtitle C of the Consolidated Farm and Rural Development Act (7 U.S.C. 1961 et seq.).

(4) Income limitation

A person who has qualifying gross revenues in excess of the amount specified in section 2266(a) of the Food, Agriculture, Conservation, and Trade Act of 1990 (7 U.S.C. 1421 note) (as in effect on November 28, 1990) during the taxable year (as determined by the Secretary) shall not be eligible to receive any noninsured assistance payment under this section.

(5) Regulations

The Secretary shall issue regulations prescribing such rules as the Secretary determines necessary to ensure a fair and equitable application of section 1308 of this title, the general payment limitation regulations of the Secretary, and the limitations established under this subsection.

(j) Omitted

(k) Service fee

(1) In general

To be eligible to receive assistance for an eligible crop for a crop year under this section, a producer shall pay to the Secretary (at the time at which the producer submits the application under subsection (b)(1) of this section) a service fee for the eligible crop in an amount that is equal to the lesser of—

(A) $100 per crop per county; or

(B) $300 per producer per county, but not to exceed a total of $900 per producer.

(2) Waiver

The Secretary shall waive the service fee required under paragraph (1) in the case of a limited resource farmer, as defined by the Secretary.

(3) Use

The Secretary shall deposit service fees collected under this subsection in the Commodity Credit Corporation Fund.

(Pub. L. 104–127, title I, §196, Apr. 4, 1996, 110 Stat. 947; Pub. L. 105–277, div. A, §101(a) [title VIII, §803(b)], Oct. 21, 1998, 112 Stat. 2681, 2681-38; Pub. L. 106–224, title I, §109, June 20, 2000, 114 Stat. 371.)

References in Text

The Consolidated Farm and Rural Development Act, referred to in subsec. (i)(3)(B), is title III of Pub. L. 87–128, Aug. 8, 1961, 75 Stat. 307, as amended. Subtitle C of the Act is classified generally to subchapter III (§1961 et seq.) of chapter 50 of this title. For complete classification of this Act to the Code, see Short Title note set out under section 1921 of this title and Tables.

Section 2266(a) of the Food, Agriculture, Conservation, and Trade Act of 1990, referred to in subsec. (i)(4), is section 2266(a) of Pub. L. 101–624, which was set out in a note under section 1421 of this title, prior to repeal by Pub. L. 103–354, title I, §119(c), Oct. 13, 1994, 108 Stat. 3208.

Codification

Section is comprised of section 196 of Pub. L. 104–127. Subsec. (j) of section 196 of Pub. L. 104–127 repealed section 1519 of this title.

Amendments

2000—Subsec. (a)(2)(C). Pub. L. 106–224, §109(a), added subpar. (C).

Subsec. (b)(1). Pub. L. 106–224, §109(b), substituted "not later than 30 days before the beginning of the coverage period, as determined by the Secretary" for "at such time as the Secretary may require" in second sentence.

Subsec. (b)(2). Pub. L. 106–224, §109(c)(1), added par. (2) and struck out heading and text of former par. (2). Text read as follows: "A producer shall provide records, as required by the Secretary, of crop acreage, acreage yields, and production."

Subsec. (b)(3). Pub. L. 106–224, §109(c)(2), inserted "annual" after "shall provide".

Subsec. (c). Pub. L. 106–224, §109(d), added subsec. (c) and struck out heading and text of former subsec. (c), which authorized noninsured crop disaster assistance if average yield fell below 65 percent of expected yield, if producer was prevented from planting more than 35 percent of intended acreage, or if total quantity of harvest was less than 50 percent of expected yield.

Subsec. (k). Pub. L. 106–224, §109(e), added subsec. (k).

1998–Subsec. (i)(3). Pub. L. 105–277 designated existing provisions as subpar. (A), inserted heading, substituted "Except as provided in subparagraph (B), if a producer" for "If a producer", and added subpar. (B).

Effective Date of 2000 Amendment

Amendment by Pub. L. 106–224 applicable beginning with the 2001 crop of an agricultural commodity, see section 171(b)(2)(G) of Pub. L. 106–224, set out as a note under section 1501 of this title.

Savings Clause

Section as in effect on day before June 20, 2000, to continue to apply with respect to 1999 crop year, and to apply with respect to 2000 crop year, to extent application of an amendment by Pub. L. 106–224 is delayed under section 171(b) or by terms of the amendment, see section 173 of Pub. L. 106–224, set out as a note under section 1501 of this title.

Section Referred to in Other Sections

This section is referred to in sections 1506, 1508a, 1515, 1522 of this title.

§7334. Flood risk reduction

(a) In general

During fiscal years 1996 through 2002, the Secretary of Agriculture (referred to in this section as the "Secretary") may enter into a contract with a producer on a farm who has contract acreage under the Agricultural Market Transition Act [7 U.S.C. 7201 et seq.] that is frequently flooded.

(b) Duties of producers

Under the terms of the contract, with respect to acres that are subject to the contract, the producer must agree to—

(1) the termination of any contract acreage and production flexibility contract under the Agricultural Market Transition Act [7 U.S.C. 7201 et seq.];

(2) forgo loans for contract commodities, oilseeds, and extra long staple cotton;

(3) not apply for crop insurance issued or reinsured by the Secretary;

(4) comply with applicable highly erodible land and wetlands conservation compliance requirements established under title XII of the Food Security Act of 1985 (16 U.S.C. 3801 et seq.);

(5) not apply for any conservation program payments from the Secretary;

(6) not apply for disaster program benefits provided by the Secretary; and

(7) refund the payments, with interest, issued under the flood risk reduction contract to the Secretary, if the producer violates the terms of the contract or if the producer transfers the property to another person who violates the contract.

(c) Duties of Secretary

In return for a contract entered into by a producer under this section, the Secretary shall pay the producer an amount that is not more than 95 percent of projected contract payments under the Agricultural Market Transition Act [7 U.S.C. 7201 et seq.] that the Secretary estimates the producer would otherwise have received during the period beginning at the time the contract is entered into under this section and ending September 30, 2002.

(d) Commodity Credit Corporation

The Secretary shall carry out the program authorized by this section (other than subsection (e) of this section) through the Commodity Credit Corporation.

(e) Additional payments

(1) In general

Subject to the availability of advanced appropriations, the Secretary may make payments to a producer described in subsection (a) of this section, in addition to the payments provided under subsection (c) of this section, to offset other estimated Federal Government outlays on frequently flooded land.

(2) Authorization of appropriations

There are authorized to be appropriated such sums as are necessary to carry out paragraph (1).

(f) Limitation on payments

Amounts made available for production flexibility contracts under section 7213 of this title shall be reduced by an amount that is equal to the contract payments that producers forgo under subsection (b)(1) of this section.

(Pub. L. 104–127, title III, §385, Apr. 4, 1996, 110 Stat. 1016.)

References in Text

The Agricultural Market Transition Act, referred to in subsecs. (a), (b)(1), and (c), is title I of Pub. L. 104–127, Apr. 4, 1996, 110 Stat. 896, which is classified principally to this chapter. For complete classification of this Act to the Code, see References in Text note set out under section 7201 of this title and Tables.

The Food Security Act of 1985, referred to in subsec. (b)(4), is Pub. L. 99–198, Dec. 23, 1985, 99 Stat. 1354, as amended. Title XII of the Act, popularly known as the "Sodbuster Law", is classified principally to chapter 58 (§3801 et seq.) of Title 16, Conservation. For complete classification of this Act to the Code, see Short Title of 1985 Amendment note set out under section 1281 of this title and Tables.

Codification

Section was enacted as part of title III of the Federal Agriculture Improvement and Reform Act of 1996, and not as part of title I of the Act, known as the Agricultural Market Transition Act, which comprises this chapter.