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Percentages for Direct and Counter-Cyclical Program Advance Payments

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Commodity Credit Corporation, USDA.


Final rule.


This final rule implements the provisions of the Agricultural Reconciliation Act of 2005 regarding percentages used to determine payment amounts for producers electing to receive advance payments through the Direct and Counter-Cyclical Program. Reducing the direct payment advance percentages shifts payments between fiscal years, but will have no impact on total payments.


Effective Date: This rule becomes effective on April 10, 2006.

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Tracey Smith, Production, Emergencies and Compliance Division, United States Department of Agriculture (USDA), Stop 0517, 1400 Independence Ave., SW., Washington, DC 20250-0517. Telephone: (202) 720-4365. Electronic mail: Persons with disabilities who require alternative means for communication (Braille, large print, audio tape, etc.) should contact the USDA Target Center at (202) 720-2600 (voice and TDD).

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The Direct and Counter-Cyclical Program (DCP), authorized by Farm Security and Rural Investment Act of 2002 (Pub. L. 107-171, May 13, 2002) (“2002 Act”), provides payments to eligible producers on farms enrolled for the 2002 through 2007 crop years. There are two types of DCP payments—direct payments and counter-cyclical payments. These payments provide income support to producers of eligible commodities and are based on historically-based acreage and yields and do not depend on the current production choices of the farmer. DCP replaces the Production Flexibility Contract (PFC) payments made under the Federal Agriculture Improvement and Reform Act of 1996 for the crop years 1996 through 2002. In addition to the commodities that were eligible for PFC payments, the 2002 Act also provides for direct and counter-cyclical payments for peanuts, soybeans, sunflower seed and other oilseeds.

Explanation of Change

This rule implements section 1102 of Title I of Subtitle A of the Deficit Reduction Act of 2005 (Pub. L. 109-171, February 8, 2006). This section provides that DCP advance direct payment percentages will be reduced for fiscal years 2006 and 2007 from 50 percent to 40 percent for the 2006 fiscal year, and to 22 percent for the 2007 program year. This rule amends the direct and counter-cyclical program regulations at 7 CFR 1412.502(b) to reduce the advance direct payment rate percentages accordingly. Producers will continue to have the option to receive advance direct payments during any month from December through September of the applicable fiscal year.

Notice and Comment

Section 1601(c) of the Farm Security and Rural Investment Act of 2002 (7 U.S.C 7991(c)), provides that the regulations needed to implement Title I of the 2002 Act (7 U.S.C. 7901 et seq.), including those involved here, may be promulgated without regard to the notice and comment provisions of 5 U.S.C. 553 or the Statement of Policy of the Secretary of Agriculture effective July 24, 1971 relating to notices of proposed rulemaking and public participating in rulemaking.

Executive Order 12866

This rule is issued in conformance with Executive Order 12866, was determined to be economically significant and was reviewed by the Office of Management and Budget. The economic effects of this rule are summarized below.

Regulatory Flexibility Act

It has been determined that the Regulatory Flexibility Act is not applicable to this rule because the CCC is not required by 5 U.S.C. 533 or any other law to publish a notice of proposed rulemaking for the subject matter of this rule.

Environmental Assessment

The environmental impacts of this rule have been considered consistent with the provisions of the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321 et seq., the regulations of the Council on Environmental Quality (40 CFR parts 1500-1508), and the FSA regulations for compliance with NEPA, 7 CFR part 799. FSA concluded that the rule requires no further environmental review because it is administrative in nature and no extraordinary circumstances or other unforeseeable factors exist which would require preparation of an environmental assessment or environmental impact statement.

Executive Order 12988

This rule has been reviewed in accordance with Executive Order 12988. This rule will preempt State laws that are inconsistent with it. Before any legal action may be brought regarding a determination under this rule, the administrative appeal provisions set forth at 7 CFR parts 11 and 780 must be exhausted.

Executive Order 12372

This program is not subject to the provisions of Executive Order 12372, which require intergovernmental consultation with State and local officials. See the notice related to 7 CFR part 3014, subpart V, published at 48 FR 29115 (June 24, 1983).

Unfunded Mandates Reform Act of 1995

The rule contains no Federal mandates under the regulatory provisions of Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) for State, local, and tribal governments or the private sector. Thus, this rule is not subject to the requirements of sections 202 and 205 of the UMRA.

Paperwork Reduction Act

Section 1601(c) of the 2002 Act (7 U.S.C. 7991(c)) provides that the promulgation of regulations and the administration of Title I of the 2002 Act shall be made without regard to chapter 5 of title 44 of the United States Code Start Printed Page 17983(the Paperwork Reduction Act). Accordingly, these regulations and the forms and other information collection activities needed to administer the program authorized by these regulations are not subject to review by OMB under the Paperwork Reduction Act.

Executive Order 12612

This rule does not have sufficient Federalism implications to warrant the preparation of a Federalism Assessment. The provisions contained in this rule will not have substantial direct effect on States or their political subdivisions or on the distribution of power and responsibilities among the various levels of government.

Government Paperwork Elimination Act

CCC is committed to compliance with the Government Paperwork Elimination Act (GPEA) and the Freedom to E-File Act, which require Government agencies in general and FSA in particular to provide the public the option of submitting information or transacting business electronically to the maximum extent possible. The forms and other information collection activities required for participation in the program are available electronically through the USDA eForms Web site at for downloading. Applications may be submitted at the FSA county offices, by mail or by FAX. At this time, electronic submission is not available. Full development of electronic submission is underway.

Federal Assistance Programs

The title and number of the Federal assistance program found in the Catalog of Federal Domestic Assistance to which this final rule applies are: 10.055—Direct and Counter-cyclical Payments Program (DCP).

Cost Benefit Analysis Summary

Changing the advance direct payment percentage shifts about $0.305 billion of 2006-crop direct payments from FY 2006 to FY 2007 direct payments among FY's and shifts about $1.47 billion of 2007-crop direct payments from FY 2007 to FY 2008. About $90 million of 2007-crop direct payments is expected to shift from calendar year 2006 into calendar year 2007 because of the direct payment percentage change from 50 percent to 22 percent. While no net impact in nominal dollars on income is expected, the postponement of some advance payments does have some time value. The reduction in the real value of payments will be approximately $5 million for the 2006 crop and $22 million for the 2007 crop.

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List of Subjects in 7 CFR Part 1412

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For the reasons set forth in the preamble,

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1. The authority section for part 1412 continues to read as follows:

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Authority: 7 U.S.C. 7911-7918, 7951-7956; 15 U.S.C. 714b and 714c.

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2. Section 1412.502 is amended by revising paragraph (b) introductory text to read as follows:

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Direct payment provisions.
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(b) At the option of the producer, direct payments for the farm with respect to covered commodities and peanuts for which payment yields and base acres are established, shall be paid in any month from December through September of the fiscal year of the contract, as requested by the producer as an advance payment based on 50 percent of the direct payment rate for 2003 through 2005 contracts, 40 percent of the direct payment rate for 2006 contracts, and 22 percent of the direct payment rate for 2007 contracts. For any producer to receive an advance direct payment, all producers sharing in the direct payments for the farm must:

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Signed in Washington, DC, on April 4, 2006.

Teresa C. Lasseter,

Executive Vice President, Commodity Credit Corporation.

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[FR Doc. 06-3364 Filed 4-7-06; 8:45 am]