USDA Action Terminating Crop Acreage Base on Federal Land
Discussion Paper, January 2009
On December 23, 2008, the Department of Agriculture issued a final rule (73 F.R. 79284) implementing the Direct Payment and the Counter-Cyclical Payment programs included in the Food, Conservation and Energy Act of 2008 (the FCEA). This rule was issued as "final" without any opportunity for notice or comment from affected individuals. Section 1412.45(d) of those regulations stated that USDA would terminate base acres on federally owned land beginning with the 2009 crop year. This subsection provides specifically provides as follows:
(d)(1) Except as provided in paragraph (d)(2) of this section, for the 2009 and subsequent crop years, crop acreage bases will be not be established with respect to land owned by Federal agencies and any crop acreage base previously established with respect to such land will be terminated.
(2) Paragraph (d)(1) of this section will not apply to Federally-owned land that was subject to a lease agreement entered into prior to December 23, 2008 during the length of the lease agreement. Upon termination of such agreement, all crop acreage bases established with respect to Federally-owned land will be terminated. To the extent a lease contains an option to extend the terms of the lease, crop acreage bases will be terminated as of the date the original lease would expire without regard to any exercise of such an option.
(3) In the event a Federal agency transfers of ownership of land to another party, crop acreage bases will not be re-established with respect to such land.
In the supplementary information accompanying the regulation, the Department stated as follows:
In addition to changes required by the 2008 Farm Bill, this rule provides that for the 2009 and subsequent crop years, crop acreage bases will be terminated with respect to land owned by Federal agencies. A transition provision is provided with respect to Federal land that was subject to a lease agreement entered into prior to the effective date of this rule. In such cases, the termination of the crop acreage bases will become effective when the lease expires.
Terminating base acres on federal cropland hurts farmers across the United States, many of whom have incorporated federally-owned land as a central component of their farming operations. This action undercuts the Congressionally mandated income safety net for farmers by removing that safety net from those farmers that happen to rent cropland owned by the federal government. It devalues land owned by the federal government, makes it difficult for such land to be put into productive use, will remove conservation requirements applicable to such land if operated under farm programs, and unfairly and unreasonably targets farmers who rent and farm federal land.
The Department of Agriculture provided no rationale for this step, cited no authority, provided no opportunity for comment, and provided no analysis concerning the potential impact of this action. It is without precedent that crop acreage base operated by farmers for many, many years would be suddenly terminated without regard to the impact on farms and individual farming operations.
Discussion
Negative Impact
The termination of base acres on all land owned by the Federal government will have a negative economic impact on all farming operations that are currently renting such land and producing commodities covered by title I of the FCEA. Counter-cyclical payments and Direct Payments are only made available with respect to farmers on farms that have historical crop acreage base. By terminating the crop acreage base on this land, USDA is unilaterally taking away from farmers that rent this land the income safety net Congress enacted for the benefit of all farmers across the United States -- including those that happen to be renting land owned by the federal government. This termination of base acres also reduces incentives for producers on this land to comply with appropriate conservation plans.
The termination of base acres (and the associated loss of income protection) will devalue the affected producers' farming operations as a whole and may make it difficult for these producers to continue to keep the federal land in cultivation. It may also affect their eligibility for conservation programs. This action will also reduce revenue to the individual federal agencies that actually own or manage the land covered by USDA's action. It is doubtful there will be any real offsetting savings to the federal government as the decline in rental revenue could easily outstrip any savings associated with decreased expenditures under the affected farm programs.
Action is Contrary to Congressional Intent
FEDERAL LAND HAS BEEN ELIGIBLE FOR FARM PROGRAMS FOR DECADES
There is ample evidence that Congress never intended the Department to take this step. Lessees of federal land have traditionally been eligible for participation in farm programs. Many of the farming operations affected by this regulation have historically rented such land, and some renters are the original owners of the land before it was put under federal ownership.
CONGRESS SPECIFICALLY PROVIDED FOR PROGRAM ELIGIBILITY FOR LESSEES OF FEDERAL LAND
Congress has never limited this eligibility, and there is no evidence that the Department of Agriculture, during debate on the 2008 farm bill, attempted to obtain direct, clear authority to terminate this crop acreage base. In fact, in its amendments to program eligibility rules, Congress denied program eligibility for Federal Agencies but specifically provided for program eligibility for lessees of land owned by a Federal agency.
"(B) LAND RENTAL.—A lessee of land owned by a Federal agency may receive a payment described in subsection (b), (c), or (d) if the lessee otherwise meets all applicable criteria." (Section 1001(f)(5) of the Food Security Act of 1985, as amended by section 1601(b)(2) of the FCEA.)
Failure to Comply With the Administrative Procedure Act
It is questionable whether the Department of Agriculture had the authority to issue this particular regulation without providing notice and comment. In the supplementary information accompanying the regulation, the Department cited section 1601(c) of the FCEA as authority for issuing the overall regulation as a final rule with no opportunity for notice or public comment as required by the Administrative Procedure Act. However, that section does not authorize this specific deviation from normal administrative procedures. Section 1601(c), in relevant part, provides as follows:
(c)(1) In General.--Except as otherwise provided in this subsection, not later than 90 days after the date of enactment of this Act, the Secretary and the Commodity Credit Corporation, as appropriate, shall promulgate such regulations as are necessary to implement this title and the amendments made by this title. [emphasis supplied]
(2) Procedure.--The promulgation of the regulations and administration of this title and the amendments made by this title shall be made without regard to--
(A) chapter 35 of title 44, United States Code (commonly known as the "Paperwork Reduction Act");
(B) the Statement of Policy of the Secretary of Agriculture effective July 24, 1971 (36 Fed. Reg. 13804), relating to notices of proposed rulemaking and public participation in rulemaking; and
(C) the notice and comment provisions of section 553 of title 5, United States Code.
The Department, however, expressly stated that the proposed change with respect to crop acreage base on acreage owned by the federal government was not required and therefore not necessary. It stated in the supplementary information to the rule that the crop acreage base provisions were "[I]n addition to changes required by the 2008 Farm Bill…" clearly differentiating this specific provision from other regulatory changes that may have been required by the FCEA.
No Open or Transparent Process
In a memorandum concerning regulatory review, the new Administration recently provided a list of guidelines to be used by agencies in reviewing regulations recently issued by the outgoing Administration. The rule terminating base acres on federally owned land violates all of the memorandum's guidelines, as indicated below:
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Memorandum Criteria |
Comments |
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Whether the rulemaking process was procedurally adequate |
There was no rulemaking process associated with this change. The termination of base acres on federally owned land was announced in a final rule, issued without notice and comment. No explanation was given. There was no discussion of the impact of the rule change. As indicated below, this portion of the regulation is likely not consistent with USDA's obligations under the Administrative Procedure Act. |
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Whether the rule reflected proper consideration of all relevant facts |
The rule did not indicate that any relevant facts were considered. |
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Whether the rule reflected due consideration of the agency's statutory or other legal obligations |
There is no specific authority cited for USDA's decision to terminate base acres on federally owned land. As discussed below, it is likely that the agency acted without authority. |
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Whether the rule is based on a reasonable judgment about the legally relevant policy considerations |
The rule contained no discussion of any legally relevant policy considerations. |
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Whether the rulemaking process was open and transparent |
The rule was issued as "final" with no opportunity for notice and comment. It was issued very late in 2008. There was no discussion or prior notice that USDA was about to take this action. |
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Whether objections to the rule were adequately considered, including whether interested parties had the benefit of access to the facts, data, or other analyses on which the agency relied |
No objections were considered. Interested parties had no access to any facts, data or other analyses on which the agency relied. |
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Whether the final rule found adequate support in the rulemaking record |
USDA cited no support for the decision in the rulemaking record. |
It is clear that this rule fails every standard listed in the recently issued White House memorandum urging agencies to review recently published regulations and consider extending the effective date of regulations that had been published but not yet taken effect.
Section 1101 of the FCEA Is Not Applicable
While the Department of Agriculture did not cite any specific authority on which it based this specific regulatory action, title I of the FCEA is cited as general authority for the regulation. Section 1101(c)(1)(A) of the FCEA provides that owners of a farm "may reduce, at any time, the base acres for any covered commodity for the farm." It further states that such reduction "shall be permanent and made in a manner prescribed by the Secretary." The 2002 farm bill contained similar authority.
Even though the authority of an owner to reduce base acres was included in the 2002 farm bill, it has never been cited by an Administration as justification for terminating base acreage on federally owned land. It should not be cited as authority for this action. First, this provision specifically states that any such reduction in base acres by the owner shall be "made in a manner prescribed by the Secretary" and the Secretary does not appear to have issued any regulations prescribing how base acreage can be terminated by its owner.
Second, section 1101(c)(1)(A) is specifically targeted to the owner of the base acreage. It is the owner of the base that is given the right to terminate. The Department of Agriculture has ignored the ownership issue and attempted in this regulation to terminate base acreage on land owned by agencies other than the Department of Agriculture.
Third, it seems apparent when reading this authority in context that Congress intended or assumed this authority would be utilized by individuals, in accordance with rules issued by the Secretary of Agriculture. Congress would not appear to have assumed the Secretary would use this provision to eliminate the income protection provisions contained in the 2002 or 2008 laws for farmers who happen to lease land from the federal government.
Finally, the legislative history of the 2002 farm law makes it clear that Congress intended for owners of base acreage to consult with tenants and others on the farm before making any significant modification of base acreage. The Department of Agriculture has long maintained regulations requiring due consideration be given to tenants by owners of farmland before the owner determines to make significant changes in the farming operation. By the action contained in the December 23 regulation, the Department of Agriculture is violating its own rules and violating Congressional intent.
Conclusion
The regulation providing for the termination of base acres on land owned by the federal government should be rescinded immediately. As demonstrated above, it is patently unfair, contrary to Congressional intent, likely without authority, and contrary to any reasonable degree of openness in the federal government.
Short of immediate revocation, the Secretary should take the action suggested in the White House memorandum, namely --
> Extend for at least 60 days the effective date of 7 CFR §1412.45(d); and
> Provide for a 30-day comment period on at least this provision.
William A. Gillon