B-137881, NOVEMBER 18, 1958, 38 COMP. GEN. 370

B-137881: Nov 18, 1958

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AGRICULTURE - SOIL BANK PROGRAM - ADMINISTRATIVE ERRORS - REGULATION AMENDMENT AMENDMENT TO A SOIL BANK REGULATION WHICH WOULD PERMIT A PRODUCER'S OFFER OF LAND AT A PAYMENT RATE IN EXCESS OF THE MAXIMUM RATE ALLOWABLE BECAUSE OF A GOVERNMENT ERROR IN ESTABLISHING SUCH MAXIMUM RATE TO BE TREATED AS AN OFFER AT THE ESTABLISHED LEGAL MAXIMUM PAYMENT RATE AND ACCORDED THE PRIORITY CATEGORY APPLICABLE TO SUCH MAXIMUM RATE IS NOT LEGALLY OBJECTIONABLE IN VIEW OF THE DISCRETIONARY AUTHORITY VESTED IN THE SECRETARY OF AGRICULTURE TO PRESCRIBE REGULATIONS TO CARRY OUT THE SOIL BANK ACT AND SINCE THE REGULATION DOES NOT GIVE THE PRODUCERS AN UNFAIR ADVANTAGE OR PRIORITY OVER OTHER PRODUCERS APPLYING FOR CONSERVATION RESERVE CONTRACTS.

B-137881, NOVEMBER 18, 1958, 38 COMP. GEN. 370

AGRICULTURE - SOIL BANK PROGRAM - ADMINISTRATIVE ERRORS - REGULATION AMENDMENT AMENDMENT TO A SOIL BANK REGULATION WHICH WOULD PERMIT A PRODUCER'S OFFER OF LAND AT A PAYMENT RATE IN EXCESS OF THE MAXIMUM RATE ALLOWABLE BECAUSE OF A GOVERNMENT ERROR IN ESTABLISHING SUCH MAXIMUM RATE TO BE TREATED AS AN OFFER AT THE ESTABLISHED LEGAL MAXIMUM PAYMENT RATE AND ACCORDED THE PRIORITY CATEGORY APPLICABLE TO SUCH MAXIMUM RATE IS NOT LEGALLY OBJECTIONABLE IN VIEW OF THE DISCRETIONARY AUTHORITY VESTED IN THE SECRETARY OF AGRICULTURE TO PRESCRIBE REGULATIONS TO CARRY OUT THE SOIL BANK ACT AND SINCE THE REGULATION DOES NOT GIVE THE PRODUCERS AN UNFAIR ADVANTAGE OR PRIORITY OVER OTHER PRODUCERS APPLYING FOR CONSERVATION RESERVE CONTRACTS.

TO THE SECRETARY OF AGRICULTURE, NOVEMBER 18, 1958:

LETTER OF NOVEMBER 6, 1958, FROM THE ACTING SECRETARY OF AGRICULTURE REQUESTS OUR DECISION ON A QUESTION WHICH HAS ARISEN UNDER THE CONSERVATION RESERVE PROGRAM OF THE SOIL BANK.

THE LETTER STATES THAT SECTION 485.185 OF THE CONSERVATION RESERVE REGULATIONS, 23 F.R. 6781, AS AMENDED, 23 F.R. 7876, PROVIDES THE FOLLOWING PROCEDURE FOR AWARDING CONSERVATION RESERVE CONTRACTS IN 1959:

(1) THE PRODUCER INDICATES HIS DESIRE TO PARTICIPATE IN THE PROGRAM BY REQUESTING THE COUNTY COMMITTEE TO ESTABLISH A MAXIMUM PAYMENT RATE FOR HIS FARM AND BY FURNISHING TO THE COUNTY COMMITTEE CERTAIN REQUIRED INFORMATION FOR THAT PURPOSE.

(2) THE COUNTY COMMITTEE, ON THE BASIS OF THE INFORMATION FURNISHED BY THE PRODUCER AND OTHER FACTORS, ESTABLISHES A MAXIMUM PAYMENT RATE FOR THE FARM. THE MAXIMUM PAYMENT RATE WHERE THE WHOLE FARM IS PLACED UNDER CONTRACT IS THE SMALLEST OF (1) THE FARM PRODUCTIVITY INDEX ESTABLISHED FOR THE FARM (THE RELATIVE PRODUCTIVITY OF SUCH FARM AS COMPARED TO THE PRODUCTIVITY OF THE AVERAGE FARM IN THE COUNTY) TIMES 110 PERCENT OF THE COUNTY PAYMENT RATE (THE 10 PERCENT IS INCLUDED AS AN INDUCEMENT TO THE PRODUCER TO PLACE THE WHOLE FARM UNDER CONTRACT INSTEAD OF PLACING ONLY PART OF THE FARM UNDER CONTRACT), (2) 20 PERCENT OF THE VALUE FOR AGRICULTURAL PURPOSES OF THE ELIGIBLE ACREAGE ON SUCH FARM AS DETERMINED BY THE COUNTY COMMITTEE (REQUIRED BY THE ACT MAKING APPROPRIATIONS FOR THE DEPARTMENT OF AGRICULTURE AND FARM CREDIT ADMINISTRATION FOR THE FISCAL YEAR ENDING JUNE 30, 1959, PUBLIC LAW 85-459), (3) 20 PERCENT OF THE VALUE FOR AGRICULTURAL PURPOSES OF SUCH LAND AS ESTIMATED BY THE APPLICANT, (4) 150 PERCENT OF THE COUNTY PAYMENT RATE, OR (5) $25.00.

(3) FOLLOWING THE ESTABLISHMENT OF THE MAXIMUM PAYMENT RATE FOR THE FARM, THE PRODUCER IS PERMITTED TO FILE AN APPLICATION FOR A CONTRACT IN WHICH HE INDICATES THE PAYMENT RATE AT WHICH HE OFFERS THE LAND. APPLICATIONS FOR CONTRACTS WERE REQUIRED TO BE FILED NOT LATER THAN OCTOBER 24, 1958.

(4) IF SUFFICIENT FUNDS ARE NOT AVAILABLE TO AWARD CONTRACTS TO ALL APPLICANTS, APPLICATIONS ARE CONSIDERED IN THE FOLLOWING ORDER OF PRIORITY:

FIRST--- APPLICATIONS OFFERING THE BALANCE OF THE ELIGIBLE LAND ON A FARM WHERE A PART OF THE ELIGIBLE LAND IS ALREADY IN THE CONSERVATION RESERVE UNDER AN EXISTING CONTRACT AND THE BALANCE BEING OFFERED WAS UNDER A 1958 ACREAGE RESERVE AGREEMENT;

SECOND--- AFTER CONTRACTS HAVE BEEN AWARDED TO ALL PRODUCERS IN THE FOREGOING CATEGORY, PRIORITY IS NEXT GIVEN TO THE APPLICATIONS HAVING THE LOWEST OFFER IN RELATION TO THE PRODUCTIVITY OF THE LAND;

THIRD--- IN CASE THERE IS MORE THAN ONE APPLICATION OFFERING LAND AT THE SAME COMPETITIVE RATING, PRIORITY IS GIVEN TO THE APPLICATIONS OFFERING LAND AT THE LOWEST PAYMENT RATE.

IF, AFTER APPLYING THE FOREGOING RULES, PRIORITY HAS NOT BEEN ESTABLISHED, THE COUNTY COMMITTEE ESTABLISHES PRIORITY ON THE BASIS OF ADDITIONAL FACTORS, NAMELY; APPLICATIONS OFFERING WHOLE FARMS, APPLICATIONS OFFERING LAND FOR THE LONGEST PERIOD, AND FINALLY, BY PUBLIC DRAWING OF NAMES.

NO CONTRACT IS ENTERED INTO AT A RATE HIGHER THAN THE MAXIMUM RATE OF PAYMENT ESTABLISHED FOR THE LAND OFFERED.

THE ACTING SECRETARY'S LETTER FURTHER STATES THAT AFTER THE APPLICATIONS WERE ALL IN AND THE FINAL DATE FOR FILING APPLICATIONS HAD PASSED, IT WAS DISCOVERED THAT IN SOME CASES ERRORS HAD BEEN MADE BY THE COUNTY OFFICE IN ESTABLISHING THE MAXIMUM PAYMENT RATE FOR THE FARM. WHEN THIS RATE IS CORRECTED, IN SOME CASES IT IS LESS THAN THE PRODUCER'S OFFER. FOR EXAMPLE:

THROUGH ERROR, THE COUNTY COMMITTEE ESTABLISHES A MAXIMUM PAYMENT RATE OF $10 PER ACRE. THE PRODUCER, ON THE BASIS OF THIS ERRONEOUS MAXIMUM PAYMENT RATE ESTABLISHED FOR HIS FARM BY THE COUNTY COMMITTEE, IN ORDER THAT HIS APPLICATION MAY RECEIVE PRIORITY OFFERS THE LAND AT $9 AN ACRE. LATER, AFTER THE CLOSING DATE HAS PASSED, IT IS DISCOVERED THAT HIS CORRECT MAXIMUM PAYMENT RATE IS $8 PER ACRE. AS A RESULT OF THE ERROR MADE BY THE COUNTY OFFICE, NOT ONLY DOES THE PRODUCER LOSE HIS PRIORITY IN HAVING HIS APPLICATION CONSIDERED, BUT HIS OFFER IS AT A RATE THAT CANNOT BE ACCEPTED UNDER THE PRESENT REGULATIONS.

THE ACTING SECRETARY PROPOSES, THEREFORE, TO AMEND THE REGULATIONS TO PROVIDE THAT IN SUCH CASES, WHERE THE PRODUCER'S OFFER IS IN EXCESS OF THE MAXIMUM PAYMENT RATE AS A RESULT OF AN ERROR MADE BY THE COUNTY OFFICE IN ESTABLISHING SUCH MAXIMUM PAYMENT RATE, THE PRODUCER'S APPLICATION BE TREATED AS AN OFFER OF THE LAND AT THE LEGAL MAXIMUM PAYMENT RATE ESTABLISHED FOR THE FARM. UNDER SUCH AMENDMENT, THE PRODUCER WOULD NOT BE GIVEN PRIORITY ON THE BASIS OF HAVING OFFERED LAND AT LESS THAN THE MAXIMUM RATE ORIGINALLY ESTABLISHED FOR THE FARM, BUT, IN ACCORDANCE WITH THE ORDER OF PRIORITY STATES ABOVE, WOULD BE PLACED IN THE THIRD CATEGORY AND WOULD BE GIVEN PRIORITY OVER OTHER APPLICATIONS WHICH OFFER LAND AT THE MAXIMUM PAYMENT RATE WHICH IS HIGHER THAN HIS OWN. IF THE PRODUCER IS UNWILLING TO ACCEPT THE LOWER RATE, HE WOULD BE PERMITTED TO WITHDRAW HIS OFFER.

THE ONLY ALTERNATIVE TO THE PROCEDURE PROPOSED WITH RESPECT TO THE APPLICATIONS UNDER CONSIDERATION IS THE OUTRIGHT REJECTION OF SUCH APPLICATIONS. THUS POSSIBLE PARTICIPATION IN THE CONSERVATION RESERVE PROGRAM BY PRODUCERS WHO FILED APPLICATION IN UTTER GOOD FAITH WOULD BE THWARTED BECAUSE OF ERRORS MADE IN COUNTY OFFICES. OBVIOUSLY, SUCH RESULT SHOULD NOT OBTAIN UNLESS THE SECRETARY'S AUTHORITY IS SO PROSCRIBED AS TO REQUIRE CANCELLATION OF THE APPLICATIONS.

SECTIONS 107 (B), 107 (C), AND 124, OF THE SOIL BANK ACT, 70 STAT. 192- 193, 198, 7 U.S.C. 1831 (B) AND (C), AND 7 U.S.C. 1812, PROVIDE:

(B) IN RETURN FOR SUCH AGREEMENT BY THE PRODUCER THE SECRETARY SHALL AGREE:

(1) TO BEAR SUCH PART OF THE COST (INCLUDING LABOR) OF ESTABLISHING AND MAINTAINING VEGETATIVE COVER OF WATER STORAGE FACILITIES, OR OTHER SOIL--- , WATER---, WILDLIFE---, OR FOREST-CONSERVING USES, ON THE DESIGNATED ACREAGE AS THE SECRETARY DETERMINES TO BE NECESSARY TO EFFECTUATE THE PURPOSES OF THIS TITLE, BUT NOT TO EXCEED A MAXIMUM AMOUNT PER ACRE OR FACILITY PRESCRIBED BY THE SECRETARY FOR THE COUNTY OR AREA IN WHICH THE FARM IS SITUATED; AND

(2) TO MAKE AN ANNUAL PAYMENT TO THE PRODUCER FOR THE TERM OF THE CONTRACT UPON DETERMINATION THAT HE HAS FULFILLED THE PROVISIONS OF THE CONTRACT ENTITLING HIM TO SUCH PAYMENT. THE RATE OR RATES OF THE ANNUAL PAYMENT TO BE PROVIDED FOR IN THE CONTRACTS SHALL BE ESTABLISHED ON SUCH BASIS AS THE SECRETARY DETERMINES WILL PROVIDE PRODUCERS WITH A FAIR AND REASONABLE ANNUAL RETURN ON THE LAND ESTABLISHED IN PROTECTIVE VEGETATIVE COVER OR WATER STORAGE FACILITIES, OR OTHER SOIL---, WATER---, WILDLIFE--- , OR FOREST CONSERVING USES, TAKING INTO CONSIDERATION THE VALUE OF THE LAND FOR THE PRODUCTION OF COMMODITIES CUSTOMARILY GROWN ON SUCH KIND OF LAND IN THE COUNTY OR AREA, THE PREVAILING RATES FOR CASH RENTALS FOR SIMILAR LAND IN THE COUNTY OR AREA, THE INCENTIVE NECESSARY TO OBTAIN CONTRACTS COVERING SUFFICIENT ACREAGE FOR THE SUBSTANTIAL ACCOMPLISHMENT OF THE PURPOSES OF THE CONSERVATION RESERVE PROGRAM, AND SUCH OTHER FACTORS AS HE DEEMS APPROPRIATE. SUCH RATE OR RATES MAY BE DETERMINED ON AN INDIVIDUAL FARM BASIS, A COUNTY OR AREA BASIS, OR SUCH OTHER BASIS AS THE SECRETARY DETERMINES WILL FACILITATE THE PRACTICAL ADMINISTRATION OF THE PROGRAM.

(C) IN DETERMINING THE LANDS IN ANY AREA TO BE COVERED BY CONTRACTS ENTERED INTO UNDER THIS SECTION, THE SECRETARY MAY USE ADVERTISING AND BID PROCEDURE IF HE DETERMINES THAT SUCH ACTION WILL CONTRIBUTE TO THE EFFECTIVE AND EQUITABLE ADMINISTRATION OF THE CONSERVATION RESERVE PROGRAM.

SEC. 124. THE SECRETARY SHALL PRESCRIBE SUCH REGULATIONS AS HE DETERMINES NECESSARY TO CARRY OUT THE PROVISIONS OF THIS TITLE.

IN VIEW OF THE DISCRETIONARY AUTHORITY VESTED IN THE SECRETARY OF AGRICULTURE BY THE SOIL BANK ACT INCLUDING THE SPECIFIC PROVISIONS QUOTED ABOVE AND THE DEPARTMENT'S VIEW THAT PERMITTING SUCH PRODUCERS TO BE CONSIDERED IN CATEGORY 3, IN THE ORDER IN WHICH THEIR MAXIMUM PAYMENT RATES PUT THEM, DOES NOT GIVEN THEM ANY UNFAIR ADVANTAGE OVER OTHER PRODUCERS, AND ONLY ACCORDS THEM WITH THE TREATMENT WHICH THE DEPARTMENT CONTEMPLATED THAT THEY WOULD BE GIVEN UNDER THE PRESENT REGULATION, WE SEE NO LEGAL OBJECTION TO THE PROPOSED AMENDMENT TO THE REGULATIONS GOVERNING THE CONSERVATION RESERVE PROGRAM.