B-129167, SEP. 14, 1956

B-129167, SEP. 14, 1956

TO THE SECRETARY OF AGRICULTURE:

YOUR LETTER OF SEPTEMBER 6, 1956 REQUESTS A DECISION CONCERNING THE LEGALITY OF TERMINATING CERTAIN ACREAGE RESERVE AGREEMENTS ENTERED INTO UNDER SUBTITLE A OF THE SOIL BANK ACT, PUBLIC LAW 540, APPROVED MAY 28, 1956, 70 STAT. 188, 189, AND THE ENTERING INTO OF CERTAIN SUPPLEMENTAL AGREEMENTS.

UNDER THE 1956 ACREAGE RESERVE AGREEMENTS, THE PRODUCER DESIGNATED PARTICULAR TRACT OR TRACTS OF LAND ON HIS FARM AS THE ACREAGE RESERVE WHICH WOULD BE WITHDRAWN FROM THE PRODUCTION OF THE COMMODITY COVERED BY THE AGREEMENT. THE ACREAGE RESERVE WAS NOT TO BE GRAZED DURING 1956 NOR WAS ANY CROP TO BE HARVESTED THEREFROM. ANY CROP GROWING ON THE ACREAGE RESERVE WAS TO BE PLOWED UNDER OR OTHERWISE PHYSICALLY INCORPORATED INTO THE SOIL, OR CLIPPED, MOWED, OR CUT TO PREVENT MATURING BY THE DATE SPECIFIED IN THE REGULATIONS. SECTION 123 OF THE SOIL BANK ACT IMPOSES A CIVIL PENALTY ON ANY PRODUCER WHO KNOWINGLY AND WILFULLY GRAZES OR HARVESTS ANY CROP FROM ANY ACREAGE IN VIOLATION OF A CONTRACT ENTERED INTO UNDER THE ACT EQUAL TO 50 PERCENTUM OF THE COMPENSATION PAYABLE FOR COMPLIANCE WITH SUCH CONTRACT FOR THE YEAR IN WHICH THE VIOLATION OCCURS. SUCH PENALTY IS IN ADDITION TO ANY AMOUNTS REQUIRED TO BE FORFEITED OR REFUNDED UNDER THE PROVISIONS OF THE AGREEMENT. AS REQUIRED BY SECTION 103 (A) OF THE ACT, THE AGREEMENT PROVIDES THAT IN THE EVENT THAT THERE HAS BEEN A VIOLATION OF THE AGREEMENT AND THAT SUCH VIOLATION IS OF SUCH A SUBSTANTIAL NATURE AS TO WARRANT TERMINATION OF THE AGREEMENT, THE PRODUCER SHALL FORFEIT ALL RIGHTS TO PAYMENTS UNDER THE AGREEMENT; AND, THAT IN THE EVENT THAT THE SECRETARY DETERMINES THAT THERE HAS BEEN A VIOLATION OF THE AGREEMENT BUT THAT SUCH VIOLATION IS OF SUCH A NATURE AS NOT TO WARRANT TERMINATION OF THE AGREEMENT, THE PRODUCER SHALL ACCEPT SUCH PAYMENT ADJUSTMENTS OR FORFEIT SUCH BENEFITS UNDER THE AGREEMENT AS THE SECRETARY MAY DETERMINE TO BE APPROPRIATE.

YOUR LETTER STATES THAT AS A RESULT OF THE DELAY IN THE PASSAGE OF THE SOIL BANK ACT, THERE WAS INSUFFICIENT TIME WITHIN WHICH ADEQUATELY TO EXPLAIN THE PROGRAM TO PRODUCERS AND STILL CARRY OUT THE MANDATE OF THE CONGRESS TO PUT THIS PROGRAM INTO EFFECT FOR 1956 AND, THEREFORE, THE PROGRAM HAD TO BE INAUGURATED WITHOUT AMPLE OPPORTUNITY TO ACQUAINT THE FIELD STAFF FULLY WITH THE REQUIREMENTS OF THE PROGRAM. YOU REPORT THAT DUE TO THE LACK OF COMPLETE INFORMATION IN THE FIELD, THE PRESSURE TO MEET THE DEADLINE FOR SIGNING AGREEMENT, AND THE NECESSITY, IN MANY CASES, OF USING INEXPERIENCED FIELD PERSONNEL, MANY PRODUCERS WERE NOT PROPERLY INFORMED OF THE NATURE AND EXTENT OF THEIR OBLIGATIONS UNDER THE 1956 ACREAGE RESERVE AGREEMENT. YOU FURTHER REPORT THAT THERE WAS A GENERAL MISUNDERSTANDING THAT THE AGREEMENT MERELY PLACED A CEILING ON THE NUMBER OF ACRES ON WHICH THE PRODUCER WAS ELIGIBLE TO EARN A PAYMENT AND DID NOT CONSTITUTE AN OBLIGATION ON HIS PART TO PARTICIPATE IN THE PROGRAM TO THE EXTENT OF THE TOTAL NUMBER OF ACRES SHOWN AS THE ACREAGE RESERVE IN THE AGREEMENT; AND, THAT SUCH PRODUCERS UNDERSTOOD THAT IF THEY EARNED A PAYMENT ON A PORTION OF THE ACREAGE COVERED BY THE AGREEMENT, THEY WOULD BE PAID AT THE SPECIFIED RATE FOR SUCH PARTIAL PERFORMANCE, AND THAT IF THEY FAILED TO PERFORM AT ALL, THEIR ONLY LOSS WOULD BE A FORFEITURE OF THE COMPENSATION PAYABLE FOR PERFORMANCES. YOUR LETTER ALSO STATES THAT AS A RESULT, A LARGE NUMBER OF SUCH PRODUCERS DID NOT DESTROY THE CROPS GROWING ON THE ACREAGE RESERVE BY THE FINAL DATE ALLOWED FOR SUCH DISPOSITION AND HAVE NOTIFIED THE COUNTY COMMITTEES THAT THEY INTEND TO HARVEST SUCH CROPS AND, THEREFORE, DO NOT EXPECT ANY COMPENSATION. OTHERS HAVE DESTROYED A PORTION OF THE CROPS GROWING ON THE ACREAGE RESERVE, INTEND TO HARVEST THE BALANCE OF THE CROP GROWING ON THE ACREAGE RESERVE, AND HAVE INDICATED THAT THEY EXPECT TO APPLY FOR PAYMENT ON THAT PORTION OF THE CROP WHICH THEY DESTROYED.

YOUR LETTER FURTHER STATES THAT THE SOIL BANK PROGRAM DEPENDS UPON VOLUNTARY PARTICIPATION BY PRODUCERS AND IF THE GOVERNMENT INSISTS UPON STRICT ENFORCEMENT OF THE AGREEMENT UNDER THE CIRCUMSTANCES PREVAILING THIS YEAR, GENERAL DISSATISFACTION ON THE PART OF PRODUCERS, WHO ACTED IN GOOD FAITH, WOULD, IN YOUR JUDGMENT, JEOPARDIZE YOUR ABILITY TO OBTAIN SUFFICIENT PARTICIPATION IN FUTURE YEARS TO ACHIEVE THE PURPOSES OF THE PROGRAM. FOR THAT REASON YOU HAVE DETERMINED THAT IT WOULD BE IN THE PUBLIC INTEREST (1) TO TERMINATE THE AGREEMENT IN THOSE CASES WHERE THE PRODUCER DESIRES SUCH ACTION, AND (2) TO ENTER INTO A SUPPLEMENTAL AGREEMENT WITH THE PRODUCER IN THOSE CASES WHERE THE PRODUCER HAS COMPLIED WITH THE AGREEMENT WITH RESPECT TO A PORTION OF THE CROP ON THE ACREAGE RESERVE, UNDER WHICH THE PRODUCER WOULD COMPLETE PERFORMANCE ON THE AGREEMENT WITH RESPECT TO SUCH ACREAGE AND WOULD BE COMPENSATED THEREFOR AT THE RATE PER ACRE SPECIFIED IN THE ORIGINAL AGREEMENT. YOU REQUEST A DECISION WHETHER YOU MAY LEGALLY TAKE SUCH ACTION.

IN AN OPINION DATED SEPTEMBER 6, 1956, OF YOUR GENERAL COUNSEL, IT IS CONCLUDED THAT THIS PROPOSED ACTION WOULD BE LEGALLY AUTHORIZED. IN THAT OPINION, IT IS STATED THAT THE VIOLATION FOR WHICH THE CIVIL PENALTIES WOULD BE INVOLVED, NAMELY, THE GRAZING OR HARVESTING OF THE ACREAGE RESERVE, HAS NOT YET OCCURRED AND, THEREFORE, THERE IS NOT INVOLVED ANY QUESTION OF GIVING AWAY OR SURRENDERING CIVIL PENALTIES WHERE THE RIGHTS TO SUCH PENALTIES HAVE ALREADY VESTED IN THE GOVERNMENT.

THE SOIL BANK ACT VESTS EXTREMELY BROAD AUTHORITY IN THE SECRETARY OF AGRICULTURE. SECTION 103 (A) AUTHORIZES THE SECRETARY, NOTWITHSTANDING ANY OTHER PROVISION OF LAW, TO FORMULATE AND CARRY OUT THE ACREAGE RESERVE PROGRAM, WITHIN SPECIFIED LIMITATIONS, AND FURTHER PROVIDES THAT THE PROGRAM MAY INCLUDE SUCH TERMS AND CONDITIONS AS THE SECRETARY DETERMINES ARE DESIRABLE TO EFFECTUATE THE PURPOSES OF THE ACT AND TO FACILITATE THE PRACTICAL ADMINISTRATION OF THE ACREAGE RESERVE PROGRAM. ONE OF THE POLICIES OF THE CONGRESS AND OF THE PURPOSES OF THE ACT SET OUT IN SECTION 102 OF THE ACT IS TO PROTECT AND INCREASE FARM INCOME. SECTION 103 (A) FURTHER PROVIDES THAT IN THE CASE OF A VIOLATION OF THE AGREEMENT WHERE THE VIOLATION IS NOT OF SUCH A NATURE AS TO WARRANT TERMINATION OF THE AGREEMENT AND FORFEITURE OF ALL RIGHTS TO PAYMENT THEREUNDER, THE PRODUCER SHALL "ACCEPT SUCH PAYMENT ADJUSTMENTS" FORFEIT SUCH BENEFITS, AND MAKE SUCH REFUNDS TO THE UNITED STATES OF PAYMENTS AND BENEFITS RECEIVED BY HIM UNDER THE CONTRACT AS THE SECRETARY MAY DETERMINE TO BE APPROPRIATE.' SECTION 105 (A) OF THE ACT PROVIDES THAT THE RATE OF COMPENSATION PAYABLE TO PRODUCERS FOR PARTICIPATION IN THE ACREAGE RESERVE PROGRAM SHALL BE "AT SUCH RATE OR RATES AS THE SECRETARY DETERMINES WILL PROVIDE PRODUCERS WITH A FAIR AND REASONABLE RETURN FOR REDUCING THEIR ACREAGE * * *.' SECTION 121 PROVIDES THAT THE FACTS CONSTITUTING THE BASIS FOR ANY PAYMENT OR COMPENSATION, OR THE AMOUNT THEREOF, AUTHORIZED, TO BE MADE UNDER THE ACT, WHEN OFFICIALLY DETERMINED ON CONFORMITY WITH APPLICABLE REGULATIONS PRESCRIBED BY THE SECRETARY, SHALL BE FINAL AND CONCLUSIVE AND SHALL NOT BE REVIEWABLE BY ANY OTHER OFFICER OR AGENCY OF THE GOVERNMENT.

IN VIEW OF THE BROAD AUTHORITY VESTED IN YOU BY THE SOIL BANK ACT, THE REPRESENTATIONS IN YOUR LETTER OF THE HASTY MANNER IN WHICH THE ACREAGE RESERVE PROGRAM AS INAUGURATED WITH THE RESULTANT GENERAL MISUNDERSTANDING AMONG THE PRODUCERS, AND YOUR DETERMINATION THAT THE ACTION YOU PROPOSE WOULD BE IN THE PUBLIC INTEREST, WE WOULD NOT BE REQUIRED TO OBJECT TO THE TERMINATION OF THE EXISTING AGREEMENTS AND THE EXECUTION OF THE SUPPLEMENTAL AGREEMENTS PROPOSED IN YOUR LETTER. THE EXISTING AGREEMENTS, INSOFAR AS THEY ARE EXECUTORY, CERTAINLY CAN BE TERMINATED BY MUTUAL AGREEMENT WITHOUT ANY COST TO THE GOVERNMENT IF YOU DETERMINE SUCH ACTION TO BE IN THE PUBLIC INTEREST. SAVAGE ARMS CORPORATION V. UNITED STATES, 266 U.S. 217. THE SUPPLEMENTAL AGREEMENTS WILL BE IDENTICAL TO THE ORIGINAL AGREEMENTS EXCEPT THAT THE NUMBER OF ACRES OF LAND COVERED WILL BE REDUCED AND THE AMOUNT OF COMPENSATION REDUCED CORRESPONDINGLY. THERE IS NO TIME LIMIT SPECIFIED IN THE ACT IN WHICH THE AGREEMENTS MUST BE EXECUTED AND THE SUPPLEMENTAL AGREEMENTS WILL FURTHER THE PURPOSES OF THE ACT.