B-144802, APRIL 12, 1961, 40 COMP. GEN. 574

B-144802, APRIL 12, 1961, 40 COMP. GEN. 574

AGRICULTURE - SOIL BANK - VIOLATIONS - INTERPRETATION LEGALITY AN INTERPRETATION UNDER SECTION 107 (A) (6) (A) OF THE SOIL BANK ACT, 7 U.S.C. 1831 (A), WHICH WOULD LIMIT THE FORFEITURE OR REFUND AMOUNTS IN CASE OF VIOLATION OF SOIL BANK AGREEMENTS COVERING MORE THAN ONE TRACT OF LAND, TO THOSE TRACTS REMAINING UNDER CONTRACT AT THE TIME OF THE VIOLATION AND IN THE CASE OF AGREEMENTS UNDER WHICH THE PRODUCER HAS SOLD PART OF THE LAND, TO THE LAND REMAINING UNDER THE PRODUCER'S CONTROL AT THE TIME OF THE VIOLATION, WOULD BE IN ACCORD WITH SECTION 107 (A) (6) (A) OF THE ACT WHICH HAS REFERENCE TO LAND UNDER CONTRACT AT THE TIME OF VIOLATION OF THE CONTRACT, AND IN BOTH CASES THE ORIGINAL CONTRACTS WOULD BE REGARDED AS HAVING BEEN MODIFIED EITHER BY THE EXPIRATION OF THE PERIOD WITH RESPECT TO ONE OF THE TRACTS OR BY THE SALE.

TO THE SECRETARY OF AGRICULTURE, APRIL 12, 1961:

THE ASSISTANT SECRETARY OF AGRICULTURE BY LETTER DATED JANUARY 11, 1961, REQUESTS A DECISION IN CONNECTION WITH THE LEGAL INTERPRETATION YOUR DEPARTMENT PROPOSES TO PLACE UPON SECTION 107 (A) (6) (A) OF THE SOIL BANK ACT.

SECTION 107 (A) (6) (A) OF THE SOIL BANK ACT, AS AMENDED, 7 U.S.C. 1831 (A) (6) (A), PROVIDES THAT A PRODUCER SHALL AGREE, UPON ENTERING INTO A CONTRACT,"TO FORFEIT ALL RIGHTS TO PAYMENTS OR GRANTS UNDER THE CONTRACT, AND TO REFUND TO THE UNITED STATES ALL PAYMENTS AND GRANTS RECEIVED BY HIM THEREUNDER," IN THE EVENT OF A DETERMINATION OF A VIOLATION OF SUCH A SUBSTANTIAL NATURE AS TO WARRANT TERMINATION OF THE CONTRACT. ACCORDANCE WITH SUCH PROVISION OF THE ACT, WE ARE ADVISED THAT SECTION 485.172 OF THE CONSERVATION RESERVE REGULATIONS FOR 1956 1959, SECTION 485.529 OF THE REGULATIONS FOR 1960, AND PARAGRAPH 11 OF PART V OF THE CONTRACT FORM PROVIDE THAT IN THE EVENT IT IS DETERMINED THAT THERE HAS BEEN A VIOLATION DURING THE TIME THE CONTRACT SIGNER HAS CONTROL OF THE FARM OF SUCH A SUBSTANTIAL NATURE AS TO WARRANT TERMINATION OF THE CONTRACT, ALL RIGHTS TO ANNUAL AND COST-SHARE PAYMENTS AND GRANTS UNDER THE CONTRACT SHALL BE FORFEITED AND ALL SUCH PAYMENTS AND GRANTS SHALL BE REFUNDED WITH INTEREST AT THE RATE OF SIX PERCENTUM PER ANNUM. SECTION 485.294J OF THE REGULATIONS GOVERNING VIOLATIONS PROVIDES THAT A CONTRACT SHALL BE TERMINATED IF CERTAIN VIOLATIONS REFERRED TO THEREIN HAVE OCCURRED FOR TWO CONSECUTIVE YEARS OF THE CONTRACT PERIOD. SECTION 485.294J FURTHER PROVIDES THAT "UPON SUCH TERMINATION, THE ENTIRE AMOUNT OF THE COST-SHARE PAYMENT AND ALL ANNUAL PAYMENTS PAID OR PAYABLE TO THE OPERATOR AND EACH OTHER PRODUCER ON THE FARM SHALL BE FORFEITED OR REFUNDED.'

THE ASSISTANT SECRETARY STATES THAT IF A PRODUCER ENTERS INTO A CONTRACT PLACING TWO TRACTS OF LAND IN THE PROGRAM FOR CONTRACT PERIODS EXPIRING AT DIFFERENT TIMES, AND, AFTER THE CONTRACT PERIOD HAS EXPIRED ON ONE OF THE TRACTS, COMMITS A VIOLATION REQUIRING THE TERMINATION OF THE CONTRACT, YOUR DEPARTMENT IS OF THE OPINION THAT THE PRODUCER IS REQUIRED BY THE TERMS OF THE ACT TO FORFEIT OR REFUND THE AMOUNT OF THE COST-SHARE PAYMENTS AND ANNUAL PAYMENTS PAID OR PAYABLE TO HIM ONLY WITH RESPECT TO THAT PART OF THE ACREAGE REMAINING UNDER CONTRACT AT THE TIME THE VIOLATION OCCURS. HE FURTHER STATES THAT TO REQUIRE THE PRODUCER ALSO TO REFUND THE PAYMENTS MADE WITH RESPECT TO THE TRACT ON WHICH THE CONTRACT HAS EXPIRED WOULD, IN YOUR DEPARTMENT'S VIEW, BE UNDULY SEVERE, OF DOUBTFUL LEGAL VALIDITY, AND, IN ANY EVENT, IS NOT COMPELLED BY THE LANGUAGE CONTAINED IN SECTION 107 (A) (6) (A) OF THE SOIL BANK ACT. ADVISES THAT:

UPON THE EXPIRATION OF THE CONTRACT PERIOD COVERING A TRACT OF LAND, THE PRODUCER MAY RESTORE THE LAND TO THE PRODUCTION OF CROPS. THE PRODUCER'S OBLIGATION TO REFRAIN FROM GRAZING OR HARVESTING A CROP FROM THE LAND IS AT AN END. HE MAY SELL THE LAND; HE NEED NOT REFUND THE COST-SHARE PAYMENTS PAID WITH RESPECT TO THE LAND. THE LAND IS NO LONGER IN THE CONSERVATION RESERVE; THE LAND IS NO LONGER "UNDER CONTRACT.' THE ORIGINAL CONTRACT HAS, IN EFFECT, BEEN MODIFIED BY THE EXPIRATION OF THE CONTRACT PERIOD WITH RESPECT TO ONE OF THE TRACTS.

SIMILARLY, THE ASSISTANT SECRETARY REPORTS THAT YOUR DEPARTMENT IS OF THE OPINION THAT IF A PRODUCER ENTERS INTO A CONTRACT PLACING LAND IN THE PROGRAM, SELLS PART OF THE LAND, AND LATER COMMITS A VIOLATION REQUIRING THE TERMINATION OF THE CONTRACT, THE PRODUCER IS REQUIRED BY THE TERMS OF THE ACT TO FORFEIT OR REFUND THE AMOUNT OF THE COST-SHARE PAYMENTS AND ANNUAL PAYMENTS PAID OR PAYABLE ONLY WITH RESPECT TO THE LAND REMAINING UNDER THE CONTRACT AT THE TIME THE VIOLATION OCCURS. HE STATES THAT HAVING SOLD PART OF HIS FARM, THE PRODUCER'S RIGHT TO RECEIVE PAYMENTS WITH RESPECT TO THE LAND HE RETAINS IS CONDITIONAL ONLY UPON HIS CONTINUED PERFORMANCE OF THE CONTRACT ACCORDING TO ALL OF ITS TERMS AND CONDITIONS WITH RESPECT TO LAND HE RETAINS. HE POINTS OUT THAT THE PRODUCER IS NOT RESPONSIBLE FOR VIOLATIONS OCCURRING ON THE LAND HE SOLD, AND HIS RIGHT TO PAYMENTS IS NOT CONTINGENT UPON PERFORMANCE OF THE CONTRACT ON THE LAND HE SOLD. THE ASSISTANT SECRETARY NOTES THAT 485.169 (B) OF THE 1956-1959 REGULATIONS AND SECTION 485.526 (B) OF THE 1960 REGULATIONS PROVIDE THAT IN THE EVENT OF SUCH A SALE, THE CONSERVATION RESERVE CONTRACT TERMINATES WITH RESPECT TO THE ACREAGE BEING SOLD. HE ALSO POINTS OUT THAT THE REGULATIONS FURTHER PROVIDE THAT THE CONTRACT SHALL REMAIN IN FULL FORCE AND EFFECT IN ACCORDANCE WITH THE ORIGINAL TERMS AND CONDITIONS OF THE CONTRACT WITH RESPECT TO THE ACREAGE REMAINING UNDER THE SELLER'S CONTROL, MODIFIED, HOWEVER, TO REFLECT THE CHANGES IN THE ACRES OF THE FARM, SOIL BANK BASE, PERMITTED ACRES, AND CONSERVATION RESERVE RESULTING FROM THE SALE. WE ARE ADVISED THAT IF THE BUYER DOES NOT CONTINUE THE LAND IN THE CONSERVATION RESERVE PROGRAM, THE ORIGINAL PRODUCER WOULD BE REQUIRED TO REFUND OR FORFEIT THE ENTIRE AMOUNT OF THE COST-SHARE PAYMENTS PAYABLE OR PAID WITH RESPECT TO THAT ACREAGE; BUT THAT IF THE BUYER ENTERS INTO A CONTRACT CONTINUING THE LAND IN THE PROGRAM, BUT LATER COMMITS A VIOLATION REQUIRING THE TERMINATION THEREOF, HE WOULD BE REQUIRED TO FORFEIT OR REFUND ALL PAYMENTS PAID OR PAYABLE WITH RESPECT TO THE LAND, INCLUDING THOSE AMOUNTS WHICH WERE PAID TO THE ORIGINAL PRODUCER.

THEREFORE, YOUR DEPARTMENT WISHES TO ADOPT THE FOLLOWING INTERPRETATION OF SECTION 107 (A) (6) (A) OF THE SOIL BANK ACT:

(1) IF A PRODUCER ENTERS INTO A CONTRACT PLACING TWO TRACTS OF LAND IN THE PROGRAM FOR CONTRACT PERIODS EXPIRING AT DIFFERENT TIMES, AND, AFTER THE CONTRACT PERIOD HAS EXPIRED ON ONE OF THE TRACTS, COMMITS A VIOLATION REQUIRING THE TERMINATION OF THE CONTRACT, SUCH PRODUCER WOULD BE REQUIRED TO FORFEIT OR REFUND ONLY THE AMOUNT OF THE COST SHARE PAYMENTS AND ANNUAL PAYMENTS PAID OR PAYABLE TO HIM WITH RESPECT TO THE TRACT FOR WHICH THE CONTRACT PERIOD HAS NOT EXPIRED.

(2) IF A PRODUCER ENTERS INTO A CONTRACT PLACING LAND IN THE PROGRAM, SELLS PART OF THE LAND, AND LATER COMMITS A VIOLATION REQUIRING THE TERMINATION OF THE CONTRACT, SUCH PRODUCER WOULD BE REQUIRED TO FORFEIT OR REFUND ONLY THE AMOUNT OF THE COST-SHARE PAYMENTS AND ANNUAL PAYMENTS PAID OR PAYABLE TO HIM WITH RESPECT TO THE LAND THAT HE RETAINED.

WE SEE NO LEGAL OBJECTION TO SUCH AN INTERPRETATION OF THE STATUTE. AGREE WITH THE VIEW EXPRESSED IN THE ASSISTANT SECRETARY'S LETTER TO THE EFFECT THAT SECTION 107 (A) (6) (A) OF THE ACT HAS REFERENCE TO LAND UNDER CONTRACT AT THE TIME THE CONTRACT IS VIOLATED. THEREFORE, IN THE CASE OF A PRODUCER WHO ENTERS INTO A CONTRACT WITH RESPECT TO TWO TRACTS OF LAND, AND, AFTER THE CONTRACT PERIOD HAS EXPIRED ON ONE OF THE TRACTS, COMMITS A VIOLATION REQUIRING THE TERMINATION THEREOF, THE REFUND OR FORFEITURE OF PAYMENTS REQUIRED BY SECTION 107 (A) (6) (A) PROPERLY RELATES TO THE LAND UNDER CONTRACT AT THE TIME OF THE VIOLATION (IN THE ABSENCE OF SOMETHING IN THE CONTRACT TO THE CONTRARY), THE ORIGINAL CONTRACT HAVING BEEN MODIFIED OR EXECUTED IN PART BY THE EXPIRATION OF THE CONTRACT PERIOD WITH RESPECT TO ONE OF THE TRACTS. LIKEWISE, IN THE CASE OF THE PRODUCER WHO ENTERS INTO A CONTRACT PLACING LAND IN THE PROGRAM, AND, AFTER SELLING PART OF THE LAND, COMMITS A VIOLATION REQUIRING THE TERMINATION THEREOF, THE REFUND OR FORFEITURE OF PAYMENTS REQUIRED BY SECTION 107 (A) (6) (A) PROPERLY RELATES ONLY TO THE LAND REMAINING UNDER THE PRODUCER'S CONTROL AT THE TIME OF THE VIOLATION (ABSENT A PROVISION IN THE CONTRACT TO THE CONTRARY), THE ORIGINAL CONTRACT HAVING BEEN MODIFIED BY THE SALE. CF. 40 COMP. GEN. 242.

IN VIEW OF THE FOREGOING WE HAVE NO OBJECTION TO YOUR DEPARTMENT'S INTERPRETATION (AS QUOTED ABOVE) OF SECTION 107 (A) (6) (A) OF THE SOIL BANK ACT, AS AMENDED.