H. Rept. 110-881 - 110th Congress (2007-2008)

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House Report 110-881 - TEMPORARY SUSPENSION OF CERTAIN LIMITATIONS ON ELIGIBILITY OF PRODUCERS FOR DIRECT PAYMENTS, COUNTER-CYCLICAL PAYMENTS, OR AVERAGE CROP REVENUE ELECTION PAYMENTS

[House Report 110-881]
[From the U.S. Government Publishing Office]






110th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     110-881

======================================================================


 
TEMPORARY SUSPENSION OF CERTAIN LIMITATIONS ON ELIGIBILITY OF PRODUCERS 
FOR DIRECT PAYMENTS, COUNTER-CYCLICAL PAYMENTS, OR AVERAGE CROP REVENUE 
                           ELECTION PAYMENTS

                                _______
                                

 September 24, 2008.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

Mr. Peterson of Minnesota, from the Committee on Agriculture, submitted 
                             the following

                              R E P O R T

                        [To accompany H.R. 6849]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Agriculture, to whom was referred the bill 
(H.R. 6849) to amend the commodity provisions of the Food, 
Conservation, and Energy Act of 2008 to permit producers to 
aggregate base acres and reconstitute farms to avoid the 
prohibition on receiving direct payments, counter-cyclical 
payments, or average crop revenue election payments when the 
sum of the base acres of a farm is 10 acres or less, and for 
other purposes, having considered the same, report favorably 
thereon with an amendment and recommend that the bill as 
amended do pass.

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. TEMPORARY SUSPENSION OF CERTAIN LIMITATIONS ON ELIGIBILITY 
                    OF PRODUCERS FOR DIRECT PAYMENTS, COUNTER-CYCLICAL 
                    PAYMENTS, OR AVERAGE CROP REVENUE ELECTION 
                    PAYMENTS.

  (a) Special Rule for 2008 and 2009 Crop Years.--Section 1101(d) of 
the Food, Conservation, and Energy Act of 2008 (7 U.S.C. 8711(d)) is 
amended by adding at the end the following new paragraph:
          ``(4) Suspension.--Paragraphs (1), (2), and (3) shall not 
        apply during the 2008 and 2009 crop years.''.
  (b) Offsetting Reduction.--Section 515(k)(1) of the Federal Crop 
Insurance Act (7 U.S.C. 1515(k)(1)) is amended by striking ``not more 
than $15,000,000 for each of fiscal years 2008 through 2011'' and 
inserting ``not more than $15,000,000 for fiscal year 2008, not more 
than $9,000,000 for fiscal year 2009, and not more than $8,000,000 for 
each of fiscal years 2010 and 2011''.

                           Brief Explanation

    H.R. 6849 suspends, for the 2008 and 2009 crop years, the 
provisions of the Food, Conservation, and Energy Act of 2008 
that prohibit receipt of direct payments, counter-cyclical 
payments, or average crop revenue election payments when the 
sum of the base acres of a farm is 10 acres or less. Also 
reduces by $20 million the funds available under section 
515(k)(1) of the Federal Crop Insurance Act for Federal Crop 
Insurance Corporation information management systems upgrades.

                            Purpose and Need

    The Department of Agriculture published a notice stating 
their intent to ``not approve requests for farm combination 
reconstitutions of farms having base acres of 10 acres or less 
if the request was received after the date of enactment of the 
2008 Farm Bill''.
    The Department's notice is a substantial change from what 
was in place prior to the most recent Farm Bill and runs 
contrary to what Congress intended when it drafted section 
1101(d) of the farm bill.

                      Section-by-Section Analysis

    Section 1(a) suspends, for the 2008 and 2009 crop years, 
the farm bill provisions that prohibit receipt of direct 
payments, counter-cyclical payments, or average crop revenue 
election payments when the sum of the base acres of a farm is 
10 acres or less.
    Section 1(b) provides an offset of $20 million by reducing 
funds available under section 515(k)(1) of the Federal Crop 
Insurance Act for Federal Crop Insurance Corporation 
information management systems upgrades.

                        Committee Consideration

    The Committee on Agriculture met, pursuant to notice, with 
a quorum present, on September 18, 2008, to consider H.R. 6849.
    Members were recognized and each made a statement in 
support of the legislation and Counsel was also recognized for 
a brief explanation of the bill.
    Chairman Peterson offered an amendment in the nature of a 
substitute to the bill. Discussion occurred and without 
objection, the amendment was adopted by a voice vote.
    There being no more amendments, Mr. Goodlatte moved that 
H.R. 6849 be reported favorably to the House with the 
recommendation that it do pass.
    By a voice vote, and in the presence of a quorum, H.R. 6849 
was ordered favorably reported to the House.
    Chairman Peterson then advised Members that pursuant to the 
rules of the House of Representatives that Members have 2 
calendar days to file such views with the Committee. No Members 
came forth with intent to file additional views.
    Without objection, staff was given permission to make any 
necessary clerical, technical or conforming changes to reflect 
the intent of the Committee.
    Chairman Peterson thanked all the Members and adjourned the 
meeting subject to the call of the chair.

                   Reporting the Bill--Rollcall Votes

    In compliance with clause 3(b) of rule XIII of the House of 
Representatives, H.R. 6849 was reported by voice vote with a 
majority quorum present. There was no request for a recorded 
vote.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee on Agriculture's 
oversight findings and recommendations are reflected in the 
body of this report.

           Budget Act Compliance (Sections 308, 402, and 423)

    The provisions of clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives and section 308(a)(1) of the 
Congressional Budget Act of 1974 (relating to estimates of new 
budget authority, new spending authority, new credit authority, 
or increased or decreased revenues or tax expenditures) are not 
considered applicable. The estimate and comparison required to 
be prepared by the Director of the Congressional Budget Office 
under clause 3(c)(3) of rule XIII of the Rules of the House of 
Representatives and sections 402 and 423 of the Congressional 
Budget Act of 1974 submitted to the Committee prior to the 
filing of this report are as follows:

                                     U.S. Congress,
                               Congressional Budget Office,
                                Washington, DC, September 22, 2008.
Hon. Collin C. Peterson,
Chairman, Committee on Agriculture,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 6849, a bill to 
amend the commodity provisions of the Food, Conservation, and 
Energy Act of 2008 to permit producers to aggregate base acres 
and reconstitute farms to avoid the prohibition on receiving 
direct payments, counter-cyclical payments, or average crop 
revenue election payments when the sum of the base acres of a 
farm is 10 acres or less, and for other purposes.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Jim Langley.
            Sincerely,
                                         Robert A. Sunshine
                                   (For Peter R. Orszag, Director).
    Enclosure.

H.R. 6849--A bill to amend the commodity provisions of the Food, 
        Conservation, and Energy Act of 2008 to permit producers to 
        aggregate base acres and reconstitute farms to avoid the 
        prohibition on receiving direct payments, counter-cyclical 
        payments, or average crop revenue election payments when the 
        sum of the base acres of a farm is 10 acres or less, and for 
        other purposes

    Summary: H.R. 6849 would suspend a prohibition on the U.S. 
Department of Agriculture's (USDA's) authority to make payments 
to certain farmers and ranchers for 2008 and 2009 crops. It 
also would reduce funds appropriated to USDA, under the Food, 
Energy, and Conservation Act of 2008 (the 2008 Farm Act), for 
information technology equipment for the federal crop insurance 
program.
    CBO estimates that suspending the prohibition on payments 
would increase direct spending for agricultural income 
protection programs by $20 million over the 2009-2018 period. 
We also estimate that reducing funds for information technology 
would reduce spending by $20 million over the same period. 
Thus, CBO estimates that enacting H.R. 6849 would have no 
significant impact on direct spending over the 2009-2018 
period. Enacting the bill would not affect revenues or 
discretionary spending.
    H.R. 6849 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would impose no costs on state, local, or tribal governments.
    Estimated Cost to the Federal Government: For this 
estimate, CBO assumes that H.R. 6849 will be enacted near the 
start of 2009. The bill's estimated budgetary impact is shown 
in the following table. The costs of this legislation fall 
within budget function 350 (agriculture).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       By fiscal year, in millions of dollars--
                                                             -------------------------------------------------------------------------------------------
                                                               2009   2010   2011   2012   2013   2014   2015   2016   2017   2018  2009-2013  2009-2018
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPENDING

Suspend Prohibition on Payments to Farms of 10 Acres or
 Less:
    Estimated Budget Authority..............................     11      9      0      0      0      0      0      0      0      0        20         20
    Estimated Outlays.......................................     11      9      0      0      0      0      0      0      0      0        20         20
Reduce Information Technology Funding:
    Estimated Budget Authority..............................     -6     -7     -7      0      0      0      0      0      0      0       -20        -20
    Estimated Outlays.......................................     -2     -6     -7     -5      0      0      0      0      0      0       -20        -20
    Total:
        Estimated Budget Authority..........................      5      2     -7      0      0      0      0      0      0      0         0          0
        Estimated Outlays...................................      9      3     -7     -5      0      0      0      0      0      0         0          0
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Basis of estimate: CBO estimates that suspending a 
prohibition on certain agricultural income support payments 
would increase direct spending. We also estimate that reducing 
funds available to USDA for information technology would reduce 
direct spending. Taken as a whole, CBO estimates that those 
effects would fully offset each other, resulting in no 
significant net change in direct spending over the next 10 
years.

Increased payments to certain farmers and ranchers

    The Food, Energy, and Conservation Act of 2008 prohibits 
direct, counter-cyclical, or average crop revenue election 
payments to producers of 20082012 crops if the sum of base 
acres on the farm is 10 acres or less, unless the farm is owned 
by a socially disadvantaged or limited resource farmer or 
rancher, as determined by the Secretary of Agriculture. (The 
Farm Act defines ``socially disadvantaged or limited resource'' 
farmers or ranchers as those who have suffered certain kinds of 
discrimination.) Each farm's base acres are an average of the 
number of acres planted in each crop (feed grains, oilseeds, 
wheat, rice, cotton, and pulse crops) over a specified 
historical period. A farm's base acres do not increase or 
decrease over time.
    According to USDA, about 255,000 farms in 2006 with total 
crop base of 10 acres or less received about $23 million in 
payments. Information from USDA also indicates that about one-
third of those payments were made to farms owned by socially 
disadvantaged or limited resource farmers or ranchers. CBO 
estimates that suspending the prohibition on payments to such 
producers would increase direct spending by a total of $11 
million for the 2008 crops and $9 million for the 2009 crops, 
for a total of $20 million over the 2009-2018 period.

Reduced funding for information technology

    Section 12021 of the 2008 Farm Act provided $15 million for 
each of fiscal years 2008 through 2011 to purchase information 
technology equipment for the federal crop insurance program. 
H.R. 6849 would reduce the amount available to $9 million for 
2009 and $8 million for each of fiscal years 2010 and 2011. 
Based on historical spending patterns for such activities, CBO 
estimates enacting this provision would reduce direct spending 
by $20 million over the 2009-2018 period.
    Intergovernmental and private-sector impact: H.R. 6849 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments.
    Estimate prepared by: Federal Costs: Jim Langley. Impact on 
State, Local, and Tribal Governments: Burke Doherty. Impact on 
the Private Sector: Amy Petz.
    Estimate approved by: Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                    Performance Goals and Objectives

    With respect to the requirement of clause 3(c)(4) of rule 
XIII of the Rules of the House of Representatives, the 
performance goals and objections of this legislation are to 
amend the commodity provisions of the Food, Conservation, and 
Energy Act of 2008 to permit producers to aggregate base acres 
and reconstitute farms to avoid the prohibition on receiving 
direct payments, counter-cyclical payments, or average crop 
revenue election payments when the sum of the base acres of a 
farm is 10 acres or less, and for other purposes.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds the 
Constitutional authority for this legislation in article I, 
clause 8, section 18, that grants Congress the power to make 
all laws necessary and proper for carrying out the powers 
vested by Congress in the Constitution of the United States or 
in any department or officer thereof.

                        Committee Cost Estimate

    Pursuant to clause 3(d)(2) of rule XIII of the Rules of the 
House of Representatives, the Committee report incorporates the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to sections 402 and 423 of the 
Congressional Budget Act of 1974.

                      Advisory Committee Statement

    No advisory committee within the meaning of section 5(b) of 
the Federal Advisory Committee Act was created by this 
legislation.

                Applicability to the Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act (Public Law 
104-1).

                       Federal Mandates Statement

    The Committee adopted as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act (Public Law 104-4).

Earmark Statement Required by Clause 9 of Rule XXI of the Rules of the 
                        House of Representatives

    H.R. 6849 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9(d), 9(e), or 9(f) of rule XXI of the rules of the 
House Representatives.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

     SECTION 1101 OF THE FOOD, CONSERVATION, AND ENERGY ACT OF 2008


SEC. 1101. BASE ACRES.

  (a) * * *

           *       *       *       *       *       *       *

  (d) Treatment of Farms With Limited Base Acres.--
          (1) * * *

           *       *       *       *       *       *       *

          (4) Suspension.--Paragraphs (1), (2), and (3) shall 
        not apply during the 2008 and 2009 crop years.
                              ----------                              


             SECTION 515 OF THE FEDERAL CROP INSURANCE ACT

SEC. 515. PROGRAM COMPLIANCE AND INTEGRITY.

  (a) * * *

           *       *       *       *       *       *       *

  (k) Funding.--
          (1) Information technology.--To carry out subsection 
        (j)(1), the Corporation may use, from amounts made 
        available from the insurance fund established under 
        section 516(c), [not more than $15,000,000 for each of 
        fiscal years 2008 through 2011] not more than 
        $15,000,000 for fiscal year 2008, not more than 
        $9,000,000 for fiscal year 2009, and not more than 
        $8,000,000 for each of fiscal years 2010 and 2011.

           *       *       *       *       *       *       *