Section 7CFR723.216

[Code of Federal Regulations]
[Title 7, Volume 7]
[Revised as of January 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR723.216]

[Page 119-131]

TITLE 7--AGRICULTURE

CHAPTER VII--FARM
SERVICE AGENCY, DEPARTMENT OF AGRICULTURE

PART 723--TOBACCO--Table of Contents

Subpart B--Allotments, Quotas, Yields, Transfers, Release and
Reapportionment, History Acreages, and Forfeitures

Sec. 723.216 Transfer of tobacco acreage allotment or marketing quota by sale, lease, or owner.

(a) General. The allotment or quota established for a farm may be
transferred to another farm to the extent provided for in this section.
For transfers by sale, common ownership units on a farm may be
considered to be separate farms. Transfers are not permitted for cigar
binder (types 54 and 55) tobacco allotments.
(1) Types of transfers. With respect to:
(i) Cigar-filler (type 46) and cigar-filler (types 42, 43, and 44),
tobacco transfers may be by lease only.
(ii) Flue-cured tobacco, transfers may be by:
(A) Sale, or
(B) Lease under certain natural disaster conditions provided in this
section.
(iii) Burley tobacco, transfers may be by:
(A) Lease
(B) Owner, or
(C) Sale.
(iv) Fire-cured, dark air-cured, and Virginia sun-cured tobacco,
transfers may be by:
(A) Lease,
(B) Owner, or
(C) Sale.
(2) Transfer agreement. In order to transfer a marketing quota or
allotment between two eligible farms, including a marketing quota or
allotment that is pooled in accordance with part 718 of this chapter,
the transfer must be recorded on Form FSA-375 and:
(i) Where to file. Filed in the county FSA office which serves the
county in which the transferring farm is located for administrative
purposes.
(ii) Signature-burley tobacco. Signed by, for burley tobacco only:
(A) Leases. The owner and operator of the transferring farm and the
owner or operator of the receiving farm. For leases made under the
disaster provisions of this section, the signature of the owner of the
transferring farm will not be required if the FSA determines that the
farm is cash leased for the current crop year and that the owner does
not share in the crop.
(B) Sales. The owner of the selling farm and an active burley
tobacco producer who is the buyer. If the buyer is neither owner nor
operator of the farm to which the quota will be assigned, the owner or
operator of the farm must give written consent for the quota to be
assigned to the farm.
(C) Owner transfers. The owner of the transferring farm, who also
must be the owner or operator of the receiving farm.
(iii) Signature-flue-cured tobacco. Signed by, for flue-cured
tobacco only:
(A) Leases. The owner of the transferring farm and the owner or
operator of the receiving farm. For leases made under the disaster
provisions of this section, the signature of the owner of the
transferring farm will not be required if the FSA determines that the
farm is cash leased for the current crop year and that the owner does
not share in the crop.
(B) Sales. The owner of the selling farm and an active flue-cured
tobacco producer who is the buyer. If the buyer is neither owner nor
operator of the farm to which allotment and quota will be assigned, the
owner or operator of the farm must be given written consent for the
allotment and quota to be assigned to the farm.
(iv) Signatures--except burley and flue-cured tobacco. Signed by,
for all kinds of tobacco other than burley and flue-cured tobacco, the
owner and operator of the transferring farm and the owner or operator of
the receiving farm.
(v) Witness. Each person whose signature is required by paragraphs
(a)(2)(ii), (iii), or (iv) of this section must sign Form FSA-375 in the
presence of a State or county FSA committee member or employee who shall
sign Form FSA-375 as a witness, except that when both the owner and the
operator of a transferring farm must sign, such witness is required for
the signature of either the owner or operator, but not both. If such
signatures cannot be witnessed in the county FSA office where

[[Page 120]]

the farm is administratively located, they may be witnessed in any State
or county FSA office convenient to the owner or operator's residence.
The requirement that signatures be witnessed for producers that are ill,
infirm, reside in distant areas, or are in similar hardship situations
or may be unduly inconvenienced may be waived provided the county FSA
office mails Form FSA-375 for the required signatures;
(b) Effective date. In order for the transfer to be effective for
the current year, the Form FSA-375 shall be filed:
(1) When to file--burley tobacco. For burley tobacco:
(i) On or before July 1 of the current year, except as provided in
paragraph (b)(1)(ii) of this section. An agreement to transfer quota by
lease may be considered to have been filed on July 1 of the current year
if such transfer agreement is filed not later than the end of the
marketing year that begins during the current year and the county FSA
committee, with the concurrence of the State FSA committee, determines
that on or before July 1 of the current year the lessee and lessor
agreed to such lease and transfer of quota and the failure to file such
transfer agreement did not result from gross negligence on the part of
any party to such lease and transfer.
(ii) After July 1 of the current crop year and before February 16 of
the following calendar year when the transfer is by lease and the
transferring farm has suffered a loss of production of burley tobacco
due to hail, drought, excessive rain, wind, tornado, or other natural
disasters as determined by the Deputy Administrator.
(2) When to file--flue-cured tobacco. For flue-cured tobacco:
(i) On or before June 15 if the transfer is by sale.
(ii) After June 30 and on or before November 15 for a transfer by
lease when the transferring farm has suffered a loss of production of
flue-cured tobacco due to drought, excessive rain, hail, wind, tornado,
or other natural disasters as determined by the Deputy Administrator.
(3) When to file--except burley and flue-cured tobacco. For all
other kinds of tobacco, by the date established by the State FSA
committee, except that a lease shall be effective if the county FSA
committee, with the approval of a State FSA committee representative,
finds that the producer was prevented from timely filing the transfer
agreement due to reasons beyond the control of the producer.
(c) Approval or disapproval. A transfer agreement shall not be
approved before the period for filing an application for review of the
initial notice of allotment or quota has expired. The county FSA
committee or its designee shall approve each transfer agreement that
meets the eligibility requirements of this section. The county FSA
committee shall disapprove any transfer agreement that does not meet the
eligibility requirement of this section. Any approval or disapproval of
a transfer agreement shall to the extent possible be made within 30 days
after the transfer agreement is filed with the county FSA committee
unless additional time is required as the result of conditions beyond
the control of the county FSA committee. However;
(1) Burley tobacco. If an agreement is filed after July 1 which
provides for the sale of quota, a transfer agreement shall not be
approved until the next year's quota is computed for the selling farm.
In addition, if marketing quota referendum will be conducted to
determine whether or not quotas will be in effect for the crop, a
transfer agreement shall not be approved until the Secretary announces
that quotas have been approved by referendum.
(2) Flue-cured tobacco. If an agreement is filed after June 15 which
provides for the sale of an allotment and quota, a transfer agreement
shall not be approved until next year's allotment and quota is computed
for the selling farm. In addition, if a marketing quota referendum will
be conducted to determine whether or not quotas will be in effect for
the crop, a transfer agreement shall not be approved until the Secretary
announces that quotas have been approved by referendum.
(d) Time of determination. An approved transfer agreement shall
become effective for the then current crop year, except that if an
agreement that is filed after June 15 for the sale of flue-cured tobacco
quota or after July 1 for the

[[Page 121]]

sale of burley tobacco quota, such approved agreement shall become
effective for the next crop year.
(e) Burley tobacco. For burley tobacco only:
(1) Basis for transfer by sale. If the transfer of a quota is by
sale, the transfer shall be based on part or all of the farm poundage
quota.
(2) Basis for transfer by lease or owner. If the transfer of a quota
is by lease or by the owner, transfer shall be based on a part of or all
of the effective farm poundage quota.
(3) Accumulation of quota. A transfer by lease or by owner shall not
be approved if the county FSA committee determines that the primary
purpose of the transfer is to accumulate the quota on the farm (i.e.,
alternately transferring to and from the farm for 2 or more years to
maintain the quota without satisfactory evidence of plans for producing
the quota on the receiving farm).
(4) Subleasing. In order to determine whether there is any
subleasing of a burley farm marketing quota, the current year is divided
into two periods, the period up to and including July 1, and the period
after July 1. The county FSA committee shall not approve a transfer
during either period if the effect would be both a transfer to and from
the farm during the same period. However, a transfer may be approved
within any crop year if quota is transferred from a farm for one or more
years and the farm subsequently is combined with another farm that
otherwise is eligible to receive quota by lease or by the owner.
(5) Transferring farm restrictions. An agreement to transfer quota
from a farm by lease or by the owner shall not be approved:
(i) Limitation. If the pounds of quota being transferred exceed the
difference obtained by subtracting from the effective farm marketing
quota the total pounds of quota purchased and/or reallocated from
forfeited quota in the current and two preceding years, as adjusted to
reflect changes in national quota factors which have occurred since each
respective purchase and/or reallocation of quota. However, this
provision shall not be applicable to transfer agreements that are filed
after July 1.
(ii) New farm. If the farm is a new farm.
(iii) Reduction pending. If consideration of a marketing quota
violation is pending which may result in a quota reduction for the farm
for the current year. However, if the county FSA committee determines
that a decision will not be made on the pending case on or before the
date specified in Sec. 723.212 of this part, a 1-year transfer will be
approved if otherwise eligible.
(iv) Filed on or before July 1. Unless the receiving farm is
administratively located in the same county as the transferring farm.
However, burley tobacco producers in the States of Tennessee, Ohio and
Indiana shall, irrespective of the preceding sentence, be permitted to
lease and transfer burley tobacco quota from one farm in a State to any
other farm in the State if other conditions for the transfer are met.
(v) Filed after July 1. If the transfer agreement is filed after
July 1, unless the county FSA committee in the county in which the farm
is located for administrative purposes determines that the:
(A) Farm's expected production of burley tobacco is less than 80
percent of the farm's effective marketing quota as a result of a flood,
hail, wind, drought, excessive rain, tornado, or other natural disaster.
(B) Acreage planted to burley tobacco on the farm was sufficient to
produce, under average conditions, an amount of tobacco which, when
added to any carryover tobacco from the previous marketing year, would
equal the farm's effective farm marketing quota.
(C) Lessor made reasonable and customary efforts to produce the
effective farm marketing quota;
(D) Producers on the farm qualify for price support in accordance
with the provisions of part 1464 of this title; and
(E) Receiving farm is administratively located in the same State as
the transferring farm.
(vi) Consent of lien holder. For a multiple year transfer, if the
farm is subject to lien, unless the lien holder agrees in writing to the
transfer; and
(vii) Claim for marketing quota penalty. If a claim has been filed
against the

[[Page 122]]

lessor for a tobacco marketing quota penalty and the claim remains
unpaid; However, this provision shall not apply if the claim is paid or
the entire proceeds of the lease of the quota are applied against the
claim and the county FSA committee determines that the amount paid for
the lease represents a reasonable price for the pounds of quota being
leased.
(viii) Forfeiture pending. To the extent that forfeiture of such
quota is expected to become final before July 1.
(ix) Divided farms with less than 1,000 pounds of quota. If the farm
has been divided by reconstitution and the divided farm has a farm
marketing quota of less than 1,000 pounds subject to being reduced to
zero pursuant to section 723.208(b).
(6) Receiving farm restrictions. An agreement to transfer quota to a
farm by lease or by owner shall not be approved:
(i) Filed on or before July 1. If the transfer agreement is filed on
or before July 1:
(A) Unless the receiving farm is administratively located in the
same county as the transferring farm and the provisions of paragraph
(e)(5)(iv) of this section are not applicable.
(B) If the pounds of quota being transferred to the farm exceed the
smaller of 30,000 pounds or the difference between the farm marketing
quota and one-half the result obtained by multiplying the acres of
cropland on the farm by the farm yield.
(ii) Filed after July 1. If the transfer agreement is filed after
July 1, unless the:
(A) Producers on the farm qualify for price support in accordance
with the provisions of part 1464 of this title; and
(B) Pounds of quota to be transferred to the lessee farm do not
exceed the difference obtained by subtracting the effective farm
marketing quota (before the filing of the transfer agreement) for the
lessee farm from the total pounds of tobacco marketed and/or available
for marketing (based on estimated pounds of tobacco on hand and/or in
the process of being produced) from the farm in the current year.
However, the total quantity of tobacco that can be leased or transferred
to a farm during a crop year may not exceed that quantity which equals
15 percent of the effective quota on the farm prior to any leases or
transfers filed after July 1 of the crop year.
(C) Transferring farm is administratively located in the same State
as the receiving farm.
(7) Selling farm restrictions. A transfer of quota from a farm by
sale shall not be approved:
(i) Previously purchased and/or reallocated quota. If the farm
marketing quota was bought and/or reallocated from quota previously
forfeited as provided in Sec. 723.219(i)(1), and the purchase and/or
reallocation became effective within the current or any of the three
preceding years; if the purchased and/or reallocated quota was obtained
from quota purchased and/or reallocated as provided in paragraph (b) of
this section within the four preceding years. However, this provision
shall not be applicable if:
(A) The quota was purchased and/or reallocated to the farm during
four preceding years; and
(B) The county FSA committee, with the concurrence of a
representative of the State FSA committee, determines that the failure
to permit the sale of quota, to the extent otherwise permitted by this
section, would cause an undue hardship on the seller and the:
(1) Sale is in connection with the settlement of an estate which
includes the farm for which the quota was established;
(2) Owner of the quota is experiencing financial distress to the
extent that current year financing is unlikely;
(3) Owner of the quota is disabled due to health reasons to the
extent that such person can no longer continue to share in the risk of
production of the purchased and/or reallocated quota; or
(4) Owner of the quota is sharing in the risk of production as an
investing producer and loses resources necessary to produce the crop due
to reasons beyond such owner's control such as the loss of a tenant or
sharecropper and a replacement cannot be obtained.
(ii) Location of farms. Unless both the selling farm and the buying
farm are administratively located in the same county.

[[Page 123]]

(iii) Pounds for sale. The pounds transferred by sale shall be based
on part of all of the farm poundage quota.
(iv) Reduction pending. If consideration of an indicated marketing
quota violation is pending which may result in quota reduction for the
farm for the current year. However, if the county FSA committee
determines that a decision will not be made on the pending case on or
before the date specified in Sec. 723.212 of this part, a transfer will
be approved if otherwise eligible.
(v) Forfeiture pending. If the agreement for transfer by sale is
filed subsequent to the final date which is permitted for the sale of
the quota in order to prevent forfeiture.
(vi) Claim for marketing quota penalty. If a claim has been filed
against the seller for a tobacco marketing quota penalty and the claim
remains unpaid: However, this provision shall not be applicable if the
claim for such penalty is paid or the entire proceeds of the sale of the
quota are applied against the claim and the county FSA committee
determines that the amount paid represents a reasonable selling price
for the pounds of quota being sold.
(vii) Consent of lien holder. Requires consent of the lien holder,
if the farm is subject to a lien, unless the lien holder agrees in
writing to the transfer. However, consent of a lien holder is not
required for a transfer of the pounds of quota from a farm for which
forfeiture is required in accordance with the provisions of
Sec. 723.219.
(viii) Quota is subject to an approved Conservation Reserve Program
Contract. If the quota has been reduced because of an approved
Conservation Reserve Program contract according to part 704 of this
chapter unless forfeiture is otherwise required.
(8) Restrictions on buying farm. A transfer of quota to a farm by
purchase shall not be approved:
(i) Active producers. Unless the buyer is an active burley tobacco
producer.
(ii) Cropland limitation. If the sum of the pounds of quota being
transferred exceeds the difference between the farm marketing quota and
one-half the result obtained by multiplying the acres of cropland on the
farm by the farm yield.
(iii) Quota previously sold. If quota was sold from the farm in the
current or either of the two preceding years.
(iv) Unless both the buying farm and the selling farm are
administratively located in the same county.
(v) Quota limitation. If the sum of the pounds of quota being
transferred in the current year exceeds the larger of: (A) 30 percent of
the receiving farm's existing quota, or (B) 20,000 pounds.
(9) Period of transfer. A transfer by lease or by owner may be for a
period of one to five years: However, an agreement to transfer quota by
lease shall be limited to the current crop year if the transfer is filed
after July 1 in accordance with the natural disaster provisions of this
section.
(10) Redetermination of quota after transfer by lease or by the
owner. After a transfer by lease or by the owner, the effective farm
marketing quota shall be redetermined for both the transferring farm and
the receiving farm.
(11) Apportionment of data-selling farm. The pounds of farm
marketing quota retained on the selling farm after the sale of quota
shall be divided by the farm marketing quota established for the selling
farm before the sale to determine a factor for apportioning farm data.
The data to be retained on the selling farm shall be determined by
multiplying the factor by the following data:
(i) The amount of any overmarketings which have not been subtracted
when a determination is made of the effective farm marketing quota of
the selling farm;
(ii) The pounds of quota which have been transferred from the
selling farm by lease or by the owner in the current year;
(iii) The pounds of quota which have been reduced in the current
year as the result of a marketing quota violation in a prior year;
(iv) The pounds of quota transferred to the farm by lease or by
owner in the previous year;
(v) The previous year's farm marketing quota; and
(vi) The previous year's effective farm marketing quota.
(12) Apportionment of data-buying farm. The buying farm's share of
each respective item of farm data shall be

[[Page 124]]

determined by subtracting the pounds which are retained on the selling
farm for the respective item from the pounds which were established for
the selling farm for the respective item before the current sale of
quota. However, the pounds of quota transferred from the selling farm by
lease or by the owner and/or the pounds of quota reduction resulting
from a marketing quota violation on the selling farm may be apportioned
between the farms in accordance with a written agreement between the
buyer and the seller if the farm marketing quota retained on the selling
farm is sufficient to satisfy the pounds of quota which were transferred
by lease or by the owner, the pounds of quota which have been reduced as
the result of a marketing quota violation, and the overmarketings for
the farm, if any. The data determined in accordance with this paragraph
shall he added to any previous data for the buying farm.
(13) Redetermination quota after sale or purchase of quota. After
adjusting the data in accordance with the provisions of this section,
the effective farm marketing quota shall be determined for both the
buying and selling farm.
(14) Farm division after transfer by lease. If a farm is divided
after there has been a transfer of a marketing quota to the farm by
lease, the transferred quota shall be divided in the manner which is
designated in writing by the lessee. In the absence of a written
designation, the leased quota shall be apportioned in the same manner as
the farm marketing quota of the parent farm.
(15) Multiple year transfer by lease or by owner. The effective farm
marketing quota on a receiving farm having a multiple-year transfer
agreement in effect shall be adjusted for each year for which such
transfer agreement is in effect to reflect any decrease in the national
quota factor which causes the farm marketing quota established for the
transferring farm to be less than the pounds of quota which have been
transferred to the receiving farm.
(16) Considered planted credit. Considered planted credit shall be
given to the transferring farm when tobacco quota is transferred from
the farm by lease or by owner.
(f) Flue-cured tobacco. For flue-cured tobacco only:
(1) Location of buying and selling farms. Marketing quota for flue
cured tobacco transferred by sale must be to a farm administratively
located within the same county, except that if 25 percent of the active
flue-cured tobacco producers within a State petition the Secretary and
the Secretary determines that a majority of the active flue-cured
tobacco producers voting in the referendum approve, the sale of a flue-
cured tobacco allotment or quota from a farm in the State to any other
farm in the State shall be permitted if all other conditions for such
transfers are met. Further, the Secretary may permit flue-cured farms
with the same owner that are located in contiguous counties to be
combined for administrative purposes as one farm, notwithstanding
provisions in part 718 of this chapter that might not otherwise permit
that kind of combination.
(2) Maximum quota to be transferred by sale. If the transfer is by
sale, the transfer shall be based on part or all of the farm poundage
quota. the maximum quota that may be transferred by sale is the farm
poundage quota.
(3) Transfer by lease-involvement of outside parties. If the
transfer is by lease, only the lessor and lessee (or any attorney,
trustee, bank, or other agent who regularly represents either the lessor
or lessee in business transactions unrelated to the production or
marketing of tobacco) may be parties to, or involved in the arrangements
for such transfer. The transfer shall be based on a portion or all of
the effective farm poundage quota. The maximum quota that may be
transferred by lease is the effective farm poundage quota.
(4) Lessor farm restrictions. A transfer of quota from a farm by
lease shall not be approved:
(i) New farm. If the farm is a new farm.
(ii) Natural disaster. Unless the county FSA committee in the county
in which the farm is located for administrative purposes determines that
the:
(A)(1) The farm has planted an acreage equal to or more than 90
percent of the effective farm acreage allotment, or

[[Page 125]]

(2) In accordance with guidelines issued by the Deputy
Administrator, the planted acreage of flue-cured tobacco on the farm is
sufficient to produce, under average conditions, an amount of tobacco
which, when added to any carryover tobacco from the previous marketing
year, would equal the farm's effective farm marketing quota;
(B) Lessor made reasonable and customary efforts to produce the
effective farm marketing quota;
(C) Producers on the farm qualify for price support in accordance
with the provisions of part 1464 of this title; and
(D) Farm's expected production of flue-cured tobacco is less than 80
percent of the farm's effective marketing quota as a result of a
drought, excessive rain, hail, wind, tornado, or other natural disaster
as determined by the Deputy Administrator.
(iii) Claim for tobacco marketing quota penalty. If a claim has been
filed against the lessor for tobacco marketing quota penalty and the
claim remains unpaid unless the claim is paid or the entire proceeds of
the lease of the allotment and quota are applied against the claim and
the county FSA committee determines that the amount of the lease
represents a reasonable price for the pounds of quota being leased.
(iv) Located in the same State. Unless the lessor farm is
administratively located in the same State as the lessee farm.
(5) Lessee farm restrictions. A transfer of quota to a farm by lease
shall not be approved:
(i) Price support eligibility. Unless the producers on the farm
qualify for price support under the provisions of part 1464 of this
title; and
(ii) Limitation. If the pounds of quota to be transferred to the
lessee farm exceed the difference obtained by subtracting the effective
farm marketing quota (before the filing of the transfer agreement) for
the lessee farm from the total pounds of tobacco marketed and/or
available for marketing (based on estimated pounds of tobacco on hand
and/or in the process of being produced) from the farm in the current
year.
(iii) Located in same State. Unless the lessee farm is
administratively located in the same State as the lessor farm.
(6) Selling farm restrictions. A transfer of quota from a farm by
sale shall not be approved:
(i) Previously purchased and/or reallocated quota. If a farm
marketing quota includes quota that was purchased and/or reallocated
from the quota which has been forfeited and the purchase and/or
reallocation became effective in the current or any of the three
preceding years. However, this provision shall not be applicable if:
(A)(1) The quota being sold was purchased in such period, if
forfeiture of such quota is required by Sec. 723.220 of this part, and
the amount of quota being transferred does not exceed the amount of
quota for which forfeiture otherwise is required in accordance with the
provisions of Sec. 723.220 of this part; or
(2) The county FSA committee, with the concurrence of a
representative of the State FSA committee, determines that the failure
to approve the sale would cause an undue hardship on the seller and:
(B) The sale is in connection with the settlement of an estate which
includes the farm for which the quota was established;
(C) The owner of the quota is experiencing financial distress to the
extent that current year financing is unlikely;
(D) The owner of the quota is disabled due to health reasons to the
extent that such person can no longer continue to share in the risk of
production of the purchased and/or reallocated quota; or
(E) The owner of the quota is sharing in the risk of production as
an investing producer and loses resources necessary to produce the crop
due to reasons beyond such owner's control such as the loss of a tenant
or share cropper and a replacement cannot be obtained.
(ii) Reduction pending. If consideration of an indicated violation
is pending which may result in an allotment and quota reduction for the
farm for the current year. However, if the county FSA committee
determines that a decision will not be made on the pending case on or
before April 1, a transfer may be approved.

[[Page 126]]

(iii) Forfeiture pending. If the agreement for transfer by sale is
filed subsequent to the final date which is permitted for the sale of
the allotment and quota in order to prevent forfeiture.
(iv) Consent of lien holder. If the farm is subject to a lien unless
the lien holder agrees in writing to the transfer: However, consent of a
lien holder is not required for a transfer of the pounds of quota for
which forfeiture is required in accordance with the provisions of
Sec. 723.220 of this part.
(v) Claim for marketing quota penalty. If a claim has been filed
against the seller for a tobacco marketing quota penalty and the claim
remains unpaid: However, this provision shall not be applicable if the
claim for such penalty is paid or the entire proceeds of the sale of the
allotment and quota are applied against the claim and the county FSA
committee determines that the amount paid represents a reasonable
selling price for the pounds of quota being sold.
(vi) Allotment and quota subject to an approved Conservation Reserve
Program contract. If the allotment and quota is subject to an approved
Conservation Reserve Program contract, unless forfeiture otherwise would
be required in accordance with the provisions of Sec. 723.220 of this
part.
(7) Buying farm restrictions. A transfer of quota to a farm by
purchase shall not be approved:
(i) Active producer. Unless the buyer is an active flue-cured
tobacco producer.
(ii) [Reserved]
(iii) Quota previously sold. If the farm owner sold quota from a
farm during the current or any of two preceding years.
(iv) Installment payment option. Unless the buyer of the flue-cured
tobacco acreage allotment and marketing quota has been afforded an
option to pay for such allotment and quota in two to five equal annual
installments payable each fall beginning with the fall of the crop year
in which the transfer becomes effective and such buyer certifies on a
form prescribed by the Deputy Administrator that such option has been
made available to the buyer.
(8) Allotment and quota after transfer by lease. The effective farm
acreage allotment and the effective farm marketing quota shall be
determined for both the lessee farm and the lessor farm in accordance
with the provisions of Secs. 723.205 and 723.206 of this part,
respectively.
(9) Apportionment of data after transfer of quota by sale-selling
farm. The pounds of farm marketing quota retained on the selling farm
after the sale of quota shall be divided by the farm marketing quota
established for the selling farm before the sale to determine a factor
for apportioning farm data for the current year and for the base period.
The data to be retained on the selling farm shall be determined by
multiplying the factor by the following data:
(i) The planted and considered planted acres for the base period;
(ii) The history acres for the base period;
(iii) The farm acreage allotment for the current year and for the
base period;
(iv) The amount of any overmarketings which have not been subtracted
when a determination is made of the effective farm marketing quota of
the selling farm;
(v) The pounds of quota which have been transferred from the selling
farm by lease in the current year;
(vi) The acres of allotment which have been reduced in the current
year as the result of a marketing quota violation in a prior year;
(vii) The pounds of quota transferred to the farm by lease in the
previous year;
(viii) The previous year's farm marketing quota;
(ix) The previous year's effective farm marketing quota; and
(x) The previous year's marketings.
(10) Apportionment of data-buying farm. The pounds of farm marketing
quota which have been purchased shall be divided by the farm yield for
the buying farm in order to determine the farm acreage allotment for the
buying farm. The buying farm's share of other farm data shall be
determined by subtracting the acres or pounds, as applicable, which are
retained on the selling farm from the acres or pounds which were
established for the selling farm

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before the current sale of quota: However, the acres computed for the
acres of reduction resulting from a marketing quota violation for the
buying farm shall be multiplied by a factor determined by dividing the
farm yield of the selling farm by the farm yield of the buying farm in
order to determine the acres of reduction from the buying farm for the
current year. The pounds of quota transferred from the selling farm by
lease and/or the acres of allotment reduction resulting from a marketing
quota violation on the selling farm may be apportioned between the farms
in accordance with a written agreement between the buyer and the seller
if the farm marketing quota retained on the selling farm is sufficient
to satisfy the pounds of quota which are leased, the pounds of quota
which have been reduced as the result of a marketing quota violation,
and the overmarketings for the farm, if any. The data determined in
accordance with this paragraph shall be added to any previous data for
the buying farm.
(11) Allotment and quota. After adjusting the data in accordance
with the provisions of this section, the farm acreage allotment, the
effective farm acreage allotment, and the effective farm marketing quota
shall be determined for both the buying and the selling farm.
(12) Effect of price support eligibility. If a lease agreement is
filed after the farm operator reports the acreage of tobacco on the farm
in the current year, the effective farm acreage allotment which has been
determined prior to the approval of the transfer will be used in
determining price support eligibility for the farm.
(13) Violation of lease provisions. (i) If, after a lease agreement
is approved, information is brought to the attention of the county FSA
committee which indicates that either the lessor or the lessee, or both,
knowingly filed a false certification with respect to a transfer of
quota by lease, the county FSA committee shall schedule a hearing,
notify such person of the time and place of the hearing, and present
evidence at the hearing with respect to the allegation of false
certification. If, as a result of the evidence presented, the county FSA
committee determines that such person knowingly made a false
certification, the county FSA committee shall notify the person of the
determination and afford such person 15 days after the mailing of the
notice to request a review of the determination by a review committee as
provided for by part 711 of this chapter.
(ii) If it is determined that the lessor knowingly made a false
certification, the next flue-cured tobacco acreage allotment and
marketing quota established for the lessor's farm shall be reduced by
that percentage which the leased quota was of the total flue-cured
tobacco farm marketing quota established for the farm in the year of the
lease.
(iii) If it is determined that the lessee knowingly made a false
certification, the lease agreement for purposes of the flue-cured
tobacco marketing quota program with respect to the lessee's farm shall
be considered to be null and void as of the date approved by the county
FSA committee.
(14) Considered planted credit. Considered planted credit shall be
given to the lessor farm for the tobacco acreage allotment which is
deducted as the result of the transfer of quota from the farm by lease.
(15) Sale of quota with installment payment option. Notwithstanding
any other provision of this section the owner of a farm who sells any
flue-cured tobacco acreage allotment and marketing quota may:
(i) Negotiate with more than one prospective buyer before selling
such allotment and quota; or
(ii) Sell such allotment and quota to any eligible buyer whom such
owner may select; or
(iii) Sell such allotment and quota for a single payment; or
(iv) Include provisions in the agreement of sale to protect the
seller's interest if the buyer fails to make full payment. Such
provisions may not include the use of such allotment and quota as
collateral for purposes of protecting the seller's interest in the
allotment and quota.
(v) Flue-cured tobacco acreage allotment and marketing quota
purchased in accordance with this subparagraph shall not revert to the
seller's farm but shall remain with the farm to which

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assigned at the time of purchase even though the buyer fails to make
full payment to the seller for such allotment and quota.
(g) Burley and flue-cured tobacco. For burley or flue-cured tobacco:
(1) Carryover tobacco. If tobacco is marketed after the entire farm
marketing quota of the producing farm has been transferred by sale, the
tobacco shall be considered as having been marketed on each farm to
which farm marketing quota was transferred by sale in accordance with a
transfer agreement filed after June 15 for flue-cured tobacco, or July 1
for burley tobacco, of the last year in which a farm marketing quota was
established for the producing farm. Such marketing shall be prorated to
each farm in proportion to the pounds of farm poundage quota purchased
by each farm. If there was more than one farm to which a farm marketing
quota was transferred by sale, the marketing may be assigned to the
farms in the manner agreed to in writing by each of the buyers of such
farm marketing quota.
(2) Cancellation of transfer. A transfer of flue-cured allotment and
quota, or burley quota, under this section which was approved in error
or on the basis of incorrect information furnished by the parties to the
agreement shall be canceled by the county FSA committee. For the purpose
of determining any overmarketings and undermarketings from the farms,
and for the purpose of determining eligibility for price support and
marketing quota penalties, the cancellation shall be effective as of the
date of approval. However, such cancellation shall not be effective for
the current marketing year for price support and marketing quota penalty
purposes if the:
(i) Transfer approval was made in error or on the basis of incorrect
information which had been unknowingly furnished by the parties to the
agreement; and
(ii) Parties to the transfer agreement were not notified of the
cancellation before the marketing for the receiving farm exceeded the
correct effective farm marketing quota.
(3) Canceled because of fraud. If a transfer of a flue-cured
allotment and quota, or burley quota, is canceled because of fraud on
the part of the owner of the transferring farm but no fraud is
attributable to either the owner or operator of the receiving farm, such
cancellation shall be effective as of the date of approval of the
transfer except for purposes of determining eligibility for price
support and marketing quota penalties for the receiving farm. In such
case, the overmarketings shall be charged against the farm from which
the transfer was made if the farm, after any reconstitution which may be
necessary as a result of fraud, is assigned a flue-cured allotment and
quota, or burley quota, against which the overmarketings could be
charged. Otherwise, the overmarketings shall be charged against any
other farm involved in the fraud having a flue-cured allotment and
quota, or burley quota, after any reconstitution required by such fraud.
Notwithstanding the foregoing, any overmarketings on the receiving farm
which are in excess of the amount of quota involved in the canceled
transfer shall be charged against the receiving farm.
(4) Dissolution or revision of a transfer agreement. A transfer
agreement may be dissolved or minor revisions made with respect to such
agreement if a written request by all parties to the agreement is made
to the county FSA committee by November 15 of the current marketing year
for flue-cured tobacco, or by February 15 of the current marketing year
for burley tobacco. After any such dissolution or revision of a transfer
agreement, an official notice of the flue-cured acreage allotment and
marketing quota, or burley quota, shall be issued by the county FSA
committee to each of the operators involved in the transfer agreement.
(h) Cigar tobacco. For cigar-filler (type 46) and cigar-filler
(types 42, 43, and 44) tobacco only, the provisions of paragraph (j) of
this section are applicable in addition to the following:
(1) Farm eligible. The owner and operator (acting together if
different person) of any farm for which an old farm tobacco acreage
allotment is established for the current year may lease and transfer all
or any part of the farm acreage allotment established for such farm to
any other owner or operator of

[[Page 129]]

a farm in the same county with a current year's allotment (old or new
farm) for the same kind of tobacco for use on such farm. Transfer of
allotments by lease shall not exceed 5 years.
(2) Transfer approved acre per acre. The lease and transfer shall be
approved acre per acre.
(3) Considered planted credit. The amount of allotment acreage which
is leased from a farm shall be considered for the purpose of determining
future allotments (and tobacco history acreage) to have been planted to
tobacco on such farm. The amount of allotment acreage which is leased
and transferred to a farm shall not be taken into account in
establishing allotments for subsequent years for such farms.
(4) Limitation on acreage transferred. The total acreage allotted to
any farm after the transfer by lease of tobacco acreage allotment to the
farm shall not exceed 50 percent of the acreage of cropland in the farm,
except that in the case of cigar-filler (types 42, 43, 44, and 46)
transfers, such transfers shall be limited to a total of 10 acres.
(5) Transfer from the pool. Allotments in a pool pursuant to part
718 of this chapter may be eligible for lease and transfer during the 3-
year life of the pooled allotment. An agreement to lease and transfer
shall not serve to extend the life of such pooled allotment.
(i) Fire-cured, Dark air-cured, and Virginia sun-cured tobacco. For
Fire-cured, Dark air-cured, and Virginia sun-cured tobacco, only, the
provisions of this section are applicable in addition to the following:
(1) Persons eligible to file a record of transfer (FSA-375)--sale or
lease. The owner and operator of any old farm for which a Fire-cured,
Dark air-cured, or Virginia sun-cured tobacco allotment is established
for the current year may sell or lease all or any part of such allotment
to any other owner or operator of a farm in the same county, and in the
same State for Virginia fire-cured (type 21) or Virginia sun-cured (type
37) tobaccos. The receiving farm need not be an old farm. In the case of
a permanent transfer, a statement signed by all parties to the
transaction confirming that the sale has been made shall be filed with
the county FSA committee.
(2) By owner. The owner of any old tobacco farm for which a Fire-
cured, Dark air-cured, or Virginia sun-cured tobacco allotment is
established for the current year may transfer any or all of such
allotment permanently, or for a term of years designated by the owner,
to another farm in the same county (within the same State for Virginia
fire-cured and Virginia sun-cured tobacco) owned or controlled by such
owner.
(3) Maximum period of transfer by lease. Transfer of allotments by
lease shall not exceed 5 years.
(4) Basis for transfer. The transfer shall be approved acre for
acre.
(5) Adjustments in farm history acreage. The farm history acreage
for the immediately preceding 5 years on farms from which and to which
permanent transfer of allotment is made shall be adjusted by the county
FSA committee for each of the base years to correspond with the amount
of allotment transferred between the farms. In the case of temporary
transfers of allotment for 1 or more years by lease or by owner, the
farm history acreage shall not be reduced on the farm from which the
transfer is made and farm history acreage shall not be transferred to
the receiving farm.
(6) Limitation on acreage transferred. The total of the Fire-cured,
Dark air-cured, or Virginia sun-cured tobacco allotment which may be
transferred for each kind of tobacco, by sale, lease, or by owner, to a
farm shall not exceed 50 percent of the acreage of cropland on the farm.
The cropland in the farm for the current year for purposes of such
transfers shall be the total cropland as defined in Part 718 of this
chapter.
(7) Prohibition on permanent transfer. A permanent transfer by sale
or by owner shall not be approved from any farm to which an allotment
was permanently transferred by sale or by owner within the 3 immediately
preceding crop years.
(8) Temporary transfer to non-owned farm. A transfer requested on a
temporary basis to a farm controlled but not owned by the applicant
shall be approved only if the applicant will be the operator of the farm
to which the transfer is to be made for each year of

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the period for which the transfer is requested. When the applicant for
whom such transfer has been approved no longer is the operator of the
receiving farm due to conditions beyond such operator's control, the
transfer shall remain in effect unless the transfer is terminated under
the provisions of paragraph (j) of this section. Conditions beyond the
operator's control shall include, but not be limited to, death, illness,
incompetence, or bankruptcy of such person.
(9) Transfer of pooled allotment. Allotments established for a farm
as pooled allotment under part 718 of this chapter may be transferred on
a:
(i) Permanent basis during the 3-year life of a pooled allotment, or
(ii) Temporary basis for a term of years not to exceed the remaining
number of crop years of such 3-year period. A temporary agreement to
transfer shall not serve to extend the life of such pooled allotment.
(10) New farm eligibility. Any farm from which the entire farm
allotment is sold or permanently transferred by the owner shall not be
eligible for a new farm tobacco allotment for the kind transferred
during the 5 years following the year in which such transfer is made.
(11) Transfer of history acreage. Permanent transfer of allotment
shall have the effect of transferring history acreage, farm base, and
marketing quota attributable to such allotment. In the case of a
transfer by lease, the transferred allotment shall be considered for
purposes of establishing future allotments to have been planted on the
farm from which such allotment was transferred.
(j) Tobacco except burley, flue-cured, and cigar (types 54 and 55).
For tobacco that may be transferred in accordance with the provisions of
paragraph (h) or (i) of this section, the following provisions shall
also apply:
(1) New farm allotment. A new farm allotment shall not be
transferred.
(2) Tobacco allotment subject to an approved Conservation Reserve
Program contract. A transfer of allotment designated for reduction under
a Conservation Reserve Program contract shall not be approved.
(3) Subleasing prohibited. A transfer of allotment from a farm shall
not be approved during the period for which a current temporary transfer
agreement is in effect that transferred quota to the same farm.
(4) Limitation on transfer to and from a farm in the same year. If a
transfer agreement is in effect for the current crop year for a farm, a
transfer of allotment shall not be approved during the same crop year:
(i) From such farm receiving allotment by transfer for such year, or
(ii) To such farm which had allotment transferred from it for such
year.
(5) Farm in violation. If consideration of a violation is pending
which may result in an allotment reduction for a farm for the current
year, the county FSA committee shall delay approval of any transfer of
allotment from or to the farm until the violation is cleared or the
allotment reduction is made. However, if the allotment reduction in such
case cannot be made effective for the current crop year before the final
date for reducing allotments for violations, the transfer may be
approved by the county FSA committee. In any case, if, after a transfer
of a tobacco acreage allotment has been approved by the county FSA
committee, it is determined that the allotment for the farm from which
or to which such acreage is transferred is to be reduced for a
violation, the allotment reduction for such farm shall be delayed until
the following year.
(6) Claim for tobacco marketing quota penalty. A transfer of acreage
allotment from a farm shall not be approved if a claim has been filed
against the lessor, seller, or transferring owner for a tobacco
marketing quota penalty and the claim remains unpaid. However, this
provision shall not apply if the claim is paid or the entire proceeds of
the lease or sale of the allotment are applied against the claim and the
county FSA committee determines that the amount paid for the lease or
sale represents a reasonable price for the acres of allotment being
transferred.
(7) Approval after review period. A transfer of allotment shall not
be approved by the county FSA committee for any farm before the time of
filing an application for review, as shown on

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the original allotment notice for the farm, has expired. If an
application for review is filed for a farm involved in a transfer
agreement, such agreement shall not be approved by the county FSA
committee until the allotment for such farm is finally determined
pursuant to part 711 of this chapter.
(8) Acreage allotment after lease and transfer. The acreage
allotment determined after a temporary transfer for a farm under the
provisions of this section shall be the allotment of such farm for the
current year only for the purpose of determining:
(i) Excess acreage,
(ii) The amount of penalty to be collected on marketings of excess
tobacco including absorption of carryover penalty tobacco,
(iii) Eligibility for price support, and
(iv) The farm marketing quota and the percentage reduction for a
violation in the allotment for the farm.
(9) Cancellation of transfer. Any transfer of allotment under this
section which was approved by the county FSA committee in error or on
the basis of incorrect information furnished by the parties to the
agreement shall be canceled by the county FSA committee. Such
cancellation shall be effective as of the date of approval for purposes
of determining eligibility for price support and marketing quota
penalties except that such cancellation shall not be effective for the
current marketing year for price support and marketing quota penalty
purposes, if:
(i) The transfer approval was made in error or on the basis of
incorrect information unknowingly furnished by the parties to the
transfer agreement; and
(ii) The parties to the transfer agreement were not notified of the
cancellation before the tobacco was planted.
(10) Dissolution or revision. A transfer agreement may be dissolved
or minor revisions made where a request by all parties to the agreement
is made in writing to the county FSA committee. Such written
notification shall be filed prior to planting the tobacco. A late filed
request to dissolve or revise the transfer may be effective for the
current year if the county FSA committee with approval of a
representative of the State FSA committee determines that the producer
was prevented from timely filing for reasons beyond such producer's
control.
(11) Reconstituted farm. The allotment for a farm being divided or
combined in the current year shall be the allotment after the transfer
has been approved. Notwithstanding the above, in the case of a division,
the county FSA committee shall allocate the acreage that was transferred
by lease to the tracts involved in the division as the parent farm
owners and operators designate in writing. In the absence of such
designation, the county FSA committee shall apportion the leased
acreage.
(12) Consent of lien holder. A transfer of allotment other than by
annual lease shall not be approved from a farm subject to a mortgage or
other lien unless the transfer is agreed to in writing by the lien
holder.

[55 FR 39914, Oct. 1, 1990, as amended at 56 FR 21441, May 9, 1991; 58
FR 11960, Mar. 2, 1993; 63 FR 11582, Mar. 10, 1998; 65 FR 7953, Feb. 16,
2000; 66 FR 53509, Oct. 23, 2001]