7 CFR 1427.175 - Liability of the producer.
(1) If a producer makes any fraudulent representation in obtaining a loan, maintaining a loan, or settling a loan or if the producer disposes of or moves the loan collateral without the prior approval of CCC, such loan amount must be refunded upon demand by CCC. The producer will be liable for:
(i) The amount of the loan;
(ii) Any additional amounts paid by CCC for the loan;
(iv) Applicable interest on such amounts; and
(v) Liquidated damages under paragraph (e) of this section.
(2) Notwithstanding any provision of the note and security agreement, if a producer has made any such fraudulent representation or if the producer has disposed of, or moved, the loan collateral without prior written approval from CCC, the value of such collateral acquired by CCC will be equal to the sales price of the cotton less any costs incurred by CCC in completing the sale.
(b) If the amount disbursed under a loan, or in settlement thereof, exceeds the amount authorized by this subpart, the producer is liable for repayment of such excess, plus interest. In addition, seed cotton pledged as collateral for such loan will not be released to the producer until such excess is repaid.
(c) If the amount collected from the producer in satisfaction of the loan is less than the amount required under this subpart, the producer is personally liable for repayment of the amount of such deficiency plus applicable interest.
(d) If more than one producer executes a note and security agreement with CCC, each such producer is jointly and severally liable for the violation of the terms and conditions of the note and security agreement and the regulations in this subpart. Each such producer also remains liable for repayment of the entire loan amount until the loan is fully repaid without regard to such producer's claimed share in the seed cotton pledged as collateral for the loan. In addition, such producer may not amend the note and security agreement for the producer's claimed share in such seed cotton, after execution of the note and security agreement by CCC.
(e) If a producer makes any fraudulent representation in obtaining a loan, in maintaining or settling a loan, or disposing of or moving the collateral without the prior approval of CCC, that is a violation of the terms or conditions of the note and security agreement. If CCC or the county committee determines that the producer has violated the terms or conditions of the note and security agreement, liquidated damages will be assessed on the quantity of the seed cotton that is involved in the violation by multiplying the quantity involved in the violation by 10 percent of the loan rate applicable to the loan note. This amount will apply for both good faith and not good faith determinations.
(1) Require repayment of the loan principal applicable to the loan quantity affected by the violation, and charges plus interest applicable to the amount repaid;
(2) Assess liquidated damages under paragraph (e) of this section; and
(3) If the producer fails to pay such amount within 30 calendar days from the date of notification, call the applicable loan involved in the violation.
(g) For cases other than first or second offenses, or any offense for which CCC or the county committee cannot determine good faith when the violation occurred, the county committee will:
(1) Assess liquidated damages under paragraph (e) of this section;
(2) Call the applicable loan involved in the violation.
(1) The producer has 30 calendar days to provide evidence and information to the county committee regarding the circumstances which caused the violation, and
(2) Administrative actions will be taken under paragraphs (f) or (g) of this section.
Title 7 published on 2015-08-22.
No entries appear in the Federal Register after this date, for 7 CFR Part 1427.