This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

28895 

Vol. 72, No. 99 

Wednesday, May 23, 2007 

DEPARTMENT OF AGRICULTURE 

Federal Crop Insurance Corporation 

7 CFR Part 457 

RIN 0563–AB98 

Common Crop Insurance Regulations, 

Tobacco Crop Insurance Provisions 

AGENCY: Federal Crop Insurance 

Corporation, USDA. 

ACTION: Proposed rule. 

SUMMARY: The Federal Crop Insurance 

Corporation (FCIC) proposes to amend 

the Common Crop Insurance 

Regulations by removing the Quota 

Tobacco Crop Insurance Provisions, 

revising the Guaranteed Tobacco Crop 

Insurance Provisions, and changing the 

title of the Guaranteed Tobacco Crop 

Insurance Provisions to Contracted 

Tobacco Crop Insurance Provisions. The 

intended effect of this action is to 

provide policy changes and clarify 

existing policy provisions to better meet 

the needs of insured producers. The 

changes will apply for the 2008 and 

succeeding crop years. 

DATES: Written comments and opinions 

on this proposed rule will be accepted 

until close of business July 23, 2007, 

and will be considered when the rule is 

to be made final. 

ADDRESSES: Interested persons are 

invited to submit comments, titled 

‘‘Tobacco Crop Insurance Provisions’’, 

by any of the following methods: 

• By Mail to: Director, Product 

Administration and Standards Division, 

Risk Management Agency, United States 

Department of Agriculture, 6501 Beacon 

Drive, Stop 0812, Room 421, Kansas 

City, MO 64133–4676. 

• E-mail: DirectorPDD@rma.usda.gov. 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

A copy of each response will be 

available for public inspection and 

copying from 7 a.m. to 4:30 p.m., CDT. 

Monday through Friday, except 

holidays, at the above address. 

FOR FURTHER INFORMATION CONTACT: Gary 

Johnson, Risk Management Specialist, 

Product Management, Product 

Administration and Standards Division, 

Risk Management Agency, at the Kansas 

City, Mo, address listed above, 

telephone (816) 926–7730. 

SUPPLEMENTARY INFORMATION: 

Executive Order 12866 

This rule has been determined to be 

nonsignificant for the purposes of 

Executive Order 12866 and, therefore, it 

has not been reviewed by the Office of 

Management and Budget (OMB). 

Paperwork Reduction Act of 1995 

Pursuant to the provisions of the 

Paperwork Reduction Act of 1995 (44 

U.S.C. chapter 35), the collections of 

information in this rule have been 

approved by OMB under control 

number 0563–0053 through November 

30, 2007. 

E-Government Act Compliance 

FCIC is committed to complying with 

the E-Government Act, to promote the 

use of the Internet and other 

information technologies to provide 

increased opportunities for citizen 

access to Government information and 

services, and for other purposes. 

Unfunded Mandates Reform Act of 

1995 

Title II of the Unfunded Mandates 

Reform Act of 1995 (UMRA), Public 

Law 104–4, establishes requirements for 

Federal agencies to assess the effects of 

their regulatory actions on State, local, 

and tribal governments and the private 

sector. This rule contains no Federal 

mandates (under the regulatory 

provisions of title II of the UMRA) for 

State, local, and tribal governments or 

the private sector. Therefore, this rule is 

not subject to the requirements of 

sections 202 and 205 of UMRA. 

Executive Order 13132 

It has been determined under section 

1(a) of Executive Order 13132, 

Federalism, that this rule does not have 

sufficient implications to warrant 

consultation with the States. The 

provisions contained in this rule will 

not have a substantial direct effect on 

States, or on the relationship between 

the national government and the States, 

or on the distribution of power and 

responsibilities among the various 

levels of government. 

Regulatory Flexibility Act 

FCIC certifies that this regulation will 

not have a significant economic impact 

on a substantial number of small 

entities. Program requirements for the 

Federal crop insurance program are the 

same for all producers regardless of the 

size of their farming operation. For 

instance, all producers are required to 

submit an application and acreage 

report to establish their insurance 

guarantees and compute premium 

amounts, and all producers are required 

to submit a notice of loss and 

production information to determine the 

amount of an indemnity payment in the 

event of an insured cause of crop loss. 

Whether a producer has 10 acres or 

1000 acres, there is no difference in the 

kind of information collected. To ensure 

crop insurance is available to small 

entities, the Federal Crop Insurance Act 

authorizes FCIC to waive collection of 

administrative fees from limited 

resource farmers. FCIC believes this 

waiver helps to ensure small entities are 

given the same opportunities as large 

entities to manage their risks through 

the use of crop insurance. A Regulatory 

Flexibility Analysis has not been 

prepared since this regulation does not 

have an impact on small entities, and, 

therefore, this regulation is exempt from 

the provisions of the Regulatory 

Flexibility Act (5 U.S.C. 605). 

Federal Assistance Program 

This program is listed in the Catalog 

of Federal Domestic Assistance under 

No. 10.450. 

Executive Order 12372 

This program is not subject to the 

provisions of Executive Order 12372, 

which require intergovernmental 

consultation with State and local 

officials. See the Notice related to 7 CFR 

part 3015, subpart V, published at 48 FR 

29115, June 24, 1983. 

Executive Order 12988 

This proposed rule has been reviewed 

in accordance with Executive Order 

12988 on civil justice reform. The 

provisions of this rule will not have a 

retroactive effect. The provisions of this 

rule will preempt State and local laws 

to the extent such State and local laws 

are inconsistent herewith. With respect 

to any direct action taken by FCIC or to 

require the insurance provider to take 

specific action under the terms of the 


cprice-sewell on PROD1PC71 with PROPOSALS
28896 Federal Register / Vol. 72, No. 99 / Wednesday, May 23, 2007 / Proposed Rules 

crop insurance policy, the 

administrative appeal provisions 

published at 7 CFR part 11 must be 

exhausted before any action against 

FCIC for judicial review may be brought. 

Environmental Evaluation 

This action is not expected to have a 

significant economic impact on the 

quality of the human environment, 

health, or safety. Therefore, neither an 

Environmental Assessment nor an 

Environmental Impact Statement is 

needed. 

Background 

FCIC proposes to amend the Common 

Crop Insurance Regulations by removing 

the Quota Tobacco Crop Insurance 

Provisions and reserving § 457.156. The 

American Jobs Creation Act of 2004 

eliminated the tobacco quota support 

program and quota support price as 

administrated by the Farm Service 

Agency (FSA). FCIC also proposes to 

revise the Guaranteed Tobacco Crop 

Insurance Provisions and change the 

title to Contracted Tobacco Crop 

Insurance Provisions. Under the new 

provisions, insurance will only be 

available for tobacco grown under a 

contract with a tobacco company. The 

entity named on the tobacco contract 

must be the same as the entity named 

on the application to indicate an 

insurable share. 

Prior to the American Jobs Creation 

Act of 2004, tobacco was sold in United 

States Department of Agriculture 

(USDA) auction warehouses. The prices 

paid to the auction warehouses by 

tobacco companies were based upon the 

quality and grade of the tobacco. Today 

the majority of tobacco is grown under 

contract with a tobacco company. 

Therefore, a new environment exists for 

tobacco production and marketing and 

FCIC is proposing to revise the tobacco 

policy to reflect this new environment. 

The proposed changes are as follows: 

1. FCIC proposes to remove the 

paragraph immediately preceding 

section 1 which refers to the order of 

priority of provisions in the event of 

conflict. This same information is 

contained in the Basic Provisions; 

therefore, it is duplicative and should be 

removed in the Crop Provisions. 

2. Section 1—Definitions—Add 

definitions of ‘‘average price received,’’

‘‘commercial tobacco producer,’’

‘‘contract price,’’ ‘‘minimum acreage,’’

‘‘price election,’’ ‘‘tobacco company or 

commercial marketing association 

(CMA),’’ ‘‘tobacco contract,’’ ‘‘tobacco 

handler,’’ and ‘‘tobacco types’’ since 

these terms are required to provide 

insurance under a tobacco company 

contract. 

FCIC proposes to revise the definition 

of ‘‘basic unit’’ so that a basic unit will 

be all insurable acreage of each tobacco 

type grown in the county for the crop 

year. Previously, basic units were 

available by farm serial number (FSN). 

However, due to the elimination of the 

tobacco quota and support program and 

the tobacco quota support price, the 

majority of tobacco is now sold under a 

contract with a tobacco company. The 

tobacco company contract indicates 

only the total quantity of tobacco 

production by tobacco type the 

producer agrees to deliver regardless of 

who shares in the production or from 

what FSN the tobacco production was 

produced. Basic units by tobacco types 

are more appropriate because tobacco 

types are planted, harvested and cured 

separately by growers. The types are 

graded, and purchased separately by 

tobacco companies. Therefore, verifiable 

production records will most likely be 

kept by type. Under the APH plan of 

insurance the producer is responsible 

for supplying verifiable production 

records for APH purposes. 

FCIC is proposing to revise the 

definition of ‘‘priming’’ to clarify that 

priming applies to one or more leaf, not 

just each leaf. 

FCIC proposes to remove the 

definitions of ‘‘average value,’’

‘‘carryover tobacco,’’ ‘‘discount variety,’’

‘‘fair market value,’’ ‘‘market price,’’

‘‘season average market price,’’ and 

‘‘support price.’’ These definitions are 

no longer necessary since the price 

support program has been eliminated. 

FCIC proposes to remove the 

definition of ‘‘adequate stand’’ because 

even though the definition was added in 

1999, the term was never used in the 

Crop Provisions. 

FCIC proposes to remove the 

definition of ‘‘approved yield,’’ and 

‘‘replanting.’’ These terms are defined in 

the Common Crop Insurance Policy 

Basic Provisions and do not require 

modification for the purpose of these 

Crop Provisions. FCIC also proposes to 

remove the definition of ‘‘production 

guarantee (per acre)’’ because the 

elimination of the quota tobacco 

program means that production will 

now be based on the actual production 

history of the producer, not the pounds 

on the actuarial documents or approved 

yield in the Special Provisions. 

Therefore, the definition in the Basic 

Provisions is appropriate. 

3. Section 2—FCIC is proposing to 

revise section 2 by removing the 

sentence that states, ‘‘The provisions in 

the Basic Provisions regarding optional 

units are not applicable, unless 

specified by the Special Provisions.’’

FCIC is proposing only basic units by 

type be available to producers. 

Previously, optional units were 

available by farm serial number (FSN) 

for certain types of tobacco in certain 

areas as specified by the Special 

Provisions. Also, enterprise units were 

available by certain types of tobacco in 

certain areas as specified by the Special 

Provisions. However, due to the 

elimination of the tobacco quota and 

support program and the tobacco quota 

support price, the majority of tobacco is 

now sold under a contract with a 

tobacco company. The tobacco company 

contract indicates only the total quantity 

of tobacco production by tobacco type 

the producer agrees to deliver regardless 

of who shares in the production or from 

what FSN the tobacco production was 

produced. Optional and enterprise units 

will not be available to any producer. 

Basic units by tobacco types are more 

appropriate because tobacco types are 

planted, harvested and cured separately 

by growers. The types are graded, and 

purchased separately by tobacco 

companies. Therefore, verifiable 

production records will most likely be 

kept by type. Under the APH plan of 

insurance the producer is responsible 

for supplying verifiable production 

records for APH purposes. 

4. Section 3—FCIC is proposing to 

revise section 3(a) by removing the word 

‘‘guaranteed’’ because the tobacco quota 

support program through the FSA has 

been abolished so there is no longer 

guaranteed tobacco. FCIC is also 

proposing to add the word ‘‘percentage’’

after the phrase ‘‘price election’’ to 

clarify that producers actually select the 

percentage of the price election that is 

announced by FCIC. 

FCIC proposes to remove section 3(b). 

Once the American Jobs Creation Act of 

2004 eliminated the tobacco quota 

support program and quota support 

price, the guarantee became based on 

the actual production history of the 

producer. Therefore, the production 

report must be filed annually. 

FCIC proposes to add a new section 

3(b) to specify the producer’s 

production guarantee will be adjusted if 

the producer has not planted a sufficient 

number of acres to produce the amount 

of tobacco necessary to fulfill the 

contracts. Whether sufficient acres have 

been planted is determined by dividing 

the pounds specified in the producer’s 

tobacco contracts in the county by the 

applicable approved yield. If the 

producer does not plant the minimum 

acreage, the production guarantee will 

be reduced proportionately. These 

provisions are necessary to prevent the 

producer from over-insuring the 

tobacco. 


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5. Section 6—FCIC proposes to 

remove the provision requiring the 

producer to report any carryover 

tobacco from previous years because 

carryover production no longer needs to 

be reported since the tobacco quota 

support program has been eliminated. 

FCIC proposes the new paragraph (a) 

specify that a copy of all tobacco 

contracts must be provided to the 

approved insurance provider on or 

before the acreage reporting date and the 

entity named on the tobacco contract 

must be the same as the entity named 

on the application. This is consistent 

with other Crop Provisions that cover 

crops under contract. However, FCIC 

added the requirement that the name on 

the tobacco contract must be the same 

name on the application in order to be 

able to verify that the producer has an 

insurable interest in the crop. 

FCIC proposes to add a new section 

6(b) to specify that a copy of any written 

lease agreement, if applicable, between 

the insured and any landlord or tenant 

must identify all other persons sharing 

in the crop and be provided to the 

approved insurance provider on or 

before the acreage reporting date. This 

provision would permit the approved 

insurance provider to properly 

determine the appropriate share in the 

crop. 

6. Section 7—FCIC is proposing to 

restructure section 7 and add new 

paragraphs (a) and (b). FCIC is 

proposing a new paragraph (a) that 

specifies that the insured tobacco crop 

must meet all rotation requirements on 

the Special Provisions, be grown in 

accordance with the requirements of the 

tobacco contract executed on or before 

the acreage reporting date, and not be 

excluded from the tobacco contract at 

any time during the insurance period. 

These requirements are consistent with 

the requirements of other Crop 

Provisions covering crops under 

contract and ensure that the coverage is 

only provided if the crop remains 

contracted throughout the insurance 

period. This will prevent a shifting of 

costs to the government if there has 

been an over-contracting of production. 

FCIC is proposing to add a new 

section 7(b) to specify a tobacco 

company or commercial marketing 

association that produces its own 

tobacco may establish an insurable 

share if they comply with the Crop 

Provisions; the Board of Directors or 

officers of the tobacco company or 

commercial marketing association, or 

tobacco handler executes and adopts a 

resolution prior to the sales closing date 

that contains the same terms as an 

acceptable tobacco contract; and the 

approved insurance provider’s 

inspection determines the processing 

facilities comply with the definition of 

a tobacco company or commercial 

marketing association. These 

requirements are consistent with the 

requirements of other Crop Provisions 

covering crops under contract and 

protect program integrity by ensuring 

that the persons responsible for 

decisions of the business determine the 

terms and conditions of the contract. 

7. Section 8—FCIC is proposing to 

revise section 8 by removing paragraphs 

(a) and (b). Paragraph (a) is not 

necessary because the quota price 

support program has been eliminated. 

Paragraph (b) is not necessary because it 

was redundant with section 7, which 

specifies the premium rate for the 

tobacco type must be provided by the 

actuarial documents. Paragraph (c) and 

(d) have been redesignated as 

paragraphs (a) and (b) respectively. FCIC 

proposes to revise redesignated 

paragraph (b) to specify that acreage is 

not insured if it is damaged before the 

final planting date to the extent that a 

majority of the producers in the area 

would normally not care for the crop. 

Previously, the provision referred to 

‘‘most’’ producers but FCIC has since 

been using the term ‘‘majority’’ in its 

other Crop Provisions because it 

provides a more determinable standard. 

8. Section 9—FCIC proposes to revise 

the introductory paragraph to specify 

that section 9 is in lieu of the provisions 

in section 11 of the Basic Provisions. 

FCIC proposes to remove section 9(b) 

because tobacco under contract may no 

longer be weighed at a tobacco 

warehouse like it was under the 

previous tobacco quota program. FCIC 

proposes to redesignate sections 9(c) 

and (d) as sections 9(b) and (f), 

respectively and revise redesignated 

section 9(b) to remove the reference to 

delivery to the warehouse for the same 

reason as stated above. FCIC proposes to 

add new sections 9(c), (d), and (e) to 

incorporate the events that trigger the 

end of the insurance period from section 

11 of the Basic Provisions that are still 

applicable and add a new event, which 

is the date the producer delivers 

sufficient production to fulfill all 

tobacco contracts in the county. This is 

consistent with other Crop Provisions 

covering crops under contract. 

FCIC is proposing to revise 

redesignated section 9(f) to clarify that 

the end of insurance period is the date 

immediately following planting and it is 

designated by specific tobacco types and 

states, unless otherwise provided on the 

Special Provisions. This proposed 

revision changes the tobacco type from 

an assigned number to a specific name. 

9. Section 10—FCIC is proposing to 

revise section 10(b) to clarify fire is a 

cause of loss if it is caused by lightning. 

Currently, the provisions provide for 

tobacco to be insured in the tobacco 

barn and fire is listed as a cause of loss. 

FCIC has received many inquiries 

asking if fire is an insurable cause of 

loss when the barn burns and there is 

no proof the fire was caused by a 

naturally occurring event. Since 

coverage can only be provided for 

naturally occurring events, FCIC is 

removing all ambiguity regarding what 

causes of the fire are covered. 

FCIC is proposing to revise section 

10(h) for clarity and to be consistent 

with other Crop Provisions. No 

substantive change has been made. 

10. Section 11—FCIC proposes to 

revise section 11(a) to be consistent with 

the format of other similar Crop 

Provisions. No substantive change has 

been made. 

FCIC proposes to revise section 11(b) 

to require producers who have filed a 

notice of damage to leave all tobacco 

stalks and stubble on the unit intact for 

the approved insurance provider’s 

inspection. Previously this requirement 

only applied to specific tobacco types 

but FCIC has determined that inspection 

of the stalks and stubble can be useful 

in the adjustment of all types of tobacco. 

11. Section 12—FCIC proposes to 

revise section 12(a) to remove the 

consequences for failure to provide 

acceptable records for optional units 

since such units are no longer available 

under the policy. As stated above, only 

basic units are available because the 

tobacco company contract indicates the 

total quantity of tobacco production the 

producer will deliver regardless of who 

shares in the production or from what 

FSN the tobacco production was grown. 

The consequences for failure to provide 

acceptable records by basic unit remains 

the same. 

FCIC proposes to revise section 12(b) 

to remove the references to different 

types because now separate basic units 

are available by type. The loss 

calculation example has also been 

revised to remove the references to the 

type by number of guaranteed tobacco 

since types are proposed to be 

designated by name, not number, and 

the tobacco is not longer guaranteed 

because of the elimination of the quotas. 

FCIC proposes to revise section 12(c) 

to be consistent with other Crop 

Provisions. FCIC also proposes to 

remove language in section 12(c)(1)(D) 

referring to specific tobacco types 

because FCIC is proposing that the 

requirement to leave all stubble and 

stalks intact be applicable to all tobacco. 

FCIC is proposing to remove the 


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28898 Federal Register / Vol. 72, No. 99 / Wednesday, May 23, 2007 / Proposed Rules 

references to the value of the production 

to count in section 12(c)(1)(E)(A) 

because there is no support price. The 

provision will now refer to the amount 

of production to count instead of the 

value of such production. 

FCIC proposes to remove sections 

12(e) through (g) since the tobacco quota 

support program has been eliminated. 

FCIC proposes to redesignate section 

12(d) as section 12(e) and add a new 

section 12(d) to specify the producer 

must destroy the production in those 

situations where an agreement is 

reached between the approved 

insurance provider and the insured that 

the current year’s tobacco has no market 

value due to an insured cause of loss. 

FCIC is also proposing that failure to 

destroy such tobacco will result in the 

production considered as production to 

count valued at the price election. 

FCIC proposes to revise redesignated 

section 12(e). Previously, quality 

deficiencies for tobacco were 

determined by using USDA Official 

Grade Standards at the tobacco 

warehouses. This allowed an objective 

third party to inspect the tobacco. 

However, most of the tobacco is now 

sold under contract and the elimination 

of the quota tobacco program has 

eliminated the need for tobacco 

warehouses. Therefore, there is no 

longer this disinterested third party 

available to grade and value the tobacco. 

Further, FCIC has not discovered any 

party other than the tobacco company, 

commercial marketing association, or 

tobacco handler who grades or values 

tobacco. This creates a serious program 

vulnerability because the person who 

would be grading and valuing the 

tobacco will be the same person who is 

purchasing it. This means there exists 

an incentive to undervalue the 

production, reduce the price the tobacco 

company, commercial marketing 

association, or tobacco handler has to 

pay the producer, and shift the costs to 

FCIC to pay the difference. There have 

been similar situations in other crop 

policies and there has been significant 

fraud and abuse. 

One solution is the removal of the 

quality adjustment provisions but 

producers claim that the value of the 

insurance is seriously diminished 

without this coverage. FCIC recognizes 

its value and is not ready to remove the 

coverage in this rule. However, FCIC is 

proposing that insured producers, with 

damaged tobacco, will be required to 

notify approved insurance providers 

before any tobacco is delivered to the 

tobacco company, commercial 

marketing association, or tobacco 

handler so that at the approved 

insurance providers option they may 

inspect the tobacco to determine and 

document the extent of the damage. 

Without the opportunity to inspect the 

damaged tobacco, such tobacco is not 

eligible for quality adjustment. Such 

inspection will assist the approved 

insurance provider in determining the 

extent of damage and if the price for the 

damaged tobacco received by the 

producer is reasonable based on the 

quality of the tobacco observed by the 

approved insurance provider. If the 

price is not reasonable, the approved 

insurance provider will have the 

authority to adjust the price. FCIC is 

also proposing quality adjustment will 

apply only when the average price per 

pound received for the damaged tobacco 

is less than 75 percent of the producer’s 

contract price. This will reduce the 

administrative burdens associated with 

minor quality adjustments. FCIC 

realizes that this is not a perfect solution 

and is seeking comments on alternative 

methods to ensure the integrity of the 

program. If the proposed solution is not 

workable or effective, and there are no 

viable alternatives, FCIC may be 

required to remove the quality 

adjustment provisions from the policy. 

12. Section 13—FCIC is proposing to 

revise section 13 to remove the numeric 

figures and parenthesis surrounding 

such figures to be consistent with the 

other Crop Provisions. No substantive 

change has been made. 

13. Section 14—FCIC is proposing to 

revise section 14 to add prevented 

planting coverage. Previously, 

prevented planting coverage was not 

available at all for tobacco. FCIC is 

proposing the producer’s prevented 

panting coverage be 35 percent of the 

producer’s production guarantee for 

timely planted acreage. However, no 

additional prevented planting coverage 

will be available. 

List of Subjects in 7 CFR Part 457 

Crop insurance, Tobacco, Reporting 

and recordkeeping requirements. 

Proposed Rule 

Accordingly, as set forth in the 

preamble, the Federal Crop Insurance 

Corporation proposes to amend 7 CFR 

part 457 to read as follows: 

PART 457—COMMON CROP 

INSURANCE REGULATIONS 

1. The authority citation for 7 CFR 

part 457 continues to read as follows: 

Authority: 7 U.S.C. 1506(l), 1506(p). 

PART 457—[AMENDED] 

§ 457.156 [Removed and Reserved] 

2. Remove and reserve § 457.156. 

3. Revise § 457.136 to read as follows: 

§ 457.136 Contracted tobacco crop 

insurance provisions. 

The contracted tobacco crop 

insurance provisions for the 2008 and 

succeeding crop years are as follows: 

FCIC policies: United States 

Department of Agriculture, Federal Crop 

Insurance Corporation. 

Reinsured policies: (Appropriate title 

for insurance provider). 

Both FCIC and reinsured policies: 

Contracted Tobacco Crop Insurance 

Provisions 

1. Definitions. 

Average price received. The price per 

pound for tobacco sold under contract 

by type, and is determined by dividing 

total receipts for the tobacco type sold 

by the number of pounds of the tobacco 

type sold, without regard to discounts or 

incentives. Failure to provide acceptable 

receipts will result in the average price 

received being the same as the price 

election. 

Basic unit. In lieu of the definition in 

the Basic Provisions, a basic unit is all 

insurable acreage of each tobacco type 

grown in the county for the crop year. 

Commercial tobacco producer. A 

producer who grows tobacco under a 

contract with tobacco company, 

commercial marketing association, or 

tobacco handler. 

Contract price. The price for each 

type of tobacco specified in the tobacco 

contract without regard to discounts or 

incentives. 

Harvest. Cutting or priming and 

removing all insured tobacco from the 

unit. 

Hydroponic plants. Seedlings grown 

in liquid nutrient solutions. 

Late planting period. In lieu of the 

definition in section 1 of the Basic 

Provisions, the period that begins the 

day after the final planting date for the 

insured crop and ends 15 days after the 

final planting date, unless otherwise 

specified in the Special Provisions. 

Minimum acreage. The minimum 

number of acres required to be planted 

to produce the number of pounds of 

tobacco under contract, determined by 

dividing the pounds specified in your 

tobacco contract by the applicable 

approved yield. 

Planted acreage. In addition to the 

definition contained in the Basic 

provisions, land in which tobacco 

seedlings, including hydroponic plants, 

have been transplanted by hand or 

machine from the tobacco bed to the 

field. 

Pound. Sixteen ounces avoirdupois. 

Price election. In lieu of the definition 

in the Basic Provisions, the price 

election will be the contract price 

multiplied by the percentage you elect. 


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Federal Register / Vol. 72, No. 99 / Wednesday, May 23, 2007 / Proposed Rules 28899 

Priming. A method of harvesting 

tobacco by which one or more leaves are 

removed from the stalk as they mature. 

Tobacco bed. An area protected from 

adverse weather in which tobacco seeds 

are sown and seedlings are grown until 

transplanted into the tobacco field by 

hand or machine. 

Tobacco company or commercial 

marketing association (CMA). Any 

business enterprise regularly engaged in 

buying and processing tobacco for 

human use, that possesses all licenses 

and permits for processing tobacco 

required by the state in which it 

operates, possesses facilities, or has 

contractual access to such facilities, 

with enough equipment to accept and 

process contracted tobacco within a 

reasonable amount of time after harvest. 

Tobacco contract. A written 

agreement between the producer or 

entity and a tobacco company or 

commercial marketing association, or 

between the producer and a tobacco 

handler, containing at a minimum: 

(a) The producer or entity’s 

commitment to plant and grow tobacco 

of an insurable type and practice, and to 

deliver the amount of production stated 

in the contract to the tobacco company, 

commercial marketing association, or 

tobacco handler; 

(b) The tobacco company’s, 

commercial marketing association’s, or 

tobacco handler’s commitment to 

purchase the specified number of 

pounds of tobacco stated in the contract 

(an option to purchase is not a 

commitment); and 

(c) A contract price. 

Tobacco handler. A business 

enterprise that has all the licenses and 

permits required by the state in which 

it operates, and has an agreement in 

writing with a tobacco company or 

commercial marketing association to 

purchase and deliver tobacco. 

Tobacco types. Insurable types as 

shown on the Special Provisions. 

2. Unit Division. 

A unit will be determined in 

accordance with the definition of basic 

unit contained in section 1 of these Crop 

Provisions. Enterprise and optional 

units are not available. 

3. Insurance Guarantees, Coverage 

Levels, and Prices for Determining 

Indemnities. 

In addition to the requirements of 

section 3 of the Basic Provisions: 

(a) You must select only one price 

election percentage and coverage level 

for each tobacco type designated in the 

Special Provisions that you elect to 

insure. 

(b) Your total production guarantee 

will be the number of pounds in your 

tobacco contract multiplied by your 

selected coverage level, provided you 

have planted sufficient acreage of 

tobacco to fulfill all of your tobacco 

contracts in the county. 

(1) Sufficient acreage is determined by 

dividing the pounds specified in your 

tobacco contracts in the county by the 

applicable approved yields. For 

example, you have three contracts for 

tobacco, each to deliver 2,000 pounds, 

and your approved yield is 1,700 

pounds. You must plant at least 3.5 

acres (6,000 ÷ 1,700). 

(2) If you do not plant sufficient 

acreage, your production guarantee (per 

acre) will be reduced proportionately. 

For example, using the example in 

paragraph (2), you only plant 2.5 acres. 

This means you could only produce 

4,250 pounds (1,700 x 2.5), which is 71 

percent of the pounds specified in your 

tobacco contracts. Therefore, your 

production guarantee (per acre) will be 

reduced to 1207 pounds (.71 x 1,700). 

4. Contract Changes. 

In accordance with section 4 of the 

Basic Provisions, the contract change 

date is November 30 preceding the 

cancellation date. 

5. Cancellation and Termination 

Dates. 

In accordance with section 2 of the 

Basic Provisions, the cancellation and 

termination dates are March 15. 

6. Report of Acreage. 

In addition to the requirements of 

section 6 of the Basic Provisions, you 

must: 

(a) Provide a copy of all tobacco 

contracts to us on or before the acreage 

reporting date. The entity named on the 

tobacco contract must be the same as the 

entity named on your application for 

you to have an insurable interest; and 

(b) Provide a copy of any written lease 

agreement, if applicable, between you 

and any landlord or tenant. The written 

lease agreement must: 

(1) Identify all other persons sharing 

in the crop; and 

(2) Be submitted to us on or before the 

acreage reporting date. 

7. Insured Crop. 

(a) In accordance with section 8 of the 

Basic Provisions, the insured crop will 

be each tobacco type you elect to insure 

and for which a premium rate is 

provided by the actuarial documents: 

(1) In which you have a share; 

(2) That meets all rotation 

requirements on the Special Provisions; 

and 

(3) That is grown and insured in 

accordance with the requirements of 

your tobacco contract executed on or 

before the acreage reporting date and the 

tobacco is not excluded from the 

tobacco contract at any time during the 

insurance period. 

(b) You will be considered to have a 

share in the insured crop if you retain 

control of the acreage on which the 

tobacco is grown and you are at risk of 

loss. 

(c) A commercial tobacco producer 

who is also a tobacco company, 

commercial marketing association, or 

tobacco handler may establish an 

insurable interest if the following 

requirements are met: 

(1) You must comply with these Crop 

Provisions; 

(2) Prior to the sales closing date, the 

Board of Directors or officers of the 

tobacco company, commercial 

marketing association, or tobacco 

handler must execute and adopt a 

resolution that contains the same terms 

as an acceptable tobacco contract. Such 

resolution will be considered a tobacco 

contract under this policy; and 

(3) Our inspection determines the 

processing facilities comply with the 

definition of a tobacco company or 

commercial marketing association 

contained in these Crop Provisions. 

8. Insurable Acreage. 

In addition to the provisions of 

section 9 of the Basic Provisions, we 

will not insure any acreage that is: 

(a) Planted in any manner other than 

as provided in the definition of ‘‘planted 

acreage’’ in section 1 of these Crop 

Provisions, unless otherwise provided 

by the Special Provisions or by written 

agreement; or 

(b) Damaged before the final planting 

date to the extent that the majority of 

producers in the area would normally 

not further care for the tobacco crop, 

unless such crop is replanted or we 

agree that replanting is not practical. 

9. Insurance Period. 

In lieu of the provisions of section 11 

of the Basic Provisions, coverage ends at 

the earlier of: 

(a) Total destruction of the tobacco on 

the unit; 

(b) Removal of the tobacco from the 

unit where grown, except for curing, 

grading, and packing; 

(c) Abandonment of the crop on the 

unit; 

(d) The date you deliver sufficient 

production to fulfill your tobacco 

contract with the tobacco company, 

commercial marketing association, or 

tobacco handler; 

(e) Final adjustment of the loss on the 

unit; or 

(f) The calendar date for the end of the 

insurance period, which is the date 

immediately following planting and 

designated by tobacco types and states 

(or as otherwise stated on the Special 

Provisions) as follows: 

(i) Flue cured—November 30 in North 

Carolina and Virginia; 


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(ii) Flue cured—October 31 in 

Alabama, Florida, Georgia, and South 

Carolina; 

(iii) Burley—February 28 in all states; 

(iv) Dark air cured—March 15 in 

Kentucky, Tennessee, and Virginia; 

(v) Fire cured—April 15 in Kentucky, 

Tennessee, and Virginia; 

(vi) Cigar Binder, Cigar Filler, and 

Cigar Wrapper—April 30 in 

Connecticut, Massachusetts, 

Pennsylvania, and Wisconsin; and 

(vii) Maryland type—May 15 in 

Maryland and Pennsylvania. 

10. Causes of Loss. 

In accordance with the provisions of 

section 12 of the Basic Provisions, 

insurance is provided only against the 

following causes of loss that occur 

during the insurance period: 

(a) Adverse weather conditions; 

(b) Fire, if caused by lightning; 

(c) Insects, but not damage due to 

insufficient or improper application of 

pest control measures; 

(d) Plant disease, but not damage due 

to insufficient or improper application 

of disease control measures; 

(e) Wildlife; 

(f) Earthquake; 

(g) Volcanic eruption; or 

(h) Failure of the irrigation water 

supply due to a cause of loss specified 

in sections 10(a) through (g) that also 

occurs during the insurance period. 

11. Duties In The Event of Damage or 

Loss. 

(a) In accordance with section 14 of 

the Basic Provisions, any representative 

sample we require of each unharvested 

tobacco type must be at least 5 feet wide 

(at least two rows), and extend the 

entire length of each field in the unit. 

The samples must not be harvested or 

destroyed until after our inspection. 

(b) If you have filed a notice of 

damage, you must leave all tobacco 

stalks and stubble in the unit intact for 

our inspection. The stalks and stubble 

must not be destroyed until we give you 

written consent to do so or until 30 days 

after the end of the insurance period, 

whichever is earlier. 

12. Settlement of Claim. 

(a) We will determine your loss on a 

unit basis. In the event you are unable 

to provide records of production that are 

acceptable to us for any basic unit, we 

will allocate any commingled 

production to such units in proportion 

to our liability on the harvested acreage 

for each unit. 

(b) In the event of loss or damage 

covered by this policy, we will settle 

your claim by: 

(1) Multiplying the number of insured 

acres by your applicable production 

guarantee (per acre), as adjusted in 

accordance with section 3(b), if 

applicable; 

(2) Multiplying the result of section 

12(b)(1) by your price election; 

(3) Multiplying the total production to 

count determined in section 12(c) by 

your price election; 

(4) Subtracting the result of section 

12(b)(3) from the result of section 

12(b)(2); and 

(5) Multiplying the result of section 

12(b)(4) by your share. 

For example: 

You have 100 percent share in a 

tobacco contract to produce 3,000 

pounds of Burley tobacco, a production 

guarantee of 1,950 pounds (APH yield of 

3,000 pounds × .65 coverage level), you 

will plant 1.0 acre (which is the 

minimum acreage requirement in this 

situation), your price election is $1.50 

per pound, and your production to 

count is 500 pounds. Your indemnity 

would be calculated as follows: 

(1) 1.0 acre × 1,950 pound production 

guarantee = 1,950 pounds; 

(2) 1,950 pounds × $1.50 price 

election = $2,925.00 value of the 

production guarantee; 

(3) 500 pound production to count × 

$1.50 price election = $750.00 value of 

the production to count; 

(4) $2,925.00 value of the production 

guarantee—$750.00 value of the 

production to count = $2,175.00; and 

(5) $2,175.00 × 1.000 share = 

$2,175.00 indemnity. 

(c) The total production (pounds) to 

count from all insurable acreage on the 

unit will include: 

(1) All appraised production as 

follows: 

(i) Not less than the production 

guarantee for acreage: 

(A) That is abandoned; 

(B) Put to another use without our 

consent; 

(C) That is damaged solely by 

uninsured causes; 

(D) For which you fail to provide 

records of production, that are 

acceptable to us; or 

(E) Of any type of tobacco when the 

stalks and stubble have been destroyed 

without our consent; 

(ii) Production lost due to uninsured 

causes. 

(iii) Potential production on insured 

acreage you intend to put to another use 

or abandon, if you and we agree on the 

appraised amount of production. Upon 

such agreement, the insurance period 

for that acreage will end when you put 

the acreage to another use or abandon 

the crop. If agreement on the appraised 

amount of production is not reached: 

(A) If you do not elect to continue to 

care for the crop, we may give you 

consent to put the acreage to another 

use if you agree to leave intact, and 

provide sufficient care for, 

representative samples of the crop in 

locations acceptable to us (The amount 

of production to count for such acreage 

will be based on the harvested 

production or appraisals from the 

samples at the time harvest should have 

occurred. If you do not leave the 

required samples intact, or fail to 

provide sufficient care for the samples, 

our appraisal made prior to giving you 

consent to put the acreage to another 

use will be used to determine the 

amount of production to count.); or 

(B) If you elect to continue to care for 

the crop, the amount of production to 

count for the acreage will be the 

harvested production, or our reappraisal 

if additional damage occurs and the 

crop is not harvested; and 

(2) All harvested production from 

insurable acreage. 

(d) Once we agree the current year’s 

tobacco has no market value due to an 

insured cause of loss, you must destroy 

it, and it will not be considered 

production to count. If you refuse to 

destroy such tobacco, we will include it 

as production to count and value it at 

your applicable price election. 

(e) Mature tobacco may be adjusted 

for quality deficiencies when 

production has been damaged by 

insurable causes. 

(1) You must contact us before any 

tobacco is delivered to the tobacco 

company, commercial marketing 

association, or tobacco handler so that at 

our option we may inspect the tobacco 

to determine and document the extent 

of the damage. 

(2) Our inspection will be used to 

assist in determining whether the price 

paid for the quality deficient tobacco by 

the tobacco company, commercial 

marketing association, or tobacco 

handler is reasonable. Based on the 

degree of damage documented by the 

tobacco company compared to our 

inspection, if the price adjusted for 

quality is: 

(i) Reasonable, such price will be used 

to determine the quality adjustment in 

section 12(e)(5); 

(ii) Unreasonable, we may adjust the 

price used to calculate the quality 

adjustment in section 12(e)(5). 

(3) If you deliver any production to 

the tobacco company, commercial 

marketing association, or tobacco 

handler without giving us the 

opportunity to inspect the tobacco you 

will not receive a quality adjustment for 

such tobacco, regardless of the price 

received by the tobacco company, 

commercial marketing association, or 

tobacco handler. 

(4) Production to count will only be 

reduced if the average price received for 

damaged tobacco is less than 75 percent 


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Federal Register / Vol. 72, No. 99 / Wednesday, May 23, 2007 / Proposed Rules 28901 

of your tobacco contract price. You must 

provide us with a marketing record 

acceptable to us which clearly shows 

the number of pounds, price per pound, 

and the quality of such tobacco. 

(5) Any reduction in the production to 

count will be determined by: 

(i) Dividing the price per pound as 

determined by us in accordance with 

section 12(e)(2) of these Crop Provisions 

by your applicable tobacco contract 

price; and 

(ii) Multiplying this result by the 

number of pounds of damaged 

production. 

13. Late Planting. 

In lieu of late planting provisions in 

the Basic Provisions regarding acreage 

initially planted after the final planting 

date, insurance will be provided for 

acreage planted to the insured crop after 

the final planting date as follows: 

(a) The production guarantee (per 

acre) for acreage planted during the late 

planting period will be reduced by: 

(1) One percent per day for the 1st 

through the 10th day; and 

(2) Two percent per day for the 11th 

through the 15th day; 

(b) The premium amount for insurable 

acreage planted to the insured crop after 

the final planting date will be the same 

as that for timely planted acreage. If the 

amount of premium you are required to 

pay (gross premium less our subsidy) for 

acreage planted after the final planting 

date exceeds the liability on such 

acreage, coverage for those acres will 

not be provided (no premium will be 

due and no indemnity will be paid for 

such acreage). 

14. Prevented Planting. 

Your prevented planting coverage will 

be 35 percent of your production 

guarantee for timely planted acreage. 

Additional prevented planting coverage 

levels are not available for tobacco. 

Signed in Washington, DC, on May 15, 

2007. 

Eldon Gould, 

Manager, Federal Crop Insurance 

Corporation. 

[FR Doc. E7–9775 Filed 5–22–07; 8:45 am] 

BILLING CODE 3410–08–P 

DEPARTMENT OF AGRICULTURE 

Commodity Credit Corporation 

7 CFR Part 1485 

RIN Number: 0051–AA69 

Market Access Program 

AGENCY: Commodity Credit Corporation, 

USDA. 

ACTION: Advance notice of proposed 

rulemaking and public hearing. 

SUMMARY: The Commodity Credit 

Corporation (CCC) is soliciting 

comments on whether to amend and 

revise the regulation at 7 CFR part 1485 

for the purpose of improving the 

effectiveness of the program. This action 

announces the comment period and the 

date, time, and location for a public 

hearing on the proposed rulemaking. 

The Market Access Program (MAP) is 

administered by personnel of the 

Foreign Agricultural Service (FAS). 

DATES: Written comments on the 

proposed rulemaking must be received 

on or before Monday, August 13, 2007, 

to be assured of consideration. FAS will 

conduct a public hearing in order to 

receive oral and written comments. The 

hearing is scheduled for Wednesday, 

July 25, 2007, from 9 a.m. to 2:30 p.m. 

ADDRESSES: The hearing scheduled for 

July 25, 2007, will be held in the 

Jefferson Auditorium at the U.S. 

Department of Agriculture, 1400 

Independence Avenue, SW., 

Washington, DC 20250. 

Comments may be hand delivered 

(including FedEx, DHL, UPS, etc.) to: 

Program Policy Staff, Office of Trade 

Programs, Foreign Agricultural Service, 

U.S. Department of Agriculture, 1250 

Maryland Avenue, SW., Suite 400, 

Washington, DC 20024–2162. 

Comments may also be delivered 

through the U.S. mail to: Program Policy 

Staff, Office of Trade Programs, Foreign 

Agricultural Service, U.S. Department of 

Agriculture, 1400 Independence Ave., 

SW., STOP 1042, Washington, DC 

20250–1042. All written comments 

received will be available for public 

inspection at the above address during 

business hours from 8 a.m. to 4 p.m., 

Monday through Friday. Persons with 

disabilities who require an alternative 

means for communication of 

information (Braille, large print, 

audiotape, etc.) should contact USDA’s 

Target Center at (202) 720–2600 (voice 

and TDD). 

FOR FURTHER INFORMATION CONTACT: 

Mark Slupek, Director, Program Policy 

Staff, Office of Trade Programs, Foreign 

Agricultural Service, U.S. Department of 

Agriculture, (202) 720–4327; fax (202) 

720–9361. 

SUPPLEMENTARY INFORMATION: 

Background 

The current regulation was last 

amended on June 2, 1998. FAS now has 

sufficient experience to propose further 

changes to improve the program’s 

effectiveness. MAP funding helps to 

create, expand, and maintain 

commercial export markets for U.S. 

agricultural products. The program 

forms partnerships between non-profit 

U.S. agricultural trade associations, U.S. 

agricultural cooperatives, non-profit 

state-regional trade groups, small U.S. 

businesses, and the CCC to share the 

costs of international marketing and 

promotional activities. Any future 

amendment of the regulation could be 

expected to include revision of outdated 

language. For example, the current 

regulation does not reflect the 

organizational changes resulting from 

the recent reorganization of FAS. 

Issues for Public Comment 

I. With respect to proposed 

administrative changes, comments on 

these specific issues are being 

requested: 

(a) Application process and activity 

plan. FAS is seeking comments on 

updating and merging the list of 

application requirements under 

§ 1485.13(a) and the activity plan 

requirements under § 1485.15 to reflect 

the Unified Export Strategy system that 

is currently in place. 

(b) Approval Criteria. FAS is seeking 

comments on the application approval 

criteria and allocation factors identified 

under § 1485.14(b) and (c). 

II. With respect to amending and 

revising the scope and coverage of the 

regulation, FAS is soliciting comments 

regarding the feasibility of the changes 

proposed below and views regarding 

how they might be implemented. 

(a) Expanding the scope of the 

program to include activities designed 

to address international market access 

issues. FAS is aware of the increasing 

numbers of trade barriers that disrupt 

the export of U.S. agricultural products 

in mature markets and is considering 

modifying the program to ensure that 

appropriate activities of this type would 

be reimbursable. 

(b) Modifying the lists of eligible and 

ineligible contributions [currently found 

at § 1485.13(c)] to better identify in-kind 

and third party contributions. 

(c) Modifying the lists of reimbursable 

and non-reimbursable activities 

[currently found at § 1485.16(b), (c), and 

(d)] to clarify existing activities and to 

include the use of electronic 

technologies not considered in the 

current regulation. 

(d) Revising the portions of the 

regulation regarding contracting 

procedures [currently found at 

§ 1485.23(c)]. The current regulation 

may not address the full range of 

contracting situations faced by 

participants. It may be necessary to 

identify the differences between 

employees, consultants, and contractors. 

(e) Revising the portions of the 

regulation regarding the compliance 

review and appeals processes. The 


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