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

48798

Vol. 62, No. 180

Wednesday, September 17, 1997

DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Chapter IV

General Administrative Regulations;

Nonstandard Underwriting

Classification System

AGENCY: Federal Crop Insurance

Corporation, USDA.

ACTION: Advanced Notice of Proposed

Rulemaking; Request for Comments.

SUMMARY: This notice announces a

public comment period on the

Nonstandard Underwriting

Classification System (NCS) which is

administered by the Federal Crop

Insurance Corporation (FCIC) in

conjunction with the Federal crop

insurance program. The NCS program

compares an individual producer’s crop

loss history with the losses for the

producer’s county. If the producer

exceeds the level of loss frequency and

severity set by FCIC, the producer’s

rates and coverages are adjusted to bring

the policy into line with FCIC’s

statutory mandate to implement an

actuarially sound crop insurance

program. Concurrently, the loss

histories for these NCS producers are

removed from the accumulated program

statistics which are used to set the

insurance rates for the remainder of the

policyholder population. This has the

effect of moderating rate increases for

the majority of producers by making

high loss producers responsible for

paying more premium based on their

individual risk.

A number of interested parties,

including producer groups and

insurance agent associations, have

indicated that NCS does not treat

producers fairly and that it does not

correctly identify those producers who

represent greater risk to the crop

insurance program based on their

individual loss histories. These

comments have come at a time when

FCIC is seeking ways to improve the

NCS process relative to reducing the

administrative burden of the program.

In its current form, NCS creates a

significant amount of work to review

individual producers who are selected

under the current NCS regulations.

FCIC is soliciting comments

concerning improving NCS in a manner

consistent with the administration of an

actuarially sound crop insurance

program.

DATES: Submit comments on or before

October 17, 1997.

ADDRESSES: Interested persons are

invited to submit written comments to

the Director, Claims and Underwriting

Services Division, Risk Management

Agency, United States Department of

Agriculture, 1400 Independence

Avenue, S.W., STOP 0803, room 6749–

S, Washington, D.C. 20250–0803. A

copy of each response will be available

for public inspection and copying

during regular business hours (7:00 a.m.

to 4:30 p.m., Eastern Time, at the above

address).

FOR FURTHER INFORMATION CONTACT:

Michael F. Hand, Director, Claims and

Underwriting Services Division, Risk

Management Agency, at the

Washington, D.C. address listed above,

telephone (202) 720–3439.

SUPPLEMENTARY INFORMATION:

Title: Nonstandard Underwriting

Classification System. 7 CFR part 400,

subpart O.

Respondents/Affected Entities: Parties

affected by the NCS process and any

changes which may occur as a result of

this review include producers,

insurance companies reinsured by FCIC,

and insurance agents.

Abstract: FCIC is conducting a review

of the NCS program to address reported

and identified problems with the

process as it currently exists. FCIC had

previously identified a need to change

the system consistent with a need to

simplify the crop insurance program in

general and reduce the time and

resources needed to administer NCS

each year. The goal was to identify

advances in the availability of crop

insurance program data and computer

processing capabilities and use these

improvements to automate the NCS

process.

Subsequent to the start of the

automation improvement effort, FCIC

began to receive comments regarding

perceived problems with the NCS

selection process. For many producers

in the Upper Midwest and Southwest,

1997 was the third year of consecutive

flooding or drought respectively.

Producers who had received crop

insurance payments in 1995 and 1996

were concerned that the 1997 losses in

conjunction with any other loss history

they had would result in their being

placed on NCS. Combined with the

increasing emphasis being placed on

crop insurance by lending institutions,

some producers worried that a sharp

increase in premium rates or adjustment

to their coverage could adversely impact

their ability to obtain financing.

Additional comments received reflected

concerns about the impact of NCS on

new producers and other situations

which might be viewed as being unfair

relative to the NCS selection process.

FCIC is seeking public comment on a

range of options being considered to

address the above stated issues. These

options include but are not limited to:

(a) Eliminate the NCS program

altogether; (b) amend the current NCS

program regulations as needed in order

to address identified issues (to include

moderation of premium increases and

changes to recognize and exclude

widespread disasters.); (c) implement an

entirely new NCS process that would

segregate producers with excessive crop

insurance losses and rate their policies

separate from the mainstream producer

population (proposals include the use of

premium adjustment tables to identify

excessive ratios, using Actual

Production History (APH) yield floors to

trigger higher premium rates, or other

means of identifying the frequency and

severity of losses); (d) maintain the

current NCS program and adjust the

process to achieve administrative

efficiencies and assure fair and

equitable determinations; and (e) place

a two year moratorium on the current

regulation to delay adding any new NCS

selections until acceptable program

changes can be implemented. If

sufficient consensus exists, FCIC would

consider implementing the revised NCS

process for the 1999 crop year.

Background: The NCS program was

implemented in 1991 in response to

data analysis which showed that a

relatively small number of crop

insurance policyholders were receiving

as much as twenty-eight (28) percent of

the indemnities for the period reviewed.

The purpose of NCS was to isolate

producers with adverse loss experience
Federal Register / Vol. 62, No. 180 / Wednesday, September 17, 1997 / Proposed Rules 48799

exceeding established limits and rate

them separately from the rest of the

policyholder population. This concept

is consistent with other private and

public insurance programs which have

the means to identify participants with

high losses and separately rate them for

the risk associated with the losses they

have incurred. In 1997 25,126 NCS

listings appeared on county crop

actuarial documents. This number,

which is less than two percent of the

policyholders with active crop policies

in 1996, includes producers no longer

actively engaged in farming, as well as

duplicate names for those producers

who farm multiple crops or farm in

more than one county. The list does not

include other persons who share in the

crop with a NCS producer, but who are

required to pay the same NCS rates as

the listed producer. The primary benefit

of the NCS program is that by

individually rating high loss producers

under this process, FCIC is able to

exclude their loss histories from the

premium rating formulas. It has been

estimated that on a crop policy basis,

this saves non-NCS producers from five

to nine percent on the cost of their crop

insurance coverage. It has also been

estimated that if NCS were eliminated,

the reintroduction of the loss history

into the rating pool would result in

across the board premium increases for

all non-NCS producers of $50 to $90 per

crop policy annually.

Under the current NCS regulations,

producers are selected for NCS

adjustment if they meet the following

criteria:

(1) Three or more indemnified losses

during the NCS base period, (The base

period generally means ten consecutive

crop years. The base period for 1998

NCS selections is 1987–1996 for most

crops.)

(2) Cumulative indemnities exceed

same period cumulative premiums by at

least $1,000.

(3) A premium has been earned in at

least one of the most recent 4 crop years

in the base period.

(4) The result of dividing the number

of indemnified losses during the base

period by the number of years premium

is earned is equal to, or greater than, .60.

(5) Either of the following apply:

(a) The ‘‘Z’’ score (a reference loss

ratio used to ensure comparability

between producers) equals 2.00 or

greater; or

(b) Five or more indemnified losses

have occurred during the NCS base

period and the cumulative loss ratio

equals 1.50 or greater.

The consecutive occurrence of

widespread adverse weather conditions

in the Upper Midwest and Southwest, at

the same time when changing U.S. farm

policy has increased producer’s reliance

on crop insurance, has resulted in a

greater awareness of the NCS program.

Some producers are concerned that their

recent losses will be followed by

selection for NCS rate or coverage

adjustments. This concern has also been

echoed by producer organizations and

elected representatives. FCIC had

formulated a two tiered strategy to deal

with these concerns. The short-term

plan was to thoroughly review the 1998

NCS selections to ensure that producers

who had been impacted by widespread

disasters were not placed on NCS based

primarily on losses associated with the

disasters. For the longer term, FCIC was

to survey interested parties about NCS

and form a work group to recommend

changes to the NCS program for the

1999 crop year. The survey was

completed and the responses received

reviewed. The work group was not

formed because of concerns relating to

the Federal Advisory Committee Act.

Instead, FCIC has determined to seek

public comment regarding the NCS

process through the Federal Register

and this notice. Comments received in

response to the original survey will be

considered in conjunction with any

comments received in response to this

notice.

Executive Order 12866

The Office of Management and Budget

(OMB) has determined this rule to be

not significant for the purposes of

Executive Order 12866, and, therefore,

this rule has not been reviewed by

OMB.

Signed in Washington, D.C., on September

12, 1997.

Kenneth D. Ackerman,

Manager, Federal Crop Insurance

Corporation.

[FR Doc. 97–24770 Filed 9–16–97; 8:45 am]

BILLING CODE 3410–08–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. 97–ANE–05]

RIN 2120–AA64

Airworthiness Directives; Pratt &

Whitney JT8D Series Turbofan Engines

AGENCY: Federal Aviation

Administration, DOT.

ACTION: Notice of proposed rulemaking

(NPRM).

SUMMARY: This document proposes the

supersedure of an existing airworthiness

directive (AD), applicable to Pratt &

Whitney JT8D series turbofan engines,

that currently requires a determination

of the utilization rate and coating type

of the 7th, 8th, 9th, 10th, 11th, and 12th

stage high pressure compressor (HPC)

disks, and removal, inspection for

corrosion, and recoating of those HPC

disks based on utilization rate. This

action would shorten the inspection

interval for certain low utilization disks.

This proposal is prompted by reports of

an additional uncontained 9th stage

HPC disk failure due to corrosion

pitting. The actions specified by the

proposed AD are intended to prevent

fracture of the HPC disks, which can

result in uncontained release of engine

fragments, inflight engine shutdown,

and airframe damage.

DATE: Comments must be received by

November 17, 1997.

ADDRESSES: Submit comments in

triplicate to the Federal Aviation

Administration (FAA), New England

Region, Office of the Assistant Chief

Counsel, Attention: Rules Docket No.

97–ANE–05, 12 New England Executive

Park, Burlington, MA 01803–5299.

Comments may also be sent via the

Internet using the following address: ‘‘9-

ad-engineprop@faa.dot.gov’’. Comments

sent via the Internet must contain the

docket number in the subject line.

Comments may be inspected at this

location between 8:00 a.m. and 4:30

p.m., Monday through Friday, except

Federal holidays.

The service information referenced in

the proposed rule may be obtained from

Pratt & Whitney, 400 Main St., East

Hartford, CT 06108; telephone (860)

565–6600, fax (860) 565–4503. This

information may be examined at the

FAA, New England Region, Office of the

Assistant Chief Counsel, 12 New

England Executive Park, Burlington,

MA.

FOR FURTHER INFORMATION CONTACT:

Christopher Spinney, Aerospace

Engineer, Engine Certification Office,

FAA, Engine and Propeller Directorate,

12 New England Executive Park,

Burlington, MA 01803–5299; telephone

(781) 238–7175, fax (781) 238–7199.

SUPPLEMENTARY INFORMATION:

Comments Invited

Interested persons are invited to

participate in the making of the

proposed rule by submitting such

written data, views, or arguments as

they may desire. Communications

should identify the Rules Docket

number and be submitted in triplicate to

the address specified above. All