65130 Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations

DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 457

RIN 0563–AB03

Common Crop Insurance Regulations;

Basic Provisions; and Various Crop

Insurance Provisions

AGENCY: Federal Crop Insurance

Corporation, USDA.

ACTION: Final rule.

SUMMARY: The Federal Crop Insurance

Corporation (FCIC) amends the

Common Crop Insurance Regulations to

delete the late and prevented planting

provisions currently contained in many

Crop Provisions, incorporate revised

late and prevented planting provisions

into the Common Crop Insurance Policy

Basic Provisions, and add definitions

and provisions that are common to most

crops. The intended effect of this action

is to provide policy changes that meet

the needs of the insured, are easier to

administer, and to delete repetitive

provisions contained in various Crop

Provisions.

EFFECTIVE DATE: This rule is effective

December 4, 1997.

FOR FURTHER INFORMATION CONTACT:

Louise Narber, Insurance Management

Specialist, Research and Development,

Product Development Division, Federal

Crop Insurance Corporation, United

States Department of Agriculture, 9435

Holmes Road, Kansas City, MO 64131,

telephone (816) 926–7730.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

The Office of Management and Budget

(OMB) has determined this rule to be

significant, and therefore, this rule has

been reviewed by OMB.

Paperwork Reduction Act of 1995

Pursuant to the Paperwork Reduction

Act of 1995 (44 U.S.C. 3507), those

collections of information have been

approved by the Office of Management

and Budget (OMB) under control

number 0563–0053.

Cost-Benefit Analysis

A Cost-Benefit Analysis has been

completed and is available to interested

persons at the Kansas City address listed

above. In summary, the analysis finds

that the rule makes several major

changes in the implementation of

prevented planting provisions.

Specifically, the rule: (1) Eliminates

substitute crop benefits, largely to

reduce the likelihood of fraud; (2)

increases prevented planting for cover

crop or black dirt situations, providing

better protection to producers who are

truly unable to plant a crop for harvest;

and (3) simplifies the payment method

by making payments on an acre-by-acre

basis in all cover crop and black dirt

situations. These provisions are

designed to improve the protection

provided to producers in adverse

prevented planting situations, and

simplify program operation.

Since this rule is expected to be

implemented in an actuarially sound

manner, there are no associated excess

losses that will be incurred by the

Federal government in the aggregate.

Two provisions—the increase in

coverage in black dirt and cover crop

situations provision and the ‘‘separate

payment’’ provision—are expected to

result in an increase in indemnities and

an increase in rates. The elimination of

substitute crop provisions will result in

reduced indemnities, and a rate

decrease in the aggregate. The net effect

of these changes is likely to be small in

terms of the rate impact, and will vary

according to crop and geographical

location. As a result of the small

expected average rate impact, any

changes in reimbursements to private

companies for delivery or any

underwriting gains are expected to be

minimal. The amendments made to

these regulations will simplify program

operations, benefit producers, FCIC, and

reinsured companies, and conform with

the Federal Crop Insurance Act.

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 the UMRA.

Executive Order 12612

It has been determined under section

6(a) of Executive Order 12612,

Federalism, that this rule does not have

sufficient federalism implications to

warrant the preparation of a Federalism

Assessment. The provisions contained

in this rule will not have a substantial

direct effect on States or their political

subdivisions, or on the distribution of

power and responsibilities among the

various levels of government.

Regulatory Flexibility Act

This regulation will not have a

significant economic impact on a

substantial number of small entities.

New provisions included in this rule

will not impact small entities to a

greater extent than large entities. The

amount of work required of insurance

companies will not increase because the

information to determine eligibility is

already maintained in their office and

the other required information is

already being collected under the

present policy. No additional actions are

required as a result of this rule on the

part of the producer or the insurance

companies. Therefore, this action is

determined to be exempt from the

provisions of the Regulatory Flexibility

Act (5 U.S.C. 605), and no Regulatory

Flexibility Analysis was prepared.

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 rule has been reviewed in

accordance with Executive Order 12988

on civil justice reform. The provisions

of this rule will not have retroactive

effect. The provisions of this rule will

preempt State and local laws to the

extent such State and local laws are

inconsistent herewith. The

administrative appeal provisions

published at 7 CFR part 11 must be

exhausted before action against FCIC for

judicial review may be brought.

Environmental Evaluation

This action is not expected to have a

significant impact on the quality of the

human environment, health, and safety.

Therefore, neither an Environmental

Assessment nor an Environmental

Impact Statement is needed.

National Performance Review

This regulatory action is being taken

as part of the National Performance

Review Initiative to eliminate

unnecessary or duplicative regulations

and improve those that remain in force.

Background

On Tuesday, August 12, 1997, FCIC

published a proposed rule in the

Federal Register at 62 FR 43236 to
Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations 65131

amend the Common Crop Insurance

Regulations, Basic Provisions (Basic

Provisions) (7 CFR part 457) and the

Crop Provisions (7 CFR §§ 457.101–

457.157) effective for the: (1) 1998 and

succeeding crop years for wheat, barley

and oats in counties with a December 31

contract change date; flax, cotton, ELS

cotton, sunflowers, and sugar beets in

counties with a November 30 contract

change date; and corn, grain sorghum,

soybeans, raisins, fresh market tomatoes

(guaranteed production plan), rice and

dry beans; (2) 1999 and succeeding crop

years for wheat, barley and oats in

counties with a June 30 contract change

date; rye, Texas citrus tree, Florida

citrus fruit, sugar beets in counties with

an April 30 contract change date; and

figs, pears, nursery, sugarcane, forage

production, walnuts, almonds,

safflowers, fresh market sweet corn,

macadamia trees, cranberry, onion,

grapes, fresh market tomatoes (dollar

plan), fresh market peppers, forage

seeding, peaches and plums; and (3)

2000 and succeeding crop years for

Texas citrus fruit, Arizona-California

citrus, and macadamia nuts. This rule

deletes the late and prevented planting

provisions, certain definitions and other

provisions that are applicable to most

crops and are currently contained in the

Crop Provisions and incorporates these

definitions and provisions into the Basic

Provisions to better meet the needs of

the insured.

Following publication of the proposed

rule, the public was afforded 30 days to

submit written comments and opinions.

Comments were received from an

insurance service organization,

reinsured companies, farm

organizations, a crop insurance agent,

national commodity groups, state

commodity groups, a regional

commodity group, a congressional

office, and legal counsel for reinsured

companies. The comments and FCIC’s

responses are as follows:

Comment: Legal counsel for a

reinsured company and an insurance

service organization stated that thirty

days was not sufficient time to review

and comment on the proposed rule. One

comment urged FCIC to leave the

comment period open for another 90

days to allow additional time for

analysis, testing, further comment, and

the promulgation of needed procedures.

However, a reinsured company urged

implementation of these provisions for

the 1998 crop year. The commenter

stated that the revised language for

prevented planting coverage is a major

step in the right direction. Many hours

have been spent in developing these

provisions and the commenter strongly

supports approval of the changes. The

changes bring simplicity to what has

been a very complicated coverage.

Farm organizations supported efforts

to expedite these changes by using a 30-

day comment period. There should be

adequate time for agent training and

producer education prior to policy signup for spring planted crops. One of the

problems with prevented planting

coverage in the past has been the lack

of understanding by producers of their

coverage.

Response: Based on the number of

comments received, FCIC believes that

for most crops 30 days provided an

adequate comment period. However,

due to the number of comments

received regarding the prevented

planting percent for cotton and ELS

cotton, this rule will be made effective

for these two crops for the 1998 crop

year only. FCIC will solicit additional

comments regarding prevented planting

coverage levels for these crops for the

1999 and succeeding crop years in a

future rule. The proposed changes are

necessary for the simplification of the

program and any extension of the

comment period would result in a delay

in the implementation of this rule until

the 1999 crop year. To best meet the

needs of producers the revised coverage

should be implemented for spring

planted crops in 1998.

Comment: An insurance service

organization felt that the amount of time

stated in the preamble under the

Paperwork Reduction Act for the

completion of an acreage report is

underestimated since all farm data,

including APH and unit arrangement,

must be incorporated into the process.

Response: FCIC had to estimate the

amount of time needed to complete each

form. The average time needed to

complete each form represents an

average of producers with only one crop

and one unit, larger operations with

several crops and units, and producers

who insure a crop but do not plant

(which would generate a zero acreage

report and only a yield descriptor on the

APH form, etc.). The average time stated

for all forms is as accurate as is possible.

Comment: Reinsured companies and

an insurance service organization

questioned the provisions in 7 CFR

457.2. They stated that sections 7 CFR

457.2(b) and (c) specify that FCIC may

offer the catastrophic level of coverage

directly to the insured through the local

Farm Service Agency (FSA) offices.

They suggested removing this language

because, effective for the 1998 crop year,

FSA offices will no longer deliver crop

insurance.

Response: Although the catastrophic

risk protection program is no longer

delivered through local FSA offices, the

authority for such delivery still exists.

However, FCIC has modified the

language to reflect the decision of the

Secretary to only offer coverage through

reinsured companies unless the

Secretary determines that the

availability of local agents is not

adequate.

Comment: A reinsured company

stated that it supported FCIC’s decision

to incorporate certain regulations into

the Basic Provisions but cautioned that

providing too much detail in the policy

could make it difficult for the producer

to understand and may drive producers

away from the crop insurance program.

The commenter stated that it is apparent

that FCIC is attempting to provide

producers with underwriting rules and

procedures. The commenter believes

that the insurance policy should simply

state definitions for clarity and

coverages for loss payments. They stated

that insureds do not need to know how

to underwrite a risk, they are the risk.

They need to be aware of what the

coverages are, when the premium is

due, what constitutes a loss, when it

will be paid, and what must be done in

the event of questions. The commenter

stated that section 457.2(b) is

unnecessary because it is a statement of

underwriting rules. A producer who has

received the crop insurance policy has

already chosen an insurance carrier and

has made a decision regardless of

whether FSA can still issue CAT

coverage. The insurance agent should

have discussed multiple contract

procedures with the producer prior to

completing a crop insurance

application. The commenter further

stated that section 457.2(d) determines

eligibility for coverage and is also

unnecessary. If the producer received

the policy information, the producer’s

eligibility has already been determined.

Otherwise the producer would not

receive the policy.

Response: The policy must contain

the information necessary for the

producer to make informed decisions.

Removing as much repetitious

information as possible from each

individual crop provision and placing it

in the Basic Provisions will make each

individual crop policy shorter and

easier to understand. It will also

eliminate any inadvertent discrepancies

that may have existed between such

information that was previously in each

individual crop policy but is now stated

only once in the Basic Provisions. The

provisions are regulatory and eligibility

and other requirements for participants

must be published where compliance is

mandatory. No change has been made.

Comment: Reinsured companies

commented on and questioned the
65132 Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations

language in 7 CFR 457.2(d), which states

that if more than one contract exists, all

contracts are void unless proven to be

inadvertent. If found to be inadvertent,

the contract with the earliest signature

date will be valid and no indemnity or

premium will attach to the canceled

contract. The commenters posed these

questions. What happens to crop acres

reported on the canceled contract, and

what impact do these crop acres have on

the contract determined to be in force.

Whether the crop acres on the canceled

contract will be uninsured or will such

acres be added to the contract found to

be in force. If the latter, have all policy

conditions regarding filing actual

production history and an acreage

report been met. If the contract in force

has higher levels of coverage than the

canceled contract, whether the insured

owes the additional premium based on

the contract in force. It has been

permissible for a producer of hybrid

seed corn who contracts with different

seed corn companies to have more than

one insurance contract for hybrid seed

corn. Whether this will be permissible.

Response: The contract in effect will

not be impacted by the canceled

contract. When multiple contracts exist

and are inadvertent and without the

fault of the insured, all timely reporting

done by the producer (e.g., actual

production history reports and acreage

reports) will be considered reported

under the active contract. If the active

contract has higher levels of coverage

than the canceled contract, the insured

will owe the additional premium based

on the active contract. FCIC has revised

the Basic Provisions to allow producers

of hybrid seed corn with more than one

contract with different seed companies

to insure the acreage under each

contract with a different reinsured

company.

Comment: A reinsured company and

an insurance service organization

commented on the language in section

457.8(b). The reinsured company stated

that the provision is not consistent with

the Standard Reinsurance Agreement

(SRA) because the SRA does not allow

rejection of applications for insurance

by a reinsured company. The

commenter also stated that the phrase

‘‘authorized to sell’’ should be defined.

The insurance service organization

stated that the first sentence of these

provisions has eliminated the

company’s prerogative to make

determinations on excessive risk

situations by eliminating the words ‘‘or

the reinsured company’s’’ determination

that the insurance risk is excessive. This

commenter questioned the effect of the

proposed language since ‘‘direct

written’’ federal policies are no longer

applicable. The commenter also stated

that the reinsured company must retain

some prerogatives in the case of

excessive risk. The FCIC should review

possible options such as removing the

cap on the Assigned Risk Fund or other

‘‘escape hatch’’ in the event of

significant change in the risk of a large

area.

Response: FCIC believes that the

authority to sell the policies is clearly

specified in other regulations and

agreements, and those provisions

should not be duplicated in this rule.

Under sections 508(b)(8) and 508(c)(9)

of the Act, only FCIC has the authority

to limit insurance on any farm, county

or area as a result of excessive risk.

Information available in the Federal

Register informs the public that

applications may not be accepted if

FCIC determines that excessive risk

exists. If such a situation were found to

exist, no insurance coverage will be

provided. If the reinsured company

believes that the risk is excessive under

a policy, it can seek a determination

from FCIC. Provisions regarding referral

to agents selling FCIC policies are no

longer applicable and they have been

removed.

Comment: An insurance service

organization suggested that a definition

be added to include both ‘‘production

guarantee’’ for APH crops and ‘‘amount

of insurance’’ for dollar plan crops. This

would shorten several long sentences

that currently refer to these terms.

Response: Adding a term which

combines both of the definitions of

‘‘production guarantee’’ and ‘‘amount of

insurance’’ would make the provisions

less clear because three terms would be

in use rather than two. No change has

been made.

Comment: An insurance service

organization suggested that ‘‘actuarial

documents’’ be defined instead of

‘‘actuarial table’’ because not all

information is provided in table format.

The commenter stated that the reference

to ‘‘forms’’ in the definition suggests

that the application and options are

included. The commenter also

questioned why ‘‘prices for computing

indemnities’’ are specified since prices

are used for premium calculation as

well.

Response: FCIC has determined that

‘‘prices for computing indemnities’’

should not be included in this

definition since those prices are now

contained in the Special Provisions.

Accordingly, the term ‘‘Actuarial Table’’

has been revised to ‘‘actuarial

documents’’ and the definition of

‘‘actuarial documents’’ has been

clarified.

Comment: An insurance service

organization suggested that the

definition of ‘‘application’’ be modified.

The commenter stated that since

suspension, debarment and violation of

the controlled substance provisions

would result in placement on the

ineligibility list, it does not seem

necessary to list these specific causes.

The definition as written suggests that a

break in coverage is always the result of

some adverse action.

Response: FCIC has revised the

definition to refer to both cancellation

and termination to mitigate any

connotation of adverse action.

Comment: An insurance service

organization suggested deleting the

phrase ‘‘made on our form’’ from the

definition of ‘‘assignment of

indemnity.’’ The commenter stated that

companies may accept and include a

lienholder without completion of a form

entitled assignment of indemnity. The

lienholder’s name can be entered on the

application, acreage report, or loss form

as ‘‘Loss payable to me and llll.’’

Response: Since the Standard

Reinsurance Agreement requires that all

forms used by the reinsured company be

approved by FCIC, the phrase ‘‘our

form’’ refers to any form that has been

approved by FCIC. The reinsured

company can effectuate an assignment

of indemnity through any form

approved for such purpose. Use of an

unapproved form by the reinsured

company is prohibited. No change has

been made.

Comment: A reinsured company and

an insurance service organization

commented on the definition of ‘‘basic

unit’’ which states’’ * * * No further

unit division may be made after the

acreage reporting date for any reason.’’

The commenter stated that basic units

may be corrected effective for the

current crop year, which could result in

more units than were reported. An

insurance service organization

suggested that a brief ‘‘unit’’ definition

be provided in conjunction with a more

detailed basic and optional unit section

for easier reference, especially since the

basic unit definition varies for some

crops. The commenter stated that the

phrase ‘‘Units will be determined when

the acreage is reported * * *’’ leads to

questions and difficulties about the

actual deadline for determining optional

units. Qualification for optional units

for APH crops depends on filing

production reports to match those units

by the production reporting date, which

is now earlier than the acreage reporting

date for many crops. The commenter

suggested rewriting the sentence to read

‘‘Units will be determined when the

acreage is reported (subject to other
Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations 65133

requirements).’’ The commenter also

questioned if the last two sentences of

the definition should be included in the

definition or in the ‘‘optional unit’’

section.

Response: Adding the phrase ‘‘subject

to other requirements’’ or a simplified

definition of ‘‘unit’’ and a detailed

section on basic and optional units

would not make these provisions more

clear. FCIC has moved the last two

sentences of the definition to the ‘‘Unit

Division’’ section.

Comment: A reinsured company

suggested adding ‘‘for all units of the

insured crop’’ at the end of the

definition ‘‘claim for indemnity.’’ Often

a unit with damage may be harvested

earlier than other units of the crop. It is

customary to finalize all loss units at the

same time, so the beginning of the 60-

day period should commence after

harvest is completed on all units.

Response: Because individual units

may have different end of insurance

period dates (e.g., differing harvest

dates, different calendar dates for the

end of the insurance period, prevented

planting acreage, etc.), FCIC does not

believe it is in the best interest of the

insured to delay finalization of claims

until all units are harvested. No change

has been made.

Comment: An insurance service

organization commented on the

definition of ‘‘contract’’ which is (See

‘‘policy’’). The commenter stated that

the definition of ‘‘contract’’ is integral in

the language of the SRA where it is

defined. The [current draft] SRA,

however, does not define ‘‘policy.’’ The

proposed Basic Provisions defines

‘‘policy’’ but not ‘‘contract.’’ The

commenter stated that the terms should

be consistent between both documents.

Response: The definition of ‘‘policy’’

and ‘‘contract’’ are the same and are not

inconsistent with the provisions in the

SRA. The definition in the SRA is

intended to accommodate differences

among reinsured companies in the

manner by which a policyholder’s

interests are identified. Some reinsured

companies issue separate contract

numbers for each county and crop;

others include multiple crops and

counties under the same contract

number. Since the purpose of the

definitions is not identical, the

definitions cannot be identical. No

change has been made.

Comment: An insurance service

organization recommended changing

the definition of ‘‘county’’ by replacing

the word ‘‘the’’ at the beginning of the

sentence with the word ‘‘any.’’ This

would recognize the possibility of

multi-county applications. Multi-county

applications, with adoption of

appropriate management procedures,

would permit a policyholder to insure a

farm in another county, if it was

acquired after the sales closing date.

Response: The provision has been

clarified to recognize that more than one

county may be shown on the

application. However, an insured may

not add acreage in another county after

the sales closing date unless such

addition results from the transfer of

insurance from a previous insured.

Comment: An insurance service

organization questioned why the word

‘‘deductible’’ is defined since it is not

used in the Basic Provisions.

Response: The word ‘‘deductible’’ is

used in some Crop Provisions. It is

defined in the Basic Provisions so it will

only have to be defined once. No change

has been made.

Comment: Reinsured companies

commented on the definition of ‘‘final

planting date.’’ The commenters stated

that the final planting dates are too late

for some crops and counties, especially

with the 25 day late planting period.

The commenters voiced their concern

regarding the impact the late planting

provisions will have in extending

coverage beyond a time period that will

allow for the normal maturity of the late

planted crop. The commenters also

questioned if an effort is being made to

assure that all final planting dates are as

accurate as possible, and if reinsured

companies will be involved in that

process.

Response: The Basic Provisions

contain provisions that are generally

applicable to most crops. If individual

crops or areas require a late planting

period shorter than 25 days, it will be

specified in the Crop Provisions or the

Special Provisions, which control the

Basic Provisions. FCIC will continue to

study and change final planting dates as

necessary and always welcomes

comments and recommendations from

all interested parties, including

reinsured companies and producers.

Comment: A reinsured company and

an insurance service organization stated

that the definitions of ‘‘FSA’’ and ‘‘FSA

farm serial number’’ should be deleted

because there is no need for reliance on

FSA information in the crop insurance

program.

Response: The FSA farm serial

number is used to qualify for optional

unit division in certain crop policies.

Further, FSA information may be used

in the crop insurance program. No

change has been made.

Comment: A reinsured company, an

insurance service organization, and

legal counsel for a reinsured company

made comments regarding the definition

of ‘‘good farming practices.’’ The

definition does not recognize how fact

sensitive and cost sensitive good

farming practices are. If the practices

‘‘generally’’ used in the county and

recognized by the Extension Service are

the ‘‘ideal’’ practices or are the practices

geared to the higher yield farms,

beginning producers, highly leveraged

producers, or producers of poorer soil

will be discriminated against and,

perhaps, ineligible for an indemnity. For

example, three applications of a

herbicide may be ideal and may be

applied by producers with a high yield

history. Two applications, however,

may be all that a producer with a low

yield history or insufficient funds may

be able to afford. For that producer, two

applications are a good farming practice.

Whether a producer is a ‘‘good’’

producer or a ‘‘bad’’ producer may

depend on what he or she can afford.

The rule must be amended to

accommodate the circumstances of the

particular farm and producer. The

reference to ‘‘Cooperative State

Research, Education, and Extension

Service,’’ should be deleted from the

definition of ‘‘good farming practices’’

or the definition must acknowledge that

there may exist acceptable cultural

practices that are not necessarily

recognized by the CSREE. A producer

using practices that differ from the norm

for the county probably would not be

eligible to insure. The practices used

should be compared to those of the area

in which the farm is located, not the

county. Perhaps a producer is located in

a microclimate within the county where

practices legitimately differ from the

county norm.

Response: FCIC recognizes that

certain circumstances for particular

farms and producers may differ (e.g.

types, varieties, farming practices, soil

types, etc.), and should be considered

when determining if good farming

practices were followed. However, the

producer’s inability to afford necessary

inputs to produce the crop should not

be a consideration in the determination

of good farming practices. FCIC believes

that the Cooperative State Research,

Education, and Extension Service

(CSREES) recognizes farming practices

that are considered acceptable for

producing a crop. If a producer is

following practices not currently

recognized as acceptable by the

CSREES, there is no reason why such

recognition cannot be sought by

interested parties.

Comment: A reinsured company

stated that the definition of

‘‘interplanted’’ is too restrictive for

interplanted perennials such as almonds

and walnuts which are maintained

separately and harvested separately,
65134 Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations

unless such will be acknowledged in the

appropriate Crop Provisions.

Response: The definition of

‘‘interplanted’’ contained in the Basic

Provisions does not adequately suit

perennial crops. Perennial crop

provisions will contain an appropriate

definition. No change has been made.

Comment: A reinsured company

suggested adding the word ‘‘initially’’

between the words ‘‘acreage’’ and

‘‘planted’’ in the definition of ‘‘late

planted.’’

Response: FCIC agrees with the

suggestion and has amended the

definition accordingly.

Comment: A reinsured company, farm

organization, a state commodity group,

and an insurance service organization

commented on the 25 day period in the

definition of ‘‘late planting period.’’ The

commenters state that producers will

have more incentive to plant the insured

crop during the late planting period.

The 25 day period is consistent with

producer comments expressed during

USDA public hearings held last

summer. The commenters support a

reduction of 1 percent per acre per day

for the full 25 day late planting period,

or a maximum reduction of 25 percent.

The phrase ‘‘unless otherwise specified

in the Special Provisions’’ should be

deleted because it could lead to program

complexity and checkerboard

application.

Response: Although FCIC recognizes

the need to mitigate program

complexity, removal of the exception for

Special Provisions would remove the

flexibility needed to recognize those

individual crops or areas that require a

shorter late planting period. No change

has been made.

Comment: A reinsured company

questioned if the definition of ‘‘noncontiguous’’ is intended to permit two

acreages of the same crop that are

separated by a different crop to qualify

for separate optional units. If so, this

may generate a large number of

additional optional units for crops for

which ‘‘non-contiguous’’ is a criterion

for optional unit division.

Response: The definition of ‘‘noncontiguous’’ is not intended to allow

two tracts of the same crop that are only

separated by a different crop to be

considered two separate optional units.

Units must be separated by land that the

insured person does not own or have an

interest in.

Comment: Legal counsel for a

reinsured company stated that the

definition of ‘‘planted acreage’’ sets

forth requirements that are inherent in

the concept of ‘‘good farming practice.’’

This definition is redundant.

Response: FCIC agrees that some of

the information is redundant but

believes that the term should be defined

since it is used in the provisions. No

change has been made.

Comment: Reinsured companies, an

insurance service organization, and

legal counsel for a reinsured company

expressed concern with the definition of

‘‘practical to replant.’’ The commenters

asked whether marketing windows

should be a factor in determining

whether a crop should be replanted.

They state that the intent of the policy

is to insure yield, not that the crop can

be marketed during an optimum

marketing window. They also state this

change in the insurance policy

represents a change in long standing

public policy. They state that the

Administrative Procedure Act requires

FCIC to disclose in detail the thinking

that animated this proposal. FCIC has

not done this, therefore, this definition

should be re-proposed for public

comment. The commmenters also

expressed concern that marketing

windows are unrelated to losses from

natural disaster and FCIC has long

opposed insuring such windows simply

because of the opportunity for fraud.

The introduction of lost marketing

windows as an insured cause of loss

makes FCIC’s policy a ‘‘business

interruption’’ policy that will

dramatically increase loss ratios and

premiums. The commenters were also

concerned moisture availability,

marketing window, condition of the

field, and time to crop maturity are all

subjective determinations that add

unnecessary complexity to the program.

The policy should deem that it is

practical to replant through the late

planting period. Further, the

commenters were concerned with the

provision that states, ‘‘unavailability of

seed or plants will not be considered a

valid reason for failure to replant’’ will

substantially add to producers’ costs.

Often it is possible to replant the

insured crop only if a different, faster

growing seed is used. There are often

shortages of such seeds when there is a

widespread disaster and those farmers

who can least afford new seed, e.g.,

beginning producers, will wait until

they are certain the original seed cannot

germinate before investing again in

seed. By that time, seed is sometimes

unavailable. Clearly, if it is impossible

to replant, it should not be practical to

replant by law. They state that FCIC’s

rule will require all producers in

general, and beginning producers in

particular, to invest in seed that they

may not need. While this may be a

boom to seed companies, they are not

the intended beneficiaries of the Act. In

addition, the commenters state that a

crop cannot be appraised and released

for another use until it is no longer

practical to replant. Making the

determination that it is no longer

practical to replant has been

problematic since it may be practical to

replant in some regions yet not in others

within the late planting period. They

state that policy language has been weak

in this regard and there is no attempt in

this rule to strengthen it. They requested

that consideration be given to counting

the ‘‘salvage value’’ against the insured

crop if an insured chooses to plant an

alternate or replacement crop when it is

practical to replant the original. Two

possible concerns are that the alternate

crop is not an insured crop and,

therefore, the value is difficult to

determine, and the alternate crop is

insured with a different company,

causing administrative difficulties.

Nevertheless, the approach could put

the industry in the cooperative position

of ‘‘staying with the insured’’ regardless

of the insured’s replanting choice, while

limiting exposure to the guarantee that

was originally established.

Response: The Federal Agriculture

Improvement and Reform Act of 1996

mandated FCIC to consider marketing

windows in determining whether it is

feasible to require planting during a

crop year. Therefore, the change

implements statute and does not require

detailed justification. Many factors other

than the end of the late planting period

enter into the decision of whether it is

practical to replant. The definition of

‘‘practical to replant’’ is only applicable

to planting acreage to the originally

planted crop. If it is considered practical

to replant, the Crop Provisions may

authorize a replanting payment. If the

crop is damaged by an insurable cause

of loss, an appraisal will be completed

to see if the crop qualifies for a

replanting payment. However, this

appraisal is used solely as a qualifier.

Planting a different crop following the

failure of an originally planted crop is

not replanting. If an alternative crop is

planted when it is still practical to

replant to the originally planted crop,

the originally planted crop is not

insured. No change has been made.

Comment: Several comments were

received regarding the definition of

‘‘prevented planting.’’ Farm

organizations stated strong support for

the new definition, which includes

acreage prevented from planting by the

final planting date or by the end of the

late planting period due to any insured

cause of loss. Reinsured companies

questioned the phrase ‘‘majority of

producers in the surrounding area.’’
Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations 65135

There will be instances where land

characteristics of a few producers or a

single producer prevent planting of the

insured crop. Possibly the phrase ‘‘with

similar land characteristics’’ should be

inserted after ‘‘majority of producers’’ to

address this situation. The commenters

also suggested that the sentence ‘‘You

must have failed to plant * * *’’ be

changed to ‘‘You must have been

prevented from planting. * * *’’ Legal

counsel for a reinsured company

recommended clarifying the definition

of ‘‘prevented planting’’ The definition

should make clear that if a majority of

producers did replant but had losses

that exceeded what would have been

their claims for prevented planting,

then, indeed, a majority were prevented

from planting. The comment also

indicated that the term ‘‘surrounding

area’’ is confusing. The commenter

believes the term describes the entire

area in which the insured cause occurs,

even if it occurs across state lines. Also,

the term ‘‘majority’’ was troublesome to

the commenter. A reinsured company

has no way of knowing whether a

majority of uninsured producers or

another reinsured company’s

policyholders were prevented from

planting. Suppose an insured lives on a

line, north of which all farmers,

numbering 100, were not prevented

from planting and south of which all

farmers, numbering 101, were prevented

from planting. The commenter asked

whether the definition is satisfied.

Response: The phrase, ‘‘majority of

producers’’ has been removed. The

definition of ‘‘prevented planting’’ has

been amended to include the phrase

‘‘You must have been prevented from

planting’’ as suggested. FCIC has also

clarified that a crop will be considered

to have been prevented from being

planted if most producers are also

prevented from planting on acreage with

similar characteristics in the

surrounding area.

Comment: A reinsured company

questioned the definition of ‘‘prevented

planting, notice of.’’ The commenter

stated that notice can be given by

telephone but must be confirmed in

writing within 15 days. The commenter

asked if it was the intent that multiple

notices be given if the county had

multiple final planting dates.

Response: Based on this and other

comments, the definition has been

deleted.

Comment: An insurance service

organization suggested that the phrase

‘‘in the actuarial documents’’ replace

the phrase ‘‘in the Special Provisions or

an addendum thereto’’ in the definition

of ‘‘price election.’’ The commenter

stated that the term creates confusion

because it refers variously to the

established (or preliminary) price, a

market price, or to the value resulting

from multiplying a percentage chosen

by the insured by either of the first

values cited. It would be helpful either

to create a new term or to assure that

this term is used consistently in policy

and procedure. Dollar plan crops may

have an amount of insurance instead of

a ‘‘price percentage,’’ but does ‘‘price

election’’ apply any better?

Response: Since the price election is

an integral part of the contract, the

insured must receive notification of the

price election each year. Insureds

receive the Special Provisions each year.

They do not receive the actuarial

documents. No change has been made.

Comment: An insurance service

organization stated that the words

‘‘replace’’ and ‘‘replacing’’ in the

definition of ‘‘replanting’’ can be read to

mean another crop is being substituted

for the originally planted crop.

Response: The definition makes it

clear that the land must be prepared to

replace the damaged or destroyed crop.

However, FCIC has clarified that the

land must be prepared to replace the

insured crop.

Comment: A reinsured company

questioned what the phrase ‘‘in certain

instances’’ means in the definition of

‘‘representative sample.’’

Response: The phrase is intended to

provide the reinsured company with the

discretion to allow the producer to

harvest the crop and only leave samples

of the residue. Certain circumstances

may be when an area has widespread

comparable losses. No change has been

made.

Comment: A reinsured company

suggested that the definition of ‘‘state’’

be modified to read, ‘‘The state where

the crop is grown, as shown on your

accepted application.’’

Response: There may be instances in

which a crop insured by written

agreement may be under the actuarial

documents of a county in a state other

than where it is grown. In this case, the

state listed on the accepted application

would be the state from which the

actuarial documents originate. No

change has been made.

Comment: A reinsured company

suggested including language in the

definition of ‘‘summary of coverage’’

that acknowledges that other names also

apply to this document.

Response: The definition of

‘‘summary of coverage’’ defines the term

as used in the policy. A form with a

different name would be considered a

summary of coverage so long as it meets

the criteria contained in the definition.

No change has been made.

Comment: Several comments were

received with regard to section 2(b). A

reinsured company and an insurance

service organization questioned whether

an incomplete application must be

rejected, or whether reinsured

companies can allow a short amount of

time to obtain the missing information.

The commenters asked about

alternatives for the applicant and the

reinsured company if the sales closing

date has passed before the omission is

discovered. An insurance service

organization questioned whether

companies have the authority to alter

the named insured by deleting any part

that is incomplete, as implied in the

second sentence. The commenter asked

whether this provision could be in

procedure rather than the policy. Legal

counsel for a reinsured company asked

if the next to the last sentence in section

2(b) should indicate that coverage will

be reduced by ‘‘that person’s share’’

rather than to ‘‘that person’s share?’’

Also, in the last sentence of the same

section, the commenter asked whether

the ‘‘person’’ refusing to supply a tax

identification number is the same

person or a different person than the

‘‘entity’’ to whom insurance will not be

available.

Response: The intent of the section

2(b) is to advise the applicant that all

required information must be provided

and that the social security number or

the employer identification number, as

appropriate, for all persons having a

substantial beneficial interest in the

insured crop always must be included

on the application. The application

must be rejected if all necessary

information is not provided by the sales

closing date. It is the insured’s and

agent’s responsibility to ensure that no

information is omitted. Reinsured

companies will delete those persons

from the application who refuse to

provide the necessary information. The

next to last sentence in section 2(b)

should indicate that coverage will be

reduced by that person’s share. The

sentence has been amended

accordingly. The last sentence has been

revised to clarify that if a person refuses

to provide identification information,

insurance will not be available for that

person and any entity in which that

person has a substantial beneficial

interest.

Comment: Several comments were

received with regard to section 2(e). An

insurance service organization stated

that the second sentence is unclear as to

its effect. The commenter stated that, as

written, a person could not be eligible

until all payments are made in

accordance with an agreement to pay, a

fact that would not be known until the
65136 Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations

last payment is made. If eligibility is

intended to be restored once a payment

schedule is established, the phrase

should be clarified. Legal counsel for

reinsured companies stated that section

2(e) is illegal, unenforceable and in

conflict with FCIC’s own regulations

and procedures. The commenter also

stated that unpaid debts alone do not

create ineligibility because the

policyholder’s name must be placed on

an ineligible list after certain procedural

requirements are satisfied and that list

must be given to insurers before the

action is effective. The commenter

suggested that FCIC should conform this

paragraph to section 23, 62 Fed. Reg. at

43248, which states that your insurance

policy will be canceled if you are

determined, by the appropriate Agency,

to be ineligible by reason of debt. The

commenter also expressed concern that

the proposed language is unclear as to

which termination date triggers

delinquency, the one contained in the

current year crop policy or the one

applicable to next year’s crop. The

commenter also stated that the

provision fails to state who determines

ineligibility and the exact date

ineligibility begins. The policy language

should state whether ineligibility begins

on the date the producer fails to pay the

premium by the termination date, the

date the reinsured company notifies the

producer of the debt and a meaningful

opportunity to contest the same, after

the producer fails to respond to the

written notice by the reinsured

company, the date the FCIC verifies that

the person has met the criteria for

ineligibility, the date the FCIC mails

notice to the producer’s last known

address, or the date that the producer

receives notice from the FCIC of

ineligibility. The commenter also stated

that the proposed regulation should set

forth the standards, if any, for

reinstatement of producer eligibility and

for removal of the producer’s name from

the ineligible tracking system. The

provisions should clarify whether

ineligibility as a result of failure to

timely pay premiums will result in the

FCIC voiding all the producer’s policies

or only the policy for which the

producer is delinquent in paying

premiums. The provisions should

clearly state that the insured is solely

responsible for any indemnities or

payments made by the reinsured

company on a policy voided by FCIC.

The provisions should state that FCIC

expressly pre-empts all claims arising

by placement of the producer’s name on

the ineligible tracking system.

Response: This provision was

intended to allow a producer to become

eligible for insurance once the producer

repays the debt, enters into an

agreement for repayment and the

payments are timely made, or files a

petition in bankruptcy to discharge the

debt. Therefore, the producer who

executes an agreement for repayment is

eligible while making payments.

However, if the producer fails to timely

make a payment, the producer is again

ineligible and will not become eligible

until the debt is paid in full or the

producer files a petition to have the debt

discharged in bankruptcy. The

bankruptcy provisions have also been

clarified. Unpaid debts do result in

ineligibility in accordance with 7 CFR

§ 400.459. Section 2(e) relates to

eligibility as described in § 400.459 and

also describes when crop insurance

policies are terminated when unpaid

debts are overdue. Therefore, the

provision is not illegal, unenforceable or

in conflict with the regulations and

procedures. Delinquency of any amount

due arises on the termination date that

the amount was due. This is the date

that triggers ineligibility. An example

has been added for clarification.

Determinations of ineligibility are made

in accordance with 7 CFR part 400,

subpart U. Policies can only be

reinstated if it is determined that the

termination was in error. If the producer

fails to repay any amount owed by the

termination date, the policy is

terminated, and the producer later

becomes eligible, the producer must

submit a new application for insurance.

FCIC believes that the provisions clearly

indicate that all policies will be

terminated in the event a debt is

delinquent for any crop. Each

application requires the applicant to

provide information on prior and

existing insurance. The reinsured

company has the capacity to verify

eligibility, which would result from

these questions. It is possible that under

some circumstances a replant payment

or early loss could be paid before the

person is made ineligible and any

existing policies voided. For example:

The producer is indebted to company A

but currently insured with company B.

Company A is late certifying the

producer as ineligible (after the

termination date by 6 months). In the

meantime, insurance attaches with

company B and a loss is paid. The

policy will be voided and the insured

will be required to repay any amounts

paid under the voided contract.

Comment: A reinsured company and

an insurance service organization

questioned if section 2(g) should be

deleted. The commenter stated that it

should be the company’s discretion to

terminate a policy if no premium is

earned for 3 consecutive years. This

provision is counter to the concept of

enrolling all crops that the producer

may grow, at least at the catastrophic

risk protection level.

Response: FCIC has modified the

language to state that reinsured

companies may terminate policies that

have not earned premium for 3

consecutive years.

Comment: Comments were received

with regard to section 3(c). A reinsured

company suggested that these

provisions be modified to facilitate

future streamlining of the APH process

that has been discussed, specifically

referencing the concept of optional yield

updating. The commenter suggested that

the sentences ‘‘If you do not provide the

required production report, we will

assign a yield for the previous crop

year’’ and ‘‘The yield assigned by us

will not be more than 75 percent of the

yield used by us to determine your

coverage for the previous crop year’’ be

removed from these provisions and put

in the Special Provisions. The

commenter also suggested that the first

sentence be modified to read, ‘‘Your

production report must be provided to

us by the earlier of the acreage reporting

date or 45 days after the cancellation

date.’’ The sentence ‘‘Production and

acreage for the prior crop year must be

reported for each proposed optional unit

by the production reporting date’’

should be modified to allow for added

land and use of another person’s records

until the acreage reporting date, which

is allowable under the Crop Insurance

Handbook. An insurance service

organization suggested clarifying the

provisions to specify that production

reports are required for some crops but

not for all crops. Also, consider if the

fifth sentence should read

‘‘* * * unless otherwise specified in

the policy’’ instead of ‘‘* * * by FCIC.’’

Response: There is nothing in these

provisions that preclude streamlining

the APH process and since the APH

regulations are separate from this

policy, reference to optional yield

updating will be more appropriately

located in the APH regulations. Further,

since the consequences of not providing

a production report is universal to all

crops requiring production reports and

do not vary by county, these provisions

are more appropriately located in the

Basic Provisions. Requirement in the

first sentence that the producer provide

the previous year’s production should

not be removed because if removed, it

could cause confusion. However, FCIC

has amended the first sentence by

adding the phrase ‘‘unless otherwise

stated in the Special Provisions’’ to
Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations 65137

allow for any future changes. FCIC

never intended to allow use of another

producer’s records in determining

optional units and it is only permitted

by the APH regulations and the Crop

Insurance Handbook when such records

are from another person who shares in

the same acreage. Since the producer

must also share in the acreage, nothing

in the existing provisions preclude this

practice. The Crop Provisions will

specify when production reports are not

required. Further, in the fifth sentence,

since the requirement that the amount

of production used to determine a claim

for indemnity constitutes the

production report is contained in the

APH regulations, the requirement can

only be modified by FCIC.

Comment: Commenters questioned if

the fifteen days specified in section 3(e)

allowed enough time between

announcement of an additional price

election or amount of insurance and the

sales closing date. A reinsured company

suggested a minimum of not less than

25 days. An insurance service

organization stated that the proposed

rule refers to ‘‘maximum’’ and

‘‘additional’’ price elections for what are

referenced elsewhere as ‘‘preliminary’’

(or ‘‘established’’) and ‘‘projected

market’’ price elections. It could cause

confusion to be able to have a price

higher than the ‘‘maximum’’ price

election. The commenter suggested

either replacing these terms, or adding

them to the definitions (perhaps as subentries under the ‘‘price election’’

definition).

Response: Although reinsured

companies and producers may not have

much advance notice, an expected

market price will be published by the

contract change date. Since contract

change dates are usually months before

the sales closing date, this provision

simply allows FCIC additional time to

determine the most accurate expected

market price to be used as the price

election. Generally, the additional price

election or amount of insurance will be

on file long before the 15 day deadline.

Therefore, the 15 day requirement has

not been changed to 25 days as

suggested. FCIC has clarified the

provision to eliminate confusion

between the maximum and additional

price elections.

Comment: Several comments were

received with respect to section 4. A

reinsured company and an insurance

service organization stated that section

4 indicates that policyholders will

receive written notification of all

changes, including the ‘‘additional price

elections,’’ at least 30 days before the

cancellation date, although according to

section 3(e) those prices may not be

available for another 15 days. A

reinsured company stated that it is

impossible for the company to comply

with the sentence which reads, ‘‘You

will be notified, in writing, of these

changes not later than 30 days prior to

the cancellation date for the insured

crop’’ because it includes all changes in

policy provisions, price elections,

amounts of insurance, premium rates,

and program dates. The Special

Provisions are provided to the insured

but the actuarial documents are not. It

is impossible to notify the insured of a

rate change that will affect that person

because this rate depends on the

insured’s APH, and the production

reporting date occurs after the date of

this notice. The commenter suggested

that the section be modified to indicate

that price elections (including price

addendum bulletins), amounts of

insurance, and premium rates are

available at the agent’s office. An

insurance service organization stated

that it would simplify the program if

companies and agents could include all

changes in one piece of correspondence

rather than several. Legal counsel for a

reinsured company recommended that

section 4 of the policy should state that

all contract changes are made pursuant

to the FCIC’s rulemaking authority and

are subject to public comment.

Response: The section has been

clarified to specify that insureds may

review or receive copies of all the

documents containing the rate, price

elections, amounts of insurance, etc.

The section has also been clarified to

state that the insured will be notified in

writing of any changes in the Basic

Provisions, Crop Provisions, or the

Special Provisions. Introductory

language in the Basic Provisions clearly

indicates that provisions of the policy

are published in the Federal Register.

However, not all contract changes are

made by rulemaking. Changes in terms

such as rates and price elections are not

subject to public comment.

Comment: Legal counsel for a

reinsured company stated that his client

is compelled to include provisions in its

policies regarding the liberalization

provisions contained in section 5. The

commenter stated that the

liberalizations allowed by these

provisions have increased the reinsured

company’s work and costs, and that

inclusion of the clause does not

constitute, imply, and should not be

inferred by FCIC as a waiver or other

relinquishment of the reinsured

company’s right under the

Administrative Procedures Act or

common law.

Response: Inclusion of section 5 in

policies sold by a reinsured company

does not waive any rights of the

company it has not already otherwise

waived. No change has been made.

Comment: Legal counsel for a

reinsured company suggested that

program dates be reviewed since the

proposed language in section 6(a)(2)

causes the acreage reporting dates for

some crops to be very close to the

premium billing date. For example, in

some cases, the acreage reporting date

for forage production policies will be

June 15 and the current billing date is

July 1.

Response: FCIC will review the

program dates as necessary to determine

whether adjustments are needed.

Comment: An insurance service

organization commented on section

6(a)(3)(ii) and recommended deleting

the phrase ‘‘the acreage reporting date

contained in the Special Provisions

since this is included in the date

determined according to 6(a)(1) and (2).

They questioned whether this refers to

both of these sections, or if there are no

fall crops with a late planting period.

This would then be easier to follow as,

‘‘* * * the acreage reporting date will

be the later of the date determined in

accordance with sections 6(a)[(1)&] (2)

or 5 days after the end of the late

planting period for the insured crop.’’

Response: The date contained in the

Special Provisions for section 6(a)(3)

may be different than the date referred

to in sections 6(a)(1) and (2). FCIC has

clarified that the date may be

determined in accordance with both

sections 6(a)(1) and (2).

Comment: Comments were received

with regard to section 6(f). An insurance

service organization recommended

consolidating the last two sentences as

follows: ‘‘If we deny liability for the

unreported units, your share of any

production from the unreported units

will be allocated, for loss purposes only,

as production to count to the reported

units in proportion to the liability on

each reported unit.’’ This avoids need to

reference ‘‘the yield for actual

production history’’ (which does not

apply to all crops) and ‘‘7 CFR’’ (which

is not provided with the policy

provisions). Legal counsel for a

reinsured company stated that section

6(f) should specifically set forth that the

reinsured company’s decision to

determine the insurable crop, acreage,

share, type, and practice, or to deny

liability, is conclusive upon the

producer and FCIC. Alternatively, the

regulation and policy language should

set forth the standards upon which

acreage, share, type, and practice are to

be determined by the reinsured

company.
65138 Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations

Response: FCIC has consolidated the

two sentences as recommended.

Provisions in section 20 indicate that

disagreement on factual determinations

will be resolved in accordance with the

rules of the American Arbitration

Association. Making the company’s

determinations conclusive would

conflict with those provisions.

Standards applicable to determination

of insurance in these situations where

the insured fails to file an acreage report

for one or more units are currently

contained in FCIC’s approved

procedure.

Comment: A reinsured company, legal

counsel for reinsured companies, and an

insurance service organization

commented on the provisions in section

6(g). They asked whether the premium

remains the same if the production

guarantee or amount of insurance on the

unit is reduced to an amount consistent

with the correct information. The

commenters expressed concern that the

provisions do not address the current

year, only subsequent years. More

importantly, there must be sanctions in

the current year. The commenters also

asked how and when do the insurers

adjust current year’s coverage. They

state that there should be a crossreference to section 27 that requires the

policyholder to reimburse the

indemnity or be subject to voidance of

the contract. The commenters also

stated that language should be added to

emphasize that it is essential for the

producer to provide accurate acreage

information and that the insurer is

relying upon the producer’s certification

to [these] material facts to establish

premium and liability. The commenters

were also concerned that section 6(g)(2)

does not relate what action the insurer

may take upon discovering the incorrect

information, which is particularly

important if it is discovered while

preparing a claim. For example, they ask

what bona fides, if any, must an acreage

measurement service possess, how can

a company test such a service’s

credibility and impartiality, and what

authority does the client company have

to reject a service’s measurements. The

commenters also asked what acreage

measurement service will be considered

acceptable, whether reinsured

companies be allowed to charge

insureds for performing this service,

what documentation is needed, and

who makes the determination. The

commenters also asked whether there is

any tolerance for error and what

‘‘support your report’’ means. The

commenters state that procedure is

needed to ensure that if business is

transferred and the receiving company

discovers that the insured misreported

acreage in any prior year, that the

insured is required to provide the

documentation specified in section

6(g)(2). In this regard, section 6(g)(2)

may prompt transfers. The commenters

ask what is the reinsured company’s

obligation and liability without

pertinent procedures and state that

section 6(g)(2) should state that the

producer will be solely liable for any

overstated liability resulting from the

incorrect information or from fraud,

misrepresentation, or concealment. The

regulation should also make clear that

the reinsured company is not liable to

the FCIC for any overpayment of

indemnity or other payments on a

policy resulting from incorrect producer

certified information or producer fraud,

misrepresentation, or concealment. Any

liability of a reinsured company for

such acts should be governed by the

criteria set forth in a previous Manager’s

Bulletin, which should be expanded to

include the aforementioned situations.

The proposed regulation states that

reinsured companies must verify

information pertaining to crop, share,

entity, and acreage. The regulation

should clearly set forth the sources that

the reinsured companies may utilize to

verify this information, especially in the

absence of information at local FSA

offices.

Response: If the correct information

results in a lower premium, the lower

premium will be charged to the

producer and liability reduced

commensurately. Sanctions are

available if the insured misreports

information. If the insured has

intentionally misrepresented or

concealed any material fact, the policy

may be voided under section 27 and the

insured may be disqualified under

section 508(n) of the Act. If the error or

omission is inadvertent, no sanctions

are available. The insured simply

receives only the coverage to which he

is entitled. No cross reference is

necessary since sections 27 and 6 are

under the same policy. Further, there is

sufficient language in the policy to put

the producer on notice that information

must be accurately reported. The crop

insurance industry recommends that the

burden of certifying acreage report

information should be placed on the

insured. FCIC assumes that a typical

insured will provide accurate

information. Therefore, documentation

to support the report of acreage that

includes, but is not limited to, an

acreage measurement service at the

producer’s own expense, has been

required only if the insured materially

misreported acreage in a prior year. It is

the reinsured company’s responsibility

to verify that the information used to

settle a claim is correct. The insured

selects the acreage measurement service.

The reinsured company should use its

business judgment to determine

whether the acreage measurement

service was reputable, competent, etc.

Since it is the insured’s responsibility to

procure the acreage measuring service,

they bear the cost. Documentation

should include the report from the

acreage measurement service stating the

measured acres. FCIC has revised the

provision to refer to ‘‘substantiate’’ the

reported acres. The intent of this

provision is to protect the integrity of

the program by increasing the reliability

of the information reported. The

reinsured company can reject any

information reported by the insured that

is not accurate, including any

information provided by the insured

from an acreage reporting service. FCIC

has revised the provisions to allow the

reinsured company to require the

insured to substantiate acreage if the

insured misreports information in any

crop year. Since the Federal crop

insurance program is operated with

public funds, FCIC cannot make

payments that are not authorized by

law. Therefore, if there is an

overpayment of an indemnity for any

reason, the reinsured company must

reimburse FCIC for its share of the

overpayment. If the reinsured company

fails to follow approved procedures

with respect to the verification of

information, FCIC may take other

actions in accordance with the SRA.

FCIC, in cooperation with reinsured

companies, will identify sources that

may be used to verify acreage and other

information. However, since these are

procedural matters and the sources may

change, the sources should not be

included in the policy.

Comment: A reinsured company

questioned if the provisions in section

7(a) were consistent with the

notification requirements in the

ineligibility (for debt) procedures,

particularly when there is a short time

between billing for one crop year and

sales closing for the next. The

commenter stated that some companies

plan to send a billing earlier than the

date specified in the Special Provisions

to assure that insureds are aware of the

amount due in time to meet the

notification requirements associated

with the ineligible for debt procedures.

Response: Section 7(a) is consistent

with the provisions in section 2, which

state that premium is considered

delinquent when not paid by the

termination date. This is the date that

triggers ineligibility, not the billing date.
Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations 65139

Reinsured companies will still be

required to send the premium bills to

the insured no earlier than the date

stated in the Special Provisions. This is

to ensure that all insureds are treated

fairly and equitably. FCIC will review

the premium billing dates and make any

necessary adjustments. The provision

has also been revised to clarify that the

premium due will be considered

delinquent if the premium is not paid

by the termination date.

Comment: Comments were received

regarding section 7(b). An insurance

service organization suggested

modifying the provisions to allow

companies to make replanting payments

to insureds who may need that money

to cover the immediate costs of

replanting the insured crop. Reinsured

companies and an insurance service

organization questioned the provision

that reads ‘‘Any delinquent amount may

be deducted from any amount owed to

you by any United States Government

agency or by us.’’

Response: The Department of

Treasury has opined that part of the

amount the producer owes a reinsured

company for any crop insured under the

authority of the Act that has been paid

by the United States may be deducted

from any amount owed to the producer

by any United States Government

agency. However, this provision has

been deleted since it is redundant with

sections 24(a) and 24(e). Since the

replant payment is intended to provide

funds to the insured to replant the crop,

it will not be used to offset other

amounts that are owed.

Comment: An insurance service

organization questioned whether

companies have the authority to

‘‘assign’’ a price election or an amount

of insurance as specified in section 7(d).

If not, the last phrase is not necessary,

and the rest of this could be

incorporated into 7(c).

Response: The reinsured company

does not have the authority to ‘‘assign’’

a price election or amount of insurance

when such information is omitted from

the application. The producer must

elect a price election or amount of

insurance or the application will be

rejected. However, if in future years the

price election or amount of insurance

changes and the producer does not elect

another price election or amount of

insurance, the reinsured company will

assign the producer a new price election

or amount of insurance as stated in

section 7(d). No change has been made.

Comment: Comments were received

regarding section 8(b). A reinsured

company questioned whether the intent

of section 8(b)(1) was to deny insurance

on all units of a crop if a producer did

not perform acceptable farming

practices on one unit of the crop instead

of charging an uninsured cause of loss

on such unit as was done in the past.

An insurance service organization stated

that sections 8(b)(4) and (5) provide the

possibility of insuring what is normally

uninsurable if permitted by the Crop

Provisions, Special Provisions, or

written agreement. The commenter was

concerned because sections 8(b)(1), (2),

(3), and (6) make no mention of possible

exceptions, yet written agreements are

allowed to insure practices or types not

listed in the actuarial documents. The

commenter suggested that some

reference is needed for subsections (1)

and (2) as well, or these terms could be

moved to the opening phrase (though

requests would be denied for volunteer

crops and crops left for wildlife). An

insurance service organization

questioned section 8(b)(6), which states

that a crop ‘‘used for wildlife protection

or management’’ is not insured. They

stated that questions have been raised in

the past about whether all acreage in a

wildlife preserve is uninsurable or only

the portion of the acreage that will not

be harvested. The commenter asked, if

the latter, whether the insured acreage

should have a different coverage or rate

since there is a higher risk of wildlife

damage.

Response: Section 8(b) has been

revised to clarify that any unit will be

uninsurable if the conditions in

paragraphs (1) through (6) exist, but that

such uninsurability will not affect other

acreage of the crop. FCIC agrees that a

written agreement should be allowed for

the circumstances contained in section

8(b)(1) and has amended that section

accordingly. A farming practice may be

acceptable, but a premium rate

previously was not established due to

lack of demand. The written agreement

will alleviate this situation. If the crop

is not adapted to the area, it should not

be insurable and there will be no

exceptions. Section 8(b)(6) is revised to

clarify that a crop used solely for

wildlife protection or management will

not be insured. Some crop land leases

require the lessee to leave a specified

number of acres or a percent of the crop

for wildlife. For leases that state a

specific amount of acreage to be left

unharvested, the stated acreage is not

insurable. For leases that specify that a

percentage of the crop must be left

unharvested, the insured person’s share

will be reduced by that percentage.

Comment: An insurance service

organization stated that section 9(a)(1)

refers to ‘‘crop provisions’’ as an

exception, section 9(a)(2) refers to

‘‘written agreement’’ as an exception,

section 9(a)(4) refers to ‘‘crop

provisions’’ as an exception, section

9(a)(5) refers to ‘‘crop provisions or

Special Provisions’’ as an exception and

section 9(a)(6) refers to ‘‘the policy

provisions’’ or a ‘‘written agreement’’ as

exceptions. The commenter stated that

the exceptions in section 9(a) (and

elsewhere in the policy) might be

preferable as ‘‘policy provisions’’ rather

than switching between ‘‘Crop

Provisions,’’ ‘‘Special Provisions,’’ and

‘‘written agreement.’’

Response: The exceptions are only

stated in the specifically referenced

documents. There is no reason to

require the insured to search all

documents for exceptions that were

previously identified. No change has

been made.

Comment: Reinsured companies, a

state commodity group, an insurance

service organization, and a member of

the Congress opposed the language in

section 9(a)(1) that specifies that acreage

will not be insurable if it has not been

planted and harvested within one of the

three previous calendar years. The

commenters are concerned that this

precludes acreage from being insurable

when adverse weather conditions

prevent planting or harvesting. They

also stated that to bar coverage when a

producer was unable to plant and

harvest a crop or in instances when the

producer lost the crop after planting

defeats the purpose of having prevented

planting coverage. They stated that this

provision would be impossible to

administer and that requiring that the

crop be both planted and harvested

within one calendar year excludes any

crop planted in the fall and harvested

the following year. This provision also

excludes any perennial crop because

such crops are not planted every year.

Although the intent of this provision

was to prevent the coverage of acres that

are outside the definition of productive

cropland, this provision will also

prevent coverage for many acres that

still carry the capacity to grow viable

crops. The commenter suggested that a

reference should be made to section

9(a)(1) in the prevented planting section

to define acreage eligible for prevented

planting.

Response: FCIC has revised section

9(a)(1) to specify that acreage not

planted in the three prior crop years

because they were prevented from

planting or where a perennial crop was

previously grown should be considered

insurable acreage. Additionally,

insurable acreage that had been planted

in any of the three prior crop years and

was not harvested due to an insured

cause of loss should be considered

insurable. Section 9(a)(1) has also been

amended to delete the word ‘‘calendar’’
65140 Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations

to recognize crop acreage planted in the

fall and harvested the next calendar

year. Referencing section 9(a)(1) in

section 17 of this rule is not necessary

because, if the acreage is not insurable,

no payment can be made on such

acreage, including a prevented planting

payment.

Comment: A reinsured company and

an insurance service organization

questioned the provisions in section

9(a)(2). The reinsured company stated

that the section would be impossible to

administer, although they did not

disagree with the concept. The

commenter questioned how the

reinsured company would determine if

crops produced for food or fiber had

been harvested from the acreage for at

least five consecutive crop years after

acreage had been strip mined. An

insurance service organization stated

that food or fiber must be defined

beyond the exclusion of cover and

forage crops. Tobacco is not a food or a

fiber, but the commenters question

whether it would qualify the acreage.

The commenters also state that if food

refers to production for human

consumption, then corn for silage does

not qualify acreage. If the term includes

feed for animals, the commenters ask

why forage is excluded. The commenter

also asks about tree crops. The

commenter also recommended deleting

the word ‘‘consecutive.’’

Response: Section 9(a)(2) has been

revised to refer to agricultural

commodities other than a cover, hay, or

forage crop (except for corn silage) that

have been harvested from the acreage

for at least five crop years after the strip

mined land was reclaimed. A definition

of agricultural commodity has also been

added.

Comment: A reinsured company

suggested adding the sentence ‘‘In the

event that it is common practice to plant

a crop relying on water to be delivered

by a third party at a later date, only

those acres for which adequate water

may reasonably be expected may be

reported as irrigated,’’ to section 9(b).

Response: Section 9(b) has been

revised to clarify that if the insured has

a reasonable expectation of having

adequate water, the acreage will qualify

for an irrigated practice. However, if the

insured knew or had reason to know

that the insured’s water could be

reduced, no reasonable expectation

exists.

Comment: A reinsured company

stated that the phrase ‘‘you may either

report and insure the irrigated acreage

as non-irrigated, or report the irrigated

acreage as not insured’’ should be

deleted from section 9(c). They stated

that allowing the irrigated acreage to not

be insured in cases where there is not

an irrigated practice sets up a situation

for no coverage to be in place if a

disaster occurs, and raises questions

about noninsured crop disaster

assistance program (NAP) coverage.

Irrigated acreage in areas without an

irrigated practice should be required to

be insured; the insured will benefit from

a higher APH yield.

Response: It is not appropriate to

require a producer to obtain coverage for

a non-irrigated practice, with its higher

premiums, when the acreage has an

irrigated practice. However, since

insurance on such acreage was

available, the insured will not be

eligible for NAP benefits on the irrigated

acreage. No change has been made.

Comment: Comments were made

regarding section 10(b). A reinsured

company suggested that this provision

be deleted because it creates problems

with tracking and confusion over tax

numbers, tax liabilities, etc. If this

provision is retained, the commenter

states that procedure must be

established. An insurance service

organization stated that the second

sentence of section 10(b) suggests the

company may not know that a landlord

(or tenant) is insuring the other’s share

until the acreage report is submitted.

The commenter stated that if this

information affects the insured entity or

who needs to be on the substantial

beneficial interest (SBI) list, the

reinsured company must determine

whether this information is needed by

the sales closing date. The commenter

was concerned because no procedure

has ever been developed for this

possibility and it is difficult to

determine what should be specified in

the policy provisions until procedure is

developed and distributed.

Response: FCIC understands that

some reinsured companies are currently

using these provisions with satisfactory

results. FCIC has amended the

provisions to clarify that insurance of

another person’s share must be

indicated on the application before it is

reported on the acreage report.

Comment: An insurance service

organization questioned whether it will

be necessary to store the date that the

insurer accepts the producer’s

application since section 11(a)(1) has

been changed from ‘‘the date you submit

your application’’ to the ‘‘date we

accept,’’ a term that needs clarification.

The commenter questioned what would

happen if a loss is submitted before a

timely signed and submitted application

is ‘‘accepted’’ and processed by the

company.

Response: The date the application is

accepted must be stored by the

reinsured company the same as the date

of application was previously stored.

The provision has been revised to

clarify that the application is considered

accepted on the date that the insured

submits a properly executed application

containing all the information required

in section 2. This change was made to

clarify when insurance begins when an

incomplete application is received.

Comment: A reinsured company

suggested adding the phrase ‘‘or

facilities controlled by you,’’ at the end

of section 12(d) to clarify that failure or

breakdown of facilities or equipment

controlled by a third party, could be

considered a covered loss.

Response: The intent of this provision

is to cover failure of the irrigation water

supply, not failure of equipment or

facilities, regardless of who controls

them. No change has been made.

Comment: A reinsured company

questioned why the phrase ‘‘as

determined on the final planting date’’

was included in section 13(a) because it

is not uncommon for acreage planted

during the late planting period to be

damaged to the extent that replanting is

necessary or practical.

Response: FCIC has revised this

provision to allow this determination to

be made within the late planting period.

Comment: Legal counsel for a

reinsured company had questions

regarding provisions in section 14(a)(2),

which require a producer to notify the

reinsured company within 72 hours of

the initial discovery of damage (but not

later than 15 days after the end of the

insurance period). The commenter

asked what the reinsured company’s

obligation is to the insured if the

insured gives notice 80 hours after the

initial discovery of damage. The

commenter asked whether the reinsured

company would reject the claim in this

case or is it liable for liquidated

damages to FCIC if it does not. The

commenter also stated that supposing

extenuating circumstances exist, e.g., a

death in the insured’s family, whether

the reinsured company has discretion in

light of the proposed SRA. The

commenter recommended that the

policy give the reinsured company some

discretion to accept or reject a notice of

loss based on the facts of each case and

the ability of the company to appraise

the loss in the context of those facts.

That is the test a court would apply and

the FCIC should not have a different

standard. Also, the policy should

specifically permit reinsured companies

to delay an indemnity payment to any

insured who is under investigation by

the Inspector General or the Department

of Justice involving wrongful claims for

indemnities.
Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations 65141

Response: These notice provisions are

intended to protect the integrity of the

program by ensuring that the reinsured

company received notice in sufficient

time to accurately adjust the loss. The

provision is revised to provide the

reinsured companies with the authority

to accept a delayed notice of loss as long

as their ability to adjust the loss has not

been adversely affected. FCIC approved

procedure allows acceptance of delayed

notices provided the delay does not

prevent the insurer from properly

adjusting the claim. Therefore, the

reinsured company does have the

discretion to accept or reject a notice as

requested in the comment and no policy

change is necessary. There is no

authority to delay the payment of a

claim simply because the insured is

under investigation.

Comment: A reinsured company

stated that the word ‘‘settlement’’ in

section 14(a)(4) should be defined.

Response: The word ‘‘settlement’’ is

self-explanatory. No change has been

made.

Comment: An insurance service

organization commented on section

14(b)(4) that the last sentence should

apply to sections 14(b)(1) through (4), as

in the current Basic Provisions.

Response: The sentence applies to

sections 14(b)(1)–(4) and FCIC has

revised the sentence accordingly.

Comment: Comments were received

regarding section 14(c). One reinsured

company suggested adding the phrase

‘‘for all units of the insured crop’’ after

‘‘insurance period.’’ Another reinsured

company questioned if the intent was to

require that the proof of loss be

completed within 60 days after the end

of the insurance period.

Response: Since insurance is

provided on a unit basis, claim

settlement should be administered on

that same basis. Addition of the

suggested language could result in

delayed payments for units with early

season losses. FCIC considers the claim

for indemnity to be synonymous with

the proof of loss and requires that it be

submitted within 60 days after the end

of the insurance period. No change has

been made.

Comment: An insurance service

organization commented on section

14(f) and stated that since the only other

reference to notice within 72 hours is in

section 14(a)(2), FCIC should consider

combining the provisions by adding the

phrase ‘‘notice may be made by

telephone or in person to your crop

insurance agent, but must be confirmed

in writing within 15 days’’ at the end of

section 14(a)(2). If (f) remains separate,

the commenter questioned whether it

should refer to ‘‘this paragraph’’ or ‘‘this

section.’’

Response: Since the provisions in

section 14(f) are applicable to the

notices required in sections 14(a)(2) and

14(b), it has not been combined with

section 14(a)(2). FCIC has revised

section 14(f) to refer to the ‘‘section’’

rather than the ‘‘paragraph.’’

Comment: An insurance service

organization questioned if section 14(d)

of ‘‘Our Duties’’ should be modified

since future procedures may be based

on FCIC’s standards rather than

‘‘established or approved’’ by FCIC.

Response: Under the 1998 SRA,

reinsured companies must use FCIC’s

loss adjustment procedures. In the

future, FCIC will always require that all

procedures be approved by FCIC before

used. No change has been made.

Comment: Some reinsured companies

and an insurance service organization

suggested deleting the reference to Form

FCI–78 in section 15(c). A company also

suggested deleting the reference to ‘‘a

form approved by the Federal Crop

Insurance Corporation’’ and adding a

provision that states how appraisals will

be made if hail and fire are excluded as

insured causes of loss.

Response: FCIC determined the

procedures to be used to conduct such

appraisals and included them in Form

FCI–78. If FCIC wants to make changes

in the procedures, it can revise the form.

No change has been made.

Comment: A reinsured company and

an insurance service organization

commented regarding the provisions in

section 16(b). The reinsured company

questioned if acreage is insurable when

planted after the late planting period for

any reason, except for an insurable

cause of prevented planting. The

insurance service organization stated

that the last sentence which states,

‘‘Such acreage must have been

prevented from being planted by an

insurable cause occurring within the

insurance period for prevented planting

coverage’’ is confusing since the acreage

was planted, but too late for timely or

late-planted coverage. Perhaps this

should say, ‘‘* * * prevented from

being planted timely or during the late

planting period * * *’’

Response: Acreage planted after the

final planting date or the late planting

period, if applicable, is not insurable

unless the acreage was prevented from

being planted or it was practical to

replant. FCIC has amended section 16(b)

to clarify that planting on such acreage

must have been prevented by the final

planting date or during the late planting

period by an insurable cause occurring

within the insurance period for

prevented planting coverage.

Comment: Comments were received

regarding section 17(a)(2). An insurance

agent opposed the 72 hour mandatory

notice of loss requirement after the final

planting date if the producer is

prevented from planting by such date.

The commenter stated that if the

substitute crop option is eliminated, this

provision is not necessary and it is a

cumbersome rule that will necessitate a

tremendous amount of effort on the part

of the agent to make certain that a

producer does not miss this deadline.

The commenter also stated that in a year

such as 1995 when adverse weather

prevented many producers over a large

area from planting, an agent must

communicate with the producers,

explaining the provisions to them, and

encouraging them to continue planting,

rather than assuring that all of the

insureds give notice within 72 hours.

The commenter claims that notice

would only be beneficial in an area with

few prevented planting claims because

in an area with a large amount of

prevented planting, inspections

probably would not even be made. The

commenter was also concerned because

any time there is a specific date, it

forces the agent and companies to have

a tracking system to protect clients,

which adds to the already burdensome

amount of processing that is required.

The commenter was concerned that

having a prevented planting reporting

date during a time span that may be

feasible for planting sends a strong

psychological signal to producers that

they have reached a point that it is time

to stop planting, regardless of what the

conditions are in the field. The

commenter also stated that reinsured

companies would be over-loaded with

loss notices that may or may not be

necessary, possibly becoming expensive

and burdensome for a company; and

that this would be a new regulation for

1998 that is not necessary. Legal counsel

for a reinsured company and the agent

questioned what the ramifications

would be if an insured notified the

reinsured company more than 72 hours

after the final planting date. A state

commodity group stated that the 72

hour proposal will cause hardships on

producers. Many producers plant 10 to

15 different crops, with varying final

planting dates. During the planting

season, producers who plant a variety of

crops are simply too busy to contact

their reinsured company. The

commenter suggested changing the 72

hours to two weeks. A reinsured

company stated that it trusted that such

notice would not be considered the

same as a ‘‘notice of loss,’’ requiring a

visit by an adjuster, especially if the
65142 Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations

land was located in an area where

known prevented planting conditions

exist and, if the acreage report did not

include prevented planting, the earlier

notice would be void. Another

reinsured company stated that the issue

of the number of required notices

should be addressed. An insurance

service organization recommended

changing the loss notice requirement to

72 hours after the latest final planting

date on the policy.

Response: The 72 hour notice

requirement could become burdensome

and cause hardships on producers.

Therefore, the provision has been

deleted.

Comment: Comments were received

regarding section 17(b). A reinsured

company and an insurance service

organization stated that, if

circumstances were favorable, increased

coverage on unplanted acreage could

allow a profit because the only expenses

may be the fixed cost of ownership or

rent. Input expenses other than those

would not be necessary. Therefore, with

65 or 70 percent prevented planting

coverage, it may become more

economical for the producer to leave

land idle rather than incur the expense

of attempting to plant. A reinsured

company, national commodity group,

and farm organizations supported the 10

percentage point increase in the level of

prevented planting coverage. The

commenters supported the concept that

prevented planting levels should be

crop specific and should closely reflect

a percentage of the pre-plant production

inputs to total costs for each crop. One

of the farm organizations stated that

differentiation by crop is important but

that the program’s overall complexity

should also be considered. An insurance

agent, national commodity group,

reinsured company, farm organizations,

and a state commodity group

commended FCIC for making higher

levels of coverage available for

prevented planting if producers choose

to elect them. The commenters stated

that optional coverage levels allow

producers to tailor their risk

management programs to individual

financial realities. The national

commodity group stated that coverage at

the 60 percent level with an option to

increase the coverage to 65–70 percent

should be adequate, provided prevented

planting losses are indemnified for each

acre that is not planted (once the

threshold of 20 acres or 20 percent of

the insurable crop acreage in the unit is

met). The current adjustment procedure

tended to penalize producers who

planted a portion of a unit to the

intended crop. A state commodity group

urged an increase in the maximum

available prevented planting coverage

level to 75 percent, particularly if the

substitute crop provision is eliminated.

An insurance agent, national

commodity group, state commodity

group, and regional commodity group

were apposed to the lower prevented

planting coverage available for cotton.

An insurance agent and national

commodity group expressed a concern

that, in certain market conditions, the

producer may shift prevented planting

from cotton to corn or soybeans due to

the possibility of a higher payment for

prevented planting and significantly

lower premium for corn and soybeans.

A national commodity group stated that

the percent of variable cost borne by

cotton producers in planting a crop is

not unlike the percent of variable cost

borne by corn producers to plant a crop

in the same states especially when seed

company technology fees and Boll

Weevil Eradication Assessments are

taken into account. The commenter

further stated that FCIC relied only on

USDA regional cost data, not county

data. The commenter also stated that

any justification for this discriminatory

treatment that is based upon a ‘‘cost of

production’’ rationale is out of place

under this program because crop

insurance coverage is based on actual

production history and price election,

not cost of production. On several

occasions, the commenters have

challenged FCIC’s claim that cotton’s

cost of production is highest for postplanting activities. A national

commodity group and state commodity

group stated that cotton producers

deserve equitable prevented planting

coverage without any rate increase since

the ratio of cotton’s insurance

indemnities to its fixed and variable

costs are far below those of other crops.

The commenters stated that this

disparity is even more glaring when

indemnities’ net of premium as a

percent of variable cost or as a percent

of a fixed cost are considered. A state

commodity group stated that a rolling

average of a producer’s normal crop

rotation should be used to determine

losses. The previous year’s total crop

indemnity divided by prevented

planting acres at this year’s prices could

be used to determine an average. An

insurance service organization stated

that although offering different

prevented planting coverage levels may

be more actuarially sound, this will

make processing more complex. The

commenter was concerned that it could

also result in questions from

policyholders when the level of

coverage they actually have may differ

from what they thought they had.

Response: Numerous issues are raised

by these comments. In light of the

comments regarding the disparity of

prevented planting coverage between

cotton and most other crops, FCIC is

making this rule effective for the Cotton

Crop Provisions and the Extra Long

Staple Cotton Crop Provisions for the

1998 crop year only. FCIC will solicit

additional comments regarding the

prevented planting coverage level

percentage for these crops for the 1999

and succeeding crop years in a future

rule.

Some commenters allege that the

differences in coverage will encourage

shifts among crops, notably from cotton

since the coverage is lower. Based on

the national average liability, the

average payment rate for cotton at 45

percent of the guarantee is $125 per acre

($0.68 average price election) while the

payment for corn is $103 per acre ($2.25

price election). Even if the price election

for corn were increased to $2.50 per

bushel the payment still would be less

than cotton ($115 per acre). Some

commenters state that the prevented

planting returns net of crop insurance

premiums should be considered.

However, based on additional (buy-up)

business for 1996, the difference in

producer-paid premium between the

two crops is about $9 per acre.

Therefore, even on this basis, there is no

marked disparity in bottom line dollars

to the producer and there should be no

impact upon cropping decisions.

Some commenters challenged the

concept of basing the prevented

planting indemnity upon costs of

production, stating that the insurance

plan is based on yield and market price.

The intent of the prevented planting

provisions is to permit producers to

recoup some of their costs when it is

impossible for the producer to generate

income from the insured crop. These

provisions were never intended to allow

producers to make a profit. To permit

profit is to introduce unmanageable and

undesirable risks of fraud.

Some of the commenters dispute the

use of regional data to establish costs of

production, arguing instead that the

costs should be developed county by

county. Such an approach is impractical

and unwieldy due to lack of credible

data and is contrary to the law, which

directs FCIC to seek administrative

efficiencies in its programs to minimize

burdens upon producers and reinsured

companies.

Comment: Comments were received

regarding the proposed removal of

prevented planting coverage when a

substitute crop is planted. A national

commodity group recommended that,

after the final planting date for a
Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations 65143

prevented planting crop has passed,

producers be allowed to collect a

prevented planting payment and then

plant any crop but that such crop not be

insurable. This would allow maximum

returns from the land without providing

any windfall benefits from the insurance

program. The commenter stated that

most producers are required to have a

crop of some type on the land for

conservation purposes and, since it will

not carry any insurance coverage,

production should be allowed. Another

national commodity group and a state

commodity group stated that they

recognize the inherent problems with

the substitute crop provisions and that

they approve the elimination of the 25

percent coverage when a substitute crop

is planted, provided there is adequate

coverage when acreage is left unplanted.

Farm organizations stated that it is

difficult to argue against elimination of

the substitute crop provisions; however,

long term crop rotations, marketing

decisions, delivery commitments,

preplant application of inputs, and

estimated economic returns from

competing crops do enter into planting

decisions. The farm organization and a

reinsured company stated that weather

induced planting changes often

represent added costs to producers and,

therefore, it may be appropriate to allow

some level of coverage if the original

crop cannot be seeded. These

commenters stated that to reduce the

potential for abuse, the provisions

should specify a significant reduction in

prevented planting benefits (40–60

percent) if an alternative crop is

ultimately planted. Another farm

organization and a reinsured company

recommended that some level of

coverage be allowed when a substitute

crop is planted because weather

induced planting changes may represent

a real cost to the producer. Often times

the producer has prepared the land for

one crop, including the application of

fertilizer and herbicides that will not be

used by the new crop, and this expense

cannot be recouped. A regional

commodity group recommended that

the provisions be amended so that a

producer is able, at the very least, to

forego crop insurance protection and

plant a follow up crop for harvest after

acreage is prevented from planting. The

commenters stated that producers who

miss the opportunity to plant their crop

of first choice still need to retain the

ability to create income from their land

to cover any fixed costs they incur such

as taxes, land payments, equipment

payments and living expenses. They feel

it is imperative that producers retain the

right to keep their land productive.

Response: This ‘‘substitute crop’’

coverage has been provided for

producers with coverage greater than

catastrophic risk protection since the

1995 crop year. During the three crop

years this provision has been effective,

FCIC has received numerous complaints

from agents, reinsured companies,

commodity groups, and producers,

including allegations of abuse, difficulty

in establishing ‘‘intent’’ as required

under those provisions, and other

problems.

If a producer is prevented from

planting the ‘‘intended’’ crop, it is the

producer’s choice to leave the acreage

idle, plant a cover crop, or plant another

crop for harvest. Prevented planting

coverage should be provided only if the

acreage is idle or planted to a cover crop

not for harvest. Based on the numerous

complaints received, the administrative

problems and hazards associated with

the substitute crop coverage, and the

fact that only one crop is normally

produced per acre, per crop year,

prevented planting coverage should not

be provided when the producer chooses

to plant another crop on the acreage for

harvest. No change has been made.

Comment: Comments were received

regarding section 17(d). A national

commodity group and a regional

commodity group commended FCIC for

including drought as an insurable risk

for prevented planting. The national

commodity group further recommended

that such a determination be made on a

field-by-field basis rather than on an

area wide basis. This is consistent with

the per acre unit change proposed for

the prevented planting determination.

Legal counsel for a reinsured company

stated that proposed section 17(d)(1)’s

requirement of inclusion of the Palmer

Drought Severity Index (Index) as a

condition precedent to the receipt of a

prevented planting payment on nonirrigated acreage is arbitrary, impractical

and exposes reinsured companies to

potential litigation or arbitration.

Though the Index surely measures a

drought’s severity, even those droughts

that are not classified as severe or

extreme may be sufficiently devastating

to prevent planting. The commenter

stated that when facing a drought, a

producer’s decision to invest the

financial resources necessary to produce

a viable crop is based on economics, not

whether the Index classifies the drought

as severe or extreme. In addition, a

drought may, over time, become severe

or extreme. The commenter asked what

if, at the acreage reporting date a

drought is not, according to the Index,

severe or extreme, but is later classified

as such by the Index. The commenter

was concerned because the reinsured

company already has denied the

producer a prevented planting payment,

and the drought’s subsequent

appearance on the Index is of little

benefit to the producer. Forced reliance

on the Index causes another problem if

the Index is not available when the

acreage is reported. The commenter

questioned whether the reinsured

company must delay its determinations

until after it obtains the Index and what

liability befalls the reinsured company

if it is delayed.

Response: Current as well as the

proposed prevented planting provisions

specify that all prevented planting

causes of loss must be general in the

area. It is important to provide a reliable

source such as the Index to provide

consistency when verifying drought as

an insured cause of loss in an area. FCIC

does not believe that prevented planting

payments should be allowed unless

other producers in the area were also

prevented from planting.

Most drought severe enough to

prevent planting will be classified by

the Index as severe or extreme by the

final planting date. The Index is readily

available to interested parties and is

updated frequently. Therefore, the Index

should be available to all reinsured

companies prior to the acreage reporting

date. FCIC expects few cases in which

a drought that develops into a severe or

extreme drought after normal planting

times will actually prevent planting. To

allow for exceptions would increase the

complexity and subjectivity of these

determinations, the administrative

burdens on reinsured companies, and

the litigative risks resulting from these

subjective decisions.

Comment: A reinsured company

stated that in section 17(e) the word

‘‘base’’ should be eliminated in all

cases.

Response: The use of the word ‘‘base’’

in section 17 can be confused with the

term ‘‘base acreage’’ used by FSA in the

past. Therefore, FCIC deleted the word

‘‘base’’ as suggested.

Comment: Comments were received

regarding section 17(e)(1). A crop

insurance agent disagreed with the

provisions in the proposed rule that

exclude from eligibility any acreage

prevented from being planted that was

planted to a substitute crop. The

producer should not be penalized a

second time for not being able to plant

a specific crop. A reinsured company

questioned if the determination of

eligible acres in the chart is done on a

county basis. The commenter also

questioned how a company is to obtain

previous year’s records of prevented

planting acres when policies are gained

by transfer. A reinsured company stated
65144 Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations

that written agreements will only be

allowed if the insured has not produced

any crop for which insurance was

available in any of the four most recent

crop years. The commenters indicated

that a written agreement may be the

only way to provide coverage in many

cases. An insurance service organization

questioned whether section 17(e)(4),

which notes that eligible acreage may be

increased to account for added land, is

considered a ‘‘written agreement.’’ The

commenters also stated that the

provisions in the table would be clearer

if reorganized. Since 17(e)(1)(i) is the

only one of the three subsections in

which (B) and (C) differ, this table may

not be necessary. Combine 17(e)(2) with

17(e)(1)(i)(C) since this is the only

situation allowing written agreements

and combine 17(e)(4) and (5) with

17(e)(1)(i)(B) to avoid the impression

that eligible acreage does not include

added land. Add 17(e)(3) to the opening

sentence in 17(e)(1). The commenter

also stated that 17(e)(1)(i)(B) must be

clarified because the heading makes (B)

apply to producers who have produced

‘‘any’’ insurable crop in any of the last

four years, but then limits eligible acres

to the maximum acres certified or

reported in those years for ‘‘the crop.’’

The commenter stated that a producer

may have produced corn in at least one

of the last four crop years, but who

planned to plant grain sorghum this

year for the first time, would not have

any eligible acres for grain sorghum and

a written agreement could not be

obtained. The commenter recommended

changing the heading above section

17(e)(1)(i)(B) to read, ‘‘if you have

produced the crop in any of the four

most recent crop years’’ instead of

‘‘* * * any crop for which insurance

was available * * *’’ The commenter

also suggested that the heading above

section 17(e)(1)(i)(C) be changed to

reference ‘‘the crop’’ instead of ‘‘any

crop for which insurance was available’’

to accommodate producers who decide

to start producing a crop for the first

time.

Response: Section 17(e)(1)(i)(B) of the

proposed rule excludes acreage reported

as prevented planting in a prior year but

that was planted to a substitute crop so

that the same acres do not qualify two

crops in the same crop year. This

provision is consistent with the removal

of the prevented planting substitute

crop coverage.

Eligible acres defined in section

17(e)(1) are determined on a county

crop basis. When policies are gained by

transfer, reinsured companies can

obtain previous years’ records of

prevented planting acres from the

insured, the ceding company, or the

FCIC policyholder tracking system.

FCIC agrees that the table contained

in section 17(e)(1) should be rearranged,

duplicate provisions removed and

combined with sections 17(e)(2) and (4),

and has revised the table accordingly.

FCIC has also revised section 17(e)(1) to

incorporate section 17(e)(3) for clarity.

Proposed section 17(e)(1)(i)(C)

(redesignated 17(e)(1)(i)(B)) has been

amended to indicate that an intended

acreage report must be submitted to the

insurance provider to provide prevented

planting eligible acreage only for a

person who has not in any of the four

most recent crop years produced any

crop for which insurance was available.

Intended acreage reports are not

necessary for other producers. Any new

insured who has produced any crop in

any of the 4 most recent crop years for

which insurance was available will

qualify for prevented planting coverage

for those crops and acres for which past

acreage and production records are

provided in accordance with APH

procedures. A provision to increase

acreage for new producers has been

added that is consistent with the

requirements for other insureds.

In most instances, the proposed

provisions allow prevented planting

coverage based on planting history. If a

producer has planted only one crop in

the past four crop years, for instance

corn, and intended to plant and insure

grain sorghum in the current crop year,

the producer would be eligible for

prevented planting coverage based on a

corn production guarantee only. Once

the producer plants grain sorghum, the

producer will be eligible for prevented

planting coverage based on a grain

sorghum production guarantee.

Comment: A reinsured company

questioned the impact and acceptability

of intended acreage reports concerning

eligible prevented planting acres. The

commenter questioned the guidelines

for approval of written agreements, and

who has the authority to approve or

disapprove such agreements.

Response: The provisions have been

amended so that the use of a written

agreement is no longer required to

establish eligible acreage. Instead,

intended acreage reports will be used.

However, the reinsured company will

be required to verify that the acreage

reported does not exceed the number of

acres of cropland in the producer’s

farming operation at the time the

intended acreage report is submitted.

The reinsured company will have the

authority to accept or reject any

intended report.

Comment: Comments were received

regarding section 17(e)(2). An insurance

service organization asked whether

‘‘requests for written agreement under

this section must be submitted to us on

or before the sales closing date’’ is

intended to supersede section 18(e),

which allows written agreements

requested after the sales closing date

only if an inspection determines no loss

has occurred. The commenter asked if

this provision prohibits consideration of

a request made shortly after the sales

closing date. Legal counsel for a

reinsured company asked if section

17(e)(2) pertains to all crops or only to

those with increased acreage. A crop

insurance agent stated that any new

producer who has a viable policy for a

crop and who has the ability to produce

that crop should be eligible for

prevented planting on all cropland

acres. The commenter also stated that

the sales closing date is a completely

unreasonable deadline for a new

producer who is trying to start a farming

operation. The insurance program

should be as liberal as is prudent with

new producers and allow them to add

to their operation until acreage reporting

time without penalty.

Response: As indicated in the

response above, written agreements are

no longer required. Since the producer

is making all other insurance decisions

by the sales closing date, it is not

unreasonable to require the producer to

specify the number of acres that the

producer intends to plant by the sales

closing date. New producers may be

eligible for prevented planting acreage

on all crop acreage if the requirements

in section 17(e)(1)(i)(B) have been met.

Comment: An insurance service

organization suggested that the

provision contained in proposed section

17(e)(3) that states, ‘‘the total number of

acres requested for all crops cannot

exceed the number of acres of cropland

in your farming operation for the crop

year’’ be revised to allow for doublecropping, as in section 17(f)(5).

Response: This provision, now

located in section 17(e)(1) is revised to

account for double cropped acreage.

Comment: Comments were received

regarding section 17(e)(4). A reinsured

company asked if all land added by the

insured after the sales closing date was

ineligible for prevented planting

coverage. An insurance agent disagreed

with requiring the producer to provide

documentation on or before the sales

closing date for newly added land

because a March 15 deadline is not

realistic and land changes hands into

the planting season for many legitimate

reasons including retirement, health,

another career, financial considerations,

etc. The commenter stated that the new

producer should not be denied coverage
Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations 65145

just because the farming operation

changed hands after March 15. The

commenter was also concerned that it is

difficult to obtain form 423 from FSA to

determine eligible acres and whenever a

farming operation is changed and the

farm is reconstituted by FSA, there can

be weeks of delay before the form is

completed. The commenter stated that

this rule again imposes an unnecessary

burden on agents. It will force them to

spend a great deal of time putting a

process in place that attempts to make

certain that none of their insureds miss

an imposed deadline. The commenter

was concerned that this is the time of

year that agents need every available

minute to be working with their clients

concerning their coverage. Producers

should be focused on sound decisions

concerning their risk management, not

focusing on what new deadline they

have to meet. The commenter also

stated that with the substitute crop

provision eliminated, there is no need to

have any other deadline in place other

than acreage reporting. There is no date

that is acceptable and crop insurance

should not be in the business of trying

to dictate to producers a date by which

all changes in a farming operation must

take place. The commenter stated that

this rule directly conflicts with the farm

program objectives of farming for the

market. If the market dictates that a

producer needs larger acreage to be

effective, that should be allowed by our

rules. The converse is also true. If a

producer decides to reduce the size of

the farm, it still is eligible for acres over

and above the size of the farm, under

the proposed rule. The commenter

stated that eligible acres should be

determined at planting time by the total

cropland acres. The limitation to the

number of acres previously planted to a

crop is prudent; however, newly added

land should be eligible for prevented

planting up to the newly established

cropland acres on any crop that the

producer has insured. This is a common

sense approach that would eliminate

burdensome paperwork and eliminate a

deadline that will cause problems. Legal

counsel for a reinsured company stated

that land rented or bought after the sales

closing date might be ineligible for

prevented planting coverage under the

proposed provisions in section 17(e)(2)

and (4). While the acreage reporting date

may improperly permit insureds to state

with the benefit of hindsight, what their

intent was, the use of written

agreements in the fashion proposed is

not an adequate solution. The

commenter suggested that the actual

production history deadline date could

be used.

Response: These provisions, now

included in section 17(e)(1)(i), have

been revised to allow an increase in

eligible prevented planting acres

provided the producer submits proof

that additional acreage was purchased,

leased, or released from any USDA

program in time to plant it for the

insured crop year. No cause of loss that

will or could prevent planting may be

evident at the time the acreage is

purchased, leased, or released from the

USDA program.

Comment: Comments were received

regarding section 17(f)(1). A reinsured

company suggested that the section be

modified to read ‘‘* * * 20

contiguous acres...’’ The commenter

suggested changing the phrase

‘‘whichever is less’’ to read ‘‘whichever

is larger’’ and also suggested that the

term ‘‘insurable crop acreage in the

unit’’ be defined. Another reinsured

company questioned if 20 acres or 20

percent was the correct acreage

limitation for the unit. The commenter

recommended a minimum figure be

established for the entire farming

operation based on cropland acres.

Legal counsel for a reinsured company

recommended that section 17 be

amended to exclude prevented planting

payments when the producer is

prevented from planting a small number

of acres. For example, if a producer is

prevented from planting five acres on a

100 acre farm, the producer should not

be entitled to a prevented planting

payment for the five acres. The

commenter stated that failure to

incorporate such a change will increase

indemnity payments and overall

administrative costs of the program.

Another legal counsel for a reinsured

company indicated that the phrase

‘‘within a field’’ contained in section

17(f)(1) is not defined or used elsewhere

in the section.

Response: Provisions are necessary to

avoid prevented planting claims when

only a small number of acres are

prevented from being planted. FCIC has

amended section 17(f)(1) to require that

at least one contiguous block of land

equal to 20 contiguous acres or a

contiguous area constituting 20 percent

of the insurable crop acreage in the unit,

whichever is less, be prevented from

being planted in order to qualify for a

prevented planting payment. This

change will reduce prevented planting

payments for pot-holes and other small

portions of fields that are wet in most

years although planting occasionally

may be possible. The phrase ‘‘whichever

is less’’ is appropriate. There is no

reason to define the phrase ‘‘insurable

crop acreage in the unit’’ since units,

insured crop, and insured acreage are

defined elsewhere in the policy.

Once the minimum acreage threshold

has been met, all acres should be

indemnified. A minimum figure should

not be established for the entire farming

operation based on cropland acres

because in very large farming

operations, that could result in a

substantial number of acres ineligible

for prevented planting coverage.

FCIC has defined the term ‘‘field’’ for

clarity. FCIC has also amended section

17(f)(1) to specify that all acreage in a

field will be presumed to have been

intended to be planted to the same crop

that is planted on the field unless the

prevented planting acreage constitutes

at least 20 acres or 20 percent of the

insurable acreage in the field and the

producer can prove that both crops were

previously planted in the same field in

the same crop year.

Comment: A reinsured company

questioned if the phrase ‘‘in which the

insured crop was grown on the acreage’’

in section 17(f)(4) allows rotation of

double-cropping so that the acreage

need not be double-cropped each of the

last four years to be eligible for

prevented planting.

Response: The double-cropped

acreage would qualify for prevented

planting as long as the insured crop was

double-cropped in each of the last four

years that it was grown.

Comment: Legal counsel for a

reinsured company stated that the terms

of FCIC’s proposed coverage for

prevented planting are inherently

inconsistent. On the one hand, FCIC is

eliminating its substitute crop

provisions, while on the other hand the

FCIC would require written agreements

to be submitted by sales closing dates on

base eligible acres on which the insured

has not produced any crop for which

insurance was available in any of the

four most recent crop years. This

requirement effectively forecloses

producers, particularly those in the

northern plains states, from responding

to market signals. Similarly, section

17(e)(3), which indicates the number of

acres requested cannot exceed the

amount of cropland, conflicts with

section 17(f)(4), which appears to permit

double cropping.

Response: The comment misinterprets

the proposed provisions. Section

17(e)(1) requires only those producers

who have not produced any crop in any

of the four most recent years for which

insurance was available to establish

eligible acres in writing. In all other

instances, either the number of

contracted acres (for contracted crops)

or the greatest number of acres of the

insured crop planted or insured in any
65146 Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations

of the four most recent years serves as

the basis to determine eligible prevented

planting acres. No provision contained

in this rule restricts a producer from

responding to market signals and

planting, or attempting to plant, any

amount of any crop he or she desires.

However, in most instances, prevented

planting compensation will be based on

the number of acres of an insured crop

that was planted in the past. As stated

above, FCIC has revised the provisions

of section 17(e)(3) (now in section

17(e)(1)) to account for double-cropped

acreage.

Comment: Comments were received

regarding section 17(f)(5). A reinsured

company questioned how a company

would know if any crop from which a

benefit is derived under any program

administered by the USDA is planted

and fails. The commenter also suggested

modifying the sentence from may be

hayed or grazed ‘‘* * * after the final

planting date for the insured crop

* * *’’ to ‘‘* * * 60 days after the final

planting date for the insured crop

* * *’’ An insurance service

organization stated that this section

refers to ‘‘other than a cover crop which

may be hayed or grazed after the final

planting date for the insured crop.’’ The

commenter questioned whether acreage

that has a cover crop that is ready to be

hayed or grazed would ever qualify for

prevented planting.

Response: Reinsured companies must

question insureds to determine if any

crop was planted for the crop year on

the acreage being claimed for prevented

planting. Producers should not be

denied grazing or haying benefits for 60

days after being prevented from

planting. In many instances, cover crops

are grown until preparation for planting

occurs in the spring. If the producer was

unable to remove the cover crop and

plant a crop, such a cover crop could be

hayed or grazed soon after the final

planting date and a prevented planting

payment would still be owed.

Comment: A reinsured company

questioned how the insurer will know if

a cash lease payment is also received for

use of the same acreage in the same crop

year as specified in section 17(f)(6),

particularly if it occurs after the

prevented planting payment has already

been received.

Response: Reinsured companies must

question insureds to determine if a cash

lease payment is, or will be, received for

the acreage being claimed for prevented

planting. Any insured who claims

prevented planting on acreage they have

cash leased would be misrepresenting a

material fact and could be subject to

civil and false claim penalties.

Comment: A reinsured company

stated that they did not disagree with

the concept of section 17(f)(7) but that

it is inconsistent with freedom to farm

and is unenforceable.

Response: The requirement that

prevented planting coverage will not be

provided for any acreage for which

planting history or conservation plans

indicate that the acreage would have

remained fallow for crop rotation

purposes is necessary to protect the

integrity of the program. FCIC is charged

with establishing an actuarially sound

insurance program, and relying upon

‘‘intentions,’’ without evidence to

support such intentions, is not an

appropriate manner of achieving

actuarial soundness. For example, if half

the acreage in a farm has remained

fallow every other year for the past ten

years to maintain a summerfallow

rotation, this is evidence that this is a

normal practice. If such patterns exist,

this provision is easier to administer

than if the reinsured companies were

forced to determine whether the

producer actually intended to plant a

crop. Since coverage for prevented

planting now begins on the previous

crop year’s sales closing date for carryover policies, producers could decide to

claim an intent to plant acreage where

the cause occurred months earlier in

order to profit from the insurance

program when they never planned to

plant a crop. While the denial of

prevented planting coverage may

adversely affect some producers who

genuinely intended to plant a crop,

given the inability to prove intent to

plant and in order to protect the

integrity of the program, FCIC must

retain the provision. No change has

been made.

Comment: Comments were received

regarding proposed section 17(f)(9)

(redesignated 17(f)(10)). A reinsured

company stated that they did not

disagree with the concept of section

17(f)(9) but that it is an unenforceable

provision. The commenter asked if

capital on hand was considered proof

that inputs were available. An insurance

service organization stated that the

burden of proof is placed on the

producer to demonstrate ‘‘he or she had

the inputs available to plant and

produce a crop.’’ The commenter asked

what guidelines have been developed to

determine that an insured has ‘‘inputs

available to plant and produce a crop’’

and what evidence will be considered

acceptable for the ‘‘proof.’’ The

commenter believes that instead of

reducing the costs associated with

prevented planting, FCIC has put forth

an indefensible proposal that will only

add to the administrative expense of the

program.

Response: Since the prevented

planting period could begin on the sales

closing date for the previous crop year

for many producers, many producers

could know that they were prevented

from planting prior to the sales closing

date and planting period. These

producers would be in a position to

claim the intent to plant higher valued

crops than they normally plant. FCIC

has revised the provision to clarify that

proof of inputs is only necessary where

there is a deviation from normal

planting practices. For example, the

producer has rotated crops between

corn and soybeans in alternate years and

this was the year the rotational pattern

showed that corn would normally be

planted, if the producer seeks a

prevented planting payment for corn,

the reinsured company does not have to

determine whether the insured had

sufficient inputs. However, if the

producer seeks a prevented planting

payment for soybeans, the reinsured

company would be required to

determine whether the producer has

sufficient inputs. Capital on hand would

not be considered proof of inputs. If the

producer could not produce receipts for

seed, fertilizer, herbicides, etc., the lease

of equipment or labor, or specific land

preparation, it will be presumed that the

crop usually planted by the producer

was the crop that the producer intended

to plant. While this provision may

preclude a producer from receiving

benefits for a crop that he genuinely

intended to plant, the producer would

still be eligible for a benefit on the crop

usually planted and the need to protect

program integrity outweighs its

disadvantages. Since this situation

should be rare, it should not impose an

undue burden on the reinsured

company.

Comment: A reinsured company

stated that proposed section 17(f)(11)

(redesignated 17(f)(12)) is contrary to

the freedom to farm concept. The

commenter also questioned how the

insurer would know if the crop was

planted in one of the last four years.

Response: Prevented planting

coverage will not be provided for any

acreage based on a price election,

amount of insurance or production

guarantee for a crop type the insured

person did not plant in one of the four

most recent years. As stated above, FCIC

has a responsibility to protect the

integrity of the program. Allowing

producers to claim prevented planting

payments for crops for which there is no

evidence that they intended to plant

would adversely affect program

integrity. While this may result in some
Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations 65147

producers not receiving benefits, it

would be impossible to maintain

actuarial soundness when such

exposure to unnecessary risk exists.

Since most crops have a production

guarantee based on actual production

history, records are an integral

requirement. Use of such records would

seem the proper way to verify previous

crops produced. However, FCIC has

created an exception for new producers

that qualify for coverage under section

17(e)(1)(i)(B).

Comment: Comments were received

regarding section 17(g). A reinsured

company stated that this section may

generate a moral as well as a morale

hazard, since producers may claim

prevented planting for marginal land

never intended for planting. This is

contrary to the intent of this policy,

which is to provide disaster based

insurance coverage, not acre by acre

coverage. Legal counsel for a reinsured

company stated that proposed

provisions allowing a prevented

planting payment on a per acre basis

add incalculable costs to the loss

adjustment process. The commenter

stated that loss adjusters must find the

acres that are prevented from being

planted, measure them, verify inputs

and calculate the loss. Also, under the

proposal, insureds can ‘‘buy-up’’ their

coverage which permits producers to be

indemnified as much for prevented

planting as for failed planting. Neither

the Cost-Benefit Analysis or the

narrative in the Federal Register

provide the level of detail needed to

permit meaningful comment on FCIC’s

conclusion that higher rates will not be

needed. The commenter further stated

that paying prevented planting claims

on a per acre basis will result in

software problems equal in magnitude

to the so-called ‘‘year 2000’’ problem.

Loss records are kept by unit and to pay

claims by acre will require a complete

revision of the reinsured company’s and

FCIC’s loss adjustment programs. In this

regard, those programs will need to

deduct from final claims paid on a unit

basis the amount paid for prevented

planting on an acre basis. Accordingly,

the commenter stated that FCIC has no

basis in fact to conclude, as it did in its

1997 Cost-Benefit Analysis, that its

proposal will simplify program

operation. A national, two state and a

regional commodity group stated that

they commend FCIC’s decision to pay

prevented planting acres on a ‘‘per acre’’

basis. Another national commodity

group stated that they strongly support

the change from computing the

prevented planting indemnification on a

unit basis to a per acre basis after the

deductible of the lesser of 20 acres or 20

percent of the eligible acreage in a unit

is met. This change provides the

producer the opportunity to more

closely recover his actual losses

associated with prevented planting on a

limited number of acres within a unit

without indirectly penalizing him for

efforts to plant the balance of a unit in

a timely, profit maximizing fashion. An

insurance service organization stated

that they received one comment

recommending prevented planting

coverage be provided on a unit basis

rather than on an acre-by-acre basis. The

commenter stated that prevented

planting coverage on a unit basis will

encourage the insured to plant the acres

if at all possible. The commenter asked

why separate units for planted and

prevented planting acres should be

established when units by planting

dates are not otherwise allowed.

Response: The other requirements of

section 17 must also be met before a

prevented planting payment is made. If

the producer cannot prove that inputs

were available to plant any acreage, then

no prevented planting payment will be

made. If the producer has previously

planted marginal acreage, any prevented

planting payment will be based on the

lower yield for such acreage. No change

has been made.

As noted in both the Cost-Benefit

Analysis and Federal Register narrative,

recent prevented planting data indicate

that the net costs are expected to be

small because the cost and liability

associated with substitute crops, which

will be reduced when that provision is

eliminated, offset the additional cost

and liability associated with adding a

per-acre basis for payment. Experience

data for 1996 demonstrate that 77

percent of declared prevented planted

acres occurred in circumstances in

which no acreage of that same crop was

planted within the unit. Similar results

appear in 1995. The implication is that

most producers who are prevented from

planting have not been able to plant any

acreage in the unit and, therefore,

already have received the equivalent of

acre-by-acre payments. Added outlays

would be associated with prevented

planted acres where some acreage in the

unit is planted, but realized production

exceeds the guarantee. In 1996, about

178,000 acres fell in this category,

accounting for about $5.6 million in

indemnities. Data for 1996 also indicate

that some acreage that did not receive

an indemnity under the prior regulation

would receive a payment under this

rule. The increased indemnity is

estimated to be about $7–8 million.

These data clearly indicate that the

effect is small.

Even with the ‘‘buy-up’’ provisions,

prevented planting compensation under

this rule cannot equal compensation

given in the event of a failed crop as

stated in the comment from the legal

counsel. The maximum coverage offered

is 70 percent of the guarantee for timely

planted acres. Therefore, the maximum

compensation the producer could

receive is 70 percent of the indemnity

paid if all acreage of the crop had failed.

Maintaining loss records for

prevented planting payments will be no

more complex than maintaining records

for any unit. It will not be necessary to

deduct the amount of a prevented

planting payment from the amount of a

final claim. This calculation is not

required by this rule. No change has

been made.

Comment: An insurance agent

recommended that the CAT level of

coverage for prevented planting be

limited to a payment based upon basic

units, and that the buy up coverage

should be eligible for acre by acre

payments. Too much coverage at the

CAT level encourages the producer to

‘‘take a chance’’ rather than make an

informed decision based upon sound

risk management principles. There is

more incentive for the producer with

many acres to elect CAT coverage,

particularly if the payment is made on

each acre, the major risk is prevented

planting, and there is no premium

impact. The producer who elects

additional coverage should receive

additional benefits to compensate for

the fact that the producer no longer has

substitute crop provisions.

Response: The argument presupposes

that the chance of prevented planting is

the dominate consideration regarding

choice of coverage level. If this is the

case, and producers can continue in

business over the long term with the

catastrophic level of coverage, the

interests of a majority of producers in

the county may be best served by this

choice. No change has been made.

Comment: A reinsured company

recommended that, in the prevented

planting provisions, FCIC remove the

crop specific nature of the proposal and

consider only those acres that cannot be

planted to any crop as eligible for a

prevented planting payment. The

commenter also suggested that FCIC

establish a non-disappearing deductible

as a percentage of cropland acreage that

must be exceeded to qualify for a

prevented planting payment.

Additionally, the commenter suggested

that FCIC determine a per-acre payment

amount based on average production

costs in the county.

Response: The recommended

changes, which result in a totally
65148 Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations

different concept for prevented planting

coverage than in the proposed rule,

could not be accomplished without the

benefit of public comment. FCIC has

reviewed the recommended coverage

and determined this concept requires

more study to determine if it is

acceptable to all interested parties. No

change has been made.

Comment: An insurance service

organization commented that crop

insurance industry representatives had

developed a total cropland prevented

planting proposal based on acres not

planted after the planting windows for

all crops had expired. Industry

representatives believed this proposal

was consistent with the intent of the

Federal Agriculture Improvement and

Reform Act of 1996 (1996 Act) in that

the coverage did not induce crop

specific behavior. The proposal

advanced by FCIC differs materially.

Due to the short comment period and

the complexity of the subject, there was

inadequate time to develop a full

response, including actuarial analysis

and total cost of administration, to

FCIC’s proposal. FCIC must provide

companies with the necessary support

to defend against challenges to the

enforcement of the ‘‘intent’’ and ‘‘proof

of intent’’ clauses, from the additional

loss adjusting expenses incurred by

companies in implementing this

program, and from compliance issues

that arise out of confusion generated by

this rule. Further, FCIC has consistently

under-estimated the costs associated

with its prevented planting provisions.

FCIC has not addressed the matter of

increased costs incurred by private

companies or the potential for private

companies to suffer excessive

underwriting losses associated with this

rule. Instead, it has only expressed in its

analysis that because of the small

expected average rate impact, any

changes in reimbursements to private

companies for delivery or any

underwriting gains are also expected to

be small. At a time when the

administrative subsidy to private

companies for delivery of the federal

program has been reduced by FCIC,

there is no room for and FCIC should

not anticipate that private companies

will bear the cost of this proposal.

Response: FCIC reviewed the

insurance service organization’s

prevented planting proposal prior to

publication of this rule, as well as other

proposals. This rule incorporates many

elements or concepts of those proposals.

The total cropland concept is inherent

to this rule in that eligible acres are

defined by the producer’s history. The

provisions contained in this rule

simplify program administration and

will reduce administrative costs

compared to current prevented planting

provisions (e.g., removal of the

substitute crop coverage, simplification

of determining eligible acreage,

reduction in the number of agreements

in writing to determine eligible acreage,

etc.). Therefore, reinsured companies

should not need additional resources,

nor should they incur additional costs

to implement the overall prevented

planting changes contained in this rule.

Comment: An insurance service

organization stated that the proposed

rule for prevented planting is built, in

part, around the ‘‘intent’’ of the farmer

to plant. Industry calls into question the

defensibility of determining ‘‘intent’’

from a legal and managerial standpoint.

The commenter provided data

published by the National Agricultural

Statistics Services (NASS) showing that

the differences between intended and

planted acreage (total cropland) at the

state-level are relatively stable.

However, the data demonstrate that

crop-specific differences between

intended and planted acres are

magnified within a state. The

commenter stated that the differences

will be even greater at the farm level.

This indicates the difficulty associated

with monitoring the prevented planting

proposal. It will require additional

dollars to deliver this type of program

in order to maintain the integrity of the

program.

Response: Without examining the

intent of a producer to plant a crop,

producers could collect indemnities

even when they did not intend to plant

a crop or claim an intent to plant a

higher valued crop in order to maximize

their payments. Therefore, intent must

be examined to protect the integrity of

the program. The provisions have been

revised to only require an examination

of intent when the producer deviates

from previous planting practices.

Therefore, the additional costs

associated with the program should be

minimal. No change has been made.

Comment: An insurance service

organization stated that the crop specific

nature of the prevented planting

provisions contained in this rule are

inconsistent with Freedom to Farm.

Response: The comments presupposes

that producers select the crop to plant

based on available insurance coverage.

This supposition is contrary to the

intent of the 1996 Act, which is to allow

producers to maximize their profits

through the use of available markets and

prices. It is possible that producers may

be denied prevented planting coverage

when they genuinely intended to plant

the crop. However, to protect the

integrity of the program, such

provisions are necessary and reduce the

administrative burdens on the reinsured

companies, which would otherwise

have to ascertain the intent of the

producers. The rule authorizes

payments for prevented planting in a

sound insurance manner. No change has

been made.

Comment: An insurance service

organization stated that problems will

be encountered with this rule because of

the degree of the over-lap of the planting

windows for the various crops by state.

Absent from this rule is any discussion

or analysis of the impact of final

planting dates in relation to the

prevented planting coverage. Final

planting dates are crucial in

determining eligibility for prevented

planting benefits. If final planting dates

are too early, then a producer may be

able to claim prevented planting

benefits even though the producer is

still able to plant within standard

practice for the crop and location. This

will lead to higher than expected

delivery expense compared to the

industry proposal because more claims

will be processed.

Response: FCIC will review final

planting dates and revise them as

necessary. However, to maximize

coverage and a potential for revenue,

most producers will elect to plant some

other crop if land becomes plantable

after the final planting date for one crop,

and thereby establish 100 percent of a

crop insurance guarantee. No change

has been made.

Comment: An insurance service

organization stated that, in certain

situations, previous land use and preplant input decisions will narrow the

set of crop choices and substitution

among crops. Industry will be required

to manage additional information and

data in order to implement the proposed

rule and maintain program integrity.

Within the context of the Paperwork

Reduction Act and program

simplification, requiring companies to

obtain, verify and retain additional

paperwork and information from

producers does not make sense.

Response: FCIC has revised the

provisions to narrow the cases in which

reinsured companies must examine

evidence of inputs. Since the

examination of inputs was required in

previous prevented planting provisions,

this change will reduce the burden on

reinsured companies. No change has

been made.

Comment: Reinsured companies and

an insurance service organization

commented on the provisions of section

18. They state that there are legitimate

reasons for written agreements to be

valid for more than one year, especially
Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations 65149

if no substantive changes occur from

one year to the next. Limiting written

agreements to one year only increases

administrative cost, complexity and

opportunity for misunderstanding and

error, and flies in the face of efforts to

simplify the program and reduce its

administrative expense. The commenter

also stated that written agreements

should be effective for more than one

year because there is already an

exception since written agreements to

establish units are continuous (unless

the farming operation changes

significantly). The commenters also

question how often written agreements

are incorporated into the actuarial

documents within one year. Often,

policyholders and reinsured companies

must duplicate their efforts to request

reissuance of written agreements

because this does not happen. The

commenters state that FCIC’s legal

counsel objects to the concept of written

agreements, which purportedly allows

exceptions for those ‘‘in the know,’’

while others may not be aware the

possibility exists. The commenters

asked whether these provisions can be

revised to simplify renewals. The

commenters suggested that the policy

should require the insured to pay the

cost of inspections necessary to obtain

a written agreement because there are

many instances where there is no

economic reason or incentive for a

company to pursue such agreements.

The commenters also suggested that

sections (a) and (e) be combined since

both deal with deadlines for written

agreement requests. They stated that the

response to this comment in prior final

rules has been that the sales closing date

is intended to be the deadline with only

limited exceptions. However, 7 of the 13

written agreement types listed in the

1998 Crop Insurance Handbook allow

requests at acreage reporting time and

one allows the request after acreage

reporting. Of the 6 types with a sales

closing date deadline, 4 are specific

cases of a practice or type not listed in

the actuarial materials, which is curious

since the general type of unrated

practice, type or variety can be

requested at acreage reporting time. So,

the exceptions seem to outnumber the

rule. Many of the situations calling for

written agreements do not become

apparent until the acreage report is

received. Therefore, the commenter

again suggests this provision might be

less misleading if the acreage reporting

date exception noted in (e) were

incorporated into (a). The commenters

stated that the provisions in section 18

that specify timing and content of the

FCI–2 written agreement should not be

part of the insurance policy. New

insureds would not have this

information until it is too late to request

a written agreement. They state that this

should have been reviewed by the

insurance agent prior to acceptance of

the application or issuance of the crop

insurance policy. The commenters also

stated that some of the written

agreement provisions need to be

carefully considered and compared to

current procedures and comments to the

Written Agreement proposed rule before

the deadlines and annual status of

written agreements are mandated in the

Basic Provisions.

Response: Written agreements are

intended to change policy terms or

permit insurance in unusual situations.

If such practices continue year to year,

they should be incorporated into the

policy or Special Provisions. It is

important to keep non-uniform

exceptions to a minimum and to insure

that the insured is well aware of the

specific terms of the policy. There are

no exceptions to the timing or duration

of written agreements except as

provided in section 18. The provisions

have been amended to indicate that

written agreements may be submitted

after the sales closing date only if the

producer demonstrates that he or she

was physically unable to apply prior to

the sales closing date or in accordance

with any regulation which may be

promulgated under 7 CFR part 400.

FCIC will be more vigilant in

incorporating changes to the policy

made by written agreement into the

actuarial documents.

FCIC does not believe that a producer

should bear the cost associated with any

inspection done for the purposes of a

written agreement. Such costs are a part

of servicing the policy and therefore, are

already compensated by the expense

reimbursement under the Standard

Reinsurance Agreement.

Section 18 was added to the Basic

Provisions so that this duplication of

information could be eliminated from

all Crop Provisions. This information is

necessary to provide authority for

policies to be altered where the policy

specifically allows the use of a written

agreement.

Comment: Legal counsel for a

reinsured company stated that FCIC’s

authorization of reinsured companies to

use written agreements to alter the terms

of published regulations is illegal and

unwise. The commenter stated that

Congress conferred on the FCIC, not on

dozens of insurance companies, the

rule-making power to define the terms

and conditions for insurance. Congress

did not confer upon the FCIC the

authority to delegate its exclusive

rulemaking authority to private

contractors. The commenter also stated

that neither the FCIC nor its contractors

may amend rules and regulations in the

Federal Register by private written

agreement. The comment also indicated

belief that the provisions of this section

are prohibited by the Office of

Management and Budget ‘‘Policy Letter

on Inherently Governmental

Functions,’’ 57 FR 45096, 45100, ¶ 5

(September 30, 1992). The commenter

stated that this section will result in

written agreements being used as

marketing gambits for agents and

policyholders by inviting them to

compete with lenient agreements that

will permit the sale of insurance by a

variety of devices after the sales closing

date. Finally, the commenter stated that

section 18 is a trap for reinsured

companies. On one hand, the salutary

purposes of the freedom to farm

legislation must be accommodated by

allowing insureds to react to market

signals. On the other hand, the timing

of those signals may invite moral

hazards. Faced with two mutually

exclusive and equally unhappy

alternatives, FCIC has decided to

abdicate responsibility. The commenter

states that section 18 gives each insurer

the choice of rejecting a written

agreement and declining coverage

(thereby causing potential for uninsured

losses of the policyholder) or accepting

a written agreement and exposing itself

to the hindsight of FCIC’s Compliance

Division.

Response: FCIC has not delegated its

rulemaking authority to the reinsured

companies. In many cases, reinsured

companies must still get FCIC approval

before providing insurance by written

agreement such as in cases involving

unrated land. Further, even if the

reinsured company has the authority to

approve written agreements, criteria

published by FCIC still must be met.

Therefore, reinsured companies do not

have the authority to revise or modify

the terms of the policy except as

provided by FCIC. All reinsured

companies are doing is applying such

criteria to their insureds’ situation. The

use of written agreements should not

provide any competitive advantage

since they must specifically be

authorized in the policy and are

available to all producers of the crop.

No change has been made.

Comment: Reinsured companies, an

insurance service organization, and

legal counsel for a reinsured company

commented on section 20. The

commenters questioned whether using

the rules of the American Arbitration

Association (AAA) for resolution of

disagreements has been satisfactory and
65150 Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations

whether utilization of the intermediate

‘‘two appraisers, umpire, etc.’’ has been

considered. The commenters also stated

that the language ‘‘for FCIC policies’’

can be deleted because, effective with

the 1998 crop year, FSA offices are no

longer delivering crop insurance

policies. Section 20(a) states that

disagreements on any factual

determination between the insured and

the company will be resolved in

accordance with the rules of the AAA.

The commenters state that this must be

clarified so that this only means the

association’s rules will be followed, not

that its personnel will be involved in

the arbitration since they are expensive

and are not familiar with crop

insurance. Section 20(b) reads ‘‘No

award determined by arbitration can

exceed the amount of liability

established or which should have been

established under the policy.’’ The

commenters stated that this should read

‘‘arbitration or appeal’’ since both are

mentioned in 20(a). The commenters

stated that section 20 and section 25 are

at odds with each other. Under these

two sections, arbitrators have

jurisdiction over questions of fact and

the courts have jurisdiction over

questions of law. Moreover, under the

policy, both can grant monetary relief.

Bifurcated proceedings are costly and

unnecessary. The commenters stated

that the policy should provide for

mandatory, binding arbitration. Such

alternative dispute resolution is

consistent with public policy. At most,

legal action should be an alternative

route, with insureds able to select one,

but not both actions.

Response: In most instances,

arbitration by the rules of the AAA has

been a satisfactory and desirable

solution to policy disputes. FCIC has

not received any recommendations

providing alternatives. The provisions

are clear that only the rules of AAA will

be used. Since the authority for FCIC to

deliver policies directly to insureds still

exists, provisions referencing FCIC

policies will be retained in case they are

needed in the future. FCIC has revised

section 20(b) to reference ‘‘arbitration or

appeal.’’ The provisions clearly state

that disagreement on any factual

determination will be resolved by

arbitration. However, if arbitration does

not result in agreement, FCIC believes

the insured producer should be able to

seek resolution through legal action as

authorized in section 25.

Comment: An insurance service

organization questioned whether section

21(b)(3) should specify that ‘‘optional

units’’ may be combined rather than just

‘‘units.’’

Response: Section 21(b)(3) should

refer to optional units and has been

amended accordingly.

Comment: An insurance service

organization stated that, under section

23, the amount the reinsured company

is allowed to retain should be increased

from 20 percent to 40 percent due to the

increased costs and paperwork.

Response: 7 CFR § 400.47 limits the

amount to 20 percent of the premium.

No change has been made.

Comment: A reinsured company and

an insurance service organization had

comments regarding section 24. They

stated that the phrase ‘‘For FCIC

Policies’’ should be deleted since all

MPCI policies will be with reinsured

companies beginning in 1998. They also

stated that the phrase, ‘‘or any part

thereof’’ after ‘‘per calendar month’’ in

the first sentence of section 24(a) under

‘‘For Reinsured Policies,’’ that presently

is in the regulations should be retained.

The commenters were concerned that

the second sentence states ‘‘interest will

start on the first day of the month

following the premium billing date’’ but

does not address subsequent months.

The commenters also suggested that the

following provisions should be

incorporated ‘‘For Reinsured Policies:’’

‘‘Any amount illegally or erroneously

paid to you or that is owed to us but is

delinquent will be recovered by us

through offset by deducting it from any

loan or payment due you under any Act

of Congress or program administered by

any United States Government Agency,

or by other collection action. No

insurance will be available until the

debt is paid or a collection plan is

implemented.’’

Response: The 1996 Act still

authorizes FCIC to offer insurance

directly to insureds under certain

conditions. Therefore, these provisions

must remain. FCIC agrees that reinsured

companies should be able to collect

interest for a portion of a month and has

revised the provision. The phrase

‘‘interest will start on the first day of the

month following the premium billing

date’’ refers to the date interest begins

to accrue. The provision has been

clarified. In certain circumstances, part

of a debt owed by an insured under a

reinsured policy may be collected by

offset from payments made by other

United States government agencies.

However, such recovery is limited to the

amount of the debt that was paid by

FCIC.

Comment: An insurance service

organization stated that section 25(c) is

entirely too vague and may not be given

any effect by a court. It must be

rewritten to read ‘‘You may not recover

compensatory or punitive damages or

attorney’s fees under this contract. Your

right to recover damages of any kind or

attorneys’ fees is limited or excluded by

Federal regulations.’’

Response: Section 25(c) is only

intended to notify the insured that

Federal Regulations and other sections

of the policy, such as section 26(a), may

provide for limitations or exclusions on

the recovery of damages, interest, fees or

costs. The provision is clearly stated

and has not been changed.

Comment: An insurance service

organization stated that section 26(a)

conflicts with section 25(c) unless

rewritten as suggested above.

Response: These provisions are

complementary, not in conflict.

Comment: Comments were received

regarding section 27(a). A reinsured

company questioned whether it is the

intent of this provision that voidance

would occur only after the legal system

determined fraud. An insurance service

organization stated that this provision

should be rewritten to read ‘‘This policy

and all other policies reinsured by the

USDA shall be void in the event you

have concealed the fact that you are

ineligible to receive benefits under the

Act, or if you are in fact ineligible (or

action is pending which would make

you ineligible), even if you are not

aware of it at the time this policy is

written. This policy may also be

voidable, in our sole discretion, if you

or anyone assisting you has

intentionally concealed or

misrepresented any material fact

relating to this or any other policy

reinsured by USDA.’’ The commenters

state that the Standard Reinsurance

Agreement voids any policy with

ineligible persons from the time of

ineligibility. Concealment makes no

difference. It is unfair to hold the

companies to liability under a policy

when FCIC controls eligibility

determinations and will not stand

behind the companies. The commenters

also state that the last sentence should

read ‘‘voidable’’ and not ‘‘void,’’ since,

in most cases, a company cannot be

placed at risk in determining whether

someone should be banned from what

remains an entitlement program.

Furthermore, in many instances, it is

better to let the company simply reduce

the amount of the indemnity. Lastly, the

commenter suggested that a sanction

short of voiding the policy would be

better than declaring someone

ineligible. One example might be to

require repayment of any overpayment

to the reinsured company by the policy

termination date with interest and, if

not repaid, to allow the company to

cancel the policy. Legal counsel for a

reinsured company stated that FCIC
Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations 65151

must understand that no reinsured

company may void a policy for fraud or

misrepresentation as provided in

section 27 since no reinsured company

can provide the due process that is a

requisite for such a finding. Further, no

reinsured company is imbued with the

constitutional or statutory authority to

bar a participant from an entitlement

program. The commenter also states that

a reinsured company cannot be held

responsible for collection of indemnities

that should not have been paid in a

prior year for policies that are

retroactively voided, particularly if the

current reinsured company was not the

insurer in the year for which the policy

was voided. The commenter stated that

the proposed language creates no duty

to the FCIC to engage in such an effort

and, vis-a-vis the insured, does not

supplant the government’s role and

responsibility.

Response: Reinsured companies

cannot bar a participant from the crop

insurance program. The section will be

revised to specify that fraud or

misrepresentation may subject the

insured to sanctions authorized in 7

CFR part 400, subpart R. However,

when violations such as concealment,

misrepresentation or fraud are found

after the appropriate due process, it is

the reinsured company that must deny

insurance or void a policy for an

ineligible person because FCIC lacks

privity with the insured. The reinsured

company that insured the policy for the

year an indemnity should not have been

paid will be responsible for collecting

the overpayment. Since whenever the

insured receives an overpayment it must

be repaid, to only require this in the

cases of fraud would not protect the

program from such conduct in the

future. Further, cancellation of the

policy would only have a prospective

effect and allow insureds to benefit from

their misconduct. FCIC must protect the

integrity of the program.

Comment: An insurance service

organization recommended that the

provisions of section 27(b) be amended

to allow the reinsured company to

retain 40 percent of the premium. The

commenter stated that reinsured

companies should not have to incur

costs if the insured commits fraud or

misrepresents a material fact.

Response: Since the majority of the

costs associated with determinations of

ineligibility will be borne by FCIC, the

percentage in this section should remain

20 percent. No change has been made.

Comment: An insurance service

organization questioned whether the

sentence ‘‘We will not be liable for any

more than the liability determined in

accordance with your policy that

existed before the transfer occurred’’ in

section 28 is necessary, since it is stated

in procedure. The commenter also

questioned the process that will be used

to determine that the transferee is

eligible, as is required by the sentence

that reads ‘‘The transferee must be

eligible for crop insurance.’’

Response: These provisions must be

included in the insurance contract since

this is a limitation imposed on the

insureds and the procedures are not

provided to insureds. The same process

used to determine eligibility of the

person originally insured will be used to

determine eligibility of any transferee.

No change has been made.

Comment: An insurance service

organization questioned the language in

section 29 regarding an assignee’s

ability to file a claim 15 days after the

60 day period for filing a claim has

expired and no action will lie against

the reinsured company if it does not

honor the terms of the assignment. They

questioned whether the assignees will

understand their right to file a claim,

but even if it is filed within the 15 days

specified, the company is not required

to accept that claim. The commenter

suggested that this language be included

on the assignment form rather than in

the policy provisions. The commenter

suggested that the insured should file a

claim within 15 days instead of 60. If 60

days are allowed, reinsured companies

will be paying for losses that should

have been discovered long before,

instead of when they are updating the

producer’s APH for the next year.

Response: A form cannot change the

terms of the policy. This provision is

intended to protect an assignee in cases

where insureds may not have timely

notified them that a loss has occurred.

This provision is clear that the assignee

has the right to file a claim. The

provision will be revised to clarify that

reinsured companies cannot reject the

claim unless it is impossible to

accurately determine the amount of the

claim. Since claims often are not

completed within 15 days after the end

of the insurance period (e.g., 15 days

after harvest, which ends the insurance

period), it is not practical to require an

insured to submit a claim within 15

days of that time.

Comment: Comments were received

regarding section 34. A reinsured

company stated that all references to

FSA or FSA farm serial numbers should

be removed. The commenter suggested

using a minimum distance to provide

for unit separation. The commenter

stated that there is no reason to rely on

FSA information because it is difficult

and expensive to obtain, often is not

current, and has an uncertain future.

The commenter recommended that a

crop enterprise unit be offered as an

option to the insured (all acreage of a

crop insured as one unit). This would be

likely to improve the program’s

underwriting results and reduce the

number and frequency of losses and,

therefore, could be offered to producers

at an attractive premium price. An

insurance service organization stated

that section 34(a) must include

reference to the possibility of unit

division by written agreement, such as

is in the Coarse Grains Crop Provisions

(‘‘if, for each optional unit, you meet all

the conditions of this section or if a

written agreement to such division

exists.’’).

Response: FSA farm serial numbers

continue to be used as a basis of unit

division in certain instances. Therefore,

reference to FSA or FSA farm serial

numbers should not be removed.

Designated distances may be considered

as a method of unit division in the

future, but appropriate research must be

done and procedures developed. Some

programs of insurance currently offer

enterprise units. As experience with

such programs becomes available, FCIC

may consider expansion of use of the

enterprise unit structure. The reference

to written agreements is included in

section 34(b). It is not included in

section 34(a) since a written agreement

should not over-ride those provisions.

Comment: A reinsured company

stated that the phrase ‘‘independently

verified’’ in section 34(a)(3) should be

defined or deleted.

Response: FCIC has clarified this

provision by indicating that the records

must be acceptable to the reinsured

company.

Comment: Comments were received

regarding § 457.9. An insurance service

organization questioned why this

section was removed from the policy.

Legal counsel for a reinsured company

recommended that this section be made

a part of the policy.

Response: No changes to § 457.9 were

proposed in this rule as it is not

specifically a part of the policy. FCIC

does not believe that it is necessary to

include this contingency in the policy.

In the event that Congress does not

appropriate funds, producers will be

notified of cancellation in accordance

with the provisions of section 2 of the

Basic Provisions.

Comment: A reinsured company

questioned if production from acreage

planted after the final planting date

(winter wheat counties only), or after

the late planting period in other

counties, will be counted against the

production guarantee if prevented

planting is applicable.
65152 Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations

Response: Acreage planted under

these circumstances will be considered

late planted under these provisions, and

the production guarantee for it will be

combined with the guarantees for

acreage that is timely planted and

planted within the late planting period.

All production from the planted acres

will then count against the combined

guarantees.

Comment: A reinsured company

questioned the definition of ‘‘planted

acreage’’ in the Small Grains Crop

Provisions and asked if the production

from acreage on which seed was

broadcasted but not incorporated will be

counted against the production

guarantee, especially if prevented

planting eligibility exists and the seed is

broadcasted after the late planting

period.

Response: A provision has been

incorporated into section 16(b) of the

Basic Provisions to address this

concern.

Comment: A reinsured company

recommended providing optional units

for durum wheat in counties with only

a spring final planting date.

Response: The suggested change

would be substantive and not subject to

this rulemaking. FCIC will consider

such a change in the future.

Comment: A reinsured company

suggested adding the phrase ‘‘A replant

payment may be made in accordance

with section 9’’ to section 7(a)(1)(ii) of

the Small Grains Crop Provisions.

Response: Section 7 of the Small

Grains Crop Provisions contains

provisions relative to insurability of

acreage. This section is not intended to

authorize a replant payment. Since

section 9 of the Small Grains Crop

Provisions specifies the conditions

under which replanting payments are

available, it is not necessary to duplicate

the provisions of section 9 in section 7.

No change has been made.

Comment: An insurance service

organization recommended that the

Small Grains Crop Provisions be

amended to allow the tenant to receive

100 percent of the replanting costs as

the Coarse Grains Crop Provisions do.

Response: FCIC has reevaluated this

provision due to comments received on

other regulations and determined that

the provision is not equitable to all

insureds. Specifically, if a landlord and

tenant are insured with different

companies, the provisions do not apply.

Crop Provisions containing these terms

will be amended to eliminate them. No

change has been made.

Comment: A reinsured company

questioned if cotton and ELS cotton

coverage should continue to be

extended while modules are left in the

field. They suggested that this coverage

could possibly be offered as an option

for additional premium.

Response: Loss adjusters, in most

situations, cannot distinguish damage

that occurred in the field from that

occurring in the module. In addition,

the weight of lint cotton, its grade, and

quality adjustment are not determined

until the cotton is ginned. Producers

might be encouraged to delay harvest to

maintain coverage if cotton in modules

is not covered. Cotton in a module is

less susceptible to weather damage than

cotton in the field. No change has been

made.

Comment: A regional and a national

commodity group stated that there are

serious inequities in insurance coverage

among crops, such as the lack of

replanting coverage for cotton and the

25 percent deductible for cotton quality

losses. Replanting provisions should be

a basic component of every cotton crop

insurance policy. The commenter stated

that, from an agronomic perspective,

cotton producers have replanting

experiences that are comparable to those

of other crops. Cottonseed now has

better vigor, is pre-treated two or three

ways, and is adapted for different

growing regions and climatic

conditions.

The national commodity group stated

that they have been unable to find any

documentation of the rationale and date

of imposition of the 25 percent

deductible. The inequity between a corn

or wheat producer and a cotton

producer exists for no apparent

economic or policy reason.

Response: FCIC is reviewing

replanting coverage for cotton and the

quality provisions. Any proposed

changes will be published in the

Federal Register as changes to the

Cotton Crop Provisions and will be

made available for public comment. No

change will be made at this time.

Comment: Comments were received

regarding the premium rates for cotton.

A national commodity group stated that

the structure for cotton needs to be

revised to account for adoption of new

production technology such as Bt cotton

seed, Boll Weevil Eradification,

irrigation, and other advances. The

commenter stated that the risks

associated with growing cotton have

decreased and so should premiums if

new cotton customers are expected. A

regional commodity group stated that

they are aware that funding shortfalls do

exist and they suggested that all

possible alternatives be exhausted

before a decision to increase premium

levels is made. They state that

increasing premiums would help

alleviate the funding problem shortterm. However, such an action would

move FCIC away from what should be

its ultimate goal of increasing the

relative value of FCIC products and

increasing producer participation in the

program. For many cotton producers,

crop insurance simply costs too much in

relation to the level of insurance

protection it provides.

Response: Premium rates on all crops

are based in part on the loss history of

the crop. Crop improvements and

practices that result in reduced losses

are also considered. All rates are

reviewed prior to the actuarial filing

dates and are changed as deemed

appropriate.

Comment: A reinsured company

questioned whether the wording in

section 2 of the Sugar Beet Crop

Provisions requires optional units to be

established by processor contract. If so,

the commenter is strongly opposed. The

commenter stated that this issue has

been addressed at an earlier date with

regard to the Processing Tomato Crop

Provisions, and the supporting reasons

are similar for sugar beets.

Response: Section 2 of the Sugar Beet

Crop Provisions does not require

optional units by processor contract.

Section 2 simply states that a producer

is not eligible for optional units unless

the producer has a processor contract

that contracts for production from a

specified number of acres. Once eligible,

optional units for sugar beets may be

established only by section, section

equivalent or FSA farm serial number;

or by irrigated and non-irrigated

acreage.

Comment: An insurance service

organization recommended changing

the Sugar Beet Crop Provisions to read

‘‘a contract must be on file.’’ The

commenter also recommended a change

to state that the acres stated in the

contract do not limit the acres the

producer can insure. It is a common

practice to overplant acres and the sugar

processors do accept all acres planted.

The commenter suggested that the

following sentence be added ‘‘We will

not cover any loss from the inability of

the sugar factory to accept production

from overage acres.’’ In this situation,

contract acres would be used. The

commenter also suggested eliminating

contracts altogether.

Response: Provisions that would be

impacted by the comment were not

published in the proposed rule and

made available for public comment. No

changes can be made at this time. FCIC

will consider this proposal when the

crop provision is reviewed.

Comment: A reinsured company

suggested adding the phrase ‘‘A replant

payment may be made in accordance
Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations 65153

with section 9’’ to section 6 of the

Coarse Grains Crop Provisions.

Response: Section 6 of the Coarse

Grains Crop Provisions proposed rule

contains provisions relative to

insurability of acreage. This section is

not intended to authorize a replant

payment. Since section 9 of the Coarse

Grains Crop Provisions specifies that

replanting payments are available, it is

not necessary to duplicate that

provision in section 6. No change has

been made.

Comment: A reinsured company

questioned whether the language in

section 9(a) of the Coarse Grains Crop

Provisions provides a replanting

payment to both a landlord and tenant

having different coverage levels. If the

replanting is required for one, both

should be entitled to a replanting

payment, providing they both incur

replanting expense.

Response: There is nothing in section

9(a) of the Coarse Grains Crop

Provisions that precludes a landlord and

tenant having different coverage levels

from being eligible for a replanting

payment. The tenant and landlord may

each be eligible as long as they both

incur replanting expense; the crop is

damaged by an insurable cause of loss

to the extent that the remaining stand

will not produce at least 90 percent of

the respective production guarantees for

the acreage; and it is practical to replant.

If a tenant or landlord elects higher

coverage, greater benefits are paid.

However, it is possible under these

provisions for one person sharing in the

crop to be eligible for a replanting

payment while the other person may be

ineligible for such a payment. For

example, assume the acreage had an

APH yield of 80 bushels per acre. If the

landlord had a 75 percent coverage level

with a production guarantee of 60

bushels per acre (80 × .75), the landlord

would be eligible for a replanting

payment if the remaining stand was

appraised at less than 54 bushels per

acre (60 × .90). If the tenant had a 50

percent coverage level with a

production guarantee of 40 bushels per

acre (80 × .50), the tenant would be

entitled to a replanting payment if the

remaining stand was appraised at less

than 36 bushels per acre (40 × .90). In

this example, if the remaining stand

appraised at 40 bushels per acre, the

landlord would be eligible for a replant

payment but not the tenant.

Comment: Some reinsured companies

questioned the elimination of optional

units from the Forage Production Crop

Provisions and whether the year of

implementation is 1999 or 1998.

Response: Optional units are

currently not available for forage

production. Since the optional unit

provisions are being added to the Basic

Provisions, those provisions must be

made ineffective to maintain the current

forage production unit structure. These

provisions are not effective until the

1999 crop year since the contract change

date for 1998 has passed.

Comment: A reinsured company

questioned whether further changes

would be made to the Raisin Crop

Provisions for the 1998 crop year.

Response: FCIC does not plan further

changes to the Raisin Crop Provisions

for the 1998 crop year.

Comment: An insurance service

organization suggested allowing units

for storage and non-storage onions only,

and not allow additional units by type.

Additional units by type will expose

insurers to unnecessary liability and

increase premiums.

Response: Under the previous Onion

Endorsement, units were allowed by

type, i.e., red, yellow, or white onions,

in lieu of the traditional units by section

or farm serial number. This unit

division structure has worked well for

onions and is consistent with onion

production practices. No change has

been made.

Comment: A reinsured company

stated that both irrigated and nonirrigated grape vineyards exist in

California, and that optional units by

these practices should be available. This

situation also exists for walnuts and

possibly other perennial crops.

Response: Irrigated and non-irrigated

practices do exist for several perennial

crops in California. However, since both

practices rarely exist on the same farm,

little or no benefit would be derived by

allowing separate optional units for

these practices. No changes have been

made.

Comment: A reinsured company

suggested adding the phrase ‘‘an

adequate rate of seed for the acreage to

produce an acceptable stand’’ to the

definition of planted acreage in the

Forage Seeding Crop Provisions.

Another reinsured company questioned

if the implementation year should be

1998 instead of 1999.

Response: FCIC has revised the

provisions to clarify that an adequate

amount of seed must be planted. The

provisions will not be made effective

until the 1999 crop year.

Comment: A reinsured company

questioned whether changes were

necessary for the proposed rules for

hybrid seed corn, green peas and sweet

corn provisions that have not been

finalized.

Response: Those Crop Provisions,

such as table grapes, prunes, etc., that

were finalized after publication of the

proposed rule will be incorporated into

this final rule. Since there were no

substantive changes since the

publication of those Crop Provisions,

additional comments are not necessary.

In addition to the changes described

above and minor editorial changes, FCIC

has made the following changes to the

Basic Provisions and the Crop

Provisions.

1. Section 1—Amended the definition

of ‘‘abandon’’ for clarification. Added a

definition for ‘‘approved yield’’ so this

definition can be deleted from the Crop

Provisions. Clarified the definition of

‘‘application’’ to indicate that insurance

will not be available to a producer who

is ineligible under any Federal

regulation. Amended the definition of

‘‘replanting’’ to indicate that seed must

be replaced with the expectation of

producing at least the yield used to

determine the production guarantee.

Also, added a definition for the term

‘‘substantial beneficial interest’’ for

clarification.

2. Section 3(d)(2)—Clarified the

provision to indicate that the

production guarantee may be revised if

the producer fails to accurately report

acreage or other material information.

3. Sections 6(a)(1) and (2)—Deleted

the references to ‘‘fall’’ and ‘‘spring.’’

These terms are not necessary since

actual dates are specified.

4. Section 6(g)(1)—Amended the

provisions to specify that if the

information reported by the insured

results in a lower liability than the

actual liability the insurance provider

determines, the production guarantee or

the amount of insurance on the unit will

be reduced to an amount that is

consistent with the reported

information.

5. Section 6(g)(2)—Amended the

provisions to specify that if the

information reported by the insured

results in a higher liability than the

actual liability the insurance provider

determines, the information contained

in the acreage report will be revised to

be consistent with the correct

information.

6. Section 8(a)—Amended the

provisions to specify that the insured

crop may also be specified in the

Special Provisions.

7. Section 9(c)—Clarified that these

provisions are applicable regardless of

the provisions in section 8(b)(1), which

specify that no insurance will be

provided unless a premium rate is

provided for the specific practice.

8. Sections 10(c) and (d)—

Reorganized and clarified the provisions

so that share arrangements and cash

arrangements are contained in separate

sections.
65154 Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations

9. Section 13(b)(2)—Clarified that a

replanting payment will not be made for

acreage planted prior to the earliest

planting date established by the Special

Provisions.

10. Section 14(a) (Our Duties)—

Amended the provisions to indicate that

the reinsured company will pay a loss

within 30 days after completion of

arbitration or appeal proceedings.

11. Section 17(a) was amended by

replacing ‘‘crop provisions’’ with

‘‘policy provisions.’’ This change allows

both the crop provisions and the Special

Provisions to limit prevented planting

coverage.

12. Clarified section 17(b) to indicate

that additional levels of prevented

planting coverage are not available for

Catastrophic Risk Protection coverage.

Also revised this section to indicate that

elected or assigned prevented planting

coverage levels may not be increased if

a cause of loss that will or could prevent

planting is evident prior to the time the

producer wishes to change the

prevented planting coverage level.

13. Changed the title of section 21 to

indicate that provisions regarding access

to records are included in the section.

14. Amended the introductory text for

the Cotton Crop Provisions and the

Extra Long Staple Cotton Crop

Provisions to make the provisions

effective for the 1998 crop year only.

15. Added the definition of ‘‘sales

closing date’’ in the Small Grains Crop

Provisions and the Forage Seeding Crop

Provisions for clarification.

16. Amended the definition of

‘‘planted acreage’’ in the Fresh Market

Sweet Corn, Fresh Market Tomato

(dollar plan), and the Fresh Market

Pepper Crop Provisions to include a

reference to separate planting periods.

17. Changed the effective dates of the

Safflower Crop Provisions and the

Onion Crop Provisions to the 1998 and

succeeding crop years for counties with

a December 31 contract change date.

18. Incorporated sections 457.133

(Prune Crop Insurance Provisions);

§ 457.137 (Green Pea Crop Insurance

Provisions); § 457.149 (Table Grape

Crop Insurance Provisions); § 457.155

(Processing Bean Crop Insurance

Provisions); and § 457.160 (Processing

Tomato Crop Insurance Provisions)

since these Crop Provisions were

finalized after this rule was proposed as

follows:

(a) Deleted definitions that are added

to the Basic Provisions by this rule. This

allows FCIC to remove duplication of

provisions from the Crop Provisions.

(b) Modified section 2 because the

requirements for optional units have

now been incorporated into section 34

of the Basic Provisions.

(c) Deleted, modified, or added late

and prevented planting provisions since

these provisions are now included in

sections 16 and 17 of the Basic

Provisions.

(d) Deleted the written agreement

provisions because they are now

incorporated into section 18 of the Basic

Provisions.

Good cause is shown to make this rule

effective upon filing for public

inspection at the Office of the Federal

Register. This rule provides prevented

planting coverage when applicable, for

all crops under the Basic Provisions.

This rule must be effective prior to the

contract change dates of the crops for

which these revised prevented planting

provisions are effective. Therefore,

public interest requires the agency to act

immediately to make these provisions

available for as many crops as possible

for the 1998 crop year.

List of Subjects in 7 CFR Part 457

Almond; Arizona-California citrus;

Coarse grains; Cotton; Cranberry; Dry

bean; Extra long staple cotton; Fig;

Florida citrus fruit; Forage production;

Forage seeding; Fresh market pepper;

Fresh market sweet corn; Fresh market

tomato (Dollar plan); Fresh market

tomato (Guaranteed production plan);

Grape; Green pea; Macadamia Nut;

Macadamia Tree; Nursery; Onion;

Peach; Pear; Plum; Processing bean;

Processing tomato; Prune; Raisin; Rice;

Safflower; Small grains; Sugar beet;

Sugarcane; Sunflower seed; Table grape;

Texas citrus tree; Texas citrus fruit; and

Walnut.

Final Rule

Accordingly, as set forth in the

preamble, the Federal Crop Insurance

Corporation hereby amends 7 CFR part

457 as follows:

PART 457—COMMON CROP

INSURANCE REGULATIONS;

REGULATIONS FOR THE 1998 AND

SUBSEQUENT CONTRACT YEARS

1. The authority citation for 7 CFR

part 457 continues to read as follows:

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

2. Section 457.2 is amended by

removing paragraph (e), redesignating

paragraphs (f), (g), and (h) as paragraphs

(e), (f), and (g) respectively and revising

paragraphs (b), (c), and (d) to read as

follows:

§ 457.2 Availability of federal crop

insurance.

* * * * *

(b) The insurance is offered through

companies reinsured by the Federal

Crop Insurance Corporation (FCIC) that

offer contracts containing the same

terms and conditions as the contract set

out in this part. These contracts are

clearly identified as being reinsured by

FCIC. FCIC may offer the contract for

the catastrophic level of coverage

contained in this part and part 402

directly to the insured through local

offices of the Department of Agriculture

only if the Secretary determines that the

availability of local agents is not

adequate. Those contracts are

specifically identified as being offered

by FCIC.

(c) Except as specified in the Crop

Provisions, the Catastrophic Risk

Protection Endorsement (part 402 of this

chapter) and part 400, subpart T of this

chapter, no person may have in force

more than one contract on the same

crop for the same crop year in the same

county.

(d) Except as specified in paragraph

(c) of this section, if a person has more

than one contract under the Act that

provides coverage for the same loss on

the same crop for the same crop year in

the same county, all such contracts shall

be voided for that crop year and the

person will be liable for the premium on

all contracts, unless the person can

show to the satisfaction of the

Corporation that the multiple contracts

of insurance were inadvertent and

without the fault of the person. If the

multiple contracts of insurance are

shown to be inadvertent and without

the fault of the person, the contract with

the earliest signature date on the

application will be valid and all other

contracts on that crop in the county for

that crop year will be canceled. No

liability for indemnity or premium will

attach to the contracts so canceled.

* * * * *

3. Revise § 457.4 to read as follows:

§ 457.4 OMB control numbers.

The information collection

requirements contained in these

regulations have been approved by the

Office of Management and Budget

(OMB) under the provisions of 44 U.S.C.

chapter 35 and have been assigned OMB

number 0563–0053.

4. Section 457.8 paragraph (b) is

revised to read as follows:

§ 457.8 The application and policy.

(a) * * *

(b) FCIC or the reinsured company

may reject or discontinue the

acceptance of applications in any

county or of any individual application

upon FCIC’s determination that the

insurance risk is excessive.

* * * * *

5. Section 457.8 is amended by

revising the policy to read as follows:
Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations 65155

DEPARTMENT OF AGRICULTURE

FEDERAL CROP INSURANCE

CORPORATION

[OR POLICY ISSUING COMPANY NAME]

Common Crop Insurance Policy

(This is a continuous policy. Refer to section

2.)

FCIC policies

This is an insurance policy issued by the

Federal Crop Insurance Corporation (FCIC), a

United States government agency. The

provisions of the policy are published in the

Federal Register and in chapter IV of title 7

of the Code of Federal Regulations (CFR)

under the Federal Register Act (44 U.S.C.

1501 et seq.), and may not be waived or

varied in any way by the crop insurance

agent or any other agent or employee of FCIC.

Throughout this policy, ‘‘you’’ and ‘‘your’’

refer to the named insured shown on the

accepted application and ‘‘we,’’ ‘‘us,’’ and

‘‘our’’ refer to the Federal Crop Insurance

Corporation. Unless the context indicates

otherwise, use of the plural form of a word

includes the singular and use of the singular

form of the word includes the plural.

Reinsured Policies

This insurance policy is reinsured by the

Federal Crop Insurance Corporation (FCIC)

under the provisions of the Federal Crop

Insurance Act, as amended (7 U.S.C. 1501 et

seq.) (Act). All provisions of the policy and

rights and responsibilities of the parties are

specifically subject to the Act. The provisions

of the policy are published in the Federal

Register and codified in chapter IV of title 7

of the Code of Federal Regulations (CFR)

under the Federal Register Act (44 U.S.C.

1501 et seq.), and may not be waived or

varied in any way by the crop insurance

agent or any other agent or employee of FCIC

or the company. In the event we cannot pay

your loss, your claim will be settled in

accordance with the provisions of this policy

and paid by FCIC. No state guarantee fund

will be liable for your loss.

Throughout this policy, ‘‘you’’ and ‘‘your’’

refer to the named insured shown on the

accepted application and ‘‘we,’’ ‘‘us,’’ and

‘‘our’’ refer to the insurance company

providing insurance. Unless the context

indicates otherwise, use of the plural form of

a word includes the singular and use of the

singular form of the word includes the plural.

Agreement to insure. In return for the

payment of the premium, and subject to all

of the provisions of this policy, we agree with

you to provide the insurance as stated in this

policy. If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) the Catastrophic Risk Protection

Endorsement, as applicable; (2) the Special

Provisions; (3) the Crop Provisions; and (4)

these Basic Provisions (§ 457.8), with (1)

controlling (2), etc.

TERMS AND CONDITIONS

Basic Provisions

1. Definitions

Abandon. Failure to continue to care for

the crop, providing care so insignificant as to

provide no benefit to the crop, or failure to

harvest in a timely manner, unless an insured

cause of loss prevents you from properly

caring for or harvesting the crop or causes

damage to it to the extent that most

producers of the crop on acreage with similar

characteristics in the area would not

normally further care for or harvest it.

Acreage report. A report required by

paragraph 6 of these Basic Provisions that

contains, in addition to other required

information, your report of your share of all

acreage of an insured crop in the county,

whether insurable or not insurable.

Acreage reporting date. The date contained

in the Special Provisions or as provided in

section 6 by which you are required to

submit your acreage report.

Act. The Federal Crop Insurance Act (7

U.S.C. 1501 et seq.).

Actuarial documents. The material for the

crop year which is available for public

inspection in your agent’s office, and which

shows the amounts of insurance or

production guarantees, coverage levels,

premium rates, practices, insurable acreage,

and other related information regarding crop

insurance in the county.

Agricultural commodity. All insurable

crops and other fruit, vegetable or nut crops

produced for human or animal consumption.

Another use, notice of. The written notice

required when you wish to put acreage to

another use (see section 14).

Application. The form required to be

completed by you and accepted by us before

insurance coverage will commence. This

form must be completed and filed in your

agent’s office not later than the sales closing

date of the initial insurance year for each

crop for which insurance coverage is

requested. If cancellation or termination of

insurance coverage occurs for any reason,

including but not limited to indebtedness,

suspension, debarment, disqualification,

cancellation by you or us or violation of the

controlled substance provisions of the Food

Security Act of 1985, a new application must

be filed for the crop. Insurance coverage will

not be provided if you are ineligible under

the contract or under any Federal statute or

regulation.

Approved yield. The yield determined in

accordance with 7 CFR part 400, subpart (G).

Assignment of indemnity. A transfer of

policy rights, made on our form, and effective

when approved by us. It is the arrangement

whereby you assign your right to an

indemnity payment to any party of your

choice for the crop year.

Basic unit. All insurable acreage of the

insured crop in the county on the date

coverage begins for the crop year:

(1) In which you have 100 percent crop

share; or

(2) Which is owned by one person and

operated by another person on a share basis.

(Example: If, in addition to the land you own,

you rent land from five landlords, three on

a crop share basis and two on a cash basis,

you would be entitled to four units; one for

each crop share lease and one that combines

the two cash leases and the land you own.)

Land which would otherwise be one unit

may, in certain instances, be divided

according to guidelines contained in section

34 of these Basic Provisions and in the

applicable Crop Provisions.

Cancellation date. The calendar date

specified in the Crop Provisions on which

coverage for the crop will automatically

renew unless canceled in writing by either

you or us or terminated in accordance with

the policy terms.

Claim for indemnity. A claim made on our

form by you for damage or loss to an insured

crop and submitted to us not later than 60

days after the end of the insurance period

(see section 14).

Consent. Approval in writing by us

allowing you to take a specific action.

Contract. (See ‘‘policy’’).

Contract change date. The calendar date by

which we make any policy changes available

for inspection in the agent’s office (see

section 4).

County. Any county, parish, or other

political subdivision of a state shown on your

accepted application, including acreage in a

field that extends into an adjoining county if

the county boundary is not readily

discernible.

Coverage. The insurance provided by this

policy, against insured loss of production or

value, by unit as shown on your summary of

coverage.

Coverage begins, date. The calendar date

insurance begins on the insured crop, as

contained in the Crop Provisions, or the date

planting begins on the unit (see section 11 of

these Basic Provisions for specific provisions

relating to prevented planting).

Crop Provisions. The part of the policy that

contains the specific provisions of insurance

for each insured crop.

Crop year. The period within which the

insured crop is normally grown and

designated by the calendar year in which the

insured crop is normally harvested.

Damage. Injury, deterioration, or loss of

production of the insured crop due to

insured or uninsured causes.

Damage, notice of. A written notice

required to be filed in your agent’s office

whenever you initially discover the insured

crop has been damaged to the extent that a

loss is probable (see section 14).

Days. Calendar days.

Deductible. The amount determined by

subtracting the coverage level percentage you

choose from 100 percent. For example, if you

elected a 65 percent coverage level, your

deductible would be 35 percent (100%¥65%

= 35%).

Delinquent account. Any account you have

with us in which premiums and interest on

those premiums is not paid by the

termination date specified in the Crop

Provisions, or any other amounts due us,

such as indemnities found not to have been

earned, which are not paid within 30 days of

our mailing or other delivery of notification

to you of the amount due.

Earliest planting date. The earliest date

established for planting the insured crop (see

Special Provisions and section 13).

End of insurance period, date of. The date

upon which your crop insurance coverage

ceases for the crop year (see Crop Provisions

and section 11).

Field. All acreage of tillable land within a

natural or artificial boundary (e.g., roads,

waterways, fences, etc.).

Final planting date. The date contained in

the Special Provisions for the insured crop by
65156 Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations

which the crop must initially be planted in

order to be insured for the full production

guarantee or amount of insurance per acre.

FSA. The Farm Service Agency, an agency

of the USDA, or a successor agency.

FSA farm serial number. The number

assigned to the farm by the local FSA office.

Good farming practices. The cultural

practices generally in use in the county for

the crop to make normal progress toward

maturity and produce at least the yield used

to determine the production guarantee or

amount of insurance, and are those

recognized by the Cooperative State

Research, Education, and Extension Service

as compatible with agronomic and weather

conditions in the county.

Insured. The named person as shown on

the application accepted by us. This term

does not extend to any other person having

a share or interest in the crop (for example,

a partnership, landlord, or any other person)

unless specifically indicated on the accepted

application.

Insured crop. The crop for which coverage

is available under these Basic Provisions and

the applicable Crop Provisions as shown on

the application accepted by us.

Interplanted. Acreage on which two or

more crops are planted in a manner that does

not permit separate agronomic maintenance

or harvest of the insured crop.

Irrigated practice. A method of producing

a crop by which water is artificially applied

during the growing season by appropriate

systems and at the proper times, with the

intention of providing the quantity of water

needed to produce at least the yield used to

establish the irrigated production guarantee

or amount of insurance on the irrigated

acreage planted to the insured crop.

Late planted. Acreage initially planted to

the insured crop after the final planting date.

Late planting period. The period that

begins the day after the final planting date for

the insured crop and ends 25 days after the

final planting date, unless otherwise

specified in the Crop Provisions or Special

Provisions.

Loss, notice of. The notice required to be

given by you not later than 72 hours after

certain occurrences or 15 days after the end

of the insurance period, whichever is earlier

(see section 14).

Negligence. The failure to use such care as

a reasonably prudent and careful person

would use under similar circumstances.

Non-contiguous. Any two or more tracts of

land whose boundaries do not touch at any

point, except that land separated only by a

public or private right-of-way, waterway, or

an irrigation canal will be considered as

contiguous.

Palmer Drought Severity Index. A

meteorological index calculated by the

National Weather Service to indicate

prolonged and abnormal moisture deficiency

or excess.

Person. An individual, partnership,

association, corporation, estate, trust, or other

legal entity, and wherever applicable, a State

or a political subdivision or agency of a State.

‘‘Person’’ does not include the United States

Government or any agency thereof.

Planted acreage. Land in which seed,

plants, or trees have been placed, appropriate

for the insured crop and planting method, at

the correct depth, into a seedbed that has

been properly prepared for the planting

method and production practice.

Policy. The agreement between you and us

consisting of the accepted application, these

Basic Provisions, the Crop Provisions, the

Special Provisions, other applicable

endorsements or options, the actuarial

documents for the insured crop, the

Catastrophic Risk Protection Endorsement, if

applicable, and the applicable regulations

published in 7 CFR chapter IV.

Practical to replant. Our determination,

after loss or damage to the insured crop,

based on all factors, including, but not

limited to moisture availability, marketing

window, condition of the field, and time to

crop maturity, that replanting the insured

crop will allow the crop to attain maturity

prior to the calendar date for the end of the

insurance period. It will not be considered

practical to replant after the end of the late

planting period, or the final planting date if

no late planting period is applicable, unless

replanting is generally occurring in the area.

Unavailability of seed or plants will not be

considered a valid reason for failure to

replant.

Premium billing date. The earliest date

upon which you will be billed for insurance

coverage based on your acreage report. The

premium billing date is contained in the

Special Provisions.

Prevented planting. Failure to plant the

insured crop with proper equipment by the

final planting date designated in the Special

Provisions for the insured crop in the county

or by the end of the late planting period. You

must have been prevented from planting the

insured crop due to an insured cause of loss

that also prevented most producers from

planting on acreage with similar

characteristics in the surrounding area.

Price election. The amounts contained in

the Special Provisions or an addendum

thereto, to be used for computing the value

per pound, bushel, ton, carton, or other

applicable unit of measure for the purposes

of determining premium and indemnity

under the policy.

Production guarantee (per acre). The

number of pounds, bushels, tons, cartons, or

other applicable units of measure determined

by multiplying the approved yield per acre

by the coverage level percentage you elect.

Production report. A written record

showing your annual production and used by

us to determine your yield for insurance

purposes (see section 3). The report contains

yield information for previous years,

including planted acreage and harvested

production. This report must be supported by

written verifiable records from a

warehouseman or buyer of the insured crop

or by measurement of farm-stored

production, or by other records of production

approved by us on an individual case basis.

Replanting. Performing the cultural

practices necessary to prepare the land to

replace the seed or plants of the damaged or

destroyed insured crop and then replacing

the seed or plants of the same crop in the

insured acreage with the expectation of

producing at least the yield used to

determine the production guarantee.

Representative sample. Portions of the

insured crop that must remain in the field for

examination and review by our loss adjuster

when making a crop appraisal, as specified

in the Crop Provisions. In certain instances

we may allow you to harvest the crop and

require only that samples of the crop residue

be left in the field.

Sales closing date. A date contained in the

Special Provisions by which an application

must be filed. The last date by which you

may change your crop insurance coverage for

a crop year.

Section. (for the purposes of unit structure)

A unit of measure under a rectangular survey

system describing a tract of land usually one

mile square and usually containing

approximately 640 acres.

Share. Your percentage of interest in the

insured crop as an owner, operator, or tenant

at the time insurance attaches. However, only

for the purpose of determining the amount of

indemnity, your share will not exceed your

share at the earlier of the time of loss or the

beginning of harvest.

Special Provisions. The part of the policy

that contains specific provisions of insurance

for each insured crop that may vary by

geographic area.

State. The state shown on your accepted

application.

Substantial beneficial interest. An interest

held by any person of at least 10 percent in

the applicant or insured.

Summary of coverage. Our statement to

you, based upon your acreage report,

specifying the insured crop and the guarantee

or amount of insurance coverage provided by

unit.

Tenant. A person who rents land from

another person for a share of the crop or a

share of the proceeds of the crop (see the

definition of ‘‘share’’ above).

Termination date. The calendar date

contained in the Crop Provisions upon which

your insurance ceases to be in effect because

of nonpayment of any amount due us under

the policy, including premium.

Timely planted. Planted on or before the

final planting date designated in the Special

Provisions for the insured crop in the county.

USDA. United States Department of

Agriculture.

Void. When the policy is considered not to

have existed for a crop year as a result of

concealment, fraud or misrepresentation (see

section 27).

Written agreement. A document that alters

designated terms of a policy as authorized

under these Basic Provisions, the Crop

Provisions, or the Special Provisions for the

insured crop (see section 18).

2. Life of Policy, Cancellation, and

Termination

(a) This is a continuous policy and will

remain in effect for each crop year following

the acceptance of the original application

until canceled by you in accordance with the

terms of the policy or terminated by

operation of the terms of the policy or by us.

(b) Your application for insurance must

contain all the information required by us to

insure the crop. Applications that do not

contain all social security numbers and

employer identification numbers, as

applicable, (except as stated herein) coverage
Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations 65157

level, price election, crop, type, variety, or

class, plan of insurance, and any other

material information required to insure the

crop, are not acceptable. If a person with a

substantial beneficial interest in the insured

crop refuses to provide a social security

number or employer identification number

and that person is:

(1) Not on the non-standard classification

system list, the amount of coverage available

under the policy will be reduced

proportionately by that person’s share of the

crop; or

(2) On the non-standard classification

system list, the insurance will not be

available to that person and any entity in

which the person has a substantial beneficial

interest.

(c) After acceptance of the application, you

may not cancel this policy for the initial crop

year. Thereafter, the policy will continue in

force for each succeeding crop year unless

canceled or terminated as provided below.

(d) Either you or we may cancel this policy

after the initial crop year by providing

written notice to the other on or before the

cancellation date shown in the Crop

Provisions.

(e) If any amount due, including premium,

is not paid on or before the termination date

for the crop on which an amount is due:

(1) For a policy with the unpaid premium,

the policy will terminate effective on the

termination date immediately subsequent to

the billing date for the crop year;

(2) For a policy with other amounts due,

the policy will terminate effective on the

termination date immediately after the

account becomes delinquent;

(3) Ineligibility will be effective as of the

date that the policy was terminated for the

crop for which you failed to pay an amount

owed and for all other insured crops with

coincidental termination dates;

(4) All other policies that are issued by us

under the authority of the Act will also

terminate as of the next termination date

contained in the applicable policy;

(5) If you are ineligible, you may not obtain

any crop insurance under the Act until

payment is made, you execute an agreement

to repay the debt and make the payments in

accordance with the agreement, or you file a

petition to have your debts discharged in

bankruptcy;

(6) If you execute an agreement to repay

the debt and fail to timely make any

scheduled payment, you will be ineligible for

crop insurance effective on the date the

payment was due until the debt is paid in

full or you file a petition to discharge the

debt in bankruptcy and subsequently obtain

discharge of the amounts due. Dismissal of

the bankruptcy petition before discharge will

void all policies in effect retroactive to the

date you were originally determined

ineligible to participate;

(7) Once the policy is terminated, the

policy cannot be reinstated for the current

crop year unless the termination was in error;

(8) After you again become eligible for crop

insurance, if you want to obtain coverage for

your crops, you must reapply on or before the

sales closing date for the crop (Since

applications for crop insurance cannot be

accepted after the sales closing date, if you

make any payment after the sales closing

date, you cannot apply for insurance until

the next crop year); and

(9) If we deduct the amount due us from

an indemnity, the date of payment for the

purpose of this section will be the date you

sign the properly executed claim for

indemnity.

(10) For example, if crop A, with a

termination date of October 31, 1997, and

crop B, with a termination date of March 15,

1998, are insured and you do not pay the

premium for crop A by the termination date,

you are ineligible for crop insurance as of

October 31, 1997, and crop A’s policy is

terminated on that date. Crop B’s policy is

terminated as of March 15, 1998. If you enter

an agreement to repay the debt on April 25,

1998, you can apply for insurance for crop

A by the October 31, 1998, sales closing date

and crop B by the March 15, 1999, sales

closing date. If you fail to make a scheduled

payment on November 1, 1998, you will be

ineligible for crop insurance effective on

November 1, 1998, and you will not be

eligible unless the debt is paid in full or you

file a petition to have the debt discharged in

bankruptcy and subsequently receive

discharge.

(f) If you die, disappear, or are judicially

declared incompetent, or if you are an entity

other than an individual and such entity is

dissolved, the policy will terminate as of the

date of death, judicial declaration, or

dissolution. If such event occurs after

coverage begins for any crop year, the policy

will continue in force through the crop year

and terminate at the end of the insurance

period and any indemnity will be paid to the

person or persons determined to be

beneficially entitled to the indemnity. The

premium will be deducted from the

indemnity or collected from the estate. Death

of a partner in a partnership will dissolve the

partnership unless the partnership agreement

provides otherwise. If two or more persons

having a joint interest are insured jointly,

death of one of the persons will dissolve the

joint entity.

(g) We may terminate your policy if no

premium is earned for 3 consecutive years.

(h) The cancellation and termination dates

are contained in the Crop Provisions.

3. Insurance Guarantees, Coverage Levels,

and Prices for Determining Indemnities

(a) For each crop year, the production

guarantee or amount of insurance, coverage

level, and price at which an indemnity will

be determined for each unit will be those

used to calculate your summary of coverage.

The information necessary to determine

those factors will be contained in the Special

Provisions or in the actuarial documents.

(b) You may select only one coverage level

from among those offered by us for each

insured crop. You may change the coverage

level, price election, or amount of insurance

for the following crop year by giving written

notice to us not later than the sales closing

date for the insured crop. Since the price

election or amount of insurance may change

each year, if you do not select a new price

election or amount of insurance on or before

the sales closing date, we will assign a price

election or amount of insurance which bears

the same relationship to the price election

schedule as the price election or amount of

insurance that was in effect for the preceding

year. (For example: If you selected 100

percent of the market price for the previous

crop year and you do not select a new price

election for the current crop year, we will

assign 100 percent of the market price for the

current crop year.)

(c) You must report production to us for

the previous crop year by the earlier of the

acreage reporting date or 45 days after the

cancellation date unless otherwise stated in

the Special Provisions:

(1) If you do not provide the required

production report, we will assign a yield for

the previous crop year. The yield assigned by

us will not be more than 75 percent of the

yield used by us to determine your coverage

for the previous crop year. The production

report or assigned yield will be used to

compute your approved yield for the purpose

of determining your coverage for the current

crop year.

(2) If you have filed a claim for any crop

year, the documents signed by you which

state the amount of production used to

complete the claim for indemnity will be the

production report for that year unless

otherwise specified by FCIC.

(3) Production and acreage for the prior

crop year must be reported for each proposed

optional unit by the production reporting

date. If you do not provide the information

stated above, the optional units will be

combined into the basic unit.

(d) We may revise your production

guarantee for any unit, and revise any

indemnity paid based on that production

guarantee, if we find that your production

report under paragraph (c) of this section:

(1) Is not supported by written verifiable

records in accordance with the definition of

production report; or

(2) Fails to accurately report actual

production, acreage, or other material

information.

(e) In addition to the price election or

amount of insurance available on the contract

change date, we may provide an additional

price election or amount of insurance no later

than 15 days prior to the sales closing date.

You must select the additional price election

or amount of insurance on or before the sales

closing date for the insured crop. These

additional price elections or amounts of

insurance will not be less than those

available on the contract change date. If you

elect the additional price election or amount

of insurance any claim settlement and

amount of premium will be based on this

amount.

4. Contract Changes

(a) We may change the terms of your

coverage under this policy from year to year.

(b) Any changes in policy provisions, price

elections, amounts of insurance, premium

rates, and program dates will be provided by

us to your crop insurance agent not later than

the contract change date contained in the

Crop Provisions, except that price elections

may be offered after the contract change date

in accordance with section 3. You may view

the documents or request copies from your

crop insurance agent.

(c) You will be notified, in writing, of

changes to the Basic Provisions, Crop
65158 Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations

Provisions, and Special Provisions not later

than 30 days prior to the cancellation date for

the insured crop. Acceptance of changes will

be conclusively presumed in the absence of

notice from you to change or cancel your

insurance coverage.

5. Liberalization

If we adopt any revision that broadens the

coverage under this policy subsequent to the

contract change date without additional

premium, the broadened coverage will apply.

6. Report of Acreage

(a) An annual acreage report must be

submitted to us on our form for each insured

crop in the county on or before the acreage

reporting date contained in the Special

Provisions, except as follows:

(1) If you insure multiple crops that have

final planting dates on or after August 15 but

before December 31, you must submit an

acreage report for all such crops on or before

the latest applicable acreage reporting date

for such crops; and

(2) If you insure multiple crops that have

final planting dates on or after December 31

but before August 15, you must submit an

acreage report for all such crops on or before

the latest applicable acreage reporting date

for such crops.

(3) Notwithstanding the provisions in

sections 6(a) (1) and (2):

(i) If the Special Provisions designate

separate planting periods for a crop, you

must submit an acreage report for each

planting period on or before the acreage

reporting date contained in the Special

Provisions for the planting period; and

(ii) If planting of the insured crop

continues after the final planting date or you

are prevented from planting during the late

planting period, the acreage reporting date

will be the later of:

(A) The acreage reporting date contained in

the Special Provisions;

(B) The date determined in accordance

with sections (a)(1) or (2); or

(C) Five (5) days after the end of the late

planting period for the insured crop, if

applicable.

(b) If you do not have a share in an insured

crop in the county for the crop year, you

must submit an acreage report, on or before

the acreage reporting date, so indicating.

(c) Your acreage report must include the

following information, if applicable:

(1) All acreage of the crop in the county

(insurable and not insurable) in which you

have a share;

(2) Your share at the time coverage begins;

(3) The practice;

(4) The type; and

(5) The date the insured crop was planted.

(d) Because incorrect reporting on the

acreage report may have the effect of

changing your premium and any indemnity

that may be due, you may not revise this

report after the acreage reporting date

without our consent.

(e) We may elect to determine all

premiums and indemnities based on the

information you submit on the acreage report

or upon the factual circumstances we

determine to have existed.

(f) If you do not submit an acreage report

by the acreage reporting date, or if you fail

to report all units, we may elect to determine

by unit the insurable crop acreage, share,

type and practice, or to deny liability on such

units. If we deny liability for the unreported

units, your share of any production from the

unreported units will be allocated, for loss

purposes only, as production to count to the

reported units in proportion to the liability

on each reported unit.

(g) If the information reported by you on

the acreage report for share, acreage, practice,

type or other material information is

inconsistent with the information that is

determined to actually exist for a unit and

results in:

(1) A lower liability than the actual

liability determined, the production

guarantee or amount of insurance on the unit

will be reduced to an amount that is

consistent with the reported information. In

the event that insurable acreage is underreported for any unit, all production or value

from insurable acreage in that unit will be

considered production or value to count in

determining the indemnity; and

(2) A higher liability than the actual

liability determined, the information

contained in the acreage report will be

revised to be consistent with the correct

information. If we discover that you have

incorrectly reported any information on the

acreage report for any crop year, you may be

required to provide documentation in

subsequent crop years that substantiates your

report of acreage for those crop years,

including, but not limited to, an acreage

measurement service at your own expense.

(h) Errors in reporting units may be

corrected by us at the time of adjusting a loss

to reduce our liability and to conform to

applicable unit division guidelines.

7. Annual Premium

(a) The annual premium is earned and

payable at the time coverage begins. You will

be billed for premium due not earlier than

the premium billing date specified in the

Special Provisions. The premium due, plus

any accrued interest, will be considered

delinquent if it is not paid on or before the

termination date specified in the Crop

Provisions.

(b) Any amount you owe us related to any

crop insured with us under the authority of

the Act will be deducted from any prevented

planting payment or indemnity due you for

any crop insured with us under the authority

of the Act.

(c) The annual premium amount is

determined, as applicable, by either:

(1) Multiplying the production guarantee

per acre times the price election, times the

premium rate, times the insured acreage,

times your share at the time coverage begins,

and times any premium adjustment

percentages that may apply; or

(2) Multiplying the amount of insurance

per acre times the premium rate, times the

insured acreage, times your share at the time

coverage begins, and times any premium

adjustment percentages that may apply.

(d) The premium will be computed using

the price election or amount of insurance you

elect or that we assign in accordance with

section 3(b).

8. Insured Crop

(a) The insured crop will be that shown on

your accepted application and as specified in

the Crop Provisions or Special Provisions

and must be grown on insurable acreage.

(b) A crop which will NOT be insured will

include, but will not be limited to, any crop:

(1) If the farming practices carried out are

not in accordance with the farming practices

for which the premium rates, production

guarantees or amounts of insurance have

been established, unless insurance is allowed

by a written agreement;

(2) Of a type, class or variety established

as not adapted to the area or excluded by the

policy provisions;

(3) That is a volunteer crop;

(4) That is a second crop following the

same crop (insured or not insured) harvested

in the same crop year unless specifically

permitted by the Crop Provisions or the

Special Provisions;

(5) That is planted for the development or

production of hybrid seed or for

experimental purposes, unless permitted by

the Crop Provisions or by written agreement

to insure such crop; or

(6) That is used solely for wildlife

protection or management. If the lease states

that specific acreage must remain

unharvested, only that acreage is

uninsurable. If the lease specifies that a

percentage of the crop must be left

unharvested, your share will be reduced by

such percentage.

9. Insurable Acreage

(a) Acreage planted to the insured crop in

which you have a share is insurable except

acreage:

(1) That has not been planted and

harvested within one of the 3 previous crop

years, unless:

(i) Such acreage was not planted:

(A) To comply with any other USDA

program;

(B) Because of crop rotation, (e.g., corn,

soybean, alfalfa; and the alfalfa remained for

4 years before the acreage was planted to

corn again);

(C) Due to an insurable cause of loss that

prevented planting; or

(D) Because a perennial crop was grown on

the acreage;

(ii) Such acreage was planted but was not

harvested due to an insurable cause of loss;

or

(iii) The Crop Provisions specifically allow

insurance for such acreage;

(2) That has been strip-mined, unless

otherwise approved by written agreement, or

unless an agricultural commodity other than

a cover, hay, or forage crop (except corn

silage), has been harvested from the acreage

for at least five crop years after the stripmined land was reclaimed;

(3) On which the insured crop is damaged

and it is practical to replant the insured crop,

but the insured crop is not replanted;

(4) That is interplanted, unless allowed by

the Crop Provisions;

(5) That is otherwise restricted by the Crop

Provisions or Special Provisions; or

(6) That is planted in any manner other

than as specified in the policy provisions for

the crop unless a written agreement to such

planting exists.
Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations 65159

(b) If insurance is provided for an irrigated

practice, you must report as irrigated only

that acreage for which you have adequate

facilities and adequate water, or the

reasonable expectation of receiving adequate

water at the time coverage begins, to carry

out a good irrigation practice. If you knew or

had reason to know that your water may be

reduced before coverage begins, no

reasonable expectation exists.

(c) Notwithstanding the provisions in

section 8(b)(1), if acreage is irrigated and we

do not provide a premium rate for an

irrigated practice, you may either report and

insure the irrigated acreage as ‘‘nonirrigated,’’ or report the irrigated acreage as

not insured.

(d) We may restrict the amount of acreage

that we will insure to the amount allowed

under any acreage limitation program

established by the United States Department

of Agriculture if we notify you of that

restriction prior to the sales closing date.

10. Share Insured.

(a) Insurance will attach only to the share

of the person completing the application and

will not extend to any other person having

a share in the crop unless the application

clearly states that:

(1) The insurance is requested for an entity

such as a partnership or a joint venture; or

(2) You as landlord will insure your

tenant’s share, or you as tenant will insure

your landlord’s share. In this event, you must

provide evidence of the other party’s

approval (lease, power of attorney, etc.). Such

evidence will be retained by us. You also

must clearly set forth the percentage shares

of each person on the acreage report.

(b) We may consider any acreage or interest

reported by or for your spouse, child or any

member of your household to be included in

your share.

(c) Acreage rented for a percentage of the

crop, or a lease containing provisions for

both a minimum payment (such as a

specified amount of cash, bushels, pounds,

etc.,) and a crop share will be considered a

crop share lease.

(d) Acreage rented for cash, or a lease

containing provisions for either a minimum

payment or a crop share (such as a 50/50

share or $100.00 per acre, whichever is

greater) will be considered a cash lease.

11. Insurance Period.

(a) Except for prevented planting coverage

(see section 17), coverage begins on each unit

or part of a unit at the later of:

(1) The date we accept your application

(For the purposes of this paragraph, the date

of acceptance is the date that you submit a

properly executed application in accordance

with section 2);

(2) The date the insured crop is planted; or

(3) The calendar date contained in the Crop

Provisions for the beginning of the insurance

period.

(b) Coverage ends at the earliest of:

(1) Total destruction of the insured crop on

the unit;

(2) Harvest of the unit;

(3) Final adjustment of a loss on a unit;

(4) The calendar date contained in the Crop

Provisions for the end of the insurance

period;

(5) Abandonment of the crop on the unit;

or

(6) As otherwise specified in the Crop

Provisions.

12. Causes of Loss.

The insurance provided is against only

unavoidable loss of production directly

caused by specific causes of loss contained

in the Crop Provisions. All other causes of

loss, including but not limited to the

following, are NOT covered:

(a) Negligence, mismanagement, or

wrongdoing by you, any member of your

family or household, your tenants, or

employees;

(b) Failure to follow recognized good

farming practices for the insured crop;

(c) Water contained by any governmental,

public, or private dam or reservoir project;

(d) Failure or breakdown of irrigation

equipment or facilities; or

(e) Failure to carry out a good irrigation

practice for the insured crop, if applicable.

13. Replanting Payment.

(a) If allowed by the Crop Provisions, a

replanting payment may be made on an

insured crop replanted after we have given

consent and the acreage replanted is at least

the lesser of 20 acres or 20 percent of the

insured planted acreage for the unit (as

determined on the final planting date or

within the late planting period if a late

planting period is applicable).

(b) No replanting payment will be made on

acreage:

(1) On which our appraisal establishes that

production will exceed the level set by the

Crop Provisions;

(2) Initially planted prior to the earliest

planting date established by the Special

Provisions; or

(3) On which one replanting payment has

already been allowed for the crop year.

(c) The replanting payment per acre will be

your actual cost for replanting, but will not

exceed the amount determined in accordance

with the Crop Provisions.

(d) No replanting payment will be paid if

we determine it is not practical to replant.

14. Duties in the Event of Damage or Loss.

Your Duties—

(a) In case of damage to any insured crop

you must:

(1) Protect the crop from further damage by

providing sufficient care;

(2) Give us notice within 72 hours of your

initial discovery of damage (but not later than

15 days after the end of the insurance

period), by unit, for each insured crop (we

may accept a notice of loss provided later

than 72 hours after your initial discovery if

we still have the ability to accurately adjust

the loss);

(3) Leave representative samples intact for

each field of the damaged unit as may be

required by the Crop Provisions; and

(4) Cooperate with us in the investigation

or settlement of the claim, and, as often as

we reasonably require:

(i) Show us the damaged crop;

(ii) Allow us to remove samples of the

insured crop; and

(iii) Provide us with records and

documents we request and permit us to make

copies.

(b) You must obtain consent from us

before, and notify us after you:

(1) Destroy any of the insured crop that is

not harvested;

(2) Put the insured crop to an alternative

use;

(3) Put the acreage to another use; or

(4) Abandon any portion of the insured

crop. We will not give consent for any of the

actions in sections 14(b) (1) through (4) if it

is practical to replant the crop or until we

have made an appraisal of the potential

production of the crop.

(c) In addition to complying with all other

notice requirements, you must submit a

claim for indemnity declaring the amount of

your loss not later than 60 days after the end

of the insurance period. This claim must

include all the information we require to

settle the claim.

(d) Upon our request, you must:

(1) Provide a complete harvesting and

marketing record of each insured crop by

unit including separate records showing the

same information for production from any

acreage not insured; and

(2) Submit to examination under oath.

(e) You must establish the total production

or value received for the insured crop on the

unit, that any loss of production or value

occurred during the insurance period, and

that the loss of production or value was

directly caused by one or more of the insured

causes specified in the Crop Provisions.

(f) All notices required in this section that

must be received by us within 72 hours may

be made by telephone or in person to your

crop insurance agent but must be confirmed

in writing within 15 days.

Our Duties—

(a) If you have complied with all the policy

provisions, we will pay your loss within 30

days after:

(1) We reach agreement with you;

(2) Completion of arbitration or appeal

proceedings; or

(3) The entry of a final judgment by a court

of competent jurisdiction.

(b) In the event we are unable to pay your

loss within 30 days, we will give you notice

of our intentions within the 30-day period.

(c) We may defer the adjustment of a loss

until the amount of loss can be accurately

determined. We will not pay for additional

damage resulting from your failure to provide

sufficient care for the crop during the deferral

period.

(d) We recognize and apply the loss

adjustment procedures established or

approved by the Federal Crop Insurance

Corporation.

15. Production Included in Determining

Indemnities.

(a) The total production to be counted for

a unit will include all production determined

in accordance with the policy.

(b) The amount of production of any

unharvested insured crop may be determined

on the basis of our field appraisals conducted

after the end of the insurance period.

(c) If you elect to exclude hail and fire as

insured causes of loss and the insured crop
65160 Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations

is damaged by hail or fire, appraisals will be

made as described in the applicable Form

FCI–78 ‘‘Request To Exclude Hail and Fire’’

or a form containing the same terms

approved by the Federal Crop Insurance

Corporation.

16. Late Planting.

Unless limited by the Crop Provisions,

insurance will be provided for acreage

planted to the insured crop after the final

planting date in accordance with the

following:

(a) The production guarantee or amount of

insurance for each acre planted to the

insured crop during the late planting period

will be reduced by 1 percent per day for each

day planted after the final planting date.

(b) Acreage planted after the late planting

period (or after the final planting date for

crops that do not have a late planting period)

may be insured as follows:

(1) The production guarantee or amount of

insurance for each acre planted as specified

in this subsection will be determined by

multiplying the production guarantee or

amount of insurance that is provided for

acreage of the insured crop that is timely

planted by the prevented planting coverage

level percentage you elected, or that is

contained in the Crop Provisions if you did

not elect a prevented planting coverage level

percentage;

(2) Planting on such acreage must have

been prevented by the final planting date (or

during the late planting period, if applicable)

by an insurable cause occurring within the

insurance period for prevented planting

coverage;

(3) The production guarantee for any

acreage on which an insured cause of loss

prevents completion of planting, as specified

in the definition of ‘‘planted acreage’’ (e.g.,

seed is broadcast on the soil surface but

cannot be incorporated), will be determined

as indicated in this section; and

(4) All production from acreage as

specified in this section will be included as

production to count for the unit.

(c) The premium amount for insurable

acreage specified in section 16 (a) or (b) 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 such acreage exceeds the

liability, coverage for those acres will not be

provided (no premium will be due and no

indemnity will be paid).

17. Prevented Planting

(a) Unless limited by the policy provisions,

a prevented planting payment may be made

to you for eligible acreage if:

(1) You were prevented from planting the

insured crop by an insured cause that occurs:

(i) On or after the sales closing date

contained in the Special Provisions for the

insured crop in the county for the crop year

the application for insurance is accepted; or

(ii) For any subsequent crop year, on or

after the sales closing date for the previous

crop year for the insured crop in the county,

provided insurance has been in force

continuously since that date. Cancellation for

the purpose of transferring the policy to a

different insurance provider for the

subsequent crop year will not be considered

a break in continuity for the purpose of the

preceding sentence; and

(2) You include any acreage of the insured

crop that was prevented from being planted

on your acreage report.

(b) The actuarial documents may contain

additional levels of prevented planting

coverage that you may purchase for the

insured crop:

(1) Such purchase must be made on or

before the sales closing date.

(2) If you do not purchase one of those

additional levels by the sales closing date,

you will receive the prevented planting

coverage specified in the Crop Provisions.

(3) If you have a Catastrophic Risk

Protection Endorsement for any crop, the

additional levels of prevented planting

coverage will not be available for that crop.

(4) You may not increase your elected or

assigned prevented planting coverage level

for any crop year if a cause of loss that will

or could prevent planting is evident prior to

the time you wish to change your prevented

planting coverage level.

(c) The premium amount for acreage that

is prevented from being planted 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

that is prevented from being planted 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).

(d) Drought or failure of the irrigation

water supply will not be considered to be an

insurable cause of loss for the purposes of

prevented planting unless, on the final

planting date:

(1) For non-irrigated acreage, the area that

is prevented from being planted is classified

by the Palmer Drought Severity Index as

being in a severe or extreme drought; or

(2) For irrigated acreage, there is not a

reasonable probability of having adequate

water to carry out an irrigated practice.

(e) The maximum number of acres that

may be eligible for a prevented planting

payment for any crop will be determined as

follows:

(1) The total number of acres eligible for

prevented planting coverage for all crops

cannot exceed the number of acres of

cropland in your farming operation for the

crop year, unless you are eligible for

prevented planting coverage on double

cropped acreage in accordance with section

17(f) (4) or (5). The eligible acres for each

insured crop will be determined in

accordance with the following table.

Type of crop

Eligible acres if, in any of the 4 most recent crop years,

you have produced any crop for which insurance was

available

Eligible acres if, in any of the 4 most recent crop years,

you have not produced any crop for which insurance

was available

(i) The crop is not required

to be contracted with a

processor to be insured.

(A) The maximum number of acres certified for APH

purposes or reported for insurance for the crop in

any one of the 4 most recent crop years (not including reported prevented planting acreage that was

planted to a substitute crop other than an approved

cover crop). The number of acres determined above

for a crop may be increased by multiplying it by the

ratio of the total cropland acres that you are farming

this year (if greater) to the total cropland acres that

you farmed in the previous year, provided that you

submit proof to us that for the current crop year you

have purchased or leased additional land or that

acreage will be released from any USDA program

which prohibits harvest of a crop. Such acreage must

have been purchased, leased, or released from the

USDA program, in time to plant it for the current crop

year using good farming practices. No cause of loss

that will or could prevent planting may be evident at

the time the acreage is purchased, leased, or released from the USDA program.

(B) The number of acres specified on your intended

acreage report which is submitted to us by the sales

closing date for all crops you insure for the crop year

and that is accepted by us. The total number of

acres listed may not exceed the number of acres of

cropland in your farming operation at the time you

submit the intended acreage report. The number of

acres determined above for a crop may only be increased by multiplying it by the ratio of the total cropland acres that you are farming this year (if greater)

to the number of acres listed on your intended acreage report, if you meet the conditions stated in section 17(e)(1)(i)(A).
Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations 65161

Type of crop

Eligible acres if, in any of the 4 most recent crop years,

you have produced any crop for which insurance was

available

Eligible acres if, in any of the 4 most recent crop years,

you have not produced any crop for which insurance

was available

(ii)The crop must be contracted with a processor to

be insured.

(A) The number of acres of the crop specified in the

processor contract, if the contract specifies a number

of acres contracted for the crop year; or the result of

dividing the quantity of production stated in the processor contract by your approved yield, if the processor contract specifies a quantity of production that

will be accepted. (For the purposes of establishing

the number of prevented planting acres, any reductions applied to the transitional yield for failure to certify acreage and production for four prior years will

not be used.).

(B) The number of acres of the crop as determined in

section 17(e)(1)(ii)(A).

(2) Any eligible acreage determined in

accordance with the table contained in

section 17(e)(1) will be reduced by

subtracting the number of acres of the crop

(insured and uninsured) that are timely and

late planted, including acreage specified in

section 16(b).

(f) Regardless of the number of eligible

acres determined in section 17(e), prevented

planting coverage will not be provided for

any acreage:

(1) If at least one contiguous block of

prevented planting acreage does not

constitute at least 20 acres or 20 percent of

the insurable crop acreage in the unit,

whichever is less. We will assume that any

prevented planting acreage within a field that

contains planted acreage would have been

planted to the same crop that is planted in

the field, unless the prevented planting

acreage constitutes at least 20 acres or 20

percent of the insurable acreage in the field

and you can prove that you have previously

produced both crops in the same field in the

same crop year;

(2) For which the actuarial documents do

not designate a premium rate unless a written

agreement designates such premium rate;

(3) Used for conservation purposes or

intended to be left unplanted under any

program administered by the USDA;

(4) On which the insured crop is prevented

from being planted, if you or any other

person receives a prevented planting

payment for any crop for the same acreage in

the same crop year (excluding share

arrangements), unless you have coverage

greater than the Catastrophic Risk Protection

Plan of Insurance and have records of acreage

and production that are used to determine

your approved yield that show the acreage

was double-cropped in each of the last 4

years in which the insured crop was grown

on the acreage;

(5) On which the insured crop is prevented

from being planted, if any crop from which

any benefit is derived under any program

administered by the USDA is planted and

fails, or if any crop is harvested, hayed or

grazed on the same acreage in the same crop

year (other than a cover crop which may be

hayed or grazed after the final planting date

for the insured crop), unless you have

coverage greater than that applicable to the

Catastrophic Risk Protection Plan of

Insurance and have records of acreage and

production that are used to determine your

approved yield that show the acreage was

double-cropped in each of the last 4 years in

which the insured crop was grown on the

acreage;

(6) Of a crop that is prevented from being

planted if a cash lease payment is also

received for use of the same acreage in the

same crop year (not applicable if acreage is

leased for haying or grazing only) (If you state

that you will not be cash renting the acreage

and claim a prevented planting payment on

the acreage, you could be subject to civil and

criminal sanctions if you cash rent the

acreage and do not return the prevented

planting payment for it);

(7) For which planting history or

conservation plans indicate that the acreage

would have remained fallow for crop rotation

purposes;

(8) That exceeds the number of acres

eligible for a prevented planting payment;

(9) That exceeds the number of eligible

acres physically available for planting;

(10) For which you cannot provide proof

that you had the inputs available to plant and

produce a crop with the expectation of at

least producing the yield used to determine

the production guarantee or amount of

insurance (Evidence that you have previously

planted the crop on the unit will be

considered adequate proof unless your

planting practices or rotational requirements

show that the acreage would have remained

fallow or been planted to another crop);

(11) Based on an irrigated practice

production guarantee or amount of insurance

unless adequate irrigation facilities were in

place to carry out an irrigated practice on the

acreage prior to the insured cause of loss that

prevented you from planting; or

(12) Of a crop type that you did not plant

in at least one of the four most recent years.

Types for which separate price elections,

amounts of insurance, or production

guarantees are available must be included in

your APH database in at least one of the most

recent four years, or crops that do not require

yield certification (crops for which the

insurance guarantee is not based on APH)

must be reported on your acreage report in

at least one of the four most recent crop years

except as allowed in section 17(e)(1)(i)(B).

(g) The prevented planting payment for any

eligible acreage within a unit will be

determined by:

(1) Multiplying the liability per acre for

timely planted acreage of the insured crop

(the amount of insurance per acre or the

production guarantee per acre multiplied by

the price election for the crop, or type if

applicable) by the prevented planting

coverage level percentage you elected, or that

is contained in the Crop Provisions if you did

not elect a prevented planting coverage level

percentage;

(2) Multiplying the result of section

17(g)(1) by the number of eligible prevented

planting acres in the unit; and

(3) Multiplying the result of section

17(g)(2) by your share.

18. Written Agreements

Terms of this policy which are specifically

designated for the use of written agreements

may be altered by written agreement in

accordance with the following:

(a) You must apply in writing for each

written agreement no later than the sales

closing date, except as provided in section

18(e);

(b) The application for a written agreement

must contain all variable terms of the

contract between you and us that will be in

effect if the written agreement is not

approved;

(c) If approved, the written agreement will

include all variable terms of the contract,

including, but not limited to, crop type or

variety, the guarantee, premium rate, and

price election;

(d) Each written agreement will only be

valid for one crop year (If a written

agreement is not specifically renewed the

following year, insurance coverage for

subsequent crop years will be in accordance

with the printed policy); and

(e) An application for a written agreement

submitted after the sales closing date may be

approved if you demonstrate your physical

inability to apply prior to the sales closing

date, or it is submitted in accordance with

any regulation which may be promulgated

under 7 CFR part 400, and after inspection

of the acreage by us, if required, it is

determined that no loss has occurred and the

crop is insurable in accordance with the

policy and written agreement provisions.

19. Crops as Payment

You must not abandon any crop to us. We

will not accept any crop as compensation for

payments due us.

For FCIC policies

20. Appeals

All determinations required by the policy

will be made by us. If you disagree with our

determinations, you may obtain

reconsideration of or appeal those
65162 Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations

determinations in accordance with appeal

provisions published at 7 CFR part 11.

For reinsured policies

20. Arbitration

(a) If you and we fail to agree on any

factual determination, the disagreement will

be resolved in accordance with the rules of

the American Arbitration Association.

Failure to agree with any factual

determination made by FCIC must be

resolved through the FCIC appeal provisions

published at 7 CFR part 11.

(b) No award determined by arbitration or

appeal can exceed the amount of liability

established or which should have been

established under the policy.

21. Access to Insured Crop and Records, and

Record Retention

(a) We reserve the right to examine the

insured crop as often as we reasonably

require.

(b) For three years after the end of the crop

year, you must retain, and provide upon our

request, complete records of the harvesting,

storage, shipment, sale, or other disposition

of all the insured crop produced on each

unit. This requirement also applies to the

records used to establish the basis for the

production report for each unit. You must

also provide upon our request, separate

records showing the same information for

production from any acreage not insured. We

may extend the record retention period

beyond three years by notifying you of such

extension in writing. Your failure to keep and

maintain such records will, at our option,

result in:

(1) Cancellation of the policy;

(2) Assignment of production to the units

by us;

(3) Combination of the optional units; or

(4) A determination that no indemnity is

due.

(c) Any person designated by us will, at

any time during the record retention period,

have access:

(1) To any records relating to this

insurance at any location where such records

may be found or maintained; and

(2) To the farm.

(d) By applying for insurance under the

authority of the Act or by continuing

insurance for which you previously applied,

you authorize us, or any person acting for us,

to obtain records relating to the insured crop

from any person who may have custody of

those records including, but not limited to,

FSA offices, banks, warehouses, gins,

cooperatives, marketing associations, and

accountants. You must assist us in obtaining

all records which we request from third

parties.

22. Other Insurance

(a) Other Like Insurance. You must not

obtain any other crop insurance issued under

the authority of the Act on your share of the

insured crop. If we determine that more than

one policy on your share is intentional, you

may be subject to the sanctions authorized

under this policy, the Act, or any other

applicable statute. If we determine that the

violation was not intentional, the policy with

the earliest date of application will be in

force and all other policies will be void.

Nothing in this paragraph prevents you from

obtaining other insurance not issued under

the Act.

(b) Other Insurance Against Fire. If you

have other insurance, whether valid or not,

against damage to the insured crop by fire

during the insurance period, and you have

not excluded coverage for fire from this

policy, we will be liable for loss due to fire

only for the smaller of:

(1) The amount of indemnity determined

pursuant to this policy without regard to

such other insurance; or

(2) The amount by which the loss from fire

is determined to exceed the indemnity paid

or payable under such other insurance.

(c) For the purpose of subsection (b) of this

section the amount of loss from fire will be

the difference between the fair market value

of the production of the insured crop on the

unit involved before the fire and after the

fire, as determined from appraisals made by

us.

23. Conformity to Food Security Act

Although your violation of a number of

federal statutes, including the Act, may cause

cancellation, termination, or voidance of

your insurance contract, you should be

specifically aware that your policy will be

canceled if you are determined to be

ineligible to receive benefits under the Act

due to violation of the controlled substance

provisions (title XVII) of the Food Security

Act of 1985 (Pub. L. 99–198) and the

regulations promulgated under the Act by

USDA. Your insurance policy will be

canceled if you are determined, by the

appropriate Agency, to be in violation of

these provisions. We will recover any and all

monies paid to you or received by you during

your period of ineligibility, and your

premium will be refunded, less a reasonable

amount for expenses and handling not to

exceed 20 percent of the premium paid or to

be paid by you.

For FCIC policies

24. Amounts Due Us

(a) Any amount illegally or erroneously

paid to you or that is owed to us but is

delinquent may be recovered by us through

offset by deducting it from any loan or

payment due you under any Act of Congress

or program administered by any United

States Government Agency, or by other

collection action.

(b) Interest will accrue at the rate of 1.25

percent simple interest per calendar month,

or any part thereof, on any unpaid premium

amount due us. With respect to any

premiums owed, interest will start to accrue

on the first day of the month following the

premium billing date specified in the Special

Provisions.

(c) For the purpose of any other amounts

due us, such as repayment of indemnities

found not to have been earned:

(1) Interest will start on the date that notice

is issued to you for the collection of the

unearned amount;

(2) Amounts found due under this

paragraph will not be charged interest if

payment is made within 30 days of issuance

of the notice by us;

(3) The amount will be considered

delinquent if not paid within 30 days of the

date the notice is issued by us;

(4) Penalties and interest will be charged

in accordance with 31 U.S.C. 3717 and 4 CFR

part 102; and

(5) The penalty for accounts more than 90

days delinquent is an additional 6 percent

per annum.

(d) Interest on any amount due us found

to have been received by you because of

fraud, misrepresentation or presentation by

you of a false claim will start on the date you

received the amount with the additional 6

percent penalty beginning on the 31st day

after the notice of amount due is issued to

you. This interest is in addition to any other

amount found to be due under any other

federal criminal or civil statute.

(e) If we determine that it is necessary to

contract with a collection agency, refer the

debt to government collection centers, the

Department of Treasury Offset Program, or to

employ an attorney to assist in collection,

you agree to pay all the expenses of

collection.

(f) All amounts paid will be applied first

to expenses of collection if any, second to the

reduction of any penalties which may have

been assessed, then to reduction of accrued

interest, and finally to reduction of the

principal balance.

For reinsured policies

24. Amounts Due Us

(a) Interest will accrue at the rate of 1.25

percent simple interest per calendar month,

or any portion thereof, on any unpaid

amount due us. For the purpose of premium

amounts due us, the interest will start to

accrue on the first day of the month

following the premium billing date specified

in the Special Provisions.

(b) For the purpose of any other amounts

due us, such as repayment of indemnities

found not to have been earned, interest will

start to accrue on the date that notice is

issued to you for the collection of the

unearned amount. Amounts found due under

this paragraph will not be charged interest if

payment is made within 30 days of issuance

of the notice by us. The amount will be

considered delinquent if not paid within 30

days of the date the notice is issued by us.

(c) All amounts paid will be applied first

to expenses of collection (see subsection (d)

of this section) if any, second to the

reduction of accrued interest, and then to the

reduction of the principal balance.

(d) If we determine that it is necessary to

contract with a collection agency or to

employ an attorney to assist in collection,

you agree to pay all of the expenses of

collection.

(e) A portion of the amount paid to you to

which you were not entitled may be collected

through administrative offset from payments

you receive from United States government

agencies in accordance with 31 U.S.C.

chapter 37.

25. Legal Action Against Us

(a) You may not bring legal action against

us unless you have complied with all of the

policy provisions.

(b) If you do take legal action against us,

you must do so within 12 months of the date
Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations 65163

of denial of the claim. Suit must be brought

in accordance with the provisions of 7 U.S.C.

1508(j).

(c) Your right to recover damages

(compensatory, punitive, or other), attorney’s

fees, or other charges is limited or excluded

by this contract or by Federal Regulations.

26. Payment and Interest Limitations

(a) Under no circumstances will we be

liable for the payment of damages

(compensatory, punitive, or other), attorney’s

fees, or other charges in connection with any

claim for indemnity, whether we approve or

disapprove such claim.

(b) We will pay simple interest computed

on the net indemnity ultimately found to be

due by us or by a final judgment of a court

of competent jurisdiction, from and

including the 61st day after the date you sign,

date, and submit to us the properly

completed claim on our form. Interest will be

paid only if the reason for our failure to

timely pay is NOT due to your failure to

provide information or other material

necessary for the computation or payment of

the indemnity. The interest rate will be that

established by the Secretary of the Treasury

under section 12 of the Contract Disputes Act

of 1978 (41 U.S.C. 611) and published in the

Federal Register semiannually on or about

January 1 and July 1 of each year, and may

vary with each publication.

27. Concealment, Misrepresentation or Fraud

(a) If you have falsely or fraudulently

concealed the fact that you are ineligible to

receive benefits under the Act or if you or

anyone assisting you has intentionally

concealed or misrepresented any material

fact relating to this policy:

(1) This policy will be voided; and

(2) You may be subject to remedial

sanctions in accordance with 7 CFR part 400,

subpart R.

(b) Even though the policy is void, you

may still be required to pay 20 percent of the

premium due under the policy to offset costs

incurred by us in the service of this policy.

If previously paid, the balance of the

premium will be returned.

(c) Voidance of this policy will result in

you having to reimburse all indemnities paid

for the crop year in which the voidance was

effective.

(d) Voidance will be effective on the first

day of the insurance period for the crop year

in which the act occurred and will not affect

the policy for subsequent crop years unless

a violation of this section also occurred in

such crop years.

28. Transfer of Coverage and Right to

Indemnity

If you transfer any part of your share

during the crop year, you may transfer your

coverage rights, if the transferee is eligible for

crop insurance. We will not be liable for any

more than the liability determined in

accordance with your policy that existed

before the transfer occurred. The transfer of

coverage rights must be on our form and will

not be effective until approved by us in

writing. Both you and the transferee are

jointly and severally liable for the payment

of the premium. The transferee has all rights

and responsibilities under this policy

consistent with the transferee’s interest.

29. Assignment of Indemnity

You may assign to another party your right

to an indemnity for the crop year. The

assignment must be on our form and will not

be effective until approved in writing by us.

The assignee will have the right to submit all

loss notices and forms as required by the

policy. If you have suffered a loss from an

insurable cause and fail to file a claim for

indemnity within 60 days after the end of the

insurance period, the assignee may submit

the claim for indemnity not later than 15

days after the 60-day period has expired. We

will honor the terms of the assignment only

if we can accurately determine the amount of

the claim. However, no action will lie against

us for failure to do so.

30. Subrogation (Recovery of Loss From A

Third Party)

Since you may be able to recover all or a

part of your loss from someone other than us,

you must do all you can to preserve this

right. If we pay you for your loss, your right

to recovery will, at our option, belong to us.

If we recover more than we paid you plus our

expenses, the excess will be paid to you.

31. Applicability of State and Local Statutes

If the provisions of this policy conflict with

statutes of the State or locality in which this

policy is issued, the policy provisions will

prevail. State and local laws and regulations

in conflict with federal statutes, this policy,

and the applicable regulations do not apply

to this policy.

32. Descriptive Headings

The descriptive headings of the various

policy provisions are formulated for

convenience only and are not intended to

affect the construction or meaning of any of

the policy provisions.

33. Notices

(a) All notices required to be given by you

must be in writing and received by your crop

insurance agent within the designated time

unless otherwise provided by the notice

requirement. Notices required to be given

immediately may be by telephone or in

person and confirmed in writing. Time of the

notice will be determined by the time of our

receipt of the written notice. If the date by

which you are required to submit a report or

notice falls on Saturday, Sunday, or a Federal

holiday, or if your agent’s office is, for any

reason, not open for business on the date you

are required to submit such notice or report,

such notice or report must be submitted on

the next business day.

(b) All notices and communications

required to be sent by us to you will be

mailed to the address contained in your

records located with your crop insurance

agent. Notice sent to such address will be

conclusively presumed to have been received

by you. You should advise us immediately of

any change of address.

34. Unit Division

(a) Unless limited by the Crop Provisions

or Special Provisions, a basic unit as defined

in section 1 of the Basic Provisions may be

divided into optional units if, for each

optional unit, you meet the following:

(1) You must plant the crop in a manner

that results in a clear and discernible break

in the planting pattern at the boundaries of

each optional unit;

(2) All optional units you select for the

crop year are identified on the acreage report

for that crop year (Units will be determined

when the acreage is reported but may be

adjusted or combined to reflect the actual

unit structure when adjusting a loss. No

further unit division may be made after the

acreage reporting date for any reason);

(3) You have records, that are acceptable to

us, of planted acreage and the production

from each optional unit for at least the last

crop year used to determine your production

guarantee;

(4) You have records of marketed or stored

production from each optional unit

maintained in such a manner that permits us

to verify the production from each optional

unit, or the production from each optional

unit is kept separate until loss adjustment is

completed by us; and

(b) Each optional unit must meet one or

more of the following, unless otherwise

specified in the Crop Provisions or allowed

by written agreement:

(1) Optional units may be established if

each optional unit is located in a separate

section. In the absence of sections, we may

consider parcels of land legally identified by

other methods of measure such as Spanish

grants, as the equivalents of sections for unit

purposes. In areas which have not been

surveyed using sections, section equivalents

or in areas where boundaries are not readily

discernible, each optional unit must be

located in a separate FSA farm serial number;

and

(2) In addition to, or instead of,

establishing optional units by section, section

equivalent or FSA farm serial number,

optional units may be based on irrigated and

non-irrigated acreage. To qualify as separate

irrigated and non-irrigated optional units, the

non-irrigated acreage may not continue into

the irrigated acreage in the same rows or

planting pattern. The irrigated acreage may

not extend beyond the point at which the

irrigation system can deliver the quantity of

water needed to produce the yield on which

the guarantee is based, except the corners of

a field in which a center-pivot irrigation

system is used may be considered as irrigated

acreage if the corners of a field in which a

center-pivot irrigation system is used do not

qualify as a separate non-irrigated optional

unit. In this case, production from both

practices will be used to determine your

approved yield.

(c) Optional units are not available for

crops insured under a Catastrophic Risk

Protection Endorsement.

(d) If you do not comply fully with the

provisions in this section, we will combine

all optional units that are not in compliance

with these provisions into the basic unit from

which they were formed. We will combine

the optional units at any time we discover

that you have failed to comply with these

provisions. If failure to comply with these

provisions is determined by us to be

inadvertent, and the optional units are

combined into a basic unit, that portion of

the additional premium paid for the optional

units that have been combined will be

refunded to you for the units combined.
65164 Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations

6. Amend § 457.101 as follows:

(a) Revise the introductory text to read

as follows:

§ 457.101 Small grains crop insurance

provisions.

The small grains crop insurance provisions

for the 1998 and succeeding crop years in

counties with a contract change date of

December 31, and for the 1999 and

succeeding crop years in counties with a

contract change date of June 30, are as

follows:

* * * * *

(b) Revise the paragraph preceding

section 1 to read as follows:

* * * * *

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) The Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(c) Remove the alphabetic paragraph

designations in section 1 and the

definitions of ‘‘days,’’ ‘‘final planting

date,’’ ‘‘good farming practices,’’

‘‘interplanted,’’ ‘‘irrigated practice,’’

‘‘late planted,’’ ‘‘late planting period,’’

‘‘practical to replant,’’ ‘‘production

guarantee,’’ ‘‘replanting,’’ and ‘‘timely

planted;’’ revise the definitions of

‘‘planted acreage’’ and ‘‘prevented

planting,’’ and add the definition of

‘‘sales closing date’’ to read as follows:

* * * * *

1. Definitions

* * * * *

Planted acreage—In addition to the

definition contained in the Basic Provisions,

except for flax, land on which seed is

initially spread onto the soil surface by any

method and subsequently is mechanically

incorporated into the soil in a timely manner

and at the proper depth will be considered

planted. Flax seed must initially be planted

in rows to be considered planted, unless

otherwise provided by the Special

Provisions, actuarial documents, or by

written agreement.

Prevented planting—In lieu of the

definition contained in the Basic Provisions,

failure to plant the insured crop with proper

equipment by the latest final planting date

designated in the Special Provisions for the

insured crop in the county or by the end of

the late planting period. You must have been

prevented from planting the insured crop due

to an insured cause of loss that also

prevented most producers from planting on

acreage with similar characteristics in the

surrounding area.

Sales closing date—In lieu of the definition

contained in the Basic Provisions, a date

contained in the Special Provisions by which

an application must be filed and by which

you may change your crop insurance

coverage for a crop year. If the Special

Provisions provide a sales closing date for

both winter and spring types of the insured

crop and you plant any insurable acreage of

the winter type, you may not change your

crop insurance coverage after the sales

closing date for the winter type.

* * * * *

(d) Remove the words ‘‘Common Crop

Insurance Policy’’ and add in their

place, the words ‘‘Basic Provisions’’ in

the following places:

i. Section 3;

ii. Section 4;

iii. Sections 6 (b)(1) and (b)(2);

iv. Section 7, introductory text;

v. Section 8, introductory text;

vi. Sections 9(a)(1) and (c); and

vii. Section 10.

(e) Remove the words ‘‘actuarial

table’’ and add in their place, the words

‘‘actuarial documents’’ in section 6

paragraphs (a) and (b)(2).

(f) Remove the word ‘‘provides’’ and

add in its place, the word ‘‘provide’’ in

section 6 paragraph (b)(2), the first

sentence.

(g) Revise section 2 to read as follows:

* * * * *

2. Unit Division

In addition to the requirements of section

34(b) of the Basic Provisions, for wheat only,

in addition to, or instead of, establishing

optional units by section, section equivalent

or FSA farm serial number and by irrigated

and non-irrigated practices, optional units

may be established if each optional unit

contains only initially planted winter wheat

or only initially planted spring wheat.

Optional units may be established in this

manner only in counties having both winter

and spring type final planting dates as

designated in the Special Provisions.

* * * * *

(h) Revise section 6(b)(1) to read as

follows:

* * * * *

6. Insured Crop

(a) * * *

(b) * * *

(1) May report all planted acreage when

you report your acreage for the crop year and

specify any acreage to be destroyed as

uninsurable acreage. (By doing so, no

coverage will be considered to have attached

on the specified acreage and no premium

will be due for such acreage. If you do not

destroy such acreage, you will be subject to

the under-reporting provisions contained in

section 6 of the Basic Provisions); or

* * * * *

(i) Revise sections 7 (a)(1)(i), (a)(1)(ii),

and (a)(2)(i) to read as follows:

* * * * *

7. Insurance Period

* * * * *

(a) * * *

(1) * * *

(i) The acreage must be planted on or

before the final planting date designated in

the Special Provisions for the insured crop

except as allowed in section 12 of these Crop

Provisions and section 16 of the Basic

Provisions.

(ii) Any acreage of the insured crop

damaged before the final planting date, to the

extent that producers in the surrounding area

would not normally further care for the crop,

must be replanted unless we agree that it is

not practical to replant.

(2) * * *

(i) The acreage must be planted on or

before the final planting date designated in

the Special Provisions for the type (winter or

spring) except as allowed in section 12 of

these Crop Provisions and section 16 of the

Basic Provisions.

* * * * *

(j) Revise section 12 to read as

follows:

* * * * *

12. Late Planting

A late planting period is not applicable to

fall-planted wheat. Any winter wheat that is

planted after the fall final planting date in

counties for which the Special Provisions

also contain a final planting date for spring

wheat will not be insured. Any winter wheat

that is planted after the fall final planting

date in counties for which the Special

Provisions contain only a fall final planting

date will not be insured unless you were

prevented from planting the winter wheat by

the fall final planting date. Such acreage will

be insurable, and the production guarantee

and premium for the acreage will be

determined in accordance with sections 16

(b) and (c) of the Basic Provisions.

(k) Add a section 13 to read as

follows:

* * * * *

13. Prevented Planting

(a) In addition to the provisions contained

in section 17 of the Basic Provisions, in

counties for which the Special Provisions

designate a spring final planting date, your

prevented planting production guarantee will

be based on your approved yield for springplanted acreage of the insured crop.

(b) Your prevented planting coverage will

be 60 percent of your production guarantee

for timely planted acreage. If you have

limited or additional levels of coverage, as

specified in 7 CFR part 400, subpart T, and

pay an additional premium, you may

increase your prevented planting coverage to

a level specified in the actuarial documents.

7. Amend § 457.104 as follows:

(a) Revise the introductory text to read

as follows:

§ 457.104 Cotton crop insurance

provisions.

The cotton crop insurance provisions

for the 1998 crop year are as follows:

* * * * *

(b) Revise the paragraph preceding

section 1 to read as follows:

* * * * *

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) the Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)
Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations 65165

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(c) Remove the alphabetic paragraph

designations in section 1 and the

definitions of ‘‘days,’’ ‘‘final planting

date,’’ ‘‘good farming practices,’’

‘‘interplanted,’’ ‘‘irrigated practice,’’

‘‘late planted,’’ ‘‘late planting period,’’

‘‘practical to replant,’’ ‘‘prevented

planting,’’ ‘‘replanting,’’ ‘‘timely

planted,’’ and ‘‘written agreement’’ and

revise the definition of ‘‘planted

acreage’’ to read as follows:

* * * * *

1. Definitions

* * * * *

Planted acreage—In addition to the

definition contained in the Basic Provisions,

cotton must be planted in rows, unless

otherwise provided by the Special

Provisions, actuarial documents, or by

written agreement. The yield conversion

factor normally applied to non-irrigated skiprow cotton acreage will not be used if the

land between the rows of cotton is planted

to any other spring planted crop.

* * * * *

(d) Remove the words ‘‘Common Crop

Insurance Policy’’ and add in their

place, the words ‘‘Basic Provisions’’ in

the following places:

i. Section 3;

ii. Section 4;

iii. Section 5, introductory text;

iv. Section 6, introductory text;

v. Section 7, introductory text;

vi. Sections 8 (a) and (b);

vii. Section 9, introductory text; and

viii. Section 10(a).

* * * * *

(e) Remove section 2.

(f) Remove section 13 and redesignate

sections 3 through 12 as sections 2

through 11 respectively.

(g) Remove the words ‘‘actuarial

table’’ and add in their place, the words

‘‘actuarial documents’’ in redesignated

section 5.

(h) Revise redesigned section 6(b) to

read as follows:

* * * * *

6. Insurable Acreage

* * * * *

(a) * * *

(b) Any acreage of the insured crop

damaged before the final planting date, to the

extent that a majority of producers in the area

would not normally further care for the crop,

must be replanted unless we agree that it is

not practical to replant.

* * * * *

(i) Revise redesignated section 7(a) to

read as follows:

* * * * *

7. Insurance Period

(a) In lieu of section 11(b)(2) of the Basic

Provisions, insurance will end upon the

removal of the cotton from the field.

* * * * *

(j) Amend redesignated section

10(c)(1)(i)(E) to change the section

reference therein from ‘‘10’’ to ‘‘9’’.

* * * * *

(k) Amend redesignated section

10(c)(1)(iii) to change the section

reference therein from ‘‘11.(d)’’ to

‘‘10(d)’’.

* * * * *

(l) Revise redesignated section 11 to

read as follows:

* * * * *

11. Prevented Planting

(a) In addition to the provisions contained

in section 17 of the Basic Provisions, your

prevented planting production guarantee will

be based on your approved yield without

adjustment for skip-row planting patterns.

(b) Your prevented planting coverage will

be 45 percent of your production guarantee

for timely planted acreage. If you have

limited or additional levels of coverage, as

specified in 7 CFR part 400, subpart T, and

pay an additional premium, you may

increase your prevented planting coverage to

a level specified in the actuarial documents.

* * * * *

8. Amend § 457.105 as follows:

(a) Revise the introductory text to read

as follows:

§ 457.105 Extra long staple cotton crop

insurance provisions.

The extra long staple cotton crop

insurance provisions for the 1998 crop

year are as follows:

* * * * *

(b) Revise the paragraph preceding

section 1 to read as follows:

* * * * *

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) the Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(c) Remove alphabetic paragraph

designations in section 1 and the

definitions of ‘‘days,’’ ‘‘final planting

date,’’ ‘‘good farming practices,’’

‘‘interplanted,’’ ‘‘irrigated practice,’’

‘‘practical to replant,’’ ‘‘prevented

planting,’’ ‘‘timely planted,’’ and

‘‘written agreement’’ and revise the

definition of ‘‘planted acreage’’ to read

as follows:

1. Definitions

* * * * *

Planted acreage—In addition to the

definition contained in the Basic Provisions,

cotton must be planted in rows, unless

otherwise provided by the Special

Provisions, actuarial documents, or by

written agreement. The yield conversion

factor normally applied to non-irrigated skiprow cotton acreage will not be used if the

land between the rows of cotton is planted

to any other spring planted crop.

* * * * *

(d) Remove the words ‘‘Common Crop

Insurance Policy’’ and add in their

place, the words ‘‘Basic Provisions’’ in

the following places:

i. Section 3;

ii. Section 4;

iii. Section 5;

iv. Section 6, introductory text;

v. Section 7, introductory text;

vi. Sections 8 (a) and (b);

vii. Section 9, introductory text; and

viii. Section 10(a).

(e) Remove section 2.

(f) Redesignate sections 3 through 13

as sections 2 through 12 respectively.

(g) Remove the words ‘‘actuarial

table’’ and add in their place, the words

‘‘actuarial documents’’ in redesignated

section 5.

(h) Revise redesignated section 6(b) to

read as follows:

* * * * *

6. Insurable Acreage

* * * * *

(a) * * *

(b) Any acreage of the insured crop

damaged before the final planting date, to the

extent that a majority of producers in the area

would not normally further care for the crop,

must be replanted unless we agree that it is

not practical to replant.

* * * * *

(i) Revise redesignated section 7(a) to

read as follows:

* * * * *

7. Insurance Period

(a) In lieu of section 11(b)(2) of the Basic

Provisions, insurance will end upon the

removal of the cotton from the field.

* * * * *

(j) Amend redesignated section

10(c)(1)(i)(E) to change the section

reference therein from ‘‘10’’ to ‘‘9’’.

(k) Amend redesignated section

10(c)(1)(iii)(A) to change the section

reference therein from ‘‘11.(d) and (e)’’

to ‘‘10(d) and (e)’’.

(l) Amend redesignated section

10(c)(1)(iii)(B) to change the section

reference therein from ‘‘11.(f)’’ to

‘‘10(f)’’.

(m) Amend redesignated section 10(e)

to change the section reference therein

from ‘‘11.(d)’’ to ‘‘10(d)’’.

(n) Revise redesignated section 11 to

read as follows:

* * * * *

11. Late Planting

A late planting period is not applicable to

ELS cotton. Any ELS cotton that is planted

after the final planting date will not be
65166 Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations

insured unless you were prevented from

planting it by the final planting date. Such

acreage will be insurable, and the production

guarantee and premium for the acreage will

be determined in accordance with section 16

of the Basic Provisions.

* * * * *

(o) Revise redesignated section 12 to

read as follows:

* * * * *

12. Prevented Planting

(a) In addition to the provisions contained

in section 17 of the Basic Provisions, your

prevented planting production guarantee will

be based on your approved yield without

adjustment for skip-row planting patterns.

(b) Your prevented planting coverage will

be 45 percent of your production guarantee

for timely planted acreage. If you have

limited or additional levels of coverage, as

specified in 7 CFR part 400, subpart T, and

pay an additional premium, you may

increase your prevented planting coverage to

a level specified in the actuarial documents.

9. Amend § 457.106 as follows:

(a) Revise the introductory text to read

as follows:

§ 457.106 Texas citrus tree crop insurance

provisions.

The Texas citrus tree crop insurance

provisions for the 1999 and succeeding

crop years are as follows:

* * * * *

(b) Revise the paragraph preceding

section 1 to read as follows:

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) The Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(c) Remove the definitions of ‘‘days,’’

‘‘deductible,’’ ‘‘FSA,’’ ‘‘non-contiguous

land,’’ and ‘‘written agreement’’ in

section 1.

(d) In sections 3(b) (1) and (2) remove

the words ‘‘actuarial 1 table’’ and add in

their place the words ‘‘actuarial

documents’’ and remove the words

‘‘actuarial table’’ and add in their place,

the words ‘‘actuarial documents and’’ in

section 7(a).

(e) Revise section 2 to read as follows:

* * * * *

2. Unit Division

(a) A basic unit, as defined in section 1 of

the Basic Provisions, will be divided into

additional basic units by each citrus crop

designated in the Special Provisions.

(b) Sections 34(a) (1), (3), and (4) of the

Basic Provisions are not applicable.

(c) Provisions in the Basic Provisions that

allow optional units by irrigated and nonirrigated practices are not applicable.

(d) Instead of establishing optional units by

section, section equivalent, or FSA farm

serial number optional units may be

established if each optional unit is located on

non-contiguous land.

* * * * *

(f) Revise section 13 to read as

follows:

* * * * *

13. Late and prevented planting

The late and prevented planting provisions

of the Basic Provisions are not applicable.

10. Amend § 457.107 as follows:

(a) Revise the introductory text to read

as follows:

§ 457.107 Florida citrus fruit crop

insurance provisions.

The Florida citrus fruit crop insurance

provisions for the 1999 and succeeding

crop years are as follows:

* * * * *

(b) Revise the paragraph preceding

section 1 to read as follows:

* * * * *

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) The Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(c) Remove the definitions of ‘‘days,’’

‘‘FSA,’’ ‘‘non-contiguous land,’’ and

‘‘written agreement’’ in section 1.

(d) Remove the words ‘‘Actuarial

Table’’ and add in their place, the words

‘‘actuarial documents’’ in the following

places:

i. Section 1, definition of ‘‘amount of

insurance;’’ and

ii. Section 6(a).

(e) Revise section 2 to read as follows:

* * * * *

2. Unit Division

(a) A basic unit, as defined in section 1 of

the Basic Provisions, will be divided into

additional basic units by each citrus crop

designated in the Special Provisions.

(b) Provisions in the Basic Provisions that

allow optional units by irrigated and nonirrigated practices are not applicable.

(c) Instead of establishing optional units by

section, section equivalent, or FSA farm

serial number, optional units may be

established if each optional unit is located on

non-contiguous land.

* * * * *

(f) Revise section 6(d) to change the

section reference therein from ‘‘6(f)’’ to

‘‘6.’’

(g) Revise section 11 to read as

follows:

* * * * *

11. Late and prevented planting

The late and prevented planting provisions

of the Basic Provisions are not applicable.

11. Amend § 457.108 as follows:

(a) Revise the introductory text to read

as follows:

§ 457.108 Sunflower seed crop insurance

provisions.

The sunflower seed crop insurance

provisions for the 1998 and succeeding

crop years are as follows:

* * * * *

(b) Revise the paragraph preceding

section 1 to read as follows:

* * * * *

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) The Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(c) Remove alphabetic paragraph

designations and the definitions of

‘‘days,’’ ‘‘final planting date,’’ ‘‘good

farming practices,’’ ‘‘interplanted,’’

‘‘irrigated practice,’’ ‘‘late planted,’’

‘‘late planting period,’’ ‘‘practical to

replant,’’ ‘‘prevented planting,’’

‘‘production guarantee,’’ ‘‘replanting,’’

‘‘timely planted,’’ and ‘‘written

agreement’’ in section 1 and revise the

definition of ‘‘planted acreage’’ to read

as follows:

* * * * *

1. Definitions

* * * * *

Planted acreage—In addition to the

definition contained in the Basic Provisions,

sunflower seed must initially be planted in

rows far enough apart to permit mechanical

cultivation, unless otherwise provided by the

Special Provisions, actuarial documents, or

by written agreement.

* * * * *

(d) Remove section 2.

(e) Redesignate sections 3 through 13

as sections 2 through 12 respectively.

(f) Amend redesignated section 4 to

change the section reference therein

from ‘‘2.(f)’’ to ‘‘2’’.

(g) Remove the word ‘‘subsection’’

and add in its place the word ‘‘section’’

in redesignated section 4.

(h) Remove the words ‘‘actuarial

table’’ and add in their place, the words

‘‘actuarial documents’’ in redesignated

section 5, introductory text.

(i) Revise section 6(b) to read as

follows:

* * * * *

6. Insurable Acreage

* * * * *

(a) * * *

(b) Any acreage of the insured crop

damaged before the final planting date, to the

extent that a majority of producers in the area

would not normally further care for the crop,

must be replanted unless we agree that it is

not practical to replant.

(j) Revise section 9(a) to read as

follows:

* * * * *
Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations 65167

9. Replanting Payments

(a) In accordance with section 13 of the

Basic Provisions, a replanting payment for

sunflower seed is allowed if the sunflowers

are damaged by an insurable cause of loss to

the extent that the remaining stand will not

produce at least 90 percent of the production

guarantee for the acreage and it is practical

to replant.

* * * * *

(k) Amend redesignated section 9(b)

to change the section reference therein

from ‘‘10.(c)’’ to ‘‘9(c).’’

(l) Remove the word ‘‘subsection’’ and

add in its place the word ‘‘section’’ in

redesignated section 9(b).

(m) Amend redesignated section

11(c)(1)(iii) to change the section

reference therein from ‘‘12.(d)’’ to

‘‘11(d)’’.

(n) Amend redesignated section

11(d)(4) to change the section reference

therein from ‘‘12.(d)(2) and (3)’’ to

‘‘11(d) (2) and (3)’’.

(o) Revise redesignated section 12 to

read as follows:

* * * * *

12. Prevented Planting.

Your prevented planting coverage will be

60 percent of your production guarantee for

timely planted acreage. If you have limited or

additional levels of coverage, as specified in

7 CFR part 400, subpart T, and pay an

additional premium, you may increase your

prevented planting coverage to a level

specified in the actuarial documents.

12. Amend § 457.109 as follows:

(a) Revise the introductory text to read

as follows:

§ 457.109 Sugar beet crop insurance

provisions.

The sugar beet crop insurance

provisions for the 1998 and succeeding

crop years in counties with a contract

change date of November 30, and for the

1999 and succeeding crop years in

counties with a contract change date of

April 30, are as follows:

* * * * *

(b) Revise the paragraph preceding

section 1 to read as follows:

* * * * *

If a conflict exists among the policy

provisions, the order of priority is as

follows: (1) The Catastrophic Risk

Protection Endorsement, if applicable;

(2) the Special Provisions; (3) these Crop

Provisions; and (4) the Basic Provisions

with (1) controlling (2), etc.

* * * * *

(c) Remove the definitions of ‘‘days,’’

‘‘FSA,’’ ‘‘final planting date,’’ ‘‘good

farming practices,’’ ‘‘interplanted,’’

‘‘irrigated practice,’’ ‘‘late planted,’’

‘‘late planting period,’’ ‘‘prevented

planting,’’ ‘‘replanting,’’ ‘‘timely

planted,’’ and ‘‘written agreement’’ in

section 1 and revise the definition of

‘‘planted acreage’’ to read as follows:

* * * * *

1. Definitions

* * * * *

Planted acreage—In addition to the

definition contained in the Basic Provisions,

sugar beets must initially be planted in rows,

unless otherwise provided by the Special

Provisions, actuarial documents, or by

written agreement.

* * * * *

(d) Revise section 2 to read as follows:

* * * * *

2. Unit Division

In addition to the requirements of section

34 of the Basic Provisions, basic units may

be divided into optional units only if you

have a sugar beet processor contract that

requires the processor to accept all

production from a number of acres specified

in the sugar beet processor contract. Acreage

insured to fulfill a sugar beet processor

contract which provides that the processor

will accept a designated amount of

production or a combination of acreage and

production will not be eligible for optional

units.

* * * * *

(e) Remove the words ‘‘actuarial

table’’ and add in their place, the words

‘‘actuarial documents’’ in redesignated

section 7(a).

* * * * *

(f) Revise section 14 to read as

follows:

* * * * *

14. Late Planting

The late planting provisions contained in

section 16 of the Basic Provisions are not

applicable in California counties with a July

15 cancellation date.

* * * * *

(g) Revise section 15 to read as

follows:

* * * * *

15. Prevented Planting

(a) The prevented planting provisions

contained in section 17 of the Basic

Provisions are not applicable in California

counties with a July 15 cancellation date.

(b) Except in those counties indicated in

section 15(a), your prevented planting

coverage will be 45 percent of your

production guarantee for timely planted

acreage. If you have limited or additional

levels of coverage, as specified in 7 CFR part

400, subpart T, and pay an additional

premium, you may increase your prevented

planting coverage to a level specified in the

actuarial documents.

13. Amend § 457.110 as follows:

(a) Revise the introductory text to read

as follows:

§ 457.110 Fig crop insurance provisions.

The fig crop insurance provisions for

the 1999 and succeeding crop years are

as follows:

* * * * *

(b) Revise the paragraph preceding

section 1 to read as follows:

* * * * *

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) the Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(c) Remove alphabetic paragraph

designations and the definitions of

‘‘good farming practices,’’ ‘‘irrigated

practice,’’ ‘‘non-contiguous land,’’ and

‘‘production guarantee’’ in section 1.

(d) Remove the words ‘‘Common Crop

Insurance Policy’’ and add in their

place, the words ‘‘Basic Provisions’’ in

the following places:

i. Section 3;

ii. Section 4 ;

iii. Section 8, introductory text; and

iv. Sections 9 (a) and (b).

(e) Revise section 2 to read as follows:

* * * * *

2. Unit Division

(a) A basic unit, as defined in section 1 of

the Basic Provisions, will be divided into

additional basic units by each fig type

designated in the Special Provisions.

(b) Provisions in the Basic Provisions that

allow optional units by section, section

equivalent, or FSA farm serial number and by

irrigated and non-irrigated practices are not

applicable. Optional units may be established

only if each optional unit is located on noncontiguous land, unless otherwise allowed by

written agreement.

(f) Remove the words ‘‘actuarial table’’

and add in their place, the words

‘‘actuarial documents’’ in section 7,

introductory text.

(g) Add a section 11 to read as

follows:

* * * * *

11. Late and Prevented Planting

The late and prevented planting provisions

of the Basic Provisions are not applicable.

14. Amend § 457.111 as follows:

(a) Revise the introductory text to read

as follows:

§ 457.111 Pear crop insurance provisions.

The pear crop insurance provisions

for the 1999 and succeeding crop years

are as follows:

* * * * *

(b) Revise the paragraph preceding

section 1 to read as follows:

* * * * *

If a conflict exists among the policy

provisions, the order of priority is as follows:
65168 Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations

(1) the Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(c) Remove the definitions of ‘‘days,’’

‘‘FSA,’’ ‘‘good farming practices,’’

‘‘irrigated practice,’’ ‘‘non-contiguous,’’

‘‘production guarantee (per acre),’’ and

‘‘written agreement’’ in section 1.

(d) Revise section 2 to read as follows:

* * * * *

2. Unit Division

(a) Provisions in the Basic Provisions that

allow optional units by irrigated and nonirrigated practices are not applicable.

(b) Instead of establishing optional units by

section, section equivalent, or FSA farm

serial number optional units may be

established if each optional unit is located on

non-contiguous land.

(c) In addition to, or instead of,

establishing optional units by section, section

equivalent, FSA farm serial number, or on

non-contiguous land, optional units may be

established by varietal group when provided

for in the Special Provisions. The

requirements of section 34(a)(1) of the Basic

Provisions are not applicable for this method

of unit division.

(e) Remove the words ‘‘actuarial

table’’ and add in their place, the words

‘‘actuarial documents’’ in the following

places:

i. Section 6, introductory text; and

ii. Sections 13(a)(1) and (3).

(f) Remove the word ‘‘designates’’ and

add in its place, the word ‘‘designate’’

in section 13(a)(1).

(g) Revise section 12 to read as

follows:

12. Late and Prevented Planting

The late and prevented planting provisions

of the Basic Provisions are not applicable.

* * * * *

15. Amend § 457.113 as follows:

(a) Revise the introductory text to read

as follows:

§ 457.113 Coarse grains crop insurance

provisions.

The coarse grains crop insurance

provisions for the 1998 and succeeding

crop years are as follows:

* * * * *

(b) Revise the paragraph preceding

section 1 to read as follows:

* * * * *

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) the Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(c) Remove alphabetic paragraph

designations and the definitions of

‘‘days,’’ ‘‘final planting date,’’ ‘‘good

farming practices,’’ ‘‘interplanted,’’

‘‘irrigated practice,’’ ‘‘late planted,’’

‘‘late planting period,’’ ‘‘practical to

replant,’’ ‘‘prevented planting,’’

‘‘replanting,’’ ‘‘timely planted,’’ and

‘‘written agreement’’ in section 1 and

revise the definitions of ‘‘planted

acreage’’ and ‘‘production guarantee’’ to

read as follows:

* * * * *

1. Definitions

* * * * *

Planted acreage—In addition to the

definition contained in the Basic Provisions,

coarse grains must initially be planted in

rows (corn must be planted in rows far

enough apart to permit mechanical

cultivation), unless otherwise provided by

the Special Provisions, actuarial documents,

or by written agreement.

Production guarantee (per acre)—In lieu of

the definition contained in the Basic

Provisions, the number of bushels (tons for

corn insured as silage) determined by

multiplying the approved actual production

history (APH) yield per acre, calculated in

accordance with 7 CFR part 400, subpart G,

by the coverage level percentage you elect.

* * * * *

(d) Remove the words ‘‘Common Crop

Insurance Policy’’ and add in their

place, the words ‘‘Basic Provisions’’ in

the following places:

i. Section 3(a);

ii. Section 4;

iii. Section 5;

iv. Section 6(a);

v. Section 7;

vi. Section 8, introductory text;

vii. Section 9, introductory text;

viii. Section 10(a); and

ix. Sections 11(a), (b)(1) and (2).

* * * * *

(e) Remove section 2.

(f) Redesignate sections 3 through 13

as sections 2 through 12 respectively.

(g) Remove the words ‘‘actuarial

table’’ and add in their place, the words

‘‘actuarial documents’’ in redesignated

sections 5(a) and (c).

(h) Remove the word ‘‘provides’’ and

add in its place, the word ‘‘provide’’ in

redesignated section 5(c).

(i) Amend redesignated section 4 to

change the section reference therein

from 2(f) to 2.

(j) Remove the word ‘‘subsection’’ and

add in its place the word ‘‘section’’ in

redesignated section 4.

(k) Amend redesignated section

5(a)(3)(i) to change the section reference

therein from ‘‘6(b)(1)’’ to ‘‘5(b)(1)’’.

(l) Amend redesignated section 5(b) to

change the section reference therein

from ‘‘6(a)’’ to ‘‘5(a)’’.

(m) Amend redesignated section

5(b)(1) to change the section reference

therein from ‘‘6(c)’’ to ‘‘5(c)’’.

(n) Amend redesignated sections 5(d)

and (e) to change the section references

therein from ‘‘6(a)’’ to ‘‘5(a)’’.

(o) Revise redesignated section 6 to

read as follows:

* * * * *

6. Insurable Acreage

In addition to the provisions of section 9

of the Basic Provisions, any acreage of the

insured crop damaged before the final

planting date, to the extent that a majority of

producers in the area would not normally

further care for the crop, must be replanted

unless we agree that it is not practical to

replant.

(p) Revise redesignated section 9(a) to

read as follows:

* * * * *

9. Replanting Payments

(a) In accordance with section 13 of the

Basic Provisions, replanting payments for

coarse grains are allowed if the coarse grains

are damaged by an insurable cause of loss to

the extent that the remaining stand will not

produce at least 90 percent of the production

guarantee for the acreage and it is practical

to replant.

* * * * *

(q) Amend redesignated section 9(b)

to change the section references therein

from ‘‘10(c)’’ to ‘‘9(c)’’.

(r) Amend redesignated sections

11(b)(2)(iv) and (11)(c) to change the

section references therein from ‘‘12(d)’’

to ‘‘11(d)’’.

(s) Amend redesignated section

11(b)(2)(iv) to change the section

reference therein from ‘‘section 3’’ to

‘‘section 2’’.

(t) Amend redesignated section

11(c)(1)(iii) to change the section

reference therein from ‘‘12(e)’’ to

‘‘11(e)’’.

(u) Amend redesignated section

11(d)(2) to change the section reference

therein from ‘‘12(c)(1)’’ to ‘‘11(c)(1)’’.

(v) Amend redesignated section 11(e)

to change the section reference therein

from ‘‘12(f)’’ to ‘‘11(f)’’.

(w) Amend redesignated section

11(e)(4) to change the section reference

therein from ‘‘12(e)(2) and (3)’’ to

‘‘11(e)(2) and (3)’’.

(x) Revise redesignated section 12 to

read as follows:

* * * * *

12. Prevented Planting

Your prevented planting coverage will be

60 percent of your production guarantee for

timely planted acreage. If you have limited or

additional levels of coverage, as specified in

7 CFR part 400, subpart T, and pay an

additional premium, you may increase your

prevented planting coverage to a level

specified in the actuarial documents.

16. Amend § 457.114 as follows:

(a) Amend the introductory text to

read as follows:
Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations 65169

§ 457.114 Nursery crop insurance

provisions.

The nursery crop insurance

provisions for the 1999 and succeeding

crop years are as follows:

* * * * *

(b) Revise the paragraph preceding

section 1 to read as follows:

* * * * *

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) The Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(c) Remove alphabetic paragraph

designations and the definition of

‘‘written agreement’’ in section 1 and

revise the definition of ‘‘irrigated

practice’’ to read as follows:

1. Definitions

* * * * *

Irrigated practice—In lieu of the definition

contained in the Basic Provisions, a method

of producing a crop by which water is

artificially applied during the growing season

by appropriate systems and at the proper

times, with the intention of providing the

quantity of water needed to maintain the

amount of insurance on the nursery plant

inventory.

* * * * *

(d) Revise section 2 to read as follows:

* * * * *

2. Unit Division

In lieu of the definition of ‘‘basic unit’’ and

section 34 of the Basic Provisions, a unit

consists of all growing locations in the

county within a five mile radius of the

named insured locations designated on your

nursery plant inventory summary. Any

growing location more than five miles from

any other growing location, but within the

county, may be designated as a separate basic

unit or be included in the closest unit listed

on your nursery plant inventory summary.

(e) Remove the words ‘‘actuarial

table’’ and add in their place, the words

‘‘actuarial documents’’ in section 8,

introductory text.

(f) Add section 13 to read as follows:

* * * * *

13. Late and Prevented Planting

The late and prevented planting provisions

of the Basic Provisions are not applicable.

17. Amend § 457.116 as follows:

(a) Revise the introductory text to read

as follows:

§ 457.116 Sugarcane crop insurance

provisions.

The sugarcane crop insurance

provisions for the 1999 and succeeding

crop years are as follows:

* * * * *

(b) Revise the paragraph preceding

section 1 to read as follows:

* * * * *

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) The Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(c) Remove alphabetic paragraph

designations and the definitions of

‘‘CFSA,’’ ‘‘good farming practices,’’

‘‘interplanted,’’ ‘‘irrigated practice,’’

‘‘production guarantee,’’ and ‘‘written

agreement’’ in section 1.

(d) Remove section 2.

(e) Redesignate sections 3 through 11

as sections 2 through 10 respectively.

(f) Amend redesignated section 4 to

change the section reference therein

from ‘‘2.(f)’’ to ‘‘2’’.

(g) Remove the word ‘‘subsection’’

and add in its place, the word ‘‘section’’

in redesignated section 4.

(h) Remove the words ‘‘actuarial

table’’ and add in their place, the words

‘‘actuarial documents’’ in redesignated

section 5, introductory text.

(i) Amend redesignated section 7(a)(2)

to change the section reference therein

from ‘‘8(a)(3)’’ to ‘‘7(a)(3)’’.

(j) Amend redesignated section

10(c)(1)(v) to change the section

reference therein from ‘‘10(a)(2)’’ to

‘‘9(a)(2)’’.

(k) Add a section 11 to read as

follows:

* * * * *

11. Late and Prevented Planting

The late and prevented planting provisions

of the Basic Provisions are not applicable.

18. Amend § 457.117 as follows:

(a) Revise the introductory text to read

as follows:

§ 457.117 Forage production crop

insurance provisions.

The forage production crop insurance

provisions for the 1999 and succeeding

crop years are as follows:

* * * * *

(b) Revise the paragraph preceding

section 1 to read as follows:

* * * * *

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) The Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(c) Remove the definitions of ‘‘days,’’

‘‘good farming practices,’’ ‘‘irrigated

practice,’’ ‘‘production guarantee (per

acre),’’ and ‘‘written agreement’’ in

section 1.

(d) Remove the words ‘‘actuarial

table’’ and add in their place, the words

‘‘actuarial documents’’ in the following

places:

i. Section 1, definition of ‘‘forage;’’

and

ii. Section 7(a).

(e) Revise section 2 to read as follows:

* * * * *

2. Unit Division

The optional unit provisions in section 34

of the Basic Provisions are not applicable.

Optional units are not allowed.

* * * * *

(f) Revise section 12 to read as

follows:

* * * * *

12. Late and Prevented Planting

The late and prevented planting provisions

of the Basic Provisions are not applicable.

19. Amend § 457.119 as follows:

(a) Revise the introductory text to read

as follows:

§ 457.119 Texas citrus fruit crop insurance

provisions.

The Texas citrus fruit crop insurance

provisions for the 2000 and succeeding

crop years are as follows:

* * * * *

(b) Revise the paragraph preceding

section 1 to read as follows:

* * * * *

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) The Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(c) Remove the definitions of ‘‘days,’’

‘‘FSA,’’ ‘‘good farming practices,’’

‘‘irrigated practice,’’ ‘‘non-contiguous

land’’ and ‘‘written agreement’’ in

section 1.

(d) Revise section 2 to read as follows:

* * * * *

2. Unit Division

(a) A basic unit, as defined in section 1 of

the Basic Provisions, will be divided into

additional basic units by each citrus crop

designated in the Special Provisions.

(b) Provisions in the Basic Provisions that

allow optional units by irrigated and nonirrigated practices are not applicable.

(c) Instead of establishing optional units by

section, section equivalent, or FSA farm

serial number, optional units may be

established if each optional unit is located on

non-contiguous land.

* * * * *

(e) Remove the words ‘‘actuarial

table’’ and add in their place, the words

‘‘actuarial documents’’ in the following

places:

i. Section 7, introductory text; and

ii. Section 12(e).
65170 Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations

(f) Remove the word ‘‘provides’’ and

add in its place, the word ‘‘provide’’ in

section 12(e).

(g) Revise section 13 to read as

follows:

* * * * *

13. Late and Prevented Planting

The late and prevented planting provisions

of the Basic Provisions are not applicable.

20. Amend § 457.121 as follows:

(a) Revise the introductory text to read

as follows:

§ 457.121 Arizona-California citrus crop

insurance provisions.

The Arizona-California citrus crop

insurance provisions for the 2000 and

succeeding crop years are as follows:

* * * * *

(b) Revise the paragraph preceding

section 1 to read as follows:

* * * * *

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) The Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(c) Remove the definitions of ‘‘days,’’

‘‘good farming practices,’’ ‘‘irrigated

practice,’’ ‘‘non-contiguous land,’’

‘‘production guarantee (per acre),’’ and

‘‘written agreement’’ in section 1.

(d) Revise section 2 to read as follows:

* * * * *

2. Unit Division

(a) A basic unit, as defined in section 1 of

the Basic Provisions, will also be divided

into additional basic units by each citrus

crop designated in the Special Provisions.

(b) Provisions in the Basic Provisions that

allow optional units by section, section

equivalent, or FSA farm serial number and by

irrigated and non-irrigated practices are not

applicable. Optional units may be established

only if each optional unit is located on noncontiguous land, unless otherwise allowed by

written agreement.

* * * * *

(e) Remove the words ‘‘actuarial

table’’ and add in their place, the words

‘‘actuarial documents’’ in section 6,

introductory text.

(f) Revise section 12 to read as

follows:

* * * * *

12. Late and Prevented Planting

The late and prevented planting provisions

of the Basic Provisions are not applicable.

21. Amend § 457.122 as follows:

(a) Revise the introductory text to read

as follows:

§ 457.122 Walnut crop insurance

provisions.

The walnut crop insurance provisions

for the 1999 and succeeding crop years

are as follows:

* * * * *

(b) Revise the paragraph preceding

section 1 to read as follows:

* * * * *

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) The Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(c) Remove the definitions of ‘‘days,’’

‘‘good farming practices,’’ ‘‘irrigated

practice,’’ ‘‘non-contiguous land,’’ and

‘‘written agreement’’ in section 1.

(d) Revise section 2 to read as follows:

* * * * *

2. Unit Division

Provisions in the Basic Provisions that

allow optional units by section, section

equivalent, or FSA farm serial number and by

irrigated and non-irrigated practices are not

applicable. Optional units may be established

only if each optional unit is located on noncontiguous land, unless otherwise allowed by

written agreement.

* * * * *

(e) Remove the words ‘‘actuarial

table’’ and add in their place, the words

‘‘actuarial documents’’ in section 6,

introductory text.

(f) Revise section 12 to read as

follows:

* * * * *

12. Late and Prevented Planting

The late and prevented planting provisions

of the Basic Provisions are not applicable.

22. Amend § 457.123 as follows:

(a) Revise the introductory text to read

as follows:

§ 457.123 Almond crop insurance

provisions.

The almond crop insurance

provisions for the 1999 and succeeding

crop years are as follows:

* * * * *

(b) Revise the paragraph preceding

section 1 to read as follows:

* * * * *

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) The Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(c) Remove the definitions of ‘‘days,’’

‘‘good farming practices,’’ ‘‘irrigated

practice,’’ ‘‘non-contiguous land,’’ and

‘‘written agreement’’ in section 1.

(d) Revise section 2 to read as follows:

* * * * *

2. Unit Division

Provisions in the Basic Provisions that

allow optional units by section, section

equivalent, or FSA farm serial number and by

irrigated and non-irrigated practices are not

applicable. Optional units may be established

only if each optional unit is located on noncontiguous land, unless otherwise allowed by

written agreement.

* * * * *

(e) Remove the words ‘‘actuarial

table’’ and add in their place, the words

‘‘actuarial documents’’ in section 6,

introductory text.

(f) Revise section 12 to read as

follows:

* * * * *

12. Late and Prevented Planting

The late and prevented planting provisions

of the Basic Provisions are not applicable.

23. Amend § 457.124 as follows:

(a) Revise the introductory text to read

as follows:

§ 457.124 Raisin crop insurance

provisions.

The raisin crop insurance provisions

for the 1998 and succeeding crop years

are as follows:

* * * * *

(b) Revise the paragraph preceding

section 1 to read as follows:

* * * * *

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) The Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(c) Remove the definitions of ‘‘days,’’

‘‘non-contiguous land,’’ and ‘‘written

agreement’’ in section 1.

(d) Remove the words ‘‘actuarial

table’’ and add in their place, the words

‘‘actuarial documents’’ in the following

places:

i. Section 1, definitions of ‘‘raisins’’

and ‘‘reference maximum dollar

amount;’’ and

ii. Section 8(a).

(e) Revise section 2 to read as follows:

2. Unit Division

(a) A basic unit, as defined in section 1 of

the Basic Provisions, will be divided into

additional basic units by grape variety.

(b) Provisions in the Basic Provisions that

allow optional units by section, section

equivalent, or FSA farm serial number and by

irrigated and non-irrigated practices are not

applicable. Optional units may be established

only if each optional unit is located on noncontiguous land, unless otherwise allowed by

written agreement.

* * * * *
Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations 65171

(f) Revise section 14 to read as

follows:

14. Late and Prevented Planting

The late and prevented planting provisions

of the Basic Provisions are not applicable.

24. Amend § 457.125 as follows:

(a) Revise the introductory text to read

as follows:

§ 457.125 Safflower crop insurance

provisions.

The safflower crop insurance

provisions for the 1998 and succeeding

crop years in counties with a contract

change date of December 31, and for the

1999 and succeeding crop years in

counties with a contract change date of

August 31 are as follows:

* * * * *

(b) Revise the paragraph preceding

section 1 to read as follows:

* * * * *

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) The Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(c) Remove the definitions of ‘‘days,’’

‘‘FSA,’’ ‘‘final planting date,’’ ‘‘good

farming practices,’’ ‘‘interplanted,’’

‘‘irrigated practice,’’ ‘‘practical to

replant,’’ ‘‘production guarantee (per

acre),’’ ‘‘replanting,’’ and ‘‘written

agreement’’ in section 1 and revise the

definition of ‘‘planted acreage’’ to read

as follows:

* * * * *

1. Definitions

* * * * *

Planted acreage—In addition to the

definition contained in the Basic Provisions,

safflowers must initially be planted in rows,

unless otherwise provided by the Special

Provisions, actuarial documents, or by

written agreement.

* * * * *

(d) Remove section 2.

(e) Redesignate sections 3 through 13

(erroneously published as 3) as sections

2 through 12 respectively.

(f) Remove the words ‘‘actuarial table’’

and add in their place, the words

‘‘actuarial documents’’ in Section 5,

introductory text.

(g) Amend redesignated section

11(b)(2) to change the section reference

therein from ‘‘12(b)(1)’’ to ‘‘11(b)(1)’’.

(h) Amend redesignated section

11(b)(3) to change the section reference

therein from ‘‘12(b)(2)’’ to ‘‘11(b)(2)’’.

(i) Amend redesignated section

11(b)(4) to change the section reference

therein from ‘‘12(c)’’ to ‘‘11(c)’’.

(j) Amend redesignated section

11(b)(5) to change the section reference

therein from ‘‘12(b)(4)’’ to ‘‘11(b)(4)’’.

(k) Amend redesignated section

11(b)(6) to change the section references

therein from ‘‘12(b)(5)’’ to ‘‘11(b)(5)’’

and ‘‘12(b)(3)’’ to ‘‘11(b)(3)’’.

(l) Amend redesignated section

11(b)(7) to change the section reference

therein from ‘‘12(b)(6)’’ to ‘‘11(b)(6)’’.

(m) Amend redesignated section

11(c)(1)(iii) to change the section

reference therein from ‘‘section 12(d)’’

to ‘‘section 11(d)’’.

(n) Amend redesignated section

11(d)(4) to change the section reference

therein from ‘‘12(d)(2) and (3)’’ to

‘‘11(d)(2) and (3)’’.

(o) Revise redesignated section 12 to

read as follows:

* * * * *

12. Prevented Planting

Your prevented planting coverage will

be 60 percent of your production

guarantee for timely planted acreage. If

you have limited or additional levels of

coverage, as specified in 7 CFR part 400,

subpart T, and pay an additional

premium, you may increase your

prevented planting coverage to a level

specified in the actuarial documents.

* * * * *

25. Amend § 457.128 as follows:

(a) Revise the paragraph preceding

section 1 to read as follows:

§ 457.128 Guaranteed production plan of

fresh market tomato crop insurance

provisions.

* * * * *

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) The Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(b) Remove the definitions of ‘‘days,’’

‘‘FSA,’’ ‘‘good farming practices,’’

‘‘irrigated practice,’’ ‘‘production

guarantee (per acre),’’ ‘‘replanting,’’ and

‘‘written agreement’’ in section 1.

(c) Revise section 2 to read as follows:

* * * * *

2. Unit Division

(a) A basic unit, as defined in section

1 of the Basic Provisions, will be

divided into additional basic units by

planting period, if separate planting

periods are provided for in the Special

Provisions.

(b) Provisions in the Basic Provisions

that allow optional units by irrigated

and non-irrigated practices are not

applicable.

* * * * *

(d) Remove the words ‘‘actuarial

table’’ and add in their place, the words

‘‘actuarial documents’’ in section 8,

introductory text.

(e) Revise section 14 to read as

follows:

* * * * *

14. Late and Prevented Planting

The late and prevented planting provisions

of the Basic Provisions are not applicable.

* * * * *

26. Amend § 457.129 as follows:

(a) Revise the introductory text to read

as follows:

§ 457.129 Fresh market sweet corn crop

insurance provisions.

The fresh market sweet corn crop

insurance provisions for the 1999 and

succeeding crop years are as follows:

* * * * *

(b) Revise the paragraph preceding

section 1 to read as follows:

* * * * *

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) The Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(c) Remove the definitions of ‘‘days,’’

‘‘FSA,’’ ‘‘good farming practices,’’

‘‘interplanted,’’ ‘‘irrigated practice,’’

‘‘replanting,’’ and ‘‘written agreement’’

in section 1 and revise the definition of

‘‘planted acreage’’ to read as follows:

* * * * *

1. Definitions

* * * * *

Planted acreage—In addition to the

definition contained in the Basic Provisions,

for each planting period, sweet corn seed

must be planted in rows far enough apart to

permit mechanical cultivation, unless

otherwise provided by the Special

Provisions, actuarial documents, or by

written agreement.

* * * * *

(d) Remove the words ‘‘Actuarial

Table’’ and add in their place, the words

‘‘actuarial documents’’ in the following

places:

i. Section 1, definition of ‘‘planting

period;’’

ii. Section 3(a);

iii. Section 7;

iv. Section 8, introductory text and

paragraph (b)(2); and

v. Section 16(a)(1).

(e) Revise section 2 to read as follows:

* * * * *

2. Unit Division

(a) A basic unit, as defined in section 1 of

the Basic Provisions, will also be divided

into additional basic units by planting

period.

(b) Provisions in the Basic Provisions that

allow optional units by irrigated and nonirrigated practices are not applicable.

* * * * *
65172 Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations

(f) Revise section 15 to read as

follows:

* * * * *

15. Late and Prevented Planting

The late and prevented planting provisions

of the Basic Provisions are not applicable.

27. Amend § 457.130 as follows:

(a) Revise the introductory text to read

as follows:

§ 457.130 Macadamia tree crop insurance

provisions.

The macadamia tree crop insurance

provisions for the 1999 and succeeding

crop years are as follows:

* * * * *

(b) Revise the paragraph preceding

section 1 to read as follows:

* * * * *

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) The Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(c) Remove the definitions of ‘‘days,’’

‘‘non-contiguous,’’ and ‘‘written

agreement’’ in section 1.

(d) Revise section 2 to read as follows:

* * * * *

2. Unit Division

(a) Sections 34(a) (1), (3) and (4) of the

Basic Provisions are not applicable.

(b) Provisions in the Basic Provisions that

allow optional units by section, section

equivalent, or FSA farm serial number and by

irrigated and non-irrigated practices are not

applicable. Unless otherwise allowed by

written agreement, optional units may be

established only if each optional unit:

(1) Contains at least 80 acres of insurable

age macadamia trees; or

(2) Is located on non-contiguous land.

(c) You must have provided records, which

can be independently verified, of acreage and

age of trees for each unit for at least the last

crop year.

* * * * *

(e) Remove the words ‘‘actuarial

table’’ and add in their place, the words

‘‘actuarial documents and’’ in the

following places:

i. Section 3(a)(1); and

ii. Section 6, introductory text.

(f) Revise section 12 to read as

follows:

12. Late and Prevented Planting

The late and prevented planting

provisions of the Basic Provisions are

not applicable.

28. Amend § 457.131 as follows:

(a) Revise the introductory text to read

as follows:

§ 457.131 Macadamia nut crop insurance

provisions.

The macadamia nut crop insurance

provisions for the 2000 and succeeding

crop years are as follows:

* * * * *

(b) Revise the paragraph preceding

section 1 to read as follows:

* * * * *

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) The Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(c) Remove the definitions of ‘‘days,’’

‘‘good farming practices,’’ ‘‘irrigated

practice,’’ ‘‘non-contiguous,’’ and

‘‘written agreement’’ in section 1.

(d) Revise section 2 to read as follows:

* * * * *

2. Unit Division

(a) Section 34(a)(1) of the Basic Provisions

is not applicable.

(b) Provisions in the Basic Provisions that

allow optional units by section, section

equivalent, or FSA farm serial number and by

irrigated and non-irrigated practices are not

applicable. Unless otherwise allowed by

written agreement, optional units may be

established only if each optional unit:

(1) Contains at least 80 acres of bearing

macadamia trees; or

(2) Is located on non-contiguous land.

* * * * *

(e) Remove the words ‘‘actuarial

table’’ and add in their place, the words

‘‘actuarial documents’’ in section 6,

introductory text.

(f) Revise section 12 to read as

follows:

* * * * *

12. Late and Prevented Planting

The late and prevented planting provisions

of the Basic Provisions are not applicable.

* * * * *

29. Amend § 457.132 as follows:

(a) Revise the introductory text to read

as follows:

§ 457.132 Cranberry crop insurance

provisions.

The cranberry crop insurance

provisions for the 1999 and succeeding

crop years are as follows:

* * * * *

(b) Revise the paragraph preceding

section 1 to read as follows:

* * * * *

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) The Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(c) Remove the definitions of ‘‘days,’’

‘‘good farming practices,’’ ‘‘irrigated

practice,’’ ‘‘non-contiguous land,’’

‘‘production guarantee (per acre),’’ and

‘‘written agreement’’ in section 1.

(d) Revise section 2 to read as follows:

* * * * *

2. Unit Division

Provisions in the Basic Provisions that

allow optional units by section, section

equivalent, or FSA farm serial number and by

irrigated and non-irrigated practices are not

applicable. Optional units may be established

only if each optional unit is located on noncontiguous land, unless otherwise allowed by

written agreement.

* * * * *

(e) Remove the words ‘‘actuarial

table’’ and add in their place, the words

‘‘actuarial documents’’ in section 6,

introductory text and paragraph (d).

(f) Revise section 11 to read as

follows:

* * * * *

11. Late and Prevented Planting

The late and prevented planting provisions

of the Basic Provisions are not applicable.

30. Amend § 457.133 as follows:

(a) Revise the introductory text to read

as follows:

§ 457.133 Prune crop insurance

provisions.

The prune crop insurance provisions

for the 1999 and succeeding crop years

are as follows:

* * * * *

(b) Revise the paragraph preceding

section 1 to read as follows:

* * * * *

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) The Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(c) Remove the definitions of ‘‘days,’’

‘‘FSA,’’ ‘‘good farming practices,’’

‘‘irrigated practice,’’ ‘‘non-contiguous

land,’’ ‘‘production guarantee (per

acre),’’ and ‘‘written agreement’’ in

section 1.

(d) Revise section 2 to read as follows:

* * * * *

2. Unit Division

Provisions in the Basic Provisions that

allow optional units by irrigated and nonirrigated practices are not applicable. Instead

of establishing optional units by section,

section equivalent, or FSA farm serial

number optional units may be established if

each optional unit is located on noncontiguous land.

* * * * *

(e) Remove the words ‘‘actuarial

table’’ and add in their place, the words
Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations 65173

‘‘actuarial documents’’ in section 6,

introductory text.

(f) Revise section 12 to read as

follows:

* * * * *

12. Late and Prevented Planting

The late and prevented planting provisions

of the Basic Provisions are not applicable.

31. Amend § 457.135 as follows:

(a) Revise the introductory text to read

as follows:

§ 457.135 Onion crop insurance

provisions.

The onion crop insurance provisions

for the 1998 and succeeding crop years

in counties with a contract change date

of December 31, and for the 1999 and

succeeding crop years in counties with

a contract change date of June 30 are as

follows:

* * * * *

(b) Revise the paragraph preceding

section 1 to read as follows:

* * * * *

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) The Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2)

etc.

* * * * *

(c) Remove the definitions of ‘‘crop

year,’’ ‘‘days,’’ ‘‘FSA,’’ ‘‘final planting

date,’’ ‘‘good farming practices,’’

‘‘interplanted,’’ ‘‘irrigated practice,’’

‘‘late planted,’’ ‘‘late planting period,’’

‘‘practical to replant,’’ ‘‘prevented

planting,’’ ‘‘replanting,’’ ‘‘timely

planted,’’ and ‘‘written agreement’’ in

section 1 and revise the definition of

‘‘planted acreage’’ to read as follows:

* * * * *

1. Definitions

* * * * *

Planted acreage—In addition to the

definition contained in the Basic Provisions,

onions must be planted in rows.

* * * * *

(d) Revise section 2 to read as follows:

* * * * *

2. Unit Division

(a) Provisions in the Basic Provisions that

allow optional units by section, section

equivalent, or FSA farm serial number are

not applicable.

(b) In addition to, or instead of,

establishing optional units by irrigated

acreage or non-irrigated acreage, optional

units may be established by type, if the

specific type is designated in the Special

Provisions.

* * * * *′

(e) Remove the words ‘‘actuarial

table’’ and add in their place, the words

‘‘actuarial documents’’ in the following

places:

i. Section 6; and

ii. Section 7, introductory text.

(f) Revise section 14 to read as

follows:

* * * * *

14. Prevented Planting

Your prevented planting coverage will be

45 percent of your production guarantee for

timely planted acreage. If you have limited or

additional levels of coverage, as specified in

7 CFR part 400, subpart T, and pay an

additional premium, you may increase your

prevented planting coverage to a level

specified in the actuarial documents.

(g) Remove section 15.

* * * * *

32. Amend § 457.137 as follows:

* * * * *

(a) Revise the paragraph preceding

section 1 to read as follows:

§ 457.137 Green pea crop insurance

provisions.

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) The Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(b) Remove the definitions of

‘‘approved yield,’’ ‘‘days,’’ ‘‘FSA,’’

‘‘final planting date,’’ ‘‘interplanted,’’

‘‘irrigated practice,’’ ‘‘replanting,’’

‘‘timely planted,’’ and ‘‘written

agreement’’ in section 1 and revise the

definition of ‘‘planted acreage’’ to read

as follows:

* * * * *

1. Definitions

* * * * *

Planted acreage—In addition to the

definition contained in the Basic Provisions,

peas must initially be placed in rows to be

considered planted. Acreage planted in any

other manner will not be insurable unless

otherwise provided by the Special Provisions

or by written agreement.

* * * * *

(c) Revise section 2 to read as follows:

* * * * *

2. Unit Division

(a) For any processor contract that

stipulates the amount of production to be

delivered:

(1) In lieu of the definition contained in the

Basic Provisions, a basic unit will consist of

all acreage planted to the insured crop in the

county that will be used to fulfill contracts

with each processor;

(i) There will be no more than one basic

unit for all production contracted with each

processor contract;

(ii) In accordance with section 12, all

production from any basic unit in excess of

the amount under contract will be included

as production to count if such production is

applied to any other basic unit for which the

contracted amount has not been fulfilled; and

(2) Provisions in the Basic Provisions that

allow optional units by section, section

equivalent, or FSA farm serial number and by

irrigated and non-irrigated practices are not

applicable. Optional units may only be

established based on shell type and pod type

green peas if the shell type acreage does not

continue into the pod type acreage in the

same rows or planting pattern.

(b) For any processor contract that

stipulates the number of acres to be planted,

in addition to or instead of, establishing

optional units by section, section equivalent

or FSA farm serial number, or irrigated and

non-irrigated acreage, optional units may be

established based on shell type and pod type

green peas if the shell type acreage does not

continue into the pod type acreage in the

same rows or planting pattern.

* * * * *

(d) Revise section 13 to read as

follows:

* * * * *

13. Late Planting

A late planting period is not applicable to

green peas unless allowed by the Special

Provisions and you provide written approval

from the processor by the acreage reporting

date that it will accept the production from

the late planted acres when it is expected to

be ready for harvest.

* * * * *

(e) Revise section 14 to read as

follows:

* * * * *

14. Prevented Planting

Your prevented planting coverage will

be 40 percent of your production

guarantee for timely planted acreage. If

you have limited or additional levels of

coverage, as specified in 7 CFR part 400,

subpart T, and pay an additional

premium, you may increase your

prevented planting coverage to a level

specified in the actuarial documents.

* * * * *

33. Amend § 457.138 as follows:

(a) Revise the introductory text to read

as follows:

§ 457.138 Grape crop insurance

provisions.

The grape crop insurance provisions

for the 1999 and succeeding crop years

are as follows:

* * * * *

(b) Revise the paragraph preceding

section 1 to read as follows:

* * * * *

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) The Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(c) Remove the definitions of ‘‘days,’’

‘‘FSA,’’ ‘‘good farming practices,’’

‘‘irrigated practice,’’ ‘‘non-contiguous,’’
65174 Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations

‘‘production guarantee (per acre)’’

‘‘USDA,’’ and ‘‘written agreement’’ in

section 1.

(d) Revise section 2 to read as follows:

* * * * *

2. Unit Division

(a) In California only, a basic unit, as

defined in section 1 of the Basic Provisions

will be divided into additional basic units by

each variety that you insure.

(b) In California only, provisions in the

Basic Provisions that provide for optional

units by section, section equivalent, or FSA

farm serial number and by irrigated and nonirrigated practices are not applicable.

Optional units may be established only if

each optional unit is located on noncontiguous land, unless otherwise allowed by

written agreement.

(c) In all states except California, in

addition to, or instead of, establishing

optional units by section, section equivalent,

or FSA farm serial number and by irrigated

and non-irrigated acreage as provided in the

unit division provisions contained in the

Basic Provisions a separate optional unit may

be established if each optional unit:

(1) Is located on non-contiguous land; or

(2) Consists of a separate varietal group

when separate varietal groups are specified

in the Special Provisions.

* * * * *

(e) Remove the words ‘‘actuarial

table’’ and add in their place, the words

‘‘actuarial documents’’ in section 7,

introductory text.

(f) Revise section 13 to read as

follows:

13. Late and Prevented Planting

The late and prevented planting provisions

of the Basic Provisions are not applicable.

34. Amend § 457.139 as follows:

(a) Revise the introductory text to read

as follows:

§ 457.139 Fresh market tomato (dollar

plan) crop insurance provisions.

The fresh market tomato (dollar plan)

crop insurance provisions for the 1999

and succeeding crop years are as

follows:

* * * * *

(b) Revise the paragraph preceding

section 1 to read as follows:

* * * * *

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) The Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(c) Remove the definitions of ‘‘days,’’

‘‘FSA,’’ ‘‘good farming practices,’’

‘‘interplanted,’’ ‘‘irrigated practice,’’

‘‘replanting,’’ and ‘‘written agreement’’

in section 1 and revise the definition of

‘‘planted acreage’’ to read as follows:

* * * * *

1. Definitions

* * * * *

Planted acreage—In addition to the

definition contained in the Basic Provisions,

for each planting period, tomato seed or

transplants must initially be planted in rows,

unless otherwise provided by Special

Provisions, actuarial documents, or by

written agreement.

* * * * *

(d) Remove the words ‘‘Actuarial

Table’’ and add in their place, the words

‘‘actuarial documents’’ in the following

places:

i. Section 1, definition of ‘‘planting

period;’’

ii. Section 3(a);

iii. Section 7, introductory text;

iv. Section 8, introductory text and

paragraph (b)(2); and

v. Section 16(a)(1).

(e) Revise section 2 to read as follows:

* * * * *

2. Unit Division

(a) A basic unit, as defined in section 1 of

the Basic Provisions, will also be divided

into additional basic units by planting

period.

(b) Provisions in the Basic Provisions that

allow optional units by irrigated and nonirrigated practices are not applicable.

* * * * *

(f) Revise section 15 to read as

follows:

* * * * *

15. Late and Prevented Planting

The late and prevented planting provisions

of the Basic Provisions are not applicable.

35. Amend § 457.141 as follows:

§ 457.141 Rice crop insurance provisions.

(a) Revise the paragraph preceding

section 1 to read as follows:

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) The Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(b) Remove the definitions of ‘‘days,’’

‘‘FSA,’’ ‘‘final planting date,’’ ‘‘good

farming practices,’’ ‘‘irrigated practice,’’

‘‘late planted,’’ ‘‘late planting period,’’

‘‘practical to replant,’’ ‘‘prevented

planting,’’ ‘‘production guarantee (per

acre),’’ ‘‘replanting,’’ ‘‘timely planted,’’

and ‘‘written agreement’’ in section 1.

* * * * *

(c) Revise section 2 to read as follows:

* * * * *

2. Unit Division

Provisions in the Basic Provisions that

allow optional units by irrigated and nonirrigated practices are not applicable.

* * * * *

(d) Remove the words ‘‘actuarial

table’’ and add in their place, the words

‘‘actuarial documents’’ in section 6,

introductory text.

(e) Revise section 13 to read as

follows:

* * * * *

13. Prevented Planting

Your prevented planting coverage will be

45 percent of your production guarantee for

timely planted acreage. If you have limited or

additional levels of coverage, as specified in

7 CFR part 400, subpart T, and pay an

additional premium, you may increase your

prevented planting coverage to a level

specified in the actuarial documents.

(f) Remove section 14.

36. Amend § 457.148 as follows:

(a) Revise the introductory text to read

as follows:

§ 457.148 Fresh market pepper crop

insurance provisions.

The fresh market pepper crop

insurance provisions for the 1999 and

succeeding crop years are as follows:

* * * * *

(b) Revise the paragraph preceding

section 1 to read as follows:

* * * * *

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) The Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(c) Remove the definitions of ‘‘days,’’

‘‘FSA,’’ ‘‘good farming practices,’’

‘‘interplanted,’’ ‘‘irrigated practice,’’

‘‘replanting,’’ and ‘‘written agreement’’

in section 1 and revise the definition of

‘‘planted acreage’’ to read as follows:

* * * * *

1. Definitions

* * * * *

Planted acreage—In addition to the

definition contained in the Basic Provisions,

for each planting period, pepper seed or

transplants must initially be planted in rows,

unless otherwise provided by the Special

Provisions, actuarial documents, or by

written agreement.

(d) Remove the words ‘‘Actuarial

Table’’ and add in their place, the words

‘‘actuarial documents’’ in the following

places:

i. Section 1, definition of ‘‘planting

period;’’

ii. Section 3(a);

iii. Section 7;

iv. Section 8, introductory text and

paragraph (b)(2); and

v. Section 16(a)(1).

(e) Revise section 2 to read as follows:

* * * * *
Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations 65175

2. Unit Division

(a) A basic unit, as defined in section 1 of

the Basic Provisions, will also be divided

into additional basic units by planting

period.

(b) Provisions in the Basic Provisions that

allow optional units by irrigated and nonirrigated practices are not applicable.

* * * * *

(f) Revise section 15 to read as

follows:

15. Late and Prevented Planting

The late and prevented planting provisions

of the Basic Provisions are not applicable.

37. Amend § 457.149 as follows:

(a) Revise the introductory text to read

as follows:

§ 457.149 Table grape crop insurance

provisions.

The table grape crop insurance

provisions for the 1999 and succeeding

crop years are as follows:

* * * * *

(b) Revise the paragraph preceding

section 1 to read as follows:

* * * * *

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) The Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(c) Remove the definitions of ‘‘days,’’

‘‘good farming practices,’’ ‘‘irrigated

practice,’’ ‘‘non-contiguous,’’

‘‘production guarantee (per acre),’’ and

‘‘written agreement’’ in section 1.

(d) Revise section 2 to read as follows:

2. Unit Division

(a) A basic unit, as defined in section 1 of

the Basic Provisions, will be divided into

additional basic units by each table grape

variety designated in the Special Provisions.

(b) Provisions in the Basic Provisions that

allow optional units by section, section

equivalent, or FSA farm serial number and by

irrigated and non-irrigated practices are not

applicable. Optional units may be established

only if each optional unit is located on noncontiguous land, unless otherwise allowed by

written agreement.

* * * * *

(e) Remove the words ‘‘actuarial

table’’ and add in their place, the words

‘‘actuarial documents’’ in section 7(a).

(f) Revise section 13 to read as

follows:

* * * * *

13. Late and Prevented Planting

The late and prevented planting provisions

of the Basic Provisions are not applicable.

38. Amend § 457.150 as follows:

(a) Revise the introductory text to read

as follows:

§ 457.150 Dry bean crop insurance

provisions.

The dry bean crop insurance

provisions for the 1998 and succeeding

crop years are as follows:

* * * * *

(b) Revise the paragraph preceding

section 1 to read as follows:

* * * * *

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) The Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(c) Remove the definitions of ‘‘days,’’

‘‘FSA,’’ ‘‘final planting date,’’ ‘‘good

farming practices,’’ ‘‘interplanted,’’

‘‘irrigated practice,’’ ‘‘late planted,’’

‘‘late planting period,’’ ‘‘prevented

planting,’’ ‘‘production guarantee (per

acre),’’ ‘‘replanting,’’ and ‘‘timely

planted,’’ and ‘‘written agreement’’ in

section 1 and revise the definition of

‘‘planted acreage’’ to read as follows:

* * * * *

1. Definitions

* * * * *

Planted acreage—In addition to the

definition contained in the Basic Provisions,

beans must initially be planted in rows far

enough apart to permit mechanical

cultivation, unless otherwise provided by the

Special Provisions, actuarial documents, or

by written agreement.

* * * * *

(d) Revise section 2 to read as follows:

* * * * *

2. Unit Division

(a) In addition to the definition of basic

unit in section 1 of the Basic Provisions, all

acreage of contract seed beans qualifies as a

separate basic unit. For production based

seed bean processor contracts, the basic unit

will consist of all the acreage needed to

produce the amount of production under

contract, based on the actual production

history of the acreage. For acreage based seed

bean processor contracts, the basic unit will

consist of all acreage specified in the

contract.

(b) In addition to, or instead of,

establishing optional units by section, section

equivalent, or FSA farm serial number and by

irrigated and non-irrigated acreage as

provided in the unit division provisions

contained in the Basic Provisions, a separate

optional unit may be established for each

bean type shown in the Special Provisions.

(c) Contract seed beans may qualify for

optional units only if the seed bean processor

contract specifies the number of acres under

contract. Contract seed beans produced

under a seed bean processor contract that

specifies only an amount of production or a

combination of acreage and production, are

not eligible for optional units.

* * * * *

(e) Remove the words ‘‘actuarial

table’’ and add in their place, the words

‘‘actuarial documents’’ in section 7(a).

(f) Revise section 7(c)(3) to read as

follows:

* * * * *

7. Insured Crop

* * * * *

(c) * * *

(3) Both parties (you and us) enter into a

written agreement allowing insurance on the

type in accordance with section 18 of the

Basic Provisions.

* * * * *

(g) Revise section 14 to read as

follows:

* * * * *

14. Prevented Planting

Your prevented planting coverage will be

60 percent of your production guarantee for

timely planted acreage. If you have limited or

additional levels of coverage, as specified in

7 CFR part 400, subpart T, and pay an

additional premium, you may increase your

prevented planting coverage to a level

specified in the actuarial documents.

(h) Remove section 15.

39. Amend § 457.151 as follows:

(a) Revise the introductory text to read

as follows:

§ 457.151 Forage seeding crop insurance

provisions.

The forage seeding crop insurance

provisions for the 1999 and succeeding

crop years are as follows:

* * * * *

(b) Revise the paragraph preceding

section 1 to read as follows:

* * * * *

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) the Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(c) Remove the definitions of ‘‘days,’’

‘‘FSA,’’ ‘‘final planting date,’’

‘‘interplanted,’’ ‘‘irrigated practice,’’

‘‘practical to replant,’’ and ‘‘written

agreement’’ in section 1 and revise the

definitions of ‘‘planted acreage’’ and

‘‘sales closing date’’ to read as follows:

* * * * *

1. Definitions

* * * * *

Planted acreage—In addition to the

provisions in section 1 of the Basic

Provisions, land on which seed is initially

spread onto the soil surface by any method

and subsequently is mechanically

incorporated into the soil in a timely manner

and at the proper depth will be considered

planted, unless otherwise provided by the

Special Provisions, actuarial documents, or

written agreement.

Sales closing date—In lieu of the definition

contained in the Basic Provisions, a date
65176 Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations

contained in the Special Provisions by which

an application must be filed and by which

you may change your crop insurance

coverage for a crop year. If the Special

Provisions provide a sales closing date for

both fall seeded and spring seeded practices

for the insured crop and you plant any

insurable fall seeded acreage, you may not

change your crop insurance coverage after

the fall sales closing date for the fall seeded

practice.

* * * * *

(d) Revise section 2 to read as follows:

* * * * *

2. Unit Division

A basic unit, as defined in section 1 of the

Basic Provisions, will also be divided into

additional basic units by spring planted and

fall planted acreage.

* * * * *

(e) Remove the words ‘‘actuarial

table’’ and add in their place, the words

‘‘actuarial documents’’ in the following

places:

i. Section 1, definition of ‘‘forage;’’

ii. Section 3(a); and

iii. Section 6, introductory text.

(f) Revise section 13 to read as

follows:

* * * * *

13. Late and Prevented Planting

The late and prevented planting provisions

of the Basic Provisions are not applicable.

40. Amend § 457.153 as follows:

(a) Revise the introductory text to read

as follows:

§ 457.153 Peach crop insurance

provisions.

The peach crop insurance provisions

for the 1999 and succeeding crop years

are as follows:

* * * * *

(b) Revise the paragraph preceding

section 1 to read as follows:

* * * * *

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) The Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(c) Remove the definitions of ‘‘days,’’

‘‘FSA,’’ ‘‘good farming practices,’’

‘‘irrigated practice,’’ ‘‘production

guarantee (per acre),’’ and ‘‘written

agreement’’ in section 1.

(d) Remove section 2.

(e) Designate sections 3 through 12 as

sections 2 through 11 respectively.

(f) Remove the words ‘‘actuarial table’’

and add in their place, the words

‘‘actuarial documents’’ in redesignated

section 5, introductory text.

(g) Amend section 10(b)(2) to change

the section reference therein from

‘‘11(b)(1)’’ to ‘‘10(b)(1)’’.

(h) Amend section 10(b)(3) to change

the section reference therein from

‘‘11(b)(2)’’ to ‘‘10(b)(2)’’.

(i) Amend section 10(b)(4) to change

the section reference therein from

‘‘11(c)’’ to ‘‘10(c)’’.

(j) Amend section 10(b)(5) to change

the section reference therein from

‘‘11(b)(4)’’ to ‘‘10(b)(4)’’.

(k) Amend section 10(b)(6) to change

the section references therein from

‘‘11(b)(5)’’ to ‘‘10(b)(5)’’ and ‘‘11(b)(3)’’

to ‘‘10(b)(3)’’.

(l) Amend section 10(b)(7) to change

the section reference therein from

‘‘11(b)(6)’’ to ‘‘10(b)(6)’’.

(m) Amend section 10(c)(1)(i)(B) to

change the section reference therein

from ‘‘section 10’’ to ‘‘section 9’’.

(n) Amend section 10(c)(3)(i)(B) to

change the section reference therein

from ‘‘11(c)(3)(i)(A)’’ to ‘‘10(c)(3)(i)(A)’’.

(o) Amend section 10(c)(3)(ii)(B) to

change the section reference therein

from ‘‘11(c)(3)(ii)(A)’’ to

‘‘10(c)(3)(ii)(A)’’.

(p) Revise section 11 to read as

follows:

* * * * *

11. Late and Prevented Planting

The late and prevented planting provisions

of the Basic Provisions are not applicable.

* * * * *

41. Amend § 457.155 as follows:

* * * * *

(a) Revise the paragraph preceding

section 1 to read as follows:

§ 457.155 Processing bean crop insurance

provisions.

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) The Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(b) Remove the definitions of

‘‘approved yield,’’ ‘‘days,’’ ‘‘FSA,’’

‘‘final planting date,’’ ‘‘interplanted,’’

‘‘irrigated practice,’’ ‘‘production

guarantee (per acre),’’ ‘‘replanting,’’

‘‘timely planted,’’ and ‘‘written

agreement’’ in section 1 and revise the

definition of ‘‘planted acreage’’ to read

as follows:

* * * * *

1. Definitions

* * * * *

Planted acreage—In addition to the

definition contained in the Basic Provisions,

beans must initially be placed in rows far

enough apart to permit mechanical

cultivation to be considered planted. Acreage

planted in any other manner will not be

insurable unless otherwise provided by the

Special Provisions or by written agreement.

* * * * *

(c) Revise section 2 to read as follows:

* * * * *

2. Unit Division

(a) For any processor contract that

stipulates the amount of production to be

delivered:

(1) In lieu of the definition contained in the

Basic Provisions, a basic unit will consist of

all acreage planted to the insured crop in the

county that will be used to fulfill contracts

with each processor;

(i) There will be no more than one basic

unit for all production contracted with each

processor contract;

(ii) In accordance with section 12, all

production from any basic unit in excess of

the amount under contract will be included

as production to count if such production is

applied to any other basic unit for which the

contracted amount has not been fulfilled; and

(2) Provisions in the Basic Provisions that

allow optional units by section, section

equivalent, or FSA farm serial number and by

irrigated and non-irrigated practices are not

applicable. Optional units will not be

established.

(b) For any processor contract that

stipulates the number of acres to be planted,

in addition to or instead of, establishing

optional units by section, section equivalent

or FSA farm serial number, or irrigated and

non-irrigated acreage, optional units may be

established by type if acreage of one type

does not continue into acreage of another

type in the same rows or planting pattern.

* * * * *

(d) Remove the words ‘‘actuarial

table’’ and add in their place, the words

‘‘actuarial documents’’ in section 7(a).

(e) Revise section 13 to read as

follows:

* * * * *

13. Late Planting

A late planting period is not applicable to

processing beans unless allowed by the

Special Provisions and you provide written

approval from the processor by the acreage

reporting date that it will accept the

production from the late planted acres when

it is expected to be ready for harvest.

* * * * *

(f) Revise section 14 to read as

follows:

* * * * *

14. Prevented Planting

Your prevented planting coverage will be

40 percent of your production guarantee for

timely planted acreage. If you have limited or

additional levels of coverage, as specified in

7 CFR part 400, subpart T, and pay an

additional premium, you may increase your

prevented planting coverage to a level

specified in the actuarial documents.

42. Amend § 457.157 as follows:

(a) Revise the introductory text to read

as follows:
Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 / Rules and Regulations 65177

§ 457.157 Plum crop insurance provisions.

The plum crop insurance provisions

for the 1999 and succeeding crop years

are as follows:

* * * * *

(b) Revise the paragraph preceding

section 1 to read as follows:

* * * * *

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) the Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(c) Remove the definitions of ‘‘days,’’

‘‘good farming practices,’’ ‘‘irrigated

practice,’’ ‘‘non-contiguous,’’

‘‘production guarantee (per acre)’’ and

‘‘written agreement’’ in section 1.

(d) Revise section 2 to read as follows:

* * * * *

2. Unit Division

Provisions in the Basic Provisions that

allow optional units by section, section

equivalent, or FSA farm serial number and by

irrigated and non-irrigated practices are not

applicable. Optional units must meet one or

more of the following, as applicable, unless

otherwise provided by the Special

Provisions, actuarial documents, or written

agreement:

(a) Optional units may be established if

each optional unit is located on noncontiguous land.

(b) In addition to, or instead of,

establishing optional units for noncontiguous land, optional units may be

established by varietal group when provided

for in the Special Provisions. The

requirements of section 34(a)(1) of the Basic

Provisions are not applicable for this method

of unit division.

* * * * *

(e) Remove the words ‘‘actuarial

table’’ and add in their place, the words

‘‘actuarial documents’’ in section 6,

introductory text.

(f) Revise section 12 to read as

follows:

* * * * *

12. Late and Prevented Planting

The late and prevented planting provisions

of the Basic Provisions are not applicable.

* * * * *

43. Amend § 457.160 as follows:

§ 457.160 Processing tomato crop

insurance provisions.

(a) Revise the paragraph preceding

section 1 to read as follows:

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) The Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

Provisions; (3) these Crop Provisions; and (4)

the Basic Provisions with (1) controlling (2),

etc.

* * * * *

(b) Remove the definitions of

‘‘approved yield,’’ ‘‘days,’’ ‘‘FSA,’’

‘‘final planting date,’’ ‘‘interplanted,’’

‘‘irrigated practice,’’ ‘‘production

guarantee (per acre),’’ ‘‘replanting,’’

‘‘timely planted,’’ ‘‘USDA,’’ and

‘‘written agreement’’ in section 1 and

revise the definition of ‘‘planted

acreage’’ to read as follows:

* * * * *

1. Definitions

* * * * *

Planted acreage—In addition to the

definition contained in the Basic Provisions,

tomatoes must initially be placed in rows to

be considered planted. Acreage planted in

any other manner will not be insurable

unless otherwise provided by the Special

Provisions or by written agreement.

* * * * *

(c) Revise section 2 to read as follows:

* * * * *

2. Unit Division

(a) Notwithstanding the provisions of this

section or any unit division provisions

contained in the Basic Provisions, no

indemnity will be paid for any loss of

production on any unit if the insured

produced a crop sufficient to fulfill the

processor contracts forming the basis for the

guarantee, and any indemnity will be limited

to the amount necessary to compensate for

loss in yield at the price elected between

production to count and the contract

requirements.

(b) In California only, in addition to, or

instead of, establishing optional units by

section, section equivalent or FSA farm serial

number and by irrigated and non-irrigated

acreage as provided in the unit division

provisions contained in the Basic Provisions,

optional units may be established if acreage

planted to tomatoes is separated by a field

that is not planted to tomatoes, or by a

permanent boundary such as a permanent

waterway, fence, public road or woodland.

Such optional unit must consist of the

minimum number of acres stated in the

Special Provisions. Acreage planted to

tomatoes that is less than the minimum

number of acres required will attach to the

closest unit within the section, section

equivalent, or FSA farm serial number.

* * * * *

(d) Remove the words ‘‘actuarial

table’’ and add in their place, the words

‘‘actuarial documents’’ in sections 7 and

8(a).

(e) Remove section 16.

Signed in Washington, D.C., on December

1, 1997.

Kenneth D. Ackerman,

Manager, Federal Crop Insurance

Corporation.

[FR Doc. 97–31860 Filed 12–4–97; 11:13 am]

BILLING CODE 3410–08–P