[Federal Register Volume 62, Number 237 (Wednesday, December 10, 1997)]
[Rules and Regulations]
[Pages 65130-65177]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-31860]



[[Page 65129]]

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Part II





Department of Agriculture





_______________________________________________________________________



Federal Crop Insurance Corporation



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7 CFR Part 457



Common Crop Insurance Regulations; Basic Provisions; and Various Crop 
Insurance Provisions; Final Rule

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

[[Page 65130]]



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.

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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

[[Page 65131]]

amend the Common Crop Insurance Regulations, Basic Provisions (Basic 
Provisions) (7 CFR part 457) and the Crop Provisions (7 CFR 
Secs. 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 sign-up 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

[[Page 65132]]

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 ________.''
    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

[[Page 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,

[[Page 65134]]

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 ``non-
contiguous'' 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 ``non-contiguous'' 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.''

[[Page 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

[[Page 65136]]

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 Sec. 400.459. Section 2(e) relates to eligibility as described in 
Sec. 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

[[Page 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 sub-entries 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.

[[Page 65138]]

    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 cross-reference 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.

[[Page 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''

[[Page 65140]]

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.

[[Page 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

[[Page 65142]]

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 post-planting 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

[[Page 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 non-irrigated 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

[[Page 65144]]

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 double-cropping, 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

[[Page 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

[[Page 65146]]

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 
carry-over 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

[[Page 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

[[Page 65148]]

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 pre-plant 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

[[Page 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, para. 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

[[Page 65150]]

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 Sec. 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

[[Page 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 Sec. 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 Sec. 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.

[[Page 65152]]

    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 short-term. 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

[[Page 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  x  .75), the 
landlord would be eligible for a replanting payment if the remaining 
stand was appraised at less than 54 bushels per acre (60  x  .90). If 
the tenant had a 50 percent coverage level with a production guarantee 
of 40 bushels per acre (80  x  .50), the tenant would be entitled to a 
replanting payment if the remaining stand was appraised at less than 36 
bushels per acre (40  x  .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 non-
irrigated 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.

[[Page 65154]]

    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); Sec. 457.137 (Green Pea Crop Insurance Provisions); 
Sec. 457.149 (Table Grape Crop Insurance Provisions); Sec. 457.155 
(Processing Bean Crop Insurance Provisions); and Sec. 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:


Sec. 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 Sec. 457.4 to read as follows:


Sec. 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:


Sec. 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:

[[Page 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 (Sec. 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

[[Page 65156]]

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

[[Page 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

[[Page 65158]]

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 under-reported 
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 strip-mined 
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.

[[Page 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 ``non-irrigated,'' 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

[[Page 65160]]

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.

------------------------------------------------------------------------
                               Eligible acres if,    Eligible acres if, 
                              in any of the 4 most  in any of the 4 most
                               recent crop years,    recent crop years, 
        Type of crop            you have produced       you have not    
                               any crop for which     produced any crop 
                                  insurance was      for which insurance
                                    available           was available   
------------------------------------------------------------------------
(i) The crop is not required  (A) The maximum       (B) The number of   
 to be contracted with a       number of acres       acres specified on 
 processor to be insured.      certified for APH     your intended      
                               purposes or           acreage report     
                               reported for          which is submitted 
                               insurance for the     to us by the sales 
                               crop in any one of    closing date for   
                               the 4 most recent     all crops you      
                               crop years (not       insure for the crop
                               including reported    year and that is   
                               prevented planting    accepted by us. The
                               acreage that was      total number of    
                               planted to a          acres listed may   
                               substitute crop       not exceed the     
                               other than an         number of acres of 
                               approved cover        cropland in your   
                               crop). The number     farming operation  
                               of acres determined   at the time you    
                               above for a crop      submit the intended
                               may be increased by   acreage report. The
                               multiplying it by     number of acres    
                               the ratio of the      determined above   
                               total cropland        for a crop may only
                               acres that you are    be increased by    
                               farming this year     multiplying it by  
                               (if greater) to the   the ratio of the   
                               total cropland        total cropland     
                               acres that you        acres that you are 
                               farmed in the         farming this year  
                               previous year,        (if greater) to the
                               provided that you     number of acres    
                               submit proof to us    listed on your     
                               that for the          intended acreage   
                               current crop year     report, if you meet
                               you have purchased    the conditions     
                               or leased             stated in section  
                               additional land or    17(e)(1)(i)(A).    
                               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.                        

[[Page 65161]]

                                                                        
(ii)The crop must be          (A) The number of     (B) The number of   
 contracted with a processor   acres of the crop     acres of the crop  
 to be insured.                specified in the      as determined in   
                               processor contract,   section            
                               if the contract       17(e)(1)(ii)(A).   
                               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.).                      
------------------------------------------------------------------------

    (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

[[Page 65162]]

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

[[Page 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.

[[Page 65164]]

    6. Amend Sec. 457.101 as follows:
    (a) Revise the introductory text to read as follows:


Sec. 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 
spring-planted 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 Sec. 457.104 as follows:
    (a) Revise the introductory text to read as follows:


Sec. 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)

[[Page 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 skip-row 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 Sec. 457.105 as follows:
    (a) Revise the introductory text to read as follows:


Sec. 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 skip-row 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

[[Page 65166]]

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 Sec. 457.106 as follows:
    (a) Revise the introductory text to read as follows:


Sec. 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 non-irrigated 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 Sec. 457.107 as follows:
    (a) Revise the introductory text to read as follows:


Sec. 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 non-irrigated 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 Sec. 457.108 as follows:
    (a) Revise the introductory text to read as follows:


Sec. 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:
* * * * *

[[Page 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 Sec. 457.109 as follows:
    (a) Revise the introductory text to read as follows:


Sec. 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 Sec. 457.110 as follows:
    (a) Revise the introductory text to read as follows:


Sec. 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 
non-contiguous 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 Sec. 457.111 as follows:
    (a) Revise the introductory text to read as follows:


Sec. 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:

[[Page 65168]]

(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 non-irrigated 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 Sec. 457.113 as follows:
    (a) Revise the introductory text to read as follows:


Sec. 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 Sec. 457.114 as follows:
    (a) Amend the introductory text to read as follows:

[[Page 65169]]

Sec. 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 Sec. 457.116 as follows:
    (a) Revise the introductory text to read as follows:


Sec. 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 Sec. 457.117 as follows:
    (a) Revise the introductory text to read as follows:


Sec. 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 Sec. 457.119 as follows:
    (a) Revise the introductory text to read as follows:


Sec. 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 non-irrigated 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).

[[Page 65170]]

    (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 Sec. 457.121 as follows:
    (a) Revise the introductory text to read as follows:


Sec. 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 
non-contiguous 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 Sec. 457.122 as follows:
    (a) Revise the introductory text to read as follows:


Sec. 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 
non-contiguous 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 Sec. 457.123 as follows:
    (a) Revise the introductory text to read as follows:


Sec. 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 
non-contiguous 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 Sec. 457.124 as follows:
    (a) Revise the introductory text to read as follows:


Sec. 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 
non-contiguous land, unless otherwise allowed by written agreement.
* * * * *

[[Page 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 Sec. 457.125 as follows:
    (a) Revise the introductory text to read as follows:


Sec. 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 Sec. 457.128 as follows:
    (a) Revise the paragraph preceding section 1 to read as follows:


Sec. 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 Sec. 457.129 as follows:
    (a) Revise the introductory text to read as follows:


Sec. 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 non-irrigated practices are not applicable.
* * * * *

[[Page 65172]]

    (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 Sec. 457.130 as follows:
    (a) Revise the introductory text to read as follows:


Sec. 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 Sec. 457.131 as follows:
    (a) Revise the introductory text to read as follows:


Sec. 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 Sec. 457.132 as follows:
    (a) Revise the introductory text to read as follows:


Sec. 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 
non-contiguous 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 Sec. 457.133 as follows:
    (a) Revise the introductory text to read as follows:


Sec. 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 non-irrigated 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 non-contiguous land.
* * * * *
    (e) Remove the words ``actuarial table'' and add in their place, 
the words

[[Page 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 Sec. 457.135 as follows:
    (a) Revise the introductory text to read as follows:


Sec. 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 Sec. 457.137 as follows:
* * * * *
    (a) Revise the paragraph preceding section 1 to read as follows:


Sec. 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 Sec. 457.138 as follows:
    (a) Revise the introductory text to read as follows:


Sec. 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,''

[[Page 65174]]

``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 non-irrigated practices are 
not applicable. Optional units may be established only if each 
optional unit is located on non-contiguous 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 Sec. 457.139 as follows:
    (a) Revise the introductory text to read as follows:


Sec. 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 non-irrigated 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 Sec. 457.141 as follows:


Sec. 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 non-irrigated 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 Sec. 457.148 as follows:
    (a) Revise the introductory text to read as follows:


Sec. 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:
* * * * *

[[Page 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 non-irrigated 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 Sec. 457.149 as follows:
    (a) Revise the introductory text to read as follows:


Sec. 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 
non-contiguous 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 Sec. 457.150 as follows:
    (a) Revise the introductory text to read as follows:


Sec. 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 Sec. 457.151 as follows:
    (a) Revise the introductory text to read as follows:


Sec. 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

[[Page 65176]]

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 Sec. 457.153 as follows:
    (a) Revise the introductory text to read as follows:


Sec. 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 Sec. 457.155 as follows:
* * * * *
    (a) Revise the paragraph preceding section 1 to read as follows:


Sec. 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 Sec. 457.157 as follows:
    (a) Revise the introductory text to read as follows:

[[Page 65177]]

Sec. 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 non-contiguous land.
    (b) In addition to, or instead of, establishing optional units 
for 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 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 Sec. 457.160 as follows:


Sec. 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