[Federal Register Volume 62, Number 241 (Tuesday, December 16, 1997)]
[Rules and Regulations]
[Pages 65741-65747]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-32619]



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Rules and Regulations
                                                Federal Register
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Federal Register / Vol. 62, No. 241 / Tuesday, December 16, 1997 / 
Rules and Regulations

[[Page 65741]]


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DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 457


Pea Crop Insurance Regulations; and Common Crop Insurance 
Regulations, Dry Pea Crop Insurance Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Final rule.

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SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes 
specific crop provisions for the insurance of dry peas. The provisions 
will be used in conjunction with the Common Crop Insurance Policy, 
Basic Provisions, which contain standard terms and conditions common to 
most crops. The intended effect of this action is to provide policy 
changes to better meet the needs of the insured, separate dry peas and 
green peas into separate crop insurance provisions, include the current 
pea crop insurance regulations with the Common Crop Insurance Policy 
for ease of use and consistency of terms, and to restrict the effect of 
the current pea crop insurance regulations to the 1997 and prior crop 
years.

EFFECTIVE DATE: December 16, 1997.

FOR FURTHER INFORMATION CONTACT: Arden Routh, 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 No. 12866

    The Office of Management and Budget (OMB) has determined this rule 
to be exempt for the purposes of Executive Order No. 12866, and, 
therefore, has not 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.

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 No. 12612

    It has been determined under section 6(a) of Executive Order No. 
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 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 on large 
entities. Under the current regulations, a producer is required to 
complete an application and acreage report. If the crop is damaged or 
destroyed, the insured is required to give notice of loss and provide 
the necessary information to complete a claim for indemnity.
    The insured must also annually certify to the previous years 
production if adequate records are available to support the 
certification. The producer must maintain the production records to 
support the certified information for at least three years. This 
regulation does not alter those requirements.
    The amount of work required of the insurance companies delivering 
and servicing these policies will not increase significantly from the 
amount of work currently required. 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 No. 12372

    This program is not subject to the provisions of Executive Order 
No. 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 No. 12998

    This final rule has been reviewed in accordance with Executive 
Order No. 12998 on civil justice reform. The provisions of this rule 
will not have a retroactive effect prior to the effective date. 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 
any action 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 Thursday, May 15, 1997, FCIC published a proposed rule in the 
Federal Register at 62 FR 26750 to add to the Common Crop Insurance 
Regulations (7 CFR part 457) a new section, 7 CFR 457.140, Dry Pea Crop 
Insurance Provisions. The new provisions will be effective for the 1998 
and succeeding crop years. These provisions will replace and supersede

[[Page 65742]]

the current provisions for insuring dry peas found at 7 CFR part 416 
(Pea Crop Insurance Regulations).
    Following publication of the proposed rule, the public was afforded 
30 days to submit written comments, data, and opinions. A total of 42 
comments were received from an insurance service organization and 
reinsured companies. The comments received, and FCIC's responses, are 
as follows:
    Comment: An insurance service organization recommended that FCIC 
consider combining contract seed peas and contract seed beans into one 
crop provision.
    Response: FCIC will consider combining insurance provisions for 
these two crop types in the future.
    Comment: An insurance service organization was concerned about late 
and prevented planting coverage for dry peas if revisions to the Basic 
Provisions are not finalized in time to be effective for the 1998 crop 
year.
    Response: The late and prevented planting provisions in the Basic 
Provisions, will be applicable to this policy.
    Comment: An insurance service organization questioned if the plant 
population is determined per unit or per acre within the unit in the 
definition of ``adequate stand.''
    Response: FCIC has clarified the definition of ``adequate stand'' 
to specify that the plant population is determined on a per acre basis.
    Comment: An insurance service organization questioned if the term 
``contract seed peas'' had replaced ``wrinkled varieties of dry peas'' 
in the 1986-CHIAA 713 policy.
    Response: The term ``contract seed peas'' has replaced ``wrinkled 
varieties of dry peas'' in those crop provisions.
    Comment: An insurance service organization questioned if item (1) 
in the definition of ``dry peas'' includes peas grown for seed that do 
not qualify as contract seed for the purpose of the policy, and if this 
allows such peas to be included in the same unit as the dry edible 
types.
    Response: Peas grown for seed that do not qualify as contract seed 
peas under the policy terms are treated the same as dry edible peas for 
purposes of the policy. Therefore, the peas grown for seed could be 
included in the same unit.
    Comment: A reinsured company and an insurance service organization 
indicated that cultural practices may exist that are not recognized (or 
possibly known) by the Cooperative State Research, Education and 
Extension Service (CSREES). The comments indicated that the definition 
of ``Good farming practices'' is too restrictive since it limits 
acceptable farming practices to those recognized by the CSREES. The 
comments also suggested changing the last word of the definition from 
``county'' to ``area.''
    Response: CSREES recognizes farming practices that are considered 
acceptable for producing dry peas. If a producer is following practices 
currently not recognized as acceptable by CSREES, such recognition can 
be sought by interested parties. The actuarial documents are on a 
county basis. No changes have been made.
    Comment: A reinsured company recommended adding the words ``and 
quality'' after the word ``quantity'' in the definition of ``Irrigated 
practice.''
    Response: Water quality is an important issue. However, since no 
standards or procedures have been developed to measure water quality 
for insurance purposes, quality cannot be included in the definition. 
No change has been made.
    Comment: An insurance service organization questioned the 
definition of ``local market price'' which refers to grades and prices 
for ``dry peas or lentils.'' The definition of ``dry peas'' includes 
lentils as one dry pea type. It seems unnecessary to specify ``or 
lentils'' if the language in the definition of ``local market price'' 
is intended to exclude contract seed peas. The commenter recommended 
changing the words ``dry peas or lentils'' to ``dry edible peas or 
lentils,'' but if there is no change, ``lentils'' should be defined 
separately from the ``dry peas.''
    Response: Under the definition of ``dry peas,'' peas grown for seed 
may be insured as dry edible peas. FCIC has amended the definition of 
local market price by deleting the words ``and lentils.''
    Comment: A reinsured company questioned whether the reference to 
``late planting period'' in the definition of ``practical to replant'' 
is still appropriate since there is not a section in these provisions 
for late and prevented planting. The commenter also asked if late 
planting period will be defined in the late and prevented planting 
provisions of the proposed Basic Provisions.
    Response: Since the late planting period is no longer defined in 
these Crop Provisions, the words ``late planting period'' have been 
changed to ``25 days.'' The Basic Provisions contain a definition for 
``late planting period'' as well as sections with provisions for late 
and prevented planting.
    Comment: An insurance service organization stated that a nurse crop 
is not always intended to be harvested separately, but may be removed 
with a herbicide or other means. The commenter recommended deleting the 
phrase ``that is intended to be harvested separately,'' in the 
definition of ``nurse crop.''
    Response: The primary reason that a nurse crop is planted is to 
improve the growing conditions of the crop with which it is grown. The 
definition has been revised to specify that the nurse crop is not 
intended to be harvested with the insured crop.
    Comment: An insurance service organization questioned if the phrase 
``marketing window'' in the definition of ``practical to replant'' 
applies to dry peas.
    Response: The Federal Agriculture Improvement and Reform Act of 
1996 requires FCIC to consider marketing window when determining 
whether it is practical to replant. No change has been made.
    Comment: A reinsured company and an insurance service organization 
are concerned with the definition of ``replanting.'' The reinsured 
company indicated that the phrase replace the pea seed and then 
replacing the pea seed is awkward and cumbersome. The insurance service 
organization recommended clarifying the definition of ``replanting'' by 
specifying the crop name as follows: ``with the expectation of growing 
a successful pea crop.''
    Response: The definition of ``replanting'' clearly describes the 
steps required to replant the crop. The producer must first perform the 
cultural practices needed to replant the seed before replanting the 
seed. FCIC has revised the definition to specify that the crop be 
replanted with or expectation of producing at least the guarantee. No 
change has been made.
    Comment: An insurance service organization stated that the 
definition of ``salvage value'' appears to be unnecessary as the term 
is not used elsewhere in these provisions.
    Response: FCIC has deleted the phrase ``salvage value'' from these 
Crop Provisions.
    Comment: An insurance service organization questioned whether the 
defined dry pea types are the same as the varietal groups of dry peas 
that qualify for basic units in the current 1986-CHIAA 713 provisions.
    Response: The dry pea types defined in these Crop Provisions are 
the same as the varietal groups of dry peas that qualify for basic 
units in the current 1986-CHIAA 713 provisions, except that Austrian 
Winter Peas are added under these Crop Provisions. A basic unit may be 
divided into optional units by type.

[[Page 65743]]

    Comment: An insurance service organization stated that section 2 
allows basic units to be divided into optional units by type (varietal 
group). The proposed change would require an insured to keep separate 
production records to qualify for optional units by type and the 
insured would no longer qualify for the basic unit discount. The 
commenter asked whether there would be any corresponding rate 
adjustment?
    Response: Insureds have the option of selecting optional units by 
type. It is not required. To qualify for optional units, the insured 
must maintain separate production records by type. The premium rate 
charged will depend on the unit structure selected by the insured.
    Comment: An insurance service organization recommended removal of 
the opening phrase in section 2(e)(4)(iii) of the proposed rule that 
states ``In addition to, or instead of, establishing optional units by 
section, section equivalent or FSA Farm Serial Number since section 
2(e)(4) of the proposed rule specifies that ``Each optional unit must 
meet one or more of the following criteria.
    Response: FCIC has revised this provision in the Basic Provisions.
    Comment: An insurance service organization questioned if the 
various types of peas listed in the ``dry pea'' definition have similar 
growing seasons and harvest dates.
    Response: With the exception of Austrian Winter Peas, the various 
types of peas listed in the ``dry pea'' definition have similar growing 
seasons and harvest dates. Austrian Winter Peas have a different 
growing season since they are normally planted in the fall. This 
difference should be no more complex than is the case for winter and 
spring wheats that also are grown in the Pacific Northwest.
    Comment: A reinsured company and an insurance service organization 
questioned why the provisions in section 3 allow different price 
election percentages by dry pea type. This is not consistent with most 
other Crop Provisions unless each type is treated as a separate crop. 
They stated that this inconsistency may lead to confusion on the part 
of the insureds and agents.
    Response: Producer groups have requested the flexibility to select 
a different percentage of the maximum price election for each type. The 
economic significance of different types of dry peas can vary 
considerably to a producer. Insurance providers have already programmed 
computer systems to allow variation in price election percentages for 
dry beans. There should be no significant costs if the same system is 
used for dry peas. No changes have been made.
    Comment: An insurance service organization questioned why peas 
would be excluded from the seed contract ``during'' the crop year.
    Response: The processor may modify the terms of the contract to 
exclude acreage or production because of over-production. If, for any 
reason, peas are excluded, they may not be covered under these Crop 
Provisions.
    Comment: An insurance service organization questioned whether, 
under section 7(a)(3), interplanting would be limited to certain acres 
and whether this practice would require a growing season inspection.
    Response: If the Special Provisions allow for interplanted dry 
peas, insurance coverage for this practice would apply to all acreage 
in a county. If a written agreement provides coverage for interplanted 
dry peas, the agreement itself would specify any limitations. In 
neither case, would a growing season inspection be required.
    Comment: An insurance service organization stated that the term 
``lease'' in section 7(b) is confusing. It questioned if this section 
should be moved to the definition of ``seed company.''
    Response: FCIC agrees that the provisions are confusing and has 
revised section 7(b) to specify that the insured must retain control of 
the leased acreage.
    Comment: An insurance service organization questioned the 
provisions in section 7(c) that reference an adequate stand as one 
capable of producing ``at least the production guarantee'' which 
conflicts with the definition of ``adequate stand.''
    Response: Section 7(c) has been revised to refer to adequate stand.
    Comment: An insurance service organization questioned the 
provisions of section 7(c), which permit insurance for Austrian Winter 
Peas, if provided for on the Special Provisions, the insured requests 
insurance on or before the sales closing date, and if the insurance 
provider agrees in writing that there is an adequate stand in the 
spring to produce the yield used to establish the production guarantee. 
The commenter asked if a growing season inspection would be required.
    Response: A preliminary inspection will be required to determine if 
there is an adequate stand for insurance coverage. Once it is 
determined that there is an adequate stand, and insurance has attached, 
it will be up to the insurance provider to determine if a growing 
season inspection should be performed.
    Comment: An insurance service organization recommended clarifying 
the provisions of section 7(d) to specify that coverage for replanted 
acreage will be based on the originally planted type, and to move this 
provision to section 8(b).
    Response: To be consistent with other Crop Provisions, FCIC has 
added a provision to specify that the guarantee and premium for acreage 
replanted to a different insurable type will be based on the replanted 
type. Since this provision describes the insured crop, it will remain 
in section 7.
    Comment: A reinsured company and an insurance service organization 
recommended deleting the phrase in section 8(b) to the extent that the 
majority of producers in the area would normally not further care for 
the crop as this phrase is subjective and meaningless, and causes 
problems if acreage of the crop is damaged after the final planting 
date, but other producers in the area are still replanting.
    Response: FCIC has revised this provision to require replanting 
when most producers of the crop on acreage with similar characteristics 
are replanting.
    Comment: A reinsured company questioned whether the phrase at the 
beginning of section 9 should be ``In addition to'' instead of ``In 
accordance with.''
    Response: FCIC has amended the beginning of section 9 accordingly.
    Comment: A reinsured company and an insurance service organization 
questioned if the provisions of section 9(b) applied only to Austrian 
Winter Peas or to all dry pea types.
    Response: Section 9(b) has been clarified to indicate that the 
provisions apply to all dry pea types unless otherwise specified in the 
Special Provisions.
    Comment: An insurance service organization indicated that the 
calculation sequence in section 12(b)(1)-(13) is difficult to follow 
because it is so wordy. They stated that it seems unnecessary to refer 
to the previous item by number as if it were on another page.
    Response: Since some of the calculations involved are not performed 
in sequential order, it is necessary to refer to specific section 
numbers. Removal of the references would make the provisions less 
clear. FCIC will add an example for clarity.
    Comment: An insurance service organization questioned if the 
reference to ``each contract seed pea type,'' in section 12(b)(4), 
meant the same as each type that qualifies for a separate optional unit 
according to section

[[Page 65744]]

2(e)(4)(i), or if the optional unit division is applicable to only the 
``types'' listed in the definition or ``dry peas.'' If this is the 
case, the commenter recommended that another term should be used in 
this section as well as section 12(c).
    Response: The provisions in sections 12(b)(4) and 12(c) should have 
referred to contract seed pea varieties. This section has been 
clarified accordingly.
    Comment: A reinsured company questioned if the terms ``value'' and 
``actual value'' in section 12(c) should be defined. The commenter also 
wanted to know how cull value is incorporated into the calculations to 
determine the value of production to count.
    Response: FCIC has revised section 12(c) to refer to the ``highest 
local market price'' instead of ``actual value'' in order to set an 
objective standard for determining the value of damaged production. The 
provisions clearly indicate that the value of production to count is 
based on the new term local market price. The local market price of any 
``cull'' production will be included when determining the amount of any 
indemnity.
    Comment: An insurance service organization questioned how the 
``actual value'' is determined for mature production that does not meet 
the minimum quality requirements contained in the seed pea contract. 
The commenter asked if the value of production that does not meet the 
minimum quality requirements contained in the seed pea contract would 
be considered to be the ``salvage value.''
    Response: The ``local market price'' for contract seed pea 
production not meeting the minimum quality requirements contained in 
the seed pea contract will be the highest price obtainable for the 
production regardless of its ultimate disposition. If a salvage use 
proves to provide the highest value obtainable, then that ``salvage 
value'' will be used to determine the value of the production to count.
    Comment: An insurance service organization received one comment 
stating that the policy should not allow the insured to defer 
settlement and wait for a later, generally lower appraisal.
    Response: A later appraisal will only be necessary if the insurance 
provider and the insured do not agree on the appraisal or if the 
insurance provider believes that the crop needs to be carried farther 
to make a more accurate appraisal. If the insured does not provide 
sufficient care for the remaining crop, the insurance provider may use 
the original appraisal or assess an appraisal for an uninsured cause of 
loss. Therefore, no change has been made.
    Comment: A reinsured company questioned if the term ``condition'' 
should be defined as this term is used in section 12(e)(3)(i)(C).
    Response: FCIC has defined ``conditioning'' in section 1 of these 
Crop Provisions.
    Comment: The crop insurance industry recommended that the 
requirement for a written agreement to be renewed each year be removed. 
Terms of the agreement should be stated in the agreement to fit the 
particular situation for the policy, or if no substantive changes occur 
from one year to the next, allow the written agreement to be 
continuous.
    Response: Written agreements are intended to change policy terms or 
permit insurance in unusual situations where such changes will not 
increase risk. If such practices continue year to year, they should be 
incorporated into the policy or Special Provisions. It is important to 
minimize exceptions to assure that the insured is well aware of the 
specific terms of the policy. The written agreement provisions are 
deleted and moved to the Basic Provisions.
    In addition to the changes described above, FCIC has made the 
following editorial changes to the Dry Pea Crop Insurance Provisions:
    1. Amended the paragraph preceding section 1 (Definitions) to 
include the Catastrophic Risk Protection Endorsement.
    2. Section 1--Amended the definition of ``combining,'' ``contract 
seed peas,'' ``local market price,'' ``practical to replant,'' and 
``seed company contract'' for clarification. Deleted the definition of 
``contract price'' since this term is not used in these provisions. 
Deleted the definition of ``days,'' ``FSA,'' ``final planting date,'' 
``good farming practices,'' ``interplanted,'' ``irrigated practice,'' 
``production guarantee (per acre),'' ``replanting,'' ``USDA,'' ``timely 
planting,'' and ``written agreement'' because these definitions were 
moved to the Basic Provisions. Revised the definition of ``planted 
acreage'' and ``practical to replant'' to delete those provisions moved 
to the Basic Provisions.
    3. Section 2--Deleted those provisions moved to the Basic 
Provisions.
    4. Section 3--Removed the provision in section 3 regarding 
administrative fees because it is duplicative of provisions contained 
in 7 CFR part 400, subpart T.
    5. Section 6--Deleted the requirements of ``spring-planted'' and 
``grown under contract with a seed company'' since they are included in 
the definition of ``contract seed peas.''
    6. Section 7(c)--Clarified that Austrian Winter Peas will be 
insured if authorized by the Special Provisions, if the insured 
requests insurance in writing for such dry peas, and if the insurance 
provider agrees in writing to provide coverage.
    7. Section 12(d)(1)(iv)(B)--Clarified language to indicate that if 
the producer continues to care for the crop, the amount of production 
to count will be the harvested production or the reappraised amount if 
the crop is not harvested.
    In general, FCIC has clarified some language to make these 
provisions easier to read.
    Good cause is shown to make this rule effective upon publication in 
the Federal Register. This rule improves the dry pea insurance coverage 
and brings it under the Common Crop Insurance Policy Basic Provisions 
for consistency among policies. The earliest contract change date that 
can be met for the 1998 crop year is December 31, 1997. It is therefore 
imperative that these provisions be made final before that date so that 
the reinsured companies and insureds may have sufficient time to 
implement these changes. Therefore, public interest requires the agency 
to act immediately to make these provisions available for the 1998 crop 
year.

List of Subjects in 7 CFR Part 457

    Crop insurance, Dry pea, Pea crop insurance regulations.

Final Rule

    Accordingly, for the reasons 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 
1994 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 457.140 is added to read as follows:


Sec. 457.140  Dry pea crop insurance provisions.

    The Dry Pea Crop Insurance Provisions for the 1998 and succeeding 
crop years are as follows:

    FCIC policies:

DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

    Reinsured policies:

[[Page 65745]]

(Appropriate title for insurance provider)

    Both FCIC and reinsured policies:

Dry Pea Crop 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.
    1. Definitions.
    Adequate stand. A population of live plants per acre that will 
produce at least the yield used to establish your production 
guarantee.
    Base price. The price per pound stipulated in the processor 
contract without regard to discounts or incentives that may apply, 
and that will be paid to the producer for at least 50 percent of the 
total production under contract with the seed company.
    Combining. A mechanical process that separates the peas from the 
pods and other vegetative matter and place the peas into a temporary 
storage receptacle.
    Conditioning. A process that improves the quality of production 
by screening or any other operation commonly used in the dry pea 
industry to remove dry peas that are deficient in quality.
    Contract seed peas. Dry peas produced for seed to be planted at 
a future date and that:
    (a) Are grown on acreage enrolled in the seed certification 
program administered by the state in which the peas are produced;
    (b) Are grown on acreage planted in the spring; and
    (c) Are under a seed company contract.
    Dry peas. Peas of the following types:
    (a) All spring-planted smooth green and yellow varieties of 
commercial dry edible peas, and peas grown to produce seed to be 
planted at a future date that do not meet the requirements contained 
in the seed company contract;
    (b) All fall-planted varieties of Austrian Winter Peas only if 
provided for in the Special Provisions;
    (c) All spring-planted varieties of lentils; and
    (d) All varieties of contract seed peas.
    Harvest. Combining of dry peas.
    Local market price. The cash price per pound for the U.S. No. 2 
grade of dry peas as determined by us. Such price will be the 
prevailing dollar amount these buyers are willing to pay for dry 
peas containing the maximum limits of quality deficiencies allowable 
for the U.S. No. 2 grade. Factors not associated with grading under 
the United States Standards for Whole Dry Peas, Split Peas and 
Lentils will not be considered.
    Nurse crop (companion crop). A crop planted into the same 
acreage as another crop, that is intended to improve the growing 
conditions for the crop with which it is grown and that is not 
intended to be harvested with the insured crop.
    Planted acreage. In addition to the definition contained in the 
Basic Provisions, dry peas must initially be planted 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.
    Practical to replant. In addition to the definition contained in 
the Basic Provisions, it will not be considered practical to replant 
dry peas, except for seed peas, more than 25 days after the final 
planting date unless replanting is generally occurring in the area. 
For seed peas, it will not be considered practical to replant unless 
production from the replanted acreage can be delivered under the 
terms of the seed pea processor contract or the seed company agrees 
in writing to accept such production.
    Price election. In addition to the provisions of the definition 
contained in the Basic Provisions, the price election for contract 
seed peas will be a percentage (not to exceed 100 percent) of the 
base price that you elect.
    Seed company. Any business enterprise regularly engaged in the 
processing of contract seed peas, that possesses all licenses and 
permits for marketing contract seed peas required by the state in 
which it operates, and that owns, or has contracted, sufficient 
drying, screening, and bagging or packaging equipment to accept and 
process the contract seed peas within a reasonable amount of time 
after harvest.
    Seed company contract. A written agreement between the producer 
and the seed company, executed by the acreage reporting date, 
containing at a minimum:
    (a) The producer's promise to plant and grow one or more 
specific varieties of contract seed peas, and deliver the production 
from those varieties to the seed company;
    (b) The seed company's promise to purchase all the production 
stated in the contract; and
    (c) A fixed price, or a method to determine such price based on 
published information compiled by a third party, that will be paid 
to the producer for at least 50 percent of the production stated in 
the contract.
    2. Unit Division.
    (a) 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 pea type listed in section 1 of 
these Crop Provisions.
    (b) Contract seed peas may qualify for optional units only if 
the seed company contract specifies the number of acres under 
contract. Contract seed peas produced under a seed company contract 
that specifies only an amount of production or a combination of 
acreage and production, are not eligible for optional units.
    3. Insurance Guarantees, Coverage Levels, and Prices for 
Determining Indemnities.
    In addition to the requirements of section 3 of the Basic 
Provisions, you may select only one price election for all the dry 
peas, including contract seed peas, in the county insured under this 
policy unless the Special Provisions provide different price 
elections by type, in which case you may select one price election 
for each dry pea type so designated in the Special Provisions. The 
price elections you choose for each type are not required to have 
the same percentage relationship to the maximum price offered by us 
for each type. For example, if you choose 100 percent of the maximum 
price election for one type, you may choose 80 percent of the 
maximum price election for another type. However, if you elect the 
Catastrophic Risk Protection level of insurance for any dry pea 
type, the same level of coverage will be applicable to all insured 
acreage in the county.
    4. Contract Changes.
    In accordance with section 4 of the Basic Provisions, the 
contract change date is November 30 preceding the cancellation date.
    5. Cancellation and Termination Dates.
    In accordance with section 2 of the Basic Provisions, the 
cancellation and termination dates are March 15.
    6. Report of Acreage.
    In addition to the provisions of section 6 of the Basic 
Provisions, you must submit a copy of the seed company contract to 
us on or before the acreage reporting date if you are insuring 
contract seed peas.
    7. Insured Crop.
    (a) In accordance with section 8 of the Basic Provisions, the 
crop insured will be all the dry pea types in the county (including 
Austrian Winter Peas if you request insurance for such peas in 
accordance with section 7(c)) for which a premium rate is provided 
by the actuarial documents:
    (1) In which you have a share;
    (2) That are planted for harvest as dry peas and which, if grown 
under a seed company contract, are not excluded from such contract 
during the crop year;
    (3) That are grown in accordance with the requirements of the 
seed company contract, if applicable;
    (4) That are not (unless allowed by the Special Provisions or by 
written agreement):
    (i) Interplanted with another crop;
    (ii) Planted into an established grass or legume; or
    (iii) Planted as a nurse crop.
    (b) You will be considered to have a share in the insured crop 
if, under the processor contract, you retain control of the acreage 
on which the contract seed peas are grown, you are at risk of loss, 
and the processor contract is in effect.
    (c) Austrian Winter Peas are only insurable if you request 
insurance in writing for such dry peas, and we agree in writing to 
provide coverage. Your request to insure Austrian Winter Peas must 
be submitted to us not later than the sales closing date. We will 
not agree to insure Austrian Winter Peas unless an adequate stand 
exists in the spring.
    (d) Any acreage of dry peas that is destroyed and replanted to a 
different insurable type of dry peas will be considered insured 
acreage. The guarantee and premium for acreage replanted to a 
different insurable type will be based on the replanted type and 
will be calculated in accordance with sections 3 and 7 of the Basic 
Provisions and section 3 of these Crop Provisions.
    8. Insurable Acreage.
    In addition to the provisions of section 9 of the Basic 
Provisions:
    (a) We will not insure any acreage that does not meet the 
rotation requirements, if applicable, contained in the Special 
Provisions; or

[[Page 65746]]

    (b) Any acreage of the insured crop damaged before the final 
planting date, to the extent that most producers of the crop or 
acreage with similar characteristics in the area would normally not 
further care for the crop, must be replanted unless we agree that it 
is not practical to replant. We will not require you to replant if 
it is not practical to replant the type of dry peas originally 
planted.
    9. Insurance Period.
    In addition to the provisions of section 11 of the Basic 
Provisions:
    (a) Coverage for Austrian Winter Peas, will begin on the earlier 
of March 16 or the date we agree to accept the acreage for 
insurance, but not before March 1; and
    (b) The calendar date for the end of the insurance period for 
all insurable types of dry peas in the county is September 30 of the 
crop year in which the crop normally is harvested unless otherwise 
specified in the Special Provisions.
    10. Causes of Loss.
    In accordance with the provisions of section 12 of the Basic 
Provisions, insurance is provided only against the following causes 
of loss that occur during the insurance period:
    (a) Adverse weather conditions;
    (b) Fire;
    (c) Insects, but not damage due to insufficient or improper 
application of pest control measures;
    (d) Plant disease, but not damage due to insufficient or 
improper application of disease control measures;
    (e) Wildlife;
    (f) Earthquake;
    (g) Volcanic eruption; or
    (h) Failure of the irrigation water supply, if due to a cause of 
loss contained in section 10(a) through (g) that occurs during the 
insurance period.
    11. Duties In The Event of Damage or Loss.
    In accordance with the requirements of section 14 of the Basic 
Provisions, the representative samples of the unharvested crop must 
be at least 10 feet wide and extend the entire length of each field 
in the unit. If you intend to destroy the crop prior to harvest, the 
samples must not be destroyed until after our inspection.
    12. Settlement of Claim.
    (a) We will determine your loss on a unit basis. In the event 
you are unable to provide separate acceptable production records:
    (1) For any optional units, we will combine all optional units 
for which such production records were not provided; or
    (2) For any basic units, we will allocate any commingled 
production to such units in proportion to our liability on the 
harvested acreage for the units.
    (b) In the event of loss or damage to your pea crop covered by 
this policy, we will settle your claim by:
    (1) Multiplying the insured acreage of each dry pea type, if 
applicable, excluding contract seed peas, by its respective 
production guarantee;
    (2) Multiplying each result of section 12(b)(1) by the 
respective price election;
    (3) Totaling the results of section 12(b)(2);
    (4) Multiplying the insured acreage of each contract seed pea 
variety by its respective production guarantee;
    (5) Multiplying each result of section 12(b)(4) by the 
applicable base price;
    (6) Multiplying each result of section 12(b)(5) by your selected 
price election percentage;
    (7) Totaling the results of section 12(b)(6);
    (8) Totaling the results of section 12(b)(3) and section 
12(b)(7);
    (9) Multiplying the total production to be counted of each dry 
pea type, excluding contract seed peas, if applicable (see section 
12(d)), by the respective price elections;
    (10) Totaling the value of all contract seed pea production (see 
section 12(c));
    (11) Totaling the results of section 12(b)(9) and section 
12(b)(10);
    (12) Subtracting the result of section 12(b)(11) from the result 
in section 12(b)(8); and
    (13) Multiplying the result of section 12(b)12 by your share.
    For example:
    You have a 100 percent share in 100 acres of spring-planted 
smooth green dry edible peas in the unit, with a guarantee of 4,000 
pounds per acre and a price election of $0.09 per pound. You are 
only able to harvest 200,000 pounds. Your indemnity would be 
calculated as follows:
    (1) 100 acres  x  4,000 pounds = 400,000 pounds guarantee;
    (2) 400,000 pounds  x  $0.09 price election = $36,000.00 value 
of guarantee;
    (9) 200,000 pounds  x  $0.09 price election = $18,000.00 value 
of production to count; $36,000.00 value of guarantee -$18,000.00 
value of production to count = $18,000.00 loss; and
    (13) $18,000.00  x  100 percent = $18,000.00 indemnity payment.
    You also have a 100 percent share in 100 acres of contract seed 
peas in the same unit, with a guarantee of 5,000 pounds per acre and 
a base price of $0.40 per pound. Your selected price election 
percentage is 75 percent. You are only able to harvest 450,000 
pounds. Your total indemnity for both spring-planted smooth green 
dry edible peas and contract seed peas would be calculated as 
follows:
    (1) 100 acres  x  4,000 pounds = 400,000 pounds guarantee for 
the spring-planted smooth green dry edible pea type, and
    (4) 100 acres  x  5,000 pounds = 500,000 pounds guarantee for 
the contract seed pea type;
    (2) 400,000 pounds guarantee  x  $0.09 price election = 
$36,000.00 value of guarantee for the spring-planted smooth green 
dry edible pea type, and
    (5) 500,000 pounds guarantee  x  $0.40 base price = $200,000.00 
gross value of guarantee for the contract seed pea type;
    (6) $200,000  x  .75 price election percentage = $150,000 net 
value of guarantee for the contract seed pea type;
    (8) $36,000.00+$150,000.00 = $186,000.00 total value of 
guarantee;
    (9) 200,000 pounds  x  $0.09 price election = $18,000.00 value 
of production to count for the spring-planted smooth green dry 
edible pea type, and
    (10) 450,000 pounds  x  $0.30 = $135,000.00 value of production 
to count for the contract seed pea type;
    (11) $18,000.00+$135,000.00 = $153,000.00 total value of 
production to count;
    (12) $186,000.00-$153,000.00 = $33,000.00 loss; and
    (13) $33,000.00 loss  x  100 percent = $33,000.00 indemnity 
payment.
    (c) The value of contract seed pea production to count for each 
variety in the unit will be determined as follows:
    (1) For production meeting the minimum quality requirements 
contained in the seed company contract, and for production that does 
not meet such requirements due to uninsured causes:
    (i) Multiplying the local market price or base price per pound, 
whichever is greater, by the price election percentage you selected; 
and
    (ii) Multiplying the result by the number of pounds of such 
production.
    (2) For mature production not meeting the minimum quality 
requirements contained in the seed pea processor contract due to 
insurable causes, and immature production that is appraised:
    (i) Multiplying the highest local market price available for 
such dry peas by the price election percentage you selected; and
    (ii) Multiplying the result by the number of pounds of such 
production.
    (d) The total pea production to count (in pounds) from all 
insurable acreage on the unit will include:
    (1) All appraised production as follows:
    (i) Not less than the production guarantee per acre for acreage:
    (A) That is abandoned;
    (B) That is put to another use without our consent;
    (C) That is damaged solely by uninsured causes; or
    (D) For which you fail to provide production records that are 
acceptable to us;
    (ii) Production lost due to uninsured causes;
    (iii) Unharvested production (mature unharvested production of 
dry peas, excluding Austrian Winter Peas, may be adjusted for 
quality deficiencies in accordance with section 12 (c) or (e), if 
applicable); and
    (iv) Potential production on insured acreage that you intend to 
put to another use or abandon, if you and we agree on the appraised 
amount of production. Upon such agreement, the insurance period for 
that acreage will end when you put the acreage to another use or 
abandon the crop. If agreement on the appraised amount of production 
is not reached:
    (A) If you do not elect to continue to care for the crop, we may 
give you consent to put the acreage to another use if you agree to 
leave intact, and provide sufficient care for, representative 
samples of the crop in locations acceptable to us (The amount of 
production to count for such acreage will be based on the harvested 
production or appraisals from the samples at the time harvest should 
have occurred. If you do not leave the required samples intact, or 
fail to provide sufficient care for the samples, our appraisal made 
prior to giving you consent to put the acreage to another use will 
be used to determine the amount of production to count); or
    (B) If you elect to continue to care for the crop, the amount of 
production to count for

[[Page 65747]]

the acreage will be the harvested production, or our reappraisal if 
the crop is not harvested; and
    (2) All harvested production from the insurable acreage.
    (e) Mature production of smooth green and yellow peas, lentils, 
and seed peas that do not qualify as contract seed peas under the 
policy terms, and that are not deliverable under the contract or are 
sold under the contract for less than the contract price, may be 
adjusted for quality deficiencies. No adjustment for quality 
deficiencies will be allowed for Austrian Winter Peas.
    (1) Production will be eligible for quality adjustment if:
    (i) Deficiencies in quality, in accordance with the United 
States Standards for Whole Dry Peas, Split Peas, and Lentils, result 
in production grading U.S. No. 2 or worse because of defects, color, 
skinned production (lentils only), odor, material weathering, or 
distinctly low quality; or
    (ii) Substances or conditions are present that are identified by 
the Food and Drug Administration or other public health 
organizations of the United States as being injurious to human or 
animal health.
    (2) Quality will be a factor in determining your loss only if:
    (i) The deficiencies, substances, or conditions resulted from a 
cause of loss against which insurance is provided under these Crop 
Provisions and which occurs within the insurance period;
    (ii) The deficiencies, substances, or conditions result in a net 
price for the damaged production that is less than the local market 
price;
    (iii) All determinations of these deficiencies, substances, or 
conditions are made using samples of the production obtained by us 
or by a disinterested third party approved by us; and
    (iv) The samples are analyzed by a grader licensed to grade dry 
peas under the authority of the United States Agricultural Marketing 
Act or the United States Warehouse Act with regard to deficiencies 
in quality, or by a laboratory approved by us with regard to 
substances or conditions injurious to human or animal health. Test 
weight for quality adjustment purposes may be determined by our loss 
adjuster.
    (3) Dry Pea production that is eligible for quality adjustment, 
as specified in sections 12(e) (1) and (2), will be reduced as 
follows:
    (i) The highest local market price for the qualifying damaged 
production will be determined on the earlier of the date such 
damaged production is sold or the date of final inspection for the 
unit. The highest local market price for the qualifying damaged 
production will be determined in the local area to the extent 
feasible. We may obtain prices from any buyer of our choice. If we 
obtain prices from one or more buyers located outside your local 
market area, we will reduce such prices by the additional costs 
required to deliver the dry peas to those buyers. Discounts used to 
establish the net value of the damaged production will be limited to 
those that are usual, customary, and reasonable.
    The value will not be reduced for:
    (A) Moisture content;
    (B) Damage due to uninsured causes; or
    (C) Drying, handling, processing, or any other costs associated 
with normal harvesting, handling, and marketing of the dry peas; 
except, if the value of the damaged production can be increased by 
conditioning, we may reduce the value of the production after it has 
been conditioned by the cost of conditioning but not lower than the 
value of the production before conditioning;
    (ii) The value per pound of the damaged or conditioned 
production will be divided by the local market price to determine 
the quality adjustment factor;
    (iii) The number of pounds of the damaged or conditioned 
production will then be multiplied by the quality adjustment factor 
to determine the production count to be included in section 12(d); 
and
    (iv) Any production harvested from plants growing in the insured 
crop may be counted as production of the insured crop on a weight 
basis.
    13. 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.

    Signed in Washington, D.C., on December 9, 1997.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 97-32619 Filed 12-15-97; 8:45 am]
BILLING CODE 3410-08-P