[Federal Register Volume 62, Number 28 (Tuesday, February 11, 1997)]
[Rules and Regulations]
[Pages 6099-6110]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-3327]



========================================================================
Rules and Regulations
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents 
having general applicability and legal effect, most of which are keyed 
to and codified in the Code of Federal Regulations, which is published 
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents. 
Prices of new books are listed in the first FEDERAL REGISTER issue of each 
week.

========================================================================


Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / 
Rules and Regulations

[[Page 6099]]



DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 433 and 457

RIN 0563-AB02


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

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes 
specific crop provisions for the insurance of dry beans. 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, include the current dry bean 
crop insurance regulation with the Common Crop Insurance Policy for 
ease of use and consistency of terms, and to restrict the effect of the 
current dry bean crop insurance regulation to the 1996 and prior crop 
years.

EFFECTIVE DATE: February 11, 1997.

FOR FURTHER INFORMATION CONTACT: Arden Routh, Program Analyst, 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

    Following publication of the proposed rule, the public was afforded 
60 days to submit written comments, data, and opinions on information 
collection requirements previously approved by OMB under OMB control 
number 0563-0003 through September 30, 1998. No public comments were 
received.

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. Thus, 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 the various levels of 
government.

Regulatory Flexibility Act

    This regulation will not have a significant impact on a substantial 
number of small entities. The effect of this regulation on small 
entities will be no greater than on larger entities. Under the current 
regulations, a producer is required to complete an application and an 
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. This rule does not have any greater 
or lesser impact on the producer. 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 3015, subpart V, 
published at 48 FR 29115, June 24, 1983.

Executive Order No. 12778

    The Office of the General Counsel has determined that these 
regulations meet the applicable standards provided in sections 2(a) and 
2(b)(2) of Executive Order No. 12778. 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 Tuesday, November 26, 1996, FCIC published a proposed rule in 
the Federal Register at 61 FR 60049-60057 to add to the Common Crop 
Insurance Regulations (7 CFR part 457) a new section, 7 CFR 457.150, 
Dry Bean Crop Provisions. The new provisions will be

[[Page 6100]]

effective for the 1997 and succeeding crop years. These provisions will 
replace and supersede the current provisions for insuring dry beans 
found at 7 CFR part 433 (Dry Bean Crop Insurance Regulations). FCIC 
also amends 7 CFR part 433 to limit its effect to the 1996 and prior 
crop years. FCIC will later publish a regulation to remove and reserve 
part 433.
    Following publication of the proposed rule, the public was afforded 
30 days to submit written comments, data, and opinions. A total of 80 
comments were received from the crop insurance industry and FCIC. The 
comments received, and FCIC's responses, are as follows:
    Comment: The crop insurance industry questioned if consideration 
had ever been given to having two bean polices, one for contract seed 
beans and one for dry beans. It would be easier for policyholders to 
have crop provisions that address only the kind of beans they are 
insuring.
    Response: FCIC will consider this option for a future rule. 
However, there is not sufficient time to divide this policy for the 
1997 crop year. Therefore, no change has been made.
    Comment: The crop insurance industry recommended defining 
``properly handled.''
    Response: The requirements for handling seed beans are contained in 
the seed bean processor contract. Therefore, it would be difficult for 
FCIC to define ``properly handled'' due to the differing requirements 
of seed bean companies. However, FCIC will amend the definition of 
``actual value'' to clarify that production must be handled in 
accordance with requirements contained in the seed bean processor 
contract.
    Comment: The crop insurance industry recommended that the 
definition of ``Base price'' be amended to exclude any bonus offered 
when the germination percentage is above the minimum required by the 
seed contract.
    Response: FCIC agrees with the comment and has amended the 
definition accordingly.
    Comment: The crop insurance industry expressed confusion with the 
definitions of ``beans,'' ``dry beans,'' and ``contract seed beans.'' 
The definition of ``contract seed beans,'' is also covered by the ``dry 
beans'' definition which makes the definition of ``beans'' seem 
redundant. The commenter questions if the definition for ``dry beans'' 
needs to include the intended use of the production.
    Response: Throughout these provisions the term ``beans'' applies to 
both dry beans and contract seed beans. The term ``dry beans'' includes 
all classes of beans included in The United States Standards for Beans. 
The term ``contract seed beans'' distinguishes dry beans grown under a 
contract for the specific purpose of producing seed for a subsequent 
crop year. The definition of ``dry beans'' was changed to exclude 
contract seed beans.
    Comment: The crop insurance industry agreed that the definition for 
``county'' should be deleted in these provisions so that the definition 
in the Basic Provisions will be effective. The commenter emphasized 
that if these provisions are approved for the 1997 crop year, these 
changes and subsequent procedures need to be issued soon enough for 
companies to provide training to their agents, rearrange APH data bases 
for units that previously included land in another county, and to allow 
policyholders to decide whether to insure any land in another county in 
which they have an interest.
    Response: FCIC will provide instructions for changing the data 
bases for units that previously included land in another county. These 
instructions will be made available at the time the policy is released. 
FCIC does not anticipate that a large number of producers farm in more 
than one county and, therefore, does not expect a large number of data 
base revisions to be necessary.
    Comment: The crop insurance industry was concerned with the 
definition of ``Good farming practices,'' which makes reference to 
``generally recognized by the Cooperative Extension Service.'' The 
commenters indicated that there are areas or situations where good, 
accepted farming practices may not necessarily be recognized by the 
Extension Service.
    Response: FCIC has removed the word ``generally'' from this part of 
the definition. However, the Cooperative State Research, Education, and 
Extension Service recognizes most farming practices that are considered 
acceptable for producing beans. The use of practices not recognized as 
acceptable by the Cooperative State Research, Education, and Extension 
Service provides no standards by which to measure performance.
    Comment: The crop insurance industry 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. 
Therefore, no change has been made.
    Comment: A representative of FCIC recommended changing the second 
sentence in the definition of ``local market price'' to ``Moisture and 
factors * * *'' and delete ``such as moisture content.''
    Response: FCIC agrees with the comment and has amended the 
definition accordingly.
    Comment: The crop insurance industry recommended changing the 
definition of ``net price'' to read, ``The dollar value of dry bean 
production received or that could have been received * * *''
    Response: FCIC agrees with comment and has amended the definition 
accordingly.
    Comment: One comment received from the insurance industry 
recommended changing the definition of ``pick'' to consider defects 
based on the original grade of the beans.
    Response: Dockage does not include defects to the beans and, 
therefore, should not be included in any calculation of the pick, which 
applies only to defects of the beans. Therefore, no change has been 
made.
    Comment: The crop insurance industry recommended adding a final 
sentence to the definition of ``prevented planting,'' which would 
require the insured to have past history of the bean type which the 
insured is declaring as being prevented from being planted.
    Response: FCIC cannot penalize new producers of a bean type, who 
can prove that they had the inputs available to plant that particular 
bean type, by denying them prevented planting coverage. Therefore, no 
change has been made.
    Comment: A representative of FCIC recommended replacing the 
reference to ``Special Provisions'' in the definition of ``Production 
guarantee (per acre)'' with ``Actuarial Table,'' since the adjustment 
factors are in the Actuarial Table and not the Special Provisions.
    Response: FCIC agrees with the comment and has amended the 
definition accordingly.
    Comment: The crop insurance industry questioned if the term 
``production guarantee'' applies only to dry beans and if the term 
``amount of insurance'' is used only for contract seed beans. If so, it 
would be helpful to identify dry beans in the definition of 
``production guarantee'' and include a definition for ``amount of 
insurance'' for contract seed beans.
    Response: The term ``production guarantee'' applies to both dry 
beans and contract seed beans. The amount of insurance for contract 
seed beans is

[[Page 6101]]

obtained by using the production guarantee per acre for each contract 
seed bean variety in the unit, as provided in section 3(b) of these 
provisions. Therefore, no change has been made.
    Comment: The crop insurance industry recommended changing the 
definition of ``Replanting.'' The commenter indicated that the wording 
``* * * replace the bean seed and then replacing the bean seed * * *'' 
is confusing and awkward.
    Response: FCIC agrees with the comment and will clarify the 
definition accordingly. Comment: The crop insurance industry and a 
representative of FCIC indicated that the definition of ``Seed 
company'' should not limit the seed company to only being a 
corporation.
    Response: FCIC agrees with the comments and has amended the 
definition.
    Comment: The crop insurance industry questioned if the term 
``type'' applies only to dry edible beans. If so, the definition should 
be clarified.
    Response: For the purpose of establishing insurability of the crop, 
FCIC's Special Provisions identify classes of all beans as types. 
Contract seed beans are a specific type under a seed bean processor 
contract.
    Comment: The crop insurance industry recommended clarifying the 
language of section 2(a) of the proposed rule by substituting language 
similar to that contained in section 2(a) of the Sugar Beet Crop 
Provisions. The wording of this section would be ``Unless limited by 
the Special Provisions, a unit (basic unit) as defined in section 1 
(Definitions) of the Basic Provisions (Sec. 457.8), may be divided * * 
*''
    Response: FCIC agrees with the comment and has amended section 2(a) 
of the proposed rule to indicate that a unit as defined in the Basic 
Provisions is a basic unit.
    Comment: A comment from the crop insurance industry asked the 
following: (1) Are optional units available by type or variety for 
contract seed beans; (2) if an insured has a processor contract for one 
seed variety and another processor contract for another seed variety, 
would each variety be eligible for a separate unit; and (3) if the 
contract specifies an amount of production rather than the number of 
acres, are optional units available?
    Response: Optional units are only available for contract seed beans 
if the contract specifies a number of acres under contract and all 
acreage under the seed bean processor contract will be included in the 
optional unit. There are no separate optional units by type for 
contract seed beans. Optional units are not available for contract seed 
beans if the seed bean processor contract specifies an amount of 
production. Section 2 has been amended to clarify the available 
optional units for contract seed beans.
    Comment: The crop insurance industry recommended that section 2(c) 
of the proposed rule be clarified to indicate that it affects only 
optional units by section and irrigated or non-irrigated practices and 
does not authorize separate optional units for different types of seed 
beans.
    Response: Types of contract seed beans do not qualify for optional 
units. Optional units by type, section, or irrigation practice are 
available for contract seed beans if the seed bean processor contract 
specifies the number of acres under contract. The provisions in section 
2 have been amended accordingly.
    Comment: Representatives of FCIC questioned the need for the 
provisions contained in section 2(c) of the proposed rule, since the 
definitions of ``base price,'' ``contract seed beans,'' and ``seed bean 
processor contract,'' specify that acreage is not eligible to be 
insured as seed beans if the total production is not contracted. The 
commenter recommended deleting section 2(c) of the proposed rule.
    Response: Section 2(c) of the proposed rule is necessary to protect 
the integrity of the program. The insured production is determined 
based on the number of acres under contract. If FCIC allows optional 
units when the contract only specifies an amount of production, this 
amount of production is prorated over the optional units to determine 
the per unit amount of insurance. If the value of the production from 
any unit is less than the amount of insurance for that unit, an 
indemnity is paid, even though the insured may have fulfilled all 
obligations under the contract from production in other units. This 
will result in FCIC insuring amounts in excess of that under contract, 
which would adversely affect the actuarial soundness of the program.
    Comment: The crop insurance industry and a representative of FCIC 
recommended clarifying the last sentence of section 2(d) of the 
proposed rule. The commenter believes that the current wording may lead 
the insured to believe that premium may be refunded any time optional 
units are combined. Premium is refunded when there are no optional 
units within a basic unit. One of the comments recommended changing the 
provisions to read as follows: ``If failure to comply with the 
provisions is determined to be inadvertent and if all of the optional 
units within a basic unit are combined, that portion of the premium 
paid for the purpose of electing optional units will be refunded to 
you.''
    Response: FCIC agrees with the comment and has amended the 
provision in redesignated section 2(e).
    Comment: A representative of FCIC recommended clarifying the 
language in section 2(e) of the proposed rule to indicate that optional 
units not planted in the current crop year need not be identified on 
the acreage report.
    Response: FCIC has clarified this provision in redesignated section 
2(f) to indicate that only those optional units established for the 
specific crop year need be identified on the acreage report.
    Comment: The insurance industry indicated that provisions in 
section 2(f)(4)(i) of the proposed rule authorize optional units by 
type for dry beans. The commenter questioned if optional units by bean 
type are available for contract seed beans, since the definition of 
``bean'' suggests it applies to all types of dry beans. This language 
needs to be more clearly distinguished. The commenter recommended that 
contract seed beans and other dry beans should be handled as separate 
basic units since procedures will be more complicated under these 
provisions. Production of one type would count against the guarantee of 
another type if insured as one basic unit, which creates difficulties. 
The commenter also questioned if the premium rates are being adjusted 
to reflect the change from basic to optional units by type (will the 
premium rates be 10-11 percent higher than last year's premium rates)? 
Policyholders must be provided the necessary information and advance 
time to decide how to accommodate the extra costs and requirements 
involved.
    Response: Optional units by type are only applicable to dry beans 
and the provision has been amended for clarification. Contract seed 
beans qualify as a basic unit. If the policyholder elects to obtain 
optional units, the premium rates will be adjusted to reflect any 
additional risk of loss. Any changes in the insurance coverage, 
including premium rates, will be available on or before the contract 
change date. This should provide the policyholder with ample time to 
make their business decisions. The provisions in section 2 have been 
amended accordingly.
    Comment: The crop insurance industry and a representative of FCIC 
questioned if the language in section 2(f)(4)(ii) of the proposed rule 
should be amended to read ``In addition to, or instead of * * *'' or if 
that phrase

[[Page 6102]]

should be omitted since the possibility of ``besides or instead'' is 
covered by the statement in section 2(f)(4) of the proposed rule that 
``one or more'' of these criteria must be met for each optional unit.
    Response: FCIC agrees that the phrase ``In addition to, or instead 
of'' should be incorporated into the first sentence of redesignated 
section 2(g)(4)(ii), and has modified this provision accordingly.
    Comment: The crop insurance industry had the following comments 
regarding the provisions in section 3(a). The provisions allow 
different price election percentages by dry bean type, which is not 
consistent with other crop provisions unless each type is treated as a 
separate crop. Based on the provisions of section 3(a), one comment 
questioned the change that no longer allows dry bean basic units by 
type. The comment indicated that if different price election 
percentages are allowed, each type should continue to be a separate 
basic unit. One of the comments questioned if other crops will be 
changed to permit different price percentages within the same basic 
unit and how the computer edits will handle these situations.
    Response: Producers can elect optional units for different types of 
dry beans. However, in those cases where multiple types are in a single 
unit, FCIC has provided producers the flexibility to select a different 
percentage of the maximum price election for each type. The costs to 
produce different types of dry beans can vary considerably as can the 
economic significance of each to the producer. It may be necessary for 
some insurance providers to reprogram computer systems to allow this 
variation in price election percentages.
    Comment: The crop insurance industry questioned the new requirement 
that the producer submit a copy of the seed bean processor contract at 
acreage reporting time. What would happen if an acreage report is 
received without a copy of the processor contract? This requirement 
could lead to policyholders waiting until acreage reporting time to 
decide if they want to insure the crop as contract seed beans.
    Response: FCIC has always required the seed bean processor contract 
to be executed on or before the acreage reporting date. Now, FCIC 
requires the insured to submit a copy of the contract no later than 
that date in order to ensure that such contract exists, prior to any 
likely loss. Thus, there is no greater effect upon the producer's 
decision as to how to insure the beans. If a copy of the contract is 
not provided at the time acreage is reported, the beans may be 
insurable as dry beans, but not as contract seed beans.
    Comment: The crop insurance industry questioned the language of 
section 7(a)(2)(i), which references dry beans. The commenter explained 
that the definition of ``dry beans'' seems to include both dry edible 
beans and contract seed beans instead of distinguishing between the 
two.
    Response: Contract seed beans are defined separately from dry beans 
so that they may be identified and treated differently in several 
sections of the policy, including price election determination, unit 
division, insured crop, and loss calculations. FCIC agrees that some 
contract seed beans would qualify under the definition of dry beans. 
Therefore, FCIC has amended the definition of dry beans to exclude 
contract seed beans.
    Comment: A representative of FCIC stated that section 7(a)(3) of 
the proposed rule is not necessary because section 8(b)(4) of the Basic 
Provisions states that we do not insure volunteer crops.
    Response: FCIC agrees and has deleted this provision and renumbered 
the remaining provisions.
    Comment: The crop insurance industry questioned the reference to 
other ``types of beans'' in section 7(c) and whether it applies only to 
dry edible beans or if it also applies to contract seed beans.
    Response: The reference to other ``types of beans'' in section 7(c) 
applies to classes of dry beans not listed as a type of dry beans in 
the Special Provisions. Section 7(c) has been amended to specify ``dry 
beans.''
    Comment: The crop insurance industry recommended putting a period 
at the end of section 8(a) and deleting the word ``or.'' As written, 
this provisions could be misunderstood to mean that as long as the 
rotation requirements are met, the insured would not have to replant 
even if practical, or vice versa. Presumably, each of the statements in 
section 8 (a) and (b) stand alone.
    Response: The use of ``or'' has the effect of making these stand 
alone requirements as written, if the insured fails to comply with 
either requirement, the acreage would be uninsurable. Therefore, no 
change will be made.
    Comment: The crop insurance industry asked the following questions: 
(1) Whether dry bean acreage that is replanted to another bean type 
would be insured as a separate optional unit, and if so, would there be 
an additional premium charged; (2) how the actual production history 
(APH) yield for the following year would be affected; and (3) whether 
the guarantee will be based on the type of dry bean originally planted 
or the type of dry bean that was replanted. They also had the following 
recommendations: (1) keep the original guarantee for acreage that is 
replanted to another bean type; (2) that no additional premium be 
charged for the new optional unit; (3) that the APH form be updated 
based on the replanted type; and (4) by adding a sentence stating ``If 
the crop is replanted, the price of the replanted type will determine 
your price election.''
    Response: The guarantee and premium must be based on the actual 
production capability and risks associated with the type planted and 
produced to maintain the actuarial soundness of the program. Optional 
unit division will be available for the replanted type in accordance 
with the provisions of section 2. Production from the replanted acreage 
will be used to update APH records for the type replanted. The original 
planted type will not be included in the APH data base for that 
particular year. Section 11(d) has been added to specify that the 
guarantee and premium amount for the replanted acreage will be based on 
the replanted type when acreage is replanted to a different insurable 
type. No premium will be due for the original type when acreage is 
replanted to a different type.
    Comment: The crop insurance industry questioned if replanting 
payments are available for contract seed bean varieties.
    Response: Provisions in section 11 allow a replanting payment for 
``the bean crop'' which includes both dry beans and contract seed 
beans.
    Comment: The crop insurance industry indicated that language in 
section 13(b) is not as clear as in other crop provisions. The comment 
recommended that the provisions start as 13(b)(1) ``For each dry bean 
type:'' followed by sub-items for the calculations in (1)-(3); then 
section 13(b)(2) would be ``For each contract seed bean variety:'' etc.
    Response: The provisions were written in this format to demonstrate 
how to settle a claim when both dry beans and contract seed beans are 
insured in one unit. If a unit contains only contract seed beans or 
only dry beans the provisions that pertain to the kinds of beans that 
are not in the unit are disregarded. Therefore, no change has been 
made.
    Comment: The crop insurance industry recommended revising section 
13(c)(1)(i) to read ``Multiply the actual value received, actual value 
at time of adjustment, or base price per pound, whichever is greater, 
by the price election percentage you selected; and''

[[Page 6103]]

    Response: Adding the suggested language would be redundant with the 
language contained in the definition of ``actual value.'' In addition, 
not all insurance providers require that the insured select a 
percentage. Therefore, no change has been made.
    Comment: The crop insurance industry recommended adding the word 
``harvestable'' to section 13(d)(1) so that it would read, ``All 
appraised harvestable production as follows:''
    Response: When making an appraisal, the loss adjuster considers 
whether the crop can be harvested. Therefore, no change has been made.
    Comment: The crop insurance industry recommended clarifying section 
13(d)(1)(i)(D). It is not necessary to use the word ``acceptable'' 
twice in this section.
    Response: FCIC agrees with the comments and has amended the 
provision accordingly.
    Comment: The crop insurance industry questioned whether the 
reference in section 13(d)(1)(iii), to ``dry beans'' excludes contract 
seed beans.
    Response: The provisions allow adjustment for quality deficiencies 
and excess moisture for mature unharvested dry beans only.
    Comment: The crop insurance industry recommended that section 
13(d)(1)(iv) be revised as follows: (1) Add the phrase ``harvestable 
beans'' to section 13(d)(1)(iv)(A) which would make the section read: 
``* * * (The amount of production to count for such acreage will be 
based on the harvested production or appraisals of harvestable beans 
from the samples at the time harvest should have occurred * * *'' (2) 
Add the phrase ``of harvestable beans'' to section 13(d)(1)(iv)(B), 
which would make this section read: ``If you elect to continue to care 
for the crop, the amount of production to count for the acreage will be 
the harvested production, or our reappraisal of harvestable beans if 
additional damage occurs and the crop is not harvested; and'' The 
comment also questioned the advisability of ``leaving representative 
samples'' when agreement on the appraised amount of production can not 
be reached. The commenter recommended the use of Arbitration (section 
17 of the Basic Provisions) as the preferable process when agreement on 
the appraised amount of production can not be reached.
    Response: The ability to harvest the crop is considered when making 
appraisals of the crop. Representative samples are the most accurate 
method available to determine an accurate representation of production 
when the parties disagree on the amount of appraised production and it 
allows the insured to put most of the acreage to another use. If it is 
not practical to leave representative samples the insurance provider 
does not have to require such samples be left. Therefore, no change has 
been made.
    Comment: The crop insurance industry recommended changing the order 
of the last two sentences of section 13(e) so the exclusion of these 
adjustments for contract seed beans does not interrupt the information 
that applies to dry edible beans.
    Response: FCIC agrees with the comment and has amended the 
provision accordingly.
    Comment: A representative of FCIC recommended deleting any 
reduction in the amount of production to count due to ``pick'' since it 
is not a term used in ``The United States Standards for Beans'' upon 
which quality adjustment is based. The reason for an excessive amount 
of ``pick'' in the beans (other than damage) is generally due to 
farming or cultural practices. ``Pick'' is normally controllable by the 
producer. ``Pick'' charts are never the same two years in a row and 
different charts are used each year by different bean dealers. ``Pick'' 
is driven by the market and supply and demand, depending on the size of 
the crop in a given area. The commenter further stated that numerous 
studies have been made on whether ``pick'' should be used as a 
reduction of production to count, and each time it has been determined 
that it is not feasible.
    Response: ``Pick'' currently is used for quality adjustment 
procedures in certain areas and has been found to be an acceptable 
method to establish quality. It is defined in the rule. Therefore, no 
change has been made.
    Comment: The crop insurance industry recommended adding the phrase: 
``and the beans are to be sold at time of adjustment or sold based on 
the original grade;'' at the end of both sections 13(e)(2) (i) and 
(ii).
    Response: Neither FCIC nor the insurance provider can require the 
insured to sell the production at the time of adjustment as a condition 
of obtaining quality adjustment. Quality adjustments are applied at the 
time of loss adjustment. Any further damage, whether the crop is sold 
or not, is not covered. Therefore, no change has been made.
    Comment; The crop insurance industry questioned if it was necessary 
to say both ``damaged'' and ``badly damaged'' in section 13(e)(2)(ii). 
The commenter recommended just the term ``damage'' should suffice.
    Response: The provisions are consistent with different degrees of 
damage defined in ``The United States Standards for Beans.'' Therefore, 
no change has been made.
    Comment: The crop insurance industry stated that dry beans are 
rarely stored in most states. The adjuster would be required to obtain 
a sample of the beans prior to or during harvest. Most samples of beans 
are provided by the facility storing or purchasing the beans. It is 
therefore unlikely that they are a ``disinterested third party,'' as 
stated in section 13(e)(3)(iii). The commenter recommended that the 
language be revised to include the ``place of storage or sale if the 
company feels the sample is consistent with the quality of beans in the 
surrounding area.''
    Response: All samples must be obtained by disinterested third 
parties to assure that such samples are genuinely representative of the 
total production. If the insurance provider believes the samples were 
not obtained in this manner, or that they are not representative, they 
should not accept the results. Therefore, no change has been made.
    Comment: The crop insurance industry recommended adding the phrase 
``based on the applicable grade or pick which the production is to be 
sold or sold at time of adjustment;'' at the end of section 
13(e)(4)(i).
    Response: As stated above, the insurance provider cannot require 
the sale of the production at the time of loss adjustment or at any 
other time. The amount of loss, including any quality adjustments, are 
made at the time of loss adjustment and any subsequent damage is not 
covered, so the time of sale should not affect this determination. 
Therefore, no change has been made.
    Comment: The crop insurance industry stated that conversion factors 
adopted for several crops have provided the industry with consistent 
quality adjustment, generally unaffected by the marketplace, and 
questions whether FCIC intends to establish conversion charts for all 
states in which dry beans are insurable.
    Response: FCIC agrees that studies should be made to determine if 
similar conversion charts for dry beans can be developed. Until this 
can be further analyzed, no change will be made.
    Comment: The crop insurance industry: (1) Recommended adding 
``based on the applicable grade or pick for the production which you 
will receive * * *'' at the end of the first sentence and after the 
word ``production'' in the second sentence of section 13(e)(4)(ii)(A); 
and (2)

[[Page 6104]]

questioned whether the current year's maximum price election for the 
type should be used when a processor refuses to quote a No. 2 price.
    Response: The price should be determined based on the quality and 
quantity of the production as it was originally delivered and the 
provisions clearly indicate that the value of the damaged production is 
used in this calculation. Therefore, the recommended change has not 
been made. Further, the current year's maximum price election is used 
only when a local market price is not available. A local market price 
may be established using price quotes from usual marketing outlets in 
the area. Refusal of one processor to quote a price does not 
automatically mean a local market price is not available.
    Comment: One comment received from the crop insurance industry 
recommended adding ``(to include trading tare for grade to obtain a 
higher grade and price),'' after the word ``processing'' in section 
13(e)(4)(ii)(A)(3).
    Response: FCIC agrees with the comment and has amended the 
provisions accordingly.
    Comment: The crop insurance industry recommended that late and 
prevented planting coverage should not be provided on crops grown under 
contract with a processor. The processor determines what the producer 
does if the insured crop is not planted during the normal planting 
period.
    Response: The inclusion of late and prevented planting is 
appropriate for contract seed beans. As the comment indicates, the 
processor may or may not allow planting within the late planting 
period. Congress has determined that marketing windows should be a 
factor in determining whether a crop has been prevented from planting. 
The contracted planting period, and intended harvest period, is 
considered as a marketing window. However, if planting is allowed under 
the contract, and the crop can reach maturity, coverage should be 
provided. Therefore, no change has been made.
    Comment: The crop insurance industry recommended adding the phrase 
``to a type for which you have history'' after the word ``planted'' in 
section 14(c)(1).
    Response: Changing the provision to require past history of the 
bean type would prevent a new producer from obtaining late planting 
coverage or diversifying their production. To protect the integrity of 
the program, the insurance provider should require the producer to 
prove that the producer had the inputs available to plant the new bean 
type. Therefore, no change has been made.
    Comment: The crop insurance industry recommended adding the phrase 
``type for which you have history'' after the words ``insured crop'' in 
the second and last sentences of section 14(d)(1)(ii) and at the end of 
the first sentence of section 14(d)(1)(iii)(B).
    Response: Changing the provision as suggested would prevent a new 
producer from having late or prevented planting coverage or 
diversifying their production. Therefore, no changes has been made.
    Comment: The crop insurance industry and a representative of FCIC 
recommended eliminating late and prevented planting provisions that 
reference participating in a USDA program that limits acreage planted, 
compliance with conservation plans, and base acreage. These do not 
apply.
    Response: FCIC agrees that acreage limiting programs and base 
acreage do not apply to dry beans and has amended the appropriate 
provisions. However, conservation plans may allow the insurance 
provider to verify an intent to produce or not produce the crop. 
Therefore, provisions regarding the use of conservation plans have not 
been changed.
    Comment: The crop insurance industry and a representative of FCIC 
asked whether the prevented planting coverage available when a 
substitute crop is planted will be dropped, or at least revised, for 
all affected crops for the 1997 crop year, and whether it is possible 
to remove (or revise) redesignated sections 14(d)(1)(iii)(B) and 
14(d)(2)(iii)(B).
    Response: The provisions that allow a prevented planting guarantee 
when a substitute crop is planted are under review for all affected 
crops for the 1998 crop year. Any changes will be made in a separate 
rule for all affected crop provisions. No change will be made in these 
provisions to maintain consistency with prevented planting provisions 
for other crops.
    Comment: The crop insurance industry questioned if the provisions 
in section 14(d)(4)(ii) apply to dry beans only since ``dry beans'' are 
referenced, or if this carryover prevented planting coverage would be 
different for contract seed beans due to the requirement that they are 
to be grown under a contract with a processor.
    Response: The Federal Crop Insurance Act requires the insurance 
period for prevented planting to begin on the sales closing date for 
the previous crop year if coverage has been continuous. Therefore, this 
``tail coverage'' would apply if any beans, including contract seed 
beans, were insured previously. This provision has been clarified by 
replacing the term ``dry beans'' with the term ``beans.''
    Comment: The crop insurance industry recommended limiting the 
number of contract seed bean acres eligible for prevented planting to 
the number of acres that are under the processor contract for the crop 
year.
    Response: FCIC agrees with the comment and has amended the 
provisions in section 14(d)(5)(iv)(A) to limit the number of acres 
eligible for prevented planting to those specified in the seed bean 
processor contract or the number needed to produce the contracted 
production based on the APH yield for the acreage.
    Comment: The crop insurance industry asked whether the language 
contained in section 14(d)(5)(iv)(E) regarding double-cropping would be 
liberalized or if proof that the acreage has a history of double-
cropping in each of the last four years would still be required. The 
comment recommended changing the words ``* * * the acreage has a 
history * * *'' to ``* * * the farm has a history * * *''
    Response: The recommended change would allow double benefits on an 
entire farm even though a very small number of acres may have been 
double-cropped in the past. Therefore, no change has been made.
    Comment: The crop insurance industry recommended revising section 
14(d)(5)(v) if the current language allows use of total acreage from 
both dry edible beans and contract seed beans for determining eligible 
prevented planting acreage. The proposed provision could result in a 
prevented planting payment for more than the acreage under contract for 
contract seed beans.
    Response: FCIC has revised section 14(d)(5)(iv)(A) to limit the 
number acres of contract seed beans that are eligible for prevented 
planting to the number of acres under contract in the current year.
    Comment: The crop insurance industry suggested combining the 
provisions contained in section 15(e) with the provisions in section 
15(a).
    Response: Approval of written agreements requested after the sales 
closing date is the exception, not the rule. Therefore, these 
provisions should be kept separate.
    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

[[Page 6105]]

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. Therefore, no change will be made.
    In addition to the changes described above, FCIC has made the 
following changes to the Dry Bean Provisions:
    1. Section 1--Amended the definition of ``practical to replant'' to 
specify that it will not be considered practical to replant contract 
seed beans unless production from the replanted acreage can be 
delivered under the terms of the seed bean processor contract.
    2. Section 14(d)(3)-Clarified that the insured must have possessed 
the inputs to plant and produce the insured crop.
    3. Revised part 433 to restrict its effect to the 1996 and prior 
crop years.
    Good cause is shown to make this rule effective upon publication in 
the Federal Register. This rule improves the dry bean 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 1997 crop year is February 15, 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 1997 crop year.

List of Subjects in 7 CFR Parts 433 and 457

    Crop insurance, Dry bean crop insurance regulations, Dry bean.

Final Rule

    Accordingly, for the reasons set forth in the preamble, the Federal 
Crop Insurance Corporation hereby amends 7 CFR parts 433 and 457 as 
follows:

PART 433--DRY BEAN CROP INSURANCE REGULATIONS

    1. The authority citation for 7 CFR part 433 continues to read as 
follows:

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

    2. The subpart heading preceding Sec. 433.1 is revised to read as 
follows:

Subpart--Regulations for the 1986 Through 1996 Crop Years

    3. Section 433.7 is amended by revising the introductory text of 
paragraph (d) to read as follows:


Sec. 433.7  The application and policy.

* * * * *
    (d) The application for the 1986 and succeeding crop years is found 
at subpart D or part 400--General Administrative Regulations (7 CFR 
400.37, 400.38). The provisions of the Dry Bean Insurance Policy for 
the 1986 through 1996 crop years are as follows:
* * * * *

PART 457--COMMON CROP INSURANCE REGULATIONS; REGULATIONS FOR THE 
1994 AND SUBSEQUENT CONTRACT YEARS

    4. The authority citation for 7 CFR part 457 continues to read as 
follows:

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

    5. Section 457.150 is added to read as follows:


Sec. 457.150  Dry bean crop insurance provisions.

    The Dry Bean Crop Insurance Provisions for the 1997 and succeeding 
crop years are as follows:

    FCIC policies:

Department of Agriculture

Federal Crop Insurance Corporation

    Reinsured policies:

(Appropriate title for insurance provider)
    Both FCIC and reinsured policies:

Dry Bean Crop Provisions

    If a conflict exists among the Basic Provisions (Sec. 457.8), 
these Crop Provisions, and the Special Provisions; the Special 
Provisions will control these Crop Provisions and the Basic 
Provisions; and these Crop Provisions will control the Basic 
Provisions.

1. Definitions

    Actual value--The dollar value received, or that could be 
received, for contract seed beans under a seed bean processor 
contract if the contract seed bean production is properly handled in 
accordance with the requirements of such contract.
    Base price--The price per pound (excluding any discounts or 
incentives that may apply) that is stated in the seed bean processor 
contract and that will be paid to the producer for at least 50 
percent of the total production under contract with the seed 
company.
    Beans--Dry beans and contract seed beans.
    Combining--A harvesting process that uses a machine to separate 
the beans from the pods and other vegetative matter and place the 
beans into a temporary storage receptacle.
    Contract seed beans--Dry beans grown under the terms of a seed 
bean processor contract for the purpose of producing seed to be used 
for producing dry beans or vegetable beans in a future crop year.
    Days--Calendar days.
    Dry beans--The crop defined by The United States Standards for 
Beans excluding contract seed beans.
    FSA--The Farm Service Agency, an agency of the United States 
Department of Agriculture, or a successor agency.
    Final planting date--The date contained in the Special 
Provisions for the insured crop by which the crop must initially be 
planted in order to be insured for the full production guarantee.
    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 and are those recognized by the Cooperative State 
Research, Education, and Extension Service as compatible with 
agronomic and weather conditions in the county.
    Harvest--Combining the beans. Beans which are swathed or knifed 
prior to combining are not considered harvested.
    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 on the irrigated 
acreage planted to the insured crop.
    Late planted--Acreage planted to the insured crop during the 
late planting period.
    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.
    Local market price--The cash price per hundredweight for the 
U.S. No. 2 grade of dry beans of the insured type offered by buyers 
in the area in which you normally market the dry beans. Moisture 
content and factors not associated with grading under the United 
States Standards for Beans will not be considered in establishing 
this price.
    Net price--The dollar value of dry bean production received, or 
that could have been received, after reductions in value due to 
insurable causes of loss.
    Pick--The percentage, on a weight basis, of defects including 
splits, damaged (including discolored) beans, contrasting types, and 
foreign material that remains in the dry beans after dockage has 
been removed by the proper use of screens or sieves.
    Planted acreage--Land in which seed has been placed by a machine 
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. Beans must initially be 
planted in rows far enough apart to permit 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.
    Practical to replant--In lieu of the definition of ``Practical 
to replant'' contained

[[Page 6106]]

in section 1 of the Basic Provisions (Sec. 457.8), practical to 
replant is defined as our determination, after loss or damage to the 
insured crop, based on factors, including but not limited to 
moisture availability, condition of the field, time to crop 
maturity, and marketing window, 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 
unless replanting is generally occurring in the area. For contract 
seed beans, it will not be considered practical to replant unless 
production from the replanted acreage can be delivered under the 
terms of the seed bean processor contract or the seed company agrees 
to accept such production.
    Prevented planting--Inability 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 the end of 
the late planting period. You must have been unable to plant the 
insured crop due to an insured cause of loss that has prevented the 
majority of producers in the surrounding area from planting the same 
crop.
    Production guarantee (per acre)--The number of pounds determined 
by multiplying the approved yield per acre by the coverage level 
percentage you elect, and multiplying the result by any applicable 
adjustment factor specified in the Actuarial Table.
    Replanting--Performing the cultural practices necessary to 
prepare the land to replace the bean seed and then replacing the 
bean seed in the insured acreage with the expectation of growing a 
successful crop.
    Seed bean processor contract--A written agreement between the 
contract seed bean producer and the seed company, containing at a 
minimum:
    (a) The contract seed bean producer's promise to plant and grow 
one or more specific varieties of contract seed beans, 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 base price, or a method to determine such price based on 
published independent information, that will be paid to the contract 
seed bean producer for the production stated in the contract.
    Seed company--Any business enterprise regularly engaged in the 
processing of seed beans, that possesses all licenses and permits 
for marketing seed beans required by the State in which it operates, 
and that possesses or has contracted for facilities, with enough 
drying, screening and bagging or packaging equipment to accept and 
process the seed beans within a reasonable amount of time after 
harvest.
    Swathing or knifing--Severance of the bean plant from the 
ground, including the pods and beans, and placing them into 
windrows.
    Timely planted--Planted on or before the final planting date 
designated in the Special Provisions for the insured crop in the 
county.
    Type--A category of beans identified as a type in the Special 
Provisions.
    Written agreement--A written document that alters designated 
terms of this policy in accordance with section 15.

2. Unit Division

    (a) In addition to section 1 (Definitions) of the Basic 
Provisions (Sec. 457.8), (basic unit) all acreage of contract seed 
beans qualifies as a separate basic unit. For production based seed 
bean processor contracts, the 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 unit will consist of all acreage 
specified in the contract.
    (b) Unless limited by the Special Provisions, a unit as defined 
in section 1 (Definitions) of the Basic Provisions (Sec. 457.8), 
(basic unit) and section 2(a) of these crop provisions, may be 
divided into optional units if, for each optional unit, you meet all 
the conditions of this section or if a written agreement to such 
division exists.
    (c) Basic units may not be divided into optional units on any 
basis including, but not limited to, production practice, variety, 
and planting period, other than as described in this section.
    (d) Contract seed beans may only qualify for optional units as 
specified in section 2(g) of these Crop Provisions 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 are not eligible for 
optional units.
    (e) If you do not comply fully with these provisions, 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 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.
    (f) All optional units you selected for the crop year must be 
identified on the acreage report for that crop year.
    (g) The following requirements must be met for each optional 
unit:
    (1) You must have records, which can be independently verified, 
of planted acreage and production for each optional unit for at 
least the last crop year used to determine your production 
guarantee;
    (2) You must plant the crop in a manner that results in a clear 
and discernable break in the planting pattern at the boundaries of 
each optional unit;
    (3) You must have records of marketed production or measurement 
of 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 unit must be kept separate until 
loss adjustment is completed by us; and
    (4) Subject to section 2(d) each optional unit must meet one or 
more of the following criteria, as applicable:
    (i) Optional Units by bean type: A separate optional unit may be 
established for each bean type shown in the Special Provisions.
    (ii) Optional Units by Section, Section Equivalent, or FSA Farm 
Serial Number: In addition to, or instead of, establishing optional 
units by type, optional units may be established if each optional 
unit is located in a separate legally identified section. In the 
absence of sections, we may consider parcels of land legally 
identified by other methods of measure including, but not limited to 
Spanish grants, railroad surveys, leagues, labors, or Virginia 
Military Lands, as the equivalent of sections for unit purposes. In 
areas that have not been surveyed using the systems identified 
above, or another system approved by us, or in areas where such 
systems exist but boundaries are not readily discernable, each 
optional unit must be located in a separate farm identified by a 
single FSA Farm Serial Number.
    (iii) Optional Units on Acreage Including Both Irrigated and 
Non-irrigated Practices: In addition to, or instead of, establishing 
optional units by type, section, section equivalent, or FSA Farm 
Serial Number, optional units may be based on irrigated acreage or 
non-irrigated acreage if both are located in the same section, 
section equivalent, or FSA Farm Serial Number. 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 your 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 will be considered as irrigated acreage if 
separate acceptable records of production from the corners are not 
provided. 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, they will be a part of the unit containing the 
irrigated acreage. However, non-irrigated acreage that is not a part 
of a field in which a center-pivot irrigation system is used may 
qualify as a separate optional unit provided that all requirements 
of this section are met.

3. Insurance Guarantees, Coverage Levels, and Prices for Determining 
Indemnities

    (a) In addition to the requirements of section 3(b) (Insurance 
Guarantees, Coverage Levels, and Prices for Determining Indemnities) 
of the Basic Provisions (Sec. 457.8), you may select only one price 
election for all the dry beans 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 bean type 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 also choose 75 percent of the 
maximum price election for another type.
    (b) For contract seed beans only, the dollar amount of insurance 
is obtained by multiplying the production guarantee per

[[Page 6107]]

acre for each variety in the unit by the insured acreage of that 
variety, times the applicable base price, and times the price 
election percentage you selected. The total of these results will be 
the amount of insurance for contract seed beans in the unit.

4. Contract Changes

    In accordance with section 4 (Contract Changes) of the Basic 
Provisions (Sec. 457.8), the contract change date is November 30 
preceding the cancellation date.

5. Cancellation and Termination Dates

    In accordance with section 2 (Life of Policy, Cancellation, and 
Termination) of the Basic Provisions (Sec. 457.8), the cancellation 
and termination dates are:

----------------------------------------------------------------------------------------------------------------
                   State and county                                Cancellation and termination dates           
----------------------------------------------------------------------------------------------------------------
California............................................                                              February 28.
All other States......................................                                                 March 15.
----------------------------------------------------------------------------------------------------------------

6. Report of Acreage

    For contract seed beans only, in addition to the requirements of 
section 6 (Report of Acreage) of the Basic Provisions (Sec. 457.8), 
you must submit a copy of the seed bean processor contract on or 
before the acreage reporting date.

7. Insured Crop

    (a) In accordance with section 8 (Insured Crop) of the Basic 
Provisions(Sec. 457.8), the crop insured will be all the beans in 
the county for which a premium rate is provided by the actuarial 
table:
    (1) In which you have a share;
    (2) That are planted for harvest as:
    (i) Dry beans; or
    (ii) If applicable, contract seed beans, if the seed bean 
processor contract is executed on or before the acreage reporting 
date; and
    (3) That are not (unless allowed by the Special Provisions or by 
written agreement):
    (i) Interplanted with another crop; or
    (ii) Planted into an established grass or legume.
    (b) For contract seed beans only:
    (1) An instrument in the form of a ``lease'' under which you 
retain control of the acreage on which the insured crop is grown and 
that provides for delivery of the crop under substantially the same 
terms as a seed bean processor contract may be treated as a contract 
under which you have an insurable interest in the crop; and
    (2) We will not insure any acreage of contract seed beans 
produced by a seed company.
    (c) In addition to the types of dry beans designated in the 
Special Provisions, we will insure other types if:
    (1) The type you intend to plant has been demonstrated to be 
adapted to the area. Evidence of adaptability must include:
    (i) Results of test plots for 2 years and recommendations by a 
university or seed company; or
    (ii) Two years of production reports that indicate your 
experience producing the type in your production area;
    (2) You submit on or before the sales closing date your 
production reports and prices received, or the test plot results, 
and evidence of market potential, including the price buyers are 
willing to pay for the type; and
    (3) Both parties (you and us) enter into a written agreement 
allowing insurance on the type in accordance with section 15.
    (d) Any acreage of beans that is destroyed and replanted to a 
different insurable type of beans will be considered insured acreage 
in accordance with section 11.

8. Insurable Acreage

    In addition to the provisions of section 9 (Insurable Acreage) 
of the Basic Provisions (Sec. 457.8):
    (a) We will not insure any acreage that does not meet the 
rotation requirements contained in the Special Provisions; or
    (b) Any acreage of the insured crop damaged before the final 
planting date, to the extent that the majority of growers in the 
area would normally not further care for the crop, must be replanted 
unless we agree that replanting is not practical. We will not 
require you to replant if it is not practical to replant to the same 
type of beans as originally planted.

9. Insurance Period

    In accordance with the provisions of section 11 (Insurance 
Period) of the Basic Provisions (Sec. 457.8), the calendar date for 
the end of the insurance period is the date immediately following 
planting as follows:
    (a) October 15 in Oklahoma, New Mexico, and Texas;
    (b) November 15 in California; and
    (c) October 31 in all other States.

10. Causes of Loss

    In accordance with the provisions of section 12 (Causes of Loss) 
of the Basic Provisions (Sec. 457.8), 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 caused by an 
insured peril that occurs during the insurance period.

11. Replanting Payments

    (a) In accordance with section 13 (Replanting Payment) of the 
Basic Provisions (Sec. 457.8), a replanting payment is allowed if 
the bean 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 
production guarantee for the acreage and it is practical to replant.
    (b) The maximum amount of the replanting payment per acre will 
be the lesser of 10 percent of the production guarantee for the type 
to be replanted or 120 pounds multiplied by your price election for 
the type to be replanted and by your insured share.
    (c) When beans are replanted using a practice that is 
uninsurable as an original planting, the liability for the unit will 
be reduced by the amount of the replanting payment. The premium 
amount will not be reduced.
    (d) 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 (Insurance 
Guarantees, Coverage Levels, and Prices for Determining Indemnities) 
and 7 (Annual Premium) of the Basic Provisions (Sec. 457.8) and 
section 3 of these Crop Provisions.

12. Duties in the Event of Damage or Loss

    In accordance with the requirements of section 14 (Duties in the 
Event of Damage or Loss) of the Basic Provisions (Sec. 457.8), 
representative samples of the unharvested crop must be at least 10 
feet wide and extend the entire length of each field in the unit. 
The samples must not be harvested or destroyed until the earlier of 
our inspection or 15 days after harvest of the balance of the unit 
is completed.

13. 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 unit.
    (b) In the event of loss or damage to your bean crop covered by 
this policy, we will settle your claim by:
    (1) Multiplying the insured acreage of each dry bean type by its 
respective production guarantee;
    (2) Multiplying each result in section 13(b)(1) by the 
respective price election for each insured type;
    (3) Totaling the results in section 13(b)(2);
    (4) Multiplying the insured acreage of each contract seed bean 
type by its respective production guarantee;
    (5 ) Multiplying each result in section 13(b)(4) by the 
applicable base price;
    (6) Multiplying each result in section 13(b)(5) by your selected 
price election percentage;
    (7) Totaling the results in section 13(b)(6);
    (8) Totaling the results in section 13(b)(3) and section 
13(b)(6);

[[Page 6108]]

    (9) Multiplying the total production to be counted of each dry 
bean type if applicable, (see section 13(d)) by the respective price 
election;
    (10) Totaling the value of all contract seed bean production 
(see section 13(c));
    (11) Totaling the results in section 13(b)(9) and section 
13(b)(10);
    (12) Subtracting the total in section 13(b)(11) from the total 
in section 13(b)(8); and
    (13) Multiplying the result by your share.
    (c) The value of contract seed bean production to count for each 
type in the unit will be determined as follows:
    (1) For production meeting the minimum quality requirements 
contained in the seed bean processor contract and for production 
that does not meet such requirements due to uninsured causes:
    (i) Multiplying the actual value 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 production not meeting the minimum quality requirements 
contained in the seed bean processor contract due to insurable 
causes:
    (i) Multiplying the actual value by the price election 
percentage you selected; and
    (ii) Multiplying the result by the number of pounds of such 
production.
    (d) The total bean 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 beans may be adjusted for quality deficiencies and excess 
moisture in accordance with section 13(e)); 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 the acreage will be the harvested 
production, or our reappraisal if additional damage occurs and the 
crop is not harvested; and
    (2) All harvested production from the insurable acreage.
    (e) Mature dry bean production to count may be adjusted for 
excess moisture and quality deficiencies. If moisture adjustment is 
applicable, it will be made prior to any adjustment for quality. 
Adjustment for excess moisture and quality deficiencies will not be 
applicable to contract seed beans.
    (1) Production will be reduced by 0.12 percent for each 0.1 
percentage point of moisture in excess of 18 percent. We may obtain 
samples of the production to determine the moisture content.
    (2) Production will be eligible for quality adjustment if:
    (i) A pick is designated in the Special Provisions and the pick 
of the damaged production exceeds this designation; or
    (ii) A pick is not designated in the Special Provisions and 
deficiencies in quality, in accordance with the United States 
Standards for Beans, result in dry beans not meeting the grade 
requirements for U.S. No. 2 (grades U.S. No. 3 or worse) because the 
beans are damaged or badly damaged; or
    (iii) 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.
    (3) 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 
beans 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.)
    (4) Dry bean production that is eligible for quality adjustment, 
as specified in sections 13(e) (2) and (3), will be reduced:
    (i) If a conversion factor is designated by the Special 
Provisions, by multiplying the number of pounds of eligible 
production by the conversion factor designated in the Special 
Provisions for the applicable grade or pick; or
    (ii) If a conversion factor is not designated by the Special 
Provisions as follows:
    (A) The market price of the qualifying damaged production and 
the local market price will be determined on the earlier of the date 
such quality adjusted production is sold or the date of final 
inspection for the unit. If a local market price is not available 
for the insured crop year, the current years' maximum price election 
available for the applicable type will be used. The price for the 
qualifying damaged production will be the market price for 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 beans to those buyers. 
Discounts used to establish the net price of the damaged production 
will be limited to those that are usual, customary, and reasonable. 
The price of the damaged production will not be reduced for:
    (1) Moisture content;
    (2) Damage due to uninsured causes; or
    (3) Drying, handling, processing, including trading tare for 
grade to obtain a higher grade and price, or any other costs 
associated with normal harvesting, handling, and marketing of the 
dry beans; except, if the price of the damaged production can be 
increased by conditioning, we may reduce the price of the production 
after it has been conditioned by the cost of conditioning but not 
lower than the value of the production before conditioning;
    (B) The value per pound of the damaged or conditioned production 
will be divided by the local market price to determine the quality 
adjustment factor; and
    (C) The number of pounds remaining after any reduction due to 
excessive moisture (the moisture-adjusted gross pounds (if 
appropriate)) of the damaged or conditioned production will then be 
multiplied by the quality adjustment factor to determine the net 
production to count.
    (f) Any production harvested from plants growing in the insured 
crop may be counted as production of the insured crop on a weight 
basis.

14. Late Planting and Prevented Planting

    (a) In lieu of provisions contained in the Basic Provisions 
(Sec. 457.8), regarding acreage initially planted after the final 
planting date and the applicability of a Late Planting Agreement 
Option, insurance will be provided for acreage planted to the 
insured crop during the late planting period (see section 14(c)), 
and acreage you were prevented from planting (see section 14(d)). 
These coverages provide reduced production guarantees. The premium 
amount for late planted acreage and eligible prevented planting 
acreage will be the same as that for timely planted. If the amount 
of premium you are required to pay (gross premium less our subsidy) 
for late planted acreage or prevented planting acreage 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.
    (b) You must provide written notice to us not later than the 
acreage reporting date if you were prevented from planting.
    (c) Late Planting
    (1) For bean acreage planted during the late planting period, 
the production guarantee or

[[Page 6109]]

amount of insurance for each acre will be reduced for each day 
planted after the final planting date by:
    (i) One percent per day for the 1st through the 10th day; and
    (ii) Two percent per day for the 11th through the 25th day.
    (2) In addition to the requirements of section 6 (Report of 
Acreage) of the Basic Provisions (Sec. 457.8), you must report the 
dates the acreage is planted within the late planting period.
    (3) If planting of beans 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:
    (i) The acreage reporting date contained in the Special 
Provisions for the insured crop; or
    (ii) Five days after the end of the late planting period.
    (d) Prevented Planting (Including Planting After the Late 
Planting Period)
    (1) If you were prevented from timely planting beans, you may 
elect:
    (i) To plant beans during the late planting period. The 
production guarantee or amount of insurance for such acreage will be 
determined in accordance with section 14(c)(1);
    (ii) Not to plant this acreage to any crop except a cover crop 
not for harvest. You may also elect to plant the insured crop after 
the late planting period. In either case, the production guarantee 
or amount of insurance for such acreage will be 50 percent of the 
production guarantee for timely planted acres. For example, if your 
production guarantee for timely planted acreage is 1,500 pounds per 
acre, your prevented planting production guarantee would be 750 
pounds per acre (1,500 pounds multiplied by 0.50). If you elect to 
plant the insured crop after the late planting period, production to 
count for such acreage will be determined in accordance with section 
13; or
    (iii) Not to plant the intended crop but plant a substitute crop 
for harvest, in which case:
    (A) No prevented planting production guarantee will be provided 
for such acreage if the substitute crop is planted on or before the 
10th day following the final planting date for the insured crop; or
    (B) A production guarantee equal to 25 percent of the production 
guarantee for timely planted acres will be provided for such 
acreage, if the substitute crop is planted after the 10th day 
following the final planting date for the insured crop. If you 
elected the Catastrophic Risk Protection Endorsement or excluded 
this coverage, and plant a substitute crop, no prevented planting 
coverage will be provided. For example, if your production guarantee 
for timely planted acreage is 30 bushels per acre, your prevented 
planting production guarantee would be 7.5 bushels per acre (30 
bushels multiplied by 0.25). You may elect to exclude prevented 
planting coverage when a substitute crop is planted for harvest and 
receive a reduction in the applicable premium rate. If you wish to 
exclude this coverage, you must so indicate, on or before the sales 
closing date, on your application or on a form approved by us. Your 
election to exclude this coverage will remain in effect from year to 
year unless you notify us in writing on our form by the applicable 
sales closing date for the crop year for which you wish to include 
this coverage. All acreage of the crop insured under this policy 
will be subject to this exclusion.
    (2) Production guarantees for timely, late, and prevented 
planting acreage within a unit will be combined to determine the 
production guarantee for the unit. For example, assume you insure 
one unit in which you have a 100 percent share. The unit consists of 
150 acres, of which 50 acres were planted timely, 50 acres were 
planted 7 days after the final planting date (late planted), and 50 
acres were not planted but are eligible for a prevented planting 
production guarantee or amount of insurance. The production 
guarantee for the unit will be computed as follows:
    (i) For the timely planted acreage, multiply the per acre 
production guarantee or amount of insurance for timely planted 
acreage by the 50 acres planted timely;
    (ii) For the late planted acreage, multiply the per acre 
production guarantee or amount of insurance for timely planted 
acreage by 93 percent and multiply the result by the 50 acres 
planted late; and
    (iii) For prevented planting acreage, multiply the per acre 
production guarantee or amount of insurance for timely planted 
acreage by:
    (A) Fifty percent and multiply the result by the 50 acres you 
were prevented from planting, if the acreage is eligible for 
prevented planting coverage, and if the acreage is left idle for the 
crop year, or if a cover crop is planted not for harvest. Prevented 
planting compensation hereunder will not be denied because the cover 
crop is hayed or grazed; or
    (B) Twenty five percent and multiply the result by the 50 acres 
you were prevented from planting, if the acreage is eligible for 
prevented planting coverage, and if you elect to plant a substitute 
crop for harvest after the 10th day following the final planting 
date for the insured crop. (This paragraph (B) is not applicable, 
and prevented planting coverage is not available under these crop 
provisions, if you elected the Catastrophic Risk Protection 
Endorsement or you elected to exclude prevented planting coverage 
when a substitute crop is planted (see section 14(d)(1)(iii)). Your 
premium will be based on the result of multiplying the per acre 
production guarantee or amount of insurance for timely planted 
acreage by the 150 acres in the unit.
    (3) You must have the inputs available to plant and produce the 
intended crop with the expectation of at least producing the 
production guarantee or amount of insurance. Proof that these inputs 
were available may be required.
    (4) In addition to the provisions of section 11 (Insurance 
Period) of the Basic Provisions (Sec. 457.8), the insurance period 
for prevented planting coverage begins:
    (i) On 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 the sales closing date for 
the insured crop in the county for the previous crop year, provided 
continuous coverage has been in effect since that date. For example: 
If you make application and purchase insurance for beans for the 
1997 crop year, prevented planting coverage will begin on the 1997 
sales closing date for beans in the county. If the bean coverage 
remains in effect for the 1998 crop year (is not terminated or 
canceled during or after the 1997 crop year), prevented planting 
coverage for the 1998 crop year began on the 1997 sales closing 
date. Cancellation for the purpose of transferring the policy to a 
different insurance provider when there is no lapse in coverage will 
not be considered terminated or canceled coverage for the purpose of 
the preceding sentence.
    (5) The acreage to which prevented planting coverage applies 
will not exceed the total eligible acreage on all FSA Farm Serial 
Numbers in which you have a share, adjusted for any reconstitution 
that may have occurred on or before the sales closing date. Eligible 
acreage for each FSA Farm Serial Number is determined as follows:
    (i) The number of acres planted to beans on the FSA Farm Serial 
Number during the previous crop year; or
    (ii) One hundred percent of the simple average of the number of 
acres planted to beans during the crop years that you certified to 
determine your yield.
    (iii) Acreage intended to be planted under an irrigated practice 
will be limited to the number of acres for which you had adequate 
irrigation facilities prior to the insured cause of loss which 
prevented you from planting.
    (iv) A prevented planting production guarantee or amount of 
insurance will not be provided for any acreage:
    (A) Of contracted seed beans in excess of the number of acres 
required to be grown in the current crop year under a seed bean 
processor contract executed on or before the acreage reporting date, 
or the number of acres needed to produce the amount of contracted 
production, based on the APH yield for the acreage.
    (B) That does not constitute at least 20 acres or 20 percent of 
the acreage in the unit, whichever is less (Acreage that is less 
than 20 acres or 20 percent of the acreage in the unit will be 
presumed to have been intended to be planted to the insured crop 
planted in the unit, unless you can show that you had the inputs 
available before the final planting date to plant and produce 
another insured crop on the acreage);
    (C) For which the actuarial table does not designate a premium 
rate unless a written agreement designates such premium rate;
    (D) Used for conservation purposes or intended to be left 
unplanted under any program administered by the United States 
Department of Agriculture;
    (E) On which another crop is prevented from being planted, if 
you have already received a prevented planting indemnity, guarantee 
or amount of insurance for the same acreage in the same crop year, 
unless you provide adequate records of acreage and production 
showing that the acreage was double-cropped in each of the last 4 
years in which the insured crop was grown on the acreage;
    (F) On which the insured crop is prevented from being planted, 
if any other crop is

[[Page 6110]]

planted and fails, or is planted and harvested, hayed or grazed on 
the same acreage in the same crop year, (other than a cover crop as 
specified in section 14 (d)(2)(iii)(A), or a substitute crop allowed 
in section 14 (d)(2)(iii)(B)), unless you provide adequate records 
of acreage and production showing that the acreage was double-
cropped in each of the last 4 years in which the insured crop was 
grown on the acreage;
    (G) When coverage is provided under the Catastrophic Risk 
Protection Endorsement if you plant another crop for harvest on any 
acreage you were prevented from planting in the same crop year, even 
if you have a history of double-cropping. If you have a Catastrophic 
Risk Protection Endorsement and receive a prevented planting 
indemnity, guarantee, or amount of insurance for a crop and are 
prevented from planting another crop on the same acreage, you may 
only receive the prevented planting indemnity, guarantee, or amount 
of insurance for the crop on which the prevented planting indemnity, 
guarantee, or amount of insurance is received; or
    (H) For which planting history or conservation plans indicate 
that the acreage would have remained fallow for crop rotation 
purposes.
    (v) For the purpose of determining eligible acreage for 
prevented planting coverage, acreage for all units will be combined 
and be reduced by the number of bean acres timely planted and late 
planted. For example, assume you have 100 acres eligible for 
prevented planting coverage in which you have a 100 percent share. 
The acreage is located in a single FSA Farm Serial Number which you 
insure as two separate optional units consisting of 50 acres each. 
If you planted 60 acres of beans on one optional unit and 40 acres 
of beans on the second optional unit, your prevented planting 
eligible acreage would be reduced to zero (i.e., 100 acres eligible 
for prevented planting coverage minus 100 acres planted equals 
zero).
    (6) In accordance with the provisions of section 6 (Report of 
Acreage) of the Basic Provisions (Sec. 457.8), you must report by 
unit any insurable acreage that you were prevented from planting. 
This report must be submitted on or before the acreage reporting 
date. For the purpose of determining acreage eligible for a 
prevented planting production guarantee, the total amount of 
prevented planting and planted acres cannot exceed the maximum 
number of acres eligible for prevented planting coverage. Any 
acreage you report in excess of the number of acres eligible for 
prevented planting coverage, or that exceeds the number of eligible 
acres physically located in a unit, will be deleted from your 
acreage report.
    15. Written Agreements.
    Designated terms of this policy 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 
15(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 year (If 
the 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, after a physical inspection 
of the acreage, it is determined that no loss has occurred and the 
crop is insurable in accordance with the policy and written 
agreement provisions.

    Signed in Washington, D.C., on February 6, 1997.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 97-3327 Filed 2-10-97; 8:45 am]
BILLING CODE 3410-FA-P