This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

10008 

Vol. 80, No. 37 

Wednesday, February 25, 2015 

DEPARTMENT OF AGRICULTURE 

Federal Crop Insurance Corporation 

7 CFR Part 400 

[Docket No. FCIC–13–0006] 

RIN 0563–AC46 

Part 400—General Administrative 

Regulation—Subpart V—Submission 

of Policies, Provisions of Policies and 

Rates of Premium 

AGENCY: Federal Crop Insurance 

Corporation, USDA. 

ACTION: Proposed rule. 

SUMMARY: The Federal Crop Insurance 

Corporation (FCIC) proposes to replace 

the General Administrative 

Regulation—Subpart V—Submission of 

Policies, Provisions of Policies and 

Rates of Premium. The intended effect 

of this action is to incorporate 

legislative changes to the Federal Crop 

Insurance Act (Act) stemming from the 

Agricultural Act of 2014, clarify existing 

regulations, lessen the burden of 

submitters of crop insurance policies, 

provisions of policies, or rates of 

premium under section 508(h) of the 

Act, provide guidance on the 

submission and payment for concept 

proposals under section 522 of the Act, 

and to incorporate changes that are 

consistent with those made in the 

Common Crop Insurance Policy Basic 

Provisions (Basic Provisions). 

DATES: Written comments and opinions 

on this proposed rule will be accepted 

until close of business April 27, 2015 

and will be considered when the rule is 

to be made final. 

ADDRESSES: FCIC prefers that comments 

be submitted electronically through the 

Federal eRulemaking Portal. You may 

submit comments, identified by Docket 

ID No. FCIC–13–0006 by any of the 

following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Mail: Director, Product 

Administration and Standards Division, 

Risk Management Agency, United States 

Department of Agriculture, P.O. Box 

419205, Kansas City, MO 64133–6205. 

All comments received, including those 

received by mail, will be posted without 

change to http://www.regulations.gov, 

including any personal information 

provided, and can be accessed by the 

public. 

All comments must include the 

agency name and docket number or 

Regulatory Information Number (RIN) 

for this rule. For detailed instructions 

on submitting comments and additional 

information, see http://

www.regulations.gov. If you are 

submitting comments electronically 

through the Federal eRulemaking Portal 

and want to attach a document, we ask 

that it be in a text-based format. If you 

want to attach a document that is a 

scanned Adobe PDF file, it must be 

scanned as text and not as an image, 

thus allowing FCIC to search and copy 

certain portions of your submissions. 

For questions regarding attaching a 

document that is a scanned Adobe PDF 

file, please contact the RMA Web 

Content Team at (816) 823–4694 or by 

email at rmaweb.content@rma.usda.gov. 

Privacy Act: Anyone is able to search 

the electronic form of all comments 

received for any dockets by the name of 

the individual submitting the comment 

(or signing the comment, if submitted 

on behalf of an association, business, 

labor union, etc.). You may review the 

complete User Notice and Privacy 

Notice for Regulations.gov at http://

www.regulations.gov/#!privacyNotice. 

FOR FURTHER INFORMATION CONTACT: Tim 

Hoffmann, Product Administration and 

Standards Division, Risk Management 

Agency, United States Department of 

Agriculture, Beacon Facility, Stop 0812, 

Room 421, P.O. Box 419205, Kansas 

City, MO 64141–6205, telephone (816) 

926–7730. 

SUPPLEMENTARY INFORMATION: 

Executive Order 12866 

This rule has been determined to be 

not significant for the purposes of 

Executive Order 12866 and, therefore, it 

has not been reviewed by the OMB. 

Paperwork Reduction Act of 1995 

Pursuant to the provisions of the 

Paperwork Reduction Act of 1995 (44 

U.S.C. chapter 35), the collections of 

information in this rule have been 

approved by the Office of Management 

and Budget (OMB) under control 

number 0563–0064. 

E-Government Act Compliance 

FCIC is committed to complying with 

the E-Government Act of 2002, to 

promote the use of the Internet and 

other information technologies to 

provide increased opportunities for 

citizen access to Government 

information and services, and for other 

purposes. 

Unfunded Mandates Reform Act of 

1995 

Title II of the Unfunded Mandates 

Reform Act of 1995 (UMRA) establishes 

requirements for Federal agencies to 

assess the effects of their regulatory 

actions on State, local, and tribal 

governments and the private sector. 

This rule contains no Federal mandates 

(under the regulatory provisions of title 

II of the UMRA) for State, local, and 

tribal governments or the private sector. 

Therefore, this rule is not subject to the 

requirements of sections 202 and 205 of 

UMRA. 

Executive Order 13132 

It has been determined under section 

1(a) of Executive Order 13132, 

Federalism, that this rule does not have 

sufficient implications to warrant 

consultation with the States. The 

provisions contained in this rule will 

not have a substantial direct effect on 

States, or on the relationship between 

the national government and the States, 

or on the distribution of power and 

responsibilities among the various 

levels of government. 

Executive Order 13175 

This rule has been reviewed in 

accordance with the requirements of 

Executive Order 13175, Consultation 

and Coordination with Indian Tribal 

Governments. The review reveals that 

this regulation will not have substantial 

and direct effects on Tribal governments 

and will not have significant Tribal 

implications. 

Regulatory Flexibility Act 

FCIC certifies that this regulation will 

not have a significant economic impact 

on a substantial number of small 

entities. The regulation does not require 

any more action on the part of the small 

entities than is required on the part of 

large entities. No matter the size of the 

submitter, all submitters are required to 


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perform the same tasks and those tasks 

are necessary to ensure that the concept 

proposal can be made into a viable and 

marketable submission and any 

submission can be made into viable and 

marketable, actuarially sound insurance 

product. A Regulatory Flexibility 

Analysis has not been prepared since 

this regulation does not have an impact 

on small entities, and, therefore, this 

regulation is exempt from the provisions 

of the Regulatory Flexibility Act (5 

U.S.C. 605). 

Federal Assistance Program 

This program is listed in the Catalog 

of Federal Domestic Assistance under 

No. 10.450. 

Executive Order 12372 

This program is not subject to the 

provisions of Executive Order 12372, 

which require intergovernmental 

consultation with State and local 

officials. See the Notice related to 7 CFR 

part 3015, subpart V, published at 48 FR 

29115, June 24, 1983. 

Executive Order 12988 

This proposed rule has been reviewed 

in accordance with Executive Order 

12988 on civil justice reform. The 

provisions of this rule will not have a 

retroactive effect. The provisions of this 

rule will preempt State and local laws 

to the extent such State and local laws 

are inconsistent herewith. With respect 

to any direct action taken by FCIC or to 

require the insurance provider to take 

specific action under the terms of the 

crop insurance policy, the 

administrative appeal provisions 

published at 7 CFR part 11 must be 

exhausted before any action against 

FCIC for judicial review may be brought. 

Environmental Evaluation 

This action is not expected to have a 

significant economic impact on the 

quality of the human environment, 

health, or safety. Therefore, neither an 

Environmental Assessment nor an 

Environmental Impact Statement is 

needed. 

Background 

FCIC makes available standard 

policies for producers to insure certain 

agricultural commodities against 

various agricultural production risks 

and perils. Under the provisions of 

section 508(h) of the Act, any person 

may submit or propose other crop 

insurance policies, plans of insurance, 

provisions of policies, or rates of 

premium to the FCIC Board of Directors 

(Board) for approval for reinsurance and 

subsidy. These policies may be 

submitted without regard to certain 

limitations contained in the Act. Section 

508(h) of the Act also requires that FCIC 

issue regulations to establish guidelines 

for the submission and Board review of 

policies or other material submitted to 

the Board under the Act. These 

regulations were published at 7 CFR 

part 400, subpart V (Subpart V) and 

provided the process for making 

submissions, its contents, the approval 

process, and the procedures for requests 

for reimbursement of research and 

development costs and maintenance. 

Section 522 of the Act authorizes the 

advance payment of research and 

development costs for concept 

proposals and this proposed rule 

includes the procedures for requesting 

such advanced payment. 

The Agricultural Act of 2014 

amended parts of section 508(h) as well 

as other sections of the Act. One such 

change requires FCIC to develop 

procedures for submitting index-based 

weather plans of insurance. Another 

change mandated by the Agricultural 

Act of 2014 requires submitters of 

products for specialty crops to follow 

certain consultation requirements with 

grower groups in the major producing 

areas. The Agricultural Act of 2014 also 

contains amendments that require 

changes to review criteria and establish 

approval priorities and considerations 

of submissions under section 508(h) of 

the Federal Crop Insurance Act. 

In addition to the changes required by 

the Agricultural Act of 2014, other 

changes are being proposed to provide 

clarity or lessen the burden on 

submitters or FCIC. This rule contains 

proposed revisions to definitions to 

clarify the meaning of terms used in 

Subpart V as well as new definitions for 

terms that were either not defined or not 

previously used. This rule also contains 

proposed changes to clarify FCIC and 

submitter responsibilities with respect 

to timing, content, approval, 

reimbursement for research and 

development costs and maintenance 

costs, and potential user fees for such 

submissions. To lessen the burden on 

submitters, this rule proposes to reduce 

the number of printed copies of the 

submission that must be provided to 

FCIC. This rule proposes to provide 

additional guidance for submitting 

concept proposals, including 

confidentially standards and advance 

payment provisions. This rule also 

proposes changes to guidelines for nonreinsured supplemental policies to be 

submitted to FCIC including a proposed 

provision to decrease the burden on 

FCIC by increasing the time FCIC has to 

review such policies from 120 to 150 

days. 

List of Subjects in 7 CFR Part 400 

Administrative practice and 

procedure, Crop insurance. 

Proposed Rule 

Accordingly, as set forth in the 

preamble, FCIC proposes to amend 7 

CFR part 400 by replacing subpart V in 

its entirety as set forth below: 

PART 400—GENERAL 

ADMINISTRATIVE REGULATIONS 

Revise subpart V to read as follows: 

Subpart V—Submission of Policies, 

Provisions of Policies, Rates of Premium, 

and Non-Reinsured Supplemental Policies 

Sec. 

400.700 Basis, purpose, and applicability. 

400.701 Definitions. 

400.702 Confidentiality and duration of 

confidentiality. 

400.703 Timing and format. 

400.704 Covered by this subpart. 

400.705 Contents for new and changed 

submissions, concept proposals, and 

index-based weather plans of insurance. 

400.706 Review. 

400.707 Presentation to the Board for 

approval or disapproval. 

400.708 Post approval. 

400.709 Roles and responsibilities. 

400.710 Preemption and premium taxation. 

400.711 Right of review, modification, and 

the withdrawal of approval. 

400.712 Research and development 

reimbursement, maintenance 

reimbursement, advance payments for 

concept proposals, and user fees. 

400.713 Non-reinsured supplemental (NRS) 

policy. 

Subpart V—Submission of Policies, 

Provisions of Policies, Rates of 

Premium, and Non-Reinsured 

Supplemental Policies. 

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

1508(h), 1522(b), 1523(i). 

§ 400.700 Basis, purpose, and 

applicability. 

This subpart establishes guidelines, 

the approval process, and 

responsibilities of FCIC and the 

applicant for policies, provisions of 

policies, and rates of premium 

submitted to the Board as authorized 

under section 508(h) of the Act. It also 

provides procedures for reimbursement 

of research and development costs and 

maintenance costs for concept proposals 

and approved submissions. Guidelines 

for submitting concept proposals and 

the standards for approval and advance 

payments are provided in this subpart. 

This subpart also provides guidelines 

and reference to procedures for 

submitting index-based weather plans of 

insurance as authorized under section 

523(i) of the Act. The procedures for 


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submitting non-reinsured supplemental 

policies in accordance with the 

Standard Reinsurance Agreement (SRA) 

are also contained within. 

§ 400.701 Definitions. 

Act. Subtitle A of the Federal Crop 

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

1501–1524). 

Actuarial documents. The 

information for the crop or insurance 

year that is available for public 

inspection in your agent’s office and 

published on RMA’s Web site, and that 

shows available insurance policies, 

coverage levels, information needed to 

determine amounts of insurance and 

guarantees, prices, premium rates, 

premium adjustment percentages, 

practices, particular types or varieties of 

the insurable crop or agricultural 

commodity, insurable acreage, and other 

related information regarding insurance 

in the county or state. 

Actuarially appropriate. Premium 

rates expected to cover anticipated 

losses and establish a reasonable reserve 

based on valid reasoning, an 

examination of available risk data, or 

knowledge or experience of the 

expected value of future costs associated 

with the risk to be covered. This will be 

expressed by a combination of data 

including, but not limited to liability, 

premium, indemnity, and loss ratios 

based on actual data or simulations 

reflecting the risks covered by the 

policy. 

Administrative and operating (A&O) 

subsidy. The subsidy for the 

administrative and operating expenses 

authorized by the Act and paid by FCIC 

on behalf of the producer to the 

approved insurance provider. Loss 

adjustment expense reimbursement paid 

by FCIC for catastrophic risk protection 

(CAT) eligible crop insurance contracts 

is not considered as A&O subsidy. 

Advance payment. A portion, up to 50 

percent, of the estimated research and 

development costs, that may be 

approved by the Board under section 

522(b) of the Act for an approved 

concept proposal, and after the 

applicant has begun research and 

development activities, the Board may 

at its sole discretion provide up to an 

additional 25 percent advance payment 

of the estimated research and 

development costs. 

Agent. An individual licensed by the 

State in which an eligible crop 

insurance contract is sold and serviced 

for the reinsurance year, and who is 

employed by, or under contract with, 

the approved insurance provider, or its 

designee, to sell and service such 

eligible crop insurance contracts. 

Applicant. Any person or entity that 

submits to the Board for approval a 

submission under section 508(h) of the 

Act, a concept proposal under section 

522 of the Act, or an index-based 

weather plan of insurance under section 

523(i) of the Act. 

Approved insurance provider. A legal 

entity that has entered into a 

reinsurance agreement with FCIC for the 

applicable reinsurance year. 

Approved procedures. The applicable 

handbooks, manuals, memoranda, 

bulletins or other directives issued by 

RMA or the Board. 

Board. The Board of Directors of 

FCIC. 

Commodity. Has the same meaning as 

section 518 of the Act. 

Complete. A submission, concept 

proposal, or index-based weather plan 

of insurance determined by RMA and 

the Board to contain all required 

documentation in accordance with 

§ 400.705 and is of sufficient quality, as 

determined by the Board and RMA, to 

conduct a meaningful review. 

Complexity. Consideration of factors 

such as originality of policy materials, 

underwriting methods, actuarial rating 

methodology, and the pricing 

methodology used in design, 

construction and processes for the full 

development of a policy or plan of 

insurance. 

Concept proposal. A written proposal 

for a prospective submission, submitted 

under section 522 of the Act for advance 

payment of research and development, 

and containing enough information that 

the Board is able to determine that, if 

approved, will be developed into a 

viable and marketable policy consistent 

with Board approved procedures, these 

regulations, and section 508(h) of the 

Act. 

Delivery system. The components or 

parties that make the policy or plan of 

insurance available to the public for 

sale. The delivery system includes, but 

is not limited to RMA, approved 

insurance providers, and agents. 

Development. The process of 

composing documentation and 

procedures, pricing and rating 

methodologies, administrative and 

operating procedures, systems and 

software, supporting materials, and 

documentation necessary to create and 

implement a submission. 

Disinterested third party. A person 

who: 

(1) Does not have any familial 

relationship (parents, brothers, sisters, 

children, spouse, grandchildren, aunts, 

uncles, nieces, nephews, first cousins, 

or grandparents, related by blood, 

adoption or marriage, are considered to 

have a familial relationship) with the 

submitter; 

(2) Who will not benefit financially 

from the submission, concept proposal, 

or index-based weather plan of 

insurance if approved, or from the 

administration of any approved policy 

or plan of insurance; or 

(3) Must not be employed by or work 

under contract or be associated in any 

similar manner to the applicant on a 

regular basis. 

Endorsement. A document that 

amends or revises an insurance policy 

reinsured under the Act in a manner 

that changes existing, or provides 

additional, coverage provided by such 

policy. 

Expert reviewer. Independent persons 

contracted by the Board who meets the 

criteria for underwriters or actuaries 

that are selected by the Board to review 

a concept proposal, submission, or 

index-based weather plan of insurance 

and provide advice to the Board 

regarding the results of their review, 

FCIC. The Federal Crop Insurance 

Corporation, a wholly owned 

government corporation within USDA, 

whose programs are administered by 

RMA. 

Index-based weather plan of 

insurance. A risk management product 

in which indemnities are based on a 

defined weather parameter exceeding or 

failing to meet a given threshold during 

a specified time period. The weather 

index is a proxy to measure expected 

loss of production when the defined 

weather parameter does not meet the 

threshold. 

Limited resource producer. Has the 

same meaning as the term defined by 

USDA at: www.lrftool.sc.egov.usda.gov/

LRP_Definition.aspx or a successor Web 

site. 

Livestock commodity. Has the same 

meaning as the term in section 523(i) of 

the Act. 

Maintenance. For the purposes of this 

subpart only, the process of continual 

support, revision or improvement, as 

needed, for an approved submission, 

including the periodic review of 

premium rates and prices, updating or 

modifying the rating or pricing 

methodologies, updating or modifying 

policy terms and conditions, adding a 

new commodity under similar policy 

terms and conditions with similar rating 

and pricing methodology, or expanding 

a plan or policy to additional states and 

counties, and any other actions 

necessary to provide adequate, 

reasonable and meaningful protection 

for producers, ensure actuarial 

soundness, or to respond to statutory or 

regulatory changes. A concept proposal 

that is similar to a previously approved 


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submission will be considered 

maintenance for the similar approved 

submission if submitted by the same 

person. 

Maintenance costs. Specific expenses 

associated with the maintenance of an 

approved submission as authorized by 

§ 400.712. 

Maintenance period. A period of time 

that begins on the date the Board 

approves the submission and ends on 

the date that is not more than four 

reinsurance years after such approval. 

Manager. The Manager of FCIC. 

Marketing plan. A plan that identifies, 

at a minimum, the expected number of 

potential buyers, premium, liability, and 

the data upon which such information 

is based. Such data must include, but is 

not limited to, focus group results, 

market research studies, qualitative 

market estimates, effects upon the 

delivery system or participants, an 

assessment of factors that could 

negatively or adversely affect the 

market, responses from a reasonable 

representative cross-section of 

producers or significant market segment 

to be affected by the policy or plan of 

insurance, and if applicable, results 

from the consultation with the major 

producer groups of specialty crops 

demonstrating their interest in 

purchasing the product. 

Multiple peril crop insurance (MPCI). 

Policies reinsured by FCIC that provide 

protection against multiple causes of 

loss that adversely affect production or 

revenue, such as to natural disasters, 

such as hail, drought, and floods. 

National Agricultural Statistics 

Service (NASS). An agency within 

USDA, or its successor agency that 

collects and analyzes data collected 

from producers and other sources. 

Non-reinsured supplemental policy 

(NRS). A policy, endorsement, or other 

risk management tool not reinsured by 

FCIC under the Act, that offers 

additional coverage, other than for loss 

related to hail. 

Non-significant changes. Minor 

changes to the policy or plan of 

insurance, such as technical corrections, 

that do not affect the rating or pricing 

methodologies, the amount of subsidy 

owed, the amount or type of coverage, 

FCIC’s reinsurance risk, or any other 

condition that does not affect liability or 

the amount of loss to be paid under the 

policy. Revisions to approved plans 

required by statutory or regulatory 

changes are included in this category. 

Changes to the policy that involve 

concepts that have been previously sent 

for expert review are also included in 

this category. 

Plan of insurance. A class of policies, 

such as yield, revenue, or area based 

that offers a specific type of coverage to 

one or more agricultural commodities. 

Policy. Has the same meaning as the 

term in section 1 of the Basic Provisions 

(7 CFR 457.8). 

Rate of premium. The dollar amount 

per insured unit, or percentage rate per 

dollar of liability, that is needed to pay 

anticipated losses and provide a 

reasonable reserve. 

Reinsurance year. The term beginning 

July 1 and ending on June 30 of the 

following year and, for reference 

purposes, identified by reference to the 

year containing June. 

Related material. The actuarial 

documents for the insured commodity 

and any underwriting or loss adjustment 

manuals, handbooks, forms, instructions 

or other information needed to 

administer the policy. 

Research. For the purposes of 

development, the gathering of 

information related to: producer needs 

and interests for risk management; the 

marketability of the policy or plan of 

insurance; appropriate policy terms, 

premium rates, price elections, 

administrative and operating 

procedures, supporting materials, 

documentation, and the systems and 

software necessary to implement a 

policy or plan of insurance. The 

gathering of information to determine 

whether it is feasible to expand a policy 

or plan of insurance to a new area or to 

cover a new commodity under the same 

policy terms and conditions, price, and 

premium rates is not considered 

research. 

Research and development costs. 

Specific expenses incurred and directly 

related to the research and development 

activities of a submission as authorized 

in § 400.712. 

Risk Management Agency (RMA). An 

agency within USDA that is authorized 

to administer the crop insurance 

program on behalf of FCIC. 

Risk subsidy. The portion of the 

premium paid by FCIC on behalf of the 

insured. 

Sales closing date. A date contained 

in the Special Provisions by which an 

application must be filed and the last 

date by which the insured may change 

the crop insurance coverage for a crop 

year. 

Secretary. The Secretary of the United 

States Department of Agriculture. 

Significant change. Any change to the 

policy or plan of insurance that may 

affect the rating and pricing 

methodologies, the amount of subsidy 

owed, the amount of coverage, the 

interests of producers, FCIC’s 

reinsurance risk, or any condition that 

may affect liability or the amount of loss 

to be paid under the policy. 

Special Provisions. Has the same 

meaning as the term in section 1 of the 

Basic Provisions (7 CFR 457.8). 

Specialty crops. Fruits and vegetables, 

tree nuts, dried fruits, and horticulture 

and nursery crops (including 

floriculture). 

Socially disadvantaged producer. Has 

the same meaning as section 2501(E) of 

the Food, Agriculture, Conservation, 

and Trade Act of 1990 (7 U.S.C. 

2279(e)). 

Standard Reinsurance Agreement 

(SRA). The reinsurance agreement 

between FCIC and the approved 

insurance provider, under which the 

approved insurance provider is 

authorized to sell and service the 

eligible crop insurance contracts for 

which the premium discount is 

proposed. For the purposes of this 

subpart, all references to the SRA will 

also include any other reinsurance 

agreements entered into with FCIC, 

including the Livestock Price 

Reinsurance Agreement. 

Submission. A policy, plan of 

insurance, provision of a policy or plan 

of insurance, or rates of premium 

provided by an applicant to FCIC in 

accordance with the requirements of 

§ 400.705. Submissions as referenced in 

this subpart do not include concept 

proposals, index-based weather plans of 

insurance, or non-reinsured 

supplemental policies. 

Submitter. Same meaning as 

applicant. 

Sufficient quality. The material 

presented is complete, understandable 

and unambiguous, so that a 

disinterested third party can 

understand, comprehend and make 

calculations, draw substantiated 

conclusions or results to determine 

whether the submission, concept 

proposal, or index-based weather plan 

of insurance is, or can result in, a viable 

and marketable insurance product with 

actuarially appropriate rates, reasonable 

expected market prices, provides 

meaningful coverage, and that protects 

the interests of producers and program 

integrity. The material must be 

presented in Microsoft Office format 

and must also contain adequate 

information that is presented clearly 

enough for the determination to be 

made whether RMA has the resources to 

implement, administer, and deliver the 

submission effectively and efficiently. 

Liability (guarantee), premium, and 

indemnity are clearly defined and 

consistent in calculation throughout the 

policy materials and appropriate for the 

commodity and the risks covered. As 

applicable, the policy, loss adjustment 

methods, underwriting procedures, and 

actuarial rating and pricing 


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methodologies must be clearly 

identified and correspond to the risks 

covered. 

Targeted producer. Producers who are 

considered small, socially 

disadvantaged, beginning and limited 

resource or other specific aspects 

designated by FCIC for review. 

USDA. The United States Department 

of Agriculture. 

User fees. Fees, approved by the 

Board, that can be charged to approved 

insurance provider for use of a policy or 

plan of insurance once the period for 

maintenance has expired that covers the 

expected maintenance costs to be 

incurred by the submitter. 

Viable and marketable. A 

determination by the Board based on a 

detailed, written marketing plan 

demonstrating that a sufficient number 

of producers will purchase the product 

to justify the resources and expenses 

required to offer the product for sale and 

maintain the product for subsequent 

years. 

§ 400.702 Confidentiality and duration of 

confidentiality. 

(a) Pursuant to section 508(h)(4)(A) of 

the Act, prior to approval by the Board, 

any submission submitted to the Board 

under section 508(h) of the Act, concept 

proposal submitted under section 522 of 

the Act, or index-based weather plan of 

insurance submitted under section 

523(i) of the Act, including any 

information generated from the 

submission, concept proposal, or indexbased weather plan of insurance, will be 

considered confidential commercial or 

financial information for purposes of 5 

U.S.C. 552(b)(4) and will not be released 

by FCIC to the public, unless the 

applicant authorizes such release in 

writing. 

(b) Once the Board approves a 

submission or an index-based weather 

plan of insurance, information provided 

with the submission (including 

information from the concept proposal) 

or the index-based weather plan of 

insurance, or generated in the approval 

process, may be released to the public, 

as applicable, including any 

mathematical modeling and data, unless 

it remains confidential business 

information under 5 U.S.C. 552(b)(4). 

While the expert reviews are releasable 

once the submission or an index-based 

weather plan of insurance has been 

approved, the names of the expert 

reviewers may be redacted to prevent 

any harassment or undue pressure on 

the expert reviewers. 

(c) Any submission, concept proposal, 

or index-based weather plan of 

insurance disapproved by the Board 

will remain confidential commercial or 

financial information in accordance 

with 5 U.S.C. 552(b)(4) and no 

information related to such submission, 

concept proposal, or index-based 

weather plan of insurance will be 

released by FCIC unless authorized in 

writing by the applicant. 

(d) All submissions, concept 

proposals, and index-based weather 

plans of insurance, will be kept 

confidential until approved by the 

Board and will be given an 

identification number for tracking 

purposes, unless the applicant advises 

otherwise. 

§ 400.703 Timing and format. 

(a) A submission, concept proposal, or 

index-based weather plan of insurance 

may only be provided to FCIC during 

the first five business days in January, 

April, July, and October. 

(b) A submission, concept proposal, 

or index-based weather plan of 

insurance must be provided to FCIC in 

the following format: 

(1) Electronic format, sent to the 

address in paragraph (d)(1) of this 

section by the due date in paragraph (a) 

of this section. The electronic copy must 

be provided as a single document so 

that when printed the order and content 

exactly match the hard copy; and 

(2) Two hard copies, mailed to the 

addresses in paragraph (d)(2) of this 

section and postmarked by the due date 

in paragraph (a) of this section. The 

hard copies must exactly match the 

electronic copy. 

(c) Any submission, concept proposal, 

or index-based weather plan of 

insurance not provided within the first 

5 business days of a month stated in 

paragraph (a) of this section will be 

considered to have been provided in the 

next month stated in paragraph (a). For 

example, if an applicant provides a 

submission on January 10, it will be 

considered to have been received on 

April 1. 

(d) Any submission, concept 

proposal, or index-based weather plan 

of insurance must be provided: 

(1) In electronic format to the Deputy 

Administrator for Product Management 

(or successor) at DeputyAdministrator@

rma.usda.gov and the Administrator at 

Administrator@rma.usda.gov; and 

(2) In hard copy format, with one hard 

copy provided to the Deputy 

Administrator for Product Management 

(or any successor position), USDA/Risk 

Management Agency, Beacon Facility 

Mail Stop 0812, 9240 Troost Ave., 

Kansas City, MO 64131–3055, and one 

identical hard copy must be provided to 

the Administrator, Risk Management 

Agency, 1400 Independence Ave., Stop 

0801, Room 3053 South Building, 

Washington, DC 20250–0801. 

(e) In addition to the requirements in 

paragraph (a) of this section, a 

submission must be received not later 

than 240 days prior to the earliest 

proposed sales closing date to be 

considered for sale in the requested crop 

year. 

(f) To be offered for sale in a crop 

year, there must be at least sixty days 

between the date the policy has been 

approved by the Board and ready to be 

made available for sale and the earliest 

sales closing date, unless this 

requirement is waived by the Board. 

(g) Notwithstanding, paragraph (f) of 

this section, the Board, or RMA if 

authorized by the Board, shall 

determine when sales can begin for a 

submission approved by the Board. 

§ 400.704 Covered by this subpart. 

(a) An applicant may submit to the 

Board, in accordance with § 400.705, a 

submission that is: 

(1) A policy or plan of insurance not 

currently reinsured by FCIC; 

(2) One or more proposed revisions to 

a policy or plan of insurance authorized 

under the Act; or 

(3) Rates of premium for any policy or 

plan of insurance authorized under the 

Act. 

(b) An applicant must submit to the 

Board, any significant change to a 

previously approved submission, 

including requests for expansion, prior 

to making the change in accordance 

with § 400.705. 

(c) An applicant may submit a 

concept proposal to the Board prior to 

developing a full submission, in 

accordance with this subpart and the 

Procedures Handbook 17030— 

Approved Procedures for Submission of 

Concept Proposals Seeking Advance 

Payment of Research and Development 

Expenses, which can be found on the 

RMA Web site at www.rma.usda.gov. 

(d) An applicant who is an approved 

insurance provider may submit an 

index-based weather plan of insurance 

for consideration as a pilot program in 

accordance with this subpart and the 

Procedures Handbook 17050— 

Approved Procedures for Submission of 

Index-based Weather Plans of Insurance, 

which can be found on the RMA Web 

site at www.rma.usda.gov. 

(e) An applicant must submit a nonreinsured supplemental policy or 

endorsement to RMA in accordance 

with § 400.713. 

§ 400.705 Contents for new and changed 

submissions, concept proposals, and 

indexed-based weather plans of insurance. 

(a) A complete submission must 

contain the following material, as 


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applicable, in the order given, in a 3- 

ring binder for hard copies and in a 

single Microsoft Word document file for 

electronic copies, with a table of 

contents, page numbers, and section 

dividers clearly labeling each section, as 

applicable. All relevant materials 

should be provided in the designated 

section and not appended to the end of 

the submission. 

(b) The first section will contain 

general information numbered as 

follows (1, 2, 3, etc.), including, as 

applicable: 

(1) The applicant’s name(s), address 

or primary business location, phone 

number, and email address; 

(2) The type of submission (see 

§ 400.704) and a notation of whether or 

not the submission was approved by the 

Board as a concept proposal; 

(3) A statement of whether the 

applicant is requesting: 

(i) Reinsurance; 

(ii) Risk subsidy; 

(iii) A&O subsidy; 

(iv) Reimbursement for research and 

development costs, as applicable and, if 

the submission was previously 

submitted as a concept proposal, the 

amount of the advance payment for 

expected research and development 

costs; or 

(v) Reimbursement for expected 

maintenance costs, if applicable; 

(4) The proposed agricultural 

commodities to be covered, including 

types, varieties, and practices covered 

by the submission; 

(5) The crop or insurance year and 

reinsurance year in which the 

submission is proposed to be available 

for purchase by producers; 

(6) The proposed sales closing date, if 

applicable, or if not applicable, the 

earliest date the applicant expects to 

release the product to the public; 

(7) The proposed area for the plan of 

insurance and if applicable, the reasons 

why the submission is not being 

proposed for other areas producing the 

commodity; 

(8) Any known or anticipated future 

expansion plans; 

(9) Identification, including names, 

addresses, telephone numbers, and 

email addresses, of the person(s) 

responsible for: 

(i) Addressing questions regarding the 

policy, underwriting rules, loss 

adjustment procedures, rate and price 

methodologies, data processing and 

record-keeping requirements, and any 

other questions that may arise in 

implementing or administering the 

program if it is approved; and 

(ii) Annual reviews to ensure 

compliance with all requirements of the 

Act, this subpart, and any agreements 

executed between the applicant and 

FCIC; and 

(10) A statement of whether the 

submission will be filed with the 

applicable office responsible for 

regulating insurance in each state 

proposed for insurance coverage, and if 

not, reasons why the submission will 

not be filed for review. 

(c) The second section must contain 

the benefits of the plan, including, as 

applicable, a summary that includes: 

(1) How the submission offers 

coverage or other benefits not currently 

available from existing public or private 

programs; 

(2) The projected demand for the 

submission, including support for and 

against development from market 

research, producers or producer groups, 

agents, lending institutions, and other 

interested parties that provide verifiable 

evidence of demand; 

(3) Potential impacts the submission 

may have on producers both where the 

new plan will and will not be available 

(include both positive and negative 

impacts); 

(4) How the submission meets public 

policy goals and objectives consistent 

with the Act and other laws, as well as 

policy goals supported by USDA and 

the Federal Government; and 

(5) A detailed description of the 

coverage provided by the submission 

and its applicability to all producers, 

including targeted producers. 

(d) Except as provided in this section, 

the third section must contain the 

policy, that is clearly written in plain 

language in accordance with the Plain 

Writing Act of 2010 (5 U.S.C. 301) such 

that producers will be able to 

understand the coverage being offered. 

The policy language permits actuaries to 

form a clear understanding of the 

payment contingencies for which they 

will set rates. The policy language does 

not encourage an excessive number of 

disputes or legal actions because of 

misinterpretations. 

(1) If the submission involves a new 

insurance policy or plan of insurance: 

(i) All applicable policy provisions; 

and 

(ii) A list of any additional coverage 

that may be elected by the insured in 

conjunction with the submission such 

as applicable endorsements (include a 

description of the coverage and how 

such coverage may be obtained). 

(2) If the submission involves a 

change to a previously approved policy, 

plan of insurance, or rates of premium, 

the proposed revisions, rationale for 

each change, data and analysis 

supporting each change, the impact of 

each change, and the impact of all 

changes in aggregate. 

(e) The fourth section must contain a 

marketing plan, including, as 

applicable: 

(1) A list of counties and states where 

the submission is proposed to be 

offered; 

(2) The amount of commodity (acres, 

head, board feet, etc.), the amount of 

production, and the value of each 

agricultural commodity proposed to be 

covered in each proposed county and 

state; 

(3) A reasonable estimate of expected 

liability and premium, for each 

proposed county and state and total 

expected liability and premium by crop 

year based on the marketing plan and an 

estimate of the market penetration of 

other similar products; 

(4) If available, any insurance 

experience for each year and in each 

proposed county and state in which the 

policy has been previously offered for 

sale including an evaluation of the 

policy’s performance and, if data are 

available, a comparison with other 

similar insurance policies reinsured 

under the Act; 

(5) Focus group results, both positive 

and negative reactions; 

(6) Market research studies that 

include: 

(i) Evidence the proposed submission 

will be positively received by 

producers; and 

(ii) Market estimates that show 

demand and level of coverage for which 

producers are willing to pay; 

(7) For submissions proposing 

products for specialty crops a 

consultation report must be provided 

that includes a summary and analysis of 

discussions with groups representing 

producers of those agricultural 

commodities in all major producing 

areas for commodities to be served or 

potentially impacted, either directly or 

indirectly, and the expected impact of 

the proposed submission on the general 

marketing and production of the crop 

from both a regional and national 

perspective including evidence that the 

submission will not create adverse 

market distortions; 

(8) Effects upon the delivery system or 

participants including: 

(i) Estimated computer system 

impacts and costs; 

(ii) Estimated administrative and 

training costs; and 

(iii) What, if any, efficiency will be 

gained; 

(9) Correspondence from producers 

expressing the need for such policy or 

plan of insurance; and 

(10) A commitment in writing from at 

least one approved insurance provider 

to sell and support the policy or plan of 

insurance. 


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(f) The fifth section must contain the 

information related to the underwriting 

and loss adjustment of the submission, 

including as applicable: 

(1) Detailed rules for determining 

insurance eligibility, including all 

producer reporting requirements; 

(2) Relevant dates; 

(3) Step by step examples of the data 

and calculations needed to establish the 

insurance guarantee (liability) and 

premium per acre or other unit of 

measure, including worksheets that 

provide the calculations in sufficient 

detail and in the same order as 

presented in the policy to allow 

verification that the premiums charged 

for the coverage are consistent with 

policy provisions; 

(4) Step-by-step examples of 

calculations used to determine 

indemnity payments for all probable 

situations where a partial or total loss 

may occur; 

(5) A detailed description of the 

causes of loss covered by the policy or 

plan of insurance and any causes of loss 

excluded; 

(6) Any statements to be included in 

the actuarial documents including any 

intended Special Provisions statements 

that may change any underlying policy 

terms or conditions; and 

(7) The loss adjustment standards 

handbook for the policy or plan of 

insurance that includes: 

(i) A table of contents and 

introduction; 

(ii) A section containing 

abbreviations, acronyms, and 

definitions; 

(iii) A section containing insurance 

contract information (insurability 

requirements; Crop Provisions not 

applicable to catastrophic risk 

protection; specific unit division 

guidelines, if applicable; notice of 

damage or loss provisions; quality 

adjustment provisions; etc.); 

(iv) A section that thoroughly 

explains appraisal methods, if 

applicable; 

(v) Illustrative samples of all the 

applicable forms needed for insuring 

and adjusting losses in regards to the 

submission, plus detailed instructions 

for their use and completion; 

(vi) Instructions, examples of 

calculations, and loss adjustment 

procedures that are necessary to 

establish the amounts of coverage and 

loss; 

(vii) A section containing any special 

coverage information (i.e., replanting, 

tree replacement or rehabilitation, 

prevented planting, etc.), as applicable; 

and 

(viii) A section containing all 

applicable reference material (i.e., 

minimum sample requirements, row 

width factors, etc.). 

(g) The sixth section must contain 

information related to prices and rates 

of premium, including, as applicable: 

(1) A detailed description of the 

specific premium rating methodology 

proposed to be used and the basis for 

selection of the rating methodology; 

(2) A list of all assumptions made in 

the premium rating and commodity 

pricing methodologies, and the basis for 

these assumptions; 

(3) A detailed description of the 

pricing and rating methodologies, 

including: 

(i) Supporting documentation; 

(ii) All mathematical formulas and 

equations; 

(iii) Data and data sources used in 

determining rates and prices and a 

detailed assessment of the data and how 

it supports the proposed rates and 

prices; 

(iv) A detailed explanation of how the 

rates account for each of the risks 

covered by the policy; and 

(v) A detailed explanation of how the 

prices are applicable to the policy; 

(4) An example of both a rate 

calculation and a price calculation; 

(5) A discussion of the applicant’s 

objective evaluation of the accuracy of 

the data, the short and long term 

availability of the data, and how the 

data will be obtained (if the data source 

is confidential or proprietary explain 

the cost of obtaining the data); and 

(6) An analysis of the results of 

simulations or modeling showing the 

performance of proposed rates and 

commodity prices, as applicable, based 

on one or more of the following (Such 

simulations must use all years of 

experience available to the applicant 

and must reflect both partial losses and 

total losses): 

(i) A recalculation of total premium 

and losses compared to a similar or 

comparable insurance plan offered 

under the authority of the Act with 

modifications, as needed, to represent 

the components of the submission; 

(ii) A simulation that shows liability, 

premium, indemnity, and loss ratios for 

the proposed insurance product based 

on the probability distributions used to 

develop the rates and commodity prices, 

as applicable, including sensitivity tests 

that demonstrate price or yield 

extremes, and the impact of 

inappropriate assumptions; or 

(iii) Any other comparable simulation 

that provides results indicating both 

aggregate and individual performance of 

the submission including expected 

liability, premium, indemnity, and loss 

ratios for the proposed insurance 

product, under various scenarios 

depicting good and poor actuarial 

experience. 

(h) The seventh section must contain 

forms, instructions for completing 

forms, and statements for all forms 

applicable to the submission in a format 

compatible with the Document and 

Supplemental Standards Handbook 

(FCIC 24040) found at http://

www.rma.usda.gov/handbooks/24000/

index.html. 

(i) The eighth section must contain 

the following: 

(1) A statement certifying that the 

submitter and any approved insurance 

provider or its affiliates will not solicit 

or market the submission until at least 

60 days after all policy materials are 

released to the public by RMA, unless 

otherwise specified by the Board; 

(2) An explanation of any provision of 

the policy not authorized under the Act 

and identification of the portion of the 

rate of premium due to these provisions; 

and 

(3) If applicable, agent and loss 

adjuster training plans. 

(j) The ninth section must contain a 

statement from the submitter that, if the 

submission is approved, the submitter 

will work with RMA and its computer 

programmers as needed to assure an 

effective and efficient implementation 

process. The applicant must consult 

with RMA to determine whether or not 

the submission can be effectively and 

efficiently implemented and 

administered through the current 

information technology standards and 

systems. 

(1) If FCIC approves the submission 

and determines that its information 

technology systems have the capacity to 

implement and administer the 

submission, the applicant must provide 

a document detailing acceptable 

computer processing requirements 

consistent with those used by RMA as 

shown on the RMA Web site in the 

Appendix III/M–13 Handbook. This 

information details the acceptable 

computer processing requirements in a 

manner consistent with that used by 

RMA to facilitate the acceptance of 

producer applications and related data. 

(2) Any computer systems, 

requirements, code and software must 

be consistent with that used by RMA 

and comply with the standards 

established in Appendix III/M–13 

Handbook, or any successor document, 

of the SRA or other reinsurance 

agreement as specified by FCIC. 

(3) These requirements are available 

from the USDA/Risk Management 

Agency, Beacon Facility Mail Stop 0812, 

9240 Troost Ave., Kansas City, MO 

64131–3055, or on RMA’s Web site at 


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http://www.rma.usda.gov/data/#m13, or 

a successor Web site. 

(k) The tenth section submitted on 

separate pages and in accordance with 

§§ 400.712 must specify: 

(1) On one page, the amount received 

for an advance payment, an estimate of 

the total amount of reimbursement for 

research and development costs (new 

products only) or an estimate for 

maintenance costs for the year that the 

submission will be effective (for 

products that are within the 

maintenance period); and 

(2) On another page, a detailed 

estimate of maintenance costs for future 

years of the maintenance period and the 

basis that such maintenance costs will 

be incurred, including, but not limited 

to: 

(i) Any anticipated expansion; 

(ii) Anticipated changes or updates to 

policy materials; 

(iii) The generation of premium rates; 

(iv) The determination of prices; and 

(v) Any other costs that the applicant 

anticipates will be requested for 

reimbursement of maintenance costs or 

expenses; 

(l) The eleventh section must contain 

executed (signed) certification 

statements in accordance with the 

following: 

(1) ‘‘{Applicant’s Name} hereby claim 

that the basis and amounts set forth in 

this section and § 400.712 are correct 

and due and owing to {Applicant’s 

Name} by FCIC under the Federal Crop 

Insurance Act’’; and 

(2) ‘‘{Applicant Name} understands 

that, in addition to criminal fines and 

imprisonment, the submission of false 

or fraudulent statements or claims may 

result in civil and administrative 

sanctions.’’ 

(m) The contents required for concept 

proposals are found in the Procedures 

Handbook 17030—Approved 

Procedures for Submission of Concept 

Proposals Seeking Advance Payment of 

Research and Development Expenses. In 

addition, the proposal must provide a 

detailed description of why the concept 

provides insurance: 

(1) In a significantly improved form; 

(2) To a crop or region not 

traditionally served by the Federal crop 

insurance program; or 

(3) In a form that addresses a 

recognized flaw or problem in the 

program; 

(n) The contents required for indexbased weather plans of insurance are 

found in the Procedures Handbook 

17050—Approved Procedures for 

Submission of Index-based Weather 

Plans of Insurance. In accordance with 

the Board approved procedures, the 

approved insurance provider that 

submits the index-based weather plan of 

insurance must provide evidence they 

have: 

(1) Adequate experience underwriting 

and administering policies or plans of 

insurance that are comparable to the 

proposed policy of plan of insurance; 

(2) Sufficient assets or reinsurance to 

satisfy the underwriting obligations of 

the approved insurance provider, and 

possess a sufficient insurance credit 

rating from an appropriate credit rating 

bureau; and 

(3) Applicable authority and approval 

from each State in which the approved 

insurance provider intends to sell the 

insurance product. 

§ 400.706 Review. 

(a) Prior to providing a submission, 

concept proposal, or index-based 

weather plan of insurance to the Board, 

RMA will: 

(1) Review the submission, concept 

proposal, or index-based weather plan 

of insurance to determine if all required 

documentation is included in 

accordance with § 400.705; 

(2) Review the submission, concept 

proposal, or index-based weather plan 

of insurance to determine whether it is 

of sufficient quality to conduct a 

meaningful review such that the Board 

will be able to make an informed 

decision regarding approval or 

disapproval; 

(3) In accordance with section 

508(h)(1)(B) of the Act, at its sole 

discretion, determine if the policy or 

plan of insurance: 

(i) Will likely result in a viable and 

marketable policy; 

(ii) Will provide crop insurance 

coverage in a significantly improved 

form; and 

(iii) Adequately protect the interests 

of producers. 

(4) Except for submissions developed 

from a concept proposal funded for 

advanced payment by the Board, reject 

and return any submission, concept 

proposal, or indexed based weather plan 

of insurance that: 

(i) Does not contain all the required 

information or is not of sufficient 

quality to conduct a meaningful review; 

(ii) Is unlikely result in a viable and 

marketable policy; 

(iii) Will not provide crop insurance 

coverage in a significantly improved 

form; and 

(iv) Will not adequately protect the 

interests of producers. 

(5) Except as provided in paragraph 

(a)(4) of this section or if the submission 

was developed from an approved 

concept proposal, forward the 

submission, concept proposal, or indexbased weather plan of insurance, and 

the results of RMA’s initial review, to 

the Board for its determination of 

completeness. 

(b) Upon the Board’s receipt of a 

submission, the Board will: 

(1) Determine if the submission is 

complete (The date the Board votes to 

contract with the expert reviewers is the 

date the submission is deemed to be 

complete for the start of the 120 day 

time-period for approval); 

(2) Unless the submission makes nonsignificant changes to a policy or plan 

of insurance, or involves policy 

provisions that have already undergone 

expert review, forward the complete 

submission to at least five expert 

reviewers to review the submission: 

(i) Of the five expert reviewers, no 

more than one will be employed by the 

Federal Government, and none may be 

employed by any approved insurance 

provider or their representative; and 

(ii) The expert reviewers will each 

provide their individual assessment of 

whether the submission: 

(A) Protects the interests of 

agricultural producers and taxpayers; 

(B) Is actuarially appropriate; 

(C) Follows appropriate insurance 

principles; 

(D) Meets the requirements of the Act; 

(E) Does not contain excessive risks; 

(F) Follows sound, reasonable, and 

appropriate underwriting principles; 

(G) Will provide a new kind of 

coverage that is likely to be viable and 

marketable; 

(H) Will provide crop insurance 

coverage in a manner that addresses a 

clear and identifiable flaw or problem in 

an existing policy; 

(I) Will provide a new kind of 

coverage for a commodity that 

previously had no available crop 

insurance, or has demonstrated a low 

level of participation or coverage level 

under existing coverage; 

(J) May have a significant adverse 

impact on the crop insurance delivery 

system; 

(K) Contains a marketing plan that 

reasonably demonstrates the product 

would be viable and marketable; 

(L) If applicable, contains a 

consultation report that provides 

evidence the submission will not create 

adverse market distortions; and 

(M) Meets any other criteria the Board 

may deem necessary; 

(3) Return to the applicant any 

submission the Board determines is not 

complete, along with an explanation of 

the reason for the determination and: 

(i) With respect to submissions 

developed from approved concept 

proposals, the provisions in 

§ 400.712(c)(1) shall apply; and 

(ii) Except for submissions developed 

from concept proposals, if the 


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submission is resubmitted at a later 

date, it will be considered a new 

submission solely for the purpose of 

determining the amount of time that the 

Board must take action; 

(4) For complete submissions: 

(i) Request review by RMA to provide 

its assessment of whether the 

submission: 

(A) Meets the criteria listed in 

subsections (b)(2)(ii)(A) through (M); 

(B) Is consistent with USDA’s public 

policy goals; 

(C) Does not increase or shift risk to 

any other FCIC reinsured policy; 

(D) Can be implemented, 

administered, and delivered effectively 

and efficiently using RMA’s information 

technology and delivery systems; and 

(E) Contains requested amounts of 

government reinsurance, risk subsidy, 

and administrative and operating 

subsidies that are reasonable and 

appropriate for the type of coverage 

provided by the policy submission; and 

(ii) Seek review from the Office of the 

General Counsel (OGC) to determine if 

the submission conforms to the 

requirements of the Act and all 

applicable Federal statutes and 

regulations. 

(5) Unless all the requirements for 

approval for submissions in this 

subsection are met or reasons for notice 

of disapproval exist as specified in 

subsection (k), provide a notice of intent 

to disapprove, including the reasons for 

the intent to disapprove. 

(c) Upon the Board’s receipt of a 

concept proposal, the Board will: 

(1) Determine whether the concept 

proposal is complete (The date the 

Board votes to contract with expert 

reviewers is the date the concept 

proposal is deemed to be a complete 

concept proposal for the start of the 120 

day time-period for approval); 

(2) If complete, forward the complete 

concept proposal to at least two expert 

reviewers with underwriting or actuarial 

experience to review the concept in 

accordance with section 522(b)(2) of the 

Act, this subpart, and Procedures 

Handbook 17030—Approved 

Procedures for Submission of Concept 

Proposals Seeking Advance Payment of 

Research and Development Expenses; 

(3) Return to the applicant any 

concept proposal the Board determines 

is not complete, along with an 

explanation of the reason for the 

determination (If the concept proposal 

is resubmitted at a later date, it will be 

considered a new concept proposal 

solely for the purposes of determining 

the amount of time that the Board must 

take action); 

(4) Determine whether the concept 

proposal, if developed into a policy or 

plan of insurance would, in good faith, 

would meet the requirement of being 

likely to result in a viable and 

marketable policy consistent with 

section 508(h); 

(5) At its sole discretion, determine 

whether the concept proposal, if 

developed into a policy or plan of 

insurance would meet the requirement 

of providing coverage: 

(i) In a significantly improved form; 

(ii) To a crop or region not 

traditionally served by the Federal crop 

insurance program; or 

(iii) In a form that addresses a 

recognized flaw or problem in the 

program; 

(6) Determine whether the proposed 

budget and timetable are reasonable; 

(7) Determine whether the concept 

proposal meets all other requirements 

imposed by the Board or as otherwise 

specified in Procedures Handbook 

17030—Approved Procedures for 

Submission of Concept Proposals 

Seeking Advance Payment of Research 

and Development Expenses; 

(8) Provide a date by which the 

submission must be provided in 

consultation with the applicant; and 

(9) Unless all the requirements for 

approval of concept proposals in this 

subsection are met or reasons for 

disapproval exist as specified in 

subsection (l), provide a notice of 

disapproval, including the reasons for 

disapproval. 

(d) Upon the Board’s receipt of an 

index-based weather plan of insurance, 

the Board will: 

(1) Determine whether the indexbased weather plan of insurance is 

complete (The date the Board votes to 

contract with expert reviewers is the 

date the index-based weather plan of 

insurance is deemed to be a complete 

for the start of the 120 day time-period 

for approval); 

(2) If determined to be complete, 

contract with five expert reviewers and 

review the index-based weather plan of 

insurance in accordance with section 

523(i) of the Act, this subpart, and 

Procedures Handbook 17050— 

Approved Procedures for Submission of 

Index-based Weather Plans of Insurance; 

(3) Return to the applicant any indexbased weather plan of insurance the 

Board determines is not complete, along 

with an explanation of the reason for the 

determination (If the index-based 

weather plan of insurance is 

resubmitted at a later date, it will be 

considered a new index-based weather 

plan of insurance solely for the 

purposes of determining the amount of 

time that the Board must take action); 

(4) Give the highest priority for 

approval of index-based weather plans 

of insurance that provide a new kind of 

coverage for specialty crops and 

livestock commodities that previously 

had no available crop insurance, or has 

demonstrated a low level of 

participation under existing coverage; 

and 

(5) Unless all the requirements for 

approval of index-based weather plans 

of insurance in this subsection are met 

or reasons for notice of disapproval exist 

as specified in paragraph (m) of this 

section, provide a notice of intent to 

disapprove including the reasons for the 

intent to disapprove. 

(e) All comments and evaluations will 

be provided to the Board by a date 

determined by the Board to allow the 

Board adequate time for review. 

(f) The Board will consider all 

comments, evaluations, and 

recommendations in its review process. 

Prior to making a decision, the Board 

may request additional information 

from RMA, OGC, the expert reviewers, 

or the applicant. 

(g) In considering whether to approve 

a submission and when such 

submission will be offered for sale, the 

Board will: 

(1) First, consider policies or plans of 

insurance that address underserved 

commodities, including commodities 

for which there is no insurance; 

(2) Second, consider existing policies 

or plans of insurance for which there is 

inadequate coverage or there exists low 

levels of participation; and 

(3) Last, consider all policies or plans 

of insurance submitted to the Board that 

do not meet the criteria described in 

paragraph (g)(1) or (2) of this section. 

(h) At any time an applicant may 

request a time delay after the 

submission, concept proposal, or indexbased weather plan of insurance has 

been placed on the Board meeting 

agenda. The Board is not required to 

agree to such an extension. 

(1) With respect to submissions from 

concept proposals approved by the 

Board for advanced payment, the 

applicant must provide good cause why 

consideration should be delayed. 

(2) Any requested time delay is not 

limited in the length of time unless a 

date is set by the Board by which all 

revisions to the submission, concept 

proposal or indexed-based weather plan 

of insurance must be made. However, 

delays may make implementation of the 

submission for the targeted crop year 

impractical or impossible as determined 

by the Board. 

(3) The time period during which the 

Board will make a decision to approve 

or disapprove the submission, concept 

proposal or indexed-based weather plan 

of insurance shall be extended 


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commensurately with any time delay 

requested by the applicant. 

(i) The applicant may withdraw a 

submission, concept proposal, indexbased weather plan of insurance, or a 

portion of a submission or concept 

proposal, at any time by presenting a 

request to the Board. A withdrawn 

submission, concept proposal or indexbased weather plan of insurance that is 

resubmitted will be deemed a new 

submission, concept proposal, or indexbased weather plan of insurance solely 

for the purposes of determining the 

amount of time that the Board must take 

action. 

(j) The Board will render a decision 

on a submission, concept proposal, or 

indexed-based weather plan of 

insurance, with or without revision 

within 90 days after the date the 

submission, concept proposal, or 

indexed-based weather plan of 

insurance is considered complete by the 

Board, unless the Board agrees to a time 

delay in accordance with paragraph (h) 

of this section. Failure to approve a 

submission, concept proposal, or 

indexed-based weather plan of 

insurance constitutes intent to give of 

intent to disapprove a submission or 

index-based weather plan of insurance 

or disapproval of a concept proposal. 

(k) The Board may provide a notice of 

intent to disapprove a submission if it 

determines: 

(1) The interests of producers and 

taxpayers are not protected, including 

but not limited to: 

(i) The submission does not provide 

adequate coverage or treats producers 

disparately; 

(ii) The applicant has not presented 

sufficient documentation that the 

submission will provide a new kind of 

coverage that is likely to be viable and 

marketable; 

(iii) Coverage would be similar to 

another policy or plan of insurance that 

has not demonstrated a low level of 

participation or does not contain a clear 

and identifiable flaw, and the producer 

would not significantly benefit from the 

submission; 

(iv) The submission may create 

adverse market distortions or adversely 

impact other crops or agricultural 

commodities if marketed; 

(v) The submission will have a 

significant adverse impact on the 

private delivery system; or 

(vi) The submission cannot be 

implemented, administered, and 

delivered effectively and efficiently 

using RMA’s information technology 

and delivery systems; 

(2) The premium rates are not 

actuarially appropriate; 

(3) The submission does not conform 

to sound insurance and underwriting 

principles; 

(4) The risks associated with the 

submission are excessive or it increases 

or shifts risk to another reinsured 

policy; 

(5) The submission does not meet the 

requirements of the Act; or 

(6) The 90 day deadline under 

subsection (i) will expire before the 

Board has time to make an informed 

decision to approve or disapprove the 

submission. 

(l) The Board may disapprove a 

concept proposal if it determines: 

(1) The concept, in good faith, will 

not likely result in a viable and 

marketable policy consistent with 

section 508(h); 

(2) At the sole discretion of the Board, 

the concept, if developed into a policy 

and approved by the Board, would not 

provide crop insurance coverage: 

(i) In a significantly improved form; 

(ii) To a crop or region not 

traditionally served by the Federal crop 

insurance program; or 

(iii) In a form that addresses a 

recognized flaw or problem in the 

program; 

(3) The proposed budget and 

timetable are not reasonable, as 

determined by the Board; or 

(4) The concept proposal fails to meet 

one or more requirements established by 

the Board. 

(m) The Board may provide a notice 

of intent to disapprove an index-based 

weather plan of insurance if it 

determines there is not: 

(1) Adequate experience underwriting 

and administering policies or plans of 

insurance that are comparable to the 

proposed policy or plan of insurance; 

(2) Sufficient assets or reinsurance to 

satisfy the underwriting obligations of 

the approved insurance provider, and 

possess a sufficient insurance credit 

rating from an appropriate credit rating 

bureau, in accordance with Board 

procedures; and 

(3) Applicable authority and approval 

from each State in which the approved 

insurance provider intends to sell the 

insurance product. 

(n) Unless otherwise provided for in 

this section: 

(1) If the Board intends to disapprove 

a submission or index-based weather 

plan of insurance or disapproves a 

concept proposal, the Board will 

provide the applicant with a written 

explanation outlining the basis for the 

intent to disapprove or disapproval; and 

(2) Any approval or disapproval of a 

submission, concept proposal, or indexbased weather plan of insurance must 

be made by the Board in writing not 

later than 120 days after the Board has 

determined it to be complete. 

(o) If a notice of intent to disapprove 

all or part of a submission or indexbased weather plan of insurance has 

been provided by the Board, the 

applicant must provide written notice to 

the Board not later than 30 days after 

the Board provides such notice if the 

submission or index-based weather plan 

of insurance will be modified. If the 

applicant does not respond within the 

30-day period, the Board will send the 

applicant a letter stating the submission 

or index-based weather plan of 

insurance is disapproved. 

(p) If the applicant elects to modify 

the submission or index-based weather 

plan of insurance: 

(1) The applicant must advise the 

Board of a date by which the modified 

submission or index-based weather plan 

of insurance will be presented to the 

Board; and 

(2) The remainder of the time left 

between the Board’s notice of intent to 

disapprove and the expiration of the 120 

day deadline is tolled until the modified 

submission or index-based weather plan 

of insurance is received by the Board. 

(3) The Board will disapprove a 

modified submission or index-based 

weather plan of insurance if the: 

(i) Causes for disapproval stated by 

the Board in its notification of intent to 

disapprove the submission or indexbased weather plan of insurance are not 

satisfactorily addressed; 

(ii) Board determines there is 

insufficient time for the Board to finish 

its review before the expiration of the 

120-day deadline for disapproval of a 

submission or index-based weather plan 

of insurance, unless the applicant grants 

the Board an extension of time to 

adequately consider the modified 

submission or index-based weather plan 

of insurance (If an extension of time is 

agreed upon, the time period during 

which the Board must act on the 

modified submission or index-based 

weather plan of insurance will tolled 

during the extension); or 

(iii) Applicant does not present a 

modification of the submission or 

index-based weather plan of insurance 

to the Board on the date the applicant 

specified and the applicant does not 

request an additional time delay. 

(q) If the Board fails to render a 

decision on a new submission or indexbased weather plan of insurance within 

the time periods specified in paragraph 

(j) or (n) of this section, such submission 

or index-based weather plan of 

insurance will be deemed approved by 

the Board for the initial reinsurance year 

designated for the submission or indexbased weather plan of insurance. The 


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Board must approve the submission or 

index-based weather plan of insurance 

for it to be available for any subsequent 

reinsurance year. 

§ 400.707 Presentation to the Board for 

approval or disapproval. 

(a) The Board will inform the 

applicant of the date, time, and place of 

the Board meeting. 

(b) The applicant will be given the 

opportunity and is encouraged to 

present the submission, concept 

proposal, or index-based weather plan 

of insurance to the Board in person. The 

applicant must confirm in writing, 

email or fax whether the applicant will 

present in person to the Board. 

(c) If the applicant elects not to 

present the submission, concept 

proposal, or index-based weather plan 

of insurance to the Board, the Board will 

make its decision based on the 

information provided in accordance 

with § 400.705 and § 400.706. 

§ 400.708 Post approval. 

(a) After a submission is approved by 

the Board, and prior to it being made 

available for sale to producers: 

(1) The following must be executed, 

as applicable: 

(i) If required by FCIC, an agreement 

between the applicant and FCIC that 

specifies: 

(A) In addition to the requirements in 

§ 400.709, responsibilities of each with 

respect to the implementation, delivery 

and maintenance of the submission; and 

(B) The required timeframes for 

submission of any information and 

documentation needed to administer the 

approved submission; 

(ii) A reinsurance agreement if terms 

and conditions differ from the available 

existing reinsurance agreements; and 

(iii) A training package to facilitate 

implementation of the approved 

submission; 

(2) The Board may limit the 

availability of coverage, for any policy 

or plan of insurance developed under 

the authority of the Act and this 

regulation, on any farm or in any county 

or area; 

(3) A submission approved by the 

Board under this subpart will be made 

available to all approved insurance 

providers under the same reinsurance, 

subsidy, and terms and conditions as 

received by the applicant; 

(4) Any solicitation, sales, marketing, 

or advertising of the approved 

submission by the applicant before FCIC 

has made the policy materials available 

to all interested parties through its 

official issuance system will result in 

the denial of reinsurance, risk subsidy, 

and A&O subsidy for those policies 

affected; and 

(5) The property rights to the 

submission will automatically transfer 

to FCIC if the applicant elects not to 

maintain the submission under 

§ 400.712(a)(3) or fails to notify FCIC of 

its decision to elect or not elect 

maintenance of the program under 

§ 400.712(l). 

(b) Requirements and procedures for 

approved index-based weather plans of 

insurance are contained in Procedures 

Handbook 17050—Approved 

Procedures for Submission of Indexbased Weather Plans of Insurance. In 

accordance with the Board approved 

procedures, index-based weather plans 

of insurance are not eligible for federal 

reinsurance, but may be approved for 

risk subsidy and A&O subsidy. 

§ 400.709 Roles and responsibilities. 

(a) With respect to the applicant: 

(1) The applicant is responsible for: 

(i) Preparing and ensuring that all 

policy documents, rates of premium, 

prices, and supporting materials, 

including actuarial documents, are 

submitted by the deadline specified by 

FCIC, in the form approved by the 

Board, and are in compliance with 

Section 508 of the Rehabilitation Act; 

(ii) Annually updating and providing 

maintenance changes no later than 180 

days prior to the earliest contract change 

date for the commodity in all counties 

or states in which the policy or plan of 

insurance is sold; 

(iii) Timely addressing responses to 

procedural issues, questions, problems 

or clarifications in regard to a policy or 

plan of insurance (all such resolutions 

for approved submissions will be 

communicated to all approved 

insurance providers through FCIC’s 

official issuance system); and 

(iv) If requested by the Board, 

providing an annual review of the 

policy’s performance, in writing to the 

Board, 180 days prior to the contract 

change date for the plan of insurance 

(The first annual report will be 

submitted one full year after 

implementation of an approved policy 

or plan of insurance, as agreed to by the 

submitter and RMA); 

(2) Only the applicant may make 

changes to the policy, plan of insurance, 

or rates of premium approved by the 

Board: 

(i) Any changes to approved 

submissions, both non-significant and 

significant, must be submitted to FCIC 

in the form of a submission for review 

in accordance with this subpart no later 

than 180 days prior to the earliest 

contract change date for the commodity 

in all counties or states in which the 

policy or plan of insurance is sold; and 

(ii) Significant changes will be 

considered a new submission; 

(3) Except as provided in paragraph 

(a)(4) of this section, the applicant is 

solely liable for any mistakes, errors, or 

flaws in the submitted policy, plan of 

insurance, their related materials, or the 

rates of premium that have been 

approved by the Board unless the policy 

or plan of insurance is transferred to 

FCIC in accordance with § 400.712(l) 

(The applicant remains liable for any 

mistakes, errors, or flaws that occurred 

prior to transfer of the policy or plan of 

insurance to FCIC); 

(4) If the mistake, error, or flaw in the 

policy, plan of insurance, their related 

materials, or the rates of premium is 

discovered more than 45 days prior to 

the cancellation or termination date for 

the policy or plan of insurance, the 

applicant may request in writing that 

FCIC withdraw the approved policy, 

plan of insurance, or rates of premium: 

(i) Such request must state the 

discovered mistake, error, or flaw in the 

policy, plan of insurance, or rates of 

premium, and the expected impact on 

the program; and 

(ii) For all timely received requests for 

withdrawal, no liability will attach to 

such policies, plans of insurance, or 

rates of premium that have been 

withdrawn and no producer, approved 

insurance provider, or any other person 

will have a right of action against the 

applicant; 

(5) Notwithstanding the policy 

provisions regarding cancellation, any 

policy, plan of insurance, or rates of 

premium that have been withdrawn by 

the applicant, in accordance with 

paragraph (a)(4) of this section is 

deemed canceled and applications are 

deemed not accepted as of the date that 

FCIC publishes the notice of withdrawal 

on its Web site at www.rma.usda.gov. 

(i) Approved insurance providers will 

be notified in writing by FCIC that the 

policy, plan of insurance, or premium 

rates have been withdrawn; and 

(ii) Producers will have the option of 

selecting any other policy or plan of 

insurance authorized under the Act that 

is available in the area by the sales 

closing date for such policy or plan of 

insurance; and 

(6) Failure of the applicant to perform 

all of the applicant’s responsibilities 

may result in the withdrawal of 

approval for the policy or plan of 

insurance. 

(b) With respect to FCIC: 

(1) FCIC is responsible for: 

(i) Conducting a review of the 

submission in accordance with 

§ 400.706 and providing its 

recommendations to the Board; 

(ii) With respect to submissions: 


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(A) Ensuring that all approved 

insurance providers receive the 

approved policy or plan of insurance, 

and related material, for sale to 

producers in a timely manner (All such 

information shall be communicated to 

all approved insurance providers 

through FCIC’s official issuance system); 

(B) As applicable, ensuring that 

approved insurance providers receive 

reinsurance under the same terms and 

conditions as the applicant (Approved 

insurance providers should contact 

FCIC to obtain and execute a copy of the 

reinsurance agreement) if required; and 

(C) Reviewing the activities of 

approved insurance providers, agents, 

loss adjusters, and producers to ensure 

that they are in accordance with the 

terms of the policy or plan of insurance, 

the reinsurance agreement, and all 

applicable procedures; 

(2) FCIC will not be liable for any 

mistakes, errors, or flaws in the policy, 

plan of insurance, their related 

materials, or the rates of premium and 

no cause of action may be taken against 

FCIC as a result of such mistake, error, 

or flaw in a submission or index-based 

weather plan of insurance submitted 

under this subpart; 

(3) If at any time prior to the 

cancellation date, FCIC discovers there 

is a mistake, error, or flaw in the policy, 

plan of insurance, their related 

materials, or the rates of premium, or 

any other reason for withdrawal of 

approval contained in § 400.706(k) 

exists, FCIC will deny reinsurance for 

such policy or plan of insurance (If 

reinsurance is denied, a written notice 

will be provided to on RMA’s Web site 

at www.rma.usda.gov); 

(4) If maintenance of the policy or 

plan of insurance is transferred to FCIC 

in accordance with § 400.712(l), FCIC 

will assume liability for the policy or 

plan of insurance for any mistake, error, 

or flaw that occur after the date the 

policy is transferred. 

(c) If approval by the Board is 

withdrawn or reinsurance is denied for 

any submission, the approved insurance 

provider must cancel the policy or plan 

of insurance in accordance with its 

terms. 

§ 400.710 Preemption and premium 

taxation. 

A policy or plan of insurance that is 

approved by the Board for FCIC 

reinsurance is preempted from state and 

local taxation. This preemption does not 

apply to index-based weather plans of 

insurance approved for premium 

subsidy or A&O subsidy under this part. 

§ 400.711 Right of review, modification, 

and the withdrawal of approval. 

(a) At any time after approval, the 

Board may review any policy, plan of 

insurance, related material, or rates of 

premium approved under this subpart, 

including index-based weather plans of 

insurance and request additional 

information to determine whether the 

policy, plan of insurance, related 

material, or rates of premium comply 

with the requirements of this subpart. 

(b) The Board will notify the 

applicant of any problem or issue that 

may arise and allow the applicant an 

opportunity to make any needed 

change. If the contract change date has 

passed, the applicant will be liable for 

such problems or issues for the crop 

year in accordance with § 400.709 until 

the policy may be changed. 

(c) The Board may withdraw approval 

for the applicable policy, plan of 

insurance or rate of premium, including 

index-based weather plans of insurance, 

as applicable, if: 

(1) The applicant fails to perform the 

responsibilities stated under 

§ 400.709(a); 

(2) The applicant does not timely and 

satisfactorily provide materials or 

resolve any issue to the Board’s 

satisfaction so that necessary changes 

can be made prior to the earliest 

contract change date; 

(3) The Board determines the 

applicable policy, plan of insurance or 

rate of premium, including index-based 

weather plans of insurance is not in 

conformance with the Act, these 

regulations or the applicable 

procedures; 

(4) The policy, plan of insurance, or 

rates of premium are not sufficiently 

marketable according to the applicant’s 

estimate in the submission or fails to 

perform sufficiently as determined by 

the Board; or 

(5) The interest of producers or tax 

payers is not protected or the 

continuation of the program raises 

questions or issues of program integrity. 

§ 400.712 Research and development 

reimbursement, maintenance 

reimbursement, advance payments for 

concept proposals, and user fees. 

(a) For submissions approved by the 

Board for reinsurance under section 

508(h) of the Act: 

(1) The submission may be eligible for 

a one-time payment of research and 

development costs and reimbursement 

of maintenance costs for up to four 

reinsurance years, as determined by the 

Board; 

(2) Reimbursement of research and 

development costs or maintenance costs 

will be considered as payment in full by 

FCIC for the submission, and no 

additional amounts will be owed to the 

applicant if the submission is 

transferred to FCIC in accordance with 

paragraph (l) of this section; and 

(3) If the applicant elects at any time 

not to continue to maintain the 

submission, it will automatically 

become the property of FCIC and the 

applicant will no longer have any 

property rights to the submission and 

will not receive any user fees for the 

plan of insurance; 

(b) The Board approved procedures 

and time-frames must be followed, or 

research and development costs and 

maintenance costs may not be 

reimbursed, unless otherwise 

determined by the Board. 

(1) After a submission has been 

approved by the Board for reinsurance, 

to be considered for reimbursement of: 

(i) Research and development costs, 

the applicant must submit the total 

amount requested and all supporting 

documentation to FCIC by electronic 

method or by hard copy and such 

information must be received by FCIC 

on or before August 1 immediately 

following the date the submission was 

released to approved insurance 

providers through FCIC’s issuance 

system; or 

(ii) Maintenance costs, the applicant 

must submit the total amount requested 

and all supporting documentation to 

FCIC by electronic method or by hard 

copy and such information must be 

received by FCIC on or before August 1 

of each year of the maintenance period. 

(2) Given the limitation on funds, 

regardless of when the request is 

received, no payment will be made prior 

to September 15 of the applicable fiscal 

year. 

(c) Applicants submitting a concept 

proposal may request an advance 

payment of up to 50 percent of the 

projected total research and 

development costs, and after the 

applicant has begun research and 

development activities, the Board may 

at its sole discretion provide up to an 

additional 25 percent advance payment 

of the estimated research and 

development costs, if requested in 

accordance with Procedures Handbook 

17030—Approved Procedures for 

Submission of Concept Proposals 

Seeking Advance Payment of Research 

and Development Expenses. 

(1) If a concept proposal is approved 

by the Board for advance payment, the 

applicant is responsible for 

independently developing a submission 

that is complete and of sufficient quality 

as specified in this subpart by the 

deadline set by the Board. 


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(i) If an applicant fails to fulfill the 

obligation to provide a submission that 

is complete and of sufficient quality by 

the deadline set by the Board, the Board 

shall provide a notice of noncompliance to the applicant and allow 

not less than 30 days for the applicant 

to respond; 

(ii) If the applicant fails to respond, to 

the satisfaction of the Board, with just 

cause as to why a submission that is 

complete and of sufficient quality was 

not provided by the deadline set by the 

Board, the applicant shall return the 

amount of the advance payment plus 

interest at the rate of 1.25 percent 

simple interest per calendar month; 

(iii) If the applicant responds, to the 

satisfaction of the Board, with just cause 

as to why a submission that is complete 

and of sufficient quality was not 

provided by the deadline set by the 

Board, the applicant will be given a new 

deadline by which to provide a 

submission that is complete and of 

sufficient quality; and 

(iv) If the applicant fails to provide a 

submission that is complete and of 

sufficient quality by the deadline, no 

additional extensions will be approved 

by the Board and the applicant shall 

return the amount of the advance 

payment plus interest at the rate of 1.25 

percent simple interest per calendar 

month. 

(2) If an applicant receives an advance 

payment for a portion of the expected 

research and development costs for a 

concept proposal that is developed into 

a submission and determined by the 

Board to be complete and of sufficient 

quality, but the submission is not 

approved by the Board following expert 

review, the Board will not: 

(i) Seek a refund of any advance 

payments for research and development 

costs; and 

(ii) Make any further research and 

development cost reimbursements 

associated with the submission. 

(d) Under section 522 of the Act, there 

are limited funds available on an annual 

fiscal year basis to pay for 

reimbursements of research and 

development costs (including advance 

payments for concept proposals) and 

maintenance costs. Consistent with 

paragraphs (e) through (j) of this section 

if all applicants’ requests for 

reimbursement of research and 

development costs (including advance 

payments for concept proposals) and 

maintenance costs in any fiscal year: 

(1) Do not exceed the maximum 

amount authorized by law, the 

applicants may receive the full amount 

of reimbursement determined 

reasonable by the Board; or 

(2) Exceed the amount authorized by 

law, each applicant’s reimbursement 

determined reasonable by the Board will 

be determined by dividing the total 

amount of each individual applicant’s 

reimbursable costs authorized in 

paragraphs (e) through (j) of this section 

by the total amount of the aggregate of 

all applicants’ reimbursable costs 

authorized in paragraphs (e) through (j) 

for the year and multiplying the result 

by the amount of reimbursement 

authorized under the Act. 

(e) The amount of reimbursement for 

research and development costs 

requested by the applicant may be 

reduced based on: 

(1) The complexity of the policy, plan 

of insurance, or rates of premium, so 

requests for reimbursements for 

submissions: 

(i) Adding commodities to existing 

plans of insurance (i.e., Yield Protection 

and Revenue Protection under the 

Common Crop insurance Policy Basic 

Provisions, Area Risk Protection, Actual 

Revenue History, Whole Farm, Rainfall 

Index, Vegetative Index, etc.) may be 

reduced by as much as 20 percent; 

(ii) Using existing rating 

methodologies or commodity prices or a 

price methodology may be reduced by 

as much as 10 percent; 

(iii) Using existing policy provisions, 

procedures, etc., may be reduced by as 

much as 10 percent; and 

(2) The scope as measured by the 

agricultural commodities proposed to be 

covered or geographic area the proposed 

submission will cover, as determined by 

FCIC so requests for reimbursements for 

submissions: 

(i) That cover a single commodity may 

be reduced by 10 percent; and 

(ii) That cover a small geographic area 

compared to the total growing area for 

the commodity may be reduced by 10 

percent. 

(f) Research and development and 

maintenance costs must be supported by 

itemized statements and supporting 

documentation (copies of contracts, 

billing statements, time sheets, travel 

vouchers, accounting ledgers, etc.). 

(1) Actual costs submitted will be 

examined for reasonableness and may 

be adjusted at the sole discretion of the 

Board. 

(2) Allowable research and 

development costs and maintenance 

costs (directly related to research and 

development or maintenance of the 

submission only) may include the 

following: 

(i) Wages and benefits, exclusive of 

bonuses, overtime pay, or shift 

differentials; 

(A) One line per employee or 

contractor, include job title, total hours, 

and total dollars; 

(B) The rates charged must be 

commensurate with the tasks performed 

(For example, a person performing the 

task of data entry should not be paid at 

the rate for performing data analysis); 

(C) The wage rate and benefits shall 

not exceed two times the hourly wage 

rate plus benefits provided by the 

Bureau of Labor Statistics; and 

(D) The applicant must report any 

familial or business relationship that 

exists between the applicant and the 

contractor or employee (Reimbursement 

may be limited or denied if the 

contractor or employee is associated to 

the applicant and they may be 

considered as one and the same. This 

includes a separate entity being created 

by the applicant to conduct research 

and development. Reimbursement may 

be limited or denied if the contractor is 

paid a salary or other compensation); 

(ii) Travel and transportation (One 

line per event, include the job title, 

destination, purpose of travel, lodging 

cost, mileage, air or other identified 

transportation costs, food and 

miscellaneous expenses, other costs, 

and the total cost); 

(iii) Software and computer 

programming developed specifically to 

determine appropriate rates, prices, or 

coverage amounts (Identify the item, 

include the purpose, and provide 

receipts or contract or straight-time 

hourly wage, hours, and total cost. 

Software developed to send or receive 

data between the producer, agent, 

approved insurance provider or RMA or 

such other similar software may not be 

included as an allowable cost); 

(iv) Miscellaneous expenses such as 

postage, telephone, express mail, and 

printing (Identify the item, cost per unit, 

number of items, and total dollars); and 

(v) Training costs expended to 

facilitate implementation of a new 

approved submission (Include 

instructor(s) hourly rate, hours, and cost 

of materials and travel) conducted at a 

national level, directed to all approved 

insurance providers interested in selling 

the submission, and approved prior to 

the training by RMA). 

(3) The following expenses are 

specifically not eligible for research and 

development and maintenance cost 

reimbursement: 

(i) Copyright fees, patent fees, or any 

other charges, costs or expenses related 

to the use of intellectual property; 

(ii) Training costs, excluding training 

costs to facilitate implementation of the 

approved submission in accordance 

with subsection (f)(2)(v); 

(iii) State filing fees and expenses; 


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Federal Register / Vol. 80, No. 37 / Wednesday, February 25, 2015 / Proposed Rules 10021 

(iv) Normal ongoing administrative 

expenses or indirect overhead costs (for 

example, costs associated with the 

management or general functions of an 

organization, such as costs for internet 

service, telephone, utilities, and office 

supplies); 

(v) Paid or incurred losses; 

(vi) Loss adjustment expenses; 

(vii) Sales commission; 

(viii) Marketing costs; 

(ix) Lobbying costs; 

(x) Product or applicant liability 

resulting from the research, 

development, preparation or marketing 

of the policy; 

(xi) Copyright infringement claims 

resulting from the research, 

development, preparation or marketing 

of the policy; 

(xii) Costs of making program changes 

as a result of any mistakes, errors or 

flaws in the policy or plan of insurance; 

(xiii) Costs associated with building 

rents or space allocation; 

(xiv) Costs in paragraphs (i) and (j) of 

this section determined by the Board to 

be ineligible for reimbursement; and 

(xv) Local, State, or Federal taxes. 

(g) Requests for reimbursement of 

maintenance costs must be supported by 

itemized statements and supporting 

documentary evidence for each 

reinsurance year in the maintenance 

period. 

(1) Actual costs submitted will be 

examined for reasonableness and may 

be adjusted at the sole discretion of the 

Board. 

(2) Maintenance costs for the 

following activities may be reimbursed: 

(i) Expansion of the original 

submission into additional crops, 

counties or states; 

(ii) Non-significant changes to the 

policy and any related material; 

(iii) Non-significant or significant 

changes to the policy as necessary to 

protect program integrity or as required 

by Congress; and 

(iv) Any other activity that qualifies as 

maintenance. 

(h) Projected costs for research and 

development for concept proposals shall 

be based on a reasonable estimate of the 

costs allowed in paragraph (f) of this 

section. 

(i) If a submission is determined to be 

of insufficient quality to refer to expert 

review, or is considered incomplete and 

is subsequently resubmitted and 

approved, the costs to perfect the 

submission may not be considered 

reimbursable costs depending on the 

level of insufficiency or incompleteness 

of the submission, as determined at the 

sole discretion of the Board. 

(j) Reimbursement of costs associated 

with addressing issues raised by the 

Board, expert reviewers and RMA will 

be evaluated based on the substance of 

the issue and the amount of time 

reasonably necessary to address the 

specific issue raised. Delays and 

additional costs caused by the inability 

or refusal to adequately address issues 

may not be considered reimbursable, as 

determined at the sole discretion of the 

Board. 

(k) If the Board withdraws its 

approval for reinsurance at any time 

during the period that reimbursement 

for maintenance is being made or user 

fees are being collected, no maintenance 

reimbursement shall be made nor any 

user fee be owed after the date of such 

withdrawal. 

(l) Not later than 180 days prior to the 

end of the last reinsurance year in 

which a maintenance reimbursement 

will be paid for the approved 

submission, the applicant must notify 

FCIC in writing regarding its decision 

on future ownership and maintenance 

of the policy or plan of insurance. 

(1) The applicant must notify FCIC in 

writing whether it intends to: 

(i) Continue to maintain the policy or 

plan of insurance and charge approved 

insurance providers a user fee to cover 

maintenance expenses for all policies 

earning premium; or 

(ii) Transfer responsibility for 

maintenance to FCIC. 

(2) If the applicant fails to notify FCIC 

in writing by the deadline, the policy or 

plan of insurance will automatically 

transfer to FCIC beginning with the next 

reinsurance year. 

(3) If the applicant elects to: 

(i) Continue to maintain the policy or 

plan of insurance, the applicant must 

submit a request for approval of the user 

fee by the Board at the time of the 

election; or 

(ii) Transfer the policy or plan of 

insurance to FCIC, FCIC may at its sole 

discretion, continue to maintain the 

policy or plan of insurance or elect to 

withdraw the availability of the policy 

or plan of insurance. 

(4) Requests for approval of the user 

fee must be accompanied by written 

documentation to support the amount 

requested will only cover direct costs to 

maintain the plan of insurance. Costs 

that are not eligible for research and 

development and maintenance 

reimbursements under this section are 

not eligible to be considered for 

determining the user fee. 

(5) The Board will approve the 

amount of user fee, including the 

maximum amount of total maintenance 

that may be collected per year, that is 

payable to the applicant by approved 

insurance providers unless the Board 

determines that the user fee charged: 

(i) Is unreasonable in relation to the 

maintenance costs associated with the 

policy or plan of insurance; or 

(ii) Unnecessarily inhibits the use of 

the policy or plan of insurance by 

approved insurance providers. 

(6) If the total user fee exceeds the 

maximum amount determined by the 

Board, the maximum amount 

determined by the Board will be divided 

by the number of policies earning 

premium to determine the amount to be 

paid by each approved insurance 

provider. 

(7) Reasonableness of the initial 

request to charge a user fee will be 

determined by the Board based on a 

comparison of the amount of 

reimbursement for maintenance 

previously received, the number of 

policies, the number of approved 

insurance providers, and the expected 

total amount of user fees to be received 

in any reinsurance year. 

(8) A user fee unnecessarily inhibits 

the use of a policy or plan of insurance 

if it is so high that approved insurance 

providers will not sell the policy. 

(9) The user fee charged to each 

approved insurance provider will be 

considered payment in full for the use 

of such policy, plan of insurance or rate 

of premium for the reinsurance year in 

which payment is made. 

(10) It is the sole responsibility of the 

applicant to collect such fees from an 

approved insurance provider and any 

indebtedness for such fees must be 

resolved by the applicant and approved 

insurance provider. 

(i) Applicants may request that FCIC 

provide the number of policies sold by 

each approved insurance provider. 

(ii) Such information will be provided 

not later than 90 days after such request 

is made or not later than 90 days after 

the requisite information has been 

provided to FCIC by the approved 

insurance provider, whichever is later. 

(11) Every two years after approval of 

a user fee, or if the applicant has made 

a significant change to the approved 

submission, applicants must submit 

documentation to the Board for review 

in determining if the user fee should be 

revised. 

(12) The Board may review the 

amount of the user fee at any time at its 

sole discretion. 

(m) The Board may consider 

information from the Equal Access to 

Justice Act, 5 U.S.C. 504, the Bureau of 

Labor Statistic’s Occupational 

Employment Statistics Survey, the 

Bureau of Labor Statistic’s Employment 

Cost Index, and any other information 

determined applicable by the Board, in 

making a determination whether to 

approve a submission for 


wreier-aviles on DSK5TPTVN1PROD with PROPOSALS
10022 Federal Register / Vol. 80, No. 37 / Wednesday, February 25, 2015 / Proposed Rules 

reimbursement of research and 

development costs, maintenance costs, 

or user fees. 

(n) For purposes of this section, rights 

to, or obligations of, research and 

development cost reimbursement, 

maintenance cost reimbursement, or 

user fees cannot be transferred from any 

individual or entity unless specifically 

approved in writing by the Board. 

(o) Applicants requesting 

reimbursement for research and 

development costs, maintenance costs, 

or user fees, may present their request 

in person to the Board prior to 

consideration for approval. 

(p) Index-based weather plans of 

insurance are not eligible for 

reimbursement from FCIC for 

maintenance costs or research and 

development costs. Submitters of 

approved index-based weather plans of 

insurance may collect user fees from 

other approved insurance providers in 

accordance with Procedures Handbook 

17050—Approved Procedures for 

Submission of Index-based Weather 

Plans of Insurance. 

§ 400.713 Non-reinsured supplemental 

(NRS) policy. 

(a) Unless otherwise specified by 

FCIC, any NRS policy that covers the 

same agricultural commodity as any 

policy reinsured by FCIC under the Act 

must be provided to RMA to ensure it 

does not shift any loss under the FCIC 

reinsured policy. Failure to provide 

such NRS policy or endorsement to 

RMA prior to its issuance shall result in 

the denial of reinsurance, A&O subsidy 

and risk subsidy on the underlying FCIC 

reinsured policy for which such NRS 

policy was sold. 

(b) Three hard copies, and an 

electronic copy in a format approved by 

RMA, of the new or revised NRS policy 

and related materials must be submitted 

at least 150 days prior to the first sales 

closing date applicable to the NRS 

policy. At a minimum, examples that 

demonstrate how liability and 

indemnities are determined under 

differing scenarios must be included. 

(1) Hard copies of the NRS must be 

sent to the Deputy Administrator for 

Product Management (or successor), 

USDA/Risk Management Agency, 

Beacon Facility Mail Stop 0812, 9240 

Troost Ave., Kansas City, MO 64131– 

3055. 

(2) Electronic copies of the NRS must 

be sent to the Deputy Administrator for 

Product Management (or successor) at 

DeputyAdministrator@rma.usda.gov. 

(c) RMA will review the NRS policy. 

If any of the conditions found in 

paragraphs (c)(1) through (5) of this 

section are found to occur, FCIC will 

deny reinsurance, A&O subsidy and risk 

subsidy on the underlying FCIC 

reinsured policy for which such NRS 

policy was sold. 

(1) If the NRS policy materially 

increases or shifts risk to the underlying 

policy or plan of insurance reinsured by 

FCIC. 

(i) An NRS policy will be considered 

to materially increase or shift risk to the 

underlying policy or plan of insurance 

reinsured by FCIC if it creates an 

incentive for moral hazard such as a 

financial incentive to increase the 

number or size of losses or, allows for 

aggregate indemnities in excess of the 

expected value of the insured 

commodity. 

(ii) The NRS must include language 

that clearly states no indemnity will be 

paid in excess of the initial value of the 

insured commodity. 

(2) The NRS reduces or limits the 

rights of the insured with respect to the 

underlying policy or plan of insurance 

reinsured by FCIC. An NRS policy will 

be considered to reduce or limit the 

rights of the insured with respect to the 

underlying policy or plan of insurance 

if it alters the terms or conditions of the 

underlying policy or otherwise 

preempts procedures issued by FCIC. 

(3) The NRS disrupts the marketplace. 

An NRS policy will be considered to 

disrupt the marketplace if it encourages 

planting more acres of the insured 

commodity in excess of normal market 

demand, adversely affects the sales or 

administration of reinsured policies, 

undermines producers’ confidence in 

the Federal crop insurance program, or 

harms public perception of the Federal 

crop insurance program. 

(4) The NRS is an impermissible 

rebate. An NRS may be considered to be 

an impermissible rebate if FCIC 

determines that the premium rates 

charged are insufficient to cover the 

expected losses and a reasonable reserve 

or it offers other benefits that are 

generally provided at a cost. 

(5) The NRS policy is conditioned 

upon or provides incentive for the 

purchase of the underlying policy or 

plan of insurance reinsured by FCIC 

with a specific agent or approved 

insurance provider. 

(d) RMA will respond not less than 60 

days before the first sales closing date or 

provide notice why RMA is unable to 

respond within the time frame allotted. 

(e) NRS policies reviewed by RMA 

will not need to be submitted for a five 

year period unless a change is made to 

the NRS or the underlying policy or the 

loss ratio for the NRS policy exceeds 

2.0. Once any changes are made to 

either policy or the five year period has 

concluded, the NRS must be 

resubmitted for review. 

Signed in Washington, DC, on February 13, 

2015. 

Brandon Willis, 

Manager, Federal Crop Insurance 

Corporation. 

[FR Doc. 2015–03604 Filed 2–23–15; 8:45 am] 

BILLING CODE 3410–08–P 

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Parts 1, 15, 17, 19, 32, 37, 38, 

140, and 150 

RIN 3038–AD99; 3038–AD82 

Position Limits for Derivatives and 

Aggregation of Positions 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Notice of proposed rulemaking; 

provision of Table 11a; and reopening of 

comment periods. 

SUMMARY: On December 12, 2013, the 

Commodity Futures Trading 

Commission (‘‘Commission’’) published 

in the Federal Register a notice of 

proposed rulemaking (the ‘‘Position 

Limits Proposal’’) to establish 

speculative position limits for 28 

exempt and agricultural commodity 

futures and options contracts and the 

physical commodity swaps that are 

economically equivalent to such 

contracts. On November 15, 2013, the 

Commission published in the Federal 

Register a notice of proposed 

rulemaking (the ‘‘Aggregation 

Proposal’’) to amend existing 

regulations setting out the Commission’s 

policy for aggregation under its position 

limits regime. The Commission’s Energy 

and Environmental Markets Advisory 

Committee has scheduled a public 

meeting to be held on February 26, 

2015, which will consider, among other 

matters, exemptions for bona fide 

hedging positions. In conjunction with 

the meeting of the Commission’s Energy 

and Environmental Markets Advisory 

Committee, the Commission will post 

an agenda and associated materials, if 

any, on the Commission’s Web site; 

additionally, access to a video webcast 

of the meeting will be added to the Web 

site. In addition, and in connection with 

the meeting, the Commission is 

providing counts of the unique persons 

over percentages of the 28 proposed 

position limit levels (currently provided 

in Table 11 of the Position Limits 

Proposal based on counts from the 

period of January 1, 2011, to December 

31, 2012 period) in a new table, Table 


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