This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

31331

Vol. 63, No. 110

Tuesday, June 9, 1998

DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 425 and 457

RIN 0563–AA85

Peanut Crop Insurance Regulations;

and Common Crop Insurance

Regulations, Peanut Crop Insurance

Provisions

AGENCY: Federal Crop Insurance

Corporation, USDA.

ACTION: Final rule.

SUMMARY: The Federal Crop Insurance

Corporation (FCIC) finalizes specific

crop provisions for the insurance of

peanuts. The provisions will be used in

conjunction with the Common Crop

Insurance Policy, Basic Provisions,

which contain standard terms and

conditions common to most crops. The

intended effect of this action is to

provide policy changes to better meet

the needs of the insured, include the

current peanut crop insurance

regulations with the Common Crop

Insurance Policy for ease of use and

consistency of terms, and restrict the

effect of the current peanut crop

insurance regulations to the 1998 and

prior crop years.

EFFECTIVE DATE: July 9, 1998.

FOR FURTHER INFORMATION CONTACT: Gary

Johnson, Insurance Management

Specialist, Research and Development,

Product Development Division, Federal

Crop Insurance Corporation, United

States Department of Agriculture, 9435

Holmes Road, Kansas City, MO 64131,

telephone (816) 926–7730.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This rule has been determined to be

exempt for the purpose of Executive

Order 12866 and, therefore, has not

been reviewed by the Office of

Management and Budget (OMB).

Paperwork Reduction Act of 1995

Pursuant to the Paperwork Reduction

Act of 1995 (44 U.S.C., chapter 35), the

collections of information for this rule

have been approved by the Office of

Management and Budget (OMB) under

control number 0563–0053 through

October 31, 2000.

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

the UMRA.

Executive Order 12612

It has been determined under section

6(a) of Executive Order 12612,

Federalism, that this rule does not have

sufficient federalism implications to

warrant the preparation of a Federalism

Assessment. The provisions contained

in this rule will not have a substantial

direct effect on States or their political

subdivisions or on the distribution of

power and responsibilities among the

various levels of government.

Regulatory Flexibility Act

This regulation will not have a

significant economic impact on a

substantial number of small entities.

New provisions included in this rule

will not impact small entities to a

greater extent than large entities. Under

the current regulations, a producer is

required to complete an application and

acreage report. If the crop is damaged or

destroyed, the producer is required to

give notice of loss and provide the

necessary information to complete a

claim for indemnity.

The producer must also annually

certify to the previous years production

if adequate records are available to

support the certification. The producer

must maintain the production records to

support the certified information for at

least three years. This regulation does

not alter those requirements.

The amount of work required of the

insurance companies delivering and

servicing these policies will not increase

significantly from the amount of work

currently required. No additional

actions are required as a result of this

rule on the part of either the insured or

the insurance companies. This rule does

not have any greater or lesser impact on

the producer. Therefore, this action is

determined to be exempt from the

provisions of the Regulatory Flexibility

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

Flexibility Analysis was prepared.

Federal Assistance Program

This program is listed in the Catalog

of Federal Domestic Assistance under

No. 10.450.

Executive Order 12372

This program is not subject to the

provisions of Executive Order 12372

which require intergovernmental

consultation with State and local

officials. See the Notice related to 7 CFR

part 3015, subpart V, published at 48 FR

29115, June 24, 1983.

Executive Order 12988

This rule has been reviewed in

accordance with Executive Order 12988

on civil justice reform. The provisions

of this rule will not have 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. The

administrative appeal provisions

published at 7 CFR part 11 must be

exhausted before any action for judicial

review of any determination made by

FCIC may be brought.

Environmental Evaluation

This action is not expected to have a

significant impact on the quality of the

human environment, health, and safety.

Therefore, neither an Environmental

Assessment nor an Environmental

Impact Statement is needed.

National Performance Review

This regulatory action is being taken

as part of the National Performance

Review Initiative to eliminate

unnecessary or duplicative regulations

and improve those that remain in force.

Background

On Thursday, May 1, 1997, FCIC

published a notice of proposed rule

making, in the Federal Register at 62 FR

23685 to add to the Common Crop

Insurance Regulations (7 CFR part 457),
31332 Federal Register / Vol. 63, No. 110 /Tuesday, June 9, 1998 /Rules and Regulations

new section, 7 CFR 457.134, Peanut

Crop Insurance Provisions. The new

provisions will be effective for the 1999

and succeeding crop years. These

provisions will replace and supersede

the current provisions for insuring

peanuts found at 7 CFR part 425 (Peanut

Crop Insurance Regulations). FCIC also

amends 7 CFR part 425 to limit its effect

to the 1998 and prior crop years.

Following publication of the proposed

rule, the public was afforded 30 days to

submit written comments and opinions.

A total of 204 comments were received

from the National Crop Insurance

Peanut Advisory Committee, Peanut

Growers Cooperative Marketing

Association, National Peanut Growers

Group, Agricultural Commodity

Commission for Peanuts, State Peanut

Growers Association, Production Farm

Credit Association, reinsured

companies, and an insurance service

organization. The comments received

and FCIC’s responses are as follows:

Comment: Three producer groups, a

lending institution, two reinsured

companies, and an insurance service

organization recommended revising the

definition of ‘‘average price per pound’’

to delete the words ‘‘and insured,’’ in

part 1 and delete the words ‘‘all nonquota’’ and ‘‘and insured,’’ in part 2.

Response: FCIC has amended the

definition accordingly.

Comment: Three producer groups, a

lending institution, two reinsured

companies, and an insurance service

organization expressed concerns with

the definition of ‘‘good farming

practices,’’ which makes reference to

‘‘cultural practices generally in use in

the county * * * recognized by the

Cooperative State Research, Education,

and Extension Service as compatible

with agronomic and weather conditions

in the county.’’ The commenters

questioned whether cultural practices

exist that are not necessarily recognized

(or possibly known) by the Cooperative

State Research, Education, and

Extension Service. The commenters also

indicated that the term ‘‘county’’ in the

definition of ‘‘good farming practices’’

should be changed to ‘‘area.’’

Response: The Cooperative State

Research, Education, and Extension

Service (CSREES) recognizes farming

practices that are considered acceptable

for producing peanuts. If a producer is

following practices currently not

recognized as acceptable by the

CSREES, such recognition can be sought

by interested parties. Although the

cultural practices recognized by the

CSREES may only pertain to specific

areas within a county, the actuarial

documents are on a county basis.

Therefore, no change has been made.

However, the definition of ‘‘good

farming practices’’ has been removed

from these Crop Provisions and is now

contained in the Basic Provisions.

Comment: Three producer groups, a

lending institution, two reinsured

companies, and an insurance service

organization recommended deleting the

second sentence of the definition of

‘‘green peanuts,’’ because not all

producers who grow green peanuts

market them exclusively as boiled

peanuts.

Response: FCIC has amended the

definition accordingly.

Comment: Three producer groups, a

lending institution, two reinsured

companies, and an insurance service

organization recommended deleting

‘‘marketing window’’ from the

definition of ‘‘practical to replant.’’ The

commenters indicated that peanuts are

unlike other crops, such as processor

and fresh market crops, where the

producer only has a certain amount of

time to market the crop. The

commenters stated that the ability to

contract peanuts with a sheller

guarantees a market for the crop.

Response: The concept of a

‘‘marketing window’’ is most applicable

to processor and fresh market crops, and

FCIC recognizes that peanuts are unlike

these crops. However, § 508(j)(4) of the

Federal Crop Insurance Act mandates

that marketing windows be considered

in determining whether it is feasible to

require replanting during a crop year.

The definition of ‘‘practical to replant’’

has been moved to the Basic Provisions.

Comment: Three producer groups, a

lending institution, two reinsured

companies, and an insurance service

organization recommended adding a

definition for ‘‘farm yield,’’ rewrite the

term ‘‘farm yield,’’ or perhaps change to

‘‘yield established by the actuarial

table’’ in the definition of ‘‘production

guarantee.’’ Commenters indicated that

since peanuts are based on a producer

listing, and not the producer’s actual

production history (APH), the term

‘‘production guarantee’’ is

inappropriate. A producer’s

classification (guarantee) is determined

by combining history from all farms in

which he has grown peanuts in the

county.

Response: FCIC has revised the

definition of ‘‘production guarantee’’ to

read ‘‘* * * yield per acre contained in

the actuarial documents or the approved

yield * * *’’

Comment: An insurance service

organization recommended deleting

from the definition of ‘‘quota peanuts,’’

the phrase, ‘‘marketed for domestic

edible use, seed, or other related uses.’’

Under the current peanut policy,

peanuts that are not eligible to be

marketed for domestic edible use or

seed could be valued as quota. For

example: if peanuts grade segregation

III, the remaining production from the

farm serial number (FSN) is not

sufficient to satisfy the quota, and the

producer signs a waiver, the peanuts

will be subject to a quality adjustment

against the support price. However,

those peanuts would not meet the

definition of ‘‘quota peanuts’’ in the

proposed rule.

Response: FCIC has amended the

definition for ‘‘quota peanuts’’

accordingly.

Comment: Three producer groups, a

lending institution, two reinsured

companies, and an insurance service

organization recommended that the

definition of ‘‘replanting’’ be modified

to include a requirement that replanted

peanuts be planted in rows wide enough

apart to permit cultivation and harvest

in the same manner as the initially

planted peanuts. Commenters indicated

that broadcast or drilled peanuts are not

acceptable methods of planting (or

replanting) because such methods do

not permit mechanical cultivation or

allow digging the crop.

Response: Section 12(b) of these Crop

Provisions clearly states the

consequences of improperly replanting

the crop. If the peanuts are replanted

using a practice that is uninsurable as

an original planting, the liability for the

unit will be reduced by the amount of

the replanting payment, with no

reduction in the premium owed.

Further, section 14(e)(1)(v), has been

revised to specify that any production

from the improperly replanted acreage

will count against the remaining

liability for the unit.

Comment: Three producer groups, a

lending institution, two reinsured

companies, and an insurance service

organization recommended revision in

the proposed definition of ‘‘value per

pound’’ because the definition is

incomplete and somewhat vague.

Response: FCIC has revised the

definition for clarification.

Comment: Three producer groups, a

lending institution, two reinsured

companies, and an insurance service

organization recommended the current

unit structure remain based on the FSN

unit. Commenters suggested that more

optional units will increase the loss

ratio. It will be necessary to add

procedures to show how to split the

quota of one FSN between separate

basic units by share and to show what

verifiable records are required to

support optional units and how those

records must be maintained because the

APH program is not applicable for
Federal Register / Vol. 63, No. 110 /Tuesday, June 9, 1998 /Rules and Regulations 31333

peanuts. Also, the commenters

indicated that if a producer commingles

production now, the company

apportions the production between the

units, whereas under the proposed rule,

the insured will lose units with

commingled production at loss time.

Response: FCIC understands the

complexity of the substantive change

toward converting units by FSN to a

basic unit by share and optional unit by

FSN. The procedure to split the quota

for basic units should be no more

difficult than any other crop permitting

basic units. Further, the producer

receives records when production is

delivered. The delivered production and

records must be maintained separately

or the producer will not qualify for

optional units. Although FCIC and the

reinsured companies may be precluded

from obtaining the producer’s

production records from the Farm

Service Agency, nothing precludes the

producer from providing such records

as a condition of insurance. FCIC is

charged to maintain an actuarially

sound program and one that is

consistent with provisions of other crop

policies. The premium charged will

reflect any additional risks associated

with basic and optional units.

Therefore, no changes will be

considered until such information is

provided.

Comment: Three producer groups, a

lending institution, two reinsured

companies, and an insurance service

organization recommended that section

3(c) be revised to incorporate the

current producer listing process for

peanuts, and remove any references to

‘‘annual production reports’’ and

‘‘establish an approved yield.’’ It was

also suggested that section 3(c) be

deleted.

Response: Section 3(c) only requires

an annual production report when

stated in the Special Provisions. The

current method of establishing yields

will continue in these Crop Provisions.

However, the peanut price support

program could be discontinued or

modified and in such an event, an

alternative method for establishing

production guarantees may be needed.

Therefore, no change has been made.

Comment: Three producer groups, a

lending institution, two reinsured

companies, and an insurance service

organization recommended the contract

change date be revised in section 4 from

November 30 to October 31 because of

the short time frame between the

contract change date and sales closing

date. The commenters indicated that

with the changing of sales closing dates,

actuarial documents are needed earlier

to allow sales agents time to make

quotes and proposals to producers and

lenders, especially since more

producers are making loan applications

before the end of the year. Also, the

November 30 contract change date does

not allow adequate time for companies

to determine changes, develop training

materials, train agents, advise carryover

insureds of changes and sell to potential

insureds.

Response: November 30 has always

been the contract change date for all

counties that do not have an April 15

cancellation date under the present

peanut provisions. The proposed rule

simply changed the contract change

date from December 31 to November 30

for all remaining counties to maintain

the same time period between the

contract change date and the revised

cancellation dates and to achieve

consistency with other annual crop

insurance policies. This time frame has

proven to be adequate to allow the

necessary preparation for the sale of

these policies. Therefore, no change has

been made.

Comment: Three producer groups, a

lending institution, two reinsured

companies, and an insurance service

organization recommended the

cancellation and termination date for

Virginia to be changed to March 15.

Commenters indicated that these dates

were originally April 15 and not

February 28.

Response: FCIC has revised the

cancellation and termination date for

Virginia accordingly.

Comment: An insurance service

organization stated that the current

peanut policy establishes units by FSN,

so reporting the effective marketing

quota by FSN on the acreage report

made sense. The proposed rule changes

unit structure, but it does not address

the resulting complications of the unit

requirement for reporting acreage in the

new peanut Crop Provisions.

Response: In addition to the

requirements of section 6 of the Basic

Provisions, the insured is required to

report the effective marketing quota, if

any, that is applicable to each unit for

the current crop year. This would

include all basic and optional units.

FCIC has revised the provision to

require the reporting of the effective

poundage marketing quota for each

basic and optional unit.

Comment: Three producer groups, a

lending institution, two reinsured

companies, and an insurance service

organization recommended section 7(e)

be revised to read ‘‘multiplying the

result of section 7(d) by your share at

the time coverage begins.’’ The

commenters indicated that this will be

consistent with section 7 of the Basic

Provisions and clarifies when premium

is earned. Also, the commenters

recommended that a new section 7(f) be

added to read as follows: ‘‘multiplying

the result of section 7(e) times any

premium adjustment percentage that

may apply.’’ This is needed for those

policies that continue to qualify for a

premium discount or qualify for the hail

and fire exclusion reduction.

Response: FCIC has amended the

provisions accordingly.

Comment: Three producer groups, a

lending institution, two reinsured

companies, and an insurance service

organization recommended changing

the word ‘‘harvested’’ to ‘‘planted’’ in

section 8(b) so that it reflects the

planted peanuts with the intent of

harvesting farmers’ stock peanuts. The

commenters also recommended that

section 8(d)(1) be amended to state that

if a crop is harvested for use as green

peanuts, such peanuts are insured and

premium is earned and due. If the intent

is to harvest green peanuts, then the

acreage should not be insurable.

Insurable acreage must be established at

the time coverage attaches (when

planted), not at harvest.

Response: Section 8(b) already

requires that the peanuts be planted as

farmers’ stock peanuts. Therefore, no

change has been made. FCIC agrees with

the recommendation to amend section

8(d)(1) to only exclude coverage for

peanuts planted for the purpose of

harvesting as green peanuts.

Comment: Three producer groups, a

lending institution, two reinsured

companies, and an insurance service

organization recommended that section

9(b)(1) be rewritten as follows: ‘‘On

which peanuts are grown using no-till

or minimum tillage farming methods,

unless a written agreement allows

otherwise or as provided on the Special

Provisions.’’ The commenters indicated

that the reference to the Special

Provisions will allow for adding a

statement if needed, making written

agreements for these practices

unnecessary. This would reduce

paperwork caused by having to request

a written agreement for each individual

case. The commenter also suggested that

section 9(b)(2) be deleted. The

commenters stated that there are no

rotation requirements for peanuts. If

requirements are established in the

future, the requirements could be added

either to the Special Provisions or by

endorsement.

Response: FCIC has amended section

9(b)(1) accordingly. However, there are

peanut types and in different areas of

production where it is essential that

peanuts be rotated with other crops in

order to insure continuous successful
31334 Federal Register / Vol. 63, No. 110 /Tuesday, June 9, 1998 /Rules and Regulations

production. Therefore, no change has

been made in the rotation provision.

Comment: A reinsured company and

an insurance service organization

questioned the reference to ‘‘removed

from the field’’ in section 10(b). The

commenters asked whether coverage

continues after the peanuts are threshed

or harvested but still in the field. The

current provision had the wording

‘‘threshed or removed from the field.’’

The commenters suggested only the

words, ‘‘threshed or harvested’’ be

referenced and the words, ‘‘removed

from the field’’ be deleted.

Response: Peanuts may be left in the

field for a short period time after

combining or threshing for the purpose

of drying. These Crop Provisions

provide coverage on such peanuts until

they are removed from the field for

shelling, storing, and processing.

Therefore, no change has been made.

Comment: Three producer groups, a

lending institution, two reinsured

companies, and an insurance service

organization recommended that FCIC:

(1) keep the current minimum

requirement of 10 acres or 10 percent of

the unit to qualify for a replanting

payment by adding that information to

section 12; (2) add the words

‘‘multiplied by the number of acres and

by your insured share’’ to section

12(a)(2)(i); and (3) delete section

12(a)(2)(iii), thereby making the

replanting payment per acre the lesser

of $80.00 or actual cost multiplied by

the producer’s share. Commenters

indicated that producers incur the same

cost to replant whether quota or nonquota acreage is being replanted. Since

peanuts must be planted in rows to

allow proper cultivation and harvest

practices, the commenters

recommended that section 12(b), which

requires replanting in rows far enough

apart to cultivate, be deleted.

Response: The increase in the

requirement from the lesser of 10

percent or 10 acres to 20 percent or 20

acres is consistent with other crop

provisions. This revision, coupled with

the change in the amount of replant

payment, simplifies the program and

does not significantly affect the insured.

Previous analyses of replant payments

paid in major peanut producing states

showed that a small amount of peanut

acreage was replanted. FCIC has revised

section 12(a)(2)(i) accordingly. Inclusion

of section 12(a)(2)(iii) is consistent with

other annual crops that have replant

payments, plus it maintains an equitable

payment for replanted acreage. Section

12(b) is necessary to ensure that the

insured properly replants the crop.

Further, this provision is consistent

with other annual crops that have

replanting provisions. Therefore, no

changes have been made.

Comments: Three producer groups, a

lending institution, two reinsured

companies, and an insurance service

organization recommended deleting the

provision addressing combining

optional units in section 14(a)(1).

Response: FCIC is maintaining the

requirement that the producer keep

separate records by unit. If a producer

fails to maintain separate production

records there is no way to authenticate

the reported production to count for

each optional unit. Since production to

count cannot be accurately determined,

the optional units must be combined.

Therefore, no change has been made.

Comments: Three producer groups, a

lending institution, two reinsured

companies, and an insurance service

organization recommend that the Farm

Service Agency (FSA) procedures that

allow producers to make ‘‘fall’’ transfers

of their farm quota to another farm or

producer be revised. Commenters also

recommended that sections 14(b)(1), (2),

and (3) should be revised because it

adversely affects acreage reporting and

claims processing.

Response: FCIC cannot require

another agency to revise its provisions.

However, FCIC will share the

commenter’s recommendation regarding

the revision of FSA procedure with

FSA. To assure there is not an

indemnity paid for quota that is later

transferred from one farm to another

farm or another producer, the provisions

must limit the effective poundage

marketing quota for each unit to reflect

such transfers. Therefore, no change has

been made.

Comments: Three producer groups, a

lending institution, two reinsured

companies, and an insurance service

organization recommended that the

peanut quota pounds indemnified by

insurance be removed from the quota

pounds of the FSN at the FSA office.

The commenters indicated that this

recommendation is to prevent insureds

from collecting an insurance indemnity

and then collecting an additional benefit

by selling or transferring those quota

pounds to another farm or producer.

Response: Sections 14(b)(1), (2), and

(3) of these Crop Provisions should

ensure that insureds are not collecting

an insurance indemnity and then

collecting an additional benefit by

selling or transferring their quota

pounds to another farm or producer.

Therefore, no change has been made.

However, FCIC will share this

recommendation with FSA.

Comments: Three producer groups, a

lending institution, two reinsured

companies, and an insurance service

organization states that the calculation

in 14(c) is cumbersome and makes a

difference in how production is counted

against the guarantee. Commenters

indicated that the calculation uses

Segregation II and III production and

that production would be counted

against the non-quota guarantee, but

current procedure counts all production

against quota first. This new calculation

results in a different indemnity payment

than current procedure.

Response: The commenters are correct

that all production does not count

against the quota first. This policy

calculates the value of all production

and subtracts it from the value of the

quota and non-quota peanut guarantees.

If Segregation II and III peanut

production are not eligible to be valued

and insured as quota peanut production,

it would be unequitable to count such

production against the quota guarantee.

Therefore, no change has been made.

Comments: An insurance service

organization commented that the

language in section 14(c)(5) suggests

that the peanut crop provision is a

‘‘dollar’’ policy rather than

‘‘guaranteed’’ production policy. The

commenter suggested revising the

following: ‘‘pounds production to count

subtracted from pounds guaranteed

multiplied by the quota price election

and non-quota price election.’’

Response: This policy does not insure

a specific dollar amount. However,

since there are more than one type of

peanuts insured, the value of the

guarantee and production to count for

each type is calculated separately to

ensure that the correct price is applied

to the specific type. Therefore, no

change has been made.

Comments: Three producer groups, a

lending institution, two reinsured

companies, and an insurance service

organization suggest that unharvested

production should not be adjusted for

quality. Commenters indicated that

quality adjustment should be restricted

to mature harvested production.

Comments were made that United States

Department of Agriculture (USDA)

inspectors do not accept unharvested

samples for grading purposes.

Furthermore, it should be made clear

that all appraised production will be

counted as quota as current procedure

requires.

Response: Producers should not be

required to incur the costs associated

with harvest just to receive a quality

adjustment when there is no dispute

that the production has been damaged.

These Crop Provisions are consistent

with other crops that have quality

adjustment provisions. As stated above,

appraised production of non-quota
Federal Register / Vol. 63, No. 110 /Tuesday, June 9, 1998 /Rules and Regulations 31335

peanuts will count against the value of

the quota if there is insufficient quota

peanuts since the total value of all

production to count is subtracted from

the total value of the quota and nonquota guarantees. Therefore, no change

has been made.

Comments: Three producer groups, a

lending institution, two reinsured

companies, and an insurance service

organization recommended that section

14(d)(2)(iv) be revised to not allow the

insured to defer settlement of a claim

and wait for a later, generally lower,

appraisal, especially on crops that have

a short ‘‘shelf life.’’

Response: This provision allows

deferment of a claim only if the

insurance provider and the insured do

not agree on the appraisal or if the

insurance provider believes that the

crop needs to be further cared for. The

insured must continue to care for the

entire crop. If the insured does not

provide sufficient care for the crop, the

original appraisal will be used.

Therefore, no change has been made.

Comments: An insurance service

organization and a reinsured company

suggest that the requirement for a

written agreement to be renewed each

year should be removed in section

15(d). Terms of the agreement should be

stated in the agreement to fit the

particular situation for the policy, or if

no substantive changes occur from one

year to the next, allow the written

agreement to be continuous.

Response: Written agreements are

intended to supplement policy terms or

permit insurance in unusual situations

that require modification of the

otherwise standard insurance

provisions. If the condition creating

need for a written agreement continues

from year to year, it should be

incorporated into the policy or the

Special Provisions. FCIC has moved the

written agreement provisions to the

Basic Provisions but no change has been

made.

Comments: Four producer groups, a

lending institution, and two reinsured

companies ask: (1) whether the Late

Planting Agreement Option is still

available; and (2) why late and

prevented planting language provisions

were not included as they have been in

other crops.

Response: The Late Planting

Agreement Option is no longer

available. The late and prevented

planting provisions in the Basic

Provisions will apply.

In addition to the changes indicated

above, FCIC has made the following

changes:

1. Section 1. Definitions—Deleted the

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

date,’’ ‘‘FSA,’’ ‘‘good farming practices,’’

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

‘‘practical to replant,’’ ‘‘replanting,’’

‘‘timely planted,’’ ‘‘USDA,’’ and

‘‘written agreement’’ since their

definitions have been moved to the

Basic Provisions. Revised the definition

of ‘‘planted acreage’’ to remove those

provisions that have been moved to the

Basic Provisions and added the

definition of ‘‘approved yield’’ for

clarification. Deleted the definition of

‘‘harvest’’ because language was added

in section 10(c) of these crop provisions

and section 11 of the Basic Provisions

to mark the end of the insurance period

for peanuts.

2. Section 2—Delete those provisions

that have been moved to the Basic

Provisions.

3. Section 14—Added a note to inform

policyholders with the Catastrophic

Risk Protection level of coverage on the

limitation of multiple benefits for the

same crop loss.

List of Subjects in 7 CFR Parts 425 and

457

Crop insurance, Peanuts, Reporting

and record keeping requirements.

Final Rule

Accordingly, for the reasons set forth

in the preamble, the Federal Crop

Insurance Corporation hereby amends 7

CFR parts 425 and 457, as follows:

PART 425—PEANUT CROP

INSURANCE REGULATIONS FOR THE

1993 THROUGH 1998 CROP YEARS

1. The authority citation for 7 CFR

part 425 is revised to read as follows:

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

2. The part heading is revised to read

as set forth above.

3. Subpart heading ‘‘Subpart—

Regulations for the 1993 and

Succeeding Crop Years’’ is removed.

4. Section 425.7 is amended by

revising the introductory text of

paragraph (d) to read as follows:

§ 425.7 The application and policy.

* * * * *

(d) The application for the 1993 and

succeeding crop years is found at

subpart D of part 400-General

Administrative Regulations (7 CFR

400.37, 400.38). The provisions of the

Peanut Insurance Policy for the 1993

through 1998 crop years are as follows:

* * * * *

PART 457—COMMON CROP

INSURANCE REGULATIONS;

REGULATIONS FOR THE 1998 AND

SUBSEQUENT CONTRACT YEARS

5. The authority citation for 7 CFR

part 457 continues to read as follows:

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

6. Section 457.134 is added to read as

follows:

§ 457.134 Peanut crop insurance

provisions.

The Peanut Crop Insurance Provisions

for the 1999 and succeeding crop years

are as follows:

FCIC policies:

United States Department of Agriculture

Federal Crop Insurance Corporation

Reinsured policies:

(Appropriate title for insurance provider)

Both FCIC and reinsured policies:

Peanut Crop Insurance Provisions

If a conflict exists among the policy

provisions, the order of priority is as follows:

(1) the Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special

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

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

etc.

1. Definitions.

Approved yield. The yield calculated in

accordance with 7 CFR part 400, subpart G,

if required by section 3(c) of these provisions.

Average price per pound:

(1) The average CCC support price per

pound, by type, for Segregation I peanuts and

Segregation II and III peanuts eligible to be

valued as quota peanuts; or

(2) The highest non-quota price election

contained in the Special Provisions for all

Segregation I, II, and III peanuts not eligible

to be valued as quota peanuts.

Average support price per pound. The

average price per pound for each type of

quota peanuts announced by the USDA

under the peanut price support program.

CCC. Commodity Credit Corporation, a

wholly owned government corporation

within USDA.

County. In addition to the definition

contained in the Basic Provisions, ‘‘county’’

also includes any land identified by a FSA

farm serial number for such county but

physically located in another county.

Effective poundage marketing quota. The

number of pounds reported on the acreage

report as eligible for the average support

price per pound (including transfers of quota

peanuts from one farm serial number to

another farm serial number), not to exceed

the Marketing Quota established by FSA for

the farm serial number.

Farmers’ stock peanuts. Peanuts

customarily marketed by producers,

produced in the United States, and which are

not shelled, crushed, cleaned, or otherwise

changed (except for removal of foreign

material, loose shelled kernels, and excess

moisture) from the condition in which

peanuts are harvested.
31336 Federal Register / Vol. 63, No. 110 /Tuesday, June 9, 1998 /Rules and Regulations

Green peanuts. Peanuts that are harvested

and marketed prior to maturity without

drying or removal of moisture either by

natural or artificial means.

Inspection certificate and sales

memorandum. A USDA form that records the

inspection grading results and marketing

record for the net weight of peanuts delivered

to a buyer.

Non-quota peanuts. Peanuts other than

quota peanuts.

Planted acreage. In addition to the

requirement in the definition in the Basic

Provisions, peanuts must initially be planted

in rows wide enough apart to permit

mechanical cultivation. Acreage planted in

any other manner will not be insurable

unless otherwise provided by the Special

Provisions or by written agreement.

Production guarantee (per acre). In

addition to the definition of ‘‘production

guarantee (per acre)’’ in the Basic Provisions,

the production guarantee (per acre) is the

number of pounds determined by

multiplying the yield per acre contained in

the actuarial documents or the approved

yield multiplied by the coverage level

percentage you elect.

Quota peanuts. Peanuts that are eligible to

be valued at the average support price per

pound.

Segregation I, II, or III. Grades designated

and defined for peanuts by the Agricultural

Marketing Service of USDA.

Value per pound. A price determined by

USDA as shown on the USDA ‘‘Inspection

Certificate and Sales Memorandum’’ or other

value accepted by us.

2. Unit Division.

(a) In lieu of the provisions in section 34

of the Basic Provisions that permit optional

unit by section, section equivalent, irrigated

or non-irrigated acreage, each optional unit

must be located in a separate farm identified

by a single FSA Farm Serial Number.

(b) We may reject or modify any FSA

reconstitution for the purpose of the unit

definition, if we determine the reconstitution

was done in whole or in part to defeat the

purpose of the Federal crop insurance

program or to gain a disproportionate

advantage under this policy.

3. Insurance Guarantees, Coverage Levels,

and Prices for Determining Indemnities.

In addition to the requirements of section

3 of the Basic Provisions:

(a) The price elections you choose for the

quota and non-quota peanuts must have the

same percentage relationship to the

maximum price election offered by us for

quota and non-quota peanuts. For example,

if you choose 100 percent of the maximum

quota peanut price election, you must also

choose 100 percent of the maximum nonquota election.

(b) The maximum pounds that may be

insured at the quota price election are the

lesser of :

(1) The effective poundage marketing

quota; or

(2) The insured acreage multiplied by the

production guarantee. If the insured acres

multiplied by the production guarantee

exceeds the effective poundage marketing

quota, the difference will be insured at the

non-quota peanut price election.

(c) You may be required to file an annual

production report to us, if required by the

Special Provisions, to establish an approved

yield in lieu of the yield published in the

actuarial documents. If we require you to file

an annual production report, you must do so

in accordance with section 3(c) of the Basic

Provisions.

4. Contract Changes

In accordance with section 4 of the Basic

Provisions, the contract change date is

November 30 preceding the cancellation

date.

5. Cancellation and Termination Dates.

In accordance with section 2 of the Basic

Provisions, the cancellation and termination

dates are:

CANCELLATION AND TERMINATION

State and county Dates

Jackson, Victoria, Golliad, Bee, Live Oak, Mullen, La Salle, and Dimmit Counties, Texas and all Texas Counties lying south

thereof.

January 15

El Paso, Hudspeth, Culberson, Reeves, Loving, Winkler, Ector, Upton, Reagan, Sterling, Coke, Tom Green, Concho, McCulloch,

San Saba, Mills, Hamilton, Bosque, Johnson, Tarrant, Wise, Cooke Counties, Texas, and all Texas counties south and east

thereof; and all other states.

February 28

New Mexico; Oklahoma; Virginia; and all other Texas counties .......................................................................................................... March 15

6. Report of Acreage.

In addition to the requirements of section

6 of the Basic Provisions, you must report the

effective poundage marketing quota, if any,

that is applicable to each basic and optional

unit for the current crop year.

7. Annual Premium

In lieu of the premium amount

determinations contained in section 7(c) of

the Basic Provisions, the annual premium

will be determined by:

(a) Multiplying the insured effective

poundage marketing quota by the price

election for quota peanuts;

(b) Multiplying the insured pounds of nonquota peanuts by the price election for nonquota peanuts;

(c) Totaling the results of section 7(a) and

7(b);

(d) Multiplying the total of section 7(c) by

the applicable premium rate stated in the

actuarial documents;

(e) Multiplying the result of section 7(d) by

your share at the time coverage begins; and

(f) Multiplying the result of section 7(e) by

any premium adjustment percentages that

may apply.

8. Insured Crop

In accordance with section 8 of the Basic

Provisions, the crop insured will be all the

peanuts in the county for which a premium

rate is provided by the actuarial documents:

(a) In which you have a share;

(b) That are planted for the purpose of

marketing as farmers’ stock peanuts;

(c) That are a type of peanut designated in

the Special Provisions as being insurable;

and

(d) That are not (unless allowed by the

Special Provisions or by written agreement):

(1) Planted for the purpose of harvesting as

green peanuts;

(2) Interplanted with another crop; or

(3) Planted into an established grass or

legume.

9. Insurable Acreage

In addition to the provisions of section 9

of the Basic Provisions:

(a) Any acreage of the insured crop

damaged before the final planting date, to the

extent that the majority of producers in the

area would normally not further care for the

crop, must be replanted unless we agree that

replanting is not practical.

(b) We will not insure any acreage:

(1) On which peanuts are grown using notill or minimum tillage farming methods

unless allowed by the Special Provisions or

written agreement; or

(2) Which does not meet the rotation

requirements, if any, contained in the Special

Provisions.

10. Insurance Period

In accordance with the provisions of

section 11 of the Basic Provisions, the

calendar date for the end of the insurance

period is the date immediately following

planting as follows:

(a) November 30 in all states except New

Mexico, Oklahoma, and Texas; and

(b) December 31 in New Mexico,

Oklahoma, and Texas.

(c) ‘‘Removal of peanuts from the field’’

replaces ‘‘harvest’’ as an event marking the

end of the insurance period in section 11 of

the Basic Provisions.

11. Causes of Loss

In accordance with the provisions of

section 12 of the Basic Provisions, insurance

is provided only against the following causes

of loss that occur during the insurance

period:

(a) Adverse weather conditions;

(b) Fire;

(c) Insects, but not damage due to

insufficient or improper application of pest

control measures;

(d) Plant disease, but not damage due to

insufficient or improper application of

disease control measures;
Federal Register / Vol. 63, No. 110 /Tuesday, June 9, 1998 /Rules and Regulations 31337

(e) Wildlife;

(f) Earthquake;

(g) Volcanic eruption; or

(h) Failure of the irrigation water supply,

if due to a cause of loss contained in section

11(a) through (g) that occurs during the

insurance period.

12. Replanting Payments

(a) In accordance with section 13 of the

Basic Provisions:

(1) A replanting payment is allowed if the

crop is damaged by an insurable cause of loss

to the extent that the remaining stand will

not produce at least 90 percent of the

production guarantee for the acreage and it

is practical to replant.

(2) The maximum amount of the replanting

payment for the unit will be the lesser of :

(i) Eighty dollars ($80.00) per acre

multiplied by the number of acres replanted

and multiplied by your insured share;

(ii) The actual cost of replanting per acre

multiplied by the number of acres replanted

and multiplied by your insured share; or

(iii) Twenty percent (20%) of the

production guarantee multiplied by your

quota price election, multiplied by the

number of acres replanted, and multiplied by

your insured share.

(b) When peanuts are replanted using a

practice that is uninsurable as an original

planting, the liability for the unit will be

reduced by the amount of the replanting

payment. The premium amount will not be

reduced.

13. Duties In The Event of Damage or Loss

In accordance with the requirements of

section 14 of the Basic Provisions, the

representative samples of the unharvested

crop that we may require must be at least 10

feet wide and extend the entire length of each

field in the unit. If you intend to put the

acreage to another use or not harvest the

crop, the samples must not be harvested or

destroyed until our inspection.

14. Settlement of Claim

(a) We will determine your loss on a unit

basis. In the event you are unable to provide

separate acceptable production records:

(1) For any optional units, we will combine

all optional units for which such production

records were not provided; and

(2) For any basic units, we will allocate any

commingled production to such units in

proportion to our liability on the harvested

acreage for the units.

(b) When settling your claim, the effective

poundage marketing quota, if any, for each

unit will be limited to the lesser of:

(1) The amount of the effective poundage

marketing quota reported on the acreage

report;

(2) The amount of the FSA effective

poundage marketing quota; or

(3) The amount determined at the final

settlement of your claim.

(c) In the event of loss or damage covered

by this policy, we will settle your claim by:

(1) Multiplying the insured acreage for the

unit by the production guarantee per acre, by

type if applicable;

(2) Subtracting the insured effective

poundage marketing quota from the result of

section 14(c)(1) to determine the amount of

insured non-quota peanuts;

(3) Multiplying the insured effective

poundage marketing quota and the result of

section 14(c)(2) by the respective price

election by type, if applicable, for quota and

non-quota peanuts, respectively;

(4) Totaling the results of section 14(c)(3)

(This amount will be the same as (3) if there

is only one type);

(5) Multiply the production to count for

quota and non-quota peanuts (see section

14(d)), for each type if applicable, by the

respective price elections;

(6) Totaling the results of section 14(c)(5)

(This amount will be the same as (5) if there

is only one type);

(7) Subtracting the result of section 14(c)(6)

from section 14(c)(4); and

(8) Multiplying the result in section

14(b)(7) and section 14(b)(8) by your share.

For example:

You have 100 percent share in 25 acres of

Valencia peanuts in the unit, with a 2000

pounds per acre guarantee, an effective

poundage marketing quota of 40,000 pounds,

and a price election of $0.34 per pound for

quota and $0.15 per pounds for non-quota.

You are able to harvest 43,000 pounds in

which 40,000 pounds are quota segregation I

and 3,000 pounds are non-quota segregation

II and III due to quality adjustment. Your

indemnity would be calculated as follows:

(1) 25 acres × 2,000 pounds per acre =

50,000 pounds guarantee;

(2) 50,000 pounds guarantee ¥40,000

pounds of effective marketing quota = 10,000

pounds of non-quota guarantee;

(3) 40,000 pounds × $.34 price election for

quota = $13,600.00 value of guarantee; 10,000

pounds × $.15 price election for non-quota =

$1,500.00 value of guarantee;

(4) $13,600.00 + $1,500.00 = $15,100.00

total of value of guarantee;

(5) 40,000 pounds of quota production to

count × .34 = $13,600.00 quota value of

production to count;

3,000 pounds of non-quota production to

count × .15 = $450.00 non-quota value of

production to count;

(6) $13,600.00 + $450.00 = $14,050.00 total

value of production to count;

(8) $15,100.00 total value guarantee

¥$14,050.00 total value of production to

count = $1,050.00 loss; and

(9) $1,050.00 value of loss × 100 percent =

$1,050.00 indemnity payment.

(d) The total production to count (in

pounds) from all insurable acreage on the

unit will include all appraised and harvested

production.

(e) All appraised production will include:

(1) Not less than the production guarantee

for acreage:

(i) That is abandoned;

(ii) Put to another use without our consent;

(iii) Damaged solely by uninsured causes;

or

(iv) For which you fail to provide

production records that are acceptable to us;

or

(v) Not replanted as required by this

policy.

(2) Production lost due to uninsured

causes;

(3) Unharvested production (mature

unharvested production may be adjusted for

quality deficiencies and excess moisture in

accordance with section 14(f)); and

(4) Potential production on insured acreage

that you intend to put to another use or

abandon, if you and we agree on the

appraised amount of production. Upon such

agreement, the insurance period for that

acreage will end when you put the acreage

to another use or abandon the crop. If

agreement on the appraised amount of

production is not reached:

(i) If you do not elect to continue to care

for the crop, we may give you consent to put

the acreage to another use if you agree to

leave intact, and provide sufficient care for,

representative samples of the crop in

locations acceptable to us (The amount of

production to count for such acreage will be

based on the harvested production or

appraisals from the samples at the time

harvest should have occurred. If you do not

leave the required samples intact, or fail to

provide sufficient care for the samples, our

appraisal made prior to giving you consent to

put the acreage to another use will be used

to determine the amount of production to

count); or

(ii) If you elect to continue to care for the

crop, the amount of production to count for

the acreage will be the harvested production,

or our reappraisal if additional damage

occurs and the crop is not harvested; and

(5) All harvested production from the

insurable acreage.

(f) Mature peanut production that is

damaged by insurable causes and for which

the value per pound is less than the average

support price per pound for the type will be

adjusted by:

(1) Dividing the value per pound for the

insured type of peanuts by the applicable

average price per pound; and

(2) Multiplying this result by the number

of pounds of such production.

(g) To enable us to determine the net

weight and quality of production of any

peanuts for which an ‘‘Inspection Certificate

and Sales Memorandum’’ has not been

issued, we must be given the opportunity to

have such peanuts inspected and graded

before you dispose of them. If you dispose of

any production without giving us the

opportunity to have the peanuts inspected

and graded, the gross weight of such

production will be used in determining total

production to count unless you submit a

marketing record satisfactory to us which

clearly shows the net weight and quality of

such peanuts.

(Note: In accordance with the Federal Crop

Insurance Act, in the event of a crop loss,

policyholders with the Catastrophic Risk

Protection level of coverage must elect to

either receive benefits under these Crop

Provisions or if applicable, the Commodity

Credit Corporation Quota Loan Pool

Regulations.)

Signed in Washington, D.C., on June 3,

1998.

Kenneth D. Ackerman,

Manager, Federal Crop Insurance

Corporation.

[FR Doc. 98–15302 Filed 6–8–98; 8:45 am]

BILLING CODE 3410–08–P