[Federal Register Volume 63, Number 119 (Monday, June 22, 1998)]
[Rules and Regulations]
[Pages 33835-33841]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-16147]



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Rules and Regulations
                                                Federal Register
________________________________________________________________________

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

The Code of Federal Regulations is sold by the Superintendent of Documents. 
Prices of new books are listed in the first FEDERAL REGISTER issue of each 
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Federal Register / Vol. 63, No. 119 / Monday, June 22, 1998 / Rules 
and Regulations

[[Page 33835]]


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DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 447 and 457

RIN 0563-AB48


Popcorn Crop Insurance Regulations; and Common Crop Insurance 
Regulations, Popcorn Crop Insurance Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Final rule.

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SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes 
specific crop provisions for the insurance of popcorn. 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 
popcorn crop insurance regulations with the Common Crop Insurance 
Policy for ease of use and consistency of terms, and to restrict the 
effect of the current popcorn crop insurance regulations to the 1998 
and prior crop years.

EFFECTIVE DATE: July 22, 1998.

FOR FURTHER INFORMATION CONTACT: Linda Williams, 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 purposes 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 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), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. This rule contains no Federal 
mandates (under the regulatory provisions of title II of the UMRA) for 
State, local, and tribal governments or the private sector. Therefore, 
this rule is not subject to the requirements of sections 202 and 205 of 
the UMRA.

Executive Order 12612

    It has been determined under section 6(a) of Executive Order 12612, 
Federalism, that this rule does not have sufficient federalism 
implications to warrant the preparation of a Federalism Assessment. The 
provisions contained in this rule will not have a substantial direct 
effect on States or their political subdivisions or on the distribution 
of power and responsibilities among the various levels of government.

Regulatory Flexibility Act

    This regulation will not have a significant economic impact on a 
substantial number of small entities. The amount of work required of 
the insurance companies will not increase because the information used 
to determine eligibility is already maintained at their office and the 
other information now required is already being gathered as a result of 
the present policy. No additional actions are required as a result of 
this action on the part of either the insured or the insurance 
companies. Additionally, this regulation does not require any greater 
action on the part of small entities than is required on the part of 
large entities. 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 Wednesday, April 9, 1997, FCIC published a notice of proposed 
rulemaking in the Federal Register at 62 FR 17103 to add to the Common 
Crop Insurance Regulations (7 CFR part 457), a new section, 7 CFR 
457.126, Popcorn 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 popcorn found 
at 7 CFR part 447 (Popcorn Crop Insurance Regulations). FCIC also 
amends 7 CFR part 447 to limit its effect to the 1998 and prior crop 
years.
    Following publication of the proposed rule, the public was afforded 
30 days to

[[Page 33836]]

submit written comments and opinions. A total of 31 comments were 
received from an insurance service organization and reinsured 
companies. The comments received and FCIC's responses are as follows:
    Comment: An insurance service organization and two reinsured 
companies asked whether, under the definition of ``good farming 
practices,'' there may exist acceptable cultural practices that are not 
necessarily recognized (or possibly not known) by the Cooperative State 
Research, Education, and Extension Service. The commenters recommended 
changing the term ``county'' in the definition of ``good farming 
practices'' to ``area.'' The insurance service organization also 
recommended adding the word ``generally'' before ``recognized by the 
Cooperative State Research, Education, and Extension Service * * *''
    Response: The Cooperative State Research, Education, and Extension 
Service (CSREES) recognizes farming practices that are considered 
acceptable for producing popcorn. If a producer is following practices 
currently not recognized as acceptable by the CSREES, such recognition 
can be sought by interested parties. Use of the term ``generally'' will 
only make the definition ambiguous and more difficult to administer. 
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. However, the definition of ``good farming 
practices'' has been moved to the Basic Provisions.
    Comment: A reinsured company expressed concern about the definition 
of ``final planting date'' because it infers that coverage is provided 
after the final planting date; however, there are no provisions for 
``late planting.''
    Response: The definition of ``late planting'' as well as provisions 
for late and prevented planting coverages common to most crops have 
been moved to the Basic Provisions. FCIC has added late planting 
provisions, section 14, and prevented planting provisions, section 15, 
to these popcorn crop provisions.
    Comment: A reinsured company recommended adding the words ``and 
quality'' after the word ``quantity'' in the definition of ``irrigated 
practice.''
    Response: There are no clear criteria regarding the quality of 
water necessary to produce a crop. The highly variable factors involved 
would make such criteria difficult to develop and administer. The 
provisions regarding good farming practices can be applied in 
situations in which the insured person failed to exercise due care and 
diligence. The definition of ``irrigated practice'' has been moved to 
the Basic Provisions.
    Comment: An insurance service organization and a reinsured company 
stated the definition of ``replanting'' is confusing and awkward. One 
of the commenters recommended revising the definition to specify ``* * 
* growing a successful popcorn crop.''
    Response: The definition of ``replanting'' clearly describes the 
steps required to replant the crop. The producer must first perform the 
cultural practices needed to replant the seed before replanting the 
seed. FCIC has revised the definition to specify that the crop be 
replanted with the expectation of producing at least the guarantee. The 
definition of ``replanting'' has been moved to the Basic Provisions.
    Comment: A reinsured company recommended that the reference 
contained in the definition of ``written agreement'' should be section 
14 rather than section 15.
    Response: The provisions for written agreements have been moved to 
the Basic Provisions with reference to the correct section.
    Comment: An insurance service organization and a reinsured company 
recommended amending section 2 of the proposed rule to clarify whether 
optional units may be established if the processor contract stipulates 
the number of contracted acres, or only if the contract does not 
specify an amount of production.
    Response: FCIC has amended section 2 to specify that processor 
contracts that stipulate a specific amount of production to be 
delivered, the basic unit will consist of all the acreage planted to 
the insured crop in the county that will be used to fulfill contracts 
with each processor, and optional units will not be established for 
such production-based processor contracts. The language in section 2 
has also been revised and reformatted to clearly state the requirements 
for both the acreage-based and production-based processor contracts. In 
addition, language in this section that is common with other Crop 
Provisions has been moved to the Basic Provisions.
    Comment: An insurance service organization recommended removal of 
the opening phrase in section 2(b)(5)(iv)(B) that states ``In addition 
to, or instead of establishing optional units by section, section 
equivalent, or FSA Farm Serial Number, * * * ``since section 
2(b)(5)(iv) specifies that ``Each optional unit must meet one or more 
of the following criteria* * *.''
    Response: FCIC has revised the language accordingly. However, the 
optional unit provisions common to most crops have been moved to the 
Basic Provisions.
    Comment: An insurance service organization stated that the language 
in section 3(a) which provides guidelines for selection of price 
elections should be moved to the Basic Provisions.
    Response: The requirement that the price election (for each type, 
varietal group, etc.) have the same percentage relationship to the 
maximum prices does not apply to all crop policies. However, this 
clause applies to a sufficient number of policies so as to make it an 
item for consideration whenever 7 CFR part 457 is amended. This 
recommendation will be considered at that time, and no change has been 
made to these popcorn provisions.
    Comment: An insurance service organization expressed concern that 
the November 30 contract change date is not early enough for counties 
with a January 15 sales closing date.
    Response: The January 15 cancellation and termination dates are 
applicable only to counties in the most southern part of Texas. The 
commenter did not provide specific details as to why the November 30 
contract change date is not sufficient. FCIC believes that the 45 days 
between the contract change date and the cancellation date allows an 
ample period of time for the insured to make a decision regarding 
subsequent crop year coverages considering the small number of policies 
and areas involved. Therefore, no change has been made.
    Comment: An insurance service organization stated that section 6 
which requires the producer to provide a copy of the processor contract 
no later than the acreage reporting date, could provide a loophole by 
allowing producers to wait until acreage reporting time to decide if 
they want coverage.
    Response: There is no evidence that allowing the producer to 
provide a copy of the processor contract as late as the acreage 
reporting date has resulted in producers waiting to decide until the 
acreage reporting date if they want coverage. Popcorn producers will 
have processor contracts much sooner to ensure that they have a market 
before expending the costs to plant the crop. The requirement to 
provide a copy of the processor contract with the acreage report is 
also most convenient for the producer. Language in section 6 has been 
revised to clarify that a copy of all processor contracts must be 
provided on or before the acreage reporting date.

[[Page 33837]]

    Comment: An insurance service organization recommended changing the 
word ``before'' in section 7(a)(3) to ``by'' or ``on or before'' the 
acreage reporting date. This would allow for the processor contract to 
be established that day.
    Response: FCIC has amended the provision accordingly.
    Comment: An insurance service organization questioned whether any 
processor contract would allow interplanted popcorn or popcorn planted 
into an established grass or legume. The commenter further indicted 
that consideration should be given to inserting the language in section 
7(a)(4) into the Basic Provisions.
    Response: Popcorn has seldom, if ever, been interplanted with 
another crop or planted into an established grass or legume. However, 
production practices are constantly evolving. FCIC chooses to retain 
the provisions of section 7(a)(4) to accommodate such developments if 
they should occur. In addition, interplanting provisions are not the 
same among the crop policies and, therefore, will be retained in the 
Crop Provisions.
    Comment: An insurance service organization indicated that the 
provisions contained in section 7(b) are confusing and seem to indicate 
that only a landlord would have a share in the insured crop and that a 
tenant cannot have a share since that person does not retain possession 
of the acreage. The commenter questioned whether the provision in 
section 7(b) is already covered in sections 7(a) (1) and (3).
    Response: The language in section 7(b) was intended to cover 
producers who have a crop share agreement, rent, or owns acreage. The 
word ``possession'' has been changed to ``control'' for clarification 
and FCIC has added that the insured must have a risk of loss. Section 
7(a) specifies requirements for insurance coverage on the crop, while 
section 7(b) specifies requirements for an insurable share in the crop. 
Therefore, both provisions are necessary.
    Comment: Two comments from an insurance service organization and 
one from a reinsured company questioned whether the provisions in 
section 9(b), which state that the insurance period ceases on the date 
sufficient production is harvested to fulfill the producer's processor 
contract, conflicts with the provisions in section 13(a), that states 
``We will determine your loss on a unit basis.'' The commenters 
questioned how the insured will know enough production has been 
harvested before acceptance by the processor. One commenter stated that 
the insured may not be aware of discounts and production modifications 
(e.g., shrinkage, foreign material, etc.) that may be imposed by the 
processor. The insured may believe the contracted amount of production 
has been harvested and later learn that the amount harvested is short 
of the production guarantee. The insurance service organization asked 
if any production in excess of the contracted amount will be considered 
as production to count for APH purposes, or is the production only 
counted when there is a processor settlement sheet? The insurance 
service organization recommended the language in section 9(b) be made 
similar to the language contained in the sugar beet policy, such as, 
``* * * the insurance period ends when the production delivered to the 
processor equals the amount of production stated in the popcorn 
processor contract.'' The insurance service organization also 
questioned whether ``delivered to'' is the same as ``accepted by'' the 
processor and suggested adding wording to include ``whether delivered 
or not.''
    Response: Section 9(b) does not conflict with section 13(a). For 
processor contracts based on a stated amount of production, FCIC is 
only insuring the contracted amount, and the producer can only 
establish one basic unit per processor contract. Therefore, once the 
contracted amount is fulfilled, insurance ceases on the unit and there 
is no payable loss. If the contract is not fulfilled and there still is 
unharvested production, any insurable cause of loss is covered up to 
the contracted amount, assuming it has not been abandoned. With respect 
to the issue of when the producer would know when the processor 
contract was fulfilled, records are kept as production is delivered to 
the processor. As a result, both the producer and processor are aware 
of the amount of production that has been delivered. All production 
from the unit, including any in excess of the amount stated in the 
contract, will be considered as production to count when determining 
the producer's approved yield. The claim settlement provisions have 
been clarified to state that, for the purposes of loss adjustment, the 
amount shown on the settlement sheet, plus any appraised or harvested 
production lost due to uninsured causes that rendered the production 
unacceptable to the processor, will be included as production to count. 
FCIC has also revised section 9(b) to clarify that the insurance period 
ceases when the production accepted by the processor equals the 
contracted amount of production if the processor contract stipulates a 
specific amount of production to be delivered. However, rejected 
production will be considered as production to count unless it was 
damaged by an insurable cause of loss occurring during the insurance 
period.
    Comment: An insurance service organization questioned a discrepancy 
between section 9(b), which states that insurance ceases on ``The date 
you harvested sufficient production to fulfill your processor 
contract,'' and section 10(b)(3) of the proposed rule, which states 
that loss of production will not be insured due to ``damage that occurs 
to unharvested production after you deliver the production required by 
the processor contract.'' The commenter indicated that this provision 
is not necessary since any damage occurring after delivery would be 
outside the insurance period as indicated in section 9(b).
    Response: FCIC has deleted the provision contained in section 
10(b)(3) accordingly.
    Comment: An insurance service organization stated that some crop 
policies allow the entire replanting payment to be paid to the person 
incurring the entire expense (usually the tenant) when landlord and 
tenant are insured by the same company. However, the commenter 
questioned why this language is not contained in section 11 of the 
proposed Popcorn Crop Provisions.
    Response: It is true that a few crop provisions allow the entire 
replanting payment to be paid to the person incurring the entire 
expense (usually the tenant) when the landlord and tenant are insured 
with the same company. However, due to comments received on other 
regulations, FCIC reevaluated this provision and has concluded it is 
not equitable to all insureds. Specifically, if a landlord and tenant 
are insured with one company, the provisions apply, but if the landlord 
and tenant are insured with different companies, the provisions do not 
apply. Any Crop Provisions containing these terms will be amended to 
eliminate them. Therefore, no change has been made.
    Comment: An insurance service organization suggested that language 
contained in section 11(b) should include 20 acres as a minimum 
qualifier in addition to the others.
    Response: The commenter misunderstood the provisions contained in 
section 11(b). Section 13 of the Basic Provisions contains the 20 acre 
or 20 percent rule referenced by the commenter which is applicable to 
this policy. Section 11(b) of the Popcorn Crop Provisions establishes 
the

[[Page 33838]]

maximum amount of the replanting payment (20 percent of the production 
guarantee or 150 pounds, multiplied by the price election, multiplied 
by the share). Therefore, no change has been made.
    Comment: An insurance service organization stated the indemnity 
calculation contained in section 13(b) was wordy, difficult to follow, 
and should be simplified for crops without separate prices by type.
    Response: Since some of the calculations involved are not performed 
in sequential order, it is necessary to refer to specific section 
numbers. Removal of the section reference would make the provisions 
less clear. However, an example has been added to clarify section 13.
    Comment: An insurance service organization stated that section 
13(c)(1)(iv) should not allow the insured to defer settlement 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 agrees that representative samples should be left or 
if the insured elects to continue to care for the entire crop in order 
to obtain a more accurate determination of the production to count for 
the unit. In either case, if the insured does not provide sufficient 
care for the crop or crop samples, the original appraisal will be used. 
Therefore, no change has been made.
    Comment: An insurance service organization and two reinsured 
companies recommended removal of the requirement contained in section 
15 that a written agreement be renewed each year if there are no 
significant changes to the farming operation. Two of the commenters 
stated a written agreement should be continuous and the effective 
period should be specified in the written agreement.
    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 such 
practices continue year to year, they should be incorporated into the 
policy or Special Provisions. It is important to minimize written 
agreement exceptions to ensure that the insured is well aware of the 
specific terms of the policy. The written agreement provisions have 
been moved to the Basic Provisions since they apply to most crops.
    Comment: An insurance service organization and two reinsured 
companies stated the proposed rule did not contain provisions for late 
planting and prevented planting coverages. The commenters questioned 
whether popcorn was intended to have late and prevented planting 
coverages?
    Response: Provisions for late and prevented planting coverages are 
now contained in the Basic Provisions which are applicable to popcorn. 
FCIC has added to the Popcorn Crop Provisions, a new section 14, which 
specifies that late planting provisions are applicable to popcorn if 
written approval is obtained from the processor by the acreage 
reporting date. FCIC has also added a new section 15, providing the 
available prevented planting coverage.
    In addition to the changes described above, FCIC has made minor 
editorial changes and has amended the following Popcorn Crop 
Provisions:
    1. Amended and clarified the paragraph preceding section 1 to 
include the Catastrophic Risk Protection Endorsement.
    2. Section 1--Amended the definition of ``planted acreage'' to add 
a requirement that popcorn must be planted in rows far enough apart to 
permit mechanical cultivation, unless otherwise excepted. Amended the 
definition of ``practical to replant'' to clarify that it will not be 
considered practical to replant unless production from the replanted 
acreage can be delivered under the terms of the processor contract, or 
the processor agrees in writing that it will accept the production from 
the replanted acreage. Clarified the definition of ``processor 
contract'' to specify that multiple contracts with the same processor, 
each of which stipulates a specific amount of production to be 
delivered under the terms of the specified contract, will be considered 
as a single processor contract. Removed the definitions of ``approved 
yield,'' ``days,'' ``FSA,'' ``interplanted,'' ``production guarantee 
(per acre),'' and ``timely planted'' because these definitions now 
appear in the Basic Provisions.
    3. Section 2--Moved all the provisions common to most crops to the 
Basic Provisions.
    4. Section 7(a)--Revised ``actuarial table'' to ``actuarial 
documents'' to be consistent with language in other crop provisions.
    5. Section 7(c)(2)--Amended and clarified that the Board of 
Directors or officers of the processor must, prior to the sales closing 
date, execute and adopt a resolution that contains the same terms as an 
acceptable processor contract.
    6. Section 14--Revised provisions to address only late planted 
acreage.
    7. Section 15--Deleted provisions for written agreements and added 
provisions for prevented planting coverage.

List of Subjects in 7 CFR Parts 447 and 457

    Crop insurance, Popcorn.

Final Rule

    Accordingly, as set forth in the preamble, the Federal Crop 
Insurance Corporation hereby amends the Popcorn Crop Insurance 
Regulations (7 CFR part 447) and the Common Crop Insurance Regulations 
(7 CFR part 457) as follows:

PART 447--POPCORN CROP INSURANCE REGULATIONS FOR THE 1987 THROUGH 
THE 1998 CROP YEARS

    1. The authority citation for 7 CFR part 447 is revised to read as 
follows:

    Authority: 7 U.S.C. 1506(1), 1506(p).

Part Heading [Revised]

    2. The part heading is revised as set forth above.

Subpart Heading [Removed]

    3. The part heading ``Subpart--Regulations for the 1987 and 
Succeeding Crop Years is removed.
    4. Section 447.7 is amended by revising the introductory text of 
paragraph (d) to read as follows:


Sec. 447.7  The application and policy.

* * * * *
    (d) The application is found at subpart D of part 400, General 
Administrative Regulations (7 CFR 400.37, 400.38). The provisions of 
the Popcorn Insurance Policy for the 1987 through 1998 crop years are 
as follows:
* * * * *

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

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

    Authority: 7 U.S.C. 1506(1), 1506(p).

    6. Section 457.126 is added to read as follows:


Sec. 457.126  Popcorn Crop Insurance Provisions.

    The Popcorn 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:

[[Page 33839]]

(Appropriate title for insurance provider)

    Both FCIC and reinsured policies:

Popcorn 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

    Base contract price. The price stipulated on the contract 
executed between you and the processor before any adjustments for 
quality.
    Harvest. Removing the grain or ear from the stalk either by hand 
or by machine.
    Merchantable popcorn. Popcorn that meets the provisions of the 
processor contract.
    Planted acreage. In addition to the definition contained in the 
Basic Provisions, popcorn must initially be planted in rows far 
enough apart to permit mechanical cultivation, unless otherwise 
provided by the Special Provisions, actuarial documents, or by 
written agreement.
    Pound. Sixteen (16) ounces avoirdupois.
    Practical to replant. In addition to the definition contained in 
the Basic Provisions, it will not be considered practical to replant 
unless production from the replanted acreage can be delivered under 
the terms of the popcorn processor contract, or the processor agrees 
in writing that it will accept the production from the replanted 
acreage.
    Processor. Any business enterprise regularly engaged in 
processing popcorn that possesses all licenses, permits or approved 
inspections for processing popcorn required by the state in which it 
operates, and that possesses facilities, or has contractual access 
to such facilities, with enough equipment to accept and process the 
contracted popcorn within a reasonable amount of time after harvest.
    Processor contract. A written agreement between the producer and 
a processor, containing at a minimum:
    (a) The producer's commitment to plant and grow popcorn, and to 
deliver the popcorn production to the processor;
    (b) The processor's commitment to purchase all the production 
stated in the processor contract;
    (c) A date, if specified on the processor's contract, by which 
the crop must be harvested to be accepted; and
    (d) A base contract price.
Multiple contracts with the same processor, each of which stipulates 
a specific amount of production to be delivered under the terms of 
the processor contact, will be considered as a single processor 
contract.

2. Unit Division

    (a) For processor contracts that stipulate the amount of 
production to be delivered:
    (1) In lieu of the definition contained in the Basic Provisions, 
a basic unit will consist of all the acreage planted to the insured 
crop in the county that will be used to fulfill contracts with each 
processor;
    (i) There will be no more than one basic unit for all production 
contracted with each processor contract;
    (ii) In accordance with section 13 of these Crop Provisions, all 
production from any basic unit in excess of the amount under 
contract will be included as production to count if such production 
is applied to any other basic unit for which the contracted amount 
has not been fulfilled; and
    (2) Provisions in the Basic Provisions that allow optional units 
by section, section equivalent, or FSA farm serial number and by 
irrigated and non-irrigated practices are not applicable.
    (b) For any processor contract that stipulates only the number 
of acres to be planted, the provisions contained in section 34 of 
the Basic Provisions will apply.

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

    In addition to the requirements of section 3 of the Basic 
Provisions, you may select only one price election for all the 
popcorn in the county insured under this policy unless the Special 
Provisions provide different price elections by type, in which case 
you may select one price election for each popcorn type designated 
in the Special Provisions. The price elections you choose for each 
type must have the same percentage relationship to the maximum price 
offered by us for each type. For example, if you choose 100 percent 
of the maximum price election for one type, you must also choose 100 
percent of the maximum price election for all other types.

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            
------------------------------------------------------------------------
Val Verde, Edwards, Kerr, Kendall, Bexar,  January 15.                  
 Wilson, Karnes, Goliad, Victoria, and                                  
 Jackson counties Texas, and all Texas                                  
 counties lying south thereof.                                          
All other Texas counties and all other     March 15.                    
 states.                                                                
------------------------------------------------------------------------

6. Report of Acreage

    In addition to the provisions of section 6 of the Basic 
Provisions, you must provide a copy of all processor contracts to us 
on or before the acreage reporting date.

7. Insured Crop

    (a) In accordance with section 8 of the Basic Provisions, the 
crop insured will be all the popcorn in the county for which a 
premium rate is provided by the actuarial documents:
    (1) In which you have a share;
    (2) That is planted for harvest as popcorn;
    (3) That is grown under, and in accordance with the requirements 
of, a processor contract executed on or before the acreage reporting 
date and is not excluded from the processor contract at any time 
during the crop year; and
    (4) That is not (unless allowed by the Special Provisions or by 
written agreement):
    (i) Interplanted with another crop; or
    (ii) Planted into an established grass or legume.
    (b) You will be considered to have a share in the insured crop 
if, under the processor contract, you retain control of the acreage 
on which the popcorn is grown, you have a risk of loss, and the 
processor contract provides for delivery of popcorn under specified 
conditions and at a stipulated base contract price.
    (c) A popcorn producer who is also a processor may be able to 
establish an insurable interest if the following requirements are 
met:
    (1) The producer must comply with these Crop Provisions;
    (2) The Board of Directors or officers of the processor must, 
prior to the sales closing date, execute and adopt a resolution that 
contains the same terms as an acceptable processor contract. Such 
resolution will be considered a processor contract under this 
policy; and
    (3) Our inspection reveals that the processing facilities comply 
with the definition of a processor contained in these Crop 
Provisions.

8. Insurable Acreage

    In addition to the provisions of section 9 of the Basic 
Provisions, any acreage of the insured crop damaged before the final 
planting date, to the extent that the majority of producers in the 
area would normally not further care for the crop, must be replanted 
unless we agree that it is not practical to replant.

9. Insurance Period

    In lieu of the provisions contained in section 11 of the Basic 
Provisions, regarding the end of the insurance period, insurance 
ceases on each unit or part of a unit at the earliest of:
    (a) The date the popcorn:
    (1) Was destroyed;
    (2) Should have been harvested but was not harvested;
    (3) Was abandoned; or
    (4) Was harvested;
    (b) When the processor contract stipulates a specific amount of 
production to be delivered, the date the production accepted by the 
processor equals the contracted amount of production;
    (c) Final adjustment of a loss; or
    (d) December 10 immediately following planting.

10. Causes of Loss

    (a) 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:
    (1) Adverse weather conditions;
    (2) Fire;
    (3) Insects, but not damage due to insufficient or improper 
application of pest control measures;
    (4) Plant disease, but not damage due to insufficient or 
improper application of disease control measures;

[[Page 33840]]

    (5) Wildlife;
    (6) Earthquake;
    (7) Volcanic eruption; or
    (8) Failure of the irrigation water supply, if caused by a cause 
of loss specified in sections 10(a)(1) through (7) that occurs 
during the insurance period.
    (b) In addition to the causes of loss excluded by section 12 of 
the Basic Provisions, we do not insure against any loss of 
production due to:
    (1) Damage resulting from frost or freeze after the date 
designated in the Special Provisions; or
    (2) Failure to follow the requirements contained in the 
processor contract.

11. Replanting Payment

    (a) In accordance with section 13 of the Basic Provisions, 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.
    (b) The maximum amount of the replanting payment per acre will 
be the lesser of 20 percent of the production guarantee or 150 
pounds, multiplied by your price election, multiplied by your 
insured share.
    (c) When popcorn is replanted using a practice that is 
uninsurable as an original planting, our liability for the unit will 
be reduced by the amount of the replanting payment. The premium 
amount will not be reduced.

12. Duties in the Event of Damage or Loss

    In accordance with the requirements of section 14 of the Basic 
Provisions, the representative samples of the unharvested crop must 
be at least 10 feet wide and extend the entire length of each field 
in the unit. The samples must not be destroyed until the earlier of 
our inspection or 15 days after harvest of the balance of the unit 
is completed.
    13. Settlement of Claim
    (a) We will determine your loss on a unit basis. In the event 
you are unable to provide acceptable production records:
    (1) For any optional unit, we will combine all optional units 
for which such production records were not provided; or
    (2) For any basic unit, we will allocate any commingled 
production to such units in proportion to our liability on the 
harvested acreage for each unit.
    (b) In the event of loss or damage covered by this policy, we 
will settle your claim by:
    (1) Multiplying the insured acreage for each type, if 
applicable, by its respective production guarantee;
    (2) Multiplying the result of section 13(b)(1) by the respective 
price election for each type, if applicable;
    (3) Totaling the results of section 13(b)(2) if there is more 
than one type;
    (4) Multiplying the total production to count (see section 
13(c)), of each type if applicable, by its respective price 
election;
    (5) Totaling the results of section 13(b)(4) if there is more 
than one type;
    (6) Subtracting the result of section 13(b)(4) from the result 
in section 13(b)(2) if there is only one type or subtracting the 
result of section 13(b)(5) from the result of section 13(b)(3) if 
there is more than one type; and
    (7) Multiplying the result of section 13(b)(6) by your share.

                                                                        
                                                                        
                                                                        
For example:                                                            
You have a 100 percent share in 100 acres of Type A popcorn in the unit,
 with a guarantee of 2,500 pounds per acre and a price election of $.12 
 per pound. You are only able to harvest 150,000 pounds. Your indemnity 
 would be calculated as follows:                                        
1....................  100 acres  x  2,500 pounds = 250,000 pound       
                        guarantee;                                      
2....................  250,00 pounds  x  $.12 price election = $30,000  
                        value of guarantee;                             
4....................  150,000 pounds production to count  x  $.12 price
                        election = $18,000 value of production to count;
6....................  $30,000-$18,000 = $12,000 loss; and              
7....................  $12,000  x  100 percent share = $12,000 indemnity
                        payment.                                        
You also have a 100 percent share in 150 acres of type B popcorn in the 
 same unit, with a guarantee of 2,250 pounds per acre and a price       
 election of $.10 per pound. You are only able to harvest 70,000 pounds.
 Your total indemnity for both popcorn types A and B would be calculated
 as follows:                                                            
1....................  100 acres  x  2,500 pounds = 250,000 guarantee   
                        for type A and 150 acres  x  2,250 pounds =     
                        337,500 pound guarantee for type B;             
2....................  250,000 pound guarantee  x  $.12 price election =
                        $30,000 value of guarantee for type A and       
                        337,500 pound guarantee  x  $.10 price election 
                        = $33,750 value guarantee for type B;           
3....................  $30,000 + $33,750 = $63,750 total value          
                        guarantee;                                      
4....................  150,000 pounds  x  $.12 price election = $18,000 
                        value of production to count for type A and     
                       70,000 pounds  x  $.10 price election = $7,000   
                        value of production to count for type B;        
5....................  $18,000 + $7,000 = $25,000 total value of        
                        production to count;                            
6....................  $63,750-$25,000 = $38,750 loss; and              
7....................  $38,750  x  100 percent = $38,750 indemnity      
                        payment.                                        
                                                                        

    (c) The total production to count (in pounds) from all insurable 
acreage on the unit will include:
    (1) All appraised production as follows:
    (i) Not less than the production guarantee for acreage:
    (A) That is abandoned;
    (B) Put to another use without our consent;
    (C) Damaged solely by uninsured causes; or
    (D) For which you fail to provide production records;
    (ii) Unharvested production (mature unharvested production may 
be adjusted for quality deficiencies and excess moisture in 
accordance with section 13(d));
    (iii) Potential production on insured acreage that you intend to 
put to another use or abandon, if you and we agree on the appraised 
amount of production. Upon such agreement, the insurance period for 
that acreage will end when you put the acreage to another use or 
abandon the crop. If agreement on the appraised amount of production 
is not reached:
    (A) If you do not elect to continue to care for the crop, we may 
give you consent to put the acreage to another use if you agree to 
leave intact, and provide sufficient care for, representative 
samples of the crop in locations acceptable to us (The amount of 
production to count for such acreage will be based on the harvested 
production or appraisals from the samples at the time harvest should 
have occurred. If you do not leave the required samples intact, or 
fail to provide sufficient care for the samples, our appraisal made 
prior to giving you consent to put the acreage to another use will 
be used to determine the amount of production to count); or
    (B) If you elect to continue to care for the crop, the amount of 
production to count for the acreage will be the harvested 
production, or our reappraisal if additional damage occurs and the 
crop is not harvested;
    (2) All harvested production from the insurable acreage in the 
unit;
    (3) All harvested and appraised production lost or damaged by 
uninsured causes; and
    (4) For processor contracts that stipulate the amount of 
production to be delivered, all harvested popcorn production from 
any other insurable unit that has been used to fulfill your 
processor contract applicable to this unit.
    (5) Any production from yellow or white dent corn will be 
counted as popcorn on a weight basis and any production harvested 
from plants growing in the insured crop may be counted as popcorn 
production on a weight basis.
    (6) Any ear production for which we cannot determine a shelling 
factor will be considered to have an 80 percent shelling factor.
    (d) Mature popcorn may be adjusted for excess moisture and 
quality deficiencies. If moisture adjustment is applicable, it will 
be made prior to any adjustment for quality.
    (1) Production will be reduced by 0.12 percent for each 0.1 
percentage point for moisture in excess of 15 percent. We may obtain 
samples of the production to determine the moisture content.
    (2) Popcorn production will be eligible for quality adjustment 
if, due to an insurable cause of loss that occurs within the 
insurance period, it is not merchantable popcorn and is rejected by 
the processor. The production will be adjusted by:

[[Page 33841]]

    (i) Dividing the value per pound of the damaged popcorn by the 
base contract price per pound for undamaged popcorn; and
    (ii) Multiplying the result by the number of pounds of such 
popcorn.

14. Late Planting

    Late planting provisions in the Basic Provisions are applicable 
for popcorn if you provide written approval from the processor by 
the acreage reporting date that it will accept the production from 
the late planted acres when it is expected to be ready for harvest.

15. Prevented Planting

    Your prevented planting coverage will be 60 percent of your 
production guarantee for timely planted acreage. If you have limited 
or additional levels of coverage, as specified in 7 CFR part 400, 
subpart T, and pay an additional premium, you may increase your 
prevented planting coverage to a level specified in the actuarial 
documents.

    Signed in Washington, D.C., on June 11, 1998.
Robert Prchal,
Acting Manager, Federal Crop Insurance Corporation.
[FR Doc. 98-16147 Filed 6-19-98; 8:45 am]
BILLING CODE 3410-08-P