34778 Federal Register / Vol. 63, No. 123 / Friday, June 26, 1998 /Rules and Regulations

DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 435 and 457

RIN 0563–AB47

Tobacco (Quota Plan) Crop Insurance

Regulations; and Common Crop

Insurance Regulations; Quota Tobacco

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

quota tobacco. 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 tobacco (quota plan) 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 tobacco (quota

plan) crop insurance regulation to the

1998 and prior crop years.

EFFECTIVE DATE: July 27, 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 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 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), Public

Law 104–4, establishes requirements for

Federal agencies to assess the effects of

their regulatory actions on State, local,

and tribal governments and the private

sector. This rule contains no Federal

mandates (under the regulatory

provisions of title II of the UMRA) for

State, local, and tribal governments or

the private sector. Thus, this rule is not

subject to the requirements of sections

202 and 205 of the UMRA.

Executive Order 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 insured is required to

give notice of loss and provide the

necessary information to complete a

claim for indemnity.

The amount of work required of

insurance companies delivering and

servicing these policies will not increase

significantly from the amount of work

currently required. The 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 Tuesday, May 13, 1997, FCIC

published a notice of proposed

rulemaking in the Federal Register at 62

FR 26248–26252 to add to the Common

Crop Insurance Regulations (7 CFR part

457), a new section, 7 CFR 457.156,

Quota Tobacco 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 quota tobacco

found at 7 CFR part 435 (Tobacco

(Quota Plan) Crop Insurance

Regulations). FCIC also amends 7 CFR

part 435 to limit its effect to the 1985

through 1998 crop years.

Following publication of the proposed

rule, the public was afforded 30 days to

submit written comments and opinions.

A total of 510 signed petitions were

received from North Carolina and

Virginia tobacco producers, and 88

comments were received from an

insurance service organization and

reinsured companies. The comments

received and FCIC’s responses are as

follows:

Comment: Two reinsured companies

and an insurance service organization

recommended that the definition of

‘‘amount of insurance’’ be revised to

read, ‘‘the dollar amount determined by

multiplying the insured poundage quota

by the current year’s support price or

the percentage of the current year’s

support price you select.’’ This revision

addresses the possibility of insureds

selecting price elections of less than 100

percent.

Response: FCIC agrees with the

comment and has amended the

definition accordingly. FCIC also has

revised this definition to address the

possible reduction in the amount of
Federal Register / Vol. 63, No. 123 / Friday, June 26, 1998 /Rules and Regulations 34779

insurance for late planted acreage in

accordance with section 14.

Comment: An insurance service

organization recommended that FCIC

either revise or delete the definition of

‘‘approved yield.’’ The commenter

mentioned that since quota tobacco

currently is not an Actual Production

History (APH) crop, the definition will

be questioned by insureds who do not

receive a copy of the Code of Federal

Regulations with their crop insurance

policies.

Response: ‘‘Approved yield’’ is

referenced in section 3 of the crop

provisions, so it must be defined.

Section 3 clearly indicates that an

approved yield is not necessary unless

required by the Special Provisions. As

written, if the FSA quota tobacco

support price program is discontinued

and quota tobacco becomes an APH

crop in the future, the Special

Provisions could be amended easily to

require an approved yield. Therefore, no

changes have been made.

Comment: A reinsured company and

an insurance service organization made

the following recommendations to

revise the definition of ‘‘effective

poundage marketing quota’’: (1) Remove

the words ‘‘minus the amount of any

carryover tobacco’’ because crop

insurance is designed to cover the

tobacco crop actually grown the current

crop year, and the restriction of yield

times acres in the definition of ‘‘insured

poundage quota’’ would take care of any

allowance the producer made for

carryover tobacco; (2) Clarify whether

any additional poundage the producer

intends to produce must be leased or if

it can be grown without any marketing

quota; (3) Add language to the definition

of ‘‘effective poundage marketing quota’’

from section 7(b), which states that

effective poundage marketing quota may

not include any tobacco that would be

subject to a marketing quota penalty

under the United States Department of

Agriculture (USDA) Tobacco Marketing

Quota Regulations; and (4) Revise the

definition to exclude the word ‘‘county’’

because the farm marketing quota is

established by the Farm Service Agency

(FSA) on a Farm Serial Number (FSN)

basis.

Response: (1) Although, producers

will normally reduce the number of

acres grown in the current crop year to

account for carryover production from

the prior years, they may instead elect

to reduce inputs (fertilizer, etc.), thereby

producing fewer pounds per acre. To

maintain the appropriate relationship

between the number of planted acres

and the effective poundage marketing

quota, the amount of any carryover

production should be removed from the

effective poundage marketing quota.

Therefore, no change has been made. (2)

FCIC agrees with the recommendation

and has clarified the definition of

‘‘effective poundage marketing quota’’ to

include any additional (above quota)

poundage as allowed by the USDA

Tobacco Marketing Quota Regulations.

Under current (FSA) procedures, a

minimal percentage of additional

poundage is allowed to be marketed. (3)

FCIC agrees and has revised the

definition of ‘‘effective poundage

marketing quota’’ accordingly. (4) The

definition has been clarified to refer to

the FSA office for the county and the

effective poundage marketing quota for

the FSN.

Comments: A reinsured company 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 not

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: FCIC believes that the

Cooperative State Research, Education,

and Extension Service (CSREES)

recognizes farming practices that are

considered acceptable for producing

quota tobacco. If a producer is following

practices currently not recognized as

acceptable by CSREES, there is no

reason why such recognition cannot be

sought by interested parties. The term

‘‘area’’ is less definitive than the term

‘‘county’’ and would cause insurance

providers to make determinations more

subjective in nature. Therefore, no

change has been made in response to

this comment, except that the definition

of ‘‘good farming practices’’ has been

moved to the Basic Provisions.

Comments: A reinsured company and

an insurance service organization

recommended revising the definition of

‘‘harvest’’ to include a requirement that

at least 20 percent of the production

guarantee must be cut on each acre to

qualify as harvested. Commenters also

recommended that a minimum

appraisal of 35 percent of the amount of

insurance be established to encourage

producers to harvest damaged tobacco.

In some cases, it will be difficult to

verify unharvested production due to

deterioration of the leaves before the

adjuster works the final claim. The

commenters believe that removal of

these requirements from the current

crop provisions will result in a

significant increase in premium rates.

Commenters expressed concern that

FCIC may have overreacted if the

changes were made because of one

lawsuit.

Response: FCIC has determined that

the requirement that at least 20 percent

of the production guarantee be cut on

each acre to qualify as harvested and the

35 percent minimum appraisal for

unharvested acreage is too severe.

Producers should not be forced to incur

the costs associated with harvesting

tobacco acres that may not be

marketable. In addition, FCIC cannot

ignore a court ruling that such

provisions are unenforceable. Therefore,

no change has been made in the final

rule provisions.

Comments: A reinsured company and

an insurance service organization noted

that the definition of ‘‘harvest’’ refers to

the phrase ‘‘removing tobacco from the

field.’’ They believe this is a

determination of when coverage ceases,

which is already included in section

9(c) of these provisions.

Response: Definitions are included in

the crop provisions for clarification of

policy provisions. The definition of

harvest is needed because this term and

its opposite ‘‘unharvested’’ are used

repeatedly in section 12 (Settlement of

Claim) (redesignated as section 13). The

insurance period is defined in section 9

(redesignated as section 10). When the

crop is harvested does not solely

determine when coverage ceases.

Therefore, no change has been made.

Comments: An insurance service

organization asked why the phrase ‘‘the

average auction price * * *’’ in the

definition of ‘‘market price’’ was

changed to ‘‘the previous years’ season

average price published by National

Agricultural Statistics Service * * *’’

Response: The phrase was changed

for clarification. In practice the ‘‘average

auction price’’ has been interpreted

consistently as the previous years’’

season average price published by

National Agriculture Statistics under the

current crop provisions. Therefore, no

change has been made.

Comments: An insurance service

organization recommended deleting

‘‘marketing window’’ from the

definition of ‘‘practical to replant.’’ The

commenters stated that quota tobacco is

unlike other crops, such as processor

and fresh market crops, where the

producer only has a certain amount of

time to market the crop.

Response: FCIC agrees that the

concept of a ‘‘marketing window’’ is
34780 Federal Register / Vol. 63, No. 123 / Friday, June 26, 1998 /Rules and Regulations

most applicable to processor and fresh

market crops and recognizes that quota

tobacco is unlike these crops. However,

the Federal Agriculture Improvement

and Reform Act of 1996 mandated that

FCIC consider marketing windows in

determining whether it is feasible to

require planting during a crop year.

Therefore, no change has been made,

except that the definition of ‘‘practical

to replant’’ has been moved to the Basic

Provisions.

Comments: A reinsured company and

an insurance service organization

expressed concern about the terms

‘‘replace’’ and ‘‘replacing’’ in the

definition of ‘‘replanting.’’ Commenters

stated that the terms, as used, seem

awkward and cumbersome.

Response: FCIC believes that the

definition of ‘‘replanting’’ clearly

describes the steps required to replant

the crop. However, FCIC has replaced

the phrase ‘‘growing a successful

tobacco crop’’ with ‘‘producing at least

the quota,’’ for clarity.

Comments: An insurance service

organization recommended that the

definition of ‘‘support price’’ be

amended to read ‘‘type 31 tobacco’’

since type 31 is the only type of tobacco

that is insurable under these provisions.

Response: FCIC believes that the

definition is clearly stated. The term

‘‘type’’ is written for the flexibility of

insuring other types of tobacco if

designated in the Special Provisions.

Comment: A reinsured company and

an insurance service organization

recommended moving the definition of

‘‘unit’’ to section 2 for consistency.

Response: All policy definitions are

contained in section 1 for uniformity.

Therefore, no change has been made in

this regard. FCIC has changed the term

‘‘unit’’ to ‘‘Basic Unit,’’ however, to

conform to recent changes in the Basic

Provisions.

Comments: An insurance service

organization and 510 growers

recommended that the unit division

guidelines of these provisions be the

same as currently specified for

Guaranteed Tobacco. Those provisions

define basic units by share and optional

units by Farm Serial Number (FSN).

Commenters believe that this change

would resolve the current conflict

between basic units (by share) as

defined for Catastrophic Risk Protection

(CAT) and basic units (by FSN) for buyup policyholders.

Response: FCIC acknowledges that

adopting the unit division rules

contained in the Common Crop

Insurance Policy for quota tobacco

would resolve the conflict between unit

definition for catastrophic coverage and

additional coverage that now exists.

However, the current unit definition for

quota tobacco was adopted beginning

with the 1985 crop year to resolve a

vulnerability that exists in this program.

Prior to that time, units were defined

similarly for guaranteed and quota

tobacco. Consider a landlord who share

rents a portion of the quota to a tenant

and also produces quota tobacco on the

Farm Serial Number (FSN). Under the

basic unit definition of the Common

Crop Insurance Policy, two basic units

are established for the landlord (a 100

percent share and the share with the

tenant). One basic unit is established for

the tenant. Under the definition

contained in the Quota Tobacco Crop

Provisions, one basic unit is established

for each producer by FSN.

The insured quantity under these

provisions is the insured marketing

quota, a quantity that is independent of

acreage if a sufficient number of acres

are planted. Premium is charged only on

the amount of insured marketing quota.

Under the ‘‘Basic unit’’ definition

contained in the Quota Tobacco Crop

Provisions, the landlord’s share of all

production from the FSN is counted

against the landlord’s share of the quota.

Under the ‘‘Basic unit’’ definition

contained in the Common Crop

Insurance Provisions, there is greater

opportunity to plant additional acreage

and manipulate production within the

FSN so that the entire quota may be

produced and sold, yet a loss be paid on

one unit. However, premium will not be

collected on the additional acreage.

Due to a large number of comments

on this particular issue, FCIC will

review any additional information that

may support a different approach to

establishing units for quota tobacco. All

such information must specifically

address the concern described herein

and demonstrate how it will be

alleviated by the proposed unit

definition. Pending the submission of

such information, FCIC will implement

the basic unit definition contained in

the proposed rule and will consider any

changes at such date as the information

may be available. If warranted, the unit

definition can be changed for the 2000

or a subsequent crop year.

Comment: A reinsured company and

an insurance service organization

recommended removing any references

to ‘‘annual production reports’’ for the

APH plan. The commenters contend

that if the FSA quota tobacco support

program is changed or eliminated, it

will be necessary to revise several

provisions of the policy.

Response: Section 3 of these

provisions requires annual production

reports only when required by the

Special Provisions. The current method

of establishing farm yields will continue

for the 1998 crop year. If the quota

tobacco support price program is

discontinued or modified in future

years, these provisions provide an

alternative method for establishing the

production guarantee. Therefore, no

change has been made. However, FCIC

has amended the definition of ‘‘support

price’’ to include the possibility that the

tobacco support program may be

changed. If there is no tobacco support

program, FCIC will announce the

average price per pound for the type of

tobacco.

Comments: A reinsured company and

an insurance service organization

recommended deleting the word

‘‘carryover’’ in section 6(a). Commenters

stated that the basic premise of multiple

peril crop insurance coverage is to

insure actual planted acreage of the

crop. Subtracting the carryover

poundage would take coverage away

from a planted crop which is legally

insurable (i.e., the carryover poundage

has value and is exposed to perils). This

could have additional unwanted

consequences by making the insurance

providers responsible for tracking and

placing value on carryover poundage.

Response: Although producers

normally reduce the number of acres

grown in the current crop year to

account for carryover production from

the prior year, they may instead elect to

reduce inputs (fertilizer, etc.), thereby

producing fewer pounds per acre.

Further, to maintain the appropriate

relationship between the number of

planted acres and the effective

poundage marketing quota, the amount

of any carryover production should be

removed from the effective poundage

marketing quota. Therefore, no change

has been made.

Comments: A reinsured company and

an insurance service organization

recommended that section 6(a) be

revised to remove the phrase, ‘‘once

submitted, you may not revise the

acreage report,’’ because section 6(c),

now 6(d), of the Basic Provisions

already states, ‘‘* * *you may not

revise this report after the acreage

reporting date without our consent.’’

The commenter inquired about the

impact of changes in information

between the time an acreage report is

submitted and the actual acreage

reporting date. The commenter stated

that, if this sentence remains in the crop

provisions, tobacco insureds will wait

until the last day to report acreage.

Response: FCIC agrees that section

6(d) of the Basic Provisions is adequate

and has deleted this language from the

Crop Provisions.
Federal Register / Vol. 63, No. 123 / Friday, June 26, 1998 /Rules and Regulations 34781

Comments: A reinsured company and

an insurance service organization

recommended revising section 7(a) to

read ‘‘type 31 tobacco designated in the

Special Provisions, in which you have

a share.’’ Commenters noted that the

current quota policy refers to only type

31 tobacco.

Response: FCIC agrees that the current

quota tobacco policy only refers to type

31 tobacco. However, section 7(a)

(redesignated as section 8(c)) is

intended to allow the flexibility of

insuring other types of tobacco if they

are designated in the Special Provisions.

Therefore, FCIC has not revised section

7(a). FCIC has changed section 12(d)

(redesignated as section 13(d)) to refer to

‘‘U.S. Official Standard Grades for the

insured type of tobacco,’’ rather than

‘‘U.S. Official Standard Grades, Burley

Tobacco, U.S. Type 31,’’ for consistency.

Comments: A reinsured company and

an insurance service organization asked

if the provisions in section 8(c) are

intended to allow written agreement

requests for a type not rated in the

actuarial documents.

Response: Section 8(c) (redesignated

as section 9(c)) only references a method

of planting. Therefore, section 9(c) does

not authorize written agreements for

types not rated.

Comments: A reinsured company and

an insurance service organization

questioned why section 9(a) is not as

precise as section 11(a) of the Basic

Provisions, which specifies ‘‘total

destruction * * * on the unit.’’

Response: FCIC has revised section

9(a) (redesignated as section 10(a)) to

refer to total destruction of the tobacco

on the unit.

Comment: A reinsured company and

an insurance service organization asked

if the current requirement that notice be

given without delay if any tobacco is

damaged and will not be sold through

an auction warehouse was removed

intentionally from section 11.

Response: Section 14(a)(2) of the

Basic Provisions states ‘‘* * *you must

* * *give us notice within 72 hours of

your initial discovery of damage* * *’’

FCIC believes this requirement is

substantially the same as requiring a

notice ‘‘without delay,’’ so the latter

requirement of section 11 was removed

in the proposed rule.

Comment: Two reinsured companies

and an insurance service organization

recommended that section 12(b)(1)

reference price elections less than 100

percent of the support price. The

commenters indicated that the language

as written could be taken to mean that

the insured poundage quota will be

multiplied by 100 percent of the support

price even for CAT policies.

Response: FCIC agrees with the

recommendation and has amended

section 12(b)(1) (redesignated as section

13(b)(1)) to read ‘‘multiplying the

insured poundage quota by your elected

percentage of the current year’s support

price.’’

Comments: Two reinsured companies

and an insurance service organization

recommended the following: (1) Add

the word ‘‘resulting’’ in section 12

(b)(2); and (2) Remove the reference to

‘‘section 12(b)(2)’’ from section 12(b)(3)

because it is not necessary to reference

the previous item by number.

Response: The recommendations do

not add any additional clarification to

the provision. Therefore, no changes

have been made.

Comments: Two reinsured companies

and an insurance service organization

recommend removing the words

‘‘acceptable production records’’ from

section 12(c)(1)(D), if these words relate

to other APH references in these

provisions.

Response: As stated in earlier

responses, section 12(c)(1)(D)

(redesignated as section 13(c)(1)(D)) will

only apply if annual production reports

are required by the Special Provisions,

and the provision has been so clarified.

Comments: Two reinsured companies

and an insurance service organization

expressed concern that section

12(c)(1)(iii) of these provisions allows

the insured to defer settlement and wait

for a later, generally lower appraisal.

Response: Section 12(c)(1)(iii)

(redesignated as section 13(c)(1)(iii))

allows deferment of a claim only if the

insurance provider agrees that

representative samples can be left or if

the insured elects to continue to care for

the entire crop. In either case, if the

insured does not provide sufficient care

for the remaining crop, appraisals for

uninsured causes of loss may be made.

Therefore, no change has been made.

Comments: Two reinsured companies

and an insurance service organization

expressed concern that there are no

instructions in section 12(c) and (d) on

how to value appraised production.

Response: Section 12(c)(1)(iv)

(redesignated as section 13(c)(1)(iii)(A))

has been rewritten to more clearly

specify the valuation of harvested and

appraised production.

Comments: Two reinsured companies

and an insurance service organization

opposed any reference to the word

‘‘carryover’’ in section 12(h).

Response: Section 12(h) (redesignated

as section 13(h)) eliminates the

adjustment of next year’s quota when

the insurance provider agrees that any

carryover or current years’ tobacco has

no market value due to an insured cause

of loss. It also eliminates the

opportunity to falsely report that

carryover and current years’ tobacco has

no value and thus increase the

indemnity payment. This provision is

consistent with FSA’s requirement that

tobacco having no value be destroyed.

Therefore, no change has been made.

Comments: Two reinsured companies

and an insurance service organization

suggested that requiring a written

agreement to be renewed each year

should be removed in section 14(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

temporary and intended to address

unusual situations. If the condition

creating a need for written agreement

remains from year to year among

producers it should be incorporated into

the policy, the Special Provisions, or the

actuarial documents. Therefore, no

change has been made, except the

provisions for written agreements have

been moved to the Basic Provisions.

Comments: Two reinsured companies

and an insurance service organization

asked: (1) Is the Late Planting

Agreement Option no longer available;

and (2) Why are the late and prevented

planting language provisions not

included in the proposed rule as they

have been in other crops?

Response: A new section 14 has been

added to provide for late planting

coverage. Under the new section 15,

prevented planting coverage will not be

provided for quota tobacco as set out in

the Basic Provisions because the high

cash value per acre and the hand labor

required to transplant tobacco on

relatively small acreage enables

producers to plant sufficient acreage to

maintain their effective poundage

marketing quota even under extremely

adverse conditions that would prevent

planting of most other crops.

In addition to the changes indicated

above, FCIC has made the following

changes:

1. Section 1. Removed definitions of

‘‘days,’’ ‘‘FSA,’’ ‘‘final planting date,’’

and ‘‘USDA,’’ because these definitions

were moved to the Basic Provisions.

Changed the definition of ‘‘unit’’ to

‘‘basic unit.’’

2. Section 7 (Annual Premium).

Added to modify section 7 of the Basic

Provisions to calculate premium, in

part, based on the producer’s amount of

insurance. As defined in these crop

provisions, the definition of ‘‘amount of

insurance’’ takes into consideration the

insured poundage quota, current year’s
34782 Federal Register / Vol. 63, No. 123 / Friday, June 26, 1998 /Rules and Regulations

support price, and late planting

adjustments unique to quota tobacco.

3. Section 12(b) (redesignated as

Section 13(b)). Revised for clarification.

Also, added an example of an indemnity

calculation for illustration purposes.

List of Subjects in 7 CFR Parts 435 and

457

Crop insurance, Quota tobacco,

Tobacco (quota plan) crop insurance

regulations.

Final Rule

Accordingly, as set forth in the

preamble, the Federal Crop Insurance

Corporation hereby amends the Tobacco

(Quota Plan) Crop Insurance

Regulations (7 CFR part 435) and the

Common Crop Insurance Regulations (7

CFR part 457) as follows:

PART 435—TOBACCO (QUOTA PLAN)

CROP INSURANCE REGULATIONS;

REGULATIONS FOR THE 1985

THROUGH 1998 CROP YEARS

1. The authority citation for 7 CFR

part 435 is revised to read as follows:

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

2. The part heading is revised as set

forth above.

Subpart Heading [Removed]

3. The subpart heading ‘‘Subpart—

Regulations for the 1985 and

Succeeding Crop Years’’ is removed.

4. Section 435.7 is amended by

revising the introductory text of

paragraph (d) to read as follows:

§ 435.7 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

Tobacco (Quota Plan) Insurance Policy

for the 1985 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(1), 1506(p).

6. Section 457.156 is added to read as

follows:

§ 457.156 Quota tobacco crop insurance

provisions.

The Quota Tobacco 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:

Quota Tobacco 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.

Amount of insurance. The dollar amount

determined by multiplying the insured

poundage quota by the current year’s support

price or the percentage of the current year’s

support price you select less any adjustments

for late planting as specified in section 14.

Approved yield. The yield calculated in

accordance with 7 CFR part 400, subpart G,

if required by the Special Provisions.

Basic unit. In lieu of the definition in the

Basic Provisions, a basic unit is all insurable

acreage of an insurable type of tobacco in the

county in which you have a share on the date

of planting for the crop year and that is

identified by a single FSA farm serial number

at the time insurance first attaches under

these provisions for the crop year.

Carryover tobacco. Any tobacco produced

on the land identified by a FSA farm serial

number in previous years that remained

unsold at the end of the most recent

marketing year.

County. In lieu of the definition in the

Basic Provisions, county is defined as the

county or other political subdivision of a

state shown on your accepted application

including any land identified by a FSA farm

serial number for such county but physically

located in another county.

Discount variety. Tobacco defined as such

under the provisions of the United States

Department of Agriculture tobacco price

support program.

Effective poundage marketing quota. The

farm marketing quota as established and

recorded by the local FSA office for the land

identified by the FSA farm serial number

plus any additional poundage, as allowed by

the USDA Tobacco Marketing Quota

Regulations, that you intend to produce for

each unit in that crop year minus the amount

of any carryover tobacco. The term may not

include any tobacco that would be subject to

a marketing quota penalty under USDA

Tobacco Marketing Quota Regulations. For

any crop year in which there are no effective

USDA Tobacco Marketing Quota Regulations,

the effective poundage marketing quota will

be the pounds obtained by multiplying the

applicable approved yield per acre by the

lower of the reported or insured acreage on

the basic unit, unless otherwise provided by

the actuarial documents.

Fair market value. The current year’s

tobacco season average price for the

applicable type of tobacco obtained from the

sale of the tobacco through a market other

than an auction warehouse.

Farm yield. The yield per acre used by FSA

to establish the effective poundage marketing

quota for land identified by a FSA farm serial

number, unless we have estab lished a yield

for that land in the actuarial documents.

Harvest. Cutting and removing all insured

tobacco from the field in which it was grown.

Hydroponic plants. Seedlings grown in

liquid nutrient solutions.

Insured poundage quota. The lesser of:

(1) The product (in pounds) obtained by

multiplying the effective poundage marketing

quota for the land identified by a FSA farm

serial number by your selected coverage

level; or

(2) The farm yield or approved yield, as

applicable, adjusted for late planting in

accordance with section 14, if applicable,

multiplied by the appropriate number of

insured acres and by your selected coverage

level.

Late planting period. In lieu of the

definition in section 1 of the Basic

Provisions, the period that begins the day

after the final planting date for the insured

crop and ends 15 days after the final planting

date, unless otherwise specified in the

Special Provisions.

Market price. The previous years’ season

average price published by National

Agricultural Statistics Service for the

applicable type of tobacco in the area.

Marketing year. The marketing year

published by National Agricultural Statistics

Service for the applicable type of tobacco in

the area.

Planted acreage. Land in which tobacco

seedlings, including hydroponic plants, have

been transplanted by hand or machine from

the tobacco bed to the field.

Pound. Sixteen ounces avoirdupois.

Replanting. In lieu of the definition in

section 1 of the Basic Provisions, performing

the cultural practices necessary to replace the

tobacco plant, and then replacing the tobacco

plant in the insured acreage with the

expectation of producing at least the quota.

Support price. The average price per

pound for the type of tobacco as announced

by the USDA under its tobacco price support

program, or, if there is no such program, as

announced by FCIC.

Tobacco bed. An area protected from

adverse weather, in which tobacco seeds are

sown and seedlings are grown until

transplanted into the tobacco field by hand

or machine.

2. Unit Division.

A unit will be determined in accordance

with the definition of basic unit contained in

section 1 of these Crop Provisions. The

provision in the Basic Provisions regarding

optional units are not applicable, unless

specified by the Special Provisions.

3. Insurance Guarantees, Coverage Levels,

and Prices for Determining Indemnities.

In addition to section 3 of the Basic

Provisions, a production report, if required

by the Special Provisions, must be filed 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.
Federal Register / Vol. 63, No. 123 / Friday, June 26, 1998 /Rules and Regulations 34783

In accordance with section 2 of the Basic

Provisions, the cancellation and termination

dates are March 15.

6. Report of Acreage.

In addition to the requirements of section

6 of the Basic Provisions:

(a) You must report the effective poundage

marketing quota and specify any amount of

carryover tobacco, if applicable.

(b) You must provide a copy of any written

lease agreement between you and any

landlord or tenant showing the amount of the

effective poundage marketing quota allocated

to you. The written lease agreement must:

(1) Identify all other persons sharing in the

effective poundage marketing quota; and

(2) Be submitted to your local insurance

provider’s office on or before the acreage

reporting date.

(c) In the event of a loss, if the written lease

agreement has been submitted timely, we

will distribute the effective poundage

marketing quota in accordance with the

terms of the written lease agreement. If the

written lease agreement is not submitted

timely, we will prorate the effective

poundage marketing quota across the FSA

farm serial number to all insured and

uninsured persons based on planted acres

within land identified by the FSA farm serial

number.

7. Annual Premium.

In lieu of paragraph (c) of section 7 of the

Basic Provisions, your annual premium

amount is determined by either:

(a) Multiplying the amount of insurance by

the rate, your share, and any premium

adjustment percentages that may apply; or

(b) If no support price program exists,

multiplying the approved yield by the

coverage level, the support price, the acres,

your share, and any premium adjustment

percentages that may apply.

8. Insured Crop.

(a) In accordance with section 8 of the

Basic Provisions, the crop insured will be

any of the tobacco types designated in the

Special Provisions for the county, in which

you have a share, that you elect to insure,

and for which a premium rate is provided by

the actuarial documents.

(b) In addition to section 8 of the Basic

Provisions, the crop insured will not include

any poundage above the effective poundage

marketing quota or the insured poundage

quota.

9. Insurable Acreage.

In addition to the provisions of section 9

of the Basic Provisions, we will not insure

any acreage under these crop provisions that

is:

(a) Planted to a discount variety;

(b) Planted to a tobacco type for which no

premium rate is provided by the actuarial

documents;

(c) Planted in any manner other than as

provided in the definition of ‘‘planted

acreage’’ in section 1 of these Crop

Provisions, unless otherwise provided by the

Special Provisions or by written agreement;

or

(d) Damaged before the final planting date

to the extent that most of the producers of

tobacco acreage with similar characteristics

in the area would normally not further care

for the crop, unless such crop is replanted or

we agree that replanting is not practical.

10. Insurance Period.

In accordance with the provisions of

section 11(b) of the Basic Provisions,

insurance ceases at the earliest of:

(a) Total destruction of the tobacco on the

unit;

(b) Weighing-in at the tobacco warehouse;

(c) Removal of the tobacco from the field

where grown except for curing, grading,

packing, or immediate delivery to the tobacco

warehouse; or

(d) The February 28 immediately following

the normal harvest period.

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;

(e) Wildlife;

(f) Earthquake;

(g) Volcanic eruption; or

(h) Failure of the irrigation water supply,

if caused by a peril specified in section 11

(a) through (g) that occurs during the

insurance period.

12. Duties In The Event of Damage or Loss.

In accordance with the requirements of

section 14 of the Basic Provisions, any

representative samples we may require of

each unharvested tobacco type must be at

least 5 feet wide (at least two rows) and

extend the entire length of each field in the

unit. The samples must not be harvested or

destroyed until after our inspection.

13. Settlement of Claim.

(a) We will determine your loss on a unit

basis. In the event you are unable to provide

separate acceptable production records, 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 poundage

quota by your elected percentage of the

current year’s support price.

(2) Subtracting the total value of the

production to be counted (see section 13(c))

from the amount of insurance; and

(3) Multiplying the result in section

13(b)(1) by your share. For example:

You have 100 percent share of type 31

quota tobacco in the unit, with an insurable

poundage quota of 1,000 pounds and a

support price of $1.73 per pound. The

amount of insurance equals $1730.00 (1,000

insurable poundage quota × $1.73 support

price). You are only able to harvest 600

pounds. The value of the total production to

count equals $1038.00 (600 harvested pounds

× $1.73 support price). Your indemnity

would be calculated as follows:

(1) $1730.00 (amount of

insurance)¥$1038.00 (value of the total

production to count) = $692.00 loss

(2) $692.00 loss x 100 percent = $692.00

indemnity payment

(c) The value of the total production to

count (pounds of appraised or harvested

production) for all insurable acreage on the

unit will include:

(1) All appraised production as follows:

(i) Not less than the amount of insurance

per insured acre for the unit for any acreage:

(A) That is abandoned;

(B) Put to another use without our consent;

(C) That is damaged solely by uninsured

causes; or

(D) For which you fail to provide

acceptable production records, if required by

the Special Provisions;

(ii) The value of production lost due to

uninsured causes which is the number of

pounds of such production multiplied by the

support price;

(iii) The value of potential production on

unharvested insured acreage that you intend

to put to another use with our consent, if you

and we agree on the number of pounds of

such production to count which will be

multiplied by the support price. 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 allow you 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 value of

production to count for such acreage will be

the number of pounds of harvested or

appraised production taken from samples at

the time harvest should have occurred

multiplied by the support price. If you do not

leave the required samples intact, or you fail

to provide sufficient care for the samples, the

value of production to count will be our

appraisal made prior to giving you consent to

put the acreage to another use multiplied by

the support price); or

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

crop, the value of production to count for the

acreage will be the harvested production, or

our reappraisal multiplied by the support

price if additional damage occurs and the

crop is not harvested;

(2) All harvested production from

insurable acreage multiplied by:

(i) The average price for any tobacco sold

on a warehouse floor; and

(ii) Fair market value for all other tobacco

sold or not sold.

(d) Mature tobacco production that is

damaged by insurable causes will be adjusted

for quality based on the USDA Official

Standard Grades for the insured type of

tobacco.

(e) To enable us to determine the fair

market value of tobacco not sold through

auction warehouses, you must give us the

opportunity to inspect such tobacco before it

is sold, contracted to be sold, or otherwise

disposed. Failure to provide us the

opportunity to inspect such tobacco may

result in rejection of any claim for indemnity.

(f) If we consider the best offer you receive

for such tobacco to be inadequate, we may

obtain additional offers on your behalf.

(g) Once we agree that any carryover or

current year’s tobacco has no market value
34784 Federal Register / Vol. 63, No. 123 / Friday, June 26, 1998 /Rules and Regulations

due to insured causes, you must destroy it.

If you disagree and refuse to destroy the

tobacco with no value, we will determine the

value and count it as production to count.

14. Late Planting.

(a) In lieu of late planting provisions in the

Basic Provisions regarding acreage initially

planted after the final planting date,

insurance will be provided for acreage

planted to the insured crop after the final

planting date as follows:

(1) For each acre or portion thereof planted

during the first 10 days after the final

planting date, the farm yield will be reduced

by 1 percent per day; and

(2) For each acre or portion thereof planted

during the 11th through the 15th day after

the final planting date, the farm yield will be

reduced by 2 percent per day.

(b) If you plant enough acreage to fulfill the

effective poundage marketing quota, there

will be no reduction in the insured poundage

quota as a result of any late planted acreage.

15. Prevented Planting.

The prevented planting provisions in the

Basic Provisions are not applicable to quota

tobacco.

Signed in Washington, D.C., on June 19,

1998.

Kenneth D. Ackerman,

Manager, Federal Crop Insurance

Corporation.

[FR Doc. 98–16968 Filed 6–25–98; 8:45 am]

BILLING CODE 3410–08–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Parts 21 and 29

[Docket No. SW002; Special Condition No.

29–002–SC]

Special Conditions: Eurocopter France

Model AS–365 N3 ‘‘Dauphin’’

Helicopters, Full Authority Digital

Engine Control (FADEC)

AGENCY: Federal Aviation

Administration (FAA), DOT.

ACTION: Final special condition; request

for comments.

SUMMARY: This special condition is

issued for the Eurocopter France Model

AS–365 N3 ‘‘Dauphin’’ helicopters.

These helicopters will have a novel or

unusual design feature associated with

the Full Authority Digital Engine

Control (FADEC). The applicable

airworthiness regulations do not contain

adequate or appropriate safety standards

to protect systems that perform critical

functions from the effects of highintensity radiated fields (HIRF). This

special condition contains the

additional safety standards that the

Administrator considers necessary to

ensure that critical functions of systems

will be maintained when exposed to

HIRF.

DATES: The effective date of this special

condition is June 17, 1998. Comments

must be received on or before August

25, 1998.

ADDRESSES: Comments on this special

condition may be mailed in duplicate

to: Federal Aviation Administration,

Office of the Regional Counsel,

Southwest Region, Attention: Rules

Docket No. SW002, Fort Worth, Texas

76193–0007 or deliver in duplicate to

the Office of the Regional Counsel,

Southwest Region, at 2601 Meacham

Blvd., Fort Worth, Texas 76137.

Comments must be marked: Rules

Docket No. SW002. Comments may be

inspected in the Rules Docket

weekdays, except Federal holidays,

between 8:30 a.m. and 4:00 p.m.

FOR FURTHER INFORMATION CONTACT:

Carroll Wright, FAA, Rotorcraft

Directorate, Regulations Group, Fort

Worth, Texas 76193–0111; telephone

817–222–5120, fax 817–222–5961.

SUPPLEMENTARY INFORMATION: The FAA

has determined that notice and

opportunity for prior public comment

hereon are impracticable because these

procedures would significantly delay

issuance of the approval design and

thus delivery of the affected aircraft. In

addition, notice and opportunity for

prior public comment are unnecessary

since the substance of this special

condition has been subject to the public

comment process in several prior

instances with no substantive comments

received. The FAA therefore finds that

good cause exists for making this special

condition effective upon issuance.

Comments Invited

Interested persons are invited to

submit such written data, views, or

arguments as they may desire.

Communications should identify the

regulatory docket and be submitted in

duplicate to the address specified above.

All communications received on or

before the closing date for comments

will be considered by the Administrator.

The special condition may be changed

in light of the comments received. All

comments received will be available in

the Rules Docket for examination by

interested persons, both before and after

the closing date for comments. A report

summarizing each substantive public

contact with FAA personnel concerning

this rulemaking will be filed in the

docket. Commenters wishing the FAA to

acknowledge receipt of their comments

submitted in response to this Special

Condition must include a selfaddressed, stamped postcard on which

the following statement is made:

‘‘Comments to Rules Docket No.

SW002’’ The postcard will be date

stamped and returned to the

commenter.

Background

On September 1, 1997, Eurocopter

France applied for an amendment to

Type Certificate (TC) No. H10EU to

include the new Model AS–365 N3

‘‘Dauphin’’ helicopter. The Model AS–

365 N3 ‘‘Dauphin’’ helicopter, which is

a derivative of the Model AS–365 N2

helicopter that is currently approved

under TC No. H10EU, is a transport

category A and B helicopter powered by

two Turbomeca Arriel 2C engines with

FADEC. The Turbomeca Arriel 1C2

engine has been replaced with the

Turbomeca Arriel 2C engine, which

includes a digital engine control system.

Type Certification Basis

Under the provisions of 14 CFR

§ 21.101, Eurocopter France must show

that the Model AS–365 N3 ‘‘Dauphin’’

helicopter meets the applicable

provisions of the regulations

incorporated by reference in TC No.

H10EU or the applicable regulations in

effect on the date of application for the

change to the Model No. AS–365 N3.

The regulations incorporated by

reference in the type certificate are

commonly referred to as the ‘‘original

type certification basis.’’ The regulations

incorporated by reference in H10EU are

as follows: § 21.29 and 14 CFR part 29,

effective February 1, 1965, plus

Amendments 29–1 through 29–11. In

addition, the applicant elected to

comply with 14 CFR part 29

amendments 29–12 through 29–16,

except for 14 CFR part 29.397

concerning the rotorbrake. The

certification basis also includes certain

special conditions and equivalent safety

findings that are not relevant to this

special condition.

If the Administrator finds that the

applicable airworthiness regulations do

not contain adequate or appropriate

safety standards for these helicopters

because of a novel or unusual design

feature, special conditions are

prescribed under the provisions of

§ 21.16.

In addition to the applicable

airworthiness regulations and special

conditions, the Model AS–365 N3

helicopter must comply with the noise

certification requirements of 14 CFR

part 36; and the FAA must issue a

finding of regulatory adequacy pursuant

to § 611 of Public Law 92–574, the

‘‘Noise Control Act of 1972.’’

Special conditions, as appropriate, are

issued in accordance with § 11.49, as

required by §§ 11.28 and 11.29(b), and

become part of the type certification

basis in accordance with § 21.101(b)(2).