This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

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

The Code of Federal Regulations is sold by

the Superintendent of Documents. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

34549

Vol. 63, No. 122

Thursday, June 25, 1998

DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 401 and 457

RIN 0563–AA84

General Crop Insurance Regulations,

Tobacco (Guaranteed Plan)

Endorsement; and Common Crop

Insurance Regulations, Guaranteed

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

guaranteed 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 (guaranteed plan)

endorsement with the Common Crop

Insurance Policy for ease of use and

consistency of terms, and to restrict the

effect of the current tobacco (guaranteed

plan) endorsement 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 in 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. 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 effect of this regulation on small

entities will be no greater than on 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 Monday, June 16, 1997, FCIC

published a notice of proposed

rulemaking in the Federal Register at 62

FR 32544 to add to the Common Crop

Insurance Regulations (7 CFR part 457),

a new section, 7 CFR 457.136,

Guaranteed 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 guaranteed

tobacco found at 7 CFR 401.129

(Tobacco (Guaranteed Plan)

Endorsement). FCIC also amends 7 CFR
34550 Federal Register / Vol. 63, No. 122 /Thursday, June 25, 1998 /Rules and Regulations

part 401 to limit its effect to the 1998

and prior crop years.

Following publication of the proposed

rule, the public was afforded 30 days to

submit written comments and opinions.

A total of 88 comments were received

from reinsured companies and an

insurance service organization. The

comments received and FCIC’s

responses are as follows:

Comment: An insurance service

organization recommended that FCIC

either revise or delete the definition of

‘‘approved yield.’’ The commenter

mentioned that since guaranteed

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 guaranteed tobacco

support price program is discontinued

and guaranteed 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

expressed concern 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

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

guaranteed tobacco. If a producer is

following practices currently not

recognized as acceptable by the

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 except that the definition of ‘‘good

farming practices’’ has been moved to

the Basic Provisions.

Comment: A reinsured company and

an insurance service organization

recommended revising the definition of

‘‘harvest’’ to include the 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

production guarantee 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 an 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

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.

Comment: An insurance service

organization asked if the phrase ‘‘if not

available’’ means the season average

price is not available at all or is not

available when a claim for an indemnity

is processed. The commenter stated that

the market price is never available when

the tobacco is harvested, only when it

is marketed.

Response: The term ‘‘if not available’’

means that the market price is not

available because no marketings of the

applicable insured type of tobacco

grown in the area have occurred. The

provision has been clarified

accordingly.

Comment: An insurance service

organization recommended deleting

‘‘marketing window’’ from the

definition of ‘‘practical to replant.’’ The

commenter stated that guaranteed

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

most applicable to processor and fresh

market crops and recognizes that

guaranteed 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.

Comment: 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 guarantee,’’ for clarity.

Comment: An insurance service

organization and a reinsured company

recommended the unit division

guidelines in the proposed rule remain

the same in the final rule.

Response: FCIC has not changed the

unit division guidelines.

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 guaranteed tobacco

support price program is changed or

eliminated, it will be necessary to revise

several provisions of the policy.

Response: Section 3(b) of these

provisions requires annual production

reports only when required by the

Special Provisions. The current method

for establishing yields will continue for

the 1998 crop year. If the guaranteed

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 not a tobacco

support program, FCIC will announce

the average price per pound for the type

of tobacco.

Comment: A reinsured company and

an insurance service organization

recommended deleting the word

‘‘carryover’’ in section 6. 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
Federal Register / Vol. 63, No. 122 /Thursday, June 25, 1998 /Rules and Regulations 34551

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 reduce the opportunity to

falsely report the amount of carryover

tobacco at time of loss adjustment, the

amount of any carryover production

must be reported on the acreage report.

Therefore, no change has been made.

Comment: 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) only references

a method of planting. Therefore, section

8(c) does not authorize written

agreements for types not rated.

Comment: A reinsured company and

an insurance service organization

question 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) to refer to the 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 that ‘‘* * * 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 adding the phrase

‘‘containing at least two rows’’ after the

phrase ‘‘at least 5 feet wide’’ in section

11(a). Commenters stated that a

representative sample of 5 feet could

have only one row in a sample where

tobacco is planted in greater than 30

inch rows.

Response: FCIC has amended the

provision accordingly.

Comment: Two reinsured companies

and an insurance organization

recommended that the word ‘‘resulting’’

be added in section 12(b)(2) and the

reference ‘‘section 12(b)(2)’’ be deleted

from section 12(b)(3) because reference

to the previous item by number is

unnecessary.

Response: The recommendations do

not add any additional clarification to

the provision. Therefore, no change has

been made.

Comment: 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) will only

apply if annual production reports are

required by the Special Provisions and

the provision has been so clarified.

Comment: 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) 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, the original

appraisal will be used. Therefore, no

change has been made.

Comment: Two reinsured companies

and an insurance service organization

are opposed to any reference to the

word ‘‘carryover’’ in section 12(g).

Response: Section 12(g) eliminates the

adjustment of next year’s production

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 the

carryover and current years’ tobacco

have no value and thus increase the

indemnity payment. This provision is

consistent with the Farm Service

Agency’s requirement that tobacco

having no value be destroyed.

Therefore, no change has been made.

Comment: Two reinsured companies

and an insurance service organization

suggested that the requirement to renew

a written agreement each year should be

removed in section 13(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, it should be

incorporated into the policy, the Special

Provisions, or the actuarial documents.

Therefore, no change has been made

except that the provisions for written

agreements have been moved to the

Basic Provisions.

Comment: Two reinsured companies

and an insurance service organization

asked: (1) Why the Late Planting

Agreement Option is no longer

available; and (2) Why the late and

prevented planting language provisions

are not included in the proposed rule as

they have been in other crops.

Response: A new section 13 has been

added to provide for late planting

coverage. Under section 14, prevented

planting coverage will not be provided

for guaranteed 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 production levels even

under extremely adverse weather

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 12(b)—Revised for

clarification. Also, added an example of

an indemnity calculation for illustration

purposes.

List of Subjects in 7 CFR Parts 401 and

457

Crop insurance, Guaranteed tobacco,

Tobacco (guaranteed plan) endorsement.

Final Rule

Accordingly, as set forth in the

preamble, the Federal Crop Insurance

Corporation hereby amends 7 CFR parts

401 and 457 as follows:

PART 401—GENERAL CROP

INSURANCE REGULATIONS;

REGULATIONS FOR THE 1988 AND

SUBSEQUENT CONTRACT YEARS

1. The authority citation for 7 CFR

part 401 continues to read as follows:

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

2. Section 401.129 introductory

paragraph is revised to read as follows:

§ 401.129 Tobacco (guaranteed plan)

endorsement

The provisions of the Tobacco

(Guaranteed Plan) Crop Insurance
34552 Federal Register / Vol. 63, No. 122 /Thursday, June 25, 1998 /Rules and Regulations

Endorsement for the 1990 through the

1998 crop years are as follows:

* * * * *

PART 457—COMMON CROP

INSURANCE REGULATIONS;

REGULATIONS FOR THE 1998 AND

SUBSEQUENT CONTRACT YEARS

3. The authority citation for 7 CFR

part 457 continues to read as follows:

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

4. Section 457.136 is added to read as

follows:

§ 457.136 Guaranteed tobacco crop

insurance provisions

The Guaranteed 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:

Guaranteed 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.

Adequate stand. A population of live

plants per unit of acreage that can be

expected to produce at least your production

guarantee.

Approved yield. The yield calculated in

accordance with 7 CFR part 400, subpart G,

if required by section 3(b) of these

provisions.

Average value. For appraised production,

the estimated value of all such production

divided by the appraised pounds. For

harvested production, the total value of such

production divided by the harvested pounds.

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 FSA farm serial number in previous

years that remained unsold at the end of the

most recent marketing year.

Discount variety. Tobacco defined as such

under the provisions of the United States

Department of Agriculture tobacco price

support program.

Fair market value. The current year’s

tobacco season average market price for the

applicable type of tobacco obtained from the

average sale of tobacco through a market

other than an auction warehouse.

Harvest. Cutting or priming and removing

all insured tobacco from the field in which

it was grown.

Hydroponic plants. Seedlings grown in

liquid nutrient solutions.

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.

(a) For types 11, 12, 13, 14, 21, 22, 23, 31,

35, 36, 37, 42, 44, 54, and 55:

(1) The support price per pound for the

insured type of tobacco as announced by the

USDA for its tobacco price support program;

or

(2) The current year’s season average

market price, when available; if not available

because the insured type of tobacco has not

been marketed in the area, the previous

year’s season average market price for the

applicable insured type tobacco grown in the

area for any crop year a tobacco price support

program is not in effect.

(b) For types 32, 41, 51, 52, and 61, the

current year’s season average market price,

when available; if not available because the

insured type of tobacco has not been

marketed in the area, the previous year’s

season average market price for the

applicable insured type of tobacco grown 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.

Priming. A method of harvesting tobacco

by which each leaf is severed from the stalk

as it matures.

Production guarantee (per acre). Either the

number of pounds of tobacco for the tobacco

type and classification shown on the county

actuarial table, or the approved yield as

provided in the Special Provisions,

multiplied by the coverage level percentage

you elect.

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

guarantee.

Season average market price. The simple

average price paid by buyers for a tobacco

type for all days sales occur at public markets

during the tobacco sales season in the area

in which the farm is located.

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 the requirements of section

3 of the Basic Provisions:

(a) You must select only one price election

and coverage level for each guaranteed

tobacco type designated in the Special

Provisions that you elect to insure.

(b) 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.

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, you must report

any carryover tobacco from previous years on

the acreage report.

7. Insured Crop.

In accordance with section 8 of the Basic

Provisions, the insured crop will be any of

the tobacco types designated in the Special

Provisions, in which you have a share, that

you elect to insure, and for which a premium

rate is provided by the actuarial documents.

8. 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 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.

9. Insurance Period.

In accordance with the provisions of

section 11 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 calendar date for the end of the

insurance period, which is:

(i) Types 11 and 12—November 30;

(ii) Type 13—October 31;

(iii) Type 14—October 15;

(iv) Types 31 and 36—February 28;

(v) Types 21, 35 and 37—March 15;

(vi) Types 22 and 23—April 15;
Federal Register / Vol. 63, No. 122 /Thursday, June 25, 1998 /Rules and Regulations 34553

(vii) Type 32—May 15;

(viii) All other types—April 30.

10. 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 10(a)

through (g) that occurs during the insurance

period.

11. Duties In The Event of Damage or Loss.

(a) 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.

(b) If tobacco types 11, 12, 13, or 14 are

insured and you have filed a notice of

damage, you also must leave all tobacco

stalks and stubble intact for our inspection.

The stalks and stubble must not be destroyed

until we give you written consent to do so

or until 30 days after the end of the insurance

period, whichever is earlier.

12. Settlement of Claim.

(a) We will determine your loss on a unit

basis. In the event you are unable to provide

separate acceptable production records:

(1) For any optional unit, we will combine

all optional units for which such production

records were not provided; or

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

commingled production to such units in

proportion to our liability on the harvested

acreage for the units.

(b) In the event of loss or damage covered

by this policy, we will settle your claim by:

(1) Multiplying the insured acreage by its

respective production guarantee, by type if

applicable;

(2) Multiplying each result in section

12(b)(1) by the respective price election, by

type if applicable;

(3) Totaling the results of section 12(b)(2)

if there are more than one type;

(4) Multiplying the total production to

count (see section 12(c)), for each type if

applicable, by its respective price election;

(5) Totaling the results of section 12(b)(4),

if there are more than one type;

(6) Subtracting the results of section

12(b)(4) from the results of section 12(b)(2) if

there is only one type or subtracting the

results of section 12(b)(5) from the result of

section 12(b)(3) if there are more than one

type; and

(7) Multiplying the result of section

12(b)(6) by your share.

For example:

You have 100 percent share in 1 acre of

type 35 (dark air cured) guaranteed tobacco

in the unit, with a 2,000 pounds per acre

guarantee and a price election of $2.00 per

pound. You are only able to harvest 500

pounds. Your indemnity would be calculated

as follows:

(1) 1.0 acre × 2,000 pounds = 2,000 pounds

guarantee;

(2) 2,000 pounds × $2.00 price election =

$4,000.00 value of guarantee;

(4) 500 pounds × $2.00 price election =

$1,000.00 value of production to count;

(6) $4,000.00¥$1,000.00 = $3,000.00 loss;

and

(7) $3,000 × 100 percent = $3,000

indemnity payment.

(c) The total production to count (pounds

of appraised or harvested production

multiplied by the applicable price) for all

insurable acreage on the unit will include:

(1) All appraised production as follows:

(i) Not less than the production guarantee

per 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;

(D) For which you fail to provide

production records, if required by the Special

Provisions, that are acceptable to us; or

(E) Of types 11, 12, 13, or 14 when the

stalks and stubble have been destroyed

without our consent;

(ii) Production lost due to uninsured

causes.

(iii) Potential production on insured

acreage that you intend to put to another use

or abandon with our consent, 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 value of

production to count for such acreage will be

the number of pounds harvested or appraised

production multiplied by the support price

taken from the samples at the time harvest

should have occurred. If you do not leave the

required samples intact, or fail to provide

sufficient care for the samples, our appraisal

made prior to giving you consent to put the

acreage to another use will be used to

determine the amount of production to

count); or

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

crop, the amount of production to count for

the acreage will be the harvested production,

or our reappraisal if additional damage

occurs and the crop is not harvested; and

(2) All harvested production from

insurable acreage.

(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 if it has

an average value less than the market price,

as follows:

(1) Divide the average value of the

damaged appraised and/or harvested

production by the market price;

(2) Multiply the result in section 12(d)(1)

(not to exceed 1.0) by the number of pounds

of damaged appraised and/or harvested

tobacco; and

(3) Multiply the product by your price

election.

If no market price has been established for

the grade of the damaged tobacco, a market

price will be imputed by reducing the lowest

available market price by 20 percent for each

grade that the production falls below the

grade for which such lowest market price is

available.

(e) To enable us to determine the fair

market value of tobacco not sold through

auction warehouses, we must be given 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 any 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

due to insured causes, you must destroy it

and it will not be considered production to

count. If you refuse to destroy such tobacco,

we will include it as production to count and

value it at the support price.

13. Late Planting.

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:

(a) The production guarantee (per acre) for

each type planted during the late planting

period will be reduced by:

(1) One percent (1%) for the 1st through

the 10th day; and

(2) Two percent (2%) for the 11th through

the 15th day;

(b) The premium amount for insurable

acreage planted to the insured crop after the

final planting date will be the same as that

for timely planted acreage. If the amount of

premium you are required to pay (gross

premium less our subsidy) for acreage

planted after the final planting date exceeds

the liability on such acreage, coverage for

those acres will not be provided (no premium

will be due and no indemnity will be paid

for such acreage).

14. Prevented Planting.

The prevented planting provisions in the

Basic Provisions are not applicable to

guaranteed tobacco.

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

1998.

Kenneth D. Ackerman,

Manager, Federal Crop Insurance

Corporation.

[FR Doc. 98–16967 Filed 6–24–98; 8:45 am]

BILLING CODE 3401–08–P