[Federal Register Volume 63, Number 146 (Thursday, July 30, 1998)]
[Rules and Regulations]
[Pages 40632-40635]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-20353]


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DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 400 and 457

RIN 0563-AB67


General Administrative Regulations, Subpart T-Federal Crop 
Insurance Reform, Insurance Implementation; Regulations for the 1999 
and Subsequent Reinsurance Years; and the Common Crop Insurance 
Regulations; Basic Provisions; and Various Crop Insurance Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Interim rule.

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SUMMARY: The Federal Crop Insurance Corporation (FCIC) amends subpart T 
in the General Administrative Regulations and the Common Crop Insurance 
Regulations, Basic Provisions, to conform with the statutory mandates 
of the Agricultural Research, Extension, and Education Reform Act of 
1998 (1998 Research Act) and to move those provisions that are terms of 
insurance from subpart T into the Basic Provisions. In this rule, FCIC 
will also remove those provisions of subpart T that have been moved to 
the Basic Provisions.

EFFECTIVE DATE: This rule is effective July 1, 1998. Written comments 
and opinions on this rule will be accepted until the close of business 
September 28, 1998, and will be considered when the rule is to be made 
final.

ADDRESSES: Interested persons are invited to submit written comments to 
the Director, Product Development Division, Federal Crop Insurance 
Corporation, United States Department of Agriculture, 9435 Holmes Road, 
Kansas City, MO 64131. A copy of each response will be available for 
public inspection and copying from 7:00 a.m. to 4:30 p.m., CDT, Monday 
through Friday, except holidays, at the above address.

FOR FURTHER INFORMATION CONTACT: Louise Narber, 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 economically significant for 
the purposes of Executive Order 12866 and, therefore, has been reviewed 
by the Office of Management and Budget (OMB).
    This action amends FCIC's regulations in accordance with the 1998 
Research Act. This rule is being published on an emergency basis so 
that affected producers have the opportunity to make timely decisions 
regarding their insurance plans for the 1999 crop year for crops with 
sales closing dates subsequent to the enactment of the 1998 Research 
Act. The 1998 Research Act was signed by the President on June 23, 
1998. The first sales closing date subsequent to the date of signing is 
July 31, 1998, for raisins in California. This emergency situation 
makes timely compliance with sections 6 (3)(B)(ii) and (3)(C) of 
Executive Order 12866 impractical due to the short time to make this 
rule effective prior to that sales closing date. FCIC will complete the 
required cost-benefit analysis within 90 days of the publication of 
this rule in the Federal Register and will make such analysis available 
to the public.

Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 
104-121, 5 U.S.C. Secs. 801-808)

    This rule has been designated by the Office of Information and 
Regulatory Affairs, OMB, as a major rule under the Small Business 
Regulatory Enforcement Fairness Act of 1996 (Small Business Act). 
However, section 808 of the Small Business Act exempts a rule from the 
60 day delay in effectiveness of a rule where an agency for good cause 
finds that notice and public procedure are impracticable, unnecessary, 
or contrary to the public interest. The Administrator of the Risk 
Management Agency (RMA) has determined that there is good cause for 
making this rule effective less than 60 days after submission of the 
rule to each House of Congress and to the Comptroller General because a 
delay would be contrary to the public interest.
    There are producers affected by this rule that must make critical 
risk management decisions and the deadline for the first 1999 crop year 
decisions is less than 60 days from the July 1, 1998, effective date of 
the 1998 Research Act. A delay in the effective date of this rule will 
create instability and inequity within the program as producers attempt 
to determine whether they are affected and it will create separate 
classes of producers who are subjected to the increased administrative 
fees and those who are not.
    Further, RMA was required to revise the Standard Reinsurance 
Agreement before the July 1, 1998, start of the 1999 reinsurance year 
to implement the provisions of the 1998 Research Act. If this rule is 
delayed, it will create

[[Page 40633]]

administrative problems for the 1999 reinsurance year because the 
reinsured companies will be subject to the provisions of the 1998 
Research Act but some of their insureds will not.

Paperwork Reduction Act of 1995

    Under the provisions of the Paperwork Reduction Act of 1995 (44 
U.S.C. chapter 35), the collections of information for this rule have 
been previously approved by the Office of Management and Budget (OMB) 
under control number 0563-0053 through October 31, 2000. The amendments 
set forth in this rule do not revise the content or alter the frequency 
of reporting for any of the forms or information collections cleared 
under the above-referenced docket.

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 UMRA) for 
State, local, and tribal governments or the private sector. Therefore, 
this rule is not subject to the requirements of sections 202 and 205 of 
UMRA.

Executive Order 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 regulation does not require 
any more action on the part of the 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 economic impact 
on the quality of the human environment, health, and safety. Therefore, 
neither an Environmental Assessment nor an Environmental Impact 
Statement is needed.

Background

    This interim rule implements revisions to these parts mandated by 
the Federal Crop Insurance Act, as amended by the 1998 Research Act, 
enacted June 23, 1998. The 1998 Research Act requires the provisions be 
implemented for the 1999 and subsequent reinsurance years. Crop 
insurance policies with a sales closing date prior to the effective 
date of this rule will not be affected by these provisions until the 
2000 reinsurance year. Crop insurance policies with a sales closing 
date after the effective date of this rule will have revised 
administrative fees. Since the changes to the policy made by this rule 
are required by statute, it is impractical and contrary to the public 
interest to publish this rule for notice and comment prior to making 
the rule effective. However, comments are solicited for 60 days after 
the date of publication in the Federal Register and will be considered 
by FCIC before this rule is made final.
    FCIC amends subpart T by deleting the provisions regarding 
available coverage, administrative fees, and election of benefits that 
are being incorporated into the Basic Provisions.
    FCIC amends the Basic Provisions as follows:
    1. Section 1 is amended to add definitions of the terms 
``additional coverage,'' ``administrative fee,'' ``catastrophic risk 
protection,'' ``Catastrophic Risk Protection Endorsement,'' ``limited 
coverage,'' and ``limited resource farmer'' for clarity.
    2. Section 2 is amended to incorporate the provisions from subpart 
T regarding the termination of a policy when a producer fails to pay 
administrative fees when they are due and revising the provisions in 
accordance with the 1998 Research Act.
    3. Section 3 is amended to incorporate the provisions from subpart 
T involving the coverage available for catastrophic risk protection, 
limited and additional coverage levels.
    4. Section 7 is amended to incorporate provisions from subpart T 
involving administrative fees that must be paid for limited and 
additional coverage policies and revising the amounts of such fees in 
accordance with the 1998 Research Act.
    5. Section 15 is amended to incorporate the provisions from subpart 
T involving the reduction of an indemnity to reflect costs not incurred 
by the producer.
    6. A new section 35 is added to incorporate provisions from subpart 
T that provide options that are available to insureds when they are 
eligible for benefits under their crop insurance policy and another 
USDA program for the same loss.

List of Subjects in 7 CFR Parts 400 and 457

    Crop insurance, Administrative practice and procedure, Claims, 
Reporting and record keeping requirements; Common Crop Insurance 
Regulations; Basic Provisions; and Various Crop Insurance Provisions.

Interim Rule

    Accordingly, as set forth in the preamble, the Federal Crop 
Insurance Corporation amends 7 CFR parts 400 and 457 as follows:

PART 400--GENERAL ADMINISTRATIVE REGULATIONS

Subpart T--Federal Crop Insurance Reform, Insurance Implementation; 
Regulations for the 1999 and Subsequent Reinsurance Years

    1. The authority citation for 7 CFR part 400 continues to read as 
follows:

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

    2. The subpart heading for subpart T is revised as set forth above.
    3. In Sec. 400.651, revise the definition of ``administrative fee'' 
to read as follows:


Sec. 400.651  Definitions.

* * * * *

[[Page 40634]]

    Administrative fee. An amount the producer must pay for 
catastrophic, limited, and additional coverage each crop year on a per 
crop and county basis as specified in the Basic Provisions or the 
Catastrophic Risk Protection Endorsement.
* * * * *
    4. Remove sections 400.655 and 400.656 and redesignate 
Secs. 400.657 through 400.659 as Secs. 400.655 through 400.657.

PART 457--COMMON CROP INSURANCE REGULATIONS

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

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

    6. In Sec. 457.8, amend the policy as follows:
    A. Amend section 1 to add the definitions of ``additional 
coverage,'' ``administrative fee,'' ``catastrophic risk protection,'' 
``Catastrophic Risk Protection Endorsement,'' ``limited coverage,'' and 
``limited resource farmer'' to read as follows:


Sec. 457.8  The application and policy.

* * * * *

Common Crop Insurance Policy

* * * * *
    1. * * *
    Additional coverage. Plans of crop insurance providing a level 
of coverage equal to or greater than 65 percent of the approved 
yield indemnified at 100 percent of the expected market price, or a 
comparable coverage as established by FCIC.
    Administrative fee. An amount the producer must pay for 
catastrophic risk protection, limited, and additional coverage for 
each crop year as specified in section 7 and the Catastrophic Risk 
Protection Endorsement.
* * * * *
    Catastrophic risk protection. The minimum level of coverage 
offered by FCIC that is required before a person may qualify for 
certain other USDA program benefits unless the producer executes a 
waiver of any eligibility for emergency crop loss assistance in 
connection with the crop.
    Catastrophic Risk Protection Endorsement. The part of the crop 
insurance policy that contains provisions of insurance that are 
specific to catastrophic risk protection.
* * * * *
    Limited coverage. Plans of insurance offering coverage that is 
equal to or greater than 50 percent of the approved yield 
indemnified at 100 percent of the expected market price, or a 
comparable coverage as established by FCIC, but less than 65 percent 
of the approved yield indemnified at 100 percent of the expected 
market price, or a comparable coverage as established by FCIC.
    Limited resource farmer. A producer or operator of a farm, with 
an annual gross income of $20,000 or less derived from all sources, 
including income from a spouse or other members of the household, 
for each of the prior two years. Notwithstanding the previous 
sentence, a producer on a farm or farms of less than 25 acres 
aggregated for all crops, where a majority of the producer's gross 
income is derived from such farm or farms, but the producer's gross 
income from farming operations does not exceed $20,000, will be 
considered a limited resource farmer.

    B. Amend section 2 by adding a new subsection (i) and revising 
sections 2(e) introductory text and 2(e)(1) to read as follows:
* * * * *
    (e) If any amount due, including administrative fees or premium, 
is not paid on or before the termination date for the crop for which 
such amount is due:
    (1) For a policy with unpaid administrative fees or premium, the 
policy will terminate effective on the termination date immediately 
subsequent to the billing date for the crop year;
* * * * *
    (i) When obtaining catastrophic, limited, or additional 
coverage, a producer must provide information regarding crop 
insurance coverage on any crop previously obtained at any other 
local FSA office or from an approved insurance provider, including 
the date such insurance was obtained and the amount of the 
administrative fee.

    C. Amend section 3 by adding new subsections (f), (g), and (h) to 
read as follows:
* * * * *
    (f) The producer must obtain the same level of coverage 
(catastrophic risk protection, limited or additional) for all 
acreage of the crop in the county unless one of the following 
applies:
    (1) The applicable crop policy allows the producer the option to 
separately insure individual crop types or varieties. In this case, 
each individual type or variety insured by the producer will be 
subject to separate administrative fees. For example, if two grape 
varieties in California are insured under the Catastrophic Risk 
Protection Endorsement and two varieties are insured under a limited 
coverage policy, a separate administrative fee will be charged for 
each of the four varieties. Although insurance may be elected by 
type or variety in these instances, failure to insure a type or 
variety that is of economic significance may result in the denial of 
other farm program benefits unless the producer executes a waiver of 
any eligibility for emergency crop loss assistance in connection 
with the crop.
    (2) The producer with limited or additional coverage for the 
crop in the county has acreage that has been designated as ``high 
risk'' by FCIC. Such producers will be able to obtain a High Risk 
Land Exclusion Option for the high risk land under the limited or 
additional coverage policies and insure the high risk acreage under 
a separate Catastrophic Risk Protection Endorsement, provided that 
the Catastrophic Risk Protection Endorsement is obtained from the 
same insurance provider from which the limited or additional 
coverage was obtained.
    (g) Hail and fire coverage may be excluded from the covered 
causes of loss for a crop policy only if additional coverage is 
selected.
    (h) Any person may sign any document relative to crop insurance 
coverage on behalf of any other person covered by such a policy, 
provided that the person has a properly executed power of attorney 
or such other legally sufficient document authorizing such person to 
sign.

    D. Amend section 7 by revising the heading and adding a new 
subsection (e) to read as follows:
* * * * *
    7. Annual Premium and Administrative Fees.
* * * * *
    (e) In addition to the premium charged:
    (1) If you elect limited coverage, you must pay an 
administrative fee each crop year of $50 per crop per county, not to 
exceed $200 per county, or $600 for all counties in which the 
producer has elected to obtain limited coverage.
    (2) If you elect additional coverage, you must pay an 
administrative fee of $20 per crop for each crop year in which crop 
insurance coverage remains in effect.
    (3) The administrative fee must be paid no later than the time 
that premium is due.
    (4) Payment of an administrative fee will not be required if the 
insured files a bona fide zero acreage report on or before the 
acreage reporting date for the crop. Any producer who falsely files 
a zero acreage report may be subject to criminal and administrative 
sanctions.
    (5) The administrative fee for limited coverage will be waived 
if you qualify as a limited resource farmer.
    (6) The administrative fee for additional coverage is not 
refundable, is not subject to any limits, and may not be waived.
    (7) Failure to pay the administrative fees when due may make you 
ineligible for certain other USDA benefits.

    E. Amend section 15 by adding a new subsection (d) to read as 
follows:
* * * * *
    (d) The amount of an indemnity that may be determined under the 
applicable provisions of your crop policy may be reduced by an 
amount, determined in accordance with the Crop Provisions or Special 
Provisions, to reflect out-of-pocket expenses that were not incurred 
by the producer as a result of not planting, caring for, or 
harvesting the crop. Indemnities paid for acreage prevented from 
planting will be based on a reduced guarantee as provided for in the 
crop policy and will not be further reduced to reflect expenses not 
incurred.

    F. Add a new section 35 to read as follows:
* * * * *
    35. Multiple Benefits.
    (a) If you are eligible to receive an indemnity under a limited 
or additional coverage plan of insurance and are also eligible to 
receive benefits for the same loss under any other USDA program, you 
may receive benefits under both programs, unless specifically 
limited by the crop insurance contract or by law.

[[Page 40635]]

    (b) The total amount received from all such sources may not 
exceed the amount of your actual loss. The total amount of the 
actual loss is the difference between the fair market value of the 
insured commodity before and after the loss, based on your 
production records and the highest price election or amount of 
insurance available for the crop.
    (c) FSA will determine and pay the additional amount due you for 
any applicable USDA program after first considering the amount of 
any crop insurance indemnity.
    (d) Farm ownership and operating loans may be obtained from USDA 
in addition to crop insurance indemnities.
* * * * *
    Signed in Washington, D.C., on July 24, 1998.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 98-20353 Filed 7-27-98; 5:10 pm]
BILLING CODE 3410-08-P