40632 Federal Register / Vol. 63, No. 146 /Thursday, July 30, 1998 /Rules and Regulations

§ 402.4 Catastrophic Risk Protection

Endorsement Provisions.

* * * * *

Catastrophic Risk Protection Endorsement

* * * * *

1. Definitions.

* * * * *

Administrative fee. An amount the

producer must pay for catastrophic coverage

each crop year on a per crop and county basis

as specified in section 6.

B. Remove section 2(d).

C. Revise section 6(b) to read as

follows:

* * * * *

6. Annual Premium and Administrative

Fees

* * * * *

(b) In return for catastrophic risk protection

coverage, you must pay an administrative fee

to the insurance provider within 30 days

after you have been billed (You will be billed

by the billing date stated in the Special

Provisions);

(1) The administrative fee owed for each

crop in the county is equal to $10 plus the

greater of either $50 or 10 percent of the

premium subsidy provided for the

catastrophic risk protection coverage.

(2) Payment of an administrative fee will

not be required if you file a bona fide zero

acreage report on or before the acreage

reporting date for the crop (if you falsely file

a zero acreage report you may be subject to

criminal and administrative sanctions).

* * * * *

D. Remove section 6(e).

E. Redesignate section 6(f) as section

6(e) and revise to read as follows:

* * * * *

(e) If the administrative fee is not paid

when due, you, and all persons with an

insurable interest in the crop under the same

contract, may be ineligible for certain other

USDA program benefits as set out in section

12, and all such benefits already received for

the crop year must be refunded.

* * * * *

Signed in Washington, D.C., on July 24,

1998.

Kenneth D. Ackerman,

Manager, Federal Crop Insurance

Corporation.

[FR Doc. 98–20352 Filed 7–27–98; 5:10 pm]

BILLING CODE 3410–08–P

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.

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
Federal Register / Vol. 63, No. 146 /Thursday, July 30, 1998 /Rules and Regulations 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 § 400.651, revise the definition of

‘‘administrative fee’’ to read as follows:

§ 400.651 Definitions.

* * * * *
40634 Federal Register / Vol. 63, No. 146 /Thursday, July 30, 1998 /Rules and Regulations

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 §§ 400.657

through 400.659 as §§ 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 § 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:

§ 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.
Federal Register / Vol. 63, No. 146 /Thursday, July 30, 1998 /Rules and Regulations 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

FEDERAL RESERVE SYSTEM

12 CFR Part 230

[Regulation DD; Docket No. R–0869]

Truth in Savings

AGENCY: Board of Governors of the

Federal Reserve System.

ACTION: Final rule.

SUMMARY: The Board has adopted a rule

amending Regulation DD (Truth in

Savings); the action makes final an

interim rule adopted in January 1995.

The amendment permits institutions to

disclose an annual percentage yield

(APY) equal to the contract interest rate

for time accounts with maturities greater

than one year that do not compound but

that require interest distributions at

least annually.

EFFECTIVE DATE: August 28, 1998.

FOR FURTHER INFORMATION CONTACT: Jane

Ahrens, Senior Attorney, or Obrea Otey

Poindexter, Staff Attorney, Division of

Consumer and Community Affairs,

Board of Governors of the Federal

Reserve System at (202) 452–2412 or

452–3667; for the hearing impaired only

contact Diane Jenkins,

Telecommunications Device for the Deaf

at (202) 452–3544.

SUPPLEMENTARY INFORMATION:

I. Background

The Truth in Savings Act (TISA) was

enacted in December 1991. The Board

published a final regulation, Regulation

DD, to implement the act on September

21, 1992 (57 FR 43337) (correction

notice at 57 FR 46480, October 9, 1992).

Compliance with the regulation became

mandatory in June 1993. The act and

regulation require depository

institutions to disclose yields, fees, and

other terms concerning deposit accounts

to consumers at account opening. The

regulation also includes rules about

advertising of deposit accounts.

Depository institutions are generally

subject to civil liability for violations of

the act and regulation. Credit unions are

not subject to Regulation DD, but are

governed by a substantially similar

regulation issued by the National Credit

Union Administration.

II. Proposals Regarding APY

Calculation

In 1993, deposit brokers covered by

Regulation DD’s advertising rules

petitioned the Board to reconsider how

the annual percentage yield (APY) is

calculated. They expressed concern that

for a certificate of deposit that has a

maturity greater than one year and that

does not compound interest, the APY is

less than the contract interest rate under

the formula prescribed by Regulation

DD. The Board subsequently published

several proposals addressing this matter

(58 FR 64190, December 6, 1993; 59 FR

24376, May 11, 1994; 59 FR 35271, July

11, 1994; 60 FR 5142, January 26, 1995).

In January 1995, to address

immediately one anomaly created by the

regulation’s formula for APY

calculations, the Board adopted an

interim rule applicable to time accounts

with maturities greater than one year

that do not compound but require

interest distributions at least annually

(60 FR 5128, January 26, 1995).

III. Summary of Final Rule

The interim rule permitted

institutions to disclose an APY equal to

the contract interest rate for

noncompounding CDs with a maturity

greater than one year if they require

interest distributions at least annually.

The Board received more than 250

comments—about 75 comments on the

interim rule and the remainder on a

proposal published concurrently with

the interim rule that would have

amended the APY formula. The majority

of commenters supported the interim

rule and urged the Board to make the

interim rule permanent. Many

commenters believed that the interim

rule adequately addressed the concerns

of deposit brokers and depository

institutions that require interest

distributions at least annually.

Commenters noted that the interim rule

provided a simple solution that would

be understandable to consumers. Some

banks that opposed any change to the

APY calculations favored the interim

rule among the alternatives offered.

Based on the comments received and

further analysis, the Board has amended

Regulation DD by making the interim

rule final. The final rule permits

institutions to disclose an APY equal to

the contract interest rate for

noncompounding CDs with a maturity

greater than one year if they require

interest distributions at least annually.

Institutions may not disclose an APY

equal to the contract interest rate for

noncompounding multi-year CDs that

either prohibit withdrawal of interest or

that permit but do not require interest

distributions; for these time accounts,

institutions will continue to use the

current formula for APY calculations.

The Board believes that this narrow rule

provides a targeted response to

questions about the APY disclosures for

certain time accounts that otherwise

would have to disclose an APY that is

lower than the contract interest rate.

The amendment retains the interim

rule’s requirement of a brief narrative

disclosure about the effect of interest

payments on the APY and earnings from

the account to minimize any possible

consumer confusion.

IV. Regulatory Revisions: Section-bySection Analysis

Section 230.4 Account Disclosures

4(b) Content of Account Disclosures

4(b)(6) Features of Time Accounts

4(b)(6)(iii) Withdrawal of Interest Prior

to Maturity

Consistent with the interim rule,

paragraph 4(b)(6) adds a brief narrative

for institutions stating an APY equal to

the contract interest rate for

noncompounding CDs that have a

maturity greater than one year and that

require interest payouts at least

annually. The Board believes a

statement alerting consumers to the fact

that interest cannot remain in the

account will assist them in comparison

shopping between CDs with annual

compounding and CDs that do not

compound but require interest payouts

during the account term. The Board

believes the disclosure does not add an

undue burden on institutions.

Section 230.8 Advertising

8(c) When Additional Disclosures are

Required

8(c)(6) Features of Time Accounts

Consistent with the interim rule,

paragraph 8(c)(6) adds a brief disclosure

for any advertisement that states an APY

equal to the contract interest rate for a

noncompounding multi-year CD that

requires the automatic payment of

interest at least annually. To assist