[Federal Register Volume 62, Number 237 (Wednesday, December 10, 1997)]
[Rules and Regulations]
[Pages 65130-65177]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-31860]
[[Page 65129]]
_______________________________________________________________________
Part II
Department of Agriculture
_______________________________________________________________________
Federal Crop Insurance Corporation
_______________________________________________________________________
7 CFR Part 457
Common Crop Insurance Regulations; Basic Provisions; and Various Crop
Insurance Provisions; Final Rule
Federal Register / Vol. 62, No. 237 / Wednesday, December 10, 1997 /
Rules and Regulations
[[Page 65130]]
DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Part 457
RIN 0563-AB03
Common Crop Insurance Regulations; Basic Provisions; and Various
Crop Insurance Provisions
AGENCY: Federal Crop Insurance Corporation, USDA.
ACTION: Final rule.
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SUMMARY: The Federal Crop Insurance Corporation (FCIC) amends the
Common Crop Insurance Regulations to delete the late and prevented
planting provisions currently contained in many Crop Provisions,
incorporate revised late and prevented planting provisions into the
Common Crop Insurance Policy Basic Provisions, and add definitions and
provisions that are common to most crops. The intended effect of this
action is to provide policy changes that meet the needs of the insured,
are easier to administer, and to delete repetitive provisions contained
in various Crop Provisions.
EFFECTIVE DATE: This rule is effective December 4, 1997.
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
The Office of Management and Budget (OMB) has determined this rule
to be significant, and therefore, this rule has been reviewed by OMB.
Paperwork Reduction Act of 1995
Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3507),
those collections of information have been approved by the Office of
Management and Budget (OMB) under control number 0563-0053.
Cost-Benefit Analysis
A Cost-Benefit Analysis has been completed and is available to
interested persons at the Kansas City address listed above. In summary,
the analysis finds that the rule makes several major changes in the
implementation of prevented planting provisions. Specifically, the
rule: (1) Eliminates substitute crop benefits, largely to reduce the
likelihood of fraud; (2) increases prevented planting for cover crop or
black dirt situations, providing better protection to producers who are
truly unable to plant a crop for harvest; and (3) simplifies the
payment method by making payments on an acre-by-acre basis in all cover
crop and black dirt situations. These provisions are designed to
improve the protection provided to producers in adverse prevented
planting situations, and simplify program operation.
Since this rule is expected to be implemented in an actuarially
sound manner, there are no associated excess losses that will be
incurred by the Federal government in the aggregate. Two provisions--
the increase in coverage in black dirt and cover crop situations
provision and the ``separate payment'' provision--are expected to
result in an increase in indemnities and an increase in rates. The
elimination of substitute crop provisions will result in reduced
indemnities, and a rate decrease in the aggregate. The net effect of
these changes is likely to be small in terms of the rate impact, and
will vary according to crop and geographical location. As a result of
the small expected average rate impact, any changes in reimbursements
to private companies for delivery or any underwriting gains are
expected to be minimal. The amendments made to these regulations will
simplify program operations, benefit producers, FCIC, and reinsured
companies, and conform with the Federal Crop Insurance Act.
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. New provisions included in this
rule will not impact small entities to a greater extent than large
entities. The amount of work required of insurance companies will not
increase because the information to determine eligibility is already
maintained in their office and the other required information is
already being collected under the present policy. No additional actions
are required as a result of this rule on the part of the producer or
the insurance companies. 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 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 action against FCIC for judicial review 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, August 12, 1997, FCIC published a proposed rule in the
Federal Register at 62 FR 43236 to
[[Page 65131]]
amend the Common Crop Insurance Regulations, Basic Provisions (Basic
Provisions) (7 CFR part 457) and the Crop Provisions (7 CFR
Secs. 457.101-457.157) effective for the: (1) 1998 and succeeding crop
years for wheat, barley and oats in counties with a December 31
contract change date; flax, cotton, ELS cotton, sunflowers, and sugar
beets in counties with a November 30 contract change date; and corn,
grain sorghum, soybeans, raisins, fresh market tomatoes (guaranteed
production plan), rice and dry beans; (2) 1999 and succeeding crop
years for wheat, barley and oats in counties with a June 30 contract
change date; rye, Texas citrus tree, Florida citrus fruit, sugar beets
in counties with an April 30 contract change date; and figs, pears,
nursery, sugarcane, forage production, walnuts, almonds, safflowers,
fresh market sweet corn, macadamia trees, cranberry, onion, grapes,
fresh market tomatoes (dollar plan), fresh market peppers, forage
seeding, peaches and plums; and (3) 2000 and succeeding crop years for
Texas citrus fruit, Arizona-California citrus, and macadamia nuts. This
rule deletes the late and prevented planting provisions, certain
definitions and other provisions that are applicable to most crops and
are currently contained in the Crop Provisions and incorporates these
definitions and provisions into the Basic Provisions to better meet the
needs of the insured.
Following publication of the proposed rule, the public was afforded
30 days to submit written comments and opinions. Comments were received
from an insurance service organization, reinsured companies, farm
organizations, a crop insurance agent, national commodity groups, state
commodity groups, a regional commodity group, a congressional office,
and legal counsel for reinsured companies. The comments and FCIC's
responses are as follows:
Comment: Legal counsel for a reinsured company and an insurance
service organization stated that thirty days was not sufficient time to
review and comment on the proposed rule. One comment urged FCIC to
leave the comment period open for another 90 days to allow additional
time for analysis, testing, further comment, and the promulgation of
needed procedures.
However, a reinsured company urged implementation of these
provisions for the 1998 crop year. The commenter stated that the
revised language for prevented planting coverage is a major step in the
right direction. Many hours have been spent in developing these
provisions and the commenter strongly supports approval of the changes.
The changes bring simplicity to what has been a very complicated
coverage.
Farm organizations supported efforts to expedite these changes by
using a 30-day comment period. There should be adequate time for agent
training and producer education prior to policy sign-up for spring
planted crops. One of the problems with prevented planting coverage in
the past has been the lack of understanding by producers of their
coverage.
Response: Based on the number of comments received, FCIC believes
that for most crops 30 days provided an adequate comment period.
However, due to the number of comments received regarding the prevented
planting percent for cotton and ELS cotton, this rule will be made
effective for these two crops for the 1998 crop year only. FCIC will
solicit additional comments regarding prevented planting coverage
levels for these crops for the 1999 and succeeding crop years in a
future rule. The proposed changes are necessary for the simplification
of the program and any extension of the comment period would result in
a delay in the implementation of this rule until the 1999 crop year. To
best meet the needs of producers the revised coverage should be
implemented for spring planted crops in 1998.
Comment: An insurance service organization felt that the amount of
time stated in the preamble under the Paperwork Reduction Act for the
completion of an acreage report is underestimated since all farm data,
including APH and unit arrangement, must be incorporated into the
process.
Response: FCIC had to estimate the amount of time needed to
complete each form. The average time needed to complete each form
represents an average of producers with only one crop and one unit,
larger operations with several crops and units, and producers who
insure a crop but do not plant (which would generate a zero acreage
report and only a yield descriptor on the APH form, etc.). The average
time stated for all forms is as accurate as is possible.
Comment: Reinsured companies and an insurance service organization
questioned the provisions in 7 CFR 457.2. They stated that sections 7
CFR 457.2(b) and (c) specify that FCIC may offer the catastrophic level
of coverage directly to the insured through the local Farm Service
Agency (FSA) offices. They suggested removing this language because,
effective for the 1998 crop year, FSA offices will no longer deliver
crop insurance.
Response: Although the catastrophic risk protection program is no
longer delivered through local FSA offices, the authority for such
delivery still exists. However, FCIC has modified the language to
reflect the decision of the Secretary to only offer coverage through
reinsured companies unless the Secretary determines that the
availability of local agents is not adequate.
Comment: A reinsured company stated that it supported FCIC's
decision to incorporate certain regulations into the Basic Provisions
but cautioned that providing too much detail in the policy could make
it difficult for the producer to understand and may drive producers
away from the crop insurance program. The commenter stated that it is
apparent that FCIC is attempting to provide producers with underwriting
rules and procedures. The commenter believes that the insurance policy
should simply state definitions for clarity and coverages for loss
payments. They stated that insureds do not need to know how to
underwrite a risk, they are the risk. They need to be aware of what the
coverages are, when the premium is due, what constitutes a loss, when
it will be paid, and what must be done in the event of questions. The
commenter stated that section 457.2(b) is unnecessary because it is a
statement of underwriting rules. A producer who has received the crop
insurance policy has already chosen an insurance carrier and has made a
decision regardless of whether FSA can still issue CAT coverage. The
insurance agent should have discussed multiple contract procedures with
the producer prior to completing a crop insurance application. The
commenter further stated that section 457.2(d) determines eligibility
for coverage and is also unnecessary. If the producer received the
policy information, the producer's eligibility has already been
determined. Otherwise the producer would not receive the policy.
Response: The policy must contain the information necessary for the
producer to make informed decisions. Removing as much repetitious
information as possible from each individual crop provision and placing
it in the Basic Provisions will make each individual crop policy
shorter and easier to understand. It will also eliminate any
inadvertent discrepancies that may have existed between such
information that was previously in each individual crop policy but is
now stated only once in the Basic Provisions. The provisions are
regulatory and eligibility and other requirements for participants must
be published where compliance is mandatory. No change has been made.
Comment: Reinsured companies commented on and questioned the
[[Page 65132]]
language in 7 CFR 457.2(d), which states that if more than one contract
exists, all contracts are void unless proven to be inadvertent. If
found to be inadvertent, the contract with the earliest signature date
will be valid and no indemnity or premium will attach to the canceled
contract. The commenters posed these questions. What happens to crop
acres reported on the canceled contract, and what impact do these crop
acres have on the contract determined to be in force. Whether the crop
acres on the canceled contract will be uninsured or will such acres be
added to the contract found to be in force. If the latter, have all
policy conditions regarding filing actual production history and an
acreage report been met. If the contract in force has higher levels of
coverage than the canceled contract, whether the insured owes the
additional premium based on the contract in force. It has been
permissible for a producer of hybrid seed corn who contracts with
different seed corn companies to have more than one insurance contract
for hybrid seed corn. Whether this will be permissible.
Response: The contract in effect will not be impacted by the
canceled contract. When multiple contracts exist and are inadvertent
and without the fault of the insured, all timely reporting done by the
producer (e.g., actual production history reports and acreage reports)
will be considered reported under the active contract. If the active
contract has higher levels of coverage than the canceled contract, the
insured will owe the additional premium based on the active contract.
FCIC has revised the Basic Provisions to allow producers of hybrid seed
corn with more than one contract with different seed companies to
insure the acreage under each contract with a different reinsured
company.
Comment: A reinsured company and an insurance service organization
commented on the language in section 457.8(b). The reinsured company
stated that the provision is not consistent with the Standard
Reinsurance Agreement (SRA) because the SRA does not allow rejection of
applications for insurance by a reinsured company. The commenter also
stated that the phrase ``authorized to sell'' should be defined. The
insurance service organization stated that the first sentence of these
provisions has eliminated the company's prerogative to make
determinations on excessive risk situations by eliminating the words
``or the reinsured company's'' determination that the insurance risk is
excessive. This commenter questioned the effect of the proposed
language since ``direct written'' federal policies are no longer
applicable. The commenter also stated that the reinsured company must
retain some prerogatives in the case of excessive risk. The FCIC should
review possible options such as removing the cap on the Assigned Risk
Fund or other ``escape hatch'' in the event of significant change in
the risk of a large area.
Response: FCIC believes that the authority to sell the policies is
clearly specified in other regulations and agreements, and those
provisions should not be duplicated in this rule. Under sections
508(b)(8) and 508(c)(9) of the Act, only FCIC has the authority to
limit insurance on any farm, county or area as a result of excessive
risk. Information available in the Federal Register informs the public
that applications may not be accepted if FCIC determines that excessive
risk exists. If such a situation were found to exist, no insurance
coverage will be provided. If the reinsured company believes that the
risk is excessive under a policy, it can seek a determination from
FCIC. Provisions regarding referral to agents selling FCIC policies are
no longer applicable and they have been removed.
Comment: An insurance service organization suggested that a
definition be added to include both ``production guarantee'' for APH
crops and ``amount of insurance'' for dollar plan crops. This would
shorten several long sentences that currently refer to these terms.
Response: Adding a term which combines both of the definitions of
``production guarantee'' and ``amount of insurance'' would make the
provisions less clear because three terms would be in use rather than
two. No change has been made.
Comment: An insurance service organization suggested that
``actuarial documents'' be defined instead of ``actuarial table''
because not all information is provided in table format. The commenter
stated that the reference to ``forms'' in the definition suggests that
the application and options are included. The commenter also questioned
why ``prices for computing indemnities'' are specified since prices are
used for premium calculation as well.
Response: FCIC has determined that ``prices for computing
indemnities'' should not be included in this definition since those
prices are now contained in the Special Provisions. Accordingly, the
term ``Actuarial Table'' has been revised to ``actuarial documents''
and the definition of ``actuarial documents'' has been clarified.
Comment: An insurance service organization suggested that the
definition of ``application'' be modified. The commenter stated that
since suspension, debarment and violation of the controlled substance
provisions would result in placement on the ineligibility list, it does
not seem necessary to list these specific causes. The definition as
written suggests that a break in coverage is always the result of some
adverse action.
Response: FCIC has revised the definition to refer to both
cancellation and termination to mitigate any connotation of adverse
action.
Comment: An insurance service organization suggested deleting the
phrase ``made on our form'' from the definition of ``assignment of
indemnity.'' The commenter stated that companies may accept and include
a lienholder without completion of a form entitled assignment of
indemnity. The lienholder's name can be entered on the application,
acreage report, or loss form as ``Loss payable to me and ________.''
Response: Since the Standard Reinsurance Agreement requires that
all forms used by the reinsured company be approved by FCIC, the phrase
``our form'' refers to any form that has been approved by FCIC. The
reinsured company can effectuate an assignment of indemnity through any
form approved for such purpose. Use of an unapproved form by the
reinsured company is prohibited. No change has been made.
Comment: A reinsured company and an insurance service organization
commented on the definition of ``basic unit'' which states'' * * * No
further unit division may be made after the acreage reporting date for
any reason.'' The commenter stated that basic units may be corrected
effective for the current crop year, which could result in more units
than were reported. An insurance service organization suggested that a
brief ``unit'' definition be provided in conjunction with a more
detailed basic and optional unit section for easier reference,
especially since the basic unit definition varies for some crops. The
commenter stated that the phrase ``Units will be determined when the
acreage is reported * * *'' leads to questions and difficulties about
the actual deadline for determining optional units. Qualification for
optional units for APH crops depends on filing production reports to
match those units by the production reporting date, which is now
earlier than the acreage reporting date for many crops. The commenter
suggested rewriting the sentence to read ``Units will be determined
when the acreage is reported (subject to other
[[Page 65133]]
requirements).'' The commenter also questioned if the last two
sentences of the definition should be included in the definition or in
the ``optional unit'' section.
Response: Adding the phrase ``subject to other requirements'' or a
simplified definition of ``unit'' and a detailed section on basic and
optional units would not make these provisions more clear. FCIC has
moved the last two sentences of the definition to the ``Unit Division''
section.
Comment: A reinsured company suggested adding ``for all units of
the insured crop'' at the end of the definition ``claim for
indemnity.'' Often a unit with damage may be harvested earlier than
other units of the crop. It is customary to finalize all loss units at
the same time, so the beginning of the 60-day period should commence
after harvest is completed on all units.
Response: Because individual units may have different end of
insurance period dates (e.g., differing harvest dates, different
calendar dates for the end of the insurance period, prevented planting
acreage, etc.), FCIC does not believe it is in the best interest of the
insured to delay finalization of claims until all units are harvested.
No change has been made.
Comment: An insurance service organization commented on the
definition of ``contract'' which is (See ``policy''). The commenter
stated that the definition of ``contract'' is integral in the language
of the SRA where it is defined. The [current draft] SRA, however, does
not define ``policy.'' The proposed Basic Provisions defines ``policy''
but not ``contract.'' The commenter stated that the terms should be
consistent between both documents.
Response: The definition of ``policy'' and ``contract'' are the
same and are not inconsistent with the provisions in the SRA. The
definition in the SRA is intended to accommodate differences among
reinsured companies in the manner by which a policyholder's interests
are identified. Some reinsured companies issue separate contract
numbers for each county and crop; others include multiple crops and
counties under the same contract number. Since the purpose of the
definitions is not identical, the definitions cannot be identical. No
change has been made.
Comment: An insurance service organization recommended changing the
definition of ``county'' by replacing the word ``the'' at the beginning
of the sentence with the word ``any.'' This would recognize the
possibility of multi-county applications. Multi-county applications,
with adoption of appropriate management procedures, would permit a
policyholder to insure a farm in another county, if it was acquired
after the sales closing date.
Response: The provision has been clarified to recognize that more
than one county may be shown on the application. However, an insured
may not add acreage in another county after the sales closing date
unless such addition results from the transfer of insurance from a
previous insured.
Comment: An insurance service organization questioned why the word
``deductible'' is defined since it is not used in the Basic Provisions.
Response: The word ``deductible'' is used in some Crop Provisions.
It is defined in the Basic Provisions so it will only have to be
defined once. No change has been made.
Comment: Reinsured companies commented on the definition of ``final
planting date.'' The commenters stated that the final planting dates
are too late for some crops and counties, especially with the 25 day
late planting period. The commenters voiced their concern regarding the
impact the late planting provisions will have in extending coverage
beyond a time period that will allow for the normal maturity of the
late planted crop. The commenters also questioned if an effort is being
made to assure that all final planting dates are as accurate as
possible, and if reinsured companies will be involved in that process.
Response: The Basic Provisions contain provisions that are
generally applicable to most crops. If individual crops or areas
require a late planting period shorter than 25 days, it will be
specified in the Crop Provisions or the Special Provisions, which
control the Basic Provisions. FCIC will continue to study and change
final planting dates as necessary and always welcomes comments and
recommendations from all interested parties, including reinsured
companies and producers.
Comment: A reinsured company and an insurance service organization
stated that the definitions of ``FSA'' and ``FSA farm serial number''
should be deleted because there is no need for reliance on FSA
information in the crop insurance program.
Response: The FSA farm serial number is used to qualify for
optional unit division in certain crop policies. Further, FSA
information may be used in the crop insurance program. No change has
been made.
Comment: A reinsured company, an insurance service organization,
and legal counsel for a reinsured company made comments regarding the
definition of ``good farming practices.'' The definition does not
recognize how fact sensitive and cost sensitive good farming practices
are. If the practices ``generally'' used in the county and recognized
by the Extension Service are the ``ideal'' practices or are the
practices geared to the higher yield farms, beginning producers, highly
leveraged producers, or producers of poorer soil will be discriminated
against and, perhaps, ineligible for an indemnity. For example, three
applications of a herbicide may be ideal and may be applied by
producers with a high yield history. Two applications, however, may be
all that a producer with a low yield history or insufficient funds may
be able to afford. For that producer, two applications are a good
farming practice. Whether a producer is a ``good'' producer or a
``bad'' producer may depend on what he or she can afford. The rule must
be amended to accommodate the circumstances of the particular farm and
producer. The reference to ``Cooperative State Research, Education, and
Extension Service,'' should be deleted from the definition of ``good
farming practices'' or the definition must acknowledge that there may
exist acceptable cultural practices that are not necessarily recognized
by the CSREE. A producer using practices that differ from the norm for
the county probably would not be eligible to insure. The practices used
should be compared to those of the area in which the farm is located,
not the county. Perhaps a producer is located in a microclimate within
the county where practices legitimately differ from the county norm.
Response: FCIC recognizes that certain circumstances for particular
farms and producers may differ (e.g. types, varieties, farming
practices, soil types, etc.), and should be considered when determining
if good farming practices were followed. However, the producer's
inability to afford necessary inputs to produce the crop should not be
a consideration in the determination of good farming practices. FCIC
believes that the Cooperative State Research, Education, and Extension
Service (CSREES) recognizes farming practices that are considered
acceptable for producing a crop. If a producer is following practices
not currently recognized as acceptable by the CSREES, there is no
reason why such recognition cannot be sought by interested parties.
Comment: A reinsured company stated that the definition of
``interplanted'' is too restrictive for interplanted perennials such as
almonds and walnuts which are maintained separately and harvested
separately,
[[Page 65134]]
unless such will be acknowledged in the appropriate Crop Provisions.
Response: The definition of ``interplanted'' contained in the Basic
Provisions does not adequately suit perennial crops. Perennial crop
provisions will contain an appropriate definition. No change has been
made.
Comment: A reinsured company suggested adding the word
``initially'' between the words ``acreage'' and ``planted'' in the
definition of ``late planted.''
Response: FCIC agrees with the suggestion and has amended the
definition accordingly.
Comment: A reinsured company, farm organization, a state commodity
group, and an insurance service organization commented on the 25 day
period in the definition of ``late planting period.'' The commenters
state that producers will have more incentive to plant the insured crop
during the late planting period. The 25 day period is consistent with
producer comments expressed during USDA public hearings held last
summer. The commenters support a reduction of 1 percent per acre per
day for the full 25 day late planting period, or a maximum reduction of
25 percent. The phrase ``unless otherwise specified in the Special
Provisions'' should be deleted because it could lead to program
complexity and checkerboard application.
Response: Although FCIC recognizes the need to mitigate program
complexity, removal of the exception for Special Provisions would
remove the flexibility needed to recognize those individual crops or
areas that require a shorter late planting period. No change has been
made.
Comment: A reinsured company questioned if the definition of ``non-
contiguous'' is intended to permit two acreages of the same crop that
are separated by a different crop to qualify for separate optional
units. If so, this may generate a large number of additional optional
units for crops for which ``non-contiguous'' is a criterion for
optional unit division.
Response: The definition of ``non-contiguous'' is not intended to
allow two tracts of the same crop that are only separated by a
different crop to be considered two separate optional units. Units must
be separated by land that the insured person does not own or have an
interest in.
Comment: Legal counsel for a reinsured company stated that the
definition of ``planted acreage'' sets forth requirements that are
inherent in the concept of ``good farming practice.'' This definition
is redundant.
Response: FCIC agrees that some of the information is redundant but
believes that the term should be defined since it is used in the
provisions. No change has been made.
Comment: Reinsured companies, an insurance service organization,
and legal counsel for a reinsured company expressed concern with the
definition of ``practical to replant.'' The commenters asked whether
marketing windows should be a factor in determining whether a crop
should be replanted. They state that the intent of the policy is to
insure yield, not that the crop can be marketed during an optimum
marketing window. They also state this change in the insurance policy
represents a change in long standing public policy. They state that the
Administrative Procedure Act requires FCIC to disclose in detail the
thinking that animated this proposal. FCIC has not done this,
therefore, this definition should be re-proposed for public comment.
The commmenters also expressed concern that marketing windows are
unrelated to losses from natural disaster and FCIC has long opposed
insuring such windows simply because of the opportunity for fraud. The
introduction of lost marketing windows as an insured cause of loss
makes FCIC's policy a ``business interruption'' policy that will
dramatically increase loss ratios and premiums. The commenters were
also concerned moisture availability, marketing window, condition of
the field, and time to crop maturity are all subjective determinations
that add unnecessary complexity to the program. The policy should deem
that it is practical to replant through the late planting period.
Further, the commenters were concerned with the provision that states,
``unavailability of seed or plants will not be considered a valid
reason for failure to replant'' will substantially add to producers'
costs. Often it is possible to replant the insured crop only if a
different, faster growing seed is used. There are often shortages of
such seeds when there is a widespread disaster and those farmers who
can least afford new seed, e.g., beginning producers, will wait until
they are certain the original seed cannot germinate before investing
again in seed. By that time, seed is sometimes unavailable. Clearly, if
it is impossible to replant, it should not be practical to replant by
law. They state that FCIC's rule will require all producers in general,
and beginning producers in particular, to invest in seed that they may
not need. While this may be a boom to seed companies, they are not the
intended beneficiaries of the Act. In addition, the commenters state
that a crop cannot be appraised and released for another use until it
is no longer practical to replant. Making the determination that it is
no longer practical to replant has been problematic since it may be
practical to replant in some regions yet not in others within the late
planting period. They state that policy language has been weak in this
regard and there is no attempt in this rule to strengthen it. They
requested that consideration be given to counting the ``salvage value''
against the insured crop if an insured chooses to plant an alternate or
replacement crop when it is practical to replant the original. Two
possible concerns are that the alternate crop is not an insured crop
and, therefore, the value is difficult to determine, and the alternate
crop is insured with a different company, causing administrative
difficulties. Nevertheless, the approach could put the industry in the
cooperative position of ``staying with the insured'' regardless of the
insured's replanting choice, while limiting exposure to the guarantee
that was originally established.
Response: The Federal Agriculture Improvement and Reform Act of
1996 mandated FCIC to consider marketing windows in determining whether
it is feasible to require planting during a crop year. Therefore, the
change implements statute and does not require detailed justification.
Many factors other than the end of the late planting period enter into
the decision of whether it is practical to replant. The definition of
``practical to replant'' is only applicable to planting acreage to the
originally planted crop. If it is considered practical to replant, the
Crop Provisions may authorize a replanting payment. If the crop is
damaged by an insurable cause of loss, an appraisal will be completed
to see if the crop qualifies for a replanting payment. However, this
appraisal is used solely as a qualifier.
Planting a different crop following the failure of an originally
planted crop is not replanting. If an alternative crop is planted when
it is still practical to replant to the originally planted crop, the
originally planted crop is not insured. No change has been made.
Comment: Several comments were received regarding the definition of
``prevented planting.'' Farm organizations stated strong support for
the new definition, which includes acreage prevented from planting by
the final planting date or by the end of the late planting period due
to any insured cause of loss. Reinsured companies questioned the phrase
``majority of producers in the surrounding area.''
[[Page 65135]]
There will be instances where land characteristics of a few producers
or a single producer prevent planting of the insured crop. Possibly the
phrase ``with similar land characteristics'' should be inserted after
``majority of producers'' to address this situation. The commenters
also suggested that the sentence ``You must have failed to plant * *
*'' be changed to ``You must have been prevented from planting. * * *''
Legal counsel for a reinsured company recommended clarifying the
definition of ``prevented planting'' The definition should make clear
that if a majority of producers did replant but had losses that
exceeded what would have been their claims for prevented planting,
then, indeed, a majority were prevented from planting. The comment also
indicated that the term ``surrounding area'' is confusing. The
commenter believes the term describes the entire area in which the
insured cause occurs, even if it occurs across state lines. Also, the
term ``majority'' was troublesome to the commenter. A reinsured company
has no way of knowing whether a majority of uninsured producers or
another reinsured company's policyholders were prevented from planting.
Suppose an insured lives on a line, north of which all farmers,
numbering 100, were not prevented from planting and south of which all
farmers, numbering 101, were prevented from planting. The commenter
asked whether the definition is satisfied.
Response: The phrase, ``majority of producers'' has been removed.
The definition of ``prevented planting'' has been amended to include
the phrase ``You must have been prevented from planting'' as suggested.
FCIC has also clarified that a crop will be considered to have been
prevented from being planted if most producers are also prevented from
planting on acreage with similar characteristics in the surrounding
area.
Comment: A reinsured company questioned the definition of
``prevented planting, notice of.'' The commenter stated that notice can
be given by telephone but must be confirmed in writing within 15 days.
The commenter asked if it was the intent that multiple notices be given
if the county had multiple final planting dates.
Response: Based on this and other comments, the definition has been
deleted.
Comment: An insurance service organization suggested that the
phrase ``in the actuarial documents'' replace the phrase ``in the
Special Provisions or an addendum thereto'' in the definition of
``price election.'' The commenter stated that the term creates
confusion because it refers variously to the established (or
preliminary) price, a market price, or to the value resulting from
multiplying a percentage chosen by the insured by either of the first
values cited. It would be helpful either to create a new term or to
assure that this term is used consistently in policy and procedure.
Dollar plan crops may have an amount of insurance instead of a ``price
percentage,'' but does ``price election'' apply any better?
Response: Since the price election is an integral part of the
contract, the insured must receive notification of the price election
each year. Insureds receive the Special Provisions each year. They do
not receive the actuarial documents. No change has been made.
Comment: An insurance service organization stated that the words
``replace'' and ``replacing'' in the definition of ``replanting'' can
be read to mean another crop is being substituted for the originally
planted crop.
Response: The definition makes it clear that the land must be
prepared to replace the damaged or destroyed crop. However, FCIC has
clarified that the land must be prepared to replace the insured crop.
Comment: A reinsured company questioned what the phrase ``in
certain instances'' means in the definition of ``representative
sample.''
Response: The phrase is intended to provide the reinsured company
with the discretion to allow the producer to harvest the crop and only
leave samples of the residue. Certain circumstances may be when an area
has widespread comparable losses. No change has been made.
Comment: A reinsured company suggested that the definition of
``state'' be modified to read, ``The state where the crop is grown, as
shown on your accepted application.''
Response: There may be instances in which a crop insured by written
agreement may be under the actuarial documents of a county in a state
other than where it is grown. In this case, the state listed on the
accepted application would be the state from which the actuarial
documents originate. No change has been made.
Comment: A reinsured company suggested including language in the
definition of ``summary of coverage'' that acknowledges that other
names also apply to this document.
Response: The definition of ``summary of coverage'' defines the
term as used in the policy. A form with a different name would be
considered a summary of coverage so long as it meets the criteria
contained in the definition. No change has been made.
Comment: Several comments were received with regard to section
2(b). A reinsured company and an insurance service organization
questioned whether an incomplete application must be rejected, or
whether reinsured companies can allow a short amount of time to obtain
the missing information. The commenters asked about alternatives for
the applicant and the reinsured company if the sales closing date has
passed before the omission is discovered. An insurance service
organization questioned whether companies have the authority to alter
the named insured by deleting any part that is incomplete, as implied
in the second sentence. The commenter asked whether this provision
could be in procedure rather than the policy. Legal counsel for a
reinsured company asked if the next to the last sentence in section
2(b) should indicate that coverage will be reduced by ``that person's
share'' rather than to ``that person's share?'' Also, in the last
sentence of the same section, the commenter asked whether the
``person'' refusing to supply a tax identification number is the same
person or a different person than the ``entity'' to whom insurance will
not be available.
Response: The intent of the section 2(b) is to advise the applicant
that all required information must be provided and that the social
security number or the employer identification number, as appropriate,
for all persons having a substantial beneficial interest in the insured
crop always must be included on the application. The application must
be rejected if all necessary information is not provided by the sales
closing date. It is the insured's and agent's responsibility to ensure
that no information is omitted. Reinsured companies will delete those
persons from the application who refuse to provide the necessary
information. The next to last sentence in section 2(b) should indicate
that coverage will be reduced by that person's share. The sentence has
been amended accordingly. The last sentence has been revised to clarify
that if a person refuses to provide identification information,
insurance will not be available for that person and any entity in which
that person has a substantial beneficial interest.
Comment: Several comments were received with regard to section
2(e). An insurance service organization stated that the second sentence
is unclear as to its effect. The commenter stated that, as written, a
person could not be eligible until all payments are made in accordance
with an agreement to pay, a fact that would not be known until the
[[Page 65136]]
last payment is made. If eligibility is intended to be restored once a
payment schedule is established, the phrase should be clarified. Legal
counsel for reinsured companies stated that section 2(e) is illegal,
unenforceable and in conflict with FCIC's own regulations and
procedures. The commenter also stated that unpaid debts alone do not
create ineligibility because the policyholder's name must be placed on
an ineligible list after certain procedural requirements are satisfied
and that list must be given to insurers before the action is effective.
The commenter suggested that FCIC should conform this paragraph to
section 23, 62 Fed. Reg. at 43248, which states that your insurance
policy will be canceled if you are determined, by the appropriate
Agency, to be ineligible by reason of debt. The commenter also
expressed concern that the proposed language is unclear as to which
termination date triggers delinquency, the one contained in the current
year crop policy or the one applicable to next year's crop. The
commenter also stated that the provision fails to state who determines
ineligibility and the exact date ineligibility begins. The policy
language should state whether ineligibility begins on the date the
producer fails to pay the premium by the termination date, the date the
reinsured company notifies the producer of the debt and a meaningful
opportunity to contest the same, after the producer fails to respond to
the written notice by the reinsured company, the date the FCIC verifies
that the person has met the criteria for ineligibility, the date the
FCIC mails notice to the producer's last known address, or the date
that the producer receives notice from the FCIC of ineligibility. The
commenter also stated that the proposed regulation should set forth the
standards, if any, for reinstatement of producer eligibility and for
removal of the producer's name from the ineligible tracking system. The
provisions should clarify whether ineligibility as a result of failure
to timely pay premiums will result in the FCIC voiding all the
producer's policies or only the policy for which the producer is
delinquent in paying premiums. The provisions should clearly state that
the insured is solely responsible for any indemnities or payments made
by the reinsured company on a policy voided by FCIC. The provisions
should state that FCIC expressly pre-empts all claims arising by
placement of the producer's name on the ineligible tracking system.
Response: This provision was intended to allow a producer to become
eligible for insurance once the producer repays the debt, enters into
an agreement for repayment and the payments are timely made, or files a
petition in bankruptcy to discharge the debt. Therefore, the producer
who executes an agreement for repayment is eligible while making
payments. However, if the producer fails to timely make a payment, the
producer is again ineligible and will not become eligible until the
debt is paid in full or the producer files a petition to have the debt
discharged in bankruptcy. The bankruptcy provisions have also been
clarified. Unpaid debts do result in ineligibility in accordance with 7
CFR Sec. 400.459. Section 2(e) relates to eligibility as described in
Sec. 400.459 and also describes when crop insurance policies are
terminated when unpaid debts are overdue. Therefore, the provision is
not illegal, unenforceable or in conflict with the regulations and
procedures. Delinquency of any amount due arises on the termination
date that the amount was due. This is the date that triggers
ineligibility. An example has been added for clarification.
Determinations of ineligibility are made in accordance with 7 CFR part
400, subpart U. Policies can only be reinstated if it is determined
that the termination was in error. If the producer fails to repay any
amount owed by the termination date, the policy is terminated, and the
producer later becomes eligible, the producer must submit a new
application for insurance. FCIC believes that the provisions clearly
indicate that all policies will be terminated in the event a debt is
delinquent for any crop. Each application requires the applicant to
provide information on prior and existing insurance. The reinsured
company has the capacity to verify eligibility, which would result from
these questions. It is possible that under some circumstances a replant
payment or early loss could be paid before the person is made
ineligible and any existing policies voided. For example: The producer
is indebted to company A but currently insured with company B. Company
A is late certifying the producer as ineligible (after the termination
date by 6 months). In the meantime, insurance attaches with company B
and a loss is paid. The policy will be voided and the insured will be
required to repay any amounts paid under the voided contract.
Comment: A reinsured company and an insurance service organization
questioned if section 2(g) should be deleted. The commenter stated that
it should be the company's discretion to terminate a policy if no
premium is earned for 3 consecutive years. This provision is counter to
the concept of enrolling all crops that the producer may grow, at least
at the catastrophic risk protection level.
Response: FCIC has modified the language to state that reinsured
companies may terminate policies that have not earned premium for 3
consecutive years.
Comment: Comments were received with regard to section 3(c). A
reinsured company suggested that these provisions be modified to
facilitate future streamlining of the APH process that has been
discussed, specifically referencing the concept of optional yield
updating. The commenter suggested that the sentences ``If you do not
provide the required production report, we will assign a yield for the
previous crop year'' and ``The yield assigned by us will not be more
than 75 percent of the yield used by us to determine your coverage for
the previous crop year'' be removed from these provisions and put in
the Special Provisions. The commenter also suggested that the first
sentence be modified to read, ``Your production report must be provided
to us by the earlier of the acreage reporting date or 45 days after the
cancellation date.'' The sentence ``Production and acreage for the
prior crop year must be reported for each proposed optional unit by the
production reporting date'' should be modified to allow for added land
and use of another person's records until the acreage reporting date,
which is allowable under the Crop Insurance Handbook. An insurance
service organization suggested clarifying the provisions to specify
that production reports are required for some crops but not for all
crops. Also, consider if the fifth sentence should read ``* * * unless
otherwise specified in the policy'' instead of ``* * * by FCIC.''
Response: There is nothing in these provisions that preclude
streamlining the APH process and since the APH regulations are separate
from this policy, reference to optional yield updating will be more
appropriately located in the APH regulations. Further, since the
consequences of not providing a production report is universal to all
crops requiring production reports and do not vary by county, these
provisions are more appropriately located in the Basic Provisions.
Requirement in the first sentence that the producer provide the
previous year's production should not be removed because if removed, it
could cause confusion. However, FCIC has amended the first sentence by
adding the phrase ``unless otherwise stated in the Special Provisions''
to
[[Page 65137]]
allow for any future changes. FCIC never intended to allow use of
another producer's records in determining optional units and it is only
permitted by the APH regulations and the Crop Insurance Handbook when
such records are from another person who shares in the same acreage.
Since the producer must also share in the acreage, nothing in the
existing provisions preclude this practice. The Crop Provisions will
specify when production reports are not required. Further, in the fifth
sentence, since the requirement that the amount of production used to
determine a claim for indemnity constitutes the production report is
contained in the APH regulations, the requirement can only be modified
by FCIC.
Comment: Commenters questioned if the fifteen days specified in
section 3(e) allowed enough time between announcement of an additional
price election or amount of insurance and the sales closing date. A
reinsured company suggested a minimum of not less than 25 days. An
insurance service organization stated that the proposed rule refers to
``maximum'' and ``additional'' price elections for what are referenced
elsewhere as ``preliminary'' (or ``established'') and ``projected
market'' price elections. It could cause confusion to be able to have a
price higher than the ``maximum'' price election. The commenter
suggested either replacing these terms, or adding them to the
definitions (perhaps as sub-entries under the ``price election''
definition).
Response: Although reinsured companies and producers may not have
much advance notice, an expected market price will be published by the
contract change date. Since contract change dates are usually months
before the sales closing date, this provision simply allows FCIC
additional time to determine the most accurate expected market price to
be used as the price election. Generally, the additional price election
or amount of insurance will be on file long before the 15 day deadline.
Therefore, the 15 day requirement has not been changed to 25 days as
suggested. FCIC has clarified the provision to eliminate confusion
between the maximum and additional price elections.
Comment: Several comments were received with respect to section 4.
A reinsured company and an insurance service organization stated that
section 4 indicates that policyholders will receive written
notification of all changes, including the ``additional price
elections,'' at least 30 days before the cancellation date, although
according to section 3(e) those prices may not be available for another
15 days. A reinsured company stated that it is impossible for the
company to comply with the sentence which reads, ``You will be
notified, in writing, of these changes not later than 30 days prior to
the cancellation date for the insured crop'' because it includes all
changes in policy provisions, price elections, amounts of insurance,
premium rates, and program dates. The Special Provisions are provided
to the insured but the actuarial documents are not. It is impossible to
notify the insured of a rate change that will affect that person
because this rate depends on the insured's APH, and the production
reporting date occurs after the date of this notice. The commenter
suggested that the section be modified to indicate that price elections
(including price addendum bulletins), amounts of insurance, and premium
rates are available at the agent's office. An insurance service
organization stated that it would simplify the program if companies and
agents could include all changes in one piece of correspondence rather
than several. Legal counsel for a reinsured company recommended that
section 4 of the policy should state that all contract changes are made
pursuant to the FCIC's rulemaking authority and are subject to public
comment.
Response: The section has been clarified to specify that insureds
may review or receive copies of all the documents containing the rate,
price elections, amounts of insurance, etc. The section has also been
clarified to state that the insured will be notified in writing of any
changes in the Basic Provisions, Crop Provisions, or the Special
Provisions. Introductory language in the Basic Provisions clearly
indicates that provisions of the policy are published in the Federal
Register. However, not all contract changes are made by rulemaking.
Changes in terms such as rates and price elections are not subject to
public comment.
Comment: Legal counsel for a reinsured company stated that his
client is compelled to include provisions in its policies regarding the
liberalization provisions contained in section 5. The commenter stated
that the liberalizations allowed by these provisions have increased the
reinsured company's work and costs, and that inclusion of the clause
does not constitute, imply, and should not be inferred by FCIC as a
waiver or other relinquishment of the reinsured company's right under
the Administrative Procedures Act or common law.
Response: Inclusion of section 5 in policies sold by a reinsured
company does not waive any rights of the company it has not already
otherwise waived. No change has been made.
Comment: Legal counsel for a reinsured company suggested that
program dates be reviewed since the proposed language in section
6(a)(2) causes the acreage reporting dates for some crops to be very
close to the premium billing date. For example, in some cases, the
acreage reporting date for forage production policies will be June 15
and the current billing date is July 1.
Response: FCIC will review the program dates as necessary to
determine whether adjustments are needed.
Comment: An insurance service organization commented on section
6(a)(3)(ii) and recommended deleting the phrase ``the acreage reporting
date contained in the Special Provisions since this is included in the
date determined according to 6(a)(1) and (2). They questioned whether
this refers to both of these sections, or if there are no fall crops
with a late planting period. This would then be easier to follow as,
``* * * the acreage reporting date will be the later of the date
determined in accordance with sections 6(a)[(1)&] (2) or 5 days after
the end of the late planting period for the insured crop.''
Response: The date contained in the Special Provisions for section
6(a)(3) may be different than the date referred to in sections 6(a)(1)
and (2). FCIC has clarified that the date may be determined in
accordance with both sections 6(a)(1) and (2).
Comment: Comments were received with regard to section 6(f). An
insurance service organization recommended consolidating the last two
sentences as follows: ``If we deny liability for the unreported units,
your share of any production from the unreported units will be
allocated, for loss purposes only, as production to count to the
reported units in proportion to the liability on each reported unit.''
This avoids need to reference ``the yield for actual production
history'' (which does not apply to all crops) and ``7 CFR'' (which is
not provided with the policy provisions). Legal counsel for a reinsured
company stated that section 6(f) should specifically set forth that the
reinsured company's decision to determine the insurable crop, acreage,
share, type, and practice, or to deny liability, is conclusive upon the
producer and FCIC. Alternatively, the regulation and policy language
should set forth the standards upon which acreage, share, type, and
practice are to be determined by the reinsured company.
[[Page 65138]]
Response: FCIC has consolidated the two sentences as recommended.
Provisions in section 20 indicate that disagreement on factual
determinations will be resolved in accordance with the rules of the
American Arbitration Association. Making the company's determinations
conclusive would conflict with those provisions. Standards applicable
to determination of insurance in these situations where the insured
fails to file an acreage report for one or more units are currently
contained in FCIC's approved procedure.
Comment: A reinsured company, legal counsel for reinsured
companies, and an insurance service organization commented on the
provisions in section 6(g). They asked whether the premium remains the
same if the production guarantee or amount of insurance on the unit is
reduced to an amount consistent with the correct information. The
commenters expressed concern that the provisions do not address the
current year, only subsequent years. More importantly, there must be
sanctions in the current year. The commenters also asked how and when
do the insurers adjust current year's coverage. They state that there
should be a cross-reference to section 27 that requires the
policyholder to reimburse the indemnity or be subject to voidance of
the contract. The commenters also stated that language should be added
to emphasize that it is essential for the producer to provide accurate
acreage information and that the insurer is relying upon the producer's
certification to [these] material facts to establish premium and
liability. The commenters were also concerned that section 6(g)(2) does
not relate what action the insurer may take upon discovering the
incorrect information, which is particularly important if it is
discovered while preparing a claim. For example, they ask what bona
fides, if any, must an acreage measurement service possess, how can a
company test such a service's credibility and impartiality, and what
authority does the client company have to reject a service's
measurements. The commenters also asked what acreage measurement
service will be considered acceptable, whether reinsured companies be
allowed to charge insureds for performing this service, what
documentation is needed, and who makes the determination. The
commenters also asked whether there is any tolerance for error and what
``support your report'' means. The commenters state that procedure is
needed to ensure that if business is transferred and the receiving
company discovers that the insured misreported acreage in any prior
year, that the insured is required to provide the documentation
specified in section 6(g)(2). In this regard, section 6(g)(2) may
prompt transfers. The commenters ask what is the reinsured company's
obligation and liability without pertinent procedures and state that
section 6(g)(2) should state that the producer will be solely liable
for any overstated liability resulting from the incorrect information
or from fraud, misrepresentation, or concealment. The regulation should
also make clear that the reinsured company is not liable to the FCIC
for any overpayment of indemnity or other payments on a policy
resulting from incorrect producer certified information or producer
fraud, misrepresentation, or concealment. Any liability of a reinsured
company for such acts should be governed by the criteria set forth in a
previous Manager's Bulletin, which should be expanded to include the
aforementioned situations. The proposed regulation states that
reinsured companies must verify information pertaining to crop, share,
entity, and acreage. The regulation should clearly set forth the
sources that the reinsured companies may utilize to verify this
information, especially in the absence of information at local FSA
offices.
Response: If the correct information results in a lower premium,
the lower premium will be charged to the producer and liability reduced
commensurately. Sanctions are available if the insured misreports
information. If the insured has intentionally misrepresented or
concealed any material fact, the policy may be voided under section 27
and the insured may be disqualified under section 508(n) of the Act. If
the error or omission is inadvertent, no sanctions are available. The
insured simply receives only the coverage to which he is entitled. No
cross reference is necessary since sections 27 and 6 are under the same
policy. Further, there is sufficient language in the policy to put the
producer on notice that information must be accurately reported. The
crop insurance industry recommends that the burden of certifying
acreage report information should be placed on the insured. FCIC
assumes that a typical insured will provide accurate information.
Therefore, documentation to support the report of acreage that
includes, but is not limited to, an acreage measurement service at the
producer's own expense, has been required only if the insured
materially misreported acreage in a prior year. It is the reinsured
company's responsibility to verify that the information used to settle
a claim is correct. The insured selects the acreage measurement
service. The reinsured company should use its business judgment to
determine whether the acreage measurement service was reputable,
competent, etc. Since it is the insured's responsibility to procure the
acreage measuring service, they bear the cost. Documentation should
include the report from the acreage measurement service stating the
measured acres. FCIC has revised the provision to refer to
``substantiate'' the reported acres. The intent of this provision is to
protect the integrity of the program by increasing the reliability of
the information reported. The reinsured company can reject any
information reported by the insured that is not accurate, including any
information provided by the insured from an acreage reporting service.
FCIC has revised the provisions to allow the reinsured company to
require the insured to substantiate acreage if the insured misreports
information in any crop year. Since the Federal crop insurance program
is operated with public funds, FCIC cannot make payments that are not
authorized by law. Therefore, if there is an overpayment of an
indemnity for any reason, the reinsured company must reimburse FCIC for
its share of the overpayment. If the reinsured company fails to follow
approved procedures with respect to the verification of information,
FCIC may take other actions in accordance with the SRA. FCIC, in
cooperation with reinsured companies, will identify sources that may be
used to verify acreage and other information. However, since these are
procedural matters and the sources may change, the sources should not
be included in the policy.
Comment: A reinsured company questioned if the provisions in
section 7(a) were consistent with the notification requirements in the
ineligibility (for debt) procedures, particularly when there is a short
time between billing for one crop year and sales closing for the next.
The commenter stated that some companies plan to send a billing earlier
than the date specified in the Special Provisions to assure that
insureds are aware of the amount due in time to meet the notification
requirements associated with the ineligible for debt procedures.
Response: Section 7(a) is consistent with the provisions in section
2, which state that premium is considered delinquent when not paid by
the termination date. This is the date that triggers ineligibility, not
the billing date.
[[Page 65139]]
Reinsured companies will still be required to send the premium bills to
the insured no earlier than the date stated in the Special Provisions.
This is to ensure that all insureds are treated fairly and equitably.
FCIC will review the premium billing dates and make any necessary
adjustments. The provision has also been revised to clarify that the
premium due will be considered delinquent if the premium is not paid by
the termination date.
Comment: Comments were received regarding section 7(b). An
insurance service organization suggested modifying the provisions to
allow companies to make replanting payments to insureds who may need
that money to cover the immediate costs of replanting the insured crop.
Reinsured companies and an insurance service organization questioned
the provision that reads ``Any delinquent amount may be deducted from
any amount owed to you by any United States Government agency or by
us.''
Response: The Department of Treasury has opined that part of the
amount the producer owes a reinsured company for any crop insured under
the authority of the Act that has been paid by the United States may be
deducted from any amount owed to the producer by any United States
Government agency. However, this provision has been deleted since it is
redundant with sections 24(a) and 24(e). Since the replant payment is
intended to provide funds to the insured to replant the crop, it will
not be used to offset other amounts that are owed.
Comment: An insurance service organization questioned whether
companies have the authority to ``assign'' a price election or an
amount of insurance as specified in section 7(d). If not, the last
phrase is not necessary, and the rest of this could be incorporated
into 7(c).
Response: The reinsured company does not have the authority to
``assign'' a price election or amount of insurance when such
information is omitted from the application. The producer must elect a
price election or amount of insurance or the application will be
rejected. However, if in future years the price election or amount of
insurance changes and the producer does not elect another price
election or amount of insurance, the reinsured company will assign the
producer a new price election or amount of insurance as stated in
section 7(d). No change has been made.
Comment: Comments were received regarding section 8(b). A reinsured
company questioned whether the intent of section 8(b)(1) was to deny
insurance on all units of a crop if a producer did not perform
acceptable farming practices on one unit of the crop instead of
charging an uninsured cause of loss on such unit as was done in the
past. An insurance service organization stated that sections 8(b)(4)
and (5) provide the possibility of insuring what is normally
uninsurable if permitted by the Crop Provisions, Special Provisions, or
written agreement. The commenter was concerned because sections
8(b)(1), (2), (3), and (6) make no mention of possible exceptions, yet
written agreements are allowed to insure practices or types not listed
in the actuarial documents. The commenter suggested that some reference
is needed for subsections (1) and (2) as well, or these terms could be
moved to the opening phrase (though requests would be denied for
volunteer crops and crops left for wildlife). An insurance service
organization questioned section 8(b)(6), which states that a crop
``used for wildlife protection or management'' is not insured. They
stated that questions have been raised in the past about whether all
acreage in a wildlife preserve is uninsurable or only the portion of
the acreage that will not be harvested. The commenter asked, if the
latter, whether the insured acreage should have a different coverage or
rate since there is a higher risk of wildlife damage.
Response: Section 8(b) has been revised to clarify that any unit
will be uninsurable if the conditions in paragraphs (1) through (6)
exist, but that such uninsurability will not affect other acreage of
the crop. FCIC agrees that a written agreement should be allowed for
the circumstances contained in section 8(b)(1) and has amended that
section accordingly. A farming practice may be acceptable, but a
premium rate previously was not established due to lack of demand. The
written agreement will alleviate this situation. If the crop is not
adapted to the area, it should not be insurable and there will be no
exceptions. Section 8(b)(6) is revised to clarify that a crop used
solely for wildlife protection or management will not be insured. Some
crop land leases require the lessee to leave a specified number of
acres or a percent of the crop for wildlife. For leases that state a
specific amount of acreage to be left unharvested, the stated acreage
is not insurable. For leases that specify that a percentage of the crop
must be left unharvested, the insured person's share will be reduced by
that percentage.
Comment: An insurance service organization stated that section
9(a)(1) refers to ``crop provisions'' as an exception, section 9(a)(2)
refers to ``written agreement'' as an exception, section 9(a)(4) refers
to ``crop provisions'' as an exception, section 9(a)(5) refers to
``crop provisions or Special Provisions'' as an exception and section
9(a)(6) refers to ``the policy provisions'' or a ``written agreement''
as exceptions. The commenter stated that the exceptions in section 9(a)
(and elsewhere in the policy) might be preferable as ``policy
provisions'' rather than switching between ``Crop Provisions,''
``Special Provisions,'' and ``written agreement.''
Response: The exceptions are only stated in the specifically
referenced documents. There is no reason to require the insured to
search all documents for exceptions that were previously identified. No
change has been made.
Comment: Reinsured companies, a state commodity group, an insurance
service organization, and a member of the Congress opposed the language
in section 9(a)(1) that specifies that acreage will not be insurable if
it has not been planted and harvested within one of the three previous
calendar years. The commenters are concerned that this precludes
acreage from being insurable when adverse weather conditions prevent
planting or harvesting. They also stated that to bar coverage when a
producer was unable to plant and harvest a crop or in instances when
the producer lost the crop after planting defeats the purpose of having
prevented planting coverage. They stated that this provision would be
impossible to administer and that requiring that the crop be both
planted and harvested within one calendar year excludes any crop
planted in the fall and harvested the following year. This provision
also excludes any perennial crop because such crops are not planted
every year. Although the intent of this provision was to prevent the
coverage of acres that are outside the definition of productive
cropland, this provision will also prevent coverage for many acres that
still carry the capacity to grow viable crops. The commenter suggested
that a reference should be made to section 9(a)(1) in the prevented
planting section to define acreage eligible for prevented planting.
Response: FCIC has revised section 9(a)(1) to specify that acreage
not planted in the three prior crop years because they were prevented
from planting or where a perennial crop was previously grown should be
considered insurable acreage. Additionally, insurable acreage that had
been planted in any of the three prior crop years and was not harvested
due to an insured cause of loss should be considered insurable. Section
9(a)(1) has also been amended to delete the word ``calendar''
[[Page 65140]]
to recognize crop acreage planted in the fall and harvested the next
calendar year. Referencing section 9(a)(1) in section 17 of this rule
is not necessary because, if the acreage is not insurable, no payment
can be made on such acreage, including a prevented planting payment.
Comment: A reinsured company and an insurance service organization
questioned the provisions in section 9(a)(2). The reinsured company
stated that the section would be impossible to administer, although
they did not disagree with the concept. The commenter questioned how
the reinsured company would determine if crops produced for food or
fiber had been harvested from the acreage for at least five consecutive
crop years after acreage had been strip mined. An insurance service
organization stated that food or fiber must be defined beyond the
exclusion of cover and forage crops. Tobacco is not a food or a fiber,
but the commenters question whether it would qualify the acreage. The
commenters also state that if food refers to production for human
consumption, then corn for silage does not qualify acreage. If the term
includes feed for animals, the commenters ask why forage is excluded.
The commenter also asks about tree crops. The commenter also
recommended deleting the word ``consecutive.''
Response: Section 9(a)(2) has been revised to refer to agricultural
commodities other than a cover, hay, or forage crop (except for corn
silage) that have been harvested from the acreage for at least five
crop years after the strip mined land was reclaimed. A definition of
agricultural commodity has also been added.
Comment: A reinsured company suggested adding the sentence ``In the
event that it is common practice to plant a crop relying on water to be
delivered by a third party at a later date, only those acres for which
adequate water may reasonably be expected may be reported as
irrigated,'' to section 9(b).
Response: Section 9(b) has been revised to clarify that if the
insured has a reasonable expectation of having adequate water, the
acreage will qualify for an irrigated practice. However, if the insured
knew or had reason to know that the insured's water could be reduced,
no reasonable expectation exists.
Comment: A reinsured company stated that the phrase ``you may
either report and insure the irrigated acreage as non-irrigated, or
report the irrigated acreage as not insured'' should be deleted from
section 9(c). They stated that allowing the irrigated acreage to not be
insured in cases where there is not an irrigated practice sets up a
situation for no coverage to be in place if a disaster occurs, and
raises questions about noninsured crop disaster assistance program
(NAP) coverage. Irrigated acreage in areas without an irrigated
practice should be required to be insured; the insured will benefit
from a higher APH yield.
Response: It is not appropriate to require a producer to obtain
coverage for a non-irrigated practice, with its higher premiums, when
the acreage has an irrigated practice. However, since insurance on such
acreage was available, the insured will not be eligible for NAP
benefits on the irrigated acreage. No change has been made.
Comment: Comments were made regarding section 10(b). A reinsured
company suggested that this provision be deleted because it creates
problems with tracking and confusion over tax numbers, tax liabilities,
etc. If this provision is retained, the commenter states that procedure
must be established. An insurance service organization stated that the
second sentence of section 10(b) suggests the company may not know that
a landlord (or tenant) is insuring the other's share until the acreage
report is submitted. The commenter stated that if this information
affects the insured entity or who needs to be on the substantial
beneficial interest (SBI) list, the reinsured company must determine
whether this information is needed by the sales closing date. The
commenter was concerned because no procedure has ever been developed
for this possibility and it is difficult to determine what should be
specified in the policy provisions until procedure is developed and
distributed.
Response: FCIC understands that some reinsured companies are
currently using these provisions with satisfactory results. FCIC has
amended the provisions to clarify that insurance of another person's
share must be indicated on the application before it is reported on the
acreage report.
Comment: An insurance service organization questioned whether it
will be necessary to store the date that the insurer accepts the
producer's application since section 11(a)(1) has been changed from
``the date you submit your application'' to the ``date we accept,'' a
term that needs clarification. The commenter questioned what would
happen if a loss is submitted before a timely signed and submitted
application is ``accepted'' and processed by the company.
Response: The date the application is accepted must be stored by
the reinsured company the same as the date of application was
previously stored. The provision has been revised to clarify that the
application is considered accepted on the date that the insured submits
a properly executed application containing all the information required
in section 2. This change was made to clarify when insurance begins
when an incomplete application is received.
Comment: A reinsured company suggested adding the phrase ``or
facilities controlled by you,'' at the end of section 12(d) to clarify
that failure or breakdown of facilities or equipment controlled by a
third party, could be considered a covered loss.
Response: The intent of this provision is to cover failure of the
irrigation water supply, not failure of equipment or facilities,
regardless of who controls them. No change has been made.
Comment: A reinsured company questioned why the phrase ``as
determined on the final planting date'' was included in section 13(a)
because it is not uncommon for acreage planted during the late planting
period to be damaged to the extent that replanting is necessary or
practical.
Response: FCIC has revised this provision to allow this
determination to be made within the late planting period.
Comment: Legal counsel for a reinsured company had questions
regarding provisions in section 14(a)(2), which require a producer to
notify the reinsured company within 72 hours of the initial discovery
of damage (but not later than 15 days after the end of the insurance
period). The commenter asked what the reinsured company's obligation is
to the insured if the insured gives notice 80 hours after the initial
discovery of damage. The commenter asked whether the reinsured company
would reject the claim in this case or is it liable for liquidated
damages to FCIC if it does not. The commenter also stated that
supposing extenuating circumstances exist, e.g., a death in the
insured's family, whether the reinsured company has discretion in light
of the proposed SRA. The commenter recommended that the policy give the
reinsured company some discretion to accept or reject a notice of loss
based on the facts of each case and the ability of the company to
appraise the loss in the context of those facts. That is the test a
court would apply and the FCIC should not have a different standard.
Also, the policy should specifically permit reinsured companies to
delay an indemnity payment to any insured who is under investigation by
the Inspector General or the Department of Justice involving wrongful
claims for indemnities.
[[Page 65141]]
Response: These notice provisions are intended to protect the
integrity of the program by ensuring that the reinsured company
received notice in sufficient time to accurately adjust the loss. The
provision is revised to provide the reinsured companies with the
authority to accept a delayed notice of loss as long as their ability
to adjust the loss has not been adversely affected. FCIC approved
procedure allows acceptance of delayed notices provided the delay does
not prevent the insurer from properly adjusting the claim. Therefore,
the reinsured company does have the discretion to accept or reject a
notice as requested in the comment and no policy change is necessary.
There is no authority to delay the payment of a claim simply because
the insured is under investigation.
Comment: A reinsured company stated that the word ``settlement'' in
section 14(a)(4) should be defined.
Response: The word ``settlement'' is self-explanatory. No change
has been made.
Comment: An insurance service organization commented on section
14(b)(4) that the last sentence should apply to sections 14(b)(1)
through (4), as in the current Basic Provisions.
Response: The sentence applies to sections 14(b)(1)-(4) and FCIC
has revised the sentence accordingly.
Comment: Comments were received regarding section 14(c). One
reinsured company suggested adding the phrase ``for all units of the
insured crop'' after ``insurance period.'' Another reinsured company
questioned if the intent was to require that the proof of loss be
completed within 60 days after the end of the insurance period.
Response: Since insurance is provided on a unit basis, claim
settlement should be administered on that same basis. Addition of the
suggested language could result in delayed payments for units with
early season losses. FCIC considers the claim for indemnity to be
synonymous with the proof of loss and requires that it be submitted
within 60 days after the end of the insurance period. No change has
been made.
Comment: An insurance service organization commented on section
14(f) and stated that since the only other reference to notice within
72 hours is in section 14(a)(2), FCIC should consider combining the
provisions by adding the phrase ``notice may be made by telephone or in
person to your crop insurance agent, but must be confirmed in writing
within 15 days'' at the end of section 14(a)(2). If (f) remains
separate, the commenter questioned whether it should refer to ``this
paragraph'' or ``this section.''
Response: Since the provisions in section 14(f) are applicable to
the notices required in sections 14(a)(2) and 14(b), it has not been
combined with section 14(a)(2). FCIC has revised section 14(f) to refer
to the ``section'' rather than the ``paragraph.''
Comment: An insurance service organization questioned if section
14(d) of ``Our Duties'' should be modified since future procedures may
be based on FCIC's standards rather than ``established or approved'' by
FCIC.
Response: Under the 1998 SRA, reinsured companies must use FCIC's
loss adjustment procedures. In the future, FCIC will always require
that all procedures be approved by FCIC before used. No change has been
made.
Comment: Some reinsured companies and an insurance service
organization suggested deleting the reference to Form FCI-78 in section
15(c). A company also suggested deleting the reference to ``a form
approved by the Federal Crop Insurance Corporation'' and adding a
provision that states how appraisals will be made if hail and fire are
excluded as insured causes of loss.
Response: FCIC determined the procedures to be used to conduct such
appraisals and included them in Form FCI-78. If FCIC wants to make
changes in the procedures, it can revise the form. No change has been
made.
Comment: A reinsured company and an insurance service organization
commented regarding the provisions in section 16(b). The reinsured
company questioned if acreage is insurable when planted after the late
planting period for any reason, except for an insurable cause of
prevented planting. The insurance service organization stated that the
last sentence which states, ``Such acreage must have been prevented
from being planted by an insurable cause occurring within the insurance
period for prevented planting coverage'' is confusing since the acreage
was planted, but too late for timely or late-planted coverage. Perhaps
this should say, ``* * * prevented from being planted timely or during
the late planting period * * *''
Response: Acreage planted after the final planting date or the late
planting period, if applicable, is not insurable unless the acreage was
prevented from being planted or it was practical to replant. FCIC has
amended section 16(b) to clarify that planting on such acreage must
have been prevented by the final planting date or during the late
planting period by an insurable cause occurring within the insurance
period for prevented planting coverage.
Comment: Comments were received regarding section 17(a)(2). An
insurance agent opposed the 72 hour mandatory notice of loss
requirement after the final planting date if the producer is prevented
from planting by such date. The commenter stated that if the substitute
crop option is eliminated, this provision is not necessary and it is a
cumbersome rule that will necessitate a tremendous amount of effort on
the part of the agent to make certain that a producer does not miss
this deadline. The commenter also stated that in a year such as 1995
when adverse weather prevented many producers over a large area from
planting, an agent must communicate with the producers, explaining the
provisions to them, and encouraging them to continue planting, rather
than assuring that all of the insureds give notice within 72 hours. The
commenter claims that notice would only be beneficial in an area with
few prevented planting claims because in an area with a large amount of
prevented planting, inspections probably would not even be made. The
commenter was also concerned because any time there is a specific date,
it forces the agent and companies to have a tracking system to protect
clients, which adds to the already burdensome amount of processing that
is required. The commenter was concerned that having a prevented
planting reporting date during a time span that may be feasible for
planting sends a strong psychological signal to producers that they
have reached a point that it is time to stop planting, regardless of
what the conditions are in the field. The commenter also stated that
reinsured companies would be over-loaded with loss notices that may or
may not be necessary, possibly becoming expensive and burdensome for a
company; and that this would be a new regulation for 1998 that is not
necessary. Legal counsel for a reinsured company and the agent
questioned what the ramifications would be if an insured notified the
reinsured company more than 72 hours after the final planting date. A
state commodity group stated that the 72 hour proposal will cause
hardships on producers. Many producers plant 10 to 15 different crops,
with varying final planting dates. During the planting season,
producers who plant a variety of crops are simply too busy to contact
their reinsured company. The commenter suggested changing the 72 hours
to two weeks. A reinsured company stated that it trusted that such
notice would not be considered the same as a ``notice of loss,''
requiring a visit by an adjuster, especially if the
[[Page 65142]]
land was located in an area where known prevented planting conditions
exist and, if the acreage report did not include prevented planting,
the earlier notice would be void. Another reinsured company stated that
the issue of the number of required notices should be addressed. An
insurance service organization recommended changing the loss notice
requirement to 72 hours after the latest final planting date on the
policy.
Response: The 72 hour notice requirement could become burdensome
and cause hardships on producers. Therefore, the provision has been
deleted.
Comment: Comments were received regarding section 17(b). A
reinsured company and an insurance service organization stated that, if
circumstances were favorable, increased coverage on unplanted acreage
could allow a profit because the only expenses may be the fixed cost of
ownership or rent. Input expenses other than those would not be
necessary. Therefore, with 65 or 70 percent prevented planting
coverage, it may become more economical for the producer to leave land
idle rather than incur the expense of attempting to plant. A reinsured
company, national commodity group, and farm organizations supported the
10 percentage point increase in the level of prevented planting
coverage. The commenters supported the concept that prevented planting
levels should be crop specific and should closely reflect a percentage
of the pre-plant production inputs to total costs for each crop. One of
the farm organizations stated that differentiation by crop is important
but that the program's overall complexity should also be considered. An
insurance agent, national commodity group, reinsured company, farm
organizations, and a state commodity group commended FCIC for making
higher levels of coverage available for prevented planting if producers
choose to elect them. The commenters stated that optional coverage
levels allow producers to tailor their risk management programs to
individual financial realities. The national commodity group stated
that coverage at the 60 percent level with an option to increase the
coverage to 65-70 percent should be adequate, provided prevented
planting losses are indemnified for each acre that is not planted (once
the threshold of 20 acres or 20 percent of the insurable crop acreage
in the unit is met). The current adjustment procedure tended to
penalize producers who planted a portion of a unit to the intended
crop. A state commodity group urged an increase in the maximum
available prevented planting coverage level to 75 percent, particularly
if the substitute crop provision is eliminated. An insurance agent,
national commodity group, state commodity group, and regional commodity
group were apposed to the lower prevented planting coverage available
for cotton. An insurance agent and national commodity group expressed a
concern that, in certain market conditions, the producer may shift
prevented planting from cotton to corn or soybeans due to the
possibility of a higher payment for prevented planting and
significantly lower premium for corn and soybeans. A national commodity
group stated that the percent of variable cost borne by cotton
producers in planting a crop is not unlike the percent of variable cost
borne by corn producers to plant a crop in the same states especially
when seed company technology fees and Boll Weevil Eradication
Assessments are taken into account. The commenter further stated that
FCIC relied only on USDA regional cost data, not county data. The
commenter also stated that any justification for this discriminatory
treatment that is based upon a ``cost of production'' rationale is out
of place under this program because crop insurance coverage is based on
actual production history and price election, not cost of production.
On several occasions, the commenters have challenged FCIC's claim that
cotton's cost of production is highest for post-planting activities. A
national commodity group and state commodity group stated that cotton
producers deserve equitable prevented planting coverage without any
rate increase since the ratio of cotton's insurance indemnities to its
fixed and variable costs are far below those of other crops. The
commenters stated that this disparity is even more glaring when
indemnities' net of premium as a percent of variable cost or as a
percent of a fixed cost are considered. A state commodity group stated
that a rolling average of a producer's normal crop rotation should be
used to determine losses. The previous year's total crop indemnity
divided by prevented planting acres at this year's prices could be used
to determine an average. An insurance service organization stated that
although offering different prevented planting coverage levels may be
more actuarially sound, this will make processing more complex. The
commenter was concerned that it could also result in questions from
policyholders when the level of coverage they actually have may differ
from what they thought they had.
Response: Numerous issues are raised by these comments. In light of
the comments regarding the disparity of prevented planting coverage
between cotton and most other crops, FCIC is making this rule effective
for the Cotton Crop Provisions and the Extra Long Staple Cotton Crop
Provisions for the 1998 crop year only. FCIC will solicit additional
comments regarding the prevented planting coverage level percentage for
these crops for the 1999 and succeeding crop years in a future rule.
Some commenters allege that the differences in coverage will
encourage shifts among crops, notably from cotton since the coverage is
lower. Based on the national average liability, the average payment
rate for cotton at 45 percent of the guarantee is $125 per acre ($0.68
average price election) while the payment for corn is $103 per acre
($2.25 price election). Even if the price election for corn were
increased to $2.50 per bushel the payment still would be less than
cotton ($115 per acre). Some commenters state that the prevented
planting returns net of crop insurance premiums should be considered.
However, based on additional (buy-up) business for 1996, the difference
in producer-paid premium between the two crops is about $9 per acre.
Therefore, even on this basis, there is no marked disparity in bottom
line dollars to the producer and there should be no impact upon
cropping decisions.
Some commenters challenged the concept of basing the prevented
planting indemnity upon costs of production, stating that the insurance
plan is based on yield and market price. The intent of the prevented
planting provisions is to permit producers to recoup some of their
costs when it is impossible for the producer to generate income from
the insured crop. These provisions were never intended to allow
producers to make a profit. To permit profit is to introduce
unmanageable and undesirable risks of fraud.
Some of the commenters dispute the use of regional data to
establish costs of production, arguing instead that the costs should be
developed county by county. Such an approach is impractical and
unwieldy due to lack of credible data and is contrary to the law, which
directs FCIC to seek administrative efficiencies in its programs to
minimize burdens upon producers and reinsured companies.
Comment: Comments were received regarding the proposed removal of
prevented planting coverage when a substitute crop is planted. A
national commodity group recommended that, after the final planting
date for a
[[Page 65143]]
prevented planting crop has passed, producers be allowed to collect a
prevented planting payment and then plant any crop but that such crop
not be insurable. This would allow maximum returns from the land
without providing any windfall benefits from the insurance program. The
commenter stated that most producers are required to have a crop of
some type on the land for conservation purposes and, since it will not
carry any insurance coverage, production should be allowed. Another
national commodity group and a state commodity group stated that they
recognize the inherent problems with the substitute crop provisions and
that they approve the elimination of the 25 percent coverage when a
substitute crop is planted, provided there is adequate coverage when
acreage is left unplanted. Farm organizations stated that it is
difficult to argue against elimination of the substitute crop
provisions; however, long term crop rotations, marketing decisions,
delivery commitments, preplant application of inputs, and estimated
economic returns from competing crops do enter into planting decisions.
The farm organization and a reinsured company stated that weather
induced planting changes often represent added costs to producers and,
therefore, it may be appropriate to allow some level of coverage if the
original crop cannot be seeded. These commenters stated that to reduce
the potential for abuse, the provisions should specify a significant
reduction in prevented planting benefits (40-60 percent) if an
alternative crop is ultimately planted. Another farm organization and a
reinsured company recommended that some level of coverage be allowed
when a substitute crop is planted because weather induced planting
changes may represent a real cost to the producer. Often times the
producer has prepared the land for one crop, including the application
of fertilizer and herbicides that will not be used by the new crop, and
this expense cannot be recouped. A regional commodity group recommended
that the provisions be amended so that a producer is able, at the very
least, to forego crop insurance protection and plant a follow up crop
for harvest after acreage is prevented from planting. The commenters
stated that producers who miss the opportunity to plant their crop of
first choice still need to retain the ability to create income from
their land to cover any fixed costs they incur such as taxes, land
payments, equipment payments and living expenses. They feel it is
imperative that producers retain the right to keep their land
productive.
Response: This ``substitute crop'' coverage has been provided for
producers with coverage greater than catastrophic risk protection since
the 1995 crop year. During the three crop years this provision has been
effective, FCIC has received numerous complaints from agents, reinsured
companies, commodity groups, and producers, including allegations of
abuse, difficulty in establishing ``intent'' as required under those
provisions, and other problems.
If a producer is prevented from planting the ``intended'' crop, it
is the producer's choice to leave the acreage idle, plant a cover crop,
or plant another crop for harvest. Prevented planting coverage should
be provided only if the acreage is idle or planted to a cover crop not
for harvest. Based on the numerous complaints received, the
administrative problems and hazards associated with the substitute crop
coverage, and the fact that only one crop is normally produced per
acre, per crop year, prevented planting coverage should not be provided
when the producer chooses to plant another crop on the acreage for
harvest. No change has been made.
Comment: Comments were received regarding section 17(d). A national
commodity group and a regional commodity group commended FCIC for
including drought as an insurable risk for prevented planting. The
national commodity group further recommended that such a determination
be made on a field-by-field basis rather than on an area wide basis.
This is consistent with the per acre unit change proposed for the
prevented planting determination. Legal counsel for a reinsured company
stated that proposed section 17(d)(1)'s requirement of inclusion of the
Palmer Drought Severity Index (Index) as a condition precedent to the
receipt of a prevented planting payment on non-irrigated acreage is
arbitrary, impractical and exposes reinsured companies to potential
litigation or arbitration. Though the Index surely measures a drought's
severity, even those droughts that are not classified as severe or
extreme may be sufficiently devastating to prevent planting. The
commenter stated that when facing a drought, a producer's decision to
invest the financial resources necessary to produce a viable crop is
based on economics, not whether the Index classifies the drought as
severe or extreme. In addition, a drought may, over time, become severe
or extreme. The commenter asked what if, at the acreage reporting date
a drought is not, according to the Index, severe or extreme, but is
later classified as such by the Index. The commenter was concerned
because the reinsured company already has denied the producer a
prevented planting payment, and the drought's subsequent appearance on
the Index is of little benefit to the producer. Forced reliance on the
Index causes another problem if the Index is not available when the
acreage is reported. The commenter questioned whether the reinsured
company must delay its determinations until after it obtains the Index
and what liability befalls the reinsured company if it is delayed.
Response: Current as well as the proposed prevented planting
provisions specify that all prevented planting causes of loss must be
general in the area. It is important to provide a reliable source such
as the Index to provide consistency when verifying drought as an
insured cause of loss in an area. FCIC does not believe that prevented
planting payments should be allowed unless other producers in the area
were also prevented from planting.
Most drought severe enough to prevent planting will be classified
by the Index as severe or extreme by the final planting date. The Index
is readily available to interested parties and is updated frequently.
Therefore, the Index should be available to all reinsured companies
prior to the acreage reporting date. FCIC expects few cases in which a
drought that develops into a severe or extreme drought after normal
planting times will actually prevent planting. To allow for exceptions
would increase the complexity and subjectivity of these determinations,
the administrative burdens on reinsured companies, and the litigative
risks resulting from these subjective decisions.
Comment: A reinsured company stated that in section 17(e) the word
``base'' should be eliminated in all cases.
Response: The use of the word ``base'' in section 17 can be
confused with the term ``base acreage'' used by FSA in the past.
Therefore, FCIC deleted the word ``base'' as suggested.
Comment: Comments were received regarding section 17(e)(1). A crop
insurance agent disagreed with the provisions in the proposed rule that
exclude from eligibility any acreage prevented from being planted that
was planted to a substitute crop. The producer should not be penalized
a second time for not being able to plant a specific crop. A reinsured
company questioned if the determination of eligible acres in the chart
is done on a county basis. The commenter also questioned how a company
is to obtain previous year's records of prevented planting acres when
policies are gained by transfer. A reinsured company stated
[[Page 65144]]
that written agreements will only be allowed if the insured has not
produced any crop for which insurance was available in any of the four
most recent crop years. The commenters indicated that a written
agreement may be the only way to provide coverage in many cases. An
insurance service organization questioned whether section 17(e)(4),
which notes that eligible acreage may be increased to account for added
land, is considered a ``written agreement.'' The commenters also stated
that the provisions in the table would be clearer if reorganized. Since
17(e)(1)(i) is the only one of the three subsections in which (B) and
(C) differ, this table may not be necessary. Combine 17(e)(2) with
17(e)(1)(i)(C) since this is the only situation allowing written
agreements and combine 17(e)(4) and (5) with 17(e)(1)(i)(B) to avoid
the impression that eligible acreage does not include added land. Add
17(e)(3) to the opening sentence in 17(e)(1). The commenter also stated
that 17(e)(1)(i)(B) must be clarified because the heading makes (B)
apply to producers who have produced ``any'' insurable crop in any of
the last four years, but then limits eligible acres to the maximum
acres certified or reported in those years for ``the crop.'' The
commenter stated that a producer may have produced corn in at least one
of the last four crop years, but who planned to plant grain sorghum
this year for the first time, would not have any eligible acres for
grain sorghum and a written agreement could not be obtained. The
commenter recommended changing the heading above section 17(e)(1)(i)(B)
to read, ``if you have produced the crop in any of the four most recent
crop years'' instead of ``* * * any crop for which insurance was
available * * *'' The commenter also suggested that the heading above
section 17(e)(1)(i)(C) be changed to reference ``the crop'' instead of
``any crop for which insurance was available'' to accommodate producers
who decide to start producing a crop for the first time.
Response: Section 17(e)(1)(i)(B) of the proposed rule excludes
acreage reported as prevented planting in a prior year but that was
planted to a substitute crop so that the same acres do not qualify two
crops in the same crop year. This provision is consistent with the
removal of the prevented planting substitute crop coverage.
Eligible acres defined in section 17(e)(1) are determined on a
county crop basis. When policies are gained by transfer, reinsured
companies can obtain previous years' records of prevented planting
acres from the insured, the ceding company, or the FCIC policyholder
tracking system.
FCIC agrees that the table contained in section 17(e)(1) should be
rearranged, duplicate provisions removed and combined with sections
17(e)(2) and (4), and has revised the table accordingly. FCIC has also
revised section 17(e)(1) to incorporate section 17(e)(3) for clarity.
Proposed section 17(e)(1)(i)(C) (redesignated 17(e)(1)(i)(B)) has
been amended to indicate that an intended acreage report must be
submitted to the insurance provider to provide prevented planting
eligible acreage only for a person who has not in any of the four most
recent crop years produced any crop for which insurance was available.
Intended acreage reports are not necessary for other producers. Any new
insured who has produced any crop in any of the 4 most recent crop
years for which insurance was available will qualify for prevented
planting coverage for those crops and acres for which past acreage and
production records are provided in accordance with APH procedures. A
provision to increase acreage for new producers has been added that is
consistent with the requirements for other insureds.
In most instances, the proposed provisions allow prevented planting
coverage based on planting history. If a producer has planted only one
crop in the past four crop years, for instance corn, and intended to
plant and insure grain sorghum in the current crop year, the producer
would be eligible for prevented planting coverage based on a corn
production guarantee only. Once the producer plants grain sorghum, the
producer will be eligible for prevented planting coverage based on a
grain sorghum production guarantee.
Comment: A reinsured company questioned the impact and
acceptability of intended acreage reports concerning eligible prevented
planting acres. The commenter questioned the guidelines for approval of
written agreements, and who has the authority to approve or disapprove
such agreements.
Response: The provisions have been amended so that the use of a
written agreement is no longer required to establish eligible acreage.
Instead, intended acreage reports will be used. However, the reinsured
company will be required to verify that the acreage reported does not
exceed the number of acres of cropland in the producer's farming
operation at the time the intended acreage report is submitted. The
reinsured company will have the authority to accept or reject any
intended report.
Comment: Comments were received regarding section 17(e)(2). An
insurance service organization asked whether ``requests for written
agreement under this section must be submitted to us on or before the
sales closing date'' is intended to supersede section 18(e), which
allows written agreements requested after the sales closing date only
if an inspection determines no loss has occurred. The commenter asked
if this provision prohibits consideration of a request made shortly
after the sales closing date. Legal counsel for a reinsured company
asked if section 17(e)(2) pertains to all crops or only to those with
increased acreage. A crop insurance agent stated that any new producer
who has a viable policy for a crop and who has the ability to produce
that crop should be eligible for prevented planting on all cropland
acres. The commenter also stated that the sales closing date is a
completely unreasonable deadline for a new producer who is trying to
start a farming operation. The insurance program should be as liberal
as is prudent with new producers and allow them to add to their
operation until acreage reporting time without penalty.
Response: As indicated in the response above, written agreements
are no longer required. Since the producer is making all other
insurance decisions by the sales closing date, it is not unreasonable
to require the producer to specify the number of acres that the
producer intends to plant by the sales closing date. New producers may
be eligible for prevented planting acreage on all crop acreage if the
requirements in section 17(e)(1)(i)(B) have been met.
Comment: An insurance service organization suggested that the
provision contained in proposed section 17(e)(3) that states, ``the
total number of acres requested for all crops cannot exceed the number
of acres of cropland in your farming operation for the crop year'' be
revised to allow for double-cropping, as in section 17(f)(5).
Response: This provision, now located in section 17(e)(1) is
revised to account for double cropped acreage.
Comment: Comments were received regarding section 17(e)(4). A
reinsured company asked if all land added by the insured after the
sales closing date was ineligible for prevented planting coverage. An
insurance agent disagreed with requiring the producer to provide
documentation on or before the sales closing date for newly added land
because a March 15 deadline is not realistic and land changes hands
into the planting season for many legitimate reasons including
retirement, health, another career, financial considerations, etc. The
commenter stated that the new producer should not be denied coverage
[[Page 65145]]
just because the farming operation changed hands after March 15. The
commenter was also concerned that it is difficult to obtain form 423
from FSA to determine eligible acres and whenever a farming operation
is changed and the farm is reconstituted by FSA, there can be weeks of
delay before the form is completed. The commenter stated that this rule
again imposes an unnecessary burden on agents. It will force them to
spend a great deal of time putting a process in place that attempts to
make certain that none of their insureds miss an imposed deadline. The
commenter was concerned that this is the time of year that agents need
every available minute to be working with their clients concerning
their coverage. Producers should be focused on sound decisions
concerning their risk management, not focusing on what new deadline
they have to meet. The commenter also stated that with the substitute
crop provision eliminated, there is no need to have any other deadline
in place other than acreage reporting. There is no date that is
acceptable and crop insurance should not be in the business of trying
to dictate to producers a date by which all changes in a farming
operation must take place. The commenter stated that this rule directly
conflicts with the farm program objectives of farming for the market.
If the market dictates that a producer needs larger acreage to be
effective, that should be allowed by our rules. The converse is also
true. If a producer decides to reduce the size of the farm, it still is
eligible for acres over and above the size of the farm, under the
proposed rule. The commenter stated that eligible acres should be
determined at planting time by the total cropland acres. The limitation
to the number of acres previously planted to a crop is prudent;
however, newly added land should be eligible for prevented planting up
to the newly established cropland acres on any crop that the producer
has insured. This is a common sense approach that would eliminate
burdensome paperwork and eliminate a deadline that will cause problems.
Legal counsel for a reinsured company stated that land rented or bought
after the sales closing date might be ineligible for prevented planting
coverage under the proposed provisions in section 17(e)(2) and (4).
While the acreage reporting date may improperly permit insureds to
state with the benefit of hindsight, what their intent was, the use of
written agreements in the fashion proposed is not an adequate solution.
The commenter suggested that the actual production history deadline
date could be used.
Response: These provisions, now included in section 17(e)(1)(i),
have been revised to allow an increase in eligible prevented planting
acres provided the producer submits proof that additional acreage was
purchased, leased, or released from any USDA program in time to plant
it for the insured crop year. No cause of loss that will or could
prevent planting may be evident at the time the acreage is purchased,
leased, or released from the USDA program.
Comment: Comments were received regarding section 17(f)(1). A
reinsured company suggested that the section be modified to read ``* *
* 20 contiguous acres...'' The commenter suggested changing the phrase
``whichever is less'' to read ``whichever is larger'' and also
suggested that the term ``insurable crop acreage in the unit'' be
defined. Another reinsured company questioned if 20 acres or 20 percent
was the correct acreage limitation for the unit. The commenter
recommended a minimum figure be established for the entire farming
operation based on cropland acres. Legal counsel for a reinsured
company recommended that section 17 be amended to exclude prevented
planting payments when the producer is prevented from planting a small
number of acres. For example, if a producer is prevented from planting
five acres on a 100 acre farm, the producer should not be entitled to a
prevented planting payment for the five acres. The commenter stated
that failure to incorporate such a change will increase indemnity
payments and overall administrative costs of the program. Another legal
counsel for a reinsured company indicated that the phrase ``within a
field'' contained in section 17(f)(1) is not defined or used elsewhere
in the section.
Response: Provisions are necessary to avoid prevented planting
claims when only a small number of acres are prevented from being
planted. FCIC has amended section 17(f)(1) to require that at least one
contiguous block of land equal to 20 contiguous acres or a contiguous
area constituting 20 percent of the insurable crop acreage in the unit,
whichever is less, be prevented from being planted in order to qualify
for a prevented planting payment. This change will reduce prevented
planting payments for pot-holes and other small portions of fields that
are wet in most years although planting occasionally may be possible.
The phrase ``whichever is less'' is appropriate. There is no reason to
define the phrase ``insurable crop acreage in the unit'' since units,
insured crop, and insured acreage are defined elsewhere in the policy.
Once the minimum acreage threshold has been met, all acres should
be indemnified. A minimum figure should not be established for the
entire farming operation based on cropland acres because in very large
farming operations, that could result in a substantial number of acres
ineligible for prevented planting coverage.
FCIC has defined the term ``field'' for clarity. FCIC has also
amended section 17(f)(1) to specify that all acreage in a field will be
presumed to have been intended to be planted to the same crop that is
planted on the field unless the prevented planting acreage constitutes
at least 20 acres or 20 percent of the insurable acreage in the field
and the producer can prove that both crops were previously planted in
the same field in the same crop year.
Comment: A reinsured company questioned if the phrase ``in which
the insured crop was grown on the acreage'' in section 17(f)(4) allows
rotation of double-cropping so that the acreage need not be double-
cropped each of the last four years to be eligible for prevented
planting.
Response: The double-cropped acreage would qualify for prevented
planting as long as the insured crop was double-cropped in each of the
last four years that it was grown.
Comment: Legal counsel for a reinsured company stated that the
terms of FCIC's proposed coverage for prevented planting are inherently
inconsistent. On the one hand, FCIC is eliminating its substitute crop
provisions, while on the other hand the FCIC would require written
agreements to be submitted by sales closing dates on base eligible
acres on which the insured has not produced any crop for which
insurance was available in any of the four most recent crop years. This
requirement effectively forecloses producers, particularly those in the
northern plains states, from responding to market signals. Similarly,
section 17(e)(3), which indicates the number of acres requested cannot
exceed the amount of cropland, conflicts with section 17(f)(4), which
appears to permit double cropping.
Response: The comment misinterprets the proposed provisions.
Section 17(e)(1) requires only those producers who have not produced
any crop in any of the four most recent years for which insurance was
available to establish eligible acres in writing. In all other
instances, either the number of contracted acres (for contracted crops)
or the greatest number of acres of the insured crop planted or insured
in any
[[Page 65146]]
of the four most recent years serves as the basis to determine eligible
prevented planting acres. No provision contained in this rule restricts
a producer from responding to market signals and planting, or
attempting to plant, any amount of any crop he or she desires. However,
in most instances, prevented planting compensation will be based on the
number of acres of an insured crop that was planted in the past. As
stated above, FCIC has revised the provisions of section 17(e)(3) (now
in section 17(e)(1)) to account for double-cropped acreage.
Comment: Comments were received regarding section 17(f)(5). A
reinsured company questioned how a company would know if any crop from
which a benefit is derived under any program administered by the USDA
is planted and fails. The commenter also suggested modifying the
sentence from may be hayed or grazed ``* * * after the final planting
date for the insured crop * * *'' to ``* * * 60 days after the final
planting date for the insured crop * * *'' An insurance service
organization stated that this section refers to ``other than a cover
crop which may be hayed or grazed after the final planting date for the
insured crop.'' The commenter questioned whether acreage that has a
cover crop that is ready to be hayed or grazed would ever qualify for
prevented planting.
Response: Reinsured companies must question insureds to determine
if any crop was planted for the crop year on the acreage being claimed
for prevented planting. Producers should not be denied grazing or
haying benefits for 60 days after being prevented from planting. In
many instances, cover crops are grown until preparation for planting
occurs in the spring. If the producer was unable to remove the cover
crop and plant a crop, such a cover crop could be hayed or grazed soon
after the final planting date and a prevented planting payment would
still be owed.
Comment: A reinsured company questioned how the insurer will know
if a cash lease payment is also received for use of the same acreage in
the same crop year as specified in section 17(f)(6), particularly if it
occurs after the prevented planting payment has already been received.
Response: Reinsured companies must question insureds to determine
if a cash lease payment is, or will be, received for the acreage being
claimed for prevented planting. Any insured who claims prevented
planting on acreage they have cash leased would be misrepresenting a
material fact and could be subject to civil and false claim penalties.
Comment: A reinsured company stated that they did not disagree with
the concept of section 17(f)(7) but that it is inconsistent with
freedom to farm and is unenforceable.
Response: The requirement that prevented planting coverage will not
be provided for any acreage for which planting history or conservation
plans indicate that the acreage would have remained fallow for crop
rotation purposes is necessary to protect the integrity of the program.
FCIC is charged with establishing an actuarially sound insurance
program, and relying upon ``intentions,'' without evidence to support
such intentions, is not an appropriate manner of achieving actuarial
soundness. For example, if half the acreage in a farm has remained
fallow every other year for the past ten years to maintain a
summerfallow rotation, this is evidence that this is a normal practice.
If such patterns exist, this provision is easier to administer than if
the reinsured companies were forced to determine whether the producer
actually intended to plant a crop. Since coverage for prevented
planting now begins on the previous crop year's sales closing date for
carry-over policies, producers could decide to claim an intent to plant
acreage where the cause occurred months earlier in order to profit from
the insurance program when they never planned to plant a crop. While
the denial of prevented planting coverage may adversely affect some
producers who genuinely intended to plant a crop, given the inability
to prove intent to plant and in order to protect the integrity of the
program, FCIC must retain the provision. No change has been made.
Comment: Comments were received regarding proposed section 17(f)(9)
(redesignated 17(f)(10)). A reinsured company stated that they did not
disagree with the concept of section 17(f)(9) but that it is an
unenforceable provision. The commenter asked if capital on hand was
considered proof that inputs were available. An insurance service
organization stated that the burden of proof is placed on the producer
to demonstrate ``he or she had the inputs available to plant and
produce a crop.'' The commenter asked what guidelines have been
developed to determine that an insured has ``inputs available to plant
and produce a crop'' and what evidence will be considered acceptable
for the ``proof.'' The commenter believes that instead of reducing the
costs associated with prevented planting, FCIC has put forth an
indefensible proposal that will only add to the administrative expense
of the program.
Response: Since the prevented planting period could begin on the
sales closing date for the previous crop year for many producers, many
producers could know that they were prevented from planting prior to
the sales closing date and planting period. These producers would be in
a position to claim the intent to plant higher valued crops than they
normally plant. FCIC has revised the provision to clarify that proof of
inputs is only necessary where there is a deviation from normal
planting practices. For example, the producer has rotated crops between
corn and soybeans in alternate years and this was the year the
rotational pattern showed that corn would normally be planted, if the
producer seeks a prevented planting payment for corn, the reinsured
company does not have to determine whether the insured had sufficient
inputs. However, if the producer seeks a prevented planting payment for
soybeans, the reinsured company would be required to determine whether
the producer has sufficient inputs. Capital on hand would not be
considered proof of inputs. If the producer could not produce receipts
for seed, fertilizer, herbicides, etc., the lease of equipment or
labor, or specific land preparation, it will be presumed that the crop
usually planted by the producer was the crop that the producer intended
to plant. While this provision may preclude a producer from receiving
benefits for a crop that he genuinely intended to plant, the producer
would still be eligible for a benefit on the crop usually planted and
the need to protect program integrity outweighs its disadvantages.
Since this situation should be rare, it should not impose an undue
burden on the reinsured company.
Comment: A reinsured company stated that proposed section 17(f)(11)
(redesignated 17(f)(12)) is contrary to the freedom to farm concept.
The commenter also questioned how the insurer would know if the crop
was planted in one of the last four years.
Response: Prevented planting coverage will not be provided for any
acreage based on a price election, amount of insurance or production
guarantee for a crop type the insured person did not plant in one of
the four most recent years. As stated above, FCIC has a responsibility
to protect the integrity of the program. Allowing producers to claim
prevented planting payments for crops for which there is no evidence
that they intended to plant would adversely affect program integrity.
While this may result in some
[[Page 65147]]
producers not receiving benefits, it would be impossible to maintain
actuarial soundness when such exposure to unnecessary risk exists.
Since most crops have a production guarantee based on actual production
history, records are an integral requirement. Use of such records would
seem the proper way to verify previous crops produced. However, FCIC
has created an exception for new producers that qualify for coverage
under section 17(e)(1)(i)(B).
Comment: Comments were received regarding section 17(g). A
reinsured company stated that this section may generate a moral as well
as a morale hazard, since producers may claim prevented planting for
marginal land never intended for planting. This is contrary to the
intent of this policy, which is to provide disaster based insurance
coverage, not acre by acre coverage. Legal counsel for a reinsured
company stated that proposed provisions allowing a prevented planting
payment on a per acre basis add incalculable costs to the loss
adjustment process. The commenter stated that loss adjusters must find
the acres that are prevented from being planted, measure them, verify
inputs and calculate the loss. Also, under the proposal, insureds can
``buy-up'' their coverage which permits producers to be indemnified as
much for prevented planting as for failed planting. Neither the Cost-
Benefit Analysis or the narrative in the Federal Register provide the
level of detail needed to permit meaningful comment on FCIC's
conclusion that higher rates will not be needed. The commenter further
stated that paying prevented planting claims on a per acre basis will
result in software problems equal in magnitude to the so-called ``year
2000'' problem. Loss records are kept by unit and to pay claims by acre
will require a complete revision of the reinsured company's and FCIC's
loss adjustment programs. In this regard, those programs will need to
deduct from final claims paid on a unit basis the amount paid for
prevented planting on an acre basis. Accordingly, the commenter stated
that FCIC has no basis in fact to conclude, as it did in its 1997 Cost-
Benefit Analysis, that its proposal will simplify program operation. A
national, two state and a regional commodity group stated that they
commend FCIC's decision to pay prevented planting acres on a ``per
acre'' basis. Another national commodity group stated that they
strongly support the change from computing the prevented planting
indemnification on a unit basis to a per acre basis after the
deductible of the lesser of 20 acres or 20 percent of the eligible
acreage in a unit is met. This change provides the producer the
opportunity to more closely recover his actual losses associated with
prevented planting on a limited number of acres within a unit without
indirectly penalizing him for efforts to plant the balance of a unit in
a timely, profit maximizing fashion. An insurance service organization
stated that they received one comment recommending prevented planting
coverage be provided on a unit basis rather than on an acre-by-acre
basis. The commenter stated that prevented planting coverage on a unit
basis will encourage the insured to plant the acres if at all possible.
The commenter asked why separate units for planted and prevented
planting acres should be established when units by planting dates are
not otherwise allowed.
Response: The other requirements of section 17 must also be met
before a prevented planting payment is made. If the producer cannot
prove that inputs were available to plant any acreage, then no
prevented planting payment will be made. If the producer has previously
planted marginal acreage, any prevented planting payment will be based
on the lower yield for such acreage. No change has been made.
As noted in both the Cost-Benefit Analysis and Federal Register
narrative, recent prevented planting data indicate that the net costs
are expected to be small because the cost and liability associated with
substitute crops, which will be reduced when that provision is
eliminated, offset the additional cost and liability associated with
adding a per-acre basis for payment. Experience data for 1996
demonstrate that 77 percent of declared prevented planted acres
occurred in circumstances in which no acreage of that same crop was
planted within the unit. Similar results appear in 1995. The
implication is that most producers who are prevented from planting have
not been able to plant any acreage in the unit and, therefore, already
have received the equivalent of acre-by-acre payments. Added outlays
would be associated with prevented planted acres where some acreage in
the unit is planted, but realized production exceeds the guarantee. In
1996, about 178,000 acres fell in this category, accounting for about
$5.6 million in indemnities. Data for 1996 also indicate that some
acreage that did not receive an indemnity under the prior regulation
would receive a payment under this rule. The increased indemnity is
estimated to be about $7-8 million. These data clearly indicate that
the effect is small.
Even with the ``buy-up'' provisions, prevented planting
compensation under this rule cannot equal compensation given in the
event of a failed crop as stated in the comment from the legal counsel.
The maximum coverage offered is 70 percent of the guarantee for timely
planted acres. Therefore, the maximum compensation the producer could
receive is 70 percent of the indemnity paid if all acreage of the crop
had failed.
Maintaining loss records for prevented planting payments will be no
more complex than maintaining records for any unit. It will not be
necessary to deduct the amount of a prevented planting payment from the
amount of a final claim. This calculation is not required by this rule.
No change has been made.
Comment: An insurance agent recommended that the CAT level of
coverage for prevented planting be limited to a payment based upon
basic units, and that the buy up coverage should be eligible for acre
by acre payments. Too much coverage at the CAT level encourages the
producer to ``take a chance'' rather than make an informed decision
based upon sound risk management principles. There is more incentive
for the producer with many acres to elect CAT coverage, particularly if
the payment is made on each acre, the major risk is prevented planting,
and there is no premium impact. The producer who elects additional
coverage should receive additional benefits to compensate for the fact
that the producer no longer has substitute crop provisions.
Response: The argument presupposes that the chance of prevented
planting is the dominate consideration regarding choice of coverage
level. If this is the case, and producers can continue in business over
the long term with the catastrophic level of coverage, the interests of
a majority of producers in the county may be best served by this
choice. No change has been made.
Comment: A reinsured company recommended that, in the prevented
planting provisions, FCIC remove the crop specific nature of the
proposal and consider only those acres that cannot be planted to any
crop as eligible for a prevented planting payment. The commenter also
suggested that FCIC establish a non-disappearing deductible as a
percentage of cropland acreage that must be exceeded to qualify for a
prevented planting payment. Additionally, the commenter suggested that
FCIC determine a per-acre payment amount based on average production
costs in the county.
Response: The recommended changes, which result in a totally
[[Page 65148]]
different concept for prevented planting coverage than in the proposed
rule, could not be accomplished without the benefit of public comment.
FCIC has reviewed the recommended coverage and determined this concept
requires more study to determine if it is acceptable to all interested
parties. No change has been made.
Comment: An insurance service organization commented that crop
insurance industry representatives had developed a total cropland
prevented planting proposal based on acres not planted after the
planting windows for all crops had expired. Industry representatives
believed this proposal was consistent with the intent of the Federal
Agriculture Improvement and Reform Act of 1996 (1996 Act) in that the
coverage did not induce crop specific behavior. The proposal advanced
by FCIC differs materially. Due to the short comment period and the
complexity of the subject, there was inadequate time to develop a full
response, including actuarial analysis and total cost of
administration, to FCIC's proposal. FCIC must provide companies with
the necessary support to defend against challenges to the enforcement
of the ``intent'' and ``proof of intent'' clauses, from the additional
loss adjusting expenses incurred by companies in implementing this
program, and from compliance issues that arise out of confusion
generated by this rule. Further, FCIC has consistently under-estimated
the costs associated with its prevented planting provisions. FCIC has
not addressed the matter of increased costs incurred by private
companies or the potential for private companies to suffer excessive
underwriting losses associated with this rule. Instead, it has only
expressed in its analysis that because of the small expected average
rate impact, any changes in reimbursements to private companies for
delivery or any underwriting gains are also expected to be small. At a
time when the administrative subsidy to private companies for delivery
of the federal program has been reduced by FCIC, there is no room for
and FCIC should not anticipate that private companies will bear the
cost of this proposal.
Response: FCIC reviewed the insurance service organization's
prevented planting proposal prior to publication of this rule, as well
as other proposals. This rule incorporates many elements or concepts of
those proposals. The total cropland concept is inherent to this rule in
that eligible acres are defined by the producer's history. The
provisions contained in this rule simplify program administration and
will reduce administrative costs compared to current prevented planting
provisions (e.g., removal of the substitute crop coverage,
simplification of determining eligible acreage, reduction in the number
of agreements in writing to determine eligible acreage, etc.).
Therefore, reinsured companies should not need additional resources,
nor should they incur additional costs to implement the overall
prevented planting changes contained in this rule.
Comment: An insurance service organization stated that the proposed
rule for prevented planting is built, in part, around the ``intent'' of
the farmer to plant. Industry calls into question the defensibility of
determining ``intent'' from a legal and managerial standpoint. The
commenter provided data published by the National Agricultural
Statistics Services (NASS) showing that the differences between
intended and planted acreage (total cropland) at the state-level are
relatively stable. However, the data demonstrate that crop-specific
differences between intended and planted acres are magnified within a
state. The commenter stated that the differences will be even greater
at the farm level. This indicates the difficulty associated with
monitoring the prevented planting proposal. It will require additional
dollars to deliver this type of program in order to maintain the
integrity of the program.
Response: Without examining the intent of a producer to plant a
crop, producers could collect indemnities even when they did not intend
to plant a crop or claim an intent to plant a higher valued crop in
order to maximize their payments. Therefore, intent must be examined to
protect the integrity of the program. The provisions have been revised
to only require an examination of intent when the producer deviates
from previous planting practices. Therefore, the additional costs
associated with the program should be minimal. No change has been made.
Comment: An insurance service organization stated that the crop
specific nature of the prevented planting provisions contained in this
rule are inconsistent with Freedom to Farm.
Response: The comments presupposes that producers select the crop
to plant based on available insurance coverage. This supposition is
contrary to the intent of the 1996 Act, which is to allow producers to
maximize their profits through the use of available markets and prices.
It is possible that producers may be denied prevented planting coverage
when they genuinely intended to plant the crop. However, to protect the
integrity of the program, such provisions are necessary and reduce the
administrative burdens on the reinsured companies, which would
otherwise have to ascertain the intent of the producers. The rule
authorizes payments for prevented planting in a sound insurance manner.
No change has been made.
Comment: An insurance service organization stated that problems
will be encountered with this rule because of the degree of the over-
lap of the planting windows for the various crops by state. Absent from
this rule is any discussion or analysis of the impact of final planting
dates in relation to the prevented planting coverage. Final planting
dates are crucial in determining eligibility for prevented planting
benefits. If final planting dates are too early, then a producer may be
able to claim prevented planting benefits even though the producer is
still able to plant within standard practice for the crop and location.
This will lead to higher than expected delivery expense compared to the
industry proposal because more claims will be processed.
Response: FCIC will review final planting dates and revise them as
necessary. However, to maximize coverage and a potential for revenue,
most producers will elect to plant some other crop if land becomes
plantable after the final planting date for one crop, and thereby
establish 100 percent of a crop insurance guarantee. No change has been
made.
Comment: An insurance service organization stated that, in certain
situations, previous land use and pre-plant input decisions will narrow
the set of crop choices and substitution among crops. Industry will be
required to manage additional information and data in order to
implement the proposed rule and maintain program integrity. Within the
context of the Paperwork Reduction Act and program simplification,
requiring companies to obtain, verify and retain additional paperwork
and information from producers does not make sense.
Response: FCIC has revised the provisions to narrow the cases in
which reinsured companies must examine evidence of inputs. Since the
examination of inputs was required in previous prevented planting
provisions, this change will reduce the burden on reinsured companies.
No change has been made.
Comment: Reinsured companies and an insurance service organization
commented on the provisions of section 18. They state that there are
legitimate reasons for written agreements to be valid for more than one
year, especially
[[Page 65149]]
if no substantive changes occur from one year to the next. Limiting
written agreements to one year only increases administrative cost,
complexity and opportunity for misunderstanding and error, and flies in
the face of efforts to simplify the program and reduce its
administrative expense. The commenter also stated that written
agreements should be effective for more than one year because there is
already an exception since written agreements to establish units are
continuous (unless the farming operation changes significantly). The
commenters also question how often written agreements are incorporated
into the actuarial documents within one year. Often, policyholders and
reinsured companies must duplicate their efforts to request reissuance
of written agreements because this does not happen. The commenters
state that FCIC's legal counsel objects to the concept of written
agreements, which purportedly allows exceptions for those ``in the
know,'' while others may not be aware the possibility exists. The
commenters asked whether these provisions can be revised to simplify
renewals. The commenters suggested that the policy should require the
insured to pay the cost of inspections necessary to obtain a written
agreement because there are many instances where there is no economic
reason or incentive for a company to pursue such agreements. The
commenters also suggested that sections (a) and (e) be combined since
both deal with deadlines for written agreement requests. They stated
that the response to this comment in prior final rules has been that
the sales closing date is intended to be the deadline with only limited
exceptions. However, 7 of the 13 written agreement types listed in the
1998 Crop Insurance Handbook allow requests at acreage reporting time
and one allows the request after acreage reporting. Of the 6 types with
a sales closing date deadline, 4 are specific cases of a practice or
type not listed in the actuarial materials, which is curious since the
general type of unrated practice, type or variety can be requested at
acreage reporting time. So, the exceptions seem to outnumber the rule.
Many of the situations calling for written agreements do not become
apparent until the acreage report is received. Therefore, the commenter
again suggests this provision might be less misleading if the acreage
reporting date exception noted in (e) were incorporated into (a). The
commenters stated that the provisions in section 18 that specify timing
and content of the FCI-2 written agreement should not be part of the
insurance policy. New insureds would not have this information until it
is too late to request a written agreement. They state that this should
have been reviewed by the insurance agent prior to acceptance of the
application or issuance of the crop insurance policy. The commenters
also stated that some of the written agreement provisions need to be
carefully considered and compared to current procedures and comments to
the Written Agreement proposed rule before the deadlines and annual
status of written agreements are mandated in the Basic Provisions.
Response: Written agreements are intended to change policy terms or
permit insurance in unusual situations. If such practices continue year
to year, they should be incorporated into the policy or Special
Provisions. It is important to keep non-uniform exceptions to a minimum
and to insure that the insured is well aware of the specific terms of
the policy. There are no exceptions to the timing or duration of
written agreements except as provided in section 18. The provisions
have been amended to indicate that written agreements may be submitted
after the sales closing date only if the producer demonstrates that he
or she was physically unable to apply prior to the sales closing date
or in accordance with any regulation which may be promulgated under 7
CFR part 400. FCIC will be more vigilant in incorporating changes to
the policy made by written agreement into the actuarial documents.
FCIC does not believe that a producer should bear the cost
associated with any inspection done for the purposes of a written
agreement. Such costs are a part of servicing the policy and therefore,
are already compensated by the expense reimbursement under the Standard
Reinsurance Agreement.
Section 18 was added to the Basic Provisions so that this
duplication of information could be eliminated from all Crop
Provisions. This information is necessary to provide authority for
policies to be altered where the policy specifically allows the use of
a written agreement.
Comment: Legal counsel for a reinsured company stated that FCIC's
authorization of reinsured companies to use written agreements to alter
the terms of published regulations is illegal and unwise. The commenter
stated that Congress conferred on the FCIC, not on dozens of insurance
companies, the rule-making power to define the terms and conditions for
insurance. Congress did not confer upon the FCIC the authority to
delegate its exclusive rulemaking authority to private contractors. The
commenter also stated that neither the FCIC nor its contractors may
amend rules and regulations in the Federal Register by private written
agreement. The comment also indicated belief that the provisions of
this section are prohibited by the Office of Management and Budget
``Policy Letter on Inherently Governmental Functions,'' 57 FR 45096,
45100, para. 5 (September 30, 1992). The commenter stated that this
section will result in written agreements being used as marketing
gambits for agents and policyholders by inviting them to compete with
lenient agreements that will permit the sale of insurance by a variety
of devices after the sales closing date. Finally, the commenter stated
that section 18 is a trap for reinsured companies. On one hand, the
salutary purposes of the freedom to farm legislation must be
accommodated by allowing insureds to react to market signals. On the
other hand, the timing of those signals may invite moral hazards. Faced
with two mutually exclusive and equally unhappy alternatives, FCIC has
decided to abdicate responsibility. The commenter states that section
18 gives each insurer the choice of rejecting a written agreement and
declining coverage (thereby causing potential for uninsured losses of
the policyholder) or accepting a written agreement and exposing itself
to the hindsight of FCIC's Compliance Division.
Response: FCIC has not delegated its rulemaking authority to the
reinsured companies. In many cases, reinsured companies must still get
FCIC approval before providing insurance by written agreement such as
in cases involving unrated land. Further, even if the reinsured company
has the authority to approve written agreements, criteria published by
FCIC still must be met. Therefore, reinsured companies do not have the
authority to revise or modify the terms of the policy except as
provided by FCIC. All reinsured companies are doing is applying such
criteria to their insureds' situation. The use of written agreements
should not provide any competitive advantage since they must
specifically be authorized in the policy and are available to all
producers of the crop. No change has been made.
Comment: Reinsured companies, an insurance service organization,
and legal counsel for a reinsured company commented on section 20. The
commenters questioned whether using the rules of the American
Arbitration Association (AAA) for resolution of disagreements has been
satisfactory and
[[Page 65150]]
whether utilization of the intermediate ``two appraisers, umpire,
etc.'' has been considered. The commenters also stated that the
language ``for FCIC policies'' can be deleted because, effective with
the 1998 crop year, FSA offices are no longer delivering crop insurance
policies. Section 20(a) states that disagreements on any factual
determination between the insured and the company will be resolved in
accordance with the rules of the AAA. The commenters state that this
must be clarified so that this only means the association's rules will
be followed, not that its personnel will be involved in the arbitration
since they are expensive and are not familiar with crop insurance.
Section 20(b) reads ``No award determined by arbitration can exceed the
amount of liability established or which should have been established
under the policy.'' The commenters stated that this should read
``arbitration or appeal'' since both are mentioned in 20(a). The
commenters stated that section 20 and section 25 are at odds with each
other. Under these two sections, arbitrators have jurisdiction over
questions of fact and the courts have jurisdiction over questions of
law. Moreover, under the policy, both can grant monetary relief.
Bifurcated proceedings are costly and unnecessary. The commenters
stated that the policy should provide for mandatory, binding
arbitration. Such alternative dispute resolution is consistent with
public policy. At most, legal action should be an alternative route,
with insureds able to select one, but not both actions.
Response: In most instances, arbitration by the rules of the AAA
has been a satisfactory and desirable solution to policy disputes. FCIC
has not received any recommendations providing alternatives. The
provisions are clear that only the rules of AAA will be used. Since the
authority for FCIC to deliver policies directly to insureds still
exists, provisions referencing FCIC policies will be retained in case
they are needed in the future. FCIC has revised section 20(b) to
reference ``arbitration or appeal.'' The provisions clearly state that
disagreement on any factual determination will be resolved by
arbitration. However, if arbitration does not result in agreement, FCIC
believes the insured producer should be able to seek resolution through
legal action as authorized in section 25.
Comment: An insurance service organization questioned whether
section 21(b)(3) should specify that ``optional units'' may be combined
rather than just ``units.''
Response: Section 21(b)(3) should refer to optional units and has
been amended accordingly.
Comment: An insurance service organization stated that, under
section 23, the amount the reinsured company is allowed to retain
should be increased from 20 percent to 40 percent due to the increased
costs and paperwork.
Response: 7 CFR Sec. 400.47 limits the amount to 20 percent of the
premium. No change has been made.
Comment: A reinsured company and an insurance service organization
had comments regarding section 24. They stated that the phrase ``For
FCIC Policies'' should be deleted since all MPCI policies will be with
reinsured companies beginning in 1998. They also stated that the
phrase, ``or any part thereof'' after ``per calendar month'' in the
first sentence of section 24(a) under ``For Reinsured Policies,'' that
presently is in the regulations should be retained. The commenters were
concerned that the second sentence states ``interest will start on the
first day of the month following the premium billing date'' but does
not address subsequent months. The commenters also suggested that the
following provisions should be incorporated ``For Reinsured Policies:''
``Any amount illegally or erroneously paid to you or that is owed to us
but is delinquent will be recovered by us through offset by deducting
it from any loan or payment due you under any Act of Congress or
program administered by any United States Government Agency, or by
other collection action. No insurance will be available until the debt
is paid or a collection plan is implemented.''
Response: The 1996 Act still authorizes FCIC to offer insurance
directly to insureds under certain conditions. Therefore, these
provisions must remain. FCIC agrees that reinsured companies should be
able to collect interest for a portion of a month and has revised the
provision. The phrase ``interest will start on the first day of the
month following the premium billing date'' refers to the date interest
begins to accrue. The provision has been clarified. In certain
circumstances, part of a debt owed by an insured under a reinsured
policy may be collected by offset from payments made by other United
States government agencies. However, such recovery is limited to the
amount of the debt that was paid by FCIC.
Comment: An insurance service organization stated that section
25(c) is entirely too vague and may not be given any effect by a court.
It must be rewritten to read ``You may not recover compensatory or
punitive damages or attorney's fees under this contract. Your right to
recover damages of any kind or attorneys' fees is limited or excluded
by Federal regulations.''
Response: Section 25(c) is only intended to notify the insured that
Federal Regulations and other sections of the policy, such as section
26(a), may provide for limitations or exclusions on the recovery of
damages, interest, fees or costs. The provision is clearly stated and
has not been changed.
Comment: An insurance service organization stated that section
26(a) conflicts with section 25(c) unless rewritten as suggested above.
Response: These provisions are complementary, not in conflict.
Comment: Comments were received regarding section 27(a). A
reinsured company questioned whether it is the intent of this provision
that voidance would occur only after the legal system determined fraud.
An insurance service organization stated that this provision should be
rewritten to read ``This policy and all other policies reinsured by the
USDA shall be void in the event you have concealed the fact that you
are ineligible to receive benefits under the Act, or if you are in fact
ineligible (or action is pending which would make you ineligible), even
if you are not aware of it at the time this policy is written. This
policy may also be voidable, in our sole discretion, if you or anyone
assisting you has intentionally concealed or misrepresented any
material fact relating to this or any other policy reinsured by USDA.''
The commenters state that the Standard Reinsurance Agreement voids any
policy with ineligible persons from the time of ineligibility.
Concealment makes no difference. It is unfair to hold the companies to
liability under a policy when FCIC controls eligibility determinations
and will not stand behind the companies. The commenters also state that
the last sentence should read ``voidable'' and not ``void,'' since, in
most cases, a company cannot be placed at risk in determining whether
someone should be banned from what remains an entitlement program.
Furthermore, in many instances, it is better to let the company simply
reduce the amount of the indemnity. Lastly, the commenter suggested
that a sanction short of voiding the policy would be better than
declaring someone ineligible. One example might be to require repayment
of any overpayment to the reinsured company by the policy termination
date with interest and, if not repaid, to allow the company to cancel
the policy. Legal counsel for a reinsured company stated that FCIC
[[Page 65151]]
must understand that no reinsured company may void a policy for fraud
or misrepresentation as provided in section 27 since no reinsured
company can provide the due process that is a requisite for such a
finding. Further, no reinsured company is imbued with the
constitutional or statutory authority to bar a participant from an
entitlement program. The commenter also states that a reinsured company
cannot be held responsible for collection of indemnities that should
not have been paid in a prior year for policies that are retroactively
voided, particularly if the current reinsured company was not the
insurer in the year for which the policy was voided. The commenter
stated that the proposed language creates no duty to the FCIC to engage
in such an effort and, vis-a-vis the insured, does not supplant the
government's role and responsibility.
Response: Reinsured companies cannot bar a participant from the
crop insurance program. The section will be revised to specify that
fraud or misrepresentation may subject the insured to sanctions
authorized in 7 CFR part 400, subpart R. However, when violations such
as concealment, misrepresentation or fraud are found after the
appropriate due process, it is the reinsured company that must deny
insurance or void a policy for an ineligible person because FCIC lacks
privity with the insured. The reinsured company that insured the policy
for the year an indemnity should not have been paid will be responsible
for collecting the overpayment. Since whenever the insured receives an
overpayment it must be repaid, to only require this in the cases of
fraud would not protect the program from such conduct in the future.
Further, cancellation of the policy would only have a prospective
effect and allow insureds to benefit from their misconduct. FCIC must
protect the integrity of the program.
Comment: An insurance service organization recommended that the
provisions of section 27(b) be amended to allow the reinsured company
to retain 40 percent of the premium. The commenter stated that
reinsured companies should not have to incur costs if the insured
commits fraud or misrepresents a material fact.
Response: Since the majority of the costs associated with
determinations of ineligibility will be borne by FCIC, the percentage
in this section should remain 20 percent. No change has been made.
Comment: An insurance service organization questioned whether the
sentence ``We will not be liable for any more than the liability
determined in accordance with your policy that existed before the
transfer occurred'' in section 28 is necessary, since it is stated in
procedure. The commenter also questioned the process that will be used
to determine that the transferee is eligible, as is required by the
sentence that reads ``The transferee must be eligible for crop
insurance.''
Response: These provisions must be included in the insurance
contract since this is a limitation imposed on the insureds and the
procedures are not provided to insureds. The same process used to
determine eligibility of the person originally insured will be used to
determine eligibility of any transferee. No change has been made.
Comment: An insurance service organization questioned the language
in section 29 regarding an assignee's ability to file a claim 15 days
after the 60 day period for filing a claim has expired and no action
will lie against the reinsured company if it does not honor the terms
of the assignment. They questioned whether the assignees will
understand their right to file a claim, but even if it is filed within
the 15 days specified, the company is not required to accept that
claim. The commenter suggested that this language be included on the
assignment form rather than in the policy provisions. The commenter
suggested that the insured should file a claim within 15 days instead
of 60. If 60 days are allowed, reinsured companies will be paying for
losses that should have been discovered long before, instead of when
they are updating the producer's APH for the next year.
Response: A form cannot change the terms of the policy. This
provision is intended to protect an assignee in cases where insureds
may not have timely notified them that a loss has occurred. This
provision is clear that the assignee has the right to file a claim. The
provision will be revised to clarify that reinsured companies cannot
reject the claim unless it is impossible to accurately determine the
amount of the claim. Since claims often are not completed within 15
days after the end of the insurance period (e.g., 15 days after
harvest, which ends the insurance period), it is not practical to
require an insured to submit a claim within 15 days of that time.
Comment: Comments were received regarding section 34. A reinsured
company stated that all references to FSA or FSA farm serial numbers
should be removed. The commenter suggested using a minimum distance to
provide for unit separation. The commenter stated that there is no
reason to rely on FSA information because it is difficult and expensive
to obtain, often is not current, and has an uncertain future. The
commenter recommended that a crop enterprise unit be offered as an
option to the insured (all acreage of a crop insured as one unit). This
would be likely to improve the program's underwriting results and
reduce the number and frequency of losses and, therefore, could be
offered to producers at an attractive premium price. An insurance
service organization stated that section 34(a) must include reference
to the possibility of unit division by written agreement, such as is in
the Coarse Grains Crop Provisions (``if, for each optional unit, you
meet all the conditions of this section or if a written agreement to
such division exists.'').
Response: FSA farm serial numbers continue to be used as a basis of
unit division in certain instances. Therefore, reference to FSA or FSA
farm serial numbers should not be removed. Designated distances may be
considered as a method of unit division in the future, but appropriate
research must be done and procedures developed. Some programs of
insurance currently offer enterprise units. As experience with such
programs becomes available, FCIC may consider expansion of use of the
enterprise unit structure. The reference to written agreements is
included in section 34(b). It is not included in section 34(a) since a
written agreement should not over-ride those provisions.
Comment: A reinsured company stated that the phrase ``independently
verified'' in section 34(a)(3) should be defined or deleted.
Response: FCIC has clarified this provision by indicating that the
records must be acceptable to the reinsured company.
Comment: Comments were received regarding Sec. 457.9. An insurance
service organization questioned why this section was removed from the
policy. Legal counsel for a reinsured company recommended that this
section be made a part of the policy.
Response: No changes to Sec. 457.9 were proposed in this rule as it
is not specifically a part of the policy. FCIC does not believe that it
is necessary to include this contingency in the policy. In the event
that Congress does not appropriate funds, producers will be notified of
cancellation in accordance with the provisions of section 2 of the
Basic Provisions.
Comment: A reinsured company questioned if production from acreage
planted after the final planting date (winter wheat counties only), or
after the late planting period in other counties, will be counted
against the production guarantee if prevented planting is applicable.
[[Page 65152]]
Response: Acreage planted under these circumstances will be
considered late planted under these provisions, and the production
guarantee for it will be combined with the guarantees for acreage that
is timely planted and planted within the late planting period. All
production from the planted acres will then count against the combined
guarantees.
Comment: A reinsured company questioned the definition of ``planted
acreage'' in the Small Grains Crop Provisions and asked if the
production from acreage on which seed was broadcasted but not
incorporated will be counted against the production guarantee,
especially if prevented planting eligibility exists and the seed is
broadcasted after the late planting period.
Response: A provision has been incorporated into section 16(b) of
the Basic Provisions to address this concern.
Comment: A reinsured company recommended providing optional units
for durum wheat in counties with only a spring final planting date.
Response: The suggested change would be substantive and not subject
to this rulemaking. FCIC will consider such a change in the future.
Comment: A reinsured company suggested adding the phrase ``A
replant payment may be made in accordance with section 9'' to section
7(a)(1)(ii) of the Small Grains Crop Provisions.
Response: Section 7 of the Small Grains Crop Provisions contains
provisions relative to insurability of acreage. This section is not
intended to authorize a replant payment. Since section 9 of the Small
Grains Crop Provisions specifies the conditions under which replanting
payments are available, it is not necessary to duplicate the provisions
of section 9 in section 7. No change has been made.
Comment: An insurance service organization recommended that the
Small Grains Crop Provisions be amended to allow the tenant to receive
100 percent of the replanting costs as the Coarse Grains Crop
Provisions do.
Response: FCIC has reevaluated this provision due to comments
received on other regulations and determined that the provision is not
equitable to all insureds. Specifically, if a landlord and tenant are
insured with different companies, the provisions do not apply. Crop
Provisions containing these terms will be amended to eliminate them. No
change has been made.
Comment: A reinsured company questioned if cotton and ELS cotton
coverage should continue to be extended while modules are left in the
field. They suggested that this coverage could possibly be offered as
an option for additional premium.
Response: Loss adjusters, in most situations, cannot distinguish
damage that occurred in the field from that occurring in the module. In
addition, the weight of lint cotton, its grade, and quality adjustment
are not determined until the cotton is ginned. Producers might be
encouraged to delay harvest to maintain coverage if cotton in modules
is not covered. Cotton in a module is less susceptible to weather
damage than cotton in the field. No change has been made.
Comment: A regional and a national commodity group stated that
there are serious inequities in insurance coverage among crops, such as
the lack of replanting coverage for cotton and the 25 percent
deductible for cotton quality losses. Replanting provisions should be a
basic component of every cotton crop insurance policy. The commenter
stated that, from an agronomic perspective, cotton producers have
replanting experiences that are comparable to those of other crops.
Cottonseed now has better vigor, is pre-treated two or three ways, and
is adapted for different growing regions and climatic conditions.
The national commodity group stated that they have been unable to
find any documentation of the rationale and date of imposition of the
25 percent deductible. The inequity between a corn or wheat producer
and a cotton producer exists for no apparent economic or policy reason.
Response: FCIC is reviewing replanting coverage for cotton and the
quality provisions. Any proposed changes will be published in the
Federal Register as changes to the Cotton Crop Provisions and will be
made available for public comment. No change will be made at this time.
Comment: Comments were received regarding the premium rates for
cotton. A national commodity group stated that the structure for cotton
needs to be revised to account for adoption of new production
technology such as Bt cotton seed, Boll Weevil Eradification,
irrigation, and other advances. The commenter stated that the risks
associated with growing cotton have decreased and so should premiums if
new cotton customers are expected. A regional commodity group stated
that they are aware that funding shortfalls do exist and they suggested
that all possible alternatives be exhausted before a decision to
increase premium levels is made. They state that increasing premiums
would help alleviate the funding problem short-term. However, such an
action would move FCIC away from what should be its ultimate goal of
increasing the relative value of FCIC products and increasing producer
participation in the program. For many cotton producers, crop insurance
simply costs too much in relation to the level of insurance protection
it provides.
Response: Premium rates on all crops are based in part on the loss
history of the crop. Crop improvements and practices that result in
reduced losses are also considered. All rates are reviewed prior to the
actuarial filing dates and are changed as deemed appropriate.
Comment: A reinsured company questioned whether the wording in
section 2 of the Sugar Beet Crop Provisions requires optional units to
be established by processor contract. If so, the commenter is strongly
opposed. The commenter stated that this issue has been addressed at an
earlier date with regard to the Processing Tomato Crop Provisions, and
the supporting reasons are similar for sugar beets.
Response: Section 2 of the Sugar Beet Crop Provisions does not
require optional units by processor contract. Section 2 simply states
that a producer is not eligible for optional units unless the producer
has a processor contract that contracts for production from a specified
number of acres. Once eligible, optional units for sugar beets may be
established only by section, section equivalent or FSA farm serial
number; or by irrigated and non-irrigated acreage.
Comment: An insurance service organization recommended changing the
Sugar Beet Crop Provisions to read ``a contract must be on file.'' The
commenter also recommended a change to state that the acres stated in
the contract do not limit the acres the producer can insure. It is a
common practice to overplant acres and the sugar processors do accept
all acres planted. The commenter suggested that the following sentence
be added ``We will not cover any loss from the inability of the sugar
factory to accept production from overage acres.'' In this situation,
contract acres would be used. The commenter also suggested eliminating
contracts altogether.
Response: Provisions that would be impacted by the comment were not
published in the proposed rule and made available for public comment.
No changes can be made at this time. FCIC will consider this proposal
when the crop provision is reviewed.
Comment: A reinsured company suggested adding the phrase ``A
replant payment may be made in accordance
[[Page 65153]]
with section 9'' to section 6 of the Coarse Grains Crop Provisions.
Response: Section 6 of the Coarse Grains Crop Provisions proposed
rule contains provisions relative to insurability of acreage. This
section is not intended to authorize a replant payment. Since section 9
of the Coarse Grains Crop Provisions specifies that replanting payments
are available, it is not necessary to duplicate that provision in
section 6. No change has been made.
Comment: A reinsured company questioned whether the language in
section 9(a) of the Coarse Grains Crop Provisions provides a replanting
payment to both a landlord and tenant having different coverage levels.
If the replanting is required for one, both should be entitled to a
replanting payment, providing they both incur replanting expense.
Response: There is nothing in section 9(a) of the Coarse Grains
Crop Provisions that precludes a landlord and tenant having different
coverage levels from being eligible for a replanting payment. The
tenant and landlord may each be eligible as long as they both incur
replanting expense; the crop is damaged by an insurable cause of loss
to the extent that the remaining stand will not produce at least 90
percent of the respective production guarantees for the acreage; and it
is practical to replant. If a tenant or landlord elects higher
coverage, greater benefits are paid. However, it is possible under
these provisions for one person sharing in the crop to be eligible for
a replanting payment while the other person may be ineligible for such
a payment. For example, assume the acreage had an APH yield of 80
bushels per acre. If the landlord had a 75 percent coverage level with
a production guarantee of 60 bushels per acre (80 x .75), the
landlord would be eligible for a replanting payment if the remaining
stand was appraised at less than 54 bushels per acre (60 x .90). If
the tenant had a 50 percent coverage level with a production guarantee
of 40 bushels per acre (80 x .50), the tenant would be entitled to a
replanting payment if the remaining stand was appraised at less than 36
bushels per acre (40 x .90). In this example, if the remaining stand
appraised at 40 bushels per acre, the landlord would be eligible for a
replant payment but not the tenant.
Comment: Some reinsured companies questioned the elimination of
optional units from the Forage Production Crop Provisions and whether
the year of implementation is 1999 or 1998.
Response: Optional units are currently not available for forage
production. Since the optional unit provisions are being added to the
Basic Provisions, those provisions must be made ineffective to maintain
the current forage production unit structure. These provisions are not
effective until the 1999 crop year since the contract change date for
1998 has passed.
Comment: A reinsured company questioned whether further changes
would be made to the Raisin Crop Provisions for the 1998 crop year.
Response: FCIC does not plan further changes to the Raisin Crop
Provisions for the 1998 crop year.
Comment: An insurance service organization suggested allowing units
for storage and non-storage onions only, and not allow additional units
by type. Additional units by type will expose insurers to unnecessary
liability and increase premiums.
Response: Under the previous Onion Endorsement, units were allowed
by type, i.e., red, yellow, or white onions, in lieu of the traditional
units by section or farm serial number. This unit division structure
has worked well for onions and is consistent with onion production
practices. No change has been made.
Comment: A reinsured company stated that both irrigated and non-
irrigated grape vineyards exist in California, and that optional units
by these practices should be available. This situation also exists for
walnuts and possibly other perennial crops.
Response: Irrigated and non-irrigated practices do exist for
several perennial crops in California. However, since both practices
rarely exist on the same farm, little or no benefit would be derived by
allowing separate optional units for these practices. No changes have
been made.
Comment: A reinsured company suggested adding the phrase ``an
adequate rate of seed for the acreage to produce an acceptable stand''
to the definition of planted acreage in the Forage Seeding Crop
Provisions. Another reinsured company questioned if the implementation
year should be 1998 instead of 1999.
Response: FCIC has revised the provisions to clarify that an
adequate amount of seed must be planted. The provisions will not be
made effective until the 1999 crop year.
Comment: A reinsured company questioned whether changes were
necessary for the proposed rules for hybrid seed corn, green peas and
sweet corn provisions that have not been finalized.
Response: Those Crop Provisions, such as table grapes, prunes,
etc., that were finalized after publication of the proposed rule will
be incorporated into this final rule. Since there were no substantive
changes since the publication of those Crop Provisions, additional
comments are not necessary.
In addition to the changes described above and minor editorial
changes, FCIC has made the following changes to the Basic Provisions
and the Crop Provisions.
1. Section 1--Amended the definition of ``abandon'' for
clarification. Added a definition for ``approved yield'' so this
definition can be deleted from the Crop Provisions. Clarified the
definition of ``application'' to indicate that insurance will not be
available to a producer who is ineligible under any Federal regulation.
Amended the definition of ``replanting'' to indicate that seed must be
replaced with the expectation of producing at least the yield used to
determine the production guarantee. Also, added a definition for the
term ``substantial beneficial interest'' for clarification.
2. Section 3(d)(2)--Clarified the provision to indicate that the
production guarantee may be revised if the producer fails to accurately
report acreage or other material information.
3. Sections 6(a)(1) and (2)--Deleted the references to ``fall'' and
``spring.'' These terms are not necessary since actual dates are
specified.
4. Section 6(g)(1)--Amended the provisions to specify that if the
information reported by the insured results in a lower liability than
the actual liability the insurance provider determines, the production
guarantee or the amount of insurance on the unit will be reduced to an
amount that is consistent with the reported information.
5. Section 6(g)(2)--Amended the provisions to specify that if the
information reported by the insured results in a higher liability than
the actual liability the insurance provider determines, the information
contained in the acreage report will be revised to be consistent with
the correct information.
6. Section 8(a)--Amended the provisions to specify that the insured
crop may also be specified in the Special Provisions.
7. Section 9(c)--Clarified that these provisions are applicable
regardless of the provisions in section 8(b)(1), which specify that no
insurance will be provided unless a premium rate is provided for the
specific practice.
8. Sections 10(c) and (d)--Reorganized and clarified the provisions
so that share arrangements and cash arrangements are contained in
separate sections.
[[Page 65154]]
9. Section 13(b)(2)--Clarified that a replanting payment will not
be made for acreage planted prior to the earliest planting date
established by the Special Provisions.
10. Section 14(a) (Our Duties)--Amended the provisions to indicate
that the reinsured company will pay a loss within 30 days after
completion of arbitration or appeal proceedings.
11. Section 17(a) was amended by replacing ``crop provisions'' with
``policy provisions.'' This change allows both the crop provisions and
the Special Provisions to limit prevented planting coverage.
12. Clarified section 17(b) to indicate that additional levels of
prevented planting coverage are not available for Catastrophic Risk
Protection coverage. Also revised this section to indicate that elected
or assigned prevented planting coverage levels may not be increased if
a cause of loss that will or could prevent planting is evident prior to
the time the producer wishes to change the prevented planting coverage
level.
13. Changed the title of section 21 to indicate that provisions
regarding access to records are included in the section.
14. Amended the introductory text for the Cotton Crop Provisions
and the Extra Long Staple Cotton Crop Provisions to make the provisions
effective for the 1998 crop year only.
15. Added the definition of ``sales closing date'' in the Small
Grains Crop Provisions and the Forage Seeding Crop Provisions for
clarification.
16. Amended the definition of ``planted acreage'' in the Fresh
Market Sweet Corn, Fresh Market Tomato (dollar plan), and the Fresh
Market Pepper Crop Provisions to include a reference to separate
planting periods.
17. Changed the effective dates of the Safflower Crop Provisions
and the Onion Crop Provisions to the 1998 and succeeding crop years for
counties with a December 31 contract change date.
18. Incorporated sections 457.133 (Prune Crop Insurance
Provisions); Sec. 457.137 (Green Pea Crop Insurance Provisions);
Sec. 457.149 (Table Grape Crop Insurance Provisions); Sec. 457.155
(Processing Bean Crop Insurance Provisions); and Sec. 457.160
(Processing Tomato Crop Insurance Provisions) since these Crop
Provisions were finalized after this rule was proposed as follows:
(a) Deleted definitions that are added to the Basic Provisions by
this rule. This allows FCIC to remove duplication of provisions from
the Crop Provisions.
(b) Modified section 2 because the requirements for optional units
have now been incorporated into section 34 of the Basic Provisions.
(c) Deleted, modified, or added late and prevented planting
provisions since these provisions are now included in sections 16 and
17 of the Basic Provisions.
(d) Deleted the written agreement provisions because they are now
incorporated into section 18 of the Basic Provisions.
Good cause is shown to make this rule effective upon filing for
public inspection at the Office of the Federal Register. This rule
provides prevented planting coverage when applicable, for all crops
under the Basic Provisions. This rule must be effective prior to the
contract change dates of the crops for which these revised prevented
planting provisions are effective. Therefore, public interest requires
the agency to act immediately to make these provisions available for as
many crops as possible for the 1998 crop year.
List of Subjects in 7 CFR Part 457
Almond; Arizona-California citrus; Coarse grains; Cotton;
Cranberry; Dry bean; Extra long staple cotton; Fig; Florida citrus
fruit; Forage production; Forage seeding; Fresh market pepper; Fresh
market sweet corn; Fresh market tomato (Dollar plan); Fresh market
tomato (Guaranteed production plan); Grape; Green pea; Macadamia Nut;
Macadamia Tree; Nursery; Onion; Peach; Pear; Plum; Processing bean;
Processing tomato; Prune; Raisin; Rice; Safflower; Small grains; Sugar
beet; Sugarcane; Sunflower seed; Table grape; Texas citrus tree; Texas
citrus fruit; and Walnut.
Final Rule
Accordingly, as set forth in the preamble, the Federal Crop
Insurance Corporation hereby amends 7 CFR part 457 as follows:
PART 457--COMMON CROP INSURANCE REGULATIONS; REGULATIONS FOR THE
1998 AND SUBSEQUENT CONTRACT YEARS
1. The authority citation for 7 CFR part 457 continues to read as
follows:
Authority: 7 U.S.C. 1506(l), 1506(p).
2. Section 457.2 is amended by removing paragraph (e),
redesignating paragraphs (f), (g), and (h) as paragraphs (e), (f), and
(g) respectively and revising paragraphs (b), (c), and (d) to read as
follows:
Sec. 457.2 Availability of federal crop insurance.
* * * * *
(b) The insurance is offered through companies reinsured by the
Federal Crop Insurance Corporation (FCIC) that offer contracts
containing the same terms and conditions as the contract set out in
this part. These contracts are clearly identified as being reinsured by
FCIC. FCIC may offer the contract for the catastrophic level of
coverage contained in this part and part 402 directly to the insured
through local offices of the Department of Agriculture only if the
Secretary determines that the availability of local agents is not
adequate. Those contracts are specifically identified as being offered
by FCIC.
(c) Except as specified in the Crop Provisions, the Catastrophic
Risk Protection Endorsement (part 402 of this chapter) and part 400,
subpart T of this chapter, no person may have in force more than one
contract on the same crop for the same crop year in the same county.
(d) Except as specified in paragraph (c) of this section, if a
person has more than one contract under the Act that provides coverage
for the same loss on the same crop for the same crop year in the same
county, all such contracts shall be voided for that crop year and the
person will be liable for the premium on all contracts, unless the
person can show to the satisfaction of the Corporation that the
multiple contracts of insurance were inadvertent and without the fault
of the person. If the multiple contracts of insurance are shown to be
inadvertent and without the fault of the person, the contract with the
earliest signature date on the application will be valid and all other
contracts on that crop in the county for that crop year will be
canceled. No liability for indemnity or premium will attach to the
contracts so canceled.
* * * * *
3. Revise Sec. 457.4 to read as follows:
Sec. 457.4 OMB control numbers.
The information collection requirements contained in these
regulations have been approved by the Office of Management and Budget
(OMB) under the provisions of 44 U.S.C. chapter 35 and have been
assigned OMB number 0563-0053.
4. Section 457.8 paragraph (b) is revised to read as follows:
Sec. 457.8 The application and policy.
(a) * * *
(b) FCIC or the reinsured company may reject or discontinue the
acceptance of applications in any county or of any individual
application upon FCIC's determination that the insurance risk is
excessive.
* * * * *
5. Section 457.8 is amended by revising the policy to read as
follows:
[[Page 65155]]
DEPARTMENT OF AGRICULTURE
FEDERAL CROP INSURANCE CORPORATION
[OR POLICY ISSUING COMPANY NAME]
Common Crop Insurance Policy
(This is a continuous policy. Refer to section 2.)
FCIC policies
This is an insurance policy issued by the Federal Crop Insurance
Corporation (FCIC), a United States government agency. The
provisions of the policy are published in the Federal Register and
in chapter IV of title 7 of the Code of Federal Regulations (CFR)
under the Federal Register Act (44 U.S.C. 1501 et seq.), and may not
be waived or varied in any way by the crop insurance agent or any
other agent or employee of FCIC.
Throughout this policy, ``you'' and ``your'' refer to the named
insured shown on the accepted application and ``we,'' ``us,'' and
``our'' refer to the Federal Crop Insurance Corporation. Unless the
context indicates otherwise, use of the plural form of a word
includes the singular and use of the singular form of the word
includes the plural.
Reinsured Policies
This insurance policy is reinsured by the Federal Crop Insurance
Corporation (FCIC) under the provisions of the Federal Crop
Insurance Act, as amended (7 U.S.C. 1501 et seq.) (Act). All
provisions of the policy and rights and responsibilities of the
parties are specifically subject to the Act. The provisions of the
policy are published in the Federal Register and codified in chapter
IV of title 7 of the Code of Federal Regulations (CFR) under the
Federal Register Act (44 U.S.C. 1501 et seq.), and may not be waived
or varied in any way by the crop insurance agent or any other agent
or employee of FCIC or the company. In the event we cannot pay your
loss, your claim will be settled in accordance with the provisions
of this policy and paid by FCIC. No state guarantee fund will be
liable for your loss.
Throughout this policy, ``you'' and ``your'' refer to the named
insured shown on the accepted application and ``we,'' ``us,'' and
``our'' refer to the insurance company providing insurance. Unless
the context indicates otherwise, use of the plural form of a word
includes the singular and use of the singular form of the word
includes the plural.
Agreement to insure. In return for the payment of the premium,
and subject to all of the provisions of this policy, we agree with
you to provide the insurance as stated in this policy. If a conflict
exists among the policy provisions, the order of priority is as
follows: (1) the Catastrophic Risk Protection Endorsement, as
applicable; (2) the Special Provisions; (3) the Crop Provisions; and
(4) these Basic Provisions (Sec. 457.8), with (1) controlling (2),
etc.
TERMS AND CONDITIONS
Basic Provisions
1. Definitions
Abandon. Failure to continue to care for the crop, providing
care so insignificant as to provide no benefit to the crop, or
failure to harvest in a timely manner, unless an insured cause of
loss prevents you from properly caring for or harvesting the crop or
causes damage to it to the extent that most producers of the crop on
acreage with similar characteristics in the area would not normally
further care for or harvest it.
Acreage report. A report required by paragraph 6 of these Basic
Provisions that contains, in addition to other required information,
your report of your share of all acreage of an insured crop in the
county, whether insurable or not insurable.
Acreage reporting date. The date contained in the Special
Provisions or as provided in section 6 by which you are required to
submit your acreage report.
Act. The Federal Crop Insurance Act (7 U.S.C. 1501 et seq.).
Actuarial documents. The material for the crop year which is
available for public inspection in your agent's office, and which
shows the amounts of insurance or production guarantees, coverage
levels, premium rates, practices, insurable acreage, and other
related information regarding crop insurance in the county.
Agricultural commodity. All insurable crops and other fruit,
vegetable or nut crops produced for human or animal consumption.
Another use, notice of. The written notice required when you
wish to put acreage to another use (see section 14).
Application. The form required to be completed by you and
accepted by us before insurance coverage will commence. This form
must be completed and filed in your agent's office not later than
the sales closing date of the initial insurance year for each crop
for which insurance coverage is requested. If cancellation or
termination of insurance coverage occurs for any reason, including
but not limited to indebtedness, suspension, debarment,
disqualification, cancellation by you or us or violation of the
controlled substance provisions of the Food Security Act of 1985, a
new application must be filed for the crop. Insurance coverage will
not be provided if you are ineligible under the contract or under
any Federal statute or regulation.
Approved yield. The yield determined in accordance with 7 CFR
part 400, subpart (G).
Assignment of indemnity. A transfer of policy rights, made on
our form, and effective when approved by us. It is the arrangement
whereby you assign your right to an indemnity payment to any party
of your choice for the crop year.
Basic unit. All insurable acreage of the insured crop in the
county on the date coverage begins for the crop year:
(1) In which you have 100 percent crop share; or
(2) Which is owned by one person and operated by another person
on a share basis. (Example: If, in addition to the land you own, you
rent land from five landlords, three on a crop share basis and two
on a cash basis, you would be entitled to four units; one for each
crop share lease and one that combines the two cash leases and the
land you own.) Land which would otherwise be one unit may, in
certain instances, be divided according to guidelines contained in
section 34 of these Basic Provisions and in the applicable Crop
Provisions.
Cancellation date. The calendar date specified in the Crop
Provisions on which coverage for the crop will automatically renew
unless canceled in writing by either you or us or terminated in
accordance with the policy terms.
Claim for indemnity. A claim made on our form by you for damage
or loss to an insured crop and submitted to us not later than 60
days after the end of the insurance period (see section 14).
Consent. Approval in writing by us allowing you to take a
specific action.
Contract. (See ``policy'').
Contract change date. The calendar date by which we make any
policy changes available for inspection in the agent's office (see
section 4).
County. Any county, parish, or other political subdivision of a
state shown on your accepted application, including acreage in a
field that extends into an adjoining county if the county boundary
is not readily discernible.
Coverage. The insurance provided by this policy, against insured
loss of production or value, by unit as shown on your summary of
coverage.
Coverage begins, date. The calendar date insurance begins on the
insured crop, as contained in the Crop Provisions, or the date
planting begins on the unit (see section 11 of these Basic
Provisions for specific provisions relating to prevented planting).
Crop Provisions. The part of the policy that contains the
specific provisions of insurance for each insured crop.
Crop year. The period within which the insured crop is normally
grown and designated by the calendar year in which the insured crop
is normally harvested.
Damage. Injury, deterioration, or loss of production of the
insured crop due to insured or uninsured causes.
Damage, notice of. A written notice required to be filed in your
agent's office whenever you initially discover the insured crop has
been damaged to the extent that a loss is probable (see section 14).
Days. Calendar days.
Deductible. The amount determined by subtracting the coverage
level percentage you choose from 100 percent. For example, if you
elected a 65 percent coverage level, your deductible would be 35
percent (100%-65% = 35%).
Delinquent account. Any account you have with us in which
premiums and interest on those premiums is not paid by the
termination date specified in the Crop Provisions, or any other
amounts due us, such as indemnities found not to have been earned,
which are not paid within 30 days of our mailing or other delivery
of notification to you of the amount due.
Earliest planting date. The earliest date established for
planting the insured crop (see Special Provisions and section 13).
End of insurance period, date of. The date upon which your crop
insurance coverage ceases for the crop year (see Crop Provisions and
section 11).
Field. All acreage of tillable land within a natural or
artificial boundary (e.g., roads, waterways, fences, etc.).
Final planting date. The date contained in the Special
Provisions for the insured crop by
[[Page 65156]]
which the crop must initially be planted in order to be insured for
the full production guarantee or amount of insurance per acre.
FSA. The Farm Service Agency, an agency of the USDA, or a
successor agency.
FSA farm serial number. The number assigned to the farm by the
local FSA office.
Good farming practices. The cultural practices generally in use
in the county for the crop to make normal progress toward maturity
and produce at least the yield used to determine the production
guarantee or amount of insurance, and are those recognized by the
Cooperative State Research, Education, and Extension Service as
compatible with agronomic and weather conditions in the county.
Insured. The named person as shown on the application accepted
by us. This term does not extend to any other person having a share
or interest in the crop (for example, a partnership, landlord, or
any other person) unless specifically indicated on the accepted
application.
Insured crop. The crop for which coverage is available under
these Basic Provisions and the applicable Crop Provisions as shown
on the application accepted by us.
Interplanted. Acreage on which two or more crops are planted in
a manner that does not permit separate agronomic maintenance or
harvest of the insured crop.
Irrigated practice. A method of producing a crop by which water
is artificially applied during the growing season by appropriate
systems and at the proper times, with the intention of providing the
quantity of water needed to produce at least the yield used to
establish the irrigated production guarantee or amount of insurance
on the irrigated acreage planted to the insured crop.
Late planted. Acreage initially planted to the insured crop
after the final planting date.
Late planting period. The period that begins the day after the
final planting date for the insured crop and ends 25 days after the
final planting date, unless otherwise specified in the Crop
Provisions or Special Provisions.
Loss, notice of. The notice required to be given by you not
later than 72 hours after certain occurrences or 15 days after the
end of the insurance period, whichever is earlier (see section 14).
Negligence. The failure to use such care as a reasonably prudent
and careful person would use under similar circumstances.
Non-contiguous. Any two or more tracts of land whose boundaries
do not touch at any point, except that land separated only by a
public or private right-of-way, waterway, or an irrigation canal
will be considered as contiguous.
Palmer Drought Severity Index. A meteorological index calculated
by the National Weather Service to indicate prolonged and abnormal
moisture deficiency or excess.
Person. An individual, partnership, association, corporation,
estate, trust, or other legal entity, and wherever applicable, a
State or a political subdivision or agency of a State. ``Person''
does not include the United States Government or any agency thereof.
Planted acreage. Land in which seed, plants, or trees have been
placed, appropriate for the insured crop and planting method, at the
correct depth, into a seedbed that has been properly prepared for
the planting method and production practice.
Policy. The agreement between you and us consisting of the
accepted application, these Basic Provisions, the Crop Provisions,
the Special Provisions, other applicable endorsements or options,
the actuarial documents for the insured crop, the Catastrophic Risk
Protection Endorsement, if applicable, and the applicable
regulations published in 7 CFR chapter IV.
Practical to replant. Our determination, after loss or damage to
the insured crop, based on all factors, including, but not limited
to moisture availability, marketing window, condition of the field,
and time to crop maturity, that replanting the insured crop will
allow the crop to attain maturity prior to the calendar date for the
end of the insurance period. It will not be considered practical to
replant after the end of the late planting period, or the final
planting date if no late planting period is applicable, unless
replanting is generally occurring in the area. Unavailability of
seed or plants will not be considered a valid reason for failure to
replant.
Premium billing date. The earliest date upon which you will be
billed for insurance coverage based on your acreage report. The
premium billing date is contained in the Special Provisions.
Prevented planting. Failure to plant the insured crop with
proper equipment by the final planting date designated in the
Special Provisions for the insured crop in the county or by the end
of the late planting period. You must have been prevented from
planting the insured crop due to an insured cause of loss that also
prevented most producers from planting on acreage with similar
characteristics in the surrounding area.
Price election. The amounts contained in the Special Provisions
or an addendum thereto, to be used for computing the value per
pound, bushel, ton, carton, or other applicable unit of measure for
the purposes of determining premium and indemnity under the policy.
Production guarantee (per acre). The number of pounds, bushels,
tons, cartons, or other applicable units of measure determined by
multiplying the approved yield per acre by the coverage level
percentage you elect.
Production report. A written record showing your annual
production and used by us to determine your yield for insurance
purposes (see section 3). The report contains yield information for
previous years, including planted acreage and harvested production.
This report must be supported by written verifiable records from a
warehouseman or buyer of the insured crop or by measurement of farm-
stored production, or by other records of production approved by us
on an individual case basis.
Replanting. Performing the cultural practices necessary to
prepare the land to replace the seed or plants of the damaged or
destroyed insured crop and then replacing the seed or plants of the
same crop in the insured acreage with the expectation of producing
at least the yield used to determine the production guarantee.
Representative sample. Portions of the insured crop that must
remain in the field for examination and review by our loss adjuster
when making a crop appraisal, as specified in the Crop Provisions.
In certain instances we may allow you to harvest the crop and
require only that samples of the crop residue be left in the field.
Sales closing date. A date contained in the Special Provisions
by which an application must be filed. The last date by which you
may change your crop insurance coverage for a crop year.
Section. (for the purposes of unit structure) A unit of measure
under a rectangular survey system describing a tract of land usually
one mile square and usually containing approximately 640 acres.
Share. Your percentage of interest in the insured crop as an
owner, operator, or tenant at the time insurance attaches. However,
only for the purpose of determining the amount of indemnity, your
share will not exceed your share at the earlier of the time of loss
or the beginning of harvest.
Special Provisions. The part of the policy that contains
specific provisions of insurance for each insured crop that may vary
by geographic area.
State. The state shown on your accepted application.
Substantial beneficial interest. An interest held by any person
of at least 10 percent in the applicant or insured.
Summary of coverage. Our statement to you, based upon your
acreage report, specifying the insured crop and the guarantee or
amount of insurance coverage provided by unit.
Tenant. A person who rents land from another person for a share
of the crop or a share of the proceeds of the crop (see the
definition of ``share'' above).
Termination date. The calendar date contained in the Crop
Provisions upon which your insurance ceases to be in effect because
of nonpayment of any amount due us under the policy, including
premium.
Timely planted. Planted on or before the final planting date
designated in the Special Provisions for the insured crop in the
county.
USDA. United States Department of Agriculture.
Void. When the policy is considered not to have existed for a
crop year as a result of concealment, fraud or misrepresentation
(see section 27).
Written agreement. A document that alters designated terms of a
policy as authorized under these Basic Provisions, the Crop
Provisions, or the Special Provisions for the insured crop (see
section 18).
2. Life of Policy, Cancellation, and Termination
(a) This is a continuous policy and will remain in effect for
each crop year following the acceptance of the original application
until canceled by you in accordance with the terms of the policy or
terminated by operation of the terms of the policy or by us.
(b) Your application for insurance must contain all the
information required by us to insure the crop. Applications that do
not contain all social security numbers and employer identification
numbers, as applicable, (except as stated herein) coverage
[[Page 65157]]
level, price election, crop, type, variety, or class, plan of
insurance, and any other material information required to insure the
crop, are not acceptable. If a person with a substantial beneficial
interest in the insured crop refuses to provide a social security
number or employer identification number and that person is:
(1) Not on the non-standard classification system list, the
amount of coverage available under the policy will be reduced
proportionately by that person's share of the crop; or
(2) On the non-standard classification system list, the
insurance will not be available to that person and any entity in
which the person has a substantial beneficial interest.
(c) After acceptance of the application, you may not cancel this
policy for the initial crop year. Thereafter, the policy will
continue in force for each succeeding crop year unless canceled or
terminated as provided below.
(d) Either you or we may cancel this policy after the initial
crop year by providing written notice to the other on or before the
cancellation date shown in the Crop Provisions.
(e) If any amount due, including premium, is not paid on or
before the termination date for the crop on which an amount is due:
(1) For a policy with the unpaid premium, the policy will
terminate effective on the termination date immediately subsequent
to the billing date for the crop year;
(2) For a policy with other amounts due, the policy will
terminate effective on the termination date immediately after the
account becomes delinquent;
(3) Ineligibility will be effective as of the date that the
policy was terminated for the crop for which you failed to pay an
amount owed and for all other insured crops with coincidental
termination dates;
(4) All other policies that are issued by us under the authority
of the Act will also terminate as of the next termination date
contained in the applicable policy;
(5) If you are ineligible, you may not obtain any crop insurance
under the Act until payment is made, you execute an agreement to
repay the debt and make the payments in accordance with the
agreement, or you file a petition to have your debts discharged in
bankruptcy;
(6) If you execute an agreement to repay the debt and fail to
timely make any scheduled payment, you will be ineligible for crop
insurance effective on the date the payment was due until the debt
is paid in full or you file a petition to discharge the debt in
bankruptcy and subsequently obtain discharge of the amounts due.
Dismissal of the bankruptcy petition before discharge will void all
policies in effect retroactive to the date you were originally
determined ineligible to participate;
(7) Once the policy is terminated, the policy cannot be
reinstated for the current crop year unless the termination was in
error;
(8) After you again become eligible for crop insurance, if you
want to obtain coverage for your crops, you must reapply on or
before the sales closing date for the crop (Since applications for
crop insurance cannot be accepted after the sales closing date, if
you make any payment after the sales closing date, you cannot apply
for insurance until the next crop year); and
(9) If we deduct the amount due us from an indemnity, the date
of payment for the purpose of this section will be the date you sign
the properly executed claim for indemnity.
(10) For example, if crop A, with a termination date of October
31, 1997, and crop B, with a termination date of March 15, 1998, are
insured and you do not pay the premium for crop A by the termination
date, you are ineligible for crop insurance as of October 31, 1997,
and crop A's policy is terminated on that date. Crop B's policy is
terminated as of March 15, 1998. If you enter an agreement to repay
the debt on April 25, 1998, you can apply for insurance for crop A
by the October 31, 1998, sales closing date and crop B by the March
15, 1999, sales closing date. If you fail to make a scheduled
payment on November 1, 1998, you will be ineligible for crop
insurance effective on November 1, 1998, and you will not be
eligible unless the debt is paid in full or you file a petition to
have the debt discharged in bankruptcy and subsequently receive
discharge.
(f) If you die, disappear, or are judicially declared
incompetent, or if you are an entity other than an individual and
such entity is dissolved, the policy will terminate as of the date
of death, judicial declaration, or dissolution. If such event occurs
after coverage begins for any crop year, the policy will continue in
force through the crop year and terminate at the end of the
insurance period and any indemnity will be paid to the person or
persons determined to be beneficially entitled to the indemnity. The
premium will be deducted from the indemnity or collected from the
estate. Death of a partner in a partnership will dissolve the
partnership unless the partnership agreement provides otherwise. If
two or more persons having a joint interest are insured jointly,
death of one of the persons will dissolve the joint entity.
(g) We may terminate your policy if no premium is earned for 3
consecutive years.
(h) The cancellation and termination dates are contained in the
Crop Provisions.
3. Insurance Guarantees, Coverage Levels, and Prices for Determining
Indemnities
(a) For each crop year, the production guarantee or amount of
insurance, coverage level, and price at which an indemnity will be
determined for each unit will be those used to calculate your
summary of coverage. The information necessary to determine those
factors will be contained in the Special Provisions or in the
actuarial documents.
(b) You may select only one coverage level from among those
offered by us for each insured crop. You may change the coverage
level, price election, or amount of insurance for the following crop
year by giving written notice to us not later than the sales closing
date for the insured crop. Since the price election or amount of
insurance may change each year, if you do not select a new price
election or amount of insurance on or before the sales closing date,
we will assign a price election or amount of insurance which bears
the same relationship to the price election schedule as the price
election or amount of insurance that was in effect for the preceding
year. (For example: If you selected 100 percent of the market price
for the previous crop year and you do not select a new price
election for the current crop year, we will assign 100 percent of
the market price for the current crop year.)
(c) You must report production to us for the previous crop year
by the earlier of the acreage reporting date or 45 days after the
cancellation date unless otherwise stated in the Special Provisions:
(1) If you do not provide the required production report, we
will assign a yield for the previous crop year. The yield assigned
by us will not be more than 75 percent of the yield used by us to
determine your coverage for the previous crop year. The production
report or assigned yield will be used to compute your approved yield
for the purpose of determining your coverage for the current crop
year.
(2) If you have filed a claim for any crop year, the documents
signed by you which state the amount of production used to complete
the claim for indemnity will be the production report for that year
unless otherwise specified by FCIC.
(3) Production and acreage for the prior crop year must be
reported for each proposed optional unit by the production reporting
date. If you do not provide the information stated above, the
optional units will be combined into the basic unit.
(d) We may revise your production guarantee for any unit, and
revise any indemnity paid based on that production guarantee, if we
find that your production report under paragraph (c) of this
section:
(1) Is not supported by written verifiable records in accordance
with the definition of production report; or
(2) Fails to accurately report actual production, acreage, or
other material information.
(e) In addition to the price election or amount of insurance
available on the contract change date, we may provide an additional
price election or amount of insurance no later than 15 days prior to
the sales closing date. You must select the additional price
election or amount of insurance on or before the sales closing date
for the insured crop. These additional price elections or amounts of
insurance will not be less than those available on the contract
change date. If you elect the additional price election or amount of
insurance any claim settlement and amount of premium will be based
on this amount.
4. Contract Changes
(a) We may change the terms of your coverage under this policy
from year to year.
(b) Any changes in policy provisions, price elections, amounts
of insurance, premium rates, and program dates will be provided by
us to your crop insurance agent not later than the contract change
date contained in the Crop Provisions, except that price elections
may be offered after the contract change date in accordance with
section 3. You may view the documents or request copies from your
crop insurance agent.
(c) You will be notified, in writing, of changes to the Basic
Provisions, Crop
[[Page 65158]]
Provisions, and Special Provisions not later than 30 days prior to
the cancellation date for the insured crop. Acceptance of changes
will be conclusively presumed in the absence of notice from you to
change or cancel your insurance coverage.
5. Liberalization
If we adopt any revision that broadens the coverage under this
policy subsequent to the contract change date without additional
premium, the broadened coverage will apply.
6. Report of Acreage
(a) An annual acreage report must be submitted to us on our form
for each insured crop in the county on or before the acreage
reporting date contained in the Special Provisions, except as
follows:
(1) If you insure multiple crops that have final planting dates
on or after August 15 but before December 31, you must submit an
acreage report for all such crops on or before the latest applicable
acreage reporting date for such crops; and
(2) If you insure multiple crops that have final planting dates
on or after December 31 but before August 15, you must submit an
acreage report for all such crops on or before the latest applicable
acreage reporting date for such crops.
(3) Notwithstanding the provisions in sections 6(a) (1) and (2):
(i) If the Special Provisions designate separate planting
periods for a crop, you must submit an acreage report for each
planting period on or before the acreage reporting date contained in
the Special Provisions for the planting period; and
(ii) If planting of the insured crop continues after the final
planting date or you are prevented from planting during the late
planting period, the acreage reporting date will be the later of:
(A) The acreage reporting date contained in the Special
Provisions;
(B) The date determined in accordance with sections (a)(1) or
(2); or
(C) Five (5) days after the end of the late planting period for
the insured crop, if applicable.
(b) If you do not have a share in an insured crop in the county
for the crop year, you must submit an acreage report, on or before
the acreage reporting date, so indicating.
(c) Your acreage report must include the following information,
if applicable:
(1) All acreage of the crop in the county (insurable and not
insurable) in which you have a share;
(2) Your share at the time coverage begins;
(3) The practice;
(4) The type; and
(5) The date the insured crop was planted.
(d) Because incorrect reporting on the acreage report may have
the effect of changing your premium and any indemnity that may be
due, you may not revise this report after the acreage reporting date
without our consent.
(e) We may elect to determine all premiums and indemnities based
on the information you submit on the acreage report or upon the
factual circumstances we determine to have existed.
(f) If you do not submit an acreage report by the acreage
reporting date, or if you fail to report all units, we may elect to
determine by unit the insurable crop acreage, share, type and
practice, or to deny liability on such units. If we deny liability
for the unreported units, your share of any production from the
unreported units will be allocated, for loss purposes only, as
production to count to the reported units in proportion to the
liability on each reported unit.
(g) If the information reported by you on the acreage report for
share, acreage, practice, type or other material information is
inconsistent with the information that is determined to actually
exist for a unit and results in:
(1) A lower liability than the actual liability determined, the
production guarantee or amount of insurance on the unit will be
reduced to an amount that is consistent with the reported
information. In the event that insurable acreage is under-reported
for any unit, all production or value from insurable acreage in that
unit will be considered production or value to count in determining
the indemnity; and
(2) A higher liability than the actual liability determined, the
information contained in the acreage report will be revised to be
consistent with the correct information. If we discover that you
have incorrectly reported any information on the acreage report for
any crop year, you may be required to provide documentation in
subsequent crop years that substantiates your report of acreage for
those crop years, including, but not limited to, an acreage
measurement service at your own expense.
(h) Errors in reporting units may be corrected by us at the time
of adjusting a loss to reduce our liability and to conform to
applicable unit division guidelines.
7. Annual Premium
(a) The annual premium is earned and payable at the time
coverage begins. You will be billed for premium due not earlier than
the premium billing date specified in the Special Provisions. The
premium due, plus any accrued interest, will be considered
delinquent if it is not paid on or before the termination date
specified in the Crop Provisions.
(b) Any amount you owe us related to any crop insured with us
under the authority of the Act will be deducted from any prevented
planting payment or indemnity due you for any crop insured with us
under the authority of the Act.
(c) The annual premium amount is determined, as applicable, by
either:
(1) Multiplying the production guarantee per acre times the
price election, times the premium rate, times the insured acreage,
times your share at the time coverage begins, and times any premium
adjustment percentages that may apply; or
(2) Multiplying the amount of insurance per acre times the
premium rate, times the insured acreage, times your share at the
time coverage begins, and times any premium adjustment percentages
that may apply.
(d) The premium will be computed using the price election or
amount of insurance you elect or that we assign in accordance with
section 3(b).
8. Insured Crop
(a) The insured crop will be that shown on your accepted
application and as specified in the Crop Provisions or Special
Provisions and must be grown on insurable acreage.
(b) A crop which will NOT be insured will include, but will not
be limited to, any crop:
(1) If the farming practices carried out are not in accordance
with the farming practices for which the premium rates, production
guarantees or amounts of insurance have been established, unless
insurance is allowed by a written agreement;
(2) Of a type, class or variety established as not adapted to
the area or excluded by the policy provisions;
(3) That is a volunteer crop;
(4) That is a second crop following the same crop (insured or
not insured) harvested in the same crop year unless specifically
permitted by the Crop Provisions or the Special Provisions;
(5) That is planted for the development or production of hybrid
seed or for experimental purposes, unless permitted by the Crop
Provisions or by written agreement to insure such crop; or
(6) That is used solely for wildlife protection or management.
If the lease states that specific acreage must remain unharvested,
only that acreage is uninsurable. If the lease specifies that a
percentage of the crop must be left unharvested, your share will be
reduced by such percentage.
9. Insurable Acreage
(a) Acreage planted to the insured crop in which you have a
share is insurable except acreage:
(1) That has not been planted and harvested within one of the 3
previous crop years, unless:
(i) Such acreage was not planted:
(A) To comply with any other USDA program;
(B) Because of crop rotation, (e.g., corn, soybean, alfalfa; and
the alfalfa remained for 4 years before the acreage was planted to
corn again);
(C) Due to an insurable cause of loss that prevented planting;
or
(D) Because a perennial crop was grown on the acreage;
(ii) Such acreage was planted but was not harvested due to an
insurable cause of loss; or
(iii) The Crop Provisions specifically allow insurance for such
acreage;
(2) That has been strip-mined, unless otherwise approved by
written agreement, or unless an agricultural commodity other than a
cover, hay, or forage crop (except corn silage), has been harvested
from the acreage for at least five crop years after the strip-mined
land was reclaimed;
(3) On which the insured crop is damaged and it is practical to
replant the insured crop, but the insured crop is not replanted;
(4) That is interplanted, unless allowed by the Crop Provisions;
(5) That is otherwise restricted by the Crop Provisions or
Special Provisions; or
(6) That is planted in any manner other than as specified in the
policy provisions for the crop unless a written agreement to such
planting exists.
[[Page 65159]]
(b) If insurance is provided for an irrigated practice, you must
report as irrigated only that acreage for which you have adequate
facilities and adequate water, or the reasonable expectation of
receiving adequate water at the time coverage begins, to carry out a
good irrigation practice. If you knew or had reason to know that
your water may be reduced before coverage begins, no reasonable
expectation exists.
(c) Notwithstanding the provisions in section 8(b)(1), if
acreage is irrigated and we do not provide a premium rate for an
irrigated practice, you may either report and insure the irrigated
acreage as ``non-irrigated,'' or report the irrigated acreage as not
insured.
(d) We may restrict the amount of acreage that we will insure to
the amount allowed under any acreage limitation program established
by the United States Department of Agriculture if we notify you of
that restriction prior to the sales closing date.
10. Share Insured.
(a) Insurance will attach only to the share of the person
completing the application and will not extend to any other person
having a share in the crop unless the application clearly states
that:
(1) The insurance is requested for an entity such as a
partnership or a joint venture; or
(2) You as landlord will insure your tenant's share, or you as
tenant will insure your landlord's share. In this event, you must
provide evidence of the other party's approval (lease, power of
attorney, etc.). Such evidence will be retained by us. You also must
clearly set forth the percentage shares of each person on the
acreage report.
(b) We may consider any acreage or interest reported by or for
your spouse, child or any member of your household to be included in
your share.
(c) Acreage rented for a percentage of the crop, or a lease
containing provisions for both a minimum payment (such as a
specified amount of cash, bushels, pounds, etc.,) and a crop share
will be considered a crop share lease.
(d) Acreage rented for cash, or a lease containing provisions
for either a minimum payment or a crop share (such as a 50/50 share
or $100.00 per acre, whichever is greater) will be considered a cash
lease.
11. Insurance Period.
(a) Except for prevented planting coverage (see section 17),
coverage begins on each unit or part of a unit at the later of:
(1) The date we accept your application (For the purposes of
this paragraph, the date of acceptance is the date that you submit a
properly executed application in accordance with section 2);
(2) The date the insured crop is planted; or
(3) The calendar date contained in the Crop Provisions for the
beginning of the insurance period.
(b) Coverage ends at the earliest of:
(1) Total destruction of the insured crop on the unit;
(2) Harvest of the unit;
(3) Final adjustment of a loss on a unit;
(4) The calendar date contained in the Crop Provisions for the
end of the insurance period;
(5) Abandonment of the crop on the unit; or
(6) As otherwise specified in the Crop Provisions.
12. Causes of Loss.
The insurance provided is against only unavoidable loss of
production directly caused by specific causes of loss contained in
the Crop Provisions. All other causes of loss, including but not
limited to the following, are NOT covered:
(a) Negligence, mismanagement, or wrongdoing by you, any member
of your family or household, your tenants, or employees;
(b) Failure to follow recognized good farming practices for the
insured crop;
(c) Water contained by any governmental, public, or private dam
or reservoir project;
(d) Failure or breakdown of irrigation equipment or facilities;
or
(e) Failure to carry out a good irrigation practice for the
insured crop, if applicable.
13. Replanting Payment.
(a) If allowed by the Crop Provisions, a replanting payment may
be made on an insured crop replanted after we have given consent and
the acreage replanted is at least the lesser of 20 acres or 20
percent of the insured planted acreage for the unit (as determined
on the final planting date or within the late planting period if a
late planting period is applicable).
(b) No replanting payment will be made on acreage:
(1) On which our appraisal establishes that production will
exceed the level set by the Crop Provisions;
(2) Initially planted prior to the earliest planting date
established by the Special Provisions; or
(3) On which one replanting payment has already been allowed for
the crop year.
(c) The replanting payment per acre will be your actual cost for
replanting, but will not exceed the amount determined in accordance
with the Crop Provisions.
(d) No replanting payment will be paid if we determine it is not
practical to replant.
14. Duties in the Event of Damage or Loss.
Your Duties--
(a) In case of damage to any insured crop you must:
(1) Protect the crop from further damage by providing sufficient
care;
(2) Give us notice within 72 hours of your initial discovery of
damage (but not later than 15 days after the end of the insurance
period), by unit, for each insured crop (we may accept a notice of
loss provided later than 72 hours after your initial discovery if we
still have the ability to accurately adjust the loss);
(3) Leave representative samples intact for each field of the
damaged unit as may be required by the Crop Provisions; and
(4) Cooperate with us in the investigation or settlement of the
claim, and, as often as we reasonably require:
(i) Show us the damaged crop;
(ii) Allow us to remove samples of the insured crop; and
(iii) Provide us with records and documents we request and
permit us to make copies.
(b) You must obtain consent from us before, and notify us after
you:
(1) Destroy any of the insured crop that is not harvested;
(2) Put the insured crop to an alternative use;
(3) Put the acreage to another use; or
(4) Abandon any portion of the insured crop. We will not give
consent for any of the actions in sections 14(b) (1) through (4) if
it is practical to replant the crop or until we have made an
appraisal of the potential production of the crop.
(c) In addition to complying with all other notice requirements,
you must submit a claim for indemnity declaring the amount of your
loss not later than 60 days after the end of the insurance period.
This claim must include all the information we require to settle the
claim.
(d) Upon our request, you must:
(1) Provide a complete harvesting and marketing record of each
insured crop by unit including separate records showing the same
information for production from any acreage not insured; and
(2) Submit to examination under oath.
(e) You must establish the total production or value received
for the insured crop on the unit, that any loss of production or
value occurred during the insurance period, and that the loss of
production or value was directly caused by one or more of the
insured causes specified in the Crop Provisions.
(f) All notices required in this section that must be received
by us within 72 hours may be made by telephone or in person to your
crop insurance agent but must be confirmed in writing within 15
days.
Our Duties--
(a) If you have complied with all the policy provisions, we will
pay your loss within 30 days after:
(1) We reach agreement with you;
(2) Completion of arbitration or appeal proceedings; or
(3) The entry of a final judgment by a court of competent
jurisdiction.
(b) In the event we are unable to pay your loss within 30 days,
we will give you notice of our intentions within the 30-day period.
(c) We may defer the adjustment of a loss until the amount of
loss can be accurately determined. We will not pay for additional
damage resulting from your failure to provide sufficient care for
the crop during the deferral period.
(d) We recognize and apply the loss adjustment procedures
established or approved by the Federal Crop Insurance Corporation.
15. Production Included in Determining Indemnities.
(a) The total production to be counted for a unit will include
all production determined in accordance with the policy.
(b) The amount of production of any unharvested insured crop may
be determined on the basis of our field appraisals conducted after
the end of the insurance period.
(c) If you elect to exclude hail and fire as insured causes of
loss and the insured crop
[[Page 65160]]
is damaged by hail or fire, appraisals will be made as described in
the applicable Form FCI-78 ``Request To Exclude Hail and Fire'' or a
form containing the same terms approved by the Federal Crop
Insurance Corporation.
16. Late Planting.
Unless limited by the Crop Provisions, insurance will be
provided for acreage planted to the insured crop after the final
planting date in accordance with the following:
(a) The production guarantee or amount of insurance for each
acre planted to the insured crop during the late planting period
will be reduced by 1 percent per day for each day planted after the
final planting date.
(b) Acreage planted after the late planting period (or after the
final planting date for crops that do not have a late planting
period) may be insured as follows:
(1) The production guarantee or amount of insurance for each
acre planted as specified in this subsection will be determined by
multiplying the production guarantee or amount of insurance that is
provided for acreage of the insured crop that is timely planted by
the prevented planting coverage level percentage you elected, or
that is contained in the Crop Provisions if you did not elect a
prevented planting coverage level percentage;
(2) Planting on such acreage must have been prevented by the
final planting date (or during the late planting period, if
applicable) by an insurable cause occurring within the insurance
period for prevented planting coverage;
(3) The production guarantee for any acreage on which an insured
cause of loss prevents completion of planting, as specified in the
definition of ``planted acreage'' (e.g., seed is broadcast on the
soil surface but cannot be incorporated), will be determined as
indicated in this section; and
(4) All production from acreage as specified in this section
will be included as production to count for the unit.
(c) The premium amount for insurable acreage specified in
section 16 (a) or (b) 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 such acreage exceeds the liability,
coverage for those acres will not be provided (no premium will be
due and no indemnity will be paid).
17. Prevented Planting
(a) Unless limited by the policy provisions, a prevented
planting payment may be made to you for eligible acreage if:
(1) You were prevented from planting the insured crop by an
insured cause that occurs:
(i) On or after the sales closing date contained in the Special
Provisions for the insured crop in the county for the crop year the
application for insurance is accepted; or
(ii) For any subsequent crop year, on or after the sales closing
date for the previous crop year for the insured crop in the county,
provided insurance has been in force continuously since that date.
Cancellation for the purpose of transferring the policy to a
different insurance provider for the subsequent crop year will not
be considered a break in continuity for the purpose of the preceding
sentence; and
(2) You include any acreage of the insured crop that was
prevented from being planted on your acreage report.
(b) The actuarial documents may contain additional levels of
prevented planting coverage that you may purchase for the insured
crop:
(1) Such purchase must be made on or before the sales closing
date.
(2) If you do not purchase one of those additional levels by the
sales closing date, you will receive the prevented planting coverage
specified in the Crop Provisions.
(3) If you have a Catastrophic Risk Protection Endorsement for
any crop, the additional levels of prevented planting coverage will
not be available for that crop.
(4) You may not increase your elected or assigned prevented
planting coverage level for any crop year if a cause of loss that
will or could prevent planting is evident prior to the time you wish
to change your prevented planting coverage level.
(c) The premium amount for acreage that is prevented from being
planted 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 that is prevented from being planted 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).
(d) Drought or failure of the irrigation water supply will not
be considered to be an insurable cause of loss for the purposes of
prevented planting unless, on the final planting date:
(1) For non-irrigated acreage, the area that is prevented from
being planted is classified by the Palmer Drought Severity Index as
being in a severe or extreme drought; or
(2) For irrigated acreage, there is not a reasonable probability
of having adequate water to carry out an irrigated practice.
(e) The maximum number of acres that may be eligible for a
prevented planting payment for any crop will be determined as
follows:
(1) The total number of acres eligible for prevented planting
coverage for all crops cannot exceed the number of acres of cropland
in your farming operation for the crop year, unless you are eligible
for prevented planting coverage on double cropped acreage in
accordance with section 17(f) (4) or (5). The eligible acres for
each insured crop will be determined in accordance with the
following table.
------------------------------------------------------------------------
Eligible acres if, Eligible acres if,
in any of the 4 most in any of the 4 most
recent crop years, recent crop years,
Type of crop you have produced you have not
any crop for which produced any crop
insurance was for which insurance
available was available
------------------------------------------------------------------------
(i) The crop is not required (A) The maximum (B) The number of
to be contracted with a number of acres acres specified on
processor to be insured. certified for APH your intended
purposes or acreage report
reported for which is submitted
insurance for the to us by the sales
crop in any one of closing date for
the 4 most recent all crops you
crop years (not insure for the crop
including reported year and that is
prevented planting accepted by us. The
acreage that was total number of
planted to a acres listed may
substitute crop not exceed the
other than an number of acres of
approved cover cropland in your
crop). The number farming operation
of acres determined at the time you
above for a crop submit the intended
may be increased by acreage report. The
multiplying it by number of acres
the ratio of the determined above
total cropland for a crop may only
acres that you are be increased by
farming this year multiplying it by
(if greater) to the the ratio of the
total cropland total cropland
acres that you acres that you are
farmed in the farming this year
previous year, (if greater) to the
provided that you number of acres
submit proof to us listed on your
that for the intended acreage
current crop year report, if you meet
you have purchased the conditions
or leased stated in section
additional land or 17(e)(1)(i)(A).
that acreage will
be released from
any USDA program
which prohibits
harvest of a crop.
Such acreage must
have been
purchased, leased,
or released from
the USDA program,
in time to plant it
for the current
crop year using
good farming
practices. No cause
of loss that will
or could prevent
planting may be
evident at the time
the acreage is
purchased, leased,
or released from
the USDA program.
[[Page 65161]]
(ii)The crop must be (A) The number of (B) The number of
contracted with a processor acres of the crop acres of the crop
to be insured. specified in the as determined in
processor contract, section
if the contract 17(e)(1)(ii)(A).
specifies a number
of acres contracted
for the crop year;
or the result of
dividing the
quantity of
production stated
in the processor
contract by your
approved yield, if
the processor
contract specifies
a quantity of
production that
will be accepted.
(For the purposes
of establishing the
number of prevented
planting acres, any
reductions applied
to the transitional
yield for failure
to certify acreage
and production for
four prior years
will not be used.).
------------------------------------------------------------------------
(2) Any eligible acreage determined in accordance with the table
contained in section 17(e)(1) will be reduced by subtracting the
number of acres of the crop (insured and uninsured) that are timely
and late planted, including acreage specified in section 16(b).
(f) Regardless of the number of eligible acres determined in
section 17(e), prevented planting coverage will not be provided for
any acreage:
(1) If at least one contiguous block of prevented planting
acreage does not constitute at least 20 acres or 20 percent of the
insurable crop acreage in the unit, whichever is less. We will
assume that any prevented planting acreage within a field that
contains planted acreage would have been planted to the same crop
that is planted in the field, unless the prevented planting acreage
constitutes at least 20 acres or 20 percent of the insurable acreage
in the field and you can prove that you have previously produced
both crops in the same field in the same crop year;
(2) For which the actuarial documents do not designate a premium
rate unless a written agreement designates such premium rate;
(3) Used for conservation purposes or intended to be left
unplanted under any program administered by the USDA;
(4) On which the insured crop is prevented from being planted,
if you or any other person receives a prevented planting payment for
any crop for the same acreage in the same crop year (excluding share
arrangements), unless you have coverage greater than the
Catastrophic Risk Protection Plan of Insurance and have records of
acreage and production that are used to determine your approved
yield that show the acreage was double-cropped in each of the last 4
years in which the insured crop was grown on the acreage;
(5) On which the insured crop is prevented from being planted,
if any crop from which any benefit is derived under any program
administered by the USDA is planted and fails, or if any crop is
harvested, hayed or grazed on the same acreage in the same crop year
(other than a cover crop which may be hayed or grazed after the
final planting date for the insured crop), unless you have coverage
greater than that applicable to the Catastrophic Risk Protection
Plan of Insurance and have records of acreage and production that
are used to determine your approved yield that show the acreage was
double-cropped in each of the last 4 years in which the insured crop
was grown on the acreage;
(6) Of a crop that is prevented from being planted if a cash
lease payment is also received for use of the same acreage in the
same crop year (not applicable if acreage is leased for haying or
grazing only) (If you state that you will not be cash renting the
acreage and claim a prevented planting payment on the acreage, you
could be subject to civil and criminal sanctions if you cash rent
the acreage and do not return the prevented planting payment for
it);
(7) For which planting history or conservation plans indicate
that the acreage would have remained fallow for crop rotation
purposes;
(8) That exceeds the number of acres eligible for a prevented
planting payment;
(9) That exceeds the number of eligible acres physically
available for planting;
(10) For which you cannot provide proof that you had the inputs
available to plant and produce a crop with the expectation of at
least producing the yield used to determine the production guarantee
or amount of insurance (Evidence that you have previously planted
the crop on the unit will be considered adequate proof unless your
planting practices or rotational requirements show that the acreage
would have remained fallow or been planted to another crop);
(11) Based on an irrigated practice production guarantee or
amount of insurance unless adequate irrigation facilities were in
place to carry out an irrigated practice on the acreage prior to the
insured cause of loss that prevented you from planting; or
(12) Of a crop type that you did not plant in at least one of
the four most recent years. Types for which separate price
elections, amounts of insurance, or production guarantees are
available must be included in your APH database in at least one of
the most recent four years, or crops that do not require yield
certification (crops for which the insurance guarantee is not based
on APH) must be reported on your acreage report in at least one of
the four most recent crop years except as allowed in section
17(e)(1)(i)(B).
(g) The prevented planting payment for any eligible acreage
within a unit will be determined by:
(1) Multiplying the liability per acre for timely planted
acreage of the insured crop (the amount of insurance per acre or the
production guarantee per acre multiplied by the price election for
the crop, or type if applicable) by the prevented planting coverage
level percentage you elected, or that is contained in the Crop
Provisions if you did not elect a prevented planting coverage level
percentage;
(2) Multiplying the result of section 17(g)(1) by the number of
eligible prevented planting acres in the unit; and
(3) Multiplying the result of section 17(g)(2) by your share.
18. Written Agreements
Terms of this policy which are specifically designated for the
use of written agreements may be altered by written agreement in
accordance with the following:
(a) You must apply in writing for each written agreement no
later than the sales closing date, except as provided in section
18(e);
(b) The application for a written agreement must contain all
variable terms of the contract between you and us that will be in
effect if the written agreement is not approved;
(c) If approved, the written agreement will include all variable
terms of the contract, including, but not limited to, crop type or
variety, the guarantee, premium rate, and price election;
(d) Each written agreement will only be valid for one crop year
(If a written agreement is not specifically renewed the following
year, insurance coverage for subsequent crop years will be in
accordance with the printed policy); and
(e) An application for a written agreement submitted after the
sales closing date may be approved if you demonstrate your physical
inability to apply prior to the sales closing date, or it is
submitted in accordance with any regulation which may be promulgated
under 7 CFR part 400, and after inspection of the acreage by us, if
required, it is determined that no loss has occurred and the crop is
insurable in accordance with the policy and written agreement
provisions.
19. Crops as Payment
You must not abandon any crop to us. We will not accept any crop
as compensation for payments due us.
For FCIC policies
20. Appeals
All determinations required by the policy will be made by us. If
you disagree with our determinations, you may obtain reconsideration
of or appeal those
[[Page 65162]]
determinations in accordance with appeal provisions published at 7
CFR part 11.
For reinsured policies
20. Arbitration
(a) If you and we fail to agree on any factual determination,
the disagreement will be resolved in accordance with the rules of
the American Arbitration Association. Failure to agree with any
factual determination made by FCIC must be resolved through the FCIC
appeal provisions published at 7 CFR part 11.
(b) No award determined by arbitration or appeal can exceed the
amount of liability established or which should have been
established under the policy.
21. Access to Insured Crop and Records, and Record Retention
(a) We reserve the right to examine the insured crop as often as
we reasonably require.
(b) For three years after the end of the crop year, you must
retain, and provide upon our request, complete records of the
harvesting, storage, shipment, sale, or other disposition of all the
insured crop produced on each unit. This requirement also applies to
the records used to establish the basis for the production report
for each unit. You must also provide upon our request, separate
records showing the same information for production from any acreage
not insured. We may extend the record retention period beyond three
years by notifying you of such extension in writing. Your failure to
keep and maintain such records will, at our option, result in:
(1) Cancellation of the policy;
(2) Assignment of production to the units by us;
(3) Combination of the optional units; or
(4) A determination that no indemnity is due.
(c) Any person designated by us will, at any time during the
record retention period, have access:
(1) To any records relating to this insurance at any location
where such records may be found or maintained; and
(2) To the farm.
(d) By applying for insurance under the authority of the Act or
by continuing insurance for which you previously applied, you
authorize us, or any person acting for us, to obtain records
relating to the insured crop from any person who may have custody of
those records including, but not limited to, FSA offices, banks,
warehouses, gins, cooperatives, marketing associations, and
accountants. You must assist us in obtaining all records which we
request from third parties.
22. Other Insurance
(a) Other Like Insurance. You must not obtain any other crop
insurance issued under the authority of the Act on your share of the
insured crop. If we determine that more than one policy on your
share is intentional, you may be subject to the sanctions authorized
under this policy, the Act, or any other applicable statute. If we
determine that the violation was not intentional, the policy with
the earliest date of application will be in force and all other
policies will be void. Nothing in this paragraph prevents you from
obtaining other insurance not issued under the Act.
(b) Other Insurance Against Fire. If you have other insurance,
whether valid or not, against damage to the insured crop by fire
during the insurance period, and you have not excluded coverage for
fire from this policy, we will be liable for loss due to fire only
for the smaller of:
(1) The amount of indemnity determined pursuant to this policy
without regard to such other insurance; or
(2) The amount by which the loss from fire is determined to
exceed the indemnity paid or payable under such other insurance.
(c) For the purpose of subsection (b) of this section the amount
of loss from fire will be the difference between the fair market
value of the production of the insured crop on the unit involved
before the fire and after the fire, as determined from appraisals
made by us.
23. Conformity to Food Security Act
Although your violation of a number of federal statutes,
including the Act, may cause cancellation, termination, or voidance
of your insurance contract, you should be specifically aware that
your policy will be canceled if you are determined to be ineligible
to receive benefits under the Act due to violation of the controlled
substance provisions (title XVII) of the Food Security Act of 1985
(Pub. L. 99-198) and the regulations promulgated under the Act by
USDA. Your insurance policy will be canceled if you are determined,
by the appropriate Agency, to be in violation of these provisions.
We will recover any and all monies paid to you or received by you
during your period of ineligibility, and your premium will be
refunded, less a reasonable amount for expenses and handling not to
exceed 20 percent of the premium paid or to be paid by you.
For FCIC policies
24. Amounts Due Us
(a) Any amount illegally or erroneously paid to you or that is
owed to us but is delinquent may be recovered by us through offset
by deducting it from any loan or payment due you under any Act of
Congress or program administered by any United States Government
Agency, or by other collection action.
(b) Interest will accrue at the rate of 1.25 percent simple
interest per calendar month, or any part thereof, on any unpaid
premium amount due us. With respect to any premiums owed, interest
will start to accrue on the first day of the month following the
premium billing date specified in the Special Provisions.
(c) For the purpose of any other amounts due us, such as
repayment of indemnities found not to have been earned:
(1) Interest will start on the date that notice is issued to you
for the collection of the unearned amount;
(2) Amounts found due under this paragraph will not be charged
interest if payment is made within 30 days of issuance of the notice
by us;
(3) The amount will be considered delinquent if not paid within
30 days of the date the notice is issued by us;
(4) Penalties and interest will be charged in accordance with 31
U.S.C. 3717 and 4 CFR part 102; and
(5) The penalty for accounts more than 90 days delinquent is an
additional 6 percent per annum.
(d) Interest on any amount due us found to have been received by
you because of fraud, misrepresentation or presentation by you of a
false claim will start on the date you received the amount with the
additional 6 percent penalty beginning on the 31st day after the
notice of amount due is issued to you. This interest is in addition
to any other amount found to be due under any other federal criminal
or civil statute.
(e) If we determine that it is necessary to contract with a
collection agency, refer the debt to government collection centers,
the Department of Treasury Offset Program, or to employ an attorney
to assist in collection, you agree to pay all the expenses of
collection.
(f) All amounts paid will be applied first to expenses of
collection if any, second to the reduction of any penalties which
may have been assessed, then to reduction of accrued interest, and
finally to reduction of the principal balance.
For reinsured policies
24. Amounts Due Us
(a) Interest will accrue at the rate of 1.25 percent simple
interest per calendar month, or any portion thereof, on any unpaid
amount due us. For the purpose of premium amounts due us, the
interest will start to accrue on the first day of the month
following the premium billing date specified in the Special
Provisions.
(b) For the purpose of any other amounts due us, such as
repayment of indemnities found not to have been earned, interest
will start to accrue on the date that notice is issued to you for
the collection of the unearned amount. Amounts found due under this
paragraph will not be charged interest if payment is made within 30
days of issuance of the notice by us. The amount will be considered
delinquent if not paid within 30 days of the date the notice is
issued by us.
(c) All amounts paid will be applied first to expenses of
collection (see subsection (d) of this section) if any, second to
the reduction of accrued interest, and then to the reduction of the
principal balance.
(d) If we determine that it is necessary to contract with a
collection agency or to employ an attorney to assist in collection,
you agree to pay all of the expenses of collection.
(e) A portion of the amount paid to you to which you were not
entitled may be collected through administrative offset from
payments you receive from United States government agencies in
accordance with 31 U.S.C. chapter 37.
25. Legal Action Against Us
(a) You may not bring legal action against us unless you have
complied with all of the policy provisions.
(b) If you do take legal action against us, you must do so
within 12 months of the date
[[Page 65163]]
of denial of the claim. Suit must be brought in accordance with the
provisions of 7 U.S.C. 1508(j).
(c) Your right to recover damages (compensatory, punitive, or
other), attorney's fees, or other charges is limited or excluded by
this contract or by Federal Regulations.
26. Payment and Interest Limitations
(a) Under no circumstances will we be liable for the payment of
damages (compensatory, punitive, or other), attorney's fees, or
other charges in connection with any claim for indemnity, whether we
approve or disapprove such claim.
(b) We will pay simple interest computed on the net indemnity
ultimately found to be due by us or by a final judgment of a court
of competent jurisdiction, from and including the 61st day after the
date you sign, date, and submit to us the properly completed claim
on our form. Interest will be paid only if the reason for our
failure to timely pay is NOT due to your failure to provide
information or other material necessary for the computation or
payment of the indemnity. The interest rate will be that established
by the Secretary of the Treasury under section 12 of the Contract
Disputes Act of 1978 (41 U.S.C. 611) and published in the Federal
Register semiannually on or about January 1 and July 1 of each year,
and may vary with each publication.
27. Concealment, Misrepresentation or Fraud
(a) If you have falsely or fraudulently concealed the fact that
you are ineligible to receive benefits under the Act or if you or
anyone assisting you has intentionally concealed or misrepresented
any material fact relating to this policy:
(1) This policy will be voided; and
(2) You may be subject to remedial sanctions in accordance with
7 CFR part 400, subpart R.
(b) Even though the policy is void, you may still be required to
pay 20 percent of the premium due under the policy to offset costs
incurred by us in the service of this policy. If previously paid,
the balance of the premium will be returned.
(c) Voidance of this policy will result in you having to
reimburse all indemnities paid for the crop year in which the
voidance was effective.
(d) Voidance will be effective on the first day of the insurance
period for the crop year in which the act occurred and will not
affect the policy for subsequent crop years unless a violation of
this section also occurred in such crop years.
28. Transfer of Coverage and Right to Indemnity
If you transfer any part of your share during the crop year, you
may transfer your coverage rights, if the transferee is eligible for
crop insurance. We will not be liable for any more than the
liability determined in accordance with your policy that existed
before the transfer occurred. The transfer of coverage rights must
be on our form and will not be effective until approved by us in
writing. Both you and the transferee are jointly and severally
liable for the payment of the premium. The transferee has all rights
and responsibilities under this policy consistent with the
transferee's interest.
29. Assignment of Indemnity
You may assign to another party your right to an indemnity for
the crop year. The assignment must be on our form and will not be
effective until approved in writing by us. The assignee will have
the right to submit all loss notices and forms as required by the
policy. If you have suffered a loss from an insurable cause and fail
to file a claim for indemnity within 60 days after the end of the
insurance period, the assignee may submit the claim for indemnity
not later than 15 days after the 60-day period has expired. We will
honor the terms of the assignment only if we can accurately
determine the amount of the claim. However, no action will lie
against us for failure to do so.
30. Subrogation (Recovery of Loss From A Third Party)
Since you may be able to recover all or a part of your loss from
someone other than us, you must do all you can to preserve this
right. If we pay you for your loss, your right to recovery will, at
our option, belong to us. If we recover more than we paid you plus
our expenses, the excess will be paid to you.
31. Applicability of State and Local Statutes
If the provisions of this policy conflict with statutes of the
State or locality in which this policy is issued, the policy
provisions will prevail. State and local laws and regulations in
conflict with federal statutes, this policy, and the applicable
regulations do not apply to this policy.
32. Descriptive Headings
The descriptive headings of the various policy provisions are
formulated for convenience only and are not intended to affect the
construction or meaning of any of the policy provisions.
33. Notices
(a) All notices required to be given by you must be in writing
and received by your crop insurance agent within the designated time
unless otherwise provided by the notice requirement. Notices
required to be given immediately may be by telephone or in person
and confirmed in writing. Time of the notice will be determined by
the time of our receipt of the written notice. If the date by which
you are required to submit a report or notice falls on Saturday,
Sunday, or a Federal holiday, or if your agent's office is, for any
reason, not open for business on the date you are required to submit
such notice or report, such notice or report must be submitted on
the next business day.
(b) All notices and communications required to be sent by us to
you will be mailed to the address contained in your records located
with your crop insurance agent. Notice sent to such address will be
conclusively presumed to have been received by you. You should
advise us immediately of any change of address.
34. Unit Division
(a) Unless limited by the Crop Provisions or Special Provisions,
a basic unit as defined in section 1 of the Basic Provisions may be
divided into optional units if, for each optional unit, you meet the
following:
(1) You must plant the crop in a manner that results in a clear
and discernible break in the planting pattern at the boundaries of
each optional unit;
(2) All optional units you select for the crop year are
identified on the acreage report for that crop year (Units will be
determined when the acreage is reported but may be adjusted or
combined to reflect the actual unit structure when adjusting a loss.
No further unit division may be made after the acreage reporting
date for any reason);
(3) You have records, that are acceptable to us, of planted
acreage and the production from each optional unit for at least the
last crop year used to determine your production guarantee;
(4) You have records of marketed or stored production from each
optional unit maintained in such a manner that permits us to verify
the production from each optional unit, or the production from each
optional unit is kept separate until loss adjustment is completed by
us; and
(b) Each optional unit must meet one or more of the following,
unless otherwise specified in the Crop Provisions or allowed by
written agreement:
(1) Optional units may be established if each optional unit is
located in a separate section. In the absence of sections, we may
consider parcels of land legally identified by other methods of
measure such as Spanish grants, as the equivalents of sections for
unit purposes. In areas which have not been surveyed using sections,
section equivalents or in areas where boundaries are not readily
discernible, each optional unit must be located in a separate FSA
farm serial number; and
(2) In addition to, or instead of, establishing optional units
by section, section equivalent or FSA farm serial number, optional
units may be based on irrigated and non-irrigated acreage. To
qualify as separate irrigated and non-irrigated optional units, the
non-irrigated acreage may not continue into the irrigated acreage in
the same rows or planting pattern. The irrigated acreage may not
extend beyond the point at which the irrigation system can deliver
the quantity of water needed to produce the yield on which the
guarantee is based, except the corners of a field in which a center-
pivot irrigation system is used may be considered as irrigated
acreage if the corners of a field in which a center-pivot irrigation
system is used do not qualify as a separate non-irrigated optional
unit. In this case, production from both practices will be used to
determine your approved yield.
(c) Optional units are not available for crops insured under a
Catastrophic Risk Protection Endorsement.
(d) If you do not comply fully with the provisions in this
section, we will combine all optional units that are not in
compliance with these provisions into the basic unit from which they
were formed. We will combine the optional units at any time we
discover that you have failed to comply with these provisions. If
failure to comply with these provisions is determined by us to be
inadvertent, and the optional units are combined into a basic unit,
that portion of the additional premium paid for the optional units
that have been combined will be refunded to you for the units
combined.
[[Page 65164]]
6. Amend Sec. 457.101 as follows:
(a) Revise the introductory text to read as follows:
Sec. 457.101 Small grains crop insurance provisions.
The small grains crop insurance provisions for the 1998 and
succeeding crop years in counties with a contract change date of
December 31, and for the 1999 and succeeding crop years in counties
with a contract change date of June 30, are as follows:
* * * * *
(b) Revise the paragraph preceding section 1 to read as follows:
* * * * *
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.
* * * * *
(c) Remove the alphabetic paragraph designations in section 1 and
the definitions of ``days,'' ``final planting date,'' ``good farming
practices,'' ``interplanted,'' ``irrigated practice,'' ``late
planted,'' ``late planting period,'' ``practical to replant,''
``production guarantee,'' ``replanting,'' and ``timely planted;''
revise the definitions of ``planted acreage'' and ``prevented
planting,'' and add the definition of ``sales closing date'' to read as
follows:
* * * * *
1. Definitions
* * * * *
Planted acreage--In addition to the definition contained in the
Basic Provisions, except for flax, land on which seed is initially
spread onto the soil surface by any method and subsequently is
mechanically incorporated into the soil in a timely manner and at
the proper depth will be considered planted. Flax seed must
initially be planted in rows to be considered planted, unless
otherwise provided by the Special Provisions, actuarial documents,
or by written agreement.
Prevented planting--In lieu of the definition contained in the
Basic Provisions, failure to plant the insured crop with proper
equipment by the latest final planting date designated in the
Special Provisions for the insured crop in the county or by the end
of the late planting period. You must have been prevented from
planting the insured crop due to an insured cause of loss that also
prevented most producers from planting on acreage with similar
characteristics in the surrounding area.
Sales closing date--In lieu of the definition contained in the
Basic Provisions, a date contained in the Special Provisions by
which an application must be filed and by which you may change your
crop insurance coverage for a crop year. If the Special Provisions
provide a sales closing date for both winter and spring types of the
insured crop and you plant any insurable acreage of the winter type,
you may not change your crop insurance coverage after the sales
closing date for the winter type.
* * * * *
(d) Remove the words ``Common Crop Insurance Policy'' and add in
their place, the words ``Basic Provisions'' in the following places:
i. Section 3;
ii. Section 4;
iii. Sections 6 (b)(1) and (b)(2);
iv. Section 7, introductory text;
v. Section 8, introductory text;
vi. Sections 9(a)(1) and (c); and
vii. Section 10.
(e) Remove the words ``actuarial table'' and add in their place,
the words ``actuarial documents'' in section 6 paragraphs (a) and
(b)(2).
(f) Remove the word ``provides'' and add in its place, the word
``provide'' in section 6 paragraph (b)(2), the first sentence.
(g) Revise section 2 to read as follows:
* * * * *
2. Unit Division
In addition to the requirements of section 34(b) of the Basic
Provisions, for wheat only, in addition to, or instead of,
establishing optional units by section, section equivalent or FSA
farm serial number and by irrigated and non-irrigated practices,
optional units may be established if each optional unit contains
only initially planted winter wheat or only initially planted spring
wheat. Optional units may be established in this manner only in
counties having both winter and spring type final planting dates as
designated in the Special Provisions.
* * * * *
(h) Revise section 6(b)(1) to read as follows:
* * * * *
6. Insured Crop
(a) * * *
(b) * * *
(1) May report all planted acreage when you report your acreage
for the crop year and specify any acreage to be destroyed as
uninsurable acreage. (By doing so, no coverage will be considered to
have attached on the specified acreage and no premium will be due
for such acreage. If you do not destroy such acreage, you will be
subject to the under-reporting provisions contained in section 6 of
the Basic Provisions); or
* * * * *
(i) Revise sections 7 (a)(1)(i), (a)(1)(ii), and (a)(2)(i) to read
as follows:
* * * * *
7. Insurance Period
* * * * *
(a) * * *
(1) * * *
(i) The acreage must be planted on or before the final planting
date designated in the Special Provisions for the insured crop
except as allowed in section 12 of these Crop Provisions and section
16 of the Basic Provisions.
(ii) Any acreage of the insured crop damaged before the final
planting date, to the extent that producers in the surrounding area
would not normally further care for the crop, must be replanted
unless we agree that it is not practical to replant.
(2) * * *
(i) The acreage must be planted on or before the final planting
date designated in the Special Provisions for the type (winter or
spring) except as allowed in section 12 of these Crop Provisions and
section 16 of the Basic Provisions.
* * * * *
(j) Revise section 12 to read as follows:
* * * * *
12. Late Planting
A late planting period is not applicable to fall-planted wheat.
Any winter wheat that is planted after the fall final planting date
in counties for which the Special Provisions also contain a final
planting date for spring wheat will not be insured. Any winter wheat
that is planted after the fall final planting date in counties for
which the Special Provisions contain only a fall final planting date
will not be insured unless you were prevented from planting the
winter wheat by the fall final planting date. Such acreage will be
insurable, and the production guarantee and premium for the acreage
will be determined in accordance with sections 16 (b) and (c) of the
Basic Provisions.
(k) Add a section 13 to read as follows:
* * * * *
13. Prevented Planting
(a) In addition to the provisions contained in section 17 of the
Basic Provisions, in counties for which the Special Provisions
designate a spring final planting date, your prevented planting
production guarantee will be based on your approved yield for
spring-planted acreage of the insured crop.
(b) Your prevented planting coverage will be 60 percent of your
production guarantee for timely planted acreage. If you have limited
or additional levels of coverage, as specified in 7 CFR part 400,
subpart T, and pay an additional premium, you may increase your
prevented planting coverage to a level specified in the actuarial
documents.
7. Amend Sec. 457.104 as follows:
(a) Revise the introductory text to read as follows:
Sec. 457.104 Cotton crop insurance provisions.
The cotton crop insurance provisions for the 1998 crop year are as
follows:
* * * * *
(b) Revise the paragraph preceding section 1 to read as follows:
* * * * *
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)
[[Page 65165]]
the Basic Provisions with (1) controlling (2), etc.
* * * * *
(c) Remove the alphabetic paragraph designations in section 1 and
the definitions of ``days,'' ``final planting date,'' ``good farming
practices,'' ``interplanted,'' ``irrigated practice,'' ``late
planted,'' ``late planting period,'' ``practical to replant,''
``prevented planting,'' ``replanting,'' ``timely planted,'' and
``written agreement'' and revise the definition of ``planted acreage''
to read as follows:
* * * * *
1. Definitions
* * * * *
Planted acreage--In addition to the definition contained in the
Basic Provisions, cotton must be planted in rows, unless otherwise
provided by the Special Provisions, actuarial documents, or by
written agreement. The yield conversion factor normally applied to
non-irrigated skip-row cotton acreage will not be used if the land
between the rows of cotton is planted to any other spring planted
crop.
* * * * *
(d) Remove the words ``Common Crop Insurance Policy'' and add in
their place, the words ``Basic Provisions'' in the following places:
i. Section 3;
ii. Section 4;
iii. Section 5, introductory text;
iv. Section 6, introductory text;
v. Section 7, introductory text;
vi. Sections 8 (a) and (b);
vii. Section 9, introductory text; and
viii. Section 10(a).
* * * * *
(e) Remove section 2.
(f) Remove section 13 and redesignate sections 3 through 12 as
sections 2 through 11 respectively.
(g) Remove the words ``actuarial table'' and add in their place,
the words ``actuarial documents'' in redesignated section 5.
(h) Revise redesigned section 6(b) to read as follows:
* * * * *
6. Insurable Acreage
* * * * *
(a) * * *
(b) Any acreage of the insured crop damaged before the final
planting date, to the extent that a majority of producers in the
area would not normally further care for the crop, must be replanted
unless we agree that it is not practical to replant.
* * * * *
(i) Revise redesignated section 7(a) to read as follows:
* * * * *
7. Insurance Period
(a) In lieu of section 11(b)(2) of the Basic Provisions,
insurance will end upon the removal of the cotton from the field.
* * * * *
(j) Amend redesignated section 10(c)(1)(i)(E) to change the section
reference therein from ``10'' to ``9''.
* * * * *
(k) Amend redesignated section 10(c)(1)(iii) to change the section
reference therein from ``11.(d)'' to ``10(d)''.
* * * * *
(l) Revise redesignated section 11 to read as follows:
* * * * *
11. Prevented Planting
(a) In addition to the provisions contained in section 17 of the
Basic Provisions, your prevented planting production guarantee will
be based on your approved yield without adjustment for skip-row
planting patterns.
(b) Your prevented planting coverage will be 45 percent of your
production guarantee for timely planted acreage. If you have limited
or additional levels of coverage, as specified in 7 CFR part 400,
subpart T, and pay an additional premium, you may increase your
prevented planting coverage to a level specified in the actuarial
documents.
* * * * *
8. Amend Sec. 457.105 as follows:
(a) Revise the introductory text to read as follows:
Sec. 457.105 Extra long staple cotton crop insurance provisions.
The extra long staple cotton crop insurance provisions for the 1998
crop year are as follows:
* * * * *
(b) Revise the paragraph preceding section 1 to read as follows:
* * * * *
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.
* * * * *
(c) Remove alphabetic paragraph designations in section 1 and the
definitions of ``days,'' ``final planting date,'' ``good farming
practices,'' ``interplanted,'' ``irrigated practice,'' ``practical to
replant,'' ``prevented planting,'' ``timely planted,'' and ``written
agreement'' and revise the definition of ``planted acreage'' to read as
follows:
1. Definitions
* * * * *
Planted acreage--In addition to the definition contained in the
Basic Provisions, cotton must be planted in rows, unless otherwise
provided by the Special Provisions, actuarial documents, or by
written agreement. The yield conversion factor normally applied to
non-irrigated skip-row cotton acreage will not be used if the land
between the rows of cotton is planted to any other spring planted
crop.
* * * * *
(d) Remove the words ``Common Crop Insurance Policy'' and add in
their place, the words ``Basic Provisions'' in the following places:
i. Section 3;
ii. Section 4;
iii. Section 5;
iv. Section 6, introductory text;
v. Section 7, introductory text;
vi. Sections 8 (a) and (b);
vii. Section 9, introductory text; and
viii. Section 10(a).
(e) Remove section 2.
(f) Redesignate sections 3 through 13 as sections 2 through 12
respectively.
(g) Remove the words ``actuarial table'' and add in their place,
the words ``actuarial documents'' in redesignated section 5.
(h) Revise redesignated section 6(b) to read as follows:
* * * * *
6. Insurable Acreage
* * * * *
(a) * * *
(b) Any acreage of the insured crop damaged before the final
planting date, to the extent that a majority of producers in the
area would not normally further care for the crop, must be replanted
unless we agree that it is not practical to replant.
* * * * *
(i) Revise redesignated section 7(a) to read as follows:
* * * * *
7. Insurance Period
(a) In lieu of section 11(b)(2) of the Basic Provisions,
insurance will end upon the removal of the cotton from the field.
* * * * *
(j) Amend redesignated section 10(c)(1)(i)(E) to change the section
reference therein from ``10'' to ``9''.
(k) Amend redesignated section 10(c)(1)(iii)(A) to change the
section reference therein from ``11.(d) and (e)'' to ``10(d) and (e)''.
(l) Amend redesignated section 10(c)(1)(iii)(B) to change the
section reference therein from ``11.(f)'' to ``10(f)''.
(m) Amend redesignated section 10(e) to change the section
reference therein from ``11.(d)'' to ``10(d)''.
(n) Revise redesignated section 11 to read as follows:
* * * * *
11. Late Planting
A late planting period is not applicable to ELS cotton. Any ELS
cotton that is planted after the final planting date will not be
[[Page 65166]]
insured unless you were prevented from planting it by the final
planting date. Such acreage will be insurable, and the production
guarantee and premium for the acreage will be determined in
accordance with section 16 of the Basic Provisions.
* * * * *
(o) Revise redesignated section 12 to read as follows:
* * * * *
12. Prevented Planting
(a) In addition to the provisions contained in section 17 of the
Basic Provisions, your prevented planting production guarantee will
be based on your approved yield without adjustment for skip-row
planting patterns.
(b) Your prevented planting coverage will be 45 percent of your
production guarantee for timely planted acreage. If you have limited
or additional levels of coverage, as specified in 7 CFR part 400,
subpart T, and pay an additional premium, you may increase your
prevented planting coverage to a level specified in the actuarial
documents.
9. Amend Sec. 457.106 as follows:
(a) Revise the introductory text to read as follows:
Sec. 457.106 Texas citrus tree crop insurance provisions.
The Texas citrus tree crop insurance provisions for the 1999 and
succeeding crop years are as follows:
* * * * *
(b) Revise the paragraph preceding section 1 to read as follows:
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.
* * * * *
(c) Remove the definitions of ``days,'' ``deductible,'' ``FSA,''
``non-contiguous land,'' and ``written agreement'' in section 1.
(d) In sections 3(b) (1) and (2) remove the words ``actuarial 1
table'' and add in their place the words ``actuarial documents'' and
remove the words ``actuarial table'' and add in their place, the words
``actuarial documents and'' in section 7(a).
(e) Revise section 2 to read as follows:
* * * * *
2. Unit Division
(a) A basic unit, as defined in section 1 of the Basic
Provisions, will be divided into additional basic units by each
citrus crop designated in the Special Provisions.
(b) Sections 34(a) (1), (3), and (4) of the Basic Provisions are
not applicable.
(c) Provisions in the Basic Provisions that allow optional units
by irrigated and non-irrigated practices are not applicable.
(d) Instead of establishing optional units by section, section
equivalent, or FSA farm serial number optional units may be
established if each optional unit is located on non-contiguous land.
* * * * *
(f) Revise section 13 to read as follows:
* * * * *
13. Late and prevented planting
The late and prevented planting provisions of the Basic
Provisions are not applicable.
10. Amend Sec. 457.107 as follows:
(a) Revise the introductory text to read as follows:
Sec. 457.107 Florida citrus fruit crop insurance provisions.
The Florida citrus fruit crop insurance provisions for the 1999 and
succeeding crop years are as follows:
* * * * *
(b) Revise the paragraph preceding section 1 to read as follows:
* * * * *
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.
* * * * *
(c) Remove the definitions of ``days,'' ``FSA,'' ``non-contiguous
land,'' and ``written agreement'' in section 1.
(d) Remove the words ``Actuarial Table'' and add in their place,
the words ``actuarial documents'' in the following places:
i. Section 1, definition of ``amount of insurance;'' and
ii. Section 6(a).
(e) Revise section 2 to read as follows:
* * * * *
2. Unit Division
(a) A basic unit, as defined in section 1 of the Basic
Provisions, will be divided into additional basic units by each
citrus crop designated in the Special Provisions.
(b) Provisions in the Basic Provisions that allow optional units
by irrigated and non-irrigated practices are not applicable.
(c) Instead of establishing optional units by section, section
equivalent, or FSA farm serial number, optional units may be
established if each optional unit is located on non-contiguous land.
* * * * *
(f) Revise section 6(d) to change the section reference therein
from ``6(f)'' to ``6.''
(g) Revise section 11 to read as follows:
* * * * *
11. Late and prevented planting
The late and prevented planting provisions of the Basic
Provisions are not applicable.
11. Amend Sec. 457.108 as follows:
(a) Revise the introductory text to read as follows:
Sec. 457.108 Sunflower seed crop insurance provisions.
The sunflower seed crop insurance provisions for the 1998 and
succeeding crop years are as follows:
* * * * *
(b) Revise the paragraph preceding section 1 to read as follows:
* * * * *
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.
* * * * *
(c) Remove alphabetic paragraph designations and the definitions of
``days,'' ``final planting date,'' ``good farming practices,''
``interplanted,'' ``irrigated practice,'' ``late planted,'' ``late
planting period,'' ``practical to replant,'' ``prevented planting,''
``production guarantee,'' ``replanting,'' ``timely planted,'' and
``written agreement'' in section 1 and revise the definition of
``planted acreage'' to read as follows:
* * * * *
1. Definitions
* * * * *
Planted acreage--In addition to the definition contained in the
Basic Provisions, sunflower seed must initially be planted in rows
far enough apart to permit mechanical cultivation, unless otherwise
provided by the Special Provisions, actuarial documents, or by
written agreement.
* * * * *
(d) Remove section 2.
(e) Redesignate sections 3 through 13 as sections 2 through 12
respectively.
(f) Amend redesignated section 4 to change the section reference
therein from ``2.(f)'' to ``2''.
(g) Remove the word ``subsection'' and add in its place the word
``section'' in redesignated section 4.
(h) Remove the words ``actuarial table'' and add in their place,
the words ``actuarial documents'' in redesignated section 5,
introductory text.
(i) Revise section 6(b) to read as follows:
* * * * *
6. Insurable Acreage
* * * * *
(a) * * *
(b) Any acreage of the insured crop damaged before the final
planting date, to the extent that a majority of producers in the
area would not normally further care for the crop, must be replanted
unless we agree that it is not practical to replant.
(j) Revise section 9(a) to read as follows:
* * * * *
[[Page 65167]]
9. Replanting Payments
(a) In accordance with section 13 of the Basic Provisions, a
replanting payment for sunflower seed is allowed if the sunflowers
are damaged by an insurable cause of loss to the extent that the
remaining stand will not produce at least 90 percent of the
production guarantee for the acreage and it is practical to replant.
* * * * *
(k) Amend redesignated section 9(b) to change the section reference
therein from ``10.(c)'' to ``9(c).''
(l) Remove the word ``subsection'' and add in its place the word
``section'' in redesignated section 9(b).
(m) Amend redesignated section 11(c)(1)(iii) to change the section
reference therein from ``12.(d)'' to ``11(d)''.
(n) Amend redesignated section 11(d)(4) to change the section
reference therein from ``12.(d)(2) and (3)'' to ``11(d) (2) and (3)''.
(o) Revise redesignated section 12 to read as follows:
* * * * *
12. Prevented Planting.
Your prevented planting coverage will be 60 percent of your
production guarantee for timely planted acreage. If you have limited
or additional levels of coverage, as specified in 7 CFR part 400,
subpart T, and pay an additional premium, you may increase your
prevented planting coverage to a level specified in the actuarial
documents.
12. Amend Sec. 457.109 as follows:
(a) Revise the introductory text to read as follows:
Sec. 457.109 Sugar beet crop insurance provisions.
The sugar beet crop insurance provisions for the 1998 and
succeeding crop years in counties with a contract change date of
November 30, and for the 1999 and succeeding crop years in counties
with a contract change date of April 30, are as follows:
* * * * *
(b) Revise the paragraph preceding section 1 to read as follows:
* * * * *
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.
* * * * *
(c) Remove the definitions of ``days,'' ``FSA,'' ``final planting
date,'' ``good farming practices,'' ``interplanted,'' ``irrigated
practice,'' ``late planted,'' ``late planting period,'' ``prevented
planting,'' ``replanting,'' ``timely planted,'' and ``written
agreement'' in section 1 and revise the definition of ``planted
acreage'' to read as follows:
* * * * *
1. Definitions
* * * * *
Planted acreage--In addition to the definition contained in the
Basic Provisions, sugar beets must initially be planted in rows,
unless otherwise provided by the Special Provisions, actuarial
documents, or by written agreement.
* * * * *
(d) Revise section 2 to read as follows:
* * * * *
2. Unit Division
In addition to the requirements of section 34 of the Basic
Provisions, basic units may be divided into optional units only if
you have a sugar beet processor contract that requires the processor
to accept all production from a number of acres specified in the
sugar beet processor contract. Acreage insured to fulfill a sugar
beet processor contract which provides that the processor will
accept a designated amount of production or a combination of acreage
and production will not be eligible for optional units.
* * * * *
(e) Remove the words ``actuarial table'' and add in their place,
the words ``actuarial documents'' in redesignated section 7(a).
* * * * *
(f) Revise section 14 to read as follows:
* * * * *
14. Late Planting
The late planting provisions contained in section 16 of the
Basic Provisions are not applicable in California counties with a
July 15 cancellation date.
* * * * *
(g) Revise section 15 to read as follows:
* * * * *
15. Prevented Planting
(a) The prevented planting provisions contained in section 17 of
the Basic Provisions are not applicable in California counties with
a July 15 cancellation date.
(b) Except in those counties indicated in section 15(a), your
prevented planting coverage will be 45 percent of your production
guarantee for timely planted acreage. If you have limited or
additional levels of coverage, as specified in 7 CFR part 400,
subpart T, and pay an additional premium, you may increase your
prevented planting coverage to a level specified in the actuarial
documents.
13. Amend Sec. 457.110 as follows:
(a) Revise the introductory text to read as follows:
Sec. 457.110 Fig crop insurance provisions.
The fig crop insurance provisions for the 1999 and succeeding crop
years are as follows:
* * * * *
(b) Revise the paragraph preceding section 1 to read as follows:
* * * * *
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.
* * * * *
(c) Remove alphabetic paragraph designations and the definitions of
``good farming practices,'' ``irrigated practice,'' ``non-contiguous
land,'' and ``production guarantee'' in section 1.
(d) Remove the words ``Common Crop Insurance Policy'' and add in
their place, the words ``Basic Provisions'' in the following places:
i. Section 3;
ii. Section 4 ;
iii. Section 8, introductory text; and
iv. Sections 9 (a) and (b).
(e) Revise section 2 to read as follows:
* * * * *
2. Unit Division
(a) A basic unit, as defined in section 1 of the Basic
Provisions, will be divided into additional basic units by each fig
type designated in the Special Provisions.
(b) Provisions in the Basic Provisions that allow optional units
by section, section equivalent, or FSA farm serial number and by
irrigated and non-irrigated practices are not applicable. Optional
units may be established only if each optional unit is located on
non-contiguous land, unless otherwise allowed by written agreement.
(f) Remove the words ``actuarial table'' and add in their place,
the words ``actuarial documents'' in section 7, introductory text.
(g) Add a section 11 to read as follows:
* * * * *
11. Late and Prevented Planting
The late and prevented planting provisions of the Basic
Provisions are not applicable.
14. Amend Sec. 457.111 as follows:
(a) Revise the introductory text to read as follows:
Sec. 457.111 Pear crop insurance provisions.
The pear crop insurance provisions for the 1999 and succeeding crop
years are as follows:
* * * * *
(b) Revise the paragraph preceding section 1 to read as follows:
* * * * *
If a conflict exists among the policy provisions, the order of
priority is as follows:
[[Page 65168]]
(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.
* * * * *
(c) Remove the definitions of ``days,'' ``FSA,'' ``good farming
practices,'' ``irrigated practice,'' ``non-contiguous,'' ``production
guarantee (per acre),'' and ``written agreement'' in section 1.
(d) Revise section 2 to read as follows:
* * * * *
2. Unit Division
(a) Provisions in the Basic Provisions that allow optional units
by irrigated and non-irrigated practices are not applicable.
(b) Instead of establishing optional units by section, section
equivalent, or FSA farm serial number optional units may be
established if each optional unit is located on non-contiguous land.
(c) In addition to, or instead of, establishing optional units
by section, section equivalent, FSA farm serial number, or on non-
contiguous land, optional units may be established by varietal group
when provided for in the Special Provisions. The requirements of
section 34(a)(1) of the Basic Provisions are not applicable for this
method of unit division.
(e) Remove the words ``actuarial table'' and add in their place,
the words ``actuarial documents'' in the following places:
i. Section 6, introductory text; and
ii. Sections 13(a)(1) and (3).
(f) Remove the word ``designates'' and add in its place, the word
``designate'' in section 13(a)(1).
(g) Revise section 12 to read as follows:
12. Late and Prevented Planting
The late and prevented planting provisions of the Basic
Provisions are not applicable.
* * * * *
15. Amend Sec. 457.113 as follows:
(a) Revise the introductory text to read as follows:
Sec. 457.113 Coarse grains crop insurance provisions.
The coarse grains crop insurance provisions for the 1998 and
succeeding crop years are as follows:
* * * * *
(b) Revise the paragraph preceding section 1 to read as follows:
* * * * *
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.
* * * * *
(c) Remove alphabetic paragraph designations and the definitions of
``days,'' ``final planting date,'' ``good farming practices,''
``interplanted,'' ``irrigated practice,'' ``late planted,'' ``late
planting period,'' ``practical to replant,'' ``prevented planting,''
``replanting,'' ``timely planted,'' and ``written agreement'' in
section 1 and revise the definitions of ``planted acreage'' and
``production guarantee'' to read as follows:
* * * * *
1. Definitions
* * * * *
Planted acreage--In addition to the definition contained in the
Basic Provisions, coarse grains must initially be planted in rows
(corn must be planted in rows far enough apart to permit mechanical
cultivation), unless otherwise provided by the Special Provisions,
actuarial documents, or by written agreement.
Production guarantee (per acre)--In lieu of the definition
contained in the Basic Provisions, the number of bushels (tons for
corn insured as silage) determined by multiplying the approved
actual production history (APH) yield per acre, calculated in
accordance with 7 CFR part 400, subpart G, by the coverage level
percentage you elect.
* * * * *
(d) Remove the words ``Common Crop Insurance Policy'' and add in
their place, the words ``Basic Provisions'' in the following places:
i. Section 3(a);
ii. Section 4;
iii. Section 5;
iv. Section 6(a);
v. Section 7;
vi. Section 8, introductory text;
vii. Section 9, introductory text;
viii. Section 10(a); and
ix. Sections 11(a), (b)(1) and (2).
* * * * *
(e) Remove section 2.
(f) Redesignate sections 3 through 13 as sections 2 through 12
respectively.
(g) Remove the words ``actuarial table'' and add in their place,
the words ``actuarial documents'' in redesignated sections 5(a) and
(c).
(h) Remove the word ``provides'' and add in its place, the word
``provide'' in redesignated section 5(c).
(i) Amend redesignated section 4 to change the section reference
therein from 2(f) to 2.
(j) Remove the word ``subsection'' and add in its place the word
``section'' in redesignated section 4.
(k) Amend redesignated section 5(a)(3)(i) to change the section
reference therein from ``6(b)(1)'' to ``5(b)(1)''.
(l) Amend redesignated section 5(b) to change the section reference
therein from ``6(a)'' to ``5(a)''.
(m) Amend redesignated section 5(b)(1) to change the section
reference therein from ``6(c)'' to ``5(c)''.
(n) Amend redesignated sections 5(d) and (e) to change the section
references therein from ``6(a)'' to ``5(a)''.
(o) Revise redesignated section 6 to read as follows:
* * * * *
6. Insurable Acreage
In addition to the provisions of section 9 of the Basic
Provisions, any acreage of the insured crop damaged before the final
planting date, to the extent that a majority of producers in the
area would not normally further care for the crop, must be replanted
unless we agree that it is not practical to replant.
(p) Revise redesignated section 9(a) to read as follows:
* * * * *
9. Replanting Payments
(a) In accordance with section 13 of the Basic Provisions,
replanting payments for coarse grains are allowed if the coarse
grains are damaged by an insurable cause of loss to the extent that
the remaining stand will not produce at least 90 percent of the
production guarantee for the acreage and it is practical to replant.
* * * * *
(q) Amend redesignated section 9(b) to change the section
references therein from ``10(c)'' to ``9(c)''.
(r) Amend redesignated sections 11(b)(2)(iv) and (11)(c) to change
the section references therein from ``12(d)'' to ``11(d)''.
(s) Amend redesignated section 11(b)(2)(iv) to change the section
reference therein from ``section 3'' to ``section 2''.
(t) Amend redesignated section 11(c)(1)(iii) to change the section
reference therein from ``12(e)'' to ``11(e)''.
(u) Amend redesignated section 11(d)(2) to change the section
reference therein from ``12(c)(1)'' to ``11(c)(1)''.
(v) Amend redesignated section 11(e) to change the section
reference therein from ``12(f)'' to ``11(f)''.
(w) Amend redesignated section 11(e)(4) to change the section
reference therein from ``12(e)(2) and (3)'' to ``11(e)(2) and (3)''.
(x) Revise redesignated section 12 to read as follows:
* * * * *
12. Prevented Planting
Your prevented planting coverage will be 60 percent of your
production guarantee for timely planted acreage. If you have limited
or additional levels of coverage, as specified in 7 CFR part 400,
subpart T, and pay an additional premium, you may increase your
prevented planting coverage to a level specified in the actuarial
documents.
16. Amend Sec. 457.114 as follows:
(a) Amend the introductory text to read as follows:
[[Page 65169]]
Sec. 457.114 Nursery crop insurance provisions.
The nursery crop insurance provisions for the 1999 and succeeding
crop years are as follows:
* * * * *
(b) Revise the paragraph preceding section 1 to read as follows:
* * * * *
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.
* * * * *
(c) Remove alphabetic paragraph designations and the definition of
``written agreement'' in section 1 and revise the definition of
``irrigated practice'' to read as follows:
1. Definitions
* * * * *
Irrigated practice--In lieu of the definition contained in the
Basic Provisions, a method of producing a crop by which water is
artificially applied during the growing season by appropriate
systems and at the proper times, with the intention of providing the
quantity of water needed to maintain the amount of insurance on the
nursery plant inventory.
* * * * *
(d) Revise section 2 to read as follows:
* * * * *
2. Unit Division
In lieu of the definition of ``basic unit'' and section 34 of
the Basic Provisions, a unit consists of all growing locations in
the county within a five mile radius of the named insured locations
designated on your nursery plant inventory summary. Any growing
location more than five miles from any other growing location, but
within the county, may be designated as a separate basic unit or be
included in the closest unit listed on your nursery plant inventory
summary.
(e) Remove the words ``actuarial table'' and add in their place,
the words ``actuarial documents'' in section 8, introductory text.
(f) Add section 13 to read as follows:
* * * * *
13. Late and Prevented Planting
The late and prevented planting provisions of the Basic
Provisions are not applicable.
17. Amend Sec. 457.116 as follows:
(a) Revise the introductory text to read as follows:
Sec. 457.116 Sugarcane crop insurance provisions.
The sugarcane crop insurance provisions for the 1999 and succeeding
crop years are as follows:
* * * * *
(b) Revise the paragraph preceding section 1 to read as follows:
* * * * *
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.
* * * * *
(c) Remove alphabetic paragraph designations and the definitions of
``CFSA,'' ``good farming practices,'' ``interplanted,'' ``irrigated
practice,'' ``production guarantee,'' and ``written agreement'' in
section 1.
(d) Remove section 2.
(e) Redesignate sections 3 through 11 as sections 2 through 10
respectively.
(f) Amend redesignated section 4 to change the section reference
therein from ``2.(f)'' to ``2''.
(g) Remove the word ``subsection'' and add in its place, the word
``section'' in redesignated section 4.
(h) Remove the words ``actuarial table'' and add in their place,
the words ``actuarial documents'' in redesignated section 5,
introductory text.
(i) Amend redesignated section 7(a)(2) to change the section
reference therein from ``8(a)(3)'' to ``7(a)(3)''.
(j) Amend redesignated section 10(c)(1)(v) to change the section
reference therein from ``10(a)(2)'' to ``9(a)(2)''.
(k) Add a section 11 to read as follows:
* * * * *
11. Late and Prevented Planting
The late and prevented planting provisions of the Basic
Provisions are not applicable.
18. Amend Sec. 457.117 as follows:
(a) Revise the introductory text to read as follows:
Sec. 457.117 Forage production crop insurance provisions.
The forage production crop insurance provisions for the 1999 and
succeeding crop years are as follows:
* * * * *
(b) Revise the paragraph preceding section 1 to read as follows:
* * * * *
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.
* * * * *
(c) Remove the definitions of ``days,'' ``good farming practices,''
``irrigated practice,'' ``production guarantee (per acre),'' and
``written agreement'' in section 1.
(d) Remove the words ``actuarial table'' and add in their place,
the words ``actuarial documents'' in the following places:
i. Section 1, definition of ``forage;'' and
ii. Section 7(a).
(e) Revise section 2 to read as follows:
* * * * *
2. Unit Division
The optional unit provisions in section 34 of the Basic
Provisions are not applicable. Optional units are not allowed.
* * * * *
(f) Revise section 12 to read as follows:
* * * * *
12. Late and Prevented Planting
The late and prevented planting provisions of the Basic
Provisions are not applicable.
19. Amend Sec. 457.119 as follows:
(a) Revise the introductory text to read as follows:
Sec. 457.119 Texas citrus fruit crop insurance provisions.
The Texas citrus fruit crop insurance provisions for the 2000 and
succeeding crop years are as follows:
* * * * *
(b) Revise the paragraph preceding section 1 to read as follows:
* * * * *
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.
* * * * *
(c) Remove the definitions of ``days,'' ``FSA,'' ``good farming
practices,'' ``irrigated practice,'' ``non-contiguous land'' and
``written agreement'' in section 1.
(d) Revise section 2 to read as follows:
* * * * *
2. Unit Division
(a) A basic unit, as defined in section 1 of the Basic
Provisions, will be divided into additional basic units by each
citrus crop designated in the Special Provisions.
(b) Provisions in the Basic Provisions that allow optional units
by irrigated and non-irrigated practices are not applicable.
(c) Instead of establishing optional units by section, section
equivalent, or FSA farm serial number, optional units may be
established if each optional unit is located on non-contiguous land.
* * * * *
(e) Remove the words ``actuarial table'' and add in their place,
the words ``actuarial documents'' in the following places:
i. Section 7, introductory text; and
ii. Section 12(e).
[[Page 65170]]
(f) Remove the word ``provides'' and add in its place, the word
``provide'' in section 12(e).
(g) Revise section 13 to read as follows:
* * * * *
13. Late and Prevented Planting
The late and prevented planting provisions of the Basic
Provisions are not applicable.
20. Amend Sec. 457.121 as follows:
(a) Revise the introductory text to read as follows:
Sec. 457.121 Arizona-California citrus crop insurance provisions.
The Arizona-California citrus crop insurance provisions for the
2000 and succeeding crop years are as follows:
* * * * *
(b) Revise the paragraph preceding section 1 to read as follows:
* * * * *
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.
* * * * *
(c) Remove the definitions of ``days,'' ``good farming practices,''
``irrigated practice,'' ``non-contiguous land,'' ``production guarantee
(per acre),'' and ``written agreement'' in section 1.
(d) Revise section 2 to read as follows:
* * * * *
2. Unit Division
(a) A basic unit, as defined in section 1 of the Basic
Provisions, will also be divided into additional basic units by each
citrus crop designated in the Special Provisions.
(b) Provisions in the Basic Provisions that allow optional units
by section, section equivalent, or FSA farm serial number and by
irrigated and non-irrigated practices are not applicable. Optional
units may be established only if each optional unit is located on
non-contiguous land, unless otherwise allowed by written agreement.
* * * * *
(e) Remove the words ``actuarial table'' and add in their place,
the words ``actuarial documents'' in section 6, introductory text.
(f) Revise section 12 to read as follows:
* * * * *
12. Late and Prevented Planting
The late and prevented planting provisions of the Basic
Provisions are not applicable.
21. Amend Sec. 457.122 as follows:
(a) Revise the introductory text to read as follows:
Sec. 457.122 Walnut crop insurance provisions.
The walnut crop insurance provisions for the 1999 and succeeding
crop years are as follows:
* * * * *
(b) Revise the paragraph preceding section 1 to read as follows:
* * * * *
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.
* * * * *
(c) Remove the definitions of ``days,'' ``good farming practices,''
``irrigated practice,'' ``non-contiguous land,'' and ``written
agreement'' in section 1.
(d) Revise section 2 to read as follows:
* * * * *
2. Unit Division
Provisions in the Basic Provisions that allow optional units by
section, section equivalent, or FSA farm serial number and by
irrigated and non-irrigated practices are not applicable. Optional
units may be established only if each optional unit is located on
non-contiguous land, unless otherwise allowed by written agreement.
* * * * *
(e) Remove the words ``actuarial table'' and add in their place,
the words ``actuarial documents'' in section 6, introductory text.
(f) Revise section 12 to read as follows:
* * * * *
12. Late and Prevented Planting
The late and prevented planting provisions of the Basic
Provisions are not applicable.
22. Amend Sec. 457.123 as follows:
(a) Revise the introductory text to read as follows:
Sec. 457.123 Almond crop insurance provisions.
The almond crop insurance provisions for the 1999 and succeeding
crop years are as follows:
* * * * *
(b) Revise the paragraph preceding section 1 to read as follows:
* * * * *
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.
* * * * *
(c) Remove the definitions of ``days,'' ``good farming practices,''
``irrigated practice,'' ``non-contiguous land,'' and ``written
agreement'' in section 1.
(d) Revise section 2 to read as follows:
* * * * *
2. Unit Division
Provisions in the Basic Provisions that allow optional units by
section, section equivalent, or FSA farm serial number and by
irrigated and non-irrigated practices are not applicable. Optional
units may be established only if each optional unit is located on
non-contiguous land, unless otherwise allowed by written agreement.
* * * * *
(e) Remove the words ``actuarial table'' and add in their place,
the words ``actuarial documents'' in section 6, introductory text.
(f) Revise section 12 to read as follows:
* * * * *
12. Late and Prevented Planting
The late and prevented planting provisions of the Basic
Provisions are not applicable.
23. Amend Sec. 457.124 as follows:
(a) Revise the introductory text to read as follows:
Sec. 457.124 Raisin crop insurance provisions.
The raisin crop insurance provisions for the 1998 and succeeding
crop years are as follows:
* * * * *
(b) Revise the paragraph preceding section 1 to read as follows:
* * * * *
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.
* * * * *
(c) Remove the definitions of ``days,'' ``non-contiguous land,''
and ``written agreement'' in section 1.
(d) Remove the words ``actuarial table'' and add in their place,
the words ``actuarial documents'' in the following places:
i. Section 1, definitions of ``raisins'' and ``reference maximum
dollar amount;'' and
ii. Section 8(a).
(e) Revise section 2 to read as follows:
2. Unit Division
(a) A basic unit, as defined in section 1 of the Basic
Provisions, will be divided into additional basic units by grape
variety.
(b) Provisions in the Basic Provisions that allow optional units
by section, section equivalent, or FSA farm serial number and by
irrigated and non-irrigated practices are not applicable. Optional
units may be established only if each optional unit is located on
non-contiguous land, unless otherwise allowed by written agreement.
* * * * *
[[Page 65171]]
(f) Revise section 14 to read as follows:
14. Late and Prevented Planting
The late and prevented planting provisions of the Basic
Provisions are not applicable.
24. Amend Sec. 457.125 as follows:
(a) Revise the introductory text to read as follows:
Sec. 457.125 Safflower crop insurance provisions.
The safflower crop insurance provisions for the 1998 and succeeding
crop years in counties with a contract change date of December 31, and
for the 1999 and succeeding crop years in counties with a contract
change date of August 31 are as follows:
* * * * *
(b) Revise the paragraph preceding section 1 to read as follows:
* * * * *
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.
* * * * *
(c) Remove the definitions of ``days,'' ``FSA,'' ``final planting
date,'' ``good farming practices,'' ``interplanted,'' ``irrigated
practice,'' ``practical to replant,'' ``production guarantee (per
acre),'' ``replanting,'' and ``written agreement'' in section 1 and
revise the definition of ``planted acreage'' to read as follows:
* * * * *
1. Definitions
* * * * *
Planted acreage--In addition to the definition contained in the
Basic Provisions, safflowers must initially be planted in rows,
unless otherwise provided by the Special Provisions, actuarial
documents, or by written agreement.
* * * * *
(d) Remove section 2.
(e) Redesignate sections 3 through 13 (erroneously published as 3)
as sections 2 through 12 respectively.
(f) Remove the words ``actuarial table'' and add in their place,
the words ``actuarial documents'' in Section 5, introductory text.
(g) Amend redesignated section 11(b)(2) to change the section
reference therein from ``12(b)(1)'' to ``11(b)(1)''.
(h) Amend redesignated section 11(b)(3) to change the section
reference therein from ``12(b)(2)'' to ``11(b)(2)''.
(i) Amend redesignated section 11(b)(4) to change the section
reference therein from ``12(c)'' to ``11(c)''.
(j) Amend redesignated section 11(b)(5) to change the section
reference therein from ``12(b)(4)'' to ``11(b)(4)''.
(k) Amend redesignated section 11(b)(6) to change the section
references therein from ``12(b)(5)'' to ``11(b)(5)'' and ``12(b)(3)''
to ``11(b)(3)''.
(l) Amend redesignated section 11(b)(7) to change the section
reference therein from ``12(b)(6)'' to ``11(b)(6)''.
(m) Amend redesignated section 11(c)(1)(iii) to change the section
reference therein from ``section 12(d)'' to ``section 11(d)''.
(n) Amend redesignated section 11(d)(4) to change the section
reference therein from ``12(d)(2) and (3)'' to ``11(d)(2) and (3)''.
(o) Revise redesignated section 12 to read as follows:
* * * * *
12. Prevented Planting
Your prevented planting coverage will be 60 percent of your
production guarantee for timely planted acreage. If you have limited or
additional levels of coverage, as specified in 7 CFR part 400, subpart
T, and pay an additional premium, you may increase your prevented
planting coverage to a level specified in the actuarial documents.
* * * * *
25. Amend Sec. 457.128 as follows:
(a) Revise the paragraph preceding section 1 to read as follows:
Sec. 457.128 Guaranteed production plan of fresh market tomato 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.
* * * * *
(b) Remove the definitions of ``days,'' ``FSA,'' ``good farming
practices,'' ``irrigated practice,'' ``production guarantee (per
acre),'' ``replanting,'' and ``written agreement'' in section 1.
(c) Revise section 2 to read as follows:
* * * * *
2. Unit Division
(a) A basic unit, as defined in section 1 of the Basic Provisions,
will be divided into additional basic units by planting period, if
separate planting periods are provided for in the Special Provisions.
(b) Provisions in the Basic Provisions that allow optional units by
irrigated and non-irrigated practices are not applicable.
* * * * *
(d) Remove the words ``actuarial table'' and add in their place,
the words ``actuarial documents'' in section 8, introductory text.
(e) Revise section 14 to read as follows:
* * * * *
14. Late and Prevented Planting
The late and prevented planting provisions of the Basic
Provisions are not applicable.
* * * * *
26. Amend Sec. 457.129 as follows:
(a) Revise the introductory text to read as follows:
Sec. 457.129 Fresh market sweet corn crop insurance provisions.
The fresh market sweet corn crop insurance provisions for the 1999
and succeeding crop years are as follows:
* * * * *
(b) Revise the paragraph preceding section 1 to read as follows:
* * * * *
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.
* * * * *
(c) Remove the definitions of ``days,'' ``FSA,'' ``good farming
practices,'' ``interplanted,'' ``irrigated practice,'' ``replanting,''
and ``written agreement'' in section 1 and revise the definition of
``planted acreage'' to read as follows:
* * * * *
1. Definitions
* * * * *
Planted acreage--In addition to the definition contained in the
Basic Provisions, for each planting period, sweet corn seed must be
planted in rows far enough apart to permit mechanical cultivation,
unless otherwise provided by the Special Provisions, actuarial
documents, or by written agreement.
* * * * *
(d) Remove the words ``Actuarial Table'' and add in their place,
the words ``actuarial documents'' in the following places:
i. Section 1, definition of ``planting period;''
ii. Section 3(a);
iii. Section 7;
iv. Section 8, introductory text and paragraph (b)(2); and
v. Section 16(a)(1).
(e) Revise section 2 to read as follows:
* * * * *
2. Unit Division
(a) A basic unit, as defined in section 1 of the Basic
Provisions, will also be divided into additional basic units by
planting period.
(b) Provisions in the Basic Provisions that allow optional units
by irrigated and non-irrigated practices are not applicable.
* * * * *
[[Page 65172]]
(f) Revise section 15 to read as follows:
* * * * *
15. Late and Prevented Planting
The late and prevented planting provisions of the Basic
Provisions are not applicable.
27. Amend Sec. 457.130 as follows:
(a) Revise the introductory text to read as follows:
Sec. 457.130 Macadamia tree crop insurance provisions.
The macadamia tree crop insurance provisions for the 1999 and
succeeding crop years are as follows:
* * * * *
(b) Revise the paragraph preceding section 1 to read as follows:
* * * * *
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.
* * * * *
(c) Remove the definitions of ``days,'' ``non-contiguous,'' and
``written agreement'' in section 1.
(d) Revise section 2 to read as follows:
* * * * *
2. Unit Division
(a) Sections 34(a) (1), (3) and (4) of the Basic Provisions are
not applicable.
(b) Provisions in the Basic Provisions that allow optional units
by section, section equivalent, or FSA farm serial number and by
irrigated and non-irrigated practices are not applicable. Unless
otherwise allowed by written agreement, optional units may be
established only if each optional unit:
(1) Contains at least 80 acres of insurable age macadamia trees;
or
(2) Is located on non-contiguous land.
(c) You must have provided records, which can be independently
verified, of acreage and age of trees for each unit for at least the
last crop year.
* * * * *
(e) Remove the words ``actuarial table'' and add in their place,
the words ``actuarial documents and'' in the following places:
i. Section 3(a)(1); and
ii. Section 6, introductory text.
(f) Revise section 12 to read as follows:
12. Late and Prevented Planting
The late and prevented planting provisions of the Basic Provisions
are not applicable.
28. Amend Sec. 457.131 as follows:
(a) Revise the introductory text to read as follows:
Sec. 457.131 Macadamia nut crop insurance provisions.
The macadamia nut crop insurance provisions for the 2000 and
succeeding crop years are as follows:
* * * * *
(b) Revise the paragraph preceding section 1 to read as follows:
* * * * *
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.
* * * * *
(c) Remove the definitions of ``days,'' ``good farming practices,''
``irrigated practice,'' ``non-contiguous,'' and ``written agreement''
in section 1.
(d) Revise section 2 to read as follows:
* * * * *
2. Unit Division
(a) Section 34(a)(1) of the Basic Provisions is not applicable.
(b) Provisions in the Basic Provisions that allow optional units
by section, section equivalent, or FSA farm serial number and by
irrigated and non-irrigated practices are not applicable. Unless
otherwise allowed by written agreement, optional units may be
established only if each optional unit:
(1) Contains at least 80 acres of bearing macadamia trees; or
(2) Is located on non-contiguous land.
* * * * *
(e) Remove the words ``actuarial table'' and add in their place,
the words ``actuarial documents'' in section 6, introductory text.
(f) Revise section 12 to read as follows:
* * * * *
12. Late and Prevented Planting
The late and prevented planting provisions of the Basic
Provisions are not applicable.
* * * * *
29. Amend Sec. 457.132 as follows:
(a) Revise the introductory text to read as follows:
Sec. 457.132 Cranberry crop insurance provisions.
The cranberry crop insurance provisions for the 1999 and succeeding
crop years are as follows:
* * * * *
(b) Revise the paragraph preceding section 1 to read as follows:
* * * * *
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.
* * * * *
(c) Remove the definitions of ``days,'' ``good farming practices,''
``irrigated practice,'' ``non-contiguous land,'' ``production guarantee
(per acre),'' and ``written agreement'' in section 1.
(d) Revise section 2 to read as follows:
* * * * *
2. Unit Division
Provisions in the Basic Provisions that allow optional units by
section, section equivalent, or FSA farm serial number and by
irrigated and non-irrigated practices are not applicable. Optional
units may be established only if each optional unit is located on
non-contiguous land, unless otherwise allowed by written agreement.
* * * * *
(e) Remove the words ``actuarial table'' and add in their place,
the words ``actuarial documents'' in section 6, introductory text and
paragraph (d).
(f) Revise section 11 to read as follows:
* * * * *
11. Late and Prevented Planting
The late and prevented planting provisions of the Basic
Provisions are not applicable.
30. Amend Sec. 457.133 as follows:
(a) Revise the introductory text to read as follows:
Sec. 457.133 Prune crop insurance provisions.
The prune crop insurance provisions for the 1999 and succeeding
crop years are as follows:
* * * * *
(b) Revise the paragraph preceding section 1 to read as follows:
* * * * *
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.
* * * * *
(c) Remove the definitions of ``days,'' ``FSA,'' ``good farming
practices,'' ``irrigated practice,'' ``non-contiguous land,''
``production guarantee (per acre),'' and ``written agreement'' in
section 1.
(d) Revise section 2 to read as follows:
* * * * *
2. Unit Division
Provisions in the Basic Provisions that allow optional units by
irrigated and non-irrigated practices are not applicable. Instead of
establishing optional units by section, section equivalent, or FSA
farm serial number optional units may be established if each
optional unit is located on non-contiguous land.
* * * * *
(e) Remove the words ``actuarial table'' and add in their place,
the words
[[Page 65173]]
``actuarial documents'' in section 6, introductory text.
(f) Revise section 12 to read as follows:
* * * * *
12. Late and Prevented Planting
The late and prevented planting provisions of the Basic
Provisions are not applicable.
31. Amend Sec. 457.135 as follows:
(a) Revise the introductory text to read as follows:
Sec. 457.135 Onion crop insurance provisions.
The onion crop insurance provisions for the 1998 and succeeding
crop years in counties with a contract change date of December 31, and
for the 1999 and succeeding crop years in counties with a contract
change date of June 30 are as follows:
* * * * *
(b) Revise the paragraph preceding section 1 to read as follows:
* * * * *
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.
* * * * *
(c) Remove the definitions of ``crop year,'' ``days,'' ``FSA,''
``final planting date,'' ``good farming practices,'' ``interplanted,''
``irrigated practice,'' ``late planted,'' ``late planting period,''
``practical to replant,'' ``prevented planting,'' ``replanting,''
``timely planted,'' and ``written agreement'' in section 1 and revise
the definition of ``planted acreage'' to read as follows:
* * * * *
1. Definitions
* * * * *
Planted acreage--In addition to the definition contained in the
Basic Provisions, onions must be planted in rows.
* * * * *
(d) Revise section 2 to read as follows:
* * * * *
2. Unit Division
(a) Provisions in the Basic Provisions that allow optional units
by section, section equivalent, or FSA farm serial number are not
applicable.
(b) In addition to, or instead of, establishing optional units
by irrigated acreage or non-irrigated acreage, optional units may be
established by type, if the specific type is designated in the
Special Provisions.
* * * * *'
(e) Remove the words ``actuarial table'' and add in their place,
the words ``actuarial documents'' in the following places:
i. Section 6; and
ii. Section 7, introductory text.
(f) Revise section 14 to read as follows:
* * * * *
14. Prevented Planting
Your prevented planting coverage will be 45 percent of your
production guarantee for timely planted acreage. If you have limited
or additional levels of coverage, as specified in 7 CFR part 400,
subpart T, and pay an additional premium, you may increase your
prevented planting coverage to a level specified in the actuarial
documents.
(g) Remove section 15.
* * * * *
32. Amend Sec. 457.137 as follows:
* * * * *
(a) Revise the paragraph preceding section 1 to read as follows:
Sec. 457.137 Green pea 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.
* * * * *
(b) Remove the definitions of ``approved yield,'' ``days,''
``FSA,'' ``final planting date,'' ``interplanted,'' ``irrigated
practice,'' ``replanting,'' ``timely planted,'' and ``written
agreement'' in section 1 and revise the definition of ``planted
acreage'' to read as follows:
* * * * *
1. Definitions
* * * * *
Planted acreage--In addition to the definition contained in the
Basic Provisions, peas must initially be placed in rows to be
considered planted. Acreage planted in any other manner will not be
insurable unless otherwise provided by the Special Provisions or by
written agreement.
* * * * *
(c) Revise section 2 to read as follows:
* * * * *
2. Unit Division
(a) For any processor contract that stipulates the amount of
production to be delivered:
(1) In lieu of the definition contained in the Basic Provisions,
a basic unit will consist of all acreage planted to the insured crop
in the county that will be used to fulfill contracts with each
processor;
(i) There will be no more than one basic unit for all production
contracted with each processor contract;
(ii) In accordance with section 12, all production from any
basic unit in excess of the amount under contract will be included
as production to count if such production is applied to any other
basic unit for which the contracted amount has not been fulfilled;
and
(2) Provisions in the Basic Provisions that allow optional units
by section, section equivalent, or FSA farm serial number and by
irrigated and non-irrigated practices are not applicable. Optional
units may only be established based on shell type and pod type green
peas if the shell type acreage does not continue into the pod type
acreage in the same rows or planting pattern.
(b) For any processor contract that stipulates the number of
acres to be planted, in addition to or instead of, establishing
optional units by section, section equivalent or FSA farm serial
number, or irrigated and non-irrigated acreage, optional units may
be established based on shell type and pod type green peas if the
shell type acreage does not continue into the pod type acreage in
the same rows or planting pattern.
* * * * *
(d) Revise section 13 to read as follows:
* * * * *
13. Late Planting
A late planting period is not applicable to green peas unless
allowed by the Special Provisions and you provide written approval
from the processor by the acreage reporting date that it will accept
the production from the late planted acres when it is expected to be
ready for harvest.
* * * * *
(e) Revise section 14 to read as follows:
* * * * *
14. Prevented Planting
Your prevented planting coverage will be 40 percent of your
production guarantee for timely planted acreage. If you have limited or
additional levels of coverage, as specified in 7 CFR part 400, subpart
T, and pay an additional premium, you may increase your prevented
planting coverage to a level specified in the actuarial documents.
* * * * *
33. Amend Sec. 457.138 as follows:
(a) Revise the introductory text to read as follows:
Sec. 457.138 Grape crop insurance provisions.
The grape crop insurance provisions for the 1999 and succeeding
crop years are as follows:
* * * * *
(b) Revise the paragraph preceding section 1 to read as follows:
* * * * *
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.
* * * * *
(c) Remove the definitions of ``days,'' ``FSA,'' ``good farming
practices,'' ``irrigated practice,'' ``non-contiguous,''
[[Page 65174]]
``production guarantee (per acre)'' ``USDA,'' and ``written agreement''
in section 1.
(d) Revise section 2 to read as follows:
* * * * *
2. Unit Division
(a) In California only, a basic unit, as defined in section 1 of
the Basic Provisions will be divided into additional basic units by
each variety that you insure.
(b) In California only, provisions in the Basic Provisions that
provide for optional units by section, section equivalent, or FSA
farm serial number and by irrigated and non-irrigated practices are
not applicable. Optional units may be established only if each
optional unit is located on non-contiguous land, unless otherwise
allowed by written agreement.
(c) In all states except California, in addition to, or instead
of, establishing optional units by section, section equivalent, or
FSA farm serial number and by irrigated and non-irrigated acreage as
provided in the unit division provisions contained in the Basic
Provisions a separate optional unit may be established if each
optional unit:
(1) Is located on non-contiguous land; or
(2) Consists of a separate varietal group when separate varietal
groups are specified in the Special Provisions.
* * * * *
(e) Remove the words ``actuarial table'' and add in their place,
the words ``actuarial documents'' in section 7, introductory text.
(f) Revise section 13 to read as follows:
13. Late and Prevented Planting
The late and prevented planting provisions of the Basic
Provisions are not applicable.
34. Amend Sec. 457.139 as follows:
(a) Revise the introductory text to read as follows:
Sec. 457.139 Fresh market tomato (dollar plan) crop insurance
provisions.
The fresh market tomato (dollar plan) crop insurance provisions for
the 1999 and succeeding crop years are as follows:
* * * * *
(b) Revise the paragraph preceding section 1 to read as follows:
* * * * *
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.
* * * * *
(c) Remove the definitions of ``days,'' ``FSA,'' ``good farming
practices,'' ``interplanted,'' ``irrigated practice,'' ``replanting,''
and ``written agreement'' in section 1 and revise the definition of
``planted acreage'' to read as follows:
* * * * *
1. Definitions
* * * * *
Planted acreage--In addition to the definition contained in the
Basic Provisions, for each planting period, tomato seed or
transplants must initially be planted in rows, unless otherwise
provided by Special Provisions, actuarial documents, or by written
agreement.
* * * * *
(d) Remove the words ``Actuarial Table'' and add in their place,
the words ``actuarial documents'' in the following places:
i. Section 1, definition of ``planting period;''
ii. Section 3(a);
iii. Section 7, introductory text;
iv. Section 8, introductory text and paragraph (b)(2); and
v. Section 16(a)(1).
(e) Revise section 2 to read as follows:
* * * * *
2. Unit Division
(a) A basic unit, as defined in section 1 of the Basic
Provisions, will also be divided into additional basic units by
planting period.
(b) Provisions in the Basic Provisions that allow optional units
by irrigated and non-irrigated practices are not applicable.
* * * * *
(f) Revise section 15 to read as follows:
* * * * *
15. Late and Prevented Planting
The late and prevented planting provisions of the Basic
Provisions are not applicable.
35. Amend Sec. 457.141 as follows:
Sec. 457.141 Rice crop insurance provisions.
(a) Revise the paragraph preceding section 1 to read as follows:
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.
* * * * *
(b) Remove the definitions of ``days,'' ``FSA,'' ``final planting
date,'' ``good farming practices,'' ``irrigated practice,'' ``late
planted,'' ``late planting period,'' ``practical to replant,''
``prevented planting,'' ``production guarantee (per acre),''
``replanting,'' ``timely planted,'' and ``written agreement'' in
section 1.
* * * * *
(c) Revise section 2 to read as follows:
* * * * *
2. Unit Division
Provisions in the Basic Provisions that allow optional units by
irrigated and non-irrigated practices are not applicable.
* * * * *
(d) Remove the words ``actuarial table'' and add in their place,
the words ``actuarial documents'' in section 6, introductory text.
(e) Revise section 13 to read as follows:
* * * * *
13. Prevented Planting
Your prevented planting coverage will be 45 percent of your
production guarantee for timely planted acreage. If you have limited
or additional levels of coverage, as specified in 7 CFR part 400,
subpart T, and pay an additional premium, you may increase your
prevented planting coverage to a level specified in the actuarial
documents.
(f) Remove section 14.
36. Amend Sec. 457.148 as follows:
(a) Revise the introductory text to read as follows:
Sec. 457.148 Fresh market pepper crop insurance provisions.
The fresh market pepper crop insurance provisions for the 1999 and
succeeding crop years are as follows:
* * * * *
(b) Revise the paragraph preceding section 1 to read as follows:
* * * * *
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.
* * * * *
(c) Remove the definitions of ``days,'' ``FSA,'' ``good farming
practices,'' ``interplanted,'' ``irrigated practice,'' ``replanting,''
and ``written agreement'' in section 1 and revise the definition of
``planted acreage'' to read as follows:
* * * * *
1. Definitions
* * * * *
Planted acreage--In addition to the definition contained in the
Basic Provisions, for each planting period, pepper seed or
transplants must initially be planted in rows, unless otherwise
provided by the Special Provisions, actuarial documents, or by
written agreement.
(d) Remove the words ``Actuarial Table'' and add in their place,
the words ``actuarial documents'' in the following places:
i. Section 1, definition of ``planting period;''
ii. Section 3(a);
iii. Section 7;
iv. Section 8, introductory text and paragraph (b)(2); and
v. Section 16(a)(1).
(e) Revise section 2 to read as follows:
* * * * *
[[Page 65175]]
2. Unit Division
(a) A basic unit, as defined in section 1 of the Basic
Provisions, will also be divided into additional basic units by
planting period.
(b) Provisions in the Basic Provisions that allow optional units
by irrigated and non-irrigated practices are not applicable.
* * * * *
(f) Revise section 15 to read as follows:
15. Late and Prevented Planting
The late and prevented planting provisions of the Basic
Provisions are not applicable.
37. Amend Sec. 457.149 as follows:
(a) Revise the introductory text to read as follows:
Sec. 457.149 Table grape crop insurance provisions.
The table grape crop insurance provisions for the 1999 and
succeeding crop years are as follows:
* * * * *
(b) Revise the paragraph preceding section 1 to read as follows:
* * * * *
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.
* * * * *
(c) Remove the definitions of ``days,'' ``good farming practices,''
``irrigated practice,'' ``non-contiguous,'' ``production guarantee (per
acre),'' and ``written agreement'' in section 1.
(d) Revise section 2 to read as follows:
2. Unit Division
(a) A basic unit, as defined in section 1 of the Basic
Provisions, will be divided into additional basic units by each
table grape variety designated in the Special Provisions.
(b) Provisions in the Basic Provisions that allow optional units
by section, section equivalent, or FSA farm serial number and by
irrigated and non-irrigated practices are not applicable. Optional
units may be established only if each optional unit is located on
non-contiguous land, unless otherwise allowed by written agreement.
* * * * *
(e) Remove the words ``actuarial table'' and add in their place,
the words ``actuarial documents'' in section 7(a).
(f) Revise section 13 to read as follows:
* * * * *
13. Late and Prevented Planting
The late and prevented planting provisions of the Basic
Provisions are not applicable.
38. Amend Sec. 457.150 as follows:
(a) Revise the introductory text to read as follows:
Sec. 457.150 Dry bean crop insurance provisions.
The dry bean crop insurance provisions for the 1998 and succeeding
crop years are as follows:
* * * * *
(b) Revise the paragraph preceding section 1 to read as follows:
* * * * *
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.
* * * * *
(c) Remove the definitions of ``days,'' ``FSA,'' ``final planting
date,'' ``good farming practices,'' ``interplanted,'' ``irrigated
practice,'' ``late planted,'' ``late planting period,'' ``prevented
planting,'' ``production guarantee (per acre),'' ``replanting,'' and
``timely planted,'' and ``written agreement'' in section 1 and revise
the definition of ``planted acreage'' to read as follows:
* * * * *
1. Definitions
* * * * *
Planted acreage--In addition to the definition contained in the
Basic Provisions, beans must initially be planted in rows far enough
apart to permit mechanical cultivation, unless otherwise provided by
the Special Provisions, actuarial documents, or by written
agreement.
* * * * *
(d) Revise section 2 to read as follows:
* * * * *
2. Unit Division
(a) In addition to the definition of basic unit in section 1 of
the Basic Provisions, all acreage of contract seed beans qualifies
as a separate basic unit. For production based seed bean processor
contracts, the basic unit will consist of all the acreage needed to
produce the amount of production under contract, based on the actual
production history of the acreage. For acreage based seed bean
processor contracts, the basic unit will consist of all acreage
specified in the contract.
(b) In addition to, or instead of, establishing optional units
by section, section equivalent, or FSA farm serial number and by
irrigated and non-irrigated acreage as provided in the unit division
provisions contained in the Basic Provisions, a separate optional
unit may be established for each bean type shown in the Special
Provisions.
(c) Contract seed beans may qualify for optional units only if
the seed bean processor contract specifies the number of acres under
contract. Contract seed beans produced under a seed bean processor
contract that specifies only an amount of production or a
combination of acreage and production, are not eligible for optional
units.
* * * * *
(e) Remove the words ``actuarial table'' and add in their place,
the words ``actuarial documents'' in section 7(a).
(f) Revise section 7(c)(3) to read as follows:
* * * * *
7. Insured Crop
* * * * *
(c) * * *
(3) Both parties (you and us) enter into a written agreement
allowing insurance on the type in accordance with section 18 of the
Basic Provisions.
* * * * *
(g) Revise section 14 to read as follows:
* * * * *
14. Prevented Planting
Your prevented planting coverage will be 60 percent of your
production guarantee for timely planted acreage. If you have limited
or additional levels of coverage, as specified in 7 CFR part 400,
subpart T, and pay an additional premium, you may increase your
prevented planting coverage to a level specified in the actuarial
documents.
(h) Remove section 15.
39. Amend Sec. 457.151 as follows:
(a) Revise the introductory text to read as follows:
Sec. 457.151 Forage seeding crop insurance provisions.
The forage seeding crop insurance provisions for the 1999 and
succeeding crop years are as follows:
* * * * *
(b) Revise the paragraph preceding section 1 to read as follows:
* * * * *
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.
* * * * *
(c) Remove the definitions of ``days,'' ``FSA,'' ``final planting
date,'' ``interplanted,'' ``irrigated practice,'' ``practical to
replant,'' and ``written agreement'' in section 1 and revise the
definitions of ``planted acreage'' and ``sales closing date'' to read
as follows:
* * * * *
1. Definitions
* * * * *
Planted acreage--In addition to the provisions in section 1 of
the Basic Provisions, land on which seed is initially spread onto
the soil surface by any method and subsequently is mechanically
incorporated into the soil in a timely manner and at the proper
depth will be considered planted, unless otherwise provided by the
Special Provisions, actuarial documents, or written agreement.
Sales closing date--In lieu of the definition contained in the
Basic Provisions, a date
[[Page 65176]]
contained in the Special Provisions by which an application must be
filed and by which you may change your crop insurance coverage for a
crop year. If the Special Provisions provide a sales closing date
for both fall seeded and spring seeded practices for the insured
crop and you plant any insurable fall seeded acreage, you may not
change your crop insurance coverage after the fall sales closing
date for the fall seeded practice.
* * * * *
(d) Revise section 2 to read as follows:
* * * * *
2. Unit Division
A basic unit, as defined in section 1 of the Basic Provisions,
will also be divided into additional basic units by spring planted
and fall planted acreage.
* * * * *
(e) Remove the words ``actuarial table'' and add in their place,
the words ``actuarial documents'' in the following places:
i. Section 1, definition of ``forage;''
ii. Section 3(a); and
iii. Section 6, introductory text.
(f) Revise section 13 to read as follows:
* * * * *
13. Late and Prevented Planting
The late and prevented planting provisions of the Basic
Provisions are not applicable.
40. Amend Sec. 457.153 as follows:
(a) Revise the introductory text to read as follows:
Sec. 457.153 Peach crop insurance provisions.
The peach crop insurance provisions for the 1999 and succeeding
crop years are as follows:
* * * * *
(b) Revise the paragraph preceding section 1 to read as follows:
* * * * *
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.
* * * * *
(c) Remove the definitions of ``days,'' ``FSA,'' ``good farming
practices,'' ``irrigated practice,'' ``production guarantee (per
acre),'' and ``written agreement'' in section 1.
(d) Remove section 2.
(e) Designate sections 3 through 12 as sections 2 through 11
respectively.
(f) Remove the words ``actuarial table'' and add in their place,
the words ``actuarial documents'' in redesignated section 5,
introductory text.
(g) Amend section 10(b)(2) to change the section reference therein
from ``11(b)(1)'' to ``10(b)(1)''.
(h) Amend section 10(b)(3) to change the section reference therein
from ``11(b)(2)'' to ``10(b)(2)''.
(i) Amend section 10(b)(4) to change the section reference therein
from ``11(c)'' to ``10(c)''.
(j) Amend section 10(b)(5) to change the section reference therein
from ``11(b)(4)'' to ``10(b)(4)''.
(k) Amend section 10(b)(6) to change the section references therein
from ``11(b)(5)'' to ``10(b)(5)'' and ``11(b)(3)'' to ``10(b)(3)''.
(l) Amend section 10(b)(7) to change the section reference therein
from ``11(b)(6)'' to ``10(b)(6)''.
(m) Amend section 10(c)(1)(i)(B) to change the section reference
therein from ``section 10'' to ``section 9''.
(n) Amend section 10(c)(3)(i)(B) to change the section reference
therein from ``11(c)(3)(i)(A)'' to ``10(c)(3)(i)(A)''.
(o) Amend section 10(c)(3)(ii)(B) to change the section reference
therein from ``11(c)(3)(ii)(A)'' to ``10(c)(3)(ii)(A)''.
(p) Revise section 11 to read as follows:
* * * * *
11. Late and Prevented Planting
The late and prevented planting provisions of the Basic
Provisions are not applicable.
* * * * *
41. Amend Sec. 457.155 as follows:
* * * * *
(a) Revise the paragraph preceding section 1 to read as follows:
Sec. 457.155 Processing bean 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.
* * * * *
(b) Remove the definitions of ``approved yield,'' ``days,''
``FSA,'' ``final planting date,'' ``interplanted,'' ``irrigated
practice,'' ``production guarantee (per acre),'' ``replanting,''
``timely planted,'' and ``written agreement'' in section 1 and revise
the definition of ``planted acreage'' to read as follows:
* * * * *
1. Definitions
* * * * *
Planted acreage--In addition to the definition contained in the
Basic Provisions, beans must initially be placed in rows far enough
apart to permit mechanical cultivation to be considered planted.
Acreage planted in any other manner will not be insurable unless
otherwise provided by the Special Provisions or by written
agreement.
* * * * *
(c) Revise section 2 to read as follows:
* * * * *
2. Unit Division
(a) For any processor contract that stipulates the amount of
production to be delivered:
(1) In lieu of the definition contained in the Basic Provisions,
a basic unit will consist of all acreage planted to the insured crop
in the county that will be used to fulfill contracts with each
processor;
(i) There will be no more than one basic unit for all production
contracted with each processor contract;
(ii) In accordance with section 12, all production from any
basic unit in excess of the amount under contract will be included
as production to count if such production is applied to any other
basic unit for which the contracted amount has not been fulfilled;
and
(2) Provisions in the Basic Provisions that allow optional units
by section, section equivalent, or FSA farm serial number and by
irrigated and non-irrigated practices are not applicable. Optional
units will not be established.
(b) For any processor contract that stipulates the number of
acres to be planted, in addition to or instead of, establishing
optional units by section, section equivalent or FSA farm serial
number, or irrigated and non-irrigated acreage, optional units may
be established by type if acreage of one type does not continue into
acreage of another type in the same rows or planting pattern.
* * * * *
(d) Remove the words ``actuarial table'' and add in their place,
the words ``actuarial documents'' in section 7(a).
(e) Revise section 13 to read as follows:
* * * * *
13. Late Planting
A late planting period is not applicable to processing beans
unless allowed by the Special Provisions and you provide written
approval from the processor by the acreage reporting date that it
will accept the production from the late planted acres when it is
expected to be ready for harvest.
* * * * *
(f) Revise section 14 to read as follows:
* * * * *
14. Prevented Planting
Your prevented planting coverage will be 40 percent of your
production guarantee for timely planted acreage. If you have limited
or additional levels of coverage, as specified in 7 CFR part 400,
subpart T, and pay an additional premium, you may increase your
prevented planting coverage to a level specified in the actuarial
documents.
42. Amend Sec. 457.157 as follows:
(a) Revise the introductory text to read as follows:
[[Page 65177]]
Sec. 457.157 Plum crop insurance provisions.
The plum crop insurance provisions for the 1999 and succeeding crop
years are as follows:
* * * * *
(b) Revise the paragraph preceding section 1 to read as follows:
* * * * *
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.
* * * * *
(c) Remove the definitions of ``days,'' ``good farming practices,''
``irrigated practice,'' ``non-contiguous,'' ``production guarantee (per
acre)'' and ``written agreement'' in section 1.
(d) Revise section 2 to read as follows:
* * * * *
2. Unit Division
Provisions in the Basic Provisions that allow optional units by
section, section equivalent, or FSA farm serial number and by
irrigated and non-irrigated practices are not applicable. Optional
units must meet one or more of the following, as applicable, unless
otherwise provided by the Special Provisions, actuarial documents,
or written agreement:
(a) Optional units may be established if each optional unit is
located on non-contiguous land.
(b) In addition to, or instead of, establishing optional units
for non-contiguous land, optional units may be established by
varietal group when provided for in the Special Provisions. The
requirements of section 34(a)(1) of the Basic Provisions are not
applicable for this method of unit division.
* * * * *
(e) Remove the words ``actuarial table'' and add in their place,
the words ``actuarial documents'' in section 6, introductory text.
(f) Revise section 12 to read as follows:
* * * * *
12. Late and Prevented Planting
The late and prevented planting provisions of the Basic
Provisions are not applicable.
* * * * *
43. Amend Sec. 457.160 as follows:
Sec. 457.160 Processing tomato crop insurance provisions.
(a) Revise the paragraph preceding section 1 to read as follows:
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.
* * * * *
(b) Remove the definitions of ``approved yield,'' ``days,''
``FSA,'' ``final planting date,'' ``interplanted,'' ``irrigated
practice,'' ``production guarantee (per acre),'' ``replanting,''
``timely planted,'' ``USDA,'' and ``written agreement'' in section 1
and revise the definition of ``planted acreage'' to read as follows:
* * * * *
1. Definitions
* * * * *
Planted acreage--In addition to the definition contained in the
Basic Provisions, tomatoes must initially be placed in rows to be
considered planted. Acreage planted in any other manner will not be
insurable unless otherwise provided by the Special Provisions or by
written agreement.
* * * * *
(c) Revise section 2 to read as follows:
* * * * *
2. Unit Division
(a) Notwithstanding the provisions of this section or any unit
division provisions contained in the Basic Provisions, no indemnity
will be paid for any loss of production on any unit if the insured
produced a crop sufficient to fulfill the processor contracts
forming the basis for the guarantee, and any indemnity will be
limited to the amount necessary to compensate for loss in yield at
the price elected between production to count and the contract
requirements.
(b) In California only, in addition to, or instead of,
establishing optional units by section, section equivalent or FSA
farm serial number and by irrigated and non-irrigated acreage as
provided in the unit division provisions contained in the Basic
Provisions, optional units may be established if acreage planted to
tomatoes is separated by a field that is not planted to tomatoes, or
by a permanent boundary such as a permanent waterway, fence, public
road or woodland. Such optional unit must consist of the minimum
number of acres stated in the Special Provisions. Acreage planted to
tomatoes that is less than the minimum number of acres required will
attach to the closest unit within the section, section equivalent,
or FSA farm serial number.
* * * * *
(d) Remove the words ``actuarial table'' and add in their place,
the words ``actuarial documents'' in sections 7 and 8(a).
(e) Remove section 16.
Signed in Washington, D.C., on December 1, 1997.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 97-31860 Filed 12-4-97; 11:13 am]
BILLING CODE 3410-08-P