[Federal Register Volume 64, Number 144 (Wednesday, July 28, 1999)]
[Rules and Regulations]
[Pages 40738-40740]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-19014]
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DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Parts 400 and 402
RIN 0563-AB68
General Administrative Regulations, Subpart U; and Catastrophic
Risk Protection Endorsement; Regulations for the 1999 and Subsequent
Reinsurance Years
AGENCY: Federal Crop Insurance Corporation, USDA.
ACTION: Final rule.
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SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes the
General Administrative Regulations, subpart U--Ineligibility for
Programs Under the Federal Crop Insurance Act (7 CFR part 400, subpart
U) and the Catastrophic Risk Protection Endorsement (7 CFR part 402) to
implement the statutory mandates of the Agricultural Research,
Extension, and Education Reform Act of 1998 (1998 Research Act) and the
Agriculture, Rural Development, Food and Drug Administration and
Related Agencies Appropriations Act, 1999 (1999 Appropriations Act)
enacted on October 19, 1998.
EFFECTIVE DATE: This rule is effective September 27, 1999.
FOR FURTHER INFORMATION CONTACT: Louise Narber, Insurance Management
Specialist, Research and Development, Product Development Division,
Federal Crop Insurance Corporation, United States Department of
Agriculture, 9435 Holmes Road, Kansas City, MO 64131, telephone (816)
926-7730.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This rule has been determined to be significant for the purposes of
Executive Order 12866 and, therefore, has been reviewed by the Office
of Management and Budget (OMB).
Paperwork Reduction Act of 1995
Under the provisions of the Paperwork Reduction Act of 1995 (44
U.S.C. chapter 35), the collections of information for this rule have
been previously approved by OMB under control number 0563-0053 through
April 30, 2001. This rule was amended to implement the statutory
mandates of the 1998 Research Act which changed the administrative fee
for CAT coverage from $50 per crop per county, not to exceed $200 per
county, or $600 for all counties in which the producer elected to
obtain limited coverage, to $60 per crop per county. The amendments set
forth in this rule do not revise the content or alter the frequency of
reporting for any of the forms or information collections cleared under
the above-referenced docket.
Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. This rule contains no Federal
mandates (under the regulatory provisions of title II of UMRA) for
State, local, and tribal governments or the private sector. Therefore,
this rule is not subject to the requirements of sections 202 and 205 of
UMRA.
Executive Order 12612
It has been determined under section 6(a) of Executive Order 12612,
Federalism, that this rule does not have sufficient federalism
implications to warrant the preparation of a Federalism Assessment. The
provisions contained in this rule will not have a substantial direct
effect on States or their political subdivisions or on the distribution
of power and responsibilities among the various levels of government.
Regulatory Flexibility Act
This regulation will not have a significant economic impact on a
substantial number of small entities. The regulation does not require
any more action on the part of the small entities than is required on
the part of large entities. Therefore, this action is determined to be
exempt from the provisions of the Regulatory Flexibility Act (5 U.S.C.
605) and no Regulatory Flexibility Analysis was prepared.
[[Page 40739]]
Federal Assistance Program
This program is listed in the Catalog of Federal Domestic
Assistance under No. 10.450.
Executive Order 12372
This program is not subject to the provisions of Executive Order
12372 which require intergovernmental consultation with State and local
officials. See the Notice related to 7 CFR part 3015, subpart V,
published at 48 FR 29115, June 24, 1983.
Executive Order 12988
This rule has been reviewed in accordance with Executive Order
12988 on civil justice reform. The provisions of this rule will not
have a retroactive effect. The provisions of this rule will preempt
State and local laws to the extent such State and local laws are
inconsistent herewith. The administrative appeal provisions published
at 7 CFR part 11 must be exhausted before any action for judicial
review of any determination made by FCIC may be brought.
Environmental Evaluation
This action is not expected to have a significant economic impact
on the quality of the human environment, health, and safety. Therefore,
neither an Environmental Assessment or an Environmental Impact
Statement is needed.
Background
This rule finalizes revisions to part 400, subpart U and part 402
mandated by the 1998 Research Act, enacted June 23, 1998, and the 1999
Appropriations Act enacted on October 19, 1998. On Thursday, July 30,
1998, FCIC published an interim rule in the Federal Register at 63 FR
40630-40632 to amend subpart U and the Catastrophic Risk Protection
Endorsement to implement the statutory mandates of the 1998 Research
Act, which requires the provisions be implemented for the 1999 and
subsequent reinsurance years. The 1999 Appropriations Act enacted after
the publication of the interim rule waives the administrative fee of 10
percent of the premium that was enacted in the 1998 Research Act for
the 1999 and subsequent reinsurance years. Changes in this rule, not
made effective by the interim rule, are not in effect until the
effective date of this rule.
Following publication of the interim rule, the public was afforded
60 days to submit written comments. A total of 8 comments was received
from an insurance company and an insurance service organization. The
comments received and FCIC's responses are as follows:
Comment: An insurance service organization stated that private
carriers are expected to complete forms, issue policies, adjust losses,
audit policies, and now reprogram the computer systems to handle the
change in the Basic Provisions procedures and perform the billing
function for CAT policies in exchange for minimal reimbursement. The
insurance service organization suggested that FCIC, through the
Standard Reinsurance Agreement, allow companies to retain 50 percent of
the fees, including flat fees or percentages based on premium
computations.
Response: The 1998 Research Act specifies all administrative fees
shall be deposited in the crop insurance fund to be available for the
programs and activities of FCIC and specifically prohibits use of this
fund to compensate insurance providers or agents for the delivery of
services. Therefore, no change has been made.
Comment: An insurance service organization suggested the
definitions for ``additional coverage,'' ``administrative fee,''
``catastrophic risk protection,'' ``limited coverage,'' and ``limited
resource farmer'' be deleted from the Catastrophic Risk Protection
Endorsement since they are being added to the Basic Provisions. The
insurance service organization suggested if they were not eliminated
they should be revised to match those definitions in the Basic
Provisions, unless additional information is needed in the Catastrophic
Risk Protection Endorsement.
Response: FCIC has deleted the definitions for ``additional
coverage,'' ``administrative fee,'' ``catastrophic risk protection,''
``limited coverage,'' and ``limited resource farmer'' from the
Catastrophic Risk Protection Endorsement and moved them to the Basic
Provisions.
Comment: An insurance company and an insurance service organization
stated the regulation references 10 percent of the premium subsidy and
the law refers to this as 10 percent of the imputed premium. They asked
if there was a reason for the difference in the wording. They stated
the industry is now accustomed to the idea of ``imputed premium.''
Response: The 1998 Research Act refers to 10 percent of the
premium. Section 6(b)(1) of the Catastrophic Risk Protection
Endorsement refers to 10 percent of the premium subsidy because all of
the CAT premium is subsidized by the Federal Government. However, this
provision has been revised to remove all reference to 10 percent of the
premium as required by the 1999 Appropriations Act.
Comment: An insurance company and an insurance service organization
stated it was their understanding that for nursery, the billing date is
at the beginning of the coverage period and this presumably would be
the fee due date. The nursery program requires periodic inventory
updates, thus the premium could vary depending on the inventory. They
asked if the fee continually adjusts through the year depending on
inventory and the corresponding imputed premium when the fee is 10
percent of the imputed premium.
Response: For the old nursery policy, the administrative fees will
be paid with the premium. If there are more than one premium due dates,
the administrative fee must be paid by the final due date. Since the
provision regarding the administrative fee of 10 percent of the premium
has been removed, inventory adjustments are no longer an issue.
Comment: An insurance company and an insurance service organization
stated the pecan program is a two year coverage module. They asked
whether a CAT pecan policy that has been in effect for one year under
the previous administrative fee structure would keep that fee or if the
new fees specified in section 7(b)(1) of the Catastrophic Risk
Protection Endorsement apply for the second year.
Response: Since the pecan policy is a two year coverage module and
the first year's sales closing date was prior to the effective date of
this regulation, the administrative fee that applied for the 1998 crop
year will also apply for the 1999 crop year.
In addition to these changes, the administrative fee for
catastrophic coverage has been changed due to the 1999 Appropriations
Act. The administrative fee for catastrophic coverage for each crop in
the county has been changed from $10 plus the greater of either $50 or
10 percent of the premium subsidy to $60 per crop per county. Also, due
to the Appropriations Act, paragraph 9(b) of the Catastrophic Risk
Protection Endorsement has been revised to state that producers
eligible for CAT coverage are also eligible for emergency loans.
List of Subjects in 7 CFR Parts 400 and 402
Administrative practice and procedure, Catastrophic risk protection
endorsement, Claims, Crop insurance, Fraud, Insurance provisions,
Reporting and recordkeeping requirements.
[[Page 40740]]
Final Rule
Accordingly, as set forth in the preamble, the interim rule
amending 7 CFR parts 400 and 402, published on July 30, 1998 at 63 FR
40630, is adopted as final with the following changes:
PART 402--CATASTROPHIC RISK PROTECTION ENDORSEMENT; REGULATIONS FOR
THE 1999 AND SUBSEQUENT REINSURANCE YEARS
1. The authority citation for 7 CFR part 402 continues to read as
follows:
Authority: 7 U.S.C. 1506(1), 1506(p).
Sec. 402.4 [Amended]
2. Amend Sec. 402.4 as follows:
a. Remove the definitions of ``additional coverage,''
``administrative fee,'' ``catastrophic risk protection,'' ``limited
coverage,'' and ``limited resource farmer'' in Section 1.
b. Revise Section 6 paragraph (b)(1).
c. Revise Section 9 paragraph (b). The revisions to Sec. 402.4 read
as follows:
Sec. 402.4 Catastrophic Risk Protection Endorsement Provisions.
6. Annual Premium and Administrative Fees.
* * * * *
(b) * * *
(1) The administrative fee owed for each crop in the county is $60.
* * * * *
9. Claim for Indemnity.
* * * * *
(b) If you are eligible to receive an indemnity under this
endorsement and benefits compensating you for the same loss under any
other USDA program, you must elect the program from which you wish to
receive benefits. Only one payment or program benefit is allowed.
However, if other USDA program benefits are not available until after
you filed a claim for indemnity, you may refund the total amount of the
indemnity and receive the other program benefit. Notwithstanding the
first sentence of this subsection, farm ownership, operating, and
emergency loans may be obtained from the USDA in addition to an
indemnity under this endorsement.
* * * * *
Signed in Washington, DC, on July 20, 1999.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 99-19014 Filed 7-27-99; 8:45 am]
BILLING CODE 3410-08-P
