[Federal Register Volume 60, Number 233 (Tuesday, December 5, 1995)]
[Rules and Regulations]
[Pages 62189-62190]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-29570]
========================================================================
Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
Prices of new books are listed in the first FEDERAL REGISTER issue of each
week.
========================================================================
Federal Register / Vol. 60, No. 233 / Tuesday, December 5, 1995 /
Rules and Regulations
[[Page 62189]]
DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Part 401
RIN 0563-AB29
General Crop Insurance Regulations; Florida Citrus Endorsement
AGENCY: Federal Crop Insurance Corporation.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Federal Crop Insurance Corporation (``FCIC'') hereby
amends the Florida Citrus Endorsement that supplements the General Crop
Insurance Policy. The intended effect of this rule is to require that
the insured crop unit suffer at least a fifty percent (50%) average
percent of damage before an indemnity would be due for any catastrophic
risk protection policy.
EFFECTIVE DATE: December 5, 1995.
FOR FURTHER INFORMATION CONTACT: Diana Moslak, Regulatory and
Procedural Development Staff, Federal Crop Insurance Corporation, U.S.
Department of Agriculture, Washington, D.C. 20250. Telephone (202) 254-
8314.
SUPPLEMENTARY INFORMATION: This action has been reviewed under United
States Department of Agriculture (``USDA'') procedures established by
Executive Order 12866 and Departmental Regulation 1512-1. This action
constitutes a review as to the need, currency, clarity, and
effectiveness of these regulations under those procedures. The sunset
review date established for these regulations is May 1, 2000.
This rule has been determined to be ``exempt'' for the purposes of
Executive Order 12866 and, therefore, has not been reviewed by the
Office of Management and Budget (``OMB'').
The information collection requirements contained in these
regulations (7 CFR part 401) were previously approved by OMB pursuant
to the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35) under OMB
control numbers 0563-0003, 0563-0014, and 0563-0016. The amendments set
forth in this rule do not revise the content or alter the frequency of
reporting for any of the forms cleared under the above mentioned
dockets. The public reporting burden for the collection of information
is estimated to range from 10 to 90 minutes per response, including the
time for reviewing instructions, searching existing data sources,
gathering and maintaining the data needed, and completing and reviewing
the collection of information.
It has been determined under section 6(a) of Executive Order 12612,
Federalism, that this rule does not have sufficient federalism
implication to warrant the preparation of a Federalism Assessment. The
policies and procedures 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.
This regulation will not have a significant impact on a substantial
number of small entities. This action neither increases nor decreases
the paperwork burden on the insured and the reinsured company.
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.
This program is listed in the Catalog of Federal Domestic
Assistance under No. 10.450.
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.
The Office of the General Counsel has determined that these
regulations meet the applicable standards provided in subsections
(2)(a) and 2(b)(2) of Executive Order 12778. 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 promulgated by the National Appeals Division under Pub. L.
No. 103-354 must be exhausted before judicial action may be brought.
This action is not expected to have any significant impact on the
quality of the human environment, health, and safety. Therefore,
neither an Environmental Assessment nor an Environmental Impact
Statement is needed.
Background
On Tuesday, June 6, 1995, FCIC published an interim rule in the
Federal Register at 60 FR 29749, to amend the Florida Citrus
Endorsement by revising the Catastrophic Risk Protection (CAT) loss
adjustment provisions contained in section 9 of the endorsement.
Following publication of the interim rule, the public was afforded
60 days to submit written comments, data, and opinions. The comments
received and FCIC responses are as follows:
Comment: One comment received from an insurance company maintains
that the rule is incomplete because it only addresses the loss
adjustment deductible aspect of the program and does not address the
dollar amount of insurance.
Response: FCIC revised Section 9 (Claim for Indemnity) because the
language did not conform with the requirements of Section 508(b) of the
Federal Crop Insurance Reform Act (Act) of 1994 which states that CAT
shall offer a producer coverage for a 50 percent loss of yield. Under
the Florida Citrus Endorsement, loss payments began once the damage
exceeded 10 percent. FCIC added language to bring Section 9 in
compliance with the Act. This language only addresses the 50 percent
deductible. The dollar amount of insurance for CAT coverage, as
determined by FCIC, is stipulated in the actuarial table. Therefore,
FCIC has addressed the dollar amount of insurance for CAT coverage and
the formula used to determine CAT coverage indemnities will not be
changed.
Comment: One comment received from an insurance company stated that
the rule was not necessary because the same result could be achieved by
multiplying the maximum value FCIC assigns to a given variety of citrus
by 50%, then multiplying this product by 60%.
Response: FCIC disagrees with the comment. The determination of an
appropriate CAT dollar amount of
[[Page 62190]]
insurance is a separate issue from establishing the amount of loss that
must be sustained before an indemnity is due.
Comment: One comment received from an insurance company suggested
that the Act specifically addresses CAT coverage for production based
programs but leaves discretion as to how to apply CAT to dollar amount
of insurance crops.
Response: The Act stipulates that CAT coverage shall offer a
producer coverage for a 50 percent loss in yield on an individual
basis, indemnified at 60 percent of the expected market price, or
comparable coverage (as determined by the Corporation). For dollar
amount of insurance crops like Florida Citrus, the CAT dollar amount of
insurance is stated in the actuarial table. The 50% loss threshold for
CAT is not discretionary and applies to dollar amount of insurance
crops.
Comment: One comment received from an insurance company suggested
that changing the loss calculation for CAT represents a material change
in the program and essentially creates a second Florida Citrus program.
Response: Changing the Florida Citrus CAT loss calculation did not
create another program. CAT coverage was a new insurance coverage level
that was required to be implemented by the Act. The change explains how
CAT losses will be calculated.
Comment: One comment received from an insurance company stated
their belief that CAT payment values are far short of 60% of the market
value called for in the Act. Consequently, loss guidelines which result
in a CAT producer being indemnified once they have sustained a loss
greater than 10% helped to compensate for the insufficient CAT dollar
amount of coverage.
Response: FCIC believes that it would be inappropriate to
compensate for a perceived insufficient dollar amount of coverage by
manipulating loss calculations, since it would violate crop loss
guidelines established in the Act.
Comment: One comment received from an insurance company suggested
that the rule change would not reduce paperwork nor simplify the
program and could cost more money to administer since agents would have
two quoting systems.
Response: FCIC disagrees with this comment. The rule change is not
expected to either increase or decrease paperwork. The change does not
create two quoting systems, it only informs the CAT policyholder how a
claim for indemnity is calculated for this new coverage level.
Comment: One comment received from an insurance company suggested
that the rule will spread confusion and bad will among their growers
and creates additional work for companies and agents who are already
``undercompensated'' for CAT.
Response: The Act mandates guidelines for implementing CAT coverage
and FCIC does not have the liberty to deviate from the guidelines.
Therefore, Florida citrus producers with CAT policies will be treated
the same as CAT policyholders of other crops.
Comment: One comment received from an insurance company stated that
while they believed the rule change was required to bring the program
in compliance with legislation, the change was made well after the
April 15, 1995 contract change date, and thus it was inappropriate to
implement it for the 1996 crop year.
Response: FCIC's position is that CAT was implemented when the
interim rules, Catastrophic Risk Protection Endorsement and Subpart T-
Regulations for Implementation, were published in the Federal Register
on January 6, 1995. The Florida Citrus interim rule was a continuation
of implementing CAT. Implementing legislation (the Act) takes
precedence over a crop policy's contract change date.
Comment: One comment received from an insurance company stated that
the only changes allowable after the April 15, 1995 contract change
date would be a liberalization which would benefit the policyholders,
as described in section 11 of the General Provisions of the MPCI
Policy. Furthermore a 500% increase in the CAT policy deductible does
not qualify as a liberalization.
Response: Implementing legislation takes precedence over a crop
policy's contract change date. CAT insureds who sustain a complete loss
of their Florida citrus can realize 100% of their CAT coverage, while
under the previous loss calculation, based on 10% deductible, they
would have received only 90% of their CAT coverage.
List of Subjects in 7 CFR Part 401
Crop insurance, Florida citrus.
Final Rule
Accordingly, pursuant to the authority contained in the Federal
Crop Insurance Act, as amended (7 U.S.C. 1501 et seq.) the Federal Crop
Insurance Corporation hereby adopts as a final rule, the interim rule
as published at 60 FR 29749 on June 6, 1995.
Done in Washington, DC, on November 29, 1995.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 95-29570 Filed 12-4-95; 8:45 am]
BILLING CODE 3410-FA-P
